EX-99.1 2 a6377032ex99_1.htm EXHIBIT 99.1 a6377032ex99_1.htm
Exhibit 99.1
 
 
Acadia Realty Trust Reports Second Quarter 2010 Operating Results
 
NEW YORK--(BUSINESS WIRE)--July 27, 2010--Acadia Realty Trust (NYSE:AKR), today reported operating results for the quarter ended June 30, 2010. All per share amounts are on a fully diluted basis.
 
Second Quarter 2010 Highlights
 
EPS of $0.32; FFO of $0.28 before non-cash gain of $0.15
 
 
·
Funds from operations (“FFO”) per share of $0.43 and Earnings per share (“EPS”) from continuing operations of $0.32 for second quarter 2010
 
Core Portfolio Performance Exceeds Expectations
 
 
·
Current occupancy of 93% increased 50 basis points over first quarter 2010
 
 
·
Same store net operating income (“NOI”) decreased 0.6% for second quarter 2010 compared to second quarter 2009
 
Guidance Increased on Improved Portfolio Performance and Non-Cash Gain
 
 
·
Forecasted 2010 same store NOI increased; revised range increased from -2% to -4%, to 0% to -2%
 
 
·
Earnings guidance range for 2010 increased $0.10 primarily from improved core portfolio performance and $0.15 from non-cash gain for a total increase of $0.25
 
 
·
Revised forecasted FFO per share range is now $1.20 to $1.25 per share and EPS range is $0.71 to $0.76
 
Strong Balance Sheet
 
 
·
Core portfolio debt, net of cash on hand (“Net Debt”) to EBIDTA ratio of 4.4x and Net Debt yield of 17%
 
 
·
Cash on hand and availability under current facilities of approximately $103 million at June 30, 2010
 
Executes on Opportunity in New York Urban Redevelopment Project
 
 
·
Completed the acquisition of an unaffiliated partner’s interest in City Point and started construction during the second quarter
 
 
 
 
Second Quarter and Six Months ended June 30, 2010 Operating Results
 
For the quarter ended June 30, 2010, FFO was $17.6 million, compared to $12.0 million for the quarter ended June 30, 2009. For the six months ended June 30, 2010, FFO was $27.8 million compared to $26.3 million for the six months ended June 30, 2009.
 
Earnings for the quarters and six months ended June 30, 2010 and 2009 were as follows:
 
   
Quarters ended June 30,
    
Six Months ended June 30,
   
2010
    
2009
    
Variance
    
2010
    
2009
    
Variance
FFO per share
  
$
0.43
    
$
0.30
    
$
0.13
    
$
0.68
    
$
0.71
    
$
(0.03
)
EPS from continuing
                                  
operations
  
$
0.32
    
$
0.18
    
$
0.14
    
$
0.45
    
$
0.45
    
$
--
  
EPS
  
$
0.32
    
$
0.18
    
$
0.14
    
$
0.45
    
$
0.48
    
$
(0.03
)
 
Following are the factors which contributed to the variance in EPS from continuing operations for the quarter and six months ended June 30, 2010 as compared to the corresponding periods in 2009:
 
   
Variance 2010 v. 2009
   
Quarter
  
Six months
2010 Non-cash gain on purchase
  
$0.15
  
$0.15
2009 Gain on extinguishment of convertible debt
  
(0.10)
  
(0.19)
2009 Reserve for mezzanine loan and development costs
  
0.06
  
0.06
2009 Income from forfeited contract deposit
  
--
  
(0.05)
Other items, net
  
0.03
  
0.03
Total
  
$0.14
  
$ --
 
Discontinued operations decreased $0.03 for the six months ended June 30, 2010 as compared to the same period in 2009 primarily as a result of a gain recognized on the sale of six Kroger Supermarket locations in the first quarter 2009.
 
 
 
Strong Balance Sheet with Available Capital
 
As of June 30, 2010, Acadia’s solid balance sheet was evidenced by the following:
 
Strong Liquidity
 
 
·
Total liquidity of $103 million, including $58 million of cash and $45 million available under existing lines of credit, excluding the cash and credit facilities of the Company’s opportunity funds (“Funds”)
 
 
·
$406 million of committed Fund III investor capital is unfunded as of June 30, 2010 of which $350 million of unallocated investor capital commitments is available for Fund III’s equity component in additional investments or to repay outstanding subscription line borrowings. Acadia’s pro-rata share of the $406 million of total unfunded capital is $81 million
 
