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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): May 5, 2020

ACADIA REALTY TRUST

(Exact name of registrant as specified in its charter)

 

Maryland		1-12002		23-2715194
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

411 Theodore Fremd Avenue

Suite 300

Rye, New York 10580

(Address of principal executive offices) (Zip Code)

(914) 288-8100

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading symbol	Name of exchange on which registered
Common shares of beneficial interest, par value $0.001 per share	AKR	The New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02.Results of Operations and Financial Condition.

 

On May 5, 2020, Acadia Realty Trust (the “Company”) issued a press release announcing its consolidated financial results for the quarter ended March 31, 2020. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and incorporated herein by reference.

 

On the same day, the Company made available supplemental reporting information concerning the financial results, operations and portfolio of the Company as of and for the quarter ended March 31, 2020. A copy of the supplemental reporting information is attached to this Current Report on Form 8-K as Exhibit 99.2 and incorporated herein by reference.

 

The information included in this Item 2.02, including the information included in Exhibits 99.1 and 99.2 attached hereto, is intended to be furnished solely pursuant to this Item 2.02, and is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any filing under the Securities Act of 1933, as amended (“Securities Act”) or the Exchange Act, or otherwise subject to the liabilities of Sections 11 and 12 (a)(2) of the Securities Act.

Item 9.01.Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit Number	Description
99.1	Press release of the Company dated May 5, 2020 regarding the Company’s consolidated financial results for the quarter ended March 31, 2020
99.2	Supplemental Reporting Information of the Company as of and for the quarter ended March 31, 2020
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Extension Calculation Linkbase
101.LAB	Inline XBRL Extension Labels Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		ACADIA REALTY TRUST
Dated:		(Registrant)
		By:		/s/ John Gottfried
		Name:		John Gottfried
May 6, 2020		Title:		Sr. Vice President and Chief Financial Officer

 

 

 

 

Exhibit 99.1

 

Sunny Holcomb

(914) 288-8100

 

ACADIA REALTY TRUST REPORTS FIRST QUARTER 2020 OPERATING RESULTS

RYE, NY (May 5, 2020) - Acadia Realty Trust (NYSE: AKR) (“Acadia” or the “Company”) today reported operating results for the quarter ended March 31, 2020. 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”), through which the Company owns and operates retail assets in the nation’s most dynamic 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 property operating income ("NOI") which were impacted due to the COVID-19 Pandemic (see “COVID-19 Pandemic Update” section that follows).

Highlights

Core Portfolio

Fund Portfolio

“We are grateful to all our front-line responders and essential businesses that are staying open to serve their communities during this crisis. As we continue to navigate through the uncertainty resulting from the COVID-19 pandemic, we remain confident that our strong balance sheet and enhanced liquidity position provides us with the flexible financial ability needed during this challenging time,” stated Kenneth F. Bernstein, President and CEO of Acadia Realty Trust. “We have seen the paramount importance of physical stores and remain optimistic that our best in class locations will prove to be resilient.”

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COVID-19 PANDEMIC UPDATE

The onset of the COVID-19 Pandemic in the United States significantly decreased consumer activity. In early March, Acadia was able to successfully transition to working remotely and continue its business operations, while protecting the safety and health of its employees.

As a result of “shelter-in-place” or “stay-at-home” orders, mandatory business shutdowns and social distancing practices, certain retailers across the country were forced to cease or decrease operations throughout the months of March, April and May-to-date. Certain retail tenants within the Company’s portfolio have been permitted to continue operating at full or decreased capacity, while other tenants have been directed to temporarily decrease or close operations for an indeterminate period to protect their employees, consumers and communities from the spread of the virus. A significant number of Acadia’s stores in the following cities were forced to close on the following dates: California (March 19), Chicago (March 21), New York (March 23), Boston (March 24) and Washington D.C. (March 30).

The Company’s first quarter metrics were on track until the pandemic struck. Additional reserves were taken as a cautious measure as businesses began to suspend their operations.

The Company continues to have active discussions with existing and potential new tenants for new and renewed leases. However, the uncertainty relating to the COVID-19 Pandemic has slowed the pace of leasing activity and could result in higher vacancy than the Company otherwise would have experienced, a longer amount of time to fill vacancies and potentially lower rental rates. While Acadia anticipates these disruptions to be temporary, the Company’s revenues, results of operations, financial condition, and liquidity, potentially for the full year 2020, are likely to be adversely impacted.

