2009 Annual Report
Focused. Disciplined. Value-Driven.
Financial Highlights
In thousands
2009
2008
2007
2006
2005
Total Revenues
$ 147,345
$ 137,936
$ 95,092
$ 89,335
$ 87,592
Funds from Operations1
49,613
37,964
42,094
39,860
35,842
Real Estate Owned,
at Cost
Common Shares
Outstanding
Operating Partnership
Units Outstanding
1,207,406
1,091,995
817,620
613,828
634,871
39,787
32,358
32,184
31,773
31,543
658
648
642
642
653
1 The Company considers funds from operations (“FFO”) as defined by the National Association of RealEstate
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 pre-
sented to assist investors in analyzing the performance of the Company. 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 and depreciation and amortization. However, the Company’s 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 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 deprecia-
tion and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
To Our Shareholders:
Focused. Disciplined. Value-Driven.
Dear fellow shareholders,
2009 brought with it a
unique and unprecedented
set of challenges for both
our economy in general
and the real estate industry
specifically. It was certainly
a challenging year for our
company as well. If you
recall, in early March 2009,
the Dow Jones Industrial
Average closed around
6,600, down more than 50% from 14,000+ less
than 18 months earlier, and the MSCI US REIT
index was down approximately 70% over the
same period. Additionally, commercial real estate
transactional and lending activity remained frozen
and, to many, it appeared as though commercial
real estate would be the “next shoe to drop.”
Kenneth F. Bernstein
President and CEO
Fortunately, that did not occur. In fact, a year later,
we are seeing noticeable signs of healing. First of
all, the Dow has significantly recovered, and Acadia,
too, ended the year on a positive note with a
12-month total shareholder return of 24%. Secondly,
and more importantly for our industry, optimism is
beginning to creep back into the real estate capital
markets. Although operating fundamentals, a lagging
indicator of economic health, will likely continue to
be challenged over the next few quarters, positive
leasing momentum within our own portfolio encour-
ages us that the beginning of an upward trend is
not too far off.
There are a host of metrics that we can use to
forecast a healthy economy. For the shopping
center industry, employment gains will be an
essential driver to enable consumer spending to
return to acceptable levels. Until we see clearer
signs of job formation, it is hard for me to be
overly optimistic about a strong rebound for retail.
Our core portfolio is structured to take advantage
of densely-populated, high barrier-to-entry and
supply-constrained markets. Furthermore, the
majority of our properties are anchored by neces-
sity and discount/value retailers, and thus less
dependent on discretionary consumer spending.
Additionally, our healthy balance sheet and access
to growth capital strongly positions us to capitalize
on new opportunities as they emerge.
It is these key principles — maintaining a healthy
balance sheet, a well-located, well-leased core
portfolio and an opportunistic growth strategy —
that have kept us successfully in business for the
past 12 years and earned us the distinction of being
the top-performing shopping center REIT of the
past decade and one of the top five among all
REITs over the same period. It is with good reason
that these principles remain in place to this day.
Balance Sheet Strength Matters Again
At the onset of 2009, with the capital markets
still frozen as a result of the prior year’s events,
it could not have been clearer that liquidity would
be of paramount importance. What was not clear
was how long capital would remain unavailable.
A weakened balance sheet, especially in the mid-
dle of a market correction, can have a significant
negative impact on the health of a company’s real
estate portfolio and, ultimately, a company’s ability
to create long-term shareholder value. If a company
has too much debt, the quality of the portfolio often
suffers as assets are haphazardly sold, or worse,
forfeited, to settle impending debt maturities.
Conversely, for those with the financial stamina to
weather droughts in liquidity in the capital markets,
the potential exists for portfolio enhancement
through the opportunistic acquisition of assets
from distressed sellers.
We learned this lesson the hard way following our
reverse merger with Mark Centers Trust in 1998,
when we were saddled with a weak balance sheet
and a difficult portfolio. This sidelined us in the early
stages of what was, in retrospect, an extremely
Acadia Realty Trust 2009 Annual Report 1
fruitful period for acquisitions. Fortunately, since
that time and, in particular, as the market became
heated in the mid 2000s, we proactively pruned
the portfolio, opportunistically disposing of the
vast majority of our non-core assets and recycling
the sale proceeds into higher-quality retail assets
located in markets with high barriers-to-entry. As a
result, we were neither under-capitalized nor over-
exposed when the recession began in December
2007, and our returns have reflected this.
Due to our disciplined approach to managing our
balance sheet, Acadia began the year in a sound
financial position. As of December 31, 2008, the
core portfolio had a total of $117 million in cash-
on-hand and availability under existing credit
facilities. Additionally, including extension options,
the core portfolio did not have any debt maturing
until December 2011, at which time $107 million
of unsecured convertible debt was scheduled
to mature.
Nevertheless, given the uncertainties in the capital
markets, in mid-April, we chose to further fortify
our balance sheet by raising $68.7 million of gross
proceeds through a secondary equity offering of
5.75 million common shares priced at $11.95 per
share. Although it was a difficult decision for many
reasons, not the least of which was the fact that
the price at issuance was approximately half that
of the prior year, the “prudent” path was not with-
out benefits. Not only did we use the proceeds to
pay down the existing secured line of credit debt,
we also used the funds accretively by repurchasing
a portion of Acadia’s outstanding convertible debt at
a discount. In fact, since the beginning of the fourth
quarter of 2008, we have been able to purchase a
total of $65 million (in face value) of our convertible
debt, which represents more than 50% of the orig-
inal balance, at an average 13% yield to maturity.
Furthermore, the stock issuance supplemented
our liquidity position, providing us with the avail-
ability of working capital as well as cash-on-hand
for investment in both existing and new ventures.
More than 10 months later, Acadia continues to
have ample liquidity and limited exposure to debt
maturities. As of year-end 2009, the core portfolio
had $130 million of cash-on-hand and availability
under existing lines of credit and, after giving effect
to extension options, has no debt maturing until
December 2011. At that time, the remaining
$50 million balance of Acadia’s convertible debt
will mature. Furthermore, with a debt yield of 12.7%,
a debt to EBIDTA ratio of 5.7x and a fixed charge
coverage ratio of 3.2x for the 12 months ended
December 31, 2009, we believe the portfolio
(comprised of the core and pro rata share of our
opportunity funds) can be refinanced even at
today’s rigorous underwriting standards.
Thankfully, compared to a year ago, it is evident
that the capital markets have begun the healing
process. Although lenders remain appropriately
cautious, we’ve seen that there is financing for
high-quality projects — even construction financing
— available to well-capitalized borrowers with
a proven track record. To this point, subsequent
to year-end, we closed a $48 million construction
loan to finance the development of Canarsie Plaza,
a 265,000 square foot shopping center located
in Brooklyn, New York, which has been 80% pre-
leased to BJ’s Wholesale Club and the New York
Police Department. We also successfully completed
other financings throughout the past year with
lenders who continue to be extremely supportive
of our thoughtful approach to a challenging market-
place. Needless to say, we are greatly appreciative
of this support from our key lenders.
Core Portfolio Differentiation Continues
Although same-store net operating income for
2009 decreased 2.6% year-over-year, this was,
in fact, a stronger performance than we anticipated.
Approximately two-thirds of that amount resulted
from two events: the bankruptcy of Circuit City
and our termination of a lease with Acme Super-
market, the dark anchor at our Absecon, New Jersey
2
Acadia Realty Trust 2009 Annual Report
shopping center. Given the relative strength of our
assets within their respective markets, we have
been able to replace a significant portion of this
vacancy with credit-worthy tenants who are well-
positioned to outperform their peers in spite of the
difficult retailing environment. Within the past year,
our former Circuit City space has been re-tenanted
with Best Buy, and approximately half of the former
Acme Supermarket box has been re-leased to two
tenants, including Dollar Tree.
It is tenants such as these that are the building
blocks of a recession-resistant portfolio. Approxi-
mately one quarter of the core portfolio is anchored
by discount and value-oriented retailers, ranging
from Target to T.J.Maxx, and, more significantly,
nearly 60% is anchored by necessity-based super-
market and drug store retailers, including Stop &
Shop and Walgreens. The remaining 15% of the
portfolio is comprised of high-quality street retail
in inherently valuable locations such as Greenwich,
Connecticut and Lincoln Park, Chicago, Illinois.
Looking ahead, despite our portfolio’s strategic
positioning, it seems likely that market forces
will continue to impact same-store net operating
income and occupancy in the near term. At the
same time, we are seeing preliminary signs of a
recovery. While we expect this recovery to be
fragile and fragmented, we look forward to
improving metrics on the horizon.
Well-Positioned for External Growth
With our portfolio and balance sheet in a relatively
strong position heading into 2009, we were able
to focus our attention on external growth. Although
acquisition activity across the industry remained
quiet, we were able to acquire one property at
extremely opportunistic pricing.
Cortlandt Towne Center
In January 2009, while the vast majority of the world
was sidelined from making additional investments,
we were able to acquire Cortlandt Towne Center
(“Cortlandt”) for $78 million, which represents
a substantial discount to replacement cost.
Anchored by quality, national retailers such as
Walmart, Marshalls, Best Buy and A&P Food
Market, the 642,000 square foot shopping center
is located in northern Westchester County, New
York, where it is the dominant retail property in
its high barrier-to-entry submarket.
We acquired the property at an attractive 9%
going-in unlevered yield and with the “upside”
of re-leasing the vacant Linens ‘n Things and Levitz
boxes. We realized a portion of this upside during
the fourth quarter of 2009, when we executed
a lease with Bed Bath & Beyond for the majority
of the former Linens ‘n Things space. After giving
effect to this lease and a few prospective small
shop leases that have gained momentum, the
investment’s return is expected to exceed 10%
on an unlevered basis and 15% on a levered basis.
Fund III
Cortlandt was acquired by Acadia’s third discretion-
ary investment fund (“Fund III”). Launched in May
2007, Fund III has utilized approximately 30% of
its $502.5 million of capital commitments through
year-end 2009. We have until 2012 to deploy the
balance of the fund’s commitments (approximately
$350 million of equity to acquire approximately
$1 billion in additional assets). As we look forward
to 2010, we will continue to remain poised but
patient, confident in our team’s collective cre-
ativity and flexibility in dealing with a protracted
period of de-levering.
With capital accumulating on the sidelines, we
suspect that some groups will grow impatient and
lose their investment discipline. While this activity
might be rewarded in the short run — any invest-
ment done in today’s low interest rate environment
should be accretive to quarterly earnings — over-
paying for assets rarely ends well. Irrespective
Acadia Realty Trust 2009 Annual Report 3
of how this cycle matures, we are confident that
we have many different means for creating long-
term shareholder value without having to stretch
beyond our comfort level.
Existing Fund Investments
Historically, our external growth platform has
had a dual investment focus: opportunistic and
“value-add.”
Retailer Controlled Property Venture: In addition
to Cortlandt, a prime example of our opportunistic
strategy is our Retailer Controlled Property (“RCP”)
Venture, which was launched in early 2004 with
our partners Klaff Realty and Lubert-Adler and
was designed to unlock the value of retailer-owned
real estate. Notable transactions include Mervyns
Department Stores and Albertson’s Supermarkets,
which we acquired as part of a consortium of
investors. Through December 31, 2009, Acadia,
through its first and second opportunity funds
(“Fund I” and “Fund II,” respectively), has earned
a cash-basis profit of $58.0 million from its aggre-
gate RCP Venture investments, equating to a 2.0x
equity multiple on invested capital.
New York Urban/Infill Redevelopment Program:
As a complement to our opportunistic investment
activities, we have also undertaken a number of
“value-add” redevelopments. In 2004, our New
York-centric program was formed with our partners,
P/A Associates, primarily in response to cap rate
compression, which had begun to make the
acquisition of stabilized, core-quality real estate
at reasonable pricing difficult. Today, the portfolio
is steadily progressing toward stabilization and
includes ten properties, of which six are operating.
Collectively they are 85% retail leased, 77% office
leased, one property is under construction and
80% pre-leased, and three are in design.
Despite the weakened economy, we continue to
gain leasing traction across this portfolio, due to
the underlying strength of our real estate and the
unfulfilled demand for retail within the densely-
populated New York City boroughs and Westchester
County. In May, BJ’s Wholesale Club opened at
Pelham Manor Shopping Plaza and, since then,
has consistently posted strong weekly sales.
As previously mentioned, the retailer will also
anchor our Canarsie, Brooklyn project.
With respect to our three design-phase assets
located in Brooklyn and Northern Manhattan, we
continue to make progress in our pre-development
activities. This spring, we will commence a small
first phase (40,000 to 50,000 square feet) of our
CityPoint development in downtown Brooklyn.
We will commence construction on the balance
of that project, as well as the other projects, when
we have the appropriate leasing and financing in
place. While it is always nice to show activity, the
key to these types of developments is to only
start them when the time is right.
Storage Post Portfolio: Self-storage is a natural,
vertical complement to urban retail redevelop-
ments. With the goal of maximizing the value of
our real estate, we partnered with Storage Post,
a New York-based self-storage company, at two
of our Fund II urban shopping centers. In addition,
Acadia, through Fund II, and Storage Post devel-
oped one stand-alone self storage facility in
Brooklyn, New York. Subsequently, in February
2008, we completed the acquisition and recapital-
ization of an 11-property self storage portfolio with
the same operator. Similar to our other three self-
storage assets, the properties are located in supply-
constrained, dense urban markets in New York
and New Jersey with natural barriers-to-entry given
the lack of developable land within the immediate
trade area. As a result, the portfolio has held up
relatively well, considering the severity of the
economic downturn. In fact, with respect to our
five stabilized properties, occupancy increased
from 81.8% as of the fourth quarter of 2008 to
85.3% as of the fourth quarter of 2009. Over the
4
Acadia Realty Trust 2009 Annual Report
Our goals are to maintain a healthy balance sheet,
build upon our high-quality core portfolio and,
through disciplined value-add and opportunistic
investing, add value for our stakeholders.
Over the past decade, we have achieved an 18%
10-year annual compound total shareholder return,
one of the best in the REIT industry, and we are
committed to repeating our success in this next
decade. Our success was certainly not the result
of any one person’s efforts. At Acadia, we have
built one of the best, most dedicated teams of
real estate professionals that any shareholder (or
CEO) could ask for. We have complemented this
team with skillful joint venture partners, astute
fund investors, reliable lenders and a tremendous
board of trustees. I am thankful to all of them for
their hard work and commitment over the past
decade. And, finally, we are grateful for and appre-
ciate the continued support of our shareholders as
we head into the next decade.
Kenneth F. Bernstein
President and CEO
same time period, same-store net operating income
increased by approximately 5%. While our focus
for growth will remain predominantly in the retail
area, we look forward to the successful stabiliza-
tion of these properties.
Mezzanine and Preferred Equity Investments
We applied the same criteria — barriers-to-entry,
population density, and asset quality — to our
mezzanine and preferred equity investments. Most
recently, we made two investments in high-quality
projects located in Georgetown, Washington D.C.
and the Upper West Side of Manhattan. The first
was a $48 million investment collateralized by a
23-property retail portfolio with locations along
Georgetown’s famed M Street and Wisconsin
Avenue. The second was a $41 million investment
collateralized by a Trader Joe’s-anchored retail and
residential development located at the corner of
72nd Street and Broadway. While all properties
and developments came under pressure during
2009, high-quality assets such as these are
uniquely well-positioned to regain and retain their
value. We suspect that, in retrospect, compared
to other investments made during late 2007 and
2008, the blended mid-teens return that we
expect to achieve on these two investments will
look very attractive.
Looking Ahead
We are extremely excited as we look ahead to 2010.
We believe that we are not only “well-hedged”
against any ongoing market disruption, but also
well-positioned to take advantage of it. Further-
more, given our relatively small size, we know
that we do not need to rely on the promise of a
“flood” to experience meaningful and profitable
acquisition activity. If the economy should recover
more aggressively than it currently appears, both
our existing and new development projects will
surely benefit.
Acadia Realty Trust 2009 Annual Report 5
Acadia Core and Opportunity Fund Properties
SELF-STORAGE PROPERTIES
Suffern, Suffern, New York
Yonkers, Westchester, New York
Jersey City, Jersey City, New Jersey
Webster Avenue, Bronx, New York
Linden, Linden, New Jersey
Bruckner Boulevard, Bronx, New York
New Rochelle, Westchester, New York
Long Island City, Queens, New York
Fordham Road, Bronx, New York
Ridgewood, Queens, New York
Lawrence, Lawrence, New York
Liberty Avenue, Queens, New York
Pelham Plaza, Pelham Manor, New York
Atlantic Avenue, Brooklyn, New York
RETAIL PROPERTIES
Core Portfolio
NEW YORK REGION
239 Greenwich Avenue, Greenwich, CT
Elmwood Park Shopping Center, Elmwood Park, NJ
A&P Shopping Plaza, Boonton, NJ
Village Commons Shopping Center, Smithtown, NY
The Branch Plaza, Smithtown, NY
Amboy Shopping Center, Staten Island, NY
Bartow Avenue, Bronx, NY
Pacesetter Park Shopping Center, Pomona, NY
2914 Third Avenue, Bronx, NY
LA Fitness, Staten Island, NY
200 West 54th Street, New York, NY
East 17th Street, New York, NY
Crossroads Shopping Center, White Plains, NY
NEW ENGLAND REGION
Town Line Plaza, Rocky Hill, CT
Methuen Shopping Center, Methuen, MA
Crescent Plaza, Brockton, MA
New Loudon Center, Latham, NY
Walnut Hill Plaza, Woonsocket, RI
The Gateway, South Burlington, VT
MIDWEST REGION
Hobson West Plaza, Naperville, IL
Clark and Diversey, Chicago, IL
Merrillville Plaza, Hobart, IN
Route 202 Shopping Center, Wilmington, DE
Mark Plaza, Edwardsville, PA
Plaza 422, Lebanon, PA
Route 6 Mall, Honesdale, PA
Chestnut Hill Shoppes, Philadelphia, PA
Abington Towne Center, Abington, PA
Opportunity Fund Portfolio
FUND I PROPERTIES
Granville Center, Columbus, OH
Tarrytown Centre, Tarrytown, NY
Sterling Heights Shopping Center, Sterling Heights, MI
Kroger/Safeway Portfolio, various locations
FUND II PROPERTIES
Oakbrook, Oakbrook, IL
98th Street and Liberty Avenue, Queens, NY
216th Street, New York, NY
260 East 161st Street, Bronx, NY
Fordham Place, Bronx, NY
Pelham Manor Shopping Plaza, Pelham Manor, NY
Sherman Plaza, New York, NY
CityPoint, Brooklyn, NY
Atlantic Avenue, Brooklyn, NY
Canarsie Plaza, Brooklyn, NY
FUND III PROPERTIES
125 Main Street, Westport, CT
Bloomfield Town Square, Bloomfield Hills, MI
Mad River Station, Dayton, OH
Cortlandt Towne Center, Mohegan Lake, NY
Sheepshead Bay Plaza, Brooklyn, NY
MID-ATLANTIC REGION
Marketplace of Absecon, Absecon, NJ
Ledgewood Mall, Ledgewood, NJ
Brandywine Town Center, Wilmington, DE
Market Square Shopping Center, Wilmington, DE
6
Acadia Realty Trust 2009 Annual Report
Form 10-K Report 2009
Focused. Disciplined. Value-Driven.
United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
(cid:109)
(cid:175) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009
(cid:175) 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 1-12002
ACADIA REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland
(State of incorporation)
23-2715194
(I.R.S. employer identification no.)
1311 Mamaroneck Avenue, Suite 260, White Plains, NY 10605
(Address of principal executive offices)
(914) 288-8100
(Registrant’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Common Shares of Beneficial Interest, $.001 par value
(Title of Class)
New York Stock Exchange
(Name of Exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
(cid:109)
YES (cid:175)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202) NO (cid:175)
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act.
(cid:109)
YES (cid:175)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202) NO (cid:175)
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 (cid:175)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202) NO (cid:175)
(cid:109)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted 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 and post such files).
YES (cid:175)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202) NO (cid:175)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
(cid:109)
Form 10-K or any amendment to this Form 10-K. (cid:175)
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule
12b-2 of the Act).
Large Accelerated Filer (cid:175)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202)Accelerated Filer (cid:175)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202)Non-accelerated Filer (cid:175)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202)Smaller Reporting Company (cid:175)
(cid:109)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant as of the last business day
of the Registrant’s most recently completed second fiscal quarter was approximately $523.5 million, based on a price of $13.05 per share,
the average sales price for the Registrant’s shares of beneficial interest on the New York Stock Exchange on that date.
The number of shares of the Registrant’s Common Shares of Beneficial Interest outstanding on March 1, 2010 was 40,111,565.
(cid:109)
YES (cid:175)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202) NO (cid:175)
DOCUMENTS INCORPORATED BY REFERENCE
Part III: Portions of the Registrant’s definitive proxy statement relating to its 2010 Annual Meeting of Shareholders presently scheduled
to be held May 10, 2010 to be filed pursuant to Regulation 14A.
Acadia Realty Trust 2009 Annual Report
Acadia Realty Trust Form 10-K Report 2009
Table of Contents
Item No.
PART I
Page
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
PART II
5. Market for Registrant’s Common Equity, Related Shareholder Matters, Issuer Purchases of
Equity Securities and Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . 32
7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . 48
9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
PART III
10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . 51
13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
PART IV
15. Exhibits, Financial Statements, Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Acadia Realty Trust 2009 Annual Report
Special Note Regarding
Forward-Looking Statements
Certain statements contained in this Annual Report on
Form 10-K may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities and Exchange Act of
1934 and as such may involve known and unknown risks,
uncertainties and other factors which may cause our actual
results, performance or achievements to be materially
different from future results, performance or achievements
expressed or implied by such forward-looking statements.
Forward-looking statements, which are based on certain
assumptions and describe our future plans, strategies and
provide operational support to the operating ventures in
which we have a minority equity interest.
All of our investments are held by, and all of our operations
are conducted through, Acadia Realty Limited Partnership
(the “Operating Partnership”) and entities in which the
Operating Partnership owns a controlling interest. As of
December 31, 2009, the Trust controlled 98% of the Oper-
ating Partnership as the sole general partner. As the gen-
eral partner, the Trust is entitled to share, in proportion to
its percentage interest, in the cash distributions and profits
and losses of the Operating Partnership. The limited part-
ners generally represent entities or individuals, which con-
tributed their interests in certain assets or entities to the
expectations are generally identifiable by use of the words
Operating Partnership in exchange for common or pre-
“may,” “will,” “should,” “expect,” “anticipate,” “estimate,”
ferred units of limited partnership interest (“Common OP
“believe,” “intend” or “project” or the negative thereof
Units” or “Preferred OP Units,” respectively, and collec-
or other variations thereon or comparable terminology.
Factors which could have a material adverse effect on our
operations and future prospects include, but are not limited
to, those set forth under the headings “Item 1A. Risk
Factors” and “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operation”
in this Form 10-K. These risks and uncertainties should be
considered in evaluating any forward-looking statements
contained or incorporated by reference herein.
PART I
ITEM 1. BUSINESS
General
Acadia Realty Trust (the “Trust”) was formed on March 4,
1993 as a Maryland real estate investment trust (“REIT”).
All references to “Acadia,” “we,” “us,” ”our,” and “Com-
pany” refer to Acadia Realty Trust and its consolidated
subsidiaries. We are a fully integrated, self-managed and
self-administered equity REIT focused primarily on the
ownership, acquisition, redevelopment and management
tively, “OP Units”). Limited partners holding Common OP
Units are generally entitled to exchange their units on a
one-for-one basis for our common shares of beneficial
interest (“Common Shares”). This structure is referred to
as an umbrella partnership REIT or “UPREIT.”
Business Objectives and Strategies
Our primary business objective is to acquire and man-
age commercial retail properties that will provide cash
for distributions to shareholders while also creating the
potential for capital appreciation to enhance investor
returns. We focus on the following fundamentals to
achieve this objective:
(cid:174) Own and operate a Core Portfolio (as defined in Item 2
of this Form 10-K) of community and neighborhood
shopping centers and main street retail located in mar-
kets with strong demographics and generate internal
growth within the Core Portfolio through aggressive
redevelopment, re-anchoring and/or leasing activities.
(cid:174) Maintain a strong and flexible balance sheet through
conservative financial practices while ensuring access to
of retail properties, including neighborhood and community
sufficient capital to fund future growth.
shopping centers and mixed-use properties with retail
components. We currently operate 79 properties, which
we own or have an ownership interest in. These assets
are located primarily in the Northeast, Mid-Atlantic and
Midwestern regions of the United States and, in total,
comprise approximately eight million square feet. We also
have private equity investments in other retail real estate
related opportunities including investments for which we
(cid:174) Generate external growth through an opportunistic yet
disciplined acquisition program. We target transactions
with high inherent opportunity for the creation of addi-
tional value through redevelopment and leasing and/or
transactions requiring creative capital structuring to
facilitate the transactions. These transactions may
include other types of commercial real estate besides
those which we invest in through our Core Portfolio.
Acadia Realty Trust 2009 Annual Report 1
These may also include joint ventures with private
partners (including the Operating Partnership) and 20%
equity investors for the purpose of making investments
to the Operating Partnership as a Promote. The Operating
in operating retailers with significant embedded value
Partnership also earns fees and/or priority distributions for
in their real estate assets.
asset management services equal to 1.5% of the allocated
Investment Strategy — External Growth through
Opportunistic Acquisition Platforms
The requirements that acquisitions be accretive on a long-
term basis based on our cost of capital, as well as increase
the overall portfolio quality and value, are core to our
acquisition program. As such, we constantly evaluate the
invested equity, as well as for property management,
leasing, legal and construction services. All such fees and
priority distributions are reflected as a reduction in the
noncontrolling interest share in income from Opportunity
Funds in the Consolidated Financial Statements beginning
on page 57 of this Form 10-K.
blended cost of equity and debt and adjust the amount of
Our acquisition program was executed primarily through
acquisition activity to align the level of investment activity
Fund I through June 2004. Fund I focused on targeting assets
with capital flows. We may also engage in discussions
for acquisition that had superior in-fill locations, restricted
with public and private entities regarding business combi-
competition due to high barriers to entry and in-place
nations. In addition to our direct investments in real estate
below-market anchor leases with the potential to create
assets, we have also capitalized on our expertise in the
significant additional value through re-tenanting, timely
acquisition, redevelopment, leasing and management of
capital improvements and property redevelopment.
retail real estate by establishing discretionary opportunity
funds in which we earn, in addition to a return on our equity
interest and carried interest (“Promote”), fees and priority
distributions for our services. To date, we have launched
three opportunity funds (“Opportunity Funds”), Acadia
As of December 31, 2009, there were 21 assets comprising
approximately 1.0 million square feet remaining in Fund I in
which the Operating Partnership’s interest in cash flow and
income is 37.8% as a result of the Promote.
Strategic Opportunity Fund, LP (“Fund I”), Acadia Strategic
Fund II
Opportunity Fund II, LLC (“Fund II”) and Acadia Strategic
Following our success with Fund I, during June of 2004
Opportunity Fund III, LLC (“Fund III”). Due to the level of
we formed a second, larger Opportunity Fund, Fund II, and
our control, we consolidate these Opportunity Funds for
during August of 2004, formed Acadia Mervyn Investors II,
financial reporting purposes.
Fund I
During September of 2001, we and four of our institutional
shareholders formed Fund I, and during August of 2004
formed a limited liability company, Acadia Mervyn Inves-
tors I, LLC (“Mervyns I”), whereby the investors commit-
ted $70.0 million for the purpose of acquiring real estate
assets. The Operating Partnership committed an additional
$20.0 million in the aggregate to Fund I and Mervyns I,
as the general partner or managing member with a 22.2%
interest. In addition to a pro-rata return on its invested
equity, the Operating Partnership is entitled to a Promote
based upon certain investment return thresholds. Cash
flow was distributed pro-rata to the partners (including the
Operating Partnership) until a 9% cumulative return was
LLC (“Mervyns II”), with the investors from Fund I as
well as two additional institutional investors, whereby the
investors, including the Operating Partnership, committed
capital totaling $300.0 million. The Operating Partnership
is the managing member with a 20% interest in Fund II
and Mervyns II and can invest the committed equity on a
discretionary basis within the parameters defined in the
Fund II and Mervyns II operating agreements. The terms
and structure of Fund II and Mervyns II are substantially
the same as Fund I and Mervyns I with the exception that
the Preferred Return is 8%. As of December 31, 2009,
$223.3 million of Fund II’s and Mervyns II’s capital was
invested and the balance of $76.7 million is expected to
be utilized to complete development activities for existing
Fund II investments.
achieved (“Preferred Return”) on, and a return of all capi-
Given the market conditions for commercial real estate at
tal contributions.
During 2006, the Fund I investors received a return of all
of their capital invested in Fund I and their unpaid preferred.
Accordingly, all cash flow is now distributed 80% to the
the time Fund II was formed, we channeled our acquisition
efforts through Fund II in two opportunistic strategies
described below — the New York Urban Infill Redevelop-
ment Initiative and the Retailer Controlled Property Venture.
2
Acadia Realty Trust 2009 Annual Report
New York Urban/Infill Redevelopment Initiative
any RCP Venture investments is to be distributed to the
During September of 2004, through Fund II, we launched
participants until they have received a 10% cumulative return
our New York Urban Infill Redevelopment Initiative. Despite
and a full return of all contributions. Thereafter, remaining
the current economy, we believe that retailers continue to
cash flow is to be distributed 20% to Klaff (“Klaff’s Promote”)
recognize that many of the nation’s urban markets are
and 80% to the partners (including Klaff). The Operating
underserved from a retail standpoint, and we capitalized
Partnership may also earn market-rate fees for property
on this situation by investing in redevelopment projects in
management, leasing and construction services on behalf
dense urban areas where retail tenant demand has effec-
of the RCP Venture. While we are primarily a passive part-
tively surpassed the supply of available sites. During 2004,
ner in the investments made through the RCP Venture,
Fund II, together with an unaffiliated partner, P/A Associ-
historically we have provided our support in reviewing
ates, LLC (“P/A”), formed Acadia-P/A Holding Company,
potential acquisitions and operating and redevelopment
LLC (“Acadia-P/A”) for the purpose of acquiring, construct-
assistance in areas where we have both a presence and
ing, developing, owning, operating, leasing and managing
expertise. We seek to invest opportunistically with the
certain retail or mixed-use real estate properties in the New
RCP Venture primarily in any of the following four ways:
York City metropolitan area. P/A agreed to invest 10% of
required capital up to a maximum of $2.2 million and Fund
II, the managing member, agreed to invest the balance to
(cid:174) Invest in operating retailers to control their real estate
through private equity joint ventures.
acquire assets in which Acadia-P/A agreed to invest. See
(cid:174) Work with financially healthy retailers to create value
Item 7 of this Form 10-K for further information on the
from their surplus real estate.
Acadia-P/A Joint Venture as detailed in “Liquidity and
Capital Resources — New York Urban/Infill Redevelopment
Initiative.” To date, Fund II has invested in nine projects,
eight of which are in conjunction with P/A, as discussed
(cid:174) Acquire properties, designation rights or other
control of real estate or leases associated with
retailers in bankruptcy.
further in “PROPERTY ACQUISITIONS — New York
(cid:174) Complete sale leasebacks with retailers in need of capital.
Urban/Infill Redevelopment Initiative” below in this Item 1.
Retailer Controlled Property Venture
(the “RCP Venture”)
During 2004, we made our first RCP Venture investment
with our participation in the acquisition of Mervyns. From
2006 through 2009, we made additional investments as
On January 27, 2004, through Funds I and II, we entered
further discussed in “PROPERTY ACQUISITIONS — RCP
into an association, known as the RCP Venture, with Klaff
Venture” below in this Item 1.
Realty, L.P. (“Klaff”) and Lubert-Adler Management, Inc.
(“Lubert-Adler”) for the purpose of making investments
in surplus or underutilized properties owned by retailers.
The initial expected size of the RCP Venture is approximately
$300.0 million in equity, of which our share is $60.0 million.
Each participant in the RCP Venture has the right to opt out
of any potential investment. We would consider expanding
the size of the RCP Venture and our share thereof based
on investment opportunities. Investments under the RCP
Venture are structured as separate joint ventures as there
may be other investors participating in certain investments
in addition to Klaff, Lubert-Adler and us. Affiliates of
Mervyns I and II and Fund II have invested $60.8 million in
the RCP Venture to date on a non-recourse basis. While
we are not required to invest any additional capital into any
of these investments, should additional capital be required
and we elect not to contribute our share, our proportionate
share in the investment will be reduced. Cash flow from
Fund III
Following the success of Fund I and the full commitment
of Fund II, Fund III was formed during 2007, with 14
institutional investors, including a majority of the investors
from Fund I and Fund II, whereby the investors, including
the Operating Partnership, committed capital totaling
$503.0 million. The Operating Partnership’s share of the
committed capital is $100.0 million and it is the sole man-
aging member with a 19.9% interest in Fund III and can
invest the committed equity on a discretionary basis within
the parameters defined in the Fund III operating agreements.
The terms and structure of Fund III are substantially the
same as the previous Funds with the exception that the
Preferred Return is 6%. As of December 31, 2009, $96.5
million of Fund III’s capital was invested. To date, Fund III
has invested in 14 projects as discussed further in “PROP-
ERTY ACQUISITIONS” below in this Item 1.
Acadia Realty Trust 2009 Annual Report 3
Notes Receivable, Preferred Equity and Other Real
Estate Related Investments
Fund capital commitments and for general working capital
purposes. During 2008, we purchased $8.0 million in princi-
We may also invest in mortgage loans, preferred equity
pal amount of the Notes and purchased an additional
investments, other real estate interests and other invest-
$57.0 million in principal amount during 2009, all at an
ments. As of December 31, 2009, our notes receivable
average discount of approximately 19%.
and preferred equity investments aggregated $125.2 million,
and were collateralized by either the properties (either first
or second mortgage liens) or the borrower’s ownership
interest in the properties. In addition, certain notes receiv-
able are personally guaranteed by principals of the bor-
rowers. Interest rates on our notes receivable, mezzanine
loan investments and preferred equity investment, ranged
from 10% to 22.4% with maturities that range from
demand notes to January 2017.
Capital Strategy — Balance Sheet Focus and
Access to Capital
Given the significant turmoil in the capital markets and
Operating Strategy — Experienced Management
Team with Proven Track Record
Our senior management team has decades of experience
in the real estate industry. We believe our management
team has demonstrated the ability to create value internally
through anchor recycling, property redevelopment and
strategic non-core dispositions. We have capitalized on
our expertise in the acquisition, redevelopment, leasing
and management of retail real estate by establishing joint
ventures, such as the Opportunity Funds, in which we earn,
in addition to a return on our equity interest and Promote,
fees and priority distributions. In connection with these
the current post-recessionary period, our primary capital
joint ventures we have launched several successful acqui-
objective is to maintain a strong and flexible balance sheet
sition platforms including our New York Urban Infill Rede-
through conservative financial practices, including moderate
velopment Initiative and RCP Venture.
leverage levels, while ensuring access to sufficient capital
to fund future growth. We intend to continue financing
acquisitions and property redevelopment with sources of
capital determined by management to be the most appro-
priate based on, among other factors, availability in the
current capital markets, pricing and other commercial and
financial terms. The sources of capital may include the
issuance of public equity, unsecured debt, mortgage and
construction loans, and other capital alternatives including
the issuance of OP Units. We manage our interest rate
risk primarily through the use of fixed rate-debt and, where
we use variable rate debt, we use certain derivative
Operating functions such as leasing, property management,
construction, finance and legal (collectively, the “Operating
Departments”) are generally provided by our personnel,
providing for fully integrated property management and
development. By incorporating the Operating Departments
in the acquisition process, acquisitions are appropriately
priced giving effect to each asset’s specific risks and returns.
Also, because of the Operating Departments involvement
with, and corresponding understanding of, the acquisition
process, transition time is minimized and management can
immediately execute on its strategic plan for each asset.
instruments, including London Interbank Offered Rate
We typically hold our Core Portfolio properties for long-term
(“LIBOR”) swap agreements and interest rate caps as
investment. As such, we continuously review the existing
discussed further in Item 7A of this Form 10-K.
During April 2009, we issued 5.75 million Common Shares
and generated net proceeds of approximately $65.0 million.
The proceeds were primarily used to purchase a portion
of our outstanding convertible notes payable and pay
down existing lines of credit.
portfolio and implement programs to renovate and mod-
ernize targeted centers to enhance the property’s market
position. This in turn strengthens the competitive position
of the leasing program to attract and retain quality tenants,
increasing cash flow and consequently property value.
We also periodically identify certain properties for disposition
and redeploy the capital to existing centers or acquisitions
During December of 2006 and January of 2007, we issued
with greater potential for capital appreciation. Our Core
$115.0 million of 3.75% unsecured Convertible Notes (the
Portfolio consists primarily of neighborhood and commu-
“Notes”). See Note 9 to our Consolidated Financial State-
nity shopping centers, which are generally dominant centers
ments, which begin on page 57 of this Form 10-K for a
in high barrier-to-entry markets and are principally anchored
discussion of the terms and conditions of the Notes. The
by supermarkets and necessity-based retailers. We believe
$112.1 million in proceeds, net of related costs, were used
these attributes enable our properties to better withstand
to retire variable rate debt, provide for future Opportunity
the current post recessionary period.
4
Acadia Realty Trust 2009 Annual Report
During 2009, 2008 and 2007 we sold three non-core prop-
in OPCO. During 2008 and 2007, Mervyns I and Mervyns II
erties and redeployed capital to acquire three retail proper-
made additional investments in Mervyns totaling $2.9 million.
ties as further discussed in “ASSET SALES AND CAPITAL/
The Operating Partnership’s share of the total investment
ASSET RECYCLING” below in this Item 1.
in Mervyns was $4.9 million.
Property Acquisitions
RCP Venture
Albertson’s
In June 2006, the RCP Venture, as part of an investment
consortium, participated in the acquisition of 699 stores
from Albertson’s and 26 Cub Food stores. Mervyns II’s
share of equity invested totaled $20.7 million. The Oper-
ating Partnership’s share was $4.2 million.
Through December 31, 2009, Mervyns I and Mervyns II have
also made add-on investments in Mervyns properties total-
ing $5.1 million including $1.7 million in 2009. The Operat-
ing Partnership’s share of this amount was $0.8 million.
During 2005, Mervyns made a distribution to the investors
from the proceeds from the sale of a portion of the portfolio
and the refinancing of existing debt, of which a total of
$42.7 million was distributed to Mervyns I and Mervyns II.
The Operating Partnership’s share of this distribution
During February of 2007, Mervyns II received cash distri-
amounted to $10.2 million. Subsequently, Mervyns and
butions totaling approximately $44.4 million from its own-
Mervyns add-ons distributed additional cash totaling $5.0
ership position in Albertson’s. The Operating Partnership’s
million. The Operating Partnership’s share of this distribu-
share of this distribution amounted to approximately $8.9
tion totaled $1.4 million.
million. Mervyns II received additional distributions from
this investment totaling $8.8 million in 2007, $10.6 million
in 2008, and $2.0 million in 2009. The Operating Partner-
ship’s share of these distributions aggregated $4.3 million.
Other RCP Venture Investments
During 2006, Fund II invested $1.1 million in Shopko and
$0.7 million in Marsh. The Operating Partnership’s share
of these investments totaled $0.3 million. Fund II received
Through December 31, 2009, Mervyns II has made addi-
a $1.1 million distribution from the Shopko investment
tional add-on investments in Albertson’s totaling $2.4 million
during 2007 and a $1.0 million distribution from the Marsh
and received distributions totaling $1.2 million. The Oper-
investment during 2008, of which the Operating Partner-
ating Partnership’s share of these combined amounts was
ship’s share totaled $0.4 million. During 2008, Fund II
$0.4 million and $0.2 million, respectively.
Mervyns Department Stores
In September 2004, we made our first RCP Venture invest-
ment. Through Mervyns I and Mervyns II, we invested in
a consortium to acquire the Mervyns Department Store
chain (“Mervyns”) consisting of 262 stores (“REALCO”)
and its retail operation (“OPCO”) from Target Corporation.
To date, REALCO has disposed of a significant portion of
the portfolio. In addition, in November 2007, we sold our
interest in OPCO and, as a result, have no further investment
made additional investments of $2.0 million in Marsh.
The Operating Partnership’s share was $0.4 million.
During 2009, Fund II received additional distributions of
$1.6 million from Marsh, of which the Operating Partner-
ship’s share was $0.3 million.
During 2007, Mervyns II invested $2.7 million in REX
Stores Corporation. The Operating Partnership’s share
was $0.5 million. During 2009, Fund II received a distribu-
tion of $0.4 million from REX, of which the Operating Part-
nership’s share was $0.1 million.
The following table summarizes the RCP Venture investments from inception through December 31, 2009:
(dollars in millions)
Investor
Investment
Year
acquired
Invested
capital
Distributions
Invested
capital
Distributions
Operating
Partnership Share
Mervyns I and Mervyns II Mervyns
Mervyns I and Mervyns II Mervyns add-on investments
Mervyns II
Mervyns II
Fund II
Fund II
Mervyns II
Albertson’s
Albertson’s add-on investments 2006/2007
Shopko
Marsh
Rex
2004
2005/2008
2006
2006
2006
2007
Total
$ 26.1
5.1
20.7
2.4
1.1
2.7
2.7
$ 60.8
$ 46.0
1.7
65.8
1.2
1.1
2.6
0.4
$ 118.8
$ 4.9
0.8
4.2
0.4
0.2
0.5
0.5
$ 11.5
$ 11.3
0.3
13.2
0.2
0.2
0.5
0.1
$ 25.8
Acadia Realty Trust 2009 Annual Report 5
New York Urban/Infill Redevelopment Initiative
161st Street — During August of 2005, Acadia-P/A purchased
As of December 31, 2009, we had ten New York Urban/
Infill projects. Construction is substantially complete at six
of the projects, one is under construction and three are in
the design phase as follows:
Construction Substantially Complete
Fordham Place — During September of 2004, Acadia-P/A
purchased 400 East Fordham Road, Bronx, New York.
