AH Realty Trust, Inc (AHRT) 2016 Q2 法說會逐字稿

Welcome to the Armada Hoffler Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, you'll be invited to participate in a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded today, Tuesday, August 2, 2016.

歡迎參加 Armada Hoffler 2016 年第二季財報電話會議。目前所有與會者皆處於僅收聽模式。管理層完成事先準備的發言後，將邀請各位參與問答環節。（接線員指示）提醒各位，本次會議正在錄音，時間為 2016 年 8 月 2 日（星期二）。

I would now like to turn the conference over to Michael O'Hara, Chief Financial Officer of Armada Hoffler. Please go ahead, sir.

現在我想將會議交給 Armada Hoffler 財務長 Michael O'Hara。先生，請開始。

Good morning and thank you for joining Armada Hoffler's second quarter 2016 earnings conference call and webcast. On the call this morning in addition to myself are Lou Haddad, CEO, and Eric Smith, our Chief Investment Officer, who will be available for questions.

各位早安，感謝各位參加 Armada Hoffler 2016 年第二季財報電話會議與網路直播。今天早上的電話會議除我之外，還有執行長 Lou Haddad 以及投資長 Eric Smith，兩位稍後將可回答提問。

The press release announcing our second quarter earnings, along with our quarterly supplemental package, was distributed this morning. A replay of this call will be available shortly after the conclusion of the call through September 2, 2016. The numbers to access the replay are provided in the earnings press release. For those who listen to the rebroadcast of this presentation, we remind you that remarks made herein are as of today, August 2, 2016, and will not be updated subsequent to this earnings call.

本公司今早已發布公布第二季財報的新聞稿，並同時提供季度補充資料包。本次電話會議的重播將於會議結束後不久提供，並可收聽至 2016 年 9 月 2 日。重播的撥入號碼已載於財報新聞稿。對於收聽本次簡報重播的聽眾，我們提醒：本次發言係截至今日（2016 年 8 月 2 日）之資訊，且在本次財報電話會議後不會再更新。

During the call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our development pipeline, impact of acquisitions and dispositions, our construction business, our portfolio performance and financing activities, as well as comments on our outlook. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control.

在本次電話會議中，我們將作出前瞻性陳述，包括與本公司投資組合未來表現、開發管線、收購與處分之影響、營造業務、投資組合營運表現與融資活動相關之陳述，以及對前景的評論。聽眾應注意，這些陳述受若干風險與不確定性影響，其中許多難以預測，且通常超出我們的控制範圍。

These risks and uncertainties can cause actual results to differ materially from our current expectations and we advise listeners to review the risk factors discussed in our press release this morning and in documents we have filed with or furnished to the SEC. We'll also discuss certain non-GAAP financial measures, including but not limited to FFO and normalized FFO. Definitions of these non-GAAP measures, as well as reconciliations to the most comparable GAAP measures are included in the quarterly supplemental package, which is available at our website at www.armadahofflercom.

這些風險與不確定性可能導致實際結果與我們目前預期存在重大差異；我們建議聽眾查閱今早新聞稿以及我們向美國證券交易委員會（SEC）提交或提供之文件中所討論的風險因素。我們也將討論若干非 GAAP 財務衡量指標，包括但不限於 FFO 與標準化 FFO。這些非 GAAP 指標的定義，以及與最可比 GAAP 指標之調節表，均收錄於季度補充資料包中，可於我們網站 www.armadahofflercom 取得。

I'd like now to turn over the call to our Chief Executive Officer, Lou Haddad. Lou?

接下來我想把電話會議交給我們的執行長 Lou Haddad。Lou？

Thanks, Mike. Good morning and thank you for joining us today. This morning we reported quarterly results with normalized FFO per share of $0.26, driven primarily by better than expected NOI growth. We are pleased with our results for the second quarter and continue to successfully execute on our strategy. Based on our year-to-date results and the outlook for the rest of the year, we've raised our 2016 normalized FFO guidance range.

謝謝你，Mike。各位早安，感謝今天加入我們。今天早上我們公布本季業績，標準化 FFO 每股為 0.26 美元，主要受惠於優於預期的 NOI 成長。我們對第二季的表現感到滿意，並持續成功執行我們的策略。基於年初至今的成果以及對今年剩餘期間的展望，我們已上調 2016 年標準化 FFO 指引區間。

Growing earnings and outpacing expectations are important, however, they are ancillary to our primary goal: creating value for our shareholders by adding quality real-estate to our portfolio through our development efforts and complementary strategic acquisitions. The result of this type of growth is not only size, but high-quality, stable NOI that demands lower cap rates.

獲利成長並超越預期固然重要，但這些都只是我們主要目標的輔助：透過開發與互補性的策略性收購，將優質不動產納入投資組合，為股東創造價值。此類成長帶來的不僅是規模，更是高品質、穩定的 NOI，並可對應較低的資本化率（cap rates）。

Since our IPO in May of 2013, we've certainly grown in size. Our portfolio has grown by over 80%, NOI has grown by over 50%, normalized FFO has grown at a double-digit pace, and our market cap has more than doubled. Just as important, we've increased the overall quality of our portfolio through developing high-quality, well located projects at our target wholesale to retail profit of 20% or more; prudent asset recycling; opportunistic acquisitions; and making the right real-estate decisions for the long-term benefit of the Company and our shareholders.

自 2013 年 5 月 IPO 以來，我們的規模確實持續擴大。我們的投資組合成長超過 80%，NOI 成長超過 50%，標準化 FFO 以雙位數速度成長，而我們的市值也已超過倍增。同樣重要的是，我們透過開發高品質、區位良好的專案，並達成我們目標的「批發到零售」利潤率 20% 以上；審慎的資產汰換；把握機會的收購；以及做出有利於公司與股東長期利益的正確不動產決策，提升了整體投資組合品質。

As a result, we've created and delivered significant value and substantially increased our NAV over that past three years. By most any measure, we are making good on our promise to investors and there is still a lot more to come. With two large projects delivering this quarter; $200 million of new development underway in the Baltimore, Washington Corridor; a new flagship project under construction in downtown Durham; another new groundbreaking in Town Center later this year; and several interesting opportunities taking shape in our pre-development pipeline. We are poised to add significant value to our asset base and continue increasing NAV.

因此，我們在過去三年創造並交付了顯著價值，並大幅提升我們的 NAV。以幾乎任何衡量標準來看，我們都正在兌現對投資人的承諾，而且未來仍有更多成果可期。本季有兩個大型專案交付；在巴爾的摩—華盛頓走廊有 2 億美元的新開發案正在進行；在達勒姆市中心有新的旗艦專案正在施工；今年稍晚在 Town Center 還將有另一個新案動工；以及多個有趣的機會正在我們的前期開發管線中成形。我們已蓄勢待發，將為資產基礎增添可觀價值並持續提升 NAV。

During the quarter, we surpassed $1 billion of the enterprise value. And as long as high-quality opportunities continue to present themselves, we have every reason to believe we will maintain our current growth trajectory toward $1 billion equity market cap. Mike will discuss our quarterly results in more detail after I briefly touch on a few of the highlights.

本季期間，我們的企業價值已突破 10 億美元。只要高品質機會持續出現，我們完全有理由相信，將維持目前的成長軌跡，朝 10 億美元股權市值邁進。在我簡要提及幾項重點後，Mike 將更詳細說明本季業績。

I'll start with the primary growth engine of the Company, our development pipeline. This quarter, we announced the planned expansion of the crown jewel of our portfolio, the Town Center of Virginia Beach. Phase VI of this public-private partnership is a new $35 million mixed use project that will include approximately 39,000 square feet of retail space, as well as a 120 luxury apartments. In addition, Zeiders American Dream Theater has committed to invest $8 million in a new 17,000 square foot performing arts theater, and the City of Virginia Beach will contribute $3 million in public infrastructure, including an open-air public plaza and pedestrian bridge connecting to the adjacent parking garage at the Cosmopolitan apartments.

我先從公司的主要成長引擎——開發管線談起。本季我們宣布計畫擴建投資組合中的皇冠明珠：維吉尼亞海灘（Virginia Beach）的 Town Center。此公私協力案的第六期（Phase VI）為一項新的 3,500 萬美元複合用途專案，將包含約 39,000 平方英尺的零售空間，以及 120 戶豪華公寓。此外，Zeiders American Dream Theater 已承諾投資 800 萬美元興建一座新的 17,000 平方英尺表演藝術劇院；維吉尼亞海灘市政府也將投入 300 萬美元於公共基礎設施，包括一座露天公共廣場與人行天橋，連接至 Cosmopolitan 公寓相鄰的停車場。

18,000 square feet of retail space has already been pre-leased to national name-brand tenants that will complement and enhance an already impressive Town Center roster that includes, amongst others, Anthropologie, lululemon, West Elm, Brooks Brothers and Free People, further solidifying Town Center as an upscale retail destination in the region.

