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ACADIA REALTY TRUST - Quarter Report: 2021 March (Form 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 March 31, 2021

or

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 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 April 23, 2021 there were 86,306,301 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

 

 

Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020

 

4

 

 

Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2021 and 2020

 

5

 

 

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31,
2021 and 2020

 

6

 

 

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) for the Three Months Ended March 31, 2021 and 2020

 

7

 

 

Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2021 and 2020

 

8

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

10

 

 

 

 

 

2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

42

3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

52

4.

 

Controls and Procedures

 

54

 

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

1.

 

Legal Proceedings

 

55

1A.

 

Risk Factors

 

55

2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

55

3.

 

Defaults Upon Senior Securities

 

55

4.

 

Mine Safety Disclosures

 

55

5.

 

Other Information

 

55

6.

 

Exhibits

 

56

 

 

Signatures

 

57

 

2


 

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, and Section 21E of the Securities and 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 use of the words “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) economic, political and social uncertainty surrounding the COVID-19 pandemic (the “COVID-19 Pandemic”), including (a) the effectiveness or lack of effectiveness of governmental relief in providing assistance to businesses, including the Company’s tenants, that have suffered significant declines in revenues as a result of mandatory business shut-downs, “shelter-in-place” or “stay-at-home” orders and social distancing practices, as well as to individuals adversely impacted by the COVID-19 Pandemic, and various actions taken to contain or mitigate the impact of the COVID-19 Pandemic (including vaccines), (b) the duration of any such orders or other formal recommendations for social distancing and the speed and extent to which revenues of the Company’s retail tenants recover following the lifting of any such orders or recommendations, (c) temporary or permanent migration out of major cities by customers, including cities where the Company’s properties are located, which may have a negative impact on the Company’s tenant’s businesses, (d) the potential impact of any such events on the obligations of the Company’s tenants to make rent and other payments or honor other commitments under existing leases, (e) to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices, (f) the potential adverse impact on returns from development and redevelopment projects, and (g) the broader impact of the severe economic contraction and increase in unemployment that has occurred in the short term and negative consequences that will occur if these trends are not quickly reversed; (ii) the ability and willingness of the Company’s tenants (in particular its major tenants) and other third parties to satisfy their obligations under their respective contractual arrangements with the Company; (iii) macroeconomic conditions, such as a disruption of or lack of access to the capital markets; (iv) the Company’s success in implementing its business strategy and its ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (v) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and their effect on the Company’s revenues, earnings and funding sources; (vi) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the potential phasing out of the London Interbank Offered Rate after 2021; (vii) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (viii) the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (ix) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (x) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration, the Company’s ability to re-lease its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations the Company may incur in connection with the replacement of an existing tenant; (xi) the Company’s liability for environmental matters; (xii) damage to the Company’s properties from catastrophic weather and other natural events, and the physical effects of climate change; (xiii) uninsured losses; (xiv) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (xv) information technology security breaches, including increased cybersecurity risks relating to the use of remote technology during the COVID-19 Pandemic; and (xvi) the loss of key executives.

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, 2020, 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 contained herein to reflect any change in the Company’s expectations with regard thereto or change 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 footnotes to the consolidated financial statements of the registrant referenced in Part I, Item 1. Financial Statements.

3


 

 

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

 

 

December 31,

 

(dollars in thousands, except per share amounts)

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

Investments in real estate, at cost

 

 

 

 

 

 

 

 

Operating real estate, net

 

$

3,238,031

 

 

$

3,260,139

 

Real estate under development

 

 

234,338

 

 

 

247,349

 

Net investments in real estate

 

 

3,472,369

 

 

 

3,507,488

 

Notes receivable, net

 

 

101,410

 

 

 

101,450

 

Investments in and advances to unconsolidated affiliates

 

 

256,332

 

 

 

249,807

 

Other assets, net

 

 

162,596

 

 

 

173,809

 

Right-of-use assets - operating leases, net

 

 

74,803

 

 

 

76,268

 

Cash and cash equivalents

 

 

15,424

 

 

 

19,232

 

Restricted cash

 

 

15,723

 

 

 

14,692

 

Rents receivable, net

 

 

46,356

 

 

 

44,136

 

Assets of properties held for sale

 

 

8,669

 

 

 

 

Total assets

 

$

4,153,682

 

 

$

4,186,882

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Mortgage and other notes payable, net

 

$

1,188,695

 

 

$

1,204,581

 

Unsecured notes payable, net

 

 

420,960

 

 

 

420,858

 

Unsecured line of credit

 

 

105,400

 

 

 

138,400

 

Accounts payable and other liabilities

 

 

237,058

 

 

 

269,911

 

Lease liability - operating leases, net

 

 

87,910

 

 

 

88,816

 

Dividends and distributions payable

 

 

14,018

 

 

 

147

 

Distributions in excess of income from, and investments in, unconsolidated affiliates

 

 

15,272

 

 

 

15,616

 

Total liabilities

 

 

2,069,313

 

 

 

2,138,329

 

Commitments and contingencies

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

Acadia Shareholders' Equity

 

 

 

 

 

 

 

 

Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,302,352 and 86,268,303 shares, respectively

 

 

86

 

 

 

86

 

Additional paid-in capital

 

 

1,683,552

 

 

 

1,683,165

 

Accumulated other comprehensive loss

 

 

(41,962

)

 

 

(74,891

)

Distributions in excess of accumulated earnings

 

 

(174,829

)

 

 

(167,046

)

Total Acadia shareholders’ equity

 

 

1,466,847

 

 

 

1,441,314

 

Noncontrolling interests

 

 

617,522

 

 

 

607,239

 

Total equity

 

 

2,084,369

 

 

 

2,048,553

 

Total liabilities and equity

 

$

4,153,682

 

 

$

4,186,882

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


 

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Three Months Ended March 31,

 

(in thousands except per share amounts)

 

2021

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

Rental income

 

$

67,205

 

 

$

70,457

 

Other

 

 

2,189

 

 

 

963

 

Total revenues

 

 

69,394

 

 

 

71,420

 

Operating expenses

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

31,390

 

 

 

33,377

 

General and administrative

 

 

8,996

 

 

 

9,070

 

Real estate taxes

 

 

11,462

 

 

 

10,447

 

Property operating

 

 

13,477

 

 

 

13,320

 

Impairment charges

 

 

 

 

 

51,549

 

Total operating expenses

 

 

65,325

 

 

 

117,763

 

 

 

 

 

 

 

 

 

 

Gain on disposition of properties

 

 

4,612

 

 

 

 

Operating income (loss)

 

 

8,681

 

 

 

(46,343

)

Equity in earnings of unconsolidated affiliates

 

 

2,263

 

 

 

1,255

 

Interest and other income

 

 

1,700

 

 

 

2,929

 

Realized and unrealized holding gains on investments and other

 

 

6,507

 

 

 

(530

)

Interest expense

 

 

(17,141

)

 

 

(18,302

)

Income (loss) from continuing operations before income taxes

 

 

2,010

 

 

 

(60,991

)

Income tax (provision) benefit

 

 

(150

)

 

 

952

 

Net income (loss)

 

 

1,860

 

 

 

(60,039

)

Net loss attributable to noncontrolling interests

 

 

3,302

 

 

 

51,625

 

Net income (loss) attributable to Acadia

 

$

5,162

 

 

$

(8,414

)

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per share

 

$

0.06

 

 

$

(0.10

)

 

The accompanying notes are an integral part of these consolidated financial statements.

5


 

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2021

 

 

2020

 

Net income (loss)

 

$

1,860

 

 

$

(60,039

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Unrealized gain (loss) on valuation of swap agreements

 

 

33,556

 

 

 

(74,774

)

Reclassification of realized interest on swap agreements

 

 

5,317

 

 

 

977

 

Other comprehensive income (loss)

 

 

38,873

 

 

 

(73,797

)

Comprehensive income (loss)

 

 

40,733

 

 

 

(133,836

)

Comprehensive (income) loss attributable to noncontrolling interests

 

 

(2,642

)

 

 

70,882

 

Comprehensive income (loss) attributable to Acadia

 

$

38,091

 

 

$

(62,954

)

 

The accompanying notes are an integral part of these consolidated financial statements.

6


 

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended March 31, 2021 and 2020

 

 

 

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

 

Balance at January 1, 2021

 

 

86,269

 

 

$

86

 

 

$

1,683,165

 

 

$

(74,891

)

 

$

(167,046

)

 

$

1,441,314

 

 

$

607,239

 

 

$

2,048,553

 

Conversion of OP Units to Common Shares by limited partners of the Operating Partnership

 

 

19

 

 

 

 

 

 

294

 

 

 

 

 

 

 

 

 

294

 

 

 

(294

)

 

 

 

Dividends/distributions declared ($0.15 per Common Share/OP Unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,945

)

 

 

(12,945

)

 

 

(1,048

)

 

 

(13,993

)

Employee and trustee stock compensation, net

 

 

14

 

 

 

 

 

 

462

 

 

 

 

 

 

 

 

 

462

 

 

 

4,049

 

 

 

4,511

 

Noncontrolling interest distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,676

)

 

 

(6,676

)

Noncontrolling interest contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,241

 

 

 

11,241

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

32,929

 

 

 

5,162

 

 

 

38,091

 

 

 

2,642

 

 

 

40,733

 

Reallocation of noncontrolling interests

 

 

 

 

 

 

 

 

(369

)

 

 

 

 

 

 

 

 

(369

)

 

 

369

 

 

 

 

Balance at March 31, 2021

 

 

86,302

 

 

$

86

 

 

$

1,683,552

 

 

$

(41,962

)

 

$

(174,829

)

 

$

1,466,847

 

 

$

617,522

 

 

$

2,084,369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

 

87,050

 

 

$

87

 

 

$

1,706,357

 

 

$

(31,175

)

 

$

(132,961

)

 

$

1,542,308

 

 

$

644,657

 

 

$

2,186,965

 

Cumulative effect of change in accounting principle

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(389

)

 

 

(389

)

 

 

(11

)

 

 

(400

)

Conversion of OP Units to Common Shares by limited partners of the Operating Partnership

 

 

148

 

 

 

 

 

 

2,472

 

 

 

 

 

 

 

 

 

2,472

 

 

 

(2,472

)

 

 

 

Repurchase of Common Shares

 

 

(1,219

)

 

 

(1

)

 

 

(22,351

)

 

 

 

 

 

 

 

 

(22,352

)

 

 

 

 

 

(22,352

)

Dividends/distributions declared ($0.29 per Common Share/OP Unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,937

)

 

 

(24,937

)

 

 

(1,849

)

 

 

(26,786

)

Employee and trustee stock compensation, net

 

 

11

 

 

 

 

 

 

171

 

 

 

 

 

 

 

 

 

171

 

 

 

3,648

 

 

 

3,819

 

Noncontrolling interest distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,118

)

 

 

(3,118

)

Noncontrolling interest contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,268

 

 

 

7,268

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(54,540

)

 

 

(8,414

)

 

 

(62,954

)

 

 

(70,882

)

 

 

(133,836

)

Reallocation of noncontrolling interests

 

 

 

 

 

 

 

 

145

 

 

 

 

 

 

 

 

 

145

 

 

 

(145

)

 

 

 

Balance at March 31, 2020

 

 

85,990

 

 

$

86

 

 

$

1,686,794

 

 

$

(85,715

)

 

$

(166,701

)

 

$

1,434,464

 

 

$

577,096

 

 

$

2,011,560

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

 

 

 

7


 

 

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,860

 

 

$

(60,039

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

31,390

 

 

 

33,377

 

Straight-line rents

 

 

(1,128

)

 

 

(1,128

)

Non-cash lease expense

 

 

1,041

 

 

 

619

 

Net unrealized holding gains on investments

 

 

(6,135

)

 

 

 

Distributions of operating income from unconsolidated affiliates

 

 

390

 

 

 

1,898

 

Equity in earnings of unconsolidated affiliates

 

 

(2,263

)

 

 

(1,255

)

Stock compensation expense

 

 

4,511

 

 

 

3,819

 

Amortization of financing costs

 

 

1,269

 

 

 

1,763

 

Impairment charges

 

 

 

 

 

51,549

 

Gain on disposition of properties

 

 

(4,612

)

 

 

 

Allowance for credit loss

 

 

3,065

 

 

 

1,273

 

Adjustments to straight-line rent reserves

 

 

817

 

 

 

2,967

 

Other, net

 

 

(2,312

)

 

 

(1,107

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Other liabilities

 

 

3,847

 

 

 

(6,844

)

Lease liability - operating leases

 

 

(494

)

 

 

(376

)

Prepaid expenses and other assets

 

 

1,859

 

 

 

2,107

 

Rents receivable

 

 

(2,408

)

 

 

1,682

 

Accounts payable and accrued expenses

 

 

237

 

 

 

(2,327

)

Net cash provided by operating activities

 

 

30,934

 

 

 

27,978

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Acquisition of real estate

 

 

 

 

 

(19,088

)

Development, construction and property improvement costs

 

 

(5,425

)

 

 

(13,576

)

Proceeds from the disposition of properties, net

 

 

15,703

 

 

 

 

Investments in and advances to unconsolidated affiliates and other

 

 

(1,725

)

 

 

(1,525

)

Return of capital from unconsolidated affiliates and other

 

 

4,377

 

 

 

5,024

 

(Issuance) redemption of notes receivable

 

 

 

 

 

(59,000

)

Return (payment) of deposits for properties under contract

 

 

 

 

 

200

 

Payment of deferred leasing costs

 

 

(1,438

)

 

 

(2,763

)

Net cash provided by (used in) investing activities

 

 

11,492

 

 

 

(90,728

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Principal payments on mortgage and other notes

 

 

(20,406

)

 

 

(1,488

)

Principal payments on unsecured debt

 

 

(33,250

)

 

 

(5,000

)

Proceeds received on mortgage and other notes

 

 

3,809

 

 

 

689

 

Proceeds from unsecured debt

 

 

536

 

 

 

122,245

 

Payments of finance lease obligations

 

 

 

 

 

(625

)

(Repurchase) proceeds from the sale of Common Shares

 

 

 

 

 

(22,352

)

Capital contributions from noncontrolling interests

 

 

11,241

 

 

 

7,268

 

Distributions to noncontrolling interests

 

 

(6,800

)

 

 

(4,914

)

Dividends paid to Common Shareholders

 

 

 

 

 

(25,245

)

Deferred financing and other costs

 

 

(333

)

 

 

(222

)

Net cash (used in) provided by financing activities

 

 

(45,203

)

 

 

70,356

 

(Decrease) increase in cash and restricted cash

 

 

(2,777

)

 

 

7,606

 

Cash of $19,232 and $15,845 and restricted cash of $14,692 and $14,165, respectively, beginning of period

 

 

33,924

 

 

 

30,010

 

Cash of $15,424 and $23,404 and restricted cash of $15,723 and $14,212, respectively, end of period

 

$

31,147

 

 

$

37,616

 

8


 

 

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2021

 

 

2020

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

Cash paid during the period for interest, net of capitalized interest of $902 and $2,938 respectively

 

$

11,824

 

 

$

14,156

 

Cash paid for income taxes, net of refunds

 

$

100

 

 

$

219

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

 

Right-of-use assets, operating leases modified in exchange for operating lease liabilities

 

$

412

 

 

$

 

Assumption of accounts payable and accrued expenses through acquisition of real estate

 

$

 

 

$

116

 

Distribution declared and payable on April 15, 2021 and 2020, respectively

 

$

13,993

 

 

$

26,816

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

9


 

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

1. Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization

The Company is a fully-integrated equity real estate investment trust (“REIT”) focused on the ownership, acquisition, development, and management of retail properties located primarily in high-barrier-to-entry, supply-constrained, densely-populated metropolitan areas in the United States.

All of the Company’s assets are held by, and all of its operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and entities in which the Operating Partnership owns an interest. As of March 31, 2021 and December 31, 2020, the Company controlled approximately 94% and 95%, respectively of the Operating Partnership as the sole general partner and is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest (“Common OP Units” or “Preferred OP Units”) and employees who have been awarded restricted Common OP Units (“LTIP Units”) as long-term incentive compensation (Note 13). Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for common shares of beneficial interest, par value $0.001 per share, of the Company (“Common Shares”). This structure is referred to as an umbrella partnership REIT or “UPREIT.”

As of March 31, 2021, the Company has ownership interests in 130 properties within its core portfolio, which consist of those properties either 100% owned, or partially owned through joint venture interests, by the Operating Partnership, or subsidiaries thereof, not including those properties owned through its funds (“Core Portfolio”). The Company also has ownership interests in 56 properties within its opportunity funds, Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”), and Acadia Strategic Opportunity Fund V LLC (“Fund V” and, collectively with Fund II, Fund III and Fund IV, the “Funds”). The 186 Core Portfolio and Fund properties primarily consist of street and urban retail and suburban shopping centers. In addition, the Company, together with the investors in the Funds, invested in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I,” which was liquidated in 2018) and Acadia Mervyn Investors II, LLC (“Mervyns II”), all on a non-recourse basis. The Company consolidates the Funds as it has (i) the power to direct the activities that most significantly impact the Funds’ economic performance, (ii) is obligated to absorb the Funds’ losses and (iii) has the right to receive benefits from the Funds that could potentially be significant.

The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns II and earns fees or priority distributions for asset management, property management, construction, development, leasing, and legal services. Cash flows from the Funds and Mervyns II are distributed pro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return (“Preferred Return”) and the return of all capital contributions. Thereafter, remaining cash flow is distributed 20% to the Operating Partnership (“Promote”) and 80% to the partners or members (including the Operating Partnership). All transactions between the Funds and the Operating Partnership have been eliminated in consolidation.

The following table summarizes the general terms and Operating Partnership’s equity interests in the Funds and Mervyns II (dollars in millions):

 

Entity

 

Formation

Date

 

Operating

Partnership

Share of

Capital

 

 

Capital Called as of

March 31, 2021 (b)

 

 

Unfunded

Commitment (b, c)

 

 

Equity Interest

Held By

Operating

Partnership (a)

 

 

Preferred

Return

 

 

Total Distributions

as of

March 31,

2021 (b, c)

 

Fund II and Mervyns II (c)

 

6/2004

 

 

28.33

%

 

$

372.6

 

 

$

12.7

 

 

 

28.33

%

 

 

8

%

 

$

169.8

 

Fund III

 

5/2007

 

 

24.54

%

 

 

448.1

 

 

 

1.9

 

 

 

24.54

%

 

 

6

%

 

 

568.8

 

Fund IV

 

5/2012

 

 

23.12

%

 

 

481.3

 

 

 

48.7

 

 

 

23.12

%

 

 

6

%

 

 

193.1

 

Fund V

 

8/2016

 

 

20.10

%

 

 

217.1

 

 

 

302.9

 

 

 

20.10

%

 

 

6

%

 

 

31.5

 

 

(a)

Amount represents the current economic ownership at March 31, 2021, which could differ from the stated legal ownership based upon the cumulative preferred returns of the respective Fund.

(b)

Represents the total for the Funds, including the Operating Partnership and noncontrolling interests’ shares.

(c)

10


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

During August 2020, a recallable distribution of $15.7 million was made by Mervyn’s II to its investors, of which $4.5 million was the Company’s share. During the first quarter of 2021, Mervyn’s II recalled $3.0 million of the $15.7 million.    

Basis of Presentation

Segments

At March 31, 2021, the Company had three reportable operating segments: Core Portfolio, Funds and Structured Financing. The Company’s chief operating decision maker may review operational and financial data on a property-level basis and does not differentiate properties on a geographical basis for purposes of allocating resources or capital. 

Principles of Consolidation

The interim consolidated financial statements include the consolidated accounts of the Company and its investments in partnerships and limited liability companies in which the Company has control in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810 “Consolidation” (“ASC Topic 810”). The ownership interests of other investors in these entities are recorded as noncontrolling interests. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities for which the Company has the ability to exercise significant influence over, but does not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings (or losses) of these entities are included in consolidated net income or loss.

