ACADIA REALTY TRUST [AKR] Filings

10-Q 1 akr-20240930.htm 10-Q 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-12002

ACADIA REALTY TRUST

(Exact name of registrant as specified in its charter)




Maryland (State or other jurisdiction of incorporation or organization)		23-2715194 (I.R.S. Employer Identification No.)

411 THEODORE FREMD AVENUE, SUITE 300, RYE, NY (Address of principal executive offices)		10580 (Zip Code)

(914) 288-8100

(Registrant’s telephone number, including area code)


Title of class of registered securities	Trading symbol	Name of exchange on which registered
Common shares of beneficial interest, par value $0.001 per share	AKR	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.




Yes ☒		No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).




Yes ☒		No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐	Emerging Growth Company	☐

Non-accelerated Filer	☐	Smaller Reporting Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐ No ☒

As of October 23, 2024 there were 119,654,906 common shares of beneficial interest, par value $0.001 per share (“Common Shares”), outstanding.

ACADIA REALTY TRUST AND SUBSIDIARIES

FORM 10-Q

INDEX




Item No.	Description	Page
	PART I - FINANCIAL INFORMATION
1.	Financial Statements	4
	Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2024 and December 31, 2023	4
	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023	6
	Condensed Consolidated Statements of Changes in Equity (Unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023	7
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2024 and 2023	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	11

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
3.	Quantitative and Qualitative Disclosures about Market Risk	57
4.	Controls and Procedures	59

	PART II - OTHER INFORMATION
1.	Legal Proceedings	60
1A.	Risk Factors	60
2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.	60
3.	Defaults Upon Senior Securities	60
4.	Mine Safety Disclosures	60
5.	Other Information	60
6.	Exhibits	61
	Signatures	62

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q (this “Report”) of Acadia Realty Trust, a Maryland real estate investment trust, (the “Company”) may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations are generally identifiable by the use of the words such as “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project,” or the negative thereof, or other variations thereon or comparable terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results and financial performance to be materially different from future results and financial performance expressed or implied by such forward-looking statements, including, but not limited to: (i) macroeconomic conditions, including due to geopolitical conditions and instability, which may lead to a disruption of or lack of access to the capital markets, disruptions and instability in the banking and financial services industries and rising inflation; (ii) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (iii) changes in general economic conditions or economic conditions in the markets in which we may, from time to time, compete, and their effect on our revenues, earnings and funding sources; (iv) increases in our borrowing costs as a result of rising inflation, changes in interest rates and other factors; (v) our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due; (vi) our investments in joint ventures and unconsolidated entities, including our lack of sole decision-making authority and our reliance on our joint venture partners’ financial condition; (vii) our ability to obtain the financial results expected from our development and redevelopment projects; (viii) our tenants’ ability and willingness to renew their leases with us upon expiration, our ability to re-lease our properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant; (ix) our potential liability for environmental matters; (x) damage to our properties from catastrophic weather and other natural events, and the physical effects of climate change; (xi) the economic, political and social impact of, and uncertainty surrounding, any public health crisis, such as the COVID-19 Pandemic, which adversely affected the Company and its tenants’ business, financial condition, results of operations and liquidity; (xii) uninsured losses; (xiii) our ability and willingness to maintain our qualification as a real estate investment trust (“REIT”) in light of economic, market, legal, tax and other considerations; (xiv) information technology security breaches, including increased cybersecurity risks relating to the use of remote technology; (xv) the loss of key executives; and (xvi) the accuracy of our methodologies and estimates regarding environmental, social and governance (“ESG”) metrics, goals and targets, tenant willingness and ability to collaborate towards reporting ESG metrics and meeting ESG goals and targets, and the impact of governmental regulation on our ESG efforts.

The factors described above are not exhaustive and additional factors could adversely affect the Company’s future results and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and other periodic or current reports the Company files with the SEC, including those set forth under the headings “Item 1A. Risk Factors” and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report. These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein. Any forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any changes in the Company’s expectations with regard thereto or changes in the events, conditions or circumstances on which such forward-looking statements are based.

