Acadia Realty Trust Reports Fourth Quarter and Full Year 2018 Operating Results
News Release
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Acadia Realty Trust Reports Fourth Quarter and Full Year 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
-
Earnings: Generated GAAP earnings per share of
$0.09 for the fourth quarter; FFO per share was$0.34 for the fourth quarter, and FFO per share of$0.36 for the fourth quarter before deduction of$0.02 per share for retirement related costs. - Core Portfolio Operating Results: Solid Core operating fundamentals and significant progress towards long-term NOI growth goals
◦ Strong same-property net operating income growth of 4.1% for the fourth quarter (excluding redevelopments) driven by profitable lease up in its street and urban portfolio
◦ Achieved substantially all (over 95%) of its 2018 leasing goals
◦ Executed key urban leases at its City Center property in
◦ Solid rent growth of 16.5% and 9.4% on new leases for the quarter on a GAAP and cash basis, respectively
◦ Reported 95.2% leased occupancy as of
-
Fund Acquisition Activity: Fund V completed a
$44.4 million acquisition during the fourth quarter. Fund acquisition volume for 2018 totaled $149.0 million; included within the Fund V pipeline is over$100.0 million of investments currently under contract -
Balance Sheet: The Company closed a
$50 million ten-year financing within its Core Portfolio in the fourth quarter. AtDecember 31, 2018 , over 95% of Core debt was fixed at an average rate of 3.7% and maturity of 5.8 years. No shares were issued or purchased during the fourth quarter -
Guidance: The Company has issued its annual 2019 guidance of
net income per share of
$0.35 to $0.46 and FFO per share of$1.34 to$1.46 . In addition, the Company expects same property net operating income growth of 3.0% to 4.0% for 2019, which is comprised of 5% to 7% growth within its street/urban portfolio and 0% to 1% within its suburban portfolio
“Our fourth quarter and full-year operating results were in line with
our expectations; driven by the strength of our Core Portfolio and a
meaningful improvement in retailer demand for high quality spaces,”
stated
FINANCIAL RESULTS
A complete reconciliation, in dollars and per share amounts, of net income attributable to common shareholders to FFO attributable to common shareholders is included in the financial tables of this release.
Net Income
Net income attributable to common shareholders for the quarter ended
Net income attributable to common shareholders for the year ended
FFO as Defined by NAREIT
FFO for the quarter ended
FFO for the year ended
FFO as Adjusted for Special Items
FFO before the pro rata impact of retirement charges of
FFO before the pro rata impact of retirement charges for the year ended
CORE PORTFOLIO
Core Operating Results
The Company experienced strong same-property net operating income growth of 4.1% for the fourth quarter (before redevelopment), driven by the profitable re-leasing of key street and urban properties.
The Company successfully completed substantially all (over 95%) of its projected 2018 leasing activities.
In addition to the successful execution of its 2018 leasing goals, the Company signed two key leases that were an integral part of the Company’s Core NOI growth plan:
-
City Center (
San Francisco ): The Company signed a lease withWhole Foods Market for approximately 56,000 square feet, which is subject to certain approvals. City Center is aTarget -anchored property located in one of San Francisco’s busiest and most prominent corridors surrounded by a dense and affluent trade area. As previously announced, the Company has commenced a 40,000 square foot expansion of City Center, which is approximately 90% pre-leased. -
State Street (Chicago ): The Company signed a lease with Uniqlo for approximately 28,000 square feet for space that is currently occupied by H&M.State Street is a 79,000 square foot property that featuresNordstrom Rack and is located within the primary urban retail corridor for Chicago’s Loop.
The Core Portfolio was 94.2% occupied and 95.2% leased as of
During the fourth quarter, the Company generated a 16.5% and 9.4% increase in rent on a GAAP and cash basis, respectively, on 5 conforming new leases aggregating approximately 39,000 square feet primarily within its street and urban portfolio.
The Company had renewals on less than 15,000 square feet, primarily within its suburban portfolio that were effectively flat for the fourth quarter on a cash and GAAP basis.
