Acadia Realty Trust Reports Third Quarter 2013 Operating Results

  Acadia Realty Trust Reports Third Quarter 2013 Operating Results

Business Wire

WHITE PLAINS, N.Y. -- October 22, 2013

Acadia Realty Trust (NYSE:AKR) today reported operating results for the
quarter ended September 30, 2013. All per share amounts are on a fully diluted
basis.

Third Quarter 2013 Highlights

Earnings

  *Funds from operations (“FFO”) of $0.32 per share
  *Earnings per share (“EPS”) from continuing operations of $0.16
  *2013 annual FFO guidance increased to a range of $1.26 - $1.29 per share
    and EPS to a range of $0.69 - $0.72, excluding transaction costs

Core Portfolio –Strong Internal Growth Accompanied by Asset Recycling

  *Same store net operating income (“NOI”) for the third quarter up 4.8%
    compared to 2012 and increased 8.4% on a year-to-date basis
  *September 30, 2013 94.0% portfolio occupancy; 95.7% including leased space
    not yet occupied
  *Currently under contract to sell an A&P supermarket-anchored shopping
    center for $18.4 million
  *Closed on previously announced $11.8 million acquisition in Georgetown,
    D.C.

Fund Platform – Acquisitions, Monetization and Redevelopment Progress

  *Fund IV closed on $18.9 million and is currently under contract for
    another $37.3 million of acquisitions
  *Fund II currently under contract to sell Fordham Place and Pelham Manor
    Shopping Plaza for $192.4 million
  *Signed Target as a co-anchor at Fund II’s City Point project; now 65%
    pre-leased

Balance Sheet – Low Leverage with Available Capital

  *Core portfolio debt, net of cash on hand and restricted cash related to
    financings (“Net Debt”), to EBITDA ratio of 3.6x at September 30, 2013;
    4.3x including pro-rata share of Opportunity Funds
  *Combined Net Debt to total equity and debt capitalization (“Total Market
    Capitalization”) of 23% at September 30, 2013

Third Quarter 2013 Operating Results

FFO and Net Income from Continuing Operations for the quarter ended September
30, 2013 were $17.9 million and $8.9 million, respectively, compared to $12.7
million and $5.8 million, respectively, for the quarter ended September 30,
2012. For the nine months ended September 30, 2013, FFO and Net Income from
Continuing Operations were $52.1 million and $26.0 million, respectively,
compared to $34.2 million and $14.8 million, respectively, for the nine months
ended September 30, 2012.

Earnings for the three and nine months ended September 30, 2013 and 2012, on a
per share basis, were as follows:

                Quarters ended September 30,  Nine Months ended September
                                                30,
                 2013     2012     Variance   2013     2012     Variance
FFO per share    $0.32     $0.27     $0.05     $0.93     $0.75     $0.18   
EPS from
continuing       $0.16     $0.12     $0.04     $0.47     $0.33     $0.14   
operations
EPS from
discontinued     $0.01     $0.04     ($0.03 )   $0.03     $0.08     ($0.05  )
operations
EPS              $0.17     $0.16     $0.01     $0.50     $0.41     $0.09   


The following significant items contributed to the above 2013 increase in EPS
from continuing operations:

                                                      2013 v 2012 Variance
                                                       Quarter    Nine Months
Income from 2012 and 2013 acquisitions and             $ 0.04      $  0.12
redevelopment projects
(Decrease)/increase in fee income                        (0.01 )      0.04
Additional interest income                               0.02         0.06
Impairment of asset                                      --           (0.02  )
Dilution from additional outstanding Common Shares       (0.02 )      (0.07  )
Increase in income from RCP Ventures                    0.01       0.01   
Total variance                                         $ 0.04     $  0.14   


Core Portfolio – Strong Internal Growth and Strategic Asset Recycling

Acadia’s core portfolio (“Core Portfolio”) is comprised of properties that are
owned in whole or in part by Acadia outside of its opportunity funds (the
“Funds”).

Same-Store NOI and Occupancy

Core Portfolio same-store NOI increased 4.8% for the third quarter 2013
compared to the third quarter 2012, and 8.4% year-to-date.

At September 30, 2013, Acadia’s Core Portfolio occupancy was 94.0%, as
compared to 93.7% as of June 30, 2013. Including space currently leased but
not yet occupied, the Core Portfolio was 95.7% leased.