April Collections

To date, 38% of the Core portfolio (based upon revenues) is essential and/or operating and the Company has collected over 50% of April rents and billed recoveries. Within the Fund portfolio, 41% of the Fund portfolio (based upon revenues) is essential and/or operating and the Company has collected over 50% of April rents and billed recoveries to date. Please refer to the supplemental information package for more details on the Company’s website under Investors. The portfolio statistics in the supplemental information package are as of April 30, 2020, and to the best of Acadia’s knowledge.

Dividend

Due to the economic uncertainties, the Company’s Board of Trustees has suspended distributions on its common shares and units beginning in the second quarter of 2020. The Board of Trustees has not made any decisions regarding its dividend policy beyond the second quarter of 2020 and will closely monitor the Company’s financial performance and economic outlook and assess when to reinitiate an appropriate dividend to maintain compliance with its REIT taxable income requirements.

CONSOLIDATED FINANCIAL RESULTS

A complete reconciliation, in dollars and per share amounts, of net income attributable to common shareholders to FFO attributable to common shareholders and operating income to NOI is included in the financial tables of this release.

Net Loss

Net loss attributable to common shareholders for the quarter ended March 31, 2020 was $(8.4) million, or $(0.10) per share, inclusive of (i) $12.4 million on a pro rata basis, or $0.14 per share attributable to impairment charges within the Funds and (ii) $4.2 million, or $0.05 per share, related to credit loss and straight-line rent reserves, primarily due to the COVID-19 Pandemic. Net income attributable to common shareholders for the quarter ended March 31, 2019 was $12.2 million, or $0.15 per share inclusive of $5.8 million, or $0.07 per share related to previously-announced accelerated tenant recaptures.

 

 

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FFO

FFO for the quarter ended March 31, 2020 was $27.7 million, or $0.30 per share, inclusive of $4.2 million, or $0.04 per share, related to credit loss and straight-line rent reserves, primarily due to the COVID-19 Pandemic, compared to $34.7 million, or $0.39 per share, for the quarter ended March 31, 2019 inclusive of $5.8 million, or $0.07 per share related to previously-announced accelerated tenant recaptures.

CORE AND FUND PORTFOLIOS

Core Operating Results

The Company had a decrease in same-property NOI of -1.4% for the three months ended March 31, 2020 primarily as a result of credit loss reserves due to the COVID-19 Pandemic. Reflected in same-property NOI is a previously-announced vacancy at 11 East Walton in Chicago, a majority of which has been successfully re-leased.

The Core Portfolio was 93.1% occupied which includes tenants that may have been temporarily closed as of March 31, 2020 and 93.9% leased as of March 31, 2020 compared to 94.0% occupied and 94.8% leased as of December 31, 2019. The leased rate includes space that is leased but not yet occupied and excludes development and redevelopment properties.

The Company generated an increase in rent on a GAAP and cash basis of 36.9% and 35.7% on one conforming new lease signed during the quarter. During the first quarter, the Company generated an 11.8% increase in rent on a GAAP basis and was flat in rent on a cash basis, on six conforming new and renewal leases aggregating approximately 32,000 square feet.

Leasing Progress

Acadia signed 42 new and renewal leases in the Core and Fund portfolios during the first quarter.

In addition, subsequent to March 31, 2020, the Company has executed six new and renewal leases.

 

Core Acquisitions

As a culmination of previously-negotiated and announced transactions, during the three months ended March 31, 2020, the Company acquired $19.2 million of Core Portfolio properties as follows (amounts below are inclusive of transaction costs):

Soho, New York, NY. In January 2020, the Company acquired 37 Greene Street for $15.7 million. The Company now owns six contiguous buildings on Greene Street.  

Lincoln Park, Chicago, IL. In February 2020, the Company acquired 917 W Armitage Avenue for $3.5 million. The Company now owns 12 buildings (seven of which are contiguous) on W Armitage Avenue.