The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. The information furnished in the accompanying consolidated financial statements reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the aforementioned consolidated financial statements for the interim periods. Such adjustments consisted of normal recurring items, with the exception of adjustments due to the adoption of the new credit loss standard and impairment.

These interim consolidated financial statements should be read in conjunction with the Company’s 2020 Annual Report on Form 10-K, as filed with the SEC on February 22, 2021.

Reclassifications

Certain prior year amounts on the Company’s consolidated balance sheet at December 31, 2020 with regard to Mortgage and other notes payable, net and Unsecured notes payable, net have been reclassified to conform to the current period presentation. In addition, certain prior year amounts in the Company’s statement of cash flows for the three months ended March 31, 2020 with regard to Right-of-use assets – operating leases, lease liabilities – operating leases and credit losses have been reclassified to conform to the current period presentation. These reclassifications had no material effect on the reported results of operations, financial condition or cash flows.

Use of Estimates

GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the interim consolidated financial statements and accompanying notes. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition and the collectability of notes receivable and rents receivable. Application of these estimates and assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

Recently Adopted Accounting and Reporting Guidance

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The amendments in this Update provide guidance for interim period and intra period tax accounting; provide tax accounting guidance for foreign subsidiaries; require that an entity recognize a franchise (or similar) tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; as well as other changes to tax accounting. This ASU is effective for fiscal years beginning after December 15, 2020. As a REIT, the Company usually does not have significant income taxes. Accordingly, the implementation of this guidance did not have a material effect on the Company’s consolidated financial statements.

During October 2020, the SEC issued new rules modernizing certain Regulation S-K disclosure requirements. The final rule is intended to improve the readability of disclosures, reduce repetition, and eliminate immaterial information, thereby simplifying compliance for registrants and making disclosures more meaningful for investors. These changes will be effective for all filings on or after November 7, 2020. The Company has made minor disclosure changes in this Report and to the "Business" and "Risk Factors" sections of the annual report on Form 10-K for 2020.

11


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

On April 8, 2020, the FASB issued a Q&A allowing for reporting entities to make an accounting policy election to account for lease concessions related to the effects of COVID-19 consistent with how those concessions would be accounted for under Topic 842, which is as though the enforceable rights and obligations for those concessions existed regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract. This election is available for concessions that result in the total cash flows required by the modified contract being substantially the same or less than total cash flows required by the original contract. Effective April 1, 2020, the Company has made the accounting policy election noted above. The Company entered into concession agreements both as lessor and lessee during the three months ended March 31, 2021 (Note 11). The Company may grant further concessions during subsequent periods.  

In January 2020, the FASB issued ASU 2020-01 Investments—Equity securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. The amendments in this Update affect all entities that apply the guidance in Topics 321, 323, and 815 and (i) elect to apply the measurement alternative or (ii) enter into a forward contract or purchase an option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting. This ASU is effective for fiscal years beginning after December 15, 2020. Currently, the Company does not apply the measurement alternative and does not have any such forward contracts or purchase options. As a result, the implementation of this guidance did not have a material effect on the Company’s consolidated financial statements.

In October 2020, the FASB issued ASU 2020-08 Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs. The amendments in this update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. Currently, the Company does not have any such callable debt securities. As a result, the implementation of this guidance did not have a material effect on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06—Debt with conversion and other options (Subtopic 470-20) and derivatives and hedging—contracts in entity's own equity (Subtopic 815-40)—accounting for convertible instruments and contracts in an entity's own equity. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU simplifies accounting for convertible instruments and simplifies the diluted earnings per share (EPS) calculation in certain areas. This ASU is effective for fiscal years beginning after December 15, 2021. Currently, the Company does not have any such debt instruments and, as a result, the implementation of this guidance is not expected to have an effect on the Company’s consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01 Reference Rate Reform (Topic 848) which modifies ASC 848 (ASU 2020-04 discussed above), which was intended to provide relief related to “contracts and transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform.” ASU 2021-01 expands the scope of ASC 848 to include all affected derivatives and give reporting entities the ability to apply certain aspects of the contract modification and hedge accounting expedients to derivative contracts affected by the discounting transition. ASU 2021-01 also adds implementation guidance to clarify which optional expedients in ASC 848 may be applied to derivative instruments that do not reference LIBOR or a reference rate that is expected to be discontinued, but that are being modified as a result of the discounting transition. Currently, the Company does not have any trades cleared by a central counterparty. As a result, the implementation of this guidance is not expected to have an effect on the Company’s consolidated financial statements.

 

 


12


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

2. Real Estate

The Company’s consolidated real estate is comprised of the following for the periods presented (in thousands):

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Land

 

$

767,631

 

 

$

776,275

 

Buildings and improvements

 

 

2,847,797

 

 

 

2,848,781

 

Tenant improvements

 

 

196,748

 

 

 

191,046

 

Construction in progress

 

 

6,453

 

 

 

5,751

 

Right-of-use assets - finance leases (Note 11)

 

 

25,086

 

 

 

25,086

 

Total

 

 

3,843,715

 

 

 

3,846,939

 

Less: Accumulated depreciation and amortization

 

 

(605,684

)

 

 

(586,800

)

Operating real estate, net

 

 

3,238,031

 

 

 

3,260,139

 

Real estate under development

 

 

234,338

 

 

 

247,349

 

Net investments in real estate

 

$

3,472,369

 

 

$

3,507,488

 

 

Acquisitions and Conversions

During the three months ended March 31, 2021 and the year ended December 31, 2020, the Company acquired the following consolidated retail properties and other real estate investments (dollars in thousands):

 

Property and Location

 

Percent

Acquired

 

 

Date of

Acquisition

 

Purchase

Price

 

2021 Acquisitions

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 Acquisitions and Conversions

 

 

 

 

 

 

 

 

 

 

Core

 

 

 

 

 

 

 

 

 

 

Soho Acquisitions - 37 Greene Street - New York, NY

 

100%

 

 

Jan 9, 2020

 

$

15,689

 

917 W. Armitage - Chicago, IL

 

100%

 

 

Feb 13, 2020

 

 

3,515

 

Town Center - Wilmington, DE (Conversion) (Note 4)

 

100%

 

 

Apr 1, 2020

 

 

138,939

 

Subtotal Core

 

 

 

 

 

 

 

 

158,143

 

 

 

 

 

 

 

 

 

 

 

 

Fund IV

 

 

 

 

 

 

 

 

 

 

230-240 W. Broughton Street - Savannah, GA

 

100%

 

 

May 26, 2020

 

 

13,219

 

102 E. Broughton Street - Savannah, GA

 

100%

 

 

May 26, 2020

 

 

790

 

Subtotal Fund IV

 

 

 

 

 

 

 

 

14,009

 

Total 2020 Acquisitions and Conversions

 

 

 

 

 

 

 

$

172,152

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2020, the Company capitalized $1.3 million of acquisition costs. No debt was assumed in any of the 2020 Acquisitions. Conversions represent notes receivable that were converted to an interest in the underlying collateral in a non-cash transaction.

 

13


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

Purchase Price Allocations

The purchase prices for the 2020 Acquisitions were allocated to the acquired assets and assumed liabilities based on their estimated fair values at the dates of acquisition. The following table summarizes the allocation of the purchase price of properties acquired during the periods presented (in thousands):

 

 

 

Three Months Ended March 31,

2021

 

 

Year Ended December 31,

2020

 

Net Assets Acquired

 

 

 

 

 

 

 

 

Land

 

$

 

 

$

25,440

 

Buildings and improvements

 

 

 

 

 

123,459

 

Accounts receivable, prepaids and other assets

 

 

 

 

 

5,770

 

Acquisition-related intangible assets (Note 6)

 

 

 

 

 

23,061

 

Right-of-use asset - Operating lease (Note 11)

 

 

 

 

 

234

 

Acquisition-related intangible liabilities (Note 6)

 

 

 

 

 

(4,569

)

Lease liability - Operating lease (Note 11)

 

 

 

 

 

(234

)

Accounts payable and other liabilities

 

 

 

 

 

(1,009

)

Net assets acquired

 

$

 

 

$

172,152

 

 

 

 

 

 

 

 

 

 

Consideration

 

 

 

 

 

 

 

 

Cash

 

$

 

 

$

21,208

 

Conversion of note receivable

 

 

 

 

 

38,674

 

Conversion of accrued interest

 

 

 

 

 

1,995

 

Liabilities assumed

 

 

 

 

 

116

 

Existing interest in previously unconsolidated investment

 

 

 

 

 

109,571

 

Acquisition of noncontrolling interests

 

 

 

 

 

588

 

Total consideration

 

$

 

 

$

172,152

 

 

Dispositions

During the three months ended March 31, 2021 and the year ended December 31, 2020, the Company disposed of the following consolidated properties and other real estate investments (in thousands):

Property and Location

 

Owner

 

Date Sold

 

Sale Price

 

 

Gain

on Sale

 

2021 Dispositions

 

 

 

 

 

 

 

 

 

 

 

 

60 Orange St - Bloomfield, NJ

 

Core

 

Jan 29, 2021

 

$

16,400

 

 

$

4,612

 

Total 2021 Dispositions

 

 

 

 

 

$

16,400

 

 

$

4,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 Dispositions

 

 

 

 

 

 

 

 

 

 

 

 

163 Highland Ave. (Easement) - Needham, MA

 

Core

 

Mar 19, 2020

 

$

238

 

 

$

88

 

Colonie Plaza - Albany, NY

 

Fund IV

 

Apr 13, 2020

 

 

15,250

 

 

 

485

 

Airport Mall (Parcel) - Bangor, ME

 

Fund IV

 

Sep 10, 2020

 

 

400

 

 

 

24

 

Cortlandt Crossing (Sewer Project and Retention Pond) - Cortlandt, NY

 

Fund III

 

Nov 30, 2020

 

 

6,325

 

 

 

 

Union Township (Parcel) - New Castle, PA

 

Core

 

Dec 11, 2020

 

 

200

 

 

 

86

 

Total 2020 Dispositions

 

 

 

 

 

$

22,413

 

 

$

683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

During the three months ended March 31, 2021, Fund III entered into an agreement to sell its 654 Broadway property, which is reflected as assets of properties held for sale at March 31, 2021 on the consolidated balance sheet.

 

The aggregate rental revenue, expenses and pre-tax income reported within continuing operations for the aforementioned consolidated properties that were sold during the three months ended March 31, 2021 and year ended December 31, 2020 were as follows (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

 

2021

 

 

2020

 

 

Revenues

 

$

82

 

 

$

870

 

 

Expenses

 

 

(90

)

 

 

(864

)

 

Gain on disposition of properties

 

 

4,612

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 

1

 

 

 

48

 

 

Net income attributable to Acadia

 

$

4,605

 

 

$

54

 

 

 

Real Estate Under Development and Construction in Progress

Real estate under development represents the Company’s consolidated properties that have not yet been placed into service while undergoing substantial development or construction.

Development activity for the Company’s consolidated properties comprised the following during the periods presented (dollars in thousands):

 

 

 

January 1, 2021

 

 

Three Months Ended March 31, 2021

 

 

March 31, 2021

 

 

 

Number of

Properties

 

 

Carrying

Value

 

 

Transfers In

 

 

Capitalized

Costs

 

 

Transfers Out

 

 

Number of

Properties

 

 

Carrying

Value

 

Core

 

 

 

 

$

63,875

 

 

$

 

 

$

933

 

 

$

14,557

 

 

 

 

 

$

50,251

 

Fund II

 

 

 

 

 

74,657

 

 

 

 

 

 

535

 

 

 

 

 

 

 

 

 

75,192

 

Fund III

 

 

1

 

 

 

23,139

 

 

 

 

 

 

277

 

 

 

 

 

 

1

 

 

 

23,416

 

Fund IV

 

 

2

 

 

 

85,678

 

 

 

 

 

 

21

 

 

 

220

 

 

 

2

 

 

 

85,479

 

Total

 

 

3

 

 

$

247,349

 

 

$

 

 

$

1,766

 

 

$

14,777

 

 

 

3

 

 

$

234,338

 

 

 

 

 

January 1, 2020

 

 

Year Ended December 31, 2020

 

 

December 31, 2020

 

 

 

Number of

Properties

 

 

Carrying

Value

 

 

Transfers In

 

 

Capitalized

Costs

 

 

Transfers Out

 

 

Number of

Properties

 

 

Carrying

Value

 

Core

 

 

 

 

$

60,863

 

 

$

 

 

$

3,012

 

 

$

 

 

 

 

 

$

63,875

 

Fund II (a)

 

 

 

 

 

10,703

 

 

 

66,812

 

 

 

3,612

 

 

 

6,470

 

 

 

 

 

 

74,657

 

Fund III

 

 

1

 

 

 

36,240

 

 

 

 

 

 

70

 

 

 

13,171

 

 

 

1

 

 

 

23,139

 

Fund IV (b)

 

 

2

 

 

 

145,596

 

 

 

 

 

 

1,368

 

 

 

61,286

 

 

 

2

 

 

 

85,678

 

Total

 

 

3

 

 

$

253,402

 

 

$

66,812

 

 

$

8,062

 

 

$

80,927

 

 

 

3

 

 

$

247,349

 

 

 

 

(a)

Transfers in include $33.8 million of non-cash Fund II additions obtained through the conversion of a note receivable (Note 3).

 

(b)

Transfers out include impairment charges totaling $16.5 million on two Fund IV development properties (Note 8).

 

The number of properties in the tables above refers to projects comprising the entire property under development; however, certain projects represent a portion of a property. Core amounts relate to City Center and Fund II amounts relate to the City Point Phase III project.

 

During the three months ended March 31, 2021, the Company:

 

 

placed a portion of one Core project, City Center, into service

 

placed the remainder of one Fund project, Paramus, into service

 


15


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

During the year ended December 31, 2020, the Company:

 

 

placed a portion of one Fund III property, Cortlandt Crossing, into service

 

converted, in a non-cash transaction, a note receivable in exchange for construction improvements in the amount of $33.8 million (Note 3)

 

recognized impairment charges totaling $16.5 million on two Fund IV properties (Note 8) including 717 N. Michigan Avenue and 110 University Place

 

placed a portion of one Fund IV property, 146 Geary Street, into service, which was also impaired (Note 8)

 

placed a portion of Fund II’s City Point Phase II into development

 

suspended certain development projects due to aforementioned disruptions related to the COVID-19 Pandemic. Substantially all remaining development and redevelopment costs are discretionary and dependent upon the resumption of tenant interest.

Construction in progress pertains to construction activity at the Company’s operating properties that are in service and continue to operate during the construction period.

3. Notes Receivable, Net

The Company’s notes receivable, net are generally collateralized either by the underlying properties or the borrowers’ ownership interests in the entities that own the properties, and were as follows (dollars in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

March 31, 2021

 

Description

 

2021

 

 

2020

 

 

Number

 

 

Maturity Date

 

Interest Rate

 

Core Portfolio (a)

 

$

96,794

 

 

$

96,794

 

 

 

6

 

 

Apr 2020 - Dec 2027

 

2.65% - 9.00%

 

Fund III

 

 

5,306

 

 

 

5,306

 

 

 

1

 

 

Jul 2020

 

18.00%

 

Total notes receivable

 

 

102,100

 

 

 

102,100

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit loss

 

 

(690

)

 

 

(650

)

 

 

 

 

 

 

 

 

 

 

Notes receivable, net

 

$

101,410

 

 

$

101,450

 

 

 

7

 

 

 

 

 

 

 

 

 

(a)

Includes two notes receivable from OP Unit holders, with balances totaling $6.5 million at March 31, 2021 and December 31, 2020.

 

During the three months ended March 31, 2021, the Company:

 

 

recorded an increase in its allowance for credit loss of approximately $0.1 million.

 

During the year ended December 31, 2020, the Company:

 

 

exchanged its Brandywine Note Receivable of $38.7 million plus accrued interest of $2.0 million for the remaining 24.78% undivided interest in Town Center on April 1, 2020;

 

recorded credit loss reserves of $0.4 million upon the adoption of ASC 326;

 

converted $33.8 million balance of a Fund II note receivable for interest in real estate on November 2, 2020. Prior to the exchange, the note had been increased by the interest accrued during 2020 of $0.6 million;

 

made a Core loan for $54.0 million with an interest rate of 9% structured as a redeemable preferred equity investment in a property at 850 Third Avenue in Brooklyn, New York on January 14, 2020;

 

issued a new Core Portfolio note for $5.0 million with an interest rate of 8% collateralized by our partner’s 50% share of the LUF (Georgetown) Portfolio (Note 4) in Washington, D.C. effective February 1, 2020; and

 

recorded additional credit loss reserves of $0.3 million related to new transactions and recent market volatility.

 

One Core Portfolio note aggregating $21.6 million including accrued interest (exclusive of default interest and other amounts due on the loan that have not been recognized) was in default at March 31, 2021 and December 31, 2020. On April 1, 2020, the loan matured and was not repaid. The Company expects to take appropriate actions to recover the amounts due under the loan, and has issued a reservation of rights letter to the borrowers and guarantor, reserving all of its rights and remedies under the applicable loan documents and otherwise. In addition, one Fund III note receivable aggregating $10.0 million, including accrued interest (exclusive of default interest and other amounts due on the loan that have not been recognized) matured on July 1, 2020 and was not repaid. The Company has issued the borrower a notice of maturity default. The Company has determined for each loan that the collateral is sufficient to cover the loan’s carrying value at March 31, 2021. In addition, there are certain personal guarantees associated with each of these notes receivable.

 

16


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company’s loan in relation to other debt secured by the collateral and the prospects of the borrower.

Earnings from these notes and mortgages receivable are reported within the Company’s Structured Financing segment (Note 12).

The Company’s estimated allowance for credit losses related to its Structured Financing segment has been computed for its amortized cost basis in the portfolio, including accrued interest (Note 5), factoring historical loss experience in the United Sates for similar loans, as adjusted for current conditions, as well as the Company’s expectations related to future economic conditions. Due to the lack of comparability across the Structured Financing portfolio, each loan was evaluated separately. As a result, for non-collateral dependent loans with a total amortized cost of $79.2 million, inclusive of accrued interest of $6.7 million, an allowance for credit losses has been recorded aggregating $0.7 million at March 31, 2021. For four loans in this portfolio, aggregating $38.4. million, inclusive of accrued interest of $8.8 million at March 31, 2021, the Company has elected to apply a practical expedient in accordance with ASC 326 and did not establish an allowance for credit losses because (i) these loans are collateral-dependent loans, which due to their settlement terms are not expected to be settled in cash but rather by the Company’s possession of the real estate collateral; and (ii) at March 31, 2021, the Company determined that the estimated fair value of the collateral at the expected realization date for these loans was sufficient to cover the carrying value of its investments in these notes receivable. Impairment charges may be required if and when such amounts are estimated to be nonrecoverable upon a realization event, which is generally at the time a loan is repaid, or in the case of foreclosure, when the underlying asset is sold; however, non-recoverability may also be concluded if it is reasonably certain that all amounts due will not be collected.