其中 18,000 平方英尺的零售空間已預先出租給全國性知名品牌租戶，將與既有且令人印象深刻的 Town Center 租戶名單相互補強並提升整體吸引力；該名單包括（但不限於）Anthropologie、lululemon、West Elm、Brooks Brothers 與 Free People，進一步鞏固 Town Center 作為本區高端零售目的地的地位。

We expect to break ground on Phase VI of Town Center later this year. This represents just the latest chapter in our successful, ongoing, multi-decade, public-private partnership with the City of Virginia Beach, one that has created a vibrant downtown Central Business District in the largest city in Virginia.

我們預期將於今年稍晚為 Town Center 第六期動工。這只是我們與維吉尼亞海灘市政府成功且持續、跨越數十年的公私協力關係的最新篇章；該合作已在維吉尼亞州最大城市打造出充滿活力的市中心中央商業區。

For those who have recently begun to follow our Company, Town Center spans 25 acres across 17 blocks and is home to 110 commercial tenants, 412 hotel rooms and 804 residential units, including five high-rise buildings, one of which is the tallest building in the Commonwealth of Virginia.

對於近期才開始關注本公司的投資人而言，Town Center 橫跨 17 個街區、占地 25 英畝，擁有 110 家商業租戶、412 間飯店客房與 804 戶住宅單位，其中包含 5 棟高樓建築；其中一棟為維吉尼亞州（Commonwealth of Virginia）最高的建築。

In addition to 800,000 square feet of office space, Town Center boasts 23 restaurants, a 1,300 seat performing arts theater, and 30,000 square feet of conference space. With over half of the tenants in Town Center new to Virginia Beach and almost a third of them new to the Coastal Virginia MSA, this signature project continues to serve as an economic catalyst for both the city and the broader region.

除 800,000 平方英尺的辦公空間外，Town Center 還擁有 23 家餐廳、一座可容納 1,300 個座位的表演藝術劇院，以及 30,000 平方英尺的會議空間。由於 Town Center 超過一半的租戶是首次進入維吉尼亞海灘，且其中近三分之一是首次進入維吉尼亞沿海都會統計區（Coastal Virginia MSA），此一指標性專案持續成為城市與更廣泛區域的經濟催化劑。

In addition to drawing new businesses to the area, Town Center provides already established tenants the ability to either relocate to or expand within the most exclusive address in the market. For example, just last month, we agreed to lease 14,000 square feet of office space at 4525 Main to an existing Town Center tenant at One Columbus looking to expand their footprint by almost 40%.

除了吸引新企業進駐外，Town Center 也讓既有租戶能夠在市場上最具獨特性的地址中選擇搬遷或擴張。例如，就在上個月，我們同意將 4525 Main 的 14,000 平方英尺辦公空間出租給一位位於 One Columbus 的既有 Town Center 租戶；該租戶希望將其使用面積擴大近 40%。

For the additional capacity we designed and built at 4525 Main, we were able to accommodate this particular tenant's needs and are in discussions with a second long term tenant, looking at a similar relocation and expansion. As a result, not only will we increase occupancy at 4525 Main, but also create capacity and opportunity for tenants looking to relocate to Town Center at a lower entry point.

針對我們在 4525 Main 所設計並興建的額外容量，我們得以滿足該租戶的需求，並正與第二位長期租戶洽談，對方也在評估類似的搬遷與擴張。因此，我們不僅將提高 4525 Main 的出租率，也將為希望以較低進入門檻搬入 Town Center 的租戶創造容量與機會。

Moving beyond Town Center to the remaining projects we have slated for delivery this year, last month the anchor Harris Teeter store at Lightfoot Marketplace in Williamsburg, Virginia, opened for business. As of today, the project stands at over 70% leased and we expect the initial small shop tenants to take occupancy later this quarter. We remain on track to deliver Johns Hopkins Village later this month and open with approximately three-fourth of the residential units leased and approximately two-thirds of the retail space leased or under LOI. We look forward to building upon this solid opening and expect to reach full stabilization next year.

離開 Town Center，談到我們今年其餘預計交付的專案：上個月，位於維吉尼亞州威廉斯堡（Williamsburg）的 Lightfoot Marketplace 之主力店 Harris Teeter 已開幕營業。截至今日，該專案出租率已超過 70%，我們預期首批小型店鋪租戶將於本季稍晚進駐。我們仍按計畫於本月稍晚交付 Johns Hopkins Village，並預計開幕時約四分之三的住宅單位已出租，且約三分之二的零售空間已出租或已簽署/洽談意向書（LOI）。我們期待在此穩健開局的基礎上持續推進，並預期於明年達到完全穩定。

With respect to our 2017 and 2018 deliveries, our progress on Point Street Apartments in Baltimore's Inner Harbor, One City Center in downtown Durham and The Residences at Annapolis Junction Town Center continues as expected with construction well underway at each site. We expect to announce at least one more development project by the end of the current quarter.

就我們於2017年及2018年的交付而言，我們在巴爾的摩內港的Point Street Apartments、達勒姆市中心的One City Center，以及The Residences at Annapolis Junction Town Center等專案的進展，均如預期持續推進，各工地施工皆已全面展開。我們預期在本季結束前至少再宣布一項開發專案。

Moving from our development pipeline to acquisitions and dispositions, this quarter we closed on our acquisition of Southgate Square, a retail center located in Colonial Heights, Virginia, just south of Richmond. This 220,000 square foot center is anchored by a brand new Burlington store, as well as Michaels and PetSmart. We acquired the asset for a combination of $21 million of debt and $1.6 million operating partnership units.

從我們的開發管線轉向收購與處分，本季我們完成收購位於維吉尼亞州Colonial Heights、里奇蒙以南的零售中心Southgate Square。該中心面積為220,000平方英尺，主力店包括全新開幕的Burlington門市，以及Michaels與PetSmart。我們以2,100萬美元債務加上160萬美元營運合夥單位（OP units）的組合取得該資產。

The opportunity to acquire Southgate Square arose from the same longstanding relationship that led to our acquisition of Dimmock Square two years ago and our pending acquisition of Southshore Shops, which we expect to close later this week. Southshore is a 40,000 square foot retail center also located in the Greater Richmond market. While this is a relatively small asset for us, approximately $9 million, it's significant in that it will be our third OP unit transaction with this particular partner and our fifth deal involving either stock or OP units. For those of you who follow our Company, it should come as no surprise that each of these new partners have been pleased with the significant returns they realized on their investment in us, leading to repeat business and further interest in our OP unit program.

收購Southgate Square的機會，源自同一段長期合作關係；該關係曾促成我們兩年前收購Dimmock Square，以及我們預計於本週稍晚完成交割的Southshore Shops收購案。Southshore為一座40,000平方英尺的零售中心，同樣位於大里奇蒙市場。雖然對我們而言這是一項相對較小的資產（約900萬美元），但其重要性在於：這將是我們與該特定合作夥伴的第三筆OP單位交易，也是我們第五筆涉及股票或OP單位的交易。對於關注本公司的各位而言，這並不令人意外：每一位新合作夥伴都對其投資於我們所實現的可觀報酬感到滿意，進而帶來重複合作與對我們OP單位計畫的進一步興趣。

Turning to dispositions, you'll remember that as part of the capital stack for our 11 asset portfolio acquisition that we completed in January, we had originally identified five non-core retail assets as disposition candidates. And as of today, we've completed the sale of two of those assets. We had been under contract to sell another two assets to a single OP market buyer. However, both fell out of contract on the last day of due diligence when the purchaser attempted to significantly re-trade the transaction. As these assets had not been fully marketed, we felt no pressure to negotiate the price. We are comfortable holding all three Kroger anchored centers for an extended period of time. Our intent is to fully market some combination of these assets later this year.

談到處分，各位會記得，作為我們於1月完成的11項資產組合收購案之資本結構（capital stack）的一部分，我們原先已辨識出五項非核心零售資產作為處分候選標的。截至今日，我們已完成其中兩項資產的出售。我們原本也與一位單一OP市場買方簽約出售另外兩項資產；然而，在盡職調查的最後一天，買方試圖大幅重新議價，導致兩案皆解約。由於這些資產尚未充分對外行銷，我們不覺得有壓力必須在價格上讓步。我們也願意長期持有這三座以Kroger為主力店的中心。我們的意圖是在今年稍晚將其中某些資產（或其組合）全面推向市場。

Shifting to the foundation of our Company, our core portfolio. At the end of the quarter, our occupancy stood at just over 95%. Occupancy across all product types at the end of the quarter remained in the mid 90s. Even with these consistently high occupancy levels, our core portfolio continues to deliver organic upside as demonstrated by our eighth consecutive quarter of same store NOI growth.

接著談到本公司的根基——核心投資組合。於季末，我們的出租率略高於95%。季末各產品類型的出租率仍維持在90%中段。即便出租率長期維持高檔，我們的核心投資組合仍持續帶來內生成長（organic upside），並由連續第八季同店NOI成長所證明。

Turning to our third-party construction business. Year-to-date, we've added over $240 million to backlog and since the end of the quarter have been verbally awarded additional contracts of approximately $30 million. With over $0.25 billion of work in the pipeline, we expect our construction business to continue to generate profits towards the higher end of our historical range for the rest of the year and through 2017.