Construction of a 119,000 square foot retail component
and 157,000 square foot office tower are complete. The
retail component is 100% occupied and the office com-
ponent is 34% occupied. The total cost of the project to
Acadia-P/A was approximately $130.0 million.
Pelham Manor Shopping Plaza — During October of 2004,
Acadia-P/A entered into a 95-year, inclusive of extension
options, ground lease to redevelop a 16-acre site in Pelham
Manor, Westchester County, New York. We demolished
the existing industrial and warehouse buildings, and com-
pleted construction of a 229,000 square foot community
retail center and a 90,000 square foot self-storage facility
at a total cost of approximately $62.0 million. Home Depot
was originally slated to anchor the project, but announced
its decision to curtail plans for expansion. As part of our
lease termination agreement with Home Depot, we pur-
chased the building that Home Depot had constructed on
the site for $10 million, representing approximately half of
their cost of construction. The retail center is currently
74% occupied and anchored by a BJ’s Wholesale Club.
244-268 161st Street located in the Bronx, New York for
$49.3 million. The redevelopment plan for this currently
99% leased and 84% occupied 10-story office building
is to recapture and convert street level office space into
retail. Additional redevelopment costs to Acadia-P/A are
anticipated to be approximately $16.0 million.
Atlantic Avenue — During May of 2007, we, through
Fund II and in partnership with Post Management, LLC
(“Storage Post”), acquired a property on Atlantic Avenue
in Brooklyn, New York. Storage Post is our unaffiliated
partner in our self-storage portfolio (see below) and at two
of our other New York urban projects with a self-storage
component. During 2009, we completed construction of
the 110,000 square feet, six-story storage facility and
commenced operations. The total cost of the project was
approximately $23.0 million.
Under Construction
Canarsie — During October of 2007, Acadia-P/A acquired
a 530,000 square foot warehouse building in Canarsie,
Brooklyn for approximately $21.0 million. The development
plan for this property includes the demolition of a portion
of the warehouse and the construction of a 265,000 square
foot mixed-use project consisting of retail and office.
The total cost of the redevelopment, including acquisition
costs, is expected to be approximately $77.0 million.
We had executed a lease with Home Depot to anchor
the project. However, during 2008, Home Depot termi-
nated their lease and paid us a fee of $24.5 million. The
216th Street — During December of 2005, Acadia-P/A
project is currently under construction and 80% pre-
acquired a parking garage located at 10th Avenue and
leased to BJ’s Wholesale Club and the New York City
216th Street in the Inwood section of Manhattan. During
Police Department.
2007, we completed the construction of a 60,000 square
foot office building and we relocated an agency of the City
of New York, which was a tenant at another of our Urban/
Infill Redevelopment projects, to this location. The total
cost to Acadia-P/A for the project, which also includes a
100-space rooftop parking deck, was approximately
$28.0 million.
Liberty Avenue — During December of 2005, Acadia-P/A
acquired the remaining 40-year term of a leasehold interest
in land located at Liberty Avenue and 98th Street in Ozone
Park (Queens), New York. The property is currently oper-
ating and includes approximately 30,000 square feet of
retail anchored by a CVS drug store and a 98,500 square
foot self-storage facility. The total cost to Acadia-P/A of
the redevelopment was approximately $15.0 million.
In Design
Sherman Plaza — During April of 2005, Acadia-P/A acquired
4650 Broadway located in the Washington Heights/Inwood
section of Manhattan. The property, which was occupied
by an agency of the City of New York (“NYC”) and a com-
mercial parking garage, was acquired for a purchase price
of $25.0 million. During 2007 we relocated NYC to Acadia-
P/A’s 216th St. redevelopment as discussed above. We
are currently reviewing various alternatives to redevelop
the site to include retail and office components.
CityPoint — During June of 2007, Acadia-P/A and an
unaffiliated joint venture partner purchased the leasehold
interests in The Gallery at Fulton Street in downtown
Brooklyn for approximately $115.0 million, with an option
6
Acadia Realty Trust 2009 Annual Report
to purchase the fee position, which is owned by the City
During January 2009, we purchased Cortlandt Towne Center
of New York, at a later date. Redevelopment plans for the
for $78.0 million. The operating property is a 642,000
property, renamed “CityPoint,” include the demolition of
square foot shopping center located in Westchester
the existing structure (completed) and the development of
County, New York.
a 1.3 million square foot project to include retail and residen-
tial components. Acadia-P/A will participate in the develop-
ment of the retail component. Acadia-P/A does not plan on
participating in the development of, or have an ownership
interest in, the residential component of the project. The
current plan calls for the commencement during 2010 of
the first of four phases of redevelopment which is expected
During November 2007, we acquired 125 Main Street,
Westport, Connecticut for approximately $17.0 million.
Our plan is to redevelop the existing building into 30,000
square feet of retail and office space.
Core Portfolio
See Item 2. PROPERTIES for the definition of our
to include between 40,000 and 50,000 square feet of retail
Core Portfolio.
space on five levels. Development of the balance of the
project, including the residential component, is expected to
occur over multiple years. The project has been conditionally
awarded $20.0 million of federal stimulus bond financing
to fund construction of the first phase. Please refer to the
discussion under the heading “Off Balance Sheet Arrange-
ments” in Item 7 of this Form 10-K for a discussion of
$26.0 million of debt on this property that will mature in
August 2010 and potential additional capital requirements
Fund II may have if our unaffiliated joint venture partner
determines not to fund its requisite share of capital.
Sheepshead Bay — During November of 2007, Fund III
acquired a property in Sheepshead Bay, Brooklyn for
approximately $20.0 million. The project is currently in
the design phase and we have demolished one of two
buildings on the existing site and expect to develop a
multi-story retail center with approximately 240,000
square feet of gross leasable area.
Self-Storage Portfolio
During April of 2008, the Operating Partnership acquired
a 20,000 square foot single tenant retail property located
on 17th Street near 5th Avenue in Manhattan, New York
for $9.7 million.
During March of 2007, the Operating Partnership purchased
a 52,000 square foot single-tenant building located at
1545 East Service Road in Staten Island, New York for
$17.0 million and a 10,000 square foot retail commercial
condominium at 200 West 54th Street located in Man-
hattan, New York for $36.4 million.
Preferred Equity, Notes Receivable and Other Real
Estate Related Investments
During December 2009, the Operating Partnership made
a loan for $8.6 million which bears interest at 14.5% with
a one year term and one six month extension.
During June 2008, the Operating Partnership made a
$40.0 million preferred equity investment in a portfolio of
18 properties located primarily in Georgetown, Washing-
On February 29, 2008, Fund III, in conjunction with Stor-
ton D.C. The portfolio consists of 306,000 square feet of
age Post, acquired a portfolio of 11 self-storage properties
principally retail space.
from Storage Post’s existing institutional investors for
approximately $174.0 million. In addition, we, through
Fund II, developed three self-storage properties as dis-
cussed above. The 14 self-storage property portfolio,
located throughout New York and New Jersey, totals
During July 2008, the Operating Partnership made a $34.0
million mezzanine loan, which is collateralized by a mixed-
use retail and residential development at 72nd Street and
Broadway on the Upper West Side of Manhattan.
approximately 1,127,000 net rentable square feet, and
During September 2008, Fund III made a $10.0 million first
is operating at various stages of stabilization.
mortgage loan, which is collateralized by land located on
Other Investments
In addition to the RCP Venture, the New York Urban/Infill
and Self-Storage Portfolio investments as discussed above,
through Fund III, we have also acquired the following:
Long Island, New York.
Acadia Realty Trust 2009 Annual Report 7
The following table sets forth our preferred equity and notes receivable investments as of December 31, 2009:
Weighted Averages
Notes Receivable
(dollars in thousands)
Investment
Principal
Accrued
Interest
Total
Stated Effective
Interest
Rate
Extension
Interest Maturity Options
Date
Rate1
(Years) Amount Maturity Dates
Underlying Third-Party
First Mortgage Loan
Georgetown A –
5 property portfolio
Georgetown B –
18 property portfolio
$ 8,000 $
994 $ 8,994
9.75%
10.19% 11/2010 2 x 1 year
$8,375
2010 through 2012
72nd Street
40,975
3,637
44,612 13.00%
19.48%
40,000
5,405
45,405 13.00%
13.44%
6/2010 2 x 1 year 115,454
1 year 185,000(2)
7/2011
2011 through 2016
2011 with one year
extension
First mortgage
and other notes
Mezzanine notes
20,853
15,393
72
20,925 12.87%
13.42%
145
15,538 13.97%
14.83%
2010
2013
1 year
N/A
N/A
—
272,559
2011 through 2019
Total notes receivable $ 125,221 $ 10,253 $ 135,474 12.89%
15.38%
1The effective rate includes upfront points and exit fees.
2The first mortgage amount for 72nd Street represents the maximum availability under the loan.
Asset Sales and Capital/Asset Recycling
We periodically identify certain core properties for disposition and redeploy the capital to existing centers or acquisitions
with greater potential for capital appreciation. Since January of 2007, we have sold the following Core Portfolio assets:
Property
Location
Date Sold
Blackman Plaza
Village Apartments
Colony and GHT Apartments
Wilkes-Barre, Pennsylvania
Winston-Salem, North Carolina
Columbia, Missouri
November 2009
April 2008
December 2007
Total
GLA
125,264
599,106
625,545
1,349,915
Sales price
(dollars in thousands)
$ 2,500
23,300
15,512
$ 41,312
Proceeds from these sales in part have been used to fund the Core Portfolio acquisitions as discussed in “PROPERTY
ACQUISITIONS” above.
Monetization of Fund I
Given that Fund I was established as a finite life entity, we are currently engaged in the multi-year process of monetizing
the fund’s investments. As of December 31, 2009 there were 21 assets comprising 1.0 million square feet remaining in
Fund I as summarized by region below:
Location
Year Acquired
GLA
Shopping Center
New York Region
New York
Tarrytown Centre
Midwest Region
Ohio
Granville Centre
Michigan
Tarrytown
Columbus
Sterling Heights Shopping Center
Detroit
Various Regions
Kroger/Safeway Portfolio
Various (18 properties)
Total
8
Acadia Realty Trust 2009 Annual Report
2004
2002
2004
2003
35,291
134,997
154,835
709,400
1,034,523
On February 2, 2009, The Kroger Co. purchased the fee at
primarily based on net operating income before depreciation,
six locations in Fund I’s Kroger/Safeway Portfolio for $14.6
amortization and certain nonrecurring items. Investments
million, resulting in a $5.6 million gain. The Operating Part-
in our Core Portfolio are typically held long-term. Given the
nership’s share of the gain was $1.6 million.
contemplated finite life of our Opportunity Funds, these
During April 2008, Fund I sold Haygood Shopping Center
located in Virginia Beach, Virginia, for $24.9 million, result-
ing in a $6.8 million gain. The Operating Partnership’s
share of the gain was $1.3 million.
investments are typically held for shorter terms. Fees earned
by us as general partner/member of the Opportunity Funds
are eliminated in our Consolidated Financial Statements.
See Note 3 to our Consolidated Financial Statements,
which begin on page 57 of this Form 10-K for information
During November 2007, Fund I sold Amherst Marketplace
regarding, among other things, revenues from external
and Sheffield Crossing, community shopping centers in
customers, a measure of profit and loss and total assets
Ohio, for $26.0 million, resulting in a $7.5 million gain. The
with respect to each of our segments.
Operating Partnership’s share of the gain was $2.8 million.
Property Redevelopment and Expansion
Our redevelopment program focuses on selecting well-
Corporate Headquarters and Employees
Our executive offices are located at 1311 Mamaroneck
Avenue, Suite 260, White Plains, New York 10605, and our
located neighborhood and community shopping centers
telephone number is (914) 288-8100. As of December 31,
within our Core Portfolio and creating significant value
2009, we had 118 employees, of which 90 were located at
through re-tenanting and property redevelopment.
our executive office and 28 were located at regional prop-
Environmental Laws
For information relating to environmental laws that may
have an impact on our business, please see “Item 1A.
Risk Factors — Possible liability relating to environ-
mental matters.”
Competition
There are numerous entities that compete with us in
seeking properties for acquisition and tenants that will
lease space in our properties. Our competitors include
other REITs, financial institutions, insurance companies,
pension funds, private companies and individuals. Our
properties compete for tenants with similar properties
primarily on the basis of location, total occupancy costs
(including base rent and operating expenses) and the
design and condition of the improvements.
Financial Information About
Market Segments
We have five reportable segments: Core Portfolio, Oppor-
tunity Funds, Self-Storage Portfolio, Notes Receivable and
Other. Notes Receivable consists of the Company’s notes
receivable and preferred equity investments and related
interest income. Other primarily consists of management
fees and interest income. The accounting policies of the
segments are the same as those described in the summary
of significant accounting policies set forth in Note 1 to our
erty management offices. None of our employees are cov-
ered by collective bargaining agreements. Management
believes that its relationship with employees is good.
Company Website
All of our filings with the Securities and Exchange Com-
mission, including our annual reports on Form 10-K, quar-
terly reports on Form 10-Q and current reports on Form 8-K
and amendments to those reports filed or furnished pursu-
ant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, are available free of charge at our website at
www.acadiarealty.com, as soon as reasonably practica-
ble after we electronically file such material with, or furnish it
to, the Securities and Exchange Commission. These filings
can also be accessed through the Securities and Exchange
Commission’s website at www.sec.gov. Alternatively, we
will provide paper copies of our filings free of charge upon
request. If you wish to receive a copy of the Form 10-K,
you may contact Robert Masters, Corporate Secretary, at
Acadia Realty Trust, 1311 Mamaroneck Avenue, Suite 260,
White Plains, NY 10605. You may also call (914) 288-8100
to request a copy of the Form 10-K. Information included
or referred to on our website is not incorporated by reference
in or otherwise a part of this Form 10-K.
Code of Ethics and
Whistleblower Policies
The Board of Trustees adopted a Code of Ethics for Senior
Consolidated Financial Statements, which begin on page 57
Financial Officers that applies to our Chief Executive Officer,
of this Form 10-K. We evaluate property performance
Senior Vice President-Chief Financial Officer, Senior Vice
Acadia Realty Trust 2009 Annual Report 9
President-Chief Accounting Officer, Vice President-Controller,
Upon the expiration of current leases for space located in
Vice President-Financial Reporting, Director of Taxation
our properties, we may not be able to re-let all or a portion
and Assistant Controllers. The Board also adopted a Code
of that space, or the terms of re-letting (including the cost
of Business Conduct and Ethics applicable to all employees,
of concessions to tenants) may be less favorable to us
as well as a “Whistleblower Policy.” Copies of these docu-
than current lease terms. If we are unable to re-let promptly
ments are available in the Investor Information section of
all or a substantial portion of the space located in our prop-
our website. We intend to disclose future amendments to,
erties or if the rental rates we receive upon re-letting are
or waivers from, our Code of Ethics for Senior Financial
significantly lower than current rates, our net income and
Officers in the Investor Information section of our website
ability to make expected distributions to our shareholders
within four business days following the date of such
will be adversely affected due to the resulting reduction in
amendment or waiver.
ITEM 1A. RISK FACTORS
If any of the following risks actually occur, our business,
results of operations and financial condition would likely
rent receipts. There can be no assurance that we will be
able to retain tenants in any of our properties upon the
expiration of their leases. See “Item 2. Properties —
Lease Expirations” in this Annual Report on Form 10-K
for additional information as to the scheduled lease expira-
suffer. This section includes or refers to certain forward-
tions in our portfolio.
looking statements. Refer to the explanation of the qualifi-
cations and limitations on such forward-looking statements
discussed in the beginning of this Form 10-K.
We rely on revenues derived from major tenants.
We derive significant revenues from certain anchor tenants
that occupy space in more than one center. We could be
adversely affected in the event of the bankruptcy or insol-
vency of, or a downturn in the business of, any of our
major tenants, or in the event that any such tenant does
not renew its leases as they expire or renews at lower
rental rates. Vacated anchor space not only would reduce
rental revenues if not re-tenanted at the same rental rates
but also could adversely affect the entire shopping center
because of the loss of the departed anchor tenant’s cus-
tomer drawing power. Loss of customer drawing power
also can occur through the exercise of the right that most
anchors have to vacate and prevent re-tenanting by paying
The current economic environment, while improving,
may cause us to lose tenants and may impair our
ability to borrow money to purchase properties,
refinance existing debt or finance our current rede-
velopment projects.
Our operations and performance depend on general eco-
nomic conditions. The U.S. economy has recently experi-
enced a financial downturn, with consumer spending on
the decline, credit tightening and unemployment rising.
Many financial and economic analysts are predicting that
the world economy has entered a prolonged economic
downturn characterized by high unemployment, limited
availability of credit and decreased consumer and business
spending. This economic downturn has and may continue
to adversely affect the businesses of many of our tenants.
We and the Opportunity Funds may experience higher
vacancy rates as well as delays in re-leasing vacant space.
rent for the balance of the lease term, or the departure of
The current downturn has had, and may continue to have,
a “shadow” anchor tenant that owns its own property. In
an unprecedented impact on the global credit markets. In
addition, in the event that certain major tenants cease to
general, credit is currently difficult to obtain. While we
occupy a property, such an action may result in a signifi-
currently believe we have adequate sources of liquidity,
cant number of other tenants having the right to terminate
there can be no assurance that we will be able to obtain
their leases, or pay a reduced rent based on a percentage
mortgage loans to purchase additional properties, obtain
of the tenant’s sales, at the affected property, which could
financing to complete current redevelopment projects, or
adversely affect the future income from such property.
successfully refinance our properties as loans become due.
See “Item 2. Properties — Major Tenants” for quantified
To the extent that the availability of credit continues to be
information with respect to the percentage of our mini-
limited, it will also adversely impact our preferred equity
mum rents received from major tenants.
We may not be able to renew current leases and the
terms of re-letting (including the cost of concessions
to tenants) may be less favorable to us than current
lease terms.
10
Acadia Realty Trust 2009 Annual Report
and mezzanine investments as counterparties may not be
able to obtain the financing required to repay the loans
upon maturity.
The bankruptcy of, or a downturn in the business
of, any of our major tenants or a significant number
of our smaller tenants may adversely affect our
cash flows and property values.
The bankruptcy of, or a downturn in the business of, any
of our major tenants causing them to reject their leases,
or not renew their leases as they expire, or renew at lower
rental rates may adversely affect our cash flows and prop-
erty values. Furthermore, the impact of vacated anchor
space and the potential reduction in customer traffic may
adversely impact the balance of tenants at the center.
There are risks relating to investments in real estate.
Real property investments are subject to varying degrees
of risk. Real estate values are affected by a number of
factors, including: changes in the general economic climate,
local conditions (such as an oversupply of space or a
reduction in demand for real estate in an area), the quality
and philosophy of management, competition from other
available space, the ability of the owner to provide ade-
quate maintenance and insurance and to control variable
operating costs. Shopping centers, in particular, may be
affected by changing perceptions of retailers or shoppers
Certain of our tenants have experienced financial difficul-
regarding the safety, convenience and attractiveness of
ties and have filed for bankruptcy under Chapter 11 of the
the shopping center and by the overall climate for the
United States Bankruptcy Code (“Chapter 11 Bankruptcy”).
retail industry generally. Real estate values are also affected
Pursuant to bankruptcy law, tenants have the right to
by such factors as government regulations, interest rate
reject their leases. In the event the tenant exercises this
levels, the availability of financing and potential liability
right, the landlord generally has the right to file a claim
under, and changes in, environmental, zoning, tax and
for lost rent equal to the greater of either one year’s rent
other laws. A significant portion of our income is derived
(including tenant expense reimbursements) for remaining
from rental income from real property. Our income and
terms greater than one year, or 15% of the rent remaining
cash flow would be adversely affected if a significant num-
under the balance of the lease term, but not to exceed
ber of our tenants were unable to meet their obligations,
three years rent. Actual amounts to be received in satis-
or if we were unable to lease on economically favorable
faction of those claims will be subject to the tenant’s final
terms a significant amount of space in our properties. In
plan of reorganization and the availability of funds to pay
the event of default by a tenant, we may experience delays
its creditors.
Since January 1, 2007, there have been two significant
tenant bankruptcies within our portfolio:
in enforcing, and incur substantial costs to enforce, our
rights as a landlord. In addition, certain significant expen-
ditures associated with each equity investment (such as
mortgage payments, real estate taxes and maintenance
On December 11, 2008, KB Toys (“KB”) filed for protection
costs) are generally not reduced when circumstances
under Chapter 11 Bankruptcy. KB operated in two locations
cause a reduction in income from the investment.
in our Core Portfolio, totaling approximately 12,000 square
feet. Rental revenues from KB at these locations totaled
$0.03 million, $0.3 million, and $0.3 million for the years
ended December 31, 2009, 2008 and 2007, respectively.
Both leases were rejected by KB in February 2009.
Our ability to change our portfolio is limited
because real estate investments are illiquid.
Equity investments in real estate are relatively illiquid and,
therefore, our ability to change our portfolio promptly in
response to changed conditions will be limited. Our Board
On November 10, 2008, Circuit City Stores Inc. (“Circuit
of Trustees may establish investment criteria or limitations
City”) filed for protection under Chapter 11 Bankruptcy.
as it deems appropriate, but currently does not limit the
Circuit City operated at two of our Core Portfolio locations
number of properties in which we may seek to invest or
totaling approximately 59,278 square feet. Rental revenues
on the concentration of investments in any one geographic
from Circuit City at these locations totaled $0.1 million,
region. We could change our investment, disposition and
$1.0 million and $0.7 million for the years ended December 31,
financing policies without a vote of our shareholders.
2009, 2008 and 2007 respectively. Circuit City has rejected
both leases. In addition, Circuit City executed a lease at a
property owned by Acadia-P/A Holding Company. Circuit
City has rejected that lease. On January 16, 2009, Circuit
City sought Bankruptcy Court approval to liquidate its assets.
We could become highly leveraged, resulting in
increased risk of default on our obligations and in an
increase in debt service requirements, which could
adversely affect our financial condition and results
of operations and our ability to pay distributions.
Acadia Realty Trust 2009 Annual Report 11
We have incurred, and expect to continue to incur, indebt-
edness in furtherance of our activities. Neither our Decla-
ration of Trust nor any policy statement formally adopted
by our Board of Trustees limits either the total amount of
indebtedness or the specified percentage of indebtedness
that we may incur. Accordingly, we could become more highly
leveraged, resulting in increased risk of default on our obli-
gations and in an increase in debt service requirements,
which could adversely affect our financial condition and
results of operations and our ability to make distributions.
Our loan agreements contain customary representations,
covenants and events of default. Certain loan agreements
require us to comply with certain affirmative and negative
covenants, including the maintenance of certain debt
service coverage and leverage ratios.
We could be adversely affected by poor market
conditions where properties are geographically
concentrated.
Our performance depends on the economic conditions
in markets in which our properties are concentrated. We
have significant exposure to the greater New York region,
from which we derive 36% of the annual base rents
within our Core Portfolio. Our operating results could be
adversely affected if market conditions, such as an over-
supply of space or a reduction in demand for real estate,
in this area become more competitive relative to other
geographic areas.
We have pursued, and may in the future continue
to pursue, extensive growth opportunities, which
may result in significant demands on our opera-
tional, administrative and financial resources.
Interest expense on our variable debt as of December 31,
We have pursued extensive growth opportunities. This
2009 would increase by $3.4 million annually for a 100 basis
expansion has placed significant demands on our opera-
point increase in interest rates. We may seek additional
tional, administrative and financial resources. The contin-
variable-rate financing if and when pricing and other com-
ued growth of our real estate portfolio can be expected to
mercial and financial terms warrant. As such, we would
continue to place a significant strain on our resources. Our
consider hedging against the interest rate risk related to
future performance will depend in part on our ability to suc-
such additional variable-rate debt through interest rate
cessfully attract and retain qualified management person-
swaps and protection agreements, or other means.
nel to manage the growth and operations of our business
We enter into interest-rate hedging transactions, including
interest rate swaps and cap agreements, with counterparties.
There can be no guarantee that the financial condition of
these counterparties will enable them to fulfill their obli-
gations under these agreements.
Competition may adversely affect our ability to pur-
chase properties and to attract and retain tenants.
There are numerous commercial developers, real estate
companies, financial institutions and other investors with
greater financial resources than we have that compete
with us in seeking properties for acquisition and tenants
who will lease space in our properties. Our competitors
include other REITs, financial institutions, insurance com-
panies, pension funds, private companies and individuals.
This competition may result in a higher cost for properties
that we wish to purchase. In addition, retailers at our
properties face increasing competition from outlet malls,
discount shopping clubs, Internet commerce, direct mail
and telemarketing, which could (i) reduce rents payable
to us; (ii) reduce our ability to attract and retain tenants at
our properties; and (iii) lead to increased vacancy rates at
our properties.
and to finance such acquisitions. In addition, acquired prop-
erties may fail to operate at expected levels due to the
numerous factors that may affect the value of real estate.
There can be no assurance that we will have sufficient
resources to identify and manage acquired properties or
otherwise be able to maintain our historic rate of growth.
Our inability to carry out our growth strategy could
adversely affect our financial condition and results
of operations.
Our earnings growth strategy is based on the acquisition
and development of additional properties, including acqui-
sitions through co-investment programs such as our
Opportunity Funds. In the context of our business plan,
“redevelopment” generally means an expansion or reno-
vation of an existing property. The consummation of any
future acquisitions will be subject to satisfactory comple-
tion of our extensive valuation analysis and due diligence
review and to the negotiation of definitive documentation.
We cannot be sure that we will be able to implement our
strategy because we may have difficulty finding new prop-
erties, negotiating with new or existing tenants or secur-
ing acceptable financing.
12
Acadia Realty Trust 2009 Annual Report
Acquisitions of additional properties entail the risk that
acquisition opportunity by Fund III would create a material
investments will fail to perform in accordance with expec-
conflict of interest for us; (iii) we require the acquisition
tations, including operating and leasing expectations. Rede-
opportunity for a “like-kind” exchange; or (iv) the consider-
velopment is subject to numerous risks, including risks of
ation payable for the acquisition opportunity is our Common
construction delays, cost overruns or uncontrollable events
Shares, OP Units or other securities. As a result, we may
that may increase project costs, new project commence-
not be able to make attractive acquisitions directly and
ment risks such as the receipt of zoning, occupancy and
may only receive a minority interest in such acquisitions
other required governmental approvals and permits, and
through Fund III.
the incurrence of development costs in connection with
projects that are not pursued to completion.
Our joint venture investments, including our Opportunity
Fund investments may involve risks not otherwise present
A component of our growth strategy is through private-
for investments made solely by us, including the possibility
equity type investments made through our RCP Venture.
that our joint venture partner might have different interests
These include investments in operating retailers. The
or goals than we do. Other risks of joint venture investments
inability of the retailers to operate profitably would have an
include impasse on decisions, such as a sale, because
adverse impact on income realized from these investments.
neither we nor a joint venture partner would have full
We operate through a partnership structure, which
could have an adverse effect on our ability to man-
age our assets.
Our primary property-owning vehicle is the Operating
Partnership, of which we are the general partner. Our
acquisition of properties through the Operating Partnership
in exchange for interests in the Operating Partnership may
permit certain tax deferral advantages to limited partners
who contribute properties to the Operating Partnership.
Since properties contributed to the Operating Partnership
control over the joint venture. Also, there is no limitation
under our organizational documents as to the amount of
funds that may be invested in joint ventures. Please refer
to the discussion under the heading “Off Balance Sheet
Arrangements” in Item 7 of this Form 10-K for a discussion
of $26.0 million of debt on the CityPoint property that will
mature in August 2010 and potential additional capital
requirements Fund II may have if our unaffiliated joint
venture partner determines not to fund its requisite share
of capital.
may have unrealized gain attributable to the difference
Through our investments in joint ventures we have also
between the fair market value and adjusted tax basis in
invested in operating businesses that have operational risk
such properties prior to contribution, the sale of such
in addition to the risks associated with real estate invest-
properties could cause adverse tax consequences to
ments, including among other risks, human capital issues,
the limited partners who contributed such properties.
adequate supply of product and material, and merchandis-
Although we, as the general partner of the Operating
ing issues.
Partnership, generally have no obligation to consider the
tax consequences of our actions to any limited partner,
there can be no assurance that the Operating Partnership
will not acquire properties in the future subject to material
restrictions designed to minimize the adverse tax conse-
quences to the limited partners who contribute such
properties. Such restrictions could result in significantly
reduced flexibility to manage our assets.
Limited control over joint venture investments.
Under the terms of our Fund III joint venture, which is
similar to the terms of Fund I and Fund II, we are required
to first offer to Fund III all of our opportunities to acquire
retail shopping centers. We may only pursue opportunities
to acquire retail shopping centers directly if (i) our joint
venture partner elects not to approve Fund III’s pursuit
of an acquisition opportunity; (ii) the ownership of the
During 2009, 2008 and 2007, our Fund I and Mervyns I
joint ventures provided Promote income. There can be no
assurance that the joint ventures will continue to operate
profitably and thus provide additional Promote income in
the future.
Market factors could have an adverse effect on our
share price.
One of the factors that may influence the trading price of
our Common Shares is the annual dividend rate on our
Common Shares as a percentage of its market price. An
increase in market interest rates may lead purchasers of
our Common Shares to seek a higher annual dividend rate,
which could adversely affect the market price of our
Common Shares. A decline in our share price, as a result
of this or other market factors, could unfavorably impact
our ability to raise additional equity in the public markets.
Acadia Realty Trust 2009 Annual Report 13
The loss of a key executive officer could have an
adverse effect on us.
From time to time, in connection with the conduct of our
business, and prior to the acquisition of any property from
Our success depends on the contribution of key manage-
a third party or as required by our financing sources, we
ment members. The loss of the services of Kenneth F.
authorize the preparation of Phase I environmental reports
Bernstein, President and Chief Executive Officer, or other
and, when necessary, Phase II environmental reports,
key executive-level employees could have a material
adverse effect on our results of operations. We have
with respect to our properties. Based upon these environ-
mental reports and our ongoing review of our properties,
obtained key-man life insurance for Mr. Bernstein. In addi-
we are currently not aware of any environmental condition
tion, we have entered into an employment agreement
with respect to any of our properties that we believe would
with Mr. Bernstein; however, it could be terminated by
be reasonably likely to have a material adverse effect on
Mr. Bernstein. We have not entered into employment
us. There can be no assurance, however, that the environ-
agreements with other key executive level employees.
mental reports will reveal all environmental conditions at
Possible liability relating to environmental matters.
Under various federal, state and local environmental laws,
our properties or that the following will not expose us to
material liability in the future:
statutes, ordinances, rules and regulations, as an owner
(cid:174) The discovery of previously unknown environmental
of real property, we may be liable for the costs of removal
conditions;
or remediation of certain hazardous or toxic substances
at, on, in or under our property, as well as certain other
(cid:174) Changes in law;
potential costs relating to hazardous or toxic substances
(cid:174) Activities of tenants; and
(including government fines and penalties and damages
for injuries to persons and adjacent property). These laws
may impose liability without regard to whether we knew
(cid:174) Activities relating to properties in the vicinity of our
properties.
of, or were responsible for, the presence or disposal of
Changes in laws increasing the potential liability for envi-
those substances. This liability may be imposed on us in
ronmental conditions existing on properties or increasing
connection with the activities of an operator of, or tenant
the restrictions on discharges or other conditions may
at, the property. The cost of any required remediation,
result in significant unanticipated expenditures or may
removal, fines or personal or property damages and our
otherwise adversely affect the operations of our tenants,
liability therefore could exceed the value of the property
which could adversely affect our financial condition or
and/or our aggregate assets. In addition, the presence of
results of operations.
those substances, or the failure to properly dispose of or
remove those substances, may adversely affect our ability
to sell or rent that property or to borrow using that prop-
erty as collateral, which, in turn, would reduce our reve-
nues and ability to make distributions.
Uninsured losses or a loss in excess of insured lim-
its could adversely affect our financial condition.
We carry comprehensive general liability, fire, extended
coverage, loss of rent insurance, and environmental liability
on most of our properties, with policy specifications and
A property can also be adversely affected either through
insured limits customarily carried for similar properties.
physical contamination or by virtue of an adverse effect
However, with respect to those properties where the
upon value attributable to the migration of hazardous or
leases do not provide for abatement of rent under any
toxic substances, or other contaminants that have or
circumstances, we generally do not maintain loss of rent
may have emanated from other properties. Although our
insurance. In addition, there are certain types of losses,
tenants are primarily responsible for any environmental
such as losses resulting from wars, terrorism or acts of
damages and claims related to the leased premises, in
God that generally are not insured because they are either
the event of the bankruptcy or inability of any of our ten-
uninsurable or not economically insurable. Should an unin-
ants to satisfy any obligations with respect to the property
sured loss or a loss in excess of insured limits occur, we
leased to that tenant, we may be required to satisfy such
could lose capital invested in a property, as well as the
obligations. In addition, we may be held directly liable for
anticipated future revenues from a property, while remain-
any such damages or claims irrespective of the provisions
ing obligated for any mortgage indebtedness or other finan-
of any lease.
cial obligations related to the property. Any loss of these
types would adversely affect our financial condition.
14
Acadia Realty Trust 2009 Annual Report
Our Board of Trustees may change our investment
policy without shareholder approval.
as a REIT. The distribution requirements also severely limit
our ability to retain earnings to acquire and improve prop-
Our Board of Trustees will determine our investment
erties or retire outstanding debt.
and financing policies, our growth strategy and our debt,
capitalization, distribution, acquisition, disposition and
operating policies. Our Board of Trustees may establish
investment criteria or limitations as it deems appropriate,
but currently does not limit the number of properties in
which we may seek to invest or on the concentration of
investments in any one geographic region. Although our
Board of Trustees has no present intention to revise or
amend our strategies and policies, it may do so at any
time without a vote by our shareholders. Accordingly,
our shareholders’ control over changes in our strategies
and policies is limited to the election of trustees, and
changes made by our Board of Trustees may not serve
the interests of all of our shareholders and could adversely
affect our financial condition or results of operations,
including our ability to distribute cash to shareholders or
qualify as a REIT.
Distribution requirements imposed by law limit our
operating flexibility.
There can be no assurance we have qualified or
will remain qualified as a REIT for federal income
tax purposes.
We believe that we have consistently met the requirements
for qualification as a REIT for federal income tax purposes
beginning with our taxable year ended December 31, 1993,
and we intend to continue to meet these requirements in
the future. However, qualification as a REIT involves the
application of highly technical and complex provisions of
the Internal Revenue Code, for which there are only limited
judicial or administrative interpretations. No assurance can
be given that we have qualified or will remain qualified as
a REIT. The Internal Revenue Code provisions and income
tax regulations applicable to REITs differ significantly from
those applicable to other corporations. The determination
of various factual matters and circumstances not entirely
within our control can potentially affect our ability to con-
tinue to qualify as a REIT. In addition, no assurance can
be given that future legislation, regulations, administrative
To maintain our status as a REIT for federal income tax
interpretations or court decisions will not significantly change
purposes, we are generally required to distribute to our
the requirements for qualification as a REIT or adversely
shareholders at least 90% of our taxable income for each
affect the federal income tax consequences of such quali-
calendar year. Pursuant to recent IRS pronouncements,
fication. Under current law, if we fail to qualify as a REIT,
up to 90% of such distribution may be made in Common
we would not be allowed a deduction for dividends paid
Shares rather than cash. Our taxable income is determined
to shareholders in computing our net taxable income. In
without regard to any deduction for dividends paid and by
addition, our income would be subject to tax at the regular
excluding net capital gains. To the extent that we satisfy
corporate rates. We also could be disqualified from treat-
the distribution requirement, but distribute less than 100%
ment as a REIT for the four taxable years following the
of our taxable income, we will be subject to federal corpo-
year during which qualification was lost. Cash available
rate income tax on our undistributed income. In addition,
for distribution to our shareholders would be significantly
we will incur a 4% nondeductible excise tax on the amount,
reduced for each year in which we do not qualify as a
if any, by which our distributions in any year are less than
REIT. In that event, we would not be required to continue
the sum of (i) 85% of our ordinary income for that year;
to make distributions. Although we currently intend to
(ii) 95% of our capital gain net income for that year and;
continue to qualify as a REIT, it is possible that future
(iii) 100% of our undistributed taxable income from prior
economic, market, legal, tax or other considerations
years. We intend to continue to make distributions to our
may cause us, without the consent of our shareholders,
shareholders to comply with the distribution requirements
to revoke the REIT election or to otherwise take action
of the Internal Revenue Code and to minimize exposure to
that would result in disqualification.
federal income and nondeductible excise taxes. Differences
in timing between the receipt of income and the payment
of expenses in determining our income as well as required
debt amortization payments and the capitalization of certain
expenses could require us to borrow funds on a short-term
basis to meet the distribution requirements that are neces-
sary to achieve the tax benefits associated with qualifying
Limits on ownership of our capital shares.
For the Company to qualify as a REIT for federal income
tax purposes, among other requirements, not more than
50% of the value of our capital shares may be owned,
directly or indirectly, by five or fewer individuals (as defined
in the Internal Revenue Code to include certain entities)
during the last half of each taxable year after 1993, and
Acadia Realty Trust 2009 Annual Report 15
such capital shares must be beneficially owned by 100 or
In addition, we have entered into an employment agree-
more persons during at least 335 days of a taxable year of
ment with our Chief Executive Officer and severance
12 months or during a proportionate part of a shorter tax-
agreements are in place with our senior vice presidents
able year (in each case, other than the first such year). Our
which provide that, upon the occurrence of a change in
Declaration of Trust includes certain restrictions regarding
control of us and either the termination of their employ-
transfers of our capital shares and ownership limits that
ment without cause (as defined) or their resignation for
are intended to assist us in satisfying these limitations.
good reason (as defined), those executive officers would
These restrictions and limits may not be adequate in all
be entitled to certain termination or severance payments
cases, however, to prevent the transfer of our capital shares
made by us (which may include a lump sum payment
in violation of the ownership limitations. The ownership
equal to defined percentages of annual salary and prior
limit discussed above may have the effect of delaying,
years’ average bonuses, paid in accordance with the
deferring or preventing someone from taking control of us.
terms and conditions of the respective agreement),
Actual or constructive ownership of our capital shares in
excess of the share ownership limits contained in our
Declaration of Trust would cause the violative transfer
or ownership to be null and void from the beginning and
which could deter a change of control of us that could
be in our best interest.
Legislative or regulatory tax changes could have
an adverse effect on us.
subject to purchase by us at a price equal to the lesser
There are a number of issues associated with an invest-
of (i) the price stipulated in the challenged transaction;
ment in a REIT that are related to the federal income tax
and (ii) the fair market value of such shares (determined
laws, including, but not limited to, the consequences of
in accordance with the rules set forth in our Declaration
a company’s failing to continue to qualify as a REIT. At
of Trust). As a result, if a violative transfer were made, the
any time, the federal income tax laws governing REITs or
recipient of the shares would not acquire any economic
the administrative interpretations of those laws may be
or voting rights attributable to the transferred shares. Addi-
amended or modified. Any new laws or interpretations
tionally, the constructive ownership rules for these limits
may take effect retroactively and could adversely affect
are complex and groups of related individuals or entities
us or our shareholders. Reduced tax rates applicable to
may be deemed a single owner and consequently in viola-
certain corporate dividends paid to most domestic non-
corporate shareholders are not generally available to
REIT shareholders since a REIT’s income generally is not
subject to corporate level tax. As a result, investment in
non-REIT corporations may be viewed as relatively more
attractive than investment in REITs by domestic noncor-
porate investors. This could adversely affect the market
price of the Company’s shares.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
tion of the share ownership limits.
Concentration of ownership by certain investors.
Six institutional shareholders own 5% or more individu-
ally, and 48.8% in the aggregate, of our Common Shares.
A significant concentration of ownership may allow an
investor or a group of investors to exert a greater influ-
ence over our management and affairs and may have the
effect of delaying, deferring or preventing a change in
control of us.
Restrictions on a potential change of control.
Our Board of Trustees is authorized by our Declaration
of Trust to establish and issue one or more series of pre-
ferred shares without shareholder approval. We have not
established any series of preferred shares. However, the
establishment and issuance of a series of preferred shares
could make more difficult a change of control of us that
could be in the best interest of the shareholders.
16
Acadia Realty Trust 2009 Annual Report
ITEM 2. PROPERTIES
Shopping Center Properties
The discussion and tables in this Item 2 include properties
Within our Core Portfolio and Opportunity Funds, we had
approximately 500 leases as of December 31, 2009. A
majority of our rental revenues were from national tenants.
A majority of the income from the properties consists
held through our Core Portfolio and our Opportunity Funds.
of rent received under long-term leases. These leases
We define our Core Portfolio as those properties either
generally provide for the payment of fixed minimum rent
100% owned by, or partially owned through joint venture
monthly in advance and for the payment by tenants of a
interests by, the Operating Partnership, or subsidiaries
pro-rata share of the real estate taxes, insurance, utilities
thereof, not including those properties owned through our
and common area maintenance of the shopping centers.
Opportunity Funds. The discussion of the Opportunity
Minimum rents and expense reimbursements accounted
Funds does not include our investment in a portfolio of
for approximately 80% of our total revenues for the year
self-storage properties, which are detailed separately
ended December 31, 2009.
within this Item 2.
As of December 31, 2009, approximately 34% of our
As of December 31, 2009, excluding two properties under
existing leases also provided for the payment of percent-
redevelopment, there are 32 properties in our Core Port-
age rents either in addition to, or in place of, minimum
folio totaling approximately 4.8 million square feet of gross
rents. These arrangements generally provide for payment
leasable area (“GLA”). Adjusting for our pro-rata ownership
to us of a certain percentage of a tenant’s gross sales in
share of partially-owned centers, we own approximately
excess of a stipulated annual amount. Percentage rents
3.9 million square feet of GLA. The Core Portfolio properties
accounted for approximately 0.3% of the total 2009
are located in 12 states and are generally well-established
revenues of the Company.
community and neighborhood shopping centers anchored
by supermarkets or value-oriented retail. The properties
are diverse in size, ranging from approximately 10,000 to
875,000 square feet. As of December 31, 2009, our Core
Portfolio was 92.9% occupied and 92.6% on a pro-rata
ownership basis.
