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Indebtedness
 12 Months Ended
Dec. 31, 2013
Indebtedness
9. Indebtedness

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

 

     Principal Balance      Stated Interest
Rate		    Stated Maturity
Date
     December 31,      December 31,

Secured Debt

    2013      2012      2013    2013

Credit facility

    $ 70,000       $ —        LIBOR +

1.60% - 2.20%

    May 13, 2016

Armada Hoffler Tower

      —          39,240       —      —  

Richmond Tower

      —          47,023       —      —  

One Columbus

      —          14,095       —      —  

Two Columbus

      —          18,854       —      —  

Oyster Point

      6,466         6,648       5.41%    December 1, 2015

Virginia Natural Gas

      —          5,524       —      —  

Sentara Williamsburg

      —          10,997       —      —  

249 Central Park Retail(1)

      15,834         16,086       5.99%    September 8, 2016

South Retail

      6,985         7,097       5.99%    September 8, 2016

Studio 56 Retail

      2,690         2,760       3.75%    May 7, 2015

Commerce Street Retail

      5,613         6,800       LIBOR + 2.25%    October 31, 2018

Fountain Plaza Retail(1)

      7,917         8,043       5.99%    September 8, 2016

Dick’s at Town Center

      8,318         8,413       LIBOR + 2.75%    October 31, 2017

Broad Creek Shopping Center

            

Note 1(2)

      4,503         4,553       LIBOR + 2.25%    October 31, 2018

Note 2(2)

      8,267         8,360       LIBOR + 2.25%    October 31, 2018

Note 3(2)

      3,461         3,500       LIBOR + 2.25%    October 31, 2018

North Point Center

            

Note 1

      10,319         10,478       6.45%    February 5, 2019

Note 2

      2,830         2,910       7.25%    September 15, 2025

Note 3

      —          9,356       —      —  

Note 4

      1,030         1,053       5.59%    December 1, 2014

Note 5(3)

      705         724       LIBOR + 2.00%    February 1, 2017

Hanbury Village

            

Note 1

      21,449         21,666       6.67%    October 11, 2017

Note 2

      4,159         4,332       LIBOR + 2.25%    October 31, 2018

Gainsborough Square

      —          9,771       —      —  

Parkway Marketplace

      —          5,747       —      —  

Harrisonburg Regal

      3,842         4,015       6.06%    June 8, 2017

Courthouse 7-Eleven

            

Note 1

      —          1,505       —      —  

Note 2

      —          1,739       —      —  

Tyre Neck Harris Teeter

      2,482         2,650       LIBOR + 2.25%    October 31, 2018

The Cosmopolitan

      47,723         48,291       3.75%    July 1, 2051

Smith’s Landing(4)

      24,795         —        LIBOR + 2.15%    January 31, 2017

Main Street Land

      —          2,208       —      —  

4525 Main Street

      11,313         —        LIBOR + 1.95%    January 30, 2017

Encore Apartments

      3,585         —        LIBOR + 1.95%    January 30, 2017

Whetstone Apartments

      284         —        LIBOR + 1.90%    October 8, 2016

Sandbridge Commons

      3,172         —        LIBOR + 1.85%    January 17, 2018
  

 

 

     

 

 

        
   $ 277,742       $ 334,438         
  

 

 

     

 

 

        

Oyster Point Participation Loan

      —        $ 643       —      —  

Unamortized fair value adjustments

      3         —          
  

 

 

     

 

 

        

Total Indebtedness

    $ 277,745       $ 335,081         
  

 

 

     

 

 

        

 

  (1) Cross collateralized.
  (2) Cross collateralized.
  (3) Subject to an interest rate swap lock at a rate of 3.57%.
  (4) Principal balance excluding fair value adjustments.

Armada Hoffler’s indebtedness comprised the following fixed-rate, variable-rate and participating notes as of December 31, 2013 and 2012 (in thousands):

 

     December 31,  
     2013      2012  

Fixed-rate secured debt

    $ 127,085       $ 188,129   

Variable-rate secured debt

      150,660         146,309   

Participating note

      —          643   
  

 

 

     

 

 

  

Total Indebtedness

    $ 277,745       $ 335,081   
  

 

 

     

 

 

  

Certain loans require the Company to comply with various financial and other covenants, including the maintenance of minimum debt coverage ratios. As of December 31, 2013, the Company was in compliance with all loan covenants.