接著談我們的第三方營造業務。今年迄今，我們已新增超過2.4億美元的在手訂單（backlog），且自季末以來又口頭獲授約3,000萬美元的額外合約。由於管線中有超過2.5億美元的工程量，我們預期營造業務在今年剩餘期間及至2017年，將持續創造接近我們歷史區間上緣的利潤。

Before I turn the call over to Mike, I should mention our new $75 million ATM equity offering program that we entered into this quarter. As you might expect, we took advantage of favorable market conditions and accelerated our use of the additional capacity created by this program in order to strengthen our balance sheet in anticipation of the future growth I discussed earlier.

在我把電話交給Mike之前，我要提到我們本季啟動的新7,500萬美元ATM（隨市發行）股權發行計畫。如各位所料，我們把握有利的市場條件，加速運用該計畫所帶來的新增額度，以強化資產負債表，為我先前談到的未來成長預作準備。

With that, I'll turn the call over to Mike for more details.

接下來，我把電話交給Mike，請他提供更多細節。

Thanks, Lou. Today, I want to cover the highlights of the quarter, thoughts on our balance sheet and additional details on our 2016 guidance. This morning, we reported FFO of $0.24 per share, and normalized FFO of $0.26 per share, which was at the high-end of our expectations. Our core portfolio continues to deliver excellent results. Both occupancy and same store NOI increased this quarter. Same-store NOI growth was positive 1.7% and 1.2% on a cash basis, which represents the eighth consecutive quarterly increase. At the end of the quarter, our core operating portfolio occupancy was 95.3% with office at 94.6%, retail at 96%, and multi-family at 94.3%.

謝謝你，Lou。今天我想說明本季重點、我們對資產負債表的看法，以及2016年財測的更多細節。今天早上，我們公布每股FFO為0.24美元，標準化（normalized）每股FFO為0.26美元，落在我們預期的高端。我們的核心投資組合持續交出優異成果；本季出租率與同店NOI皆上升。同店NOI成長為1.7%，以現金基礎計為1.2%，這是連續第八季的季度增長。季末，我們核心營運投資組合出租率為95.3%，其中辦公為94.6%、零售為96%、多戶住宅（multi-family）為94.3%。

On the construction front, we reported a segment gross profit in the second quarter of $1.2 million on revenue of $33 million. At the end of the second quarter, the Company had a third-party construction backlog of $252 million, which will sustain this part of our business for the foreseeable future and should translate into profit at the higher end of our historical range.

在營造方面，我們第二季該分部的毛利為120萬美元，營收為3,300萬美元。於第二季末，公司第三方營造在手訂單為2.52億美元，將在可預見的未來支撐此業務，並應可轉化為接近我們歷史區間上緣的利潤。

Now turning to our balance sheet. We continue to take actions to enhance flexibility and strengthen our balance sheet, including refinancing upcoming loan maturities, hedging our interest rate exposure and continued use of the ATM program. We used the ATM program last quarter to raise $21 million of gross proceeds at an average price of $12.32 per share. The amount raised was substantially higher than last quarter's guidance. The stock hit record highs on 16 occasions and was up 22% during the quarter, so we took advantage of this opportunity to strengthen the balance sheet. If the stock continues to trade at these levels, we will continue to be opportunistic with the program. Even with the increased use of the ATM program, we are raising our 2016 earnings guidance.

接著談資產負債表。我們持續採取行動以提升彈性並強化資產負債表，包括為即將到期的貸款再融資、對利率曝險進行避險，以及持續使用ATM計畫。上季我們透過ATM計畫以每股平均12.32美元的價格募集2,100萬美元的總收益。募集金額明顯高於上季指引。該季股價16次創下歷史新高，季度漲幅達22%，因此我們把握機會強化資產負債表。若股價持續在此水準交易，我們將持續以機會主義方式運用該計畫。即便ATM計畫使用增加，我們仍上調2016年盈餘指引。

During the quarter, we sold one of the five non-core properties in the January portfolio acquisition and a second of these recently closed. Combined, these assets sold for $12.9 million. As previously discussed, these proceeds will be used for balance sheet purposes. At the end of the quarter, we had total outstanding debt of $513 million, including $107 million outstanding under our $150 million revolving credit facility. We continue to evaluate our exposure to higher interest rates and look for opportune times to enter into hedges.

本季我們出售了1月投資組合收購案中五項非核心資產之一，且第二項也已於近期完成出售。合計而言，這些資產以1,290萬美元售出。如先前所述，該等款項將用於資產負債表相關用途。季末，我們未償還總負債為5.13億美元，其中包括在我們1.5億美元循環信用額度（revolving credit facility）下動用的1.07億美元。我們持續評估對較高利率的曝險，並尋找適當時點進行避險。

During the quarter, we purchased a $70 million LIBOR interest rate cap at 1% for two years. As we have said before, we believe using interest rate caps is the most efficient way to hedge against the potential for increasing interest rates. With this new cap, 95% of our debt was fixed or hedged. We're also working on refinancing the 2016 and 2017 debt maturities. We have a commitment to refinance the Town Center 2016 maturities, bonus of five years, $35 million and floating at LIBOR plus 195. The new loan amount is $6 million more than the maturing loans. We also have a commitment to refinance 4525 Main Street in the Encore Apartments. The new loan is a five-year loan for $57 million and the rate was locked at 3.25%. Both loans are scheduled to close this month.

本季我們購入一項為期兩年、上限利率為1%的7,000萬美元LIBOR利率上限（interest rate cap）。如我們先前所述，我們認為使用利率上限是對沖利率可能上升最有效率的方式。透過這項新的上限安排，我們95%的債務已為固定利率或已避險。我們也正進行2016年與2017年到期債務的再融資。我們已取得承諾為Town Center於2016年到期部分再融資，延長五年，金額3,500萬美元，利率為浮動、LIBOR加195個基點。新貸款金額較到期貸款多出600萬美元。我們也已取得承諾為Encore Apartments的4525 Main Street再融資。新貸款為5年期、金額5,700萬美元，利率鎖定為3.25%。兩筆貸款預計於本月完成交割。

Now turning to development. During the quarter we closed on the Annapolis Junction project. This is structured similar to the Point Street Apartments project with our investment funded through a mezzanine loan. The project is non-consolidated and therefore does not stress our balance sheet during construction and lease-up. Projects of this size and duration require debt and equity for over two years with no return on our capital. With the mezzanine debt structure, we have paid a return on investment and a constructions fee during development and have the option to purchase a controlling interest in the property upon completion. Our current investment in Annapolis Junction is in the form of a $42 million mezzanine loan which bears interest at 10%.

接著談開發。本季我們完成Annapolis Junction專案交割。其架構與Point Street Apartments專案類似，我們的投資係透過夾層貸款（mezzanine loan）提供資金。該專案不併入合併報表（non-consolidated），因此在施工與招租（lease-up）期間不會對我們的資產負債表造成壓力。此等規模與期間的專案，通常需要超過兩年的債務與股權投入，且在此期間我們的資本不會有回報。採用夾層債務架構，我們在開發期間可取得投資報酬與施工費（construction fee），並可在完工後選擇購買該物業的控股權。我們目前對Annapolis Junction的投資為4,200萬美元的夾層貸款，年利率為10%。

Now let me walk you through our full 2016 guidance that we updated this morning. We expect 2016 normalized FFO in the range of $0.96 to $1 per share. This updated 2016 guidance is predicated on the following assumptions. Total NOI in the $65.8 million to $66.5 million range, third-party construction company gross profit in the $4.7 million to $5.2 million range, general and administrative expenses in the $9.1 million to $9.4 million range, interest income for our mezzanine financing program in the $3 million to $3.3 million range. As of June 30, the aggregate loan balance was $39 million. Interest expense in the $16 million and $16.5 million range. The sale of two of the five non-core retail properties totaling $12.9 million and the sale of the others at year-end, and 49.8 million weighted average shares in OP units outstanding, including the OP units expected to be issued as part of the Southshore acquisition. This guidance excludes any impact from future acquisitions other than Southshore, asset sales or the other capital markets activity with the exception of continuing the ATM program.

