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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 26, 2004
ACADIA REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-12002 23-2715194
- ------------------------------- ------------ -------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of incorporation) File Number) Identification No.)
1311 Mamaroneck Avenue
Suite 260
White Plains, New York 10605
(Address of principal executive offices) (Zip Code)
(914) 288-8100
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit Number Description
- ------------------- --------------------------------
99.1 Press release dated July 26, 2004
ITEM 12. Results of Operations and Financial Condition
On July 26, 2004, the Registrant announced its consolidated financial results
for the quarter ended June 30, 2004. A copy of the Registrant's earnings press
release is furnished as Exhibit 99.1 to this report on Form 8-K. The information
contained in Item 12. of this report on Form 8-K, including Exhibit 99.1, shall
not be deemed "filed" with the Securities and Exchange Commission nor
incorporated by reference in any registration statement filed by the Registrant
under the Securities Act of 1933, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACADIA REALTY TRUST
(Registrant)
Date: July 26, 2004 By: /s/ Michael Nelsen
-------------------------------
Name: Michael Nelsen
Title: Sr. Vice President
and Chief Financial Officer
2
Exhibit 99.1
Acadia Realty Trust Announces 13% Increase in
Second Quarter 2004 Operating Results;
Same Store NOI up 2.8% - Occupancy Increases 1%;
Raises 2004 Earnings Guidance
NEW YORK--(BUSINESS WIRE)--July 26, 2004--Acadia Realty Trust
(NYSE: AKR - "Acadia" or the "Company"), a real estate investment
trust ("REIT") and owner and operator of shopping centers anchored by
grocery and value-oriented retail, today reported operating results
for the quarter and six months ended June 30, 2004. All per share
amounts discussed below are on a fully diluted basis.
Second Quarter 2004 Highlights
Quarterly earnings up 13%
-- Earnings per share for the quarter of $0.13
-- Funds from operations ("FFO") per share for the quarter of
$0.26. This represents a 13% increase over second quarter 2003
Same-store net operating income up 2.8% - Portfolio occupancy
increases 1.0%
-- Same store NOI up 2.8% over second quarter 2003
-- Portfolio occupancy of 88.5% up 1.0% over first quarter 2004
of 87.5%
-- Executed new and renewal leases totaling approximately 190,000
square feet for the quarter
Balance sheet ratios remain strong - Coverage ratios strengthen
-- Conservative dividend payout ratio of 60%
-- 3.4 to 1 fixed-charge coverage
-- 38% debt to total market capitalization
External growth initiative expanded - Three acquisitions in second
quarter and new acquisition fund launched
-- Acquired interests in three value-added redevelopment shopping
centers for an aggregate investment of $8.4 million.
-- Formed second acquisition fund ("Fund II") with $300 million
of committed discretionary capital
Second Quarter Operating Results - Earnings up 13%
Earnings per share on a fully diluted basis was $0.13 for second
quarter 2004 compared to $0.09 for second quarter 2003. For the six
months ended June 30, 2004 and 2003, earnings per share was $0.23 for
both periods.
FFO for the quarter ended June 30, 2004 was $8.1 million, or $0.26
per share compared to $0.23 for the second quarter 2003, representing
a 13% increase on a per share basis. FFO for the six months ended June
30, 2004 was $15.2 million, or $0.50 per share compared to $0.50 per
share for the same period in 2003. It is important to note that FFO
for the six months ended June 30, 2003 included $0.06 of income from
both merchant development activity with Target as well as a lump sum
additional rent payment received from a tenant in connection with the
re-anchoring of the Branch Plaza in Smithtown, NY.
Portfolio Activity - Same Store Net Operating Income ("NOI') up
2.8%
Same store NOI increased 2.8% for second quarter 2004 over 2003.
The favorable variance was the result of increased rents in the core
portfolio from leasing and redevelopment activities. Year to date,
same property NOI was up 5.9% due to the above factors as well as a
decrease in operating expenses in early 2004, primarily winter related
charges.
June 30, 2004 occupancy of 88.5% was up 1.0% over the March 31,
2004 occupancy of 87.5%. This was primarily the result of the opening
of a new 49,000 square foot Raymour and Flanigan Furniture store at
the New Loudon Shopping Center redevelopment project during the second
quarter. This center is now 100% occupied. The remaining two projects
in the Company's redevelopment pipeline continue on schedule. The
installation of a 17,500 square foot Petco store, which co-anchors the
Bloomfield Town Square, also contributed to the second quarter
occupancy increase. On a year-over-year basis, Acadia's portfolio
occupancy increased by 0.8% as compared to 87.7% at June 30, 2003.
