Acadia Realty Trust Annual Report 2011

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FY2011 Annual Report · Acadia Realty Trust

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Focused.
Disciplined.
Value-Driven.

2011
ANNUAL REPORT

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Financial Highlights

In thousands

2011

2010

2009

2008

2007

Total Revenues

$ 150,161

$ 141,045

$ 134,445

$ 121,462

$ 75,917

Funds from Operations1

40,297

50,440

49,613

37,964

42,094

Real Estate Owned,
at Cost

Common Shares
Outstanding

Operating Partnership
Units Outstanding

1,471,745

1,305,561

1,119,758

1,004,347

729,979

42,586

40,255

39,787

32,358

32,184

498

360

658

648

642

1 The Company considers funds from operations (“FFO”) as defined by the National Association of Real Estate
Investment Trusts (“NAREIT”) to be an appropriate supplemental disclosure of operating performance for an
equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO is 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.

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Dear Fellow Shareholders:

In 2011, the commercial real estate industry continued its multi-year recovery
process and adjusted to the reality of a lower interest rate/lower growth
environment. While this “new normal” has created its own set of challenges, the
“silver lining” is that it has been beneficial to owners of well-located and well-
tenanted retail properties who have seen values continue to recover and, in some
instances, return towards pre-crash levels. It has also been a beneficial time for
well-capitalized real estate companies which acquire this kind of real estate. In
2011, Acadia’s shareholders achieved a 14.5% total return for the year (compared
to a negative 6.4% for the shopping center sector). These strong results are
consistent with our long-term performance. Over the past 10 years, we have
achieved an annual, compounded return of 17.4% compared to 2.0% for the
shopping center sector. And over the mid-term (three years), we have achieved
an annual, compounded return of 26.8% compared to 10.1% for the shopping
center sector.

Kenneth F. Bernstein
President and CEO

While we are constantly reminded that past performance is no guarantee of future results, we do believe
that our business model, capital structure, and management team’s capabilities position us to succeed in
these uncertain times. In 2011, we continued to focus on creating value through our two key operating
platforms: ownership of high quality retail properties in our “infinite life” core portfolio and opportunistically
investing in value add/turnaround projects through our discretionary investment fund platform.

CORE PORTFOLIO

Our goal for our core portfolio is to create a best-in-class collection of retail properties that have the
potential to significantly outperform average shopping centers over an extended period. We want to own
properties that provide defensive protection during softer economic periods and superior rental growth
during good times. We want to own locations with outstanding demographics that are compatible with the
changing technological landscape of how and where we shop, consistent with how retailers are positioning
themselves for these shifts.

In 2011, we continued to greatly enhance the value of our core portfolio through three accretive re-
anchoring projects, the sale of a large “non-core” asset and several important property acquisitions. In
doing so, we reduced our exposure to certain weaker tenants and added strong tenants in high-traffic
locations ranging from a Trader Joe’s market in Lincoln Park, Chicago, to Lacoste and Coach in Washington
D.C., and including a Whole Foods Market in Cambridge, Massachusetts. As a result of these activities,
our core portfolio is moderately larger, of a better quality, and, more importantly, better positioned to
respond and profit from the continual evolution of retailing in the 21st century.

ENHANCING THE VALUE OF OUR CORE PORTFOLIO

ANCHOR RECYCLING: We will not shy away from opportunities to re-capture and profitably re-tenant
underutilized anchor space despite the fact that these long-term accretive events produce short-term
volatility in our reported operating metrics. During 2011, we executed three of these re-anchoring projects.
The first, in Bloomfield Hills, Michigan, is fully and profitably leased. The other two were in connection
with A&P supermarket’s bankruptcy, which enabled us to regain possession of an underutilized A&P store
in Westchester County, New York and another one on Long Island. We have already re-leased
approximately 75% of the anchor space at these three properties at replacement rents that, on a blended
basis, represent an increase of more than 50% over those of the former tenants. We expect to have the

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balance of the space leased this year. Once these tenants open and begin operations, core portfolio
physical occupancy is anticipated to increase by 370 basis points to almost 94%. Correspondingly, this
leasing will add approximately 8% to our net operating income on a run-rate basis.

ASSET RECYCLING PLUS GROWTH: Along with enhancing the value of our existing core portfolio, in
2011 we also found opportunities to add properties that will help ensure our portfolio remains one of the
best in our sector. Retailers are embracing multi-channel retailing: the sale of merchandise and services to
consumers through more than one “touch point.” These multi-channels include stores, websites, social
media, mobile phones and catalogs. As e-commerce continues to become a larger percentage of retailers’
total company sales, we believe that the best performing, next-generation brick-and-mortar stores will likely
be smaller and more strategically located in higher-traffic retail corridors. These locations will complement
(rather than compete with) retailers’ e-commerce initiatives by providing significant branding and showroom
opportunities as well serving as important order-fulfillment (pick-up/return/exchange) destinations. In light of
the foregoing, over the past year we added, or are in the process of adding, approximately $180 million of
urban/street retail to our core portfolio. These acquisitions will have a meaningful impact on our portfolio as
they will represent approximately 20% of our core net operating income.

First-rate street retail in the Second City. The most significant of our 2011 core portfolio additions was
the acquisition of 21 street retail properties in Chicago for approximately $115 million. Located in Lincoln
Park and the Gold Coast, these properties are situated primarily within the city’s prime Clark-Diversey,
Halsted-Armitage, and Rush-Walton corridors and are tenanted by Trader Joe’s, Urban Outfitters, Express,
Intermix, and Carhartt, among others.

We made our first investment in Chicago’s high-traffic Clark & Diversey neighborhood in 2006. On a
blended basis, these select neighborhoods are more than twice as dense as the City of Chicago and
growing, realizing an 8% population increase between 2000 and 2010. Strong demographics, which include
a healthy $74,000 median household income and a highly-educated population (71% with bachelor’s
degrees or higher), point to smart brick-and-mortar retail locations.

East Coast street retail. On the East Coast, during 2011, we added properties in high-barrier-to-entry
shopping corridors ranging from M Street in Georgetown, Washington, D.C. to SoHo in New York. In
Georgetown, we transitioned a finite-life mezzanine investment into a 50% equity interest in a six-property
portfolio located on or adjacent to M Street. Tenants include Lacoste, Juicy Couture, and Coach.
Additionally, in New York’s “hip” SoHo market, we acquired a property on Mercer Street. We expect these
proven, high-traffic retail corridors to become increasingly more relevant to our tenants in the multi-channel
era.

Following the completion of these acquisitions — and including our pro rata share of our opportunity fund
investments — we have nearly doubled our ownership of street and/or urban retail, which will represent
approximately 40% of our combined portfolio. Suburban discount/value-anchored centers will represent
approximately 35%, and the balance will be suburban supermarket-anchored properties.

In 2011, we also disposed of our only enclosed mall in Ledgewood, New Jersey and recycled the
proceeds into our recent core acquisitions. As we prune our portfolio of low-growth assets in non-core
geographies, we will continue to maintain a well-balanced core portfolio, which, in addition to street retail,
includes both necessity and discount-anchored assets. New acquisitions will be located in markets
characterized by high barriers to entry, a constrained retail supply, and high population density. This was
the case with our recent Cambridge, Massachusetts acquisition where we acquired a Whole Foods Market
and an adjacent Rite Aid Pharmacy. Both leases have below-market rents, providing long-term growth
potential in an excellent location.

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OPPORTUNISTIC & VALUE-ADD EXTERNAL GROWTH PLATFORM

The second key component of our growth strategy is to opportunistically invest in turnaround projects
through our discretionary investment fund vehicles. We are currently investing through our third opportunity
fund (“Fund III”) and look forward to launching our fourth fund later this year. Fund III is capitalized with
$500 million dollars of equity, enabling us to acquire up to $1.5 billion dollars in investments.

Over the past year, we have executed the majority of our new Fund III investment activity in three
strategic areas: urban/street retail repositioning, where we invest in the re-leasing or re-anchoring of
properties in high-traffic retail corridors in gateway cities; distressed retailers, where we invest in strong
real estate locations, anchored by weak retailers that provide us with the opportunity to recapture their
space and re-anchor it with healthy retailers; and distressed debt/recapitalization, where we are beginning
to see opportunities to purchase defaulted debt on well-located assets with the goal of gaining control of
the property, either by restructuring the loan with the existing borrower or by relieving them of their
burden of ownership.

Urban/Street retail repositioning: While, in general, there is plenty of retail space in the United States,
certain markets are significantly under-retailed, and national retailers continue to aggressively pursue
opportunities to penetrate these markets. In 2011, we executed a contract to acquire a well-located
property anchored by a former Borders Books at the corner of North Avenue and Halsted Street in
Chicago’s Lincoln Park neighborhood. This highly-visible, flagship retail location is situated directly across
the street from a recently-developed flagship Apple Store. Other retailers on this street include Restoration
Hardware, Crate & Barrel and Forever 21. Our leasing team is very excited by the tenant interest we have
already received for the re-anchoring of this project.

Distressed retailers: Within our fund platform, we have intentionally targeted well-located real estate
saddled with weak operators where we have the ability to create significant incremental value through
recapture and re-tenanting activities. The former Borders space at our Lincoln Park Centre is an example of
this opportunity, but we are also seeing a similar opportunity in connection with shopping centers anchored
by weaker supermarkets. During 2011, while the shopping center industry — ourselves included —
endeavored to address exposure to the bankrupt A&P, we swam upstream and acquired two more A&P
supermarket-anchored properties through Fund III. As a testament to the strength of the underlying real
estate at both locations, we have already successfully re-leased both of the supermarket stores to
ShopRite supermarkets.

Distressed debt/recapitalization: The commercial real estate industry is still over-leveraged. We expect
the re-equitization of commercial real estate to be a growing part of our investment activity as the era of
lenders “kicking the can down the road” ends and existing borrowers need to restructure, recapitalize or
walk away from their properties. An example of this trend is our recent acquisition of 654 Broadway in
New York City’s NoHo neighborhood. We purchased the debt secured by this asset at a discount from a
financial institution while simultaneously concluding a consensual transfer by deed from the former
borrower, thus giving us control of the asset which we will reposition.

EXECUTING ON OUR EXISTING FUND PORTFOLIO: Over the last year, we also made significant
progress stabilizing our existing fund investments. With respect to our New York urban/infill redevelopment
portfolio, we have brought the retail leased rate at our operating properties to 95%, primarily driven by
leasing progress at our Canarsie, Brooklyn and Pelham Manor, New York redevelopments. Additionally, our
office leased rate is now at 93%, driven by notable leasing activity at our Fordham Road project, which is
one lease away from full occupancy. Finally, last year, our team made significant progress with respect to
our City Point development in downtown Brooklyn. Once completed, this project will include 500,000

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square feet of world-class retail. The project will also include over a million square feet of residential
apartments, which will be developed in stages by New York’s premier residential developers.

As is the case with all of these investments, our goal is to redevelop the properties, stabilize them and
profitably monetize our investments. With pricing and demand for these types of properties increasing, we
are a significant step closer to our goal.

THE BALANCE SHEET: OUR FOUNDATION FOR GROWTH

Responsible balance sheet management is in our DNA. While in 2011, we aggressively executed our
growth strategies, with respect to both our core portfolio and our investment fund platform, at the same
time, we did not waiver from our commitment to a safe and liquid balance sheet. We raised $45 million of
net proceeds in a secondary equity offering to ensure that we maintained the liquidity and strength needed
to execute our business plan. Without the burden of legacy leverage issues, we were able to maintain our
focus on growth. Since August 1998, when we recapitalized a highly-leveraged REIT and renamed the
company Acadia Realty Trust, we have been committed to maintaining a healthy balance sheet. We know
that sustainable growth depends on it. At year-end 2011, our net debt to EBITDA ratio was 4.9x, our fixed-
charge coverage ratio was 3.0x, and our debt to total market capitalization was 31%. You can expect more
of the same in 2012.

OUR TEAM’S COMMITMENT TO SUCCESS

While having the right talent is always important, it is even more so in our current economic environment.
Over the past several years, we have assembled and cultivated a talented team in order to accomplish our
growth objectives for the company. At the end of 2011, we celebrated several colleagues’ individual
contributions to Acadia’s success and promoted: Christopher Conlon to Executive Vice President and Chief
Operating Officer, Jon Grisham to Senior Vice President and Chief Financial Officer, and Richard Hartmann
to Senior Vice President and Chief Accounting Officer. We also promoted Amy Racanello to Vice President,
Capital Markets and Investments and George Acosta to Vice President and Controller.

These individuals have been critical drivers of our success over the years. Along with our other highly-
talented senior management team members, they are already current leaders of the company, but they will
become even more critical to our success in the future. Chris Conlon, who has been leading our
leasing/redevelopment department for several years, now joins Joel Braun as one of Acadia’s two
Executive Vice Presidents. Joel has been a key leader and driver of Acadia’s success for almost 20 years. I
am confident that, like Joel, Chris will bring his talent, passion and leadership to everything that he does
for Acadia.

Mike Nelsen, who turned over the responsibilities of Chief Financial Officer to Jon Grisham, deserves
special recognition for planning a smooth and successful succession process. As many of you already
know, Jon has been a critical team member and is an excellent CFO. Furthermore, Mike is not leaving
Acadia any time soon. He is focusing on key parts of our growth strategy while continuing to help train the
future leaders of Acadia. Succession is too often an ugly or poorly planned process. Mike and Jon proved
that this does not need to be the case.

Over the years, it has become clear to us that in order to have the kind of talent that can drive strong
future results, we need to identify and cultivate talented and committed team members from the earliest
stages of their careers. Thereafter, we need to help them grow into the type of professionals that are
consistent with Acadia’s goals, values and philosophy. No one has done more to execute this mission than
our Chief Administrative Officer, Joe Napolitano. Under Joe’s leadership, we have been developing a

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management team that appropriately complements our goals for Acadia. I cannot imagine what Acadia
would have looked like without Joe’s contributions over the years. More importantly, our team is incredibly
energized by his commitment to our future growth.

IN CONCLUSION

With an already strong core portfolio that we are committed to making even stronger, we will continue to
position our core portfolio to be best in class for the 21st century. With a well-capitalized investment fund
platform that has a great existing pipeline of high-quality projects and plenty of capital to add more, we will
be well situated to capitalize on the type of opportunities that can create significant value for our
stakeholders. With a strong balance sheet, we have access to the capital necessary to enable us to
execute our business plan both when the economy is strong and during times of economic crisis. And
with a management team that is fully committed to driving Acadia’s success well into the future, I am very
excited about how we are positioned today to capitalize on the opportunities going forward

2011 was a year of solid progress and performance, but it was only one more step in the right direction.
With the continued support of our shareholders and with the guidance of our extraordinary Board of
Trustees, our team is ready to continue on the path that we started over ten years ago.

Kenneth F. Bernstein
President and CEO

Acadia Realty Trust 2011 Annual Report

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
Third Avenue, Bronx, NY
West Shore Expressway, Staten Island, NY
West 54th Street, New York, NY
East 17th Street, New York, NY
Crossroads Shopping Center, White Plains, NY
Mercer Street, New York, NY
4401 White Plains Road, Bronx, 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
West Diversey, Chicago, IL
Chicago Street Retail Portfolio, Chicago, IL
Merrillville Plaza, Hobart, IN
Bloomfield Town Square, Bloomfield Hills, MI
Mad River Station, Dayton, OH

MID-ATLANTIC REGION
Marketplace of Absecon, Absecon, NJ
Brandywine Town Center, Wilmington, DE

Market Square Shopping Center, Wilmington, DE
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
Georgetown Portfolio, Washington, DC

Opportunity Fund Portfolio

FUND I PROPERTIES
Tarrytown Centre, Tarrytown, NY
Kroger/Safeway Portfolio, three locations

FUND II PROPERTIES
Liberty Avenue, Queens, NY
216th Street, New York, NY
161st Street, Bronx, NY
Fordham Place, Bronx, NY
Pelham 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
Cortlandt Towne Center, Mohegan Lake, NY
654 Broadway, New York, NY
New Hyde Park Shopping Center, New Hyde Park, NY
Sheepshead Bay Plaza, Brooklyn, NY
White City Shopping Center, Shrewsbury, MA
White Oak, Silver Spring, MD
Parkway Crossing, Baltimore, MD
Lincoln Road, Miami, FL
Heritage Shops, Chicago, IL

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Acadia Realty Trust 2011 Annual Report

Focused.
Disciplined.
Value-Driven.

2011
FORM 10-K REPORT

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3/26/12 3:09 PM

19928

21183

United States Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

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.

YES

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.

YES

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

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

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 Form 10-K or any amendment to this Form 10-K.

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

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Indicate by checkmark 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 $818.7 million, based on a price of $20.30 per
share, the average sales price for the registrant’s common 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 February 28, 2012 was 42,763,289.

YES

Part III—Portions of the registrant’s definitive proxy statement relating to its 2012 Annual Meeting of Shareholders presently
scheduled to be held May 16, 2012 to be filed pursuant to Regulation 14A.

DOCUMENTS INCORPORATED BY REFERENCE

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Acadia Realty Trust Form 10-K Report 2011

Table of Contents

Item No.

PART I

1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

5. Market for Registrant’s Common Equity, Related Stockholder Matters, Issuer Purchases of

Equity Securities and Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . .

9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9B. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

10. Directors and Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . .

13. Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . . . . . . . . . . .

14. Principal Accountant Fees and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV

Page

15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Special Note Regarding
Forward-Looking Statements
Certain statements contained in this Annual Report on

estate related opportunities in which we have a minority

equity interest.

All of our investments are held by, and all of our

Form 10-K may contain forward-looking statements

operations are conducted through, Acadia Realty Limited

within the meaning of Section 27A of the Securities Act

Partnership (the “Operating Partnership”) and entities in

of 1933 and Section 21E of the Securities and Exchange

which the Operating Partnership owns a controlling

Act of 1934 and as such may involve known and

interest. As of December 31, 2011, the Trust controlled

unknown risks, uncertainties and other factors which

99% of the Operating Partnership as the sole general

may cause our actual results, performance or

partner. As the general partner, the Trust is entitled to

achievements to be materially different from future

share, in proportion to its percentage interest, in the

results, performance or achievements expressed or

cash distributions and profits and losses of the Operating

implied by such forward-looking statements. Forward-

Partnership. The limited partners generally represent

looking statements, which are based on certain

entities or individuals which contributed their interests in

assumptions and describe our future plans, strategies

certain assets or entities to the Operating Partnership in

and expectations are generally identifiable by use of the

exchange for common or preferred units of limited

words “may,” “will,” “should,” “expect,” “anticipate,”

partnership interest (“Common OP Units” or “Preferred

“estimate,” “believe,” “intend” or “project” or the

OP Units”, respectively, and collectively, “OP Units”) and

negative thereof or other variations thereon or

employees who have been awarded restricted Common

comparable terminology. Factors which could have a

OP Units (“LTIP Units”) as long-term incentive

material adverse effect on our operations and future

compensation. Limited partners holding Common OP

prospects include, but are not limited to those set forth

Units are generally entitled to exchange their units on a

under the headings “Item 1A. Risk Factors” and “Item 7.

one-for-one basis for our common shares of beneficial

Management’s Discussion and Analysis of Financial

interest (“Common Shares”). This structure is referred to

Condition and Results of Operation” in this Form 10-K.

as an umbrella partnership REIT, or “UPREIT”.

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

Business Objectives and Strategies
Our primary business objective is to acquire and manage

commercial retail properties that will provide cash for

distributions to shareholders while also creating the

potential for capital appreciation to enhance investor

returns. We focus on the following fundamentals to

achieve this objective:

(cid:2) Own and operate a Core Portfolio (as defined in Item 2.
of this Form 10-K) of high-quality retail properties located

(“REIT”). All references to “Acadia,” “we,” “us,” “our,”

primarily in high-barrier-to-entry, densely-populated

and “Company” refer to the 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

of retail properties, including neighborhood and

community shopping centers and mixed-use properties

with retail components. We currently operate 82

properties, which we own or have an ownership interest

in. These assets are located primarily in high-barrier-to-

entry, densely-populated metropolitan areas in the United

States along the East Coast and in Chicago and, in total,

comprise approximately eight million square feet. We

also have private equity investments in other retail real

metropolitan areas and create value through accretive

redevelopment and re-anchoring activities coupled with

the acquisition of high-quality assets that have the long-

term potential to outperform the asset class as part of

our Core asset recycling and acquisition initiative.

(cid:2) Generate additional external growth through an
opportunistic yet disciplined acquisition program

through our Opportunity Funds (as defined in Item 1.

of this Form 10-K). We target transactions with high

inherent opportunity for the creation of additional value

through:

Acadia Realty Trust 2011 Annual Report

55661

(cid:2) value-add investments in high-quality urban and/or

addition to a pro-rata return based on our equity interest,

street retail properties with re-tenanting or

repositioning opportunities,

(cid:2) opportunistic acquisitions of well-located real-estate
anchored by distressed retailers or by motivated

sellers and

a carried interest (“Promote”) and fees and priority

distributions for our services. To date, we have launched

three opportunity funds (“Opportunity Funds”), Acadia

Strategic Opportunity Fund, LP (“Fund I”), Acadia

Strategic Opportunity Fund II, LLC (“Fund II”) and Acadia

Strategic Opportunity Fund III, LLC (“Fund III”). Due to

(cid:2) opportunistic purchases of debt which may include

the level of our control, we consolidate these

restructuring.

Opportunity Funds for financial reporting purposes.

These may also include joint ventures with private

equity investors for the purpose of making

investments in operating retailers with significant

embedded value in their real estate assets.

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

(cid:2) Maintain a strong and flexible balance sheet through

Investors I, LLC (“Mervyns I”), in which the investors,

conservative financial practices while ensuring access to

including the Operating Partnership, committed a total of

sufficient capital to fund future growth.

$90.0 million for the purpose of acquiring real estate

Investment Strategy — External Growth
through Core Asset Recycling/Acquisition
initiative and Opportunity Fund Platform
The requirements that acquisitions be accretive on a

long-term basis based on our cost of capital, as well as

increase the overall Core Portfolio quality and value, are

key strategic considerations to our Core Portfolio asset

recycling/acquisition program. As such, we constantly

evaluate the blended cost of equity and debt and adjust

assets. The Operating Partnership is 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 investors (including the Operating

Partnership) until they earned a 9% cumulative return

(“Preferred Return”) and the return of all of their capital

contributions.

the amount of acquisition activity to align the level of

Fund I investors have received a return of all of their capital

investment activity with capital flows. Given the growing

invested in Fund I and Mervyns I and their Preferred

importance of technology and e-commerce, many of our

Return. Accordingly, all cash flow is now distributed 20%

retail tenants are appropriately focused on multi-channel

to the Operating Partnership as a Promote and 80% to the

sales and how to best utilize e-commerce initiatives to

partners (including the Operating Partnership). The

drive sales at their stores. In light of these initiatives, we

Operating Partnership also earns fees and/or priority

have found retailers are becoming more selective as to

distributions for asset management services equal to 1.5%

the location, size and format of their next-generation

of the allocated invested equity, as well as for property

stores and are focused on dense, high-traffic retail

management, leasing, legal and construction services. All

corridors, where they can utilize smaller and more

such fees and priority distributions are eliminated in

productive formats closer to their shopping population.

consolidation and reflected as a reduction in the

Accordingly, our focus for Core Portfolio acquisitions is

noncontrolling interest share in income from Opportunity

on those properties which we believe will not only

Funds in the Consolidated Financial Statements beginning

remain relevant to our tenants, but become even more

on page F-1 of this Form 10-K.

so in the future. In connection with our Core Portfolio

acquisition activity, we may also engage in discussions

with public and private entities regarding business

combinations.

We are currently in the latter stages of our multi-year

process of monetizing Fund I as discussed further in

“— ASSET SALES AND CAPITAL/ASSET RECYCLING”

below in this Item 1. As of December 31, 2011, there were

In addition to our Core Portfolio investments in real

four assets comprising approximately 0.1 million square

estate assets, we have also capitalized on our expertise

feet remaining in Fund I in which the Operating

in the acquisition, redevelopment, leasing and

Partnership’s interest in cash flow and income is 37.8% as

management of retail real estate by establishing

a result of the Promote.

discretionary opportunity funds in which we earn, in

2 Acadia Realty Trust 2011 Annual Report

43859

Fund II
Following our success with Fund I, during June of 2004

Redevelopment Initiative.” Through December 31, 2011,

eight of Fund II’s nine projects are owned through Acadia

we formed a second, larger Opportunity Fund, Fund II,

Urban Development, as discussed further in

and during August of 2004, formed Acadia Mervyn

“— PROPERTY ACQUISITIONS — New York Urban/Infill

Investors II, LLC (“Mervyns II”), with the investors from

Redevelopment Initiative” below in this Item 1.

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, 2011, $282.2 million of Fund II’s

and Mervyns II’s capital was invested and the balance of

$17.8 million is expected to be utilized to complete

development activities for existing Fund II investments.

Retailer Controlled Property Venture
(the “RCP Venture”)
During 2004, through Funds I and II or affiliates thereof,

we entered into an association, known as the RCP

Venture, with Klaff 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 RCP Venture is neither a single

entity nor a specific investment. Any member of this

association has the option of participating, or not, in any

individual investment and each individual investment has

been made on a stand-alone basis through a separate

limited liability company. These investments have been

made through different investment vehicles with different

Given the market conditions for commercial real estate at

affiliated and unaffiliated investors and different

the time Fund II was formed, we channeled our

acquisition efforts through Fund II in two opportunistic

strategies — the New York Urban/Infill Redevelopment

Initiative and the Retailer Controlled Property Venture,

which are more fully described below.

New York Urban/Infill Redevelopment Initiative
During September of 2004, through Fund II, we launched

our New York Urban/Infill Redevelopment Initiative. In

addition to retailer multi-channeling initiatives as discussed

above, we also believe that retailers continue to recognize

that many of the nation’s urban markets are under-served

from a retail standpoint, and we have capitalized on this

situation by investing in redevelopment projects in dense

urban areas where retail tenant demand has effectively

surpassed the supply of available sites. During 2004, Fund

II, together with an unaffiliated partner, formed Acadia

Urban Development LLC (“Acadia Urban Development”)

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. The unaffiliated partner 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 Urban

Development agreed to invest. See Item 7. of this Form

10-K for further information on the Acadia Urban

Development joint venture as detailed in “Liquidity and

Capital Resources — New York Urban/Infill

economics to us. The initial size of the RCP Venture was

expected to be approximately $300.0 million in equity, of

which our share would be $60.0 million. Based on the

investment opportunities, the size of the RCP Venture

could be and was expanded. Mervyns I and II and

Fund II have invested a total of $62.2 million in the RCP

Venture to date on a non-recourse basis. 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. 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 would

be reduced. Cash flow from any RCP Venture investment

is distributed to the participants until they have received

a 10% cumulative return on and a full return of all capital

contributions. Thereafter, remaining cash flow is

distributed 20% to Klaff (“Klaff’s Promote”) and 80% to

the partners (including Klaff). As the participants have

received a return of all of their capital invested and their

unpaid cumulative return, all cash flow is now distributed

20% to Klaff as Klaff’s Promote and then 80% to the

partners. The Operating Partnership may also earn

market-rate fees for property management, leasing and

construction services on behalf of the RCP Venture.

While we are primarily a passive partner in the

investments made through the RCP Venture, historically

Acadia Realty Trust 2011 Annual Report

06614

we have provided our services in reviewing potential

practices, including a moderate use of leverage, while

acquisitions and operating and redevelopment assistance

ensuring access to sufficient capital to fund future

in areas where we have both a presence and expertise.

growth. We intend to continue financing acquisitions and

We continue to seek to invest opportunistically with the

property redevelopment with sources of capital

RCP Venture primarily in any of the following four ways:

determined by management to be the most appropriate

(cid:2) Invest in operating retailers to control their real estate

through private equity joint ventures

(cid:2) Work with financially healthy retailers to create value

from their surplus real estate

(cid:2) Acquire properties, designation rights or other control
of real estate or leases associated with retailers in

bankruptcy

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

(cid:2) Complete sale-leasebacks with retailers in need of

derivative instruments, including London Interbank

capital

Our RCP Venture investments are further discussed in

“— PROPERTY ACQUISITIONS — RCP Venture” below

in this Item 1.

Fund III
Fund III was formed during 2007 with fourteen

institutional investors, including a majority of the investors

from Funds I and II, whereby the investors, including the

Operating Partnership, committed capital totaling $502.5

million. 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 and

can invest the committed equity on a discretionary basis

within the parameters defined in the Fund III operating

agreement. The terms and structure of Fund III are

substantially the same as Fund I and Fund II with the

exception that the Preferred Return is 6%. As of

December 31, 2011, $226.8 million of Fund III’s capital

was invested. To date, Fund III has invested in 21 projects

as discussed further in “— PROPERTY ACQUISITIONS”

below in this Item 1.

Through Fund III, our acquisition efforts are focused on

the investment themes as discussed above in

“BUSINESS OBJECTIVES AND STRATEGIES” in this

Item 1.

In connection with the focus on urban locations, Fund III

has invested in a portfolio of 11 self-storage facilities

located in and around the New York City metropolitan

Offered Rate (“LIBOR”) swap agreements and interest

rate caps as discussed further in Item 7A. of this

Form 10-K.

During January 2012, we established an at-the-market

(“ATM”) equity program with an aggregate offering of up

to $75.0 million in Common Shares. We intend to use

the future net proceeds of this offering for general

corporate purposes, which may include, among other

things, repayment of our debt, future acquisitions,

directly in the Core Portfolio and through our Opportunity

Funds, and redevelopments of and capital improvements

to our properties.

During November 2011, we issued 2.25 million Common

Shares, which generated net proceeds of approximately

$45.0 million. The proceeds were primarily used for

general corporate purposes, which included (i) the

repurchase of $24.0 million of our convertible notes

(“Convertible Notes”) payable as discussed further in

Note 9 to our Consolidated Financial Statements, which

begin on page F-1 of this Form 10-K, (ii) additional

property acquisitions and investments, including the

funding of our capital commitments to our Opportunity

Funds and (iii) redevelopment and re-tenanting activities

within our Core Portfolio.

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 as discussed below and pay down existing lines

area.

of credit.

Capital Strategy — Balance Sheet Focus
and Access to Capital
Our primary capital objective is to maintain a strong and

flexible balance sheet through conservative financial

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

4 Acadia Realty Trust 2011 Annual Report

72047

team has demonstrated the ability to create value

Property Acquisitions

through anchor recycling, property redevelopment and

strategic non-core dispositions. We have capitalized on

our expertise in the acquisition, redevelopment, leasing

Core Portfolio

See Item 2. PROPERTIES for the definition of our Core

and management of retail real estate by establishing joint

Portfolio.

ventures, such as the Opportunity Funds, in which we

During 2011, we continued to execute on our strategy of

earn, in addition to a return on our equity interest,

owning a superior Core Portfolio by acquiring, through

Promotes, fees and priority distributions. In connection

our Operating Partnership, high-quality, urban and street

with these joint ventures we have launched several

retail assets with the following acquisitions:

successful acquisition platforms including our New York

Urban/Infill Redevelopment Initiative and RCP Venture.

Operating functions such as leasing, property

(cid:2) During September 2011, acquired a 50% equity
interest in an entity which owns a six property

portfolio (the “Georgetown Portfolio”) located in

management, construction, finance and legal (collectively,

Washington, D.C. for a purchase price of $13.4 million,

the “Operating Departments”) are generally provided by

which included the assumption of 50% of in-place

our personnel, providing for fully integrated property

debt of $9.2 million, inclusive of our existing

management and development. By incorporating the

mezzanine loan to the entity.

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.

We typically hold our Core Portfolio properties for long-

term investment. As such, we continuously review the

existing portfolio and implement programs to renovate

(cid:2) During August 2011, acquired a six property portfolio
located in Chicago, Illinois for $18.0 million and a

newly constructed 13,000 square foot property located

in the Bronx, New York for $9.1 million.

(cid:2) During June 2011, acquired a 6,000 square foot single-
tenant retail condominium located in New York, New

York for $4.8 million.

(cid:2) During May 2011, acquired a 44,000 square foot retail
property located in Chicago, Illinois, for $28.4 million.

and modernize targeted centers to enhance the

In addition, as of December 31, 2011 we have 16

property’s market position. This in turn strengthens the

properties under contract for an aggregate purchase price

competitive position of the leasing program to attract and

of $107.3 million. Two of these transactions, with

retain quality tenants, increasing cash flow and

purchase prices totaling $22.7 million, were completed

consequently property value. We also periodically identify

subsequent to December 31, 2011. The closings of the

certain properties for disposition and redeploy the capital

transactions still under contract, which are anticipated to

to existing centers or acquisitions with greater potential

be completed during 2012, are subject to customary

for capital appreciation. Our Core Portfolio consists

closing conditions and in certain instances, lender

primarily of urban/street retail properties and

approval. As such, no assurance can be given that we

neighborhood and community shopping centers located in

will successfully complete these transactions.

high barrier-to-entry supply constrained markets. The

See Item 2. PROPERTIES for a description of the other

neighborhood and community shopping centers owned in

properties in our Core Portfolio.

both our Core Portfolio and through our Opportunity

Funds are principally anchored by supermarkets and

necessity-based retailers. We believe these attributes

enable our properties to better withstand the current

post recessionary period.

During 2011 and 2009 we sold two non-core properties

and redeployed capital in part to fund Core Portfolio

acquisitions as further discussed in “— PROPERTY

ACQUISITIONS” and “ASSET SALES AND

CAPITAL/ASSET RECYCLING” below in this Item 1.

Opportunity Funds

Fund III
Through Fund III, we have also acquired the following

properties:

(cid:2) During December 2011, acquired a 31,500 square foot
shopping center located in New Hyde Park, New York

for $11.3 million.

Acadia Realty Trust 2011 Annual Report

74460

(cid:2) During December 2011, in joint ventures with

square foot shopping center located in Westchester

unaffiliated partners, acquired a 260,000 square foot

County, New York.

shopping center located in Baltimore, Maryland for

$21.6 million and an 18,700 square foot property

located at 654 Broadway, New York, New York for

$13.3 million.

(cid:2) During November 2007, acquired a property at 125

Main Street, Westport, Connecticut for approximately

$17.0 million. Redevelopment of the property was

completed in 2011 at a cost of approximately $8.5

(cid:2) During April 2011, acquired a 105,000 square foot

million. The property is 89% leased and anchored by

property located in the East Loop section of downtown

Gap Inc.

Chicago, Illinois, for $31.6 million.

(cid:2) During November 2007, acquired a property in

(cid:2) During February 2011, in a joint venture with an

Sheepshead Bay, Brooklyn for approximately $20.0

unaffiliated partner, acquired a 64,600 square foot

million. The property is currently in the design stage.

single tenant retail property located in Silver Springs,

Maryland, for approximately $9.8 million.

(cid:2) During February 2011, in a joint venture with an

unaffiliated partner, acquired a three property portfolio

(the “Portfolio”) for an aggregate purchase price of

$51.9 million with $20.6 million of in-place mortgage

financing assumed at closing. The Portfolio consists of

three street-retail properties, aggregating 61,000

square feet, and is located in South Miami Beach,

Florida.

Self-Storage Portfolio
During February 2008, Fund III, in conjunction with

Storage Post, acquired a portfolio of eleven 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 fourteen self-storage property portfolio,

located throughout New York and New Jersey, totals

approximately 1,124,000 net rentable square feet, and is

operating at various stages of stabilization. As of

(cid:2) During December 2010, in a joint venture with an

December 31, 2011, overall occupancy for this portfolio

unaffiliated partner, purchased the White City Shopping

was 87.0% compared with 76.5% at December 31,

Center for $56.0 million. The property is a 255,000

2010.

square foot shopping center located in Shrewsbury,

Massachusetts.

