Acadia Realty Trust
Annual Report 2015

Plain-text annual report

2015 ANNUAL REPORT INTEGRITY // INTENSITY // INTELLIGENCE // INNOVATION Dear Fellow Shareholders: Last year, while we continued to see steady improvements in operating fundamentals and asset values, we also observed aggressive leverage, leasing projections, and exit assumptions among buyers that often outstripped reality. Accordingly, we “stuck to our knitting” and remained focused on driving the growth of our existing assets, only adding new investments with compelling accretion. More recently, the increase in volatility in the global financial markets, especially the debt markets, reminds us that real estate is a cyclical business and reaffirms our disciplined approach to capital allocation. At the same time, the changes in the retailing industry – both cyclical challenges as well as the multi-year secular evolution driven by e- commerce growth and the rise of omnichannel retailing – reaffirm our focus on those retail properties best positioned to thrive today as well as 3, 5, and 10 years into the future. From our perspective, these cyclical and secular shifts bring challenges but, more importantly, opportunities. With this in mind, during 2015, we remained focused on executing our goals through our dual-platform model: Solid Core Portfolio We continued to build a best-in-class core retail real estate portfolio that responds to the changes in retailing and addresses demands for live-work-play locations, by:  acquiring $237.4 million of primarily urban retail properties in our nation’s gateway cities, including New York City and San Francisco, including $38.8 million acquired in January 2016. We delivered solid core operating results that further evidenced the strength of our core portfolio and its ability to produce above-average operating results by:   maintaining a well-leased portfolio (96.9% as of year-end). generating 4.0% same-property NOI growth for the year, excluding redevelopment activities; and Profitable Fund Platform In response to capital markets tailwinds, we were net sellers of assets in our buy-fix-sell fund platform, opportunistically harvesting embedded profits by:  completing $295.3 million of dispositions in Fund III (including $107.3 million sold in January 2016), which generated a blended 39.1% IRR and 2.60x multiple on invested equity;  monetizing $139.8 million of assets across the balance of our fund platform, most notably, the residential air rights for Phase 3 of our City Point development project in downtown Brooklyn ($115.6 million); distributing the capital gains attributed to these sales to our shareholders in the form of a special cash dividend, which totaled $0.25 per share; and subsequent to year-end, generating approximately $0.05 per share of net promote income from the recapitalization of Fund III’s Cortlandt Town Center.   We planted the seeds for future fund profit-taking by:  acquiring $173.9 million of opportunistic investments or value-add street-retail properties on behalf of Fund IV, including $27.8 million acquired subsequent to year-end; and continuing to execute on the strategic business plans for our existing pool of lease-up and development assets.  Solid Balance Sheet And, similar to prior years, we protected shareholder value by growing our company on a substantially leverage-neutral basis by:  flexibly funding our acquisition activities through a combination of disciplined common share and operating partnership unit issuance, opportunistic capital recycling, and conservative borrowing. More importantly, we believe that our company is well positioned to repeat this success during 2016, due to: Our Differentiated Core Investment Strategy: Urban and Street Retail Even as retailers reevaluate their bricks-and-mortar strategy in light of technological and other secular shifts impacting the retail industry, we are seeing that well-located urban and street-retail properties are actually becoming more important to our retailers. Whether it is Warby Parker at one of our Lincoln Park, Chicago properties or Target and Trader Joe’s who are opening soon at City Point in Brooklyn, our properties are attracting strong interest due to dense urban demographics and the higher sales productivity, profitability, and brand awareness that can be generated by these high-traffic locations. In light of the foregoing, we purposefully focused our core acquisition activities on urban and street retail. As a result, over the past five years, we have increased our street-retail segment from 13% of estimated gross asset value to roughly 45% and increased our urban-retail segment from 4% to 19%. That being said, we also remain committed to traditional suburban shopping centers when they are located in supply- constrained, high-barrier-to-entry trade areas. We now have an ideal blend of properties, both by product type and geography. As such, we believe that our core portfolio remains well positioned from both an offensive and defensive perspective. It is positioned for growth because:  street-retail leases generally have superior contractual growth and more frequent opportunities to mark rents to market rates; and  we can supplement our solid internal growth with a disciplined acquisition program. At the same time, we believe that our core portfolio is highly recession resistant, because:  approximately half of our portfolio is comprised of high-quality, live-work-play retail, predominantly anchored by supermarkets, drug stores, other necessity retailers, and discounters; and strong growth in market rents has created a cushion to our in-place street-retail rents.  Our Dual Platforms A second point of differentiation is our complementary fund platform. In 2001, we launched our first fund as a public company, and, since then, we have raised $1.4 billion of capital commitments to invest in opportunistic and value-add investments. Today, we continue to implement our location-driven investment strategy, targeting: (i) street retail redevelopments; (ii) next-generation street retail; (iii) distressed-retailer real estate; and (iv) other opportunistic retail real estate investments. Over the past few years, the capital markets have been pricing returns on generic shopping centers below the level that we believe is appropriate on a risk-adjusted basis. Accordingly, we have allocated the majority of Fund IV’s capital commitments to street retail redevelopments and next-generation street retail locations, which we believe have greater potential for asymmetric returns – that is, we believe that there are more muted downside risks and that there is outsized potential for outperformance, driven by limited supply, barriers to entry, and strong retailer demand. Last fall, the widening of borrowing spreads led to disruption among high-leverage buyers and a renewed desire for certainty of closing among sellers. This is beginning to lead to more investment opportunities for our funds. Looking ahead, we are closely tracking borrowing spreads, which could cause a pause in the private market, thereby decreasing liquidity for commercial real estate and (possibly) increasing our fund platform’s opportunistic investment activity. Unlike our core platform, our fund acquisition program is not correlated to the REIT market. If anything, there is probably a negative correlation, with some of the best buying opportunities arising when REITs are sidelined. Importantly, given our dual structure, we are not overly beholden to the public markets for equity. That is, when public equity is unavailable, we can still be active acquirers through our fund platform. And, if the overall acquisition market is unattractive, we can fix and sell fund assets instead, which the fund structure rewards. Above all, we can remain flexible, profitably pursuing a broader scope of buy-fix-sell investments than we would on behalf of our “infinite-life” core portfolio. Moreover, by purposefully concentrating our “heavy-lift” value-add activities in our fund platform, where capital is committed by our institutional partners and on call, we are protecting our shareholders from ill- timed public equity raises necessitated by capital-intensive redevelopments. Our Dry Powder (An Under-rated Differentiator) Overall, we firmly believe that companies seeking long-term, responsible growth should also be focused on maintaining low leverage and appropriate levels of liquidity. We are, on all counts. For example, our net debt to EBITDA ratio was 5.1x at year-end 2015 – one of the lowest in the industry – and our fixed-charge coverage ratio was 4.1x. Likewise, our debt to total market capitalization was 22%. We also have ample dry powder in our fund platform, enabling us to quickly take advantage of interesting investment opportunities, regardless of the state of the capital markets. Our Dedicated Team However, our most valuable asset is our team, who is dedicated to delivering long-term, profitable growth on behalf of all of our stakeholders. This year, there are a few team members that I would like to recognize:  Our CFO – Jon Grisham, who, in November, announced that he plans to retire during 2016. Jon and I began working together nearly two decades ago. He has played an important role in the transformation of our balance sheet and the profitable growth of this company. Jon, you will be missed!  Our new Senior Vice Presidents – Tim Collier (Leasing), Mark O’Connor (Property Management), Amy Racanello (Capital Markets & Investments), and John Swagerty (Development). Not only have each of these talented individuals played an integral role in Acadia’s ability to deliver on its long-term growth goals, but also, they clearly embody the core values on which this company was founded: integrity, intensity, intelligence, and innovation.  And, our two newest Trustees, both of whom were elected to the Board within the past eight months – C. David Zoba, senior real estate strategy advisor of Gap, Inc. and Gap’s former senior vice president of global real estate, who has valuable experience from the front lines of retailing, and Lynn C. Thurber, Chairman, and former CEO, of LaSalle Investment Management, who has significant private and public real estate investment experience. The perspectives of these industry leaders will surely be a valuable addition to our executive-level conversations. In conclusion, as we welcome several new members to Acadia’s executive team, it reminds us that Acadia is still in its early innings. And, I am pleased to report that we remain well positioned, well capitalized, and highly motivated. On behalf of the Acadia team, we look forward to continuing to grow this company together with you, our shareholders, and thank you for your support. Kenneth F. Bernstein President & CEO March 2016 UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from toCommission File Number 1-12002ACADIA REALTY TRUST(Exact name of registrant as specified in its charter)Maryland23-2715194(State of incorporation)(I.R.S. employer identification no.)411 Theodore Fremd Avenue, Suite 300 Rye, NY 10580(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:NoneIndicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YES x NO oIndicate 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 o NO xIndicate 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 1934during 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 filingrequirements for the past 90 days.YES x NO oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File requiredto 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 periodthat the registrant was required to submit and post such files).YES x NO oIndicate 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 thebest 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 thisForm 10-K. oIndicate 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 x Accelerated Filer o Non-accelerated Filer o Smaller Reporting Company oIndicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)YES o NO xThe 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’smost recently completed second fiscal quarter was approximately $2,011.2 million, based on a price of $29.22 per share, the average sales price for theregistrant’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 19, 2016 was 70,462,368.DOCUMENTS INCORPORATED BY REFERENCEPart III – Portions of the registrant’s definitive proxy statement relating to its 2016 Annual Meeting of Shareholders presently scheduled to be held May 9,2016 to be filed pursuant to Regulation 14A.TABLE OF CONTENTSForm 10-K ReportItem No. Page PART I 1.Business 41A.Risk Factors 91B.Unresolved Staff Comments 202.Properties 213.Legal Proceedings 304.Mine Safety Disclosures 30 PART II 5.Market for Registrant’s Common Equity, Related Stockholder Matters, Issuer Purchases of Equity Securities and PerformanceGraph 316.Selected Financial Data 337.Management’s Discussion and Analysis of Financial Condition and Results of Operations 357A.Quantitative and Qualitative Disclosures about Market Risk 518.Financial Statements and Supplementary Data 539.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 539A.Controls and Procedures 539B.Other Information 55 PART III 10.Directors, Executive Officers and Corporate Governance 5611.Executive Compensation 5612.Security Ownership of Certain Beneficial Owners and Management 5613.Certain Relationships and Related Transactions and Director Independence 5614.Principal Accounting Fees and Services 56 PART IV 15.Exhibits and Financial Statement Schedule 562SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSCertain statements contained in this Annual Report on Form 10-K may contain forward-looking statements within the meaning of Section 27A of theSecurities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 and as such may involve known and unknown risks, uncertainties andother factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievementsexpressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our future plans,strategies and expectations are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend" or"project" or the negative thereof or other variations thereon or comparable terminology. Factors which could have a material adverse effect on our operationsand future prospects include, but are not limited to those set forth under the headings "Item 1A. Risk Factors" and "Item 7. Management’s Discussion andAnalysis of Financial Condition and Results of Operations" in this Form 10-K. These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein.3PART IITEM 1. BUSINESS.GENERALAcadia Realty Trust (the "Trust") was formed on March 4, 1993 as a Maryland real estate investment trust ("REIT"). All references to "Acadia," "we," "us,""our" and "Company" refer to the Trust and its consolidated subsidiaries. We are a fully integrated REIT focused on the ownership, acquisition,redevelopment and management of high-quality retail properties located primarily in high-barrier-to-entry, supply-constrained, densely-populatedmetropolitan areas in the United States. We currently own, or have an ownership interest in these properties through our Core Portfolio (as defined below) andour Funds (as defined in Item 1. of this Form 10-K).All of our assets are held by, and all of our operations are conducted through, Acadia Realty Limited Partnership (the "Operating Partnership") and entities inwhich the Operating Partnership owns an interest. As of December 31, 2015, the Trust controlled 95% 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 OperatingPartnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the OperatingPartnership in exchange for common or preferred units of limited partnership interest ("Common OP Units" or "Preferred OP Units," respectively, andcollectively, "OP Units") and employees who have been awarded restricted Common OP Units as long-term incentive compensation ("LTIP Units"). Limitedpartners holding Common OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for our common shares of beneficialinterest of the Trust ("Common Shares"). This structure is referred to as an umbrella partnership REIT, or "UPREIT."BUSINESS OBJECTIVES AND STRATEGIESOur primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while alsocreating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective:•Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas.Our goal is to create value through accretive redevelopment and re-tenanting activities within our existing portfolio and grow this platform throughthe acquisition of high-quality assets that have the long-term potential to outperform the asset class.•Generate additional growth through our Funds in which we co-invest with high-quality institutional investors. Our Fund strategy focuses onopportunistic yet disciplined acquisitions with high inherent opportunity for the creation of additional value, execution on this opportunity and therealization of value through the sale of these assets. In connection with this strategy, we focus on:◦value-add investments in street retail properties, located in established and "next-generation" submarkets, with re-tenanting orrepositioning opportunities,◦opportunistic acquisitions of well-located real estate anchored by distressed retailers, and◦other opportunistic acquisitions, which vary based on market conditions and may include high-yield acquisitions and purchases ofdistressed debt.Some of these investments historically have also included, and may in the future include, joint ventures with private equity investors for the purposeof making investments in operating retailers with significant embedded value in their real estate assets.•Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund futuregrowth.Investment Strategy — Generate External Growth through our Dual Platforms; Core Portfolio and FundsThe 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 andvalue, are key strategic considerations to the growth of our Core Portfolio. As such, we constantly evaluate the blended cost of equity and debt and adjust theamount of acquisition activity to align the level of investment activity with capital flows.4Given the growing importance of technology and e-commerce, many of our retail tenants are appropriately focused on omni-channel sales and how to bestutilize e-commerce initiatives to drive sales at their stores. In light of these initiatives, we have found retailers are becoming more selective as to the location,size and format of their next-generation stores and are focused on dense, high-traffic retail corridors, where they can utilize smaller and more productiveformats closer to their shopping population. Accordingly, our focus for Core Portfolio and Fund acquisitions is on those properties which we believe will notonly remain relevant to our tenants, but become even more so in the future.In addition to our Core Portfolio investments in real estate assets, we have also capitalized on our expertise in the acquisition, redevelopment, leasing andmanagement of retail real estate by establishing discretionary opportunity funds. Our Fund platform is an investment vehicle where the Operating Partnershipinvests, along with outside institutional investors, including, but not limited to, endowments, foundations, pension funds and investment managementcompanies, in primarily opportunistic and value-add retail real estate. To date, we have launched four funds ("Funds"); Acadia Strategic Opportunity Fund,LP ("Fund I"), Acadia Strategic Opportunity Fund II, LLC ("Fund II"), Acadia Strategic Opportunity Fund III LLC ("Fund III") and Acadia StrategicOpportunity Fund IV LLC ("Fund IV"). Due to our level of control, we consolidate these Funds for financial reporting purposes. Fund I and Fund II alsoinclude investments in operating companies through Acadia Mervyn Investors I, LLC ("Mervyns I"), Acadia Mervyn Investors II, LLC ("Mervyns II") and, incertain instances, directly through Fund II, all on a non-recourse basis. These investments comprise and are referred to as the Company's Retailer ControlledProperty Venture ("RCP Venture"). As of December 31, 2015, Fund I has been liquidated.The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns I and II and earns priority distributions or fees for assetmanagement, property management, construction, redevelopment, leasing and legal services. Cash flows from the Funds and the RCP Venture are distributedpro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return ("Preferred Return"),and the return of all capital contributions. Thereafter, remaining cash flow is distributed 20% to the Operating Partnership ("Promote") and 80% to thepartners or members (including the Operating Partnership).See Note 1 in the Notes to Consolidated Financial Statements, which begin on page F-1 of this Form 10-K ("Notes to Consolidated Financial Statements"), fora detailed discussion of the Funds and RCP Venture.Capital Strategy — Balance Sheet Focus and Access to CapitalOur primary capital objective is to maintain a strong and flexible balance sheet through conservative financial practices, including moderate use of leverage,while ensuring access to sufficient capital to fund future growth. We intend to continue financing acquisitions and property redevelopment with sources ofcapital determined by management to be the most appropriate based on, among other factors, availability in the current capital markets, pricing and othercommercial and financial terms. The sources of capital may include the issuance of public equity, unsecured debt, mortgage and construction loans, and othercapital alternatives including the issuance of OP Units. We manage our interest rate risk through the use of fixed rate debt and, where we use variable ratedebt, through the use of certain derivative instruments, including London Interbank Offered Rate ("LIBOR") swap agreements and interest rate caps asdiscussed further in Item 7A. of this Form 10-K.During January 2012, we launched an at-the-market ("ATM") equity issuance program which provides us an efficient and low-cost vehicle for raising publicequity to fund our capital needs. Through this program, we have been able to effectively "match-fund" a portion of the required equity for our Core Portfolioand Fund acquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time,we have issued and intend to continue to issue equity in follow-on offerings separate from our ATM program. Net proceeds raised through our ATM programand follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions and for other generalcorporate purposes.Common Share issuances for each of the years ended December 31, 2015, 2014 and 2013 are summarized as follows:5(shares and dollars in millions)201520142013 ATM Issuance (1) Common Shares issued2.04.73.0Gross proceeds$65.6$128.9$82.2Net proceeds$64.4$126.8$80.7 Follow-on Offering Issuances Common Shares issued—7.6—Gross proceeds$—$237.4$—Net proceeds$—$230.7$—Note:(1) This activity includes 1.2 million shares issued during the fourth quarter of 2015, which generated gross proceeds of $38.0 million and net proceeds of$37.5 million.During 2013 and 2014, we also issued 1.2 million and 1.6 million OP Units, respectively, in connection with the acquisition of properties. During January2016, we issued 0.9 million OP Units in connection with the acquisition of a property.Operating Strategy — Experienced Management Team with Proven Track RecordOur senior management team has decades of experience in the real estate industry. We have capitalized on our expertise in the acquisition, redevelopment,leasing and management of retail real estate by creating value through property redevelopment, re-tenanting and establishing joint ventures, such as theFunds, in which we earn, in addition to a return on our equity interest, Promotes, priority distributions and fees.Operating functions such as leasing, property management, construction, finance and legal (collectively, the "Operating Departments") are generallyprovided by our personnel, providing for a vertically integrated operating platform. By incorporating the Operating Departments in the acquisition process,acquisitions are appropriately priced giving effect to each asset’s specific risks and returns and transition time is minimized allowing management toimmediately execute on its strategic plan for each asset.INVESTING ACTIVITIESCore PortfolioOur Core Portfolio consists primarily of high-quality street retail and urban assets, as well as suburban properties located in high-barrier-to-entry, densely-populated trade areas.For the year ended December 31, 2015, we continued to execute on our strategy of owning a superior Core Portfolio by acquiring, through our OperatingPartnership and its subsidiaries, properties consistent with our existing portfolio for an aggregate purchase price of $204.2 million. See Note 2 in the Notes toConsolidated Financial Statements, for a detailed discussion of these acquisitions and Item 2. Properties for a description of the other properties in our CorePortfolio. Additionally, subsequent to December 31, 2015, we acquired a 49% interest in a property for $39.8 million.As we typically hold our Core Portfolio properties for long-term investment, we periodically review the portfolio and implement programs to renovate and re-tenant targeted properties to enhance their market position. This in turn is expected to strengthen the competitive position of the leasing program to attractand retain quality tenants, increasing cash flow, and consequently, property values. From time to time, we also identify certain properties for disposition andredeploy the capital for acquisitions and for the repositioning of existing properties with greater potential for capital appreciation. During 2015, there wereno dispositions within the Core Portfolio.We also make investments in first mortgages, preferred equity and other notes receivable collateralized by real estate, ("Structured Finance Program") eitherdirectly or through entities having an ownership interest therein. During 2015, we made investments6totaling $41.4 million in this program and as of December 31, 2015 had $147.2 million invested in this program. See Note 5 in the Notes to ConsolidatedFinancial Statements, for a detailed discussion of our Structured Finance Program.FundsDuring 2015, the Operating Partnership acquired an additional 4.6% interest in Fund III from a limited partner for $7.3 million, giving the Company anaggregate 24.5% interest in Fund III. During January 2016, the Operating Partnership acquired an additional 8.3% interest in Fund II from a limited partnerfor $18.4 million, giving the Company an aggregate 28.3% interest in Fund II.AcquisitionsFund IIDuring 2015, Fund II acquired an additional 43% interest in Tower I of its City Point Development located in Brooklyn, NY. Fund II now owns 95% of thisdevelopment project. See Note 2 in the Notes to Consolidated Financial Statements for a detailed discussion of this acquisition.Fund IVDuring 2015, Fund IV acquired seven properties for an aggregate purchase price of $146.1 million. See Note 2 in the Notes to Consolidated FinancialStatements for a detailed discussion of these acquisitions.During February 2016, Fund IV closed on a $14.0 million preferred equity investment in a development site in Chicago, Illinois.DispositionsFund IIDuring 2015, Fund II sold the residential air rights in Phase III of its City Point project located in Brooklyn, NY for a sales price of $115.6 million, and aproperty located in Queens, NY for $24.0 million. See Note 2 in the Notes to Consolidated Financial Statements for a detailed discussion of thesedispositions.Fund IIIDuring 2015, Fund III sold three properties located in Chicago, IL, Shrewsbury, MA and Baltimore, MD for an aggregate sales price of $188.0 million. SeeNote 2 in the Notes to Consolidated Financial Statements, for a detailed discussion of these dispositions. Subsequent to December 31, 2015, Fund III sold a65% interest in Cortlandt Town Center for $107.3 million.Redevelopment ActivitiesAs part of our Fund strategy, we invest in real estate assets that may require significant redevelopment. As of December 31, 2015, the Funds had 10redevelopment projects, consisting of 30 individual properties, four of which are under construction and six are in various stages of the redevelopmentprocess as follows:7(dollars in millions) Property Owner Coststo date Anticipatedadditionalcosts (1) Status Squarefeet uponcompletionAnticipatedcompletion dateCity Point (2) Fund II $341.9 $48.1 - $68.1 (3) Construction commenced 763,0002016/2020 (4)Sherman Plaza (2) Fund II 35.8 TBD Pre-construction TBDTBDCortlandt Crossing Fund III 14.6 32.4 - 41.4 Pre-construction 150,000 - 170,00020173104 M Street NW (2) Fund III 7.3 0.7 - 1.7 Construction commenced 10,0002016Broad Hollow Commons Fund III 14.4 35.6 - 45.6 Pre-construction 180,000 - 200,0002016210 Bowery Fund IV 13.2 5.3 - 9.3 Pre-construction 16,0002016Broughton Street Portfolio (2) Fund IV 61.3 23.7 - 28.7 Construction commenced 200,000201627 E. 61st Street Fund IV 21.3 1.5 - 5.5 Construction commenced 9,5002016801 Madison Avenue Fund IV 33.6 2.4 - 7.4 Pre-construction 5,0002016650 Bald Hill Road Fund IV 10.5 17.0 - 22.0 Pre-construction 161,0002016Total $553.9 Notes:TBD – To be determined(1) Anticipated additional costs are estimated ranges for completing the projects and include costs for tenant improvements and leasing commissions.(2) These projects are being redeveloped in joint ventures with unaffiliated entities.(3) Net of actual and anticipated contributions from retail tenants and proceeds from residential tower sales.(4) Phases I and II have an estimated completion date of 2016. Phase III has an estimated completion date of 2020.RCP VentureThrough Mervyns I and II, and in certain instances, Fund II, we have opportunistically made investments through our RCP Venture in surplus orunderutilized properties owned by retailers. While we are primarily a passive partner in the investments made through the RCP Venture, historically we haveprovided our services in reviewing potential acquisitions and operating and redevelopment assistance in areas where we have both a presence and expertise.To date, we have invested an aggregate $63.2 million in our RCP Venture on a non-recourse basis. See Note 4 in the Notes to Consolidated FinancialStatements for a detailed discussion of the RCP Venture.ENVIRONMENTAL LAWSFor information relating to environmental laws that may have an impact on our business, please see "Item 1A. Risk Factors - Possible liability relating toenvironmental matters."COMPETITIONThere are numerous entities that compete with us in seeking properties for acquisition and tenants that will lease space in our properties. Our competitorsinclude other REITs, financial institutions, insurance companies, pension funds, private companies and individuals. Our properties compete for tenants withsimilar properties primarily on the basis of location, total occupancy costs (including base rent and operating expenses) and the design and condition of theimprovements.FINANCIAL INFORMATION ABOUT MARKET SEGMENTSWe have three reportable segments: Core Portfolio, Funds and Structured Financing. Structured Financing consists of our notes receivable and related interestincome. The accounting policies of the segments are the same as those described in the summary of significant accounting policies set forth in Note 1 in theNotes to Consolidated Financial Statements. We evaluate property8performance primarily based on net operating income before depreciation, amortization and certain nonrecurring items. Investments in our Core Portfolio aretypically held long-term. Given the contemplated finite life of our Funds, these investments are typically held for shorter terms. Priority distributions and feesearned by us as general partner or managing member of the Funds are eliminated in our Consolidated Financial Statements. See Note 3 in the Notes toConsolidated Financial Statements for information regarding, among other things, revenues from external customers, a measure of profit and loss and totalassets with respect to each of our segments. Our profits and losses for both our business and each of our segments are not seasonal.CORPORATE HEADQUARTERS AND EMPLOYEESOur executive office is located at 411 Theodore Fremd Avenue, Suite 300, Rye, New York 10580, and our telephone number is (914) 288-8100. As ofDecember 31, 2015, we had 116 employees, of which 97 were located at our executive office and 19 were located at regional property management offices.None of our employees are covered by collective bargaining agreements. Management believes that its relationship with employees is good.COMPANY WEBSITEAll of our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and currentreports 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, areavailable 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 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, you may contact RobertMasters, Corporate Secretary, at Acadia Realty Trust, 411 Theodore Fremd Avenue, Suite 300, Rye, NY 10580. You may also call (914) 288-8100 to request acopy of the Form 10-K. Information included or referred to on our website is not incorporated by reference in or otherwise a part of this Form 10-K.CODE OF ETHICS AND WHISTLEBLOWER POLICIESThe Board of Trustees adopted a Code of Business Conduct and Ethics applicable to all employees, as well as a "Whistleblower Policy." Copies of thesedocuments are available in the Investor Information section of our website. We intend to disclose future amendments to, or waivers from (with respect to oursenior executive financial officers), our Code of Ethics in the Investor Information section of our website within four business days following the date of suchamendment or waiver.ITEM 1A. RISK FACTORS.If any of the following risks occur, the impact on our business, results of operations and financial condition could be material. This section includes or refersto certain forward-looking statements. Refer to the explanation of the qualifications and limitations on such forward-looking statements discussed in thebeginning of this Form 10-K.We rely on revenues derived from key tenants.We derive significant revenues from a concentration of certain key tenants that occupy space at more than one property. We could be adversely affected inthe event of the bankruptcy or insolvency of, or a downturn in the business of, any of our key tenants, or in the event that any such tenant does not renew itsleases as they expire or renews such leases at lower rental rates. See "Item 2. Properties-Major Tenants" in this Annual Report on Form 10-K for quantifiedinformation with respect to the percentage of our minimum rents received from major tenants.Anchor tenants and co-tenancy are crucial to the success of retail properties.Vacated anchor space not only directly reduces rental revenues, but if not re-tenanted with a similar tenant, or one with equal consumer attraction, couldadversely affect the entire shopping center primarily through the loss of customer drawing power. This can also occur through the exercise of the right thatmost 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 is owned by another landlord. In addition, in the event that certain anchor tenants cease to occupy a property, such an action may result ina significant number of other tenants having the contractual right to terminate their leases, or pay a reduced rent based on a percentage of the tenant's sales, atthe affected property, which could adversely affect the future income from such property ("co-tenancy"). Although, it may not directly reduce our rentalrevenues, and there are no contractual co-tenancy conditions, vacant retail space adjacent to, or even on the same block as our street and urban propertiesmay similarly affect shopper traffic and re-tenanting activities at our9properties. See "Item 2. Properties-Major Tenants" in this Annual Report on Form 10-K for quantified information with respect to the percentage of ourminimum rents received from major tenants.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 ourcash 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 to not renew their leases as they expire, orrenew at lower rental rates, may adversely affect our cash flows and property values. Furthermore, the impact of vacated anchor space and the potentialreduction in customer traffic may adversely impact the balance of tenants at a shopping center.Historically and from time to time, certain of our tenants experienced financial difficulties and filed for bankruptcy protection, typically under Chapter 11 ofthe United States Bankruptcy Code ("Chapter 11 Bankruptcy"). Pursuant to bankruptcy law, tenants have the right to reject some or all of their leases. In theevent a tenant exercises this right, the landlord generally has the right to file a claim for lost rent equal to the greater of either one year's rent (including tenantexpense reimbursements) for remaining terms greater than one year, or 15% of the rent remaining under the balance of the lease term, but not to exceed threeyears rent. Actual amounts to be received in satisfaction of those claims will be subject to the tenant's final bankruptcy plan and the availability of funds topay its creditors.Although currently none of our major tenants are in bankruptcy, experience shows that there can be no assurance that one or more of our major tenants will beimmune from bankruptcy.We may not be able to renew current leases or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us thancurrent 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 substantialportion of the space located in our properties or if the rental rates we receive upon re-letting are significantly lower than current rates, our net income andability to make expected distributions to our shareholders will be adversely affected due to the resulting reduction in revenues. There can be no assurancethat we will be able to retain tenants in any of our properties upon the expiration of their leases. See "Item 2. Properties - Lease Expirations" in this AnnualReport on Form 10-K for additional information as to the scheduled lease expirations in our portfolio.E-commerce can have an impact on our business.The use of the internet by consumers continues to gain in popularity. The migration toward e-commerce is expected to continue. This increase in internetsales could result in a downturn in the business of our current tenants in their "brick and mortar" locations and could affect the way future tenants lease space.While we devote considerable effort and resources to analyze and respond to tenant trends, preferences and consumer spending patterns, we cannot predictwith certainty what future tenants will want, what future retail spaces will look like and how much revenue will be generated at traditional "bricks and mortar"locations. If we are unable to anticipate and respond promptly to trends in the market because of the illiquid nature of real estate (See the Risk Factor entitled,"Our ability to change our portfolio is limited because real estate investments are illiquid" below), our occupancy levels and financial results could suffer.The economic environment may cause us to lose tenants and may impair our ability to borrow money to purchase properties, refinance existing debt orfinance our current redevelopment projects.Our operations and performance depend on general economic conditions, including the health of the consumer. The U.S. economy has historicallyexperienced financial downturns from time to time, including a decline in consumer spending, credit tightening and high unemployment.While we currently believe we have adequate sources of liquidity, there can be no assurance that we will be able to obtain secured or unsecured loan facilitiesto meet our needs, including to purchase additional properties, to complete current redevelopment projects, or to successfully refinance our properties asloans become due. To the extent that the availability of credit is limited, it would also adversely impact our notes receivable as counterparties may not beable to obtain the financing required to repay the loans upon maturity.10Political and economic uncertainty could have an adverse effect on us.We cannot predict how current political and economic uncertainty, including uncertainty related to taxation, will affect our critical tenants, joint venturepartners, lenders, financial institutions and general economic conditions, including the health and confidence of the consumer and the volatility of the stockmarket.Political and economic uncertainty poses a risk to us in that it may cause consumers to postpone discretionary spending in response to tighter credit, reducedconsumer confidence and other macroeconomic factors affecting consumer spending behavior, resulting in a downturn in the business of our tenants. In theevent current political and economic uncertainty results in financial turmoil affecting the banking system and financial markets or significant financialservice institution failures, there could be a new or incremental tightening in the credit markets, low liquidity, and extreme volatility in fixed income, credit,currency and equity markets. Each of these could have an adverse effect on our business, financial condition and operating results.