During the second quarter 2004, Acadia executed new and renewal
leases approximating 190,000 square feet. Rent spreads on new and
renewal leases which commenced during the period increased 6% over the
previous rents on a cash basis.
Balance Sheet - Continued Strength Reflected in Ratios
During the quarter, Acadia reduced the financing spread on $48.6
million of LIBOR- based debt to 1.4% and extended its maturity by five
years to 2012. This debt has been hedged through maturity with
interest rate swap agreements that lock in long-term interest rates at
a blended all-in rate of 6.0%. Including the effect of rate swaps, as
well as the pay-down of $19,500 of variable-rate debt on July 1, 2004,
82% of the Company's total mortgage debt, inclusive of its pro-rata
share of JV debt, is fixed-rate. This has been accomplished while
maintaining a low blended cost of debt of 5.7% as of June 30, 2004, as
compared to 6.1% as of the beginning of the year.
As of June 30, 2004, Acadia maintained its solid balance sheet
position as reflected in its financial ratios as follows (all ratios
include the Company's pro-rata share of unconsolidated joint venture
debt and interest expense):
-- Debt to total market capitalization at quarter-end was 38%
-- Fixed-charge ratio was 3.4 times (EBITDA / interest expense
plus preferred distributions)
-- Dividend payout ratio was 60% of FFO
External Growth Initiatives Continue - New Acquisition Fund with
$300 Million of Discretionary Equity Commitments
Fund II - Formation of Second Acquisition Joint Venture
As previously announced, Acadia launched its second discretionary
acquisition fund, Acadia Strategic Opportunity Fund II, LLC ("Fund
II") during the quarter. Of the $300 million of committed
discretionary capital, it is anticipated that $40 million will be
invested in the RCP Venture as discussed below. With the remaining
equity, Fund II will be able to acquire approximately $750 million of
real estate assets on a leveraged basis. All of the current investors
in Acadia's existing acquisition fund, Acadia Strategic Opportunity
Fund, LLC ("Fund I") along with two additional institutional investors
will invest a total of $240 million of equity in Fund II and Acadia
will invest $60 million. The terms and structure of Fund II are
substantially the same as Fund I. Acadia will earn a pro rata return
on its invested equity in Fund II as well as fees for asset
management, property management, leasing and construction services.
Acadia also has the opportunity to earn additional amounts based on
certain investment return thresholds.
Fund I - Acquisition of interests in value-added redevelopment
projects
During the quarter, Acadia, through Fund I, acquired interests in
three shopping centers for an aggregate investment of $8.4 million.
Fund I acquired a 50% interest in the Haygood Shopping Center and
Sterling Heights Shopping Center from Klaff Realty, LP ("Klaff") for
$3.2 million. These assets are part of the portfolio that the Company
currently manages as a result of its January 2004 acquisition of the
management contracts from Klaff and are separate from the formation of
the Retailer Controlled Property Venture ("RCP Venture") between
Klaff, Lubert-Adler Management Inc. and the Company. Both of these
assets are currently scheduled for redevelopment. Fund I, in
conjunction with Noddle Development Company, also purchased the
Tarrytown Centre for $5.2 million during the quarter. The
redevelopment of this 35,000 square foot, Westchester, NY property
(New York City MSA), which was formerly anchored by a 25,000 square
foot Grand Union supermarket, will include a new 15,000 square foot
Walgreen's drugstore.
To date, approximately $70 million of the $90 million of the
equity committed to Fund I has now been invested or committed to
redevelopment of currently owned assets. The remaining $20 million of
Fund I equity, along with $40 million of Fund II equity as discussed
above, has been allocated for investment in the RCP Venture.
Increased Earnings Guidance for 2004
As a result of a combination of stronger than anticipated 2004
core portfolio operating results, accretive external growth from Fund
I's acquisitions and the formation of Fund II during the second
quarter, the Company is currently increasing its earnings guidance for
2004. The Company's 2004 FFO forecast range is now $0.99 to $1.01.
This compares to Acadia's original 2004 forecast of $0.95 to $1.00 per
share. On an earnings per share basis, the Company now forecasts $0.44
to $0.46 per share, as compared to its original forecast of $0.40 to
$0.45 per share. Management will discuss the 2004 earnings guidance
during tomorrow's conference call.
Management Comments
Commenting on the results for the quarter, Kenneth Bernstein,
President and CEO, stated, "Our second quarter results --driven by an
ideal combination of internal and external growth -- provides further
evidence of the continued success of our business plan. By combining
robust operating performance with a strong balance sheet and the
discretionary acquisition capital of Fund II, Acadia is well
positioned to create significant and sustainable multi-year growth
without being overly-reliant on the increasingly volatile public
markets. In fact, given our size, balance sheet strength and the
structure of our acquisition platform, increased volatility should
create even further growth opportunities."
