UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2019
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
Commission File Number 1-12002
ACADIA REALTY TRUST AND SUBSIDIARIES
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(Exact name of registrant in its charter)
Maryland | 23-2715194 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
411 Theodore Fremd Avenue, Suite 300 Rye, NY 10580
(Address of principal executive offices)
(914) 288-8100
(Registrant’s telephone number, including area code)
Title of class of registered securities | Trading symbol | Name of exchange on which registered |
Common shares of beneficial interest, par value $0.001 per share | AKR | The New York Stock Exchange |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES ☒ NO ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YES ☐NO ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES☒ | NO☐ |
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YES☒ | NO☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ☒ | Accelerated Filer | ☐ | Emerging Growth Company | ☐ |
Non-accelerated Filer | ☐ | Smaller Reporting Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) YES ☐ NO ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $2,311.5 million, based on a price of $27.37 per share, the average sales price for the registrant’s common shares of beneficial interest on the New York Stock Exchange on that date.
The number of shares of the registrant’s common shares of beneficial interest outstanding on February 12, 2020 was 82,127,330.
DOCUMENTS INCORPORATED BY REFERENCE
Part III – Portions of the registrant’s definitive proxy statement relating to its 2020 Annual Meeting of Shareholders presently scheduled to be held May 7, 2020 to be filed pursuant to Regulation 14A.
ACADIA REALTY TRUST AND SUBSIDIARIES
FORM 10-K
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7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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12. | Security Ownership of Certain Beneficial Owners and Management |
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report on Form 10-K (the “Report”) may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and as such may involve known and unknown risks, uncertainties and other factors whichthat may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative thereof or other variations thereon or comparable terminology. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to those set forth under the headings “
SPECIAL NOTE REGARDING CERTAIN REFERENCES
All references to “Notes” throughout the document refer to the footnotes to the consolidated financial statements of the registrant referenced in Part II,
Item 8. Financial Statements.PART I
ITEM.1. | ||
BUSINESS. |
GENERAL
Acadia Realty Trust (the “Trust”) was formed on March 4, 1993 as a Maryland real estate investment trust (“REIT”). All references to “Acadia,” “we,” “us,” “our” and “Company” refer to the Trust and its consolidated subsidiaries. We are a fully integrated REIT focused on the ownership, acquisition, development and management of high-quality retail properties located primarily in high-barrier-to-entry, supply-constrained, densely-populated metropolitan areas in the United States. We currently own or have an ownership interest in these properties through our Core Portfolio and(as defined below). We generate additional growth through our Funds (each as(as defined below).
All of our assets are held by, and all of our operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and entities in which the Operating Partnership owns an interest. As of December 31, 2017,2019, the Trust controlled 95% of the Operating Partnership as the sole general partner. As the general partner, the Trust is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest (“Common OP Units” or “Preferred OP Units,” respectively, and collectively, “OP Units”) and employees who have been awarded restricted Common OP Units as long-term incentive compensation (“LTIP Units”). Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for our common shares of beneficial interest of the Trust (“Common Shares”). This structure is referred to as an umbrella partnership REIT, or “UPREIT.”
BUSINESS OBJECTIVES AND STRATEGIES
Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective:
• | Own and operate a portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas (“Core Portfolio”). Our goal is to create value through accretive development and re-tenanting activities within our existing portfolio and grow this platform through the acquisition of high-quality assets that have the long-term potential to outperform the asset class. |
• | Generate additional growth through our Funds (as defined below) in which we co-invest with high-quality institutional investors. Our Fund strategy focuses on opportunistic yet disciplined acquisitions with high inherent opportunity for the creation of additional value, execution on this opportunity and the realization of value through the sale of these assets. In connection with this strategy, we focus on: |
o | value-add investments in street retail properties, located in established and “next-generation” submarkets, with re-tenanting or repositioning opportunities, |
o | opportunistic acquisitions of well-located real estate anchored by distressed retailers, and |
o | other opportunistic acquisitions, which vary based on market conditions and may include high-yield acquisitions and purchases of distressed debt. |
Some of these investments historically have also included, and may in the future include, joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets.
• | Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth. |
Investment Strategy — Generate External Growth through our Dual Platforms; Core Portfolio and Funds
The requirements that acquisitions be accretive on a long-term basis based on our cost of capital, as well as increase the overall Core Portfolio quality and value, are key strategic considerations to the growth of our Core Portfolio. As such, we constantly evaluate the blended cost of equity and debt and adjust the amount of acquisition activity to align the level of investment activity with capital flows.
Given the growing importance of technology and e-commerce, many of our retail tenants are appropriately focused on omni-channel sales and how to best utilize e-commerce initiatives to drive sales at their stores. In light of these initiatives, we have found retailers are becoming more selective as to the location, size and format of their next-generation stores and are focused on dense, high-traffic retail corridors, where they can
utilize smaller and more productive formats closer to their shopping population. Accordingly, our focus for Core Portfolio and Fund acquisitions is on those properties which we believe will not only remain relevant to our tenants, but become even more so in the future.
In addition to our Core Portfolio investments in real estate assets, we have also capitalized on our expertise in the acquisition, development, leasing and management of retail real estate by establishing discretionary opportunity funds. Our Fund platform is an investment vehicle where the Operating Partnership invests, along with outside institutional investors, including, but not limited to, endowments, foundations, pension funds and investment management companies, in primarily opportunistic and value-add retail real estate. To date, we have launched five funds (“Funds”); Acadia Strategic Opportunity Fund, LP (“Fund I,” which was liquidated in 2015), Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”) and Acadia Strategic Opportunity Fund V LLC (“Fund V,” and our “current fund”). Due to our level of control, we consolidate these Funds for financial reporting purposes. Fund I and Fund II have also included investments in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I”), which was liquidated in 2018), Acadia Mervyn Investors II, LLC (“Mervyns II”) and, in certain instances, directly through Fund II, all on a non-recourse basis. These investments comprise, and are referred to as, the Company's Retailer Controlled Property Venture (“RCP Venture”).
The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns I and II and earns priority distributions or fees for asset management, property management, construction, development, leasing and legal services. Cash flows from the Funds and the RCP Venture are distributed pro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return (“Preferred Return”), and the return of all capital contributions. Thereafter, remaining cash flows are distributed 20% to the Operating Partnership (“Promote”) and 80% to the partners or members (including the Operating Partnership).
See
Note 1 in the Notes to Consolidated Financial Statements, included in Item 8 of this Report (“Notes to Consolidated Financial Statements”), for a detailed discussion of the Funds.Capital Strategy — Balance Sheet Focus and Access to Capital
Our primary capital objective is to maintain a strong and flexible balance sheet through conservative financial practices, including moderate use of leverage within our Core Portfolio, while ensuring access to sufficient capital to fund future growth. We intend to continue financing acquisitions and property development with sources of capital determined by management to be the most appropriate based on, among other factors, availability in the current capital markets, pricing and other commercial and financial terms. The sources of capital may include the issuance of public equity, unsecured debt, mortgage and construction loans, and other capital alternatives including the issuance of OP Units. We manage our interest rate risk through the use of fixed-rate debt and, where we use variable-rate debt, through the use of certain derivative instruments, including London Interbank Offered Rate (“LIBOR”) swap agreements and interest rate caps as discussed further in
ItemDuring 2018, the Company revised its share repurchase program. The new share repurchase program authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program may be discontinued or extended at any time. The Company repurchased 2,294,235 shares for $55.1 million, inclusive of $0.1 million of fees, during the year ended December 31, 2018. The Company did not repurchase any shares during the years ended December 31, 2019 or 2017. As of December 31, 2019, management may repurchase up to approximately $145.0 million of the Company’s outstanding Common Shares under this program.
We launched an at-the-market (“ATM”) equity issuance program in 2012 which provides us an efficient and low-cost vehicle for raising public equity to fund our capital needs. Through this program, we have been able to effectively “match-fund” a portion of the required equity for our Core Portfolio and Fund acquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time, we have issued and intend to continue to issue equity in follow-on offerings separate from our ATM program. Net proceeds raised through our ATM program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions and for other general corporate purposes.
(shares and dollars in millions) | 2017 | 2016 | 2015 | ||||||
ATM Issuance | |||||||||
Common Shares issued | — | 4.5 | 2.0 | ||||||
Gross proceeds | $ | — | $ | 157.6 | $ | 65.6 | |||
Net proceeds | $ | — | $ | 155.7 | $ | 64.4 | |||
Follow-on Offering Issuances | |||||||||
Common Shares issued | — | 8.4 | — | ||||||
Gross proceeds | $ | — | $ | 302.0 | $ | — | |||
Net proceeds | $ | — | $ | 296.6 | $ | — |
Operating Strategy — Experienced Management Team with Proven Track Record
Our senior management team has decades of experience in the real estate industry. We have capitalized on our expertise in the acquisition, development, leasing and management of retail real estate by creating value through property development, re-tenanting and establishing joint ventures, such as the Funds, in which we earn, in addition to a return on our equity interest, Promotes, priority distributions and fees.
Operating functions such as leasing, property management, construction, finance and legal (collectively, the “Operating Departments”) are generally provided by our personnel, providing for a vertically integrated operating platform. By incorporating the Operating Departments in the acquisition process, the Company believes that its acquisitions are appropriately pricedevaluated giving effect to each asset’s specific risks and returnsreturns.
INVESTING ACTIVITIES
See Item 2. Properties for a description of the properties in our Core and transition time is minimized allowing management to immediately execute on its strategic planFund portfolios. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for each asset.
Core Portfolio
Our Core Portfolio consists primarily of high-quality street retail and urban assets, as well as suburban properties located in high-barrier-to-entry, densely-populated trade areas.
As we typically hold our Core Portfolio properties for long-term investment, we periodically review the portfolio and implement programs to renovate and re-tenant targeted properties to enhance their market position. This in turn is expected to strengthen the competitive position of the leasing program to attract and retain quality tenants, increasing cash flow, and consequently, property values. From time to time, we also identify certain properties for disposition and redeploy the capital for acquisitions and for the repositioning of existing properties with greater potential for capital appreciation. During 2017, there were no dispositions within the Core Portfolio.
We also make investments in first mortgages and other notes receivable collateralized by real estate, (“Structured Finance Program”) either directly or through entities having an ownership interest therein.
Acquisitions
During 2017,2019, we made investments totaling $10.0invested in one unconsolidated leasehold interest and one unconsolidated property (Note 4), acquired nine consolidated properties (Note 2) and invested in one leasehold interest (Note 11) in our Core portfolio for a total of $185.9 million.
Dispositions
During 2019, we sold our Pacesetter Park shopping center for $22.6 million (Note 2).
Structured Financing Investments
During 2019, we provided seller financing on our sale of Pacesetter Park shopping center in this programthe amount of $13.5 million within our Structured Financing segment and asadvanced $4.3 million on an existing loan. As of December 31, 20172019, we had $101.7$76.5 million invested in this program and we exchanged a portion of our notes receivable for interests in two properties as described above.program. See
Funds
Acquisitions
Fund IV –
DuringFund V – During 2019, Fund V invested in four unconsolidated properties (Note 4) and three consolidated properties (Note 2) for an aggregate purchase price of $44.5$318.0 million.
Dispositions
Fund VIII –
Fund IIIV –
Structured Financing Investments
Fund IV –
DuringDevelopment and seven unconsolidated properties for an aggregate sales price of $35.6 million.
As part of our investing strategy, we invest in real estate assets that may require significant development. In addition, certain assets may require redevelopment to meet the demand of changing markets. As of December 31, 2017,2019, there were two Core and fourfive Fund development projects, consisting of five consolidated properties and one unconsolidated property.Core development project and four Core redevelopment projects. During the year ended December 31, 2017,2019, the Company placed five consolidated and three unconsolidated properties into service, reclassified one consolidated Core property as held for sale andinto service, placed one consolidated Core property into development, placed one consolidated Core property into redevelopment and placed two consolidated Fund properties into development. See
INFLATION
Our long-term leases contain provisions designed to mitigate the adverse impact of inflation on our net income. Such provisions include escalation clauses, which generally increase rental rates during the terms of the leases, and to a lesser extent, clauses enabling us to receive percentage rents based on tenants’ gross sales, which generally increase as prices rise, and/or, in certain cases, escalation clauses, which generally increase rental rates during the terms of the leases.rise. Such escalation clauses are often related to increases in the consumer price indexConsumer Price Index or similar inflation indexes. In addition, many of our leases are for terms of less than ten years, which permits us to seek to increase rents upon re-rental at market rates if current rents are below the then existing market rates. Most of our leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation.
ENVIRONMENTAL LAWS
For information relating to environmental laws that may have an impact on our business, please see “
Item 1A. Risk Factors— We are exposed to possible liability relating to environmental matters.”COMPETITION
There are numerous entities that compete with us in seeking properties for acquisition and tenants that will lease space in our properties. Our competitors include other REITs, financial institutions, insurance companies, pension funds, private companies and individuals. Our properties compete for tenants with similar properties primarily on the basis of location, total occupancy costs (including base rent and operating expenses) and the design and condition of the improvements.
CORPORATE HEADQUARTERS AND EMPLOYEES
Our executive office is located at 411 Theodore Fremd Avenue, Suite 300, Rye, New York 10580, and our telephone number is (914) 288-8100. As of December 31, 2017,2019, we had 118 employees, of which 9792 were located at our executive office and 2126 were located at regional property management offices. None of our employees are covered by collective bargaining agreements. Management believes that its relationship with employees is good.
COMPANY WEBSITE
All of our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available at no cost at our website at www.acadiarealty.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. These filings can also be accessed through the Securities and Exchange Commission’s website at www.sec.gov. Alternatively, we will provide paper copies of our filings at no cost upon request. If you wish to receive a copy of the Form 10-K, you may contact Jason Blacksberg, Corporate Secretary, at Acadia Realty Trust, 411 Theodore Fremd Avenue, Suite 300, Rye, NY 10580. You may also call (914) 288-8100 to request a copy of the Form 10-K. Information included or referred to on our website is not incorporated by reference in or otherwise a part of this Form 10-K.
CODE OF ETHICS AND WHISTLEBLOWER POLICIES
Our board of Trusteestrustees (the “Board of Trustees”), adopted a Code of Business Conduct and Ethics applicable to all employees, as well as a “Whistleblower Policy.” Copies of these documents are available in the Investor Information section of our website. We intend towill disclose future amendments to, or waivers from (with respect to our senior executive financial officers), our Code of Ethics in the Investor Information section of our website within four business days following the date of such amendment or waiver.
ITEM 1A. | ||
RISK FACTORS. |
Set forth below are the risk factors that we believe are material to our investors. You should carefully consider these risk factors, together with all of the other information included in this Form 10-K,Report, including our consolidated financial statements and the related notes thereto, before you decide whether to make an investment in our securities. The occurrence of any of the following risks could adversely affect our business,financial condition, cash flows, results of operations, financial condition and value ofability to satisfy our Common Shares.debt service obligations and to make distributions to our shareholders. In such case, the value of our Common Shares and the trading price of our securitiesCommon Shares could decline, and you may lose all or a significant part of your investment. This section includes or refers to certain forward-looking statements. Refer to the explanation of the qualifications and limitations on such forward-looking statements discussedSee “Special Note Regarding Forward-Looking Statements” in the beginning of this Form 10-K.
The following risk factors are not exhaustive. Other sections of this reportReport may include additional factors that could adversely affect our businessfinancial condition, cash flows, results of operations, and financial performance. ability to satisfy our debt service obligations and to make distributions to our shareholders.
Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may affect our business. Investors should also refer to our quarterly reports on Form 10-Q and current reports on Form 8-K for future periods for material updates to these risk factors.
RISKS RELATED TO OUR BUSINESS AND OUR PROPERTIES
There are risks relating to investments in real estate that maycould adversely affect our incomefinancial condition, cash flows, results of operations, and cash flow.
Real property investments are subject to multiple risks. Real estate values are affected by a number of factors, including: changes in the general economic climate, local conditions (such as an oversupply of space or a reduction in demand for real estate in an area)demand), the quality and philosophy of management, competition from other available space, and the ability of the owner to provide adequate maintenance and insurance and to control variable operating costs. Retail properties, in particular, may be affected by changing perceptions of retailers or shoppers regarding the safety, convenience and attractiveness of the property and by the overall climate for the retail industry. Real estate values are also affected by such factors as government regulations, interest rate levels, the availability of financing and potential liability under, and changes in, environmental, zoning, tax and other laws. A significant portion of our income is derived from rental income from real property. Our income and cash flow would be adversely affected if we were unable to rent our vacant space to viable tenants on economically favorable terms.terms or at all. In the event of default by a tenant, we may experience delays in enforcing, as well as incur substantial costs to enforce, our rights as a landlord. In addition, certain significant expenditures associated with each equity investment (such as mortgage payments, real estate taxes and maintenance costs) are generally not reduced even though there may be a reduction in income from the investment.
We rely on revenues derived from tenants, in particular our key tenants, and a decrease in those revenues maycould adversely affect our ability to make distributions.
Revenue from our properties depends primarily on the ability of our tenants to pay the full amount of rent and other charges due under their leases on a timely basis. We derive significant revenues from a concentration of certain20 key tenants thatwhich occupy space at more than one property.property and collectively account for approximately 37.8% of our consolidated revenue. We could be adversely affected in the event of the bankruptcy or insolvency of, or a downturn in the business of, any of our key tenants, or in the event that any such tenant does not renew its leases as they expire or renews such leases at lower rental rates. See “
Anchor tenants and co-tenancy are crucial to the success of retail properties and vacated anchor space directly and indirectly affects our rental revenues.
Certain of our properties which are supported by “anchor” tenants. Anchor tenants pay a significant portion of the total rents at a property and contribute to the success of other tenants by drawing large numbers of customers to a property. Vacated anchor space not only directly reduces rental revenues, but, if not re-tenanted with a similar tenant or one with equalcomparable consumer attraction, could adversely affect the entire shopping centerrest of the property primarily through the loss of customer drawing power. This can also occur through the exercise of the right that most anchors have, to vacate and prevent re-tenanting by paying rent for the balance of the lease term (“going dark”), such as wouldthe case of the departure of a “shadow” anchor tenant that is owned by another landlord. In addition, in the event that certain anchor tenants cease to occupy a property, such an action may resultresults in a significant number of other tenants having the contractual right to terminate their leases, or pay a reduced rent based on a percentage of the tenant's sales, at the affected property, which could adversely affect the future income from such property, (“co-tenancy”).also known as “co-tenancy.” Although it may not directly reduce our rental revenues, and there are no contractual co-tenancy conditions, vacant retail space adjacent to, or even on the same block as our street and urban properties may similarly affect shopper traffic and re-tenanting activities at our properties. See “
The bankruptcy of, or a downturn in the business of, any of our major tenants or a significant number of our smaller tenants may adversely affect our financial condition, cash flows, results of operations and property values.
The bankruptcy of, or a downturn in the business of, any of our major tenants causing them to reject their leases, or to not renew their leases as they expire, or renew at lower rental rates, may adversely affect our cash flows and property values. Furthermore, the impact of vacated anchor space and the potential reduction in customer traffic may adversely impact the balance of tenants at a shopping center.
Historically and from time to time, certain of our tenants experienced financial difficulties and filed for bankruptcy protection, typically under Chapter 11 of the United States Bankruptcy Code (“Chapter 11 Bankruptcy”). Pursuant to bankruptcy law, tenants have the right to reject some or all of their leases. In the event a tenant exercises this right, the landlord generally has the right to file a claim for lost rent equal to the greater of either one year's rent (including tenant expense reimbursements) for remaining terms greater than one year, or 15% of the rent remaining under the balance of the lease term, but not to exceed three years rent. Actual amounts to be received in satisfaction of those claims will be subject to the
tenant's final bankruptcy plan and the availability of funds to pay its creditors.
We may not be able to renew current leases or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms.
Upon the expiration of current leases for space located in our properties, we may not be able to re-let all or a portion of that space, or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms. If we are unable to re-let promptly all or a substantial portion of the space located in our properties or if the rental rates we receive upon re-letting are significantly lower than current rates, our net income and ability to make expected distributions to our shareholders will be adversely affected due to the resulting reduction in revenues. There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases. See “
Item 2. Properties—Lease Expirations” in thisOur business is significantly influenced by demand for retail space generally, and a decrease in such demand may have a greater adverse effect on our business than if we owned a more diversified real estate portfolio.
A decrease in the demand for retail space, due to the economic factors discussed above or otherwise, may have a greater adverse effect on our business and financial condition than if we owned a more diversified real estate portfolio. The market for retail space has been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retailing companies and bankruptcy incidence, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets, and increasing consumer purchases through the Internet. To the extent that any of these conditions occur, they are likely to negatively affect market rents for retail space and could materially and adversely affect our financial condition, cash flows, results of operations, cash flow, the trading price of our common sharesCommon Shares and our ability to satisfy our debt service obligations and to pay distributions to our shareholders.
E-commerce can have an impact on our business because it may cause a downturn in the business of our current tenants and affect future leases.
The use of the internetInternet by retail consumers continues to gain in popularity. Thepopularity and the migration toward e-commerce is expected to continue. ThisThe increase in internetInternet sales could result in a downturn in the business of our current tenants in their “brick and mortar” locations, adversely impacting their ability to satisfy their rent obligations, and could affect the way future tenants lease space.
While we devote considerable effort and resources to analyze and respond to tenant trends, preferences and consumer spending patterns, we cannot predict with certainty what future tenants will want, what future retail spaces will look like and how much revenue will be generated at traditional “bricks and mortar” locations. If we are unable to anticipate and respond promptly to trends in the market because of the illiquid nature of real estate (See the Risk Factor entitled, “Our ability to change our portfolio is limited because real estate investments are illiquid” below), our occupancy levels and financial results could suffer.
The economic environment may cause us to lose tenants and may impair our ability to borrow money to purchase properties, refinance existing debt or finance our current development projects.
Our operations and performance depend on general economic conditions, including the health of the consumer.consumer health. The U.S. economy has historically experienced financial downturns from time to time, including a decline in consumer spending, credit tightening and high unemployment.
While we currently believe we have adequate sources of liquidity, there can be no assurance that, in the event of a financial downturn, we will be able to obtain secured or unsecured loan facilities to meet our needs, including to purchase additional properties, to complete current development projects, or to successfully refinance our properties as loans become due. To the extent that the availability of credit is limited, it would also adversely impact our notes receivable as counterparties may not be able to obtain the financing required to repay the loans upon maturity.
Certain sectors of the United StatesU. S. economy are still experiencing weakness. Over the past several years, this structural weakness has resulted in periods of high unemployment, the bankruptcy or weakened financial condition of a number of retailers, decreased consumer spending, increased home foreclosures, low consumer confidence, and reduced demand and rental rates for certain retail space. There can be no assurance that the recovery will continue. General economic factors that are beyond our control, including, but not limited to, economic recessions, decreases in consumer confidence, reductions in consumer credit availability, increasing consumer debt levels, rising energy costs, higher tax rates, continued business layoffs, downsizing and industry slowdowns, and/or rising inflation, could have a negative impact on the business of our retail tenants. In turn, this could have a material adverse effect on our business because current or prospective tenants may, among other things, (i) have difficulty paying their rent obligations as they struggle to sell goods and services to consumers, (ii) be unwilling to enter into or renew leases with us on favorable terms or at all, (iii) seek to terminate their existing leases with us or request rental concessions on such leases, or (iv) be forced to curtail operations or declare bankruptcy.
Political and economic uncertainty could have an adverse effect on our business.
We cannot predict how current political and economic uncertainty including uncertainty related to taxation, will affect our critical tenants, joint venture partners, lenders, financial institutions and general economic conditions, including the health and confidence of the consumer and the volatility of the stock market.
Political and economic uncertainty poses a risk to us in that it may cause consumers to postpone discretionary spending in response to tighter credit, reduced consumer confidence and other macroeconomic factors affecting consumer spending behavior, resulting in a downturn in the business of our tenants. In the event current political and economic uncertainty results in financial turmoil affecting the banking system and financial markets generally or significant financial service institution failures, there could be a new or incremental tightening in the credit markets, low liquidity, and extreme volatility in fixed income, credit, currency and equity markets. Each of these factors could have an adverse effect onadversely affect our business, financial condition, cash flows and operating results.
Inflation may adversely affect our financial condition, cash flows and results of operations.
Increased inflation could have a more pronounced negative impact on our mortgage and debt interest and general and administrative expenses, as these costs could increase at a rate higher than our rents. Also, inflation may adversely affect tenant leases with stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses, which could be lower than the increase in inflation at any given time. It may also limit our ability to recover all of our operating expenses. Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our average rents, and in some cases, our percentage rents, where applicable. In addition, renewals of leases or future leases may not be negotiated on current terms, in which event we may recover a smaller percentage of our operating expenses.
Many of our real estate costs are fixed, even if income from our properties decreases, which would cause a decrease in revenue.
Our financial results depend primarily on leasing space at our properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes, insurance and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the property. As a result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to fully lease our properties on favorable terms. Additionally, properties that we develop or redevelop may not produce any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with such projects until they are fully occupied.
Our ability to change our portfolio is limited because real estate investments are illiquid.
Equity investments in real estate are relatively illiquid and, therefore, our ability to change our portfolio promptly in response to changed conditions is limited, which could adversely affect our financial condition, cash flows, and results of operations and our ability to pay dividendssatisfy our debt service obligations and to make distributions.distributions to our shareholders. In addition, the Code contains restrictions on a REITs ability to dispose of properties that are not applicable to other types of real estate companies. Our Board of Trustees may establish investment criteria or limitations as it deems appropriate, but our Board of Trusteesit currently does not limit the number of properties in which we may seek to invest or on the concentration of investments in any one geographic region. As discussed under the heading “Our Board of Trustees may change our investment policy without shareholder approval” below, we could change our investment, disposition and financing policies and objectives without a vote of our shareholders, but such change may be delayed or more difficult to implement due to the illiquidity of real estate.
If we decided to employ higher leverage levels, we would be subject to increased debt service requirements and a higher risk of default on our debt obligations, which could adversely affect our financial conditions, cash flows and ability to make distributions to our shareholders. In addition, increases or changes in interest rates could cause our borrowing costs to rise and may limit our ability to refinance debt.
Although we have historically used moderate levels of leverage, if we employed higher levels of leverage, it would result in increased risk of default on our obligations and in an increase in debt service requirements, which could adversely affect our financial condition and results of operations and our ability to pay dividends and make distributions. In addition, the viability of the interest rate hedges we use is subject to the strength of the counterparties.
None of our Declaration of Trust, our bylaws or any policy statement formally adopted by our Board of Trustees limits either the total amount of indebtedness or the specified percentage of indebtedness that we may incur. Accordingly, we could become more highly leveraged, resulting in increased debt service requirements and a higher risk of default on our financial obligations and in an increase in debt service requirements.obligations. This in turn, could adversely affect our financial condition, results of operationscash flows and our ability to make distributions.
Although approximately 81.7% of our outstanding debt has fixed or effectively fixed interest rates, we also borrow funds at variable interest rates. Variable rate debt exposes us to changes in interest rates.rates, which could cause our borrowing costs to rise and may limit our ability to refinance debt. Interest expense on our variable rate debt as of December 31, 20172019 would increase by $5.4$7.5 million annually for a 100-basis-point increase in interest rates. This exposure would increase if we seek additional variable rate financing based on pricing and other commercial and financial terms.
In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee ("ARRC"), which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.
The Company has contracts indexed to LIBOR and is monitoring and evaluating the risks related to potential discontinuation of LIBOR, including transitioning contracts to a new alternative rate and any resulting value transfer that may occur. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected. In addition, uncertainty about the extent and manner of future changes may result in interest rates would cause our borrowing costsand/or payments that are higher or lower than if LIBOR were to rise and may limit our ability to refinance debt.
Competition may adversely affect our ability to purchase properties and to attract and retain tenants.
There are numerous commercial developers, real estate companies, financial institutions and other investors with greater financial resources than we have that compete with us in seeking properties for acquisition and tenants who will lease space in our properties. Our competitors include other REITs, financial institutions, private funds, insurance companies, pension funds, private companies, family offices, sovereign wealth funds and individuals. This competition may result in a higher cost for properties than we wish to pay. In addition, retailers at our properties (both in our Core Portfolio and in the portfolios of the Funds) face increasing competition from outlet malls, discount shopping clubs, e-commerce, direct mail and telemarketing, which could (i) reduce rents payable to us and (ii) reduce our ability to attract and retain tenants at our properties leading to increased vacancy rates at our properties.
We could be adversely affected by poor market conditions in the markets where our properties are geographically concentrated.
Our performance depends on the economic conditions in markets in whichwhere our properties are geographically concentrated. We have significant exposure to the greater New York and Chicago metropolitan regions, from which we derive 34%36.2% and 27%27.6% of the annual base rents within our Core Portfolio, respectively, and 34%21.0% and 6%3.5% of annual base rents within our Funds, respectively. Our operating results could be adversely affected if market conditions, such as an oversupply of space or a reduction in demand for real estate, occur in these areas occur.
We have pursued, and may in the future continue to pursue extensive growth opportunities, including investing in new markets, which may result in significant demands on our operational, administrative and financial resources.
We are pursuing extensive growth opportunities, some of which have been, and in the future may be, in locations in which we have not historically invested. This expansion places significant demands on our operational, administrative and financial resources. The continued growth of our real estate portfolio can be expected to continue to place a significant strain on our resources. Our future performance will depend in part on
our ability to successfully attract and retain qualified management personnel to manage the growth and operations of our business. In addition, the acquired properties may fail to operate at expected levels due to the numerous factors that may affect the value of real estate. There can be no assurance that we will have sufficient resources to identify and manage the newly acquired properties.
Our inability to raise capital for ournew Funds or to carry out our growth strategy could adversely affect our financial condition, cash flows and results of operations.
Our earnings growth strategy is based on the acquisition and development of additional properties, including acquisitions of core properties through our Operating Partnership and our high return investment programs through our Fund platform. The consummation of any future acquisitions will be subject to satisfactory completion of our extensive valuation analysis and due diligence review and to the negotiation of definitive documentation. We cannot be sure that we will be able to implement our strategy because we may have difficulty finding new properties, obtaining necessary entitlements, negotiating with new or existing tenants or securing acceptable financing. Furthermore, if we were unable to obtain sufficient investor capital commitments in order to initiate future Funds, this would adversely impact our current growth strategy.
Acquisitions of additional properties entail the risk that investments will fail to perform in accordance with expectations, including operating and leasing expectations. In the context of our business plan, “development” generally means an expansion or renovation of an existing property. Development is subject to numerous risks, including risks of construction delays, cost overruns or uncontrollable events that may increase project costs, new project commencement risks such as the receipt of zoning, occupancy and other required governmental approvals and permits, and incurring development costs in connection with projects that are not pursued to completion.
Historically, a component of our growth strategy has been through private-equity type investments made through our RCP Venture. TheseVenture, which have included investments in operating retailers. The inability of thesuch retailers to operate profitably would have an adverse impact on income realized from these investments. Through our investments in joint ventures we have also invested in operating businesses that have operational risk in addition to the risks associated with real estate investments, including among other risks, human capital issues, adequate supply of product and material, and merchandising issues.
Furthermore, if we were unable to obtain sufficient investor capital commitments in order to initiate future Funds, this would adversely impact our current growth strategy would be adversely impacted. Because the Operating Partnership is the sole general partner or managing member of our Funds and earns promote distributions or fees for asset management, property management, construction, development, leasing and legal services, such a situation would also adversely impact the amount or ability to earn such promotes or fees.
Our development and construction activities could affect our operating results.
We intend to continue the selective development and construction of retail properties with our project at City Point currently being our largest development project (see “
As opportunities arise, we may delay construction until sufficient pre-leasing is reached and financing is in place. Our development and construction activities include risksthe risk that:
• | we may abandon development opportunities after expending resources to determine feasibility; |
• | construction costs of a project may exceed our original estimates; |
• | occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable; |
• | financing for development of a property may not be available to us on favorable terms; |
• | we may not complete construction and lease-up on schedule, resulting in increased debt service expense and construction costs, including labor and material costs; and |
• | we may not be able to obtain, or may experience delays in obtaining necessary zoning and land use approvals as well as building, occupancy and other required governmental permits and authorizations. |
In addition, the entitlement and development of real estate entails extensive approval processes, sometimes involving multiple regulatory jurisdictions. It is common for a project to require multiple approvals, permits and consents from U.S. federal, state and local governing and regulatory bodies. Compliance with these and other regulations and standards is time intensive and costly and may require additional long range infrastructure review and approvals which can add to project cost. In addition, development of properties containing delineated wetlands may require one or more permits from the U.S. federal government and/or state and
At times, we may also be required to use unionized construction workers or to pay the prevailing wage in a jurisdiction to unionized workers. Due to the highly labor intensive and price competitive nature of the construction business, the cost of unionization and/or prevailing wage requirements for new developments or redevelopments could be substantial. Unionization and prevailing wage requirements could adversely affect a project’s profitability. In addition, union activity or a union workforceworkers, which could increase projects costs and the risk of a strike, which would adversely affect our ability to meet ourthereby affecting construction timetables, which could adversely affect our reputation and our results of operations.timelines.
Additionally, the time frame required for development, construction and lease-up of these properties means that we may not realize a significant cash return for several years. If any of the above events occur, the development of properties may hinder our growth and could have an adverse effect on our financial condition, cash flows and results of operations and cash flows.operations. In addition, new development activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management.
Developments and acquisitions may fail to perform as expected which could adversely affect our results of operations.
Our investment strategy includes the development and acquisition of retail properties in supply constrained markets in densely populated areas with high average household incomes and significant barriers to entry. The acquisition of such properties is highly competitive. Additionally, the development and acquisition of such properties entails risks that include the following, any of which could adversely affect our financial condition, cash flows, results of operations, and our ability to meet our obligations:
• | The property may fail to achieve the returns we have projected, either temporarily or for extended periods; |
• | We may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the properties we identify; |
• | We may not be able to integrate an acquisition into our existing operations successfully; |
• | Properties we redevelop or acquire may fail to achieve the occupancy or rental rates we project or within the time frames we project |
• | Our pre-acquisition evaluation of the physical condition of each new investment may not detect certain defects or identify necessary repairs until after the property is acquired, which could significantly increase our total acquisition costs or decrease cash flow from the property; and |
• | Our investigation of a property or building prior to our acquisition, and any representations we may receive from the seller of such building or property, may fail to reveal various liabilities, which could reduce the cash flow from the property or increase our acquisition cost. |
We operate through a partnership structure, which could have an adverse effect on our ability to manage our assets.
Our primary property-owning vehicle is the Operating Partnership, of which we are the general partner. Our acquisition of properties through the Operating Partnership in exchange for interests in the Operating Partnership may permit certain tax deferral advantages to limited partners who contribute properties to the Operating Partnership. Since properties contributed to the Operating Partnership may have unrealized gains attributable to the differences between the fair market value and adjusted tax basis in such properties prior to contribution, the sale of such properties could cause adverse tax consequences to the limited partners who contributed such properties. Although we, as the general partner of the Operating Partnership, generally have no obligation to consider the tax consequences of our actions to any limited partner, we own several properties subject to material contractual restrictions for varying periods of time designed to minimize the adverse tax consequences to the limited partners who contributed such properties. Such restrictions may result in significantly reduced flexibility to manage some of our assets.
We currently have an exclusive obligation to seek investments for our Funds, which may prevent us from making acquisitions directly.
Under the terms of the organizational documents of our current Fund,Funds, our primary goal is to seek investments for the Fund,Funds, subject to certain exceptions. We may only pursue opportunities to acquire retail properties directly through the Operating Partnership if (i) the ownership of the acquisition opportunity by the FundFunds would create a material conflict of interest for us; (ii) we require the acquisition opportunity for a “like-kind” exchange; (iii) the consideration payable for the acquisition opportunity is our Common Shares, OP Units or other securities or (iv) the investment is outside the parameters of our investment goals for the FundFunds (which, in general, seeksseek more opportunistic level returns). As a result, we may not be able to make attractive acquisitions directly and instead may only receive a minority interest in such acquisitions through the Fund.
Our joint venture investments carry additional risks not present in our direct investments.
Partnership or joint venture investments may involve risks not otherwise present for investments made solely by us, including the possibility that our partner or co-venturer might become bankrupt, and that our partner or co-venturer may take action contrary to our instructions, requests, policies or objectives, including with respect to maintaining our qualification as a REIT. Actions by, or disputes with, joint venture partners might result in subjecting properties owned by the joint venture to additional risks. Other risks of joint venture investments include impasse on decisions, such as a sale, because neither we nor a joint venture partner may have full control over the joint venture. Also, there is no limitation under our organizational documents as to the amount of our funds that may be invested in joint ventures.
Additionally, our partners or co-venturers may engage in malfeasance in spite of our efforts to perform a high level of due diligence on them. Such acts may or may not be covered by insurance. Finally, partners and co-venturers may engage in illegal activitiesthem, which may jeopardize an investment and/or subject us to reputational risk.
Any disputes that may arise between joint venture partners and us may result in potentially costly litigation or arbitration that would increase our expenses and prevent our officers and/or trustees from focusing their time and effort on our business. Consequently, actions by or disputes with joint venture partners might result in subjecting properties owned by the joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party joint venture partners.
Historically, Fund I, Mervyns I and Fund III have provided Promote income. There can be no assurance that our joint ventures will continue to operate profitably and thus provide additional Promote income in the future. These factors could limit the return that we receive from such investments or cause our cash flows to be lower than our estimates. In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture.
Our structured financing portfolio is subject to specific risks relating to the structure and terms of the instruments and the underlying collateral.
We invest in notes receivables and preferred equity investments that are collateralized by the underlying real estate, a direct interest or the borrower’s ownership interest in the entities that own the properties and/or by the borrower’s personal guarantee. The underlying assets are sometimes subordinate in payment and collateral to more senior loans. The ability of a borrower or entity to make payments on these investments may be subject to the senior lender and/or the performance of the underlying real estate. In the event of a default by the borrower or entity on its senior loan, our investment will only be satisfied after the senior loan and we may not be able to recover the full value of the investment. In the event of a bankruptcy of an entity in which we have a preferred equity interest, or in which the borrower has pledged its interest, the assets of the entity may not be sufficient to satisfy our investment.
Our real estate assets may be subject to impairment charges.
We periodically assess whether there are any indicators that the value of our real estate assets and other investments may be impaired. A property’s value is considered to be impaired only if the estimated aggregate future undiscounted property cash flows are less than the carrying value of the property. In our estimate of cash flows, we consider factors such as trends and prospects and the effects of demand and competition on expected future operating income. If we are evaluating the potential sale of an asset or redevelopment alternatives, the undiscounted future cash flows consider the most likely course of action as of the balance sheet date based on current plans, intended holding periods and available market information. We are required to make subjective assessments as to whether there are impairments in the value of our real estate assets and other investments. Impairment charges have an immediate direct impact on our earnings. There can be no assurance that we will not take additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our operating results in the period in which the charge is taken.
Market factors could have an adverse effect on our share price and our ability to access the public equity markets.
The market price of our Common Shares or other securities may fluctuate significantly in response to many factors, including:
• | ||
actual or anticipated variations in our operating results, funds from operations, cash flows or liquidity; |
• | changes in our earnings estimates or those of analysts; |
• | changes in our dividend policy; |
• | impairment charges affecting the carrying value of one or more of our Properties or other assets; |
• | publication of research reports about us, the retail industry or the real estate industry generally; |
• | increases in market interest rates that lead purchasers of our securities to seek higher dividend or interest rate yields; |
• | changes in market valuations of similar companies; |
• | adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt in the near and medium term and our ability to refinance such debt and the terms thereof or our plans to incur additional debt in the future; |
• | additions or departures of key management personnel; |
• | actions by institutional security holders; |
• | proposed or adopted regulatory or legislative changes or developments; |
• | speculation in the press or investment community; |
• | the occurrence of any of the other risk factors included in, or incorporated by reference in, this report; and |
• | general market and economic conditions. |
Many of the factors listed above are beyond our control. Those factors may cause the market price of our Common Shares or other securities to decline significantly, regardless of our financial performance, and condition and prospects. It is impossible toWe may not provide any assurance that the market price of our Common Shares or other securities will not fall in the future, and it may be difficult for holders to sell such securities at prices they find attractive, or at all. A decline in our share price, as a result of this or other market factors, could unfavorably impact our ability to raise additional equity in the public markets.
RISKS RELATED TO STRUCTURE AND MANAGEMENT
The loss of a key executive officermanagement members could have an adverse effect on us.
Our success depends on the contribution of key management members. The loss of the services of Kenneth F. Bernstein, President and Chief Executive Officer, or other key executive-level employees could have a material adverse effect on our business, financial condition and results of operations. Management continues to strengthen our team and provide forwe have CEO succession planning in place, but there can be no assurance that such planning will be capable of implementation or of the success of such efforts.that our efforts will be successful. We have obtained key-man life insurance for Mr. Bernstein. In addition, we have entered into an employment agreement with Mr. Bernstein; however, the employment agreement can be terminated by Mr. Bernstein at his discretion. We have not enteredand into employmentseverance agreements with other key executive-level employees.
Our Board of Trustees may change our investment policy or objectives without shareholder approval.
Our Board of Trustees may determine to change our investment and financing policies or objectives, our growth strategy and our debt, capitalization, distribution, acquisition, disposition and operating policies. Our Board of Trustees may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number of properties in which we may seek to invest or on the concentration of investments in any one geographic region. Although our Board of Trustees has no present intention to revise or amend our strategies and policies, it may do so at any time without a vote by our shareholders. Accordingly, the results of decisions made by our Board of Trustees as implemented by management may or may not serve the interests of all of our shareholders and could adversely affect our financial condition, orcash flows, results of operations, including ourand ability to distribute cashsatisfy our debt service obligations and to shareholders or qualify as a REIT.
Distribution requirements imposed by law limit our operating flexibility.
To maintain our status as a REIT for Federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for each calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to Federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year; (ii) 95% of our capital gain net income for that year; and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Internal Revenue Code and to minimize exposure to Federal income and excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our income as well as required debt amortization payments and the capitalization of certain expenses could require us to borrow funds on a short-term basis to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT. The distribution requirements also severely limit our ability to retain earnings to acquire and improve properties or retire outstanding debt.
Concentration of ownership by certain investors.
As of December 31, 2017,2019, five institutional shareholders own 5% or more individually, and 59.5%54.5% in the aggregate, of our Common Shares. While this ownership concentration does not jeopardize our qualification as a REIT (due to certain “look-through provisions”), a significant concentration of ownership may allow an investor or a group of investors to exert a greater influence over our management and affairs and may have the effect of delaying, deferring or preventing a change in control of us.
Restrictions on a potential change of control could prevent changes that would be beneficial to our shareholders.
Our Board of Trustees is authorized by our Declaration of Trust to establish and issue one or more series of preferred shares of beneficial interest without shareholder approval. We have not established any series of preferred shares other than the Series A and Series C Preferred OP Units in the Operating Partnership Units.Partnership. However, the establishment and issuance of a class or series of preferred shares could make a change of control of us that could be in the best interests of the shareholders more difficult. In addition, we have entered into an employment agreement with our Chief Executive Officer and severance agreements are in place with certain of our executives, which provide that, upon the occurrence of a change in control of us and either the termination of their employment without cause (as defined) or their resignation for good reason (as defined), thosesuch executive officers would be entitled to certain termination or severance payments made by us (which may include a lump sum payment equal to defined percentages of annual salary and prior years' average bonuses, paid in accordance with the terms and conditions of the respective agreement), which could deter a change of control of us that could be in the best interests of our shareholders generally.
Certain provisions of Maryland law may limit the ability of a third party to acquire control of our Company.
Under the provisions of the Maryland General Corporation Law as amended, which we refer to as the “MGCL,” as(the “MGCL”) applicable to REITs, certain “businessbusiness combinations,” including certain mergers, consolidations, share exchanges and asset transfers and certain issuances and reclassifications of equity securities, between a Maryland REIT and any person who beneficially owns 10% or more of the voting power of the REIT's outstanding voting shares or an affiliate or an associate, as defined in the MGCL, of the REIT who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding shares of beneficial interest of the REIT which we refer to as an(an “interested shareholder,”shareholder”) or an affiliate of the interested shareholder, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. After that five-year period, any such business combination must be recommended by the board of trustees of the REIT and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the REIT and (ii) two-thirds of the votes entitled to be cast by holders of voting shares of the REIT other than shares held by the interested shareholder with whom, or with whose affiliate, the business combination is to be effected or held by an affiliate or associate of the interested shareholder, unless, among other conditions, the REIT's common shareholders receive a minimum price, as defined in the MGCL, for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its Common Shares.
These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of trustees of the REIT before the interested shareholder becomes an interested shareholder, and a person is not an interested shareholder if the board of trustees approved in advance the transaction by which the person otherwise would have become an interested shareholder. In approving a transaction, our Board of Trustees may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board. We have not elected to opt out of the business combination statute.
The MGCL also provides that holders of “control shares” of a Maryland REIT (defined as voting shares that, when aggregated with all other shares owned by the acquirer or in respect of which the acquirer is entitled to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by the affirmative vote of holders of at least two-thirds of all the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by officers or by employees who are also trustees of the REIT. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares of beneficial interest. Our Bylaws can be amended by our Board of Trustees by majority vote, and there can be no assurance that this provision will not be amended or eliminated at any time in the future.
Additionally, Title 3, Subtitle 8 of the MGCL permits our Board of Trustees, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or Bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring or preventing a transaction or a change of control of our Company that might involve a premium to the market price of our Common Shares or otherwise be in the best interests of our shareholders. We are subject to some of these provisions (for example, a two-thirds vote requirement for removing a trustee) by provisions of our
Becoming subject to, or the potential to become subject to, these provisions of the MGCL could inhibit, delay or prevent a transaction or a change of control of our Company that might involve a premium price for our shareholders or otherwise be in our or their best interests. In addition, the provisions of our Declaration of Trust on removal of trustees and the provisions of our Bylaws regarding advance notice of shareholder nominations of trustees and other business proposals and restricting shareholder action outside of a shareholders meeting unless such action is taken by unanimous written consent could have a similar effect.
Our rights and shareholders' rights to take action against trustees and officers are limited, which could limit recourse in the event of actions not in the best interests of shareholders.
As permitted by Maryland law, our Declaration of Trust eliminates the liability of our trustees and officers to the Company and its shareholders for money damages, except for liability resulting from:
• | actual receipt of an improper benefit or profit in money, property or services; or |
• | a final judgment based upon a finding of active and deliberate dishonesty by the trustee or officer that was material to the cause of action adjudicated. |
In addition, our Declaration of Trust authorizes, and our Bylaws obligate, us to indemnify each present or former trustee or officer, to the maximum extent permitted by Maryland law, who is made a party to any proceeding because of his or her service to our Company in those or certain other capacities. As part of these indemnification obligations, we may be obligated to fund the defense costs incurred by our trustees and officers.
Outages, computer viruses and similar events could disrupt our operations.
We rely on information technology networks and systems, some of which are owned and operated by third parties, to process, transmit and store electronic information. Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist or cyber-attacks and similar events. Despite the implementation of network security measures, our systems and those of third parties on which we rely may also be vulnerable to computer viruses and similar disruptions. If we or the third parties on whom we rely are unable to prevent such outages and breaches, our operations could be disrupted.
Increased Information Technology (“IT”) security threats and more sophisticated computer crime could pose a risk to our systems, networks and services.
Cyber incidents can result from deliberate attacks or unintentional events. There have been an increased number of significant cyber-attacks targeted at the retail, insurance, financial and banking industries that include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as by causing denial-of-service attacks on websites. Cyber-attacks by third parties or insiders utilize techniques that range from highly sophisticated efforts to electronically circumvent network security or overwhelm a website to more traditional intelligence gathering and social engineering aimed at obtaining information necessary to gain access.
Increased global IT security threats are more sophisticated and targeted computer crimes pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. The open nature of interconnected technologies may allow for a network or Web outage or a privacy breach that reveals sensitive data or transmission of harmful/malicious code to business partners and clients. TheBecause the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures.
Cyber-attacks may causeresult in substantial financial and reputational cost, and other negative consequences, which may include,including but are not limited to:
• | ||
Compromising of confidential information; |
• | Manipulation and destruction of data; |
• | Loss of trade secrets; |
• | System downtimes and operational disruptions; |
• | Remediation costs that may include liability for stolen assets or information and repairing system damage, as well as incentives offered to customers, tenants or other business partners in an effort to maintain the business relationships; |
• | Loss of revenues resulting from unauthorized use of proprietary information; |
• | Cost to deploy additional protection strategies, training employees and engaging third party experts and consultants; |
• | Reputational damage adversely affecting investor and tenant confidence; and |
• | Costly litigation. |
While we attempt to mitigate these risks by employing a number of measures, including a dedicated IT team, employee training and background checks, maintenance of backup systems, utilization of third partythird-party service providers to provide redundancy over multiple locations, and comprehensive monitoring of our networks and systems along with purchasing cyber security insurance coverage, our systems, networks and services remain potentially vulnerable to advanced threats.
If a Third-Party Vendorthird-party vendor fails to provide agreed upon services, we may suffer losses.
We are dependent and rely on third party vendors, including Cloud providers, for redundancy of our network, system data, security and data integrity. If a vendor fails to provide services as agreed, suffers outages, business interruptions, financial difficulties or bankruptcy, we may experience service interruption, delays or loss of information. Cloud computing is dependent upon having access to an internetInternet connection in order to retrieve data. If a natural disaster, blackout or other unforeseen event were to occur that disrupted the ability to obtain an internetInternet connection, we may experience a slowdown or delay in our operations. We conduct appropriate due diligence on all services providers and restrict access, use and disclosure of personal information. We engage vendors with formal written agreements clearly defining the roles of the parties specifying privacy and data security responsibilities.
Use of social media may adversely impact our reputation and business.
There has been a significant increase in the use of social media platforms, including weblogs, social media websites and other forms of Internet-based communications, which allow individuals access to a broad audience, including our significant business constituents. The availability of information through these platforms is virtually immediate as is its impact and may be posted at any time without affording us an opportunity to redress or correct it timely. This information may be adverse to our interests, may be inaccurate and may harm our reputation, brand image, goodwill, performance, prospects or business. Furthermore, these platforms increase the risk of unauthorized disclosure of material non-public Company information.
Climate change, and catastrophic risk from natural perilsdisasters or health crises could adversely affect our properties.
Some of our current or future properties could be subject to potential natural disasters and may be impacted by climate change. To the extent climate change causes adverse changes in weather patterns, rising sea levels or other disasters. Weextreme temperatures, our properties in certain markets may acquire properties that are located in areas which are subject to natural disasters. Anybe adversely affected. Specifically, properties located in coastal regions would thereforecould be affected by any future increases in sea levels or in the frequency or severity of hurricanes and tropical storms, whether such increases are caused by global climate changeschange or other factors.
Climate change iscould have a long-term change in the statistical distributionvariety of weather patterns over periods of time that range from decadesdirect or indirect adverse effects on our properties and business, including:
• | Property damage to our retail properties; |
• | Indirect financial and operational impacts from disruptions to the operations of major tenants located in our retail properties from severe weather, such as hurricanes, floods, wildfires or other natural disasters; |
• | Increased insurance premiums and deductibles, or a decrease in or unavailability of coverage, for properties in areas subject to severe weather, such as hurricanes, floods, wildfires or other natural disasters; |
• | Increased insurance claims and liabilities; |
• | Increases in energy costs impacting operational returns; |
• | Changes in the availability or quality of water or other natural resources on which the tenant's business depends; |
• | Decreased consumer demand for products or services resulting from physical changes associated with climate change (e.g., warmer temperatures or decreasing shoreline could reduce demand for residential and commercial properties previously viewed as desirable); |
• | Incorrect long-term valuation of an equity investment due to changing conditions not previously anticipated at the time of the investment; and |
• | Economic disruptions arising from the above. |
Moreover, compliance with new laws or regulations related to millions of years. It may be a change in the average weather conditions or a change in the distribution of weather events with respect to an average, for example, greater or fewer extreme weather events. Climate change may be limited to a specific region, or may occur across the whole Earth.