最後我帶各位快速說明我們今天早上更新的2016年完整指引。我們預期2016年標準化FFO為每股0.96至1.00美元區間。此更新後的2016年指引係基於以下假設：總NOI介於6,580萬至6,650萬美元；第三方營造公司毛利介於470萬至520萬美元；一般及行政費用介於910萬至940萬美元；夾層融資計畫的利息收入介於300萬至330萬美元。截至6月30日，貸款餘額合計為3,900萬美元；利息費用介於1,600萬至1,650萬美元；出售五項非核心零售資產中的兩項、合計1,290萬美元，以及其餘資產於年底出售；加權平均流通股數（含OP單位）為4,980萬股，包括預計作為Southshore收購案一部分而發行的OP單位。本指引不包含除Southshore以外之未來收購、資產出售或其他資本市場活動的影響，但持續執行ATM計畫者除外。

Now, I'd like to make a few comments about this updated guidance. The increase in guidance is due to a number of factors, the Southshore acquisition is accretive, increases in occupancy, and third-party construction gross profit. Another factor is the delay in selling three of the non-core retail assets that we purchased in January. As Lou discussed, the buyer attempted to renegotiate the sales amount and we decided not to sell these properties. The proceeds from these sales were to be used for balance sheet purposes, but due to the increased proceeds from the ATM program, we can hold these assets and stay within our target debt metrics. The updated average shares outstanding takes into account the OP units to be issued in the Southshore transaction, as well as increased use of the ATM program during the year as I mentioned earlier.

現在，我想就這份更新後的指引做幾點說明。指引上調是由多項因素所致：Southshore 收購具增益性（accretive）、入住率提升，以及第三方施工的毛利。另一個因素是我們延後出售今年一月購入的三項非核心零售資產。如 Lou 所提，買方試圖重新協商出售金額，因此我們決定不出售這些物業。原本這些出售所得將用於資產負債表用途，但由於 ATM 計畫帶來的資金增加，我們可以持有這些資產，同時仍維持在我們目標的負債指標範圍內。更新後的平均流通在外股數已納入 Southshore 交易將發行的 OP 單位，以及如我先前提到的，今年 ATM 計畫使用量的增加。

I'll now turn the call back to Lou.

我現在把電話交回給 Lou。

Thank you, Mike, and thank you for your time this morning and your interest in Armada Hoffler. Operator, we would like to begin the question-and-answer session.

謝謝你，Mike，也謝謝各位今天早上的時間以及對 Armada Hoffler 的關注。接線員，我們想開始問答環節。

(Operator Instructions) Dave Rodgers, Baird.

（接線員指示）Dave Rodgers，Baird。

Good morning, guys. Nice quarter, obviously. Just wanted to, I guess, quickly touch on a couple of different things. I guess the first would be on the office side, particularly around Town Center, I guess where the remaining portion of your office is. Not a lot of leasing activity in the quarter, but it seemed like your commentary in the prepared comments was a little bit more positive in terms of maybe moving people over to the Main Street Tower and seeing some backfill activity at One and Two Columbus. So can you extrapolate on that a little bit?

各位早安。本季表現很不錯，顯然如此。我想快速談幾個不同的面向。第一個是辦公室端，特別是 Town Center 周邊，也就是你們剩餘辦公室資產所在的地方。本季租賃活動不多，但你們在事先準備的發言中，評論似乎更偏正面，提到可能把一些租戶移到 Main Street Tower，並在 One 和 Two Columbus 看到一些回補（backfill）活動。你們能否就此再延伸說明一下？

Sure, Dave. You'll recall that, one of the main reasons to build 4525 Main and the size that we built it, was to allow just this type of activity. And so it really does this -- it's really pleasant to see that we're starting to get that organic growth that traditionally has been a big driver for us here at Town Center, in the last couple of years has kind of flattened out. So, it's good to see that moving out again. The two firms that we're talking about are long-term tenants, one being a brokerage firm, the other being an engineering firm.

當然可以，Dave。你會記得，當初興建 4525 Main、而且規模做得那麼大，其中一個主要原因就是為了促成這類活動。所以看到我們開始出現這種有機成長，真的很令人欣慰；在 Town Center 這裡，過去幾年傳統上一直是我們的重要成長動能，但最近兩年有點趨於平緩。現在很高興看到又開始動起來。我們提到的兩家公司都是長期租戶，一家是經紀公司，另一家是工程公司。

Okay, good, that's helpful. And then interest in the Town Center from kind of outside of the Town Center and kind of the timing around that. I know that there are some bigger expirations coming. How do you feel about those still in the current market?

好的，很有幫助。那再來是 Town Center 來自外部（非 Town Center 內部）的興趣，以及相關時程。我知道接下來會有一些較大的租約到期。在目前的市場環境下，你對那些到期租約的看法如何？

I'm feeling very positive about it, Dave. We're seeing an increase in activity, a lot more tours coming through and people looking for offers. So, I feel really good about that for the first time in a while. So hopefully that's a trend that's going to continue.

Dave，我對此非常樂觀。我們看到活動量增加，有更多帶看（tour），也有更多人尋求報價/提案。所以我一段時間以來第一次感覺非常好。希望這會成為持續的趨勢。

Great. On the new development, you said you'd announce a new development this quarter. Can you kind of just talk about what kind of those conversations look like, and whether that might be office or multi-family and how you're looking at the major positive development opportunities for you guys going forward?

很好。關於新開發案，你說你們會在本季宣布一個新開發案。你能否談談目前這些對話大概是什麼樣子？以及它可能是辦公室或多戶住宅（multi-family）？你們如何看待未來對你們而言最具正面效益的重大開發機會？

Sure. As we alluded to on the last call, actually the last couple of calls, we're really focusing our development efforts in that Baltimore-Washington Corridor, as well as in the Raleigh-Durham area as well as Charlotte. I think most probably these new announcements will come from there. It really hits -- it's kind of a horse race. In the pipeline right now, we have office opportunities, multi-family opportunities, as well as retail opportunities. I wouldn't handicap what wins, but I can tell you that they are really exciting opportunities I think our Group's going to be very happy to perform.

當然。如同我們在上一通電話會議、其實過去幾次電話會議中提到的，我們正把開發重心放在巴爾的摩—華盛頓走廊（Baltimore-Washington Corridor），以及羅利—達勒姆（Raleigh-Durham）地區，還有夏洛特（Charlotte）。我想大多數新的宣布會來自這些地區。這其實——有點像賽馬競賽。目前在我們的案源管線中，有辦公室機會、多戶住宅機會，也有零售機會。我不會去預測哪個會勝出，但我可以告訴你，這些都是非常令人振奮的機會，我相信我們團隊會很樂於去執行。

And I guess should we expect that these would be more traditional equity owned developments or will we expect to see continued the -- the mezz program expands a little further as you think about multi-family maybe?

那我想問，我們是否應該預期這些會是較傳統、以自有股權持有的開發案？還是你們會預期持續看到——尤其在多戶住宅方面——夾層（mezz）計畫再擴大一些？

Yes, I don't believe you'll see that taking the form of the mezz program. I appreciate you bringing that up, I want to make sure we reiterate. We are a traditional developer, we like doing joint ventures and we also obviously go it alone. The mezz program was created specifically for large volume multi-year commitments of multi-family. It's typically because these things take a couple years to build and then some amount of time after that to lease-up. And the kind of size that we are talking with the two that are underway, basically being $100 million projects. The stress on our balance sheet just isn't tenable and hence the mezz program, but that's not a natural way of doing business for us.

是的，我不認為你會看到它以 mezz 計畫的形式進行。謝謝你提到這點，我也想再次強調：我們是傳統型開發商，我們喜歡做合資（joint ventures），當然也會獨立開發。mezz 計畫是專門為多戶住宅的大量、跨多年承諾而設計的。通常是因為這類案子需要幾年時間建造，之後還需要一段時間出租穩定。以我們目前進行中的兩個案子來看，基本上都是 1 億美元規模的專案。對我們的資產負債表造成的壓力並不可承受，因此才有 mezz 計畫；但那並不是我們自然的經營方式。

Okay, that's fair. Last question from me and I can jump back in. But you did the ATM in the quarter, about $20 million, I think at $12.30 or so per share. With the stock up closer to $15, it doesn't seem like you have a large amount of equity issuance built into your guidance in terms of the underlying share count, but I guess, talk about these large projects in relation to the ability to go get equity at a much more attractive price now and how you think about that?

好的，合理。我最後一個問題，之後我可以再回到隊列。但你們本季透過 ATM 做了大約 2,000 萬美元，我想每股大概 12.30 美元左右。現在股價上到接近 15 美元，看起來你們在指引中、就基礎股數而言，並沒有納入大量的股權發行。不過我想請你談談：這些大型專案與你們現在能以更具吸引力的價格取得股權資金之間的關係，以及你們如何思考這件事？

Good morning, Dave. So obviously with the stock trading at $15, our cost of capital has gotten low, which is terrific. So it just helps our returns on our development spreads versus the retail and return on cost versus our cost of equity. And I think or maybe just like to spend a couple minutes on the development pipeline and just kind of go through the requirements and just kind of tell you how our balance sheet is set up. So on page 17 of supplemental kind of lays out our development pipeline. And what's been -- what's under developed right now -- under development and not delivered, we've got about $55 million to fund out the remaining part of that pipeline, of which $33 million of that is the Town Center Phase VI, which will not begin until this fall. So, a majority of that funding is going to be in 2017 and 2018.

