0000899629 akr:AtTheMarketProgramMember 2019-04-01 2019-06-30

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2019~~2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number ~~1-12002~~001-12002

ACADIA REALTY TRUST

(Exact name of registrant in its charter)




Maryland (State or other jurisdiction of incorporation or organization)		23-2715194 (I.R.S. Employer Identification No.)

411 THEODORE FREMD AVENUE, SUITE 300, RYE, NY (Address of principal executive offices)		10580 (Zip Code)

(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 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 ☒

As of October ~~21, 2019~~30, 2020 there were ~~86,948,888~~86,268,103 common shares of beneficial interest, par value $0.001 per share (“Common Shares”), outstanding.

ACADIA REALTY TRUST AND SUBSIDIARIES

FORM 10-Q

INDEX



Item No.	Description	Page	Description	Page
	PART I - FINANCIAL INFORMATION		PART I - FINANCIAL INFORMATION
1.	Financial Statements	4	Financial Statements	4
	Consolidated Balance Sheets as of September 30, 2019 (Unaudited) and December 31, 2018	4	Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019	4
	Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	5	Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2020 and 2019	5
	Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	6	Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Nine Months Ended September 30, 2020 and 2019	6
	Consolidated Statements of Shareholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	7	Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2020 and 2019	7
	Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2019 and 2018	9	Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2020 and 2019	9
	Notes to Consolidated Financial Statements (Unaudited)	11	Notes to Consolidated Financial Statements (Unaudited)	11

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
3.	Quantitative and Qualitative Disclosures about Market Risk	58	Quantitative and Qualitative Disclosures about Market Risk	63
4.	Controls and Procedures	61	Controls and Procedures	65

	PART II - OTHER INFORMATION		PART II - OTHER INFORMATION
1.	Legal Proceedings	61	Legal Proceedings	65
1A.	Risk Factors	61	Risk Factors	66
2.	Unregistered Sales of Equity Securities and Use of Proceeds	61	Unregistered Sales of Equity Securities and Use of Proceeds	67
3.	Defaults Upon Senior Securities	61	Defaults Upon Senior Securities	67
4.	Mine Safety Disclosures	61	Mine Safety Disclosures	67
5.	Other Information	61	Other Information	67
6.	Exhibits	62	Exhibits	68
	Signatures	63	Signatures	69

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q ~~(the~~(this “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 which 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”~~“project,” or the negative thereof, or other variations thereon or comparable terminology. ~~Factors~~Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results and financial performance to be materially different from future results and financial performance expressed or implied by such forward-looking statements, including, but not limited to: (i) economic, political and social uncertainty surrounding the COVID-19 Pandemic (the “COVID-19 Pandemic”), including (a) the effectiveness or lack of effectiveness of governmental relief in providing assistance to large and small businesses, including the Company’s tenants, that have suffered significant declines in revenues as a result of mandatory business shut-downs, “shelter-in-place” or “stay-at-home” orders and social distancing practices, as well as individuals adversely impacted by the COVID-19 Pandemic, (b) the duration of any such orders or other formal recommendations for social distancing and the speed and extent to which ~~could have~~revenues of the Company’s retail tenants recover following the lifting of any such orders or recommendations, (c) the potential impact of any such events on the obligations of the Company’s tenants to make rent and other payments or honor other commitments under existing leases, (d) to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices, (e) the potential adverse impact on returns from development and redevelopment projects, and (f) the broader impact of the severe economic contraction and increase in unemployment that has occurred in the short term and negative consequences that will occur if these trends are not quickly reversed; (ii) the ability and willingness of the Company’s tenants (in particular its major tenants) and other third parties to satisfy their obligations under their respective contractual arrangements with the Company; (iii) macroeconomic conditions, such as a ~~material adverse~~disruption of or lack of access to the capital markets; (iv) the Company’s success in implementing its business strategy and its ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (v) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and their effect on ~~our operations~~the Company’s revenues, earnings and ~~future prospects include, but~~funding sources; (vi) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the potential phasing out of the London Interbank Offered Rate after 2021; (vii) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (viii) the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (ix) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (x) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration, the Company’s ability to re-lease its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations the Company may incur in connection with the replacement of an existing tenant; (xi) the Company’s liability for environmental matters; (xii) damage to the Company’s properties from catastrophic weather and other natural events, and the physical effects of climate change; (xiii) uninsured losses; (xiv) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (xv) information technology security breaches, including increased cybersecurity risks relating to the use of remote technology during the COVID-19 Pandemic; and (xvi) the loss of key executives.

The factors described above are not ~~limited to~~exhaustive and additional factors could adversely affect the Company’s future results and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and other periodic or current reports the Company files with the SEC, including those set forth under the headings “Item 1A. Risk Factors” and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report. These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein. Any forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or change in the events, conditions or circumstances on which such forward-looking statements are based.

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 I, Item 1. Financial Statements.

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			September 30,			December 31,
(dollars in thousands, except per share amounts)	2019			2018			2020			2019
ASSETS	(Unaudited)						(Unaudited)
Investments in real estate, at cost
Operating real estate, net	$	3,288,377		$	3,160,851		$	3,347,431		$	3,355,913
Real estate under development		250,278			120,297			268,298			253,402
Net investments in real estate		3,538,655			3,281,148			3,615,729			3,609,315
Notes receivable, net		94,807			109,613			134,798			114,943
Investments in and advances to unconsolidated affiliates		372,478			262,410			240,414			305,097
Other assets, net		200,588			208,570			183,170			190,658
Cash and cash equivalents		48,140			21,268			16,108			15,845
Restricted cash		12,867			13,580			13,673			14,165
Rents receivable		59,071			62,191			47,516			59,091
Assets of properties held for sale		2,939			—
Total assets	$	4,329,545		$	3,958,780		$	4,251,408		$	4,309,114

LIABILITIES
Mortgage and other notes payable, net	$	1,029,678		$	1,017,288		$	1,159,688		$	1,170,076
Unsecured notes payable, net		625,677			533,257			502,500			477,320
Unsecured line of credit								127,400			60,800
Accounts payable and other liabilities		403,297			286,072			394,111			371,516
Dividends and distributions payable		26,017			24,593			147			27,075
Distributions in excess of income from, and investments in, unconsolidated affiliates		15,353			15,623			15,462			15,362
Total liabilities		2,100,022			1,876,833			2,199,308			2,122,149
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,644,196 and 81,557,472 shares, respectively		87			82
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,266,122 and 87,050,465 shares, respectively								86			87
Additional paid-in capital		1,692,659			1,548,603			1,695,338			1,706,357
Accumulated other comprehensive (loss) income		(44,138	)		516
Accumulated other comprehensive loss								(85,873	)		(31,175	)
Distributions in excess of accumulated earnings		(129,026	)		(89,696	)		(156,321	)		(132,961	)
Total Acadia shareholders’ equity		1,519,582			1,459,505			1,453,230			1,542,308
Noncontrolling interests		709,941			622,442			598,870			644,657
Total equity		2,229,523			2,081,947			2,052,100			2,186,965
Total liabilities and equity	$	4,329,545		$	3,958,780		$	4,251,408		$	4,309,114

The accompanying notes are an integral part of these consolidated financial statements

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands except per share amounts)	2019			2018			2019			2018			2020			2019			2020			2019
Revenues
Rental income	$	72,191		$	51,003		$	214,490		$	150,838		$	50,300		$	72,191		$	183,396		$	214,490
Expense reimbursements		—			13,194			—			35,000
Other		1,136			1,330			3,053			4,116			981			1,136			3,078			3,053
Total revenues		73,327			65,527			217,543			189,954			51,281			73,327			186,474			217,543
Operating expenses
Depreciation and amortization		32,170			28,676			92,807			86,755			34,457			32,170			101,627			92,807
General and administrative		8,222			7,982			25,579			24,359			8,625			8,222			26,415			25,579
Real estate taxes		10,225			11,538			29,680			27,528			10,689			10,225			31,833			29,680
Property operating		13,180			10,113			37,267			30,709			11,559			13,180			41,685			37,267
Impairment charge		321			—			1,721			—
Other operating		—			270			—			655
Impairment charges														—			321			51,549			1,721
Total operating expenses		64,118			58,579			187,054			170,006			65,330			64,118			253,109			187,054

Gain on disposition of properties		12,056			5,107			14,070			5,140			24			12,056			509			14,070
Operating income		21,265			12,055			44,559			25,088
Equity in earnings of unconsolidated affiliates		1,299			376			7,129			7,079
Interest income		1,748			3,513			6,247			10,539
Other income		5,034			—			6,947			—
Operating (loss) income														(14,025	)		21,265			(66,126	)		44,559
Equity in (losses) earnings of unconsolidated affiliates														(624	)		1,299			(155	)		7,129
Interest and other income														2,132			6,782			7,156			13,194
Realized and unrealized holding (losses) gains on investments and other														(7,946	)		—			79,335			—
Interest expense		(19,103	)		(18,077	)		(56,721	)		(50,882	)		(17,752	)		(19,103	)		(54,373	)		(56,721	)
Income (loss) from continuing operations before income taxes		10,243			(2,133	)		8,161			(8,176	)
Income tax provision		(1,403	)		(464	)		(1,622	)		(851	)
Net income (loss)		8,840			(2,597	)		6,539			(9,027	)
(Loss) income from continuing operations before income taxes														(38,215	)		10,243			(34,163	)		8,161
Income tax (provision) benefit														(74	)		(1,403	)		741			(1,622	)
Net (loss) income														(38,289	)		8,840			(33,422	)		6,539
Net loss attributable to noncontrolling interests		1,618			11,822			25,196			33,336			29,259			1,618			35,388			25,196
Net income attributable to Acadia	$	10,458		$	9,225		$	31,735		$	24,309
Net (loss) income attributable to Acadia													$	(9,030	)	$	10,458		$	1,966		$	31,735

Basic and diluted earnings per share	$	0.12		$	0.11		$	0.38		$	0.29
Basic and diluted (loss) earnings per share													$	(0.10	)	$	0.12		$	0.02		$	0.38

The accompanying notes are an integral part of these consolidated financial statements

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2019

2018

2019

2018

Net income (loss)

$
8,840

$
(2,597
)

$
6,539

$
(9,027
)
Other comprehensive (loss) income:

Unrealized (loss) income on valuation of swap agreements

(15,388
)

3,973

(51,347
)

12,576

Reclassification of realized interest on swap agreements

(288
)

(55
)

(1,374
)

417

Other comprehensive (loss) income

(15,676
)

3,918

(52,721
)

12,993

Comprehensive (loss) income

(6,836
)

1,321

(46,182
)

3,966

Comprehensive loss attributable to noncontrolling interests

2,726

11,033

33,263

30,996

Comprehensive (loss) income attributable to Acadia

$
(4,110
)

$
12,354

$
(12,919
)

$
34,962

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2020			2019			2020			2019
Net (loss) income	$	(38,289	)	$	8,840		$	(33,422	)	$	6,539
Other comprehensive income (loss):
Unrealized gain (loss) on valuation of swap agreements		952			(15,388	)		(82,444	)		(51,347	)
Reclassification of realized interest on swap agreements		5,506			(288	)		9,598			(1,374	)
Other comprehensive income (loss)		6,458			(15,676	)		(72,846	)		(52,721	)
Comprehensive loss		(31,831	)		(6,836	)		(106,268	)		(46,182	)
Comprehensive loss attributable to noncontrolling interests		27,137			2,726			53,536			33,263
Comprehensive loss attributable to Acadia	$	(4,694	)	$	(4,110	)	$	(52,732	)	$	(12,919	)

The accompanying notes are an integral part of these consolidated financial statements.

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

	Acadia Shareholders																					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			Common Shares		Share Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Distributions in Excess of Accumulated Earnings			Total Common Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at July 1, 2020																							86,265	$	86	$	1,693,006	$	(90,209	)	$	(147,291	)	$	1,455,592		$	637,739		$	2,093,331
Issuance of Common Shares																							—		—		—		—			—			—			—			—
Dividends/distributions declared ($0 per Common Share/OP Unit)																							—		—		—		—						—			(123	)		(123	)
Employee and trustee stock compensation, net																							1		—		232		—			—			232			2,181			2,413
Noncontrolling interest distributions																							—		—		—		—			—			—			(20,117	)		(20,117	)
Noncontrolling interest contributions																							—		—		—		—			—			—			8,427			8,427
Comprehensive (loss) income																							—		—		—		4,336			(9,030	)		(4,694	)		(27,137	)		(31,831	)
Reallocation of noncontrolling interests																							—		—		2,100		—			—			2,100			(2,100	)		0
Balance at September 30, 2020																							86,266	$	86	$	1,695,338	$	(85,873	)	$	(156,321	)	$	1,453,230		$	598,870		$	2,052,100

Balance at July 1, 2019		84,453	$	84	$	1,625,906	$	(29,570	)	$	(115,224	)	$	1,481,196		$	618,910		$	2,100,106			84,453	$	84	$	1,625,906	$	(29,570	)	$	(115,224	)	$	1,481,196		$	618,910		$	2,100,106
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership		42		—		720		—			—			720			(720	)		—			42		—		720		—			—			720			(720	)		0
Issuance of Common Shares		2,149		3		60,634		—			—			60,637			—			60,637			2,149		3		60,634		—			—			60,637			—			60,637
Dividends/distributions declared ($0.28 per Common Share/OP Unit)		—		—		—		—			(24,260	)		(24,260	)		(1,765	)		(26,025	)		—		—		—		—			(24,260	)		(24,260	)		(1,765	)		(26,025	)
Employee and trustee stock compensation, net		—		—		148		—			—			148			1,768			1,916			—		—		148		—			—			148			1,768			1,916
Noncontrolling interest distributions		—		—		—		—			—			—			(29,713	)		(29,713	)		—		—		—		—			—			—			(29,713	)		(29,713	)
Noncontrolling interest contributions		—		—		—		—			—			—			129,438			129,438			—		—		—		—			—			—			129,438			129,438
Comprehensive (loss) income		—		—		—		(14,568	)		10,458			(4,110	)		(2,726	)		(6,836	)		—		—		—		(14,568	)		10,458			(4,110	)		(2,726	)		(6,836	)
Reallocation of noncontrolling interests		—		—		5,251		—			—			5,251			(5,251	)		—			—		—		5,251		—			—			5,251			(5,251	)		0
Balance at September 30, 2019		86,644	$	87	$	1,692,659	$	(44,138	)	$	(129,026	)	$	1,519,582		$	709,941		$	2,229,523			86,644	$	87	$	1,692,659	$	(44,138	)	$	(129,026	)	$	1,519,582		$	709,941		$	2,229,523

Balance at July 1, 2018		81,503	$	82	$	1,543,651	$	10,138		$	(61,196	)	$	1,492,675		$	619,874		$	2,112,549
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership		47		—		834		—			—			834			(834	)		—
Dividends/distributions declared ($0.27 per Common Share/OP Unit)		—		—		—		—			(22,019	)		(22,019	)		(1,692	)		(23,711	)
Employee and trustee stock compensation, net		—		—		137		—			—			137			2,082			2,219
Noncontrolling interest distributions		—		—		—		—			—			—			(9,014	)		(9,014	)
Noncontrolling interest contributions		—		—		—		—			—			—			40,440			40,440
Comprehensive income (loss)		—		—		—		3,129			9,225			12,354			(11,033	)		1,321
Reallocation of noncontrolling interests		—		—		1,783		—			—			1,783			(1,783	)		—
Balance at September 30, 2018		81,550	$	82	$	1,546,405	$	13,267		$	(73,990	)	$	1,485,764		$	638,040		$	2,123,804

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY ~~(Continued)~~

Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~

2019

	Acadia Shareholders																								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			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, 2020																										87,050		$	87		$	1,706,357		$	(31,175	)	$	(132,961	)	$	1,542,308		$	644,657		$	2,186,965
Cumulative effect of change in accounting principle (Note 1)																										—			—			—			—			(389	)		(389	)		(11	)		(400	)
Acquisition of noncontrolling interest																										—			—			—			—			—			—			588			588
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership																										408			—			6,544			—			—			6,544			(6,544	)		0
Repurchase of Common Shares																										(1,219	)		(1	)		(22,385	)		—			—			(22,386	)		—			(22,386	)
Dividends/distributions declared ($0.29 per Common Share/OP Unit)																										—			—			—			—			(24,937	)		(24,937	)		(2,095	)		(27,032	)
Employee and trustee stock compensation, net																										27			—			578			—			—			578			7,973			8,551
Noncontrolling interest distributions																										—			—			—			—			—			—			(24,654	)		(24,654	)
Noncontrolling interest contributions																										—			—			—			—			—			—			36,736			36,736
Comprehensive (loss) income																										—			—			—			(54,698	)		1,966			(52,732	)		(53,536	)		(106,268	)
Reallocation of noncontrolling interests																										—			—			4,244			—			—			4,244			(4,244	)		0
Balance at September 30, 2020																										86,266		$	86		$	1,695,338		$	(85,873	)	$	(156,321	)	$	1,453,230		$	598,870		$	2,052,100

Balance at January 1, 2019		81,557		$	82		$	1,548,603		$	516		$	(89,696	)	$	1,459,505		$	622,442		$	2,081,947			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		250			—			4,230			—			—			4,230			(4,230	)		—			250			—			4,230			—			—			4,230			(4,230	)		0
Issuance of Common Shares		4,816			5			135,746			—			—			135,751			—			135,751			4,816			5			135,746			—			—			135,751			—			135,751
Dividends/distributions declared ($0.84 per Common Share/OP Unit)		—			—			—			—			(71,065	)		(71,065	)		(5,322	)		(76,387	)		—			—			—			—			(71,065	)		(71,065	)		(5,322	)		(76,387	)
Employee and trustee stock compensation, net		21			—			396			—			—			396			6,965			7,361			21			—			396			—			—			396			6,965			7,361
Noncontrolling interest distributions		—			—			—			—			—			—			(34,595	)		(34,595	)		—			—			—			—			—			—			(34,595	)		(34,595	)
Noncontrolling interest contributions		—			—			—			—			—			—			161,628			161,628			—			—			—			—			—			—			161,628			161,628
Comprehensive (loss) income		—			—			—			(44,654	)		31,735			(12,919	)		(33,263	)		(46,182	)		—			—			—			(44,654	)		31,735			(12,919	)		(33,263	)		(46,182	)
Reallocation of noncontrolling interests		—			—			3,684			—			—			3,684			(3,684	)		—			—			—			3,684			—			—			3,684			(3,684	)		0
Balance at September 30, 2019		86,644		$	87		$	1,692,659		$	(44,138	)	$	(129,026	)	$	1,519,582		$	709,941		$	2,229,523			86,644		$	87		$	1,692,659		$	(44,138	)	$	(129,026	)	$	1,519,582		$	709,941		$	2,229,523

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		111			—			1,957			—			—			1,957			(1,957	)		—
Repurchase of Common Shares		(2,294	)		(2	)		(55,055	)		—			—			(55,057	)		—			(55,057	)
Dividends/distributions declared ($0.81 per Common Share/OP Unit)		—			—			—			—			(66,286	)		(66,286	)		(5,126	)		(71,412	)
Employee and trustee stock compensation, net		25			—			408			—			—			408			7,924			8,332
Noncontrolling interest distributions		—			—			—			—			—			—			(24,654	)		(24,654	)
Noncontrolling interest contributions		—			—			—			—			—			—			46,990			46,990
Comprehensive income (loss)		—			—			—			10,653			24,309			34,962			(30,996	)		3,966
Reallocation of noncontrolling interests		—			—			2,581			—			—			2,581			(2,581	)		—
Balance at September 30, 2018		81,550		$	82		$	1,546,405		$	13,267		$	(73,990	)	$	1,485,764		$	638,040		$	2,123,804

The accompanying notes are an integral part of these consolidated financial statements.

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	6,539		$	(9,027	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net (loss) income							$	(33,422	)	$	6,539
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		92,807			86,755			101,627			92,807
Net unrealized holding gains on investments								(57,031	)		—
Distributions of operating income from unconsolidated affiliates		8,654			12,906			2,829			8,654
Equity in earnings and gains of unconsolidated affiliates		(7,129	)		(7,079	)		155			(7,129	)
Stock compensation expense		7,361			8,332			8,551			7,361
Amortization of financing costs		5,769			4,350			4,040			5,769
Impairment charge		1,721			—
Impairment charges								51,549			1,721
Gain on disposition of properties		(14,070	)		(5,140	)		(509	)		(14,070	)
Credit loss and straight-line rent reserves								39,882			—
Deferred gain on tax credits		(5,034	)		—			—			(5,034	)
Other, net		(7,804	)		(6,331	)		(2,923	)		(7,804	)
Changes in assets and liabilities:
Other liabilities		(6,071	)		(61	)		(7,736	)		(6,071	)
Prepaid expenses and other assets		10,271			(4,860	)		(1,435	)		10,271
Rents receivable		870			(7,452	)		(31,511	)		870
Accounts payable and accrued expenses		1,303			(5,210	)		7,015			1,303
Net cash provided by operating activities		95,187			67,183			81,081			95,187
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate		(256,647	)		(104,902	)		(21,208	)		(256,647	)
Development, construction and property improvement costs		(77,636	)		(66,238	)		(27,949	)		(77,636	)
Issuance of or advances on notes receivable		—			(3,002	)
(Issuance) redemption of notes receivable								(59,000	)		15,250
Proceeds from the disposition of properties, net		80,120			52,759			14,182			80,120
Investments in and advances to unconsolidated affiliates and other		(154,256	)		(3,481	)		(3,662	)		(154,256	)
Return of capital from unconsolidated affiliates and other		38,359			23,777			9,054			38,359
Proceeds from notes receivable		15,250			26,000
Return of deposits for properties under contract		1,060			1,750
Return (payment) of deposits for properties under contract								187			1,060
Payment of deferred leasing costs		(5,874	)		(2,981	)		(5,422	)		(5,874	)
Change in control of previously unconsolidated affiliate								950			—
Net cash used in investing activities		(359,624	)		(76,318	)		(92,868	)		(359,624	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes		(166,865	)		(69,050	)		(18,981	)		(166,865	)
Principal payments on unsecured debt		(352,195	)		(578,600	)		(123,750	)		(352,195	)
Proceeds received on mortgage and other notes		183,556			122,332			5,523			183,556
Proceeds from unsecured debt		444,575			578,800			215,554			444,575
Payments for repurchase of Common Shares		—			(55,057	)
Payments of finance lease obligations		(2,125	)		—			(903	)		(2,125	)
Proceeds from the sale of Common Stock, net		135,750			—
(Repurchase) proceeds from the sale of Common Shares								(22,386	)		135,750
Capital contributions from noncontrolling interests		161,628			46,990			36,736			161,628
Distributions to noncontrolling interests		(39,917	)		(29,731	)		(28,418	)		(39,917	)
Dividends paid to Common Shareholders		(69,641	)		(66,869	)		(50,182	)		(69,641	)
Deferred financing and other costs		(4,170	)		(3,316	)		(1,635	)		(4,170	)
Net cash provided by (used in) financing activities		290,596			(54,501	)
Increase (decrease) in cash and restricted cash		26,159			(63,636	)
Cash of $21,268 and $74,823 and restricted cash of $13,580 and $10,846, respectively, beginning of period		34,848			85,669
Cash of $48,140 and $9,525 and restricted cash of $12,867 and $12,508, respectively, end of period	$	61,007		$	22,033
Net cash provided by financing activities								11,558			290,596
(Decrease) increase in cash and restricted cash								(229	)		26,159
Cash of $15,845 and $21,268 and restricted cash of $14,165 and $13,580, respectively, beginning of period								30,010			34,848
Cash of $16,108 and $27,765 and restricted cash of $13,673 and $12,527, respectively, end of period							$	29,781		$	61,007

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

	Nine Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	2019			2018		2020			2019
Supplemental disclosure of cash flow information
Cash paid during the period for interest, net of capitalized interest of $8,430 and $4,366 respectively	$	53,586		$	45,251
Cash paid during the period for interest, net of capitalized interest of $6,270 and $8,430 respectively						$	40,470		$	53,586
Cash paid for income taxes, net of refunds	$	730		$	1,227	$	282		$	730

Supplemental disclosure of non-cash investing and financing activities
Assumption of accounts payable and accrued expenses through acquisition of real estate	$	3,697		$	1,014	$	116		$	3,697
Right-of-use assets, finance leases obtained in exchange for finance lease liabilities	$	16,349		$	—
Right-of-use assets, finance leases (terminated) obtained in exchange for finance lease liabilities						$	(70,427	)	$	16,349
Right-of-use assets, finance leases obtained in exchange for assets under capital lease	$	76,965		$	—	$	—		$	76,965
Right-of-use assets, operating leases obtained in exchange for operating lease liabilities	$	57,165		$	—	$	33,189		$	57,165
Capital lease obligation exchanged for finance lease liability	$	71,111		$	—	$	—		$	71,111
Other liabilities exchanged for operating lease liabilities	$	946		$	—	$	—		$	946
Assumption of debt through investments in unconsolidated affiliates	$	4,688		$	—	$	—		$	4,688
Acquisition of undivided interest in a property through conversion of notes receivable	$	—		$	22,201
Debt exchanged for deferred gain on tax credits	$	(5,262	)	$	—	$	—		$	(5,262	)
Other assets exchanged for deferred gain on tax credits	$	228		$	—	$	—		$	228
Right of use assets, operating leases obtained (terminated) in exchange for finance lease liabilities						$	(1,432	)	$	—

Change in control of previously unconsolidated (consolidated) investment
Increase in real estate						$	(135,190	)	$	—
Decrease in investments in and advances to unconsolidated affiliates							96,816			—
Change in other assets and liabilities							1,238			—
Acquisition of noncontrolling interest asset							(588	)
Decrease in notes receivable							38,674			—
Increase in cash and restricted cash upon change of control						$	950		$	—

The accompanying notes are an integral part of these consolidated financial statements.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization

Acadia Realty Trust (collectively with its subsidiaries, 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 September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company controlled approximately ~~94%~~95% 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 (Note 13). Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a 1-for-one basis for common shares of beneficial interest of the Company (“Common Shares”). This structure is referred to as an umbrella partnership REIT or “UPREIT.”

As of September 30, ~~2019,~~2020, the Company has ownership interests in ~~125~~131 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 5756 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” and, collectively with Fund II, Fund III and Fund IV, the “Funds”). The ~~182~~187 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, invested in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I,” which was liquidated in 2018) and Acadia Mervyn Investors II, LLC (“Mervyns 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 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 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 20% to the Operating Partnership (“Promote”) and 80% to the partners or members (including the Operating Partnership). All transactions between the Funds and the Operating Partnership have been eliminated in consolidation.

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 September 30, 2019		Unfunded Commitment		Equity Interest Held By Operating Partnership^(a)			Preferred Return			Total Distributions as of September 30, 2019 ^(b)		Formation Date	Operating Partnership Share of Capital			Capital Called as of September 30, 2020 ^(b)		Unfunded Commitment^{(b, c)}		Equity Interest Held By Operating Partnership^(a)			Preferred Return			Total Distributions as of September 30, 2020 ^{(b, c)}
Fund II and Mervyns II ^(c)	6/2004		28.33	%	$	347.1	$	15.0		28.33	%		8	%	$	146.6	6/2004		28.33	%	$	369.6	$	15.7		28.33	%		8	%	$	169.8
Fund III	5/2007		24.54	%		436.4		13.6		24.54	%		6	%		568.8	5/2007		24.54	%		440.3		9.7		24.54	%		6	%		568.8
Fund IV	5/2012		23.12	%		438.1		91.9		23.12	%		6	%		172.1	5/2012		23.12	%		457.1		72.9		23.12	%		6	%		193.1
Fund V	8/2016		20.10	%		258.6		261.4		20.10	%		6	%		2.0	8/2016		20.10	%		217.1		302.9		20.10	%		6	%		20.9

(a)	Amount represents the current economic ownership at September 30, ~~2019,~~2020, which could differ from the stated legal ownership based upon the cumulative preferred returns of the respective Fund.

(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~~was re-contributed to Fund II ~~until~~during April ~~2021.~~2020. In June 2020, a distribution of $7.5 million was made from Mervyns II to Fund II which was deemed a re-contribution.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Basis of Presentation

Segments

At September 30, ~~2019,~~2020, the Company had 3 reportable operating segments: Core Portfolio, Funds and Structured Financing. The Company’s chief operating decision maker may review operational and financial data on a property-level basis and does not differentiate properties on a geographical basis for purposes of allocating resources or capital.

Principles of Consolidation

The interim 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”) Accounting Standards Codification (“ASC”) Topic 810 “Consolidation” (“ASC Topic 810”). 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.~~income or loss.

The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. The information furnished in the accompanying consolidated financial statements reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the aforementioned consolidated financial statements for the interim periods. Such adjustments consisted of normal recurring ~~items.~~items, with the exception of adjustments due to the adoption of the new credit loss standard and impairment.

These interim consolidated financial statements should be read in conjunction with the Company’s ~~2018~~2019 Annual Report on Form 10-K, as filed with the SEC on February ~~19, 2019.~~21, 2020.

Use of Estimates

GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the interim 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 and assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

~~Reclassifications~~

~~Certain prior period amounts with regard to gains on dispositions of properties and credit losses have been reclassified to conform to the current period presentation.~~

Recently Adopted Accounting Pronouncements

~~Lease Accounting~~Credit Losses

In ~~February~~June 2016, the FASB issued ASU ~~No. 2016-02~~2016-13, ~~, Leases (Topic 842)~~Financial Instruments — Credit Losses. ASU ~~2016-02 outlines~~2016-13 introduced a new model for ~~accounting~~estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modified the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments — Credit Losses (Topic 326) which provided relief to certain entities adopting ASU 2016-13. The amendments accomplish those objectives by ~~lessees, whereby their rights~~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, therefore, the Company did not elect to apply this option.

ASU 2016-13, and ~~obligations under substantially all leases, existing and new, will be capitalized and recorded on~~its related ASUs have been adopted by the ~~balance sheet. For lessors, however, the accounting remains largely unchanged from the former model, with the distinction between operating, sales-type and direct-financing leases~~Company effective January 1, 2020. Retrospective adjustments were applied through a cumulative-effect adjustment to retained ~~but updated to align with certain changes to the lessee model and the new revenue recognition standard, ASC Topic 606,~~ ~~Revenue from Contracts with Customers~~ ~~(“Topic 606”). To ease the transition, the new lease accounting guidance permits companies to utilize certain practical expedients in their~~earnings. Upon implementation of ASU 2016-13 and other related guidance, the Company recorded loan loss allowances related to its Structured Financing portfolio (Note 3) of $0.4 million with a cumulative effect adjustment to distributions in excess of accumulated earnings. The Company recorded a credit loss allowance of $0.5 million during the nine months ended September 30, 2020. Effective January 1, 2020, the Company has implemented a new ~~standard:~~

•methodology for computing credit losses for its Structured

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;~~

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

•

~~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 No. 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~~.

