RYE, N.Y.--(BUSINESS WIRE)--May 1, 2018-- Acadia Realty Trust (NYSE:AKR) (“Acadia” or the “Company”) today reported operating results for the quarter ended March 31, 2018. All per share amounts are on a fully-diluted basis.

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

• Earnings: Generated earnings per share of $0.09 for the first quarter; FFO per share was $0.33 for the first quarter
• Core Portfolio Operating Results: Solid Core operating fundamentals
  • To date, achieved 60% of our 2018 leasing goals based on NOI, representing approximately $5 million of annualized NOI
  • Rent growth of 15.3% on new and renewal leases for the quarter on a cash basis
  • Reported 95.3% leased occupancy as of March 31, 2018
  • As projected, same-property net operating income decreased 1.0% for the first quarter (excluding redevelopment), driven by the previously-reported recapture of occupancy during 2017 which impacted period-over-period comparability
• Core Structured Finance Investments: As projected, the Company received repayment of a $26 million Core note receivable in the first quarter of 2018
• Fund Transactional Activity: Fund V acquired a high-yield investment during the first quarter for $45 million; Fund IV completed $8 million of dispositions during the first quarter
• Balance Sheet: As a result of successful capital recycling efforts, the Company repurchased $32 million through March 31, 2018, pursuant to its new share repurchase program on a leverage-neutral basis; As previously reported, the Company extended the maturity of its corporate unsecured facility resulting in reduced borrowing costs and improved flexibility

• Guidance: Following its 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 first-quarter operating results were consistent with our expectations but, more importantly, we continued to make significant progress on both our immediate leasing goals and our long-term growth plans,” stated Kenneth F. Bernstein, President and CEO of Acadia Realty Trust. “At the beginning of this year, we laid out important leasing goals for our high-quality core portfolio; this leasing, together with two key redevelopments, should drive strong, organic NOI growth over the next several years. In the fund platform, we continue to selectively acquire durable high-yield properties while we watch the disruption in our industry translate into other actionable opportunities. Especially during times like these, it feels good to have significant dry powder, both on balance sheet and in our fund platform, to execute on interesting investment opportunities as they arise.”

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 March 31, 2018 was $7 million, or $0.09 per share. Net income attributable to common shareholders for the quarter ended March 31, 2017 was $16 million, or $0.18 per share. The decrease in net income for the quarter was attributable to gains on dispositions of unconsolidated properties in 2017 as well as a reduction in the current quarter in interest income following the monetization of structured finance investments and the impact of the previously discussed recapture of occupancy.

FFO

Consistent with our expectations, FFO for the quarter ended March 31, 2018 was $29 million, or $0.33 per share compared to $35 million, or $0.40 per share for the quarter ended March 31, 2017. The decrease in FFO for the quarter was primarily due to a reduction in interest income in the current quarter following the monetization of structured finance investments and the previously discussed recapture of occupancy.

CORE PORTFOLIO

Core Operating Results

The Company's 2018 leasing goal is to execute leases comprising approximately $8 million of NOI on a run rate basis. To date, the Company has executed leases comprising approximately $5 million of annualized NOI at its key street and urban locations on Madison Avenue (New York), Armitage Avenue (Lincoln Park, Chicago), M Street (Georgetown, Washington DC) and Greenwich Avenue (Greenwich, CT). As such, the Company has achieved 60% of its leasing goals at rents in line with its expectations.

As projected, the Company reported a decrease in same-property net operating income of 1.0% for the first quarter (excluding redevelopment) driven by the previously-reported recapture of occupancy during 2017, which impacted period-over-period comparability.

The Core Portfolio was 94.4% occupied and 95.3% leased as of March 31, 2018, compared to 93.9% occupied and 95.3% leased as of December 31, 2017. The leased rate includes space that is leased but not yet occupied and excludes development and redevelopment properties.

During the first quarter, the Company generated a 23.3% increase in average rents on a GAAP basis, and a 15.3% increase on a cash basis, on 9 new and renewal leases aggregating 66,000 square feet.

Redevelopment Update

City Center, San Francisco, CA.The Company has commenced construction on the 40,000-square foot expansion of City Center, its Target-anchored urban shopping center located in San Francisco. The expansion space is approximately 80% pre-leased, with anticipated tenant delivery and rent commencement in 2019.