17


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

4. Investments in and Advances to Unconsolidated Affiliates

The Company accounts for its investments in and advances to unconsolidated affiliates primarily under the equity method of accounting as it has the ability to exercise significant influence, but does not have financial or operating control over the investment, which is maintained by each of the unaffiliated partners who co-invest with the Company. The Company’s investments in and advances to unconsolidated affiliates consist of the following (dollars in thousands):

 

 

 

 

 

Ownership Interest

 

 

March 31,

 

 

December 31,

 

Portfolio

 

Property

 

March 31, 2021

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core:

 

840 N. Michigan (a)

 

88.43%

 

 

$

54,924

 

 

$

55,863

 

 

 

Renaissance Portfolio

 

20%

 

 

 

28,742

 

 

 

29,270

 

 

 

Gotham Plaza

 

49%

 

 

 

28,589

 

 

 

28,683

 

 

 

Georgetown Portfolio

 

50%

 

 

 

3,870

 

 

 

4,624

 

 

 

1238 Wisconsin Avenue

 

80%

 

 

 

3,008

 

 

 

2,571

 

 

 

 

 

 

 

 

 

 

119,133

 

 

 

121,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mervyns I & II:

 

KLA/ABS (b)

 

36.7%

 

 

 

78,526

 

 

 

72,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund III:

 

Self Storage Management (c)

 

95%

 

 

 

207

 

 

 

207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund IV:

 

Fund IV Other Portfolio

 

98.57%

 

 

 

12,394

 

 

 

11,719

 

 

 

650 Bald Hill Road

 

90%

 

 

 

12,532

 

 

 

12,550

 

 

 

 

 

 

 

 

 

 

24,926

 

 

 

24,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund V:

 

Family Center at Riverdale (a)

 

89.42%

 

 

 

12,679

 

 

 

11,824

 

 

 

Tri-City Plaza

 

90%

 

 

 

7,309

 

 

 

7,024

 

 

 

Frederick County Acquisitions

 

90%

 

 

 

10,647

 

 

 

10,837

 

 

 

 

 

 

 

 

 

 

30,635

 

 

 

29,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Various:

 

Due from (to) Related Parties

 

 

 

 

 

 

290

 

 

 

363

 

 

 

Other (d)

 

 

 

 

 

 

2,615

 

 

 

1,881

 

 

 

Investments in and advances to

unconsolidated affiliates

 

 

 

 

 

$

256,332

 

 

$

249,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core:

 

Crossroads (e)

 

49%

 

 

$

15,272

 

 

$

15,616

 

 

 

Distributions in excess of income from,

and investments in, unconsolidated affiliates

 

 

 

 

 

$

15,272

 

 

$

15,616

 

 

 

(a)

Represents a tenancy-in-common interest.

 

(b)

Includes an interest in Albertsons (at fair value, as described below) (Note 8).

 

(c)

Represents a variable interest entity for which the Company was determined not to be the primary beneficiary.

 

(d)

Includes cost-method investments in Storage Post, Fifth Wall and other investments.

 

(e)

Distributions have exceeded the Company’s investment; however, the Company recognizes a liability balance as it may be required to return distributions to fund future obligations of the entity.

Core Portfolio

Acquisition of Unconsolidated Investments

On August 8, 2019, the Company invested $1.8 million in Fifth Wall Ventures Retail Fund, L.P. (“Fifth Wall”) Subsequent to its initial investment, the Company invested a total of $1.1 million through March 31, 2021. The Company accounts for its interest at cost less impairment given its ownership is less than five percent and the Company has no influence over the partnership’s operating and financial policies. During

18


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

the fourth quarter of 2020, the Company impaired $0.4 million of this investment (Note 8) reflecting management’s estimate of fair value at that date. At March 31, 2021, the Company’s investment was $2.5 million.

Town Center

On April 1, 2020, the Company exchanged the remaining $38.7 million of Brandywine Notes Receivable (Note 3), plus accrued interest of $2.0 million for the remaining 24.78% interest in Town Center, thereby obtaining a 100% controlling interest in the property. The property was then consolidated (Note 2) and the Company recorded the remaining interest in the property investment at the carrying value of the notes.

Fund Investments

Albertsons

During 2006, as part of a series of investments with a consortium of other investors known as the “RCP Venture”, Mervyns II acquired an indirect interest in Albertsons Companies, Inc. a private chain of grocery stores (“Albertsons”) through two 36.67% owned entities (KLA A Investments, LLC and ABS Opportunities, LLC, “KLA/ABS”). Its investment (the “Investment in Albertsons”) has been accounted for under the cost method as Mervyns II has no influence over operating and financial policies of KLA/ABS. Subsequent to the initial investment in 2006, Mervyns II received distributions from its Investment in Albertsons in excess of its initial contribution, which has been recognized in earnings. During the second and fourth quarters of 2020, Mervyns II realized gains of approximately $22.8 million and $0.4 million, respectively, from its Investment in Albertsons. The realized gains during the second quarter of 2020 resulted from the issuance and distribution of proceeds from a preferred equity investment and a sale of a portion of its investment in an initial public offering of Albertsons, both of which occurred in June 2020. Following these transactions, Mervyns II has retained an effective indirect ownership of approximately 4.1 million shares (approximately 1% interest) through its Investment in Albertsons, which it has accounted for at fair value following the initial public offering given the readily determinable fair value, resulting in an unrealized gain of approximately $64.9 million during the second quarter of 2020. During the year ended December 31, 2020, the Company recorded an additional net unrealized holding gain of $7.5 million reflecting the change in fair value of its Investment in Albertsons. During the three months ended March 31, 2021, Mervyns II realized gains of $0.4 million related to distributions from its Investment in Albertsons and recorded an additional net unrealized holding gain of $6.1 million reflecting the change in fair value of its Investment in Albertsons. The Company has reflected both the realized and net unrealized gain as Realized and unrealized holding gains on investments and other within its consolidated statements of operations. The Company has an effective ownership interest of 28.33% in Mervyns II.

Broughton Street Portfolio

On May 26, 2020, pursuant to the buy-sell provisions of the operating agreement of the Broughton Street Portfolio, Fund IV acquired all of the third-party equity of BSP II, which underlies two properties within Broughton Street Portfolio, for $1.3 million. These two BSP II properties were consolidated during the second quarter of 2020.

Fees from Unconsolidated Affiliates

The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling $0.1 million for each of the three months ended March 31, 2021 and 2020, which are included in other revenues in the consolidated statements of operations.

In addition, the Company paid to certain unaffiliated partners of its joint ventures, $0.4 million and $1.0 million for the three months ended March 31, 2021 and 2020, respectively for leasing commissions, development, management, construction and overhead fees.

19


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

Summarized Financial Information of Unconsolidated Affiliates

The following combined and condensed Balance Sheets and Statements of operations, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates that were held as of December 31, 2020, and accordingly exclude the results of any investments disposed of or consolidated prior to that date (in thousands):

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Combined and Condensed Balance Sheets

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Rental property, net

 

$

552,262

 

 

$

563,997

 

Real estate under development

 

 

15,907

 

 

 

14,517

 

Other assets

 

 

64,358

 

 

 

61,969

 

Total assets

 

$

632,527

 

 

$

640,483

 

Liabilities and partners’ equity:

 

 

 

 

 

 

 

 

Mortgage notes payable

 

$

505,245

 

 

$

512,490

 

Other liabilities

 

 

75,268

 

 

 

74,872

 

Partners’ equity

 

 

52,014

 

 

 

53,121

 

Total liabilities and partners’ equity

 

$

632,527

 

 

$

640,483

 

 

 

 

 

 

 

 

 

 

Company's share of accumulated equity

 

$

100,729

 

 

$

100,767

 

Basis differential

 

 

54,582

 

 

 

55,017

 

Deferred fees, net of portion related to the Company's interest

 

 

4,111

 

 

 

3,565

 

Amounts receivable/payable by the Company

 

 

290

 

 

 

363

 

Investments in and advances to unconsolidated affiliates, net of Company's

   share of distributions in excess of income from and investments in

   unconsolidated affiliates

 

 

159,712

 

 

 

159,712

 

Investments carried at fair value or cost

 

 

81,348

 

 

 

74,479

 

Company's share of distributions in excess of income from and

   investments in unconsolidated affiliates

 

 

15,272

 

 

 

15,616

 

Investments in and advances to unconsolidated affiliates

 

$

256,332

 

 

$

249,807

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Combined and Condensed Statements of Operations

 

 

 

 

 

 

 

 

Total revenues

 

$

17,281

 

 

$

19,496

 

Operating and other expenses

 

 

(6,219

)

 

 

(6,579

)

Interest expense

 

 

(4,822

)

 

 

(5,256

)

Depreciation and amortization

 

 

(8,801

)

 

 

(6,360

)

Gain on disposition of properties (a)

 

 

3,206

 

 

 

 

Net income attributable to unconsolidated affiliates

 

$

645

 

 

$

1,301

 

 

 

 

 

 

 

 

 

 

Company’s share of equity in net income of unconsolidated affiliates

 

$

2,699

 

 

$

334

 

Basis differential amortization

 

 

(436

)

 

 

(324

)

Company’s equity in earnings of unconsolidated affiliates

 

$

2,263

 

 

$

10

 

 

 

(a)

Represents the gain on the sale of two land parcels by the Family Center at Riverdale on January 4, 2021.

 

 

 

20


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

5. Other Assets, Net and Accounts Payable and Other Liabilities

Other assets, net and accounts payable and other liabilities are comprised of the following for the periods presented:

 

(in thousands)

 

March 31,

2021

 

 

December 31,

2020

 

Other Assets, Net:

 

 

 

 

 

 

 

 

Lease intangibles, net (Note 6)

 

$

91,371

 

 

$

100,732

 

Deferred charges, net (a)

 

 

30,524

 

 

 

30,488

 

Accrued interest receivable

 

 

15,481

 

 

 

13,917

 

Prepaid expenses

 

 

14,121

 

 

 

17,468

 

Due from seller

 

 

3,364

 

 

 

3,682

 

Income taxes receivable

 

 

2,613

 

 

 

2,433

 

Other receivables

 

 

2,068

 

 

 

2,058

 

Deposits

 

 

1,744

 

 

 

1,728

 

Corporate assets, net

 

 

1,308

 

 

 

1,302

 

Derivative financial instruments (Note 8)

 

 

2

 

 

 

1

 

 

 

$

162,596

 

 

$

173,809

 

 

 

 

 

 

 

 

 

 

(a) Deferred Charges, Net:

 

 

 

 

 

 

 

 

Deferred leasing and other costs

 

$

61,107

 

 

$

57,533

 

Deferred financing costs related to line of credit

 

 

11,380

 

 

 

11,341

 

 

 

 

72,487

 

 

 

68,874

 

Accumulated amortization

 

 

(41,963

)

 

 

(38,386

)

Deferred charges, net

 

$

30,524

 

 

$

30,488

 

 

 

 

 

 

 

 

 

 

Accounts Payable and Other Liabilities:

 

 

 

 

 

 

 

 

Lease intangibles, net (Note 6)

 

$

71,023

 

 

$

76,434

 

Accounts payable and accrued expenses

 

 

56,149

 

 

 

53,031

 

Derivative financial instruments (Note 8)

 

 

56,083

 

 

 

90,139

 

Deferred income

 

 

35,396

 

 

 

31,842

 

Tenant security deposits, escrow and other

 

 

12,025

 

 

 

12,178

 

Lease liability - finance leases, net (Note 11)

 

 

6,382

 

 

 

6,287

 

 

 

$

237,058

 

 

$

269,911

 

 

 

6. Lease Intangibles

Upon acquisitions of real estate (Note 2), the Company assesses the fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above- and below-market leases, including below-market options and acquired in-place leases) and assumed liabilities. The lease intangibles are amortized over the remaining terms of the respective leases, including option periods where applicable.

21


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

Intangible assets and liabilities are included in Other assets and Accounts payable and other liabilities (Note 5) on the consolidated balance sheet and summarized as follows (in thousands):

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net Carrying

Amount

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net Carrying

Amount

 

Amortizable Intangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-place lease intangible assets

 

$

265,722

 

 

$

(178,279

)

 

$

87,443

 

 

$

268,335

 

 

$

(171,856

)

 

$

96,479

 

Above-market rent

 

 

19,188

 

 

 

(15,260

)

 

 

3,928

 

 

 

19,188

 

 

 

(14,935

)

 

 

4,253

 

 

 

$

284,910

 

 

$

(193,539

)

 

$

91,371

 

 

$

287,523

 

 

$

(186,791

)

 

$

100,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortizable Intangible Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Below-market rent

 

$

(160,388

)

 

$

89,812

 

 

$

(70,576

)

 

$

(164,923

)

 

$

88,951

 

 

$

(75,972

)

Above-market ground lease

 

 

(671

)

 

 

224

 

 

 

(447

)

 

 

(671

)

 

 

209

 

 

 

(462

)

 

 

$

(161,059

)

 

$

90,036

 

 

$

(71,023

)

 

$

(165,594

)

 

$

89,160

 

 

$

(76,434

)

 

During the three months ended March 31, 2021, the Company did not acquire or assume any intangible assets or liabilities.

 

During the year ended December 31, 2020, the Company acquired in-place lease intangible assets of $21.0 million, above-market rents of $2.0 million, and below-market rents of $4.6 million with weighted-average useful lives of 4.9, 5.8, and 20.2 years, respectively.

Amortization of in-place lease intangible assets is recorded in depreciation and amortization expense and amortization of above-market rent and below-market rent is recorded as a reduction to and increase to rental income, respectively, in the consolidated statements of operations. Amortization of above-market ground leases are recorded as a reduction to rent expense in the consolidated statements of operations.

The scheduled amortization of acquired lease intangible assets and assumed liabilities as of March 31, 2021 is as follows (in thousands):

 

Years Ending December 31,

 

Net Increase in

Lease Revenues

 

 

Increase to

Amortization

 

 

Reduction of

Rent Expense

 

 

Net (Expense) Income

 

2021 (Remainder)

 

$

4,923

 

 

$

(17,375

)

 

$

44

 

 

$

(12,408

)

2022

 

 

5,944

 

 

 

(17,869

)

 

 

58

 

 

 

(11,867

)

2023

 

 

5,476

 

 

 

(13,239

)

 

 

58

 

 

 

(7,705

)

2024

 

 

5,126

 

 

 

(9,297

)

 

 

58

 

 

 

(4,113

)

2025

 

 

4,459

 

 

 

(6,939

)

 

 

58

 

 

 

(2,422

)

Thereafter

 

 

40,720

 

 

 

(22,724

)

 

 

171

 

 

 

18,167

 

Total

 

$

66,648

 

 

$

(87,443

)

 

$

447

 

 

$

(20,348

)

 

22


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

7. Debt

A summary of the Company’s consolidated indebtedness is as follows (dollars in thousands):

 

 

 

Interest Rate at

 

 

 

 

Carrying Value at

 

 

 

March 31,

 

 

December 31,

 

 

Maturity Date at

 

March 31,

 

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

March 31, 2021

 

2021

 

 

 

 

2020

 

Mortgages Payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Fixed Rate

 

3.88%-5.89%

 

 

3.88%-5.89%

 

 

Feb 2024 - Apr 2035

 

$

147,233

 

 

 

 

$

147,810

 

Core Variable Rate - Swapped  (a)

 

3.41%-4.54%

 

 

3.41%-4.54%

 

 

Jan 2023 - Nov 2028

 

 

73,569

 

 

 

 

 

80,500

 

Total Core Mortgages Payable

 

 

 

 

 

 

 

 

 

 

 

 

220,802

 

 

 

 

 

228,310

 

Fund II Variable Rate

 

LIBOR+3.00% - PRIME+2.00%

 

 

LIBOR+3.00% - PRIME+2.00%

 

 

Mar 2022 - August 2022

 

 

229,101

 

 

 

 

 

228,282

 

Fund II Variable Rate - Swapped  (a)

 

2.88%

 

 

2.88%

 

 

Nov 2021

 

 

18,733

 

 

 

 

 

18,803

 

Total Fund II Mortgages Payable

 

 

 

 

 

 

 

 

 

 

 

 

247,834

 

 

 

 

 

247,085

 

Fund III Variable Rate

 

LIBOR+2.75%-LIBOR+3.10%

 

 

LIBOR+2.75%-LIBOR+3.10%

 

 

Jun 2021 - Jul 2022

 

 

71,613

 

 

 

 

 

71,918

 

Fund IV Fixed Rate

 

3.40%-4.50%

 

 

3.40%-4.50%

 

 

Oct 2025 - Jun 2026

 

 

6,726

 

 

 

 

 

6,726

 

Fund IV Variable Rate

 

LIBOR+1.60%-LIBOR+3.40%

 

 

LIBOR+1.60%-LIBOR+3.40%

 

 

Apr 2021 - Oct 2025

 

 

245,302

 

 

 

 

 

254,234

 

Fund IV Variable Rate - Swapped  (a)

 

3.48%-4.61%

 

 

3.48%-4.61%

 

 

Apr 2022 - Dec 2022

 

 

66,250

 

 

 

 

 

66,590

 

Total Fund IV Mortgages and Other Notes Payable

 

 

 

 

 

 

 

 

 

 

 

 

318,278

 

 

 

 

 

327,550

 

Fund V Variable Rate

 

LIBOR+1.50%-LIBOR+2.20%

 

 

LIBOR+1.50%-LIBOR+2.20%

 

 

Jun 2021 - Dec 2024

 

 

1,077

 

 

 

 

 

1,354

 

Fund V Variable Rate - Swapped (a)

 

2.95%-4.78%

 

 

2.95%-4.78%

 

 

Jun 2021 - Dec 2024

 

 

334,339

 

 

 

 

 

334,323

 

Total Fund V Mortgages Payable

 

 

 

 

 

 

 

 

 

 

 

 

335,416

 

 

 

 

 

335,677

 

Net unamortized debt issuance costs

 

 

 

 

 

 

 

 

 

 

 

 

(5,770

)

 

 

 

 

(6,507

)

Unamortized premium

 

 

 

 

 

 

 

 

 

 

 

 

522

 

 

 

 

 

548

 

Total Mortgages Payable

 

 

 

 

 

 

 

 

 

 

 

$

1,188,695

 

 

 

 

$

1,204,581

 

Unsecured Notes Payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Variable Rate Credit Facility

 

LIBOR+2.55%

 

 

LIBOR+2.55%

 

 

Jun 2021

 

$

30,000

 

 

 

 

$

30,000

 

Core Variable Rate Unsecured

   Term Loans - Swapped (a)

 

2.49%-5.02%

 

 

2.49%-5.02%

 

 

Mar 2023

 

 

350,000

 

 

 

 

 

350,000

 

Total Core Unsecured Notes

   Payable

 

 

 

 

 

 

 

 

 

 

 

 

380,000

 

 

 

 

 

380,000

 

Fund II Unsecured Notes Payable

 

LIBOR+1.65%

 

 

LIBOR+1.65%

 

 

Sep 2021

 

 

40,000

 

 

 

 

 

40,000

 

Fund IV Term Loan/Subscription Facility

 

LIBOR+1.90%

 

 

LIBOR+1.90%

 

 

Dec 2021

 

 

1,400

 

 

 

 

 

864

 

Fund V Subscription Facility

 

LIBOR+1.60%

 

 

LIBOR+1.60%

 

 

May 2021

 

 

 

 

 

 

 

250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unamortized debt issuance costs

 

 

 

 

 

 

 

 

 

 

 

 

(440

)

 

 

 

 

(256

)

Total Unsecured Notes Payable

 

 

 

 

 

 

 

 

 

 

 

$

420,960

 

 

 

 

$

420,858

 

Unsecured Line of Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Unsecured Line of Credit -Swapped (a)

 

2.49%-5.02%

 

 

2.49%-5.02%

 

 

Mar 2022

 

$

105,400

 

 

 

 

$

138,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt - Fixed Rate (b, c )

 

 

 

 

 

 

 

 

 

 

 

$

1,102,250

 

 

 

 

$

1,143,152

 

Total Debt - Variable Rate (d)

 

 

 

 

 

 

 

 

 

 

 

 

618,493

 

 

 

 

 

626,902

 

Total Debt

 

 

 

 

 

 

 

 

 

 

 

 

1,720,743

 

 

 

 

 

1,770,054

 

Net unamortized debt issuance costs

 

 

 

 

 

 

 

 

 

 

 

 

(6,210

)

 

 

 

 

(6,763

)

Unamortized premium

 

 

 

 

 

 

 

 

 

 

 

 

522

 

 

 

 

 

548

 

Total Indebtedness

 

 

 

 

 

 

 

 

 

 

 

$

1,715,055

 

 

 

 

$

1,763,839

 

 

 

(a)

At March 31, 2021, the stated rates ranged from LIBOR + 1.50% to LIBOR +1.90% for Core variable-rate debt; LIBOR + 1.39% for Fund II variable-rate debt; LIBOR + 2.75% to LIBOR + 3.10% for Fund III variable-rate debt; LIBOR + 1.75% to LIBOR +2.00% for Fund IV variable-rate debt; LIBOR + 1.50% to LIBOR + 2.20% for Fund V variable-rate debt; LIBOR + 1.25% for Core variable-rate unsecured term loans; and LIBOR + 1.35% for Core variable-rate unsecured lines of credit.