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).

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 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 forFinancing portfolio 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 adopted Topic 842 effective January 1, 2019 utilizing the new transition method~~ASC 326 (as further described in ASU 2018-11 and has availed itself of all the available practical expedients described above except it did 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,~~Note 3), however, the Company has ~~more than 1,000 leases primarily with retail tenants and~~not made any changes to ~~a lesser extent with office and residential tenants. A significant majority of~~ its ~~leases are on a triple-net basis. The impact of adoption of ASU 2016-02~~accounting policies for ~~the Company as lessor was as follows:~~

•

~~The Company has elected the lessor practical expedient to not separate common area maintenance~~accounting for credit losses for its receivables arising 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, will be 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 will not be adjusted.

•

Due to its election of available practical expedients, the Company expects that post-adoption substantially all existing leases, and new leases compared to similar existing leases, will have no change in the timing of revenue recognition.

•

~~The Company’s~~ internal leasing costs will be 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 will no longer capitalize internal

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~leasing costs that were previously capitalized (the Company capitalized $1.8~~ ~~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 expects that its 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 makes 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 $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~~):

•

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 did not record any cumulative effect of change in accounting principle upon the adoption of ASC Topic 842 as lessor or lessee. Consistent with the transition guidance under ASU 2018-11, all prior period disclosures remain in accordance with ASC Topic 840.

~~Other Accounting Topics~~

In ~~February~~November 2018, the FASB issued ASU ~~No. 2018-02,~~2018-19, ~~Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~Codification Improvements to Topic 326, Financial Instruments — Credit Losses. ~~These amendments provide financial statement preparers~~This ASU modifies ASU 2016-13. 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 ~~an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which~~Topic 842, Leases. ASU 2018-19 was adopted by the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recorded. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods therein. The Company ~~adopted this guidance~~ effective January 1, 2020. The Company already accounted for its lease receivables utilizing the guidance of ASC 842 and did not make any adjustments related to the implementation of ASU 2018-19.

Other Guidance

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which ~~had~~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 above; 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 2019-04 were adopted by the Company effective January 1, 2020 with no ~~effect~~material impact on the Company’s consolidated financial statements.

In ~~July~~August 2018, the FASB issued ASU ~~No. 2018-09,~~2018-13, Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. This guidance was adopted on January 1, 2020 and did not have a material impact on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. 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), 718-740 (Compensation - Stock Compensation - Income Taxes), 805-740 (Business Combinations - Income Taxes), 815-10 (Derivatives and Hedging - Overall), and 820-10 (Fair Value Measurement - Overall). Some of theThe amendments in ~~ASU 2018-09 do not require transition guidance and~~this Update represent changes to clarify or improve the Codification, 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~~adopted effective January 1, ~~2019 or earlier, there was no~~2020 and did not have a material effect on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Effective in the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation and does not have a material impact on the consolidated financial statements.

Recently Issued Accounting Pronouncements

In ~~April~~December 2019, the FASB issued ASU ~~No. 2019-04~~ 2019-12,~~Codification Improvements~~Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes.The amendments in this Updateprovideguidance for interim period and intra period tax accounting; provide tax accounting guidance for foreign subsidiaries; require that an entity recognize a franchise (or similar) tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; as well as other changes 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~~tax accounting. This ASU is effective for fiscal years beginning after December 15, 2020. As a REIT, the Company ~~has~~usually does not ~~yet adopted;~~have significant income taxes. Accordingly, the implementation of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01 Investments—Equity securities (Topic 321), Investments—Equity Method and ~~2017-12~~ Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)~~: Targeted Improvements to Accounting for Hedging Activities,~~ ~~which~~—Clarifying the ~~Company early adopted effective January 1, 2018.~~Interactions Between Topic 321, Topic 323, and Topic 815. The ~~updates related~~amendments in this Update affect all entities that apply the guidance in Topics 321, 323, and 815 and (i) elect to apply the measurement alternative or (ii) enter into a forward contract or purchase an option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting. This ASU ~~2016-13 have the same transition as ASU 2016-13 and are~~is effective for ~~periods~~fiscal years beginning after December 15, ~~2019,~~2020. Currently, the Company does not apply the measurement alternative and does not have any such forward contracts or purchase options. As a result, the implementation of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.

On April 8, 2020, the FASB issued a Q&A allowing for reporting entities to make an accounting policy election to account for lease concessions related to the effects of COVID-19 consistent with ~~adoption permitted after~~how those concessions would be accounted for under Topic 842, which is as though the ~~issuance~~enforceable rights and obligations for those concessions existed regardless of ~~ASU 2019-04. The~~whether those enforceable rights and obligations for the concessions explicitly exist in the contract.This election is available for concessions that result in the total cash flows required by the modified contract being substantially the same or less than total cash flows required by the original contract. Effective April 1, 2020, the Company has made the

1413

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~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.~~accounting policy election noted above. The Company ~~is currently evaluating~~entered into concession agreements both as lessor and lessee during the ~~impact of this new standard on its consolidated financial statements.~~nine months ended September 30, 2020 (Note 11). The Company expects that it will grant further concessions during subsequent periods.

In ~~May 2019,~~August 2020, the FASB issued ASU ~~No. 2019-05~~ 2020-06—~~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~~Debt with conversion and other options (Subtopic 470-20) and derivatives and hedging—contracts in entity's own equity (Subtopic 815-40)—accounting for convertible instruments and contracts in 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 is currently evaluating the impact of this new standard on its consolidated financial statements.

~~In November 2018, the FASB issued ASU No. 2018-19~~ ~~Codification Improvements to Topic 326, Financial Instruments — Credit Losses~~entity's own equity. This ASU ~~modifies ASU 2016-13 (discussed below). The amendment clarifies that receivables arising from operating leases are not within~~simplifies 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. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments — Credit Losses. ASU 2016-13 introduces a new model for estimating credit losses~~accounting for certain ~~types of~~ financial instruments with characteristics of liabilities and equity, including ~~loans receivable, held-to-maturity debt securities,~~convertible instruments and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regardingcontracts on an entity’s ~~assumptions, models,~~own equity. The ASU simplifies accounting for convertible instruments and ~~methods for estimating~~simplifies the ~~allowance for losses.~~diluted earnings per share (EPS) calculation in certain areas. This ASU 2016-13 is effective for periods beginning after December 15, 2019, with adoption permitted for fiscal years beginning after December 15, 2018. Retrospective adjustments shall be applied through a cumulative-effect adjustment to retained earnings. The Company is currently evaluating the impact of this new standard on its consolidated 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 but not earlier than~~2021. Currently, the ~~adoption of Topic 606. The~~ Company does not ~~believe that~~have any such debt instruments and, as a result, the implementation of this guidance ~~will have a material effect on its consolidated financial statements as it has not historically issued share-based payments in exchange for goods or services to be consumed within its operations.~~

~~In August 2018, the FASB issued ASU No. 2018-13,~~ ~~Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement~~ which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. This guidance is effective for public companies in fiscal years beginning after December 15, 2019 with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

~~In August 2018, the FASB issued ASU No. 2018-15~~ ~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~ to provide guidance on implementation costs incurred in a cloud computing arrangement that is a service contract. The ASU aligns the accounting for such costs with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of such arrangements that are service contracts and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized. This ASU, which is effective for fiscal years beginning after December 15, 2019, is not expected to have a material ~~impact~~effect on the Company’s consolidated financial ~~statements as~~statements.

During October 2020, the SEC issued new rules modernizing certain Regulation S-K disclosure requirements. The final rule is intended to improve the readability of disclosures, reduce repetition, and eliminate immaterial information, thereby simplifying compliance for registrants and making disclosures more meaningful for investors. These changes will be effective for all filings on or after November 7, 2020. The Company has ~~not incurred any significant costs associated with cloud computing arrangements.~~

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~made minor disclosure changes in this form 10-Q and will make other changes to the "Business" and "Risk Factors" sections of the annual report on Form 10-K for 2020.

2. Real Estate

The Company’s consolidated real estate is comprised of the following (in thousands):

	September 30, 2019			December 31, 2018			September 30, 2020			December 31, 2019
Land	$	733,679		$	710,469		$	771,508		$	756,297
Buildings and improvements		2,669,992			2,594,828			2,822,818			2,740,479
Tenant improvements		170,214			151,154			183,361			173,686
Construction in progress		38,458			44,092			7,605			13,617
Properties under capital lease (Note 11)		—			76,965
Right-of-use assets - finance leases (Note 11)		93,796			—			25,086			102,055
Right-of-use assets - operating leases (Note 11)		55,717			—
Right-of-use assets - operating leases (Note 11), net								89,615			60,006
Total		3,761,856			3,577,508			3,899,993			3,846,140
Less: Accumulated depreciation and amortization		(473,479	)		(416,657	)		(552,562	)		(490,227	)
Operating real estate, net		3,288,377			3,160,851			3,347,431			3,355,913
Real estate under development, at cost		250,278			120,297
Real estate under development								268,298			253,402
Net investments in real estate	$	3,538,655		$	3,281,148		$	3,615,729		$	3,609,315

1614

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Acquisitions and Conversions

During the nine months ended September 30, ~~2019~~2020 and the year ended December 31, ~~2018,~~2019, 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, 47, 51 and 53 Greene Street - New York, NY ^(a)

100%

Mar 15, 2019
Mar 27, 2019 May 29, 2019 July 30, 2019

$
74,638

849 and 912 W. Armitage - Chicago, IL

100%

Sept 11, 2019

7,802

Subtotal Core

82,440

Fund V

Palm Coast Landing - Palm Coast, FL

100%

May 6, 2019

36,644

Lincoln Commons - Lincoln, RI

100%

June 21, 2019

54,299

Landstown Commons - Virginia Beach, VA

100%

Aug 2, 2019

86,961

Subtotal Fund V

177,904

Total 2019 Acquisitions

$
260,344

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

~~(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. The acquisitions of the remaining three properties are expected to be finalized through early 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.~~

Property and Location	Percent Acquired	Date of Acquisition	Purchase Price
2020 Acquisitions and Conversions
Core
Soho Acquisitions - 37 Greene Street - New York, NY	100%	Jan 9, 2020	$	15,689
917 W. Armitage - Chicago, IL	100%	Feb 13, 2020		3,515
Town Center - Wilmington, DE (Conversion) (Note 4)	100%	Apr 1, 2020		138,939
Subtotal Core				158,143

Fund IV
230-240 W. Broughton Street - Savannah, GA	100%	May 26, 2020		13,219
102 E. Broughton Street - Savannah, GA	100%	May 26, 2020		790
Subtotal Fund IV				14,009
Total 2020 Acquisitions and Conversions			$	172,152

2019 Acquisitions
Core
Soho Acquisitions - 41, 45, 47, 51 and 53 Greene Street - New York, NY	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

The ~~2019~~2020 Acquisitions and ~~2018~~Conversions and 2019 Acquisitions ~~and Conversions~~ were considered asset acquisitions based on accounting guidance effective as of January 1, 2018. For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~the year ended December 31, 2019, the Company capitalized ~~$1.4~~$1.3 million and ~~$0.2~~$2.6 million, respectively, of acquisition costs. NaN debt was assumed in any of the 2020 Acquisitions and Conversions or 2019 ~~Acquisitions or 2018 Acquisitions or Conversions.~~Acquisitions.

1715

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Purchase Price Allocations

The purchase prices for the ~~2019~~2020 Acquisitions and ~~the 2018~~Conversions and 2019 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 nine months ended September 30, ~~2019~~2020 and the year ended December 31, ~~2018~~2019 (in thousands):

	Nine Months Ended September 30, 2019			Year Ended December 31, 2018			Nine Months Ended September 30, 2020			Year Ended December 31, 2019
Net Assets Acquired
Land	$	54,171		$	38,086		$	25,440		$	78,263
Buildings and improvements		183,829			129,586			123,459			221,185
Net working capital								4,761			0
Acquisition-related intangible assets (Note 6)		31,883			26,693			23,061			34,972
Right-of-use asset - Operating lease (Note 11)								234			0
Acquisition-related intangible liabilities (Note 6)		(9,539	)		(7,902	)		(4,569	)		(10,081	)
Lease liability - Operating lease (Note 11)								(234	)		0
Net assets acquired	$	260,344		$	186,463		$	172,152		$	324,339

Consideration
Cash	$	256,647		$	147,985		$	21,208		$	319,673
Conversion of note receivable								38,674			0
Conversion of accrued interest								1,995			0
Liabilities assumed		3,697			2,597			116			4,666
Existing interest in previously unconsolidated investment		—			35,881			109,571			0
Acquisition of noncontrolling interests								588			0
Total consideration	$	260,344		$	186,463		$	172,152		$	324,339

Dispositions

During the nine months ended September 30, ~~2019~~2020 and the year ended December 31, ~~2018,~~2019, the Company disposed of the following consolidated properties (in thousands):

Property and Location	Owner	Date Sold	Sale Price		Gain (Loss) on Sale			Owner	Date Sold	Sale Price		Gain (Loss) on Sale
2020 Dispositions
Colonie Plaza - Albany, NY								Fund IV	Apr 13, 2020	$	15,250	$	485
Airport Mall (Parcel) - Bangor, ME								Fund IV	Sep 10, 2020		400		24
Total 2020 Dispositions										$	15,650	$	509

2019 Dispositions
3104 M Street - Washington, DC (Note 4)	Fund III	Jan 24, 2019	$	10,500	$	2,014		Fund III	Jan 24, 2019	$	10,500	$	2,014
210 Bowery - 2 Residential Condos - New York, NY	Fund IV	May 17, 2019, Sept 23, 2019		5,900		(242	)
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	July 24, 2019		7,800		2,012		Fund IV	Jul 24, 2019		7,800		2,075
3780-3858 Nostrand Avenue - New York, NY	Fund III	Aug 22, 2019		27,650		3,079		Fund III	Aug 22, 2019		27,650		2,562
938 W North Avenue - Chicago, IL	Fund IV	Sept 27, 2019		32,000		7,207		Fund IV	Sep 27, 2019		32,000		7,144
Pacesetter Park - Pomona, NY								Core	Oct 28, 2019		22,550		16,771
Total 2019 Dispositions			$	83,850	$	14,070				$	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

1816

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The aggregate rental revenue, expenses and pre-tax income reported within continuing operations for the aforementioned consolidated properties that were sold during the nine months ended September 30, ~~2019~~2020 and year ended December 31, ~~2018~~2019 were as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenues	$	1,071		$	2,919		$	5,652		$	7,542		$	—		$	2,099		$	721		$	8,972
Expenses		(1,322	)		(2,192	)		(4,595	)		(6,368	)		(44	)		(2,237	)		(982	)		(7,738	)
Gain on disposition of properties		12,056			5,107			14,070			5,140			24			12,056			509			14,070
Net income attributable to noncontrolling interests		(8,675	)		(4,089	)		(11,045	)		(4,155	)		16			(8,943	)		(169	)		(11,184	)
Net income attributable to Acadia	$	3,130		$	1,745		$	4,082		$	2,159		$	(4	)	$	2,975		$	79		$	4,120

~~Properties Held for Sale~~

At June 30, 2019, the Company had 1 property in Fund IV classified as held-for-sale, JFK Plaza, with total assets of $6.3 million. The property, which was sold during the third quarter of 2019, had insignificant net income for each of the nine months ended September 30, 2019 and 2018.

At September 30, 2019, the Company had 1 property in Fund IV classified as held-for-sale, a residential condo at 210 Bowery, with total assets of $2.9 million. The property had an insignificant loss for each of the nine months ended September 30, 2019 and 2018.

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				Nine Months Ended 2019						September 30, 2019				January 1, 2020				Nine Months Ended September 30, 2020						September 30, 2020
	Number of Properties		Carrying Value		Transfers In		Capitalized Costs		Transfers Out		Number of Properties		Carrying Value		Number of Properties		Carrying Value		Transfers In		Capitalized Costs		Transfers Out		Number of Properties		Carrying Value
Core		1	$	7,759	$	57,342	$	9,663	$	9,819		1	$	64,945		0	$	60,863	$	0	$	3,083	$	0		0	$	63,946
Fund II		—		7,462		—		1,626		—		—		9,088		0		10,703		33,057		2,631		6,470		0		39,921
Fund III		1		21,242		12,313		1,969		—		1		35,524		1		36,240		0		1,071		14,045		1		23,266
Fund IV(a)		1		83,834		47,166		9,721		—		2		140,721		2		145,596		0		4,091		8,522		2		141,165
Total		3	$	120,297	$	116,821	$	22,979	$	9,819		4	$	250,278		3	$	253,402	$	33,057	$	10,876	$	29,037		3	$	268,298

(a)

Transfers out include an impairment charge of $6.7 million on 146 Geary Street, a Fund IV project (Note 8).

	January 1, 2019				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		0	$	60,863
Fund II		0		7,462		0		3,241		0		0		10,703
Fund III		1		21,242		12,313		2,685		0		1		36,240
Fund IV		1		83,834		47,689		14,073		0		2		145,596
Total		3	$	120,297	$	117,344	$	25,580	$	9,819		3	$	253,402

The number of properties in the ~~table~~tables above refers to projects comprising the entire ~~property;~~property under development; however, certain projects represent a portion of a property. Fund II amounts relate to the City Point Phase III project.

During the nine months ended September 30, ~~2019,~~2020, the ~~Company placed the following projects into development:~~Company:

•

placed 1 Fund III project, Cortlandt Crossing, into service

•

placed a portion of Fund II’s City Point Phase II into development

During the year ended December 31, 2019, the Company placed 1238 Wisconsin, an unconsolidated Core property (Note 4) and the following consolidated projects into development:

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

•

a portion of City Center (Core)

•

a portion of Cortlandt Crossing (Fund III)

•

~~its 1238 Wisconsin Avenue property (Core,~~ ~~Note 11~~)

•

a portion of 110 University Place (Fund IV, Note 11)

•

its 146 Geary Street property (Fund IV)

During the ~~nine months~~year ended ~~September 30,~~December 31, 2019, the Company placed 1 Core development project, 56 E. Walton, into service. ~~Fund II amounts relate to the City Point Phase III project.~~

During the year ended December 31, 2018, the Company placed 1 Core development project into service. In addition to the consolidated projects noted above, the Company had 1 unconsolidated project in development at December 31, 2017, which it placed into service during the year ended December 31, 2018.

Construction in progress pertains to construction activity at the Company’s operating properties that are in service and continue to operate during the construction period.

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

3. Notes Receivable, Net

The Company’s notes receivable, net ~~were~~are generally collateralized either by the underlying properties or the ~~borrower’s~~borrowers’ ownership ~~interest~~interests in the entities that own the properties, and were as follows (dollars in thousands):

	September 30,		December 31,		September 30, 2019				September 30,			December 31,		September 30, 2020
Description	2019		2018		Number		Maturity Date	Interest Rate	2020			2019		Number		Maturity Date	Interest Rate
Core Portfolio	$	56,475	$	56,475		2	Oct 2019 - Apr 2020	6.0% - 8.1%
Core Portfolio ^{(a, b)}									$	96,794		$	76,467		6	Apr 2020 - Dec 2027	4.7% - 9%
Fund II		33,026		32,582		1	Dec 2020	1.75%		33,608			33,170		1	Dec 2020	1.75%
Fund III		5,306		5,306		1	Jul 2020	18.0%		5,306			5,306		1	Jul 2020	18.0%
Fund IV		—		15,250		—	Feb 2021	15.3%
	$	94,807	$	109,613		4
Total notes receivable										135,708			114,943
Credit loss reserves										(910	)		—
Notes receivable, net									$	134,798		$	114,943		8

(a)

Includes 2 notes receivable from OP Unit holders, with balances totaling $6.5 million at September 30, 2020 and December 31, 2019.

(b)

Balance at December 31, 2019 includes $38.7 million for the Brandywine Note Receivable, which was collateralized by the remaining 24.78% undivided interest in Town Center (Note 4).

During the nine months ended September 30, ~~2019,~~2020, the Company:

•

exchanged its Brandywine Note Receivable of $38.7 million plus accrued interest of $2.0 million for the remaining 24.78% undivided interest in Town Center (Note 4);

•

recorded credit loss reserves of $0.4 million upon the adoption of ASC 326 (Note 1);

•

increased the balance of a Fund II note receivable by the interest accrued of $0.4 million;

•

made a Core loan for $54.0 million with an interest rate of 9% structured as a redeemable preferred equity investment in a property at 850 Third Avenue in Brooklyn, New York;

•

issued a new Core note for $5.0 million with an interest rate of 8% collateralized by our partner’s 50% share of the LUF Portfolio (Note 4) in Washington, D.C.; and

•

recorded additional credit loss reserves of $0.5 million related to new transactions and recent market volatility.

One Core note aggregating $21.6 million including accrued interest (exclusive of default interest and other amounts due on the loan) was in default at September 30, 2020and December 31, 2019. On April 1, 2020, the loan matured and was not repaid. The Company expects to take appropriate actions to recover the amounts due under the loan, and has issued a reservation of rights letter to the borrowers and guarantor, reserving all of its rights and remedies under the applicable loan documents and otherwise. In addition, one Fund III note receivable aggregating $10.0 million, including accrued interest (exclusive of default interest and other amounts due on the loan) matured on July 1, 2020 and was not repaid. The Company is evaluating its rights and remedies in light of the default. The Company believes that the collateral and/or personal assets of the obligors on each loan is sufficient to cover all indebtedness to which it is owed on the loans.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

During the year ended December 31, 2019, the Company:

•

redeemed its ~~$15.25~~$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 ~~September 30, 2019;~~

•

~~extended the maturity for Brandywine’s note receivable to October~~December 31, ~~2019;~~2019 and was guaranteed by a third party; 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.

~~During the year ended December 31, 2018, the Company:~~

•

~~exchanged $22.0 million of a Core note receivable plus accrued interest thereon of $0.3 million for an additional undivided interest in the Town Center property (Note 4~~);

•

~~received full payment on $26.0 million of Core notes receivable plus accrued interest of $0.2 million;~~

•

~~funded an additional $2.8 million to its existing $15.0 million Core note receivable and entered into an agreement to extend the maturity to April 1, 2020;~~

•

~~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 of $0.8 million.~~

The Company monitors the credit quality of its notes receivable on ~~an ongoing~~a quarterly 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 (Note 12).

20The Company’s estimated reserve for credit losses related to its Structured Financing segment has been computed for its amortized cost basis in the portfolio, including accrued interest (Note 5), factoring historical loss experience in the United Sates for similar loans, as adjusted for current conditions, as well as the Company’s expectations related to future economic conditions. Due to the lack of comparability across the Structured Financing portfolio, each loan was evaluated separately. As a result, for non-collateral dependent loans with a total amortized cost of $92.5 million, inclusive of accrued interest of $8.7 million, credit loss reserves have been recorded aggregating $0.9 million at September 30, 2020. For certain loans in this portfolio, aggregating $55.7 million, inclusive of accrued interest of $3.8 million, at September 30, 2020, there has been 0 credit loss reserve established because (i) these loans are collateral-dependent loans, which due to their settlement terms are not expected to be settled in cash but rather by the Company’s possession of the real estate collateral; and (ii) at September 30, 2020, the Company believes that the collateral for these three loans was sufficient to cover its investment.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

4. Investments in and Advances to Unconsolidated Affiliates

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	September 30,			December 31,				Ownership Interest	September 30,		December 31,
Portfolio	Property	September 30, 2019	2019			2018			Property	September 30, 2020	2020		2019
Core:
									840 N. Michigan^(a)	88.43%	$	56,725	$	61,260
	840 N. Michigan^(a)	88.43%	$	63,925		$	65,013		Renaissance Portfolio	20%		29,729		31,815
	Renaissance Portfolio	20%		32,458			32,458		Gotham Plaza	49%		28,975		29,466
	Gotham Plaza	49%		29,463			29,550		Town Center^{(a, b)}	100%		—		97,674
	Town Center^{(a, b)}	75.22%		98,243			99,758		Georgetown Portfolio	50%		4,529		4,498
	Georgetown Portfolio	50%		4,738			4,653		1238 Wisconsin Avenue	80%		2,320		1,194
				228,827			231,432					122,278		225,907

Mervyns I & II:	KLA/Mervyn's, LLC ^(c)	10.5%		—			—		KLA/ABS ^(c)	36.7%		57,031		402

Fund III:
	Fund III Other Portfolio	90%		17			21		Fund III Other Portfolio	94.23%		17		17
	Self Storage Management ^(d)	95%		206			206		Self Storage Management ^(d)	95%		207		207
				223			227					224		224
Fund IV:
	Broughton Street Portfolio ^(e)	50%		12,650			3,236		Broughton Street Portfolio ^(e)	100%		—		12,702
	Fund IV Other Portfolio	90%		14,353			14,540		Fund IV Other Portfolio	98.57%		13,300		14,733
	650 Bald Hill Road	90%		12,504			12,880		650 Bald Hill Road	90%		13,672		12,450
				39,507			30,656					26,972		39,885

Fund V:	Family Center at Riverdale ^(a)	89.42%		13,818			—		Family Center at Riverdale ^(a)	89.42%		12,124		13,329
	Tri-City Plaza	90%		36,106			—		Tri-City Plaza	90%		7,395		10,250
	Washington REIT Portfolio	90%		52,463			—		Frederick County Acquisitions	90%		12,117		15,070
				102,387			—					31,636		38,649

Various:	Due (to) from Related Parties			(827	)		(461	)	Due from (to) Related Parties			243		(1,902	)
	Other ^(f)			2,361			556		Other ^(f)			2,030		1,932
	Investments in and advances to unconsolidated affiliates		$	372,478		$	262,410		Investments in and advances to unconsolidated affiliates		$	240,414	$	305,097

Core:
	Crossroads ^(g)	49%	$	15,353		$	15,623		Crossroads ^(g)	49%	$	15,462	$	15,362
	Distributions in excess of income from, and investments in, unconsolidated affiliates		$	15,353		$	15,623		Distributions in excess of income from, and investments in, unconsolidated affiliates		$	15,462	$	15,362

(a)

Represents a tenancy-in-common interest.

(b)

During November 2017, ~~and~~ March 2018 and April 2020, as discussed below, the Company gradually increased its ownership into 100% and consolidated Town Center.

(c)

~~Distributions, discussed below, have exceeded the Company’s non-recourse investment, therefore the carrying~~Includes an interest in Albertsons (at fair value ~~is 0.~~at September 30, 2020 and at cost at December 31, 2019, as described below) (Note 8).

(d)

Represents a variable interest entity for which the Company was determined not to be the primary beneficiary.

(e)

~~The Company is entitled to a 15% return on its cumulative capital contribution which was $5.9 million and $3.0 million at September 30, 2019 and December 31, 2018, respectively. In addition,~~During May 2020, as discussed below, the Company ~~is entitled~~increased its ownership in Broughton Street Portfolio to ~~a 9% preferred return on a portion of its equity, which was $9.4 million~~100% and ~~$2.8 million at September 30, 2019 and December 31, 2018, respectively.~~consolidated the underlying properties.

(f)

Includes cost-method method investments in ~~Albertson’s (Note 8~~), Storage Post, Fifth Wall and other investments.

(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.

2120

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Core Portfolio

~~2019~~ Acquisition of Unconsolidated Investments

On January 24, 2019, the Renaissance Portfolio, in which the Company owns a 20% noncontrolling interest, acquired a 7,300 ~~square foot~~square-foot property, in Fund III’s 3104 M Street property located in Washington, D.C., for $10.7 million (Note 2) less the assumption of the outstanding mortgage of $4.7 million.

On August 8, 2019, the Company invested $1.8 million in Fifth Wall Ventures Retail Fund, L.P. During the nine months ended September 30, 2020, the Company invested another $0.2 million. The Company’s total commitment is $5.0 million. The Company accounts for its interest ~~using the~~at cost ~~method of accounting~~less impairment given its ownership is ~~approximately~~less than 5 percent and the Company has virtually no influence over the partnership’s operating and financial policies. At September 30, 2020, the Company’s investment was $2.0 million.

On May 2, 2019, the Company acquired a ground lease interest at 1238 Wisconsin Avenue in Washington, D.C. (“1238 Wisconsin”). Prior to the fourth quarter of 2019, the Company had a controlling interest, and therefore consolidated the property within the Company’s financial statements. During December 2019, the Company entered into an operating agreement in order to admit a co-investor and property manager, who was also appointed the development manager under a separate agreement. As a result of these transactions and the significant participation rights of the co-investor, the Company de-consolidated 1238 Wisconsin and accounted for its interest under the equity method of accounting effective October 1, 2019 as it does not ~~have~~control but exercises significant influence over the investment. NaN gain or loss was recognized as the Company’s investment approximated fair value at the time of de-consolidation.

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 in which the Company has a 22.22% interest and which is consolidated by the Company.

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”) (Note 3) plus accrued interest of $0.3 million for one of the partner’s 38.89% tenancy-in-common interests in Market Square. The Company already had a 22.22% interest in Market Square and continued to apply the equity method of accounting for its aggregate 61.11% noncontrolling interest in Market Square and its 22.22% interest in Town Center through November 16, 2017. The incremental investment in Market Square was recorded at $16.3 million and the excess of this amount over the venture’s book value associated with this interest, or $9.8 million, was being amortized over the remaining depreciable lives of the venture’s assets through November 16, 2017. On November 16, 2017, the Company exchanged an additional $16.0 million of Brandywine Notes Receivable plus accrued interest of $0.6 million for the remaining 38.89% interest in Market Square, thereby obtaining a 100% controlling interest in the property. The exchange was deemed to be a business combination and as a result, the property was consolidated and a gain on change of control of $5.6 million was recorded (Note 2).

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, is being amortized over the remaining depreciable lives of the venture’s assets. The Company previously had a 22.22% interest in Town Center which then became 61.11% following the November 2017 transaction.

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 depreciable lives of the venture’s assets. The Company ~~continues~~continued to apply the equity method of accounting for its aggregate 75.22% noncontrolling interest in Town Center after the March 2018 transaction.