Public health crises, pandemics and epidemics, such as those caused by new strains of viruses such as H5N1 (avian flu), severe acute respiratory syndrome (SARS) and, most recently, the novel coronavirus (COVID-19), are expected to increase as international travel continues to rise and could adversely impact our business by interrupting our tenants’ business, supply chains and operations. These effects can impact our personnel, physical assets, tenantstransactional activities, disrupting travel, and overall operations.
We are exposed to possible liability relating to environmental matters.
Under various Federal, state and local environmental laws, statutes, ordinances, rules and regulations, as an owner of real property, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under our property, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on us in connection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect our ability to sell or rent that property or to borrow using that property as collateral, which, in turn, could reduce our revenues and affect our ability to make distributions.
A property can also be adversely affected either through physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of any of our tenants to satisfy any obligations with respect to the property leased to that tenant, we may be required to satisfy such obligations. In addition, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease.
From time to time, in connection with the conduct of our business, and prior to the acquisition of any property from a third party or as required by our financing sources, we authorize the preparation of Phase I environmental reports and, when necessary, Phase II environmental reports, with respect to our properties. Based upon these environmental reports and our ongoing review of our properties, we are currently not aware of any environmental condition with respect to any of our properties that we believe would be reasonably likely to have a material adverse effect on us. There can be no assurance, however, that the environmental reports will reveal all environmental conditions at our properties or that the following will not expose us to material liability in the future:
• | The discovery of previously unknown environmental conditions; |
• | Changes in law; |
• | Activities of tenants; and |
• | Activities relating to properties in the vicinity of our properties. |
Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of our tenants, which could adversely affect our financial condition, orcash flows and results of operations.
Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition.
We carry comprehensive general liability, all-risk property, extended coverage, loss of rent insurance, and environmental liability on our properties, with policy specifications and insured limits customarily carried for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, we maintain a minimum of twelve months loss of rent insurance. In addition, there are certain types of losses, such as losses resulting from wars, terrorism or acts of God that generally are not insured because they are either uninsurable or not economically insurable. Should an uninsured loss or a loss in excess of insured limits occur, we could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types wouldcould adversely affect our financial condition.
Future terrorist attacks or civil unrest could harm the demand for, and the value of, our properties.
Over the past several years, a number of highly publicized terrorist acts and shootings have occurred at domestic and international retail properties. Future terrorist attacks, civil unrest and other acts of terrorism or war could harm the demand for, and the value of, our properties. Terrorist attacks could directly impact the value of our properties through damage, destruction, loss or increased security costs, and the availability of insurance for such acts may be limited or may be subject to substantial cost increases. To the extent that our tenants are impacted by future attacks, their ability to continue to honor obligations under their existing leases could be adversely affected. A decrease in retail demand could make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates. These acts might erode business and consumer confidence and spending, and might result in increased volatility in national and international financial markets and economies. Any one of these events might decrease demand for real estate, decrease or delay the occupancy of our properties, and limit our access to capital or increase our cost of raising capital.
We may from time to time be subject to litigation that maycould negatively impact our cash flow, financial condition, cash flows, results of operations and the trading price of our Common Shares.
We may from time to time be a defendant in lawsuits and regulatory proceedings relating to our business. Such litigation and proceedings may result in defense costs, settlements, fines or judgments against us, some of which may not be covered by insurance. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such litigation or proceedings. An unfavorable outcome may result in our having to pay significant fines, judgments or settlements, which, if uninsured, or if exceeding insurance coverage, could negativelyadversely impact our cash flow, financial condition, cash flows, results of operations and the trading price of our Common Shares.
Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unplanned expenditures that could adversely affect our financial condition, cash flows.
All of our properties are required to comply with the Americans with Disabilities Act or ADA.(the “ADA”). The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with
disabilities. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While the tenants to whom we lease properties are obligated by law to comply with theapplicable ADA provisions, and are typically obligated to cover costs of compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs could be adversely affected. As a result of the foregoing or if a tenant is not obligated to cover the cost of compliance, we could be required to expend funds to comply with the provisions of the ADA, which could adversely affect our financial condition, cash flows and results of operations and financial condition and our ability to make distributions to shareholders.operations. In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to the properties. We may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could have a material adverse effect on our ability to meetalso adversely affect our financial obligationscondition, cash flows and make distributions to shareholders.
RISKS RELATED TO OUR REIT STATUS
There can be no assurance we have qualified or will remain qualified as a REIT for Federal income tax purposes.
We believe that we have consistently met the requirements for qualification as a REIT for Federal income tax purposes beginning with our taxable year ended December 31, 1993, and we intend to continue to meet these requirements in the future. However, qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code, for which there may be only limited judicial or administrative interpretations. No assurance can be given that we have qualified or will remain qualified as a REIT. The Internal Revenue Code provisions and income tax regulations applicable to REITs differ significantly from those applicable to other entities. The determination of various factual matters and circumstances not entirely within our control can potentially affect our ability to continue to qualify as a REIT. In addition, no assurance can be given that future legislation, regulations, administrative interpretations or court decisions will not significantly change the requirements for qualification as a REIT or adversely affect the Federal income tax consequences of such qualification. Under current law, if we fail to qualify as a REIT, we would not be allowed a deduction for dividends paid to shareholders in computing our net taxable income. In addition, our income would be subject to tax at the regular corporate rates. Also, we could be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. Cash available for distribution to our shareholders would be significantly reduced for each year in which we do not qualify as a REIT. In that event, we would not be required to continue to make distributions. Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us, without the consent of our shareholders, to revoke the REIT election or to otherwise take action that would result in disqualification.
Legislative or regulatory tax changes could have an adverse effect on us.
There are a number of issues associated with an investment in a REIT that are related to the Federal income tax laws, including, but not limited to, the consequences of our failing to continue to qualify as a REIT. At any time, the Federal income tax laws governing REITs or the administrative interpretations of those laws may be amended or modified. Any new laws or interpretations may take effect retroactively and could adversely affect us or our shareholders. Reduced tax rates applicable to certain corporate dividends paid to most domestic noncorporate shareholders are not generally available to REIT shareholders since a REIT's income generally is not subject to corporate level tax. As a result, investment in non-REIT corporations may be viewed
On December 22, 2017, Pub. L. No. 115-97 (informally known as relatively more attractive than investment in REITs by domestic noncorporate investors. Moreover, in the event that there is a reduction in tax rates applicable to corporate dividends, or a reduction in the corporate tax rate, such views may strengthen as the perceived benefits of investing in REITs by domestic noncorporate investors may decline. The foregoing factors could adversely affect the market price of our shares.
We may be required to borrow funds or sell assets to satisfy our REIT distribution requirements.
Our cash flows may be insufficient to fund distributions required to maintain our qualification as a REIT as a result of differences in timing between the actual receipt of income and the recognition of income for U.S. Federal income tax purposes, or the effectas a result of non-deductibleour inability to currently deduct certain expenditures that we must currently pay, such as capital expenditures, payments of compensation for which Section 162(m) of the Code denies a deduction, any business interest expense that is disallowed under Section 163 (j) of the Code (unless we elect to be an “electing real property trade or business”), the creation of reserves or required amortization payments. If we do not have other funds available in these situations, we may need to borrow funds on a short-term basis or sell assets, even if the then- prevailing market conditions are not favorable for these borrowings or sales, in order to satisfy our REIT distribution requirements. Such actions could adversely affect our cash flow and results of operations.
Dividends payable by REITs generally do not qualify for reduced tax rates
.Certain qualified dividends paid by corporations to individuals, trusts and estates that are U.S. shareholders are taxed at capital gain rates, which are lower than ordinary income rates. Dividends of current and accumulated earnings and profits payable by REITs, however, are taxed at ordinary income rates as opposed to the capital gain rates. FromPursuant to the Act, from 2018 through 2025, certain REIT shareholders will be permitted to deduct 20% of ordinary REIT dividends received. Dividends payable by REITs in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof and thereafter as taxable gain. The more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs,
including us, to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which may negatively impact the trading prices of our securities.
Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our Common Shares. In order to meet these tests, we may be required to forego investments we might otherwise make and refrain from engaging in certain activities. Thus, compliance with the REIT requirements may hinder our performance.
In addition, if we fail to comply with certain asset ownership tests at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification. As a result, we may be required to liquidate otherwise attractive investments.
We have limits on ownership of our shares of beneficial interest.
For us to qualify as a REIT for Federal income tax purposes, among other requirements, not more than 50% of the value of our shares of beneficial interest may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of each taxable year, and such shares of beneficial interest must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (in each case, other than the first such year). Our Declaration of Trust includes certain restrictions regarding transfers of our shares of beneficial interest and ownership limits that are intended to assist us in satisfying these limitations, among other purposes. These restrictions and limits may not be adequate in all cases, however, to prevent the transfer of our shares of beneficial interest in violation of the ownership limitations. The ownership limits contained in our Declaration of Trust may have the effect of delaying, deferring or preventing a change of control of us.
Actual or constructive ownership of our shares of beneficial interest in excess of the share ownership limits contained in our Declaration of Trust would cause the violative transfer or ownership to be null and void from the beginning and subject to purchase by us at a price equal to the fair market value of such shares (determined in accordance with the rules set forth in our Declaration of Trust). As a result, if a violative transfer were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex and groups of related individuals or entities may be deemed a single owner and consequently in violation of the share ownership limits.
ITEM 1B. | UNRESOLVED STAFF COMMENTS. |
None.
ITEM 2. | ||
PROPERTIES. |
Retail Properties
The discussion and tables in this Item 2. include wholly-owned and partially-owned properties held through our Core Portfolio and our Funds. We define our Core Portfolio as those properties either 100% owned by, or partially owned through joint venture interests by the Operating Partnership or subsidiaries thereof, not including those properties owned through our Funds.
As of December 31, 2017,2019, there are 116123 operating properties in our Core Portfolio totaling approximately 6.35.6 million square feet of gross leasable area (“GLA”) excluding twofour properties under development.redevelopment, one property in development and one pre-stabilized property. The Core Portfolio properties are located in 12 states and the District of Columbia and primarily consist of street retail and dense suburban shopping centers. These properties are diverse in size, ranging from approximately 1,000 to 800,000 square feet and as of December 31, 2017,2019, were in total, excluding the properties that were pre-stabilized or under development, 93.5%redevelopment, 93.4% occupied.
As of December 31, 2017,2019, we owned and operated 5453 properties totaling approximately 4.27.5 million square feet of GLA in our Funds, excluding four properties under development. In addition to shopping centers, the Funds have invested in mixed-use properties, which generally include retail activities. The Fund properties are located in 1317 states and the District of Columbia and, as of December 31, 2017,2019, were in total, excluding the properties under development, 86.5%88.6% occupied.
Within our Core Portfolio and Funds, we had approximately 9001,100 retail leases as of December 31, 2017.2019. A majoritysignificant portion of our rental revenues were from national retailers and consist of rents received under long-term leases. These leases generally provide for the monthly payment of fixed minimum rent and the tenants' pro-rata share of the real estate taxes, insurance, utilities and common area maintenance of the shopping centers. CertainAn insignificant portion of our leases also provide for the payment of rent based on a percentage of a tenant's gross sales in
excess of a stipulated annual amount, either in addition to, or in place of, minimum rents. Minimum rents percentage rents and expense reimbursements accounted for approximately 97%substantially all of our total revenues for the year ended December 31, 2017.
Six of our Core Portfolio properties and twothree of our Fund properties are subject to long-term ground leases in which a third party owns and has leased the underlying land to us. We pay rent for the use of the land and are responsible for all costs and expenses associated with the building and improvements at all of these locations.
No individual property contributed in excess of 10% of our total revenues for the years ended December 31, 2017, 20162019, 2018 or 2015.2017. See
The following table sets forth more specific information with respect to each of our Core properties at December 31, 2017:
Year Acquired | Acadia's Interest | Gross Leasable Area (GLA) | In Place Occupancy | Leased Occupancy | Annualized Base Rent (ABR) | ABR/ Per Square Foot | ||||||||||||||||||||||||||||||||||||||||||||||||
Property (a) | Key Tenants |
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| Annualized Base Rent (ABR) |
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STREET AND URBAN RETAIL |
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Chicago Metro |
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664 N. Michigan Avenue | Tommy Bahama, Ann Taylor Loft | 2013 | 100.0 | % | 18,141 | 100.0 | % | 100.0 | % | $ | 4,597,909 | $ | 253.45 |
| Tommy Bahama, Ann Taylor Loft |
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| 2013 |
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| 100.0 | % |
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| 18,141 |
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| 100.0 | % |
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| $ | 4,845,848 |
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| $ | 267.12 |
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840 N. Michigan Avenue | H & M, Verizon Wireless | 2014 | 88.4 | % | 87,135 | 100.0 | % | 100.0 | % | 7,673,433 | 88.06 |
| H & M, Verizon Wireless |
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| 2014 |
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| 88.4 | % |
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| 87,135 |
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| 8,313,164 |
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| 95.41 |
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Rush and Walton Streets Collection - 5 properties | Lululemon, BHLDN, Marc Jacobs | 2011/12 | 100.0 | % | 32,501 | 85.3 | % | 85.3 | % | 5,854,996 | 211.19 | |||||||||||||||||||||||||||||||||||||||||||
Rush and Walton Streets Collection (6 properties) |
| Lululemon, BHLDN, Reformation, Sprinkles |
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| 40,210 |
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| 81.4 | % |
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| 81.4 | % |
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| 5,209,839 |
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| 159.23 |
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651-671 West Diversey | Trader Joe's, Urban Outfitters | 2011 | 100.0 | % | 46,259 | 100.0 | % | 100.0 | % | 2,008,816 | 43.43 |
| Trader Joe's, Urban Outfitters |
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| 46,259 |
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| 2,037,056 |
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Clark Street and W. Diversey Collection - 3 properties | Ann Taylor, Akira | 2011/12 | 100.0 | % | 23,531 | 91.3 | % | 91.3 | % | 1,244,789 | 57.94 | |||||||||||||||||||||||||||||||||||||||||||
Halsted and Armitage Collection - 9 properties | Club Monaco | 2011/12 | 100.0 | % | 45,151 | 75.9 | % | 75.9 | % | 1,235,966 | 36.07 | |||||||||||||||||||||||||||||||||||||||||||
North Lincoln Park Chicago Collection - 6 properties | Forever 21, Aldo, Carhartt | 2011/14 | 100.0 | % | 50,961 | 85.0 | % | 85.0 | % | 1,733,715 | 40.02 | |||||||||||||||||||||||||||||||||||||||||||
Clark Street and W. Diversey Collection (3 properties) |
| Ann Taylor, Starbucks |
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| 23,531 |
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| 697,459 |
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Halsted and Armitage Collection (12 properties) |
| Serena and Lily, Bonobos, Allbirds Warby Parker, Marine Layer, Kiehl's |
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| 2011 2012 2019 |
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| 51,104 |
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North Lincoln Park Chicago Collection (6 properties) |
| Champion, Carhartt |
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State and Washington | H & M, Nordstrom Rack | 2016 | 100.0 | % | 78,819 | 100.0 | % | 100.0 | % | 2,969,482 | 37.67 |
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151 N. State Street | Walgreens | 2016 | 100.0 | % | 27,385 | 100.0 | % | 100.0 | % | 1,430,000 | 52.22 |
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| 27,385 |
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North and Kingsbury | Old Navy, Pier 1 Imports | 2016 | 100.0 | % | 41,700 | 100.0 | % | 100.0 | % | 1,608,789 | 38.58 |
| Old Navy, Pier 1 Imports |
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Concord and Milwaukee | — | 2016 | 100.0 | % | 13,105 | 87.8 | % | 87.8 | % | 355,976 | 30.94 |
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California and Armitage | — | 2016 | 100.0 | % | 18,275 | 70.6 | % | 70.6 | % | 612,519 | 47.47 |
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| 621,266 |
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Roosevelt Galleria | Petco, Vitamin Shoppe | 2015 | 100.0 | % | 37,995 | 63.4 | % | 63.4 | % | 701,982 | 29.14 |
| Petco, Vitamin Shoppe |
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| 37,995 |
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| 47.7 | % |
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| 47.7 | % |
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| 604,179 |
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| 33.33 |
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Sullivan Center | Target, DSW | 2016 | 100.0 | % | 176,181 | 98.6 | % | 100.0 | % | 6,444,079 | 37.10 |
| Target, DSW |
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| 176,181 |
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| 98.6 | % |
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| 98.6 | % |
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| 6,854,811 |
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| 39.45 |
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|
|
|
|
| 709,713 |
|
|
| 89.7 | % |
|
| 90.8 | % |
| $ | 39,304,158 |
|
| $ | 61.77 |
| ||||||||||||||||||||||||
New York Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Soho Collection (10 properties) |
| Paper Source, Faherty, ALC Stone Island, Taft, Frame, Theory |
|
| 2011 2014 2019 |
|
| 100.0 | % |
|
| 33,553 |
|
|
| 78.6 | % |
|
| 89.9 | % |
|
| 8,992,661 |
|
|
| 341.03 |
| |||||||||||||||||||||||||
5-7 East 17th Street |
| Union Park Events |
|
| 2008 |
|
| 100.0 | % |
|
| 11,467 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,300,014 |
|
|
| 113.37 |
| |||||||||||||||||||||||||
200 West 54th Street |
| Stage Coach Tavern |
|
| 2007 |
|
| 100.0 | % |
|
| 5,777 |
|
|
| 77.8 | % |
|
| 77.8 | % |
|
| 1,921,520 |
|
|
| 427.29 |
| |||||||||||||||||||||||||
61 Main Street |
|
| — |
|
| 2014 |
|
| 100.0 | % |
|
| 3,470 |
|
|
| — | % |
|
| 100.0 | % |
|
| — |
|
|
| — |
| ||||||||||||||||||||||||
181 Main Street |
| TD Bank |
|
| 2012 |
|
| 100.0 | % |
|
| 11,350 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 968,387 |
|
|
| 85.32 |
| |||||||||||||||||||||||||
4401 White Plains Road |
| Walgreens |
|
| 2011 |
|
| 100.0 | % |
|
| 12,964 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 625,000 |
|
|
| 48.21 |
| |||||||||||||||||||||||||
Bartow Avenue |
|
| — |
|
| 2005 |
|
| 100.0 | % |
|
| 14,590 |
|
|
| 66.6 | % |
|
| 66.6 | % |
|
| 324,007 |
|
|
| 33.33 |
| ||||||||||||||||||||||||
239 Greenwich Avenue |
| Betteridge Jewelers |
|
| 1998 |
|
| 75.0 | % |
|
| 16,553 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,641,124 |
|
|
| 99.14 |
| |||||||||||||||||||||||||
252-256 Greenwich Avenue |
| Madewell, Jack Wills, Blue Mercury |
|
| 2014 |
|
| 100.0 | % |
|
| 7,986 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,350,370 |
|
|
| 169.09 |
| |||||||||||||||||||||||||
2914 Third Avenue |
| Planet Fitness |
|
| 2006 |
|
| 100.0 | % |
|
| 40,320 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 985,972 |
|
|
| 24.45 |
| |||||||||||||||||||||||||
868 Broadway |
| Dr. Martens |
|
| 2013 |
|
| 100.0 | % |
|
| 2,031 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 790,705 |
|
|
| 389.32 |
| |||||||||||||||||||||||||
313-315 Bowery (b) |
| John Varvatos, Patagonia |
|
| 2013 |
|
| 100.0 | % |
|
| 6,600 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 479,160 |
|
|
| 72.60 |
| |||||||||||||||||||||||||
120 West Broadway |
| HSBC Bank |
|
| 2013 |
|
| 100.0 | % |
|
| 13,838 |
|
|
| 79.8 | % |
|
| 100.0 | % |
|
| 1,971,384 |
|
|
| 178.59 |
|
Property (a) |
| Key Tenants |
|
| Year Acquired |
| Acadia's Interest |
|
| Gross Leasable Area (GLA) |
|
| In Place Occupancy |
|
| Leased Occupancy |
|
| Annualized Base Rent (ABR) |
|
| ABR/ Per Square Foot |
| |||||||
2520 Flatbush Avenue |
| Bob's Disc. Furniture, Capital One |
|
| 2014 |
|
| 100.0 | % |
|
| 29,114 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,163,976 |
|
|
| 39.98 |
| |
991 Madison Avenue |
| Vera Wang, Gabriella Hearst |
|
| 2016 |
|
| 100.0 | % |
|
| 7,513 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 3,046,736 |
|
|
| 405.53 |
| |
Shops at Grand |
| Stop & Shop (Ahold) |
|
| 2014 |
|
| 100.0 | % |
|
| 99,685 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 3,332,491 |
|
|
| 33.43 |
| |
Gotham Plaza |
| Bank of America, Footlocker |
|
| 2016 |
|
| 49.0 | % |
|
| 25,927 |
|
|
| 58.6 | % |
|
| 58.6 | % |
|
| 1,067,395 |
|
|
| 70.25 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| 342,738 |
|
|
| 91.1 | % |
|
| 94.1 | % |
|
| 29,960,902 |
|
|
| 95.90 |
|
San Francisco Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
555 9th Street |
| Bed, Bath & Beyond, Nordstrom Rack |
|
| 2016 |
|
| 100.0 | % |
|
| 148,832 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 6,219,355 |
|
|
| 41.79 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| 148,832 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 6,219,355 |
|
|
| 41.79 |
|
Los Angeles Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Melrose Place Collection |
| The Row, Chloe, Oscar de la Renta |
|
| 2019 |
|
| 100.0 | % |
|
| 14,000 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 2,365,606 |
|
|
| 168.97 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| 14,000 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 2,365,606 |
|
|
| 168.97 |
|
District of Columbia Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1739-53 & 1801-03 Connecticut Avenue |
| Ruth Chris Steak- house, TD Bank |
|
| 2012 |
|
| 100.0 | % |
|
| 20,669 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,359,986 |
|
|
| 65.80 |
| |
Rhode Island Place Shopping Center |
| Ross Dress for Less |
|
| 2012 |
|
| 100.0 | % |
|
| 57,667 |
|
|
| 89.1 | % |
|
| 93.4 | % |
|
| 1,605,057 |
|
|
| 31.24 |
| |
M Street and Wisconsin Corridor (26 Properties) (c) |
| Lululemon, Sephora, The Reformation |
|
| 2011 2016 2019 |
|
| 24.9 | % |
|
| 244,709 |
|
|
| 90.8 | % |
|
| 94.2 | % |
|
| 16,463,715 |
|
|
| 74.08 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| 323,045 |
|
|
| 91.1 | % |
|
| 94.4 | % |
|
| 19,428,758 |
|
|
| 66.01 |
|
Boston Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
330-340 River Street |
| Whole Foods |
|
| 2012 |
|
| 100.0 | % |
|
| 54,226 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,243,517 |
|
|
| 22.93 |
| |
165 Newbury Street |
| Starbucks |
|
| 2016 |
|
| 100.0 | % |
|
| 1,050 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 277,719 |
|
|
| 264.49 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| 55,276 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,521,236 |
|
|
| 27.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Street and Urban Retail |
|
|
|
|
|
|
|
|
|
|
|
| 1,593,604 |
|
|
| 91.7 | % |
|
| 93.5 | % |
| $ | 98,800,015 |
|
| $ | 67.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadia Share Total Street and Urban Retail |
|
|
|
|
|
|
|
|
|
|
|
| 1,382,320 |
|
|
| 92.1 | % |
|
| 93.7 | % |
| $ | 84,810,177 |
|
| $ | 66.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBURBAN PROPERTIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Jersey |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketplace of Absecon |
| Rite Aid, Dollar Tree |
|
| 1998 |
|
| 100.0 | % |
|
| 104,556 |
|
|
| 84.1 | % |
|
| 84.1 | % |
| $ | 1,372,830 |
|
| $ | 15.61 |
| |
60 Orange Street |
| Home Depot |
|
| 2012 |
|
| 98.0 | % |
|
| 101,715 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 730,000 |
|
|
| 7.18 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Village Commons Shopping Center |
|
| — |
|
| 1998 |
|
| 100.0 | % |
|
| 87,128 |
|
|
| 98.1 | % |
|
| 98.1 | % |
|
| 2,795,940 |
|
|
| 32.72 |
|
Branch Plaza |
| LA Fitness, The Fresh Market |
|
| 1998 |
|
| 100.0 | % |
|
| 123,345 |
|
|
| 94.2 | % |
|
| 94.2 | % |
|
| 3,176,630 |
|
|
| 27.34 |
| |
Amboy Center |
| Stop & Shop (Ahold) |
|
| 2005 |
|
| 100.0 | % |
|
| 63,290 |
|
|
| 80.9 | % |
|
| 89.9 | % |
|
| 1,683,453 |
|
|
| 32.89 |
| |
LA Fitness |
| LA Fitness |
|
| 2007 |
|
| 100.0 | % |
|
| 55,000 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,485,287 |
|
|
| 27.01 |
|
Year Acquired | Acadia's Interest | Gross Leasable Area (GLA) | In Place Occupancy | Leased Occupancy | Annualized Base Rent (ABR) | ABR/ Per Square Foot | ||||||||||||||||||
Property (a) | Key Tenants | |||||||||||||||||||||||
New York Metro | ||||||||||||||||||||||||
Soho Collection - 4 properties | Paper Source, Kate Spade, 3x1 Jeans | 2011/14 | 100.0 | % | 12,511 | — | 82.4 | % | — | 82.4 | % | — | 3,157,177 | 306.25 | ||||||||||
5-7 East 17th Street | Union Fare | 2008 | 100.0 | % | 11,467 | 100.0 | % | 100.0 | % | 1,300,014 | 113.37 | |||||||||||||
200 West 54th Street | Stage Coach Tavern | 2007 | 100.0 | % | 5,777 | 77.8 | % | 77.8 | % | 1,941,814 | 432.04 | |||||||||||||
61 Main Street | — | 2014 | 100.0 | % | 3,400 | — | % | — | % | — | — | |||||||||||||
181 Main Street | TD Bank | 2012 | 100.0 | % | 11,350 | 100.0 | % | 100.0 | % | 870,274 | 76.68 | |||||||||||||
4401 White Plains Road | Walgreens | 2011 | 100.0 | % | 12,964 | 100.0 | % | 100.0 | % | 625,000 | 48.21 | |||||||||||||
Bartow Avenue | Mattress Firm | 2005 | 100.0 | % | 14,590 | 100.0 | % | 100.0 | % | 485,495 | 33.28 | |||||||||||||
239 Greenwich Avenue | Betteridge Jewelers | 1998 | 75.0 | % | 16,553 | 100.0 | % | 100.0 | % | 1,546,912 | 93.45 | |||||||||||||
252-256 Greenwich Avenue | Madewell, Jack Wills | 2014 | 100.0 | % | 7,986 | 71.0 | % | 71.0 | % | 1,027,271 | 181.17 | |||||||||||||
2914 Third Avenue | Planet Fitness | 2006 | 100.0 | % | 40,320 | 100.0 | % | 100.0 | % | 963,001 | 23.88 | |||||||||||||
868 Broadway | Dr. Martens | 2013 | 100.0 | % | 2,031 | 100.0 | % | 100.0 | % | 745,315 | 366.97 | |||||||||||||
313-315 Bowery (b) | John Varvatos, Patagonia | 2013 | 100.0 | % | 6,600 | 100.0 | % | 100.0 | % | 479,160 | 72.60 | |||||||||||||
120 West Broadway | HSBC Bank | 2013 | 100.0 | % | 13,838 | 100.0 | % | 100.0 | % | 2,255,814 | 163.02 | |||||||||||||
2520 Flatbush Avenue | Bob's Discount Furniture, Capital One | 2014 | 100.0 | % | 29,114 | 100.0 | % | 100.0 | % | 1,064,374 | 36.56 | |||||||||||||
991 Madison Avenue | Vera Wang, Perrin Paris | 2016 | 100.0 | % | 7,513 | 65.6 | % | 65.6 | % | 1,553,292 | 315.16 | |||||||||||||
Shops at Grand | Stop & Shop (Ahold) | 2014 | 100.0 | % | 99,975 | 92.7 | % | 92.7 | % | 2,873,056 | 31.00 | |||||||||||||
Gotham Plaza | Bank of America, Children's Place | 2016 | 49.0 | % | 26,182 | 68.6 | % | 68.6 | % | 1,064,361 | 59.26 | |||||||||||||
San Francisco Metro | ||||||||||||||||||||||||
City Center | City Target, Best Buy | 2015 | 100.0 | % | 204,648 | 98.1 | % | 98.1 | % | 7,759,488 | 38.65 | |||||||||||||
555 9th Street | Bed, Bath & Beyond, Nordstrom Rack | 2016 | 100.0 | % | 148,832 | 100.0 | % | 100.0 | % | 6,105,614 | 41.02 | |||||||||||||
District of Columbia Metro | ||||||||||||||||||||||||
1739-53 & 1801-03 Connecticut Avenue | Ruth Chris Steakhouse, TD Bank | 2012 | 100.0 | % | 20,669 | 100.0 | % | 100.0 | % | 1,266,138 | 61.26 | |||||||||||||
Rhode Island Place Shopping Center | Ross Dress for Less | 2012 | 100.0 | % | 57,667 | 45.5 | % | 93.4 | % | 1,246,065 | 47.49 | |||||||||||||
M Street and Wisconsin Corridor - 25 Properties (c) | Lululemon, North Face, Coach | 2011/16 | 25.4 | % | 241,182 | 91.5 | % | 91.5 | % | 15,168,759 | 68.74 | |||||||||||||
Boston Metro | ||||||||||||||||||||||||
330-340 River Street | Whole Foods | 2012 | 100.0 | % | 54,226 | 100.0 | % | 100.0 | % | 1,200,045 | 22.13 | |||||||||||||
165 Newbury Street | Starbucks | 2016 | 100.0 | % | 1,050 | 100.0 | % | 100.0 | % | 261,777 | 249.31 | |||||||||||||
Total Street and Urban Retail | 1,747,584 | 92.4 | % | 94.2 | % | 93,432,667 | 57.86 | |||||||||||||||||
Acadia Share Total Street and Urban Retail | 1,540,088 | 92.8 | % | 95.1 | % | 80,531,452 | 56.35 | |||||||||||||||||
SUBURBAN PROPERTIES | ||||||||||||||||||||||||
New Jersey | ||||||||||||||||||||||||
Elmwood Park Shopping Center | Walgreens, Acme | 1998 | 100.0 | % | 143,910 | 97.2 | % | 97.2 | % | 4,046,223 | 28.93 | |||||||||||||
Marketplace of Absecon | Rite Aid, Dollar Tree | 1998 | 100.0 | % | 104,556 | 90.3 | % | 90.3 | % | 1,362,152 | 14.43 | |||||||||||||
60 Orange Street | Home Depot | 2012 | 98.0 | % | 101,715 | 100.0 | % | 100.0 | % | 695,000 | 6.83 | |||||||||||||
New York | ||||||||||||||||||||||||
Village Commons Shopping Center | — | 1998 | 100.0 | % | 87,128 | 91.1 | % | 91.1 | % | 2,612,204 | 32.91 | |||||||||||||
Branch Plaza | LA Fitness, The Fresh Market | 1998 | 100.0 | % | 123,378 | 92.2 | % | 92.2 | % | 3,024,863 | 26.59 | |||||||||||||
Amboy Center | Stop & Shop (Ahold) | 2005 | 100.0 | % | 63,290 | 100.0 | % | 100.0 | % | 2,072,234 | 32.74 | |||||||||||||
Pacesetter Park Shopping Center | Stop & Shop (Ahold) | 1999 | 100.0 | % | 97,806 | 100.0 | % | 100.0 | % | 1,338,641 | 13.69 | |||||||||||||
LA Fitness | LA Fitness | 2007 | 100.0 | % | 55,000 | 100.0 | % | 100.0 | % | 1,485,287 | 27.01 | |||||||||||||
Crossroads Shopping Center | Home Goods, PetSmart, Kmart, DSW | 1998 | 49.0 | % | 311,958 | 94.6 | % | 94.6 | % | 6,834,714 | 23.16 | |||||||||||||
New Loudon Center | Price Chopper, Marshalls | 1993 | 100.0 | % | 255,673 | 100.0 | % | 100.0 | % | 2,153,484 | 8.42 | |||||||||||||
28 Jericho Turnpike | Kohl's | 2012 | 100.0 | % | 96,363 | 100.0 | % | 100.0 | % | 1,815,000 | 18.84 | |||||||||||||
Bedford Green | Shop Rite, CVS | 2014 | 100.0 | % | 90,589 | 84.9 | % | 84.9 | % | 2,495,885 | 32.45 | |||||||||||||
Connecticut | ||||||||||||||||||||||||
Town Line Plaza (d) | Wal-Mart, Stop & Shop (Ahold) | 1998 | 100.0 | % | 206,346 | 98.7 | % | 98.7 | % | 1,756,884 | 16.32 | |||||||||||||
Massachusetts | ||||||||||||||||||||||||
Methuen Shopping Center | Wal-Mart, Market Basket | 1998 | 100.0 | % | 130,021 | 100.0 | % | 100.0 | % | 1,360,858 | 10.47 | |||||||||||||
Crescent Plaza | Home Depot, Shaw's (Supervalu) | 1993 | 100.0 | % | 218,148 | 90.9 | % | 90.9 | % | 1,764,520 | 8.90 | |||||||||||||
201 Needham Street | Michael's | 2014 | 100.0 | % | 20,409 | 100.0 | % | 100.0 | % | 591,861 | 29.00 | |||||||||||||
163 Highland Avenue | Staples, Petco | 2015 | 100.0 | % | 40,505 | 100.0 | % | 100.0 | % | 1,311,747 | 32.38 | |||||||||||||
Vermont | ||||||||||||||||||||||||
The Gateway Shopping Center | Shaw's (Supervalu) | 1999 | 100.0 | % | 101,655 | 95.3 | % | 98.2 | % | 1,956,540 | 20.20 | |||||||||||||
Illinois | ||||||||||||||||||||||||
Hobson West Plaza | Garden Fresh Markets | 1998 | 100.0 | % | 99,137 | 83.0 | % | 85.8 | % | 897,118 | 10.90 |
Property (a) |
| Key Tenants |
|
| Year Acquired |
| Acadia's Interest |
|
| Gross Leasable Area (GLA) |
|
| In Place Occupancy |
|
| Leased Occupancy |
|
| Annualized Base Rent (ABR) |
|
| ABR/ Per Square Foot |
| |||||||
Crossroads Shopping Center |
| HomeGoods,Pet- Smart, Kmart |
|
| 1998 |
|
| 49.0 | % |
|
| 311,904 |
|
|
| 91.8 | % |
|
| 91.8 | % |
|
| 7,089,909 |
|
|
| 24.77 |
| |
New Loudon Center |
| Price Chopper, Marshalls |
|
| 1993 |
|
| 100.0 | % |
|
| 255,673 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 2,188,447 |
|
|
| 8.56 |
| |
28 Jericho Turnpike |
| Kohl's |
|
| 2012 |
|
| 100.0 | % |
|
| 96,363 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,815,000 |
|
|
| 18.84 |
| |
Bedford Green |
| Shop Rite, CVS |
|
| 2014 |
|
| 100.0 | % |
|
| 90,589 |
|
|
| 83.0 | % |
|
| 83.0 | % |
|
| 2,476,876 |
|
|
| 32.95 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Connecticut |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Town Line Plaza (d) |
| Wal-Mart, Stop & Shop (Ahold) |
|
| 1998 |
|
| 100.0 | % |
|
| 206,346 |
|
|
| 98.7 | % |
|
| 98.7 | % |
|
| 1,827,704 |
|
|
| 16.99 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Massachusetts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Methuen Shopping Center |
| Wal-Mart, Market Basket |
|
| 1998 |
|
| 100.0 | % |
|
| 130,021 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,360,858 |
|
|
| 10.47 |
| |
Crescent Plaza |
| Home Depot, Shaw's (Supervalu) |
|
| 1993 |
|
| 100.0 | % |
|
| 218,148 |
|
|
| 90.9 | % |
|
| 90.9 | % |
|
| 1,905,550 |
|
|
| 9.60 |
| |
201 Needham Street |
| Michael's |
|
| 2014 |
|
| 100.0 | % |
|
| 20,409 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 646,965 |
|
|
| 31.70 |
| |
163 Highland Avenue |
| Staples, Petco |
|
| 2015 |
|
| 100.0 | % |
|
| 40,505 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,311,747 |
|
|
| 32.38 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vermont |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Gateway Shopping Center |
| Shaw's (Supervalu) |
|
| 1999 |
|
| 100.0 | % |
|
| 101,474 |
|
|
| 98.4 | % |
|
| 100.0 | % |
|
| 2,147,052 |
|
|
| 21.50 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Illinois |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hobson West Plaza |
| Garden Fresh Markets |
|
| 1998 |
|
| 100.0 | % |
|
| 98,950 |
|
|
| 83.3 | % |
|
| 96.4 | % |
|
| 830,409 |
|
|
| 10.07 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indiana |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrillville Plaza |
| Jo-Ann Fabrics, TJ Maxx |
|
| 1998 |
|
| 100.0 | % |
|
| 236,087 |
|
|
| 90.0 | % |
|
| 90.5 | % |
|
| 3,168,339 |
|
|
| 14.91 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michigan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bloomfield Town Square |
| Best Buy, HomeGoods, TJ Maxx |
|
| 1998 |
|
| 100.0 | % |
|
| 235,022 |
|
|
| 96.4 | % |
|
| 96.4 | % |
|
| 3,745,862 |
|
|
| 16.53 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Town Center and Other (2 properties) |
| Lowes, Bed Bath & Beyond, Target |
|
| 2003 |
|
| 65.1 | % |
|
| 800,018 |
|
|
| 91.3 | % |
|
| 91.3 | % |
|
| 12,642,074 |
|
|
| 17.32 |
| |
Market Square Shopping Center |
| Trader Joe's, TJ Maxx |
|
| 2003 |
|
| 100.0 | % |
|
| 102,047 |
|
|
| 97.4 | % |
|
| 97.4 | % |
|
| 3,022,011 |
|
|
| 30.41 |
| |
Naamans Road |
|
| — |
|
| 2006 |
|
| 100.0 | % |
|
| 19,850 |
|
|
| 30.1 | % |
|
| 30.1 | % |
|
| 433,785 |
|
|
| 72.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pennsylvania |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Plaza |
| Kmart |
|
| 1993 |
|
| 100.0 | % |
|
| 106,856 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 244,279 |
|
|
| 2.29 |
| |
Plaza 422 |
| Home Depot |
|
| 1993 |
|
| 100.0 | % |
|
| 156,279 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 894,880 |
|
|
| 5.73 |
| |
Chestnut Hill |
|
| — |
|
| 2006 |
|
| 100.0 | % |
|
| 37,646 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 988,897 |
|
|
| 26.27 |
|
Abington Towne Center (e) |
| Target, TJ Maxx |
|
| 1998 |
|
| 100.0 | % |
|
| 216,871 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,225,915 |
|
|
| 20.69 |
|
Property (a) |
| Key Tenants |
|
| Year Acquired |
| Acadia's Interest |
|
| Gross Leasable Area (GLA) |
|
| In Place Occupancy |
|
| Leased Occupancy |
|
| Annualized Base Rent (ABR) |
|
| ABR/ Per Square Foot |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Suburban Properties |
|
|
|
|
|
|
|
|
|
|
|
| 4,016,092 |
|
|
| 94.1 | % |
|
| 94.6 | % |
| $ | 61,210,699 |
|
| $ | 17.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadia Share Total Suburban Properties |
|
|
|
|
|
|
|
|
|
|
|
| 3,606,052 |
|
|
| 94.7 | % |
|
| 95.3 | % |
| $ | 53,931,537 |
|
| $ | 17.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Core Properties |
|
|
|
|
|
|
|
|
|
|
|
| 5,609,696 |
|
|
| 93.4 | % |
|
| 94.3 | % |
| $ | 160,010,714 |
|
| $ | 31.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadia Share Total Core Properties |
|
|
|
|
|
|
|
|
|
|
|
| 4,988,372 |
|
|
| 94.0 | % |
|
| 94.8 | % |
| $ | 138,741,714 |
|
| $ | 31.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) | ||
Year Acquired | Acadia's Interest | Gross Leasable Area (GLA) | In Place Occupancy | Leased Occupancy | Annualized Base Rent (ABR) | ABR/ Per Square Foot | ||||||||||||||||||
Property (a) | Key Tenants | |||||||||||||||||||||||
Indiana | ||||||||||||||||||||||||
Merrillville Plaza | Jo-Ann Fabrics, TJ Maxx | 1998 | 100.0 | % | 236,087 | 96.8 | % | 96.8 | % | 3,350,975 | 14.66 | |||||||||||||
Michigan | ||||||||||||||||||||||||
Bloomfield Town Square | Best Buy, Home Goods, TJ Maxx, Dick's Sporting Goods | 1998 | 100.0 | % | 235,786 | 90.6 | % | 90.6 | % | 3,266,797 | 15.29 | |||||||||||||
Ohio | ||||||||||||||||||||||||
Mad River Station | Babies 'R' Us | 1999 | 100.0 | % | 123,335 | 77.1 | % | 82.7 | % | 1,255,391 | 13.20 | |||||||||||||
Delaware | ||||||||||||||||||||||||
Town Center | Lowes, Bed Bath & Beyond, Target, Dick's Sporting Goods | 2003 | 61.1 | % | 824,411 | 89.2 | % | 93.8 | % | 12,107,759 | 16.46 | |||||||||||||
Market Square Shopping Center | Trader Joe's, TJ Maxx | 2003 | 100.0 | % | 102,047 | 100.0 | % | 100.0 | % | 3,034,567 | 29.74 | |||||||||||||
Naamans Road | — | 2006 | 100.0 | % | 19,850 | 30.1 | % | 63.9 | % | 433,785 | 72.60 | |||||||||||||
Pennsylvania | ||||||||||||||||||||||||
Mark Plaza | Kmart | 1993 | 100.0 | % | 106,856 | 100.0 | % | 100.0 | % | 244,279 | 2.29 | |||||||||||||
Plaza 422 | Home Depot | 1993 | 100.0 | % | 156,279 | 100.0 | % | 100.0 | % | 850,978 | 5.45 | |||||||||||||
Route 6 Plaza | Kmart | 1994 | 100.0 | % | 175,589 | 100.0 | % | 100.0 | % | 1,327,169 | 7.56 | |||||||||||||
Chestnut Hill | — | 2006 | 100.0 | % | 37,646 | 100.0 | % | 100.0 | % | 953,589 | 25.33 | |||||||||||||
Abington Towne Center (e) | Target, TJ Maxx | 1998 | 100.0 | % | 216,278 | 94.5 | % | 94.5 | % | 914,927 | 16.50 | |||||||||||||
Total Suburban Properties | 4,581,751 | 93.9 | % | 95.1 | % | 67,315,431 | 16.57 | |||||||||||||||||
Acadia Share Total Suburban Properties | 4,099,922 | 94.3 | % | 95.3 | % | 59,105,909 | 16.30 | |||||||||||||||||
TOTAL CORE PROPERTIES | 6,329,335 | 93.5 | % | 94.9 | % | 160,748,098 | 28.30 | |||||||||||||||||
Acadia Share Total Core Properties | 5,640,010 | 93.9 | % | 95.3 | % | 139,637,361 | 27.61 |
Excludes properties under development, redevelopment or pre-stabilized, see “Development and Redevelopment Activities” section below. The above occupancy and rent amounts do not include space which is currently leased, other than |
(b) | |
Represents the annual base rent paid to Acadia pursuant to a master lessee and does not reflect the rent paid by the retail tenants at the property. |
(c) | |
Excludes 94,000 square feet of office GLA. |
(d) | |
Anchor GLA includes a 97,300 square foot Wal-Mart store which is not owned by the Company. This square footage has been excluded for calculating annualized base rent per square foot. |
(e) | |
Anchor GLA includes a 157,616 square foot Target store which is not owned by the Company. This square footage has been excluded for calculating annualized base rent per square foot. |
The following table sets forth more specific information with respect to each of our Fund properties at December 31, 2017:
Year Acquired | Acadia's Interest | Gross Leasable Area (GLA) | In Place Occupancy | Leased Occupancy | Annualized Base Rent (ABR) | ABR/ Per Square Foot | |||||||||||||||||||||||||||||||||||||||||||
Property (a) | Key Tenants |
| Key Tenants |
| Year Acquired |
| Acadia's Interest |
|
| Gross Leasable Area (GLA) |
|
| In Place Occupancy |
|
| Leased Occupancy |
|
| Annualized Base Rent (ABR) |
|
| ABR/Per Square Foot |
| ||||||||||||||||||||||||||
Fund II Portfolio Detail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
City Point - Phase I and II | — | 2007 | 26.7 | % | 475,000 | 72.6 | % | 80.1 | % | $ | 9,384,250 | $ | 27.21 |
| Century 21, Target, Alamo Drafthouse |
| 2007 |
|
| 26.7 | % |
|
| 469,518 |
|
|
| 65.2 | % |
|
| 86.2 | % |
| $ | 8,856,930 |
|
| $ | 28.91 |
| ||||||||
Total - Fund II | 475,000 | 72.6 | % | 80.1 | % | $ | 9,384,250 | $ | 27.21 |
|
|
|
|
|
|
|
|
|
| 469,518 |
|
|
| 65.2 | % |
|
| 86.2 | % |
| $ | 8,856,930 |
|
| $ | 28.91 |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Fund III Portfolio Detail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
654 Broadway | — | 2011 | 24.5 | % | 2,896 | — | % | — | % | $ | — | $ | — |
| ─ |
| 2011 |
|
| 24.5 | % |
|
| 2,896 |
|
|
| 100.0 | % |
|
| 100.0 | % |
| $ | 455,000 |
|
| $ | 157.11 |
| ||||||||
640 Broadway | Swatch | 2012 | 15.5 | % | 4,247 | 70.6 | % | 70.6 | % | 975,313 | 325.28 |
| Swatch |
| 2012 |
|
| 15.5 | % |
|
| 4,637 |
|
|
| 73.1 | % |
|
| 73.1 | % |
|
| 942,161 |
|
|
| 277.91 |
| ||||||||||
3104 M Street | — | 2012 | 19.6 | % | 3,608 | — | % | — | % | — | — | ||||||||||||||||||||||||||||||||||||||
Nostrand Avenue | — | 2013 | 24.5 | % | 42,628 | 87.3 | % | 96.8 | % | 1,738,116 | 46.71 | ||||||||||||||||||||||||||||||||||||||