SPECIAL NOTE REGARDING CERTAIN REFERENCES

All references to “Notes” throughout the document refer to the Notes to the Condensed Consolidated Financial Statements of the registrant referenced in Part I, Item 1. Financial Statements.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

ACADIA REALTY TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	September 30,			December 31,
(dollars in thousands, except share and per share data)	2024			2023
ASSETS
Investments in real estate, at cost
Operating real estate, net	$	3,450,575		$	3,517,281
Real estate under development		109,778			94,799
Net investments in real estate		3,560,353			3,612,080
Notes receivable, net ($1,835 and $1,279 of allowance for credit losses as of September 30, 2024 and December 31, 2023, respectively)(a)		126,576			124,949
Investments in and advances to unconsolidated affiliates		187,363			197,240
Other assets, net		196,920			208,460
Right-of-use assets - operating leases, net		26,820			29,286
Cash and cash equivalents		46,207			17,481
Restricted cash		23,088			7,813
Marketable securities		17,503			33,284
Rents receivable, net		55,615			49,504
Assets of properties held for sale		35,878			11,057
Total assets (b)	$	4,276,323		$	4,291,154

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage and other notes payable, net	$	954,371		$	930,127
Unsecured notes payable, net		569,242			726,727
Unsecured line of credit		56,000			213,287
Accounts payable and other liabilities		221,506			229,375
Lease liability - operating leases		29,013			31,580
Dividends and distributions payable		22,995			18,520
Distributions in excess of income from, and investments in, unconsolidated affiliates		7,797			7,982
Liabilities of properties held for sale		5,435			—
Total liabilities (b)		1,866,359			2,157,598
Commitments and contingencies (Note 9)
Redeemable noncontrolling interests (Note 10)		35,037			50,339
Equity:
Acadia Shareholders' Equity
Common shares, $0.001 par value per share, authorized 200,000,000 shares, issued and outstanding 113,902,348 and 95,361,676 shares, respectively		114			95
Additional paid-in capital		2,304,534			1,953,521
Accumulated other comprehensive income		17,251			32,442
Distributions in excess of accumulated earnings		(395,172	)		(349,141	)
Total Acadia shareholders’ equity		1,926,727			1,636,917
Noncontrolling interests		448,200			446,300
Total equity		2,374,927			2,083,217
Total liabilities, redeemable noncontrolling interests, and equity	$	4,276,323		$	4,291,154

(a)

Includes Notes receivable, net from related parties of $14.6 million and $6.4 million as of September 30, 2024 and December 31, 2023, respectively (Note 3).

(b)

Represents the consolidated assets and liabilities of Acadia Realty Limited Partnership (the “Operating Partnership”), which is a consolidated variable interest entity (“VIE”) (Note 15). The Condensed Consolidated Balance Sheets include the following amounts related to our consolidated VIEs that are consolidated by the Operating Partnership: $1,647.8 million and $1,679.8 million of Operating real estate, net; $30.7 million and $28.9 million of Real estate under development; $73.1 million and $92.8 million of Investments in and advances to unconsolidated affiliates; $81.8 million and $101.7 million of Other assets, net; $2.1 million and $2.1 million of Right-of-use assets - operating leases, net; $35.5 million and $10.8 million of Cash and cash equivalents; $10.2 million and $7.0 million of Restricted cash; $26.5 million and $21.4 million of Rents receivable, net; $800.0 million and $764.6 million of Mortgage and other notes payable, net; $0.0 million and $80.5 million of Unsecured notes payable, net; $124.4 million and $127.2 million of Accounts payable and other liabilities; $2.2 million and $2.2 million of Lease liability- operating leases, net as of September 30, 2024 and December 31, 2023, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

ACADIA REALTY TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2024			2023			2024			2023
Revenues
Rental	$	86,288		$	79,961		$	257,951		$	248,839
Other		1,457			1,431			8,404			4,340
Total revenues		87,745			81,392			266,355			253,179
Expenses
Depreciation and amortization		34,500			33,726			103,721			100,955
General and administrative		10,215			10,309			30,162			30,898
Real estate taxes		11,187			11,726			33,514			34,586
Property operating		14,351			15,254			49,228			44,597
Impairment charges		—			3,686			—			3,686
Total expenses		70,253			74,701			216,625			214,722

Loss on disposition of properties		—			—			(441	)		—
Operating income		17,492			6,691			49,289			38,457
Equity in earnings (losses) of unconsolidated affiliates		11,784			(4,865	)		15,952			(6,273	)
Interest income (a)		7,859			5,087			18,510			14,875
Realized and unrealized holding (losses) gains on investments and other		(1,503	)		1,664			(5,918	)		30,236
Interest expense		(23,363	)		(24,885	)		(70,653	)		(68,561	)
Income (loss) from continuing operations before income taxes		12,269			(16,308	)		7,180			8,734
Income tax (provision) benefit		(15	)		40			(201	)		(248	)
Net income (loss)		12,254			(16,268	)		6,979			8,486
Net loss attributable to redeemable noncontrolling interests		1,672			2,495			6,518			5,661
Net (income) loss attributable to noncontrolling interests		(5,512	)		12,347			(371	)		7,063
Net income (loss) attributable to Acadia shareholders	$	8,414		$	(1,426	)	$	13,126		$	21,210

