Acadia Realty Trust Reports Second Quarter 2018 Operating Results
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Acadia Realty Trust Reports Second Quarter 2018 Operating Results
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").
Highlights
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Earnings: Generated earnings per share of
$0.09 for the second quarter; FFO per share was$0.34 for the second quarter including approximately$0.01 from fund transactional activity -
Core Portfolio Operating Results: Solid Core operating
fundamentals
-
Achieved over 75% of our 2018 leasing goals to date based on NOI,
representing approximately
$6.0 million of annualized NOI - Rent growth of 8.7% on new and renewal leases for the quarter on a cash basis
- Reported 95.3% leased occupancy as of June 30, 2018
- Higher than anticipated same-property net operating income growth of 0.8% for the second quarter (excluding redevelopment)
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Achieved over 75% of our 2018 leasing goals to date based on NOI,
representing approximately
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Fund Acquisition Activity: During July, Fund V completed a
$59.3 million acquisition -
Fund Disposition Activity: As previously reported, Fund II
completed a
$26.0 million disposition during the second quarter; Fund IV also has$8.1 million of dispositions under contract -
Balance Sheet: The Company repurchased an additional
$23.1 million of its shares during the three months ended June 30, 2018. Aggregate purchases were$55.1 million for the six months endedJune 30, 2018 at an average cost of approximately$24 per share on a leverage-neutral basis. As a result of the Company's successful capital recycling efforts to date, Core net debt decreased by$19.9 million during 2018 -
Guidance: Following its continued strong leasing efforts and
its portfolio performance to date, the Company reaffirms its 2018
guidance of FFO per share of
$1.33 to $1.45 and same-property net operating income growth of 1-3%, including 2-7% growth in the second half of the year
“Our second-quarter operating results exceeded our expectations but,
more importantly, we continued to put the key drivers of our long-term
growth plan into place,” stated
FINANCIAL RESULTS
A complete reconciliation, in dollars and per share amounts, of net income to FFO is included in the financial tables of this release.
Net Income
Net income attributable to common shareholders for the quarter ended
June 30, 2018 was
Net income attributable to common shareholders for the six months ended
June 30, 2018 was
FFO
Consistent with our expectations, FFO for the quarter ended June 30,
2018 was
FFO for the six months ended June 30, 2018 was
CORE PORTFOLIO
Core Operating Results
As previously discussed, the Company's 2018 leasing goal is to execute
leases comprising approximately
The Company experienced higher-than-anticipated same-property net operating income growth of 0.8% for the second quarter (excluding redevelopment), driven by better than expected portfolio performance. As projected, the first half of 2018 continued to reflect the impact of the previously-reported recapture of occupancy during 2017.
The Core Portfolio was 94.8% occupied and 95.3% leased as of June 30,
2018, compared to 94.4% occupied and 95.3% leased as of
During the second quarter, the Company generated an 8.7% increase in rent on a cash basis on 25 conforming new and renewal leases aggregating 279,000 square feet primarily within our suburban portfolio.
Redevelopment Update
City Center,
Clark and Diversey,
FUND PLATFORM
Fund Acquisitions
Fund V completed a
Fund Dispositions
Through June 30, 2018, the Company has completed
Fund IV also has
BALANCE SHEET
The Company has maintained its solid, low-leveraged balance sheet.