FUND PLATFORM
Fund Acquisitions
During 2018, the Company completed
The Company, on behalf of Fund V, has an acquisition pipeline with
over
Fund Dispositions
During 2018, the Company completed
210 Bowery,
Acadia does not report return metrics for partial sales of its investments.
BALANCE SHEET
The Company has maintained its solid, low-leveraged balance sheet, with
over 95% of its Core Portfolio debt fixed at an average rate of 3.7%. As
of
During the quarter, the Company closed on a
The Company repurchased
2019 GUIDANCE
The following guidance is based upon our current view of existing market
conditions and assumptions for the year ending
| 2019 Guidance | 2018 Actual | |||||||
| Net income per share attributable to Common Shareholders | $0.35 to $0.46 | $ | 0.38 | |||||
| Impact of transactional activity and tenant recapture | (0.08) to (0.13) | (0.04 | ) | |||||
| Depreciation of real estate and amortization of leasing costs | ||||||||
| (net of noncontrolling interests' share) | 0.96 | 0.98 | ||||||
| Gain on disposition of properties (net of noncontrolling interests' share) | - | (0.01 | ) | |||||
| Noncontrolling interest in Operating Partnership | 0.02 | 0.03 | ||||||
| Funds from operations, prior to transactional activity, per share | $1.25 to $1.31 | $ | 1.34 | |||||
| Fund acquisitions and related fees | 0.01 to 0.03 | - | ||||||
| Net Promote and other transactional income | 0.01 to 0.05 | 0.01 | ||||||
| Accelerated tenant recapture - GAAP adjustments | 0.07 | 0.03 | ||||||
|
Funds from operations per share attributable to Common |
$1.34 to $1.46 | $ | 1.38 | |||||
The Company is projecting same property net operating income growth (excluding redevelopment) of 3.0% to 4.0% for 2019. This growth is comprised of 5% to 7% within its street/urban portfolio and 0% to 1% within its suburban portfolio.
Please refer to the Company’s fourth quarter 2018 supplemental information package for additional details.
CONFERENCE CALL
Management will conduct a conference call on
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Live Conference Call: |
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| Date: | Thursday, February 14, 2019 | |
| Time: | 12:00 PM ET | |
| Dial#: | 844-309-6711 | |
| Passcode: | “Acadia Realty” or “6289135” | |
| 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: | “6289135” | |
| Available Through: | Thursday, February 21, 2019 | |
| Webcast Replay: |
www.acadiarealty.com under Investors, Presentations & Events |
|
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) (dollars and Common Shares in thousands, except per share data) |
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Three Months Ended |
Year Ended |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenues | ||||||||||||||||
| Rental income | $ | 55,104 | $ | 50,181 | $ | 208,756 | $ | 198,941 | ||||||||
| Expense reimbursements | 13,284 | 12,560 | 48,284 | 44,907 | ||||||||||||
| Other | 1,057 | 3,340 | 5,173 | 6,414 | ||||||||||||
| Total revenues | 69,445 | 66,081 | 262,213 | 250,262 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Depreciation and amortization | 30,794 | 27,689 | 117,549 | 104,934 | ||||||||||||
| General and administrative | 9,984 | 8,470 | 34,343 | 33,756 | ||||||||||||
| Real estate taxes | 9,184 | 8,484 | 36,712 | 35,946 | ||||||||||||
| Property operating | 11,688 | 14,690 | 45,211 | 41,668 | ||||||||||||
| Impairment charge | — | 10,615 | — | 14,455 | ||||||||||||
| Other operating | 202 | 1,197 | 857 | 2,184 | ||||||||||||
| Total operating expenses | 61,852 | 71,145 | 234,672 | 232,943 | ||||||||||||
| Operating income (loss) | 7,593 | (5,064 | ) | 27,541 | 17,319 | |||||||||||
|
Equity in earnings of unconsolidated affiliates inclusive of gain
on |
2,223 | 2,327 | 9,302 | 23,371 | ||||||||||||
| Interest income | 2,692 | 5,495 | 13,231 | 29,143 | ||||||||||||
| Interest expense | (19,096 | ) | (19,312 | ) | (69,978 | ) | (58,978 | ) | ||||||||