Scheduled principal repayments and term-loan maturities during each of the next five years and thereafter are as follows (in thousands):

 

Year

    Scheduled
Principal
Payments		      Term-
Loan
Maturities		      Total
Payments		  

2014

    $ 2,870       $ 1,007       $ 3,877   

2015

      2,930         8,681         11,611   

2016

      2,653         99,565         102,218   

2017

      1,843         70,885         72,728   

2018

      1,404         29,669         31,073   

Thereafter

      45,558         10,677         56,235   
  

 

 

     

 

 

     

 

 

  

Total

    $ 57,258       $ 220,484       $ 277,742   
  

 

 

     

 

 

     

 

 

  

2012 Financing Activity

On February 13, 2012, Armada Hoffler modified the North Point Center Note 5 to lower the interest rate to LIBOR plus 2.00% and extend the maturity date to February 1, 2017. In conjunction with this note, Armada Hoffler entered into an interest rate swap lock at a rate of 3.57%.

On May 7, 2012, Armada Hoffler refinanced the existing Studio 56 Retail loan with a new $2.9 million loan that bears interest at 3.75% and matures on May 7, 2015.

On October 31, 2012, Armada Hoffler modified the Dick’s at Town Center loan to extend the maturity date to October 31, 2017.

On December 7, 2012, Armada Hoffler refinanced the existing Broad Creek Note 2 with a new loan for up to $11.1 million that bears interest at LIBOR plus 2.75% and matures on December 7, 2016. On April 15, 2013, Armada Hoffler borrowed an additional $2.7 million on Broad Creek Shopping Center Note 2.

On December 7, 2012, Armada Hoffler refinanced the existing Broad Creek Note 3 with a new $3.5 million loan that bears interest at LIBOR plus 2.75% and matures on December 7, 2016.

 

Credit Facility

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. On October 10, 2013, the Operating Partnership increased the aggregate capacity under the credit facility to $155.0 million.

As of December 31, 2013, the following properties served as the borrowing base collateral for the credit facility: (i) Armada Hoffler Tower, (ii) Richmond Tower, (iii) One Columbus, (iv) Two Columbus, (v) Virginia Natural Gas, (vi) Sentara Williamsburg, (vii) a portion of North Point Center, (viii) Gainsborough Square, (ix) Parkway Marketplace and (x) Courthouse 7-Eleven.

The credit facility requires the Operating Partnership to comply with various financial covenants, including:

 

  •   Maximum leverage ratio of 65% as of the last day of each fiscal quarter through December 31, 2014 and 60% as of the last day of each fiscal quarter thereafter;

 

  •   Minimum fixed charge coverage ratio of 1.75x;

 

  •   Minimum tangible net worth equal to at least the sum of 80% of tangible net worth on the closing date of the credit facility plus 75% of the net proceeds of any additional equity issuances;

 

  •   Maximum amount of variable rate indebtedness not exceeding 30% of our total asset value; and

 

  •   Maximum amount of secured recourse indebtedness of 35% of our total asset value.

The credit facility permits investments in the following types of assets: (i) unimproved land holdings in an aggregate amount not exceeding 5% of total asset value, (ii) construction in progress in an aggregate amount not exceeding 25% of total asset value and (iii) unconsolidated affiliates in aggregate amount not exceeding 5% of total asset value. Investments in these types of assets cannot exceed 30% of total asset value. In addition to these financial covenants, the credit facility requires the Operating Partnership to comply with various customary affirmative and negative covenants that restrict the ability to, among other things, incur debt and liens, make investments, dispose of properties and make distributions. As of December 31, 2013, the Operating Partnership was in compliance with all covenants under the credit facility.

