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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 30, 2003
ACADIA REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-12002 23-2715194
(State or other (Commission (I.R.S. Employer
jurisdiction of incorporation) File Number) Identification No.)
20 Soundview Marketplace
Port Washington, New York 11050
(Address of principal executive offices) (Zip Code)
(516) 767-8830
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit Number Description
- ------------------- --------------------------------
99.1 Press release dated April 30, 2003
ITEM 9. Regulation FD Disclosure
On April 30, 2003, the Registrant, Acadia Realty Trust, announced its
consolidated financial results for the quarter ended March 31, 2003. A copy of
the Registrant's earnings press release is furnished as Exhibit 99.1 to this
report on Form 8-K. The information contained in this report on Form 8-K,
including Exhibit 99.1, is being furnished pursuant to Item 12 of Form 8-K under
Item 9 of Form 8-K as directed by the Securities and Exchange Commission in
Release No. 34-47583. The information contained in this report on Form 8-K,
including Exhibit 99.1, shall not be deemed "filed" with the Securities and
Exchange Commission nor incorporated by reference in any registration statement
filed by the Registrant under the Securities Act of 1933, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACADIA REALTY TRUST
(Registrant)
Date: April 30, 2003 By: /s/ Michael Nelsen
-------------------
Name: Michael Nelsen
Title: Sr. Vice President and Chief Financial Officer
Exhibit 99.1
Acadia Realty Trust Announces First Quarter 2003 Operating Results;
All Components of Business Plan on Track -
Reaffirms 2003 Guidance
NEW YORK--(BUSINESS WIRE)--April 30, 2003--Acadia Realty Trust
(NYSE: AKR - "Acadia" or the "Company"), a real estate investment
trust ("REIT") and owner and operator of shopping centers anchored by
grocery and value-oriented retail, today reported operating results
for the first quarter ended March 31, 2003.
First Quarter 2003 Highlights
Financial Information
-- Diluted funds from operations ("FFO") of $0.27 per share
-- Increased the dividend by 11.5% in first quarter 2003, from
$0.52 to $0.58 per share annually
-- Maintained conservative FFO payout ratio below 65%
-- 44% debt to total market capitalization based on current share
price
-- In excess of 3.0 to 1 fixed-charge coverage
Acquisition Activity
-- Brandywine Portfolio - Acquired one-million square foot
value-based retail portfolio for $89 million
-- Kroger/Safeway Portfolio - Acquired one-million square foot
supermarket portfolio of 25 Kroger and Safeway supermarkets
for $48 million
Portfolio Information
-- Executed lease with Home Depot for first of four recaptured
Ames locations
-- Kmart scheduled to assume all of its leases within the
portfolio
-- Occupancy up 1.1% over year-end 2002
-- Executed new and renewal leases totaling 140,000 square feet
at favorable rent spreads of 6%
-- Re-anchoring of Crescent Plaza complete with opening of Home
Depot
First Quarter Operating Results - Earnings on Track
FFO for the first quarter 2003 was $7.8 million, or $0.27 per
share on a fully diluted basis, compared to $12.2 million or $0.40 for
the same quarter 2002. Included in 2003 is a total of $0.06 of FFO per
share from merchant development activity with Target as well as a lump
sum additional rent payment received from a tenant in connection with
the re-anchoring of the Branch Plaza in Smithtown, NY. In comparison,
historical first quarter 2002 FFO included a total of $0.16 per share
from lease termination income received from a single tenant and
merchant development activity as well as $0.05 from discontinued
operations. Earnings per share on a fully diluted basis were $0.14 and
$0.24 for the quarters ended March 31, 2003 and 2002, respectively.
Portfolio Activity - Former Ames Location Leased to Home Depot -
Kmart Anticipated to Assume All Its Leases
Year-end occupancy increased 1.1% to 87.4% for first quarter 2003
compared to 86.3% for the fourth quarter 2002. Excluding the impact of
the Ames closings, which occurred during the fourth quarter of 2002,
current occupancy was 92.1%. On a same store basis, occupancy for the
first quarter 2002 was 90.9%.
During the first quarter 2003, the Company executed new and
renewal leases totaling 140,000 square feet at an average increase of
6% above the previous base rents on a cash basis.
As anticipated at year-end 2002, same store net operating income
("NOI") was adversely impacted by the short-term effect of the 2002
Ames and PharMor store closings in connection with their bankruptcies.
