UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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no ☐ |
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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no ☐ |
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Emerging Growth Company |
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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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) YES ☐ NO
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The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2023, the last business day of the registrant’s most recently completed second fiscal quarter was approximately $
The number of shares of the registrant’s common shares of beneficial interest outstanding on February 13, 2024 was
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates by reference information from certain portions of the definitive proxy statement of Acadia Realty Trust for the 2024 annual meeting of shareholders to be filed with the Securities and Exchange Commission (the “SEC”) within 120 days after the end of the fiscal year, or April 29, 2024, covered by this Annual Report on Form 10-K for the year ended December 31, 2023 (the “Report”).
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ACADIA REALTY TRUST AND SUBSIDIARIES
FORM 10-K
INDEX
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Item No. |
Description |
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Page |
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1. |
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7 |
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1A. |
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14 |
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1B. |
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30 |
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1C. |
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30 |
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2. |
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31 |
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3. |
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41 |
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4. |
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41 |
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5. |
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41 |
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6. |
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42 |
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7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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43 |
7A. |
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57 |
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8. |
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59 |
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9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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120 |
9A. |
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120 |
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9B. |
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122 |
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9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
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122 |
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10. |
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122 |
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11. |
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122 |
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12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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122 |
13. |
Certain Relationships and Related Transactions and Director Independence |
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122 |
14. |
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122 |
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15. |
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123 |
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16. |
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126 |
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127 |
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SPECIAL NOTE REGARDING CERTAIN REFERENCES
All references to “Notes” throughout the document refer to the footnotes to the consolidated financial statements of the registrant referenced in Part II, Item 8. Financial Statements.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Report of Acadia Realty Trust, a Maryland real estate investment trust, (the “Company”), may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations are generally identifiable by the use of the words such as “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) macroeconomic conditions, including due to geopolitical conditions and instability, which may lead to a disruption of or lack of access to the capital markets, disruptions and instability in the banking and financial services industries and rising inflation; (ii) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (iii) changes in general economic conditions or economic conditions in the markets in which we may, from time to time, compete, and their effect on our revenues, earnings and funding sources; (iv) increases in our borrowing costs as a result of rising inflation, changes in interest rates and other factors, including the discontinuation of USD LIBOR, which was effected on June 30, 2023; (v) our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due; (vi) our investments in joint ventures and unconsolidated entities, including our lack of sole decision-making authority and our reliance on our joint venture partners’ financial condition; (vii) our ability to obtain the financial results expected from our development and redevelopment projects; (viii) our tenants’ ability and willingness to renew their leases with us upon expiration, our ability to re-lease our properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant; (ix) our potential liability for environmental matters; (x) damage to our properties from catastrophic weather and other natural events, and the physical effects of climate change; (xi) the economic, political and social impact of, and uncertainty surrounding, any public health crisis, such as the COVID-19 Pandemic, which adversely affected the Company and its tenants’ business, financial condition, results of operations and liquidity; (xii) uninsured losses; (xiii) our ability and willingness to maintain our qualification as a real estate investment trust (“REIT”) in light of economic, market, legal, tax and other considerations; (xiv) information technology security breaches, including increased cybersecurity risks relating to the use of remote technology; (xv) the loss of key executives; and (xvi) the accuracy of our methodologies and estimates regarding environmental, social and governance (“ESG”) metrics, goals and targets, tenant willingness and ability to collaborate towards reporting ESG metrics and meeting ESG goals and targets, and the impact of governmental regulation on our ESG efforts.
The factors described above are not exhaustive and additional factors could adversely affect the Company’s future results and financial performance, including the risk factors discussed under the section captioned “Risk Factors” set forth under the headings Item 1A. Risk Factors and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Report. These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein. Any forward-looking statements 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 to reflect any changes in the Company’s expectations with regard thereto or changes in the events, conditions, or circumstances on which such forward-looking statements are based.
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SUMMARY RISK FACTORS
Set forth below is a summary of the risks described under Item 1A. Risk Factors in the Report on Form 10-K:
Risks related to our business, properties and tenants
Risks related to our liquidity and indebtedness
Risks related to litigation, environmental matters and government regulation
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Risks related to our management and structure
Risks related to our REIT status
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PART I
ITEM 1. BUSINESS.
GENERAL
Acadia Realty Trust (the “Trust”) was formed on March 4, 1993 as a Maryland real estate investment trust (“REIT”). All references to “Acadia,” “we,” “us,” “our” and “Company” refer to the Trust and its consolidated subsidiaries. We are a fully integrated REIT focused on the ownership, acquisition, development, and management of high-quality retail properties located primarily in high-barrier-to-entry, supply-constrained, densely populated metropolitan areas in the United States. We currently own or have an ownership interest in these properties through our Core Portfolio (as defined below). We generate additional growth through our Funds (as defined below) in which we co-invest with high-quality institutional investors.
All of our assets are held by, and all of our operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and entities in which the Operating Partnership owns an interest. As of December 31, 2023, the Trust controlled approximately 95% of the Operating Partnership as the sole general partner. As the general partner, the Trust is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest (“Common OP Units” or “Preferred OP Units,” respectively, and collectively, “OP Units”) and employees who have been awarded restricted Common OP Units as long-term incentive compensation (“LTIP Units”). Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for our common shares of beneficial interest, par value $0.001 per share, of the Company (“Common Shares”). This structure is referred to as an umbrella partnership REIT, or “UPREIT.”
BUSINESS OBJECTIVES AND STRATEGIES
Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective:
Investment Strategy — Generate External Growth through our Dual Platforms: Core Portfolio and Funds
The objective that acquisitions be accretive on a long-term basis based on our cost of capital, as well as increase the overall Core Portfolio quality and value, is a key strategic consideration to the growth of our Core Portfolio. As such, we constantly evaluate the blended cost of equity and debt and adjust the amount of acquisition activity to align the level of investment activity with capital flows.
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Given the growing importance of technology and e-commerce, many of our retail tenants are appropriately focused on omni-channel sales and how to best utilize e-commerce initiatives to drive sales at their stores. Considering these initiatives, we have found retailers are becoming more selective as to the location, size and format of their next-generation stores and are focused on dense, high-traffic retail corridors, where they can utilize smaller and more productive formats closer to their shopping population. Accordingly, our focus for Core Portfolio and Fund acquisitions is on those properties which we believe will not only remain relevant to our tenants but become even more so in the future.
In addition to our Core Portfolio investments in real estate assets, we have also capitalized on our expertise in the acquisition, development, leasing, and management of retail real estate by establishing discretionary opportunity funds. Our Fund platform is an investment vehicle where the Operating Partnership invests, along with outside institutional investors, including, but not limited to, endowments, foundations, pension funds and investment management companies, in primarily opportunistic and value-add retail real estate. To date, we have launched five funds (“Funds”); Acadia Strategic Opportunity Fund, LP (“Fund I,” which was liquidated in 2015), Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”) and Acadia Strategic Opportunity Fund V LLC (“Fund V,” and our “current fund”). The investment period for our current fund was completed in August 2023. Thus, as of December 31, we have closed on all new investments in our Funds, and any remaining obligations to our Funds are related to existing investments. Due to our level of control, we consolidate these Funds for financial reporting purposes. Fund I and Fund II have also included investments in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I,” which was liquidated in 2018), Acadia Mervyn Investors II, LLC (“Mervyns II”) and, in certain instances, directly through Fund II, all on a non-recourse basis. These investments comprise, and are referred to as, the Company's Retailer Controlled Property Venture (“RCP Venture”).
The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns II and earns priority distributions or fees for asset management, property management, construction, development, leasing, and legal services. Cash flows from the Funds and the RCP Venture are distributed pro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return (“Preferred Return”), and the return of all capital contributions. Thereafter, remaining cash flows are distributed 20% to the Operating Partnership (“Promote”) and 80% to the partners or members (including the Operating Partnership).
See Note 1 to Consolidated Financial Statements for a detailed discussion of the Funds.
Capital Strategy — Balance Sheet Focus and Access to Capital
Our primary capital objective is to maintain a strong and flexible balance sheet through conservative financial practices, including moderate use of leverage within our Core Portfolio, while ensuring access to sufficient capital to fund future growth. We intend to continue financing acquisitions and property development and redevelopment with sources of capital determined by management to be the most appropriate based on, among other factors, availability in current capital markets, pricing, and other commercial and financial terms. Such sources of capital may include the issuance of public equity, unsecured debt, mortgage and construction loans, and other capital alternatives including strategic capital and the issuance of OP Units. We manage our interest rate risk through the use of fixed-rate debt and, where we use variable-rate debt, through the use of certain derivative instruments, including Secured Overnight Financing Rate (“SOFR”) swap agreements and interest rate caps as discussed further in Item 7A. Quantitative and Qualitative Disclosures about Market Risk of this Report.
We maintain a share repurchase program that authorizes management, at its discretion, to repurchase up to $200.0 million of outstanding Common Shares. The program may be discontinued or extended at any time. We did not repurchase any shares during the years ended December 31, 2023, 2022 or 2021. As of December 31, 2023, management may repurchase up to approximately $122.5 million of Common Shares under the program. See Note 10.
We also maintain an at-the-market equity issuance program (the "ATM Program") that provides us with an efficient and low-cost vehicle for raising capital through public equity issuances on an as-we-go basis to fund our capital needs. Through the ATM Program, we have been able to effectively “match-fund” a portion of the required capital for our Core Portfolio and Fund acquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time, we have issued and intend to continue to issue equity in follow-on offerings separate from our ATM Program. Net proceeds raised through our ATM Program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions, the repayment of outstanding indebtedness and for other general corporate purposes. During the year ended December 31, 2023, we did not issue any Common Shares under our ATM Program. During the year ended December 31, 2022, we issued 5,525,419 Common Shares under our ATM Program for gross proceeds of $123.9 million. During the year ended December 31, 2021, we issued 2,889,371 Common Shares under our ATM Program for gross proceeds of $64.9 million. See Note 10.
In January 2024, we completed an underwritten offering of 6,900,000 Common Shares (inclusive of the underwriters’ option to purchase 900,000 additional shares) for net proceeds of $113.0 million (Note 17).
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Operating Strategy — Experienced Management Team with Proven Track Record
Our senior management team has decades of experience in the real estate industry. We have capitalized on our expertise in the acquisition, development/redevelopment, leasing, and management of retail real estate by creating value through property development/redevelopment, re-tenanting and establishing joint ventures, such as the Funds, in which we earn, in addition to a return on our equity interest, promotes, priority distributions and fees.
Operating functions such as leasing, property management, construction, finance and legal are generally provided by our personnel, providing for a vertically integrated operating platform.
INVESTING ACTIVITIES
See Item 2. Properties for a description of the properties in our Core and Fund portfolios. See Significant Developments under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a detailed discussion of our consolidated and unconsolidated acquisitions, dispositions and financing activity for the year ended December 31, 2023.
Core Portfolio
Our Core Portfolio consists primarily of high-quality street retail and urban assets, as well as suburban properties located in high-barrier-to-entry, trade areas.
As we typically hold our Core Portfolio properties for long-term investment, we review our portfolio and implement programs to renovate and re-tenant targeted properties to enhance their market position. This in turn is expected to strengthen the competitive position of our leasing department to attract and retain quality tenants, increasing cash flow, and consequently, property values. From time to time, we also identify certain properties for disposition and redeploy the capital for acquisitions and for the repositioning of existing properties with greater potential for capital appreciation.
Funds
Our Fund investments, which are discretionary and consolidated, consist of suburban shopping centers and urban retail assets structured as wholly-owned by our Funds or through jointly-owned investments with the Funds.
Structured Finance Program
We also make investments in first mortgages and other notes receivable collateralized by real estate, (which we refer to as our Structured Finance Program or SF) either directly or through entities having an ownership interest therein.
Development and Redevelopment Activities
As part of our investing strategy, we invest in real estate assets that may require significant development. In addition, certain assets may require redevelopment to meet the demand of changing markets. As of December 31, 2023, there were two Core Portfolio and one Fund development projects, and eight Core Portfolio and one Fund redevelopment projects. During the year ended December 31, 2023, we placed three Core Portfolio properties into redevelopment and one Fund Portfolio property into service. See Item 2. Properties—Development Activities and Note 2.
GOVERNMENT REGULATIONS AND ENVIRONMENTAL LAWS
We are subject to federal, state and local laws and regulations, including environmental laws and regulations. As of the date of this Report, we do not expect the cost of compliance with such laws and regulations to have a material impact on our capital expenditures, earnings, or competitive position. See Item 1A. Risk Factors — Risks Related to Litigation, Environmental Matters and Governmental Regulation.
We may be liable for the costs of removal or remediation of certain hazardous or toxic substances at our property sites, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on us in connection with the activities of an operator of, or tenant at our properties. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of such substances, or the failure to properly dispose of or remove such substances, may adversely impact our ability to sell or rent an affected property or to borrow using that property as collateral, which, in turn, would reduce our revenues and ability to make distributions.
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Our existing properties, as well as properties we may acquire, as commercial facilities, are required to comply with the Americans with Disabilities Act of 1990, as amended (the "ADA"). See Item 1A. Risk Factors — Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unplanned expenditures that could adversely affect our financial condition, cash flows and results of operations.
In addition, we may become subject to new compliance requirements and/or new costs or taxes associated with natural resource or energy usage and related emissions (such as a carbon tax), which could increase our operating costs. Compliance with new laws or regulations related to climate change may require us to make improvements to our existing properties or pay additional taxes and fees assessed on us or our properties. See Item 1A. Risk Factors — Climate change, natural disasters or health crises could adversely affect our properties and business.
CORPORATE HEADQUARTERS
Our executive office is located at 411 Theodore Fremd Avenue, Suite 300, Rye, New York 10580, and our telephone number is (914) 288-8100.
HUMAN CAPITAL
We recognize that our ability to achieve the high standards we set for our company can best be accomplished by curating a diverse team of top talent. We are committed to fostering an energized and motivated workforce through programs and benefits that promote employee satisfaction, advancement, equity, and inclusion.
As of December 31, 2023, we had 117 employees, of whom 95 were located at our executive office and 22 were located at regional property management offices. During 2023, our total turnover rate was approximately 11%. None of our employees are covered by collective bargaining agreements and management believes that its relationship with employees is good.
Diversity, Equity, and Inclusion
Diversity, equity, and inclusion (“DEI”) are fundamental values of our business. We believe that our potential for success is maximized by having a diverse workforce that is reflective of our society and the communities we serve.
As of December 31, 2023, women represent 49% of our employees, 36% of our management-level positions and 25% of the independent trustees on our board of trustees (the "Board"), and racially and ethnically diverse individuals represent 25% of our employees, 24% of our management-level positions, and 13% of the independent trustees on our Board.
Our DEI Program is focused on fostering a professional environment that fully embraces individuals with varied backgrounds, cultures, races, identities, ages, perspectives, beliefs, and values. Through education and awareness – including annual employee training on DEI topics such as unconscious bias and allyship – we are working to maintain a corporate culture that is characterized by respect, acceptance, and inclusivity. We believe that we have an individual and institutional responsibility to observe, promote and protect DEI principles. As part of our commitment to promoting DEI principles, we signed the CEO Action for Diversity & Inclusion pledge in 2020, and since that year, our DEI Steering Committee has actively worked to establish goals and initiatives for our DEI program.
Employee Engagement
We have been recognized as a Great Place to Work® based on employee satisfaction surveys for four consecutive years. We analyze the survey results to identify opportunity areas for enhancing employee satisfaction and engagement.
Training and Development
We continually invest in the training and development of our people. Education opportunities are offered within our organization and through attendance at industry conferences, seminars, and company offered resources, like LinkedIn Learning.
To promote career advancement, leadership training opportunities are available to managers and high-potential employees who are identified as possible successors for senior-level roles.
We believe that mentorship within our organization supports employee development while building a sense of inclusion and increasing employee engagement and satisfaction. Our senior management team focuses on succession planning for senior leadership and business unit lead roles and presents a succession plan to our Board annually.
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Our summer internship program offers hands-on experience to students looking to specialize in the retail real estate industry and offers our company a fresh perspective. We are committed to building our own talent pipeline and are thrilled that many of our interns return to Acadia to work with us as full-time employees. We seek to consider a diverse pool of candidates for our internship program through partnerships with external organizations.
Health and Wellness
All of our employees are eligible to participate in our Wellness at Acadia Program, which is focused on education, awareness, and fitness classes, and is coordinated by our Wellness Team, comprised of members across our company with an active interest in wellness programming. Our Wellness at Acadia Program advocates for, and provides resources regarding, nutrition, exercise, mental health, and workplace ergonomics.
We offer a comprehensive benefits package to all eligible employees.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)
Achievements and Initiatives
We seek to drive financial performance while engaging in environmentally and socially responsible business practices grounded in sound corporate governance. Our ESG program is overseen by the Board’s Nominating and Corporate Governance Committee (“NCG Committee”). The NCG Committee periodically reviews our ESG strategy, practices and policies, receives regular updates from management regarding our ESG activities and reports to the full Board for further discussion and evaluation as needed and appropriate. Day-to-day management of our ESG program, including developing and guiding the implementation of our ESG initiatives, is performed by our full-time dedicated Director of ESG and our internal ESG Committee, comprised of senior leaders and representatives from various departments. The ESG Committee meets regularly, at least quarterly, and provides periodic updates on our ESG program to our Chief Executive Officer and the Board.
We maintain an Enterprise Risk Management (“ERM”) plan to identify and formulate responses to the most critical risks to operations, including those related to climate change and environmental impact. ERM planning serves as an additional forum for the integration of ESG considerations into our business operations.
In addition to a dedicated team of professionals, we have established ESG policies and procedures that inform and guide our ESG approach and drive our ESG goals forward, including a firm-wide ESG Policy and a Tenant Sustainability Guide. We continue to align our reporting with the Task Force on Climate-Related Financial Disclosures (“TCFD”), the Sustainability Accounting Standards Board (“SASB”), and Global Reporting Initiative (“GRI”) frameworks. We seek to align our ESG strategy and goals with certain United Nations Sustainable Development Goals ("UN SDGs"), such as goals to combat climate change and to promote the sustainability of our communities.
Below are some highlights of our ESG program. Additional information is available in our Proxy and Corporate Responsibility Report. Such information is not incorporated by reference into, and is not part of this Report.
Environmental
We are committed to understanding the environmental impact of our operations and promoting environmental sustainability while maintaining high standards for our company and our stakeholders.
We are building the resiliency of our portfolio to the physical and transition risks of climate change. For standing investments, we analyze climate-related physical and transition risks and we consider any identified risks as part of our ERM budgeting, and capital improvements processes. Climate-related physical and transition risks are also assessed as part of the due diligence process for acquisitions. Understanding climate-related risks to our portfolio enables us to implement mitigation measures, including increased insurance coverage and physical enhancements, such as waterproofing systems, as necessary. In addition, we established a GHG emissions reduction goal for scope 1 and 2 emissions in our portfolio in an effort to reduce our exposure to, and our contribution to, the negative impacts of climate change. See also Item 1A. Risk Factors — Climate change and natural disasters could adversely affect our properties and business.
We prioritize energy efficiency to try to reduce the amount of GHG emissions generated by our properties. Our energy efficiency strategy seeks to reduce energy consumption through a variety of measures, including LED lighting, and smart lighting controls upgrades in our parking areas, and smart thermostat installations in our vacant tenant spaces.
Our energy efficiency strategy is complemented by our renewable energy strategy which seeks to incorporate the use of electricity sourced from renewable energy projects, such as solar and wind, for the landlord-controlled common areas of our properties. We engage in renewable energy projects through leasing roof and parking lot space at our properties for solar panel arrays and electric vehicle charging stations.
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Our water management program focuses on monitoring and reducing common area water consumption, while encouraging water management practices by our tenants. We leverage technology to track and analyze water consumption at our properties to identify and decrease excessive use. A majority of our properties benefit from the use of a landscape design focused on drought-resistant, native, pollinator-friendly plantings that save water. For substantially all of our properties with landlord-controlled irrigation, we have installed smart irrigation systems with features like rain sensors, to ensure the irrigation is turned on only when necessary. In addition, we use submeters at certain of our properties to give our retail tenants visibility into their water consumption and a financial incentive to decrease their consumption.
We include a green clause into our standard form of retail leases to align tenant and landlord interests in promoting the sustainability of our properties, which provides for, among other requirements, cooperation on environmental and social initiatives, and upgrades. We are proud to be named a Green Lease Leader by the Institute for Market Transformation/the U.S. Department of Energy’s Better Buildings Alliance and achieved gold status for using green leases to engage our tenants in making our properties more sustainable.
Our sustainable practices extend to our corporate offices where we have adopted energy reduction, waste management and water conservation initiatives. These initiatives include, for example, installing LED lighting and automatic occupancy sensors for lighting and equipment, recycling programs, implementing electronic communication systems for tenant billing, and using low-flow faucets. Our corporate headquarters is easily accessible by public transit due to the close proximity to two train stations, helping to reduce air pollution and greenhouse gas emissions from employee travel. As a result of sustainability efforts made at our corporate headquarters, we were awarded the Outstanding Achievement in Land Use Award by the Green Business Partnership in 2019.
Social
DEI are fundamental values of our business. For additional details regarding our DEI Program, as well as employee engagement, employee training and development, and employee health and wellness initiatives, see Item 1. Business - Human Capital.
Our company supports employee volunteerism and philanthropy. We engage with local charitable and volunteer organizations to connect with those in need and provide support to our communities.
We value the importance of community engagement through the facilitation of events at our properties. We partner with local communities and non-profit organizations to host community events and fundraisers throughout our portfolio.
The health and well-being of our tenants and their employees and customers are important to us. Our property managers conduct regular inspections, repairs and improvements to maintain safe and secure shopping centers and enhance the retail experience.
We strive to respect and promote human rights in accordance with the UN Guiding Principles on Business and Human Rights. We support freedom of association as proclaimed in the Universal Declaration of Human Rights.
Governance
We are dedicated to maintaining a high standard for corporate governance predicated on integrity, ethics, diversity, and transparency. All of our Board members stand for re-election every year. We seek to maintain a diverse Board primarily comprised of independent trustees who represent a mix of varied experience, backgrounds, tenure, and skills to ensure a broad range of perspectives is represented. In 2021, our NCG Committee formally committed in its charter to seek to include candidates with a diversity of race, ethnicity, and gender in the pool from which it selects trustee candidates. The Committee annually reviews the composition of the Board and recommends measures to seek to achieve the appropriate balance of knowledge, experience, skills, expertise, and diversity of backgrounds on the Board to enable the Company to execute its strategic plan and achieve its objectives. As of December 31, 2023, two of our eight independent trustees are female and one independent trustee represents racial and ethnic diversity.
Additionally, we regularly monitor developments in the area of corporate governance and seek to enhance our corporate governance structure based upon a review of new developments and recommended best practices, considering investor feedback. We believe that sound corporate governance strengthens the accountability of our Board and management and promotes the long-term interests of our shareholders. Governance highlights include: opt-out of the Board self-classification provisions of Subtitle 8; no shareholder rights plan; annual election of trustees; majority voting standard for trustees in uncontested elections with a resignation policy if an incumbent trustee fails to receive the required vote for re-election; independent and diverse Board with a lead independent trustee; regular succession planning; risk oversight by the full Board and committees; claw-back, anti-hedging and anti-pledging policies; annual Say-on-Pay vote; and shareholders’ ability to call a special meeting.
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Our Corporate Governance Guidelines and associated policies mandate an elevated level of excellence from our company, the Board and management. Through transparency, alignment of interests, and removal of potential conflicts of interests, we ensure that our decisions and actions advance the interests of our shareholders, employees, and other stakeholders.
COMPANY WEBSITE
All of our filings with the Securities and Exchange Commission (the “SEC”), including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to such reports, are available at no cost on the Investors page of our website at www.acadiarealty.com, as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. These filings can also be accessed through the SEC’s website at www.sec.gov. Alternatively, we will provide paper copies of our filings, including this Report, at no cost upon request addressed to Investor Relations at Acadia Realty Trust, 411 Theodore Fremd Avenue, Suite 300, Rye, NY 10580, phone number (914) 288-8100 or email investorrelations@acadiarealty.com.
We use, and intend to use, the Investors page of our website as a means of disclosing material nonpublic information and of complying with our disclosure obligations under Regulation FD, including, without limitation, through the posting of investor presentations that may include material nonpublic information. Accordingly, investors should monitor the Investors page, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts.
The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this Report.
CODE OF ETHICS AND WHISTLEBLOWER POLICIES
Our Board adopted a Code of Business Conduct and Ethics applicable to all employees, as well as a “Whistleblower Policy.” Copies of these documents are available in the Investors – Corporate Governance page of our website at www.acadiarealty.com. We will disclose future amendments to, or waivers from (with respect to our executive officers and trustees), our Code of Business Conduct and Ethics on our website within four business days following the date of such amendment or waiver. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this Report.
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ITEM 1A. RISK FACTORS.
Set forth below are the risk factors that we believe are material to our investors. You should carefully consider these risk factors, together with all of the other information included in this Report, including our consolidated financial statements and related notes thereto, before you decide whether to make an investment in our securities. The occurrence of any of the following risks could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. In such case, the trading price of our Common Shares could decline, and you may lose all or a significant part of your investment. This section includes or refers to certain forward-looking statements. See “Special Note Regarding Forward-Looking Statements”.
The following risk factors are not exhaustive. Other sections of this Report may include additional factors that could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may affect our business. Investors should also refer to our quarterly reports on Form 10-Q and current reports on Form 8-K for future periods for material updates to these risk factors.
There are risks relating to investments in real estate that could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and make distributions to our shareholders.
Real property investments are subject to multiple risks. Real estate values are affected by several factors, including changes in the general economic climate, local conditions (such as an oversupply of space or a reduction in demand), the quality and philosophy of management, competition from other available space, and the ability to provide adequate maintenance and insurance and to control variable operating costs. Retail properties, in particular, may be affected by changing perceptions of retailers or shoppers regarding the convenience and attractiveness of the property and by the overall climate for the retail industry. Real estate values are also affected by such factors as government regulations, interest rate levels, the availability of financing and potential liability under, and changes in, environmental, zoning, tax, and other laws. A significant portion of our income is derived from rental income from real property. Our income and cash flow would be adversely affected if we were unable to rent our vacant space to viable tenants on economically favorable terms or at all. In the event of default by a tenant, we may experience delays in enforcing, as well as incur substantial costs to enforce, our rights as a landlord. In addition, certain significant expenditures associated with each equity investment (such as mortgage payments, real estate taxes and maintenance costs) are generally not reduced even though there may be a reduction in income from the investment.
We rely on revenues derived from tenants, in particular our key tenants, and a decrease in those revenues could adversely affect our ability to make distributions to our shareholders.
Revenue from our properties depends primarily on the ability of our tenants to pay the full amount of rent and other charges due under their leases on a timely basis. We derive significant revenues from a concentration of 20 key tenants, which occupy space at more than one property and collectively account for approximately 17.8% of our consolidated revenue. We could be adversely affected in the event of the bankruptcy or insolvency of, or a downturn in the business of, any of our key tenants, or in the event that any such tenant does not renew its leases as they expire or renews such leases at lower rental rates. See Item 2. Properties—Major Tenants for quantified information with respect to the percentage of our minimum rents received from major tenants.
Anchor tenants and co-tenancy are crucial to the success of retail properties and vacated anchor space directly and indirectly affects our rental revenues.
Certain of our properties are supported by “anchor” tenants. Anchor tenants pay a significant portion of total rents at a property and contribute to the success of other tenants by drawing large numbers of customers to a property. Vacated anchor space not only directly reduces rental revenues, but, if not re-tenanted with a tenant with comparable consumer attraction, could adversely affect the rest of the property primarily through the loss of customer drawing power. This can also occur through the exercise of the right that most anchors have to vacate and prevent re-tenanting by paying rent for the balance of the lease term, also known as “going dark”, such as the case of the departure of a “shadow” anchor tenant that is owned by another landlord. In addition, in the event that certain anchor tenants cease to occupy a property, such an action results in a significant number of other tenants having the contractual right to terminate their leases, or pay a reduced rent based on a percentage of the tenant’s sales, at the affected property, which could adversely affect the future income from such property, also known as “co-tenancy.” Although it may not directly reduce our rental revenues, and there are no contractual co-tenancy conditions, vacant retail space adjacent to, or even on the same block as our street and urban properties may similarly affect shopper traffic and re-tenanting activities at our properties. See Item 2. Properties—Major Tenants.
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The bankruptcy of, or a downturn in the business of, any of our major tenants or a significant number of our smaller tenants may adversely affect our financial condition, cash flows, results of operations and property values.
The bankruptcy of, or a downturn in the business of, any of our major tenants causing them to reject their leases, or to not renew their leases as they expire, or renew at lower rental rates, may adversely affect our cash flows and property values. Furthermore, the impact of vacated anchor space and the potential reduction in customer traffic may adversely impact the balance of tenants at a shopping center.
Historically and from time to time, certain of our tenants experienced financial difficulties and filed for bankruptcy protection, typically under Chapter 11 of the United States Bankruptcy Code. Pursuant to bankruptcy law, tenants have the right to reject some or all of their leases. In the event a tenant exercises this right, the landlord generally has the right to file a claim for lost rent equal to the greater of either one year’s rent (including tenant expense reimbursements) for remaining terms greater than one year, or 15% of the rent remaining under the balance of the lease term, but not to exceed three years rent. Actual amounts to be received in satisfaction of those claims will be subject to the tenant’s final bankruptcy plan and the availability of funds to pay its creditors. There can be no assurance that our major tenants will not declare bankruptcy, in which case we may be unable to recoup past and future rent in full, and to re-lease a terminated or rejected space on comparable terms or at all.
We may not be able to renew current leases or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms.
Upon the expiration of current leases for space located in our properties, we may not be able to re-let all or a portion of that space, or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms. If we are unable to re-let promptly all or a substantial portion of the space located in our properties or if the rental rates we receive upon re-letting are significantly lower than current rates, our net income and ability to make expected distributions to our shareholders will be adversely affected due to the resulting reduction in revenues. There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases. See Item 2. Properties—Lease Expirations for additional information regarding the scheduled lease expirations in our portfolio. In addition, current inflation levels are greater than the contractual rent increases we obtain from our tenant base. As a result, the Company could feel pricing pressure on rents that it is able to charge to new or renewing tenants, such that future rents and rent spreads could be negatively impacted.
Our business is significantly influenced by demand for retail space generally, and a decrease in such demand may have a greater adverse effect on our business than if we owned a more diversified real estate portfolio.
A decrease in the demand for retail space may have a greater adverse effect on our business and financial condition than if we owned a more diversified real estate portfolio. The market for retail space has been, and could continue to be, adversely affected by weakness in the national, regional, and local economies, the adverse financial condition of some large retailing companies and bankruptcy incidence, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets and increasing consumer purchases through the Internet. To the extent that any of these conditions occur, they are likely to negatively affect market rents for retail space and could adversely affect our financial condition, cash flows, results of operations, the trading price of our Common Shares and our ability to satisfy our debt service obligations and to pay distributions to our shareholders.
E-commerce can have an impact on our business because it may cause a downturn in the business of our current tenants and affect future leases.
The use of the Internet by retail consumers continues to gain in popularity and the migration toward e-commerce is expected to continue. The increase in Internet sales could result in a downturn in the business of our current tenants in their “brick and mortar” locations, adversely impacting their ability to satisfy their rent obligations, and could affect the way future tenants lease space.
While we devote considerable effort and resources to analyze and respond to tenant trends, preferences, and consumer spending patterns, we cannot predict with certainty what future tenants will want, what future retail spaces will look like and how much revenue will be generated at traditional “bricks and mortar” locations. If we are unable to anticipate and respond promptly to trends in the market because of, among others, the illiquid nature of real estate our occupancy levels and financial results could suffer. See the Risk Factor entitled, “Our ability to change our portfolio is limited because real estate investments are illiquid” below.
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Many of our real estate costs are fixed, even if income from our properties decreases, which would cause a decrease in net income.
Our financial results depend primarily on leasing space at our properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes, insurance, and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the property. As a result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to fully lease our properties on favorable terms. Additionally, properties that we develop or redevelop may not produce any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with such projects until they are fully occupied.
Our ability to change our portfolio is limited because real estate investments are illiquid.
Equity investments in real estate are relatively illiquid and, therefore, our ability to change our portfolio promptly in response to changed conditions is limited, which could adversely affect our financial condition, cash flows, and ability to satisfy our debt service obligations and to make distributions to our shareholders. In addition, the Internal Revenue Code of 1986, as amended (the “Code”), contains restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. Our Board may establish investment criteria or limitations as it deems appropriate, but it currently does not limit the number of properties in which we may seek to invest or on the concentration of investments in any one geographic region. As discussed under the heading “Our Board may change our investment policy or objectives without shareholder approval” below, we could change our investment, disposition and financing policies and objectives without a vote of our shareholders, but such change may be delayed or more difficult to implement due to the illiquidity of real estate.
We could be adversely affected by conditions in the markets where our properties are geographically concentrated.
Our performance depends on the economic conditions in markets where our properties are geographically concentrated. We have significant exposure to the greater New York and Chicago metropolitan regions, from which we derive 42.8% and 18.3% of the annual base rents within our Core Portfolio, respectively. In addition, our Funds derive 31.8%, 22.4% and 26.0% of their annual base rents in the New York metropolitan, Southeast, and Northeast regions of the United States, respectively. Our operating results could be adversely affected if market conditions, such as an oversupply of space or a reduction in demand for real estate, occur in these areas.
Our development and construction activities could affect our operating results.
We intend to continue selective development and construction of retail properties. See Item 1. Business — Investing Activities– Funds–Development Activities.
As opportunities arise, we may delay construction until sufficient pre-leasing is reached, and financing is in place. Our development and construction activities include, among others, the risks that:
In addition, the entitlement and development of real estate entails extensive approval processes, sometimes involving multiple regulatory jurisdictions. It is common for a project to require multiple approvals, permits and consents from U.S. federal, state and local governing and regulatory bodies. Compliance with these and other regulations and standards is time intensive and costly and may require additional long range infrastructure review and approvals which can add to project cost. In addition, development of properties containing delineated wetlands may require one or more permits from the U.S. federal government and/or state and local governmental agencies. Any of these issues can materially affect the cost, timing and economic viability of our development and redevelopment projects.
At times, we may also be required to use unionized construction workers or to pay the prevailing wage in a jurisdiction to unionized workers, which could increase a project’s costs and the risk of a strike, thereby affecting construction timelines.
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Additionally, the time frame required for development, construction and lease-up of these properties means that we may not realize a significant cash return for several years. If any of the above events occur, the development and construction of properties may hinder our growth and could have an adverse effect on our financial condition, cash flows and results of operations. In addition, new development and construction activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management.
Developments and acquisitions may fail to perform as expected, which could adversely affect our results of operations.
Our investment strategy includes the development and acquisition of retail properties in supply constrained markets in densely populated areas with high average household incomes and significant barriers to entry. The acquisition of such properties is highly competitive. Additionally, the development and acquisition of such properties entails risks that include the following, any of which could adversely affect our financial condition, cash flows, results of operations, and our ability to meet our debt obligations and make distributions to shareholders:
Historically, Fund I, Mervyns I and Fund III have provided Promote income. There can be no assurance that our joint ventures will continue to operate profitably and thus provide additional Promote income in the future. These factors could limit the return that we receive from such investments or cause our cash flows to be lower than our estimates. In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture.
We may not be able to recover our investments in marketable securities or other investments, which may result in significant losses to us.
Our investments in marketable securities are subject to specific risks relating to the particular issuer of the securities, including the financial condition and business outlook of the issuer, which may result in significant losses to us. Marketable securities are generally unsecured and may also be subordinated to other obligations of the issuer. As a result, investments in marketable securities are subject to risks of substantial market price volatility, resulting from changes in prevailing interest rates and the possibility that earnings of the issuer may be insufficient to meet its debt service and distribution obligations. These risks may adversely affect the value of outstanding marketable securities and the ability of the issuers to make distribution payments.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 8 for additional discussion regarding the shares held by the Company of Albertsons Companies, Inc. (“Albertsons”).
The economic performance and value of our other investments, which we do not control and are in retail operations, are subject to risks associated with owning and operating retail businesses, as outlined in our other risk factors provided herein. A decline in the value of our other investments may require us to recognize an other-than-temporary impairment (“OTTI”) against such assets. When the fair value of an investment is determined to be less than its amortized cost at the balance sheet date, we assess whether the decline is temporary or other-than-temporary. If we intend to sell an impaired asset, or it is more likely than not that we will be required to sell the impaired asset before any anticipated recovery, then we must recognize an OTTI through charges to earnings equal to the entire difference between the asset’s amortized cost and its fair value at the balance sheet date. When an OTTI is recognized through earnings, a new cost basis is established for the asset, and the new cost basis may not be adjusted through earnings for subsequent recoveries in fair value.
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Our real estate assets may be subject to impairment charges.
We periodically assess whether there are any indicators that the value of our real estate assets and other investments may be impaired. A property’s value is considered to be impaired only if the estimated aggregate future undiscounted property cash flows are less than the carrying value of the property. In our estimate of cash flows, we consider factors such as trends and prospects and the effects of demand and competition on expected future operating income. If we are evaluating the potential sale of an asset or redevelopment alternatives, the undiscounted future cash flows consider the most likely course of action as of the balance sheet date based on current plans, intended holding periods and available market information. We are required to make subjective assessments as to whether there are impairments in the value of our real estate assets and other investments. Impairment charges have an immediate direct impact on our earnings. There can be no assurance that we will not take additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our operating results in the period in which the charge is taken.
If a third-party vendor fails to provide agreed upon services, we may suffer losses.
We are dependent and rely on third party vendors, including Cloud providers, for redundancy of our network, system data, security, and data integrity. If a vendor fails to provide services as agreed, suffers outages, business interruptions, financial difficulties, or bankruptcy, we may experience service interruption, delays, or loss of information. Cloud computing is dependent upon having access to an Internet connection in order to retrieve data. If a natural disaster, blackout, or other unforeseen event were to occur that disrupted the ability to obtain an Internet connection, we may experience a slowdown or delay in our operations. We conduct due diligence on all services providers, contractually specify privacy and data security responsibilities, and restrict access, use and disclosure of personal information.
Actual or perceived threats associated with epidemics, pandemics or other public health crises, including the COVID-19 Pandemic, have had and could continue to have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity, and ability to access the capital markets and satisfy debt service obligations.
Epidemics, pandemics, or other public health crises, including the COVID-19 Pandemic, that impact economic and market conditions, particularly in the markets where our properties are located, and preventative measures taken to alleviate their impact, may have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity, and ability to access capital markets and satisfy debt service obligations.
Our retail tenants depend on in-person interactions with their customers to generate unit-level profitability, and an epidemic, pandemic or other public health crisis may decrease customer willingness to frequent, and “shelter-in-place” or “stay-at-home” orders or recommendations may prevent customers from frequenting our tenants’ businesses, which may result in their inability to maintain profitability and make timely rental payments to us under their leases. Such restrictions may also affect customer behavior longer term by, among other things, creating a preference for e-commerce, discussed further in our risk factors above.
If we decided to employ higher leverage levels, we would be subject to increased debt service requirements and a higher risk of default on our debt obligations, which could adversely affect our financial conditions, cash flows and ability to make distributions to our shareholders. In addition, increases or changes in interest rates could cause our borrowing costs to rise and may limit our ability to refinance debt.
Although we have historically used moderate levels of leverage, we have incurred, and expect to continue to incur, indebtedness to support our activities. As of December 31, 2023, our outstanding indebtedness was $1,881.1 million, of which $426.4 million was variable-rate indebtedness.
None of our Declaration of Trust, our Bylaws or any policy statement formally adopted by our Board limits either the total amount of indebtedness or the specified percentage of indebtedness that we may incur. Accordingly, we could become more highly leveraged, resulting in increased debt service requirements and a higher risk of default on our debt obligations. This in turn could adversely affect our financial condition, cash flows and ability to make distributions to our shareholders.
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Although approximately 77.3% of our outstanding debt has fixed or effectively fixed interest rates, we also borrow funds at variable interest rates. We are exposed to risks related to a potential rising interest rate environment for our current or any future variable interest rate debt, which could cause our borrowing costs to rise and may limit our ability to refinance debt. Interest expense on our variable-rate debt as of December 31, 2023 would increase by approximately $4.3 million annually for a 100-basis-point increase in interest rates. This exposure would increase if we sought additional variable-rate financing based on pricing and other commercial and financial terms. We enter into interest rate hedging transactions, including interest rate swap and cap agreements, with counterparties, generally, the same lenders who made the loan in question. There can be no guarantee that the future financial condition of these counterparties will enable them to fulfill their obligations under these agreements.
As a result of LIBOR being discontinued, our LIBOR-based borrowings and hedges were converted to the Secured Overnight Financing Rate (“SOFR”). The discontinuation of LIBOR did not affect our ability to borrow or maintain already outstanding borrowings. Higher average interest rates resulted in higher interest expense and payments under our debt agreements.
Our inability to raise capital or to carry out our growth strategy could adversely affect our financial condition, cash flows and results of operations.
Our earnings growth strategy is based on the acquisition and development of additional properties, including acquisitions of core properties through our Operating Partnership and our high return investment programs through our Fund platform. The consummation of any future acquisitions will be subject to satisfactory completion of our extensive valuation analysis and due diligence review and to the negotiation of definitive documentation. We cannot be sure that we will be able to implement our strategy because we may have difficulty finding new properties, obtaining necessary entitlements, negotiating with new or existing tenants or securing acceptable financing.
Acquisitions of additional properties entail the risk that investments will fail to perform in accordance with expectations, including operating and leasing expectations. In the context of our business plan, “development” generally means an expansion or renovation of an existing property. Development is subject to numerous risks, including risks of construction delays, cost overruns or uncontrollable events that may increase project costs, new project commencement risks such as the receipt of zoning, occupancy and other required governmental approvals and permits, and incurring development costs in connection with projects that are not pursued to completion.
Historically, a component of our growth strategy has been through private-equity type investments made through our RCP Venture, which have included investments in operating retailers. The inability of such retailers to operate profitably would have an adverse impact on income realized from these investments. Through our investments in joint ventures, we have also invested in operating businesses that have operational risk in addition to the risks associated with real estate investments, including human capital issues, adequate supply of product and material, and merchandising issues.
Furthermore, if we were unable to obtain sufficient investor capital commitments in order to initiate future Funds, or other sources of strategic capital, our current growth strategy would be adversely impacted. Because the Operating Partnership is the sole general partner or managing member of our Funds and earns promote distributions or fees for asset management, property management, construction, development, leasing, and legal services, such a situation would also adversely impact the amount of or ability to earn such promotes or fees.
Our structured financing portfolio is subject to specific risks relating to the structure and terms of the instruments and the underlying collateral.
We invest in notes receivables and preferred equity investments that are collateralized by the underlying real estate, a direct interest or the borrower’s ownership interest in the entities that own the properties and/or by the borrower’s personal guarantee. The underlying assets are sometimes subordinate in payment and collateral to more senior loans. The ability of a borrower or entity to make payments on these investments may be subject to the senior lender and/or the performance of the underlying real estate. In the event of a default by the borrower or entity on its senior loan, our investment will only be satisfied after the senior loan and we may not be able to recover the full value of the investment. In the event of a bankruptcy of an entity in which we have a preferred equity interest, or in which the borrower has pledged its interest, the assets of the entity may not be sufficient to satisfy our investment.
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We are exposed to possible liability relating to environmental matters.
Under various federal, state and local environmental laws, statutes, ordinances, rules, and regulations, as an owner of real property, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under our property, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on us in connection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect our ability to sell or rent that property or to borrow using that property as collateral, which, in turn, could reduce our revenues and affect our ability to make distributions.
A property can also be adversely affected either through physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of any of our tenants to satisfy any obligations with respect to the property leased to that tenant, we may be required to satisfy such obligations. In addition, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease.
From time to time, in connection with the conduct of our business, and prior to the acquisition of any property from a third party or as required by our financing sources, we authorize the preparation of Phase I environmental reports and, when necessary, Phase II environmental reports, with respect to our properties. Based upon these environmental reports and our ongoing review of our properties, we are currently not aware of any environmental condition with respect to any of our properties that we believe would be reasonably likely to have a material adverse effect on us. There can be no assurance, however, that the environmental reports will reveal all environmental conditions at our properties or that the following will not expose us to material liability in the future:
Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of our tenants, which could adversely affect our financial condition, cash flows and results of operations.
Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition, cash flows and results of operations.
We carry comprehensive general liability, all-risk property, extended coverage, loss of rent insurance, and environmental liability on our properties, with policy specifications and insured limits customarily carried for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, we maintain a minimum of twelve months loss of rent insurance. In addition, there are certain types of losses, such as losses resulting from wars, terrorism or acts of God that generally are not insured because they are either uninsurable or not economically insurable. Should an uninsured loss or a loss in excess of insured limits occur, we could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types could adversely affect our financial condition, cash flows and results of operations.
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We may from time to time be subject to litigation that could negatively impact our financial condition, cash flows, results of operations and the trading price of our Common Shares.
We may from time to time be a defendant in lawsuits and regulatory proceedings relating to our business. Such litigation and proceedings may result in defense costs, settlements, fines, or judgments against us, some of which may not be covered by insurance. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such litigation or proceedings. An unfavorable outcome may result in our having to pay significant fines, judgments, or settlements, which, if uninsured, or if exceeding insurance coverage, could adversely impact our financial condition, cash flows, results of operations and the trading price of our Common Shares. Additionally, certain proceedings or the resolution of certain proceedings may affect the availability or cost of some of our insurance coverage and expose us to increased risks that would be uninsured. See Item 3. Legal Proceedings and the Notes to Consolidated Financial Statements as updated by our subsequent filings with the SEC, for pending litigation, if any.
Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unplanned expenditures that could adversely affect our financial condition, cash flows and results of operations.
All of our properties are required to comply with the Americans with Disabilities Act, as amended (the “ADA”). The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While the tenants to whom we lease properties are obligated by law to comply with applicable ADA provisions, and are typically obligated to cover costs of compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs could be adversely affected. As a result of the foregoing or if a tenant is not obligated to cover the cost of compliance, we could be required to expend funds to comply with the provisions of the ADA, which could adversely affect our financial condition, cash flows and results of operations. In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to the properties. We may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could also adversely affect our financial condition, cash flows and results of operations.
The loss of key management members could have an adverse effect on our business, financial condition, and results of operations.
Our success depends on the contribution of key management members. The loss of the services of Kenneth F. Bernstein, President and Chief Executive Officer, or other key executive-level employees could have a material adverse effect on our business, financial condition, and results of operations. Management continues to strengthen our team and we have CEO succession planning in place, as well as an emergency transition plan, but there can be no assurance that such planning will be capable of implementation or that our efforts will be successful. We have obtained key-man life insurance for Mr. Bernstein. In addition, we have entered into an employment agreement with Mr. Bernstein and into severance agreements with other senior executives; however, Mr. Bernstein and such executives may terminate their employment with us at will.
We have pursued and may in the future continue to pursue extensive growth opportunities, including investing in new markets, which may result in significant demands on our operational, administrative, and financial resources.
We have pursued and may pursue growth opportunities, some of which have been, and in the future may be, in locations in which we have not historically invested. This expansion places significant demands on our operational, administrative, and financial resources. The continued growth of our real estate portfolio can be expected to continue to place a significant strain on our resources. Our future performance will depend in part on our ability to successfully attract and retain qualified management personnel to manage the growth and operations of our business. In addition, the acquired properties may fail to operate at expected levels due to the numerous factors that may affect the value of real estate. There can be no assurance that we will have sufficient resources to identify and manage the newly acquired properties.
Our Board may change our investment policy or objectives without shareholder approval.
Our Board may determine to change our investment and financing policies or objectives, our growth strategy and our debt, capitalization, distribution, acquisition, disposition, and operating policies. Our Board may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number of properties in which we may seek to invest or the concentration of investments in any one geographic region. Although our Board has no present intention to revise or amend our strategies and policies, it may do so at any time without a vote by our shareholders. Accordingly, the results of decisions made by our Board as implemented by management may or may not serve the interests of all of our shareholders and could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders.
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Concentration of ownership by certain investors may allow these investors to exert influence over the business and affairs of our Company.
As of December 31, 2023, four institutional shareholders own 5% or more individually, and 54.7% in the aggregate, of our Common Shares. While this ownership concentration does not jeopardize our qualification as a REIT for U.S. federal income tax purposes (due to certain “look-through provisions” of the Code), a significant concentration of ownership may allow an investor or a group of investors to exert a greater influence over our management and affairs and may have the effect of delaying, deferring, or preventing a change in control of us. Additionally, our Board may, in its sole discretion, waive or modify the 9.8% Common Shares ownership limit in our Declaration of Trust with respect to one or more persons if it is satisfied that ownership in excess of the limit will not jeopardize our qualification as a REIT for U.S. federal income tax purposes. From time to time, we have entered into waivers with certain institutional investors, subject to certain representations from such investors, including that the Common Shares held by the investors will be held in the ordinary course of business and not with the purpose or effect of changing or influencing control of us.
Restrictions on a potential change of control could prevent changes that would be beneficial to our shareholders.
Our Board is authorized by our Declaration of Trust to establish and issue one or more series of preferred shares of beneficial interest without shareholder approval. We have not established any series of preferred shares other than the Series A and Series C Preferred OP Units in the Operating Partnership. However, the establishment and issuance of a class or series of preferred shares could make a change of control of us that could be in the best interests of the shareholders more difficult. In addition, we have entered into an employment agreement with our Chief Executive Officer and severance agreements with certain of our executives, which provide that, upon the occurrence of a change in control of us and either the termination of their employment without “cause” or their resignation for “good reason” (each, as defined in the respective agreement), such executive officers would be entitled to certain termination or severance payments made by us (which may include a lump sum payment equal to defined percentages of annual salary and prior years’ average bonuses, paid in accordance with the terms and conditions of the respective agreement), which could deter a change of control of us that could be in the best interests of our shareholders generally.
Certain provisions of Maryland law may limit the ability of a third party to acquire control of our Company.
Under the provisions of the Maryland General Corporation Law (the “MGCL”) applicable to REITs, certain business combinations, including certain mergers, consolidations, share exchanges and asset transfers and certain issuances and reclassifications of equity securities, between a Maryland REIT and any person who beneficially owns 10% or more of the voting power of the REIT’s outstanding voting shares of beneficial interest or an affiliate or an associate, as defined in the MGCL, of the REIT who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding shares of beneficial interest of the REIT (an “interested shareholder”) or an affiliate of the interested shareholder, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. After that five-year period, any such business combination must be recommended by the board of trustees of the REIT and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the REIT and (ii) two-thirds of the votes entitled to be cast by holders of voting shares of beneficial interest of the REIT other than shares held by the interested shareholder with whom, or with whose affiliate, the business combination is to be effected or held by an affiliate or associate of the interested shareholder, unless, among other conditions, the REIT’s common shareholders receive a minimum price, as defined in the MGCL, for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its common shares.
These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of trustees of the REIT before the interested shareholder becomes an interested shareholder. A person is not an interested shareholder if the board of trustees approved in advance the transaction by which the person otherwise would have become an interested shareholder. In approving a transaction, the board of trustees may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board. We have not elected to opt out of the business combination statute.
The MGCL also provides that holders of “control shares” of a Maryland REIT (defined as voting shares that, when aggregated with all other shares owned by the acquirer or in respect of which the acquirer is entitled to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by the affirmative vote of holders of at least two-thirds of all the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by officers or by employees who are also trustees of the REIT. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares of beneficial interest. Our Bylaws can be amended by our Board by majority vote or by our shareholders, pursuant to a binding proposal properly submitted for consideration at a meeting of shareholders, by the affirmative vote of a majority of all votes entitled to be cast on the matter, and there can be no assurance that this provision will not be amended or eliminated at any time in the future.
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Additionally, Title 3, Subtitle 8 of the MGCL (“Subtitle 8”) permits our Board, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or Bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring or preventing a transaction or a change of control of our Company that might involve a premium to the market price of our Common Shares or otherwise be in the best interests of our shareholders. We are subject to some of these provisions (for example, a two-thirds vote requirement for removing a trustee) by provisions of our Declaration of Trust and Bylaws unrelated to Subtitle 8. However, pursuant to the Articles Supplementary filed with the State Department of Assessments and Taxation of Maryland on November 9, 2017, which are referenced in Part IV Item 15. Exhibits and Financial Statement Schedules hereto, the Board approved a resolution to opt out of Section 3-803 of Subtitle 8 that allows the Board, without shareholder approval, to elect to classify into three classes with staggered three-year terms. The Articles Supplementary prohibit the Company, without the affirmative vote of a majority of the votes cast on the matter by shareholders entitled to vote generally in the election of trustees, from classifying the Board under Subtitle 8.
Becoming subject to, or the potential to become subject to, these provisions of the MGCL could inhibit, delay, or prevent a transaction or a change of control of our Company that might involve a premium price for our shareholders or otherwise be in our or their best interests. In addition, the provisions of our Declaration of Trust on removal of trustees and the provisions of our Bylaws regarding advance notice of shareholder nominations of trustees and other business proposals and restricting shareholder action outside of a shareholders meeting unless such action is taken by unanimous written consent could have a similar effect.
Our rights and shareholders’ rights to take action against trustees and officers are limited, which could limit recourse in the event of actions not in the best interests of shareholders.
As permitted by Maryland law, our Declaration of Trust eliminates the liability of our trustees and officers to the Company and its shareholders for money damages, except for liability resulting from:
In addition, our Declaration of Trust authorizes, and our Bylaws obligate, us to indemnify each present or former trustee or officer, to the maximum extent permitted by Maryland law, who is made a party to any proceeding because of his or her service to our Company in those or certain other capacities. As part of these indemnification obligations, we may be obligated to fund the defense costs incurred by our trustees and officers.
We operate through a partnership structure, which could have an adverse effect on our ability to manage our assets.
Our primary property-owning vehicle is the Operating Partnership, of which we are the general partner. Our acquisition of properties through the Operating Partnership in exchange for interests in the Operating Partnership may permit certain tax deferral advantages to limited partners who contribute properties to the Operating Partnership. Since properties contributed to the Operating Partnership may have unrealized gains attributable to the differences between the fair market value and adjusted tax basis in such properties prior to contribution, the sale of such properties could cause adverse tax consequences to the limited partners who contributed such properties. Although we, as the general partner of the Operating Partnership, generally have no obligation to consider the tax consequences of our actions to any limited partner, we own several properties subject to material contractual restrictions for varying periods of time designed to minimize the adverse tax consequences to the limited partners who contributed such properties. Such restrictions may result in significantly reduced flexibility to manage some of our assets.
Our joint venture investments carry additional risks not present in our direct investments.
Partnership or joint venture investments (that may include, among others, tenancy-in common and other similar investments) may involve risks not otherwise present for investments made solely by us, including the possibility that our partner or co-venturer might become bankrupt, and that our partner or co-venturer may take action contrary to our instructions, requests, policies, or objectives, including with respect to maintaining our qualification as a REIT. Actions by, or disputes with, joint venture partners might result in subjecting properties owned by the joint venture to additional risks. Other risks of joint venture investments include impasses on decisions, such as a sale, because neither we nor a joint venture partner may have full control over the joint venture. Also, there is no limitation under our organizational documents as to the amount of our funds that may be invested in joint ventures.
Additionally, our partners or co-venturers may engage in malfeasance in spite of our efforts to perform a high level of due diligence on them, which may jeopardize an investment and/or subject us to reputational risk. Such acts may or may not be covered by insurance.
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Any disputes that may arise between joint venture partners and us may result in potentially costly litigation or arbitration that would prevent our officers and/or trustees from focusing their time and effort on our business. In addition, we may, in certain circumstances, be liable for the actions of our third-party joint venture partners.
There can be no assurance we have qualified or will remain qualified as a REIT for federal income tax purposes.
We believe that we have consistently met the requirements for qualification as a REIT for federal income tax purposes beginning with our taxable year ended December 31, 1993, and we intend to continue to meet these requirements in the future. However, qualification as a REIT involves the application of highly technical and complex provisions of the Code, for which there may be only limited judicial or administrative interpretations. No assurance can be given that we have qualified or will remain qualified as a REIT. The Code provisions and income tax regulations applicable to REITs differ significantly from those applicable to other entities. The determination of various factual matters and circumstances not entirely within our control can potentially affect our ability to continue to qualify as a REIT. In addition, no assurance can be given that future legislation, regulations, administrative interpretations, or court decisions will not significantly change the requirements for qualification as a REIT or adversely affect the Federal income tax consequences of such qualification. Under current law, if we fail to qualify as a REIT, we would not be allowed a deduction for dividends paid to shareholders in computing our net taxable income. In addition, our income would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at the regular corporate rates and we could be subject to the one-percent excise tax on share repurchases imposed by the 2022 Inflation Reduction Act. Also, we could be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. Cash available for distribution to our shareholders would be significantly reduced for each year in which we do not qualify as a REIT. In that event, we would not be required to continue to make distributions. Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us, without the consent of our shareholders, to revoke the REIT election or to otherwise take action that would result in disqualification.
Legislative or regulatory tax changes could have an adverse effect on our status as a REIT for Federal income tax purposes.
There are a number of issues associated with an investment in a REIT that are related to the Federal income tax laws, including, but not limited to, the consequences of our failing to continue to qualify as a REIT. At any time, the Federal income tax laws governing REITs, or the administrative interpretations of those laws may be amended or modified. Any new laws or interpretations may take effect retroactively and could adversely affect us or our shareholders.
We may be required to borrow funds or sell assets to satisfy the REIT distribution requirements.
Our cash flows may be insufficient to fund distributions required to maintain our qualification as a REIT as a result of differences in timing between the actual receipt of income and the recognition of income for U.S. Federal income tax purposes, or as a result of our inability to currently deduct certain expenditures that we must currently pay, such as capital expenditures, payments of compensation for which Section 162(m) of the Code denies a deduction, any business interest expense that is disallowed under Section 163 (j) of the Code (unless we elect to be an “electing real property trade or business”), and the creation of reserves or required amortization payments. We have historically satisfied these distribution requirements by making cash distributions to our shareholders, a REIT is permitted to satisfy these requirements by making distributions of cash or other property, including, in limited circumstances, its own stock. Assuming we continue to satisfy these distribution requirements with cash, we may need to borrow funds on a short term basis or sell assets, to meet the REIT distribution requirements and avoid the payment of income and excise taxes even if the then prevailing market conditions are not favorable for these borrowings or sales. These cash needs could result from differences in timing between the actual receipt of cash and inclusion of income for U.S. federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of cash reserves or required debt or amortization payments. These sources, however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth potential, our current debt levels, the market price of our common stock, and our current and potential future earnings. Such actions could adversely affect our cash flow and results of operations.
Dividends payable by REITs generally do not qualify for reduced tax rates.
Certain qualified dividends paid by corporations to individuals, trusts and estates that are U.S. shareholders are taxed at capital gain rates, which are lower than ordinary income rates. Dividends of current and accumulated earnings and profits payable by REITs, however, are taxed at ordinary income rates as opposed to the capital gain rates. Pursuant to section 199A of the Code, from 2018 through 2025, certain REIT shareholders will be permitted to deduct 20% of ordinary REIT dividends received. Dividends payable by REITs in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof and thereafter as taxable gain. The more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts, and estates to perceive investments in REITs, including us, to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which may negatively impact the trading prices of our securities.
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Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
To qualify to be taxed as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our Common Shares. In order to meet these tests, we may be required to forego investments we might otherwise make and refrain from engaging in certain activities. Thus, compliance with the REIT requirements may hinder our performance.
In addition, if we fail to comply with certain asset ownership tests at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification. As a result, we may be required to liquidate otherwise attractive investments.
We have limits on ownership of our shares of beneficial interest.
For us to qualify as a REIT for federal income tax purposes, among other requirements, not more than 50% of the value of our shares of beneficial interest may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year, and such shares of beneficial interest must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (in each case, other than the first such year). Our Declaration of Trust includes certain restrictions regarding transfers of our shares of beneficial interest and ownership limits that are intended to assist us in satisfying these limitations, among other purposes. These restrictions and limits may not be adequate in all cases, however, to prevent the transfer of our shares of beneficial interest in violation of the ownership limitations. The ownership limits contained in our Declaration of Trust may have the effect of delaying, deferring, or preventing a change of control of us.
Actual or constructive ownership of our shares of beneficial interest in excess of the share ownership limits contained in our Declaration of Trust would cause the violative transfer or ownership to be null and void from the beginning and subject to purchase by us at a price equal to the fair market value of such shares (determined in accordance with the rules set forth in our Declaration of Trust). As a result, if a violative transfer were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex and groups of related individuals or entities may be deemed a single owner and consequently in violation of the share ownership limits.
Distribution requirements imposed by law limit our operating flexibility.
To maintain our status as a REIT for Federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for each calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to Federal corporate income tax on our undistributed net taxable income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year; (ii) 95% of our capital gain net income for that year; and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Code and to minimize exposure to Federal income and excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our income as well as required debt amortization payments and the capitalization of certain expenses could require us to borrow funds on a short-term basis to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT. The distribution requirements also severely limit our ability to retain earnings to acquire and improve properties or retire outstanding debt.
GENERAL RISK FACTORS
The economic environment may cause us to lose tenants and may impair our ability to borrow money to purchase properties, refinance existing debt or finance our current development projects.
Our operations and performance depend on general economic conditions, including consumer health. The U.S. economy has historically experienced financial downturns from time to time, including a decline in consumer spending, credit tightening and high unemployment.
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Certain sectors of the U. S. economy have experienced weakness over the past several years. General economic factors that are beyond our control, including, but not limited to, economic recessions, decreases in consumer confidence, reductions in consumer credit availability, increasing consumer debt levels, rising energy costs, higher tax rates, continued business layoffs, downsizing and industry slowdowns, and/or rising inflation, could have a negative impact on the business of our retail tenants. In turn, this could have a material adverse effect on our business because current or prospective tenants may, among other things, (i) have difficulty paying their rent obligations as they struggle to sell goods and services to consumers, (ii) be unwilling to enter into or renew leases with us on favorable terms or at all, (iii) seek to terminate their existing leases with us or request rental concessions on such leases, or (iv) be forced to curtail operations or declare bankruptcy. There can be no assurance that an economic recovery will occur or continue.
While we currently believe we have adequate sources of liquidity, there can be no assurance that, in the event of a financial downturn, we will be able to obtain secured or unsecured loan facilities to meet our needs, including to purchase additional properties, to complete current development projects, or to successfully refinance our properties as loans become due. To the extent that the availability of credit is limited, it would also adversely impact our notes receivable, as counterparties may not be able to obtain the financing required to repay the loans upon maturity.
Political and economic uncertainty could have an adverse effect on our business.
The year ended December 31, 2023 was impacted by significant volatility in global markets, largely driven by rising inflation and interest rates, slowing economic growth (including continued fallout from the COVID-19 Pandemic), geopolitical uncertainty (including as a result of the armed conflict between Russia and Ukraine, and recent escalation in the conflict between the State of Israel and Hamas, and potentially other countries in the Middle East and North Africa), supply-chain disruptions and instability in the banking sector following multiple bank failures. We cannot predict how current political and economic uncertainty will affect our critical tenants, joint venture partners, lenders, financial institutions, and general economic conditions, including the health and confidence of the consumer and the volatility of the stock market.
Political and economic uncertainty poses a risk to us in that it may cause consumers to postpone discretionary spending in response to tighter credit, reduced consumer confidence and other macroeconomic factors affecting consumer spending behavior, resulting in a downturn in the business of our tenants. In the event current political and economic uncertainty results in further financial turmoil affecting the banking system and financial markets generally or significant financial service institution failures, there could be new or incremental tightening in the credit markets, low liquidity, and extreme volatility in fixed income, credit, currency, and equity markets. Each of these factors could adversely affect our financial condition, cash flows and results of operations.
Inflation may adversely affect our financial condition, cash flows and results of operations.
Rising inflation could have a pronounced negative impact on our mortgage and debt interest, development and redevelopment costs, and general and administrative expenses, as such costs and expenses could increase at a rate higher than our rents.
In recent periods, central banks have responded to rapidly rising inflation by tightening monetary policies, which could create headwinds to economic growth. The rate hikes enacted by the Federal Reserve have had a significant impact on interest rate indexes, such as SOFR and the Prime Rate. See “Risks Related to Our Liquidity and Indebtedness”. We believe we manage our properties in a cost-conscious manner to minimize recurring operational expenses and utilize multi-year contracts to alleviate the impact of inflation on our business and our tenants. Most of our leases require tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. While these provisions are designed to partially mitigate the impact of inflation, current inflation levels are greater than the contractual rent increases we are able obtain from our tenant base. Increased inflation could also have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our average rents, and in some cases, our percentage rents, where applicable. In addition, renewals of leases or future leases may not be negotiated on current terms, in which event we may recover a smaller percentage of our operating expenses.
Competition may adversely affect our ability to purchase properties and to attract and retain tenants.
There are numerous commercial developers, real estate companies, financial institutions, and other investors with greater financial resources than we have that compete with us in seeking properties for acquisition and tenants who will lease space in our properties. Our competitors include other REITs, financial institutions, private funds, insurance companies, pension funds, private companies, family offices, sovereign wealth funds and individuals. This competition may result in a higher cost for properties than we wish to pay. In addition, retailers at our properties (both in our Core Portfolio and in the portfolios of the Funds) face increasing competition from outlet malls, discount shopping clubs, e-commerce, direct mail, and telemarketing, which could (i) reduce rents payable to us and (ii) reduce our ability to attract and retain tenants at our properties leading to increased vacancy rates at our properties.
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Changes in market conditions could have an adverse effect on our share price and our ability to access the public equity markets.
The market price of our Common Shares may fluctuate significantly in response to many factors, including:
Many of the factors listed above are beyond our control. Those factors may cause the market price of our Common Shares to decline significantly, regardless of our financial performance, condition, and prospects. We cannot provide any assurance that the market price of our Common Shares will not fall in the future, and it may be difficult for holders to sell such securities at prices they find attractive, or at all. A decline in our share price, as a result of this or other market factors, could unfavorably impact our ability to raise additional equity in the public markets.
Outages, computer viruses and similar events could disrupt our operations.
We rely on information technology networks and systems, some of which are owned and operated by third parties, to process, transmit and store electronic information. Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist or cyber-attacks and similar events. Despite the implementation of network security measures, our systems and those of third parties on which we rely may also be vulnerable to computer viruses and similar disruptions. If we or the third parties on whom we rely are unable to prevent such outages and breaches, our operations could be disrupted.
Increased Information Technology (“IT”) security threats and more sophisticated computer crime could pose a risk to our systems, networks, and services.
Cyber incidents can result from deliberate attacks or unintentional events. There have been an increased number of significant cyber-attacks targeted at the retail, insurance, financial and banking industries that include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as by causing denial-of-service attacks on websites. Cyber-attacks by third parties or insiders utilize techniques that range from highly sophisticated efforts to electronically circumvent network security or overwhelm a website to more traditional intelligence gathering, and social engineering aimed at obtaining information necessary to gain access.
Increased global IT security threats are more sophisticated and targeted computer crimes pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. The open nature of interconnected technologies may allow for a network or Web outage or a privacy breach that reveals sensitive data or transmission of harmful/malicious code to business partners and clients. Because the techniques used to obtain unauthorized access, disable, or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures.
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Cyber-attacks may result in substantial financial and reputational cost, including but are not limited to:
The control environment for cybersecurity is an ever-changing risk landscape across the entire attack surface which includes risks from on-premises, cloud infrastructure, software as a service and mobile applications. While we attempt to mitigate these risks by employing a number of cybersecurity measures, along with purchasing cybersecurity insurance coverage, our insurance coverage may be insufficient in the event of an incident and our systems, networks, and services remain potentially vulnerable to advanced threats.
Use of social media may adversely impact our reputation and business.
There has been a significant increase in the use of social media platforms, including weblogs, social media websites and other forms of Internet-based communications, which allow individuals access to a broad audience, including our significant business constituents. The availability of information through these platforms is virtually immediate as is its impact and may be posted at any time without affording us an opportunity to redress or correct it timely. This information may be adverse to our interests, may be inaccurate and may harm our reputation, brand image, goodwill, performance, prospects, or business. Furthermore, these platforms increase the risk of unauthorized disclosure of material non-public Company information.
Climate change and natural disasters could adversely affect our properties and business.
Some of our current or future properties could be subject to natural disasters and may be impacted by climate change. To the extent climate change causes adverse changes in weather patterns, rising sea levels or extreme temperatures, our properties in certain markets may be adversely affected. Specifically, properties located in coastal regions, including Florida, Virginia, Georgia, New York, and Massachusetts could be affected by any future increases in sea levels or in the frequency or severity of hurricanes and storms, whether caused by climate change or other factors. Additionally, we own properties in California, which in recent years has experienced intense drought and wildfires and has had earthquake activity.
Climate change could have a variety of direct or indirect adverse effects on our properties and business, including:
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Moreover, compliance with new laws or regulations related to climate change, including compliance with “green” building codes, may require us to make improvements to our existing properties or pay additional taxes and fees assessed on us or our properties. Although we strive to identify, analyze, and respond to the risk and opportunities that climate change presents, at this time there can be no assurance that climate change will not have an adverse effect on us.
Future terrorist attacks or civil unrest could harm the demand for, and the value of, our properties.
Over the past several years, a number of highly publicized terrorist acts and shootings have occurred at domestic and international retail properties. Future terrorist attacks, civil unrest and other acts of terrorism or war could harm the demand for, and the value of, our properties. Terrorist attacks could directly impact the value of our properties through damage, destruction, loss or increased security costs, and the availability of insurance for such acts may be limited or may be subject to substantial cost increases. To the extent that our tenants are impacted by future attacks, their ability to continue to honor obligations under their existing leases could be adversely affected. A decrease in retail demand could make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates. These acts might erode business and consumer confidence and spending and might result in increased volatility in national and international financial markets and economies. Any one of these events might decrease demand for real estate, decrease or delay the occupancy of our properties, and limit our access to capital or increase our cost of raising capital.
Increased scrutiny by and changing expectations from investors, tenants, employees, and other stakeholders regarding our ESG practices and reporting could cause us to incur additional costs and adversely impact our reputation, tenant and employee acquisition and retention, and access to capital.
Companies across all industries are facing increasing scrutiny related to their ESG practices and disclosure. Investors, tenants, employees, and other stakeholders have begun to focus increasingly on ESG practices and to place heightened importance on the environmental and social cost of their investments, business decisions and consumer choices. For example, an increasing number of investment funds focus on positive ESG practices and sustainability scores when making an investment decision. Additionally, certain institutional investors have demonstrated increased activism with respect to their existing investments, including by urging companies to take certain actions in areas of perceived ESG significance.
Investors, particularly institutional investors, use or may use third-party benchmarks and scores to assess our ESG practices against our peers and if we are perceived as lagging, such investors may decide to not invest in our Common Shares or to divest from their current investment, and we may face reputational challenges. Alternatively, such investors may decide to actively engage with us to improve ESG disclosure or performance, and may also make voting decisions on this basis. Given increased investor focus and demand, public disclosure regarding ESG practices is becoming more broadly expected. Any disclosure we make may include our policies and practices on a variety of ESG matters, including corporate governance, environmental compliance, human capital management, and workforce inclusion and diversity. It is possible that stakeholders may not be satisfied with our ESG practices, reporting and goals, or with our speed of adoption. If our ESG practices and disclosures do not meet investor, tenant, employee or other stakeholder expectations, which continue to evolve, our reputation and tenant and employee retention, and access to capital may be negatively impacted.
In 2022, the SEC proposed extensive rules aimed at enhancing and standardizing climate-related disclosures in an effort to foster greater consistency, comparability and reliability of climate-related information among public issuers. The proposal, if adopted, would require public issuers to include prescribed climate-related information in their registration statements and annual reports, including information regarding greenhouse gas emissions and climate-related risks and opportunities and related financial impacts, governance and strategy. Additionally, we may become subject to new compliance requirements and/or new costs or taxes associated with natural resource or energy usage and related emissions (such as a “carbon tax”), which could increase our operating costs.
We could incur additional costs relating to implementing, monitoring and reporting various ESG practices and initiatives, as well as complying with applicable law, which could place a strain on our personnel, systems and resources. Our failure, or perceived failure, to meet the goals and objectives we set in any ESG disclosure within the timelines announced or at all, or the expectations of our various stakeholders could negatively impact our reputation, tenant and employee retention, and access to capital.
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ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C. CYBERSECURITY.
Governance
Cybersecurity is an integral part of the Board’s risk analysis and discussions with management. At least annually, the full Board is updated on the Company’s cybersecurity risks and risk mitigation strategy by our Vice President of Information Technology, who is responsible for management of our Information Technology program. The Board also receives ad hoc updates, as needed, about material changes to the Company’s cybersecurity program and/or the cybersecurity landscape, including briefings on major legislative and regulatory developments, from our Vice President of Information Technology and representatives from Legal and/or Risk Management, as applicable.
Our Vice President of Information Technology and Director of Risk Management regularly evaluate the Company’s cybersecurity risk profile and lead the development of strategies to mitigate risks and address cybersecurity issues that may arise, in consultation with members of our senior management team. Our Vice President of Information Technology and Director of Risk Management each have approximately 25 years of experience in their respective fields, and our Vice President of Information Technology holds certifications in cybersecurity from accredited information technology certification providers.
We have formal policies and procedures that address cybersecurity incident response and disaster recovery from interference with our critical applications. Our Cybersecurity Incident Response Plan provides a documented framework for responding to cybersecurity incidents in coordination across multiple departments. In the event of such an incident, our Cybersecurity Incident Response Team (“CIRT”), which is comprised of our Vice President of Information Technology, Director of Risk Management and representatives from Risk Management, Legal and Financial Reporting, would respond to such incident in accordance with our Cybersecurity Incident Response Plan. Any cybersecurity incident that meets certain criteria will be communicated by the CIRT to senior management and the Board in a timely manner, and will be evaluated by our Executive Management Team, comprised of certain executives, to assess the impact of the incident on the Company, considering qualitative and quantitative factors. In conducting this assessment and responding to an incident, the CIRT and Executive Management Team may utilize the services of third-party consultants.
Cybersecurity user awareness training is mandatory for all new hires and for existing employees on an annual basis to help protect our employees and the Company against cybersecurity threats. This annual training is customized to address specific cybersecurity challenges and scenarios that we may face within the real estate investment industry. Novel cybersecurity threats to the Company that are identified by our Information Technology team are communicated to all employees by email, as needed, in an effort to promote awareness and protect the Company from cyber attacks.
Risk Management and Strategy
We maintain an Enterprise Risk Management (“ERM”) program to identify and respond to the most critical risks to our business, including cybersecurity risks. Risks and vulnerabilities from our increased reliance on information technology systems are assessed at least annually as part of our ERM program. In response to such assessments, controls are embedded into our processes and technology by our Vice President of Information Technology and Director of Risk Management to seek to mitigate risks to our systems and processes from cybersecurity incidents. We continuously evaluate if we have adequate controls in place utilizing a risk-based approach that aligns with the National Institute of Standards and Technology Cybersecurity Framework.
Our daily operations are monitored by a dedicated information technology team. We conduct monitoring of our computer networks, and have implemented systems and processes intended to secure our information technology systems and prevent unauthorized access to or loss of sensitive data, including through the use of encryption and authentication technologies. We assess the adequacy of our cybersecurity measures through annual penetration testing of our computer networks by external consultants, and we have performed tabletop simulations and drills at both a technical and management level around scenarios involving the loss of critical information and technology systems.
We maintain a risk-based approach to evaluating and overseeing cybersecurity risks presented by our third-party vendors. Third-party vendors that meet certain criteria, such as owning and operating any information technology networks and systems on which the Company relies, are evaluated to assess their performance across several domains, including data security and operations management. We seek to maintain effective communication with our third-party vendors to facilitate timely notification of cybersecurity incidents that might impact the Company.
Although risks from cybersecurity threats have to date not materially affected, and we do not believe they are reasonably likely to materially affect, us, our business strategy, results of operations or financial condition, like other companies in our industry, we could, from time to time, experience threats and security incidents related to our and our third-party vendors’ information systems. For more information, please see Item 1A. Risk Factors - Increased Information Technology (“IT”) security threats and more sophisticated computer crime could pose a risk to our systems, networks, and services.
30
ITEM 2. PROPERTIES.
Retail Properties
The discussion and tables in this Item 2. include wholly-owned and partially-owned properties held through our Core Portfolio and our Funds. We define our Core Portfolio as those properties either 100% owned by, or partially owned through joint venture interests by the Operating Partnership or subsidiaries thereof, not including those properties owned through our Funds.
As of December 31, 2023, our Core Portfolio consisted of 139 operating properties totaling approximately 5.4 million square feet (or 5.0 million at our pro-rata share) of gross leasable area (“GLA”) excluding two properties in development and eight properties under redevelopment. The Core Portfolio properties are located in 12 states and the District of Columbia and primarily consist of street retail and dense suburban shopping centers. These properties are diverse in size, ranging from approximately 1,000 to 800,000 square feet and as of December 31, 2023, were 92.8% occupied and 94.8% leased (or 93.0% occupied and 95.0% leased at our pro-rata share), excluding properties under development or redevelopment.
As of December 31, 2023, we owned and operated 50 properties totaling approximately 9.0 million square feet in total (or 2.0 million square feet at our pro-rata share) of GLA in our Funds, excluding one property under development and one property under redevelopment. In addition to shopping centers, the Funds have invested in mixed-use properties, which generally include retail activities. The Fund properties are located in 19 states and the District of Columbia and, as of December 31, 2023, were 91.4% occupied and 93.3% leased (or 89.6% occupied and 92.4% leased at our pro-rata share), excluding the properties under development.
Within our Core Portfolio and Funds, we had more than 1,200 retail leases as of December 31, 2023. A significant portion of our rental revenues are from national retailers and consist of rents received under long-term leases. These leases generally provide for the monthly payment of fixed minimum rent and the tenants' pro-rata share of the real estate taxes, insurance, utilities, and common area maintenance of the shopping centers. An insignificant portion of our leases also provide for the payment of rent based on a percentage of a tenant's gross sales in excess of a stipulated annual amount, either in addition to, or in place of, minimum rents, which we refer to as percentage rents. Minimum rents and expense reimbursements accounted for substantially all of our total revenues for the year ended December 31, 2023.
Five of our Core Portfolio properties and four of our Fund properties are subject to long-term ground leases in which a third party owns and has leased the underlying land to us. We pay rent for the use of the land and are responsible for all costs and expenses associated with the building and improvements at all of these locations.
No individual property or tenant contributed in excess of 10% of our total revenues for the years ended December 31, 2023, 2022 or 2021. See Note 7 for information on the mortgage debt pertaining to our properties.
