Press release·05/01/2025 02:21:51

Overview of Acadia Realty Trust

Acadia Realty Trust is a real estate investment trust (REIT) that focuses on owning, acquiring, developing, and managing retail properties in high-barrier-to-entry, supply-constrained, densely populated metropolitan areas in the United States. The company operates through two main segments: the Core Portfolio, which includes properties that Acadia fully or partially owns, and the Investment Management platform, which includes properties owned through various investment funds.

Acadia’s key strategies are to maximize internal growth in the Core Portfolio, pursue accretive acquisition and development opportunities, capitalize on the Investment Management platform, and maintain a strong and flexible balance sheet. As of March 31, 2025, Acadia owned or had an ownership interest in 213 properties across its Core Portfolio and Investment Management segments.

Significant Developments in Q1 2025

In the first quarter of 2025, Acadia made several notable investments and financing moves:

• Acquired an additional 48% interest in the Renaissance Portfolio in Washington D.C., increasing its ownership to 68%. This gave Acadia a controlling financial interest and led it to consolidate the portfolio within its Core segment.
• Acquired two Core Portfolio retail properties and one Investment Management shopping center for a total of $148.8 million.
• Recognized a $6.5 million impairment charge on a Fund III property in Manhattan due to a shortened hold period as the company markets the asset for sale.
• Refinanced the mortgage debt on the Renaissance Portfolio, reducing the interest rate from SOFR + 2.55% to SOFR + 1.55% through a $50 million principal paydown.
• Issued 2.4 million forward shares under its $500 million at-the-market (ATM) equity program and settled 11.2 million shares, raising $277.9 million in net proceeds.

Financial Performance Comparison: Q1 2025 vs. Q1 2024

Acadia’s financial performance in Q1 2025 was mixed compared to the prior year period:

Core Portfolio Segment

• Rental revenue increased $15.0 million, primarily due to $8.4 million in termination income at a San Francisco property, $4.0 million from new acquisitions, and $2.8 million from the Renaissance Portfolio consolidation.
• Depreciation and amortization increased $5.4 million, largely from the Renaissance Portfolio acquisition and accelerated write-offs of in-place lease intangibles.
• Equity in earnings of unconsolidated affiliates decreased $1.8 million due to tenant vacancies.
• Realized and unrealized gains on investments increased $3.7 million, mainly from a change in the mark-to-market on Acadia’s Albertsons investment.

Investment Management Segment

• Rental revenue increased $1.6 million due to tenant lease-up.
• Recognized a $6.5 million impairment charge on a Fund III property in Manhattan.
• Net loss attributable to noncontrolling interests increased $3.5 million, reflecting their share of the segment’s performance.

Unallocated Items

• General and administrative expenses increased $1.8 million, primarily due to higher compensation costs.

Overall, Acadia’s net income attributable to shareholders decreased $1.7 million in Q1 2025 compared to Q1 2024, driven by the impairment charge, loss on change in control from the Renaissance Portfolio acquisition, and higher depreciation and amortization, partially offset by increased rental revenue and investment gains.

Non-GAAP Financial Measures

Acadia provides supplemental disclosure of two non-GAAP financial measures:

1. Net Operating Income (NOI): Acadia’s Core Portfolio NOI increased 2.2% in Q1 2025 compared to Q1 2024, driven by higher rental revenue. Same-Property NOI, which excludes properties acquired, sold, or in redevelopment, increased 4.1%.

2. Funds from Operations (FFO): Acadia’s FFO attributable to common shareholders and OP unit holders increased 44.0% in Q1 2025 compared to Q1 2024, primarily due to higher net income and depreciation and amortization.

Liquidity and Capital Resources

Acadia’s primary sources of liquidity include:

• Issuance of public equity and OP units
• Secured and unsecured debt financing
• Unfunded capital commitments from Investment Management investors
• Property sales
• Repayments of structured financing investments
• Cash flow from operations

As of March 31, 2025, Acadia had $32.0 million in consolidated cash and $525.0 million of capacity under existing Core Portfolio debt facilities. The company also had 117 unleveraged consolidated properties with an aggregate carrying value of $1.9 billion that could potentially be used to obtain additional financing.

Acadia’s consolidated debt totaled $1.63 billion as of March 31, 2025, with 75.2% at fixed or effectively fixed rates and 24.8% at variable rates. The company has $471.8 million of debt maturing in 2025 and an additional $499.4 million maturing by March 31, 2026. Acadia plans to refinance this debt as it comes due, but there is no assurance it will be able to do so on favorable terms.

The company maintains a share repurchase program with $122.5 million remaining as of March 31, 2025, but did not repurchase any shares during the quarter.

Outlook and Risks

Acadia faces several economic and market risks, including heightened inflation, rising interest rates, and potential impacts from recent tariff policies. However, the company believes it is well-positioned to manage these challenges:

• Most leases include contractual rent escalations and require tenants to pay operating expenses, reducing Acadia’s exposure to inflation.
• The company utilizes fixed-rate debt and interest rate hedges to manage exposure to interest rate fluctuations.
• Acadia continues to see strong leasing momentum and expects to add value through its development and redevelopment projects.

While the full impact of recent government actions and changing global political conditions is uncertain, Acadia is closely monitoring the situation and does not believe it has experienced any material negative impacts so far.

Overall, Acadia’s diversified portfolio, active management strategies, and conservative financial practices position the company to navigate the current economic environment and continue delivering long-term, profitable growth for its shareholders.