Armada Hoffler Properties, Inc. Price & Performance (AHH)

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 the remarks made herein are as of today, 02/20/2025 and will not be updated subsequent to this initial earnings call. During this call, we may make forward looking statements, including our statements related to the future performance of our portfolio, our development pipeline, the impact of acquisitions and dispositions, mezzanine program, our construction business, our liquidity position, our portfolio performance and financing activities as well as comments on our guidance and outlook. Listeners are cautioned that any forward looking statements are based upon management's beliefs, assumptions and expectations taking into account information that is currently available. These beliefs, assumptions and expectations may change as a result of possible events or factors, not all which are known and many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations, and we advise listeners to review the forward looking statement disclosure in press release that we distributed yesterday. The risk factors disclosed in the documents that we filed with or furnished to the SEC.

We will 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. Is available on our website at armadahoffler.com Armada. I will now turn the call over to Sean.

Good morning. And thank you for joining us to review Armada Hoffler's 2024 results and the path forward for 2025.

We have turned the page to the next chapter at Armada Hoffler and I'm honored to be leading the company into the future as we work toward achieving our long term objectives. Since the last call, we've made significant advances in leasing, delivered developments and executed asset dispositions. I will now walk through the details. I reiterate that we remain committed to our core goal improving the income stream, and balance sheet quality. Our short term strategy is centered on positioning the company for sustainable growth while maintaining financial strength in an evolving market. We will remain highly focused on continuous improvement of the company's quality as our value proposition being surgical and intentional with enhancements to our income stream, and balance sheet. We had an impressive fourth quarter delivering normalized FFO of $0.27 per diluted share and FFO of $0.29 per diluted share. Leasing remained very strong with sustained tenant demand across all three of our asset classes, Our team transacted on over 5% of commercial portfolio during the quarter. Executing accretive new leases on nearly 200,000 square feet and renewing over 125,000 square feet at positive releasing spreads. While fourth quarter multifamily trade outs were slightly negative, twenty twenty five year to date trade outs have since turned positive as competing new supply in the Atlanta and Charlotte markets is absorbed We released our 2025 guidance yesterday afternoon with a range of $1 to $1.1 We recognize that on the surface, this range might be viewed as a step back from where we ended last year.

That said, we believe that the underlying decisions that led to this range simply reflect our intentional actions to improve quality. Additionally, the range includes market dynamics and challenges we are navigating, specifically relating to construction delivery delays interest expense and one time transaction fees recognized as income in 2024. We are focused and committed to positioning the company for consistent long term growth. We are taking a prudent approach to investment emphasizing disciplined capital allocation and continuing to optimize our portfolio.

Matt will walk through specific details to bridge from 2024 to 2025. Before discussing the quarter in more detail, I would like to remind you of the steps we have been and will continue taking to position [indiscernible] for long term success. We will continue to focus on recycling stabilized assets where value has been maximized given limited growth upside and where we feel that institutional interest is willing to pay up The ability to make this choice and then to capitalize on better long term opportunities that may arise is one of the benefits of having options within the multiple sectors within our current So in the fourth quarter, we capitalized on the heightened demand for Southeast U. S. Retail assets. Selling two of our non core fully stabilized retail assets at a blended cap rate in the low 6% range.

The 82,000,000 aggregate sales price represents more than a 20% profit spread over cost. Proving out the company's initial development thesis. We are finalizing the development assets at Harbor Point The T. Rowe Price Global headquarters is nearing completion and we look forward to having their 2,500 employees join the community. Similarly, we are excited about realizing the full value of the Southern Post NOI in the coming periods. The mixed use community is thriving. With retail tenants successfully opening their doors and receiving an overwhelmingly positive response from residents, and visitors alike. It has been a fantastic start and we're excited to see the continued growth and collaboration within this ecosystem. At the same time, we are committed to investing in the right assets, particularly in the multifamily and mixed use sectors. Which we believe offer significant potential for growth. As part of this strategy, are focused on further strengthening our balance sheet by reducing leverage and enhancing our financial flexibility. At the end of twenty twenty four, we disposed of two resell assets that while diluting earnings allowed us to prudently decrease debt, While the current cost of capital presents challenges, we are confident in our ability to continue refining our business model and pursuing redevelopment opportunities that add significant value.

