Armada Hoffler Properties is shedding its name, its apartments and its construction arm in a sweeping strategic pivot that strips the company down to its retail and office core and sets the stage for a series of pending asset sales expected to close in 2026.
The Virginia Beach, Virginia-based company said Monday it will rebrand as AH Realty Trust, effective March 2. The move caps a yearlong transformation.
The repositioning fundamentally rewires a real estate investment trust that has operated across four business lines — retail, office, multifamily and construction. Armada Hoffler is betting that shedding its apartments and fee-income businesses will unlock private-market value hidden by public-market pricing, slash its $1.5 billion in debt and produce more predictable, recurring cash flows from retail and office investor demand.
The REIT announced a pending sale of 11 multifamily properties to a global real estate investment management firm. If the deal closes as expected, it would accelerate the company's deleveraging program and signal a new identity centered on income-producing commercial real estate.
Armada Hoffler signed two other letters of intent covering debt investments and its construction management business, CEO Shawn Tibbetts told analysts Tuesday on the company's earnings call.
The REIT's multifamily portfolio consists of about 3,500 units in Virginia, Maryland, North Carolina and Georgia, according to CoStar data. The largest of the properties is the 562-unit Allied Harbor Point apartments in Baltimore.
"Exiting the multifamily portfolio unlocks significant embedded value by harvesting the arbitrage between public and private market valuations," Tibbetts said.
The company expects all three transactions to close during 2026 and said it will provide updates as definitive agreements are executed.
Sale proceeds will flow first to debt reduction, Tibbetts said.
As of Dec. 31, Armada Hoffler carried $1.5 billion in total debt, including $241 million outstanding on its revolving credit facility.
Following the announcements, Morningstar DBRS confirmed its BBB stable credit rating on Armada Hoffler. The ratings firm noted that the repositioning weakens asset quality, market diversification and portfolio size — factors that constrain the rating — but said those risks are offset by meaningful improvement in leverage and interest coverage.
Viktor Fediv, a REIT analyst with Scotiabank, also viewed the repositioning favorably.
"We view the simplification positively, despite the steep earnings reset," Fediv wrote in a report to clients and shared with CoStar News. "The move eliminates earnings volatility from non‑core businesses."
Retail, office become focus
Armada Hoffler's new investment mandate centers on retail real estate, with office properties retained as a complementary segment. Tibbetts told analysts that the company generates its strongest competitive returns in both sectors.
The REIT's stabilized portfolio finished 2025 at 95.3% occupancy overall, with retail at 94.9% and office at 96.4%. Retail leases renewed during the fourth quarter produced a 10.1% spread on a cash basis. Same-store net operating income rose 6.3% year over year in the fourth quarter.
Recent retail leasing at Columbus Village II in the Town Center of Virginia Beach underscored demand. Trader Joe's opened a 14,000-square-foot location, and Golf Galaxy opened a 19,000-square-foot store during the fourth quarter, pushing occupancy at the center to 95.3%.
The company has budgeted about $50 million for retail acquisitions and is evaluating targeted opportunities in markets where it already operates, Tibbetts said, though he added the company is not obligated to deploy that capital.
"We are not beholden to that," he said.
Tibbetts, who became chairman Jan. 1, stepped into the CEO role a year ago with a mission to evaluate every aspect of the business.
"We have done exactly that," he told analysts. "Reviewing every layer of the business, challenging long-held assumptions and focusing on where we believe we can create the most durable value for shareholders."
Funds from operations — a measure closely watched by commercial real estate investors — rose to $29.5 million, or $0.29 per diluted share, in the fourth quarter. That is up from $27.8 million, or $0.27 per diluted share, in the same quarter of 2024. The improvement was driven primarily by higher portfolio net operating income and higher lease termination income, the company reported.