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 economicclimate, 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.Retail properties, in particular, may be affected by changing perceptions of retailers or shoppers regarding the safety, convenience and attractiveness of theproperty and by the overall climate for the retail industry. Real estate values are also affected by such factors as government regulations, interest rate levels,the availability of financing and potential liability under, and changes in, environmental, zoning, tax and other laws. A significant portion of our income isderived from rental income from real property. Our income and cash flow would be adversely affected if we were unable to rent our vacant space to viabletenants on economically favorable terms. In the event of default by a tenant, we may experience delays in enforcing, as well as incur substantial costs toenforce, our rights as a landlord. In addition, certain significant expenditures associated with each equity investment (such as mortgage payments, real estatetaxes and maintenance costs) are generally not reduced even though there may be a reduction in income from the investment.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 islimited, which could adversely affect our financial condition and results of operations and our ability to pay dividends and make distributions. Our Board ofTrustees may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number of properties in which we may seekto invest or on the concentration of investments in any one geographic region. As discussed under the heading "Our Board of Trustees may change ourinvestment policy without shareholder approval" below, we could change our investment, disposition and financing policies and objectives without a vote ofour shareholders, but such change may be delayed or more difficult to implement due to the illiquidity of real estate.Although we have historically used moderate levels of leverage, if we employed higher levels of leverage, it would result in increased risk of default onour obligations and in an increase in debt service requirements, which could adversely affect our financial condition and results of operations and ourability to pay dividends and make 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 formallyadopted 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 financial obligations and in an increase in debt service requirements.This in turn could adversely affect our financial condition, results of operations and our ability to make distributions.Variable rate debt exposes us to changes in interest rates. Interest expense on our variable rate debt as of December 31, 2015 would increase by $5.6 millionannually for a 100 basis point increase in interest rates. This exposure would increase if we seek additional variable rate financing based on pricing and othercommercial and financial terms.We enter into interest rate hedging transactions, including interest rate swap and cap agreements, with counterparties, generally, the same lenders who madethe loan in question. There can be no guarantee that the future financial condition of these counterparties will enable them to fulfill their obligations underthese agreements.11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 thatcompete with us in seeking properties for acquisition and tenants who will lease space in our properties. Our competitors include other REITs, financialinstitutions, private funds, insurance companies, pension funds, private companies, family offices, sovereign wealth funds and individuals. This competitionmay 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 theFunds) face increasing competition from outlet malls, discount shopping clubs, e-commerce, direct mail and telemarketing, which could (i) reduce rentspayable to us and (ii) reduce our ability to attract and retain tenants at our properties leading to increased vacancy rates at our properties.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 NewYork and Chicago metropolitan regions, from which we derive 41% and 23% of the annual base rents within our Core Portfolio, respectively and 63% and8% of annual base rents within our Funds, respectively. Our operating results could be adversely affected if market conditions, such as an oversupply of spaceor a reduction in demand for real estate, in these areas occur.We have pursued, and may in the future continue to pursue extensive growth opportunities, including investing in new markets, which may result insignificant demands on our operational, administrative and financial resources.We are pursuing extensive growth opportunities, some of which have been, and in the future may be, in locations in which we have not historically invested.This expansion places significant demands on our operational, administrative and financial resources. The continued growth of our real estate portfolio canbe expected to continue to place a significant strain on our resources. Our future performance will depend in part on our ability to successfully attract andretain qualified management personnel to manage the growth and operations of our business. In addition, the acquired properties may fail to operate atexpected 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 toidentify 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 redevelopment of additional properties, including acquisitions of core properties through ourOperating Partnership and our high return investment programs through our Fund platform. The consummation of any future acquisitions will be subject tosatisfactory completion of our extensive valuation analysis and due diligence review and to the negotiation of definitive documentation. We cannot be surethat we will be able to implement our strategy because we may have difficulty finding new properties, obtaining necessary entitlements, negotiating with newor existing tenants or securing acceptable financing. Furthermore, if we were unable to obtain sufficient investor capital commitments in order to initiatefuture Funds, this would adversely impact our current growth strategy.Acquisitions of additional properties entail the risk that investments will fail to perform in accordance with expectations, including operating and leasingexpectations. In the context of our business plan, "redevelopment" generally means an expansion or renovation of an existing property. Redevelopment issubject to numerous risks, including risks of construction delays, cost overruns or uncontrollable events that may increase project costs, new projectcommencement risks such as the receipt of zoning, occupancy and other required governmental approvals and permits, and incurring redevelopment costs inconnection with projects that are not pursued to completion.Historically, a component of our growth strategy has been through private-equity type investments made through our RCP Venture. These have includedinvestments in operating retailers. The inability of the retailers to operate profitably would have an adverse impact on income realized from theseinvestments. Through our investments in joint ventures we have also invested in operating businesses that have operational risk in addition to the risksassociated with real estate investments, including among other risks, human capital issues, adequate supply of product and material, and merchandisingissues.Our redevelopment and construction activities could affect our operating results.We intend to continue the selective redevelopment and construction of retail properties, with our project at City Point currently being our largestredevelopment project (see "Item 1. BUSINESS - INVESTING ACTIVITIES - Funds - Redevelopment Activities" for a description of the City Point project).12As opportunities arise, we may delay construction until sufficient pre-leasing is reached and financing is in place. Our redevelopment and constructionactivities include risks that:•We may abandon redevelopment opportunities after expending resources to determine feasibility;•Construction costs of a project may exceed our original estimates;•Occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable;•Financing for redevelopment of a property may not be available to us on favorable terms;•We may not complete construction and lease-up on schedule, resulting in increased debt service expense and construction costs; and•We may not be able to obtain, or may experience delays in obtaining necessary zoning and land use approvals as well as building, occupancy andother required governmental permits and authorizations.Additionally, the time frame required for redevelopment, construction and lease-up of these properties means that we may not realize a significant cash returnfor several years. If any of the above events occur, the redevelopment of properties may hinder our growth and have an adverse effect on our results ofoperations and cash flows. In addition, new redevelopment activities, regardless of whether or not they are ultimately successful, typically require substantialtime and attention from management.Redevelopments and acquisitions may fail to perform as expected.Our investment strategy includes the redevelopment and acquisition of retail properties in supply constrained markets in densely populated areas with highaverage household incomes and significant barriers to entry. The redevelopment and acquisition of properties entails risks that include the following, any ofwhich could adversely affect our results of operations and our ability to meet our obligations:•The property may fail to achieve the returns we have projected, either temporarily or for extended periods;•We may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the properties we identify;•We may not be able to integrate an acquisition into our existing operations successfully;•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 wemake the decision to invest, which may result in the properties' failure to achieve the returns we projected;•Our pre-acquisition evaluation of the physical condition of each new investment may not detect certain defects or identify necessary repairs untilafter the property is acquired, which could significantly increase our total acquisition costs or decrease cash flow from the property; and•Our investigation of a property or building prior to our acquisition, and any representations we may receive from the seller of such building orproperty, may fail to reveal various liabilities, which could reduce the cash flow from the property or increase our acquisition cost.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 OperatingPartnership in exchange for interests in the Operating Partnership may permit certain tax deferral advantages to limited partners who contribute properties tothe Operating Partnership. Since properties contributed to the Operating Partnership may have unrealized gains attributable to the differences between the fairmarket value and adjusted tax basis in such properties prior to contribution, the sale of such properties could cause adverse tax consequences to the limitedpartners who contributed such properties. Although we, as the general partner of the Operating Partnership, generally have no obligation to consider the taxconsequences of our actions to any limited partner, we own several properties subject to material contractual restrictions for varying periods of time designedto minimize the adverse tax consequences to the limited partners who contributed such properties. Such restrictions may result in significantly reducedflexibility to manage some of our assets.Exclusivity obligation to our Funds.Under the terms of our current Fund (Fund IV), our primary goal is to seek investments for the Fund, subject to certain exceptions. We may only pursueopportunities to acquire retail properties directly through the Operating Partnership if (i) the ownership of the acquisition opportunity by the Fund wouldcreate a material conflict of interest for us; (ii) we require the acquisition opportunity for a "like-kind" exchange; (iii) the consideration payable for theacquisition opportunity is our Common Shares, OP Units or other securities or (iv) the investment is outside the parameters of our investment goals for theFund (which, in general, seeks more opportunistic level returns). As a result, we may not be able to make attractive acquisitions directly and instead may onlyreceive a minority interest in such acquisitions through the Fund.13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 partneror co-venturer might become bankrupt, and that our partner or co-venturer may take action contrary to our instructions, requests, policies or objectives,including our policy with respect to maintaining our qualification as a REIT. Other risks of joint venture investments include impasse on decisions, such as asale, because neither we nor a joint venture partner would have full control over the joint venture. Also, there is no limitation under our organizationaldocuments as to the amount of our funds that may be invested in joint ventures.Additionally, our partners or co-venturers may engage in malfeasance in spite of our efforts to perform a high level of due diligence on them. Such acts mayor may not be covered by insurance. Finally, partners and co-venturers may engage in illegal activities which may jeopardize an investment and/or subject usto reputational risk.Any disputes that may arise between joint venture partners and us may result in litigation or arbitration that would increase our expenses and prevent ourofficers and/or directors from focusing their time and effort on our business. Consequently, actions by or disputes with joint venture partners might result insubjecting properties owned by the joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-partyjoint venture partners.Historically our Fund I and Mervyns I joint ventures provided Promote income. There can be no assurance that the joint ventures will continue to operateprofitably and thus provide additional Promote income in the future. These factors could limit the return that we receive from such investments or cause ourcash 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 tothe joint venture.Our structured financing portfolio is subject to specific risks relating to the structure and terms of the instruments and the underlying collateral.We invest in notes receivables and preferred equity investments that are collateralized by the underlying real estate, a direct interest or the borrower’sownership interest in the entities that own the properties and/or by the borrower’s personal guarantee. The underlying assets are sometimes subordinate inpayment and collateral to more senior loans. The ability of a borrower or entity to make payments on these investments may be subject to the senior lenderand/or the performance of the underlying real estate. In the event of a default by the borrower or entity on its senior loan, our investment will only be satisfiedafter the senior loan and we may not be able to recover the full value of the investment. In the event of a bankruptcy of an entity in which we have a preferredequity interest, or in which the borrower has pledged its interest, the assets of the entity may not be sufficient to satisfy our investment.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 marketprice. An increase in market interest rates may lead purchasers of our Common Shares to seek a higher annual dividend rate, which could adversely affect themarket 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 raiseadditional 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 ExecutiveOfficer, or other key executive-level employees could have a material adverse effect on our results of operations. Management continues to strengthen ourteam and provide for succession planning, but there can be no assurance that such planning will be capable of implementation or of the success of suchefforts. We have obtained key-man life insurance for Mr. Bernstein. In addition, we have entered into an employment agreement with Mr. Bernstein; however,it can be terminated by Mr. Bernstein at his discretion. We have not entered into employment agreements with other key executive-level employees.Our Board of Trustees may change our investment policy or objectives without shareholder approval.Our Board of Trustees may determine to change our investment and financing policies or objectives, our growth strategy and our debt, capitalization,distribution, acquisition, disposition and operating policies. Our Board of Trustees may establish investment criteria or limitations as it deems appropriate,but currently does not limit the number of properties in which we may seek to invest or on the concentration of investments in any one geographic region.Although our Board of Trustees has no present intention to revise or amend our strategies and policies, it may do so at any time without a vote by ourshareholders. Accordingly, the results14of decisions made by our Board of Trustees as implemented by management may or may not serve the interests of all of our shareholders and could adverselyaffect 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 taxableincome for each calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. Tothe extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to Federal corporate incometax 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 areless 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 undistributedtaxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the InternalRevenue Code and to minimize exposure to Federal income and excise taxes. Differences in timing between the receipt of income and the payment ofexpenses in determining our income as well as required debt amortization payments and the capitalization of certain expenses could require us to borrowfunds on a short-term basis to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT. Thedistribution 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 requirements for qualification as a REIT for Federal income tax purposes beginning with our taxable year endedDecember 31, 1993, and we intend to continue to meet these requirements in the future. However, qualification as a REIT involves the application of highlytechnical and complex provisions of the Internal Revenue Code, for which there may be only limited judicial or administrative interpretations. No assurancecan be given that we have qualified or will remain qualified as a REIT. The Internal Revenue Code provisions and income tax regulations applicable toREITs differ significantly from those applicable to other corporations. The determination of various factual matters and circumstances not entirely within ourcontrol 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 Federalincome 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 toshareholders in computing our net taxable income. In addition, our income would be subject to tax at the regular corporate rates. Also, we could bedisqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. Cash available for distribution to ourshareholders 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 makedistributions. Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerationsmay cause us, without the consent of our shareholders, to revoke the REIT election or to otherwise take action that would result in disqualification.