AHH - Armada Hoffler: Market Mispricing Means Income Opportunity And Potential Upside

2024-03-08 17:00:00 ET

Summary

• Armada Hoffler Properties is a mispriced REIT that presents an opportunity for income growth.
• AHH's financials for 2023 were solid, with steady revenue growth and a well-covered dividend with a conservative FFO payout of 62.5% .
• The company has a solid balance sheet, although its leverage level is higher than ideal, and it has plans to reduce it in the coming quarters.
• Due to their mixed-use portfolio, this has caused the REIT to be mis-priced by the market due to office REITs being out of favor.
• The current P/AFFO ratio of 8.3x is significantly lower than the sector median and peers like Alexander & Baldwin.

Introduction

Nothing excites me more than an opportunity to grow my income at cheaper valuations. One way to do that currently is by investing in the REIT sector. As readers may know, I've written plenty of articles regarding the opportunity REITs have presented investors because of the sharp decline they've experienced in the last two years....

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