Low Leverage
 
 
·
Debt yield (annualized net operating income divided by principal amount of debt) of 14% and Net Debt yield (annualized net operating income divided by principal amount of debt less cash on hand) of 17% on the core portfolio debt. Including the Company’s pro-rata share of Fund debt, a debt yield of 13% and a Net Debt yield of 15%
 
 
·
Core portfolio Net Debt to EBIDTA ratio of 4.4x. Including the Company’s pro-rata share of the Funds, a Net Debt to EBITDA ratio of 5.2x
 
 
·
Combined fixed-charge coverage ratio, including core portfolio and Funds, of 3.1 to 1 for the quarter ended June 30, 2010
 
Low Exposure to Interest Rate Variability
 
 
·
100% of the Company’s core portfolio debt is fixed rate at an average interest rate of 6.0%. Including the Company’s pro-rata share of the Fund debt, 87% of the Company’s debt is fixed rate at an average interest rate of 5.5%
 
Retail Portfolio Performance Exceeds Expectations
 
Portfolio Occupancy
 
At June 30, 2010, Acadia’s core portfolio occupancy was 93.0%. This represents an increase of 50 basis points from 92.5% occupancy at March 31, 2010 and a 40 basis point increase over year-end 2009 occupancy of 92.6%, which is at the high-end of management’s 2010 projected portfolio occupancy. Acadia’s combined portfolio occupancy, including its core portfolio and Funds, was 92.4% as of June 30, 2010, which represents an increase of 60 basis points from occupancy at March 31, 2010 and an increase of 50 basis points from year-end 2009.
 
 
 
Same Store NOI
 
For the quarter ended June 30, 2010, same store NOI decreased 0.6% compared to the quarter ended June 30, 2009. For the six months ended June 30, 2010, same store NOI decreased 0.9% from the six months ended June 30, 2009. As discussed in prior quarters, 2010 NOI continues to be impacted by the non-renewal of a Borders Bookstore lease at the Chestnut Hill (Philadelphia) property and the re-anchoring of the Marketplace at Absecon. Excluding the 2.7% reduction in total core portfolio NOI resulting from these two locations, same store NOI for second quarter 2010 would have increased 2.1% over second quarter 2009. As a result of the improved year-to-date performance of the core portfolio, the Company is increasing its expected full year 2010 same store NOI guidance range from -2% to -4%, to 0% to -2%.
 
Leasing Activity
 
During the second quarter of 2010, the Company realized an increase in average rents of 0.2% in its core portfolio on new and renewal leases totaling 88,000 square feet. Excluding the effect of the straight-lining of rents, the Company experienced an 11.7% decrease in average rents.
 
Acquires Remaining Interest in City Point Project
 
As previously disclosed in the Company’s Form 8-K filed with the SEC on July 12, 2010, Fund II together with P/A Associates and Washington Square Partners, acquired all of the unaffiliated joint venture partner’s interest in City Point during the second quarter for $9.2 million and the assumption of the partner’s share of the first mortgage debt totaling $19.6 million.
 
Construction has commenced on the first phase of City Point, a mixed-use project located in Downtown Brooklyn. The construction is being financed with a $20 million Recovery Zone Facility bond financing through the New York City Capital Resource Corporation.
 
The first phase of the project will be a four-story, retail building of approximately 50,000 square feet, located on the Fulton Mall, Brooklyn’s busiest shopping district. Ultimately the project is expected to aggregate approximately 1.5 million square feet of new construction, consisting of retail and commercial space and a mixture of affordable and market-rate housing.
 
As a result of this transaction, Fund II was required to report its entire investment in City Point at fair market value. Based on a June 30, 2010 third-party appraised value of $108 million and the Fund’s aggregate cost basis, including its basis before the acquisition of $45.4 million, Fund II reported a non-cash gain of approximately $33.8 million for the three months ended June 30, 2010. The Company’s share of this gain, net of the noncontrolling interests’ share, amounts to $6.3 million, or $0.15 per share.
 
 
 
 
Outlook - Earnings Guidance for 2010 Increased
 
Primarily as a result of stronger than anticipated core portfolio performance, reduced general and administrative expenses and the abovementioned non-cash gain, the Company has increased its 2010 earnings guidance range from that issued on April 27, 2010. Full-year 2010 EPS guidance has been increased by $0.25 at both the low and high ends resulting in an updated EPS guidance range of $0.71 to $0.76. Full-year 2010 FFO per share guidance has also been increased by $0.25 (inclusive of a $0.15 non-cash gain) resulting in an updated FFO per share guidance range of $1.20 to $1.25 compared to the previous guidance of $0.95 to $1.00. This revised guidance is before any potential contributions from new acquisitions, income from Acadia’s RCP investments or promote income from its opportunity funds. The following is a reconciliation of the calculation of the Company’s revised guidance for 2010 EPS and FFO per share:
 
