Michael O’Hara - Chief Financial Officer Louis Haddad - President and Chief Executive Officer Eric Smith - Chief Investment Officer.

David Rodgers - Robert W. Baird & Co. John Guinee - Stifel Nicolaus & Co., Inc. Robert Stevenson - Janney Montgomery Scott William Crow - Raymond James Financials Craig Kucera - Wunderlich Laura Engel - Stonegate Capital Partners Paul Puryear - Raymond James Financial John Guinee - Stifel.

Welcome to the Armada Hoffler’s Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, you will be invited to participate in a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded today, Tuesday, November 1, 2016.

I will now turn the conference call over to Mike O’Hara, Chief Financial Officer of Armada Hoffler. Please go ahead, sir..

Good morning, and thank you for joining Armada Hoffler’s third quarter 2016 earnings conference call and webcast. On the call this morning, in addition to myself, are Lou Haddad, CEO; and Eric Smith, our Chief Investment Officer, who will be available for questions.

The press release announcing our third quarter earnings, along with our quarterly supplemental package was distributed this morning. A replay of this call will be available shortly after the conclusion of the call through December 1, 2016. The numbers to access the replay are provided in the earnings press release.

For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, November 1, 2016, and will not be updated subsequent to this earnings call.

During this call, we will make forward-looking statements including statements related to the future performance of our portfolio, our development pipeline, potential redevelopment opportunities, the impact of acquisitions and dispositions, our construction business, our portfolio performance and financing activities, as well as comments on our outlook and dividend.

Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control.

The risks and uncertainties can cause actual results to differ materially from our current expectations and we advise listeners to review the risk factors disclosed in our press release this morning and in documents we have filed with or furnished to the SEC.

We will also discuss certain non-GAAP financial measures including but not limited to FFO and normalized FFO. Definitions of these non-GAAP measures as well as reconciliations to the most comparable GAAP measures are included in the quarterly supplemental package, which is available at our website at www.armadahoffler.com.

I’d now like to turn the call over to our Chief Executive Officer, Lou Haddad.

Lou?.

Thanks, Mike. Good morning and thank you for joining us today. This morning we once again reported quarterly results at the higher end of our expected range with normalized FFO of $0.26 per share. And once again we have raised our guidance range for 2016 and expect to close the year between $0.99 to $1.01.

Later in the call Mike will discuss our quarterly results and 2016 guidance in greater detail. But first I will provide some comments on our overall corporate strategy as well as an update on our development pipeline.

Since our founding nearly four decades ago, our goal has been consistent to build a portfolio of the highest quality real estate through conservative, selective development complemented by strategic acquisitions and dispositions.

As market dynamics change over time, our strategy to achieve this goal will continue to evolve, but our key advantage of being a diversified and vertically integrated organization, and our ability to quickly assess, react and adapt to changing market conditions in order to capitalize on opportunities as they present themselves.

A good example of this is what we are seeing on the development front. Over the past several months, we have observed a notable tightening in commercial construction lending with loan dollars decreasing and equity requirements on the rise, thus leading private developers in need of greater equity sources to our doorstep.

For potential partners, we as the lead developer and controlling interest holder, provide substantial advantages in addition to providing equity, the strength of our balance sheet and the ability to obtain construction financing, over 30 years of real estate development, construction and asset management expertise and our in-house general contracting company to provide tight control over both cost and schedule.

In partnering with high-quality private developers that have local market knowledge, who have already invested the time, energy and resources in teeing up a project whether it be through site selection and acquisition, loaning, permitting, or architectural we can significantly shorten the overall development process and therefore expand our development pipeline without significantly increasing our expenditure of internal resources.

As a result, we continue to see a robust level of deal flow for projects that meet all of our development criteria, Class A assets, high barrier to entry locations, secondary and tertiary markets in the mid-Atlantic and Southeastern United States, wholesale to retail profit margins of 20% or more.

In addition to sourcing new development projects, we continue to evaluate several promising new joint venture opportunities across all product types, office, retail and multifamily in our target markets. A perfect example of such is Harding Place, our 80:20 joint venture with Southern Apartment Group that we announced this past quarter.