 

(b)

Includes $948.3 million and $988.6 million, respectively, of variable-rate debt that has been fixed with interest rate swap agreements as of the periods presented.

 

(c)

Fixed-rate debt at March 31, 2021 and December 31, 2020 includes $36.2 million and $3.2 million, respectively of Core swaps that may be used to hedge debt instruments of the Funds.

 

(d)

Includes $140.0 million and $139.2 million, respectively, of variable-rate debt that is subject to interest cap agreements.

 

 

23


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

Credit Facility

The Company has a $600.0 million senior unsecured credit facility (the “Credit Facility”), comprised of a $250.0 million senior unsecured revolving credit facility (the “Revolver”) which bears interest at LIBOR + 1.40%, and a $350.0 million senior unsecured term loan (the “Term Loan”) which bears interest at LIBOR + 1.30%. The revolving credit facility matures on March 31, 2022, subject to two six-month extension options, and the $350.0 million Term Loan expires on March 31, 2023.

Mortgages and Other Notes Payable

During the three months ended March 31, 2021, the Company:

 

extended three Fund mortgages, two of which were extended for one year with aggregate outstanding balances of $37.7 million at March 31, 2021 and one of which was extended for one month with an outstanding balance of $23.1 million at March 31, 2021;

 

modified the terms of the Fund IV Bridge facility which had an outstanding balance of $79.2 million. Fund IV repaid $10.0 million of principal, the maturity date was extended from June 30, 2021 to December 31, 2021, and the interest rate was changed from LIBOR plus 2.0% to LIBOR plus 2.5% with a floor of 0.25%;

 

entered into a swap agreement in January 2021 with a notional value of $16.7 million, for its New Towne Plaza mortgage replacing the existing swap which expired. In addition, the Company terminated two forward starting interest rate swaps resulting in cash proceeds of approximately $3.4 million (Note 8);

 

repaid one Core mortgage of $6.7 million in connection with the sale of 60 Orange Street in January 2021 (Note 2); and

 

made scheduled principal payments of $2.0 million.

During the year ended December 31, 2020, the Company:

 

 

extended the maturity date of a $200.0 million Fund II loan from May 2020 to May 2022. In addition, the Company extended seven Fund mortgages, two of which were extended for one year during the first quarter with aggregate outstanding balances of $46.0 million at December 31, 2020, two of which were extended for one year during the second quarter with an aggregate outstanding balance of $51.3 million at December 31, 2020, one of which was extended for one year during the third quarter with aggregate outstanding balances of $40.0 million at December 31, 2020, and two of which were extended for a minimum of one year during the fourth quarter with aggregate outstanding balances of $88.0 million at December 31, 2020;

 

modified the terms of one Fund IV $23.8 million mortgage, which had $18.9 million outstanding, in June 2020 to adjust the allowable timing of draws. At closing, an additional $1.0 million was drawn and in July 2020 an additional $0.9 million was drawn. The Company also modified one Fund III and two Fund IV loans aggregating $103.4 million requiring the repayment of $11.5 million; 

 

entered into two swap agreements in February 2020 each with notional values of $50.0 million, which are not effective until April 2022 and April 2023 and were later terminated in the first quarter of 2021. In July 2020, two previously-executed forward swap agreements took effect with current notional values as of December 31, 2020 of $30.4 million each (Note 8);

 

repaid one Core mortgage of $26.3 million in connection with the litigation settlement discussed below and one Fund IV mortgage of $11.6 million in connection with the sale of Colonie Plaza in April 2020 (Note 2); and

 

made scheduled principal payments of $6.1 million.

At March 31, 2021, a Fund III mortgage in the amount of $35.6 million, or $8.7 million at the Company’s share, had not met its liquidity requirement; however, this condition is expected to be remedied by the sale of 654 Broadway, which is reflected as held for sale at March 31, 2021 (Note 2).

At March 31, 2021 and December 31, 2020, the Company’s mortgages were collateralized by 41 and 42 properties, respectively, and the related tenant leases. Certain loans are cross-collateralized and contain cross-default provisions. The loan agreements contain customary representations, covenants and events of default. Certain loan agreements require the Company to comply with affirmative and negative covenants, including the maintenance of debt service coverage and leverage ratios. The Company is not in default on any of its loan agreements. A portion of the Company’s variable-rate mortgage debt has been effectively fixed through certain cash flow hedge transactions (Note 8).

A mortgage loan collateralized by the property held by Brandywine Holdings in the Core Portfolio, was in default and subject to litigation at December 31, 2019. The loan was originated in June 2006 and had an original principal amount of $26.3 million and a scheduled maturity of July 1, 2016. By maturity, the loan was in default. On October 30, 2020, the Company settled the litigation for approximately $30.0 million resulting in a gain on debt extinguishment of $18.3 million reflected in Realized and unrealized holding gains on investments and other in the consolidated statement of operations during the fourth quarter of 2020, of which the Company’s proportionate share was $4.1 million. Upon settlement of this litigation, the Company obtained its partner’s 77.78% noncontrolling interest for nominal consideration, resulting in a negative adjustment of $15.9 million to equity.  

24


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

Unsecured Notes Payable

Unsecured notes payable for which total availability was $127.8 million and $128.7 million at March 31, 2021 and December 31, 2020, respectively, are comprised of the following:

 

The outstanding balance of the Core term loan was $350.0 million at each of March 31, 2021 and December 31, 2020. The Company previously entered into swap agreements fixing the rates of the remaining Core term loan balance.

 

On July 1, 2020, the Company obtained an additional $30.0 million Core term loan, with an accordion option to increase up to $90.0 million. This term loan matures on June 30, 2021 and bears interest at LIBOR plus 2.55% with a LIBOR floor of 0.75%. The outstanding balance at each of March 31, 2021 and December 31, 2020 was $30.0 million. There was no availability at each of March 31, 2021 and December 31, 2020.

 

Fund II has a $40.0 million term loan secured by the real estate assets of City Point Phase II and guaranteed by the Operating Partnership. The outstanding balance of the Fund II term loan was $40.0 million at each of March 31, 2021 and December 31, 2020. There was no availability at each of March 31, 2021 and December 31, 2020.

 

Fund IV has a $5.0 million subscription line with an outstanding balance and total available credit of $1.4 million and $0, respectively at March 31, 2021, reflecting letters of credit of $3.6 million. The outstanding balance and total availability at December 31, 2020 were $0.9 million and $0.5 million, respectively, reflecting letters of credit of $3.6 million.

 

Fund V has a $150.0 million subscription line collateralized by Fund V’s unfunded capital commitments, and, to the extent of Acadia’s capital commitments, is guaranteed by the Operating Partnership. During the year ended December 31, 2020, the Company modified the $150.0 million Fund V Subscription line and extended the due date from May 2020 to May 2021. The outstanding balance and total available credit of the Fund V subscription line was $0 and $127.8 million, respectively at March 31, 2021 reflecting outstanding letters of credit of $22.2 million. The outstanding balance were $0.3 million and $128.2 million at December 31, 2020 reflecting outstanding letters of credit of $21.5 million.

Unsecured Revolving Line of Credit

The Company had a total of $136.6 million and $101.1 million, respectively, available under its $250.0 million Core Revolver, reflecting borrowings of $105.4 million and $138.4 million and letters of credit of $8.0 million and $10.5 million at March 31, 2021 and December 31, 2020, respectively. At each of March 31, 2021 and December 31, 2020, all of the Core unsecured revolving line of credit was swapped to a fixed rate.

Scheduled Debt Principal Payments

The scheduled principal repayments, without regard to available extension options (described further below), of the Company’s consolidated indebtedness, as of March 31, 2021 are as follows (in thousands):

 

Year Ending December 31,

 

 

 

 

2021

 

$

365,838

 

2022

 

 

535,612

 

2023

 

 

409,359

 

2024

 

 

212,020

 

2025

 

 

65,326

 

Thereafter

 

 

132,588

 

 

 

 

1,720,743

 

Unamortized premium

 

 

522

 

Net unamortized debt issuance costs

 

 

(6,210

)

Total indebtedness

 

$

1,715,055

 

 

The table above does not reflect available extension options (subject to customary conditions) on consolidated debt of $260.5 million contractually due in 2021, $250.6 million contractually due in 2022, and $41.5 million contractually due in 2023; most for which the Company has available options to extend by up to 12 months and for some an additional 12 months thereafter. However, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options.

 

See Note 4 for information about liabilities of the Company’s unconsolidated affiliates.

25


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

8. Financial Instruments and Fair Value Measurements

The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and interest rate swaps; and Level 3, for financial instruments or other assets/liabilities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring the Company to develop its own assumptions.

Items Measured at Fair Value on a Recurring Basis

The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, the Company has also provided the unobservable inputs along with their weighted-average ranges.

Money Market Funds — The Company has money market funds, which at times have zero balances and are included in Cash and cash equivalents in the consolidated balance sheets, and are comprised of government securities and/or U.S. Treasury bills. These funds were classified as Level 1 as we used quoted prices from active markets to determine their fair values.

Equity Investments –Albertsons became publicly traded during 2020 (Note 4). Upon Albertsons’ IPO, the Company’s Investment in Albertsons has a readily determinable market value (traded on an exchange) and is being accounted for as a Level 1 investment.

Derivative Assets — The Company has derivative assets, which are included in Other assets, net on the consolidated balance sheets, and are comprised of interest rate swaps and caps. The derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.

Derivative Liabilities — The Company has derivative liabilities, which are included in Accounts payable and other liabilities on the consolidated balance sheets, and are comprised of interest rate swaps. These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.

Other than the Investment in Albertsons described above, the Company did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the three months ended March 31, 2021 or 2020.

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands):

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Derivative financial instruments

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

1

 

 

 

 

Investment in Albertsons (Note 4)

 

 

78,526

 

 

 

 

 

 

 

 

 

72,391

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

 

 

 

56,083

 

 

 

 

 

 

 

 

 

90,139

 

 

 

 

 

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.


26


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

Items Measured at Fair Value on a Nonrecurring Basis (Including Impairment Charges)

During 2020, the Company was impacted by the COVID-19 Pandemic (Note 11), which caused the Company to reduce its holding periods and forecasted operating income at certain properties. As a result, several impairments were recorded. Impairment charges for the periods presented are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

Impairment Charge

 

Property and Location

 

Owner

 

Triggering Event

 

Level 3 Inputs

 

Effective Date

 

Total

 

 

Acadia's Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021 Impairment Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 Impairment Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cortlandt Crossing,

Mohegan Lake, NY

 

Fund III

 

Reduced holding period, reduced projected operating income

 

Projections of: holding period, net operating income, cap rate, incremental costs

 

Mar 31, 2020

 

$

27,402

 

 

$

6,726

 

654 Broadway,

New York, NY

 

Fund III

 

Reduced holding period

 

Projections of: holding period, net operating income, cap rate, incremental costs

 

Mar 31, 2020

 

 

6,398

 

 

 

1,570

 

146 Geary Street,

San Francisco, CA

 

Fund IV

 

Reduced holding period, reduced projected operating income

 

Projections of: holding period, net operating income, cap rate, incremental costs

 

Mar 31, 2020

 

 

6,718

 

 

 

1,553

 

801 Madison Avenue,

New York, NY

 

Fund IV

 

Reduced holding period, reduced projected operating income

 

Projections of: holding period, net operating income, cap rate, incremental costs

 

Mar 31, 2020

 

 

11,031

 

 

 

2,551

 

717 N. Michigan Avenue,

Chicago, IL

 

Fund IV

 

Reduced holding period, reduced projected operating income

 

Projections of: holding period, net operating income, cap rate, incremental costs

 

Dec 31, 2020

 

 

17,392

 

 

 

4,021

 

110 University,

New York, NY

 

Fund IV

 

Reduced holding period, reduced projected operating income

 

Projections of: holding period, net operating income, cap rate, incremental costs

 

Dec 31, 2020

 

 

16,238

 

 

 

3,754

 

Fifth Wall Investment

 

Core

 

Decline in fair value

 

Projections of: reported fair value of net assets

 

Dec 31, 2020

 

 

419

 

 

 

419

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total 2020 Impairment Charges

 

 

 

 

 

 

 

 

 

$

85,598

 

 

$

20,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

Derivative Financial Instruments

The Company had the following interest rate swaps and caps for the periods presented (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

Strike Rate

 

 

 

 

Fair Value

 

Derivative

Instrument

 

Aggregate Notional Amount

 

 

Effective Date

 

Maturity Date

 

Low

 

 

 

 

High

 

 

Balance Sheet

Location

 

March 31,

2021

 

 

December 31,

2020

 

Core

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Swaps

 

$

565,158

 

 

Dec 2012-Jul 2020

 

Jun 2021-Jul 2030

 

 

1.24

%

 

 

 

3.77

%

 

Other Liabilities

 

$

(44,451

)

 

$

(74,990

)

 

 

$

565,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(44,451

)

 

$

(74,990

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund II

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Swap

 

$

18,733

 

 

Oct 2014

 

Nov 2021

 

 

2.88

%

 

 

 

2.88

%

 

Other Liabilities

 

$

(154

)

 

$

(219

)

Interest Rate Cap

 

 

45,000

 

 

Mar 2019

 

Mar 2022

 

 

3.50

%

 

 

 

3.50

%

 

Other Assets

 

 

 

 

 

 

 

 

$

63,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(154

)

 

$

(219

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund III

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Caps

 

$

35,970

 

 

Jan 2021

 

Jul 2022

 

 

3.00

%

 

 

 

3.00

%

 

Other Assets

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund IV

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Swaps

 

$

66,250

 

 

Mar 2017 - Dec 2019

 

Apr 2022 - Dec 2022

 

 

1.48

%

 

 

 

4.00

%

 

Other Liabilities

 

$

(1,399

)

 

$

(1,713

)

Interest Rate Caps

 

 

77,400

 

 

July 2019 - Dec 2020

 

Jul 2021 - Dec 2022

 

 

3.00

%

 

 

 

3.50

%

 

Other Assets

 

 

2

 

 

 

1

 

 

 

$

143,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,397

)

 

$

(1,712

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund V

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Swaps

 

$

334,339

 

 

Jun 2018-Feb 2021

 

Jun 2021-Oct 2024

 

 

0.23

%

 

 

 

2.88

%

 

Other Liabilities

 

$

(10,079

)

 

$

(13,217

)

 

 

$

334,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(10,079

)

 

$

(13,217

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total asset derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2

 

 

$

1

 

Total liability derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(56,083

)

 

$

(90,139

)

 

 

All of the Company’s derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable-rate debt (Note 7). It is estimated that approximately $19.7 million included in Accumulated other comprehensive loss related to derivatives will be reclassified to interest expense within the next twelve months. As of March 31, 2021 and December 31, 2020, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated hedges.

 

During the first quarter of 2021, the Company terminated two forward swaps with an aggregate notional value of $100.0 million (Note 7) for cash proceeds of $3.4 million. As the hedged forecasted transaction is still expected, amounts deferred in Accumulated other comprehensive loss will be amortized into earnings as a reduction of interest expense over the original term of the swaps, beginning in 2022.

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, through the use of derivative financial instruments. The Company enters into derivative financial instruments to manage exposures that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

The Company is exposed to credit risk in the event of non-performance by the counterparties to the swaps if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions. 

28


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

Credit Risk-Related Contingent Features

The Company has agreements with each of its swap counterparties that contain a provision whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its swaps, resulting in an acceleration of payment under the swaps.

Other Financial Instruments

The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands, inclusive of amounts attributable to noncontrolling interests where applicable):

 

 

 

 

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Level

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

Notes Receivable (a)

 

 

3

 

 

$

101,410

 

 

$

101,917

 

 

$

101,450

 

 

$

102,135

 

Mortgage and Other Notes Payable (a)

 

 

3

 

 

 

1,193,943

 

 

 

1,171,180

 

 

 

1,210,540

 

 

 

1,190,214

 

Investment in non-traded equity securities (b)

 

 

3

 

 

 

2,460

 

 

 

2,386

 

 

 

1,726

 

 

 

1,456

 

Unsecured notes payable and Unsecured line of credit (c)

 

 

2

 

 

 

526,800

 

 

 

514,982

 

 

 

559,514

 

 

 

544,532

 

 

(a)

The Company determined the estimated fair value of these financial instruments using a discounted cash flow model with rates that take into account the credit of the borrower or tenant, where applicable, and interest rate risk. The Company also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the borrower, the time until maturity and the current market interest rate environment.

(b)

Represents the Operating Partnership’s cost-method investment in Fifth Wall (Note 4).

(c)

The Company determined the estimated fair value of the unsecured notes payable and unsecured line of credit using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, the Company determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants.

The Company’s cash and cash equivalents, restricted cash, rents receivable, accounts payable and certain financial instruments included in other assets and other liabilities had fair values that approximated their carrying values due to their short maturity profiles at March 31, 2021.

9. Commitments and Contingencies

The Company is involved in various matters of litigation arising out of, or incident to, its business. While the Company is unable to predict with certainty the outcome of any particular matter, management does not expect, when such litigation is resolved, that the Company’s resulting exposure to loss contingencies, if any, will have a material adverse effect on its consolidated financial position.

Commitments and Guaranties

In conjunction with the development and expansion of various properties, the Company has entered into agreements with general contractors for the construction or development of properties aggregating approximately $32.4 million and $32.7 million as of March 31, 2021 and December 31, 2020, respectively.

At March 31, 2021 and December 31, 2020, the Company had Core and Fund letters of credit outstanding of $33.8 million and $35.6 million, respectively (Note 7). The Company has not recorded any obligation associated with these letters of credit. The majority of the letters of credit are collateral for existing indebtedness and other obligations of the Company.

10. Shareholders’ Equity, Noncontrolling Interests and Other Comprehensive Loss

Common Shares and Units

In addition to the share repurchase activity discussed below, the Company completed the following transactions in its Common Shares during the three months ended March 31, 2021:

 

The Company withheld 3,050 restricted shares of its Common Shares (“Restricted Shares”) to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.

 

The Company recognized Common Share and Common OP Unit-based compensation expense totaling $2.7 million and $2.4 million in connection with Restricted Shares and Units (Note 13) for the three months ended March 31, 2021 and 2020, respectively.

29


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

In addition to the ATM Program activity discussed below, the Company completed the following transactions in its Common Shares during the year ended December 31, 2020:

 

The Company withheld 2,075 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.

 

The Company recognized Common Share and Common OP Unit-based compensation expense totaling $8.4 million in connection with Restricted Shares and Units (Note 13).

ATM Program

The Company has an at-the-market equity issuance program (“ATM Program”) that provides the Company an efficient and low-cost vehicle for raising public equity capital to fund its needs. The Company entered into its current $250.0 million ATM Program, which includes an optional “forward purchase” component, in the second quarter of 2019. The Company has not sold any Common Shares under its ATM Program nor issued any shares on a forward basis during the three months ended March 31, 2021 or the year ended December 31, 2020 and currently has approximately $170.0 million of availability under the ATM program.