Four of our Core Portfolio properties and two of our
Opportunity Fund properties are subject to long-term
ground leases in which a third party owns and has leased
the underlying land to us. We pay rent for the use of the
land and are responsible for all costs and expenses
associated with the building and improvements at all
As of December 31, 2009, we owned and operated 26
six locations.
properties totaling 2.1 million square feet of GLA, excluding
properties under redevelopment, in our Opportunity Funds.
In addition to shopping centers, the Opportunity Funds’
have invested in mixed-use properties, which generally
include retail activities, and self-storage properties. The
Opportunity Fund properties are located in 15 states.
As of December 31, 2009, the properties owned by our
Opportunity Funds were, in total, 86.8% occupied.
No individual property contributed in excess of 10% of our
total revenues for the years ended December 31, 2009,
2008 and 2007. Reference is made to Note 8 to our Con-
solidated Financial Statements, which begin on page 57
of this Form 10-K, for information on the mortgage debt
pertaining to our properties. The following sets forth more
specific information with respect to each of our shopping
centers at December 31, 2009:
Acadia Realty Trust 2009 Annual Report 17
Shopping Center
Location
Acquired (A)
Interest
GLA
Year
Constructed (C) Ownership
Occupancy %(1)
12/31/09
Anchor Tenants
Current Lease Expiration/
Lease Option Expiration
Core Portfolio
NEW YORK REGION
Connecticut
239 Greenwich Avenue
Greenwich
1998 (A)
Fee
16,834 (2)
100%
Restoration Hardware 2014/2024
Coach 2016/2021
New Jersey
Elmwood Park Shopping Center
Elmwood Park
1998 (A)
Fee
149,491
92%
A&P 2017/2052
A&P Shopping Plaza
Boonton
2006 (A)
Fee
62,908
92%
A&P 2024/2069
Walgreens 2022/2062
New York
Village Commons Shopping Center
Branch Shopping Plaza
Smithtown
Smithtown
1998 (A)
1998 (A)
Fee
LI (3)
87,237
125,751
73%
95%
A&P 2013/2028
CVS 2010/—
Amboy Road
Staten Island
2005 (A)
LI (3)
60,090
100%
King Kullen 2028/—
Bartow Avenue
Pacesetter Park Shopping Center
West Shore Expressway
West 54th Street
East 17th Street
Crossroads Shopping Center
Bronx
Pomona
Staten Island
Manhattan
Manhattan
White Plains
2005 (C)
1999 (A)
2007 (A)
2007 (A)
2008 (A)
1998 (A)
Fee
Fee
Fee
Fee
Fee
14,676
96,353
55,000
9,693
19,622
JV (4)
310,742
76%
89%
100%
100%
100%
94%
Duane Reade 2013/2018
Stop & Shop 2020/2040
LA Fitness 2021/2036
Stage Deli 2018/—
Barnes & Noble 2011/2016
A&P/Waldbaum’s 2012/2032
Kmart 2012/2032
B. Dalton 2012/2022
Modell’s 2014/2019
Pier 1 2012/—
Home Goods 2018/2033
Total New York Region
NEW ENGLAND REGION
Connecticut
Town Line Plaza
Massachusetts
1,008,397
92%
Rocky Hill
1998 (A)
Fee
206,346 (5)
98%
Stop & Shop 2024/2064
Walmart (5)
Methuen Shopping Center
Methuen
1998 (A)
Fee
130,021
100%
DeMoulas Market 2010/2015
Crescent Plaza
Brockton
1984 (A)
Fee
218,141
91%
Supervalu 2012/2042
Walmart 2012/2052
Home Depot 2021/2056
New York
New Loudon Center
Rhode Island
Walnut Hill Plaza
Vermont
Latham
1982 (A)
Fee
255,826
100%
Price Chopper 2015/2035
Woonsocket
1998 (A)
Fee
284,717
96%
Marshall’s 2014/2029
Bon Ton 2014/2034
Raymour and Flanigan 2019/2034
AC Moore 2014/2024
Supervalu 2013/2028
Sears 2013/2033
CVS 2011/2014
The Gateway Shopping Center
South Burlington
1999 (A)
Fee
Total New England Region
101,784
1,196,835
94%
97%
Supervalu 2024/2053
18
Acadia Realty Trust 2009 Annual Report
Shopping Center
Location
Acquired (A)
Interest
GLA
Year
Constructed (C) Ownership
Occupancy %(1)
12/31/09
Anchor Tenants
Current Lease Expiration/
Lease Option Expiration
MIDWEST REGION
Illinois
Hobson West Plaza
Clark Diversey
Indiana
Merrillville Plaza
Naperville
Chicago
1998 (A)
2006 (A)
Fee
Fee
99,126
19,265
93%
92%
Garden Fresh Markets 2012/2032
Merrillville
1998 (A)
Fee
235,026
94%
T.J.Maxx 2019/2029
JC Penney 2013/2018
Office Max 2013/2028
Pier 1 2014
David’s Bridal 2010/2020
K&G Fashion 2017/2027
Michigan
Bloomfield Town Square
Bloomfield Hills
1998 (A)
Fee
232,181
87%
T.J.Maxx 2019/2029
Marshalls 2011/2026
Home Goods 2010/2020
Office Max 2010/2025
Ohio
Mad River Station
Dayton
1999 (A)
Fee
125,984
88%
Babies ‘R’ Us 2010/2020
Office Depot 2010/—
Pier 1 2010/—
Total Midwest Region
711,582
91%
Acadia Realty Trust 2009 Annual Report 19
Shopping Center
Location
Acquired (A)
Interest
GLA
Year
Constructed (C) Ownership
Occupancy %(1)
12/31/09
Anchor Tenants
Current Lease Expiration/
Lease Option Expiration
MID-ATLANTIC REGION
New Jersey
Marketplace of Absecon
Absecon
1998 (A)
Fee
104,718
65%
Rite Aid 2020/2040
Delaware
Brandywine Town Center
Wilmington
2003 (A)
JV (7)
874,908
95%
Michaels 2011/2026
Old Navy (The Gap) 2011/2016
PetSmart 2017/2042
Thomasville Furniture 2011/2021
Access Group 2015/2025
Bed, Bath & Beyond 2014/2029
Dick’s Sporting Goods 2013/2028
Lowe’s Home Centers 2018/2048
Regal Cinemas 2017/2037
Target 2018/2058
TransUnion Settlement 2013/2018
Lane Home Furnishings 2015/—
MJM Designer 2015/2035
Christmas Tree Shops 2028/2048
Market Square Shopping Center
Wilmington
2003 (A)
JV (7)
102,047
96%
T.J.Maxx 2011/2016
Trader Joe’s 2019/2034
Route 202 Shoping Center
Wilmington
2006 (C)
LI/JV (3) (7)
19,970
55%
Pennsylvania
Mark Plaza
Edwardsville
1968 (C)
LI/Fee (3)
216,401
81%
Redner’s Markets 2018/2028
Kmart 2014/2049
Plaza 422
Lebanon
1972 (C)
Fee
156,279
100%
Home Depot 2028/2058
Route 6 Mall
Honesdale
1994 (C)
Fee
175,519
99%
Kmart 2020/2070
Dunham’s 2016/2031
Chestnut Hill
Abington Towne Center
Philadelphia
Abington
2006 (A)
Fee (8)
40,570
1998 (A)
Fee
216,369 (6)
68%
99%
Total Mid-Atlantic Region
Total Core Operating Properties
Properties Under Redevelopment
1,906,781
93%
4,823,595
92.9%
Rite Aid 2011/2026
Fashion Bug 2016/—
Borders 2010/2020
T.J.Maxx 2010/2020
Target (6)
2914 Third Avenue
Ledgewood Mall
Bronx
Ledgewood
2006 (A)
1983 (A)
Fee
Fee
42,400
79%
Dr. J’s 2021/—
517,151
86%
Walmart 2019/2049
Total Core Properties
5,383,146
92%
Macy’s 2010/2025
The Sports Authority 2012/2037
Marshalls 2014/2034
Ashley Furniture 2010/2020
Barnes and Noble 2010/2035
20
Acadia Realty Trust 2009 Annual Report
Shopping Center
Location
Acquired (A)
Interest
GLA
Year
Constructed (C) Ownership
Occupancy %(1)
12/31/09
Anchor Tenants
Current Lease Expiration/
Lease Option Expiration
Opportunity Fund Portfolio
Fund I Properties
Ohio
Granville Centre
New York
Columbus
2002 (A)
Fee
134,997
36%
Lifestyle Family Fitness 2017/2027
Tarrytown Shopping Center
Tarrytown
2004 (A)
Fee
35,291
85%
Walgreens 2080/—
VARIOUS REGIONS
Kroger/Safeway Portfolio
Total Fund I Properties
Fund II Properties
Illinois
Oakbrook
New York
Liberty Avenue
216th Street
Fordham Place
Various
2003 (A)
JV
709,400
100%
18 Kroger/Safeway Supermarkets
879,688
90%
Various
Oakbrook
2005 (A)
LI (3)
112,000
100%
Neiman Marcus 2011/2036
New York
New York
Bronx
2005 (A)
2005 (A)
2004 (A)
LI/JV (3)
JV
JV
26,125
60,000
119,446
100%
100%
82%
CVS 2032/2052
City of New York 2027/2032
Best Buy 2019/2039
Sears 2023/2033
Pelham Manor Shopping Plaza
Pelham Manor
2004 (A)
LI/JV (3)
229,183
74%
BJ’s Wholesale Club 2033/2053
Total Fund II Properties
Fund III Properties
New York
546,754
85%
Michaels 2013/2033
Cortlandt Towne Center
Mohegan Lake
2009 (A)
641,797
85%
Walmart 2018/2048
A&P 2022/2047
United Artists Theatre 2018/2038
Barnes & Noble 2013/2028
Officemax 2013/2028
Petsmart 2014/2034
Modell’s 2013/2023
Michaels 2017/2037
Old Navy 2014/2019
Marshalls 2014/2024
Best Buy 2017/2032
Total Fund III Properties
Total Opportunity Fund Operating Properties
641,797
2,068,239
85%
87%
Acadia Realty Trust 2009 Annual Report 21
Shopping Center
Location
Acquired (A)
Interest
GLA
Year
Constructed (C) Ownership
Occupancy %(1)
12/31/09
Anchor Tenants
Current Lease Expiration/
Lease Option Expiration
Properties Under Redevelopment
Sterling Heights Shopping Center
Detroit
Sherman Plaza
CityPoint
Atlantic Avenue
Canarsie Plaza
Westport
Sheepshead Bay
161st Street
Total Redevelopment Properties
New York
Brooklyn
Brooklyn
Brooklyn
Westport
Brooklyn
Bronx
2004 (A)
2005 (A)
2007 (A)
2007 (A)
2007 (A)
2007 (A)
2007 (A)
2005 (A)
JV (9)
154,835
60%
JV
JV
JV
JV
JV
JV
JV
—
—
—
—
—
—
227,379
382,214
—
—
—
—
—
—
84%
74%
Target
City of New York 2011/—
Notes:
(5) Includes a 97,300 square foot Walmart which is not owned by us.
(1) Does not include space leased for which rent had not yet commenced as of
(6) Includes a 157,616 square foot Target Store that is not owned by us.
December 31, 2009.
(2) In addition to the 16,834 square feet of retail GLA, this property also has 21
apartments comprising 14,434 square feet.
(3) We are a ground lessee under a long-term ground lease.
(4) We have a 49% investment in this property.
(7) We have a 22% investment in this property.
(8) Property consists of two buildings.
(9) Fund I has a 50% interest in this property.
22
Acadia Realty Trust 2009 Annual Report
Major Tenants
No individual retail tenant accounted for more than 5.8% of minimum rents for the year ended December 31, 2009 or
occupied more than 6.8% of total leased GLA as of December 31, 2009. The following table sets forth certain information
for the 20 largest retail tenants based upon minimum rents in place as of December 31, 2009. The amounts below
include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in
properties, including the Opportunity Funds (GLA and rent in thousands):
Percentage of Total
Represented by Retail Tenant
Annualized
Base Rent (1)
Total Portfolio
GLA (2)
Annualized Base
Rent (2)
$ 3,468,127
2,420,980
3.8%
3.5%
Retail Tenant
A&P (Waldbaum’s, Pathmark)
Supervalu (Shaw’s)
TJX Companies (T.J.Maxx, Marshalls,
Homegoods)
Walmart
Sears (Sears, Kmart)
Stage Deli
Ahold (Stop & Shop)
L.A. Fitness
Safeway
Barnes & Noble
Home Depot
Restoration Hardware
Walgreens
Sleepy’s
Price Chopper
BJ’s Wholesale Club
King Kullen
Macy’s
Kroger
Payless Shoesource
Total
Notes:
Total GLA
191,902
175,801
255,843
235,996
341,708
Number of Stores
in Portfolio
5
3
10
3
5
1
2
1
2,254,281
1,713,410
1,653,320
4,211
1,403,822
117,911
1,363,237
55,000
1,265,000
12
123,626
1,212,747
4
2
1
3
5
1
1
1
1
6
8
43,260
1,146,102
211,003
1,099,996
12,293
22,692
33,635
77,450
25,881
37,266
73,349
77,383
27,739
1,041,152
854,313
828,474
802,105
772,834
745,320
651,245
626,822
603,259
5.1%
4.7%
6.8%
0.1%
2.4%
1.1%
2.5%
0.9%
4.2%
0.2%
0.5%
0.7%
1.6%
0.5%
0.7%
1.5%
1.5%
0.6%
5.8%
4.0%
3.8%
2.9%
2.8%
2.3%
2.3%
2.1%
2.0%
1.9%
1.8%
1.7%
1.4%
1.4%
1.3%
1.3%
1.2%
1.1%
1.0%
1.0%
75
2,143,949
$ 25,926,546
42.9%
43.1%
(1) Base rents do not include percentage rents (except where noted), additional rents for property expense reimbursements, and contrac-
tual rent escalations due after December 31, 2009.
(2) Represents total GLA and annualized base rent for our retail properties including the Operating Partnership’s pro-rata share of joint
venture properties, including the Opportunity Funds.
Acadia Realty Trust 2009 Annual Report 23
Lease Expirations
The following table shows scheduled lease expirations for retail tenants in place as of December 31, 2009, assuming that
none of the tenants exercise renewal options. (GLA and Annualized Base Rent in thousands):
Core Portfolio:
Leases maturing in
Month to Month
2010
2011
2012
2013
2014
2015
2016
2017
2018
Thereafter
Total
Number of
Leases
Annualized Base Rent (1)
Current
Annual Rent
Percentage
of Total
GLA
Square Feet
Percentage
of Total
11
62
62
52
55
57
22
12
18
25
47
423
$
355
6,013
7,107
6,468
8,803
7,842
5,000
1,940
4,592
7,013
13,055
$ 68,188
1%
9%
10%
9%
13%
12%
7%
3%
7%
10%
19%
100%
17
543
379
555
524
556
285
123
202
403
1,128
4,715
0%
12%
8%
12%
11%
12%
6%
3%
4%
9%
23%
100%
Opportunity Funds:
Number of
Leases
9
6
27(2)
8
6
13
4
1
5
10
22
111
Leases maturing in
Month to Month
2010
2011
2012
2013
2014
2015
2016
2017
2018
Thereafter
Total
Notes:
Annualized Base Rent (1)
Current
Annual Rent
Percentage
of Total
GLA
Square Feet
Percentage
of Total
$
428
239
11,172
859
2,086
2,160
221
177
1,583
2,383
14,595
$ 35,903
1%
1%
31%
2%
6%
6%
1%
0%
4%
7%
41%
100%
31
13
980
38
95
107
9
9
97
198
522
2,099
1%
1%
47%
2%
5%
5%
0%
0%
5%
9%
25%
100%
(1) Base rents do not include percentage rents, additional rents for property expense reimbursements, nor contractual rent escalations
due after December 31, 2009.
(2) Includes 18 Kroger/Safeway leases representing annualized base rent of $6,492 and GLA of 709 square feet. Reference is made to
page 27 below for a discussion of the Kroger/Safeway portfolio.
24
Acadia Realty Trust 2009 Annual Report
Geographic Concentrations
The following table summarizes our retail properties by region as of December 31, 2009. (GLA and Annualized Base Rent
in thousands):
Region
Core Properties:
New York Region (3)
New England
Midwest
Mid-Atlantic
Total Core Properties
Opportunity Funds:
Operating Properties:
Midwest (4)
New York Region (5)
Various (Kroger/Safeway
GLA (1)
Occupied % (2)
Annualized
Base Rent (2)
Annualized Base
Rent Per Occupied
Square Foot
1,051
1,197
711
2,424
5,383
92%
97%
91%
91%
92%
$ 24,453
10,225
8,666
24,844
$ 68,188
$ 25.42
9.66
13.45
12.19
$ 14.50
Percentage of Total
Represented by Region
GLA
20%
22%
13%
45%
Annualized
Base Rent
36%
15%
13%
36%
100%
100%
247
1,112
65%
83%
$ 1,418
23,044
$ 8.87
24.87
12%
54%
5%
74%
Portfolio) (6)
709
100%
6,492
9.15
34%
21%
Total Opportunity Fund
Operating Properties
2,068
87%
$ 30,954
$ 17.23
100%
100%
Redevelopment Properties:
Midwest (7)
New York Region (8)
Total Opportunity Fund
155
227
61%
84%
$
563
4,385
$ 6.02
23.09
41%
59%
11%
89%
Redevelopment Properties
382
74%
$ 4,948
$ 17.46
100%
100%
Notes:
(1) Property GLA includes a total of 255,000 square feet, which is not owned by us. This square footage has been excluded for
calculating annualized base rent per square foot.
(2) The above occupancy and rent amounts do not include space that is currently leased, but for which payment of rent had not
commenced as of December 31, 2009.
(3) We have a 49% interest in two partnerships, which together, own the Crossroads Shopping Center.
(4) We have a 37.78% interest in future earnings and distributions from Fund I, which owns one property, and a 20% interest in Fund II,
which owns one property.
(5) We have a 37.78% interest in future earnings and distributions from Fund I, which owns one property, a 20% interest in Fund II,
which has a 99.01% interest in four properties, and a 20% interest in Fund III, which owns one property.
(6) Fund I portfolio of 18 triple-net, anchor-only leases with Kroger and Safeway supermarkets.
(7) We have a 37.78% interest in future earnings and distributions from Fund I, which has a 50% interest in one property.
(8) We have a 20% interest in Fund II, which has a 99.01% interest in one property.
Acadia Realty Trust 2009 Annual Report 25
Self-Storage Portfolio
During February 2008, through Fund III, we acquired a
95% controlling interest in a portfolio of 11 self-storage
properties from Storage Post’s existing institutional investors
for approximately $174.0 million. In addition, we, through
Fund II, developed three self-storage properties. The 14
self-storage property portfolio, located throughout New
York and New Jersey, totals 1,126,708 net rentable square
feet, and is operating at various stages of stabilization as
detailed in the table below. The portfolio is operated by
Storage Post, which is an equity partner.
Owner Operating Properties
Location
Net Rentable
Occupancy as of
Square Feet
December 31, 2009
Stabilized
Fund III Suffern
Fund III Yonkers
Fund III
Jersey City
Fund III Webster Avenue
Fund III Linden
Subtotal Stabilized
Suffern, New York
Westchester, New York
Jersey City, New Jersey
Bronx, New York
Linden, New Jersey
Redeveloped — in Lease-up
Fund III Bruckner Boulevard
Bronx, New York
Fund III New Rochelle
Fund III Long Island City
Westchester, New York
Queens, New York
Subtotal in Lease-up
Total Operating Properties
In Initial Lease-up
Fund III Fordham Road
Fund III Ridgewood
Fund III Lawrence
Fund II
Liberty Avenue
Fund II
Pelham Plaza
Fund II Atlantic Avenue
Bronx, New York
Queens, New York
Lawrence, New York
Queens, New York
Pelham Manor, New York
Brooklyn, New York
78,950
100,523
76,720
36,535
84,235
376,963
89,448
42,203
134,816
266,467
643,430
84,955
88,839
97,693
72,850
62,020
76,921
85.3%
70.9%
79.3%
Subtotal in Initial Leaseup
483,278
51.7%
Total Self-Storage Portfolio
1,126,708
26
Acadia Realty Trust 2009 Annual Report
Kroger/Safeway Portfolio
At December 31, 2009, Fund I, together with an unaffiliated
assets was made in an effort to defraud creditors. We
believe this aspect of the case is without merit. There
joint venture partner (“Kroger/Safeway JV”), owns interests,
are four other claims relating to transfers of assets of
through two master leases with an unaffiliated entity
(“Master Lessee”), in 18 triple-net Kroger and Safeway
supermarket leases (“Operating Leases”) aggregating
approximately 0.7 million square feet. There are six
Kroger and 12 Safeway locations in 11 states averaging
approximately 39,000 square feet at rents ranging from
approximately $3.90 to $7.00 per square foot. The master
leases expire in 2011 with the Master Lessee having the
option of extending the term of either or both of the master
leases. The Kroger/Safeway JV acquired its interest subject
to long-term ground leases, which have a term in excess
of 80 years inclusive of multiple renewal options. Although
there is no obligation for the Kroger/Safeway JV to pay
ground rent during the initial term of the master lease, to
the extent it exercises an option to renew a ground lease
for a property thereafter, it will be obligated to pay an aver-
age ground rent of approximately $2.00 per square foot.
The Kroger Co. purchased six locations comprising
277,700 square feet, or 28% of the portfolio, during
February of 2009 for $14.6 million, resulting in a gain of
approximately $5.6 million.
The initial Operating Leases expired during 2009. Options
on these leases provide for extensions through 2049 at an
average rent of approximately $5.00 per square foot upon
Mervyns at various times. We believe there are substantial
defenses to these claims. The matter is in the early stages
of discovery and we believe the lawsuit will not have a
material adverse effect on our results of operations or
consolidated financial condition.
ITEM 4. SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders
through the solicitation of proxies or otherwise during the
fourth quarter of 2009.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCK MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
(a) Market Information, dividends and record holders
of our Common Shares
The following table shows, for the period indicated, the high
and low sales price for our Common Shares as reported on
the New York Stock Exchange, and cash dividends declared
during the two years ended December 31, 2009 and 2008:
Dividend
Per Share
the commencement of the initial option period during 2009.
Quarter Ended
High
Low
All of the remaining locations exercised their extension
options during 2009.
ITEM 3. LEGAL PROCEEDINGS
We are involved in other various matters of litigation aris-
ing in the normal course of business. While we are unable
to predict with any certainty the amounts involved, man-
agement is of the opinion that, when such litigation is
resolved, our resulting net liability, if any, will not have a
significant effect on our consolidated financial position or
2009
March 31, 2009
June 30, 2009
September 30, 2009
December 31, 2009
2008
$14.69
15.44
16.51
17.69
$8.50
10.37
11.55
13.31
$0.2100
0.1800
0.1800
0.1800
March 31, 2008
$26.09
$21.17
$0.2100
June 30, 2008
September 30, 2008
December 31, 2008
26.78
26.14
25.23
22.54
21.38
9.04
0.2100
0.2100
0.7600
results of operations.
At March 1, 2010, there were 326 holders of record of our
In September 2008, we, and certain of our subsidiaries,
Common Shares.
and other unrelated entities were named as defendants
We have determined for income tax purposes that the
in an adversary proceeding brought by Mervyn’s LLC
composition of dividends for 2009 are as follows. 95% of
(“Mervyns”) in the United States Bankruptcy Court for
the total dividends distributed to shareholders represented
the District of Delaware. This lawsuit involves five claims
ordinary income, 4% represented unrecaptured Section
alleging fraudulent transfers. The first claim is that, at the
1250 gain and 1% represented Section 1231 gain. The
time of the sale of Mervyns by Target Corporation to a
dividend for the quarter ended December 31, 2009 was
consortium of investors including Acadia, a transfer of
paid on February 1, 2010 and will be taxable in 2010. Our
Acadia Realty Trust 2009 Annual Report 27
cash flow is affected by a number of factors, including the
(b) Issuer purchases of equity securities
revenues received from rental properties, our operating
We have an existing share repurchase program that autho-
expenses, the interest expense on our borrowings, the
rizes management, at its discretion, to repurchase up to
ability of lessees to meet their obligations to us and unan-
$20.0 million of our outstanding Common Shares. The pro-
ticipated capital expenditures. Future dividends paid by
gram may be discontinued or extended at any time and
us will be at the discretion of the Trustees and will depend
there is no assurance that we will purchase the full amount
on our actual cash flows, our financial condition, capital
authorized. There were no Common Shares repurchased
requirements, the annual distribution requirements under
by us during the fiscal year ended December 31, 2009.
the REIT provisions of the Code and such other factors
as the Trustees deem relevant. In addition, we have the
ability to pay dividends in cash, Common Shares or in any
combination of cash (minimum 10%) and Common Shares
(maximum 90%).
(c) Securities authorized for issuance under equity compensation plans
The following table provides information related to our 1999 Share Incentive Plan (the “1999 Plan”), 2003 Share Incentive
Plan (the “2003 Plan”) and the 2006 Share Incentive Plan (the “2006 Plan”) as of December 31, 2009:
Equity Compensation Plan Information
(a)
(b)
Number of securities to be issued
upon exercise of outstanding
options, warrants and rights
Weighted-average
exercise price of outstanding
options, warrants and rights
(c)
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column a)
Eq uity compensation plans
approved by security holders
159,283
Eq uity compensation plans
not approved by security holders
Total
Notes:
—
159,283
$18.04
—
$18.04
1,037,444 (1)
—
1,037,444 (1)
(1) The 1999 Plan authorizes the issuance of options equal to up to 8% of the total Common Shares outstanding from time to time on a
fully diluted basis. However, not more than 4,000,000 of the Common Shares in the aggregate may be issued pursuant to the exer-
cise of options and no participant may receive more than 5,000,000 Common Shares during the term of the 1999 Plan. The 2003 Plan
authorizes the issuance of options equal to up to 4% of the total Common Shares outstanding from time to time on a fully diluted
basis. However, no participant may receive more than 1,000,000 Common Shares during the term of the 2003 Plan. The 2006 Plan
authorizes the issuance of a maximum number of 500,000 Common Shares. No participant may receive more than 500,000 Common
Shares during the term of the 2006 Plan.
Remaining Common Shares available is as follows:
Outstanding Common Shares as of December 31, 2009
Outstanding OP Units as of December 31, 2009
Total Outstanding Common Shares and OP Units
12% of Common Shares and OP Units pursuant to the 1999 and 2003 Plans
Common Shares pursuant to the 2006 Plan
Total Common Shares available under equity compensation plans
Less: Issuance of Restricted Shares and LTIP Units Granted
Issuance of Options Granted
Number of Common Shares remaining available
39,787,018
657,786
40,444,804
4,853,376
500,000
5,353,376
(1,540,413)
(2,775,519)
1,037,444
28
Acadia Realty Trust 2009 Annual Report
(d) Share Price Performance Graph (1)
The following graph compares the cumulative total shareholder return for our Common Shares for the period commencing
December 31, 2004 through December 31, 2009 with the cumulative total return on the Russell 2000 Index (“Russell 2000”),
the NAREIT All Equity REIT Index (the “NAREIT”) and the SNL Shopping Center REITs (the “SNL”) over the same period.
Total return values for the Russell 2000, the NAREIT, the SNL and the Common Shares were calculated based upon
cumulative total return assuming the investment of $100.00 in each of the Russell 2000, the NAREIT, the SNL and our
Common Shares on December 31, 2004, and assuming reinvestment of dividends. The shareholder return as set forth
in the table below is not necessarily indicative of future performance.
Comparison of Five-Year Cumulative Total Return among Acadia Realty Trust, the Russell 2000,
the NAREIT and the SNL:
Total Return Performance
200
175
150
125
100
75
50
e
u
l
a
V
x
e
d
n
I
Acadia Realty Trust
Russell 2000
NAREIT All Equity REIT Index
SNL REIT Retail
Shopping Center Index
25
12/31/04
12/31/05
12/31/06
12/31/07
12/31/08
12/31/09
Period Ended
Index
Acadia Realty Trust
Russell 2000
NAREIT All Equity REIT Index
SNL REIT Retail Shopping Ctr Index
12/31/04
12/31/05
12/31/06
12/31/07
12/31/08
12/31/09
100.00
100.00
100.00
100.00
127.93
104.55
112.16
109.12
164.70
123.76
151.49
146.88
175.34
121.82
127.72
120.93
106.43
80.66
79.53
72.81
132.98
102.58
101.79
71.87
(1) The information in this section is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by
reference into any filing of the Trust under the Securities Act or the Exchange Act, whether made before or after the date hereof
and irrespective of any general incorporation language contained in such filing.
Acadia Realty Trust 2009 Annual Report 29
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth, on a historical basis, our selected financial data. This information should be read in conjunc-
tion with our audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condi-
tion and Results of Operations appearing elsewhere in this Form 10-K. Funds from operations (“FFO”) amounts for the
year ended December 31, 2009 have been adjusted as set forth in “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations – Reconciliation of Net Income to Funds from Operations and Adjusted
Funds From Operations.”
(dollars in thousands, except per share amounts)
2009
2008
2007
2006
2005
Years ended December 31,
OPERATING DATA:
Revenues
Operating expenses
Interest expense
Depreciation and amortization
Gain on sale of land
Equity in (losses) earnings of
unconsolidated partnerships
Impairment of notes receivable
Gain on extinguishment of debt
Income tax provision (benefit)
Income from continuing operations
Income from discontinued operations
Income from extraordinary item (1)
$ 147,345
71,141
32,154
37,218
—
(5,297)
(1,734)
7,057
1,541
5,317
7,389
—
$ 137,936
61,390
28,893
33,334
763
$ 95,092
46,265
24,564
25,114
—
$ 89,335
40,525
19,929
23,016
—
$ 87,592
36,250
16,166
22,375
—
19,906
6,619
2,559
21,280
(4,392)
1,523
3,362
28,757
8,680
—
—
—
297
5,471
7,246
27,844
40,561
—
—
(508)
8,932
25,223
—
—
—
2,140
31,941
2,657
—
34,155
34,598
Net income
12,706
37,437
Loss (income) attributable to noncontrolling
interests in subsidiaries:
Continuing operations
Discontinued operations
Extraordinary item
Net loss (income) attributable to noncontrolling
23,282
(4,855)
(11,630)
(739)
9,558
(606)
—
—
(24,167)
5,594
(829)
—
(13,650)
(322)
—
interests in subsidiaries
18,427
(12,369)
Net income attributable to Common Shareholders
$ 31,133
$ 25,068
(15,215)
$ 25,346
4,765
$ 38,920
(13,972)
$ 20,626
Supplemental Information:
Income from continuing operations attributable
to Common Shareholders
$ 28,599
$ 17,127
$ 15,029
$ 14,526
$ 18,291
Income from discontinued operations attributable
to Common Shareholders
2,534
7,941
6,640
24,394
2,335
Income from extraordinary item attributable
to Common Shareholders
—
—
3,677
—
—
Net income attributable to Common Shareholders
$ 31,133
$ 25,068
$ 25,346
$ 38,920
$ 20,626
Basic earnings per share:
Income from continuing operations
Income from discontinued operations
Income from extraordinary item
Basic earnings per share
Diluted earnings per share:
Income from continuing operations
Income from discontinued operations
Income from extraordinary item
Diluted earnings per share
$
0.75
0.07
—
$
0.51
0.23
—
$
0.82
$
0.74
$
0.75
0.07
—
$
0.50
0.23
—
$
0.82
$
0.73
$
$
$
$
0.45
0.20
0.11
0.76
0.44
0.19
0.11
0.74
$
0.43
0.72
—
$
0.55
0.07
—
$
1.15
$
0.62
$
0.42
0.71
$
0.55
0.07
—
—
$
1.13
$
0.62
30
Acadia Realty Trust 2009 Annual Report
(dollars in thousands, except per share amounts)
2009
2008
2007
2006
2005
Years ended December 31,
Weighted average number of Common Shares
outstanding
– basic
– diluted
38,005
38,242
33,813
34,267
33,600
34,282
Cash dividends declared per Common Share
$ 0.7500
$ 0.8951 (3)
$ 1.0325
BALANCE SHEET DATA:
Real estate before accumulated depreciation
$ 1,207,406
$ 1,091,995
1,382,464
1,291,383
732,287
47,910
312,185
220,292
532,477
653,543
100,403
227,722
214,506
442,228
$ 817,620
998,783
399,997
105,790
249,717
171,111
420,828
33,789
34,440
$ 0.7550
$ 613,828
851,396
315,147
90,256
250,567
113,737
364,304
33,236
33,501
$ 0.7025
$ 634,871
841,204
372,957
—
220,576
146,290
366,866
Total assets
Total mortgage indebtedness
Total convertible notes payable
Total Common Shareholders’ equity
Noncontrolling interests in subsidiaries
Total equity
OTHER:
Funds from Operations, adjusted for
extraordinary item (1) (2)
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
49,613
37,964
42,094
39,860
35,842
47,462
(123,380)
83,035
66,517
(302,265)
199,096
105,294
(208,998)
87,476
39,627
(58,890)
68,359
50,239
(135,470)
159,425
Notes:
(1) The extraordinary item only relates to 2007 and represents
the Company’s share of an extraordinary gain from its private-
equity investment in Albertson’s. The Company considers its
private-equity investments to be investments in operating
businesses as opposed to real estate. Accordingly, all gains
and losses from private-equity investments are included in
FFO, which management believes provides a more accurate
reflection of the operating performance of the Company.
(2) The Company considers funds from operations (“FFO”) as
defined by the National Association of Real Estate Investment
Trusts (“NAREIT”) to be an appropriate supplemental disclo-
sure 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
the performance of the Company. 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 and depreciation and amortization.
However, the Company’s 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 gen-
erally 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 per-
formance 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.
(3) In addition to the $0.8951 cash dividends declared in 2008,
the Company declared a Common Share dividend of $0.4949.
Acadia Realty Trust 2009 Annual Report 31
Management’s Discussion and Analysis
ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
As of December 31, 2009, we operated 79 properties,
which we own or have an ownership interest in, within
our Core Portfolio or within our three Opportunity Funds.
Our Core Portfolio consists of those properties either
100% owned by, or partially owned through joint venture
(cid:174) Own and operate a Core Portfolio of community and
neighborhood shopping centers and main street retail
located in markets with strong demographics and
generate internal growth within the Core Portfolio
through aggressive redevelopment, re-anchoring
and/or leasing activities.
(cid:174) Maintain a strong and flexible balance sheet through
conservative financial practices while ensuring access
to sufficient capital to fund future growth.
interests by the Operating Partnership, or subsidiaries
(cid:174) Generate external growth through an opportunistic yet
thereof, not including those properties owned through our
disciplined acquisition program. We target transactions
Opportunity Funds. These 79 properties consist of com-
with high inherent opportunity for the creation of addi-
mercial properties, primarily neighborhood and community
tional value through redevelopment and leasing and/or
shopping centers, self-storage and mixed-use properties
transactions requiring creative capital structuring to
with a retail component. The properties we operate are
facilitate the transactions. These transactions may
located primarily in the Northeast, Mid-Atlantic and Mid-
include other types of commercial real estate besides
western regions of the United States. Excluding two prop-
those which we invest in through our Core Portfolio.
erties under redevelopment, there are 32 properties in our
These may also include joint ventures with private equity
Core Portfolio totaling approximately 4.8 million square
investors for the purpose of making investments in
feet. Fund I has 21 properties comprising approximately
operating retailers with significant embedded value
1.0 million square feet. Fund II has 10 properties, seven of
in their real estate assets.
which (representing 1.2 million square feet) are currently
operating, one is under construction, and two are in design
phase. Three of the properties also include self-storage
facilities. We expect the Fund II portfolio will have approxi-
mately 2.0 million square feet upon completion of all current
construction and anticipated redevelopment activities.
Fund III has 14 properties totaling approximately 1.8 million
square feet, of which 11 locations representing 0.9 million
net rentable square feet are self-storage facilities. The
majority of our operating income is derived from rental
revenues from these 79 properties, including recoveries
from tenants, offset by operating and overhead expenses.
As our RCP Venture invests in operating companies, we
consider these investments to be private-equity style, as
opposed to real estate, investments. Since these are not
traditional investments in operating rental real estate but
investments in operating businesses, the Operating
Partnership invests in these through a taxable REIT sub-
sidiary (“TRS”).
Our primary business objective is to acquire and manage
commercial retail properties that will provide cash for distri-
butions to shareholders while also creating the potential for
capital appreciation to enhance investor returns. We focus
on the following fundamentals to achieve this objective:
Business Outlook
The U.S. economy is currently in a post-recessionary
period, which has resulted in a significant decline in retail
sales due to reduced consumer spending. Many financial
and economic analysts are predicting that this period will
extend beyond 2009. Although the occupancy and net
operating income within our portfolio has not been
materially adversely affected through December 31, 2009,
should retailers continue to experience deteriorating sales
performance, the likelihood of additional tenant bankruptcy
filings may increase, which would negatively impact our
results of operations. In addition to the impact on retailers,
this period has had an unprecedented impact on the U.S.
credit markets. Traditional sources of financing, such as
the commercial-mortgage backed security market, have
become severely curtailed, if not eliminated. If these con-
ditions continue, our ability to finance new acquisitions or
refinance existing debts as they mature will be adversely
affected. Accordingly, our ability to generate external
growth in income, as well as maintain existing operating
income, could be limited.
See the “Item 1A. Risk Factors,” including the discussions
under the headings “The current economic environment,
while improving, may cause us to lose tenants and may
impair our ability to borrow money to purchase properties,
32
Acadia Realty Trust 2009 Annual Report
refinance existing debt or finance our current redevelopment projects” and “The bankruptcy of, or a downturn in the busi-
ness of, any of our major tenants or a significant number of our smaller tenants may adversely affect our cash flows and
property values.”
Results of Operations
Reference is made to Note 3 to the Notes to Consolidated Financial Statements beginning on page 57 of this Form 10-K
for an overview of our five reportable segments.
Comparison of the year ended December 31, 2009 (“2009”) to the year ended December 31, 2008 (“2008”)
(dollars in millions)
2009
2008
Core Opportunity Storage Receivable
Core
Self-
Notes
and Other Portfolio
Revenues:
Minimum rents
Percentage rents
Expense reimbursements
Lease termination income
Other property income
Management fee income (1)
Interest income
Other income
Portfolio
$ 50.7
0.5
13.7
2.8
0.2
—
—
1.7
Funds
$ 35.7
—
7.2
—
1.4
—
—
—
Portfolio
$ 9.8
—
—
—
1.3
—
—
—
$ —
—
—
—
—
2.0
20.3
—
Total revenues
$ 69.6
$ 44.3
$ 11.1
$ 22.3
Notes
Self-
Opportunity Storage Receivable
Portfolio and Other
$ 4.8
—
—
—
0.8
—
—
—
Funds
$ 22.4
—
2.7
24.0
(0.6)
—
—
—
$ —
—
—
—
0.6
3.4
14.5
—
$ 48.5
$ 5.6
$ 18.5
$ 50.4
0.5
14.1
—
0.3
—
—
—
$ 65.3
(1) Includes fees earned by the Company as general partner/managing member of the Opportunity Funds that are eliminated in con-
solidation. The Operating Partnership’s share of these fees are recognized as a reduction in noncontrolling interests. The net balance
reflected herein represents third party fees which are not eliminated in consolidation.
The increase in minimum rents in the Opportunity Funds
Lease termination income in the Core Portfolio for 2009
primarily relates to additional rents following the acquisi-
relates to a termination fee earned from Acme at Absecon
tion of Cortlandt Towne Center (“2009 Fund Acquisition”)
Marketplace. Lease termination income in the Opportunity
of $7.5 million and additional leases at Fordham Place
Funds for 2008 relates to a termination fee earned, net of
and Pelham Manor Shopping Plaza commencing in 2009
costs, from Home Depot at Canarsie Plaza.
(“Fordham and Pelham”). The increase in minimum rents
in the Storage Portfolio relates to the February 2008 acqui-
sition of the Storage Post Portfolio and the Company’s
election in 2008 to report the Storage Portfolio activity one
month in arrears to enhance the accuracy and timeliness
Management fee income decreased primarily as a result
of lower fees earned of $0.9 million from the CityPoint
development project and lower fees from our Klaff man-
agement contracts.
of reporting. Accordingly, the year ended December 31,
The increase in interest income was the result of higher
2008 reflects nine months of activity while the year ended
interest earning assets in 2009, primarily from new notes/
December 31, 2009 reflects twelve months of activity
mezzanine financing investments originated during the
(“Storage Acquisition”). In addition, the increase in minimum
second half of 2008.
rents in the Storage Portfolio was also attributable to the full
amortization of acquired lease intangible cost during 2009.
Other income of $1.7 million in the Core Portfolio was
the result of the Company’s retention of a sales contract
Expense reimbursements in the Opportunity Funds
deposit forfeited during 2009.
increased for both real estate taxes and common area
maintenance as a result of the 2009 Fund Acquisition as
well as Fordham and Pelham.
Acadia Realty Trust 2009 Annual Report 33
Management’s Discussion and Analysis continued
(dollars in millions)
2009
2008
Core Opportunity Storage Receivable
Core
Self-
Notes
Operating Expenses:
Property operating
Real estate taxes
General and administrative
Depreciation and amortization
Abandonment of project costs
Reserve for notes receivable
Portfolio
$ 12.1
9.3
24.0
17.2
—
—
Total operating expenses
$ 62.6
Funds
$ 10.2
5.3
13.5
17.1
2.5
—
$ 48.6
Portfolio
$ 8.7
2.2
0.1
4.4
—
—
and Other Portfolio
$ (1.2)
—
(15.6)
(1.5)
—
1.7
$ 12.2
8.8
26.0
20.3
—
—
Notes
Self-
Opportunity Storage Receivable
Portfolio and Other
$ 5.3
1.3
0.1
3.0
—
—
Funds
$ 7.0
2.0
16.1
10.0
0.6
—
$ (0.4)
—
(17.6)
—
—
4.4
$ 15.4
$ (16.6)
$ 67.3
$ 35.7
$ 9.7
$ (13.6)
The increase in property operating expenses in the Oppor-
attributable to the bankruptcy of Circuit City. Amortization
tunity Funds was primarily the result of the 2009 Fund
expense in the Core Portfolio decreased $0.7 million primar-
Acquisition as well as Fordham and Pelham. The increase
ily as a result of lower amortization expense in 2009 asso-
in property operating expenses in the Storage Portfolio
ciated with the Klaff management contracts. Depreciation
relates to the Storage Acquisition.
expense increased $5.0 million and amortization expense
The increase in real estate taxes in the Opportunity Funds
was primarily attributable to the 2009 Fund Acquisition.