(cid:2) During June 2010, in a joint venture with an

unaffiliated partner, invested in an entity formed for

the purpose of providing management services to

owners of self-storage properties, including the 14

locations currently owned through Fund II and Fund III.

To date, Fund III has invested $4.2 million in this

entity.

(cid:2) During January 2009, purchased Cortlandt Towne

Center for $78.0 million. The property is a 641,000

Fund II New York Urban/Infill
Redevelopment Initiative
As of December 31, 2011, Fund II had nine New York

Urban/Infill Redevelopment Initiative projects, eight of

which were made through Acadia Urban Development.

Construction is substantially complete at seven of the

projects, one is under construction and one is in the

design phase as follows:

6 Acadia Realty Trust 2011 Annual Report

Year
Acquired

Costs
to Date

Anticipated
Additional
Costs(4)

(dollars in millions)
Property

Liberty Avenue(1)

216th Street

Fordham Place

Location

Queens

Manhattan

Bronx

2005

2004

Pelham Manor Shopping Plaza(1)

Westchester

2004

161st Street

Atlantic Avenue(3)

Canarsie Plaza

CityPoint(1)
Sherman Plaza

Total

Bronx

Brooklyn

Brooklyn
Manhattan

2005

2007

2007
2005

$—

—

6.2

1.1

1.0

—

0.5

145.1 - 235.1
TBD

$ 15.6

27.7

128.4

63.2

65.7

22.6

90.5

104.9
34.2

$552.8

83485

Status

Construction
complete
Construction
complete
Construction
complete
Construction
complete
Construction
complete(2)
Construction
complete
Construction
complete
Under
construction
In design

Square
Feet Upon
Completion

125,000

60,000

262,000

320,000

237,000

110,000

274,000

685,000 - 710,000
TBD

Notes:
TBD — To be determined
(1) Acadia Urban Development acquired a ground lease interest at these properties.
(2) Currently operating but re-tenanting activities have commenced.
(3) Fund II owns 100% of this project.
(4) Anticipated additional costs for completed properties represent costs for tenant improvements.

Under Construction

was $23.2 million. Subsequent to the initial acquisition of

CityPoint — During June of 2007, Acadia Urban

Mervyns, we made additional investments of $2.9 million.

Development and an unaffiliated joint venture partner,

To date, REALCO has disposed of a significant portion of

California Urban Investment Partners, LLC (“CUIP”)

the portfolio. In addition, during November 2007, we sold

purchased the leasehold interests in The Gallery at Fulton

our interest in, and as a result, have no further investment

Street in downtown Brooklyn for approximately $115.0

in OPCO. Through December 31, 2011, we have received

million, with an option to purchase the fee position, which

distributions from this investment totaling $46.0 million.

is owned by the City of New York, at a later date. On

June 30, 2010, Acadia Urban Development acquired all of

CUIP’s interest in CityPoint for a total consideration of

$9.2 million and the assumption of CUIP’s share of debt

of $19.6 million. Reference is made to Note 2 in our

Consolidated Financial Statements, which begin on Page

F-1 of this Form 10-K for a further discussion of this

transaction. The development will proceed in three

phases. Construction has commenced on Phase 1, a five-

story retail building of approximately 50,000 square feet.

Phase 2 will consist of approximately 625,000 square feet

of additional retail. Phase 2 will also contain an affordable

and market-rate residential component. Phase 3 is

anticipated to be a stand-alone mixed use, but primarily

residential building, of approximately 650,000 square feet.

RCP Venture
Mervyns Department Stores

In September 2004, we made our first RCP Venture

investment. Through Mervyns I and Mervyns II, we

invested in a consortium to acquire Mervyns consisting of

262 stores (“REALCO”) and its retail operation (“OPCO”)

from Target Corporation. Our share of this investment

Through December 31, 2011, we, through Mervyns I and

Mervyns II, made additional investments in locations that

are separate from these original investments (“Add-On

Investments”) in Mervyns totaling $6.5 million and have

received distributions totaling $3.6 million.

Albertson’s

During June of 2006, the RCP Venture made its second

investment as part of an investment consortium,

acquiring Albertson’s and Cub Foods, of which our share

was $20.7 million. Through December 31, 2011, we have

received distributions from this investment totaling $81.6

million, including $4.5 million and $11.4 million received

in 2011 and 2010, respectively.

Through December 31, 2011, we, through Mervyns II,

made Add-On Investments in Albertson’s totaling $2.4

million and received distributions totaling $1.7 million,

including $0.5 million received in 2011.

Other RCP Investments

Through December 31, 2011, we, through Fund II, made

investments of $1.1 million in Shopko, $0.7 million in

Acadia Realty Trust 2011 Annual Report

79046

Marsh, and $2.0 million in Add-On Investments in Marsh.

During July of 2007, the RCP Venture acquired a

As of December 31, 2011, we have received

portfolio of 87 retail properties from Rex Stores

distributions totaling $1.7 million from our Shopko

Corporation (“Rex”), in which we invested through

investment and $2.6 million from our Marsh and Marsh

Mervyns II. Our share of this investment was $2.7

Add-On Investments.

million. As of December 31, 2011, we have received

distributions from Rex totaling $0.8 million.

The following table summarizes the RCP Venture investments from inception through December 31, 2011, and the

Operating Partnership’s share of this activity:

(dollars in millions)
Investor

Investment

Year
Acquired

Invested
Capital

Distributions

Invested
Capital

Distributions

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
Shopko
Marsh/Add-On Investments
Rex

2004
2005/2008
2006
2006/2007
2006
2006
2007

Total

$26.1
6.5
20.7
2.4
1.1
2.7
2.7

$62.2

$ 46.0
3.6
81.6
1.7
1.7
2.6
0.8

$138.0

$ 4.9
1.1
4.2
0.4
0.2
0.5
0.5

$11.8

$11.3
0.8
16.3
0.3
0.3
0.5
0.2

$29.7

Operating
Partnership Share

Notes Receivable, Preferred Equity and Other Real
Estate Related Investments
We also make investments in preferred equity positions

into and subsequently exercised an option to purchase

the shopping center at a future date, pending the

servicer’s approval of the assignment of a first mortgage

and notes receivable collateralized by real estate, either

loan of $17.0 million. The loan will be offset against the

directly or through entities having an ownership interest

purchase price when the Operating Partnership acquires

therein.

the property.

During December 2011, the Operating Partnership made

During May 2011, we received a final payment of $54.7

an $8.5 million loan, which is collateralized by 3

million on a mezzanine loan, representing $33.8 million of

properties located in Chicago, IL. The loan matures in

principal, $13.4 million of accrued interest, and a $7.5

December 2012 and bears interest at 12.0%.

million exit fee.

During December 2011, Fund I made a $12.6 million loan

During February 2011, the Operating Partnership made a

in conjunction with the sale of 15 Kroger/Safeway

locations. The loan, which is collateralized by 14

mezzanine loan for $3.8 million which accrues interest at

15% and is payable upon a capital event. The Operating

Kroger/Safeway properties, matures in December 2012

Partnership also received a payment of $1.9 million on a

and bears interest at 6.0%. There are two six month

mezzanine loan.

extension options, the first of which bears interest at 9%

and the second bears interest at 12%.

During September 2010, we received a final payment of

$49.4 million on a preferred equity investment,

During October 2011, the Operating Partnership made a

representing $40.0 million of invested capital and $9.4

$5.4 million construction loan, which is collateralized by

million of accrued preferred return.

an interest in a development in Haledon, NJ. The loan

matures in April 2012 and has one six month extension

and bears interest at 15.0%.

During December 2009, the Operating Partnership made

a loan for $8.6 million. The original term of this loan was

for one year, with two six month extensions, and bore

During September 2011, the Operating Partnership made

interest at 14.5%. During December 2011, this

a $4.0 million loan to two members of an entity which

investment was fully liquidated. The Operating

owns a shopping center in Washington D.C. The note

Partnership received $8.6 million of principal along with

accrues interest at 7% and matures in February 2012. In

$1.0 million of accrued interest.

addition to the loan, the Operating Partnership entered

8 Acadia Realty Trust 2011 Annual Report

94463

The following table sets forth our notes receivable investments as of December 31, 2011:

Notes Receivable
(dollars in thousands)

Investment

Principal

Accrued
Interest

Total

Stated
Interest
Rate

Effective
Interest
Rate(1)

Maturity
Date

Extension
Options
(years)

Underlying Third-Party
First Mortgage Loan

Amount Maturity Dates

First mortgage and
other notes

$41,331

$1,772

$43,103

9.50% 10.47% 2012

Mezzanine notes

18,658

723

19,381

12.78% 14.57% 2013

—

N/A N/A

301,660

2012 through 2017

Weighted Averages

Total notes receivable

$59,989

$2,495

$62,484

10.52% 11.75%

Note:
(1) The effective rate includes points and exit fees

Asset Sales and Capital/Asset Recycling

Core Portfolio
We periodically identify certain properties in our Core Portfolio for disposition and redeploy the capital to existing

centers or acquisitions with greater potential for capital appreciation. Since 2009, we have sold the following Core

Portfolio assets:

(dollars in thousands)
Property

Ledgewood Mall
Blackman Plaza

Total

Location

Date Sold

Gross Leasable Area

Sales Price

Ledgewood, New Jersey
Wilkes-Barre, Pennsylvania

May 2011
November 2009

517,151
125,264

642,415

$37,000
2,500

$39,500

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, 2011 there were four assets comprising 0.1 million square

feet remaining in Fund I as summarized below:

Shopping Center

Tarrytown Centre
Kroger/Safeway properties

Total

Location

Tarrytown (Westchester), NY
3 locations

Year Acquired

2004
2003

GLA

35,000
98,000

133,000

During December 2011, Fund I sold 15 locations in the

sale along with Fund I’s recourse obligation of $0.6

Kroger/Safeway Portfolio for $17.5 million, resulting in a

million were used to fully liquidate the outstanding loan

$14.6 million gain. The Operating Partnership’s share of

obligation.

the gain was $2.4 million.

During February 2009, The Kroger Co. purchased the

During October 2011, Fund I sold Granville Centre, a

leasehold interest at six locations in Fund I’s

135,000 square foot shopping center, located in

Kroger/Safeway Portfolio for $9.5 million, resulting in a

Columbus, Ohio, for $2.3 million, resulting in a loss of

$5.6 million gain. The Operating Partnership’s share of

$0.3 million. The Operating Partnership’s share of the

the gain was $0.9 million.

loss was $0.1 million. During the quarter ended June 30,

2011, we determined that the value of the Granville

Centre was impaired and recorded an impairment loss of

$6.9 million. The Operating Partnership’s share of the

impairment loss was $1.5 million.

During March 2010, Fund I sold the Sterling Heights

Shopping Center for $2.3 million. The proceeds from the

Fund II
During January 2011, Fund II completed the sale of a

leasehold interest in the Neiman Marcus location at

Oakbrook Center, located in Oak Brook, Illinois, for $8.2

million. The sale resulted in a gain of $3.9 million. The

Operating Partnership’s share of the gain was $0.8

million.

Acadia Realty Trust 2011 Annual Report

69380

Environmental Laws
For information relating to environmental laws that may

have an impact on our business, please see “Item 1A.

located at regional property management offices. None

of our employees are covered by collective bargaining

agreements. Management believes that its relationship

Risk Factors — Possible liability relating to environmental

with employees is good.

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.

Company Website
All of our filings with the Securities and Exchange

Commission, including our annual reports on Form 10-K,

quarterly reports on Form 10-Q and current reports on

Form 8-K and amendments to those reports filed or

furnished pursuant to Section 13(a) or 15(d) of the

Securities Exchange Act of 1934, are available at no cost

at our website at www.acadiarealty.com, as soon as

reasonably practicable 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

Financial Information About
Market Segments
We have five reportable segments: Core Portfolio,

Commission’s website at www.sec.gov. Alternatively, we

will provide paper copies of our filings at no cost upon

request. If you wish to receive a copy of the Form 10-K,

Opportunity Funds, Self-Storage Portfolio, Notes

you may contact Robert Masters, Corporate Secretary, at

Receivable and Other. Notes Receivable consists of our

Acadia Realty Trust, 1311 Mamaroneck Avenue, Suite

notes receivable and related interest income, Other

260, White Plains, NY 10605. You may also call (914)

primarily consists of management fees and interest

288-8100 to request a copy of the Form 10-K.

income. The accounting policies of the segments are the

Information included or referred to on our website is not

same as those described in the summary of significant

incorporated by reference in or otherwise a part of this

accounting policies set forth in Note 1 to our

Form 10-K.

Consolidated Financial Statements, which begin on page

F-1 of this Form 10-K. We evaluate property performance

primarily based on net operating income before

depreciation, amortization and certain nonrecurring items.

Code of Ethics and
Whistleblower Policies
The Board of Trustees adopted a Code of Business

Investments in our Core Portfolio are typically held long-

Conduct and Ethics applicable to all employees, as well

term. Given the contemplated finite life of our

as a “Whistleblower Policy.” Copies of these documents

Opportunity Funds, these investments are typically held

are available in the Investor Information section of our

for shorter terms. Fees earned by us as general

website. We intend to disclose future amendments to, or

partner/member of the Opportunity Funds are eliminated

waivers from (with respect to our senior executive

in our Consolidated Financial Statements. See Note 3 to

financial officers), our Code of Ethics in the Investor

our Consolidated Financial Statements, which begin on

page F-1 of this Form 10-K for information regarding,

among other things, revenues from external customers, a

Information section of our website within four business

days following the date of such amendment or waiver.

measure of profit and loss and total assets with respect

ITEM 1A. RISK FACTORS

to each of our segments.

Corporate Headquarters and Employees
Our executive offices are located at 1311 Mamaroneck

If any of the following risks actually occur, our business,

results of operations and financial condition would likely

suffer. This section includes or refers to certain forward-

looking statements. Refer to the explanation of the

Avenue, Suite 260, White Plains, New York 10605, and

qualifications and limitations on such forward-looking

our telephone number is (914) 288-8100. As of

statements discussed in the beginning of this Form 10-K.

December 31, 2011, we had 114 employees, of which

92 were located at our executive office and 22 were

10 Acadia Realty Trust 2011 Annual Report

19011

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 insolvency 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 customer

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 rent for the balance of the lease term (“going

dark”) as would the departure of a “shadow” anchor

tenant that owns its own property. In addition, in the

event that certain major tenants cease to occupy a

property, such an action may result in a significant

number of other tenants having the right to terminate

their leases, or pay a reduced rent based on a

percentage of the tenant’s sales, at the affected

property, which could adversely affect the future income

from such property (“co-tenancy”). See “Item 2.

Properties — Major Tenants” for quantified information

with respect to the percentage of our minimum 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.
Upon the expiration of current leases for space located in

our properties, we may not be able to re-let all or a

portion of that space, or the terms of re-letting (including

the cost of concessions to tenants) may be less

favorable to us than current lease terms. If we are

unable to re-let promptly all or a substantial portion of

the space located in our properties or if the rental rates

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 redevelopment projects.
Our operations and performance depend on general

economic conditions, including the health of the

consumer. The U.S. economy recently experienced a

financial downturn, with a decline in consumer spending,

credit tightening and high unemployment. This economic

downturn has had, and may continue to have, an adverse

affect on 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.

The current downturn has had, and may continue to

have, an unprecedented impact on the global credit

markets. While we currently believe we have adequate

sources of liquidity, there can be no assurance that we

will be able to obtain mortgage loans to purchase

additional properties, obtain financing to complete current

redevelopment projects, or successfully refinance our

properties as loans become due. To the extent that the

availability of credit is limited, it would also adversely

impact our notes receivable 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 property values. Furthermore, the impact of vacated

anchor space and the potential reduction in customer

traffic may adversely impact the balance of tenants at a

shopping center.

we receive upon re-letting are significantly lower than

Certain of our tenants have experienced financial

current rates, our net income and ability to make

expected distributions to our shareholders will be

adversely affected due to the resulting reduction in

revenues. 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 —

difficulties and have filed for bankruptcy under Chapter

11 of the United States Bankruptcy Code (“Chapter 11

Bankruptcy”). Pursuant to bankruptcy law, tenants have

the right to reject their leases. In the event the tenant

exercises this right, the landlord generally has the right

to file a claim for lost rent equal to the greater of either

Lease Expirations” in this Annual Report on Form 10-K

one year’s rent (including tenant expense

for additional information as to the scheduled lease

reimbursements) for remaining terms greater than one

expirations in our portfolio.

Acadia Realty Trust 2011 Annual Report

60527

year, or 15% of the rent remaining under the balance of

potential liability under, and changes in, environmental,

the lease term, but not to exceed three years rent.

zoning, tax and other laws. A significant portion of our

Actual amounts to be received in satisfaction of those

income is derived from rental income from real property.

claims will be subject to the tenant’s final plan of

Our income and cash flow would be adversely affected if

reorganization and the availability of funds to pay its

we were unable to rent our vacant space to viable

creditors.

tenants on economically favorable terms. In the event of

Since January 1, 2010, there have been two significant

tenant bankruptcies within our portfolio:

During February 2012, the United Retail Group, which

owns and operates Avenue, filed for protection under

Chapter 11 Bankruptcy. Avenue operates in four locations

in our Core Portfolio, totaling approximately 25,000

default by a tenant, we may experience delays in

enforcing, and incur substantial costs to enforce, our

rights as a landlord. In addition, certain significant

expenditures associated with each equity investment

(such as mortgage payments, real estate taxes and

maintenance costs) are generally not reduced even

though there may be a reduction in income from the

square feet. Rental revenues from Avenue at these four

locations totaled $0.7 million for each the years ended

investment.

December 31, 2011, 2010 and 2009. United Retail Group

has neither affirmed nor rejected any of the leases at

any of our locations.

On December 12, 2010, the Great Atlantic & Pacific Tea

Company, Inc. (“A&P”) filed for protection under Chapter

11 Bankruptcy. At the time of filing, A&P was a tenant in

five of our properties. A&P has affirmed three of its

leases. It now operates in two locations in our Core

Portfolio, totaling approximately 97,000 square feet.

Rental revenues from A&P at these two locations totaled

$2.0 million, $2.0 million and $1.9 million for the years

ended December 31, 2011, 2010 and 2009, respectively.

In addition, A&P operates in one Fund III location,

totaling approximately 65,000 square feet. Rental

revenues from A&P at this location totaled $1.0 million

for each of the years ended December 31, 2011, 2010

and 2009. A&P has filed a plan of reorganization.

There are risks relating to investments in real estate.
Real property investments are subject to multiple risks.

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

adequate maintenance and insurance and to control

variable operating costs. Shopping centers, in particular,

may be affected by changing perceptions of retailers or

shoppers regarding the safety, convenience and

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 is limited.

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. We could change our investment,

disposition and financing policies without a vote of our

shareholders.

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. In
addition, the viability of the interest rate hedges we
use is subject to the strength of the counterparties.
We have incurred, and expect to continue to incur,

indebtedness to support our activities. Neither our

Declaration 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 obligations 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.

attractiveness of the shopping center and by the overall

Interest expense on our variable rate debt as of

climate for the retail industry. Real estate values are also

December 31, 2011 would increase by $4.3 million

affected by such factors as government regulations,

annually for a 100 basis point increase in interest rates.

interest rate levels, the availability of financing and

We may seek additional variable-rate financing if and

12 Acadia Realty Trust 2011 Annual Report

30400

when pricing and other commercial and financial terms

administrative and financial resources. The continued

warrant. As such, we would consider hedging against the

growth of our real estate portfolio can be expected to

interest rate risk related to such additional variable rate

continue to place a significant strain on our resources.

debt, primarily through interest rate swaps but can use

Our future performance will depend in part on our ability

other means.

We enter into interest rate hedging transactions,

including interest rate swaps and cap agreements, with

counterparties. There can be no guarantee that the future

financial condition of these counterparties will enable

them to fulfill their obligations under these agreements.

Competition may adversely affect our ability to
purchase 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

companies, pension funds, private companies and

individuals. This competition may result in a higher cost

for properties than we wish to pay. In addition, retailers

at our properties (both in our Core Portfolio and in the

portfolios of the Opportunity Funds) face increasing

competition from outlet malls, discount shopping clubs,

internet commerce, direct mail and telemarketing, which

could (i) reduce rents payable to us and (ii) reduce our

ability to attract and retain tenants at our properties

to successfully attract and retain qualified management

personnel to manage the growth and operations of our

business. In addition, the acquired properties 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 the properties.

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

acquisitions through our Operating Partnership and co-

investment programs such as our Opportunity Funds. In

the context of our business plan, “redevelopment”

generally means an expansion or renovation of an

existing property. The consummation of any future

acquisitions will be subject to satisfactory completion 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

properties, negotiating with new or existing tenants or

securing acceptable financing.

leading to increased vacancy rates at our properties.

Acquisitions of additional properties entail the risk that

We could be adversely affected by poor market
conditions where our 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 and 76% of annual base

rents within our Opportunity Funds’ portfolios. Our

operating results could be adversely affected if market

investments will fail to perform in accordance with

expectations, including operating and leasing

expectations. Redevelopment is subject to numerous

risks, including risks of construction delays, cost overruns

or uncontrollable events that may increase project costs,

new project commencement risks such as the receipt of

zoning, occupancy and other required governmental

approvals and permits, and incurring development costs

in connection with projects that are not pursued to

completion.

conditions, such as an oversupply of space or a reduction

A component of our growth strategy is through private-

in demand for real estate, in this area occurs.

equity type investments made through our RCP Venture.

We have pursued, and may in the future continue
to pursue extensive growth opportunities, which
may result in significant demands on our
operational, administrative and financial resources.
We are pursuing extensive growth opportunities. This

expansion places significant demands on our operational,

These include investments in operating retailers. The

inability of the retailers to operate profitably would have

an adverse impact on income realized from these

investments. Through our investments in joint ventures

we have also invested in operating businesses that have

operational risk in addition to the risks associated with

real estate investments, including among other risks,

Acadia Realty Trust 2011 Annual Report

76804

human capital issues, adequate supply of product and

co-venturer may take action contrary to our instructions,

material, and merchandising issues.

requests, policies or objectives, including our policy with

We operate through a partnership structure, which
could have an adverse effect on our ability to
manage 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

respect to maintaining our qualification as a REIT. Other

risks of joint venture investments include impasse on

decisions, such as a sale, because neither we nor a joint

venture partner would have full control over the joint

venture. Also, there is no limitation under our

organizational documents as to the amount of our funds

that may be invested in joint ventures.

Partnership may permit certain tax deferral advantages to

Any disputes that may arise between joint venture

limited partners who contribute properties to the

partners and us may result in litigation or arbitration that

Operating Partnership. Since properties contributed to the

would increase our expenses and prevent our officers

Operating Partnership may have unrealized gain

and/or directors from focusing their time and effort on

attributable to the difference between the fair market

our business. Consequently, actions by or disputes with

value and adjusted tax basis in such properties prior to

joint venture partners might result in subjecting

contribution, the sale of such properties could cause

properties owned by the joint venture to additional risk.

adverse tax consequences to the limited partners who

In addition, we may in certain circumstances be liable for

contributed such properties. Although we, as the general

the actions of our third-party joint venture partners.

partner of the Operating 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 consequences to the limited

partners who contribute such properties. Such

restrictions could result in significantly reduced flexibility

to manage our assets.

Exclusivity obligation to our Opportunity Funds.
Under the terms of our Opportunity Funds, we are

required to first offer to our current fund, all of our

opportunities to acquire retail shopping centers with

limited exceptions. We may only pursue opportunities to

acquire retail shopping centers directly if (i) the

ownership of the acquisition opportunity by Fund III

would create a material conflict of interest for us; (ii) we

require the acquisition opportunity for a “like-kind”

exchange; or (iii) the consideration payable for the

acquisition opportunity is our Common Shares, OP Units

or other securities. As a result, we may not be able to

make attractive acquisitions directly and instead may only

receive a minority interest in such acquisitions through

Fund III.

Risks of joint ventures.
Partnership or joint venture investments may involve

risks not otherwise present for investments made solely

by us, including the possibility that our partner or co-

venturer might become bankrupt, and that our partner or

During 2011, 2010 and 2009, 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.

These factors could limit the return that we receive from

such investments or cause our cash flows to be lower

than our estimates. In addition, a partner or co-venturer

may not have access to sufficient capital to satisfy its

funding obligations to the joint venture.

Market factors could have an adverse effect on
our share price and our ability to access the
public equity markets.
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.

The loss of a key executive officer could have an
adverse effect on us.
Our success depends on the contribution of key

management members. The loss of the services of

Kenneth F. Bernstein, President and Chief Executive

Officer, or other key executive-level employees could

have a material adverse effect on our results of

14 Acadia Realty Trust 2011 Annual Report

76526

operations. We have obtained key-man life insurance for

Differences in timing between the receipt of income and

Mr. Bernstein. In addition, we have entered into an

the payment of expenses in determining our income as

employment agreement with Mr. Bernstein; however, it

well as required debt amortization payments and the

can be terminated by Mr. Bernstein in his discretion. We

capitalization of certain expenses could require us to

have not entered into employment agreements with

borrow funds on a short-term basis to meet the

other key executive-level employees.

distribution requirements that are necessary to achieve

Our Board of Trustees may change our investment
policy without shareholder approval.
Our Board of Trustees may determine to change our

investment 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

the tax benefits associated with qualifying as a REIT. The

distribution requirements also severely limit our ability to

retain earnings to acquire and improve properties or

retire outstanding debt.

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

number of properties in which we may seek to invest or

requirements for qualification as a REIT for federal

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

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,

and policies, it may do so at any time without a vote by

qualification as a REIT involves the application of highly

our shareholders. Accordingly, the results of decisions

made by our Board of Trustees and implemented by

technical and complex provisions of the Internal Revenue

Code, for which there are only limited judicial or

management may or may not serve the interests of all of

administrative interpretations. No assurance can be given

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.
To maintain our status as a REIT for federal income tax

purposes, we are generally required to distribute to our

shareholders at least 90% of our taxable income for each

calendar year. Pursuant to IRS pronouncements, up to

90% of such distribution may be made in Common

Shares rather than cash. Our taxable income is

determined without regard to any deduction for dividends

paid and by excluding net capital gains. To the extent

that we satisfy the distribution requirement, but

distribute less than 100% of our taxable income, we will

be subject to federal corporate income tax on our

undistributed income. In addition, we will incur a 4%

nondeductible excise tax on the amount, if any, by which

our distributions in any year are less than the sum of (i)

85% of our ordinary income for that year; (ii) 95% of our

capital gain net income for that year and; (iii) 100% of

our undistributed taxable income from prior years. We

intend to continue to make distributions to our

shareholders to comply with the distribution requirements

of the Internal Revenue Code and to minimize exposure

to federal income and nondeductible excise taxes.

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

continue to qualify as a REIT. In addition, no assurance

can be given that future legislation, regulations,

administrative interpretations or court decisions will not

significantly change the requirements for qualification as

a REIT or adversely affect the federal income tax

consequences of such qualification. Under current law, if

we fail to qualify as a REIT, we would not be allowed a

deduction for dividends paid to shareholders in

computing our net taxable income. In addition, our

income would be subject to tax at the regular corporate

rates. We also could be disqualified from treatment as a

REIT for the four taxable years following the year during

which qualification was lost. Cash available for

distribution to our shareholders would be significantly

reduced for each year in which we do not qualify as a

REIT. In that event, we would not be required to

continue to make distributions. Although we currently

intend to continue to qualify as a REIT, it is possible that

future economic, market, legal, tax or other

considerations may cause us, without the consent of our

Acadia Realty Trust 2011 Annual Report

16900

shareholders, to revoke the REIT election or to otherwise

take action that would result in disqualification.

Limits on ownership of our capital shares.
For us 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 such capital shares must be beneficially

owned by 100 or more persons during at least 335 days

of a taxable year of 12 months or during a proportionate

part of a shorter taxable year (in each case, other than

the first such year). Our Declaration of Trust includes

certain restrictions regarding transfers of our capital

shares and ownership limits that are intended to assist

us in satisfying these limitations, among other purposes.

These restrictions and limits may not be adequate in all

cases, however, to prevent the transfer of our capital

shares in violation of the ownership limitations. The

ownership limit discussed above may have the effect of

delaying, deferring or preventing someone from taking

control of us.

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

subject to purchase by us at a price equal to the fair

market value of such shares (determined in accordance

with the rules set forth in our Declaration of Trust). As a

result, if a violative transfer were made, the recipient of

the shares would not acquire any economic or voting

rights attributable to the transferred shares. Additionally,

the constructive ownership rules for these limits are

complex and groups of related individuals or entities may

be deemed a single owner and consequently in violation

of the share ownership limits.

Concentration of ownership by certain investors.
As of December 31, 2011, eight institutional shareholders

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

preferred 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 interests of the

shareholders.

In addition, we have entered into an employment

agreement with our Chief Executive Officer and

severance agreements are in place with our executives

which provide that, upon the occurrence of a change in

control of us and either the termination of their

employment without cause (as defined) or their

resignation for good reason (as defined), those executive

officers would be entitled to certain termination or

severance payments made by us (which may include a

lump sum payment equal to defined percentages of

annual salary and prior years’ average bonuses, paid in

accordance with the terms and conditions of the

respective agreement), which could deter a change of

control of us that could be in the best interests of the

shareholders.

Certain provisions of Maryland law may limit the
ability of a third party to acquire control of our
Company.
Under the Maryland General Corporation Law, as

amended, which we refer to as the “MGCL,” as

applicable to REITs, certain “business combinations,”

including certain mergers, consolidations, share

exchanges and asset transfers and certain issuances and

reclassifications of equity securities, between a Maryland

REIT and any person who beneficially owns 10% or

more of the voting power of the trust’s outstanding

voting shares or an affiliate or an associate, as defined in

the MGCL, of the trust who, at any time within the two-

year period immediately prior to the date in question,

was the beneficial owner of 10% or more of the voting

power of the then-outstanding shares of beneficial

own 5% or more individually, and 70.8% in the

interest of the trust, which we refer to as an “interested

aggregate, of our Common Shares. A significant

shareholder,” or an affiliate of the interested shareholder,

concentration of ownership may allow an investor or a

are prohibited for five years after the most recent date

group of investors to exert a greater influence over our

on which the interested shareholder becomes an

management and affairs and may have the effect of

interested shareholder. After that five-year period, any

delaying, deferring or preventing a change in control of

such business combination must be recommended by

us.

the board of trustees of the trust and approved by the

affirmative vote of at least (1) 80% of the votes entitled

16 Acadia Realty Trust 2011 Annual Report

88266

to be cast by holders of outstanding voting shares of

regardless of what is currently provided in our

beneficial interest of the trust and (2) two-thirds of the

Declaration of Trust or Bylaws, to elect to be subject to

votes entitled to be cast by holders of voting shares of

certain provisions relating to corporate governance that

the trust other than shares held by the interested

may have the effect of delaying, deferring or preventing

shareholder with whom, or with whose affiliate, the

a transaction or a change of control of our Company that

business combination is to be effected or held by an

might involve a premium to the market price of our

affiliate or associate of the interested shareholder,

Common Shares or otherwise be in the best interests of

unless, among other conditions, the trust’s common

our shareholders. We are subject to some of these

shareholders receive a minimum price, as defined in the

provisions (for example, a two-thirds vote requirement for

MGCL, for their shares and the consideration is received

removing a trustee) by provisions of our Declaration of

in cash or in the same form as previously paid by the

Trust and Bylaws unrelated to Subtitle 8.

interested shareholder for its common shares.

Becoming subject to, or the potential to become subject

These provisions of the MGCL do not apply, however, to

to, these provisions of the MGCL could inhibit, delay or

business combinations that are approved or exempted by

prevent a transaction or a change of control of our

the board of trustees of the trust before the interested

Company that might involve a premium price for our

shareholder becomes an interested shareholder, and a

shareholders or otherwise be in our or their best

person is not an interested shareholder if the board of

interests. In addition, the provisions of our Declaration of

trustees approved in advance the transaction by which

Trust on removal of trustees and the provisions of our

the person otherwise would have become an interested

Bylaws regarding advance notice of shareholder

shareholder. In approving a transaction, our Board of

nominations of trustees and other business proposals

Trustees may provide that its approval is subject to

and restricting shareholder action outside of a

compliance, at or after the time of approval, with any

shareholders meeting unless such action is taken by

terms and conditions determined by the Board.

unanimous written consent could have a similar effect.

The MGCL also provides that holders of “control shares”

of a Maryland REIT (defined as voting shares that, when

aggregated with all other shares owned by the acquirer

or in respect of which the acquirer is entitled to exercise

or direct the exercise of voting power (except solely by

Our rights and shareholders’ rights to take action
against trustees and officers are limited, which
could limit recourse in the event of actions not in
the best interests of shareholders.
As permitted by Maryland law, our Declaration of Trust

virtue of a revocable proxy), would entitle the acquirer to

eliminates the liability of our trustees and officers to the

exercise one of three increasing ranges of voting power

Company and its shareholders for money damages,

in electing trustees) acquired in a “control share

except for liability resulting from:

acquisition” (defined as the direct or indirect acquisition

of ownership or control of “control shares”) have no

voting rights except to the extent approved by the

affirmative vote of holders of at least two-thirds of all the

votes entitled to be cast on the matter, excluding shares

owned by the acquirer, by officers or by employees who

(cid:2) actual receipt of an improper benefit or profit in

money, property or services; or

(cid:2) a final judgment based upon a finding of active and

deliberate dishonesty by the trustee or officer that was

material to the cause of action adjudicated.

are also trustees of the trust. Our Bylaws provide that

In addition, our Declaration of Trust authorizes, and our

the control share acquisition statute shall not apply to

Bylaws obligate, us to indemnify each present or former

shares acquired or owned, directly or indirectly, by any

trustee or officer, to the maximum extent permitted by

person acting in concert with any group (as defined in

Maryland law, who is made a party to any proceeding

Section 13 of the Exchange Act and the rules

because of his or her service to our Company. As part of

thereunder). Our Bylaws can be amended by our Board

these indemnification obligations, we may be obligated to

of Trustees by majority vote, and there can be no

fund the defense costs incurred by our trustees and

assurance that this provision will not be amended or

officers.

eliminated at any time in the future.

Additionally, Title 3, Subtitle 8 of the MGCL permits our

Board of Trustees, without shareholder approval and

Acadia Realty Trust 2011 Annual Report

94240

Legislative or regulatory tax changes could have
an adverse effect on us.
There are a number of issues associated with an

investment in a REIT that are related to the federal

income tax laws, including, but not limited to, the

consequences of our failing to continue to qualify as a

REIT. At any time, the federal income tax laws governing

REITs or the administrative interpretations of those laws

may be amended or modified. Any new laws or

interpretations may take effect retroactively and could

adversely affect us or our shareholders. Reduced tax

rates applicable to certain corporate dividends paid to

most domestic noncorporate shareholders are not

generally available to REIT shareholders since a REITs

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 noncorporate investors. This could

adversely affect the market price of our shares.

Our development and construction activities could
affect our operating results.
We intend to continue the selective development and

construction of retail properties, with our project at

CityPoint currently being our largest development project

(see “Item 1. BUSINESS — PROPERTY ACQUISITIONS

— Opportunity Funds — Fund II New York Urban/Infill

Redevelopment Initiative — Under Construction” for a

description of the CityPoint project).

As opportunities arise, we expect to delay construction

until sufficient pre-leasing is reached and financing is in

place. Our development and construction activities

include risks that:

(cid:2) We may abandon development opportunities after

expending resources to determine feasibility;

(cid:2) Construction costs of a project may exceed our original

estimates;

(cid:2) Occupancy rates and rents at a newly completed

building, occupancy and other required governmental

permits and authorizations.

Additionally, the time frame required for development,

construction and lease-up of these properties means that

we may not realize a significant cash return for several

years. If any of the above events occur, the development

of properties may hinder our growth and have an

adverse effect on our results of operations and cash

flows. In addition, new development activities, regardless

of whether or not they are ultimately successful, typically

require substantial time and attention from management.