       
Revised Guidance Range for 2010
    
           
Low
  
High
       
Diluted earnings per share
  
$
0.71
  
$
0.76
       
Depreciation of real estate and amortization of leasing costs:
        
       
Wholly owned and consolidated partnerships
    
0.44
    
0.44
       
Unconsolidated partnerships
    
0.04
    
0.04
       
Noncontrolling interest in Operating Partnership
    
0.01
    
0.01
       
Diluted FFO per share
  
$
1.20
  
$
1.25
 
Management Comments
 
“We are pleased with our second quarter results, which were driven by continued stronger than anticipated core portfolio performance” stated Kenneth F. Bernstein, President and CEO of Acadia Realty Trust. “We recognize that we are still in a fragile and volatile economic environment and therefore, remain focused on maintaining the strength of our portfolio and our balance sheet. Furthermore, we believe that our liquidity and available discretionary acquisition fund capital puts us in a strong position to execute on potential opportunities, both within our existing portfolio as well as for new investments as they arise.”
 
Investor Conference Call
 
Management will conduct a conference call on Wednesday, July 28, 2010 at 12:00 PM ET to review the Company's earnings and operating results. The live conference call can be accessed by dialing 866-831-6272 (internationally 617-213-8859). The pass code is “Acadia”. The call will also be webcast and can be accessed in a listen-only mode at Acadia's web site at www.acadiarealty.com. If you are unable to participate during the live webcast, the call will be archived and available on Acadia's website. Alternatively, to access the replay by phone, dial 888-286-8010 (internationally 617-801-6888), and the passcode will be 37205528. The phone replay will be available through Wednesday, August 4, 2010.
 
Acadia Realty Trust, headquartered in White Plains, NY, is a fully integrated, self-managed and self-administered equity REIT focused primarily on the ownership, acquisition, redevelopment and management of retail and mixed-use properties, including neighborhood and community shopping centers located in dense urban and suburban markets in major metropolitan areas.
 
 
 
 
 
Certain matters in this press release may constitute forward-looking statements within the meaning of federal securities law and as such may involve known and unknown risk, uncertainties and other factors that may cause the actual results, performances or achievements of Acadia to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. These forward-looking statements include statements regarding Acadia’s future financial results and its ability to capitalize on potential opportunities arising from continued economic uncertainty. Factors that could cause the Company’s forward-looking statements to differ from its future results include, but are not limited to, those discussed under the headings “Risk Factors” and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s most recent annual report on Form 10-K filed with the SEC on March 1, 2010 (“Form 10-K”) and other periodic reports filed with the SEC, including risks related to: (i) the current global financial environment and its effect on retail tenants; (ii) the Company’s reliance on revenues derived from major tenants; (iii) the Company’s limited control over joint venture investments; (iv) the Company’s partnership structure; (v) real estate and the geographic concentration of our properties; (vi) market interest rates; (vii) leverage; (viii) liability for environmental matters; (ix) the Company’s growth strategy; (x) the Company’s status as a REIT; (xi) uninsured losses and (xii) the loss of key executives. Copies of the Form 10-K and the other periodic reports Acadia files with the SEC are available on the Company’s website at www.acadiarealty.com. Any forward-looking statements in this press release speak only as of the date hereof. Acadia 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 Acadia's expectations with regard thereto or change in events, conditions or circumstances on which any such statement is based.
 
 
 
 
 
 
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights 1
For the Quarters and Six Months ended June 30, 2010 and 2009
(dollars in thousands, except per share data)
 
