RYE, N.Y.–(BUSINESS WIRE)–Acadia Realty Trust (NYSE: AKR) today reported operating results for the quarter ended September 30, 2024. All per share amounts are on a fully-diluted basis, where applicable. Acadia owns and operates a high-quality real estate portfolio of street and open-air retail properties in the nation’s most dynamic retail corridors, along with an investment management platform that targets opportunistic and value-add investments through its institutional co-investment vehicles.
|
Kenneth F. Bernstein, President and CEO of Acadia, commented: |
|
“Our third-quarter results highlight the ongoing internal growth from our Core Portfolio now coupled with the recent acceleration of our accretive acquisition initiatives. We achieved record acquisition and leasing volumes during the quarter. With approximately $575 million of accretive Core and Investment Management acquisitions completed or in advanced stages of negotiation, along with achieving a record setting volume of $7 million in new Core leases, we have increased confidence in our earnings growth over the next several years. We continue to see compelling investment opportunities and remain focused on acquisitions in our key street markets that provide us with immediate accretion to our earnings, net asset value creation, and complement the continuation of our long-term internal growth. We believe that our highly differentiated platform is well-positioned to deliver meaningful value and provides us with sustainable growth for our stakeholders.” |
FINANCIAL RESULTS
A complete reconciliation, in dollars and per share amounts, of (i) net income attributable to Acadia to FFO (as defined by NAREIT and Before Special Items) attributable to common shareholders and common OP Unit holders and (ii) operating income to NOI is included in the financial tables of this release. The amounts discussed below are net of noncontrolling interests and all per share amounts are on a fully-diluted basis.
|
|
|
Financial Results |
||
|
|
|
2024 |
|
2023 |
|
|
|
3Q |
|
3Q |
|
|
|
|
|
|
|
Net earnings per share attributable to Acadia |
|
$0.07 |
|
($0.02) |
|
Depreciation of real estate and amortization of leasing costs (net of noncontrolling interest share) |
|
0.23 |
|
0.27 |
|
Gain on disposition of properties (net of noncontrolling interests’ share) |
|
(0.02) |
|
— |
|
Noncontrolling interest in Operating Partnership |
|
— |
|
0.01 |
|
NAREIT Funds From Operations per share attributable to Common Shareholders and Common OP Unit holders |
|
$0.28 |
|
$0.26 |
|
Net unrealized holding loss (gain) 1 |
|
0.02 |
|
(0.01) |
|
Funds From Operations Before Special Items and Realized Gains and Promotes per share attributable to Common Shareholders and Common OP Unit holders |
|
$0.30 |
|
$0.25 |
|
Realized gains and promotes1 |
|
0.02 |
|
0.02 |
|
Funds From Operations Before Special Items per share attributable to Common Shareholders and Common OP Unit holders |
|
$0.32 |
|
$0.27 |
| ________ | ||
|
1. |
It is the Company’s policy to exclude unrealized gains and losses from FFO Before Special items and to include realized gains related to the Company’s investment in Albertsons. The Company realized investment gains of $2.9 million on 150,000 shares for the quarter ended September 30, 2024 and investment gains of $2.4 million for the quarter ended September 30, 2023. Refer to the “Notes to Financial Highlights” page 14 of this document. |
|
|
Net Income
NAREIT FFO
FFO Before Special Items
|
CORE PORTFOLIO PERFORMANCE
|
Same-Property NOI
Leasing and Occupancy Update
|
ACQUISITION ACTIVITY
As further described below, during the quarter and to date, the Company increased its Core and Investment Management acquisition activities to approximately $575 million, consisting of $150 million of completed acquisitions ($120 million and $30 million of Core and Investment Management acquisitions, respectively) and a pipeline of $425 million of acquisitions that are subject to agreements or in advanced stages of negotiation ($150 million and $275 million of Core and Investment Management acquisitions, respectively).
Core Portfolio Acquisitions
Completed: Approximately $120 million | Pipeline: Approximately $150 million
- Bleecker Street Portfolio, Manhattan, New York. As previously announced, during the third quarter, the Company acquired a four-building retail portfolio along the Bleecker Street retail corridor in the West Village of Manhattan for $20.3 million. The portfolio offers the potential for both lease up and accretive mark-to-market re-leasing opportunities. This acquisition is complementary to its existing Street retail corridors and aligns with the Company’s strategy of targeting high-quality core assets in markets with high barriers to entry.
- Williamsburg, Brooklyn, New York. In October 2024, the Company completed the acquisitions of 123-129 N. 6th Street for $35.0 million and 109 N. 6th Street for $18.3 million in Williamsburg, Brooklyn. This collection of retail assets is located in one of New York City’s most dynamic and in-demand retail corridors and offers below-market rents and lease-up opportunities. These acquisitions expand the Company’s existing Williamsburg portfolio.
- SoHo Manhattan, New York. In October 2024, the Company closed on 92-94 Greene Street for $43.4 million which is adjacent to its existing property located on the corner of Spring and Green Street in SoHo. This acquisition expands the Company’s SoHo portfolio to 12 buildings, eight of which are on Greene Street. The property provides an opportunity for near-term opportunity for accretive re-leasing.
