Armada Hoffler to recognize $5M purchase option sale gain over four quarters
Armada Hoffler has reached an agreement to sell its at-cost purchase option to the developer of The Residences at Annapolis Junction for $5.0M. The company has agreed to allow the developer to refinance the project and extend the maturity of the mezzanine loan in order to realize the full potential value upon expected stabilization in 2019. Although the full option payment is expected to be received in Q4, as a result of this change in strategy, the proper accounting treatment will be to recognize the $5.0M profit over the next four quarters. The company expects the developer to close on these transactions in Q4, at which time the company expects the developer to pay down the mezzanine loan balance by over $10.0M. The company is updating FY18 Normalized FFO guidance to $1.00-$1.03.