   
For the Quarters ended
  
For the Six Months ended
   
June 30,
  
June 30,
Revenues
  
2010
  
2009
  
2010
  
2009
                 
Minimum rents
  
$
25,702
    
$
23,797
    
$
51,434
    
$
45,046
  
Percentage rents
    
124
      
128
      
259
      
329
  
Mortgage interest income
    
5,238
      
4,933
      
10,231
      
9,959
  
Expense reimbursements
    
4,870
      
4,921
      
10,900
      
10,383
  
Lease termination income
    
59
      
21
      
65
      
226
  
Other property income
    
503
      
887
      
934
      
1,189
  
Management fee income
    
436
      
444
      
836
      
1,200
  
Other
    
--
      
--
      
--
      
1,700
  
Total revenues
    
36,932
      
35,131
      
74,659
      
70,032
  
Operating expenses
                
Property operating
    
6,571
      
7,240
      
14,416
      
14,546
  
Real estate taxes
    
4,346
      
4,088
      
8,873
      
7,753
  
General and administrative
    
5,416
      
5,208
      
10,535
      
11,349
  
Depreciation and amortization
    
7,864
      
8,456
      
18,205
      
17,036
  
Abandonment of project costs
    
--
      
2,415
      
3
      
2,431
  
Reserve for notes receivable
    
--
      
1,734
      
--
      
1,734
  
Total operating expenses
    
24,197
      
29,141
      
52,032
      
54,849
  
Operating income
    
12,735
      
5,990
      
22,627
      
15,183
  
Equity in earnings (losses) of unconsolidated affiliates
    
80
      
49
      
467
      
(3,258
)
Other interest income
    
153
      
95
      
287
      
212
  
Interest expense and other finance costs
    
(8,631
)
    
(7,631
)
    
(17,098
)
    
(15,452
)
Gain from bargain purchase
    
33,805
      
--
      
33,805
      
--
  
Gain on extinguishment of debt
    
--
      
3,895
      
--
      
7,045
  
Income from continuing operations before income taxes
    
38,142
      
2,398
      
40,088
      
3,730
  
Income taxes
    
(645
)
    
(1,096
)
    
(1,084
)
    
(1,622
)
Income from continuing operations
    
37,497
      
1,302
      
39,004
      
2,108
  
 
 
 
 
 
 
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights 1
For the Quarters and Six Months ended June 30, 2010 and 2009
(dollars in thousands, except per share data)
 
   
For the Quarters ended
    
For the Six Months ended
   
June 30,
    
June 30,
     
2010
      
2009
      
2010
      
2009
  
                   
Discontinued operations:
                  
Operating income from discontinued operations
    
--
      
19
      
--
      
193
  
Gain on sale of property
    
--
      
--
      
--
      
5,637
  
Income from discontinued operations
    
--
      
19
      
--
      
5,830
  
Net income
    
37,497
      
1,321
      
39,004
      
7,938
  
(Income) loss attributable to noncontrolling interests in subsidiaries:
                  
Continuing operations
    
(24,699
)
    
5,814
      
(21,076
)
    
14,360
  
Discontinued operations
    
--
      
--
      
--
      
(4,864
)
Net (income) loss attributable to noncontrolling interests in subsidiaries
    
(24,699
)
    
5,814
      
(21,076
)
    
9,496
  
                   
Net income attributable to Common Shareholders
  
$
12,798
    
$
7,135
    
$
17,928
    
$
17,434
  
                   
Supplemental Information
                  
Income from continuing operations attributable to Common Shareholders
  
$
12,798
    
$
7,116
    
$
17,928
    
$
16,468
  
Income from discontinued operations attributable to Common Shareholders
    
--
      
19
      
--
      
966
  
Net income attributable to Common Shareholders
  
$
12,798
    
$
7,135
    
$
17,928
    
$
17,434
  
                   
Net income attributable to Common Shareholders per
Common Share – Basic
                  
Net income per Common Share – Continuing operations
  
$
0.32
    
$
0.18
    
$
0.45
    
$
0.45
  
Net income per Common Share – Discontinued operations
    
--
      
--
      
--
      
0.03
  
Net income per Common Share
  
$
0.32
    
$
0.18
    
$
0.45
    
$
0.48
  
Weighted average Common Shares
    
40,135
      
38,592
      
40,058
      
36,261
  
                   
Net income attributable to Common Shareholders per
Common Share – Diluted 2
                  
Net income per Common Share – Continuing operations
  
$
0.32
    
$
0.18
    
$
0.45
    
$
0.45
  
Net income per Common Share – Discontinued operations
    
--
      
--
      
--
      
0.03
  
Net income per Common Share
  
$
0.32
    
$
0.18
    
$
0.45
    
$
0.48
  
Weighted average Common Shares
    
40,372
      
38,804
      
40,274
      
36,440
  
 
 
 
 
 

 
 
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights 1
For the Quarters and Six Months ended June 30, 2010 and 2009
(dollars in thousands, except per share data)
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS 3
 
   
For the Quarters ended
    
For the Six Months ended
   
June 30,
    
June 30,
     
2010
      
2009
      
2010
      
2009
  
                       
                       
Net income attributable to Common Shareholders
  
$
12,798
    
$
7,135
    
$
17,928
    
$
17,434
  
                       
Depreciation of real estate and amortization of leasing costs (net of noncontrolling interests' share):
                      
                       
Consolidated affiliates
    
4,202
      
4,427
      
8,790
      
8,798
  
Unconsolidated affiliates
    
475
      
365
      
833
      
736
  
Gain on sale (net of noncontrolling interests' share):
                      