Share Repurchase Program

During 2018, the Company’s board of trustees (the “Board”) approved a new share repurchase program, which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program does not obligate the Company to repurchase any specific number of Common Shares and may be discontinued or extended at any time. The Company did not repurchase any shares during the three months ended March 31, 2021. During the first quarter of 2020, the Company repurchased 1,219,065 Common Shares for $22.4 million, inclusive of $0.1 million of fees at a weighted average price per share of $18.29, under the share repurchase program, under which $122.6 million remains available as of March 31, 2021.

Dividends and Distributions

The following table sets forth the distributions declared and/or paid during the periods presented:

 

Date Declared

 

Amount Per Share

 

 

Record Date

 

Payment Date

 

 

 

 

 

 

 

 

 

November 5, 2019

 

$

0.29

 

 

December 31, 2019

 

January 15, 2020

February 26, 2020

 

$

0.29

 

 

March 31, 2020

 

April 15, 2020

March 15, 2021

 

$

0.15

 

 

March 31, 2021

 

April 15, 2021

 

Beginning with the second quarter of 2020, the Board temporarily suspended distributions on its Common Shares and Common Units, which suspension continued through the fourth quarter of 2020; however, distributions of $0.1 million were payable to preferred unit holders at each of June 30, 2020, September 30, 2020 and December 31, 2020. The Company reinstated quarterly distributions beginning in the first quarter of 2021.  

30


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

Accumulated Other Comprehensive Loss

The following tables set forth the activity in accumulated other comprehensive loss for three months ended March 31, 2021 and 2020 (in thousands):

 

 

 

Gains or Losses

on Derivative

Instruments

 

Balance at January 1, 2021

 

$

(74,891

)

 

 

 

 

 

Other comprehensive income before reclassifications - swap agreements

 

 

33,556

 

Reclassification of realized interest on swap agreements

 

 

5,317

 

Net current period other comprehensive income

 

 

38,873

 

Net current period other comprehensive income attributable to noncontrolling

   interests

 

 

(5,944

)

Balance at March 31, 2021

 

$

(41,962

)

 

 

 

 

 

Balance at January 1, 2020

 

$

(31,175

)

 

 

 

 

 

Other comprehensive loss before reclassifications - swap agreements

 

 

(74,774

)

Reclassification of realized interest on swap agreements

 

 

977

 

Net current period other comprehensive loss

 

 

(73,797

)

Net current period other comprehensive loss attributable to noncontrolling

   interests

 

 

19,257

 

Balance at March 31, 2020

 

$

(85,715

)

 


31


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

Noncontrolling Interests

The following tables summarize the change in the noncontrolling interests for the three months ended March 31, 2021 and 2020 (dollars in thousands):

 

 

 

Noncontrolling

Interests in

Operating

Partnership (a)

 

 

Noncontrolling

Interests in

Partially-Owned

Affiliates (b)

 

 

Total

 

Balance at January 1, 2021

 

$

89,431

 

 

$

517,808

 

 

$

607,239

 

Distributions declared of $0.15 per Common OP Unit

 

 

(1,048

)

 

 

 

 

 

(1,048

)

Net income (loss) for the three months ended March 31, 2021

 

 

470

 

 

 

(3,772

)

 

 

(3,302

)

Conversion of 18,800 Common OP Units to Common Shares by limited partners of the Operating Partnership

 

 

(294

)

 

 

 

 

 

(294

)

Other comprehensive income - unrealized gain on valuation of swap agreements

 

 

1,900

 

 

 

2,143

 

 

 

4,043

 

Reclassification of realized interest expense on swap agreements

 

 

53

 

 

 

1,848

 

 

 

1,901

 

Noncontrolling interest contributions

 

 

 

 

 

11,241

 

 

 

11,241

 

Noncontrolling interest distributions

 

 

 

 

 

(6,676

)

 

 

(6,676

)

Employee Long-term Incentive Plan Unit Awards

 

 

4,049

 

 

 

 

 

 

4,049

 

Reallocation of noncontrolling interests (c)

 

 

369

 

 

 

 

 

 

369

 

Balance at March 31, 2021

 

$

94,930

 

 

$

522,592

 

 

$

617,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

$

97,670

 

 

$

546,987

 

 

$

644,657

 

Distributions declared of $0.29 per Common OP Unit

 

 

(1,849

)

 

 

 

 

 

(1,849

)

Net loss for the three months ended March 31, 2020

 

 

(336

)

 

 

(51,289

)

 

 

(51,625

)

Conversion of 147,882 Common OP Units to Common Shares by limited partners of the Operating Partnership

 

 

(2,472

)

 

 

 

 

 

(2,472

)

Other comprehensive loss - unrealized loss on valuation of swap agreements

 

 

(3,141

)

 

 

(16,388

)

 

 

(19,529

)

Reclassification of realized interest expense on swap agreements

 

 

7

 

 

 

265

 

 

 

272

 

Noncontrolling interest contributions

 

 

 

 

 

7,268

 

 

 

7,268

 

Noncontrolling interest distributions

 

 

 

 

 

(3,118

)

 

 

(3,118

)

Employee Long-term Incentive Plan Unit Awards

 

 

3,648

 

 

 

 

 

 

3,648

 

Reallocation of noncontrolling interests (c)

 

 

(145

)

 

 

 

 

 

(145

)

Cumulative effect of change in accounting principle

 

 

 

 

 

(11

)

 

 

(11

)

Balance at March 31, 2020

 

$

93,382

 

 

$

483,714

 

 

$

577,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ 3,101,958 and 3,205,931 Common OP Units at March 31, 2021 and March 31, 2020; (ii) 188 Series A Preferred OP Units at March 31, 2021 and March 31, 2020; (iii) 126,593 Series C Preferred OP Units at March 31, 2021 and March 31, 2020; and (iv) 3,409,232 and 3,003,027 LTIP units at March 31, 2021 and March 31, 2020, respectively, as discussed in Share Incentive Plan (Note 13). Distributions declared for Preferred OP Units are reflected in net income (loss) in the table above.

(b)

Noncontrolling interests in partially-owned affiliates comprise third-party interests in Funds II, III, IV and V, and Mervyns II, and six other subsidiaries.

(c)

Adjustment reflects the difference between the fair value of the consideration received or paid and the book value of the Common Shares, Common OP Units, Preferred OP Units, and LTIP Units involving changes in ownership.


32


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

Preferred OP Units

There were no issuances of Preferred OP Units during the three months ended March 31, 2021 or the year ended December 31, 2020.

In 1999, the Operating Partnership issued 1,580 Series A Preferred OP Units in connection with the acquisition of a property, which have a stated value of $1,000 per unit, and are entitled to a preferred quarterly distribution of the greater of (i) $22.50 (9% annually) per Series A Preferred OP Unit or (ii) the quarterly distribution attributable to a Series A Preferred OP Unit if such unit was converted into a Common OP Unit. Through March 31, 2021, 1,392 Series A Preferred OP Units were converted into 185,600 Common OP Units and then into Common Shares. The 188 remaining Series A Preferred OP Units are currently convertible into Common OP Units based on the stated value divided by $7.50. Either the Company or the holders can currently call for the conversion of the Series A Preferred OP Units at the lesser of $7.50 or the market price of the Common Shares as of the conversion date.

During 2016, the Operating Partnership issued 442,478 Common OP Units and 141,593 Series C Preferred OP Units to a third party to acquire Gotham Plaza (Note 4). The Series C Preferred OP Units have a value of $100.00 per unit and are entitled to a preferred quarterly distribution of $0.9375 per unit and are convertible into Common OP Units at a rate based on the share price at the time of conversion. If the share price is below $28.80 on the conversion date, each Series C Preferred OP Unit will be convertible into 3.4722 Common OP Units. If the share price is between $28.80 and $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into a number of Common OP Units equal to $100.00 divided by the closing share price. If the share price is above $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into 2.8409 Common OP Units. The Series C Preferred OP Units have a mandatory conversion date of December 31, 2025, at which time all units that have not been converted will automatically be converted into Common OP Units based on the same calculations. Through March 31, 2021, 15,000 Series C Preferred OP Units were converted into 51,887 Common OP Units and then into Common Shares.

11. Leases

As Lessor

The Company is engaged in the operation of shopping centers and other retail properties that are either owned or, with respect to certain shopping centers, operated under long-term ground leases (see below) that expire at various dates through June 20, 2066, with renewal options (see below). Space in the shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to sixty years and generally provide for additional rents based on certain operating expenses as well as tenants’ sales volumes. During the three months ended March 31, 2021 and 2020, the Company earned $14.8 million and $14.6 million, respectively in variable lease revenues, primarily for real estate taxes and common area maintenance charges, which are included in rental income in the consolidated statements of operations.

The activity for the reserves related to billed rents and straight-line rents is as follows:

 

 

Three Months Ended March 31, 2021

 

 

 

Balance at

Beginning of

Period

 

 

Charged to

Expenses

 

 

Adjustments

to Valuation

Accounts

 

 

Deductions

 

 

Balance at

End of Period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit loss - billed rents

 

$

30,366

 

 

$

3,065

 

 

$

 

 

$

(1,162

)

 

$

32,269

 

Straight-line rent reserves

 

 

15,042

 

 

 

817

 

 

 

 

 

 

(175

)

 

 

15,684

 

Total - rents receivable

 

$

45,408

 

 

$

3,882

 

 

$

 

 

$

(1,337

)

 

$

47,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Lessee

During the three months ended March 31, 2021, the Company:

 

modified its Rye corporate office lease. As a result, of the modification, the lease was remeasured and the lease liability and right-of-use asset were each reduced by $0.4 million.  


33


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

During the year ended December 31, 2020, the Company:

 

entered into one new office lease as lessee for which the lease commenced in the third quarter of 2020. The Company recorded a right-of-use asset and corresponding lease liability of $1.7 million;

 

modified its 991 Madison master lease by converting the 49-year fixed term to a 15-year term. As a result of the modification, the lease was reclassified from a finance lease to an operating lease during the second quarter of 2020;

 

consolidated one property within the BSP II portfolio, 102 E. Broughton, (Note 2), which was subject to a ground lease classified as an operating lease, during the second quarter of 2020;

 

recorded an impairment charge of $12.3 million on a right-of-use asset for a Fund IV property, 110 University Place (Note 8)

 

renewed one ground lease for Branch Plaza, an operating lease, for 22 years; and

 

modified its 1238 Wisconsin lease agreement for a reduced purchase price from $14.5 million to $11.5 million. As a result, remeasured and reduced its right-of-use asset and lease liability by $1.9 million in the fourth quarter of 2020.

Additional disclosures regarding the Company’s leases as lessee are as follows:

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Lease Cost

 

 

 

 

 

 

 

 

Finance lease cost:

 

 

 

 

 

 

 

 

   Amortization of right-of-use assets

 

$

226

 

 

$

657

 

   Interest on lease liabilities

 

 

95

 

 

 

850

 

   Subtotal

 

 

321

 

 

 

1,507

 

Operating lease cost

 

 

2,286

 

 

 

1,394

 

Variable lease cost

 

 

101

 

 

 

16

 

Total lease cost

 

$

2,708

 

 

$

2,917

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

Weighted-average remaining lease term - finance leases (years)

 

 

33.2

 

 

 

42.3

 

Weighted-average remaining lease term - operating leases (years)

 

 

24.5

 

 

 

34.1

 

Weighted-average discount rate - finance leases

 

 

6.3

%

 

 

4.4

%

Weighted-average discount rate - operating leases

 

 

5.6

%

 

 

5.8

%

 

 

 

 

 

 

 

 

 

 

Right-of-use assets – finance leases are included in Operating real estate (Note 2) in the consolidated balance sheets. Lease liabilities – finance leases are included in Accounts payable and other liabilities in the consolidated balance sheets (Note 5). Operating lease cost comprises amortization of right-of-use assets for operating properties (related to ground rents) or amortization of right-of-use assets for office and corporate assets and is included in Property operating expense or General and administrative expense, respectively, in the consolidated statements of operations. Finance lease cost comprises amortization of right-of-use assets for certain ground leases, which is included in Property operating expense, as well as interest on lease liabilities, which is included in Interest expense in the consolidated statements of operations.

34


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

Lease Obligations

The scheduled future minimum (i) rental revenues from rental properties under the terms of non-cancelable tenant leases greater than one year (assuming no new or renegotiated leases or option extensions for such premises) and (ii) rental payments under the terms of all non-cancelable operating and finance leases in which the Company is the lessee, principally for office space, land and equipment, as of March 31, 2021, are summarized as follows (in thousands):

 

 

 

 

 

 

 

Minimum Rental Payments

 

Year Ending December 31,

 

Minimum Rental

Revenues (a)

 

 

Operating Leases (b)

 

 

Finance

Leases (b)

 

2021 (Remainder)

 

$

149,226

 

 

$

6,465

 

 

$

69

 

2022

 

 

198,269

 

 

 

7,768

 

 

 

28

 

2023

 

 

177,885

 

 

 

7,789

 

 

 

 

2024

 

 

152,363

 

 

 

7,974

 

 

 

 

2025

 

 

122,715

 

 

 

7,969

 

 

 

 

Thereafter

 

 

503,880

 

 

 

150,446

 

 

 

12,289

 

 

 

 

1,304,338

 

 

 

188,411

 

 

 

12,386

 

Interest

 

 

 

 

 

(100,587

)

 

 

(6,230

)

Total

 

$

1,304,338

 

 

$

87,824

 

 

$

6,156

 

 

(a)

Amount represents contractual lease maturities at March 31, 2021 including any extension options that management determined were reasonably certain of exercise. During 2020, numerous tenants were forced to suspend operations by government mandate as a result of the COVID-19 Pandemic. The Company has negotiated payment agreements with selected tenants which resulted in rent concessions or deferral of rents as discussed further below.

(b)

Minimum rental payments exclude options or renewals not reasonably certain of exercise.

During the three months ended March 31, 2021 and 2020, no single tenant or property collectively comprised more than 10% of the Company’s consolidated total revenues.

COVID-19 Pandemic Impacts

 

Beginning in March 2020, the COVID-19 Pandemic has had a material adverse impact on economic and market conditions, and consumer activity, and triggered a period of global and domestic economic slowdown. The COVID-19 Pandemic and government responses created disruption in global supply chains and adversely impacting many industries, including the domestic retail sectors in which the Company’s tenants operate. Under governmental restrictions and guidance, certain retailers were considered “essential businesses” and were permitted to remain fully operating during the COVID-19 Pandemic, while other “non-essential businesses” were ordered to decrease or close operations for an indeterminate period of time to protect their employees and customers from the spread of the virus. These disruptions, which have been significantly reduced as of the date of this Report, have impacted the collectability of rent from the Company’s affected tenants. The Company cannot estimate with reasonable certainty which currently operating tenants will remain open or if and when non-operating retailers will re-open for business as the COVID-19 Pandemic progresses. While the Company considers disruptions related to the COVID-19 Pandemic to be temporary, if such government mandated closures are reinstated, they may have a material, adverse effect on the Company’s revenues, results of operations, financial condition, and liquidity in future periods.

Tenant Operating Status – At March 31, 2021 92.4% and 94.8% of the Core Portfolio and Fund, respectively, consolidated and unconsolidated annualized base rents (“ABR”) were derived from stores that were open or partially open for business at that date.

Rent CollectionsThe Company collected or negotiated payment agreements through March 31, 2021 for approximately 91.8% and 84.3% of its first quarter pre-COVID billings (original contract rents without regard to deferral or abatement agreements) for its Core Portfolio and the Funds, respectively.


35


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

Earnings Impact – The Company was impacted as follows by the COVID-19 Pandemic during the periods presented:   

 

 

Three Months Ended March 31, 2021

 

 

Three Months Ended March 31, 2020

 

 

 

Consolidated

 

 

Non-Controlling Interests

 

 

Unconsolidated

 

 

Attributable to Acadia

 

 

Consolidated

 

 

Non-Controlling Interests

 

 

Unconsolidated

 

 

Attributable to Acadia

 

Credit Loss - Billed Rents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

$

1,883

 

 

$

17

 

 

$

386

 

 

$

2,286

 

 

$

832

 

 

$

 

 

$

268

 

 

$

1,100

 

Funds

 

 

1,182

 

 

 

(979

)

 

 

37

 

 

 

240

 

 

 

526

 

 

 

(498

)

 

 

110

 

 

 

138

 

Total

 

 

3,065

 

 

 

(962

)

 

 

423

 

 

 

2,526

 

 

 

1,358

 

 

 

(498

)

 

 

378

 

 

 

1,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight - Line Rent Reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

 

(8

)

 

 

(1

)

 

 

(29

)

 

 

(38

)

 

 

2,744

 

 

 

 

 

 

220

 

 

 

2,964

 

Funds

 

 

825

 

 

 

(645

)

 

 

10

 

 

 

190

 

 

 

223

 

 

 

(220

)

 

 

62

 

 

 

65

 

Total

 

 

817

 

 

 

(646

)

 

 

(19

)

 

 

152

 

 

 

2,967

 

 

 

(220

)

 

 

282

 

 

 

3,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rent Abatements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

 

756

 

 

 

 

 

 

87

 

 

 

843

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds

 

 

783

 

 

 

(611

)

 

 

7

 

 

 

179

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

1,539

 

 

 

(611

)

 

 

94

 

 

 

1,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51,549

 

 

 

(39,149

)

 

 

 

 

 

12,400

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51,549

 

 

 

(39,149

)

 

 

 

 

 

12,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COVID Earnings Impact

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

 

2,631

 

 

 

16

 

 

 

444

 

 

 

3,091

 

 

 

3,576

 

 

 

 

 

 

488

 

 

 

4,064

 

Funds

 

 

2,790

 

 

 

(2,235

)

 

 

54

 

 

 

609

 

 

 

52,298

 

 

 

(39,867

)

 

 

172

 

 

 

12,603

 

Total

 

$

5,421

 

 

$

(2,219

)

 

$

498

 

 

$

3,700

 

 

$

55,874

 

 

$

(39,867

)

 

$

660

 

 

$

16,667

 

 

Other Impacts

 

Rent Concession Agreements – During the three months ended March 31, 2021, the Company executed 47 rent concession arrangements with tenants comprised of 12 agreements for rent deferral and 35 agreements for rent abatements. Of these deferral agreements, 11 were accounted for as if no changes to the contract were made and therefore there were no changes to the current or future recognition of revenue and $8.9 million of deferred receivables are included in Rents receivable in the consolidated balance sheet at March 31, 2021. Consolidated rent abatements in the table above represent $1.5 million for the three months ended March 31, 2021, of which $1.2 million had been negotiated and reserved in prior periods.

 

Occupancy – At March 31, 2021, the Company’s pro rata Core and Fund leased occupancy rates were 91.0% and 89.0%, respectively, compared to 93.9% and 93.2%, respectively, at March 31, 2020 reflecting primarily leases terminated as a result of the COVID-19 Pandemic.

 

Bankruptcy Risk – Through March 31, 2021 there have been continued bankruptcies of national retailers, some of which are tenants of the Company. Of these bankruptcies, the Core Portfolio has three operating stores, with ABR attributable to Acadia totaling $0.7 million, or 0.6% of Core ABR, and the Fund Portfolio has five operating stores, with ABR attributable to Acadia totaling $0.6 million, or 2.7% of Fund ABR, for which it is possible that these leases may be rejected in the future. During the three months ended March 31, 2021, one operating store in the Core Portfolio rejected its lease with ABR attributable to Acadia of $0.1 million or 0.1% of Core ABR, and two operating stores in the Fund Portfolio assumed their locations with ABR attributable to Acadia of $0.1 million or 0.1% of Fund ABR.

12. Segment Reporting

The Company has three reportable segments: Core Portfolio, Funds and Structured Financing. The Company’s Core Portfolio consists primarily of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas with a long-term investment horizon. The Company’s Funds hold primarily retail real estate in which the Company co-invests with high-quality institutional investors. The Company’s Structured Financing segment consists of earnings and expenses related to notes and mortgages receivable which are held within the Core Portfolio or the Funds (Note 3). Fees earned by the Company as the general partner or managing member of the Funds are eliminated in the Company’s consolidated financial statements and are not presented in the Company’s segments.

