|ACADIA REALTY TRUST filed this Form 10-Q on 04/25/2019|
Interest expense for the Funds increased $1.8 million for the three months ended March 31, 2019 compared to the prior year period due to a $1.3 million increase related to higher average outstanding borrowings in 2019, a $0.9 million increase related to higher average interest rates during 2019 and $0.3 million from higher loan cost amortization in 2019. These increases were partially offset by $0.7 million more interest capitalized in 2019.
Net income attributable to noncontrolling interests for the Funds increased $2.4 million for the three months ended March 31, 2019 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above. Income attributable to noncontrolling interests in the Funds includes asset management fees earned by the Company of $4.5 million and $4.4 million for the three months ended March 31, 2019 and 2018, respectively.
The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” Interest income for the Structured Financing portfolio decreased $1.4 million for the three months ended March 31, 2019 compared to the prior year period primarily due to a reduction of $1.2 million from the conversion of a portion of two notes receivable into increased ownership in the real estate (Note 4) and $0.2 million for loan payoffs during 2018 and 2019.
The Company does not allocate general and administrative expense and income taxes to its reportable segments. These unallocated amounts are depicted in the table above under the headings labeled “Total.”
SUPPLEMENTAL FINANCIAL MEASURES
Net Property Operating Income
The following discussion of net property operating income (“NOI”) and rent spreads on new and renewal leases includes the activity from both our consolidated and our pro-rata share of unconsolidated properties within our Core Portfolio. Our Funds invest primarily in properties that typically require significant leasing and development. Given that the Funds are finite-life investment vehicles, these properties are sold following stabilization. For these reasons, we believe NOI and rent spreads are not meaningful measures for our Fund investments.
NOI represents property revenues less property expenses. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriate supplemental disclosures of portfolio operating performance due to their widespread acceptance and use within the REIT investor and analyst communities. NOI and rent spreads on new and renewal leases are presented to assist investors in analyzing our property performance, however, our method of calculating these may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
A reconciliation of consolidated operating income to net operating income - Core Portfolio follows (in thousands):