早安，Dave。很明顯地，股價在 15 美元交易時，我們的資金成本已經下降，這非常好。這有助於提升我們開發利差的報酬，相較於零售投資，以及以成本報酬率（return on cost）相對於我們股權成本（cost of equity）的表現。我想花幾分鐘談一下開發案管線，簡單走過資金需求，並說明我們的資產負債表配置。在補充資料第 17 頁，列出了我們的開發案管線。目前——正在開發但尚未交付的部分——我們大約還需要投入 5,500 萬美元，其中 3,300 萬美元是 Town Center 第六期（Phase VI），要到今年秋天才會開始。因此，大部分資金投入會落在 2017 年與 2018 年。

And of the remaining $14 million that's finishing out at JHU and Lightfoot, of we have construction loans to fund those out. 4525 Main Street, we have about -- approximately we're estimating $6 million to complete that, which is TI and leasing commissions, and that will get obviously spent out as we lease the space.

至於剩下在 JHU 和 Lightfoot 收尾的 1,400 萬美元，我們有建築貸款可用來支應。4525 Main Street 方面，我們估計大約還需要 600 萬美元完成，主要是裝修補助（TI）與租賃佣金，並且會隨著我們出租空間而逐步支出。

On the Durham City Center joint venture, we've funded a 100% of our equity requirement. Our equity requirement of $10 million has been funded. The remaining of that will be funded through the construction loan that the joint venture has. And then upon completion in the second quarter of 2018 we will bring it on to our balance sheet at that point in time. And the last piece of the mezz loans, we've got $26 million to fund under our mezzanine program and that will go out over the next six months. You can see that what's happening with the ATM program or what's in our development pipeline right now, we're situated real well to fund these out.

在 Durham City Center 合資案方面，我們已經投入了 100% 的股權需求；我們 1,000 萬美元的股權需求已到位。其餘部分將透過該合資案的建築貸款來支應。並且在 2018 年第二季完工後，我們會在那個時間點把它納入我們的資產負債表。最後是 mezz 貸款部分，我們在 mezzanine 計畫下還有 2,600 萬美元需要撥付，將在未來六個月內逐步放款。你可以看到，無論是 ATM 計畫的進展或我們目前的開發案管線，我們的資金安排都足以很好地支應這些需求。

Okay, great, thanks for the color.

好的，很棒，謝謝補充說明。

Rob Stevenson, Janney.

Rob Stevenson，Janney。

Good morning, guys. Lou, can you talk a little bit about -- like, when you take a look at the portfolio today, other than the Kroger assets, what -- and obviously was your point. I mean, what else from your standpoint or how sizable -- if you don't want identify projects specifically -- how sizable is the pool of properties that beyond that that you think about likely gets recycled over the next 12 months to 18 months in the portfolio?

各位早安。Lou，你能否稍微談一下——例如你看今天的投資組合，除了 Kroger 資產之外，還有什麼——而且那顯然是你提到的重點。我的意思是，從你的角度來看，還有哪些資產池——如果你不想點名特定專案也沒關係——在未來 12 到 18 個月內，你認為可能會在投資組合中被回收/汰換（recycled）的規模大概有多大？

Thanks Rob, good question. As you had mentioned, we've got the three Krogers that we intend to market later on this fall and the SunTrust building is already under contract, and I believe that closes at the beginning of the fourth quarter.

謝謝 Rob，問得很好。如你所提，我們有三個 Kroger 物業，打算在今年秋天稍晚時推向市場；而 SunTrust 大樓已經在合約之下，我相信會在第四季初完成交割。

With regard to the rest of the portfolio, we don't have the obvious candidates that we did a couple of years ago. We've told you that we don't like to hold on to suburban office space and we don't like single-tenant buildings. We've pretty much gotten rid of those in the portfolio. That being said, we're constantly evaluating what's going on within the portfolio and really looking hard at what the tenant make-up is, as well as the sales of those tenants in the case of the retail. So it's hard to put a number on it. We're going to continue to be opportunistic with recycling capital, but there aren't any obvious candidates at this minute.

關於投資組合其餘部分，我們不像幾年前那樣有很明顯的標的。我們已經告訴各位，我們不喜歡持有郊區辦公空間，也不喜歡單一租戶大樓。我們在投資組合裡幾乎已經把這些都處理掉了。即便如此，我們仍持續評估投資組合內的狀況，並且非常仔細地檢視租戶組成；若是零售資產，也會看這些租戶的銷售表現。因此很難給出一個數字。我們會持續以機會主義方式進行資本回收再配置，但此刻並沒有任何特別明顯的標的。

Actually, Lou, we have the two coming up in the Virginia buildings, at combined rates kind of [$12 million] -- which we were waiting to hold until we got to the -- past the two year holding point on those, which will be coming up next spring.

其實，Lou，我們在維吉尼亞的兩棟大樓有兩筆即將到期的（合計金額大概是[$12 million]）——我們一直等著先持有到滿兩年的門檻之後再處理，這個時間點會在明年春天到來。

And then within the retail portfolio, I mean, what's the opportunity set for you guys in the near term to get occupancy up in a couple of the Kroger assets and at the Harper Hill Harris Teeter location, to [boist] occupancy in a couple of assets that are sort of sub optimally occupied in the retail portfolio today?

另外在零售投資組合方面，我是說，短期內你們有哪些機會可以把幾個Kroger資產以及Harper Hill的Harris Teeter據點的出租率拉高，來[boist]目前零售投資組合中幾個出租率相對不理想的資產？

Steve, this is Eric, I appreciate the question. As you may recall from our conversation last quarter, there has been some meaningful lease-up activity across the core portion of that 11 asset portfolio we purchased. When we talked about kind of going in cap rates, you may recall that, due to the efforts of our asset management team, we had increased that going in cap rate from the high sixes to the low sevens with some near-term lease-up activity post acquisition. And so we are pleased that there were some near term wins there.

Steve，我是Eric，謝謝你的問題。你可能還記得我們上季的討論，在我們收購的那個11項資產投資組合的核心部分，確實出現了一些具意義的招租進展。當時我們談到收購時的資本化率（going-in cap rates），你可能記得，在資產管理團隊的努力下，我們在收購後透過一些短期招租活動，已把收購時的資本化率從6%高段提升到7%低段。因此我們很高興短期內有一些成果。

There still are some challenges. The center you mentioned, particularly has a little bit of challenging space, given the layout of the center, the changes in elevations, and some other challenges that we're working through. We continue to have a positive outlook on being able to lease up that particular center beyond, I think it's in the high 60s right now, with some prospects we're talking to, but that is a center we're particularly focused on either in finding the lease-up opportunity or looking at some other creative ways to think about that center and the way to create some value-add opportunities. So we are mindful of that particular center and working hard, but overall on that core portfolio throughout the Carolinas, we're pleased with some of the leasing activity we've had to-date.

但仍然有一些挑戰。你提到的那個購物中心，因為中心的格局、樓地板高程的變化，以及其他一些我們正在處理的問題，確實有一部分空間比較棘手。我們對於能把那個中心的出租率再往上拉仍持正面看法；我想目前大概在60%高段，且我們正在與一些潛在租戶洽談。不過那個中心是我們特別聚焦的標的：要嘛找出招租的機會，要嘛用一些更具創意的方式來思考該中心，並創造一些增值（value-add）機會。所以我們很重視那個中心並且努力推進；但整體而言，就那個位於卡羅萊納地區的核心投資組合來看，我們對目前為止的租賃活動感到滿意。

Okay. Thanks guys.

好的。謝謝各位。

Bill Crow, Raymond James.

Bill Crow，Raymond James。

Good morning guys. A question, just if you could give us a 30,000 foot picture of the local economy in Virginia Beach. Any progress towards light-rail that might be helpful for you guys? And in particular, kind of what is the -- what are the fundamentals like on the multi-family side since you've decided to go ahead with another development project in that sector?

各位早安。我有個問題：能否請你們用一個宏觀（30,000英尺高度）的角度，談談維吉尼亞海灘（Virginia Beach）的在地經濟概況？輕軌方面是否有任何進展，可能對你們有幫助？另外，既然你們決定在多戶住宅（multi-family）領域再推進一個開發案，特別想請教該領域的基本面目前如何？

Okay. I'll take the first question or the first part of your question. Things are progressing well here in Virginia Beach on a number of fronts. The city has several initiatives that are well underway. They look to crystallize a deal for a new 17,000 seat arena here at the Oceanfront, here in I think this quarter. They're also making all of the necessary pre-development expenditures towards the light-rail expansion to Town Center. I don't think it will be crystallized till after the November election. There will be a -- there is a referendum -- a non-binding referendum, but a referendum nonetheless on the issue that's going to be on the ballot.