36


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

The following tables set forth certain segment information for the Company (in thousands):

 

 

As of or for the Three Months Ended March 31, 2021

 

 

 

Core

Portfolio

 

 

Funds

 

 

Structured

Financing

 

 

Unallocated

 

 

Total

 

Revenues

 

$

42,349

 

 

$

27,045

 

 

$

 

 

$

 

 

$

69,394

 

Depreciation and amortization

 

 

(16,887

)

 

 

(14,503

)

 

 

 

 

 

 

 

 

(31,390

)

Property operating expenses, other operating and real estate taxes

 

 

(13,657

)

 

 

(11,282

)

 

 

 

 

 

 

 

 

(24,939

)

General and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

(8,996

)

 

 

(8,996

)

Gain on disposition of properties

 

 

4,612

 

 

 

 

 

 

 

 

 

 

 

 

4,612

 

Operating income

 

 

16,417

 

 

 

1,260

 

 

 

 

 

 

(8,996

)

 

 

8,681

 

Interest income

 

 

 

 

 

 

 

 

1,700

 

 

 

 

 

 

1,700

 

Realized and unrealized holding gains on investments and other

 

 

 

 

 

6,547

 

 

 

(40

)

 

 

 

 

 

6,507

 

Equity in (losses) earnings of unconsolidated affiliates

 

 

(1,129

)

 

 

3,392

 

 

 

 

 

 

 

 

 

2,263

 

Interest expense

 

 

(7,214

)

 

 

(9,927

)

 

 

 

 

 

 

 

 

(17,141

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

(150

)

 

 

(150

)

Net income

 

 

8,074

 

 

 

1,272

 

 

 

1,660

 

 

 

(9,146

)

 

 

1,860

 

Net (income) loss attributable to noncontrolling interests

 

 

(607

)

 

 

3,909

 

 

 

 

 

 

 

 

 

3,302

 

Net income attributable to Acadia (a)

 

$

7,467

 

 

$

5,181

 

 

$

1,660

 

 

$

(9,146

)

 

$

5,162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate at cost (b)

 

$

2,319,584

 

 

$

1,758,469

 

 

$

 

 

$

 

 

$

4,078,053

 

Total assets (b)

 

$

2,222,886

 

 

$

1,829,386

 

 

$

101,410

 

 

$

 

 

$

4,153,682

 

Cash paid for acquisition of real estate

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Cash paid for development and property improvement costs

 

$

2,843

 

 

$

2,582

 

 

$

 

 

$

 

 

$

5,425

 

 

 

 

As of or for the Three Months Ended March 31, 2020

 

 

 

Core

Portfolio

 

 

Funds

 

 

Structured

Financing

 

 

Unallocated

 

 

Total

 

Revenues

 

$

39,933

 

 

$

31,487

 

 

$

 

 

$

 

 

$

71,420

 

Depreciation and amortization

 

 

(17,056

)

 

 

(16,321

)

 

 

 

 

 

 

 

 

(33,377

)

Property operating expenses, other operating and real estate taxes

 

 

(11,814

)

 

 

(11,953

)

 

 

 

 

 

 

 

 

(23,767

)

General and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

(9,070

)

 

 

(9,070

)

Impairment charges

 

 

 

 

 

(51,549

)

 

 

 

 

 

 

 

 

(51,549

)

Operating income (loss)

 

 

11,063

 

 

 

(48,336

)

 

 

 

 

 

(9,070

)

 

 

(46,343

)

Interest and other income

 

 

 

 

 

 

 

 

2,929

 

 

 

 

 

 

2,929

 

Realized and unrealized holding gains on investments and other

 

 

 

 

 

 

 

 

(530

)

 

 

 

 

 

(530

)

Equity in earnings (losses) of unconsolidated affiliates

 

 

1,642

 

 

 

(387

)

 

 

 

 

 

 

 

 

1,255

 

Interest expense

 

 

(8,250

)

 

 

(10,052

)

 

 

 

 

 

 

 

 

(18,302

)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

952

 

 

 

952

 

Net income (loss)

 

 

4,455

 

 

 

(58,775

)

 

 

2,399

 

 

 

(8,118

)

 

 

(60,039

)

Net loss attributable to noncontrolling interests

 

 

1,216

 

 

 

50,409

 

 

 

 

 

 

 

 

 

51,625

 

Net income (loss) attributable to Acadia

 

$

5,671

 

 

$

(8,366

)

 

$

2,399

 

 

$

(8,118

)

 

$

(8,414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate at cost (a)

 

$

2,289,449

 

 

$

1,792,667

 

 

$

 

 

$

 

 

$

4,082,116

 

Total assets (a)

 

$

2,330,971

 

 

$

1,801,008

 

 

$

173,159

 

 

$

 

 

$

4,305,138

 

Cash paid for acquisition of real estate

 

$

19,088

 

 

$

 

 

$

 

 

$

 

 

$

19,088

 

Cash paid for development and property improvement costs

 

$

2,638

 

 

$

10,695

 

 

$

 

 

$

 

 

$

13,576

 

 

 

 

 

 

 

 

 

(a)

Real estate at cost and total assets for the Funds segment include $643.0 million and $641.7 million, or $186.9 million and $186.5 million net of non-controlling interests, related to Fund II’s City Point property at March 31, 2021 and March 31, 2020, respectively.

37


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

 

13. Share Incentive and Other Compensation

Share Incentive Plan

The 2020 Share Incentive Plan (the “Share Incentive Plan”) authorizes the Company to issue options, Restricted Shares, LTIP Units and other securities (collectively “Awards”) to, among others, the Company’s officers, trustees and employees. At March 31, 2021 a total of 1,975,780 shares remained available to be issued under the Share Incentive Plan.

Restricted Shares and LTIP Units

During the three months ended March 31, 2021, and the year ended December 31, 2020, the Company issued 633,462 and 396,149 LTIP Units and 11,119 and 13,766 restricted share units (“Restricted Share Units”), respectively, to employees of the Company pursuant to the Share Incentive Plan. These awards were measured at their fair value on the grant date, incorporating the following factors:

 

A portion of these annual equity awards is granted in performance-based Restricted Share Units or LTIP Units that may be earned based on the Company’s attainment of specified relative total shareholder returns (“Relative TSR”) hurdles.

 

In the event the Relative TSR percentile falls between the 25th percentile and the 50th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 50% and 100% and in the event that the Relative TSR percentile falls between the 50th percentile and 75th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 100% and 200%.

 

Two-thirds (2/3) of the performance-based LTIP Units will vest based on the Company’s total shareholder return (“TSR”) for the three-year forward-looking performance period relative to the constituents of the SNL U.S. REIT Retail Shopping Center Index and one-third (1/3) on the Company’s TSR for the three-year forward-looking performance period as compared to the constituents of the SNL U.S. REIT Retail Index (both on a non-weighted basis).

 

If the Company’s performance fails to achieve the aforementioned hurdles at the culmination of the three-year performance period, all performance-based shares will be forfeited. Any earned performance-based shares vest 60% at the end of the performance period, with the remaining 40% of shares vesting ratably over the next two years.

 

For valuation of the 2021 and 2020 Performance Shares, a Monte Carlo simulation was used to estimate the fair values based on probability of satisfying the market conditions and the projected share prices at the time of payments, discounted to the valuation dates over the three-year performance periods. The assumptions include volatility (48.0% and 21.0%) and risk-free interest rates of (0.2% and 1.4%) for 2021 and 2020, respectively. The total value of the 2021 and 2020 Performance Shares will be expensed over the vesting period regardless of the Company’s performance.

The total value of the above Restricted Share Units and LTIP Units as of the grant date was $12.5 million during the three months ended March 31, 2021 and $10.4 million during the year ended December 31, 2020. Total long-term incentive compensation expense, including the expense related to the Share Incentive Plan, was $2.7 million and $2.4 million for the three months ended March 31, 2021 and 2020, respectively and is recorded in General and Administrative on the Consolidated Statements of Operations.

In addition, members of the Board have been issued shares and units under the Share Incentive Plan. During the three months ended March 31, 2021, the Company issued 1,242 Restricted Shares to Trustees of the Company in connection with Trustee fees. These Restricted Shares vest over three years with 33% vesting May 9, 2021 and the remaining amount vesting ratably on May 9, 2022 and May 9, 2023. The Restricted Shares do not carry voting rights or other rights of Common Shares until vesting and may not be transferred, assigned or pledged until the recipients have a vested non-forfeitable right to such shares. Dividends are not paid currently on unvested Restricted Shares, but are paid cumulatively from the issuance date through the applicable vesting date of such Restricted Shares. Total trustee fee expense, including the expense related to the Share Incentive Plan, was $0.4 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively.

In 2009, the Company adopted the Long-Term Investment Alignment Program (the “Program”) pursuant to which the Company may grant awards to employees, entitling them to receive up to 25% of any potential future payments of Promote to the Operating Partnership from Funds III, IV and V. The Company has granted such awards to employees representing 25% of the potential Promote payments from Fund III to the Operating Partnership, 23.1% of the potential Promote payments from Fund IV to the Operating Partnership and 8.4% of the potential Promote payments from Fund V to the Operating Partnership. Payments to senior executives under the Program require further Board approval at the time any potential payments are due pursuant to these grants. Compensation relating to these awards will be recognized in each reporting period in which Board approval is granted.

38


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

As payments to other employees are not subject to further Board approval, compensation relating to these awards will be recorded based on the estimated fair value at each reporting period in accordance with ASC Topic 718, Compensation– Stock Compensation. The awards in connection with Fund IV and Fund V were determined to have no intrinsic value as of March 31, 2021 or December 31, 2020.

The Company did not recognize any compensation expense for the three months ended March 31, 2021 or the year ended December 31, 2020 related to the Program in connection with Fund III, Fund IV or Fund V.

A summary of the status of the Company’s unvested Restricted Shares and LTIP Units is presented below:

 

Unvested Restricted Shares and LTIP Units

 

Common

Restricted

Shares

 

 

Weighted

Grant-Date

Fair Value

 

 

LTIP Units

 

 

Weighted

Grant-Date

Fair Value

 

Unvested at January 1, 2020

 

 

42,390

 

 

$

23.73

 

 

 

936,180

 

 

$

28.24

 

Granted

 

 

66,824

 

 

 

13.70

 

 

 

440,829

 

 

 

19.64

 

Vested

 

 

(19,264

)

 

 

27.72

 

 

 

(250,241

)

 

 

30.44

 

Forfeited

 

 

(39

)

 

 

24.77

 

 

 

(3,879

)

 

 

24.67

 

Unvested at December 31, 2020

 

 

89,911

 

 

 

15.42

 

 

 

1,122,889

 

 

 

24.38

 

Granted

 

 

12,361

 

 

 

18.50

 

 

 

633,462

 

 

 

19.42

 

Vested

 

 

(7,847

)

 

 

26.13

 

 

 

(250,748

)

 

 

28.20

 

Forfeited

 

 

(159

)

 

 

36.22

 

 

 

(91,637

)

 

 

36.22

 

Unvested at March 31, 2021

 

 

94,266

 

 

$

14.90

 

 

 

1,413,966

 

 

$

20.72

 

 

The weighted-average grant date fair value for Restricted Shares and LTIP Units granted for the three months ended March 31, 2021 and the year ended December 31, 2020 were $19.40 and $18.86, respectively. As of March 31, 2021, there was $23.5 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Share Incentive Plan. That cost is expected to be recognized over a weighted-average period of 1.7 years. The total fair value of Restricted Shares that vested for the three months ended March 31, 2021 and the year ended December 31, 2020, was $0.2 million and $0.5 million, respectively. The total fair value of LTIP Units that vested (LTIP units vest primarily during the first quarter) during the three months ended March 31, 2021 and the year ended December 31, 2020, was $7.1 million and $7.6 million, respectively.

Other Plans

On a combined basis, the Company incurred a total of $0.1 million of compensation expense related to the following employee benefit plans for each of the three months ended March 31, 2021 and 2020.

Employee Share Purchase Plan

The Acadia Realty Trust Employee Share Purchase Plan (the “Purchase Plan”), allows eligible employees of the Company to purchase Common Shares through payroll deductions. The Purchase Plan provides for employees to purchase Common Shares on a quarterly basis at a 15% discount to the closing price of the Company’s Common Shares on either the first day or the last day of the quarter, whichever is lower. A participant may not purchase more than $25,000 in Common Shares per year. Compensation expense will be recognized by the Company to the extent of the above discount to the closing price of the Common Shares with respect to the applicable quarter. A total of 2,428 and 395 Common Shares were purchased by employees under the Purchase Plan for the three months ended March 31, 2021 and 2020, respectively. On March 23, 2021, the Board adopted, subject to the approval by the Company’s shareholders at the 2021 annual meeting of shareholders, the Acadia Realty Trust 2021 Employee Share Purchase Plan which will allow for a maximum aggregate issuance of 200,000 Common Shares.

Deferred Share Plan

During 2006, the Company adopted a Trustee Deferral and Distribution Election, under which the participating Trustees earn deferred compensation.

39


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

Employee 401(k) Plan

The Company maintains a 401(k) plan for employees under which the Company currently matches 50% of a plan participant’s contribution up to 6% of the employee’s annual salary. A plan participant may contribute up to a maximum of 15% of their compensation, up to $19,500, for the year ending December 31, 2021.

14. Earnings (Loss) Per Common Share

Basic earnings per Common Share is computed by dividing net income (loss) attributable to Common Shareholders by the weighted-average Common Shares outstanding (Note 10). During the periods presented, the Company had unvested LTIP Units which provide for non-forfeitable rights to dividend equivalent payments. Accordingly, these unvested LTIP Units are considered participating securities and are included in the computation of basic earnings per Common Share pursuant to the two-class method.

Diluted earnings per Common Share reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including the effects of Restricted Share Units issued under the Company’s Share Incentive Plans (Note 13). The effect of such shares is excluded from the calculation of earnings per share when anti-dilutive as indicated in the table below.

The effect of the conversion of Common OP Units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable for Common Shares on a one-for-one basis. The income allocable to such units is allocated on this same basis and reflected as noncontrolling interests in the accompanying consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings per share.

 

 

 

 

Three Months Ended March 31,

 

(dollars in thousands)

 

2021

 

 

2020

 

Numerator:

 

 

 

 

 

 

 

 

Net income (loss) attributable to Acadia

 

$

5,162

 

 

$

(8,414

)

Less: net income attributable to participating securities

 

 

(156

)

 

 

 

Income (loss) from continuing operations net of income attributable to participating securities

 

$

5,006

 

 

$

(8,414

)

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

Weighted average shares for basic earnings per share

 

 

86,323,267

 

 

 

86,971,552

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

Employee unvested restricted shares

 

 

23,093

 

 

 

 

Denominator for diluted earnings per share

 

 

86,346,360

 

 

 

86,971,552

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings and basic loss per Common Share from continuing operations attributable to Acadia

 

$

0.06

 

 

$

(0.10

)

 

 

 

 

 

 

 

 

 

Anti-Dilutive Shares Excluded from Denominator:

 

 

 

 

 

 

 

 

Series A Preferred OP Units

 

 

188

 

 

 

188

 

Series A Preferred OP Units - Common share equivalent

 

 

25,067

 

 

 

25,067

 

 

 

 

 

 

 

 

 

 

Series C Preferred OP Units

 

 

126,593

 

 

 

126,593

 

Series C Preferred OP Units - Common share equivalent

 

 

439,556

 

 

 

439,556

 

Restricted shares

 

 

 

 

 

49,182

 

 

 


40


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

15. Subsequent Events 

Dispositions

On April 2, 2021, Fund IV entered into an agreement to sell its Airport Mall, Shaw’s North Windham, Shaw’s Waterville and Wells Plaza properties for a total of $40.4 million.

Debt Extensions

On April 6, 2021 Fund IV extended the maturity of the $23.1 million mortgage on its Lincoln Place property to March 13, 2022.

On April 27, 2021, Fund IV extended the maturity of the $18.5 million mortgage on an unconsolidated property, 650 Bald Hill Road, to June 27, 2021.

Fund V Extension

As of April 8, 2021, Fund V’s investment period was extended by one year to August 25, 2022.

Note Receivable

On April 20, 2021, the Company issued a note for $16.0 million to the partner of its MCB venture, collateralized by real estate.

41


 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

As of March 31, 2021, we own or have an ownership interest in 186 properties held through our Core Portfolio and Funds. Our Core Portfolio consists of those properties either 100% owned, or partially owned through joint venture interests, by the Operating Partnership or its subsidiaries, not including those properties owned through our Funds. These properties primarily consist of street and urban retail, and dense suburban shopping centers. Our Funds are investment vehicles through which our Operating Partnership and outside institutional investors invest in primarily opportunistic and value-add retail real estate. Currently, we have active investments in four Funds. A summary of our wholly-owned and partially-owned retail properties and their physical occupancies (including tenants who may have been forced to close their businesses as a result of the COVID-19 Pandemic, as discussed under “Significant Developments” below) at March 31, 2021 is as follows:

 

 

 

Number of Properties

 

 

Operating Properties

 

 

 

Development or

Redevelopment

 

 

Operating

 

 

GLA

 

 

Occupancy

 

Core Portfolio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chicago Metro

 

 

 

 

 

39

 

 

 

741,365

 

 

 

86.6

%

New York Metro

 

 

 

 

 

27

 

 

 

346,481

 

 

 

84.5

%

Los Angeles Metro

 

 

 

 

 

1

 

 

 

14,000

 

 

 

100.0

%

San Francisco Metro

 

 

1

 

 

 

1

 

 

 

148,832

 

 

 

100.0

%

Washington DC Metro

 

 

1

 

 

 

28

 

 

 

322,595

 

 

 

69.7

%

Boston Metro

 

 

 

 

 

3

 

 

 

55,276

 

 

 

100.0

%

Suburban

 

 

3

 

 

 

26

 

 

 

3,914,497

 

 

 

89.7

%

Total Core Portfolio

 

 

5

 

 

 

125

 

 

 

5,543,046

 

 

 

88.2

%

Acadia Share of Total Core Portfolio

 

 

5

 

 

 

125

 

 

 

5,173,753

 

 

 

89.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund Portfolio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund II

 

 

 

 

 

1

 

 

 

469,518

 

 

 

42.6

%

Fund III

 

 

1

 

 

 

3

 

 

 

135,382

 

 

 

81.7

%

Fund IV

 

 

2

 

 

 

35

 

 

 

2,329,497

 

 

 

91.8

%

Fund V

 

 

 

 

 

14

 

 

 

4,367,622

 

 

 

86.4

%

Total Fund Portfolio

 

 

3

 

 

 

53

 

 

 

7,302,019

 

 

 

85.2

%

Acadia Share of Total Fund Portfolio

 

 

3

 

 

 

53

 

 

 

1,526,724

 

 

 

84.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Core and Funds

 

 

8

 

 

 

178

 

 

 

12,845,065

 

 

 

86.5

%

Acadia Share of Total Core and Funds

 

 

8

 

 

 

178

 

 

 

6,700,477

 

 

 

88.4

%

 

The majority of our operating income is derived from rental revenues from operating properties, including expense recoveries from tenants, offset by operating and overhead expenses.

Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. Generally, we focus on the following fundamentals to achieve this objective:

 

Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas and create value through accretive development and re-tenanting activities coupled with the acquisition of high-quality assets that have the long-term potential to outperform the asset class as part of our Core asset recycling and acquisition initiative.

 

Generate additional external growth through an opportunistic yet disciplined acquisition program within our Funds. We target transactions with high inherent opportunity for the creation of additional value through:

 

o

value-add investments in street retail properties, located in established and “next generation” submarkets, with re-tenanting or repositioning opportunities,

 

o

opportunistic acquisitions of well-located real-estate anchored by distressed retailers, and

 

o

other opportunistic acquisitions which may include high-yield acquisitions and purchases of distressed debt.

