Acadia Realty Trust Reports First Quarter 2006 Operating Results
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Acadia Realty Trust Reports First Quarter 2006 Operating Results
NEW YORK--(BUSINESS WIRE)--April 26, 2006--Acadia Realty Trust (NYSE: AKR - "Acadia" or the "Company"), a real estate investment trust ("REIT") today reported operating results for the quarter ended March 31, 2006. All per share amounts discussed below are on a fully diluted basis.
First Quarter 2006 Highlights
FFO continues to increase
-- Funds from operations ("FFO") per share of $0.28 for the first
quarter 2006 compared to $0.27 for first quarter 2005
-- Earnings per share from continuing operations for 2006 of
$0.12 compared to $0.13 for 2005
Same Store NOI up 4.7% - Wholly-owned portfolio occupancy remains strong at 93.7%
-- Same-store net operating income for the retail portfolio up
4.7% for first quarter 2006 over 2005
Balance sheet ratios remain strong
-- Maintained conservative dividend payout ratio for first
quarter 2006 of 64% of FFO
-- 30% debt to total market capitalization
-- 2.9 to 1 fixed-charge coverage for the quarter
External growth initiatives continue with acquisition activity
-- New York Urban/Infill Redevelopment progress continues
-- RCP: Mervyn's investment has now returned 185% of invested
capital to date
-- Successful completion of previously announced acquisitions in
Chicago and New Jersey in connection with asset recycling
activities
Harvesting of profits from completion of Brandywine recapitalization
-- Previously announced recapitalization of Brandywine Portfolio
completed during first quarter 2006
First Quarter Operating Results
As previously disclosed, effective January 1, 2006, the Company accounts for its Funds I, II and Mervyn's investments on a fully consolidated basis pursuant to Emerging Issues Task Force ("EITF") 04-5, "Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights". Historic results for the quarter ended March 31, 2005 have also been presented on a fully consolidated basis for purposes of comparability with 2006. The Company has also included financial schedules in its Quarterly Financial and Operating Reporting Supplement ("Quarterly Supplement"), as currently posted on its website, reflecting a pro-rata consolidation of joint venture activities to assist investors in evaluating and comparing the Company's results for the quarter ended March 31, 2006 with previous periods.
FFO, a widely accepted measure of REIT performance, for the quarter ended March 31, 2006 was $9.6 million, or $0.28 per share, compared to $8.9 million, or $0.27 per share for the first quarter 2005. Earnings per share ("EPS") from continuing operations was $0.12 for first quarter 2006 compared to $0.13 for first quarter 2005. EPS and FFO for first quarter 2005 included income of approximately $0.5 million, or $0.015 per share, related to an insurance claim adjustment.
Portfolio Activity - Same-Store NOI Up 4.7% - Wholly-Owned Portfolio Occupancy remains strong at 93.7%
Same store net operating income ("NOI") for the retail portfolio increased 4.7% for the first quarter 2006 over 2005.
During the first quarter 2006, Acadia executed new and renewal leases at an average increase of 8.7% over the previous base rents on a cash basis.
On a year-over-year basis, Acadia increased its portfolio occupancy for its wholly-owned portfolio by 130 basis points. March 31, 2006 occupancy was 93.7% compared to 92.4% as of March 31, 2005. On a same-store basis, first quarter 2006 occupancy increased 70 basis points over first quarter 2005 occupancy of 93.0%. On a sequential basis, March 31, 2006 occupancy decreased 60 basis points from the December 31, 2005 occupancy of 94.3%.
Combined occupancy within the operating joint venture portfolios (Funds I, II, Brandywine and Crossroads joint ventures) remained high at 96.8% as of March 31, 2006, which was the same occupancy level as of March 31 and December 31, 2005.
Balance Sheet - Low Interest Rate Exposure
As of March 31, 2006, 91% of the Company's total mortgage debt, inclusive of long-term interest rate swaps and the Company's pro-rata share of joint venture debt is now fixed-rate. This compares to 88% being fixed rate as of December 31, 2005. As a result, the Company continues to maintain its blended cost of debt below 6.0%, despite a 2% increase in LIBOR from a year ago.
For 2006, the strength of Acadia's balance sheet was evidenced by continued strong financial ratios which include the Company's pro-rata share of unconsolidated joint venture debt and interest expense as follows:
-- Debt to total market capitalization at March 31, 2006 was 30%
-- Fixed-charge ratio (EBITDA / interest expense plus preferred
distributions) was 2.9 for the first quarter 2006
-- Dividend payout ratio for first quarter 2006 was 64% of FFO
and 68% of AFFO
-- $44 million currently remains available under existing credit
facilities to fund capital requirements
External Growth Continues with Focus on New York Urban/Infill Redevelopments, RCP Venture and Other Activities
New York Urban/Infill Redevelopment Program
In the first quarter 2006, Acadia continued to make steady progress in its New York Urban/Infill Redevelopment Program, which was launched in conjunction with its partner, P/A Associates. The Company currently has a total of seven properties in its redevelopment pipeline, for which acquisition and development costs are anticipated to total approximately $354.0 million with anticipated completion schedules and costs as set forth in the Company's Quarterly Supplement.