Investor Conference Call
Mr. Bernstein and Michael Nelsen, Sr. Vice President and CFO, will
conduct a conference call July 27, 2004 at 12 Noon EST to review the
Company's earnings and operating results. The live conference call can
be accessed by dialing 888-339-2688 (internationally 617-847-3007). No
passcode is required.
The call will also be webcast and can be accessed in a listen-only
mode at Acadia's web site at www.acadiarealty.com.
If you are unable to participate during the live webcast, the call
will be archived and available on Acadia's website. Alternatively, to
access the replay by phone, dial 888-286-8010 (internationally
617-801-6888). The passcode will be 61784604. The phone replay will be
available through Monday, August 2, 2004.
Acadia Realty Trust, headquartered in White Plains, NY, is a fully
integrated and self-managed real estate investment trust which
specializes in the acquisition, redevelopment and operation of
shopping centers which are anchored by grocery and value-oriented
retail. Acadia currently owns, or has interests in, and operates 67
properties totaling approximately nine million square feet, located
primarily in the Northeast, Mid-Atlantic and Midwest United States.
Certain matters in this press release may constitute
forward-looking statements within the meaning of federal securities
law and as such may involve known and unknown risk, uncertainties and
other factors which may cause the actual results, performances or
achievements of Acadia to be materially different from any future
results, performances or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements speak only
as of the date of this document. Acadia 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 Acadia's expectations with regard thereto or change in
events, conditions or circumstances on which any such statement is
based. The Company also refers you to the documents filed by the
Company, from time to time, with the Securities and Exchange
Commission, including without limitation the Company's Annual Report
on Form 10-K and the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" incorporated by
reference therein, for a discussion of such risks and uncertainties.
The Company considers 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 the performance of the Company. It is helpful as it excludes
various items included in net income that are not indicative of the
operating performance, such as gains (or losses) from sales of
property and depreciation and amortization. However, the Company's
method of calculating FFO may be different from methods used by other
REITs and, accordingly, may not be comparable to such other REITs. FFO
does not represent cash generated from operations as defined by
generally accepted accounting principles ("GAAP") and is not
indicative of cash available to fund all cash needs, including
distributions. It should not be considered as an alternative to net
income for the purpose of evaluating the Company's performance or to
cash flows as a measure of liquidity. Consistent with the NAREIT
definition, the Company defines FFO as net income (computed in
accordance with GAAP), excluding gains (or losses) from sales of
depreciated property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures.
EBITDA is a widely used financial measure in many industries,
including the REIT industry, and is presented to assist investors and
analysts in analyzing the performance of the Company. It is helpful as
it excludes various items included in net income that are not
indicative of operating performance, such as gains (or losses) from
sales of property and depreciation and amortization and is used in
computing various financial ratios as a measure of operational
performance. The Company computes EBITDA as the sum of net income
before extraordinary items plus interest expense, depreciation, income
taxes and amortization, less any gains (losses including impairment
charges) on the sale of income producing properties. The Company's
method of calculating EBITDA may be different from methods used by
other REITs and, accordingly, may not be comparable to such other
REITs. EBITDA does not represent cash generated from operations as
defined by 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 the Company's
performance or to cash flows as a measure of liquidity. Refer to the
Company's Financial and Operating Reporting Supplement for the Quarter
ended June 30, 2004 as posted on its website and included in the
Company's filing on Form 8K with the Securities and Exchange
Commission for a reconciliation of EBITDA.