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, theconsequences of our failing to continue to qualify as a REIT. At any time, the Federal income tax laws governing REITs or the administrative interpretationsof 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 REITshareholders since a REITs income generally is not subject to corporate level tax. As a result, investment in non-REIT corporations may be viewed asrelatively more attractive than investment in REITs by domestic noncorporate investors. This could adversely affect the market price of our shares.Changes in accounting standards may adversely impact our financial results.The Financial Accounting Standards Board (the "FASB"), in conjunction with the U.S. Securities and Exchange Commission, has several key projects on itsagenda that could impact how we currently account for our material transactions, including, but not limited to, lease accounting and other convergenceprojects with the International Accounting Standards Board. In addition, the FASB has the ability to introduce new projects to its agenda which may alsoimpact how we account for our material transactions. At this time, we are unable to predict with certainty which, if any, proposals may be passed, what newlegislation may be implemented or what level of impact any such proposal could have on the presentation of our consolidated financial statements, ourresults of operations and our financial ratios required by our debt covenants.15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) at any time during the last half of eachtaxable year, 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 aproportionate part of a shorter taxable year (in each case, other than the first such year). Our Declaration of Trust includes certain restrictions regardingtransfers of our capital shares and ownership limits that are intended to assist us in satisfying these limitations, among other purposes. These restrictions andlimits may not be adequate in all cases, however, to prevent the transfer of our capital shares in violation of the ownership limitations. The ownership limitdiscussed 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 violativetransfer 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 (determinedin 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 acquireany economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex and groups ofrelated 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, 2015, four institutional shareholders own 5% or more individually, and 45.6% in the aggregate, of our Common Shares. A significantconcentration of ownership may allow an investor or a group of investors to exert a greater influence over our management and affairs and may have theeffect of delaying, deferring or preventing a change in control of us.Restrictions on a potential change of control.Our Board of Trustees is authorized by our Declaration of Trust to establish and issue one or more series of preferred shares without shareholder approval. Wehave not established any series of preferred shares. However, the establishment and issuance of a series of preferred shares could make more difficult a changeof 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 ExecutiveOfficer and severance agreements are in place with our executives which provide that, upon the occurrence of a change in control of us and either thetermination of their employment without cause (as defined) or their resignation for good reason (as defined), those executive officers would be entitled tocertain 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 inthe 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 aMaryland 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 interest of the trust, which we refer to as an "interested shareholder," or an affiliate ofthe interested shareholder, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. Afterthat five-year period, any such business combination must be recommended by the board of trustees of the trust and approved by the affirmative vote of atleast (1) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the trust and (2) two-thirds of the votes entitledto be cast by holders of voting shares of the trust other than shares held by the interested shareholder with whom, or with whose affiliate, the businesscombination is to be effected or held by an affiliate or associate of the interested shareholder, unless, among other conditions, the trust's commonshareholders receive a minimum price, as defined in the MGCL, for their shares and the consideration is received in cash or in the same form as previouslypaid by the interested shareholder for its Common Shares.These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of trustees of the trust before theinterested shareholder becomes an interested shareholder, and a person is not an interested shareholder if the board of trustees approved in advance thetransaction by which the person otherwise would have become an interested shareholder. In approving a transaction, our Board of Trustees may provide thatits approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board.16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 bythe acquirer or in respect of which the acquirer is entitled to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy),would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired in a "control share acquisition" (defined asthe direct or indirect acquisition of ownership or control of "control shares") have no voting rights except to the extent approved by the affirmative vote ofholders 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 arealso trustees of the trust. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of ourshares of beneficial interest. Our Bylaws can be amended by our Board of Trustees by majority vote, and there can be no assurance that this provision will notbe amended or eliminated at any time in the future.Additionally, Title 3, Subtitle 8 of the MGCL permits our Board of Trustees, without shareholder approval and regardless of what is currently provided in ourDeclaration of Trust or Bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring orpreventing a transaction or a change of control of our Company that might involve a premium to the market price of our Common Shares or otherwise be inthe best interests of our shareholders. We are subject to some of these provisions (for example, a two-thirds vote requirement for removing a trustee) byprovisions of our Declaration of Trust and Bylaws unrelated to Subtitle 8.Becoming subject to, or the potential to become subject to, these provisions of the MGCL could inhibit, delay or prevent a transaction or a change of controlof our Company that might involve a premium price for our shareholders or otherwise be in our or their best interests. In addition, the provisions of ourDeclaration of Trust on removal of trustees and the provisions of our Bylaws regarding advance notice of shareholder nominations of trustees and otherbusiness proposals and restricting shareholder action outside of a shareholders meeting unless such action is taken by unanimous written consent could havea similar effect.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 thebest interests of shareholders.As permitted by Maryland law, our Declaration of Trust eliminates the liability of our trustees and officers to the Company and its shareholders for moneydamages, except for liability resulting from:•actual receipt of an improper benefit or profit in money, property or services; or•a final judgment based upon a finding of active and deliberate dishonesty by the trustee or officer that was material to the cause of actionadjudicated.In addition, our Declaration of Trust authorizes, and our Bylaws obligate, us to indemnify each present or former trustee or officer, to the maximum extentpermitted by Maryland law, who is made a party to any proceeding because of his or her service to our Company. As part of these indemnificationobligations, we may be obligated to fund the defense costs incurred by our trustees and officers.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 electronicinformation. Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist or cyber attacks andsimilar events. Despite the implementation of network security measures, our systems and those of third parties on which we rely may also be vulnerable tocomputer viruses and similar disruptions. If we and the third parties on whom we rely are unable to prevent such outages and breaches, our operations couldbe disrupted.Increased Information Technology ("IT") security threats and more sophisticated computer crime could pose a risk to our systems, networks andservices.Cyber incidents can result from deliberate attacks or unintentional events. There have been an increased number of significant cyber attacks targeted at theretail, insurance, financial and banking industries that include, but are not limited to, gaining unauthorized access to digital systems for purposes ofmisappropriating assets or sensitive information, corrupting data or causing operational disruption. Cyber attacks may also be carried out in a manner thatdoes not require gaining unauthorized access, such as by causing denial-of-service attacks on websites. Cyber attacks by third parties or insiders utilizestechniques that range from highly sophisticated efforts to electronically circumvent network security or overwhelm website to more traditional intelligencegathering and social engineering aimed at obtaining information necessary to gain access.17Increased global IT security threats are more sophisticated and targeted computer crimes pose a risk to the security of our systems and networks and theconfidentiality, availability and integrity of our data. The open nature of interconnected technologies may allow for a network or Web outage or a privacybreach that reveals sensitive data or transmission of harmful/malicious code to business partners and clients. The techniques used to obtain unauthorizedaccess, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable toanticipate these techniques or implement adequate preventive measures.Cyber attacks may cause substantial cost and other negative consequences, which may include, but are not limited to:•Compromising of confidential information;•Manipulation and destruction of data;•Loss of trade secrets;•System downtimes and operational disruptions;•Remediation cost that may include liability for stolen assets or information and repairing system damage that may have been caused. Remediationmay include incentives offered to customers, tenants or other business partners in an effort to maintain the business relationships or due to legalrequirements imposed by the Gramm-Leach-Bliley Act of 1999 or the Privacy of Consumer Financial Information Rule;•Loss of revenues resulting from unauthorized use of proprietary information;•Cost to deploy additional protection strategies, training employees and engaging third party experts and consultants;•Reputational damage adversely affecting investor confidence; and•Litigation.While we attempt to mitigate these risks by employing a number of measures, including a dedicated IT team, employee training and background checks,maintenance of backup systems and utilization of third party service providers to provide redundancy over multiple locations, and comprehensivemonitoring of our networks and systems along with purchasing cyber security insurance coverage, our systems, networks and services remain potentiallyvulnerable to advanced threats.Third Party Vendor Risk - Network and Data redundancyWe are dependent and rely on third party vendors including Cloud providers for redundancy of our network, system data, security and data integrity. If avendor fails to provide services as agreed, suffers outages, business interruptions, financial difficulties or bankruptcy we may experience service interruption,delays or loss of information. Cloud computing is dependent upon having access to an internet connection in order to retrieve data. If a natural disaster,blackout or other unforeseen event were to occur that disrupted the ability to obtain an internet connection we may experience a slowdown or delay in ouroperations. We conduct appropriate due diligence on all services providers and restrict access, use and disclosure of personal information. We engagevendors with formal written agreements clearly defining the roles of the parties specifying privacy and data security responsibilities.Use of social media may adversely impact our reputation and business.There has been a significant increase in the use of social media platforms, including weblogs, social media websites and other forms of Internet-basedcommunications, which allow individuals access to a broad audience including our significant business constituents. The availability of information throughthese platforms is virtually immediate as is its impact and may be posted at any time without affording us an opportunity to redress or correct it timely. Thisinformation may be adverse to our interests, may be inaccurate and may harm our reputation, brand image, goodwill, performance, prospects or business.Furthermore, these platforms increase the risk of unauthorized disclosure of material non-public Company information.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 tonatural disasters. Any properties located in coastal regions would therefore be affected by any future increases in sea levels or in the frequency or severity ofhurricanes 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. Itmay be a change in the average weather conditions or a change in the distribution of weather events with respect to an average, for example, greater or fewerextreme weather events. Climate change may be limited to a specific region, or may occur across the whole Earth.18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 canimpact our personnel, physical assets, tenants and overall operations.Physical impacts of climate change may include:•Increased storm intensity and severity of weather (e.g., floods or hurricanes);•Sea level rise; and•Extreme temperatures.As a result of these physical impacts from climate-related events, we may be vulnerable to the following:•Risks of property damage to our retail properties;•Indirect financial and operational impacts from disruptions to the operations of major tenants located in our retail properties from severe weather,such as hurricanes or floods;•Increased insurance premiums and deductibles, or a decrease in the availability of coverage, for properties in areas subject to severe weather;•Increased insurance claims and liabilities;•Increases in energy costs impacting operational returns;•Changes in the availability or quality of water, or other natural resources on which the tenant's business depends;•Decreased consumer demand for consumer products or services resulting from physical changes associated with climate change (e.g., warmertemperatures or decreasing shoreline could reduce demand for residential and commercial properties previously viewed as desirable);•Incorrect long-term valuation of an equity investment due to changing conditions not previously anticipated at the time of the investment; and•Economic disruptions arising from the above.Possible liability relating to environmental matters.Under various Federal, state and local environmental laws, statutes, ordinances, rules and regulations, as an owner of real property, we may be liable for thecosts of removal or remediation of certain hazardous or toxic substances at, on, in or under our property, as well as certain other potential costs relating tohazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may imposeliability 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 inconnection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or propertydamages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or thefailure 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 ascollateral, which, in turn, could reduce our revenues and affect our ability to make distributions.A property can also be adversely affected either through physical contamination or by virtue of an adverse effect upon value attributable to the migration ofhazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although our tenants are primarily responsiblefor 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 anyobligations with respect to the property leased to that tenant, we may be required to satisfy such obligations. In addition, we may be held directly liable forany such damages or claims irrespective of the provisions of any lease.From time to time, in connection with the conduct of our business, and prior to the acquisition of any property from a third party or as required by ourfinancing sources, we authorize the preparation of Phase I environmental reports and, when necessary, Phase II environmental reports, with respect to ourproperties. Based upon these environmental reports and our ongoing review of our properties, we are currently not aware of any environmental condition withrespect 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, thatthe environmental reports will reveal all environmental conditions at our properties or that the following will not expose us to material liability in the future:•The discovery of previously unknown environmental conditions;•Changes in law;•Activities of tenants; and•Activities relating to properties in the vicinity of our properties.19Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or otherconditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of our tenants, which could adversely affectour 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, all-risk property, extended coverage, loss of rent insurance, and environmental liability on our properties, withpolicy specifications and insured limits customarily carried for similar properties. However, with respect to those properties where the leases do not providefor abatement of rent under any circumstances, we maintain a minimum of twelve months loss of rent insurance. In addition, there are certain types of losses,such as losses resulting from wars, terrorism or acts of God that generally are not insured because they are either uninsurable or not 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 revenuesfrom a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these typeswould adversely affect our financial condition.Future terrorist attacks or civil unrest could harm the demand for, and the value of, our properties.Future terrorist attacks, civil unrest and other acts of terrorism or war, could harm the demand for, and the value of, our properties. Terrorist attacks coulddirectly impact the value of our properties through damage, destruction, loss or increased security costs, and the availability of insurance for such acts may belimited or may be subject to substantial cost increases. To the extent that our tenants are impacted by future attacks, their ability to continue to honorobligations under their existing leases could be adversely affected. A decrease in retail demand could make it difficult for us to renew or re-lease ourproperties at lease rates equal to or above historical rates. These acts might erode business and consumer confidence and spending, and might result inincreased volatility in national and international financial markets and economies. Any one of these events might decrease demand for real estate, decrease ordelay the occupancy of our properties, and limit our access to capital or increase our cost of raising capital.ITEM 1B. UNRESOLVED STAFF COMMENTS.None.20ITEM 2. PROPERTIES.RETAIL PROPERTIESThe discussion and tables in this Item 2. include properties held through our Core Portfolio and our Funds. We define our Core Portfolio as those propertieseither 100% owned by, or partially owned through joint venture interests by, the Operating Partnership, or subsidiaries thereof, not including those propertiesowned through our Funds.As of December 31, 2015, there are 90 operating properties in our Core Portfolio totaling approximately 5.6 million square feet of