Derivative Financial Instruments

6 Months Ended

Jun. 30, 2013

Derivative Financial Instruments

6. Derivative Financial Instruments

Armada Hoffler may enter into interest rate derivatives to manage exposure to interest rate risks. Armada Hoffler does not use derivative financial instruments for trading or speculative purposes and has not designated any of its derivatives as hedges for accounting purposes. As a result, changes in the fair value of derivatives are recognized currently within other income in the consolidated and combined statements of operations.

Armada Hoffler’s derivatives comprised the following as of June 30, 2013 and December 31, 2012 (in thousands):

	June 30, 2013							December 31, 2012
	(Unaudited)
	Notional Amount		Fair Value					Notional Amount		Fair Value
			Gain		Loss					Gain		Loss
Pay fixed interest rate swaps	$	714	$	—	$	(16	)	$	11,721	$	—	$	(239	)
Interest rate cap		9,242		13		—			9,356		9		—
Total	$	9,956	$	13	$	(16	)	$	21,077	$	9	$	(239	)

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(Unaudited)
Pay fixed interest rate swaps	$	44	$	125	$	152	$	221
Interest rate cap		2		—		4		—
Other income	$	46	$	125	$	156	$	221