Redevelopments and acquisitions may fail to
perform as expected.
Our investment strategy includes the redevelopment and

acquisition of shopping centers in supply constrained

markets in densely populated areas with high average

household incomes and significant barriers to entry. The

redevelopment and acquisition of properties entails risks

that include the following, any of which could adversely

affect our results of operations and our ability to meet

our obligations:

(cid:2) The property may fail to achieve the returns we have
projected, either temporarily or for extended periods;

(cid:2) We may not be able to identify suitable properties to
acquire or may be unable to complete the acquisition

of the properties we identify;

(cid:2) We may not be able to integrate an acquisition into

our existing operations successfully;

(cid:2) Properties we redevelop or acquire may fail to achieve
the occupancy or rental rates we project, within the

time frames we project, at the time we make the

decision to invest, which may result in the properties’

failure to achieve the returns we projected;

(cid:2) Our pre-acquisition evaluation of the physical condition

of each new investment may not detect certain

defects or identify necessary repairs until after the

property may not be sufficient to make the property

property is acquired, which could significantly increase

profitable;

our total acquisition costs or decrease cash flow from

(cid:2) Financing for development of a property may not be

the property; and

available to us on favorable terms;

(cid:2) We may not complete construction and lease-up on

schedule, resulting in increased debt service expense

and construction costs; and

(cid:2) We may not be able to obtain, or may experience
delays in obtaining necessary zoning, land use,

18 Acadia Realty Trust 2011 Annual Report

(cid:2) Our investigation of a property or building prior to our
acquisition, and any representations we may receive

from the seller of such building or property, may fail to

reveal various liabilities, which could reduce the cash

flow from the property or increase our acquisition cost.

92713

Climate change and catastrophic risk from natural
perils.
Some of our current properties could be subject to

potential natural or other disasters. We may acquire

properties that are located in areas which are subject to

natural disasters. Any properties located in coastal

regions would therefore be affected by any future

increases in sea levels or in the frequency or severity of

hurricanes and tropical storms, whether such increases

are caused by global climate changes or other factors.

Climate change is a long-term change in the statistical

distribution of weather patterns over periods of time that

range from decades to millions of years. It may be a

change in the average weather conditions or a change in

(cid:2) Decreased consumer demand for consumer products
or services resulting from physical changes associated

with climate change (e.g., warmer temperatures or

decreasing shoreline could reduce demand for

residential and commercial properties previously

viewed as desirable);

(cid:2) Incorrect long term valuation of an equity investment
due to changing conditions not previously anticipated

at the time of the investment; and

(cid:2) Economic disruptions arising from the above.

Possible liability relating to environmental
matters.
Under various federal, state and local environmental

the distribution of weather events with respect to an

laws, statutes, ordinances, rules and regulations, as an

average, for example, greater or fewer extreme weather

owner of real property, we may be liable for the costs of

events. Climate change may be limited to a specific

region, or may occur across the whole Earth.

There may be significant physical effects of climate

change that have the potential to have a material effect

on our business and operations. These effects can

impact our personnel, physical assets, tenants and overall

operations.

Physical impacts of climate change may include:

(cid:2) Increased storm intensity and severity of weather (e.g.,

floods or hurricanes);

(cid:2) Sea level rise; and

(cid:2) Extreme temperatures.

As a result of these physical impacts from climate-related

events, we may be vulnerable to the following:

(cid:2) Risks of property damage to our shopping centers;

(cid:2) Indirect financial and operational impacts from

removal or remediation of certain hazardous or toxic

substances at, on, in or under our property, as well as

certain other potential costs relating to hazardous or toxic

substances (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 of, or were responsible for, the

presence or disposal of those substances. This liability

may be imposed on us in connection with the activities

of an operator of, or tenant at, the property. The cost of

any required remediation, removal, fines or personal or

property damages and our liability therefore could exceed

the value of the property and/or our aggregate assets. In

addition, the presence of 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 property as collateral, which, in turn,

could reduce our revenues and affect our ability to make

disruptions to the operations of major tenants located

distributions.

in our shopping centers from severe weather, such as

A property can also be adversely affected either through

hurricanes or floods;

physical contamination or by virtue of an adverse effect

(cid:2) Increased insurance premiums and deductibles, or a

upon value attributable to the migration of hazardous or

decrease in the availability of coverage, for properties

toxic substances, or other contaminants that have or may

in areas subject to severe weather;

(cid:2) Increased insurance claims and liabilities;

(cid:2) Increases in energy costs impacting operational

returns;

have emanated from other properties. Although our

tenants are primarily responsible for any environmental

damages and claims related to the leased premises, in

the event of the bankruptcy or inability of any of our

tenants to satisfy any obligations with respect to the

(cid:2) Changes in the availability or quality of water, or other

property leased to that tenant, we may be required to

natural resources on which the tenant’s business

satisfy such obligations. In addition, we may be held

depends;

directly liable for any such damages or claims

irrespective of the provisions of any lease.

Acadia Realty Trust 2011 Annual Report

50826

From time to time, in connection with the conduct of our

financial obligations related to the property. Any loss of

business, and prior to the acquisition of any property

these types would adversely affect our financial

from a third party or as required by our financing

condition.

sources, we authorize the preparation of Phase I

environmental reports and, when necessary, Phase II

environmental reports, with respect to our properties.

Based upon these environmental reports and our ongoing

review of our properties, we are currently not aware of

any environmental condition with respect to any of our

properties that we believe would be reasonably likely to

have a material adverse effect on us. There can be no

assurance, however, that the environmental reports will

reveal all environmental conditions at our properties or

that the following will not expose us to material liability

in the future:

(cid:2) The discovery of previously unknown environmental

conditions;

(cid:2) Changes in law;

(cid:2) Activities of tenants; and

(cid:2) Activities relating to properties in the vicinity of our

properties.

Future terrorist attacks or civil unrest could harm
the demand for, and the value of, our properties.
Future terrorist attacks or civil unrest, such as the

attacks that occurred in New York, Pennsylvania and

Washington, D.C. on September 11, 2001, and other acts

of terrorism or war, could harm the demand for, and the

value of, our properties. Terrorist attacks could directly

impact the value of our properties through damage,

destruction, loss or increased security costs, and the

availability of insurance for such acts may be limited or

may be subject to substantial cost increases. To the

extent that our tenants are impacted by future attacks,

their ability to continue to honor obligations under their

existing leases could be adversely affected. A decrease

in retail demand could make it difficult for us to renew or

re-lease our properties at lease rates equal to or above

historical rates. These acts might erode business and

consumer confidence and spending, and might result in

increased volatility in national and international financial

Changes in laws increasing the potential liability for

markets and economies. Any one of these events might

environmental conditions existing on properties or

decrease demand for real estate, decrease or delay the

increasing the restrictions on discharges or other

occupancy of our properties, and limit our access to

conditions may result in significant unanticipated

capital or increase our cost of raising capital.

expenditures or may otherwise adversely affect the

operations of our tenants, which could adversely affect

our financial condition or results of operations.

Uninsured losses or a loss in excess of insured
limits 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 insured limits customarily carried for

similar properties. However, with respect to those

properties where the leases do not provide for

abatement of rent under any circumstances, we generally

do not maintain loss of rent insurance. In addition, there

are certain types of losses, such as losses resulting from

Outages, computer viruses and similar events
could disrupt our operations.
We rely on information technology networks and

systems, some of which are owned and operated by

third parties, to process, transmit and store electronic

information. Any of these systems may be susceptible to

outages due to fire, floods, power loss,

telecommunications failures, terrorist attacks and similar

events. Despite the implementation of network security

measures, our systems and those of third parties on

which we rely may also be vulnerable to computer

viruses and similar disruptions. If we and the third parties

on whom we rely are unable to prevent such outages

and breaches, our operations could be disrupted.

wars, terrorism or acts of God that generally are not

ITEM 1B. UNRESOLVED STAFF COMMENTS.

insured because they are either uninsurable or not

None.

economically insurable. Should an uninsured loss or a

loss in excess of insured limits occur, we could lose

capital invested in a property, as well as the anticipated

future revenues from a property, while remaining

obligated for any mortgage indebtedness or other

20 Acadia Realty Trust 2011 Annual Report

60414

ITEM 2. PROPERTIES.

Shopping Center Properties
The discussion and tables in this Item 2. include

majority of our rental revenues were from national

retailers. A majority of the income from the properties

consists of rent received under long-term leases. These

leases generally provide for the payment of fixed

properties held through our Core Portfolio and our

minimum rent monthly in advance and for the payment

Opportunity Funds. We define our Core Portfolio as

by tenants of a pro-rata share of the real estate taxes,

those properties either 100% owned by, or partially

insurance, utilities and common area maintenance of the

owned through joint venture interests by, the Operating

shopping centers. Minimum rents and expense

Partnership, or subsidiaries thereof, not including those

reimbursements accounted for approximately 89% of our

properties owned through our Opportunity Funds. The

total revenues for the year ended December 31, 2011.

discussion of the Opportunity Funds does not include our

investment in a portfolio of self-storage properties, which

are detailed separately within this Item 2.

Certain of our leases also provided for the payment of

percentage rents either in addition to, or in place of,

minimum rents. These arrangements generally provide

As of December 31, 2011, there are 48 operating

for payment to us of a certain percentage of a tenant’s

properties in our Core Portfolio totaling approximately 5.0

gross sales in excess of a stipulated annual amount.

million square feet of gross leasable area (“GLA”). The

Percentage rents accounted for less than 1% of our total

Core Portfolio properties are located in 12 states and the

2011 revenues.

District of Columbia and are generally well-established

urban/street retail locations and community and

neighborhood shopping centers. Our shopping centers

are predominately anchored by supermarkets or value-

oriented retail. The properties are diverse in size, ranging

from approximately 3,000 to 875,000 square feet and as

of December 31, 2011, were, in total, 91% occupied.

As of December 31, 2011, we owned and operated 19

properties totaling 2.5 million square feet of GLA in our

Opportunity Funds, excluding three properties under

redevelopment. 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 nine states and as of December 31, 2011, were, in

total, 87% occupied.

Within our Core Portfolio and Opportunity Funds, we had

approximately 600 leases as of December 31, 2011. A

Three of our Core Portfolio properties and six 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 nine locations.

No individual property contributed in excess of 10% of

our total revenues for the years ended December 31,

2011, 2010 or 2009. Reference is made to Note 8 to our

Consolidated Financial Statements, which begin on page

F-1 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, 2011:

Acadia Realty Trust 2011 Annual Report

20631

Shopping Center

Location

Year
Constructed (C)
Acquired (A)

Ownership
Interest

GLA

Occupancy %
12/31/11(1)

Annual
Base
Rent

Annual
Base
Rent
PSF

Anchor Tenants
Current Lease Expiration/
Lease Option Expiration

Core Portfolio

NEW YORK
Connecticut

239 Greenwich Avenue
New Jersey

Greenwich

1998 (A)

Fee/JV

16,834 (2)

100%

$ 1,554,663 $ 92.35

Elmwood Park Shopping Center Elmwood

1998 (A)

Fee

149,262

92%

3,364,939

24.58 A&P 2017/2052

Park

Walgreen’s 2022/2062

A&P Shopping Plaza
New York

Boonton

2006 (A)

Fee/JV

62,741

97%

1,284,146

21.08 A&P 2024/2054

Village Commons Shopping

Smithtown

1998 (A)

Fee

87,330

91%

2,409,990

30.22

Center

Branch Shopping Plaza (3)

Smithtown

Amboy Road

Bartow Avenue

Staten
Island

Bronx

Pacesetter Park Shopping

Pomona

Center

West Shore Expressway

West 54th Street

East 17th Street

Staten
Island

Manhattan

Crossroads Shopping Center

White Plains

1998 (A)

2005 (A)

2005 (C)

1999 (A)

2007 (A)

2008 (A)

1998 (A)

LI (4)

Fee

9,693

19,622

Fee/JV (5)

309,487

Third Avenue

Mercer Street

Bronx

Manhattan

4401 White Plains Road

Bronx

Total New York Region

2006 (A)

2011 (A)

Fee

39,367

6,225

12,964

1,065,883

126,212

60,090

14,676

96,380

46%

100%

89%

90%

1,570,504

27.35 CVS 2020/—

1,619,949

26.96 King Kullen 2028/2043

439,246

33.43

1,101,867

12.76 Stop & Shop 2020/2040

55,000

100%

1,265,000

23.00 LA Fitness 2022/2037

96%

100%

82%

81%

100%

84%

2,418,894

261.09

625,000

31.85 Barnes & Noble 2013/2018

5,590,135

22.10 Kmart 2012/2032

Barnes & Noble 2012/2022
Modell’s 2014/2019
Home Goods 2018/2033
20.85 Planet Fitness 2027/2042

59.76

48.21

666,631

372,000

625,000

$24,907,964 $ 27.69

NEW ENGLAND
Connecticut

Town Line Plaza

Massachusetts

Rocky Hill

1998 (A)

Fee

206,346

99%

$ 1,672,273 $ 15.63 Stop & Shop 2024/2064

Wal-Mart(6)

7.86 Demoulas Market 2015/—
Wal-Mart 2016/2051

Methuen Shopping Center

Methuen

1998 (A)

Fee

130,021

100%

1,021,370

Crescent Plaza

Brockton

1984 (A)

Fee

218,137

91%

1,576,543

7.97 Supervalu 2012/2042

New York

New Loudon Center

Latham

1982 (A)

Fee

255,673

100%

1,959,124

Rhode Island

Walnut Hill Plaza

Woonsocket

1998 (A)

Fee

284,717

94%

2,408,508

Home Depot 2021/2056

7.66 Price Chopper 2015/2035
Marshall’s 2014/2029
Raymour and Flanigan 2019/2034
AC Moore 2014/2024
Hobby Lobby 2021/—

8.96 Supervalu 2013/2028
Sears 2013/2033
Savers 2013/2018
CVS 2012/—
Ocean State Job Lot 2012/—
Woonsocket Bowling 2021/—

Vermont

The Gateway Shopping Center

Total New England Region

South
Burlington

1999 (A)

Fee

101,655

93%

1,733,487

18.40 Supervalu 2024/2053

1,196,549

96%

$10,371,305 $

9.84

22 Acadia Realty Trust 2011 Annual Report

39438

Shopping Center

Location

Year
Constructed (C)
Acquired (A)

Ownership
Interest

GLA

Occupancy %
12/31/11(1)

Annual
Base
Rent

Annual
Base
Rent
PSF

Anchor Tenants
Current Lease Expiration/
Lease Option Expiration

MIDWEST

Illinois

Hobson West Plaza

Clark Diversey

West Diversey
Chicago Street Retail

Portfolio (7)

Indiana

Merrillville Plaza

Naperville

Chicago

Chicago
Chicago

1998 (A)

2006 (A)

2011 (A)
2011 (A)

Fee

Fee
Fee

99,125

19,265

46,259
24,374

96%

100%
100%

$ 1,117,715 $ 11.79 Garden Fresh Markets 2012/2032

810,154

43.93

1,757,463
1,279,938

37.99 Trader Joe’s
52.51

2021/2041

Merrillville

1998 (A)

Fee

235,824

92%

2,852,636

13.22 TJ Maxx 2019/2029

JC Penney 2013/2018

OfficeMax 2013/2028

K&G Fashion 2017/2027

Michigan

Bloomfield Town Square (8)

Bloomfield
Hills

Ohio

1998 (A)

Fee

236,418

69%

2,277,192

13.88 TJ Maxx 2019/2029

Home Goods 2016/2026

Best Buy 2021/2041

Mad River Station

Dayton

1999 (A)

Fee

125,984 (9)

81%

1,264,608

12.39 Babies ‘R’ Us 2015/2020

Total Midwest Region

MID-ATLANTIC

New Jersey

787,249

85%

$11,359,706 $ 17.06

Office Depot 2015/—

Marketplace of Absecon

Absecon

1998 (A)

Fee

104,762

72%

$ 1,231,831 $ 16.43 Rite Aid 2020/2040

White Horse Liquors 2019/—

Delaware

Brandywine Town Center

Wilmington

2003 (A)

Fee/JV (10)

874,989

97%

12,800,555

15.13 Bed, Bath & Beyond 2014/2029

Dick’s Sporting Goods 2013/2028

Lowe’s Home Centers 2018/2048

Target 2018/2058

HH Gregg 2020/2035

Market Square Shopping

Center

Wilmington

2003 (A)

Fee/JV (10)

102,047

98%

2,471,924

24.66 TJ Maxx 2016/2021

Trader Joe’s 2019/2034

Route 202 Shopping Center

Wilmington

2006 (C)

LI/JV (4) (10)

19,984

55%

558,340

50.89

Pennsylvania

Mark Plaza
Plaza 422

Edwardsville
Lebanon

1968 (C)
1972 (C)

LI/Fee (4)
Fee

216,401
156,279

86%
100%

823,922
795,852

4.45 Kmart 2014/2049
5.09 Home Depot 2028/2058

Dunham’s 2016/2031

Route 6 Mall

Honesdale

1994 (C)

Fee

175,519

100%

1,175,170

6.70 Kmart 2020/2070

Chestnut Hill (11) (12)

Abington Towne Center

Philadelphia

Abington

2006 (A)

1998 (A)

Fee

37,916

216,369

District of Columbia

Georgetown Portfolio (14)

Total Mid-Atlantic Region

Total Core Properties

Washington
D.C.

2011 (A)

Fee/JV

27,666

1,931,932

4,981,613

14%

99%

96%

93%

91%

Fashion Bug 2016/—

Advance Auto 2013/—

164,483

31.94

1,120,795

19.63 TJ Maxx 2016/2021

Target (13)

1,649,967

61.87

$22,792,839 $ 13.91

$69,431,814 $ 16.31

Acadia Realty Trust 2011 Annual Report

94263

Year
Constructed (C)
Acquired (A)

Ownership
Interest

GLA

Occupancy %
12/31/11(1)

Annual
Base
Rent

Annual
Base
Rent
PSF

Anchor Tenants
Current Lease Expiration/
Lease Option Expiration

Shopping Center

Location

Opportunity Fund Portfolio

Fund I Properties

New York

Tarrytown Shopping Center

Tarrytown

2004 (A)

Fee

34,979

85%

847,360 $ 28.40 Walgreen’s 2080/—

VARIOUS REGIONS
Kroger/Safeway Portfolio

3 locations
(15)

Total Fund I Properties

Fund II Properties

New York

Pelham Plaza

Pelham
Manor

2003 (A)

LI/JV (4)

97,500

69%

302,076

4.48 Kroger 2014/2049

132,479

73%

$ 1,149,436 $ 11.81

Safeway 2014/2044

2004 (A)

LI/JV (4)

228,493

91%

$ 5,622,651 $ 27.05 BJ’s Wholesale Club 2033/2053

Michaels 2013/2033
Petsmart 2021/2036

Fordham Place

Bronx

2004 (A)

Fee/JV

119,446

100%

5,519,760

46.21 Best Buy 2019/2039

Liberty Avenue

Canarsie Plaza

New York

Brooklyn

2005 (A)

2007 (A)

LI/JV (4)

Fee/JV

26,125

273,536

New York

Bronx

2005 (A)

Fee/JV

60,000

236,571
944,171

Sears 2023/2033

732,755

33.83 CVS 2032/2052

7,494,788

29.75 BJ’s Wholesale Club 2030/2055

Petsmart 2022/2037

2,460,000

41.00 City of New York 2027/2032

4,617,137

22.36 City of New York MTM

$26,447,091 $ 30.49

83%

92%

100%

87%
92%

216th Street

161st Street (19)
Total Fund II Properties

Fund III Properties

Connecticut

125 Main Street

New York

Cortlandt Towne Center

654 Broadway

New Hyde Park Shopping

Center

Massachusetts

Maryland

White Oak

Parkway Crossing

Florida

Lincoln Road

Illinois

Heritage Shops

Westport

2007 (A)

Fee/JV

27,033

80%

$ 1,639,550 $ 75.64 Gap 2021/2026

Mohegan
Lake

New York

New Hyde
Park

2009 (A)

Fee

641,211

90%

9,270,706

16.06 Walmart 2018/2048

A&P 2022/2047

Best Buy 2017/2032

Petsmart 2014/2034

2011 (A)

Fee

2,896

31,498

100%

91%

300,000

103.59

855,244

29.76

White City Shopping Center

Shrewsbury

2010 (A)

Fee/JV (16)

255,560

93%

5,184,956

21.85 Shaw’s 2018/2033

Michaels 2012/2022

Silver Spring

Baltimore

2011 (A)

Fee/JV (17)

64,626

Fee/JV (17)

260,264

100%

74%

874,416

13.53 Super Fresh 2021/2076

1,271,641

6.63 Home Depot 2032/—

Big Lots 2016/—

Miami

2011 (A)

Fee/JV (18)

61,443

35%

2,305,809

105.99

Chicago

2011 (A)

Fee

105,449

Total Fund III Properties

Total Opportunity Fund Operating Properties (20)

1,449,980

2,526,630

76%

85%

87%

2,621,122

32.69 LA Fitness 2025/2040

$24,323,444 $ 19.84

$51,919,971 $ 23.62

Notes:

(1) Does not include space for which lease term had not yet

commenced as of December 31, 2011.

(2) In addition to the 16,834 square feet of retail GLA, this

property also has 21 apartments comprising 14,434 square
feet.

(3) The vacant anchor space, formerly occupied by an A&P

store, is currently in the process of being re-anchored with
a replacement tenant.

(4) We are a ground lessee under a long-term ground lease.
(5) We have a 49% investment in this property.

24 Acadia Realty Trust 2011 Annual Report

32876

(6) Includes a 97,300 square foot Wal-Mart which is not

owned by us.

(7) Includes six properties (56 E. Walton, 841 W. Armitage,
2731 N. Clark, 2140 N. Clybourn, 853 W. Armitage and
2299 N. Clybourn).

(8) Re-anchoring activities at this property commenced during
second quarter 2011 and are expected to be completed
during 2012.

(9) The GLA for this property excludes 29,857 square feet of

office space.

(10) We have a 22% investment in this property.
(11) Property consists of two buildings.
(12) Does not include space leased but not yet occupied as of
December 31, 2011, aggregating 23,500 square feet.

(13) Includes a 157,616 square foot Target Store that is not

owned by us.

(14) Includes six properties (1533 Wisconsin Ave., 3025 M St.,
3034 M St., 3146 M St, 3259-61 M St., and 2809 M St.).
We have a 50% investment in this property.

(15) Three remaining assets including locations in Benton, AR,

Tulsa, OK and Indianapolis, IN.

(16) The Fund has an 84% investment in this property.
(17) The Fund has a 90% investment in this property.
(18) The Fund has a 95% investment in this property.
(19) Currently operating but re-tenanting activities have

commenced.

(20) In addition to the Opportunity Fund operating properties,

there are three properties under redevelopment; Sherman
Plaza (Fund II), CityPoint (Fund II) and Sheepshead Bay
(Fund III).

Acadia Realty Trust 2011 Annual Report

95994

Major Tenants
No individual retail tenant accounted for more than 4.1% of base rents for the year ended December 31, 2011 or

occupied more than 7.6% of total leased GLA as of December 31, 2011. The following table sets forth certain

information for the 20 largest retail tenants based upon base rents in place as of December 31, 2011. 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:

Retail Tenant

Supervalu (Shaw’s)
Ahold (Stop and Shop)
A&P
Walgreen’s
TJX Companies
BJ’s Wholesale Club
Sears
LA Fitness
Restoration Hardware
Home Depot
Stage Deli
Trader Joe’s
Price Chopper
Barnes & Noble
Walmart
Sleepy’s
Best Buy
Pier 1 Imports
CVS
JP Morgan Chase

Total

Notes:

Number of Stores
in Portfolio

Total GLA

Annualized
Base Rent (1)

Total Portfolio
GLA

Annualized Base
Rent

Percentage of Total
Represented by Retail Tenant (2)

5
3
4
6
9
4
6
1
1
4
1
2
1
4
2
8
5
5
5
6

186,489
155,177
90,391
45,337
190,172
60,695
341,638
64,926
12,293
230,895
4,211
19,094
87,709
30,758
115,420
34,532
43,227
25,454
36,454
19,126

$ 2,563,450
2,131,400
1,828,055
1,783,898
1,708,874
1,663,200
1,651,067
1,479,473
1,166,090
1,121,476
1,050,000
961,105
958,924
922,077
887,440
848,374
806,162
664,439
642,022
620,914

4.1%
3.5%
2.0%
1.0%
4.2%
1.4%
7.6%
1.4%
0.3%
5.1%
0.1%
0.4%
2.0%
0.7%
2.6%
0.8%
1.0%
0.6%
0.8%
0.4%

4.1%
3.4%
2.9%
2.9%
2.7%
2.7%
2.6%
2.4%
1.9%
1.8%
1.7%
1.5%
1.5%
1.5%
1.4%
1.4%
1.3%
1.1%
1.0%
1.0%

1,793,998

$25,458,440

40.0%

40.8%

(1) Base rents do not include percentage rents, additional rents for property expense reimbursements and contractual rent escalations

due after December 31, 2011.

(2) Represents percentage of 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.

26 Acadia Realty Trust 2011 Annual Report

92003

Lease Expirations
The following table shows scheduled lease expirations for retail tenants in place as of December 31, 2011, assuming

that none of the tenants exercise renewal options. (GLA and Annualized Base Rent in thousands):

Core Portfolio:

Leases maturing in

Month to Month
2012
2013
2014
2015
2016
2017
2018
2019
2020
Thereafter

Total

Annualized Base Rent (1)

GLA

Number of
Leases

Current
Annual Rent

Percentage
of Total

Square Feet

Percentage
of Total

1
53
62
63
40
51
18
28
20
15
42

64
6,041
8,931
8,834
6,747
6,677
5,344
7,399
2,021
2,986
14,388

—%
9%
13%
13%
10%
9%
8%
10%
3%
4%
21%

3
398
498
485
440
462
213
459
167
257
875

—%
9%
12%
11%
10%
11%
5%
11%
4%
6%
21%

393

$69,432

100%

4,257

100%

Opportunity Fund Portfolio:

Annualized Base Rent (1)

GLA

Number of
Leases

Current
Annual Rent

Percentage
of Total

Square Feet

Percentage
of Total

3
18
17
21
13
22
8
14
9
8
46

192
5,112
3,128
3,103
1,358
2,663
2,148
3,477
3,396
933
26,410

—%
10%
6%
6%
3%
5%
4%
7%
6%
2%
51%

179

$51,920

100%

15
237
128
193
58
111
76
266
67
31
1,009

2,191

1%
11%
6%
9%
3%
5%
3%
12%
3%
1%
46%

100%

Leases maturing in

Month to Month
2012
2013
2014
2015
2016
2017
2018
2019
2020
Thereafter

Total

Note:

(1) Base rents do not include percentage rents, additional rents for property expense reimbursements, nor contractual rent

escalations.

Acadia Realty Trust 2011 Annual Report

03581

Geographic Concentrations
The following table summarizes our retail properties by region as of December 31, 2011. The amounts below also

reflect properties that we invest in through joint ventures and that are held in our Opportunity Funds (GLA and

Annualized Base Rent in thousands):

Region

Core Portfolio:
Operating Properties:
New York Region
New England
Midwest
Mid-Atlantic

Total Core Operating Properties

Opportunity Fund Portfolio:
Operating Properties:
New York Region
New England
Midwest
Mid-Atlantic
Southeast
Other

Total Opportunity Fund Operating

Properties

Note:

GLA (1) Occupied % (2)

Annualized
Base Rent (2)

Annualized Base
Rent per Occupied
Square Foot

1,066
1,196
787
1,932

4,981

1,682
256
105
325
61
98

84%
96%
85%
93%

91%

91%
93%
76%
81%
35%
69%

$24,908
10,371
11,360
22,793

$69,432

$39,360
5,185
2,621
2,146
2,306
302

$ 27.69
9.84
17.06
13.91

$ 16.31

$ 25.76
21.85
32.69
8.12
105.99
4.48

Percentage of Total
Represented by Region

GLA

Annualized
Base Rent

21%
24%
16%
39%

36%
15%
16%
33%

100%

67%
10%
4%
13%
2%
4%

76%
10%
5%
4%
4%
1%

2,527

87%

$51,920

$ 23.62

100%

(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, 2011.

28 Acadia Realty Trust 2011 Annual Report

92723

Self-Storage Portfolio
During February 2008, we, through Fund III, acquired a

95% controlling interest in a portfolio of eleven self-

storage properties from Storage Post’s existing

portfolio, located throughout New York and New Jersey,

totals 1,124,135 net rentable square feet, and is

operating at various stages of stabilization as detailed in

the table below. The portfolio is operated by Self Storage

institutional investors for approximately $174.0 million. In

Management, a joint venture entity formed by Fund III

addition, we, through Fund II, developed three self-

and an unaffiliated partner.

storage properties. The fourteen self-storage property

Owner

Operating Properties

Location

Net Rentable
Square Feet

Occupancy as of
December 31, 2011

Fund III
Fund III
Fund III
Fund III
Fund III
Fund III
Fund III
Fund III

Fund III

Fund III
Fund III
Fund II
Fund II
Fund II

Stabilized
Suffern
Yonkers
Jersey City
Webster Ave
Linden
Bruckner Blvd
New Rochelle
Lawrence

Subtotal Stabilized

Redeveloped — in Lease-up
Long Island City

Subtotal in Lease-up

Total Operating Properties

In Initial Lease-up
Fordham Road
Ridgewood
Liberty Avenue
Pelham Plaza
Atlantic Avenue

Subtotal in Initial Lease-up

Total Self-Storage Portfolio

Suffern, New York
Westchester, New York
Jersey City, New Jersey
Bronx, New York
Linden, New Jersey
Bronx, New York
Westchester, New York
Lawrence, New York

Queens, New York

Bronx, New York
Queens, New York
Queens, New York
Pelham Manor, New York
Brooklyn, New York

78,825
100,697
76,920
36,339
84,035
89,422
42,155
97,743

606,136

134,193

740,329

85,155
87,645
72,900
62,220
75,886

89.9%

79.4%

85.3%

383,806

1,124,135

85.1%

87.0%

Acadia Realty Trust 2011 Annual Report

40434

ITEM 3. LEGAL PROCEEDINGS.

We are involved in various matters of litigation arising in

the normal course of business. While we are unable to

predict with any certainty the amounts involved,

management is of the opinion that, when such litigation

is resolved, our resulting exposure to loss contingencies,

if any, will not have a significant effect on our

consolidated financial position, results of operations, or

liquidity.

million under the severance agreement. Because we

terminated him for “cause,” we did not pay the Former

Employee any severance benefits under the agreement.

The Former Employee has brought a lawsuit against us

in New York State Supreme Court, alleging breach of the

severance agreement. The suit is in the pre-trial

discovery stage. We believe we have meritorious

defenses to the suit.

ITEM 4. MINE SAFETY DISCLOSURES.

In addition to the foregoing, we are currently involved in

Not applicable.

the following litigation matters:

In September 2008, the Company, certain of its

subsidiaries, and other unrelated entities (the “Investor

Consortium”) 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. The action involves five claims alleging

fraudulent transfers in which Mervyns is nominally

seeking approximately $1.175 billion in damages from the

Investor Consortium, although the actual claims made by

the administrator and the unsecured creditors are

substantially less. The first claim contends that, at the

time of the sale of Mervyns by Target Corporation to the

Investor Consortium, a transfer of assets was made in

an effort to defraud creditors. The Company believes that

this aspect of the case is without merit. The remaining

four claims relate to transfers of assets of Mervyns at

various times after the sale by Target. The Company

believes that there are substantial defenses to these

claims and intends to continue to defend them

vigorously. This matter is in the early stages of

discovery. The parties to this action have agreed to a

non-binding mediation, which is scheduled for the end of

March, 2012.

Because of the inherently unpredictable nature of

litigation, the Company could incur some amount of

liability in connection with this matter. However, at the

present time, there have not been sufficient

developments in this matter for us to estimate the

reasonably possible loss or range of loss that the

Company might incur as a result of this matter.

During August 2009, we terminated the employment of a

former Senior Vice President (the “Former Employee”)

for engaging in conduct that fell within the definition of

“cause” in his severance agreement with us. Had the

Former Employee not been terminated for “cause,” he

would have been eligible to receive approximately $0.9

30 Acadia Realty Trust 2011 Annual Report

71405

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER 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, 2011 and 2010:

Quarter Ended

High

Low

2011
March 31, 2011
June 30, 2011
September 30, 2011
December 31, 2011
2010
March 31, 2010
June 30, 2010
September 30, 2010
December 31, 2010

$19.80
20.99
21.97
20.72

$18.40
19.80
19.77
20.17

$17.86
18.63
17.82
17.85

$14.88
16.22
15.87
17.72

Dividend
Per Share

$0.1800
0.1800
0.1800
0.1800

ended December 31, 2011 was paid on February 1, 2012

and will be taxable in 2012. Our cash flow is affected by

a number of factors, including the revenues received

from rental properties, our operating expenses, the

interest expense on our borrowings, the ability of lessees

to meet their obligations to us and unanticipated capital

expenditures. Future dividends paid by us will be at the

discretion of the Trustees and will depend on our actual

cash flows, our financial condition, capital requirements,

the annual distribution requirements under 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%).

(b) Issuer purchases of equity securities

We have an existing share repurchase program that

authorizes management, at its discretion, to repurchase

up to $20.0 million of our outstanding Common Shares.

The program may be discontinued or extended at any

time and there is no assurance that we will purchase the

full amount authorized. There were no Common Shares

At February 28, 2012, there were 311 holders of record

repurchased by us during the year ended December 31,

of our Common Shares.

We have determined for income tax purposes that 97%

of the total dividends distributed to shareholders during

2011 represented ordinary income (22% qualified

dividends and 75% nonqualified dividends) and 3%

represented capital gains. The dividend for the quarter

2011. Under this program we have repurchased 2.1

million Common Shares, none of which were

repurchased after December 2001. As of December 31,

2011, management may repurchase up to approximately

$7.5 million of our outstanding Common Shares under

this program.

Acadia Realty Trust 2011 Annual Report

35495

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, 2011:

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))

150,283

—

150,283

$18.33

—

$18.33

600,451 (1)

—

600,451 (1)

Equity compensation plans approved

by security holders

Equity compensation plans not
approved by security holders

Total

Notes:

(1) The 1999 Plan authorizes the issuance of incentive awards 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 any incentive awards 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 incentive awards 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. We have also issued LTIP Units, which are
generally exchangeable on a one-for-one basis for our Operating Partnership Units which in turn are convertible into Common
Shares. Reference is made to Note 15 to our Consolidated Financial Statements, which begin on Page F-1 of this Form 10-K, for a
summary of our Share Incentive Plans.

Remaining Common Shares available under our share incentive plans is as follows:

Outstanding Common Shares as of December 31, 2011
Outstanding OP Units as of December 31, 2011

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

42,586,376
497,574

43,083,950

5,170,074
500,000

5,670,074
(2,294,104)
(2,775,519)

600,451

(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, 2006 through December 31, 2011 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, 2006, and assuming reinvestment of dividends. The

shareholder return as set forth in the table below is not necessarily indicative of future performance.

Note:

(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 of our filings 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.

32 Acadia Realty Trust 2011 Annual Report

51523

Comparison of 5 Year Cumulative Total Return among Acadia Realty Trust, the Russell 2000, the NAREIT and

the SNL:

Total Return Performance

120

100

e
u
l
a
V
x
e
d
n

20
12/31/06

12/31/07

12/31/08

12/31/09

12/31/10

12/31/11

Acadia Realty Trust

Russell 2000

NAREIT All Equity REIT Index

SNL REIT Retail Shopping Ctr

Index

Acadia Realty Trust
Russell 2000
NAREIT All Equity REIT Index
SNL REIT Retail Shopping Ctr Index

Period Ended

12/31/06

12/31/07

12/31/08

12/31/09

12/31/10

12/31/11

$100.00
100.00
100.00
100.00

$106.46
98.43
84.31
82.33

$64.62
65.18
52.50
49.57

$80.74
82.89
67.20
48.93

$ 90.84
105.14
85.98
63.52

$104.09
100.75
93.10
61.70

Acadia Realty Trust 2011 Annual Report

01420

ITEM 6. SELECTED FINANCIAL DATA.

