|ACADIA REALTY TRUST filed this Form 8-K on 02/19/2019|
|ACADIA REALTY TRUST filed this Form 8-K on 02/19/2019|
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 13, 2019
ACADIA REALTY TRUST
(Exact name of registrant as specified in its charter)
411 Theodore Fremd Avenue
Rye, New York 10580
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth 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. ☐
On February 13, 2019, Acadia Realty Trust (the “Company”) issued a press release announcing its consolidated financial results for the quarter and year ended December 31, 2018. A copy of this press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and incorporated herein by reference. On the same day, the Company made available supplemental reporting information concerning the ownership, operations and portfolio of the Company as of and for the quarter and year ended December 31, 2018. A copy of this supplemental reporting information is attached to this Current Report on Form 8-K as Exhibit 99.2 and incorporated herein by reference.
The information included in this Item 2.02, including the information included in Exhibits 99.1 and 99.2 attached hereto, is intended to be furnished solely pursuant to this Item 2.02, and is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any filing under the Securities Act of 1933, as amended (“Securities Act”), or the Exchange Act, or otherwise subject to the liabilities of Sections 11 and 12 (a) (2) of the Securities Act.
Item 9.01.Financial Statements and Exhibits.
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.
RYE, NY (February 13, 2019) - Acadia Realty Trust (NYSE:AKR) (“Acadia” or the “Company”) today reported operating results for the quarter and year ended December 31, 2018. All per share amounts are on a fully-diluted basis.
Acadia operates dual platforms, comprised of a high-quality core real estate portfolio (“Core Portfolio”), which owns and operates assets in the nation’s most dynamic urban and street-retail corridors, and a series of discretionary, institutional funds (“Funds”) that target opportunistic and value-add investments.
Please refer to the tables and notes accompanying this press release for further details on operating results and additional disclosures related to net income, funds from operations ("FFO") and net operating income ("NOI").
“Our fourth quarter and full-year operating results were in line with our expectations; driven by the strength of our Core Portfolio and a meaningful improvement in retailer demand for high quality spaces,” stated Kenneth F. Bernstein, President and CEO of Acadia Realty Trust. “Following the successful and profitable execution of two important leases in San Francisco and Chicago, our long-term growth plan remains well on track as we add these two exciting retailers to our best-in-class portfolio. We are seeing compelling investment opportunities as we head into 2019. With significant dry powder, both on balance sheet and within our Fund business, we are well-positioned in our highly differentiated dual platform.”
A complete reconciliation, in dollars and per share amounts, of net income attributable to common shareholders to FFO attributable to common shareholders is included in the financial tables of this release.
Net income attributable to common shareholders for the quarter ended December 31, 2018 was $7.1 million, or $0.09 per share. Net income attributable to common shareholders for the quarter ended December 31, 2017 was $20.9 million, or $0.25 per share, inclusive of $6.8 million on a pro rata basis, or $0.08 per share, attributable to an aggregate gain on dispositions of Fund properties net of related impairment charges and $5.6 million, or $0.07 per share, attributable to a Core gain on change in control partially offset by $1.0 million, or $0.01 per share, of acquisition costs.
Net income attributable to common shareholders for the year ended December 31, 2018 was $31.4 million, or $0.38 per share. Net income attributable to common shareholders for the year ended December 31, 2017 was $61.5 million, or $0.73 per share, inclusive of $11.5 million on a pro rata basis, or $0.14 per share, attributable to an aggregate gain on dispositions of Fund properties net of related impairment charges and $5.6 million, or $0.07 per share, attributable to a Core gain on change in control; partially offset by $1.3 million, or $0.01 per share, of acquisition expenses.
