\nAcadia Realty Trust (NYSE: AKR) (\u201cAcadia\u201d or the \u201cCompany\u201d) today reported operating results for the quarter ended March 31, 2023. For the quarter ended March 31, 2023, net earnings per share was $0.14. All per share amounts are on a fully-diluted basis, where applicable. Acadia operates dual platforms, comprised of a high-quality core real estate portfolio (\u201cCore Portfolio\u201d), through which the Company owns and operates retail assets in the nation\u2019s most dynamic corridors, and a series of discretionary, institutional funds (\u201cFunds\u201d) that target opportunistic and value-add investments.<\/p>\n
Please refer to the tables and notes accompanying this press release for further details on operating results and additional disclosures related to net income (loss), funds from operations (“FFO”)<\/i>as per NAREIT and Before Special Items, net property operating income (“NOI”) and same-property NOI.<\/i><\/p>\n
First Quarter and Recent Highlights<\/span><\/b><\/p>\n \n\u201cWe are very pleased with a simple \u2018beat and raise quarter\u2019 with the upside driven by internal growth. Despite pressures from rising interest rates, we were able to achieve robust growth in the first quarter, which is reflective of the multi-year embedded growth that we see from our existing portfolio. Looking forward, we remain confident in meeting our internal growth expectations coming from lease-up, contractual rent steps, rebounding market rents and the execution of our value-add business plan on recently acquired properties,\u201d stated Kenneth F. Bernstein, President and CEO of Acadia. \u201cWhile we have visibility on the internal growth leading to earnings growth, we are also prepared to take advantage of external growth opportunities by leveraging our institutional relationships which will add further accretion to our earnings.\u201d<\/p>\n CORE PORTFOLIO OPERATING RESULTS<\/span><\/b><\/p>\n \nThe Company had net earnings per share of $0.14, NAREIT FFO per share of $0.40 and FFO Before Special Items per share of $0.40 for the quarter ended March 31, 2023. Please refer to the Consolidated Financial Results section below for additional details.<\/p>\n \nDriven by a combination of market rent growth, lease-up and contractual rent increases within its Street portfolio, the Company’s same-property NOI, excluding redevelopments, increased 7.0% for the quarter ended March 31, 2023.<\/p>\n CORE PORTFOLIO LEASING UPDATE<\/span><\/b><\/p>\n \nDuring the quarter ended March 31, 2023, GAAP and cash leasing spreads were 22.3% and 9.9%, respectively, on 17 new and renewal leases aggregating approximately 55,000 square feet.<\/p>\n \nAs of March 31, 2023, the Core Portfolio was 94.6% leased and 92.8% occupied. As of December 31, 2022, the Core Portfolio was 94.9% leased and 92.7% occupied. The leased rate includes space that is leased but not yet occupied and excludes development and redevelopment properties.<\/p>\n \nAs previously announced, the Company placed its North Michigan Avenue assets within the Core Portfolio into redevelopment during the first quarter of 2023 (and thus are excluded from Core occupancy metrics).<\/p>\n \nAdditionally, as part of its initial accretive acquisition plan, the Company successfully recaptured two below-market spaces with aggregate GLA of approximately 9,500 square feet during the first quarter of 2023 within its Henderson Avenue portfolio. The planned recapture contributed to a 730-bps decline in occupancy within the Company’s Dallas portfolio. The recapture of these spaces will allow the Company to execute its value-add strategy to re-demise and re-tenant this site and is in advanced stages of lease negotiations at rents in excess of its initial underwriting.<\/p>\n \nAs previously announced, during the quarter ended March 31, 2023, the Company signed a lease for the entirety of Bed Bath and Beyond store at Brandywine Town Center in Wilmington, Delaware. The space is being taken by the adjacent tenant, Dick’s Sporting Goods, which plans to open in the combined space a flagship House of Sport, its newest comprehensive format. As part of the expansion, Dick’s Sporting Goods profitably executed a new 15-year lease covering the combined space. The Bed Bath and Beyond store at Brandywine is one of its two locations within the Company’s Core Portfolio.