The following table sets forth, on a historical basis, our selected financial data. This information should be read in

conjunction with our audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial

Condition and Results of Operations appearing elsewhere in this Form 10-K. Funds from operations (“FFO”) amounts

for the year ended December 31, 2011 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)

OPERATING DATA:
Revenues
Operating expenses, excluding depreciation and reserves
Interest expense
Depreciation and amortization
Gain on sale of land
Equity in earnings (losses) of unconsolidated partnerships
Impairment of investment in unconsolidated affiliate
Reserve for notes receivable
Other interest income
Gain from bargain purchase
Gain on debt extinguishment
Income tax provision

Income from continuing operations
Income from discontinued operations
Income from extraordinary item (1)

Net income

Loss (income) attributable to noncontrolling interests:
Continuing operations
Discontinued operations
Extraordinary item

2011

Years ended December 31,
2010
2009

2008

2007

$ 150,161 $ 141,045 $ 134,445 $ 121,462 $ 75,917
43,647
26,290
16,633
—
6,619
—
—
5,833
—
—
297

58,450
31,635
22,508
763
19,906
—
(4,392)
3,370
—
1,523
3,362

68,484
35,632
27,612
—
(1,529)
(3,768)
(1,734)
642
—
7,057
1,541

66,698
40,498
28,808
—
10,971
—
—
408
33,805
—
2,890

71,143
37,109
32,986
—
1,555
—
—
276
—
1,268
474

11,548
42,167
—

53,715

47,335
3,332
—

50,667

1,844
10,862
—

12,706

26,677
10,760
—

37,437

1,502
11,215
27,844

40,561

8,514
(10,674)
—

(19,075)
(1,535)
—

24,730
(6,303)
—

(10,387)
(1,982)

10,747
(1,795)
— (24,167)

Net (income) loss attributable to noncontrolling interests

(2,160)

(20,610)

18,427

(12,369)

(15,215)

Net income attributable to Common Shareholders

51,555 $

30,057 $

31,133 $

25,068 $ 25,346

Supplemental Information:
Income from continuing operations attributable to Common

Shareholders

20,062 $

28,260 $

26,574 $

16,290 $ 12,249

Income from discontinued operations attributable to Common

Shareholders

31,493

1,797

4,559

8,778

9,420

Income from extraordinary item attributable to Common

Shareholders

Net income attributable to Common Shareholders

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

—

3,677

51,555 $

30,057 $

31,133 $

25,068 $ 25,346

0.50 $
0.77
—

1.27 $

0.49 $
0.77
—

1.26 $

0.70 $
0.05
—

0.75 $

0.70 $
0.04
—

0.74 $

0.70 $
0.12
—

0.82 $

0.70 $
0.12
—

0.82 $

0.48 $
0.26
—

0.74 $

0.47 $
0.26
—

0.73 $

0.37
0.28
0.11

0.76

0.36
0.27
0.11

0.74

34 Acadia Realty Trust 2011 Annual Report

68151

(dollars in thousands, except per share amounts)

2011

2010

2009

2008

2007

Years ended December 31,

Weighted average number of Common Shares

outstanding
– basic
– diluted

Cash dividends declared per Common Share (3)
BALANCE SHEET DATA:

Real estate before accumulated depreciation
Total assets
Total mortgage indebtedness
Total convertible notes payable
Total Common Shareholders’ equity
Noncontrolling interests

Total equity
OTHER:
Funds from Operations, adjusted for

extraordinary item (1) (2)
Cash flows provided by (used in):

Operating activities
Investing activities
Financing activities

40,697
40,986
0.7200 $

40,136
40,406
0.7200 $

38,005
38,242
0.7500 $

33,813
33,600
34,282
34,267
0.8951 $ 1.0325

$1,471,745 $1,305,561 $1,119,758 $1,004,347 $ 729,979
998,783
391,108
105,790
249,717
171,111
420,828

1,291,383
650,508
100,403
227,722
214,506
442,228

1,382,464
730,287
47,910
312,185
220,292
532,477

1,524,806
806,212
48,712
318,212
269,310
587,522

1,653,319
787,910
930
384,114
385,195
769,309

40,297

50,440

49,613

37,964

42,094

66,332
(153,157)
56,045

44,377
(60,745)
43,152

47,462
(123,380)
83,035

66,517
(302,265)
199,096

105,294
(208,998)
87,476

Notes:

(1) The extraordinary item relates to 2007 and represents our
share of an extraordinary gain from our investment in
Albertson’s. We consider this to be a private-equity style
investment in an operating businesses as opposed to real
estate. Accordingly, all gains and losses from this investment
is included in FFO, which we believe provides a more
accurate reflection of our operating performance.

However, our method of calculating FFO may be different
from methods used by other REITs and, accordingly, may
not be comparable to such other REITs. FFO does not
represent cash generated from operations as defined by
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 our performance or
to cash flows as a measure of liquidity. Consistent with the
NAREIT definition, we define FFO as net income (computed
in accordance with GAAP), excluding gains (losses) from
sales of depreciated property, plus depreciation and
amortization, and after adjustments for unconsolidated
partnerships and joint ventures. See “Reconciliation of Net
Income to Funds From Operations and Adjusted Funds From
Operations” in Item 7 below.

(3) In addition to the $0.8951 cash dividends declared in 2008,

we declared a Common Share dividend of $0.4949.

Acadia Realty Trust 2011 Annual Report

26635

Management’s Discussion And Analysis

ITEM 7. MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.

OVERVIEW
As of December 31, 2011, we operated 82 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

returns. We focus on the following fundamentals to

achieve this objective:

(cid:2) Own and operate a Core Portfolio (as defined in Item
2. of this Form 10-K) of high-quality retail properties

located primarily in high-barrier-to-entry, densely-

populated metropolitan areas and create value through

accretive redevelopment and re-anchoring activities

coupled with the acquisition of high-quality assets that

have the long-term potential to outperform the asset

100% owned by, or partially owned through joint venture

class as part of our Core asset recycling and

interests by the Operating Partnership, or subsidiaries

thereof, not including those properties owned through

our Opportunity Funds. These 82 properties consist of

commercial properties, primarily urban/street retail

locations, neighborhood and community shopping

centers, mixed-use properties with a retail component

and urban self-storage locations. The properties we

operate are located primarily in high-barrier-to-entry,

densely-populated metropolitan areas in the United

acquisition initiative.

(cid:2) Generate additional external growth through an
opportunistic yet disciplined acquisition program

through our Opportunity Funds (as defined in Item 1.

of this Form 10-K). We target transactions with high

inherent opportunity for the creation of additional value

through:

(cid:2) value-add investments in high-quality urban and/or

States along the East Coast and in Chicago. There are 48

street retail properties with re-tenanting or

properties in our Core Portfolio totaling approximately 5.0

repositioning opportunities,

million square feet. Fund I has four remaining properties

comprising approximately 0.1 million square feet. Fund II

has nine properties, seven of which (representing 1.2

million square feet) are currently operating, one is under

construction, and one is in the design phase. Three of

the properties also include a self-storage component. We

(cid:2) opportunistic acquisitions of well-located real-
estate anchored by distressed retailers or by

motivated sellers and

(cid:2) opportunistic purchases of debt which may

include restructuring.

expect the Fund II portfolio will have approximately 2.0

These may also include joint ventures with private

million square feet upon completion of all current

equity investors for the purpose of making

construction and anticipated redevelopment activities.

investments in operating retailers with significant

Fund III has 21 properties totaling approximately 2.3

embedded value in their real estate assets.

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 82 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 subsidiary (“TRS”).

Our primary business objective is to acquire and manage

commercial retail properties that will provide cash for

distributions to shareholders while also creating the

potential for capital appreciation to enhance investor

(cid:2) Maintain a strong and flexible balance sheet through
conservative financial practices while ensuring access

to sufficient capital to fund future growth.

Business Outlook
The U.S. economy is currently in a post-recessionary

period. The recession resulted in a significant decline in

retail sales due to reduced consumer spending. Although

the occupancy and net operating income within our

portfolio has not been materially adversely affected

through December 31, 2011, should the overall economy

again decline, we would expect retailers to experience

deteriorating sales performance, and the likelihood of

additional tenant bankruptcy filings may increase, which

would negatively impact our results of operations. In

addition to the impact on retailers, the recession had a

significant impact on the U.S. credit markets. Some

sources of financing, such as the commercial-mortgage

36 Acadia Realty Trust 2011 Annual Report

77434

backed security market, are still severely curtailed. If

environment, while improving, may cause us to lose

economic conditions again deteriorate, our ability to

tenants and may impair our ability to borrow money to

finance new acquisitions or refinance existing debts as

purchase properties, refinance existing debt or finance

they mature could be adversely affected. Accordingly, our

our current redevelopment projects” and “The

ability to generate external growth in income, as well as

bankruptcy of, or a downturn in the business of, any of

maintain existing operating income, could be limited.

our major tenants or a significant number of our smaller

See the “Item 1A. Risk Factors,” including the

discussions under the headings “The current economic

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 F-1 of this Form

10-K for an overview of our five reportable segments.

A discussion of the significant variances and primary factors contributing thereto within the results of operations for the

years ended December 31, 2011, 2010 and 2009 are addressed below:

Comparison of the year ended December 31, 2011 (“2011”) to the year ended December 31, 2010 (“2010”)

(dollars in millions)

2011

2010

Revenues

Rental income
Interest income
Expense reimbursements
Lease termination income
Management fee income (1)
Other

Total revenues

Note:

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

$45.9
—
11.6
0.1
—
0.4

$58.0

$45.0
—
10.8
—
—
—

$55.8

$21.3
—
—
—
—
1.9

$23.2

$ —
11.4
—
—
1.7
—

$13.1

$44.6
—
11.9
0.3
—
0.3

$57.1

$33.3
—
8.6
—
—
0.2

$42.1

$19.6
—
—
—
—
1.7

$21.3

$ —
19.2
—
—
1.4
—

$20.6

(1) Includes fees earned by us as general partner/managing member of the Opportunity Funds that are eliminated in consolidation and
adjusts the loss (income) attributable to noncontrolling interests. The balance reflected in the table represents third party fees that
are not eliminated in consolidation. Reference is made to Note 3 of the Notes to Consolidated Financial Statements which begin
on page F-1 of this Form 10-K for an overview of our five reportable segments.

The increase in rental income in the Core Portfolio was

Self-Storage Investments was a result of increased

primarily attributable to additional rents following the

occupancy and rental rates throughout the Storage

acquisitions of West Diversey, Mercer Street and the

Portfolio.

Latsko properties in 2011 (“2011 Core Acquisitions”).

Rental income in the Opportunity Funds increased from

additional rents at Canarsie, Pelham Manor, 161st Street

and Westport of $10.2 million for leases that

commenced during 2010 and 2011 (“Fund

Redevelopment Properties”) as well as additional rents of

$2.1 million following the acquisition of The Heritage

Shops at Millennium Park (“2011 Fund Acquisition”)

during April 2011. The increase in rental income in the

Interest income decreased as a result of the full

repayment of two notes during 2010 and 2011.

Expense reimbursements in the Opportunity Funds

increased for both real estate taxes and common area

maintenance primarily as a result of the Fund

Redevelopment Properties and the 2011 Fund

Acquisition.

Acadia Realty Trust 2011 Annual Report

28414

Management’s Discussion And Analysis continued

(dollars in millions)

2011

2010

Operating Expenses

Property operating
Real estate taxes
General and administrative
Depreciation and amortization

Total operating expenses

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

$ 8.4
8.6
24.2
14.2

$55.4

$11.5
7.4
16.7
15.5

$51.1

$11.9
2.6
—
4.2

$18.7

$ (2.4)
—
(17.8)
(0.9)

$ 9.0
8.2
22.4
13.8

$(21.1)

$53.4

$11.4
6.1
13.6
10.9

$42.0

$10.3
2.9
—
4.5

$17.7

$ (1.5)
—
(15.8)
(0.4)

$(17.7)

The increase in property operating expenses in the Self-

increase in general and administrative expense in the

Storage Investments primarily related to higher operating

Opportunity Funds related to an increase in Promote

costs in 2011 following increased occupancy throughout

expense within Fund I resulting from the sale of 15

the Storage Portfolio.

Real estate taxes in the Opportunity Funds increased due

to the Fund Redevelopment Properties and the 2011

Fund Acquisition.

General and administrative expense in the Core Portfolio

increased as a result of higher stock compensation

expense and employee severance costs during 2011. The

Kroger/Safeway properties. The variance in the Other

category was related to the elimination of Fund I

Promote expense for consolidated financial statement

presentation purposes.

Depreciation and amortization expense in the Opportunity

Funds increased due to the Fund Redevelopment

Properties and the 2011 Fund Acquisition.

(dollars in millions)

2011

2010

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

Other

Equity in earnings (losses) of
unconsolidated affiliates

Other interest income
Gain from bargain purchase
Gain on debt extinguishment
Interest and other finance

expense

Income tax provision
Income from discontinued

operations

(Loss) income attributable to
noncontrolling interests:

$ 0.7
—
—
1.3

$ 3.7
—
—
—

(16.0)
(1.1)

(16.5)
0.1

$(2.9)
—
—
—

(3.6)
0.5

$ — $ 0.6
—
—
—

0.3
—
—

$ 11.8
—
33.8
—

(1.0)
—

(18.0)
(3.2)

(18.2)
(0.1)

—

42.2

—

$(1.4)
—
—
—

(4.7)
0.4

—

0.1

—

$ —
0.4
—
—

0.4
—

3.3

—

(1.5)

– Continuing operations
– Discontinued
operations

(0.3)

—

8.7

—

0.1

—

(0.3)

(18.9)

(10.7)

—

Equity in earnings (losses) of unconsolidated affiliates in

The $33.8 million gain from bargain purchase was

the Opportunity Funds decreased primarily as a result of

attributable to Fund II’s purchase of an unaffiliated

a decrease in distributions in excess of basis from our

membership interest in CityPoint in 2010. Reference is

Albertson’s investment of $6.3 million in 2011 and a

made to Note 4 of the Notes to Consolidated Financial

decrease in our pro-rata share of income from Mervyns

Statements which begin on page F-1 of this Form 10-K

in 2011. The Self Storage Investments equity in earnings

for a discussion of this transaction.

(losses) represents our pro-rata share of losses from our

unconsolidated investment in a self storage management

Gain on debt extinguishment of $1.3 million was the

result of the purchase of mortgage debt at a discount in

company which manages 21 locations, including our 14

self storage properties. The self storage management

2011.

company currently operates at a deficit, however it plans

to increase third-party assets under management to

ultimately achieve profitability.

Interest expense in the Core Portfolio decreased $2.0

million in 2011. This was the result of a decrease in

average outstanding borrowings during 2010 resulting in

38 Acadia Realty Trust 2011 Annual Report

20533

a decrease of $1.5 million as well as a decrease in loan

The variance in the income tax provision in the Core

amortization expense of $0.4 million related to refinanced

Portfolio related to income taxes at the TRS level for our

debt in 2011. Interest expense in the Opportunity Funds

pro-rata share of income from our Albertson’s investment

decreased $1.7 million in 2011. This was attributable to

in 2010 and an overaccrual of the 2010 tax liability at the

higher capitalized interest in 2011 and a decrease in loan

TRS levels.

amortization expense related to refinanced debt in 2010.

These decreases were offset by an increase of $2.8

million related to higher average outstanding borrowings

in 2011. Interest expense in the Self-Storage

Investments decreased $1.1 million in 2011. This was

primarily attributable to lower average interest rates

during 2011.

Income from discontinued operations represents activity

related to property sales during 2011.

(Loss) income attributable to noncontrolling interests —

Continuing operations and Discontinued operations

primarily represents the noncontrolling interests’ share of

all the Opportunity Funds variances discussed above.

Comparison of the year ended December 31, 2010 (“2010”) to the year ended December 31, 2009 (“2009”)

(dollars in millions)

2010

2009

Revenues

Rental income
Interest income
Expense reimbursements
Lease termination income
Management fee income (1)
Other

Total revenues

Note:

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

$44.6
—
11.9
0.3
—
0.3

$57.1

$33.3
—
8.6
—
—
0.2

$42.1

$19.6
—
—
—
—
1.7

$21.3

$ —
19.2
—
—
1.4
—

$20.6

$47.3
—
12.3
2.8
—
1.9

$64.3

$28.8
—
7.1
—
—
1.4

$37.3

$ 9.9
—
—
—
—
1.3

$11.2

$ —
19.7
—
—
2.0
—

$21.7

The decrease in rental income in the Core Portfolio was

activity while the year ended December 31, 2009 reflects

primarily attributable to tenant vacancies at Chestnut Hill

twelve months of storage activity (“Storage Portfolio

and Third Avenue. Rental income in the Opportunity

Activity”).

Funds increased as a result of additional rents following

the acquisition of Cortlandt Towne Center in January,

2009 (“2009 Fund Acquisition”) of $1.0 million and

additional rents at Fordham Place, Pelham Manor and

Canarsie for leases that commenced in 2009 and 2010

(“2009/2010 Fund Redevelopment Properties”). The

increase in rental income in the Storage Portfolio related

to the full amortization of acquired lease intangible costs

during 2009, increased occupancy in the Self-Storage

Expense reimbursements in the Opportunity Funds

increased for both real estate taxes and common area

maintenance primarily as a result of the 2009 Fund

Acquisition and 2009/2010 Fund Redevelopment

Properties.

Lease termination income in the Core Portfolio for 2009

related to termination fee income received from a former

tenant at Absecon Marketplace.

Investments in 2010 as well as our discontinued practice

Other in the Core Portfolio in 2009 included $1.7 million

of reporting the Storage Portfolio one month in arrears

resulting from a forfeited sales contract deposit.

which was based on the historical unavailability of timely

financial information. Based on improvements in the

Storage Portfolio accounting systems, we report this

activity on a current basis. Accordingly, the year ended

December 31, 2010 reflects thirteen months of storage

Other in the Opportunity Funds during 2009 included

$0.9 million received by Fund II in settlement of litigation

in connection with a property acquisition.

Acadia Realty Trust 2011 Annual Report

99960

Management’s Discussion And Analysis continued

(dollars in millions)

2010

2009

Operating Expenses

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

Property operating
Real estate taxes
General and administrative
Depreciation and amortization
Abandonment of project

costs

Reserve for notes receivable

$ 9.0
8.2
22.4
13.8

—
—

$11.4
6.1
13.6
10.9

—
—

$10.3
2.9
—
4.5

—
—

$ (1.5)
—
(15.8)
(0.4)

—
—

$10.8
8.5
24.0
14.6

—
—

$ 9.8
5.1
13.5
10.5

2.5
—

$ 8.7
2.2
0.1
3.7

—
—

$ (1.2)
—
(15.6)
(1.2)

—
1.7

Total operating expenses

$53.4

$42.0

$17.7

$(17.7)

$57.9

$41.4

$14.7

$(16.3)

Property operating expenses in the Core Portfolio

Depreciation and amortization expense in the Core

decreased as a result of a decrease in bad debt expense

Portfolio decreased as a result of the write-off of lease

in 2010. The increase in property operating expenses in

intangible costs in connection with a terminated lease in

the Opportunity Funds was primarily attributable to the

2009. The increase in depreciation and amortization in

2009 Fund Acquisition and 2009/2010 Fund

the Self-Storage Investments was the result of two self

Redevelopment Properties. The increase in property

storage properties placed in service during the second

operating expenses in the Self-Storage Investments

quarter 2009.

primarily related to higher operating costs in 2010

following increased occupancy as well as the Storage

Portfolio Activity.

The $2.5 million abandonment of project costs in the

Opportunity Funds in 2009 was attributable to our

determination that we most likely would not participate

The increase in real estate taxes in the Opportunity

in a specific future development project.

Funds was primarily attributable to the 2009 Fund

Acquisition as well as 2009/2010 Fund Redevelopment

Properties.

The decrease in general and administrative expense in

the Core Portfolio was primarily attributable to reduced

compensation expense following staff reductions in 2009.

The reserve for notes receivable of $1.7 million in 2009

related to the loss of an anchor tenant at the underlying

collateral property.

(dollars in millions)

2010

2009

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

Core
Portfolio

Opportunity
Funds

Self-
Storage
Investments

Notes
Receivable
and Other

$ 0.6

$ 11.8

$(1.4)

$ —

$ 0.7

$ (2.2)

$ —

Other

Equity in earnings (losses) of
unconsolidated affiliates
Impairment of investment in
unconsolidated affiliate

Other interest income
Gain from bargain purchase
Gain on debt extinguishment
Interest and other finance

expense

Income tax expense
Income from discontinued

operations

(Loss) income attributable to
noncontrolling interests:

—
—
—
—

—
—
33.8
—

(18.0)
(3.2)

(18.2)
(0.1)

—

– Continuing operations
– Discontinued
operations

(0.3)

(18.9)

—

40 Acadia Realty Trust 2011 Annual Report

—
—
—
—

(4.7)
0.4

—

0.1

—

—
0.4
—
—

0.4
—

3.3

—
—
—
7.1

(3.8)
—
—
—

(19.5)
(1.4)

(10.6)
(0.1)

—
—
—
—

(5.7)
—

—
0.6
—
—

0.2
—

—

10.9

—

(0.4)

24.6

(1.5)

—

0.5

—

(6.3)

54649

Equity in earnings (losses) of unconsolidated affiliates in

Interest expense in the Opportunity Funds increased $7.6

the Opportunity Funds increased primarily as a result of

million in 2010. This was the result of an increase of

an increase in distributions in excess of basis from our

$2.9 million due to higher average interest rates in 2010,

Albertson’s investment of $9.5 million in 2010 and an

an increase of $1.8 million due to higher average

increase in our pro-rata share of income from Mervyns in

outstanding borrowings in 2010, an increase in

2010. Equity in earnings (losses) in the Self Storage

amortization expense of $2.6 million due to the write-off

Investments represents our pro-rata share of losses from

of deferred financing costs related to refinanced debt in

our unconsolidated investment in the newly-formed self

2010 and $0.3 million of lower capitalized interest in

storage management company.

2010. Interest expense in the Self-Storage Investments

The $3.8 million impairment of investment in

unconsolidated affiliate during 2009 was the result of the

reduction in value of the underlying property due to the

recession and the related reduction in Fund I’s carrying

value of this investment including a partial guarantee of

the mortgage debt.

The $33.8 million gain from bargain purchase was

attributable to Fund II’s purchase of an unaffiliated

membership interest in CityPoint as previously discussed.

The gain on debt extinguishment of $7.1 million was

attributable to the purchase of our convertible debt at a

discount in 2009.

Total interest expense in the Core Portfolio decreased

$1.5 million in 2010. This was the result of a $2.4 million

decrease attributable to lower average outstanding

borrowings in 2010 offset by a $0.9 million increase

attributable to higher average interest rates in 2010.

decreased $1.0 million in 2010. This was primarily

attributable to a $1.4 million decrease due to lower

average interest rates in 2010. This decrease was offset

by $0.3 million of lower capitalized interest in 2010 and

an increase of $0.2 million due to higher average

outstanding borrowings in 2010.

The variance in the income tax expense in the Core

Portfolio primarily related to income taxes at the TRS

level for our pro-rata share of income from our

Albertson’s investment in 2010.

Income from discontinued operations represents activity

related to a property held for sale in 2010 and property

sales in 2009.

(Loss) income attributable to noncontrolling interests—

Continuing operations and Discontinued operations

primarily represents the noncontrolling interests’ share of

all the Opportunity Funds variances discussed above.

Acadia Realty Trust 2011 Annual Report

Management’s Discussion And Analysis continued

Reconciliation of Net Income to Funds from Operations and Adjusted Funds from Operations

2011

For the Years Ended December 31,
2009

2008

2010

18857

2007

(dollars in thousands)
Net income attributable to Common Shareholders
Depreciation of real estate and amortization of leasing

costs:
Consolidated affiliates, net of noncontrolling interests’

Unconsolidated affiliates

Income attributable to noncontrolling interests in

operating partnership (1)

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)

$ 51,555

$30,057

$31,133

$25,068

$25,346

18,274
1,549

18,445
1,561

18,847
1,604

18,519
1,687

19,669
1,736

635

377

464

437

614

(31,716)
—

—

40,297
—

—
—

—

50,440
—

(2,435)
—

(7,182)
(565)

(5,271)
—

—

49,613
—

—

(3,677)

37,964
—

38,417
3,677

Funds from operations, adjusted for extraordinary item

$ 40,297

$50,440

$49,613

$37,964

$42,094

Adjusted Funds From Operations per Share – Diluted
Weighted average number of Common Shares and OP

Units

41,467

40,876

38,913

34,940

34,924

Diluted funds from operations, per share

0.97

1.23

1.28

1.09

1.21

Notes:

(1) Represents income attributable to Common OP Units and does not include distributions paid to Series A and B Preferred OP

Unitholders.

(2) We consider funds from operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”)
to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and
use within the REIT and analyst communities. FFO is presented to assist investors in analyzing our performance. It is helpful as it
excludes various items included in net income that are not indicative of the operating performance, such as gains (losses) from
sales of depreciated property and depreciation and amortization. However, our method of calculating FFO may be different from
methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash
generated from operations as defined by 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 our performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, we define FFO as
net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property, plus depreciation
and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

(3) This item represents our share of an extraordinary gain from our investment in Albertson’s, which recorded an extraordinary gain
in connection with the allocation of purchase price to assets acquired. We consider this to be a private-equity style investment in
an operating businesses as opposed to real estate. Accordingly, all gains and losses from this investment are included in FFO,
which we believe provides a more accurate reflection of our operating performance.

Liquidity and Capital Resources
Uses of Liquidity
Our principal uses of liquidity are (i) distributions to our

shareholders and OP unit holders, (ii) investments which

include the funding of our capital committed to the

Opportunity Funds and property acquisitions and

redevelopment/re-tenanting activities within our Core

Portfolio, and (iii) debt service and loan repayments,

including the repurchase of our Convertible Notes.

42 Acadia Realty Trust 2011 Annual Report

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 31, 2011, we paid dividends and

distributions on our Common Shares and Common OP

Units totaling $29.9 million.

88561

Investments

Fund I and Mervyns I
Fund I and Mervyns I have returned all invested capital

and accumulated preferred return thus triggering our

Promote in all future Fund I and Mervyns I earnings and

distributions. As of December 31, 2011, $86.6 million has

been invested in Fund I and Mervyns I, of which the

Operating Partnership contributed $19.2 million.

As of December 31, 2011, Fund I currently owned, or

had ownership interests in four remaining assets

comprising approximately 0.1 million square feet as

further discussed in “— PROPERTY ACQUISITIONS” in

Item 1. of this Form 10-K.

In addition, we, along with our Fund I investors have

invested in Mervyns as discussed in Item 1. of this Form

10-K.

Fund II and Mervyns II
To date, Fund II’s primary investment focus has been in

the New York Urban/Infill Redevelopment Initiative and

the Retailer Controlled Property Venture. As of December

31, 2011, $282.2 million has been invested in Fund II, of

which the Operating Partnership contributed $56.4

million. The remaining capital balance of $17.8 million is

expected to be utilized to complete development

activities for existing Fund II investments.

Fund II has invested in the New York Urban/Infill

Redevelopment and the RCP Venture initiatives and other

investments. See “— PROPERTY ACQUISITIONS” in

Item 1. of this Form 10-K for a table summarizing the

New York Urban/Infill Redevelopment investments from

inception through December 31, 2011.

RCP Venture
See “— PROPERTY ACQUISITIONS” in Item 1. of this

Form 10-K for a table summarizing the RCP Venture

investments from inception through December 31, 2011.

Fund III
During 2007, we formed Fund III with 14 institutional

investors, including all of the investors from Fund I and a

majority of the investors from Fund II with $502.5 million

of committed discretionary capital. As of December 31,

2011, $226.8 million has been invested in Fund III, of

which the Operating Partnership contributed $45.1

million.

Fund III has invested in New York Urban/Infill

Redevelopment 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

Total

Notes:

TBD — To be determined

Location

Year
acquired

Brooklyn, NY

2007

Westport, CT

2007

Costs
to date

$22.8

24.9

$47.7

Anticipated
additional
costs (1)

TBD

$ 0.6

Estimated
construction
completion

In design
Construction
complete

Square
feet upon
completion

TBD

27,000

(1) Anticipated additional costs for completed property represents costs for tenant improvements.

Acadia Realty Trust 2011 Annual Report

31068

Management’s Discussion And Analysis continued

Other Fund III Investments

Fund III currently owns, or had ownership interests in, the following 19 assets comprising approximately 2.3 million

square feet as follows:

(dollars in millions)
Property

New Hyde Park
654 Broadway
Perring Parkway
The Heritage Shops at Millennium Park
Lincoln Road
White Oak
White City Shopping Center
Cortlandt Towne Center
Self-storage Portfolio (11 locations)

Total

Location

New Hyde Park, NY
New York, NY
Baltimore, MD
Chicago, IL
South Miami Beach, FL
Silver Spring, MD
Shrewsbury, MA
Westchester Co. NY
Various NY and NJ locations

Date Acquired

December 2011
December 2011
December 2011
April 2011
February 2011
February 2011
December 2010
January 2009
February 2008

Purchase
Price

$ 11.2
13.7
21.6
31.6
51.9
9.8
56.0
78.0
174.0

GLA

31,500
18,700
260,000
105,000
61,400
64,600
225,200
642,000
913,000

$447.8

2,321,400

Notes Receivable
As of December 31, 2011, our notes receivable, net

with the two former A&P supermarket locations are

estimated to range between $4.0 million and $8.0 million.

aggregated $60.0 million, with accrued interest thereon

of $2.5 million, and were collateralized by the underlying

properties, the borrower’s ownership interest in the

entities that own the properties and/or by the borrower’s

personal guarantee. Effective interest rates on our notes

receivable ranged from 6.0% to 24.0% with maturities

through January 2017.

Investments made in notes receivable and preferred

equity positions during 2011, 2010 and 2009 are

discussed in “— NOTES RECEIVABLE, PREFERRED

Purchase of Convertible Notes
Purchases of the Convertible Notes have been another

use of our liquidity although as of December 31, 2011 all

but $0.9 million of the Convertible Notes have been

retired. During 2011, we purchased $48.8 million in face

amount of our outstanding Convertible Notes for $49.0

million. During 2009, we purchased $57.0 million in face

amount of our outstanding Convertible Notes for $46.7

million.

EQUITY AND OTHER REAL ESTATE RELATED

INVESTMENTS” in Item 1. of this Form 10-K.

Share Repurchase
We have an existing share repurchase program that

Other Investments
Acquisitions made during 2011, 2010 and 2009 are

discussed in “— PROPERTY ACQUISITIONS” in Item 1.

of this Form 10-K.

Core Portfolio Property Redevelopment and Re-
anchoring
Our Core Portfolio redevelopment and re-anchoring

programs focus on selecting well-located urban/street

retail locations and suburban shopping centers and

creating significant value through re-tenanting and

property redevelopment. During 2011, we initiated the re-

anchoring of three properties, the Bloomfield Town

Square, located in Bloomfield Hills, MI and two former

A&P supermarket locations located in the New York City

metropolitan area. Re-anchoring costs for the Bloomfield

Town Center totaled $1.6 million as of December 31,

2011 with total re-anchoring costs expected to be

approximately $7.0 million. Re-anchoring costs associated

authorizes management, at its discretion, to repurchase

up to $20.0 million of our outstanding Common Shares.

The program may be discontinued or extended at any

time and there is no assurance that we will purchase the

full amount authorized. Under this program we have

repurchased 2.1 million Common Shares, none of which

were repurchased after December 2001. As of

December 31, 2011, 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 opportunity

funds that we may establish in the future, as the primary

vehicles for our future acquisitions. Fund III has $220.8

million of unfunded capital commitments as of December

31, 2011. Additional sources of capital for funding

property acquisitions, redevelopment, expansion and re-

tenanting 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 activities,

44 Acadia Realty Trust 2011 Annual Report

83168

(iii) additional debt financings, (iv) noncontrolling interests’

During November 2011, we issued 2.25 million Common

unfunded capital commitments of $14.2 million for Fund

Shares, which generated net proceeds of approximately

II and (v) future sales of existing properties.

$45.0 million.

During 2011, Fund II received capital contributions of

In addition, during January 2012, we established an ATM

$17.0 million to fund development costs. During 2011,

equity program with an aggregate offering of up to $75.0

Fund III received capital contributions of $46.5 million to

million in Common Shares. We intend to use the net

fund acquisitions and to pay down a portion of Fund III’s

proceeds of these offerings for general corporate

credit facility.

As of December 31, 2011, we had cash and cash

equivalents on hand of $89.8 million and $73.1 million of

additional capacity under existing debt facilities.

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. We currently have remaining capacity under

this registration statement to issue up to approximately

$311 million of these securities. This shelf registration

purposes, which may include, among other things,

repayment of our debt, future acquisitions, directly and

through our Opportunity Funds, and redevelopments of

and capital improvements to our properties.

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.

Asset Sales
Asset sales are an additional source of liquidity for us.

During the years ended December 31, 2011, 2010 and

statement expires in April 2012 and we intend to replace

2009, we disposed of the following properties:

it with a new shelf registration on Form S-3.

(dollars in millions)
Property

Fifteen Kroger/Safeway locations
Granville Centre
Ledgewood Mall
Oakbrook
Blackman Plaza
Six Kroger locations

Total

Year
Sold

2011
2011
2011
2011
2009
2009

Sales Price

$17.5
2.3
37.0
8.2
2.5
9.5

$77.0

Gain
(Loss)

$14.6
(0.3)
28.6
3.9
1.5
5.6

$53.9

Operating
Partnership Share
of Gain (Loss)

$ 2.4
(0.1)
28.6
0.8
1.5
0.9

$34.1

GLA

617,276
134,997
517,151
112,000
125,264
277,700

1,784,388

These sales are discussed in “— ASSET SALES AND CAPITAL/ASSET RECYCLING” in Item 1. of this Form 10-K.

Notes Receivable and Preferred Equity
Repayments
Reference is made to Note 5 in our Consolidated

variable to fixed-rate swap agreements currently in

effect, $300.2 million of the portfolio, or 38%, was fixed

at a 5.8% weighted average interest rate and $488.6

Financial Statements, which begin on Page F-1 of this

million, or 62% was floating at a 3.7% weighted average

Form 10-K, for an overview of our notes receivable and

interest rate as of December 31, 2011. There is $298.3

preferred equity investments and for payments received

million of debt maturing in 2012 at weighted average

during the years ended December 31, 2011, 2010 and

interest rates of 4.0%. Of this amount, $2.8 million

2009.

Financing and Debt
As of December 31, 2011, our outstanding mortgage and

convertible notes payable aggregated $788.8 million, and

were collateralized by 29 properties and related tenant

leases. Interest rates on our outstanding indebtedness

ranged from 1.55% to 7.34% with maturities that ranged

from September 2012 to November 2032. Taking into

consideration $57.0 million of notional principal under

represents scheduled annual amortization. The loans

relating to $56.5 million of the 2012 maturities provide

for extension options, which we believe we will be able

to exercise. As it relates to the remaining 2012

maturities, we may not have sufficient cash on hand to

repay such indebtedness and, as such, we may have to

refinance this indebtedness or select other alternatives

based on market conditions at that time.