The Company repurchased an additional
2018 GUIDANCE
The Company reaffirms that its 2018 annual earnings per share will range
from
The Company’s 2018 operating assumptions are reaffirmed as follows:
- 2018 annual growth of 1% to 3% in same-property NOI (excluding redevelopments), with quarterly SSNOI growth in the second half ranging from 2% - 7%:
- The variability and range of estimates for the third and fourth quarter are primarily dependent upon the rent commencement dates of certain executed key leases
CONFERENCE CALL
Management will conduct a conference call on
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Live Conference Call: |
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| Date: | Wednesday, July 25, 2018 | |||
| Time: | 12:00 PM ET | |||
| Dial#: | 844-309-6711 | |||
| Passcode: | “Acadia Realty” or “2664047” | |||
| Webcast (Listen-only): |
www.acadiarealty.com under Investors, Presentations & Events |
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Phone Replay: |
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| Dial#: | 855-859-2056 | |||
| Passcode: | “2664047” | |||
| Available Through: | Wednesday, August 1, 2018 | |||
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Webcast Replay: |
www.acadiarealty.com under Investors, Presentations & Events |
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About
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
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ACADIA REALTY TRUST AND SUBSIDIARIES |
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Consolidated Statements of Operations (a) |
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(dollars and Common Shares in thousands, except per share data) |
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| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
| Revenues | |||||||||||||||||||||
| Rental income | $ | 51,322 | $ | 48,468 | $ | 102,101 | $ | 97,053 | |||||||||||||
| Expense reimbursements | 10,598 | 10,074 | 21,806 | 22,390 | |||||||||||||||||
| Other | 1,649 | 962 | 2,786 | 2,060 | |||||||||||||||||
| Total revenues | 63,569 | 59,504 | 126,693 | 121,503 | |||||||||||||||||
| Operating expenses | |||||||||||||||||||||
| Depreciation and amortization | 29,503 | 26,057 | 58,079 | 50,593 | |||||||||||||||||
| General and administrative | 7,907 | 8,864 | 16,377 | 17,333 | |||||||||||||||||
| Real estate taxes | 7,031 | 8,034 | 15,990 | 18,640 | |||||||||||||||||
| Property operating | 12,524 | 9,364 | 22,862 | 17,561 | |||||||||||||||||
| Other operating | 305 | 443 | 385 | 737 | |||||||||||||||||
| Total operating expenses | 57,270 | 52,762 | 113,693 | 104,864 | |||||||||||||||||
| Operating income | 6,299 | 6,742 | 13,000 | 16,639 | |||||||||||||||||
| Equity in earnings of unconsolidated affiliates inclusive of gain on disposition of properties of $0, $3,285, $0 and $14,771, respectively | 5,019 | 4,340 | 6,703 | 17,043 | |||||||||||||||||
| Interest income | 3,289 | 8,203 | 7,026 | 17,187 | |||||||||||||||||
| Interest expense | (16,915 | ) | (12,750 | ) | (32,805 | ) | (24,238 | ) | |||||||||||||
| (Loss) income from continuing operations before income taxes | (2,308 | ) | 6,535 | (6,076 | ) | 26,631 | |||||||||||||||
| Income tax benefit (provision) | 5 | (427 | ) | (387 | ) | (552 | ) | ||||||||||||||
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(Loss) income from continuing operations before gain on disposition of properties |
(2,303 | ) | 6,108 | (6,463 | ) | 26,079 | |||||||||||||||
| Gain on disposition of properties, net of tax | 33 | — | 33 | — | |||||||||||||||||
| Net (loss) income | (2,270 | ) | 6,108 | (6,430 | ) | 26,079 | |||||||||||||||
| Net loss attributable to noncontrolling interests | 9,935 | 5,952 | 21,514 | 1,612 | |||||||||||||||||
| Net income attributable to Acadia | $ | 7,665 | $ | 12,060 | $ | 15,084 | $ | 27,691 | |||||||||||||
| Less: net income attributable to participating securities | (47 | ) | (126 | ) | (91 | ) | (372 | ) | |||||||||||||
| Net income attributable to Common Shareholders - basic and diluted earnings per share | $ | 7,618 | $ | 11,934 | $ | 14,993 | $ | 27,319 | |||||||||||||
| Weighted average shares for diluted earnings per share | 81,756 | 83,662 | 82,592 | 83,654 | |||||||||||||||||
| Net Earnings per share - basic and diluted (b) | $ | 0.09 | $ | 0.14 | $ | 0.18 | $ | 0.33 | |||||||||||||
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ACADIA REALTY TRUST AND SUBSIDIARIES |
