Acadia Realty Trust Announces Third Quarter 2001 Operating Results

News Release

Nov 06, 2001

Acadia Realty Trust Announces Third Quarter 2001 Operating Results

NEW YORK, Nov. 6 /PRNewswire/ -- Acadia Realty Trust (NYSE: AKR), a fully integrated shopping center real estate investment trust ("REIT"), today reported operating results for the third quarter ended September 30, 2001.

Highlights

Funds from Operations ("FFO") were $0.21 per share for the third quarter 2001, an increase in recurring FFO of $0.01 per share over third quarter 2000
Wal*Mart opened for business in the redevelopment project at the Methuen Shopping Center
Target opened for business in the redevelopment project at the Abington Towne Center
Entered into a lease with Shaw's Supermarkets for a new supermarket to be constructed in the redevelopment project at the Gateway Shopping Center
Formed a new joint venture with four prominent institutional investors to seek to acquire up to $300 million in real estate assets
Non-core disposition program continues with the completed sale of the Wesmark Plaza and Tioga West shopping centers
Two additional non-core properties are currently under contract for sale
Executed two swap agreements totaling $50 million to lock in favorable interest rates

Operating Results

FFO for the third quarter ended September 30, 2001 was $7.3 million, or $0.21 per share (both basic and fully diluted), compared with recurring FFO of $7.2 million, or $0.20 per share for the quarter ended September 30, 2000. FFO for third quarter 2000 included non-recurring lease termination income of $200,000, or $0.01 per share, in connection with the redevelopment project at the Abington Towne Center. FFO for the nine months ended September 30, 2001 was $21.7 million, or $0.63 per share. This compares with recurring FFO of $22.0 million, or $0.62 per share for the same period in 2000. FFO for the nine months ended September 30, 2000 included non-recurring lease termination income of $2.0 million, or $0.05 per share, associated with the above- mentioned project.

The net loss for the quarter ended September 30, 2001 was $9.3 million, or $0.33 per share, which included a non-cash $14.8 million write-down for property held for sale. This compares to net income of $1.1 million, or $0.04 per share for third quarter 2000. Net income for the nine months ended September 30, 2001 was $114,000 compared with $5.9 million for the same period in 2000.

Leasing and Redevelopment Activity

Within the Company's core portfolio, occupancy (including the Crossroads joint venture property) was 92.9%, which was unchanged from second quarter 2001. The core portfolio, as previously defined by the Company, is comprised of 30 community and neighborhood shopping centers that are predominantly supermarket or discount retailer anchored and situated in high quality locations with, in many cases, limited competition in the local retail market.

For the overall portfolio, which includes those assets that are currently in various stages of the disposition process ("non-core" properties), occupancy was 88.9%. This was down from 90.6% for the second quarter 2001 due in large part to the closing of a 96,000 square foot Ames store within the non-core portion of the portfolio. Ames, which is currently operating under Chapter 11 bankruptcy, also notified the Company that it intends on closing a 94,000 square foot store at the Union Plaza, which is a non-core property currently under contract for sale by the Company. The sales contract anticipates the closing of this store.

During the third quarter and into October 2001, Acadia made significant strides at three of its redevelopment properties. Accomplishments included the grand opening of a 158,000 square foot Target store at the Abington Towne Center in suburban Philadelphia. Acadia had previously sold this portion of the property to Target Corporation in December 2000. Wal*Mart opened a store in 89,000 square feet at the redevelopment and reanchoring project at the Methuen Shopping Center in Methuen, Massachusetts. Wal*Mart replaces the previous anchor, Caldor, whose lease was acquired by the Company in connection with Caldor's bankruptcy. At a third redevelopment project in South Burlington, Vermont, the Company executed a lease for a 66,000 square foot Shaw's supermarket, which replaces a former 32,000 undersized Grand Union supermarket at the center. Additional leasing activity within the core portfolio also included the opening of a 30,000 square foot Marshalls store at the Bloomfield Towne Square in Bloomfield Hills, Michigan.

