Acadia Realty Trust Reports Second Quarter 2006 Operating Results
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Acadia Realty Trust Reports Second Quarter 2006 Operating Results
NEW YORK--(BUSINESS WIRE)--July 31, 2006--Acadia Realty Trust (NYSE: AKR - "Acadia" or the "Company"), a real estate investment trust ("REIT") today reported operating results for the quarter ended June 30, 2006. All per share amounts discussed below are on a fully diluted basis.
Second Quarter 2006 Highlights
FFO increases
- Funds from operations ("FFO") per share of $0.30 for second quarter 2006 compared to $0.26 for second quarter 2005
- Earnings per share from continuing operations for 2006 of $0.14 compared to $0.15 for 2005
- Same-store net operating income for the retail portfolio up 2.2% for six months ended June 30, 2006 over same period 2005
- Including pro-rata share of Joint Venture properties, June 30, 2006 occupancy at 93.5%; Wholly-Owned properties occupancy at 93.2%
- Maintained conservative dividend payout ratio for second quarter 2006 of 59% of FFO
- 31% debt to total market capitalization
- 2.8 to 1 fixed-charge coverage ratio for the quarter
- RCP Venture: $21.2 million invested in Albertson's
- New York Urban/Infill Redevelopment progress continues
- Completed core portfolio acquisition in Philadelphia for $16.0 million in connection with asset recycling program
Additional harvesting from the previous Brandywine recapitalization
- Completed $166.2 million, 10-year, 6% fixed-rate financing resulting in cash distribution of $34.2 million to Acadia
FFO, a widely accepted measure of REIT performance, for the quarter ended June 30, 2006 was $10.3 million, or $0.30 per share, compared to $8.5 million, or $0.26 per share for second quarter 2005. The second quarter 2005 results included a $0.8 million, or $0.02 per share impairment charge related to the sale of the Berlin Shopping Center. For the six months ended June 30, 2006, FFO was $19.9 million or $0.59 per share compared to $17.4 million, or $0.52 per share for the six months ended June 30, 2005.
Earnings per share from continuing operations was $0.14 for the second quarter 2006 compared to $0.15 for second quarter 2005 and $0.26 for the six months ended June 30, 2006 compared to $0.27 for the six months ended June 30, 2005.
Portfolio Activity - Same-Store NOI up 2.2% - Portfolio Occupancy at 93.5%
Same store net operating income ("NOI") for the retail portfolio increased 2.2% for the six months ended June 30, 2006 compared with the same period for 2005, and decreased 0.2% for the quarter ended June 30, 2006 compared to the same quarter in 2005. The same store NOI for the six months and quarter ended June 30, 2006 was adversely impacted by 1.3% and 2.0%, respectively, as a result of re-tenanting activities at one of the Company's properties located in Bloomfield Hills, Michigan.
During the second quarter 2006, Acadia executed new and renewal leases at an average increase of 12.3% over the previous base rents on a cash basis.
On a year-over-year basis, Acadia's portfolio occupancy remained consistent. Including its pro-rata share of operating Joint Venture properties, June 30, 2006 occupancy was 93.5% as compared to 93.7% at June 30, 2005. Compared to first quarter 2006, June 30, 2006 occupancy decreased 50 basis points from the March 31, 2006 occupancy of 94.0%.
For Acadia's Wholly-Owned properties, June 30, 2006 occupancy was 93.2% compared to 93.3% as of June 30, 2005 and 93.7% at March 31, 2006.
Balance Sheet - Low Interest Rate Exposure
As of June 30, 2006, 96% of the Company's total mortgage debt, inclusive of long-term interest rate swaps and adjusted for the Company's pro-rata share of consolidated joint venture debt, is fixed-rate. 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 as adjusted for the Company's pro-rata share of consolidated joint venture debt and interest expense as follows:
- Debt to total market capitalization at June 30, 2006 was 31%
- Fixed-charge coverage ratio (EBITDA / interest expense plus preferred distributions) was 2.8 to 1 for the second quarter 2006
- Dividend payout ratio for second quarter 2006 was 59% of FFO
- As of June 30, 2006, approximately $180 million was available under existing credit facilities and cash on hand 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 second 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 Program currently includes a total of seven properties in its redevelopment pipeline, for which acquisition and development costs are anticipated to total approximately $354.0 million. The anticipated completion schedules and costs for these projects are set forth in the Company's Quarterly Supplement which will be filed on Form 8-K with the SEC.
RCP Venture - New investment in Albertson's
During the second quarter, Acadia made its second investment in the Retailer Controlled Property Venture ("RCP Venture") in connection with the acquisition of Albertson's. A total of $21.2 million was invested by Acadia and its Fund investors in an investment consortium which includes, among others, its RCP partners - the Klaff and Lubert-Adler organizations. This follows the RCP investment in Mervyns, which has already returned approximately 190% of invested capital to date.