Harding Place is a Class A multifamily project in Midtown Charlotte. The site provides residents with convenient access to the greenway, as well as downtown Charlotte, and is strategically located in close proximity to the Carolinas Medical Center, one of the largest employers in the city.

The Charlotte MSA is a target market for our company and we are pleased to have teamed with local partners that have more than 45 years of combined experience developing real estate in this market. With our construction company fully engaged we expect to deliver Harding Place in 2018.

Turing to the remaining projects in our development pipeline, this past quarter we delivered both Lightfoot Marketplace and Johns Hopkins Village. The initial performance from both assets has been solid and we expect to ride this momentum through eventual full stabilization.

Last week we officially broke ground on the next phase of the Town Center of Virginia Beach, representing the latest chapter in our successful, multi-decade public-private partnership with the city.

We expect to deliver this next phase of Town Center in 2018 as progress continues as expected on Point Street Apartments in Baltimore’s Inner Harbor, One City Center in Downtown Durham, and The Residences at Annapolis Junction Town Center with construction well underway at each site.

If you check page 17 of our supplemental, you will see that our current development pipeline includes well over $300 million worth of projects. Given our historical profit spreads, we believe these projects when delivered and stabilized will yield significant value to our shareholders.

This value creation may manifest itself in a combination of ways including total and per share FFO growth, monetization through dispositions, NAV growth or multiple expansion. We believe the result is organic, profitable growth that could lead to a lower cost of equity for future opportunities.

Our expectation is that 2017 will be a year of significant value creation as we continue to build towards deliveries in 2018 and beyond. And we would expect significant bottom-line growth that I just discussed to naturally follow that timeline.

While we have been able to grow per share earnings by nearly 10% annually over the last couple of years, the timing of these deliveries suggest a somewhat slower growth trajectory over the short-term. Moving from our development pipeline to acquisitions and dispositions.

This quarter we completed our planned disposition of the Oyster Point office building in Newport News, Virginia. The Oyster Point building was one of the oldest assets in our portfolio and one that faced stiff competition in this submarket.

We are currently under contract to redeploy our proceeds from this building into a stabilized grocery anchored retail center in the Charlotte market. We expect to close on that acquisition in the next few weeks and look forward to providing further details after closing.

You may have also seen that last month we issued 2 million shares of common stock in a off market acquisition of a stabilized retail asset, our sixth transaction involving either stock or OP units. We acquired the property in an all stock transaction from a seller who now holds a significant equity position in our company.

We believe the acquired property is a logical and strategic addition to our portfolio with tremendous potential upside related to redevelopment opportunity, and I look forward to sharing more details with you at the appropriate time.

Whether it is through selective development, redevelopment or strategic acquisitions and dispositions the management team at Armada Hoffler remains committed to making the right real estate decisions in order to grow our portfolio, create value and return that value to our shareholders.

To that end our current payout ratio suggest that we have more than enough room to make powerful recommendations to our board regarding our dividend. With that, I’ll turn the call over to Mike for further details..

construction is having another strong year, portfolio occupancy is increasing, and the two recently delivered development projects are exceeding expectation. I’ll now turn the call back to Lou..

Thank you, Mike. Thank you for your time this morning and your interest in Armada Hoffler. Operator, we would like to begin the question-and-answer session..

[Operator Instructions] Our first question comes from the line of Dave Rodgers with Robert W. Baird. Please proceed with your question..

Hi, good morning guys.

I wanted to ask I guess quickly about the acquisition that you referred to for October and you issued – I think was [S34], it doesn't sound like you're ready to fully talk about it, but it sounds like given that you've already issued the shares and talked about the acquisition having closed in October that maybe we can get a little bit more detail on that before you are fully ready to announce it?.

Dave. Thanks for the question. There is not much detail that we want to talk about at this time. It is a stable center, and I believe that the NOI is in our projections for 2016. We have got some very sensitive negotiations going on right now with regard to redevelopment opportunities there.

I look forward to sharing more detail as soon as possible but I can't do it quite yet..

Okay. Thanks for that detail at least.

I would say maybe Lou, another question on the development side, it sounds like you have more joint venture opportunities, how does the 100% equity-owned pipeline look, it sounds like you are kind of maybe leaning more to joint ventures, but I guess correct me if I am wrong, how are you thinking about putting capital to work here through new development?.

