December
17, 2007
VIA
EDGAR
U.S.
Securities and Exchange Commission
Division
of Corporate Finance
100
F
Street, N.E.
Washington,
D.C. 20549
Attn: Linda
VanDoorn, Senior Assistant Chief Accountant
|
Re:
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Acadia
Realty Trust
Form
10-K for the year ended December 31, 2006
File
No. 001-12002
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Dear
Ms.
VanDoorn:
This
letter sets forth the response of Acadia Realty Trust (“Acadia”) to the Staff’s
comment letter dated November 30, 2007 in connection with the Staff’s review of
Acadia’s Form 10-K for the year ended December 31, 2006. For your
convenience, we have repeated the comment prior to our response. Throughout
this
letter, we have presented dollars in thousands.
Form
10-K
Consolidated
Statements of Cash Flows, page F-7
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|
1.
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Reference
is being made to the first paragraph on page 36. We note you anticipate
that cash flow from operating activities will continue to provide
adequate
capital for all of the company’s debt service payments, recurring capital
expenditures and REIT distribution requirements. We also note that
your
distributions and dividends paid were in excess of net cash provided
by
operating activities. Discuss your distributions for each period
in
comparison to the cash flow from operating activities for each respective
period as reported in the statement of cash flows. If the cash flows
from
operating activities were insufficient to pay the distribution for
any
period, disclose the dollar amount of the deficiency and the alternative
source of cash used to fund the distribution. Alternative sources
would
include such items as borrowings from related parties, bank borrowings,
proceeds from loan sales, proceeds from equity offerings
etc.
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Background
In
our
Form 10-K for the year ended December 31, 2006, we state that we anticipate
that
cash flow from operating activities will continue to provide adequate capital
for all of our debt service payments, recurring capital expenditures and REIT
distribution requirements.
We
consider “REIT distribution requirements” to mean dividends paid to our
shareholders in order to maintain our REIT status. Presented below is the detail
of total distributions
compared to cash provided by operating activities:
|
Years
ended December 31,
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||||||||||||
|
2006
|
2005
|
2004
|
||||||||||
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(dollars
in thousands)
|
||||||||||||
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Cash
provided by Operating Activities
|
$ |
39,627
|
$ |
50,239
|
$ |
33,885
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||||||
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Dividends
paid (REIT distribution requirements)
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(23,823 | ) | (21,869 | ) | (18,507 | ) | ||||||
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Distributions
to minority interests:
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||||||||||||
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Distributions
to partners and members
|
(36,120 | ) |
-
|
(3,238 | ) | |||||||
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Distributions
to minority interests in Operating Partnership
|
(487 | ) | (380 | ) | (416 | ) | ||||||
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Distributions
on preferred Operating Partnership Units
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(254 | ) | (342 | ) | (283 | ) | ||||||
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Distributions
to minority interests in partially-owned affiliates
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(232 | ) | (436 | ) | (1,031 | ) | ||||||
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Total
distributions to minority interests
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(37,093 | ) | (1,158 | ) | (4,968 | ) | ||||||
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Total
Dividends paid and distributions to
minority
interests (total distributions)
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(60,916 | ) | (23,027 | ) | (23,475 | ) | ||||||
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Cash
provided by operating activities less total distributions
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$ | (21,289 | ) | $ |
27,212
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$ |
10,410
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|||||
It
is
important to note that on December 29, 2005, we received a distribution of
$42,738 from an unconsolidated affiliate. This receipt was reflected in the
2005
Consolidated Statements of Cash Flows as a $20,902 “distribution recognized as
income from unconsolidated affiliates” in cash flows provided by operating
activities and a $21,836 “return of capital from unconsolidated affiliates” in
cash flows provided from investing activities. Seven days later, on January
5,
2006, the $42,738 was distributed to us and our minority interests. Of this
amount $32,537 was distributed to minority interests ($15,913 as a distribution
of operating income and $16,624 as a return of capital) and reflected in the
2006 Consolidated Statement of Cash Flow as a financing activity.
Conclusion
As
indicated in the table below, assuming the $20,902 distribution had been
received three days later (in 2006 instead of 2005), the 2005 surplus of cash
provided by operating activities in excess of total distributions would be
$6,310. In addition, assuming the $20,902 distribution of operating income
from
unconsolidated affiliates and the $21,836 return of capital from unconsolidated
affiliates had been received three days later (in 2006 instead of 2005), cash
flow from operating activities combined with return of capital would exceed
the
amount of distributions for 2006 by $21,449 as follows:
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Years
ended December 31,
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||||||||
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2006
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2005
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|||||||
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(dollars
in thousands)
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||||||||
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Cash
(used) provided by operating activities
less
total distributions
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$ | (21,289 | ) | $ |
27,212
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|||
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Timing
difference of distribution received
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20,902
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(20,902 | ) | |||||
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Return
of capital
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21,836
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-
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||||||
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As
adjusted
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$ |
21,449
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$ |
6,310
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||||
In
future
filings, if our cash flows from operating activities are insufficient to pay
the
distributions for any period, we will disclose the dollar amount of the
deficiency and the alternative sources of cash used to fund the
distributions.
We
trust
this response fully addresses the Staff’s questions and concerns. Please give me
a call at (914) 288-8138 if you have further questions.
Sincerely,
/s/
Michael Nelsen
Michael
Nelsen
Senior
Vice President and
Chief
Financial Officer
| cc: | Yolanda Crittendon |
| Jon Grisham | |
| William Regan |