Capital Recycling
During the second quarter, Acadia continued its asset recycling initiative with the purchase of 8400 and 8625 Germantown Avenue in the Chestnut Hill section of Philadelphia, Pennsylvania. The strong "main street" location has tenants including Borders bookstore, Talbot's and Limited Express. This on-balance sheet acquisition was for $16.0 million with an initial yield in excess of 7%. This is a continuation of Acadia's initiative of replacing non-core or lower growth assets with high-quality cash flow from infill/supply constrained properties. This core portfolio purchase is in addition to the Company's core purchases of properties in Staten Island, New York, northern New Jersey and Lincoln Park, Chicago over the previous 12 months.
Harvesting Activities Continues with Refinancing of Brandywine Portfolio
During the second quarter, Acadia completed a $166.2 million, 10-year, 6% fixed-rate refinancing of the Brandywine Portfolio which provided distributable proceeds of $34.2 million to Acadia and $36.0 million to the other Fund I investors ("Investors"). The Investors previously received a return of all of their invested capital and accumulated preferred return in Fund I following the recapitalization of the Brandywine Portfolio during the first quarter 2006. Accordingly, Acadia is now entitled to its 20% Promoted Interest in addition to its 22% equity interest (effectively 38%) of the remaining Fund I investments. Acadia is also entitled to a 20% promote, or $7.2 million, on the Investors' $36.0 million distribution, as well as any future proceeds to the Investors from the Brandywine recapitalization. Any promote earned as a result of the Brandywine transaction will be paid from the Investors' 62% share of future cash flow from the remaining Fund I investments.
Outlook - Earnings Guidance for 2006
The Company currently reaffirms its previously announced 2006 annual FFO and earnings per share forecast. FFO for 2006 is anticipated to range from $1.14 to $1.19 per share. Earnings per share for 2006 is still expected to range from $0.59 to $0.64.
Management Comments
Commenting on the results for the second quarter, Kenneth Bernstein, President and CEO, stated, "Our second quarter results reflect the continued success of our business plan. The continued aggressive re-leasing and recycling of our core portfolio combined with our strong balance sheet position and exciting external growth initiatives enables us to lay the foundation for future growth. Both our Urban /Infill platform and our RCP ventures continue to provide excellent long-term value enhancement. 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 on August 1, 2006 at 2:00 PM EDT to review the Company's earnings and operating results. The live conference call can be accessed by dialing 888-339-2688 (internationally 617-847-3007). 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 72726845. The phone replay will be available through Tuesday, August 8, 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. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in the Company's most recent annual report on Form 10-K filed with the SEC on March 16, 2006 (the "Form 10-K") and other periodic reports filed with the SEC, including risks related to: (i) the Company's reliance on revenues derived from major tenants; (ii) the Company's limited control over joint venture investments; (iii) the Company's partnership structure; (iv) real estate and the geographic concentration of our properties; (v) market interest rates; (vi) leverage; (vii) liability for environmental matters;(viii) the Company's growth strategy; (ix) the Company's status as a REIT (x) uninsured losses and (xi) 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.acadia.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.
See the notes to the attached financial tables for a further discussion of the Company's use of FFO and NOI.
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 and Six Months ended June 30, 2006 and 2005
(dollars in thousands, except per share data)
For the For the six
quarters ended months ended
June 30, June 30,
Revenues 2006 (1) 2005 (1) 2006 (1)2005 (1)
-------- -------- ------- --------
Minimum rents $ 17,448 $ 19,134 $ 35,236 37,635
Percentage rents 126 150 311 351
Expense reimbursements 3,480 3,555 7,559 7,929
Other property income 251 175 462 505
Management fee income 1,281 982 2,482 1,557
Interest income 1,907 903 3,653 1,320
-------- -------- ------- --------
Total revenues 24,493 24,899 49,703 49,297
-------- -------- ------- --------
Operating expenses
Property operating 3,602 4,639 7,652 9,459
Real estate taxes 2,460 2,325 5,259 4,887
General and administrative 4,779 3,820 10,086 6,935
Depreciation and amortization 6,506 6,234 12,904 12,506
-------- -------- ------- --------
Total operating expenses 17,347 17,018 35,901 33,787
-------- -------- ------- --------
Operating income 7,146 7,881 13,802 15,510
Equity in earnings of
unconsolidated partnerships 3,028 126 7,140 387
Interest expense (5,654) (4,352) (10,839) (8,285)
Minority interest 327 1,050 (754) 1,251
-------- -------- ------- --------
Income from continuing operations
before income taxes 4,847 4,705 9,349 8,863
-------- -------- ------- --------
Income taxes (363) -- (812) --
-------- -------- ------- --------
Income from continuing operations 4,484 4,705 8,537 8,863