| Gain on change in control | — | 5,571 | — | 5,571 | ||||||||||||
| (Loss) income from continuing operations before income taxes | (6,588 | ) | (10,983 | ) | (19,904 | ) | 16,426 | |||||||||
| Income tax (provision) benefit | (83 | ) | 13 | (934 | ) | (1,004 | ) | |||||||||
|
(Loss) income from continuing operations before gain on
disposition of |
(6,671 | ) | (10,970 | ) | (20,838 | ) | 15,422 | |||||||||
| Gain on disposition of properties, net of tax | — | 35,914 | 5,140 | 48,886 | ||||||||||||
| Net (loss) income | (6,671 | ) | 24,944 | (15,698 | ) | 64,308 | ||||||||||
| Net loss (income) attributable to noncontrolling interests | 13,801 | (4,032 | ) | 47,137 | (2,838 | ) | ||||||||||
| Net income attributable to Acadia | $ | 7,130 | $ | 20,912 | $ | 31,439 | $ | 61,470 | ||||||||
| Less: net income attributable to participating securities | (78 | ) | (219 | ) | (267 | ) | (642 | ) | ||||||||
|
Net income attributable to Common Shareholders - basic and diluted |
$ | 7,052 | $ | 20,693 | $ | 31,172 | $ | 60,828 | ||||||||
| Weighted average shares for diluted earnings per share | 81,591 | 83,733 | 82,080 | 83,685 | ||||||||||||
| Net Earnings per share - basic and diluted (b) | $ | 0.09 | $ | 0.25 | $ | 0.38 | $ | 0.73 | ||||||||
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ACADIA REALTY TRUST AND SUBSIDIARIES |
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Reconciliation of Consolidated Net Income to Funds From Operations (a, c) (dollars and Common Shares and Units in thousands, except per share data) |
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Three Months Ended |
Year Ended |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net income attributable to Acadia | $ | 7,130 | $ | 20,912 | $ | 31,439 | $ | 61,470 | ||||||||
|
Depreciation of real estate and amortization of leasing costs (net
of |
22,040 | 20,580 | 85,852 | 83,515 | ||||||||||||
| Impairment charge (net of noncontrolling interests' share) | — | — | — | 1,088 | ||||||||||||
| Gain on sale (net of noncontrolling interests’ share) | — | (9,776 | ) | (994 | ) | (15,565 | ) | |||||||||
| Income attributable to Common OP Unit holders | 462 | 1,209 | 2,033 | 3,609 | ||||||||||||
| Distributions - Preferred OP Units | 135 | 135 | 540 | 550 | ||||||||||||
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Funds from operations attributable to Common Shareholders and |
$ | 29,767 | $ | 33,060 | $ | 118,870 | $ | 134,667 | ||||||||
| Funds From Operations per Share - Diluted | ||||||||||||||||
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Weighted average number of Common Shares and Common OP |
87,212 | 88,990 | 87,728 | 88,998 | ||||||||||||
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Diluted Funds from operations, per Common Share and Common OP |
$ | 0.34 | $ | 0.37 | $ | 1.35 | $ | 1.51 | ||||||||
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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) (dollars in thousands) |
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Three Months Ended |
Year Ended |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Consolidated operating income (loss) | $ | 7,593 | $ | (5,064 | ) | $ | 27,541 | $ | 17,319 | |||||||
| Add back: | ||||||||||||||||
| General and administrative | 9,984 | 8,470 | 34,343 | 33,756 | ||||||||||||
| Depreciation and amortization | 30,794 | 27,689 | 117,549 | 104,934 | ||||||||||||
| Impairment charge | — | 10,615 | — | 14,455 | ||||||||||||
| Less: | ||||||||||||||||
| Above/below market rent, straight-line rent and other adjustments | (8,030 | ) | (6,439 | ) | (23,521 | ) | (21,110 | ) | ||||||||
| Consolidated NOI | 40,341 | 35,271 | 155,912 | 149,354 | ||||||||||||
| Noncontrolling interest in consolidated NOI | (10,583 | ) | (5,917 | ) | (37,496 | ) | (28,379 | ) | ||||||||
| Less: Operating Partnership's interest in Fund NOI included above | (2,852 | ) | (1,382 | ) | (9,790 | ) | (7,927 | ) | ||||||||