Rent Spreads on New and Renewal Leases

The Company realized an increase in average rents on a GAAP basis, which
includes the effect of the straight-lining of rents, of 14.3% on 155,000
square feet of new and renewal leases executed during the third quarter of
2013 in its Core Portfolio. On a contractual rent basis, which excludes
straight-line rent, the Company experienced an increase of 4.6% in average
rents for these same leases.

Recycling Activity – Acquired in Georgetown and Selling in New Jersey

The Company has closed on $120.9 million of Core Portfolio acquisitions since
the beginning of 2013. As previously announced, Acadia closed on 3200-3204 M
Street in Georgetown, DC for a purchase price of $11.8 million. This 7,000
square foot property, tenanted by Banana Republic, is located at the
intersection of M Street and Wisconsin Avenue, the two most desirable retail
corridors in Georgetown. The location benefits from excellent demographics,
including a population of approximately 321,000 and an average income of
approximately $114,000 within a 3-mile radius.

During the third quarter, Acadia entered into a contract to sell the A&P
Shopping Center located in Boonton, New Jersey for $18.4 million.

The closing of this transaction and those under contract as discussed
hereafter are subject to customary closing conditions, and specific to the
sale of the A&P Shopping Center, the assumption of debt. As such, no assurance
can be given that the Company will successfully complete these transactions.

Core Portfolio Anchor Recycling

As previously announced, Acadia initiated three key re-anchoring projects
during 2011. Two of the projects, the Bloomfield Town Square, located in
Bloomfield Hills, Michigan, and the Branch Plaza located in Smithtown (Long
Island), New York were completed prior to 2013. During the third quarter, the
Company completed a lease with Designer Shoe Warehouse (“DSW”) at the
Crossroads Shopping Center located in White Plains, New York. Together with
the recently signed PetSmart, these tenants will replace the former A&P
supermarket at approximately double the rent and will raise the center’s
leased rate to 96%.

Fund Platform – Closed on $18.9 Million Acquisition; Continued Monetization of
Fund II Assets

Fund IV New Investments

During the third quarter, Fund IV, in partnership with two unaffiliated
entities, completed the acquisition of Paramus Plaza for $18.9 million. This
152,100 square foot property is anchored by Babies “R” Us and Ashley
Furniture. The center is located on Route 17 South in the affluent suburban
neighborhood of Paramus, New Jersey with a population of approximately 106,000
within a three mile radius and a median annual household income of
approximately $123,000.

Also during the quarter, Fund IV entered into contracts to purchase $37.3
million of new acquisitions.

Fund II Continued Monetization

During the third quarter, Fund II entered into a contract to sell Fordham
Place and the retail portion of the Pelham Manor Shopping Plaza for a combined
purchase price of $192.4 million. The Fund developed these properties in
connection with its New York Urban/Infill Redevelopment Initiative. The
Company anticipates closing on this transaction prior to the end of the year.

City Point Progress

During the quarter, Fund II entered into a lease with Target to co-anchor City
Point, its 1.8 million square foot mixed-use project located in downtown
Brooklyn with a vibrant mix of retail, entertainment, food and residential
uses. The new CityTarget store, which will occupy 120,000 square feet
representing the entire second floor, will join other high-quality anchors
Century 21 Department Store, Armani Exchange and Alamo Drafthouse Cinema.
Following the signing of this lease, the Company has now completed all
pre-leasing of the anchor retail space at City Point and the 675,000 square
foot retail component is now 65% pre-leased. With the second through fifth
floors now leased, only the first floor and concourse level remain to be
leased between now and the expected opening of the center in 2015.

Balance Sheet – Continued Strength with Available Capital

Acadia continues to maintain a solid balance sheet with available liquidity
and low leverage as evidenced by the following as of September 30, 2013:

  *Combined Net Debt to Total Market Capitalization of 23%
  *Core Portfolio Net Debt to EBITDA ratio of 3.6x
  *Including the Company’s Core Portfolio debt and pro-rata share of the
    Company’s Fund debt (“Combined”), a Net Debt to EBITDA ratio of 4.3x
  *Core Portfolio and Combined fixed-charge coverage ratios of 3.2 to 1
  *The Company had total liquidity of $193.2 million, including $55.7 million
    of cash on hand and $137.5 million available under its unsecured line of
    credit, excluding the Funds’ cash and credit facilities.

Outlook – Increased Earnings Guidance Range for 2013

Previously, the Company had forecasted its 2013 annual FFO to range from $1.17
- $1.25 per share and EPS from $0.66 - $0.71.