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Reconciliation of Consolidated Net Income to Funds From Operations (a, c) |
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(dollars and Common Shares and Units in thousands, except per share data) |
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| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
| Net income attributable to Acadia | $ | 7,665 | $ | 12,060 | $ | 15,084 | $ | 27,691 | |||||||||||||
| Depreciation of real estate and amortization of leasing costs (net of noncontrolling interests' share) | 21,586 | 21,093 | 42,671 | 42,626 | |||||||||||||||||
| Gain on sale (net of noncontrolling interests’ share) | — | (753 | ) | — | (3,495 | ) | |||||||||||||||
| Income attributable to Common OP Unit holders | 498 | 719 | 975 | 1,642 | |||||||||||||||||
| Distributions - Preferred OP Units | 135 | 138 | 270 | 277 | |||||||||||||||||
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Funds from operations attributable to Common Shareholders
and Common OP Unit holders |
$ | 29,884 | $ | 33,257 | $ | 59,000 | $ | 68,741 | |||||||||||||
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Funds From Operations per Share - Diluted |
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| Weighted average number of Common Shares and Common OP Units (d) | 87,485 | 88,973 | 88,272 | 88,998 | |||||||||||||||||
| Diluted Funds from operations, per Common Share and Common OP Unit | $ | 0.34 | $ | 0.37 | $ | 0.67 | $ | 0.77 | |||||||||||||
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ACADIA REALTY TRUST AND SUBSIDIARIES |
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Reconciliation of Consolidated Operating Income to Net Property Operating Income (“NOI”) (a) |
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(dollars in thousands) |
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| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
| Consolidated operating income | $ | 6,299 | $ | 6,742 | $ | 13,000 | $ | 16,639 | |||||||||||||
| Add back: | |||||||||||||||||||||
| General and administrative | 7,907 | 8,864 | 16,377 | 17,333 | |||||||||||||||||
| Depreciation and amortization | 29,503 | 26,057 | 58,079 | 50,593 | |||||||||||||||||
| Less: | |||||||||||||||||||||
| Above/below market rent, straight-line rent and other adjustments | (5,577 | ) | (3,956 | ) | (11,104 | ) | (9,943 | ) | |||||||||||||
| Consolidated NOI | 38,132 | 37,707 | 76,352 | 74,622 | |||||||||||||||||
| Noncontrolling interest in consolidated NOI | (8,804 | ) | (7,046 | ) | (17,431 | ) | (13,585 | ) | |||||||||||||
| Less: Operating Partnership's interest in Fund NOI included above | (2,304 | ) | (2,029 | ) | (4,461 | ) | (3,976 | ) | |||||||||||||
| Add: Operating Partnership's share of unconsolidated joint ventures NOI (e) | 6,428 | 4,980 | 12,076 | 9,687 | |||||||||||||||||
| NOI - Core Portfolio | $ | 33,452 | $ | 33,612 | $ | 66,536 | $ | 66,748 | |||||||||||||
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ACADIA REALTY TRUST AND SUBSIDIARIES |
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Consolidated Balance Sheets (a) |
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(dollars in thousands) |
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| As of | |||||||||||
| June 30, 2018 | December 31, 2017 | ||||||||||
| ASSETS | |||||||||||
| Investments in real estate, at cost | |||||||||||
| Land | $ | 667,759 | $ | 658,835 | |||||||
| Buildings and improvements | 2,583,665 | 2,538,338 | |||||||||
| Construction in progress | 27,439 | 18,642 | |||||||||
| Properties under capital lease | 76,965 | 76,965 | |||||||||
| 3,355,828 | 3,292,780 | ||||||||||
| Less: accumulated depreciation | (378,272 | ) | (339,862 | ) | |||||||
| Operating real estate, net | 2,977,556 | 2,952,918 | |||||||||
| Real estate under development | 192,215 | 173,702 | |||||||||
| Net investments in real estate | 3,169,771 | 3,126,620 | |||||||||
| Notes receivable, net | 109,209 | 153,829 | |||||||||
| Investments in and advances to unconsolidated affiliates | 306,616 | 302,070 | |||||||||
| Other assets, net | 207,583 | 214,959 | |||||||||
| Cash and cash equivalents | 17,330 | 74,823 | |||||||||
| Rents receivable, net | 56,503 | 51,738 | |||||||||
| Restricted cash | 13,756 | 10,846 | |||||||||
| Assets of properties held for sale | — | 25,362 | |||||||||
| Total assets | $ | 3,880,768 | $ | 3,960,247 | |||||||