~~At September 30, 2019, $38.7 million of the Brandywine Note Receivable remains outstanding (Note 3), which is collateralized by the remaining 24.78% undivided interest in Town Center.~~

2221

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On April 1, 2020, the Company exchanged the remaining $38.7 million of Brandywine Notes Receivable (Note 3) plus accrued interest of $2.0 million for the remaining 24.78% interest in Town Center, thereby obtaining a 100% controlling interest in the property. The property was then consolidated (Note 2) and the Company recorded the remaining interest in the property investment at cost.

Fund Investments

~~2019~~ Acquisitions of Unconsolidated Investments

On March 19, 2019, Fund V obtained an 99.35% interest in a joint venture which in turn obtained a 90% undivided interest in the property and invested in a 428,000 square-foot property located in Riverdale, Utah referred to as “Family Center at Riverdale” for $48.5 million. The property is held by the venture as a tenancy in common. The Company accounts for its interest in the Family Center at Riverdale under the equity method of accounting as it does not control but exercises significant influence over the investment.

On April 30, 2019, Fund V acquired ana 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 ana 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 ~~“Washington REIT Portfolio”~~“Frederick County Acquisitions” for $21.8 million and $33.1 million, respectively. The Company accounts for its interest in the ~~Washington REIT Portfolio~~Frederick County Acquisitions under the equity method of accounting as it does not control but exercises significant influence over the investment.

Broughton Street Portfolio

During 2014, Fund IV acquired 50% interests in 2 joint ventures referred to as “BSP I” and “BSP II” with the same venture partner to acquire and operate a total of 23 properties in Savannah, Georgia referred to as the “Broughton Street Portfolio.” Since that time, as described below, the ventures have sold 8 of the properties and terminated the master leases on 2 of the properties. In October 2018, the venture partner relinquished its interest in BSP I resulting in Fund IV becoming the 100% owner of the BSP I venture, which holds 11 consolidated properties (Note 2). Fund IV accounted for this transaction as an asset purchase at fair value whereby its existing preferred and common interests were deemed consideration for the properties and no gain or loss was recognized.~~At September 30, 2019,~~

On May 26, 2020, pursuant to the buy-sell provisions of the operating agreement of the Broughton Street ~~portfolio had 13 remaining~~Portfolio, Fund IV acquired all of the third-party equity of BSP II, which underlies 2 properties~~2 of which are unconsolidated and are held~~ within the Broughton Street Portfolio, for $1.2 million plus closing costs of $0.1 million. These 2 BSP II ~~venture~~.properties were consolidated during the second quarter of 2020.

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,~~

Albertsons

During 2006, as part of a series of investments with a consortium of other investors known as the ~~Storage Post venture,distributed $3.2~~“RCP Venture”, Mervyns II acquired an indirect interest in Albertsons Companies, Inc. a private chain of grocery stores (“Albertsons”) through two 36.67% owned entities (KLA A Investments, LLC and ABS Opportunities, LLC, “KLA/ABS”). Its investment (the “Investment in Albertsons”) has been accounted for under the cost method as Mervyns II has no influence over operating and financial policies of KLA/ABS. Subsequent to the initial investment in 2006, Mervyns II received distributions from its Investment in Albertsons in excess of its initial contribution, which has been recognized in earnings. During the second quarter of 2020, Mervyns II realized a gain of approximately $23.2 million from its Investment in Albertsons. The realized gains resulted from the issuance and distribution of proceeds from a preferred equity investment and a sale of a portion of its investment in an initial public offering of Albertsons, both of which occurred in June 2020. Following these transactions, Mervyns II has retained an effective indirect ownership of approximately 4.1 million shares (approximately 1% interest) through its Investment in Albertsons, which it has accounted for at fair value following the ~~Operating Partnership’s share was $0.8 million.~~

~~2018 Dispositions of Unconsolidated Investments~~

~~On January 18, 2018, Fund IV’s Broughton Street Portfolio venture sold 2 properties for aggregate proceeds of $8.0 million,~~initial public offering given the readily determinable fair value, resulting in ~~a net~~an unrealized gain of approximately $64.9 million. During the three months ended September 30, 2020, the Company recorded an unrealized holding loss of ~~$0.4~~$7.9 million atreflecting the ~~property level of which the Fund’s share and the Operating Partnership’s proportionate share of the loss was 0, due to Fund IV’s preferred return.~~

~~On June 29, 2018, Fund IV’s Broughton Street Portfolio venture terminated its master leases on 2~~change in fair value of its ~~properties resulting~~Investment in aAlbertsons. The Company has reflected both the realized and net unrealized gain or loss as Realized and unrealized holding (losses) gains on investments and other within its consolidated statements of ~~$1.0~~operations for the three and nine months ended

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

September 30, 2020. From inception through September 30, 2020, Mervyns II has earned approximately $110.0 million ~~at the property level for which the Operating Partnership’s share was less than $0.1 million.~~

~~On August 29, 2018, Fund IV’s Broughton Street Portfolio venture sold a property for proceeds~~in distributions related to its Investment in Albertsons. The Company has an effective ownership interest of ~~$2.1 million, resulting~~28.3% in ~~a net loss of $0.3 million at the property level, of which the Operating Partnership’s share was less than $0.1 million.~~Mervyns II.

Fees from Unconsolidated Affiliates

The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling ~~$0.2~~$0.1 million ~~and $0.3 million~~each for ~~each of~~ the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$0.7~~$0.3 million and ~~$0.8~~$0.2 million for ~~each of~~ the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, which is included in other revenues in the consolidated ~~financial statements.~~statements of operations.

In addition, the Company paid to certain unaffiliated partners of its joint ventures, ~~$0.3~~$0.4 million and ~~$0.4~~$0.3 million for the three months ended September 30, 2020 and 2019, respectively, and ~~2018,~~$1.8 million and $1.0 million ~~and $1.3 million~~ for ~~the~~ nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, for leasing commissions, development, management, construction and overhead fees.

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

Summarized Financial Information of Unconsolidated Affiliates

The following combined and condensed Balance Sheets and Statements of ~~Income,~~operations, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates (in thousands):

September 30,
2019

December 31,
2018

Combined and Condensed Balance Sheets

Assets:

Rental property, net

$
644,970

$
487,846

Investment in unconsolidated affiliates

—

—

Other assets

82,302

89,890

Total assets

$
727,272

$
577,736

Liabilities and partners’ equity:

Mortgage notes payable

$
496,371

$
408,967

Other liabilities

63,478

54,585

Partners’ equity

167,423

114,184

Total liabilities and partners’ equity

$
727,272

$
577,736

Company's share of accumulated equity

$
249,480

$
139,028

Basis differential

101,658

103,812

Deferred fees, net of portion related to the Company's interest

4,247

3,646

Amounts payable by the Company

(827
)

(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

354,558

246,025

Cost method investments

2,567

762

Company's share of distributions in excess of income from and
   investments in unconsolidated affiliates

15,353

15,623

Investments in and advances to unconsolidated affiliates

$
372,478

$
262,410

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Combined and Condensed Statements of Income

Total revenues

$
22,310

$
19,971

$
65,023

$
59,730

Operating and other expenses

(6,746
)

(6,028
)

(17,088
)

(17,479
)
Interest expense

(5,888
)

(5,240
)

(16,303
)

(15,365
)
Depreciation and amortization

(7,321
)

(5,502
)

(17,908
)

(17,340
)
Loss on disposition of properties

—

(263
)

—

(1,673
)
Net income attributable to unconsolidated affiliates

$
2,355

$
2,938

$
13,724

$
7,873

Company’s share of equity in net income of unconsolidated affiliates

$
2,006

$
1,136

$
9,283

$
9,396

Basis differential amortization

(707
)

(760
)

(2,154
)

(2,317
)
Company’s equity in earnings of unconsolidated affiliates

$
1,299

$
376

$
7,129

$
7,079

	September 30, 2020		December 31, 2019
Combined and Condensed Balance Sheets
Assets:
Rental property, net	$	568,583	$	656,265
Real estate under development		12,149		1,341
Other assets		66,465		85,540
Total assets	$	647,197	$	743,146
Liabilities and partners’ equity:
Mortgage notes payable	$	509,904	$	502,036
Other liabilities		77,844		77,785
Partners’ equity		59,449		163,325
Total liabilities and partners’ equity	$	647,197	$	743,146

Company's share of accumulated equity	$	106,386	$	186,864
Basis differential		55,570		100,962
Deferred fees, net of portion related to the Company's interest		3,485		1,270
Amounts receivable/payable by the Company		243		(1,902	)
Investments in and advances to unconsolidated affiliates, net of Company's share of distributions in excess of income from and investments in unconsolidated affiliates		165,684		287,194
Cost method investments		59,268		2,541
Company's share of distributions in excess of income from and investments in unconsolidated affiliates		15,462		15,362
Investments in and advances to unconsolidated affiliates	$	240,414	$	305,097

2423

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Combined and Condensed Statements of Income
Total revenues	$	21,348		$	22,310		$	64,517		$	65,023
Operating and other expenses		(10,291	)		(6,746	)		(27,162	)		(17,088	)
Interest expense		(4,865	)		(5,888	)		(15,368	)		(16,303	)
Depreciation and amortization		(7,947	)		(7,321	)		(21,653	)		(17,908	)
Net (loss) income attributable to unconsolidated affiliates	$	(1,755	)	$	2,355		$	334		$	13,724

Company’s share of equity in net (loss) income of unconsolidated affiliates	$	10		$	2,006		$	1,496		$	9,283
Basis differential amortization		(634	)		(707	)		(1,651	)		(2,154	)
Company’s equity in (losses) earnings of unconsolidated affiliates	$	(624	)	$	1,299		$	(155	)	$	7,129

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)	September 30, 2019			December 31, 2018			September 30, 2020			December 31, 2019
Other Assets, Net:
Lease intangibles, net (Note 6)	$	121,171		$	115,939		$	109,488		$	116,820
Deferred charges, net ^(a)		28,520			28,619			30,032			28,746
Prepaid expenses		18,301			18,422			16,527			18,873
Accrued interest receivable								12,471			9,872
Other receivables		10,361			5,058			4,755			3,996
Accrued interest receivable		9,898			17,046
Due from seller		3,682			4,000			3,682			3,682
Income taxes receivable								2,301			1,755
Deposits		3,673			4,611			1,712			1,853
Corporate assets		1,666			1,953
Income taxes receivable		1,443			2,070
Corporate assets, net								1,288			1,565
Deferred tax assets								914			913
Derivative financial instruments (Note 8)		1,217			7,018			—			2,583
Deferred tax assets		656			2,032
Due from related parties		—			1,802
	$	200,588		$	208,570		$	183,170		$	190,658

(a) Deferred Charges, Net:
Deferred leasing and other costs	$	47,984		$	45,011		$	54,795		$	49,081
Deferred financing costs related to line of credit		9,489			8,960			10,731			10,051
		57,473			53,971			65,526			59,132
Accumulated amortization		(28,953	)		(25,352	)		(35,494	)		(30,386	)
Deferred charges, net	$	28,520		$	28,619		$	30,032		$	28,746

Accounts Payable and Other Liabilities:
Derivative financial instruments (Note 8)							$	103,204		$	39,061
Lease liability - operating leases, net (Note 11)								89,437			56,762
Lease intangibles, net (Note 6)	$	89,832		$	95,045			79,343			82,926
Lease liability - finance leases, net (Note 11)		88,137			—
Accounts payable and accrued expenses		71,732			65,215			71,393			68,838
Lease liability - operating leases, net (Note 11)		57,093			—
Derivative financial instruments (Note 8)		53,194			7,304
Deferred income		31,392			34,052			32,325			33,682
Tenant security deposits, escrow and other		11,780			10,588			12,215			12,590
Other		137			2,757
Capital lease obligations (Note 11)		—			71,111
Lease liability - finance leases, net (Note 11)								6,194			77,657
	$	403,297		$	286,072		$	394,111		$	371,516

2524

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

6. Lease Intangibles

Upon acquisitions of real estate (Note 2), 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 below-market options and acquired in-place leases) and assumed liabilities. The lease intangibles are amortized over the remaining terms of the respective leases, including option periods where applicable.

Intangible assets and liabilities are included in ~~other~~Other assets and Accounts payable and other liabilities (Note 5) on the consolidated balance sheet and summarized as follows (in thousands):

	September 30, 2019									December 31, 2018									September 30, 2020									December 31, 2019
	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Amortizable Intangible Assets
In-place lease intangible assets	$	245,221		$	(128,237	)	$	116,984		$	216,021		$	(105,972	)	$	110,049		$	268,335		$	(163,479	)	$	104,856		$	249,961		$	(137,108	)	$	112,853
Above-market rent		17,118			(12,931	)		4,187			18,169			(12,279	)		5,890			19,188			(14,556	)		4,632			17,227			(13,260	)		3,967
	$	262,339		$	(141,168	)	$	121,171		$	234,190		$	(118,251	)	$	115,939		$	287,523		$	(178,035	)	$	109,488		$	267,188		$	(150,368	)	$	116,820

Amortizable Intangible Liabilities
Below-market rent	$	(159,814	)	$	70,516		$	(89,298	)	$	(152,188	)	$	57,721		$	(94,467	)	$	(164,923	)	$	86,057		$	(78,866	)	$	(160,721	)	$	78,315		$	(82,406	)
Above-market ground lease		(671	)		137			(534	)		(671	)		93			(578	)		(671	)		194			(477	)		(671	)		151			(520	)
	$	(160,485	)	$	70,653		$	(89,832	)	$	(152,859	)	$	57,814		$	(95,045	)	$	(165,594	)	$	86,251		$	(79,343	)	$	(161,392	)	$	78,466		$	(82,926	)

During the nine months ended September 30, ~~2019,~~2020, the Company acquired in-place lease intangible assets of ~~$31.4~~$21.0 million, above-market rents of ~~$0.5~~$2.0 million and below-market rents of ~~$9.5~~$4.6 million with weighted-average useful lives of ~~8.5, 6.7,~~4.9, 5.8 and ~~23.4~~20.2 years, respectively.

During the year ended December 31, ~~2018,~~2019, the Company acquired in-place lease intangible assets of ~~$24.2~~$36.1 million, above-market rents of ~~$2.5~~$0.6 million, and below-market rents of ~~$7.9~~$10.4 million with weighted-average useful lives of ~~5.2, 5.1,~~7.9, 6.7, and ~~20.5~~21.7 years, respectively.

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.~~operations. Amortization of above-market ground leases are recorded as a reduction to rent expense in the consolidated statements of ~~income.~~operations.

The scheduled amortization of acquired lease intangible assets and assumed liabilities as of September 30, ~~2019~~2020 is as follows (in thousands):

Years Ending December 31,	Net Increase in Lease Revenues		Increase to Amortization			Reduction of Rent Expense		Net (Expense) Income			Net Increase in Lease Revenues		Increase to Amortization			Reduction of Rent Expense		Net (Expense) Income
2019 (Remainder)	$	2,233	$	(8,454	)	$	15	$	(6,206	)
2020		8,120		(27,446	)		58		(19,268	)
2020 (Remainder)											$	1,790	$	(7,490	)	$	15	$	(5,685	)
2021		7,672		(20,486	)		58		(12,756	)		7,043		(24,992	)		58		(17,891	)
2022		7,312		(14,970	)		58		(7,600	)		6,372		(18,314	)		58		(11,884	)
2023		7,386		(11,432	)		58		(3,988	)		5,894		(13,560	)		58		(7,608	)
2024												5,539		(9,525	)		58		(3,928	)
Thereafter		52,388		(34,196	)		287		18,479			47,596		(30,975	)		230		16,851
Total	$	85,111	$	(116,984	)	$	534	$	(31,339	)	$	74,234	$	(104,856	)	$	477	$	(30,145	)

2625

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

7. Debt

A summary of the Company’s consolidated indebtedness is as follows (dollars in thousands):

	Interest Rate at						Carrying Value at						Interest Rate at				Carrying Value at
	September 30,		December 31,		Maturity Date at		September 30,			December 31,			September 30,	December 31,		Maturity Date at	September 30,			December 31,
	2019		2018		September 30, 2019		2019			2018			2020	2019		September 30, 2020	2020			2019
Mortgages Payable
Core Fixed Rate	3.88%-6.00%		3.88%-6.00%		Feb 2024 - Apr 2035		$	176,714		$	178,271		3.88%-6.00%	3.88%-6.00%		Feb 2024 - Apr 2035	$	174,628		$	176,176
Core Variable Rate - Swapped ^(a)	3.41%-5.67%		3.41%-5.67%		Jan 2023 - Nov 2028			81,819			82,583		3.41%-4.54%	3.41%-4.54%		Jan 2023 - Nov 2028		80,770			81,559
Total Core Mortgages Payable								258,533			260,854							255,398			257,735
Fund II Fixed Rate(b)	4.75%		1.00%-4.75%		May 2020			200,000			205,262		4.75%	4.75%		May 2022		200,000			200,000
Fund II Variable Rate	LIBOR+3.00%			—	March 2022			23,925			—		LIBOR+3.00%	LIBOR+3.00%		March 2022		26,670			24,225
Fund II Variable Rate - Swapped ^(a)	4.27%		4.27%		Nov 2021			19,138			19,325		2.88%	2.88%		Nov 2021		18,872			19,073
Total Fund II Mortgages Payable								243,063			224,587							245,542			243,298
Fund III Variable Rate	LIBOR+3.00%-LIBOR+3.10%		Prime+0.50%-LIBOR+4.65%		Jan 2020 - Jun 2020			74,145			90,096		LIBOR+2.75%-LIBOR+3.10%	LIBOR+2.75%-LIBOR+3.10%		Jan 2021 - Jun 2021		75,722			74,554
Fund IV Fixed Rate	3.40%-4.50%		3.40%-4.50%		Oct 2025 - Jun 2026			8,189			8,189		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%		Dec 2019 - Apr 2022			157,200			233,065		LIBOR+1.60%-LIBOR+3.40%	LIBOR+1.60%-LIBOR+3.40%		Dec 2020 - Aug 2021		178,380			157,015
Fund IV Variable Rate - Swapped ^(a)	3.67%-4.61%		3.67%-4.23%		Mar 2020 - Dec 2022			88,601			71,841		3.48%-4.61%	3.48%-4.61%		Mar 2021 - Dec 2022		66,921			102,699
Total Fund IV Mortgages Payable								253,990			313,095							253,490			267,903
Fund V Variable Rate	LIBOR+2.15%-LIBOR+2.25%		LIBOR+2.25%		Oct 2020 - Jan 2021			51,506			51,506		LIBOR+1.50%-LIBOR+2.20%	LIBOR+1.50%-LIBOR+2.20%		Feb 2021 - Dec 2024		1,478			1,387
Fund V Variable Rate - Swapped ^(a)	4.01%-4.78%		4.61%-4.78%		Feb 2021 - Mar 2024			156,900			86,570		2.95%-4.78%	2.95%-4.78%		Feb 2021 - Dec 2024		334,416			334,626
Total Fund V Mortgage Payable								208,406			138,076							335,894			336,013
Net unamortized debt issuance costs								(9,135	)		(10,173	)						(6,932	)		(10,078	)
Unamortized premium								676			753							574			651
Total Mortgages Payable							$	1,029,678		$	1,017,288						$	1,159,688		$	1,170,076
Unsecured Notes Payable
Core Term Loans		—	LIBOR+1.25%		Mar 2023		$	—		$	383
Core Variable Rate Unsecured Term Loans													LIBOR+2.55%		—	Jun 2021	$	30,000		$	—
Core Variable Rate Unsecured Term Loans - Swapped ^(a)	2.49%-4.05%		2.54%-3.59%		Mar 2023			350,000			349,617		2.49%-5.02%	2.49%-5.02%		Mar 2023		350,000			350,000
Total Core Unsecured Notes Payable								350,000			350,000							380,000			350,000
Fund II Unsecured Notes Payable	LIBOR+1.65%		LIBOR+1.40%		Sep 2020			40,000			40,000		LIBOR+1.65%	LIBOR+1.65%		Sep 2021		40,000			40,000
Fund IV Term Loan/Subscription Facility	LIBOR+1.65%-LIBOR+2.00%		LIBOR+1.65%-LIBOR+2.75%		Dec 2019 - June 2021			87,625			40,825		LIBOR+1.65%-LIBOR+2.00%	LIBOR+1.65%-LIBOR+2.00%		Dec 2020 - June 2021		82,829			87,625
Fund V Subscription Facility	LIBOR+1.60%		LIBOR+1.60%		May 2020			148,380			102,800		LIBOR+1.60%		—	May 2021		—			—

Net unamortized debt issuance costs								(328	)		(368	)						(329	)		(305	)
Total Unsecured Notes Payable							$	625,677		$	533,257						$	502,500		$	477,320
Unsecured Line of Credit
Core Unsecured Line of Credit		—		—		—	$	—		$	—
Core Unsecured Line of Credit -Swapped ^(a)													2.49%-5.02%	2.49%-5.02%		Mar 2022	$	127,400		$	60,800

Total Debt - Fixed Rate ^(b)(c)							$	1,236,805		$	1,001,658
Total Debt - Fixed Rate ^{(b, c )}																	$	1,361,199		$	1,403,324
Total Debt - Variable Rate ^(d)								427,337			558,675							435,076			314,604
Total Debt								1,664,142			1,560,333							1,796,275			1,717,928
Net unamortized debt issuance costs								(9,463	)		(10,541	)						(7,261	)		(10,383	)
Unamortized premium								676			753							574			651
Total Indebtedness							$	1,655,355		$	1,550,545						$	1,789,588		$	1,708,196

(a)

At September 30, ~~2019,~~2020, the stated rates ranged from LIBOR + 1.50% to LIBOR +1.90% for Core variable-rate debt; LIBOR + 1.39% for Fund II variable-rate debt; LIBOR + ~~3.00%~~2.75% to LIBOR + 3.10% for Fund III variable-rate debt; LIBOR + ~~1.60%~~1.75% to LIBOR ~~+3.40%~~+2.25% for Fund IV variable-rate debt; LIBOR + ~~2.15%~~1.50% to LIBOR + ~~2.25%~~2.20% for Fund V variable-rate debt; LIBOR + 1.25% for Core variable-rate unsecured term loans; and LIBOR + 1.35% for Core variable-rate unsecured lines of credit.

(b)

Includes ~~$696.5~~$978.4 million and ~~$609.9~~$948.8 million, respectively, of variable-rate debt that has been fixed with interest rate swap agreements as of the periods presented.

(c)

Fixed-rate debt at September 30, 2020 and December 31, 2019 includes ~~$155.4~~$14.3 million and $70.2 million, respectively of Core swaps that may be used to hedge debt instruments of the Funds.

(d)

Includes ~~$143.0~~$144.5 million and ~~$143.8~~$143.3 million, respectively, of variable-rate debt that is subject to interest cap agreements.

2726

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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%~~1.40%, and a $350.0 million senior unsecured term loan (the “Term Loan”) which bears interest at LIBOR + ~~1.25%~~1.30%. ~~The~~

On October 8, 2019, the Company modified the Credit Facility, ~~refinanced~~which provided for a $100.0 million increase in the ~~Company’s existing $300.0~~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 (comprised of the $150.0 million Core unsecured revolving line of credit and the $150.0 million term loan), $150.0 million in Core unsecured term loans and repaid a $40.4 million mortgage secured by its 664 North Michigan Property. The Revolver and Term Loans maturematuring on March 31, 2022, subject to an extension option, and a $350.0 million Term Loan expiring on March 31, ~~2023, respectively.~~

~~The Company’s Credit Facility was amended, and~~2023. In addition, the ~~capacity of~~amendment provides for revisions to the ~~unsecured~~accordion feature, which allows for one or more increases in the revolving ~~line of~~ credit ~~was increased on October 8, 2019 (Note 15~~).facility or term loan facility, for a maximum aggregate principal amount not to exceed $750.0 million.

Mortgages Payable

During the nine months ended September 30, ~~2019:~~2020, the Company:

•

~~The~~extended the maturity dates of a $200.0 million Fund II loan from May 2020 to May 2022 and the $150.0 million Fund V Subscription line from May 2020 to May 2021. In addition, the Company ~~obtained 4 new~~extended 5 Fund mortgages, ~~totaling $118.3~~three of which were extended for one year during the second quarter with aggregate outstanding balances of $75.4 million at September 30, 2020 and two of which were extended for one year during the third quarter with ~~a weighted-average interest rate~~aggregate outstanding balances of ~~LIBOR + 1.65% collateralized by four properties and maturing in 2022 through 2024.~~$55.4 million at September 30, 2020;

•

~~The Company refinanced a~~modified the terms of one Fund IV ~~loan in the amount of~~ $23.8 million ofmortgage, which had $18.9 million ~~had been~~outstanding, in June 2020 to adjust the allowable timing of draws. At closing, an additional $1.0 million was drawn ~~at September 30, 2019,~~ and ~~which bears interest at a rate of LIBOR + 1.75% and matures~~ in ~~2022.~~July 2020 an additional $0.9 million was drawn;

•

negotiated mortgage interest payment deferrals during the second quarter in relation to the COVID-19 Pandemic for three months on two Core loans and seven Fund loans aggregating $1.8 million. Of this total deferral, $0.7 million has since been repaid as of September 30, 2020;

•

entered into two swap agreements in February 2020 each with notional values of $50.0 million, which are not effective until April 2022 and April 2023. In July 2020, two previously-executed forward swap agreements took effect with current notional values as of September 30, 2020 of $30.4 million each (Note 8);

•

At September 30, 2020 five Fund mortgages aggregating $177.7 million, or $36.2 million at the Company’s share, had not met their debt yield and/or debt service coverage ratio requirements. Some of these lenders may require cash sweeps of property rents until the condition is remedied.

•

repaid one Fund IV mortgage of $11.6 million in connection with the sale of Colonie Plaza in April 2020 (Note 2); and

•

made scheduled principal payments of $4.2 million.

During the year ended December 31, 2019 the Company:

•

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 ~~which had~~with a balance of $4.7 million and an interest rate of Prime + 0.5%, which was assumed by the purchasing venture in a property sale (Note 2)~~. 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 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 ~~$4.6 million.~~$5.9 million;

•

~~The Company re-borrowed $49.0~~modified 3 loans with prior borrowing capacity totaling $135.9 million ~~in the third quarter pursuant to the requirements~~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 ~~loan amendment entered into during the second quarter~~weighted-average rate of LIBOR + 2.96% and ~~the Company also drew down $8.7 million on a Fund III construction loan~~maturities ranging from December 2020 through May 2021; and

•

The Company modified two Fund IV loans to increase the commitment of BSP Venture I’s mortgage by $9.4 million; and to decrease the 717 North Michigan Avenue mortgage balance by $9.9 million, decrease future availability by $3.9 million and reduce the interest rate to LIBOR + 3.10%. The Company also modified a Fund III loan to decrease the balance by $10.0 million to $39.5 million and reduce the interest rate to LIBOR plus 3.10% from LIBOR plus 4.65%.

•

~~The Company~~ entered into interest rate swap contracts to effectively fix the variable portion of the interest rates of ~~four~~all nine new obligations and two of the ~~new~~refinanced obligations with a notional value of ~~$91.5~~$283.6 million at a weighted-average interest rate of ~~2.74%~~1.78%.

At September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company’s mortgages were collateralized by 4143 and 4344 properties, respectively, and the related tenant leases. Certain loans are cross-collateralized and contain cross-default provisions. The loan agreements contain customary

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

representations, covenants and events of default. Certain loan agreements require the Company to comply with affirmative and negative covenants, including the maintenance of debt service coverage and leverage ratios. The Company is not in default of its loan agreements, except as noted below. A portion of the Company’s variable-rate mortgage debt has been effectively fixed through certain cash flow hedge transactions (Note 8).

The mortgage loan collateralized by the property held by Brandywine Holdings in the Core Portfolio, was in default and subject to litigation at September 30, ~~2019~~2020 and December 31, ~~2018. This~~2019. The loan was originated in June 2006 and had an original principal amount of $26.3 million and a scheduled maturity of July 1, 2016. By maturity, the loan was in default. The loan ~~bears~~bore interest at a stated rate of approximately ~~6.00%,~~6% and iswas 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 Court of 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~~Successor Lender also 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~~alleged that the Operating Partnership iswas liable for the ~~full balance of the~~original principal, accrued interest, default interest, late charges as well as fees, costs and ~~costs~~protective advances, under the ~~note,~~Brandywine Loan, which the ~~lender alleges was~~Successor Lender alleged totaled approximately $33.0 million as of November 9, 2017 (exclusive of accruing interest, default interest, late charges, and fees and costs). In August 2019, the Delaware Superior Court heard arguments on the parties’ cross-motions for summary ~~judgement~~judgment regarding both the Guaranty Complaint and the Note Complaint. ~~The Company believes it has valid defenses~~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 under the Brandywine Loan and requesting the parties to contact the Court regarding a hearing of any additional outstanding issues. On June 24, 2020, the ~~Guaranty Complaint and~~Successor Lender filed a motion to (i) amend the Note Complaint and ~~has been vigorously defending itself. A decision~~Guaranty Complaint in order to increase the alleged balance under the Brandywine Loan to $46.8 million as of March 31, 2020, plus default interest of $0.3 million and additional attorneys’ fees of $0.2 million from April 1, 2020 to April 23, 2020, minus suspense funds of $1.5 million, and (ii) for entry of judgment in the foregoing amounts. Brandywine Holdings and the Operating Partnership opposed the motion. By Final Order and Judgment, entered July 27, 2020, the Delaware Superior Court denied the Successor Lender’s motion, and entered judgment against Brandywine Holdings and the Operating Partnership, jointly and severally, in the amount of $33.2 million, plus accruing interest and default interest in the total amount of $8,017 per diem from and after November 10, 2017 through the date of entry of judgment, less $1.3 million in “suspense funds” (consisting of unapplied property collections minus unapplied fees (including attorneys’ fees), costs, and protective advances made on Successor Lender’s behalf), together with post judgment interest, accruing after the ~~cross-motions~~entry of judgment, at the contract rate of interest agreed to by the parties. In connection with the Final Order and Judgment, during the three months ended June 30, 2020, the Company recorded an additional $6.8 million related primarily to legal and other costs of which the Company’s proportionate share was $1.5 million. Brandywine Holdings and the Operating Partnership filed a notice of appeal of the ruling by the Delaware Superior Court and the lender filed a notice of cross-appeal. On October 2, 2020, on request of all parties to the litigation, the appeal and cross-appeal were stayed by the Supreme Court of Delaware for ~~summary judgment is expected before~~a period of 90 days so that the ~~end~~parties could pursue settlement of ~~2019.~~the litigation. On October 30, 2020, this matter was settled (Note 15).