Management now anticipates Acadia’s 2013 annual FFO will range from $1.26 -
$1.29 per share and EPS from $0.69 - $0.72. Consistent with the original
earnings guidance, these increased ranges are before transaction costs, which
through September 30, 2013 totaled $0.04 per share. Inclusive of these costs,
FFO is expected to range from $1.22 - $1.25.

Management Comments

“Our portfolio delivered another quarter of solid results,” stated Kenneth F.
Bernstein, President and CEO of Acadia Realty Trust. “Importantly, our
company, through its dual – core and fund – operating platforms, is well
positioned for growth with its multifaceted value-creation capabilities. Over
the past 12 months, we have either completed or are in the process of
completing, more than $1 billion of transactions, including both strategic
acquisitions and profitable asset sales. Additionally, tenant interest in the
high-quality real estate within our existing portfolio remains strong, as
exemplified by our core portfolio’s 95.7% leased rate and the successful
completion of the anchor leasing at Fund II’s Downtown Brooklyn project. We
remain convinced of the benefits of our location-driven capital-allocation
strategy.”

Investor Conference Call

Management will conduct a conference call on Wednesday, October 23, 2013 at
12:00 PM ET to review the Company’s earnings and operating results. The live
conference call can be accessed by dialing 888-771-4371. The pass code is
“35746700” or “Acadia Realty”. 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 888-843-7419, and the passcode will be “35746700#”. The
phone replay will be available through Wednesday, October 30, 2013.

About Acadia Realty Trust

Acadia Realty Trust, a fully-integrated equity real estate investment trust,
is focused on the acquisition, ownership, management and redevelopment of
high-quality retail properties and urban/infill mixed-use properties with a
strong retail component located primarily in high-barrier-to-entry,
densely-populated metropolitan areas along the East Coast and in Chicago.
Acadia owns, or has an ownership interest in, these properties through its
core portfolio and its opportunistic/value-add investment funds. Additional
information may be found on the Company’s website at www.acadiarealty.com.

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 risks, uncertainties and other factors that 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. These forward-looking
statements include statements regarding Acadia’s future financial results and
its ability to capitalize on potential opportunities arising from continued
economic uncertainty. Factors that could cause the Company’s forward-looking
statements to differ from its future results include, but are not limited to,
those discussed under the headings “Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in the
Company’s most recent annual report on Form 10-K filed with the SEC on
February 27, 2013 (“Form 10-K”) and other periodic reports filed with the SEC,
including risks related to: (i) the current global financial environment and
its effect on retail tenants; (ii) the Company’s reliance on revenues derived
from major tenants; (iii) the Company’s limited control over joint venture
investments; (iv) the Company’s partnership structure; (v) real estate and the
geographic concentration of the Company’s properties; (vi) market interest
rates; (vii) leverage; (viii) liability for environmental matters; (ix) the
Company’s growth strategy; (x) the Company’s status as a REIT; (xi) uninsured
losses and (xii) the loss of key executives. Copies of the Form 10-K and the
other periodic reports Acadia files with the SEC are available on the
Company’s website at www.acadiarealty.com. Any forward-looking statements in
this press release speak only as of the date hereof. 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.

                        (Financial Highlights Follow)


ACADIA REALTY TRUST AND SUBSIDIARIES

Financial Highlights ^1

For the Quarters and Nine Months ended September 30, 2013 and 2012

(dollars and Common Shares in thousands, except per share data)
                                                  
                          For the Quarters ended     For the Nine Months ended
                          September 30,              September 30,
Revenues                  2013         2012         2013         2012
                                                                   
Rental income             $ 29,913      $ 21,708     $ 88,067      $ 59,208
Interest income             2,969         1,921        9,265         6,127
Expense reimbursements      7,279         4,567        20,800        13,770
Other property income       139           345          737           762
Management fee income       18            290          60            1,166
Other income               --          --         2,962       --      
Total revenues             40,318      28,831     121,891     81,033  
Operating expenses
Property operating          5,937         4,487        16,130        13,041
Real estate taxes           5,795         4,353        15,739        11,973
General and                 5,335         5,517        17,261        16,636
administrative
Depreciation and           10,450      7,376      29,278      20,671  
amortization
Total operating            27,517      21,733     78,408      62,321  
expenses
                                                                   
Operating income            12,801        7,098        43,483        18,712
                                                                   
Equity in earnings
(losses) of                 4,209         (2,538 )     7,274         1,997
unconsolidated
affiliates
Impairment of asset         --            --           (1,500  )     --
Interest expense and       (10,517 )    (6,085 )    (29,562 )    (16,547 )
other finance costs
Income (loss) from
continuing operations       6,493         (1,525 )     19,695        4,162
before income taxes
Income tax (provision)     (186    )    104        (53     )    (1,125  )
benefit
Income (loss) from         6,307       (1,421 )    19,642      3,037   
continuing operations