As you recall, in September, we successfully executed $109,000,000 common equity offering that reduced leverage and positioned us to add approximately 900 units across four high quality assets over the next year. Resulting in a 37% increase in multifamily door count. We are in the process of bringing that increased multifamily door count a reality, and look forward to updating you along the way. We believe that real estate is all about spread investing and appropriate leverage. Although the markets remain in flux, we believe a more stabilized rate environment will allow us to with an eye toward longer term fixed rate instruments. Let's quickly walk through the fundamentals across the property sectors. Consistent commercial leasing activity and rent growth have been key drivers of value creation for the company. Our ability to secure high quality tenants across our portfolio combined with our focus on maintaining competitive rental rates has significantly contributed to long term stability. Our office assets and mixed use environment are commanding around 15% premium above the competing central business districts in the region. The ongoing leasing momentum coupled with double digit releasing spreads strengthens our income stream and enhances the overall value of our assets. Our office product continues to perform exceptionally well.

With occupancy currently at 97% with limited near term rollover, Importantly, 95% of our office ABR is located in mixed use communities. Which create dynamic ecosystems that provide ideal environments for employers to attract top talent. This has driven sustained demand for our premium office spaces. Notably, we successfully backfilled most of the former WeWork space at the interlock. Additionally, we completed a significant 12,000 square foot lease with Trader Interactive at Town Center Of Virginia Beach. This floor was previously occupied by our own team and to meet the demand, we were able to consolidate and set a new benchmark for office rent per square foot in the submarket. Although near term office rollover is low, we proactively identify early renewal opportunities and existing tenants or potential backfill candidates or space that we anticipate recapturing. For example, just last month here at Town Center of Virginia Beach, we proactively negotiated long term extensions with two existing office tenants occupying over 120,000 square feet of space, that involved the simultaneous downsize of one in order to accommodate the expansion of the other. Renewing both tenants positive spreads. Favorable office demand dynamics in Town Center and Harbor Point result in consistent high occupancy and shorter downtime.

While others in the sector are seeing incremental progress toward the high 80s and low 90s in occupancy our biggest challenge continues to be accommodating the growing demand for tenant expansion space given our limited available inventory, and while we've released the former WeWorks space at the interlock, one floor of WeWork space at one city center is scheduled to As the single largest near term office expiration, the team is focused on finding the appropriate long term solution for this space.

Our retail portfolio had a strong performance with 95% occupancy. We executed new leases, extensions or options covering approximately 195,000 square feet. We recently executed a large and impactful new lease at the Interlock with the Gathering Spot. A market leading membership only gathering hub for professionals. The ten year old Atlanta based organization will be moving their headquarters to our building taking 13,000 square feet on the rooftop and an additional 21,000 square feet of office formerly occupied by WeWork. Furthermore, we completed two significant new retail leases at Columbus Village in the town center of Virginia Beach. With a national name brand grocer, and specialty sports retailer, were projected to open by the end of twenty twenty five. And rental income will be realized in 2026. These two credit tenants will backfill substantially all of the space previously occupied by Bed Bath and Beyond. In the eighteen months since Bed Bath and Beyond closed, our team has now both spaces previously occupied by the retailer having also released the former Bed Bath and Beyond space at Patterson Place to another national credit senate, Overall, we are seeing strong demand from retail tenants looking for space in a supply constrained market.

That said, have not lost sight of the renewals and releasing required to remain at this level of occupancy. We want to acknowledge the impact of store closures within the retail sector specifically. The recently completed or announced store closures for Conn's, HomePlus Party City, [indiscernible] Combined, these three retailers represent over 115,000 square feet of space in our retail portfolio, or $1,500,000 of ABR. Fortunately, we've already received unsolicited inbound interest from potential backfill tenants on all of this space. Demonstrating the continued demand for well located retail centers. As we continue to monitor these developments, we remain focused on mitigating any risk to our portfolio. The multifamily portfolio continues to operate well at 95.3% occupancy The rent growth in our markets such as Baltimore and Virginia Beach continue to create and we stand by our thesis well located, amenitized and high quality assets outperform the competition within the submarkets.

As you know, there is some evidence that supply pressures may be easing and we have started to recognize the start of this effect in our Southeast submarkets. This should result in improvement in rents as supply incrementally absorbs over 2025 and into 2026. Earlier this year, residents began moving into Allied at Harbor Point, This property stands out as the premier multifamily asset in the area. Offering stunning waterfront views and a range of top tier amenities, Allied is already receiving positive feedback. And we're confident it will continue to be a highly sought after destination for residents seeking an exceptional living experience in this vibrant location. Have taken intentional steps to focus our investments on the right assets that align with our strategic long term objectives. While the current cost of capital remains a challenge, we are committed to refining our business model staying disciplined in how we deploy capital. We remain confident in the long term value of our portfolio. Particularly as we continue to unlock redevelopment opportunities within our existing assets. These projects are poised to drive meaningful value and enhance returns for our shareholders. We believe these development opportunities will position us for future success as market conditions evolve.