-------- -------- ------- --------
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters and Six Months ended June 30, 2006 and 2005
(dollars in thousands, except per share data)
For the quarters For the six months
ended ended
June 30, June 30,
2006 (1) 2005 (1) 2006 (1) 2005 (1)
-------- -------- -------- --------
Discontinued operations:
Operating income from discontinued
operations $ 371 $ 400 $ 677 $ 692
Impairment of real estate -- (770) -- (770)
Minority interest (7) 10 (13) 5
-------- -------- -------- --------
Income (loss) from discontinued
operations 364 (360) 664 (73)
-------- -------- -------- --------
Net income $ 4,848 $ 4,345 $ 9,201 $ 8,790
======== ======== ======== ========
Net income per Common Share -
Basic
Net income per Common Share -
Continuing operations $ .14 $ .15 $ .26 $ .28
Net income (loss) per Common Share
- Discontinued operations .01 (.01) .02 --
-------- -------- -------- --------
Net income per Common Share $ .15 $ .14 $ .28 $ .28
======== ======== ======== ========
Weighted average Common Shares 32,509 31,899 32,489 31,883
======== ======== ======== ========
Net income per Common Share -
Diluted (2)
Net income per Common Share -
Continuing operations $ .14 $ .15 $ .26 $ .27
Net income (loss) per Common Share
- Discontinued operations .01 (.01) .02 --
-------- -------- -------- --------
Net income per Common Share $ .15 $ .14 $ .28 $ .27
-------- -------- -------- --------
Weighted average Common Shares 32,811 32,145 32,789 32,142
======== ======== ======== ========
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters and Six Months ended June 30, 2006 and 2005
(dollars in thousands, except per share data)
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS (3)
For the quarters For the six months
ended ended
June 30, June 30,
2006 (1) 2005 (1) 2006 (1) 2005 (1)
-------- -------- -------- --------
Net income $ 4,848 $ 4,345 $ 9,201 $ 8,790
Depreciation of real estate and
amortization of leasing costs
(net of minority interests' share)
Wholly owned and consolidated
partnerships 5,293 3,396 10,327 7,017
Unconsolidated partnerships 438 598 850 1,228
Income attributable to minority
interest in Operating Partnership 104 109 198 187
Gain on sale (net of minority
share and income taxes) (459) -- (831) --
-------- -------- -------- --------
Funds from operations - Basic 10,224 8,448 19,745 17,222
Distributions - Preferred OP Units 63 93 125 180
-------- -------- -------- --------
Funds from operations - Diluted $ 10,287 $ 8,541 $ 19,870 $ 17,402
======== ======== ======== ========
Funds from operations per
share - Basic
Weighted average Common Shares and
OP Units (4) 33,161 32,541 33,141 32,462
-------- -------- -------- --------
Funds from operations per share $ .31 $ .26 $ .60 $ .53
======== ======== ======== ========
Funds from operations per
share - Diluted
Weighted average Common Shares and
OP Units (4) 33,799 33,310 33,778 33,244
======== ======== ======== ========
Funds from operations per share $ .30 $ .26 $ .59 $ .52
======== ======== ======== ========
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
As of June 30, 2006 and December 31, 2005
(dollars in thousands, except per share data)
SELECTED BALANCE SHEET INFORMATION
June 30, December 31,
2006 (1) 2005 (1)
---------------- ---------------
Cash and cash equivalents $55,114 $91,398
Rental property, at cost 649,776 735,218
Total assets 760,989 841,858
Mortgage notes payable 361,889 411,000
Total liabilities 423,290 475,017
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 and six
months ended June 30, 2005 have also been presented on a fully
consolidated basis for purposes of comparability with 2006. In
addition, the Company's investment in the Brandywine Portfolio was
fully consolidated as part of Fund I for the quarter and six
months ended June 30, 2005. As a result of the recapitalization
and conversion of the Brandywine Portfolio interests from Fund I
to GDC Properties Incorporated during January 2006, this
investment is accounted for under the equity method of accounting
for the quarter and six months ended June 30, 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") and net operating income ("NOI") to be appropriate
supplemental disclosures of operating performance for an equity
REIT due to its 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 and depreciation and
amortization. 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, and after
adjustments for unconsolidated partnerships and joint ventures.
Reference is made to the Company's Quarterly Supplemental
Disclosure filed on Form 8-K with the SEC for a reconciliation of
theses non-GAAP financial measures to the most comparable GAAP
financial measures.
(4) In addition to the weighted average Common Shares outstanding,
basic and diluted FFO also assumes full conversion of a weighted
average 651 and 642 OP Units into Common Shares for the quarters
ended June 30, 2006 and 2005, respectively, and 652 and 579 OP
Units into Common Shares for the six months ended June 30, 2006
and 2005, respectively. Diluted FFO also includes the assumed
conversion of Preferred OP Units into 337 and 523 Common Shares
for the quarters and six months ended June 30, 2006 and 2005
respectively.
CONTACT: Acadia Realty Trust
Investor Relations
Jon Grisham, 914-288-8142
SOURCE: Acadia Realty Trust