Real Estate

The Company's consolidated real estate is comprised of the following (in thousands):



	December 31,
	2016			2015
Land	$	693,252		$	514,120
Buildings and improvements	1,916,288			1,457,351
Tenant improvements	132,220			135,999
Construction in progress	19,789			19,239
Properties under capital lease	76,965			—
Total	2,838,514			2,126,709
Less: Accumulated depreciation	(287,066		)	(298,703		)
Operating real estate, net	2,551,448			1,828,006
Real estate under development at cost	543,486			609,574
Net investment in real estate	$	3,094,934		$	2,437,580

Acquisitions

During 2016 and 2015, the Company acquired the following consolidated retail properties (dollars in thousands):



Property	Percent Acquired	Date of Acquisition	Purchase Price		Debt Assumed
2016 Acquisitions
Core Portfolio:
991 Madison Avenue - New York, NY ^(a)	100%	Mar 26, 2016	$	76,628	$	—
165 Newbury Street - Boston, MA	100%	May 13, 2016	6,250		—
Concord & Milwaukee - Chicago, IL	100%	Jul 28, 2016	6,000		2,902
151 North State Street - Chicago, IL	100%	Aug 10, 2016	30,500		14,556
State & Washington - Chicago, IL	100%	Aug 22, 2016	70,250		25,650
North & Kingsbury - Chicago, IL	100%	Aug 29, 2016	34,000		13,409
Sullivan Center - Chicago, IL	100%	Aug 31, 2016	146,939		—
California & Armitage - Chicago, IL	100%	Sep 12, 2016	9,250		2,692
555 9th Street - San Francisco, CA	100%	Nov 2, 2016	139,775		60,000
Subtotal Core Portfolio			519,592		119,209

Fund IV:
Restaurants at Fort Point - Boston, MA	100%	Jan 14, 2016	11,500		—
1964 Union Street - San Francisco, CA	90%	Jan 28, 2016	2,250		1,463
Wake Forest Crossing - Wake Forest, NC	100%	Sep 27, 2016	36,600		—
Airport Mall - Bangor, ME	100%	Oct 28, 2016	10,250		—
Colonie Plaza - Albany, NY	100%	Oct 28, 2016	15,000		—
Dauphin Plaza - Harrisburg, PA	100%	Oct 28, 2016	16,000		—
JFK Plaza - Waterville, ME	100%	Oct 28, 2016	6,500		—
Mayfair Shopping Center - Philadelphia, PA	100%	Oct 28, 2016	16,600		—
Shaw's Plaza - Waterville, ME	100%	Oct 28, 2016	13,800		—
Wells Plaza - Wells, ME	100%	Oct 28, 2016	5,250		—
717 N Michigan - Chicago, IL	100%	Dec 1, 2016	103,500		—
Subtotal Fund IV			237,250		1,463
Total 2016 Acquisitions			$	756,842	$	120,672



Property	Percent Acquired	Date of Acquisition	Purchase Price		Debt Assumed
2015 Acquisitions
Core Portfolio:
City Center - San Francisco, CA	100%	Mar 13, 2015	$	155,000	$	—
163 Highland Avenue - Needham, MA	100%	Mar 26, 2015	24,000		9,765
Route 202 Shopping Center - Wilmington, DE	100%	Apr 1, 2015	5,643		—
Roosevelt Galleria - Chicago, IL	100%	Sep 11, 2015	19,600		—
Subtotal Core Portfolio			204,243		9,765

Fund II:
City Point Tower I - Brooklyn, NY ^(a)	95%		100,800		81,000

Fund IV:
1035 Third Avenue - New York, NY	100%	Jan 28, 2015	51,036		—
801 Madison Avenue - New York, NY	100%	Apr 1, 2015	33,000		—
650 Bald Hill Road - Warwick, RI ^(a)	90%	Sep 30, 2015	9,216		—
2208-2216 Fillmore Street - San Francisco, CA	90%	Oct 22, 2015	8,625		—
146 Geary Street - San Francisco, CA	100%	Nov 12, 2015	38,000		—
2207 Fillmore Street - San Francisco, CA	90%	Nov 19, 2015	2,800		1,120
1861 Union Street - San Francisco, CA	90%	Dec 2, 2015	3,500		—
Subtotal Fund IV			146,177		1,120
Total 2015 Acquisitions			$	451,220	$	91,885

__________


(a)	These acquisitions were accounted for as asset acquisitions.

All of the above acquisitions were deemed to be business combinations except 991 Madison Avenue, 1964 Union Street, City Point Tower I, and 650 Bald Hill Road. The Company expensed $5.5 million, $1.3 million and $4.8 million of acquisition costs for the years ended December 31, 2016, 2015 and 2014, respectively, related to the Core Portfolio; $0.2 million of acquisition costs for the year ended December 31, 2014 related to Fund III; and $2.7 million, $3.5 million and $2.7 million of acquisition costs for the years ended December 31, 2016, 2015 and 2014, respectively, related to Fund IV.

Purchase Price Allocations

With the exception of the asset acquisitions noted above, the above acquisitions have been accounted for as business combinations. The purchase prices for the business combinations were allocated to the acquired assets and assumed liabilities based on their estimated fair values at the dates of acquisition. The preliminary measurements of fair value reflected below are subject to change. The Company expects to finalize the valuations and complete the purchase price allocations within one year from the dates of acquisition. During 2016 and 2015, the Company acquired properties and recorded the preliminary allocation of the purchase price to the assets acquired based on provisional measurements of fair value. During 2016, the Company made certain measurement period adjustments related to its 2015 acquisitions.