The increase in real estate taxes in the Storage Portfolio
relates to the Storage Acquisition.
increased $2.1 million in the Opportunity Funds primarily
due to the 2009 Fund Acquisition as well as Fordham and
Pelham. Depreciation expense and amortization expense
increased $1.4 million in the Storage Portfolio primarily as
a result of the Storage Acquisition as previously discussed.
The decrease in general and administrative expense in the
Depreciation and amortization expense decreased $1.5
Core Portfolio was primarily attributable to reduced com-
million in Other as a result of depreciation associated with
pensation expense following staff reductions in the second
the elimination of capitalizable costs within the consoli-
half of 2008 and in the first half of 2009. The decrease in
dated group.
general and administrative expense in the Opportunity Funds
relates to the reduction in Promote expense attributable to
Fund I and Mervyns I. The increase in general and admin-
istrative expense in Other primarily relates to the reduction
in Fund I and Mervyns I Promote expense eliminated for
The $2.5 million abandonment of project costs in 2009
is attributable to the Company’s determination that it
most likely will not participate in a specific future develop-
ment project.
consolidated financial statement presentation purposes.
The reserve for notes receivable of $1.7 million in 2009
Depreciation expense in the Core Portfolio decreased
$2.4 million in 2009. This was principally a result of
increased depreciation expense in 2008 resulting from
the write-down of tenant improvements at two properties
relates to the establishment of a reserve for a notes receiv-
able due to the loss of an anchor tenant at the underlying
property. The 2008 reserve for notes receivable of $4.4
million relates to a mezzanine loan.
34
34
Acadia Realty Trust 2009 Annual Report
Acadia Realty Trust 2009 Annual Report
(dollars in millions)
2009
2008
Core Opportunity Storage Receivable
Core
Self-
Notes
Funds
Portfolio
and Other Portfolio
Self-
Opportunity Storage Receivable
Portfolio and Other
Funds
Notes
$ 0.7
Portfolio
Other:
Equity in (losses) earnings
of unconsolidated affiliates
Unconsolidated affiliate
impairment reserve
Interest expense
Gain on debt extinguishment
Gain on sale of land
Income tax provision
Income from discontinued
operations
Loss (income) attributable to
noncontrolling interests in subsidiaries:
– Continuing operations
– Discontinued operations
—
(18.7)
7.1
—
(1.5)
(0.4)
—
—
$ (2.2)
$ —
$ —
$ —
$ 19.9
$ —
$ —
(3.8)
(8.4)
—
—
—
—
(5.0)
—
—
—
—
—
—
—
—
—
(19.8)
1.5
0.8
(3.4)
—
(5.5)
—
—
—
—
(3.6)
—
—
—
—
—
—
—
—
—
—
7.4
—
—
—
8.7
22.3
—
(0.5)
—
1.9
(4.9)
0.2
—
(15.8)
—
0.4
—
3.6
(0.7)
Equity in (losses) earnings of unconsolidated affiliates in
The gain on sale of land of $0.8 million in the Core Portfolio
the Opportunity Funds decreased primarily as a result of
relates to a land sale at Bloomfield Town Square in 2008.
our pro-rata share of gains from the sale of Mervyns loca-
tions in 2008 of $10.4 million, a decrease in distributions
in excess of basis from our Albertson’s investment of $7.9
million in 2009 and our pro-rata share of gain from the sale
of the Haygood Shopping Center of $3.4 million in 2008.
The $3.8 million unconsolidated affiliate impairment reserve
in 2009 relates to a Fund I unconsolidated investment.
Interest expense in the Core Portfolio decreased $1.1
million in 2009. This was primarily the result of lower
interest expense related to the purchase of the Company’s
convertible notes payable offset by a $0.7 million write-off
of the unamortized premium related to the repayment of
a mortgage note payable during 2008. Interest expense
in the Opportunity Funds increased $2.9 million in 2009.
This was primarily attributable to an increase of $4.2 million
due to higher average outstanding borrowings in 2009 and
$0.6 million of lower capitalized interest in 2009. These
increases were offset by a $2.2 million decrease related
The variance in the income tax provision in the Core Port-
folio primarily relates to income taxes at the TRS level for
our share of income/gains from Mervyns and Albertson’s
in 2008.
Income from discontinued operations represents activity
related to properties sold in 2009 and 2008.
Loss (income) attributable to noncontrolling interests in
subsidiaries — Continuing operations for the Opportunity
Funds primarily represents the noncontrolling interests’
share of all Opportunity Fund activity and ranges from a
77.8% interest in Fund I to an 80.1% interest in Fund III.
The variance between 2009 and 2008 represents the non-
controlling interests’ share of all the Opportunity Funds
variances discussed above. Loss (income) attributable to
noncontrolling interests in subsidiaries — Continuing oper-
ations in Other relates to the noncontrolling interests’
share of capitalized construction, leasing and legal fees.
to lower average interest rates in 2009. Interest expense
Loss (income) attributable to noncontrolling interests in
in the Storage Portfolio increased $1.4 million in 2009.
subsidiaries — Discontinued operations primarily repre-
This was primarily due to an increase of $0.9 million due
sents the noncontrolling interests’ share of activity related
to higher average outstanding borrowings in 2009 as well
to properties sold in 2009 and 2008.
as an increase of $0.8 million due to higher interest rates
in 2009.
The gain on debt extinguishment of $7.1 million in 2009
and $1.5 million in 2008 is attributable to the purchase of
our convertible debt at a discount.
Acadia Realty Trust 2009 Annual Report 35
Management’s Discussion and Analysis continued
Comparison of the year ended December 31, 2008 (“2008”) to the year ended December 31, 2007 (“2007”)
(dollars in millions)
2008
2007
Core Opportunity Storage Receivable
Core
Self-
Notes
Revenues:
Minimum rents
Percentage rents
Expense reimbursements
Lease termination income
Other property income
Management fee income (1)
Interest income
Other income
Portfolio
$ 50.4
0.5
14.1
—
0.3
—
—
—
Funds
$ 22.4
—
2.7
24.0
(0.6)
—
—
—
Portfolio
$ 4.8
—
—
—
0.8
—
—
—
Total revenues
$ 65.3
$ 48.5
$ 5.6
and Other Portfolio
$ —
—
—
—
0.6
3.4
14.5
—
$ 18.5
$ 48.6
0.5
12.4
—
0.8
—
—
0.2
$ 62.5
Notes
Self-
Opportunity Storage Receivable
Portfolio and Other
$ 0.3
—
—
—
—
—
—
—
Funds
$ 17.0
—
0.9
—
0.1
—
—
—
$ —
—
—
—
—
4.1
10.3
—
$ 18.0
$ 0.3
$ 14.4
(1) Includes fees earned by the Company as general partner/managing member of the Opportunity Funds that are eliminated in con-
solidation. The Operating Partnership’s share of these fees are recognized as a reduction in noncontrolling interests. The net balance
reflected herein represents third party fees which are not eliminated in consolidation.
The increase in minimum rents in the Core Portfolio was
CAM expense reimbursements in the Core Portfolio
attributable to additional rents following the acquisitions
increased $1.0 million. As a result of the completion of
of 200 West 54th Street, 145 East Service Road and East
a multi-year review of CAM billings during 2007 and the
17th Street (“2007/2008 Core Acquisitions”) of $1.8 million.
resolution of the majority of all outstanding CAM billing
The increase in rents in the Opportunity Funds primarily
issues with our tenants, 2007 CAM expense reimburse-
relates to additional rents following the acquisition of 125
ments were adversely impacted by charges related to
Main Street (“2007 Fund Acquisitions”) of $0.5 million,
this settlement and the related accrual adjustments total-
216th Street being placed in service October 1, 2007 of
ing $1.0 million. The increase in expense reimbursements
$2.1 million, and Pelham Manor Shopping Plaza and Ford-
in the Opportunity Funds relates primarily to the billing in
ham Plaza being partially placed in service in 2008. The
2008 of previous year’s operating expenses at 161st Street
increase in minimum rents in the Storage Portfolio relates
for $1.2 million and the billing of previous year’s utility
to the acquisition of the Storage Post Portfolio (“2008
charges to an anchor tenant for $0.3 million.
Storage Acquisition”).
Lease termination income in the Opportunity Funds for
Expense reimbursements in the Core Portfolio increased
2008 relates to a termination fee earned, net of costs,
for both real estate taxes and common area maintenance
from Home Depot at Canarsie Plaza.
(“CAM”). Real estate tax reimbursements increased $0.7
million in the Core Portfolio as a result of the 2007/2008
Core Acquisitions as well as general increases in real estate
taxes experienced across the Core Portfolio in 2008.
The increase in interest income was the result of higher
interest earning assets in 2008, primarily from new notes/
mezzanine financing investments.
36
Acadia Realty Trust 2009 Annual Report
(dollars in millions)
2008
2007
Core Opportunity Storage Receivable
Core
Self-
Notes
Operating Expenses:
Property operating
Real estate taxes
General and administrative
Depreciation and amortization
Abandonment of project costs
Reserve for notes receivable
Portfolio
$ 12.2
8.8
26.0
20.3
—
—
Total operating expenses
$ 67.3
Funds
$ 7.0
2.0
16.1
10.0
0.6
—
$ 35.7
Portfolio
$ 5.3
1.3
0.1
3.0
—
—
and Other Portfolio
$ (0.4)
—
(17.6)
—
—
4.4
$ 10.4
8.1
25.1
17.4
—
—
Notes
Self-
Opportunity Storage Receivable
Portfolio and Other
$ 0.7
—
—
0.3
—
—
Funds
$ 3.0
1.3
13.0
7.4
0.1
—
$ (0.3)
—
(15.2)
—
—
—
$ 9.7
$ (13.6)
$ 61.0
$ 24.8
$ 1.0
$ (15.5)
The increase in property operating expenses in the Core
increased activity in Opportunity Fund assets and asset
Portfolio relates to additional reserves for tenant receivables,
management services. The increase in general and
including straight line rent. The increase in property operat-
administrative expense in the Opportunity Funds primarily
ing expenses in the Opportunity Funds was attributable to
related to additional Fund III asset management fees of
216th Street being placed in service October 1, 2007 of
$2.8 million in 2008 as well as an increase in other profes-
$0.6 million, allocated property operating expenses related
sional fees. These increases were offset by a $0.8 million
to Pelham Manor Shopping Plaza and Fordham Plaza being
decrease in Promote expense related to Fund I and
partially placed in service in 2008 of $2.3 million as well
Mervyns I. The decrease in general and administrative in
as additional reserves for tenant receivables, which was
“Other” primarily relates to the elimination of the Fund III
primarily for straight line rent receivables. The increase
asset management fees offset by the elimination of the
in property operating expenses in the Storage Portfolio
Fund I and Mervyns I Promote expense for consolidated
relates to the 2008 Storage Acquisition.
financial statement presentation purposes.
The increase in real estate taxes in the Core Portfolio was
Depreciation expense in the Core Portfolio increased $2.9
due to the 2007/2008 Core Acquisitions as well as general
million in 2008. This was principally a result of increased
increases in real estate taxes experienced across the Core
depreciation expense following the full depreciation of
Portfolio. The increase in real estate taxes in the Opportu-
tenant improvements at two properties following the
nity Funds was primarily attributable to allocated real estate
bankruptcy of Circuit City of $2.4 million and increased
taxes related to Pelham Manor Shopping Plaza and Ford-
depreciation expense resulting from the 2007/2008 Core
ham being partially placed in service in 2008. The increase
Acquisitions. The increase in depreciation and amortization
in real estate taxes in the Storage Portfolio relates to the
expense for the Opportunity Funds is primarily related to
acquisition of the 2008 Storage Acquisition.
216th Street being placed in service October 1, 2007 as
The increase in general and administrative expense in the
Core Portfolio was primarily attributable to increased com-
pensation expense of $1.1 million for additional personnel
hired in the second half of 2007 and in 2008 as well as
well as Pelham Manor Shopping Plaza and Fordham Plaza
being partially placed in service in 2008. The increase in
depreciation and amortization in the Storage Portfolio
relates to the acquisition of the 2008 Storage Acquisition.
increases in existing employee salaries. In addition, there
The reserve for notes receivable of $4.4 million in 2008
was an increase of $0.3 million for other overhead expenses
relates to the impairment of a mezzanine loan.
following the expansion of our infrastructure related to
Acadia Realty Trust 2009 Annual Report 37
Management’s Discussion and Analysis continued
(dollars in millions)
2008
2007
Core Opportunity Storage Receivable
Core
Self-
Notes
Funds
Portfolio
and Other Portfolio
Self-
Opportunity Storage Receivable
Portfolio and Other
Funds
Notes
Portfolio
$ —
(19.8)
1.5
0.8
(3.4)
Other:
Equity in (losses) earnings
of unconsolidated affiliates
Interest expense
Gain on debt extinguishment
Gain on sale of land
Income tax provision
Income from discontinued
operations
Extraordinary item
Loss (income) attributable to
noncontrolling interests in subsidiaries:
– Continuing operations
– Discontinued operations
– Extraordinary item
0.2
—
—
—
—
$ 19.9
(5.5)
—
—
—
—
—
$ —
(3.6)
—
—
—
—
—
$ —
—
—
—
—
$ 0.6
(19.4)
—
—
(0.3)
$ 5.8
(5.3)
—
—
—
8.7
—
—
—
—
27.8
$ —
(0.4)
—
—
—
—
—
$ 0.2
0.5
—
—
—
7.2
—
(15.8)
—
—
0.4
—
—
3.6
(0.7)
—
—
—
—
6.5
—
(24.2)
—
—
—
3.0
(0.6)
—
Equity in earnings of unconsolidated affiliates in the
The variance in income tax provision in the Core Portfolio
Opportunity Funds increased primarily as a result of our
primarily relates to income taxes at the TRS level for our
pro-rata share of gains from the sale of Mervyns locations
share of gains from the sale of Mervyns locations in 2008.
in 2008 of $5.2 million, additional distributions in excess of
basis from our Albertson’s investment of $7.9 million and
our pro-rata share of gain from the sale of the Haygood
Income from discontinued operations represents activity
related to properties sold in 2009, 2008 and 2007.
Shopping Center of $3.3 million. These increases were
The extraordinary item in 2007 in the Opportunity Funds
partially offset by a decrease in our pro-rata share of
relates to the extraordinary gain, net of income taxes,
distributions in excess of basis from our investment in
from our Albertson’s investment.
Hitchcock Plaza of $2.7 million as compared to 2007.
Loss (income) attributable to noncontrolling interests in
Interest expense in the Core Portfolio increased $0.4 million
subsidiaries — Continuing operations for the Opportunity
in 2008. This was primarily the result of a $1.1 million
Funds primarily represents the noncontrolling interests’
increase attributable to higher average outstanding bor-
share of all Opportunity Fund activity and ranges from a
rowings in 2008 and a $0.2 million increase related to
77.8% interest in Fund I to an 80.1% interest in Fund III.
higher average interest rates in 2008. These increases
The variance between 2008 and 2007 represents the non-
were offset by a $0.7 million write-off of the unamortized
controlling interests’ share of all the Opportunity Funds
premium related to the repayment of a mortgage note
variances discussed above. Loss (income) attributable to
payable in 2008 and a $0.4 million decrease resulting
noncontrolling interests in subsidiaries — Continuing oper-
from costs associated with a loan payoff in 2007. Interest
ations in Notes Receivable and Other relates to the non-
expense in the Opportunity Funds increased $0.2 million
controlling interests’ share of capitalized construction,
in 2008. This was the result of an increase of $3.2 million
leasing and legal fees.
due to higher average outstanding borrowings in 2008
offset by a $3.1 million decrease related to lower average
interest rates in 2008. Interest expense in the Storage
Portfolio increased $3.2 million as a result of the 2008
Storage Acquisition.
The gain on debt extinguishment of $1.5 million is attrib-
utable to the purchase of the Company’s convertible debt
at a discount in 2008.
The gain on sale of land in 2008 in the Core Portfolio
relates to a land parcel sale at Bloomfield Town Square.
38
Acadia Realty Trust 2009 Annual Report
Loss (income) attributable to noncontrolling interests in
subsidiaries — Discontinued operations primarily represents
the noncontrolling interests’ share of activity related to
properties sold in 2009, 2008 and 2007.
Loss (income) attributable to noncontrolling interests in
subsidiaries — Extraordinary item represents the noncon-
trolling interests’ share of the extraordinary gain from the
Albertson’s investment.
Reconciliation of Net Income to Funds from Operations and Adjusted Funds from Operations
For the years ended December 31,
2009
2008
2007
2006
2005
(dollars in thousands)
Net income attributable to
Common Shareholders
Depreciation of real estate and amortization
of leasing costs:
Consolidated affiliates, net of noncontrolling
interests’ share
Unconsolidated affiliates
Income attributable to noncontrolling interests
$ 31,133
$ 25,068
$ 25,346
$ 38,920
$ 20,626
18,847
1,603
18,519
1,687
19,669
1,736
20,206
1,806
16,676
746
in operating partnership (1)
465
437
614
803
416
Gain on sale of properties (net of noncontrolling
interests’ share)
Consolidated affiliates
Unconsolidated affiliates
Extraordinary item (net of noncontrolling
interests’ share and income taxes) (3)
Funds from operations (2)
Add back: Extraordinary item, net (3)
Funds from operations, adjusted
for extraordinary item
Notes:
(2,435)
—
(7,182)
(565)
(5,271)
—
(20,974)
(901)
50
(2,672)
—
49,613
—
—
37,964
—
(3,677)
38,417
3,677
—
39,860
—
—
35,842
—
$ 49,613
$ 37,964
$ 42,094
$ 39,860
$ 35,842
(1) Represents income attributable to Common OP Units and does not include distributions paid to Series A and B Preferred OP Unitholders.
(2) The Company considers funds from operations (“FFO”) as defined by 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 the performance of the Company. 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 and
depreciation and amortization. However, the Company’s 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 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.
(3) The extraordinary item represents the Company’s share of estimated extraordinary gain related to its private-equity investment in
Albertson’s. The Albertson’s entity has recorded an extraordinary gain in connection with the allocation of purchase price to assets
acquired. The Company considers its private-equity investments to be investments in operating businesses as opposed to real
estate. Accordingly, all gains and losses from private-equity investments are included in adjusted FFO, which management believes
provides a more accurate reflection of the operating performance of the Company.
Liquidity and Capital Resources
Uses of Liquidity
Our principal uses of liquidity are (i) distributions to our
Distributions
In order to qualify as a REIT for Federal income tax purposes,
we must currently distribute at least 90% of our taxable
income to our shareholders. For the year ended December
shareholders and OP unit holders, (ii) investments which
31, 2009, we paid dividends and distributions on our
include the funding of our capital committed to the
Common Shares and Common OP Units totaling $29.1
Opportunity Funds and property acquisitions and redevel-
million. In addition, in December of 2008, our Board of
opment/re-tenanting activities within our Core Portfolio,
Trustees approved a special dividend of approximately
and (iii) debt service and loan repayments, including the
$0.55 per share, or $18.0 million in the aggregate, which
repurchase of our Convertible Notes.
was associated with taxable gains arising from property
dispositions in 2008, which was paid on January 30, 2009,
to shareholders of record on December 31, 2008. Ninety
Acadia Realty Trust 2009 Annual Report 39
Management’s Discussion and Analysis continued
percent of the special dividend was paid with the issuance
centers on a leveraged basis. During 2006, the Fund I inves-
of 1.3 million Common Shares and 10%, or $1.8 million, was
tors received a return of all their invested capital in Fund I
paid in cash.
Fund I and Mervyns I
In September 2001, the Operating Partnership committed
$20.0 million to a newly formed Opportunity Fund with four
of our institutional shareholders, who committed $70.0
million for the purpose of acquiring a total of approximately
$300.0 million of community and neighborhood shopping
and their unpaid preferred return. The Operating Partner-
ship is entitled to 37.8% of all future income and distribu-
tions (Promote and pro-rata share of the remaining 80%).
As of December 31, 2009, Fund I has a total of 21 proper-
ties totaling 1.0 million square feet as further discussed in
“PROPERTY ACQUISITIONS” in Item 1 of this Form 10-K.
Shopping Center
New York Region
New York
Location
Year Acquired
GLA
Tarrytown Shopping Center
Tarrytown
Midwest Region
Ohio
Granville Centre
Michigan
Columbus
Sterling Heights Shopping Center (1)
Detroit
Various Regions
Kroger/Safeway Portfolio
Various
Total
Notes:
2004
2002
2004
2003
35,291
134,997
154,835
709,400
1,034,523
(1) During 2009, Fund I recorded an impairment reserve of $3.8 million related to this investment.
In addition, we, along with our Fund I investors have invested
2004, Fund II, together with an unaffiliated partner, P/A
in Mervyns as discussed in Item 1 of this Form 10-K.
Associates, LLC (“P/A”), formed Acadia-P/A Holding
Fund II and Mervyns II
On June 15, 2004, we formed our second opportunity
fund, Fund II, and during August 2004, formed Mervyns II
with the investors from Fund I as well as two additional
institutional investors, whereby the investors, including the
Operating Partnership, committed capital totaling $300.0
million. The Operating Partnership is the managing member
with a 20% interest in the joint venture. The terms and
structure of Fund II are substantially the same as Fund I
with the exception that the preferred return is 8%. As of
December 31, 2009, $223.3 million had been contributed
to Fund II, of which the Operating Partnership’s share was
$44.7 million.
Fund II has invested in the New York Urban/Infill Rede-
velopment and the RCP Venture initiatives and other
investments as further discussed in “PROPERTY
ACQUISITIONS” in Item 1 of this Form 10-K.
Company, LLC (“Acadia-P/A”) for the purpose of acquiring,
constructing, developing, owning, operating, leasing and
managing certain retail or mixed-use real estate properties
in the New York City metropolitan area. P/A agreed to
invest 10% of required capital up to a maximum of $2.2
million and Fund II, the managing member, agreed to
invest the balance to acquire assets in which Acadia-P/A
agrees to invest. Operating cash flow is generally to be
distributed pro-rata to Fund II and P/A until each has
received a 10% cumulative return and then 60% to Fund II
and 40% to P/A. Distributions of net refinancing and net
sales proceeds, as defined, follow the distribution of
operating cash flow except that unpaid original capital is
returned before the 60%/40% split between Fund II and
P/A. Upon the liquidation of the last property investment
of Acadia-P/A, to the extent that Fund II has not received
an 18% internal rate of return (“IRR”) on all of its capital
contributions, P/A is obligated to return a portion of its
previous distributions, as defined, until Fund II has received
New York Urban/Infill Redevelopment Initiative
In September 2004, we, through Fund II, launched our
an 18% IRR. To date, Fund II has invested in nine New
York Urban Infill Redevelopment construction projects,
New York Urban Infill Redevelopment initiative. During
eight of which were made through Acadia-P/A, as follows:
40
Acadia Realty Trust 2009 Annual Report
Location
Queens
Manhattan
Bronx
Property
Liberty Avenue (1)
216th Street
Fordham Place
Pelham Manor Shopping Plaza (1) Westchester
161st Street
Atlantic Avenue (3)
Canarsie Plaza
Sherman Plaza
CityPoint (1)
Bronx
Brooklyn
Brooklyn
Manhattan
Brooklyn
Year
Acquired
2005
2005
2004
2004
2005
2007
2007
2005
2007
Costs
to Date
$ 15.2
27.7
123.5
58.0
55.3
21.0
32.1
34.1
43.7
Redevelopment (dollars in millions)
Anticipated
Additional
Costs
$ —
—
Estimated
Construction
Completion
Completed
Completed
Square
Feet Upon
Completion
125,000
60,000
6.5 Substantially completed 276,000
4.0 Substantially completed 320,000
230,000
9.7
110,000
2.0
265,000
44.9
—(2)
—(2)
—(2)
—(2)
(2) (4)
Completed
First half of 2011
(2)
(2)
Total
Notes:
$ 410.6
$ 67.1
1,386,000
(3) P/A is not a partner in this project.
(1) Acadia-P/A acquired a ground lease interest at this property.
(4) Currently operating but redevelopment activities have
(2) To be determined.
commenced.
RCP Venture
See “Property Acquisitions” in Item 1 of this Form 10-K
terms and structure of Fund III are substantially the same
as the previous Funds, including the Promote structure,
for a table summarizing the RCP Venture investments
with the exception that the Preferred Return is 6%. As of
from inception through December 31, 2009.
December 31, 2009, $96.5 million has been invested in
Fund III
In May 2007, we formed Fund III with 14 institutional
investors, including a majority of the investors from Fund I
and Fund II with a total of $503.0 million of committed
discretionary capital. The Operating Partnership’s share of
the committed capital is $100.0 million and it is the sole
managing member with a 19.9% interest in Fund III. The
Fund III, of which the Operating Partnership contributed
$19.2 million.
Fund III has invested in the New York Urban/Infill Rede-
velopment initiatives and other investments as further
discussed in “PROPERTY ACQUISITIONS” in Item 1 of
this Form 10-K. The projects are as follows:
Property
Sheepshead Bay
125 Main Street
Location
Brooklyn
Westport, CT
Total
Note:
Year
Acquired
2007
2007
Costs
to Date
$ 22.7
17.6
$ 40.3
Redevelopment (dollars in millions)
Anticipated
Additional
Costs
$ — (1)
5.4 (2)
$ 5.4
Square
Feet Upon
Completion
—
30,000
30,000
(1) To be determined.
(2) Completion to be determined.
During February 2008, Acadia, through Fund III, and in con-
a trade area with high barriers to entry for regional and
junction with an unaffiliated partner, Storage Post, acquired
national retailers.
a portfolio of 11 self-storage properties from Storage Post’s
existing institutional investors for approximately $174.0 million.
The properties are located throughout New York and New
Jersey. The portfolio continues to be operated by Storage
Post, which is a 5% equity partner.
Preferred Equity Investment, Mezzanine Loan
Investments and Notes Receivable
At December 31, 2009, our preferred equity investment,
mezzanine loan investments and notes receivable, net
aggregated $125.2 million, with accrued interest thereon
During January 2009, Fund III purchased Cortlandt Towne
of $10.3 million, and were collateralized by the underlying
Center for $78.0 million. The property is a 642,000 square
properties, the borrower’s ownership interest in the entities
foot shopping center located in Westchester County, NY,
that own the properties and/or by the borrower’s personal
Acadia Realty Trust 2009 Annual Report 41
Management’s Discussion and Analysis continued
guarantee. Effective interest rates on our preferred equity
activities, (iii) additional debt financings, (iv) noncontrolling
investment, mezzanine loan investments and notes receiv-
interests’ unfunded capital commitments of $61.3 million
able ranged from 10.0% to 22.4% with maturities through
and $325.2 million for Funds II and III, respectively, and
January 2017.
(v) future sales of existing properties.
During December 2009, we made a loan for $8.6 million
During 2009, Fund II received capital contributions of
which bears interest at 14.5% with a one year term and
$31.2 million to fund redevelopment projects and pay
one six month extension.
down the line of credit of Fund II.
Other Investments
Acquisitions made during 2007, 2008 and 2009 are dis-
cussed in “PROPERTY ACQUISITIONS” in Item 1 of this
As of December 31, 2009, we had approximately $139.5
million of additional capacity under existing debt facilities
and cash and cash equivalents on hand of $93.8 million.
Form 10-K.
Property Redevelopment and Expansion
Our redevelopment program focuses on selecting well-
located neighborhood and community shopping centers
and creating significant value through re-tenanting and
property redevelopment.
Purchase of Convertible Notes
Repurchase of the Notes is another use of our liquidity.
During 2009, we purchased an additional $57.0 million
in face amount of our outstanding convertible notes for
$46.7 million.
Issuance of Convertible Notes
During December of 2006 and January of 2007, we
issued $115.0 million of 3.75% Convertible Notes.
These notes were issued at par and are due in 2026.
The $112.1 million in proceeds, net of related costs, was
used to retire variable rate debt, fund capital commitments
and general corporate purposes.
Shelf Registration Statements and
Issuance of Equity
During April 2009, we filed a shelf registration on Form S-3
providing for offerings of up to a total of $500.0 million of
Common Shares, Preferred Shares and debt securities.
Share Repurchase
We have an existing share repurchase program that
During April 2009, we issued 5.75 million Common Shares
and generated net proceeds of approximately $65.0 million.
authorizes management, at its discretion, to repurchase
The proceeds were primarily used to purchase a portion of
up to $20.0 million of our outstanding Common Shares.
our outstanding convertible notes payable and pay down
The program may be discontinued or extended at any time
existing lines of credit. Following this issuance, we have
and there is no assurance that we will purchase the full
remaining capacity under this registration statement to
amount authorized. Under this program we have repur-
issue up to approximately $430.0 million of these securities.
chased 2.1 million Common Shares, none of which were
repurchased after December 2001. As of December 31,
2009, management may repurchase up to approximately
$7.5 million of our outstanding Common Shares under
this program.
Sources of Liquidity
We intend on using Fund III, as well as new funds that
we may establish in the future, as the primary vehicles for
our future acquisitions, including investments in the RCP
Venture and New York Urban/Infill Redevelopment Initiative.
Additional sources of capital for funding property acquisi-
tions, redevelopment, expansion and re-tenanting and
RCP Venture investments, are expected to be obtained
primarily from (i) the issuance of public equity or debt
instruments, (ii) cash on hand and cash flow from operating
Asset Sales
Asset sales are an additional source of liquidity for us.
During November 2009, we sold Blackman Plaza for
$2.5 million, which resulted in a gain on sale of $1.5 million.
During February 2009, The Kroger Co. purchased the fee
at six locations in Fund I’s Kroger/Safeway Portfolio for
$14.6 million of which Fund I’s share of the sales proceeds
amounted to $8.1 million after the repayment of the mort-
gage debt on these properties. During April 2008, we sold
a residential complex located in Winston-Salem, North
Carolina. During December of 2007, we sold an apartment
complex in Columbia, Missouri. These sales are discussed
in “ASSET SALES AND CAPITAL/ASSET RECYCLING” in
Item 1 of this Form 10-K.
42
Acadia Realty Trust 2009 Annual Report
Notes Receivable Repayment and Mezzanine
Loan Paydowns
During the year ended December 31, 2009, we received
2010 at weighted average interest rates of 2.2%. Of this
amount, $2.1 million represents scheduled annual amorti-
zation. The loans relating to $80.3 million of the 2010
$12.6 million in loan repayments on several first mortgage
maturities provide for extension options, which we believe
notes and $1.0 million in paydowns on mezzanine loans.
we will be able to exercise. If we are unable to extend
Financing and Debt
At December 31, 2009, mortgage and convertible notes
payable aggregated $780.1 million, net of unamortized
premium of $0.1 million, and the mortgage notes were
collateralized by 28 properties and related tenant leases.
Interest rates on our outstanding indebtedness ranged
from 0.72% to 7.18% with maturities that ranged from
March 2010 to November 2032. Taking into consideration
$83.4 million of notional principal under variable to fixed-
rate swap agreements currently in effect, as of December
31, 2009, $439.0 million of the portfolio, or 56%, was
fixed at a 5.8% weighted average interest rate and $341.1
million, or 44% was floating at a 3.1% weighted average
interest rate. There is $132.6 million of debt maturing in
these loans and refinance the balance of $52.3 million,
we believe we will be able to repay this debt with existing
liquidity, including unfunded capital commitments from
the Opportunity Fund investors. As it relates to maturities
after 2010, we may not have sufficient cash on hand to
repay such indebtedness; we may have to refinance this
indebtedness or select other alternatives based on market
conditions at that time. Given the current post-recessionary
period, refinancing this debt will be very difficult. See
“Item 1A. Risk Factors — The current economic environ-
ment, while improving, may cause us to lose tenants and
may impair our ability to borrow money to purchase prop-
erties, refinance existing debt or finance our current rede-
velopment projects.”
The following table sets forth certain information pertaining to the Company’s secured credit facilities:
(dollars in millions)
Borrower
Total available
credit facilities
Amount borrowed
as of 12/31/08
Acadia Realty, LP
Acadia Realty, LP
Fund II
Fund III
Total
$ 64.5
30.0
53.5
221.0
$ 369.0
$ 48.9
—
34.7
62.3
$ 145.9
2009 net borrowings
(repayments)
during the year
ended 12/31/09
Amount borrowed
as of 12/31/09
Letters of credit
outstanding
as of 12/31/09
Amount available
under credit
facilities as of
12/31/09
$ (18.9)
$ 30.0
2.0
13.6
77.2
$ 73.9
2.0
48.3
139.5
$ 219.8
$ 4.0
—
5.2
0.5
$ 9.7
$ 30.5
28.0
—
81.0
$ 139.5
Reference is made to Note 8 and Note 9 to our Consolidated Financial Statements, which begin on page 57 of this Form
10-K, for a summary of the financing and refinancing transactions since December 31, 2008.
Contractual Obligations and
Other Commitments
At December 31, 2009, maturities on our mortgage notes
centers. We lease space for our White Plains corporate
office for a term expiring in 2015. The following table sum-
marizes our debt maturities, obligations under non-cancelable
ranged from March 2010 to November 2032. In addition,
operating leases and construction commitments as of
we have non-cancelable ground leases at six of our shopping
December 31, 2009:
(dollars in millions)
Contractual obligations
Future debt maturities
Interest obligations on debt
Operating lease obligations
Construction commitments (1)
Total
Note:
Payments due by period
Total
$ 782.1
145.2
111.6
32.3
$ 1,071.2
Less than
1 year
$ 132.6
31.2
4.8
32.3
$ 200.9
1 to 3
years
$ 388.5
46.0
9.8
—
$ 444.3
3 to 5
years
$ 31.8
29.7
10.0
—
$ 71.5
More than
5 years
$ 229.2
38.3
87.0
—
$ 354.5
(1) In conjunction with the redevelopment of our Core Portfolio and Opportunity Fund properties, we have entered into construction
commitments with general contractors. We intend to fund these requirements with existing liquidity.
Acadia Realty Trust 2009 Annual Report 43
Management’s Discussion and Analysis continued
Off Balance Sheet Arrangements
We have investments in four joint ventures for the pur-
pose of investing in operating properties. We account for
these investments using the equity method of accounting
Reference is made to Note 4 to our Consolidated Financial
Statements, which begin on page 57 of this Form 10-K, for
a discussion of our unconsolidated investments. Our pro-
rata share of unconsolidated debt related to those invest-
as we have a noncontrolling interest. As such, our financial
ments is as follows:
statements reflect our share of income and loss from but
not the assets and liabilities of these joint ventures.
(dollars in millions)
Investment
Crossroads
Brandywine
CityPoint
Sterling Heights
Total
Pro rata share of mortgage debt
Opportunity Funds
Operating Partnership
Interest rate at
December 31, 2009
$ N/A
N/A
6.1
2.1
$ 8.2
$ 30.6
36.9
1.2
0.8
$ 69.5
5.37%
5.99%
2.73%
2.08%
Maturity date
December 2014
July 2016
August 2010
August 2010
As of December 31, 2009, there was $26.0 million of debt
at CityPoint scheduled to mature during August of 2010.
Years Ended December 31,
2009
2008
Variance
There are no options to extend this debt. Fund II and its
(dollars in millions)
unaffiliated joint venture partner’s (“JV Partner”) share of
this debt was $6.1 million and $19.9 million, respectively.
If CityPoint is unable to extend the maturity date of this
debt, Fund II and its JV Partner may be required to fund
their requisite share of capital to repay this obligation. In
the event that the JV Partner does not fund its requisite
Net cash provided by
operating activities
Net cash used in
investing activities
Net cash provided by
financing activities
share of capital, pursuant to the joint venture agreement,
Total
$ 47.5
$ 66.5
$ (19.0)
(123.4)
(302.3)
178.9
83.0
199.1
(116.1)
$
7.1
$ (36.7) $ 43.8
Fund II would have the option to fund the JV Partner’s
share of capital to repay this debt either as a loan to the
JV Partner or as additional equity in CityPoint.
In addition, we have arranged for the provision of four
separate letters of credit in connection with certain leases
and investments. As of December 31, 2009, there were
no outstanding balances under any of the letters of credit.
If the letters of credit were fully drawn, the combined
maximum amount of exposure would be $9.7 million.
Historical Cash Flow
The following table compares the historical cash flow for
the year ended December 31, 2009 (“2009”) with the cash
flow for the year ended December 31, 2008 (“2008”).
A discussion of the significant changes in cash flow for
2009 versus 2008 is as follows:
A decrease of $19.0 million in net cash provided by operat-
ing activities resulted from the following: (i) lease termina-
tion income of $24.0 million from Home Depot at Canarsie
Plaza in 2008 and (ii) a $13.5 million decrease in distributions
(primarily Albertson’s) of operating income from unconsoli-
dated affiliates in 2009. These 2009 decreases were offset
by a $24.0 million increase in other assets primarily related
to additional cash used for the purchase of short term
financial instruments in 2008 and the subsequent redemp-
tion of these financial instruments in 2009.
44
Acadia Realty Trust 2009 Annual Report
A decrease of $178.9 million of net cash used in investing
whether an asset is impaired. We record impairment
activities resulted from the following: (i) a decrease of
losses and reduce the carrying value of properties when
$112.4 million in expenditures for real estate, development
indicators of impairment are present and the expected
and tenant installations in 2009 and (ii) a decrease of
undiscounted cash flows related to those properties are
$81.5 million in advances of notes receivable in 2009.
less than their carrying amounts. In cases where we do
These decreases in cash used were offset by (i) an additional
not expect to recover our carrying costs on properties
$11.7 million in proceeds from the sale of properties in
held for use, we reduce our carrying cost to fair value.
2008 and (ii) a decrease of $6.3 million in collections of
For properties held for sale, we reduce our carrying value
notes receivable in 2009.
The $116.1 million decrease in net cash provided by
financing activities resulted from the following decreases
in cash for 2009: (i) $114.2 million of additional cash used
for repayment of debt in 2009, (ii) an additional $40.7 million
of cash used for the purchase of convertible notes in 2009,
(iii) a decrease of $21.1 million of proceeds received on
borrowings of debt in 2009, and (iv) a decrease of $20.4
to the fair value less costs to sell. For the years ended
December 31, 2009, 2008 and 2007, no impairment losses
were recognized. Management does not believe that the
value of any properties in its portfolio was impaired as of
December 31, 2009.
Investments in and Advances to Unconsolidated
Joint Ventures
The Company periodically reviews its investment in
million in capital contributions from noncontrolling interests
unconsolidated joint ventures for other than temporary
in 2009. These 2009 cash decreases were offset by the
declines in market value. Any decline that is not expected
following: (i) $65.2 million of additional cash from the
to be recovered in the next 12 months is considered other
issuance of Common Shares, net of costs, in 2009,
than temporary and an impairment charge is recorded as a
(ii) an additional $13.7 million of distributions to noncon-
reduction in the carrying value of the investment. During the
trolling interests in 2008, and (iii) an additional $4.5 million
year ended December 31, 2009, the Company recorded a
of dividends paid to Common Shareholders in 2008.
$3.8 million impairment reserve related to a Fund I uncon-
Critical Accounting Policies
Management’s discussion and analysis of financial condi-
solidated joint venture. No impairment charges related to
the Company’s investment in unconsolidated joint ventures
were recognized for the years ended December 31, 2008
tion and results of operations is based upon our Consoli-
and 2007.
dated Financial Statements, which have been prepared in
accordance with U.S. GAAP. The preparation of these
Consolidated Financial Statements requires management
Bad Debts
We maintain an allowance for doubtful accounts for estimated
to make estimates and judgments that affect the reported
losses resulting from the inability of tenants to make payments
amounts of assets, liabilities, revenues and expenses. We
on arrearages in billed rents, as well as the likelihood that
base our estimates on historical experience and assump-
tenants will not have the ability to make payments on
tions that are believed to be reasonable under the circum-
unbilled rents including estimated expense recoveries.
stances, the results of which form the basis for making
We also maintain a reserve for straight-line rent receivables.
judgments about carrying value of assets and liabilities
For the years ended December 31, 2009 and 2008, we
that are not readily apparent from other sources. Actual
had recorded an allowance for doubtful accounts of $7.0
results may differ from these estimates under different
million and $5.7 million, respectively. If the financial condi-
assumptions or conditions. We believe the following criti-
tion of our tenants were to deteriorate, resulting in an
cal accounting policies affect the significant judgments
impairment of their ability to make payments, additional
and estimates used by us in the preparation of our Con-
allowances may be required.
solidated Financial Statements.
Valuation of Property Held for Use and Sale
On a quarterly basis, we review the carrying value of
Real Estate
Real estate assets are stated at cost less accumulated
depreciation. Expenditures for acquisition, development,
both properties held for use and for sale. We perform the
construction and improvement of properties, as well as
impairment analysis by calculating and reviewing net oper-
significant renovations are capitalized. Interest costs are
ating income on a property-by-property basis. We evaluate
capitalized until construction is substantially complete.
leasing projections and perform other analyses to conclude
Construction in progress includes costs for significant
Acadia Realty Trust 2009 Annual Report 45
Management’s Discussion and Analysis continued
property expansion and redevelopment. Depreciation is
computed on the straight-line basis over estimated useful
Notes Receivable and Preferred Equity Investment
Real estate notes receivable and preferred equity invest-
lives of 30 to 40 years for buildings, the shorter of the
ments are intended to be held to maturity and are carried
useful life or lease term for tenant improvements and five
at cost. Interest income from notes receivable and pre-
years for furniture, fixtures and equipment. Expenditures
ferred equity investments are recognized on the effective
for maintenance and repairs are charged to operations
interest method over the expected life of the loan. Under
as incurred.
