SEC Filing - Acadia Realty Trust

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 OR [ ] 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 ACADIA REALTY TRUST (Exact name of registrant in its charter) MARYLAND 23-2715194 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 20 SOUNDVIEW MARKETPLACE, PORT WASHINGTON, NY 11050 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (516) 767-8830 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 X No As of August 11, 1999, there were 26,115,615 common shares of beneficial interest, par value $.001 per share, outstanding.

FORM 10-Q INDEX Part I: Financial Information Page Item 1. Financial Statements (unaudited) Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998 1 Consolidated Statements of Operations for the three and six months ended June 30, 1999 and 1998 2 Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and 1998 3 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosure of Market Risk 20 Part II: Other Information Item 2. Changes in Securities and Use of Proceeds 21 Item 4. Submission of Matters to a Vote of Security Holders 21 Item 6. Exhibits 22 Signatures 23

Item 1. Financial Statements ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) June 30, 1999 December 31, (unaudited) 1998 ----------- ---- Assets Real estate: Land $ 79,761 $ 76,136 Buildings and improvements 474,141 452,300 Properties under development 25,674 22,813 --------- -------- 579,576 551,249 Less: accumulated depreciation 95,955 87,202 --------- -------- Net real estate 483,621 464,047 Property held for sale -- 7,073 Cash and cash equivalents 12,779 15,183 Cash in escrow 13,830 12,650 Investments in unconsolidated partnerships 7,219 7,516 Rents receivable, net 7,087 6,006 Prepaid expenses 1,295 2,797 Deferred charges, net 12,013 11,461 Other assets 1,870 1,779 -------- -------- $539,714 $528,512 ======== ======== Liabilities and Shareholders' Equity Mortgage notes payable $294,775 $277,561 Accounts payable and accrued expenses 6,632 10,673 Due to related parties 320 176 Dividends and distributions payable 4,392 -- Other liabilities 3,087 3,817 -------- ------- Total liabilities 309,206 292,227 -------- -------- Minority interest in Operating Partnership 76,923 79,344 Minority interests in majority- owned partnerships 2,350 2,350 -------- -------- Total minority interests 79,273 81,694 -------- -------- Shareholders' Equity: Common shares, $.001 par value, authorized 100,000,000 shares, issued and outstanding 25,515,615 and 25,419,215 shares, respectively 26 25 Additional paid-in capital 167,409 170,746 Deficit (16,180) (16,180) Less: 3,600 treasury shares, at cost (20) -- -------- -------- Total shareholders' equity 151,235 154,591 -------- -------- $539,714 $528,512 ======== ======== See accompanying notes 1

ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (in thousands, except per share amounts) Three months ended Six months ended June 30, June 30, 1999 1998 1999 1998 ---- ---- ---- ---- (unaudited) (unaudited) Revenues Minimums rents $17,500 $ 8,509 $34,853 $16,973 Percentage rents 686 524 1,473 1,089 Expense reimbursements 3,037 1,527 6,495 3,280 Other 681 189 1,333 358 ------- ------- ------- ------- Total revenues 21,904 10,749 44,154 21,700 ------- ------- ------- ------- Operating expenses Property operating 5,427 2,263 11,308 4,555 Real estate taxes 2,564 1,403 5,115 2,831 General and administrative 1,638 589 3,104 1,045 Non-recurring charges -- 554 -- 554 Depreciation and amortization 4,965 3,512 9,651 6,985 ------- ------- ------- ------- Total operating expenses 14,594 8,321 29,178 15,970 ------- ------- ------- ------- Operating income 7,310 2,428 14,976 5,730 Equity in earnings of unconsolidated partnerships 157 -- 340 -- Loss on sale of properties -- -- (1,284) -- Interest expense (5,581) (3,996) (11,005) (7,919) ------- ------- ------- ------- Income (loss) before extraordinary item and minority interest 1,886 (1,568) 3,027 (2,189) Extraordinary item - loss on extinguishment of debt -- (268) -- (268) Minority interest in Operating Partnership (597) 275 (973) 363 ------- ------- ------- ------- Net Income (loss) $ 1,289 $(1,561) $ 2,054 $(2,094) ======= ======= ======= ======= Net income (loss) per Common Share - basic and diluted: Income (loss) before extraordinary item $ .05 $ (.15) $ .08 $ (.21) Extraordinary item -- (.03) -- (.03) ------- ------- ------- ------- Net income (loss) per Common Share - basic and diluted $ .05 $ (.18) $ .08 $ (.24) ======= ======= ======= ======= See accompanying notes 2

ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998 (in thousands) June 30, June 30, 1999 1998 (unaudited) (unaudited) ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 2,054 $ (2,094) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 9,651 6,985 Minority interest in Operating Partnership 973 (363) Equity in income of unconsolidated partnerships (340) -- Provision for bad debts 893 578 Loss on sale of properties 1,284 -- Extraordinary item - loss on extinguishment of debt -- 268 Other -- 29 Changes in assets and liabilities: Funding of escrows, net (1,180) (1,091) Rents receivable (1,974) 245 Prepaid expenses 1,502 421 Due to/from related parties 144 177 Other assets (312) 116 Accounts payable and accrued expenses (4,041) (686) Other liabilities (730) (186) -------- -------- Net cash provided by operating activities 7,924 4,399 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for real estate and improvements (14,626) (8,026) Net proceeds from sale of property 6,128 -- Investments in unconsolidated partnerships 637 -- Payment of deferred leasing costs (863) (2,125) -------- -------- Net cash used in investing activities (8,724) (10,151) -------- -------- See accompanying notes 3

ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (in thousands) June 30, June 30, 1999 1998 (unaudited) (unaudited) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on mortgages $(1,863) $(9,730) Proceeds received on mortgage notes 5,194 19,619 Payment of deferred financing and other costs (523) (1,446) Dividends paid ($0.12 per Common Share) (3,050) -- Distributions to minority interests (1,342) (19) Repurchase of Common Shares (20) -- ------- ------- Net cash (used in) provided by financing activities (1,604) 8,424 ------- ------- (Decrease) increase in cash and cash equivalents (2,404) 2,672 Cash and cash equivalents, beginning of period 15,183 1,287 ------- ------- Cash and cash equivalents, end of period $12,779 $ 3,959 ======= ======= Supplemental Disclosures of Cash Flow Information: Cash paid during the period for interest, net of amounts capitalized of $732 and $342, respectively $11,624 $ 7,807 ======= ======= Supplemental Disclosure of Non-Cash Investing and Financing Activities: Acquisition of real estate by assumption of debt $13,883 ======= See accompanying notes 4

ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share amounts) 1. THE COMPANY Acadia Realty Trust (the "Company"), formerly known as Mark Centers Trust, is a fully integrated and self-managed real estate investment trust ("REIT") focused primarily on the ownership, acquisition, redevelopment and management of neighborhood and community shopping centers, and multi-family properties. All of the Company's assets are held by, and all of its operations are conducted through, Acadia Realty Limited Partnership (the "Operating Partnership"), formerly known as Mark Centers Limited Partnership, and its majority owned partnerships. As of June 30, 1999, the Company controlled 69% of the Operating Partnership as the sole general partner. The Company currently operates fifty-seven properties, which it owns or has an ownership interest in, consisting of forty-six neighborhood and community shopping centers, three enclosed malls, one mixed use (retail/office) property, five multi-family properties and two redevelopment properties located in the Eastern and Midwestern regions of the United States. 2. BASIS OF PRESENTATION The consolidated financial statements include the consolidated accounts of the Company and its majority owned partnerships, including the Operating Partnership, and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Non-controlling investments in partnerships are accounted for under the equity method of accounting as the Company exercises significant influence. The information furnished in the accompanying consolidated financial statements reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the aforementioned consolidated financial statements for the interim periods. The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. 5

ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share amounts) 2. BASIS OF PRESENTATION, CONTINUED Actual results could differ from these estimates. Operating results for the six-month period ended June 30, 1999 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1999. For further information refer to the consolidated financial statements and accompanying footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Certain 1998 amounts were reclassified to conform to the 1999 presentation. 3. ACQUISITION OF PROPERTY On May 5, 1999, the Company acquired the general partner's interest in the entity owning the Gateway Mall (formerly the Mall 189), a 122,000 square foot shopping center located in South Burlington, Vermont for approximately $6,547. The interest was acquired out of bankruptcy by restructuring and assuming the mortgage debt of $6,222. The center, which is currently a partially enclosed mall, will be redeveloped into a conventional strip center format. 4. SHAREHOLDERS' EQUITY AND MINORITY INTERESTS The following table summarizes the change in the shareholders' equity and minority interests since December 31, 1998: Shareholders' Minority Equity Interests Balance at December 31, 1998 $154,591 $81,694 Dividends and distributions declared of $0.24 per Common Share and Operating Partnership ("OP") Unit (6,112) (2,672) Conversion of 100,000 OP Units by OP Unitholder 722 (722) Repurchase of Common Shares (20) -- Net income for the period January 1 through June 30, 1999 2,054 973 -------- ------- Balance at June 30, 1999 $151,235 $79,273 ======== ======= Minority interests represent the limited partners' interest of 11,084,143 and 1,623,000 units in the Operating Partnership at June 30, 1999 and 1998, respectively. In addition, at June 30, 1999, minority interests also include an aggregate amount of $2,350 representing interests held by third parties in four partnerships in which the Company has a majority ownership position. On June 16, 1999 the Board of Trustees approved a stock repurchase program. Management is authorized, in its discretion, to repurchase up to $10,000 of its currently outstanding Common Shares on the open market. As of June 30, 1999, the Company had repurchased 3,600 shares at a total cost of $20. The program may be discontinued or extended at any time and there is no assurance that the Company will purchase the full amount authorized. 6

ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share amounts) 5. INVESTMENT IN PARTNERSHIPS The Company owns a 49% interest in the Crossroads Joint Venture and Crossroads II Joint Venture (collectively "Crossroads") and accounts for this investment using the equity method. Summary financial information of the Crossroads and the Company's investment in and share of income from Crossroads follows: June 30, 1999 ---- Balance Sheet Assets: Rental property, net $ 8,982 Other assets 4,219 ------- Total assets $13,201 ======= Liabilities and partners' equity Mortgage note payable $35,320 Other liabilities 656 Partners' equity (22,775) ------- Total liabilities and partners' equity $13,201 ======= Company's investment in partnerships $ 7,219 ======= Six months Three months ended ended June 30, June 30, 1999 1999 ---- ---- Statement of Operations Total revenue $3,527 $1,724 Operating and other expenses 898 435 Interest expense 1,271 637 Depreciation and amortization 264 132 ------ ------ Net income $1,094 $ 520 ====== ====== Company's share of net income $ 536 $ 255 Amortization of excess investment (See below) 196 98 ------ ------ Income from partnerships $ 340 $ 157 ====== ====== The unamortized excess of the Company's investment over its share of the net equity in Crossroads at the date of acquisition was $19,580. The portion of this excess attributable to buildings and improvements is being amortized over the life of the related property. 7

ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share amounts) 6. MORTGAGE LOANS On May 5, 1999, the Company assumed $6,222 in mortgage debt in connection with the acquisition of the general partner's interest in the Gateway Mall (formerly the Mall 189). The debt, which matures September 1, 2002, bears interest at a fixed-rate of 7.5% and requires the payment of interest only through May 4, 2001. Thereafter, and through the maturity date, the loan bears interest at a fixed-rate of 9.875% and requires total monthly payments of $55 representing interest and principal. The debt can be prepaid commencing May 4, 2002, without any prepayment fees. 7. RELATED PARTY TRANSACTIONS The Company manages three properties in which certain current shareholders of the Company or their affiliates have ownership interests. Management fees earned by the Company under these contracts are at rates of 3.25% and 3.5% of collections, or in one case, a fixed annual fee of $110. Such fees aggregated $296 and $153 during the six and three-month periods ended June 30, 1999. On April 9, 1999, Marvin Slomowitz, a current trustee of the Company, converted 100,000 OP Units to 100,000 Common Shares. Mr. Slomowitz converted an additional 600,000 OP Units to 600,000 Common Shares subsequent to June 30, 1999. (Note 12) 8. DIVIDENDS AND DISTRIBUTIONS PAYABLE On June 16, 1999, the Board of Trustees of the Company approved and declared a quarterly dividend for the quarter ended June 30, 1999 of $0.12 per Common Share. The dividend was paid on July 15, 1999 to the shareholders of record as of June 30, 1999. 8

ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share amounts) 9. PER SHARE DATA Basic earnings per share was determined by dividing the net income applicable to common shareholders by the weighted average number of Common Shares outstanding during each period consistent with the guidelines of the Financial Accounting Standards Board Statement No. 128. The weighted average number of Common Shares for the six-month periods ended June 30, 1999 and 1998 totaled 25,465,071 and 8,554,810, respectively. The weighted average number of Common Shares for the three-month periods ended June 30, 1999 and 1998 totaled 25,510,424 and 8,555,346, respectively. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue Common Shares were exercised or converted into Common Shares or resulted in the issuance of Common Shares that then shared in the earnings of the Company. Options to purchase an aggregate of 2,342,350 Common Shares at option prices ranging from $5.75 to $9.00 per share were outstanding during the six month period ended June 30, 1999 but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the Common Shares and, therefore, the effect would be antidilutive. For the six months ended June 30, 1998, no additional Common Shares were reflected as the impact would be anti-dilutive due to the net loss for the period. 10. SEGMENT REPORTING The Company has two reportable segments: retail properties and multi-family properties. The Company evaluates property performance primarily based on net operating income before depreciation, amortization and certain non-recurring items. The reportable segments are managed separately due to the differing nature of the leases and property operations associated with the retail versus residential tenants. The following table sets forth certain segment information for the Company as of and for the six and three-month periods ended June 30, 1999 and 1998 (does not include unconsolidated partnerships).

Six months ended June 30, 1999 Retail Multi-Family All Properties Properties Other Total ------------------------------------------------ Revenues .................................................... $ 35,927 $ 7,390 $ 837 $ 44,154 Property operating expenses and real estate taxes ......................................... 13,483 2,940 -- 16,423 Net property income before depreciation, amortization and certain nonrecurring items ............... 22,444 4,450 837 27,731 Depreciation and amortization ............................... 8,701 880 70 9,651 Interest expense ............................................ 8,980 2,025 -- 11,005 Real estate at cost ......................................... 497,960 81,616 -- 579,576 Total assets ................................................ 449,571 82,924 7,219 539,714 Gross leasable area (multi-family - 2,273 units) ............ 8,709 2,039 -- 10,748 Expenditures for real estate and improvements ............... 13,976 650 -- 14,626 Reconciliation to income (loss) before minority interest Net property income before depreciation, amortization and certain nonrecurring items ............... $ 27,731 Depreciation and amortization ............................... (9,651) General and administrative .................................. (3,104) Non-recurring charges ....................................... Equity in earnings of uncomsolidated partnerships .............................................. 340 Loss on sale of property .................................... (1,284) Interest expense ............................................ (11,005) -------- Income (loss) before extraordinary item and minority interest $ 3,027 ======== [RESTUBED TABLE FOR ABOVE] Three months ended June 30, 1999 Retail Multi-Family All Properties Properties Other Total ------------------------------------------------ Revenues .................................................... $17,668 $3,696 $540 $21,904 Property operating expenses and real estate taxes ......................................... 6,441 1,550 -- 7,991 Net property income before depreciation, amortization and certain nonrecurring items ............... 11,227 2,146 540 13,913 Depreciation and amortization ............................... 4,448 447 70 4,965 Interest expense ............................................ 4,574 1,007 -- 5,581 Real estate at cost ......................................... -- -- -- -- Total assets ................................................ -- -- -- -- Gross leasable area (multi-family - 2,273 units) ............ -- -- -- -- Expenditures for real estate and improvements ............... 3,259 397 -- 3,656 Reconciliation to income (loss) before minority interest Net property income before depreciation, amortization and certain nonrecurring items ............... $13,913 Depreciation and amortization ............................... (4,965) General and administrative .................................. (1,638) Non-recurring charges ....................................... Equity in earnings of uncomsolidated partnerships .............................................. 157 Loss on sale of property .................................... -- Interest expense ............................................ (5,581) ------- Income (loss) before extraordinary item and minority interest $ 1,886 =======

[RESTUBED TABLE FOR ABOVE] Six months ended June 30, 1998 Retail Multi-Family All Properties Properties Other Total ------------------------------------------------ Revenues .................................................... $ 21,430 $ -- $270 $ 21,700 Property operating expenses and real estate taxes ......................................... 7,386 -- -- 7,386 Net property income before depreciation, amortization and certain nonrecurring items ............... 14,044 -- 270 14,314 Depreciation and amortization ............................... 6,884 -- 101 6,985 Interest expense ............................................ 7,914 -- 5 7,919 Real estate at cost ......................................... 315,206 -- -- 315,206 Total assets ................................................ 539,714 -- -- 539,714 Gross leasable area (multi-family - 2,273 units) ............ 7,269 -- -- 7,269 Expenditures for real estate and improvements ............... 8,026 -- -- 8,026 Reconciliation to income (loss) before minority interest Net property income before depreciation, amortization and certain nonrecurring items ............... $ 14,314 Depreciation and amortization ............................... (6,985) General and administrative .................................. (3,104) Non-recurring charges ....................................... Equity in earnings of uncomsolidated partnerships .............................................. 340 Loss on sale of property .................................... (1,284) Interest expense ............................................ (7,919) -------- Income (loss) before extraordinary item and minority interest $ (4,638) ======== [RESTUBED TABLE FOR ABOVE] Three months ended June 30, 1998 Retail Multi-Family All Properties Properties Other Total ------------------------------------------------ Revenues .................................................... $10,6190 -- $130 $10,749 Property operating expenses and real estate taxes ......................................... 3,666 -- -- 3,666 Net property income before depreciation, amortization and certain nonrecurring items ............... 6,953 -- 130 7,083 Depreciation and amortization ............................... 3,411 -- 101 3,512 Interest expense ............................................ 3,993 -- 3 3,996 Real estate at cost ......................................... -- -- -- -- Total assets ................................................ -- -- -- -- Gross leasable area (multi-family - 2,273 units) ............ -- -- -- -- Expenditures for real estate and improvements ............... 4,216 -- -- 4,216 Reconciliation to income (loss) before minority interest Net property income before depreciation, amortization and certain nonrecurring items ............... $ 7,083 Depreciation and amortization ............................... (3,512) General and administrative .................................. (589) Non-recurring charges ....................................... (554) Equity in earnings of uncomsolidated partnerships .............................................. -- Loss on sale of property .................................... -- Interest expense ............................................ (3,996) ------- Income (loss) before extraordinary item and minority interest $(1,568) =======

ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share amounts) 11. SHARE OPTION PLAN On June 16, 1999, the Company adopted the 1999 Share Incentive Plan (the "Plan"), authorizing the issuance of up to 8% of the Common Shares outstanding on a fully diluted basis, subject to other additional limitations. The Company has terminated all outstanding options under the former plan with the exception of 300,000 share options issued to the Former Principal Shareholder. Pursuant to the Plan, the Company has issued 2,037,350 share options which vested 1/3 on the grant date and 1/3 on each of the following two anniversaries of the grant date. The options are exercisable at prices ranging from $5.75 to $7.50 per share for a period of ten years. The Company has also issued 5,000 share options to non-employee trustees which vested 1/5 on the grant date and 1/5 on each of the following four anniversaries of the grant date. The options are exercisable at $5.75 for a period of ten years.

ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share amounts) 12. SUBSEQUENT EVENTS On July 7, 1999 the Company closed on a $14,000 financing with Sun America Life Insurance Company. The debt, which is secured by the Merrillville Plaza, matures in July 2002 and requires monthly payments of interest at a rate of LIBOR plus 205 basis points adjusted on a quarterly basis and principal amortized over 25 years. The Company has also purchased an interest rate swap agreement which caps LIBOR at 6.50%. On July 8, 1999 the Company received a $1,370 settlement related to the liability of a tenant-assigner of a lease to a former tenant who had filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy laws. On July 16, 1999, Marvin Slomowitz, a current trustee of the Company, converted 600,000 OP Units to 600,000 Common Shares. 13. PRO FORMA INFORMATION The following unaudited pro forma condensed consolidated information for the six months ended June 30, 1998 is presented as if the RDC Transaction as described in the Company's Annual Report on Form 10-K for the year ended December 31, 1998, had occurred on January 1, 1997. June 30, 1998 ---- Revenue $41,400 Income before extraordinary item $ 2,153 ======= Net income $ 1,973 ======= Net income per share- basic and diluted $ 0.08 ======= Weighted average number of Common Shares outstanding 24,677,191 ========== Weighted average number of Common Shares outstanding-assuming dilution 24,680,358 ========== 10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion is based on the consolidated financial statements of Acadia Realty Trust (the "Company") as of June 30, 1999 and 1998 and for the three and six months then ended. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto. Certain statements contained in this report constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, which will, among other things, affect demand for rental space, the availability and creditworthiness of prospective tenants, lease rents and the availability of financing; adverse changes in the Company's real estate markets, including, among other things, competition with other companies; risks of real estate development and acquisition; governmental actions and initiatives; and environmental/safety requirements. RESULTS OF OPERATIONS The following comparison for the three and six-month periods ended June 30, 1999 as compared to the same periods for 1998 reference the effect of the properties acquired on August 12, 1998 (the "RDC Properties") as a result of the RDC Transaction as discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Comparison of the three-month period ended June 30, 1999 ("1999") to the three-month period ended June 30, 1998 ("1998") Total revenues increased $11.2 million, or 104%, to $21.9 million for 1999 compared to $10.7 million for 1998. Minimum rents increased $9.0 million, or 106%, to $17.5 million for 1999 compared to $8.5 million for 1998. $8.9 million, or 99%, of the increase was attributable to the RDC Properties. Percentage rents increased $162,000, or 31%, to $686,000 for 1999 compared to $524,000 for 1998. $68,000 of the increase was attributable to the RDC properties. The remaining increase was primarily attributable to the impact from the Company's adopting the Emerging Issue Task Force ("EITF") Issue No. 98-9 "Accounting for Contingent Rent in Interim Financial Periods" in 1998, which requires lessors to defer income recognition for percentage rent until the tenant sales breakpoint is met. 11

RESULTS OF OPERATIONS, continued Expense reimbursements increased $1.5 million, or 99%, from $1.5 million for 1998 to $3.0 million for 1999, which was primarily attributable to the RDC Properties which had expense reimbursements of $1.4 million for 1999. Other income increased $492,000 for 1999 which was primarily a result of $163,000 in management fees earned in 1999 under four contracts acquired in the RDC Transaction and an increase in interest earning assets in 1999. Total operating expenses increased $6.3 million, or 75%, to $14.6 million for 1999, from $8.3 million for 1998. Property operating expenses increased $3.1 million, or 140%, to $5.4 million for 1999 compared to $2.3 million for 1998. Of this increase, $2.5 million, or 78%, was attributable to the RDC Properties. The remaining increase was primarily due to additional staffing in the leasing and property management departments following the RDC Transaction. Real estate taxes increased $1.2 million, or 83%, from $1.4 million for 1998 to $2.6 million for 1999 primarily attributable to the RDC Properties which had real estate tax expense in 1999 of $1.2 million. Depreciation and amortization increased $1.5 million, or 41%, for 1999 primarily attributable to the RDC Properties. General and administrative expense increased $1.0 million, or 178%, from $589,000 for 1998 to $1.6 million for 1999, which was primarily attributable to additional staffing and administration costs following the RDC Transaction. Non-recurring charges of $554,000 in 1998 are costs incurred related to the RDC Transaction and primarily represent payments made to certain officers and key employees pursuant to change in control provisions of employment contracts. Interest expense of $5.6 million for 1999 increased $1.6 million, or 40%, from $4.0 million for 1998 primarily attributable to the mortgage debt associated with the RDC Properties partially offset by the paydown of certain existing debt with the proceeds from the RDC Transaction. 12