31
The following table sets forth more specific information with respect to each of our Core operating properties at December 31, 2023:
Property (a) |
|
Key Tenants |
|
Year |
|
Acadia's |
|
|
Gross Leasable |
|
|
In Place |
|
|
Leased |
|
|
Annualized Base |
|
|
ABR/ Per |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
STREET AND URBAN RETAIL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Chicago Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Rush and Walton Streets |
|
Lululemon, |
|
2011 |
|
|
100.0 |
% |
|
|
40,384 |
|
|
|
78.3 |
% |
|
|
78.3 |
% |
|
$ |
6,608,610 |
|
|
$ |
208.90 |
|
Clark Street and W. Diversey |
|
Starbucks, |
|
2011 |
|
|
100.0 |
% |
|
|
53,099 |
|
|
|
78.2 |
% |
|
|
79.9 |
% |
|
|
1,798,496 |
|
|
|
43.29 |
|
Halsted and Armitage |
|
Serena and Lily, |
|
2011 |
|
|
100.0 |
% |
|
|
53,220 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
2,766,615 |
|
|
|
51.98 |
|
North Lincoln Park Chicago |
|
Champion, |
|
2011 |
|
|
100.0 |
% |
|
|
49,921 |
|
|
|
67.9 |
% |
|
|
67.9 |
% |
|
|
1,132,561 |
|
|
|
33.39 |
|
State and Washington |
|
Nordstrom Rack, |
|
2016 |
|
|
100.0 |
% |
|
|
65,401 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
2,749,189 |
|
|
|
42.04 |
|
151 N. State Street |
|
Walgreens |
|
2016 |
|
|
100.0 |
% |
|
|
27,385 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,573,000 |
|
|
|
57.44 |
|
North and Kingsbury |
|
Old Navy, |
|
2016 |
|
|
100.0 |
% |
|
|
41,791 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,931,746 |
|
|
|
46.22 |
|
Concord and Milwaukee |
|
— |
|
2016 |
|
|
100.0 |
% |
|
|
13,147 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
469,100 |
|
|
|
35.68 |
|
California and Armitage |
|
— |
|
2016 |
|
|
100.0 |
% |
|
|
18,275 |
|
|
|
70.5 |
% |
|
|
70.5 |
% |
|
|
696,715 |
|
|
|
54.04 |
|
Roosevelt Galleria |
|
Petco, Vitamin |
|
2015 |
|
|
100.0 |
% |
|
|
37,995 |
|
|
|
89.7 |
% |
|
|
89.7 |
% |
|
|
880,649 |
|
|
|
25.84 |
|
Sullivan Center |
|
Target |
|
2016 |
|
|
100.0 |
% |
|
|
176,181 |
|
|
|
78.9 |
% |
|
|
82.2 |
% |
|
|
5,251,599 |
|
|
|
37.79 |
|
|
|
|
|
|
|
|
|
|
|
576,799 |
|
|
|
85.6 |
% |
|
|
86.8 |
% |
|
|
25,858,278 |
|
|
|
52.35 |
|
|
New York Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Soho Collection |
|
Zimmermann, Faherty, Watches of |
|
2011 |
|
|
100.0 |
% |
|
|
36,094 |
|
|
|
74.4 |
% |
|
|
100.0 |
% |
|
|
9,974,725 |
|
|
|
371.55 |
|
5-7 East 17th Street |
|
— |
|
2008 |
|
|
100.0 |
% |
|
|
8,658 |
|
|
|
0.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
200 West 54th Street |
|
— |
|
2007 |
|
|
100.0 |
% |
|
|
5,862 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,603,613 |
|
|
|
273.56 |
|
61 Main Street |
|
Splendid |
|
2014 |
|
|
100.0 |
% |
|
|
3,470 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
322,294 |
|
|
|
92.88 |
|
181 Main Street |
|
TD Bank |
|
2012 |
|
|
100.0 |
% |
|
|
11,514 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,085,445 |
|
|
|
94.27 |
|
4401 White Plains Road |
|
Walgreens |
|
2011 |
|
|
100.0 |
% |
|
|
12,964 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
625,000 |
|
|
|
48.21 |
|
Bartow Avenue |
|
— |
|
2005 |
|
|
100.0 |
% |
|
|
14,824 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
481,687 |
|
|
|
32.49 |
|
239 Greenwich Avenue |
|
Watches of |
|
1998 |
|
|
75.0 |
% |
|
|
16,621 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,847,097 |
|
|
|
111.13 |
|
252-256 Greenwich Avenue |
|
Veronica Beard, |
|
2014 |
|
|
100.0 |
% |
|
|
7,986 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,037,059 |
|
|
|
129.86 |
|
2914 Third Avenue |
|
Planet Fitness |
|
2006 |
|
|
100.0 |
% |
|
|
40,603 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,107,063 |
|
|
|
27.27 |
|
868 Broadway |
|
Dr. Martens |
|
2013 |
|
|
100.0 |
% |
|
|
2,031 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
859,826 |
|
|
|
423.35 |
|
313-315 Bowery (c) |
|
John Varvatos |
|
2013 |
|
|
100.0 |
% |
|
|
6,600 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
527,076 |
|
|
|
79.86 |
|
120 West Broadway |
|
Citizens Bank, |
|
2013 |
|
|
100.0 |
% |
|
|
13,838 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
2,438,595 |
|
|
|
176.22 |
|
2520 Flatbush Avenue |
|
Bob's Disc. |
|
2014 |
|
|
100.0 |
% |
|
|
29,114 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,285,105 |
|
|
|
44.14 |
|
Williamsburg Collection (d) |
|
Sephora, SweetGreen, |
|
2022 |
|
|
100.0 |
% |
|
|
50,842 |
|
|
|
95.3 |
% |
|
|
95.3 |
% |
|
|
5,264,882 |
|
|
|
108.70 |
|
991 Madison Avenue (e) |
|
Vera Wang, |
|
2016 |
|
|
100.0 |
% |
|
|
7,512 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
3,572,528 |
|
|
|
475.58 |
|
Shops at Grand |
|
Stop & Shop (Ahold), Starbucks |
|
2014 |
|
|
100.0 |
% |
|
|
99,837 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
3,553,548 |
|
|
|
35.59 |
|
32
Property (a) |
|
Key Tenants |
|
Year |
|
Acadia's |
|
|
Gross Leasable |
|
|
In Place |
|
|
Leased |
|
|
Annualized Base |
|
|
ABR/ Per |
|
||||||
Gotham Plaza (f) |
|
Bank of America, |
|
2016 |
|
|
49.0 |
% |
|
|
25,922 |
|
|
|
91.6 |
% |
|
|
91.6 |
% |
|
|
2,016,748 |
|
|
|
84.98 |
|
|
|
|
|
|
|
|
|
|
|
394,292 |
|
|
|
94.3 |
% |
|
|
98.8 |
% |
|
|
37,602,290 |
|
|
|
101.14 |
|
|
Los Angeles Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
8833 Beverly Blvd |
|
Luxury Living |
|
2022 |
|
|
97.0 |
% |
|
|
9,757 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,311,046 |
|
|
|
134.37 |
|
Melrose Place Collection |
|
The Row, Chloe, |
|
2019 |
|
|
100.0 |
% |
|
|
14,000 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
3,083,482 |
|
|
|
220.25 |
|
|
|
|
|
|
|
|
|
|
|
23,757 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
4,394,528 |
|
|
|
184.98 |
|
|
District of Columbia Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
1739-53 & 1801-03 |
|
TD Bank |
|
2012 |
|
|
100.0 |
% |
|
|
20,669 |
|
|
|
60.9 |
% |
|
|
60.9 |
% |
|
|
780,099 |
|
|
|
61.95 |
|
14th Street Collection (3 properties) |
|
Verizon |
|
2021 |
|
|
100.0 |
% |
|
|
19,461 |
|
|
|
62.3 |
% |
|
|
62.3 |
% |
|
|
1,037,040 |
|
|
|
85.54 |
|
Rhode Island Place |
|
Ross Dress |
|
2012 |
|
|
100.0 |
% |
|
|
57,667 |
|
|
|
93.5 |
% |
|
|
93.5 |
% |
|
|
1,883,023 |
|
|
|
34.92 |
|
M Street and Wisconsin Corridor |
|
Lululemon, |
|
2011 |
|
|
24.4 |
% |
|
|
254,942 |
|
|
|
91.3 |
% |
|
|
94.1 |
% |
|
|
16,719,810 |
|
|
|
71.83 |
|
|
|
|
|
|
|
|
|
|
|
352,739 |
|
|
|
88.3 |
% |
|
|
90.3 |
% |
|
|
20,419,972 |
|
|
|
65.58 |
|
|
Boston Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
165 Newbury Street |
|
Starbucks |
|
2016 |
|
|
100.0 |
% |
|
|
1,050 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
312,576 |
|
|
|
297.69 |
|
|
|
|
|
|
|
|
|
|
|
1,050 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
312,576 |
|
|
|
297.69 |
|
|
Dallas Metro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Henderson Avenue Portfolio (14 properties) |
|
Sprouts Market, |
|
2022 |
|
|
100.0 |
% |
|
|
121,386 |
|
|
|
89.2 |
% |
|
|
94.4 |
% |
|
|
4,444,837 |
|
|
|
41.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Street and Urban Retail |
|
|
|
|
|
|
|
|
|
1,470,023 |
|
|
|
89.1 |
% |
|
|
91.7 |
% |
|
$ |
93,032,480 |
|
|
$ |
71.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Acadia Share Total Street and Urban Retail |
|
|
|
|
|
|
|
|
|
1,266,059 |
|
|
|
88.9 |
% |
|
|
91.4 |
% |
|
$ |
80,170,479 |
|
|
$ |
71.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
SUBURBAN PROPERTIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New Jersey |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Elmwood Park Shopping Center |
|
Walgreens, Lidl, |
|
1998 |
|
|
100.0 |
% |
|
|
143,969 |
|
|
|
96.9 |
% |
|
|
96.9 |
% |
|
$ |
3,670,835 |
|
|
$ |
26.32 |
|
Marketplace of Absecon |
|
Walgreens, |
|
1998 |
|
|
100.0 |
% |
|
|
104,556 |
|
|
|
89.1 |
% |
|
|
89.1 |
% |
|
|
1,573,106 |
|
|
|
16.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Village Commons |
|
Citibank, |
|
1998 |
|
|
100.0 |
% |
|
|
87,128 |
|
|
|
91.1 |
% |
|
|
93.1 |
% |
|
|
2,736,099 |
|
|
|
34.48 |
|
Branch Plaza (e) |
|
LA Fitness, |
|
1998 |
|
|
100.0 |
% |
|
|
123,345 |
|
|
|
98.8 |
% |
|
|
98.8 |
% |
|
|
3,551,081 |
|
|
|
29.13 |
|
Amboy Center (e) |
|
Stop & Shop (Ahold) |
|
2005 |
|
|
100.0 |
% |
|
|
63,372 |
|
|
|
92.1 |
% |
|
|
92.1 |
% |
|
|
2,047,298 |
|
|
|
35.07 |
|
Crossroads Shopping Center (f) |
|
HomeGoods, |
|
1998 |
|
|
49.0 |
% |
|
|
311,528 |
|
|
|
87.5 |
% |
|
|
90.7 |
% |
|
|
8,567,491 |
|
|
|
31.41 |
|
New Loudon Center |
|
Price Chopper, |
|
1993 |
|
|
100.0 |
% |
|
|
258,701 |
|
|
|
95.2 |
% |
|
|
95.2 |
% |
|
|
2,251,770 |
|
|
|
9.15 |
|
28 Jericho Turnpike |
|
Kohl's |
|
2012 |
|
|
100.0 |
% |
|
|
96,363 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,996,500 |
|
|
|
20.72 |
|
Bedford Green |
|
Shop Rite, CVS |
|
2014 |
|
|
100.0 |
% |
|
|
90,589 |
|
|
|
73.9 |
% |
|
|
73.9 |
% |
|
|
2,280,620 |
|
|
|
34.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Connecticut |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Town Line Plaza (h) |
|
Wal-Mart, |
|
1998 |
|
|
100.0 |
% |
|
|
206,346 |
|
|
|
97.2 |
% |
|
|
98.5 |
% |
|
|
1,811,142 |
|
|
|
17.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Massachusetts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Methuen Shopping Center |
|
Wal-Mart, |
|
1998 |
|
|
100.0 |
% |
|
|
130,021 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,467,751 |
|
|
|
11.29 |
|
33
Property (a) |
|
Key Tenants |
|
Year |
|
Acadia's |
|
|
Gross Leasable |
|
|
In Place |
|
|
Leased |
|
|
Annualized Base |
|
|
ABR/ Per |
|
||||||
Crescent Plaza |
|
Home Depot, |
|
1993 |
|
|
100.0 |
% |
|
|
218,002 |
|
|
|
98.9 |
% |
|
|
98.9 |
% |
|
|
2,111,087 |
|
|
|
9.80 |
|
201 Needham Street |
|
Michael's |
|
2014 |
|
|
100.0 |
% |
|
|
20,409 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
711,662 |
|
|
|
34.87 |
|
163 Highland Avenue |
|
Staples, Petco |
|
2015 |
|
|
100.0 |
% |
|
|
40,505 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,490,575 |
|
|
|
36.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Vermont |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
The Gateway Shopping Center |
|
Shaw's (Supervalu), Starbucks |
|
1999 |
|
|
100.0 |
% |
|
|
102,854 |
|
|
|
96.7 |
% |
|
|
96.7 |
% |
|
|
2,190,988 |
|
|
|
22.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Illinois |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hobson West Plaza |
|
Garden Fresh |
|
1998 |
|
|
100.0 |
% |
|
|
98,962 |
|
|
|
97.7 |
% |
|
|
97.7 |
% |
|
|
1,426,291 |
|
|
|
14.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indiana |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Merrillville Plaza |
|
Dollar Tree, |
|
1998 |
|
|
100.0 |
% |
|
|
235,926 |
|
|
|
88.9 |
% |
|
|
91.1 |
% |
|
|
2,950,134 |
|
|
|
14.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Michigan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Bloomfield Town Square |
|
HomeGoods, |
|
1998 |
|
|
100.0 |
% |
|
|
234,951 |
|
|
|
99.4 |
% |
|
|
99.4 |
% |
|
|
4,305,998 |
|
|
|
18.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Delaware |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Town Center and Other |
|
Lowes, |
|
2003 |
|
|
100.0 |
% |
|
|
704,421 |
|
|
|
89.5 |
% |
|
|
96.7 |
% |
|
|
10,692,084 |
|
|
|
16.96 |
|
Market Square Shopping Center |
|
Trader Joe's, |
|
2003 |
|
|
100.0 |
% |
|
|
102,047 |
|
|
|
98.1 |
% |
|
|
98.1 |
% |
|
|
3,288,210 |
|
|
|
32.83 |
|
Naamans Road (e) |
|
Jared Jewelers, |
|
2006 |
|
|
100.0 |
% |
|
|
19,850 |
|
|
|
63.9 |
% |
|
|
63.9 |
% |
|
|
705,101 |
|
|
|
55.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pennsylvania |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Mark Plaza (e) |
|
Kmart |
|
1993 |
|
|
100.0 |
% |
|
|
106,856 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
246,274 |
|
|
|
2.30 |
|
Plaza 422 |
|
Home Depot |
|
1993 |
|
|
100.0 |
% |
|
|
156,279 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
956,954 |
|
|
|
6.12 |
|
Chestnut Hill |
|
— |
|
2006 |
|
|
100.0 |
% |
|
|
36,492 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
986,067 |
|
|
|
27.02 |
|
Abington Towne Center (i) |
|
Target, TJ Maxx |
|
1998 |
|
|
100.0 |
% |
|
|
216,871 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,312,228 |
|
|
|
22.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Suburban Properties |
|
|
|
|
|
|
|
|
|
3,910,343 |
|
|
|
94.1 |
% |
|
|
95.9 |
% |
|
$ |
65,327,344 |
|
|
$ |
19.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Acadia Share Total Suburban Properties |
|
|
|
|
|
|
|
|
|
3,751,464 |
|
|
|
94.4 |
% |
|
|
96.2 |
% |
|
$ |
60,957,924 |
|
|
$ |
18.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Core Properties |
|
|
|
|
|
|
|
|
|
5,380,366 |
|
|
|
92.8 |
% |
|
|
94.8 |
% |
|
$ |
158,359,825 |
|
|
$ |
33.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Acadia Share Total Core Properties |
|
|
|
|
|
|
|
|
|
5,017,522 |
|
|
|
93.0 |
% |
|
|
95.0 |
% |
|
$ |
141,128,403 |
|
|
$ |
31.99 |
|
|
34
The following table sets forth more specific information with respect to each of our Fund properties at December 31, 2023:
Property (a) |
|
Key Tenants |
|
Year |
|
Acadia's |
|
|
Gross Leasable |
|
|
In Place |
|
|
Leased |
|
|
Annualized Base |
|
|
ABR/Per |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fund II Portfolio Detail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
City Point (b)© |
|
Primark, Target, |
|
2007 |
|
|
58.1 |
% |
|
|
535,817 |
|
|
|
74.0 |
% |
|
|
83.9 |
% |
|
$ |
16,782,168 |
|
|
$ |
42.31 |
|
Total - Fund II |
|
|
|
|
|
|
|
|
|
535,817 |
|
|
|
74.0 |
% |
|
|
83.9 |
% |
|
$ |
16,782,168 |
|
|
$ |
42.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fund III Portfolio Detail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
640 Broadway |
|
─ |
|
2012 |
|
|
24.5 |
% |
|
|
4,637 |
|
|
|
91.6 |
% |
|
|
91.6 |
% |
|
$ |
1,113,528 |
|
|
$ |
262.19 |
|
Total - Fund III |
|
|
|
|
|
|
|
|
|
4,637 |
|
|
|
91.6 |
% |
|
|
91.6 |
% |
|
$ |
1,113,528 |
|
|
$ |
262.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fund IV Portfolio Detail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
801 Madison Avenue |
|
─ |
|
2015 |
|
|
23.1 |
% |
|
|
2,522 |
|
|
|
— |
% |
|
|
— |
% |
|
$ |
— |
|
|
$ |
— |
|
210 Bowery |
|
─ |
|
2012 |
|
|
23.1 |
% |
|
|
2,538 |
|
|
|
— |
% |
|
|
— |
% |
|
|
— |
|
|
|
— |
|
27 East 61st Street |
|
─ |
|
2014 |
|
|
23.1 |
% |
|
|
4,177 |
|
|
|
— |
% |
|
|
— |
% |
|
|
— |
|
|
|
— |
|
17 East 71st Street |
|
The Row |
|
2014 |
|
|
23.1 |
% |
|
|
8,432 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
2,055,281 |
|
|
|
243.75 |
|
1035 Third Avenue (d) |
|
─ |
|
2015 |
|
|
23.1 |
% |
|
|
7,634 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,203,962 |
|
|
|
157.71 |
|
New Jersey |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Paramus Plaza (e) |
|
Marshalls, Hobby Lobby, Skechers |
|
2013 |
|
|
11.6 |
% |
|
|
153,494 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
3,262,289 |
|
|
|
21.25 |
|
Massachusetts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Restaurants at Fort Point |
|
─ |
|
2016 |
|
|
23.1 |
% |
|
|
15,711 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1,072,232 |
|
|
|
68.25 |
|
Rhode Island |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
650 Bald Hill Road (e) |
|
Dick's Sporting Goods, Burlington |
|
2015 |
|
|
20.8 |
% |
|
|
160,448 |
|
|
|
85.3 |
% |
|
|
85.3 |
% |
|
|
2,061,926 |
|
|
|
15.06 |
|
Delaware |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Eden Square (e) |
|
Giant Food, LA Fitness |
|
2014 |
|
|
20.8 |
% |
|
|
229,171 |
|
|
|
91.1 |
% |
|
|
96.5 |
% |
|
|
3,357,465 |
|
|
|
16.09 |
|
Georgia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Broughton Street Portfolio |
|
H&M, Lululemon, |
|
2014 |
|
|
23.1 |
% |
|
|
94,713 |
|
|
|
89.1 |
% |
|
|
92.6 |
% |
|
|
3,090,918 |
|
|
|
36.61 |
|
California |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Union and Fillmore |
|
Eileen Fisher, Bonobos |
|
2015 |
|
|
20.8 |
% |
|
|
7,183 |
|
|
|
77.5 |
% |
|
|
77.5 |
% |
|
|
654,290 |
|
|
|
117.57 |
|
Total - Fund IV |
|
|
|
|
|
|
|
|
|
686,023 |
|
|
|
90.5 |
% |
|
|
92.8 |
% |
|
$ |
16,758,363 |
|
|
$ |
26.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fund V Portfolio Detail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New Mexico |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Plaza Santa Fe (c) |
|
TJ Maxx, Best Buy, |
|
2017 |
|
|
20.1 |
% |
|
|
224,152 |
|
|
|
95.1 |
% |
|
|
95.7 |
% |
|
$ |
4,058,309 |
|
|
$ |
19.03 |
|
Texas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Wood Ridge Plaza (e) |
|
Kirkland's, Office Depot |
|
2022 |
|
|
18.1 |
% |
|
|
213,120 |
|
|
|
90.1 |
% |
|
|
90.1 |
% |
|
|
4,377,879 |
|
|
|
22.80 |
|
La Frontera Village (e) |
|
Kohl's, Hobby Lobby, Burlington, Marshalls |
|
2022 |
|
|
18.1 |
% |
|
|
534,430 |
|
|
|
88.5 |
% |
|
|
89.0 |
% |
|
|
6,609,207 |
|
|
|
13.98 |
|
Michigan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New Towne Center |
|
Kohl's, Jo-Ann's, DSW |
|
2017 |
|
|
20.1 |
% |
|
|
190,530 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
2,363,758 |
|
|
|
12.41 |
|
Fairlane Green |
|
TJ Maxx, Michaels, Burlington |
|
2017 |
|
|
20.1 |
% |
|
|
270,187 |
|
|
|
98.7 |
% |
|
|
100.0 |
% |
|
|
5,194,785 |
|
|
|
19.49 |
|
Maryland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Frederick County (2 properties) (e) |
|
Kohl's, Best Buy, |
|
2019 |
|
|
18.1 |
% |
|
|
530,816 |
|
|
|
93.7 |
% |
|
|
94.8 |
% |
|
|
7,696,127 |
|
|
|
15.47 |
|
Connecticut |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tri-City Plaza (e) |
|
TJ Maxx, HomeGoods, ShopRite |
|
2019 |
|
|
18.1 |
% |
|
|
302,738 |
|
|
|
90.0 |
% |
|
|
92.0 |
% |
|
|
3,913,671 |
|
|
|
14.36 |
|
New Jersey |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Midstate |
|
ShopRite, Best Buy, DSW, PetSmart |
|
2021 |
|
|
20.1 |
% |
|
|
388,616 |
|
|
|
86.5 |
% |
|
|
94.2 |
% |
|
|
6,456,914 |
|
|
|
19.21 |
|
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Shoppes at South Hills (e) |
|
ShopRite, At Home, |
|
2022 |
|
|
18.1 |
% |
|
|
512,218 |
|
|
|
67.0 |
% |
|
|
74.3 |
% |
|
|
3,990,900 |
|
|
|
11.64 |
|
Mohawk Commons (e) |
|
Lowe's, Target |
|
2023 |
|
|
18.1 |
% |
|
|
399,338 |
|
|
|
98.3 |
% |
|
|
98.3 |
% |
|
|
5,550,595 |
|
|
|
14.15 |
|
Pennsylvania |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
35
Property (a) |
|
Key Tenants |
|
Year |
|
Acadia's |
|
|
Gross Leasable |
|
|
In Place |
|
|
Leased |
|
|
Annualized Base |
|
|
ABR/Per |
|
||||||
Monroe Marketplace |
|
Kohl's, Dick's |
|
2021 |
|
|
20.1 |
% |
|
|
370,533 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
4,250,625 |
|
|
|
11.47 |
|
Rhode Island |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lincoln Commons |
|
Stop and Shop, Marshalls, |
|
2019 |
|
|
20.1 |
% |
|
|
461,995 |
|
|
|
88.0 |
% |
|
|
90.8 |
% |
|
|
5,570,789 |
|
|
|
13.70 |
|
Vermont |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Maple Tree Place (f) |
|
Shaw's, Dick's Sporting Goods, |
|
2023 |
|
|
20.1 |
% |
|
|
394,368 |
|
|
|
84.6 |
% |
|
|
84.6 |
% |
|
|
6,567,224 |
|
|
|
19.68 |
|
Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Landstown Commons |
|
Best Buy, Burlington, |
|
2019 |
|
|
20.1 |
% |
|
|
380,199 |
|
|
|
96.8 |
% |
|
|
97.2 |
% |
|
|
7,528,566 |
|
|
|
20.46 |
|
Florida |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Palm Coast Landing |
|
TJ Maxx, PetSmart, |
|
2019 |
|
|
20.1 |
% |
|
|
171,799 |
|
|
|
96.9 |
% |
|
|
96.9 |
% |
|
|
3,495,105 |
|
|
|
21.00 |
|
Cypress Creek (c) |
|
Hobby Lobby, Total Wine, HomeGoods |
|
2023 |
|
|
20.1 |
% |
|
|
239,656 |
|
|
|
98.5 |
% |
|
|
98.5 |
% |
|
|
4,919,868 |
|
|
|
20.83 |
|
North Carolina |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hickory Ridge |
|
Kohl's, Best Buy, Dick's Sporting Goods |
|
2017 |
|
|
20.1 |
% |
|
|
380,565 |
|
|
|
99.3 |
% |
|
|
99.3 |
% |
|
|
4,742,374 |
|
|
|
12.55 |
|
Alabama |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trussville Promenade |
|
Wal-Mart, Regal Cinemas |
|
2018 |
|
|
20.1 |
% |
|
|
463,681 |
|
|
|
95.8 |
% |
|
|
96.8 |
% |
|
|
4,279,904 |
|
|
|
9.63 |
|
Georgia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Canton Marketplace |
|
Dick's Sporting Goods, |
|
2021 |
|
|
20.1 |
% |
|
|
351,988 |
|
|
|
96.1 |
% |
|
|
96.6 |
% |
|
|
5,971,975 |
|
|
|
17.65 |
|
Hiram Pavilion |
|
Kohl's, HomeGoods |
|
2018 |
|
|
20.1 |
% |
|
|
362,675 |
|
|
|
99.4 |
% |
|
|
100.0 |
% |
|
|
4,666,300 |
|
|
|
12.94 |
|
California |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Elk Grove Commons |
|
Kohl's, HomeGoods |
|
2018 |
|
|
20.1 |
% |
|
|
242,078 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
5,312,115 |
|
|
|
21.94 |
|
Utah |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Family Center at Riverdale (e) |
|
Target, Home Goods, |
|
2019 |
|
|
18.0 |
% |
|
|
372,475 |
|
|
|
97.9 |
% |
|
|
97.9 |
% |
|
|
4,010,821 |
|
|
|
11.00 |
|
Total - Fund V |
|
|
|
|
|
|
|
|
|
7,758,157 |
|
|
|
92.6 |
% |
|
|
94.0 |
% |
|
$ |
111,527,808 |
|
|
$ |
15.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
TOTAL FUND PROPERTIES |
|
|
|
|
|
|
|
|
|
8,984,634 |
|
|
|
91.4 |
% |
|
|
93.3 |
% |
|
$ |
146,181,867 |
|
|
$ |
17.81 |
|
|
Acadia Share of Total Fund Properties |
|
|
|
|
|
|
|
|
|
1,945,468 |
|
|
|
89.6 |
% |
|
|
92.4 |
% |
|
$ |
35,065,352 |
|
|
$ |
20.13 |
|
|
36
Major Tenants
No individual retail tenant accounted for more than 5.2% of total Core Portfolio and Fund base rents for the year ended December 31, 2023 or occupied more than 7.4% of total Core Portfolio and Fund leased GLA as of December 31, 2023. The following table sets forth certain information for our 20 largest retail tenants by base rent for leases in place as of December 31, 2023. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in properties including the Funds (GLA and Annualized Base Rent in thousands):
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total |
|
||||||||
Retail Tenant |
|
Number of |
|
|
Total GLA |
|
|
Annualized |
|
|
Total |
|
|
Annualized |
|
|||||
Target |
|
|
5 |
|
|
|
512 |
|
|
$ |
9,233 |
|
|
|
7.4 |
% |
|
|
5.2 |
% |
TJX Companies (b) |
|
|
31 |
|
|
|
367 |
|
|
|
4,330 |
|
|
|
5.2 |
% |
|
|
2.5 |
% |
Royal Ahold (c) |
|
|
6 |
|
|
|
198 |
|
|
|
4,209 |
|
|
|
2.8 |
% |
|
|
2.4 |
% |
PetSmart, Inc. |
|
|
14 |
|
|
|
115 |
|
|
|
3,485 |
|
|
|
1.7 |
% |
|
|
2.0 |
% |
Trader Joe's |
|
|
5 |
|
|
|
54 |
|
|
|
3,356 |
|
|
|
0.8 |
% |
|
|
1.9 |
% |
Verizon |
|
|
8 |
|
|
|
30 |
|
|
|
3,064 |
|
|
|
0.4 |
% |
|
|
1.7 |
% |
Walgreens |
|
|
5 |
|
|
|
71 |
|
|
|
2,962 |
|
|
|
1.0 |
% |
|
|
1.7 |
% |
Kohl's |
|
|
8 |
|
|
|
211 |
|
|
|
2,859 |
|
|
|
3.0 |
% |
|
|
1.6 |
% |
ALO Yoga |
|
|
3 |
|
|
|
25 |
|
|
|
2,852 |
|
|
|
0.4 |
% |
|
|
1.6 |
% |
Lululemon |
|
|
5 |
|
|
|
11 |
|
|
|
2,719 |
|
|
|
0.2 |
% |
|
|
1.5 |
% |
Lowe's |
|
|
2 |
|
|
|
164 |
|
|
|
2,648 |
|
|
|
2.4 |
% |
|
|
1.5 |
% |
Fast Retailing (d) |
|
|
2 |
|
|
|
32 |
|
|
|
2,450 |
|
|
|
0.5 |
% |
|
|
1.4 |
% |
Dicks Sporting Goods, Inc. |
|
|
7 |
|
|
|
152 |
|
|
|
2,284 |
|
|
|
2.2 |
% |
|
|
1.3 |
% |
Ulta Beauty |
|
|
16 |
|
|
|
58 |
|
|
|
2,199 |
|
|
|
0.8 |
% |
|
|
1.2 |
% |
Supervalu Inc. (e) |
|
|
3 |
|
|
|
136 |
|
|
|
2,198 |
|
|
|
2.0 |
% |
|
|
1.2 |
% |
Bob's Discount Furniture |
|
|
3 |
|
|
|
75 |
|
|
|
2,043 |
|
|
|
1.1 |
% |
|
|
1.2 |
% |
H&M |
|
|
2 |
|
|
|
60 |
|
|
|
2,032 |
|
|
|
0.9 |
% |
|
|
1.2 |
% |
Gap |
|
|
11 |
|
|
|
66 |
|
|
|
1,801 |
|
|
|
0.9 |
% |
|
|
1.0 |
% |
Wakefern Food Corporation (f) |
|
|
4 |
|
|
|
80 |
|
|
|
1,743 |
|
|
|
1.1 |
% |
|
|
1.0 |
% |
Watches of Switzerland |
|
|
2 |
|
|
|
14 |
|
|
|
1,705 |
|
|
|
0.2 |
% |
|
|
1.0 |
% |
Total |
|
|
142 |
|
|
|
2,431 |
|
|
$ |
60,172 |
|
|
|
35.0 |
% |
|
|
34.1 |
% |
37
Lease Expirations
The following tables show scheduled lease expirations on a pro-rata basis for retail tenants in place as of December 31, 2023, assuming that none of the tenants will exercise renewal options (GLA and Annualized Base Rent in thousands):
Core Portfolio
|
|
|
|
|
GLA |
|
|
Annualized Base Rent (a, b) |
|
|||||||||||
Leases Maturing in |
|
Number of |
|
|
Square |
|
|
Percentage |
|
|
Current |
|
|
Percentage |
|
|||||
Month to Month |
|
|
— |
|
|
|
— |
|
|
|
0.0 |
% |
|
$ |
— |
|
|
|
0.0 |
% |
2024 |
|
|
79 |
|
|
|
828 |
|
|
|
18.8 |
% |
|
$ |
17,730 |
|
|
|
12.6 |
% |
2025 |
|
|
68 |
|
|
|
585 |
|
|
|
13.3 |
% |
|
$ |
21,064 |
|
|
|
14.9 |
% |
2026 |
|
|
78 |
|
|
|
626 |
|
|
|
14.2 |
% |
|
$ |
18,470 |
|
|
|
13.1 |
% |
2027 |
|
|
57 |
|
|
|
332 |
|
|
|
7.5 |
% |
|
$ |
12,140 |
|
|
|
8.6 |
% |
2028 |
|
|
68 |
|
|
|
827 |
|
|
|
18.7 |
% |
|
$ |
23,880 |
|
|
|
16.9 |
% |
2029 |
|
|
31 |
|
|
|
175 |
|
|
|
4.0 |
% |
|
$ |
6,430 |
|
|
|
4.6 |
% |
2030 |
|
|
20 |
|
|
|
96 |
|
|
|
2.2 |
% |
|
$ |
5,449 |
|
|
|
3.9 |
% |
2031 |
|
|
24 |
|
|
|
176 |
|
|
|
4.0 |
% |
|
$ |
6,565 |
|
|
|
4.7 |
% |
2032 |
|
|
45 |
|
|
|
216 |
|
|
|
4.9 |
% |
|
$ |
10,342 |
|
|
|
7.3 |
% |
2033 |
|
|
44 |
|
|
|
217 |
|
|
|
4.9 |
% |
|
$ |
8,688 |
|
|
|
6.2 |
% |
Thereafter |
|
|
20 |
|
|
|
334 |
|
|
|
7.6 |
% |
|
$ |
10,370 |
|
|
|
7.3 |
% |
Total |
|
|
534 |
|
|
|
4,412 |
|
|
|
100.0 |
% |
|
$ |
141,128 |
|
|
|
100.0 |
% |
Funds
|
|
|
|
|
GLA |
|
|
Annualized Base Rent (a, b) |
|
|||||||||||
Leases Maturing in |
|
Number of |
|
|
Square |
|
|
Percentage |
|
|
Current |
|
|
Percentage |
|
|||||
Month to Month |
|
|
3 |
|
|
|
2 |
|
|
|
0.1 |
% |
|
$ |
29 |
|
|
|
0.1 |
% |
2024 |
|
|
112 |
|
|
|
217 |
|
|
|
12.5 |
% |
|
|
3,539 |
|
|
|
10.1 |
% |
2025 |
|
|
103 |
|
|
|
251 |
|
|
|
14.4 |
% |
|
|
4,060 |
|
|
|
11.6 |
% |
2026 |
|
|
104 |
|
|
|
138 |
|
|
|
7.9 |
% |
|
|
2,769 |
|
|
|
7.9 |
% |
2027 |
|
|
101 |
|
|
|
224 |
|
|
|
12.9 |
% |
|
|
4,070 |
|
|
|
11.6 |
% |
2028 |
|
|
98 |
|
|
|
172 |
|
|
|
9.9 |
% |
|
|
3,524 |
|
|
|
10.1 |
% |
2029 |
|
|
46 |
|
|
|
111 |
|
|
|
6.3 |
% |
|
|
1,722 |
|
|
|
4.9 |
% |
2030 |
|
|
36 |
|
|
|
82 |
|
|
|
4.7 |
% |
|
|
1,251 |
|
|
|
3.6 |
% |
2031 |
|
|
40 |
|
|
|
89 |
|
|
|
5.1 |
% |
|
|
1,536 |
|
|
|
4.4 |
% |
2032 |
|
|
47 |
|
|
|
185 |
|
|
|
10.6 |
% |
|
|
3,119 |
|
|
|
8.9 |
% |
2033 |
|
|
39 |
|
|
|
99 |
|
|
|
5.7 |
% |
|
|
2,559 |
|
|
|
7.3 |
% |
Thereafter |
|
|
24 |
|
|
|
172 |
|
|
|
9.9 |
% |
|
|
6,887 |
|
|
|
19.6 |
% |
Total |
|
|
753 |
|
|
|
1,742 |
|
|
|
100.0 |
% |
|
$ |
35,065 |
|
|
|
100.0 |
% |
38
Geographic Concentrations
The following table summarizes our operating retail properties by region, excluding redevelopment properties, as of December 31, 2023. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in properties, including the Funds (GLA and Annualized Base Rent in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total |
|
|||||||||
Region |
|
GLA (a) |
|
|
% Occupied (b) |
|
|
Annualized |
|
|
Annualized Base |
|
|
GLA |
|
|
Annualized |
|
||||||
Core Portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New York Metro (c) |
|
|
1,498 |
|
|
|
92.9 |
% |
|
$ |
60,417 |
|
|
$ |
43.44 |
|
|
|
29.9 |
% |
|
|
42.8 |
% |
Chicago Metro |
|
|
577 |
|
|
|
85.6 |
% |
|
|
25,858 |
|
|
|
52.35 |
|
|
|
11.5 |
% |
|
|
18.3 |
% |
Mid-Atlantic |
|
|
1,343 |
|
|
|
93.8 |
% |
|
|
18,187 |
|
|
|
16.36 |
|
|
|
26.8 |
% |
|
|
12.9 |
% |
New England |
|
|
719 |
|
|
|
98.4 |
% |
|
|
10,096 |
|
|
|
16.50 |
|
|
|
14.3 |
% |
|
|
7.2 |
% |
Washington D.C. Metro |
|
|
166 |
|
|
|
85.8 |
% |
|
|
9,088 |
|
|
|
63.62 |
|
|
|
3.3 |
% |
|
|
6.4 |
% |
Midwest |
|
|
570 |
|
|
|
94.8 |
% |
|
|
8,682 |
|
|
|
16.08 |
|
|
|
11.4 |
% |
|
|
6.2 |
% |
Los Angeles Metro |
|
|
23 |
|
|
|
100.0 |
% |
|
|
4,355 |
|
|
|
185.61 |
|
|
|
0.4 |
% |
|
|
3.1 |
% |
Dallas Metro |
|
|
121 |
|
|
|
89.2 |
% |
|
|
4,445 |
|
|
|
41.07 |
|
|
|
2.4 |
% |
|
|
3.1 |
% |
Total Core Operating Properties |
|
|
5,017 |
|
|
|
93.0 |
% |
|
$ |
141,128 |
|
|
$ |
31.99 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fund Portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New York Metro |
|
|
336 |
|
|
|
75.3 |
% |
|
$ |
11,153 |
|
|
$ |
44.10 |
|
|
|
17.3 |
% |
|
|
31.8 |
% |
Northeast |
|
|
678 |
|
|
|
87.9 |
% |
|
|
9,095 |
|
|
|
15.28 |
|
|
|
34.7 |
% |
|
|
26.0 |
% |
Southeast |
|
|
494 |
|
|
|
97.1 |
% |
|
|
7,871 |
|
|
|
16.39 |
|
|
|
25.4 |
% |
|
|
22.4 |
% |
Southwest |
|
|
180 |
|
|
|
90.5 |
% |
|
|
2,803 |
|
|
|
17.18 |
|
|
|
9.2 |
% |
|
|
8.0 |
% |
West |
|
|
116 |
|
|
|
98.8 |
% |
|
|
1,789 |
|
|
|
15.66 |
|
|
|
6.0 |
% |
|
|
5.1 |
% |
Midwest |
|
|
93 |
|
|
|
99.2 |
% |
|
|
1,519 |
|
|
|
16.54 |
|
|
|
4.8 |
% |
|
|
4.3 |
% |
Mid-Atlantic |
|
|
48 |
|
|
|
91.1 |
% |
|
|
700 |
|
|
|
16.09 |
|
|
|
2.5 |
% |
|
|
2.0 |
% |
San Francisco Metro |
|
|
1 |
|
|
|
77.5 |
% |
|
|
136 |
|
|
|
117.57 |
|
|
|
0.1 |
% |
|
|
0.4 |
% |
Total Fund Operating Properties |
|
|
1,946 |
|
|
|
89.6 |
% |
|
$ |
35,066 |
|
|
$ |
20.13 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
39
Development and Redevelopment Activities
As part of our strategy, we invest in retail real estate assets that may require significant development. As of December 31, 2023, we had the following development or redevelopment projects in various stages of the development process (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
Acadia's Pro-rata Share |
|
||||||||||||||||||||||||||
Property |
|
AKR Pro-rata share |
|
Location |
|
Estimated Stabilization |
|
Est. Sq ft Upon Completion |
|
|
Costs prior to development / redevelopment |
|
|
Incurred costs since development / redevelopment |
|
|
Total Costs to Date |
|
|
Estimated Future Range |
|
|
Estimated Total Range |
|
||||||||||||||
CORE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Henderson - Development 1 & 2 |
|
100.0% |
|
Dallas, TX |
|
TBD |
|
|
160,000 |
|
|
$ |
9.6 |
|
|
$ |
6.4 |
|
|
$ |
16.0 |
|
|
TBD |
|
- |
TBD |
|
|
TBD |
|
- |
TBD |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Major Redevelopment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
City Center |
|
100.0% |
|
San Francisco, CA |
|
2024 |
|
|
241,000 |
|
|
|
155.0 |
|
|
|
51.8 |
|
|
|
206.8 |
|
|
|
3.2 |
|
- |
|
6.2 |
|
|
|
210.0 |
|
- |
|
213.0 |
|
555 9th Street |
|
100.0% |
|
San Francisco, CA |
|
TBD |
|
|
149,000 |
|
|
|
141.7 |
|
|
|
5.1 |
|
|
|
146.8 |
|
|
|
19.9 |
|
- |
|
29.9 |
|
|
|
166.7 |
|
- |
|
176.7 |
|
651-671 West Diversey |
|
100.0% |
|
Chicago, IL |
|
TBD |
|
|
46,000 |
|
|
|
29.1 |
|
|
|
0.4 |
|
|
|
29.5 |
|
|
TBD |
|
- |
TBD |
|
|
TBD |
|
- |
TBD |
|
||||
Route 6 Mall |
|
100.0% |
|
Honesdale, PA |
|
TBD |
|
TBD |
|
|
|
14.8 |
|
|
|
4.5 |
|
|
|
19.3 |
|
|
|
1.5 |
|
- |
|
4.5 |
|
|
|
20.8 |
|
- |
|
23.8 |
|
|
Mad River |
|
100.0% |
|
Dayton, OH |
|
TBD |
|
TBD |
|
|
|
14.3 |
|
|
|
0.4 |
|
|
|
14.7 |
|
|
|
1.5 |
|
- |
|
1.9 |
|
|
|
16.2 |
|
- |
|
16.6 |
|
|
840 N. Michigan Avenue |
|
91.9% |
|
Chicago, IL |
|
TBD |
|
|
87,000 |
|
|
|
152.3 |
|
|
|
— |
|
|
|
152.3 |
|
|
TBD |
|
- |
TBD |
|
|
TBD |
|
- |
TBD |
|
||||
664 N. Michigan Avenue |
|
100.0% |
|
Chicago, IL |
|
TBD |
|
|
18,000 |
|
|
|
87.2 |
|
|
|
— |
|
|
|
87.2 |
|
|
TBD |
|
- |
TBD |
|
|
TBD |
|
- |
TBD |
|
||||
Brandywine Holdings |
|
100.0% |
|
Wilmington, DE |
|
TBD |
|
|
96,000 |
|
|
|
24.0 |
|
|
|
0.1 |
|
|
|
24.1 |
|
|
TBD |
|
- |
TBD |
|
|
TBD |
|
- |
TBD |
|
||||
Total Core Redevelopment |
|
|
|
|
|
|
|
|
|
|
$ |
618.4 |
|
|
$ |
62.3 |
|
|
$ |
680.7 |
|
|
$ |
26.1 |
|
|
$ |
42.5 |
|
|
$ |
413.7 |
|
|
$ |
430.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Core Development and Redevelopment |
|
|
|
|
|
|
|
|
|
|
$ |
628.0 |
|
|
$ |
68.7 |
|
|
$ |
696.7 |
|
|
$ |
26.1 |
|
|
$ |
42.5 |
|
|
$ |
413.7 |
|
|
$ |
430.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
FUNDS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
FUND III |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Broad Hollow Commons |
|
24.5% |
|
Farmingdale, NY |
|
TBD |
|
TBD |
|
|
$ |
3.0 |
|
|
$ |
3.9 |
|
|
$ |
6.9 |
|
|
TBD |
|
- |
TBD |
|
|
TBD |
|
- |
TBD |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Major Redevelopment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
FUND IV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
717 N. Michigan Avenue |
|
23.1% |
|
Chicago, IL |
|
TBD |
|
TBD |
|
|
|
26.9 |
|
|
|
0.8 |
|
|
|
27.7 |
|
|
TBD |
|
- |
TBD |
|
|
TBD |
|
- |
TBD |
|
|||||
Total Funds Development and Major Redevelopment |
|
|
|
|
|
|
|
|
|
|
$ |
29.9 |
|
|
$ |
4.7 |
|
|
$ |
34.6 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Core and Funds Development and Major Redevelopment |
|
|
|
|
|
|
|
|
|
|
$ |
657.9 |
|
|
$ |
73.4 |
|
|
$ |
731.3 |
|
|
$ |
26.1 |
|
|
$ |
42.5 |
|
|
$ |
413.7 |
|
|
$ |
430.1 |
|
|
40
ITEM 3. LEGAL PROCEEDINGS.
From time to time, we are a party to various legal proceedings, claims or regulatory inquiries and investigations arising out of, or incident to, our ordinary course of business. While we are unable to predict with certainty the outcome of any particular matter, management does not currently expect, when any such matters are resolved, that our resulting exposure to loss contingencies, if any, will have a material adverse effect on our consolidated financial position.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information, Dividends and Holders of Record of our Common Shares
At February 13, 2024, there were 247 holders of record of our Common Shares, which are traded on the New York Stock Exchange under the symbol “AKR.” Our quarterly dividends are discussed in Note 10 and the characterization of such dividends for federal income tax purposes is discussed in Note 14.
Securities Authorized for Issuance Under Equity Compensation Plans
Our 2020 Share Incentive Plan (the “2020 Plan”) which was approved by our shareholders at the 2020 annual shareholders’ meeting, and Amended and Restated 2020 Share Incentive Plan (the “Amended and Restated 2020 Plan”) which was approved by our shareholders at the 2023 annual shareholders’ meeting, authorizes us to issue options, restricted shares, LTIP Units and other securities (collectively, the “Awards”) to, among others, the Company’s officers, trustees, and employees up to a total of 3,883,564 Common Shares (on a converted basis). See Note 13 for a discussion of the 2020 Plan and the Amended and Restated 2020 Plan.
The following table provides information related to the 2020 Plan and the Amended and Restated 2020 Plan as of December 31, 2023:
|
|
Equity Compensation Plan Information |
|
|||||||||
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
|||
|
|
Number of |
|
|
Weighted-average |
|
|
Number of |
|
|||
Equity compensation plans approved by security holders |
|
|
— |
|
|
$ |
— |
|
|
|
3,804,345 |
|
Equity compensation plans not approved by security holders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
|
— |
|
|
$ |
— |
|
|
|
3,804,345 |
|
Remaining Common Shares available under the 2020 Plan and the Amended and Restated 2020 Plan are as follows:
Outstanding Common Shares as of December 31, 2023 |
|
|
95,361,676 |
|
Outstanding OP Units as of December 31, 2023 |
|
|
5,346,042 |
|
Total Outstanding Common Shares and OP Units |
|
|
100,707,718 |
|
|
|
|
|
|
Common Shares and OP Units pursuant to the 2020 Plan and Amended and Restated 2020 Plan |
|
|
5,929,953 |
|
Less: Issuance of Restricted Shares and LTIP Units Granted |
|
|
(2,125,608 |
) |
Number of Common Shares remaining available |
|
|
3,804,345 |
|
41
Share Price Performance
The following performance graph compares the cumulative total shareholder return for our Common Shares for the five-year period commencing December 31, 2018, through December 31, 2023, with the cumulative total return on the Russell 2000 Index (“Russell 2000”), the FTSE NAREIT All Equity REITs Index (the “All Equity REITs”) and the FTSE NAREIT Equity Shopping Centers Index (the “Equity Shopping Centers”) (previously SNL REIT Shopping Center Index which was discontinued) over the same period. Total return values for the Russell 2000, the All Equity REITs, the Equity Shopping Centers and the Common Shares were calculated based upon cumulative total return assuming the investment of $100.00 in each of the Russell 2000, the All Equity REITs, the Equity Shopping Centers and our Common Shares on December 31, 2018, and assuming reinvestment of dividends. The shareholder return as set forth in the table below is not necessarily indicative of future performance. The information in this section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing.
Source: S&P Global Market Intelligence
|
|
At December 31, |
|
|||||||||||||||||||||
Index |
|
2018 |
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
2022 |
|
|
2023 |
|
||||||
Acadia Realty Trust |
|
$ |
100.00 |
|
|
$ |
113.78 |
|
|
$ |
63.61 |
|
|
$ |
100.74 |
|
|
$ |
69.32 |
|
|
$ |
86.21 |
|
Russell 2000 Index |
|
|
100.00 |
|
|
|
125.53 |
|
|
|
150.58 |
|
|
|
172.90 |
|
|
|
137.56 |
|
|
|
160.85 |
|
FTSE NAREIT All Equity REITs Index |
|
|
100.00 |
|
|
|
128.66 |
|
|
|
122.07 |
|
|
|
172.49 |
|
|
|
129.45 |
|
|
|
144.16 |
|
FTSE NAREIT Equity Shopping Centers Index |
|
|
100.00 |
|
|
|
125.03 |
|
|
|
90.47 |
|
|
|
149.32 |
|
|
|
130.60 |
|
|
|
146.32 |
|
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
None.
Issuer Purchases of Equity Securities
The Company maintains a share repurchase program which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program may be discontinued or extended at any time. The Company did not repurchase any shares during the years ended December 31, 2023, 2022 or 2021. As of December 31, 2023, management may repurchase up to approximately $122.5 million of the Company’s outstanding Common Shares under this program.
ITEM 6. [RESERVED]
Not applicable.
42
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
As of December 31, 2023, there were 201 properties, which we own or have an ownership interest in, within our Core Portfolio and Funds. Our Core Portfolio consists of those properties either 100% owned, or partially owned through joint venture interests by the Operating Partnership, or subsidiaries thereof, not including those properties owned through our Funds. These properties primarily consist of street and urban retail, and suburban shopping centers. See Item 2. Properties for a summary of our wholly-owned and partially-owned retail properties and their physical occupancies at December 31, 2023.
The majority of our operating income is derived from rental revenues from operating properties, including expense recoveries from tenants, offset by operating and overhead expenses.
Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective:
Inflation and Economic Condition Considerations
The economy continues to face several issues including geopolitical conditions and instability, the Gaza-Israel conflict, the war in Ukraine, the fallout from the COVID-19 Pandemic, supply-chain disruptions, and the recessionary outlook of the current financial markets, which has increased volatility in the market and has caused a surge in interest rates in a period of high inflation. While we have not experienced any material negative impacts at this time, we are actively managing our business to respond to the ongoing economic and social impact from such events. We believe we manage our properties in a cost-conscious manner to minimize recurring operational expenses and utilize multi-year contracts to alleviate the impact of inflation on our business and our tenants. Most of our leases require tenants to pay their share of operating expenses, including real estate taxes, insurance, utilities, and common area maintenance of the shopping centers, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. These provisions are designed to partially mitigate the impact of inflation; however, current inflation levels are greater than the contractual rent increases we obtain from our tenant base. As a result, the Company could feel pricing pressure on rents that it is able to charge to new or renewing tenants, such that future rents and rent spreads could be negatively impacted. While interest rate increases enacted by the Federal Reserve have had a significant impact on interest rate indexes such as SOFR and the Prime Rate, as of December 31, 2023, approximately 77.3%, or 86.7% at our pro-rata share, of our outstanding debt is fixed or effectively fixed interest rate, with the remaining 22.7%, or 13.3% at our pro-rata share, indexed to SOFR or Prime plus an applicable margin per the loan agreement. We were also counterparty to 36 interest rate swap agreements and four interest rate cap agreements, all of which qualify for and are designated as hedging instruments. This helps to alleviate the impact of rising interest rates on our operations. The Company continues to monitor economic, financial, and social conditions and will assess its asset portfolio for any impairment indicators. See Item 1A. Risk Factors.
43
SIGNIFICANT DEVELOPMENTS DURING THE year ended December 31, 2023 AND SUBSEQUENT EVENTS
Investments
During the year ended December 31, 2023, Fund V acquired two consolidated properties and one unconsolidated property totaling $189.3 million, inclusive of transaction costs, as described below (Note 2, Note 4).
On January 20, 2023, through Mervyns II, we received a special cash dividend of $28.2 million from our investment in Albertsons, of which our share was $11.3 million. Additionally, following the expiration of the lock-up period and distribution of 2.5 million shares of Albertsons to our partners, we received 1.6 million shares of Albertsons (Note 4, Note 8). During the year ended December 31, 2023, we sold 200,000 shares of Albertsons, generating net proceeds of $4.6 million. As of December 31, 2023, we still held 1.4 million shares of Albertsons which had a fair value of $33.3 million. In January 2024, we sold an additional 175,000 shares of Albertsons, generating net proceeds of $4.0 million (Note 17).
Financing Activity
During the year ended December 31, 2023, we effected the following financing activities (Note 7, Note 4):
On July 15, 2023, the 146 Geary Street, Fund IV non-recourse mortgage loan with an outstanding balance of $19.3 million, or $4.5 million at the Company’s share, matured with no further extension options and was in default (Note 7). The property securing the mortgage was a vacant building located in San Francisco, California. The loan accrued default interest at a rate of 4.00% per annum in excess of the interest rate of SOFR + 3.65%. On October 27, 2023, the Company completed the transfer of the property to its lender through a deed-in-lieu of foreclosure and derecognized the mortgage loan as it had no continuing obligations. The Company had previously impaired the asset, and recorded an impairment charge of $3.7 million, or $0.9 million at the Company’s share, related to the change in estimated value and holding period of the asset for the year ended December 31, 2023 (Note 8).