For more information visit Acadia Realty Trust's Web site at
www.acadiarealty.com
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters and Six Months ended June 30, 2004 and 2003
(amounts in thousands, except per share data)
STATEMENTS OF INCOME
For the quarters For the six
ended months ended
Revenues June 30, June 30,
2004 2003 2004 2003
------- ------- ------- -------
Minimums rents $13,079 $12,618 $26,180 $24,715
Percentage rents 203 95 422 389
Expense reimbursements 3,129 2,896 6,803 6,613
Other property income 200 147 328 298
Management fee income 1,007 545 1,552 943
Interest income 485 164 600 414
Other 40 -- 196 1,218
------- ------- ------- -------
Total revenues 18,143 16,465 36,081 34,590
------- ------- ------- -------
Operating expenses
Property operating 3,527 3,389 7,544 7,743
Real estate taxes 2,117 1,812 4,439 4,009
General and administrative 2,422 2,449 4,911 5,145
Depreciation and amortization 4,121 3,888 7,977 7,489
------- ------- ------- -------
Total operating expenses 12,187 11,538 24,871 24,386
------- ------- ------- -------
Operating income 5,956 4,927 11,210 10,204
Equity in earnings of unconsolidated
partnerships 506 595 1,050 1,148
Interest expense (2,761) (2,805) (5,506) (5,531)
Gain on sale 508 -- 508 1,212
Minority interest (445) (274) (648) (1,127)
------- ------- ------- -------
Net income - Basic 3,764 2,443 6,614 5,906
Distributions - Preferred OP Units 88 50 160 100
------- ------- ------- -------
Net income - Diluted $ 3,852 $ 2,493 $ 6,774 $ 6,006
======= ======= ======= =======
Net income per Common Share - Basic
Weighted average Common Shares 29,128 26,387 28,407 25,885
======= ======= ======= =======
Net income per Common Share $ .13 $ .09 $ .23 $ .23
======= ======= ======= =======
Net income per Common Share -
Diluted
Weighted average Common Shares 30,192 27,176 29,632 26,558
======= ======= ======= =======
Net income per Common Share $ .13 $ .09 $ .23 $ .23
======= ======= ======= =======
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters and Six Months ended June 30, 2004 and 2003
(amounts in thousands, except per share data)
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS (2)
For the quarters For the six
ended months ended
June 30, June 30,
2004 2003 2004 2003
------- ------- ------- -------
Net income $ 3,764 $ 2,443 $ 6,614 $ 5,906
Depreciation of real estate and
amortization of leasing costs:
Wholly owned and consolidated
partnerships 3,567 3,571 7,084 6,970
Unconsolidated partnerships 569 551 1,121 1,010
Income attributable to minority
interest in Operating Partnership 72 203 187 641
------- ------- ------- -------
Funds from operations - Basic 7,972 6,768 15,006 14,527
Distributions - Preferred OP Units 88 50 160 100
------- ------- ------- -------
Funds from operations - Diluted $ 8,060 $ 6,818 $15,166 $14,627
======= ======= ======= =======
Funds from operations per share -
Basic
Weighted average Common Shares and OP
Units (3) 29,654 28,461 29,197 28,448
======= ======= ======= =======
Funds from operations per share $ .27 $ .24 $ .51 $ .51
======= ======= ======= =======
Funds from operations per share -
Diluted
Weighted average Common Shares and OP
Units (1,3) 30,718 29,250 30,422 29,121
======= ======= ======= =======
Funds from operations per share $ .26 $ .23 $ .50 $ .50
======= ======= ======= =======
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
As of June 30, 2004 and December 31, 2003
(amounts in thousands, except per share data)
SELECTED BALANCE SHEET INFORMATION
June 30, December 31,
2004 2003
---- ----
Cash and cash equivalents $ 32,352 $ 14,663
Rental property, at cost 430,736 427,628
Total assets 422,876 388,184
Mortgage notes payable 214,738 190,444
Total liabilities 230,262 208,765
Fixed rate debt: (4) 155,802 156,433
% of outstanding debt 73 % 82 %
Weighted average interest rate 6.6 % 6.6 %
Variable rate debt (4) $ 58,936 $ 34,011
% of outstanding debt 27 % 18 %
Weighted average interest rate 2.5 % 2.9 %
Total weighted average interest rate 5.5 % 5.9 %
Notes:
(1) Reflects the potential dilution that could occur if securities
or other contracts to issue Common Shares, including Preferred OP
Units, were exercised or converted into Common Shares.
(2) The Company considers 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 the performance of the Company. It is
helpful as it excludes various items included in net income that are
not indicative of the operating performance, such as gains (or losses)
from sales of property and depreciation and amortization. However, the
Company's method of calculating FFO may be different from methods used
by other REITs and, accordingly, may not be comparable to such other
REITs. FFO does not represent cash generated from operations as
defined by generally accepted accounting principles ("GAAP") and is
not indicative of cash available to fund all cash needs, including
distributions. It should not be considered as an alternative to net
income for the purpose of evaluating the Company's performance or to
cash flows as a measure of liquidity. Consistent with the NAREIT
definition, the Company defines FFO as net income (computed in
accordance with GAAP), excluding gains (or losses) from sales of
depreciated property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures.
(3) In addition to the weighted average Common Shares outstanding,
diluted FFO also assumes full conversion of a weighted average 526 and
2,074 OP Units into Common Shares for the quarters ended June 30, 2004
and 2003, respectively and 790 and 2,563 OP Units into Common Shares
for the six months ended June 30, 2004 and 2003, respectively.
(4) Fixed-rate debt includes $86,419 of notional principal fixed
through swap transactions. Conversely, variable-rate debt excludes
this amount. In addition, on July 1, 2004, the Company repaid a total
of $19,500 of outstanding principal of floating rate debt.
CONTACT: Acadia Realty Trust
Jon Grisham, 914-288-8142