Cortlandt Crossing |
| ShopRite, HomeSense |
| 2012 |
|
| 24.5 | % |
|
| 127,849 |
|
|
| 76.5 | % |
|
| 81.1 | % |
|
| 2,632,143 |
|
|
| 26.92 |
| |||||||||||||||||||||
Total - Fund III | 53,379 | 75.3 | % | 82.9 | % | $ | 2,713,429 | $ | 67.51 |
|
|
|
|
|
|
|
|
|
| 135,382 |
|
|
| 76.9 | % |
|
| 81.3 | % |
| $ | 4,029,304 |
|
| $ | 38.72 |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Fund IV Portfolio Detail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
801 Madison Avenue |
| ─ |
| 2015 |
|
| 23.1 | % |
|
| 2,522 |
|
|
| — | % |
|
| — | % |
| $ | — |
|
| $ | — |
| |||||||||||||||||||||
210 Bowery |
| ─ |
| 2012 |
|
| 23.1 | % |
|
| 2,538 |
|
|
| — | % |
|
| — | % |
|
| — |
|
|
| — |
| |||||||||||||||||||||
27 East 61st Street |
| ─ |
| 2014 |
|
| 23.1 | % |
|
| 4,177 |
|
|
| — | % |
|
| — | % |
|
| — |
|
|
| — |
| |||||||||||||||||||||
17 East 71st Street |
| The Row |
| 2014 |
|
| 23.1 | % |
|
| 8,432 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 2,113,110 |
|
|
| 250.61 |
| |||||||||||||||||||||
1035 Third Avenue (b) |
| ─ |
| 2015 |
|
| 23.1 | % |
|
| 7,617 |
|
|
| 58.7 | % |
|
| 58.7 | % |
|
| 1,029,564 |
|
|
| 230.38 |
| |||||||||||||||||||||
Colonie Plaza |
| Price Chopper, Big Lots |
| 2016 |
|
| 23.1 | % |
|
| 153,483 |
|
|
| 94.9 | % |
|
| 95.8 | % |
|
| 1,662,817 |
|
|
| 11.41 |
| |||||||||||||||||||||
New Jersey |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Paramus Plaza |
| Ashley Furniture, Marshalls |
| 2013 |
|
| 11.6 | % |
|
| 153,060 |
|
|
| 72.9 | % |
|
| 100.0 | % |
|
| 2,103,780 |
|
|
| 18.86 |
| |||||||||||||||||||||
Massachusetts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Restaurants at Fort Point |
| ─ |
| 2016 |
|
| 23.1 | % |
|
| 15,711 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 990,230 |
|
|
| 63.03 |
| |||||||||||||||||||||
Maine |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Airport Mall |
| Hannaford, Marshalls |
| 2016 |
|
| 23.1 | % |
|
| 221,830 |
|
|
| 68.6 | % |
|
| 87.2 | % |
|
| 1,027,139 |
|
|
| 6.75 |
| |||||||||||||||||||||
Wells Plaza |
| Reny's, Dollar Tree |
| 2016 |
|
| 23.1 | % |
|
| 90,434 |
|
|
| 98.3 | % |
|
| 98.3 | % |
|
| 737,326 |
|
|
| 8.29 |
| |||||||||||||||||||||
Shaw's Plaza (Waterville) |
| Shaw's |
| 2016 |
|
| 23.1 | % |
|
| 119,015 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 1,400,053 |
|
|
| 11.76 |
| |||||||||||||||||||||
Shaw's Plaza (Windham) |
| Shaw's |
| 2017 |
|
| 23.1 | % |
|
| 124,330 |
|
|
| 88.4 | % |
|
| 88.4 | % |
|
| 1,035,744 |
|
|
| 9.42 |
| |||||||||||||||||||||
Pennsylvania |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Dauphin Plaza |
| Price Rite, Ashley Furniture |
| 2016 |
|
| 23.1 | % |
|
| 206,206 |
|
|
| 91.1 | % |
|
| 91.1 | % |
|
| 1,732,892 |
|
|
| 9.23 |
| |||||||||||||||||||||
Mayfair Shopping Center |
| Planet Fitness, Dollar Tree |
| 2016 |
|
| 23.1 | % |
|
| 115,411 |
|
|
| 86.8 | % |
|
| 97.4 | % |
|
| 1,690,741 |
|
|
| 16.88 |
| |||||||||||||||||||||
Rhode Island |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
650 Bald Hill Road |
| Dick's Sporting Goods, Burlington Coat Factory |
| 2015 |
|
| 20.8 | % |
|
| 160,448 |
|
|
| 85.3 | % |
|
| 85.3 | % |
|
| 1,978,902 |
|
|
| 14.45 |
| |||||||||||||||||||||
Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Promenade at Manassas |
| Home Depot |
| 2013 |
|
| 22.8 | % |
|
| 280,760 |
|
|
| 83.2 | % |
|
| 98.6 | % |
|
| 3,122,520 |
|
|
| 13.36 |
| |||||||||||||||||||||
Delaware |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Eden Square |
| Giant Food, LA Fitness |
| 2014 |
|
| 22.8 | % |
|
| 231,074 |
|
|
| 85.9 | % |
|
| 85.9 | % |
|
| 3,045,812 |
|
|
| 15.34 |
| |||||||||||||||||||||
Illinois |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Lincoln Place |
| Kohl's, Marshall's, Ross |
| 2017 |
|
| 23.1 | % |
|
| 272,060 |
|
|
| 99.6 | % |
|
| 99.6 | % |
|
| 3,315,314 |
|
|
| 12.23 |
| |||||||||||||||||||||
Georgia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Broughton Street Portfolio (13 properties) |
| H&M, Lululemon, Michael Kors, Starbucks |
| 2014 |
|
| 19.1 | % |
|
| 100,676 |
|
|
| 83.7 | % |
|
| 83.7 | % |
|
| 3,152,794 |
|
|
| 37.40 |
| |||||||||||||||||||||
North Carolina |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Wake Forest Crossing |
| Lowe's, TJ Maxx |
| 2016 |
|
| 23.1 | % |
|
| 202,880 |
|
|
| 98.7 | % |
|
| 99.3 | % |
|
| 2,951,295 |
|
|
| 14.74 |
| |||||||||||||||||||||
California |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Union and Fillmore Collection (3 properties) |
| Eileen Fisher, L'Occitane, Bonobos |
| 2015 |
|
| 20.8 | % |
|
| 7,148 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
| 716,262 |
|
|
| 100.20 |
| |||||||||||||||||||||
Total - Fund IV |
|
|
|
|
|
|
|
|
|
| 2,479,812 |
|
|
| 87.7 | % |
|
| 93.6 | % |
| $ | 33,806,295 |
|
| $ | 15.54 |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Fund V Portfolio Detail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
New Mexico |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Plaza Santa Fe |
| TJ Maxx, Best Buy, Ross Dress for Less |
| 2017 |
|
| 20.1 | % |
|
| 224,223 |
|
|
| 99.4 | % |
|
| 99.4 | % |
| $ | 3,952,239 |
|
| $ | 17.73 |
| |||||||||||||||||||||
Michigan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
New Towne Plaza |
| Kohl's, Jo-Ann's, DSW |
| 2017 |
|
| 20.1 | % |
|
| 193,446 |
|
|
| 94.0 | % |
|
| 98.3 | % |
|
| 2,125,496 |
|
|
| 11.69 |
| |||||||||||||||||||||
Fairlane Green |
| TJ Maxx, Michaels, Bed Bath & Beyond |
| 2017 |
|
| 20.1 | % |
|
| 252,904 |
|
|
| 95.7 | % |
|
| 95.7 | % |
|
| 5,021,289 |
|
|
| 20.74 |
| |||||||||||||||||||||
Maryland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property (a) |
| Key Tenants |
| Year Acquired |
| Acadia's Interest |
|
| Gross Leasable Area (GLA) |
|
| In Place Occupancy |
|
| Leased Occupancy |
|
| Annualized Base Rent (ABR) |
|
| ABR/Per Square Foot |
| ||||||
Frederick County Acquisitions |
| Kmart, Kohl's, Best Buy, Ross Dress for Less |
| 2019 |
|
| 18.1 | % |
|
| 524,156 |
|
|
| 91.1 | % |
|
| 97.9 | % |
|
| 6,206,501 |
|
|
| 13.00 |
|
Connecticut |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tri-City Plaza |
| TJ Maxx, HomeGoods |
| 2019 |
|
| 18.1 | % |
|
| 300,067 |
|
|
| 56.7 | % |
|
| 90.5 | % |
|
| 2,726,231 |
|
|
| 16.04 |
|
Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Landstown Commons |
| Best Buy, Bed Bath & Beyond, Ross Dress for Less |
| 2019 |
|
| 20.1 | % |
|
| 404,808 |
|
|
| 96.3 | % |
|
| 97.3 | % |
|
| 7,917,849 |
|
|
| 20.31 |
|
Florida |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palm Coast Landing |
| TJ Maxx, PetSmart, Ross Dress for Less |
| 2019 |
|
| 20.1 | % |
|
| 171,324 |
|
|
| 94.0 | % |
|
| 94.0 | % |
|
| 3,233,194 |
|
|
| 20.08 |
|
North Carolina |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hickory Ridge |
| Kohl's, Best Buy, Dick's |
| 2017 |
|
| 20.1 | % |
|
| 380,565 |
|
|
| 98.3 | % |
|
| 98.3 | % |
|
| 4,295,679 |
|
|
| 11.49 |
|
Rhode Island |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lincoln Commons |
| Stop and Shop, Marshalls, HomeGoods |
| 2019 |
|
| 20.1 | % |
|
| 455,441 |
|
|
| 84.8 | % |
|
| 84.8 | % |
|
| 5,104,039 |
|
|
| 13.21 |
|
Alabama |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trussville Promenade |
| Wal-Mart, Regal Cinemas |
| 2018 |
|
| 20.1 | % |
|
| 463,725 |
|
|
| 95.9 | % |
|
| 95.9 | % |
|
| 4,471,270 |
|
|
| 10.06 |
|
Georgia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hiram Pavilion |
| Kohl's, HomeGoods |
| 2018 |
|
| 20.1 | % |
|
| 362,675 |
|
|
| 98.6 | % |
|
| 98.6 | % |
|
| 4,228,143 |
|
|
| 11.82 |
|
California |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elk Grove Commons |
| Kohl's, HomeGoods |
| 2018 |
|
| 20.1 | % |
|
| 220,726 |
|
|
| 96.0 | % |
|
| 96.0 | % |
|
| 4,677,104 |
|
|
| 22.08 |
|
Utah |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Family Center at Riverdale |
| Target, Gordman's, Sportman's Warehouse |
| 2019 |
|
| 18.0 | % |
|
| 427,828 |
|
|
| 96.7 | % |
|
| 96.7 | % |
|
| 4,027,458 |
|
|
| 9.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total - Fund V |
|
|
|
|
|
|
|
|
|
| 4,381,888 |
|
|
| 92.0 | % |
|
| 95.5 | % |
| $ | 57,986,492 |
|
| $ | 14.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL FUND PROPERTIES |
|
|
|
|
|
|
|
|
|
| 7,466,600 |
|
|
| 88.6 | % |
|
| 94.0 | % |
| $ | 104,679,021 |
|
| $ | 15.82 |
|
Acadia Share of Total Fund Properties |
|
|
|
|
|
|
|
|
|
| 1,559,270 |
|
|
| 88.3 | % |
|
| 93.7 | % |
| $ | 22,040,271 |
|
| $ | 16.00 |
|
(a) | ||
Year Acquired | Acadia's Interest | Gross Leasable Area (GLA) | In Place Occupancy | Leased Occupancy | Annualized Base Rent (ABR) | ABR/ Per Square Foot | |||||||||||||||
Property (a) | Key Tenants | ||||||||||||||||||||
Fund IV Portfolio Detail | |||||||||||||||||||||
New York | |||||||||||||||||||||
801 Madison Avenue | — | 2015 | 23.1 | % | 2,625 | — | % | — | % | $ | — | $ | — | ||||||||
210 Bowery | — | 2012 | 23.1 | % | 2,300 | — | % | — | % | — | — | ||||||||||
27 East 61st Street | — | 2014 | 23.1 | % | 4,177 | — | % | — | % | — | — | ||||||||||
17 East 71st Street | The Row | 2014 | 23.1 | % | 8,432 | 100.0 | % | 100.0 | % | 1,988,159 | 235.79 | ||||||||||
1035 Third Avenue (b) | — | 2015 | 23.1 | % | 7,617 | 67.1 | % | 67.1 | % | 982,035 | 192.14 | ||||||||||
Colonie Plaza | Price Chopper, Big Lots | 2016 | 23.1 | % | 153,483 | 96.9 | % | 96.9 | % | 1,680,527 | 11.30 | ||||||||||
New Jersey | |||||||||||||||||||||
Paramus Plaza | Babies R Us, Ashley Furniture | 2013 | 11.6 | % | 152,509 | 88.3 | % | 88.3 | % | 2,385,448 | 17.71 | ||||||||||
Massachusetts | |||||||||||||||||||||
Restaurants at Fort Point | — | 2016 | 23.1 | % | 15,711 | 100.0 | % | 100.0 | % | 329,155 | 20.95 | ||||||||||
Maine | |||||||||||||||||||||
Airport Mall | Hannaford, Marshalls | 2016 | 23.1 | % | 221,830 | 89.2 | % | 89.2 | % | 1,272,679 | 6.43 | ||||||||||
Wells Plaza | Reny's, Dollar Tree | 2016 | 23.1 | % | 90,434 | 92.4 | % | 94.4 | % | 680,143 | 8.14 | ||||||||||
Shaw's Plaza (Waterville) | Shaw's | 2016 | 23.1 | % | 119,015 | 100.0 | % | 100.0 | % | 1,407,316 | 11.82 | ||||||||||
Shaw's Plaza (Windham) | Shaw's | 2017 | 23.1 | % | 124,330 | 86.5 | % | 86.5 | % | 1,008,393 | 9.38 | ||||||||||
JFK Plaza | Hannaford, TJ Maxx | 2016 | 23.1 | % | 151,107 | 78.0 | % | 78.0 | % | 761,510 | 6.46 | ||||||||||
Pennsylvania | |||||||||||||||||||||
Dauphin Plaza | Price Rite, Ashley Furniture | 2016 | 23.1 | % | 205,727 | 84.2 | % | 84.2 | % | 1,656,365 | 9.56 | ||||||||||
Mayfair Shopping Center | — | 2016 | 23.1 | % | 115,411 | 62.4 | % | 62.4 | % | 1,365,002 | 18.95 | ||||||||||
Virginia | |||||||||||||||||||||
Promenade at Manassas | Home Depot | 2013 | 22.8 | % | 265,442 | 86.4 | % | 86.4 | % | 2,978,427 | 12.99 | ||||||||||
Lake Montclair | Food Lion | 2013 | 23.1 | % | 105,832 | 98.5 | % | 98.5 | % | 2,009,651 | 19.28 | ||||||||||
Delaware | |||||||||||||||||||||
Eden Square | Giant Food, LA Fitness | 2014 | 22.8 | % | 231,044 | 73.9 | % | 88.9 | % | 2,432,867 | 14.25 | ||||||||||
Illinois | |||||||||||||||||||||
938 W. North Avenue | Sephora | 2013 | 23.1 | % | 33,228 | 16.1 | % | 16.1 | % | 326,350 | 61.00 | ||||||||||
Lincoln Place | Kohl's, Marshall's | 2017 | 23.1 | % | 271,866 | 91.2 | % | 91.2 | % | 2,884,796 | 11.63 | ||||||||||
Georgia | |||||||||||||||||||||
Broughton Street Portfolio - 19 properties | J. Crew, L'Occitane, Lululemon, Michael Kors | 2014 | 11.6 | % | 115,640 | 76.3 | % | 76.3 | % | 3,441,130 | 39.00 | ||||||||||
North Carolina | |||||||||||||||||||||
Wake Forest Crossing | — | 2016 | 23.1 | % | 203,131 | 98.5 | % | 98.5 | % | 2,955,442 | 14.77 | ||||||||||
California | |||||||||||||||||||||
146 Geary Street | — | 2015 | 23.1 | % | 11,436 | — | % | — | % | — | — | ||||||||||
Union and Fillmore Collection - 4 properties | — | 2015 | 20.8 | % | 10,048 | 71.1 | % | 71.1 | % | 689,790 | 96.55 | ||||||||||
Total - Fund IV | 2,622,375 | 85.3 | % | 86.7 | % | $ | 33,235,185 | $ | 14.86 | ||||||||||||
Fund V Portfolio Detail | |||||||||||||||||||||
New Mexico | |||||||||||||||||||||
Plaza Santa Fe | TJ Maxx, Best Buy, Ross Dress for Less | 2017 | 20.1 | % | 224,223 | 88.3 | % | 97.3 | % | $ | 3,401,093 | $ | 17.18 | ||||||||
Michigan | |||||||||||||||||||||
New Towne Plaza | Kohl's, Jo-Ann's, DSW | 2017 | 20.1 | % | 190,530 | 96.3 | % | 96.3 | % | 2,163,338 | 11.79 | ||||||||||
Fairlane Green | TJ Maxx, Bed Bath & Beyond, Michaels | 2017 | 20.1 | % | 252,904 | 100.0 | % | 100.0 | % | 5,225,804 | 20.66 | ||||||||||
North Carolina | |||||||||||||||||||||
Hickory Ridge | Kohl's, Best Buy, Dick's | 2017 | 20.1 | % | 380,565 | 98.7 | % | 98.7 | % | 4,140,630 | 11.02 | ||||||||||
Total - Fund V | 1,048,222 | 96.4 | % | 98.3 | % | $ | 14,930,865 | $ | 14.78 | ||||||||||||
TOTAL FUND PROPERTIES | 4,198,976 | 86.5 | % | 88.8 | % | $ | 60,263,729 | $ | 16.59 | ||||||||||||
Acadia Share of Total Fund Properties | 923,247 | 86.3 | % | 88.5 | % | $ | 13,058,882 | $ | 16.39 |
Excludes properties under development, see “Development and Redevelopment Activities” section below. The above occupancy and rent amounts do not include space which is currently leased, other than |
(b) | |
Property also includes 12,371 square feet of 2nd floor office space and a 29,760 square foot parking garage (131 spaces). |
Major Tenants
No individual retail tenant accounted for more than 5.3%5.1% of base rents for the year ended December 31, 2017,2019, or occupied more than 6.5%6.9% of total leased GLA as of December 31, 2017.2019. The following table sets forth certain information for the 20 largest retail tenants by base rent for leases in place as of December 31, 2017.2019. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in properties including the Funds (GLA and Annualized Base Rent in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
| Percentage of Total Represented by Retail Tenant |
| |||||
Retail Tenant |
| Number of Stores in Portfolio (a) |
|
| Total GLA |
|
| Annualized Base Rent (a) |
|
| Total Portfolio GLA |
|
| Annualized Base Rent |
| |||||
Target |
|
| 5 |
|
|
| 454 |
|
| $ | 8,248 |
|
|
| 6.9 | % |
|
| 5.1 | % |
H & M |
|
| 2 |
|
|
| 56 |
|
|
| 5,039 |
|
|
| 0.9 | % |
|
| 3.1 | % |
Walgreens (b) |
|
| 7 |
|
|
| 98 |
|
|
| 4,204 |
|
|
| 1.5 | % |
|
| 2.6 | % |
TJX Companies (c) |
|
| 26 |
|
|
| 330 |
|
|
| 3,784 |
|
|
| 5.0 | % |
|
| 2.4 | % |
Royal Ahold (d) |
|
| 5 |
|
|
| 182 |
|
|
| 3,711 |
|
|
| 2.8 | % |
|
| 2.3 | % |
Nordstrom, Inc. |
|
| 2 |
|
|
| 89 |
|
|
| 3,515 |
|
|
| 1.4 | % |
|
| 2.2 | % |
Bed, Bath, and Beyond (e) |
|
| 6 |
|
|
| 137 |
|
|
| 3,371 |
|
|
| 2.1 | % |
|
| 2.1 | % |
Ascena Retail Group (f) |
|
| 12 |
|
|
| 28 |
|
|
| 2,735 |
|
|
| 0.4 | % |
|
| 1.7 | % |
LA Fitness International LLC |
|
| 3 |
|
|
| 108 |
|
|
| 2,680 |
|
|
| 1.6 | % |
|
| 1.7 | % |
Trader Joe's |
|
| 5 |
|
|
| 49 |
|
|
| 2,642 |
|
|
| 0.7 | % |
|
| 1.6 | % |
Kohls |
|
| 7 |
|
|
| 203 |
|
|
| 2,600 |
|
|
| 3.1 | % |
|
| 1.6 | % |
Verizon |
|
| 8 |
|
|
| 29 |
|
|
| 2,566 |
|
|
| 0.4 | % |
|
| 1.6 | % |
Lululemon |
|
| 3 |
|
|
| 8 |
|
|
| 2,431 |
|
|
| 0.1 | % |
|
| 1.5 | % |
Gap (h) |
|
| 8 |
|
|
| 61 |
|
|
| 2,327 |
|
|
| 0.9 | % |
|
| 1.4 | % |
Albertsons Companies (g) |
|
| 4 |
|
|
| 154 |
|
|
| 2,266 |
|
|
| 2.4 | % |
|
| 1.4 | % |
Home Depot |
|
| 4 |
|
|
| 337 |
|
|
| 2,193 |
|
|
| 5.1 | % |
|
| 1.4 | % |
Ulta Salon Cosmetic & Fragrance |
|
| 10 |
|
|
| 48 |
|
|
| 1,801 |
|
|
| 0.7 | % |
|
| 1.1 | % |
Bob's Discount Furniture |
|
| 2 |
|
|
| 58 |
|
|
| 1,629 |
|
|
| 0.9 | % |
|
| 1.0 | % |
Tapestry (i) |
|
| 2 |
|
|
| 4 |
|
|
| 1,552 |
|
|
| 0.1 | % |
|
| 1.0 | % |
DSW |
|
| 3 |
|
|
| 40 |
|
|
| 1,464 |
|
|
| 0.6 | % |
|
| 0.9 | % |
Total |
|
| 124 |
|
|
| 2,473 |
|
| $ | 60,758 |
|
|
| 37.8 | % |
|
| 37.8 | % |
Number of Stores in Portfolio (a) | Percentage of Total Represented by Retail Tenant | |||||||||||||||
Retail Tenant | Total GLA | Annualized Base Rent (a) | Total Portfolio GLA | Annualized Base Rent | ||||||||||||
Target | 3 | 367 | $ | 7,424 | 6.5 | % | 5.3 | % | ||||||||
H & M | 2 | 81 | 5,310 | 1.4 | % | 3.8 | % | |||||||||
Royal Ahold (b) | 4 | 208 | 3,653 | 3.7 | % | 2.6 | % | |||||||||
Walgreens | 5 | 78 | 3,599 | 1.4 | % | 2.6 | % | |||||||||
Best Buy (c) | 2 | 87 | 3,595 | 1.5 | % | 2.6 | % | |||||||||
Nordstrom, Inc. | 2 | 89 | 3,339 | 1.6 | % | 2.4 | % | |||||||||
Albertsons Companies (d) | 3 | 171 | 3,304 | 3.0 | % | 2.4 | % | |||||||||
Bed, Bath, and Beyond (e) | 3 | 115 | 2,797 | 2.0 | % | 2.0 | % | |||||||||
Ascena Retail Group (f) | 5 | 23 | 2,567 | 0.4 | % | 1.8 | % | |||||||||
LA Fitness International LLC | 2 | 100 | 2,525 | 1.8 | % | 1.8 | % | |||||||||
Lululemon | 2 | 8 | 2,268 | 0.1 | % | 1.6 | % | |||||||||
Trader Joe's | 3 | 41 | 2,226 | 0.7 | % | 1.6 | % | |||||||||
TJX Companies (g) | 7 | 208 | 2,095 | 3.7 | % | 1.5 | % | |||||||||
Home Depot | 3 | 313 | 1,894 | 5.5 | % | 1.4 | % | |||||||||
Gap | 3 | 37 | 1,747 | 0.7 | % | 1.3 | % | |||||||||
Tapestry 8 | 2 | 4 | 1,463 | 0.1 | % | 1.0 | % | |||||||||
JP Morgan Chase | 7 | 29 | 1,405 | 0.5 | % | 1.0 | % | |||||||||
Ulta Salon Cosmetic & Fragrance | 3 | 31 | 1,395 | 0.6 | % | 1.0 | % | |||||||||
DSW | 2 | 36 | 1,319 | 0.6 | % | 0.9 | % | |||||||||
Mattress Firm | 8 | 39 | 1,289 | 0.7 | % | 0.9 | % | |||||||||
Total | 71 | 2,065 | $ | 55,214 | 36.6 | % | 39.5 | % |
(a) | |
Does not include tenants that operate at only one Acadia |
(b) | |
Walgreens (5 locations), Rite Aid (2 locations) |
(c) | |
TJ Maxx (11 locations), Marshalls (8 locations), HomeGoods (6 locations), HomeSense (1 location) |
(d) Stop and Shop (4 locations), Giant (1 location)
(e) | |
Bed Bath and Beyond |
(f) | |
Catherine’s (3 locations), Lane Bryant (4 locations), Ann Taylor Loft (1 location), Ann Taylor (1 location), Justice (2 locations), |
(g) | Shaw’s (4 locations) |
(h) | Old Navy (6 locations), Banana Republic (1 location), |
(i) | |
Kate Spade (2 locations) |
Lease Expirations
The following tables show scheduled lease expirations on a pro rata basis for retail tenants in place as of December 31, 2017,2019, assuming that none of the tenants exercise renewal options (GLA and Annualized Base Rent in thousands):
Core Portfolio
|
|
|
|
|
| Annualized Base Rent (a, b) |
|
| GLA |
| ||||||||||
Leases Maturing in |
| Number of Leases |
|
| Current Annual Rent |
|
| Percentage of Total |
|
| Square Feet |
|
| Percentage of Total |
| |||||
Month to Month |
|
| 6 |
|
| $ | 470 |
|
|
| 0.3 | % |
|
| 13,994 |
|
|
| 0.3 | % |
2020 |
|
| 33 |
|
|
| 5,546 |
|
|
| 4.0 | % |
|
| 92,281 |
|
|
| 2.1 | % |
2021 |
|
| 74 |
|
|
| 16,470 |
|
|
| 11.9 | % |
|
| 758,396 |
|
|
| 17.1 | % |
2022 |
|
| 53 |
|
|
| 13,288 |
|
|
| 9.6 | % |
|
| 345,694 |
|
|
| 7.8 | % |
2023 |
|
| 61 |
|
|
| 21,621 |
|
|
| 15.6 | % |
|
| 666,307 |
|
|
| 15.0 | % |
2024 |
|
| 56 |
|
|
| 15,043 |
|
|
| 10.8 | % |
|
| 656,819 |
|
|
| 14.8 | % |
2025 |
|
| 51 |
|
|
| 16,112 |
|
|
| 11.6 | % |
|
| 486,153 |
|
|
| 11.0 | % |
2026 |
|
| 33 |
|
|
| 7,134 |
|
|
| 5.1 | % |
|
| 161,679 |
|
|
| 3.6 | % |
2027 |
|
| 23 |
|
|
| 5,673 |
|
|
| 4.1 | % |
|
| 127,084 |
|
|
| 2.9 | % |
2028 |
|
| 41 |
|
|
| 18,502 |
|
|
| 13.3 | % |
|
| 674,430 |
|
|
| 15.2 | % |
2029 |
|
| 23 |
|
|
| 6,667 |
|
|
| 4.8 | % |
|
| 157,652 |
|
|
| 3.6 | % |
Thereafter |
|
| 27 |
|
|
| 12,216 |
|
|
| 8.9 | % |
|
| 291,551 |
|
|
| 6.6 | % |
Total |
|
| 481 |
|
| $ | 138,742 |
|
|
| 100.0 | % |
|
| 4,432,040 |
|
|
| 100.0 | % |
Funds
|
|
|
|
|
| Annualized Base Rent (a, b) |
|
| GLA |
| ||||||||||
Leases Maturing in |
| Number of Leases |
|
| Current Annual Rent |
|
| Percentage of Total |
|
| Square Feet |
|
| Percentage of Total |
| |||||
Month to Month |
|
| 16 |
|
| $ | 164 |
|
|
| 0.7 | % |
|
| 13 |
|
|
| 0.9 | % |
2020 |
|
| 68 |
|
|
| 1,522 |
|
|
| 6.9 | % |
|
| 88 |
|
|
| 6.4 | % |
2021 |
|
| 94 |
|
|
| 2,325 |
|
|
| 10.5 | % |
|
| 147 |
|
|
| 10.7 | % |
2022 |
|
| 84 |
|
|
| 2,321 |
|
|
| 10.5 | % |
|
| 152 |
|
|
| 11.1 | % |
2023 |
|
| 79 |
|
|
| 2,133 |
|
|
| 9.7 | % |
|
| 155 |
|
|
| 11.2 | % |
2024 |
|
| 71 |
|
|
| 2,182 |
|
|
| 9.9 | % |
|
| 144 |
|
|
| 10.5 | % |
2025 |
|
| 54 |
|
|
| 2,503 |
|
|
| 11.4 | % |
|
| 185 |
|
|
| 13.4 | % |
2026 |
|
| 43 |
|
|
| 1,238 |
|
|
| 5.6 | % |
|
| 61 |
|
|
| 4.4 | % |
2027 |
|
| 19 |
|
|
| 546 |
|
|
| 2.5 | % |
|
| 51 |
|
|
| 3.7 | % |
2028 |
|
| 28 |
|
|
| 1,248 |
|
|
| 5.7 | % |
|
| 57 |
|
|
| 4.1 | % |
2029 |
|
| 32 |
|
|
| 1,894 |
|
|
| 8.6 | % |
|
| 116 |
|
|
| 8.4 | % |
Thereafter |
|
| 33 |
|
|
| 3,965 |
|
|
| 18.0 | % |
|
| 208 |
|
|
| 15.2 | % |
Total |
|
| 621 |
|
| $ | 22,041 |
|
|
| 100.0 | % |
|
| 1,377 |
|
|
| 100.0 | % |
Annualized Base Rent (a, b) | GLA | |||||||||||||||
Leases Maturing in | Number of Leases | Current Annual Rent | Percentage of Total | Square Feet | Percentage of Total | |||||||||||
Month to Month | 8 | $ | 525 | 0.4 | % | 28 | 0.4 | % | ||||||||
2018 | 55 | 9,734 | 7.0 | % | 313 | 2.9 | % | |||||||||
2019 | 56 | 9,391 | 6.7 | % | 508 | 10.1 | % | |||||||||
2020 | 58 | 12,592 | 9.0 | % | 595 | 9.7 | % | |||||||||
2021 | 78 | 17,065 | 12.2 | % | 837 | 10.8 | % | |||||||||
2022 | 56 | 12,320 | 8.8 | % | 426 | 15.7 | % | |||||||||
2023 | 44 | 16,588 | 11.9 | % | 517 | 8.4 | % | |||||||||
2024 | 44 | 15,202 | 10.9 | % | 485 | 6.9 | % | |||||||||
2025 | 41 | 11,446 | 8.2 | % | 262 | 9.4 | % | |||||||||
2026 | 30 | 5,203 | 3.7 | % | 133 | 5.3 | % | |||||||||
2027 | 27 | 5,270 | 3.8 | % | 172 | 2.6 | % | |||||||||
Thereafter | 38 | 24,301 | 17.4 | % | 763 | 17.8 | % | |||||||||
Total | 535 | $ | 139,637 | 100.0 | % | 5,039 | 100.0 | % |
Annualized Base Rent (a, b) | GLA | |||||||||||||||
Leases Maturing in | Number of Leases | Current Annual Rent | Percentage of Total | Square Feet | Percentage of Total | |||||||||||
Month to Month | 8 | $ | 63 | 0.6 | % | 4 | 0.5 | % | ||||||||
2018 | 41 | 604 | 4.6 | % | 37 | 4.6 | % | |||||||||
2019 | 33 | 545 | 5.7 | % | 45 | 4.2 | % | |||||||||
2020 | 44 | 1,205 | 13.8 | % | 110 | 9.2 | % | |||||||||
2021 | 68 | 2,031 | 16.9 | % | 134 | 15.6 | % | |||||||||
2022 | 43 | 1,266 | 9.9 | % | 78 | 9.7 | % | |||||||||
2023 | 30 | 842 | 8.6 | % | 69 | 6.4 | % | |||||||||
2024 | 18 | 956 | 5.9 | % | 47 | 7.3 | % | |||||||||
2025 | 20 | 769 | 2.9 | % | 23 | 5.9 | % | |||||||||
2026 | 27 | 782 | 5.1 | % | 40 | 6.0 | % | |||||||||
2027 | 20 | 824 | 4.4 | % | 35 | 6.3 | % | |||||||||
Thereafter | 21 | 3,172 | 21.6 | % | 172 | 24.3 | % | |||||||||
Total | 373 | $ | 13,059 | 100.0 | % | 794 | 100.0 | % |
(a) | |
Base rents do not include percentage rents, additional rents for property expense reimbursements, nor contractual rent escalations. |
(b) | |
No single market, except as discussed below under Geographic Concentrations, represents a material amount of exposure to the Company as it relates to the rents from these leases. Given the diversity of these markets, properties and characteristics of the individual spaces, the Company cannot make any general representations as it relates to the expiring rents and the rates for which these spaces may be re-leased. |
Geographic Concentrations
The following table summarizes our operating retail properties by region, excluding redevelopment and pre-stabilization properties, as of December 31, 2017.2019. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in properties, including the Funds (GLA and Annualized Base Rent in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Percentage of Total Represented by Region |
| |||||
Region |
| GLA (a,c) |
|
| % Occupied (b) |
|
| Annualized Base Rent (b, c) |
|
| Annualized Base Rent per Occupied Square Foot (c) |
|
| GLA |
|
| Annualized Base Rent |
| ||||||
Core Portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York Metro |
|
| 1,454 |
|
|
| 93.8 | % |
| $ | 50,190 |
|
| $ | 36.81 |
|
|
| 29.1 | % |
|
| 36.2 | % |
Mid-Atlantic |
|
| 1,191 |
|
|
| 95.5 | % |
|
| 15,803 |
|
|
| 16.02 |
|
|
| 23.9 | % |
|
| 11.4 | % |
New England |
|
| 772 |
|
|
| 96.9 | % |
|
| 10,721 |
|
|
| 16.40 |
|
|
| 15.5 | % |
|
| 7.7 | % |
Chicago Metro |
|
| 700 |
|
|
| 89.5 | % |
|
| 38,340 |
|
|
| 61.23 |
|
|
| 14.0 | % |
|
| 27.6 | % |
Midwest |
|
| 570 |
|
|
| 91.5 | % |
|
| 7,745 |
|
|
| 14.85 |
|
|
| 11.4 | % |
|
| 5.6 | % |
San Francisco Metro |
|
| 149 |
|
|
| 100.0 | % |
|
| 6,219 |
|
|
| 41.79 |
|
|
| 3.0 | % |
|
| 4.5 | % |
Washington D.C. Metro |
|
| 139 |
|
|
| 91.8 | % |
|
| 7,358 |
|
|
| 57.55 |
|
|
| 2.8 | % |
|
| 5.3 | % |
Los Angeles Metro |
|
| 14 |
|
|
| 100.0 | % |
|
| 2,366 |
|
|
| 168.97 |
|
|
| 0.3 | % |
|
| 1.7 | % |
Total Core Operating Properties |
|
| 4,989 |
|
|
| 94.0 | % |
| $ | 138,742 |
|
| $ | 31.20 |
|
|
| 100.0 | % |
|
| 100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast |
|
| 425 |
|
|
| 96.3 | % |
| $ | 6,158 |
|
| $ | 15.06 |
|
|
| 27.3 | % |
|
| 27.9 | % |
Northeast |
|
| 480 |
|
|
| 83.7 | % |
|
| 5,044 |
|
|
| 12.55 |
|
|
| 30.7 | % |
|
| 22.9 | % |
New York Metro |
|
| 217 |
|
|
| 72.1 | % |
|
| 4,621 |
|
|
| 29.52 |
|
|
| 13.9 | % |
|
| 21.0 | % |
West |
|
| 121 |
|
|
| 96.4 | % |
|
| 1,665 |
|
|
| 14.23 |
|
|
| 7.8 | % |
|
| 7.6 | % |
Mid-Atlantic |
|
| 117 |
|
|
| 84.4 | % |
|
| 1,406 |
|
|
| 14.27 |
|
|
| 7.5 | % |
|
| 6.4 | % |
Midwest |
|
| 90 |
|
|
| 95.0 | % |
|
| 1,437 |
|
|
| 16.86 |
|
|
| 5.8 | % |
|
| 6.5 | % |
Chicago Metro |
|
| 63 |
|
|
| 99.6 | % |
|
| 766 |
|
|
| 12.23 |
|
|
| 4.0 | % |
|
| 3.5 | % |
Southwest |
|
| 45 |
|
|
| 99.4 | % |
|
| 794 |
|
|
| 17.73 |
|
|
| 2.9 | % |
|
| 3.6 | % |
San Francisco Metro |
|
| 1 |
|
|
| 100.0 | % |
|
| 149 |
|
|
| 100.20 |
|
|
| 0.1 | % |
|
| 0.6 | % |
Total Fund Operating Properties |
|
| 1,559 |
|
|
| 88.3 | % |
| $ | 22,040 |
|
| $ | 16.00 |
|
|
| 100.0 | % |
|
| 100.0 | % |
Percentage of Total Represented by Region | ||||||||||||||||||||
Region | GLA (a,c) | % Occupied (b) | Annualized Base Rent (b,c) | Annualized Base Rent per Occupied Square Foot (c) | GLA | Annualized Base Rent | ||||||||||||||
Core Portfolio: | ||||||||||||||||||||
Operating Properties: | ||||||||||||||||||||
New York Metro | 1,675 | 87 | % | $ | 47,459 | $ | 32.53 | 30 | % | 34 | % | |||||||||
New England | 772 | 96 | % | 10,204 | 15.66 | 14 | % | 7 | % | |||||||||||
Chicago Metro | 687 | 93 | % | 37,583 | 58.88 | 12 | % | 27 | % | |||||||||||
Midwest | 694 | 89 | % | 8,770 | 14.16 | 12 | % | 6 | % | |||||||||||
Washington D.C. Metro | 140 | 75 | % | 6,600 | 63.36 | 2 | % | 5 | % | |||||||||||
San Francisco Metro | 354 | 99 | % | 13,865 | 39.68 | 6 | % | 10 | % | |||||||||||
Mid-Atlantic | 1,318 | 94 | % | 15,157 | 13.91 | 24 | % | 11 | % | |||||||||||
Total Core Operating Properties | 5,640 | 94 | % | $ | 139,638 | $ | 27.61 | 100 | % | 100 | % | |||||||||
Fund Portfolio: | ||||||||||||||||||||
Operating Properties: | ||||||||||||||||||||
New York Metro | 198 | 78 | % | $ | 4,434 | $ | 28.66 | 21 | % | 34 | % | |||||||||
San Francisco Metro | 5 | 31 | % | 143 | 96.56 | 1 | % | 1 | % | |||||||||||
Chicago Metro | 70 | 83 | % | 742 | 12.68 | 8 | % | 6 | % | |||||||||||
Northeast | 241 | 85 | % | 1,959 | 9.56 | 26 | % | 15 | % | |||||||||||
Midwest | 89 | 98 | % | 1,485 | 16.93 | 10 | % | 11 | % | |||||||||||
Southeast | 137 | 96 | % | 1,914 | 14.51 | 15 | % | 15 | % | |||||||||||
Southwest | 45 | 88 | % | 684 | 17.18 | 5 | % | 5 | % | |||||||||||
Mid-Atlantic | 138 | 84 | % | 1,698 | 14.72 | 14 | % | 13 | % | |||||||||||
Total Fund Operating Properties | 923 | 86 | % | $ | 13,059 | $ | 16.39 | 100 | % | 100 | % |
(a) | |
Property GLA includes a total of 255,000 square feet, which is not owned by us. This square footage has been excluded for calculating annualized base rent per square foot. |
(b) | |
The above occupancy and rent amounts do not include space that is currently leased, but for which payment of rent had not commenced as of December 31, |
(c) | |
The amounts presented reflect the Operating Partnership's pro-rata shares of properties included within each region. |
Development and Redevelopment Activities
As part of our strategy, we invest in retail real estate assets that may require significant development. As of December 31, 2017,2019, we had 6six development or redevelopment projects of which two are under construction and four are in various stages of the development process.
Property |
| Ownership (a) |
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| Location |
| Estimated Stabilization |
| Square Feet Upon Completion |
|
| Leased Rate |
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| Key Tenants |
| Outstanding Debt |
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| Incurred (b) |
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| Estimated Future Range |
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| Estimated Total Range |
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Development: |
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CORE |
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1238 Wisconsin |
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| 100.0 | % |
| Washington DC |
| 2022 |
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| 29,000 |
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| — | % |
| TBD |
| $ | — |
|
| $ | 1.3 |
|
| $ | 31.3 |
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| to |
| $ | 32.7 |
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| $ | 32.6 |
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| to |
| $ | 34.0 |
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FUND II |
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City Point Phase III |
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| 94.2 | % |
| Brooklyn, NY |
| 2021 |
|
| 63,000 |
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| — | % |
| TBD |
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| 24.2 |
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| 10.0 |
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| 52.0 |
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| to |
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| 55.0 |
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| 62.0 |
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| to |
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| 65.0 |
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FUND III |
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Broad Hollow Commons |
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| 100.0 | % |
| Farmingdale, NY |
| 2021 |
| 180,000 - 200,000 |
|
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| — | % |
| TBD |
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| — |
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| 17.9 |
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| 32.1 |
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| to |
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| 42.1 |
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| 50.0 |
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| to |
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| 60.0 |
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FUND IV |
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110 University Place |
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| 100.0 | % |
| New York, NY |
| 2022 |
|
| 46,000 |
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|
| — | % |
| TBD |
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| — |
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|
| 14.2 |
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| 6.4 |
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| to |
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| 10.8 |
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| 20.6 |
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| to |
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| 25.0 |
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146 Geary |
|
| 100.0 | % |
| San Francisco, CA |
| 2022 |
|
| 13,000 |
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|
| — | % |
| TBD |
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| 22.9 |
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| 42.6 |
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| 17.4 |
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| to |
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| 22.4 |
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| 60.0 |
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| to |
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| 65.0 |
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717 N. Michigan Avenue |
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| 100.0 | % |
| Chicago, IL |
| 2020 |
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| 62,000 |
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| 30.0 | % |
| Disney Store |
|
| 56.7 |
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| 110.0 |
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| 10.0 |
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| to |
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| 17.5 |
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| 120.0 |
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| to |
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| 127.5 |
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Major Redevelopment: |
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CORE |
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City Center |
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| 100.0 | % |
| San Francisco, CA |
| 2021 |
|
| 241,000 |
|
|
| 90.0 | % |
| Target |
|
| — |
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|
| 190.2 |
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| 4.8 |
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| to |
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| 10.8 |
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| 195.0 |
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| to |
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| 201.0 |
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Elmwood Park |
|
| 100.0 | % |
| Elmwood Park, NJ |
| 2021 |
|
| 144,000 |
|
|
| 100.0 | % |
| Walgreens |
|
| — |
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| — |
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| TBD |
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| to |
| TBD |
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| TBD |
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| to |
| TBD |
| ||||
Route 6 Mall |
|
| 100.0 | % |
| Honesdale, PA |
| TBD |
| TBD |
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|
| 100.0 | % |
| TBD |
|
| — |
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| — |
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| TBD |
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| to |
| TBD |
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| TBD |
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| to |
| TBD |
| |||||
Mad River |
|
| 100.0 | % |
| Dayton, OH |
| TBD |
| TBD |
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|
| 50.0 | % |
| TBD |
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| — |
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| — |
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| TBD |
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| to |
| TBD |
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| TBD |
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| to |
| TBD |
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Pre-Stabilized: |
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CORE |
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613-623 West Diversey |
|
| 100.0 | % |
| Chicago, IL |
| 2020 |
|
| 29,778 |
|
|
| 76.1 | % |
| TJ Maxx, Blue Mercury |
|
| — |
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FUND II |
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City Point, Phase I and II |
|
| 94.2 | % |
| New York, NY |
| 2020 |
|
| 475,000 |
|
|
| 86.2 | % |
| Century 21, Target, Alamo Drafthouse |
|
| 259.1 |
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FUND III |
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Cortlandt Crossing |
|
| 100.0 | % |
| Mohegan Lake, NY |
| 2020 |
|
| 125,906 |
|
|
| 81.1 | % |
| ShopRite, HomeSense |
|
| 35.1 |
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640 Broadway |
|
| 63.1 | % |
| New York, NY |
| 2020 |
|
| 4,637 |
|
|
| 73.1 | % |
| Swatch |
|
| 39.5 |
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FUND IV |
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Paramus Plaza |
|
| 50.0 | % |
| Paramus, NJ |
| 2020 |
|
| 150,660 |
|
|
| 100.0 | % |
| Ashley Furniture, Marshalls |
|
| 18.9 |
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210 Bowery |
|
| 100.0 | % |
| New York, NY |
| 2020 |
|
| 2,538 |
|
|
| — | % |
| ─ |
|
| — |
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801 Madison |
|
| 100.0 | % |
| New York, NY |
| 2020 |
|
| 2,625 |
|
|
| — | % |
| ─ |
|
| — |
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27 E 61st Street |
|
| 100.0 | % |
| New York, NY |
| 2020 |
|
| 4,177 |
|
|
| — | % |
| ─ |
|
| — |
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1035 Third Avenue |
|
| 100.0 | % |
| New York, NY |
| 2020 |
|
| 7,617 |
|
|
| 58.7 | % |
| ─ |
|
| — |
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| $ | 352.6 |
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Property | Location | Costs to Date | Anticipated Additional Costs (a) | Status | Square Feet Upon Completion | Estimated Stabilization Date | ||||||||||||||
(dollars in millions) | ||||||||||||||||||||
Cortlandt Crossing | Mohegan Lake, NY | $ | 40.4 | $ | 20.0 | to | $ | 25.0 | Construction commenced | 130,000 | 2019 | |||||||||
Broad Hollow Commons | Farmingdale, NY | 16.5 | 33.5 | to | 43.5 | Pre-construction | 180,000 - 200,000 | 2020 | ||||||||||||
Total Fund III | 56.9 | 53.5 | 68.5 | |||||||||||||||||
650 Bald Hill Road (b,c) | Warwick, RI | 33.0 | 2.5 | to | 3.5 | Construction commenced | 161,000 | 2018 | ||||||||||||
717 N. Michigan Avenue | Chicago, IL | 109.2 | 10.8 | to | 18.3 | Pre-construction | 62,000 | 2018 | ||||||||||||
Total Fund IV | 142.2 | 13.3 | 21.8 | |||||||||||||||||
613-623 West Diversey | Chicago, IL | 16.1 | 6.9 | to | 8.4 | Construction commenced | 30,000 | 2018 | ||||||||||||
56 E. Walton Street | Chicago, IL | 8.5 | 2.0 | to | 3.0 | Construction commenced | TBD | 2018 | ||||||||||||
Total Core | 24.6 | 8.9 | 11.4 | |||||||||||||||||
Total | $ | 223.7 | $ | 75.7 | $ | 101.7 |
(a) | Ownership percentage represents the Core or Fund level ownership and not Acadia’s pro rata share. |
(b) | Incurred amounts include costs |
ITEM 3. | |
LEGAL PROCEEDINGS. |
As previously disclosed in our periodic findings, Acadia Brandywine Holdings, LLC (“Brandywine Holdings”), a consolidated entity in which we have a 22.22% interest, is a party to litigation in connection with a mortgage loan collateralized by a Core Portfolio property held by it (the “Brandywine Loan”), which has been in default since July 1, 2016. The Brandywine Loan was originated in June 2006 and had an original principal amount of $26.3 million and a scheduled maturity of July 1, 2016. The Brandywine Loan bears interest at a stated rate of approximately 6% and is subject to additional default interest of 5%. In April 2017, the successor to the original lender, Wilmington – 5190 Brandywine Parkway, LLC (the “Successor Lender”), initiated lawsuits against Brandywine Holdings in Delaware Superior Court and Delaware Chancery Court for, among other things, judgment on the note (the “Note Complaint”) and foreclosure on the property. In a contemporaneously filed action in Delaware Superior Court (the “Guaranty Complaint”), the Successor Lender initiated a lawsuit against the Operating Partnership as guarantor
of certain guaranteed obligations of Brandywine Holdings set forth in a non-recourse carve-out guaranty executed by the Operating Partnership. The Guaranty Complaint alleges that the Operating Partnership is liable for the full balance of the principal, accrued interest, default interest, as well as fees and costs, under the Brandywine Loan, which the Successor Lender alleges totaled approximately $33.0 million as of November 9, 2017 (exclusive of accruing interest, default interest, and fees and costs). In August 2019, the Delaware Superior Court heard arguments on the parties’ cross-motions for summary judgement regarding both the Guaranty Complaint and the Note Complaint. On February 7, 2020, the Delaware Superior Court granted in part the Successor Lender’s motion and denied Brandywine Holdings’ and the Operating Partnership’s cross-motion, for summary judgment, finding that each of Brandywine Holdings and the Operating Partnership have recourse liability for the outstanding balance of the Brandywine Loan. The Delaware Superior Court’s decision will be appealable when a judgement is formally entered. Brandywine Holdings and the Operating Partnership intend to appeal the ruling as soon as it becomes appealable and to vigorously contest it.
In addition, from time to time, we are involved ina party to various matterslegal proceedings, claims or regulatory inquiries and investigations arising out of, litigation arising in the normalor incident to, our ordinary course of business. While we are unable to predict with certainty the outcome of any particular matter, Management is of the opinion that,management does not expect, when such litigation ismatters are resolved, that our resulting exposure to loss contingencies, if any, will not have a significantmaterial adverse effect on our consolidated financial position, results of operations, or liquidity.
ITEM 4. | MINE SAFETY DISCLOSURES. |
Not applicable.
PART II
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES AND PERFORMANCE GRAPH. |
Market Information, Dividends and Holders of Record of our Common Shares
At February 12, 2020, there were 255 holders of record of our Common Shares, as reportedwhich are traded on the New York Stock Exchange and cashunder the symbol “AKR.” Our quarterly dividends declared duringare discussed in Note 10 and the two years ended December 31, 2017 and 2016:
Quarter Ended | Dividend | |||||||||||
2017 | High | Low | Per Share | |||||||||
March 31, 2017 | $ | 33.45 | $ | 29.23 | $ | 0.26 | ||||||
June 30, 2017 | 32.02 | 26.70 | 0.26 | |||||||||
September 30, 2017 | 30.36 | 26.97 | 0.26 | |||||||||
December 31, 2017 | 30.63 | 26.85 | 0.27 | |||||||||
2016 | ||||||||||||
March 31, 2016 | $ | 35.24 | $ | 30.25 | $ | 0.25 | ||||||
June 30, 2016 | 35.98 | 32.76 | 0.25 | |||||||||
September 30, 2016 | 38.01 | 34.91 | 0.25 | |||||||||
December 31, 2016 | (a) | 36.02 | 31.31 | 0.41 |
At the 2016 annual shareholders’ meeting, the shareholders' approved the Second Amended and Restated 2006 Incentive Plan (the “Second Amended 2006 Plan”). This plan replaced all previous share incentive plans and increased the authorization to issue options, Restricted Shares and LTIP Units (collectively “Awards”) available to officers and employees by 1.6 million shares, for a total of 3.7 million shares available to be issued. See
Note 13 in the Notes to Consolidated Financial Statements, for a summary of our Share Incentive Plans.The following table provides information related to the Second Amended 2006 Plan as of December 31, 2017:
Equity Compensation Plan Information | |||||||||||||||||||
(a) | (b) | (c) | |||||||||||||||||
Number of securities to be issued upon exercise outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, and rights | Number of securities remaining available future issuance under compensation plans securities reflected in column (a)) | |||||||||||||||||
Equity compensation plans approved by security holders | — | $ | — | 708,632 | |||||||||||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||||||||||||
Total | — | $ | — | 708,632 |
Remaining Common Shares available under the Amended 2006 Plan are as follows:
Outstanding Common Shares as of December 31, | 87,050,465 | |||
Outstanding OP Units as of December 31, | 5,013,507 | |||
Total Outstanding Common Shares and OP Units | 92,063,972 | |||
Common Shares and OP Units pursuant to the Second Amended 2006 Plan | 8,893,681 | |||
Total Common Shares available under equity compensation plans | 8,893,681 | |||
Less: Issuance of Restricted Shares and LTIP Units Granted | (5,413,276 | ) | ||
Issuance of Options Granted | (2,771,773 | ) | ||
Number of Common Shares remaining available | 708,632 |
Share Price Performance
The following graph compares the cumulative total shareholder return for our Common Shares for the period commencing December 31, 2012,2014, through December 31, 2017,2019, with the cumulative total return on the Russell 2000 Index (“Russell 2000”), the NAREIT All Equity REIT Index (the “NAREIT”) and the SNL Shopping Center REITs (the “SNL”) over the same period. Total return values for the Russell 2000, the NAREIT, the SNL and the Common Shares were calculated based upon cumulative total return assuming the investment of $100.00 in each of the Russell 2000, the NAREIT, the SNL and our Common Shares on December 31, 2012,2014, and assuming reinvestment of dividends. The shareholder return as set forth in the table below is not necessarily indicative of future performance. The information in this section is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing.
|
| At December 31, |
| |||||||||||||||||||||
Index |
| 2014 |
|
| 2015 |
|
| 2016 |
|
| 2017 |
|
| 2018 |
|
| 2019 |
| ||||||
Acadia Realty Trust |
| $ | 100.00 |
|
| $ | 107.51 |
|
| $ | 109.70 |
|
| $ | 95.30 |
|
| $ | 86.34 |
|
| $ | 98.24 |
|
Russell 2000 |
|
| 100.00 |
|
|
| 95.59 |
|
|
| 115.95 |
|
|
| 132.94 |
|
|
| 118.30 |
|
|
| 148.49 |
|
NAREIT All Equity REIT Index |
|
| 100.00 |
|
|
| 102.83 |
|
|
| 111.70 |
|
|
| 121.39 |
|
|
| 116.48 |
|
|
| 149.86 |
|
SNL REIT Retail Shopping Ctr Index |
|
| 100.00 |
|
|
| 105.35 |
|
|
| 109.02 |
|
|
| 96.94 |
|
|
| 81.36 |
|
|
| 103.18 |
|
At December 31, | ||||||||||||||||||||||||
Index | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||||||||
Acadia Realty Trust | $ | 100.00 | $ | 102.39 | $ | 137.70 | $ | 148.00 | $ | 150.95 | $ | 131.10 | ||||||||||||
Russell 2000 | 100.00 | 138.82 | 145.62 | 139.19 | 168.85 | 193.58 | ||||||||||||||||||
NAREIT All Equity REIT Index | 100.00 | 102.86 | 131.68 | 135.40 | 147.09 | 159.85 | ||||||||||||||||||
SNL REIT Retail Shopping Ctr Index | 100.00 | 106.84 | 138.44 | 145.85 | 150.94 | 134.21 |
Recent Sales of Unregistered SecuritiesSecurities; Use of Proceeds from Registered Securities
None.