In January 2024, through Fund V, made a $3.8 million principal payment on a mortgage loan (Note 17).
44
Structured Financing Investments
During the year ended December 31, 2023, we originated a Core Portfolio note for $1.4 million collateralized by our venture’s partner’s interest in 840 N. Michigan Avenue. We also funded $5.3 million of a $12.8 million construction loan commitment to an unconsolidated venture (Note 4). Through Fund V, we refinanced a $31.7 million bridge loan at an unconsolidated property that was originated by Fund V at acquisition with a new mortgage loan at an unconsolidated property.
Common Share Issuances
In January 2024, we completed an underwritten offering of 6,900,000 Common Shares (inclusive of the underwriters’ option to purchase 900,000 additional shares) for net proceeds of $113.0 million (Note 17). We intend to use the net proceeds from the offering for general corporate purposes, which may include, without limitation, the repayment of outstanding indebtedness, funding future acquisitions, working capital and other general corporate purposes.
During the year ended December 31, 2023, we did not sell any shares under our ATM program.
Inflation
The year ended December 31, 2023 was impacted by significant volatility in global markets, largely driven by rising inflation, rising interest rates, slowing economic growth, geopolitical uncertainty and instability in the banking sector following multiple bank failures. Except for increased interest costs, we have not experienced any material negative impacts at this time and we intend to actively manage our business to respond to the ongoing economic and social impact from such events. The rate hikes enacted by the Federal Reserve have had a significant impact on interest rate indexes such as SOFR and the Prime Rate and cost of borrowing. We manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap and cap agreements. We believe we manage our properties in a cost-conscious manner to minimize recurring operational expenses and utilize multi-year contracts to alleviate the impact of inflation on our business and our tenants. Most of our leases require tenants to pay their share of operating expenses, including real estate taxes, insurance, utilities, and common area maintenance of the shopping centers. These provisions are designed to partially mitigate the impact of inflation. We also continue to see consumer confidence and we expect to continue to add value to our portfolio by executing on our current leasing momentum, our active development and redevelopment projects, and leasing pipeline.
Tenant Bankruptcy
On April 23, 2023, Bed Bath and Beyond, Inc. (“Bed Bath and Beyond”) filed for Chapter 11 bankruptcy protection. Bed Bath and Beyond had leases at two locations within our Core Portfolio and three locations in our Fund Portfolio, with aggregate GLA of 124,432 square feet and 59,391 square feet, representing 2.1% and 0.7% of Core and Fund GLA, respectively. In our Core Portfolio, we recaptured and re-leased one of the spaces to an existing tenant that is expanding a flagship store under a new 15-year lease. We are actively seeking a tenant for the remaining Core Portfolio location. In our Fund Portfolio, one lease was assumed by a new tenant and we have regained possession of the other two locations; we have one signed lease and identified future tenants at these two Fund locations. As a result of the bankruptcy filing, during the year ended December 31, 2023, we accelerated the amortization of the below-market lease intangibles of $8.1 million related to the Bed Bath and Beyond lease terminations. We did not experience any material negative impacts on our cash flows or property values as a result of the bankruptcy.
45
RESULTS OF OPERATIONS
See Note 12 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments.
Comparison of Results for the Year Ended December 31, 2023 to the Year Ended December 31, 2022
The results of operations by reportable segment for the year ended December 31, 2023 compared to the year ended December 31, 2022 are summarized in the table below (in millions, totals may not add due to rounding):
|
|
Year Ended |
|
|
Year Ended |
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
|
Increase (Decrease) |
|
|||||||||||||||||||||||||||||||||||||||
|
|
Core |
|
|
Funds |
|
|
SF |
|
|
Total |
|
|
Core |
|
|
Funds |
|
|
SF |
|
|
Total |
|
|
Core |
|
|
Funds |
|
|
SF |
|
|
Total |
|
||||||||||||
Total revenues |
|
$ |
203.5 |
|
|
$ |
135.1 |
|
|
$ |
— |
|
|
$ |
338.7 |
|
|
$ |
202.5 |
|
|
$ |
123.7 |
|
|
$ |
— |
|
|
$ |
326.3 |
|
|
$ |
1.0 |
|
|
$ |
11.4 |
|
|
$ |
— |
|
|
$ |
12.4 |
|
Depreciation and amortization expenses |
|
|
(76.6 |
) |
|
|
(59.3 |
) |
|
|
— |
|
|
|
(136.0 |
) |
|
|
(75.6 |
) |
|
|
(60.3 |
) |
|
|
— |
|
|
|
(135.9 |
) |
|
|
1.0 |
|
|
|
(1.0 |
) |
|
|
— |
|
|
|
0.1 |
|
General and administrative expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(41.5 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(44.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2.6 |
) |
Property operating expenses, other |
|
|
(64.4 |
) |
|
|
(44.1 |
) |
|
|
— |
|
|
|
(108.5 |
) |
|
|
(60.3 |
) |
|
|
(41.6 |
) |
|
|
— |
|
|
|
(101.9 |
) |
|
|
4.1 |
|
|
|
2.5 |
|
|
|
— |
|
|
|
6.6 |
|
Impairment charges |
|
|
— |
|
|
|
(3.7 |
) |
|
|
— |
|
|
|
(3.7 |
) |
|
|
— |
|
|
|
(33.3 |
) |
|
|
— |
|
|
|
(33.3 |
) |
|
|
— |
|
|
|
(29.6 |
) |
|
|
— |
|
|
|
(29.6 |
) |
Gain on disposition of properties |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7.2 |
|
|
|
49.9 |
|
|
|
— |
|
|
|
57.2 |
|
|
|
(7.2 |
) |
|
|
(49.9 |
) |
|
|
— |
|
|
|
(57.2 |
) |
Operating income |
|
|
62.5 |
|
|
|
28.0 |
|
|
|
— |
|
|
|
49.1 |
|
|
|
73.9 |
|
|
|
38.4 |
|
|
|
— |
|
|
|
68.2 |
|
|
|
(11.4 |
) |
|
|
(10.4 |
) |
|
|
— |
|
|
|
(19.1 |
) |
Equity in earnings (losses) of |
|
|
2.7 |
|
|
|
(10.4 |
) |
|
|
— |
|
|
|
(7.7 |
) |
|
|
(45.9 |
) |
|
|
13.0 |
|
|
|
— |
|
|
|
(32.9 |
) |
|
|
48.6 |
|
|
|
(23.4 |
) |
|
|
— |
|
|
|
25.2 |
|
Interest income |
|
|
— |
|
|
|
— |
|
|
|
20.0 |
|
|
|
20.0 |
|
|
|
— |
|
|
|
— |
|
|
|
14.6 |
|
|
|
14.6 |
|
|
|
— |
|
|
|
— |
|
|
|
5.4 |
|
|
|
5.4 |
|
Realized and unrealized holding gains (losses) |
|
|
5.8 |
|
|
|
25.0 |
|
|
|
(0.3 |
) |
|
|
30.4 |
|
|
|
1.2 |
|
|
|
(35.6 |
) |
|
|
(0.6 |
) |
|
|
(35.0 |
) |
|
|
4.6 |
|
|
|
60.6 |
|
|
|
0.3 |
|
|
|
65.4 |
|
Interest expense |
|
|
(44.5 |
) |
|
|
(48.7 |
) |
|
|
— |
|
|
|
(93.3 |
) |
|
|
(37.9 |
) |
|
|
(42.3 |
) |
|
|
— |
|
|
|
(80.2 |
) |
|
|
6.6 |
|
|
|
6.4 |
|
|
|
— |
|
|
|
13.1 |
|
Income tax provision |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.3 |
) |
Net income (loss) |
|
|
26.5 |
|
|
|
(6.1 |
) |
|
|
19.7 |
|
|
|
(1.7 |
) |
|
|
(8.8 |
) |
|
|
(26.4 |
) |
|
|
14.0 |
|
|
|
(65.3 |
) |
|
|
35.3 |
|
|
|
20.3 |
|
|
|
5.7 |
|
|
|
63.6 |
|
Net loss attributable |
|
|
— |
|
|
|
8.2 |
|
|
|
— |
|
|
|
8.2 |
|
|
|
— |
|
|
|
5.5 |
|
|
|
— |
|
|
|
5.5 |
|
|
|
— |
|
|
|
(2.7 |
) |
|
|
— |
|
|
|
(2.7 |
) |
Net (income) loss attributable |
|
|
(1.9 |
) |
|
|
15.3 |
|
|
|
— |
|
|
|
13.4 |
|
|
|
1.0 |
|
|
|
23.3 |
|
|
|
— |
|
|
|
24.3 |
|
|
|
2.9 |
|
|
|
8.0 |
|
|
|
— |
|
|
|
10.9 |
|
Net income (loss) attributable to Acadia |
|
$ |
24.6 |
|
|
$ |
17.4 |
|
|
$ |
19.7 |
|
|
$ |
19.9 |
|
|
$ |
(7.8 |
) |
|
$ |
2.4 |
|
|
$ |
14.0 |
|
|
$ |
(35.4 |
) |
|
$ |
32.4 |
|
|
$ |
15.0 |
|
|
$ |
5.7 |
|
|
$ |
55.3 |
|
Core Portfolio
The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio increased $32.4 million for the year ended December 31, 2023 compared to the prior year as a result of the changes further described below.
Revenues for our Core Portfolio increased $1.0 million for the year ended December 31, 2023 compared to the prior year primarily due to (i) a $7.8 million acceleration of a below market lease for a bankrupt tenant, (ii) $6.0 million from lease up within the Core Portfolio, and (iii) a $2.8 million increase from Core Portfolio property acquisitions in 2022 (Note 2). These increases were offset by (i) $7.2 million from vacating tenants, (ii) $3.2 million from additional termination income received in 2022, (iii) a $3.2 million increase associated with revenues deemed uncollectible in 2023, and (iv) $1.2 million from Core property dispositions in 2022.
Depreciation and amortization for our Core Portfolio increased $1.0 million for the year ended December 31, 2023 compared to the prior year primarily due to Core Portfolio acquisitions in 2022.
Property operating expenses, other operating and real estate taxes for our Core Portfolio increased $4.1 million for the year ended December 31, 2023 compared to the prior year primarily due to an increase in non-recurring repairs and maintenance, utility and insurance costs in 2023.
The gain on disposition of properties for our Core Portfolio of $7.2 million for the year ended December 31, 2022 primarily relates to the sale of 330-340 River Street (Note 2).
Equity in (losses) earnings of unconsolidated affiliates for our Core Portfolio increased $48.6 million for the year ended December 31, 2023 compared to the prior year primarily due to the Company’s $50.8 million proportionate share of an impairment charge at 840 N. Michigan Avenue in 2022 (Note 4).
46
Interest expense for our Core Portfolio increased $6.6 million for the year ended December 31, 2023 compared to the prior year primarily due to (i) $6.1 million from higher average outstanding borrowings in 2023, and (ii) $1.8 million from higher average interest rates in 2023. These increases were partially offset by $1.1 million from higher capitalized interest in 2023.
Realized and unrealized holding gains (losses) on investments and other for our Core Portfolio includes (i) a $5.2 million mark-to-market adjustment on the Investment in Albertsons in 2023, and (ii) a $1.2 million bargain purchase gain on the acquisition of the Williamsburg Collection in 2022 (Note 2). In January 2023, following the expiration of the lock-up period and distribution of approximately 2.5 million shares by Mervyns II to its partners, the Company received 1.6 million shares of Albertsons, of which 1.4 million shares are included in the Core portfolio following the sale of 200,000 shares in 2023 (Note 4, Note 8).
Net loss attributable to noncontrolling interests for our Core Portfolio increased $2.9 million for the year ended December 31, 2023 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above.
Funds
The results of operations for our Funds segment are depicted in the table above under the headings labeled “Funds.” Segment net income attributable to Acadia for the Funds increased $15.0 million for the year ended December 31, 2023 compared to the prior year as a result of the changes described below.
Revenues for the Funds increased $11.4 million for the year ended December 31, 2023 compared to the prior year primarily due to (i) $9.0 million from new tenant lease up in 2022 and 2023, (ii) $4.3 million from Fund property acquisitions in 2023, and (iii) $2.0 million from settlement income related to a tenant. These increases were offset by (i) $4.1 million from Fund property dispositions in 2022 (Note 2).
Depreciation and amortization for the Funds decreased $1.0 million for the year ended December 31, 2023 compared to the prior year primarily due to Fund property dispositions in 2022 (Note 2).
Impairment charges for the Funds decreased $29.6 million for the year ended December 31, 2023 compared to the prior year (Note 8). Impairment charges totaled $3.7 million during 2023 for the Funds related to 146 Geary Street in Fund IV. Impairment charges totaled $33.3 million during 2022 for the Funds related to 146 Geary Street and 717 N. Michigan Avenue in Fund IV.
Property operating expenses, other operating and real estate taxes for the Funds increased $2.5 million for the year ended December 31, 2023 compared to the prior year primarily due to an increase in non-recurring repairs and maintenance, utility and insurance costs in 2023.
Gain on disposition of properties for the Funds decreased $49.9 million for the year ended December 31, 2023 compared to the prior year due to the sales of Cortlandt Crossing at Fund III, Lincoln Place, Mayfair, Dauphin and Wake Forest Crossing in Fund IV (Note 2).
Equity in (losses) earnings of unconsolidated affiliates for the Funds decreased $23.4 million for the year ended December 31, 2023 compared to the prior year due to new unconsolidated Fund acquisitions in 2022 and 2023 (Note 4) and the $12.8 million gain on sale of Promenade at Manassas in 2022.
Interest expense for the Funds increased $6.4 million for the year ended December 31, 2023 compared to the prior year primarily due to $17.3 million from higher average interest rates in 2023 offset by $9.0 million from lower average outstanding borrowings in 2023 and $1.9 million from higher capitalized interest in 2023.
Realized and unrealized holding gains (losses) on investments and other for the Funds increased $60.6 million for the year ended December 31, 2023 compared to the prior year primarily due to (i) a $28.2 million increase in dividend income from Albertsons in 2023 and (ii) a $38.9 million decrease in the mark-to-market adjustment on the Investment in Albertsons in 2022, offset by (i) a $2.0 million decrease in the mark-to-market adjustment on the Investment in Albertsons in 2023, and (ii) a $1.4 million distribution from the Storage Post Management Company in 2022. (Note 4).
Net loss attributable to redeemable noncontrolling interests for the Funds increased $2.7 million for the year ended December 31, 2023 compared to the prior year due to the City Point Loan in 2022 (Note 10).
Net loss attributable to noncontrolling interests for the Funds increased $8.0 million for the year ended December 31, 2023 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above. Net loss attributable to noncontrolling interests in the Funds
47
includes asset management fees earned by the Company of $7.2 million and $9.5 million for the years ended December 31, 2023 and 2022, respectively.
Structured Financing
The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” Interest and other income for the Structured Financing portfolio increased $5.4 million for the year ended December 31, 2023 compared to the prior year period primarily due to the City Point Loan in 2022 (Note 10).
Unallocated
The Company does not allocate general and administrative expense and income taxes to its reportable segments. These unallocated amounts are depicted in the table above under the headings labeled “Total.” Unallocated general and administrative expense decreased $2.6 for the year ended December 31, 2023 compared to the prior year due to $2.0 million related to acquisition costs (Note 2).
Discussions of 2021 items and comparisons between the year ended December 31, 2022 and 2021, respectively, that are not included in this Report can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
NON-GAAP FINANCIAL MEASURES
Net Property Operating Income
The following discussion of net property operating income (“NOI”) and rent spreads on new and renewal leases includes the activity from both our consolidated and our pro-rata share of unconsolidated properties within our Core Portfolio. Our Funds invest primarily in properties that typically require significant leasing and development. Given that the Funds are finite-life investment vehicles, these properties are sold following stabilization. For these reasons, we believe NOI and rent spreads are not meaningful measures for our Fund investments.
NOI represents property revenues less property expenses. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriate supplemental disclosures of Core Portfolio operating performance due to their widespread acceptance and use within the REIT investor and analyst communities. NOI and rent spreads on new and renewal leases are presented to assist investors in analyzing our property performance, however, our method of calculating these may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
A reconciliation of consolidated operating income to net operating income (loss) - Core Portfolio follows (in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Consolidated operating income |
|
$ |
49,076 |
|
|
$ |
68,230 |
|
|
$ |
30,656 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|||
General and administrative |
|
|
41,470 |
|
|
|
44,066 |
|
|
|
40,125 |
|
Depreciation and amortization |
|
|
135,984 |
|
|
|
135,917 |
|
|
|
123,439 |
|
Impairment charges |
|
|
3,686 |
|
|
|
33,311 |
|
|
|
9,925 |
|
|
|
|
|
|
|
|
|
|
|
|||
Less: |
|
|
|
|
|
|
|
|
|
|||
Above/below-market rent, straight-line rent and other adjustments (a) |
|
|
(20,617 |
) |
|
|
(20,869 |
) |
|
|
(19,862 |
) |
Gain on disposition of properties |
|
|
— |
|
|
|
(57,161 |
) |
|
|
(10,521 |
) |
Consolidated NOI |
|
|
209,599 |
|
|
|
203,494 |
|
|
|
173,762 |
|
|
|
|
|
|
|
|
|
|
|
|||
Redeemable noncontrolling interest in consolidated NOI |
|
|
(4,420 |
) |
|
|
(1,892 |
) |
|
|
— |
|
Noncontrolling interest in consolidated NOI |
|
|
(59,597 |
) |
|
|
(58,277 |
) |
|
|
(48,795 |
) |
Less: Operating Partnership's interest in Fund NOI included above |
|
|
(19,816 |
) |
|
|
(14,476 |
) |
|
|
(11,608 |
) |
Add: Operating Partnership's share of unconsolidated joint ventures NOI (b) |
|
|
14,249 |
|
|
|
14,381 |
|
|
|
13,279 |
|
NOI - Core Portfolio |
|
$ |
140,015 |
|
|
$ |
143,230 |
|
|
$ |
126,638 |
|
48
Same-Property NOI includes Core Portfolio properties that we owned for both the current and prior period presented, but excludes those properties which we acquired, sold or expected to sell, redeveloped and developed during these periods. The following table summarizes Same-Property NOI for our Core Portfolio (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Core Portfolio NOI |
|
$ |
140,015 |
|
|
$ |
143,230 |
|
Less properties excluded from Same-Property NOI |
|
|
(26,147 |
) |
|
|
(35,557 |
) |
Same-Property NOI |
|
$ |
113,868 |
|
|
$ |
107,673 |
|
|
|
|
|
|
|
|
||
Percent change from prior year period |
|
|
5.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
||
Components of Same-Property NOI: |
|
|
|
|
|
|
||
Same-Property Revenues |
|
$ |
165,933 |
|
|
$ |
158,415 |
|
Same-Property Operating Expenses |
|
|
(52,065 |
) |
|
|
(50,742 |
) |
Same-Property NOI |
|
$ |
113,868 |
|
|
$ |
107,673 |
|
Rent Spreads on Core Portfolio New and Renewal Leases
The following table summarizes rent spreads on both a cash basis and straight-line basis for new and renewal leases based on leases executed within our Core Portfolio for the period presented. Cash basis represents a comparison of rent most recently paid on the previous lease as compared to the initial rent paid on the new lease. Straight-line basis represents a comparison of rents as adjusted for contractual escalations, abated rent, and lease incentives for the same comparable leases. The table below includes embedded option renewals for which the renewed rent was equal to or approximated existing base rent.
|
|
Year Ended December 31, 2023 |
|
|||||
Core Portfolio New and Renewal Leases |
|
Cash Basis |
|
|
Straight- |
|
||
Number of new and renewal leases executed |
|
|
65 |
|
|
|
65 |
|
GLA commencing |
|
|
436,322 |
|
|
|
436,322 |
|
New base rent |
|
$ |
36.42 |
|
|
$ |
38.11 |
|
Expiring base rent |
|
$ |
30.49 |
|
|
$ |
29.72 |
|
Percent growth in base rent |
|
|
19.5 |
% |
|
|
28.2 |
% |
Average cost per square foot (a) |
|
$ |
16.11 |
|
|
$ |
16.11 |
|
Weighted average lease term (years) |
|
|
6.7 |
|
|
|
6.7 |
|
49
Funds from Operations
We consider funds from operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be meaningful non-GAAP measure 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 our performance. It is helpful as it excludes 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 real estate. Our 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 our performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, we define FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Also consistent with NAREIT’s definition of FFO, the Company has elected to include gains and losses incidental to its main business (including those related to its RCP investments such as Albertsons) in FFO. A reconciliation of net income attributable to Acadia to FFO follows (dollars in thousands, except per share amounts):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net income (loss) attributable to Acadia shareholders |
|
$ |
19,873 |
|
|
$ |
(35,445 |
) |
|
$ |
23,548 |
|
|
|
|
|
|
|
|
|
|
|
|||
Depreciation of real estate and amortization of leasing costs (net of |
|
|
109,732 |
|
|
|
104,910 |
|
|
|
93,388 |
|
Impairment charges (net of noncontrolling interests' share) (a) |
|
|
852 |
|
|
|
58,481 |
|
|
|
2,294 |
|
Gain on disposition of properties (net of noncontrolling interests' share) |
|
|
— |
|
|
|
(22,137 |
) |
|
|
(4,163 |
) |
Income (loss) attributable to Common OP Unit holders |
|
|
1,282 |
|
|
|
(1,800 |
) |
|
|
1,584 |
|
Distributions - Preferred OP Units |
|
|
492 |
|
|
|
492 |
|
|
|
492 |
|
Funds from operations attributable to Common Shareholders and |
|
$ |
132,231 |
|
|
$ |
104,501 |
|
|
$ |
117,143 |
|
|
|
|
|
|
|
|
|
|
|
|||
Less: Impact of City Point share conversion (b) |
|
|
— |
|
|
|
(906 |
) |
|
|
— |
|
Funds from operations attributable to Common Shareholders and |
|
$ |
132,231 |
|
|
$ |
103,595 |
|
|
$ |
117,143 |
|
|
|
|
|
|
|
|
|
|
|
|||
Funds From Operations per Share - Diluted |
|
|
|
|
|
|
|
|
|
|||
Basic weighted-average shares outstanding, GAAP earnings |
|
|
95,283,752 |
|
|
|
94,575,251 |
|
|
|
87,653,818 |
|
Weighted-average OP Units outstanding |
|
|
7,179,974 |
|
|
|
6,299,222 |
|
|
|
5,115,319 |
|
Basic weighted-average shares and OP Units outstanding, FFO |
|
|
102,463,726 |
|
|
|
100,874,473 |
|
|
|
92,769,137 |
|
Assumed conversion of Preferred OP Units to Common Shares |
|
|
463,898 |
|
|
|
463,898 |
|
|
|
464,623 |
|
Assumed conversion of LTIP units and restricted share units to |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Diluted weighted-average number of Common Shares and Common |
|
|
102,927,624 |
|
|
|
101,338,371 |
|
|
|
93,233,760 |
|
|
|
|
|
|
|
|
|
|
|
|||
Diluted Funds from operations, per Common Share and Common OP Unit (c) |
|
$ |
1.28 |
|
|
$ |
1.02 |
|
|
$ |
1.26 |
|
50
LIQUIDITY AND CAPITAL RESOURCES
Uses of Liquidity and Cash Requirements
Generally, our principal uses of liquidity are (i) distributions to our shareholders and OP unit holders, (ii) investments which include the funding of our capital committed to the Funds and property acquisitions and development/re-tenanting activities within our Core Portfolio, (iii) distributions to our Fund investors, (iv) debt service and loan repayments and (v) share repurchases.
Distributions
In order to qualify as a REIT for federal income tax purposes, we must currently distribute at least 90% of our taxable income to our shareholders. During the year ended December 31, 2023, we paid dividends and distributions on our Common Shares, Common OP Units and Preferred OP Units totaling $68.6 million.
Investments
During the year ended December 31, 2023, Fund V acquired two consolidated properties and one unconsolidated property totaling $189.3 million, inclusive of transaction costs (Note 2, Note 4).
Structured Financing Investments
During the year ended December 31, 2023, we funded $5.3 million of a $12.8 million construction loan commitment to an unconsolidated venture (Note 4). We originated a new $1.4 million Core Portfolio loan and, through Fund V, we refinanced a $31.7 million bridge loan at an unconsolidated property that was originated by Fund V at acquisition with a new mortgage loan at an unconsolidated property.
Capital Commitments
During the year ended December 31, 2023, we made capital contributions aggregating $15.5 million to Funds IV and V, and $1.3 million to Fund II for City Point.
At December 31, 2023, our share of the remaining capital commitments to our Funds aggregated $29.3 million as follows:
Development Activities
During the year ended December 31, 2023, capitalized costs associated with development activities totaled $14.9 million (Note 2). At December 31, 2023, we had a total of twelve consolidated projects under development or redevelopment, for which the estimated total cost to complete these projects through 2025 was $26.1 million to $42.5 million. Substantially all remaining development and redevelopment costs are discretionary, which could be affected by various risks and uncertainties, including, but not limited to, the effects of the current inflationary environment, rising interest rates, and other risks detailed in Item 1A. Risk Factors.
51
Debt
A summary of our consolidated debt, which includes the full amount of Fund related obligations and excludes our pro-rata share of debt at our unconsolidated subsidiaries, is as follows (in thousands):
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
|
|
|
|
|
|
|
||
Total Debt - Fixed and Effectively Fixed Rate |
|
$ |
1,454,707 |
|
|
$ |
1,440,773 |
|
Total Debt - Variable Rate |
|
|
426,380 |
|
|
|
364,641 |
|
|
|
|
1,881,087 |
|
|
|
1,805,414 |
|
Net unamortized debt issuance costs |
|
|
(11,186 |
) |
|
|
(12,697 |
) |
Unamortized premium |
|
|
240 |
|
|
|
343 |
|
Total Indebtedness |
|
$ |
1,870,141 |
|
|
$ |
1,793,060 |
|
As of December 31, 2023, our consolidated indebtedness aggregated $1,881.1 million, excluding unamortized premium of $0.2 million and unamortized loan costs of $11.2 million, and were collateralized by 33 properties and related tenant leases. Stated interest rates on our outstanding indebtedness ranged from 3.99% to SOFR + 3.75% with maturities that ranged from January 2024 to April 2035, without regard to available extension options. Taking into consideration $1,249.8 million of notional principal under variable to fixed-rate swap agreements currently in effect, $1,454.7 million of the portfolio debt, or 77.3%, was fixed at a 4.71% weighted-average interest rate and $426.4 million, or 22.7% was floating at a 7.77% weighted average interest rate as of December 31, 2023. Our variable-rate debt includes $151.4 million of debt subject to interest rate caps.
Without regard to available extension options, at December 31, 2023 there is $327.6 million of debt maturing in 2024 at a weighted-average interest rate of 4.95%; there is $5.6 million of scheduled principal amortization due in 2024; and our share of scheduled 2024 principal payments and maturities on our unconsolidated debt was $69.1 million. In addition, $680.8 million of our total consolidated debt and $10.2 million of our pro-rata share of unconsolidated debt will come due in 2025. As it relates to the aforementioned maturing debt in 2024 and 2025, we have options to extend consolidated debt aggregating $0.0 million and $535.4 million at December 31, 2023, respectively; however, there can be no assurance that we will be able to successfully execute any or all of its available extension options. As it relates to the remaining maturing debt in 2024 and 2025, we may not have sufficient cash on hand to repay such indebtedness, and, therefore, we expect to refinance at least a portion of this indebtedness or select other alternatives based on market conditions as these loans mature; however, there can be no assurance that we will be able to obtain financing at acceptable terms or at all. Our ability to obtain financing could be affected by various risks and uncertainties, including, but not limited to, the effects of the current inflationary environment, rising interest rates, and other risks detailed in Part I, Item 1A. Risk Factors.
Share Repurchase Program
We maintain a share repurchase program under which $122.5 million remains available as of December 31, 2023 (Note 10). The Company did not repurchase any of its Common Shares under this program during the year ended December 31, 2023.
Sources of Liquidity
Our primary sources of capital for funding our short-term (less than 12 months) and long-term (12 months and longer) liquidity needs include (i) the issuance of both public equity and OP Units, (ii) the issuance of both secured and unsecured debt, (iii) unfunded capital commitments from noncontrolling interests within our Funds, (iv) investments of strategic capital (v) future sales of existing properties, (vi) repayments of structured financing investments, and (vii) cash on hand and future cash flow from operating activities. Our cash on hand in our consolidated subsidiaries at December 31, 2023 totaled $17.5 million. Our remaining sources of liquidity are described further below.
Common Share Issuances
We have an ATM Program (Note 10) that provides us with an efficient and low-cost vehicle for raising capital through public equity issuances on an as-we-go basis to fund our capital needs. Through this program, we have been able to effectively “match-fund” the required capital for our Core Portfolio and Fund acquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time, we have issued and intend to continue to issue, equity in follow-on offerings separate from our ATM Program. Net proceeds raised through our ATM Program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions, and for general corporate purposes. We did not sell any shares under our ATM Program for the year ended December 31, 2023.
52
In January 2024, we completed an underwritten offering of 6,900,000 Common Shares (inclusive of the underwriters’ option to purchase 900,000 additional shares) for net proceeds of $113.0 million (Note 17). We intend to use the net proceeds from the Offering for general corporate purposes, which may include, without limitation, the repayment of outstanding indebtedness, funding future acquisitions, working capital and other general corporate purpose activities.
Fund Capital
During the year ended December 31, 2023, Funds IV and V called for capital contributions of $74.8 million, of which our aggregate share was $15.5 million. At December 31, 2023, unfunded capital commitments from noncontrolling interests within our Funds II, III, IV and V were zero, $1.4 million, $20.4 million, and $90.0 million, respectively.
Other Transactions
The contractual lock-up restrictions on our investment in Albertsons expired in January 2023, and we received 1.6 million shares. During the year ended December 31, 2023, we sold 200,000 shares of Albertsons, generating net proceeds of $4.6 million. At December 31, 2023, we held 1.4 million shares which had a fair value of $33.3 million (Note 4, Note 8). In addition, during the year ended December 31, 2023, we recognized dividend income of $29.1 million (inclusive of the $28.2 million special dividend received from Mervyns II investment in Albertsons prior to the expiration of the lockup), of which the Company's share was $12.0 million (Note 8). In April and June 2023, Fund II received $2.0 million, or $1.1 million at the Company’s share, of proceeds from the Century 21 Department Stores LLC bankruptcy claim (Note 11).
During the year ended December 31, 2023, Fund V refinanced a $31.7 million bridge loan at an unconsolidated property that was originated by Fund V at acquisition. We also have one Structured Financing investment in the amount of $21.6 million including accrued interest (exclusive of default interest and other amounts due on the loan that have not been recognized) that previously matured and has not been repaid (Note 3).
Financing and Debt
As of December 31, 2023, we had $106.1 million of additional capacity under existing consolidated Core and Fund revolving debt facilities. In addition, at that date within our Core and Fund portfolios, we had 92 unleveraged consolidated properties with an aggregate carrying value of approximately $1.8 billion, although there can be no assurance that we would be able to obtain financing for these properties at favorable terms, if at all.
HISTORICAL CASH FLOW
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
The following table compares the historical cash flow for the year ended December 31, 2023 with the cash flow for the year ended December 31, 2022 (in millions, totals may not add due to rounding):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
Variance |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net cash provided by operating activities |
|
$ |
155.8 |
|
|
$ |
133.2 |
|
|
$ |
22.6 |
|
Net cash used in investing activities |
|
|
(208.5 |
) |
|
|
(124.2 |
) |
|
|
(84.3 |
) |
Net cash provided by (used in) financing activities |
|
|
45.9 |
|
|
|
(4.4 |
) |
|
|
50.3 |
|
Changes in cash, cash equivalents and restricted cash |
|
$ |
(6.9 |
) |
|
$ |
4.7 |
|
|
$ |
(11.6 |
) |
Operating Activities
Net cash provided by operating activities primarily consists of cash inflows from dividend income and rental revenue, and cash outflows for property operating expenses, general and administrative expenses, and interest and debt expense.
Our operating activities provided $22.6 million more cash for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to the $28.2 million dividend received from our investment in Albertsons in 2023, offset by higher payments of interest in 2023.
53
Investing Activities
Net cash used in investing activities is impacted by our investments in and advances to unconsolidated affiliates, the timing and extent of our real estate development, capital improvements, and acquisition and disposition activities during the period.
Our investing activities used $84.3 million more cash for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to (i) $224.6 million less cash received from the disposition of properties, (ii) $33.3 million less cash received from return of capital from unconsolidated affiliates, (iii) $29.5 million less cash received from repayment of notes receivable, and (iv) $18.5 million more cash used in development, construction, and property improvements. These sources of cash were primarily offset by (i) $117.9 million less cash used for the acquisition of properties, and (ii) $101.0 million less cash used in our investments in and advances to unconsolidated affiliates.
Financing Activities
Net cash used in financing activities is impacted by the timing and extent of issuances of debt and equity securities, distributions paid to common shareholders and unitholders of the Operating Partnership as well as principal and other payments associated with our outstanding indebtedness.
Our financing activities provided $50.3 million more cash during the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily from (i) $145.4 million more cash received in proceeds from debt, (ii) $48.3 million less cash used for distributions to noncontrolling interests, (iii) $24.3 million less cash used for the acquisition of noncontrolling interests, and (iv) $5.3 million from lower financing costs. These decreases were offset by (i) $119.5 million less cash provided by the sale of Common Shares, (ii) $49.5 million less cash provided by contributions from noncontrolling interests, and (iii) $4.0 million more cash used in dividends paid to Common shareholders.
OFF-BALANCE SHEET ARRANGEMENTS
We have the following investments made through joint ventures (that may include, among others, tenancy-in common and other similar investments) for the purpose of investing in operating properties. We account for these investments using the equity method of accounting. As such, our financial statements reflect our investment and our share of income and loss from, but not the individual assets and liabilities, of these joint ventures.
See Note 4 for a discussion of our unconsolidated investments. The Operating Partnership’s pro-rata share of unconsolidated non-recourse debt related to those investments is as follows (dollars in millions):
|
|
Operating Partnership |
|
|
December 31, 2023 |
|||||||||
Investment |
|
Ownership |
|
|
Pro-rata Share of |
|
|
Effective Interest Rate (a) |
|
|
Maturity Date |
|||
Gotham |
|
|
49.0 |
% |
|
$ |
8.5 |
|
|
|
8.36 |
% |
|
Mar 2024 |
Eden Square |
|
|
20.8 |
% |
|
|
5.0 |
|
|
|
7.60 |
% |
|
Sep 2024 |
Crossroads |
|
|
49.0 |
% |
|
|
29.1 |
|
|
|
3.94 |
% |
|
Oct 2024 |
Tri City Plaza(c) |
|
|
18.1 |
% |
|
|
6.9 |
|
|
|
3.04 |
% |
|
Oct 2024 |
Frederick Crossing(c) |
|
|
18.1 |
% |
|
|
4.3 |
|
|
|
3.27 |
% |
|
Dec 2024 |
Paramus Plaza(b) |
|
|
11.6 |
% |
|
|
3.2 |
|
|
|
7.69 |
% |
|
Dec 2024 |
Frederick County Square(c) |
|
|
18.1 |
% |
|
|
4.2 |
|
|
|
5.49 |
% |
|
Jan 2025 |
650 Bald Hill |
|
|
20.8 |
% |
|
|
3.2 |
|
|
|
3.75 |
% |
|
Jun 2026 |
Renaissance(b) |
|
|
20.0 |
% |
|
|
30.4 |
|
|
|
7.15 |
% |
|
Nov 2026 |
840 N. Michigan |
|
|
91.9 |
% |
|
|
50.0 |
|
|
|
6.50 |
% |
|
Dec 2026 |
3104 M Street(b) |
|
|
20.0 |
% |
|
|
0.8 |
|
|
|
8.50 |
% |
|
Jan 2027 |
Wood Ridge Plaza |
|
|
18.1 |
% |
|
|
6.1 |
|
|
|
7.20 |
% |
|
Mar 2027 |
La Frontera |
|
|
18.1 |
% |
|
|
10.0 |
|
|
|
6.11 |
% |
|
Jun 2027 |
Riverdale |
|
|
18.0 |
% |
|
|
6.9 |
|
|
|
7.28 |
% |
|
Nov 2027 |
Georgetown |
|
|
50.0 |
% |
|
|
7.2 |
|
|
|
4.72 |
% |
|
Dec 2027 |
Mohawk Commons |
|
|
18.1 |
% |
|
|
7.2 |
|
|
|
5.80 |
% |
|
Mar 2028 |
Shoppes at South Hills(c) |
|
|
18.1 |
% |
|
|
5.8 |
|
|
|
5.95 |
% |
|
Mar 2028 |
Total |
|
|
|
|
$ |
188.8 |
|
|
|
|
|
|
||
54
CRITICAL ACCOUNTING ESTIMATES
Management’s discussion and analysis of financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, referred to as “GAAP”. The preparation of these Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. We base our estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect the significant judgments and estimates used by us in the preparation of our Consolidated Financial Statements.
Real Estate and Investments in and Advances to Unconsolidated Affiliates – Impairment of Properties
On a periodic basis, we assess whether there are any indicators that the value of real estate assets, including any related right-of-use (“ROU”), intangible assets, undeveloped land and construction in progress, may be impaired. A property’s value is impaired only if the estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. The determination of undiscounted cash flows requires significant estimates by management. In management’s estimate of cash flows, it considers factors such as expected future sale of an asset or development alternatives, capitalization rates and the undiscounted future cash flows analysis, which is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action. Expected future cash flows and recoverability conclusions could be materially impacted by changes in items such as future leasing activity, occupancy, property operating costs, market pricing, our view or strategy relative to a tenant’s business or industry, the manner in which a property is used and the expected hold period of an asset. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated actions could affect the determination of whether an impairment exists and whether the effects could have a material impact on the Company’s net income. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property.
The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties and other investments. These assessments have a direct impact on the Company’s estimates of the projected future cash flows, anticipated holding periods or market conditions change, its evaluation of the impairment charges may be different, and such differences could be material to the Company’s consolidated financial statements. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.
During 2023 and 2022, the Company recognized impairment charges on properties of $3.7 million and $33.3 million, respectively. See Note 8 for a discussion of impairments recognized during the periods presented.
Our investments in unconsolidated joint ventures are reviewed for indicators of impairment on a quarterly basis and we record impairment charges when events or circumstances change indicating that a decline in the fair values below the carrying amounts has occurred and such decline is other-than-temporary. This evaluation of the investments in unconsolidated joint ventures is dependent on a number of factors, including the performance of each investment and market conditions. We will record an impairment charge if we determine that a decline in the fair value below the carrying amount of an investment in an unconsolidated joint venture is other-than-temporary. The fair value is calculated using discounted cash flows which is subjective and considers assumptions regarding future occupancy, future rental rates, future capital requirements, debt interest rates and availability, discount rates and capitalization rates that could differ materially from actual results in future periods.
Revenue Recognition and Receivables – Estimating Collectability
We assess the collectability of our accounts receivable related to tenant revenues under ASC Topic 842 “Leases” (“ASC 842”). Management exercises judgment in assessing collectability and will look to both quantitative and qualitative factors. Such factors include tenants’ current credit status, either from third parties or using an internal risk assessment, payment history, amount of outstanding receivables, tenant sales performance, potential liquidity and current economic and sector specific trends. Changes in our assessments of collectability are recognized as adjustments to rental revenue in accordance with ASC 842. These assessments are inherently sensitive as they are based on the judgment of management and information available at the time of evaluation. We routinely reassess the quantitative and qualitative factors used to derive these estimates and believe the methods and assumptions noted above to be reasonable in evaluating collectability.
Billed tenant receivables, and receivables arising from the straight-lining of rents, are written-off when management deems the collectability of substantially all future lease payments from a specific lease is not probable, at which point, the Company will begin recognizing revenue from such leases prospectively on a cash basis, based on actual amounts received. If the Company subsequently determines that it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term, the Company will reinstate the receivables balance, including those arising from the straight-lining of rents, adjusting for the amount related to the period when the lease was accounted for on a cash basis.
55
Rental revenue for the years ended December 31, 2023, 2022 and 2021 are reported net of our collectability related adjustments of $(1.3) million, $1.5 million, and $1.9 million, respectively (Note 11).
Real Estate – Estimates Related to Valuing Acquired Assets and Liabilities
Upon acquisitions of real estate, we assess the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-” and “below-market” leases, leasing and assumed financing origination costs, acquired in-place leases, other identified intangible assets and assumed liabilities) in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 “Business Combinations” and ASC Topic 350 “Intangibles – Goodwill and Other,” and allocate the purchase price to the acquired assets and assumed liabilities, including land and buildings as if vacant.
We assess fair value based on estimated cash flow projections utilizing appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. Based on these estimates, we allocate the purchase price to the applicable assets and liabilities based on their relative fair values at date of acquisition. In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above-market and below-market leases is estimated based on the present value of the difference between the contractual amounts, including fixed rate below-market renewal options, to be paid pursuant to the in-place leases and our estimate of the market lease rates and other lease provisions for comparable leases measured over a period equal to the estimated remaining term of the lease. Tenant related intangibles and improvements are amortized on a straight-line basis over the related lease term, including any renewal options. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired. We consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below market renewal option and include such renewal options in the calculation of in-place leases. If the value of below-market lease intangibles includes renewal option periods, we include such renewal periods in the amortization period utilized. If a lease terminates prior to its stated expiration, all unamortized amounts relating to that lease are written off.
During the year ended December 31, 2023, we completed two asset acquisitions, and the purchase price of each was allocated based on the relative fair values of the assets acquired and liabilities assumed (Note 2).
Investments in and Advances to Unconsolidated Affiliates – Consolidation
We account for our investments in and advances to unconsolidated affiliates under the equity method of accounting in cases where we exercise significant influence over, but do not control, these entities and are not considered to be the primary beneficiary. We consolidate those joint ventures that we control or which are variable interest entities (each, a "VIE") and where we are considered to be the primary beneficiary. In all these joint ventures, the rights of the joint venture partner are both protective as well as participating. Unless we are determined to be the primary beneficiary in a VIE, these participating rights preclude us from consolidating these VIE entities. Determining control of the entities can be subjective in assessing which activities of the joint venture most significantly impact the economic performance and whether the rights of the joint venture partner are protective or participating. In making this determination, any new or amended joint venture agreement is assessed by the Company for the activities that most significantly impact the joint venture’s economic performance based on the business purpose and design of the venture. We assess the rights that are conveyed to us in the agreement and evaluate whether we are provided with participating or protective rights over the activities that most significantly impact the entity’s economic performance. We also assess the rights of our joint venture partner. Such participating rights include, among other things, the right to approve/amend the annual budget, leasing of the property to a significant tenant, and approval of financing. If our joint venture partner has substantive participating rights and we are determined not to be the primary beneficiary, we do not consolidate the entity. The assets and liabilities of the consolidated VIEs are described in Note 16.
Recently Issued Accounting Pronouncements
Reference is made to Note 1 for information about recently issued and recently adopted accounting pronouncements.
56
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Information as of December 31, 2023
Our primary market risk exposure is to changes in interest rates related to our mortgage and other debt. See Note 7 for certain quantitative details related to our mortgage and other debt.
Currently, we manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap and cap agreements. As of December 31, 2023, we had total mortgage and other notes payable of $1,881.1 million, excluding the unamortized premium of $0.2 million and unamortized debt issuance costs of $11.2 million, of which $1,454.7 million, or 77.3% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $426.4 million, or 22.7%, was variable-rate based upon LIBOR rates plus certain spreads. As of December 31, 2023, we were party to 36 interest rate swap and four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $1,249.8 million and $151.4 million of LIBOR or SOFR-based variable-rate debt, respectively. For a discussion of the risks associated with the discontinuation of LIBOR, see Item 1A. Risk Factors —Risks Related to Our Liquidity and Indebtedness — If we decided to employ higher leverage levels, we would be subject to increased debt service requirements and a higher risk of default on our debt obligations, which could adversely affect our financial conditions, cash flows and ability to make distributions to our shareholders. In addition, increases or changes in interest rates could cause our borrowing costs to rise and may limit our ability to refinance debt.