RESULTS OF OPERATIONS, continued Comparison of the six-month period ended June 30, 1999 ("1999") to the six-month period ended June 30, 1998 ("1998") Total revenues increased $22.5 million, or 103%, to $44.2 million for 1999 compared to $21.7 million for 1998. Minimum rents increased $17.9 million, or 105%, to $34.9 million for 1999 compared to $17.0 million for 1998 of which $17.5 million, or 98%, of the increase was attributable to the RDC Properties. Percentage rents increased $384,000, or 35%, to $1.5 million for 1999 compared to $1.1 million for 1998. $158,000 of the increase was attributable to the RDC properties. The remaining increase was primarily attributable to the impact from the Company's adopting EITF No. 98-9 in 1998. Expense reimbursements increased $3.2 million, or 98%, for 1999, of which $3.0 million resulted from the RDC Properties. Other income increased $975,000 for 1999; a result primarily of $319,000 in management fees earned in 1999 under four contracts acquired in the RDC Transaction and a $257,000 increase in interest income resulting from a higher balance of interest earning assets in 1999. Total operating expenses increased $13.2 million, or 83%, to $29.2 million for 1999, from $16.0 million for 1998. Property operating expenses increased $6.7 million, or 148%, to $11.3 million for 1999 compared to $4.6 million for 1998. $4.2 million, or 63% of the increase, was attributable to the RDC Properties. $1.0 million, or 15% of the increase, was due to additional staffing in the leasing and property management departments following the RDC Transaction. $440,000 of the remaining increase resulted from increased contract services, primarily snow removal, as a result of the comparatively mild winter season in 1998. Real estate taxes increased $2.3 million, or 81%, from $2.8 million for 1998 to $5.1 million for 1999 primarily attributable to the RDC Properties. Depreciation and amortization increased $2.7 million, or 38%, for 1999 of which $3.0 million was attributable to the RDC Properties. This was offset by the reduction in depreciation expense following the sale of three properties subsequent to 1998. General and administrative expense increased $2.1 million, or 197%, from $1.0 million for 1998 to $3.1 million for 1999, which was primarily attributable to additional staffing and administration costs following the RDC Transaction. Interest expense of $11.0 million for 1999 increased $3.1 million, or 39%, from $7.9 million for 1998 primarily attributable to the mortgage debt associated with the RDC Properties partially offset by the paydown of certain existing debt with the proceeds from the RDC Transaction. Funds from Operations The Company, along with most industry analysts, consider funds from operations("FFO") as defined by the National Association of Real Estate Investment Trusts ("NAREIT")as an appropriate supplemental measure of operating performance. However, FFO does not represent cash generated from operations as defined by generally accepted accounting principles and is not indicative of cash available to fund cash needs. It should not be considered as an alternative to net income for the purpose of evaluating the Company's performance or to cash flows as a measure of liquidity. 13

RESULTS OF OPERATIONS, continued Generally, NAREIT defines FFO as net income (loss) before gains (losses) on sales of property, non-recurring charges and extraordinary items, adjusted for certain non-cash charges, primarily depreciation and amortization of capitalized leasing costs. The reconciliation of net income to FFO for the three and six-month periods ended June 30, 1999 and 1998 is as follows: For the three months For the six months ended ended June 30, June 30, 1999 1998 1999 1998 -------------- ------------- ------------- ------------ Net income (loss) $ 1,289 $(1,561) $ 2,054 $(2,094) Depreciation of real estate and amortization of leasing costs: Wholly owned and consolidated subsidiaries 4,769 3,279 9,282 6,560 Unconsolidated subsidiaries 156 -- 311 -- Non-recurring RDC transaction charges -- 554 -- 554 Income (loss) attributable to minority interest 597 (275) 973 (363) Loss on sale of property -- -- 1,284 -- Other adjustments -- 19 -- 29 Establish reserve for environmental remediation costs -- 88 -- 88 Extraordinary item - loss on extinguishment of debt -- 268 -- 268 -------------- ------------- ------------- ------------ Funds from Operations (a) $6,811 $ 2,372 $13,904 $ 5,042 ============== ============= ============= ============ Funds from Operations per Share (b) $ 0.19 $ 0.23 $ 0. 38 $ 0.50 ============== ============= ============= ============ (a) Commencing in 1999, the Company includes the effect of the straight-lining of rents in computing FFO in accordance with the NAREIT definition. Prior to 1999, straight-line rents, net of related write-offs, were excluded in reporting FFO. The above 1998 amounts have been restated to include the effect from the straight-lining of rents. (b) Assumes full conversion of 11,084,143 and 1,623,000 OP Units into Common Shares for the three months ended June 30, 1999 and 1998, respectively, for a total weighted average Common Shares and OP Units of 36,603,358 and 10,178,346, respectively. For the six months ended June 30, 1999 and 1998, full conversion of 11,084,143 and 1,623,000 OP Units into Common Shares is assumed, respectively, for a total weighted average Common Shares and OP Units of 36,603,358 and 10,177,810, respectively LIQUIDITY AND CAPITAL RESOURCES Financing and Debt On May 5, 1999, the Company assumed $6.2 million in mortgage debt in connection with the acquisition of the general partner's interest in the Gateway Mall (formerly the Mall 189). The debt, which matures September 1, 2002, bears interest at a fixed-rate of 7.5% and requires the payment of interest only through May 4, 2001. Thereafter, and through the maturity date, the loan bears interest at a fixed-rate of 9.875% and requires total monthly payments of $55,000 representing interest and principal. The debt can be prepaid commencing May 4, 2002, without any prepayment fees. 14