Issuer Purchases of Equity Securities
During 2018, the Company revised its share repurchase program. The new share repurchase program that authorizes management, at its discretion, to repurchase up to $20.0$200.0 million of ourits outstanding Common Shares. The program may be discontinued or extended at any time and there is no assurance that we will purchase the full amount authorized. There were no Common Sharestime. The Company repurchased by us2,294,235 shares for $55.1 million, inclusive of $0.1 million of fees, during the year ended December 31, 2017. Under this program we have repurchased 2.1 million Common Shares, none of which were repurchased after2018. The Company did not repurchase any shares during the years ended December 2001.31, 2019 or 2017. As of December 31, 2017,2019, management may repurchase up to approximately $7.5$145.0 million of ourthe Company’s outstanding Common Shares under this program. On February 20, 2018, this plan was revised as discussed in
ITEM 6. | SELECTED FINANCIAL DATA |
The following table sets forth, on a historical basis, our selected financial data. This information should be read in conjunction with our audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this Form 10-K. Funds from operations (“FFO”) amounts for the year ended December 31, 2017 have been adjusted as set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Net Income to Funds from Operations.”Report.
|
| Year Ended December 31, |
| |||||||||||||||||
(dollars in thousands, except per share amounts) |
| 2019 |
|
| 2018 |
|
| 2017 |
|
| 2016 |
|
| 2015 |
| |||||
OPERATING DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues (a) |
| $ | 295,327 |
|
| $ | 259,681 |
|
| $ | 248,552 |
|
| $ | 189,804 |
|
| $ | 196,783 |
|
Operating expenses, excluding depreciation and impairment charges |
|
| (125,884 | ) |
|
| (114,591 | ) |
|
| (111,844 | ) |
|
| (97,904 | ) |
|
| (86,570 | ) |
Depreciation and amortization |
|
| (125,443 | ) |
|
| (117,549 | ) |
|
| (104,934 | ) |
|
| (70,011 | ) |
|
| (60,751 | ) |
Impairment charges |
|
| (1,721 | ) |
|
| — |
|
|
| (14,455 | ) |
|
| — |
|
|
| (5,000 | ) |
Gain on disposition of properties |
|
| 30,324 |
|
|
| 5,140 |
|
|
| 48,886 |
|
|
| 81,965 |
|
|
| 89,063 |
|
Equity in earnings of unconsolidated affiliates inclusive of gains on disposition of properties |
|
| 8,922 |
|
|
| 9,302 |
|
|
| 23,371 |
|
|
| 39,449 |
|
|
| 37,330 |
|
Interest income |
|
| 7,988 |
|
|
| 13,231 |
|
|
| 29,143 |
|
|
| 25,829 |
|
|
| 16,603 |
|
Other income |
|
| 6,947 |
|
|
| — |
|
|
| 5,571 |
|
|
| — |
|
|
| 1,596 |
|
Interest expense |
|
| (73,788 | ) |
|
| (69,978 | ) |
|
| (58,978 | ) |
|
| (34,645 | ) |
|
| (37,297 | ) |
Income (loss) from continuing operations before income taxes |
|
| 22,672 |
|
|
| (14,764 | ) |
|
| 65,312 |
|
|
| 134,487 |
|
|
| 151,757 |
|
Income tax (provision) benefit |
|
| (1,468 | ) |
|
| (934 | ) |
|
| (1,004 | ) |
|
| 105 |
|
|
| (1,787 | ) |
Net income (loss) |
|
| 21,204 |
|
|
| (15,698 | ) |
|
| 64,308 |
|
|
| 134,592 |
|
|
| 149,970 |
|
Loss (income) attributable to noncontrolling interests |
|
| 31,841 |
|
|
| 47,137 |
|
|
| (2,838 | ) |
|
| (61,816 | ) |
|
| (84,262 | ) |
Net income attributable to Acadia |
| $ | 53,045 |
|
| $ | 31,439 |
|
| $ | 61,470 |
|
| $ | 72,776 |
|
| $ | 65,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share |
| $ | 0.62 |
|
| $ | 0.38 |
|
| $ | 0.73 |
|
| $ | 0.94 |
|
| $ | 0.94 |
|
Weighted-average number of Common Shares outstanding, basic |
|
| 84,436 |
|
|
| 82,080 |
|
|
| 83,683 |
|
|
| 76,231 |
|
|
| 68,851 |
|
Weighted-average number of Common Shares outstanding, diluted |
|
| 84,436 |
|
|
| 82,080 |
|
|
| 83,685 |
|
|
| 76,244 |
|
|
| 68,870 |
|
Cash dividends declared per Common Share |
| $ | 1.13 |
|
| $ | 1.09 |
|
| $ | 1.05 |
|
| $ | 1.16 |
|
| $ | 1.22 |
|
BALANCE SHEET DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate before accumulated depreciation |
| $ | 4,099,542 |
|
| $ | 3,697,805 |
|
| $ | 3,466,482 |
|
| $ | 3,382,000 |
|
| $ | 2,736,283 |
|
Total assets |
|
| 4,309,114 |
|
|
| 3,958,780 |
|
|
| 3,960,247 |
|
|
| 3,995,960 |
|
|
| 3,032,319 |
|
Total indebtedness, net |
|
| 1,708,196 |
|
|
| 1,550,545 |
|
|
| 1,424,409 |
|
|
| 1,488,718 |
|
|
| 1,358,606 |
|
Total common shareholders’ equity |
|
| 1,542,308 |
|
|
| 1,459,505 |
|
|
| 1,567,199 |
|
|
| 1,588,577 |
|
|
| 1,100,488 |
|
Noncontrolling interests |
|
| 644,657 |
|
|
| 622,442 |
|
|
| 648,440 |
|
|
| 589,548 |
|
|
| 420,866 |
|
Total equity |
|
| 2,186,965 |
|
|
| 2,081,947 |
|
|
| 2,215,639 |
|
|
| 2,178,125 |
|
|
| 1,521,354 |
|
OTHER: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations attributable to Common Shareholders and Common OP Unit holders (b) |
|
| 126,862 |
|
|
| 118,870 |
|
|
| 134,667 |
|
|
| 117,070 |
|
|
| 111,560 |
|
Cash flows provided by (used in): (c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
| 127,177 |
|
|
| 96,076 |
|
|
| 114,655 |
|
|
| 109,848 |
|
|
| 113,598 |
|
Investing activities |
|
| (397,057 | ) |
|
| (136,619 | ) |
|
| 4,063 |
|
|
| (613,564 | ) |
|
| (354,503 | ) |
Financing activities |
|
| 265,042 |
|
|
| (10,278 | ) |
|
| (127,758 | ) |
|
| 488,365 |
|
|
| 96,101 |
|
Year Ended December 31, | ||||||||||||||||||||
(dollars in thousands, except per share amounts) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
OPERATING DATA: | ||||||||||||||||||||
Revenues | $ | 250,262 | $ | 189,939 | $ | 199,063 | $ | 179,681 | $ | 156,486 | ||||||||||
Operating expenses, excluding depreciation and reserves | (113,554 | ) | (98,039 | ) | (88,850 | ) | (79,104 | ) | (72,108 | ) | ||||||||||
Depreciation and amortization | (104,934 | ) | (70,011 | ) | (60,751 | ) | (49,645 | ) | (40,299 | ) | ||||||||||
Impairment charges | (14,455 | ) | — | (5,000 | ) | — | (1,500 | ) | ||||||||||||
Equity in earnings and gains unconsolidated affiliates inclusive of gains on disposition of properties | 23,371 | 39,449 | 37,330 | 111,578 | 12,382 | |||||||||||||||
Interest income | 29,143 | 25,829 | 16,603 | 12,607 | 11,800 | |||||||||||||||
Gain on change in control and other | 5,571 | — | 1,596 | 2,724 | — | |||||||||||||||
Interest expense | (58,978 | ) | (34,645 | ) | (37,297 | ) | (39,426 | ) | (40,239 | ) | ||||||||||
Income from continuing operations before income taxes | 16,426 | 52,522 | 62,694 | 138,415 | 26,522 | |||||||||||||||
Income tax (provision) benefit | (1,004 | ) | 105 | (1,787 | ) | (629 | ) | (19 | ) | |||||||||||
Income from continuing operations before gain on disposition of properties | 15,422 | 52,627 | 60,907 | 137,786 | 26,503 | |||||||||||||||
Income from discontinued operations, net of tax | — | — | — | 1,222 | 18,137 | |||||||||||||||
Gain on disposition of properties, net of tax | 48,886 | 81,965 | 89,063 | 13,138 | — | |||||||||||||||
Net income | 64,308 | 134,592 | 149,970 | 152,146 | 44,640 | |||||||||||||||
(Income) loss attributable to noncontrolling interests: | ||||||||||||||||||||
Continuing operations | (2,838 | ) | (61,816 | ) | (84,262 | ) | (80,059 | ) | 7,523 | |||||||||||
Discontinued operations | — | — | — | (1,023 | ) | (12,048 | ) | |||||||||||||
Net income attributable to noncontrolling interests | (2,838 | ) | (61,816 | ) | (84,262 | ) | (81,082 | ) | (4,525 | ) | ||||||||||
Net income attributable to Acadia | $ | 61,470 | $ | 72,776 | $ | 65,708 | $ | 71,064 | $ | 40,115 | ||||||||||
Supplemental Information: | ||||||||||||||||||||
Income from continuing operations attributable to Acadia | $ | 61,470 | $ | 72,776 | $ | 65,708 | $ | 70,865 | $ | 34,026 | ||||||||||
Income from discontinued operations attributable to Acadia | — | — | — | 199 | 6,089 | |||||||||||||||
Net income attributable to Acadia | $ | 61,470 | $ | 72,776 | $ | 65,708 | $ | 71,064 | $ | 40,115 | ||||||||||
Basic earnings per share: | ||||||||||||||||||||
Income from continuing operations | $ | 0.73 | $ | 0.94 | $ | 0.94 | $ | 1.18 | $ | 0.61 | ||||||||||
Income from discontinued operations | — | — | — | — | 0.11 | |||||||||||||||
Basic earnings per share | $ | 0.73 | $ | 0.94 | $ | 0.94 | $ | 1.18 | $ | 0.72 | ||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Income from continuing operations | $ | 0.73 | $ | 0.94 | $ | 0.94 | $ | 1.18 | $ | 0.61 | ||||||||||
Income from discontinued operations | — | — | — | — | 0.11 | |||||||||||||||
Diluted earnings per share | $ | 0.73 | $ | 0.94 | $ | 0.94 | $ | 1.18 | $ | 0.72 | ||||||||||
Weighted average number of Common Shares outstanding | ||||||||||||||||||||
Basic | 83,683 | 76,231 | 68,851 | 59,402 | 54,919 | |||||||||||||||
Diluted | 83,685 | 76,244 | 68,870 | 59,426 | 54,982 | |||||||||||||||
Cash dividends declared per Common Share | $ | 1.05 | $ | 1.16 | $ | 1.22 | $ | 1.23 | $ | 0.86 | ||||||||||
(a) | ||
Amounts for credit losses have been reclassified from operating expenses to revenues for the years ended December 31, 2018, 2017, 2016 and 2015. |
BALANCE SHEET DATA: | ||||||||||||||||||||
Real estate before accumulated depreciation | $ | 3,466,482 | $ | 3,382,000 | $ | 2,736,283 | $ | 2,208,595 | $ | 1,819,053 | ||||||||||
Total assets | 3,960,247 | 3,995,960 | 3,032,319 | 2,720,721 | 2,264,957 | |||||||||||||||
Total indebtedness | 1,424,409 | 1,488,718 | 1,358,606 | 1,118,602 | 1,039,997 | |||||||||||||||
Total common shareholders’ equity | 1,567,199 | 1,588,577 | 1,100,488 | 1,055,541 | 704,236 | |||||||||||||||
Noncontrolling interests | 648,440 | 589,548 | 420,866 | 380,416 | 417,352 | |||||||||||||||
Total equity | 2,215,639 | 2,178,125 | 1,521,354 | 1,435,957 | 1,121,588 | |||||||||||||||
OTHER: | ||||||||||||||||||||
Funds from operations attributable to Common Shareholders and Common OP Unit holders (a) | 134,667 | 117,070 | 111,560 | 78,882 | 67,161 | |||||||||||||||
Cash flows provided by (used in): | ||||||||||||||||||||
Operating activities | 119,833 | 111,760 | 113,598 | 82,519 | 65,233 | |||||||||||||||
Investing activities | 10,082 | (610,970 | ) | (354,503 | ) | (268,516 | ) | (87,879 | ) | |||||||||||
Financing activities | (126,897 | ) | 498,239 | 96,101 | 324,388 | 10,022 |
(b) | Funds from operations is a non-GAAP measure. For an explanation of the measure and a reconciliation to the nearest GAAP measure, see “ Item 7. Management’s Discussion and Analysis — Supplemental Financial |
(c) | Cash flow activities for the year ended December 31, 2015 have not been adjusted for the impact of ASUs 2016-15 and 2016-18 (Note 1). |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
OVERVIEW
As of December 31, 2017,2019, there were 176186 properties, which we own or have an ownership interest in, within our Core Portfolio and Funds. Our Core Portfolio consists of those properties either 100% owned, or partially owned through joint venture interests by the Operating Partnership, or subsidiaries thereof, not including those properties owned through our Funds. These properties primarily consist of street and urban retail, and dense suburban shopping centers. See
The majority of our operating income is derived from rental revenues from operating properties, including expense recoveries from tenants, offset by operating and overhead expenses. As our RCP Venture invests in operating companies, the Operating Partnership invests through a taxable REIT subsidiary (“TRS”).
Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective:
• | Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas and create value through accretive development and re-tenanting activities coupled with the acquisition of high-quality assets that have the long-term potential to outperform the asset class as part of our Core asset recycling and acquisition initiative. |
• | Generate additional external growth through an opportunistic yet disciplined acquisition program within our Funds. We target transactions with high inherent opportunity for the creation of additional value through: |
◦ | value-add investments in street retail properties, located in established and “next generation” submarkets, with re-tenanting or repositioning opportunities, |
◦ | opportunistic acquisitions of well-located real-estate anchored by distressed retailers, and |
◦ | other opportunistic acquisitions which may include high-yield acquisitions and purchases of distressed debt. |
Some of these investments historically have also included, and may in the future include, joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets.
• | Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth. |
SIGNIFICANT DEVELOPMENTS DURING THE YEAR ENDED DECEMBERyear ended December 31, 2017
Investments
During the year ended December 31, 2017,2019, within our Core and Fund portfoliosportfolio we invested in six newtwelve properties aggregating $185.9 million, inclusive of transaction costs, as follows (
• | On January 24, 2019, our |
• | On March 15, March 27, May 29, July 30 and November 8, 2019, we acquired five retail condominiums located in the Soho section of New York City for a |
• | ||
On May 2, 2019, we entered into a ground lease (Note 11) on a development property in Washington, D.C. referred to as “1238 Wisconsin Avenue.” |
• | On |
• | On October 25, 2019, we acquired a retail building in Los Angeles, California, referred to as “8436-8452 Melrose Place” for $48.7 million (Note 2). |
• | On December 9, 2019, we acquired a master lease position on a building in the Soho section of New York City, referred to as “565 Broadway” for $28.8 million (Note 11). |
• | On December 11, 2019, we acquired a building in Chicago, Illinois, referred to as “907 W. Armitage” for $2.9 million (Note 2). |
During the year ended December 31, 2017,2019, within our FundsFund portfolio we invested in eight properties aggregating $328.5 million as follows:
• | On March 19, 2019, Fund V’s unconsolidated venture (Note 4) acquired a suburban shopping center in Riverdale, Utah for $48.5 million, referred to as “Family Center at Riverdale,” of which Fund V’s share was $43.7 million. |
• | On April 30, 2019, Fund V’s unconsolidated venture (Note 4) acquired a suburban shopping center in Vernon, Connecticut for $36.7 million, referred to as “Tri-City Plaza,” of which Fund V’s share was $33.0 million |
• | On May 1, 2019, Fund IV acquired a leasehold interest (Note 11) in a retail and parking condominium in a building in New York, New York for $10.5 million, referred to as “110 University Place.” |
• | On May 6, 2019, Fund V acquired a suburban shopping center (Note 2) in Palm Coast, Florida for $36.6 million, referred to as “Palm Coast Landing.” |
• | On June 21, 2019, Fund V acquired a suburban shopping center (Note 2) in Lincoln, Rhode Island for $54.3 million, referred to as “Lincoln Commons.” |
• | On August 2, Fund V acquired a suburban shopping center (Note 2) in Virginia Beach, Virginia for $87.0 million, referred to as “Landstown Commons.” |
• | On August 21, Fund V’s unconsolidated venture (Note 4) acquired two suburban shopping centers in Frederick County, Maryland for a total of $54.9 million, referred to as the “Frederick County Acquisitions,” for which Fund V’s share was $49.4 million. |
Dispositions
On October 28, 2019, we sold 13 propertiesour Pacesetter Park shopping center for an aggregate sales price of $345.8$22.6 million and our proportionate share of the aggregate gains was $15.6 million as follows (
During the year ended December 31, 2017,2019, we obtained aggregate financing of $352.9made four consolidated property dispositions and sold three condominium units (Note 2) from our Fund Portfolio for gross proceeds totaling $86.8 million including (
• | On January 24, 2019, a venture in which Fund III holds an 80% interest sold its 3104 M Street property to an unconsolidated venture (Note 4), in which the Core Portfolio holds a 20% interest, for $10.5 million. The acquiring venture assumed the property’s mortgage in the amount of $4.7 million. |
• | On July 24, 2019, Fund IV sold its consolidated JFK Plaza property for $7.8 million (Note 2). |
• | On August 22, 2019, Fund III sold its consolidated Nostrand Avenue property for $27.7 million (Note 2). |
• | On May 17, September 23, and November 7, 2019, Fund IV sold three consolidated residential condominium units for a total of $8.8 million (Note 2). |
• | On September 27, 2019 Fund IV sold its consolidated 938 W. North Avenue property for $32.0 million (Note 2). |
The Funds recognized a net aggregate gain on the sales of $162.9these consolidated properties of $13.6 million in financings with eleven new non-recourse mortgages, primarily for Fund IV.
Financings
During the year ended December 31, 20172019, we obtained aggregate new consolidated financings of $358.9 million (
• | An additional $100.0 million of borrowing capacity on our senior unsecured revolving credit facility was obtained by amending the facility on October 8, 2019, bringing the total revolving credit capacity to $250.0 million. |
• | An aggregate of $258.9 million in new consolidated mortgage financing was obtained through one Fund II loan, three Fund IV loans and five Fund V loans. |
• | Fund V also obtained a total of $122.5 million in new mortgage financing for its three unconsolidated joint ventures (Note 4). |
In addition, during the year ended December 31, 2019, the Funds repaid mortgage debt aggregating $71.1 million (Note 7) at five consolidated Fund properties, four of which were sold, and Fund IV repaid a $9.4 million mortgage at one of its unconsolidated joint venture properties (Note 4).
Structured Financing
During the year ended December 31, 2019, we entered into the following structured financing transactions:
• | We redeemed a $15.3 million Fund IV Structured Financing investment; |
• | We provided seller financing in the amount of |
• | ||
We funded an additional $4.3 million on an existing loan. |
Equity Issuance
During the second quarter.
RESULTS OF OPERATIONS
See
Note 12 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments.Comparison of Results for theYear Ended December 31, 2017 2019to the Year Ended December 31, 2016
The results of operations by reportable segment for the year ended December 31, 20172019 compared to the year ended December 31, 20162018 are summarized in the table below (in millions, totals may not add due to rounding):
|
| Year Ended |
|
| Year Ended |
|
|
|
| |||||||||||||||||||||||||||||||||||||||
|
| December 31, 2019 |
|
| December 31, 2018 |
|
| Increase (Decrease) |
| |||||||||||||||||||||||||||||||||||||||
|
| Core |
|
| Funds |
|
| SF |
|
| Total |
|
| Core |
|
| Funds |
|
| SF |
|
| Total |
|
| Core |
|
| Funds |
|
| SF |
|
| Total |
| ||||||||||||
Revenues |
| $ | 173.2 |
|
| $ | 122.2 |
|
| $ | — |
|
| $ | 295.3 |
|
| $ | 166.8 |
|
| $ | 92.9 |
|
| $ | — |
|
| $ | 259.7 |
|
| $ | 6.4 |
|
| $ | 29.3 |
|
| $ | — |
|
| $ | 35.6 |
|
Depreciation and amortization |
|
| (61.8 | ) |
|
| (63.6 | ) |
|
| — |
|
|
| (125.4 | ) |
|
| (60.9 | ) |
|
| (56.6 | ) |
|
| — |
|
|
| (117.5 | ) |
|
| 0.9 |
|
|
| 7.0 |
|
|
| — |
|
|
| 7.9 |
|
Property operating expenses, other operating and real estate taxes |
|
| (47.0 | ) |
|
| (43.4 | ) |
|
| — |
|
|
| (90.5 | ) |
|
| (44.1 | ) |
|
| (36.2 | ) |
|
| — |
|
|
| (80.2 | ) |
|
| 2.9 |
|
|
| 7.2 |
|
|
| — |
|
|
| 10.3 |
|
General and administrative expenses |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (35.4 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (34.3 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1.1 |
|
Impairment charge |
|
| — |
|
|
| (1.7 | ) |
|
| — |
|
|
| (1.7 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1.7 |
|
|
| — |
|
|
| 1.7 |
|
Gain on disposition of properties |
|
| 16.8 |
|
|
| 13.6 |
|
|
| — |
|
|
| 30.3 |
|
|
| — |
|
|
| 5.1 |
|
|
| — |
|
|
| 5.1 |
|
|
| 16.8 |
|
|
| 8.5 |
|
|
| — |
|
|
| 25.2 |
|
Operating income |
|
| 81.1 |
|
|
| 26.9 |
|
|
| — |
|
|
| 72.6 |
|
|
| 61.9 |
|
|
| 5.2 |
|
|
| — |
|
|
| 32.7 |
|
|
| 19.2 |
|
|
| 21.7 |
|
|
| — |
|
|
| 39.9 |
|
Interest income |
|
| — |
|
|
| — |
|
|
| 8.0 |
|
|
| 8.0 |
|
|
| — |
|
|
| — |
|
|
| 13.2 |
|
|
| 13.2 |
|
|
| — |
|
|
| — |
|
|
| (5.2 | ) |
|
| (5.2 | ) |
Equity in earnings (losses) of unconsolidated affiliates |
|
| 9.0 |
|
|
| (0.1 | ) |
|
| — |
|
|
| 8.9 |
|
|
| 7.4 |
|
|
| 1.9 |
|
|
| — |
|
|
| 9.3 |
|
|
| 1.6 |
|
|
| (2.0 | ) |
|
| — |
|
|
| (0.4 | ) |
Interest expense |
|
| (28.3 | ) |
|
| (45.5 | ) |
|
| — |
|
|
| (73.8 | ) |
|
| (27.6 | ) |
|
| (42.4 | ) |
|
| — |
|
|
| (70.0 | ) |
|
| 0.7 |
|
|
| 3.1 |
|
|
| — |
|
|
| 3.8 |
|
Other income |
|
| 0.3 |
|
|
| 6.6 |
|
|
| — |
|
|
| 6.9 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.3 |
|
|
| 6.6 |
|
|
| — |
|
|
| 6.9 |
|
Income tax provision |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.5 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.9 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.6 | ) |
Net income (loss) |
|
| 62.1 |
|
|
| (12.0 | ) |
|
| 8.0 |
|
|
| 21.2 |
|
|
| 41.7 |
|
|
| (35.3 | ) |
|
| 13.2 |
|
|
| (15.7 | ) |
|
| 20.4 |
|
|
| 23.3 |
|
|
| (5.2 | ) |
|
| 36.9 |
|
Net loss attributable to noncontrolling interests |
|
| 0.3 |
|
|
| 31.5 |
|
|
| — |
|
|
| 31.8 |
|
|
| 0.8 |
|
|
| 46.4 |
|
|
| — |
|
|
| 47.1 |
|
|
| 0.5 |
|
|
| 14.9 |
|
|
| — |
|
|
| 15.3 |
|
Net income attributable to Acadia |
| $ | 62.5 |
|
| $ | 19.5 |
|
| $ | 8.0 |
|
| $ | 53.0 |
|
| $ | 42.4 |
|
| $ | 11.0 |
|
| $ | 13.2 |
|
| $ | 31.4 |
|
| $ | 20.1 |
|
| $ | 8.5 |
|
| $ | (5.2 | ) |
| $ | 21.6 |
|
Year Ended December 31, 2017 | Year Ended December 31, 2016 | Increase (Decrease) | ||||||||||||||||||||||||||||||||||||||||||||||
Core | Funds | SF | Total | Core | Funds | SF | Total | Core | Funds | SF | Total | |||||||||||||||||||||||||||||||||||||
Revenues | $ | 170.0 | $ | 80.3 | $ | — | $ | 250.3 | $ | 150.2 | $ | 39.7 | $ | — | $ | 189.9 | $ | 19.8 | $ | 40.6 | $ | — | $ | 60.4 | ||||||||||||||||||||||||
Depreciation and amortization | (61.7 | ) | (43.2 | ) | — | (104.9 | ) | (54.6 | ) | (15.4 | ) | — | (70.0 | ) | 7.1 | 27.8 | — | 34.9 | ||||||||||||||||||||||||||||||
Property operating expenses, other operating and real estate taxes | (45.3 | ) | (34.4 | ) | — | (79.8 | ) | (39.6 | ) | (17.8 | ) | — | (57.4 | ) | 5.7 | 16.6 | — | 22.4 | ||||||||||||||||||||||||||||||
Impairment charges | — | (14.5 | ) | — | (14.5 | ) | — | — | — | — | — | 14.5 | — | 14.5 | ||||||||||||||||||||||||||||||||||
General and administrative expenses | — | — | — | (33.8 | ) | — | — | — | (40.6 | ) | — | — | — | (6.8 | ) | |||||||||||||||||||||||||||||||||
Operating income | 62.9 | (11.8 | ) | — | 17.3 | 56.0 | 6.5 | — | 21.9 | 6.9 | (18.3 | ) | — | (4.6 | ) | |||||||||||||||||||||||||||||||||
Gain on disposition of properties | — | 48.9 | — | 48.9 | — | 82.0 | — | 82.0 | — | (33.1 | ) | — | (33.1 | ) | ||||||||||||||||||||||||||||||||||
Interest income | — | — | 29.1 | 29.1 | — | — | 25.8 | 25.8 | — | — | 3.3 | 3.3 | ||||||||||||||||||||||||||||||||||||
Gain on change in control | 5.6 | — | — | 5.6 | — | — | — | — | 5.6 | — | — | 5.6 | ||||||||||||||||||||||||||||||||||||
Equity in earnings and gains of unconsolidated affiliates inclusive of gains on disposition of properties | 3.7 | 19.6 | — | 23.4 | 3.8 | 35.7 | — | 39.4 | (0.1 | ) | (16.1 | ) | — | (16.0 | ) | |||||||||||||||||||||||||||||||||
Interest expense | (28.6 | ) | (30.4 | ) | — | (59.0 | ) | (27.4 | ) | (7.2 | ) | — | (34.6 | ) | 1.2 | 23.2 | — | 24.4 | ||||||||||||||||||||||||||||||
Income tax (provision) benefit | — | — | — | (1.0 | ) | — | — | — | 0.1 | — | — | — | (1.1 | ) | ||||||||||||||||||||||||||||||||||
Net income | 43.6 | 26.3 | 29.1 | 64.3 | 32.4 | 116.9 | 25.8 | 134.6 | 11.2 | (90.6 | ) | 3.3 | (70.3 | ) | ||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | (1.1 | ) | (1.7 | ) | — | (2.8 | ) | (3.4 | ) | (58.4 | ) | — | (61.8 | ) | (2.3 | ) | (56.7 | ) | — | (59.0 | ) | |||||||||||||||||||||||||||
Net income attributable to Acadia | $ | 42.5 | $ | 24.6 | $ | 29.1 | $ | 61.5 | $ | 29.0 | $ | 58.5 | $ | 25.8 | $ | 72.8 | $ | 13.5 | $ | (33.9 | ) | $ | 3.3 | $ | (11.3 | ) |
Core Portfolio
The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio increased by $13.5$20.1 million for the year ended December 31, 20172019 compared to the prior year as a result of the changes as further described below.
Revenues fromfor our Core Portfolio increased by $19.8$6.4 million for the year ended December 31, 20172019 compared to the prior year due primarily to $22.7$5.8 million from the acceleration of amortization on a below-market lease related to a tenant that vacated in 2019 and $3.4 million related to Core Portfolio property acquisitions in 2016 partiallyacquisitions. These increases were offset by $3.8a $2.4 million attributabledecrease in 2019 due to the deconsolidationacceleration of the Brandywine Portfolio in 2016.
Property operating expenses, other operating expenses and real estate taxes for our Core Portfolio increased by $5.7$2.9 million for the year ended December 31, 20172019 compared to the prior year primarily due to Core property acquisitions$1.3 million from increased real estate tax expense at City Center and $1.1 million from increased legal expenses in 2016.
Gain on changedisposition of properties for $16.8 million relates to the sale of Pacesetter Park in control2019 (Note 2).
Equity in earnings of $5.6 million during the year ended December 31, 2017 resulted from the consolidation ofunconsolidated affiliates for our investment in Market Square upon acquisition of the outstanding third party interests (
Interest expense for our Core Portfolio increased $0.7 million for the year ended December 31, 2019 compared to the prior year due to $2.1a $1.3 million increase related to higher average outstanding borrowings, a $1.2 million increase related to higher average interest rates and $0.3 million from higher average principal balanceloan cost amortization in 2017 and a $0.9 million increase in capital lease interest in 2017,2019. These increases were partially offset by $1.0$2.1 million due to lower averagemore interest rates.
Funds
The results of operations for our Funds segment are depicted in the table above under the headings labeled “Funds.” Segment net income attributable to Acadia for the Funds decreased by $33.9increased $8.5 million for the year ended December 31, 20172019 compared to the prior year as a result of the changes described below.
Revenues fromfor the Funds increased by $40.6$29.3 million for the year ended December 31, 20172019 compared to the prior year primarily due to $26.1(i) $19.8 million increase from Fund property acquisitions in 2018 and 2019, (ii) $5.1 million from the acceleration of amortization on a below-market lease, (iii) $3.6 million from lease up at Fund II’s City Point property, (iv) $3.0 million related to Fund III’s Cortlandt Crossing property acquisitions in 2016being placed into service and 2017 as well as $13.6(v) $2.1 million from development projects being placedthe consolidation of Fund IV’s Broughton Street Portfolio. These increases were partially offset by $2.8 million due to property sales in service during 2017 (
Depreciation and amortization for the Funds increased by $27.8$7.0 million for the year ended December 31, 20172019 compared to the prior year
Property operating expenses, other operating expenses and real estate taxes for the Funds increased by $16.6$7.2 million for the year ended December 31, 20172019 compared to the prior year due to $8.5 million from the development projects placed into service in 2017 as well as $6.8 million from Fund property acquisitions in 20162018 and 2017.
The $1.7 million impairment charge in 2019 (Note 8) relates to residential condominium units at Fund IV’s 210 Bowery that were sold during the year ended December 31, 2017 totaled $14.5 million, comprised of charges of
Gain on disposition of properties for the Funds decreased by $33.1increased $8.5 million for the year ended December 31, 20172019 compared to the prior year. Gainsyear due to the sales of 938 West North Avenue and JFK Plaza in Fund IV and Nostrand Avenue and 3104 M Street in Fund III during 2019 compared to the current year period comprised $31.5 million from the salesales of Lake Montclair and 1861 Union in Fund II’s 260 E. 161st Street property, $6.5 million from the sale of Fund II’s 216th Street property, $5.2 million from Fund IV’s 1151 Third Avenue property and $6.4 million from the sale of Fund III’s New Hyde Park Shopping Center. Gains during the prior year period comprised $16.6 million from the sale of Fund III’s Heritage Shops and $65.4 million from the sale of a 65% interestIV in Cortlandt Town Center.
Equity in earnings of unconsolidated affiliates for the Funds decreased by $16.1$2.0 million for the year ended December 31, 20172019 compared to the prior year primarily due to the Fund’s proportionate share of $14.8a $3.2 million distribution from Fund III’s Storage Post venture in aggregate gains from the sales of 1701 Belmont Avenue, Arundel Plaza and 2819 Kennedy Boulevard during the current year period as well as distributions in excess of our carrying value related to investments in Mervyn’s and Albertsons2018, a cost method investment, (
Interest expense for the Funds increased $23.2$3.1 million for the year ended December 31, 20172019 compared to the prior year due to $7.8 million less interest capitalized during 2017, a $6.0 million increase related to higher average interest rates in 2017, a $5.1$6.2 million increase related to higher average outstanding borrowings and $1.5 million from higher loan cost amortization in 2017, and a $2.92019 associated with Fund acquisitions. These increases were partially offset by $4.8 million increasemore interest capitalized in amortization of additional loan costs in 2017.
Other income attributable to noncontrolling interests infor the Funds decreased by $56.7increased $6.6 million for the year ended December 31, 20172019 compared to the prior year due to $5.0 million from the New Market Tax Credit transaction at Fund II’s City Point investment (Note 7) and $1.6 million from an incentive fee earned from Fund III’s Storage Post Venture.
Net loss (income) attributable to noncontrolling interests for the Funds increased $14.9 million for the year ended December 31, 2019 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above.
Structured Financing
The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” NetInterest income for the Structured Financing increased by $3.3portfolio decreased $5.2 million for the year ended December 31, 2019 compared to the prior year
Unallocated
The Company does not allocate general and administrative expense and income taxes to its reportable segments. These unallocated amounts are
depicted in the table above under the headings labeledUnallocated general and administrative expenses decreased by
Prior Year Periods
Discussions of 2017 items and comparisons between the year ended December 31, 20152018 and 2017, respectively, that are summarizednot included in this Report can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the table below (in millions, totals may not add due to rounding):
Year Ended December 31, 2016 | Year Ended December 31, 2015 | Increase (Decrease) | ||||||||||||||||||||||||||||||||||||||||||||||
Core | Funds | SF | Total | Core | Funds | SF | Total | Core | Funds | SF | Total | |||||||||||||||||||||||||||||||||||||
Revenues | $ | 150.2 | $ | 39.7 | $ | — | $ | 189.9 | $ | 150.0 | $ | 49.0 | $ | — | $ | 199.1 | $ | 0.2 | $ | (9.3 | ) | $ | — | $ | (9.2 | ) | ||||||||||||||||||||||
Depreciation and amortization | (54.6 | ) | (15.4 | ) | — | (70.0 | ) | (46.2 | ) | (14.5 | ) | — | (60.8 | ) | 8.4 | 0.9 | — | 9.2 | ||||||||||||||||||||||||||||||
Property operating expenses, other operating and real estate taxes | (39.6 | ) | (17.8 | ) | — | (57.4 | ) | (37.3 | ) | (21.2 | ) | — | (58.5 | ) | 2.3 | (3.4 | ) | — | (1.1 | ) | ||||||||||||||||||||||||||||
Impairment charges | — | — | — | — | (5.0 | ) | — | — | (5.0 | ) | (5.0 | ) | — | — | (5.0 | ) | ||||||||||||||||||||||||||||||||
General and administrative expenses | — | — | — | (40.6 | ) | — | — | — | (30.4 | ) | — | — | — | 10.2 | ||||||||||||||||||||||||||||||||||
Operating income (loss) | 56.0 | 6.5 | — | 21.9 | 61.5 | 13.3 | — | 44.5 | (5.5 | ) | (6.8 | ) | — | (22.6 | ) | |||||||||||||||||||||||||||||||||
Gain on disposition of properties | — | 82.0 | — | 82.0 | — | 89.1 | — | 89.1 | — | (7.1 | ) | — | (7.1 | ) | ||||||||||||||||||||||||||||||||||
Interest income | — | — | 25.8 | 25.8 | — | — | 16.6 | 16.6 | — | — | 9.2 | 9.2 | ||||||||||||||||||||||||||||||||||||
Equity in earnings and gains of unconsolidated affiliates inclusive of gains on disposition of properties | 3.8 | 35.7 | — | 39.4 | 1.2 | 36.2 | — | 37.3 | 2.6 | (0.5 | ) | — | 2.1 | |||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | — | 1.6 | 1.6 | — | — | (1.6 | ) | (1.6 | ) | ||||||||||||||||||||||||||||||||||
Interest expense | (27.4 | ) | (7.2 | ) | — | (34.6 | ) | (27.9 | ) | (9.4 | ) | — | (37.3 | ) | (0.5 | ) | (2.2 | ) | — | (2.7 | ) | |||||||||||||||||||||||||||
Income tax benefit (provision) | — | — | — | 0.1 | — | — | — | (1.8 | ) | — | — | — | 1.9 | |||||||||||||||||||||||||||||||||||
Net income (loss) | 32.4 | 116.9 | 25.8 | 134.6 | 34.8 | 129.2 | 18.2 | 150.0 | (2.4 | ) | (12.3 | ) | 7.6 | (15.4 | ) | |||||||||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | $ | (3.4 | ) | $ | (58.4 | ) | $ | — | $ | (61.8 | ) | $ | (0.1 | ) | $ | (84.1 | ) | $ | — | $ | (84.3 | ) | $ | 3.3 | $ | (25.7 | ) | $ | — | $ | (22.5 | ) | ||||||||||||||||
Net income attributable to Acadia | $ | 29.0 | $ | 58.5 | $ | 25.8 | $ | 72.8 | $ | 34.6 | $ | 45.0 | $ | 18.2 | $ | 65.7 | $ | (5.6 | ) | $ | 13.5 | $ | 7.6 | $ | 7.1 |
SUPPLEMENTAL FINANCIAL MEASURES
Net Property Operating Income
The following discussion of net property operating income (“NOI”) and rent spreads on new and renewal leases includes the activity from both our consolidated and our pro-rata share of unconsolidated properties within our Core Portfolio. Our Funds invest primarily in properties that typically require significant leasing and development. Given that the Funds are finite-life investment vehicles, these properties are sold following stabilization. For these reasons, we believe NOI and rent spreads are not meaningful measures for our Fund investments.
NOI represents property revenues less property expenses. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriate supplemental disclosures of portfolioCore Portfolio operating performance due to their widespread acceptance and use within the REIT investor and analyst communities. NOI and rent spreads on new and renewal leases are presented to assist investors in analyzing our property performance, however, our method of calculating these may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
A reconciliation of consolidated operating income to net operating income - Core Portfolio follows (in thousands):
|
| Year Ended December 31, |
| |||||||||||||
|
| 2019 |
|
|
|
| 2018 |
|
|
|
| 2017 |
| |||
Consolidated operating income (a) |
| $ | 72,603 |
|
|
|
| $ | 32,681 |
|
|
|
| $ | 66,205 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| 35,416 |
|
|
|
|
| 34,343 |
|
|
|
|
| 33,756 |
|
Depreciation and amortization |
|
| 125,443 |
|
|
|
|
| 117,549 |
|
|
|
|
| 104,934 |
|
Impairment charge |
|
| 1,721 |
|
|
|
|
| — |
|
|
|
|
| 14,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Above/below market rent and straight-line rent |
|
| (24,447 | ) |
|
|
|
| (23,521 | ) |
|
|
|
| (21,110 | ) |
Gain on disposition of properties |
|
| (30,324 | ) |
|
|
|
| (5,140 | ) |
|
|
|
| (48,886 | ) |
Consolidated NOI |
|
| 180,412 |
|
|
|
|
| 155,912 |
|
|
|
|
| 149,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest in consolidated NOI |
|
| (52,248 | ) |
|
|
|
| (37,496 | ) |
|
|
|
| (28,379 | ) |
Less: Operating Partnership's interest in Fund NOI included above |
|
| (13,870 | ) |
|
|
|
| (9,790 | ) |
|
|
|
| (7,927 | ) |
Add: Operating Partnership's share of unconsolidated joint ventures NOI (a) |
|
| 25,948 |
|
|
|
|
| 24,919 |
|
|
|
|
| 19,539 |
|
NOI - Core Portfolio |
| $ | 140,242 |
|
|
|
| $ | 133,545 |
|
|
|
| $ | 132,587 |
|
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Consolidated Operating Income | $ | 17,319 | $ | 21,889 | $ | 44,462 | ||||||
Add back: | ||||||||||||
General and administrative | 33,756 | 40,648 | 30,368 | |||||||||
Depreciation and amortization | 104,934 | 70,011 | 60,751 | |||||||||
Impairment charges | 14,455 | — | 5,000 | |||||||||
Less: | ||||||||||||
Above/below market rent, straight-line rent and other adjustments | (21,110 | ) | (5,313 | ) | (8,192 | ) | ||||||
Consolidated NOI | 149,354 | 127,235 | 132,389 | |||||||||
Noncontrolling interest in consolidated NOI | (28,379 | ) | (20,872 | ) | (34,675 | ) | ||||||
Less: Operating Partnership's interest in Fund NOI included above | (7,927 | ) | (4,981 | ) | (5,767 | ) | ||||||
Add: Operating Partnership's share of unconsolidated joint ventures NOI (a) | 19,539 | 16,547 | 10,382 | |||||||||
NOI - Core Portfolio | $ | 132,587 | $ | 117,929 | $ | 102,329 | ||||||
(a) | Prior year amounts have been adjusted to include gains on disposition of properties, which have been reclassified to operating income effective January 1, 2019. |
(b) | Does not include the Operating Partnership’s share of NOI from unconsolidated joint ventures within the |
Funds. |
Same-Property NOI includes Core Portfolio properties that we owned for both the current and prior periods presented, but excludes those properties which we acquired, sold or expected to sell, and developed during these periods. The following table summarizes Same-Property NOI for our Core Portfolio (in thousands):
Year Ended December 31, |
| Year Ended December 31, |
| |||||||||||||
2017 | 2016 |
| 2019 |
|
| 2018 |
| |||||||||
Core Portfolio NOI | $ | 132,587 | $ | 117,929 |
| $ | 140,242 |
|
| $ | 133,545 |
| ||||
Less properties excluded from Same-Property NOI | (31,778 | ) | (17,172 | ) |
|
| (16,312 | ) |
|
| (14,235 | ) | ||||
Same-Property NOI | $ | 100,809 | $ | 100,757 |
| $ | 123,930 |
|
| $ | 119,310 |
| ||||
|
|
|
|
|
|
|
| |||||||||
Percent change from prior year period | 0.1 | % |
|
| 3.9 | % |
|
|
|
| ||||||
|
|
|
|
|
|
|
| |||||||||
Components of Same-Property NOI: |
|
|
|
|
|
|
|
| ||||||||
Same-Property Revenues | $ | 137,590 | $ | 133,086 |
| $ | 167,806 |
|
| $ | 163,469 |
| ||||
Same-Property Operating Expenses | (36,781 | ) | (32,329 | ) |
|
| (43,876 | ) |
|
| (44,159 | ) | ||||
Same-Property NOI | $ | 100,809 | $ | 100,757 |
| $ | 123,930 |
|
| $ | 119,310 |
|
Rent Spreads on Core Portfolio New and Renewal Leases
The following table summarizes rent spreads on both a cash basis and straight-line basis for new and renewal leases based on comparable leases executed within our Core Portfolio for the year ended
December 31,
|
| Year Ended December 31, 2019 |
| |||||
Core Portfolio New and Renewal Leases |
| Cash Basis |
|
| Straight- Line Basis |
| ||
Number of new and renewal leases executed |
|
| 42 |
|
|
| 42 |
|
GLA commencing |
|
| 507,431 |
|
|
| 507,431 |
|
New base rent |
| $ | 17.48 |
|
| $ | 18.22 |
|
Expiring base rent |
| $ | 16.65 |
|
| $ | 15.77 |
|
Percent growth in base rent |
|
| 5.0 | % |
|
| 15.5 | % |
Average cost per square foot (a) |
| $ | 5.52 |
|
| $ | 5.52 |
|
Weighted average lease term (years) |
|
| 6.9 |
|
|
| 6.9 |
|
Year Ended December 31, 2017 | ||||||||
Core Portfolio New and Renewal Leases | Cash Basis | Straight-Line Basis | ||||||
Number of new and renewal leases executed | 72 | 72 | ||||||
GLA commencing | 500,028 | 500,028 | ||||||
New base rent | $ | 23.63 | $ | 24.23 | ||||
Expiring base rent | $ | 21.66 | $ | 20.48 | ||||
Percent growth in base rent | 9.1 | % | 18.3 | % | ||||
Average cost per square foot | $ | 6.16 | $ | 6.16 | ||||
Weighted average lease term (years) | 5.3 | 5.3 |
(a) | |
The average cost per square foot includes tenant improvement costs, leasing commissions and tenant allowances. |
Funds from Operations
We consider funds from operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO is presented to assist investors in analyzing our performance. It is helpful as it excludes various items included in net income that are not indicative of the operating performance, such as gains (losses) from sales of depreciated property, depreciation and amortization, and impairment of depreciable real estate. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generated from operations as defined by generally accepted accounting principles (“GAAP”) and is not indicative of cash available to fund all cash needs, including distributions. It should not be considered as an alternative to net income for the purpose of evaluating our performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, we define FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships
|
| Year Ended December 31, |
| |||||||||
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Net income attributable to Acadia |
| $ | 53,045 |
|
| $ | 31,439 |
|
| $ | 61,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of real estate and amortization of leasing costs (net of noncontrolling interests' share) |
|
| 89,373 |
|
|
| 85,852 |
|
|
| 83,515 |
|
Impairment charge (net of noncontrolling interests' share) |
|
| 395 |
|
|
| — |
|
|
| 1,088 |
|
Gain on disposition of properties (net of noncontrolling interests' share) |
|
| (19,786 | ) |
|
| (994 | ) |
|
| (15,565 | ) |
Income attributable to Common OP Unit holders |
|
| 3,295 |
|
|
| 2,033 |
|
|
| 3,609 |
|
Distributions - Preferred OP Units |
|
| 540 |
|
|
| 540 |
|
|
| 550 |
|
Funds from operations attributable to Common Shareholders and Common OP Unit holders |
| $ | 126,862 |
|
| $ | 118,870 |
|
| $ | 134,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From Operations per Share - Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding, GAAP earnings |
|
| 84,435,826 |
|
|
| 82,080,159 |
|
|
| 83,682,789 |
|
Weighted-average OP Units outstanding |
|
| 5,111,262 |
|
|
| 4,941,661 |
|
|
| 4,741,058 |
|
Basic weighted-average shares outstanding, FFO |
|
| 89,547,088 |
|
|
| 87,021,820 |
|
|
| 88,423,847 |
|
Assumed conversion of Preferred OP Units to common shares |
|
| 499,345 |
|
|
| 499,345 |
|
|
| 505,045 |
|
Assumed conversion of LTIP units and restricted share units to common shares |
|
| — |
|
|
| 206,646 |
|
|
| 69,488 |
|
Diluted weighted-average number of Common Shares and Common OP Units outstanding, FFO |
|
| 90,046,433 |
|
|
| 87,727,811 |
|
|
| 88,998,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Funds from operations, per Common Share and Common OP Unit |
| $ | 1.41 |
|
| $ | 1.35 |
|
| $ | 1.51 |
|
(dollars in thousands except per share data) | Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | ||||||||||
Net income attributable to Acadia | $ | 61,470 | $ | 72,776 | $ | 65,708 | ||||||
Depreciation of real estate and amortization of leasing costs (net of noncontrolling interests' share) | 83,515 | 67,446 | 52,013 | |||||||||
Impairment charges (net of noncontrolling interests’ share) | 1,088 | — | 1,111 | |||||||||
Gain on sale (net of noncontrolling interests’ share) | (15,565 | ) | (28,154 | ) | (11,114 | ) | ||||||
Income attributable to Common OP Unit holders | 3,609 | 4,442 | 3,811 | |||||||||
Distributions - Preferred OP Units | 550 | 560 | 31 | |||||||||
Funds from operations attributable to Common Shareholders and Common OP Unit holders | $ | 134,667 | $ | 117,070 | $ | 111,560 | ||||||
Funds From Operations per Share - Diluted | ||||||||||||
Basic weighted-average shares outstanding, GAAP earnings | 83,682,789 | 76,231,000 | 68,851,083 | |||||||||
Weighted-average OP Units outstanding | 4,741,058 | 4,435,041 | 3,894,542 | |||||||||
Basic weighted-average shares outstanding, FFO | 88,423,847 | 80,666,041 | 72,745,625 | |||||||||
Assumed conversion of Preferred OP Units to common shares | 505,045 | 435,274 | 25,067 | |||||||||
Assumed conversion of options, LTIP units and restricted share units to common shares | 69,488 | 150,843 | 296,815 | |||||||||
Diluted weighted-average number of Common Shares and Common OP Units outstanding, FFO | 88,998,380 | 81,252,158 | 73,067,507 | |||||||||
Diluted Funds from operations, per Common Share and Common OP Unit | $ | 1.51 | $ | 1.44 | $ | 1.53 |
LIQUIDITY AND CAPITAL RESOURCES
Uses of Liquidity and Cash Requirements
Our principal uses of liquidity are (i) distributions to our shareholders and OP unit holders, (ii) investments which include the funding of our capital committed to the Funds and property acquisitions and development/re-tenanting activities within our Core Portfolio, (iii) distributions to our Fund investors, and (iv) debt service and loan repayments.
Distributions
In order to qualify as a REIT for Federalfederal income tax purposes, we must currently distribute at least 90% of our taxable income to our shareholders. During the year ended December 31, 2017,2019, we paid dividends and distributions on our Common Shares, Common OP Units and Preferred OP Units totaling $106.7$101.0 million. This amount included a $13.3 million special dividend that was paid
Investments in January 2017, which related to the Operating Partnership’s share of cash proceeds from property dispositions during 2016. The balance of the distributions were funded from the Operating Partnership’s share of operating cash flow.
As previously discussed, during the year ended December 31, 2017. These resulted from proceeds related to the dispositions of New Hyde Park Shopping Center (
Structured Financing Investment
During the year ended December 31, 2017,2019, we advanced an additional $4.3 million on a note receivable and provided seller financing for $13.5 million (Note 3).
Capital Commitments
During the year ended December 31, 2019, we made capital contributions of $11.1aggregating $32.8 million to Fund IV, $9.2 million to Fund V, and $3.6 million to Fund III in connection with acquisitions and development costs.our Funds. At December 31, 2017,2019, our share of the remaining capital commitments to our Funds aggregated $131.9$86.1 million as follows:
• | $3.3 million to Fund III. Fund III was launched in May 2007 with total committed capital of $450.0 million of which our original share was $89.6 million. During 2015, we acquired an additional interest, which had an original capital commitment of $20.9 million. |
• | $21.2 million to Fund IV. Fund IV was launched in May 2012 with total committed capital of $530.0 million of which our original share was $122.5 million. |
• | $61.6 million to Fund V. Fund V was launched in August 2016 with total committed capital of $520.0 million of which our initial share is $104.5 million. |
In addition, during April 2018, a distribution was made to the Fund II was launched in June 2004 with total committed capital of $300.0 million of which our share was $85.0 million, which has been fully funded.
Development Activities
During the year ended December 31, 2017,2019, capitalized costs associated with development activities totaled $108.1 million. These costs primarily related to Fund II’s City Point project.$25.6 million (Note 2). At December 31, 2017, we had 62019, there were five Core portfolio properties under development and redevelopment and five Fund properties under development for which the estimated total cost to complete these projects through 20202022 was $75.7$154.0 million to $101.7$191.3 million and our share was approximately $25.1$93.0 million to $33.2$111.1 million.
Debt
A summary of our consolidated debt, which includes the full amount of Fund related obligations and excludes our pro rata share of debt at our unconsolidated subsidiaries, is as follows (in thousands):
|
| December 31, |
|
|
|
| December 31, |
| ||
|
| 2019 |
|
|
|
| 2018 |
| ||
Total Debt - Fixed and Effectively Fixed Rate |
| $ | 1,403,324 |
|
|
|
| $ | 1,001,658 |
|
Total Debt - Variable Rate |
|
| 314,604 |
|
|
|
|
| 558,675 |
|
|
|
| 1,717,928 |
|
|
|
|
| 1,560,333 |
|
Net unamortized debt issuance costs |
|
| (10,383 | ) |
|
|
|
| (10,541 | ) |
Unamortized premium |
|
| 651 |
|
|
|
|
| 753 |
|
Total Indebtedness |
| $ | 1,708,196 |
|
|
|
| $ | 1,550,545 |
|
December 31, | December 31, | |||||||
2017 | 2016 | |||||||
Total Debt - Fixed and Effectively Fixed Rate | $ | 899,650 | $ | 860,486 | ||||
Total Debt - Variable Rate | 538,736 | 645,185 | ||||||
1,438,386 | 1,505,671 | |||||||
Net unamortized debt issuance costs | (14,833 | ) | (18,289 | ) | ||||
Unamortized premium | 856 | 1,336 | ||||||
Total Indebtedness | $ | 1,424,409 | $ | 1,488,718 |
As of December 31, 2017,2019, our consolidated outstanding mortgage and notes payable aggregated $1,438.4$1,717.9 million, excluding unamortized premium of $0.9$0.7 million and unamortized loan costs of $14.8$10.4 million, and were collateralized by 4244 properties and related tenant leases. Interest rates on our outstanding indebtedness ranged from 1.00%2.95% to 5.89%6.00% with maturities that ranged from May 1, 2018,February 2020 to April 15, 2035. Taking into consideration $504.0$948.8 million of notional principal under variable to fixed-rate swap agreements currently in effect, $899.7$1,403.3 million of the portfolio debt, or 62.5%81.7%, was fixed at a 3.74%3.56% weighted-average interest rate and $538.7$314.6 million, or 37.5%18.3% was floating at a 3.44%3.71% weighted average interest rate as of December 31, 2017.2019. Our variable-rate debt includes $196.4$143.3 million of debt subject to interest rate caps.