Acadia Realty Trust 2011 Annual Report

96096

Management’s Discussion And Analysis continued

The following table sets forth certain information pertaining to our secured credit facilities:

(dollars in millions)
Borrower

Total available
credit facilities

Acadia Realty, LP
Fund II
Fund III

Total

$ 64.5
40.0
150.3

$254.8

Amount borrowed
as of
December 31, 2010

1.0
40.0
171.5

$212.5

2011 net
borrowings
(repayments)
during the
year ended
December 31, 2011

$ —
—
(35.4)

$(35.4)

Amount borrowed
as of
December 31, 2011

Letters of credit
outstanding
as of
December 31, 2011

Amount available
under credit
facilities as of
December 31, 2011

1.0
40.0
136.1

$177.1

$4.6
—
—

$4.6

$58.9
—
14.2

$73.1

Reference is made to Note 8 and Note 9 to our Consolidated Financial Statements, which begin on Page F-1 of this

Form 10-K, for a summary of the financing and refinancing transactions during the year ended December 31, 2011.

Contractual Obligations and Other
Commitments
At December 31, 2011, maturities on our mortgage

notes ranged from September 2012 to November 2032.

In addition, we have non-cancelable ground leases at

nine of our shopping centers. We lease space for our

White Plains corporate office for a term expiring in 2015.

The following table summarizes our debt maturities,

obligations under non-cancelable operating leases and

construction commitments as of December 31, 2011:

(dollars in millions)
Contractual obligations:

Future debt maturities
Interest obligations on debt
Operating lease obligations
Construction commitments (1)

Total

Notes:

Total

$ 788.8
103.4
162.6
22.9

$1,077.7

Payments due by period
1 to 3
years

Less than
1 year

3 to 5
years

$298.4
32.2
5.1
22.9

$358.6

$232.7
38.6
10.2
—

$154.4
21.9
9.1
—

$281.5

$185.4

More than
5 years

$103.3
10.7
138.2
—

$252.2

(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.

Off Balance Sheet Arrangements
We have investments in the following joint ventures for

the purpose of investing in operating properties. We

Reference is made to Note 4 to our Consolidated

Financial Statements, which begin on page F-1 of this

Form 10-K, for a discussion of our unconsolidated

account for these investments using the equity method

investments. Our pro-rata share of unconsolidated debt

of accounting. As such, our financial statements reflect

related to those investments is as follows:

our share of income and loss from but not the individual

assets and liabilities of these joint ventures.

(dollars in millions)
Investment

Crossroads
Brandywine
White City
Lincoln Road
Georgetown Portfolio
Perring Parkway

Total

Pro-rata share of
mortgage debt
Operating Partnership

Interest rate at
December 31, 2011

$29.6
36.9
6.6
3.8
5.1
2.5

$84.5

5.37%
5.99%
2.90%
6.14%
5.12%
2.50%

Maturity date

December, 2014
July, 2016
December, 2017
August, 2014
October 2012 - May 2021
January, 2015

46 Acadia Realty Trust 2011 Annual Report

88862

In addition, we have arranged for the provision of one

The increase of $92.5 million of net cash used in

separate letter of credit in connection with certain leases

investing activities primarily resulted from the following:

and investments. As of December 31, 2011, there was

no outstanding balance under the letter of credit. If the

letter of credit were fully drawn, the maximum amount

of our exposure would be $4.6 million.

In addition to our derivative financial instruments, one of

our unconsolidated affiliates is a party to two separate

interest rate LIBOR swaps with a notional value of $29.6

million, which effectively fix the interest rate at 5.54%

and expire in December 2017. Our pro-rata share of the

fair value of the derivative liabilities totaled $0.4 million at

December 31, 2011.

Historical Cash Flow
The following table compares the historical cash flow for

the year ended December 31, 2011 (“2011”) with the

Items which contributed to an increase in cash used

in investing activities:

(cid:2) An increase of $103.4 million in expenditures for
real estate, development and tenant installations

during 2011

(cid:2) An increase of $35.9 million in investments and

advances to unconsolidated affiliates during 2011

related to the acquisitions of Lincoln Road, White

Oak, Georgetown, and Perring Parkway

(cid:2) An increase of $34.3 million in advances of notes

receivable during 2011

Items which contributed to a decrease in cash used

in investing activities:

cash flow for the year ended December 31, 2010

(cid:2) An increase of $62.9 million in proceeds from the

(“2010”).

(dollars in millions)
Net cash provided by

Years Ended December 31,
Variance
2011

2010

(cid:2) An increase of $14.5 million from the collection of

notes receivable during 2011

sale of properties during 2011

operating activities

$ 66.3

$ 44.4

$ 21.9

Net cash used in investing

activities

(153.2)

(60.7)

(92.5)

Net cash provided by

financing activities

56.1

43.1

13.0

Total

$ (30.8) $ 26.8

$(57.6)

A discussion of the significant changes in cash flow for

2011 versus 2010 is as follows:

The increase of $21.9 million in net cash provided by

The $13.0 million increase in net cash provided by

financing activities resulted primarily from the following:

Items which contributed to an increase in cash from

financing activities:

(cid:2) An additional $84.4 million in contributions from

noncontrolling interests during 2011

(cid:2) An increase of $44.7 million in cash from the

issuance of Common Shares, net of costs during

2011

operating activities was primarily attributable to the

Items which contributed to a decrease in cash from

following:

financing activities:

Items which contributed to an increase in cash from

(cid:2) $48.8 million in repurchases of convertible notes

operating activities:

during 2011

(cid:2) Additional rents from Opportunity Fund

(cid:2) An increase of $33.6 million in debt repayments

redevelopment projects as well as Core Portfolio

during 2011

and Opportunity Fund acquisitions

(cid:2) Additional cash used during 2010 to fund an
escrow account with the proceeds from the

CityPoint bond financing

Items which contributed to a decrease in cash from

operating activities:

(cid:2) A decrease in distributions related to our RCP

investment in Albertson’s during 2010

(cid:2) A decrease of $30.8 million in borrowings during

2011

Critical Accounting Policies

Management’s discussion and analysis of financial

condition and results of operations is based upon our

Consolidated Financial Statements, which have been

prepared in accordance with U.S. GAAP. The preparation

of these Consolidated Financial Statements requires

Acadia Realty Trust 2011 Annual Report

15976

Management’s Discussion And Analysis continued

management to make estimates and judgments that

were recognized for the years ended December 31, 2011

affect the reported amounts of assets, liabilities,

and 2010.

revenues and expenses. We base our estimates on

historical experience and assumptions that are believed

to be reasonable under the circumstances, the results of

which form the basis for making judgments about

carrying value of assets and liabilities that are not readily

apparent from other sources. Actual results may differ

from these estimates under different assumptions or

conditions. We believe the following critical accounting

policies affect the significant judgments and estimates

used by us in the preparation of our Consolidated

Financial Statements.

Valuation of Property Held for Use and Sale
On a quarterly basis, we review the carrying value of

Bad Debts
We maintain an allowance for doubtful accounts for

estimated losses resulting from the inability of tenants to

make payments on arrearages in billed rents, as well as

the likelihood that tenants will not have the ability to

make payments on unbilled rents including estimated

expense recoveries. We also maintain a reserve for

straight-line rent receivables. For the years ended

December 31, 2011 and 2010, the allowance for doubtful

accounts totaled $5.3 million and $7.5 million,

respectively. If the financial condition of our tenants were

to deteriorate, resulting in an impairment of their ability

to make payments, additional allowances may be

both properties held for use and for sale. We perform an

required.

impairment analysis by calculating and reviewing net

operating income on a property-by-property basis. We

evaluate leasing projections and perform other analyses

to conclude whether an asset is impaired. We record

impairment losses and reduce 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 we do not expect to recover our carrying costs on

properties held for use, we reduce our carrying cost to

fair value. For properties held for sale, we reduce our

carrying value to the fair value less costs to sell. During

the year ended December 31, 2011, we determined that

the value of the Granville Centre owned by Fund I was

impaired. Accordingly, we recorded an impairment loss of

Real Estate
Real estate assets are stated at cost less accumulated

depreciation. Expenditures for acquisition, development,

construction and improvement of properties, as well as

significant renovations are capitalized. Interest costs are

capitalized until construction is substantially complete.

Construction in progress includes costs for significant

property expansion and redevelopment. Depreciation is

computed on the straight-line basis over estimated useful

lives of 30 to 40 years for buildings, the shorter of the

useful life or lease term for tenant improvements and

five years for furniture, fixtures and equipment.

Expenditures for maintenance and repairs are charged to

operations as incurred.

$6.9 million. For the years ended December 31, 2010

Upon acquisitions of real estate, we assess the fair value

and 2009, no impairment losses on our properties were

of acquired assets (including land, buildings and

recognized. Management does not believe that the value

improvements, and identified intangibles such as above

of any properties in its portfolio was impaired as of

and below market leases and acquired in-place leases

December 31, 2011.

Investments in and Advances to Unconsolidated
Joint Ventures
We periodically review our investment in unconsolidated

joint ventures for other than temporary declines in

market value. Any decline that is not expected to be

recovered in the next twelve months is considered other

than temporary and an impairment charge is recorded as

a reduction in the carrying value of the investment.

During the year ended December 31, 2009, we recorded

a $3.8 million impairment reserve related to a Fund I

unconsolidated joint venture. No impairment charges

related to our investment in unconsolidated joint ventures

and customer relationships) and acquired liabilities in

accordance with the Financial Accounting Standards

Board (“FASB”) Accounting Standards Codification

(“ASC”) Topic 805 “Business Combinations” and ASC

Topic 350 “Intangibles — Goodwill and Other,” and

allocate purchase price based on these assessments. We

assess 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.

48 Acadia Realty Trust 2011 Annual Report

44244

Involuntary Conversion of Asset
We experienced significant flooding resulting in extensive

damage to one of its properties during September 2011.

Notes Receivable and Preferred Equity
Investment
Real estate notes receivable and preferred equity

Costs related to the clean-up and redevelopment are

investments are intended to be held to maturity and are

insured to a limit sufficient that we believe will allow for

carried at cost. Interest income from notes receivable

full restoration of the property. Loss of rents during the

redevelopment are covered by business interruption

and preferred equity investments are recognized on the

effective interest method over the expected life of the

insurance subject to a $0.1 million deductible. We plan to

loan. Under the effective interest method, interest or

restore the improvements that were damaged by the

flooding and expects that the costs of such restoration

fees to be collected at the origination of the loan or the

payoff of the loan is recognized over the term of the

and rebuilding will be recoverable from insurance

loan as an adjustment to yield.

proceeds. In accordance with ASC Topic 360 “Property,

Plant and Equipment” and as a result of the above-

described property damage, we have recorded a write-

down of the asset’s carrying value in the accompanying

consolidated balance sheet of approximately $1.4 million.

In addition, we have recorded an insurance recovery in

the same amount that is included in Prepaid Expenses

and Other Assets in the accompanying consolidated

balance sheet as of December 31, 2011. We have also

provided a $0.1 million provision in the consolidated

statement of income for our exposure to the insurance

deductible attributable to the loss of rents. As of

December 31, 2011, we have received initial insurance

proceeds of approximately $6.9 million.

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. 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 breakpoint is met. In addition, leases

Allowances for real estate notes receivable and preferred

equity investments are established based upon

management’s quarterly review of the investments. 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

recognition 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, we 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.

Inflation

typically provide for the reimbursement to us of real

Our long-term leases contain provisions designed to

estate taxes, insurance and other property operating

mitigate the adverse impact of inflation on our net

expenses. These reimbursements are recognized as

income. Such provisions include clauses enabling us to

revenue in the period the expenses are incurred.

receive percentage rents based on tenants’ gross sales,

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.

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 are for terms of less than ten years, which

permits us to seek to increase rents upon re-rental at

market rates if current rents are below the then existing

market rates. Most of our leases require the tenants to

pay their share of operating expenses, including common

Acadia Realty Trust 2011 Annual Report

10619

Management’s Discussion And Analysis continued

area maintenance, real estate taxes, insurance and

Currently, we manage our exposure to fluctuations in

utilities, thereby reducing our exposure to increases in

interest rates primarily through the use of fixed-rate debt

costs and operating expenses resulting from inflation.

and interest rate swap agreements. As of December 31,

Recently Issued Accounting
Pronouncements
Reference is made to Notes to our Consolidated

Financial Statements, which begin on page F-1 of this

Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.

Information as of December 31, 2011
Our primary market risk exposure is to changes in

interest rates related to our mortgage debt. See Note 8

to our Consolidated Financial Statements, which begin on

page F-1 of this Form 10-K, for certain quantitative

details related to our mortgage debt.

2011, we had total mortgage and convertible notes

payable of $788.8 million of which $300.2 million, or

38% was fixed-rate, inclusive of debt with rates fixed

through the use of derivative financial instruments, and

$488.6 million, or 62%, was variable-rate based upon

LIBOR rates plus certain spreads. As of December 31,

2011, we were a party to five interest rate swap

transactions and three interest rate caps transaction to

hedge our exposure to changes in interest rates with

respect to $57.0 million and $75.0 million of LIBOR-

based variable-rate debt, respectively. We were also a

party to one forward interest rate swap transaction with

respect to $12.5 million of LIBOR-based variable-rate

debt.

The following table sets forth information as of December 31, 2011 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

2012
2013
2014
2015
2016
Thereafter

Scheduled
Amortization

$ 2.8
3.6
2.8
2.4
1.2
6.9

$19.7

Maturities

$295.5
124.5
101.9
77.3
73.5
96.4

$769.1

Mortgage debt in unconsolidated partnerships (at our pro-rata share):

Year

2012
2013
2014
2015
2016
Thereafter

Scheduled
Amortization

Maturities

$0.7
0.7
0.7
0.1
0.1
0.1

$2.4

$ —
1.1
31.6
—
—
42.9

$75.6

Total

$298.3
128.1
104.7
79.7
74.7
103.3

$788.8

Total

$ 0.7
1.8
32.3
0.1
0.1
43.0

$78.0

Weighted Average
Interest Rate

4.0%
4.2%
4.3%
3.2%
5.6%
5.4%

Weighted Average
Interest Rate

n/a
6.0%
5.5%
n/a
n/a
5.6%

$298.3 million of our total consolidated debt and $0.7

interest expense would increase by approximately $4.3

million of our pro-rata share of unconsolidated

million annually if the interest rate on the refinanced debt

outstanding debt will become due in 2012. $128.1 million

increased by 100 basis points. After giving effect to

of our total consolidated debt and $1.8 million of our pro-

noncontrolling interests, our share of this increase would

rata share of unconsolidated debt will become due in

be $0.9 million. Interest expense on our variable debt of

2013. As we intend on refinancing some or all of such

$488.6 million, net of variable to fixed-rate swap

debt at the then-existing market interest rates, which

agreements currently in effect, as of December 31, 2011

may be greater than the current interest rate, our

would increase $4.9 million if LIBOR increased by 100

50 Acadia Realty Trust 2011 Annual Report

82556

basis points. After giving effect to noncontrolling

million if LIBOR increased by 100 basis points. Based on

interests, our share of this increase would be $0.7

our outstanding debt balances as of December 31, 2010,

million. We may seek additional variable-rate financing if

the fair value of our total outstanding debt would have

and when pricing and other commercial and financial

decreased by approximately $12.6 million if interest rates

terms warrant. As such, we would consider hedging

increased by 1%. Conversely, if interest rates decreased

against the interest rate risk related to such additional

by 1%, the fair value of our total outstanding debt would

variable-rate debt through interest rate swaps and

have increased by approximately $13.8 million.

protection agreements, or other means.

Based on our outstanding debt balances as of December

31, 2011, the fair value of our total consolidated

outstanding debt would decrease by approximately $11.1

million if interest rates increase by 1%. Conversely, if

interest rates decrease by 1%, the fair value of our total

outstanding debt would increase by approximately $13.2

million.

As of December 31, 2011 and 2010, we had notes

receivable and preferred equity investments of $60.0

million and $89.2 million, respectively. We determined

the estimated fair value of our notes receivable and

preferred equity investments as of December 31, 2011

and 2010 were $60.0 million and $90.6 million,

respectively, by discounting future cash receipts utilizing

a discount rate equivalent to the rate at which similar

notes receivable would be originated under conditions

then existing.

Based on our outstanding notes receivable and preferred

equity investments balances as of December 31, 2011,

the fair value of our total outstanding notes receivable

and preferred equity investments would decrease by

approximately $0.2 million if interest rates increase by

1%. Conversely, if interest rates decrease by 1%, the

fair value of our total outstanding notes receivable and

preferred equity investments would increase by

approximately $0.2 million.

Summarized Information as of December 31, 2010
As of December 31, 2010, we had total mortgage and

convertible notes payable of $854.9 million of which

$415.0 million, or 49% was fixed-rate, inclusive of

interest rate swaps, and $439.9 million, or 51%, was

variable-rate based upon LIBOR plus certain spreads. As

of December 31, 2010, 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 $71.5 million and $28.9 million of

LIBOR-based variable-rate debt, respectively.

Interest expense on our variable debt of $439.9 million

as of December 31, 2010 would have increased $4.4

Changes in Market Risk Exposures from 2011 to
2010
Our interest rate risk exposure from December 31, 2010

to December 31, 2011 has increased, as we had $439.9

million in variable-rate debt (or 51% of our total debt) at

December 31, 2010, as compared to $488.6 million (or

62% of our total debt) in variable-rate debt at December

31, 2011.

ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.

The financial statements beginning on page F-1 of this

Form 10-K are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

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

effectiveness 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, 2011 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, summarized, and reported within the time

periods specified in SEC rules and forms, and is

accumulated and communicated to management,

including our Chief Executive Officer and Chief Financial

Officer, as appropriate to allow timely decisions regarding

required disclosure.

Acadia Realty Trust 2011 Annual Report

99511

(ii) Internal Control Over Financial Reporting

control over financial reporting was effective as of

(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

December 31, 2011 to provide reasonable assurance

regarding the reliability of financial reporting and the

preparation of financial statements for external reporting

purposes in accordance with U.S. generally accepted

accounting principles.

Securities Exchange Act of 1934 Rule 13(a)-15(f). Under

BDO USA, LLP, an independent registered public

the supervision and with the participation of our

accounting firm that audited our Financial Statements

management, including our principal executive officer and

included in this Annual Report, has issued an attestation

principal financial officer, we conducted an evaluation of

report on our internal control over financial reporting as

the effectiveness of our internal control over financial

of December 31, 2011, which appears in paragraph (b) of

reporting as of December 31, 2011 as required by the

this Item 9A.

Securities Exchange Act of 1934 Rule 13(a)-15(c). In

making this assessment, we used the criteria set forth in

the framework in Internal Control — Integrated

Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (the “COSO

criteria”). Based on our evaluation under the COSO

criteria, our management concluded that our internal

Acadia Realty Trust

White Plains, New York

February 28, 2012

52 Acadia Realty Trust 2011 Annual Report

97245

(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,

2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring

Organizations 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 control over financial reporting included in the accompanying Management’s Report on Internal Control over

Financial Reporting. 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

understanding 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

generally accepted accounting principles. A company’s internal control over financial reporting includes those policies

and procedures 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, 2011, 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, 2011 and 2010

and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for

each of the three years in the period ended December 31, 2011 and our report dated February 28, 2012 expressed an

unqualified opinion thereon.

/s/ BDO USA, LLP

New York, New York

February 28, 2012

Acadia Realty Trust 2011 Annual Report

43190

ITEM 9B. OTHER INFORMATION.

None

There was no change in our internal control over financial

reporting during our fourth fiscal quarter ended

December 31, 2011 that has materially affected, or is

reasonably likely to materially affect, our internal control

over financial reporting.

PART III

In accordance with the rules of the SEC, certain information required by Part III is omitted and is incorporated by

reference into this Form 10-K from our definitive proxy statement relating to our 2012 annual meeting of stockholders

(our “2012 Proxy Statement”) that we intend to file with the SEC no later than April 29, 2012.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information under the following headings in the 2012 Proxy Statement is incorporated herein by reference:

(cid:2) “PROPOSAL 1 — ELECTION OF TRUSTEES”
(cid:2) “MANAGEMENT”

(cid:2) “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE”

ITEM 11. EXECUTIVE COMPENSATION.

The information under the following headings in the 2012 Proxy Statement is incorporated herein by reference:

(cid:2) “ACADIA REALTY TRUST COMPENSATION COMMITTEE REPORT”
(cid:2) “COMPENSATION DISCUSSION AND ANALYSIS”

(cid:2) “EXECUTIVE AND TRUSTEE COMPENSATION”

(cid:2) “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 2012 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 2012 Proxy Statement is incorporated herein by reference:

(cid:2) “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”
(cid:2) “PROPOSAL 1 — ELECTION OF TRUSTEES — Trustee Independence”

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information under the heading “AUDIT COMMITTEE INFORMATION” in the 2012 Proxy Statement is incorporated

herein by reference.

54 Acadia Realty Trust 2011 Annual Report

10115

PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

1. Financial Statements: See “Index to Financial Statements” at page F-1 below.

2. Financial Statement Schedule: See “Schedule III — Real Estate and Accumulated Depreciation” at page

F-42 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:

/s/ Kenneth F. Bernstein
Kenneth F. Bernstein
Chief Executive Officer, President and Trustee

/s/ Jonathan W. Grisham
Jonathan W. Grisham
Senior Vice President and Chief Financial Officer

/s/ Richard Hartmann
Richard Hartmann
Senior Vice President and Chief Accounting Officer

Dated: February 28, 2012

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/ Jonathan W. Grisham
(Jonathan W. Grisham)

/s/ Richard Hartmann
(Richard Hartmann)

/s/ Douglas Crocker II
(Douglas Crocker II)

/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

Date
February 28, 2012

February 28, 2012

Acadia Realty Trust 2011 Annual Report

85472

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

10.18

10.19

10.26

10.28

10.36

10.39

10.43

10.44

Declaration of Trust of the Company, as amended (1)

Fourth Amendment to Declaration of Trust (3)

Amended and Restated Bylaws of the Company (16)

Fifth Amendment to Declaration of Trust (20)

First Amendment the Amended and Restated Bylaws of the Company (20)
Voting Trust Agreement between the Company and Yale University dated February 27, 2002 (9)

1999 Share Option Plan (5) (15)

2003 Share Option Plan (11) (15)

Form of Share Award Agreement (12) (15)

Form of Registration Rights Agreement and Lock-Up Agreement (13)

Registration Rights and Lock-Up Agreement (RD Capital Transaction) (7)

Registration Rights and Lock-Up Agreement (Pacesetter Transaction) (7)

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 (6)

Agreement of Contribution among Acadia Realty Limited Partnership, Acadia Realty Trust and Klaff Realty, LP and Klaff
Realty, Limited (13)

Employment agreement between the Company and Kenneth F. Bernstein dated October 1998 (4) (15)

Amendment to employment agreement between the Company and Kenneth F. Bernstein dated January 19, 2007 (18) (15)

First Amendment to Employment Agreement between the Company and Kenneth Bernstein dated as of January 1,
2001 (8) (15)

Description of Long Term Investment Alignment Program (20)
Letter of employment offer between the Company and Michael Nelsen, Sr. Vice President and Chief Financial Officer
dated February 19, 2003 (10) (15)
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) (15)

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 Amalgamated 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. (22)

Fifth Amendment to Employment Agreement between the Company and Kenneth F. Bernstein dated August 5, 2008 (21)

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
President, General Counsel, Chief Compliance Officer and Secretary and Joseph Hogan, Senior Vice President and
Director of Construction dated January 19, 2007 (15) (18)
Third Amended and Restated Credit Agreement and Note among Acadia Strategic Opportunity Fund II, LLC and Bank
of America, N.A., dated March 3, 2010 (21)
Amended and Restated Loan Agreement among Acadia Cortlandt LLC and Bank of America, N.A., Note between
Acadia Cortlandt LLC and Bank of America, N.A., Note Consolidation and Modification Agreement between Acadia
Cortlandt LLC and Bank of America, N.A., Note between Acadia Cortlandt LLC and Bank of America, N.A., Mortgage
Consolidation and Modification Agreement between Acadia Cortlandt LLC and Bank of America, N.A., Mortgage
Security Agreement between Acadia Cortlandt LLC and Bank of America, N.A. and Amended and Restated Guaranty
Agreement between Acadia Cortlandt LLC and Bank of America, N.A., all dated October 26, 2010 (23)

Fourth Amended and Restated Credit Agreement among Acadia Strategic Opportunity Fund II, LLC and Bank of
America, N.A. dated December 22, 2010 (23)

Amended and Restated Severance Agreement, dated April 19, 2011, that was entered into with Christopher Conlon,
Senior Vice President, Leasing and Development (24)

Prospectus Supplement Regarding Options Issued under the Acadia Realty Trust 1999 Share Incentive Plan and 2003
Share Incentive Plan (14) (15)

56 Acadia Realty Trust 2011 Annual Report

36093

Exhibit No. Description

10.45

10.48

10.49

10.55

10.59

10.67

10.68

10.69

10.75

10.79

10.80

10.81

10.82

10.84

23.1

31.1

31.2

32.1

32.2

99.1

99.2

Acadia Realty Trust 1999 Share Incentive Plan and 2003 Share Incentive Plan Deferral and Distribution Election Form
(14) (15)
Sixth Amendment to the Employment Agreement between the Company and Kenneth F. Bernstein dated March 7,
2011 (25)

Second Amendment to Consolidated, Amended and Restated Term Loan Agreement and Omnibus Amendment and
Ratification of Loan Documents between Acadia East Fordham Acquisitions, LLC and Eurohypo AG, New York Branch,
Replacement Note between Acadia East Fordham Acquisitions, LLC and Eurohypo AG, New York Branch and First
Amendment to Cash Management and Security Agreement between Acadia East Fordham Acquisitions, LLC and
Eurohypo AG, New York Branch all dated June 30, 2011 (26)

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 Apartments, LLC and SMG Celebration, LLC (17)

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. (18)

Acquisition and Project Loan agreement between Acadia—PA East Fordham Acquisitions, LLC and Eurohypo AG, New
York Branch dated October 5, 2007 (22)

Building Loan Agreement between Acadia—PA East Fordham Acquisitions, LLC and Eurohypo AG, New York Branch
dated October 5, 2007 (19)

Revolving credit agreement between Acadia Strategic Opportunity Fund III, LLC. and Bank of America, N.A. dated
October 10, 2007 (22)

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)

Amended and Restated Agreement of Limited Partnership of the Operating Partnership (7)

First and Second Amendments to the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (7)

Third Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership (13)

Fourth Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership (13)

Second Amendment to the Revolving Credit Agreement between Acadia Strategic Opportunity Fund III, LLC as
borrower and Bank of America, N.A., dated September 1, 2011, and Third Amendment to the Revolving Credit
Agreement between Acadia Strategic Opportunity Fund III, LLC as borrower and Bank of America, N.A., dated
September 23, 2011 (27)

List of Subsidiaries of Acadia Realty Trust (29)

Consent of Registered Public Accounting Firm to incorporation by reference its reports into Forms S-3 and Forms S-8 (29)

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 (29)

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 (29)

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 (29)

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 (29)

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 (13)

101.INS

101.SCH

101.CAL

101.DEF
101.LAB

101.PRE

XBRL Instance Document* (28)

XBRL Taxonomy Extension Schema Document* (28)

XBRL Taxonomy Extension Calculation Document* (28)

XBRL Taxonomy Extension Definitions Document* (28)
XBRL Taxonomy Extension Labels Document* (28)

XBRL Taxonomy Extension Presentation Document* (28)

* Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for

purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities
Exchange Act of 1934, and otherwise is not subject to liability under these sections.

Notes:

(1) 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

Acadia Realty Trust 2011 Annual Report

70945

(2) 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

(3) 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

(4) Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Annual Report on Form10-K filed for the fiscal

year ended December 31, 1998

(5) 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

(6) Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Form 8-K filed on April 20, 1998

(7) 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

(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, 2001

(9) Incorporated by reference to the copy thereof filed as an Exhibit to Yale University’s Schedule 13D filed on September 25, 2002

(10) 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

(11) 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.

(12) 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

(13) 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

(14) 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.

(15) Management contract or compensatory plan or arrangement.

(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, 2005.

(17) 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

(18) 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

(19) 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.

(20) 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.

(21) 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, 2010.

(22) 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, 2010.

(23) 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, 2010.

(24) 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, 2011.

(25) Incorporated by reference to the copy thereof filed as an Exhibit to the Company’s Current Report on Form 8-K filed on March 9,

2011.

(26) 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 June 30, 2011.

(27) 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, 2011.

(28) XBRL Interactive Data File will be filed by amendment to this Annual Report on Form 10-K within 30 days of the filing date of

this Annual Report on Form 10-K, as permitted by Rule 405(a)(2)(ii) of Regulation S-T.

(29) Filed herewith.

58 Acadia Realty Trust 2011 Annual Report

52039

ACADIA REALTY TRUST AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Balance Sheets as of December 31, 2011 and 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Income for the years ended December 31, 2011, 2010 and 2009 . . . . . . .

F-2

F-3

F-4

Consolidated Statements of Comprehensive Income for the years ended December 31, 2011, 2010

and 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-6

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2011, 2010 and
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009 . . .

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule III—Real Estate and Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-7

F-9

F-11

F-42

Acadia Realty Trust 2011 Annual Report

F-1

20223

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, 2011 and 2010 and the related consolidated statements of income, comprehensive

income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2011. In

connection with our audits of the financial statements we have also audited the accompanying financial statement

schedule listed on page F-1. These financial statements 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

supporting 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 schedule. 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, 2011, and 2010 and the results of their

operations and their cash flows for each of the three years in the period ended December 31, 2011, 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.

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, 2011, based on

criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of

the Treadway Commission (COSO) and our report dated February 28, 2012 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

New York, New York

February 28, 2012

F-2 Acadia Realty Trust 2011 Annual Report

52361

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
Notes receivable and preferred equity investments, net
Investments in and advances to unconsolidated affiliates
Cash and cash equivalents
Cash in escrow
Rents receivable, net
Deferred charges, net
Acquired lease intangibles, net
Prepaid expenses and other assets
Accounts receivable from related parties
Assets of discontinued operations

December 31,

2011

2010

$ 285,622
958,995
7,483

1,252,100
180,796

1,071,304
219,645
59,989
84,568
89,812
20,969
26,415
25,854
26,721
26,667
1,375
—

$ 219,981
837,452
4,236

1,061,669
156,117

905,552
243,892
89,202
31,036
120,592
28,610
17,464
23,714
18,622
19,912
2,409
23,801

Total assets

$1,653,319

$1,524,806

Liabilities
Mortgages payable
Convertible notes payable, net of unamortized discount of $0 and $1,063,

respectively

Distributions in excess of income from, and investments in,

unconsolidated affiliates

Accounts payable and accrued expenses
Dividends and distributions payable
Acquired lease and other intangibles, net
Other liabilities
Liabilities of discontinued operations

Total liabilities

$ 787,910

$ 806,212

930

48,712

21,710
39,647
7,914
5,462
20,437
—

20,884
27,458
7,427
5,737
20,279
575

884,010

937,284

Equity
Shareholders’ Equity
Common shares, $.001 par value, authorized 100,000,000 shares, issued

and outstanding 42,586,376 and 40,254,525 shares, respectively

Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings

Total shareholders’ equity
Noncontrolling interests

Total equity

Total liabilities and equity

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

43
348,667
(3,913)
39,317

384,114
385,195

769,309

40
303,823
(2,857)
17,206

318,212
269,310

587,522

$1,653,319

$1,524,806

Acadia Realty Trust 2011 Annual Report

F-3

Consolidated Statements of Income

30678

(dollars in thousands except per share amounts)
Revenues
Rental income
Interest income
Expense reimbursements
Lease termination income
Management fee income
Other

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 earnings (losses) of unconsolidated affiliates
Impairment of investment in unconsolidated affiliate
Other interest income
Gain from bargain purchase
Gain on debt extinguishment
Interest and other finance expense

Income from continuing operations before income taxes
Income tax provision

Income from continuing operations

Discontinued operations
Operating income from discontinued operations
Loss on impairment of asset
Gain on sale of property

Income from discontinued operations

Net income

Noncontrolling interests
Continuing operations
Discontinued operations

Net (income) loss attributable to noncontrolling interests

Years ended December 31,

2011

2010

2009

$112,223
11,429
22,388
96
1,677
2,348

$ 97,475
19,161
20,499
290
1,424
2,196

$ 86,021
19,698
19,435
2,751
1,961
4,579

150,161

141,045

134,445

29,371
18,686
23,086
32,986
—
—

104,129

46,032
1,555
—
276
—
1,268
(37,109)

12,022
474

11,548

2,262
(6,925)
46,830

42,167

53,715

8,514
(10,674)

(2,160)

29,223
17,255
20,220
28,808
—
—

95,506

45,539
10,971
—
408
33,805
—
(40,498)

50,225
2,890

47,335

3,332
—
—

3,332

50,667

(19,075)
(1,535)

(20,610)

28,143
15,848
22,006
27,612
2,487
1,734

97,830

36,615
(1,529)
(3,768)
642
—
7,057
(35,632)

3,385
1,541

1,844

3,719
—
7,143

10,862

12,706

24,730
(6,303)

18,427

Net income attributable to Common Shareholders

$ 51,555

$ 30,057

$ 31,133

F-4 Acadia Realty Trust 2011 Annual Report

79449

Consolidated Statements of Income continued

(dollars in thousands except per share amounts)
Basic earnings per share
Income from continuing operations
Income from discontinued operations

Basic earnings per share

Diluted earnings per share
Income from continuing operations
Income from discontinued operations

Diluted earnings per share

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

Years ended December 31,

2011

2010

2009

$0.50
0.77

$1.27

$0.49
0.77

$1.26

$0.70
0.05

$0.75

$0.70
0.04

$0.74

$0.70
0.12

$0.82

$0.70
0.12

$0.82

Acadia Realty Trust 2011 Annual Report

F-5

03265

Consolidated Statements of Comprehensive Income

(dollars in thousands)
Net income
Other Comprehensive (loss) income:
Unrealized loss on valuation of swap agreements
Reclassification of realized interest on swap agreements

Other comprehensive (loss) income

Comprehensive income
Comprehensive (income) loss attributable to noncontrolling interests

Comprehensive income attributable to Common Shareholders

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

Years ended December 31,
2009
2010
2011

$53,715

$ 50,667

$12,706

(5,611)
3,081

(2,530)

51,185
(686)

(2,683)
2,749

50,733
(20,539)

(1,052)
2,745

1,693

14,399
18,248

$50,499

$ 30,194

$32,647

F-6 Acadia Realty Trust 2011 Annual Report

Consolidated Statements of Shareholders’ Equity

01713

Common Shares
Shares Amount

Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Total
Common
Shareholders’
Equity

Noncontrolling
Interests

Total
Equity

32,357

$ 32

$218,527

$(4,508)

$ 13,671

$227,722

$214,506

$442,228

(amounts in thousands, except per share amounts)

Balance at January 1, 2009
Conversion of OP Units to Common
Shares by limited partners of the
Operating Partnership

Issuance of Common Shares, net of

issuance costs

Issuance of Common Shares through

special dividend

Vesting of employee Restricted Share and

16 —

5,750

1,287

65,216

16,190

LTIP awards

253 —

2,957

Dividends declared ($0.75 per Common

Share)

Employee exercise of 258,900 options to

— —

—

purchase Common Shares

259 —

1,556

Common Shares issued under Employee

Share Purchase Plan

Issuance of Common Shares to Trustees
Employee Restricted Shares cancelled
Deferred shares converted to Common

Conversion options on Convertible Notes

purchased (Note 9)

Noncontrolling interest distributions
Noncontrolling interest contributions

9 —
25 —
(359) —

190 —

— —
— —
— —

106
635
(5,423)

—

(840)
—
—

Comprehensive income (loss):
Net income (loss)
Unrealized loss on valuation of swap

agreements

Reclassification of realized interest on

swap agreements

Total comprehensive income (loss)