During the third quarter of 2019, the ~~company~~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

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

exchange for $5.2 million. The NMTCs were subject to recapture under various circumstances, including redemption of the loan/investment prior to a requisite seven-year hold period, and recognition of income was deferred. Upon the expiration of the seven-year period and no further obligations, the Company recognized income of $5.0 million during the three and nine months ended September 30, 2019, of which the Company’s proportionate share was $1.4 million, which is included in ~~Other~~Interest and other income in the consolidated statements of ~~income.~~operations.

Unsecured Notes Payable

Unsecured notes payable for which total availability was ~~$17.6~~$157.3 million and ~~$62.3~~$152.5 million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, are comprised of the following:

•

As discussed above, the Core unsecured term loans totaling $300.0 million were refinanced in February 2018, into one $350.0 million term loan with an interest rate of LIBOR+ 1.25% and maturing in March 2023. The outstanding balance of the Core term ~~loans~~loan was $350.0 million at September 30, ~~2019~~2020 and December 31, 2018. During the nine months ended September 30, 2019, the Company entered into interest rate swap contracts to effectively fix the variable portion of the interest rate with a notional value of $156.0 million at a weighted-average interest rate of 2.43%, which may be used to swap the Company’s unhedged, unsecured, LIBOR-based variable-rate debt.2019. The Company previously entered into swap agreements fixing the rates of the remaining Core term loan balance.

•

On July 1, 2020, the Company obtained an additional $30.0 million Core term loan, with an accordion option to increase up to $90.0 million. This term loan matures on June 30, 2021 and bears interest at LIBOR plus 2.55% with a LIBOR floor of 0.75%. The outstanding balance and total availability at September 30, 2020 was $30.0 million and $0.0 million, respectively.

•

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 September 30, ~~2019~~2020 and December 31, ~~2018. Total~~2019. There was 0 availability ~~was $0.0 million~~ at each of September 30, ~~2019~~2020 and December 31, ~~2018.~~2019.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

•

At Fund IV ~~there is~~has a ~~$80.2~~$79.2 million bridge facility and a ~~$27.0~~$15.0 million subscription ~~line, which were modified from their previous limits of $41.8 million and $15.0 million, respectively, during~~line. The bridge facility is guaranteed by the ~~second quarter of 2019.~~Operating partnership up to $50.8 million. The outstanding balance and total available credit of the Fund IV bridge facility was $79.2 million ~~at September 30, 2019~~ and ~~$40.8~~$0.0 million, ~~at December 31, 2018. Total availability was $1.0 million~~respectively at each of September 30, ~~2019~~2020 and at December 31, ~~2018.~~2019. The outstanding balance and total available credit of the Fund IV subscription line was ~~$8.4~~$3.6 million and $7.3 million, respectively at September 30, ~~2019 and $0 at December 31, 2018. Total availability was $15.0 million at both September 30, 2019 and December 31, 2018,~~2020, reflecting letters of credit of ~~$3.6~~$4.1 million. The outstanding balance and total availability at December 31, 2019 was $8.4 million and ~~$7.4~~$2.5 million, respectively, reflecting letters of credit of $4.1 million.

•

Fund V has a $150.0 million subscription line collateralized by Fund V’s unfunded capital commitments, and, to the extent of Acadia’s capital commitments, is guaranteed by the Operating Partnership. The outstanding balance and total available credit of the Fund V subscription line was ~~$148.4~~$0.0 million and ~~$1.6~~$150.0 million, respectively at September 30, ~~2019. The outstanding balance~~2020 and ~~total available credit of the Fund V subscription line was $102.8 million and $47.2 million, respectively at~~ December 31, ~~2018.~~2019.

Unsecured Revolving Line of Credit

The Company had a total of ~~$133.2~~$112.1 million and ~~$137.7~~$173.6 million available under its ~~$150.0~~$250.0 million Core ~~unsecured revolving line~~Revolver, reflecting borrowings of ~~credit reflecting the issuance of~~$127.4 million and $60.8 million and letters of credit of ~~$16.8~~$10.5 million and ~~$12.3~~$15.6 million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. At each of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, all of the Core unsecured revolving line of credit was swapped to a fixed rate.

~~The capacity of the Company’s unsecured revolving line of credit was increased on October 8, 2019 (Note 15~~).

Scheduled Debt Principal Payments

The scheduled principal repayments, without regard to available extension options (described further below), of the Company’s consolidated indebtedness, as of September 30, ~~2019~~2020 are as follows (in thousands):

Year Ending December 31,
2019 (Remainder)	$	121,846
2020		561,472
2020 (Remainder)				$	88,360
2021		240,659			455,086
2022		91,357			427,401
2023		412,305			415,507
2024					212,015
Thereafter		236,503			197,906
		1,664,142			1,796,275
Unamortized premium		676			574
Net unamortized debt issuance costs		(9,463	)		(7,261	)
Total indebtedness	$	1,655,355		$	1,789,588

The table above does not reflect available extension options (subject to customary conditions) on consolidated debt of $56.7 million contractually due in 2020, $271.2 million contractually due in 2021, $365.7 million contractually due in 2022 and $41.5 million contractually due in 2023; all for which the Company has available options to extend by up to 12 months and for some an additional 12 months thereafter. However, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options.

See Note 4 for information about liabilities of the Company’s unconsolidated affiliates.

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Money Market Funds — The Company has money market funds, which are included in Cash and cash equivalents in the consolidated financial statements, and are comprised of government securities and/or U.S. Treasury bills. These funds were classified as Level 1 as we used quoted prices from active markets to determine their fair values.

Equity Investments –Albertsons became publicly traded during 2020 (Note 4). Upon Albertsons’ IPO, the Company’s Investment in Albertsons has a readily determinable market value (traded on an exchange) and is being accounted for as a Level 1 investment.

Derivative Assets — The Company has derivative assets, which are included in Other assets, net in the consolidated financial statements, and are comprised of interest rate swaps and caps. The derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.

Derivative Liabilities — The Company has derivative liabilities, which are included in Accounts payable and other liabilities in the consolidated financial statements, and are comprised of interest rate swaps. These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.

~~The~~Other than the Investment in Albertsons described above, the Company did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the nine months ended September 30, ~~2019~~2020 or ~~2018.~~2019.

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):

	September 30, 2019						December 31, 2018						September 30, 2020						December 31, 2019
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Money Market Funds	$	10,000	$	—	$	—	$	4,504	$	—	$	—
Money market funds													$	0	$	0	$	0	$	0	$	0	$	0
Derivative financial instruments		—		1,217		—		—		7,018		—		0		0		0		0		2,583		0
Investment in Albertsons (Note 4)														57,031		0		0		0		0		0
Liabilities
Derivative financial instruments		—		53,194		—		—		7,304		—		0		103,204		0		0		39,061		—

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,~~March of 2020, the Company ~~began selling~~was impacted by the ~~residential units of~~COVID-19 Pandemic (Note 11), which caused the Company to reduce its ~~210 Bowery property in Fund IV. As the projected aggregate selling prices net of selling costs~~holding periods and forecasted operating income at certain properties. There 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~~charges recorded subsequent to March 31, 2020. As a result, several impairments were recorded at Fund assets. Impairment charges for 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~~periods presented are as follows (in thousands):

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Impairment Charge

Property and Location

Owner

Triggering Event

Level 3 Inputs

Effective Date

Total

Acadia's Share

2020 Impairment Charges

Cortlandt Crossing, Mohegan Lake, NY

Fund III

Reduced holding period, reduced projected operating income

Projections of: holding period, net operating income, cap rate, incremental costs

3/31/2020

27,402

6,726

654 Broadway, New York, NY

Fund III

Reduced holding period

Projections of: holding period, net operating income, cap rate, incremental costs

3/31/2020

6,398

1,570

146 Geary Street, San Francisco, CA

Fund IV

Reduced holding period, reduced projected operating income

Projections of: holding period, net operating income, cap rate, incremental costs

3/31/2020

6,718

1,553

801 Madison Avenue, New York, NY

Fund IV

Reduced holding period, reduced projected operating income

Projections of: holding period, net operating income, cap rate, incremental costs

3/31/2020

11,031

2,551

Total 2020 Impairment Charges

51,549

12,400

2019 Impairment Charges

210 Bowery residential units

Fund IV

Reduced selling price

Contract sales price

9/30/2019

321

210 Bowery residential units

Fund IV

Reduced selling price

Offering price

6/30/2019

1,400

321

Total 2019 Impairment Charges

1,721

395

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 nine months ended September 30, 2018.~~

Derivative Financial Instruments

The Company had the following interest rate swaps and caps for the periods presented (dollars in thousands):

								Strike Rate								Fair Value													Strike Rate								Fair Value
Derivative Instrument		Aggregate Notional Amount		Effective Date		Maturity Date		Low				High			Balance Sheet Location	September 30, 2019			December 31, 2018				Aggregate Notional Amount		Effective Date		Maturity Date		Low				High			Balance Sheet Location	September 30, 2020			December 31, 2019
Core
Interest Rate Swaps		$	423,761	Dec 2012-July 2020		Mar 2022-July 2030			1.71	%	—		3.77	%	Other Liabilities ^(a)	$	(46,395	)	$	(6,332	)		$	572,476	Dec 2012-Apr 2023		Jan 2021-Apr 2033			1.24	%	—		3.77	%	Other Liabilities ^(a)	$	(85,942	)	$	(33,750	)
Interest Rate Swaps			163,500	Oct 2014 - July 2016		Nov 2019-June 2021			1.24	%	—		1.70	%	Other Assets		581			6,022				0		—		—		—		—		—		Other Assets		0			456
		$	587,261													$	(45,814	)	$	(310	)		$	572,476													$	(85,942	)	$	(33,294	)

Fund II
Interest Rate Swap		$	19,138	Oct 2014		Nov 2021			2.88	%	—		2.88	%	Other Liabilities	$	(180	)	$	—			$	18,872	Oct 2014		Nov 2021			2.88	%	—		2.88	%	Other Liabilities	$	(282	)	$	(139	)
Interest Rate Swap			—		—		—		—		—		—		Other Assets		—			108
Interest Rate Cap			23,300	Mar 2019		Mar 2022			3.50	%	—		3.50	%	Other Assets		3			—				45,000	Mar 2019		Mar 2022			3.50	%	—		3.50	%	Other Assets		0			1
		$	42,438													$	(177	)	$	108			$	63,872													$	(282	)	$	(138	)

Fund III
Interest Rate Cap		$	58,000	Dec 2016		Jan 2020			3.00	%	—		3.00	%	Other Assets	$	—		$	8			$	39,470	Jan 2020		Jan 2021			3.00	%	—		3.00	%	Other Assets	$	0		$	0

Fund IV
Interest Rate Swap		$	23,100	Mar 2017		Mar 2020			1.82	%	—		1.82	%	Other Assets	$	2		$	851
Interest Rate Swaps																							$	0		—		—		—		—		—		Other Assets	$	0		$	22
Interest Rate Swaps			65,501	Mar 2017 - May 2019		Apr 2022 - Dec 2022			1.97	%	—		4.00	%	Other Liabilities		(1,068	)		—				66,921	Mar 2017 - Dec 2019		Apr 2022 - Dec 2022			1.48	%	—		4.00	%	Other Liabilities		(2,019	)		(812	)
Interest Rate Caps			104,400	Nov 2016 - July 2019		Dec 2019 - July 2021			3.00	%	—		3.50	%	Other Assets		—			8				90,600	July 2019 - Dec 2019		Dec 2020 - July 2021			3.00	%	—		3.50	%	Other Assets		0			0
		$	193,001													$	(1,066	)	$	859			$	157,521													$	(2,019	)	$	(790	)

Fund V
Interest Rate Swaps		$	—	Nov 2019		Sept 2024 - Oct 2024			1.25	%	—		1.28	%	Other Assets ^(b)	$	631		$	21			$	0		—		—		—		—		—		Other Assets	$	0		$	2,104
Interest Rate Swaps			156,900	Jan 2018-Oct 2019		Feb 2021-Oct 2024			1.45	%	—		2.88	%	Other Liabilities ^(c)		(5,551	)		(972	)			334,416	Jan 2018-Nov 2019		Feb 2021-Oct 2024			1.25	%	—		2.88	%	Other Liabilities		(14,961	)		(4,360	)
		$	156,900													$	(4,920	)	$	(951	)		$	334,416													$	(14,961	)	$	(2,256	)

Total asset derivatives	Total asset derivatives															$	1,217		$	7,018		Total asset derivatives															$	0		$	2,583
Total liability derivatives	Total liability derivatives															$	(53,194	)	$	(7,304	)	Total liability derivatives															$	(103,204	)	$	(39,061	)

(a)

Includes ~~2 swaps~~1 swap with an aggregate value of ($2.9) million at September 30, 2020, which was acquired during February 2020 with a notional value of $50.0 million and is not effective until April 2022. Includes 1 swap with an aggregate fair value of ($~~15.7) million and ($2.9)~~2.6) million at September 30, ~~2019 and December 31, 2018, respectively,~~2020, which ~~were~~was acquired during ~~July 2018~~February 2020 with a notional value of $50.0 million and ~~are~~is not effective until ~~July 2020. At September 30, 2019 and December 31, 2018, $155.4 million and $0.0 million of the Core swaps were available, respectively to hedge debt at the Funds.~~

~~(b)~~

~~Includes 3 swaps with an aggregate fair value of $0.6 million at September 30, 2019, which were acquired during August 2019 and are not effective until November 2019.~~

~~(c)~~

~~Includes 2 swaps with an aggregate fair value of ($0.1) million at September 30, 2019, which were acquired during September 2019 and are not effective until October 2019.~~April 2023.

All of the Company’s derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable-rate debt (Note 7). It is estimated that approximately ~~$4.8~~$20.2 million included in ~~accumulated~~Accumulated other comprehensive ~~(loss) income~~loss related to derivatives will be reclassified to interest expense within the next twelve months. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 0 derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated hedges.

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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, the values 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 swaps if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions.

Credit Risk-Related Contingent Features

The Company has agreements with each of its swap counterparties that contain a provision whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its swaps, resulting in an acceleration of payment under the swaps.

Other Financial Instruments

The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands, inclusive of amounts attributable to noncontrolling interests where applicable):

			September 30, 2019				December 31, 2018						September 30, 2020				December 31, 2019
	Level		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Level		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Notes Receivable ^(a)		3	$	94,807	$	94,180	$	109,613	$	107,370		3	$	135,708	$	135,581	$	114,943	$	113,422
Mortgage and Other Notes Payable ^(a)		3		1,038,137		1,048,580		1,026,708		1,021,075		3		1,166,046		1,153,378		1,179,503		1,191,281
Investment in non-traded equity securities ^(b)		3		—		56,337		—		56,337		3		1,875		1,631		1,778		57,964
Unsecured notes payable and Unsecured line of credit ^(c)		2		626,005		626,785		533,625		533,954		2		630,229		614,713		538,425		539,362

(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~~the Operating Partnership’s cost-method investment in ~~Albertson’s supermarkets~~Fifth Wall (Note 4). ~~The~~Fair value as of December 31, 2019 also represents Mervyns II’s cost-method Investment in Albertsons, which is carried at fair ~~values for~~value at September 30, ~~2019~~2020 and, ~~December 31, 2018 are based on a valuation at December 31, 2018.~~therefore, is no longer reflected in the table above.

(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 due to their short maturity profiles at September 30, ~~2019.~~2020.

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 Note 7. While the Company is unable to predict with certainty the outcome of any particular matter, management does not expect, when such litigation is resolved, that the Company’s resulting exposure to loss contingencies, if any, will have a material adverse effect on its consolidated financial position.

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 ~~$42.9~~$33.6 million and ~~$55.5~~$41.1 million as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

At September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company had letters of credit outstanding of ~~$20.4~~$14.6 million and ~~$19.7~~$19.8 million, respectively. The Company has not recorded any obligation associated with these letters of credit. The majority of the letters of credit are collateral for existing indebtedness and other obligations of the Company.

10. Shareholders’ Equity, Noncontrolling Interests and Other Comprehensive ~~Income~~Loss

Common Shares and Units

In addition to the share repurchase activity discussed below, the Company completed the following transactions in its Common Shares during the nine months ended September 30, 2020:

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

•

The Company withheld 2,075 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 expense totaling $6.3 million and $5.4 million in connection with Restricted Shares and Units (Note 13) for the nine months ended September 30, 2020 and 2019, respectively.

In addition to the ATM Program activity discussed below, the Company completed the following transactions in its ~~common shares~~Common Shares during the ~~nine months~~year ended ~~September 30,~~December 31, 2019:

•

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 Share and Common OP Unit-based compensation expense totaling ~~$5.4 million and $6.3 million in connection with Restricted Shares and Units (Note 13) for the nine months ended September 30, 2019 and 2018, respectively.~~

~~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~~$8.8 million in connection with Restricted Shares and Units (Note 13).

ATM Program

The Company has an at-the-market equity issuance program (“ATM Program”) which provides the Company an efficient and low-cost vehicle for raising public equity to fund its capital needs. The Company entered into its current $250.0 million ATM Program (which replaced its prior program) in the second quarter of 2019 and also added an optional “forward purchase” component. The Company has not issued any shares on a forward basis during the nine months ended September 30, 2020 or for the year ended December 31, 2019. During the ~~three months~~year ended ~~September 30,~~December 31, 2019, the Company sold ~~2,149,154~~5,164,055 Common Shares under its ATM Program for gross proceeds of ~~$61.6~~$147.7 million, or ~~$60.6~~$145.5 million net of issuance costs, at a weighted-average gross price per share of ~~$28.64.~~$28.61. During the nine months ended September 30, ~~2019,~~2020, the Company ~~sold 4,816,505~~did 0t sell any Common Shares under its ATM ~~Program for gross proceeds of $137.8 million, or $135.8 million net of issuance costs, at a weighted-average gross price per share of $28.61.~~Program.

Share Repurchase Program

During 2018, the Company’s board of trustees (the “Board”) approved a new share repurchase program, which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program does not obligate the Company to repurchase any specific number of Common Shares and may be discontinued or extended at any time. The Company did 0t repurchase any shares during the year ended December 31, 2019. During the first quarter of 2020, the Company repurchased ~~2,294,235~~1,219,065 Common Shares for ~~$55.1~~$22.4 million, inclusive of $0.1 million of fees ~~during the year ended December 31, 2018.~~ ~~The Company repurchased 2,294,235 shares for $55.1 million, inclusive~~at a weighted average price per share of ~~$0.1 million of fees, during the nine months ended September 30, 2018.~~ ~~During the nine months ended September 30, 2019 the Company made 0 repurchases~~$18.29, under the share repurchase program, under which ~~$144.9~~$122.6 million ~~currently~~ remains ~~available.~~available as of September 30, 2020.

Dividends and Distributions

The following table sets forth the ~~dividends~~distributions declared and/or paid during the ~~nine months ended September 30, 2019:~~periods presented:

Date Declared

Amount Per Share

Record Date

Payment Date

Amount Per Share

Record Date

Payment Date

November 15, 2018

0.28

December 31, 2018

January 15, 2019

November 13, 2018

0.28

December 31, 2018

January 15, 2019

February 28, 2019

0.28

March 29, 2019

April 15, 2019

0.28

March 29, 2019

April 15, 2019

May 9, 2019

0.28

June 28, 2019

July 15, 2019

0.28

June 28, 2019

July 15, 2019

August 13, 2019

0.28

September 30, 2019

October 15, 2019

0.28

September 30, 2019

October 15, 2019

November 5, 2019

0.29

December 31, 2019

January 15, 2020

February 26, 2020

0.29

March 31, 2020

April 15, 2020

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~Accumulated Other Comprehensive Income~~

~~The following tables set forth the activity in accumulated other comprehensive income for the three and nine months ended September 30, 2019 and 2018 (in thousands):~~

Gains or Losses
on Derivative
Instruments

Balance at July 1, 2019

$
(29,570
)

Other comprehensive loss before reclassifications

(15,388
)
Reclassification of realized interest on swap agreements

(288
)
Net current period other comprehensive loss

(15,676
)
Net current period other comprehensive loss attributable to noncontrolling
interests

1,108

Balance at September 30, 2019

$
(44,138
)

Balance at July 1, 2018

$
10,138

Other comprehensive income before reclassifications

3,973

Reclassification of realized interest on swap agreements

(55
)
Net current period other comprehensive income

3,918

Net current period other comprehensive income attributable to noncontrolling
interests

(789
)
Balance at September 30, 2018

$
13,267

Gains or Losses
on Derivative
Instruments

Balance at January 1, 2019

$
516

Other comprehensive loss before reclassifications

(51,347
)
Reclassification of realized interest on swap agreements

(1,374
)
Net current period other comprehensive loss

(52,721
)
Net current period other comprehensive loss attributable to noncontrolling
interests

8,067

Balance at September 30, 2019

$
(44,138
)

Balance at January 1, 2018

$
2,614

Other comprehensive income before reclassifications

12,576

Reclassification of realized interest on swap agreements

417

Net current period other comprehensive income

12,993

Net current period other comprehensive income attributable to noncontrolling
interests

(2,340
)
Balance at September 30, 2018

$
13,267

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Beginning with the second quarter of 2020, the Board temporarily suspended distributions on its common shares and common units, which suspension the Board has determined to continue through the fourth quarter of 2020; however, distributions of $0.1 million were payable to preferred unit holders at June 30, 2020 and September 30, 2020. Assuming that current operating conditions continue to prevail, the Company currently expects to reinstate quarterly distributions in the first quarter of 2021, which would be subject to Board approval at that time.

Accumulated Other Comprehensive Loss

The following tables set forth the activity in accumulated other comprehensive loss for three and nine months ended September 30, 2020 and 2019 (in thousands):

	Gains or Losses on Derivative Instruments
Balance at July 1, 2020	$	(90,209	)

Other comprehensive income before reclassifications - swap agreements		952
Reclassification of realized interest on swap agreements		5,506
Net current period other comprehensive income		6,458
Net current period other comprehensive income attributable to noncontrolling interests		(2,122	)
Balance at September 30, 2020	$	(85,873	)

Balance at July 1, 2019	$	(29,570	)

Other comprehensive loss before reclassifications - swap agreements		(15,388	)
Reclassification of realized interest on swap agreements		(288	)
Net current period other comprehensive loss		(15,676	)
Net current period other comprehensive loss attributable to noncontrolling interests		1,108
Balance at September 30, 2019	$	(44,138	)

	Gains or Losses on Derivative Instruments
Balance at January 1, 2020	$	(31,175	)

Other comprehensive loss before reclassifications - swap agreements		(82,444	)
Reclassification of realized interest on swap agreements		9,598
Net current period other comprehensive loss		(72,846	)
Net current period other comprehensive loss attributable to noncontrolling interests		18,148
Balance at September 30, 2020	$	(85,873	)

Balance at January 1, 2019	$	516

Other comprehensive loss before reclassifications - swap agreements		(51,347	)
Reclassification of realized interest on swap agreements		(1,374	)
Net current period other comprehensive loss		(52,721	)
Net current period other comprehensive loss attributable to noncontrolling interests		8,067
Balance at September 30, 2019	$	(44,138	)

Noncontrolling Interests

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables summarize the change in the noncontrolling interests for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 (dollars in thousands):

										Noncontrolling Interests in Operating Partnership ^(a)			Noncontrolling Interests in Partially-Owned Affiliates ^(b)			Total
Balance at July 1, 2020										$	90,321		$	547,418		$	637,739
Distributions on Preferred OP Units											(123	)		0			(123	)
Net loss for the three months ended September 30, 2020											(352	)		(28,907	)		(29,259	)
Other comprehensive loss - unrealized earnings (loss) on valuation of swap agreements											183			(166	)		17
Reclassification of realized interest expense on swap agreements											63			2,042			2,105
Noncontrolling interest contributions											0			8,427			8,427
Noncontrolling interest distributions											0			(20,117	)		(20,117	)
Employee Long-term Incentive Plan Unit Awards											2,181			0			2,181
Reallocation of noncontrolling interests ^(c)											(2,100	)		0			(2,100	)
Balance at September 30, 2020										$	90,173		$	508,697		$	598,870
	Noncontrolling Interests in Operating Partnership ^(a)			Noncontrolling Interests in Partially-Owned Affiliates ^(b)			Total
Balance at July 1, 2019	$	103,705		$	515,205		$	618,910		$	103,705		$	515,205		$	618,910
Distributions declared of $0.28 per Common OP Unit		(1,765	)		—			(1,765	)		(1,765	)		0			(1,765	)
Net income (loss) for the three months ended September 30, 2019		785			(2,403	)		(1,618	)		785			(2,403	)		(1,618	)
Conversion of 41,646 Common OP Units to Common Shares by limited partners of the Operating Partnership		(720	)		—			(720	)		(720	)		0			(720	)
Other comprehensive loss - unrealized loss on valuation of swap agreements		(864	)		(251	)		(1,115	)
Other comprehensive income - unrealized loss on valuation of swap agreements											(864	)		(251	)		(1,115	)
Reclassification of realized interest expense on swap agreements		(16	)		23			7			(16	)		23			7
Noncontrolling interest contributions		—			129,438			129,438			0			129,438			129,438
Noncontrolling interest distributions		—			(29,713	)		(29,713	)		0			(29,713	)		(29,713	)
Employee Long-term Incentive Plan Unit Awards		1,768			—			1,768			1,768			0			1,768
Reallocation of noncontrolling interests ^(c)		(5,251	)		—			(5,251	)		(5,251	)		0			(5,251	)
Balance at September 30, 2019	$	97,642		$	612,299		$	709,941		$	97,642		$	612,299		$	709,941

Balance at July 1, 2018	$	105,100		$	514,774		$	619,874
Distributions declared of $0.27 per Common OP Unit		(1,692	)		—			(1,692	)
Net income (loss) for the three months ended September 30, 2018		732			(12,554	)		(11,822	)
Conversion of 46,950 Common OP Units to Common Shares by limited partners of the Operating Partnership		(834	)		—			(834	)
Other comprehensive income - unrealized gain on valuation of swap agreements		197			505			702
Reclassification of realized interest expense on swap agreements		(9	)		96			87
Noncontrolling interest contributions		—			40,440			40,440
Noncontrolling interest distributions		—			(9,014	)		(9,014	)
Employee Long-term Incentive Plan Unit Awards		2,082			—			2,082
Reallocation of noncontrolling interests ^(c)		(1,783	)		—			(1,783	)
Balance at September 30, 2018	$	103,793		$	534,247		$	638,040

3536

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

										Noncontrolling Interests in Operating Partnership ^(a)			Noncontrolling Interests in Partially-Owned Affiliates ^(b)			Total
Balance at January 1, 2020										$	97,670		$	546,987		$	644,657
Distributions declared of $0.29 per Common OP Unit											(2,095	)		0			(2,095	)
Net income (loss) for the nine months ended September 30, 2020											570			(35,958	)		(35,388	)
Conversion of 407,594 Common OP Units to Common Shares by limited partners of the Operating Partnership											(6,544	)		0			(6,544	)
Other comprehensive loss - unrealized loss on valuation of swap agreements											(3,268	)		(18,423	)		(21,691	)
Cumulative effect of change in accounting principle (Note 1)											—			(11	)		(11	)
Acquisition of noncontrolling interest											—			588			588
Reclassification of realized interest expense on swap agreements											111			3,432			3,543
Noncontrolling interest contributions											0			36,736			36,736
Noncontrolling interest distributions											0			(24,654	)		(24,654	)
Employee Long-term Incentive Plan Unit Awards											7,973			0			7,973
Reallocation of noncontrolling interests ^(c)											(4,244	)		0			(4,244	)
Balance at September 30, 2020										$	90,173		$	508,697		$	598,870
	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		$	104,223		$	518,219		$	622,442
Distributions declared of $0.84 per Common OP Unit		(5,322	)		—			(5,322	)		(5,322	)		0			(5,322	)
Net income (loss) for the nine months ended September 30, 2019		2,437			(27,633	)		(25,196	)		2,437			(27,633	)		(25,196	)
Conversion of 249,464 Common OP Units to Common Shares by limited partners of the Operating Partnership		(4,230	)		—			(4,230	)		(4,230	)		0			(4,230	)
Other comprehensive loss - unrealized loss on valuation of swap agreements		(2,686	)		(5,320	)		(8,006	)
Other comprehensive income - unrealized loss on valuation of swap agreements											(2,686	)		(5,320	)		(8,006	)
Reclassification of realized interest expense on swap agreements		(61	)		—			(61	)		(61	)		—			(61	)
Noncontrolling interest contributions		—			161,628			161,628			0			161,628			161,628
Noncontrolling interest distributions		—			(34,595	)		(34,595	)		0			(34,595	)		(34,595	)
Employee Long-term Incentive Plan Unit Awards		6,965			—			6,965			6,965			0			6,965
Reallocation of noncontrolling interests ^(c)		(3,684	)		—			(3,684	)		(3,684	)		0			(3,684	)
Balance at September 30, 2019	$	97,642		$	612,299		$	709,941		$	97,642		$	612,299		$	709,941

Balance at January 1, 2018	$	102,921		$	545,519		$	648,440
Distributions declared of $0.81 per Common OP Unit		(5,126	)		—			(5,126	)
Net income (loss) for the nine months ended September 30, 2018		1,977			(35,313	)		(33,336	)
Conversion of 111,588 Common OP Units to Common Shares by limited partners of the Operating Partnership		(1,957	)		—			(1,957	)
Other comprehensive income - unrealized gain on valuation of swap agreements		625			1,435			2,060
Reclassification of realized interest expense on swap agreements		10			270			280
Noncontrolling interest contributions		—			46,990			46,990
Noncontrolling interest distributions		—			(24,654	)		(24,654	)
Employee Long-term Incentive Plan Unit Awards		7,924			—			7,924
Reallocation of noncontrolling interests ^(c)		(2,581	)		—			(2,581	)
Balance at September 30, 2018	$	103,793		$	534,247		$	638,040

(a)

Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ ~~3,306,879~~3,101,958 and ~~3,331,440~~3,306,879 Common OP Units at September 30, ~~2019~~2020 and September 30, ~~2018;~~2019; (ii) 188 Series A Preferred OP Units at September 30, ~~2019~~2020 and September 30, ~~2018;~~2019; (iii) 126,593 and 136,593 Series C Preferred OP Units at September 30, ~~2019~~2020 and September 30, ~~2018;~~2019; and (iv) ~~2,673,608~~2,886,207 and ~~2,547,002~~2,673,610 LTIP units at September 30, ~~2019~~2020 and September 30, ~~2018,~~2019, respectively, as discussed in Share Incentive Plan (Note 13). Distributions declared for Preferred OP Units are reflected in net income (loss) in the table above.