FFO as Defined by NAREIT
FFO for the quarter ended December 31, 2018 was $29.8 million, or $0.34 per share compared to $33.1 million, or $0.37 per share for the quarter ended December 31, 2017. The decrease in FFO for the quarter is due primarily to a decrease $0.05 per share related to a $2.1 million reduction of interest income (following scheduled repayments within the Structured Finance business) and a $2.0 million executive retirement charge, partially offset by an increase of $2.7 million, or $0.03 per share, of below-market lease adjustments.
FFO for the year ended December 31, 2018 was $118.9 million, or $1.35 per share compared to $134.7 million, or $1.51 per share, for the year ended December 31, 2017. The decrease in FFO for the year is due primarily to a decrease of $0.19 per share, related to a $14.8 million reduction of interest income (following scheduled repayments within the Structured Finance business) and a $2.0 million executive retirement charge, partially offset by an increase of $2.7 million, or $0.03 per share, of below-market lease adjustments.
FFO as Adjusted for Special Items
FFO before the pro rata impact of retirement charges of $2.0 million, or $0.02 per share, for the quarter ended December 31, 2018 was $31.8 million, or $0.36 per share. FFO before the pro rata impact of retirement charges, acquisition-related costs and gains/losses on sale or impairment of depreciated and non-operating properties for the quarter ended December 31, 2017 was $31.4 million, or $0.35 per share, which excludes the net $0.02 per share effect of a $5.6 million gain on change in control partially offset by $3.0 million of impairment charges and $1.0 million of acquisition expenses.
FFO before the pro rata impact of retirement charges for the year ended December 31, 2018 was $120.9 million, or $1.38 per share, which excludes an executive retirement charge of $2.0 million, or $0.02 per share. FFO before the pro rata impact of retirement charges, acquisition-related costs and gains/losses on sale or impairment of depreciated and non-operating properties for the year ended December 31, 2017 was $133.4 million, or $1.50 per share, which excludes the net $0.01 per share effect of a $5.6 million gain on change in control partially offset by $3.0 million of impairment charges and $1.3 million of acquisition expenses.
Core Operating Results
The Company experienced strong same-property net operating income growth of 4.1% for the fourth quarter (before redevelopments), driven by the profitable re-leasing of key street and urban properties.
The Company successfully completed substantially all (over 95%) of its projected 2018 leasing activities.
In addition to the successful execution of its 2018 leasing goals, the Company signed two key leases that were an integral part of the Company’s Core NOI growth plan:
The Core Portfolio was 94.2% occupied and 95.2% leased as of December 31, 2018, compared to 94.7% occupied and 95.5% leased as of September 30, 2018. The leased rate includes space that is leased but not yet occupied and excludes development and redevelopment properties.
During the fourth quarter, the Company generated a 16.5% and 9.4% increase in rent on a GAAP and cash basis, respectively, on 5 conforming new leases aggregating approximately 39,000 square feet primarily within its street and urban portfolio.
The Company had renewals on less than 15,000 square feet, primarily within its suburban portfolio that were effectively flat for the fourth quarter on a cash and GAAP basis.
During 2018, the Company completed $149.0 million in acquisitions including $44.4 million completed during fourth quarter 2018 as follows:
Hiram Pavilion, Hiram, GA (Fund V). In October 2018, Fund V acquired a 363,000-square foot shopping center, located in greater Atlanta, GA for $44.4 million. The property is anchored by Kohl’s, Marshalls and Ross Dress for Less.
The Company, on behalf of Fund V, has an acquisition pipeline with over $100.0 million of investments currently under contract.
During 2018, the Company completed $76.6 million of Fund dispositions including $12.1 million completed during the fourth quarter as follows:
210 Bowery, New York, NY (Fund IV). In November and December, Fund IV sold four residential units within its 210 Bowery property located in New York City, NY for $12.1 million.
Acadia does not report return metrics for partial sales of its investments.
The Company has maintained its solid, low-leveraged balance sheet, with over 95% of its Core Portfolio debt fixed at an average rate of 3.7%. As of December 31, 2018, the Company’s net debt to EBITDA ratio for the Core Portfolio was 5.0x.