— —

—

(912)

2,426

1,514

Balance at December 31, 2009

39,787

299,014

(2,994)

39,787

299,014

(4,508)

(15,008)

279,538

238,540

518,078

—

—
—
—

—

—
—
—

—

65,222

16,192

2,957

(90)

—

65,222

16,192

890

3,847

(28,679)

(795)

(29,474)

—

—
—
—

—

—
—
—

1,556

106
635
(5,423)

—

(840)
—
—

—

—
—
—

—

—
(1,624)
25,653

1,556

106
635
(5,423)

—

(840)
(1,624)
25,653

—

31,133

(18,427)

12,706

—

31,133

16,125

(912)

(140)

(1,052)

2,426

32,647

319

(18,248)

2,745

14,399

312,185

220,292

532,477

Acadia Realty Trust 2011 Annual Report

F-7

Consolidated Statements of Shareholders’ Equity
continued

59489

(amounts in thousands, except per share amounts)
Conversion of OP Units to Common
Shares by limited partners of the
Operating Partnership

Vesting of employee Restricted Share and

LTIP awards

Dividends declared ($0.72 per Common

Share)

Exercise of trustees options
Common Shares issued under Employee

Share Purchase Plan

Issuance of Common Shares to Trustees
Employee Restricted Shares cancelled
Noncontrolling interest distributions
Noncontrolling interest contributions

Comprehensive income (loss):
Net income
Unrealized loss on valuation of swap

agreements

Reclassification of realized interest on

swap agreements

Total comprehensive income

Balance at December 31, 2010
Conversion of OP Units to Common
Shares by limited partners of the
Operating Partnership

Issuance of Common Shares, net of

issuance costs

Vesting of employee Restricted Share and

LTIP awards

Dividends declared ($0.72 per Common

Share)

Exercise of trustees options
Common Shares issued under Employee

Share Purchase Plan

Issuance of LTIP Unit awards to

employees

Issuance of Common Shares to Trustees
Employee Restricted Shares cancelled
Noncontrolling interest distributions
Noncontrolling interest contributions

Comprehensive income (loss):
Net income
Unrealized loss on valuation of swap

agreements

Reclassification of realized interest on

swap agreements

Total comprehensive income (loss)

Common Shares
Shares Amount

Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Total
Common
Shareholders’
Equity

Noncontrolling
Interests

Total
Equity

365 —

3,240

133 —

2,060

— —
7 —

6 —
13 —
(57) —
— —
— —

—
109

100
266
(966)
—
—

—

—
—

—
—
—
—
—

—

3,240

2,060

(3,240)

—

1,778

3,838

(28,976)
—

(28,976)
109

(723)
—

(29,699)
109

—
—
—
—
—

100
266
(966)
—
—

—
—
—
(2,892)
33,556

100
266
(966)
(2,892)
33,556

40,254

303,823

(2,994)

(12,851)

288,018

248,771

536,789

—

30,057

20,610

50,667

— —

—

(2,329)

2,466

137

40,254

303,823

(2,857)

11 —

2,250

— —
2 —

5 —

— —
8 —
(40) —
— —
— —

44,658

481

—
16

—
264
(724)
—
—

—

—
—

—

—
—
—
—
—

—

30,057

17,206

—

(2,329)

(354)

(2,683)

2,466

30,194

283

20,539

2,749

50,733

318,212

269,310

587,522

44,660

(56)

—

44,660

482

3,550

4,032

(29,444)
—

(29,444)
16

—

—
—
—
—
—

—
264
(724)
—
—

(984)
—

—

2,441
—
—
(7,697)
117,945

(30,428)
16

2,441
264
(724)
(7,697)
117,945

42,586

348,667

(2,857)

(12,238)

333,615

384,509

718,124

— —

—

51,555

2,160

53,715

(3,461)

2,405

(1,056)

—

51,555

(3,461)

(2,150)

(5,611)

2,405

50,499

676

686

3,081

51,185

Balance at December 31, 2011

42,586

$ 43

$348,667

$(3,913)

$ 39,317

$384,114

$385,195

$769,309

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

F-8 Acadia Realty Trust 2011 Annual Report

23753

Consolidated Statements of Cash Flows

(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
Amortization of financing costs
Gain from bargain purchase
Gain on sale of property
Gain on debt extinguishment
Impairment of asset
Amortization of discount on convertible debt
Non-cash accretion of notes receivable
Share compensation expense
Equity in (earnings) losses of unconsolidated affiliates
Impairment of investment in unconsolidated affiliate
Distributions of operating income from unconsolidated affiliates
Reserve for notes receivable
Provision for bad debts
Other, net

Changes in assets and liabilities

Cash in escrow
Rents receivable, net
Prepaid expenses and other assets
Accounts receivable from related parties
Accounts payable and accrued expenses
Other liabilities

Net cash provided by operating activities

Cash Flows from Investing Activities
Investments in real estate
Deferred acquisition and leasing costs
Investments in and advances to unconsolidated affiliates
Return of capital from unconsolidated affiliates
Repayments of notes receivable
Increase in notes receivable
Proceeds from sale of property

Years ended December 31,

2011

2010

2009

$ 53,715

$ 50,667

$ 12,706

33,683
3,918
—
(46,830)
(1,268)
6,925
829
(786)
4,299
(1,555)
—
5,515
—
252
472

7,319
(8,894)
(5,906)
1,034
14,513
(903)

66,332

(181,498)
(6,298)
(54,981)
4,504
56,519
(34,343)
62,940

34,499
6,054
(33,805)
—
—
—
1,042
(6,164)
4,104
(10,971)
—
12,124
—
3,331
906

(20,028)
(4,662)
4,297
(2,408)
1,874
3,517

44,377

(80,520)
(3,904)
(19,116)
785
42,010
—
—

33,520
3,722
—
(7,143)
(7,057)
—
1,280
(5,352)
3,969
1,529
3,768
880
1,734
4,132
7,457

(1,788)
(8,370)
6,166
1,990
(5,902)
221

47,462

(127,322)
(11,368)
(5,603)
4,705
13,614
(9,362)
11,956

Net cash used in investing activities

(153,157)

(60,745)

(123,380)

Acadia Realty Trust 2011 Annual Report

F-9

38148

Consolidated Statements of Cash Flows continued

(dollars in thousands)

Cash Flows from Financing Activities
Principal payments on mortgage notes
Proceeds received on mortgage notes
Purchase of convertible notes payable
Increase in deferred financing and other costs
Capital contributions from noncontrolling interests
Distributions to noncontrolling interests
Dividends paid to Common Shareholders
Proceeds from issuance of Common Shares, net of issuance costs
Repurchase and 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

(Decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period

Years ended December 31,

2011

2010

2009

(161,389)
144,959
(48,997)
(2,877)
117,945
(8,605)
(29,033)
44,659
(726)
93
16

56,045

(30,780)
120,592

(127,823)
175,793
(240)
(6,830)
33,556
(1,638)
(28,909)
—
(966)
100
109

43,152

26,784
93,808

(182,610)
260,065
(46,736)
(1,755)
25,653
(2,879)
(30,163)
65,222
(5,424)
106
1,556

83,035

7,117
86,691

Cash and cash equivalents, end of period

$ 89,812

$ 120,592

$ 93,808

Supplemental disclosure of cash flow information
Cash paid during the period for interest, net of capitalized interest of

$4,850, $2,903, and $3,516, respectively

$ 32,120

$ 31,920

$ 30,183

Cash paid for income taxes

3,776

1,263

777

Supplemental disclosure of non-cash investing and financing

activities

Dividends paid through the issuance of Common Shares

Acquisition of interest in unconsolidated affiliates
Real Estate, net
Assumption of mortgage debt
Gain from bargain purchase
Other assets and liabilities
Investment in unconsolidated affiliates

Cash included in investment in real estate

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

—

$ 16,192

—
—
—
—
—

—

$(108,000)
25,990
33,805
7,532
37,824

(2,849)

—
—
—
—
—

—

F-10 Acadia Realty Trust 2011 Annual Report

64811

Notes to Consolidated Financial Statements

Note 1

Organization, Basis of
Presentation and Summary of
Significant Accounting Policies
Acadia Realty Trust (the “Trust”) and subsidiaries

(collectively, the “Company”), is a fully-integrated equity

real estate investment trust (“REIT”) focused on the

ownership, management and redevelopment of retail

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, 2011, Fund I was fully

invested, with the Operating Partnership having

contributed $16.5 million to Fund I and $2.7 million to

Mervyns I.

properties and urban/infill mixed-use properties with a

The Operating Partnership is the general partner of Fund

retail component located primarily in high-barrier-to-entry,

I and sole managing member of Mervyns I, with a

densely-populated metropolitan areas in the United

22.2% interest in both Fund I and Mervyns I and is also

States along the East Coast and in Chicago.

entitled to a profit participation in excess of its invested

As of December 31, 2011, the Company operated 82

properties, which it owns or has an ownership interest

in, within its Core Portfolio or within the three

opportunity funds (Fund I, Fund II and Fund III (defined

below), which the Company refers to as the

“Opportunity Funds”). The Company defines its Core

Portfolio as those properties either 100% owned by, or

partially owned through joint venture interests by, the

Operating Partnership (defined below), or subsidiaries

thereof, not including those properties owned through its

Opportunity Funds.

All of the Company’s assets are held by, and all of its

operations are conducted through, Acadia Realty Limited

Partnership (the “Operating Partnership”) and entities in

which the Operating Partnership owns a controlling

interest. As of December 31, 2011, the Trust controlled

99% 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 primarily represent

entities or individuals that contributed their interests in

certain properties or entities to the Operating Partnership

in exchange for common or preferred units of limited

partnership interest (“Common OP Units” or “Preferred

OP Units”) and employees who have been awarded

restricted Common OP Units (“LTIP Units”) as long-term

incentive compensation (Note 15). Limited partners

holding Common OP Units are generally entitled to

exchange their units on a one-for-one basis for common

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 the return of all capital

contributions. Thereafter, remaining cash flow (which is

net of distributions and fees to the Operating Partnership

for management, asset management, leasing,

construction and legal services) is distributed 20% to the

Operating Partnership as a Promote and 80% to the

partners (including the Operating Partnership). As all

contributed capital and accumulated preferred return has

been distributed to investors, the Operating Partnership

is currently entitled to a Promote on all earnings and

distributions.

The Company formed Acadia Strategic Opportunity

Fund II, LLC (“Fund II”) and 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 committed 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, 2011, the Operating Partnership had

contributed $48.8 million to Fund II and $7.6 million to

Mervyns II.

shares of beneficial interest of the Trust (“Common

The Company formed Acadia Strategic Opportunity

Shares”). This structure is referred to as an umbrella

Fund III LLC (“Fund III”) with fourteen institutional

partnership REIT or “UPREIT.”

The Company formed Acadia Strategic Opportunity

Fund I, LP (“Fund I”), and formed Acadia Mervyn

investors, including a majority of the investors from Fund

I and Fund II, with a total of $502.5 million of committed

discretionary capital. The Operating Partnership’s share of

Acadia Realty Trust 2011 Annual Report

F-11

15753

Notes to Consolidated Financial Statements continued

the invested capital is $100.0 million and it is the

primary beneficiary under ASC Topic 810, as discussed

managing member with a 19.9% interest in Fund III. The

above. The Company does have significant influence over

terms and structure of Fund III are substantially the

the investments which requires equity method

same as the previous Funds I and II, including the

accounting. Under the equity method, the Company

Promote structure, with the exception that the Preferred

increases its investment for its proportionate share of net

Return is 6%. As of December 31, 2011, the Operating

income and contributions to the joint venture and

Partnership had contributed $45.1 million to Fund III.

decreases its investment balance by recording its

Principles of Consolidation
The consolidated financial statements include the

consolidated accounts of the Company and its controlling

investments in partnerships and limited liability

companies in which the Company has control in

accordance Financial Accounting Standards Board

(“FASB”) Accounting Standards Codification (“ASC”)

Topic 810 “Consolidation” (“ASC Topic 810”). The

ownership interests of other investors in these entities

are recorded as noncontrolling interests. All significant

intercompany balances and transactions have been

eliminated in consolidation. Investments in entities for

proportionate share of net loss and distributions. The

Company recognizes income for distributions in excess

of its investment where there is no recourse to the

Company. For investments in which there is recourse to

the Company, distributions in excess of the investment

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 unconsolidated affiliate until it receives the

audited financial statements of Albertson’s to support the

equity earnings or losses in accordance with ASC Topic

323, “Investments — Equity Method and Joint

which the Company has the ability to exercise significant

Ventures.”

influence over, but does not have financial or operating

control, are accounted for using the equity method of

accounting. Accordingly, the Company’s share of the

earnings (or losses) of these entities are included in

consolidated net income.

Variable interest entities are accounted for within the

scope of ASC Topic 810 and are required to be

consolidated by their primary beneficiary. The primary

beneficiary of a variable interest entity is the enterprise

that has the power to direct the activities that most

significantly impact the variable interest entity’s economic

performance and the obligation to absorb losses or the

right to receive benefits of the variable interest entity

that could be significant to the variable interest entity.

Management has evaluated the applicability of ASC Topic

The Company periodically reviews its investment in

unconsolidated 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 carrying value of the investment. During

the years ended December 31, 2011 and 2010, there

were no impairment charges related to the Company’s

investment in unconsolidated joint ventures. During the

year ended December 31, 2009, the Company recorded

an impairment charge of $3.8 million related to its

investment in unconsolidated joint ventures.

Use of Estimates
Accounting principles generally accepted in the United

810 to its investments in certain joint ventures and

States of America (“GAAP”) require the Company’s

determined that these joint ventures are not variable

management to make estimates and assumptions that

interest entities or that the Company is not the primary

affect the amounts reported in the financial statements

beneficiary and, therefore, consolidation of these

and accompanying notes. The most significant

ventures is not required. These investments are

assumptions and estimates relate to the valuation of real

accounted for using the equity method of accounting.

estate, depreciable lives, revenue recognition and the

Investments in and Advances to Unconsolidated
Joint Ventures
The Company accounts for its investments in

unconsolidated 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

F-12 Acadia Realty Trust 2011 Annual Report

collectability of notes receivable and rents receivable.

Application of these estimates and assumptions requires

the exercise of judgment as to future uncertainties and,

as a result, actual results could differ from these

estimates.

14256

Real Estate
Real estate assets are stated at cost less accumulated

to recover its carrying costs on properties held for use,

the Company reduces its carrying costs to fair value, and

depreciation. Expenditures for acquisition, development,

for properties held for sale, the Company reduces its

construction and improvement of properties, as well as

carrying value to the fair value less costs to sell. During

significant renovations are capitalized. Interest costs are

the year ended December 31, 2011, the Company

capitalized until construction is substantially complete and

determined that the value of the Granville Centre owned

the real estate is ready for its intended use. Construction

by Fund I was impaired. Accordingly, an impairment loss

in progress includes costs for significant property

of $6.9 million was recorded, of which the Operating

expansion and redevelopment. Depreciation is computed

Partnership’s share was $1.5 million. During the years

on the straight-line basis over estimated useful lives of

ended December 31, 2010, and 2009, no impairment

30 to 40 years for buildings, the shorter of the useful life

losses were recognized. Management does not believe

or lease term for tenant improvements and five years for

that the values of its properties within the portfolio are

furniture, fixtures and equipment. Expenditures for

impaired as of December 31, 2011.

maintenance and repairs are charged to operations as

incurred.

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

leases and customer relationships) and acquired liabilities

in accordance with ASC Topic 805 “Business

Combinations” and ASC Topic 350 “Intangibles —

Sale of Real Estate
The Company recognizes property sales in accordance

with ASC Topic 970 “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.

Goodwill and Other,” and allocates the acquisition price

based on these assessments. Fixed-rate renewal options

Real Estate Held for Sale
The Company evaluates the held-for-sale classification of

have been included in the calculation of the fair value of

its real estate each quarter. Assets that are classified as

acquired leases where applicable. To the extent there

held for sale are recorded at the lower of their carrying

were fixed-rate options at below-market rental rates, the

amount or fair value less cost to sell. Assets are

Company included these along with the current term

generally classified as held for sale once management

below-market rent in arriving at the fair value of the

has initiated an active program to market them for sale

acquired leases. The discounted difference between

and has received a firm purchase commitment. The

contract and market rents is being amortized over the

results of operations of these real estate properties are

remaining applicable lease term, inclusive of any option

reflected as discontinued operations in all periods

periods. The Company assesses fair value based on

presented.

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

operations for impairment when there is an event or a

change in circumstances that indicates that the carrying

amount may not be recoverable. The Company measures

and 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 Company does not expect

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.

Involuntary Conversion of Asset
The Company experienced significant flooding that

resulted in extensive damage to one of its properties

during September 2011. Costs related to the clean-up

and redevelopment are insured to a limit sufficient that

the Company believes will allow for full restoration of the

property. Loss of rents during the redevelopment are

covered by business interruption insurance subject to a

Acadia Realty Trust 2011 Annual Report

F-13

94105

Notes to Consolidated Financial Statements continued

$0.1 million deductible. The Company plans to restore

property operating expenses. These reimbursements are

the improvements that were damaged by the flooding

recognized as revenue in the period the related expenses

and expects that the costs of such restoration and

are incurred.

rebuilding will be recoverable from insurance proceeds.

In accordance with ASC Topic 360 “Property, Plant and

Equipment” and as a result of the above-described

property damage, the Company has recorded a write-

down of the asset’s carrying value in the accompanying

2011 consolidated balance sheets of approximately $1.4

million as of December 31, 2011. In addition, the

Company has recorded an insurance recovery in the

same amount that is included in Prepaid Expenses and

Other Assets in the accompanying 2011 consolidated

balance sheets. The Company has also provided a $0.1

million provision in the 2011 consolidated statement of

income for its exposure to the insurance deductible

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

estimated to be uncollectible. Once the amount is

ultimately deemed to be uncollectible, it is written off.

Rents receivable at December 31, 2011 and 2010 are

shown net of an allowance for doubtful accounts of $5.3

million and $7.2 million, respectively.

Notes Receivable and Preferred Equity
Investments
Notes receivable and preferred equity investments are

attributable to the loss of rents. As of December 31,

intended to be held to maturity and are carried at

2011, the Company has received initial insurance

amortized cost. Interest income from notes receivable

proceeds of approximately $6.9 million.

Deferred Costs
Fees and costs paid in the successful negotiation of

leases are deferred and 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 amortized over the term of the related debt

obligation.

and preferred equity investments are recognized on the

effective 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 investments. In performing this review,

Management Contracts
Income from management contracts is recognized on an

management considers the estimated net recoverable

value of the loan as well as other factors, including the

accrual basis as such fees are earned. The initial

acquisition cost of any 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 is entitled to take possession of 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 recognition 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

space. As of December 31, 2011 and 2010, included in

becomes contractually current and performance is

Rents Receivable, Net on the accompanying consolidated

demonstrated to be resumed.

balance sheets, are unbilled rents receivable relating to

straight-lining of rents of $22.8 million and $16.9 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 breakpoint is met. In

addition, leases typically provide for the reimbursement

to the Company of real estate taxes, insurance and other

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.

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. Cash and cash

F-14 Acadia Realty Trust 2011 Annual Report

07836

equivalents are maintained at financial institutions and, at

positions as a component of the provision for income

times, balances may exceed the federally insured limit by

taxes.

the Federal Deposit Insurance Corporation. The Company

has never experienced any losses related to these

balances.

Stock-based Compensation
The Company accounts for stock-based compensation

pursuant to ASC Topic 718, “Compensation—Stock

Restricted Cash and Cash in Escrow
Restricted cash and cash in escrow consist principally of

Compensation.” As such, all equity based awards are

reflected as compensation expense in the Company’s

cash held for real estate taxes, construction costs,

consolidated financial statements over their vesting

property maintenance, insurance, minimum occupancy

period based on the fair value at the date of grant.

and property operating income requirements at specific

properties as required by certain loan agreements.

Recent Accounting Pronouncements
During April 2011, the FASB issued Accounting

Income Taxes
The Company has made an election to be taxed, and

Standards Update (“ASU”) No. 2011-02, “A Creditor’s

Determination of Whether a Restructuring Is a Troubled

believes it qualifies as a REIT under Sections 856

Debt Restructuring.” ASU 2011-02 requires a creditor to

through 860 of the Internal Revenue Code of 1986, as

evaluate whether a restructuring constitutes a troubled

amended (the “Code”). To maintain REIT status for

debt restructuring by concluding that the restructuring

Federal income tax purposes, the Company is generally

constitutes a concession and that the debtor is

required to distribute at least 90% of its REIT taxable

experiencing financial difficulties and was effective for

income to its shareholders as well as comply with

the first interim or annual period beginning on or after

certain other income, asset and organizational

June 15, 2011. The adoption of ASU 2011-02 did not

requirements as defined in the Code. Accordingly, the

have a material impact on the Company’s financial

Company is generally not subject to Federal corporate

condition or results of operations.

income tax to the extent that it distributes 100% of its

REIT taxable income each year.

During May 2011, the FASB issued ASU No. 2011-04,

“Amendments to Achieve Common Fair Value

Although it may qualify for REIT status for Federal

Measurement and Disclosure Requirements in U.S.

income tax purposes, the Company is subject to state

GAAP and IFRSs.” ASU No. 2011-04 amended ASC 820,

income or franchise taxes in certain states in which

Fair Value Measurements and Disclosures, to converge

some of its properties are located. In addition, taxable

the fair value measurement guidance in GAAP and

income from non-REIT activities managed through the

International Financial Reporting Standards (“IFRS”). The

Company’s taxable REIT subsidiaries (“TRS”) is fully

amendments, which primarily require additional fair value

subject to Federal, state and local income taxes.

disclosure, are to be applied prospectively. ASU 2011-04

The Company accounts for TRS income taxes under the

liability method as required by ASC Topic 740, “Income

Taxes.” Under the liability method, deferred income

taxes are recognized for the temporary differences

is effective for interim and annual periods beginning after

December 15, 2011. The adoption of ASU No. 2011-04 is

not expected to have a material impact on the

Company’s financial condition or results of operations.

between GAAP basis and the tax basis of the TRS

During June 2011, the FASB issued ASU No. 2011-05,

income, assets and liabilities.

In accordance with ASC Topic 740, 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, if successfully challenged,

could 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 recognizes

potential interest and penalties related to uncertain tax

“Presentation of Comprehensive Income,” which revises

the manner in which companies present comprehensive

income. Under ASU No. 2011-05, companies may

present comprehensive income, which is net income

adjusted for the components of other comprehensive

income, either in a single continuous statement of

comprehensive income or by using two separate but

consecutive statements. Regardless of the alternative

chosen, companies must display adjustments for items

reclassified from other comprehensive income into net

income within the presentation of both net income and

Acadia Realty Trust 2011 Annual Report

F-15

48509

Notes to Consolidated Financial Statements continued

other comprehensive income. ASU 2011-05 is effective

During May 2011, acquired a 44,000 square foot retail

for interim and annual periods beginning after December

property located in Chicago, Illinois, for $28.4 million.

15, 2011, on a retrospective basis. The Company

adopted ASU 2011-05 as of December 31, 2011 and the

adoption did not have a material impact on the

The Company expensed $0.8 million of costs related to

these 2011 Core Portfolio acquisitions.

Company’s financial condition or results of operations.

Fund III

During December 2011, the FASB issued ASU No. 2011-

During December 2011, acquired New Hyde Park

10, “Property, Plant and Equipment (Topic 360):

Derecognition of In substance Real Estate - a Scope

Clarification” which clarifies current guidance found in

ASC Topic 810 as to how to account when a reporting

entity ceases to have a controlling financial interest in a

subsidiary that is in substance real estate as a result of

default on the subsidiary’s nonrecourse debt. ASU No.

2011-10 is effective for fiscal years, and interim periods

within those years, beginning on or after June 15, 2012.

The adoption of ASU No. 2011-10 is not expected to

have a material impact on the Company’s financial

condition or results of operations.

Note 2

Acquisition and Disposition of
Properties and Discontinued
Operations

Shopping Center, a 31,500 square foot center, located in

New Hyde Park, NY, for approximately $11.3 million.

During December 2011, in a venture with an unaffiliated

partner, acquired Parkway Crossing, a 260,000 square

foot center located in Baltimore, MD for approximately

$21.6 million.

During December 2011, in a venture with an unaffiliated

partner, acquired 654 Broadway, an 18,700 square foot

property located in New York City for approximately

$13.3 million.

During April 2011, acquired a 105,000 square foot

property located in the East Loop section of downtown

Chicago, Illinois for $31.6 million.

During February 2011, in a venture with an unaffiliated

partner, acquired three retail properties (“Lincoln Road”),

aggregating 61,400 square feet located in the Lincoln

Road area of South Miami Beach, Florida for $51.9

A. Acquisition and Disposition of Properties

million, which included the assumption of $20.6 million of

Acquisitions
The Company acquired the following properties through

in-place mortgage debt. Fund III has a 95% interest in

these properties.

its Core Portfolio, Fund III and Fund II as follows:

During February 2011, in a venture with an unaffiliated

Core Portfolio
During September 2011, acquired a 50% equity interest

in an entity which owns a six property portfolio (the

“Georgetown Portfolio”) located in Washington, D.C. for

a purchase price of $13.4 million, which included the

assumption of 50% of in-place debt of $9.2 million,

partner, acquired a 64,600 square foot single-tenant retail

property (“White Oak”) located in Silver Spring, Maryland

for $9.8 million. Fund III has a 90% interest in the

property.

The Company expensed $0.6 million of costs related to

these 2011 Fund III acquisitions.

inclusive of the Company’s existing mezzanine loan to

During December 2010, in a joint venture with an

the entity (Note 5).

During August 2011, acquired a six property portfolio

located in Chicago, Illinois for $18.0 million.

During August 2011, acquired a newly constructed

13,000 square foot property located in the Bronx, New

York for $9.1 million.

During June 2011, acquired a 6,000 square foot single-

tenant retail condominium located in New York, New

York for $4.8 million.

unaffiliated partner, acquired White City Shopping Center,

a 255,000 square foot center located in Shrewsbury,

Massachusetts for $56.0 million.

During January 2009, acquired the 641,000 square foot

Cortlandt Towne Center in Cortlandt, NY for $78.0 million

and expensed $0.2 million of costs associated with this

acquisition.

The following table sets forth a summary of the finalized

acquisition purchase price consideration of each major

F-16 Acadia Realty Trust 2011 Annual Report

60788

class of assets acquired and liabilities assumed in the

During June 2010, Fund II acquired all of CUIP’s interest

2011 acquisitions discussed above:

in CityPoint for $9.2 million (the “Transaction”),

Total Purchase Price
Consideration

(dollars in thousands)

Land

Buildings and improvements

Acquisition-related intangible
assets (in Acquired lease
intangibles, net)

Acquisition-related intangible
liabilities (in Acquired lease
and other intangibles, net)

Total consideration

$24,993

39,594

9,945

(627)

$73,905

Fund II

Prior to June 30, 2010, the Company, through Fund II in

a joint venture with an unaffiliated partner, California

Urban Investment Partners, LLC (“CUIP”), owned a

leasehold interest in CityPoint, a mixed-use,

redevelopment project located in downtown Brooklyn,

New York. Fund II owned a 75% interest in the retail

component, a 50% interest in the office component and

no interest in the residential component of CityPoint.

CUIP owned the remaining interests in the retail and

office components and 100% of the residential

component of the project. Accordingly, Fund II’s

investment represented 24.75% of the overall original

acquisition cost and subsequent carry and pre-

consisting of a current payment of $2.0 million and

deferred payments, potentially through 2020, aggregating

$7.2 million. Fund II also assumed CUIP’s share of the

first mortgage debt of $19.6 million.

The Transaction was a business combination achieved in

stages and, as a result, Fund II was required to report its

entire investment in CityPoint at fair market value. Based

on a June 30, 2010 third-party appraisal, CityPoint was

valued at $108.0 million which resulted in Fund II

recording a non-cash gain from bargain purchase of

approximately $33.8 million. A majority of the gain was

attributable to the components of CityPoint that was

acquired as the book value of the Company’s original

investment approximated fair value. The Operating

Partnership’s share of this gain, net of the noncontrolling

interests’ share, totaled $6.3 million. As a result of the

Transaction, the Company changed its method of

accounting for CityPoint from the equity method and

now consolidates CityPoint in its consolidated financial

statements. As CityPoint is currently in the

redevelopment stage, there are no revenues or earnings

from CityPoint included in the Company’s consolidated

statements of income for the years ended December 31,

2011, 2010 and 2009.

Dispositions
During 2011 and 2009, the Company disposed of the

development costs and was accounted for using the

following properties:

equity method.

(dollars in thousands)
Property

Fifteen Kroger/Safeway

locations

Granville Centre

Ledgewood Mall

Oakbrook

Blackman Plaza

Owner

Year Sold

Sales Price

Gain (Loss)

GLA

Fund I

Core Portfolio

Fund II

Core Portfolio

2011

2009

$17,490

2,250

37,000

8,200

2,500

9,481

$14,645

(313)

28,576

3,922

1,506

5,637

617,276

134,997

517,151

112,000

125,264

277,700

Six Kroger locations

Fund I

Total

$76,921

$53,973

1,784,388

B. Discontinued Operations
The Company reports properties held-for-sale and

properties sold during the periods as discontinued

operations. The assets and liabilities and results of

operations of discontinued operations are reflected as a

separate component within the accompanying

consolidated financial statements for all periods

presented.

The combined assets and liabilities as of December 31,

2010, and the results of operations of the properties

classified as discontinued operations for the years ended

Acadia Realty Trust 2011 Annual Report

F-17

35253

Notes to Consolidated Financial Statements continued

December 31, 2011, 2010 and 2009, are summarized as

Note 3

follows:

Balance Sheet

(dollars in thousands)

Assets

Net real estate

Rents receivable, net

Deferred charges, net of amortization

Prepaid expenses and other assets, net

December 31,
2010

Segment Reporting
The Company has five reportable segments: Core

Portfolio, Opportunity Funds, Self-Storage Portfolio, Notes

Receivable and Other. Notes Receivable consists of the

$20,981

Company’s notes receivable and preferred equity

649

2,016

155

investment and related interest income. Other consists

primarily 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. The Company evaluates property performance

primarily based on net operating income before

depreciation, amortization and certain nonrecurring items.

Investments in the Core Portfolio are typically held long-

term. Given the contemplated finite life of the

Opportunity Funds, these investments are typically held

for shorter terms. Fees earned by the Company as the

general partner/member of the Opportunity Funds are

eliminated in the Company’s consolidated financial

statements. The following table sets forth certain

segment information for the Company, reclassified for

discontinued operations, as of and for the years ended

December 31, 2011, 2010, and 2009 (does not include

unconsolidated affiliates):

Total assets of discontinued operations

$23,801

Liabilities

Accounts payable and accrued expenses

Other liabilities

Total liabilities of discontinued operations

233

342

575

Statements of Operations

2011

2010

2009

Years ended
December 31,

(dollars in thousands)
Total revenues
Total expenses

$ 5,309 $11,913 $12,902
9,183

8,581

3,047

Operating income
Loss on impairment of asset
Gain on sale of property

2,262
(6,925)
46,830

3,719
3,332
—
—
— 7,143

Income from discontinued

operations

42,167

3,332

10,862

(Income) from discontinued
operations attributable to
noncontrolling interests

Income from discontinued
operations attributable to
Common Shareholders

(10,674)

(1,535)

(6,303)

$ 31,493 $ 1,797 $ 4,559

F-18 Acadia Realty Trust 2011 Annual Report

10630

2011

Core
Portfolio

Opportunity
Funds

Self-Storage
Investments

Notes
Receivable

Other

Amounts
Eliminated in
Consolidation

Total

(dollars in thousands)
Revenues

Property operating expenses

and real estate taxes

General and administrative

expenses

$ 57,994

$ 55,888

$ 23,189

$11,429

$25,782

$ (24,121)

$ 150,161

17,087

18,952

14,435

24,226

16,678

—

(2,417)

48,057

(17,818)

23,086

Income before depreciation and

amortization

$ 16,681

$ 20,258

Depreciation and amortization

$ 14,206

$ 15,454

4,221

8,754

$11,429

$25,782

—

Interest and other finance

expense

$ 15,967

$ 16,546

3,603

Real estate at cost

$499,872

$773,562

$213,743

Total assets

$633,345

$901,758

$192,154

$59,989

Expenditures for real estate and

improvements

$ 72,571

$107,231

3,779

—

Reconciliation to net income and net income attributable to

Common Shareholders

Income before depreciation and

amortization

Other interest income

Depreciation and amortization

Equity in earnings of

unconsolidated affiliates

Interest and other finance

expense

Gain on debt extinguishment

Income tax provision

Impairment of asset

Gain on sale of property

Income from discontinued

operations

Net income

Net (income) attributable to
noncontrolling interests

Net income attributable to
Common Shareholders

(3,886)

(895)

79,018

32,986

993

37,109

$ (15,432)

$1,471,745

$(133,927)

$1,653,319

—

(2,083)

$ 181,498

79,018

276

(32,986)

1,555

(37,109)

1,268

474

(6,925)

46,830

2,262

53,715

(2,160)

51,555

Acadia Realty Trust 2011 Annual Report

F-19

07084

Notes to Consolidated Financial Statements continued

2010

Core
Portfolio

Opportunity
Funds

Self-Storage
Investments

Notes
Receivable

Other

Amounts
Eliminated in
Consolidation

Total

(dollars in thousands)
Revenues

Property operating expenses

and real estate taxes

General and administrative

expenses

$ 57,084

$ 42,062

$ 21,314

$19,161

$22,479

$ (21,055)

$ 141,045

17,236

17,671

13,107

22,439

13,588

—

(1,536)

46,478

(15,807)

20,220

8,207

$19,161

$22,479

$ (3,712)

74,347

28,808

(440)

—

(442)

40,498

$ (13,349)

$1,305,561

$(105,611)

$1,524,806

—

$ (2,302)

80,520

74,347

408

(28,808)

10,971

(40,498)

2,890

33,805

3,332

50,667

(20,610)

30,057

Income before depreciation and

amortization

$ 17,409

$ 10,803

Depreciation and amortization

$ 13,798

$ 10,898

4,552

Interest and other finance

expense

$ 18,036

$ 18,244

4,660

Real estate at cost

$441,714

$667,179

$210,017

—

Total assets

$574,497

$772,715

$194,003

$89,202

Expenditures for real estate and

improvements

4,137

$ 77,309

1,376

—

Reconciliation to net income and net income attributable to

Common Shareholders

Income before depreciation and

amortization

Other interest income

Depreciation and amortization

Equity in earnings of

unconsolidated affiliates

Interest and other finance

expense

Income tax provision

Gain from bargain purchase

Income from discontinued

operations

Net income

Net (income) attributable to
noncontrolling interests

Net income attributable to
Common Shareholders

F-20 Acadia Realty Trust 2011 Annual Report

06322

2009

Core
Portfolio

Opportunity
Funds

Self-Storage
Investments

Notes
Receivable

Other

Amounts
Eliminated in
Consolidation

Total

(dollars in thousands)
Revenues

Property operating expenses

and real estate taxes

Reserve for notes receivable

Abandonment of project costs

General and administrative

expenses

$ 64,249

$ 37,375

$ 11,166

$ 19,698

$23,265

$ (21,308)

$ 134,445

19,282

14,874

10,985

—

2,475

23,983

13,593

—

1,734

—

(1,150)

—

43,991

1,734

2,487

(15,570)

22,006

Income before depreciation and

amortization

$ 20,972

6,433

Depreciation and amortization

$ 14,595

$ 10,480

181

$ 17,964

$23,265

$ (4,588)

3,762

— $

—

$ (1,225)

64,227

27,612

Interest and other finance

expense

$ 19,539

$ 10,657

5,681

Real estate at cost

$436,071

$486,032

$208,702

Total assets

$558,240

$607,706

$196,658

$125,221

— $

—

(245)

35,632

$ (11,047)

$1,119,758

$(105,361)

$1,382,464

Expenditures for real estate and

improvements

3,161

$116,734

$ 10,996

— $

—

$ (3,569)

$ 127,322

Reconciliation to net income and net income attributable to

Common Shareholders

Income before depreciation and

amortization

Other interest income

Depreciation and amortization

Equity in (losses) of

unconsolidated affiliates

Impairment of investment in
unconsolidated affiliate

Interest and other finance

expense

Gain on debt extinguishment

Income tax provision

Gain on sale of property

Income from discontinued

operations

Net income

Net loss attributable to

noncontrolling interests

Net income attributable to
Common Shareholders

64,227

642

(27,612)

(1,529)

(3,768)

(35,632)

7,057

1,541

7,143

3,719

12,706

18,427

31,133

Acadia Realty Trust 2011 Annual Report

F-21

90601

Notes to Consolidated Financial Statements continued

Note 4

Investments In and Advances to
Unconsolidated Affiliates

investments (“Add-On Investments”). Additionally, they

have invested in Shopko, Marsh and Rex Stores

Corporation (collectively “Other RCP Investments”).