(b)	Noncontrolling interests in partially-owned affiliates comprise third-party interests in Funds II, III, IV and V, and Mervyns II, and six other subsidiaries.

(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 ownership.

Preferred OP Units

There were 0 issuances of Preferred OP Units during the nine months ended September 30, 2020 or the year ended December 31, 2019.

3637

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 September 30, ~~2019,~~2020, 1,392 Series A Preferred OP Units were converted into 185,600 Common OP Units and then into Common Shares. The 188 remaining Series A Preferred OP Units are currently convertible into Common OP Units based on the stated value divided by $7.50. Either the Company or the holders can currently call for the conversion of the Series A Preferred OP Units at the lesser of $7.50 or the market price of the Common Shares as of the conversion date.

During 2016, the Operating Partnership issued 442,478 Common OP Units and 141,593 Series C Preferred OP Units to a third party to acquire Gotham Plaza (Note 4). The Series C Preferred OP Units have a value of $100.00 per unit and are entitled to a preferred quarterly distribution of $0.9375 per unit and are convertible into Common OP Units at a rate based on the share price at the time of conversion. If the share price is below $28.80 on the conversion date, each Series C Preferred OP Unit will be convertible into 3.4722 Common OP Units. If the share price is between $28.80 and $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into a number of Common OP Units equal to $100.00 divided by the closing share price. If the share price is above $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into 2.8409 Common OP Units. The Series C Preferred OP Units have a mandatory conversion date of December 31, 2025, at which time all units that have not been converted will automatically be converted into Common OP Units based on the same calculations. Through September 30, ~~2019, 5,000~~2020, 15,000 Series C Preferred OP Units were converted into ~~17,165~~51,887 Common OP Units and then into Common Shares.

11. 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.~~options (see below). Space in the shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to sixty years and generally provide for additional rents based on certain operating expenses as well as tenants’ sales volumes. During the three months ended September 30, 2020 and 2019, the Company earned $14.5 million and $14.7 million, respectively, and during the nine months ended September 30, 2020 and 2019, the Company earned ~~$14.7~~$41.8 million and $41.2 million, respectively in variable lease revenues, primarily for real estate taxes and common area maintenance charges, which are included in ~~lease revenues~~rental income in the consolidated statements of ~~income.~~operations.

As Lessee

As lessee, upon implementation of ASC Topic 842, the Company recorded right-of-use assets and corresponding lease liabilities 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, of the total. Three finance leases were recorded post-implementation upon assessment of triggering events whereby the Company’s cumulative leasehold investment made it reasonably certain that the Company would exercise its purchase options.

During the ~~three~~nine months ended ~~June~~September 30, ~~2019,~~2020, the ~~Company~~Company:

•

~~Entered~~entered into 1 new office lease as lessee for which the lease commenced in the third quarter of 2020. The Company recorded a ~~new~~right-of-use asset and corresponding lease liability of $1.7 million;

•

modified its 991 Madison master lease ~~that is~~by converting the 49-year fixed term to a 15-year term. As a result of the modification, the lease was reclassified from a finance lease ~~(1238 Wisconsin Avenue, acquired on May 2, 2019~~to an operating lease during the second quarter of 2020;

•

consolidated 1 property within the ~~Core Portfolio) and recorded~~BSP II portfolio, 102 E. Broughton, (Note 2, Note 4), which was subject to a ~~Right-of-use asset–finance~~ground lease classified as an operating lease, during the second quarter of ~~$11.2 million and a corresponding Lease liability–finance lease of $10.7 million;~~2020; and

•

~~Entered into a new master~~renewed 1 ground lease ~~that is~~for Branch Plaza, an operating lease, ~~(110 University Place, acquired on May 1, 2019 by Fund IV~~ for ~~$10.5 million) and recorded a Right of use asset–operating lease of $45.3 million and a corresponding Lease liability–operating lease of $45.3 million.~~22 years.

37During 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

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

•

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 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:

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018
Lease Cost

(Not applicable)

(Not applicable)
Finance lease cost:

   Amortization of right-of-use assets
$
565

$
1,603

   Interest on lease liabilities

978

2,755

   Subtotal

1,543

4,358

Operating lease cost

1,394

3,037

Variable lease cost

62

119

Total lease cost
$
2,999

$
7,514

Other Information

Weighted-average remaining lease term - finance leases (years)

42.9

Weighted-average remaining lease term - operating leases (years)

33.7

Weighted-average discount rate - finance leases

4.5
%

Weighted-average discount rate - operating leases

5.8
%

	Nine Months Ended September 30, 2020		Year Ended December 31, 2019

Amounts recorded upon acquisition of leasehold interests:
Right of use asset - operating lease	$	—	$	50,147
Right of use asset - finance lease		—		19,422
Other Assets		—		—
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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020			2019
Lease Cost
Finance lease cost:
Amortization of right-of-use assets	$	226		565	$	1,370		$	1,603
Interest on lease liabilities		92		978		1,541			2,755
Subtotal		318		1,543		2,911			4,358
Operating lease cost		2,258		1,394		5,377			3,037
Variable lease cost		5		62		27			119
Total lease cost	$	2,581	$	2,999	$	8,315		$	7,514

Other Information
Weighted-average remaining lease term - finance leases (years)						33.5			42.9
Weighted-average remaining lease term - operating leases (years)						26.5			33.7
Weighted-average discount rate - finance leases						6.2	%		4.5	%
Weighted-average discount rate - operating leases						5.4	%		5.8	%

Right-of-use assets are included in Operating real estate (Note 2) in the consolidated balance ~~sheet.~~sheets. Lease liabilities are included in Accounts payable and other liabilities in the consolidated balance ~~sheet~~sheets (Note 5). Operating lease cost comprises amortization of right-of-use assets for 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.~~operations. 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.~~operations.

~~Lease Disclosures Related to Prior Periods~~

The Company leased land at 6 of its shopping centers, which were accounted for as operating leases through December 31, 2018 which generally provided the Company with renewal options. Ground rent expense was $1.2 million (including capitalized ground rent at a property under development of $0.5 million) for the nine months ended September 30, 2018. The leases terminate at various dates between 2020 and 2066. These leases provide the Company with options to renew for additional terms aggregating up to 25 to 71 years. The Company also leases space for its corporate office. Office rent expense under this lease was $0.7 million for the nine months ended September 30, 2018.

During 2016, the Company entered into a 49-year master lease, which was accounted for as a capital lease through December 31, 2018 and was later reclassified as a finance lease upon implementation of ASC 842 as described above. During the nine months ended September 30, 2018, payments for this lease totaled $1.9 million. The property under the capital lease is included in ~~Note 2~~.

3839

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Lease Obligations

The scheduled future minimum (i) rental revenues from rental properties under the terms of non-cancelable tenant leases greater than one year (assuming no new or renegotiated leases or option extensions for such premises) and (ii) rental payments under the terms of all non-cancelable operating and finance leases in which the Company is the lessee, principally for office space, land and equipment, as of September 30, ~~2019,~~2020, are summarized as follows (in thousands):

Year Ending December 31,	Minimum Rental Revenues		Minimum Rental Payments ^{(a, b)}		Minimum Rental Revenues ^(a)		Minimum Rental Payments ^(b)
2019 (Remainder)	$	48,697	$	1,821
2020		205,710		7,139
2020 (Remainder)					$	48,803	$	1,877
2021		193,653		7,073		208,058		8,665
2022		173,664		7,082		190,266		7,874
2023		152,273		7,075		166,701		7,869
2024						142,019		8,029
Thereafter		652,003		334,761		563,493		170,745
Total	$	1,426,000	$	364,951	$	1,319,340	$	205,059

(a)

~~A ground~~Amount represents contractual lease ~~expiring during 2078 provides~~maturities at September 30, 2020. During the end of March 2020, numerous tenants were forced to suspend operations by government mandate as a result of the COVID-19 Pandemic. The Company has negotiated payment agreements with ~~an option to purchase the underlying land during 2031. If the Company does not exercise the option, the~~selected tenants which resulted in rent concessions or deferral of rents ~~that will be due are based on future values and~~ as ~~such are not determinable at this time. Accordingly, the above table does not include rents for this lease beyond 2031.~~discussed further below.

(b)	Minimum rental payments include ~~$220.8~~$109.5 million of interest related to ~~finance~~ leases.

During the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, no single tenant or property collectively comprised more than 10% of the Company’s consolidated total revenues.

COVID-19 Pandemic Impacts

Beginning in March 2020, the COVID-19 Pandemic has adversely affected economic activity and significantly decreased consumer activity, both on a global and domestic level. The COVID-19 Pandemic and government responses created disruption in global supply chains and adversely impacting many industries, including the domestic retail sectors in which the Company’s tenants operate. The COVID-19 Pandemic could continue to have a material adverse impact on economic and market conditions and trigger a period of global economic slowdown. Under governmental restrictions and guidance, certain retailers were considered “essential businesses” and were permitted to remain fully operating during the COVID-19 Pandemic, while other “non-essential businesses” were ordered to decrease or close operations for an indeterminate period of time to protect their employees and customers from the spread of the virus. These disruptions, which continue to a lesser extent as of the date of this Report, have impacted the collectability of rent from the Company’s affected tenants. The Company cannot estimate with reasonable certainty which currently operating tenants will remain open or if and when non-operating retailers will re-open for business as the COVID-19 Pandemic progresses. While the Company considers disruptions related to the COVID-19 Pandemic to be temporary, if the disruptions are protracted or escalate, they may have a material, adverse effect on the Company’s revenues, results of operations, financial condition, and liquidity in future periods.

Tenant Operating Status – The following table illustrates the percentage of the Company’s consolidated and unconsolidated annualized base rents (“ABR”) derived from stores which were open or partially open for business as of the dates indicated:

	Percentage of Tenants Open for Business as of
	June 30, 2020			September 30, 2020

Core		74	%		86	%
Fund		74	%		88	%

Rent Collections – The following table depicts collections of pre-COVID billings (original contract rents without regard to deferral or abatement agreements) and excludes the impact of any security deposits applied against tenant accounts as of the dates shown:

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Collections as of:
	June 30, 2020 for			September 30, 2020 for
	Second Quarter 2020			Second Quarter 2020			Third Quarter 2020

Core		71	%		74	%		85	%
Fund		62	%		65	%		77	%

Earnings Impact – During the three and nine months ended September 30, 2020, the Company reassessed its reserves for collection losses with respect to its billed receivables and straight-line rents receivable which were negatively impacted by the COVID-19 Pandemic. The Company also entered into agreements with selected tenants for rent forgiveness related to the COVID-19 Pandemic which were recorded in the period the rent was forgiven. In addition, the Company determined that several properties were impaired at March 31, 2020 (Note 8). These collection losses, and rent abatements were recorded as a reduction of rental income in the consolidated statements of operations. The rental income reductions and impairment charges impacted net earnings and segment performance as follows for the periods presented:

	Three Months Ended September 30, 2020									Nine Months Ended September 30, 2020
	Consolidated		Non-Controlling Interests			Unconsolidated		Attributable to Acadia		Consolidated		Non-Controlling Interests			Unconsolidated		Attributable to Acadia

Credit Loss - Billed Rents
Core	$	5,158	$	35		$	661	$	5,854	$	10,980	$	(20	)	$	1,335	$	12,295
Funds		5,678		(4,544	)		297		1,431		9,190		(7,620	)		685		2,255
Total		10,836		(4,509	)		958		7,285		20,170		(7,640	)		2,020		14,550

Straight - Line Rent Reserves
Core		2,113		(52	)		48		2,109		6,969		(86	)		498		7,381
Funds		11,072		(8,789	)		769		3,052		12,743		(10,183	)		889		3,449
Total		13,185		(8,841	)		817		5,161		19,712		(10,269	)		1,387		10,830

Rent Abatements
Core		687		—			75		762		803		—			684		1,487
Funds		244		(240	)		56		60		244		(240	)		56		60
Total		931		(240	)		131		822		1,047		(240	)		740		1,547

Impairment charges
Core		—		—			—		—		—		—			—		—
Funds		—		—			—		—		51,549		(39,149	)		—		12,400
Total		—		—			—		—		51,549		(39,149	)		—		12,400

COVID Earnings Impact
Core		7,958		(17	)		784		8,725		18,752		(106	)		2,517		21,163
Funds		16,994		(13,573	)		1,122		4,543		73,726		(57,192	)		1,630		18,164
Total	$	24,952	$	(13,590	)	$	1,906	$	13,268	$	92,478	$	(57,298	)	$	4,147	$	39,327

Other Impacts

•

Rent Concession Agreements – During the nine months ended September 30, 2020, the Company executed 237 rent concession arrangements with tenants comprised of 210 agreements for rent deferral and 27 agreements for rent abatements. Of these deferral agreements, 203 were accounted for as if no changes to the contract were made and therefore there were no changes to the current or future recognition of revenue and $7.5 million of deferred receivables are included in Rents receivable in the consolidated balance sheet at September 30, 2020. The impact of the rent abatements is depicted in the table above. In addition, as lessee, the Company has deferred lease payments on certain office space aggregating $0.1 million through December 2021, which has been recorded in accounts payable and accrued expenses in the consolidated balance sheet at September 30, 2020.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

•

Occupancy – At September 30, 2020, the Company’s pro rata Core and Fund leased occupancy rates were 91.1% and 89.8%, respectively, compared to 93.3% and 91.1%, respectively, at June 30, 2020 reflecting primarily leases terminated under bankruptcy proceedings.

•

Bankruptcy Risk – Through September 30, 2020 there have been numerous bankruptcies of national retailers, some of which are tenants of the Company. Of these bankruptcies, the Core Portfolio has 6 operating stores, with ABR attributable to Acadia totaling $2.6 million, or 1.9% of Core ABR, and the Fund Portfolio has 17 operating stores, with ABR attributable to Acadia totaling $1.1 million, or 5.2% of Fund ABR, for which it is possible that these leases may be rejected in the future.

•

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES

Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. It also appropriated funds for the SBA Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by the COVID-19 Pandemic. Management has not yet determined the impact that the CARES Act will have on the Company and ultimately on its financial condition, results of operations, or liquidity for 2020.

See Note 15 for updates to some of these results through October 31, 2020.

12. Segment Reporting

The Company has 3 reportable segments: Core Portfolio, Funds and Structured Financing. The Company’s Core Portfolio consists primarily of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas with a long-term investment horizon. The Company’s Funds hold primarily retail real estate in which the Company co-invests with high-quality institutional investors. The Company’s Structured Financing segment consists of earnings and expenses related to notes and mortgages receivable which are held within the Core Portfolio or the Funds (Note 3). Fees earned by the Company as the general partner or managing member of the Funds are eliminated in the Company’s consolidated financial statements and are not presented in the Company’s segments.

The following tables set forth certain segment information for the Company (in thousands):

	For the Three Months Ended September 30, 2019														For the Three Months Ended September 30, 2020
	Core Portfolio			Funds			Structured Financing		Unallocated			Total			Core Portfolio			Funds			Structured Financing			Unallocated			Total
Revenues	$	42,142		$	31,185		$	—	$	—		$	73,327		$	38,848		$	12,433		$	0		$	0		$	51,281
Depreciation and amortization		(15,179	)		(16,991	)		—		—			(32,170	)		(17,987	)		(16,470	)		0			0			(34,457	)
Property operating expenses, other operating and real estate taxes		(11,205	)		(12,200	)		—		—			(23,405	)		(12,709	)		(9,539	)		0			0			(22,248	)
General and administrative expenses		—			—			—		(8,222	)		(8,222	)		0			0			0			(8,625	)		(8,625	)
Impairment charge		—			(321	)		—		—			(321	)
Gain on disposition of properties		—			12,056			—		—			12,056			0			24			0			0			24
Operating income (loss)		15,758			13,729			—		(8,222	)		21,265			8,152			(13,552	)		0			(8,625	)		(14,025	)
Interest income		—			—			1,748		—			1,748			0			0			2,132			0			2,132
Other income		—			5,034			—		—			5,034
Equity in earnings (losses) of unconsolidated affiliates		1,798			(499	)		—		—			1,299
Realized and unrealized holding losses on investments and other																0			(7,906	)		(40	)		0			(7,946	)
Equity in (losses) earnings of unconsolidated affiliates																(784	)		160			0			0			(624	)
Interest expense		(7,333	)		(11,770	)		—		—			(19,103	)		(8,276	)		(9,476	)		0			0			(17,752	)
Income tax provision		—			—			—		(1,403	)		(1,403	)		0			0			0			(74	)		(74	)
Net income (loss)		10,223			6,494			1,748		(9,625	)		8,840
Net (loss) income																(908	)		(30,774	)		2,092			(8,699	)		(38,289	)
Net loss attributable to noncontrolling interests		263			1,355			—		—			1,618			1,407			27,852			0			0			29,259
Net income attributable to Acadia	$	10,486		$	7,849		$	1,748	$	(9,625	)	$	10,458
Net (loss) income attributable to Acadia															$	499		$	(2,922	)	$	2,092		$	(8,699	)	$	(9,030	)

3942

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	For the Three Months Ended September 30, 2018														For the Three Months Ended September 30, 2019
	Core Portfolio			Funds			Structured Financing		Unallocated			Total			Core Portfolio			Funds			Structured Financing		Unallocated			Total
Revenues	$	41,742		$	23,785		$	—	$	—		$	65,527		$	42,142		$	31,185		$	0	$	0		$	73,327
Depreciation and amortization		(14,856	)		(13,820	)		—		—			(28,676	)		(15,179	)		(16,991	)		0		0			(32,170	)
Property operating expenses, other operating and real estate taxes		(11,910	)		(10,011	)		—		—			(21,921	)		(11,205	)		(12,200	)		0		0			(23,405	)
General and administrative expenses		—			—			—		(7,982	)		(7,982	)		0			0			0		(8,222	)		(8,222	)
Impairment charges																0			(321	)		0		0			(321	)
Gain on disposition of properties		—			5,107			—		—			5,107			0			12,056			0		0			12,056
Operating income (loss)		14,976			5,061			—		(7,982	)		12,055
Interest income		—			—			3,513		—			3,513
Operating income																15,758			13,729			0		(8,222	)		21,265
Interest and other income																0			5,034			1,748		0			6,782
Equity in earnings (losses) of unconsolidated affiliates		2,005			(1,629	)		—		—			376			1,798			(499	)		0		0			1,299
Interest expense		(6,972	)		(11,105	)		—		—			(18,077	)		(7,333	)		(11,770	)		0		0			(19,103	)
Income tax provision		—			—			—		(464	)		(464	)		0			0			0		(1,403	)		(1,403	)
Net income (loss)		10,009			(7,673	)		3,513		(8,446	)		(2,597	)
Net income																10,223			6,494			1,748		(9,625	)		8,840
Net loss attributable to noncontrolling interests		115			11,707			—		—			11,822			263			1,355			0		0			1,618
Net income attributable to Acadia	$	10,124		$	4,034		$	3,513	$	(8,446	)	$	9,225		$	10,486		$	7,849		$	1,748	$	(9,625	)	$	10,458

	As of or for the Nine Months Ended September 30, 2019														As of or for the Nine Months Ended September 30, 2020
	Core Portfolio			Funds			Structured Financing		Unallocated			Total			Core Portfolio			Funds			Structured Financing			Unallocated			Total
Revenues	$	131,356		$	86,187		$	—	$	—		$	217,543		$	117,383		$	69,091		$	0		$	0		$	186,474
Depreciation and amortization		(45,949	)		(46,858	)		—		—			(92,807	)		(53,193	)		(48,434	)		0			0			(101,627	)
Property operating expenses, other operating and real estate taxes		(34,730	)		(32,217	)		—		—			(66,947	)		(42,484	)		(31,034	)		0			0			(73,518	)
General and administrative expenses		—			—			—		(25,579	)		(25,579	)		0			0			0			(26,415	)		(26,415	)
Impairment charge		—			(1,721	)		—		—			(1,721	)
Impairment charges																0			(51,549	)		0			0			(51,549	)
Gain on disposition of properties		—			14,070			—		—			14,070			0			509			0			0			509
Operating income (loss)		50,677			19,461			—		(25,579	)		44,559			21,706			(61,417	)		0			(26,415	)		(66,126	)
Interest income		—			—			6,247		—			6,247			0			0			7,156			0			7,156
Other income		327			6,620			—		—			6,947
Equity in earnings (losses) of unconsolidated affiliates		7,322			(193	)		—		—			7,129
Realized and unrealized holding gains on investments and other																0			79,845			(510	)		0			79,335
Equity in (losses) earnings of unconsolidated affiliates																(212	)		57			0			0			(155	)
Interest expense		(20,866	)		(35,855	)		—		—			(56,721	)		(25,127	)		(29,246	)		0			0			(54,373	)
Income tax provision		—			—			—		(1,622	)		(1,622	)
Net income (loss)		37,460			(9,967	)		6,247		(27,201	)		6,539
Income tax benefit																0			0			0			741			741
Net (loss) income																(3,633	)		(10,761	)		6,646			(25,674	)		(33,422	)
Net loss attributable to noncontrolling interests		648			24,548			—		—			25,196			7,691			27,697			0			0			35,388
Net income attributable to Acadia(a)	$	38,108		$	14,581		$	6,247	$	(27,201	)	$	31,735		$	4,058		$	16,936		$	6,646		$	(25,674	)	$	1,966

Real estate at cost(b)	$	2,190,281		$	1,821,853		$	—	$	—		$	4,012,134		$	2,365,426		$	1,802,865		$	0		$	0		$	4,168,291
Total assets(b)	$	2,316,683		$	1,918,055	��	$	94,807	$	—		$	4,329,545		$	2,291,730		$	1,824,880		$	134,798		$	0		$	4,251,408
Cash paid for acquisition of real estate	$	82,125		$	174,522		$	—	$	—		$	256,647		$	19,963		$	1,245		$	0		$	0		$	21,208
Cash paid for development and property improvement costs	$	19,059		$	58,577		$	—	$	—		$	77,636		$	7,522		$	20,427		$	0		$	0		$	27,949

4043

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	As of or for the Nine Months Ended September 30, 2018														As of or for the Nine Months Ended September 30, 2019
	Core Portfolio			Funds			Structured Financing		Unallocated			Total			Core Portfolio			Funds			Structured Financing		Unallocated			Total
Revenues	$	122,959		$	66,995		$	—	$	—		$	189,954		$	131,356		$	86,187		$	0	$	0		$	217,543
Depreciation and amortization		(45,283	)		(41,472	)		—		—			(86,755	)		(45,949	)		(46,858	)		0		0			(92,807	)
Property operating expenses, other operating and real estate taxes		(32,102	)		(26,790	)		—		—			(58,892	)		(34,730	)		(32,217	)		0		0			(66,947	)
General and administrative expenses		—			—			—		(24,359	)		(24,359	)		0			0			0		(25,579	)		(25,579	)
Impairment charges																0			(1,721	)		0		0			(1,721	)
Gain on disposition of properties		—			5,140			—		—			5,140			0			14,070			0		0			14,070
Operating income (loss)		45,574			3,873			—		(24,359	)		25,088
Operating income																50,677			19,461			0		(25,579	)		44,559
Interest and other income		—			—			10,539		—			10,539			327			6,620			6,247		0			13,194
Equity in earnings of unconsolidated affiliates		5,171			1,908			—		—			7,079
Equity in earnings (losses) of unconsolidated affiliates																7,322			(193	)		0		0			7,129
Interest expense		(20,475	)		(30,407	)		—		—			(50,882	)		(20,866	)		(35,855	)		0		0			(56,721	)
Income tax provision		—			—			—		(851	)		(851	)		0			0			0		(1,622	)		(1,622	)
Net income (loss)		30,270			(24,626	)		10,539		(25,210	)		(9,027	)		37,460			(9,967	)		6,247		(27,201	)		6,539
Net loss attributable to noncontrolling interests		241			33,095			—		—			33,336			648			24,548			0		0			25,196
Net income attributable to Acadia	$	30,511		$	8,469		$	10,539	$	(25,210	)	$	24,309
Net income attributable to Acadia ^(a)															$	38,108		$	14,581		$	6,247	$	(27,201	)	$	31,735

Real estate at cost	$	2,060,024		$	1,553,150		$	—	$	—		$	3,613,174
Total assets	$	2,234,521		$	1,574,785		$	109,410	$	—		$	3,918,716
Real estate at cost ^(b)															$	2,190,281		$	1,821,853		$	0	$	0		$	4,012,134
Total assets^(b)															$	2,316,683		$	1,918,055		$	94,807	$	0		$	4,329,545
Cash paid for acquisition of real estate	$	1,343		$	103,559		$	—	$	—		$	104,902		$	82,125		$	174,522		$	0	$	0		$	256,647
Cash paid for development and property improvement costs	$	22,892		$	43,346		$	—	$	—		$	66,238		$	19,059		$	58,577		$	0	$	0		$	77,636

(a)

Net income attributable to Acadia for the Core segment includes $1.0 million, and $3.7 million associated with one property, Town Center, for the nine months ended September 30, 2020 and 2019, respectively. These amounts include the results of three entities, including the unconsolidated Town Center venture and the consolidated Brandywine Holdings and Brandywine Maintenance Corp., which on a combined basis constitute the operating results of the shopping center. In April 2020, the Town Center venture was consolidated (Note 4).

(b)

Real estate at cost and total assets for the Funds segment include $606.6 million and $598.1 million, or $176.5 million and $173.5 million net of non-controlling interests, related to Fund II’s City Point property at September 30, 2020 and December 31, 2019, respectively.

13. Share Incentive and Other Compensation

Share Incentive Plan

~~The Second Amended and Restated 2006~~On March 23, 2020, the Company’s Board of Trustees approved the 2020 Share Incentive Plan (the ~~“Share Incentive~~“2020 Plan”), which increased the aggregate number of Common Shares authorized for issuance by 2,650,000 shares. The 2020 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 September 30, ~~2019~~2020 a total of ~~704,479~~2,746,406 shares remained available to be issued under the ~~Share Incentive~~2020 Plan.

Restricted Shares and LTIP Units

During the nine months ended September 30, 2020, and the year ended December 31, 2019, the Company issued 396,149 and 330,718 LTIP Units and 13,766 and 8,041 restricted share units (“Restricted Share ~~Units~~Units”), respectively, to employees of the Company pursuant to the Share Incentive Plan. These awards were measured at their fair value on the grant date, incorporating the following factors:

•

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%.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

•

Two-thirds ~~(2/3)~~(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)~~(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.

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

For valuation of the 2020 and 2019 Performance Shares, a Monte Carlo simulation was used to estimate the fair values based on probability of satisfying the market conditions and the projected share prices at the time of payments, discounted to the valuation dates over the three-year performance periods. The assumptions include volatility ~~(19.60%~~(21.0% and 19.6%) and risk-free interest rates ~~(2.5%~~of (1.4% and 2.5%). for 2020 and 2019, respectively. The total value of the 2020 and 2019 Performance Shares will be expensed over the vesting period regardless of the Company’s performance.

The total value of the above Restricted Share Units and LTIP Units as of the grant date was ~~$ 11.1 million.~~$10.4 million during the nine months ended September 30, 2020 and $11.1 million during the year ended December 31, 2019. Total long-term incentive compensation expense, including the expense related to the Share Incentive Plan, was ~~$1.7 million, $5.4 million, $2.0~~$2.1 million and ~~$6.3~~$1.7 million for the three months ended September 30, 2020 and 2019 and $6.3 million and $5.4 million for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively and is recorded in General and Administrative on the Consolidated Statements of ~~Income.~~Operations.

In addition, members of the Board ~~of Trustees (the “Board”)~~ have been issued shares and units under the Share Incentive Plan. During ~~2019,~~the nine months ended September 30, 2020, the Company issued ~~18,009~~42,680 LTIP Units and ~~17,318~~53,058 Restricted Shares to Trustees of the Company in connection with Trustee fees. Vesting with respect to ~~6,463~~17,492 of the LTIP Units and ~~3,996~~19,474 of the Restricted Shares will be on the first anniversary of the date of issuance and ~~11,546~~25,188 of the LTIP Units and ~~13,322~~33,584 of the Restricted Shares vest over three years with 33% vesting on each of the next three anniversaries of the issuance date. The Restricted Shares do not carry voting rights or other rights of Common Shares until vesting and may not be transferred, assigned or pledged until the recipients have a vested non-forfeitable right to such shares. Dividends are not paid currently on unvested Restricted Shares, but are paid cumulatively from the issuance date through the applicable vesting date of such Restricted Shares. Total trustee fee expense, including the expense related to the Share Incentive Plan, was ~~$1.7~~$1.0 million ~~and $0.9 million~~ for each of the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.

In 2009, the Company adopted the Long-Term Investment Alignment Program (the “Program”) pursuant to which the Company may grant awards to employees, entitling them to receive up to 25% of any potential future payments of Promote to the Operating Partnership from Funds III, IV and V. The Company has granted such awards to employees representing 25% of the potential Promote payments from Fund III to the Operating Partnership, 22.8% of the potential Promote payments from Fund IV to the Operating Partnership and ~~2.2%~~4.3% of the potential Promote payments from Fund V to the Operating Partnership. Payments to senior executives under the Program require further Board approval at the time any potential payments are due pursuant to these grants. Compensation relating to these awards will be recognized in each reporting period in which Board approval is granted.

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– Stock Compensation. The awards in connection with Fund IV and Fund V were determined to have 0 intrinsic value as of September 30, 2020 or December 31, 2019.