Same store NOI for the entire portfolio decreased 8.9% for first
quarter 2003 over 2002. Substantially all of the 9.6% decrease for the
retail portfolio was attributable to the above closings. Same store
retail NOI would have increased 1.7% adjusting for this as well as for
the impact of increased seasonal expenses (net of tenant
reimbursements) resulting from the effects of the harsh 2003 winter
season.
During March 2003, the Company signed a lease for one of the four
former Ames locations with Home Depot at the Plaza 422, located in
Lebanon, PA. The Home Depot lease will not only include the former
Ames space, but also an expansion into formerly vacant space, with the
new store anticipated to open during the first quarter of 2004.
Pursuant to the lease, Home Depot will pay rent totaling approximately
$0.02 per share of FFO on an annual basis as compared to the $0.01
that was paid by Ames under its former lease. As previously reported,
Acadia had anticipated a total of $0.06 per share of FFO dilution
during 2003 as a result of the Ames closings. The Company currently
forecasts that this dilution will be recovered during the next 12 to
24 months.
In April 2003, Kmart announced its intent to assume all five of
its leases within Acadia's portfolio effective with its reorganization
in May 2003. All of these stores are paying full rents with occupancy
costs under 3% and average sales of $176 per square foot. In addition,
the Company also has one Kmart store at a joint venture property that
is anticipated to be assumed by Kmart.
At the Branch Plaza located in Smithtown, NY, the Pathmark
supermarket lease was assigned to a division of A&P. In connection
with the assignment, Pathmark paid the Company $1.2 million of
additional rent during the first quarter 2003.
Redevelopment Activity - Shaw's to Open May 2003 at the Gateway
Shopping Center
The de-malling and re-anchoring of the Gateway Shopping Center
located in South Burlington, VT, continues on schedule. The project,
formerly a partially enclosed mini-mall with an undersized Grand
Union, is being converted into a new open-air community shopping
center with a 72,000 square foot Shaw's supermarket. Shaw's grand
opening and rent commencement is scheduled for May 2003. The Company
anticipates it will complete the construction of the remaining small
shop space later during 2003.
Merchant Development Activity
During the first quarter 2003, the Company completed a transaction
with Target Corporation for the development of a free-standing Target
department store in Bethel, CT. Acadia, in conjunction with its joint
venture partner, Hendon Properties based in Atlanta, GA, entered into
a contract to acquire the site and secured approvals for Target.
Target has purchased the site and will construct its free-standing
building as the sole tenant of the development. The transaction
resulted in a gain to Acadia of $659,000.
Balance Sheet - Maintaining Strong Financial Position
For 2003, Acadia maintained its balance sheet strength and
conservative financial ratios as well as sufficient in-place working
capital to continue to fund all of its foreseeable near-term internal
and external capital requirements:
-- Dividend payout ratio for the quarter was below 65% of FFO
-- Debt to total market capitalization was 44% (based on current
common share price) with a blended cost of debt of 5.9%. This
compares to 49% as of year-end 2002 and 52% as of the first
quarter 2002.
-- 76% of the total mortgage debt was fixed-rate, inclusive of
the effect of interest rate swaps and the Company's pro-rata
share of joint venture debt.
-- Fixed-charge ratio was greater than 3.0 times (EBITDA /
interest expense plus preferred distributions)
-- Even after investing $6.0 million in the joint venture to fund
two major acquisitions during the quarter, Acadia still has
$34 million of working capital at quarter-end with an
additional $45 million available under current credit
facilities
Dividend Increase - 11.5% Increase for 2003 - Follows 8% Increase
in 2002
On April 15, 2003, Acadia paid a quarterly dividend of $0.145 per
share, which represented an 11.5% increase over the $0.13 quarterly
dividend paid by Acadia during 2002. On an annualized basis, the
dividend will increase $0.06 resulting in an annual 2003 dividend of
$0.58. This follows an 8% increase in Acadia's dividend for 2002. Even
after the recent dividend increase, Acadia expects to maintain a
payout ratio that is among the most conservative in its sector based
on 2003 earnings guidance.
Acquisitions - 2003 Acquisition Guidance Already Achieved
Kroger/Safeway Portfolio
In January of 2003, the joint venture acquired a one million
square foot supermarket portfolio consisting of twenty-five
anchor-only leases with either Kroger or Safeway supermarkets. The
purchase price of $47.9 million included the assumption of $34.5
million of existing debt, which fully amortizes over the remaining
seven-year term. Even after the heavy debt amortization, the projected
cash flow on Acadia's portion of its equity investment is anticipated
to yield in excess of a 16% return.