There is $87.7$431.5 million of Fund debt maturing in 20182020 at a weighted-average interest rate of 4.17%;4.46%, including $121.5 million of debt with available one-year extension options and $240.0 million at Fund II for which the Company is actively seeking refinancing; there is $6.7$5.8 million of scheduled principal amortization due in 2018;2020; and our share of scheduled remaining 20182020 principal payments and maturities on our unconsolidated debt was $7.9$10.1 million at December 31, 2017.2019. In addition, $213.6$287.7 million of our total consolidated debt and $1.0$7.9 million of our pro-rata share of unconsolidated debt will come due in 2019.2021. As it relates to the maturing debt in 20182020 and 2019,2021, we may not have sufficient cashliquidity on hand to repay such indebtedness, and, therefore, we expect to refinance at least a portion of this indebtedness or select other alternatives based on market conditions as these loans mature; however, there can be no assurance that we will be able to obtain financing at acceptable terms.
A mortgage loan in the Company’s Core Portfolio for $26.3 million was in default and subject to litigation at December 31, 20172019 and 2018 (Note 7).
Share Repurchase Program
The Company did not repurchase any of its Common Shares pursuant to its new share repurchase program (Note 10) during the year ended December 31, 2016 (
Sources of Liquidity
Our primary sources of capital for funding our liquidity needs include (i) the issuance of both public equity and OP Units, (ii) the issuance of both secured and unsecured debt, (iii) unfunded capital commitments from noncontrolling interests within our Funds, (iv) future sales of existing properties, (v) repayments of structured financing investments, and (v)(vi) cash on hand and future cash flow from operating activities. Our cash on hand in our consolidated subsidiaries at December 31, 20172019 totaled $74.8$15.8 million. Our remaining sources of liquidity are described further below.
ATM Program
We have an at-the-market (“ATM”ATM Program (Note 10) equity issuance program which provides us an efficient and low-cost vehicle for raising public equity to fund our capital needs. Through this program, we have been able to effectively “match-fund” the required equity for our Core Portfolio and Fund acquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time, we have issued and intend to continue to issue, equity in follow-on offerings separate from our ATM program.Program. Net proceeds raised through our ATM programProgram and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions, and for general corporate purposes. There were no issuances of equity under the ATM program during the year ended December 31, 2017.
Fund Capital
During the year ended December 31, 2019, Fund III called capital contributions tototaling $12.5 million, Fund IV called capital contributions of $37.0$17.3 million toand Fund V called capital contributions of $36.6$128.2 million, and to Fund III of $11.2 million were primarily used to fund recent acquisitions and development activities.which our aggregate proportionate share from all Funds was $32.8 million. At December 31, 2017,2019, unfunded capital commitments from noncontrolling interests within our Funds II, III, IV and V were $29.1$10.8 million, $90.2$10.3 million, $70.6 million and $378.9$245.1 million, respectively.
Asset Sales
As previously discussed, during the year ended December 31, 2017,2019, within our Fund portfolio we sold fiveone Core and four Fund consolidated properties, and eight unconsolidated propertiesthree Fund consolidated residential condominium units for an aggregate sales price of $345.8$109.3 million for which our proportionate share of the aggregate gains was $15.6 million (
Structured Financing Repayments
During 2017, wethe year ended December 31, 2019, Fund IV received total collectionsfull payment of $15.3 million plus accrued interest of $10.0 million on our notes receivable of $32.0 million, including full repayment of two notes issued in prior periodsits Structured Financing investment. (
Financing and Debt
As of December 31, 2017,2019, we had $166.5$326.0 million of additional capacity under existing consolidated Core and Fund revolving debt facilities. In addition, at that date within our Core and Fund portfolios, we had 7178 unleveraged consolidated properties with an aggregate carrying value of approximately $1.6$1.5 billion and 25one unleveraged unconsolidated propertiesproperty for which our share of the carrying value was $62.9$100.7 million, although there can be no assurance that we would be able to obtain financing for these properties at favorable terms, if at all.
HISTORICAL CASH FLOW
The following table compares the historical cash flow for the year ended December 31, 20172019 with the cash flow for the year ended December 31, 20162018 (in millions):
|
| Year Ended December 31, |
| |||||||||
|
| 2019 |
|
| 2018 |
|
| Variance |
| |||
Net cash provided by operating activities |
| $ | 127.2 |
|
| $ | 96.1 |
|
| $ | 31.1 |
|
Net cash used in investing activities |
|
| (397.1 | ) |
|
| (136.6 | ) |
|
| (260.5 | ) |
Net cash provided by (used in) financing activities |
|
| 265.0 |
|
|
| (10.3 | ) |
|
| 275.3 |
|
Decrease in cash and restricted cash |
| $ | (4.8 | ) |
| $ | (50.8 | ) |
| $ | 46.0 |
|
Year Ended December 31, | ||||||||||||
2017 | 2016 | Variance | ||||||||||
Net cash provided by operating activities | $ | 119.8 | $ | 111.8 | $ | 8.0 | ||||||
Net cash provided by (used in) investing activities | 10.1 | (611.0 | ) | 621.1 | ||||||||
Net cash (used in) provided by financing activities | (126.9 | ) | 498.2 | (625.1 | ) | |||||||
Increase (decrease) in cash and cash equivalents | $ | 3.0 | $ | (1.0 | ) | $ | 4.0 |
Operating Activities
Our operating activities provided $8.0$31.1 million more cash during the year ended December 31, 2017, primarily due to additional cash flow from 2016 and 2017 Core and Fund acquisitions partially offset by a $27.0 million rent prepayment received from a tenant in 2016.
Investing Activities
During the year ended December 31, 2019 as compared to the year ended December 31, 2018, our investing activities used $621.1$260.5 million lessmore cash, primarily due to (i) $291.8 million less cash used for the acquisition of real estate, (ii) $146.8 million less cash used for the issuance of notes receivable, (iii) $111.8$209.5 million more cash received from dispositionused in acquisition and lease of properties, including unconsolidated affiliates, (iv) $65.6(ii) $148.1 million lessmore cash used forin investments and advances to unconsolidated investments, and (v) $41.3 million less cash used for development and property improvement costs. These items were partially offset by (i) $30.5 million less cash received from return of capital fromin unconsolidated affiliates, and (ii)(iii) $10.8 million less cash received from repayments of notes receivable.
Year Ended December 31, | ||||||||||||
2016 | 2015 | Variance | ||||||||||
Net cash provided by operating activities | $ | 111.8 | $ | 113.6 | $ | (1.8 | ) | |||||
Net cash used in investing activities | (611.0 | ) | (354.5 | ) | (256.5 | ) | ||||||
Net cash provided by financing activities | 498.2 | 96.1 | 402.1 | |||||||||
Total | $ | (1.0 | ) | $ | (144.8 | ) | $ | 143.8 |
Financing Activities
Our financing activities provided $402.1$275.3 million more cash during 2016,the year ended December 31, 2019 as compared to the year ended December 31, 2018, primarily from (i) $386.9$145.5 million more cash received from the issuancesale of Common Shares, and (ii) an increase of $259.6$114.1 million more cash provided from capital contributions from noncontrolling interests.interests, (iii) $55.1 million less cash used to repurchase Common Shares, and (iv) $40.9 million more cash provided from net borrowings. These itemssources of cash were partially offset by (i) a decrease of $210.7$69.8 million ofmore cash provided from net borrowings, (ii)used in distributions to noncontrolling interests increased $21.4 million, (iii) $7.3and $5.0 million more cash used for deferred financing and other costs, and (iv) an additional $5.0 million of cash used to payin dividends paid to Common Shareholders.
CONTRACTUAL OBLIGATIONS
The following table summarizes: (i) principal and interest obligations under mortgage and other notes, (ii) rents due under non-cancelable operating and capital leases, which includes ground leases at seven of our properties and the lease for our corporate office and (iii) construction commitments as of December 31, 20172019 (in millions):
|
| Payments Due by Period |
| |||||||||||||||||
Contractual Obligations |
| Total |
|
| Less than 1 Year |
|
| 1 to 3 Years |
|
| 3 to 5 Years |
|
| More than 5 Years |
| |||||
Principal obligations on debt |
| $ | 1,717.9 |
|
| $ | 437.3 |
|
| $ | 455.2 |
|
| $ | 627.5 |
|
| $ | 197.9 |
|
Interest obligations on debt |
|
| 207.4 |
|
|
| 63.1 |
|
|
| 78.1 |
|
|
| 37.4 |
|
|
| 28.8 |
|
Lease obligations |
|
| 346.9 |
|
|
| 7.0 |
|
|
| 13.7 |
|
|
| 13.8 |
|
|
| 312.4 |
|
Construction commitments (a) |
|
| 41.1 |
|
|
| 41.1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
| $ | 2,313.3 |
|
| $ | 548.5 |
|
| $ | 547.0 |
|
| $ | 678.7 |
|
| $ | 539.1 |
|
Payments Due by Period | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | |||||||||||||||
Principal obligations on debt | $ | 1,438.4 | $ | 94.4 | $ | 790.0 | $ | 353.9 | $ | 200.1 | ||||||||||
Interest obligations on debt | 217.3 | 60.7 | 92.5 | 34.4 | 29.7 | |||||||||||||||
Lease obligations (a) | 207.2 | 4.5 | 8.9 | 8.7 | 185.1 | |||||||||||||||
Construction commitments (b) | 92.2 | 92.2 | — | — | — | |||||||||||||||
Total | $ | 1,955.1 | $ | 251.8 | $ | 891.4 | $ | 397.0 | $ | 414.9 |
(a) In conjunction with the development of our Core Portfolio and Fund properties, we have entered into construction commitments with general contractors. We intend to fund these requirements with existing liquidity.
OFF-BALANCE SHEET ARRANGEMENTS
We have the following investments made through joint ventures for the purpose of investing in operating properties. We account for these investments using the equity method of accounting. As such, our financial statements reflect our investment and our share of income and loss from, but not the individual assets and liabilities, of these joint ventures.
See
Note 4 in the Notes to Consolidated Financial Statements, for a discussion of our unconsolidated investments. The Operating Partnership’s pro-rata share of unconsolidated non-recourse debt related to those investments is as follows (dollars in millions):
|
| Operating Partnership |
|
| December 31, 2019 | |||||||||
Investment |
| Ownership Percentage |
|
| Pro-rata Share of Mortgage Debt |
|
| Effective Interest Rate (a) |
|
| Maturity Date | |||
650 Bald Hill Road |
|
| 20.8 | % |
| $ | 3.5 |
|
|
| 4.35 | % |
| Apr 2020 |
Eden Square |
|
| 22.8 | % |
|
| 5.5 |
|
|
| 3.00 | % |
| Jun 2020 |
Promenade at Manassas |
|
| 22.8 | % |
|
| 5.9 |
|
|
| 3.45 | % |
| Dec 2021 |
3104 M Street |
|
| 20.0 | % |
|
| 0.9 |
|
|
| 5.25 | % |
| Dec 2021 |
Family Center at Riverdale |
|
| 18.0 | % |
|
| 5.8 |
|
|
| 3.40 | % |
| May 2022 |
Gotham Plaza |
|
| 49.0 | % |
|
| 9.5 |
|
|
| 3.30 | % |
| Jun 2023 |
Renaissance Portfolio |
|
| 20.0 | % |
|
| 32.0 |
|
|
| 3.40 | % |
| Aug 2023 |
Crossroads |
|
| 49.0 | % |
|
| 31.8 |
|
|
| 3.94 | % |
| Oct 2024 |
Tri-City Plaza |
|
| 18.1 | % |
|
| 5.5 |
|
|
| 3.09 | % |
| Oct 2024 |
Frederick Crossing |
|
| 18.1 | % |
|
| 4.4 |
|
|
| 3.26 | % |
| Dec 2024 |
Frederick County Square |
|
| 18.1 | % |
|
| 2.7 |
|
|
| 4.00 | % |
| Jan 2025 |
840 N. Michigan |
|
| 88.4 | % |
|
| 65.0 |
|
|
| 4.36 | % |
| Feb 2025 |
Georgetown Portfolio |
|
| 50.0 | % |
|
| 8.1 |
|
|
| 4.72 | % |
| Dec 2027 |
Total |
|
|
|
|
| $ | 180.6 |
|
|
|
|
|
|
|
(a) | ||
Effective interest rates incorporate the effect of interest rate swaps and caps that were in effect at December 31, 2019, where applicable. |
Operating Partnership Ownership Percentage | Operating Partnership Pro-rata Share of Mortgage Debt | |||||||||||
Investment | Interest Rate at December 31, 2017 | Maturity Date | ||||||||||
230/240 W. Broughton | 11.6 | % | $ | 1.2 | 4.37 | % | May 2018 | |||||
Promenade at Manassas | 22.8 | % | 5.7 | 3.07 | % | November 2018 | ||||||
650 Bald Hill | 20.8 | % | 2.9 | 4.02 | % | April 2020 | ||||||
Eden Square | 22.8 | % | 5.1 | 3.52 | % | June 2020 | ||||||
Gotham Plaza (a) | 49.0 | % | 10.0 | 2.97 | % | June 2023 | ||||||
Renaissance Portfolio | 20.0 | % | 32.0 | 3.07 | % | August 2023 | ||||||
Crossroads | 49.0 | % | 33.0 | 3.94 | % | October 2024 | ||||||
840 N. Michigan | 88.4 | % | 65.0 | 4.36 | % | February 2025 | ||||||
Georgetown Portfolio | 50.0 | % | 8.4 | 4.72 | % | December 2027 | ||||||
Total | $ | 163.3 |
CRITICAL ACCOUNTING POLICIES
Management’s discussion and analysis of financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect the significant judgments and estimates used by us in the preparation of our Consolidated Financial Statements.
Valuation of Properties
On a quarterly basis, we review the carrying value of properties held for use and for sale as well as our development properties. We perform an impairment analysis by calculating and reviewing net operating income on a property-by-property basis. We evaluate leasing projections and perform other analyses to conclude whether an asset is impaired. We record impairment losses and reduce the carrying value of properties when indicators of impairment are present and the expected undiscounted cash flows related to those properties are less than their carrying amounts. In cases where we do not expect to recover our carrying costs on properties held for use, we reduce our carrying cost to fair value. For properties held for sale, we reduce our carrying value to the fair value less costs to sell.
See
Note 8 of the Notes to the Consolidated Financial Statements for a discussion of impairments recognized during the periods presented.Investments in and Advances to Unconsolidated Joint Ventures
We periodically review our investment in unconsolidated joint ventures for other than temporary declines in market value. AnyAn impairment charge is recorded for a decline that is not expectedconsidered to be recovered in the next twelve months is considered other-than-temporary and an impairment charge is recorded as a reduction in the carrying value of the investment. No impairment charges related to our investment in unconsolidated joint ventures were recognized for the years ended December 31, 2017, 20162019, 2018 and 2015.
Bad Debts
We maintainassess the collectability of our accounts receivable related to tenant revenues. We first apply the guidance under ASC Topic 842 “Leases” (“ASC 842”) in assessing our rents receivable: if collection of rents under specific operating leases is not probable, then we recognize the lesser of that lease’s rental income on a straight-line basis or cash received, plus variable rents as earned. Once this initial assessment is completed, we apply a general reserve, as provided under ASC 450-20, if applicable. Rents receivable at December 31, 2019 and 2018 are shown net of an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make payments on arrearages in billed rents, as well as the likelihood that tenants will not have the ability to make payments on unbilled rents including estimated expense recoveries. We also maintain a reserve for straight-line rent receivables. For the years ended December 31, 2017 and 2016, the allowance for doubtful accounts totaled $5.9$11.4 million and $5.7$7.9 million, respectively. If the financial condition
Real Estate
Real estate assets are stated at cost less accumulated depreciation. Expenditures for acquisition, development, construction and improvement of properties, as well as significant renovations are capitalized. Interest costs are capitalized until construction is substantially complete. Construction in progress includes costs for significant property expansion and development. Depreciation is computed on the straight-line basis over estimated useful lives of 40 years for buildings, the shorter of the useful life or lease term for tenant improvements and five years for furniture, fixtures and equipment. Expenditures for maintenance and repairs are charged to operations as incurred.
Upon acquisitions of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above and below marketbelow-market leases and acquired in-place leases and customer relationships) and acquired liabilities in accordance with the FASBFinancial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Revenue Recognition and Accounts Receivable
Leases with tenants are accounted for as operating leases. Minimum rents are recognized on a straight-line basis over the non-cancelable term of the respective leases, beginning when the tenant takes possession of the space.leases. Certain of these leases also provide for percentage rents based upon the level of sales achieved by the tenant. Percentage rent is recognized in the period when the tenants’ sales breakpoint is met. In addition, leases typically provide for the reimbursement to us of real estate taxes, insurance and other property operating expenses. These reimbursements are recognized as revenue in the period the expenses are incurred.
We make estimates ofassess the uncollectabilitycollectability of our accounts receivable related to tenant revenues. An allowance for doubtful accounts has been provided against certain tenant accounts receivable that are estimated to be uncollectible. Seerevenues as described under the heading “Bad Debts” above. Once the amount is ultimately deemed to be uncollectible, it is written off.
Structured Financings
Real estate notes receivable investments and preferred equity investments (“Structured Financings”) are intended to be held to maturity and are carried at cost. Interest income from Structured Financings areis recognized on the effective interest method over the expected life of the loan. Under the effective interest method, interest or fees to be collected at the origination of the Structured Financing investment is recognized over the term of the loan as an adjustment to yield.
Allowances for Structured Financing investments are established based upon management’s quarterly review of the investments. In performing this review, management considers the estimated net recoverable value of the investment as well as other factors, including the fair value of any collateral, the amount and status of any senior debt, and the prospects for the borrower. Because this determination is based upon projections of future economic events, which are inherently subjective, the amounts ultimately realized from the Structured Financings may differ materially from the carrying value at the balance sheet date. Interest income recognition is generally suspended for investments when, in the opinion of management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the suspended investment becomes contractually current and performance is demonstrated to be resumed.
Recently Issued Accounting Pronouncements
Reference is made to
Note 1 for information about recently issued and recently adopted accounting pronouncements.ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
Information as ofDecember 31, 2017
Our primary market risk exposure is to changes in interest rates related to our mortgage and other debt. See
Note 7 in the Notes to Consolidated Financial Statements, for certain quantitative details related to our mortgage and other debt.Currently, we manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap and cap agreements. As of December 31, 2017,2019, we had total mortgage and other notes payable of $1,438.4$1,717.9 million, excluding the unamortized premium of $0.9$0.7 million and unamortized loandebt issuance costs of $14.8$10.4 million, of which $899.7$1,403.3 million, or 62.5%81.7% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $538.7$314.6 million, or 37.5%18.3%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of December 31, 2017,2019, we were party to 2740 interest rate swap and four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $504.0$948.8 million and $196.4$143.3 million of LIBOR-based variable-rate debt, respectively.
The following table sets forth information as of December 31, 20172019 concerning our long-term debt obligations, on a pro-rata share basis, including principal cash flows by scheduled maturity and weighted average interest rates of maturing amounts (dollars in millions):
Core Consolidated Mortgage and Other Debt
Year | Scheduled Amortization | Maturities | Total | Weighted-Average Interest Rate |
| Scheduled Amortization |
|
| Maturities |
|
| Total |
|
| Weighted-Average Interest Rate |
| |||||||||||||||
2018 | $ | 3.1 | $ | 45.9 | $ | 49.0 | 4.2 | % | |||||||||||||||||||||||
2019 | 3.0 | — | 3.0 | — | % | ||||||||||||||||||||||||||
2020 | 3.1 | 91.5 | 94.6 | 2.7 | % |
| $ | 3.3 |
|
| $ | 26.3 |
|
| $ | 29.6 |
|
|
| 6.0 | % | ||||||||||
2021 | 3.2 | 200.0 | 203.2 | 2.7 | % |
|
| 3.5 |
|
|
| — |
|
|
| 3.5 |
|
|
| — | % | ||||||||||
2022 | 3.4 | 50.0 | 53.4 | 3.0 | % |
|
| 3.6 |
|
|
| 60.8 |
|
|
| 64.4 |
|
|
| 3.0 | % | ||||||||||
2023 |
|
| 2.9 |
|
|
| 367.9 |
|
|
| 370.8 |
|
|
| 3.0 | % | |||||||||||||||
2024 |
|
| 2.6 |
|
|
| 7.3 |
|
|
| 9.9 |
|
|
| 4.7 | % | |||||||||||||||
Thereafter | 17.4 | 147.7 | 165.1 | 3.7 | % |
|
| 13.1 |
|
|
| 177.2 |
|
|
| 190.3 |
|
|
| 3.8 | % | ||||||||||
$ | 33.2 | $ | 535.1 | $ | 568.3 |
| $ | 29.0 |
|
| $ | 639.5 |
|
| $ | 668.5 |
|
|
|
|
|
Fund Consolidated Mortgage and Other Debt
Year |
| Scheduled Amortization |
|
| Maturities |
|
| Total |
|
| Weighted-Average Interest Rate |
| ||||
2020 |
| $ | 2.5 |
|
| $ | 405.3 |
|
| $ | 407.8 |
|
|
| 4.4 | % |
2021 |
|
| 2.8 |
|
|
| 281.5 |
|
|
| 284.3 |
|
|
| 4.0 | % |
2022 |
|
| 3.1 |
|
|
| 100.0 |
|
|
| 103.1 |
|
|
| 3.9 | % |
2023 |
|
| 3.7 |
|
|
| 40.9 |
|
|
| 44.6 |
|
|
| 3.2 | % |
2024 |
|
| 2.5 |
|
|
| 199.5 |
|
|
| 202.0 |
|
|
| 3.5 | % |
Thereafter |
|
| 0.3 |
|
|
| 7.3 |
|
|
| 7.6 |
|
|
| 3.6 | % |
|
| $ | 14.9 |
|
| $ | 1,034.5 |
|
| $ | 1,049.4 |
|
|
|
|
|
Year | Scheduled Amortization | Maturities | Total | Weighted-Average Interest Rate | |||||||||||
2018 | $ | 0.7 | $ | 5.1 | $ | 5.8 | 3.6 | % | |||||||
2019 | 0.8 | 46.0 | 46.8 | 4.2 | % | ||||||||||
2020 | 0.5 | 111.8 | 112.3 | 3.9 | % | ||||||||||
2021 | 0.5 | 11.3 | 11.8 | 3.5 | % | ||||||||||
2022 | 0.4 | 10.1 | 10.5 | 3.4 | % | ||||||||||
Thereafter | 0.1 | 7.0 | 7.1 | 3.6 | % | ||||||||||
$ | 3.0 | $ | 191.3 | $ | 194.3 |
Mortgage Debt in Unconsolidated Partnerships (at our Pro-Rata Share)
Year |
| Scheduled Amortization |
|
| Maturities |
|
| Total |
|
| Weighted-Average Interest Rate |
| ||||
2020 |
| $ | 1.2 |
|
| $ | 8.9 |
|
| $ | 10.1 |
|
|
| 4.0 | % |
2021 |
|
| 1.2 |
|
|
| 6.7 |
|
|
| 7.9 |
|
|
| 3.7 | % |
2022 |
|
| 1.2 |
|
|
| 5.8 |
|
|
| 7.0 |
|
|
| 3.4 | % |
2023 |
|
| 1.2 |
|
|
| 40.6 |
|
|
| 41.8 |
|
|
| 3.4 | % |
2024 |
|
| 0.9 |
|
|
| 38.2 |
|
|
| 39.1 |
|
|
| 3.8 | % |
Thereafter |
|
| 0.8 |
|
|
| 73.9 |
|
|
| 74.7 |
|
|
| 4.4 | % |
|
| $ | 6.5 |
|
| $ | 174.1 |
|
| $ | 180.6 |
|
|
|
|
|
Scheduled Amortization | Maturities | Total | Weighted-Average Interest Rate | ||||||||||||
2018 | $ | 1.0 | $ | 6.9 | $ | 7.9 | 3.1 | % | |||||||
2019 | 1.0 | — | 1.0 | — | % | ||||||||||
2020 | 1.1 | 8.0 | 9.1 | 1.9 | % | ||||||||||
2021 | 1.1 | — | 1.1 | — | % | ||||||||||
2022 | 1.2 | — | 1.2 | — | % | ||||||||||
Thereafter | 2.6 | 140.4 | 143.0 | 3.9 | % | ||||||||||
$ | 8.0 | $ | 155.3 | $ | 163.3 |
In 2018, $94.42020, $437.3 million of our total consolidated debt and $10.1 million of our pro-rata share of unconsolidated outstanding debt will become due, substantially all of which is Fund debt including $121.5 million of debt with available one-year extension options and $240.0 million at Fund II for which the Company is actively seeking refinancing. In addition, $287.7 million of our total consolidated debt and $7.9 million of our pro-rata share of unconsolidated outstanding debt will become due. In addition, $213.6 million of our total consolidated debt and $1.0 million of our pro-rata share of unconsolidated debt will become due in 2019.2021. As we intend on refinancing some or all of such debt at the then-existing market interest rates, which may be greater than the current interest rate, our interest expense would increase by approximately $3.1$7.4 million annually if the interest rate on the refinanced debt increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $1.0$1.8 million. Interest expense on our variable-rate debt of $538.7$314.6 million, net of variable to fixed-rate swap agreements currently in effect, as of December 31, 2017,2019, would increase $5.4$3.1 million if LIBOR increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $1.3$0.3 million. We may seek additional variable-rate financing if and when pricing and other commercial and financial terms warrant. As such, we would consider hedging against the interest rate risk related to such additional variable-rate debt through interest rate swaps and protection agreements, or other means.
Based on our outstanding debt balances as of December 31, 2017,2019, the fair value of our total consolidated outstanding debt would decrease by approximately $15.9$11.5 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding debt would increase by approximately $17.3$13.6 million.
As of December 31, 2017,2019, and December 31, 2016,2018, we had consolidated notes receivable of $153.8$114.9 million and $276.2$111.8 million, respectively. We determined the estimated fair value of our notes receivable by discounting future cash receipts utilizing a discount rate equivalent to the rate at which similar notes receivable would be originated under conditions then existing.
Based on our outstanding notes receivable balances as of December 31, 2017,2019, the fair value of our total outstanding notes receivable would decrease by approximately $1.9$1.1 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding notes receivable would increase by approximately $2.0$1.1 million.
Summarized Information as of December 31, 2016
As of December 31, 2016,2018, we had total mortgage and other notes payable of $1,505.7$1,560.3 million, excluding the unamortized premium of $1.3$0.8 million and unamortized loandebt issuance costs of $18.3$10.5 million, of which $860.5$1,001.7 million, or 57.1%64.2% was fixed-rate, inclusive of interest rate swaps,debt with rates fixed through the use of derivative financial instruments, and $645.2$558.7 million, or 42.9%35.8%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of December 31, 2016,2018, we were party to 1829 interest rate swap and fourthree interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $365.3$609.9 million and $196.4$143.8 million of LIBOR-based variable-rate debt, respectively.
Interest expense on our variable-rate debt of $645.2$558.7 million as of December 31, 2016,2018, would have increased $6.5$5.6 million if LIBOR increased by 100 basis points. Based on our outstanding debt balances as of December 31, 2016,2018, the fair value of our total outstanding debt would have decreased by approximately $20.3$13.5 million if interest rates increased by 1%. Conversely, if interest rates decreased by 1%, the fair value of our total outstanding debt would have increased by approximately $22.8$14.7 million.
Changes in Market Risk Exposures from 2016December 31, 2018 to 2017
Our interest rate risk exposure from December 31, 2016,2018, to December 31, 2017,2019, has decreased on an absolute basis, as the $645.2$558.7 million of variable-rate debt as of December 31, 2016,2018, has decreased to $538.7$314.6 million as of December 31, 2017.2019. As a percentage of our overall debt, our interest rate risk exposure has decreased as our variable-rate debt accounted for 42.9%35.8% of our consolidated debt as of December 31, 2016, and decreased2018 compared to 37.5%18.3% as of December 31, 2017.
ITEM 8.FINANCIAL STATEMENTS.
ACADIA REALTY TRUST AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page | ||
Financial Statements: | ||
53 | ||
55 | ||
56 | ||
57 | ||
58 | ||
59 | ||
61 | ||
Financial Statement Schedules: | ||
105 | ||
106 | ||
112 |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of Acadia Realty Trust
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Acadia Realty Trust and subsidiaries (the “Company”) as of December 31, 20172019 and 2016, and2018, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 20172019 and the related notes and financial statement schedules listed in the Indexindex at Item 15 (collectively referred to as the “financial“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20172019 and 2016,2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2017,2019, based on criteria established in
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Purchase price allocation
As described in note 2 to the consolidated financial statements, during the year ended December 31, 2019, the Company acquired approximately $334 million of tangible and intangible real estate assets and $10 million of related intangible liabilities. The Company allocates the purchase price of real estate investments to the identifiable assets and liabilities acquired based on their relative fair values. The determination of fair value requires significant judgment by management and third-party valuation specialists to develop significant estimates and market-based assumptions used in the cash flow models.
We identified the purchase price allocation processas a critical audit matter. Auditing management’s judgmentsregarding market-based assumptions used in the discounted cash flow models including the forecastsoffuturerevenueandoperating expense growth rates, market capitalization rates and discountrates involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.
The primary procedures we performed to address this critical audit matter included:
• | Testing the design and operating effectiveness of certain controls relating to management’s purchase price allocation process including controls over assessment of the reasonableness of market-based assumptions. |
• | Assessing the reasonableness of significant market-based assumptions through: (i) benchmarking against third-party market data, industry metrics, and reviewing relevant supporting documentation, and (ii) assessing whethersuchassumptionswereconsistentwithevidenceobtainedinotherareasofthe audit. |
• | Utilizing personnel with specialized knowledge and skill in valuation to assist in evaluating the reasonableness of the methodologies, certain assumptions, and mathematical accuracy of the underlying models used in the preparation of the purchase price allocations. |
Assessment of impairment of real estate and real-estate related investments
As described in note 2 to the consolidated financial statements, the Company’s net investment balance in real estate was $3.2 billion as of December 31, 2019. This represents the Company’s ownership interest in 186 properties. In addition, as described in notes 3 and 4 to the consolidated financial statements, the Company’s investments in unconsolidated affiliates and structured loan portfolio was $0.3 billion and $0.1 billion, respectively. During the year ended December 31, 2019, the Company recorded impairment charges of $1.7 million related to its real estate investments. The Company tests the recoverability of the real estate and real-estate related investments whenever events or changes in circumstances indicate that amounts may not be recoverable. Significant management’s judgment is involved in determining if impairment indicators exist, assessing investments for recoverability and measuring fair value of the real estate and real-estate related investments.
We identified the assessment of impairment of the real estate and real-estate related investments as a critical audit matter due to the complexity of management’s judgments relating to: (i) assessment of impairment indicators, and (ii) assessment of inputs and assumptions used in the expected future cash flows to determine fair values of real estate investments. Auditing management’s judgments relating to the existence of impairment indicators and market-based assumptions used in the cash flow models including futurerevenueandoperating expense growth rates, market capitalization rates, discountrates, and holding periods involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.
The primary procedures we performed to address this critical audit matter included:
• | Testing the design and operating effectiveness of certain controls relating to: (i) assessment of the existence of impairment indicators, and (ii) assessment of real estate investments for recoverability and measurement of impairment including controls over the market-based assumptions used in the cash flow models. |
• | Testing the reasonableness of the significant market-based assumptions used in the cash flow models used by the Company against relevant supporting documentation and market-based information, industry metrics and other relevant information. |
• | Assessing whether the financial forecasts used by the Company in the impairment analysis were consistent with those used to support other judgments in the financial statements. |
• | Utilizing professionals with specialized skills and knowledge to assist in evaluating the reasonableness of the discount rates and certain other market-based information utilized by management. |
/s/ BDO USA, LLP
We have served as the Company’s auditor since 2005.
New York, New York
February 27, 2018
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
| December 31, |
|
| December 31, |
| ||
(dollars in thousands, except per share amounts) |
| 2019 |
|
| 2018 |
| ||
ASSETS |
| (Unaudited) |
|
|
|
|
| |
Investments in real estate, at cost |
|
|
|
|
|
|
|
|
Operating real estate, net |
| $ | 3,355,913 |
|
| $ | 3,160,851 |
|
Real estate under development |
|
| 253,402 |
|
|
| 120,297 |
|
Net investments in real estate |
|
| 3,609,315 |
|
|
| 3,281,148 |
|
Notes receivable, net |
|
| 114,943 |
|
|
| 111,775 |
|
Investments in and advances to unconsolidated affiliates |
|
| 305,097 |
|
|
| 262,410 |
|
Other assets, net |
|
| 190,658 |
|
|
| 206,408 |
|
Cash and cash equivalents |
|
| 15,845 |
|
|
| 21,268 |
|
Restricted cash |
|
| 14,165 |
|
|
| 13,580 |
|
Rents receivable |
|
| 59,091 |
|
|
| 62,191 |
|
Total assets |
| $ | 4,309,114 |
|
| $ | 3,958,780 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Mortgage and other notes payable, net |
| $ | 1,170,076 |
|
| $ | 1,017,288 |
|
Unsecured notes payable, net |
|
| 477,320 |
|
|
| 533,257 |
|
Unsecured line of credit |
|
| 60,800 |
|
|
| — |
|
Accounts payable and other liabilities |
|
| 371,516 |
|
|
| 286,072 |
|
Dividends and distributions payable |
|
| 27,075 |
|
|
| 24,593 |
|
Distributions in excess of income from, and investments in, unconsolidated affiliates |
|
| 15,362 |
|
|
| 15,623 |
|
Total liabilities |
|
| 2,122,149 |
|
|
| 1,876,833 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
Acadia Shareholders' Equity |
|
|
|
|
|
|
|
|
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 87,050,465 and 81,557,472 shares, respectively |
|
| 87 |
|
|
| 82 |
|
Additional paid-in capital |
|
| 1,706,357 |
|
|
| 1,548,603 |
|
Accumulated other comprehensive (loss) income |
|
| (31,175 | ) |
|
| 516 |
|
Distributions in excess of accumulated earnings |
|
| (132,961 | ) |
|
| (89,696 | ) |
Total Acadia shareholders’ equity |
|
| 1,542,308 |
|
|
| 1,459,505 |
|
Noncontrolling interests |
|
| 644,657 |
|
|
| 622,442 |
|
Total equity |
|
| 2,186,965 |
|
|
| 2,081,947 |
|
Total liabilities and equity |
| $ | 4,309,114 |
|
| $ | 3,958,780 |
|
December 31, | ||||||||
(dollars in thousands, except per share amounts) | 2017 | 2016 | ||||||
ASSETS | ||||||||
Investments in real estate, at cost | ||||||||
Operating real estate, net | $ | 2,952,918 | $ | 2,551,448 | ||||
Real estate under development | 173,702 | 543,486 | ||||||
Net investments in real estate | 3,126,620 | 3,094,934 | ||||||
Notes receivable, net | 153,829 | 276,163 | ||||||
Investments in and advances to unconsolidated affiliates | 302,070 | 272,028 | ||||||
Other assets, net | 214,959 | 192,786 | ||||||
Cash and cash equivalents | 74,823 | 71,805 | ||||||
Rents receivable, net | 51,738 | 43,842 | ||||||
Restricted cash | 10,846 | 22,904 | ||||||
Assets of properties held for sale | 25,362 | 21,498 | ||||||
Total assets | $ | 3,960,247 | $ | 3,995,960 | ||||
LIABILITIES | ||||||||
Mortgage and other notes payable, net | $ | 909,174 | $ | 1,055,728 | ||||
Unsecured notes payable, net | 473,735 | 432,990 | ||||||
Unsecured line of credit | 41,500 | — | ||||||
Accounts payable and other liabilities | 210,052 | 208,672 | ||||||
Capital lease obligation | 70,611 | 70,129 | ||||||
Dividends and distributions payable | 24,244 | 36,625 | ||||||
Distributions in excess of income from, and investments in, unconsolidated affiliates | 15,292 | 13,691 | ||||||
Total liabilities | 1,744,608 | 1,817,835 | ||||||
Commitments and contingencies | ||||||||
EQUITY | ||||||||
Acadia Shareholders' Equity | ||||||||
Common shares, $0.001 par value, authorized 200,000,000 and 100,000,000 shares, issued and outstanding 83,708,140 and 83,597,741 shares, respectively | 84 | 84 | ||||||
Additional paid-in capital | 1,596,514 | 1,594,926 | ||||||
Accumulated other comprehensive loss | 2,614 | (798 | ) | |||||
Distributions in excess of accumulated earnings | (32,013 | ) | (5,635 | ) | ||||
Total Acadia shareholders’ equity | 1,567,199 | 1,588,577 | ||||||
Noncontrolling interests | 648,440 | 589,548 | ||||||
Total equity | 2,215,639 | 2,178,125 | ||||||
Total liabilities and equity | $ | 3,960,247 | $ | 3,995,960 |
The accompanying notes are an integral part of these consolidated financial statements
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
|
| Year Ended December 31, |
| |||||||||
(in thousands except per share amounts) |
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
| $ | 291,190 |
|
| $ | 254,508 |
|
| $ | 242,138 |
|
Other |
|
| 4,137 |
|
|
| 5,173 |
|
|
| 6,414 |
|
Total revenues |
|
| 295,327 |
|
|
| 259,681 |
|
|
| 248,552 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 125,443 |
|
|
| 117,549 |
|
|
| 104,934 |
|
General and administrative |
|
| 35,416 |
|
|
| 34,343 |
|
|
| 33,756 |
|
Real estate taxes |
|
| 39,315 |
|
|
| 36,712 |
|
|
| 35,946 |
|
Property operating |
|
| 51,153 |
|
|
| 42,679 |
|
|
| 39,958 |
|
Impairment charges |
|
| 1,721 |
|
|
| — |
|
|
| 14,455 |
|
Other operating |
|
| — |
|
|
| 857 |
|
|
| 2,184 |
|
Total operating expenses |
|
| 253,048 |
|
|
| 232,140 |
|
|
| 231,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposition of properties |
|
| 30,324 |
|
|
| 5,140 |
|
|
| 48,886 |
|
Operating income |
|
| 72,603 |
|
|
| 32,681 |
|
|
| 66,205 |
|
Equity in earnings of unconsolidated affiliates inclusive of gain on disposition of properties of $0, $0 and $15,336, respectively |
|
| 8,922 |
|
|
| 9,302 |
|
|
| 23,371 |
|
Interest income |
|
| 7,988 |
|
|
| 13,231 |
|
|
| 29,143 |
|
Other income |
|
| 6,947 |
|
|
| — |
|
|
| 5,571 |
|
Interest expense |
|
| (73,788 | ) |
|
| (69,978 | ) |
|
| (58,978 | ) |
Income (loss) from continuing operations before income taxes |
|
| 22,672 |
|
|
| (14,764 | ) |
|
| 65,312 |
|
Income tax provision |
|
| (1,468 | ) |
|
| (934 | ) |
|
| (1,004 | ) |
Net income (loss) |
|
| 21,204 |
|
|
| (15,698 | ) |
|
| 64,308 |
|
Net loss (income) attributable to noncontrolling interests |
|
| 31,841 |
|
|
| 47,137 |
|
|
| (2,838 | ) |
Net income attributable to Acadia |
| $ | 53,045 |
|
| $ | 31,439 |
|
| $ | 61,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share |
| $ | 0.62 |
|
| $ | 0.38 |
|
| $ | 0.73 |
|
Year Ended December 31, | ||||||||||||
(in thousands except per share amounts) | 2017 | 2016 | 2015 | |||||||||
Revenues | ||||||||||||
Rental income | $ | 198,941 | $ | 152,814 | $ | 158,632 | ||||||
Expense reimbursements | 44,907 | 32,282 | 36,306 | |||||||||
Other | 6,414 | 4,843 | 4,125 | |||||||||
Total revenues | 250,262 | 189,939 | 199,063 | |||||||||
Operating expenses | ||||||||||||
Depreciation and amortization | 104,934 | 70,011 | 60,751 | |||||||||
General and administrative | 33,756 | 40,648 | 30,368 | |||||||||
Real estate taxes | 35,946 | 25,630 | 25,384 | |||||||||
Property operating | 41,668 | 24,244 | 28,423 | |||||||||
Other operating | 2,184 | 7,517 | 4,675 | |||||||||
Impairment charges | 14,455 | — | 5,000 | |||||||||
Total operating expenses | 232,943 | 168,050 | 154,601 | |||||||||
Operating income | 17,319 | 21,889 | 44,462 | |||||||||
Equity in earnings and gains of unconsolidated affiliates inclusive of gains on disposition of properties of $15,336, $35,950 and $24,043, respectively | 23,371 | 39,449 | 37,330 | |||||||||
Interest income | 29,143 | 25,829 | 16,603 | |||||||||
Interest expense | (58,978 | ) | (34,645 | ) | (37,297 | ) | ||||||
Gain on change in control and other | 5,571 | — | 1,596 | |||||||||
Income from continuing operations before income taxes | 16,426 | 52,522 | 62,694 | |||||||||
Income tax (provision) benefit | (1,004 | ) | 105 | (1,787 | ) | |||||||
Income from continuing operations before gain on disposition of properties | 15,422 | 52,627 | 60,907 | |||||||||
Gain on disposition of properties, net of tax | 48,886 | 81,965 | 89,063 | |||||||||
Net income | 64,308 | 134,592 | 149,970 | |||||||||
Net income attributable to noncontrolling interests | (2,838 | ) | (61,816 | ) | (84,262 | ) | ||||||
Net income attributable to Acadia | $ | 61,470 | $ | 72,776 | $ | 65,708 | ||||||
Basic and diluted earnings per share | $ | 0.73 | $ | 0.94 | $ | 0.94 |
The accompanying notes are an integral part of these consolidated financial statements
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
| Year Ended December 31, |
| |||||||||
(in thousands) |
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Net income (loss) |
| $ | 21,204 |
|
| $ | (15,698 | ) |
| $ | 64,308 |
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (loss) income on valuation of swap agreements |
|
| (35,674 | ) |
|
| (2,659 | ) |
|
| 634 |
|
Reclassification of realized interest on swap agreements |
|
| (872 | ) |
|
| 71 |
|
|
| 3,317 |
|
Other comprehensive (loss) income |
|
| (36,546 | ) |
|
| (2,588 | ) |
|
| 3,951 |
|
Comprehensive (loss) income |
|
| (15,342 | ) |
|
| (18,286 | ) |
|
| 68,259 |
|
Comprehensive loss (income) attributable to noncontrolling interests |
|
| 36,696 |
|
|
| 47,627 |
|
|
| (3,377 | ) |
Comprehensive income attributable to Acadia |
| $ | 21,354 |
|
| $ | 29,341 |
|
| $ | 64,882 |
|
Year Ended December 31, | ||||||||||||
(in thousands) | 2017 | 2016 | 2015 | |||||||||
Net income | $ | 64,308 | $ | 134,592 | $ | 149,970 | ||||||
Other comprehensive income (loss): | ||||||||||||
Unrealized income (loss) on valuation of swap agreements | 634 | (646 | ) | (5,061 | ) | |||||||
Reclassification of realized interest on swap agreements | 3,317 | 4,576 | 5,524 | |||||||||
Other comprehensive income | 3,951 | 3,930 | 463 | |||||||||
Comprehensive income | 68,259 | 138,522 | 150,433 | |||||||||
Comprehensive income attributable to noncontrolling interests | (3,377 | ) | (62,081 | ) | (85,183 | ) | ||||||
Comprehensive income attributable to Acadia | $ | 64,882 | $ | 76,441 | $ | 65,250 |
The accompanying notes are an integral part of these consolidated financial statements.
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Years Ended December 31, 2017, 20162019, 2018 and 20152017
|
| Acadia Shareholders |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
(in thousands, except per share amounts) |
| Common Shares |
|
| Share Amount |
|
| Additional Paid-in Capital |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Distributions in Excess of Accumulated Earnings |
|
| Total Common Shareholders’ Equity |
|
| Noncontrolling Interests |
|
| Total Equity |
| ||||||||
Balance at January 1, 2019 |
|
| 81,557 |
|
| $ | 82 |
|
| $ | 1,548,603 |
|
| $ | 516 |
|
| $ | (89,696 | ) |
| $ | 1,459,505 |
|
| $ | 622,442 |
|
| $ | 2,081,947 |
|
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership |
|
| 308 |
|
|
| — |
|
|
| 5,104 |
|
|
| — |
|
|
| — |
|
|
| 5,104 |
|
|
| (5,104 | ) |
|
| — |
|
Issuance of Common Shares |
|
| 5,164 |
|
|
| 5 |
|
|
| 145,493 |
|
|
| — |
|
|
| — |
|
|
| 145,498 |
|
|
| — |
|
|
| 145,498 |
|
Dividends/distributions declared ($1.13 per Common Share/OP Unit) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (96,310 | ) |
|
| (96,310 | ) |
|
| (7,124 | ) |
|
| (103,434 | ) |
Employee and trustee stock compensation, net |
|
| 21 |
|
|
| — |
|
|
| 546 |
|
|
| — |
|
|
| — |
|
|
| 546 |
|
|
| 10,411 |
|
|
| 10,957 |
|
Noncontrolling interest distributions |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (94,289 | ) |
|
| (94,289 | ) |
Noncontrolling interest contributions |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 161,628 |
|
|
| 161,628 |
|
Comprehensive (loss) income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (31,691 | ) |
|
| 53,045 |
|
|
| 21,354 |
|
|
| (36,696 | ) |
|
| (15,342 | ) |
Reallocation of noncontrolling interests |
|
| — |
|
|
| — |
|
|
| 6,611 |
|
|
| — |
|
|
| — |
|
|
| 6,611 |
|
|
| (6,611 | ) |
|
| — |
|
Balance at December 31, 2019 |
|
| 87,050 |
|
| $ | 87 |
|
| $ | 1,706,357 |
|
| $ | (31,175 | ) |
| $ | (132,961 | ) |
| $ | 1,542,308 |
|
| $ | 644,657 |
|
| $ | 2,186,965 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2018 |
|
| 83,708 |
|
| $ | 84 |
|
| $ | 1,596,514 |
|
| $ | 2,614 |
|
| $ | (32,013 | ) |
| $ | 1,567,199 |
|
| $ | 648,440 |
|
| $ | 2,215,639 |
|
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership |
|
| 117 |
|
|
| — |
|
|
| 2,068 |
|
|
| — |
|
|
| — |
|
|
| 2,068 |
|
|
| (2,068 | ) |
|
| — |
|
Repurchase of Common Shares |
|
| (2,294 | ) |
|
| (2 | ) |
|
| (55,109 | ) |
|
| — |
|
|
| — |
|
|
| (55,111 | ) |
|
| — |
|
|
| (55,111 | ) |
Dividends/distributions declared ($1.09 per Common Share/OP Unit) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (89,122 | ) |
|
| (89,122 | ) |
|
| (6,888 | ) |
|
| (96,010 | ) |
Employee and trustee stock compensation, net |
|
| 26 |
|
|
| — |
|
|
| 574 |
|
|
| — |
|
|
| — |
|
|
| 574 |
|
|
| 12,374 |
|
|
| 12,948 |
|
Noncontrolling interest distributions |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (24,793 | ) |
|
| (24,793 | ) |
Noncontrolling interest contributions |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 47,560 |
|
|
| 47,560 |
|
Comprehensive income (loss) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,098 | ) |
|
| 31,439 |
|
|
| 29,341 |
|
|
| (47,627 | ) |
|
| (18,286 | ) |
Reallocation of noncontrolling interests |
|
| — |
|
|
| — |
|
|
| 4,556 |
|
|
| — |
|
|
| — |
|
|
| 4,556 |
|
|
| (4,556 | ) |
|
| — |
|
Balance at December 31, 2018 |
|
| 81,557 |
|
| $ | 82 |
|
| $ | 1,548,603 |
|
| $ | 516 |
|
| $ | (89,696 | ) |
| $ | 1,459,505 |
|
| $ | 622,442 |
|
| $ | 2,081,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017 |
|
| 83,598 |
|
| $ | 84 |
|
| $ | 1,594,926 |
|
| $ | (798 | ) |
| $ | (5,635 | ) |
| $ | 1,588,577 |
|
| $ | 589,548 |
|
| $ | 2,178,125 |
|
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership |
|
| 87 |
|
|
| — |
|
|
| 1,541 |
|
|
| — |
|
|
| — |
|
|
| 1,541 |
|
|
| (1,541 | ) |
|
| — |
|
Dividends/distributions declared ($1.05 per Common Share/OP Unit) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (87,848 | ) |
|
| (87,848 | ) |
|
| (6,453 | ) |
|
| (94,301 | ) |
Employee and trustee stock compensation, net |
|
| 23 |
|
|
| — |
|
|
| 698 |
|
|
| — |
|
|
| — |
|
|
| 698 |
|
|
| 10,457 |
|
|
| 11,155 |
|
Noncontrolling interest distributions |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (32,805 | ) |
|
| (32,805 | ) |
Noncontrolling interest contributions |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 85,206 |
|
|
| 85,206 |
|
Comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,412 |
|
|
| 61,470 |
|
|
| 64,882 |
|
|
| 3,377 |
|
|
| 68,259 |
|
Reallocation of noncontrolling interests |
|
| — |
|
|
| — |
|
|
| (651 | ) |
|
| — |
|
|
| — |
|
|
| (651 | ) |
|
| 651 |
|
|
| — |
|
Balance at December 31, 2017 |
|
| 83,708 |
|
| $ | 84 |
|
| $ | 1,596,514 |
|
| $ | 2,614 |
|
| $ | (32,013 | ) |
| $ | 1,567,199 |
|
| $ | 648,440 |
|
| $ | 2,215,639 |
|
Acadia Shareholders | ||||||||||||||||||||||||||||||
(in thousands, except per share amounts) | Common Shares | Share Amount | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | (Distributions in Excess of Accumulated Earnings) Retained Earnings | Total Common Shareholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||
Balance at January 1, 2017 | 83,598 | $ | 84 | $ | 1,594,926 | $ | (798 | ) | $ | (5,635 | ) | $ | 1,588,577 | $ | 589,548 | $ | 2,178,125 | |||||||||||||
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership | 87 | — | 1,541 | — | — | 1,541 | (1,541 | ) | — | |||||||||||||||||||||
Dividends/distributions declared ($1.05 per Common Share/OP Unit) | — | — | — | — | (87,848 | ) | (87,848 | ) | (6,453 | ) | (94,301 | ) | ||||||||||||||||||
Employee and trustee stock compensation, net | 23 | — | 698 | — | — | 698 | 10,457 | 11,155 | ||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — | (32,805 | ) | (32,805 | ) | ||||||||||||||||||||
Noncontrolling interest contributions | — | — | — | — | — | — | 85,206 | 85,206 | ||||||||||||||||||||||
Reallocation of noncontrolling interests | — | — | (651 | ) | — | — | (651 | ) | 651 | — | ||||||||||||||||||||
Comprehensive income | — | — | — | 3,412 | 61,470 | 64,882 | 3,377 | 68,259 | ||||||||||||||||||||||
Balance at December 31, 2017 | 83,708 | $ | 84 | $ | 1,596,514 | $ | 2,614 | $ | (32,013 | ) | $ | 1,567,199 | $ | 648,440 | $ | 2,215,639 | ||||||||||||||
Balance at January 1, 2016 | 70,258 | $ | 70 | $ | 1,092,239 | $ | (4,463 | ) | $ | 12,642 | $ | 1,100,488 | $ | 420,866 | $ | 1,521,354 | ||||||||||||||
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership | 351 | 1 | 7,891 | — | — | 7,892 | (7,892 | ) | — | |||||||||||||||||||||
Issuance of Common Shares, net of issuance costs | 12,961 | 13 | 450,117 | — | — | 450,130 | — | 450,130 | ||||||||||||||||||||||
Issuance of OP Units to acquire real estate | — | — | — | — | — | — | 31,429 | 31,429 | ||||||||||||||||||||||
Dividends/distributions declared ($1.16 per Common Share/OP Unit) | — | — | — | — | (91,053 | ) | (91,053 | ) | (6,753 | ) | (97,806 | ) | ||||||||||||||||||
Acquisition of noncontrolling interests | — | — | 7,546 | — | — | 7,546 | (25,925 | ) | (18,379 | ) | ||||||||||||||||||||
Employee and trustee stock compensation, net | 28 | — | 926 | — | — | 926 | 12,768 | 13,694 | ||||||||||||||||||||||
Change in control of previously unconsolidated investment | — | — | — | — | — | — | (75,713 | ) | (75,713 | ) | ||||||||||||||||||||
Windfall tax benefit | — | — | 555 | — | — | 555 | — | 555 | ||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — | (80,769 | ) | (80,769 | ) | ||||||||||||||||||||
Noncontrolling interest contributions | — | — | — | — | — | — | 295,108 | 295,108 | ||||||||||||||||||||||
Comprehensive income | — | — | — | 3,665 | 72,776 | 76,441 | 62,081 | 138,522 | ||||||||||||||||||||||
Reallocation of noncontrolling interests | — | — | 35,652 | — | — | 35,652 | (35,652 | ) | — | |||||||||||||||||||||
Balance at December 31, 2016 | 83,598 | $ | 84 | $ | 1,594,926 | $ | (798 | ) | $ | (5,635 | ) | $ | 1,588,577 | $ | 589,548 | $ | 2,178,125 | |||||||||||||
Acadia Shareholders | ||||||||||||||||||||||||||||||
(in thousands, except per share amounts) | Common Shares | Share Amount | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | (Distributions in Excess of Accumulated Earnings) Retained Earnings | Total Common Shareholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||
(Continued) | ||||||||||||||||||||||||||||||
Balance at January 1, 2015 | 68,109 | $ | 68 | $ | 1,027,861 | $ | (4,005 | ) | $ | 31,617 | $ | 1,055,541 | $ | 380,416 | $ | 1,435,957 | ||||||||||||||
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership | 101 | — | 2,451 | — | — | 2,451 | (2,451 | ) | — | |||||||||||||||||||||
Issuance of Common Shares, net of issuance costs | 1,973 | 2 | 64,415 | — | — | 64,417 | — | 64,417 | ||||||||||||||||||||||
Acquisition of noncontrolling interests | — | — | (4,409 | ) | — | — | (4,409 | ) | (3,561 | ) | (7,970 | ) | ||||||||||||||||||
Dividends/distributions declared ($1.22 per Common Share/OP Unit) | — | — | — | — | (84,683 | ) | (84,683 | ) | (5,983 | ) | (90,666 | ) | ||||||||||||||||||
Employee and trustee stock compensation, net | 75 | — | 1,921 | — | — | 1,921 | 6,723 | 8,644 | ||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — | (74,950 | ) | (74,950 | ) | ||||||||||||||||||||
Noncontrolling interest contributions | — | — | — | — | — | — | 35,489 | 35,489 | ||||||||||||||||||||||
Comprehensive (loss) income | — | — | — | (458 | ) | 65,708 | 65,250 | 85,183 | 150,433 | |||||||||||||||||||||
Balance at December 31, 2015 | 70,258 | $ | 70 | $ | 1,092,239 | $ | (4,463 | ) | $ | 12,642 | $ | 1,100,488 | $ | 420,866 | $ | 1,521,354 |
The accompanying notes are an integral part of these consolidated financial statements.