Well, as I said on the call activity is extremely robust right now both from our own sourcing as well as JV. We are basically blind to the source at this point in time. We are basically cherry-picking the opportunity, whether they come from outside with developers that we know or we have sourced them internally..

Okay.

In terms of maybe the financing plan, Mike, you kind of referenced paying off some of the secured debt that you have, it didn’t sound like you have a plan of financing those assets and so those maybe just go into an unencumbered pool, is that correct, is that how you are thinking about it?.

Good morning Dave. We still have time to come up with that but right now we are thinking about just keeping the credit facility in its current place right now, it is 250 million with 150 million on a revolver, and kind of been doing what we have been doing here in the past. Maybe we will look at that one at a floating rate debt on that one.

So at some point in time if we wanted to monetize it and sell it we will pay it off and add it to the [Indiscernible] for the credit facility we could do that..

Okay, and maybe last question, I think the only area that you really have any meaningful amount of speculative development underway would be Town Center and then a couple of different Maryland apartment buildings, but all kind of on the residential side, can you talk about kind of the demand in each of those markets and kind of how you are feeling today about each one of those projects even though you are just getting underway, but how you kind of see the underlying fundamentals for those assets?.

Great question, Dave. I don't want to take all of our time. I can't tell you how excited we are about the Maryland property. Every scrap of news that comes in on what is going on in those markets is more and more positive.

At the end of [Indiscernible] apartments in lesser locations than our Point Street Apartments are leasing at unbelievable rates, and unbelievable speed. So we just can't wait to get that up and the same is happening at [Indiscernible].

We feel really good about the choices that we have made and we look forward to getting those completed and leased up as soon as possible..

Okay, great. Thanks guys..

Thanks Dave..

Thank you. Our next question comes from the line of John Guinee with Stifel. Please proceed with your question..

Great, okay. Thank you.

A couple of comments, I can't remember at the IPO what the status was of your Virginia Beach Town Center high-rise, but it is sitting at about 64% lease, is there just no demand for that location anymore or is there a favored submarket that is more in vogue in your part of the world, that is one question and then the second question is you are buying a bunch of commodity grocery anchored retail, remind us again what you like about those assets?.

Sure. Thanks John. First on your first question, I was hoping that someone would ask that question with regard to the Town Center at Virginia Beach.

First let me say as I said before on previous conference calls that new high-rise that we put up was designed to give us some flexibility and some vacant space due to the fact that for nearly a decade we essentially had zero space at Town Center. So we programmed in an extra 100,000 square feet in order to soak up that demand.

Secondly, as I have said before, rents at Town Center are a solid 20% above the surrounding market and perhaps 20% above the entire MSA, and as such a vast majority of companies are not going to pay the price to come here. So it takes a special user to want to pay for that rent.

Thirdly, what I am happy about and glad that you asked the question for is that we have seen a noticeable uptick in activity over the last quarter. In fact, it has had probably more activity on the office side than we have seen in the last couple of years.

I hope that is indicative of what might be brewing in the economy, but I know it is indicative of what is happening here. We look forward to – we are in lease negotiations on four different tenants that would substantially take up the remaining space in Town Center. Of course, it is not done until it is done. So we look forward to updating you on that.

With regard to your second question, I am not sure that I would refer to our acquisition as commodity-based retail, of course, it depends on your definition of that. If all that we were looking at was the credit of the anchor and the term of the leases Then I might agree with you that those could be characterized as run-of-the-mill centers.

What we look for is well located stores with high volume sales. Again as I have said in the past, over nearly 40 years now we are seeing that while there isn’t any real estate that is completely bulletproof, grocery anchored centers with high sales stay full. That has been our strategy for a long, long time. It is going to continue to be our strategy.

That will resolve itself even further in the coming year. As you know, John, we are not a fan calling on to suburban office, we are not a fan of garden variety multi-family. Those things have their ups and downs and that's why see us weed them out of the portfolio at opportune times. But grocery-anchored high sales by stores stand that test of time..

Great. Thank you..

Thank you. Our next question come from the line of Rob Stevenson with Janney Montgomery Scott. Please proceed with your question..

Good morning, guys. Lou, look at the development page, I get a 17 at the supplemental on the stuff. -- That either delivery not stabilized or still under development or in the midst and the JVs and everything.