Brandywine Portfolio
In January of 2003, the joint venture acquired another one million
square foot portfolio for an initial purchase price of $89.3 million
plus a contingent additional purchase price ("Earnout") based on
certain conditions. The portfolio consists of two open-air,
value-based shopping centers. The first being the Market Square
Shopping Center, a 103,000 square foot community shopping center
anchored by a TJ Maxx and Trader Joe's gourmet grocery. The second
center, the Brandywine Towne Center, consists of two components. The
first is 450,000 square feet which is 97% occupied by dominant tenants
including Lowe's, Bed Bath & Beyond, Regal Cinema, Michaels, Petsmart,
Old Navy, Annie Sez, Thomasville Furniture, KB Toys and Dick's
Sporting Goods. The second component is 420,000 square feet of
existing space of which Target occupies 138,000 square feet. The joint
venture is responsible for the Earnout payment only when the existing
vacant space is leased. The initial acquisition price represents a
better than 10.25% capitalization rate based on the net operating
income at acquisition. The project is financed with $68.0 million of
6.2% (blended) fixed-rate debt resulting in an initial leveraged yield
in excess of 15%.
In total, these acquisitions, together with the JV's existing
portfolio, are projected to contribute approximately $0.09 to $0.10 of
FFO on an annual basis. Additional information on these acquisitions
is available at Acadia's website at acadiarealty.com.
Outlook - Guidance for 2003 Reaffirmed
Acadia reaffirmed its 2003 annual FFO forecast ranging from $0.88
to $0.92 per share. Management will discuss further details for the
2003 forecast in the conference call to be conducted later today.
Management Comments
Commenting on the results for the quarter, Kenneth Bernstein,
President and CEO, stated, "We are quite pleased with our first
quarter results which are consistent with our expectations and further
evidence of the continued success of our business plan. We continue to
remain focused on the three key areas of our business. First,
maintaining a solid core portfolio through aggressive leasing and
redevelopment of assets, replacing tenants such as Ames and Grand
Union with strong anchors like Home Depot and Shaw's. Second,
continuing to strengthen our balance sheet as evidenced by some of the
strongest coverage ratios in our sector. Lastly, executing on our
exciting and rational external growth program as evidenced by the two
portfolio acquisitions completed in the first quarter. By continuing
to successfully execute in all three areas, we are adding to the
platform from which to deliver continued growth to our shareholders."
Investor Conference Call
Kenneth Bernstein, President and CEO, and Michael Nelsen, Sr. Vice
President and CFO, will conduct a conference call April 30, 2003 at
2:30 p.m. EST to review the Company's earnings and operating results.
The live conference call can be accessed by dialing 888-339-2688
(internationally 617-847-3007). No passcode is required.
The call will also be webcast and can be accessed in a listen-only
mode at Acadia's web site at www.acadiarealty.com. If you are unable
to participate during the live webcast, the call will be archived and
available on Acadia's website. Alternatively, to access the replay by
phone, dial 888-286-8010 (internationally 617-801-6888). The passcode
will be 79811214. The phone replay will be available through Tuesday,
May 6, 2003.
Formerly headquartered in Long Island, NY, Acadia Realty Trust has
established new headquarters in White Plains, NY. Acadia is a fully
integrated and self-managed real estate investment trust which
specializes in the acquisition, redevelopment and operation of
shopping centers which are anchored by grocery and value-oriented
retail. Acadia currently owns (or has interests in) and operates 62
properties totaling approximately nine million square feet, located
primarily in the Eastern United States.
Certain matters in this press release may constitute
forward-looking statements within the meaning of federal securities
law and as such may involve known and unknown risk, uncertainties and
other factors which may cause the actual results, performances or
achievements of Acadia to be materially different from any future
results, performances or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements speak only
as of the date of this document. Acadia expressly disclaims any
obligation or undertaking to release publicly any updates or revisions
to any forward-looking statements contained herein to reflect any
change in Acadia's expectations with regard thereto or change in
events, conditions or circumstances on which any such statement is
based.
The Company considers funds from operations ("FFO") as defined by
the National Association of Real Estate Investment Trusts ("NAREIT")
to be an appropriate supplemental disclosure of operating performance
for an equity REIT due to its widespread acceptance and use within the
REIT and analyst communities. FFO is presented to assist investors in
analyzing the performance of the Company. However, the Company's
method of calculating FFO may be different from methods used by other
REITs and, accordingly, may not be comparable to such other REITs. FFO
does not represent cash generated from operations as defined by
generally accepted accounting principles ("GAAP") and is not
indicative of cash available to fund all cash needs, including
distributions. It should not be considered as an alternative to net
income for the purpose of evaluating the Company's performance or to
cash flows as a measure of liquidity.