NaN compensation expense was recognized for the nine months ended September 30, 2020 or the year ended December 31, 2019 ~~and 2018, respectively,~~ related to the Program in connection with Fund III, Fund IV or Fund V.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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		Common Restricted Shares			Weighted Grant-Date Fair Value		LTIP Units			Weighted Grant-Date Fair Value
Unvested at January 1, 2018		41,327		$	26.92		910,099		$	28.28
Unvested at January 1, 2019												38,455		$	22.44		891,886		$	26.87
Granted		22,817			23.65		425,880			26.80		25,359			28.56		348,726			32.78
Vested		(25,261	)		30.79		(431,827	)		29.72		(21,424	)		27.12		(290,753	)		29.30
Forfeited		(428	)		27.25		(12,266	)		28.57		—			—		(15,679	)		31.49
Unvested at December 31, 2018		38,455			22.44		891,886			26.87
Unvested at December 31, 2019												42,390			23.73		934,180			28.24
Granted		25,359			28.56		348,726			32.78		66,824			13.70		440,829			19.64
Vested		(21,424	)		27.12		(290,753	)		29.30		(19,264	)		27.72		(250,241	)		30.44
Forfeited		—			—		(15,679	)		31.49		(39	)		24.77		(3,879	)		24.67
Unvested at September 30, 2019		42,390		$	23.73		934,180		$	28.24
Unvested at September 30, 2020												89,911		$	15.42		1,120,889		$	24.38

The weighted-average grant date fair value for Restricted Shares and LTIP Units granted for the nine months ended September 30, ~~2019~~2020 and the year ended December 31, ~~2018~~2019 were ~~$32.50~~$18.86 and ~~$26.64,~~$32.50, respectively. As of September 30, ~~2019,~~2020, there was ~~$18.2~~$17.4 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Share Incentive Plan. That cost is expected to be recognized over a weighted-average period of ~~1.9~~1.5 years. The total fair value of Restricted Shares that vested for the nine months ended September 30, ~~2019~~2020 and the year ended December 31, ~~2018,~~2019, was ~~$0.6~~$0.5 million and ~~$0.8~~$0.6 million, respectively. The total fair value of LTIP Units that vested (LTIP units vest primarily during the first quarter) during the nine months ended September 30, ~~2019~~2020 and the year ended December 31, ~~2018,~~2019, was $7.6 million and $8.5 million, ~~and $12.8 million,~~ respectively.

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

Other Plans

On a combined basis, the Company incurred a total of $0.3 million related to the following employee benefit plans for each of the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019.

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~~than $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. A total of ~~1,803~~3,262 and ~~2,836~~1,803 Common Shares were purchased by employees under the Purchase Plan for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Deferred Share Plan

During 2006, the Company adopted a Trustee Deferral and Distribution Election, under which the participating Trustees earn deferred compensation.

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 ~~$19,000,~~$19,500, for the year ending December 31, ~~2019.~~2020.

14. (Loss) 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 outstanding (Note 10). During the periods presented, the Company had unvested LTIP Units which provide for non-forfeitable rights to dividend equivalent payments. Accordingly, these unvested LTIP Units are considered participating securities and are included in the computation of basic earnings per Common Share pursuant to the two-class method.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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”)~~Units issued under the Company’s Share Incentive Plans (Note 13). The effect of such shares is excluded from the calculation of earnings per share when anti-dilutive as indicated in the table below.

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 1-for-one basis. The income allocable to such units is allocated on this same basis and reflected as noncontrolling interests in the accompanying consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings per share.

	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)	2020			2019			2020			2019
Numerator:
Net (loss) income attributable to Acadia	$	(9,030	)	$	10,458		$	1,966		$	31,735
Less: net income attributable to participating securities		0			(38	)		(233	)		(134	)
(Loss) income from continuing operations net of income attributable to participating securities	$	(9,030	)	$	10,420		$	1,733		$	31,601

Denominator:
Weighted average shares for basic earnings per share		86,308,500			84,888,445			86,486,017			83,552,182
Effect of dilutive securities:
Employee unvested restricted shares		0			0			0			0
Denominator for diluted earnings per share		86,308,500			84,888,445			86,486,017			83,552,182

Basic (loss) and basic and diluted earnings per Common Share from continuing operations attributable to Acadia	$	(0.10	)	$	0.12		$	0.02		$	0.38

Anti-Dilutive Shares Excluded from Denominator:
Series A Preferred OP Units		188			188			188			188
Series A Preferred OP Units - Common share equivalent		25,067			25,067			25,067			25,067

Series C Preferred OP Units		126,593			136,593			126,593			136,593
Series C Preferred OP Units - Common share equivalent		439,556			474,278			439,556			474,278
Restricted shares		76,394			40,821			76,394			40,821

15. Subsequent Events

COVID-19 Pandemic Update

The information provided about the impact of the COVID-19 Pandemic in Note 11 is updated for activity subsequent to September 30, 2020 as follows:

•

Tenant Operating Status – The following table illustrates the percentage of the Company’s consolidated and unconsolidated ABR derived from stores which were open or partially open for business as of the dates indicated:

	Percentage of Tenants Open for Business as of
	June 30, 2020			September 30, 2020			October 31, 2020

Core		74	%		86	%		86	%
Fund		74	%		88	%		87	%

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

2019

2018

2019

2018

Numerator:

Net income attributable to Acadia

$
10,458

$
9,225

$
31,735

$
24,309

Less: net income attributable to participating securities

(38
)

(66
)

(134
)

(158
)
Income from continuing operations net of income attributable to participating securities

$
10,420

$
9,159

$
31,601

$
24,151

Denominator:

Weighted average shares for basic earnings per share

84,888,445

81,565,805

83,552,182

82,245,020

Effect of dilutive securities:

Employee unvested restricted shares

—

—

—

—

Denominator for diluted earnings per share

84,888,445

81,565,805

83,552,182

82,245,020

Basic and diluted earnings per Common Share from continuing operations attributable to Acadia

$
0.12

$
0.11

$
0.38

$
0.29

Anti-Dilutive Shares Excluded from Denominator:

Series A Preferred OP Units

188

188

188

188

Series A Preferred OP Units - Common share equivalent

25,067

25,067

25,067

25,067

Series C Preferred OP Units

136,593

136,593

136,593

136,593

Series C Preferred OP Units - Common share equivalent

474,278

474,278

474,278

474,278

Restricted shares

40,821

38,450

40,821

37,180

•

	Collections as of:
	June 30, 2020 for			September 30, 2020 for						October 31, 2020 for
	Second Quarter 2020			Second Quarter 2020			Third Quarter 2020			Second Quarter 2020			Third Quarter 2020			October 2020

Core		71	%		74	%		85	%		76	%		87	%		90	%
Fund		62	%		65	%		77	%		67	%		79	%		81	%

~~15. Subsequent Events~~

~~Financings~~

~~On October 8, 2019, the Operating Partnership amended its revolving senior unsecured credit facility which it originally entered into on February 20, 2018 (Note 7~~). Prior to this amendment, the credit agreement provided for a principal amount of up to $500.0 million, which consisted of a $150.0 million revolving credit facility and a $350.0 million term loan facility. The amendment provides for a $100.0 million increase in the revolving credit facility, resulting in borrowing capacity of up to $600.0 million in principal amount, which includes the $250.0 million revolving credit facility and the $350.0 million term loan facility. In addition, the amendment provides for an 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.

~~During October 2019, Fund V’s property entities entered into new mortgages for certain of its consolidated (Note 2) and unconsolidated (Note 4) properties totaling $140.4 million for which Fund V had previously entered into forward swaps effective November 1 (Note 8) as follows:~~

•

~~Landstown Commons~~Rent Concession Agreements – ~~$60.9~~During October 2020, the Company executed 18 rent concession arrangements with tenants comprised of 9 agreements for rent deferral and 9 agreements for rent forgiveness aggregating approximately $1.4 million ~~at LIBOR plus 1.7%, swapped~~related to the COVID-19 Pandemic. The Company is currently determining how it will account for these agreements. At September 30, 2020, the Company had executed a ~~fixed rate~~total of ~~2.949%, maturing on October 24, 2024.~~237 rent concession agreements (Note 11).

•

~~Lincoln Commons~~Bankruptcy Risk – ~~$40.8~~Subsequent to September 30, 2020 and through October 31, 2020, there have been no additional bankruptcies of national retailers, that are tenants of the Company. As of October 31, for all bankruptcies announced during 2020, the Core Portfolio has 6 operating stores with ABR attributable to Acadia totaling $2.6 million, ~~at LIBOR plus 1.7%, swapped~~or 1.9% of Core ABR, and the Fund Portfolio has 17 operating stores with ABR attributable to ~~a fixed rate~~Acadia totaling $1.1 million, or 5.2% of ~~2.949%, maturing on October 24, 2024. At closing, $38.8 million was funded.~~

•

~~Tri-City Plaza – $38.7 million at LIBOR plus 1.9%, swapped to a fixed rate of 3.0935%, maturing on October 18, 2024. At closing, $25.4 million was funded.~~Fund ABR, for which these leases may be rejected in the future.

Debt Extensions

Subsequent to September 30, 2020, the Company modified 2 consolidated Fund ~~Distribution~~loans aggregating $96.2 million (prior to principal reductions aggregating $8.2 million) as well as 1 unconsolidated Fund loan for $15.3 million, to extend their maturity dates by one to two years.

Litigation Settlement

On October ~~11, 2019,~~30, 2020, the litigation matter concerning the Brandywine Holdings loan (Note 7) was settled, with the mortgage loan being satisfied by Brandywine Holdings through a $30 million payment that represented a discount to the carrying value at September 30,2020 (and the Successor Lender retained amounts in the suspense account from property collections), which will result in a gain for accounting purposes in the fourth quarter. In connection with the settlement, the parties entered into joint stipulations dismissing each of the Court of Chancery action, the Delaware Superior Court actions, and the appeals with prejudice.

Note Receivable Modification

On November 2, 2020, Fund ~~V distributed $6.3~~II modified its $33.6 million note receivable (Note 3) to ~~investors,~~extend the maturity date from December 7, 2020 to April 15, 2021 and to reduce the outstanding balance by $10.0 million reflecting substantial completion of ~~which~~ the ~~Company’s share was $1.3 million.~~project by the developer/borrower.

4448

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

As of September 30, ~~2019,~~2020, we own or have an ownership interest in ~~182~~187 properties held through 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 its subsidiaries, not including those properties owned through our Funds. These properties primarily consist of street and urban retail, and dense suburban shopping centers. Our Funds are investment vehicles through which our Operating Partnership and outside institutional investors invest in primarily opportunistic and value-add retail real estate. Currently, we have active investments in four Funds. A summary of our wholly-owned and partially-owned retail properties and their physical occupancies (including tenants who may have been forced to close their businesses as a result of the COVID-19 Pandemic, as discussed under “Significant Developments” below) at September 30, ~~2019~~2020 is as follows:

	Number of Properties				Operating Properties					Number of Properties				Operating Properties
	Development or Redevelopment		Operating		GLA		Occupancy			Development or Redevelopment		Operating		GLA		Occupancy
Core Portfolio:
Chicago Metro		—		36		707,911		88.0	%		—		39		741,365		86.5	%
New York Metro		—		24		335,239		92.4	%		—		27		345,954		88.6	%
Los Angeles Metro											—		1		14,000		100.0	%
San Francisco Metro		1		1		148,832		100.0	%		1		1		148,832		100.0	%
Washington DC Metro		1		28		323,189		91.8	%		1		28		322,595		73.9	%
Boston Metro		—		3		55,276		100.0	%		—		3		55,276		100.0	%
Suburban		2		29		4,257,989		93.7	%		3		27		4,015,847		90.0	%
Total Core Portfolio		4		121		5,828,436		93.0	%		5		126		5,643,869		89.0	%
Acadia Share of Total Core Portfolio		4		121		5,207,696		93.5	%		5		126		5,198,149		90.3	%

Fund Portfolio:
Fund II		—		1		469,518		65.2	%		—		1		469,518		64.7	%
Fund III		1		3		134,434		75.2	%		1		3		135,382		82.2	%
Fund IV		3		35		2,487,995		85.5	%		3		34		2,321,322		89.8	%
Fund V		—		14		4,381,658		90.9	%		—		14		4,384,709		87.0	%
Total Fund Portfolio		4		53		7,473,605		87.2	%		4		52		7,310,931		86.4	%
Acadia Share of Total Fund Portfolio		4		53		1,598,960		87.0	%		4		52		1,527,101		86.5	%

Total Core and Funds		8		174		13,302,041		89.8	%		9		178		12,954,800		87.5	%
Acadia Share of Total Core and Funds		8		174		6,806,656		92.0	%		9		178		6,725,250		89.4	%

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.

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. WeAlthough our distributions have been temporarily suspended during 2020, generally, 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 NINE MONTHS ENDED SEPTEMBER 30, ~~2019~~2020

~~Investments~~Special Note Regarding the COVID-19 Pandemic

During the ~~nine months ended September 30, 2019, within our Core portfolio we invested~~first quarter of 2020, the COVID-19 Pandemic began to impact the Company. In order to protect citizens and slow the spread of COVID-19, a majority of state governments in ~~eight properties aggregating $93.2 million~~the United States instituted restrictions on travel, implemented “shelter-in-place” or “stay-at-home” orders and social distancing practices, and mandated shutdowns of certain “non-essential” businesses for an indeterminate period of time. As a result, a majority of the Company’s retail tenants were forced to temporarily close their businesses during all or a portion of the second quarter of 2020. While most tenants have since reopened, the tenant closures created concern regarding the Company’s ability to fully collect rents billed during the second and third quarters of 2020 and possibly thereafter from non-operating tenants, many of which have already requested rent concessions from the Company. In addition, the COVID-19 Pandemic has had a significant adverse impact on economic and market conditions resulting in a decline in the Company’s share price, disruption of or lack of access to the capital markets and depressed real estate values, among others. The Company notes the following as ~~follows:~~a result of theCOVID-19 Pandemic:

•

~~On January 24, 2019, our unconsolidated Renaissance Portfolio venture acquired Fund III’s 3104 M Street property located~~Effective March 20, 2020, the Company closed its offices and its employees successfully transitioned to working from their homes. Effective June 29, 2020 the Company has reopened its main office and has put robust protocols in ~~Washington, D.C.~~place for ~~$10.7 million (Note 4) for which our share was $2.1 million as discussed further below.~~protecting its employees against the spread of the COVID-19 virus.

•

On March ~~15, March 27, May 29, 2019~~31, 2020, the Company issued a press release relaying that certain major development and July 30, 2019, we acquired four retail condominiums located in the Soho section of New York City for a total of $74.7 million as part of a collection of seven properties referred to as the “Soho Acquisitions” with an aggregate purchase price of approximately $122.0 million (~~Note 2). The acquisitions of the remaining three properties are expected to be finalized through early 2020. No assurance can be given that we will successfully close~~construction projects have been placed on ~~the remaining acquisitions under contract, which are subject to customary closing conditions.~~hold and withdrawing its 2020 guidance.

•

~~On May 2, 2019, we entered into~~The Company reviewed its assets for impairment at March 31, 2020 and determined that it would take an aggregate non-cash impairment charge of $51.5 million, of which $12.4 million was the Company’s pro-rata share, as a ~~ground lease~~result of changes in estimated holding periods, estimated net operating income and cap rates at selected properties due to circumstances stemming from the COVID-19 Pandemic (Note 118) ~~on a development property in Washington, D.C. referred to as “1238 Wisconsin Avenue.”~~. The Company reviewed its assets for impairment at June 30, 2020 and September 30, 2020 and did not believe that additional impairment charges were required for these periods.

•

OnTenant Operating Status – The following table illustrate the percentage of the Company’s consolidated and unconsolidated ABR derived from stores which were open or partially open for business as of the dates indicated:

	Percentage of Tenants Open for Business as of
	June 30, 2020			September 30, 2020			October 31, 2020

Core		74	%		86	%		86	%
Fund		74	%		88	%		87	%

•

	Collections as of:
	June 30, 2020 for			September 30, 2020 for						October 31, 2020 for
	Second Quarter 2020			Second Quarter 2020			Third Quarter 2020			Second Quarter 2020			Third Quarter 2020			October 2020

Core		71	%		74	%		85	%		76	%		87	%		90	%
Fund		62	%		65	%		77	%		67	%		79	%		81	%

•

The Company has negotiated rent deferrals and abatements with select tenants. As of September ~~11, we acquired two mixed-use buildings~~30, 2020, the Company has deferred rents aggregating $7.5 million included in ~~Chicago, Illinois, referred to as “849~~Rents receivable on its balance sheet and ~~912 W. Armitage” for a total~~through September 30, 2020 has abated rents of ~~$7.8~~$1.5 million at the Company’s proportionate share (Note 211). Subsequent to September 30, 2020 and through October 31, 2020 the Company has entered into 18 additional agreements (Note 15).

•

The Company has also negotiated payment deferrals of $0.1 million associated with some of its leased office space (Note 11) and interest payment deferrals of $0.8 million as of September 30, 2020 associated with some of its Fund mortgage debt (Note 7). In addition, the Company has negotiated deferrals for certain real estate taxes.

•

The Company reviewed the collectability of its rents receivable and straight-line rents and has recorded credit loss reserves of approximately $24.0 million and $39.9 million, of which $12.4 million and $25.4 million was the Company’s share, (Note 11, Note 3) during the three and nine months ended September 30, 2020, respectively, primarily related to projected tenant defaults stemming from business closures attributable to the COVID-19 Pandemic.

•

The Company continues to have active discussions with existing and potential new tenants for new and renewed leases. However, the uncertainty relating to the COVID-19 Pandemic could result in higher vacancy than the Company otherwise would have experienced, a longer amount of time to fill vacancies and potentially lower rental rates. As of September 30, 2020, approximately 0.7% and 1.6% of the Company’s Core and Fund portfolio rents, respectively, was subject to month-to-month leases or leases scheduled to expire in 2020 and 9.7% and 8.7% was subject to leases scheduled to expire in 2021.

•

Given the impact of the COVID-19 Pandemic on the markets where our properties are located, we anticipate continued reductions in our disposition and acquisition activity for the remainder of 2020.

•

The Company has numerous long-dated interest rate cash flow hedges (Note 7, Note 8) in place to effectively fix the interest rates on its variable-rate debt. In periods when current referenced interest rates fall below strike rates of the swap, the Company is required to make payments that are charged to interest expense. The fair value of the interest rate swaps at September 30, 2020 was a liability of $103.2 million, which represents the present value of expected payments over the weighted-average remaining term of the swaps, which was 7.7 years.

•

The Company has reviewed its debt covenants with no significant new compliance issues noted as of September 30, 2020. However, potential reductions in the collections of rent during the remainder of 2020 may impact future debt compliance at various properties.

•

Beginning with the second quarter of 2020, the Board temporarily suspended distributions on its common shares and common units, which suspension the Board has determined to continue through the fourth quarter of 2020. Assuming that current operating conditions continue to prevail, the Company currently expects to reinstate quarterly distributions in the first quarter of 2021, which would be subject to Board approval at that time (Note 10).

While the Company currently considers the disruptions associated with the COVID-19 Pandemic to be temporary, if such disruptions escalate, are protracted or have a more severe impact than anticipated, they may have a material adverse effect on the Company’s revenues, results of operations, financial condition, and liquidity in future periods.

Investments

During the nine months ended September 30, ~~2019, within our Fund portfolio~~2020, we invested in ~~eight~~two properties aggregating ~~$328.5~~$19.2 million, inclusive of transaction costs, within our Core portfolio as follows:

•

On ~~March 19, 2019, Fund V’s unconsolidated venture (Note 4~~)January 9, we acquired a ~~suburban shopping center~~fully-occupied retail condominium, 37 Greene Street, located in ~~Riverdale, Utah~~the SoHo section of New York City, for ~~$48.5 million referred to as “Family Center at Riverdale” for which Fund V’s share was $43.7~~$15.7 million.

•

On ~~April 30, 2019, Fund V’s unconsolidated venture (Note 4~~)February 13, we acquired a ~~suburban shopping center~~fully-occupied, mixed-use building in ~~Vernon, Connecticut~~Chicago, Illinois, for ~~$36.7~~$3.5 million.

On April 1, as described further below, in a non-cash transaction, we converted a note receivable into the remaining venture partner’s interest in Town Center. We consolidated the previously unconsolidated investment (Note 4).

During June, Mervyns II liquidated a portion of its Investment in Albertsons (Note 4), which had an initial public offering. Mervyns II recognized realized gains on the sale of those shares in addition to the appreciation in the fair value of its remaining shares of Albertsons. Unrealized holding gains, distributions and other for the nine months ended September 30, 2020 includes Mervyns II’s $57.0 million share of net unrealized holding gains through September 30, 2020 and its $22.8 million share of realized distributions related to its Investment in Albertsons, of which the Company’s aggregate share is $22.6 million.

During the nine months ended September 30, 2020, we did not make any investments within our Fund portfolio. However, Fund IV obtained the venture partner’s interest in two of its Broughton Street properties for $1.3 million (Note 4) and now consolidates those properties.

Dispositions of Real Estate

During the nine months ended September 30, 2020, we did not make any dispositions in our Core Portfolio; however, a Fund IV property and a Fund IV parcel were sold in April and September 2020, respectively, (Note 2) for a total of $15.7 million resulting in an aggregate gain of $0.5 million of which the Company’s share was $0.1 million.

Financing Activity

During the nine months ended September 30, 2020, we extended the maturity dates of a Fund II loan, the Fund V Subscription line and five Fund mortgages, which had aggregate outstanding balances of $337.8 million at September 30, 2020 (Note 7).

Structured Financing Investments

During the nine months ended September 30, 2020, the Company had the following Structured Financing investment activity (Note 3):

•

On January 17, the Company provided a loan for $54.0 million ~~referred~~ to ~~as “Tri-City Plaza” for which Fund V’s share was $33.0 million~~an entity that owns an interest in 850 Third Avenue, in Brooklyn, New York.

•

On ~~May 1, 2019, Fund IV acquired~~February 6, the Company provided a ~~leasehold interest (Note 11) in a retail and parking condominium in a building in New York, New York~~loan for ~~$10.5~~$5.0 million ~~referred~~ to ~~as “110 University Place.”~~one of the Company’s venture partners.

•

On ~~May 6, 2019, Fund V acquired~~April 1, 2020, in a ~~suburban shopping center~~non-cash transaction, the Company converted its $38.7 million note receivable plus accrued interest of $2.0 million (Note 23) to a controlling interest in ~~Palm Coast, Florida for $36.6 million referred to~~Town Center in Wilmington, Delaware as ~~“Palm Coast Landing.”~~described above.

•

~~On June 21, 2019,~~One Core and one Fund ~~V acquired a suburban shopping center (Note 2~~)III notes receivable matured but were not repaid. These notes, which aggregated $31.6 million including accrued interest, remained 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 collectively referred to as the “Washington REIT Portfolio” for which Fund V’s share was $49.4 million. default at September 30, 2020.

~~Dispositions of Real Estate~~Equity Repurchases

During the ~~nine months ended~~first quarter of 2020, the Company repurchased 1,219,065 Common Shares for $22.4 million, inclusive of $0.1 million of fees at a weighted average price per share of $18.29, under the share repurchase program, under which $122.6 million remains available as of September 30, ~~2019, we sold four consolidated properties (Note 2) from our Fund Portfolio for gross proceeds totaling $83.9 million as follows:~~

•

~~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 JFK Plaza property for $7.8 million.~~

•

~~On August 22, 2019, Fund III sold its Nostrand Avenue property for $27.7 million.~~

•

~~On May 17 and September 23, 2019, Fund IV sold two residential condominium units for a total of $5.9 million.~~

•

~~On September 27, 2019 Fund IV sold its 938 W. North Street property for $32.0 million.~~

~~The Funds recognized a net aggregate gain on the sales of these consolidated properties of $14.1 million and our share was $3.1 million, net of noncontrolling interests.~~

~~Financings~~

~~During the nine months ended September 30, 2019, we obtained aggregate new financing of $137.2 million including (Note 7~~):

•

~~An aggregate of $70.3 million in financings with two new mortgages for Fund V.~~

•

~~An aggregate of $21.9 million in financings, with one new mortgage of $3.0 million and a refinancing of an $18.9 million mortgage for Fund IV.~~

•

~~A $45.0 million loan for Fund II, of which $23.9 million was drawn at September 30, 2019.~~

~~In addition, Funds III and IV modified two mortgages by repaying a total of $14.8 million and reducing borrowing costs (Note 7~~).

~~Structured Financing~~

~~During the nine months ended September 30, 2019, the Company redeemed its $15.3 million Fund IV Structured Financing investment (Note 3~~).

~~Equity Issuance~~

~~During the three months ended September 30, 2019, the Company sold 2,149,154 shares under its ATM program~~2020 (Note 10) for gross proceeds of $61.6 million, or $60.6 million net of issuance costs, at a weighted-average gross price per share of $28.64. During the nine months ended September 30, 2019, the Company sold 4,816,505 shares under its ATM program for gross proceeds of $137.8 million, or $135.8 million net of issuance costs, at a weighted-average gross price per share of $28.61..

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 the Three Months Ended September 30, ~~2019~~2020 to the Three Months Ended September 30, ~~2018~~2019

The results of operations by reportable segment for the three months ended September 30, ~~2019~~2020 compared to the three months ended September 30, ~~2018~~2019 are summarized in the table below (in millions, totals may not add due to rounding):

	Three Months Ended											Three Months Ended																							Three Months Ended											Three Months Ended
	September 30, 2019											September 30, 2018											Increase (Decrease)												September 30, 2020											September 30, 2019											Increase (Decrease)
	Core			Funds			SF		Total			Core			Funds			SF		Total			Core			Funds			SF			Total			Core			Funds			SF		Total			Core			Funds			SF		Total			Core			Funds			SF		Total
Revenues	$	42.1		$	31.2		$	—	$	73.3		$	41.7		$	23.8		$	—	$	65.5		$	0.4		$	7.4		$	—		$	7.8		$	38.8		$	12.4		$	—	$	51.3		$	42.1		$	31.2		$	—	$	73.3		$	(3.3	)	$	(18.8	)	$	—	$	(22.0	)
Depreciation and amortization		(15.2	)		(17.0	)		—		(32.2	)		(14.9	)		(13.8	)		—		(28.7	)		0.3			3.2			—			3.5			(18.0	)		(16.5	)		—		(34.5	)		(15.2	)		(17.0	)		—		(32.2	)		2.8			(0.5	)		—		2.3
Property operating expenses, other operating and real estate taxes		(11.2	)		(12.2	)		—		(23.4	)		(11.9	)		(10.0	)		—		(21.9	)		(0.7	)		2.2			—			1.5			(12.7	)		(9.5	)		—		(22.2	)		(11.2	)		(12.2	)		—		(23.4	)		1.5			(2.7	)		—		(1.2	)
General and administrative expenses		—			—			—		(8.2	)		—			—			—		(8.0	)		—			—			—			0.2			—			—			—		(8.6	)		—			—			—		(8.3	)		—			—			—		0.3
Impairment charge		—			(0.3	)		—		(0.3	)		—			—			—		—			—			0.3			—			0.3
Impairment charges																																				—			—			—		—			—			(0.3	)		—		(0.3	)		—			(0.3	)		—		(0.3	)
Gain on disposition of properties		—			12.1			—		12.1			—			5.1			—		5.1			—			7.0			—			7.0			—			—			—		—			—			12.1			—		12.1			—			(12.1	)		—		(12.1	)
Operating income		15.8			13.7			—		21.3			15.0			5.1			—		12.1			0.8			8.6			—			9.2			8.2			(13.6	)		—		(14.0	)		15.8			13.7			—		21.3			(7.6	)		(27.3	)		—		(35.3	)
Interest income		—			—			1.7		1.7			—			—			3.5		3.5			—			—			(1.8	)		(1.8	)
Other income		—			5.0			—		5.0			—			—			—		—			—			5.0			—			(5.0	)
Equity in earnings (losses) of unconsolidated affiliates		1.8			(0.5	)		—		1.3			2.0			(1.6	)		—		0.4			(0.2	)		1.1			—			0.9
Interest and other income																																				—			—			2.1		2.1			—			5.0			1.7		6.8			—			(5.0	)		0.4		(4.7	)
Realized and unrealized holding losses on investments and other																																				—			(7.9	)		—		(7.9	)		—			—			—		—			—			(7.9	)		—		7.9
Equity in (losses) earnings of unconsolidated affiliates																																				(0.8	)		0.2			—		(0.6	)		1.8			(0.5	)		—		1.3			(2.6	)		0.7			—		(1.9	)
Interest expense		(7.3	)		(11.8	)		—		(19.1	)		(7.0	)		(11.1	)		—		(18.1	)		0.3			0.7			—			1.0			(8.3	)		(9.5	)		—		(17.8	)		(7.3	)		(11.8	)		—		(19.1	)		1.0			(2.3	)		—		(1.3	)
Income tax provision		—			—			—		(1.4	)		—			—			—		(0.5	)		—			—			—			(0.9	)
Income tax (provision) benefit																																				—			—			—		(0.1	)		—			—			—		(1.4	)		—			—			—		1.3
Net income (loss)		10.2			6.5			1.7		8.8			10.0			(7.7	)		3.5		(2.6	)		0.2			14.2			(1.8	)		11.4			(0.9	)		(30.8	)		2.1		(38.3	)		10.2			6.5			1.7		8.8			(11.1	)		(37.3	)		0.4		(47.1	)
Net loss attributable to noncontrolling interests		0.3			1.4			—		1.6			0.1			11.7			—		11.8			0.2			(10.3	)		—			(10.2	)		1.4			27.9			—		29.3			0.3			1.4			—		1.6			1.1			26.5			—		27.7
Net income attributable to Acadia	$	10.5		$	7.8		$	1.7	$	10.5		$	10.1		$	4.0		$	3.5	$	9.2		$	0.4		$	3.8		$	(1.8	)	$	1.3		$	0.5		$	(2.9	)	$	2.1	$	(9.0	)	$	10.5		$	7.8		$	1.7	$	10.5		$	(10.0	)	$	(10.7	)	$	0.4	$	(19.5	)

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 $0.4~~decreased $10.0 million for the three months ended September 30, ~~2019~~2020 compared to the prior year ~~period.~~period as a result of the changes further described below.

Revenues for our Core Portfolio decreased $3.3 million for the three months ended September 30, 2020 compared to the prior year period primarily due to a $6.8 million increase in credit loss reserves (comprised of $4.7 million and $2.1 million of billed rent and straight-line rent, respectively) in 2020 primarily related to the COVID-19 Pandemic (Note 11) and $1.4 million from tenant bankruptcies in 2020. These decreases were partially offset by increases of $3.0 million related to the consolidation of Town Center in 2020 (Note 4) and additional rents of $1.9 million from Core property acquisitions during 2019 and 2020 (Note 2).