Upon acquisitions of real estate, we assess the fair value
of acquired assets (including land, buildings and improve-
ments, and identified intangibles such as above and below
the effective interest method, interest or fees to be col-
lected at the origination of the loan or the payoff of the
loan is recognized over the term of the loan as an adjust-
ment to yield.
market leases and acquired in-place leases and customer
Allowances for real estate notes receivable and preferred
relationships) and acquired liabilities in accordance with the
equity investments are established based upon manage-
Financial Accounting Standards Board (“FASB”) Accounting
ment’s quarterly review of the investments. In performing
Standards Codification (“ASC”) Topic 805 “Business Com-
this review, management considers the estimated net
binations” (formerly Statement of Financial Accounting
recoverable value of the loan as well as other factors,
Standards [“SFAS”] No. 141, “Business Combinations”)
including the fair value of any collateral, the amount and
and ASC Topic 350 “Intangibles – Goodwill and Other”
status of any senior debt, and the prospects for the borrower.
(formerly SFAS No. 142, “Goodwill and Other Intangible
Because this determination is based upon projections of
Assets”), and allocate purchase price based on these
future economic events, which are inherently subjective,
assessments. We assess fair value based on estimated
the amounts ultimately realized from the loans may differ
cash flow projections that utilize appropriate discount
materially from the carrying value at the balance sheet
and capitalization rates and available market information.
date. Interest income recognition is generally suspended
Estimates of future cash flows are based on a number of
for loans when, in the opinion of management, a full
factors including the historical operating results, known
recovery of income and principal becomes doubtful.
trends, and market/economic conditions that may affect
Income recognition is resumed when the suspended loan
the property.
becomes contractually current and performance is demon-
Revenue Recognition and Accounts and
Notes Receivable
Leases with tenants are accounted for as operating leases.
strated to be resumed.
During 2009, we provided a $1.7 million reserve on a note
receivable as a result of the loss of an anchor tenant at the
Minimum rents are recognized on a straight-line basis
underlying collateral property.
over the term of the respective leases, beginning when
the tenant takes possession of the space. Certain of these
leases also provide for percentage rents based upon the
level of sales achieved by the tenant. Percentage rent is
recognized in the period when the tenants’ sales break-
point is met. In addition, leases typically provide for the
reimbursement to us of real estate taxes, insurance and
other property operating expenses. These reimbursements
are recognized as revenue in the period the expenses
are incurred.
We make estimates of the uncollectability of our accounts
receivable related to tenant revenues. An allowance for
doubtful accounts has been provided against certain tenant
accounts receivable that are estimated to be uncollectible.
See “Bad Debts” above. Once the amount is ultimately
deemed to be uncollectible, it is written off.
During 2008, we provided a $4.4 million reserve on a note
receivable collateralized by an interest in an entity owning
retail complexes associated with seven public rest stops
along the toll roads in and around Chicago, Illinois. The
note and all accrued interest was subsequently cancelled
during 2009.
Inflation
Our long-term leases contain provisions designed to miti-
gate the adverse impact of inflation on our net income.
Such provisions include clauses enabling us to receive
percentage rents based on tenants’ gross sales, which
generally increase as prices rise, and/or, in certain cases,
escalation clauses, which generally increase rental rates
during the terms of the leases. Such escalation clauses
are often related to increases in the consumer price index
or similar inflation indexes. In addition, many of our leases
46
Acadia Realty Trust 2009 Annual Report
are for terms of less than 10 years, which permits us to
Consolidated Financial Statements, which begin on page 57
seek to increase rents upon re-rental at market rates if
of this Form 10-K, for certain quantitative details related to
current rents are below the then existing market rates.
our mortgage debt.
Most of our leases require the tenants to pay their share
of operating expenses, including common area mainte-
nance, real estate taxes, insurance and utilities, thereby
reducing our exposure to increases in costs and operating
expenses resulting from inflation.
Recently Issued Accounting
Pronouncements
Reference is made to Notes to our Consolidated Financial
Statements, which begin on page 57 of this Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Currently, we manage our exposure to fluctuations in
interest rates primarily through the use of fixed-rate debt
and interest rate swap agreements. As of December 31,
2009, we had total mortgage and convertible notes payable
of $780.1 million of which $439.0 million, or 56% was
fixed-rate, inclusive of debt with rates fixed through the
use of derivative financial instruments, and $341.1 million,
or 44%, was variable-rate based upon LIBOR or commer-
cial paper rates plus certain spreads. As of December 31,
2009, we were a party to eight interest rate swap trans-
actions and one interest rate cap transaction to hedge our
exposure to changes in interest rates with respect to
$83.4 million and $30.0 million of LIBOR-based variable-
Information as of December 31, 2009
rate debt, respectively.
Our primary market risk exposure is to changes in interest
rates related to our mortgage debt. See Note 8 to our
The following table sets forth information as of December 31, 2009 concerning our long-term debt obligations, including
principal cash flows by scheduled maturity and weighted average interest rates of maturing amounts (dollars in millions):
Consolidated mortgage debt:
Year
2010
2011
2012
2013
2014
Thereafter
Scheduled
Amortization
Maturities
$ 2.1
2.5
2.5
2.9
2.8
14.2
$ 27.0
$ 130.5
328.6
52.9
8.8
17.3
215.0
$ 753.1
Mortgage debt in unconsolidated partnerships (at our pro-rata share):
Year
2010
2011
2012
2013
2014
Thereafter
Scheduled
Amortization
Maturities
$ 0.5
0.5
0.5
0.5
0.6
—
$ 2.6
$ 2.0
—
—
—
28.0
36.9
$ 66.9
Total
$ 132.6
331.1
55.4
11.7
20.1
229.2
$ 780.1
Total
$ 2.5
0.5
0.5
0.5
28.6
36.9
$ 69.5
Weighted Average
Interest Rate
2.2%
2.9%
3.8%
5.5%
5.8%
5.9%
Weighted Average
Interest Rate
2.5%
N/A
N/A
N/A
5.4%
6.0%
$132.6 million of our total consolidated debt and $2.5 million
market interest rates, which may be greater than the cur-
of our pro-rata share of unconsolidated outstanding debt
rent interest rate, our interest expense would increase by
will become due in 2010. $331.1 million of our total consoli-
approximately $4.7 million annually if the interest rate on
dated debt and $0.5 million of our pro-rata share of uncon-
the refinanced debt increased by 100 basis points. After
solidated debt will become due in 2011. As we intend on
giving effect to noncontrolling interests, the Company’s
refinancing some or all of such debt at the then-existing
share of this increase would be $1.7 million. Interest
Acadia Realty Trust 2009 Annual Report 47
Management’s Discussion and Analysis continued
expense on our variable debt of $341.1 million, net of
Interest expense on our variable debt of $248.2 million as
variable to fixed-rate swap agreements currently in effect,
of December 31, 2008 would have increased $2.5 million
as of December 31, 2009 would increase $3.4 million if
if LIBOR increased by 100 basis points. Based on our out-
LIBOR increased by 100 basis points. After giving effect
standing debt balances as of December 31, 2008, the fair
to noncontrolling interests, the Company’s share of this
value of our total outstanding debt would have decreased
increase would be $0.6 million. We may seek additional
by approximately $18.1 million if interest rates increased
variable-rate financing if and when pricing and other com-
by 1%. Conversely, if interest rates decreased by 1%,
mercial and financial terms warrant. As such, we would
the fair value of our total outstanding debt would have
consider hedging against the interest rate risk related to
increased by approximately $19.3 million.
such additional variable-rate debt through interest rate
swaps and protection agreements, or other means.
Changes in Market Risk Exposures from 2008
to 2009
Based on our outstanding debt balances as of December 31,
Our interest rate risk exposure from December 31, 2008
2009, the fair value of our total consolidated outstanding
to December 31, 2009 has increased, as we had $248.2
debt would decrease by approximately $18.3 million if
million in variable-rate debt (or 33% of our total debt) at
interest rates increase by 1%. Conversely, if interest rates
December 31, 2008, as compared to $341.1 million (or
decrease by 1%, the fair value of our total outstanding
44% of our total debt) in variable-rate debt at December
debt would increase by approximately $20.5 million.
31, 2009. In addition, the amount of our total debt
As of December 31, 2009 and 2008, we had preferred
equity investments and notes receivable of $125.2 million
and $125.6 million, respectively. We determined the esti-
mated fair value of our preferred equity investment and
notes receivable as of December 31, 2009 and 2008 were
$126.4 million and $122.3 million, respectively, by discount-
ing future cash receipts utilizing a discount rate equivalent
to the rate at which similar notes receivable would be
originated under conditions then existing.
increased from $753.8 million at December 31, 2008 to
$780.1 million at December 31, 2009. This increased
amount of debt could expose us to greater fluctuations
in the fair value of our debt.
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
The financial statements beginning on page 57 are incor-
porated herein by reference.
Based on our outstanding preferred equity investments
and notes receivable balances as of December 31, 2009,
the fair value of our total outstanding preferred equity invest-
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
ments and notes receivable would decrease by approximately
None.
$0.7 million if interest rates increase by 1%. Conversely,
if interest rates decrease by 1%, the fair value of our total
outstanding preferred equity investments and notes
receivable would increase by approximately $0.7 million.
Summarized Information as of December 31, 2008
As of December 31, 2008, we had total mortgage and
convertible notes payable of $753.8 million of which
$505.6 million, or 67% was fixed-rate, inclusive of interest
rate swaps, and $248.2 million, or 33%, was variable-rate
based upon LIBOR plus certain spreads. As of December
31, 2008, we were a party to seven interest rate swap
transactions and one interest rate cap transaction to hedge
our exposure to changes in interest rates with respect to
$73.4 million and $30.0 million of LIBOR-based variable-
rate debt, respectively.
ITEM 9A. CONTROLS AND PROCEDURES
(i) Disclosure Controls and Procedures
We conducted an evaluation, under the supervision and
with the participation of management including our Chief
Executive Officer and Chief Financial Officer, of the effec-
tiveness of our disclosure controls and procedures. Based
on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls
and procedures were effective as of December 31, 2009
to provide reasonable assurance that information required
to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summa-
rized, and reported within the time periods specified in
SEC rules and forms, and is accumulated and communi-
cated to management, including our Chief Executive
48
Acadia Realty Trust 2009 Annual Report
Officer and Chief Financial Officer, as appropriate to allow
was effective as of December 31, 2009 to provide reasonable
timely decisions regarding required disclosure.
assurance regarding the reliability of financial reporting and
(ii) Internal Control Over Financial Reporting
(a) Management’s Annual Report on Internal
Control Over Financial Reporting
Management of Acadia Realty Trust is responsible for
establishing and maintaining adequate internal control
over financial reporting, as such term is defined in the
Securities Exchange Act of 1934 Rule 13(a)-15(f). Under
the supervision and with the participation of our manage-
ment, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effec-
tiveness of our internal control over financial reporting
as of December 31, 2009 as required by the Securities
Exchange Act of 1934 Rule 13(a)-15(c). In making this
assessment, we used the criteria set forth in the frame-
work in Internal Control–Integrated Framework issued by
the Committee of Sponsoring Organizations of the Tread-
way Commission (the “COSO criteria”). Based on our
evaluation under the COSO criteria, our management
concluded that our internal control over financial reporting
the preparation of financial statements for external reporting
purposes in accordance with U.S. generally accepted
accounting principles.
BDO Seidman, LLP, an independent registered public
accounting firm that audited our Financial Statements
included in this Annual Report, has issued an attestation
report on our internal control over financial reporting as
of December 31, 2009, which appears in paragraph (b) of
this Item 9A.
Acadia Realty Trust
White Plains, New York
March 1, 2010
Acadia Realty Trust 2009 Annual Report 49
(b) Attestation report of the independent registered public accounting firm
The Shareholders and Trustees of Acadia Realty Trust
We have audited Acadia Realty Trust and subsidiaries’ internal control over financial reporting as of December 31, 2009,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organiza-
tions of the Treadway Commission (the “COSO criteria”). Acadia Realty Trust and subsidiaries’ management is responsible
for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal con-
trol over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Report-
ing. Our responsibility is to express an opinion on a company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understand-
ing of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control, based on the assessed risk. Our audit also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with gener-
ally accepted accounting principles. A company’s internal control over financial reporting includes those policies and proce-
dures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Acadia Realty Trust and subsidiaries maintained in all material respects effective internal control over financial
reporting as of December 31, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated balance sheets of Acadia Realty Trust and subsidiaries as of December 31, 2009 and 2008 and the related
consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended
December 31, 2009 and our report dated March 1, 2010 expressed an unqualified opinion thereon.
/s/ BDO Seidman, LLP
New York, New York
March 1, 2010
50
Acadia Realty Trust 2009 Annual Report
ITEM 9B. OTHER INFORMATION
None
(c) Changes in internal control over financial
reporting
There was no change in our internal control over financial
reporting during our fourth fiscal quarter ended December
31, 2009 that has materially affected, or is reasonably
likely to materially affect, our internal control over finan-
cial reporting.
PART III
In accordance with the rules of the SEC, certain information required by Part III is omitted and is incorporated by refer-
ence into this Form 10-K from our definitive proxy statement relating to our 2010 annual meeting of stockholders (our
“2010 Proxy Statement”) that we intend to file with the SEC no later than April 30, 2010.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information under the following headings in the 2010 Proxy Statement is incorporated herein by reference:
(cid:174) “PROPOSAL 1 — ELECTION OF TRUSTEES”
(cid:174) “MANAGEMENT”
(cid:174) “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE”
ITEM 11. EXECUTIVE COMPENSATION
The information under the following headings in the 2010 Proxy Statement is incorporated herein by reference:
(cid:174) “ACADIA REALTY TRUST COMPENSATION COMMITTEE REPORT”
(cid:174) “COMPENSATION DISCUSSION AND ANALYSIS”
(cid:174) “EXECUTIVE AND TRUSTEE COMPENSATION”
(cid:174) “COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION”
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the heading “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT”
in the 2010 Proxy Statement is incorporated herein by reference.
The information under Item 5 of this Form 10-K under the heading “(c) Securities authorized for issuance under equity
compensation plans” is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information under the following headings in the 2010 Proxy Statement is incorporated herein by reference:
(cid:174) “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”
(cid:174) “PROPOSAL 1 — ELECTION OF TRUSTEES — Trustee Independence”
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information under the heading “AUDIT COMMITTEE INFORMATION” in the 2010 Proxy Statement is incorporated
herein by reference.
Acadia Realty Trust 2009 Annual Report 51
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1. Financial Statements: See “Index to Financial Statements” at page 57 below.
2. Financial Statement Schedule: See “Schedule III — Real Estate and Accumulated Depreciation”
at page 98 below.
3. Exhibits: The index of exhibits below is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereto duly authorized.
ACADIA REALTY TRUST
(Registrant)
By:
By:
By:
/s/ Kenneth F. Bernstein
Kenneth F. Bernstein
Chief Executive Officer, President and Trustee
/s/ Michael Nelsen
Michael Nelsen
Senior Vice President and Chief Financial Officer
/s/ Jonathan W. Grisham
Jonathan W. Grisham
Senior Vice President and Chief Accounting Officer
Dated: March 1, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
Signature
/s/ Kenneth F. Bernstein
(Kenneth F. Bernstein)
/s/ Michael Nelsen
(Michael Nelsen)
/s/ Jonathan W. Grisham
(Jonathan W. Grisham)
/s/ Douglas Crocker II
(Douglas Crocker II)
/s/ Suzanne Hopgood
(Suzanne Hopgood)
/s/ Lorrence T. Kellar
(Lorrence T. Kellar)
/s/ Wendy Luscombe
(Wendy Luscombe)
/s/ William T. Spitz
(William T. Spitz)
/s/ Lee S. Wielansky
(Lee S. Wielansky)
Title
Chief Executive Officer,
President and Trustee
(Principal Executive Officer)
Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)
Senior Vice President
and Chief Accounting Officer
(Principal Accounting Officer)
Trustee
Trustee
Trustee
Trustee
Trustee
Trustee
Date
March 1, 2010
March 1, 2010
March 1, 2010
March 1, 2010
March 1, 2010
March 1, 2010
March 1, 2010
March 1, 2010
March 1, 2010
52
Acadia Realty Trust 2009 Annual Report
EXHIBIT INDEX
The following is an index to all exhibits filed with the Annual Report on Form 10-K other than those incorporated by
reference herein:
Exhibit No. Description
3.1
3.2
3.3
3.4
3.5
4.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.20
10.21
10.22
Declaration of Trust of the Company, as amended (1)
Fourth Amendment to Declaration of Trust (4)
Amended and Restated By-Laws of the Company (22)
Fifth Amendment to Declaration of Trust (32)
First Amendment the Amended and Restated Bylaws of the Company (32)
Voting Trust Agreement between the Company and Yale University dated February 27, 2002 (14)
1999 Share Option Plan (8) (21)
2003 Share Option Plan (16) (21)
Form of Share Award Agreement (17) (21)
Form of Registration Rights Agreement and Lock-Up Agreement (18)
Registration Rights and Lock-Up Agreement (RD Capital Transaction) (11)
Registration Rights and Lock-Up Agreement (Pacesetter Transaction) (11)
Contribution and Share Purchase Agreement dated as of April 15, 1998 among Mark Centers Trust, Mark Centers Limited
Partnership, the Contributing Owners and Contributing Entities named therein, RD Properties, L.P. VI, RD Properties, L.P.
VIA and RD Properties, L.P. VIB (9)
Agreement of Contribution among Acadia Realty Limited Partnership, Acadia Realty Trust and Klaff Realty, LP and Klaff
Realty, Limited (18)
Employment agreement between the Company and Kenneth F. Bernstein dated October 1998 (6) (21)
Amendment to employment agreement between the Company and Kenneth F. Bernstein dated January 19, 2007 (26) (21)
First Amendment to Employment Agreement between the Company and Kenneth Bernstein dated as of January 1, 2001
(12) (21)
Description of Long Term Investment Alignment Program (32)
Letter of employment offer between the Company and Michael Nelsen, Sr. Vice President and Chief Financial Officer
dated February 19, 2003 (15) (21)
Form of Amended and Restated Severance Agreement, dated June 12, 2008, that was entered into with each of Joel Braun,
Executive Vice President and Chief Investment Officer; Michael Nelsen, Senior Vice President and Chief Financial Officer;
Robert Masters, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary; and Joseph Hogan,
Senior Vice President and Director of Construction. (Incorporated by reference to the Exhibit 10.1 to the Company’s
Form 8-K filed with the SEC on June 12, 2008) (21)
Note Modification Agreement, Note, Mortgage Modification Agreement, Mortgage, Assignment of Leases and Rents and
Security Agreement between Acadia-P/A Sherman Avenue LLC and Bank of America N. A. dated January 15, 2009 (32)
Mortgage, Assignment of Leases and Rents and Security Agreement from Acadia Cortlandt LLC to Bank of America, N.A.
dated July 29, 2009 [Initial Advance], Note made by Acadia Cortlandt LLC in favor of Bank of America, N.A. dated July 29,
2009 [Initial Advance], Mortgage, Assignment of Leases and Rents and Security Agreement from Acadia Cortlandt LLC to
Bank of America, N.A. dated July 29, 2009 [Future Advance] and Note made by Acadia Cortlandt LLC in favor of Bank of
America, N.A. dated July 29, 2009 [Future Advance] (33)
Consolidated, Amended and Restated Term Loan Agreement among Acadia-PA East Fordham Acquisitions, LLC, and
Fordham Place Office LLC as borrower and The Lenders Party Hereto as lenders and Eurohypo AG, New York Branch as
Administrative Agent; Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by Acadia-PA
East Fordham Acquisitions, LLC, and Fordham Place Office LLC in favor of Eurohypo AG, New York Branch as Administrative
Agent; Replacement Note between Acadia-PA East Fordham Acquisitions, LLC, and Fordham Place Office LLC and Amal-
gamated Bank; Replacement Note between Acadia-PA East Fordham Acquisitions, LLC, and Fordham Place Office LLC
and Deutsche Genossenschafts – Hypothekenbank AG; Replacement Note between Acadia-PA East Fordham Acquisitions,
LLC, and Fordham Place Office LLC and Eurohypo AG, New York Branch; and Replacement Note between Acadia-PA East
Fordham Acquisitions, LLC, and Fordham Place Office LLC and TD Bank. All dated November 4, 2009. (34)
Secured Promissory Note between RD Absecon Associates, L.P. and Fleet Bank, N.A. dated February 8, 2000 (7)
Promissory Note between 239 Greenwich Associates, L.P. and Greenwich Capital Financial Products, Inc. dated May 30,
2003 (18)
Open-End Mortgage, Assignment of Leases and Rents, and Security Agreement between 239 Greenwich Associates, L.P.
and Greenwich Capital Financial Products, Inc. dated May 30, 2003 (18)
Acadia Realty Trust 2009 Annual Report 53
Exhibit No. Description
10.23
10.24
10.25
10.26
10.33
10.34
10.44
10.45
10.46
10.47
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
10.62
10.63
10.64
10.65
Promissory Note between Merrillville Realty, L.P. and Sun America Life Insurance Company dated July 7, 1999 (7)
Secured Promissory Note between Acadia Town Line, LLC and Fleet Bank, N.A. dated March 21, 1999 (7)
Promissory Note between RD Village Associates Limited Partnership and Sun America Life Insurance Company Dated
September 21, 1999 (7)
First Amendment to Severance Agreements between the Company and Joel Braun Executive Vice President and Chief
Investment Officer, Michael Nelsen, Senior Vice President and Chief Financial Officer, Robert Masters, Senior Vice Presi-
dent, General Counsel, Chief Compliance Officer and Secretary and Joseph Hogan, Senior Vice President and Director of
Construction dated January 19, 2007 (21) (26)
Term Loan Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York, dated March 30, 2000 (10)
Mortgage Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York, dated March 30, 2000 (10)
Prospectus Supplement Regarding Options Issued under the Acadia Realty Trust 1999 Share Incentive Plan and 2003
Share Incentive Plan (19) (21)
Acadia Realty Trust 1999 Share Incentive Plan and 2003 Share Incentive Plan Deferral and Distribution Election Form (19) (21)
Amended, Restated And Consolidated Promissory Note between Acadia New Loudon, LLC and Greenwich Capital Financial
Products, Inc. dated August 13, 2004 (19)
Amended, Restated And Consolidated Mortgage, Assignment Of Leases And Rents And Security Agreement between
Acadia New Loudon, LLC and Greenwich Capital Financial Products, Inc. dated August 13, 2004 (19)
Mortgage, Assignment of Leases and Rents and Security Agreement between Acadia Crescent Plaza, LLC and Greenwich
Capital Financial Products, Inc. dated August 31, 2005 (22)
Mortgage, Assignment of Leases and Rents and Security Agreement between Pacesetter/Ramapo Associates and Green-
wich Capital Financial Products, Inc. dated October 17, 2005 (22)
Loan Agreement between RD Elmwood Associates, L.P. and Bear Stearns Commercial Finance Mortgage, Inc. dated
December 9, 2005 (22)
Mortgage and Security Agreement between RD Elmwood Associates, L.P. and Bear Stearns Commercial Finance Mortgage,
Inc. dated December 9, 2005 (22)
Agreement and Plan Of Merger Dated as of December 22, 2005 by and among Acadia Realty Acquisition I, LLC, Ara Btc
LLC, ARA MS LLC, ARA BS LLC, ARA BC LLC and ARA BH LLC, Acadia Investors, Inc., AII BTC LLC, AII MS LLC, AII BS
LLC, AII BC LLC And AII BH LLC, Samuel Ginsburg 2000 Trust Agreement #1, Martin Ginsburg 2000 Trust Agreement #1,
Martin Ginsburg, Samuel Ginsburg and Adam Ginsburg, and GDC SMG, LLC, GDC Beechwood, LLC, Aspen Cove Apart-
ments, LLC and SMG Celebration, LLC (23)
Amended and Restated Loan Agreement between Acadia Realty Limited Partnership, as lender, and Levitz SL Woodbridge,
L.L.C., Levitz SL St. Paul, L.L.C., Levitz SL La Puente, L.L.C., Levitz SL Oxnard, L.L.C., Levitz SL Willowbrook, L.L.C., Levitz
SL Northridge, L.L.C., Levitz SL San Leandro, L.L.C., Levitz SL Sacramento, L.L.C., HL Brea, L.L.C., HL Deptford, L.L.C.,
HL Hayward, L.L.C., HL San Jose, L.L.C., HL Scottsdale, L.L.C., HL Torrance, L.L.C., HL Irvine 1, L.L.C., HL West Covina,
L.L.C., HL Glendale, L.L.C. and HL Northridge, L.L.C., each a Delaware limited liability company, Levitz SL Langhorne, L.P.
and HL Fairless Hills, L.P., each a Delaware limited partnership (each, together with its permitted successors and assigns,
a “Borrower,” and collectively, together with their respective permitted successors and assigns, “Borrowers”), dated June 1,
2006 (24)
Consent and Assumption Agreement between Thor Chestnut Hill, LP, Thor Chestnut Hill II, LP, Acadia Chestnut, LLC, Acadia
Realty Limited Partnership and Wells Fargo Bank, N.A. dated June 9, 2006, original Mortgage and Security Agreement
between Thor Chestnut Hill, LP and Thor Chestnut Hill II, LP and Column Financial, Inc. dated June 5, 2003 and original
Assignment of Leases and Rents from Thor Chestnut Hill, LP and Thor Chestnut Hill II, LP to Column Financial, Inc. dated
June 2003. (24)
Loan Agreement and Promissory Note between RD Woonsocket Associates, L.P. and Merrill Lynch Mortgage Lending, Inc.
dated September 8, 2006 (25)
Amended and Restated Revolving Loan Agreement dated as of December 19, 2006 by and among RD Abington Associates
LP, Acadia Town Line, LLC, RD Methuen Associates LP, RD Absecon Associates, LP, RD Bloomfield Associates, LP, RD
Hobson Associates, LP, and RD Village Associates LP, and Bank of America, N.A. and the First Amendment to Amended
and Restated Revolving Loan Agreement dated February, 2007. (26)
Loan Agreement between Bank of America, N.A. and RD Branch Associates, LP dated December 19, 2006. (26)
Loan Agreement between 239 Greenwich Associates Limited Partnership and Wachovia Bank, National Association dated
January 25, 2007. (28)
Revolving Credit Agreement between Acadia Realty Limited Partnership and Washington Mutual Bank dated March 29,
2007. (28)
Loan Agreement between Acadia Merrillville Realty, L.P. and Bear Stearns Commercial Mortgage, Inc dated July 2, 2007. (29)
Promissory Note between Acadia Merrillville Realty, L.P. and Bear Stearns Commercial Mortgage, Inc dated July 2, 2007. (29)
Loan Agreement Note between APA 216th Street and Bank of America, N.A. dated September 11, 2007. (29)
54
Acadia Realty Trust 2009 Annual Report
Exhibit No. Description
Promissory Note between APA 216th Street and Bank of America, N.A. dated September 11, 2007. (29)
Acquisition and Project Loan agreement between Acadia – PA East Fordham Acquisitions, LLC and Eurohypo AG, New
York Branch dated October 5, 2007 (30)
Building Loan Agreement between Acadia – PA East Fordham Acquisitions, LLC and Eurohypo AG, New York Branch dated
October 5, 2007 (30)
Revolving credit agreement between Acadia Strategic Opportunity Fund III, LLC. and Bank of America, N.A. dated October
10, 2007 (30)
Mortgage Consolidation and Modification Agreement between Acadia Tarrytown LLC and Anglo Irish Bank Corporation,
PLC dated October 30, 2007 (30)
Project Loan Agreement between P/A – Acadia Pelham Manor, LLC and Bear Stearns Commercial Mortgage, Inc. dated
December 10, 2007 (30)
Building Loan Agreement P/A – Acadia Pelham Manor, LLC and Bear Stearns Commercial Mortgage, Inc. dated December
10, 2007 (30)
Project Loan Agreement between Acadia Atlantic Avenue, LLC and Bear Stearns Commercial Mortgage, Inc. dated
December 26, 2007 (30)
Building Loan Agreement between Acadia Atlantic Avenue, LLC and Bear Stearns Commercial Mortgage, Inc. dated
December 26, 2007 (30)
Certain information regarding the compensation arrangements with certain officers of registrant (Incorporated by reference
to Item 5.02 of the registrant’s Form 8-K filed with the SEC on February 4, 2008)
Real Estate Purchase and Sale Agreement between Suffern Self Storage, L.L.C., Jersey City Self Storage, L.L.C., Linden
Self Storage, L.L.C., Webster Self Storage, L.L.C., Bronx Self Storage, L.L.C., American Storage Properties North LLC, and
The Storage Company LLC (collectively, as Seller) and Acadia Storage Post LLC, a Delaware limited liability company, as
Buyer, for ten Properties and Storage Facilities located thereon (31)
Real Estate Purchase and Sale Agreement between American Storage Properties North LLC , as Seller and Acadia Storage
Post Metropolitan Avenue LLC, as Buyer for 4805 Metropolitan Avenue, Unit 2, Maspeth, Queens, New York (31)
First Amendment to Real Estate Purchase and Sale Agreement between Suffern Self Storage, L.L.C., Jersey City Self
Storage, L.L.C., Linden Self Storage, L.L.C., Webster Self Storage, L.L.C., Bronx Self Storage, L.L.C., American Storage
Properties North LLC, and The Storage Company LLC (collectively, “Seller”) and Acadia Storage Post LLC (“Buyer”) (31)
Amended and Restated Agreement of Limited Partnership of the Operating Partnership (11)
First and Second Amendments to the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (11)
Third Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership (18)
Fourth Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership (18)
List of Subsidiaries of Acadia Realty Trust (34)
Consent of Registered Public Accounting Firm to incorporation by reference its reports into Forms S-3 and Forms S-8 (34)
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 (34)
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 (34)
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 (34)
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 (34)
Certificate of Designation of Series A Preferred Operating Partnership Units of Limited Partnership Interest of Acadia
Realty Limited Partnership (2)
Certificate of Designation of Series B Preferred Operating Partnership Units of Limited Partnership Interest of Acadia
Realty Limited Partnership (18)
10.66
10.67
10.68
10.69
10.70
10.71
10.72
10.73
10.74
10.75
10.76
10.77
10.78
10.79
10.80
10.81
10.82
21
23.1
31.1
31.2
32.1
32.2
99.1
99.2
Notes:
(1)
(2)
(3)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
Year ended December 31, 1994
Incorporated by reference to the copy thereof filed as an Exhibit to Company’s Quarterly Report on Form 10-Q filed for the quarter
ended June 30, 1997
Incorporated by reference to the copy thereof filed as an Exhibit to Company’s Quarterly Report on Form 10-Q filed for the quarter
ended September 30, 1998
Acadia Realty Trust 2009 Annual Report 55
(4)
(5)
(6)
(7)
(8)
Incorporated by reference to the copy thereof filed as an Exhibit to Company’s Quarterly Report on Form 10-Q filed for the quarter
ended September 30, 1998
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Registration Statement on Form S-11 (File No.
33-60008)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
year ended December 31, 1998
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
year ended December 31, 1999
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Registration Statement on Form S-8 filed
September 28, 1999
(9)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Form 8-K filed on April 20, 1998
(10)
(11)
(12)
(13)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Form 10-K filed for the fiscal year ended
December 31, 2000
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Registration Statement on Form S-3 filed on
March 3, 2000
Incorporated by reference to the copy thereof filed as an Exhibit to Company’s Quarterly Report on Form 10-Q filed for the quarter
ended September 30, 2001
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
year ended December 31, 2001
(14)
Incorporated by reference to the copy thereof filed as an Exhibit to Yale University’s Schedule 13D filed on September 25, 2002
(15)
(16)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
year ended December 31, 2002
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Definitive Proxy Statement on Schedule 14A
filed April 29, 2003
(17)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Current Report on Form 8-K filed on July 2, 2003
(18)
(19)
(20)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
year ended December 31, 2003
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
year ended December 31, 2004
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
year ended December 31, 2004
(21)
Management contract or compensatory plan or arrangement
(22)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
year ended December 31, 2005
(23)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Current Report on Form 8-K filed on January 4, 2006
(24)
(25)
Incorporated by reference to the copy thereof filed as an Exhibit to Company’s Quarterly Report on Form 10-Q filed for the quarter
ended June 30, 2006
Incorporated by reference to the copy thereof filed as an Exhibit to Company’s Quarterly Report on Form 10-Q filed for the quarter
ended September 30, 2006
(26)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Current Report on Form 8-K filed on January 19, 2007
(27)
(28)
(29)
(30)
(31)
(32)
(33)
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form 10-K filed for the fiscal
year ended December 31, 2006
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q filed for the
quarter ended March 31, 2007
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q filed for the
quarter ended September 30, 2007
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Quarterly Report on Form 10-K filed for the year
ended December 31, 2007
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q filed for the
quarter ended March 31, 2008
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q filed for the
quarter ended March 31, 2009
Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q filed for the
quarter ended September 30, 2009
(34)
Filed herewith.
56
Acadia Realty Trust 2009 Annual Report
ACADIA REALTY TRUST AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Consolidated Balance Sheets as of December 31, 2009 and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Consolidated Statements of Income for the years ended December 31, 2009, 2008 and 2007 . . . . . . . . . . . . . . . . . . . 60
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2009, 2008 and 2007 . . . . . . . . 62
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007 . . . . . . . . . . . . . . . 64
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Schedule III – Real Estate and Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Acadia Realty Trust 2009 Annual Report 57
Report of Independent Registered Public Accounting Firm
The Shareholders and Trustees of Acadia Realty Trust
We have audited the accompanying consolidated balance sheets of Acadia Realty Trust and subsidiaries (the “Company”)
as of December 31, 2009 and 2008 and the related consolidated statements of income, shareholders’ equity, and cash
flows for each of the three years in the period ended December 31, 2009. In connection with our audits of the financial
statements we have also audited the accompanying financial statement schedule listed on page 57. These financial state-
ments and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements and schedules.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Acadia Realty Trust and subsidiaries at December 31, 2009, and 2008 and the results of their operations and
their cash flows for each of the three years in the period ended December 31, 2009, in conformity with generally
accepted accounting principles in the United States of America.
Also, in our opinion, the financial statement schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth therein.
As discussed in Note 1 to the consolidated financial statements, the Company retrospectively changed its method of
accounting for its convertible debt instruments with the adoption of the guidance originally issued in FSP APB 14-1
“Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)” (ASC Topic 470-20, “Debt with Conversion and Other Options”) effective January 1, 2009. The Company
also retrospectively changed its presentation of non-controlling interests with the adoption of the guidance originally issued
in SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (ASC Topic 810-10, “Consolidation”)
effective January 1, 2009.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), Acadia Realty Trust and subsidiaries’ internal control over financial reporting as of December 31, 2009, based
on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organiza-
tions of the Treadway Commission (COSO) and our report dated March 1, 2010 expressed an unqualified opinion thereon.
BDO Seidman, LLP
New York, New York
March 1, 2010
58
Acadia Realty Trust 2009 Annual Report
Consolidated Balance Sheets
(dollars in thousands)
Assets
Operating real estate:
Land
Buildings and improvements
Construction in progress
Less: accumulated depreciation
Net operating real estate
Real estate under development
Cash and cash equivalents
Cash in escrow
Investments in and advances to unconsolidated affiliates
Rents receivable, net
December 31,
2009
2008
$ 221,740
$ 192,496
845,751
648,112
2,575
16,618
1,070,066
193,745
857,226
165,067
876,321
692,159
137,340
234,769
93,808
8,582
51,712
16,782
86,691
6,794
54,978
12,648
Notes receivable and preferred equity investment, net
125,221
125,587
Deferred charges, net of amortization
Acquired lease intangibles, net of amortization
Prepaid expenses and other assets, net of amortization
Assets of discontinued operations
Liabilities and Shareholders’ Equity
Mortgage notes payable
Convertible notes payable, net of unamortized discount
of $2,105 and $6,597, respectively
Acquired lease and other intangibles, net of amortization
Accounts payable and accrued expenses
Dividends and distributions payable
Distributions in excess of income from, and investments in, unconsolidated affiliates
Other liabilities
Liabilities of discontinued operations
Total liabilities
Shareholders’ equity:
Common shares, $.001 par value, authorized 100,000,000 shares, issued
and outstanding 39,787,018 and 32,357,530 shares, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total Common Shareholders equity
Noncontrolling interests in subsidiaries
Total equity
The accompanying notes are an integral part of these consolidated financial statements.
28,311
22,382
22,005
21,899
19,476
31,692
—
4,690
$ 1,382,464
$ 1,291,383
$ 732,287
$ 653,543
47,910
6,753
17,548
7,377
20,589
17,523
—
100,403
6,506
22,179
25,514
20,633
18,896
1,481
849,987
849,155
40
32
299,014
218,527
(2,994)
16,125
312,185
220,292
(4,508)
13,671
227,722
214,506
532,477
442,228
$ 1,382,464
$ 1,291,383
Acadia Realty Trust 2009 Annual Report 59
Consolidated Statements of Income
Years Ended December 31,
2009
2008
2007
(dollars in thousands, except per share amounts)
Revenues
Minimum rents
Percentage rents
Expense reimbursements
Lease termination income
Other property income
Management fee income
Interest income
Other income
Total revenues
Operating Expenses
Property operating
Real estate taxes
General and administrative
Depreciation and amortization
Abandonment of project costs
Reserve for notes receivable
Total operating expenses
Operating Income
Equity in (losses) earnings of unconsolidated affiliates
Impairment of investment in unconsolidated affiliate
Interest and other finance expense
Gain on debt extinguishment
Gain on sale of land
Income from continuing operations before income taxes
Income tax expense
Income from continuing operations
Discontinued operations
Operating income from discontinued operations
Gain on sale of property
Income from discontinued operations
Extraordinary item
Share of extraordinary gain from investment in unconsolidated affiliate
Income tax provision
Income from extraordinary item
Net income
Loss (income) attributable to noncontrolling
interests in subsidiaries
Continuing operations
Discontinued operations
Extraordinary item
Net loss (income) attributable to noncontrolling
interests in subsidiaries
Net income attributable to Common Shareholders
60
Acadia Realty Trust 2009 Annual Report
$ 96,239
477
20,982
2,751
2,895
1,961
20,340
1,700
147,345
29,829
16,812
22,013
37,218
2,487
1,734
110,093
37,252
(1,529)
(3,768)
(32,154)
7,057
—
6,858
(1,541)
5,317
246
7,143
7,389
—
—
—
$ 77,610
510
16,789
23,961
1,099
3,434
14,533
—
$ 65,908
526
13,259
—
855
4,064
10,315
165
137,936
95,092
24,092
12,123
24,545
33,334
630
4,392
13,792
9,415
22,929
25,114
129
—
99,116
71,379
38,820
19,906
—
(28,893)
1,523
763
32,119
(3,362)
28,757
1,498
7,182
8,680
23,713
6,619
—
(24,564)
—
—
5,768
(297)
5,471
1,975
5,271
7,246
—
—
—
30,200
(2,356)
27,844
12,706
37,437
40,561
23,282
(4,855)
—
18,427
$31,133
(11,630)
(739)
—
9,558
(606)
(24,167)
(12,369)
(15,215)
$ 25,068
$ 25,346
Consolidated Statements of Income continued
(dollars in thousands, except per share amounts)
Income from continuing operations attributable to
Common Shareholders
Income from discontinued operations attributable to
Common Shareholders
Income from extraordinary item attributable to
Common Shareholders
Years Ended December 31,
2009
2008
2007
$ 28,599
$ 17,127
$ 15,029
2,534
7,941
6,640
—
—
3,677
Net income attributable to Common Shareholders
$ 31,133
$ 25,068
$ 25,346
Basic earnings per share
Income from continuing operations
Income from discontinued operations
Income from extraordinary item
Basic earnings per share
Diluted earnings per share
Income from continuing operations
Income from discontinued operations
Income from extraordinary item
Diluted earnings per share
$ 0.75
0.07
—
$ 0.82
$ 0.75
0.07
—
$ 0.82
$ 0.51
0.23
—
$ 0.74
$ 0.50
0.23
—
$ 0.73
$ 0.45
0.20
0.11
$ 0.76
$ 0.44
0.19
0.11
$ 0.74
The accompanying notes are an integral part of these consolidated financial statements.