I will now turn the call to Matt. Good morning and thank you, Sean. I'll start by giving a brief overview of our quarter four and full year results conclude with an update on our balance sheet and some additional insights into our initial earnings guidance for 2025. For the fourth quarter of twenty twenty four, we reported a normalized FFO of $0.27 per diluted share and FFO of $0.29 per diluted share. The variance between FFO and normalized FFO during the quarter is due to the change in fair market value of our derivatives reflecting a more For the full 2024 fiscal year, we had and normalized FFO of $1.29 per diluted share. In the fourth quarter, we delivered solid financial results driven by strong portfolio performance and disciplined asset management. This was primarily driven by higher rental income along with our continued focus on operational efficiency and tenant retention.

All three segments posted positive releasing spreads. The retail segment achieved an 11.1% GAAP spread with the Office segment achieving an 18.7% GAAP spread. These results were 2.93.5% on a cash basis, respectively. Our multifamily portfolio reported a combined trade out spread of negative 0.8% for the quarter. Renewal spreads on apartment leases remained strong at 4.7% for the fourth quarter. The twenty twenty five year to date stabilized trade out are showing improvements with a combined trade out of positive 0.6%. Our portfolio same store NOI growth was $1,300,000 at 3.6% on a GAAP basis and $800,000 at 2.3% on a cash basis. The Office segment was a standout performer this quarter posting 12.3% GAAP and 7.9% cash same store growth. Excluding the termination fee mentioned previously. During the fourth quarter, we successfully completed 315,000 square feet of new leases and renewals. Our overall portfolio occupancy at the end of the fourth quarter stood at 96%, slightly increasing compared to the prior quarter and in line with our expectations. We continue to see strong demand for high quality assets and expect this trend to continue in 2025.

The Construction Management segment posted $2,100,000 of gross As telegraphed previously, we expect that this segment's financial performance to return close to historical levels in the short term and likely below historical levels over the next couple of years. Facing some expected downwards pressure on earnings. As you will see in our guidance presentation, we estimate construction gross profit to be between $6,800,000 and $8,600,000 in 2025. For the fourth quarter, our stabilized leverage remained at 5.8x. We have discussed in detail our ongoing efforts to transform the balance sheet towards long term fixed rate unsecured debt. We are pleased to report that we continue to make progress in executing As a result, we have successfully maintained our BBB credit rating from Morningstar DBRS along with an upgraded stable outlook trend even under the backdrop of bringing our large multifamily asset the Allied on balance sheet with the expected earnings pressure throughout the eighteen month lease up period. Mitigate the risks associated with rising interest rates, we have successfully hedged 100% of our variable rate debt exposure ensuring stability and predictability in our interest expenses. This strategy not only enhances our financial resilience, but also positions us for stronger cash flow management in the coming quarters.

Additionally, 56% of our debt is unsecured as of year end. Up from twenty two percent three years ago. Looking ahead, we remain committed to maintaining this position through 2025. Now let's discuss our 2025 guidance. As you saw in our guidance presentation released last night, we are providing a normalized FFO guidance range of $1 to $1.1 per diluted share. The primary factor affecting the guidance range is the delays in the delivery of our Harbour Point projects which as mentioned on prior earnings calls has shifted some of the NOI and earnings expectations. This coupled with the increased interest expense from our recently completed development pipeline will burden earnings until we have leased up the space and stabilized these assets. Additionally, the stabilization of Chandler Residences which is now expected to occur in the second quarter of twenty twenty five, rather than earlier in the year as previously anticipated. Lastly, we aim to execute leases on the remaining vacant commercial spaces at Southern Post in 2025 to bring this new mixed use property to stabilization 2026.

We also anticipate lower construction gross profits decreased real estate financing income as we maintain dollars dollars of principal outstanding and the dilutionary effect of our September capital raise. These factors whilst challenging, are being actively managed and our team remains focused on establishing a solid foundation for future sustained growth. Focused on continued improvement to the quality of earnings and the quality of our assets, as we as well as proactive balance sheet management. I will now turn the call back over to Sean. Thank you, Matt. I'd like to take a moment to sincerely thank the entire Armada Hoffler team.