What's the sort of blended stabilized yield that you're expecting on that capital deployment today?.

Thanks, Robert. That's a good question. As you know there's a couple of different product type scenarios, so I'm not quite sure of the mix but we're as the quality of the product increases, obviously the returns decrease. What we're focusing on is the significant spread and we told you that we anchored 20% between wholesale and retail.

Right now that pipeline has waved toward multi-family, which obviously drags you into the lower end of the scale. For instance on Harbor Point, we're seeing cap rates there in Baltimore transaction believe it or not in the low fives, even though one a couple of months ago in the high fours, and we're well north of 20% over that.

But as a blended average, the more multi-family that we're going to have in the pipeline to more and skew down into the seven as opposed to when we have more office in retail in that pipeline which has skewed into the eight. So, but it’s a fairly type range. And again, we had to be mindful of as our cost of capital.

And so, what you may see as we've alluded to a number of time is that some of those might be monetized rather than brought on board in order to reset benefit that we may not get paid for in this offering.

As everybody on the phone knows, as the largest shareholder, we have to look through that lens before we just add things to our portfolio because we like them..

Okay. And then, where are you guys in terms of current occupancy at Hopkins Village. I think it was basically 78% or so at September 30th. Has that moved up since then? And the how should we be thinking about this asset going forward.

Is this more like a student housing asset, where if you miss this semester, you're stuck with all lower occupancy for a period of time or is this, just typical market rate apartments where you could continue to build even once the semester starts?.

Yes. Great question. I appreciate that gives us an opportunity to make sure everybody has a good understanding on the phone. That project is a venture with John Hopkins University. And its purpose is for junior and senior housing. The occupancy is hanging right around there, it hasn’t grown appreciably after the start of the semester.

We wouldn’t expect that it's going to grow appreciably other than the retail rents all coming online and till we have a pickup in January. But I wouldn’t expect as we said on our last call, I wouldn’t expect full stabilization until late next summer..

Okay. And then just lastly, how should we be thinking about this positions over the next six months to a year call it, mean there's not much left in the office portfolio, the Harvest. I know that some of the stuff was recently delivered, so you got REIT full around that.

May what is there stuff in the portfolio at this point where you're looking at it thing, the time to monetize it next six to nine months or year or we basically looking at equity funding for 17 largely coming to the ATM?.

Okay. Another great question. There are a few things in our portfolio. We're looking at strongly as we've alluded to before that is we have two state office buildings in the portfolio that frankly will be monetized to the appropriate time.

We also some of our centers, kind of go on back to John's question, some of our older centers are performing well, but what we're seeing out in the marketplace still is a compression on cap rates in what we consider to be maybe not commodity retail but not the all starts in our portfolio.

So, you could see us recycle some of those older centers in the coming year..

Okay. I appreciate it, guys..

Thank you. Our next question comes from the line of Will Crow with Raymond James Financials. Please proceed with your question..

Hey, good morning guys..

Hi, Will..

A couple of questions.

First of all Opposite end of Guinee’s question earlier you’re selling office to buy the retail, I would point it, why is that you want to get off square feet of office and we’re waiting a lot more reports about suburban office starting to help perform, kind of thesis on that?.

Sure, I appreciate that.

Again it’s really kind of hard knock, remember our market we’re dealing in secondary market, secondary market lands is not at a premium when you have an office you really essentially have – speaking in broad generality here, what we’ve seen over a three and a half decade is that you don’t have much of a barrier to answer and while we’re really pleased with a tenant 15-year leases that we get at the outset, we’ve seen that once those things rollover it’s very difficult to maintain the rent and even if you can maintain the rent you got a huge outweigh of TI in order to attract that new tenant.

And you’re at risk because it’s fairly easy again in secondary market for someone that’s through out of the building next door and draw your tenant. So, it’s been our experience over a long, long period of time that those things have their greatest value essential that they like to deliver.

That’s works for us a very long time, I would not want to get caught up in believing that there is significant upside in assets in suburban market..

I appreciate the answer. One final question for me.

You talked about the construction lender – lending environment tightening that might be touched on last quarter as well, is there any difference between you three asset classes or reached away as far the availability in cost of money?.