Acadia Realty Trust 2009 Annual Report 61
Consolidated Statements of Shareholders’ Equity
Common Shares
Shares Amount
Additional
Paid-in
Capital
Accumulated
Other
Total
Common
Total
Comprehensive Retained Shareholders’ Noncontrolling Shareholders’
Loss
Earnings
Equity
Interests
Equity
(amounts in thousands, except per share amounts)
Balance as originally stated at January 1, 2007 31,773
$ 31
$ 227,555
$
(234)
$ 13,767
$ 241,119
$ 113,736
$ 354,855
Adjustment due to ASC 470-20 cumulative effect
of accounting change
—
—
9,544
—
(96)
9,448
—
9,448
Revised balance as of January 1, 2007
31,773
31
237,099
(234)
13,671
250,567
113,736
364,303
Conversion of 4,000 Series B Preferred OP Units
to Common Shares by limited partners of the
Operating Partnership
Employee Restricted Share awards
Di vidends declared ($1.0325 per Common Share)
Employee exercise of 17,474 options to purchase
312
103
—
—
1
—
4,000
3,151
(8,349)
—
—
—
—
—
(25,346)
Common Shares
17
—
174
—
—
Common Shares issued under Employee
Share Purchase Plan
Issuance of Common Shares to Trustees
Employee Restricted Shares cancelled
Conversion options on Convertible Notes
issued (Note 11)
Noncontrolling interest distributions
Noncontrolling interest contributions
Net income
Unrealized loss on valuation of swap agreements
Amortization of derivative instrument
7
13
(41)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total comprehensive income
—
—
183
346
(1,094)
1,457
—
—
—
—
—
—
—
—
—
—
—
—
—
(921)
202
—
—
—
—
—
—
25,346
—
—
4,000
3,152
(33,695)
174
183
346
(1,094)
1,457
—
—
25,346
(921)
202
(4,000)
134
(690)
—
—
—
—
—
(63,691)
110,542
15,216
(136)
—
—
3,286
(34,385)
174
183
346
(1,094)
1,457
(63,691)
110,542
40,562
(1,057)
202
—
—
24,627
15,080
39,707
Balance at December 31, 2007
32,184
32
236,967
(953)
13,671
249,717
171,111
420,828
Employee Restricted Share awards
Dividends declared ($1.39 per Common Share)
Employee exercise of 110,245 options to
137
—
—
—
2,917
(20,385)
—
—
—
(25,068)
2,917
(45,453)
1,863
(1,192)
4,780
(46,645)
purchase Common Shares
110
—
Common Shares issued under
Employee Share Purchase Plan
Issuance of Common Shares to Trustees
Employee Restricted Shares cancelled
Conversion options on Convertible Notes
purchased (Note 11)
Noncontrolling interest distributions
Noncontrolling interest contributions
Net income
Unrealized loss on valuation of swap agreements
7
2
(83)
—
—
—
—
—
Reclassification of realized interest on swap agreements —
—
—
—
—
—
—
—
—
—
Total comprehensive income
—
—
841
180
81
(1,997)
(77)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,179)
624
—
—
—
—
—
—
25,068
—
—
841
180
81
(1,997)
(77)
—
—
25,068
(4,179)
624
—
—
—
—
—
(15,347)
46,014
12,369
(421)
109
841
180
81
(1,997)
(77)
(15,347)
46,014
37,437
(4,600)
733
—
—
21,513
12,057
33,570
Balance at December 31, 2008
32,357
$ 32
$ 218,527
$ (4,508)
$ 13,671
$ 227,722
$ 214,506
$ 442,228
62
Acadia Realty Trust 2009 Annual Report
Consolidated Statements of Shareholders’ Equity continued
Common Shares
Shares Amount
Additional
Paid-in
Capital
Accumulated
Other
Total
Common
Total
Comprehensive Retained Shareholders’ Noncontrolling Shareholders’
Loss
Earnings
Equity
Interests
Equity
(amounts in thousands, except per share amounts)
Conversion of 15,666 OP Units to Common Shares
by limited partners of the Operating Partnership
16
Issuance of Common Shares through special dividend 1,287
Employee Restricted Share awards
Dividends declared ($0.75 per Common Share)
Employee exercise of 258,900 options to purchase
253
—
$ —
2
—
—
$
90
16,190
2,957
—
$ —
—
—
—
$ —
$
90
$
—
—
(28,679)
16,192
2,957
(28,679)
Common Shares
259
—
1,556
—
—
1,556
Common Shares issued under Employee Share
Purchase Plan
Issuance of Common Shares to Trustees
Employee Restricted Shares cancelled
9
25
(359)
Issuance of Common Shares, net of issuance costs
5,750
Deferred shares converted to Common Shares
190
Conversion options on Convertible Notes
purchased (Note 11)
Noncontrolling interest distributions
Noncontrolling interest contributions
Net income
Unrealized loss on valuation of swap agreements
—
—
—
—
—
Reclassification of realized interest on swap agreements —
—
—
—
6
—
—
—
—
—
—
—
Total comprehensive income (loss)
—
—
106
635
(5,423)
65,216
—
(840)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(912)
2,426
—
—
—
106
635
(5,423)
—
65,222
—
—
—
—
—
(840)
—
—
31,133
31,133
—
—
(912)
2,426
(90)
—
890
(795)
—
—
—
—
—
—
—
(1,624)
25,653
(18,427)
319
(140)
$ —
16,192
3,847
(29,474)
1,556
106
635
(5,423)
65,222
—
(840)
(1,624)
25,653
12,706
(593)
2,286
—
—
32,647
(18,248)
14,399
Balance at December 31, 2009
39,787
$ 40
$ 299,014
$ (2,994)
$ 16,125
$ 312,185
$ 220,292
$ 532,477
The accompanying notes are an integral part of these consolidated financial statements.
Acadia Realty Trust 2009 Annual Report 63
Consolidated Statements of Cash Flows
Years Ended December 31,
2009
2008
2007
$ 12,706
$ 37,437
$ 40,561
37,242
34,908
28,361
(dollars in thousands)
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
Gain on sale of property
Gain on debt extinguishment
Amortization of lease intangibles
Amortization of mortgage note premium
Amortization of discount on convertible debt
Non-cash accretion of notes receivable
Share compensation expense
Equity in losses (earnings) of unconsolidated affiliates
Impairment of investment in unconsolidated affiliate
Distributions of operating income from unconsolidated affiliates
Abandonment of project costs
(7,143)
(7,057)
5,006
(36)
1,280
(5,352)
3,969
1,529
3,768
880
2,487
Amortization of derivative settlement included in interest expense
—
Reserve for notes receivable
Provision for bad debt
Changes in assets and liabilities:
Cash in escrows
Rents receivable
Prepaid expenses and other assets, net
Accounts payable and accrued expenses
Other liabilities
1,734
4,132
(1,788)
(8,370)
8,156
(5,902)
221
(7,945)
(1,523)
6,856
(782)
2,101
(2,367)
3,434
(5,271)
—
722
(111)
1,991
(148)
3,285
(19,906)
(36,819)
—
—
14,420
36,666
630
—
4,392
3,593
(157)
(2,305)
129
202
—
881
667
(2,061)
(15,865)
24,074
8,368
1,228
4,962
7,203
Net cash provided by operating activities
47,462
66,517
105,294
Cash Flows from Investing Activities
Investment in real estate and improvements
Deferred acquisition and leasing costs
Investments in and advances to unconsolidated affiliates
Return of capital from unconsolidated affiliates
Repayments of notes receivable
Advances on notes receivable
Proceeds from sale of property
(127,322)
(245,033)
(210,356)
(11,368)
(5,603)
4,705
13,614
(9,362)
11,956
(6,068)
(7,918)
(1,746)
(39,712)
4,052
26,625
19,922
11,071
(90,847)
(14,548)
23,627
19,668
Net cash used in investing activities
(123,380)
(302,265)
(208,998)
64
Acadia Realty Trust 2009 Annual Report
Consolidated Statements of Cash Flows continued
Years Ended December 31,
2009
2008
2007
(dollars in thousands)
Cash Flows from Financing Activities
Principal payments on mortgage notes
Proceeds received on mortgage notes
Purchase of convertible notes
Proceeds received on convertible notes
Increase in deferred financing and other costs
Capital contributions from noncontrolling interests
in partially-owned affiliates
Distributions to noncontrolling interests in partially-owned affiliates
Dividends paid to Common Shareholders
Distributions to noncontrolling interests in Operating Partnership
Distributions on preferred Operating Partnership Units
to noncontrolling interests
Proceeds from issuance of Common Shares, net of issuance costs
Cancellation of Common Shares
Common Shares issued under Employee Share Purchase Plan
Exercise of options to purchase Common Shares
Net cash provided by financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
$ (182,610)
260,065
(46,736)
—
(1,755)
25,653
(1,624)
(30,163)
(1,222)
(33)
65,222
(5,424)
106
1,556
83,035
7,117
86,691
$ (68,412)
$ (165,451)
281,192
222,218
(6,042)
—
—
15,000
(1,763)
(4,128)
46,014
110,542
(15,347)
(34,710)
(809)
(63,662)
(26,039)
(527)
(27)
—
(86)
—
(2,102)
(1,094)
261
841
529
174
199,096
87,476
(36,652)
(16,228)
123,343
139,571
Cash and cash equivalents, end of period
$ 93,808
$ 86,691
$ 123,343
Supplemental disclosure of cash flow information:
Cash paid during the period for interest, including capitalized
interest of $3,516, $6,779, and $3,031, respectively
$ 33,699
$ 33,778
$ 26,705
Cash paid for income taxes
$
777
$ 6,633
$
348
Supplemental disclosure of non-cash investing
and financing activities:
Acquisition of real estate through assumption of debt
$
Issuance of notes receivable in connection with sale of real estate $
—
—
Dividends paid through the issuance of Common Shares
$ 16,192
$ 39,967
$
—
$
$
—
—
$ (18,000)
$
—
The accompanying notes are an integral part of these consolidated financial statements.
Acadia Realty Trust 2009 Annual Report 65
Notes to Consolidated Financial Statements
Note 1
Organization, Basis of Presentation
and Summary of Significant
Accounting Policies
Acadia Realty Trust (the “Trust”) and subsidiaries (collec-
interest in both Fund I and Mervyns I and is also entitled
to a profit participation in excess of its invested capital
based on certain investment return thresholds (“Promote”).
Cash flow is distributed pro-rata to the partners and
members (including the Operating Partnership) until they
receive a 9% cumulative return (“Preferred Return”), and
tively, the “Company”) is a fully integrated, self-managed
the return of all capital contributions. Thereafter, remaining
and self-administered equity real estate investment trust
cash flow (which is net of distributions and fees to the
(“REIT”) focused primarily on the ownership, acquisition,
Operating Partnership for management, asset management,
redevelopment and management of retail properties,
leasing, construction and legal services) is distributed 80%
including neighborhood and community shopping centers
to the partners (including the Operating Partnership) and
and mixed-use properties with retail components.
20% to the Operating Partnership as a Promote. As all
As of December 31, 2009, the Company operated 79
properties, which it owns or has an ownership interest
in, principally located in the Northeast, Mid-Atlantic and
Midwest regions of the United States.
All of the Company’s assets are held by, and all of its oper-
ations are conducted through, Acadia Realty Limited Part-
nership (the “Operating Partnership”) and entities in which
the Operating Partnership owns a controlling interest. As
of December 31, 2009, the Trust controlled 98% of the
Operating Partnership as the sole general partner. As the
general partner, the Trust 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 represent entities or individuals who contributed
their interests in certain properties or entities to the Oper-
ating Partnership in exchange for common or preferred
units of limited partnership interest (“Common or Preferred
OP Units”). Limited partners holding Common OP Units
contributed capital and accumulated preferred return
has been distributed to investors, the Operating Partner-
ship is currently entitled to a Promote on all earnings
and distributions.
During June of 2004, the Company formed Acadia Strate-
gic Opportunity Fund II, LLC (“Fund II”), and during August
2004 formed Acadia Mervyn Investors II, LLC (“Mervyns II”),
with the investors from Fund I as well as two additional
institutional investors with a total of $300.0 million of com-
mitted discretionary capital. The Operating Partnership’s
share of committed capital is $60.0 million. The Operating
Partnership is the managing member with a 20% interest
in both Fund II and Mervyns II. The terms and structure of
Fund II and Mervyns II are substantially the same as Fund
I and Mervyns I, including the Promote structure, with the
exception that the Preferred Return is 8%. As of December
31, 2009, the Operating Partnership had contributed $37.1
million to Fund II and $7.6 million to Mervyns II.
are generally entitled to exchange their units on a one-for-
During May of 2007, the Company formed Acadia Strategic
one basis for common shares of beneficial interest of the
Opportunity Fund III LLC (“Fund III”) with 14 institutional
Trust (“Common Shares”). This structure is referred to as
investors, including a majority of the investors from Fund I
an umbrella partnership REIT or “UPREIT.”
and Fund II with a total of $503.0 million of committed
During September of 2001, the Company formed a part-
nership, Acadia Strategic Opportunity Fund I, LP (“Fund I”),
and during August of 2004 formed a limited liability com-
pany, Acadia Mervyn Investors I, LLC (“Mervyns I”), with
four institutional investors. The Operating Partnership
committed a total of $20.0 million to Fund I and Mervyns
I, and the four institutional shareholders committed a total
of $70.0 million for the purpose of acquiring real estate
investments. As of December 31, 2009, Fund I was fully
invested, with the Operating Partnership having contributed
$16.5 million to Fund I and $2.7 million to Mervyns I.
The Operating Partnership is the general partner of Fund I
and sole managing member of Mervyns I, with a 22.2%
discretionary capital. The Operating Partnership’s share of
the invested capital is $100.0 million and it is the managing
member with a 19.9% interest in Fund III. The terms and
structure of Fund III are substantially the same as the
previous Funds I and II, including the Promote structure,
with the exception that the Preferred Return is 6%. As of
December 31, 2009, the Operating Partnership had con-
tributed $19.2 million to Fund III.
Principles of Consolidation
The consolidated financial statements include the con-
solidated accounts of the Company and its controlling
investments in partnerships and limited liability companies
in which the Company is presumed to have control in
66
Acadia Realty Trust 2009 Annual Report
accordance with Financial Accounting Standards Board
statements of Albertson’s to support the equity earnings
(“FASB”) Accounting Standards Codification (“ASC”)
or losses in accordance with ASC Topic 323 “Investments
Topic 810 “Consolidation” (formerly Emerging Issues Task
— Equity Method and Joint Ventures” (formerly Account-
Force [“EITF”] Issue No. 04-5) (“ASC Topic 810”). The
ing Principles Board [“APB”] 18 “Equity Method of
ownership interests of other investors in these entities are
Accounting for Investments in Common Stock”).
recorded as noncontrolling interests. All significant inter-
company 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 loss)
of these entities are included in consolidated net income.
The Company periodically reviews its investment in uncon-
solidated joint ventures for other than temporary losses in
investment value. Any decline that is not expected to be
recovered is considered other than temporary and an
impairment charge is recorded as a reduction in the car-
rying value of the investment. During the year ended
December 31, 2009, the Company recorded a $3.8 million
impairment charge related to a Fund I unconsolidated joint
Variable interest entities within the scope of ASC Topic 810
venture. No impairment charges related to the Company’s
(formerly FASB Interpretation No. 46-R, “Consolidation of
investment in unconsolidated joint ventures were recog-
Variable Interest Entities”) are required to be consolidated
nized for the years ended December 31, 2008 and 2007.
by their primary beneficiary. The primary beneficiary of a
variable interest entity is determined to be the party that
bears a majority of the entity’s expected losses, receives
a majority of its expected returns, or both. Management has
evaluated the applicability of ASC Topic 810 to its invest-
ments in certain joint ventures and determined that these
joint ventures are not variable interest entities or that the
Company is not the primary beneficiary and, therefore,
consolidation of these ventures is not required. These
investments are accounted for using the equity method.
Investments in and Advances to Unconsolidated
Joint Ventures
The Company accounts for its investments in unconsoli-
dated joint ventures using the equity method as it does
not exercise control over significant asset decisions such
as buying, selling or financing nor is it the primary benefi-
Use of Estimates
Accounting principles generally accepted in the United
States of America (“GAAP”) require the Company’s man-
agement to make estimates and assumptions that affect
the amounts reported in the financial statements and
accompanying notes. The most significant assumptions
and estimates relate to the valuation of real estate, depre-
ciable lives, revenue recognition and the collectability of
trade accounts receivable. Application of these assump-
tions requires the exercise of judgment as to future
uncertainties and, as a result, actual results could differ
from these estimates.
Real Estate
Real estate assets are stated at cost less accumulated
depreciation. Expenditures for acquisition, development,
ciary under ASC Topic 810, as discussed above. The Com-
construction and improvement of properties, as well as
pany does have significant influence over the investments
significant renovations are capitalized. Interest costs are
which requires equity method accounting. Under the equity
capitalized until construction is substantially complete.
method, the Company increases its investment for its
proportionate share of net income and contributions to
Construction in progress includes costs for significant
property expansion and redevelopment. Depreciation is
the joint venture and decreases its investment balance by
computed on the straight-line basis over estimated useful
recording its proportionate share of net loss and distribu-
tions. The Company recognizes income for distributions
lives of 30 to 40 years for buildings, the shorter of the
useful life or lease term for tenant improvements and
in excess of its investment where there is no recourse to
five years for furniture, fixtures and equipment. Expendi-
the Company. For investments in which there is recourse
tures for maintenance and repairs are charged to opera-
to the Company, distributions in excess of the investment
tions as incurred.
are recorded as a liability. Although the Company accounts
for its investment in Albertson’s (Note 4) under the equity
method of accounting, the Company adopted the policy of
not recording its equity in earnings or losses of this uncon-
solidated affiliate until it receives the audited financial
Upon acquisitions of real estate, the Company assesses
the fair value of acquired assets (including land, buildings
and improvements, and identified intangibles such as
above and below market leases and acquired in-place
Acadia Realty Trust 2009 Annual Report 67
Notes to Consolidated Financial Statements continued
leases and customer relationships) and acquired liabilities
these real estate properties are reflected as discontinued
in accordance with ASC Topic 805 “Business Combinations”
operations in all periods reported.
(formerly SFAS No. 141R, “Business Combinations”) and ASC
Topic 350 “Intangibles — Goodwill and Other” (formerly
SFAS No. 142, “Goodwill and Other Intangible Assets”), and
allocates acquisition price based on these assessments.
The Company assesses fair value based on estimated
cash flow projections that utilize appropriate discount and
capitalization rates and available market information.
Estimates of future cash flows are based on a number of
factors including the historical operating results, known
trends, and market/economic conditions that may affect
the property.
The Company reviews its long-lived assets used in opera-
tions for impairment when there is an event, or change in
circumstances that indicates that the carrying amount may
not be recoverable. The Company records impairment
losses and reduces the carrying value of properties when
indicators of impairment are present and the expected
undiscounted cash flows related to those properties are
less than their carrying amounts. In cases where the Com-
pany does not expect to recover its carrying costs on prop-
erties held for use, the Company reduces its carrying cost
to fair value, and for properties held for sale, the Company
reduces its carrying value to the fair value less costs to
sell. During the years ended December 31, 2009, 2008
and 2007, no impairment losses were recognized. Man-
On occasion, the Company will receive unsolicited offers
from third parties to buy individual Company properties.
Under these circumstances, the Company will classify
the properties as held for sale when a sales contract is
executed with no contingencies and the prospective buyer
has funds at risk to ensure performance.
Deferred Costs
Fees and costs paid in the successful negotiation of
leases are deferred and are being amortized on a straight-
line basis over the terms of the respective leases. Fees
and costs incurred in connection with obtaining financing
are deferred and are amortized over the term of the
related debt obligation.
Management Contracts
Income from management contracts is recognized on an
accrual basis as such fees are earned. The initial acquisition
cost of the management contracts are amortized over the
estimated lives of the contracts acquired.
Revenue Recognition and Accounts Receivable
Leases with tenants are accounted for as operating leases.
Minimum rents are recognized on a straight-line basis over
the term of the respective leases, beginning when the
tenant takes possession of the space. As of December 31,
agement does not believe that the values of its properties
2009 and 2008, included in rents receivable, net on the
within the portfolio are impaired as of December 31, 2009.
accompanying consolidated balance sheet, unbilled rents
Sale of Real Estate
The Company recognizes property sales in accordance
with ASC Topic 970 “Real Estate” (formerly SFAS No. 66,
“Accounting for Sales of Real Estate”). The Company
generally records the sales of operating properties and
outparcels using the full accrual method at closing when
the earnings process is deemed to be complete. Sales
not qualifying for full recognition at the time of sale are
accounted for under other appropriate deferral methods.
Real Estate Held for Sale
The Company evaluates the held-for-sale classification of
its real estate each quarter. Assets that are classified as
held for sale are recorded at the lower of their carrying
amount or fair value less cost to sell. Assets are generally
classified as held for sale once management has initiated
an active program to market them for sale and has received
a firm purchase commitment. The results of operations of
receivable relating to straight-lining of rents were $12.7
million and $11.1 million, respectively. Certain of these
leases also provide for percentage rents based upon the
level of sales achieved by the tenant. Percentage rent is
recognized in the period when the tenants’ sales break-
point is met. In addition, leases typically provide for the
reimbursement to the Company of real estate taxes,
insurance and other property operating expenses. These
reimbursements are recognized as revenue in the period
the expenses are incurred.
The Company makes estimates of the uncollectability
of its accounts receivable related to tenant revenues.
An allowance for doubtful accounts has been provided
against certain tenant accounts receivable that are esti-
mated to be uncollectible. Once the amount is ultimately
deemed to be uncollectible, it is written off. Rents receivable
at December 31, 2009 and 2008 are shown net of an
allowance for doubtful accounts of $7.0 million and
$5.7 million, respectively.
68
Acadia Realty Trust 2009 Annual Report
Notes Receivable and Preferred Equity
Investments
Notes receivable and preferred equity investments are
intended to be held to maturity and are carried at amor-
tized cost. Interest income from notes receivable and
preferred equity investments are recognized on the effec-
tive interest method over the expected life of the loan.
Under the effective interest method, interest or fees
to be collected at the origination of the loan or the payoff
of the loan are recognized over the term of the loan as an
adjustment to yield.
Allowances for real estate notes receivable are established
based upon management’s quarterly review of the invest-
ments. In performing this review, management considers
the estimated net recoverable value of the loan as well as
other factors, including the fair value of any collateral, the
amount and status of any senior debt, and the prospects
for the borrower. Because this determination is based
upon projections of future economic events, which are
inherently subjective, the amounts ultimately realized
from the loans may differ materially from the carrying
value at the balance sheet date. Interest income recogni-
tion is generally suspended for loans when, in the opinion
of management, a full recovery of income and principal
becomes doubtful. Income recognition is resumed when
the suspended loan becomes contractually current and
performance is demonstrated to be resumed.
During 2009, the Company provided a $1.7 million reserve
on a note receivable as a result of the loss of an anchor
tenant at the underlying collateral property. During 2008,
the Company provided a $4.4 million reserve on a note
receivable collateralized by an interest in an entity owning
retail complexes associated with seven public rest stops
along the toll roads in and around Chicago, Illinois. The
note and all accrued interest was subsequently cancelled
during 2009. Management believes that the balance of
notes receivable are collectible as of December 31, 2009.
Cash and Cash Equivalents
The Company considers all highly liquid investments
with an original maturity of three months or less when
purchased to be cash equivalents.
Restricted Cash and Cash in Escrow
Restricted cash and cash in escrow consist principally
of cash held for real estate taxes, property maintenance,
insurance, minimum occupancy and property operating
income requirements at specific properties as required by
certain loan agreements.
Income Taxes
The Company has made an election to be taxed, and
believes it qualifies as a REIT under Sections 856 through
860 of the Internal Revenue Code of 1986, as amended
(the “Code”). To maintain REIT status for Federal income
tax purposes, the Company is generally required to distrib-
ute at least 90% of its REIT taxable income to its stock-
holders as well as comply with certain other income, asset
and organizational requirements as defined in the Code.
Accordingly, the Company is generally not subject to Fed-
eral corporate income tax to the extent that it distributes
100% of its REIT taxable income each year.
Although it may qualify for REIT status for Federal income
tax purposes, the Company is subject to state income or
franchise taxes in certain states in which some of its prop-
erties are located. In addition, taxable income from non-
REIT activities managed through the Company’s taxable
REIT subsidiary (“TRS”) is fully subject to Federal, state
and local income taxes.
TRS income taxes are accounted for under the liability
method as required by ASC Topic 740 “Income Taxes”
(formerly SFAS No. 109, “Accounting for Income Taxes”).
Under the liability method, deferred income taxes are
recognized for the temporary differences between the
financial reporting basis and the tax basis of the TRS
income, assets and liabilities.
In accordance with ASC Topic 740 “Income Taxes” (formerly
FASB Financial Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes — an interpretation of SFAS
No. 109”), the Company believes that it has appropriate
support for the income tax positions taken and, as such,
does not have any uncertain tax positions that result in a
material impact on the Company’s financial position or
results of operation. The prior three years’ income tax
returns are subject to review by the Internal Revenue
Service. The Company’s policy relating to interest and
penalties is to recognize them as a component of the
provision for income taxes.
Stock-based Compensation
The Company accounts for stock options pursuant to ASC
Topic 718 “Compensation — Stock Compensation” (for-
merly SFAS No. 123R “Accounting for Stock-Based Com-
pensation”). As such, all equity based awards are reflected
Acadia Realty Trust 2009 Annual Report 69
Notes to Consolidated Financial Statements continued
as compensation expense in the Company’s consolidated
was effective for financial statements issued for fiscal
financial statements over their vesting period based on the
years beginning after November 15, 2008. The adoption
fair value at the date the stock option was granted.
of ASC 815 did not have an impact on the Company’s
Recent Accounting Pronouncements
In June 2009, the FASB issued ASC Topic 105 “Generally
Accepted Accounting Principles” (formerly Statement of
Financial Accounting Standards (“SFAS”) No. 168, “The
FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles”) (“ASC
Topic 105”). ASC Topic 105 identifies the sources of
accounting principles and the framework for selecting the
principles used in the preparation of financial statements
that are presented in conformity with GAAP. It establishes
the FASB Accounting Standards Codification (“ASC”) as
the single source of authoritative accounting principles
recognized by the FASB in the preparation of financial state-
ments in conformity with GAAP. The ASC does not create
new accounting and reporting guidance; rather, it reorga-
nizes GAAP pronouncements into approximately 90 topics
within a consistent structure. All guidance contained in
the ASC carries an equal level of authority. Relevant por-
tions of authoritative content, issued by the Securities and
Exchange Commission (“SEC”), for SEC registrants, have
been included in the ASC. ASC Topic 105 was effective for
financial statements issued for interim and annual periods
ending after September 15, 2009. The Company adopted
ASC Topic 105 on September 30, 2009.
During December of 2007, the FASB issued ASC Topic
805 “Business Combinations” (formerly SFAS No. 141R,
“Business Combinations”) (“ASC Topic 805”). ASC Topic
805 establishes principles and requirements for how an
acquirer entity recognizes and measures in its financial
statements the identifiable assets acquired (including
intangibles), the liabilities assumed and any noncontrolling
interest in the acquired entity. Effective January 1, 2009,
the Company adopted ASC Topic 805 and it did not have
a material impact on the Company’s financial position or
results of operations.
During March of 2008, the FASB issued ASC Topic 815
“Derivatives and Hedging” (formerly SFAS No. 161
“Disclosures about Derivative Instruments and Hedging
Activities — an amendment of SFAS No. 133”) (“ASC Topic
815”). ASC Topic 815 amends SFAS No. 133 to provide
additional information about how derivative and hedging
activities affect an entity’s financial position, financial per-
formance, and cash flows. It requires enhanced disclosures
about an entity’s derivatives and hedging activities. ASC 815
financial condition or results of operations.
During June of 2008, the FASB ratified ASC Topic 815
(formerly EITF Issue 07-5 “Determining Whether an
Instrument [or Embedded Feature] Is Indexed to an Entity’s
Own Stock”). Paragraph 11(a) of SFAS 133 specifies that
a contract that would otherwise meet the definition of a
derivative but is both (a) indexed to the Company’s own
stock and (b) classified in stockholders’ equity in the
statement of financial position would not be considered
a derivative financial instrument. ASC Topic 815 provides a
new two-step model to be applied in determining whether
a financial instrument or an embedded feature is indexed
to an issuer’s own stock and thus able to qualify for the
SFAF 133 paragraph 11(a) scope exception. ASC Topic 815
became effective on January 1, 2009. The adoption of
ASC 815 did not have an impact on the Company’s
financial position and results of operations.
During October of 2008, the FASB issued ASC Topic 820
“Fair Value Measurements and Disclosures” (formerly
FSP FAS 157-3, “Determining the Fair Value of a Financial
Asset When the Market for That Asset Is Not Active”)
(“ASC Topic 820”). ASC Topic 820 provides guidance in
determining the fair value of a financial asset when there
is not an active market for that financial asset. The adop-
tion of ASC Topic 820 did not have an impact on the
Company’s financial position and results of operations.
Effective January 1, 2009, the Company adopted the fol-
lowing FASB pronouncements, which required it to retro-
spectively restate and reclassify previously disclosed
consolidated financial statements. As such, certain prior
period amounts have been restated or reclassified in the
accompanying unaudited consolidated financial statements
to conform to the adoption of these FASB pronouncements.
The Company adopted ASC Topic 810 (formerly SFAS
No. 160, “Noncontrolling Interests in Consolidated Finan-
cial Statements). ASC Topic 810, among other things,
provides guidance and establishes amended accounting
and reporting standards for noncontrolling interests in a
consolidated subsidiary and the deconsolidation of a sub-
sidiary. Under ASC Topic 810, the Company now reports
noncontrolling interests in subsidiaries as a separate com-
ponent of equity in the consolidated financial statements
and shows both net income and net loss attributable to
the noncontrolling interests and net income attributable
70
Acadia Realty Trust 2009 Annual Report
to the controlling interests on the face of the Consolidated
recorded as additional paid-in capital was $11.3 million,
Statements of Income.
The Company adopted ASC Topic 470-20 “Debt with Con-
version and Other Options” (formerly FASB Staff Position
No. APB 14-1, “Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion Including
Partial Cash Settlement”), (“ASC Topic 470-20”). ASC
Topic 470-20 requires the proceeds from the issuance of
convertible debt be allocated between a debt component
and an equity component. The debt component is mea-
sured based on the fair value of similar debt without an
which represented the difference between the proceeds
from the issuance of the convertible notes payable and
the fair value of the liability at the time of issuance. The
additional non-cash interest expense recognized in the
Consolidated Statements of Income was $1.3 million and
$2.1 million for the fiscal years ended 2009 and 2008,
respectively. Accumulated amortization related to the
convertible notes payable was $0.7 million and $1.1 million
as of December 31, 2009 and December 31, 2008,
respectively, after giving effect to repurchases.
equity conversion feature, and the equity component is
The following table shows the effect of the retrospective
determined as the residual of the fair value of the debt
application and reclassification of (i) the consolidated balance
deducted from the original proceeds received. The result-
sheet accounts for the year ended December 31, 2008
ing discount on the debt component is amortized over the
and (ii) the consolidated statement of income for the years
period the convertible debt is expected to be outstanding,
ended December 31, 2008 and 2007 and consolidated
which is December 11, 2006 to December 20, 2011, as
statement of cash flow accounts for the years ended
additional non-cash interest expense. The equity component
December 31, 2008 and 2007:
(dollars in thousands, except per share amounts)
December 31, 2008
Affected Consolidated
Balance Sheet Accounts
Deferred charges, net of amortization
Convertible notes payable
Minority interests
Additional paid-in capital
Retained earnings
Noncontrolling interests in subsidiaries
Affected Consolidated Income
Statement Accounts
Depreciation and amortization
Interest expense
Gain on debt extinguishment
Income from continuing operations
Net income
Net income attributable
to Common Shareholders
Basic earnings per share
Diluted earnings per share
Before
Adjustment
$ 22,072
$ 107,000
$ 214,506
$ 212,007
$ 13,767
$
—
Before
Adjustment
$ 33,390
$ 26,792
$
1,958
$ 31,237
$ 39,917
$ 27,548
$
$
0.81
0.80
As
Adjusted
$ 21,899
$ 100,403
$
—
$ 218,527
$ 13,671
$ 214,506
Year Ended December 31, 2008
As
Adjusted
$ 33,334
$ 28,893
$ 1,523
$ 28,757
$ 37,437
$ 25,068
$
$
0.74
0.73
Effect of
Change
$
$
(173)
(6,597)
$ (214,506)
$
$
6,520
(96)
$ 214,506
Effect of
Change
$
$
$
$
$
$
$
$
56
(2,101)
(435)
(2,480)
(2,480)
(2,480)
(0.07)
(0.07)
Acadia Realty Trust 2009 Annual Report 71
Notes to Consolidated Financial Statements continued
(dollars in thousands, except per share amounts)
Year Ended December 31, 2007
Affected Consolidated Income
Statement Accounts
Depreciation and amortization
Interest expense
Income from continuing operations
Net income
Net income attributable
to Common Shareholders
Basic earnings per share
Diluted earnings per share
Affected Consolidated Statement
of Cash Flow Accounts
Depreciation and amortization
Gain on debt extinguishment
Amortization of discount on convertible debt
Depreciation and amortization
Amortization of discount on convertible debt
Before
Adjustment
$ 25,181
$ 22,573
$ 7,395
$ 42,485
$ 27,270
$
$
0.81
0.80
Before
Adjustment
$ 34,964
$ (1,958)
$
—
Before
Adjustment
$ 28,428
$
—
As
Adjusted
$ 25,114
$ 24,564
$ 5,471
$ 40,561
$ 25,346
$
$
0.76
0.74
Year Ended December 31, 2008
As
Adjusted
$ 34,908
$ (1,523)
$ 2,101
Year Ended December 31, 2007
As
Adjusted
$ 28,361
$ 1,991
Effect of
Change
$
67
$ (1,991)
$ (1,924)
$ (1,924)
$ (1,924)
$ (0.05)
$ (0.06)
Effect of
Change
$
(56)
$ 435
$ 2,101
Effect of
Change
$
(67)
$ 1,991
In April 2009, the FASB issued ASC Topic 825 “Financial
standards of accounting and disclosure for events that
Instruments” (formerly FSP SFAS 107-1 and APB 28-1,
occur after the balance sheet date but before the financial
“Interim Disclosures About Fair Value of Financial Instru-
statements are issued and was effective for interim or
ments”) (“ASC Topic 825”). ASC Topic 825 amends SFAS
annual periods ending after June 15, 2009. The Company
No. 107, “Disclosures about Fair Values of Financial Instru-
adopted ASC Topic 855 and the adoption did not have
ments” and Accounting Principles Board Opinion No. 28,
an impact on the Company’s financial position and results
“Interim Financial Reporting,” to require disclosures about
of operations.
fair value of financial instruments in interim financial state-
ments. ASC Topic 825 is effective for interim periods end-
ing after June 15, 2009. The Company adopted ASC Topic
825 and has provided the disclosures in Note 10 to the
Consolidated Financial Statements. The adoption did not
have an impact on the Company’s financial position and
results of operations.
In June 2009, the FASB issued ASC 810 (formerly SFAS
No. 167, “Amendments to FASB Interpretation No. 46[R],”
which changes the approach to determining the primary
beneficiary of a variable interest entity and requires compa-
nies to more frequently assess whether they must consol-
idate a variable interest entity. ASC 810 is effective on the
first annual reporting period that begins after November
In May 2009, the FASB issued ASC Topic 855 “Subsequent
15, 2009. The adoption of ASC 810 on January 1, 2010
Events” (formerly SFAS No. 165 “Subsequent Events”)
did not have a material impact on the Company’s financial
(“ASC Topic 855”). ASC Topic 855 establishes general
position and results of operations.
72
Acadia Realty Trust 2009 Annual Report
Comprehensive Income
The following table sets forth comprehensive income for
Acquisitions
On January 29, 2009, the Company acquired the 642,000
the years ended December 31, 2009, 2008 and 2007:
square foot Cortlandt Towne Center in Cortlandt, NY for
Years Ended December 31,
$78.0 million.
2009
2008
2007
On February 29, 2008, the Company acquired a portfolio of
(dollars in thousands)
Net income attributable to
11 self-storage properties located throughout New York and
New Jersey for approximately $174.0 million. The portfolio
Common Shareholders $ 31,133
$ 25,068 $25,346
totals approximately 920,000 net rentable square feet.
Other comprehensive
income (loss)
1,514
(3,555)
(719)
On April 22, 2008, the Company acquired a 20,000 square
foot single tenant retail property located in Manhattan,
Comprehensive income
attributable to Common
Shareholders
$ 32,647
$21,513 $24,627
Other comprehensive income relates to the changes in
the fair value of derivative instruments accounted for as
cash flow hedges and amortization, which is included in
interest expense, of derivative instruments.
The following table sets forth the change in accumulated
other comprehensive loss for the years ended December 31,
2009 and 2008:
Accumulated other comprehensive loss
Years Ended
December 31,
2009
2008
New York for $9.7 million.
On March 20, 2007, the Company purchased a retail com-
mercial condominium at 200 West 54th Street located in
Manhattan, New York. The 10,000 square foot property
was acquired for $36.4 million.
Additionally, on March 20, 2007, the Company purchased
a single-tenant building located at 1545 East Service Road
in Staten Island, New York for $17.0 million.
On May 31, 2007, the Company purchased a property
located on Atlantic Avenue in Brooklyn, New York for
$5.0 million. The property was redeveloped into a 110,000
square foot, six-story self-storage facility.
On June 13, 2007, the Company (approximately 25% of
the invested equity), along with an unaffiliated partner
(approximately 75% of the invested equity), acquired a
(dollars in thousands)
Beginning balance
Unrealized loss on valuation
of derivative instruments
and amortization of derivative
Reclassification of loss on
derivative instruments
to interest expense
$ (4,508) $
(953)
leasehold interest in The Gallery at Fulton Street and
adjacent parking garage located in downtown Brooklyn,
New York for $115.0 million. The property has been
(912)
(4,179)
demolished and redevelopment plans for CityPoint are
in the design phase.
2,426
624
On October 31, 2007, the Company, in conjunction with
an unaffiliated partner, P/A Associates, LLC (collectively,
Ending balance
$ (2,994) $ (4,508)
“Acadia-P/A”) acquired a 530,000 square foot warehouse
Note 2
Acquisition and Disposition of
Properties and Discontinued
Operations
A. Acquisition and Disposition of Properties
The Company has historically made acquisitions through
its Opportunity Funds and the Operating Partnership.
building in Canarsie, Brooklyn for approximately $21.0 million.
Demolition and construction has commenced on the
320,000 square foot mixed-use project.
On November 1, 2007, the Company, and an unaffiliated
partner acquired a property in Westport, Connecticut for
approximately $17.0 million. The plan is to redevelop the
existing building into 30,000 square feet of retail and
office use.
Acadia Realty Trust 2009 Annual Report 73
Notes to Consolidated Financial Statements continued
On November 5, 2007, the Company acquired a property
in Sheepshead Bay, Brooklyn for approximately $20.0 million.
Dispositions
During 2009, 2008 and 2007, the Company disposed of
Redevelopment plans for this property are in the
the following properties:
design phase.
(dollars in thousands)
Property
Blackman Plaza
Six Kroger locations
Village Apartments
Amherst Marketplace and Sheffield Crossing
Colony and GHT Apartments
Total
Year Sold
Sales Price
Gain/(Loss)
GLA
2009
2009
2008
2007
2007
$ 2,500
9,481
23,300
26,000
15,500
$ 76,781
$ 1,506
5,637
7,182
7,516
(2,245)
125,264
277,700
599,106
192,479
625,545
$ 19,596
1,820,094
B. Discontinued Operations
In accordance with ASC 205-20 “Presentation of Financial
Statements, Discontinued Operations,” which requires
discontinued operations presentation for disposals of a
“component” of an entity, for all periods presented, the
Company reclassified its consolidated statements of income
to reflect income and expenses for properties that were
sold prior to December 31, 2009, as discontinued opera-
tions and reclassified its consolidated balance sheets to
reflect assets and liabilities related to such properties as
assets and liabilities related to discontinued operations.
