Acadia Realty Trust Provides Update on $313 Million of Core Portfolio
WHITE PLAINS, N.Y. -- January 30, 2014
Acadia Realty Trust (NYSE:AKR) today announced that, during the year ended
December 31, 2013, it acquired, or entered into agreements to buy and
subsequently closed on, $220.9 million of complementary street-retail assets
for its Core Portfolio. Additionally, the Company announced that it has
another $92.1 million of Core properties currently under contract to purchase.
The Core Portfolio does not include those assets in which the Company has
co-invested through its opportunity funds (the “Funds”). Discussion of the
Company’s 2013 Fund acquisition activity and Core Portfolio operating progress
will be included in the Company’s release of fourth quarter and full year 2013
operating results scheduled for February 12, 2014.
Core Portfolio Acquisition of Street Retail Properties
The $220.9 million of portfolio additions during 2013 are located in certain
Chicago, New York, and Washington DC sub-markets in which Acadia already had
an established presence and add to the Company’s existing position in these
dominant retail corridors.
The following is a discussion of the Company’s 2013 Core investments. A
pictorial tour of these acquisitions may be found in the Core Acquisition
Update on the Company’s website under Investor Relations, Presentations.
During the year ended December 31, 2013, Acadia acquired, or entered into
agreements to buy and subsequently closed on, $153.1 million of high-street
retail in Chicago’s Gold Coast neighborhood, a premier shopping destination
with luxury retail, world-class hotels, museums and noted art galleries. The
Gold Coast boasts the Chicago flagship stores of global fashion houses such as
Prada, Barneys New York, Brioni and Hermès and is a major draw for the city’s
over 46 million annual tourists.
11 East Walton Street
During the fourth quarter of 2013, Acadia entered into a contract to acquire
approximately 6,700 square feet of luxury retail space at the base of the
Waldorf Astoria Chicago, formerly the Elysian Hotel, for $44.0 million. The
property is located at the corner of Rush and Walton Streets, proximate to
several prior Acadia acquisitions, and is 100% occupied by Marc Jacobs, Saint
Laurent Paris, and Perchance Boutique. The Company closed on this acquisition
during January 2014.
8-12 East Walton Street
As previously announced, during the second quarter of 2013, the Company
purchased 8-12 East Walton Street for $22.5 million. This newly-constructed,
8,200 square foot retail property, which is also located within the
Rush/Walton corridor, is tenanted by high-end retailers Brioni and BHLDN, an
Urban Outfitters brand. Together with 11 East Walton Street and several other
previous acquisitions, the Company now controls a significant stretch of the
Walton Street corridor at its key intersection with Rush Street, with tenants
including Lululemon Athletica, Barbour, Burton, and Sprinkles.
664 North Michigan Avenue
As previously announced, during the first quarter of 2013, the Company
acquired this property for $86.6 million. Located on Michigan Avenue between
Erie and Huron Streets, the building is centrally located in the Magnificent
Mile, the premier retail corridor in Chicago with eight blocks of high-street
retail. The 18,100 square foot retail condominium forms the base of the
40-story Ritz-Carlton Residences Chicago. Tenants at the property include
Tommy Bahama and Ann Taylor Loft.
During the year ended December 31, 2013, Acadia acquired $56.0 million of
street retail in the Manhattan submarkets of Tribeca, Midtown-South, and the
120 West Broadway
During the fourth quarter of 2013, Acadia purchased the master lease for the
retail portion of this cooperative located in the Manhattan neighborhood of
Tribeca for $37.0 million. The Tribeca submarket represents one of the
wealthiest demographics in Manhattan, with median household incomes above
$190,000. It has become one of Manhattan’s most desirable neighborhoods and
continues to evolve with the addition of high-end luxury residential
developments. The property is highly visible, located one block north of the
primary subway stop in Tribeca. The trapezoidal building has 14,000 square
feet of retail space and includes four corners with frontage on West Broadway,
Duane Street, Reade Street and Hudson Street. The property is anchored by high
quality tenants including HSBC and Citibank. In addition, expiring leases in
the short term should provide upside from rents currently below market rates.
The Company acquired the asset off-market as part of a private negotiation and
funded its investment primarily with Operating Partnership Units.