gross leasable area("GLA"). The Core Portfolio properties are located in 12 states and the District of Columbia and primarily consist of street retail and dense suburban shoppingcenters. These properties are diverse in size, ranging from approximately 2,000 to 900,000 square feet and as of December 31, 2015, were, in total, 96%occupied.As of December 31, 2015, we owned and operated 27 properties totaling approximately 2.3 million square feet of GLA in our Funds, excluding 30 propertiesunder redevelopment. In addition to shopping centers, the Funds have invested in mixed-use properties, which generally include retail activities. The Fundproperties are located in 9 states and the District of Columbia and as of December 31, 2015, were, in total, 83% occupied.Within our Core Portfolio and Funds, we had approximately 700 leases as of December 31, 2015. A majority of our rental revenues were from nationalretailers and consist of rents received under long-term leases. These leases generally provide for the monthly payment of fixed minimum rent and the tenants'pro-rata share of the real estate taxes, insurance, utilities and common area maintenance of the shopping centers. Certain of our leases also provide for thepayment of rent based on a percentage of a tenant's gross sales in excess of a stipulated annual amount, either in addition to, or in place of, minimum rents.Minimum rents, percentage rents and expense reimbursements accounted for approximately 89% of our total revenues for the year ended December 31, 2015.Four of our Core Portfolio properties and one of our Fund properties are subject to long-term ground leases in which a third party owns and has leased theunderlying 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 allfive locations.No individual property contributed in excess of 10% of our total revenues for the years ended December 31, 2015, 2014 or 2013. See Note 8 in the Notes toConsolidated Financial Statements, for information on the mortgage debt pertaining to our properties. The following sets forth more specific information withrespect to each of our shopping centers at December 31, 2015:Retail Property Location YearConstructed(C)Acquired(A) OwnershipInterest GLA Occupancy%12/31/15 (1) AnnualBaseRent (2) AnnualBaseRentPSF Anchor TenantsCurrent LeaseExpiration/Lease OptionExpirationCore Portfolio STREET AND URBANRETAIL Chicago Metro 664 N. Michigan Chicago 2013 (A) Fee 18,141 100% $4,399,313 $242.51 Tommy Bahama2029/2039Ann Taylor Loft2028/2033840 N. Michigan Chicago 2014 (A) Fee/JV 87,135 100% 7,548,895 86.63 H&M 2018/2028Verizon 2024/2034Rush and Walton Streets(4) Chicago 2011/14 (A) Fee 41,533 100% 6,205,858 156.00 Lululemon2019/2029Brioni 2023/2033BHLDN 2023/2033Marc Jacobs613-623 West Diversey Chicago 2006 (A) Fee 19,265 26% 428,662 88.16 651-671 West Diversey Chicago 2011 (A) Fee 46,259 100% 1,922,016 41.55 Trader Joe's2021/2041Urban Outfitters2021/2031Clark Street and W.Diversey (5) Chicago 2011/12 (A) Fee 23,531 96% 1,232,791 54.82 Ann Taylor2021/2031Akira 2018/202821Retail Property Location YearConstructed(C)Acquired(A) OwnershipInterest GLA Occupancy%12/31/15 (1) AnnualBaseRent (2) AnnualBaseRentPSF Anchor TenantsCurrent LeaseExpiration/Lease OptionExpirationHalsted and Armitage(6) Chicago 2011/12 (A) Fee 44,658 95% 1,831,119 43.07 Intermix 2017/2022BCBG 2018/2028Club Monaco2016/2021North Lincoln Park (7) Chicago 2011/14 (A) Fee 51,255 82% 1,659,944 39.68 Aldo 2019/2024Carhartt 2021/2031Roosevelt Galleria Chicago 2015 (A) Fee 37,995 100% 1,066,439 28.07 Petco 2024/2039Vitamin Shoppe2028/2038Total Chicago Metro 369,772 92% 26,295,037 77.09 New York Metro 83 Spring Street Manhattan 2012 (A) Fee 3,000 100% 686,272 228.76 Paper Source2022/2027152-154 Spring Street Manhattan 2014 (A) Fee 2,936 100% 2,209,681 752.62 Kate SpadeSaturday 2025/—15 Mercer Street Manhattan 2011 (A) Fee 3,375 100% 418,689 124.06 3 x 1 Denim 2021/—East 17th Street Manhattan 2008 (A) Fee 11,467 100% 1,300,014 113.37 Union Fare 2036/—West 54th Street Manhattan 2007 (A) Fee 5,773 86% 2,058,708 413.46 Stage Coach Tavern2033/—61 Main Street Westport 2014 (A) Fee 3,400 100% 351,560 103.40 181 Main Street Westport 2012 (A) Fee 11,350 100% 852,150 75.08 TD Bank2026/20414401 White Plains Road Bronx 2011 (A) Fee 12,964 100% 625,000 48.21 Walgreens 2060/—Bartow Avenue Bronx 2005 (C) Fee 14,676 100% 371,379 25.31 Sleepy's 2019/—239 Greenwich Avenue Greenwich 1998 (A) Fee/JV 16,553(8)100% 1,469,653 88.78 252-256 GreenwichAvenue Greenwich 2014 (A) Fee 9,172 100% 1,238,827 135.07 Calypso 2016/2026Jack Wills2020/2025Madewell2020/20252914 Third Avenue Bronx 2006 (A) Fee 40,320 100% 898,890 22.29 Planet Fitness2027/2042868 Broadway Manhattan 2013 (A) Fee 2,031 100% 702,531 345.90 Dr Martens2022/2027313-315 Bowery Manhattan 2013 (A) Fee 6,600 100% 435,600 66.00 120 West Broadway Manhattan 2013 (A) Fee 13,838 91% 1,873,981 148.28 HSBC Bank2021/2031Citibank 2022/2037131-135 Prince Street Manhattan 2014 (A) Fee 3,200 100% 1,269,324 396.66 Follie Follie2020/2030Uno de 502017/2022Shops at Grand Queens 2014 (A) Fee 99,975 91% 2,736,357 29.99 Stop and Shop2023/20432520 Flatbush Avenue Brooklyn 2014 (A) Fee 29,114 100% 1,054,338 36.21 Bob's DiscountFurniture2028/2033Capital One2024/2034Total New York Metro 289,744 96% 20,552,954 73.67 22Retail Property Location YearConstructed(C)Acquired(A) OwnershipInterest GLA Occupancy%12/31/15 (1) AnnualBaseRent (2) AnnualBaseRentPSF Anchor TenantsCurrent LeaseExpiration/Lease OptionExpirationSan Francisco Metro City Center San Francisco 2015 (A) Fee 204,648 98% 7,333,292 36.76 City Target2025/2035Best Buy2018/2042Total San FranciscoMetro 204,648 98% 7,333,292 36.76 District of ColumbiaMetro 1739-53 & 1801-03Connecticut Avenue WashingtonD.C. 2012 (A) Fee 22,907 100% 1,321,630 57.70 Ruth ChrisSteakhouse 2020/—TD Bank2024/2044Rhode Island PlaceShopping Center WashingtonD.C. 2012 (A) Fee 57,529 90% 1,460,379 28.07 TJ Maxx 2017/—M Street and WisonsinCorridor (9) WashingtonD.C. 2011/14 (A) Fee/JV 31,629 100% 2,715,244 85.85 Lacoste 2019/2025Juicy Couture2018/2028Coach 2017/—Total District ofColumbia Metro 112,065 95% 5,497,253 51.59 Boston Metro 330-340 River Street Cambridge 2012 (A) Fee 54,226 100% 1,130,470 20.85 Whole Foods2021/2051Total Boston Metro 54,226 100% 1,130,470 20.85 TOTAL STREET ANDURBAN RETAIL 1,030,455 95% 60,809,006 62.03 SUBURBANPROPERTIES New Jersey Elmwood ParkShopping Center Elmwood Park 1998 (A) Fee 149,070 97% 3,833,276 26.43 Acme 2017/2052Walgreen’s2022/2062Marketplace of Absecon Absecon 1998 (A) Fee 104,556 95% 1,416,309 14.30 Rite Aid 2020/2040White HorseLiquors2019/20202460 Orange Street Bloomfield 2012 (A) Fee/JV 101,715 100% 695,000 6.83 Home Depot2032/2052New York Village CommonsShopping Center Smithtown 1998 (A) Fee 87,330 98% 2,737,535 31.96 Branch ShoppingCenter Smithtown 1998 (A) LI (3) 124,439 92% 2,915,843 25.61 CVS 2020/— LA Fitness2027/2042Amboy Road Staten Island 2005 (A) LI (3) 63,290 100% 2,046,520 32.34 Stop & Shop2028/2043Pacesetter ParkShopping Center Ramapo 1999 (A) Fee 98,159 85% 1,047,708 12.54 Stop & Shop2020/2040West Shore Expressway Staten Island 2007 (A) Fee 55,000 100% 1,391,500 25.30 LA Fitness2022/2037Crossroads ShoppingCenter White Plains 1998 (A) Fee/JV (10) 310,762 94% 6,846,836 23.36 Kmart 2017/2032Home Goods2018/2033PetSmart2024/203923Retail Property Location YearConstructed(C)Acquired(A) OwnershipInterest GLA Occupancy%12/31/15 (1) AnnualBaseRent (2) AnnualBaseRentPSF Anchor TenantsCurrent LeaseExpiration/Lease OptionExpirationNew Loudon Center Latham 1993 (A) Fee 255,673 100% 2,033,458 7.95 Price Chopper2020/2035AC Moore 2016/—Hobby Lobby2021/203128 Jericho Turnpike Westbury 2012 (A) Fee 96,363 100% 1,650,000 17.12 Kohl's 2020/2050Bedford Green Bedford Hills 2014 (A) Fee 90,472 81% 2,188,367 29.99 Shop Rite2016/2031Connecticut Town Line Plaza Rocky Hill 1998 (A) Fee 206,346 99% 1,720,212 16.18 Stop & Shop2024/2064Wal-Mart(11)Massachusetts Methuen ShoppingCenter Methuen 1998 (A) Fee 130,021 100% 1,257,627 9.67 Market Basket2025/2035Wal-Mart2016/2051Crescent Plaza Brockton 1993 (A) Fee 218,148 96% 1,812,245 8.65 Supervalu2017/2047Home Depot2021/2056201 Needham Street Newton 2014 (A) Fee 20,409 100% 591,861 29.00 Michael's2023/2033163 Highland Needham 2015 (A) Fee 40,505 100% 1,275,673 31.49 Staples 2020/2035Petco 2025/2040Vermont Gateway ShoppingCenter SouthBurlington 1999 (A) Fee 101,655 100% 2,037,757 20.05 Supervalu2024/2053Illinois Hobson West Plaza Naperville 1998 (A) Fee 99,137 96% 1,158,605 12.14 Garden FreshMarkets 2017/2022Indiana Merrillville Plaza Hobart 1998 (A) Fee 236,087 100% 3,384,713 14.40 TJ Maxx2019/2034Art Van 2023/2038Michigan Bloomfield TownSquare Bloomfield Hills 1998 (A) Fee 235,786 100% 3,576,014 15.17 TJ Maxx2019/2034Home Goods2016/2026Best Buy2021/2041Dick's SportingGoods 2023/2043Ohio Mad River Station (12) Dayton 1999 (A) Fee 123,335 83% 1,396,788 13.69 Babies ‘R’ Us 2020/—Delaware Brandywine TownCenter Wilmington 2003 (A) Fee/JV (13) 824,411 93% 12,328,789 16.06 Bed, Bath &Beyond 2019/2029Dick’s SportingGoods 2018/2033Lowe’s HomeCenters 2018/2048Target 2018/2058HH Gregg2020/203524Retail Property Location YearConstructed(C)Acquired(A) OwnershipInterest GLA Occupancy%12/31/15 (1) AnnualBaseRent (2) AnnualBaseRentPSF Anchor TenantsCurrent LeaseExpiration/Lease OptionExpirationMarket SquareShopping Center Wilmington 2003 (A) Fee/JV (13) 102,047 95% 2,490,003 25.67 TJ Maxx2016/2021Trader Joe’s2019/2034Route 202 ShoppingCenter Wilmington 2006 (C) LI (3) 19,984 75% 637,701 42.55 Pennsylvania Mark Plaza Edwardsville 1993 (C) LI (3) 106,856 100% 240,664 2.25 Kmart 2019/2049Plaza 422 Lebanon 1993 (C) Fee 156,279 100% 835,956 5.35 Home Depot2028/2058Route 6 Plaza Honesdale 1994 (C) Fee 175,589 100% 1,295,907 7.38 Kmart 2020/2070Dollar Tree2018/2033Peebles 2024/2034Chestnut Hill (14) Philadelphia 2006 (A) Fee 37,646 100% 908,141 24.12 Abington Towne Center Abington 1998 (A) Fee 216,278 96% 1,023,468 20.76 TJ Maxx2016/2021Target (15)TOTAL SUBURBANPROPERTIES 4,587,348 96% 66,774,476 16.10 Total Core Portfolio 5,617,803 96% 127,583,482 24.88 Fund Portfolio Fund II Properties New York 216th Street Manhattan 2005 (A) Fee/JV 60,000 100% 2,574,000 42.90 City of New York2027/2032161st Street Manhattan 2005 (A) Fee/JV 249,336 41% 3,238,376 31.91 Total Fund IIProperties 309,336 52% 5,812,376 35.99 Fund III Properties New York Cortlandt Towne Center Mohegan Lake 2009 (A) Fee 635,457 93% 10,134,945 17.14 Walmart 2018/2048A&P 2022/2047Best Buy2017/2032Petsmart 2019/2034654 Broadway Manhattan 2011 (A) Fee 2,896 100% 583,495 201.48 Penguin 2023/2033640 Broadway Manhattan 2012 (A) Fee/JV (16) 4,251 79% 818,375 245.17 Swatch 2023/2028New Hyde ParkShopping Center New Hyde Park 2011 (A) Fee 32,602 83% 1,172,792 43.41 Petsmart 2024/20393780-3858 NostrandAvenue Brooklyn 2013 (A) Fee 42,912 78% 1,559,139 46.45 Maryland Arundel Plaza Glen Burnie 2012 (A) Fee/JV (17) 265,116 95% 1,320,784 5.25 Giant Food2016/2026Lowes 2019/2059Illinois Heritage Shops Chicago 2011 (A) Fee 82,098 97% 3,279,138 41.20 LA Fitness2025/2040Ann Taylor2016/2026Total Fund IIIProperties 1,065,332 93% 18,868,668 19.07 25Retail Property Location YearConstructed(C)Acquired(A) OwnershipInterest GLA Occupancy%12/31/15 (1) AnnualBaseRent (2) AnnualBaseRentPSF Anchor TenantsCurrent LeaseExpiration/Lease OptionExpiration Fund IV Properties New York 1151 Third Avenue Manhattan 2013 (A) Fee 13,250 100% 1,700,850 128.37 Vineyard Vines2025/203517 East 71st Street Manhattan 2014 (A) Fee 8,432 100% 1,792,487 212.58 1035 Third Avenue Manhattan 2015 (A) Fee 7,617 71% 918,500 168.94 New Jersey 2819 KennedyBoulevard North Bergen 2013 (A) Fee/JV (17) 47,539 48% 605,558 26.75 Aldi 2030/2050Paramus Plaza Paramus 2013 (A) Fee/JV (18) 154,409 63% 1,847,945 18.89 Babies R Us2019/2044Ashley Furniture2024/2034Virginia Promenade at Manassas Manassas 2013 (A) Fee/JV (17) 265,442 99% 3,480,754 13.30 Home Depot2031/2071HH Gregg2020/2030Lake Montclair Center Dumfries 2013 (A) Fee 105,832 95% 1,893,136 18.85 Food Lion 2023/2043Maryland 1701 Belmont Avenue Catonsville 2012 (A) Fee/JV (17) 58,674 100% 936,166 15.96 Best Buy 2017/2032Delaware Eden Square Bear 2014 (A) Fee/JV (17) 231,392 73% 2,393,735 14.09 Giant, 2024/2059Lowe's 2017/2032Illinois 938 W. North Avenue Chicago 2013 (A) Fee/JV (19) 33,228 16% 326,350 61.00 Sephora 2024/2029Georgia Broughton StreetPortfolio Savannah 2014 (A) Fee/JV (20) 24,961 100% 981,469 33.48 J. Crew 2025/2035L'Occitane2025/2030California 146 Geary Street San Francisco 2015 (A) Fee 11,436 100% 300,000 26.23 Union and FillmoreCollection San Francisco 2015 (A) Fee/JV (21) 9,104 100% 635,279 69.78 Total Fund IVProperties 971,316 81% 17,812,229 22.24 Total Fund OperatingProperties (22) 2,345,984 83% $42,493,273 $21.77 Notes:(1)Does not include space for which lease term had not yet commenced as of December 31, 2015.(2)These amounts include, where material, the effective rent, net of concessions, including free rent.(3)We are a ground lessee under a long-term ground lease.(4)Includes 6 properties (8-12 E. Walton, 11 E. Walton, 50-54 E. Walton, 56 E. Walton, 930 Rush Street and 21 E. Chestnut).(5)Includes 3 properties (639 W. Diversey, 662 W. Diversey and 2731 N. Clark).(6)Includes 9 properties (819 W. Armitage, 823 W. Armitage, 837 W. Armitage, 841 W. Armitage, 843-45 W. Armitage, 851 W. Armitage, 853 W. Armitage, 2206-08 N.Halsted and 2633 N. Halsted).(7)Includes 6 properties (2140 N. Clybourn, 2299 N. Clybourn, 1520 Milwaukee Avenue, 1240 W. Belmont, 1521 W. Belmont and 865 W. North Avenue).(8)In addition to the 16,834 square feet of retail GLA, this property also has 21 apartments comprising 14,434 square feet.(9)Includes seven properties (1533 Wisconsin Ave., 2809 M St, 3025 M St., 3034 M St., 3146 M St and 3259-61 M St., in which we have a 50% investment, and 3200 MSt. in which we have a 100% investment).(10)We have a 49% investment in this property.(11)Includes a 97,300 square foot Wal-Mart which is not owned by us.26(12)The GLA for this property excludes 29,857 square feet of office space.(13)We have a 22% investment in this property.(14)Property consists of two buildings.(15)Includes a 157,616 square foot Target Store that is not owned by us.(16)The Fund has a 63% investment in this property.(17)The Fund has a 90% investment in this property.(18)The Fund has a 50% investment in this property.(19)The Fund has a 80% investment in this property.(20)The Fund has a 50% investment in this portfolio.(21)The Fund has a 90% investment in this portfolio of 3 properties.(22)In addition to the Fund operating properties, there are 30 properties under redevelopment; Sherman Plaza (Fund II), City Point (Fund II) , Broad Hollow Commons(Fund III), Cortlandt Crossing (Fund III), 3104 M Street (Fund III), Broughton Street Portfolio (Fund IV, includes 21 properties), 27 E. 61st (Fund IV), 210 Bowery (Fund IV), 801Madison Avenue (Fund IV) and 650 Bald Hill Road (Fund IV).MAJOR TENANTSNo individual retail tenant accounted for more than 3.1% of base rents for the year ended December 31, 2015, or occupied more than 6.6% of total leasedGLA as of December 31, 2015. The following table sets forth certain information for the 20 largest retail tenants by base rent for leases in place as ofDecember 31, 2015. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interestin properties, including the Funds (GLA and Annualized Base Rent in thousands): Number of Percentage of TotalRepresented by Retail TenantRetail Tenant Stores in Portfolio(1) Total GLA Annualized BaseRent (2) Total PortfolioGLA Annualized Base RentThe Stop & Shop Supermarket Co 5 220 $3,643 4.3% 3.1%Best Buy Co., Inc. 4 107 3,628 2.1% 3.1%Supervalu Inc. 4 187 3,425 3.7% 2.9%Target Corp. 2 156 3,225 3.1% 2.8%LA Fitness International LLC 3 112 2,624 2.2% 2.2%Verizon Wireless 2 31 2,331 0.6% 2.0%Ann Inc. 3 16 2,309 0.3% 2.0%TJX Companies, Inc. 9 217 2,131 4.3% 1.8%The Home Depot, Inc. 4 337 2,036 6.6% 1.7%Walgreens 4 40 1,552 0.8% 1.3%Kate Spade & Co. 2 4 1,379 0.1% 1.2%Sleepy's Inc. 11 50 1,321 1.0% 1.1%Citibank 6 18 1,304 0.4% 1.1%Lululemon Athletica, Inc. 2 3 1,267 0.1% 1.1%Kmart 3 274 1,170 5.4% 1.0%JP Morgan Chase Co. 7 19 1,128 0.4% 1.0%Bob's Discount Furniture 2 35 1,064 0.7% 0.9%Toronto-Dominion Bank 2 16 1,061 0.3% 0.9%Trader Joe's Co., Inc. 2 19 967 0.4% 0.8%Gap, Inc. 4 18 964 0.3% 0.8%Total 81 1,879 $38,529 37.1% 32.8%Notes:(1) Does not include the following tenants that only operate at one location within the Company's portfolio; Tommy Bahama, H&M, Price Chopper, Union Fare, Marc Jacobs andKohl's.(2) Base rents do not include percentage rents, additional rents for property expense reimbursements and contractual rent escalations.27LEASE EXPIRATIONSThe following table shows scheduled lease expirations for retail tenants in place as of December 31, 2015, assuming that none of the tenants exercise renewaloptions. (GLA and Annualized Base Rent in thousands):Core Portfolio: Annualized Base Rent (1) GLALeases maturing in Number ofLeases Current Annual Rent Percentage of Total Square Feet Percentage of TotalMonth to Month 8 $453 —% 23 1%2016 (2) 66 10,210 8% 575 11%2017 57 11,473 9% 508 10%2018 70 19,935 16% 725 14%2019 45 8,623 7% 446 9%2020 47 12,296 10% 632 12%2021 27 7,447 6% 389 8%2022 28 7,076 6% 176 3%2023 22 7,599 6% 297 6%2024 37 15,446 12% 498 10%2025 34 9,513 8% 279 5%Thereafter 30 17,083 12% 575 11%Total 471 $127,154 100% 5,123 100%Fund Portfolio: Annualized Base Rent (1) GLALeases maturing in Number ofLeases Current Annual Rent Percentage of Total Square Feet Percentage of TotalMonth to Month 8 $529 1% 26 1%2016 (2) 22 1,879 4% 110 6%2017 23 4,450 11% 178 9%2018 29 4,807 11% 307 16%2019 22 4,325 10% 359 19%2020 16 1,960 5% 69 4%2021 6 1,274 3% 80 4%2022 9 2,230 5% 114 6%2023 10 2,023 5% 76 4%2024 15 5,021 12% 177 9%2025 18 5,174 12% 90 5%Thereafter 16 8,820 21% 354 17%Total 194 $42,492 100% 1,940 100%Notes: (1)Base rents do not include percentage rents, additional rents for property expense reimbursements, nor contractual rent escalations.(2)The 88 leases scheduled to expire during 2016 are for tenants at 42 properties located in 34 markets. No single market represents a materialamount of exposure to the Company as it relates to the rents from these leases. Given the diversity of these markets, properties andcharacteristics of the individual spaces, the Company cannot make any general representations as it relates to the expiring rents and the ratesfor which these spaces may be re-leased.28GEOGRAPHIC CONCENTRATIONSThe following table summarizes our retail properties by region as of December 31, 2015. The amounts below include our pro-rata share of GLA andannualized base rent for the Operating Partnership’s partial ownership interest in properties, including the Funds (GLA and Annualized Base Rent inthousands): Percentage of TotalRepresented byRegionRegion GLA (1) (3) Occupied %(2) AnnualizedBaseRent (2) (3) Annualized BaseRent perOccupied SquareFoot (3) GLA AnnualizedBase RentCore Portfolio: Operating Properties: New York Metro 1,662 96% $45,482 $28.66 36% 41%New England 771 99% 9,826 12.93 16% 9%Chicago Metro 340 96% 24,991 76.55 7% 23%Midwest 694 96% 9,516 14.24 15% 9%Washington D.C Metro 100 95% 4,476 47.19 2% 4%San Francisco Metro 205 98% 7,333 36.76 4% 7%Mid-Atlantic 918 95% 8,235 9.40 20% 7%Total Core Operating Properties 4,690 97% $109,859 $24.38 100% 100% Fund Portfolio: Operating Properties: New York Metro 239 77% $5,302 $28.83 51% 63%San Francisco Metro 5 100% 202 44.41 1% 2%Chicago Metro 22 74% 713 43.05 5% 8%Mid-Atlantic 197 91% 2,208 12.31 43% 26%Total Fund Operating Properties 463 82% $8,425 $22.02 100% 99% Fund Redevelopment Portfolio: Southeast 14 29% $121 $30.92 90% 100%Other 1 —% — — 10% —%Total Fund Redevelopment Properties 15 27% $121 $28.11 100% 100%Notes: (1)Property GLA includes a total of 255,000 square feet, which is not owned by us. This square footage has beenexcluded 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 renthad not commenced as of December 31, 2015.