RCP Venture - Mervyn's investment returns 185% of invested capital
In 2004, Acadia formed the Retailer Controlled Property Venture ("RCP Venture") with the Klaff and Lubert-Adler organizations. The RCP Venture completed its first investment with its participation in the acquisition of Mervyn's Department Stores. A total of $24.5 million was invested by Acadia and its Fund investors ("Acadia/Mervyn's"). In the fourth quarter of 2005, Acadia/Mervyn's received distributions totaling $42.7 million, or 174% of its invested capital. During the first quarter 2006, an additional $2.8 million was distributed increasing this return to 185% to date. During the first quarter 2006, Acadia's Promoted Interest from the Mervyn's investment amounted to $0.3 million.
As previously announced, Acadia closed on the following two additional investments during the first quarter of 2006, which were made directly through the Company:
-- On January 12, 2006, Acadia closed on a 20,000 square foot
retail building in the Lincoln Park district in Chicago for
$9.9 million. Tenants include Starbucks, Nine West, Vitamin
Shoppe, The Body Shop, Papyrus and Cold Stone Creamery.
-- On January 24, 2006, Acadia acquired a 60% interest in the A&P
Shopping Plaza located in Boonton, New Jersey for $3.2
million.
Harvesting of Fund I Continues with Recapitalization of Brandywine Portfolio at Significant Profit
As previously announced, Acadia recapitalized its one million square foot Wilmington, Delaware shopping center portfolio through a merger of interests at an implied value of $211 million, as compared to Fund I's cost basis of $108 million. Acadia has retained its existing 22.2% interest and continues to operate the portfolio and earn fees for such services.
At the closing, the Fund I investors received a return of all of their invested capital and accumulated preferred return in the Fund, thus triggering Acadia's 20% Promoted Interest in all future earnings and distributions from Fund I. Additionally there are 32 remaining Fund I assets, comprising approximately 2.0 million square feet, in which Acadia's ownership interest has increased from 22.2% to 37.8%.
Outlook - Earnings Guidance for 2006
The Company currently reaffirms its previously announced 2006 FFO and earnings per share forecast. On a fully diluted basis, FFO for 2006 is anticipated to range from $1.14 to $1.19 per share. 2006 earnings per share is expected to range from $0.59 to $0.64.
Management Comments
Commenting on the results for the first quarter, Kenneth Bernstein, President and CEO, stated, "We are quite pleased with our first quarter results which reflect our continued strong portfolio performance, strong balance sheet position and further accretion from our external growth initiatives. The first quarter results also show the positive impact of harvesting significant profits through our Fund I/ Brandywine recapitalization as well as laying the foundation for future growth through our Urban /Infill platform and our RCP ventures. We believe the combination of solid internal performance with strong external growth potential should enable us to continue to effectively execute our business plan."
Investor Conference Call
Management will conduct a conference call April 27, 2006 at 2:00 PM ET to review the Company's earnings and operating results. The live conference call can be accessed by dialing 888-481-7939 (internationally 617-847-8707). The pass-code is "Acadia". The call will also be webcast and can be accessed in a listen-only mode at Acadia's web site at acadiarealty.com. If you are unable to participate during the live webcast, the call will be archived and available on Acadia's website. Alternatively, to access the replay by phone, dial 888-286-8010 (internationally 617-801-6888). The pass-code will be 70341177. The phone replay will be available through Thursday May 4, 2006.
Acadia Realty Trust, headquartered in White Plains, NY, is a fully integrated and self-managed real estate investment trust which specializes in the acquisition, redevelopment and operation of shopping centers which are anchored by grocery and value-oriented retail.
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 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. The Company also refers you to the documents filed by the Company, from time to time, with the Securities and Exchange Commission, including without limitation the Company's Annual Report on Form 10-K and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated by reference therein, for a discussion of such risks and uncertainties.
See the notes to the attached financial tables for a further discussion of the Company's use of FFO.