The following table sets forth information as of December 31, 2023 concerning our long-term debt obligations, including principal cash flows by scheduled maturity and weighted average interest rates of maturing amounts (dollars in millions):
Core Consolidated Mortgage and Other Debt
Year |
|
Scheduled |
|
|
Maturities |
|
|
Total |
|
|
Weighted-Average |
|
||||
2024 |
|
$ |
1.8 |
|
|
$ |
7.3 |
|
|
$ |
9.1 |
|
|
|
4.7 |
% |
2025 |
|
|
2.0 |
|
|
|
273.3 |
|
|
|
275.3 |
|
|
|
4.7 |
% |
2026 |
|
|
2.4 |
|
|
|
400.0 |
|
|
|
402.4 |
|
|
|
4.7 |
% |
2027 |
|
|
2.3 |
|
|
|
200.1 |
|
|
|
202.4 |
|
|
|
4.6 |
% |
2028 |
|
|
1.8 |
|
|
|
67.9 |
|
|
|
69.7 |
|
|
|
4.5 |
% |
Thereafter |
|
|
2.5 |
|
|
|
93.7 |
|
|
|
96.2 |
|
|
|
5.6 |
% |
|
|
$ |
12.8 |
|
|
$ |
1,042.3 |
|
|
$ |
1,055.1 |
|
|
|
|
|
Fund Consolidated Mortgage and Other Debt
Year |
|
Scheduled |
|
|
Maturities |
|
|
Total |
|
|
Weighted-Average |
|
||||
2024 |
|
$ |
3.8 |
|
|
$ |
320.3 |
|
|
$ |
324.1 |
|
|
|
5.0 |
% |
2025 |
|
|
0.5 |
|
|
|
405.0 |
|
|
|
405.5 |
|
|
|
7.3 |
% |
2026 |
|
|
0.2 |
|
|
|
34.5 |
|
|
|
34.7 |
|
|
|
6.6 |
% |
2027 |
|
|
0.4 |
|
|
|
— |
|
|
|
0.4 |
|
|
|
— |
% |
2028 |
|
|
0.2 |
|
|
|
61.1 |
|
|
|
61.3 |
|
|
|
6.0 |
% |
Thereafter |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
% |
|
|
$ |
5.1 |
|
|
$ |
820.9 |
|
|
$ |
826.0 |
|
|
|
|
|
Mortgage Debt in Unconsolidated Partnerships (at our Pro-Rata Share)
Year |
|
Scheduled |
|
|
Maturities |
|
|
Total |
|
|
Weighted-Average |
|
||||
2024 |
|
$ |
13.0 |
|
|
$ |
56.1 |
|
|
$ |
69.1 |
|
|
|
5.0 |
% |
2025 |
|
|
6.0 |
|
|
|
4.2 |
|
|
|
10.2 |
|
|
|
5.5 |
% |
2026 |
|
|
6.0 |
|
|
|
61.0 |
|
|
|
67.0 |
|
|
|
6.7 |
% |
2027 |
|
|
0.6 |
|
|
|
29.6 |
|
|
|
30.2 |
|
|
|
6.3 |
% |
2028 |
|
|
— |
|
|
|
12.3 |
|
|
|
12.3 |
|
|
|
5.9 |
% |
Thereafter |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
% |
|
|
$ |
25.6 |
|
|
$ |
163.2 |
|
|
$ |
188.8 |
|
|
|
|
|
57
Without regard to available extension options, in 2024, $333.2 million of our total consolidated debt and $69.1 million of our pro-rata share of unconsolidated outstanding debt will become due. In addition, $680.8 million of our total consolidated debt and $10.2 million of our pro-rata share of unconsolidated debt will become due in 2025. As it relates to the maturing debt in 2024 and 2025, we have options to extend consolidated debt aggregating $0.0 million and $535.4 million, respectively; however, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options. As we intend on refinancing some or all of such debt at the then-existing market interest rates, which may be greater than the current interest rate, our interest expense would increase by approximately $10.8 million annually if the interest rate on the refinanced debt increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $5.6 million. Interest expense on our consolidated variable-rate debt of $426.4 million, net of variable to fixed-rate swap agreements currently in effect, as of December 31, 2023, would increase $4.3 million if interest rates increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $1.7 million. We may seek additional variable-rate financing if and when pricing and other commercial and financial terms warrant. As such, we would consider hedging against the interest rate risk related to such additional variable-rate debt through interest rate swaps and protection agreements, or other means.
Based on our outstanding debt balances as of December 31, 2023, the fair value of our total consolidated outstanding debt would decrease by approximately $6.9 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding debt would increase by approximately $6.6 million.
As of December 31, 2023, and 2022, we had consolidated notes receivable of $124.9 million and $123.9 million, respectively. We determined the estimated fair value of our notes receivable by discounting future cash receipts utilizing a discount rate equivalent to the rate at which similar notes receivable would be originated under conditions then existing.
Based on our outstanding notes receivable balances as of December 31, 2023, the fair value of our total outstanding notes receivable would decrease by approximately $0.6 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding notes receivable would increase by approximately $0.6 million.
Summarized Information as of December 31, 2022
As of December 31, 2022, we had total mortgage and other notes payable of $1,805.4 million, excluding the unamortized premium of $0.3 million and unamortized debt issuance costs of $12.7 million, of which $1,440.8 million, or 79.8% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $364.6 million, or 20.2%, was variable-rate based upon LIBOR, SOFR or Prime rates plus certain spreads. As of December 31, 2022, we were party to 36 interest rate swap and three interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $1,264.0 million and $103.8 million of variable-rate debt, respectively.
Interest expense on our variable-rate debt of $364.6 million as of December 31, 2022, would have increased $3.6 million if corresponding rate indices increased by 100 basis points. Based on our outstanding debt balances as of December 31, 2022, the fair value of our total outstanding debt would have decreased by approximately $5.4 million if interest rates increased by 1%. Conversely, if interest rates decreased by 1%, the fair value of our total outstanding debt would have increased by approximately $6.5 million.
Changes in Market Risk Exposures from December 31, 2022 to December 31, 2023
Our interest rate risk exposure from December 31, 2022, to December 31, 2023, has increased on an absolute basis, as the $364.6 million of variable-rate debt as of December 31, 2022, has increased to $426.4 million as of December 31, 2023. As a percentage of our overall debt, our interest rate risk exposure has increased as our variable-rate debt accounted for 20.2% of our consolidated debt as of December 31, 2022 compared to 22.7% as of December 31, 2023.
58
ITEM 8. FINANCIAL STATEMENTS.
ACADIA REALTY TRUST AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
|
|
Page |
|
|
|
Financial Statements: |
|
|
|
60 |
|
|
62 |
|
Consolidated Balance Sheets as of December 31, 2023 and 2022 |
|
63 |
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021 |
|
64 |
|
65 |
|
|
66 |
|
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 |
|
68 |
|
70 |
|
|
|
|
Financial Statement Schedules: |
|
|
|
115 |
|
|
119 |
59
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Trustees of Acadia Realty Trust
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Acadia Realty Trust and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders' equity, and cash flows, for the year ended December 31, 2023, and the related notes, and the schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Operating real estate, net — Impairment — Refer to Notes 1, 2 and 8 to the financial statements
Critical Audit Matter Description
The Company reviews its real estate assets for impairment periodically or when there is an event or a change in circumstances that indicates the carrying amount may not be recoverable. The Company’s evaluation of the recoverability of real estate assets involves the comparison of undiscounted future cash flows expected to be generated by each real estate asset over the Company’s estimated holding period to the respective carrying amount. The cash flow analysis considers factors such as expected future operating income, trends, and prospects, as well as the effects of demand, competition, and other factors. If the Company is evaluating the potential sale of an asset, the undiscounted future cash flows analysis is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action for that particular asset as of the balance sheet date. If an impairment is indicated, an impairment loss is recognized equal to the excess of the carrying amount of the asset over its estimated fair value.
The determination of anticipated undiscounted cash flows is inherently subjective, requiring significant estimates and assumptions to be made by management such as future market rental rates and capitalization rates.
60
We identified the impairment of certain real estate assets as a critical audit matter because of the significant estimates and assumptions management makes related to future market rental rates and capitalization rates. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s undiscounted future cash flows analysis.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the undiscounted future cash flows analysis included the following, among others:
/s/ Deloitte & Touche LLP
New York, New York
February 16, 2024
We have served as the Company’s auditor since 2023.
61
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Trustees
Acadia Realty Trust
Rye, New York
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Acadia Realty Trust (the “Company”) as of December 31, 2022, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ BDO USA, LLP
We have served as the Company's auditor from 2005 to 2022.
March 1, 2023
62
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
December 31, |
|
|
December 31, |
|
||
(dollars in thousands, except share and per share data) |
|
2023 |
|
|
2022 |
|
||
ASSETS |
|
|
|
|
|
|
||
Investments in real estate, at cost |
|
|
|
|
|
|
||
Operating real estate, net |
|
$ |
|
|
$ |
|
||
Real estate under development |
|
|
|
|
|
|
||
Net investments in real estate |
|
|
|
|
|
|
||
Notes receivable, net ($ |
|
|
|
|
|
|
||
Investments in and advances to unconsolidated affiliates |
|
|
|
|
|
|
||
Other assets, net |
|
|
|
|
|
|
||
Right-of-use assets - operating leases, net |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Restricted cash |
|
|
|
|
|
|
||
Marketable securities |
|
|
|
|
|
|
||
Rents receivable, net |
|
|
|
|
|
|
||
Assets of properties held for sale |
|
|
|
|
|
|
||
Total assets (a) |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
|
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
|
||
Mortgage and other notes payable, net |
|
$ |
|
|
$ |
|
||
Unsecured notes payable, net |
|
|
|
|
|
|
||
Unsecured line of credit |
|
|
|
|
|
|
||
Accounts payable and other liabilities |
|
|
|
|
|
|
||
Lease liability - operating leases |
|
|
|
|
|
|
||
Dividends and distributions payable |
|
|
|
|
|
|
||
Distributions in excess of income from, and investments in, unconsolidated affiliates |
|
|
|
|
|
|
||
Total liabilities (a) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Redeemable noncontrolling interests (Note 10) |
|
|
|
|
|
|
||
Equity: |
|
|
|
|
|
|
||
Acadia Shareholders' Equity |
|
|
|
|
|
|
||
Common shares, $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Accumulated other comprehensive income |
|
|
|
|
|
|
||
Distributions in excess of accumulated earnings |
|
|
( |
) |
|
|
( |
) |
Total Acadia shareholders’ equity |
|
|
|
|
|
|
||
Noncontrolling interests |
|
|
|
|
|
|
||
Total equity |
|
|
|
|
|
|
||
Total liabilities, redeemable noncontrolling interests, and equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements
63
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
Year Ended December 31, |
|
|||||||||
(in thousands except per share amounts) |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
Revenues |
|
|
|
|
|
|
|
|
|
|||
Rental |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other |
|
|
|
|
|
|
|
|
|
|||
Total revenues |
|
|
|
|
|
|
|
|
|
|||
Expenses |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
General and administrative |
|
|
|
|
|
|
|
|
|
|||
Real estate taxes |
|
|
|
|
|
|
|
|
|
|||
Property operating |
|
|
|
|
|
|
|
|
|
|||
Impairment charges |
|
|
|
|
|
|
|
|
|
|||
Total expenses |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Gain on disposition of properties |
|
|
|
|
|
|
|
|
|
|||
Operating income |
|
|
|
|
|
|
|
|
|
|||
Equity in (losses) earnings of unconsolidated affiliates |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|||
Realized and unrealized holding gains (losses) on investments and other |
|
|
|
|
|
( |
) |
|
|
|
||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
(Loss) income from continuing operations before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Income tax provision |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net (loss) income |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net loss attributable to redeemable noncontrolling interests |
|
|
|
|
|
|
|
|
|
|||
Net loss (income) attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
( |
) |
||
Net income (loss) attributable to Acadia shareholders |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|||
Basic earnings (loss) per share |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Diluted earnings (loss) per share |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|||
Weighted average shares for basic earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|||
Weighted average shares for diluted earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|||
The accompanying notes are an integral part of these consolidated financial statements
64
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
Year Ended December 31, |
|
|||||||||
(in thousands) |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net (loss) income |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|||
Unrealized gain on valuation of swap agreements |
|
|
|
|
|
|
|
|
|
|||
Reclassification of realized interest on swap agreements |
|
|
( |
) |
|
|
|
|
|
|
||
Other comprehensive (loss) income |
|
|
( |
) |
|
|
|
|
|
|
||
Comprehensive (loss) income |
|
|
( |
) |
|
|
|
|
|
|
||
Comprehensive loss attributable to redeemable noncontrolling interests |
|
|
|
|
|
|
|
|
|
|||
Comprehensive loss (income) attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
( |
) |
||
Comprehensive income attributable to Acadia shareholders |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The accompanying notes are an integral part of these consolidated financial statements.
65
ACADIA REALTY TRUST AND SUBSIDIARIES
Years Ended December 31, 2023, 2022, and 2021
|
|
Acadia Shareholders |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
(in thousands, except per share amounts) |
|
Common |
|
|
Share |
|
|
Additional |
|
|
Accumulated |
|
|
Distributions |
|
|
Total |
|
|
Noncontrolling |
|
|
Total |
|
|
Redeemable Noncontrolling Interest |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at January 1, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|||
Dividends/distributions declared ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
City Point Loan Advances |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
City Point Loan accrued interest, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Employee and trustee stock compensation, net |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||||
Noncontrolling interest distributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Noncontrolling interest contributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
||
Reallocation of noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
||
Balance at December 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at January 1, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
||||||
Issuance of Common Shares, net |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||||
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|||
Dividends/distributions declared ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Acquisition of noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
||
City Point Loan Advances |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
City Point Loan accrued interest, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Employee and trustee stock compensation, net |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||||
Noncontrolling interest distributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Noncontrolling interest contributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Reclassification of redeemable noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Reallocation of noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
Balance at December 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at January 1, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
||||||
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|||
Cancellation of OP Units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Issuance of Common Shares |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||||
Dividends/distributions declared ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Employee and trustee stock compensation, net |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||||
Noncontrolling interest distributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Noncontrolling interest contributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||
Comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||||
Reallocation of noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
||
Balance at December 31, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
||||||
66
The accompanying notes are an integral part of these consolidated financial statements.
67
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Year Ended December 31, |
|
|||||||||
(in thousands) |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|||
Net (loss) income |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Gain on disposition of properties and other investments |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net unrealized holding (gains) losses on investments |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Stock compensation expense |
|
|
|
|
|
|
|
|
|
|||
Straight-line rents |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Equity in losses (earnings) of unconsolidated affiliates |
|
|
|
|
|
|
|
|
( |
) |
||
Distributions of operating income from unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
|||
Adjustments to straight-line rent reserves |
|
|
|
|
|
( |
) |
|
|
|
||
Amortization of financing costs |
|
|
|
|
|
|
|
|
|
|||
Non-cash lease expense |
|
|
|
|
|
|
|
|
|
|||
Adjustments to allowance for credit loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Acceleration of below market lease |
|
|
( |
) |
|
|
|
|
|
|
||
Impairment charges |
|
|
|
|
|
|
|
|
|
|||
Termination of ground lease |
|
|
|
|
|
|
|
|
( |
) |
||
Other, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|||
Rents receivable |
|
|
|
|
|
|
|
|
|
|||
Other liabilities |
|
|
|
|
|
( |
) |
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
( |
) |
|
|
|
||
Prepaid expenses and other assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Lease liability - operating leases |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|||
Acquisitions of real estate |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds from the disposition of properties and other investments, net |
|
|
|
|
|
|
|
|
|
|||
Investments in and advances to unconsolidated affiliates |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Development, construction and property improvement costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Refund (deposits) for properties under purchase contract |
|
|
|
|
|
( |
) |
|
|
|
||
Deposits for properties under sale contract |
|
|
|
|
|
|
|
|
|
|||
Change in control of previously unconsolidated affiliate |
|
|
|
|
|
|
|
|
|
|||
Return of capital from unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
|||
Payment of deferred leasing costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Acquisition of investment interests |
|
|
|
|
|
( |
) |
|
|
|
||
Proceeds from sale of marketable securities |
|
|
|
|
|
|
|
|
|
|||
Proceeds from repayment of notes receivable |
|
|
|
|
|
|
|
|
|
|||
Issuance of notes receivable |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|||
Proceeds from unsecured debt |
|
|
|
|
|
|
|
|
|
|||
Principal payments on unsecured debt |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds from the sale of Common Shares |
|
|
|
|
|
|
|
|
|
|||
Capital contributions from noncontrolling interests |
|
|
|
|
|
|
|
|
|
|||
Principal payments on mortgage and other notes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Distributions to noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Dividends paid to Common Shareholders |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds received from mortgage and other notes |
|
|
|
|
|
|
|
|
|
|||
Payment of deferred financing and other costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Acquisition of noncontrolling interest |
|
|
|
|
|
( |
) |
|
|
|
||
Payments of finance lease obligations |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net cash provided by (used in) financing activities |
|
|
|
|
|
( |
) |
|
|
|
||
Changes in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents of $ |
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents of $ |
|
$ |
|
|
$ |
|
|
$ |
|
|||
68
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
|
|
Year Ended December 31, |
|
|||||||||
(in thousands) |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
|
|||
Cash paid during the period for interest, net of capitalized interest of $ |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cash paid for income taxes, net of (refunds) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Supplemental disclosure of non-cash investing and financing activities |
|
|
|
|
|
|
|
|
|
|||
Distribution declared and payable |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Assumption of accounts payable and accrued expenses through acquisition of real estate |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Right-of-use assets, operating leases exchanged for operating lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Disposition of 146 Geary Street upon deed-in-lieu of foreclosure |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Extinguishment of the obligations under the mortgage loan for 146 Geary Street upon deed-in-lieu of foreclosure |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Issuance of note receivable used as capital contributions from redeemable noncontrolling interests |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Accrued interest on note receivable recorded to redeemable noncontrolling interest |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Distributions to noncontrolling interests of marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reclassification of investment in unconsolidated affiliate to marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reclassification of noncontrolling interest in excess of amount paid to additional paid-in capital |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Acquisition of real estate through assumption of debt |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Settlement of note receivable through cancellation of OP Units |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Change in control of previously unconsolidated investment |
|
|
|
|
|
|
|
|
|
|||
Increase in real estate |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Increase in mortgage notes payable |
|
|
|
|
|
|
|
|
|
|||
Decrease in investments in and advances to unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
|||
Decrease in notes receivable |
|
|
|
|
|
|
|
|
|
|||
Decrease in reserve on note receivable |
|
|
|
|
|
( |
) |
|
|
|
||
Decrease in accrued interest on notes receivable |
|
|
|
|
|
|
|
|
|
|||
Change in other assets and liabilities |
|
|
|
|
|
|
|
|
|
|||
Increase in cash and restricted cash upon change of control |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The accompanying notes are an integral part of these consolidated financial statements.
69
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and Summary of Significant Accounting Policies
Organization
Acadia Realty Trust, (the “Trust”, collectively with its consolidated subsidiaries, the “Company”), a Maryland real estate investment trust (“REIT”), is a fully-integrated equity REIT focused on the ownership, acquisition, development, and management of retail properties located primarily in high-barrier-to-entry, supply-constrained, densely populated metropolitan areas in the United States.
All of the Company’s assets are held by, and all of its operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and entities in which the Operating Partnership owns an interest. As of December 31, 2023 and 2022, the Trust controlled approximately
As of December 31, 2023, the Company has ownership interests in
The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns II and earns fees or priority distributions for asset management, property management, construction, development, leasing, and legal services. Cash flows from the Funds and Mervyns II are distributed pro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return (“Preferred Return”) and the return of all capital contributions. Thereafter, remaining cash flow is distributed
The following table summarizes the general terms and Operating Partnership’s equity interests in the Funds and Mervyns II (dollars in millions):
Entity |
|
Formation |
|
Operating |
|
|
Capital Called |
|
|
Unfunded |
|
|
Equity Interest |
|
|
Preferred |
|
|
Total |
|
||||||
Fund II and Mervyns II (c) |
|
6/2004 |
|
|
% |
|
$ |
|
|
$ |
|
|
|
% |
|
|
% |
|
$ |
|
||||||
Fund III |
|
5/2007 |
|
|
% |
|
|
|
|
|
|
|
|
% |
|
|
% |
|
|
|
||||||
Fund IV |
|
5/2012 |
|
|
% |
|
|
|
|
|
|
|
|
% |
|
|
% |
|
|
|
||||||
Fund V |
|
8/2016 |
|
|
% |
|
|
|
|
|
|
|
|
% |
|
|
% |
|
|
|
||||||
70
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
Principles of Consolidation
The consolidated financial statements include the consolidated accounts of the Company and its investments in partnerships and limited liability companies in which the Company has control, including where the Company has been determined to be a primary beneficiary of a variable interest entity ("VIE"), in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810 “Consolidation” (“ASC Topic 810”). The ownership interests of other investors in these entities are recorded as noncontrolling interests. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities for which the Company has the ability to exercise significant influence over, but does not have financial or operating control and does not consolidate, are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings (or losses) of these entities are included in Equity in (losses) earnings of unconsolidated affiliates in the Consolidated Statement of Operations.
Use of Estimates
Generally accepted accounting principles (“GAAP”) requires the Company’s management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition and the collectability of notes receivable and rents receivable. Application of these estimates and assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.
Segments
We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. We define our reportable segments to be aligned with our method of internal reporting and the way our chief operating decision maker makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable operating segments: Core Portfolio, Funds and Structured Financing, based on the economic characteristics and nature of our assets and services.
Reclassifications
Certain prior year amounts with regard to general reserves for leases and rental revenue have been reclassified to conform to the current year presentation. These reclassifications had no effect on the reported results of operations. Financial Statement Schedule II was also removed to conform to the current year presentation in the footnotes to the consolidated financial statements.
Summary of Significant Accounting Policies
Real Estate
Land, buildings, and personal property are carried at cost less accumulated depreciation. Improvements and significant renovations that extend the useful life of the properties are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Real estate under development includes costs for significant property expansion and development. Construction in progress pertains to construction activity at the Company’s operating properties that are in service and continue to operate during the construction period.
Depreciation is computed on the straight-line basis over estimated useful lives of the assets as follows:
Buildings and improvements |
Useful lives of |
Furniture and fixtures |
Useful lives, ranging from |
Tenant improvements |
Shorter of economic life or lease terms |
If the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition will commence when the improvements are substantially completed, and possession or control of the space is turned over to the tenant. If the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition when possession or control of the space is turned
71
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
over to the tenant for tenant work to begin. The lease incentive is recorded as a deferred expense and amortized as a reduction of revenue on a straight-line basis over the respective lease term.
Purchase Accounting – Upon acquisitions of real estate, the Company assesses the fair value of acquired assets and assumed liabilities (including land, buildings and improvements, and identified intangibles such as above- and below-market leases and acquired in-place leases) in accordance with ASC Topic 805, “Business Combinations” and ASC Topic 350 “Intangibles – Goodwill and Other,” and allocates the acquisition price based on their relative fair values. When acquisitions of properties do not meet the criteria for business combinations, they are accounted for as asset acquisitions; therefore,
The Company assesses the fair value of its tangible assets acquired and liabilities assumed based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information at the measurement period. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property.
In determining the value of above- and below-market leases, the Company estimates the present value difference between contractual rent obligations and estimated market rate of leases at the time of the transaction. To the extent there were fixed-rate options at below-market rental rates, the Company included these periods along with the current term below-market rent in arriving at the fair value of the acquired leases. The discounted difference between contract and market rents is being amortized to rental revenue over the remaining applicable lease term, inclusive of any option periods.
In determining the value of acquired in-place leases, the Company considers market conditions at the time of the transaction and values the costs to execute similar leases during the expected lease-up period from vacancy to existing occupancy, including carrying costs. The value assigned to in-place leases and tenant relationships is amortized to depreciation and amortization expense over the estimated remaining term of the leases. If a lease were to be terminated prior to its scheduled expiration, all unamortized costs (e.g., lease intangibles) relating to that lease would be written off.
The Company estimates the value of any assumption of mortgage debt based on market conditions at the time of acquisitions including prevailing interest rates, terms, and ability to obtain financing for a similar asset. Mortgage debt discounts or premiums are included in the carrying value of the debt and amortized into interest expense over the remaining term of the related debt instrument.
Real Estate Under Development – The Company capitalizes certain costs related to the development of real estate. Interest and real estate taxes incurred during the period of the construction, expansion or development of real estate are capitalized and depreciated over the estimated useful life of the building. The Company will cease the capitalization of these costs when construction activities are substantially completed and the property is available for occupancy by tenants, but no later than one year from the completion of major construction activity, at which time the project is placed in service and depreciation commences. If the Company suspends substantially all activities related to the development of a qualifying asset, the Company will cease capitalization of interest and taxes until activities are resumed.
Real Estate Impairment – The Company reviews its real estate, real estate under development and right-of-use assets for impairment periodically or when there is an event or a change in circumstances that indicates that the carrying amount may not be recoverable. In cases where the Company does not expect to recover its carrying amounts on properties held for use, the Company reduces its carrying amounts to fair value. The determination of anticipated undiscounted cash flows considers the most likely expected course of action at the balance sheet date based on current plans, intended holding periods and available market information. If the Company is evaluating the potential sale of an asset, the undiscounted future cash flows analysis is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action as of the balance sheet date. Such cash flow projections consider factors such as expected future operating income, trends, and prospects, as well as the effects of demand, competition, and other factors. If an impairment is indicated, an impairment loss is recognized based on the excess of the carrying amount of the asset over its estimated fair value based on third-party appraisals, broker selling estimates, sale agreements under negotiation, and/or final selling prices, when available. The determination of anticipated undiscounted cash flows is inherently subjective, requiring significant estimates to be made by management such as market rental rates and capitalization rates, and considers the most likely expected course of action at the balance sheet date based on current plans and available market information. See Note 8 for information about impairment charges recorded during the periods presented.
Dispositions of Real Estate – The Company recognizes property sales in accordance with ASC Topic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets. Sales of real estate include the sale of investments in real estate properties and real estate joint ventures. Gains on the sale of investment in real estate are recognized, and the related real estate derecognized, when the Company has satisfied its performance obligations by transferring control of the property. Typically, the timing of payment and satisfaction of performance obligations occur simultaneously on the disposition date.
72
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Real Estate Held for Sale – The Company generally considers assets to be held for sale when certain criteria have been met, and management believes it is probable that the disposition will occur within one year. Properties are held for sale for a period longer than one year if events or circumstances out of the Company's control occur that delay the sale and while management continues to be committed to the plan of sale and is performing actions necessary to respond to the conditions causing the delay the properties held for sale remain salable in their current condition. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value, less cost to sell, and depreciation and amortization are no longer recognized. Held for sale properties are evaluated quarterly to ensure that properties continue to meet the held for sale criteria. If properties are required to be reclassified from held for sale to held for use due to changes to a plan of sale, they are recorded at the lower of fair value or the carrying amount before the property was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used. Properties that do not meet the held for sale criteria are accounted for as operating properties.
Notes Receivable
Notes receivable include certain loans that are held for investment and are collateralized by real estate-related investments and may be subordinate to other senior loans. Notes receivable are reported net of an allowance for current expected credit losses (“CECL”) and are recorded at stated principal amounts or at initial investment less accretive yield for loans purchased at a discount, which is accreted over the life of the note. The Company defers loan origination and commitment fees, net of origination costs, and amortizes them over the term of the related loan. Changes in cash flows from previous estimates are included in future interest income on a prospective basis and a new effective interest rate is computed based on the current cost basis of the instrument and remaining cash flows. Earnings from these notes and mortgages receivable are reported within the Company’s Structured Financing segment (Note 12). Interest receivable is included in Other assets (Note 5).
The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company’s loan in relation to other debt secured by the collateral and the prospects of the borrower. Given the small number of notes outstanding, the Company believes the characteristics of its notes are not sufficiently similar to allow an evaluation as a group for CECL allowance. As such, all of the Company’s notes are evaluated individually for this purpose. The Company evaluates the collectability of both principal and interest based upon an assessment of the underlying collateral value to determine whether the note is impaired. Allowance for CECL represents management’s estimate of future losses based on national historical economic loss rates for similar obligations, management’s estimate of future economic impacts and factors specific to the borrower. Impairment charges may be required if and when such amounts are estimated to be nonrecoverable upon a realization event, which is generally at the time a loan is repaid, or in the case of foreclosure, when the underlying asset is sold; however, non-recoverability may also be concluded if it is reasonably certain that all amounts due will not be collected.
Pursuant to ASC 326, certain of the Company’s loans are considered “collateral dependent” in that settlement of the amount is likely to be achieved by obtaining access to the collateral (e.g., notes in default). The same valuation techniques are used to value the collateral for such collateral dependent instruments as those used to determine the fair value of real estate investments for impairment purposes.
Interest income on performing notes is accrued as earned. The Company assesses the probability of a borrower’s ability to repay the loan similar to the factors noted above. We consider a loan to be past due when amounts contractually due have not been paid. Loans are placed on a non-accrual status at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income becomes doubtful. Interest income recognition is resumed on any loan that is on non-accrual status when such loan becomes contractually current and performance is demonstrated to be resumed.
Allowance for Credit Losses
The Company’s estimated allowance for CECL related to its Structured Financing segment (including unfunded commitments and guarantees) has been computed for its amortized cost basis in the portfolio, including accrued interest (Note 5), factoring in the Company’s historical results and loss experience in the United States for similar loans, as adjusted for current conditions, as well as the Company’s expectations related to future economic conditions. If the Company has determined that a loan or a portion of a loan is uncollectible, it will write-off the loan through an adjustment to its CECL allowance based on the net present value of expected future cash flows or the fair value of the collateral less costs to sell, if repayment is expected from the sale of the collateral. The write-offs are recorded in the period in which the loan balance is deemed uncollectible based on management’s judgment. The Company records the CECL allowance related to its City Point Loan (Note 10) as a reduction to redeemable noncontrolling interest.
73
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments in and Advances to Unconsolidated Joint Ventures
Some of the Company’s unconsolidated joint ventures obtain non-recourse third-party financing on their property investments, contractually limiting the Company’s exposure to losses. The Company recognizes income for distributions in excess of its investment where there is no recourse to the Company and no intention or obligation to contribute additional capital. For investments in which there is recourse to the Company or an obligation or intention to contribute additional capital exists, distributions in excess of the investment are recorded as a liability.
When characterizing distributions from unconsolidated investees within the Company's consolidated statements of cash flows, all distributions received are first applied as returns on investment to the extent there are cumulative earnings related to the respective investment and are classified as cash inflows from operating activities. If cumulative distributions are in excess of cumulative earnings, distributions are considered return of investment. In such cases, the distribution is classified as cash inflows from investing activities.
To the extent that the Company’s carrying basis in an unconsolidated affiliate is different from the basis reflected at the joint venture level, the basis difference is amortized over the life of the related assets and included in the Company’s share of equity in earnings (losses) of unconsolidated affiliates.
The Company periodically reviews its investments in unconsolidated joint ventures for other-than-temporary losses in investment value. A decline in the value of our other investments may require us to recognize an other-than-temporary impairment (“OTTI”) against such assets. When the fair value of an investment is determined to be less than its amortized cost at the balance sheet date, we assess whether the decline is temporary or other-than-temporary. If we intend to sell an impaired asset, or it is more likely than not that we will be required to sell the impaired asset before any anticipated recovery, then we must recognize an OTTI through charges to earnings equal to the entire difference between the asset’s amortized cost and its fair value at the balance sheet date. When an OTTI is recognized through earnings, a new cost basis is established for the asset, and the new cost basis may not be adjusted through earnings for subsequent recoveries in fair value.
Fair Value Measurements
The Company follows the guidance in the FASB ASC Topic 820, Fair Value Measurements and Disclosures ("Topic 820"), to determine the fair value of financial and non-financial instruments. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considering counterparty credit risk. The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value:
Level 1 - quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities;
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and interest rate swaps;
Level 3 - Financial instruments or other assets/liabilities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring the Company to develop its own assumptions. For significant Level 3 items, the Company has also provided the unobservable inputs.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed the limits insured by the Federal Deposit Insurance Corporation.
Restricted Cash
Restricted cash consists principally of cash held for real estate taxes, construction costs, property maintenance, insurance, minimum occupancy, and property operating income requirements at specific properties as required by certain loan agreements.
74
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marketable Equity Securities
The Company classifies its marketable equity securities as available-for-sale in accordance with the FASB’s Investments-Debt and Equity Securities guidance. In accordance with ASC Topic 825 Financial Instruments: the Company recognizes changes in the fair value of equity investments with readily determinable fair values in Realized and unrealized holding gains on investments and other on the Company's Consolidated Statements of Operations.
Deferred Costs
External fees and costs paid in the successful negotiation of leases are deferred and amortized on a straight-line basis over the terms of the respective leases. External fees and costs incurred in connection with obtaining financing are deferred and amortized as a component of interest expense over the term of the related debt obligation on a straight-line basis, which approximates the effective interest method.
Derivative Instruments and Hedging Activities
The Company measures derivative instruments at fair value and records them as assets or liabilities, depending on its rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated and that qualified as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in Accumulated other comprehensive income on the Consolidated Balance Sheets until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. The Company accounts for its share of cash flow hedges from non-consolidated entities as part of Investment in and advances to unconsolidated affiliates and Accumulated other comprehensive income on the Consolidated Balance Sheets.
Although the Company's derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both the Company and its counterparties under certain situations, the Company does not net its derivative fair values or any existing rights or obligations to cash collateral on the Consolidated Balance Sheets. The Company does not use derivatives for trading or speculative purposes. The Company will discontinue hedge accounting on a prospective basis with changes in the estimated fair value reflected in earnings when (i) it is determined that the derivative is no longer effective in offsetting cash flows of a hedged item (including forecasted transactions), (ii) it is no longer probable that the forecasted transaction will occur, or (iii) it is determined that designating the derivative as an interest rate swap is no longer appropriate. For the periods presented, all of the Company's derivatives qualified and were designated as cash flow hedges, and none of its derivatives were deemed ineffective.
Noncontrolling Interests
Noncontrolling interests represent the portion of equity that the Company does not own in those entities it consolidates. Noncontrolling interests also include amounts related to Common and Preferred OP Units issued to unrelated third parties in connection with certain property acquisitions. The Company identifies its noncontrolling interests separately within the equity section on the Company’s Consolidated Balance Sheets. Redeemable noncontrolling interests that are redeemable at the option of the holder are classified outside of shareholders' equity in accordance with Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity on the Company’s Consolidated Balance Sheets as temporary equity under the caption, Redeemable noncontrolling interests, and are measured at their redemption values at the end of each period. If the redemption value is greater than the carrying value, an adjustment is recorded in Additional paid-in capital to record the noncontrolling at its redemption value. The amounts of consolidated net earnings attributable to the Company and to the noncontrolling interests are presented separately on the Company’s Consolidated Statements of Operations.
Variable Interest Entities
The Company consolidates a VIE in which it is considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The Company assesses the accounting treatment and determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion on an ongoing basis when certain events occur. In determining whether the Company is the primary beneficiary, it evaluates its control rights as well as economic interests in the entity held either directly or indirectly by the Company. Each entity is assessed on an individual basis to determine the rights provided to each party and whether those rights are protective or participating. For all VIEs, the Company reviews such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity's economic performance.
75
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For those entities evaluated under the voting interest model, the Company consolidates the entity if it has a controlling financial interest. The Company has a controlling financial interest in a voting interest entity (“VOE”) if it owns a majority voting interest in the entity. Investments in entities for which the Company has the ability to exercise significant influence over the entity, but does not have financial or operating control through its voting interest and entities which are VIEs but where the Company is not the primary beneficiary, are accounted for using the equity method of accounting.
Revenue Recognition
Rental Revenue - The Company recognizes rental revenue from fixed and variable lease payments, as designated within tenant operating leases in accordance with ASC Topic 842, Leases (“ASC 842”), as further described below, as Rental revenue on the Consolidated Statement of Operations. We evaluate the collectability of amounts due from tenants and disputed enforceable charges on a lease-by-lease basis, which result from the inability of tenants to make required payments under their operating lease agreements. We recognize changes in the collectability assessment of these operating leases as adjustments to rental revenue in accordance with ASC 842.
Other Revenue - The Company recognizes other categories of revenue such as parking and storage, as well as management, leasing, legal, development and construction fees charged to our unconsolidated affiliates.
Leases
Pursuant to ASC 842, the Company does not separate the non-lease components, such as common area maintenance, from its leases. In addition, the Company accounts for those taxes that it pays on behalf of the tenant as reimbursable costs and does not account for those taxes paid directly by the tenant. Minimum rents from tenants are recognized using the straight-line method over the non-cancelable lease term of the respective leases, unless another systematic and rational basis is more representative of the pattern in which benefit is expected to be derived from the use of the underlying asset. At December 31, 2023 and 2022, unbilled rents receivable relating to the straight-lining of rents of $
Contractual rent increases of renewal options are often fixed at the initial lease agreement. In addition to fixed base rents, variable rental revenue is derived from certain leases that are dependent on percentage rents based upon the level of sales achieved by the tenant. Percentage rent is recognized in the period when the tenants’ sales breakpoint is met. In addition, variable rental revenue is derived from leases through reimbursement to the Company by our tenants for real estate taxes, insurance, and other property operating expenses. These reimbursements are recognized as revenue in the period the related expenses are incurred.
Right-of-use ("ROU") assets are recorded for properties the Company leases from third parties, and represent our right to use an underlying asset for the lease term, and the corresponding lease liabilities represent our obligation to make lease payments arising from these leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The initial measurement of a ROU asset may differ from the initial measurement of the lease liability due to initial direct costs, prepaid lease payments and lease incentives. Our leases often offer renewal options, which we assess against relevant economic factors to determine whether the Company is reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods, for which the Company has determined are reasonably certain of being exercised, are included in the measurement of the corresponding lease liability and the ROU asset.
For finance leases and operating leases, the discount rate applied to measure each ROU asset and lease liability is based on the incremental borrowing rate of the lease due to the rate implicit in the lease not being readily determinable. The Company initially considers the general economic environment and factors in various financing and asset specific secured borrowings so that the overall incremental borrowing rate is appropriate to the intended use of the lease. Certain expenses derived from these leases are variable and are not included in the measurement of the corresponding lease liability and ROU asset, but are recognized in the period in which the obligation for those payments is incurred. These variable lease payments consist of payments for real estate taxes and common area maintenance, which is dependent on projects and activities at each individual property under ground or building lease.
Right-of-use assets – finance leases are included in Operating real estate (Note 2) on the Consolidated Balance Sheets. Lease liabilities – finance leases are included in Accounts payable and other liabilities on the Consolidated Balance Sheets (Note 5). Operating lease cost comprises amortization of ROU assets for operating properties (related to ground rents) or amortization of ROU assets for office and corporate assets and is included in Property operating expense or General and administrative expense, respectively, on the Consolidated Statements of Operations.
76
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Finance lease cost comprises amortization of ROU assets for certain ground leases, which is included in Property operating expense, as well as interest on lease liabilities, which is included in Interest expense on the Consolidated Statements of Operations.
Accounts Receivable
In addition to the lease-specific collectability assessment, the Company also recognizes a general allowance based on the Company’s historical collection experience, for its portfolio of operating lease receivables which are not expected to be fully collectible. The Company estimates the collectability of its accrued rent and accounts receivable balances related to lease revenue. The Company estimates the collectability of the accounts receivable related to billed rents, straight-line rents, recoveries from tenants, and other revenue taking into consideration the Company's historical write-off experience, tenant creditworthiness, current economic trends, and remaining lease terms. Rents receivable at December 31, 2023 and 2022 are shown net of a general allowance of $
Stock-Based Compensation
Stock-based compensation expense for all equity-classified stock-based compensation awards is based on the grant date fair value estimated in accordance with current accounting guidance for share-based payments. The Company recognizes these compensation costs for only those shares or units expected to vest on a straight-line or graded-vesting basis, as appropriate, over the requisite service period of the award. The Company records forfeitures during the period in which they occur by reversing all previously recorded stock compensation expense associated with the forfeited shares. Dividends declared on awards issued are recorded as cumulative distributions in excess of retained earnings on the Consolidated Balance Sheets. Accumulated dividends related to forfeited awards are reversed through compensation expense in the period the forfeiture occurs. The Company includes stock-based compensation within general and administrative expense on the Consolidated Statements of Operations.
Income Taxes
The Company has made an election to be taxed, and believes it qualifies, as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). To maintain REIT status for federal income tax purposes, the Company is generally required to distribute at least
The Company is permitted to participate in certain activities and still maintain its qualification as a REIT, so long as these activities are conducted in entities that elect to be treated as taxable subsidiaries under the Code. As such, the Company is subject to federal and state income taxes on the income from these activities.
Although it may qualify for REIT status for federal income tax purposes, the Company is subject to state or local income or franchise taxes in certain jurisdictions in which some of its properties are located. In addition, taxable income from non-REIT activities managed through the Company’s Taxable REIT Subsidiary (“TRS”) is fully subject to federal, state and local income taxes.
The Company accounts for TRS income taxes under the liability method as required by ASC Topic 740, “Income Taxes.” Under the liability method, deferred income taxes are recognized for the temporary differences between the GAAP basis and tax basis of the TRS income, assets, and liabilities.
Recent Accounting Pronouncements
In January 2021, the FASB issued Accounting Standards Update (“ASU”) 2021-01, “Reference Rate Reform (Topic 848): Scope”, which modifies ASC 848, Reference Rate Reform (“ASC 848”), which was intended to provide relief related to “contracts and transactions that reference LIBOR
77
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
or a reference rate was discontinued effective June 30, 2023 as a result of reference rate reform.” ASU 2021-01 expands the scope of ASC 848 to include all affected derivatives and give reporting entities the ability to apply certain aspects of the contract modification and hedge accounting expedients to derivative contracts affected by the discounting transition. ASU 2020-04, “Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, also adds implementation guidance to clarify which optional expedients in ASC 848 may be applied to derivative instruments that do not reference LIBOR or a reference rate that is expected to be discontinued, but that are being modified as a result of the discounting transition. The Company has elected the optional practical expedients under ASU 2020-04 and 2021-01, which allows entities to account for the modification as if the modification was not substantial, and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of hedge accounting expedients preserved the presentation of derivatives consistent with past presentation. As a result, the implementation of this guidance did not have an effect on the Company’s consolidated financial statements.
In December 2022, the FASB issued ASU 2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The guidance in this update defers the sunset date of ASC 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The amendments are effective for all entities in scope upon issuance of the ASU. The Company transitioned all variable rate loans to SOFR or another applicable benchmark index and will apply the relief based Topic 848 in line with the sunset date.
In August 2023, the FASB issued ASU 2023-05, ”Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement” (“ASU 2023-05”). ASU 2023-05 addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements. Prior to the amendment, the FASB did not provide specific authoritative guidance on the initial measurement of assets and liabilities assumed by a joint venture upon its formation. ASU 2023-05 requires a joint venture to recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance). ASU 2023-05 is effective for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. The Company has elected not to early adopt ASU 2023-05 and does not expect the adoption will have a significant impact on our consolidated financial statements.
Any other recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the Company, or they are not expected to have a material impact on the consolidated financial statements.