(3)The amounts presented reflect the Operating Partnership's pro-rata shares of properties included within each region.29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 certainty the outcome of anyparticular matter, Management is of the opinion that, when such litigation is resolved, our resulting exposure to loss contingencies, if any, will not have asignificant effect on our consolidated financial position, results of operations, or liquidity.During August 2009, we terminated the employment of a former Senior Vice President (the "Former Employee") for engaging in conduct that materiallyviolated the Company's employee handbook. We determined that the behavior fell within the definition of "cause" in his severance agreement with us andtherefore did not pay him anything thereunder. The Former Employee brought a lawsuit against us in New York State Supreme Court (the "Court"), in theamount of $0.9 million alleging breach of the severance agreement. On August 7, 2014, the Court granted summary judgment in favor of us, as defendant,and against plaintiff, the Former Employee, finding that his conduct in fact and law, constituted "cause" under his severance agreement. The Court renderedtwo decisions, one granting our motion for summary judgment and a second denying the Former Employee's motion to dismiss our answer as an abuse ofjudicial discretion. The Former Employee has only appealed the latter decision. We believe that it will be successful on appeal.In addition to the foregoing, we recently settled or are currently involved in the following litigation matters:During July 2013, a lawsuit was brought against us relating to the 2011 flood at Mark Plaza by Kmart Corporation in the Luzerne County Court of CommonPleas, State of Pennsylvania. The lawsuit alleged a breach of contract and negligence relating to landlord responsibility to prevent damage to tenant as aresult of the flood and for the subsequent damage to tenant's property, including lost profits. The tenant was seeking judgment in excess of $9.0 million.During the third quarter of 2015, the case was settled for $1.1 million. Of this amount, $0.8 million was paid by insurance and we $0.3 million.During December 2013, in connection with our Fund II’s City Point Project, Albee Development LLC ("Albee") and a non-affiliated construction managerwere served with a Summons With Notice as well as a Demand for Arbitration by Casino Development Group, Inc. ("Casino"), the former contractorresponsible for the excavation and concrete work at the City Point Project. Albee terminated the contract with Casino for cause prior to completion of thecontract. Casino was seeking approximately $7.4 million. During the second quarter of 2015, the case was settled for $3.3 million, of which the OperatingPartnership's share was $0.6 million.ITEM 4. MINE SAFETY DISCLOSURES.Not applicable.30PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES AND PERFORMANCE GRAPH.(a) Market Information, dividends and record holders of our Common SharesThe 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, andcash dividends declared during the two years ended December 31, 2015 and 2014:Quarter Ended Dividend2015 High Low Per ShareMarch 31, 2015 $36.82 $32.13 $0.24June 30, 2015 35.36 29.05 0.24September 30, 2015 32.67 28.34 0.24December 31, 2015(1)34.06 29.80 0.502014 March 31, 2014 $27.06 $24.47 $0.23June 30, 2014 28.60 25.98 0.23September 30, 2014 29.36 27.00 0.23December 31, 2014(2)33.18 27.52 0.54Note:(1) Includes a special dividend of $0.25 for the quarter ended December 31, 2015(2) Includes a special dividend of $0.30 for the quarter ended December 31, 2014At February 19, 2016, there were 208 holders of record of our Common Shares.We have determined for income tax purposes that 68% of the total dividends distributed to shareholders during 2015 represented ordinary income and 32%represented capital gains. The dividend for the quarter ended December 31, 2015, was paid on January 15, 2016, and is taxable in 2015. Our cash flow isaffected by a number of factors, including the revenues received from rental properties, our operating expenses, the interest expense on our borrowings, theability of lessees to meet their obligations to us and unanticipated capital expenditures. Future dividends paid by us will be at the discretion of the Trusteesand will depend on our actual cash flows, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of theCode and such other factors as the Trustees deem relevant. In addition, we have the ability to pay dividends in cash, Common Shares or a combinationthereof, subject to a minimum of 10% in cash.(b) Issuer purchases of equity securitiesWe have an existing share repurchase program that authorizes management, at its discretion, to repurchase up to $20.0 million of our outstanding CommonShares. 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 noCommon Shares repurchased by us during the year ended December 31, 2015. Under this program we have repurchased 2.1 million Common Shares, none ofwhich were repurchased after December 2001. As of December 31, 2015, management may repurchase up to approximately $7.5 million of our outstandingCommon Shares under this program.(c) Securities authorized for issuance under equity compensation plansDuring 2012, the Company terminated the 1999 and 2003 Share Incentive Plans (the "1999 and 2003 Plans") and adopted the Amended and Restated 2006Share Incentive Plan (the "Amended 2006 Plan"). The Amended 2006 Plan amended and restated our 2006 Share Incentive Plan and increased theauthorization to issue options, Restricted Shares and LTIP Units (collectively "Awards") available to officers and employees by 1.9 million shares, for a totalof 2.1 million shares available to be issued. See Note 15 in the Notes to Consolidated Financial Statements, for a summary of our Share Incentive Plans. Thefollowing table provides information related to the Amended 2006 Plan as of December 31, 2015:31 Equity Compensation Plan Information (a) (b) (c) Number of securities tobe issued upon exerciseof outstanding options,warrants and rights Weighted - averageexercise price ofoutstanding options,warrants and rights Number of securitiesremaining availablefor future issuance underequity compensation plans(excluding securitiesreflected in column (a))Equity compensation plans approved bysecurity holders 3,249 $22.27 851,125Equity compensation plans notapproved by security holders — — —Total 3,249 $22.27 851,125Remaining Common Shares available under the Amended 2006 Plan are as follows:Outstanding Common Shares as of December 31, 201570,258,415Outstanding OP Units as of December 31, 20153,857,368Total Outstanding Common Shares and OP Units74,115,783 Common Shares and OP Units pursuant to the 1999 and 2003 Plans5,193,681Common Shares pursuant to the Amended 2006 Plan2,100,000Total Common Shares available under equity compensation plans7,293,681 Less: Issuance of Restricted Shares and LTIP Units Granted(3,670,783)Issuance of Options Granted(2,771,773)Number of Common Shares remaining available851,125(d) Share Price Performance GraphThe following graph compares the cumulative total shareholder return for our Common Shares for the period commencing December 31, 2010, throughDecember 31, 2015, with the cumulative total return on the Russell 2000 Index ("Russell 2000"), the NAREIT All Equity REIT Index (the "NAREIT") and theSNL Shopping Center REITs (the "SNL") over the same period. Total return values for the Russell 2000, the NAREIT, the SNL and the Common Shares werecalculated based upon cumulative total return assuming the investment of $100.00 in each of the Russell 2000, the NAREIT, the SNL and our CommonShares on December 31, 2010, and assuming reinvestment of dividends. The shareholder return as set forth in the table below is not necessarily indicative offuture performance. The information in this section is not "soliciting material," is not deemed "filed" with the SEC, and is not to be incorporated by referenceinto any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any generalincorporation language contained in such filing.Comparison of five Year Cumulative Total Return among Acadia Realty Trust, the Russell 2000, the NAREIT and the SNL:32 Period EndedIndex 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15Acadia Realty Trust $100.00 $114.59 $147.08 $150.59 $202.52 $217.68Russell 2000 100.00 95.82 111.49 154.78 162.35 155.18NAREIT All Equity REIT Index 100.00 108.28 129.62 133.32 170.68 175.51SNL REIT Retail Shopping Ctr Index 100.00 97.14 122.65 131.04 169.80 178.88ITEM 6. SELECTED FINANCIAL DATAThe following table sets forth, on a historical basis, our selected financial data. This information should be read in conjunction with our audited ConsolidatedFinancial 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, 2015 have been adjusted as set forth in "Item 7. Management’s Discussion andAnalysis of Financial Condition and Results of Operations – Reconciliation of Net Income to Funds from Operations."33 Years ended December 31,(dollars in thousands, except per share amounts) 2015 2014 2013 2012 2011OPERATING DATA: Revenues $217,262 $195,012 $168,286 $114,987 $97,857Operating expenses, excluding depreciation and reserves 88,850 79,104 72,108 58,939 51,024Interest expense 37,162 39,091 39,474 22,811 23,343Gain on disposition of properties 89,063 13,138 — — —Depreciation and amortization 60,751 49,645 40,299 27,888 20,975Equity in earnings of unconsolidated affiliates 13,287 8,723 12,382 550 1,555Gain on sale of properties of unconsolidated affiliates 24,043 102,855 — 3,061 —Impairment of investment in unconsolidated affiliates — — — (2,032) —Impairment of asset (5,000) — (1,500) — —Reserve for notes receivable — — — (405) —Gain on involuntary conversion of asset — — — 2,368 —(Loss) gain on debt extinguishment (135) (335) (765) (198) 1,268Income tax (provision) benefit (1,787) (629) (19) 574 (461)Income from continuing operations 149,970 150,924 26,503 9,267 4,877Income from discontinued operations — 1,222 18,137 80,669 48,838Net income 149,970 152,146 44,640 89,936 53,715(Income) loss attributable to noncontrolling interests: Continuing operations (84,262) (80,059) 7,523 14,352 13,734Discontinued operations — (1,023) (12,048) (64,582) (15,894)Net income attributable to noncontrolling interests (84,262) (81,082) (4,525) (50,230) (2,160)Net income attributable to Common Shareholders $65,708 $71,064 $40,115 $39,706 $51,555Supplemental Information: Income from continuing operations attributable to Common Shareholders $65,708 $70,865 $34,026 $23,619 $18,611Income from discontinued operations attributable to Common Shareholders — 199 6,089 16,087 32,944Net income attributable to Common Shareholders $65,708 $71,064 $40,115 $39,706 $51,555Basic earnings per share: Income from continuing operations $0.94 $1.18 $0.61 $0.51 $0.45Income from discontinued operations — — 0.11 0.34 0.80Basic earnings per share $0.94 $1.18 $0.72 $0.85 $1.25Diluted earnings per share: Income from continuing operations $0.94 $1.18 $0.61 $0.51 $0.45Income from discontinued operations — — 0.11 0.34 0.80Diluted earnings per share $0.94 $1.18 $0.72 $0.85 $1.25Weighted average number of Common Shares outstanding basic 68,851 59,402 54,919 45,854 40,697diluted 68,870 59,426 54,982 46,335 40,986Cash dividends declared per Common Share $1.22 $1.23 $0.86 $0.72 $0.72 34 Years ended December 31,(dollars in thousands, except per share amounts) 2015 2014 2013 2012 2011BALANCE SHEET DATA: Real estate before accumulated depreciation $2,736,283 $2,208,595 $1,819,053 $1,287,198 $897,370Total assets 3,032,319 2,720,721 2,264,957 1,908,440 1,653,319Total mortgage indebtedness 1,050,051 991,502 1,039,997 613,181 531,881Total common shareholders’ equity 1,100,488 1,055,541 704,236 622,797 384,114Noncontrolling interests 420,866 380,416 417,352 447,459 385,195Total equity 1,521,354 1,435,957 1,121,588 1,070,256 769,309OTHER: Funds from operations attributable to Common Shareholders andCommon OP Unit holders (1) 111,560 78,882 67,161 48,845 42,931Cash flows provided by (used in): Operating activities 113,598 82,519 65,233 59,001 65,715Investing activities (354,503) (268,516) (87,879) (136,745) (153,157)Financing activities 96,101 324,388 10,022 79,745 56,662Note: (1)The Company considers funds from operations ("FFO") as defined by the National Association of Real Estate Investment Trusts ("NAREIT")and net property operating income ("NOI") to be appropriate supplemental disclosures of operating performance for an equity REIT due totheir widespread acceptance and use within the REIT and analyst communities. FFO and NOI are presented to assist investors in analyzing theperformance of the Company. They are helpful as they exclude various items included in net income that are not indicative of the operatingperformance, such as gains (losses) from sales of depreciated property, depreciation and amortization, and impairment of depreciable realestate. In addition, NOI excludes interest expense. The Company's method of calculating FFO and NOI may be different from methods used byother REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generated from operations as definedby generally accepted accounting principles ("GAAP") and is not indicative of cash available to fund all cash needs, including distributions. Itshould not be considered as an alternative to net income for the purpose of evaluating the Company's performance or to cash flows as ameasure 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 and impairment of depreciable real estate, plus depreciation and amortization, andafter adjustments for unconsolidated partnerships and joint ventures.ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.OVERVIEWAs of December 31, 2015, we operated 147 properties, which we own or have an ownership interest in, within our Core Portfolio or Funds. Our Core Portfolioconsists of those properties either 100% owned, or partially owned through joint venture interests by the Operating Partnership, or subsidiaries thereof, notincluding those properties owned through our Funds. These 147 properties primarily consist of street and urban retail, and dense suburban shopping centers.The properties we operate are located primarily in markets within the United States' top ten metropolitan areas. There are 90 properties in our Core Portfoliototaling approximately 5.6 million square feet. Fund II has four properties, two of which (representing 0.3 million square feet) are currently operating, one isunder construction, and one is in the design phase. Fund III has 10 properties, seven of which (representing 1.1 million square feet) are currently operatingand three of which are in the design phase. Fund IV has 43 properties, 18 of which (representing 1.0 million square feet) are operating and 25 are underdevelopment. The majority of our operating income is derived from rental revenues from operating properties, including expense 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, asopposed to real estate, investments. Since these are not traditional investments in operating rental real estate but investments in operating businesses, theOperating Partnership typically 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 alsocreating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective:35•Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areasand create value through accretive redevelopment and re-tenanting 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.•Generate additional external growth through an opportunistic yet disciplined acquisition program within our Funds. We target transactions withhigh inherent opportunity for the creation of additional value through:◦value-add investments in street retail properties, located in established and "next generation" submarkets, with re-tenanting or repositioningopportunities,◦opportunistic acquisitions of well-located real-estate anchored by distressed retailers, and◦other opportunistic acquisitions which may include high-yield acquisitions and purchases of distressed debt.These may also include joint ventures with private equity investors for the purpose of making investments in operating retailers with significantembedded value in their real estate assets.•Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund futuregrowth.RESULTS OF OPERATIONSSee Note 3 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments.A discussion of the significant variances and primary factors contributing thereto within the results of operations for the years ended December 31, 2015,2014 and 2013 are addressed below:Comparison of the year ended December 31, 2015 ("2015") to the year ended December 31, 2014 ("2014")Revenues 2015 2014(dollars in millions) CorePortfolio Funds StructuredFinancings CorePortfolio Funds StructuredFinancingsRental income $121.2 $37.5 $— $102.1 $43.0 $—Interest income — — 16.6 — — 12.6Expense reimbursements 26.5 9.8 — 22.1 10.6 —Other 2.3 1.8 1.6 0.8 1.1 2.7Total revenues $150.0 $49.1 $18.2 $125.0 $54.7 $15.3Rental income in the Core Portfolio increased $19.1 million primarily as a result of additional rents from property acquisitions in 2014 and 2015 ("CoreAcquisitions"). Rental income in the Funds decreased $5.5 million due to decreases of $4.7 million relating to property dispositions in 2015 ("FundDispositions") and an anticipated significant vacancy at 161st Street in connection with its redevelopment. These decreases were partially offset by propertyacquisitions in 2015 and 2014 ("Fund Acquisitions").The $4.0 million increase in interest income in the Structured Financing Portfolio was a result of $2.7 million of additional interest from loans originated in2014 and 2015 as well as the collection of $1.5 million of interest that was previously reserved.Expense reimbursements in the Core Portfolio increased $4.4 million primarily as a result of Core Acquisitions as well as additional repairs and maintenanceduring 2015.Other income in the Core Portfolio increased $1.5 million primarily as a result of a gain on the acquisition of the unaffiliated partner's remaining interest inthe Route 202 Shopping Center during 2015.Other income in the Structured Financing Portfolio for 2015 relates to the collection of a note receivable in excess of carrying value, including defaultinterest and other costs. In 2014, the $2.7 million relates to the collection of two notes that were previously reserved for.36Operating Expenses 2015 2014(dollars in millions) CorePortfolio Funds StructuredFinancings CorePortfolio Funds StructuredFinancingsProperty operating $19.2 $9.2 $— $15.1 $9.7 $—Other operating 1.1 3.5 — 3.6 0.2 —Real estate taxes 16.9 8.5 — 14.4 8.7 —General and administrative 28.6 1.8 — 24.8 1.7 0.9Depreciation and amortization 46.2 14.5 — 35.9 13.8 —Impairment of asset 5.0 — — — — —Total operating expenses $117.0 $37.5 $— $93.8 $34.1 $0.9Property operating expenses in the Core Portfolio increased $4.1 million primarily as a result of Core Acquisitions as well as additional repairs andmaintenance during 2015.Other operating expenses in the Core Portfolio decreased $2.5 million as a result of lower acquisition costs during 2015. Other operating expenses in theFunds increased $3.3 million as a result of higher acquisition costs during 2015.Real estate taxes in the Core Portfolio increased $2.5 million primarily as a result of Core Acquisitions.General and administrative in the Core Portfolio increased $3.8 million primarily as a result of (i) increased compensation expense of $2.5 million in 2015and (ii) higher legal and other professional fees of $0.9 million in 2015. General and administrative expenses decreased $0.9 million in Structured Financingsprimarily as a result of legal fees incurred during 2014 associated with collection efforts on non-performing notes receivable.The $10.3 million increase in depreciation and amortization in the Core Portfolio was attributable to Core Acquisitions.The impairment of asset in the Core Portfolio was a charge at a property within the Brandywine Portfolio.Other 2015 2014(dollars in millions) CorePortfolio Funds StructuredFinancings CorePortfolio Funds StructuredFinancingsEquity in earnings (losses) ofunconsolidated affiliates $1.2 $12.2 $— $(0.1) $8.8 $—Gain on disposition of properties ofunconsolidated affiliates — 24.0 — — 102.9 —Loss on debt extinguishment — (0.1) — — (0.3) —Interest and other finance expense (27.9) (9.2) — (27.0) (12.1) —Gain on disposition of properties — 89.1 — 12.6 0.5 —Income tax provision (0.6) (1.2) — (0.2) (0.4) —Income from discontinued operations — — — — 1.2 —Loss attributable to noncontrollinginterests: - Continuing operations (0.1) (84.1) — (3.2) (76.9) — - Discontinued operations — — — — (1.0) —Equity in earnings of unconsolidated affiliates in the Funds increased $3.4 million primarily due to additional distributions in excess of basis from the RCPVenture in 2015.The gain on disposition of properties of unconsolidated affiliates in the Funds during 2015 represents our pro-rata share of gain on sale from ParkwayCrossing and the White City Shopping Center. Gain on disposition of properties of unconsolidated affiliates in the Funds in 2014 resulted from our pro-ratashare of gain on sale of investments in the Fund III and Fund IV Lincoln Road Portfolios.37Interest and other finance expense in the Funds decreased $2.9 million from (i) a $3.7 million increase in capitalized interest related to our City Pointredevelopment project and (ii) a $3.3 million decrease related to lower average interest rates during 2015. These decreases were offset by a $4.0 millionincrease related to higher average outstanding borrowings during 2015.Gain on disposition of properties in the Core Portfolio during 2014 represents the gain on the foreclosure of the Walnut Hill Plaza.Gain on disposition of properties in the Funds in 2015 represents our gain on the sales of air rights on Phase III at our City Point development, Lincoln ParkCentre and Liberty Avenue.Net income attributable to noncontrolling interests in the Funds represents their share of all Fund variances discussed above.Comparison of the year ended December 31, 2014 ("2014") to the year ended December 31, 2013 ("2013")Revenues 2014 2013(dollars in millions) CorePortfolio Funds StructuredFinancings CorePortfolio Funds StructuredFinancingsRental income $102.1 $43.0 $— $90.2 $32.5 $—Interest income — — 12.6 — — 11.8Expense reimbursements 22.1 10.6 — 19.1 9.3 —Other 0.8 1.1 2.7 1.1 4.3 —Total revenues $125.0 $54.7 $15.3 $110.4 $46.1 $11.8Rental income in the Core Portfolio increased $11.9 million primarily as a result of additional rents from 2013 and 2014 Core Acquisitions. These increaseswere partially offset by a $1.7 million reduction in rental income following the disposition of Walnut Hill Plaza. Rental income in the Funds increased $10.5million primarily as a result of additional rents of $6.0 million related to 2014 Fund Portfolio property acquisitions ("2014 Fund Acquisitions") and $4.3million as a result of re-anchoring and leasing activities within the Fund Portfolio ("Fund Re-tenanting").Expense reimbursements in the Core Portfolio increased $3.0 million primarily as a result of $2.0 million related to 2013 and 2014 Core Acquisitions as wellas $0.7 million related to reimbursement of higher winter related operating costs in 2014. Expense reimbursements in the Funds increased $1.3 millionprimarily as a result of the 2014 Fund Acquisitions and reimbursement of higher winter related operating costs in 2014.Other income in the Funds decreased $3.2 million primarily due to the recognition of income upon the collection of a note receivable during 2013, whichhad been previously written off. Other income in Structured Financing increased $2.7 million as a result of the collection of two notes that had been reservedprior to 2014.Operating Expenses 2014 2013(dollars in millions) CorePortfolio Funds StructuredFinancings CorePortfolio Funds StructuredFinancingsProperty operating $15.1 $9.7 $— $13.5 $7.5 $—Other operating 3.6 0.2 — 2.7 1.9 —Real estate taxes 14.4 8.7 — 12.8 8.1 —General and administrative 24.8 1.7 0.9 24.4 1.2 —Depreciation and amortization 35.9 13.8 — 29.0 11.3 —Impairment of asset — — — 1.5 — —Total operating expenses $93.8 $34.1 $0.9 $83.9 $30.0 $—Property operating expenses in the Core Portfolio increased $1.6 million primarily as a result of the 2013 and 2014 Core Acquisitions. Property operatingexpenses in the Funds increased $2.2 million primarily as a result of $1.5 million attributable to the 2014 Fund Acquisitions and $0.5 million related to FundRe-tenanting.Other operating in the Funds decreased $1.3 million as a result of a decrease in acquisition related costs.38Real estate taxes in the Core Portfolio increased $1.6 million primarily as a result of the 2013 and 2014 Core Acquisitions.General and administrative expenses increased $0.9 million in Structured Financing primarily as a result of legal fees incurred during 2014 associated withcollection efforts on non-performing notes receivable.Depreciation and amortization expenses in the Core Portfolio increased $6.9 million primarily as a result of the 2013 and 2014 Core Acquisitions.Depreciation and amortization expenses in the Funds increased $2.5 million primarily as a result of the 2014 Fund Acquisitions.Impairment of asset in the Core Portfolio represents a charge related to Walnut Hill Plaza during 2013.Other 2014 2013(dollars in millions) CorePortfolio Funds StructuredFinancings CorePortfolio Funds StructuredFinancingsEquity in earnings (losses) ofunconsolidated affiliates $0.1 $8.8 $— $(0.1) $12.5 $—Gain on disposition of properties ofunconsolidated affiliates — 102.9 — — — —Loss on debt extinguishment — (0.3) — (0.3) (0.5) —Interest and other finance expense (27.0) (12.1) — (26.2) (13.3) —Gain on disposition of properties 12.6 0.5 — — — —Income tax (provision) benefit (0.2) (0.4) — 0.1 (0.1) —Income from discontinued operations — 1.2 — 6.9 11.2 —(Loss) income attributable tononcontrolling interests: - Continuing operations (3.2) (76.9) — (1.0) 8.5 — - Discontinued operations — (1.0) — (2.4) (9.6) —Equity in earnings (losses) of unconsolidated affiliates in the Funds decreased $3.7 million primarily due to the loss of operating income from the sale of ourinvestments in the Fund III and Fund IV Lincoln Road Portfolios during 2014.The gain on disposition of properties of unconsolidated affiliates in the Funds during 2014 represents our pro-rata share of gain from the sale of the Fund IIIand Fund IV Lincoln Road Portfolios.Interest expense in the Funds decreased $1.2 million primarily as a result of a (i) $3.4 million increase in capitalized interest related to our City Pointredevelopment project during 2014 and (ii) a $1.7 million decrease related to lower average interest rates during 2014. These decreases were partially offsetby a (i) $2.8 million increase related to higher average outstanding borrowings during 2014 and (ii) $0.8 million related to an increase in market rateadjustments of assumed debt interest expense during 2014.Gain on disposition of properties in the Core Portfolio during 2014 represents the gain on the foreclosure of the Walnut Hill Plaza (See Note 2 in the Notes toConsolidated Financial Statements).Income from discontinued operations primarily represents activity related to properties sold during 2013.(Loss) income attributable to noncontrolling interests - Continuing operations and Discontinued operations primarily represents the noncontrolling interests'share of all the Funds variances discussed above.CORE PORTFOLIOThe following discussion of net property operating income ("NOI") and rent spreads on new and renewal leases includes the activity from both ourconsolidated and our pro-rata share of unconsolidated properties within our Core Portfolio. Our Funds invest primarily in properties that typically requiresignificant leasing and redevelopment. Given that the Funds are finite-life investment vehicles, these properties are sold following stabilization. For thesereasons, we believe NOI and rent spreads are not meaningful measures for our Fund investments.39NOI represents property revenues less property expenses. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriatesupplemental disclosures of portfolio operating performance due to their widespread acceptance and use within the REIT investor and analyst communities.NOI and rent spreads on new and renewal leases are presented to assist investors in analyzing our property performance, however, our method of calculatingthese may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.Net Property Operating IncomeNOI is determined as follows:RECONCILIATION OF CONSOLIDATED OPERATING INCOME TO NET OPERATING INCOME - CORE PORTFOLIO(dollars in millions) Year Ended December 31, 2015 2014Consolidated Operating Income $62.7 $66.3Add back: General and administrative 30.4 27.4 Depreciation and amortization 60.7 49.6 Impairment of asset 5.0 —Less: Interest income (16.6) (12.6)Above/below market rent, straight-line rent and other adjustments (9.8) (8.6)Consolidated NOI 132.4 122.1 Noncontrolling interest in consolidated NOI (34.7) (38.9)Less: Operating Partnership's interest in Fund NOI included above (5.8) (6.3)Add: Operating Partnership's share of unconsolidated joint ventures NOI 1 10.4 4.4NOI - Core Portfolio $102.3 $81.3Note:(1) Does not include the Operating Partnership's share of NOI from unconsolidated joint ventures within the FundsSame-Property NOI includes Core Portfolio properties that we owned for both the current and prior periods presented, but excludes those properties which weacquired, sold or expected to be sold, and redeveloped during these periods. The following table summarizes Same-Property NOI for our Core Portfolio for theyears ended December 31, 2015 and 2014:40SAME-PROPERTY NET OPERATING INCOME - CORE PORTFOLIO Year Ended December 31,(dollars in millions) 2015 2014Core Portfolio NOI - Continuing Operations $102.3 $81.3Less properties excluded from Same-Property NOI (28.7) (10.4)Same-Property NOI $73.6 $70.9 Percent change from 2014 4.0% Components of Same-Property NOI Same-Property Revenues $99.8 $96.0Same-Property Operating Expenses 26.2 25.1Same-Property NOI $73.6 $70.9The 4.0% increase in Same-Property NOI was primarily attributable to increased rents and occupancy gains during 2015.Rent Spreads on Core Portfolio New and Renewal LeasesThe following table summarizes rent spreads on both a cash basis and straight-line basis for new and renewal leases based on leases executed within our CorePortfolio for the year ended December 31, 2015. Cash basis represents a comparison of rent most recently paid on the previous lease as compared to the initialrent paid on the new lease. Straight-line basis represents a comparison of rents as adjusted for contractual escalations, abated rent and lease incentives for thesame comparable leases. Year Ended December 31, 2015Core Portfolio New and Renewal LeasesCash Basis Straight-Line BasisNumber of new and renewal leases executed53 53Gross leasable area325,627 325,627New base rent$19.23 $19.95Previous base rent$17.41 $16.79Percent growth in base rent10.5% 18.8%Average cost per square foot (1)$8.5 $8.5Weighted average lease term (years)6.4 6.4Note:(1) The average cost per square foot includes tenant improvement costs, leasing commissions and tenant allowances.41RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS For the Years Ended December 31,(dollars in thousands) 2015 2014 2013 2012 2011Net income attributable to Common Shareholders $65,708 $71,064 $40,115 $39,706 $51,555 Depreciation of real estate and amortization of leasing costs: (net ofnoncontrolling interests' share) 52,013 38,020 31,432 24,671 19,823 Gain on sale (net of noncontrolling interests’ share) (11,114) (33,438) (6,378) (16,060) (31,716)Income attributable to Common OP Unit holders 3,811 3,203 470 510 635Impairment of asset (net of noncontrolling interests’ share) 1,111 — 1,500 — 2,616Distributions - Preferred OP Units 31 33 22 18 18Funds from operations attributable to Common Shareholders and Common OPUnit holders (1) $111,560 $78,882 $67,161 $48,845 $42,931Funds From Operations per Share - Diluted Weighted average number of Common Shares and Common OP Units 73,067 62,420 55,954 46,940 41,467Diluted Funds from operations, per Common Share and Common OP Unit $1.53 $1.26 $1.20 $1.04 $1.04Note:(1) We consider funds from operations ("FFO") as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and net propertyoperating income ("NOI") to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and usewithin the REIT and analyst communities. FFO and NOI are presented to assist investors in analyzing our performance. They are helpful as they excludevarious items included in net income that are not indicative of the operating performance, such as gains (losses) from sales of depreciated property,depreciation and amortization, and impairment of depreciable real estate. In addition, NOI excludes interest expense. Our method of calculating FFO and NOImay be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generatedfrom operations as defined by generally accepted accounting principles ("GAAP") and is not indicative of cash available to fund all cash needs, includingdistributions. 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 ofliquidity. Consistent with the NAREIT definition, we define FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales ofdepreciated property and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships andjoint ventures.LIQUIDITY AND CAPITAL RESOURCESUses of LiquidityOur principal uses of liquidity are (i) distributions to our shareholders and OP unit holders, (ii) investments which include the funding of our capitalcommitted to the Funds and property acquisitions and redevelopment/re-tenanting activities within our Core Portfolio, (iii) distributions to our Fundinvestors and (iv) debt service and loan repayments.DistributionsIn 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 theyear ended December 31, 2015, we paid dividends and distributions on our Common Shares and Common OP Units totaling $92.5 million, which wereprimarily funded from the Operating Partnership's share of operating cash flow. This amount included a $21.8 million special dividend that was paid inJanuary 2015, which related to the Operating Partnership's share of cash proceeds from property dispositions during 2014.Distributions of $1.8 million were made to noncontrolling interests in Fund I during the year ended December 31, 2015 primarily as a result of asset sales inthe RCP Venture.42Distributions of $1.4 million were made to noncontrolling interests in Fund II during the year ended December 31, 2015 primarily as a result of operatingcash flows.Distributions of $61.8 million were made to noncontrolling interests in Fund III during the year ended December 31, 2015. Of this, $57.9 million resultedfrom proceeds following the dispositions of Lincoln Park Centre, White City Shopping Center and Parkway Crossing as discussed in Note 2 to the Notes toConsolidated Financial Statements. $3.0 million resulted from operating cash flows and $0.9 million resulted from financing proceeds.Distributions of $4.6 million were made to noncontrolling interests in Fund IV during the year ended December 31, 2015. Of this, $0.2 million was made fromoperating cash flows and $4.4 million resulted from financing proceeds.Distributions to other noncontrolling interests within Fund joint ventures totaled $1.7 million for the year ended December 31, 2015.InvestmentsDuring 2015, we acquired an additional 4.6% interest in Fund III from a limited partner for $7.3 million, giving us an aggregate 24.5% interest in Fund III.During January 2016, we acquired an additional 8.3% interest in Fund II from a limited partner for $18.4 million, giving us an aggregate 28.3% interest inFund II.Fund I and Mervyns IFund I and Mervyns I have returned all invested capital and accumulated preferred return thus triggering our Promote in all future Fund I and Mervyns Iearnings and distributions. As of December 31, 2015, $86.6 million has been invested in Fund I and Mervyns I, of which the Operating Partnershipcontributed $19.2 million. As of December 31, 2015, Fund I has been liquidated.In addition, we, along with our Fund I investors, have invested in Mervyns as discussed in Note 4 to the Consolidated Financial Statements of this Form 10-K.Fund II and Mervyns IITo date, Fund II’s primary investment focus has been in investments involving significant redevelopment activities and the RCP Venture. As of December 31,2015, $300.0 million has been invested in Fund II and Mervyns II, of which the Operating Partnership contributed $60.0 million. During January 2016, theOperating Partnership acquired an additional 8.3% interest in Fund II from one of the investors for $18.4 million.During September of 2004, through Fund II, we launched our New York Urban/Infill Redevelopment Initiative. Fund II, together with an unaffiliated partner,formed Acadia Urban Development LLC ("Acadia Urban Development") for the purpose of acquiring, constructing, redeveloping, owning, operating, leasingand managing certain retail or mixed-use real estate properties in the New York City metropolitan area. The unaffiliated partner agreed to invest 10% ofrequired 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 UrbanDevelopment agreed to invest. Of the eight properties acquired by Acadia Urban Development, four have been sold. Of the remaining four assets, one iscurrently at, or near, stabilization, one is under contract for disposition, one is currently under construction and one is in the pre-construction phase aspreviously discussed in "-INVESTING ACTIVITIES- REDEVELOPMENT ACTIVITIES" in Item 1. of this Form 10-K. Redevelopment costs incurred during2015 by Acadia Urban Development in connection with the New York Urban/Infill Redevelopment Initiative totaled $46.3 million. Anticipated additionalcosts for the property currently under construction are currently estimated to range between $48.1 and $68.1 million. These amounts are net of anticipatedcontributions from the proceeds of residential tower sales.RCP VentureSee Note 4 in the Notes to Consolidated Financial Statements, for a table summarizing the RCP Venture investments from inception through December 31,2015.Fund IIIDuring 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. During 2012, the committed capital amount was43reduced to $475.0 million and during 2015, this amount was further reduced to $450.0 million. As of December 31, 2015, $387.5 million has been investedin Fund III, of which the Operating Partnership contributed $77.1 million. The remaining $62.5 million of unfunded capital will be used to fund currentredevelopment projects. During December 2015, the Operating Partnership acquired an additional 4.6% interest in Fund III from one of the investors for $7.3million.Fund III has invested in three redevelopment projects as previously discussed in "—INVESTING ACTIVITIES-REDEVELOPMENT ACTIVITIES" in Item 1.of this Form 10-K. Remaining anticipated costs for the three projects currently owned by Fund III that can be estimated aggregate between $68.7 million and$88.7 million.In addition to its three redevelopment projects noted above, Fund III also owns, or has ownership interests in, the following seven assets comprisingapproximately 1.1 million square feet as follows:(dollars in millions) PropertyLocationDate AcquiredPurchase PriceGLA3780-3858 Nostrand AvenueBrooklyn, NYFebruary 2013$18.540,300Arundel PlazaGlen Burnie, MDAugust 201217.6265,100640 BroadwayNew York, NYFebruary 201232.539,600New Hyde ParkNew Hyde Park, NYDecember 201111.232,600654 BroadwayNew York, NYDecember 201113.718,700The Heritage Shops at Millennium ParkChicago, ILApril 201131.681,700Cortlandt Towne Center (1)Westchester Co. NYJanuary 200978.0639,400Total $203.11,117,400Note:(1) Fund III sold a 65% interest in this property subsequent to December 31, 2015.Fund IVDuring 2012, we formed Fund IV with 17 principally institutional investors as well as some high-net worth individuals with $540.6 million of committeddiscretionary capital. As of December 31, 2015, $179.4 million has been invested in Fund IV, of which the Operating Partnership contributed $41.5 million.The remaining $361.2 million of unfunded capital will be used to fund future acquisitions and current redevelopment projects.Fund IV has invested in three redevelopment projects as previously discussed in "—INVESTING ACTIVITIES-REDEVELOPMENT ACTIVITIES" in Item 1.of this Form 10-K. Remaining costs for these projects are currently estimated to aggregate between $49.9 million and $72.9 million.In addition to its redevelopment