Consolidated affiliates
    
--
      
--
      
--
      
(929
)
Unconsolidated affiliates
    
--
      
--
      
--
      
--
  
Income attributable to noncontrolling interests’ in Operating Partnership
    
160
      
60
      
247
      
211
  
                       
Distributions – Preferred OP Units
    
5
      
5
      
9
      
10
  
                       
Funds from operations
  
$
17,640
    
$
11,992
    
$
27,807
    
$
26,260
  
Funds from operations per share – Diluted
                      
Weighted average Common Shares and OP Units 4
    
40,844
      
39,477
      
40,810
      
37,113
  
Funds from operations, per share
  
$
0.43
    
$
0.30
    
$
0.68
    
$
0.71
  
 
 
 
 
 
 
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights 1
For the Quarters and Six Months ended June 30, 2010 and 2009
(dollars in thousands)
RECONCILIATION OF OPERATING INCOME TO NET PROPERTY
OPERATING INCOME (“NOI”) 3
 
   
For the Quarters ended
  
For the Six Months ended
   
June 30,
  
June 30,
   
2010
  
2009
  
2010
  
2009
                 
Operating income
  
$
12,735
    
$
5,990
    
$
22,627
    
$
15,183
  
                 
Add back:
                
General and administrative
    
5,416
      
5,208
      
10,535
      
11,349
  
Depreciation and amortization
    
7,864
      
8,456
      
18,205
      
17,036
  
Abandonment of project costs
    
--
      
2,415
      
3
      
2,431
  
Reserve for notes receivable
    
--
      
1,734
      
--
      
1,734
  
Less:
                
Management fee income
    
(436
)
    
(444
)
    
(836
)
    
(1,200
)
Mortgage interest income
    
(5,238
)
    
(4,933
)
    
(10,231
)
    
(9,959
)
Other income
    
--
      
--
      
--
      
(1,700
)
Lease termination income
    
(59
)
    
(21
)
    
(65
)
    
(226
)
Straight line rent and other adjustments
    
(792
)
    
429
      
(1,710
)
    
443
  
                 
Consolidated NOI
    
19,490
      
18,834
      
38,528
      
35,091
  
                 
Noncontrolling interest in NOI
    
(5,371
)
    
(4,819
)
    
(10,824
)
    
(6,982
)
Pro-rata share of NOI
  
$
14,119
    
$
14,015
    
$
27,704
    
$
28,109
  

 
SELECTED BALANCE SHEET INFORMATION
  
 
As of
  
 
June 30,
  
December 31,
  
 
2010
  
2009
  
         
         
Cash and cash equivalents
   $ 78,930     $ 93,808  
Rental property, at cost
     1,057,392       1,070,066  
Total assets
     1.462,433       1,382,464  
Notes payable
     809,376       780,094  
Total liabilities
     885,547       849,987  
   
Notes:
  
1 For additional information and analysis concerning the Company’s results of operations, reference is made to the Company’s Quarterly Supplemental Disclosure furnished on Form 8-K to the SEC and included on the Company’s website at www.acadiarealty.com.
   
2 Reflects the potential dilution that could occur if securities or other contracts to issue Common Shares were exercised or converted into Common Shares. The effect of the conversion of Common OP Units is not reflected in the above table 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 consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings per share.
   
3 The Company considers funds from operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and net property operating income (“NOI”) to be appropriate supplemental disclosures of operating performance for an equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO and NOI are presented to assist investors in analyzing the performance of the Company. They are helpful as they exclude various items included in net income that are not indicative of the operating performance, such as gains (losses) from sales of depreciated property and depreciation and amortization. In addition, NOI excludes interest expense. The Company’s method of calculating FFO and NOI 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 generally accepted accounting principles (“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 the Company’s performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, the Company defines FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
   
4 In addition to the weighted average Common Shares outstanding, basic and diluted FFO also assumes full conversion of a weighted average 472 and 673 OP Units into Common Shares for the quarters ended June 30, 2010 and 2009, respectively and 536 and 673 OP Units into Common Shares for the six months ended June 30, 2010 and 2009, respectively. Diluted FFO also includes the assumed conversion of Preferred OP Units into 25 Common Shares for each of the quarters ended June 30, 2010 and 2009, and for each of six months ended June 30, 2010 and 2009. In addition, diluted FFO also includes the effect of employee share options of 212 and 187 Common Shares for the quarters ended June 30, 2010 and 2009, respectively, and 191 and 155 Common Shares for the six months ended June 30, 2010 and 2009, respectively.
 
CONTACT:
Acadia Realty Trust
Jon Grisham, 914-288-8100