2. Real Estate
The Company’s real estate is comprised of the following for the periods presented (in thousands):
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
|
|
|
|
|
|
|
||
Land |
|
$ |
|
|
$ |
|
||
Buildings and improvements |
|
|
|
|
|
|
||
Tenant improvements |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
(Note 11) |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Less: Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Operating real estate, net |
|
|
|
|
|
|
||
Real estate under development |
|
|
|
|
|
|
||
Net investments in real estate |
|
$ |
|
|
$ |
|
||
78
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Acquisitions and Foreclosure
During the years ended December 31, 2023 and 2022, the Company acquired (through purchase, investment, or foreclosure) the following retail properties and other real estate investments (dollars in thousands):
Property and Location |
|
Percent |
|
Date of |
|
Purchase |
|
|
Fund V 2023 Acquisitions |
|
|
|
|
|
|
|
|
Cypress Creek - Tampa, FL |
|
|
July 3, 2023 |
|
$ |
|
||
Maple Tree Place - Williston, VT |
|
|
November 27, 2023 |
|
|
|
||
Total Fund V 2023 Acquisitions |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
2022 Acquisitions and Foreclosure |
|
|
|
|
|
|
|
|
Core |
|
|
|
|
|
|
|
|
121 Spring Street - New York, NY |
|
|
Jan 12, 2022 |
|
$ |
|
||
Williamsburg Collection - Brooklyn, NY (a) |
|
(a) |
|
Feb 18, 2022 |
|
|
|
|
8833 Beverly Boulevard - West Hollywood, CA |
|
|
Mar 2, 2022 |
|
|
|
||
Henderson Avenue Portfolio - Dallas, TX (b) |
|
|
Apr 18, 2022 |
|
|
|
||
Subtotal Core |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund III |
|
|
|
|
|
|
|
|
640 Broadway - New York, NY (Foreclosure) (c) |
|
|
Jan 26, 2022 |
|
|
|
||
Subtotal Fund III |
|
|
|
|
|
|
|
|
Total 2022 Acquisitions and Foreclosure |
|
|
|
|
|
$ |
|
|
For the years ended December 31, 2023 and 2022, the Company capitalized $
79
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Purchase Price Allocations
The purchase prices for the 2023 Acquisitions and 2022 Acquisitions and Foreclosure were allocated to the acquired assets and assumed liabilities based on their estimated relative fair values at the dates of acquisition.
|
|
Land |
|
|
Buildings and improvements |
|
|
Intangible assets |
|
|
Right-of-use asset |
|
|
Lease liability |
|
|
Intangible liabilities |
|
Other assets, net |
|
|
Net assets acquired |
|
||||||||
Property Name |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cypress Creek |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
$ |
|
|
$ |
|
||||||
Maple Tree Place |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|||||||
2023 Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
121 Spring Street |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||||||
Williamsburg Collection |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|||||||
8833 Beverly Boulevard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Henderson Avenue Portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|||||||
640 Broadway (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
||||||
2022 Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
$ |
|
|
$ |
|
||||||
The Company determines the fair value of the individual components of real estate asset acquisitions primarily through calculating the "as-if vacant" value of a building, using an income approach, which relies significantly upon internally determined assumptions. The Company has determined that these estimates primarily rely on Level 3 inputs, which are unobservable inputs based on our own assumptions.
|
|
2023 |
|
|
2022 |
|
||||||||
|
|
Low |
|
High |
|
|
Low |
|
High |
|
||||
Exit Capitalization Rate |
|
|
% |
|
% |
|
|
% |
|
% |
||||
Annual net rental rate per square foot on acquired buildings |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Annual net rental rate per square foot on acquired ground lease |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
The estimate of the portion of the "as-if vacant" value that is allocated to the land underlying the acquired real estate relies on Level 3 inputs and is primarily determined by reference to recent comparable transactions.
80
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dispositions
During the years ended December 31, 2023 and 2022, the Company disposed of the following properties and other real estate investments (in thousands):
Property and Location |
|
Owner |
|
Sale Date |
|
Sale Price |
|
|
Gain (Loss) |
|
||
2023 Dispositions (a) |
|
|
|
|
|
|
|
|
|
|
||
None |
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
2022 Dispositions |
|
|
|
|
|
|
|
|
|
|
||
NE Grocer Portfolio (Selected Assets) - Pennsylvania |
|
Fund IV |
|
|
$ |
|
|
$ |
|
|||
New Towne (Parcel) - Canton, MI |
|
Fund V |
|
|
|
|
|
|
|
|||
Cortlandt Crossing - Westchester County, NY |
|
Fund III |
|
|
|
|
|
|
|
|||
Lincoln Place - Fairview Heights, IL |
|
Fund IV |
|
|
|
|
|
|
|
|||
Wake Forest Crossing - Wake Forest, NC |
|
Fund IV |
|
|
|
|
|
|
|
|||
Henderson Avenue (Parcel) - Dallas, TX |
|
Core |
|
|
|
|
|
|
( |
) |
||
330-340 River Street - Cambridge, MA |
|
Core |
|
|
|
|
|
|
|
|||
Total 2022 Dispositions |
|
|
|
|
|
$ |
|
|
$ |
|
||
Properties Held for Sale
At December 31, 2023 and 2022, the Company had one Core property under contract for sale with assets totaling $
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Assets |
|
|
|
|
|
|
||
Buildings and improvements |
|
$ |
|
|
$ |
|
||
Land |
|
|
|
|
|
|
||
Tenant improvements |
|
|
|
|
|
|
||
Less: Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
$ |
|
||
Real Estate Under Development
Real estate under development represents the Company’s properties that have not yet been placed into service while undergoing substantial development or construction.
Development activity for the Company’s properties comprised the following during the periods presented (dollars in thousands):
|
|
January 1, 2023 |
|
|
Year Ended December 31, 2023 |
|
|
December 31, 2023 |
|
|||||||||||||||||||
|
|
Number of |
|
|
Carrying |
|
|
Transfers In |
|
|
Capitalized |
|
|
Transfers Out |
|
|
Number of |
|
|
Carrying |
|
|||||||
Core |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|||||||
Fund II |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fund III |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fund IV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|||||||
81
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
January 1, 2022 |
|
|
Year Ended December 31, 2022 |
|
|
December 31, 2022 |
|
|||||||||||||||||||
|
|
Number of |
|
|
Carrying |
|
|
Transfers In |
|
|
Capitalized |
|
|
Transfers Out |
|
|
Number of |
|
|
Carrying |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Core |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|||||||
Fund II (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fund III |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fund IV (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|||||||
The number of properties in the tables above refers to projects comprising the entire property under development; however, certain projects represent a portion of a property. At December 31, 2023, development projects included: portions of the Henderson 1 & 2 Portfolio, in Core, and Broad Hollow Commons in Fund III. During the year ended December 31, 2023, the Company:
At December 31, 2022, development projects included: portions of the Henderson 1 & 2 Portfolio in Core, Broad Hollow Commons in Fund III and a portion of 717 N. Michigan Avenue at Fund IV. During the year ended December 31, 2022, the Company:
3. Notes Receivable, Net
The Company’s notes receivable, net are generally collateralized either by the underlying properties or the borrowers’ ownership interests in the entities that own the properties, and were as follows (dollars in thousands):
|
|
December 31, |
|
|
December 31, |
|
|
December 31, 2023 |
||||||||
Description |
|
2023 |
|
|
2022 |
|
|
Number |
|
|
Maturity Date |
|
Interest Rate |
|||
Core Portfolio (a) |
|
$ |
|
|
$ |
|
|
|
|
|
- |
|
||||
Allowance for credit losses |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
Notes receivable, net |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|||
Changes in the Company’s CECL allowance were as follows (dollars in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
CECL Allowance beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Provision of loan losses |
|
|
|
|
|
( |
) |
|
|
|
||
Write-offs |
|
|
|
|
|
( |
) |
|
|
|
||
Total - CECL Allowance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
82
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Due to the lack of comparability across the Structured Financing portfolio, each note was evaluated separately. As a result, the Company did not elect the collateral-dependent practical expedient for four of its notes with a total amortized cost of $
Default
One Core Portfolio note aggregating $
During the year ended December 31, 2023, the Company:
During the year ended December 31, 2022, the Company:
83
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Investments in and Advances to Unconsolidated Affiliates
The Company’s investments in and advances to unconsolidated affiliates consist of the following (dollars in thousands):
|
|
|
|
Ownership Interest |
|
December 31, |
|
|
December 31, |
|
||
Portfolio |
|
Property |
|
December 31, 2023 |
|
2023 |
|
|
2022 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Core: |
|
Renaissance Portfolio |
|
|
$ |
|
|
$ |
|
|||
|
|
Gotham Plaza |
|
|
|
|
|
|
|
|||
|
|
Georgetown Portfolio (a) |
|
|
|
|
|
|
|
|||
|
|
1238 Wisconsin Avenue (a, b) |
|
|
|
|
|
|
|
|||
|
|
840 N. Michigan Avenue (d) |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Mervyns II: |
|
KLA/ABS (c) |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
Fund IV: |
|
Fund IV Other Portfolio |
|
|
|
|
|
|
|
|||
|
|
650 Bald Hill Road |
|
|
|
|
|
|
|
|||
|
|
Paramus Plaza |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Fund V: |
|
Family Center at Riverdale (d) |
|
|
|
|
|
|
|
|||
|
|
Tri-City Plaza |
|
|
|
|
|
|
|
|||
|
|
Frederick County Acquisitions |
|
|
|
|
|
|
|
|||
|
|
Wood Ridge Plaza |
|
|
|
|
|
|
|
|||
|
|
La Frontera Village |
|
|
|
|
|
|
|
|||
|
|
Shoppes at South Hills (e) |
|
|
|
|
|
|
|
|||
|
|
Mohawk Commons |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Various: |
|
Due from (to) Related Parties |
|
|
|
|
|
|
|
|
||
|
|
Other (f) |
|
|
|
|
|
|
|
|
||
|
|
Investments in and advances to |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Core: |
|
Crossroads (g) |
|
|
$ |
|
|
$ |
|
|||
|
|
840 N. Michigan Avenue (d, g) |
|
|
|
|
|
|
|
|||
|
|
Distributions in excess of income from, |
|
|
|
$ |
|
|
$ |
|
||
84
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the year ended December 31, 2023, the Company:
In December 2023, an unconsolidated venture that holds an interest in a property on North Michigan Avenue modified its $
In December 2023, the Company acquired an additional
During the year ended December 31, 2022, the Company:
85
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fees from Unconsolidated Affiliates
The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling $
In addition, the Company’s joint ventures paid certain unaffiliated partners of its joint ventures, $
86
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summarized Financial Information of Unconsolidated Affiliates
The following combined and condensed Balance Sheets and Statements of Operations, in each period, summarized the financial information of the Company’s investments in unconsolidated affiliates that were held as of December 31, 2023, and accordingly exclude the results of any investments disposed of or consolidated prior to that date (in thousands):
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Combined and Condensed Balance Sheets |
|
|
|
|
|
|
||
Assets: |
|
|
|
|
|
|
||
Rental property, net |
|
$ |
|
|
$ |
|
||
Real estate under development |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
Liabilities and partners’ equity: |
|
|
|
|
|
|
||
Mortgage notes payable |
|
$ |
|
|
$ |
|
||
Other liabilities |
|
|
|
|
|
|
||
Partners’ equity |
|
|
|
|
|
|
||
Total liabilities and partners’ equity |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Company's share of accumulated equity |
|
$ |
|
|
$ |
|
||
Basis differential |
|
|
|
|
|
|
||
Deferred fees, net of portion related to the Company's interest |
|
|
|
|
|
|
||
Amounts receivable to/payable by the Company |
|
|
|
|
|
|
||
Investments in and advances to unconsolidated affiliates, net of Company's |
|
|
|
|
|
|
||
Investments carried at fair value or cost |
|
|
|
|
|
|
||
Company's share of distributions in excess of income from and |
|
|
|
|
|
|
||
Investments in and advances to unconsolidated affiliates |
|
$ |
|
|
$ |
|
||
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
Combined and Condensed Statements of Operations |
|
|
|
|
|
|
|
|
|
|||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Operating and other expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Gain (loss) on extinguishment of debt (a) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Impairment of Investment (b) |
|
|
|
|
|
( |
) |
|
|
|
||
Gain on disposition of properties (c) |
|
|
|
|
|
|
|
|
|
|||
Net (losses) earnings attributable to unconsolidated affiliates |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Company’s share of equity in net losses of unconsolidated affiliates |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Basis differential amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Company’s equity in (losses) earnings of unconsolidated affiliates |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
87
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Other Assets, Net and Accounts Payable and Other Liabilities
Other assets, net and accounts payable and other liabilities are comprised of the following for the periods presented:
|
|
December 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2023 |
|
|
2022 |
|
||
Other Assets, Net: |
|
|
|
|
|
|
||
Lease intangibles, net (Note 6) |
|
$ |
|
|
$ |
|
||
Derivative financial instruments (Note 8) |
|
|
|
|
|
|
||
Deferred charges, net (a) |
|
|
|
|
|
|
||
Accrued interest receivable (Note 3) |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Due from seller |
|
|
|
|
|
|
||
Income taxes receivable |
|
|
|
|
|
|
||
Deposits |
|
|
|
|
|
|
||
Corporate assets, net |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
(a) Deferred Charges, Net: |
|
|
|
|
|
|
||
Deferred leasing and other costs (a) |
|
$ |
|
|
$ |
|
||
Deferred financing costs related to line of credit |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Accumulated amortization |
|
|
( |
) |
|
|
( |
) |
Deferred charges, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Accounts Payable and Other Liabilities: |
|
|
|
|
|
|
||
|
$ |
|
|
$ |
|
|||
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Deferred income |
|
|
|
|
|
|
||
Tenant security deposits, escrow and other |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Derivative financial instruments (Note 8) |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
88
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Lease Intangibles
Intangible assets and liabilities are included in Other assets and Accounts payable and other liabilities (Note 5) on the Consolidated Balance Sheets and summarized as follows (in thousands):
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
||||||||||||||||||
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Carrying |
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Carrying |
|
||||||
Amortizable Intangible Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
In-place lease intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Above-market rent |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortizable Intangible Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Below-market rent |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Above-market ground lease |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
During the year ended December 31, 2023, the Company:
During the year ended December 31, 2022, the Company:
Amortization of in-place lease intangible assets is recorded in depreciation and amortization expense and amortization of above-market rent and below-market rent is recorded as a reduction to and increase to rental income, respectively, on the Consolidated Statements of Operations. Amortization of above-market ground leases are recorded as a reduction to rent expense on the Consolidated Statements of Operations.
The scheduled amortization of acquired lease intangible assets and assumed liabilities as of December 31, 2023 is as follows (in thousands):
Years Ending December 31, |
|
Net Increase in |
|
|
Increase to |
|
|
Reduction of |
|
|||
2024 |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
2025 |
|
|
|
|
|
( |
) |
|
|
|
||
2026 |
|
|
|
|
|
( |
) |
|
|
|
||
2027 |
|
|
|
|
|
( |
) |
|
|
|
||
2028 |
|
|
|
|
|
( |
) |
|
|
|
||
89
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Debt
A summary of the Company’s consolidated indebtedness is as follows (dollars in thousands):
|
|
Interest Rate at |
|
|
|
Carrying Value at |
|
|||||||
|
|
December 31, |
|
December 31, |
|
Maturity Date at |
|
December 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
2022 |
|
December 31, 2023 |
|
2023 |
|
|
2022 |
|
||
Mortgages Payable |
|
|
|
|
|
|
|
|
|
|
|
|
||
Core |
|
|
|
|
$ |
|
|
$ |
|
|||||
Fund II (a) |
|
SOFR+ |
|
SOFR+ |
|
|
|
|
|
|
|
|||
Fund III |
|
SOFR+ |
|
SOFR+ |
|
|
|
|
|
|
|
|||
Fund IV (b) |
|
SOFR+ |
|
LIBOR+ |
|
|
|
|
|
|
|
|||
Fund V |
|
SOFR + |
|
LIBOR + |
|
|
|
|
|
|
|
|||
Net unamortized debt issuance costs |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Unamortized premium |
|
|
|
|
|
|
|
|
|
|
|
|
||
Total Mortgages Payable |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Unsecured Notes Payable |
|
|
|
|
|
|
|
|
|
|
|
|
||
Core Term Loans (c) |
|
SOFR+ |
|
|
|
$ |
|
|
$ |
|
||||
Fund V Subscription Facility |
|
SOFR+ |
|
SOFR+ |
|
|
|
|
|
|
|
|||
Net unamortized debt issuance costs |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Total Unsecured Notes Payable |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Unsecured Line of Credit |
|
|
|
|
|
|
|
|
|
|
|
|
||
Revolving credit facility (c) |
|
SOFR+ |
|
SOFR+ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total Debt (d)(e) |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||
Net unamortized debt issuance costs |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Unamortized premium |
|
|
|
|
|
|
|
|
|
|
|
|
||
Total Indebtedness |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||
Unsecured Debt
Credit Facility
The Operating Partnership has a $
Revolving Credit Facility
At December 31, 2023, The Revolver bears interest at SOFR +
90
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Core Term Loans
At December 31, 2023, the Term Loan bears interest at SOFR +
On April 6, 2022, the Operating Partnership entered into a $
On July 29, 2022, the Operating Partnership entered into the $
Fund V Subscription Facility
Fund V has a $
Mortgages and Other Notes Payable
During the year ended December 31, 2023, the Company (amounts represent balances at the time of transactions):
During the year ended December 31, 2022, the Company (amounts represent balances at the time of transactions):
91
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A portion of the Company’s variable-rate mortgage debt has been effectively fixed through certain cash flow hedge transactions (Note 8).
At December 31, 2023 and 2022, the Company’s mortgages were collateralized by
On July 15, 2023, the 146 Geary Street, Fund IV non-recourse mortgage loan with an outstanding balance of $
Scheduled Debt Principal Payments
The scheduled principal repayments, without regard to available extension options (described further below), of the Company’s consolidated indebtedness, as of December 31, 2023 are as follows (in thousands):
Maturities |
|
|
|
|
2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
Unamortized premium |
|
|
|
|
Net unamortized debt issuance costs |
|
|
( |
) |
Total indebtedness |
|
$ |
|
|
The table above does not reflect available extension options (subject to customary conditions) on debt balances as of December 31, 2023. The Company has debt balances of $
8. Financial Instruments and Fair Value Measurements
Items Measured at Fair Value on a Recurring Basis
The methods and assumptions described below were used to estimate the fair value of each class of financial instrument.
92
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marketable Equity Securities — The Company has an investment in marketable equity securities of Albertsons, which has a readily determinable market value (traded on an exchange) and is being accounted for as a Level 1 investment. This investment was included in Marketable securities and Investments in and advances to unconsolidated affiliates on the Consolidated Balance Sheets at December 31, 2023 and 2022, respectively.
Derivative Financial Instruments — The Company has derivative assets, which are included in Other assets, net on the Consolidated Balance Sheets, and are comprised of interest rate swaps and caps. The Company has derivative liabilities, which are included in Accounts payable and other liabilities on the Consolidated Balance Sheets and are comprised of interest rate swaps. The derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands):
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
||||||||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marketable equity securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivative financial instruments |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The Company did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the year ended December 31, 2023 or 2022.
Marketable Equity Securities
During the year ended December 31, 2023, the Company sold
During the year ended December 31, 2023 and 2022, the Company recognized dividend income from marketable securities of $
The following table represents the realized and unrealized gain (loss) on marketable securities included in Realized and unrealized holding gains on investments and other on the Company's Consolidated Statements of Operations (in thousands):
|
Year Ended December 31, |
|
|||||||||
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
Realized gain on marketable securities |
$ |
|
|
$ |
|
|
$ |
|
|||
Less: previously recognized unrealized gains on marketable securities sold during the period |
|
( |
) |
|
|
|
|
|
|
||
Unrealized gains (losses) on marketable securities still held at the end of the period and through the disposition date on marketable securities sold during the period |
|
|
|
|
( |
) |
|
|
|
||
Gain on marketable securities, net |
$ |
|
|
$ |
( |
) |
|
$ |
|
||
93
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Items Measured at Fair Value on a Nonrecurring Basis
Impairment Charges
Impairment charges for the periods presented are as follows (in thousands):
|
|
|
|
|
|
|
|
Impairment Charge (a) |
|
|||||
Property and Location |
|
Owner |
|
Triggering Event |
|
Effective Date |
|
Total |
|
|
Acadia's Share |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
2023 Impairment Charges |
|
|
|
|
|
|
|
|
|
|
|
|
||
146 Geary Street, |
|
Fund IV |
|
|
Sept 30, 2023 |
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
2022 Impairment Charges |
|
|
|
|
|
|
|
|
|
|
|
|
||
146 Geary Street, |
|
Fund IV |
|
|
Sept 30, 2022 |
|
$ |
|
|
$ |
|
|||
717 N. Michigan Avenue, |
|
Fund IV |
|
|
Sept 30, 2022 |
|
|
|
|
|
|
|||
Total 2022 Impairment Charges |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||
Redeemable Noncontrolling Interests
The Company has redeemable noncontrolling interests related to certain properties. The Company is required to periodically review these redeemable noncontrolling interests to in order to compare the redemption value to the carrying value. See Note 10 for further discussion regarding these interests.
94
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivative Financial Instruments
The Company had the following interest rate swaps and caps for the periods presented (dollars in thousands):
|
|
|
|
|
|
|
|
|
Strike Rate |
|
|
|
Fair Value |
|
||||||||||
Derivative |
|
Aggregate Notional Amount |
|
|
Effective Date |
|
Maturity Date |
|
Low |
|
|
High |
|
Balance Sheet |
|
December 31, |
|
|
December 31, |
|
||||
Core |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Rate Swaps |
|
$ |
|
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|||||||
Interest Rate Swaps |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|||||||
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fund II |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Rate Swap |
|
$ |
|
|
|
|
|
— |
|
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fund III |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Rate Cap |
|
$ |
|
|
|
|
|
— |
|
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fund IV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Rate Cap |
|
$ |
|
|
|
|
|
— |
|
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fund V |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Rate Swaps |
|
$ |
|
|
|
|
|
|
— |
|
|
|
$ |
|
|
$ |
|
|||||||
Interest Rate Caps |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
||||||||
Interest Rate Swaps |
|
|
|
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
|||||||
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total asset derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||||
Total liability derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
All of the Company’s derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable-rate debt (Note 7). It is estimated that approximately $
During the year ended December 31, 2023, the Company terminated
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its debt funding and, from time to time, through the use of derivative financial instruments. The Company enters into derivative financial instruments to manage exposures that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.
The Company is exposed to credit risk in the event of non-performance by the counterparties to the swaps if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions.
95
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Credit Risk-Related Contingent Features
The Company has agreements with each of its swap counterparties that contain a provision whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its swaps, resulting in an acceleration of payment under the swaps.
Other Financial Instruments
The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands, inclusive of amounts attributable to noncontrolling interests where applicable):
|
|
|
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
|||||||||||
|
|
Level |
|
|
Carrying |
|
|
Estimated |
|
|
Carrying |
|
|
Estimated |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Notes Receivable (a) |
|
|
3 |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
City Point Loan (a) |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgages Payable (a) |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment in non-traded equity securities (b) |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unsecured notes payable and Unsecured line of credit (c) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
The Company’s cash and cash equivalents, restricted cash, rents receivable, accounts payable and certain financial instruments (classified as Level 1) included in other assets and other liabilities had fair values that approximated their carrying values due to their short maturity profiles at December 31, 2023 and 2022.
9. Commitments and Contingencies
The Company is involved in various matters of litigation arising out of, or incidental to, its business. While the Company is unable to predict with certainty the outcome of any particular matter, management does not expect, when such litigation is resolved, that the Company’s resulting exposure to loss contingencies, if any, will have a material adverse effect on its consolidated financial position or results of operations.
Commitments and Guaranties
From time to time, the Company (or ventures in which the Company has an ownership interest) has agreed, and may in the future agree, to guarantee portions of the principal, interest and other amounts in connection with their borrowings, provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) in connection with their borrowings and provide guarantees to lenders, tenants and other third parties for the completion of development projects.
With respect to borrowings of our consolidated entities, the Company has guaranteed $
96
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Additionally, in connection with the refinancing of the La Frontera Village mortgage loan of $
In conjunction with the development and expansion of various properties, the Company has entered into agreements with general contractors for the construction or development of properties aggregating approximately $
Gain Contingency
The Company entered into a purchase and sale agreement (together with subsequent amendments thereto) to sell its West Shore Expressway property in the Core Portfolio. At the request of the former potential buyer, the Company extended the closing date numerous times in exchange for additional non-refundable deposits and contributions towards the carrying costs of the property. The agreement terminated and expired by its terms on August 2, 2023, and the $
Insurance Coverage
We carry insurance coverage on our properties of different types and in amounts with deductibles that we believe are in line with coverage customarily obtained by owners of similar properties.
Common Shares and Units
In addition to the ATM Program and share repurchase activity discussed below, the Company completed the following transactions during the year ended December 31, 2023:
In addition to the ATM Program and share repurchase activity discussed below, the Company completed the following transactions during the year ended December 31, 2022:
In January 2024, the Company completed an underwritten offering of
97
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ATM Program
The Company has an at-the-market equity issuance program (“ATM Program”) that provides the Company an efficient vehicle for raising public equity capital to fund its needs. The Company entered into its current $
Share Repurchase Program
During 2018, the Company’s board of trustees (the “Board”) approved a new share repurchase program, which authorizes management, at its discretion, to repurchase up to $
Dividends and Distributions
The following table sets forth the distributions declared and/or paid during the periods presented:
Date Declared |
|
Amount Per Share |
|
|
Record Date |
|
Payment Date |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
||||
|
$ |
|
|
|
||||
|
$ |
|
|
|
||||
|
$ |
|
|
|
||||
|
$ |
|
|
|
||||
|
$ |
|
|
|
||||
|
$ |
|
|
|
||||
|
$ |
|
|
|
||||
98
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Noncontrolling Interests
The following tables summarize the change in the noncontrolling interests for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands):
|
|
Noncontrolling |
|
|
Noncontrolling |
|
|
Total |
|
|
Redeemable Noncontrolling Interests (c) |
|
||||
Balance at January 1, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Conversion of |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Distributions declared of $ |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
City Point Loan |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
City Point Loan accrued interest |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Employee and trustee stock compensation, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noncontrolling interest distributions |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Noncontrolling interest contributions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) for the year ended December 31, 2023 |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Other comprehensive (loss) income - unrealized gain on valuation of swap agreements |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Reclassification of realized interest expense on swap agreements |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Reallocation of noncontrolling interests (d) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Balance at December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at January 1, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Conversion of |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Distributions declared of $ |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Acquisition of noncontrolling interest (e) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
City Point Loan |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
City Point Loan accrued interest |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Employee and trustee stock compensation, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noncontrolling interest distributions |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Noncontrolling interest contributions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss for the year ended December 31, 2022 |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive income - unrealized gain on valuation of swap agreements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reclassification of realized interest expense on swap agreements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reclassification of redeemable noncontrolling interests(f) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Reallocation of noncontrolling interests (d) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at December 31, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
99
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Noncontrolling |
|
|
Noncontrolling |
|
|
Total |
|
|
Redeemable Noncontrolling Interests (c) |
|
||||
Balance at January 1, 2021 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Conversion of |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Cancellation of OP units(g) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Distributions declared of $ |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Employee and trustee stock compensation, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noncontrolling interest distributions |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Noncontrolling interest contributions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income for the year ended December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive loss - unrealized loss on valuation of swap agreements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reclassification of realized interest expense on swap agreements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reallocation of noncontrolling interests (d) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Balance at December 31, 2021 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Redeemable Noncontrolling Interests
Williamsburg Portfolio
In connection with the Williamsburg Portfolio acquisition in February 2022 (Note 2), the Company evaluated the Williamsburg Noncontrolling Interest ("Williamsburg NCI"), which represents the venture partner's one-time right to put its
City Point Loan
In August 2022, the Company provided a loan, through a separate lending subsidiary, to other Fund II investors in City Point, through a separate borrower subsidiary, to fund the investors' pro-rata contribution necessary to complete the refinancing of the City Point debt, of which $
100
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In connection with the City Point Loan, each partner has a one-time right to put its City Point NCI to the Company for redemption in exchange for the settlement of its proportion of the City Point Loan amount plus either (i) a fixed cash amount or (ii) a cash amount equal to the value of fixed number of Common Shares of the Company on the trading day prior to the election, which began in August 2023 ("Redemption Value"). As a result of granting these redemption rights, the City Point NCI, net of the City Point Loan, has been reclassified and presented as Redeemable noncontrolling interests on the Company's Consolidated Balance Sheets. Given the carrying value of the City Point NCI at the time of the transaction exceeded the maximum Redemption Value, the Company did not recognize any initial adjustment to accrete the City Point NCI to the Redemption Value. The Company is required to periodically evaluate the maximum redemption amount of the City Point NCI interest and recognize an increase in the carrying value if the redemption value exceeds the then current carrying value. At December 31, 2023, the Company determined that the carrying value exceeded the maximum Redemption Value and no adjustment was required. The Company determined that its valuation was classified within Level 3 of the fair value hierarchy. The estimated fair market value of this noncontrolling interest was based upon a discounted cash flow model, for which a capitalization rate of
8833 Beverly Boulevard
In July 2023, the Company entered into a limited partnership agreement to own and operate the 8833 Beverly Boulevard property. Following the formation of the partnership, the Company retained a
Preferred OP Units
In 2016, the Operating Partnership issued
In 1999, the Operating Partnership issued
101
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Leases
As Lessor
The Company has approximately
The components of rental revenue are as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
Fixed lease revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Variable lease revenue |
|
|
|
|
|
|
|
|
|
|||
Total rental revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The scheduled future minimum rental revenues from rental properties under the terms of non-cancelable tenant leases greater than one year (assuming no new or renegotiated leases or option extensions for such premises) as of December 31, 2023, are summarized as follows (in thousands):
|
|
|
|
|
|
|
Minimum Rental |
|
|
2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
Interest |
|
|
— |
|
Total |
|
$ |
|
|
During the years ended December 31, 2023, 2022 and 2021, no single tenant or property collectively comprised more than
During the year ended December 31, 2023, Fund II received $
As Lessee
The Company has properties in its portfolio that are currently owned by third parties. We also lease real estate for equipment and office space. We lease these properties pursuant to ground leases that provide us the right to operate each such property, and generally provide form terms ranging from
102
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The scheduled future minimum rental payments under the terms of all non-cancelable operating and finance leases in which the Company is the lessee, principally for office space, land, and equipment, as of December 31, 2023, are summarized as follows (in thousands):
|
|
Minimum Rental Payments |
|
|||||
|
|
Operating Leases (a) |
|
|
Finance |
|
||
2024 |
|
$ |
|
|
$ |
|
||
2025 |
|
|
|
|
|
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Interest |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
||
Additional disclosures regarding the Company’s leases as lessee are as follows (dollars in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
Lease Cost |
|
|
|
|
|
|
|
|
|
|||
Finance lease cost: |
|
|
|
|
|
|
|
|
|
|||
Amortization of right-of-use assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Interest on lease liabilities |
|
|
|
|
|
|
|
|
|
|||
Subtotal |
|
|
|
|
|
|
|
|
|
|||
Operating lease cost |
|
|
|
|
|
|
|
|
|
|||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Cash Paid |
|
|
|
|
|
|
|
|
|
|||
Payments of operating lease obligations - operating activities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Payments of interest on finance lease obligations - operating activities |
|
|
|
|
|
|
|
|
|
|||
Payments of finance lease obligations - financing activities |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
As of December 31, |
|
|
|
|
||||||
|
|
2023 |
|
|
2022 |
|
|
|
|
|||
Other Information |
|
|
|
|
|
|
|
|
|
|||
Weighted-average remaining lease term - finance leases (years) |
|
|
|
|
|
|
|
|
|
|||
Weighted-average remaining lease term - operating leases (years) |
|
|
|
|
|
|
|
|
|
|||
Weighted-average discount rate - finance leases |
|
|
% |
|
|
% |
|
|
|
|||
Weighted-average discount rate - operating leases |
|
|
% |
|
|
% |
|
|
|
|||
During the year ended December 31, 2023, the Company:
103
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the year ended December 31, 2022, there were no new leases entered or modified where the Company acted as lessee.
12. Segment Reporting
The Company has
The following tables set forth certain segment information for the Company (in thousands):
|
|
As of or for the Year Ended December 31, 2023 |
|
|||||||||||||||||
|
|
Core |
|
|
Funds |
|
|
Structured |
|
|
Unallocated |
|
|
Total |
|
|||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Depreciation and amortization expenses |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Property operating expenses, other operating and real estate taxes |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Impairment charges |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Operating income |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Equity in earnings (losses) of unconsolidated affiliates |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Realized and unrealized holding gains (losses) on investments and other |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Net loss attributable to redeemable noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net (income) loss attributable to noncontrolling interests |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Acadia shareholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Real estate at cost (a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Total assets (a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Cash paid for acquisition of real estate |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Cash paid for development, construction and property improvement costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
104
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
As of or for the Year Ended December 31, 2022 |
|
|||||||||||||||||
|
|
Core |
|
|
Funds |
|
|
Structured |
|
|
Unallocated |
|
|
Total |
|
|||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Depreciation and amortization expenses |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Property operating expenses, other operating and real estate taxes |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Impairment charges |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Gain on disposition of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating income (loss) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Equity in (losses) earnings of unconsolidated affiliates |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Realized and unrealized holding gains (losses) on investments and other |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Net (loss) income |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net loss attributable to redeemable noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net loss attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net (loss) income attributable to Acadia |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Real estate at cost (a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Total assets (a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Cash paid for acquisition of real estate |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Cash paid for development, construction and property improvement costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
105
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
As of or for the Year Ended December 31, 2021 |
|
|||||||||||||||||
|
|
Core |
|
|
Funds |
|
|
Structured |
|
|
Unallocated |
|
|
Total |
|
|||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Depreciation and amortization expenses |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Property operating expenses, other operating and real estate taxes |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Impairment charges |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Gain on disposition of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating income (loss) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Equity in earnings of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Realized and unrealized holding gains (losses) on investments and other |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Net income attributable to noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Net income (loss) attributable to Acadia |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Real estate at cost (a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Total assets (a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Cash paid for acquisition of real estate and leasehold interest |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Cash paid for development, construction and property improvement costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Share Incentive Plan
In March and May of 2020, respectively, the Board and the Company’s shareholders, approved the 2020 Share Incentive Plan (the “2020 Plan”), which increased the number of Common Shares authorized for issuance by
106
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the status of the Company’s unvested Restricted Shares and LTIP Units is presented below:
Unvested Restricted Shares and LTIP Units |
|
Common |
|
|
Weighted |
|
|
LTIP Units |
|
|
Weighted |
|
||||
Unvested at January 1, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Unvested at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unvested at January 1, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Unvested at December 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unvested at January 1, 2021 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Unvested at December 31, 2021 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The weighted-average grant date fair value for Restricted Shares and LTIP Units granted for the years ended December 31, 2023, 2022 and 2021 were $
Restricted Shares and LTIP Units - Employees
During the year ended December 31, 2023, the Company issued
107
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For valuation of the 2023, 2022 and 2021 Performance Shares, a Monte Carlo simulation was used to estimate the fair values of the relative TSR portion based on probability of satisfying the market conditions and the projected share prices at the time of payments, discounted to the valuation dates over the
The total fair value of the above Restricted Share Units and LTIP Units as of the grant date was $
Restricted Shares and LTIP Units - Board of Trustees
In addition, members of the Board have been issued shares and units under the Amended and Restated 2020 Plan. During 2023, the Company issued
Long-Term Investment Alignment Program
In 2009, the Company adopted the Long-Term Investment Alignment Program (the “Program”) pursuant to which the Company may grant awards to employees, entitling them to receive up to
As payments to other employees are not subject to further Board approval, compensation relating to these awards will be recorded based on the estimated fair value at each reporting period in accordance with ASC Topic 718, Compensation – Stock Compensation. The awards in connection with Fund IV were determined to have
The Company recognized $
Other Plans
On a combined basis, the Company incurred a total of $
108
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Employee Share Purchase Plan
The Acadia Realty Trust Employee Share Purchase Plan (the “Purchase Plan”) allows eligible employees of the Company to purchase Common Shares through payroll deductions for a maximum aggregate issuance of
Deferred Share Plan
The Company maintains a Trustee Deferral and Distribution Election program, under which the participating Trustees earn deferred compensation.
Employee 401(k) Plan
The Company maintains a 401(k) plan for employees under which the Company currently matches
14. Federal Income Taxes
The Company has elected to qualify as a REIT in accordance with Sections 856 through 860 of the Code and intends at all times to qualify as a REIT under the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least
In the normal course of business, the Company or one or more of its subsidiaries is subject to examination by federal, state and local jurisdictions, in which it operates, where applicable. The Company expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense. For the three years ended December 31, 2023, the Company recognized no material adjustments regarding its tax accounting treatment for uncertain tax provisions. As of December 31, 2023, the tax years that remain subject to examination by the major tax jurisdictions under applicable statutes of limitations are generally the year 2020 and forward.
109
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation of Net Income to Taxable Income
Reconciliation of GAAP net income attributable to Acadia to taxable income (loss) is as follows:
|
|
Year Ended December 31, |
|
|||||||||
(in thousands) |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net income (loss) attributable to Acadia |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Deferred rental and other (loss) income (a) |
|
|
|
|
|
( |
) |
|
|
|
||
Book/tax difference - depreciation and amortization (a) |
|
|
|
|
|
|
|
|
|
|||
Straight-line rent and above- and below-market rent adjustments (a) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Book/tax differences - equity-based compensation |
|
|
|
|
|
|
|
|
|
|||
Joint venture equity in earnings, net and other investments (a) |
|
|
|
|
|
|
|
|
|
|||
Impairment charges and reserves |
|
|
|
|
|
|
|
|
|
|||
Acquisition costs (a) |
|
|
|
|
|
|
|
|
|
|||
Gain (loss) on disposition of properties and investments |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Book adjustment marketable securities |
|
|
( |
) |
|
|
|
|
|
|
||
Book/tax differences - miscellaneous |
|
|
|
|
|
|
|
|
( |
) |
||
Taxable income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Dividends/Distributions declared (b) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Characterization of Distributions
The Company has determined that the cash distributed to the shareholders for the periods presented is characterized as follows for federal income tax purposes:
|
|
Year Ended December 31, |
|
|||||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||||||||||||||
|
|
Per Share |
|
|
% |
|
|
Per Share |
|
|
% |
|
|
Per Share |
|
|
% |
|
||||||
Ordinary income - Section 199A |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Qualified dividend |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Capital gain |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Total (a) |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
110
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Taxable REIT Subsidiaries
Income taxes have been provided for using the liability method as required by ASC Topic 740, “Income Taxes.” The Company’s TRS income (loss) and provision for income taxes associated with the TRS for the periods presented are summarized as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
TRS loss before income taxes |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Provision for income taxes: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
|
|
|
|
|
|
|
|||
State and local |
|
|
|
|
|
|
|
|
|
|||
TRS net loss before noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Noncontrolling interests |
|
|
|
|
|
|
|
|
|
|||
TRS net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The income tax provision for the Company differs from the amount computed by applying the statutory Federal income tax rate to income (loss) before income taxes as follows. Amounts are not adjusted for temporary book/tax differences (in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Federal tax benefit at statutory tax rate |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
TRS state and local taxes, net of Federal benefit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Tax effect of: |
|
|
|
|
|
|
|
|
|
|||
Permanent differences, net |
|
|
|
|
|
|
|
|
|
|||
Adjustment to deferred tax reserve |
|
|
( |
) |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
REIT state and local income and franchise taxes |
|
|
|
|
|
|
|
|
|
|||
Total provision for income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of December 31, 2023, and 2022, the Company’s deferred tax assets were $
Under GAAP a reduction of the carrying amounts of deferred tax assets by a valuation allowance is required, if, based on the evidence available, it is more likely than not (a likelihood of more than
Basic earnings (loss) per Common Share is computed by dividing net income (loss) attributable to Common Shareholders by the weighted average Common Shares outstanding (Note 10). During the periods presented, the Company had unvested LTIP Units which provide for non-forfeitable rights to dividend equivalent payments. Accordingly, these unvested LTIP Units are considered participating securities and are included in the computation of basic earnings per Common Share pursuant to the two-class method.
Diluted earnings (loss) per Common Share reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including the effects of Restricted Share Units issued under the Company’s Amended and Restated 2020 Plan (Note 13). The effect of such shares is excluded from the calculation of earnings per share when anti-dilutive as indicated in the table below.
111
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Year Ended December 31, |
|
|||||||||
(dollars in thousands) |
2023 |
|
|
2022 |
|
|
2021 |
|
|||
Numerator: |
|
|
|
|
|
|
|
|
|||
Net income (loss) attributable to Acadia shareholders |
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Less: earnings attributable to unvested participating securities |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income (loss) from continuing operations net of income attributable to participating securities for basic earnings per share |
|
|
|
|
( |
) |
|
|
|
||
Impact of City Point Loan share conversion option (a) |
|
|
|
|
( |
) |
|
|
|
||
Income from continuing operations net of income attributable to participating securities for diluted earnings per share |
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|||
Denominator: |
|
|
|
|
|
|
|
|
|||
Weighted average shares for basic earnings (loss) per share |
|
|
|
|
|
|
|
|
|||
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|||
Series A Preferred OP Units |
|
|
|
|
|
|
|
|
|||
Employee unvested restricted shares |
|
|
|
|
|
|
|
|
|||
City Point Loan common stock conversion option (Note 10) (a) |
|
|
|
|
|
|
|
|
|||
Weighted average shares for diluted earnings per share |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Basic earnings (loss) per Common Share from continuing operations attributable to Acadia |
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Diluted earnings (loss) per Common Share from continuing operations attributable to Acadia |
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|||
Anti-Dilutive Shares Excluded from Denominator: |
|
|
|
|
|
|
|
|
|||
Series A Preferred OP Units |
|
|
|
|
|
|
|
|
|||
Series A Preferred OP Units - Common share equivalent |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Series C Preferred OP Units |
|
|
|
|
|
|
|
|
|||
Series C Preferred OP Units - Common share equivalent |
|
|
|
|
|
|
|
|
|||
Restricted shares |
|
|
|
|
|
|
|
|
|||
16. Variable Interest Entities
Pursuant to GAAP consolidation guidance, the Company consolidates certain VIEs for which the Company is the primary beneficiary. As of December 31, 2023 and 2022, the Company had seven and eight consolidated VIEs, respectively, including the Operating Partnership and the Funds. Excluding the Operating Partnership and the Funds at December 31, 2023, the VIEs consisted of three in-service Core properties: the Williamsburg Portfolio, 239 Greenwich Avenue, and 8833 Beverly Boulevard. The Operating Partnership is considered a VIE in which the Company is the primary beneficiary because the limited partners do not have substantive kick-out or participating rights. The Company consolidated these VIEs because it is the primary beneficiary as it has (i) the power to direct the activities of the entity that most significantly impact the entity's economic performance, and (ii) the obligation to absorb the entity's losses or receive benefits from the entity that could potentially be significant to the entity. The third parties’ interests in these consolidated entities are reflected as noncontrolling interests in the accompanying consolidated financial statements and in Note 10.
112
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The majority of the operations of these VIEs are funded with fees earned from investment opportunities or cash flows generated from the properties. The Company has not provided financial support to any of these VIEs that it was not previously contractually required to provide, which consists primarily of funding any capital commitments and capital expenditures, which are deemed necessary to continue to operate the entity and any operating cash shortfalls the entity may experience.
Since the Company conducts its business through and substantially all of its interests are held by the Operating Partnership, substantially all of the assets and liabilities on the Consolidated Balance Sheets represent the assets and liabilities of the Operating Partnership.