LIQUIDITY AND CAPITAL RESOURCES, continued On July 7, 1999 the Company closed on a $14.0 million financing with Sun America Life Insurance Company. The debt, which is secured by the Merrillville Plaza, matures in July 2002 and requires monthly payments of interest at a rate of LIBOR plus 205 basis points adjusted on a quarterly basis and principal amortized over 25 years. The Company has also purchased an interest rate swap agreement which caps LIBOR at 6.50% for this debt. As of June 30, 1999 interest on the Company's mortgage indebtedness ranged from 6.2% to 9.6% with maturities that ranged from September 1999 to March 2022. Of the total outstanding debt, $259.8 million, or 88%, was carried at fixed interest rates with a weighted average of 8.4% and $35.0 million, or 12%, was carried at variable rates with a weighted average of 6.7%. Of the total outstanding debt, $150.1 million will mature by 2001 (outstanding principal at maturity dates), with scheduled maturities of $13.0 million in 1999 at a weighted average interest rate of 7.7%, $94.9 million in 2000 at a weighted average interest rate of 8.5% and $42.2 million in 2001 at a weighted average interest rate of 7.8%. As the Company does not anticipate having sufficient cash on hand to repay such indebtedness, it will need to refinance this indebtedness or select other alternatives based on market conditions at that time. The following table summarizes the Company's mortgage indebtedness as of June 30, 1999: June 30, December 31, Interest 1999 1998 Rate ---- ---- ---- Mortgage notes payable - variable-rate General Electric Capital Corp. $ 7,187 $ 6,989 7.69% (Commercial paper rate +2.75%) Fleet Bank, N.A. 9,157 8,268 6.71% (LIBOR + 1.78%) KBC Bank 14,634 14,760 6.19% (LIBOR + 1.25%) Fleet Bank, N.A. 3,992 - 6.69% (LIBOR + 1.75%) -------- -------- Total variable-rate debt 34,970 30,017 -------- -------- Mortgage notes payable - fixed rate Sun America Life Insurance Company 8,610 8,717 7.75% The Manufacturers Life Insurance Company (USA) 4,337 4,372 7.73% John Hancock Mutual Life Insurance Company 54,147 54,445 9.11% Metropolitan Life Insurance Company 41,000 41,000 7.75% Sun America Life Insurance Company 43,449 43,832 7.75% Anchor National Life Insurance Company 3,909 3,950 7.93% Lehman Brothers Holdings, Inc. 18,058 18,140 8.32% Northern Life Insurance Company 3,293 3,409 7.70% Bankers Security Life 2,271 2,351 7.70% Morgan Stanley Mortgage Capital 44,418 44,729 8.84% Nomura Asset Capital Corporation 22,467 22,599 9.02% Mellon Mortgage Company 7,624 - 9.60% Huntoon Hastings Capital Corporation 6,222 - 7.50% -------- -------- Total fixed-rate debt 259,805 247,544 -------- -------- $294,775 $277,561 ======== ========

Properties Payment Maturity Encumbered Terms -------- ---------- ------- Mortgage notes payable - variable-rate General Electric Capital Corp. 01/01/02 (1) (18) Fleet Bank, N.A. 05/31/02 (2) (18) KBC Bank 12/31/02 (3) (18) Fleet Bank, N.A. 03/15/02 (4) (18) Mortgage notes payable - fixed rate Sun America Life Insurance Company 09/24/99 (5) $74(18) The Manufacturers Life Insurance Company (USA) 12/10/99 (6) $34(18) John Hancock Mutual Life Insurance Company 04/01/00 (7) $455(18) Metropolitan Life Insurance Company 06/01/00 (8) (17) Sun America Life Insurance Company 01/01/01 (9) $346(18) Anchor National Life Insurance Company 01/01/04 (10) $33(18) Lehman Brothers Holdings, Inc. 03/01/04 (11) $139(18) Northern Life Insurance Company 12/01/08 (12) $41(18) Bankers Security Life 12/01/08 (12) $28(18) Morgan Stanley Mortgage Capital 11/01/21 (13) $380(18) Nomura Asset Capital Corporation 03/11/22 (14) $193(18) Mellon Mortgage Company 05/23/05 (15) $71(18) Huntoon Hastings Capital Corporation 09/01/02 (16) (17) Notes: (1) Soundview Marketplace (8) Valmont Plaza (13) Midway Plaza Luzerne Street Plaza Northside Mall (2) Village Commons Green Ridge Plaza New Smyrna Beach Crescent Plaza Cloud Springs Plaza (3) Marley Run Apartments East End Centre Troy Plaza Martintown Plaza (4) Town Line (9) Bloomfield Town Square Kings Fairgrounds Atrium Mall Shillington Plaza (5) Village Apartments Walnut Hill Shopping Center Dunmore Plaza GHT Apartments Kingston Plaza (6) Hobson West Plaza Colony Apartments Twenty Fifth Street Shopping Center Circle Plaza (7) New Loudon Centre (10) Pittston Plaza Mountainville Plaza Ledgewood Mall Plaza 15 Plaza 422 (11) Glen Oaks Apartments Birney Plaza Berlin Shopping Center Monroe Plaza Route 6 Mall (12) Manahawkin Shopping Center Ames Plaza Tioga West Bradford Towne Centre (14) Northwood Centre (15) Mad River (16) Gateway Mall (17) Interest only monthly (18) Monthly principal and interest 15