During the quarter, the Company closed on a $73.5 million non-recourse mortgage, of which $50 million was drawn at December 31, 2018. The loan matures in November 2028 with interest only at LIBOR plus 1.5%. The proceeds were used to repay outstanding indebtedness.
The Company repurchased $55.1 million of its common shares (2.3 million shares) during the year ended December 31, 2018 at an average cost of approximately $24 per share on a leverage-neutral basis. No shares were issued or purchased during the fourth quarter.
The following guidance is based upon our current view of existing market conditions and assumptions for the year ending December 31, 2019. The Company forecasts that its 2019 annual earnings per share will range from $0.35 to $0.46 and 2019 FFO per share will range from $1.34 to $1.46. These forecasts, and the comparable 2018 FFO, both presented below, are before acquisition and gains/losses on sale or impairment of depreciated and non-operating assets:
The Company is projecting same property net operating income growth (excluding redevelopment) of 3.0% to 4.0% for 2019. This growth is comprised of 5% to 7% within its street/urban portfolio and 0% to 1% within its suburban portfolio.
Please refer to the Company’s fourth quarter 2018 supplemental information package for additional details.
Management will conduct a conference call on Thursday, February 14, 2019 at 12:00 PM ET to review the Company’s earnings and operating results. Dial-in and webcast information is listed below.
Live Conference Call:
Date: Thursday, February 14, 2019
Time: 12:00 PM ET
Passcode: “Acadia Realty” or “6289135”
Webcast (Listen-only): www.acadiarealty.com under Investors, Presentations & Events
Available Through: Thursday, February 21, 2019
Webcast Replay: www.acadiarealty.com under Investors, Presentations & Events
Acadia Realty Trust is an equity real estate investment trust focused on delivering long-term, profitable growth via its dual - Core and Fund - operating platforms and its disciplined, location-driven investment strategy. Acadia Realty Trust is accomplishing this goal by building a best-in-class core real estate portfolio with meaningful concentrations of assets in the nation’s most dynamic urban and street-retail corridors; making profitable opportunistic and value-add investments through its series of discretionary, institutional funds; and maintaining a strong balance sheet. For further information, please visit www.acadiarealty.com.
Safe Harbor Statement
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 risks, uncertainties and other factors that 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. These forward-looking statements include statements regarding Acadia’s future financial results and its ability to capitalize on potential investment opportunities. Factors that could cause the Company’s forward-looking statements to differ from its future results include, but are not limited to, those discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent annual report on Form 10-K filed with the SEC on February 27, 2018 (“Form 10-K”) and other periodic reports filed with the SEC, including risks related to: (i) political and economic uncertainty; (ii) the Company’s reliance on revenues derived from major tenants; (iii) the Company’s limited control over joint venture investments; (iv) the Company’s partnership structure; (v) real estate and the geographic concentration of the Company’s properties; (vi) market interest rates; (vii) leverage; (viii) liability for environmental matters; (ix) the Company’s growth strategy; (x) the Company’s status as a REIT; (xi) uninsured losses; (xii) information technology security threats and (xiii) the loss of key executives. Copies of the Form 10-K and the other periodic reports Acadia files with the SEC are available on the Company’s website at www.acadiarealty.com. Any forward-looking statements in this press release speak only as of the date hereof. 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.
Consolidated Statements of Operations (a)
(dollars and Common Shares in thousands, except per share data)
Reconciliation of Consolidated Net Income to Funds From Operations (a, c)
(dollars and Common Shares and Units in thousands, except per share data)
Reconciliation of Consolidated Operating Income to Net Property Operating Income (“NOI”) (a)
(dollars in thousands)
Consolidated Balance Sheets (a)
(dollars in thousands)
Notes to Financial Highlights:
ACADIA—REALTY TRUST—Q2 2018 SUPPLEMENTAL REPORTING INFORMATIO
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