ACADIA REALTY TRUST AND SUBSIDIARIES

Financial Highlights ^1

For the Quarters and Nine Months ended September 30, 2013 and 2012

(dollars and Common Shares in thousands, except per share data)
                                                  
                           For the Quarters ended    For the Nine Months ended
                           September 30,             September 30,
                           2013        2012         2013         2012
                                                                   
Operating income from        2,835        2,159         6,100        9,030
discontinued operations
Gain on sale of             --         5,917       4,191      8,585   
properties
Income from discontinued    2,835      8,076       10,291     17,615  
operations
Net income                  9,142      6,655       29,933     20,652  
Loss (income)
attributable to
noncontrolling
interests:
Continuing operations        2,551        7,223         6,391        11,775
Discontinued operations     (2,208 )    (6,297 )     (8,459 )    (13,998 )
Net loss (income)
attributable to             343        926         (2,068 )    (2,223  )
noncontrolling interests
                                                                   
Net income attributable    $ 9,485     $ 7,581     $  27,865    $ 18,429  
to Common Shareholders
                                                                   
Supplemental Information
Income from continuing
operations attributable    $ 8,858      $ 5,802      $  26,033     $ 14,812
to Common Shareholders
Income from discontinued
operations attributable     627        1,779       1,832      3,617   
to Common Shareholders
Net income attributable    $ 9,485     $ 7,581     $  27,865    $ 18,429  
to Common Shareholders
                                                                   
Net income attributable
to Common Shareholders
per Common Share – Basic
Net income per Common
Share – Continuing         $ 0.16       $ 0.12       $  0.48       $ 0.33
operations
Net income per Common
Share – Discontinued        0.01       0.04        0.03       0.08    
operations
Net income per Common      $ 0.17      $ 0.16      $  0.51      $ 0.41    
Share
Weighted average Common     55,460     46,338      54,686     44,447  
Shares
Net income attributable
to Common Shareholders
per Common Share –
Diluted ^2
Net income per Common
Share – Continuing         $ 0.16       $ 0.12       $  0.47       $ 0.33
Operations
Net income per Common
Share – Discontinued        0.01       0.04        0.03       0.08    
Operations
Net income per Common      $ 0.17      $ 0.16      $  0.50      $ 0.41    
Share
Weighted average Common     55,818     46,812      55,092     44,884  
Shares



ACADIA REALTY TRUST AND SUBSIDIARIES

Financial Highlights ^1

For the Quarters and Nine Months ended September 30, 2013 and 2012

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

RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS ^3
                                                  
                            For the Quarters ended   For the Nine Months ended
                            September 30,            September 30,
                            2013       2012         2013          2012
                                                                    
                                                                    
Net income attributable     $  9,485    $ 7,581      $  27,865      $ 18,429
to Common Shareholders
                                                                    
Depreciation of real
estate and amortization
of leasing costs
(net of noncontrolling
interests' share):
Consolidated affiliates        7,558      5,827         21,145        16,308
Unconsolidated affiliates      777        374           1,978         1,155
Impairment of asset            --         --            1,500         --
Gain on sale (net of
noncontrolling interests’
share):
Consolidated affiliates        --         (1,178 )      (776    )     (1,391 )
Unconsolidated affiliates      --         --            --            (609   )
Income attributable to
noncontrolling interests’
in
Operating Partnership          104        105           329           269
Distributions – Preferred     5         4           16          14     
OP Units
Funds from operations       $  17,929   $ 12,713    $  52,057     $ 34,175 
Funds from operations per
share – Diluted
Weighted average Common       56,436    47,410      55,735      45,513 
Shares and OP Units ^4
Funds from operations,      $  0.32     $ 0.27      $  0.93       $ 0.75   
per share



ACADIA REALTY TRUST AND SUBSIDIARIES

Financial Highlights ^1

For the Quarters and Nine Months ended September 30, 2013 and 2012

(dollars in thousands)

RECONCILIATION OF OPERATING INCOME TO NET PROPERTY

OPERATING INCOME (“NOI”) ^3
                                                  
                           For the Quarters ended    For the Nine Months ended
                           September 30,             September 30,
                           2013        2012         2013         2012
                                                                   
