2.	*Initial Public Offering and Formation Transactions*

On May 13, 2013, the Company completed the IPO of 16,525,000 shares of common stock priced at $11.50 per share. On May 22, 2013, the underwriters of the IPO exercised their overallotment option in full to purchase an additional 2,478,750 shares at the IPO price of $11.50 per share. Proceeds from the IPO to the Company were approximately $199.2 million after deducting the underwriting discount and offering costs. The common shares are listed on the New York Stock Exchange under the symbol “AHH” and began trading on May 8, 2013. The Company contributed the net proceeds from the IPO to the Operating Partnership in exchange for common units in the Operating Partnership.

Pursuant to the Formation Transactions, the Operating Partnership (i) acquired 100% of the interests in the entities that own 24 real estate properties in Virginia and North Carolina, (ii) succeeded to the ongoing construction and development businesses of Armada Hoffler Holding Company, Inc. (“AH Holding”), Armada Hoffler Construction Company and Armada Hoffler Construction Company of Virginia (collectively, “AH Construction”), (iii) assumed asset management of certain of the properties acquired, (iv) succeeded to the third party asset management business of AH Holding, (v) succeeded to the development of six properties in Virginia and North Carolina, (vi) received options to acquire nine parcels of developable land in Virginia and North Carolina and (vii) entered into a contribution agreement to acquire a 197-unit multifamily property in Newport News, VA that is currently under development, upon satisfaction of certain conditions and transferability restrictions, including completion of the project’s construction by AH Construction.

On May 13, 2013, the Operating Partnership, as borrower, and the Company, as parent guarantor, entered into a $100.0 million senior secured revolving credit facility. Subject to the satisfaction of certain conditions, the Operating Partnership has the option to increase the borrowing capacity under the revolving credit facility to $250.0 million. The revolving credit facility has a three-year term with an initial maturity date of May 13, 2016. The Operating Partnership has the option to extend the term to May 12, 2017. Upon completion of the IPO, the Operating Partnership borrowed $40.0 million under the revolving credit facility to fund a portion of the consideration payable in connection with the completion of the Formation Transactions, repay existing lines of credit and certain debt relating to the projects in the Company’s development pipeline and repay existing indebtedness relating to certain properties acquired in connection with the Formation Transactions. In June 2013, the Operating Partnership repaid $15.0 million on the revolving credit facility. Armada Hoffler Tower, Richmond Tower, Virginia Natural Gas and Sentara Williamsburg collectively serve as the borrowing base collateral for the revolving credit facility. The revolving credit facility bears interest between LIBOR plus 1.60% and LIBOR plus 2.20%.

The accompanying balance sheet of the Company does not reflect the IPO or the Formation Transactions completed in May 2013.