Given the impact of the COVID-19 Pandemic on the markets where Acadia’s properties are located, the Company anticipates a reduction in acquisition and disposition activity during the second quarter and potentially for the remainder of 2020.

 

STRUCTURED FINANCING INVESTMENT

As previously announced, in January 2020, the Company funded a $54.0 million loan on a mixed-use redevelopment in Sunset Park Brooklyn, New York.    

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BALANCE SHEET AND LIQUIDITY

Core Portfolio

As previously announced, there are no material scheduled Core debt maturities until 2023 (inclusive of extension options subject to customary conditions).

During the quarter, prior to the mandatory closure of non-essential businesses, the Company repurchased 1.2 million of its shares totaling $22.3 million at a weighted average price per share of $18.29.

Fund Portfolio

Subsequent to March 31, 2020, Fund IV completed the disposition of Colonie Plaza in Albany, New York, a property within the Northeast Grocery Portfolio for $15.3 million and repaid the property’s $11.6 million mortgage. During its ownership, the Fund stabilized the asset through tenant lease extensions and by securing attractive financing. The Company does not report return metrics for partial sales of portfolio transactions but expects to report a gain related to the disposition in the second quarter.

During the quarter ended March 31, 2020, two properties (Wake Forest Crossing and Lincoln Place) within Fund IV exercised options to extend their mortgages by one year to 2021. Subsequent to March 31, 2020, the Fund V subscription line was extended by one year to 2021.

As previously announced, there are no material secured or unsecured debt maturities in 2020, inclusive of extension options (which are subject to customary conditions). There was approximately $150.0 million available under Fund credit facilities as of March 31, 2020.

Fund V has $208.0 million of acquisition capital remaining to reinvest (approximately $600.0 million on a leveraged basis) as opportunities arise.

 

2020 GUIDANCE

As previously announced, Acadia withdrew its full-year 2020 guidance due to the economic uncertainty resulting from the COVID-19 Pandemic. The Company is not providing updated 2020 guidance at this time.

CONFERENCE CALL

Management will conduct a conference call on Wednesday, May 6, 2020 at 12:00 PM ET to review the Company’s earnings and operating results. Dial-in and webcast information is listed below.

Live Conference Call:

Date:            Wednesday, May 6, 2020

Time:           12:00 PM ET

Dial#:         844-309-6711

Passcode:     “Acadia Realty” or “5296442”

Webcast (Listen-only):  www.acadiarealty.com under Investors, Presentations & Events

Phone Replay:

Dial#:            855-859-2056

Passcode:      “5296442”

Available Through:     Wednesday, May 13, 2020

Webcast Replay:      www.acadiarealty.com under Investors, Presentations & Events

 

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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 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 statements in this press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project,” or the negative thereof, or other variations thereon or comparable terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results and financial performance to be materially different from future results and financial performance expressed or implied by such forward-looking statements, including, but not limited to: (i) economic, political and social uncertainty surrounding the COVID-19 pandemic, including (a) the effectiveness or lack of effectiveness of governmental relief in providing assistance to large and small businesses, including the Company’s tenants, that have suffered significant declines in revenues as a result of mandatory business shut-downs, “shelter-in-place” or “stay-at-home” orders and social distancing practices, as well as individuals adversely impacted by the COVID-19 pandemic, (b) the duration of any such orders or other formal recommendations for social distancing and the speed and extent to which revenues of the Company’s retail tenants recover following the lifting of any such orders or recommendations, (c) the potential impact of any such events on the obligations of the Company’s tenants to make rent and other payments or honor other commitments under existing leases, (d) to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices, (e) the potential adverse impact on returns from development and redevelopment projects, and (f) the broader impact of the severe economic contraction and increase in unemployment that has occurred in the short term and negative consequences that will occur if these trends are not quickly reversed; (ii) the ability and willingness of the Company’s tenants (in particular its major tenants) and other third parties to satisfy their obligations under their respective contractual arrangements with the Company; (iii) macroeconomic conditions, such as a disruption of or lack of access to the capital markets; (iv) the Company’s success in implementing its business strategy and its ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (v) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and their effect on the Company’s revenues, earnings and funding sources; (vi) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the potential phasing out of the London Interbank Offered Rate after 2021; (vii) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (viii) the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (ix) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (x) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration, the Company’s ability to re-lease its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations the Company may incur in connection with the replacement of an existing tenant; (xi) the Company’s liability for environmental matters; (xii) damage to the Company’s properties from catastrophic weather and other natural events, and the physical effects of climate change; (xiii) uninsured losses; (xiv) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (xv) information technology security breaches, including increased cybersecurity risks relating to the use of remote technology during the COVID-19 pandemic; and (xvi) the loss of key executives. The risks described above are not exhaustive and additional factors could adversely affect the Company’s business and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and other periodic or current reports the Company files with the SEC. Any forward-looking statements in this press release speak only as of the date hereof. The Company 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 the Company’s expectations with regard thereto or change in the events, conditions or circumstances on which such forward-looking statements are based.

