4.	*Real Estate Investments*

The Company’s real estate investments comprised the following as of September 30, 2014 and December 31, 2013 (in thousands):


	September 30, 2014
	Income producing property		Held for development		Construction in progress		Total
	(Unaudited)
Land	$	38,691	$	—	$	19,428	$	58,119
Land improvements		13,891		—		—		13,891
Buildings and improvements		447,079		—		—		447,079
Development and construction costs		—		—		74,518		74,518

Real estate investments	$	499,661	$	—	$	93,946	$	593,607


	December 31, 2013
	Income producing property		Held for development		Construction in progress		Total
Land	$	27,736	$	—	$	13,577	$	41,313
Land improvements		12,562		—		—		12,562
Buildings and improvements		365,941		—		—		365,941
Development and construction costs		—		—		43,160		43,160

Real estate investments	$	406,239	$	—	$	56,737	$	462,976

Acquisition of Liberty Apartments

As discussed in Note 1, the Company completed the acquisition of Liberty Apartments on January 17, 2014. The fair value of the total consideration transferred at the acquisition date to acquire Liberty Apartments was $26.7 million, consisting of 695,652 common units of limited partner interest in the Operating Partnership, $3.0 million in cash to affiliates of the Predecessor and the assumption of $17.0 million of debt. The fair value adjustment to the assumed debt of Liberty Apartments was a $1.5 million discount. The outstanding principal balance of the assumed debt of Liberty Apartments at the acquisition date was $18.5 million.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):


	Liberty Apartments
	(Unaudited)
Land	$	3,580
Site improvements		280
Building and improvements		23,214
In-place leases		340
Indebtedness		(16,966	)
Net working capital		(679	)


Net assets acquired	$	9,769

Liberty Apartments did not have any operations during the nine months ended September 30, 2013. Rental revenues and net loss from Liberty Apartments for the period from the acquisition date to September 30, 2014 included in the consolidated statement of income was $0.6 million and $(1.7) million, respectively.

Acquisition of Dimmock Square

On August 15, 2014, the Company completed the acquisition of Dimmock Square, a 106,166 square foot retail center located in Colonial Heights, Virginia. The fair value of the total consideration transferred at the acquisition date to acquire Dimmock Square was $19.7 million, consisting of 990,952 common units of limited partner interest in the Operating Partnership and $10.1 million of cash that was used to immediately defease the loan secured by Dimmock Square upon its contribution to the Operating Partnership.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):


	Dimmock Square
	(Unaudited)
Land	$	5,100
Site improvements		600
Building and improvements		12,526
In-place leases		1,880
Above and below-market leases		(390	)


Net assets acquired	$	19,716

The following table summarizes the consolidated and combined results of operations of Armada Hoffler on a pro forma basis, as if Dimmock Square had been acquired on January 1, 2013 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(Unaudited)
Rental revenues	$	16,952	$	15,409	$	48,479	$	44,059
Net income		3,316		1,329		8,135		11,527

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2013. The pro forma financial information includes adjustments to rental revenues for above and below-market leases and adjustments to depreciation and amortization expense for acquired property and in-place lease assets.

Rental revenues and net loss from Dimmock Square for the period from the acquisition date to September 30, 2014 included in the consolidated statement of income was $0.3 million and $(0.1) million, respectively.

Other Real Estate Transactions

On April 16, 2014, the Company purchased land in Williamsburg, Virginia for $7.6 million for the development and construction of Lightfoot Marketplace.

On May 1, 2014, the Company purchased land in Chesapeake, Virginia for $0.3 million for the development and construction of a new administrative building for the Commonwealth of Virginia.

On July 30, 2014, the Company entered into a non-binding letter of intent to sell the Virginia Natural Gas office property for approximately $8.9 million. The Company expects to enter into a purchase and sale agreement and complete the disposition in 2014. However, no assurances can be given that the Company will enter into a binding agreement related to this disposition or that the Company will complete the disposition on the terms described herein or at all. Net assets of $5.2 million associated with the Virginia Natural Gas office property were included in the consolidated balance sheet as of September 30, 2014.

On September 29, 2014, the Company purchased land in Virginia Beach, Virginia for $0.2 million for the development and construction of a new administrative building for the Commonwealth of Virginia.

Subsequent to September 30, 2014

On October 2, 2014, the Company entered into a non-binding letter of intent to sell the Sentara Williamsburg office property for approximately $15.4 million. The Company expects to enter into a purchase and sale agreement and complete the disposition in 2014. However, no assurances can be given that the Company will enter into a binding agreement related to this disposition or that the Company will complete the disposition on the terms described herein or at all. Net assets of $9.1 million associated with the Sentara Williamsburg office property were included in the consolidated balance sheet as of September 30, 2014.