Clark and Diversey, Lincoln Park, Chicago, IL. Construction is currently underway on the Company's 30,000-square foot development located at the corner of Clark Street and Diversey Parkway in Lincoln Park, Chicago. The Company anticipates construction completion and delivery of approximately 75% of the total leasable space to T.J. Maxx and Blue Mercury in the second half of 2018.

FUND PLATFORM

Fund Acquisitions

The Company completed a $45 million Fund V acquisition during first quarter 2018 as follows:

Trussville Promenade, Trussville, AL (Fund V). As previously reported, in February 2018, Fund V acquired a 464,000-square foot shopping center, located in Trussville, AL (Birmingham MSA), for $45 million. The property is 95% leased and its anchors include Walmart, Marshalls, and Ross Dress for Less. This investment is consistent with the Fund platform’s high-yield opportunistic strategy.

Fund Dispositions

The Company completed $34 million of Fund dispositions during 2018 as follows:

108-110 W Broughton St, Savannah, GA (Fund IV). As previously reported, in January 2018, Fund IV completed the sale of another two properties in its Broughton St Collection in Savannah, GA for $8 million. The mixed use properties total 11,000 square feet and are 100% occupied; Bluemercury and Tommy Bahama are the key retail tenants. To date, Fund IV has sold seven of 23 properties in its Broughton St Collection, aggregating 31,000 square feet of approximately 200,000 square feet of retail, residential, and office space.

Sherman Plaza, New York, NY (Fund II). Subsequent to the first quarter, Fund II completed the sale of Sherman Plaza, located in upper Manhattan, to a residential developer for $26 million. Following this sale, Fund II’s sole real estate investment is City Point.

BALANCE SHEET

The Company has maintained its solid, low-leveraged balance sheet by reducing its Core pro rata debt by $19 million during the most recent quarter. As of March 31, 2018, the Company’s net debt to EBITDA ratio for the Core Portfolio was 4.9x.

During the first quarter 2018, the Company completed a $500 million Senior Unsecured Credit Facility comprised of a $150 million revolving credit facility and a $350 million term loan. The new facility extended the maturity dates of its prior facilities, and provided a reduction in all-in pricing and improvements to market terms and conditions.

Through April 30, 2018, the Company has repurchased $54 million, or 2.2 million shares, pursuant to its new share repurchase program on a leverage-neutral basis, of which $32 million was acquired as of March 31, 2018.

2018 GUIDANCE

The Company reaffirms that its 2018 annual earnings per share will range from $0.37 to $0.48 and 2018 FFO per share will range from $1.33 to $1.45.

The Company’s 2018 operating assumptions are reaffirmed as follows:

• 2018 annual growth of 1% to 3% in same-property NOI (excluding redevelopments):
  • first half of 2018: (2%) to 0%
  • second half of 2018: 2% to 7%

• The variability and range of estimates is primarily dependent upon the rent commencement dates of certain executed key leases

CONFERENCE CALL

Management will conduct a conference call on Wednesday, May 2, 2018 at 12:00 PM ET to review the Company’s earnings and operating results. Dial-in and webcast information is listed below.

About Acadia Realty Trust

Acadia Realty Trust is an equity real estate investment trust focused on delivering long-term, profitable growth via its dual - Core and Fund - operating platforms and its disciplined, location-driven investment strategy. Acadia Realty Trust is accomplishing this goal by building a best-in-class core real estate portfolio with meaningful concentrations of assets in the nation’s most dynamic urban and street-retail corridors; making profitable opportunistic and value-add investments through its series of discretionary, institutional funds; and maintaining a strong balance sheet. For further information, please visit www.acadiarealty.com.

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 SEC on February 27, 2018 (“Form 10-K”) and other periodic reports filed with the SEC, including risks related to: (i) political and economic uncertainty; (ii) the Company’s reliance on revenues derived from major tenants; (iii) the Company’s limited control over joint venture investments; (iv) the Company’s partnership structure; (v) real estate and the geographic concentration of the Company’s properties; (vi) market interest rates; (vii) leverage; (viii) liability for environmental matters; (ix) the Company’s growth strategy; (x) the Company’s status as a REIT; (xi) uninsured losses; (xii) information technology security threats and (xiii) the loss of key executives. Copies of the Form 10-K and the other periodic reports Acadia files with the SEC are available on the Company’s website at www.acadiarealty.com. Any forward-looking statements in this press release speak only as of the date hereof. 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.

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Source: Acadia Realty Trust

Acadia Realty Trust
Amy L. Racanello, 914-288-8100