For more information visit Acadia Realty Trust's Web site at
www.acadiarealty.com
(Financial Tables Follow)
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters ended March 31, 2003 and 2002
(dollars in thousands, except per share data)
STATEMENTS OF INCOME
For the quarters ended
March 31,
Revenues 2003 2002
--------------------------
Minimum rents $12,097 $11,829
Percentage rents 294 319
Expense reimbursements 3,717 2,525
Lease termination income -- 3,800
Other property income 151 165
Other 1,866 888
--------------------------
Total revenues 18,125 19,526
--------------------------
Operating expenses
Property operating 4,354 2,715
Real estate taxes 2,197 1,920
General and administrative 2,696 2,325
Depreciation and amortization 3,601 3,585
--------------------------
Total operating expenses 12,848 10,545
--------------------------
Operating income 5,277 8,981
Equity in earnings of unconsolidated
partnerships 553 118
Interest expense (2,726) (2,761)
Gain on sale 1,212 1,530
Minority interest (853) (1,718)
--------------------------
Income from continuing operations 3,463 6,150
--------------------------
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters ended March 31, 2003 and 2002
(dollars in thousands, except per share data)
STATEMENTS OF INCOME (continued)
For the quarters ended
March 31,
2003 2002
--------- ---------
Discontinued operations:
Operating income from discontinued
operations $ -- $ 524
Impairment of real estate -- --
Loss on sale of properties -- (155)
Minority interest -- (53)
--------- ---------
Income from discontinued operations -- 316
--------- ---------
Net income $ 3,463 $ 6,466
========= =========
Net income per Common Share - basic (a) $ .14 $ .25
========= =========
Net income per Common Share - diluted (a) $ .14 $ .25
========= =========
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters ended March 31, 2003 and 2002
(dollars in thousands, except per share data)
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS (b)
For the quarters ended
March 31,
2003 2002
--------- ----------
Net income $ 3,463 $ 6,466
Depreciation of real estate and
amortization of leasing costs:
Wholly owned and consolidated
partnerships 3,399 4,339
Unconsolidated partnerships 459 157
Income attributable to minority interest in
Operating
Partnership 438 1,116
Loss on sale of properties -- 155
--------- ----------
Funds from operations $ 7,759 $ 12,233
========= ==========
Funds from operations per share - Basic (c)$ .27 $ .40
========= ==========
Funds from operations per share - Diluted
(c) $ .27 $ .40
========= ==========
Funds from operations per share -
Continuing operations (Diluted) (c) $ .27 $ .35
========= ==========
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
As of March 31, 2003 and December 31, 2002
(dollars in thousands, except per share data)
SELECTED BALANCE SHEET INFORMATION
March 31, December 31,
2003 2002
---------- ------------
Cash and cash equivalents $ 31,320 $ 45,168
Rental property, at cost 416,047 413,878
Total assets 402,185 410,935
Mortgage notes payable 197,900 202,361
Total liabilities 215,837 224,487
Fixed rate debt: (d) 141,360 145,236
% of outstanding debt 71% 72%
Weighted average interest rate 6.8% 6.8%
Variable rate debt $ 56,540 $ 57,125
% of outstanding debt 29% 28%
Weighted average interest rate 3.2% 3.3%
Total weighted average interest rate 5.7% 5.8%
Notes:
(a) Basic net income per share is computed based on the weighted
average number of Common Shares outstanding for the quarters ended
March 31, 2003 and 2002 of 25,377,095 and 26,376,443,
respectively. Diluted net income per share, which assumes the
conversion of securities and other contracts to issue Common
Shares is computed based on the weighted average number of Common
Shares outstanding for the quarters ended March 31, 2003 and 2002
of 25,933,960 and 26,786,454, respectively.
(b) Consistent with the NAREIT definition, the Company defines FFO as
net income (computed in accordance with GAAP), excluding gains (or
losses) from sales of depreciated property, plus depreciation and
amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Included in FFO for the quarters
ended March 31, 2003 and 2002 are gains from the sale of
undepreciated land of $659 and $957, respectively.
(c) Assumes full conversion of a weighted average 3,058,564 and
4,379,309 OP Units into Common Shares for the quarters ended March
31, 2003 and 2002, respectively.
(d) Fixed-rate debt includes $87,027 of notional principal fixed
through swap transactions. Conversely, variable-rate debt excludes
this amount.
CONTACT: Acadia Realty Trust
Investor Relations:
Jon Grisham, 516/767-8830 ext. 342