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| Year Ended December 31, |
| |||||||||
(in thousands) |
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 21,204 |
|
| $ | (15,698 | ) |
| $ | 64,308 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 125,443 |
|
|
| 117,549 |
|
|
| 104,934 |
|
Distributions of operating income from unconsolidated affiliates |
|
| 11,273 |
|
|
| 15,556 |
|
|
| 15,556 |
|
Equity in earnings and gains of unconsolidated affiliates |
|
| (8,922 | ) |
|
| (9,302 | ) |
|
| (23,371 | ) |
Stock compensation expense |
|
| 10,957 |
|
|
| 12,948 |
|
|
| 11,155 |
|
Amortization of financing costs |
|
| 7,577 |
|
|
| 6,008 |
|
|
| 5,985 |
|
Impairment charge |
|
| 1,721 |
|
|
| — |
|
|
| 14,455 |
|
Gain on disposition of properties |
|
| (30,324 | ) |
|
| (5,140 | ) |
|
| (48,886 | ) |
Gain on change in control |
|
| — |
|
|
| — |
|
|
| (5,571 | ) |
Deferred gain on tax credits |
|
| (5,034 | ) |
|
| — |
|
|
| — |
|
Other, net |
|
| (11,627 | ) |
|
| (11,768 | ) |
|
| (10,621 | ) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities |
|
| (4,466 | ) |
|
| 6,161 |
|
|
| (4,285 | ) |
Prepaid expenses and other assets |
|
| 8,198 |
|
|
| (7,168 | ) |
|
| (6,498 | ) |
Rents receivable, net |
|
| (455 | ) |
|
| (10,044 | ) |
|
| (11,274 | ) |
Accounts payable and accrued expenses |
|
| 1,632 |
|
|
| (3,026 | ) |
|
| 8,768 |
|
Net cash provided by operating activities |
|
| 127,177 |
|
|
| 96,076 |
|
|
| 114,655 |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of real estate |
|
| (319,673 | ) |
|
| (147,985 | ) |
|
| (200,429 | ) |
Acquisition of leasehold interests |
|
| (39,031 | ) |
|
| — |
|
|
| — |
|
Development, construction and property improvement costs |
|
| (89,270 | ) |
|
| (94,834 | ) |
|
| (108,142 | ) |
Issuance of or advances on notes receivable |
|
| (3,608 | ) |
|
| (3,002 | ) |
|
| (10,600 | ) |
Proceeds from the disposition of properties, net |
|
| 88,738 |
|
|
| 63,866 |
|
|
| 260,711 |
|
Investments in and advances to unconsolidated affiliates and other |
|
| (151,281 | ) |
|
| (3,161 | ) |
|
| (6,535 | ) |
Return of capital from unconsolidated affiliates and other |
|
| 105,999 |
|
|
| 26,338 |
|
|
| 43,684 |
|
Proceeds from notes receivable |
|
| 15,250 |
|
|
| 26,000 |
|
|
| 32,000 |
|
Return of deposits for properties under contract |
|
| 2,870 |
|
|
| 1,692 |
|
|
| (2,000 | ) |
Payment of deferred leasing costs |
|
| (7,051 | ) |
|
| (6,106 | ) |
|
| (5,202 | ) |
Change in control of previously unconsolidated affiliate |
|
| — |
|
|
| 573 |
|
|
| 576 |
|
Net cash (used in) provided by investing activities |
|
| (397,057 | ) |
|
| (136,619 | ) |
|
| 4,063 |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments on mortgage and other notes |
|
| (168,211 | ) |
|
| (81,726 | ) |
|
| (306,119 | ) |
Principal payments on unsecured debt |
|
| (521,600 | ) |
|
| (632,300 | ) |
|
| (277,134 | ) |
Proceeds received on mortgage and other notes |
|
| 326,268 |
|
|
| 187,173 |
|
|
| 156,344 |
|
Proceeds from unsecured debt |
|
| 526,400 |
|
|
| 648,800 |
|
|
| 359,625 |
|
Payments of finance lease obligations |
|
| (2,749 | ) |
|
| — |
|
|
| — |
|
Repurchase of Common Shares |
|
| — |
|
|
| (55,111 | ) |
|
| — |
|
Proceeds from the sale of Common Shares, net |
|
| 145,498 |
|
|
| — |
|
|
| — |
|
Capital contributions from noncontrolling interests |
|
| 161,628 |
|
|
| 47,560 |
|
|
| 85,206 |
|
Distributions to noncontrolling interests |
|
| (101,370 | ) |
|
| (31,568 | ) |
|
| (39,942 | ) |
Dividends paid to Common Shareholders |
|
| (93,902 | ) |
|
| (88,887 | ) |
|
| (99,527 | ) |
Deferred financing and other costs |
|
| (6,920 | ) |
|
| (4,219 | ) |
|
| (6,211 | ) |
Net cash provided by (used in) financing activities |
|
| 265,042 |
|
|
| (10,278 | ) |
|
| (127,758 | ) |
Decrease in cash and restricted cash |
|
| (4,838 | ) |
|
| (50,821 | ) |
|
| (9,040 | ) |
Cash of $21,268, $74,823 and $71,805 and restricted cash of $13,580, $10,846 and $22,904, respectively, beginning of year |
|
| 34,848 |
|
|
| 85,669 |
|
|
| 94,709 |
|
Cash of $15,845, $21,268 and $74,823 and restricted cash of $14,165, $13,580 and $10,846, respectively, end of year |
| $ | 30,010 |
|
| $ | 34,848 |
|
| $ | 85,669 |
|
Year Ended December 31, | ||||||||||||
(in thousands) | 2017 | 2016 | 2015 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 64,308 | $ | 134,592 | $ | 149,970 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Gain on disposition of properties | (48,886 | ) | (81,965 | ) | (89,063 | ) | ||||||
Gain on change in control | (5,571 | ) | — | — | ||||||||
Depreciation and amortization | 104,934 | 70,011 | 60,751 | |||||||||
Distributions of operating income from unconsolidated affiliates | 9,249 | 7,256 | 12,291 | |||||||||
Equity in earnings and gains of unconsolidated affiliates | (23,371 | ) | (39,449 | ) | (37,330 | ) | ||||||
Stock compensation expense | 11,155 | 13,695 | 7,438 | |||||||||
Amortization of financing costs | 5,985 | 3,204 | 3,537 | |||||||||
Impairment charges | 14,455 | — | 5,000 | |||||||||
Other, net | (10,610 | ) | (8,095 | ) | (6,483 | ) | ||||||
Changes in assets and liabilities: | ||||||||||||
Other liabilities | (4,285 | ) | 26,532 | 5,354 | ||||||||
Prepaid expenses and other assets | (6,498 | ) | (11,677 | ) | 12,690 | |||||||
Rents receivable, net | (11,274 | ) | (4,847 | ) | (5,673 | ) | ||||||
Restricted cash | 11,474 | 1,912 | (6,168 | ) | ||||||||
Accounts payable and accrued expenses | 8,768 | 591 | 1,284 | |||||||||
Net cash provided by operating activities | 119,833 | 111,760 | 113,598 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Acquisition of real estate | (200,429 | ) | (495,644 | ) | (338,700 | ) | ||||||
Development and property improvement costs | (108,142 | ) | (149,434 | ) | (164,315 | ) | ||||||
Issuance of or advances on notes receivable | (10,600 | ) | (157,352 | ) | (48,500 | ) | ||||||
Proceeds from the disposition of properties | 260,711 | 150,378 | 168,895 | |||||||||
Investments in and advances to unconsolidated affiliates | (6,535 | ) | (72,098 | ) | (24,168 | ) | ||||||
Return of capital from unconsolidated affiliates | 23,946 | 54,444 | 11,892 | |||||||||
Proceeds from notes receivable | 32,000 | 42,819 | 15,984 | |||||||||
Deposits for properties under contract | (2,000 | ) | 1,424 | (5,776 | ) | |||||||
Proceeds from disposition of properties of unconsolidated affiliates | 26,045 | 24,586 | 38,392 | |||||||||
Payment of deferred leasing costs | (5,202 | ) | (7,515 | ) | (8,207 | ) | ||||||
Change in control of previously unconsolidated (consolidated) affiliate | 288 | (2,578 | ) | — | ||||||||
Net cash provided by (used in) investing activities | 10,082 | (610,970 | ) | (354,503 | ) |
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
|
| Year Ended December 31, |
| |||||||||
(in thousands) |
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest, net of capitalized interest of $12,586 and $5,625 and $13,509 respectively |
| $ | 53,586 |
|
| $ | 61,832 |
|
| $ | 49,942 |
|
Cash paid for income taxes, net of refunds |
| $ | 730 |
|
| $ | 1,227 |
|
| $ | 875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Assumption of accounts payable and accrued expenses through acquisition of real estate |
| $ | 4,666 |
|
| $ | 2,597 |
|
| $ | 2,173 |
|
Right-of-use assets, finance leases obtained in exchange for finance lease liabilities |
| $ | 16,349 |
|
| $ | — |
|
| $ | — |
|
Right-of-use assets, finance leases obtained in exchange for assets under capital lease |
| $ | 76,965 |
|
| $ | — |
|
| $ | — |
|
Right-of-use assets, operating leases obtained in exchange for operating lease liabilities |
| $ | 57,165 |
|
| $ | — |
|
| $ | — |
|
Capital lease obligation exchanged for finance lease liability |
| $ | 71,111 |
|
| $ | — |
|
| $ | — |
|
Note receivable exchanged for sale of real estate |
| $ | 13,530 |
|
| $ | — |
|
|
|
|
|
Other liabilities exchanged for operating lease liabilities |
| $ | 946 |
|
| $ | — |
|
| $ | — |
|
Assumption of debt through investments in unconsolidated affiliates |
| $ | 4,688 |
|
| $ | — |
|
| $ | — |
|
Acquisition of undivided interest in a property through conversion of notes receivable |
| $ | — |
|
| $ | 22,201 |
|
| $ | 60,695 |
|
Acquisition of real estate through conversion of note receivable |
| $ | — |
|
| $ | — |
|
| $ | 9,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in control of previously unconsolidated (consolidated) investment |
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in real estate |
| $ | 828 |
|
| $ | (31,836 | ) |
| $ | (39,322 | ) |
Decrease (increase) in investments in and advances to unconsolidated affiliates |
|
| (1,189 | ) |
|
| 35,881 |
|
|
| 4,159 |
|
Change in other assets and liabilities |
|
| 12 |
|
|
| (3,472 | ) |
|
| (1,842 | ) |
Decrease in right-of-use assets, finance leases |
|
| 11,051 |
|
|
| — |
|
|
| — |
|
Decrease in finance lease liability |
|
| (10,702 | ) |
|
| — |
|
|
| — |
|
Decrease in notes receivable |
|
| — |
|
|
| — |
|
|
| 32,010 |
|
Gain on change in control |
|
| — |
|
|
| — |
|
|
| 5,571 |
|
Increase in cash and restricted cash upon change of control |
| $ | — |
|
| $ | 573 |
|
| $ | 576 |
|
Year Ended December 31, | ||||||||||||
(Continued) | 2017 | 2016 | 2015 | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Principal payments on mortgage and other notes | (306,119 | ) | (394,864 | ) | (148,423 | ) | ||||||
Principal payments on unsecured debt | (277,134 | ) | (541,790 | ) | (234,815 | ) | ||||||
Proceeds received on mortgage and other notes | 156,344 | 222,071 | 90,234 | |||||||||
Proceeds from unsecured debt | 359,625 | 666,716 | 417,425 | |||||||||
Proceeds from issuance of Common Shares, net of issuance costs of $0, $9,238 and $1,150, respectively | — | 450,130 | 63,234 | |||||||||
Capital contributions from noncontrolling interests | 85,206 | 295,108 | 35,489 | |||||||||
Distributions to noncontrolling interests | (39,942 | ) | (105,994 | ) | (84,610 | ) | ||||||
Dividends paid to Common Shareholders | (99,527 | ) | (91,334 | ) | (86,353 | ) | ||||||
Deferred financing and other costs | (6,211 | ) | (11,678 | ) | (4,376 | ) | ||||||
Loan proceeds held as restricted cash | 861 | 9,874 | 48,676 | |||||||||
Purchase of convertible notes payable | — | — | (380 | ) | ||||||||
Net cash (used in) provided by financing activities | (126,897 | ) | 498,239 | 96,101 | ||||||||
Increase (decrease) in cash and cash equivalents | 3,018 | (971 | ) | (144,804 | ) | |||||||
Cash and cash equivalents, beginning of the year | 71,805 | 72,776 | 217,580 | |||||||||
Cash and cash equivalents, end of the year | $ | 74,823 | $ | 71,805 | $ | 72,776 | ||||||
Supplemental disclosure of cash flow information | ||||||||||||
Cash paid during the period for interest, net of capitalized interest of $13,509, $21,109 and $16,447, respectively | $ | 49,942 | $ | 42,279 | $ | 47,960 | ||||||
Cash paid for income taxes, net of (refunds) | $ | 875 | $ | 2,036 | $ | 2,038 | ||||||
Supplemental disclosure of non-cash investing activities | ||||||||||||
Acquisition of real estate through assumption of debt | $ | — | $ | 120,672 | $ | 91,885 | ||||||
Acquisition of real estate through issuance of OP Units | $ | — | $ | 29,336 | $ | — | ||||||
Acquisition of capital lease obligation | $ | — | $ | 76,461 | $ | — | ||||||
Mortgage debt financed at time of acquisition | $ | — | $ | 63,900 | $ | — | ||||||
Assumption of accounts payable and accrued expenses through acquisition of real estate | $ | 2,173 | $ | 3,587 | $ | — | ||||||
Assumption of prepaid expenses and other assets through acquisition of real estate | $ | 2,226 | $ | — | ||||||||
Disposition of air rights through issuance of notes receivable | $ | — | $ | (29,539 | ) | |||||||
Acquisition of real estate through assumption of restricted cash | $ | — | $ | (28,912 | ) | |||||||
Acquisition of real estate through conversion of note receivable | $ | 9,000 | $ | — | $ | 13,386 | ||||||
Acquisition of undivided interest in a property through conversion of notes receivable | $ | 60,695 | $ | — | $ | — | ||||||
Change in control of previously unconsolidated (consolidated) investment | ||||||||||||
(Increase) decrease in real estate, net | $ | (39,322 | ) | $ | 90,559 | $ | — | |||||
Gain on change in control | 5,571 | — | — | |||||||||
Decrease in notes receivable | 32,010 | — | — | |||||||||
Decrease (increase) in investments in and advances to unconsolidated affiliates | 4,159 | (21,421 | ) | — | ||||||||
Decrease in noncontrolling interest | — | (75,713 | ) | — | ||||||||
Change in other assets and liabilities | (2,130 | ) | 3,997 | — | ||||||||
Increase (decrease) in cash upon change of control | $ | 288 | $ | (2,578 | ) | $ | — | |||||
The accompanying notes are an integral part of these consolidated financial statements.
60
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and Summary of Significant Accounting Policies
Organization
Acadia Realty Trust and(collectively with its subsidiaries, (collectively, the “Company”) is a fully-integrated equity real estate investment trust (“REIT”) focused on the ownership, acquisition, development, and management of retail properties located primarily in high-barrier-to-entry, supply-constrained, densely-populated metropolitan areas in the United States.
All of the Company’s assets are held by, and all of its operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and entities in which the Operating Partnership owns an interest. As of December 31, 20172019 and December 31, 2016,2018, the Company controlled approximately 95% and 94% of the Operating Partnership as the sole general partner and is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest (“Common OP Units” or “Preferred OP Units”) and employees who have been awarded restricted Common OP Units (“LTIP Units”) as long-term incentive compensation (
As of December 31, 2017,2019, the Company has ownership interests in 118129 properties within its core portfolio, which consist of those properties either 100% owned, or partially owned through joint venture interests, by the Operating Partnership, or subsidiaries thereof, not including those properties owned through its funds (“Core Portfolio”). The Company also has ownership interests in 5857 properties within its opportunity funds, Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”), and Acadia Strategic Opportunity Fund V LLC (“Fund V”). Acadia Strategic Opportunity and collectively with Fund I, LP (“II, Fund I,” together with Funds II, III, IV, and V,Fund IV, the “Funds”) was liquidated in 2015.. The 176186 Core Portfolio and Fund properties primarily consist of street and urban retail, and suburban shopping centers. In addition, the Company, together with the investors in the Funds, investinvested in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I”),I,” which was liquidated in 2018) and Acadia Mervyn Investors II, LLC (“Mervyns II”) and Fund II,, all on a non-recourse basis. The Company consolidates the Funds as it has (i) the power to direct the activities that most significantly impact the Funds’ economic performance, (ii) is obligated to absorb the Funds’ losses and (iii) has the right to receive benefits from the Funds that could potentially be significant.
The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns I and II and earns fees or priority distributions for asset management, property management, construction, development, leasing, and legal services. Cash flows from the Funds and Mervyns I and II are distributed pro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return (“Preferred Return”) and the return of all capital contributions. Thereafter, remaining cash flow is distributed
The following table summarizes the general terms and Operating Partnership’s equity interests in the Funds and Mervyns II (dollars in millions):
Entity |
| Formation Date |
| Operating Partnership Share of Capital |
|
| Capital Called as of December 31, 2019 (b) |
|
| Unfunded Commitment (b) |
|
| Equity Interest Held By Operating Partnership (a) |
|
| Preferred Return |
|
| Total Distributions as of December 31, 2019 (b) |
| ||||||
Fund II and Mervyns II (c) |
| 6/2004 |
|
| 28.33 | % |
| $ | 347.1 |
|
| $ | 15.0 |
|
|
| 28.33 | % |
|
| 8 | % |
| $ | 146.6 |
|
Fund III |
| 5/2007 |
|
| 24.54 | % |
|
| 436.4 |
|
|
| 13.6 |
|
|
| 24.54 | % |
|
| 6 | % |
|
| 568.8 |
|
Fund IV |
| 5/2012 |
|
| 23.12 | % |
|
| 438.1 |
|
|
| 91.9 |
|
|
| 23.12 | % |
|
| 6 | % |
|
| 193.1 |
|
Fund V |
| 8/2016 |
|
| 20.10 | % |
|
| 213.3 |
|
|
| 306.7 |
|
|
| 20.10 | % |
|
| 6 | % |
|
| 11.1 |
|
Entity | Formation Date | Operating Partnership Share of Capital | Capital Called as of December 31, 2017 | Unfunded Commitment | Equity Interest Held By Operating Partnership (a) | Preferred Return | Total Distributions as of December 31, 2017 (b) | ||||||
Fund II and Mervyns II | 6/2004 | 28.33% | $ | 347.1 | $ | — | 28.33% | 8% | $ | 131.6 | |||
Fund III | 5/2007 | 24.54% | 411.5 | 38.5 | 24.54% | 6% | 551.9 | ||||||
Fund IV | 5/2012 | 23.12% | 412.7 | 117.3 | 23.12% | 6% | 131.5 | ||||||
Fund V | 8/2016 | 20.10% | 45.8 | 474.2 | 20.10% | 6% | — |
(a) | |
Amount represents the current economic ownership at December 31, |
(b) | |
Represents the total for the Funds, including the Operating Partnership and noncontrolling interests’ shares. |
(c) | ||
During April 2018, a distribution of $15.0 million was made to the Fund II investors, including $4.3 million to the Operating Partnership. This amount remains subject to re-contribution to Fund II until April 2021. |
61
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
Segments
At December 31, 2017,2019, the Company had three3 reportable operating segments: Core Portfolio, Funds and Structured Financing. The Company’s chief operating decision maker may review operational and financial data on a propertyproperty-level basis and does not differentiate properties on a geographical basis for purposes of allocating resources or capital. Each property is considered a separate operating segment; however, each property on a stand-alone basis represents less than 10% of revenues, profit or loss, and assets of the combined reported operating segment and meets the majority of the aggregations criteria under the applicable standard.
Principles of Consolidation
The consolidated financial statements include the consolidated accounts of the Company and its investments in partnerships and limited liability companies in which the Company has control in accordance with Financial Accounting Standards Board (“FASB”)FASB Accounting Standards Codification (“ASC”) Topic 810 “Consolidation” (“ASC Topic 810”).“Consolidation.” The ownership interests of other investors in these entities are recorded as noncontrolling interests. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities for which the Company has the ability to exercise significant influence over, but does not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings (or losses) of these entities are included in consolidated net income.
Use of Estimates
GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition and the collectability of notes receivable and rents receivable. Application of these estimates
Reclassifications
Certain prior year amounts with regard to gains on dispositions of properties and credit losses have been reclassified to conform to the current year presentation. These reclassifications had no effect on the reported results of operations.
Summary of Significant Accounting Policies
Real Estate
Land, buildings, and personal property are carried at cost less accumulated depreciation. Improvements and significant renovations that extend the useful life of the properties are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Real estate under development includes costs for significant property expansion and development.
Depreciation is computed on the straight-line basis over estimated useful lives of the assets as follows:
Buildings and improvements Useful lives of 40 years for buildings and 15 years for improvements
Furniture and fixtures Useful lives, ranging from five years to 20 years
Tenant improvements Shorter of economic life or lease terms
Purchase Accounting –
Upon acquisitions of real estate, the Company assesses the fair value of acquired assets and assumed liabilities (including land, buildings and improvements, and identified intangibles such as above- and below-market leases and acquired in-place leases and customer relationships) and acquired liabilities in accordance with ASC Topic 805, “Business Combinations” and ASC Topic 350 “Intangibles – Goodwill and Other,” and allocates the acquisition price based on these assessments.The Company assesses fair value of its tangible assets acquired and assumed liabilities based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information at the measurement period. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property.
62
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In determining the value of above- and below-market leases, the Company estimates the present value difference between contractual rent obligations and estimated market rate of leases at the time of the transaction. To the extent there were fixed-rate options at below-market rental rates, the Company included these along with the current term below-market rent in arriving at the fair value of the acquired leases. The discounted difference between contract and market rents is being amortized to rental income over the remaining applicable lease term, inclusive of any option periods.
In determining the value of acquired in-place leases and customer relationships, the Company considers market conditions at the time of the transaction and values the costs to execute similar leases during the expected lease-up period from vacancy to existing occupancy, including carrying costs. The value assigned to in-place leases and tenant relationships is amortized over the estimated remaining term of the leases. If a lease were to be terminated prior to its scheduled expiration, all unamortized costs relating to that lease would be written off.
The Company estimates the value of any assumption of mortgage debt based on market conditions at the time of acquisitions including prevailing interest rates, terms and ability to obtain financing for a similar asset. Mortgage debt discounts or premiums are amortized into interest expense over the remaining term of the related debt instrument.
Real Estate Under Development –
The Company capitalizes certain costs related to the development of real estate. Interest and real estate taxes incurred during the period of the construction, expansion or development of real estate are capitalized and depreciated over the estimated useful life of the building. The Company will cease the capitalization of these costs when construction activities are substantially completed and the property is available for occupancy by tenants, but no later than one year from the completion of major construction activity at which time the project is placed in service and depreciation commences. If the Company suspends substantially all activities related to development of a qualifying asset, the Company will cease capitalization of interest and taxes until activities are resumed.Real Estate Impairment
– The Company reviews its real estate and real estate under development for impairment when there is an event or a change in circumstances that indicates that the carrying amount may not be recoverable. In cases where the Company does not expect to recover its carrying costs on properties held for use, the Company reduces its carrying costs to fair value. The determination of anticipated undiscounted cash flows is inherently subjective, requiring significant estimates made by management, and considers the most likely expected course of action at the balance sheet date based on current plans, intended holding periods and available market information. If the Company is evaluating the potential sale of an asset, the undiscounted future cash flowsDispositions of Real Estate –
The Company recognizes property sales in accordance with ASC Topic 970 “Real Estate.” Sales of real estate include the sale of land, operating properties and investments in real estate joint ventures.Real Estate Held for Sale –
The Company generally considers assets to be held for sale when it has entered into a contract to sell the property, all material due diligence requirements have been satisfied, and management believes it is probable that the disposition will occur within one year. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value, less cost to sell.Notes Receivable
Notes receivable include certain loans that are held for investment and are collateralized by real estate-related investments and may be subordinate to other senior loans. Notes receivable are recorded at stated principal amounts or at initial investment less accretive yield for loans purchased at a discount, which is accreted over the life of the note. The Company defers loan origination and commitment fees, net of origination costs, and amortizes them over the term of the related loan. The Company evaluates the collectability of both principal and interest based upon an assessment of the underlying collateral value to determine whether it is impaired. A reserve is recorded when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. The amount of the reserve is calculated by comparing the recorded investment to the value of the underlying collateral. As the underlying collateral for a majority of the notes receivable is real estate-related investments, the same valuation techniques are used to value the collateral as those used to determine the fair value of real estate investments for impairment purposes. Given the small number of notes outstanding, the Company does not provide for an additional reserve based on the grouping of loans, as the Company believes the characteristics of its notes are not sufficiently similar to allow an
63
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
evaluation of these notes as a group for a possible loan loss allowance. As such, all of the Company’s notes are evaluated individually for this purpose. Interest income on performing notes is accrued as earned. A note is placed on non-accrual status when, based upon current information and events, it is probable that the Company will not be able to collect all amounts due according to the existing contractual terms. Recognition of interest income on an accrual basis on non-performing notes is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms.
Investments in and Advances to Unconsolidated Joint Ventures
Some of the Company’s joint ventures obtain non-recourse third-party financing on their property investments, contractually limiting the Company’s exposure to losses. The Company recognizes income for distributions in excess of its investment where there is no recourse to the Company and no intention or obligation to contribute additional capital. For investments in which there is recourse to the Company or an obligation or intention to contribute additional capital exists, distributions in excess of the investment are recorded as a liability.
When characterizing distributions from equity investees within the Company's consolidated statements of cash flows, all distributions received are first applied as returns on investment to the extent there are cumulative earnings related to the respective investment and are classified as cash inflows from operating activities. If cumulative distributions are in excess of cumulative earnings, distributions are considered return of investment. In such cases, the distribution is classified as cash inflows from investing activities.
To the extent that the Company’s carrying basis in an unconsolidated affiliate is different from the basis reflected at the joint venture level, the basis difference is amortized over the life of the related assets and included in the Company’s share of equity in net income (loss) of investments in unconsolidated affiliates the joint venture.
The Company periodically reviews its investments in unconsolidated joint ventures for other-than-temporary losses in investment value. Any decline that is not expected to be recovered based on the underlying assets of the investment, is considered other than temporary and an impairment charge is recorded as a reduction in the carrying value of the investment. During the periods presented there were no impairment charges related to the Company’s investments in unconsolidated joint ventures.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed the limits insured by the Federal Deposit Insurance Corporation.
Restricted Cash
Restricted cash consists principally of cash held for real estate taxes, construction costs, property maintenance, insurance, minimum occupancy and property operating income requirements at specific properties as required by certain loan agreements.
Deferred Costs
External fees and costs paid in the successful negotiation of leases are deferred and amortized on a straight-line basis over the terms of the respective leases. FeesExternal fees and costs incurred in connection with obtaining financing are deferred and amortized as a component of interest expense over the term of the related debt obligation on a straight-line basis, which approximates the effective interest method. The Company capitalizes salaries, commissions and benefits related to time spent byEffective January 1, 2019, internal leasing and legal department personnel involved in originating leases.
Derivative Instruments and Hedging Activities
The Company measures derivative instruments at fair value and records them as assets or liabilities, depending on its rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated and that qualified as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in Other comprehensive (loss) income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings.
Although the Company's derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both the Company and its counterparties under certain situations, the Company does not net its derivative fair values or any existing rights or obligations to cash collateral on the consolidated balance sheets. The Company does not use derivatives for trading or speculative purposes. For the periods
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ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
presented, all of the Company's derivatives qualified and were designated as cash flow hedges, and none of its derivatives were deemed ineffective.
Noncontrolling Interests
Noncontrolling interests represent the portion of equity that the Company does not own in those entities it consolidates. The Company identifies its noncontrolling interests separately within the equity section on the Company’s consolidated balance sheets. The amounts of consolidated net earnings attributable to the Company and to the noncontrolling interests are presented separately on the Company’s consolidated statements of income. Noncontrolling interests also include amounts related to common and preferred OP Units issued to unrelated third parties in connection with certain property acquisitions. In addition, the Company periodically issues common OP Units and LTIPs to certain employees of the Company under its share-based incentive program. Unit holders generally have the right to redeem their units for shares of the Company's common stockCommon Shares subject to blackout and other limitations. Common and restricted OP Units are included in the caption Noncontrolling interest within the equity section on the Company’s consolidated balance sheets.
Revenue Recognition and Accounts Receivable
Effective January 1, 2019, and as further described below, the Company accounts for its leases under ASC 842. Pursuant to ASC 842, the Company has made an accounting policy election to not separate the non-lease components from its leases, such as common area maintenance, and has accounted for each of its leases as a single lease component. In addition, the Company has elected to account only for those taxes that it pays on behalf of the tenant as reimbursable costs and will not account for those taxes paid directly by the tenant. Minimum rents from tenants are recognized using the straight-line method over the non-cancelable lease term of the respective leases. Lease termination fees are recognized upon the effective termination of a tenant’s lease when the Company has no further obligations under the lease. As of December 31, 20172019 and 2016,2018, unbilled rents receivable relating to the straight-lining of rents of $37.3$48.4 million and $34.9$47.2 million, respectively, are included in Rents Receivable, net on the accompanying consolidated balance sheets. Certain of these leases also provide for percentage rents based upon the level of sales achieved by the tenant. Percentage rent is recognized in the period when the tenants’ sales breakpoint is met. In addition, leases typically provide for the reimbursement to the Company of real estate taxes, insurance and other property operating expenses. These reimbursements are recognized as revenue in the period the related expenses are incurred.
The Company makes estimates ofassesses the uncollectabilitycollectability of its accounts receivable related to tenant revenues. An allowance for doubtful accounts has beenWith the adoption of ASC Topic 842, the Company will first apply the guidance under ASC 842 in assessing its rents receivable: if collection of rents under specific operating leases is not probable, then the Company recognizes the lesser of that lease’s rental income on a straight-line basis or cash received, plus variable rents as earned. Once this initial assessment is completed, the Company applies a general reserve, as provided against certain tenant accounts receivable that are estimated to be uncollectible. Once the
Stock-Based Compensation
Stock-based compensation expense for all equity-classified stock-based compensation awards is based on the grant date fair value estimated in accordance with current accounting guidance for share-based payments. The Company recognizes these compensation costs for only those shares or units expected to vest on a straight-line or graded-vesting basis, as appropriate, over the requisite service period of the award. The Company includes stock-based compensation within general and administrative expense on the Additional paid-in capital captionconsolidated statements of equity.
Income Taxes
The Company has made an election to be taxed, and believes it qualifies, as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). To maintain REIT status for Federal income tax purposes, the Company is generally required to distribute at least 90% of its REIT taxable income to its shareholders as well as comply with certain other income, asset and organizational requirements as defined in the Code. Accordingly, the Company is generally not subject to Federal corporate income tax to the extent that it distributes 100% of its REIT taxable income each year.
In connection with the REIT Modernization Act, the Company is permitted to participate in certain activities and still maintain its qualification as a REIT, so long as these activities are conducted in entities that elect to be treated as taxable subsidiaries under the Code. As such, the Company is subject to Federal and state income taxes on the income from these activities.
The Protecting Americans from Tax Hikes Act (PATH Act) was enacted in December 2015, and included numerous law changes applicable to REITs. The provisions have various effective dates beginning as early as 2016. These changes did not materially impact the Company's operations or consolidated financial statements.
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ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Although it may qualify for REIT status for Federalfederal income tax purposes, the Company is subject to state or local income or franchise taxes in certain statesjurisdictions in which some of its properties are located. In addition, taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiaries (“TRS”)TRS is fully subject to Federal,federal, state and local income taxes.
The Company accounts for TRS income taxes under the liability method as required by ASC Topic 740, “Income Taxes.” Under the liability method, deferred income taxes are recognized for the temporary differences between the GAAP basis and tax basis of the TRS income, assets and liabilities.
The Company records net deferred tax assets to the extent it believes it is more likely than not that these assets will be realized and would record arealized. In 2019, the Company recorded valuation allowanceallowances to reduce deferred tax assets when it has determined that an uncertainty existsexisted regarding their realization, which would increaseincreased the provision for income taxes. In making such determination, the Company considersconsidered all available positive and negative evidence, including forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carry-forwards, tax planning strategies and recent results of operations. Several of these considerations require assumptions and significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is utilizing to manage its business. To the extent facts and circumstances change in the future, further adjustments to the valuation allowances may be required.
Recently IssuedAdopted Accounting Pronouncements
Lease Accounting Standards Update
In February 2016, the FASB issued ASU No. 2016-02
,To ease the transition, the new lease accounting guidance also requires that internal leasing costs be expensed as incurred, as opposedpermits companies to capitalized and deferred. utilize certain practical expedients in their implementation of the new standard:
• | A package of three practical expedients that must be elected together for all leases and includes: (i) not reassessing expired or existing contracts as to whether they are or contain leases; (ii) not reassessing lease classification of existing leases and (iii) not reassessing the amount of capitalized initial direct costs for existing leases; |
• | A practical expedient to use hindsight in determining the lease term or assessing purchase options for existing leases and in assessing impairment of right of use assets; |
• | Lessees may make an accounting policy election by class of underlying asset not to separate lease components from non-lease components; and |
• | Lessees may make an accounting policy election not to apply the recognition and measurement requirements to short-term leases. |
ASU 2016-02 was modified by the following subsequently issued ASU’s (together with ASU 2016-02, “Topic 842”), many of which provided additional transition practical expedients:
• | ASU 2018-01, Land Easements Practical Expedient for Transition to Topic 842 added a transition practical expedient to not reassess existing or expired land easement agreements not previously accounted for as leases; |
• | ASU 2018-10, Codification Improvements to Topic 842, Leases. These amendments provide minor clarifications and corrections to ASU 2016-02 |
• | ASU 2018-11, Leases (Topic 842): Targeted Improvements. |
o | The amendments in this Update provide entities with an additional optional transition method to adopt ASU 2016-02. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting under this additional transition method for the comparative periods presented in the financial statements in which it adopts the new leases standard would continue to be in accordance with former GAAP (Topic 840, Leases). |
o | The amendments in this Update also provide lessors with a practical expedient, by class of underlying asset, to make a policy election to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606). Conditions are required to elect the practical expedient, and if met, the single component will be accounted for under either under Topic 842 or Topic 606 depending on which component(s) are predominant. The lessor |
66
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases. |
• | ASU 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors. This ASU modifies ASU No. 2016-02 to permit lessors, as an accounting policy election, not to evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, those lessors will account for those costs as if they are lessee costs. Consequently, a lessor making this election will exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all collections from lessees of taxes within the scope of the election and will provide certain disclosures (includes sales, use, value added, and some excise taxes and excludes real estate taxes). ASU 2019-01, Leases (Topic 842), Codification Improvements. There are three codification updates to Topic 842 covered by this ASU: Issue 1 provides guidance on how to compute fair value of leased items for lessors who are non-dealers or manufacturers; Issue 2 relates to cash flow presentation for lessors of sales-type and direct financing leases; and Issue 3 clarifies that certain transition disclosures will only be required in annual disclosures. |
• | Under the new leasing guidance, contract consideration shall be allocated to its lease components (such as the lease of retail properties) and non-lease components (such as maintenance). For lessors, any non-lease components will be accounted for under Topic 606 unless the entity elects the lessor practical expedient to not separate the non-lease components from the associated lease component as described above. The new guidance also includes a definition of initial direct costs that is narrower than the prior definition in former GAAP (Topic 840, Leases). Topic 842 was effective for the Company beginning January 1, 2019. |
The Company expects thatadopted Topic 842 effective January 1, 2019 utilizing the new transition method described in ASU 2018-11 and has availed itself of all the available practical expedients described above except it will no longer capitalizedid not use hindsight in determining the lease term or assessing purchase options for existing leases and in assessing impairment of right of use assets.
As lessor, the Company has more than 1,000 leases with retail tenants and to a lesser extent with office and residential tenants. A significant portionmajority of internal leasing costs that were previouslyits leases are on a triple-net basis. The impact of adoption of ASU 2016-02 for the Company as lessor was as follows effective January 1, 2019:
• | The Company has elected the lessor practical expedient to not separate common area maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. Common area maintenance is considered a non-lease component within the scope of Topic 606 and reimbursements of taxes and insurance are considered contractual payments that do not transfer a good or service to the tenant; however, such revenues related to leases, which were formerly reported as reimbursed expenses, have been reported within lease revenues in the presentation of the statement of income subsequent to the implementation of ASC 842. Prior year classifications under ASC 840 have been reclassified to conform to the current period presentation. |
• | Due to its election of available practical expedients, the Company notes that post-adoption substantially all existing leases, and new leases compared to similar existing leases, had no change in the timing of revenue recognition. |
• | The Company’s internal leasing costs have been expensed as incurred, as opposed to being capitalized and deferred. Commissions subsequent to successful lease execution will continue to be capitalized. After adoption, the Company no longer capitalizes internal leasing costs that were previously capitalized (the Company capitalized $1.7 million of internal leasing costs during the year ended December 31, 2018). |
• | The Company has existing easement arrangements that have not been previously identified as leases. The Company’s existing and similar future easement arrangements will not be classified as rental revenue but as other revenues as these arrangements do not transfer control to the counterparty. |
• | The Company has made a policy election to continue to account for only those taxes described under ASU 2018-20 that it pays on behalf of the tenant as reimbursable costs and will not account for those taxes paid directly by the lessee which are considered lessee costs. |
As lessee, the Company was party to 13 ground, office and equipment leases with future payment obligations aggregating approximately $203.1 million at December 31, 2018. The impact of adoption of ASU 2016-02 for the Company as lessee was as follows (Note 11):
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ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
• | As lessee, the Company has applied the following practical expedients in the implementation ASU 2016-02: (i) to not separate non-lease components from the associated lease component as described above and (ii) to not apply the right-of-use recognition requirements to short-term leases. As such, there were no changes in the timing of recognition of expenses related to its operating leases. |
• | The Company recognized right-of-use assets and lease liabilities of $11.9 million and $12.8 million, respectively, related to its operating leases. |
• | The Company reclassified its existing capital lease asset of $77.0 million and capital lease liability of $71.1 million to a right-of-use asset and a lease liability, respectively, pertaining to finance leases. |
• | Subsequent to the adoption of and in accordance with Topic 842, the Company reassessed the circumstances surrounding three of its operating ground leases and determined that it had made significant leasehold improvements and was now reasonably certain to exercise their purchase options. Accordingly, the Company reclassified the existing right-of-use assets and lease liabilities from operating leases to finance leases and adjusted the leases’ right-of-use assets and corresponding lease liabilities to $5.7 million and $5.7 million, respectively, to incorporate the present value of the purchase options, which totaled $4.7 million at January 1, 2019. |
• | With the adoption of ASC Topic 842, the Company will first apply the guidance under ASC 842 in assessing its rents receivable: if collection of rents under specific operating leases is not probable, then the Company recognizes the lesser of that lease’s rental income on a straight-line basis or cash received, plus variable rents as earned. Once this initial assessment is completed, the Company may apply a general reserve, as provided under ASC 450-20, if applicable. |
The Company capitalized $1.0 million, $1.1 million and $1.4 milliondid not record any cumulative effect of internal leasing costs duringchange in accounting principle upon the years ended December 31, 2017, 2016 and 2015, respectively.adoption of ASC Topic 842 as lessor or lessee. Consistent with the transition guidance under ASU 2016-02 will also require extensive quantitative and qualitative2018-11, all prior period disclosures andremain in accordance with ASC Topic 840.
Other Accounting Topics
In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. These amendments provide financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recorded. This guidance is effective for fiscal years beginning after December 15, 2018, but earlyand interim periods therein. The Company adopted this guidance effective January 1, 2019, which had no material effect on the Company’s financial statements.
In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. These amendments provide specific guidance for transactions for acquiring goods and services from nonemployees and specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (i) financing to the issuer or (ii) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods beginning after December 15, 2020. Early adoption is permitted.
In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements. These amendments provide clarifications and corrections to certain ASC subtopics including the following: 220-10 (Income Statement - Reporting Comprehensive Income - Overall), 470-50 (Debt - Modifications and Extinguishments), 480-10 (Distinguishing Liabilities from Equity - Overall). Some of the amendments in ASU 2018-09 do not require transition guidance and were effective upon issuance; however, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018. For those amendments that were effective January 1, 2019 or earlier, there was no material effect on the Company’s financial statements.
Recently Issued Accounting Pronouncements
In April 2019, the FASB issued ASU No. 2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which provides updates and clarifications to three previously-issued ASUs: 2016-01 Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities; 2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, described further below and which the Company has not yet adopted; and 2017-12 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which the Company early adopted effective January 1, 2018.The updates related to ASU 2016-13 (discussed below) have the same transition as ASU 2016-13 and are effective for periods beginning after December 15, 2019, with adoption permitted after the issuance of ASU 2019-04. The updates related to ASU 2017-12 are effective for the Company on January 1, 2020.The updates related to ASU 2016-01 are effective for fiscal years beginning after December 15, 2019.
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ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In May 2019, the FASB issued ASU No. 2019-05 Financial Instruments — Credit Losses (Topic 326) which provides relief to certain entities adopting ASU 2016-13 (discussed below). The amendments accomplish those objectives by providing entities with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments, that are within the scope of Subtopic 326-20, upon adoption of Topic 326. The fair value option election does not apply to held-to-maturity debt securities. ASU 2019-05 has the same transition as ASU 2016-13 and is effective for periods beginning after December 15, 2019, with adoption permitted after this update. The Company currently does not expect to utilize this election upon adoption of ASU 2016-13 (discussed below) because it does not currently have any significant held-to-maturity debt securities.
In November 2018, the FASB issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments — Credit Losses. This ASU modifies ASU 2016-13 (discussed below). The amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20, Financial Instruments – Credit Losses – Measure at Amortized Cost. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. ASU 2018-19 is effective for periods beginning after December 15, 2019, with adoption permitted for fiscal years beginning after December 15, 2018. As previously discussed, the Company accounts for its lease receivables utilizing the guidance of ASC 842 and does not expect to make any adjustments related to the implementation of ASU 2019-19.