| Add: Operating Partnership's share of unconsolidated joint ventures NOI (e) | 6,563 | 5,124 | 24,919 | 19,539 | ||||||||||||
| NOI - Core Portfolio | $ | 33,469 | $ | 33,096 | $ | 133,545 | $ | 132,587 | ||||||||
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ACADIA REALTY TRUST AND SUBSIDIARIES |
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Consolidated Balance Sheets (a) (dollars in thousands) |
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| As of | ||||||||
|
December 31, |
December 31, |
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| ASSETS | ||||||||
| Investments in real estate, at cost | ||||||||
| Land | $ | 710,469 | $ | 658,835 | ||||
| Buildings and improvements | 2,745,982 | 2,538,338 | ||||||
| Construction in progress | 44,092 | 18,642 | ||||||
| Properties under capital lease | 76,965 | 76,965 | ||||||
| 3,577,508 | 3,292,780 | |||||||
| Less: Accumulated depreciation | (416,657 | ) | (339,862 | ) | ||||
| Operating real estate, net | 3,160,851 | 2,952,918 | ||||||
| Real estate under development | 120,297 | 173,702 | ||||||
| Net investments in real estate | 3,281,148 | 3,126,620 | ||||||
| Notes receivable, net | 109,613 | 153,829 | ||||||
| Investments in and advances to unconsolidated affiliates | 262,410 | 302,070 | ||||||
| Other assets, net | 208,570 | 214,959 | ||||||
| Cash and cash equivalents | 21,268 | 74,823 | ||||||
| Rents receivable, net | 62,191 | 51,738 | ||||||
| Restricted cash | 13,580 | 10,846 | ||||||
| Assets of properties held for sale | — | 25,362 | ||||||
| Total assets | $ | 3,958,780 | $ | 3,960,247 | ||||
| LIABILITIES | ||||||||
| Mortgage and other notes payable, net | $ | 1,017,288 | $ | 909,174 | ||||
| Unsecured notes payable, net | 533,257 | 473,735 | ||||||
| Unsecured line of credit | — | 41,500 | ||||||
| Accounts payable and other liabilities | 214,961 | 210,052 | ||||||
| Capital lease obligation | 71,111 | 70,611 | ||||||
| Dividends and distributions payable | 24,593 | 24,244 | ||||||
| Distributions in excess of income from, and investments in, unconsolidated affiliates | 15,623 | 15,292 | ||||||
| Total liabilities | 1,876,833 | 1,744,608 | ||||||
| Commitments and contingencies | ||||||||
| EQUITY | ||||||||
| Acadia Shareholders' Equity | ||||||||
|
Common shares, $0.001 par value, authorized 200,000,000 shares,
issued and outstanding |
82 | 84 | ||||||
| Additional paid-in capital | 1,548,603 | 1,596,514 | ||||||
| Accumulated other comprehensive income | 516 | 2,614 | ||||||
| Distributions in excess of accumulated earnings | (89,696 | ) | (32,013 | ) | ||||
| Total Acadia shareholders’ equity | 1,459,505 | 1,567,199 | ||||||
| Noncontrolling interests | 622,442 | 648,440 | ||||||
| Total equity | 2,081,947 | 2,215,639 | ||||||
| Total liabilities and equity | $ | 3,958,780 | $ | 3,960,247 | ||||
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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. |
|
| (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 4,906 thousand and 4,717 thousand OP Units into Common Shares for the quarters ended December 31, 2018 and 2017 and 4,942 thousand and 4,741 thousand OP Units into Common Shares for the year ended December 31, 2018 and 2017, respectively. Diluted FFO also includes: (i) the assumed conversion of Preferred OP Units into 499 thousand and 499 thousand Common Shares for the quarters ended December 31, 2018 and 2017 and 499 thousand and 505 thousand Common Shares for the year ended December 31, 2018 and 2017, respectively; and (ii) the effect of 215 thousand and 40 thousand restricted share units and LTIP units for the quarters ended December 31, 2018 and 2017 and 207 thousand and 69 thousand for the year ended December 31, 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. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190213005759/en/
Source:
Amy L. Racanello
(914) 288-8100