Non-Core Property Disposition Program

The Company continued its progress with the non-core disposition program with the sale of two more retail properties. Following these completed sales and two additional properties currently under contract for sale, the Company will have executed on approximately 75% of the net value of its planned dispositions. Acadia completed the sale of the Wesmark Plaza, a 207,000 square foot shopping center located in Sumter, South Carolina. The Company also sold the Tioga West shopping center, a 122,000 square foot center anchored by an Ames department store and Penn Traffic supermarket. Additionally, Acadia signed two sales contracts during the third quarter to sell a non-core shopping center, the Union Plaza, which is also anchored by an Ames store, and a 463-unit apartment complex located in Greenbelt, Maryland.

Financing Activity

During the third quarter the Company completed two interest rate swap transactions. These agreements effectively fix the interest rate on $50 million of the Company's variable-rate debt at a blended rate of 6.4% for a weighted average term of approximately four years.

New Joint Venture

As previously announced in early October, Acadia formed a new joint venture during the third quarter with four of its key institutional investors. Under the terms of the joint venture agreement, Acadia and the investors will contribute $20 million and $70 million, respectively, and will seek to acquire up to $300 million of real estate assets, focusing on neighborhood and community shopping centers. Acadia will earn a pro-rata return on its invested equity and fees for construction, leasing and asset management services. Acadia also has the opportunity to earn additional amounts based on certain investment return thresholds.

Commenting on the results for the quarter, Kenneth Bernstein, Chief Executive Officer, noted, "While we are focused on the continuing softening economy and its potential impact on the Company, we remain pleased with the performance of our core portfolio and our team's progress in implementing our key initiatives. The defensive profile of our necessity-based, supermarket and discount retailer anchored shopping centers has enabled our same property net operating income for our core portfolio to continue to grow and our occupancy at these centers to remain stable. However, we think it is prudent to remain cautious and anticipate a further weakening in the economy in the future. Nevertheless, we believe that the contributions to earnings from our redevelopment pipeline as well as lower cost debt should help to counterbalance the possible effects from the economic downturn. Additionally, the success of our non-core disposition program continues to improve the quality of our earnings and the strength of our balance sheet. Most importantly, our new joint venture, in partnership with some of our current key institutional investors, enables Acadia to take advantage of the investment opportunities that are beginning to present themselves in the current environment. "

Investor Conference Call

The Company will provide a live online Web simulcast of the quarterly conference call on November 6, 2001 beginning at 11:00 a.m. EST. The webcast can be accessed at Acadia's web site at www.acadiarealty.com. The webcast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.companyboardroom.com , or by visiting any of the investor sites in CCBN's Individual Investor Network such as America Online's Personal Finance Channel, Fidelity Investments(R) (Fidelity.com) and others. Institutional investors can access the call via CCBN's password protected event management site, StreetEvents, at www.streetevents.com. StreetEvents allows institutional investors to identify, organize, and track the hundreds of conference calls that occur each day during earnings season, to download events of interest to their Outlook calendar, and to RSVP to events online. An online rebroadcast of the call will be available at these sites after the call.

Investors may also participate by telephone. The dial-in number for the call is 800-491-3423. A replay of the call will also be available through November 12, 2001 at 800-696-1588 - Passcode 1263775.

Acadia Realty Trust, headquartered on Long Island, NY, is a self- administered equity real estate investment trust structured as an UPREIT, which specializes in the operation, management, leasing, renovation and acquisition of shopping centers. The Company currently owns and operates 54 properties totaling approximately 10 million square feet, primarily in the eastern half of the United States. Acadia's principal executive offices are located in Port Washington, New York, with a corporate office located in Manhattan.

Certain matters in this press release may constitute forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 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.

For more information on Acadia Realty Trust visit Acadia Realty Trust's Web site at www.acadiarealty.com .