Your hard work, dedication, and resilience have been critical to the company's success. I truly appreciate your commitment to excellence and I'm proud to work alongside each of you as we enter the next chapter of Armada Hoffler, I'd like to extend my gratitude to all of our investors both long standing and new, for your trust and confidence in our company. Thank you to everyone who joined us today on the call and I appreciate your interest in our story. We look forward to the future opportunities and leveraging our capabilities to create additional shareholder value. Operator?

Thank you. Ladies and gentlemen, Please Should you wish to decline from the polling process, Your first question comes from Robert Stevenson from Johnny Company. Please go ahead.

Good morning, guys.

What does the market look like going forward on the mezz side? Any of your historical partners starting new apartment projects might need that type of financing in 2025 at this point?

Rob, good morning. This is Sean. Thank you for the question. Yes, we're getting inquiries about financing those types of deals. As we discussed in the past, quarters, we think that the pressure in the lending market has actually accelerated some of this. In other words, there's a gap that needs to be filled, right, when the loan to value has has pulled back. That said, we take a look at each and every one of these but we have committed to the market that we we want to be roughly $80,000,000 in principal outstanding. We are sitting above that now. So we're looking at a time line when these kind of roll back in and trying to ladder, if you will, that capital. There's some good deals out there and yes, there's some activity. But we're not prepared to execute 11 as we sit here today. So yes, theoretically, if we wanted to deploy capital, thinking of two deals off the top of my mind right now that we could deploy, We think the quality story is best maintained And I guess any new investments there? Does it need to be sort of a loan to own rather than just straight loan if you're looking to bring down that balance over time that incremental investments would have to have some sort of kicker there for you in order to make it attractive enough?

Yes. I think they're all of the above are possible. At the end of the day, the question becomes for us what is the risk adjusted return on that capital, right? And can we can does The Street give us more credit for [indiscernible] kind of deriving asset and asset that derives rent. But yes, I think there's opportunity for both. We're just not prepared to pull that trigger as we [indiscernible] Okay. And it seems like from your comments, Virginia Beach office market really strong. But two of your three apartment assets in that home market are sub 94% occupancy. Can you talk about how much supply that market has been seeing or is this just a price point issue given that you guys have higher rents than the market given the location?

I think it's the latter Rob. Certainly there are new developments in the broader market, but within the ecosystem here, the walkability, if you will, is key. And so we want to maintain rate, especially when we can. So I think this is just a short term blip, if you will. We're not concerned about it. We could easily drop by a couple of bucks, but we think the equation is maintain the market rents where and when we can. And our team takes a hard look Craig Romero and his team take a hard look at what makes the most sense is is a couple of bucks less and another 100 basis points more on occupancy better than the the inverse of that and we think we're in a pretty comfortable place there. I mean, frankly, in this time of the year, Rob, we see slowdown anyway, but we we would normally be in the mid-90s across the board there at Town Center.

Okay. And Matt, after you've been active here, you paid down some debt. You've done some equity raises and some asset sales in the back half of twenty twenty four. Can you talk about what the dilution is from that combo on an FFO per share basis on a quarterly basis. Just trying to figure out if there's some embedded growth that essentially gets turned on if you wind up investing in a stabilized asset rather than having it sitting on the balance sheet in debt repayment, etcetera. What sort of embedded in that in terms of the $24,500,000 guidance here?

Yes, certainly. Good morning, Rob. The equity raise in September was roughly about $0.05 worth of dilution net once we'd paid down the debt there. So that that is kind of what is being carried on from the the '24 to the twenty five year Does that help Yes, that's perfect. And then last one for me. Sean, with T. Rowe headquarters wrapping up, you talked about monetizing some assets, etcetera. How are you and the Board thinking about the longer term play here and the timing mean the term is never going to get longer than it is Obviously, there's some work left to do there. Is that something that you guys are anticipating on whether or not it's a JV or an outright sale or some other sort of transaction there? That that's going to wind up being a late twenty five type of transaction that you would look to do something there, 2026, or is that at this point, not contemplated as you guys think about the strategic plan over the next twelve to eighteen months?

Yes, it's a great question, Rob. I think as you know, in the past, when we initiated the deal, we were thinking, well, we may harvest that capital. As we sit here today, we don't think that's the most attractive option. However, we do look at this as well as the rest of the assets on iterative basis and ask ourselves, okay, what's the next best capital allocation move? I think the truth is the markets too soft right now for office and we believe as I think you do, I don't want to put words in your mouth, but that is a a trophy asset and we're not willing to part with it at a discount especially given the credit that sits there. So I think we'll monitor it over time. But as we sit here today, we're excited about having KeyRO in that building and partnering with them for the long term in terms of that lease. Yes, we'll continue to look at it. I think, especially as markets improve, we will probably get a little more comfortable with the pricing there, but who knows? We're happy to hold it if that's not the case.