During the fourth quarter of 2013, the Company also acquired this retail
condominium unit for $13.5 million. The asset is located in the
heavily-trafficked Broadway retail corridor just north of Union Square in
Manhattan’s prime Midtown-South submarket and draws strong foot traffic from
both Union Square and the Flatiron District. The Union Square subway hub hosts
approximately 35 million riders annually, making it the fourth-busiest subway
station in New York City on weekdays and the second-busiest on weekends.
Retail vacancy stands at under 3% and sales volumes along Broadway are in
excess of $1,500 per square foot. The 2,000 square foot retail area is 100%
leased to Dr. Martens, a 50 year old British footwear and apparel brand.
Located in the block between East 17^th and 18^th Streets, this is Acadia’s
second investment in this Manhattan submarket and is located in close
proximity to its property at 5-7 East 17^th Street.
Additionally, during the fourth quarter of 2013, Acadia purchased a leasehold
interest in this 7,900 square foot street retail property for $5.5 million.
The property is currently occupied by John Varvatos and Patagonia and is
located in the heart of the Bowery corridor. The Bowery submarket has
considerable momentum, with high-fashion retailers APC and Phillip Lim set to
open new stores alongside those of Billy Reid, Intermix, Bettie Page, and Blue
and Cream, all within the immediate vicinity of 313-315 Bowery. Additionally,
the property is located within close proximity to Whole Foods and a variety of
high-end restaurants, nightclubs and boutique hotels.
Georgetown, Washington D.C.
As previously announced, during the second quarter of 2013, Acadia closed on
the acquisition of 3200-3204 M Street for a purchase price of $11.8 million.
Located in Georgetown, a premier shopping and dining district in the
Washington D.C. metropolitan area, this 7,000 square foot property is tenanted
by Banana Republic and is located at the corner of M Street and Wisconsin
Avenue. This 2013 purchase added to Acadia’s existing six-property portfolio
in Georgetown, also located primarily on M Street, with tenants including
Coach, Juicy Couture and Lacoste.
Additional Acquisition Pipeline
In addition to the above acquisitions, Acadia currently has three additional
Core properties under contract for an aggregate purchase price of $92.1
million. Although the Company anticipates completing these closings during the
first quarter of 2014, these transactions are subject to customary closing
conditions, including lender approval for the assumption of existing mortgage
debt, and, as such, no assurance can be given that the Company will
successfully complete these.
Acquisition Funding and Balance Sheet
The incremental net operating income (“NOI”) for the $220.9 million of
completed acquisitions initially aggregates $10.8 million, which represents
approximately 20% of the Company’s Core Portfolio NOI as reported for the
previous year ended December 31, 2012.
These completed acquisitions were funded using approximately two thirds
equity, which is consistent with Acadia’s conservative balance sheet
management practices. The equity requirement was funded primarily by a
combination of (i) the issuance of both Common Shares under the Company’s
at-the-market (“ATM”) stock offering program and Operating Partnership Units
during 2013 aggregating $114.3 million at an average net price of $26.92, and
(ii) $46.9 million of recycled capital from fourth quarter Core Portfolio and
Fund asset sales.
After taking into account all of the Company’s 2013 core acquisition
activities, Acadia’s Net Debt to EBITDA ratio was under 5.0x at December 31,
2013, which keeps the Company among the lowest leveraged of its peers. Net
Debt includes the Company’s pro rata share of Fund debt and deducts both cash
on hand and restricted cash related to financings. This provides Acadia
additional flexibility in using the most efficient source of capital based on
pricing and availability to fund its Core and Fund acquisition activities
“During 2013, we continued to execute on our core portfolio acquisition goals,
enabling us to accretively increase our total core portfolio value in excess
of 20%,” stated Kenneth F. Bernstein, President and CEO of Acadia Realty
Trust. “Consistent with plan, our multi-year acquisition activities have led
to a significant elevation in the quality of our already-solid portfolio.
Today, our portfolio is well balanced, with approximately half of its value
concentrated in prime street-retail corridors primarily in Manhattan, Chicago,
and Washington DC, up from approximately 16% three years ago. By aggregating
assets within these densely-populated, vibrant cities, we believe that we are
strengthening our core earnings base and positioning our portfolio to benefit
from short and long-term rental growth. Furthermore, by continuing to expand
our local-market expertise and deepen our existing relationships, we believe
that we are well-equipped to mine future core, opportunistic, and value-add
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.
Acadia Realty Trust
Jon Grisham, 914-288-8100
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