Mervyns Department Stores

Core Portfolio
The Company owns a 22.2% interest in an approximately

Through Mervyns I and Mervyns II, the Company

invested in a consortium to acquire Mervyns, consisting

one million square foot retail portfolio (the “Brandywine

of 262 stores (“REALCO”) and its retail operations

Portfolio”) located in Wilmington, Delaware and a 49%

(“OPCO”), from Target Corporation. The Company’s

interest in a 311,000 square foot shopping center located

share of this investment was $23.2 million. Subsequent

in White Plains, New York (“Crossroads”). These

to the initial acquisition, the Company, through Mervyns I

investments are accounted for under the equity method.

and Mervyns II, made additional investments of $2.9

During September 2011, the Company acquired a 50%

equity interest in the Georgetown Portfolio (Note 2). The

unaffiliated venture partner for the Georgetown Portfolio

maintains control over this investment and, as such, the

Company accounts for this investment under the equity

method. Due to this acquisition, the Company

reclassified an existing $8.0 million mezzanine loan

million. Through December 31, 2011, REALCO has

disposed of a significant portion of the portfolio. In

addition, in November 2007, the Company sold its

interest in OPCO and, as a result, has no further

investment in OPCO. Through December 31, 2011, the

Company has received distributions from this investment

totaling $46.0 million.

collateralized by five properties within the Georgetown

Through December 31, 2011, the Company, through

Portfolio from Notes Receivable to Investments in and

Mervyns I and Mervyns II, made Add-On Investments in

Advances to Unconsolidated Affiliates.

Mervyns totaling $6.5 million and have received

distributions totaling $3.6 million, including $1.9 million

Opportunity Funds

RCP Venture
The Company, along with Klaff Realty, LP (“Klaff”) and

Lubert-Adler Management, Inc. (“Lubert-Adler”), formed

an investment group, the RCP Venture, for the purpose

of making investments in surplus or underutilized

properties owned by retailers. The RCP Venture is

neither a single entity nor a specific investment. Any

member of this group has the option of participating, or

not, in any individual investment and each individual

received in 2011.

Albertson’s

The RCP Venture made its second investment as part of

an investment consortium, acquiring Albertson’s and Cub

Foods, of which the Company’s share was $20.7 million.

Through December 31, 2011, the Company has received

distributions from this investment totaling $81.6 million,

including $4.5 million and $11.4 million received in 2011

and 2010, respectively.

investment has been made on a stand-alone basis

Through December 31, 2011, the Company, through

through a separate limited liability company (“LLC”).

Mervyns II, made Add-On Investments in Albertson’s

These investments have been made through different

totaling $2.4 million and received distributions totaling

investment vehicles with different affiliated and

$1.7 million, including $0.5 million received in 2011.

unaffiliated investors and different economics to the

Company. Investments under the RCP Venture are

Other RCP Investments

structured as separate joint ventures as there may be

Through December 31, 2011, the Company, through

other investors participating in certain investments in

Fund II, made investments of $1.1 million in Shopko,

addition to Klaff, Lubert-Adler and Acadia. The Company

$0.7 million in Marsh, and $2.0 million in Add-On

has made these investments through its subsidiaries,

Investments in Marsh. As of December 31, 2011, the

Mervyns I, Mervyns II and Fund II, (together the “Acadia

Company has received distributions totaling $1.7 million

Investors”), all on a non-recourse basis. Through

from its Shopko investment and $2.6 million from its

December 31, 2011, the Acadia Investors have made

Marsh and Marsh Add-On Investments.

investments in Mervyns Department Stores (“Mervyns”)

and Albertson’s, including additional investments in

locations that are separate from these original

During July of 2007, the RCP Venture acquired a

portfolio of 87 retail properties from Rex Stores

F-22 Acadia Realty Trust 2011 Annual Report

09278

Corporation, which the Company invested through

The following table summarizes activity related to the

Mervyns II. The Company’s share of this investment was

RCP Venture investments from inception through

$2.7 million. As of December 31, 2011, the Company

December 31, 2011:

has received distributions totaling $0.8 million.

Year
Acquired

Invested Capital
and Advances

Distributions

Invested Capital
and Advances

Distributions

Operating Partnership Share

Investment

Mervyns

2004

Mervyns Add-On investments

2005/2008

Albertsons

2006

Albertsons Add-On investments

2006/2007

Shopko

2006

Marsh and Add-On investments

2006/2008

Rex Stores

Total

2007

$26,058

6,517

20,717

2,416

1,108

2,667

2,701

$ 45,966

$ 4,901

3,558

81,594

1,679

1,659

2,639

840

1,046

4,239

388

222

533

535

$11,251

819

16,318

336

332

528

168

$62,184

$137,935

$11,864

$29,752

The Company accounts for the original investments in

than the minority investor rights to which the Company

Mervyns and Albertson’s under the equity method of

is entitled pursuant to statute, it has no rights other than

accounting as the Company has the ability to exercise

to receive its pro-rata share of cash distributions as

significant influence, but does not have financial or

declared by the managers of the Add-On Investments

operating control.

and Other RCP Investments. The Company has no rights

The Company accounts for the Add-On Investments and

Other RCP Investments under the cost method. Due to

its minor ownership interest, based on the size of the

with respect to the control and operation of these

investment vehicles, nor with the formulation and

execution of business and investment policies.

investments as well as the terms of the underlying

The Acadia Investors have non-controlling interests in the

operating agreements, the Company has no influence

individual investee LLC’s as follows:

over such entities’ operating and financial policies. Other

Investee LLC

Acadia Investors
Entity

Investee
LLC

Underlying
Entity(s)

Acadia Investors
Ownership % in:

Investment

Mervyns

KLA/Mervyn’s, LLC

Mervyns I and Mervyns II

Mervyns Add-On Investments

KLA/Mervyn’s, LLC

Mervyns I and Mervyns II

Albertsons

Albertsons Add-On Investments

Shopko

Marsh and Add-On Investments

KLA A Markets, LLC

KA-Shopko, LLC

KA Marsh, LLC

Mervyns II

Fund II

Rex Stores

KLAC Rex Venture, LLC Mervyns II

10.5%

18.9%

20.0%

13.3%

5.8%

5.7%

6.0%

2.0%

3.3%

13.3%

Other Opportunity Fund Investments

of $0.6 million were used to fully liquidate the

Fund I Investments

Fund I owned a 50% interest in the Sterling Heights

Shopping Center, which was accounted for under the

equity method of accounting. During the year ended

December 31, 2009, Fund I recorded an impairment

reserve of $3.8 million related to this investment. On

March 25, 2010, the Sterling Heights Shopping Center

was sold for $2.3 million. The proceeds from this sale

together with the balance of Fund I’s recourse obligation

outstanding mortgage loan obligation.

Fund II Investments

Prior to June 30, 2010, Fund II had a 24.75% interest in

CityPoint, a redevelopment project located in downtown

Brooklyn, NY, which was accounted for under the equity

method. On June 30, 2010, Fund II acquired the

remaining interest in the project from its unaffiliated

partner and, as a result, consolidates the CityPoint

investment. (Note 2 — “Fund II”).

Acadia Realty Trust 2011 Annual Report

F-23

36526

Notes to Consolidated Financial Statements continued

Fund III Investments

interest in the entity. This entity was determined to be a

The unaffiliated venture partners for the Lincoln Road

variable interest entity for which the Company was

(Note 2), White Oak (Note 2), Parkway Crossing (Note 2)

determined not to be the primary beneficiary. As such,

and the White City Shopping Center (Note 2)

the Company accounts for this investment under the

investments maintain control over these entities and, as

equity method.

such, the Company accounts for these investments

under the equity method.

During June 2010, Fund III, in a joint venture with an

unaffiliated partner, invested in an entity for the purpose

of providing management services to owners of self-

storage properties, including the 14 locations currently

owned through Fund II and Fund III. Fund III has a 50%

Summary of Investments in Unconsolidated
Affiliates
The following combined and condensed Balance Sheets

and Statements of Operations, in each period, summarize

the financial information of the Company’s investments

in unconsolidated affiliates.

December 31,
2011

December 31,
2010

(dollars in thousands)
Combined and Condensed Balance Sheets
Assets:
Rental property, net
Investment in unconsolidated affiliates
Other assets

Total assets

Liabilities and partners’ equity:
Mortgage notes payable
Other liabilities
Partners’ equity

Total liabilities and partners’ equity

Company’s investment in and advances to unconsolidated affiliates

$280,470
156,421
29,587

$466,478

$319,425
16,902
130,151

$466,478

$ 84,568

$186,802
192,002
27,841

$406,645

$267,565
13,815
125,265

$406,645

$ 31,036

Company’s share of distributions in excess of share of income and investments in

unconsolidated affiliates

$ (21,710)

$ (20,884)

Years Ended December 31,
2009

2010

2011

(dollars in thousands)
Combined and Condensed Statements of Operations
Total revenues
Operating and other expenses
Interest expense
Equity in earnings (losses) of unconsolidated affiliates
Depreciation and amortization
Loss on sale of property, net

Net income (loss)

Company’s share of net income (loss)
Impairment loss
Amortization of excess investment

$42,185
15,924
17,099
7,243
8,837
—

$29,460
10,617
13,525
56,482
4,839
(2,957)

$ 30,835
9,851
13,786
(30,568)
5,152
(390)

$ 7,568

$54,004

$(28,912)

$ 1,946
—
(391)

$11,363
—
(392)

$ (1,141)
(3,768)
(388)

Company’s equity in earnings (losses) of unconsolidated affiliates

$ 1,555

$10,971

$ (5,297)

F-24 Acadia Realty Trust 2011 Annual Report

09671

Note 5

Notes Receivable and Preferred
Equity Investment
As of December 31, 2011, the Company’s notes

receivable, net approximated $60.0 million and were

collateralized by the underlying properties, the borrower’s

ownership interest in the entities that own the properties

and/or by the borrower’s personal guarantee. Notes

Receivable were as follows at December 31, 2011:

(dollars in thousands)

Description

Zero Coupon Loan
Mezzanine Loan
Mezzanine Loan
Mezzanine Loan
First Mortgage Loan
First Mortgage Loan
First Mortgage Loan
Construction Loan
First Mortgage Loan
Individually less than 3%

Total

Notes:

Effective
Interest Rate

Maturity
Date

Periodic
Payment
Terms

Prior
Liens

Face Amount
of Mortgages

Carrying
Amount of
Mortgages

24.00%
10.00%
15.00%
17.50%
12.00%
10.77%
7.00%
20.51%
6.00%
10.00% to
12.00%

1/3/2016
12/31/2013
Capital Event
1/1/2017
12/5/2012
Demand Note
2/1/2012
4/1/2012
12/1/2012
12/31/13 to
Capital Event

(2)
(2)
(2)
(2)
(1)
(2)
(1)
(2)
(1)

$166,200
85,835
11,925
37,700
—
—
—
—
—
—

$ 5,644
9,089
3,834
3,550
8,500
10,000
4,000
5,400
12,609
8,399

$ 3,563
9,089
3,834
2,173
8,500
10,000
4,000
5,400
12,609
821

$71,025

$59,989

(1) Payable upon maturity.

(2) Interest only payable monthly, principal due on maturity.

During December 2011, the Company made an $8.5

shopping center in Washington D.C. The note accrues

million loan, which is collateralized by three properties

interest at 7% and matures in February 2012. In addition

located in Chicago, IL. The loan matures in December

to the loan, the Company entered into and subsequently

2012 and bears interest at 12.0%.

exercised an option to purchase the shopping center at a

During December 2011, the Company made a $12.6

million loan in conjunction with the sale of 15

Kroger/Safeway locations. The loan, which is

collateralized by 14 Kroger/Safeway properties, matures

future date, pending the servicer’s approval of the

assignment of a first mortgage loan of $17.0 million. The

loan will be offset against the purchase price when the

Company acquires the property.

in December 2012 and bears interest at 6.0%. There are

During May 2011, the Company received a final payment

two six-month extension options, the first of which bears

of $54.7 million on a mezzanine loan, representing $33.8

interest at 9% and the second bears interest at 12%.

million of principal, $13.4 million of accrued interest, and

During October 2011, the Company made a $5.4 million

a $7.5 million exit fee.

construction loan which is collateralized by an interest in

During February 2011, the Company made a mezzanine

a development property located in Haledon, NJ. The loan

loan for $3.8 million which accrues interest at 15% and

matures in April 2012 and has one six-month extension

is payable upon a capital event. The Company also

option and bears interest at 15.0%.

received a payment of $1.9 million on a mezzanine loan.

During September 2011, the Company reclassified an

During September 2010, the Company received a

$8.0 million mezzanine loan from Notes Receivable to

payment of $49.4 million on a preferred equity

Investments in and Advances to Unconsolidated Affiliates

investment, representing $40.0 million of invested capital

related to the acquisition of the Georgetown Portfolio

and $9.4 million of accrued preferred return.

(Note 4).

During April 2010, the Company received a payment of

During September 2011, the Company made a $4.0

$2.1 million and during December 2009 received a

million loan to two members of an entity which owns a

payment of $4.7 million, both representing paydowns on

Acadia Realty Trust 2011 Annual Report

F-25

01708

Notes to Consolidated Financial Statements continued

its first mortgage loan secured by three retail properties,

The following table reconciles the allowance for notes

following the sale of two of the collateralized properties.

receivable from December 31, 2009 to December 31,

During December 2009, the Company made a loan for

$8.6 million. The original term of this loan was for one

year, with two six- month extension options, and bore

interest at 14.5%. During December 2011, this

investment was fully liquidated. The Company received

$8.6 million of principal and $1.0 million of accrued

interest.

2011:

(dollars in thousands)

Balance at December 31, 2009
Reserves
Write off of notes receivable

Balance at December 31, 2010
Reserves

Balance at December 31, 2011

Allowance for
Notes Receivable

$ 5,943
93
(3,000)

3,036
240

$ 3,276

During August 2009, the Company received a payment

of $2.8 million representing the entire balance on its first

mortgage loan secured by an interest in a property in

Note 6

Pennsylvania.

During August 2009, the Company received a payment

of $5.1 million representing a paydown on its first

mortgage loan secured by an interest in a single tenant

property located in Long Island, New York.

During June 2009, the Company received a payment of

$0.7 million representing a paydown on its loan secured

by an interest in a property in South Carolina.

During March 2009, the Company received a payment of

$0.3 million representing the entire balance on a loan

secured by an interest in a property in South Carolina.

The following table reconciles notes receivable and

preferred equity investments from January 1, 2009 to

December 31, 2011:

For the years ended December 31,

Deferred Charges
Deferred charges consist of the following as of

December 31, 2011 and 2010:

(dollars in thousands)

December 31,

2011

2010

Deferred financing costs

$ 31,860

$ 29,692

Deferred leasing and other costs

32,103

30,485

Accumulated amortization

Total

Note 7

63,963

60,177

(38,109)

(36,463)

$ 25,854

$ 23,714

Acquired Lease Intangibles
Upon acquisitions of real estate, the Company assesses

(dollars in thousands)

2011

2010

2009

the fair value of acquired assets (including land, buildings

Balance at beginning of

period

$ 89,202 $125,221 $125,587

Additions during period:

New mortgage loans

34,758

— 10,839

Deductions during period:

and improvements, and identified intangibles such as

above and below market leases, acquired in-place leases

and customer relationships) and acquired liabilities in

accordance with ASC Topic 805. The intangibles are

amortized over the remaining non-cancelable terms of

Collections of principal

(56,517)

(42,010)

(13,614)

the respective leases.

Reclass to investments
in unconsolidated
affiliates

Non-cash accretion of
notes receivable

Reserves

Other

Balance at close of

(8,000)

—

786

(240)

—

6,164

(93)

(80)

5,352

(2,943)

—

period

$ 59,989 $ 89,202 $125,221

F-26 Acadia Realty Trust 2011 Annual Report

70886

The scheduled amortization of acquired lease intangible

assets and liabilities as of December 31, 2011 is as

continues to bear interest at LIBOR plus 125 basis

points.

follows:

(dollars in thousands)

Assets

Liabilities

Acquired lease intangible

iv) During October 2011, the Company amended and

extended the maturity of a $13.7 million loan

collateralized by a property that was scheduled to

$ 3,695

$1,112

mature in December 2011. The amendment

2012

2013

2014

2015

2016

Thereafter

Total

Note 8

3,083

2,688

2,550

2,387

12,318

$26,721

895

587

419

395

2,054

$5,462

required a $0.9 million pay down of principal,

reducing the balance of the loan to $12.8 million.

The loan bears interest at LIBOR plus 225 basis

points, matures on September 30, 2014, and has

one three-year extension option.

v) During September 2011, the Company modified

and extended the Fund III subscription line of

credit. The modification provided a one year

extension of the maturity date to October 10, 2012

and adjusted the interest rate to LIBOR plus 225

basis points. During 2011, the Company borrowed

Mortgages Payable
At December 31, 2011 and 2010, mortgage notes

payable, excluding the net valuation premium on the

$71.6 million and repaid $107.0 million under this

assumption of debt, aggregated $787.9 million and

line of credit. As of December 31, 2011, the total

$806.1 million, respectively, and were collateralized by 29

outstanding amount on this line of credit was

properties and related tenant leases. Interest rates on

$136.1 million.

the Company’s outstanding mortgage indebtedness

ranged from 1.55% to 7.34% with maturities that ranged

from September 2012 to November 2032. Certain loans

are cross-collateralized and contain cross-default

provisions. The loan agreements contain customary

representations, covenants and events of default. Certain

loan agreements require the Company to comply with

affirmative and negative covenants, including the

maintenance of debt service coverage and leverage

ratios.

The following reflects mortgage loan activity for the year

ended December 31, 2011:

vi) During September 2011, the Company closed on a

$12.5 million loan collateralized by a property. The

loan bears interest at LIBOR plus 235 basis points

and matures on September 30, 2014 with two

one-year extension options.

vii) During August 2011, the Company amended an

existing $58.0 million loan collateralized by a

property. The amendment provided for an

additional $4.0 million of proceeds. The amended

loan continues to bear interest at LIBOR plus 400

basis points, subject to a LIBOR floor of 250 basis

points and matured on January 12, 2012 and was

i) During November 2011, the Company extended

extended. Previously, during January 2011, the

the maturity date of a $9.9 million loan to

Company had amended this loan to provide for an

September 1, 2012. The extension required a

additional $3.0 million supplemental loan and a $7.0

payment of $0.5 million, reducing the balance of

million subordinate loan. During 2011, the Company

the loan to $9.4 million. The loan continues to bear

drew down an additional $16.2 million on this

interest at LIBOR plus 325 basis points.

ii) During November 2011, the Company extended

the maturity date of an $8.3 million loan that was

maturing to October 30, 2012. The loan continues

to bear interest at LIBOR plus 165 basis points.

iii) During October 2011, the Company extended the

maturity date of its $64.5 million revolving credit

facility collateralized by six properties from

December 1, 2011 to December 1, 2012. The loan

construction loan. As of December 31, 2011, the

total outstanding amount on this loan was $56.5

million. Subsequent to December 31, 2011, the

loan maturity date was extended to September 11,

2012. All other terms have remained the same.

viii) During August 2011, the Company closed on a

$42.0 million loan collateralized by six properties.

The loan bears interest at LIBOR plus 415 basis

points, with a LIBOR floor of 50 basis points and

Acadia Realty Trust 2011 Annual Report

F-27

22858

Notes to Consolidated Financial Statements continued

matures on August 31, 2013. The proceeds of this

property. The modification extended the maturity

loan were used to repay a $41.5 million loan that

date from June 29, 2012 to June 30, 2018. The

matured July 31, 2011.

loan continues to bear interest at LIBOR plus 140

ix) During June 2011, the Company modified an

basis points.

existing $85.3 million loan collateralized by a

xi) During January 2011, the Company purchased a

property. The modification extended the maturity

$9.3 million mortgage loan collateralized by one of

date from October 4, 2011 to September 30, 2012.

its properties for $7.6 million, resulting in a $1.7

The loan continues to bear interest at LIBOR plus

million gain on extinguishment of debt.

350 basis points subject to a LIBOR floor of 150

basis points.

xii) During January 2011, the Company borrowed the

remaining $2.4 million of a $34.0 million loan

x) During June 2011, the Company modified an

collateralized by a property.

existing $9.4 million loan collateralized by a

The following table sets forth certain information pertaining to our secured credit facilities:

(dollars in thousands)
Borrower

Acadia Realty, LP
Fund II
Fund III

Total

Total amount of
credit facility

Amount borrowed
as of
December 31,
2010

Net borrowings
(repayments)
during the
year ended
December 31,
2011

Amount borrowed
as of
December 31,
2011

Letters of credit
outstanding
as of
December 31,
2011

Amount available
under credit
facilities as of
December 31,
2011

$ 64,498
40,000
150,286

$254,784

1,000
40,000
171,450

$212,450

—
—
(35,371)

1,000
40,000
136,079

$(35,371)

$177,079

$4,561
—
—

$4,561

$58,937
—
14,207

$73,144

F-28 Acadia Realty Trust 2011 Annual Report

53960

The following table summarizes the Company’s mortgage and other secured indebtedness as of December 31, 2011

and December 31, 2010:

(dollars in thousands)

December 31,

2011

2010

Interest Rate at
December 31, 2011

Maturity

Payment Terms

Description of Debt and Collateral
Mortgage notes payable — variable-rate
Canarsie Plaza

$ 56,476

$ 40,243

Liberty Avenue
Fordham Place

Tarrytown Shopping Center
161st Street
CityPoint
Six self-storage properties

Pelham Manor
Branch Shopping Plaza
125 Main Street, Westport
Cortlandt Towne Center
Village Commons Shopping

Center

Sub-total mortgage notes

payable

9,395
84,277

8,260
28,900
20,650
42,000

34,000
12,761
12,500
50,000
9,310

10,000
85,910

8,427
28,900
20,650
—

31,554
13,932
—
50,000
9,305

368,529

298,921

Secured credit facilities — variable-rate:
Fund III revolving subscription

Greater of 6.50% or
4.30% (LIBOR+4.00%)
3.55% (LIBOR+3.25%)
Greater of 1.5%+3.5% or
5.00% (LIBOR+3.50%)
1.95% (LIBOR+1.65%)
5.80% (LIBOR+5.50%)
2.80% (LIBOR+2.50%)
Greater of 4.65% or
4.45% (LIBOR+4.15%)

9/11/2012

Interest only monthly.

9/1/2012

Interest only monthly.

9/30/2012 Monthly principal and interest.

10/30/2012
4/1/2013
8/12/2013
8/31/2013

Interest only monthly.
Interest only monthly.
Interest only monthly.
Interest only monthly until
10/2012; monthly principal
and interest thereafter.

3.05% (LIBOR+2.75%)
2.55% (LIBOR+2.25%)
2.65% (LIBOR+2.35%)
2.20% (LIBOR+1.90%)
1.70% (LIBOR+1.40%)

12/1/2013 Monthly principal and interest.
9/30/2014 Monthly principal and interest.
9/30/2014

Interest only monthly.

10/26/2015 Monthly principal and interest.
6/30/2018 Monthly principal and interest.

line of credit (2)

Six Core Portfolio properties

136,079
1,000

171,450
1,000

2.55% (LIBOR+2.25%)
1.55% (LIBOR+1.25%)

10/10/2012
12/1/2012

Fund II term loan

40,000

3.20% (LIBOR+2.90%)

12/22/2014

Interest only monthly.
Annual principal and monthly
interest.
Interest only monthly.

Sub-total secured credit facilities

177,079

212,450

Interest rate swaps (1)

Total variable-rate debt

(57,027)

(71,535)

488,581

439,836

Mortgage notes payable — fixed-rate
Five Self-Storage properties
Chestnut Hill
Clark Diversey
New Loudon Center
CityPoint
Crescent Plaza
Pacesetter Park Shopping

—
—
4,491
13,882
20,000
17,287
11,941

Center

Elmwood Park Shopping Center
The Gateway Shopping Center
Walnut Hill Plaza
239 Greenwich Avenue
Merrillville Plaza

33,738
20,308
23,458
26,000
26,250

41,500
9,338
4,625
14,119
20,000
17,539
12,132

34,197
20,500
23,500
26,000
26,250

216th Street
Atlantic Avenue

25,500
11,540

A&P Shopping Plaza
Interest rate swaps (1)

Total fixed-rate debt
Unamortized premium

Total

7,874
57,027

299,296
33

8,033
71,535

366,308
68

$787,910

$806,212

6.35%
5.64%
7.25%
4.98%
5.12%

5.53%
5.44%
6.06%
5.42%
5.88%

5.80%
7.34%

6.40%
5.41%

7/1/2014 Monthly principal and interest.
9/6/2014 Monthly principal and interest.

11/1/2014

Interest only quarterly.

9/6/2015 Monthly principal and interest.
11/6/2015 Monthly principal and interest.

1/1/2016 Monthly principal and interest.
3/1/2016 Monthly principal and interest.
10/1/2016 Monthly principal and interest.
2/11/2017
8/1/2017

Interest only monthly.
Interest only monthly until
7/2012; monthly principal and
interest thereafter.
Interest only monthly.
Interest only upon drawdown
on construction loan until
1/2015; monthly principal and
interest thereafter.
11/1/2032 Monthly principal and interest.

10/1/2017
1/1/2020

(1) Represents the amount of the Company’s variable-rate debt that has been fixed through certain cash flow hedge transactions.

(Note 10).

(2) The Fund III revolving subscription line of credit is secured by unfunded investor capital commitments.

Acadia Realty Trust 2011 Annual Report

F-29

01214

Notes to Consolidated Financial Statements continued

The scheduled principal repayments of all indebtedness

date. The Holders of notes may require the Company to

including Convertible Notes (Note 9) as of December 31,

repurchase their notes, in whole or in part, on December

2011 are as follows (does not include $33,000 net

20, 2011, December 15, 2016, and December 15, 2021

valuation premium on assumption of debt):

for cash equal to 100% of the principal amount of the

(dollars in thousands)
2012
2013
2014
2015
2016
Thereafter

Note 9

$298,335
128,059
104,667
79,710
74,722
103,314

$788,807

Convertible Notes Payable
In December 2006 and January 2007, the Company

issued a total of $115.0 million 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 15 and December 15 of each year. The Convertible

Notes are unsecured unsubordinated obligations and rank

notes to be repurchased plus any accrued and unpaid

interest to, but not including, the repurchase date (the

“Repurchase Option”).

In general, upon a conversion of notes, the Company will

deliver cash and, at the Company’s election, its Common

Shares, with an aggregate value, which the Company

refers to as the “conversion value”, equal to the

conversion rate multiplied by the average price of the

Company’s Common Shares. The net amount may be

paid, at the Company’s option, in cash, its Common

Shares or a combination of cash and its Common

Shares.

The Convertible Notes “if-converted” value does not

exceed their principal amount as of December 31, 2011

and there are no derivative transactions that were

entered into in connection with the issuance of the

Convertible Notes.

equally with all other unsecured and unsubordinated

Effective January 1, 2009, the Company adopted ASC

indebtedness. The Convertible Notes have an effective

Topic 470-20 which required it to retrospectively restate

interest rate of 6.03% giving effect to the accounting

and reclassify previously disclosed consolidated financial

treatment required by ASC Topic 470-20, “Debt with

statements to allocate the proceeds from the issuance of

Conversion and Other Options.” The Convertible Notes

convertible debt between a debt component and an

had an initial conversion price of $30.86 per share. The

equity component. The resulting discount on the debt

conversion rate may be adjusted under certain

component was amortized over the period the

circumstances, including the payment of cash dividends

convertible debt was expected to be outstanding, which

in excess of the regular quarterly cash dividend in place

was December 11, 2006 to December 20, 2011, as

at the time the Convertible Notes were issued. As of

additional non-cash interest expense.The equity

December 31, 2011, the adjusted conversion price is

component recorded as additional paid-in capital was

$29.26. Upon conversion of the Convertible Notes, the

$11.3 million, which represented the difference between

Company will deliver cash and, in some circumstances,

the proceeds from the issuance of the Convertible Notes

Common Shares, as specified in the indenture relating to

and the fair value of the liability at the time of issuance.

the Convertible Notes. In general, the Convertible Notes

As the Company determined, in connection with the

may only be converted prior to maturity during any

Repurchase Option, that the Convertible Notes matured

calendar quarter beginning after December 31, 2006 if

on December 20, 2011, as of December 31, 2011, all

the Company’s Common Shares trade at 130% of the

loan costs associated with the issuance have been

conversion price for at least 20 days within a consecutive

expensed and there is no remaining carrying amount of

30 day trading period. Prior to December 20, 2011, the

the equity component included in additional paid-in

Company did not have the right to redeem Convertible

capital.

Notes, except to preserve its status as a REIT. After

December 20, 2011, the Company has 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

The carrying amount of the equity component included in

additional paid-in capital totaled $1.1 million at December

31, 2010. Interest expense relating to the contractual

interest coupon recognized in the Consolidated

Statements of Income was $1.5 million, $1.9 million and

$2.5 million for the years ended December 31, 2011,

F-30 Acadia Realty Trust 2011 Annual Report

35066

2010, and 2009, respectively, The additional non-cash

(outside of earnings) and subsequently reclassified to

interest expense recognized in the Consolidated

earnings when the hedged transaction affects earnings,

Statements of Income was $0.8 million, $1.0 million and

and the ineffective portion of changes in the fair value of

$1.3 million for the years ended December 31, 2011,

the derivative is recognized directly in earnings. The

2010, and 2009, respectively.

During 2011, the Company purchased $48.8 million of

the Convertible Notes, including $24.0 million that were

repurchased on December 20, 2011 pursuant to the

Repurchase Option. As of December 31, 2011, the

Company has purchased $114.1 million in principal

amount of its convertible debt at an average discount of

Company assesses the effectiveness of each hedging

relationship by comparing the changes in fair value or

cash flows of the derivative hedging instrument with the

changes in fair value or cash flows of the designated

hedged item or transaction. For derivatives not

designated as hedges, changes in fair value would be

recognized in earnings.

approximately 11%. The transactions resulted in a (loss)

As of December 31, 2011, the Company’s derivative

gain on debt extinguishment of ($0.4) million and $7.1

financial instruments consisted of six interest rate LIBOR

million for the years ended December 31, 2011 and

swaps with an aggregate notional value of $57.0 million

2009, respectively. The outstanding Convertible Notes

which fix interest at rates from 2.7% to 5.1% and mature

principal amount as of December 31, 2011 and 2010 was

between March 2012 and December 2022. The Company

$0.9 million and $49.8 million, respectively. The

also has three derivative financial instruments with a

outstanding Convertible Notes net carrying amount as of

notional value of $75.0 million which cap interest at 3.0%,

December 31, 2011 and 2010 was $0.9 million and $48.7

6.0% and 3.5% and mature in October 2012, April 2013

million, respectively.

Note 10

Financial Instruments and Fair
Value Measurements

and August 2013, respectively. The fair value of the

derivative liability of these instruments, which is included

in other liabilities in the consolidated balance sheets,

totaled $3.5 million and $2.8 million at December 31, 2011

and 2010, respectively. The notional value does not

represent exposure to credit, interest rate or market risks.

Derivative Financial Instruments
The FASB’s derivative and hedging guidance establishes

These derivative instruments have been designated as

cash flow hedges and hedge the future cash outflows on

accounting and reporting standards for derivative

variable rate mortgage debt. Such instruments are

instruments, including certain derivative instruments

reported at the fair value reflected above. As of

embedded in other contracts, and for hedging activities.

December 31, 2011 and 2010, unrealized losses totaling

As required by the FASB guidance, the Company records

$3.9 million and $2.8 million, respectively, were reflected

all derivatives on the balance sheet at fair value. The

in accumulated other comprehensive loss. It is estimated

accounting for changes in the fair value of derivatives

that approximately $1.5 million included in accumulated

depends on the intended use of the derivative and the

other comprehensive loss related to derivatives will be

resulting designation. Derivatives used to hedge the

reclassified to interest expense in the 2012 results of

exposure to changes in the fair value of an asset,

operations.

liability, 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 forecast transactions, are considered cash flow

hedges.

As of December 31, 2011 and 2010, no derivatives were

designated as fair value hedges or hedges of net

investments in foreign operations. Additionally, the

Company does not use derivatives for trading or

speculative purposes and currently does not have any

derivatives that are not designated as hedges. As of

For derivatives designated as fair value hedges, changes

December 31, 2011, none of the Company’s hedges

in the fair value of the derivative and the hedged item

were ineffective.

related 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 (loss) income

The FASB’s fair value measurements and disclosure

guidance requires the valuation of certain of the

Company’s financial assets and liabilities, based on a

three-level fair value hierarchy. Market participant

Acadia Realty Trust 2011 Annual Report

F-31

04534

Notes to Consolidated Financial Statements continued

assumptions obtained from sources independent of the

cash flows, which it determined were not sufficient to

Company are observable inputs that are classified within

recover the property’s net book value. The inputs used

Levels 1 and 2 of the hierarchy, and the Company’s own

to determine the fair value of the Granville Centre were

assumptions about market participant assumptions are

classified as Level 3 under authoritative guidance for fair

unobservable inputs classified within Level 3 of the

value measurements.

hierarchy.

The following table presents the Company’s fair value

hierarchy for those assets and liabilities measured at fair

value on a recurring basis as of December 31, 2011:

(dollars in thousands)

Liabilities
Derivative financial

instruments

Level 1

Level 2

Level 3

$ — $3,518

$ —

During the year ended December 31, 2011, the Company

determined that the value of the Granville Centre owned

by Fund I was impaired and recorded an impairment loss

of $6.9 million (Note 1). The Company estimated the

Granville Centre’s fair value by using projected future

(dollars in thousands)

Financial Instruments
Certain of the Company’s assets and liabilities meet the

definition of financial instruments. Except as disclosed

below, the carrying amounts of these financial

instruments approximates their fair value due to the

short-term nature of such accounts.

The Company has determined the estimated fair values

of the following financial instruments by discounting

future cash flows utilizing a discount rate equivalent to

the rate at which similar financial instruments would be

originated at the reporting date:

December 31, 2011

December 31, 2010

Carrying
Amount

Estimated
Fair
Value

Carrying
Amount

Estimated
Fair
Value

Notes Receivable and Preferred Equity Investments

$ 59,989

$ 89,202

$ 90,612

Mortgage Notes Payable and Convertible Notes Payable

$788,840

$792,737

$854,924

$863,639

Note 11

Shareholders’ Equity and
Noncontrolling Interests

Common Shares
During the first quarter of 2011, 40,254 employee

Restricted Shares were canceled to pay the employees’

income taxes due on the value of the portion of their

Restricted Shares that vested. During the year ended

December 31, 2011, the Company recognized accrued

Common Share and Common OP Unit-based

compensation totaling $4.0 million in connection with the

vesting of Restricted Shares and Units (Note 15).