Okay. Thanks guys. Appreciate the time this morning.

Yes, sir.

Thank you, Robert.

The next question comes from Victor Fadev from Scotiabank.

Please go ahead.

Good morning, everyone, and thank you for taking the question. Could you please provide some details on Southgate Square's occupancy, which declined to 82% in Q4. Specifically, which tenant department and how is the releasing process going?

Sure.

That really relates to Joanne and Conn's both in the Southgate Complex there.

Joanne is dark in that location, so they've shut the doors. I think the good news there is we are at least with a backfill tenant as we as we sit here today. So we're excited about coming to market with that when we're able. So our team is working hard there. On the cons store, has been closed as well. Obviously, we are sensitive to the bankruptcy proceedings here, but the truth is we are in active negotiations with the potential backfill I would say in the sporting goods category in that space. And so interesting not only the Joanne, but the Conn's and Party City, we essentially have on or active deals working on all of those spaces. So I think that's a good news story. We do anticipate positive releasing activity there in terms of the spread. So we're excited about that. In the short run, it looks like a challenge, but in my view, that challenge has created an opportunity to potentially create lift. So we're excited about that.

But then probably just a follow-up in terms of potential downtime, what could be the reasonable expectation for these two boxes?

That's tough to say. Like I said, we're at least on the Joanne store. So I would say depending on the the build out and the required maneuvering there, if you will. In addition to kind of these bankruptcy procedures, We'd like to have something more concrete toward the end of the year. But time will tell. I think my view on this is the the sooner we ink a lease, obviously, the sooner the tenants in place. So we have essentially removed the majority of the income for 20 for the aforementioned tenants We do have some speculative upside, either we collect a little more rent as they roll through proceedings or we're able to get a tenant in but we're viewing that as upside, Victor. So I think time will tell. But like I said, we'd like to see some activity in a couple of those spots this year. Got it. Thank you.

And probably just the last one for me. So in terms of potential capital recycling, do you have any offers or any active properties that you are actively marketing now on the retail side or not really?

So it's interesting. Even on the other the two retails we sold in the fourth quarter, we received a fair amount of unsolicited activity seems like the capital is pent up and would like to get into retail, which is good. Again, we don't want to dispose of properties that we don't need to, but if it's a good capital harvestingreallocation, we'll take advantage of that. We have Providence in the market It's a mixed use asset. Just renewed a lease there. May or may not transact on that, but for us, it looks like something that we've we would potentially take a look at, but we're not committal here. We just want to see what the pricing is, the indicative pricing in the marketplace. So I think the broader answer is we will take a look, as I mentioned, iterative basis. Especially when we receive unsolicited offers. For us, it's an equation it's the quality equation, right? What do we believe is core to our strategy improving the quality of the income stream, and what do we believe is accretive in terms of reinvesting and or retiring some debt. So I think it's an interesting time right now with retail price retail cap rates better said compressed.

So I think the message to you is we're looking at our assets and trying to best understand where the best opportunity sits But I think we're pretty comfortable where we sit today.

See what comes in the future.

Understood. Thank you. Thank you, Victor.

Next question comes from Andrew Yirger from Bank of America. Please go ahead. Hey, good morning. This is Andrew on for Jeff Spector.

Appreciate all the color on 2025 guidance. It sounds like maybe some of the income that receive in the near future has just been sort of shifted back a couple of quarters So maybe just from a high level, are you able to help us understand the trajectory as we exit '25, maybe any color on what's assumed for the cadence of FFO throughout the year and whether or not you expect 25% to be the trough in earnings? Just kind of given the moving pieces that you're aware of today? And maybe a follow-up to that as well as Sean, I know you said you're focused on quality of the income stream as one of your main focuses, maybe just if you could tie in some of your key focuses to drive that earnings growth over the next couple of years?