| LIABILITIES | |||||||||||
| Mortgage and other notes payable, net | $ | 981,567 | $ | 909,174 | |||||||
| Unsecured notes payable, net | 465,687 | 473,735 | |||||||||
| Unsecured line of credit | 14,000 | 41,500 | |||||||||
| Accounts payable and other liabilities | 197,181 | 210,052 | |||||||||
| Capital lease obligation | 70,857 | 70,611 | |||||||||
| Dividends and distributions payable | 23,719 | 24,244 | |||||||||
| Distributions in excess of income from, and investments in, unconsolidated affiliates | 15,208 | 15,292 | |||||||||
| Total liabilities | 1,768,219 | 1,744,608 | |||||||||
| Commitments and contingencies | |||||||||||
| EQUITY | |||||||||||
| Acadia Shareholders' Equity | |||||||||||
| Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 81,502,812 and 83,708,140 shares, respectively | 82 | 84 | |||||||||
| Additional paid-in capital | 1,543,651 | 1,596,514 | |||||||||
| Accumulated other comprehensive income | 10,138 | 2,614 | |||||||||
| Distributions in excess of accumulated earnings | (61,196 | ) | (32,013 | ) | |||||||
| Total Acadia shareholders’ equity | 1,492,675 | 1,567,199 | |||||||||
| Noncontrolling interests | 619,874 | 648,440 | |||||||||
| Total equity | 2,112,549 | 2,215,639 | |||||||||
| Total liabilities and equity | $ | 3,880,768 | $ | 3,960,247 | |||||||
ACADIA REALTY TRUST AND SUBSIDIARIES
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Notes to Financial Highlights: |
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| (a) |
For additional information and analysis concerning the Company’s results of operations, reference is made to the Company’s Quarterly Supplemental Disclosure furnished on Form 8-K to the SEC and included on the Company’s website at www.acadiarealty.com. |
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| (b) | 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. The effect of the conversion of Common OP Units is not reflected in the above table as they are exchangeable for Common Shares on a one-for-one basis. The income allocable to such units is allocated on the same basis and reflected as noncontrolling interests in the consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings per share. | ||
| (c) | The Company considers funds from operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and net property operating income (“NOI”) to be appropriate supplemental disclosures of operating performance for an equity REIT due to their widespread acceptance and use within the REIT and analyst communities. FFO and NOI are presented to assist investors in analyzing the performance of the Company. They are helpful as they exclude various items included in net income that are not indicative of the operating performance, such as gains (losses) from sales of depreciated property, depreciation and amortization, and impairment of depreciable real estate. In addition, NOI excludes interest expense. The Company’s method of calculating FFO and NOI 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 (losses) from sales of depreciated property, plus depreciation and amortization, impairment of depreciable real estate, and after adjustments for unconsolidated partnerships and joint ventures. | ||
| (d) | In addition to the weighted-average Common Shares outstanding, basic and diluted FFO also assume full conversion of a weighted-average 4,966 thousand and 4,755 thousand OP Units into Common Shares for the quarters ended June 30, 2018 and 2017 and 4,966 thousand and 4,755 thousand OP Units into Common Shares for the six months ended June 30, 2018 and 2017, respectively. Diluted FFO also includes: (i) the assumed conversion of Preferred OP Units into 499 thousand and 512 thousand Common Shares for the quarters ended June 30, 2018 and 2017 and 499 thousand and 504 thousand Common Shares for the six months ended June 30, 2018 and 2017, respectively; and (ii) the effect of 264 thousand and 44 thousand restricted share units and LTIP units for the quarters ended June 30, 2018 and 2017 and 216 thousand and 91 thousand for the six months ended June 30, 2018 and 2017, respectively. | ||
| (e) |
The Pro-rata share of NOI is based upon our stated ownership percentages in each operating agreement. Does not include the Operating Partnership's share of NOI from unconsolidated joint ventures within the Funds. |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20180724005916/en/
Source:
Acadia Realty Trust
Amy L. Racanello, 914-288-8100