In June 2016, the FASB issued ASU No. 2016-13,
In August 2016,2018, the FASB issued ASU No. 2016-15
In August 2017,2018, the Financial Accounting Standards BoardFASB issued ASU 2017-12,
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ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Real Estate
The Company’s consolidated real estate is comprised of the following for the periods presented (in thousands):
|
| December 31, 2019 |
|
| December 31, 2018 |
| ||
Land |
| $ | 756,297 |
|
| $ | 710,469 |
|
Buildings and improvements |
|
| 2,740,479 |
|
|
| 2,594,828 |
|
Tenant improvements |
|
| 173,686 |
|
|
| 151,154 |
|
Construction in progress |
|
| 13,617 |
|
|
| 44,092 |
|
Properties under capital lease (Note 11) |
|
| — |
|
|
| 76,965 |
|
Right-of-use assets - finance leases (Note 11) |
|
| 102,055 |
|
|
| — |
|
Right-of-use assets - operating leases (Note 11), net |
|
| 60,006 |
|
|
| — |
|
Total |
|
| 3,846,140 |
|
|
| 3,577,508 |
|
Less: Accumulated depreciation and amortization |
|
| (490,227 | ) |
|
| (416,657 | ) |
Operating real estate, net |
|
| 3,355,913 |
|
|
| 3,160,851 |
|
Real estate under development, at cost |
|
| 253,402 |
|
|
| 120,297 |
|
Net investments in real estate |
| $ | 3,609,315 |
|
| $ | 3,281,148 |
|
December 31, 2017 | December 31, 2016 | |||||||
Land | $ | 658,835 | $ | 693,252 | ||||
Buildings and improvements | 2,406,488 | 1,916,288 | ||||||
Tenant improvements | 131,850 | 132,220 | ||||||
Construction in progress | 18,642 | 19,789 | ||||||
Properties under capital lease | 76,965 | 76,965 | ||||||
Total | 3,292,780 | 2,838,514 | ||||||
Less: Accumulated depreciation | (339,862 | ) | (287,066 | ) | ||||
Operating real estate, net | 2,952,918 | 2,551,448 | ||||||
Real estate under development, at cost | 173,702 | 543,486 | ||||||
Net investments in real estate | $ | 3,126,620 | $ | 3,094,934 |
70
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Acquisitions and Conversions
During the years ended December 31, 20172019 and December 31, 2016,2018, the Company acquired the following consolidated retail properties (dollars in thousands):
Property and Location |
| Percent Acquired |
|
| Date of Acquisition |
| Purchase Price |
| ||
2019 Acquisitions |
|
|
|
|
|
|
|
|
|
|
Core |
|
|
|
|
|
|
|
|
|
|
Soho Acquisitions - 41, 45, 47, 51 and 53 Greene Street - New York, NY (a) |
| 100% |
|
| Mar 15, 2019 Mar 27, 2019 May 29, 2019 Jul 30, 2019 Nov 8, 2019 |
| $ | 87,006 |
| |
849, 907 and 912 W. Armitage - Chicago, IL |
| 100% |
|
| Sep 11, 2019 Dec 11, 2019 |
|
| 10,738 |
| |
8436-8452 Melrose Place - Los Angeles, CA |
| 100% |
|
| Oct 25, 2019 |
|
| 48,691 |
| |
Subtotal Core |
|
|
|
|
|
|
|
| 146,435 |
|
|
|
|
|
|
|
|
|
|
|
|
Fund V |
|
|
|
|
|
|
|
|
|
|
Palm Coast Landing - Palm Coast, FL |
| 100% |
|
| May 6, 2019 |
|
| 36,644 |
| |
Lincoln Commons - Lincoln, RI |
| 100% |
|
| Jun 21, 2019 |
|
| 54,299 |
| |
Landstown Commons - Virginia Beach, VA |
| 100% |
|
| Aug 2, 2019 |
|
| 86,961 |
| |
Subtotal Fund V |
|
|
|
|
|
|
|
| 177,904 |
|
Total 2019 Acquisitions |
|
|
|
|
|
|
| $ | 324,339 |
|
|
|
|
|
|
|
|
|
|
|
|
2018 Acquisitions and Conversions |
|
|
|
|
|
|
|
|
|
|
Core |
|
|
|
|
|
|
|
|
|
|
Bedford Green Land Parcel - Bedford Hills, NY |
| 100% |
|
| Mar 23, 2018 |
| $ | 1,337 |
| |
Subtotal Core |
|
|
|
|
|
|
|
| 1,337 |
|
|
|
|
|
|
|
|
|
|
|
|
Fund IV |
|
|
|
|
|
|
|
|
|
|
Broughton Street Partners I - Savannah, GA (Conversion) (Note 4) |
| 100% |
|
| Oct 11, 2018 |
|
| 36,104 |
| |
Subtotal Fund IV |
|
|
|
|
|
|
|
| 36,104 |
|
|
|
|
|
|
|
|
|
|
|
|
Fund V |
|
|
|
|
|
|
|
|
|
|
Trussville Promenade - Trussville, AL |
| 100% |
|
| Feb 21, 2018 |
|
| 45,259 |
| |
Elk Grove Commons - Elk Grove, CA |
| 100% |
|
| Jul 18, 2018 |
|
| 59,320 |
| |
Hiram Pavilion - Hiram, GA |
| 100% |
|
| Oct 23, 2018 |
|
| 44,443 |
| |
Subtotal Fund V |
|
|
|
|
|
|
|
| 149,022 |
|
Total 2018 Acquisitions and Conversions |
|
|
|
|
|
|
| $ | 186,463 |
|
|
|
|
|
|
|
|
|
|
|
|
Property and Location | Percent Acquired | Date of Acquisition | Purchase Price | Debt Assumed | |||||
2017 Acquisitions and Conversions | |||||||||
Core | |||||||||
Market Square Shopping Center - Wilmington, DE (Conversion) (Note 4) | 100% | Nov 16, 2017 | $ | 42,800 | $ | — | |||
Subtotal Core | 42,800 | — | |||||||
Fund IV | |||||||||
Lincoln Place - Fairview Heights, IL | 100% | Mar 13, 2017 | 35,350 | — | |||||
Shaw's Plaza - Windham, ME (Conversion) (Note 3) | 100% | Jun 30, 2017 | 9,142 | — | |||||
Subtotal Fund IV | 44,492 | — | |||||||
Fund V | |||||||||
Plaza Santa Fe - Santa Fe, NM | 100% | Jun 5, 2017 | 35,220 | — | |||||
Hickory Ridge - Hickory, NC | 100% | Jul 27, 2017 | 44,020 | — | |||||
New Towne Plaza - Canton, MI | 100% | Aug 4, 2017 | 26,000 | — | |||||
Fairlane Green - Allen Park, MI | 100% | Dec 20, 2017 | 62,000 | — | |||||
Subtotal Fund V | 167,240 | — | |||||||
Total 2017 Acquisitions and Conversions | $ | 254,532 | $ | — | |||||
2016 Acquisitions | |||||||||
Core Portfolio | |||||||||
991 Madison Avenue - New York, NY (a) | 100% | Mar 26, 2016 | $ | 76,628 | $ | — | |||
165 Newbury Street - Boston, MA | 100% | May 13, 2016 | 6,250 | — | |||||
Concord & Milwaukee - Chicago, IL | 100% | Jul 28, 2016 | 6,000 | 2,902 | |||||
151 North State Street - Chicago, IL | 100% | Aug 10, 2016 | 30,500 | 14,556 | |||||
State & Washington - Chicago, IL | 100% | Aug 22, 2016 | 70,250 | 25,650 | |||||
North & Kingsbury - Chicago, IL | 100% | Aug 29, 2016 | 34,000 | 13,409 | |||||
Sullivan Center - Chicago, IL | 100% | Aug 31, 2016 | 146,939 | — | |||||
California & Armitage - Chicago, IL | 100% | Sep 12, 2016 | 9,250 | 2,692 | |||||
555 9th Street - San Francisco, CA | 100% | Nov 2, 2016 | 139,775 | 60,000 | |||||
Subtotal Core Portfolio | 519,592 | 119,209 | |||||||
Fund IV | |||||||||
Restaurants at Fort Point - Boston, MA | 100% | Jan 14, 2016 | 11,500 | — | |||||
1964 Union Street - San Francisco, CA (a) | 90% | Jan 28, 2016 | 2,250 | 1,463 | |||||
Wake Forest Crossing - Wake Forest, NC | 100% | Sep 27, 2016 | 36,600 | — | |||||
Airport Mall - Bangor, ME | 100% | Oct 28, 2016 | 10,250 | — | |||||
Colonie Plaza - Albany, NY | 100% | Oct 28, 2016 | 15,000 | — | |||||
Dauphin Plaza - Harrisburg, PA | 100% | Oct 28, 2016 | 16,000 | — | |||||
JFK Plaza - Waterville, ME | 100% | Oct 28, 2016 | 6,500 | — | |||||
Mayfair Shopping Center - Philadelphia, PA | 100% | Oct 28, 2016 | 16,600 | — | |||||
Shaw's Plaza - Waterville, ME | 100% | Oct 28, 2016 | 13,800 | — | |||||
Wells Plaza - Wells, ME | 100% | Oct 28, 2016 | 5,250 | — | |||||
717 N Michigan - Chicago, IL | 100% | Dec 1, 2016 | 103,500 | — | |||||
Subtotal Fund IV | 237,250 | 1,463 | |||||||
Total 2016 Acquisitions | $ | 756,842 | $ | 120,672 |
(a) | ||
The Soho Acquisitions are a collection of 7 properties located in New York, NY with an aggregate purchase price of approximately $122.0 million under two separate contracts. One of the remaining properties was acquired in January 2020 (Note 17). The acquisition of the remaining property is expected to be finalized during 2020.No assurance can be given that the Company will successfully close on the remaining acquisitions under contract, which are subject to customary closing conditions. |
The 2019 Acquisitions and 2018 Acquisitions and Conversions were considered asset acquisitions based on accounting guidance effective as |
71
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Purchase Price Allocations
The purchase prices for the business combinations2019 Acquisitions and the 2018 Acquisitions and Conversions were allocated to the acquired assets and assumed liabilities based on their estimated fair values at the dates of acquisition. The following table summarizes the allocation of the purchase price of properties acquired during the years ended December 31, 20172019 and December 31, 20162018 (in thousands):
|
| Year Ended December 31, 2019 |
|
| Year Ended December 31, 2018 |
| ||
Net Assets Acquired |
|
|
|
|
|
|
|
|
Land |
| $ | 78,263 |
|
| $ | 38,086 |
|
Buildings and improvements |
|
| 221,185 |
|
|
| 129,586 |
|
Acquisition-related intangible assets (Note 6) |
|
| 34,972 |
|
|
| 26,693 |
|
Acquisition-related intangible liabilities (Note 6) |
|
| (10,081 | ) |
|
| (7,902 | ) |
Net assets acquired |
| $ | 324,339 |
|
| $ | 186,463 |
|
|
|
|
|
|
|
|
|
|
Consideration |
|
|
|
|
|
|
|
|
Cash |
| $ | 319,673 |
|
| $ | 147,985 |
|
Liabilities assumed |
|
| 4,666 |
|
|
| 2,597 |
|
Existing interest in previously unconsolidated investment |
|
| — |
|
|
| 35,881 |
|
Total consideration |
| $ | 324,339 |
|
| $ | 186,463 |
|
Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||
Net Assets Acquired | |||||||
Land | $ | 48,138 | $ | 225,729 | |||
Buildings and improvements | 173,576 | 458,525 | |||||
Other assets | 84 | 3,481 | |||||
Acquisition-related intangible assets (in Acquired lease intangibles, net) | 44,269 | 63,606 | |||||
Acquisition-related intangible liabilities (in Acquired lease intangibles, net) | (11,535 | ) | (72,985 | ) | |||
Above and below market debt assumed (included in Mortgages and other notes payable, net) | — | (119,601 | ) | ||||
Net assets acquired | $ | 254,532 | $ | 558,755 |
Consideration | |||||||
Cash | $ | 200,429 | $ | 439,546 | |||
Conversion of note receivable | 41,010 | — | |||||
Debt assumed | — | 119,209 | |||||
Liabilities assumed | 3,363 | — | |||||
Existing interest in previously unconsolidated investment | 4,159 | �� | — | ||||
Change in control of previously unconsolidated investment | 5,571 | — | |||||
Total Consideration | $ | 254,532 | $ | 558,755 |
Dispositions
During the years ended December 31, 20172019 and December 31, 2016,2018, the Company disposed of the following consolidated properties (in thousands):
Property and Location |
| Owner |
| Date Sold |
| Sale Price |
|
| Gain (Loss) on Sale |
| ||
2019 Dispositions |
|
|
|
|
|
|
|
|
|
|
|
|
3104 M Street - Washington, DC (Note 4) |
| Fund III |
| Jan 24, 2019 |
| $ | 10,500 |
|
| $ | 2,014 |
|
210 Bowery - 3 Residential Condos - New York, NY |
| Fund IV |
| May 17, 2019 Sep 23, 2019 Nov 7, 2019 |
|
| 8,826 |
|
|
| (242 | ) |
JFK Plaza - Waterville, ME |
| Fund IV |
| Jul 24, 2019 |
|
| 7,800 |
|
|
| 2,075 |
|
3780-3858 Nostrand Avenue - New York, NY |
| Fund III |
| Aug 22, 2019 |
|
| 27,650 |
|
|
| 2,562 |
|
938 W North Avenue - Chicago, IL |
| Fund IV |
| Sep 27, 2019 |
|
| 32,000 |
|
|
| 7,144 |
|
Pacesetter Park - Pomona, NY |
| Core |
| Oct 28, 2019 |
|
| 22,550 |
|
|
| 16,771 |
|
Total 2019 Dispositions |
|
|
|
|
| $ | 109,326 |
|
| $ | 30,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Dispositions |
|
|
|
|
|
|
|
|
|
|
|
|
Sherman Avenue - New York, NY |
| Fund II |
| Apr 17, 2018 |
| $ | 26,000 |
|
| $ | 33 |
|
Lake Montclair - Dumfries, VA |
| Fund IV |
| Aug 27, 2018 |
|
| 22,450 |
|
|
| 2,923 |
|
1861 Union Street - San Francisco, CA |
| Fund IV |
| Aug 29, 2018 |
|
| 6,000 |
|
|
| 2,184 |
|
210 Bowery - 4 Residential Condos - New York, NY |
| Fund IV |
| Nov 30, 2018 Dec 10, 2018 Dec 17, 2018 Dec 21, 2018 |
|
| 12,050 |
|
|
| — |
|
Total 2018 Dispositions |
|
|
|
|
| $ | 66,500 |
|
| $ | 5,140 |
|
Property and Location | Owner | Date Sold | Sale Price | Gain/(Loss) on Sale | |||||
2017 Dispositions | |||||||||
New Hyde Park Shopping Center - New Hyde Park, NY | Fund III | Jul 6, 2017 | $ | 22,075 | $ | 6,433 | |||
216th Street - New York, NY | Fund II | Sep 11, 2017 | 30,579 | 6,543 | |||||
City Point Condominium Tower I - Brooklyn, NY | Fund II | Oct 13, 2017 | 96,000 | (810 | ) | ||||
1151 Third Avenue - New York, NY | Fund IV | Nov 16, 2017 | 27,000 | 5,183 | |||||
260 E 161st Street - Bronx, NY | Fund II | Dec 13, 2017 | 105,684 | 31,537 | |||||
Total 2017 Dispositions | $ | 281,338 | $ | 48,886 | |||||
2016 Dispositions | |||||||||
Cortlandt Town Center (65%) - Mohegan Lake, NY (Note 4) | Fund III | Jan 28, 2016 | $ | 107,250 | $ | 65,393 | |||
Heritage Shops - Chicago, IL | Fund III | Apr 26, 2016 | 46,500 | 16,572 | |||||
Total 2016 Dispositions | $ | 153,750 | $ | 81,965 |
72
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The aggregate rental revenue, expenses and pre-tax income reported within continuing operations for the aforementioned consolidated properties that were sold during the years ended December 31, 2017, 20162019, 2018 and 20152017 were as follows (in thousands):
|
|
| Year Ended December 31, |
| |||||||||
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Revenues |
|
| $ | 7,295 |
|
| $ | 11,633 |
|
| $ | 23,617 |
|
Expenses |
|
|
| (6,403 | ) |
|
| (10,084 | ) |
|
| (31,651 | ) |
Gain on disposition of properties |
|
|
| 30,324 |
|
|
| 5,140 |
|
|
| 48,886 |
|
Net income attributable to noncontrolling interests |
|
|
| (10,515 | ) |
|
| (4,742 | ) |
|
| (29,233 | ) |
Net income attributable to Acadia |
|
| $ | 20,701 |
|
| $ | 1,947 |
|
| $ | 11,619 |
|
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Rental revenues | $ | 13,021 | $ | 16,946 | $ | 31,935 | ||||||
Expenses | (18,964 | ) | (13,653 | ) | (27,265 | ) | ||||||
Loss on extinguishment of debt | (1,380 | ) | (81 | ) | (111 | ) | ||||||
(Loss) income from continuing operations of disposed properties before gain on disposition of properties | (7,323 | ) | 3,212 | 4,559 | ||||||||
Gain on disposition of properties, net of tax | 48,886 | 81,965 | 89,063 | |||||||||
Net income attributable to noncontrolling interests | (30,072 | ) | (70,850 | ) | (1,732 | ) | ||||||
Net income attributable to Acadia | $ | 11,491 | $ | 14,327 | $ | 91,890 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Pro forma revenues | $ | 266,485 | $ | 247,843 | $ | 243,237 | |||||
Pro forma income from continuing operations | 21,878 | 63,681 | 52,442 | ||||||||
Pro forma net income attributable to Acadia | 64,107 | 82,485 | 58,232 | ||||||||
Pro forma basic and diluted earnings per share | 0.77 | 1.02 | 0.79 |
Real Estate Under Development and Construction in Progress
Real estate under development represents the Company’s consolidated properties that have not yet been placed into service while undergoing substantial development or construction.
Development activity for the Company’s consolidated properties comprised the following during the periods presented (dollars in thousands):
|
| December 31, 2018 |
|
| Year Ended December 31, 2019 |
|
| December 31, 2019 |
| |||||||||||||||||||
|
| Number of Properties |
|
| Carrying Value |
|
| Transfers In |
|
| Capitalized Costs |
|
| Transfers Out |
|
| Number of Properties |
|
| Carrying Value |
| |||||||
Core |
|
| 1 |
|
| $ | 7,759 |
|
| $ | 57,342 |
|
| $ | 5,581 |
|
| $ | 9,819 |
|
|
| — |
|
| $ | 60,863 |
|
Fund II |
|
| — |
|
|
| 7,462 |
|
|
| — |
|
|
| 3,241 |
|
|
| — |
|
|
| — |
|
|
| 10,703 |
|
Fund III |
|
| 1 |
|
|
| 21,242 |
|
|
| 12,313 |
|
|
| 2,685 |
|
|
| — |
|
|
| 1 |
|
|
| 36,240 |
|
Fund IV |
|
| 1 |
|
|
| 83,834 |
|
|
| 47,689 |
|
|
| 14,073 |
|
|
| — |
|
|
| 2 |
|
|
| 145,596 |
|
Total |
|
| 3 |
|
| $ | 120,297 |
|
| $ | 117,344 |
|
| $ | 25,580 |
|
| $ | 9,819 |
|
|
| 3 |
|
| $ | 253,402 |
|
December 31, 2016 | Year Ended December 31, 2017 | December 31, 2017 | |||||||||||||||||||||||
Number of Properties | Carrying Value | Transfers In | Capitalized Costs | Transfers Out | Number of Properties | Carrying Value | |||||||||||||||||||
Core | 1 | $ | 3,499 | $ | 22,422 | $ | 819 | $ | 4,843 | 2 | $ | 21,897 | |||||||||||||
Fund II | 2 | 443,012 | — | 6,851 | 444,955 | — | 4,908 | ||||||||||||||||||
Fund III | 3 | 50,452 | — | 22,572 | 9,085 | 2 | 63,939 | ||||||||||||||||||
Fund IV | 4 | 46,523 | 80,508 | 2,158 | 46,231 | 1 | 82,958 | ||||||||||||||||||
Total | 10 | $ | 543,486 | $ | 102,930 | $ | 32,400 | $ | 505,114 | 5 | $ | 173,702 |
The number of properties in the table above refers to projects comprising the entire property; however, certain projects represent a portion of a property. During the year ended December 31, 2017,2019, the Company placed substantially allthe following projects into development:
• | a portion of City Center (Core) |
• | a portion of Cortlandt Crossing (Fund III) |
• | a portion of 110 University Place (Fund IV, Note 11) |
• | its 146 Geary Street property (Fund IV) |
During the year ended December 31, 2019, the Company placed 1 Core development project, 56 E. Walton, into service. Fund II’sII amounts relate to the City Point Phase III project.
|
| December 31, 2017 |
|
| Year Ended 2018 |
|
| December 31, 2018 |
| |||||||||||||||||||
|
| Number of Properties |
|
| Carrying Value |
|
| Transfers In |
|
| Capitalized Costs |
|
| Transfers Out |
|
| Number of Properties |
|
| Carrying Value |
| |||||||
Core |
|
| 2 |
|
| $ | 21,897 |
|
| $ | — |
|
| $ | 6,320 |
|
| $ | 20,458 |
|
|
| 1 |
|
| $ | 7,759 |
|
Fund II |
|
| — |
|
|
| 4,908 |
|
|
| — |
|
|
| 2,554 |
|
|
| — |
|
|
| — |
|
|
| 7,462 |
|
Fund III |
|
| 2 |
|
|
| 63,939 |
|
|
| — |
|
|
| 36,117 |
|
|
| 78,814 |
|
|
| 1 |
|
|
| 21,242 |
|
Fund IV |
|
| 1 |
|
|
| 82,958 |
|
|
| — |
|
|
| 876 |
|
|
| — |
|
|
| 1 |
|
|
| 83,834 |
|
Total |
|
| 5 |
|
| $ | 173,702 |
|
| $ | — |
|
| $ | 45,867 |
|
| $ | 99,272 |
|
|
| 3 |
|
| $ | 120,297 |
|
During the year ended December 31, 2018, the Company placed 1 Core development project into service as well as threeand one Fund IV properties, reclassified Fund II’s Sherman Avenue property as held for sale and placed one Core propertyIII development project into development.service. In addition to the consolidated projects noted above, the Company had one1 unconsolidated project remaining in development after placing three of its four unconsolidated Fund IV development propertiesat December 31, 2017, which it placed into service during the year ended December 31, 2017.
73
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Construction in progress pertains to construction activity at the Company’s operating properties whichthat are in service and continue to operate during the construction period.
3. Notes Receivable, Net
The Company’s notes receivable, net were generally collateralized either by the underlying properties or the borrower’s ownership interest in the entities that own the properties, and were as follows (dollars in thousands):
|
| December 31, |
|
| December 31, |
|
| December 31, 2019 |
| |||||||||
Description |
| 2019 |
|
| 2018 |
|
| Number |
|
| Maturity Date |
| Interest Rate |
| ||||
Core Portfolio (a) |
| $ | 76,467 |
|
| $ | 58,637 |
|
|
| 5 |
|
| Apr 2020 - Apr 2026 |
| 4.7% - 8.1% |
| |
Fund II |
|
| 33,170 |
|
|
| 32,582 |
|
|
| 1 |
|
| Dec 2020 |
| 1.75% |
| |
Fund III |
|
| 5,306 |
|
|
| 5,306 |
|
|
| 1 |
|
| Jul 2020 |
| 18.0% |
| |
Fund IV |
|
| — |
|
|
| 15,250 |
|
|
| — |
|
| Feb 2021 |
| 15.3% |
| |
|
| $ | 114,943 |
|
| $ | 111,775 |
|
|
| 7 |
|
|
|
|
|
|
|
(a) | Includes 2 notes receivable from OP Unit holders, which are collateralized by their OP Units, with balances totaling $6.5 million at December 31, 2019 and $4.8 million at December 31, 2018. |
December 31, | December 31, | December 31, 2017 | ||||||||||||
Description | 2017 | 2016 | Number | Maturity Date | Interest Rate | |||||||||
Core Portfolio | $ | 101,695 | $ | 216,400 | 3 | June 2018 - April 2019 | 6.0% - 8.1% | |||||||
Fund II | 31,778 | 31,007 | 1 | May 2020 | 2.5% | |||||||||
Fund III | 5,106 | 4,506 | 1 | July 2020 | 18.0% | |||||||||
Fund IV | 15,250 | 24,250 | 1 | February 2021 | 15.3% | |||||||||
$ | 153,829 | $ | 276,163 | 6 |
During the year ended December 31, 2017,2019, the Company:
• | redeemed its $15.3 million Fund IV investment plus accrued interest of $10.0 million; |
• | provided seller financing to the buyer in the amount of $13.5 million with an effective interest rate of 5.1%, collateralized by Pacesetter Park, in connection with the sale of the property (Note 2); |
• | funded an additional $4.3 million on a Core note receivable from an OP Unit holder; |
• | increased the balance of a Fund II note receivable by the interest accrued of $0.4 million; |
• | stopped accruing interest on one Fund III loan, due to the estimated market value of the collateral. The note had $4.7 million of accrued interest at each of December 31, 2018 and December 31, 2019 and was guaranteed by a third party; |
• | extended the maturity for a Core note receivable to June 2, 2020; and |
• | modified one Core loan to defer $0.4 million of interest until maturity. Subsequent to modification, the first mortgage, which aggregated $20.8 million including accrued interest, was in default as of December 31, 2019. The Company believes that the collateral is sufficient to cover the outstanding principal and interest. |
During the year ended December 31, 2018, the Company:
• | exchanged |
• | received full payment on $26.0 million of Core notes receivable plus accrued interest |
• | funded an additional $2.8 million to its existing $15.0 million Core • advanced an additional $0.2 million on a Fund III note receivable; and • increased the balance of a Fund II note receivable by the interest accrued The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company’s loan in relation to other debt secured by the collateral and the prospects of the borrower. Earnings from these notes and mortgages receivable are reported within the Company’s Structured Financing segment ( 74 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Investments The Company accounts for its investments in and advances to unconsolidated affiliates primarily under the equity method of accounting as it has the ability to exercise significant influence, but does not have financial or operating control over the investment, which is maintained by each of the unaffiliated partners who co-invest with the Company. The Company’s investments in and advances to unconsolidated affiliates consist of the following (dollars in thousands): Ownership Interest December 31, December 31, Portfolio Property December 31, 2019 2019 2018 Core: 840 N. Michigan (a) 88.43% $ 61,260 $ 65,013 Renaissance Portfolio 20% 31,815 32,458 Gotham Plaza 49% 29,466 29,550 Town Center (a, b) 75.22% 97,674 99,758 Georgetown Portfolio 50% 4,498 4,653 1238 Wisconsin Avenue 80% 1,194 — 225,907 231,432 Mervyns I & II: KLA/Mervyn's, LLC (c) 10.5% — — Fund III: Fund III Other Portfolio 94.23% 17 21 Self Storage Management (d) 95% 207 206 224 227 Fund IV: Broughton Street Portfolio (e) 50% 12,702 3,236 Fund IV Other Portfolio 98.57% 14,733 14,540 650 Bald Hill Road 90% 12,450 12,880 39,885 30,656 Fund V: Family Center at Riverdale (a) 89.42% 13,329 — Tri-City Plaza 90% 10,250 — Frederick County Acquisitions 90% 15,070 — 38,649 — Various: Due to Related Parties (1,902 ) (461 ) Other (f) 2,334 556 Investments in and advances to unconsolidated affiliates $ 305,097 $ 262,410 Core: Crossroads (g) 49% $ 15,362 $ 15,623 Distributions in excess of income from, and investments in, unconsolidated affiliates $ 15,362 $ 15,623 (a) Represents a tenancy-in-common interest. (b) During (c) Distributions, discussed below, have exceeded the Company’s non-recourse investment, therefore the carrying value is (d) Represents a variable interest (e) Also referred to as “BSP II” as discussed further below. The Company is entitled to a 15% return on its cumulative capital contribution which was (f) Includes (g) Distributions have exceeded the Company’s investment; however, the Company recognizes a liability balance as it may be required to return distributions to fund future obligations of the entity. 75 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Core Portfolio 2019 Acquisitions of Unconsolidated On January On August 8, 2019, the Company invested $1.8 million in Fifth Wall Ventures Retail Fund, L.P. (“ On May 2, 2019, the Company acquired a Brandywine Portfolio, Market Square and Town Center The Company owns an interest in an approximately one million square foot retail portfolio (the “Brandywine Portfolio” joint venture) located in Wilmington, Delaware, which includes two properties referred to as “Market Square” and “Town Center.” Prior to the second quarter of 2016, the Company had a controlling interest in the Brandywine Portfolio, and it was therefore consolidated within the Company’s financial statements. During April 2016, the arrangement with the partners of the Brandywine Portfolio was modified to change the legal ownership from a partnership to a tenancy-in-common interest, as well as to provide certain participating rights to the outside partners. As a result of these modifications, the Company de-consolidated the Brandywine Portfolio and accounted for its interest under the equity method of accounting effective May 1, 2016. Furthermore, as the owners of the Brandywine Portfolio had consistent ownership interests before and after the modification and the underlying net assets were unchanged, the Company reflected the change from consolidation to equity method based upon its historical cost. The Brandywine Portfolio and Market Square ventures do not include the property held by Acadia Brandywine Holdings, LLC (“Brandywine Holdings”), an entity Additionally, in April 2016, the Company repaid the outstanding balance of $140.0 million of non-recourse debt collateralized by the Brandywine Portfolio and provided a note receivable collateralized by the partners’ tenancy-in-common interest in the Brandywine Portfolio for their proportionate share of the repayment. On May 1, 2017, the Company exchanged $16.0 million of the $153.4 million notes receivable (the “Brandywine Notes Receivable”) ( On November 16, 2017, the Company exchanged $60.7 million of the Brandywine Notes Receivable plus accrued interest of $0.9 million for one of the partner’s 38.89% tenancy-in-common interests in Town Center. The incremental investment in Town Center was recorded at $61.6 million and the excess of this amount over the venture’s book value associated with this interest, or $34.5 million, On March 28, 2018, the Company exchanged $22.0 million of its Brandywine Notes Receivable plus accrued interest of $0.3 million for one of the partner’s 14.11% tenancy-in-common interests in Town Center. The incremental investment in Town Center was recorded at $ 22.3 million and the excess of this amount over the venture’s book value associated with this interest, or $12.7 million, is being amortized over the remaining 76 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS depreciable lives of the venture’s assets. The Company continues to apply the equity method of accounting for its aggregate At December 31, Fund Investments 2019 Acquisitions of Unconsolidated Investments On March 19, 2019, Fund On April 30, 2019, Fund V acquired a 90% interest in a venture which invested in a 300,000 square-foot property located in Vernon, Connecticut referred to as “Tri-City Plaza” for $36.7 million. The Company accounts for its interest in Tri-City Plaza under the equity method of accounting as it does not control but exercises significant influence over the investment. On August 21, 2019, Fund V acquired a 90% interest in a venture which invested in a 225,000 square foot property and a 300,000 square foot property, both located in Frederick County, Maryland collectively referred to as the “Frederick County Acquisitions” for $21.8 million and $33.1 million, respectively. The Company accounts for its interest in the Frederick County Acquisitions under the equity method of accounting as it does not control but exercises significant influence over the investment. Storage Post On June 29, 2019, Fund III’s Storage Post venture, which is a cost-method investment with 0 carrying value, distributed $1.6 million of which the Operating Partnership’s share was $0.4 million. On May 15, 2018, Fund III’s Storage Post venture, distributed $3.2 million of which the Operating Partnership’s share was $0.8 million. Broughton Street Portfolio During 2014, Fund IV 2018 Dispositions of Unconsolidated Investments On January On June 29, 2018, Fund IV’s Broughton Street Portfolio venture terminated its master leases on 2 of its properties resulting in a net loss of $1.0 million On 77 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fees from Unconsolidated Affiliates The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling In addition, the Company paid to certain unaffiliated partners of its joint ventures, Summarized Financial Information of Unconsolidated Affiliates The following combined and condensed Balance Sheets and Statements of Income, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates (in thousands): December 31, 2019 December 31, 2018 Combined and Condensed Balance Sheets Assets: Rental property, net $ 656,265 $ 487,846 Real estate under development 1,341 — Other assets 85,540 89,890 Total assets $ 743,146 $ 577,736 Liabilities and partners’ equity: Mortgage notes payable $ 502,036 $ 408,967 Other liabilities 77,785 54,585 Partners’ equity 163,325 114,184 Total liabilities and partners’ equity $ 743,146 $ 577,736 Company's share of accumulated equity $ 186,864 $ 139,028 Basis differential 100,962 103,812 Deferred fees, net of portion related to the Company's interest 1,270 3,646 Amounts payable by the Company (1,902 ) (461 ) Investments in and advances to unconsolidated affiliates, net of Company's share of distributions in excess of income from and investments in unconsolidated affiliates 287,194 246,025 Cost method investments 2,541 762 Company's share of distributions in excess of income from and investments in unconsolidated affiliates 15,362 15,623 Investments in and advances to unconsolidated affiliates $ 305,097 $ 262,410 78 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2019 2018 2017 Combined and Condensed Statements of Income Total revenues $ 88,585 $ 80,184 $ 83,222 Operating and other expenses (24,624 ) (23,586 ) (24,711 ) Interest expense (21,874 ) (19,954 ) (18,733 ) Depreciation and amortization (25,358 ) (22,228 ) (24,192 ) Loss on debt extinguishment — — (154 ) (Loss) gain on disposition of properties — (1,673 ) 18,957 Net income attributable to unconsolidated affiliates $ 16,729 $ 12,743 $ 34,389 Company’s share of equity in net income of unconsolidated affiliates $ 11,772 $ 12,345 $ 26,039 Basis differential amortization (2,850 ) (3,043 ) (2,668 ) Company’s equity in earnings of unconsolidated affiliates $ 8,922 $ 9,302 $ 23,371 79 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Other Assets, Net and Accounts Payable and Other Liabilities Other assets, net and accounts payable and other liabilities are comprised of the following for the periods presented: (in thousands) December 31, 2019 December 31, 2018 Other Assets, Net: Lease intangibles, net (Note 6) $ 116,820 $ 115,939 Deferred charges, net (a) 28,746 28,619 Prepaid expenses 18,873 18,422 Other receivables 3,996 2,896 Accrued interest receivable 9,872 17,046 Due from seller 3,682 4,000 Deposits 1,853 4,611 Corporate assets, net 1,565 1,953 Income taxes receivable 1,755 2,070 Derivative financial instruments (Note 8) 2,583 7,018 Deferred tax assets 913 2,032 Due from related parties — 1,802 $ 190,658 $ 206,408 (a) Deferred Charges, Net: Deferred leasing and other costs $ 49,081 $ 45,011 Deferred financing costs related to line of credit 10,051 8,960 59,132 53,971 Accumulated amortization (30,386 ) (25,352 ) Deferred charges, net $ 28,746 $ 28,619 Accounts Payable and Other Liabilities: Lease intangibles, net (Note 6) $ 82,926 $ 95,045 Lease liability - finance leases, net (Note 11) 77,657 — Accounts payable and accrued expenses 68,838 65,215 Lease liability - operating leases, net (Note 11) 56,762 — Derivative financial instruments (Note 8) 39,061 7,304 Deferred income 33,682 34,052 Tenant security deposits, escrow and other 12,590 10,588 Capital lease obligations (Note 11) — 71,111 Other — 2,757 $ 371,516 $ 286,072 80 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Lease Intangibles Upon acquisitions of real estate, the Company assesses the fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above- and below-market leases, including Intangible assets and liabilities are included in other assets and other liabilities (Note 5) on the consolidated balance sheet and summarized as follows (in thousands): December 31, 2019 December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortizable Intangible Assets In-place lease intangible assets $ 249,961 $ (137,108 ) $ 112,853 $ 216,021 $ (105,972 ) $ 110,049 Above-market rent 17,227 (13,260 ) 3,967 18,169 (12,279 ) 5,890 $ 267,188 $ (150,368 ) $ 116,820 $ 234,190 $ (118,251 ) $ 115,939 Amortizable Intangible Liabilities Below-market rent $ (160,721 ) $ 78,315 $ (82,406 ) $ (152,188 ) $ 57,721 $ (94,467 ) Above-market ground lease (671 ) 151 (520 ) (671 ) 93 (578 ) $ (161,392 ) $ 78,466 $ (82,926 ) $ (152,859 ) $ 57,814 $ (95,045 ) During the year ended December 31, Amortization of in-place lease intangible assets is recorded in depreciation and amortization expense and amortization of above-market rent and below-market rent is recorded as a reduction to and increase to rental income, respectively, in the consolidated statements of income. Amortization of above-market ground leases are recorded as a reduction to rent expense in the consolidated statements of income. The scheduled amortization of acquired lease intangible assets and assumed liabilities as of December 31, Years Ending December 31, Net Increase in Lease Revenues Increase to Amortization Reduction of Rent Expense Net (Expense) Income 2020 $ 7,177 $ (27,827 ) $ 58 $ (20,592 ) 2021 6,717 (21,053 ) 58 (14,278 ) 2022 6,196 (15,160 ) 58 (8,906 ) 2023 6,149 (11,578 ) 58 (5,371 ) 2024 5,706 (8,931 ) 58 (3,167 ) Thereafter 46,494 (28,304 ) 230 18,420 Total $ 78,439 $ (112,853 ) $ 520 $ (33,894 ) 81 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Debt A summary of the Company’s consolidated indebtedness is as follows (dollars in thousands): Interest Rate at Carrying Value at December 31, December 31, Maturity Date at December 31, December 31, 2019 2018 December 31, 2019 2019 2018 Mortgages Payable Core Fixed Rate 3.88%-6.00% 3.88%-6.00% Feb 2024 - Apr 2035 $ 176,176 $ 178,271 Core Variable Rate - Swapped (a) 3.41%-4.54% 3.41%-5.67% Jan 2023 - Nov 2028 81,559 82,583 Total Core Mortgages Payable 257,735 260,854 Fund II Fixed Rate 4.75% 1.00%-4.75% May 2020 200,000 205,262 Fund II Variable Rate LIBOR+3.00% — March 2022 24,225 — Fund II Variable Rate - Swapped (a) 2.88% 4.27% Nov 2021 19,073 19,325 Total Fund II Mortgages Payable 243,298 224,587 Fund III Variable Rate LIBOR+2.75%-LIBOR+3.10% Prime+0.50%-LIBOR+4.65% Jun 2020 - Jan 2021 74,554 90,096 Fund IV Fixed Rate 3.40%-4.50% 3.40%-4.50% Oct 2025 - Jun 2026 8,189 8,189 Fund IV Variable Rate LIBOR+1.60%-LIBOR+3.40% LIBOR+1.60%-LIBOR+3.95% Feb 2020 - Aug 2021 157,015 233,065 Fund IV Variable Rate - Swapped (a) 3.48%-4.61% 3.67%-4.23% Mar 2020 - Dec 2022 102,699 71,841 Total Fund IV Mortgages Payable 267,903 313,095 Fund V Variable Rate LIBOR+1.50%-LIBOR+2.20% LIBOR+2.25% Feb 2021 - Dec 2024 1,387 51,506 Fund V Variable Rate - Swapped (a) 2.95%-4.78% 4.61%-4.78% Feb 2021 - Dec 2024 334,626 86,570 Total Fund V Mortgage Payable 336,013 138,076 Net unamortized debt issuance costs (10,078 ) (10,173 ) Unamortized premium 651 753 Total Mortgages Payable $ 1,170,076 $ 1,017,288 Unsecured Notes Payable Core Term Loans — LIBOR+1.25% Mar 2023 $ — $ 383 Core Variable Rate Unsecured Term Loans - Swapped (a) 2.49%-5.02% 2.54%-3.59% Mar 2023 350,000 349,617 Total Core Unsecured Notes Payable 350,000 350,000 Fund II Unsecured Notes Payable LIBOR+1.65% LIBOR+1.40% Sep 2020 40,000 40,000 Fund IV Term Loan/Subscription Facility LIBOR+1.65%-LIBOR+2.00% LIBOR+1.65%-LIBOR+2.75% Dec 2020 - June 2021 87,625 40,825 Fund V Subscription Facility — LIBOR+1.60% May 2020 — 102,800 Net unamortized debt issuance costs (305 ) (368 ) Total Unsecured Notes Payable $ 477,320 $ 533,257 Unsecured Line of Credit Core Unsecured Line of Credit -Swapped (a) 2.49%-5.02% — Mar 2022 $ 60,800 $ — Total Debt - Fixed Rate (b)(c) $ 1,403,324 $ 1,001,658 Total Debt - Variable Rate (d) 314,604 558,675 Total Debt 1,717,928 1,560,333 Net unamortized debt issuance costs (10,383 ) (10,541 ) Unamortized premium 651 753 Total Indebtedness $ 1,708,196 $ 1,550,545 (a) At December 31, (b) Includes (c) Fixed-rate debt at December 31, 2019 includes $70.2 million of Core swaps that may be used to hedge debt instruments of the Funds. (d) Includes 82 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Credit Facility On February 20, 2018, the Company entered into a $500.0 million senior unsecured credit facility (the “Credit Facility”), comprised of a $150.0 million senior unsecured revolving credit facility (the “Revolver”) which bears interest at LIBOR + 1.35% (inclusive of a 20 basis-point facility fee), and a $350.0 million senior unsecured term loan (the “Term Loan”) which bears interest at LIBOR + 1.25%. On October 8, 2019, the Company modified the Credit Facility, which provided for a $100.0 million increase in the Revolver. This amendment resulted in borrowing capacity of up to $600.0 million in principal amount, which includes a $250.0 million revolving credit facility maturing on March 31, 2022, subject to an extension option, and a $350.0 million Term Loan expiring on March 31, 2023. In addition, the amendment provides for revisions to the accordion feature, which allows for one or more increases in the revolving credit facility or term loan facility, for a maximum aggregate principal amount not to exceed $750.0 million. Mortgages Payable During the year ended December 31, • obtained 1 new Fund II construction loan, 3 new Fund IV mortgages and 5 new Fund V mortgages totaling $258.9 million with a weighted-average interest rate of LIBOR + 1.70% collateralized by nine properties and maturing in 2022 through 2024; • refinanced 3 mortgages with existing balances totaling $69.0 million at a weighted-average rate of LIBOR + 2.08% and maturities ranging from May 2019 to January 2021 with new mortgages totaling $71.8 million with a weighted-average rate of LIBOR + 1.86% and maturities ranging from April 2022 through December 2024; • transferred a Fund III mortgage with a balance of $4.7 million and an interest rate of Prime + 0.5% and assumed by the purchasing venture in a property sale (Note 2). The Company repaid one Fund III loan in the amount of $9.8 million and two Fund IV loans in the aggregate amount of $18.4 million in connection with the sale of the properties. The Company also repaid a Fund IV loan in full, which had a balance of $38.2 million and an interest rate of LIBOR + 2.35%. The Company also made scheduled principal payments of $5.9 million; • modified 3 loans with prior borrowing capacity totaling $135.9 million at a weighted-average rate of LIBOR + 3.65% and maturities ranging from November 2019 through January 2020 by obtaining new commitments totaling $125.3 million with a weighted-average rate of LIBOR + 2.96% and maturities ranging from December 2020 through May 2021; and • Entered into interest rate swap contracts to effectively fix the variable portion of the interest rates of all nine new obligations and two of the refinanced obligations with a notional value of $283.6 million at a weighted-average interest rate of 1.78%. During the year ended December 31, 2018, the Company obtained At December 31, The mortgage loan 83 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Successor Lender alleges totaled approximately $33.0 million as of November 9, 2017 (exclusive of accruing interest, default interest, and fees During the third quarter of 2019, the company recognized income of $5.0 million related to Fund II’s New Market Tax Credit transaction (“NMTC”) involving its City Point project. NMTCs were created to encourage economic development in low income communities and provided for a 39% tax credit on certain qualifying invested equity/loans. In 2012, the NMTCs were transferred to a group of investors (“Investors”) in exchange for $5.2 million. The Unsecured Notes Payable Unsecured notes payable for which total availability was • The outstanding • Fund II has a $40.0 million term loan secured by the real estate assets of City Point Phase II and guaranteed by the Company and the Operating Partnership. The outstanding balance of the Fund II term loan was $40.0 million at each of December 31, 2019 and 2018. Total availability was $0.0 at each of December 31, 2019 and 2018. • At Fund IV there are • Fund V has a $150.0 million subscription line collateralized by Fund V’s unfunded capital commitments and guaranteed in Unsecured Revolving Line of Credit The Company had a total of 84 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Scheduled Debt Principal Payments The scheduled principal repayments of the Company’s consolidated indebtedness, as of December 31, Year Ending December 31, 2020 $ 437,329 2021 287,723 2022 167,514 2023 415,476 2024 211,991 Thereafter 197,895 1,717,928 Unamortized premium 651 Net unamortized debt issuance costs (10,383 ) Total indebtedness $ 1,708,196 8. Financial Instruments and Fair Value Measurements The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and interest rate swaps; and Level 3, for financial instruments or other assets/liabilities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring the Company to develop its own assumptions. Items Measured at Fair Value on a Recurring Basis The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, the Company has also provided the unobservable inputs along with their weighted-average ranges. Money Market Funds Derivative Assets Derivative Liabilities 85 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands): December 31, 2019 December 31, 2018 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Money market funds $ — $ — $ — $ 4,504 $ — $ — Derivative financial instruments — 2,583 — — 7,018 — Liabilities Derivative financial instruments — 39,061 — — 7,304 — In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Items Measured at Fair Value on a Nonrecurring Basis (Including Impairment Charges) During 2018, the Company began selling the residential units of its 210 Bowery property in Fund IV. As the projected aggregate selling prices net of selling costs were in line with the carrying amount of the property through the first quarter 2019, 0 gain or loss had been recognized on the units sold through that date and 0 impairment was previously deemed necessary. During the second quarter 2019, the Company revised its estimate of the expected selling price of the remaining three units. Accordingly, the Company recognized a $1.4 million impairment charge, inclusive of an amount attributable to a noncontrolling interest of $1.1 million, to adjust the carrying value to the estimated selling price less estimated costs to sell. During the third quarter 2019, upon execution of a contract for sale (Note 2) the Company recognized an additional $0.3 million impairment charge for the remaining condominium unit, inclusive of an amount attributable to a noncontrolling interest of $0.2 million, to adjust the carrying value to the estimated selling price less estimated costs to sell. The Company did 0t record any impairment charges during the year ended December 31, 2018. During the year ended December 31, 2017, the Company recognized an impairment charge of $3.8 million, inclusive of an amount attributable to a noncontrolling interest of $2.7 million, on 86 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Derivative Financial Instruments The Company had the following interest rate swaps and caps for the periods presented (dollars in thousands): Strike Rate Fair Value Derivative Instrument Aggregate Notional Amount Effective Date Maturity Date Low High Balance Sheet Location December 31, 2019 December 31, 2018 Core Interest Rate Swaps $ 423,442 Dec 2012-July 2020 Mar 2022-July 2030 1.71 % — 3.77 % Other Liabilities (a) $ (33,750 ) $ (6,332 ) Interest Rate Swaps 139,118 Nov 2015 - July 2016 July 2020-June 2021 1.24 % — 1.31 % Other Assets 456 6,022 $ 562,560 $ (33,294 ) $ (310 ) Fund II Interest Rate Swap $ 19,073 Oct 2014 Nov 2021 2.88 % — 2.88 % Other Liabilities $ (139 ) $ — Interest Rate Swap — — — — — — Other Assets — 108 Interest Rate Cap 23,300 Mar 2019 Mar 2022 3.50 % — 3.50 % Other Assets 1 — $ 42,373 $ (138 ) $ 108 Fund III Interest Rate Cap $ 58,000 Dec 2016 Jan 2020 3.00 % — 3.00 % Other Assets $ — $ 8 Fund IV Interest Rate Swaps $ 14,395 Dec 2019 Apr 2022 - Dec 2022 1.48 % — 1.52 % Other Assets $ 22 $ 851 Interest Rate Swaps 88,304 Mar 2017 - May 2019 Mar 2020 - Dec 2022 1.82 % — 4.00 % Other Liabilities (812 ) — Interest Rate Caps 90,600 July 2019 - Dec 2019 Dec 2020 - July 2021 3.00 % — 3.50 % Other Assets — 8 $ 193,299 $ (790 ) $ 859 Fund V Interest Rate Swaps $ 177,726 Oct 2019 - Nov 2019 Oct 2022 - Oct 2024 1.25 % — 1.47 % Other Assets $ 2,104 $ 21 Interest Rate Swaps 156,900 Jan 2018-Mar 2019 Feb 2021-Mar 2024 2.27 % — 2.88 % Other Liabilities (4,360 ) (972 ) $ 334,626 $ (2,256 ) $ (951 ) Total asset derivatives $ 2,583 $ 7,018 Total liability derivatives $ (39,061 ) $ (7,304 ) (a) Includes 2 swaps with a total fair value of ($11.8) million and ($2.9) million at December 31, 2019 and 2018, respectively, which were acquired during July 2018 and are not effective until July 2020. All of the Company’s derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable-rate debt ( 87 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, through the use of derivative financial instruments. The Company enters into derivative financial instruments to manage exposures that result in the receipt or payment of future known and uncertain cash amounts, thevalues of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings. The Company is exposed to credit risk in the event of non-performance by the counterparties to the Credit Risk-Related Contingent Features The Company has agreements with each of its Other Financial Instruments The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in December 31, 2019 December 31, 2018 Level Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Notes Receivable (a) 3 $ 114,943 $ 113,422 $ 111,775 $ 109,532 Mortgage and Other Notes Payable (a) 3 1,179,503 1,191,281 1,026,708 1,021,075 Investment in non-traded equity securities (b) 3 1,778 57,964 — 56,337 Unsecured notes payable and Unsecured line of credit (c) 2 538,425 539,362 533,625 533,954 (a) The Company determined the estimated fair value of these financial instruments using a discounted cash flow model with rates that take into account the credit of the borrower or tenant, where applicable, and interest rate risk. The Company also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the borrower, the time until maturity and the current market interest rate environment. (b) Represents Fund II’s cost-method investment in (c) The Company determined the estimated fair value of the unsecured notes payable and unsecured line of credit using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, the Company determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants. The Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and certain financial instruments included in other assets and other liabilities had fair values that approximated their carrying values at December 31, 88 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. Commitments and Contingencies The Company is involved in various matters of litigation arising out of, or incident to, its business, including the litigation described in Commitments and Guaranties In conjunction with the development and expansion of various properties, the Company has entered into agreements with general contractors for the construction or development of properties aggregating approximately At December 31, 10. Shareholders’ Equity, Noncontrolling Interests and Other Comprehensive Income Common Shares In addition to the ATM Program activity discussed below, the Company completed the following transactions in its • The Company withheld 2,468 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested. • The Company recognized Common In addition to the share repurchase activity discussed below, the Company completed the following transactions in its Common Shares during the year ended December 31, 2018: • The Company withheld 3,288 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested. • The Company recognized Common Share- and Common OP Unit-based compensation totaling $8.4 million in connection with Restricted Shares and Units (Note 13). ATM Program The Company has an Share Repurchase Program During 2018, the Company’s Board of Trustees approved a 89 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Dividends and Distributions The following table sets forth the Date Declared Amount Per Share Record Date Payment Date November 8, 2017 $ 0.27 December 29, 2017 January 13, 2018 February 27, 2018 $ 0.27 March 30, 2018 April 13, 2018 May 11, 2018 $ 0.27 June 29, 2018 July 13, 2018 August 7, 2018 $ 0.27 September 28, 2018 October 15, 2018 November 13, 2018 $ 0.28 December 31, 2018 January 15, 2019 February 28, 2019 $ 0.28 March 29, 2019 April 15, 2019 May 9, 2019 $ 0.28 June 28, 2019 July 15, 2019 August 13, 2019 $ 0.28 September 30, 2019 October 15, 2019 November 5, 2019 $ 0.29 December 31, 2019 January 15, 2020 Accumulated Other Comprehensive Income The following Gains or Losses on Derivative Instruments Balance at January 1, 2019 $ 516 Other comprehensive loss before reclassifications (35,674 ) Reclassification of realized interest on swap agreements (872 ) Net current period other comprehensive loss (36,546 ) Net current period other comprehensive loss attributable to noncontrolling interests 4,855 Balance at December 31, 2019 $ (31,175 ) Balance at January 1, 2018 $ 2,614 Other comprehensive loss before reclassifications (2,659 ) Reclassification of realized interest on swap agreements 71 Net current period other comprehensive loss (2,588 ) Net current period other comprehensive loss attributable to noncontrolling interests 490 Balance at December 31, 2018 $ 516 Balance at January 1, 2017 $ (798 ) Other comprehensive income before reclassifications 634 Reclassification of realized interest on swap agreements 3,317 Net current period other comprehensive income 3,951 Net current period other comprehensive income attributable to noncontrolling interests (539 ) Balance at December 31, 2017 $ 2,614 90 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Noncontrolling Interests The following Noncontrolling Interests in Operating Partnership (a) Noncontrolling Interests in Partially-Owned Affiliates (b) Total Balance at January 1, 2019 $ 104,223 $ 518,219 $ 622,442 Distributions declared of $1.13 per Common OP Unit (7,124 ) — (7,124 ) Net income (loss) for the year ended December 31, 2019 3,836 (35,677 ) (31,841 ) Conversion of 307,663 Common OP Units to Common Shares by limited partners of the Operating Partnership (5,104 ) — (5,104 ) Other comprehensive loss - unrealized loss on valuation of swap agreements (1,899 ) (3,036 ) (4,935 ) Reclassification of realized interest expense on swap agreements (62 ) 142 80 Noncontrolling interest contributions — 161,628 161,628 Noncontrolling interest distributions — (94,289 ) (94,289 ) Employee Long-term Incentive Plan Unit Awards 10,411 — 10,411 Reallocation of noncontrolling interests (c) (6,611 ) — (6,611 ) Balance at December 31, 2019 $ 97,670 $ 546,987 $ 644,657 Balance at January 1, 2018 $ 102,921 $ 545,519 $ 648,440 Distributions declared of $1.09 per Common OP Unit (6,888 ) — (6,888 ) Net income (loss) for the year ended December 31, 2018 2,572 (49,709 ) (47,137 ) Conversion of 117,978 Common OP Units to Common Shares by limited partners of the Operating Partnership (2,068 ) — (2,068 ) Other comprehensive income - unrealized gain on valuation of swap agreements (129 ) (681 ) (810 ) Reclassification of realized interest expense on swap agreements (3 ) 323 320 Noncontrolling interest contributions — 47,560 47,560 Noncontrolling interest distributions — (24,793 ) (24,793 ) Employee Long-term Incentive Plan Unit Awards 12,374 — 12,374 Reallocation of noncontrolling interests (c) (4,556 ) — (4,556 ) Balance at December 31, 2018 $ 104,223 $ 518,219 $ 622,442 Balance at January 1, 2017 $ 95,422 $ 494,126 $ 589,548 Distributions declared of $1.05 per Common OP Unit (6,453 ) — (6,453 ) Net income (loss) for the year ended December 31, 2017 4,159 (1,321 ) 2,838 Conversion of 81,453 Common OP Units to Common Shares by limited partners of the Operating Partnership (1,541 ) — (1,541 ) Other comprehensive loss - unrealized loss on valuation of swap agreements 85 (232 ) (147 ) Reclassification of realized interest expense on swap agreements 141 545 686 Noncontrolling interest contributions — 85,206 85,206 Noncontrolling interest distributions — (32,805 ) (32,805 ) Employee Long-term Incentive Plan Unit Awards 10,457 — 10,457 Rebalancing adjustment (c) 651 — 651 Balance at December 31, 2017 $ 102,921 $ 545,519 $ 648,440 91 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (a) Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ (b) Noncontrolling interests in partially-owned affiliates comprise third-party interests in Funds II, III, IV and V, and Mervyns (c) Adjustment reflects the difference between the fair value of the