Sure. [indiscernible] can see, we have and let me answer the question first. Yes, we [indiscernible] from here, as I mentioned to the two previous questions, we think there's some upside. And frankly, when I say quality of the income stream, we're talking about what the what the investors really want to see, at least what we hear from investors they really want to see, which is property income, right? And so we have a great fee income business and we are not shy about that. But our view is we need to become hyper focused and remain hyper focused on creating high quality property level income. As we begin to stabilize the developments in 2026, you will see, yes, we believe you're going to see increased growth there in addition to our team's focus on managing OpEx and increasing the organic growth and the kind of underlying portfolio. So we should see lift in the out years. In my view, we are stabilizing a foundational element this year and we're going to continue to grow on that into 2026 and beyond.

So yes, I think there are a couple of things not only these backfills that I've been mentioning here, hopefully also the debt markets behave, if you will, in addition to the fact that we will be incrementally realizing income in addition to growing organically in a healthy way the underlying portfolio income. And I think that kind of equation helps us see that '26 and '27 will certainly be improved five. Matt, did you want to add anything to that?

No, that was was well said, Sean. Andrew, what I would note is also as we get into the end of twenty twenty five and 2026, hopefully there will be a better macroeconomic markets for us rate environment. So that will allow us to continue with our balance sheet strategy, higher quality debt. And we're hoping when those maturities for us come up in 2026, we will be in a better interest rate position than we are as we stand here today. Andrew, top of my mind are things like this Bed Bath and Beyond redevelopment account center. We put out that a high quality grocer and another retailer have already signed with us. This goes back to Rob's question. Apartment rents, when those tenants are in place should increase right? And we see some lifts that kind of is ecosystem type lift and and also realization of this kind of redevelopment opportunity as it comes online. So we have a lot of variables that I would say contribute in a positive way to the equation in the out months and out years.

Great. That's very helpful. Thank you. And maybe just to follow-up, you mentioned earlier I think it was 15% higher rents in your mixed use office assets versus the respective CBDs. I was hoping maybe you could touch a little bit more on that. I guess, a couple small questions would be one, is that compared to similar quality assets in the CBDs? Or is the quality different? I guess I'm just trying to understand how much value is really kind of from the mixed use environment versus just the quality specifically of your assets? And then on the flip side, just kind of thinking about multifamily and the retail, just having an office building add any value to them or is it really kind of the where you're able to kind of have those synergies and and be able to raise rents all around?

I'll start with the ecosystem Our thesis is and I think we've proven it that this ecosystem helps rental rates in all of those categories, mainly due to the amenities right? Like retail in a big way is an amenity to both the office and the multifamily. So this walkability in our markets maybe different than a Manhattan, if you will, is not available otherwise. And so this creates an opportunity for for both office users and apartment residents to eat downstairs at a restaurant or shop or whatever the case may be. To your first question, we took a look at both in terms of CBDs and across the kind of broader market average, because it's tough to tell, right? These are disparate markets. [indiscernible] issue. And frankly, the tenants in the office side want to be in a mixed use location because it makes inviting their employees back to work and this kind of employee morale increase over time. So they're willing to pay up for that. So that's why you see the demand for us kind of increasing in these office spaces. Matt, did you have something you want to say? [indiscernible] Andrew, just to give you some specifics as Sean mentioned that the Baltimore market in Q4 CBRE published a Baltimore office market report and if you just look at vacancy across the entire Baltimore office market, is just under 20%.

The vacancy in the Baltimore CV is 22% compared to only 2.25% in our mix community. So that shows there the evidence suggests that that is the benefit of that. When you look at rental rates, CBRE reported that the Baltimore office market is below $20.27 dollars a square foot. The CBD specifically is right at that $27 mark where we are our buildings in Harbor Pointe at North 30. So that's the 15% above CBD asking rents there.

Andrew, I think you have further math Andrew, to further Matt's point, I think for the Virginia Beach market, there aren't the closest competitive market is the Norfolk CBD and the numbers Matt stated are probably more pronounced than I don't have them sitting in front of me, but probably more pronounced terms of rent spreads as well as occupancy. So I think in terms of being in the A position, the trophy position, that's that's a That's a good place to be.

Great. Thank you very much. Thank you, Andrew.

There are no further questions at this time. I would like to turn the call back over to Sean Tibbett. Please go ahead.

Sure. Thank you. So to say, I appreciate all of you taking time to walk through this with us today. We're excited about the future here at Armada Hoffler. We do apologize for any choppiness. We are after all office owners and we are working remotely to take the call due to weather conditions. So this is not normal for us.

We prefer to be in the office as any office owner should be.

And that said, seriously, I hope you all stay safe. And we appreciate your confidence in us and look forward to taking any questions independently if necessary. Thank you very much for your time today. [indiscernible] Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.