好的。我先回答你問題的第一個部分。維吉尼亞海灘在多個面向的進展都很順利。市政府有幾項倡議正在積極推動中。他們希望在我想是本季，敲定在海濱（Oceanfront）興建一座可容納17,000席的新體育館的交易。他們也正在為輕軌延伸到Town Center進行所有必要的前期開發支出。我認為要到11月選舉之後才會定案。這個議題會有一個——有一項公投——雖然是不具拘束力的公投，但仍然是一項公投，會列入選票。

As far as the local economy, we are continuing to see some fairly robust growth. There has been a number of announcements here recently, particularly in downtown Norfolk that has backfilled some of those older office buildings, that's going to help the entire region. The port continues to grow by leaps and bounds. Its data says the only Panamax-ready port on the East Coast, is bearing dividends. So we're very optimistic about what's going on here, and hence launching another phase of Town Center, as well as the acquisition next door that we had last year.

就當地經濟而言，我們持續看到相當強勁的成長。最近有一些公告，特別是在諾福克（Norfolk）市中心，已讓一些較舊的辦公大樓重新被進駐（backfilled），這將有助於整個區域。港口業務也持續大幅成長。資料顯示它是東岸唯一可供Panamax級船舶靠泊的港口，正在帶來成果。因此我們對這裡的發展非常樂觀，也因此啟動Town Center的下一期開發，以及我們去年在隔壁完成的收購案。

Multi-family specifically is doing extremely well here at Town Center. As of today, the Encore Apartments are approaching 97% leased; Cosmo, it continues to be strong. We are forecasting, once we start construction, much like happened a couple years ago when we were building 4525 Main, we are forecasting a little bit of a swoon at Cosmo when that construction starts on that face of the building, but again just a temporary blip.

多戶住宅在Town Center這裡表現特別好。截至今天，Encore Apartments的出租率接近97%；Cosmo也持續強勁。我們預期一旦開始施工，就像幾年前我們興建4525 Main時一樣，當Cosmo那一側開始施工時，Cosmo的表現會有一點點下滑，但同樣只是短暫的波動。

Okay, that's helpful. A follow-up, you did mention the Panamax and the ports, are they actually -- is the port actually experiencing heavier traffic now that the canal is open?

好的，這很有幫助。我追問一下：你提到Panamax和港口，那麼運河開通後，港口現在是否真的出現更繁忙的貨運量？

We have actually welcomed the first two 12,000 unit -- you are testing my knowledge -- ships that have come through and they were greeted with much fanfare here a couple weeks ago.

我們其實已經迎來了前兩艘12,000單位——你是在考驗我的知識——的船舶通過，幾週前在這裡還以相當盛大的方式迎接。

Okay. And then finally from me, Turner Construction Cost Index, which we look at, is showing that the construction costs are up almost 5% year-over-year. Is that consistent with what you guys are seeing?

好的。最後一個問題：我們關注的Turner Construction Cost Index顯示，建築成本年增將近5%。這與你們看到的情況一致嗎？

Yes, we are seeing some fairly healthy increases, mainly on the labor side. As you know, commodities remain pretty cheap and of course the oil swoon has helped out as well, but labor wise, prices are going up, particularly in large complex and really when you get into high rises. It's harder and harder to find subcontractors.

是的，我們確實看到相當明顯的上升，主要是在勞務成本端。如你所知，大宗商品價格仍相當便宜，當然油價下滑也有所幫助；但就勞務而言，價格正在上升，尤其是在大型複雜案以及高樓案更為明顯。要找到分包商越來越困難。

Great, that's it for me. Thank you.

很好，我的問題就這些。謝謝。

John Guinee, Stifel.

John Guinee，Stifel。

Great. Okay. Just a few easy ones. You guys love developing all types of product, particularly the complicated deals. I was in Durham -- by the way, that's a ginormous hole you have in the ground there.

很好。好，我只有幾個簡單的問題。你們喜歡開發各種產品，尤其是複雜的案子。我人在Durham——順帶一提，你們那裡地上挖了一個超級巨大的洞。

Thank you.

謝謝。

And by the way, it looks like you have a lot of work to do to get Hopkins open in the third quarter. Are they really going to make it for the students coming back in a few weeks?

另外，看起來你們要在第三季讓Hopkins開幕還有很多工作要做。他們真的能趕上幾週後學生返校嗎？

They will make it. Yes.

他們會趕上。是的。

It seems like you -- but you like to own retail and candidly you're buying a lot of commodity retail: Kroger's, Burlington Coat Factory, PetSmarts, Michaels, is that the sweet spot right now when you're looking at all types of products in the Mid-Atlantic, that you like this commodity retail the best and why?

看起來你們——但你們喜歡持有零售，而且坦白說你們買了很多同質性（commodity）的零售：Kroger、Burlington Coat Factory、PetSmart、Michaels。當你們在中大西洋地區看各種產品類型時，現在最喜歡的是這種同質性零售嗎？為什麼？

John, I'm going to turn that over to Eric to answer more specifically, but I can answer it from a 33-year perspective. Over those decades, we've been through four recessions, we've been through booms, we've been through busts in the Mid-Atlantic and I can tell you consistently what always survives and thrives is commodity retail, particularly well-located, grocery anchored high-volume retail. Those are lessons that were hard-won over a long period of time. And so we are sticking with that axiom. Eric?

John，我把這題交給Eric更具體地回答，但我可以用33年的角度先說。這些年來，我們經歷過四次衰退、也經歷過景氣繁榮與低迷，在中大西洋地區我可以很一致地告訴你：總是能存活並且茁壯的，就是同質性零售，尤其是位置良好、以超市為主力店（grocery anchored）、高來客量的零售。這些都是長期累積、得來不易的經驗教訓。所以我們會堅持這個原則。Eric？

Thank Lou. Yes, John, just a little more color, because I think your comment is a fair one. Some color into our process and the number of opportunities that we're looking at relative to the transaction volume. The folks on the investment team here I would suggest are seeing almost all, if not a very close to all of the opportunities, certainly the on-market opportunities in the Mid-Atlantic within our geographical footprint, and per our history, a number of market opportunities as well.

謝謝Lou。是的，John，我再補充一些細節，因為我認為你的評論很合理。我們的流程，以及我們所看到的機會數量相對於實際成交量，提供一些背景。我會說這裡的投資團隊幾乎看到了所有——或非常接近所有——的機會，至少在我們地理覆蓋範圍內的中大西洋地區，市場上公開出售（on-market）的機會幾乎都會看到；依我們過往經驗，也會看到不少非公開的市場機會。

And most of those that we're looking at on the retail side, after we utilized our relationships and contacts and sources to check on the activity at the center, have the conversation behind the scene with the tenants themselves on how the stores are doing and how those particular stores at the various centers we're looking at fit into the long-term strategy of that particular retailer. We're turning down many, many of those retail opportunities.

而在我們所評估的零售案源中，多數在我們運用人脈、聯絡網與資訊來源去查核該中心的營運狀況，並在幕後與租戶本身對談、了解店鋪表現如何，以及我們所看的各個中心裡那些店鋪在該零售商長期策略中扮演什麼角色之後，我們其實拒絕了非常非常多的零售機會。

So the ones that actually make it through the filter and on to this call and our disclosure and into our portfolio are the ones that made it through a fairly thorough and robust analysis of that tenant quality at that particular center in that particular submarket. So I think that's an important point that while on the surface these centers may look a little bit more commoditized, a great deal of diligence has gone into the strength of those particular tenants, those particular centers within the overall plan of the retailers in question.

因此，真正能通過篩選、進到這通電話、我們的揭露內容並納入我們投資組合的標的，都是在特定次市場、特定中心，針對該租戶品質做過相當全面且嚴謹分析後才通過的。我認為這點很重要：雖然表面上看起來這些中心可能更像是商品化的資產，但我們已對那些特定租戶、以及那些特定中心在相關零售商整體布局中的地位，做了大量的盡職調查。

And then let me just ask, I think Dave Rodgers asked a question, but let me just rephrase the same question. You've been up and complete at, I think at 4265 at Virginia Beach Town Center for two years now, sort of sitting in the mid 60%s. Is it because the economy is just a very defense oriented economy really a far suburb of Washington, DC? Two, Virginia Beach Town Center is just too pricey relative to alternatives or is it because -- whether it's Virginia Beach prop or downtown Norfolk or some office park, there are now more competitive, more attractive office alternatives in your part of the world?

那我再追問一下，我想 Dave Rodgers 問過一個問題，但我把同樣的問題換個說法。你們在維吉尼亞海灘市中心（Virginia Beach Town Center）的 4265 那棟，我記得已經完工並投入使用兩年了，但出租率大概一直停在 60% 中段。這是因為當地經濟本來就偏國防導向、其實算是華盛頓特區的遠郊嗎？第二，Virginia Beach Town Center 相對於其他選擇是不是太貴？還是因為——不論是 Virginia Beach 的其他物件、諾福克市中心（downtown Norfolk）或某個辦公園區——你們那一帶現在有更多更具競爭力、也更吸引人的辦公替代方案？

It's no, yes and no. So, John, we start by reiterating for --.

答案是：不是、是、以及不是。所以，John，我先重申——。

That's good, those are good, I got the answer, thanks. Thanks a lot.

