Real Estate

6 Months Ended

Jun. 30, 2022

Acquisition And Disposition Of Properties And Discontinued Operations [Abstract]

2. Real Estate

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


	June 30,			December 31,
	2022			2021

Land	$	845,022		$	739,641
Buildings and improvements		3,043,234			2,892,051
Tenant improvements		206,285			199,925
Construction in progress		12,494			11,131
Right-of-use assets - finance leases (Note 11)		25,086			25,086
Total		4,132,121			3,867,834
Less: Accumulated depreciation and amortization		(690,945	)		(648,461	)
Operating real estate, net		3,441,176			3,219,373
Real estate under development		203,036			203,773
Net investments in real estate	$	3,644,212		$	3,423,146

Acquisitions and Foreclosure

During the six months ended June 30, 2022 and the year ended December 31, 2021, the Company acquired (through purchase, investment or foreclosure) the following consolidated retail properties and other real estate investments (dollars in thousands):


Property and Location	Percent Acquired	Date of Acquisition	Purchase Price
2022 Acquisitions and Foreclosure
Core
121 Spring Street - New York, NY	100%	Jan 12, 2022	$	39,637
Williamsburg Collection - Brooklyn, NY (a)	(a)	Feb 18, 2022		97,750
8833 Beverly Boulevard - West Hollywood, CA	100%	Mar 2, 2022		24,117
Henderson Avenue Portfolio - Dallas, TX (b)	100%	Apr 18, 2022		85,192
Subtotal Core				246,696

Fund III
640 Broadway - New York, NY (Foreclosure) (c)	100%	Jan 26, 2022		59,207
Subtotal Fund III				59,207
Total 2022 Acquisitions and Foreclosure			$	305,903

2021 Acquisitions
Core
14th Street Portfolio - Washington, DC	100%	Dec 23, 2021	$	26,320
Subtotal Core				26,320

Fund V
Canton Marketplace - Canton, GA	100%	Aug 20, 2021		50,954
Monroe Marketplace - Selinsgrove, PA	100%	Sept 9, 2021		44,796
Monroe Marketplace (Parcel) - Selinsgrove, PA	100%	Nov 12, 2021		1,029
Midstate - East Brunswick, NJ	100%	Dec 14, 2021		71,867
Subtotal Fund V				168,646
Total 2021 Acquisitions			$	194,966

The Williamsburg Collection entity is a variable interest entity and the Company consolidates the entity because it is the entity's primary beneficiary. The Company invested $2.8 million in its 49.99% equity interest and, through a separate lending subsidiary, provided a $64.1 million first mortgage loan and a $30.9 million mezzanine loan to subsidiaries of the venture (such equity and loans have been eliminated in consolidation). Pursuant to the entity’s operating agreement, the venture partner has a one-time right to put its 50.01% interest in the entity (the "Williamsburg NCI", which is further described in Note 8) to the Company for fair value at a future date. Given the preferred rate of return of the Company embedded in its equity interests and the accruing debt senior to the equity, the Company did not attribute any initial redemption

value to the Williamsburg NCI and recognized a bargain purchase gain of $1.2 million, which is included in Realized and unrealized holding (losses) gains on investments and other in the consolidated statements of operations.

The Henderson Avenue Portfolio comprises 14 operating retail assets, one residential building and two development and redevelopment sites.

The entity was previously accounted for as an equity method investment until an affiliate of Fund III acquired the venture partner's interest in a foreclosure action. Fund III now indirectly owns 100% of the entity and consolidates it (Note 4).

For the six months ended June 30, 2022 and the year ended December 31, 2021, the Company capitalized $1.2 million and $3.6 million of acquisition costs in connection with the 2022 Acquisitions and Foreclosure and the 2021 Acquisitions, respectively. In addition, during the six months ended June 30, 2022, the Company expensed $2.0 million of acquisition costs (including a $1.5 million acquisition fee paid to an affiliate of a joint venture partner). Acquisition costs that were expensed are included in General and administrative expenses in the consolidated statements of operations. During the six months ended June 30, 2022, the Company assumed a $36.0 million mortgage with the consolidation of 640 Broadway and during the year ended December 31, 2021, the Company assumed a $31.8 million mortgage with the acquisition of Canton Marketplace (Note 7).