<\/p>\n FUND TRANSACTIONAL ACTIVITY<\/span><\/b><\/p>\n Fund V<\/i><\/p>\n Mohawk Commons (Fund V). <\/b>As previously announced, in January 2023, Fund V completed the acquisition of a 90% interest in Mohawk Commons in Schenectady, New York for $62.1 million in a joint venture with DLC Management. The investment, which was funded with a new non-recourse mortgage of $39.7 million, is expected to result in mid-teens leveraged returns. This grocery-anchored power center is currently 98% leased and is anchored by Lowe’s and a shadow anchor, Target, along with other national junior anchors, including Burlington Coat Factory, PetSmart and Marshalls.<\/p>\n Albertsons Special Dividend<\/i><\/p>\n \nAs previously announced, on January 17, 2023, Albertsons Companies, Inc. (“Albertsons”) announced that the State of Washington\u2019s Supreme Court denied a motion by the Attorney General of the State of Washington to hear an appeal from the trial court\u2019s denial of its request to enjoin the Company from paying its previously announced $6.85 per common share of the Special Dividend, originally scheduled to be paid November 7, 2022. Albertsons further announced that the temporary restraining order preventing the payment of the Special Divided was lifted as a result of the decision. Albertsons paid the Special Dividend on January 20, 2023. Acadia’s share of the Special Dividend was approximately $11.3 million, or $0.11 per share, and was recognized in the first quarter of 2023 and is included in Net Promote and Other Transactional Income.<\/p>\n BALANCE SHEET<\/span><\/b><\/p>\n \nAs of March 31, 2023, substantially all of the Core Portfolio debt was fixed or effectively fixed, inclusive of interest rate swap contracts at a blended rate of 4.25%.<\/p>\n CONSOLIDATED FINANCIAL RESULTS<\/span><\/b><\/p>\n \nA 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. Amounts discussed below are net of noncontrolling interests and all per share amounts are on a fully-diluted basis.<\/p>\n Net Income<\/span><\/b><\/p>\n \nNet income attributable to Acadia for the quarter ended March 31, 2023, was $13.1 million, or $0.14 per share, which included $11.3 million, or $0.11 per share, from the receipt of the Special Dividend.<\/p>\n \nNet income attributable to Acadia for the quarter ended March 31, 2022, was $16.6 million, or $0.18 per share, which included: (i) $8.3 million gain, or $0.08 per share, on dispositions and (ii) $3.6 million, or $0.04 per share, primarily from the unrealized mark-to-market holding gain on its investment in Albertsons supermarkets, offset by $0.9 million, or $0.01 per share for net acquisition and transaction costs from a Core acquisition.<\/p>\n FFO as Defined by NAREIT<\/span><\/b><\/p>\n \nFFO as defined by NAREIT for the quarter ended March 31, 2023 was $40.7 million, or $0.40 per share, which included $11.3 million, or $0.11 per share, from the receipt of the Special Dividend.<\/p>\n \nFFO as defined by NAREIT for the quarter ended March 31, 2022 was $35.4 million, or $0.36 per share, and included $3.6 million, or $0.04 per share, primarily from the unrealized mark-to-market holding gain on Albertsons and (ii) $1.5 million, or $0.01 per share from the Fund III disposition of its interest in Self Storage Management.<\/p>\n FFO Before Special Items<\/span><\/b><\/p>\n \nFFO Before Special Items for the quarter ended March 31, 2023 was $40.7 million, or $0.40 per share, which included $11.3 million, or $0.11 per share, from the receipt of the Special Dividend. The unrealized mark-to-market holding gain on Albertsons was insignificant for the quarter ended March 31, 2023. Therefore, FFO Before Special Items and FFO as defined by NAREIT for the quarter ended March 31, 2023 were both $0.40 per share.<\/p>\n \nFFO Before Special Items for the quarter ended March 31, 2022 was $32.7 million, or $0.33 per share, which excluded $3.6 million, or $0.04 per share, primarily from the unrealized mark-to-market holding gain on Albertsons offset by $0.9 million, or $0.01 per share for net acquisition and transaction costs from a Core acquisition.<\/p>\n GUIDANCE<\/span><\/b><\/p>\n \nThe Company increased its annual 2023 guidance as follows:<\/p>\n\n
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