Recently he was gone out on the multi-family, we haven’t gone out recently on the retail and office but the feedback I’m hearing is that it’s striking up across all the product item including PCRE regs that are coming through are really changing the capital requirements for the banks, so they’re changing their pricing and the cost around that..

Great, thank you, guys..

Thank you. Our next question comes from the line of Craig Kucera with Wunderlich, please proceed with your question..

Hi good morning guys. It’s a follow up on the last question.

I know you mentioned that you’re tightening up across the board that are you seeing any difference in the type of projects that are coming to market maybe a little bit more peer play multifamily or retail but may be last mix piece because it’s more moving parts, little profit for the banks that maybe underway?.

I wouldn’t say that Craig, we’ve seen vendors are significantly vary of multifamily across the board as you all know, there has been a huge boom in multifamily construction and so a lot of these guys regardless of how good the project is, simply have portfolio of construction loans on other projects in a particular market.

I think that combined with the high risk loans that the regulators are basically poising on the banks with regard to the real estate funding has led them to bring loan dollars into the 60% range where in a couple of years ago we said multifamily then you will look at 75% well.

Overall I think that’s really good for the market and the economy and I guess the right thing for the wrong reason if you will, because it will cause things to slow down in some of these projects that really shouldn’t get build perhaps, it won’t. But in the meantime for the beneficiary, a lot of people putting in their project their way..

Craig, let me just also add when we’re talking about this, we’re talking about construction loans and not the stabilized assets, this is the different lending environment stabilized versus construction..

I would add one more comment to that, the topic on another question.

That’s another benefit that we’re enjoying from having the local – specific developers brining a development opportunity on the JV development platform side is that it will mention we can share – the best of those opportunities throughout and to the extent that construction lenders only have room for one or few remaining projects to take to sub markets where we’re able to take advantage in some cases that our development partner has done locally and see that opportunity in that marketplace which allows us in what is increasingly competitive construction loan environment to be able to secure those construction loans albeit maybe a lower LCC that we’ve been seeing in the past of money assets, those construction dollars because of those attractive opportunities..

Got it.

Well, and following up on that are you -- if someone's put in, two three years into a project, are you seeing any opportunities where there may be some distress, maybe developers have been caught midstream and a little bit surprised and now has maybe over extended themselves and maybe you can get an even better deals than he might normally be able to get?.

That's definitely happening out there. If we were, we'd be think about it if he started working in 2014 to bring a project to bear to 2016, then you definitely had a different expectation when he started. So, yes. And again we want to be opportunistic without being piggish if you will, this company was built on relationship.

We guess, per shot that allow these project because of our longevity and the fairness with what we treat people. So, you're not going to see or rate a partner over the call. But at the same time, obviously it puts us in a very good position to make a very good deal..

Got it, thanks guys..

Thank you..

Thank you. Our next question comes from the line of Laura Engel with Stonegate Capital Partners. Please proceed with your question..

Good morning. What that is on the Town Center next phase is under development. If you could tell us, I know as this anchored tenants not yet announced.

If you could tell us a little bit about how that mix of tenants compares to what is already there, how the preleasing compares to what you've seen historically and then maybe I guess any kind of lessons learnt having been there for a while and really done the majority of the development.

What's going to bring the most success in getting that property online and what you think as far as, anything of the stabilization rates compared to historical rates?.

Sure. And thanks for the question. When you guys want to start talk about Town Center, if you guys keep nudging me, they want me to shut up because I get really excited about what we're doing there. The anchor that have be reticent to make announcements yet basically want to be much closer to the store opening before they unveil.

But I can tell you it's the same type of lifestyle center and that we've endeavored to attract the Anthropologie in West Elm, Brooks Brothers of the world. So, you'll see that it's been that same yoke, well known international name.

I tell you, it's brought, this whole project has brought a tremendous amount of excitement at Town Center from a standpoint of how quickly it is going to stabilize. It's right in the -- for those of you are somewhat familiar with Town Center, it's right in the centre of Town Center as opposed on the periphery.

Its right next to the public place that had become a gathering place for the townspeople. And so it's going to be highly visible, highly desirable and we've had some great absorption rates on our retail and our apartment to-date.