Purchase Price Allocations

The purchase prices for the 2022 Acquisitions and Foreclosure and 2021 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):


	Six Months Ended June 30,			Year Ended December 31,
	2022			2021
Net Assets Acquired
Land	$	120,037		$	37,290
Buildings and improvements		169,075			134,065
Acquisition-related intangible assets (Note 6)		28,615			39,953
Accounts receivable, prepaids and other assets		4,077			—
Accounts payable and other liabilities		(661	)		—
Acquisition-related intangible liabilities (Note 6)		(14,077	)		(16,342	)
Net assets acquired	$	307,066		$	194,966

Consideration
Cash	$	242,633		$	161,846
Carrying value of note receivable exchanged in foreclosure (Note 3)		5,416			—
Existing interest in previously unconsolidated investment (Note 4)		17,822			—
Debt assumed		35,970			31,801
Liabilities assumed		4,062			1,319
Total consideration		305,903			194,966
Gain on bargain purchase		1,163			—
	$	307,066		$	194,966

Dispositions

During the six months ended June 30, 2022 and the year ended December 31, 2021, 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
2022 Dispositions
NE Grocer Portfolio (Selected Assets) - Pennsylvania	Fund IV	Jan 26, 2022 Mar 4, 2022	$	45,350	$	13,784
New Towne (Parcel) - Canton, MI	Fund V	Feb 1, 2022		2,231		1,776
Cortlandt Crossing - Westchester County, New York	Fund III	Feb 9, 2022		65,533		13,255
Lincoln Place - Fairview Heights, IL	Fund IV	May 25, 2022		40,670		12,216
Total 2022 Dispositions			$	153,784	$	41,031

2021 Dispositions
60 Orange St - Bloomfield, NJ	Core	Jan 29, 2021	$	16,400	$	4,612
654 Broadway - New York, NY	Fund III	May 19, 2021		10,000		111
NE Grocer Portfolio (Selected Assets) - Maine	Fund IV	Jun 18, 2021		39,925		5,064
Total 2021 Dispositions (a)			$	66,325	$	9,787

Does not include the gain on lease termination of $0.7 million related to the Fund IV lease at 110 University Place (Note 11).

The aggregate rental revenue, expenses and pre-tax income reported within continuing operations for the aforementioned consolidated properties that were sold as well as the lease that was terminated (Note 11) during the three and six months ended June 30, 2022 and 2021 were as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenues	$	501		$	4,781		$	2,428		$	9,763
Expenses		(636	)		(4,765	)		(1,917	)		(9,516	)
Gain on disposition of properties		12,216			5,909			41,031			10,521
Net (income) loss attributable to noncontrolling interests		(9,290	)		(4,556	)		(31,801	)		(4,741	)
Net income attributable to Acadia	$	2,791		$	1,369		$	9,741		$	6,027

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, 2022				Six Months Ended June 30, 2022						June 30, 2022
	Number of Properties		Carrying Value		Transfers In		Capitalized Costs		Transfers Out		Number of Properties		Carrying Value
Core		—	$	42,517	$	9,610	$	986	$	—		2	$	53,113
Fund II		—		35,125		—		845		—		—		35,970
Fund III		1		24,296		—		602		—		1		24,898
Fund IV (a)		1		101,835		—		71		12,851		1		89,055
Total		2	$	203,773	$	9,610	$	2,504	$	12,851		4	$	203,036

Transfers out include $12.9 million related to a portion of one Fund IV property that was transferred out of development.


	January 1, 2021				Year Ended December 31, 2021						December 31, 2021
	Number of Properties		Carrying Value		Transfers In		Capitalized Costs		Transfers Out		Number of Properties		Carrying Value

Core		—	$	63,875	$	—	$	1,855	$	23,213		—	$	42,517
Fund II		—		74,657		—		3,921		43,453		—		35,125
Fund III		1		23,104		—		1,192		—		1		24,296
Fund IV (a)		2		85,565		29,758		2,026		15,514		1		101,835
Total		3	$	247,201	$	29,758	$	8,994	$	82,180		2	$	203,773

Transfers in include $29.8 million related to the remaining portion of one Fund IV property that was placed in development.

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. At June 30, 2022, consolidated development projects included: a portion of City Center and the Henderson Portfolio for the Core Portfolio, portions of City Point Phase I and II at Fund II, Broad Hollow Commons at Fund III, and a portion of 717 N. Michigan Avenue at Fund IV. In addition, at June 30, 2022, the Company had one Core unconsolidated development project, 1238 Wisconsin Avenue.

During the six months ended June 30, 2022, the Company:

•

placed a portion of one Fund IV property, 717 N. Michigan Avenue, into service; and

•

placed two Core properties in the Henderson Portfolio into development.

At December 31, 2021, consolidated development projects included: a portion of City Center for Core, portions of City Point Phase I and II at Fund II, Broad Hollow Commons at Fund III and 717 N. Michigan Avenue at Fund IV. In addition, at December 31, 2021, the Company had one Core unconsolidated development project, 1238 Wisconsin Avenue. During the year ended December 31, 2021, the Company:

•

placed portions of one Core project, City Center, into service in the first and second quarter of 2021;

•

disposed of building improvements related to one Fund IV project, 110 University Place, in connection with a lease termination in the second quarter of 2021 (Note 11);

•

placed the remaining portion of one Fund IV property, 717 N. Michigan Avenue, into development in the fourth quarter of 2021; and

•

placed a portion of Fund II’s City Point Phase III into service in the fourth quarter of 2021.

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.