42


 

 

Some of these investments historically have also included, and may in the future include, joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets.

 

Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth.

 

SIGNIFICANT DEVELOPMENTS DURING THE THREE MONTHS ENDED MARCH 31, 2021

Special Note Regarding the COVID-19 Pandemic

During the first quarter of 2020, the COVID-19 Pandemic had a negative impact on the business of the Company and that of its tenants. In order to protect citizens and slow the spread of COVID-19, a majority of state governments in the United States instituted restrictions on travel, implemented “shelter-in-place” or “stay-at-home” orders and social distancing practices, and mandated shutdowns of certain “non-essential” businesses for what was then an indeterminate period of time. As a result, a majority of the Company’s retail tenants were forced to temporarily close their businesses during all or a portion of the second quarter of 2020. While most tenants have since reopened, the tenant closures created concern regarding the Company’s ability to fully collect billed rents from non-operating tenants, many of which have already requested rent concessions from the Company. In addition, the COVID-19 Pandemic has had a significant adverse impact on economic and market conditions resulting in a decline in the Company’s share price, disruption of or lack of access to the capital markets and depressed real estate values, among others.

For the three months ended March 31, 2021 the Company incurred charges totaling $3.7 million at its pro rata share, as compared to $16.7 million for the prior year period, as a result of the COVID-19 Pandemic. These charges comprised credit loss, straight-line rent reserves, abatements and impairment charges (Note 11).

While the Company currently considers the disruptions associated with the COVID-19 Pandemic to be temporary, if such disruptions escalate, are protracted or have a more severe impact than anticipated, they may have a material adverse effect on the Company’s revenues, results of operations, financial condition, and liquidity in future periods.

Investments

During the three months ended March 31, 2021, we did not make any new investments within our Core or Fund portfolios.

Dispositions of Real Estate

During the three months ended March 31, 2021, we sold one Core Portfolio property for $16.4 million, repaid the related mortgage of $6.7 million and recognized a gain of $4.6 million (Note 2). In addition, Fund V sold two land parcels at its unconsolidated Family Center at Riverdale property (Note 4) for a total of $10.5 million, repaid $7.9 million of the related mortgage and recognized a gain of $2.9 million, of which the Company’s share was $0.6 million.

Financing Activity

During the three months ended March 31, 2021, we (Note 7):

 

extended two Fund V mortgages and one Fund IV mortgage aggregating $60.8 million of consolidated Fund debt

 

modified and extended the Fund IV bridge facility resulting in, among other changes, a six-month extension and a $10.0 million repayment; and

 

made repayments of mortgages underlying property dispositions as noted above.

Structured Financing Investments

During the three months ended March 31, 2021, the Company did not have any significant Structured Financing activity; however, two loans receivable remain in default (Note 3):

Equity Sales and Repurchases

The Company did not make any purchases or sales of its Common Shares during the three months ended March 31, 2021 (Note 10).

 


43


 

 

RESULTS OF OPERATIONS

See Note 12 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments.

Comparison of Results for the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

The results of operations by reportable segment for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 are summarized in the table below (in millions, totals may not add due to rounding):

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

 

 

 

March 31, 2021

 

 

March 31, 2020

 

 

Increase (Decrease)

 

 

 

Core

 

 

Funds

 

 

SF

 

 

Total

 

 

Core

 

 

Funds

 

 

SF

 

 

Total

 

 

Core

 

 

Funds

 

 

SF

 

 

Total

 

Revenues

 

$

42.3

 

 

$

27.0

 

 

$

 

 

$

69.4

 

 

$

39.9

 

 

$

31.5

 

 

$

 

 

$

71.4

 

 

$

2.4

 

 

$

(4.5

)

 

$

 

 

$

(2.0

)

Depreciation and amortization

 

 

(16.9

)

 

 

(14.5

)

 

 

 

 

 

(31.4

)

 

 

(17.1

)

 

 

(16.3

)

 

 

 

 

 

(33.4

)

 

 

(0.2

)

 

 

(1.8

)

 

 

 

 

 

(2.0

)

Property operating expenses, other

   operating and real estate taxes

 

 

(13.7

)

 

 

(11.3

)

 

 

 

 

 

(24.9

)

 

 

(11.8

)

 

 

(12.0

)

 

 

 

 

 

(23.8

)

 

 

1.9

 

 

 

(0.7

)

 

 

 

 

 

1.1

 

General and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

(9.0

)

 

 

 

 

 

 

 

 

 

 

 

(9.1

)

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

Impairment charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(51.5

)

 

 

 

 

 

(51.5

)

 

 

 

 

 

(51.5

)

 

 

 

 

 

(51.5

)

Gain on disposition of properties

 

 

4.6

 

 

 

 

 

 

 

 

 

4.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.6

 

 

 

 

 

 

 

 

 

4.6

 

Operating income (loss)

 

 

16.4

 

 

 

1.3

 

 

 

 

 

 

8.7

 

 

 

11.1

 

 

 

(48.3

)

 

 

 

 

 

(46.3

)

 

 

5.3

 

 

 

49.6

 

 

 

 

 

 

55.0

 

Interest and other income

 

 

 

 

 

 

 

 

1.7

 

 

 

1.7

 

 

 

 

 

 

 

 

 

2.9

 

 

 

2.9

 

 

 

 

 

 

 

 

 

(1.2

)

 

 

(1.2

)

Realized and unrealized holding losses on investments and other

 

 

 

 

 

6.5

 

 

 

 

 

 

6.5

 

 

 

 

 

 

 

 

 

(0.5

)

 

 

(0.5

)

 

 

 

 

 

6.5

 

 

 

(0.5

)

 

 

(7.0

)

Equity in (losses) earnings of unconsolidated affiliates

 

 

(1.1

)

 

 

3.4

 

 

 

 

 

 

2.3

 

 

 

1.6

 

 

 

(0.4

)

 

 

 

 

 

1.3

 

 

 

(2.7

)

 

 

3.8

 

 

 

 

 

 

1.0

 

Interest expense

 

 

(7.2

)

 

 

(9.9

)

 

 

 

 

 

(17.1

)

 

 

(8.3

)

 

 

(10.1

)

 

 

 

 

 

(18.3

)

 

 

(1.1

)

 

 

(0.2

)

 

 

 

 

 

(1.2

)

Income tax (provision) benefit

 

 

 

 

 

 

 

 

 

 

 

(0.2

)

 

 

 

 

 

 

 

 

 

 

 

1.0

 

 

 

 

 

 

 

 

 

 

 

 

(1.2

)

Net income (loss)

 

 

8.1

 

 

 

1.3

 

 

 

1.7

 

 

 

1.9

 

 

 

4.5

 

 

 

(58.8

)

 

 

2.4

 

 

 

(60.0

)

 

 

3.6

 

 

 

60.1

 

 

 

(0.7

)

 

 

61.9

 

Net loss attributable to noncontrolling interests

 

 

(0.6

)

 

 

3.9

 

 

 

 

 

 

3.3

 

 

 

1.2

 

 

 

50.4

 

 

 

 

 

 

51.6

 

 

 

(1.8

)

 

 

(46.5

)

 

 

 

 

 

(48.3

)

Net income (loss) attributable to Acadia

 

$

7.5

 

 

$

5.2

 

 

$

1.7

 

 

$

5.2

 

 

$

5.7

 

 

$

(8.4

)

 

$

2.4

 

 

$

(8.4

)

 

$

1.8

 

 

$

13.6

 

 

$

(0.7

)

 

$

13.6

 

 

Core Portfolio

The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio increased $1.8 million for the three months ended March 31, 2021 compared to the prior year period as a result of the changes further described below.

Revenues for our Core Portfolio increased $2.4 million for the three months ended March 31, 2021 compared to the prior year period primarily due to $2.7 million related to the consolidation of Town Center effective April 2020, a $1.7 million decrease in credit loss reserves in 2021 primarily related to the COVID-19 Pandemic (Note 11) and $0.9 million from accelerated of amortization of below-market lease adjustments for tenants that vacated. These increases were partially offset by decreases in revenues of $2.1 million for tenants that vacated during 2020 and $0.8 million from an increase in COVID-19 abatements in 2021.

Property operating expenses, other operating and real estate taxes for our Core Portfolio increased $1.9 million for the three months ended March 31, 2021 compared to the prior year period primarily due to additional ground rent for new operating leases that commenced after March 31, 2020 and the consolidation of Town Center effective April 2020.

Gain on disposition of properties of $4.6 million relates to the sale of 60 Orange Street in 2021 (Note 2).

Equity in (losses) earnings of unconsolidated affiliates for our Core Portfolio decreased $2.7 million for the three months ended March 31, 2021 compared to the prior year period, primarily due to $1.4 million from the consolidation of Town Center in 2020 as well as a $1.3 million increase in credit loss reserves at unconsolidated properties related to the COVID-19 Pandemic (Note 11).

Interest expense for our Core Portfolio decreased $1.1 million for the three months ended March 31, 2021 compared to the prior year period primarily due to the reclassification of a finance lease to an operating lease in 2020 (Note 11).

Net loss attributable to noncontrolling interests for our Core Portfolio decreased $1.8 million for the three months ended March 31, 2021 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above.

44


 

Funds

The results of operations for our Funds segment are depicted in the table above under the headings labeled “Funds.” Segment net income attributable to Acadia for the Funds increased $13.6 million for the three months ended March 31, 2021 compared to the prior year period as a result of the changes described below.

Revenues for the Funds decreased $4.5 million for the three months ended March 31, 2021 compared to the prior year period primarily due to (i) a $1.4 million decrease due to tenants who vacated during 2020; (ii) a $1.3 million increase in credit loss reserves in 2021 primarily related to the COVID-19 Pandemic (Note 11); (iii) $1.2 million from the temporary closure of the Market Hall at City Point during the COVID-19 Pandemic (iv) $0.8 million from an increase in COVID-19 abatements; and (v) $0.5 million from Fund property dispositions. These decreases were partially offset by $1.0 million of termination income recognized in 2021.

Depreciation and amortization for the Funds decreased $1.8 million for the three months ended March 31, 2021 compared to the prior year period primarily due to the write off of costs associated with tenants that vacated during 2020.

Impairment charges of $51.5 million in 2020 for the Funds relates to $33.8 million for 654 Broadway and Cortlandt Crossing in Fund III and $17.7 million for 801 Madison and 146 Geary in Fund IV (Note 8).

 

Realized and unrealized holding losses on investments and other includes a $6.1 million mark-to-market adjustment on the Investment in Albertsons (Note 4) during the three months ended March 31, 2021.

Equity in earnings of unconsolidated affiliates for the Funds increased $3.8 million for the three months ended March 31, 2021 compared to the prior year period primarily due to the gain on sale related to two land parcels at Riverdale Family Center in Fund V (Note 2).

Net loss attributable to noncontrolling interests for the Funds decreased $46.5 million for the three months ended March 31, 2021 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above. Net loss attributable to noncontrolling interests in the Funds includes asset management fees earned by the Company of $3.1 million and $4.3 million for the three months ended March 31, 2021 and 2020, respectively.

Structured Financing

The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” Interest income for the Structured Financing portfolio decreased $1.2 million for the three months ended March 31, 2021 compared to the prior year period primarily due to the conversion of the Brandywine Note to equity in 2020 (Note 3).

Unallocated

The Company does not allocate general and administrative expense and income taxes to its reportable segments. These unallocated amounts are depicted in the table above under the headings labeled “Total.” Unallocated income tax benefit decreased $1.2 million for the three months ended March 31, 2021 compared to the prior year period due to the carry-back of net operating losses under Federal rules in 2020.

SUPPLEMENTAL FINANCIAL MEASURES

Net Property Operating Income

The following discussion of net property operating income (“NOI”) and rent spreads on new and renewal leases includes the activity from both our consolidated and our pro-rata share of unconsolidated properties within our Core Portfolio. Our Funds invest primarily in properties that typically require significant leasing and development. Given that the Funds are finite-life investment vehicles, these properties are sold following stabilization. For these reasons, we believe NOI and rent spreads are not meaningful measures for our Fund investments.

NOI represents property revenues less property expenses. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriate supplemental disclosures of portfolio operating performance due to their widespread acceptance and use within the REIT investor and analyst communities. NOI and rent spreads on new and renewal leases are presented to assist investors in analyzing our property performance, however, our method of calculating these may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

45


 

A reconciliation of consolidated operating income to net operating income - Core Portfolio follows (in thousands):

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

2021

 

 

 

 

2020

 

Consolidated operating income (loss) (a)

 

 

 

$

8,681

 

 

 

 

$

(46,343

)

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

 

 

8,996

 

 

 

 

 

9,070

 

Depreciation and amortization

 

 

 

 

31,390

 

 

 

 

 

33,377

 

Impairment charges

 

 

 

 

 

 

 

 

 

51,549

 

Straight-line rent reserves

 

 

 

 

817

 

 

 

 

 

2,967

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Above/below-market rent, straight-line rent and other adjustments

 

 

 

 

(5,284

)

 

 

 

 

(4,336

)

Gain on disposition of properties

 

 

 

 

(4,612

)

 

 

 

 

 

Consolidated NOI

 

 

 

 

39,988

 

 

 

 

 

46,284

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interest in consolidated NOI

 

 

 

 

(10,861

)

 

 

 

 

(14,298

)

Less: Operating Partnership's interest in Fund NOI included above

 

 

 

 

(2,618

)

 

 

 

 

(3,595

)

Add: Operating Partnership's share of unconsolidated joint ventures NOI

 

 

 

 

3,300

 

 

 

 

 

6,346

 

NOI - Core Portfolio

 

 

 

$

29,809

 

 

 

 

$

34,737

 

 

(a)

Does not include the Operating Partnership’s share of NOI from unconsolidated joint ventures within the Funds.

Same-Property NOI includes Core Portfolio properties that we owned for both the current and prior periods presented, but excludes those properties which we acquired, sold or expected to sell, and developed during these periods. The following table summarizes Same-Property NOI for our Core Portfolio (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Core Portfolio NOI

 

$

29,809

 

 

$

34,737

 

Less properties excluded from Same-Property NOI

 

 

(1,452

)

 

 

(1,581

)

Same-Property NOI

 

$

28,357

 

 

$

33,156

 

 

 

 

 

 

 

 

 

 

Percent change from prior year period

 

 

(14.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of Same-Property NOI:

 

 

 

 

 

 

 

 

Same-Property Revenues

 

$

41,388

 

 

$

45,729

 

Same-Property Operating Expenses

 

 

(13,031

)

 

 

(12,573

)

Same-Property NOI

 

$

28,357

 

 

$

33,156

 

 

46


 

 

Rent Spreads on Core Portfolio New and Renewal Leases

The following table summarizes rent spreads on both a cash basis and straight-line basis for new and renewal leases based on leases executed within our Core Portfolio for the three months ended March 31, 2021. Cash basis represents a comparison of rent most recently paid on the previous lease as compared to the initial rent paid on the new lease. Straight-line basis represents a comparison of rents as adjusted for contractual escalations, abated rent and lease incentives for the same comparable leases.

 

 

 

Three Months Ended March 31, 2021

 

Core Portfolio New and Renewal Leases

 

Cash Basis

 

 

Straight-

Line Basis

 

Number of new and renewal leases executed

 

 

11

 

 

 

11

 

GLA commencing

 

 

59,546

 

 

 

59,546

 

New base rent

 

$

27.01

 

 

$

30.63

 

Expiring base rent

 

$

26.70

 

 

$

24.77

 

Percent growth in base rent

 

 

1.1

%

 

 

23.7

%

Average cost per square foot (a)

 

$

15.29

 

 

$

15.29

 

Weighted average lease term (years)

 

 

9.2

 

 

 

9.2

 

 

(a)

The average cost per square foot includes tenant improvement costs, leasing commissions and tenant allowances.

47


 

 

Funds from Operations

We consider funds from operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO is presented to assist investors in analyzing our performance. It is helpful as it excludes 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 real estate. Our method of calculating FFO 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 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 our performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, we define FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Also consistent with NAREIT’s definition of FFO, the Company has elected to include gains and losses incidental to its main business (including those related to its RCP investments such as Albertsons) in FFO. A reconciliation of net income attributable to Acadia to FFO follows (dollars in thousands, except per share amounts):

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

2021

 

 

 

 

2020

 

Net income (loss) attributable to Acadia

 

 

 

$

5,162

 

 

 

 

$

(8,414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation of real estate and amortization of leasing costs (net of

   noncontrolling interests' share)

 

 

 

 

23,807

 

 

 

 

 

24,088

 

Impairment charges (net of noncontrolling interests' share)

 

 

 

 

 

 

 

 

 

12,400

 

Gain on disposition of properties (net of noncontrolling interests' share)

 

 

 

 

(5,096

)

 

 

 

 

 

Income (loss) attributable to Common OP Unit holders

 

 

 

 

347

 

 

 

 

 

(462

)

Distributions - Preferred OP Units

 

 

 

 

123

 

 

 

 

 

126

 

Funds from operations attributable to Common Shareholders and

   Common OP Unit holders

 

 

 

$

24,343

 

 

 

 

$

27,738

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations per Share - Diluted

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted-average shares outstanding, GAAP earnings

 

 

 

 

86,323,267

 

 

 

 

 

86,971,552

 

Weighted-average OP Units outstanding

 

 

 

 

5,119,639

 

 

 

 

 

5,189,995

 

Basic weighted-average shares outstanding, FFO

 

 

 

 

91,442,906

 

 

 

 

 

92,161,547

 

Assumed conversion of Preferred OP Units to Common Shares

 

 

 

 

464,623

 

 

 

 

 

464,623

 

Assumed conversion of LTIP units and Restricted Share Units to

   Common Shares

 

 

 

 

23,093

 

 

 

 

 

158,902

 

Diluted weighted-average number of Common Shares and Common

   OP Units outstanding, FFO

 

 

 

 

91,930,622

 

 

 

 

 

92,785,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Funds from operations, per Common Share and Common OP Unit

 

 

 

$

0.26

 

 

 

 

$

0.30

 

 

 


48


 

 

LIQUIDITY AND CAPITAL RESOURCES

Uses of Liquidity and Cash Requirements

Generally, our principal uses of liquidity are (i) distributions to our shareholders and OP unit holders, (ii) investments which include the funding of our capital committed to the Funds and property acquisitions and development/re-tenanting activities within our Core Portfolio, (iii) distributions to our Fund investors, (iv) debt service and loan repayments and (v) share repurchases.

Distributions

In order to qualify as a REIT for federal income tax purposes, we must distribute at least 90% of our taxable income to our shareholders. During the three months ended March 31, 2021, we paid dividends and distributions on our Preferred OP Units totaling $0.1 million. Beginning with the second quarter of 2020, the Board temporarily suspended distributions on its Common Shares and Common Units, which suspension continued through the fourth quarter of 2020. The Company reinstated quarterly distributions beginning in the first quarter of 2021 (Note 10).

Investments in Real Estate

During the three months ended March 31, 2021, we did not make any new investments within our Core or Fund portfolios.

Capital Commitments

During the three months ended March 31, 2021, we made capital contributions aggregating $3.6 million to our Funds. At March 31, 2021, our share of the remaining capital commitments to our Funds aggregated $76.3 million as follows:

 

$3.6 million to Fund II. During August 2020, a recallable distribution of $15.7 million was made by Mervyn’s II to its investors, of which our share is $4.5 million. During March 2020, Mervyn’s II recalled $3.0 million of the $15.7 million of which our share is $0.9 million.

 

$0.5 million to Fund III. Fund III was launched in May 2007 with total committed capital of $450.0 million, of which our original share was $89.6 million. During 2015, we acquired an additional interest, which had an original capital commitment of $20.9 million.