LIQUIDITY AND CAPITAL RESOURCES, continued Payment of Dividend On June 16, 1999, the Board of Trustees of the Company approved and declared a quarterly dividend for the quarter ended June 30, 1999 of $0.12 per Common Share. The dividend was paid on July 15, 1999 to the shareholders of record as of June 30, 1999. Stock Repurchase Plan On June 16, 1999 the Board of Trustees also approved a stock repurchase program. Management is authorized, in its discretion, to repurchase up to $10.0 million of its currently outstanding Common Shares on the open market. As of August 11, 1999, the Company has repurchased 21,400 shares at a total cost of $115,000. The program may be discontinued or extended at any time and there is no assurance that the Company will purchase the full amount authorized. Acquisition and development of properties The Company's acquisition program focuses on acquiring sub-performing neighborhood and community shopping centers that are well-located and creating significant value through retenanting and property redevelopment. The Company is currently redeveloping two such properties; both located in the Northeast region. The Company is currently redeveloping a 39,700 square foot retail and residential building located in Greenwich, Connecticut. During June 1999, Restoration Hardware, the lead anchor for the center occupying 12,300 square feet of the retail space, commenced paying rent. The building, which was formerly vacant, is being completely refurbished, and when completed in late 1999 will consist of approximately 17,000 square feet of total retail space and 21 apartments (approximately 15,000 square feet). As of June 30, 1999, costs incurred to date were $13.8 million. The Company expects that an additional $2.4 million will be required to complete this project. The second redevelopment property, which was acquired on May 5, 1999 for approximately $6.5 million, is the Gateway Mall (formerly the Mall 189), a 122,000 square foot shopping center located in South Burlington, Vermont. The Company acquired the general partner's interest in the entity owning the center, which was acquired out of bankruptcy by restructuring and assuming the mortgage debt of $6.2 million. The Gateway Mall is a partially enclosed mall that will be redeveloped into a conventional strip center format at an estimated cost of $4.6 million. The existing tenants include a 31,600 square foot Grand Union supermarket that is currently paying a below-market rent. Other redevelopment and expansion activity in the portfolio included the completion of construction of a 10-screen movie theater at the Wesmark Plaza in Sumter, South Carolina. On May 28, 1999, the tenant commenced paying an annual base rent of $252,000 plus operating expense pass-throughs. Total costs incurred through June 30, 1999 for this project were $1.1 million. Retenanting activity included the installation and commencement of rent for A.J. Wright in 29,000 square feet at the Walnut Hill Plaza in Woonsocket, Rhode Island and the replacement of BiLo (Penn Traffic) with a Redner's Market, which opened June 9, 1999 at the Pittston Plaza in Pittston, Pennsylvania. At the Ledgewood Mall, in Ledgewood, New Jersey, Stern's was expanded by 11,600 square feet and the Company signed a lease with Phar-Mor for 47,300 square feet of space bringing the total leased percentage of the center to 94%. The Company currently estimates remaining capital outlays of $730,000 for these projects. Additionally, the Company currently estimates that for the remaining portfolio, capital outlays of approximately $2.2 million will be required for tenant improvements, related renovations and other property improvements related to executed leases. 16

LIQUIDITY AND CAPITAL RESOURCES, continued Sources of capital for funding property development, property expansion and renovation and future property acquisitions are expected to be obtained from additional debt financings, sales of existing properties and additional equity offerings. As of June 30, 1999, the Company had total cash available of $12.8 million as well as 10 properties that are currently unencumbered and therefore available as potential collateral for future borrowings. The Company anticipates that cash flow from operating activities will continue to provide adequate capital for all debt service payments, recurring capital expenditures and REIT distribution requirements. HISTORICAL CASH FLOW The following discussion of historical cash flow compares the Company's cash flow for the six month period ended June 30, 1999 ("1999") with the Company's cash flow for the six month period ended June 30, 1998 ("1998"). Net cash provided by operating activities increased from $4.4 million for 1998 to $7.9 million for 1999. This variance was primarily attributable to an increase in operating income before non-cash expenses in 1999 offset, primarily, by $3.4 million additional cash used in 1999 for the payment of accounts payable and accrued expenses. Investing activities used $8.7 million during 1999, representing a $1.4 million decrease from $10.2 million of cash used during 1998. This variance was the result of a $5.3 million increase in expenditures for real estate acquisitions, development and tenant installation in 1999, offset by net sales proceeds of $6.1 million received in 1999 following the sale of two properties and $637,000 of distributions received from an unconsolidated subsidiary partnership. Net cash used in financing activities of $1.6 million for 1999 decreased $10.0 million compared to $8.4 million provided in 1998. The decrease resulted primarily from the combination of a $5.6 million decrease in 1999 of net proceeds provided from refinancings and dividends and distributions of $4.4 million being paid in 1999. 17

INFLATION The Company's long-term leases contain provisions designed to mitigate the adverse impact of inflation on the Company's net income. Such provisions include clauses enabling the Company to receive percentage rents based on tenants' gross sales, which generally increase as prices rise, and/or, in certain cases, escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses are often related to increases in the consumer price index or similar inflation indexes. In addition, many of the Company's leases are for terms of less than ten years, which permits the Company to seek to increase rents upon re-rental at market rates if rents are below the then existing market rates. Most of the Company's leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing the Company's exposure to increases in costs and operating expenses resulting from inflation. YEAR 2000 COMPLIANCE The year 2000 ("Y2K") problem refers to computer applications using only the last two digits to refer to a year rather than all four digits. As a result, these applications could fail or create erroneous results if they recognize "00" as the year 1900 rather than year 2000. The Company has taken Y2K initiatives in three general areas which represent the areas that could have an impact on the Company: information technology systems, non-information technology systems and third party issues. The following is a summary of these initiatives: Information technology and related costs: The Company's information technology systems generally consist of file servers, workstations, operating systems and applications which are all purchased systems. The Company's assessment and testing of these systems has revealed that they are Y2K compliant. Non-information technology and related costs: Non-information technology consists mainly of facilities management systems such as telephone, utility and security systems for its properties. The Company is in the process of identifying date sensitive systems and equipment including HVAC units, telephones, security systems and alarms, fire and flood warning systems and general office systems at its properties. Assessment, testing and remediation of these systems is approximately 85% complete and is expected to be fully completed during the early fourth quarter of 1999. The identification and remediation of systems at the properties is being accomplished by Company personnel with the assistance of consultants, for which both costs are being recorded as normal operating expenses. Based on preliminary assessment the cost of any upgrades or replacement is not expected to be significant. 18