(dollars in thousands) |
|
December 31, 2023 |
|
|
December 31, 2022 |
|
||
VIE ASSETS |
|
|
|
|
|
|
||
Operating real estate, net |
|
$ |
|
|
$ |
|
||
Real estate under development |
|
|
|
|
|
|
||
Investments in and advances to unconsolidated affiliates |
|
|
|
|
|
|
||
Other assets, net |
|
|
|
|
|
|
||
Right-of-use assets - operating leases, net |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Restricted cash |
|
|
|
|
|
|
||
Rents receivable, net |
|
|
|
|
|
|
||
Total VIE assets (a) |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
VIE LIABILITIES |
|
|
|
|
|
|
||
Mortgage and other notes payable, net |
|
$ |
|
|
$ |
|
||
Unsecured notes payable, net |
|
|
|
|
|
|
||
Accounts payable and other liabilities |
|
|
|
|
|
|
||
Lease liability - operating leases |
|
|
|
|
|
|
||
Total VIE liabilities (a) |
|
$ |
|
|
$ |
|
||
Unconsolidated VIEs
The Company holds variable interests in certain VIEs which are not consolidated. While the Company may be responsible for managing the day-to-day operations of these investees, it is not the primary beneficiary of these VIEs, as the Company does not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE's economic performance. The Company accounts for investments in these entities under the equity method (Note 4). As of December 31, 2023 and 2022, the Company has determined that the following entities are VIEs: 1238 Wisconsin Avenue and the Georgetown Portfolio. The Company's involvement with these entities is in the form of direct and indirect equity interests and fee arrangements. The maximum exposure to loss in these entities is limited to: (i) the amount of the Company's equity investment and (ii) debt guarantees (Note 9). The Company's aggregate investment in the unconsolidated VIEs assets was $
113
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Subsequent Events
On January 8, 2024, the Company sold
On January 8, 2024, the Company completed an underwritten offering of
The Company had the following financing activity:
114
ACADIA REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2023
|
|
|
|
|
Initial Cost |
|
|
|
|
|
Gross Amount at Which |
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Description and |
|
Encumbrances |
|
|
Land |
|
|
Buildings & |
|
|
Increase |
|
|
Land |
|
|
Buildings & |
|
|
Total (2) |
|
|
Accumulated |
|
|
Date of |
|
|
Life on which |
||||||||
Core Portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Crescent Plaza |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1993 |
(a) |
|
|||||||||
New Loudon Center |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1993 |
(a) |
|
|||||||||
Mark Plaza |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1993 |
(c) |
|
|||||||||
Plaza 422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1993 |
(c) |
|
|||||||||
Route 6 Mall |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1994 |
(c) |
|
|||||||||
Abington Towne Center |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
Bloomfield Town Square |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
Elmwood Park Shopping Center Elmwood Park, NJ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
Merrillville Plaza |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
Marketplace of Absecon |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
239 Greenwich Avenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
Hobson West Plaza |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
Village Commons Shopping Center Smithtown, NY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
Town Line Plaza |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
Branch Shopping Center |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
Methuen Shopping Center |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 |
(a) |
|
|||||||||
The Gateway Shopping Center |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1999 |
(a) |
|
|||||||||
Mad River Station |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1999 |
(a) |
|
|||||||||
Brandywine Holdings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003 |
(a) |
|
|||||||||
Bartow Avenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 |
(c) |
|
|||||||||
Amboy Road |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 |
(a) |
|
|||||||||
Chestnut Hill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 |
(a) |
|
|||||||||
2914 Third Avenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 |
(a) |
|
|||||||||
West 54th Street |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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2007 |
(a) |
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5-7 East 17th Street |
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2008 |
(a) |
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651-671 W Diversey |
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2011 |
(a) |
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15 Mercer Street |
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2011 |
(a) |
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4401 White Plains |
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2011 |
(a) |
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56 E. Walton |
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2011 |
(a) |
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841 W. Armitage |
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2011 |
(a) |
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2731 N. Clark |
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2011 |
(a) |
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2140 N. Clybourn |
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2011 |
(a) |
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853 W. Armitage |
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2011 |
(a) |
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2299 N. Clybourn Avenue |
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2011 |
(a) |
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843-45 W. Armitage |
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2012 |
(a) |
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1525 W. Belmont Avenue |
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2012 |
(a) |
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2206-08 N. Halsted |
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2012 |
(a) |
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2633 N. Halsted |
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2012 |
(a) |
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50-54 E. Walton |
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2012 |
(a) |
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662 W. Diversey |
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2012 |
(a) |
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837 W. Armitage |
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2012 |
(a) |
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823 W. Armitage |
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2012 |
(a) |
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|||||||||
115
ACADIA REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
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Initial Cost |
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Gross Amount at Which |
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|||||||||||||||||
Description and |
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Encumbrances |
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Land |
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Buildings & |
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Increase |
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Land |
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Buildings & |
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Total (2) |
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Accumulated |
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Date of |
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Life on which |
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851 W. Armitage |
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2012 |
(a) |
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1240 W. Belmont Avenue |
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2012 |
(a) |
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21 E. Chestnut |
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2012 |
(a) |
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819 W. Armitage |
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2012 |
(a) |
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|||||||||
1520 Milwaukee Avenue |
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2012 |
(a) |
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|||||||||
Rhode Island Place Shopping Center Washington, D.C. |
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2012 |
(a) |
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|||||||||
930 Rush Street |
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2012 |
(a) |
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|||||||||
28 Jericho Turnpike |
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2012 |
(a) |
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|||||||||
181 Main Street |
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2012 |
(a) |
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|||||||||
83 Spring Street |
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2012 |
(a) |
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|||||||||
179-53 & 1801-03 Connecticut Avenue Washington, D.C. |
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2012 |
(a) |
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|||||||||
639 West Diversey |
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2012 |
(a) |
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|||||||||
664 North Michigan |
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2013 |
(a) |
|
|||||||||
8-12 E. Walton |
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2013 |
(a) |
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|||||||||
3200-3204 M Street |
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2013 |
(a) |
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|||||||||
868 Broadway |
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2013 |
(a) |
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|||||||||
313-315 Bowery |
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2013 |
(a) |
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|||||||||
120 West Broadway |
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2013 |
(a) |
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|||||||||
11 E. Walton |
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2014 |
(a) |
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|||||||||
61 Main Street |
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2014 |
(a) |
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|||||||||
865 W. North Avenue |
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2014 |
(a) |
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|||||||||
152-154 Spring St. |
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2014 |
(a) |
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|||||||||
2520 Flatbush Ave |
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2014 |
(a) |
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|||||||||
252-256 Greenwich Avenue |
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2014 |
(a) |
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|||||||||
Bedford Green |
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2014 |
(a) |
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|||||||||
131-135 Prince Street |
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2014 |
(a) |
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|||||||||
Shops at Grand Ave |
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2014 |
(a) |
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|||||||||
201 Needham Street |
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2014 |
(a) |
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|||||||||
City Center |
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2015 |
(a) |
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|||||||||
163 Highland Avenue |
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( |
) |
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2015 |
(a) |
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||||||||
Roosevelt Galleria |
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2015 |
(a) |
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|||||||||
Route 202 Shopping Center |
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2015 |
(a) |
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|||||||||
991 Madison Avenue |
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( |
) |
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2016 |
(a) |
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||||||||
165 Newbury Street |
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2016 |
(a) |
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|||||||||
Concord & Milwaukee |
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2016 |
(a) |
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|||||||||
State & Washington |
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2016 |
(a) |
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|||||||||
151 N. State Street |
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2016 |
(a) |
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|||||||||
North & Kingsbury |
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2016 |
(a) |
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|||||||||
Sullivan Center |
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2016 |
(a) |
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|||||||||
California & Armitage |
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2016 |
(a) |
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|||||||||
555 9th Street |
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2016 |
(a) |
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|||||||||
Market Square |
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2017 |
(a) |
|
|||||||||
613-623 W. Diversey |
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2018 |
(c) |
|
|||||||||
51 Greene Street |
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|
2019 |
(a) |
|
|||||||||
116
ACADIA REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
|
|
|
|
|
Initial Cost |
|
|
|
|
|
Gross Amount at Which |
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|
|
|||||||||||||||||
Description and |
|
Encumbrances |
|
|
Land |
|
|
Buildings & |
|
|
Increase |
|
|
Land |
|
|
Buildings & |
|
|
Total (2) |
|
|
Accumulated |
|
|
Date of |
|
|
Life on which |
||||||||
53 Greene Street |
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2019 |
(a) |
|
|||||||||
41 Greene Street |
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2019 |
(a) |
|
|||||||||
47 Greene Street |
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2019 |
(a) |
|
|||||||||
849 W Armitage |
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2019 |
(a) |
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|||||||||
912 W Armitage |
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2019 |
(a) |
|
|||||||||
Melrose Place Collection |
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2019 |
(a) |
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|||||||||
45 Greene Street |
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2019 |
(a) |
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|||||||||
565 Broadway |
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2019 |
(a) |
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|||||||||
907 W Armitage |
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2019 |
(a) |
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|||||||||
37 Greene Street |
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2020 |
(a) |
|
|||||||||
917 W Armitage |
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2020 |
(a) |
|
|||||||||
Brandywine Town Center |
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2020 |
(a) |
|
|||||||||
1324 14th Street |
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2021 |
(a) |
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1526 14th Street |
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2021 |
(a) |
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1529 14th Street |
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2021 |
(a) |
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121 Spring St |
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2022 |
(a) |
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8833 Beverly Blvd |
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2022 |
(a) |
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Williamsburg Portfolio |
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2022 |
(a) |
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Henderson Portfolio |
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2022 |
(a) |
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Fund II: |
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City Point |
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2007 |
(c) |
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Fund III: |
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640 Broadway |
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2012 |
(a) |
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Fund IV: |
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210 Bowery |
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( |
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2012 |
(c) |
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27 E. 61st Street |
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2014 |
(c) |
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17 E. 71st Street |
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2014 |
(a) |
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1035 Third Avenue |
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2015 |
(a) |
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801 Madison Avenue |
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( |
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2015 |
(c) |
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2208-2216 Fillmore Street |
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2015 |
(a) |
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2207 Fillmore Street |
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2015 |
(a) |
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1964 Union Street |
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2016 |
(c) |
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Restaurants at Fort Point |
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2016 |
(a) |
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717 N. Michigan |
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( |
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2016 |
(a) |
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18 E. Broughton St. |
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2018 |
(a) |
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20 E. Broughton St. |
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2018 |
(a) |
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25 E. Broughton St. |
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2018 |
(a) |
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|||||||||
109 W. Broughton St. |
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2018 |
(a) |
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204-206 W. Broughton St. |
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2018 |
(a) |
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|||||||||
216-218 W. Broughton St. |
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2018 |
(a) |
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|||||||||
220 W. Broughton St. |
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2018 |
(a) |
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|||||||||
223 W. Broughton St. |
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2018 |
(a) |
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|||||||||
226-228 W. Broughton St. |
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2018 |
(a) |
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|||||||||
309/311 W. Broughton St. |
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2018 |
(a) |
|
|||||||||
230-240 W. Broughton St. |
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2020 |
(a) |
|
|||||||||
102 E. Broughton St. |
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2020 |
(a) |
|
|||||||||
117
ACADIA REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
|
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Initial Cost |
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|
Gross Amount at Which |
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|
|||||||||||||||||
Description and |
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Encumbrances |
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Land |
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Buildings & |
|
|
Increase |
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|
Land |
|
|
Buildings & |
|
|
Total (2) |
|
|
Accumulated |
|
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Date of |
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Life on which |
||||||||
Fund V: |
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|
||||||||
Plaza Santa Fe |
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2017 |
(a) |
|
|||||||||
Hickory Ridge |
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2017 |
(a) |
|
|||||||||
New Towne Plaza |
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2017 |
(a) |
|
|||||||||
Fairlane Green |
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2017 |
(a) |
|
|||||||||
Trussville Promenade |
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2018 |
(a) |
|
|||||||||
Elk Grove Commons |
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2018 |
(a) |
|
|||||||||
Hiram Pavilion |
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2018 |
(a) |
|
|||||||||
Palm Coast Landing |
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2019 |
(a) |
|
|||||||||
Lincoln Commons |
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2019 |
(a) |
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|||||||||
Landstown Commons |
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2019 |
(a) |
|
|||||||||
Canton Marketplace |
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2021 |
(a) |
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|||||||||
Monroe Marketplace |
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2021 |
(a) |
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|||||||||
Midstate Mall |
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2021 |
(a) |
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|||||||||
Cypress Creek |
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2023 |
(a) |
|
|||||||||
Maple Tree Place |
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2023 |
(a) |
|
|||||||||
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|
||||||||
Total operating real estate |
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|
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|
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|
||||||||
Real estate under development |
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|
|
|
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|
||||||||
Unamortized loan costs |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Unamortized premium |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
||||||||
Notes:
The following table reconciles the activity for real estate properties from January 1, 2021 to December 31, 2023 (in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Balance at beginning of year |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Improvements and other |
|
|
|
|
|
|
|
|
|
|||
Property acquisitions |
|
|
|
|
|
|
|
|
|
|||
Property dispositions or held for sale assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Consolidation of previously unconsolidated investments |
|
|
|
|
|
|
|
|
|
|||
Impairment charges |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at end of year |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The following table reconciles accumulated depreciation from January 1, 2021 to December 31, 2023 (in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Balance at beginning of year |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Depreciation related to real estate |
|
|
|
|
|
|
|
|
|
|||
Property dispositions or held for sale assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at end of year |
|
$ |
|
|
$ |
|
|
$ |
|
|||
118
ACADIA REALTY TRUST
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 2023
(in thousands)
Description |
|
Effective |
|
Final Maturity |
|
Periodic Payment Terms |
|
Prior Liens |
|
|
Face Amount |
|
|
Net Carrying Amount of |
|
|
Principal Amount of Loans |
|
||||
First Mortgage Loan |
|
|
4/1/2020 |
|
Interest only |
|
|
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Mezzanine Loan |
|
|
1/9/2024 |
|
Interest only |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
First Mortgage Loan |
|
|
9/17/2024 |
|
Interest only |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
Other |
|
|
9/27/2024 |
|
Interest only |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
Other |
|
|
4/12/2026 |
|
Interest only |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
Mezzanine Loan |
|
|
12/11/2027 |
|
Interest only |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
Total |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Allowance for credit loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Net carrying amount of notes receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
||||
Notes:
The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company's loan in relation to other debt secured by the collateral, the personal guarantees of the borrower and the prospects of the borrower.
The following table reconciles the activity for loans on real estate from January 1, 2021 to December 31, 2023 (in thousands):
|
|
Reconciliation of Loans on Real Estate |
|
|||||||||
|
|
Year Ended December 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Balance at beginning of year |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additions |
|
|
|
|
|
|
|
|
|
|||
Repayments |
|
|
|
|
|
( |
) |
|
|
|
||
Conversion of OP Units |
|
|
|
|
|
|
|
|
( |
) |
||
Conversion to real estate through receipt of deed or through foreclosure |
|
|
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Allowance for credit loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at end of year |
|
$ |
|
|
$ |
|
|
$ |
|
|||
119
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
We conducted an evaluation, under the supervision and with the participation of management including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2023 to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management of Acadia Realty Trust is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13(a)-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023 as required by the Securities Exchange Act of 1934 Rule 13(a)-15(c). In making this assessment, we used the criteria set forth in the framework in Internal Control–Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). Based on our evaluation under the COSO criteria, our management concluded that our internal control over financial reporting was effective as of December 31, 2023 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
Deloitte & Touche LLP, an independent registered public accounting firm that audited our Financial Statements included in this Annual Report, has issued an attestation report on our internal control over financial reporting as of December 31, 2023, which also appears in this Item 9A.
Acadia Realty Trust
Rye, New York
February 16, 2024
Changes in Internal Control Over Financial Reporting
During the three months ended December 31, 2023, there were no changes in the Company’s internal control over financial reporting that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
120
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Trustees of Acadia Realty Trust
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Acadia Realty Trust and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 16, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
New York, New York
February 16, 2024
121
ITEM 9B. OTHER INFORMATION.
Trading Arrangements
During the three months ended December 31, 2023, none of our officers or trustees (as defined in Rule 16a-1(f) of the Exchange Act)
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
None.
PART III
In accordance with the rules of the SEC, certain information required by Part III is omitted and is incorporated by reference into this Annual Report from our definitive proxy statement relating to our 2024 annual meeting of shareholders (our “2024 Proxy Statement”) that we intend to file with the SEC no later than April 29, 2024.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information under the following headings in the 2024 Proxy Statement is incorporated herein by reference:
ITEM 11. EXECUTIVE COMPENSATION.
The information under the following headings in the 2024 Proxy Statement is incorporated herein by reference:
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information under the heading “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” in the 2024 Proxy Statement is incorporated herein by reference.
The information under Item 5. Market for Registrant's Common Equity, Related Stockholders Matters, Issuer Purchases of Equity Securities of this Report under the heading “(c) Securities authorized for issuance under equity compensation plans” is incorporated herein by reference.
The information under the following headings in the 2024 Proxy Statement is incorporated herein by reference:
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information under the heading “AUDIT COMMITTEE INFORMATION” in the 2024 Proxy Statement is incorporated herein by reference.
122
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
1. |
Financial Statements: See “Index to Financial Statements” at Item 8. |
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2. |
Financial Statement Schedule: See “Schedule III—Real Estate and Accumulated Depreciation” at Item 8. |
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3. |
Financial Statement Schedule: See “Schedule IV—Mortgage Loans on Real Estate” at Item 8. |
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4. |
For the year ended December 31, 2022, 840 N. Michigan Avenue is considered a significant subsidiary of the Company based upon reaching certain income thresholds per the SEC Regulation S-X Rule 3-09. The Company has included audited financial statements of 840 N. Michigan Avenue for the year ended December 31, 2022 as Exhibit 99.3 to this annual report on Form 10-K. As the investee was significant in the prior year, and is not considered to be significant in the current year, the current year financial statements are unaudited. |
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5. |
Exhibits: See index of exhibits below and incorporated herein by reference. |
The following is an index to all exhibits including (i) those filed with this Report and (ii) those incorporated by reference herein:
Exhibit |
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Description |
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Method of Filing |
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Declaration of Trust of the Company |
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Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012. |
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First Amendment to Declaration of Trust of the Company |
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Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012. |
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Second Amendment to Declaration of Trust of the Company |
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Incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012. |
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Third Amendment to Declaration of Trust of the Company |
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Incorporated by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012. |
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Fourth Amendment to Declaration of Trust |
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Incorporated by reference to Exhibit 3.1 (a) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998. |
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Fifth Amendment to Declaration of Trust |
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Incorporated by reference to Exhibit 3.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2009. |
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Sixth Amendment to Declaration of Trust |
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Incorporated by reference to Exhibit 3.01 to the Company’s Current Report on Form 8-K filing on July 28, 2017. |
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Articles Supplementary |
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Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 9, 2017. |
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Amended and Restated Bylaws of the Company |
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Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on April 28, 2022. |
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Description of Acadia Realty Trust Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended |
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Incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022. |
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Description of Long-Term Investment Alignment Program |
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Incorporated by reference to page 20 to the Company’s 2009 Annual Proxy Statement filed with the SEC April 9, 2009. |
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Amended and Restated Employment Agreement between the Company and Kenneth F. Bernstein |
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Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 1, 2014. |
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Form of Second Amended and Restated Severance Agreement, effective as of February 26, 2018, with each of: John Gottfried, Executive Vice President and Chief Financial Officer; Jason Blacksberg, Executive Vice President, Chief |
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Incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
123
Exhibit |
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Description |
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Method of Filing |
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Legal Officer and Secretary; and Joseph M. Napolitano, Senior Vice President and Chief Administrative Officer |
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Form of 2018 Long-Term Incentive Plan Award Agreement (time- and performance-based) |
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Incorporated by reference to Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018. |
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Form of Assignments and Assumptions of Carried Interest with respect to the Company's Long-Term Incentive Alignment Program |
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Incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015. |
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Form of Omnibus Amendment to the Series of Assignments and Assumptions of Carried Interest with respect to the Company's Long-Term Incentive Alignment Program |
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Incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015. |
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Form of 2018 Long-Term Incentive Plan Award Agreement (Time-Based Only) |
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Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017. |
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Form of Long-Term Incentive Plan Award Agreement (Time-Based Only) (Chief Executive Officer) |
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Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. |
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Form of Long-Term Incentive Plan Award Agreement (Time and Performance Based) (SVP/EVP) |
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Incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022. |
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Form of Long-Term Incentive Plan Award Agreement (Time and Performance Based) (Chief Executive Officer) |
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Incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022. |
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Second Amended and Restated Credit Agreement dated as of June 29, 2021, by and among Acadia Realty Limited Partnership, as borrower, Acadia Realty Trust and certain subsidiaries of Acadia Realty Limited Partnership from time to time party thereto, as guarantors, Bank of America, N.A., as administrative agent, Wells Fargo Bank, National Association, Truist Bank, and PNC Bank, National Association, as syndication agents, BofA Securities, Inc. and Wells Fargo Securities, LLC, as joint bookrunners, and BofA Securities, Inc., Wells Fargo Securities, LLC, Truist Bank and PNC Capital Markets LLC, as joint lead arrangers and the lenders party thereto |
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Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 2, 2021. |
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First Amendment to the Second Amended and Restated Credit Agreement dated as of March 3, 2022, by and among Acadia Realty Limited Partnership, as borrower, Acadia Realty Trust and certain subsidiaries of Acadia Realty Limited Partnership from time to time party thereto, as guarantors, the Lenders and L/C Issuers from time to time party thereto, and Bank of America, N.A., as administrative agent |
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Incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022. |
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Second Amendment to the Second Amended and Restated Credit Agreement dated as of December 21, 2022, by and among Acadia Realty Limited Partnership, as borrower, Acadia Realty Trust and certain subsidiaries of Acadia Realty Limited Partnership from time to time party thereto, as guarantors, the Lenders and L/C Issuers from time to time party thereto, and Bank of America, N.A., as administrative agent |
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Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022. |
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Credit Agreement dated as of April 6, 2022, by and among Acadia Realty Trust, Acadia Realty Limited Partnership, Bank of America, N.A., as administrative agent, BofA Securities, Inc., as sole lead arranger and sole bookrunner |
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Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 11, 2022. |
124
Exhibit |
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Description |
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Method of Filing |
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and the lenders party thereto |
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Third Amendment to the Second Amended and Restated Credit Agreement dated as of March 22, 2023, by and among Acadia Realty Limited Partnership, as borrower, Acadia Realty Trust and certain subsidiaries of Acadia Realty Limited Partnership from time to time party thereto, as guarantors, Bank of America, N.A., as administrative agent, Wells Fargo Bank, National Association, Truist Bank, and PNC Bank, National Association, as syndication agents, BofA Securities, Inc. and Wells Fargo Securities, LLC, as joint bookrunners, and BofA Securities, Inc., Wells Fargo Securities, LLC, Truist Bank and PNC Capital Markets LLC, as joint lead arrangers and the lenders party thereto
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Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. |
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Amended and Restated Acadia Realty Trust 2020 Share Incentive Plan |
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Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. |
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Compensation Recovery Policy, Adopted November 2, 2023 |
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Filed herewith |
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Insider Trading Policy, Adopted November 2, 2023 |
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Filed herewith |
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List of Subsidiaries of Acadia Realty Trust |
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Filed herewith |
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Consent of Registered Public Accounting Firm, BDO USA, P.C. |
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Filed herewith |
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Consent of Registered Public Accounting Firm, BDO USA, P.C. - 840 North Michigan Avenue, Tenant-in-Common Interests |
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Filed herewith |
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Consent of Registered Public Accounting Firm, Deloitte & Touche LLP |
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Filed herewith |
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Certification of Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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Filed herewith |
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Certification of Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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Filed herewith |
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Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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Furnished herewith |
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Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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Furnished herewith |
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Amended and Restated Agreement of Limited Partnership Agreement dated July 23, 2019 |
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Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. |
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Certificate of Designation of Series A Preferred Operating Partnership Units of Limited Partnership Interest of Acadia Realty Limited Partnership |
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Incorporated by reference to Exhibit 10.1(C) to the Company's Annual Report on Form 10-K filed for the year ended December 31, 1999. |
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840 North Michigan Avenue, Tenant-in-Common Interests Combined Financial Statements for the Years Ended |
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Filed herewith |
125
Exhibit |
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Description |
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Method of Filing |
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December 31, 2023 and 2022 |
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101.INS |
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XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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Filed herewith |
101.SCH |
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Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document |
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Filed herewith |
104 |
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
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Filed herewith |
ITEM 16. Form 10-K SUMMARY.
None.
126
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
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ACADIA REALTY TRUST |
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(Registrant) |
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By: |
/s/ Kenneth F. Bernstein |
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Kenneth F. Bernstein |
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Chief Executive Officer, |
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President and Trustee |
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By: |
/s/ John Gottfried |
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John Gottfried |
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Executive Vice President and |
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Chief Financial Officer |
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By: |
/s/ Richard Hartmann |
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Richard Hartmann |
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Senior Vice President and |
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Chief Accounting Officer |
Dated: February 16, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature |
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Title |
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Date |
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/s/ Kenneth F. Bernstein |
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Chief Executive Officer, President and Trustee (Principal Executive Officer) |
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February 16, 2024 |
(Kenneth F. Bernstein) |
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/s/ John Gottfried |
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Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
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February 16, 2024 |
(John Gottfried) |
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/s/ Richard Hartmann |
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Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) |
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February 16, 2024 |
(Richard Hartmann) |
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/s/ Douglas Crocker II |
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Trustee |
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February 16, 2024 |
(Douglas Crocker II) |
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/s/ Mark A. Denien |
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Trustee |
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February 16, 2024 |
(Mark A. Denien) |
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/s/ Kenneth A. McIntyre |
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Trustee |
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February 16, 2024 |
(Kenneth A. McIntyre) |
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/s/ William T. Spitz |
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Trustee |
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February 16, 2024 |
(William T. Spitz) |
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/s/ Lynn Thurber |
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Trustee |
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February 16, 2024 |
(Lynn C. Thurber) |
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/s/ Lee S. Wielansky |
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Trustee |
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February 16, 2024 |
(Lee S. Wielansky) |
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/s/ Hope B. Woodhouse |
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Trustee |
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February 16, 2024 |
(Hope B. Woodhouse) |
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127
/s/ C. David Zoba |
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Trustee |
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February 16, 2024 |
(C. David Zoba) |
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128
Exhibit 19.1
ACADIA REALTY TRUST
COMPENSATION RECOVERY POLICY
Adopted as of November 2, 2023
Acadia Realty Trust, a Maryland real estate investment trust (the “Company”), has adopted a Compensation Recovery Policy (this “Policy”) as described below. This Policy is an amendment and restatement of the Company’s Clawback Policy (included in the Company’s Corporate Governance Guidelines, as in effect from time to time prior to the Effective Date (as defined below)), and such prior version of this Policy shall continue in effect with respect to compensation subject to the terms of such prior version of this Policy that is not subject to the terms of this Policy.
1. Overview
The Policy sets forth the circumstances and procedures under which the Company shall recover Erroneously Awarded Compensation from Covered Persons (as defined below) in accordance with rules issued by the United States Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the New York Stock Exchange. Capitalized terms used and not otherwise defined herein shall have the meanings given in Section 3 below.
2. Compensation Recovery Requirement
In the event the Company is required to prepare a Material Financial Restatement, the Company shall reasonably promptly recover all Erroneously Awarded Compensation with respect to such Material Financial Restatement, and each Covered Person shall be required to take all actions necessary to enable such recovery.
3. Definitions
2
4. Exception to Compensation Recovery Requirement
The Company may elect not to recover Erroneously Awarded Compensation pursuant to this Policy if the Committee determines that recovery would be impracticable, and one or more of the following conditions, together with any further requirements set forth in the Applicable Rules, are met: (i) the direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered, and the Company has made a reasonable attempt to recover such Erroneously Awarded Compensation; or (ii) recovery would likely cause an otherwise tax-qualified retirement plan to fail to be so qualified under applicable regulations.
6. Tax Considerations
To the extent that, pursuant to this Policy, the Company is entitled to recover any Erroneously Awarded Compensation that is received by a Covered Person, the gross amount received (i.e., the amount the Covered Person received, or was entitled to receive, before any deductions for tax withholding or other payments) shall be returned by the Covered Person.
7. Method of Compensation Recovery
3
The Committee shall determine, in its sole discretion, the method for recovering Erroneously Awarded Compensation hereunder, which may include, without limitation, any one or more of the following:
Notwithstanding the foregoing, a Covered Person will be deemed to have satisfied such person’s obligation to return Erroneously Awarded Compensation to the Company if such Erroneously Awarded Compensation is returned in the exact same form in which it was received; provided that equity withheld to satisfy tax obligations will be deemed to have been received in cash in an amount equal to the tax withholding payment made.
8. Policy Interpretation
This Policy shall be interpreted in a manner that is consistent with the Applicable Rules and any other applicable law, and shall otherwise be interpreted (including in the determination of amounts recoverable) in the business judgment of the Committee. The Committee shall take into consideration any applicable interpretations and guidance of the SEC in interpreting this Policy, including, for example, in determining whether a financial restatement qualifies as a Material Financial Restatement hereunder. To the extent the Applicable Rules require recovery of Incentive-Based Compensation in additional circumstances besides those specified above, nothing in this Policy shall be deemed to limit or restrict the right or obligation of the Company to recover Incentive-Based Compensation to the fullest extent required by the Applicable Rules.
9. Policy Administration
This Policy shall be administered by the Committee. The Committee shall have such powers and authorities related to the administration of this Policy as are consistent with the governing documents of the Company and applicable law. The Committee shall have full power and authority to take, or direct the taking of, all actions and to make all determinations required or provided for under this Policy and shall have full power and authority to take, or direct the taking of, all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of this Policy that the Committee deems to be necessary or appropriate to the administration of this Policy. The interpretation and construction by the Committee of any
4
provision of this Policy and all determinations made by the Committee under this policy shall be final, binding and conclusive.
10. Compensation Recovery Repayments not Subject to Indemnification
Notwithstanding anything to the contrary set forth in any agreement with, or the organizational documents of, the Company or any of its subsidiaries, Covered Persons are not entitled to indemnification for Erroneously Awarded Compensation and, to the extent any such agreement or organizational document purports to provide otherwise, Covered Persons hereby irrevocably agree to forego such indemnification.
5
Exhibit 19.1
Exhibit A
ACKNOWLEDGMENT OF RECEIPT OF COMPENSATION RECOVERY POLICY
I have received and read the Compensation Recovery Policy (the “Policy”). I understand the requirements of the Policy and I agree to comply with the Policy. I further acknowledge that the Policy applies in accordance with its terms notwithstanding anything to the contrary set forth in any agreement between me and the Company, or in the organizational documents of the Company or any of its subsidiaries.
If I have questions concerning the meaning or application of the Policy, any Company policies, or the legal and regulatory requirements applicable to my position, I know I can consult the Chief Legal Officer or the Chief Executive Officer, knowing that my questions will be maintained in confidence.
____________________________________
Employee Name
____________________________________
Signature
____________________________________
Date
Exhibit 19.2
INSIDER TRADING POLICY
(1) TRADING IN THE COMPANY’S SECURITIES.
(a) General. Federal and state laws prohibit the misuse of material nonpublic information (referred to as “inside information”) in connection with the purchase or sale of securities. These laws also prohibit the disclosure of inside information to others who might trade based on such information. These laws apply to ANYONE trading in securities – not just officers, trustees and others who are typically thought of as “insiders.” As part of your work at the Company, from time to time, some of you will have access to material, nonpublic information about the Company and its business, including information about other companies with which the Company does or may do business. The purpose of this policy statement is to inform you of your legal responsibilities in this area, to establish guidelines for trading in the Company’s securities and to make clear to you that the misuse of sensitive information is contrary to Company policy and will be dealt with severely.
(b) Policy. Any employee who possesses material, nonpublic information relating to the Company, including information relating to other companies, such as tenants or suppliers of the Company, that is obtained in the course of employment with the Company is prohibited from:
There are no exceptions to these rules, even for transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure). Even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct.
The Company itself, as well as every employee, is subject to liability under the federal securities laws if the Company or that employee knew, or recklessly disregarded the fact, that another employee of the Company was likely to engage in insider trading and failed to take appropriate steps to prevent such an act before it occurred. Accordingly, the policy also requires the following:
• If material, nonpublic information is inadvertently disclosed, no matter what the circumstances, by any Company employee, the person making or discovering that disclosure must immediately report the facts to the Chief Legal Officer of the Company (“Chief Legal Officer”).
In addition, in order to prevent inadvertent violations of insider trading laws, the policy requires that:
1
Exhibit 19.2
• Trustees of the Company, all officers of the Company that file reports with the SEC pursuant to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the following employees of the accounting and finance departments: the Controller, the Director of Financial Reporting, Assistant Controller(s) and Accounting Manager, and all other employees designated by the Chief Legal Officer and members of any of the foregoing persons’ “immediate family” sharing the same household (each a “Restricted Person” and collectively, the “Restricted Persons”) may not buy and sell the Company’s securities during any Blackout Period (as that term is defined below);
• Employees must comply with specific restricted trading periods that the Company may impose from time to time in response to particular circumstances; and
• Restricted Persons may not engage in any transactions involving the Company’s securities without first obtaining pre-clearance of the transaction from the Chief Legal Officer.
These requirements are discussed in more detail below.
(2) CONSEQUENCES OF VIOLATING INSIDER TRADING LAWS. The consequences of violating insider trading laws can be severe. An individual who trades on inside information (or tips information to others) may face a civil penalty of up to three times the profit gained or the loss avoided; a criminal fine of up to $5,000,000 (no matter how small the profit); and a jail term of up to 20 years. A company (and possibly its supervisory personnel) that fails to take appropriate steps to prevent illegal trading by its employees may face a civil penalty of $1,100,000 or three times the profit gained or loss avoided as a result of an employee’s violation (whichever is greater). A company may also face a criminal penalty of up to $25,000,000.
Furthermore, the Company may impose its own sanctions on anyone who violates its policy. These sanctions may include demotion or other disciplinary action, including termination of employment. The Company intends to enforce this policy rigorously. Needless to say, any of these consequences could severely tarnish one’s reputation and irreparably damage a career.
(3) DEFINITION OF “INSIDE INFORMATION”. As noted above, “inside information” is material, nonpublic information. “Material” information is any information that a reasonable investor would likely consider important in a decision to buy, hold or sell securities. In short, any information that could reasonably be expected to affect the price of the securities is “material.” Either positive or negative information can be “material.” Examples of information that usually will be regarded as material are projections of future earnings or losses; news relating to financial liquidity; major marketing changes; news of a pending or proposed joint venture, merger, acquisition or tender offer; news of a significant purchase or sale of assets or the acquisition or disposition of a subsidiary; changes in dividend policies or the declaration of a stock split; a proposed offering of additional securities; changes in management or other major personnel changes; significant litigation or government investigations; or the gain or loss of a substantial tenant. This list is not intended to be exhaustive, and any questions concerning whether specific information is “material” should be discussed with the Chief Legal Officer.
“Nonpublic” information is any information that has not been disclosed generally to the marketplace. Nonpublic information can include not only information concerning the Company and its subsidiaries, but also information about its affiliates and about its tenants and competitors. Information about the Company that is not yet in general circulation should be considered nonpublic. Similarly, information received about another company in circumstances indicating that it is not yet in general circulation should be considered nonpublic. All information that you learn about the Company or its
2
Exhibit 19.2
business plans in connection with your employment is potentially “inside” information until publicly disclosed or made available by the Company.
You should treat all information you receive through your position with the Company as confidential and proprietary to the Company. You may not disclose that information to others, such as family, relatives, business or social acquaintances, who do not need to know it for legitimate business reasons of the Company. If this nonpublic information is also “material”, you are required by law and this policy to refrain from trading in the Company’s securities (or securities of any other company to which the information pertains) and from passing the information on to others who may trade, until the information becomes “public.” Furthermore, because it may take the market some time to absorb and act on publicly announced information, you should not engage in any transactions until at least one full business day after the public release of material information.
As you assess whether you possess inside information prior to a trade, you should remember that if your securities transactions are the subject of scrutiny, they will be viewed after-the-fact, with the benefit of hindsight. Even if, at the time of the trade, you thought certain information was not likely to affect the price of the securities, if the information does in fact affect the price of the securities when it becomes public, the information will likely be viewed by regulators as inside information. As a result, before engaging in any transaction you should carefully consider how regulators and others might view your transaction in hindsight.
(4) TIPPING INFORMATION TO OTHERS. You must not pass inside information on to others, including family members, others living in your household, friends, casual acquaintances, business associates or personal advisors (such as accountants, financial planners or lawyers). Employees are expected to be responsible for the compliance by their immediate family and others living in the households with the insider trading laws and this policy. The insider trading penalties described above will apply to you if you tip information to others, whether or not you trade on the basis of that information and whether or not you derive any benefit from another’s trading.
(5) BLACKOUT PERIODS. No Restricted Person may trade in the Company’s securities during (i) the period that begins at the close of business 14 days before the end of each calendar quarter and ends at the close of business one full business day following the relevant earnings release, or (ii) any other period designated by the Company (each a “Blackout Period”). In addition, any time the Company makes a public announcement of material information, the Company’s shareholders and the investing public should be afforded the time to receive the information and act upon it, and as a general rule one should not engage in any transactions until one full business day after the information has been released. Notwithstanding the foregoing restrictions on trading, Restricted Persons may execute trades in the Company’s securities during a Blackout Period if such trades are pursuant to a prearranged written trading contract, instruction or program that (a) complies with Rule 10b5-1 of the Exchange Act; (b) is not entered into during a Blackout Period or such other time when the Restricted Person is in possession of any material nonpublic information; and (c) is approved by the Company’s Chief Legal Officer.
In addition to the regular Blackout Periods, the Company may, from time to time, designate additional periods during which trading in the Company’s securities is prohibited. These restricted trading periods will be imposed in response to existing or pending events or circumstances that management believes create an increased risk of insider trading. In these situations, the Company’s Chief Legal Officer will advise the affected employees in writing that they may not engage in any trades (except as permitted under a Rule 10b5-1 plan as described above) until further notice and may not disclose to others the fact that trading in the Company’s securities has been prohibited. Affected employees will be notified in writing when the restricted trading period ends. If the relationship of an individual with the Company should
3
Exhibit 19.2
terminate while such a notice is in effect, the prohibition will continue to apply until the Company gives notice that the trading restrictions have been lifted.
We encourage investment by employees in the Company’s securities. Any questions regarding the propriety of trading in the Company’s securities must be referred to the Chief Legal Officer.
(6) No Short Sales. No Restricted Person or employee may at any time sell any securities of the Company that are not owned by such Restricted Person or employee at the time of the sale (typically referred to as a “short sale”).
(7) No Purchases or Sales of Derivative Securities or Hedging Transactions. No Restricted Person or employee may buy or sell puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of the Company’s securities or an opportunity, direct or indirect, to profit from any change in the value of the Company’s securities or engage in any other hedging transaction with respect to the Company’s securities.
(8) No Company Securities Subject to Margin Calls. No Restricted Person or employee may use the Company’s securities as collateral in a margin account.
(9) No Pledges. No Restricted Person or employee may pledge Company securities as collateral for a loan (or modify an existing pledge).
(10) PRE-CLEARANCE PROCEDURES. To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of trading on inside information, no Restricted Person may engage in any transaction involving the Company's securities without first obtaining pre-clearance of the transaction from the Chief Legal Officer or from the Chief Financial Officer of the Company (“Chief Financial Officer”), if the Chief Legal Officer is not available. A request for pre-clearance should be submitted to the Chief Legal Officer or the Chief Financial Officer, as applicable, as soon as possible in advance of the proposed transaction. The Chief Legal Officer or the Chief Financial Officer, as applicable, is under no obligation to approve a trade submitted for pre-clearance, and may determine not to permit the trade.
See Annex A – Rule 10b5-1 Trading Plan Policy – for specific approval and other requirements regarding Rule 10b5-1 trading plans.
(11) ADDITIONAL GUIDANCE AVAILABLE. Any person who has any questions about specific transactions may obtain additional guidance from the Chief Legal Officer of the Company. However, the ultimate responsibility for adhering to the policy and avoiding improper transactions rests with you. It is imperative that you use your best judgment.
4
Exhibit 19.2
Annex A
Rule 10b5-1 Trading Plan Policy
Adopted on November 2, 2023 (the “Effective Date”)
This Rule 10b5-1 Trading Plan Policy should be read in conjunction with the Insider Trading Policy (the “Insider Trading Policy”) of Acadia Realty Trust (the “Company”). Specifically, Section (5) of the Insider Trading Policy provides that transactions made pursuant to an approved Rule 10b5-1 trading plan will not be subject to the Blackout Periods or pre-clearance procedures set forth in the Insider Trading Policy. Terms used in this Rule 10b5-1 Trading Plan Policy and not otherwise defined have the meanings set forth in the Insider Trading Policy.
Rule 10b5-1(c) under the Exchange Act provides an affirmative defense against allegations of insider trading. This affirmative defense is often referred to as a “safe harbor” from such allegations. The Rule 10b5‑1(c) safe harbor is available to the Company’s employees, officers and trustees (collectively, “Insiders”) who make trades pursuant to a trading “plan” that meets the requirements of the rule. A plan that meets the requirements of the Rule 10b5-1(c) safe harbor is referred to herein as a “Trading Plan.” Trading Plans may be used for purchases, sales, gifts or other transfers of securities.
The Company allows Insiders to enter into Trading Plans, but only if those plans are pre-approved in writing by the Company’s Chief Legal Officer or their designee(s) (each, the “Compliance Officer”). The Compliance Officer is assigned the responsibility of approving any Trading Plan as to its form. Most brokerage firms will provide a form Trading Plan that is used for all clients.
All Trading Plans adopted after the Effective Date and any amendment to, modification of, or termination of a Trading Plan adopted after the Effective Date must comply with Rule 10b5-1 and must meet the following minimum conditions:
5
Exhibit 19.2
For executive officers (those officers of the Company who are required by Section 16 of the Exchange Act to file reports on their transactions in the Company’s securities) and members of the Company’s board of trustees, the Trading Plan must provide that the first transaction executed pursuant to the Trading Plan may not occur until the later of (i) the 91st day after adoption, amendment or modification of the plan and (ii) the third business day following the disclosure of the Company’s financial results in a Form 10-Q or Form 10-K for the fiscal quarter in which the plan was adopted, amended or modified. With respect to the period described in clause (ii), the required cooling off period need not exceed 120 days.
For Insiders who are not executive officers or trustees, the Trading Plan must provide that the first transaction executed pursuant to the Trading Plan may not occur until 31 days following the adoption, amendment or modification of the Trading Plan, as applicable.