Depreciation and amortization for our Core Portfolio increased $2.8 million for the three months ended September 30, 2020 compared to the prior year period primarily due to $2.1 million from the consolidation of Town Center and $1.0 million from Core property acquisitions in 2019 and 2020.

Property operating expenses, other operating and real estate taxes for our Core Portfolio increased $1.5 million for the three months ended September 30, 2020 compared to the prior year period primarily due to ground rent for new operating leases which commenced after September 30, 2019.

Equity in (losses) earnings of unconsolidated affiliates for our Core Portfolio decreased $2.6 million for the three months ended September 30, 2020 compared to the prior year period, primarily due to $1.5 million from the consolidation of Town Center in 2020 as well as a $1.0 million increase in credit loss reserves at unconsolidated properties related to the COVID-19 Pandemic (Note 11).

Interest expense for our Core Portfolio increased $1.0 million for the three months ended September 30, 2020 compared to the prior year period primarily due to higher average outstanding borrowings in 2020.

Net loss attributable to noncontrolling interests for our Core Portfolio increased $1.1 million for the three months ended September 30, 2020 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above.

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 ~~increased $3.8~~decreased $10.7 million for the three months ended September 30, ~~2019~~2020 compared to the prior year period as a result of the changes described below.

Revenues for the Funds ~~increased $7.4~~decreased $18.8 million for the three months ended September 30, ~~2019~~2020 compared to the prior year period primarily due to (i) a $16.8 million increase in credit loss reserves (comprised of $5.4 million and $11.4 million of billed rent and straight-line rent, respectively) in 2020 primarily related to the COVID-19 Pandemic (Note 11); (ii) $1.1 million from Fund property dispositions; and (iii) $1.2 million from the temporary closure of the Market Hall at City Point during the COVID-19 Pandemic. These decreases were partially offset by $1.1 million from Fund property acquisitions in 2019 ~~and 2018.~~

Depreciation and amortization expense for the Funds increased $3.2 million for the three months ended September 30, 2019 compared to the prior year period primarily due to Fund property acquisitions in 2019 and 2018.(Note 2).

Property operating expenses, other operating and real estate taxes for the Funds ~~increased $2.2~~decreased $2.7 million for the three months ended September 30, ~~2019~~2020 compared to the prior year period primarily due to an overall decrease in operating expenses across the portfolio related to the COVID-19 Pandemic.

Gain on disposition of properties for the Funds decreased $12.1 million for the three months ended September 30, 2020 compared to the prior year period due to the sale of 938 W. North and JFK Plaza in Fund ~~property acquisitions~~IV and Nostrand Avenue in ~~2019~~Fund III during 2019.

Interest and ~~2018.~~

~~Other~~other income for the Funds ~~increased~~decreased $5.0 million for the three months ended September 30, ~~2019~~2020 compared to the prior year period due to the recognition of income associated with its New Market Tax Credit transaction within Fund II’s City Point investment in 2019 (Note 7).

~~Equity in earnings of unconsolidated affiliates~~

Realized and unrealized holding losses on investments and other includes a $7.9 million mark-to-market adjustment on the Albertson’s IPO shares during the three months ended September 30, 2020.

Interest expense for ~~our~~the Funds ~~increased $1.1~~decreased $2.3 million for the three months ended September 30, ~~2019 compared to the prior period primarily due to the recognition of 100% of the net loss generated from Broughton Street portfolio venture (Note 4~~) ~~in 2018 as our partner is no longer being allocated their share of the losses.~~

~~Interest expense for the Funds increased $0.7 million for the three months ended September 30, 2019~~2020 compared to the prior year period due to $2.6 million from lower average interest rates in 2020 and a ~~$2.0~~$0.8 million increase related to higher ~~average outstanding borrowings~~loan cost amortization in ~~2019 partially~~2019. These decreases were offset by ~~$1.1~~$1.4 million ~~of additional~~less interest capitalized in ~~2019.~~2020.

Net loss attributable to noncontrolling interests for the Funds ~~decreased $10.3~~increased $26.5 million for the three months ended September 30, ~~2019~~2020 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above. Net loss attributable to noncontrolling interests in the Funds includes asset management fees earned by the Company of ~~$4.4~~$3.6 million and ~~$4.5~~$4.4 million for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Structured Financing

The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” Interest income for the Structured Financing portfolio ~~decreased $1.8~~increased $0.4 million for the three months ended September 30, ~~2019~~2020 compared to the prior year period primarily due to $1.5 million from new notes issued in 2020 and 2019 partially offset by a $1.0 million decrease from ~~the payoff of a Fund IV note in 2019 along with~~ the conversion of ~~a portion of a note receivable into increased ownership~~the Brandywine Note to equity in ~~the real estate in 2018~~2020 (Note 43).

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 labeled “Total.” Unallocated income tax benefit increased $1.3 million for the three months ended September 30, 2020 compared to the prior year period due to the newly available carry-back of net operating losses under current Federal rules.

Comparison of Results for the Nine Months Ended September 30, 2020to theNine Months Ended September 30, 2019 ~~to theNine Months Ended September 30, 2018~~

The results of operations by reportable segment for the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018~~2019 are summarized in the table below (in millions, totals may not add due to rounding):

Nine Months Ended

Nine Months Ended

September 30, 2019

September 30, 2018

Increase (Decrease)

Core

Funds

SF

Total

Core

Funds

SF

Total

Core

Funds

SF

Total

Revenues

$
131.4

$
86.2

$
—

$
217.5

$
123.0

$
67.0

$
—

$
190.0

$
8.4

$
19.2

$
—

$
27.5

Depreciation and amortization

(45.9
)

(46.9
)

—

(92.8
)

(45.3
)

(41.5
)

—

(86.8
)

0.6

5.4

—

6.0

Property operating expenses, other
   operating and real estate taxes

(34.7
)

(32.2
)

—

(66.9
)

(32.1
)

(26.8
)

—

(58.9
)

2.6

5.4

—

8.0

General and administrative expenses

—

—

—

(25.6
)

—

—

—

(24.4
)

—

—

—

1.2

Impairment charge

—

(1.7
)

—

(1.7
)

—

—

—

—

—

1.7

—

1.7

Gain on disposition of properties

—

14.1

—

14.1

—

5.1

—

5.1

—

9.0

—

9.0

Operating income

50.7

19.5

—

44.6

45.6

3.9

—

25.1

5.1

15.6

—

19.5

Interest income

—

—

6.2

6.2

—

—

10.5

10.5

—

—

(4.3
)

(4.3
)
Other income

0.3

6.6

—

6.9

—

—

—

—

(0.3
)

6.6

—

(6.9
)
Equity in earnings (losses) of unconsolidated
   affiliates

7.3

(0.2
)

—

7.1

5.2

1.9

—

7.1

2.1

(2.1
)

—

-

Interest expense

(20.9
)

(35.9
)

—

(56.7
)

(20.5
)

(30.4
)

—

(50.9
)

0.4

5.5

—

5.8

Income tax provision

—

—

—

(1.6
)

—

—

—

(0.9
)

—

—

—

(0.7
)
Net income

37.5

(10.0
)

6.2

6.5

30.3

(24.6
)

10.5

(9.0
)

7.2

14.6

(4.3
)

15.5

Net loss attributable
   to noncontrolling interests

0.6

24.5

—

25.2

0.2

33.1

—

33.3

0.4

(8.6
)

—

(8.1
)
Net income attributable to Acadia

$
38.1

$
14.6

$
6.2

$
31.7

$
30.5

$
8.5

$
10.5

$
24.3

$
7.6

$
6.1

$
(4.3
)

$
7.4

	Nine Months Ended												Nine Months Ended
	September 30, 2020												September 30, 2019											Increase (Decrease)
	Core			Funds			SF			Total			Core			Funds			SF		Total			Core			Funds			SF		Total
Revenues	$	117.4		$	69.1		$	—		$	186.5		$	131.4		$	86.2		$	—	$	217.5		$	(14.0	)	$	(17.1	)	$	—	$	(31.0	)
Depreciation and amortization		(53.2	)		(48.4	)		—			(101.6	)		(45.9	)		(46.9	)		—		(92.8	)		7.3			1.5			—		8.8
Property operating expenses, other operating and real estate taxes		(42.5	)		(31.0	)		—			(73.5	)		(34.7	)		(32.2	)		—		(66.9	)		7.8			(1.2	)		—		6.6
General and administrative expenses		—			—			—			(26.4	)		—			—			—		(25.6	)		—			—			—		0.8
Impairment charges		—			(51.5	)		—			(51.5	)		—			(1.7	)		—		(1.7	)		—			49.8			—		49.8
Gain on disposition of properties		—			0.5			—			0.5			—			14.1			—		14.1			—			(13.6	)		—		(13.6	)
Operating income (loss)		21.7			(61.4	)		—			(66.1	)		50.7			19.5			—		44.6			(29.0	)		(80.9	)		—		(110.7	)
Interest and other income		—			—			7.2			7.2			0.3			6.6			6.2		13.2			(0.3	)		(6.6	)		1.0		(6.0	)
Realized and unrealized holding gains on investments and other		—			79.8			(0.5	)		79.3			—			—			—		—			—			79.8			0.5		(79.3	)
Equity in (losses) earnings of unconsolidated affiliates		(0.2	)		0.1			—			(0.2	)		7.3			(0.2	)		—		7.1			(7.5	)		0.3			—		(7.3	)
Interest expense		(25.1	)		(29.2	)		—			(54.4	)		(20.9	)		(35.9	)		—		(56.7	)		4.2			(6.7	)		—		(2.3	)
Income tax benefit (provision)		—			—			—			0.7			—			—			—		(1.6	)		—			—			—		2.3
Net income (loss)		(3.6	)		(10.8	)		6.6			(33.4	)		37.5			(10.0	)		6.2		6.5			(41.1	)		(0.8	)		0.4		(39.9	)
Net loss attributable to noncontrolling interests		7.7			27.7			—			35.4			0.6			24.5			—		25.2			7.1			3.2			—		10.2
Net income (loss) attributable to Acadia	$	4.1		$	16.9		$	6.6		$	2.0		$	38.1		$	14.6		$	6.2	$	31.7		$	(34.0	)	$	2.3		$	0.4	$	(29.7	)

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 $7.6~~decreased $34.0 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period as a result of the changes further described below.

Revenues for our Core Portfolio ~~increased $8.4~~decreased $14.0 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period primarily due to ~~$5.8~~(i) a $16.8 million ~~from~~increase in credit loss reserves (comprised of $9.9 million and $6.9 million of billed rent and straight-line rent, respectively) in 2020 related to the COVID-19 Pandemic (Note 11); (ii) the write-off of a ~~below market~~below-market lease in the prior year period related to a tenant that vacated for $5.7 million, (iii) $4.0 million from tenant bankruptcies and (iv) $0.9 million from property dispositions in 2019. These decreases were offset by additional rents of $7.2 million from Core property acquisitions during 2019 ~~a $1.3~~and 2020 (Note 2) and $6.0 million related to the consolidation of Town Center in 2020 (Note 4).

Depreciation and amortization for our Core Portfolio increased $7.3 million for the nine months ended September 30, 2020 compared to the prior year period primarily due to $3.6 million from Core property acquisitions in 2019 and ~~approximately $1.0~~2020 and $4.1 million from ~~improved credit loss experience and recoveries.~~the consolidation of Town Center.

Property operating expenses, other operating and real estate taxes for our Core Portfolio increased ~~$2.6~~$7.8 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period primarily due to ~~$1.3~~$6.8 million from ~~a reduced real estate tax assessment at City Center in 2018~~interest and ~~$1.1~~other related charges for Brandywine Holdings litigation (Note 7) and $1.0 million from ~~increased legal expenses~~Core property acquisitions in ~~the portfolio in 2019.~~2019 and 2020.

Equity in (losses) earnings of unconsolidated affiliates for our Core Portfolio ~~increased $2.1~~decreased $7.5 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period primarily due to ~~$1.1 million from lease up at various joint ventures in 2019 along with $1.0~~$3.8 million from the ~~conversion~~consolidation of Town Center in 2020 as well as a ~~portion~~$3.6 million increase in credit loss reserves at unconsolidated properties related to the COVID-19 Pandemic (Note 11).

Interest expense for our Core Portfolio increased $4.2 million for the nine months ended September 30, 2020 compared to the prior year period primarily due to higher average outstanding borrowings in 2020.

Net loss attributable to noncontrolling interests for our Core Portfolio increased $7.1 million for the nine months ended September 30, 2020 compared to the prior year period based on the noncontrolling interests’ share of ~~a note receivable into increased ownership in real estate during 2018.~~the variances discussed above.

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 increased ~~$6.1~~$2.3 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period as a result of the changes described below.

Revenues for the Funds ~~increased $19.2~~decreased $17.1 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period primarily due to ~~$13.0~~(i) a $21.0 million increase in credit loss reserves (comprised of $8.2 million and $12.8 million of billed rent and straight-line rent, respectively) in 2020 primarily related to the COVID-19 Pandemic (Note 11); (ii) $4.2 million from Fund property dispositions (Note 2) and (iii) $1.4 million from tenant bankruptcies. These decreases were partially offset by $9.4 million from Fund property acquisitions in 2019 and 2018, $4.7 million from lease up at City Point and 938 W North, $2.2 million from the consolidation of the Broughton Street Portfolio and $2.5 million related to Cortlandt Crossing being placed into service. These increases were partially offset $1.8 million due to property sales in 2019 and $1.4 million from a write off of a below market lease related to a bankruptcy in 2018.2019.

Depreciation and amortization for the Funds increased ~~$5.4~~$1.5 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period primarily due to $4.8 million from Fund property acquisitions in 2019 partially offset by $2.0 million from Fund property dispositions in 2019 and ~~2018.~~2020 and $1.3 million for write offs due to tenant bankruptcies in 2019.

Property operating expenses, other operating and real estate taxes for the Funds ~~increased $5.4~~decreased $1.2 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period primarily from $3.1 million for the closure of Fund II’s City Point property due to the COVID-19 Pandemic in 2020 and $2.4 million from Fund property dispositions in 2019 and 2020. These decreases were offset by $4.2 million from Fund property acquisitions in ~~2019 and 2018.~~2019.

~~The $1.7~~

Impairment charges for the Funds increased $49.8 million ~~impairment charge in 2019 relates~~for the nine months ended September 30, 2020 compared to ~~residential condominium units at Fund IV’s 210 Bowery~~the prior year period (Note 8). Impairment of $51.5 million during the first quarter of 2020 for the Funds relates to $33.8 million for 654 Broadway and Cortlandt Crossing in Fund III and $17.7 million for 801 Madison and 146 Geary Street in Fund IV. Charges during 2019 relate to $1.4 million for residential condos at 210 Bowery in Fund IV.

Gain on disposition of properties for the Funds ~~increased $9.0~~decreased $13.6 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period due to the sale of 3104 M Street and Nostrand Avenue in Fund III and 938 WW. North and JFK Plaza in Fund IV ~~and Nostrand Avenue and 3104 M Street in Fund III~~ during 2019 compared to the ~~sales~~sale of ~~Lake Montclair and 1861 Union~~Colonie Plaza in Fund IV ~~in 2018.~~during 2020 (Note 2, Note 4).

~~Other~~

Interest and other income for the Funds ~~increased~~decreased $6.6 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period 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 ~~investment.~~investment during 2019.

~~Equity in earnings~~

Realized and unrealized holding gains on investments and other includes a $57.0 million net mark-to-market adjustment on the Albertson’s IPO shares and a $22.8 million net realized gain on disposition of ~~unconsolidated affiliates~~Albertson’s shares during 2020 (Note 4).

Interest expense for the Funds decreased ~~$2.1~~$6.7 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period due to ~~a $3.2~~$7.4 million ~~distribution~~ from ~~Fund III’s Storage Post venture~~lower average interest rates in ~~2018 (Note 4~~)2020 and $1.9 million from lower loan cost amortization in 2020. These decreases were offset by ~~$1.1~~a $1.9 million ~~from the recognition of 100% of the net loss from the Broughton Street Portfolio venture~~decrease in ~~2018 as our partner is no longer being allocated their share of the losses.~~

~~Interest expense for the Funds increased $5.5 million for the nine months ended September 30, 2019 compared to the prior year period due to~~interest capitalized in 2020 and a ~~$4.9~~$0.4 million increase related to higher average outstanding borrowings in 2019, a $1.5 million increase related to higher average interest rates during 2019 and $1.4 million from higher loan cost amortization in 2019. These increases were partially offset by $2.4 million more interest capitalized in 2019.2020.

Net loss attributable to noncontrolling interests for the Funds ~~decreased $8.6~~increased $3.2 million for the nine months ended September 30, ~~2019~~2020 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above. Net loss attributable to noncontrolling interests in the Funds includes asset management fees earned by the Company of ~~$13.2~~$12.0 million and ~~$13.5~~ $13.2 million for the nine months ended September 30, 2020 and 2019, ~~and 2018,~~ respectively.

Structured Financing

The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” Interest income for the Structured Financing portfolio ~~decreased $4.3~~increased $1.0 million for the nine months ended September 30, 2020 compared to the prior year period primarily due to $4.0 million of additional interest income from new notes issued in 2020 and 2019 partially offset by $3.0 million from the conversion of the Brandywine Note Receivable to equity in 2020 (Note 4) and the payoff of a Fund IV note during 2019 (Note 3).

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 labeled “Total.” Unallocated income tax benefit increased $2.3 million for the nine months ended September 30, 2020 compared to the prior year period due to the ~~conversion~~newly available carry-back of ~~a portion of two notes receivable into increased ownership in the real estate (~~net operating losses under current Federal rules. ~~Note 4) during 2018 along with the payoff of a note made by Fund IV during 2019.~~

~~Unallocated~~

Unallocated general and administrative expense increased $1.2 million for the nine months ended September 30, 2019 compared to the prior year period primarily due to internal leasing salaries no longer being capitalized in 2019.

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 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):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Consolidated operating income	$	21,265		$	12,055		$	44,559		$	25,088
Consolidated operating (loss) income ^(a)													$	(14,025	)	$	21,265		$	(66,126	)	$	44,559
Add back:
General and administrative		8,222			7,982			25,579			24,359			8,625			8,222			26,415			25,579
Depreciation and amortization		32,170			28,676			92,807			86,755			34,457			32,170			101,627			92,807
Impairment charge		321			—			1,721			—

Impairment charges														—			321			51,549			1,721
Straight-line rent reserves														13,185			—			19,714			—
Less:
Above/below market rent, straight-line rent and other adjustments		(4,338	)		(4,387	)		(16,970	)		(15,491	)
Above/below-market rent, straight-line rent and other adjustments														(3,671	)		(4,338	)		(6,256	)		(16,970	)
Gain on disposition of properties		(12,056	)		(5,107	)		(14,070	)		(5,140	)		(24	)		(12,056	)		(509	)		(14,070	)
Consolidated NOI		45,584			39,219			133,626			115,571			38,547			45,584			126,414			133,626

Noncontrolling interest in consolidated NOI		(13,157	)		(9,482	)		(38,217	)		(26,913	)		(10,335	)		(13,157	)		(36,327	)		(38,217	)
Less: Operating Partnership's interest in Fund NOI included above		(3,480	)		(2,477	)		(10,292	)		(6,938	)		(2,289	)		(3,480	)		(8,710	)		(10,292	)
Add: Operating Partnership's share of unconsolidated joint ventures NOI ^(a)		6,288			6,280			19,553			18,356			3,133			6,288			12,353			19,553
NOI - Core Portfolio	$	35,235		$	33,540		$	104,670		$	100,076		$	29,056		$	35,235		$	93,730		$	104,670

(a)	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):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Core Portfolio NOI	$	35,235		$	33,540		$	104,670		$	100,076		$	29,056		$	35,235		$	93,730		$	104,670
Less properties excluded from Same-Property NOI		(4,046	)		(3,286	)		(11,737	)		(10,844	)		(3,731	)		(3,015	)		(11,094	)		(8,700	)
Same-Property NOI	$	31,189		$	30,254		$	92,933		$	89,232		$	25,325		$	32,220		$	82,636		$	95,970

Percent change from prior year period		3.1	%					4.1	%					(21.4	)%					(13.9	)%

Components of Same-Property NOI:
Same-Property Revenues	$	41,678		$	42,056		$	125,893		$	121,990		$	37,160		$	43,783		$	117,383		$	131,488
Same-Property Operating Expenses		(10,489	)		(11,802	)		(32,960	)		(32,758	)		(11,835	)		(11,563	)		(34,747	)		(35,518	)
Same-Property NOI	$	31,189		$	30,254		$	92,933		$	89,232		$	25,325		$	32,220		$	82,636		$	95,970

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 leases executed within our Core Portfolio for the three and nine months ended September 30, ~~2019.~~2020. Cash basis represents a comparison of rent most recently paid on the previous lease as compared to the initial rent paid on the new lease. Straight-line basis represents a comparison of rents as adjusted for contractual escalations, abated rent and lease incentives for the same comparable leases.

	Three Months Ended September 30, 2019							Nine Months Ended September 30, 2019						Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
Core Portfolio New and Renewal Leases	Cash Basis			Straight- Line Basis				Cash Basis			Straight- Line Basis			Cash Basis			Straight- Line Basis			Cash Basis			Straight- Line Basis
Number of new and renewal leases executed		17			17				33			33			11			11			27			27
GLA commencing		254,531			254,531				492,444			492,444			120,256			120,256			340,889			340,889
New base rent	$	22.96		$	24.17			$	17.08		$	17.80		$	28.61		$	29.38		$	20.31		$	21.00
Expiring base rent	$	21.97		$	20.37			$	16.32		$	15.43		$	27.23		$	26.12		$	20.00		$	19.24
Percent growth in base rent		4.5	%		18.7	%	��		4.7	%		15.4	%		5.1	%		12.5	%		1.5	%		9.1	%
Average cost per square foot ^(a)	$	7.87		$	7.87			$	5.18		$	5.18		$	4.22		$	4.22		$	2.19		$	2.19
Weighted average lease term (years)		8.4			8.4				7.0			7.0			9.2			9.2			6.6			6.6

(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”)~~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 and joint ventures. Also consistent with NAREIT’s definition of FFO, the Company has elected to include gains and losses incidental to its main business (including those related to its RCP investments such as Albertsons) in FFO. A reconciliation of net income attributable to Acadia to FFO follows (dollars in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands except per share data)	2019			2018			2019			2018
Net income attributable to Acadia	$	10,458		$	9,225		$	31,735		$	24,309
													2020			2019			2020			2019
Net (loss) income attributable to Acadia													$	(9,030	)	$	10,458		$	1,966		$	31,735

Depreciation of real estate and amortization of leasing costs (net of noncontrolling interests' share)		22,436			21,141			66,157			63,812			25,106			22,436			73,584			66,157
Impairment charge (net of noncontrolling interests' share)		74			—			395			—
Gain on disposition of properties (net of noncontrolling interests’ share)		(2,758	)		(994	)		(3,142	)		(994	)
Income attributable to Common OP Unit holders		649			596			2,031			1,572
Impairment charges (net of noncontrolling interests' share)														—			74			12,400			395
Gain on disposition of properties (net of noncontrolling interests' share)														(6	)		(2,758	)		(117	)		(3,142	)
(Loss) income attributable to Common OP Unit holders														(475	)		649			199			2,031
Distributions - Preferred OP Units		135			135			405			404			4			135			372			405
Funds from operations attributable to Common Shareholders and Common OP Unit holders	$	30,994		$	30,103		$	97,581		$	89,103		$	15,599		$	30,994		$	88,404		$	97,581

Funds From Operations per Share - Diluted
Basic weighted-average shares outstanding, GAAP earnings		84,888,445			81,565,805			83,552,182			82,245,020			86,308,500			84,888,445			86,486,017			83,552,182
Weighted-average OP Units outstanding		5,082,189			4,928,636			5,139,545			4,953,549			4,890,876			5,082,189			5,027,646			5,139,545
Basic weighted-average shares outstanding, FFO		89,970,634			86,494,441			88,691,727			87,198,569			91,199,376			89,970,634			91,513,663			88,691,727
Assumed conversion of Preferred OP Units to common shares		499,345			499,345			499,345			499,345
Assumed conversion of LTIP units and restricted share units to common shares		212,776			257,658			212,776			201,675
Assumed conversion of Preferred OP Units to Common Shares														25,067			499,345			464,623			499,345
Assumed conversion of LTIP units and Restricted Share Units to Common Shares														—			212,776			—			212,776
Diluted weighted-average number of Common Shares and Common OP Units outstanding, FFO		90,682,755			87,251,444			89,403,848			87,899,589			91,224,443			90,682,755			91,978,286			89,403,848

Diluted Funds from operations, per Common Share and Common OP Unit	$	0.34		$	0.35		$	1.09		$	1.01		$	0.17		$	0.34		$	0.96		$	1.09

LIQUIDITY AND CAPITAL RESOURCES

Uses of Liquidity and Cash Requirements

~~Our~~Generally, 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, (iv) debt service and loan repayments and (v) share repurchases.

Distributions

In order to qualify as a REIT for federal income tax purposes, we must distribute at least 90% of our taxable income to our shareholders. During the nine months ended September 30, ~~2019,~~2020, we paid dividends and distributions on our Common Shares, Common OP Units and Preferred OP Units totaling ~~$74.9~~$54.0 million. Beginning with the second quarter of 2020, the Board temporarily suspended distributions on its common shares and common units, which suspension the Board has determined to continue through the fourth quarter of 2020. Assuming that current operating conditions continue to prevail, the Company currently expects to reinstate quarterly distributions in the first quarter of 2021, which would be subject to Board approval at that time (Note 10).

Investments in Real Estate

During the nine months ended September 30, ~~2019,~~2020, within our Core portfolio we invested in ~~eight~~two properties aggregating ~~$93.2~~$19.2 million ~~and within our Fund portfolio we invested in eight properties aggregating $328.5 million~~inclusive of transaction costs, as follows:

•

On January ~~24, 2019, our unconsolidated Renaissance portfolio venture~~9, the Company acquired ~~Fund III’s 3104 M~~a retail condominium, 37 Greene Street, ~~property~~ located in ~~Washington, D.C.~~the SoHo section of New York City, for ~~$10.7~~$15.7 million (Note 42).

•

On ~~March 15, March 27, May 29, and July 30, 2019, we~~February 13, the Company acquired ~~four retail condominiums located~~a fully-occupied, mixed-use building in ~~the Soho section of New York City~~Chicago, Illinois, for ~~a total of $74.7 million as part of a collection of seven properties referred to as the “Soho Acquisitions” with an aggregate purchase price of approximately $122.0 million (Note 2~~). The acquisitions of the remaining three properties are expected to be finalized through early 2020. No assurance can be given that we will successfully close on the remaining acquisitions under contract, which are subject to customary closing conditions.

•

~~On March 19, 2019, Fund V acquired an interest in an unconsolidated suburban shopping center (Note 4~~) ~~in Riverdale, Utah for $48.5~~$3.5 million.

•

On April 1, 2020, we converted a note receivable into the remaining venture partner’s interest in Town Center and now consolidate that property.

During the nine months ended September 30, 2020, we did not make any new investments within our Fund portfolio. However, during the second quarter 2020, Fund IV obtained the venture partner’s interest in two of its Broughton Street properties for $1.3 million (Note 4) and now consolidates those properties.

~~On April 30, 2019, Fund V acquired an interest in an unconsolidated (Note 4) suburban shopping center in Vernon, Connecticut for $36.7 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.~~

•

~~On May 2, 2019, we entered into a ground lease (Note 11) on a development property in Washington, D.C.~~

•

~~On May 6, 2019, Fund V acquired a suburban shopping center (Note 2) in Palm Coast, Florida for $36.6 million.~~

•

~~On June 21, 2019, Fund V acquired a suburban shopping center (Note 2) in Lincoln, Rhode Island for $54.3 million.~~

•

~~On August 2, Fund V acquired a suburban shopping center (Note 2) in Virginia Beach, Virginia for $87.0 million.~~

•

~~On August 21, Fund V acquired an interest in a two unconsolidated suburban shopping centers (Note 4) in Frederick County, Maryland for a total of $54.9 million.~~

•

~~On September 11, we acquired two buildings (Note 2) in in Chicago, Illinois for a total of $7.8 million.~~

Capital Commitments

During the nine months ended September 30, ~~2019,~~2020, we made capital contributions aggregating ~~$41.9~~$6.1 million to our Funds. At September 30, ~~2019,~~2020, our share of the remaining capital commitments to our Funds aggregated ~~$77.0~~$80.2 million as follows:

•

$~~3.3~~2.4 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.

•

$~~21.3~~16.9 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.

•

$~~52.5~~60.9 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.

During April 2018, a $15.0 million distribution was made to the Fund II investors, including $4.3 million to the Operating Partnership, which amount ~~remains subject to re-contribution~~was re-contributed to Fund II ~~until~~in April ~~2021.~~2020 (Note 1). During June 2020, a distribution was made by Mervyn’s II to its investors which were re-contributed to Fund II in the amount of $7.5 million. During August 2020, a recallable distribution of $15.7 million was made by Mervyn’s II to its investors, of which $4.5 million was the Company’s share.

Development Activities

During the nine months ended September 30, ~~2019,~~2020, capitalized costs associated with development activities totaled ~~$23.0 million.~~$10.9 million (Note 2). At September 30, ~~2019,~~2020, we had a total of ~~eight~~nine consolidated ~~properties~~and one unconsolidated projects under development ~~and~~or redevelopment ~~and~~for which the estimated total cost to complete these projects through ~~2020~~2023 was ~~$160.1~~$124.9 million to ~~$201.4~~$161.9 million and our estimated share was approximately ~~$95.5~~$61.5 million to ~~$117.4~~$76.4 million. Substantially all remaining development and redevelopment costs are discretionary and dependent upon the resumption of tenant interest due to aforementioned disruptions related to the COVID-19 Pandemic.