The combined assets and liabilities as of December 31,
2008 and results of operations of the properties classified
as discontinued operations for the years ended December
31, 2009, 2008 and 2007 are summarized as follows:
Statement of Operations 2009
2008
2007
Years Ended December 31,
(dollars in thousands)
Total revenues
Total expenses
$ 644 $ 4,136 $ 12,948
398
2,638
10,973
Operating Income
246
1,498
1,975
Gain on sale of property
7,143
7,182
5,271
Income from
discontinued operations
7,389
8,680
7,246
Income from discontinued
operations attributable to
noncontrolling interests
in subsidaries
Income from discontinued
operations attributable to
Common Shareholders
(4,855)
(739)
(606)
$ 2,534 $ 7,941 $ 6,640
December 31,
2008
Note 3
(dollars in thousands)
Assets
Net real estate
Rents receivable, net
Prepaid expenses and other assets, net
$ 4,635
12
43
Total assets of discontinued operations
$ 4,690
Liabilities
Mortgage Notes Payable
Accounts payable and accrued expenses
Other liabilities
$
1,325
57
99
Total liabilities of discontinued operations
$ 1,481
Segment Reporting
The Company has five reportable segments: Core Portfolio,
Opportunity Funds, Self-Storage Portfolio, Notes Receivable
and Other. Notes Receivable consists of the Company’s
notes receivable and preferred equity investment and
related interest income. Other consists primarily of man-
agement fees and interest income. The accounting policies
of the segments are the same as those described in the
summary of significant accounting policies. The Company
evaluates property performance primarily based on net
operating income before depreciation, amortization and
certain nonrecurring items. Investments in the Core Port-
folio are typically held long-term. Given the contemplated
finite life of the Opportunity Funds, these investments are
74
Acadia Realty Trust 2009 Annual Report
typically held for shorter terms. Fees earned by the Com-
segment information for the Company, reclassified for
pany as the general partner/member of the Opportunity
discontinued operations, as of and for the years ended
Funds are eliminated in the Company’s consolidated finan-
December 31, 2009, 2008, and 2007 (does not include
cial statements. The following table sets forth certain
unconsolidated affiliates):
2009
Core
Portfolio
Opportunity
Funds
Storage
Portfolio
Notes
Receivable
Other
Elimination
Total
$ 69,553
$ 44,326
$ 11,166
$ 19,156
$ 23,681
$ (20,537)
$ 147,345
(dollars in thousands)
Revenues
Property operating expenses
and real estate taxes
21,335
15,427
11,029
Reserve for notes receivable
Abandonment of project costs
—
—
—
2,487
Other expenses
23,983
13,597
—
—
3
—
1,734
—
—
—
—
—
—
(1,150)
46,641
—
—
1,734
2,487
(15,570)
22,013
Income before depreciation and
amortization
$ 24,235
$ 12,815
$
134
$ 17,422
$ 23,681
Depreciation and amortization
$ 17,200
$ 17,051
$ 4,437
Interest and other finance expense
$ 18,744
$ 8,404
$ 5,006
Real estate at cost
$ 475,486
$ 534,393
$ 208,574
$
$
$
—
—
—
$
$
$
(3,817)
$ 74,470
(1,470)
$ 37,218
—
$ 32,154
$ —
$ —
$ —
$ (11,047)
$ 1,207,406
Total assets
$ 558,240
$ 607,706
$ 196,658
$ 125,221
$ —
$ (105,361)
$ 1,382,464
Expenditures for real estate
and improvements
Reconciliation to net income
Income before depreciation and
amortization
Depreciation and amortization
Equity in losses of
unconsolidated partnerships
Interest and other finance expense
Gain on debt extinguishment
Impairment of investment
in unconsolidated affiliate
Income tax provision
Income from discontinued operations
Net income
Net loss attributable to noncontrolling
interests in subsidiaries
Net income attributable to
Common Shareholders
$ 1,938
$ 119,665
$ 10,996
$
—
$ —
$
(5,277)
$ 127,322
$ 74,470
(37,218)
(1,529)
(32,154)
7,057
(3,768)
(1,541)
7,389
12,706
18,427
$ 31,133
Acadia Realty Trust 2009 Annual Report 75
Notes to Consolidated Financial Statements continued
2008
Core
Portfolio
Opportunity
Funds
Storage
Portfolio
Notes
Receivable
Other
Elimination
Total
$ 65,347
$ 48,400
$ 5,589
$ 10,903
$ 30,928
$ (23,231)
$ 137,936
(dollars in thousands)
Revenues
Property operating expenses and
real estate taxes
20,973
8,954
6,669
Reserve for notes receivable
Abandonment of project costs
—
—
—
630
Other expenses
26,007
16,131
—
—
58
—
4,392
—
—
—
—
—
—
(381)
36,215
—
—
4,392
630
(17,651)
24,545
Income before depreciation
and amortization
$ 18,367
$ 22,685
$
(1,138)
$ 6,511
$ 30,928
$ (5,199)
$ 72,154
Depreciation and amortization
$ 20,296
$ 10,036
$ 3,002
Interest and other finance expense
$ 19,698
$ 5,549
$ 3,650
Real estate at cost
$ 474,684
$ 438,260
$ 186,529
$
$
$
—
—
—
$ —
$ —
$
$
—
$ 33,334
(4)
$ 28,893
$ —
$ (7,478)
$ 1,091,995
Total assets
$ 567,882
$ 487,182
$ 194,992
$ 125,587
$ —
$ (84,260)
$ 1,291,383
Expenditures for real estate
and improvements
Reconciliation to net income
Income before depreciation and
amortization
Depreciation and amortization
Equity in earnings of unconsolidated
partnerships
Interest and other finance expense
Gain on sale
Gain on debt extinguishment
Income tax provision
Income from discontinued operations
Net income
Net loss attributable to noncontrolling
interests in subsidiaries
Net income attributable to
Common Shareholders
$ 18,424
$ 94,191
$ 135,391
$
—
$ —
$ (2,973)
$ 245,033
$ 72,154
(33,334)
19,906
(28,893)
763
1,523
(3,362)
8,680
37,437
(12,369)
$ 25,068
76
Acadia Realty Trust 2009 Annual Report
2007
Core
Portfolio
Opportunity
Funds
Storage
Portfolio
Notes
Receivable
Other
Elimination
Total
$ 62,520
$ 17,901
$
291
$ 3,682
$ 31,065
$ (20,367)
$ 95,092
18,467
—
4,264
129
25,217
12,903
756
—
—
—
—
—
—
—
—
(280)
23,207
—
129
(15,191)
22,929
(dollars in thousands)
Revenues
Property operating expenses and
real estate taxes
Abandonment of project costs
Other expenses
Income (loss) before depreciation
and amortization
$ 18,836
$
605
$
(465)
$ 3,682
$ 31,065
$ (4,896)
$ 48,827
Depreciation and amortization
$ 17,394
$ 7,409
Interest and other finance expense
$ 19,430
$ 5,291
$
$
311
$ —
$ —
359
$ —
$ —
$
$
—
$ 25,114
(516)
$ 24,564
Real estate at cost
$ 458,042
$ 350,699
$ 12,407
$ —
$ —
$ (3,528)
$ 817,620
Total assets
$ 578,310
$ 403,844
$ 15,200
$ 57,662
$ —
$ (56,233)
$ 998,783
$ 58,575
$ 149,453
$ 6,626
$ —
$ —
$ (4,298)
$ 210,356
Expenditures for real estate
and improvements
Reconciliation to net income
Income before depreciation and
amortization
Depreciation and amortization
Equity in earnings of
unconsolidated partnerships
Interest and other finance expense
Income tax provision
Income from discontinued operations
Extraordinary item
Net income
Net loss attributable to noncontrolling
interests in subsidiaries
Net income attributable to
Common Shareholders
Note 4
$ 48,827
(25,114)
6,619
(24,564)
(297)
7,246
27,844
40,561
(15,215)
$ 25,346
investment in which the RCP Venture participants elect
to invest is to be distributed to the participants until they
have received a 10% cumulative return and a full return
of all related contributions. Thereafter, remaining cash flow
is to be distributed 20% to Klaff and 80% to the partners
(including Klaff).
Investments in and Advances to
Unconsolidated Affiliates
Retailer Controlled Property Venture
("RCP Venture”)
During January of 2004, the Company commenced the
The table below summarizes the Company’s invested
RCP Venture with Klaff Realty, LP (“Klaff”) and Lubert-
capital and distributions received from its RCP Venture
Adler Management, Inc., through a limited liability com-
investments.
pany (“KLA”), for the purpose of making investments in
surplus or underutilized properties owned by retailers. As
of December 31, 2009, the Company has invested $60.8
million through the RCP Venture on a non-recourse basis.
Upon formation, it was contemplated the RCP Venture
would invest $300.0 million, of which the Company’s share
would be $60.0 million. Cash flow from any individual
Mervyns Department Stores
In September 2004, the Company made its first RCP
Venture investment. Through Mervyns I and Mervyns II,
the Company invested in a consortium to acquire the
Mervyns Department Store chain (“Mervyns”) consisting
of 262 stores (“REALCO”) and its retail operation (“OPCO”)
Acadia Realty Trust 2009 Annual Report 77
Notes to Consolidated Financial Statements continued
from Target Corporation. To date, REALCO has disposed
Through December 31, 2009, the Company has received
of a significant portion of the portfolio. In addition, in
additional distributions from this investment totaling
November 2007, the Company sold its interest in OPCO
$21.3 million.
and, as a result, has no further investment in OPCO.
Subsequent to the initial acquisition, the Company,
through Mervyns I and Mervyns II, made additional
investments of $2.9 million.
Through December 31, 2009, the Company, through
Mervyns II, made Add-On investments in Albertson’s total-
ing $2.4 million and received distributions totaling $1.2 million.
The Company accounts for these Add-On investments using
During the year ended December 31, 2009, REALCO
the cost method due to the minor ownership interest and
recorded an impairment charge on its investment in certain
the inability to exert influence over KLA’s operating and
locations and leasehold interests of which Mervyns I and II
financial policies.
recognized a combined loss of $3.1 million. The Operating
Partnership’s share of this loss, net of taxes, was $0.6 million.
Other RCP Investments
During 2006, the Company, through Fund II, made invest-
Through December 31, 2009, the Company, through
ments of $1.1 million in Shopko and $0.7 million in Marsh.
Mervyns I and Mervyns II, made additional investments in
During 2007, Fund II received a $1.1 million cash distribu-
locations that are separate from the original investment
tion from the Shopko investment representing 100% of its
(“Add-On Investments”) in Mervyns totaling $5.1 million.
invested capital. As of December 31, 2009, the Company,
The Company accounts for these Add-On Investments
through Fund II, made investments of $2.0 million in addi-
using the cost method due to the minor ownership inter-
tional Add-On investments in Marsh and has received
est and the inability to exert influence over KLA’s operating
distributions totaling $2.6 million.
and financial policies.
Albertson’s
During July of 2007, the RCP Venture acquired a portfolio
of 87 retail properties from Rex Stores Corporation, which
During June of 2006, the RCP Venture made its second
the Company invested through Mervyns II. The Company’s
investment as part of an investment consortium, acquiring
share of this investment was $2.7 million. In December of
Albertson’s and Cub Foods, of which the Company’s share
2009, the Company received distributions of $0.4 million.
was $20.7 million. During February of 2007, the Company
received a cash distribution of $44.4 million from this
investment, which was sourced from the disposition of
certain operating stores and a refinancing of the remaining
assets held by Albertson’s. The Company recognized
The Company accounts for these other investments using
the cost method due to its minor ownership interest and
the inability to exert influence over KLA’s operating and
financial policies.
distributions in excess of its invested capital in income,
The following table summarizes the Company’s RCP Venture
including $30.2 million characterized as extraordinary
investments from inception through December 31, 2009:
consistent with the accounting treatment by Albertson’s.
Operating
Partnership Share
(dollars in thousands)
Investment
Investor
Mervyns I and Mervyns II Mervyns
Year
Acquired
2004
Invested Capital
and Advances Distributions
Invested Capital
and Advances Distributions
$ 26,058
$ 45,966
$ 4,901
$ 11,251
Mervyns I and Mervyns II Mervyns add-on investments
2005/2008
Mervyns II
Mervyns II
Fund II
Fund II
Mervyns II
Total
Albertson’s
2006
Albertson’s add-on investments 2006/2007
Shopko
Marsh
Rex Stores
2006
2006
2007
5,126
20,717
2,409
1,100
2,667
2,701
$ 60,778
1,703
753
283
65,757
4,239
13,151
1,215
1,100
2,639
386
220
533
243
220
528
400
$ 118,780
535
$ 11,567
80
$ 25,756
78
Acadia Realty Trust 2009 Annual Report
Brandywine Portfolio
has determined that CityPoint is a variable interest entity,
The Company owns a 22.2% interest in a one million
and the Company is not the primary beneficiary. The Com-
square foot retail portfolio located in Wilmington, Dela-
pany’s maximum exposure is its current investment balance
ware (the “Brandywine Portfolio”) that is accounted for
of $37.4 million.
using the equity method.
Crossroads
The Company owns a 49% interest in the Crossroads
Joint Venture and Crossroads II (collectively, “Crossroads”),
which collectively own a 311,000 square foot shopping
center located in White Plains, New York that is accounted
for using the equity method.
Other Investments
Fund I Investments
Fund I owns a 50% interest in the Sterling Heights Shop-
ping Center which is accounted for using the equity method
of accounting. During 2009, Fund I recorded an impairment
As of December 31, 2009, there was $26.0 million of debt
at CityPoint scheduled to mature during August of 2010.
There are no options to extend this debt. Fund II and its
unaffiliated joint venture partner’s (“JV Partner”) share of
this debt was $6.1 million and $19.9 million, respectively.
If CityPoint is unable to extend the maturity date of this
debt, Fund II and its JV Partner may be required to fund
their requisite share of capital to repay this obligation. In
the event that the JV Partner does not fund its requisite
share of capital, pursuant to the joint venture agreement,
Fund II would have the option to fund the JV Partner’s
share of capital to repay this debt either as a loan to the
JV Partner or as additional equity in CityPoint.
charge of $3.8 million related to this investment.
The following tables summarize the Company’s invest-
Fund II Investments
Fund II’s approximately 25% investment in CityPoint is
accounted for using the equity method. The Company
ments in unconsolidated affiliates as of December 31,
2009, December 31, 2008 and December 31, 2007.
Acadia Realty Trust 2009 Annual Report 79
Notes to Consolidated Financial Statements continued
December 31, 2009
RCP
Venture
Brandywine
Other
CityPoint
Portfolio Crossroads Investments
Total
(dollars in thousands)
Balance Sheets
Assets
Rental property, net
Real estate under development
$
—
—
$
—
$ 127,091
$ 4,968
$ 10,631
$ 142,690
166,381
—
—
—
—
—
—
166,381
209,407
Investment in unconsolidated affiliates
209,407
—
Other assets
Total assets
Liabilities and partners’ equity
Mortgage note payable
Other liabilities
Partners equity (deficit)
—
3,265
11,388
4,322
1,976
20,951
$ 209,407
$ 169,646
$ 138,479
$ 9,290
$ 12,607
$ 539,429
$
—
—
$ 25,990
$ 166,200
$ 62,295
$ 4,200
$ 258,685
2,096
7,762
977
1,250
12,085
209,407
141,560
(35,483)
(53,982)
7,157
268,659
Total liabilities and partners’ equity
$ 209,407
$ 169,646
$ 138,479
$ 9,290
$ 12,607
$ 539,429
Company’s investment in and advances to
unconsolidated affiliates
$ 12,832
$ 37,357
$
—
$
—
$ 1,523
$ 51,712
Share of distributions in excess of share of income
and investment in unconsolidated affiliates
$
—
$
—
$ (8,212)
$ (12,377)
$ —
$ (20,589)
December 31, 2008
RCP
Venture
Brandywine
Other
CityPoint
Portfolio Crossroads Investments
Total
(dollars in thousands)
Balance Sheets
Assets
Rental property, net
Real estate under development
$
—
—
$
—
$ 129,679
$ 5,143
$ 11,481
$ 146,303
159,922
—
—
—
—
—
—
159,922
295,168
Investment in unconsolidated affiliates
295,168
—
Other assets
Total assets
Liabilities and partners’ equity
Mortgage note payable
Other liabilities
Partners equity (deficit)
—
3,983
8,769
5,283
2,770
20,805
$ 295,168
$ 163,905
$ 138,448
$ 10,426
$ 14,251
$ 622,198
$
—
—
$ 34,000
$ 166,200
$ 63,176
$ 5,173
$ 268,549
2,307
7,895
2,072
1,083
13,357
295,168
127,598
(35,647)
(54,822)
7,995
340,292
Total liabilities and partners’ equity
$ 295,168
$ 163,905
$ 138,448
$ 10,426
$ 14,251
$ 622,198
Company’s investment in and advances to
unconsolidated affiliates
Share of distributions in excess of share of income
and investment in unconsolidated affiliates
$ 18,066
$ 33,445
$
—
$
—
$ 3,467
$ 54,978
$
—
$
—
$ (8,236)
$ (12,397)
$ —
$ (20,633)
80
Acadia Realty Trust 2009 Annual Report
Year Ended December 31, 2009
RCP
Venture
Brandywine
Portfolio
Crossroads
Other
Investments
Total
(dollars in thousands)
Statement of Operations
Total revenue
Operating and other expenses
Interest expense
$
—
—
—
Equity in losses of unconsolidated affiliates
(30,568)
Depreciation and amortization
Gain on sale of property, net
Net (loss) income
$ 20,740
6,045
10,102
—
3,479
—
—
—
$ (30,568)
$ 1,114
Company’s share of net (loss) income
$ (2,213)
$
249
Impairment reserve
Amortization of excess investment
—
—
—
—
Company’s share of net (loss) income
$ (2,213)
$
249
$ 8,420
2,726
3,437
—
568
—
$ 1,689
$ 824
—
(388)
$ 436
$ 1,675
1,080
247
—
1,105
(390)
$ 30,835
9,851
13,786
(30,568)
5,152
(390)
$ (1,147)
$ (28,912)
$
(1)
(3,768)
—
$ (1,141)
(3,768)
(388)
$ (3,769)
$ (5,297)
Year Ended December 31, 2008
RCP
Venture
Brandywine
Portfolio
Crossroads
Other
Investments
Total
(dollars in thousands)
Statement of Operations
Total revenue
Operating and other expenses
Interest expense
$
—
—
—
Equity in earnings of unconsolidated affiliates
177,775
Depreciation and amortization
Gain on sale of property, net
Net income (loss)
Company’s share of net income (loss)
Amortization of excess investment
—
—
$ 177,775
$ 16,784
—
$ 19,782
6,535
10,130
—
3,799
—
(682)
(151)
—
$
$
Company’s share of net income (loss)
$ 16,784
$
(151)
$ 7,894
3,116
3,461
—
650
—
$ 667
$ 326
(391)
$
(65)
$ 2,781
1,909
542
—
884
6,838
$ 6,284
$ 30,457
11,560
14,133
177,775
5,333
6,838
$ 184,044
$ 3,338
$ 20,297
—
(391)
$ 3,338
$ 19,906
Year Ended December 31, 2007
RCP
Venture
Brandywine
Portfolio
Crossroads
Other
Investments
Total
(dollars in thousands)
Statement of Operations
Total revenue
Operating and other expenses
Interest expense
$
—
—
—
$ 19,449
5,223
10,102
Equity in earnings of unconsolidated affiliates
46,416
Equity in earning of unconsolidated affiliates
—
—
151,000
—
3,081
$ 197,416
$ 1,043
extraordinary gain
Depreciation and amortization
Net income (loss)
Company’s share of net income
$ 3,312
$
232
Amortization of excess investment
Company’s share of net income
before extraordinary gain
Company’s share of extraordinary gain
—
—
$ 3,312
$ 30,200
$
$
232
—
$ 8,518
3,095
3,485
—
—
475
$ 1,463
$ 717
(392)
$ 325
$ —
$ 6,665
1,793
2,333
—
—
4,627
$ (2,088)
$ 34,632
10,111
15,920
46,416
151,000
8,183
$ 197,834
$ 2,750
$ 7,011
—
(392)
$ 2,750
$ 6,619
$ —
$ 30,200
Acadia Realty Trust 2009 Annual Report 81
Notes to Consolidated Financial Statements continued
Note 5
Notes Receivable and Preferred
Equity Investment
At December 31, 2009, the Company’s preferred equity
the borrower’s ownership interest in the entities that own
the properties and/or by the borrower’s personal guarantee.
Interest rates on the Company’s preferred equity invest-
ment and notes receivable ranged from 10.0% to 22.4%
with maturities that range from demand notes to January
investment and notes receivable, net aggregated $125.2
2017. Notes receivable and preferred equity investments
million, and were collateralized by the underlying properties,
are as follows:
(dollars in thousands)
Description
72nd Street
Georgetown A
Georgetown B
Individually less than 3%
Other Loan
First Mortgage Loan
First Mortgage Loan
Total
Notes:
Effective
Final
Interest Rate Maturity Date
7/18/2011
11/12/2010
6/27/2010
19.48%
10.19%
13.44%
10.00%– Demand note –
22.43%
14.50%
12.75%
12.29%
1/1/2017
12/30/2010
9/11/2010
12/31/2011
Periodic
Payment
Terms
(1)
(3)
(2)
(2)
(3)
(2)
Prior
Liens
$ 185,000
8,375
115,454
272,559
Carrying
Face Amount
Amount of
of Mortgages Mortgages
$ 40,975
8,000
40,000
15,393
$ 47,000
8,000
40,000
24,390
—
—
—
8,585
10,000
7,134
8,585
10,000
2,268
$ 145,109
$ 125,221
(1) Principal and interest, including a $7.5 million exit fee, are due upon maturity.
(2) Payable upon maturity.
(3) Interest only payable monthly, principal due on maturity.
During December 2009, the Company has made a loan of
of 18 properties located primarily in Georgetown, Wash-
$8.6 million which bears interest at 14.5% with a one year
ington D.C. The portfolio consists of 306,000 square feet
term and one six month extension.
of principally retail space. The term of this investment is
During December 2009, the Company received a payment
of $4.7 million, representing a paydown on the first mort-
for two years, with two one-year extensions, and provides
a 13% preferred return.
gage loan secured by three retail properties, following the
During July 2008, the Company made a $34.0 million
sale of one of the collateralized properties.
mezzanine loan, which is collateralized by a mixed-use
During August 2009, the Company received a payment
of $2.8 million, representing the entire balance on the first
mortgage loan secured by a property in Pennsylvania.
retail and residential development at 72nd Street and
Broadway on the Upper West Side of Manhattan. Upon
completion, this project is expected to include approximately
50,000 square feet of retail on three levels and 196 luxury
During August 2009, the Company received a payment of
residential rental apartments. The term of the loan is for
$5.1 million, representing a paydown on the first mortgage
a period of three years, with a one year extension, and is
loan secured by a single tenant property located in Long
expected to yield in excess of 20%.
Island, New York.
During September 2008, the Company, through Fund III,
During June 2009, the Company received a payment of
made a $10.0 million first mortgage loan, which is collater-
$0.7 million, representing a paydown on the mezzanine
alized by land located on Long Island, New York. The term
loan secured by a property in South Carolina.
of the loan is for a period of two years, and provides an
During March 2009, the Company received a payment of
effective annual return of approximately 13%.
$0.3 million, representing the entire balance on a mezza-
The following table reconciles notes receivable and pre-
nine loan secured by a property in South Carolina.
ferred equity investments from January 1, 2007 to
During June 2008, the Company made a $40.0 million pre-
ferred equity investment in an entity that owns a portfolio
December 31, 2009:
82
Acadia Realty Trust 2009 Annual Report
Years Ended December 31,
2009
2008
2007
The scheduled amortization of acquired lease intangible
assets as of December 31, 2009 is as follows:
(dollars in thousands)
Balance at beginning
of period
$ 125,587 $ 57,662 $ 36,038
Additions during period:
New mortgage loans
9,362
88,480 32,548
Deductions during period:
Collections of principal
(13,614) (19,923) (11,071)
Amortization of premium
5,352
2,368
147
(dollars in thousands)
2010
2011
2012
2013
2014
Thereafter
$ 3,648
3,086
2,596
2,011
1,644
9,397
$ 22,382
(1,466)
(3,000)
—
$ 125,221 $ 125,587 $ 57,662
liabilities as of December 31, 2009 is as follows:
The scheduled amortization of acquired lease intangible
Reserves
Balance at close
of period
Note 6
(dollars in thousands)
2010
2011
2012
2013
2014
Thereafter
Deferred Charges
Deferred charges consist of the following as of
December 31, 2009 and 2008:
December 31,
2009
2008
(dollars in thousands)
Deferred financing costs
$ 22,852 $ 22,750
Deferred leasing and other costs
33,169
22,117
Note 8
$ 991
994
948
730
451
2,639
$ 6,753
56,021
44,867
Accumulated amortization
(27,710)
(22,968)
$ 28,311 $ 21,899
Note 7
Acquired Lease Intangibles
Upon acquisitions of real estate, the Company assesses
Mortgage Loans
At December 31, 2009 and 2008, mortgage notes payable,
excluding the net valuation premium on the assumption
of debt, aggregated $732.2 million and $653.4 million,
respectively, and were collateralized by 28 and 57 proper-
ties and related tenant leases, respectively. Interest rates
on the Company’s outstanding mortgage indebtedness
ranged from 0.72% to 7.18% with maturities that ranged
the fair value of acquired assets (including land, buildings
from March 2010 to November 2032. Certain loans are
and improvements, and identified intangibles such as
cross-collateralized and cross-defaulted. The loan agree-
above and below market leases, acquired in-place leases
ments contain customary representations, covenants and
and customer relationships) and acquired liabilities in
events of default. Certain loan agreements require the
accordance with ASC Topic 805. The intangibles are
Company to comply with affirmative and negative covenants,
amortized over the remaining non-cancelable terms of
including the maintenance of debt service coverage and
the respective leases.
leverage ratios.
Acadia Realty Trust 2009 Annual Report 83
Notes to Consolidated Financial Statements continued
The following reflects mortgage loan activity for the year
vi)
closed on a $4.8 million loan that bears interest at
ended December 31, 2009:
a fixed rate of 6.35% and matures on July 1, 2014,
i)
borrowed $20.3 million on three existing construc-
vii) paid off $1.1 million of principal on an outstanding loan,
tion loans,
viii) closed on a $45.0 million note that bears interest
ii)
paid off $4.8 million of self-amortizing debt,
at a floating rate of LIBOR plus 400 basis points
iii)
closed on a $19.0 million loan that bears interest
at a floating rate of LIBOR plus 150 basis points
and matures on January 15, 2010. The proceeds
of the loan were used to repay a maturing loan of
$19.0 million,
iv)
extended a credit facility, with a balance of $53.7
million, to March 1, 2010 and adjusted the interest
and matures on July 29, 2012 with two one-year
extension options. The loan provides for a future
advance of up to $2.0 million to finance tenant
improvements and leasing commissions incurred
in leasing the property,
ix)
paid off the outstanding balance of $33.7 million
on a loan that had matured,
rate spread over LIBOR from 100 basis points to
x)
paid off the outstanding balance of $4.8 million
250 basis points,
on a loan that had matured, and
v)
extended a $11.4 million note that was to mature
xi) paid off the balance of $19.0 million on an
on May 18, 2009 to July 18, 2009. On July 18, 2009
outstanding loan.
this note was paid down by $0.9 million and extended
to July 19, 2010 at an interest rate of LIBOR plus
325 basis points with a one year extension option,
The following table sets forth certain information pertain-
ing to the Company’s secured credit facilities:
(dollars in thousands)
Borrower
Total amount of
credit facility
Amount borrowed
as of 12/31/08
2009 net borrowings
(repayments)
during the year
ended 12/31/09
Amount borrowed
as of 12/31/09
Letters of credit
outstanding
as of 12/31/09
Amount available
under credit
facilities as of
12/31/09
Acadia Realty, LP
$ 64,498
$ 48,900
$ (18,900)
$ 30,000
Acadia Realty, LP
30,000
—
2,000
2,000
Fund II
Fund III
Total
53,455
34,681
13,564
48,245
221,000
62,250
77,200
139,450
$ 368,953
$ 145,831
$ 73,864
$ 219,695
$ 9,710
$ 4,000
—
5,210
500
$ 30,498
28,000
—
81,050
$ 139,548
In June 2009, the servicer of two of the Company’s loans
requirements for the final draws. The Company does not
alleged that non-monetary defaults had occurred on con-
believe the loans are in default and will vigorously defend
struction loans for $31.7 million and $11.5 million collater-
its position and is currently in discussions with the servicer
alized by the Pelham Manor Shopping Plaza and Atlantic
to resolve these issues. The Company believes that the
Avenue, respectively. The servicer contends that the Com-
ultimate resolution of this matter will not have a material
pany did not substantially complete the improvements in
adverse effect on the Company’s financial condition or
accordance with the required completion dates as defined
results of operations.
in the loan agreements and, accordingly, did not meet the
84
Acadia Realty Trust 2009 Annual Report
The following table summarizes the Company’s mortgage indebtedness as of December 31, 2009 and December 31, 2008:
December 31,
2009
2008
Interest Rate at
December 31, 2009
Properties
Payment
Maturity
Encumbered
Terms
(dollars in thousands)
Mortgage notes payable — variable-rate
Bank of America, N.A.
RBS Greenwich Capital
$
9,467 $ 9,624
1.63% (LIBOR + 1.40%)
30,000
30,000
1.63% (LIBOR + 1.40%)
PNC Bank, National Association
10,450
11,423
3.48% (LIBOR + 3.25%)
Bank of America, N.A.
14,179
15,526
1.53% (LIBOR + 1.30%)
6/29/12
4/1/10
7/18/10
12/1/11
Anglo Irish Bank Corporation
9,800
9,800
1.88% (LIBOR + 1.65%)
10/30/10
Eurohypo AG
86,000
80,443 Greater of 1.5% + 3.5% or
10/4/11
5.00% (LIBOR + 3.50%)
Bank of China
Bank of America, N.A.
—
19,000
2.29% (LIBOR + 1.85%)
44,878
— 4.23% (LIBOR + 4.00%)
1/15/09
8/1/12
Sub-total mortgage notes payable
204,774
175,816
Secured credit facilities
Bank of America, N.A.
30,000
48,900
1.48% (LIBOR + 1.25%)
JP Morgan Chase Bank, N.A.
2,000
—
1.48% (LIBOR + 1.25%)
Bank of America, N.A./Bank of New York
48,245
34,681
2.73% (LIBOR + 2.50%)
12/1/10
3/29/10
3/1/10
Bank of America, N.A
139,450
62,250
0.72% (Base rate + 0.50%)
10/9/11
Sub-total secured credit facilities
219,695
145,831
Interest rate swaps (43)
Total variable-rate debt
(83,416)
(73,415)
341,053
248,232
Mortgage notes payable – fixed-rate
RBS Greenwich Capital
RBS Greenwich Capital
RBS Greenwich Capital
Bear Stearns Commercial
Bear Stearns Commercial
American United Life Insurance Company
J.P. Morgan Chase
Column Financial, Inc.
14,343
14,554
17,600
17,600
12,313
12,485
34,600
34,600
20,500
20,500
4,751
8,182
9,481
—
8,322
9,663
Merrill Lynch Mortgage Lending, Inc.
23,500
23,500
Cortlandt Deposit Corp
Cortlandt Deposit Corp
Bank of America N.A.
Bear Stearns Commercial
Wachovia
Bear Stearns Commercial
GEMSA Loan Services, L.P.
Wachovia
GEMSA Loan Services, L.P.
Bear Stearns Commercial
Interest rate swaps (43)
Total fixed-rate debt
Total fixed and variable debt
—
—
1,150
2,318
25,500
25,500
26,250
26,250
26,000
26,000
31,652
25,284
—
4,944
— 34,322
41,500
41,500
11,543
3,265
83,416
73,415
391,131 405,172
732,184 653,404
Va luation premium, net of amortization (44)
103
139
Total
$ 732,287 $ 653,543
See notes on following page.
5.64%
4.98%
5.12%
5.53%
5.44%
6.35%
6.40%
5.45%
6.06%
6.62%
6.51%
5.80%
5.88%
5.42%
7.18%
5.37%
5.86%
5.30%
7.14%
5.35%
9/6/14
9/6/15
11/6/15
1/1/16
3/1/16
7/1/14
11/1/32
6/11/13
10/1/16
2/1/09
1/15/09
10/1/17
8/1/17
2/11/17
1/1/20
12/1/09
6/11/09
3/16/11
1/1/20
(45)
(1)
(2)
(4)
(7)
(11)
(6)
(23)
(5)
(8)
(31)
(9)
(10)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(24)
(25)
(3)
(12)
(13)
(29)
(26)
(27)
(28)
(30)
(32)
(33)
(42)
(32)
(33)
(33)
(33)
(32)
(34)
(33)
(33)
(33)
(32)
(35)
(32)
(36)
(33)
(32)
(32)
(32)
(37)
(41)
(41)
(33)
(38)
(33)
(39)
(32)
(32)
(33)
(40)
Acadia Realty Trust 2009 Annual Report 85
Notes to Consolidated Financial Statements continued
Notes:
(14) New Loudon Center
(36) Interest only monthly until 1/10; monthly
(1) Village Commons Shopping Center
(15) Crescent Plaza
(2) 161st Street
(3) 216th Street
(4) Liberty Avenue
(16) Pacesetter Park Shopping Center
(17) Elmwood Park Shopping Center
(18) Gateway Shopping Center
(5) Cortlandt Towne Center
(19) Clark Diversey
(6) Fordham Place
(7) Branch Shopping Center
(8) Line of credit secured by the
following properties:
Marketplace of Absecon
Bloomfield Town Square
Hobson West Plaza
Town Line Plaza
Methuen Shopping Center
Abington Towne Center
(9) Acadia Strategic Opportunity Fund II, LLC
line of credit secured by unfunded investor
capital commitments
(10) Acadia Strategic Opportunity Fund III, LLC
line of credit secured by unfunded investor
capital commitments
(11) Tarrytown Center
(12) Merrillville Plaza
(13) 239 Greenwich Avenue
(20) Boonton Shopping Center
(21) Chestnut Hill
(22) Walnut Hill
(23) Sherman Avenue
(24) Kroger Portfolio
(25) Safeway Portfolio
(26) Acadia Suffern
(27) Acadia Storage Company, LLC
(28) Acadia Storage Post Portfolio Co., LLC
(29) Pelham Manor
(30) Atlantic Avenue
(31) Line of credit secured by Ledgewood Mall
(32) Monthly principal and interest.
(33) Interest only monthly.
(34) Annual principal and monthly interest.
(35) Interest only monthly until 9/10; monthly
principal and interest thereafter.
principal and interest thereafter.
(37) Interest only monthly until 10/11;
monthly principal and interest thereafter.
(38) Interest only monthly until 7/12;
monthly principal and interest thereafter.
(39) Interest only monthly until 1/13;
monthly principal and interest thereafter.
(40) Interest only monthly until 1/15;
monthly principal and interest thereafter
(41) Annual principal and semi-annual
interest payments.
(42) Interest only upon drawdown on
construction loan.
(43) Maturing between 1/1/10 and 11/30/12.
(44) In connection with the assumption of
debt in accordance with the requirements
of ASC Topic 805, the Company has
recorded valuation premium that is being
amortized to interest expense over the
remaining terms of the underlying mort-
gage loans.
(45) Represents the amount of the Company’s
variable-rate debt that has been fixed
through certain cash flow hedge trans-
actions (Note 20).
The scheduled principal repayments of all indebtedness
be adjusted under certain circumstances, including the
including Convertible Notes as of December 31, 2009 are
payment of cash dividends in excess of the regular quar-
as follows (does not include $103 net valuation premium
terly cash dividend in place at the time the Convertible Notes
on assumption of debt):
(dollars in thousands)
2010
2011
2012
2013
2014
Thereafter
Note 9
$ 132,620
331,047
55,379
11,692
20,117
229,239
$ 780,094
Convertible Notes Payable
In December 2006 and January 2007, the Company issued
a total of $115.0 million in principal of convertible notes with
a fixed interest rate of 3.75% due 2026 (the “Convertible
Notes”). The Convertible Notes were issued at par and
require interest payments semi-annually in arrears on June
15th and December 15th of each year. The Convertible
Notes are unsecured unsubordinated obligations and rank
equally with all other unsecured and unsubordinated
indebtedness. The Convertible Notes had an initial conver-
sion price of $30.86 per share. The conversion rate may
were issued. As of December 31, 2009, the adjusted con-
version price is $29.26. Upon conversion of the Convertible
Notes, the Company will deliver cash and, in some circum-
stances, Common Shares, as specified in the indenture
relating to the Convertible Notes. In general, the Convert-
ible Notes may only be converted prior to maturity during
any calendar quarter beginning after December 31, 2006
if the Company’s Common Shares trade at 130% of the
conversion price for at least 20 days within a consecutive
30 day trading period. Prior to December 20, 2011, the
Company will not have the right to redeem Convertible Notes,
except to preserve its status as a REIT. After December
20, 2011, the Company will have the right to redeem the
notes, in whole or in part, at any time and from time to
time, for cash equal to 100% of the principal amount of
the notes plus any accrued and unpaid interest to, but not
including, the redemption date. The Holders of notes may
require the Company to repurchase their notes, in whole
or in part, on December 20, 2011, December 15, 2016,
and December 15, 2021 for cash equal to 100% of the
principal amount of the notes to be repurchased plus any
accrued and unpaid interest to, but not including, the
repurchase date.
86
Acadia Realty Trust 2009 Annual Report
In general, upon a conversion of notes, the Company will
Derivative Instruments — The Company’s derivative finan-
deliver cash and, at the Company’s election, its Common
cial liabilities primarily represent interest rate swaps and a
Shares, with an aggregate value, which the Company
cap and are valued using Level 2 inputs. The fair value of
refers to as the “conversion value,” equal to the conver-
these instruments is based upon the estimated amounts
sion rate multiplied by the average price of the Company’s
the Company would receive to sell an asset or pay to
Common Shares. The net amount may be paid, at the
transfer a liability in an orderly transaction between market
Company’s option, in cash, its Common Shares or a com-
participants at the reporting date and is determined using
bination of cash and its Common Shares.
interest rate market pricing models. With the adoption
During 2009 and 2008, the Company purchased $57.0
million and $8.0 million in face amount, respectively, of its
convertible debt at an average discount of approximately
19%. The transactions resulted in a gain on debt extinguish-
ment of $7.1 million and $1.5 million for the years ended
December 31, 2009 and 2008, respectively. The outstanding
Convertible Note face amount as of December 31, 2009
ASC Topic 820, the Company has amended the techniques
used in measuring the fair value of its derivative positions.
This amendment includes the impact of credit valuation
adjustments on derivatives measured at fair value. The
implementation of this amendment did not have a material
impact on the Company’s consolidated financial position
or results of operations.
and 2008 was $50.0 million and $107.0 million, respectively.
The following table presents the Company’s liabilities mea-
sured at fair value based on level of inputs at December
Note 10
31, 2009:
Fair Value Measurements
ASC Topic 820 “Fair Value Measurements and Disclosures”
defines fair value as the price that would be received to
sell an asset, or paid to transfer a liability, in an orderly
transaction between market participants.
ASC Topic 820’s valuation techniques are based on
observable or unobservable inputs. Observable inputs
reflect market data obtained from independent sources,
while unobservable inputs reflect the Company’s market
assumptions. These two types of inputs have created the
following fair value hierarchy:
(cid:174) Level 1: Quoted prices for identical instruments in
active markets
(dollars in thousands)
Level 1
Level 2
Level 3
Liabilities
Derivatives
$ —
$ 3,256
$ —
Total liabilities measured
at fair value
$ —
$ 3,256
$ —
Note 11
Shareholders’ Equity and
Noncontrolling Interests
Common Shares
During the first quarter of 2009, 107,331 employee Restricted
Shares were cancelled to pay the employees’ income taxes
due on the value of the portion of the Restricted Shares that
vested. During the year ended December 31, 2009, the
(cid:174) Level 2: Quoted prices for similar instruments in active
Company recognized accrued Common Share and Common
markets; quoted prices for identical or similar instruments
OP Unit-based compensation totaling $3.7 million in connec-
in markets that are not active; and model-derived valua-
tion with the vesting of Restricted Shares and Units (Note 15).
tions in which significant value drivers are observable
During April 2009, the Company issued 5.75 million Com-
(cid:174) Level 3: Valuations derived from valuation techniques in
mon Shares and generated net proceeds of approximately
which significant value drivers are unobservable
$65.2 million.
The following describes the valuation methodologies the
On October 29, 2009, Kenneth Bernstein, President and
Company uses to measure financial assets and liabilities
CEO, exercised 250,000 Options and received 81,897
at fair value:
Common Shares after using shares to pay income tax
and exercise price.
Acadia Realty Trust 2009 Annual Report 87
Notes to Consolidated Financial Statements continued
Noncontrolling Interests
The following table summarizes the change in the noncontrolling interests since December 31, 2008:
Noncontrolling Interests in
Operating Partnership
Noncontrolling Interests in
Partially-Owned Affiliates
(dollars in thousands)
Balance at December 31, 2008
Distributions declared of $0.75 per Common OP Unit
Net income for the period January 1 through December 31, 2009
Conversion of 15,666 Preferred OP Units
Other comprehensive income — unrealized loss
on valuation of swap agreements
Reclassification of realized interest expense on swap agreements
Noncontrolling Interest contributions
Noncontrolling Interest distributions
Employee Long-term Incentive Plan Unit Awards
Balance at December 31, 2009
$ 5,667
(795)
465
(90)
40
(1)
—
—
890
$6,176
$ 208,839
—
(18,892)
—
279
(139)
25,653
(1,624)
—
$ 214,116
Noncontrolling interest in the Operating Partnership repre-
December 31, 2008, 696 Series A Preferred OP Units were
sents (i) the limited partners’ 626,606 and 642,272 Common
converted into 92,800 Common OP Units and then into
OP Units at December 31, 2009 and 2008, (ii) 188 Series
Common Shares. The 188 remaining Series A Preferred
A Preferred OP Units at both December 31, 2009 and 2008,
OP Units are currently convertible into Common OP Units
with a stated value of $1,000 per unit, which are entitled
based on the stated value divided by $7.50. Either the
to a preferred quarterly distribution of the greater of (a)
Company or the holders can currently call for the conver-
$22.50 (9% annually) per Series A Preferred OP Unit or
sion of the Series A Preferred OP Units at the lesser of
(b) the quarterly distribution attributable to a Series A
$7.50 or the market price of the Common Shares as of
Preferred OP Unit if such unit were converted into a
the conversion date.
Common OP Unit, and (iii) 393,909 and 186,951 LTIP units
as of December 31, 2009 and December 31, 2008 respec-
Note 12
tively, as discussed in Share Incentive Plan (Note 15).
Noncontrolling interests in partially-owned affiliates include
Related Party Transactions
During 2007, Klaff converted 4,000 Series B Preferred OP
third-party interests in Fund I, II and III, and Mervyns I and II
units into 312,013 Common Shares (Note 11).
and three other entities.
The Company earns asset management, leasing, disposi-
In 2004 and 2005, the Company issued 4,000 Series B
tion, development and construction fees for providing
Preferred OP Units and 250,000 Restricted Common OP
services to an existing portfolio of retail properties and/or
Units, respectively, to Klaff in consideration for interest in
leasehold interests in which Klaff has an interest. Fees
certain management contract rights. The Preferred OP
earned by the Company in connection with this portfolio
Units were convertible into Common OP Units based on
were $0.4 million, $0.8 million and $2.1 million for the years
the stated value of $1,000 divided by $12.82 at any time.
ended December 31, 2009, 2008 and 2007, respectively.
The Restricted Common OP Units are convertible into the
Company’s Common Shares on a one-for-one basis after
a five-year lock-up period. During 2007, Klaff converted all
4,000 Series B Preferred Units into 312,013 Common OP
Units and ultimately into Common Shares.
The Company earns fees from two of its investments in
unconsolidated partnerships (Note 4). The Company earned
property management, construction, legal and leasing fees
from the Brandywine Portfolio totaling $0.7 million, $1.1
million and $1.7 million for the years ended December 31,
The Series A Preferred OP Units were issued in 1999 in
2009, 2008 and 2007, respectively. In addition, the Com-
connection with the acquisition of a property. Through
pany earned property management and development fees
88
Acadia Realty Trust 2009 Annual Report
from CityPoint totaling $1.0 million and $0.2 million for the
(dollars in thousands)
years ended December 31, 2008 and 2007, respectively.
Lee Wielansky, the Lead Trustee of the Company, was
paid a consulting fee of $0.1 million for each of the years
ended December 31, 2009, 2008, and 2007.
Note 13
Tenant Leases
Space in the shopping centers and other retail properties
is leased to various tenants under operating leases that
usually grant tenants renewal options and generally
provide for additional rents based on certain operating
expenses as well as tenants’ sales volume.
Minimum future rentals to be received under non-cancel-
able leases for shopping centers and other retail properties
as of December 31, 2009 are summarized as follows:
(dollars in thousands)
2010
2011
2012
2013
2014
Thereafter
$ 95,778
84,952
78,014
70,807
61,606
471,436
$ 862,593
During the years ended December 31, 2009, 2008 and
2007, no single tenant collectively accounted for more
than 10% of the Company’s total revenues.