During November 2011, the Company issued 2.25 million

Common Shares generating net proceeds of

approximately $45.0 million.

F-32 Acadia Realty Trust 2011 Annual Report

28831

Noncontrolling Interests
The following table summarizes the change in the noncontrolling interests since December 31, 2010:

Noncontrolling Interests in
Operating Partnership

Noncontrolling Interests in
Partially-Owned Affiliates

(dollars in thousands)
Balance at December 31, 2010
Distributions declared of $0.72 per Common OP Unit
Net income for the period January 1 through December 31,

2011

Conversion of 11,569 OP Units to Common Shares by limited

partners of the Operating Partnership

Issuance of LTIP Unit Awards to employees
Other comprehensive income — unrealized loss on valuation

of swap agreements

Reclassification of realized interest expense on swap

agreements

Noncontrolling interest contributions
Noncontrolling interest distributions and other reductions
Employee Long-term Incentive Plan Unit Awards

Balance at December 31, 2011

$4,409
(984)

652

(56)
2,441

(48)

28
—
—
3,550

$9,992

$264,901
—

1,508

—
—

(2,102)

648
117,945
(7,697)
—

$375,203

Noncontrolling interests in the Operating Partnership

call for the conversion of the Series A Preferred OP

represents (i) the limited partners’ 279,748 and 281,294

Units at the lesser of $7.50 or the market price of the

Common OP Units at December 31, 2011 and 2010,

Common Shares as of the conversion date.

(ii) 188 Series A Preferred OP Units at December 31,

2011 and 2010, with a stated value of $1,000 per unit,

Note 12

which are entitled to a preferred quarterly distribution of

the greater of (a) $22.50 (9% annually) per Series A

Preferred OP Unit or (b) the quarterly distribution

attributable to a Series A Preferred OP Unit if such unit

were converted into a Common OP Unit, and

Related Party Transactions
During February 2010, Klaff converted all 250,000 of its

Restricted Common OP Units into 250,000 Common

Shares.

(iii) 1,061,564 and 641,534 LTIP units as of December

In 2009, the Company earned asset management,

31, 2011 and December 31, 2010 respectively, as

leasing, disposition, development and construction fees

discussed in Share Incentive Plan (Note 15).

for providing services to an existing portfolio of retail

Noncontrolling interests in partially-owned affiliates

include third-party interests in Fund I, II and III, Mervyns I

and II, and ten other entities.

In 2005, the Company issued 250,000 Restricted

Common OP Units to Klaff in consideration for an

interest in certain management contract rights. During

2010, Klaff converted the 250,000 Restricted Common

OP Units into Common Shares.

The Series A Preferred OP Units were issued in 1999 in

connection with the acquisition of a property. Through

December 31, 2011, 1,392 Series A Preferred OP Units

were converted into 185,600 Common OP Units and

then into Common Shares. The 188 remaining Series A

properties and/or leasehold interests in which Klaff had

an interest. Fees earned by the Company in connection

with this portfolio were $0.4 million for the year ended

December 31, 2009.

The Company earns fees from one of its investments in

unconsolidated partnerships (Note 4). The Company

earned property management, construction, legal and

leasing fees from the Brandywine Portfolio totaling $1.0

million, $0.8 million and $0.7 million for the years ended

December 31, 2011, 2010 and 2009, respectively.

Related party receivables due from unconsolidated

affiliates totaled $1.4 million and $2.4 million at

December 31, 2011 and 2010, respectively.

Preferred OP Units are currently convertible into

Lee Wielansky, the Lead Trustee of the Company, was

Common OP Units based on the stated value divided by

paid a consulting fee of $0.1 million for each of the years

$7.50. Either the Company or the holders can currently

ended December 31, 2011, 2010, and 2009.

Acadia Realty Trust 2011 Annual Report

F-33

37637

Notes to Consolidated Financial Statements continued

Note 13

(dollars in thousands)

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.

2012
2013
2014
2015
2016
Thereafter

Total

Minimum future rentals to be received under non-

cancelable leases for shopping centers and other retail

properties as of December 31, 2011 are summarized as

Note 15

5,115
5,162
4,975
5,093
3,986
138,242

$162,573

follows:

(dollars in thousands)

2012
2013
2014
2015
2016
Thereafter

Total

$ 87,873
82,153
75,099
69,636
65,245
574,137

$954,143

During the years ended December 31, 2011, 2010 and

2009, no single tenant collectively accounted for more

than 10% of the Company’s total revenues.

Note 14

Lease Obligations
The Company leases land at nine of its shopping centers,

which are accounted for as operating leases and

generally provide the Company with renewal options.

Ground rent expense was $4.6 million, $3.7 million, and

$2.5 million (including capitalized ground rent at

properties under development of $1.5 million, $0.5 million

and $0.6 million) for the years ended December 31,

2011, 2010 and 2009, respectively. The leases terminate

at various dates between 2020 and 2078. These leases

provide the Company with options to renew for

additional terms aggregating from 20 to 71 years. The

Company leases space for its White Plains corporate

office for a term expiring in 2015. Office rent expense

under this lease was $1.4 million, $1.5 million and $1.5

million for the years ended December 31, 2011, 2010

Share Incentive Plan
During 2003, the Company adopted the 2003 Share

Incentive 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 Common Shares at the

grant date. The Committee determines the restrictions

placed on Awards, including the dividends or distributions

thereon and the term of such restrictions. The

Committee also determines the award and vesting of

performance units and performance shares based on the

attainment of specified performance objectives of the

Company within a specified performance period. Through

and 2009, respectively. Future minimum rental payments

required for leases having remaining non-cancelable lease

December 31, 2011, no share appreciation rights or

performance units/shares had been awarded. In

terms are as follows:

F-34 Acadia Realty Trust 2011 Annual Report

connection with the Awards, to the extent that a portion

of senior management’s cash bonus is converted into

elective Awards, the number of shares issued are at a

25% discount and vest over time.

18402

During 2006, the Company adopted the 2006 Share

the years ended December 31, 2011, 2010 and 2009,

Incentive Plan (the “2006 Plan”). The 2006 Plan is

respectively.

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.

On May 10, 2011, the Company issued 22,154

Restricted Shares to Trustees of the Company in

connection with Trustee fees. Vesting with respect to

10,279 of the Restricted Shares will be on the first

On March 3, 2011 and March 22, 2011, the Company

anniversary of the date of issuance and 11,875 of the

issued a combined total of 431,248 LTIP Units and 210

Restricted Shares vest over three years with 33%

Restricted Shares to officers of the Company and 164

vesting on each of the next three anniversaries of the

LTIP Units and 9,584 Restricted Shares to other

issuance date. The Restricted Shares do not carry voting

employees of the Company. Vesting with respect to

rights or other rights of Common Shares until vesting

these awards is recognized ratably over the five annual

and may not be transferred, assigned or pledged until

anniversaries following the issuance date. Vesting with

the recipients have a vested non-forfeitable right to such

respect to 11% of the awards issued to officers are also

shares. Dividends are not paid currently on unvested

generally subject to achieving certain Company

Restricted Shares, but are paid cumulatively from the

performance measures. LTIP Units are similar to

issuance date through the applicable vesting date of such

Restricted Shares but provide for a quarterly partnership

Restricted Shares. Trustee fee expense of $0.2 million

distribution in a like amount as paid to Common OP

for the year ended December 31, 2011 has been

Units. This distribution is paid on both unvested and

recognized in the accompanying consolidated financial

vested LTIP Units. The LTIP Units are convertible into

statements related to this issuance.

Common OP Units and Common Shares upon vesting

and a revaluation of the book capital accounts.

In 2009, the Company adopted the Long Term

Investment Alignment Program (the “Program”) pursuant

These awards were measured at their fair value as if

to which the Company may award units primarily to

they were vested on the grant date. Fair value was

senior executives which would entitle them to receive up

established as the market price of the Company’s

to 25% of any future Fund III Promote when and if such

Common Shares as of the close of trading on the day

Promote is ultimately realized. The Company has

preceding the grant date.

The total value of the above Restricted Shares and LTIP

Units as of the grant date was $8.4 million, of which

$2.4 million was recognized in compensation expense

during 2011 and $6.0 million will be recognized in

compensation expense over the vesting period. The

weighted average fair value for Restricted Shares and

awarded units representing 71% of the Program, which

were determined to have no value at issuance or as of

December 31, 2011. In accordance with ASC Topic 718,

“Compensation – Stock Compensation,” compensation

relating to these awards will be recorded based on the

change in the estimated fair value at each reporting

period.

LTIP Units granted for the years ended December 31,

As of December 31, 2011, the Company had 101,283

2011, 2010 and 2009 were $19.08, $16.73 and $10.31,

options outstanding to officers and employees and

respectively.

Total long-term incentive compensation expense,

including the expense related to the above mentioned

plans, was $4.0 million, $3.8 million and $3.7 million for

49,000 options outstanding to non-employee Trustees of

the Company 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 their

respective grant dates.

Acadia Realty Trust 2011 Annual Report

F-35

Notes to Consolidated Financial Statements continued

A summary of option activity under all option arrangements as of December 31, 2010 and 2011, and changes

during the years then ended is presented below:

41194

Weighted Average
Exercise Price

Weighted
Average
Remaining
Contractual
Term (years)

Aggregate
Intrinsic Value
(dollars in thousands)

Options

Outstanding and exercisable at

December 31, 2009

Granted
Exercised
Forfeited or Expired

Outstanding and exercisable at

December 31, 2010

Granted
Exercised
Forfeited or Expired

159,283
—
(7,000)
—

152,283
—
(2,000)
—

$18.04
—
14.46
—

18.20
—
8.21
—

Outstanding and exercisable

at December 31, 2011

150,283

$18.33

5.5
—
—
—

4.5
—
—
—

3.5

$ —
—
26
—

6
—
—
—

$272

The total intrinsic value of options exercised during the

A summary of the status of the Company’s unvested

years ended December 31, 2011, 2010 and 2009 was

Restricted Shares and LTIP Units as of December 31,

$0.02 million, $0.03 million and $2.8 million, respectively.

2010 and 2011 and changes during the years ended

December 31, 2010 and 2011, is presented below:

Unvested Shares and LTIP Units

Restricted Shares

Unvested at December 31, 2009
Granted
Vested
Forfeited

Unvested at December 31, 2010
Granted
Vested
Forfeited

Unvested at December 31, 2011

272,512
24,473
(143,042)
(513)

153,430
32,970
(104,196)
(6,465)

75,739

Weighted
Grant-Date
Fair Value

$20.76
17.32
21.26
13.74

19.75
19.13
20.95
14.73

$18.25

LTIP Units

362,833
266,928
(67,022)
—

562,739
431,412
(153,895)
(1,358)

838,898

Weighted
Grant-Date
Fair Value

$16.35
16.73
15.69
—

16.61
19.08
16.78
16.86

$17.85

As of December 31, 2011, there was $9.4 million of total

deductions. The Purchase Plan provides for employees to

unrecognized compensation cost related to unvested

purchase Common Shares on a quarterly basis at a 15%

share-based compensation arrangements granted under

discount to the closing price of the Company’s Common

share incentive plans. That cost is expected to be

Shares on either the first day or the last day of the

recognized over a weighted-average period of 1.9 years.

quarter, whichever is lower. A participant may not

The total fair value of Restricted Shares that vested during

purchase more the $25,000 in Common Shares per year.

the years ended December 31, 2011, 2010 and 2009 was

Compensation expense will be recognized by the

$2.2 million, $3.0 million and $5.0 million, respectively.

Company to the extent of the above discount to the

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

F-36 Acadia Realty Trust 2011 Annual Report

closing price of the Common Shares with respect to the

applicable quarter. During 2011, 2010 and 2009, a total

of 4,886, 6,184 and 8,744 Common Shares, respectively,

were purchased by employees under the Purchase Plan.

Associated compensation expense of $0.01 million was

recorded in 2011 and $0.02 million was recorded in both

2010 and 2009.

45539

During May of 2006, the Company adopted a Trustee

will be subject to Federal income taxes at the regular

Deferral and Distribution Election (“Trustee Deferral

corporate rates (including any applicable alternative

Plan”) whereby the participating Trustees have deferred

minimum tax) and may not be able to qualify as a REIT

compensation of $0.06 million in both 2011 and 2010

for the four subsequent taxable years. Even though the

and $0.05 million for 2009. During 2009, certain trustees

Company qualifies for taxation as a REIT, the Company is

elected to receive 14,722 Common Shares, which were

subject to certain state and local taxes on its income and

previously deferred, from the Trustee Deferral Plan.

property and Federal income and excise taxes on any

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 up to $16,500 for the year ended

December 31, 2011. The Company contributed $0.2

million for each of the years ended December 31, 2011,

2010 and 2009.

Note 18

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.

Characterization of Distributions:
The Company has determined that the cash distributed

to the shareholders is characterized as follows for

Federal income tax purposes:

Ordinary income
Qualified dividend
Capital gain

For the years ended December 31,

2011

75%
22%
3%
100%

2010

100%
—%
—%
100%

2009

95%
—%
5%
100%

Dividends and Distributions
Payable
On November 29, 2011, the Board of Trustees declared

Taxable REIT Subsidiaries
Income taxes have been provided for using the liability

method as required by ASC Topic 740 “Income Taxes.”

a cash dividend for the quarter ended December 31,

The Company’s TRS income and provision for income

2011, of $0.18 per Common Share, which was paid on

taxes for the years ended December 31, 2011, 2010 and

February 1, 2012 to holders of record as of December

2009 are summarized as follows:

31, 2011.

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 organizational and operational requirements, including a

requirement 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 sufficient taxable income for the

years ended December 31, 2011, 2010 and 2009, no

U.S. Federal income or excise taxes were incurred. If the

Company fails to qualify as a REIT in any taxable year, it

(dollars in thousands)

TRS income before
income taxes

2011

2010

2009

$ 376

$5,716

$2,671

Provision for income taxes:

Federal
State and local

TRS net income

before
noncontrolling
interests
Noncontrolling
interests

222
59

2,164
543

1,025
292

3,009

1,354

1,245

(545)

—

TRS net income

$1,340

$2,464

$1,354

The income tax provision differs from the amount

computed by applying the statutory federal income tax

rate to income before income taxes as follows (not

adjusted for temporary book/tax differences):

Acadia Realty Trust 2011 Annual Report

F-37

Notes to Consolidated Financial Statements continued

2011

2010

2009

Note 20

66483

(dollars in thousands)

Federal provision

at statutory tax rate

TRS State and local

taxes,
net of federal
benefit

Tax effect of:
Permanent

differences, net

Restricted stock

vesting

Other
REIT state and local

income and
franchise taxes

Total provision

for income taxes

$ 128

$1,943

$ 908

358

193

(279)

406

138

—
78

—
—

183

224

266
146

193

$ 474

$2,890

$1,541

(dollars in thousands, except per share amounts)

Numerator:

Income from continuing operations attributable

to Common Shareholders
Effect of dilutive securities:
Preferred OP Unit distributions

Numerator for diluted earnings per Common Share

Denominator:

Weighted average shares for basic earnings per

Effect of dilutive securities:
Employee share options
Convertible Preferred OP Units

Dilutive potential Common Shares

Earnings Per Common Share
Basic earnings per Common Share is computed using
net income attributable to common shareholders and the
weighted average Common Shares outstanding. Diluted

earnings per Common Share reflect the conversion of
obligations and the assumed exercises of securities
including the effects of awards issuable under the
Company’s Share Incentive Plans. In accordance with

GAAP, all Common Shares used to calculate earnings per
Common Share have been adjusted to reflect a special
dividend paid on January 30, 2009, which resulted in the
issuance of approximately 1.3 million additional Common
Shares. The following table sets forth the computation of

basic and diluted earnings per share from continuing
operations for the periods indicated:

Years ended December 31,

2011

2010

2009

$20,062

$28,260

$26,574

20,080

28,278

26,593

40,697

40,136

38,005

264
25

289

245
25

270

212
25

237

Denominator for diluted earnings per share

40,986

40,406

38,242

Basic earnings per Common Share from continuing
operations attributable to Common Shareholders

Diluted earnings per Common Share from

continuing operations attributable to Common
Shareholders

0.50

0.70

0.49

0.70

The weighted average shares used in the computation of

such, the assumed conversion of these units would have

dilutive earnings per share include unvested restricted

no net impact on the determination of diluted earnings

Common Shares (“Restricted Shares”) and restricted OP

per share. The conversion of the convertible notes

Units (“LTIP Units”) (Note 15) that are entitled to receive

payable (Note 9) is not reflected in the table above as

dividend equivalent payments. The effect of the

such conversion, based on the market price of the

conversion of Common OP Units is not reflected in the

Common Shares, would be settled with cash.

above table, as they are exchangeable for Common

Shares on a one-for-one basis. The income allocable to

such units is allocated on this same basis and reflected

as noncontrolling interest in subsidiaries in the

accompanying consolidated financial statements. As

The effect of the assumed conversion of 188 Series A

Preferred OP Units into 25,067 Common Shares would

be dilutive for the years ended December 31, 2011, 2010

and 2009 and are accordingly included in the table above.

F-38 Acadia Realty Trust 2011 Annual Report

84778

Note 21

Summary of Quarterly Financial Information (unaudited)
The quarterly results of operations of the Company for the years ended December 31, 2011 and 2010 are as follows:

2011

(dollars in thousands, except per share amounts)

March 31,

June 30,

September 30,

December 31,

Revenue

Income from continuing operations attributable

to Common Shareholders

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 per share

Net income attributable to Common

Shareholders per Common Share—diluted:

Income from continuing operations

Income from discontinued operations

Net income per share

Cash dividends declared per Common Share

Weighted average Common Shares

outstanding:

Basic

Diluted

37,447

8,185

1,238

37,845

4,245

25,989

9,423

30,234

0.20

0.03

0.23

0.20

0.03

0.23

0.18

0.11

0.64

0.75

0.10

0.64

0.74

0.18

36,656

3,843

168

4,011

0.10

—

0.10

—

0.10

0.18

38,213

3,789

4,098

7,887

0.09

0.10

0.19

0.09

0.10

0.19

0.18

40,317,603

40,333,575

40,339,958

41,785,261

40,580,173

40,633,317

40,628,781

42,066,390

Acadia Realty Trust 2011 Annual Report

F-39

Notes to Consolidated Financial Statements continued

(dollars in thousands, except per share amounts)

March 31,

June 30,

September 30,

December 31,

2010

10888

Revenue

Income from continuing operations attributable

to Common Shareholders

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 per share

Net income attributable to Common

Shareholders per Common Share — diluted:

Income from continuing operations

Income from discontinued operations

Net income per share

Cash dividends declared per Common Share

Weighted average Common Shares

outstanding:

Basic

Diluted

Note 22

34,702

4,829

301

33,997

12,250

548

5,130

12,798

0.12

0.01

0.13

0.12

0.01

0.13

0.18

0.30

0.02

0.32

0.30

0.01

0.31

0.18

36,302

4,592

525

5,117

0.12

0.01

0.13

0.12

0.01

0.13

0.18

36,044

6,589

423

7,012

0.16

0.01

0.17

0.16

0.01

0.17

0.18

39,980,646

40,134,706

40,169,141

40,257,378

40,149,931

40,371,812

40,430,998

40,594,009

Commitments and Contingencies
Under various Federal, state and local laws, ordinances

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

and regulations relating to the protection of the

assessment has resulted in specific recommendations for

environment, a current or previous owner or operator of

remedial actions, the Company has either taken or

real estate may be liable for the cost of removal or

scheduled the recommended remedial action. To mitigate

remediation of certain hazardous or toxic substances

unknown risks, the Company has obtained environmental

disposed, stored, generated, released, manufactured or

insurance for most of its properties, which covers only

discharged from, on, at, under, or in a property. As such,

unknown environmental risks.

the Company may be potentially liable for costs

associated with any potential environmental remediation

at any of its formerly or currently owned properties.

The Company believes that it is in compliance in all

material respects with all Federal, state and local

ordinances and regulations regarding hazardous or toxic

The Company conducts Phase I environmental reviews

substances. Management is not aware of any

with respect to properties it acquires. These reviews

environmental liability that it believes would have a

include an investigation for the presence of asbestos,

material adverse impact on the Company’s financial

underground storage tanks and polychlorinated biphenyls

position or results of operations. Management is

(PCBs). Although such reviews are intended to evaluate

unaware of any instances in which the Company would

the environmental condition of the subject property as

incur significant environmental costs if any or all

well as surrounding properties, there can be no

properties were sold, disposed of or abandoned.

assurance that the review conducted by the Company

However, there can be no assurance that any such non-

will be adequate to identify environmental or other

F-40 Acadia Realty Trust 2011 Annual Report

71101

compliance, liability, claim or expenditure will not arise in

agreement with the Company. Had the Former Employee

the future.

The Company is involved in various matters of litigation

arising in the normal course of business. While the

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

significant effect on the Company’s consolidated financial

position, results of operations, or liquidity. The

not been terminated for “cause,” he would have been

eligible to receive approximately $0.9 million under the

severance agreement. Because the Company terminated

him for “cause,” it did not pay the Former Employee any

severance benefits under the agreement. The Former

Employee has brought a lawsuit against the Company in

New York State Supreme Court, alleging breach of the

severance agreement. The suit is in the pre-trial

discovery stage. The Company believes it has meritorious

Company’s policy is to accrue legal expenses as they are

defenses to the suit.

incurred.

In September 2008, the Company, certain of its

subsidiaries, and other unrelated entities (the “Investor

Consortium”) 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. The action involves five claims alleging

fraudulent transfers in which Mervyns is nominally

seeking approximately $1.175 billion in damages from the

Investor Consortium, although the actual claims made by

the administrator and the unsecured creditors are

substantially less. The first claim contends that, at the

time of the sale of Mervyns by Target Corporation to the

Investor Consortium, a transfer of assets was made in

an effort to defraud creditors. The Company believes that

this aspect of the case is without merit. The remaining

four claims relate to transfers of assets of Mervyns at

various times after the sale by Target. The Company

believes that there are substantial defenses to these

claims and intends to continue to defend them

vigorously. This matter is in the early stages of

discovery. The parties to this action have agreed to a

The Company has arranged for the provision of one letter

of credit in connection with a certain lease and

investment. As of December 31, 2011, there were no

outstanding balances under the letter of credit. If the

letter of credit was fully drawn, the combined maximum

amount of exposure would be $4.6 million.

Note 23

Subsequent Events
During January 2012, the Company established an at-the-

market (“ATM”) equity program with an aggregate

offering price of up to $75.0 million in Common Shares.

The Company intends to use the future net proceeds of

this offering for general corporate purposes, which may

include, among other things, repayment of its debt,

future acquisitions, (directly in the Core Portfolio and

through its Opportunity Funds), and redevelopments of

and capital improvements to its properties.

During January 2012, the Company acquired 1520 North

Milwaukee Ave, a 3,100 square foot property located in

Chicago, IL for approximately $3.8 million.

non-binding mediation, which is scheduled for the end of

During February 2012, Fund III, in a venture with an

March, 2012.

Because of the inherently unpredictable nature of

litigation, the Company could incur some amount of

unaffiliated partner, acquired 640 Broadway, a 45,700

square foot property located in New York, NY for

approximately $32.5 million.

liability in connection with this matter. However, at the

During February 2012, the Company acquired a 40,000

present time, there have not been sufficient

square foot single tenant property, located in Cambridge,

developments in this matter for us to estimate the

MA, for approximately $19.2 million, which included the

reasonably possible loss or range of loss that the

Company might incur as a result of this matter.

During August 2009, the Company terminated the

employment of a former Senior Vice President (the

assumption of $7.0 million of in-place mortgage debt.

During February 2012, Kenneth Bernstein, President and

CEO, converted 150,000 Common OP Units into

Common Shares and subsequently sold 75,000 Common

“Former Employee”) for engaging in conduct that fell

Shares.

within the definition of “cause” in his severance

Acadia Realty Trust 2011 Annual Report

F-41

68619

Schedule III — Real Estate and Accumulated Depreciation

December 31, 2011

Description

Encumbrances

Land

Buildings &
Improvements

Initial Cost
to Company

Costs
Capitalized
Subsequent to
Acquisition

Amount at which
Carried at
December 31, 2011

Buildings &

Land

Improvements Total

Accumulated
Depreciation

Date of
Acquisition (a)
Construction (c)

Shopping Centers

Core Portfolio:
Crescent Plaza
Brockton, MA

New Loudon Center
Latham, NY

Mark Plaza
Edwardsville, PA

Plaza 422
Lebanon, PA

Route 6 Mall
Honesdale, PA

Bartow Avenue
Bronx, NY

Amboy Rd. Shopping Ctr.
Staten Island, NY

Abington Towne Center
Abington, PA

Bloomfield Town Square
Bloomfield Hills, MI

Walnut Hill Plaza
Woonsocket, RI

Elmwood Park Plaza
Elmwood Park, NJ

Merrillville Plaza
Hobart, IN

Marketplace of Absecon
Absecon, NJ

Clark Diversey
Chicago, IL

Boonton
Boonton, NJ

Chestnut Hill
Philadelphia, PA

Third Avenue
Bronx, NY

Hobson West Plaza
Naperville, IL

Village Commons
Shopping Center
Smithtown, NY

Town Line Plaza
Rocky Hill, CT

Branch
Shopping Center
Village of the
Branch, NY

The Methuen Shopping
Center
Methuen, MA

Gateway Shopping Center
Burlington, VT

Mad River Station
Dayton, OH

$17,287

$ 1,147

$ 7,425

$ 1,219

$ 1,147

$ 8,644

$ 9,791

$ 6,116

1984(a)

13,882

505

4,161

11,469

505

15,630

16,135

11,770

1982(a)

—

(1)

—

4,268

(872)

—

3,396

2,596

1968(c)

190

3,004

2,199

190

5,203

5,393

4,010

1972(c)

1,664

—

11,185

1,664

11,185

12,849

6,381

1994(c)

1,691

5,803

560

1,691

6,363

8,054

1,686

2005(c)

—

11,909

1,519

—

13,428

2,184

2005(a)

799

3,197

2,007

799

5,204

6,003

2,504

1998(a)

3,207

13,774

13,647

3,207

27,421

30,628

10,260

1998(a)

23,458

3,122

12,488

1,941

3,122

14,429

17,551

5,378

1998(a)

33,738

3,248

12,992

14,789

3,798

27,231

31,029

12,081

1998(a)

26,250

4,288

17,152

2,702

4,288

19,854

24,142

7,203

1998(a)

(1)

2,573

10,294

3,798

2,577

14,088

16,665

5,090

1998(a)

4,491

10,061

2,773

187

10,061

2,960

13,021

452

2006(a)

7,874

1,328

7,188

196

1,328

7,384

8,712

1,076

2006(a)

—

8,289

5,691

8,289

5,735

14,024

11,108

8,038

3,943

11,855

11,234

23,089

794

965

2006(a)

(1)

1,793

7,172

1,763

1,793

8,935

10,728

3,286

1998(a)

9,310

3,229

12,917

3,358

3,229

16,275

19,504

6,168

1998(a)

(1)

878

3,510

7,502

907

10,983

11,890

7,935

1998(a)

12,761

3,156

12,545

1,021

3,156

13,566

16,722

4,816

1998(a)

(1)

956

3,826

594

961

4,415

5,376

1,681

1998(a)

20,308

1,273

5,091

12,009

1,273

17,100

18,373

5,607

1999(a)

—

2,350

9,404

1,058

2,350

10,462

12,812

3,573

1999(a)

F-42 Acadia Realty Trust 2011 Annual Report

36793

December 31, 2011

Description

Encumbrances Land

Buildings &
Improvements

Initial Cost
to Company

Costs
Capitalized
Subsequent to
Acquisition

Amount at which
Carried at
December 31, 2011

Buildings &

Land

Improvements Total

Accumulated
Depreciation

Date of
Acquisition (a)
Construction (c)

Shopping Centers, continued

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

West Diversey
651-671 W Diversey
Chicago, IL

Mercer Street
15 Mercer Street
New York, NY

4401 White Plains
Bronx, NY

Chicago Street Retail
Portfolio

Undeveloped Land

Fund I:

Tarrytown Centre
Westchester, NY

Kroger/Safeway
Various

Fund II:

Liberty Avenue
New York, NY

Pelham Manor
Westchester, NY

400 E. Fordham Road
Bronx, NY

216th Street
New York, NY

161st Street
Bronx, NY

Atlantic Avenue
Brooklyn, NY

Canarsie Plaza
Brooklyn, NY

ASOF II, LLC

Fund III:

125 Main Street Assoc.
Westport, CT

Suffern Self Storage
Suffern, NY

Linden Self Storage
Linden, NJ

Webster Self Storage
Bronx, NY

11,941

1,475

5,899

1,121

1,475

7,020

8,495

2,720

1999(a)

26,000

1,817

15,846

549

1,817

16,395

18,212

5,276

1998(a)

—

3,380

13,554

16,699

18,704

3,380

13,564

16,944

1,818

2007(a)

16,699

18,732

35,431

2,221

2007(a)

—

3,048

7,281

—

3,048

7,281

10,329

743

2008(a)

—

8,576

17,256

—

8,576

17,256

25,832

252

2011(a)

—

1,887

2,483

1,581

5,054

3,319

13,187

251

—

1,887

2,483

4,370

1,581

5,054

6,635

3,319

13,187

16,506

251

—

251

137

—

2011(a)

8,260

2,323

7,396

619

2,323

8,015

10,338

1,641

2004(a)

—

9,395

34,000

—

4,265

12,627

—

721

—

65,399

—

4,265

4,067

2003(a)

13,348

1,717

2005(a)

65,399

5,544

2004(a)

84,277

11,144

18,010

95,318

16,253

108,219

124,472

9,090

2004(a)

25,500

7,261

—

19,146

7,261

19,146

26,407

2,467

2005(a)

28,900

16,679

28,410

261

16,679

28,671

45,350

4,642

2005(a)

11,540

5,322

56,476

32,543

40,000

—

15,350

5,322

15,350

20,672

945

2007(a)

82,915

32,543

82,915

115,458

2,368

2007(a)

—

12,500

12,993

4,316

8,012

12,993

12,328

25,321

364

2007(a)

—

4,561

7,484

208

4,561

7,692

12,253

815

2008(a)

(2)

3,515

6,139

385

3,515

6,524

10,039

726

2008(a)

959

5,506

157

959

5,663

6,622

592

2008(a)

Acadia Realty Trust 2011 Annual Report

F-43

24214

Schedule III — Real Estate and Accumulated Depreciation continued

December 31, 2011

Description

Encumbrances

Land

Buildings &
Improvements

Initial Cost
to Company

Costs
Capitalized
Subsequent to
Acquisition

Amount at which
Carried at
December 31, 2011

Buildings &
Improvements

Land

Total

Accumulated
Depreciation

Date of
Acquisition (a)
Construction (c)

Fund III, continued

Jersey City Self
Storage
Jersey City, NJ

Bronx Self Storage
Bronx, NY

Lawrence Self
Storage
Lawrence, NY

Starr Avenue Self
Storage
Queens, NY

New Rochelle Self
Storage
Westchester, NY

Yonkers Self Storage
Westchester, NY

Bruckner Blvd. Self
Storage
Bronx, NY

Ridgewood Self
Storage
Queens, NY

Document Storage
New York City, NY

Cortlandt Towne
Center
Cortlandt, NY

Heritage Shops
Chicago, IL

654 Broadway
New York, NY

Marcus Avenue
New Hyde Park, NY

Real Estate Under
Development

Total

Notes:

(2)

2,377

9,654

2,377

9,745

12,122

1,059

2008(a)

10,835

5,936

153

10,835

6,089

16,924

688

2008(a)

(2)

6,977

12,688

6,977

12,774

19,751

1,272

2008(a)

—

7,597

22,391

512

7,597

22,903

30,500

2,420

2008(a)

1,977

4,769

443

1,977

5,212

7,189

544

2008(a)

3,121

17,457

283

3,121

17,740

20,861

1,765

2008(a)

6,244

10,551

245

6,244

10,796

17,040

1,105

2008(a)

(2)

8,000

—

13,942

8,000

13,942

21,942

1,083

—

1,083

979

208

2008(c)

2008(a)

50,000

7,293

61,395

3,712

7,293

65,107

72,400

8,512

2009(a)

—

13,131

15,409

3,188

9,563

2,250

9,000

13,131

15,409

28,540

394

2011(a)

—

3,188

9,563

12,751

2,250

9,000

11,250

—

2011(a)

—

40,650

45,658

2,564

171,423

45,658

181,470

227,128

$787,877

$324,836

$559,416

$580,010

$331,280

$1,140,465

$1,471,745

$180,796

ASOF III, LLC

136,079

—

(1) These properties serve as collateral for the financing with Bank of America, N.A. in the amount of $1,000.

(2) These properties serve as collateral for the financing with GEMSA, in the amount of $42,000.

F-44 Acadia Realty Trust 2011 Annual Report

74500

December 31, 2011

1. Depreciation on buildings and improvements reflected in the statements of income is 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 $1,345.0 million as of

December 31, 2011

3. (a) Reconciliation of Real Estate Properties:

The following table reconciles the real estate properties from January 1, 2009 to December 31, 2011:

(dollars in thousands)

Balance at beginning of year

Other improvements

Property Acquired

Balance at end of year

For the years ended December 31,

2011

2010

2009

$1,305,561

60,300

105,884

$1,119,758

185,803

—

$1,004,347

46,723

68,688

$1,471,745

$1,305,561

$1,119,758

3. (b) Reconciliation of Accumulated Depreciation:

The following table reconciles accumulated depreciation from January 1, 2009 to December 31, 2011:

(dollars in thousands)

Balance at beginning of year

Depreciation related to real estate

Balance at end of year

For the years ended December 31,

2011

2010

2009

$156,117

24,679

$180,796

$132,488

23,629

$156,117

$109,376

23,112

$132,488

Acadia Realty Trust 2011 Annual Report

F-45

19928

[THIS PAGE INTENTIONALLY LEFT BLANK]

Trustees and Officers

Shareholder Information

Trustees

Senior Officers

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

Lorrence T. Kellar
Former Vice President,
Retail Development
Continental Properties

Wendy Luscombe
Principal
WKL Consulting

William T. Spitz
Director, Diversified Trust

Joel Braun
Executive Vice President,
Chief Investment Officer

Christopher Conlon
Executive Vice President,
Chief Operating Officer

Jon Grisham
Sr. Vice President,
Chief Financial Officer

Richard Hartman
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(cid:31)

Heather Moore, Esq.
Sr. Vice President,
Associate General Counsel

Joseph M. Napolitano
Sr. Vice President,
Chief Administrative Officer

Michael Nelsen
Sr. Vice President,
Accounting and Financial Principal

Investor Relations

Jon Grisham
Sr. Vice President,
Chief Financial 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 2011 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
Goodwin Procter, LLP
620 Eighth Avenue
New York, NY 10018

Annual Meeting
Acadia’s Board of Trustees has sched-
uled the Annual Shareholder Meeting
for Wednesday, May 16, 2012,
at 1:00 p.m., local time, to be held at
the offices of Paul, Hastings, Janofsky
& Walker, LLP, 191 North Wacker Drive,
Chicago, IL 60606. The record date for
determination of shareholders entitled
to vote is March 21, 2012.

Independent Auditors
BDO USA, 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.

68749_ACD251 AR11_FrontCvr_M.indd 3

3/26/12 3:12 PM

1311 Mamaroneck Avenue

Suite 260

White Plains, NY 10605

Tel: 914.288.8100

68749_ACD251 AR11_FrontCvr_M.indd 4

3/26/12 3:12 PM

E Printed on recycled paper.