很好，這些都很好，我得到答案了，謝謝。非常感謝。

I appreciate the question, John. I want to make sure that we reiterate this properly. For the first 11 years of the existence of Town Center, we effectively had -- did not have any space to lease. We had been at 99% occupancy on the office side for going on a decade and basically had to say no to every 5,000 foot tenant or expansion opportunity that came along. When we built 4525 Main, the idea was to oversize it and have some flexibility for some time to come. We frankly had expected that some time to come would have come a little faster than it has, but we're very comfortable having that space to lease.

John，謝謝你的問題。我想確保我們把這點重申清楚。Town Center 存在的前 11 年，我們基本上——在辦公端幾乎沒有任何可出租的空間。我們辦公出租率接近 99% 已經將近十年，基本上每當有 5,000 平方英尺的租戶或擴租機會出現，我們都只能說不。當我們興建 4525 Main 時，構想就是把規模做大一些，讓未來一段時間有彈性。坦白說，我們原本預期「未來一段時間」會來得更快一些，但我們對於手上有這些可出租空間感到很安心。

The second part of John's question, is it too pricey for the market? That's a nuanced question. It is intended to be the most expensive address in the region, a region of 1.8 million people. And so therefore naturally some 80%, 85% of the tenants in the market are not coming to Town Center. It takes those tenants that are willing to pay that premium in order to have that address, be it for recruitment, or clients or what have you. So it's by design not going to be filled with the natural growth in the market.

John 問題的第二部分：對這個市場來說是不是太貴？這是個需要細緻回答的問題。它的定位就是要成為這個區域最昂貴的地址——這個區域人口約 180 萬。因此，自然地，市場上大約 80% 到 85% 的租戶不會來 Town Center。必須是那些願意為了這個地址支付溢價的租戶才會來，可能是為了招募人才、為了客戶或其他原因。所以按設計，它不會只靠市場的自然成長就被填滿。

And thirdly, the other no to that piece of the puzzle is that there is not a competing product in the region. There are products that offer 20%, 30% cheaper rent. We can't compete with that, nor are we interested in. But that's about it.

第三點，對於那個拼圖的另一部分，答案也是否定的：這個區域沒有直接競爭的產品。有些產品的租金便宜 20%、30%。我們無法也不打算跟那種產品競爭。但大致就是這樣。

Great. Thank you.

很好。謝謝你。

Craig Kucera, Wunderlich.

Craig Kucera，Wunderlich。

Good morning guys. Appreciate the guidance update that I noted that the NOI guidance was up about $1.3 million on both the bottom and the top. Is that purely a function of hanging onto the three extra Krogers or is there some other moving parts?

各位早安。感謝更新指引。我注意到 NOI 指引在下緣和上緣都上調了大約 130 萬美元。這純粹是因為你們把額外那三間 Kroger 留到年底，還是有其他變動因素？

Yes, good morning, Craig, it's a combination of a couple items. One is, yes, holding on to those three properties through year-end. The other is the addition of the Southshores acquisition.

是的，早安 Craig，這是幾個項目的組合。第一個是，沒錯，把那三個物件持有到年底。第二個是，納入 Southshores 的收購。

Got it.

了解。

And on top of that with you know, our NOI has performed -- or I'm saying, our properties have performed really well in the first six months, has added to that as well.

另外，我們的 NOI 表現——或者說，我們的物件在前六個月表現非常好——也對此有所貢獻。

And we've also upped guidance on the construction company as well.

我們也上調了營造公司的指引。

Right, right. Getting to the same store, You know, I think last year, the cash same-store was running at maybe 5.5%, first quarter was just inside 4%, this quarter things slowed down a bit. Do you think that you are going to see a pickup back to maybe the 4% to 5% range in the back half of this year, or do you feel like, to a large extent, the portfolio is settling down to 2%, which I think it's maybe closer to your longer-term average?

對，對。談到同店（same store），你知道，我想去年現金同店大概在 5.5% 左右，第一季略低於 4%，這一季又慢了一些。你們覺得今年下半年會回升到大概 4% 到 5% 的區間嗎？還是你們覺得在很大程度上，投資組合正在回落到 2% 左右——我想那可能更接近你們的長期平均？

Yes, we had some nice cash pickups last year. Part of it had to do with the re-tenanting here at Town Center. We had the big law firm there, if you remember, that took to 15 year space and all that we had some free rent and moving periods and all that had the straight-line rent adjustment. So we really started picking up some cash there in the retail re-tenanting that we did here. We are not out giving guidance on same-store NOI, but we certainly hope to see it back at that level.

是的，我們去年有一些不錯的現金成長。部分原因是 Town Center 這邊的重新招租（re-tenanting）。如果你還記得，我們有一家大型律師事務所簽了 15 年的空間，期間有一些免租與搬遷期等因素，造成直線法租金（straight-line rent）調整。所以我們在那邊的現金回收其實是從後來才開始明顯增加，另外也包括我們在這裡做的零售重新招租。我們不會對同店 NOI 提供指引，但我們當然希望能回到那個水準。

Again, for those of you on the phone, Mike and I have been telling people for a very long time, again, having that 33-year window of what goes on in our portfolio. Our long-term, same-store growth is in the 2% range. We've enjoyed significantly higher gains than that over the last couple of years. But we would expect that that would return to the center line over the long haul. Now again, of course, what's been added to that is, there are lease-up opportunities now within the portfolio that would augment that, but that's traditionally what happens in our markets.

再說一次，電話線上的各位，Mike 和我很長一段時間以來一直在跟大家說：我們有 33 年的時間窗口可以觀察我們投資組合發生的事情。我們長期的同店成長大約在 2% 左右。過去幾年我們享受了顯著高於此的增幅，但我們預期長期來看會回到中軸水準。當然，另外加成的是，目前投資組合內也有一些出租提升（lease-up）的機會可以增強表現，但在我們的市場裡，傳統上就是這樣運作的。

Got it. In the past you've had some success pricing OP unit deals actually above the stock price, but maybe to discount to NAV. Here we stand today with you guys trading in the $15 range. Can you comment on where this next tranche of Southshore is pricing?

了解。過去你們在 OP 單位交易的定價上有些成功案例，實際上能定在高於股價、但可能低於 NAV 的水準。以目前你們股價在 15 美元附近交易的情況，你能談談下一批 Southshore 的定價落在哪裡嗎？

This is Eric, I appreciate the question. That trend is intact and going strong. If it weren't for the robust movement of the stock in a very short time period. So a little bit of history with -- maybe with the group that we're buying Southshores from is appropriate for a second. You'll recall we [can have engaged] acquiring Dimmock Square from this group. And that OP unit deal, if my memory serves me correctly, was priced at a high $9 handle. The stock quickly traded down thereafter to the low $9s. And those folks obviously questioned it, which they no longer question anymore obviously.

我是 Eric，謝謝你的問題。那個趨勢仍然維持而且很強勁——如果不是因為股價在很短時間內大幅上漲的話。先簡單回顧一下我們向這個賣方收購 Southshores 的背景可能比較合適。你會記得我們曾經向這個團隊收購 Dimmock Square。那筆 OP 單位交易，如果我沒記錯，定價大概在 9 美元多。之後股價很快又跌到 9 美元出頭，對方當然也質疑過——但顯然現在不再質疑了。

Only to return and do the next deal with us, Southgate, and I believe we did that one at a low $11 handle. When we actually came to closing that deal at a low $11 handle, the stock had traded up into the high $11s, approaching $12. And so, when we negotiated the Southshores deal, we not only went out with an offer cap rate that we weren't going to budge off of, but we definitively said that those shares needed to be -- those OP units need to be priced at $12.50, a good $0.60 at the time, $0.60 or $0.65 above the current trading share price. Only to negotiate the deal and see the stock price take off to the $15 range.

接著他們又回來跟我們做下一筆交易 Southgate，我記得那筆大概定在 11 美元出頭。當我們以 11 美元出頭完成交割時，股價已經漲到 11 美元高段、接近 12 美元。所以當我們談 Southshores 這筆交易時，我們不僅提出一個我們不打算讓步的出價資本化率（cap rate），也明確表示那些股份——也就是那些 OP 單位——必須以 12.50 美元定價，當時比市場交易股價高出大約 0.60 或 0.65 美元。結果交易談成後，股價又一路衝到 15 美元附近。

Given the relationship with this seller and the success that they had experienced over the first two deals, we actually came out and were able to negotiate a pricing of those OP units at $13 at the end of the day, which was I think a fair negotiation on both sides, given the success of that relationship in the previous deals for both parties. But certainly any deals we are now discussing are certainly that the $15 handle is where the conversation is beginning.