The Encore apartments are already in the high-90s and I expect there's a waiting list for the type of apartments that we're building on this block. So, I expect that's going to stabilize very quickly.

We're also we got where while we have a couple of leases with the people I just mentioned, we're in LOI negotiations especially for the rest of the state. There is going to be some rework involved. I guess something else we want to get out there.

We're going to have to move some tenants around and the retail under the Cosmopolitan Apartments to make room for some other co-tenants that we really want. We're going to be moving a couple of the local shop.

And when we put together our 2017 guidance, our expectation is much like when we built 45 25 that we're going to see some loss of occupancy in the Cosmopolitan while that construction is going on, when at least those are in full swing. But again, temporary glitches for a much greater good..

Very well, and my other questions have been answered. So, will hop back in the queue, but appreciate all the given information and congrats from the successful quarter..

Thanks, very much..

Thank you. Our next question comes from the line of Paul Puryear with Raymond James Financial. Please proceed with your question..

Hey, good morning. We'd really like to get some more color on your construction company. The profitability there and I would assume you're getting cost pressure.

If you could comment on that and are you able just to pass that through?.

Yes. Great question, Paul. I appreciate it. May I tell, you guys will make me talk forever here? Some of you know I came up through that, that company is still near and dear to my heart. Paul, we're not seeing any pressure on the profitability on that company essentially because of the way we do business.

This is much different than traditional construction. Our guys are not out there trying to be the low bid on a project.

Our people get hired to help an owner develop a project when he hires an architect and he hires a contractor and watch those two together to ultimately come up with the best product he can for a reasonable price in a very short timeframe.

Therefore, we are not -- is not incumbent upon us to put a hard number on the project and till essentially we have the entire thing subcontracted. So, long answer to a short question, essentially everything is pass through.

Now, it's still the construction business and there's still some risk, obviously you can have subcontractors go out on here in the middle of our project. So, we have an extremely well oiled wedding machine to keep that to a minimum. As Mike mentioned, that backlog is well over a couple of $100 million.

For the third or fourth year in a row, we our expectation as of 2017 is going to once again be at the higher end of the range. And it also it begs the question why not expand it. Well, it's not really expandable. We really like the idea of that company bring in $4 million $5 million every year.

That kind of work that it gets, it gets from a couple of handfuls of client that understand the value of hiring an contractor upfront because that’s where the money is saved through the design process. But it doesn't scale up well.

And frankly, we have as much benefit in having those guys work for us in controlling our cost of schedule as well as involved in these joint ventures. As we've said before, this makes any lending program that we have wouldn’t have it if we didn’t have our construction company on site basically monitoring the process in prosecuting the construction.

So, it's a multi-headed monster for us that happens to be very lucrative on this side..

Thanks for that.

And in the cost pressure?.

We're seeing a lot of cost pressure across the board in a number of different market. I tell you it’s kind of interesting to look at as you wonder why in a flat economy and where commodity prices have essentially gone down for the last several years, why are we to begin a cost pressure.

And the biggest reason that we see is that there is a dearth of subcontractors out there to do complex high rise type work. A lot of them went away in the great recession and they largely have not come back. You've seen a few articles in the Wall Street Journal talking about how difficult it is to get glass on high rise, it say.

That’s really a manpower thing. And so, not sure when that results itself. So, for our third party clients, they know what's going on and can react accordingly.

For our development business, it's kind of interesting, again as you guys know, we don’t throw up buildings and help to lease them, we do projects with cities and with well-heeled anchor tenants and basically it becomes back to a pass through. And when we're doing a public private partnership, we do our forecasting on with what costs are going to be.

That basically just means there needs to be more participation from the city or the university or wherever our public partner is. The same thing when we get a or when we get an engagement from one of our grocery anchors asked us to go somewhere and build a building for them, they understand what that price is going to be.

So, while we'd rather not see a rising prices but we're well equipped to take there ever..

Paul, this is Eric. I would add one thing to Louis's comments.

The other thing that we obviously don’t know the answer to but we're discussing and keeping eye on is as how that cost pressure out there on the construction cost side might manifest itself in the context of the construction lender pull back we're seeing and that impact on your number of deals that get done.

So, we're keeping eye on that and obviously it's very gets to party..