As of December 31, 2013, the Operating Partnership had $70.0 million outstanding on the credit facility. The credit facility matures on May 13, 2016 and bears interest between LIBOR plus 1.60% and LIBOR plus 2.20%. The interest rate on the credit facility as of December 31, 2013 was 1.93%. On September 1, 2013, the Operating Partnership executed a LIBOR interest rate cap agreement on a notional amount of $40.0 million and a strike price of 1.50%. The interest rate cap agreement expires on March 1, 2016.

 

2013 Financing Activity

In connection with the IPO and Formation Transactions, the Company used proceeds from the IPO and the credit facility to repay the following debt (in thousands):

 

Properties unencumbered:    Amount repaid  

Armada Hoffler Tower

    $ 38,813   

Richmond Tower

      46,523   

Two Columbus

      18,785   

Virginia Natural Gas

      5,457   

Sentara Williamsburg

      10,915   

North Point Center Note 3

      9,242   

Gainsborough Square

      9,732   

Parkway Marketplace

      5,669   

Courthouse 7-Eleven Note 1

      1,485   
  

 

 

  

Subtotal

      146,621   

Other debt repayments:

   

Broad Creek Shopping Center Note 2

      2,697   

Oyster Point Participation Loan

      643   
  

 

 

  

Subtotal

      3,340   
  

 

 

  

Total

    $ 149,961   
  

 

 

  

The Company recognized a $1.1 million loss on extinguishment of debt representing $0.6 million of fees and $0.5 million of unamortized debt issuance costs associated with the debt repaid in connection with the IPO and Formation Transactions.

On July 3, 2013, the Company repaid the outstanding $2.2 million balance of the Main Street Land loan in full.

On July 17, 2013, the Operating Partnership defeased the One Columbus loan for $14.9 million, including costs of $1.0 million. The Company recognized a $1.0 million loss on extinguishment of debt representing defeasance costs.

On July 30, 2013, the Company closed on a $63.0 million construction loan to fund the 4525 Main Street and Encore Apartments development projects. The construction loan bears interest at LIBOR plus 1.95% and matures on January 30, 2017. On September 1, 2013, the Company executed two LIBOR interest rate cap agreements on an aggregate notional amount of $63.0 million both with strike prices at 3.50%. The interest rate cap agreements expire on March 1, 2016.

On October 8, 2013, the Company closed on an $18.5 million loan to fund the development and construction of Whetstone Apartments. The construction loan bears interest at LIBOR plus 1.90% and matures on October 8, 2016. In conjunction with this loan, the Company executed a LIBOR interest rate cap agreement on a notional amount of $18.5 million and a strike price of 1.50%. The interest rate cap agreement expires on April 1, 2016.

On October 11, 2013, the Operating Partnership repaid the Bermuda Crossroads loan for $10.8 million. The Company recognized a $0.1 million gain on extinguishment of debt representing the unamortized fair value premium adjustment.

On October 25, 2013, the Operating Partnership amended Broad Creek Shopping Center Notes 1, 2 and 3 to remove the recourse component, lower the interest rates to LIBOR plus 2.25% and extend the maturity dates to October 31, 2018. The Company recognized a $0.2 million loss on extinguishment of debt representing unamortized debt issuance costs on Broad Creek Shopping Center Notes 2 and 3.

 

On October 31, 2013, the Operating Partnership amended the Commerce Street Retail loan, Hanbury Village Note 2 and the Tyre Neck Harris Teeter loan to remove the recourse components, lower the interest rates to LIBOR plus 2.25% and extend the maturity dates to October 31, 2018. The Operating Partnership prepaid an aggregate of $1.4 million of principal on these three loans.

On December 19, 2013, the Company closed on a $10.0 million loan to fund the development and construction of Sandbridge Commons. The construction loan bears interest at LIBOR plus 1.85% and matures on January 17, 2018.

On December 19, 2013, the Company amended the Smith’s Landing loan to extend the maturity date to January 31, 2017.

Subsequent to December 31, 2013

On January 17, 2014, the Company assumed $20.9 million of debt in connection with the acquisition of Liberty Apartments. The loan bears interest at 5.66% and has a 30-year term.

On February 28, 2014, the Company closed on a $19.5 million loan to fund the development and construction of the Oceaneering International facility. The construction loan bears interest at LIBOR plus 1.75% and matures on February 28, 2018.