ACADIA REALTY TRUST AND SUBSIDIARIES Financial Highlights

For the Quarter and Nine Months ended September 30, 2001 and 2000

( dollars in thousands, except per share data )

For the quarter ended For the nine months ended September 30, September 30, 2001 2000 2001 2000 Revenues Minimum rents $ 16,391 $ 18,368 $ 50,795 $ 55,472 Percentage rents 290 401 1,381 1,741 Expense reimbursements 3,258 3,498 10,305 10,541 Other 574 1,222 1,639 4,567 Total revenues 20,513 23,489 64,120 72,321 Operating expenses Property operating 4,817 5,568 15,772 16,891 Real estate taxes 2,840 2,991 8,458 8,618 General and administrative 1,156 1,168 3,697 3,746 Depreciation and amortization 4,837 5,164 14,737 15,264 Adjustment of carrying value of property held for sale 14,756 -- 14,756 -- Total operating expenses 28,406 14,891 57,420 44,519 Operating income (loss) (7,893) 8,598 6,700 27,802 Equity in earnings of unconsolidated partnerships 125 102 414 453 Gain (loss) on sale of property 1,245 (839) 8,280 (839) Interest expense (4,382) (6,334) (14,441) (18,950) Income (loss) before minority interest, extraordinary item and cumulative effect of change in accounting principal (10,905) 1,527 953 8,466 Minority interest 1,636 (422) (550) (2,523) Extraordinary item - Loss on early extinguishment of debt -- -- (140) -- Cumulative effect of change in accounting principal -- -- (149) -- Net income (loss) $ (9,269) $1,105 $114 $5,943

Net income (loss)

per Common Share

basic

and diluted (a): $(0.33) $0.04 $0.00 $0.23

ACADIA REALTY TRUST AND SUBSIDIARIES Financial Highlights

For the Quarter and Nine Months ended September 30, 2001 and 2000

( dollars in thousands, except per share data ) RECONCILIATION OF NET INCOME (LOSS) TO FUNDS FROM OPERATIONS (b) For the quarter ended For the nine months ended September 30, September 30, 2001 2000 2001 2000 Net income (loss) above $(9,269) $1,105 $114 $5,943 Depreciation of real estate and amortization of leasing costs: Wholly owned and consolidated partnerships 4,579 4,888 13,976 14,414 Unconsolidated partnerships 157 153 470 469 Income attributable to minority interest in Operating Partnership (c) (1,707) 369 347 2,365 Adjustment of carrying value of property held for sale 14,756 -- 14,756 -- (Gain) loss on sale of property (1,245) 839 (8,280) 839 Extraordinary item -- -- 140 -- Cumulative effect of change in accounting principal -- -- 149 -- Funds from operations $7,271 $ 7,354 $ 21,672 $ 24,030 Funds from operations per share (d) $0.21 $0.21 $0.63 $0.67 Selected Balance Sheet Information September 30,

December 31,

2001 2000 Cash and cash equivalents $24,883 $22,167 Rental property, at cost 495,008 514,139 Total assets 478,311 523,611 Mortgage notes payable 251,897 277,112 Total liabilities 268,229 293,138 Fixed rate debt (e): 173,737 153,203 % of outstanding debt 69 % 55 % Weighted average interest rate 7.9 % 8.3 % Variable rate debt $78,160 $ 123,909 % of outstanding debt 31 % 45 % Weighted average interest rate 5.4 % 8.5 % Total weighted average interest rate 7.1 % 8.3 % ACADIA REALTY TRUST AND SUBSIDIARIES Financial Highlights

For the Quarter and Nine Months ended September 30, 2001 and 2000

(Dollars in thousands, except per share data)

Notes:

(a) Net income per share (basic and diluted) is computed based on the

weighted average number of Common Shares outstanding for the quarter ended September 30, 2001 and 2000 of 28,488,712 and 26,789,666, respectively, and the weighted average number of Common Shares outstanding for the nine months ended September 30, 2001 and 2000 of 28,224,716 and 25,839,334, respectively.

(b) Consistent with the NAREIT definition, the Company defines FFO as net

income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

the quarter and nine months ended September 30, 2001 and 2000.

(d) Assumes full conversion of a weighted average 5,628,091 and 8,754,294

OP Units into Common Shares for the quarter ended September 30, 2001 and 2000, and 6,227,938 and 9,903,318 OP Units into Common Shares for the nine months ended September 30, 2001 and 2000.

(e) Fixed-rate debt includes $50,000 of notional principal fixed through

swap transactions. Conversely, variable-rate debt excludes this amount.

SOURCE Acadia Realty Trust

CONTACT: Jon Grisham, Investor Relations of Acadia Realty Trust, +1-516-767-7550; General Inquiries, Susan Garland of FRB Weber Shandwick, +1-212-445-8458/