Note 14
Lease Obligations
The Company leases land at six of its shopping centers,
2010
2011
2012
2013
2014
Thereafter
Note 15
$ 4,827
4,864
4,932
5,009
5,012
86,958
$ 111,602
Share Incentive Plan
During 2003, the Company adopted the 2003 Share Incen-
tive Plan (the “2003 Plan”). The 2003 Plan authorizes the
issuance of options, share appreciation rights, restricted
shares (“Restricted Shares”), restricted OP Units (“LTIP
Units”) and performance units (collectively, “Awards”) to
officers, employees and trustees of the Company and
consultants to the Company equal to up to four percent
of the total Common Shares of the Company outstanding
from time to time on a fully diluted basis. However, no
participant may receive more than the equivalent of
1,000,000 Common Shares during the term of the 2003
Plan with respect to Awards. Options are granted by the
Compensation Committee (the “Committee”), which
currently consists of three non-employee Trustees, and
will not have an exercise price less than 100% of the fair
market value of the Common Shares and a term of greater
than ten years at the grant date. Vesting of options is at
the discretion of the Committee. Share appreciation rights
provide for the participant to receive, upon exercise, cash
and/or Common Shares, at the discretion of the Committee,
equal to the excess of the market value of the Common
Shares at the exercise date over the market value of the
which are accounted for as operating leases and generally
Common Shares at the grant date. The Committee deter-
provide the Company with renewal options. Ground rent
mines the restrictions placed on Awards, including the
expense was $2.7 million, $2.4 million, and $3.8 million
dividends or distributions thereon and the term of such
(including capitalized ground rent at properties under
restrictions. The Committee also determines the award
development of $0.6 million, $1.1 million and $2.7 million)
and vesting of performance units and performance shares
for the years ended December 31, 2009, 2008 and 2007,
based on the attainment of specified performance objectives
respectively. The leases terminate at various dates between
of the Company within a specified performance period.
2017 and 2066. These leases provide the Company with
Through December 31, 2009, no share appreciation rights
options to renew for additional terms aggregating from 20
or performance units/shares had been awarded.
to 60 years. The Company leases space for its White Plains
corporate office for a term expiring in 2015. Office rent
expense under this lease was $1.5 million, $1.2 million and
$0.8 million for the years ended December 31, 2009, 2008
and 2007, respectively. Future minimum rental payments
required for leases having remaining non-cancelable lease
terms are as follows:
During 2006, the Company adopted the 2006 Share Incen-
tive Plan (the “2006 Plan”). The 2006 Plan is substantially
similar to the 2003 Plan, except that the maximum number
of Common Share equivalents that the Company may
issue pursuant to the 2006 Plan is 500,000.
Acadia Realty Trust 2009 Annual Report 89
Notes to Consolidated Financial Statements continued
On March 5, 2009, the Company issued 8,612 Restricted
with Trustee fees. In addition, on May 28, 2009, the Com-
Shares and 200,574 LTIP Units to officers of the Company.
pany issued an additional 1,299 unrestricted Common Shares
Vesting with respect to these awards is recognized ratably
to the Lead Trustee of the Company in connection with
over the next five annual anniversaries of the issuance date.
the Lead Trustee fee. The Company also issued 10,000
The vesting on 39% of these awards is also generally
Restricted Shares to Trustees, which vest over three years
subject to achieving certain total shareholder returns on
with 33% vesting on each of the next three anniversaries
the Company’s Common Shares or certain Company per-
of the issuance date. The Restricted Shares do not carry
formance measures. LTIP Units are similar to Restricted
voting rights or other rights of Common Shares until vest-
Shares but provide for a quarterly partnership distribution
ing and may not be transferred, assigned or pledged until
in a like amount as paid to Common OP Units. This distri-
the recipients have a vested non-forfeitable right to such
bution is paid on both unvested and vested LTIP Units.
shares. Dividends are not paid currently on unvested
The LTIP Units are convertible into Common OP Units and
Restricted Shares, but are paid cumulatively, from the
Common Shares upon vesting and a revaluation of the
issuance date through the applicable vesting date of such
book capital accounts.
Also on March 5, 2009 and March 10, 2009, the Company
issued a total of 36,347 Restricted Shares and 8,221
LTIP Units to employees of the Company, other than
Restricted Shares vesting. Trustee fee expense of $0.2
million for the year ended December 31, 2009 has been
recognized in the accompanying consolidated financial
statements related to this issuance.
the Company’s officers. Vesting with respect to these
During 2009, the Company adopted the Long Term
awards is recognized ratably over the next five annual
Investment Alignment Program (the “Program”) pursuant
anniversaries of the issuance date. In addition, the vest-
to which the Company may award units for up to 25% of
ing on 1,196 Restricted Shares and 6,258 LTIP Units
its Fund III Promote to senior executives when and if such
vest 25% subject to achieving certain total shareholder
Promote is ultimately realized. As of December 31, 2009,
returns on the Company’s Common Shares or certain
the Company has awarded units representing 60% of the
Company performance measures.
Program, which were determined to have no value at
The total value of the above Restricted Shares and LTIP
Units issued was $2.6 million. The weighted average fair
value for Restricted Shares and LTIP Units granted for the
years ended December 31, 2009, 2008 and 2007 were
$10.31, $24.51 and $24.91, respectively.
For the years ended December 31, 2009, 2008 and 2007,
$3.7 million, $3.5 million and $3.3 million, respectively,
were recognized in compensation expense related to
Restricted Share and LTIP Unit grants.
issuance. In accordance with ASC Topic 718 “Compen-
sation — Stock Compensation” (formerly SFAS No. 123R,
“Share-Based Payments”) compensation relating to these
awards will be recorded based on the change in the esti-
mated fair value at each reporting period.
As of December 31, 2009, the Company had 101,283
options outstanding to officers and employees of which
all have vested. These options are for ten-year terms from
the grant date and vested in three equal annual installments,
which began on the grant date. In addition, 58,000 options
On May 13, 2009, the Company issued 5,435 unrestricted
have been issued, of which all have vested, to non-employee
Common Shares to Trustees of the Company in connection
Trustees as of December 31, 2009.
A summary of option activity under all option arrangements as of December 31, 2009, and changes during the year then
ended is presented below:
Options
Outstanding at January 1, 2009
Granted
Exercised
Forfeited or Expired
Outstanding and exercisable
at December 31, 2009
90
Acadia Realty Trust 2009 Annual Report
Weighted Average
Exercise Price
Weighted Average
Remaining
Contractual Term
Aggregate
Intrinsic Value
(dollars in thousands)
Shares
421,244
—
(258,900)
(3,061)
$ 10.65
—
5.99
19.67
159,283
$ 18.04
—
—
—
—
5.5
—
—
—
—
$ —
The total intrinsic value of options exercised during the
A summary of the status of the Company’s unvested
years ended December 31, 2009, 2008 and 2007 was
Restricted Shares and LTIP Units as of December 31,
$2.8 million, $0.8 million and $0.3 million, respectively.
2009 and changes during the year ended December 31,
Unvested Shares and LTIP Units
Restricted Shares
Unvested at January 1, 2009
Granted
Vested
Forfeited
487,434
54,960
(249,825)
(20,057)
Unvested at December 31, 2009
272,512
2009, is presented below:
Weighted
Grant-Date
Fair Value
$ 21.37
10.95
20.07
17.35
$ 20.76
LTIP Units
181,350
208,796
(25,472)
(1,841)
362,833
Weighted
Grant-Date
Fair Value
$ 24.55
10.30
24.60
24.61
$ 16.35
As of December 31, 2009, there was $6.6 million of total
Common Shares (“Share Units”) that otherwise would
unrecognized compensation cost related to unvested share-
have been issued upon the exercise of certain options. In
based compensation arrangements granted under share
January 2009, these Share Units were converted to 190,487
incentive plans. That cost is expected to be recognized
Common Shares and issued to the recipients and 83,433
over a weighted-average period of 1.7 years. The total fair
of these Common Shares were cancelled to pay for the
value of Restricted Shares that vested during the years
participants income taxes.
ended December 31, 2009, 2008 and 2007 was $5.0 million,
$2.7 million and $1.6 million, respectively.
Note 16
Employee Share Purchase and
Deferred Share 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. During 2009,
2008 and 2007, 8,744, 7,499, and 7,123 Common Shares,
respectively, were purchased by employees under the
Purchase Plan. Associated compensation expense of
$0.02 million was recorded in 2009 and $0.03 million was
recorded in 2008 and 2007.
During August of 2004, the Company adopted a Deferral
and Distribution Election pursuant to the 1999 Share
Incentive Plan and 2003 Share Incentive Plan, whereby
the participants elected to defer receipt of 190,487
During May of 2006, the Company adopted a Trustee
Deferral and Distribution Election (“Trustee Deferral Plan”)
whereby the participating Trustees have deferred compen-
sation of $0.05 million, $0.4 million and $0.2 million for
2009, 2008 and 2007, respectively. During 2009, certain
trustees elected to receive 14,722 Common Shares, which
were previously deferred, from the Trustee Deferral Plan.
Note 17
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 but not in excess
of $16,500 for the year ended December 31, 2009. The
Company contributed $0.2 million, $0.3 million and $0.2
million for the years ended December 31, 2009, 2008 and
2007, respectively.
Note 18
Dividends and Distributions Payable
On December 15, 2009, the Board of Trustees declared a
cash dividend for the quarter ended December 31, 2009,
of $0.18 per Common Share, which was paid on February
1, 2010 to holders of record as of December 31, 2009.
Acadia Realty Trust 2009 Annual Report 91
Notes to Consolidated Financial Statements continued
Note 19
Federal Income Taxes
The Company has elected to qualify as a REIT in accordance
with Sections 856 through 860 of the Internal Revenue
Code of 1986, as amended (the “Code”), and intends at
all times to qualify as a REIT under the Code. To qualify
as a REIT, the Company must meet a number of organiza-
tional and operational requirements, including a require-
ment that it currently distribute at least 90% of its annual
REIT taxable income to its shareholders. As a REIT, the
Company generally will not be subject to corporate Federal
income tax, provided that distributions to its shareholders
equal at least the amount of its REIT taxable income as
defined under the Code. As the Company distributed suffi-
cient taxable income for the years ended December 31,
2009, 2008 and 2007, no U.S. Federal income or excise
taxes were incurred. If the Company fails to qualify as a
REIT in any taxable year, it will be subject to Federal income
taxes at the regular corporate rates (including any applica-
ble alternative minimum tax) and may not be able to qualify
as a REIT for the four subsequent taxable years. Even
though the Company qualifies for taxation as a REIT, the
Company is subject to certain state and local taxes on its
income and property and Federal income and excise taxes
on any undistributed taxable income. In addition, taxable
income from non-REIT activities managed through the
Company’s Taxable REIT Subsidiary (“TRS”) is subject to
Federal, state and local income taxes.
The difference between the GAAP and tax reported
amounts of the Company’s assets and liabilities is due
largely to the higher GAAP basis in the Company’s real
estate properties. This variance is primarily the result of
assets acquired as a result of property contributions in
exchange for OP Units and the utilization of Code Section
1031 tax-deferred exchanges.
Reconciliation between GAAP net income and Federal taxable income
The following unaudited table reconciles GAAP net income to taxable income for the years ended December 31, 2009,
2008 and 2007:
(dollars in thousands)
Net income (1)
Net income attributable to TRS
Net income attributable to REIT
GAAP to tax difference related to:
Depreciation and amortization (2)
Exercise of stock options and vesting of Restricted Shares
Property dispositions (3)
Reserves and impairment loss (4)
Gain on repurchase of Convertible Notes (5)
Differences pursuant to ASC Topic 805 “Business Combinations” (6)
Convertible Notes (1)
Other GAAP/tax differences, net
2009
(Estimated)
2008
(Actual)
2007
(Actual)
$ 31,133
$ 25,068
946
1,155
30,187
23,913
2,383
(2,373)
(2,577)
1,700
(7,057)
1,300
1,280
(1,214)
81
11,960
6,779
—
1,221
2,536
537
(1,602)
$ 25,346
2,514
22,832
4,155
(689)
8,300
(138)
—
1,610
—
919
REIT taxable income before dividends paid deduction
$ 25,380
$ 43,674
$ 36,989
Notes:
(1) Net income for 2007 and 2008 has been restated pursuant to ASC Topic 470-20, which reclassified a portion of the interest expense
on the Company’s convertible debt as equity distributions. This restatement has no impact on the Company’s taxable income.
(2) Includes one-time deduction of $4,907 in 2008, resulting from reclassification of certain fixed assets for income tax purposes.
(3) 2009 difference due to higher tax basis on sold properties (net of noncontrolling interests). In 2007 and 2008, principally the result of
the deferral of the gain from the sale of properties for income tax purposes. Also affected by special tax allocations pursuant to Code
Section 704(c).
(4) 2009 impairment loss of $1,700 (net of noncontrolling interest and deduction of 2008 impairment of $4,286) not recognized for tax.
2008 impairment loss includes 100% of mezzanine loans (principal and accrued interest) for redevelopment of the retail complexes
associated with seven public rest stops along the toll roads in and around Chicago, Illinois. Deducted for income tax purposes in 2009.
Includes difference between bad debt allowance and bad debts deducted for income tax purposes.
(5) Recognition of the taxable gain has been deferred for five years pursuant to Code Section 108(i).
(6) Formerly SFAS No. 141R “Business Combinations.”
92
Acadia Realty Trust 2009 Annual Report
Characterization of Distributions
The Company has determined that the cash distributed to
the shareholders is characterized as follows for Federal
Note 20
Financial Instruments
income tax purposes:
Ordinary income
Capital gain
Years Ended December 31,
2009
2008
2007
95%
5%
54%
46%
51%
49%
100%
100%
100%
Taxable REIT Subsidiaries (“TRS”)
Income taxes have been provided for using the liability
method as required by ASC Topic 740 “Income Taxes”
Fair Value of Financial Instruments:
ASC Topic 825 “Financial Instruments” requires disclosure
on the fair value of financial instruments. Certain of the
Company’s assets and liabilities are considered financial
instruments. Fair value estimates, methods and assump-
tions are set forth below.
Cash and Cash Equivalents, Restricted Cash, Cash in
Escrow, Rents Receivable, Prepaid Expenses, Other Assets,
Accounts Payable and Accrued Expenses, Dividends and
Distributions Payable, and Other Liabilities — The carry-
(formerly SFAS No. 109). The Company’s TRS income and
ing amount of these assets and liabilities approximates fair
provision for income taxes for the years ended December
value due to the short-term nature of such accounts.
31, 2009, 2008 and 2007 are summarized as follows:
2009
2008
(Estimated) (Actual)
2007
(Actual)
(dollars in thousands)
TRS income before
income taxes
$ 2,263
$ 4,359
$ 5,077
Provision for income taxes:
Federal
State and local
1,025
292
2,441
763
2,097
466
Notes Receivable and Preferred Equity Investments —
As of December 31, 2009 and 2008, the Company has
determined the estimated fair values of its preferred equity
investments and notes receivable were $126.4 million and
$122.3 million, respectively, by discounting future cash
receipts utilizing a discount rate equivalent to the rate at
which similar notes receivable would be originated at the
reporting date.
TRS net income
$ 946
$ 1,155
$ 2,514
Derivative Instruments — The fair value of these instru-
$ 908
$ 1,996
$ 1,726
141
277
255
were $751.0 million and $731.8 million, respectively, by
The income tax provision differs from the amount com-
puted by applying the statutory federal income tax rate to
income before income taxes as follows (not adjusted for
temporary book/tax differences):
2009
2008
2007
(dollars in thousands)
Federal provision
at statutory tax rate
State and local taxes,
net of federal benefit
Tax effect of:
Change in estimate
268
931
582
REIT state and local income
and franchise taxes
224
158
90
Total provision
for income taxes
$ 1,541
$ 3,362
$ 2,653
ments is based upon the estimated amounts the Company
would receive to sell an asset or pay to transfer a liability
in an orderly transaction between market participants at
the reporting date and is determined using interest rate
market pricing models.
Mortgage Notes Payable and Notes Payable — As of
December 31, 2009 and 2008, the Company has deter-
mined the estimated fair values of its mortgage notes
payable, including those relating to discontinued operations,
discounting future cash payments utilizing a discount rate
equivalent to the rate at which similar mortgage notes
payable would be originated at the reporting date.
ASC Topic 815 “Derivative and Hedging,” as amended
and interpreted, establishes accounting and reporting
standards for derivative instruments, including certain
Acadia Realty Trust 2009 Annual Report 93
Notes to Consolidated Financial Statements continued
derivative instruments embedded in other contracts, and
directly in earnings. The Company assesses the effective-
for hedging activities. As required by ASC Topic 815, the
ness of each hedging relationship by comparing the changes
Company records all derivatives on the balance sheet at
in fair value or cash flows of the derivative hedging instru-
fair value. The accounting for changes in the fair value of
ment with the changes in fair value or cash flows of the
derivatives depends on the intended use of the derivative
designated hedged item or transaction. For derivatives not
and the resulting designation. Derivatives used to hedge
designated as hedges, changes in fair value are recognized
the exposure to changes in the fair value of an asset, lia-
in earnings.
bility, or firm commitment attributable to a particular risk,
such as interest rate risk, are considered fair value hedges.
Derivatives used to hedge the exposure to variability in
expected future cash flows, or other types of forecasted
transactions, are considered cash flow hedges.
As of December 31, 2009 and 2008, no derivatives were
designated as fair value hedges or hedges of net invest-
ments 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
For derivatives designated as fair value hedges, changes in
designated as hedges. As of December 31, 2009, none
the fair value of the derivative and the hedged item related
of the Company’s hedges were ineffective.
to the hedged risk are recognized in earnings. For derivatives
designated as cash flow hedges, the effective portion of
changes in the fair value of the derivative is initially reported
in other comprehensive income (outside of earnings) and
subsequently reclassified to earnings when the hedged
transaction affects earnings, and the ineffective portion of
changes in the fair value of the derivative is recognized
Derivative Financial Instruments:
The following table summarizes the notional values and fair
values of the Company’s derivative financial instruments as
of December 31, 2009. The notional value does not repre-
sent exposure to credit, interest rate or market risks:
Hedge Type
Notional Value
Rate
Maturity
Fair Value
(dollars in thousands)
Interest Rate Swaps
LIBOR Swap
LIBOR Swap
LIBOR Swap
LIBOR Swap
LIBOR Swap
LIBOR Swap
LIBOR Swap
LIBOR Swap
Interest rate swaps
Interest Rate LIBOR Cap
$ 4,390
10,741
8,035
9,800
15,000
15,000
10,000
10,450
$ 83,416
$ 30,000
4.71%
4.90%
5.14%
4.47%
3.79%
3.41%
2.65%
0.90%
1/1/10
10/1/11
3/1/12
10/29/10
11/30/12
11/30/12
11/30/12
7/19/10
6.00%
4/1/10
Net Derivative instrument liability
The above derivative instruments have been designated as
Note 21
$
(2)
(674)
(607)
(319)
(783)
(628)
(211)
(32)
(3,256)
—
$ (3,256)
cash flow hedges and hedge the future cash outflows on
mortgage debt. Such instruments are reported at the fair
values reflected above. As of December 31, 2009 and
2008, unrealized losses totaling $3.3 million and $4.9 million,
respectively were reflected in accumulated other compre-
hensive loss. It is estimated that approximately $2.3 million
included in accumulated other comprehensive income
related to derivatives will be reclassified to interest
expense in the 2010 results of operations.
Earnings Per Common Share
Basic earnings per share was determined by dividing the
applicable net income to common shareholders for the
year by the weighted average number of Common Shares
outstanding during each year consistent with ASC Topic
260, “Earnings Per Share.” Diluted earnings per share
reflects the potential dilution that could occur if securities
or other contracts to issue Common Shares were exercised
or converted into Common Shares or resulted in the
94
Acadia Realty Trust 2009 Annual Report
issuance of Common Shares that then shared in the earn-
resulted in the issuance of approximately 1.3 million addi-
ings of the Company. In accordance with GAAP, all Com-
tional Common Shares. The following table sets forth the
mon Shares used to calculate EPS have been adjusted to
computation of basic and diluted earnings per share from
reflect a special dividend paid on January 30, 2009, which
continuing operations for the periods indicated:
(dollars in thousands, except per share amounts)
Numerator:
Income from continuing operations attributable
to Common Shareholders
Effect of dilutive securities:
Preferred OP Unit distributions
Years Ended December 31,
2009
2008
2007
$ 28,599
$ 17,127
$ 15,029
19
—
23
Numerator for diluted earnings per Common Share
28,618
17,127
15,052
Denominator:
Weighted average shares for basic earnings per share
38,005
33,813
33,600
Effect of dilutive securities:
Employee share options
Convertible Preferred OP Units
Di lutive potential Common Shares
212
25
237
454
—
454
616
66
682
De nominator for diluted earnings per share
38,242
34,267
34,282
Basic earnings per Common Share from continuing operations
attributable to Common Shareholders
$ 0.75
$ 0.51
$ 0.45
Diluted earnings per Common Share from continuing operations
attributable to Common Shareholders
$ 0.75
$ 0.50
$ 0.44
The weighted average shares used in the computation
diluted earnings per share. The conversion of the convertible
of basic earnings per share include unvested Restricted
notes payable (Note 9) is not reflected in the table above
Shares and LTIP Units (Note 15) that are entitled to receive
as such conversion based on the market price of the Com-
dividend equivalent payments. The effect of the conver-
mon Shares would be effected with only cash. The effect
sion of Common OP Units is not reflected in the above
of the assumed conversion of 25,067 Series A Preferred
table, as they are exchangeable for Common Shares on
OP Units for the year ended December 31, 2009 would
a one-for-one basis. The income allocable to such units is
be dilutive and they are included in the table. The effect of
allocated on this same basis and reflected as noncontrol-
the assumed conversion of 25,067 Series A Preferred OP
ling interest in the accompanying consolidated financial
Units and 41,696 Series B Preferred OP Units for the year
statements. As such, the assumed conversion of these
ended December 31, 2007 would be dilutive and they are
units would have no net impact on the determination of
included in the table.
Acadia Realty Trust 2009 Annual Report 95
Notes to Consolidated Financial Statements continued
Note 22
Summary of Quarterly Financial Information (unaudited)
The quarterly results of operations of the Company for the years ended December 31, 2009 and 2008 are as follows:
2009
(dollars in thousands, except per share amounts)
Revenue
March 31
$ 35,018
June 30
$ 35,226
September 30
December 31
$ 39,055
$ 38,046
Income from continuing operations attributable
to Common Shareholders
$ 9,352
$ 7,117
$ 7,276
$ 4,854
Income from discontinued operations attributable
to Common Shareholders
Net income attributable to Common Shareholders
Net income attributable to Common Shareholders
per Common Share — basic:
Income from continuing operations
Income from discontinued operations
Net income
Net income attributable to Common Shareholders
per Common Share — diluted:
Income from continuing operations
Income from discontinued operations
Net income
Cash dividends declared per Common Share
Weighted average Common Shares outstanding:
$
947
$ 10,299
$
18
$ 7,135
$
31
$ 7,307
$ 1,538
$ 6,392
$ 0.27
0.03
$ 0.30
$ 0.27
0.03
$ 0.30
$ 0.21
$ 0.18
$ 0.18
$ 0.12
—
—
0.04
$ 0.18
$ 0.18
$ 0.16
$ 0.18
$ 0.18
$ 0.12
—
$ 0.18
$ 0.18
—
$ 0.18
$ 0.18
0.04
$ 0.16
$ 0.18
Basic
Diluted
33,902,958
34,050,446
38,592,289
38,804,108
39,685,623
39,967,714
39,756,060
40,037,555
(dollars in thousands, except per share amounts)
Revenue
March 31
$ 27,928
June 30
$ 51,549
September 30
December 31
$ 28,089
$ 30,370
Income (loss) from continuing operations attributable
to Common Shareholders
$ 7,652
$ 10,222
$ 4,417
$ (5,164)
Income from discontinued operations attributable
to Common Shareholders
$
586
Net income (loss) attritubale to Common Shareholders
$ 8,238
$ 7,176
$ 17,398
$
49
$ 4,466
$
130
$ (5,034)
2008
Net income attributable to Common Shareholders
per Common Share — basic:
Income (loss) from continuing operations
Income from discontinued operations
Net income (loss)
Net income attributable to Common Shareholders
per Common Share — diluted:
Income (loss) from continuing operations
Income from discontinued operations
Net income (loss)
Cash dividends declared per Common Share
Weighted average Common Shares outstanding:
$ 0.23
0.01
$ 0.24
$ 0.23
0.01
$ 0.24
$ 0.21
$ 0.30
0.21
$ 0.51
$ 0.30
0.21
$ 0.51
$ 0.21
$ 0.13
$
(0.15)
—
—
$ 0.13
$
(0.15)
$ 0.13
$
(0.15)
—
$ 0.13
$ 0.21
—
$
(0.15)
$ 0.76
Basic
Diluted
33,747,797
34,244,449
33,806,747
34,376,530
33,845,368
34,366,022
33,850,271
33,850,271
96
Acadia Realty Trust 2009 Annual Report
Note 23
Commitments and Contingencies
Under various Federal, state and local laws, ordinances
and regulations relating to the protection of the environ-
ment, a current or previous owner or operator of real
estate may be liable for the cost of removal or remediation
of certain hazardous or toxic substances disposed, stored,
generated, released, manufactured or discharged from,
on, at, under, or in a property. As such, the Company may
be potentially liable for costs associated with any potential
environmental remediation at any of its formerly or cur-
rently owned properties.
The Company conducts Phase I environmental reviews with
respect to properties it acquires. These reviews include
an investigation for the presence of asbestos, underground
storage tanks and polychlorinated biphenyls (PCBs).
Although such reviews are intended to evaluate the envi-
ronmental condition of the subject property as well as
surrounding properties, there can be no assurance that
the review conducted by the Company will be adequate
to identify environmental or other problems that may
exist. Where a Phase II assessment is so recommended,
a Phase II assessment is conducted to further determine
the extent of possible environmental contamination. In all
instances where a Phase I or II assessment has resulted
in specific recommendations for remedial actions, the
Company has either taken or scheduled the recommended
remedial action. To mitigate unknown risks, the Company
has obtained environmental insurance for most of its prop-
erties, which covers only unknown environmental risks.
The Company believes that it is in compliance in all mate-
rial respects with all Federal, state and local ordinances
and regulations regarding hazardous or toxic substances.
Management is not aware of any environmental liability
that it believes would have a material adverse impact on
the Company’s financial position or results of operations.
Management is unaware of any instances in which the
Company would incur significant environmental costs if
any or all properties were sold, disposed of or abandoned.
However, there can be no assurance that any such non-
Company is unable to predict with certainty the amounts
involved, the Company’s management and counsel are
of the opinion that, when such litigation is resolved, the
Company’s resulting liability, if any, will not have a signifi-
cant effect on the Company’s consolidated financial posi-
tion or results of operations.
In September 2008, the Company, certain of its subsidiaries,
and other unrelated entities were named as defendants
in an adversary proceeding brought by Mervyn’s LLC
(“Mervyns”) in the United States Bankruptcy Court for
the District of Delaware. This lawsuit involves five claims
alleging fraudulent transfers. The first claim is that, at the
time of the sale of Mervyns by Target Corporation to a
consortium of investors including Acadia, a transfer of
assets was made in an effort to defraud creditors. The
Company believes this aspect of the case is without merit.
There are four other claims relating to transfers of assets
of Mervyns at various times. The Company believes there
are substantial defenses to these claims. The matter is in
the early stages of discovery and the Company believes
the lawsuit will not have a material adverse effect on its
results of operations or consolidated financial condition.
The Company has arranged for the provision of four sepa-
rate letters of credit in connection with certain leases and
investments. As of December 31, 2009, there were no
outstanding balances under any of the letters of credit.
If the letters of credit were fully drawn, the combined
maximum amount of exposure would be $9.7 million.
Note 24
Subsequent Events
The Company has evaluated subsequent events from
December 31, 2009 through the time of filing this Form
10-K with the SEC on March 1, 2010. Material subsequent
events that have occurred since December 31, 2009 are
discussed below.
On January 12, 2010, the Company closed on a $48.0
million construction loan on its Canarsie Plaza redevelop-
ment project. The loan bears interest equal to the greater
of (a) LIBOR plus 4% or (b) an interest rate floor of 6.5%
compliance, liability, claim or expenditure will not arise
and matures on January 12, 2012.
in the future.
The Company is involved in various matters of litigation
On February 16, 2010, Klaff converted all 250,000
Restricted Common OP Units into 250,000 Common
arising in the normal course of business. While the
Shares (Note 11).
Acadia Realty Trust 2009 Annual Report 97
Schedule III: Real Estate and Accumulated Depreciation
December 31, 2009
Encum-
brances
Land
Buildings and
Improvements
Costs
Capitalized
Subsequent to
Acquisition
Land
Buildings and
Improvements
Accumulated Acquisition (a)
Total Depreciation Construction (c)
Date of
$ 17,600
$ 1,147
$ 7,425
$ 1,219
$ 1,147
$ 8,644
$ 9,791
$ 5,581
1984(a)
Description
Shopping Centers
Core Portfolio:
Crescent Plaza
Brockton, MA
New Loudon Center 14,343
Latham, NY
505
4,161
10,879
505
15,040
15,545
10,321
1982(a)
Ledgewood Mall
Ledgewood, NJ
Mark Plaza
Edwardsville, PA
Plaza 422
Lebanon, PA
Route 6 Mall
Honesdale, PA
Bartow Avenue
Bronx, NY
Amboy Road
Shopping Ctr.
Staten Island, NY
Abington
Towne Center1
Abington, PA
Bloomfield
Town Square1
Bloomfield Hills, MI
Walnut Hill Plaza
Woonsocket, RI
2,000
619
5,434
33,199
619
38,633
39,252
32,784
1983(a)
—
—
4,268
4,690
—
8,958
8,958
6,496
1968(c)
—
190
3,004
2,189
190
5,193
5,383
3,369
1972(c)
—
—
—
12,696
1,664
11,032
12,696
5,667
1994(c)
—
1,691
5,803
560
1,691
6,363
8,054
1,233
2005(c)
—
—
11,909
1,519
—
13,428
13,428
1,501
2005(a)
—
799
3,197
2,007
799
5,204
6,003
2,105
1998(a)
—
3,207
13,774
9,570
3,207
23,344
26,551
7,721
1998(a)
23,500
3,122
12,488
1,840
3,122
14,328
17,450
4,555
1998(a)
Elmwood Park Plaza 34,600
Elmwood Park, NJ
3,248
12,992
14,764
3,798
27,206
31,004
9,813
1998(a)
Merrillville Plaza
Hobart, IN
Marketplace
of Absecon1
Absecon, NJ
Clark Diversey
Chicago, IL
Boonton
Boonton, NJ
Chestnut Hill
Philadelphia, PA
Third Avenue
Bronx, NY
26,250
4,288
17,152
1,645
4,288
18,797
23,085
5,996
1998(a)
—
2,573
10,294
3,416
2,577
13,706
16,283
4,181
1998(a)
4,751
10,061
2,773
9
10,061
2,782
12,843
282
2006(a)
8,182
1,328
7,188
—
1,328
7,188
8,516
704
2006(a)
9,481
8,289
5,691
44
8,289
5,735
14,024
505
2006(a)
—
11,108
8,038
1,015
11,855
8,306
20,161
685
2006(a)
Hobson West Plaza1
Naperville, IL
—
1,793
7,172
1,370
1,793
8,542
10,335
2,599
1998(a)
Village Commons
Shopping Center
Smithtown, NY
Town Line Plaza1
Rocky Hill, CT
Branch
Shopping Center
Village of the
Branch, NY
9,467
3,229
12,917
2,438
3,229
15,355
18,584
5,131
1998(a)
—
878
3,510
7,303
907
10,784
11,691
7,399
1998(a)
14,179
3,156
12,545
777
3,156
13,322
16,478
4,043
1998(a)
98
Acadia Realty Trust 2009 Annual Report
December 31, 2009
Description
Encum-
brances
Land
Buildings and
Improvements
Shopping Centers, cont’d
Costs
Capitalized
Subsequent to
Acquisition
Land
Buildings and
Improvements
Accumulated Acquisition (a)
Total Depreciation Construction (c)
Date of
The Methuen
Shopping Center1
Methuen, MA
Gateway
Shopping Center
Burlington, VT
Mad River Station
Dayton, OH
Pacesetter Park
Shopping Center
Ramapo, NY
239 Greenwich
Greenwich, CT
West Shore
Expressway
Staten Island, NY
West 54th Street
Manhattan, NY
Acadia 5-7
East 17th Street
Manhattan, NY
Fund I:
Tarrytown Centre
Westchester, NY
Granville Center
Columbus, OH
Kroger/Safeway
Various
Fund II:
Liberty Avenue
New York, NY
Pelham Manor
Westchester, NY
400 East
Fordham Road
Bronx, NY
4650 Broadway/
Sherman Avenue
New York, NY
216th Street
New York, NY
161st Street
Bronx, NY
Oakbrook
Oakbrook, IL
Atlantic Avenue
Brooklyn, NY
Canarsie Plaza
Brooklyn, NY
Pelham Manor
Westchester, NY
—
956
3,826
594
961
4,415
5,376
1,331
1998(a)
20,500
1,273
5,091
11,536
1,273
16,627
17,900
4,343
1999(a)
—
2,350
9,404
693
2,350
10,097
12,447
2,903
1999(a)
12,313
1,475
5,899
1,121
1,475
7,020
8,495
2,348
1999(a)
26,000
1,817
15,846
549
1,817
16,395
18,212
4,428
1998(a)
—
3,380
13,554
10
3,380
13,564
16,944
1,041
2007(a)
—
16,699
18,704
28
16,699
18,732
35,431
1,281
2007(a)
—
3,048
7,281
—
3,048
7,281
10,329
337
2008(a)
9,800
2,323
7,396
359
2,323
7,755
10,078
1,136
2004(a)
—
2,186
8,744
59
2,186
8,803
10,989
1,643
2002(a)
—
—
34,586
—
—
34,586
34,586
27,899
2003(a)
10,450
—
12,627
471
—
13,098
13,098
982
2005(a)
31,652
905
—
49,006
9,020
40,891
49,911
1,783
2004(a)
86,000
11,144
18,010
93,559
16,254
106,459
122,713
4,347
2004(a)
—
—
—
32,020
25,267
6,753
32,020
—
2005(a)
25,500
7,261
—
19,224
7,261
19,224
26,485
1,298
2005(a)
30,000
16,679
28,410
4,409
16,679
32,819
49,498
3,111
2005(a)
—
—
6,906
17
—
6,923
6,923
2,438
2005(a)
11,543
5,322
—
15,007
5,322
15,007
20,329
146
2007(a)
—
32,543
—
26,025
32,543
26,025
58,568
—
2007(a)
—
—
10,161
638
511
10,288
10,799
442
2004(a)
ASOF II, LLC
48,245
—
—
—
—
—
—
—
Acadia Realty Trust 2009 Annual Report 99
Schedule III: Real Estate and Accumulated Depreciation continued
December 31, 2009
Encum-
brances
Land
Buildings and
Improvements
Costs
Capitalized
Subsequent to
Acquisition
Land
Buildings and
Improvements
Accumulated Acquisition (a)
Total Depreciation Construction (c
Date of
—
12,993
4,316
1,687
12,993
6,003
18,996
62
2007(a)
—
20,391
—
3,313
20,391
3,313
23,704
—
2007(a)
—
4,561
7,484
3
4,561
7,487
12,048
368
2008(a)
—
3,515
6,139
10
3,515
6,149
9,664
324
2008(a)
—
959
5,506
7
959
5,513
6,472
264
2008(a)
—
2,377
9,654
2
2,377
9,656
12,033
480
2008(a)
—
10,835
5,936
17
10,835
5,953
16,788
308
2008(a)
—
6,977
12,688
—
6,977
12,688
19,665
579
2008(a)
—
7,597
22,391
366
7,597
22,757
30,354
1,092
2008(a)
—
1,977
4,769
139
1,977
4,908
6,885
233
2008(a)
—
3,121
17,457
60
3,121
17,517
20,638
795
2008(a)
—
6,244
10,551
25
6,244
10,576
16,820
487
2008(a)
—
8,000
—
13,260
8,000
13,260
21,260
187
2008(c)
—
—
—
1,080
—
1,080
1,080
55
2008(a)
44,878
7,293
61,395
—
7,293
61,395
68,688
2,603
2009(a)
Description
Fund III:
125 Main Street
Association
Westport, CT
Sheepshead Bay
Brooklyn, NY
Suffern Self Storage
Suffern, NY
Linden Self Storage2
Linden, NJ
Webster
Self Storage2
Bronx, NY
Jersey City
Self Storage2
Jersey City, NJ
Bronx Self Storage2
Bronx, NY
Lawrence
Self Storage2
Lawrence, NY
Starr Avenue
Self Storage
Queens, NY
New Rochelle
Self Storage
Westchester, NY
Yonkers Self Storage
Westchester, NY
Bruckner Boulevard
Self Storage
Bronx, NY
Ridgewood
Self Storage
Queens, NY
Document Storage
New York City, NY
Cortlandt
Towne Center
Cortlandt, NY
ASOF III, LLC
139,450
—
Underdeveloped land
—
251
—
—
—
—
—
251
—
—
—
251
—
—
Construction in
progress and other
investments
Notes:
—
—
—
—
—
4,814
4,814
—
$ 732,184
$ 267,683
$ 546,466
$ 388,443
$ 309,685 $ 897,721 $ 1,207,406 $ 193,745
(1) These properties serve as collateral for the financing with Bank of America, N.A. in the amount of $30,000.
(2) These properties serve as collateral for the financing with GEMSA, in the amount of $41,500.
100
Acadia Realty Trust 2009 Annual Report
Notes:
1. Depreciation and investments in buildings and improvements reflected in the statements of income are calculated over
the estimated useful life of the assets as follows:
Buildings: 30 to 40 years
Improvements: shorter of lease term or useful life.
2. The aggregate gross cost of property included above for Federal income tax purposes was $1,123.5 million as of
December 31, 2009.
3. (a) Reconciliation of Real Estate Properties:
The following table reconciles the real estate properties from January 1, 2007 to December 31, 2009:
Years Ended December 31,
2009
2008
2007
(dollars in thousands)
Balance at beginning of year
$ 1,091,995
Other improvements
Property acquired
Balance at end of year
46,723
68,688
$ 1,207,406
3. (b) Reconciliation of Accumulated Depreciation:
$ 818,816
103,476
169,703
$ 1,091,995
$ 615,024
75,776
128,016
$ 818,816
The following table reconciles accumulated depreciation from January 1, 2007 to December 31, 2009:
(dollars in thousands)
Balance at beginning of year
Depreciation related to real estate
Balance at end of year
Years Ended December 31,
2009
2008
2007
$ 165,067
28,678
$ 193,745
$ 142,312
22,755
$ 165,067
$ 124,088
18,224
$ 142,312
Acadia Realty Trust 2009 Annual Report 101
Trustees and Officers
Shareholder Information
Trustees
Senior Officers
Kenneth F. Bernstein
President and Chief Executive Officer
Kenneth F. Bernstein
President and Chief Executive Officer
Lee S. Wielansky
(Lead Trustee)
Chairman of the Board and
Chief Executive Officer
Midland Development Group Inc.
Douglas Crocker II
Former Chief Executive Officer
Equity Residential
Suzanne M. Hopgood
President and Chief Executive Officer
The Hopgood Group, LLC
Lorrence T. Kellar
Former Vice President,
Retail Development
Continental Properties
Wendy Luscombe
President and CEO
WKL Associates, Inc.
William T. Spitz
Director, Diversified Trust
Joel Braun
Executive Vice President,
Chief Investment Officer
Christopher Conlon
Sr. Vice President,
Acquisitions and Leasing
Jon Grisham
Sr. Vice President,
Chief Accounting Officer
Joseph Hogan
Sr. Vice President,
Director of Construction
Robert Masters, Esq.
Sr. Vice President,
General Counsel and
Chief Compliance Officer
Joseph M. Napolitano
Sr. Vice President,
Chief Administrative Officer
Michael Nelsen
Sr. Vice President,
Chief Financial Officer
David Robinov
Sr. Vice President,
Investments
Investor Relations
Jon Grisham
Sr. Vice President,
Chief Accounting Officer
Tel: 914.288.8100
email: jgrisham@acadiarealty.com
A copy of the Company’s annual report
and Form 10-K filed with the Securities
and Exchange Commission may be
obtained without charge by
contacting Investor Relations.
Dividend Reinvestment
Acadia Realty Trust offers a dividend
reinvestment plan that enables its
shareholders to automatically reinvest
dividends as well as make voluntary
cash payments toward the purchase of
additional shares. To participate, contact
Acadia Realty Trust’s dividend reinvest-
ment agent at 800.937.5449 ext.6820
or write to:
American Stock Transfer &
Trust Company
Attn: Dividend Reinvestment Dept.
59 Maiden Lane
Plaza Level
New York, NY 10038
For further information contact
Investor Relations.
Internet Address
Visit us online at www.acadiarealty.com
for more information. The 2009 Annual
Report, current news and quarterly
financial and operational supplementary
information can be found on the
Company’s website.
Corporate Headquarters
Acadia Realty Trust
1311 Mamaroneck Avenue,
Suite 260
White Plains, NY 10605
Tel: 914.288.8100
Legal Counsel
Paul, Hastings, Janofsky & Walker, LLP
Park Avenue Tower
75 East 55th Street
New York, NY 10022
Annual Meeting
Acadia’s Board of Trustees has sched-
uled the Annual Shareholder Meeting
for Monday, May 10, 2010,
at 10 a.m., local time, to be held at
the Company’s corporate headquarters
at 1311 Mamaroneck Avenue, Suite
260, White Plains, NY 10605. The
record date for determination of
shareholders entitled to vote is
March 31, 2010.
Independent Auditors
BDO Seidman, LLP
330 Madison Avenue
New York, NY 10017
Stock Exchange
NYSE: AKR
The Company has filed the Section 302
certifications as an exhibit to its Form
10-K, and the Chief Executive Officer
has provided the annual certification to
the NYSE.
Transfer Agent and Registrar
American Stock Transfer &
Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
Tel: 877.777.0800
website: www.amstock.com
email: info@ amstock.com
email: info@amstock.
1311 Mamaroneck Avenue
Suite 260
White Plains, NY 10605
Tel: 914.288.8100