YEAR 2000 COMPLIANCE, continued Third parties and related costs: The Company has assessed major third parties' Y2K readiness including tenants, contractors and key suppliers of out-sourced services including, property maintenance, stock transfer, debt servicing, banking collection and disbursement, payroll and benefits. Some of these third parties are publicly traded corporations subject to disclosure requirements for which the Company currently monitors Y2K disclosures in SEC filings. The majority of the Company's private vendors are small suppliers that the Company believes can manually execute their business and are readily replaceable. Management also believes there is no material risk of being unable to procure necessary supplies and services. The Company has requested all significant vendors and tenants to complete Y2K questionnaires and to date has not received any response from such third parties indicating that they have a significant Y2K problem. Based on the responses received to date, the Company believes there are no conditions related to third party readiness that would require material remediation costs. The assessment of third party readiness has been conducted by Company personnel whose costs are recorded as normal operating expenses. Risks: The principal risk to the Company relating to the implementation of its accounting system hardware and software upgrades is failure to correctly bill tenants by December 31, 1999 and pay invoices when due. Management believes it has adequate resources, or could obtain the needed resources, to manually bill tenants and pay bills until the systems become operational. The principal risks to the Company relating to non-information systems at the properties are failure to identify time-sensitive systems and inability to find an appropriate replacement system. The Company believes that adequate replacement components or new systems are available at reasonable prices and are in good supply. The Company also believes that adequate time and resources are available to remediate these areas as needed. The principal risks to the Company in its relationship with third parties are failure of third party systems used to conduct business such as: disruption of tenant operations at the properties; banks being unable to process receipts and disbursements; vendors being unable to supply needed materials and services to the Company's properties; and processing of out-sourced employee payroll. Based on Y2K compliance work done to date, the Company has no reason to believe that key tenants, banks and suppliers will not be Y2K compliant in all material respects or cannot be replaced within an acceptable timeframe. 19

YEAR 2000 COMPLIANCE, continued Contingency plans: The Company intends to deal with contingency planning after all the results of the above assessments and related remediations are known. To date, the Company is not aware of any conditions requiring further material expenditures for remediation. The Company's description of its Y2K compliance issue is based upon information obtained by management through evaluations of internal business systems and tenant and vendor compliance efforts. No assurance can be given that the Company will be able to address the Y2K issues for all its systems in a timely manner or that it will not encounter unexpected difficulties or significant expenses relating to adequately addressing the Y2K issue. If the Company or the major tenants or vendors with whom the Company does business fail to address their major issues, the Company's operating results or financial position could be materially adversely affected. Item 3. Quantitative and qualitative disclosures about market risk The Company's primary market risk exposure is to changes in interest rates related to the Company's mortgage debt. See the discussion under Item 2. of this report for certain quantitative details related to the Company's mortgage debt. Currently, the Company manages its exposure to fluctuations in interest rates primarily through the use of fixed-rate debt. As of June 30, 1999, the Company had total mortgage debt of $294.8 million of which $259.8 million, or 88%, is fixed-rate and $35.0 million, or 12%, is variable-rate based upon either LIBOR or the lender's commercial paper rate, plus certain spreads. The Company may seek variable-rate financing if and when pricing and other commercial and financial terms warrant. As such, the Company would consider hedging against the interest rate risk related to such variable-rate debt through interest rate swaps, as was done related to the $14.0 million financing with Sun America Life Insurance Company that closed in July 1999, or other means. 20

Part II. Other Information Item 1. Legal Proceedings There have been no material legal proceedings beyond those previously disclosed in the Registrants previously filed Annual Report on Form 10-K for the year ended December 31, 1998. Item 2. Changes in Securities Other On April 9 and July 16, 1999, Marvin Slomowitz, the former principal shareholder, converted 100,000 and 600,000 OP Units, respectively, to Common Shares on a one-for-one basis. Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders On June 16, 1999 the Registrant held its annual meeting of shareholders. The shareholders voted, in person or by proxy for the following proposals. The results of the voting are shown below: Proposal 1 - Votes Cast For Votes Against Election of Trustees: Ross Dworman 25,320,364 98,850 Kenneth Bernstein 25,320,364 98,850 Martin L. Edelman, Esq. 25,320,364 98,850 Marvin J. Levine, Esq. 25,319,839 99,375 Lawrence J. Longua 25,319,864 99,350 Gregory White 25,320,364 98,850 Marvin Slomowitz 25,320,059 99,155 Proposal 2 - The ratification of the appointment of Ernst & Young, LLP as independent auditors for the Company for the fiscal year ending December 31, 1999: Votes Cast For Votes Cast Against Abstain Unvoted 25,333,949 62,665 22,600 -- Proposal 3 - The approval of the Company's 1999 Share Incentive Plan:. Votes Cast For Votes Cast Against Abstain Unvoted 19,007,004 664,470 2,033,123 3,714,318 Proposal 4 - Such other business as may properly come before the Annual Meeting Or adjournments thereof: Votes Cast For Votes Cast Against Abstain Unvoted 22,606,693 2,394,878 417,643 -- 21

Item 6. Exhibits and Reports on Form 8-K The following exhibit is included herein: 27 Financial Data Schedule (EDGAR filing only) Reports on Form 8-K - The Company did not file any report on Form 8-K during the three month period ended June 30, 1999. 22

SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has fully caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ACADIA REALTY TRUST By: /s/ Ross Dworman Chairman and Chief Executive Officer (Principal Executive Officer) /s/ Perry Kamerman Senior Vice President of Finance (Principal Financial and Accounting Officer) Date: August 13, 1999 23

5 0000899629 ACADIA REALTY TRUST 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 12,779 0 9,630 2,543 0 0 579,576 95,955 539,714 0 294,775 0 0 26 151,209 539,714 0 44,154 0 29,178 0 0 11,005 2,054 0 2,054 0 0 0 2,054 0.08 0.08