The following table summarizes the allocation of the purchase price of properties acquired during 2016 and 2015 (in thousands):



	Year Ended December 31,
	2016			2015
	Purchase Price Allocation			Preliminary Purchase Price Allocation			Adjustments			Finalized Purchase Price Allocation
Net assets acquired:
Land	$	225,729		$	83,890		$	4,178		$	88,068
Buildings and improvements	458,525			258,926			(14,023		)	244,903
Other assets	3,481			—			—			—
Acquisition-related intangible assets (in Acquired lease intangibles, net)	63,606			—			22,660			22,660
Acquisition-related intangible liabilities (in Acquired lease intangibles, net)	(72,985		)	—			(12,094		)	(12,094		)
Above and below market debt assumed (included in Mortgages and other notes payable, net)	(119,601		)	(10,885		)	(721		)	(11,606		)
Net assets acquired	$	558,755		$	331,931		$	—		$	331,931



Consideration:
Cash	$	677,964		$	342,816
Debt assumed	(119,209		)	(10,885		)
Total Consideration	$	558,755		$	331,931

Dispositions and Discontinued Operations

During 2016 and 2015, the Company disposed of the following consolidated properties (in thousands):




	Owner	Date Sold	Sale Price		Gain on Sale
2016 Dispositions:
Cortlandt Town Center - 65% (Note 4)	Fund III	Jan 28, 2016	$	107,250	$	65,393
Heritage Shops	Fund III	Apr 26, 2016	46,500		16,572
Total 2016 Dispositions			$	153,750	$	81,965

2015 Dispositions:
Lincoln Park Centre	Fund III	Jan 15, 2015	$	64,000	$	27,143
Liberty Avenue	Fund II	May 6, 2015	24,000		11,957
City Point - Air Rights	Fund II	May 29, 2015	115,600		49,884
Kroger-Safeway	Fund I	Aug 31, 2015	278		79
Total 2015 Dispositions			$	203,878	$	89,063

The aggregate rental revenue, expenses and pre-tax income reported within continuing operations for the aforementioned consolidated properties that were sold during 2016 and 2015 were as follows (in thousands):



	Year Ended December 31,
	2016			2015			2014

Rental revenues	$	3,503		$	21,987		$	26,374
Expenses	(1,179		)	(16,246		)	(19,753		)
Gain on disposition of properties	81,965			89,063			—
Loss on extinguishment of debt	(15		)	(111		)	(181		)
Provision for income taxes	—			(2		)	(2		)
Income from continuing operations of disposed properties, net of income taxes	$	84,274		$	94,691		$	6,438
Amounts attributable to noncontrolling interests	$	(64,374	)	$	(76,277	)	$	—

In addition, during the year ended December 31, 2014, the Company reported one consolidated property sold within discontinued operations, comprised of a net gain on the disposition of properties of $1.2 million of which $1.0 million was attributable to noncontrolling interests.

Properties Held For Sale

At December 31, 2016, the Company had one property in Fund II classified as held-for-sale with net assets of $21.5 million and subject to a mortgage of $25.5 million, which will be repaid prior to the sale. The property held for sale had net income (loss) of $0.4 million, ($0.3 million) and $0.6 million for the years ended December 31, 2016, 2015 and 2014, respectively. At December 31, 2015 the Company had no properties classified as held for sale.

Pro Forma Financial Information (Unaudited)

The following unaudited pro forma operating data is presented for the year ended December 31, 2016, as if the acquisition of the properties acquired in 2016 were completed on January 1, 2015 and as if the acquisition of the properties acquired in 2015 were completed on January 1, 2014, including recognition of the related acquisition expenses of $8.2 million and $4.8 million, respectively. The unaudited supplemental pro forma operating data is not necessarily indicative of what the actual results of operations of the Company would have been, assuming the transactions had been completed as set forth above, nor do they purport to represent the Company's results of operations for future periods.



	Year Ended December 31,
	2016		2015		2014
Pro forma revenues	$	252,702	$	274,972	$	215,991
Pro forma income from continuing operations	$	141,612	$	150,498	$	145,398
Pro forma net income attributable to Acadia	$	79,680	$	67,788	$	67,888
Pro forma basic and diluted earnings per share	$	0.94	$	0.81	$	1.03

Real Estate Under Development and Construction in Progress

Real estate under development represents the Company's consolidated properties which have not yet been placed into service while undergoing substantial development or construction. At December 31, 2015, the Company had two properties in Fund II, two properties in Fund III and four properties in Fund IV aggregating $609.6 million under development. During 2016, the Company acquired two properties in Fund IV that were under development. Also during 2016, the Company placed a portion of its City Point property in Fund II aggregating $187.4 million into service and capitalized $98.4 million related to City Point and $22.9 million relating to its other projects. At December 31, 2016, the Company had one Core property, two properties in Fund II, three properties in Fund III and four properties in Fund IV classified as real estate under development with accumulated costs aggregating $543.5 million.

Construction in progress pertains to the Company's operating properties which have already been placed into service.