SEC Filings

10-Q
ACADIA REALTY TRUST filed this Form 10-Q on 04/25/2019
Entire Document
 

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

The Company is exposed to credit risk in the event of non-performance by the counterparties to the swaps if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions. The Company has not entered, and does not plan to enter, into any derivative financial instruments for trading or speculative purposes.

The following table presents the location in the financial statements of the income (losses) recognized related to the Company’s cash flow hedges (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

Amount of (loss) income recognized in other comprehensive income

 

$

(13,306

)

 

$

5,653

 

Amount of (income) loss subsequently reclassified to earnings

 

 

(551

)

 

 

363

 

 

Credit Risk-Related Contingent Features

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

Other Financial Instruments

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

 

 

 

 

 

 

 

March 31, 2019

 

 

December 31, 2018

 

 

 

Level

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

Notes Receivable (a)

 

 

3

 

 

$

109,769

 

 

$

108,343

 

 

$

109,613

 

 

$

107,370

 

Mortgage and Other Notes Payable (a)

 

 

3

 

 

 

1,120,349

 

 

 

1,122,067

 

 

 

1,026,708

 

 

 

1,021,075

 

Investment in non-traded equity securities (b)

 

 

3

 

 

 

 

 

 

23,208

 

 

 

 

 

 

23,208

 

Unsecured notes payable and Unsecured line of credit (c)

 

 

2

 

 

 

490,425

 

 

 

490,819

 

 

 

533,625

 

 

 

533,954

 

 

(a)

The Company determined the estimated fair value of these financial instruments using a discounted cash flow model with rates that take into account the credit of the borrower or tenant, where applicable, and interest rate risk. The Company also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the borrower, the time until maturity and the current market interest rate environment.

(b)

Represents Fund II’s cost-method investment in Albertson’s supermarkets (Note 4).

(c)

The Company determined the estimated fair value of the unsecured notes payable and unsecured line of credit using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, the Company determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants.

The Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and certain financial instruments included in other assets and other liabilities had fair values that approximated their carrying values at March 31, 2019.

9. Commitments and Contingencies

The Company is involved in various matters of litigation arising in the normal course of business. While the Company is unable to predict with certainty the amounts involved, the Company’s management and counsel are of the opinion that, when such litigation is resolved, the Company’s resulting liability, if any, will not have a significant effect on the Company’s consolidated financial position, results of operations, or liquidity. The Company's policy is to accrue legal expenses as they are incurred.

Commitments and Guaranties

In conjunction with the development and expansion of various properties, the Company has entered into agreements with general contractors for the construction or development of properties aggregating approximately $69.9 million and $55.5 million as of March 31, 2019 and December 31, 2018, respectively.

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