Operating income           $ 12,801     $ 7,098      $ 43,483      $ 18,712
                                                                   
Add back:
General and                  5,335        5,517        17,261        16,636
administrative
Depreciation and             10,450       7,376        29,278        20,671
amortization
Less:
Management fee income        (18    )     (290   )     (60     )     (1,166  )
Interest income              (2,969 )     (1,921 )     (9,265  )     (6,127  )
Straight line rent and      (1,724 )    (262   )    (4,271  )    (1,322  )
other adjustments
                                                                   
Consolidated NOI            23,875     17,518     76,426      47,404  
                                                                   
Noncontrolling interest     (6,695 )    (4,638 )    (24,709 )    (10,906 )
in NOI
Pro-rata share of NOI        17,180       12,880       51,717        36,498
Operating Partnerships’
interest in Opportunity      (930   )     (1,064 )     (3,683  )     (2,427  )
Funds
Operating Partnerships’
share of unconsolidated     662        1,521      2,017       4,900   
joint ventures ^1
NOI – Core Portfolio       $ 16,912    $ 13,337    $ 50,051     $ 38,971  
                                                                   
Note:
^1 Does not include
share of unconsolidated
joint
ventures within
Opportunity Funds


SELECTED BALANCE SHEET INFORMATION
                              As of
                                  September 30,         December 31,
                                                   
                                  2013                  2012
                                  (dollars in thousands)
                                                        
Cash and cash equivalents         $  88,421             $  91,813
Rental property, at cost             1,348,979             1,051,531
Total assets                         2,349,368             1,908,440
Notes payable                        1,004,555             603,973
Total liabilities                    1,236,212             838,184


ACADIA REALTY TRUST AND SUBSIDIARIES

Financial Highlights

For the Quarters and Nine Months ended September 30, 2013 and 2012

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

Notes:
  
    For additional information and analysis concerning the Company’s results
1   of operations, reference is made to the Company’s Quarterly Supplemental
    Disclosure furnished on Form 8-K to the SEC and included on the Company’s
    website at www.acadiarealty.com.
    
    Reflects the potential dilution that could occur if securities or other
    contracts to issue Common Shares were exercised or converted into Common
    Shares. The effect of the conversion of Common OP Units is not reflected
2   in the above table as they are exchangeable for Common Shares on a
    one-for-one basis. The income allocable to such units is allocated on the
    same basis and reflected as noncontrolling interests in the consolidated
    financial statements. As such, the assumed conversion of these units would
    have no net impact on the determination of diluted earnings per share.
    
    The Company considers funds from operations (“FFO”) as defined by the
    National Association of Real Estate Investment Trusts (“NAREIT”) and net
    property operating income (“NOI”) to be appropriate supplemental
    disclosures of operating performance for an equity REIT due to their
    widespread acceptance and use within the REIT and analyst communities. FFO
    and NOI are presented to assist investors in analyzing the performance of
    the Company. They are helpful as they exclude 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 depreciable real estate. In addition, NOI
    excludes interest expense. The Company’s method of calculating FFO and NOI
3   may be different from methods used by other REITs and, accordingly, may
    not be comparable to such other REITs. FFO does not represent cash
    generated from operations as defined by generally accepted accounting
    principles (“GAAP”) and is not indicative of cash available to fund all
    cash needs, including distributions. It should not be considered as an
    alternative to net income for the purpose of evaluating the Company’s
    performance or to cash flows as a measure of liquidity. Consistent with
    the NAREIT definition, the Company defines FFO as net income (computed in
    accordance with GAAP), excluding gains (losses) from sales of depreciated
    property, plus depreciation and amortization, impairment of depreciable
    real estate, and after adjustments for unconsolidated partnerships and
    joint ventures.
    
    In addition to the weighted average Common Shares outstanding, basic and
    diluted FFO also assume full conversion of a weighted average 592 and 612
    OP Units into Common Shares for the quarters ended September 30, 2013 and
    2012, respectively and 618 and 617 OP Units into Common Shares for the
    nine months ended September 30, 2013 and 2012, respectively. Diluted FFO
4   also includes the assumed conversion of Preferred OP Units into 25 Common
    Shares for each of the quarters and nine months ended September 30, 2013
    and 2012. In addition, diluted FFO also includes the effect of 358 and 435
    employee share options, restricted share units and LTIP units for the
    quarters ended September 30, 2013 and 2012, respectively and 406 and 424
    employee share options, restricted share units and LTIP units for the nine
    months ended September 30, 2013 and 2012, respectively.

Contact:

Acadia Realty Trust
Jon Grisham, 914-288-8100
 
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