For more information visit Acadia Realty Trust's Web site at www.acadiarealty.com, which is not to be deemed a part of this press release
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters ended March 31, 2006 and 2005
(dollars in thousands, except per share data)
==============================================
For the quarters ended
March 31,
Revenues 2006 2005 (1)
-------- --------
Minimum rents $ 17,788 $ 18,501
Percentage rents 185 201
Expense reimbursements 4,079 4,374
Other property income 211 330
Management fee income 1,201 575
Interest income 1,746 417
Other -- --
-------- --------
Total revenues 25,210 24,398
-------- --------
Operating expenses
Property operating 4,050 4,820
Real estate taxes 2,799 2,562
General and administrative 5,307 3,115
Depreciation and amortization 6,398 6,272
-------- --------
Total operating expenses 18,554 16,769
-------- --------
Operating income 6,656 7,629
Equity in earnings of unconsolidated
partnerships 4,112 261
Interest expense (5,185) (3,933)
Minority interest (1,081) 201
-------- --------
Income from continuing operations before income
taxes 4,502 4,158
-------- --------
Income taxes (449) --
-------- --------
Income from continuing operations 4,053 4,158
-------- --------
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters ended March 31, 2006 and 2005
(dollars in thousands, except per share data)
==============================================
For the quarters ended
March 31,
2006 2005 (1)
--------- ---------
Discontinued operations:
Operating (loss) income from discontinued
operations $ 306 $ 292
Impairment of real estate -- --
Gain (loss) on sale of property -- --
Minority interest (6) (5)
-------- --------
(Loss) income from discontinued operations 300 287
-------- --------
Net income $ 4,353 $ 4,445
======== ========
Net income per Common Share - Basic
Net income per Common Share - Continuing
operations $ .12 $ .13
Net (loss) income per Common Share -
Discontinued operations .01 .01
-------- --------
Net income per Common Share $ .13 $ .14
======== ========
Weighted average Common Shares 32,468 31,867
======== ========
Net income per Common Share - Diluted (2)
Net income per Common Share - Continuing
operations $ .12 $ .13
Net (loss) income per Common Share -
Discontinued operations .01 .01
-------- --------
Net income per Common Share $ .13 $ .14
-------- --------
Weighted average Common Shares 32,766 32,140
======== ========
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters ended March 31, 2006 and 2005
(dollars in thousands, except per share data)
=========================================================
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS (3)
For the quarters ended
March 31,
2006 2005 (1)
--------- ---------
Net income $ 4,353 $ 4,445
Depreciation of real estate and amortization
of leasing costs (net of minority interests'
share)
Wholly owned and consolidated partnerships 5,034 3,620
Unconsolidated partnerships 412 633
Income attributable to minority interest in
Operating Partnership 94 75
Gain on sale (net of minority share and income
taxes) (372) --
--------- ---------
Funds from operations - Basic 9,521 8,773
Distributions - Preferred OP Units 62 87
--------- ---------
Funds from operations - Diluted $ 9,583 $ 8,860
========= =========
Funds from operations per share - Basic
Weighted average Common Shares and OP Units (4) 33,122 32,382
--------- ---------
Funds from operations per share $ .29 $ .27
========= =========
Funds from operations per share - Diluted
Weighted average Common Shares and OP Units (4) 33,757 33,177
========= =========
Funds from operations per share $ .28 $ .27
========= =========
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
As of March 31, 2006 and December 31, 2005
(dollars in thousands, except per share data)
=============================================
SELECTED BALANCE SHEET INFORMATION
March 31, December 31,
2006 2005 (1)
-------------- ------------
Cash and cash equivalents $ 50,141 $ 62,117
Rental property, at cost 659,881 767,852
Total assets 732,712 841,858
Mortgage notes payable 376,273 406,865
Total liabilities 431,442 475,017
Notes:
(1) Effective January 1, 2006, the Company accounts for its Funds I,
II and Mervyn's investments on a fully consolidated basis pursuant to
Emerging Issues Task Force ("EITF") 04-5, "Determining Whether a
General Partner, or the General Partners as a Group, Controls a
Limited Partnership or Similar Entity When the Limited Partners Have
Certain Rights". Historic results for the quarter ended March 31, 2005
have also been presented on a fully consolidated basis for purposes of
comparability with 2006.
(2) 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 this same basis and reflected as minority interest 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.
(3) The Company considers funds from operations ("FFO") as defined
by the National Association of Real Estate Investment Trusts
("NAREIT") to be an appropriate supplemental disclosure of operating
performance for an equity REIT due to its widespread acceptance and
use within the REIT and analyst communities. FFO is presented to
assist investors in analyzing the performance of the Company. It is
helpful as it excludes various items included in net income that are
not indicative of the operating performance, such as gains (losses)
from sales of depreciated property and depreciation and amortization.
However, the Company's method of calculating FFO 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, and
after adjustments for unconsolidated partnerships and joint ventures.
(4) In addition to the weighted average Common Shares outstanding,
basic and diluted FFO also assumes full conversion of a weighted
average 654 and 515 OP Units into Common Shares for the quarters ended
March 31, 2006 and 2005, respectively. Diluted FFO also includes the
assumed conversion of Preferred OP Units into 337 and 522 Common
Shares for the quarters ended March 31, 2006 and 2005, respectively.
(5) Fixed-rate debt includes $91,894 and $92,376 of notional
principal fixed through swap transactions as of March 31, 2006 and
December 31, 2005, respectively. Conversely, variable-rate debt
excludes this amount.
CONTACT:
Acadia Realty Trust
Investor Relations:
Jon Grisham, 914-288-8142