 

$11.3 million to Fund IV. Fund IV was launched in May 2012 with total committed capital of $530.0 million, of which our original share was $122.5 million.

 

$60.9 million to Fund V. Fund V was launched in August 2016 with total committed capital of $520.0 million, of which our initial share is $104.5 million.

Development Activities

During the three months ended March 31, 2021, capitalized costs associated with development activities totaled $1.8 million (Note 2). At March 31, 2021, we had a total of eight consolidated and one unconsolidated projects under development or redevelopment for which the estimated total cost to complete these projects through 2025 was $105.3 million to $132.9 million and our estimated share was approximately $57.0 million to $68.9 million. Substantially all remaining development and redevelopment costs are discretionary.

Debt

A summary of our consolidated debt, which includes the full amount of Fund related obligations and excludes our pro rata share of debt at our unconsolidated subsidiaries, is as follows (in thousands):

 

 

 

March 31,

 

 

 

 

December 31,

 

 

 

2021

 

 

 

 

2020

 

Total Debt - Fixed and Effectively Fixed Rate

 

$

1,102,250

 

 

 

 

$

1,143,152

 

Total Debt - Variable Rate

 

 

618,493

 

 

 

 

 

626,902

 

 

 

 

1,720,743

 

 

 

 

 

1,770,054

 

Net unamortized debt issuance costs

 

 

(6,210

)

 

 

 

 

(6,763

)

Unamortized premium

 

 

522

 

 

 

 

 

548

 

Total Indebtedness

 

$

1,715,055

 

 

 

 

$

1,763,839

 

 

49


 

 

As of March 31, 2021, our consolidated outstanding mortgage and notes payable aggregated $1,720.7 million, excluding unamortized premium of $0.5 million and net unamortized loan costs of $6.2 million, and were collateralized by 41 properties and related tenant leases. Stated interest rates on our outstanding indebtedness ranged from LIBOR + 1.25% to 5.89% with maturities that ranged from April 13, 2021 to April 15, 2035. Taking into consideration $948.3 million of notional principal under variable to fixed-rate swap agreements currently in effect, $1,102.3 million of the portfolio debt, or 64.1%, was fixed at a 3.74% weighted-average interest rate and $618.5 million, or 35.9% was floating at a 2.41% weighted average interest rate as of March 31, 2021. Our variable-rate debt includes $140.0 million of debt subject to interest rate caps.

 

Without regard to available extension options, there is $360.6 million of debt maturing in 2021 at a weighted-average interest rate of 2.84%; there is $5.2 million of scheduled principal amortization due in 2021; and our share of scheduled remaining 2021 principal payments and maturities on our unconsolidated debt was $16.5 million at March 31, 2021. In addition, $535.6 million of our total consolidated debt and $5.6 million of our pro-rata share of unconsolidated debt will come due in 2022. As it relates to the aforementioned maturing debt in 2021 and 2022, we have options to extend consolidated debt aggregating $260.5 million and $250.6 million, respectively; however, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options. For the remaining indebtedness, we may not have sufficient cash on hand to repay such indebtedness, and, therefore, we expect to refinance at least a portion of this indebtedness or select other alternatives based on market conditions as these loans mature; however, there can be no assurance that we will be able to obtain financing at acceptable terms.

At March 31, 2021, one Fund mortgage had not met certain of its financial covenants; however, this condition is expected to be remedied with a pending asset sale (Note 7).

Share Repurchase Program

We maintain a share repurchase program under which $122.6 million remains available as of March 31, 2021 (Note 10). We did not repurchase any shares under this program during the three months ended March 31, 2021.

Sources of Liquidity

Our primary sources of capital for funding our liquidity needs include (i) the issuance of both public equity and OP Units, (ii) the issuance of both secured and unsecured debt, (iii) unfunded capital commitments from noncontrolling interests within our Funds, (iv) future sales of existing properties, (v) repayments of structured financing investments, and (vi) cash on hand and future cash flow from operating activities. Our cash on hand in our consolidated subsidiaries at March 31, 2021 totaled $15.4 million. Our remaining sources of liquidity are described further below.

ATM Program

We have an ATM Program (Note 10) which provides us an efficient and low-cost vehicle for raising public equity to fund our capital needs. Through this program, we have been able to effectively “match-fund” the required equity for our Core Portfolio and Fund acquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time, we have issued and intend to continue to issue, equity in follow-on offerings separate from our ATM Program. Net proceeds raised through our ATM Program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions, and for general corporate purposes. During the three months ended March 31, 2021, and to date, the Company did not sell any shares under its ATM Program.

Fund Capital

During the three months ended March 31, 2021, Funds II and IV called for capital contributions of $3.0 million and $11.8 million, respectively, of which our aggregate share was $3.6 million. At March 31, 2021, unfunded capital commitments from noncontrolling interests within our Funds II, III, IV and V were $9.1 million, $1.4 million, $37.4 million and $242.0 million, respectively.

Asset Sales and Other Transactions

 

During the three months ended March 31, 2021, we sold one Core Portfolio property for $16.4 million, repaid the related mortgage of $6.7 million and recognized a gain of $4.6 million (Note 2). In addition, Fund V sold two land parcels at its unconsolidated Family Center at Riverdale property for a total of $10.5 million, repaid $7.9 million of the related mortgage and recognized a gain of $2.9 million, of which the Company’s share was $0.6 million (Note 4).

During the three months ended March 31, 2021 the Company had no Structured Financing redemptions. The Company has two loans aggregating $14.1 million including accrued interest that are maturing during the remainder of 2021. The Company also has two Structured Financing investments aggregating $31.6 million including accrued interest that previously matured and have not been repaid (Note 3).

50


 

 

Financing and Debt

As of March 31, 2021, we had $264.4 million of additional capacity under existing Core and Fund revolving debt facilities. In addition, at that date within our Core and Fund portfolios, we had 84 unleveraged consolidated properties with an aggregate carrying value of approximately $1.7 billion, although there can be no assurance that we would be able to obtain financing for these properties at favorable terms, if at all.

HISTORICAL CASH FLOW

The following table compares the historical cash flow for the three months ended March 31, 2021 with the cash flow for the three months ended March 31, 2020 (in millions, totals may not add due to rounding):

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

Variance

 

Net cash provided by operating activities

 

$

30.9

 

 

$

28.0

 

 

$

2.9

 

Net cash provided by (used in) investing activities

 

 

11.5

 

 

 

(90.7

)

 

 

102.2

 

Net cash (used in) provided by financing activities

 

 

(45.2

)

 

 

70.4

 

 

 

(115.6

)

(Decrease) increase in cash and restricted cash

 

$

(2.8

)

 

$

7.6

 

 

$

(10.4

)

 

Operating Activities

 

Our operating activities provided $2.9 million more cash during the three months ended March 31, 2021 as compared to the three months ended March 31, 2020, primarily due to an increase in cash receipts from tenants because of the COVID-19 Pandemic in 2020.

Investing Activities

During the three months ended March 31, 2021 as compared to the three months ended March 31, 2020, our investing activities provided $102.2 million more cash, primarily due to (i) $59.0 million less cash used to issue notes receivable, (ii) $18.9 million less cash used in acquisition and lease of properties, (ii) $15.7 million more cash received from the disposition of properties, and (iii) $8.2 million less cash used in development, construction and property improvement costs.

Financing Activities

Our financing activities used $115.6 million more cash during the three months ended March 31, 2021 as compared to the three months ended March 31, 2020, primarily from (i) $165.8 million less cash provided from net borrowings and (ii) $1.9 more cash distributed to noncontrolling interests. These uses of cash were partially offset by (i) $25.2 million less cash used in dividends paid to Common Shareholders, (ii) $22.4 million less cash used to repurchase Common Shares, and (iv) $4.0 million more cash provided from contributions from noncontrolling interests.

OFF-BALANCE SHEET ARRANGEMENTS

We have the following investments made through joint ventures for the purpose of investing in operating properties. We account for these investments using the equity method of accounting. As such, our financial statements reflect our investment and our share of income and loss from, but not the individual assets and liabilities, of these joint ventures.

51


 

See Note 4 in the Notes to Consolidated Financial Statements, for a discussion of our unconsolidated investments. The Operating Partnership’s pro-rata share of unconsolidated non-recourse debt related to those investments is as follows (dollars in millions):

 

 

 

Operating Partnership

 

 

March 31, 2021

Investment

 

Ownership

Percentage

 

 

Pro-rata Share of

Mortgage Debt

 

 

Effective Interest Rate (a)

 

 

Maturity Date

650 Bald Hill Road

 

 

20.8

%

 

$

3.1

 

 

 

2.77

%

 

Apr 2021

Eden Square

 

 

22.8

%

 

 

5.4

 

 

 

2.27

%

 

Dec 2021

Promenade at Manassas (b)

 

 

22.8

%

 

 

6.3

 

 

 

4.57

%

 

Dec 2021

3104 M Street

 

 

20.0

%

 

 

0.9

 

 

 

3.75

%

 

Dec 2021

Family Center at Riverdale (b)

 

 

18.0

%

 

 

4.4

 

 

 

3.68

%

 

May 2022

Gotham Plaza

 

 

49.0

%

 

 

9.2

 

 

 

5.09

%

 

Jun 2023

Renaissance Portfolio

 

 

20.0

%

 

 

32.0

 

 

 

3.81

%

 

Aug 2023

Crossroads

 

 

49.0

%

 

 

31.0

 

 

 

3.94

%

 

Oct 2024

Tri-City Plaza (c)

 

 

18.1

%

 

 

7.0

 

 

 

3.01

%

 

Oct 2024

Frederick Crossing (c)

 

 

18.1

%

 

 

4.4

 

 

 

3.26

%

 

Dec 2024

Frederick County Square (c)

 

 

18.1

%

 

 

3.5

 

 

 

4.00

%

 

Jan 2025

840 N. Michigan

 

 

88.4

%

 

 

65.0

 

 

 

4.36

%

 

Feb 2025

Georgetown Portfolio

 

 

50.0

%

 

 

7.8

 

 

 

4.72

%

 

Dec 2027

Total

 

 

 

 

 

$

180.0

 

 

 

 

 

 

 

 

 

 

 

(a)

Effective interest rates incorporate the effect of interest rate swaps and caps that were in effect at March 31, 2021, where applicable.

(b)

The debt has one available 12-month extension option.

(c)

The debt has two available 12-month extension options.

CRITICAL ACCOUNTING POLICIES

Management’s discussion and analysis of financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe there have been no material changes to the items that we disclosed as our critical accounting policies under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2020 Annual Report on Form 10-K.

Recently Issued and Adopted Accounting Pronouncements

Reference is made to Note 1 for information about recently issued accounting pronouncements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Information as of March 31, 2021

Our primary market risk exposure is to changes in interest rates related to our mortgage and other debt. See Note 7 in the Notes to Consolidated Financial Statements, for certain quantitative details related to our mortgage and other debt.

Currently, we manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap and cap agreements. As of March 31, 2021, we had total mortgage and other notes payable of $1,720.7 million, excluding the unamortized premium of $0.5 million and net unamortized debt issuance costs of $6.2 million, of which $1,102.3 million, or 64.1% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $618.5 million, or 35.9%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of March 31, 2021, we were party to 37 interest rate swaps and four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $948.3 million and $140.0 million of LIBOR-based variable-rate debt, respectively.

52


 

The following table sets forth information as of March 31, 2021 concerning our long-term debt obligations, including principal cash flows by scheduled maturity (without regard to available extension options) and weighted average effective interest rates of maturing amounts (dollars in millions):

Core Consolidated Mortgage and Other Debt

 

Year

 

Scheduled

Amortization

 

 

Maturities

 

 

Total

 

 

Weighted-Average

Interest Rate

 

2021 (Remainder)

 

$

2.3

 

 

$

30.0

 

 

$

32.3

 

 

 

3.3

%

2022

 

 

3.3

 

 

 

105.4

 

 

 

108.7

 

 

 

3.5

%

2023

 

 

2.9

 

 

 

361.7

 

 

 

364.6

 

 

 

3.5

%

2024

 

 

2.7

 

 

 

7.4

 

 

 

10.1

 

 

 

4.7

%

2025

 

 

2.8

 

 

 

60.0

 

 

 

62.8

 

 

 

4.0

%

Thereafter

 

 

10.3

 

 

 

117.4

 

 

 

127.7

 

 

 

4.2

%

 

 

$

24.3

 

 

$

681.9

 

 

$

706.2

 

 

 

 

 

 

Fund Consolidated Mortgage and Other Debt

 

Year

 

Scheduled

Amortization

 

 

Maturities

 

 

Total

 

 

Weighted-Average

Interest Rate

 

2021 (Remainder)

 

$

2.9

 

 

$

330.6

 

 

$

333.5

 

 

 

3.1

%

2022

 

 

3.2

 

 

 

423.7

 

 

 

426.9

 

 

 

4.2

%

2023

 

 

3.6

 

 

 

40.9

 

 

 

44.5

 

 

 

4.0

%

2024

 

 

2.6

 

 

 

199.4

 

 

 

202.0

 

 

 

3.2

%

2025

 

 

0.2

 

 

 

2.6

 

 

 

2.8

 

 

 

3.4

%

Thereafter

 

 

0.1

 

 

 

4.7

 

 

 

4.8

 

 

 

3.4

%

 

 

$

12.6

 

 

$

1,001.9

 

 

$

1,014.5

 

 

 

 

 

 

Mortgage Debt in Unconsolidated Partnerships (at our Pro-Rata Share)

 

Year

 

Scheduled

Amortization

 

 

Maturities

 

 

Total

 

 

Weighted-Average

Interest Rate

 

2021 (Remainder)

 

$

1.0

 

 

$

15.5

 

 

$

16.5

 

 

 

3.4

%

2022

 

 

1.2

 

 

 

4.4

 

 

 

5.6

 

 

 

3.7

%

2023

 

 

1.2

 

 

 

40.6

 

 

 

41.8

 

 

 

4.1

%

2024

 

 

0.9

 

 

 

39.7

 

 

 

40.6

 

 

 

3.7

%

2025

 

 

0.3

 

 

 

68.5

 

 

 

68.8

 

 

 

4.3

%

Thereafter

 

 

0.5

 

 

 

6.2

 

 

 

6.7

 

 

 

4.7

%

 

 

$

5.1

 

 

$

174.9

 

 

$

180.0

 

 

 

 

 

 

Without regard to available extension options, in 2021, $365.8 million of our total consolidated debt and $16.5 million of our pro-rata share of unconsolidated outstanding debt will become due. In addition, $535.6 million of our total consolidated debt and $5.6 million of our pro-rata share of unconsolidated debt will become due in 2022. As it relates to the aforementioned maturing debt in 2021 and 2022, we have options to extend consolidated debt aggregating $260.5 million and $250.6 million, respectively; however, there can be no assurance that the Company will be able successfully execute any or all of its available extension options. As we intend on refinancing some or all of such debt at the then-existing market interest rates, which may be greater than the current interest rates, our interest expense would increase by approximately $9.2 million annually if the interest rate on the refinanced debt increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $3.2 million. Interest expense on our variable-rate debt of $618.5 million, net of variable to fixed-rate swap agreements currently in effect, as of March 31, 2021, would increase $6.2 million if LIBOR increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $1.7 million. We may seek additional variable-rate financing if and when pricing and other commercial and financial terms warrant. As such, we would consider hedging against the interest rate risk related to such additional variable-rate debt through interest rate swaps and protection agreements, or other means.

53


 

Based on our outstanding debt balances as of March 31, 2021, the fair value of our total consolidated outstanding debt would decrease by approximately $8.2 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding debt would increase by approximately $21.7 million.

As of March 31, 2021, and December 31, 2020, we had consolidated notes receivable of $101.4 million and $101.5 million, respectively. We determined the estimated fair value of our notes receivable by discounting future cash receipts utilizing a discount rate equivalent to the rate at which similar notes receivable would be originated under conditions then existing.

Based on our outstanding notes receivable balances as of March 31, 2021, the fair value of our total outstanding notes receivable would decrease by approximately $1.4 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding notes receivable would increase by approximately $1.5 million.

Summarized Information as of December 31, 2020

As of December 31, 2020, we had total mortgage and other notes payable of $1,770.1 million, excluding the unamortized premium of $0.5 million and unamortized debt issuance costs of $6.8 million, of which $1,143.2 million, or 64.6% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $626.9 million, or 35.4%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of December 31, 2020, we were party to 39 interest rate swap and four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $988.6 million and $139.2 million of LIBOR-based variable-rate debt, respectively.

Interest expense on our variable-rate debt of $626.9 million as of December 31, 2020, would have increased $6.3 million if LIBOR increased by 100 basis points. Based on our outstanding debt balances as of December 31, 2020, the fair value of our total outstanding debt would have decreased by approximately $9.2 million if interest rates increased by 1%. Conversely, if interest rates decreased by 1%, the fair value of our total outstanding debt would have increased by approximately $26.7 million.

Changes in Market Risk Exposures from December 31, 2020 to March 31, 2021

Our interest rate risk exposure from December 31, 2020, to March 31, 2021, has decreased on an absolute basis, as the $626.9 million of variable-rate debt as of December 31, 2020, has decreased to $618.5 million as of March 31, 2021. As a percentage of our overall debt, our interest rate risk exposure has increased as our variable-rate debt accounted for 35.4% of our consolidated debt as of December 31, 2020 compared to 35.9% as of March 31, 2021.

ITEM 4.CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Exchange Act, is recorded, processed, summarized, and reported within the required time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls. Our chief executive officer and chief financial officer, after conducting an evaluation, together with members of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of March 31, 2021, at a reasonable level of assurance.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

 


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PART II OTHER INFORMATION

ITEM 1.

From time to time, we are a party to various legal proceedings, claims or regulatory inquiries and investigations arising out of, or incident to, our ordinary course of business. While we are unable to predict with certainty the outcome of any particular matter, management does not expect, when such matters are resolved, that our resulting exposure to loss contingencies, if any, will have a material adverse effect on our consolidated financial position.

ITEM 1A.

RISK FACTORS.

Except to the extent additional factual information disclosed elsewhere in this Report relates to such risk factors (including, without limitation, the matters discussed in Part I, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes to the risk factors disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4.

MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.

OTHER INFORMATION.

Not applicable.

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ITEM 6.

EXHIBITS.

The following is an index to all exhibits including (i) those filed with this Quarterly Report on Form 10-Q and (ii) those incorporated by reference herein:

 

Exhibit No.

 

Description

 

Method of Filing

 

 

 

 

 

31.1

 

Certification of Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

 

 

 

 

 

 

 

31.2

 

Certification of Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

 

 

 

 

 

32.1

 

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

 

 

 

 

 

32.2

 

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

 

 

 

 

 

101.INS

 

XBRL Instance Document the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

 

Filed herewith

 

 

 

 

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

 

Filed herewith

 

 

 

 

 

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Document

 

Filed herewith

 

 

 

 

 

101.DEF

 

Inline XBRL Taxonomy Extension Definitions Document

 

Filed herewith

 

 

 

 

 

101.LAB

 

Inline XBRL Taxonomy Extension Labels Document

 

Filed herewith

 

 

 

 

 

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Document

 

Filed herewith

 

 

 

 

 

104

 

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

Filed herewith

 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

 

 

ACADIA REALTY TRUST

 

 

(Registrant)

 

 

 

By:

 

/s/ Kenneth F. Bernstein

 

 

Kenneth F. Bernstein

 

 

Chief Executive Officer,

 

 

President and Trustee

 

 

 

By:

 

/s/ John Gottfried

 

 

John Gottfried

 

 

Senior Vice President and

 

 

Chief Financial Officer

 

 

 

By:

 

/s/ Richard Hartmann

 

 

Richard Hartmann

 

 

Senior Vice President and

 

 

Chief Accounting Officer

 

Dated: April 29, 2021

 

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