Yes. Sounds like somebody needs to raise the raft..

Exactly..

Going back to the discussion on leasing at Virginia Beach Office, last quarter I think you commented that B rents B space in Norfolk was filling. Could you just give us some more color on that the rate that its filling, how much lease rates are going up and how that effects the leasing at Virginia Beach.

And I guess is part of that, are you holding rate at Virginia Beach?.

Great question, Paul. We're seeing some great success in downtown Norfolk because of late in an Axis very recently reported that the companies that have chosen to relocate in some of those older buildings that we talked about have brought in over 2000 jobs over the last 18 months.

As a matter of fact, they're setting up training stations that a lot of these people allow the locals to be able to get those job as opposed to the people coming in from the area. And possibly some of that as well. So, it's a great benefit for the region to have those buildings full.

There is also been one of the major high rises in downtown that is off course you want to say it's like 40 years old is now being converted into multi-family. So, it's another few 100,000 square feet that's taken off the market. So, again we applaud their success.

We're hopeful that there are going to be a one end of the light rail line that's going to come to the Town Center. That in any respect it's good for the region. In terms of what it does in for our rent, it's not much one way or another. We are holding rate, the lease that we did we off to that last quarter in 45 25 was a 27 50 rent.

The four tenants that we're talking with now that I mentioned are all going to be in the high-20s. So, we're not budging. If you think about it, we can't it would not be wise for us to try and dive and fill these buildings not when you have another 700,000 square feet that ultimately is going to roll over.

And then [indiscernible] with you, the 110 tenants here enjoy the exclusivity that we've been able to maintain. So, we're going to stay that with that, like I said activity has been robust. I look forward to having significant increases in occupancy over the next couple of quarters. Long answer to a short question, I hope I called it all.

Does that catch you?.

Yes, you did, except for the rate of increase in B rents, if you have a number that would be helpful..

Yes. I don’t have the number. I would tell you that those B rents are still B low. You'd say for instance there one of the prices that they got was a big commitment from ADP which I think is around 800 jobs, 150 some 1000 square feet.

The city had to kick in significant money to help, there was a huge economic development department list where they competed with a number of competing cities in order to get that. So, I wouldn’t think and got down speculating, and I shouldn’t. I wouldn’t think that there was any material increase in what happened.

Now, you would imagine with the successes that they’ve had, I mean they're well supplying demand, the remaining space that's been downtown Norfolk, you would imaging you'd be able to start getting a bit of a premium and those rents will start to creep up..

Yes. I'm sure we can drag it down. Thank you, good color..

Thank you. Our final question comes from the line of John Guinee with Stifel. Please proceed with your question..

Great. Quick follow-up. Refresh on memory as to when you raised the dividend last and by how much? And then the second question is if you look at your guidance that implies a $0.22 to $0.24 fourth quarter FFO, I think. And that seems like a little stint if you raise your dividend a penny about the same time you're FFO is only $0.22 or $0.24.

Can you walk us through those two issues?.

Yes. I'm sorry, now I'll turn it over to Mike. So, for the last two years, we raised the dividend by coincidently $0.04 at the in the first quarter of the subsequent year. So, that was in I want to say February of 15 as well as February of 14.

Mike?.

Yes, John. On some of the guidance. So, year-to-date we are at $0.77 at normalized and our range was up with $1. Surely we're not showing the same run rate as in the past quarter.

Apart of that is the effect of using the ATM this past year, as it been talked about, we've ramped out up quite a bit and raised this $50 million on the ATM, that I'll think we need to go a share count going up, it's going to bring down 4rth quarter earnings a little bit..

Okay..

Thank you..

Remember in that past quarter, we had $20 million on the ATM and you have 2 million shares go out with all as well for this property that we're looking for to talking with you about. So, that obviously had a bit of delusion. But as mike said, we've had strong a FFO growth this year.

We expect that to continue and so we feel real good about that dividend coverage..

Right. Thank you, very much..

There are no further question at this time. I would like to turn the call back over to Mr. Haddad for any closing comments..

Guys, thanks for all your attention and the great questions. Look forward in updating you soon on some of the things that we talked about. And have a great day..

This concludes today’s teleconference. You may disconnect you lines at this time. Thank you for your participation and have a wonderful day..