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ACADIA REALTY TRUST AND SUBSIDIARIES

Consolidated Statements of Operations ^(a)  

(dollars and Common Shares in thousands, except per share data)

 

 

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ACADIA REALTY TRUST AND SUBSIDIARIES

Reconciliation of Consolidated Net (Loss) Income to Funds From Operations ^{(a, c)}  

(dollars and Common Shares and Units in thousands, except per share data)

 

 

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ACADIA REALTY TRUST AND SUBSIDIARIES

Reconciliation of Consolidated Operating (Loss) Income to Net Property Operating Income (“NOI”) ^(a)  

(dollars in thousands)

 

 

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ACADIA REALTY TRUST AND SUBSIDIARIES

Consolidated Balance Sheets ^(a)  

(dollars in thousands)

 

 

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ACADIA REALTY TRUST AND SUBSIDIARIES

Notes to Financial Highlights:

 

 

 

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Exhibit 99.2

ACADIA—REALTY TRUST—Q2 2018 SUPPLEMENTAL REPORTING INFORMATIO

 

 

 

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Visit www.acadiarealty.com for additional investor and portfolio information

 

 

 

 

 

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Notes to income statements, balance sheet and pro rata adjustments:

 

 

 

 

 

 

 

 

 

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Refer to “ Net Asset Valuation Information ” for pro-rata costs incurred

 

 

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this supplemental disclosure may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 and as such may involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative thereof or other variations thereon or comparable terminology. Factors which could have a material adverse effect on the operations and future prospects of the Company include, but are not limited to those set forth under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K. These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein.

USE OF FUNDS FROM OPERATIONS AS NON-GAAP FINANCIAL MEASURE

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 (or losses) from sales of 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 (or losses) from sales of depreciated property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that income or gains derived from its RCP investments, including its investment in Albertson’s, are private-equity investments and, as such, should be treated as operating income and therefore FFO. The Company believes that this supplemental adjustment more appropriately reflects the results of its operations. The Company also provides one other supplemental disclosure of operating performance, adjusted funds from operations (“AFFO”). The Company defines AFFO as FFO adjusted for straight line rent, non-real estate depreciation, stock-based compensation, amortization of finance costs and costs of management contracts, tenant improvements, leasing commissions and capital expenditures.

USE OF NON-GAAP FINANCIAL MEASURES

Non-GAAP financial measures such as EBITDA, NOI, Same-Property NOI and lease spreads are widely used financial measures in many industries, including the REIT industry, and are presented to assist investors and analysts in analyzing the performance of the Company. They are helpful as they exclude various items included in net income that are not indicative of operating performance, such as gains (or losses) from sales of property and depreciation and amortization and is used in computing various financial ratios as a measure of operational performance. The Company computes EBITDA as the sum of net income before extraordinary items plus interest expense, depreciation, income taxes and amortization, less any gains (losses including impairment charges) on the sale of income producing properties. The Company computes NOI by taking the difference between Property Revenues and Property Expenses as detailed in this reporting supplement. Same-Property NOI includes properties in our Core Portfolio that we owned for both the current and prior periods presented, but excludes those properties which we acquired, sold or expected to sell, and redeveloped during these periods. The Company’s method of calculating EBITDA, NOI and Same-Property NOI may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. EBITDA, NOI and Same-Property NOI do not represent cash generated from operations as defined by GAAP and are not indicative of cash available to fund all cash needs, including distributions. They 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.