consideration received or paid and the book value of the Common Shares, Common OP Units, Preferred OP Units, and LTIP Units involving changes in Preferred OP Units There were In 1999 the Operating Partnership issued 1,580 Series A Preferred OP Units in connection with the acquisition of a property, which have a stated value of $1,000 per unit, and are entitled to a preferred quarterly distribution of the greater of (i) $22.50 (9% annually) per Series A Preferred OP Unit or (ii) the quarterly distribution attributable to a Series A Preferred OP Unit if such unit was converted into a Common OP Unit. Through December 31, During 11. Leases Operating Leases As Lessor The Company implemented ASC Topic 842, Leases, effective January 1, 2019 (Note 1). As lessor, there were no accounting adjustments required, however, the presentation of the Company’s lease revenues in 2019 includes amounts previously reported as reimbursed expenses. There was 0 cumulative effect adjustment to retained earnings required upon adoption of the new standard. In addition, the Company began expensing internal leasing costs, which have historically been capitalized. The Company is engaged in the operation of shopping centers and other retail properties that are either owned or, with respect to certain shopping centers, operated under long-term ground leases (see below) that expire at various dates through June 20, 2066, with renewal options. Space in the shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to 92 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Lessee During the year ended December 31, 2019, the Company: • recorded right-of-use assets and corresponding lease liabilities as lessee of $11.9 million and $12.8 million, respectively, for 9 existing operating leases (for ground, office and equipment leases) and $82.6 million and $76.6 million, respectively, for 4 finance leases related to ground rentals including an existing capital lease which represented $77.0 million and $71.1 million, respectively, upon implementation of ASC Topic 842; • recorded 3 new finance leases effective January 1, 2019 upon the implementation of ASC 842. An assessment of triggering events whereby the Company’s cumulative leasehold investment made it reasonably certain that the Company would exercise its purchase options; • entered into a prepaid master lease on December 9, 2019 comprised of an operating lease component related to the land and a finance lease component related to the building. The property is referred to as “565 Broadway” within the Core Portfolio. The Company recorded a Right-of-use-asset-operating-lease of $4.9 million and a Right-of-use-asset-finance lease of $19.4 million; and • entered into a ground lease on May 1, 2019 which is an operating lease. The property is referred to as “110 University Place” and is within the Fund IV portfolio. The Company recorded a Right of use asset–operating lease of $45.3 million and a corresponding Lease liability–operating-lease of $45.3 million. The Company recorded the following assets and liabilities in connection with acquisitions of leasehold interests: Year Ended December 31, 2019 Year Ended December 31, 2018 Amounts recorded upon acquisition of leasehold interests: (Not applicable) Right of use asset - operating lease $ 50,147 Right of use asset - finance lease 19,422 Leasehold improvements 13,354 Lease intangibles (Note 6) 1,760 Lease liability - operating lease (45,293 ) Acquisition-related intangible liabilities (Note 6) (359 ) Cash paid upon acquisition of leasehold interests $ 39,031 Additional disclosures regarding the Company’s leases as lessee are as follows: Year Ended December 31, 2019 2018 2017 Lease Cost (Not applicable) (Not applicable) Finance lease cost: Amortization of right-of-use assets $ 2,168 Interest on lease liabilities 3,737 Subtotal 5,905 Operating lease cost 4,430 Variable lease cost 164 Total lease cost $ 10,499 Other Information Weighted-average remaining lease term - finance leases (years) 42.5 Weighted-average remaining lease term - operating leases (years) 34.1 Weighted-average discount rate - finance leases 4.5 % Weighted-average discount rate - operating leases 5.8 % Right-of-use assets are included in Operating real estate (Note 2) in the consolidated balance sheet. Lease liabilities are included in Accounts payable and other liabilities in the consolidated balance sheet (Note 5). Operating lease cost comprises amortization of right-of-use assets for 93 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS operating properties (related to ground rents) or amortization of right-of-use assets for office and corporate assets and is included in Property operating expense or General and administrative expense, respectively,in the consolidated statements of income. Finance lease cost comprises amortization of right-of-use assets for certain ground leases, which is included in Property operating expense, as well as interest on lease liabilities, which is included in Interest expense in the consolidated statements of income. Lease Disclosures Related to Prior Periods The Company leased land at During 2016, the Company entered into a 49-year master lease, Lease Obligations The scheduled future minimum (i) rental revenues from rental properties under the terms of Year Ending December 31, Minimum Rental Revenues Minimum Rental Payments (a) 2020 $ 212,871 $ 7,040 2021 203,077 6,823 2022 181,731 6,832 2023 160,237 6,825 2024 137,451 7,008 Thereafter 563,124 312,421 Total $ 1,458,491 $ 346,949 (a) Minimum rental payments include $219.0 million of interest related to leases. During the years ended December 31, 12. Segment Reporting The Company has 94 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables set forth certain segment information for the Company (in thousands): As of or for the Year Ended December 31, 2019 Core Portfolio Funds Structured Financing Unallocated Total Revenues $ 173,177 $ 122,150 $ — $ — $ 295,327 Depreciation and amortization (61,819 ) (63,624 ) — — (125,443 ) Property operating expenses, other operating and real estate taxes (47,032 ) (43,436 ) — — (90,468 ) General and administrative expenses — — — (35,416 ) (35,416 ) Impairment charge — (1,721 ) — — (1,721 ) Gain on disposition of properties 16,771 13,553 — — 30,324 Operating income 81,097 26,922 — (35,416 ) 72,603 Interest income — — 7,988 — 7,988 Equity in earnings of unconsolidated affiliates inclusive of gains on disposition of properties 9,020 (98 ) — — 8,922 Interest expense (28,304 ) (45,484 ) — — (73,788 ) Other income 327 6,620 — — 6,947 Income tax provision — — — (1,468 ) (1,468 ) Net income (loss) 62,140 (12,040 ) 7,988 (36,884 ) 21,204 Net loss attributable to noncontrolling interests 337 31,504 — — 31,841 Net income attributable to Acadia (a) $ 62,477 $ 19,464 $ 7,988 $ (36,884 ) $ 53,045 Real estate at cost (b) $ 2,264,010 $ 1,835,532 $ — $ — $ 4,099,542 Total Assets (b) $ 2,350,833 $ 1,843,338 $ 114,943 $ — $ 4,309,114 Cash paid for acquisition of real estate and leasehold interest $ 173,892 $ 184,812 $ — $ — $ 358,704 Cash paid for development and property improvement costs $ 22,724 $ 66,546 $ — $ — $ 89,270 95 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of or for the Year Ended December 31, 2018 Core Portfolio Funds Structured Financing Unallocated Total Revenues $ 166,816 $ 92,865 $ — $ — $ 259,681 Depreciation and amortization (60,903 ) (56,646 ) — — (117,549 ) Property operating expenses, other operating and real estate taxes (44,060 ) (36,188 ) — — (80,248 ) General and administrative expenses — — — (34,343 ) (34,343 ) Gain on disposition of properties — 5,140 — — 5,140 Operating income 61,853 5,171 - (34,343 ) 32,681 Interest income — — 13,231 — 13,231 Equity in earnings of unconsolidated affiliates inclusive of gains on disposition of properties 7,415 1,887 — — 9,302 Interest expense (27,575 ) (42,403 ) — — (69,978 ) Income tax provision — — — (934 ) (934 ) Net income (loss) 41,693 (35,345 ) 13,231 (35,277 ) (15,698 ) Net income attributable to noncontrolling interests 752 46,385 — — 47,137 Net income attributable to Acadia (a) $ 42,445 $ 11,040 $ 13,231 $ (35,277 ) $ 31,439 Real estate at cost (b) $ 2,069,439 $ 1,628,366 $ — $ — $ 3,697,805 Total Assets (b) $ 2,232,695 $ 1,616,472 $ 109,613 $ — $ 3,958,780 Cash paid for acquisition of real estate $ 1,343 $ 146,642 $ — $ — $ 147,985 Cash paid for development and property improvement costs $ 32,662 $ 62,172 $ — $ — $ 94,834 As of or for the Year Ended December 31, 2017 Core Portfolio Funds Structured Financing Unallocated Total Revenues $ 168,795 $ 79,757 $ — $ — $ 248,552 Depreciation and amortization (61,705 ) (43,229 ) — — (104,934 ) Property operating expenses, other operating and real estate taxes (44,169 ) (33,919 ) — — (78,088 ) General and administrative expenses — — — (33,756 ) (33,756 ) Impairment charge — (14,455 ) — — (14,455 ) Gain on disposition of properties — 48,886 — — 48,886 Operating income 62,921 37,040 — (33,756 ) 66,205 Interest income — — 29,143 — 29,143 Equity in earnings of unconsolidated affiliates inclusive of gains on disposition of properties 3,735 19,636 — — 23,371 Interest expense (28,618 ) (30,360 ) — — (58,978 ) Other income 5,571 — — — 5,571 Income tax provision — — — (1,004 ) (1,004 ) Net income 43,609 26,316 29,143 (34,760 ) 64,308 Net income attributable to noncontrolling interests (1,107 ) (1,731 ) — — (2,838 ) Net income attributable to Acadia (a) $ 42,502 $ 24,585 $ 29,143 $ (34,760 ) $ 61,470 Cash paid for acquisition of real estate $ — $ 200,429 $ — $ — $ 200,429 Cash paid for development and property improvement costs $ 42,026 $ 66,116 $ — $ — $ 108,142 96 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (a) Net income attributable to Acadia for the Core segment includes $4.7 million, $4.1 million and $0.9 million associated with one property, Town Center, for the years ended December 31, 2019, 2018 and 2017, respectively. These amounts include the results of three entities, including the unconsolidated Town Center venture and the consolidated Brandywine Holdings (Note 4) and Brandywine Maintenance Corp., which on a combined basis constitute the operating results of the shopping center. (b) Real estate at cost and total assets for the Funds segment include $603.3 million and $576.1 million, or $174.7 million and $167.2 million net of non-controlling interests, related to Fund II’s City Point property for the years ended December 31, 2019 and 2018, respectively. 13. Share Incentive and Other Compensation Share Incentive Plan The Second Amended and Restated 2006 Incentive Plan (the “Share Incentive Plan”) authorizes the Company to issue options, Restricted Shares, LTIP Units and other securities (collectively “Awards”) to, among others, the Company’s officers, trustees and employees. At December 31, Restricted Shares and LTIP Units During the year ended December 31, • A portion of these annual equity awards is granted in performance-based Restricted Share Units or LTIP Units that may be earned based on the Company’s attainment of specified relative total shareholder returns (“Relative TSR”) hurdles. • In the event the Relative TSR percentile falls between the 25th percentile and the 50th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 50% and 100% and in the event that the Relative TSR percentile falls between the 50th percentile and 75th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 100% and 200%. • Two-thirds (2/3) of the performance-based LTIP Units will vest based on the Company’s total shareholder return (“TSR”) for the three -year forward-looking performance period ending December 31, 2021 relative to the constituents of the SNL U.S. REIT Retail Shopping Center Index and one-third (1/3) on the Company’s TSR for the three-year forward-looking performance period as compared to the constituents of the SNL U.S. REIT Retail Index (both on a non-weighted basis). • If the Company’s performance fails to achieve the aforementioned hurdles at the culmination of the three-year performance period, all performance-based shares will be forfeited. Any earned performance-based shares vest 60% at the end of the performance period, with the remaining 40% of shares vesting ratably over the next two years. For valuation of the 2019 Performance Shares, a Monte Carlo simulation was The total value of the above Restricted Share Units and LTIP Units as of the grant date was During the quarter ended December 31, 2018, in connection with the retirement of an executive, an additional 26,632 LTIP Units were issued. The value of these LTIP Units was $0.6 million and was recognized as compensation expense in 2018. Also, in connection with this retirement, the Company recognized $1.7 million as compensation expense relating to the acceleration of previously granted LTIP Units. In addition, members of the Board of Trustees 97 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In 2009, the Company adopted the As payments to other employees are not subject to further Board approval, compensation relating to these awards will be recorded based on the estimated fair value at each reporting period in accordance with ASC Topic 718, Compensation expense of A summary of the status of the Company’s unvested Restricted Shares and LTIP Units is presented below: Unvested Restricted Shares and LTIP Units Common Restricted Shares Weighted Grant-Date Fair Value LTIP Units Weighted Grant-Date Fair Value Unvested at January 1, 2017 46,499 $ 27.58 856,877 $ 26.99 Granted 19,442 29.85 310,551 31.80 Vested (23,430 ) 30.47 (257,124 ) 28.27 Forfeited (1,184 ) 32.65 (205 ) 32.49 Unvested at December 31, 2017 41,327 $ 26.92 910,099 $ 28.28 Granted 22,817 23.65 425,880 26.80 Vested (25,261 ) 30.79 (431,827 ) 29.72 Forfeited (428 ) 27.25 (12,266 ) 28.57 Unvested at December 31, 2018 38,455 22.44 891,886 26.87 Granted 25,359 28.56 348,726 32.78 Vested (21,424 ) 27.12 (290,753 ) 29.30 Forfeited — — (15,679 ) 31.49 Unvested at December 31, 2019 42,390 $ 23.73 934,180 $ 28.24 The weighted-average grant date fair value for Restricted Shares and LTIP Units granted for the 98 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other Plans On a combined basis, the Company incurred a total of $0.3 million, $0.3 million and $0.2 million related to the following employee benefit plans for each of the years ended December 31, 2019, 2018 and 2017, Employee Share Purchase Plan The Acadia Realty Trust Employee Share Purchase Plan (the “Purchase Plan”), allows eligible employees of the Company to purchase Common Shares through payroll deductions. The Purchase Plan provides for employees to purchase Common Shares on a quarterly basis at a 15% discount to the closing price of the Company’s Common Shares on either the first day or the last day of the quarter, whichever is lower. A participant may not purchase more the $25,000 in Common Shares per year. Compensation expense will be recognized by the Company to the extent of the above discount to the closing price of the Common Shares with respect to the applicable quarter. Deferred Share Plan During Employee 401(k) Plan The Company maintains a 401(k) plan for employees under which the Company currently matches 50% of a plan participant’s contribution up to 6% of the employee’s annual salary. A plan participant may contribute up to a maximum of 15% of their compensation, up to 14. Federal Income Taxes The Company has elected to qualify as a REIT in accordance with Sections 856 through 860 of the Code, and intends at all times to qualify as a REIT under the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its annual REIT taxable income to its shareholders. As a REIT, the Company generally will not be subject to corporate Federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Code. As the Company distributed sufficient taxable income for the years ended December 31, In the normal course of business, the Company or one or more of its subsidiaries is subject to examination by Federal, state and local jurisdictions, 99 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Reconciliation of Net Income to Taxable Income Reconciliation of GAAP net income attributable to Acadia to taxable income is as follows: Year Ended December 31, (in thousands) 2019 2018 2017 Net income attributable to Acadia $ 53,045 $ 31,439 $ 61,470 Deferred cancellation of indebtedness income — 2,050 2,050 Deferred rental and other income (a) 1,203 1,222 (934 ) Book/tax difference - depreciation and amortization (a) 21,688 23,166 21,334 Straight-line rent and above- and below-market rent adjustments (a) (10,949 ) (12,129 ) (10,559 ) Book/tax differences - equity-based compensation 7,177 6,042 5,325 Joint venture equity in earnings, net (a) 15,571 13,905 9,114 Acquisition costs (a) 63 326 1,135 Gain (loss) on disposition of properties 2,375 — (5,181 ) Book/tax differences - miscellaneous (1,473 ) (2,821 ) 930 Taxable income $ 88,700 $ 63,200 $ 84,684 Distributions declared $ 96,310 $ 89,122 $ 87,848 (a) Adjustments from certain subsidiaries and affiliates, which are consolidated for financial reporting but not for tax reporting, are included in the reconciliation item Characterization of Distributions The Company has determined that the cash distributed to the shareholders for the periods presented is characterized as follows for Federal income tax purposes: Year Ended December 31, 2019 2018 2017 Per Share % Per Share % Per Share % Ordinary income - Non-Section 199A $ — — % — — % $ 0.820 78 % Ordinary income - Section 199A 0.820 77 % 0.870 100 % — — % Qualified dividend — — % — — % — — % Capital gain 0.240 23 % — — % 0.230 22 % Total (b) $ 1.060 100 % 0.870 100 % $ 1.050 100 % (b) The fourth quarter 2019 regular dividend was $0.29 per common share, all of which is allocable to 2020. The fourth quarter 2018 regular dividend was $0.28 per common share of which approximately $0.06 was allocable to 2018 and approximately $0.22 is allocable to 2019. Taxable REIT Subsidiaries Income taxes have been provided for using the liability method as required by ASC Topic 740, “Income Taxes.” The Company’s TRS income and provision for income taxes associated with the TRS for the periods presented are summarized as follows (in thousands): Year Ended December 31, 2019 2018 2017 TRS loss before income taxes $ (3,117 ) $ (2,609 ) $ (3,604 ) (Provision) benefit for income taxes: Federal 754 (377 ) (982 ) State and local 317 26 423 TRS net loss before noncontrolling interests (2,046 ) (2,960 ) (4,163 ) Noncontrolling interests (369 ) 4 8 TRS net loss $ (2,415 ) $ (2,956 ) $ (4,155 ) 100 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The income tax provision for the Company differs from the amount computed by applying the statutory Federal income tax rate to income before income taxes as follows. Amounts are not adjusted for temporary book/tax differences (in thousands): Year Ended December 31, 2019 2018 2017 Federal tax benefit at statutory tax rate $ (655 ) $ (548 ) $ (1,225 ) TRS state and local taxes, net of Federal benefit (197 ) (165 ) (190 ) Tax effect of: Permanent differences, net 239 951 1,131 Prior year over-accrual, net — — (1,541 ) Effect of Tax Cuts and Jobs Act — — 1,982 Adjustment to deferred tax reserve 1,748 (1,530 ) — Other (112 ) 1,702 404 REIT state and local income and franchise taxes 445 524 443 Total provision (benefit) for income taxes $ 1,468 $ 934 $ 1,004 As of December 31, Under GAAP a reduction of the carrying amounts of deferred tax assets by a valuation allowance is required, if, based on the evidence available, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. During 2019, the Company determined that the realization of its deferred tax assets was not likely and as such, the Company recorded a valuation allowance against its deferred tax assets. 101 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15. Earnings Per Common Share Basic earnings per Common Share is computed by dividing net income attributable to Common Shareholders by the weighted average Common Shares Diluted earnings per Common Share reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including the effects of restricted share units (“Restricted Share Units”) The effect of the conversion of Common OP Units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable for Common Shares on a Year Ended December 31, (dollars in thousands) 2019 2018 2017 Numerator: Net income attributable to Acadia $ 53,045 $ 31,439 $ 61,470 Less: net income attributable to participating securities (413 ) (267 ) (642 ) Income from continuing operations net of income attributable to participating securities $ 52,632 $ 31,172 $ 60,828 Denominator: Weighted average shares for basic earnings per share 84,435,826 82,080,159 83,682,789 Effect of dilutive securities: Employee unvested restricted shares — — 2,682 Denominator for diluted earnings per share 84,435,826 82,080,159 83,685,471 Basic and diluted earnings per Common Share from continuing operations attributable to Acadia $ 0.62 $ 0.38 $ 0.73 Anti-Dilutive Shares Excluded from Denominator: Series A Preferred OP Units 188 188 188 Series A Preferred OP Units - Common share equivalent 25,067 25,067 25,067 Series C Preferred OP Units 136,593 136,593 136,593 Series C Preferred OP Units - Common share equivalent 474,278 474,278 479,978 Restricted shares 40,821 36,879 41,299 102 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 16. Summary of Quarterly Financial Information (Unaudited) The quarterly results of operations of the Company for the years ended December 31, Three Months Ended (a, b, c, d, e) March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019 Revenues $ 73,985 $ 70,229 $ 73,327 $ 77,786 Net income (loss) 2,936 (5,237 ) 8,840 14,665 Net loss attributable to noncontrolling interests 9,261 14,317 1,618 6,645 Net income attributable to Acadia 12,197 9,080 10,458 21,310 Earnings per share attributable to Acadia: Basic $ 0.15 $ 0.11 $ 0.12 $ 0.24 Diluted 0.15 0.11 0.12 0.24 Weighted average number of shares: Basic 82,037 83,704 84,888 87,058 Diluted 82,037 83,704 84,888 87,058 Cash dividends declared per Common Share $ 0.28 $ 0.28 $ 0.28 $ 0.29 (a) The quarter ended June 30, 2019 includes an impairment charge of $1.4 million and the quarter ended September 30, 2019 includes an impairment charge of $0.3 million, of which the Company’s aggregate share was $0.4 million (Note 8) (b) The (c) The quarter ended December 31, 2019 includes a net gain on disposition of a consolidated Core property of $16.3 million, of which the Company’s share was $16.7 million (Note 2). (d) The quarter ended September 30, 2019 includes a deferred gain on tax credits at Fund II of which the Company’s share was $1.4 million (Note 7). (e) Revenues for the quarters ended March 31, Three Months Ended (a, b) March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Revenues $ 62,226 $ 62,201 $ 65,527 $ 69,727 Net income (4,160 ) (2,270 ) (2,597 ) (6,671 ) Net (income) loss attributable to noncontrolling interests 11,579 9,935 11,822 13,801 Net income attributable to Acadia 7,419 7,665 9,225 7,130 Earnings per share attributable to Acadia: Basic Diluted $ 0.09 $ 0.09 $ 0.11 $ 0.09 0.09 0.09 0.11 0.09 Weighted average number of shares: Basic 83,434 81,756 81,566 81,591 Diluted 83,438 81,756 81,566 81,591 Cash dividends declared per Common Share $ 0.27 $ 0.27 $ 0.27 $ 0.28 (a) Credit losses aggregating $2.5 million have been reclassified from property operating expense to revenues in each of (b) The three months ended September 30, 103 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17. Subsequent Events Acquisitions In January 2020, the Company acquired 2 properties in its Core Portfolio as follows: • 37 Greene Street – On January 9, the Company acquired a retail condominium in the Soho section of New York City for approximately $15.4 million. • 917 West Armitage Avenue – On February 13, the Company acquired a mixed-use property in Chicago Illinois for approximately $3.5 million. It is not practicable to disclose the preliminary purchase price Structured Financing Transactions On January On February ACADIA REALTY TRUST SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Balance at Beginning of Year Charged to Expenses Adjustments to Valuation Accounts Deductions Balance at End of Year Year Ended December 31, 2019: Allowance for deferred tax asset $ — $ — $ 1,748 $ — $ 1,748 Allowance for uncollectible accounts 7,921 4,402 (915 ) — 11,408 Allowance for notes receivable — — — — — Year Ended December 31, 2018: Allowance for deferred tax asset $ 1,530 $ — $ (1,530 ) — $ — Allowance for uncollectible accounts 5,920 2,532 (531 ) — 7,921 Allowance for notes receivable — — — — — Year Ended December 31, 2017: Allowance for deferred tax asset $ 859 $ — $ 671 $ — $ 1,530 Allowance for uncollectible accounts 5,720 200 — — 5,920 Allowance for notes receivable — — — — — ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, Initial Cost to Company Amount at Which Carried at December 31, 2019 Description and Location Encumbrances Land Buildings & Improvements Increase (Decrease) in Net Investments Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Income is Compared Core Portfolio: Crescent Plaza Brockton, MA — 1,147 7,425 3,301 1,147 10,726 11,873 8,455 1993 (a) 40 years New Loudon Center Latham, NY — 505 4,161 14,119 505 18,280 18,785 15,352 1993 (a) 40 years Mark Plaza Edwardsville, PA — — 3,396 — — 3,396 3,396 3,028 1993 (c) 40 years Plaza 422 Lebanon, PA — 190 3,004 2,809 190 5,813 6,003 5,262 1993 (c) 40 years Route 6 Mall Honesdale, PA — 1,664 — 12,490 1,664 12,490 14,154 10,235 1994 (c) 40 years Abington Towne Center Abington, PA — 799 3,197 3,872 799 7,069 7,868 4,222 1998 (a) 40 years Bloomfield Town Square Bloomfield Hills, MI — 3,207 13,774 25,803 3,207 39,577 42,784 24,739 1998 (a) 40 years Elmwood Park Shopping Center Elmwood Park, NJ — 3,248 12,992 16,314 3,798 28,756 32,554 20,402 1998 (a) 40 years Merrillville Plaza Hobart, IN — 4,288 17,152 6,058 4,288 23,210 27,498 13,910 1998 (a) 40 years Marketplace of Absecon Absecon, NJ — 2,573 10,294 5,072 2,577 15,362 17,939 9,096 1998 (a) 40 years 239 Greenwich Avenue Greenwich, CT 26,572 1,817 15,846 1,086 1,817 16,932 18,749 8,738 1998 (a) 40 years Hobson West Plaza Naperville, IL — 1,793 7,172 4,604 1,793 11,776 13,569 5,871 1998 (a) 40 years Village Commons Shopping Center Smithtown, NY — 3,229 12,917 5,228 3,229 18,145 21,374 10,479 1998 (a) 40 years Town Line Plaza Rocky Hill, CT — 878 3,510 7,736 907 11,217 12,124 9,348 1998 (a) 40 years Branch Shopping Center Smithtown, NY — 3,156 12,545 16,414 3,401 28,714 32,115 14,322 1998 (a) 40 years Methuen Shopping Center Methuen, MA — 956 3,826 1,695 961 5,516 6,477 2,866 1998 (a) 40 years The Gateway Shopping Center South Burlington, VT — 1,273 5,091 12,471 1,273 17,562 18,835 10,712 1999 (a) 40 years Mad River Station Dayton, OH — 2,350 9,404 2,251 2,350 11,655 14,005 6,310 1999 (a) 40 years Brandywine Holdings Wilmington, DE 26,250 5,063 15,252 2,495 5,201 17,609 22,810 7,601 2003 (a) 40 years Bartow Avenue Bronx, NY — 1,691 5,803 1,196 1,691 6,999 8,690 3,458 2005 (c) 40 years Amboy Road Staten Island, NY — — 11,909 3,175 — 15,084 15,084 8,094 2005 (a) 40 years Chestnut Hill Philadelphia, PA — 8,289 5,691 4,509 8,289 10,200 18,489 4,910 2006 (a) 40 years 2914 Third Avenue Bronx, NY — 11,108 8,038 5,175 11,855 12,466 24,321 3,420 2006 (a) 40 years West Shore Expressway Staten Island, NY — 3,380 13,499 28 3,380 13,527 16,907 4,878 2007 (a) 40 years West 54th Street Manhattan, NY — 16,699 18,704 1,264 16,699 19,968 36,667 6,730 2007 (a) 40 years 5-7 East 17th Street Manhattan, NY — 3,048 7,281 6,133 3,048 13,414 16,462 3,386 2008 (a) 40 years 651-671 W Diversey Chicago, IL — 8,576 17,256 8 8,576 17,264 25,840 3,704 2011 (a) 40 years 15 Mercer Street Manhattan, NY — 1,887 2,483 1 1,887 2,484 4,371 528 2011 (a) 40 years ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Company Amount at Which Carried at December 31, 2019 Description and Location Encumbrances Land Buildings & Improvements Increase (Decrease) in Net Investments Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Income is Compared 4401 White Plains Bronx, NY — 1,581 5,054 — 1,581 5,054 6,635 1,053 2011 (a) 40 years 56 E. Walton Chicago, IL — 994 6,126 2,558 994 8,684 9,678 177 2011 (a) 40 years 841 W. Armitage Chicago, IL — 728 1,989 422 728 2,411 3,139 517 2011 (a) 40 years 2731 N. Clark Chicago, IL — 557 1,839 32 557 1,871 2,428 402 2011 (a) 40 years 2140 N. Clybourn Chicago, IL — 306 788 — 306 788 1,094 168 2011 (a) 40 years 853 W. Armitage Chicago, IL — 557 1,946 439 557 2,385 2,942 557 2011 (a) 40 years 2299 N. Clybourn Avenue Chicago, IL — 177 484 — 177 484 661 102 2011 (a) 40 years 843-45 W. Armitage Chicago, IL — 731 2,730 228 731 2,958 3,689 590 2012 (a) 40 years 1525 W. Belmont Avenue Chicago, IL — 1,480 3,338 710 1,480 4,048 5,528 735 2012 (a) 40 years 2206-08 N. Halsted Chicago, IL — 1,183 3,540 351 1,183 3,891 5,074 961 2012 (a) 40 years 2633 N. Halsted Chicago, IL — 960 4,096 359 998 4,417 5,415 837 2012 (a) 40 years 50-54 E. Walton Chicago, IL — 2,848 12,694 570 2,848 13,264 16,112 2,613 2012 (a) 40 years 662 W. Diversey Chicago, IL — 1,713 1,603 10 1,713 1,613 3,326 284 2012 (a) 40 years 837 W. Armitage Chicago, IL — 780 1,758 237 780 1,995 2,775 393 2012 (a) 40 years 823 W. Armitage Chicago, IL — 717 1,149 95 717 1,244 1,961 223 2012 (a) 40 years 851 W. Armitage Chicago, IL — 545 209 139 545 348 893 107 2012 (a) 40 years 1240 W. Belmont Avenue Chicago, IL — 2,137 1,589 583 2,137 2,172 4,309 456 2012 (a) 40 years 21 E. Chestnut Chicago, IL — 1,318 8,468 34 1,318 8,502 9,820 1,503 2012 (a) 40 years 819 W. Armitage Chicago, IL — 790 1,266 140 790 1,406 2,196 336 2012 (a) 40 years 1520 Milwaukee Avenue Chicago, IL — 2,110 1,306 290 2,110 1,596 3,706 304 2012 (a) 40 years 330-340 River St Cambridge, MA 11,140 8,404 14,235 — 8,404 14,235 22,639 2,914 2012 (a) 40 years Rhode Island Place Shopping Center Washington, D.C. — 7,458 15,968 1,902 7,458 17,870 25,328 3,995 2012 (a) 40 years 930 Rush Street Chicago, IL — 4,933 14,587 — 4,933 14,587 19,520 2,826 2012 (a) 40 years 28 Jericho Turnpike Westbury, NY 13,416 6,220 24,416 12 6,220 24,428 30,648 4,856 2012 (a) 40 years 181 Main Street Westport, CT — 1,908 12,158 409 1,908 12,567 14,475 2,279 2012 (a) 40 years 83 Spring Street Manhattan, NY — 1,754 9,200 — 1,754 9,200 10,954 1,725 2012 (a) 40 years 60 Orange Street Bloomfield, NJ 7,001 3,609 10,790 — 3,609 10,790 14,399 2,157 2012 (a) 40 years 179-53 & 1801-03 Connecticut Avenue Washington, D.C. — 11,690 10,135 1,088 11,690 11,223 22,913 2,205 2012 (a) 40 years 639 West Diversey Chicago, IL — 4,429 6,102 1,034 4,429 7,136 11,565 1,503 2012 (a) 40 years 664 North Michigan Chicago, IL — 15,240 65,331 — 15,240 65,331 80,571 11,229 2013 (a) 40 years 107 ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Company Amount at Which Carried at December 31, 2019 Description and Location Encumbrances Land Buildings & Improvements Increase (Decrease) in Net Investments Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Income is Compared 8-12 E. Walton Chicago, IL — 5,398 15,601 978 5,398 16,579 21,977 2,910 2013 (a) 40 years 3200-3204 M Street Washington, DC — 6,899 4,249 168 6,899 4,417 11,316 839 2013 (a) 40 years 868 Broadway Manhattan, NY — 3,519 9,247 5 3,519 9,252 12,771 1,405 2013 (a) 40 years 313-315 Bowery Manhattan, NY — — 5,516 — — 5,516 5,516 1,339 2013 (a) 40 years 120 West Broadway Manhattan, NY — — 32,819 1,124 — 33,943 33,943 3,403 2013 (a) 40 years 11 E. Walton Chicago, IL — 16,744 28,346 195 16,744 28,541 45,285 4,373 2014 (a) 40 years 61 Main Street Westport, CT — 4,578 2,645 789 4,578 3,434 8,012 436 2014 (a) 40 years 865 W. North Avenue Chicago, IL — 1,893 11,594 41 1,893 11,635 13,528 1,688 2014 (a) 40 years 152-154 Spring St. Manhattan, NY — 8,544 27,001 180 8,544 27,181 35,725 3,878 2014 (a) 40 years 2520 Flatbush Ave Brooklyn, NY — 6,613 10,419 303 6,613 10,722 17,335 1,575 2014 (a) 40 years 252-256 Greenwich Avenue Greenwich, CT — 10,175 12,641 544 10,175 13,185 23,360 2,008 2014 (a) 40 years Bedford Green Bedford Hills, NY — 12,425 32,730 4,370 13,763 35,762 49,525 5,263 2014 (a) 40 years 131-135 Prince Street Manhattan, NY — — 57,536 625 — 58,161 58,161 14,554 2014 (a) 40 years Shops at Grand Ave Queens, NY — 20,264 33,131 1,715 20,264 34,846 55,110 4,615 2014 (a) 40 years 201 Needham Street Newton, MA — 4,550 4,459 105 4,550 4,564 9,114 652 2014 (a) 40 years City Center San Francisco, CA — 36,063 109,098 (24,600 ) 26,386 94,175 120,561 13,356 2015 (a) 40 years 163 Highland Avenue Needham, MA 8,582 12,679 11,213 43 12,679 11,256 23,935 1,486 2015 (a) 40 years Roosevelt Galleria Chicago, IL — 4,838 14,574 61 4,838 14,635 19,473 1,590 2015 (a) 40 years Route 202 Shopping Center Wilmington, DE — — 6,346 501 — 6,847 6,847 1,297 2015 (a) 40 years 991 Madison Avenue Manhattan, NY — — 76,965 1,691 — 78,656 78,656 6,160 2016 (a) 40 years 165 Newbury Street Boston, MA — 1,918 3,980 — 1,918 3,980 5,898 365 2016 (a) 40 years Concord & Milwaukee Chicago, IL 2,650 2,739 2,746 246 2,739 2,992 5,731 278 2016 (a) 40 years State & Washington Chicago, IL 23,881 3,907 70,943 5,436 3,907 76,379 80,286 6,205 2016 (a) 40 years 151 N. State Street Chicago, IL 13,574 1,941 25,529 — 1,941 25,529 27,470 2,181 2016 (a) 40 years North & Kingsbury Chicago, IL 12,164 18,731 16,292 192 18,731 16,484 35,215 1,420 2016 (a) 40 years Sullivan Center Chicago, IL 50,000 13,443 137,327 536 13,443 137,863 151,306 11,837 2016 (a) 40 years California & Armitage Chicago, IL 2,506 6,770 2,292 2 6,770 2,294 9,064 211 2016 (a) 40 years 555 9th Street San Francisco, CA 60,000 75,591 73,268 82 75,591 73,350 148,941 5,848 2016 (a) 40 years Market Square Wilmington, DE — 8,100 31,221 313 8,100 31,534 39,634 1,807 2017 (a) 40 years 613-623 W. Diversey Chicago, IL — 10,061 2,773 11,101 10,061 13,874 23,935 3,408 2018 (c) 40 years 108 ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Company Amount at Which Carried at December 31, 2019 Description and Location Encumbrances Land Buildings & Improvements Increase (Decrease) in Net Investments Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Income is Compared 51 Greene Street Manhattan, NY — 4,488 8,992 — 4,488 8,992 13,480 187 2019 (a) 40 years 53 Greene Street Manhattan, NY — 3,605 12,177 — 3,605 12,177 15,782 228 2019 (a) 40 years 41 Greene Street Manhattan, NY — 6,276 9,582 — 6,276 9,582 15,858 140 2019 (a) 40 years 47 Greene Street Manhattan, NY — 6,265 16,758 — 6,265 16,758 23,023 175 2019 (a) 40 years 849 W Armitage Chicago, IL — 837 2,731 — 837 2,731 3,568 24 2019 (a) 40 years 912 W Armitage Chicago, IL — 982 2,868 — 982 2,868 3,850 25 2019 (a) 40 years Melrose Place Collection Los Angeles, CA — 20,490 26,788 — 20,490 26,788 47,278 112 2019 (a) 40 years 45 Greene Street Manhattan, NY — 2,903 8,487 — 2,903 8,487 11,390 39 2019 (a) 40 years 565 Broadway Manhattan, NY — — 22,491 — — 22,491 22,491 — 2019 (a) 40 years 907 W Armitage Chicago, IL — 700 2,081 — 700 2,081 2,781 5 2019 (a) 40 years Undeveloped Land — 100 — — 100 — 100 — Fund II: City Point Brooklyn, NY 243,298 — 100,316 491,335 — 591,651 591,651 48,096 2007 (c) 40 years Fund III: 654 Broadway Manhattan, NY — 9,040 3,654 4,177 9,040 7,831 16,871 1,549 2011 (a) 40 years 640 Broadway Manhattan, NY 39,470 12,503 19,960 15,225 12,503 35,185 47,688 6,970 2012 (a) 40 years Cortlandt Crossing Mohegan Lake, NY 28,818 11,000 — 59,277 10,473 59,804 70,277 2,005 2012 (c) 40 years Fund IV: 210 Bowery Manhattan, NY — 1,875 5,625 (3,950 ) 1,875 1,675 3,550 57 2012 (c) 40 years Paramus Plaza Paramus, NJ 18,900 11,052 7,037 12,901 11,052 19,938 30,990 4,304 2013 (a) 40 years 27 E. 61st Street Manhattan, NY — 4,813 14,438 7,241 4,813 21,679 26,492 1,311 2014 (c) 40 years 17 E. 71st Street Manhattan, NY 18,833 7,391 20,176 306 7,391 20,482 27,873 2,987 2014 (a) 40 years 1035 Third Avenue Manhattan, NY — 12,759 37,431 5,541 14,099 41,632 55,731 6,070 2015 (a) 40 years 801 Madison Avenue Manhattan, NY — 4,178 28,470 5,844 4,178 34,314 38,492 2,085 2015 (c) 40 years 2208-2216 Fillmore Street San Francisco, CA 5,606 3,027 6,376 57 3,027 6,433 9,460 734 2015 (a) 40 years 2207 Fillmore Street San Francisco, CA 1,120 1,498 1,735 118 1,498 1,853 3,351 213 2015 (a) 40 years 1964 Union Street San Francisco, CA 1,463 563 1,688 1,867 563 3,555 4,118 230 2016 (c) 40 years Restaurants at Fort Point Boston, MA 6,070 1,041 10,905 182 1,041 11,087 12,128 1,200 2016 (a) 40 years Wakeforest Crossing Wake Forest, NC 23,337 7,570 24,829 472 7,570 25,301 32,871 2,846 2016 (a) 40 years Airport Mall Bangor, ME 5,334 2,294 7,067 1,882 2,294 8,949 11,243 868 2016 (a) 40 years Colonie Plaza Albany, NY 11,713 2,852 9,619 273 2,852 9,892 12,744 1,021 2016 (a) 40 years Dauphin Plaza Harrisburg, PA 12,718 5,290 9,464 3,056 5,290 12,520 17,810 1,557 2016 (a) 40 years 109 ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Company Amount at Which Carried at December 31, 2019 Description and Location Encumbrances Land Buildings & Improvements Increase (Decrease) in Net Investments Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Income is Compared Mayfair Shopping Center Philadelphia, PA 11,895 6,178 9,266 1,132 6,178 10,398 16,576 1,061 2016 (a) 40 years Shaw's Plaza Waterville, ME 7,636 828 11,814 272 828 12,086 12,914 1,162 2016 (a) 40 years Wells Plaza Wells, ME 5,700 1,892 2,585 505 1,892 3,090 4,982 424 2016 (a) 40 years 717 N. Michigan Chicago, IL 16,148 20,674 10,093 — 20,674 10,093 30,767 843 2016 (c) 40 years Shaw's Plaza North Windham, ME 5,702 1,876 6,696 1 1,876 6,697 8,573 509 2017 (a) 40 years Lincoln Place Fairview Heights, IL 23,100 7,149 22,201 2,035 7,149 24,236 31,385 2,215 2017 (a) 40 years 18 E. Broughton St. Savannah, GA 2,032 609 1,513 — 609 1,513 2,122 51 2018 (a) 40 years 20 E. Broughton St. Savannah, GA 1,258 588 937 — 588 937 1,525 32 2018 (a) 40 years 25 E. Broughton St. Savannah, GA 3,302 1,324 2,459 319 1,324 2,778 4,102 109 2018 (a) 40 years 109 W. Broughton St. Savannah, GA 8,809 2,343 6,560 — 2,343 6,560 8,903 223 2018 (a) 40 years 204-206 W. Broughton St. Savannah, GA 590 547 439 45 547 484 1,031 15 2018 (a) 40 years 216-218 W. Broughton St. Savannah, GA 3,674 1,160 2,736 17 1,160 2,753 3,913 94 2018 (a) 40 years 220 W. Broughton St. Savannah, GA 2,416 619 1,799 — 619 1,799 2,418 61 2018 (a) 40 years 223 W. Broughton St. Savannah, GA 924 465 688 — 465 688 1,153 24 2018 (a) 40 years 226-228 W. Broughton St. Savannah, GA 2,551 660 1,900 — 660 1,900 2,560 64 2018 (a) 40 years 309/311 W. Broughton St. Savannah, GA 3,619 1,160 2,695 — 1,160 2,695 3,855 91 2018 (a) 40 years 110 University Manhattan, NY — — 1,370 — — 1,370 1,370 25 2019 (a) 40 years Fund V: Plaza Santa Fe Santa Fe, NM 22,893 — 28,214 360 — 28,574 28,574 2,047 2017 (a) 40 years Hickory Ridge Hickory, NC 30,000 7,852 29,998 1,350 7,852 31,348 39,200 2,120 2017 (a) 40 years New Towne Plaza Canton, MI 16,900 5,040 17,391 59 5,040 17,450 22,490 1,210 2017 (a) 40 years Fairlane Green Allen Park, MI 40,300 18,121 37,143 256 18,121 37,399 55,520 2,059 2017 (a) 40 years Trussville Promenade Birmingham, AL 29,370 7,587 34,285 36 7,587 34,321 41,908 1,713 2018 (a) 40 years Elk Grove Commons Elk Grove, CA 41,500 6,204 48,008 70 6,204 48,078 54,282 1,786 2018 (a) 40 years Hiram Pavilion Hiram, GA 28,830 13,029 25,446 56 13,029 25,502 38,531 964 2018 (a) 40 years Palm Coast Landing Palm Coast, FL 26,500 7,066 27,299 — 7,066 27,299 34,365 554 2019 (a) 40 years Lincoln Commons Lincoln, RI 38,820 14,429 34,417 170 14,429 34,587 49,016 517 2019 (a) 40 years Landstown Commons Virginia Beach, VA 60,900 10,221 69,005 166 10,221 69,171 79,392 766 2019 (a) 40 years Real Estate Under Development 69,718 82,969 53,847 116,586 94,923 158,479 253,402 — Right-of-use assets - operating lease — 56,961 5,058 (2,013 ) 55,764 4,242 60,006 — 110 ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Company Amount at Which Carried at December 31, 2019 Description and Location Encumbrances Land Buildings & Improvements Increase (Decrease) in Net Investments Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Income is Compared Unamortized Loan Costs (10,078 ) — — — — — — — Unamortized Premium 651 — — — — — — — Total $ 1,170,076 $ 901,997 $ 2,286,624 $ 910,921 $ 906,984 $ 3,192,558 $ 4,099,542 $ 490,227 Notes: 1. Depreciation on buildings and improvements reflected in the consolidated statements of income is calculated over the estimated useful life of the assets as follows: Buildings at 40 years and improvements at the shorter of lease term or useful life. 2. The aggregate gross cost of property included above for Federal income tax purposes was approximately The following table reconciles the activity for real estate properties from January 1, Year Ended December 31, 2019 2018 2017 Balance at beginning of year $ 3,697,805 $ 3,466,482 $ 3,382,000 Improvements and other 97,000 99,594 55,763 Property acquisitions 303,884 134,559 179,292 Property dispositions or held for sale assets (84,243 ) (34,666 ) (189,895 ) Right-of-use assets - operating leases obtained 62,020 — — Right-of-use assets - finance leases obtained and reclassified 102,055 — — Capital lease reclassified as Right-of-use assets - finance lease (76,965 ) — — Right-of-use assets - operating lease amortization (2,014 ) — — Consolidation of previously unconsolidated investments — 31,836 39,322 Balance at end of year $ 4,099,542 $ 3,697,805 $ 3,466,482 The following table reconciles accumulated depreciation from January 1, Year Ended December 31, 2019 2018 2017 Balance at beginning of year $ 416,657 $ 339,862 $ 287,066 Depreciation related to real estate 85,317 78,453 73,268 Property dispositions (11,747 ) (1,658 ) (20,472 ) Balance at end of year $ 490,227 $ 416,657 $ 339,862 ACADIA REALTY TRUST SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE December 31, (in thousands) Description Effective Interest Rate Final Maturity Date Face Amount of Notes Receivable Net Carrying Amount of Notes Receivable as of December 31, 2019 First Mortgage Loan 6.0% 4/30/2020 $ 17,810 $ 17,802 First Mortgage Loan 8.1% 6/20/2020 153,400 38,673 Zero Coupon Loan 2.5% 5/31/2020 29,793 33,170 Mezzanine Loan 18.0% 7/1/2020 5,306 5,306 First Mortgage Loan 5.1% 10/28/2021 13,530 13,530 Other 4.65% 4/12/2026 6,000 6,000 Other 4.82% 4/10/2021 462 462 Total $ 226,301 $ 114,943 The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company's loan in relation to other debt secured by the collateral, the personal guarantees of the borrower and the prospects of the borrower. The following table reconciles the activity for loans on real estate from January 1, Reconciliation of Loans on Real Estate Year Ended December 31, 2019 2018 2017 Balance at beginning of year $ 111,775 $ 160,991 $ 283,125 Additions 18,418 3,805 11,571 Repayments (15,250 ) (31,000 ) (32,000 ) Conversion to real estate through receipt of deed — (22,021 ) (101,705 ) Balance at end of year $ 114,943 $ 111,775 $ 160,991 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES. None. ITEM 9A. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures We conducted an evaluation, under the supervision and with the participation of management including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, Management’s Report on Internal Control Over Financial Reporting Management of Acadia Realty Trust is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13(a)-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, BDO USA, LLP, an independent registered public accounting firm that audited our Financial Statements included in this Annual Report, has issued an attestation report on our internal control over financial reporting as of December 31, Acadia Realty Trust Rye, New York February Changes in Internal Control Over Financial Reporting During the three months ended December 31, Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Trustees of Acadia Realty Trust Opinion on Internal Control over Financial Reporting We have audited Acadia Realty Trust and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, Basis for Opinion The Company’s management is We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ BDO USA, LLP New York, New York February ITEM 9B. OTHER INFORMATION. None. PART III In accordance with the rules of the SEC, certain information required by Part III is omitted and is incorporated by reference into this ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information under the following headings in the • “PROPOSAL 1 — ELECTION OF TRUSTEES” • “MANAGEMENT” • “DELINQUENT SECTION 16(a) REPORTS” ITEM 11. EXECUTIVE COMPENSATION. The information under the following headings in the • “ACADIA REALTY TRUST COMPENSATION COMMITTEE REPORT” • “COMPENSATION DISCUSSION AND ANALYSIS” • “BOARD OF TRUSTEES COMPENSATION” • “COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION” ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information under the heading “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” in the The information under ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. The information under the following headings in the • “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS” • “PROPOSAL 1 — ELECTION OF TRUSTEES—Trustee Independence” ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information under the heading “AUDIT COMMITTEE INFORMATION” in the PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. 1. 2. Financial Statement Schedule: See “Schedule II—Valuation and Qualifying Accounts” at Item 8. 3. Financial Statement Schedule: See “Schedule III—Real Estate and Accumulated Depreciation” at Item 8. 4. Financial Statement Schedule: See “Schedule IV—Mortgage Loans on Real Estate” at Item 8. 5. Exhibits: The index of exhibits below is incorporated herein by reference. The following is an index to all exhibits including (i) those filed with this Exhibit Description Method of Filing Declaration of Trust of the Company Incorporated by reference to First Amendment to Declaration of Trust of the Company Incorporated by reference to Second Amendment to Declaration of Trust of the Company Incorporated by reference to Third Amendment to Declaration of Trust of the Company Incorporated by reference to Fourth Amendment to Declaration of Trust Incorporated by reference to Fifth Amendment to Declaration of Trust Incorporated by reference to Sixth Amendment to Declaration of Trust Incorporated by reference to Exhibit 3.01 to the Company’s Current Report on Form 8-K filing on July 28, 2017. Articles Supplementary Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 9, 2017. Amended and Restated Bylaws of the Company Incorporated by reference to Amendment No. 1 to Amended and Restated Bylaws of the Company Incorporated by reference to Description of Acadia Realty Trust Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended Filed herewith. 10.1* Second Amended and Restated Acadia Realty Trust 2006 Share Incentive Plan Incorporated by reference to Exhibit Description Method of Filing 10.2* Certain information regarding Incorporated by reference 10.3* Description of Incorporated by reference to page 20 to the Company’s 2009 Annual Proxy Statement filed with the SEC April 9, 2009. Registration Rights and Lock-Up Agreement (RD Capital Transaction) Incorporated by reference to Contribution and Share Purchase Agreement dated as of April 15, 1998 among Mark Centers Trust, Mark Centers Limited Partnership, the Contributing Owners and Contributing Entities named therein, RD Properties, L.P. VI, RD Properties, L.P. VIA and RD Properties, L.P. VIB Incorporated by reference to 10.6* Amended and Restated Employment Incorporated by reference to 10.7* Form of Second Amended and Restated Severance Agreement, effective as of February 26, 2018, with each of: Incorporated by reference to Form of 2018 Long-Term Incentive Plan Award Agreement (time- and performance-based) Incorporated by reference to Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018. Amended and Restated Credit Agreement, dated as of February 20, 2018, among Acadia Realty Limited Partnership, as Incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017. Agreement and Plan Of Merger Dated as of December 22, 2005 by and among Acadia Realty Acquisition I, LLC, Ara Btc LLC, ARA MS LLC, ARA BS LLC, ARA BC LLC and ARA BH LLC, Acadia Investors, Inc., AII BTC LLC, AII MS LLC, AII BS LLC, AII BC LLC And AII BH LLC, Samuel Ginsburg 2000 Trust Agreement #1, Martin Ginsburg 2000 Trust Agreement #1, Martin Ginsburg, Samuel Ginsburg and Adam Ginsburg, and GDC SMG, LLC, GDC Beechwood, LLC, Aspen Cove Apartments, LLC and SMG Celebration, LLC Incorporated by reference to Form of Assignments and Assumptions of Carried Interest with respect to the Company's Long-Term Incentive Alignment Program Incorporated by reference to Form of Omnibus Amendment to the Series of Assignments and Assumptions of Carried Interest with respect to the Company's Long-Term Incentive Alignment Program Incorporated by reference to Form of 2018 Long-Term Incentive Plan Award Agreement Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017. First Amendment, dated April 2, 2019, to Amended and Restated Credit Agreement, dated as of February 20, 2018, among Acadia Realty Limited Partnership, as borrower, Acadia Realty Trust and certain subsidiaries of Acadia Realty Limited Partnership from time to time party thereto, as guarantors, Bank of America, N.A., as administrative agent, swing line lender, L/C issuer, and as lender, PNC Bank, National Association and Wells Fargo Bank, National Association, as co-documentation agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arranger and sole bookrunner and PNC Bank, National Association and Wells Fargo Securities, LLC, as joint lead arrangers Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10.15 Second Amendment, dated October 8, 2019, to Amended and Restated Credit Agreement, dated as of February 20, 2018, among Acadia Realty Limited Partnership, as borrower, Acadia Realty Trust and certain subsidiaries of Acadia Realty Limited Partnership from time to time party thereto, as guarantors, Bank of America, N.A., as administrative agent, swing line lender, L/C issuer, and as lender, PNC Bank, National Association and Wells Fargo Bank, National Association, as co-documentation agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arranger and sole bookrunner and PNC Bank, National Association and Wells Fargo Securities, LLC, as joint lead arrangers, as amended to date Incorporated by reference to Exhibit 10.01 to the Company’s Current Report on Form 8-K filed on October 11, 2019. List of Subsidiaries of Acadia Realty Trust Filed herewith Consent of Registered Public Accounting Firm to incorporation by reference its reports into Forms S-3 and Forms S-8 Filed herewith Certification of Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith Certification of Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith Amended and Restated Agreement of Limited Partnership Incorporated by reference to Certificate of Designation of Series A Preferred Operating Partnership Units of Limited Partnership Interest of Acadia Realty Limited Partnership Incorporated by reference to Exhibit Description Method of Filing 101.INS Inline XBRL Instance Document– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document Filed herewith 101.SCH Inline XBRL Taxonomy Extension Schema Document Filed herewith 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101.DEF Inline XBRL Taxonomy Extension Filed herewith 101.LAB Inline XBRL Taxonomy Extension Filed herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith 104 The cover page for the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, has been formatted in Inline XBRL Filed herewith * The referenced exhibit is a management contract or compensation plan or ITEM 16.Form 10-K SUMMARY. None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities ACADIA REALTY TRUST (Registrant) By: /s/ Kenneth F. Bernstein Kenneth F. Bernstein Chief Executive Officer, President and Trustee By: /s/ John Gottfried John Gottfried Senior Vice President and Chief Financial Officer By: /s/ Richard Hartmann Richard Hartmann Senior Vice President and Chief Accounting Officer Dated: February Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Kenneth F. Bernstein Chief Executive Officer, President and Trustee (Principal Executive Officer) February 20, 2020 (Kenneth F. Bernstein) /s/ John Gottfried Senior Vice President (Principal Financial Officer) February (John Gottfried) /s/ Richard Hartmann Senior Vice President (Principal Accounting Officer) February (Richard Hartmann) /s/ Douglas Crocker II Trustee February 20, 2020 (Douglas Crocker II) /s/ Lorrence T. Kellar Trustee February 20, 2020 (Lorrence T. Kellar) /s/ Wendy Luscombe Trustee February 20, 2020 (Wendy Luscombe) /s/ William T. Spitz Trustee February 20, 2020 (William T. Spitz) /s/ Lynn Thurber Trustee February 20, 2020 (Lynn Thurber) /s/ Lee S. Wielansky Trustee February 20, 2020 (Lee S. Wielansky) /s/ C. David Zoba Trustee February 20, 2020 (C. David Zoba) 119 |