Basic income (loss) per share	$	0.07		$	(0.02	)	$	0.12		$	0.21
Diluted income (loss) per share	$	0.07		$	(0.02	)	$	0.12		$	0.21

Weighted average shares for basic income (loss) per share		108,351			95,320			104,704			95,257
Weighted average shares for diluted income (loss) per share		108,351			95,320			104,704			95,257

(a)

Includes interest income on Notes receivable, net, advances to unconsolidated affiliates, and loans to redeemable noncontrolling interests from related parties of $4.8 million and $2.6 million for the three months ended September 30, 2024 and 2023, respectively, and $10.3 million and $7.7 million for the nine months ended September 30, 2024 and 2023, respectively (Note 3, Note 10).

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

ACADIA REALTY TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023

Net income (loss)	$	12,254		$	(16,268	)	$	6,979		$	8,486
Other comprehensive (loss) income:
Unrealized (loss) gain on valuation of derivatives		(31,715	)		26,763			2,301			45,034
Reclassification of realized interest on swap derivatives		(7,327	)		(9,478	)		(25,011	)		(24,293	)
Other comprehensive (loss) income		(39,042	)		17,285			(22,710	)		20,741
Comprehensive (loss) income		(26,788	)		1,017			(15,731	)		29,227
Comprehensive loss attributable to redeemable noncontrolling interests		1,672			2,495			6,518			5,661
Comprehensive loss attributable to noncontrolling interests		3,160			10,767			7,148			5,065
Comprehensive (loss) income attributable to Acadia shareholders	$	(21,956	)	$	14,279		$	(2,065	)	$	39,953

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

ACADIA REALTY TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

Three Months Ended September 30, 2024 and 2023


	Acadia Shareholders
(in thousands, except per share amounts)	Common Shares		Share Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Distributions in Excess of Accumulated Earnings			Total Common Shareholders’ Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
Balance as of July 1, 2024		105,267	$	105	$	2,115,689	$	47,621		$	(381,945	)	$	1,781,470		$	457,221		$	2,238,691		$	40,874
Issuance of Common Shares, net		8,534		9		186,710		—			—			186,719			—			186,719			—
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership		95		—		1,546		—			—			1,546			(1,546	)		—			—
Dividends/distributions declared ($0.19 per Common Share/OP Unit)		—		—		—		—			(21,641	)		(21,641	)		(1,273	)		(22,914	)		—
City Point Loan accrued interest		—		—		—		—			—			—			—			—			(4,165	)
Employee and trustee stock compensation, net		6		—		235		—			—			235			2,494			2,729			—
Noncontrolling interest distributions		—		—		—		—			—			—			(7,591	)		(7,591	)		—
Noncontrolling interest contributions		—		—		—		—			—			—			2,409			2,409			—
Comprehensive (loss) income		—		—		—		(30,370	)		8,414			(21,956	)		(3,160	)		(25,116	)		(1,672	)
Reallocation of noncontrolling interests		—		—		354		—			—			354			(354	)		—			—
Balance as of September 30, 2024		113,902	$	114	$	2,304,534	$	17,251		$	(395,172	)	$	1,926,727		$	448,200		$	2,374,927		$	35,037

Balance as of July 1, 2023		95,297	$	95	$	1,947,779	$	49,855		$	(312,057	)	$	1,685,672		$	452,437		$	2,138,109		$	59,833
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership		11		—		182		—			—			182			(182	)		—			—
Dividends/distributions declared ($0.18 per Common Share/OP Unit)		—		—		—		—			(17,156	)		(17,156	)		(1,338	)		(18,494	)		—
City Point Loan accrued interest		—		—		—		—			—			—			—			—			(2,332	)
Employee and trustee stock compensation, net		2		—		212		—			—			212			2,353			2,565			—
Capital call receivable		—		—		—		—			—			—			(16,300	)		(16,300	)		—
Noncontrolling interest distributions		—		—		—		—			—			—			(1,754	)		(1,754	)		(37	)
Noncontrolling interest contributions		—		—		—		—			—			—			16,600			16,600			315
Comprehensive income (loss)		—		—		—		15,705			(1,426	)		14,279			(10,767	)		3,512			(2,495	)
Reallocation of noncontrolling interests		—		—		2,039		—			—			2,039			(2,039	)		—			—
Balance as of September 30, 2023		95,310	$	95	$	1,950,212	$	65,560		$	(330,639	)