基於與這位賣方的關係，以及他們在前兩筆交易中獲得的成功經驗，我們最後其實談到 OP 單位以 13 美元定價；我認為在雙方都在前幾筆合作中受益的前提下，這是個對兩邊都公平的結果。不過，我們現在正在討論的任何交易，對話的起點當然就是以 15 美元這個價位區間來開始。

Got it. One last one for me. Lou, with the cost of equity capital so much lower today than it's been in the past, are you more inclined to maybe push harder on looking at acquisitions, maybe more so in the retail space today than you were maybe six months to nine months ago, or is development still in the near term probably the way to go?

了解。我最後一個問題。Lou，現在股權資本成本比過去低很多，你們是否更傾向於在收購上更積極一些——也許在零售領域比六到九個月前更積極——還是短期內開發（development）仍然可能是比較好的方向？

It's an interesting questions. It does open up more opportunities to acquire higher quality products. But we are really reticent to change our strategy for a short-term -- what could be short-term. The development pipeline is going to continue to be our main engine. I think where you would see what you're speaking of manifest itself more, as Mike alluded to, was using that ATM even more robustly to allow for further development opportunities.

這是個有趣的問題。它確實會帶來更多機會去收購更高品質的產品。但我們對於因短期——可能是短期的因素——而改變策略相當謹慎。開發管線仍將是我們的主要引擎。我認為你所提到的情況更可能會如 Mike 所暗示的那樣，透過更積極地運用那個 ATM（隨時發行機制），以便取得更多開發機會而體現出來。

Okay, great. Thanks, guys.

好的，很棒。謝謝各位。

Laura Engel, Stonegate Capital.

Laura Engel，Stonegate Capital。

Good morning and thanks for all the information, as always, and a good quarter. A lot of my questions have obviously been answered, but I wondered that if you could just give us -- you talked a lot about the sale of the non-core centers, especially the Kroger centers. What's the kind of the best or worst case scenario going forward for those properties and at what point will you all reconsider pricing given performance?

早安，並且一如既往感謝提供所有資訊，也恭喜本季表現不錯。我很多問題顯然都已經被回答了，但我想請教的是——你們談了很多出售非核心中心，尤其是 Kroger 的那些中心。就這些資產而言，未來最好的或最差的情境大概會是什麼？以及在什麼時間點，你們會根據表現重新考慮定價？

This is Eric, I appreciate the question. So just for a refresher of a couple of stats on the three centers in question. The center in South Bend has a Kroger lease going out to 2020 and is in the mid 90% occupancy. The center in the Memphis MSA has a Kroger till 2028 with 96% occupancy. And then the one in Waynesboro, Virginia, has a shorter term on Kroger till 2018. But again, there is only about 15,000 square feet of small shops that that Kroger dominates that rural portion of the Memphis MSA, that's a 100% occupied. And so we feel good about the centers, we feel good about the Kroger anchors and we feel good about the term left and the likelihood for renewal.

我是 Eric，謝謝你的問題。我先簡單回顧一下這三個中心的幾個數據。South Bend 的那個中心，Kroger 租約到 2020 年，入住率在 90% 中段。Memphis MSA 的那個中心，Kroger 到 2028 年，入住率 96%。然後維吉尼亞州 Waynesboro 的那個，Kroger 租期較短，到 2018 年。不過再說一次，那裡只有大約 15,000 平方英尺的小店面，而 Kroger 在 Memphis MSA 的那個鄉村區域占主導地位，該中心是 100% 入住。因此我們對這些中心有信心，對 Kroger 主力店有信心，也對剩餘租期以及續約的可能性有信心。

So, I guess the worst reasonable case is for reasons we are unaware of as we sit here on this call that pricing doesn't come in where we need -- where we'd like it to be during our marketing effort later this year and we opt to hold these. I guess that's worst reasonable case. That's certainly not our plan. And best case, I really don't want to get into pricing here on the call of the individual centers and our asking prices and to negotiate against ourselves publicly, but obviously best case is we hit pricing that puts the all-in sale of all these at a 7 handle collectively across these non-core assets that we would have sold and we would dispose of the remaining -- some subset of those remaining three by the end of the year, as we have mentioned.

所以，我想合理的最差情況是：基於我們在這通電話當下尚未知悉的原因，今年稍晚行銷推售時，價格沒有達到我們需要——或希望——的水準，於是我們選擇繼續持有這些資產。我想這就是合理的最差情況。這當然不是我們的計畫。至於最佳情況，我不想在電話會議上談各個中心的具體定價與我們的要價，避免在公開場合與自己談判；但顯然最佳情況是，我們達到的價格使得這些非核心資產整體出售的綜合資本化率落在 7% 開頭（7 handle），並且如我們所提到的，在年底前處分剩餘三個中的——某個子集合——的資產。

Right. Okay. And then, we talked a lot about the development pipeline, but just with three significant projects seeing initial occupancy coming up. These estimates for stabilization and I'm -- haven't ever tracked it historically, estimated versus the final. Would you say these are conservative as we factor these into estimates within the next 12 months to 24 months? How would you characterize these estimates as far as stabilization for several of them coming online mid-2017?

了解。好的。接著，我們談了很多開發管線，但有三個重要專案即將迎來初始入住。關於達到穩定期（stabilization）的估計——我以前沒有追蹤過歷史上估計值與最終結果的差異——你會說在我們把這些納入未來 12 到 24 個月的預估時，這些假設是偏保守的嗎？對於其中幾個在 2017 年年中上線的專案，你會如何形容這些穩定期估計？

I'd say they're reasonably conservative. It is certainly not worst case, but we try and err on being a little bit more conservative than our goals.

我會說它們算是相當保守。當然不是最差情境，但我們會盡量偏向比目標稍微保守一些。

Well, I appreciate it and I'll get back in the queue. Thank you.

好的，感謝，我會回到提問隊列。謝謝。

Paul Puryear, Raymond James Financial.

Paul Puryear，Raymond James Financial。

Good morning, thanks. Lou, just one more question from us on the apartment side. We're seeing a lot of new supply at the A level in the apartment space. Are you not seeing that in that region? Are you still getting rent increases there at Town Center?

早安，謝謝。Lou，我們在公寓端還有一個問題。我們看到公寓市場 A 級產品有大量新供給。你們在那個區域沒有看到這種情況嗎？在 Town Center 那邊你們仍然能夠調漲租金嗎？

We're still getting rent increases, but we are seeing a lot more supply come on. And that's not just at Town Center, as you suggested Paul, we're seeing it in our markets in the Carolinas, as well as that Baltimore-Washington Corridor, so obviously location becomes more and more important. So we're still eking up here.

我們仍在調漲租金，但確實看到更多供給進入市場。而且不只是 Town Center，如你所說 Paul，我們在卡羅萊納州的市場，以及巴爾的摩—華盛頓走廊也都看到了，所以地點顯然變得越來越重要。我們這邊仍在小幅上調。

Again, just to reiterate, the A locations are going to stand the test of time and weather any storms that might be coming. The rate of increase might slow, but I feel that they will -- and this is for here, for the Baltimore's Inner Harbor, for the Fort Meade area in Washington where we are, I think they are going to continue to grow albeit at a slower pace until that new supply gets absorbed.

再重申一次，A 級地段會經得起時間考驗，也能承受可能到來的任何風暴。增幅可能會放緩，但我認為它們仍會——以我們所在的巴爾的摩內港、華盛頓的 Fort Meade 區域為例——持續成長，只是速度較慢，直到新供給被市場吸收。

But at Town Center, again, just this morning coming in to work listening on the radio, heard an advertisement for yet another apartment project that is one mile east of Town Center. And my guess is it's a couple hundred bucks a month cheaper than being in Town Center. That's going to continue to happen and probably accelerate, but we don't really feel a whole lot of that pressure.

但在 Town Center，還是那句話，就在今天早上我上班路上聽廣播，聽到又有另一個公寓專案的廣告，位置在 Town Center 以東一英里。我的猜測是，它每月租金可能比住在 Town Center 便宜幾百美元。這種情況會持續發生，甚至可能加速，但我們並沒有真正感受到太大的壓力。

So are you expecting different yields in your apartments versus your retail and office in the expansion?

那麼在擴建中，你們是否預期公寓的報酬率會與零售和辦公不同？

Yes, on the retail side, again, we look for that 20% spread between wholesale and retail. And obviously that's different for retail than it is for apartments and that's continuing -- it's going to continue to hold true here.

是的。在零售端，我們同樣尋求批發與零售之間 20% 的利差。而且很明顯，零售與公寓的情況不同，而這一點在這裡仍然——也將會持續——成立。

All right, thank you.

好的，謝謝。

Thank you. At this time, I would like to turn the call back over to management for closing comments.

謝謝。此時我想把電話交回管理層作結語。

Thank you for your time this morning. And thank you for your interest in Armada Hoffler. We look forward to updating you again soon. Have a good day.

感謝各位今天早上的時間，也謝謝各位對 Armada Hoffler 的關注。我們期待不久後再次向各位更新。祝各位有美好的一天。

Thank you. This concludes today's teleconference. Thank you for your participation and you may disconnect your lines at this time.

謝謝。今天的電話會議到此結束。感謝各位參與，現在可以掛斷電話線。