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):

	September 30,			December 31,			September 30,			December 31,
	2019			2018			2020			2019
Total Debt - Fixed and Effectively Fixed Rate	$	1,236,805		$	1,001,658		$	1,361,199		$	1,403,324
Total Debt - Variable Rate		427,337			558,675			435,076			314,604
		1,664,142			1,560,333			1,796,275			1,717,928
Net unamortized debt issuance costs		(9,463	)		(10,541	)		(7,261	)		(10,383	)
Unamortized premium		676			753			574			651
Total Indebtedness	$	1,655,355		$	1,550,545		$	1,789,588		$	1,708,196

As of September 30, ~~2019,~~2020, our consolidated outstanding mortgage and notes payable aggregated ~~$1,664.1~~$1,796.3 million, excluding unamortized premium of ~~$0.7~~$0.6 million and net unamortized loan costs of ~~$9.5~~$7.3 million, and were collateralized by 4143 properties and related tenant leases. Interest rates on our outstanding indebtedness ranged from ~~3.40%~~1.41% to 6.00% with maturities that ranged from December 9, ~~2019~~2020 to April 15, 2035. Taking into consideration ~~$696.5~~$978.4 million of notional principal under variable to fixed-rate swap agreements currently in effect, ~~$1,236.8~~$1,361.2 million of the portfolio debt, or ~~74.3%~~75.8%, was fixed at a ~~3.41%~~3.71% weighted-average interest rate and ~~$427.3~~$435.1 million, or ~~25.7%~~24.2% was floating at a ~~4.46%~~2.00% weighted average interest rate as of September 30, ~~2019.~~2020. Our variable-rate debt includes ~~$143.0~~$145.7 million of debt subject to interest rate caps.

~~There~~Without regard to available extension options, there is ~~$120.5~~$86.6 million of debt maturing in ~~2019~~2020 at a weighted-average interest rate of ~~5.32%~~4.03%; there is ~~$1.3~~$1.8 million of scheduled principal amortization due in ~~2019;~~2020; and our share of scheduled remaining ~~2019~~2020 principal payments and maturities on our unconsolidated debt was ~~$0.3~~$8.9 million at September 30, ~~2019.~~2020. In addition, ~~$561.5~~$455.1 million of our total consolidated debt and ~~$10.1~~$8.3 million of our pro-rata share of unconsolidated debt will come due in ~~2020.~~2021. As it relates to the aforementioned maturing debt in ~~2019~~2020 and ~~2020,~~2021, we have options to extend consolidated debt aggregating $56.7 million and $271.2 million, respectively; however, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options. For the remaining indebtedness, we may not have sufficient cash 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 September 30, ~~2019~~2020 and December 31, ~~2018~~2019 (Note 7). This litigation was settled subsequent to September 30, 2020 (Note 15). At September 30, 2020, several Fund mortgages had not met certain financial covenants and were subject to cash flow sweeps (Note 7).

Share Repurchase Program

During the ~~nine months ended September 30, 2019,~~first quarter of 2020, we ~~made no repurchases~~repurchased 1,219,065 Common Shares for $22.4 million, inclusive of $0.1 million of fees, under the share repurchase program at a weighted average price per share of $18.29, under which $122.6 million remains available as of September 30, 2020 (Note 10)~~, under which $144.9 million currently remains available.~~.

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 (vi) cash on hand and future cash flow from operating activities. Our cash on hand in our consolidated subsidiaries at September 30, ~~2019~~2020 totaled ~~$48.1~~$16.1 million. Our remaining sources of liquidity are described further below.

ATM Program

We have an ATM Program (Note 10) 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. 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 general

corporate purposes. During the three months ended September 30, 2019, the Company sold 2,149,154 shares under its ATM Program for gross proceeds of $61.6 million, or $60.6 million net of issuance costs, at a weighted-average gross price per share of $28.64. During the nine months ended September 30, ~~2019,~~2020, the Company ~~sold 4,816,505~~did not sell any shares under its ATM ~~Program for gross proceeds of $137.8 million, or $135.8 million net of issuance costs, at a weighted-average gross price per share of $28.61.~~Program.

Fund Capital

During the nine months ended September 30, ~~2019,~~2020, Funds III, IV and V called capital contributions of ~~$12.5~~$3.9 million, ~~$17.3~~$19.0 million and ~~$173.5~~$3.8 million, respectively, of which our aggregate share was ~~$41.9~~$6.1 million. At September 30, ~~2019,~~2020, unfunded capital commitments from noncontrolling interests within our Funds III, IV and V were ~~$10.3~~$7.3 million, ~~$70.6~~$56.0 million and ~~$208.9~~$242.0 million, respectively.

Asset Sales and Other Transactions

~~As previously discussed, during~~On April 13, 2020, Fund IV sold its Colonie Plaza property for $15.3 million and repaid the ~~nine months ended September 30, 2019 the Funds made the following dispositions:~~

•

~~On January 24, 2019,~~associated mortgage, recognizing 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 JFK Plaza property (Note 2) for $7.8 million.~~

•

~~On August 22, 2019, Fund III sold its Nostrand Avenue property (Note 2) for $27.7 million.~~

•

~~On May 17 and September 23, 2019, Fund IV sold two residential condominium units for a total of $5.9 million.~~

•

~~On September 27, 2019 Fund IV sold its 938 W. North Street property (Note 2) for $32.0 million.~~

~~We recognized an aggregate net~~ gain on disposition of $0.5 million, of which the ~~sales of these consolidated properties of $14.1 million, for which our~~Company’s share was ~~$3.1~~$0.1 million. In addition, on September 10, 2020, Fund IV sold a land parcel for $0.4 million, ~~net~~recognizing a gain of ~~noncontrolling interests.~~less than $0.1 million.

~~Structured Financing Repayments~~During June 2020, Mervyns II recognized $22.8 million in distributions, of which $6.5 million was the Company’s share, related to its Investment in Albertsons, which had an IPO (Note 4).

During the nine months ended September 30, ~~2019, Fund IV received full payment of $15.3 million plus accrued interest of $10.0 million on its~~2020 the Company had no Structured Financing ~~investment. Notes~~redemptions; however, one note receivable ~~aggregating~~for $38.7 million, ~~are scheduled~~was converted to ~~be redeemed or converted~~the remaining interest in the collateral on April 1, 2020. A Core note for $17.8 million matured on April 1, 2020 and one $5.3 million Fund note matured on July 1, 2020, but neither has been repaid. Scheduled maturities of Structured Financing loans include a $33.6 million loan maturing during the remainder of ~~2019.~~2020, which is expected to be converted to an interest in a property (Note 3).

Financing and Debt

As of September 30, ~~2019,~~2020, we had ~~$150.8~~$269.4 million of additional capacity under existing Core and Fund revolving debt facilities. In addition, at that date within our Core and Fund portfolios, we had 7881 unleveraged consolidated properties with an aggregate carrying value of approximately ~~$1.5~~$1.6 billion, ~~and one unleveraged unconsolidated property for which our share of the carrying value was $99.1 million,~~ although there can be no assurance that we would be able to obtain financing for these properties at favorable terms, if at all. Also, during July 2020, the Company obtained a $30.0 million term loan with a $90.0 million accordion feature (Note 7).

HISTORICAL CASH FLOW

The following table compares the historical cash flow for the nine months ended September 30, ~~2019~~2020 with the cash flow for the nine months ended September 30, ~~2018~~2019 (in millions):

	Nine Months Ended September 30,									Nine Months Ended September 30,
	2019			2018			Variance			2020			2019			Variance
Net cash provided by operating activities	$	95.2		$	67.2		$	28.0		$	81.1		$	95.2		$	(14.1	)
Net cash used in investing activities		(359.6	)		(76.3	)		(283.3	)		(92.9	)		(359.6	)		266.7
Net cash provided by (used in) financing activities		290.6			(54.5	)		345.1
Increase (decrease) in cash and restricted cash	$	26.2		$	(63.6	)	$	89.8
Net cash provided by financing activities											11.6			290.6			(279.0	)
(Decrease) increase in cash and restricted cash										$	(0.2	)	$	26.2		$	(26.4	)

Operating Activities

Our operating activities provided ~~$28.0~~$14.1 million ~~more~~less cash during the nine months ended September 30, ~~2019~~2020 as compared to the nine months ended September 30, ~~2018,~~2019, primarily due to ~~property acquisitions along with $10.0 million~~a decrease in cash receipts from tenants because of the ~~collection~~COVID-19 Pandemic partially offset by the monetization of ~~accrued interest on a note receivable.~~the Company's Investment in Albertsons.

Investing Activities

During the nine months ended September 30, ~~2019~~2020 as compared to the nine months ended September 30, ~~2018,~~2019, our investing activities used ~~$283.3~~$266.7 million ~~more~~less cash, primarily due to (i) ~~$152.4~~$234.5 million ~~more~~less cash used in acquisition and lease of properties, (ii) ~~$150.8~~$150.6 million ~~more~~less cash used in investments in unconsolidated affiliates, and (iii) ~~$10.8~~$49.7 million less ~~cash received from repayments of notes receivable and (iv) $11.4 million more~~ cash used in development, construction and property improvement costs. These ~~uses~~sources of cash were partially offset by (i) ~~$27.4~~$65.9 million less cash received from the disposition of properties, (ii) $59.0 million more cash ~~received from disposition of properties and (ii) $14.6~~used to issue notes receivable, (iii) $29.3 million ~~more~~less cash received from return of capital from unconsolidated ~~affiliates.~~affiliates and (iv) $15.3 million less cash received from proceeds of notes receivable.

Financing Activities

Our financing activities provided ~~$345.1~~$279.0 million ~~more~~less cash during the nine months ended September 30, ~~2019~~2020 as compared to the nine months ended September 30, ~~2018,~~2019, primarily from (i) $135.8 million ~~more~~less cash received from the sale of Common Shares, (ii) ~~an increase of $114.6 million of cash provided from contributions from noncontrolling interests, (iii) $55.6~~$30.7 million more cash provided from net borrowings, ~~and (iv) $55.1~~(iii) $22.4 million ~~less~~more cash used to repurchase Common ~~Shares.~~Shares, (iv) $19.5 million less cash used in dividends paid to Common Shareholders, and (v) $124.9 million less cash provided from contributions from noncontrolling interests. These sources of cash were partially offset by ~~$10.2~~$2.5 million ~~more~~less cash used ~~in distributions to noncontrolling interests.~~for financing costs.

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 September 30, ~~2019~~2020 (in millions):

	Payments Due by Period										Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years		Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
Principal obligations on debt	$	1,664.1	$	613.4	$	395.5	$	456.0	$	199.2	$	1,796.3	$	483.3	$	901.3	$	275.9	$	135.8
Interest obligations on debt		238.8		71.7		85.0		39.3		42.8		210.4		60.6		72.6		35.9		41.3
Lease obligations ^(a)		365.0		1.8		14.2		14.2		334.8		205.1		1.9		16.5		15.9		170.8
Construction commitments^(b)(a)		42.9		42.9		—		—		—		33.6		33.6		—		—		—
Total	$	2,310.8	$	729.8	$	494.7	$	509.5	$	576.8	$	2,245.4	$	579.4	$	990.4	$	327.7	$	347.9

(a)

A ground lease expiring during 2078 provides the Company with an option to purchase the underlying land during 2031. If we do not exercise the option, the rents that will be due are based on future values and as such are not determinableIncludes amounts budgeted for previously-approved development projects at ~~this time. Accordingly, the above table does not include rents for this lease beyond 2020.~~

~~(b)~~

~~In conjunction with the development of~~ our Core Portfolio and Fund ~~properties, we have entered into construction commitments with general contractors. We intend~~properties. As of September 30, 2020, substantially all remaining development and redevelopment costs, which are discretionary, are temporarily on hold dependent upon the resumption of tenant interest due to ~~fund these requirements with existing liquidity.~~aforementioned disruptions related to the COVID-19 Pandemic.

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					September 30, 2019				Operating Partnership					September 30, 2020
Investment	Ownership Percentage			Pro-rata Share of Mortgage Debt		Interest Rate			Maturity Date	Ownership Percentage			Pro-rata Share of Mortgage Debt		Effective Interest Rate ^(a)			Maturity Date
650 Bald Hill		20.8	%	$	3.5		4.74	%	Apr 2020
650 Bald Hill Road											20.8	%	$	3.2		2.81	%	Oct 2020
Eden Square ^(a)(b)		22.8	%		5.6		4.24	%	Jun 2020		22.8	%		5.4		2.31	%	Dec 2020
Promenade at Manassas ^(b)(c)		22.8	%		5.9		3.84	%	Dec 2021		22.8	%		6.3		1.91	%	Dec 2021
3104 M Street		20.0	%		0.9		5.75	%	Dec 2021		20.0	%		0.9		3.75	%	Dec 2021
Family Center at Riverdale ^(c)		18.0	%		5.8		3.79	%	May 2022		18.0	%		5.8		1.86	%	May 2022
Gotham Plaza ^(d)		49.0	%		9.6		3.69	%	Jun 2023		49.0	%		9.3		1.76	%	Jun 2023
Renaissance Portfolio		20.0	%		32.0		3.79	%	Aug 2023		20.0	%		32.0		1.86	%	Aug 2023
Crossroads		49.0	%		32.0		3.94	%	Oct 2024		49.0	%		31.3		3.94	%	Oct 2024
Tri-City Plaza											18.1	%		7.0		2.06	%	Oct 2024
Frederick Crossing ^(b)											18.1	%		4.4		1.91	%	Dec 2024
Frederick County Square ^(b)											18.1	%		2.7		2.56	%	Jan 2025
840 N. Michigan		88.4	%		65.0		4.36	%	Feb 2025		88.4	%		65.0		4.36	%	Feb 2025
Georgetown Portfolio		50.0	%		8.0		4.72	%	Dec 2027		50.0	%		8.0		4.72	%	Dec 2027
Total				$	168.3								$	181.3

(a)

~~Our unconsolidated affiliate is a party to two~~Effective interest rates incorporate the effect of interest rate ~~LIBOR caps. One of the interest rate LIBOR~~swaps and caps ~~effectively fixes the interest rate~~that were in effect at ~~3.00%. The second interest rate LIBOR cap effectively fixes the interest rate at 3.85%.~~September 30, 2020, where applicable.

(b)	~~Our unconsolidated affiliate is a party to an interest rate LIBOR swap, which effectively fixes the all-in interest rate at 4.57%.~~The debt has one available 12-month extension option.

(c)	~~Our unconsolidated affiliate is a party to an interest rate LIBOR swap, which effectively fixes the all-in interest rate at 3.68%.~~The debt has two available 12-month extension options.

~~(d)~~

~~Our unconsolidated affiliate is a party to an interest rate LIBOR swap, which effectively fixes the all-in interest rate at 5.09%.~~

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 there have been no material changes to the items that we disclosed as our critical accounting policies under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our ~~2018~~2019 Annual Report on Form 10-K.

Recently Issued and Adopted Accounting Pronouncements

Reference is made to Note 1 for information about recently issued accounting pronouncements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Information as of September 30, ~~2019~~2020

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 September 30, ~~2019,~~2020, we had total mortgage and other notes payable of ~~$1,664.1~~$1,796.3 million, excluding the unamortized premium of ~~$0.7~~$0.6 million and net unamortized debt issuance costs of ~~$9.5~~$7.3 million, of which ~~$1,236.8~~$1,361.2 million, or ~~74.3%~~75.8% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and ~~$427.3~~$435.1 million, or ~~25.7%~~24.2%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of September 30, ~~2019,~~2020, we were party to 3439 interest rate ~~swap~~swaps and four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to ~~$696.5~~$978.4 million and ~~$143.0~~$145.7 million of LIBOR-based variable-rate debt, respectively.

The following table sets forth information as of September 30, ~~2019~~2020 concerning our long-term debt obligations, including principal cash flows by scheduled maturity (without regard to available extension options) 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
2019 (Remainder)	$	0.8	$	26.2	$	27.0		6.0	%
2020		3.2		—		3.2		—	%
2020 (Remainder)										$	0.8	$	26.3	$	27.1		6.0	%
2021		3.4		—		3.4		—	%		3.5		30.0		33.5		3.3	%
2022		3.5		—		3.5		—	%		3.6		127.4		131.0		1.5	%
2023		2.9		367.8		370.7		3.4	%		2.9		367.9		370.8		1.4	%
2024											2.6		7.4		10.0		4.7	%
Thereafter		15.4		185.3		200.7		3.9	%		13.1		177.4		190.5		3.3	%
	$	29.2	$	579.3	$	608.5				$	26.5	$	736.4	$	762.9

Fund Consolidated Mortgage and Other Debt

Year	Scheduled Amortization		Maturities		Total		Weighted-Average Interest Rate			Scheduled Amortization		Maturities		Total		Weighted-Average Interest Rate
2019 (Remainder)	$	0.5	$	94.3	$	94.8		5.1	%
2020		2.0		556.3		558.3		4.3	%
2020 (Remainder)										$	1.0	$	60.3	$	61.3		3.2	%
2021		1.6		235.7		237.3		4.2	%		3.1		418.5		421.6		2.4	%
2022		1.5		86.4		87.9		4.3	%		3.1		293.3		296.4		4.3	%
2023		0.7		40.9		41.6		3.6	%		3.8		40.9		44.7		1.7	%
2024											2.6		199.4		202.0		1.9	%
Thereafter		0.1		35.6		35.7		3.9	%		0.3		7.1		7.4		3.6	%
	$	6.4	$	1,049.2	$	1,055.6				$	13.9	$	1,019.5	$	1,033.4

Mortgage Debt in Unconsolidated Partnerships (at our Pro-Rata Share)

Year	Scheduled Amortization		Maturities		Total		Weighted-Average Interest Rate			Scheduled Amortization		Maturities		Total		Weighted-Average Interest Rate
2019 (Remainder)	$	0.3	$	—	$	0.3		0.0	%
2020		1.1		9.0		10.1		4.4	%
2020 (Remainder)										$	0.3	$	8.6	$	8.9		2.5	%
2021		1.1		6.8		7.9		4.1	%		1.2		7.1		8.3		2.1	%
2022		1.2		5.8		7.0		3.8	%		1.2		5.8		7.0		1.9	%
2023		1.0		40.6		41.6		3.8	%		1.2		40.6		41.8		1.8	%
2024											0.9		39.7		40.6		3.4	%
Thereafter		1.6		99.8		101.4		4.3	%		0.8		73.9		74.7		4.3	%
	$	6.3	$	162.0	$	168.3				$	5.6	$	175.7	$	181.3

~~In 2019, $121.8~~Without regard to available extension options, in 2020, $88.4 million of our total consolidated debt and ~~$0.3~~$8.9 million of our pro-rata share of unconsolidated outstanding debt will become due. In addition, ~~$561.5~~$455.1 million of our total consolidated debt and ~~$10.1~~$8.3 million of our pro-rata share of unconsolidated debt will become due in ~~2020.~~2021. As it relates to the aforementioned maturing debt in 2020 and 2021, we have options to extend consolidated debt aggregating $56.7 million and $271.2 million, respectively; however, there can be no assurance that the Company will be able successfully execute any or all of its available extension options. 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,~~rates, our interest expense would increase by approximately ~~$6.9~~$5.6 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 ~~$1.6~~$1.5 million. Interest expense on our variable-rate debt of ~~$427.3~~$435.1 million, net of variable to fixed-rate swap agreements currently in effect, as of September 30, ~~2019,~~2020, would increase $4.3 million if LIBOR increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be ~~$0.8~~$0.9 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 September 30, ~~2019,~~2020, the fair value of our total consolidated outstanding debt would decrease by approximately ~~$12.2~~$10.1 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 ~~$14.5~~$26.7 million.

As of September 30, ~~2019,~~2020, and December 31, ~~2018,~~2019, we had consolidated notes receivable of ~~$94.8~~$134.8 million and ~~$109.6~~$114.9 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 September 30, ~~2019,~~2020, the fair value of our total outstanding notes receivable would decrease by approximately ~~$0.5~~$1.8 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 ~~$0.5~~$1.9 million.

Summarized Information as of December 31, ~~2018~~2019

As of December 31, ~~2018,~~2019, we had total mortgage and other notes payable of ~~$1,560.3~~$1,717.9 million, excluding the unamortized premium of ~~$0.8~~$0.7 million and unamortized debt issuance costs of ~~$10.5~~$10.4 million, of which ~~$1,001.7~~$1,403.3 million, or ~~64.2%~~81.7% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and ~~$558.7~~$314.6 million, or ~~35.8%~~18.3%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of December 31, ~~2018,~~2019, we were party to 2940 interest rate swap and ~~three~~four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to ~~$609.9~~$948.8 million and ~~$143.8~~$143.3 million of LIBOR-based variable-rate debt, respectively.

Interest expense on our variable-rate debt of ~~$558.7~~$314.6 million as of December 31, ~~2018,~~2019, would have increased ~~$5.6~~$3.1 million if LIBOR increased by 100 basis points. Based on our outstanding debt balances as of December 31, ~~2018,~~2019, the fair value of our total outstanding debt would have decreased by approximately ~~$13.5~~$11.5 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 ~~$14.7~~$13.6 million.

Changes in Market Risk Exposures from December 31, ~~2018~~2019 to September 30, ~~2019~~2020

Our interest rate risk exposure from December 31, ~~2018,~~2019, to September 30, ~~2019,~~2020, has ~~decreased~~increased on an absolute basis, as the ~~$558.7~~$314.6 million of variable-rate debt as of December 31, ~~2018,~~2019, has ~~decreased~~increased to ~~$427.3~~$435.1 million as of September 30, ~~2019.~~2020. As a percentage of our overall debt, our interest rate risk exposure has ~~decreased~~increased as our variable-rate debt accounted for ~~35.8%~~18.3% of our consolidated debt as of December 31, ~~2018~~2019 compared to ~~25.7%~~24.2% as of September 30, ~~2019.~~2020.

ITEM 4.CONTROLS AND PROCEDURES.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES.~~

Disclosure Controls and Procedures

Our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Exchange Act, is recorded, processed, summarized, and reported within the required time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls. Our chief executive officer and chief financial officer, after conducting an evaluation, together with members of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, ~~2019,~~2020, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of September 30, ~~2019,~~2020, at a reasonable level of assurance.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

WeAs previously disclosed in our periodic findings, Acadia Brandywine Holdings, LLC (“Brandywine Holdings”), a consolidated entity in which we have a 22.22% interest, was a party to litigation in connection with a mortgage loan collateralized by a Core Portfolio property held by it (the “Brandywine Loan”). 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. By maturity, the Brandywine Loan was in default. The Brandywine Loan bore interest at a stated rate of approximately 6% and was 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 Court of Chancery 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 also 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 alleged that the Operating Partnership was liable for the original principal, accrued interest, default interest,

late charges, as well as fees, costs and protective advances, under the Brandywine Loan, which the Successor Lender alleged totaled approximately $33.0 million as of November 9, 2017 (exclusive of accruing interest, default interest, late charges, and fees and costs). In August 2019, the Delaware Superior Court heard arguments on the parties’ cross-motions for summary judgment 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 under the Brandywine Loan and requesting the parties to contact the Court regarding a hearing of any additional outstanding issues. On June 24, 2020, the Successor Lender filed a motion to (i) amend the Note Complaint in order to increase the alleged balance under the Brandywine Loan to $46.8 million as of March 31, 2020, plus default interest of $0.3 million and additional attorneys’ fees of $0.2 million from April 1, 2020 to April 23, 2020, minus suspense funds of $1.5 million and (ii) for entry of judgment in the foregoing amounts. Brandywine Holdings and the Operating Partnership opposed the motion. By Final Order and Judgment, entered July 27, 2020, the Delaware Superior Court, denied the Successor Lender’s motion, and entered judgment against Brandywine Holdings and the Operating Partnership, jointly and severally, in the amount of $33.2 million, plus accruing interest and default interest in the total amount of $8,017 per diem from and after November 10, 2017 through the date of entry of judgment, less $1.3 million in “suspense funds” (consisting of unapplied property collections minus unapplied fees (including attorneys’ fees), costs, and protective advances made on Successor Lender’s behalf), together with post judgment interest, accruing after the entry of judgment, at the contract rate of interest agreed to by the parties. Brandywine Holdings and the Operating Partnership filed a notice of appeal of the ruling by the Delaware Superior Court and the lender filed a notice of cross-appeal. On October 2, 2020, on request of all parties to the litigation, the appeal and cross-appeal were stayed by the Supreme Court of Delaware for a period of 90 days so that the parties could pursue settlement of the litigation. On October 30, 2020 the litigation was settled, with the mortgage loan being satisfied by Brandywine Holdings through a $30 million payment that represented a discount to the carrying value at September 30, 2020 (and the Successor Lender retained amounts in the suspense account from property collections), which will result in a gain for accounting purposes in the fourth quarter. In connection with the settlement, the parties entered into joint stipulations dismissing each of the Court of Chancery action, the Delaware Superior Court actions, and the appeals with prejudice (Note 15).

In addition, from time to time, we are ~~involved in~~a party to various ~~matters of litigation~~legal proceedings, claims or regulatory inquiries and investigations arising out of, or incident to, our ~~business, including the litigation described in~~ ~~Note 7~~.ordinary course of business. While we are unable to predict with certainty the outcome of any particular matter, management does not expect, when such ~~litigation is~~matters are resolved, that our resulting exposure to loss contingencies, if any, will have a material adverse effect on our consolidated financial position.

ITEM 1A.

RISK FACTORS.

~~The most significant~~Except to the extent additional factual information disclosed elsewhere in this Report relates to such risk factors ~~applicable~~(including, without limitation, the matters discussed in Part I, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes to ~~us are described~~the risk factors disclosed in ~~Item~~Part I, “Item 1A. Risk Factors” of our ~~2018~~ Annual Report on Form ~~10-K. There~~10-K for the year ended December 31, 2019, other than those disclosed below.

Actual or perceived threats associated with epidemics, pandemics or other public health crises, including the COVID-19 Pandemic, could have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity, and ability to access the capital markets and satisfy debt service obligations.

Epidemics, pandemics or other public health crises, including the recent COVID-19 Pandemic, that impact economic and market conditions, particularly in the markets where our properties are located, and preventative measures taken to alleviate their impact, including mandatory business shutdowns, “shelter-in-place” or “stay-at-home” orders issued by local, state or federal authorities, may have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity, and ability to access capital markets and satisfy debt service obligations.

Our retail tenants depend on in-person interactions with their customers to generate unit-level profitability, and an epidemic, pandemic or other public health crisis may decrease customer willingness to frequent, and mandated “shelter-in-place” or “stay-at-home” orders may continue to prevent customers from frequenting, our tenants’ businesses, which may result in their inability to maintain profitability and make timely rental payments to us under their leases. We own properties across the United States, including in some of the states that have been nosignificantly impacted by the COVID-19 Pandemic, such as New York, New Jersey, Massachusetts, Pennsylvania and California. As of October 31, 2020, approximately 86% and 87% (based on ABR) of Core Portfolio and Fund Portfolio retail tenants, respectively, are open or partially open for business. We cannot presently determine when or how many of our remaining tenants will reopen. As of October 31, 2020, we collected approximately 87% and 79% of Core Portfolio and Fund Portfolio pre-COVID billings (original contract rents without regard to deferral or abatement agreements excluding the impact of any security deposits applied against tenant accounts), respectively, for the third quarter 2020. We have negotiated rent concessions, substantially in the form of deferrals, with select tenants. We currently anticipate the above circumstances to negatively impact our revenues potentially for the remainder of the year.

Moreover, the ongoing COVID-19 Pandemic and restrictions intended to prevent and mitigate its spread could have additional adverse effects on our business, including with regards to:

•

the ability and willingness of our tenants to renew their leases upon expiration, our ability to re-lease the properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant, particularly in light of the adverse impact to the financial health of many retailers that has occurred and continues to occur as a result of the COVID-19 Pandemic and the significant uncertainty as to when and the conditions under which potential tenants will be able to operate physical retail locations in the future;

•

anticipated returns from development and redevelopment projects, which have been temporarily suspended;

•

to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices,

•

the broader impact of the severe economic contraction due to the COVID-19 Pandemic, the resulting increase in unemployment that has occurred in the short-term and its effect on consumer behavior, and negative consequences that will occur if these trends are not timely reversed;

•

macroeconomic conditions, such as a disruption of or lack of access to the capital markets and the adverse impact of the recent significant decline in our share price from prices prior to the spread of the COVID-19 Pandemic;

•

our ability to obtain additional indebtedness or pay down, refinance, restructure or extend our indebtedness as it becomes due, and negative impact of reductions in rent on financial covenants on corporate and/or property-level debt; and

•

potential reduction in our operating effectiveness as employees work remotely or if key personnel become unavailable due to illness or other personal circumstances related to COVID-19, as well as increased cybersecurity risks relating to the use of remote technology.

The COVID-19 Pandemic and restrictions intended to prevent and mitigate its spread have already had a significant adverse impact on economic and market conditions around the world, including the United States and markets where our properties are located, which began during the first quarter of 2020 and could further trigger a period of sustained global and U.S. economic downturn or recession. While the rapid developments regarding the COVID-19 Pandemic preclude any prediction as to its ultimate adverse impact, the current economic, political and social environment presents material ~~changes~~risks and uncertainties with respect to ~~those previously-disclosed risk factors.~~our and our tenants’ business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy debt service obligations. Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks described under the section entitled “Item 1A. Risk Factors” in our most recent annual report on Form 10-K for the year ended December 31, 2019.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4.

MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.

OTHER INFORMATION.

Not applicable.

ITEM 6.

EXHIBITS.

The following is an index to all exhibits including (i) those filed with this Quarterly Report on Form 10-Q and (ii) those incorporated by reference herein:

Exhibit No.		Description		Method of Filing
~~10.1~~	~~Second Amendment dated October 8, 2019 to Acadia Realty Limited Partnership Credit Agreement dated February 20, 2018~~		~~Incorporated by reference to the copy thereof filed as Exhibit 10.01 to the Company's Current Report on Form 8-K filed on October 11, 2019.~~

~~10.2~~10.1	~~Second Amended and Restated Limited Partnership Agreement dated July 23, 2019~~Acadia Realty Trust 2020 Share Incentive Plan		Incorporated by reference to page 63 of the ~~copy thereof~~Company’s 2020 Definitive Proxy Statement filed ~~as Exhibit 10.2 to~~with the ~~Company's Quarterly Report~~SEC on ~~Form 10-Q filed on July 25, 2019.~~March 24, 2020

31.1	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

31.2	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

32.1	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

32.2	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

101.INS	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 Document		Filed herewith

101.DEF	Inline XBRL Taxonomy Extension Definitions Document		Filed herewith

101.LAB	Inline XBRL Taxonomy Extension Labels Document		Filed herewith

101.PRE	Inline XBRL Taxonomy Extension Presentation Document		Filed herewith

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)		Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

		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: ~~October 24, 2019~~November 5, 2020

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