6
Exhibit 19.2
7
Exhibit 21.1
LIST OF AFFILIATES OF
ACADIA REALTY TRUST
SUBSIDIARIES |
|
JURISDICTION OF INCORPORATION/ ORGANIZATION |
Acadia Realty Limited Partnership |
|
DE |
ARLP GS LLC |
|
DE |
100 Bull LLC |
|
DE |
102 EB LLC |
|
DE |
1035 Third Avenue LLC |
|
DE |
11 East Walton LLC |
|
DE |
110 UP NY LLC |
|
DE |
1100 N. State Lender LLC |
|
DE |
120 West Broadway Lender LLC |
|
DE |
120 West Broadway LLC |
|
DE |
121 Spring Street Owner LLC |
|
DE |
1238 Wisconsin Holdco LLC |
|
DE |
1238 Wisconsin Lender LLC |
|
DE |
1238 Wisconsin Owner LLC |
|
DE |
131-135 Prince Street LLC |
|
DE |
1324 14th Street Owner LLC |
|
DE |
135 East 65th Street Lender LLC |
|
DE |
146 Geary LLC |
|
DE |
146 Geary Member LLC |
|
DE |
151 North State Owner LLC |
|
DE |
152-154 Spring Street Lender LLC |
|
DE |
152-154 Spring Street Retail LLC |
|
DE |
1526 14th Street Owner LLC |
|
DE |
1529 14th Street Owner LLC |
|
DE |
158 East 126th Street LLC |
|
DE |
163 Highland Owner LLC |
|
DE |
165 E 66th Retail LLC |
|
DE |
165 Newbury Street Owner LLC |
|
DE |
17 East 71 Street LLC |
|
DE |
182-186 Spring Street Lender LLC |
|
DE |
188 Spring Street Lender LLC |
|
DE |
1964 Union Member LLC |
|
DE |
201 Needham Street Owner LLC |
|
DE |
201 WB LLC |
|
DE |
210 Bowery LLC |
|
DE |
210 Bowery Owners LLC |
|
DE |
210 Bowery Residential Owners LLC |
|
DE |
2207 Fillmore Member LLC |
|
DE |
2208-2216 Fillmore Member LLC |
|
DE |
230/240 WB LLC |
|
DE |
239 Greenwich Associates Limited Partnership |
|
CT |
241 Bedford JV LLC |
|
DE |
241 Bedford JV Member LLC |
|
DE |
241 Bedford Mezz Owner LLC |
|
DE |
241 Bedford Owner LLC |
|
DE |
241 Bedford Portfolio Lender LLC |
|
DE |
2520 Flatbush Avenue LLC |
|
DE |
252-264 Greenwich Avenue Retail LLC |
|
DE |
2622-2634 Henderson Ave Owner LLC |
|
DE |
2675 City Center Partner LLC |
|
DE |
2675 Geary Boulevard LP |
|
DE |
27 East 61st Street LLC |
|
DE |
300 WB LLC |
|
DE |
3131 M Street Owner LLC |
|
DE |
313-315 Bowery Lender LLC |
|
DE |
313-315 Bowery LLC |
|
DE |
3177 East Main LLC |
|
DE |
3200 M Street Lender LLC |
|
DE |
37 Greene Street Owner LLC |
|
DE |
41 Greene Street Owner LLC |
|
DE |
45 Greene Street Owner LLC |
|
DE |
SUBSIDIARIES |
|
JURISDICTION OF INCORPORATION/ ORGANIZATION |
453 Broome Street Owner LLC |
|
DE |
47-49 Greene Street Owner LLC |
|
DE |
51 Greene Street Owner LLC |
|
DE |
53 Greene Street Owner LLC |
|
DE |
555 9th Street LP |
|
DE |
555 9th Street Partner LLC |
|
DE |
55-57 Spring Street Lender LLC |
|
DE |
565 Broadway Owner LLC |
|
DE |
57-63 Greene Acquisition LLC |
|
DE |
57-63 Greene Street NYC Lender LLC |
|
DE |
61 Main Street Owner LLC |
|
DE |
640 Broadway Lender LLC |
|
DE |
640 Broadway Member LLC |
|
DE |
640 Broadway Owners LLC |
|
DE |
640 Broadway Owners Subsidiary I LLC |
|
DE |
640 Broadway Owners Subsidiary II LLC |
|
DE |
717 N Michigan Ave Owner LLC |
|
DE |
717 N Michigan Ave Owner Subsidiary LLC |
|
DE |
801 Madison Avenue Owner LLC |
|
DE |
8-12 East Walton LLC |
|
DE |
830 Strategic Capital Investor LLC |
|
DE |
840 North Michigan Avenue Acquisition LLC |
|
DE |
8436-8452 Melrose General Partner LLC |
|
DE |
8436-8452 Melrose Owner LP |
|
DE |
849 W. Armitage Owner LLC |
|
DE |
850 Third Preferred Equity Member LLC |
|
DE |
865 West North Avenue LLC |
|
DE |
868 Broadway LLC |
|
DE |
8833 Beverly Lender LLC |
|
DE |
900 Block I Holdings LLC |
|
DE |
900 W Randolph Preferred Member LLC |
|
DE |
907 W. Armitage Owner LLC |
|
DE |
912 W. Armitage Owner LLC |
|
DE |
917 W. Armitage Owner LLC |
|
DE |
991 Madison Ave LLC |
|
DE |
A/L 3200 M Street LLC |
|
DE |
ABR Amboy Road LLC |
|
DE |
ABS Investor LLC |
|
DE |
ABS Opportunities, LLC |
|
DE |
ABS Preferred Equity Member LLC fka Broughton Street Partners Lender LLC |
|
DE |
Acadia 1520 Milwaukee Avenue LLC |
|
DE |
Acadia 152-154 Spring Street Retail LLC |
|
DE |
Acadia 161ST Street LLC |
|
DE |
Acadia 181 Main Street LLC |
|
DE |
Acadia 239 Greenwich Avenue, LLC |
|
DE |
Acadia 28 Jericho Turnpike LLC |
|
DE |
Acadia 2914 Third Avenue LLC |
|
DE |
Acadia 3104 M Street LLC |
|
DE |
Acadia 3200 M Street LLC |
|
DE |
Acadia 330 River Street LLC |
|
DE |
Acadia 3780-3858 Nostrand Avenue LLC |
|
DE |
Acadia 4401 White Plains Road LLC |
|
DE |
Acadia 56 East Walton LLC |
|
DE |
Acadia 5-7 East 17th Street LLC |
|
DE |
Acadia 639 West Diversey LLC |
|
DE |
Acadia 654 Broadway LLC |
|
DE |
Acadia 654 Broadway Member LLC |
|
DE |
Acadia 83 Spring Street LLC |
|
DE |
Acadia Absecon LLC |
|
DE |
Acadia Albee LLC |
|
DE |
Acadia Albertsons Investors LLC |
|
DE |
Acadia Bartow Avenue, LLC |
|
DE |
Acadia Bloomfield NJ LLC |
|
DE |
Acadia Brandywine Holdings, LLC |
|
DE |
Acadia Brentwood LLC |
|
DE |
Acadia Cambridge LLC |
|
DE |
SUBSIDIARIES |
|
JURISDICTION OF INCORPORATION/ ORGANIZATION |
Acadia Chestnut LLC |
|
DE |
Acadia Chicago LLC |
|
DE |
Acadia Clark-Diversey LLC |
|
DE |
Acadia Connecticut Avenue LLC |
|
DE |
Acadia Cortlandt Crossing LLC |
|
DE |
Acadia Cortlandt LLC |
|
DE |
Acadia Crescent Plaza LLC |
|
DE |
Acadia Crossroads, LLC |
|
DE |
Acadia Cub Foods Investors LLC |
|
DE |
Acadia D.R. Management LLC |
|
DE |
Acadia Elmwood Park LLC |
|
DE |
Acadia Fund IV Investments LLC |
|
DE |
Acadia Gold Coast LLC |
|
DE |
Acadia Gotham Member LLC |
|
DE |
Acadia Heathcote LLC |
|
DE |
Acadia Hobson LLC |
|
DE |
Acadia L.U.F. LLC |
|
DE |
Acadia Mad River Property LLC |
|
DE |
Acadia Mark Plaza LLC |
|
DE |
Acadia Market Square, LLC |
|
DE |
Acadia MCB Holding Company II LLC |
|
DE |
Acadia MCB Holding Company LLC |
|
DE |
Acadia Mercer Street LLC |
|
DE |
Acadia Merrillville LLC |
|
DE |
Acadia Merrillville Realty, L.P. |
|
IN |
Acadia Mervyn I, LLC |
|
DE |
Acadia Mervyn II, LLC |
|
DE |
Acadia Mervyn Investors II, LLC |
|
DE |
Acadia Naamans Road LLC |
|
DE |
Acadia New Loudon, LLC |
|
DE |
Acadia North Michigan Avenue LLC |
|
DE |
Acadia Nostrand Avenue LLC |
|
DE |
Acadia Pacesetter LLC |
|
DE |
Acadia Paramus Plaza LLC |
|
DE |
Acadia Pelham Manor LLC |
|
DE |
Acadia Property Holdings, LLC |
|
DE |
Acadia Realty Acquisition II, LLC |
|
DE |
Acadia Realty Acquisition III LLC |
|
DE |
Acadia Realty Acquisition IV LLC |
|
DE |
Acadia Realty Acquisition V LLC |
|
DE |
Acadia Republic Farmingdale LLC |
|
DE |
Acadia Rush Walton LLC |
|
DE |
Acadia Second City 1521 West Belmont LLC |
|
DE |
Acadia Second City 2206-08 North Halsted LLC |
|
DE |
Acadia Second City 2633 North Halsted LLC |
|
DE |
Acadia Second City 843-45 West Armitage LLC |
|
DE |
Acadia Self Storage Management Company LLC |
|
DE |
Acadia Self Storage Management Investment Company LLC |
|
DE |
Acadia SP Investor LLC |
|
DE |
Acadia Strategic Opportunity Fund II, LLC |
|
DE |
Acadia Strategic Opportunity Fund III LLC |
|
DE |
Acadia Strategic Opportunity Fund III Special Member LLC |
|
DE |
Acadia Strategic Opportunity Fund IV LLC |
|
DE |
Acadia Strategic Opportunity Fund IV Promote Member LLC |
|
DE |
Acadia Strategic Opportunity Fund IV Special Member LLC |
|
DE |
Acadia Strategic Opportunity Fund V LLC |
|
DE |
Acadia Strategic Opportunity Fund V Promote Member LLC |
|
DE |
Acadia Strategic Opportunity Fund V Special Member LLC |
|
DE |
Acadia Town Center Holdco LLC |
|
DE |
Acadia Town Line, LLC |
|
CT |
Acadia Urban Development LLC |
|
DE |
Acadia West 54th Street LLC |
|
DE |
Acadia West Diversey LLC |
|
DE |
Acadia West Shore Expressway LLC |
|
DE |
Acadia-Washington Square Albee LLC |
|
DE |
ACF Paramus Plaza LLC |
|
DE |
SUBSIDIARIES |
|
JURISDICTION OF INCORPORATION/ ORGANIZATION |
ACRS II LLC |
|
DE |
ACRS, Inc. |
|
DE |
AFWV Investor Member LLC |
|
DE |
Airport Mall Owner LLC |
|
DE |
A-K JV I LLC |
|
DE |
Albee Development LLC |
|
DE |
Albee Food LLC |
|
DE |
Albee Phase 3 Development LLC |
|
DE |
Albee Retail 21 Development LLC |
|
DE |
Albee Retail Development LLC |
|
DE |
AMCB Bloomfield LLC |
|
DE |
AMCB Eden Square LLC |
|
DE |
AMCB Kennedy LLC |
|
DE |
AMCB Manassas Promenade LLC |
|
DE |
AMCB Rhode Island Mall Owner LLC |
|
DE |
AP Fillmore II LLC |
|
DE |
AP Fillmore LLC |
|
DE |
AP Union II LLC |
|
DE |
ARA IV Class A Member LLC |
|
DE |
BDG Gotham Plaza LLC |
|
DE |
Bedford Green LLC |
|
DE |
Beverly Owner GP LLC |
|
DE |
Beverly Owner Holdco LP |
|
DE |
Beverly Owner LP |
|
DE |
BKLYN Studios LLC |
|
DE |
Brandywine Town Center Maintenance Corporation |
|
DE |
Brandywine Town Center/Market Square Lender LLC |
|
DE |
Broughton Street Partners Company II LLC |
|
DE |
Broughton Street Partners Company LLC |
|
DE |
California & Armitage Main Owner LLC |
|
DE |
California & Armitage Outparcel Owner LLC |
|
DE |
Canton Marketplace Owner LLC |
|
DE |
City Point 21 Development LLC |
|
DE |
City Point Retail Development LLC |
|
DE |
Concord & Milwaukee Owner LLC |
|
DE |
Cortlandt Crossing Sewage Works Corporation |
|
NY |
Cortlandt Town Center Member LLC |
|
DE |
Crossing Release Parcel Owner LLC |
|
DE |
Crossroads II |
|
NY |
Crossroads II, LLC |
|
DE |
Crossroads Joint Venture |
|
NY |
Crossroads Joint Venture, LLC |
|
DE |
Cypress Creek Atlantic LLC |
|
DE |
Cypress Creek G5 LLC |
|
DE |
Cypress Creek G6 LLC |
|
DE |
Cypress Creek Holdco LLC |
|
DE |
Cypress Creek Power Center LLC |
|
DE |
Dauphin Plaza Member LLC |
|
DE |
Dauphin Plaza Owner LLC |
|
DE |
Dekalb Market Hall LLC |
|
DE |
Elk Grove General Partner LLC |
|
DE |
Elk Grove Owner LP |
|
DE |
Fairlane Green Condo Manager LLC |
|
DE |
Fairlane Green Owner LLC |
|
DE |
FAPFABI LLC |
|
DC |
FC Riverdale Investor Member LLC |
|
DE |
FC Riverdale Lender LLC |
|
DE |
FC Riverdale Shopping Center, LLC |
|
DE |
Fifth Wall Ventures Retail Fund, L.P. |
|
DE |
Frederick County Square Improvements, LLC |
|
DE |
Frederick Crossing Improvements, LLC |
|
DE |
Frederick Crossing Operator, LLC |
|
DE |
Fund II Lender LLC |
|
DE |
George Washington Bridge Bus Station Development Venture LLC |
|
DE |
Georgetown Ownership Associates LLC |
|
DE |
Gotham Member LLC |
|
DE |
SUBSIDIARIES |
|
JURISDICTION OF INCORPORATION/ ORGANIZATION |
GT Metro Portfolio Member LLC |
|
DE |
Heathcote Associates, L.P. |
|
NY |
Henderson Ave Dev 1 Owner LLC |
|
DE |
Henderson Ave Dev 2 Owner LLC |
|
DE |
Henderson Ave Grand Owner LLC |
|
DE |
Henderson Ave Land Owner LLC |
|
DE |
Henderson Ave Lots Owner LLC |
|
DE |
Henderson Ave Main Owner LLC |
|
DE |
Henderson Ave Shops Owner LLC |
|
DE |
Henderson Portfolio Owner LLC |
|
DE |
Hickory Ridge Owner LLC |
|
DE |
Hiram Pavilion Owner LLC |
|
DE |
JP Waterville Owner LLC |
|
DE |
La Frontera Holdco LLC |
|
DE |
La Frontera Improvements, LLC |
|
DE |
La Frontera Lender LLC |
|
DE |
La Frontera Landlord, LLC |
|
DE |
La Frontera Member LLC |
|
DE |
Lake Montclair-Dumfries, VA LLC |
|
DE |
Landstown Commons Owner LLC |
|
DE |
Lincoln Commons Owner LLC |
|
DE |
Lincoln Place SC Owner LLC |
|
DE |
Lincoln Road III LLC |
|
FL |
L.U.F. Associates LLC |
|
DC |
Maple Tree Place Owner LLC |
|
DE |
Mark Plaza Fifty L.P. |
|
PA |
Mark Twelve Associates, L.P. |
|
PA |
Mayfair Center Owner LLC |
|
DE |
MCB Bloomfield LLC |
|
NJ |
MC MP 850 Third Holdings LLC |
|
DE |
Miami Beach Lincoln, LLC |
|
FL |
Mid-Atlantic Portfolio Holdings, LLC |
|
DE |
Mid-Atlantic Portfolio Lender LLC |
|
DE |
Mid-Atlantic Portfolio Member LLC |
|
DE |
Midstate Owner LLC |
|
DE |
Mohawk Commons Member LLC |
|
DE |
Mohawk Commons Owner LLC |
|
DE |
Monroe Marketplace Owner LLC |
|
DE |
New Towne Center Owner LLC |
|
DE |
North & Kingsbury Owner LLC |
|
DE |
Pacesetter Lender LLC |
|
DE |
Pacesetter/Ramapo Associates |
|
NY |
Palm Coast Landing Owner LLC |
|
DE |
Plaza Santa Fe Owner LLC |
|
DE |
RD Abington Associates Limited Partnership |
|
DE |
RD Absecon Associates, L.P. |
|
DE |
RD Bloomfield Associates Limited Partnership |
|
DE |
RD Branch Associates L.P. |
|
NY |
RD Elmwood Associates, L.P. |
|
DE |
RD Hobson Associates, L.P. |
|
DE |
RD Methuen Associates Limited Partnership |
|
MA |
RD Smithtown, LLC |
|
NY |
Restaurants at Fort Point LLC |
|
DE |
RIM Member LLC |
|
DE |
Roosevelt Galleria LLC |
|
DE |
SC Retail Owner LLC |
|
DE |
Self Storage Management LLC |
|
DE |
Shops At Grand Avenue LLC |
|
DE |
South Hills Lender LLC |
|
DE |
South Hills Member LLC |
|
DE |
South Hills Owner LLC |
|
DE |
SP Holdings I LLC |
|
DE |
SP Holdings II LLC |
|
DE |
SP Holdings III LLC |
|
DE |
State & Washington Food Hall LLC |
|
DE |
State & Washington Owner LLC |
|
DE |
SUBSIDIARIES |
|
JURISDICTION OF INCORPORATION/ ORGANIZATION |
Storage Post Holdings LLC |
|
DE |
Storage Post Member I LLC |
|
DE |
Strategic Capital Holdco LLC |
|
DE |
Strategic Opportunity Acquisition LLC |
|
DE |
Strategic Opportunity Acquisition I LLC |
|
DE |
Strategic Opportunity Acquisition II LLC |
|
DE |
Strategic Opportunity Acquisition III LLC |
|
DE |
Strategic Opportunity Acquisition IV LLC |
|
DE |
Strategic Opportunity Acquisition V LLC |
|
DE |
Strategic Opportunity Fund Acquisition LLC |
|
DE |
Tri-City Plaza Lender LLC |
|
DE |
Tri-City Plaza Member LLC |
|
DE |
Tr-City Plaza Owner LLC |
|
DE |
Trussville Promenade I Owner LLC |
|
DE |
Trussville Promenade II Owner LLC |
|
DE |
Wake Forest Crossing Owner LLC |
|
DE |
Westport Retail Owner LLC |
|
DE |
White Oak Lender LLC |
|
DE |
Wood Ridge Improvements LLC |
|
DE |
Wood Ridge Plaza Member LLC |
|
DE |
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
Acadia Realty Trust
Rye, New York
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-275356, 333-203236, 333-126712, 333-114785, 333-31630) and Form S-8 (Nos. 333-272041, 333-256025, 333-249898) of Acadia Realty Trust of our report dated March 1, 2023, relating to the consolidated financial statements and financial statement schedules, which appears in this Annual Report on Form 10-K.
/s/ BDO USA, P.C.
New York, New York
February 16, 2024
EXHIBIT 23.2
Consent of Independent Registered Public Accounting Firm
Acadia Realty Trust
Rye, New York
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-275356, 333-203236, 333-126712, 333-114785, 333-31630) and Form S-8 (Nos. 333-272041, 333-256025, 333-249898) of Acadia Realty Trust of our report dated March 1, 2023, relating to the combined financial statements of 840 North Michigan Avenue, Tenant-in-Common Interests, which appears in this Annual Report on Form 10-K.
/s/ BDO USA, P.C.
New York, New York
February 16, 2024
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-203236, 333-126712, 333-114785, 333-31630 and 333-275356 on Form S-3 and Registration Statement Nos. 333-256025, 333-249898 and 333-272041 on Form S-8 of our reports dated February 16, 2024, relating to the financial statements of Acadia Realty Trust and the effectiveness of Acadia Realty Trust 's internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2023.
/s/ DELOITTE & TOUCHE LLP
New York, New York
February 16, 2024
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a - 14(a)
(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)
I, Kenneth F. Bernstein, certify that:
/s/ Kenneth F. Bernstein |
Kenneth F. Bernstein |
President and Chief Executive Officer |
February 16, 2024 |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a - 14(a)
(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)
I, John Gottfried, certify that:
/s/ John Gottfried |
John Gottfried |
Executive Vice President and |
Chief Financial Officer |
February 16, 2024 |
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
In connection with the Annual Report on Form 10-K of Acadia Realty Trust (the “Company”) for the period ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kenneth F. Bernstein, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
/s/ Kenneth F. Bernstein |
Kenneth F. Bernstein |
President and Chief Executive Officer |
February 16, 2024 |
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
In connection with the Annual Report on Form 10-K of Acadia Realty Trust (the “Company”) for the period ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Gottfried, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
/s/ John Gottfried |
John Gottfried |
Executive Vice President and |
Chief Financial Officer |
February 16, 2024 |
840 North Michigan Avenue, Tenant-in-Common Interests
Combined Financial Statements for the Years Ended December 31, 2023 and 2022
and Independent Auditor’s Report
1
840 North Michigan Avenue, Tenant-in-Common Interests
Combined Financial Statements
For the Years Ended December 31, 2023 (Unaudited) and 2022
Contents
2
Independent Auditor’s Report
840 North Michigan Avenue, Tenant-in-Common Interests
Rye, New York
Opinion
We have audited the combined financial statements of 840 North Michigan Avenue, Tenant-in-Common Interests (the “Commonly-Held Property”), which comprise the combined balance sheet as of December 31, 2022, and the related combined statements of operations, tenant-in-common interests, and cash flows for the year then ended, and the related notes to the combined financial statements.
In our opinion, the accompanying combined financial statements present fairly, in all material respects, the financial position of the Commonly-Held Property as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Combined Financial Statements section of our report. We are required to be independent of the Commonly-Held Property and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Combined Financial Statements
Management is responsible for the preparation and fair presentation of the combined financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the combined financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Commonly-Held Property’s ability to continue as a going concern within one year after the date that the combined financial statements are issued or available to be issued.
Auditor’s Responsibilities for the Audit of the Combined Financial Statements
Our objectives are to obtain reasonable assurance about whether the combined financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the combined financial statements.
In performing an audit in accordance with GAAS, we:
3
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
/s/ BDO USA, LLP
New York, New York
March 1, 2023
4
840 North Michigan Avenue, Tenant-in-Common Interests
Combined Balance Sheets
|
|
December 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2023 |
|
|
2022 |
|
||
Assets |
|
(Unaudited) |
|
|
|
|
||
Operating real estate: |
|
|
|
|
|
|
||
Land |
|
$ |
11,931 |
|
|
$ |
11,931 |
|
Buildings and improvements |
|
|
93,777 |
|
|
|
93,708 |
|
Construction in progress |
|
|
118 |
|
|
|
101 |
|
|
|
|
105,826 |
|
|
|
105,740 |
|
Less: accumulated depreciation |
|
|
(30,069 |
) |
|
|
(28,010 |
) |
Net operating real estate |
|
|
75,757 |
|
|
|
77,730 |
|
Cash |
|
|
1,332 |
|
|
|
1,175 |
|
Restricted cash |
|
|
425 |
|
|
|
— |
|
Rents receivable |
|
|
(839 |
) |
|
|
591 |
|
Prepaid expenses |
|
|
21 |
|
|
|
18 |
|
Acquired lease intangibles, net of accumulated amortization of $13,899 and $12,661, respectively |
|
|
145 |
|
|
|
1,383 |
|
Total assets |
|
$ |
76,841 |
|
|
$ |
80,897 |
|
|
|
|
|
|
|
|
||
Liabilities and tenant-in-common interests |
|
|
|
|
|
|
||
Acquired lease intangibles, net of accumulated amortization of $10,424 and $8,553, respectively |
|
$ |
491 |
|
|
$ |
2,362 |
|
Accounts payable and accrued expenses |
|
|
3,010 |
|
|
|
3,027 |
|
Due to affiliates |
|
|
81 |
|
|
|
2 |
|
Deferred income and other liabilities |
|
|
441 |
|
|
|
3,771 |
|
Total liabilities |
|
|
4,023 |
|
|
|
9,162 |
|
Commitments and contingencies (Note 8) |
|
|
|
|
|
|
||
Tenant-in-common interests |
|
|
72,818 |
|
|
|
71,735 |
|
Total liabilities and tenant-in-common interests |
|
$ |
76,841 |
|
|
$ |
80,897 |
|
See accompanying notes to combined financial statements.
5
840 North Michigan Avenue, Tenant-in-Common Interests
Combined Statements of Operations
|
|
Year Ended December 31, |
|
|||||||||
(in thousands) |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
Revenues |
|
(Unaudited) |
|
|
|
|
|
(Unaudited) |
|
|||
Rental |
|
$ |
10,880 |
|
|
$ |
13,590 |
|
|
$ |
13,926 |
|
Total revenues |
|
|
10,880 |
|
|
|
13,590 |
|
|
|
13,926 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
3,297 |
|
|
|
4,757 |
|
|
|
5,135 |
|
Property operating |
|
|
511 |
|
|
|
653 |
|
|
|
457 |
|
Real estate taxes |
|
|
2,759 |
|
|
|
1,397 |
|
|
|
4,064 |
|
Impairment charge |
|
|
— |
|
|
|
57,423 |
|
|
|
— |
|
Total expenses |
|
|
6,567 |
|
|
|
64,230 |
|
|
|
9,656 |
|
|
|
|
|
|
|
|
|
|
|
|||
Net income (loss) |
|
$ |
4,313 |
|
|
$ |
(50,640 |
) |
|
$ |
4,270 |
|
See accompanying notes to combined financial statements.
6
840 North Michigan Avenue, Tenants-in-Common Interests
Combined Statements of Tenant-in-Common Interests
|
|
|
|
|
|
|
|
|
|
|||
(in thousands) |
|
Acadia |
|
|
CHUSA |
|
|
Total |
|
|||
Combined tenant-in-common interests at January 1, 2021 (Unaudited) |
|
$ |
121,051 |
|
|
$ |
15,838 |
|
|
$ |
136,889 |
|
Distributions to tenant-in-common interests |
|
|
(8,142 |
) |
|
|
(1,065 |
) |
|
|
(9,207 |
) |
Net income allocated to tenant-in-common interests |
|
|
3,776 |
|
|
|
494 |
|
|
|
4,270 |
|
Combined tenant-in-common interests at December 31, 2021 (Unaudited) |
|
$ |
116,685 |
|
|
$ |
15,267 |
|
|
$ |
131,952 |
|
|
|
|
|
|
|
|
|
|
|
|||
Distributions to tenant-in-common interests |
|
|
(8,470 |
) |
|
|
(1,107 |
) |
|
|
(9,577 |
) |
Net (loss) allocated to tenant-in-common interests |
|
|
(44,781 |
) |
|
|
(5,859 |
) |
|
|
(50,640 |
) |
Combined tenant-in-common interests at December 31, 2022 |
|
$ |
63,434 |
|
|
$ |
8,301 |
|
|
$ |
71,735 |
|
|
|
|
|
|
|
|
|
|
|
|||
Distributions to tenant-in-common interests |
|
|
(2,857 |
) |
|
|
(373 |
) |
|
|
(3,230 |
) |
Net income allocated to tenant-in-common interests |
|
|
3,961 |
|
|
|
352 |
|
|
|
4,313 |
|
Combined tenant-in-common interests at December 31, 2023 (unaudited) |
|
$ |
64,538 |
|
|
$ |
8,280 |
|
|
$ |
72,818 |
|
See accompanying notes to combined financial statements.
7
840 North Michigan Avenue, Tenant-in-Common Interests
Combined Statements of Cash Flows
|
|
Year Ended December 31, |
|
|||||||||
(in thousands) |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
(Unaudited) |
|
|
|
|
|
(Unaudited) |
|
|||
Net income (loss) |
|
$ |
4,313 |
|
|
$ |
(50,640 |
) |
|
$ |
4,270 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
3,297 |
|
|
|
4,757 |
|
|
|
5,135 |
|
Impairment charge |
|
|
— |
|
|
|
57,423 |
|
|
|
— |
|
Amortization of lease intangibles |
|
|
(1,872 |
) |
|
|
(3,544 |
) |
|
|
(1,468 |
) |
Straight-line rents |
|
|
862 |
|
|
|
512 |
|
|
|
441 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|||
Due to/from affiliates |
|
|
79 |
|
|
|
(97 |
) |
|
|
98 |
|
Prepaid expenses and other assets |
|
|
(3 |
) |
|
|
1 |
|
|
|
17 |
|
Rents receivable |
|
|
568 |
|
|
|
64 |
|
|
|
(13 |
) |
Accounts payable and accrued expenses |
|
|
(17 |
) |
|
|
(1,342 |
) |
|
|
338 |
|
Deferred income and other liabilities |
|
|
(3,330 |
) |
|
|
2,320 |
|
|
|
18 |
|
Net cash provided by operating activities |
|
|
3,897 |
|
|
|
9,454 |
|
|
|
8,836 |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|||
Development, construction and property improvement costs |
|
|
(85 |
) |
|
|
(49 |
) |
|
|
(52 |
) |
Net cash used in investing activities |
|
|
(85 |
) |
|
|
(49 |
) |
|
|
(52 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|||
Distributions to members |
|
|
(3,230 |
) |
|
|
(9,577 |
) |
|
|
(9,207 |
) |
Net cash used in financing activities |
|
|
(3,230 |
) |
|
|
(9,577 |
) |
|
|
(9,207 |
) |
Increase (decrease) in cash |
|
|
582 |
|
|
|
(172 |
) |
|
|
(423 |
) |
Cash of $1,175, $1,347 and $1,770, respectively, beginning of year |
|
|
1,175 |
|
|
|
1,347 |
|
|
|
1,770 |
|
Cash of $1,332, $1,175 and $1,347 and restricted cash of $425, $0 and $0, respectively, end of year |
|
$ |
1,757 |
|
|
$ |
1,175 |
|
|
$ |
1,347 |
|
See accompanying notes to combined financial statements.
8
840 North Michigan Avenue, Tenant-in-Common Interests
Notes to Combined Financial Statements
Years Ended December 31, 2023 (unaudited) and 2022
(dollars in thousands)
1. Organization
On December 3, 2014, two unrelated parties acquired an undivided 100% tenant-in-common (“TIC”) interest in a commercial retail property located at 840 North Michigan Avenue in Chicago, Illinois (the “commonly-held property”). 840 North Michigan Avenue Acquisition LLC (“Acadia”), a wholly-owned subsidiary of Acadia Realty Limited Partnership, originally held an 88.43% TIC interest, and the remaining 11.57% TIC interest is held by an unaffiliated third-party CHUSA LLC (“CHUSA”), pursuant to the terms of the tenants-in-common agreement. In December 2023, Acadia and CHUSA entered into the first amendment to the tenants-in-common agreement (collectively with the original tenants-in-common agreement, the “TIC Agreement”). Pursuant to the TIC Agreement, CHUSA conveyed an additional 3.42% of TIC interest to Acadia. At December 31, 2023, Acadia held a 91.85% TIC Interest and CHUSA holds the remaining 8.15% TIC interest.
These combined financial statements represent 100% of the combined TIC interest in the commonly-held property for the years ended December 31, 2023 and 2022, and are being presented to satisfy certain reporting requirements of Acadia Realty Trust. These combined financial statements exclude a $54.4 million and $73.5 million mortgage loan (the "Mortgage Loan") at December 31, 2023 and 2022, respectively, and the related interest expense, both of which are the obligation of the individual TIC interest holders.
2. Summary of Significant Accounting Policies
Use of Estimates
Accounting principles generally accepted in the United States of America (“GAAP”) require estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition and the collectability of rents receivable. Application of these estimates and assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.
Basis of Presentation
Dollar amounts disclosed in these Notes to Combined Financial Statements are presented in thousands, unless otherwise noted.
Real Estate
Land, buildings improvements, and other property are carried at cost less accumulated depreciation. Improvements and significant renovations that extend the useful lives of the property are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred.
Depreciation is computed on the straight-line basis over estimated useful lives of the assets as follows:
Buildings and improvements Useful life of 40 years for buildings and 15 years for improvements
Tenant improvements Shorter of economic life or lease terms
If the commonly-held property funds tenant improvements and the improvements are deemed to be owned by the commonly-held property, revenue recognition will commence when the improvements are substantially completed, and possession or control of the space is turned over to the tenant. If it is determined that the tenant allowances are lease incentives, the commonly-held property commences revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin. The lease incentive is recorded as a deferred expense and amortized as a reduction of revenue on a straight-line basis over the respective lease term.
Upon acquisition of the real estate property, Management assesses the fair value of acquired assets and assumed liabilities (including land, buildings, and improvements, and identified intangibles such as above- and below-market leases and acquired in-place leases) and assumed liabilities in accordance with ASC Topic 805, “Business Combinations” and ASC Topic 350 “Intangibles – Goodwill and Other,” and allocates the acquisition price based on these assessments. As the acquisition of the commonly-held property did not meet the criteria for a business combination, the property was accounted for as an asset acquisition; therefore, no goodwill was recorded, and acquisition costs were capitalized.
9
840 North Michigan Avenue, Tenant-in-Common Interests
Notes to Combined Financial Statements
Years Ended December 31, 2023 (unaudited) and 2022
(dollars in thousands)
Management assesses the fair value of its tangible assets acquired and liabilities assumed based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information at the measurement period. Estimates of future cash flows are based on several factors including the historical operating results, known trends, and market/economic conditions that may affect the property.
In determining the value of the above- and below-market leases, Management estimates the present value difference between contractual rent obligations and estimated market rate of leases at the time of the transaction. To the extent there are fixed-rate options at below-market rental rates, management includes these periods along with the current term below-market rent in arriving at the fair value of the acquired leases. The discounted difference between contract and market rents is amortized to rental income over the remaining applicable lease term, inclusive of any option periods.
In determining the value of acquired in-place leases, Management considered market conditions at the time of the transaction and values the costs to execute similar leases during the expected lease-up period from vacancy to existing occupancy, including carrying costs. The value assigned to in-place leases and tenant relationships is amortized over the estimated remaining term of the leases. If a lease were to be terminated prior to its scheduled expiration, all unamortized costs (e.g., lease intangibles) relating to that lease would be written off.
Construction in progress pertains to construction activity at the commonly-held property that when the property remains in service and continues to operate during the construction period.
Real Estate Impairment – Impairment losses on long-lived assets used in operations will be recorded when events and circumstances indicate that the assets might be impaired and the estimated undiscounted cash flows, without interest charges to be generated by those assets are less than the carrying amounts of those assets. The property is reviewed periodically, or upon certain events or a change in circumstances, to determine if its carrying costs will be recovered from future operating cash flows. In cases where the carrying costs are not expected to be recovered, an impairment loss will be recognized. If management is evaluating the potential sale of an asset, the undiscounted future cash flows analysis is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action as of the balance sheet date. Such cash flow projections consider factors such as expected future operating income, trends, and prospects, as well as the effects of demand, competition, and other factors. If an impairment is indicated, an impairment loss is recognized based on the excess of the carrying amount of the asset over its estimated fair value based on third-party appraisals, broker selling estimates, sale agreements under negotiation, and/or final selling prices, when available. The determination of anticipated undiscounted cash flows is inherently subjective, requiring significant estimates made by management, and considers the most likely expected course of action at the balance sheet date based on current plans, intended holding periods and available market information.
No impairment loss were recognized in 2023. An impairment charge of $57,423 was recognized for the year ended December 31, 2022 (Note 7).
Revenue Recognition
The commonly-held property recognizes rental revenue from fixed and variable lease payments, as designated within tenant operating leases in accordance with ASC Topic 842, “Leases,” as further described below, as Rental Revenue on the accompanying statements of operations. The collectability of amounts due from tenants and disputed enforceable charges, which result from the inability of tenants to make required payments under their operating lease agreements, are evaluated on a lease-by-lease basis. Changes in the collectability assessment of these operating leases are recognized as adjustments to rental revenue in accordance with ASC 842.
Leases
Pursuant to ASC 842, the commonly-held property does not separate the non-lease components, such as common area maintenance, from its leases. In addition, the commonly-held property accounts for those taxes that it pays on behalf of the tenant as reimbursable costs and does not account for those taxes paid directly by the tenant. Minimum rents from tenants are recognized using the straight-line method over the non-cancelable lease term of the respective leases, unless another systematic and rational basis is more representative of the pattern in which benefit is expected to be derived from the use of the underlying asset. As of December 31, 2023 and 2022, unbilled rents receivable relating to the straight-lining of rents of ($321)and $540, respectively, were included in Rents Receivable on the accompanying balance sheets.
10
840 North Michigan Avenue, Tenant-in-Common Interests
Notes to Combined Financial Statements
Years Ended December 31, 2023 (unaudited) and 2022
(dollars in thousands)
Contractual rent increases of renewal options are often fixed at the initial lease agreement. In addition to fixed base rents, variable rental revenue is derived from certain leases that are dependent on percentage rents based upon the level of sales achieved by the tenant. Percentage rent is recognized in the period when the tenants’ sales breakpoint is met. In addition, variable rental revenue is derived from leases through reimbursement to the commonly-held property by our tenants for real estate taxes, insurance, and other property operating expenses. These reimbursements are recognized as revenue in the period the related expenses are incurred.
Accounts Receivable
In addition to the lease-specific collectability assessment, a general allowance is considered based on historical collection experience, Collectability is based upon accrued rent and accounts receivable balances related to lease revenue. Collectability of the accounts receivable related to billed rents, straight-line rents, recoveries from tenants, and other revenue is considered through an analysis of historical write-off experience, tenant creditworthiness, current economic trends, and remaining lease terms. At both December 31, 2023 and December 31, 2022, there was no provision for doubtful accounts.
Cash
Cash is maintained at financial institutions and, at times, balances may exceed the limits insured by the Federal Deposit Insurance Corporation.
Income Taxes
No provision for income taxes is necessary in these financial statements because, as a TIC interest, the tax effect of its activities accrues to the individual TIC interest holders.
Concentration of Credit Risk
There is a concentration of credit risk as the space in the property is 100% leased to two tenants, which terms expire at various dates through December 31, 2024. It is anticipated that both of these tenants will not renew upon expiration of the lease term, including one such tenant that comprises approximately 68.1% of the space with a scheduled expiration in December 2024. These two tenants each accounted for more than 10% of total revenues for the year ended December 31, 2023 and 2022.
3. Lease Intangibles
Upon acquisitions of real estate, management assesses the fair value of acquired assets (including land, buildings, and improvements, and identified intangibles such as above- and below-market leases, including below- market options and acquired in-place leases) and assumed liabilities. The lease intangibles are amortized over the remaining terms of the respective leases, including option periods where applicable.
Intangible assets and liabilities are summarized as follows (in thousands):
|
|
December 31, 2023 (Unaudited) |
|
|
December 31, 2022 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
||||||
Amortizable Intangible Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
In-place lease intangible assets |
|
$ |
1,383 |
|
|
$ |
(1,238 |
) |
|
$ |
145 |
|
|
$ |
2,950 |
|
|
$ |
(1,567 |
) |
|
$ |
1,383 |
|
|
|
$ |
1,383 |
|
|
$ |
(1,238 |
) |
|
$ |
145 |
|
|
$ |
2,950 |
|
|
$ |
(1,567 |
) |
|
$ |
1,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortizable Intangible Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Below-market rent |
|
$ |
(2,362 |
) |
|
$ |
1,871 |
|
|
$ |
(491 |
) |
|
$ |
(5,906 |
) |
|
$ |
3,544 |
|
|
$ |
(2,362 |
) |
|
|
$ |
(2,362 |
) |
|
$ |
1,871 |
|
|
$ |
(491 |
) |
|
$ |
(5,906 |
) |
|
$ |
3,544 |
|
|
$ |
(2,362 |
) |
11
840 North Michigan Avenue, Tenant-in-Common Interests
Notes to Combined Financial Statements
Years Ended December 31, 2023 (unaudited) and 2022
(dollars in thousands)
Amortization of in-place lease intangible assets is recorded in depreciation and amortization expense and amortization of above-market rent and below-market rent is recorded as a reduction to and increase to rental income, respectively, in the combined statements of operations.
The scheduled amortization of acquired lease intangible assets and liabilities, net as of December 31, 2023 (unaudited) is as follows (in thousands):
Years Ending December 31, |
|
Net Increase in |
|
|
Increase to |
|
|
Net (Expense) Income |
|
|||
2024 |
|
$ |
491 |
|
|
$ |
(145 |
) |
|
$ |
346 |
|
2025 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
2026 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
2027 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
2028 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Thereafter |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
491 |
|
|
$ |
(145 |
) |
|
$ |
346 |
|
4. Mortgage Loan Payable (Not Reflected in Combined Financial Statements)
In connection with the acquisition of the commonly-held property, each TIC interest holder is party to the Mortgage Loan. The Mortgage Loan and related interest expense is the responsibility of the individual TIC interest holders and is not reflected in these combined financial statements. The Mortgage Loan is subject to certain debt service coverage ratio requirements, with which the commonly-held property is compliant as of December 31, 2023 and 2022. Interest expense on the Mortgage Loan was $3,145 for the year ended December 31, 2023 and $3,145 for the year ended December 31, 2022.
The following table summarizes the mortgage notes payable as of December 31, 2023 and 2022 (dollars in thousands):
|
|
Interest Rate |
|
|
|
|
December 31, |
|
||||||||||
Description |
|
2023 |
|
|
2022 |
|
|
Maturity Date |
|
2023 |
|
|
2022 |
|
||||
Secured |
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
||||
Promissory Note |
|
6.50% |
|
|
|
4.49 |
% |
|
December 10, 2026 |
|
$ |
54,375 |
|
|
$ |
55,000 |
|
|
Additional Advance Promissory Note |
|
|
— |
|
|
|
3.97 |
% |
|
February 10, 2025 |
|
|
— |
|
|
|
18,500 |
|
Total Debt |
|
|
|
|
|
|
|
|
|
$ |
54,375 |
|
|
$ |
73,500 |
|
||
In December 2023, the TIC interest holders modified the $73.5 million nonrecourse mortgage loan. As part of the modification, the principal balance was reduced by $18.5 million and required a principal paydown of $17.5 million, the interest rate increased from 4.4% to 6.5%, and the maturity date was extended from February 2025 to December 2026. In addition, upon a sale or secured refinancing prior to maturity (or early prepayment) at an amount that exceeds $55.0 million (as adjusted pursuant to the modification agreement), the TIC interest holders may be subject to additional contingent payments of up to $17.5 million (“Contingent Payment”), which amortizes on a straight-line basis over the remaining term of the loan. The modification was accounted for as a troubled debt restructuring pursuant to ASC 470, resulting in an initial gain of approximately $0.4 million, and represented the excess of the original principal balance of the mortgage (prior to modification), over the maximum total future cash payments under the new terms, inclusive of the Contingent Payment. Thus, all future cash payments under the terms of the payable, including the Contingent Payment, shall be accounted for as a reduction of the carrying amount of the mortgage, and no interest expense shall be recognized for any period between the modification and the revised maturity of the mortgage. No amortization of the Contingent Payment occurred in 2023. As part of the modification, the Acadia Realty Limited Partnership provided a recourse guarantee equivalent to 50% of the unpaid outstanding principal balance of the mortgage.
Scheduled Debt Principal Payments
The scheduled principal repayments, without regard to available extension options (described further below) as of December 31, 2023 are as follows (in thousands):
12
840 North Michigan Avenue, Tenant-in-Common Interests
Notes to Combined Financial Statements
Years Ended December 31, 2023 (unaudited) and 2022
(dollars in thousands)
Year Ending December 31, |
|
|
|
|
2024 |
|
$ |
12,709 |
|
2025 |
|
|
5,833 |
|
2026 |
|
|
35,833 |
|
2027 |
|
|
— |
|
2028 |
|
|
— |
|
Thereafter |
|
|
— |
|
Total indebtedness |
|
$ |
54,375 |
|
5. Related Party Transactions
Acadia Realty Limited Partnership (the "ARLP Manager"), an affiliate of Acadia, and Parkside Realty, Inc. (“Parkside Manager” and collectively, “Property Managers”), were engaged by the TIC interest holders to perform respective property management duties for the commonly-held property pursuant to the terms of the property management agreement (the “Management Agreement”). Under the Management Agreement, the ARLP Manager and Parkside Manager each receive a property management fee equal to 1.0% of the monthly gross revenues of the commonly-held property. Total management fees earned by the Property Managers for the year ended December 31, 2023 and 2022 were $157 and $259, respectively, and are included in Property operating expenses on the combined statements of operations. Payables due to Property Managers totaled $81 and $2 at December 31, 2023 and 2022, respectively.
6. Tenant Leases
Space in the commonly-held property is currently 100% leased to two tenants which terms expire at various dates through December 31, 2024. Space is generally leased to tenants pursuant to agreements that provide for terms that generally provide for additional rents based on certain operating expenses. It is anticipated that both of these tenants will not renew upon expiration of the lease term. During the years ended December 31, 2023 and 2022, variable-lease revenue of $2,486 and $2,047, respectively, primarily for real estate taxes and common area maintenance charges are included in rental income in the combined statements of operations.
Minimum future annual rentals to be received under non-cancelable operating leases as of December 31, 2023 are summarized as follows (in thousands):
Year Ending December 31, |
|
Minimum Rental |
|
|
2024 |
|
$ |
665 |
|
2025 |
|
|
— |
|
2026 |
|
|
— |
|
2027 |
|
|
— |
|
2028 |
|
|
— |
|
Thereafter |
|
|
— |
|
Total |
|
$ |
665 |
|
7. Impairment
There was no impairment charge for the year ended December 31, 2023. During 2022, management identified an impairment indicator of a significant decrease in the market price of its real estate. As a result, management recorded an impairment charge of $57,423 for the year ended December 31, 2022. The fair value of these assets were derived using discounted cash flow analyses based on Level 3 inputs based on projections of: holding period, net operating income, capitalization rate, and incremental costs.
13
840 North Michigan Avenue, Tenant-in-Common Interests
Notes to Combined Financial Statements
Years Ended December 31, 2023 (unaudited) and 2022
(dollars in thousands)
8. Commitments and Contingencies
As an acquirer and holder of real estate, the TIC is subject to various federal and local environmental laws. Compliance by the TIC with existing laws has not had a material adverse effect on the TIC and management does not believe that it will have a negative impact in the future. However, the TIC cannot predict the impact of new or changed laws or regulations on its current investment in operating real estate.
The TIC may, over time, be subject to routine litigation arising out of the normal course of business, none of which is expected to have a material adverse effect on the financial position, results of operations or liquidity of the TIC.
9. Tenants-in-Common Interests
The TIC Agreement includes, among other matters, the rights and limitations of the TIC interest holders.
Pursuant to the TIC Agreement, each TIC interest holder is responsible for its pro-rata share of contributions which may be required thereunder in connection with the ownership, operation, management, and maintenance of the commonly-held property, and each TIC interest holder is entitled to receive its pro-rata share of applicable revenues and proceeds derived from the commonly-held property in accordance with the terms thereof.
10. Subsequent Events
Management has performed subsequent events procedures through February 16, 2024, which is the date the financial statements were available to be issued. No material subsequent events have occurred since December 31, 2023, that require recognition or disclosure in the combined financial statements.
14