- Core Portfolio Pipeline. The Company is also under agreements or in advanced stages of negotiations relating to potential investments with an aggregate purchase price of approximately $150.0 million to acquire Street retail assets within its existing markets, including the Georgetown corridor of Washington D.C., SoHo Manhattan, New York, and Henderson Avenue in Dallas, Texas.
Investment Management Acquisitions
Completed: Approximately $30 million | Pipeline: Approximately $275 million
- The Walk at Highwoods Preserve, Tampa, Florida. As previously announced, in July 2024, the Company completed the acquisition of a 141,000 square foot open-air shopping center anchored by Home Goods and Michaels.
In October 2024, the Company entered into a joint venture with funds managed by the Private Real Estate Group of Cohen & Steers to own the property. The Company will be entitled to an asset management fee and an opportunity to earn a promote upon the ultimate disposition of the investment. Additionally, the Company will manage the day-to-day operations of the investment entitling it to earn management, leasing, and construction fees. - Investment Management Pipeline. The Company is in advanced stages of negotiation involving a potential investment with an aggregate purchase price of approximately $275.0 million of gross asset value (including the Company’s share). The Company anticipates acquiring a minority interest along with a leading global alternative asset management firm. Upon closing, the Company will be entitled to an asset management fee and an opportunity to earn a promote upon the ultimate disposition of the investment. Additionally, the Company will manage day-to-day operations entitling it to earn management, leasing, and construction fees.
The pending Core and Investment Management transactions described within the Pipeline above are subject to final agreement between the parties, customary closing conditions and market uncertainty. Thus, no assurances can be given that the Company will successfully close on any of these transactions on the anticipated timeline or at all.
DISPOSITION ACTIVITY
Investment Management Disposition
- Frederick Crossing, Frederick, Maryland. In the third quarter, the Company, in partnership with DLC Management Corp., completed the sale of Frederick Crossing, a Fund V asset, for $47.2 million, and repaid the related $23.2 million mortgage loan. This sale generated a 27% IRR, 2.1x multiple on the Fund’s equity investment and a $11.6 million gain, of which $2.3 million was the Company’s share.
PORTFOLIO EXPANSION
Core Portfolio
- Henderson Avenue Corridor Expansion. In October 2024, the Company, in partnership with Ignite-Rebees, commenced construction on a major expansion to its existing 14 building portfolio on Henderson Avenue in Dallas, Texas. Upon completion, the project will add up to an additional 10 buildings and approximately 160,000 square feet to its existing 121,385 square feet retail portfolio, which was acquired by the Company in 2022. The expansion will accelerate the transformation of this corridor into a vibrant, walkable, street retail destination, positioning the asset to be one of the most exciting urban retail hubs in the Dallas-Fort Worth Metroplex. The project is scheduled for completion in late 2026 and stabilization in 2027.
BALANCE SHEET
- Equity Activity: Raised net proceeds during the quarter and through October 28, 2024 of $318.8 million from the sale of 14.3 million shares of its common stock consisting of $187.0 million (8.5 million shares) through the Company’s at-the-market issuance program and $131.8 million (5.75 million shares, inclusive of the underwriters exercised option to purchase 750,000 additional shares) through an underwritten public offering in connection with forward sales agreements. Subsequent to the quarter end, the Company physically settled the forward sales agreements in its entirety to fund its acquisition activities.
- Expansion of Unsecured Credit Facility and Repayment of $175 Million Term Loan: In September 2024, the Company increased the borrowing capacity of its credit facility from $350.0 million to $525.0 million along with increasing the facility’s accordion feature from $900.0 million to $1.1 billion. Additionally, the Company repaid, in full, its $175.0 million term loan.
- Debt-to-EBITDA Metrics: Pro-rata Core and Investment Management Net Debt-to-EBITDA improved to 5.6x at September 30, 2024 as compared to 6.3x and 6.7x at June 30, 2024, and December 31, 2023, respectively. Refer to the third quarter 2024 Supplemental Information package for reconciliations and details on financial ratios.
- $100 Million of Private Unsecured Notes: In August 2024, the Company closed on its previously reported inaugural private placement of $100 million of senior unsecured notes comprised of an $80 million and $20 million note with a five- and three- year term, respectively. The five-year and three-year notes bear interest at fixed annual rates of 5.94% and 5.86%, respectively, based on credit spreads of 150 and 125 basis points over the five- and three-year U.S. Treasury bonds as of the date of pricing (May 21, 2024), respectively.
- No Significant Core Debt Maturities until 2028: 3.4%, 0.3%, 6.9% and 5.6% of Core debt maturing in 2024, 2025, 2026, and 2027, respectively.
About Acadia Realty Trust
Acadia Realty Trust is an equity real estate investment trust focused on delivering long-term, profitable growth. Acadia owns and operates a high-quality core real estate portfolio (“Core” or “Core Portfolio”) of street and open-air retail properties in the nation’s most dynamic retail corridors, along with an investment management platform that targets opportunistic and value-add investments through its institutional co-investment vehicles. For further information, please visit www.acadiarealty.com.
