Armada Hoffler Properties: Strong Industry Dynamics Coupled With Strong Management Indicate Upside Potential

Armada Hoffler Properties: Strong Industry Dynamics Coupled With Strong Management Indicate Upside Potential 

October 15, 2021

Price (as of close on Oct 14, 2021)

$13.70

Rating

BUY

12- Month Target Price

Armada Hoffler Properties Inc. (AHH)

Armada Hoffler Properties is repositioning its portfolio for growth and represents an opportunistic way to play a reopening trade. AHH’s diversified portfolio with high occupancy rates, coupled with strong industry dynamics and a healthy development pipeline, should result in a growing NAV and stock price. In addition, AHH’s dividend yield of 4.7% is attractive. We initiate with a BUY rating and a price target.

Investment Thesis

➢ Armada Hoffler Properties is a self-managed REIT with four decades of experience in developing, acquiring, and managing high-quality office, retail, and multi-family properties.

➢The stabilized property occupancy rate for AHH was 94.1% as of Q2:21, which reflects AHH’s high-quality portfolio.

➢ We are encouraged by a strong development pipeline which should support NOI growth. AHH expects its portfolio NOI to climb by over 40% from 2020 levels when current development projects are fully stabilized.

➢ A diversified portfolio with high occupancy rates, coupled with strong industry dynamics and a healthy development pipeline, should result in a growing Net Asset Value (NAV) and stock price. In addition, the dividend yield of 4.7% is attractive.

➢ The Company is poised to grow its earnings over the near to medium term. We initiate coverage with a BUY rating and a price target of .

PRIMARY RISKS

➢ The Company is dependent on timely completion of its development projects. Failure to remain on schedule can lead to cost overruns, which can impact profitability.

➢ The Company is dependent on external capital to fund its asset purchase. There is risk of dilution from any future equity offerings.

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