projects, Fund IV also owns, or has ownership interests in, the following 17 assets compromising1.0 million square feet as follows:44(dollars in millions) PropertyLocationDate AcquiredPurchase PriceGLARestaurants at Fort PointBoston, MAJanuary 2016$11.515,7111964 Union StreetSan Francisco, CAJanuary 20161.83,1001861 Union StreetSan Francisco, CADecember 20153.24,2752207 Fillmore StreetSan Francisco, CANovember 20152.53,870146 Geary StreetSan Francisco, CANovember 201538.011,4002208-2216 Fillmore StreetSan Francisco, CAOctober 20157.87,3751035 Third AvenueNew York, NYJanuary 201551.053,29417 East 71st StreetNew York, NYOctober 201428.09,330Eden SquareBear, DEJuly 201425.4235,5081151 Third AvenueNew York, NYOctober 201318.012,0402819 Kennedy BoulevardNorth Bergen, NJJune 20139.041,480Paramus PlazaParamus, NJSeptember 201318.9152,060Promenade at ManassasManassas, VAJuly 201338.0265,440Lake Montclair CenterDumfries, VAOctober 201319.3105,8501701 Belmont AvenueCatonsville, MDDecember 20124.758,670938 W. North AvenueChicago, ILNovember 201320.035,400Broughton StreetSavannah, GA201533.924,961Total $331.01,039,764Development ActivitiesDuring the year ended December 31, 2015, costs associated with redevelopment and leasing activities totaled $202.1 million. Of this amount, $193.9 millionrepresented costs associated with redevelopment, primarily related to Fund II's City Point project and Fund IV's Broughton Street portfolio, and re-tenantcosts and $8.2 million represented direct leasing costs.Structured FinancingsAs of December 31, 2015, our structured financing portfolio, net of allowances aggregated $147.2 million, with related accrued interest of $13.6 million. Thenotes were collateralized by the underlying properties, the borrower’s ownership interest in the entities that own the properties and/or by the borrower’spersonal guarantee. Effective interest rates on our notes receivable ranged from 2.5% to 18.0% with maturities from April 2016 through November 2020.Investments made in our structured financing portfolio during 2015 are discussed in Note 5 in the Notes to Consolidated Financial Statements.Other InvestmentsAcquisitions made during 2015 are discussed in Note 2 in the Notes to Consolidated Financial Statements.Core Portfolio Property Redevelopment and Re-tenantingOur Core Portfolio redevelopment and re-anchoring programs focus on selecting well-located street retail locations and dense suburban shopping centers andcreating significant value through re-tenanting and property redevelopment.Purchase of Convertible NotesPurchases of the Convertible Notes have been another use of our liquidity. As of December 31, 2015, the entire $115.0 million of Convertible Notesoriginally issued during 2006 have been retired. See Note 9 in the Notes to Consolidated Financial Statements for further discussion of our ConvertibleNotes.45Share RepurchaseWe have an existing share repurchase program as further described in Item 5. of this Form 10-K. Management has not repurchased any shares under thisprogram since December 2001, although it has the authority to repurchase up to approximately $7.5 million of our outstanding Common Shares.SOURCES OF LIQUIDITYOur primary sources of capital for funding our liquidity needs include (i) the issuance of both public equity and OP Units, (ii) the issuance of both securedand unsecured debt, of which we had availability of $197.8 million as of December 31, 2015, (iii) unfunded capital commitments from noncontrollinginterests within our Funds III and IV of $47.1 million and $277.7 million, respectively, as of December 31, 2015, (iv) future sales of existing properties and(v) cash on hand of $72.8 million as of December 31, 2015 and future cash flow from operating activities.Issuance of EquityDuring January 2012, we launched an at-the-market ("ATM") equity issuance program which provides us an efficient and low-cost vehicle for raising publicequity to fund our capital needs. Through this program, we have been able to effectively "match-fund" the required equity for our Core Portfolio and Fundacquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time, we haveissued and intend to continue to issue, equity in follow-on offerings separate from our ATM program. Net proceeds raised through our ATM program andfollow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions and for general corporatepurposes.Equity issuances totaled net proceeds of $63.2 million, $357.5 million and $80.7 million for the years ended December 31, 2015, 2014 and 2013,respectively. See Item 1. Business - Capital Strategy — Balance Sheet Focus and Access to Capital for more detail on these issuances.Fund CapitalDuring 2015, noncontrolling interest capital contributions to Fund III and IV of $4.7 million and $30.1 million, respectively, were primarily used to fundacquisitions and to pay down existing credit facilities.Asset SalesDuring January 2015, we completed the sale of Fund III's Lincoln Park Centre for $64.0 million, of which the Operating Partnership's share was $12.7 million.During April 2015, we completed the sale of Fund III's White City Shopping Center for $96.8 million, of which the Operating Partnership's share was $16.2million.During May 2015, we completed the sale of Fund II's Liberty Avenue for $24.0 million, of which the Operating Partnership's share was $3.9 million.During May 2015, we completed the sale of a 92.5% interest in Phase III at Fund II's City Point project for $115.6 million. The sales price was comprised of$85.8 million in cash and the issuance of a $29.8 million note. After the repayment of $20.7 million of debt, the Operating Partnership's share of net proceedswas $13.0 million.During July 2015, we completed the sale of Fund III's Perring Parkway for $27.3 million, of which the Operating Partnership's share was $4.9 million.Structured Financing RepaymentsSee Note 5 in the Notes to Consolidated Financial Statements, for an overview of our notes receivable and for payments received during the years endedDecember 31, 2015, 2014 and 2013.Financing and Debt46As of December 31, 2015, our outstanding mortgage, convertible notes and other notes payable aggregated $1,369.0 million, excluding unamortizedpremium of $1.4 million and unamortized loan costs of $(11.7) million, and were collateralized by 39 properties and related tenant leases. Interest rates onour outstanding indebtedness ranged from 1.00% to 6.65% with maturities that ranged from February 1, 2016, to October 31, 2025. Taking into consideration$256.5 million of notional principal under variable to fixed-rate swap agreements currently in effect, $808.7 million of the portfolio debt, or 59%, was fixedat a 4.74% weighted average interest rate and $560.3 million, or 40.9% was floating at a 2.08% weighted average interest rate as of December 31, 2015. Thereis $573.5 million of debt maturing in 2016 at a weighted average interest rate of 3.45%. In addition, there is $5.0 million of scheduled principal amortizationdue in 2016. As it relates to the maturing debt in 2016, we may not have sufficient cash on hand to repay such indebtedness, and, therefore, we expect torefinance at least a portion of this indebtedness or select other alternatives based on market conditions as these loans mature. Additionally, we have oneforward-starting interest rate swap agreement with respect to $50.0 million of notional principal. Subsequent to December 31, 2015, we closed on a new $50.0million term loan.As of December 31, 2015, we had $197.8 million of additional capacity under existing revolving debt facilities. The following table sets forth certaininformation pertaining to our secured credit facilities:(dollars in millions)Borrower Totalavailablecreditfacilities Amountborrowedas ofDecember 31,2014 Netborrowings(repayments)during the yearended December 31, 2015 Amountborrowedas ofDecember 31,2015 Lettersof creditoutstanding asof December 31, 2015 Amount availableundercreditfacilitiesas of December 31, 2015Unsecured Line (1) $150.0 $— $20.8 $20.8 $17.5 $111.7Term Loan 50.0 50.0 — 50.0 — —Term Loan 50.0 — 50.0 50.0 — —Term Loan 50.0 — 50.0 50.0 — —Fund II Line (1) 25.0 — 12.5 12.5 — 12.5Fund IV revolving subscriptionline (2) 150.0 77.1 14.8 91.9 — 58.1Fund IV Revolving Loan 50.0 — 34.5 34.5 — 15.5Total $525.0 $127.1 $182.6 $309.7 $17.5 $197.8(1) This is an unsecured revolving credit facility.(2) The Fund IV revolving subscription line of credit is secured by unfunded investor capital commitments.CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTSThe following table summarizes: (i) principal and interest obligations under mortgage and other notes, (ii) rents due under non-cancelable operating leases,which includes ground leases at five of our properties and the lease for our corporate office and (iii) construction commitments as of December 31, 2015:(dollars in millions) Payments due by periodContractual obligations: Total Less than1 year 1 to 3years 3 to 5years More than5 yearsPrincipal obligations on debt $1,369.0 $578.5 $288.4 $353.7 $148.3Interest obligations on debt 130.3 42.9 46.9 29.8 10.7Operating lease obligations (1) 22.7 1.8 7.7 5.8 7.4Construction commitments (2) 85.8 85.8 — — —Total $1,607.8 $709.0 $343.0 $389.3 $166.4Notes:47(1) The ground lease expiring during 2078 has an option to purchase the underlying land during 2031. If we do not exercise the option, the rents that will bedue are based on future values and as such are not determinable at this time. Accordingly, the above table does not include rents for this lease beyond 2031.(2) In conjunction with the redevelopment of our Core Portfolio and Fund properties, we have entered into construction commitments with generalcontractors. We intend to fund these requirements with existing liquidity.OFF BALANCE SHEET ARRANGEMENTSWe have investments in the following joint ventures for the purpose of investing in operating properties. We account for these investments using the equitymethod of accounting. As such, our financial statements reflect our share of income and loss from, but not the individual assets and liabilities, of these jointventures.See Note 4 in the Notes to Consolidated Financial Statements, for a discussion of our unconsolidated investments. The Operating Partnership's pro-rata shareof unconsolidated debt related to those investments is as follows:(dollars in millions) Investment Pro-rata share ofmortgage debt OperatingPartnership Interest rate at December 31,2015 Maturity datePromenade at Manassas $5.7 1.59% 11/19/20161701 Belmont Avenue 0.7 4.00% 1/31/2017Arundel Plaza 1.8 2.19% 4/8/20172819 Kennedy Boulevard 1.6 2.34% 12/9/2017Eden Square 3.6 2.19% 12/17/2017230/240 W. Broughton 0.9 2.09% 5/1/2018Crossroads Shopping Center 33.1 3.94% 9/30/2024840 N. Michigan 65.0 4.36% 2/10/2025Georgetown Portfolio 8.8 4.72% 12/10/2027Total $121.2 Note:In addition, we have arranged for the provision of two separate letters of credit in connection with certain leases and investments. As of December 31, 2015there was no outstanding balance under the letters of credit. If the letters of credit were fully drawn, the maximum amount of our exposure would be $17.5million.HISTORICAL CASH FLOWThe following table compares the historical cash flow for the year ended December 31, 2015 ("2015") with the cash flow for the year ended December 31,2014 ("2014"). Years Ended December 31,(dollars in millions) 2015 2014 VarianceNet cash provided by operating activities $113.6 $82.5 $31.1Net cash used in investing activities (354.5) (268.5) (86.0)Net cash provided by financing activities 96.1 324.4 (228.3)Total $(144.8) $138.4 $(283.2)A discussion of the significant changes in cash flows for 2015 compared to 2014 is as follows:Operating ActivitiesOur operating activities provided $31.1 million of additional cash during 2015, primarily from the following:48•An increase in cash flow from Core and Fund Property acquisitions•An increase in cash flow from our Structured Financing PortfolioInvesting ActivitiesDuring 2015, our investing activities used an additional $86.0 million of cash, primarily for the following:•An additional $94.1 million was used for the acquisition of real estate•$62.5 million less cash was collected from the return of capital from unconsolidated affiliates•$28.5 million more was used for redevelopment and property improvement costs•$17.3 million of additional cash was issued for notes receivable•$14.3 million less cash received from the disposition of properties, including unconsolidated affiliates•$4.3 million more was used for deferred leasing costsThese items were partially offset by:•$132.8 million less cash used in investments and advances to unconsolidated affiliatesFinancing ActivitiesOur financing activities provided $228.3 million less cash during 2015, primarily from the following:•$294.2 million less cash received from the issuance of Common Shares•Cash provided from net borrowings decreased $16.4 million•An additional $33.1 million of cash was used to pay dividends to Common Shareholders•Capital contributions from noncontrolling interests decreased $22.5 millionThese items were partially offset by:•$136.7 million of less cash distributed to noncontrolling interestsCRITICAL ACCOUNTING POLICIESManagement’s discussion and analysis of financial condition and results of operations is based upon our Consolidated Financial Statements, which havebeen prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires management to make estimates andjudgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and assumptions thatare believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilitiesthat are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe thefollowing 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 SaleOn a quarterly basis, we review the carrying value of both properties held for use and for sale. We perform an impairment analysis by calculating andreviewing net operating income on a property-by-property basis. We evaluate leasing projections and perform other analyses to conclude whether an asset isimpaired. We record impairment losses and reduce the carrying value of properties when indicators of impairment are present and the expected undiscountedcash 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 foruse, 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, 2015, as a result of the loss of a key anchor tenant, one of the properties in our Brandywine Portfolio, in which anunaffiliated third party has a 77.78% noncontrolling interest, did not generate sufficient cash flow to meet the full debt service requirements leading to adefault on the mortgage loan. We performed an analysis and determined that the carrying amount of this property was not recoverable. Accordingly, werecorded an impairment charge of $5.0 million, which is included in the statement of income for the year ended December 31, 2015. The OperatingPartnership's share of this charge, net of the noncontrolling interest, was $1.1 million. The property is collateral for $26.3 million of non-recourse mortgagedebt which matures July 1, 2016. During the year ended December 31, 2013, we determined that the value of the Walnut Hill Plaza, a Core Portfolio property,was impaired as a result of a deterioration in the local economic environment. Accordingly, we recorded an49impairment loss of $1.5 million. This property was collateral for $23.1 million of non-recourse mortgage debt which matured October 1, 2016. During 2014,this property was foreclosed upon by the lender. Additionally, during the year ended December 31, 2013, we entered into a firm contract to sell ourSheepshead Bay property owned by Fund III at an amount less than the carrying value. Accordingly, we recorded an impairment loss of $6.7 million to adjustthe carrying value to the net realizable value from the sale, which was subsequently completed during 2014. For the year ended December 31, 2014, noimpairment losses on our properties were recognized. Management does not believe that the value of any other properties in our portfolio was impaired as ofDecember 31, 2015.Investments in and Advances to Unconsolidated Joint VenturesWe periodically review our investment in unconsolidated joint ventures for other than temporary declines in market value. Any decline that is not expectedto 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 theinvestment. No impairment charges related to our investment in unconsolidated joint ventures were recognized for the years ended December 31, 2015, 2014and 2013. Management does not believe that the value of any other investments in unconsolidated joint ventures was impaired as of December 31, 2015.Bad DebtsWe maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make payments on arrearages in billed rents, aswell as the likelihood that tenants will not have the ability to make payments on unbilled rents including estimated expense recoveries. We also maintain areserve for straight-line rent receivables. For the years ended December 31, 2015 and 2014, the allowance for doubtful accounts totaled $7.5 million and $6.0million, respectively. If the financial condition of our tenants were to deteriorate, resulting in an impairment of their ability to make payments, additionalallowances may be required.Real EstateReal estate assets are stated at cost less accumulated depreciation. Expenditures for acquisition, redevelopment, construction and improvement of properties,as well as significant renovations are capitalized. Interest costs are capitalized until construction is substantially complete. Construction in progress includescosts for significant property expansion and redevelopment. Depreciation is computed on the straight-line basis over estimated useful lives of 30 to 40 yearsfor buildings, the shorter of the useful life or lease term for tenant improvements and five years for furniture, fixtures and equipment. Expenditures formaintenance and repairs are charged to operations as incurred.Upon acquisitions of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, and identified intangibles such asabove and below market leases and acquired in-place leases and customer relationships) and acquired liabilities in accordance with the FASB AccountingStandards Codification ("ASC") Topic 805 "Business Combinations" and ASC Topic 350 "Intangibles – Goodwill and Other," and allocate purchase pricebased on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates andavailable market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, andmarket/economic conditions that may affect the property.Revenue Recognition and Accounts ReceivableLeases 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 bythe tenant. Percentage rent is recognized in the period when the tenants’ sales breakpoint is met. In addition, leases typically provide for the reimbursement tous of real estate taxes, insurance and other property operating expenses. These reimbursements are recognized as revenue in the period the expenses areincurred.We make estimates of the uncollectability of our accounts receivable related to tenant revenues. An allowance for doubtful accounts has been providedagainst certain tenant accounts receivable that are estimated to be uncollectible. See "Bad Debts" above. Once the amount is ultimately deemed to beuncollectible, it is written off.Structured FinancingsReal estate notes receivable investments and preferred equity investments ("Structured Financings") are intended to be held to maturity and are carried atcost. Interest income from Structured Financings are recognized on the effective interest method over50the expected life of the loan. Under the effective interest method, interest or fees to be collected at the origination of the Structured Financing investment isrecognized over the term of the loan as an adjustment to yield.Allowances for Structured Financing 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 investment as well as other factors, including the fair value of any collateral, the amountand status of any senior debt, and the prospects for the borrower. Because this determination is based upon projections of future economic events, which areinherently subjective, the amounts ultimately realized from the Structured Financings may differ materially from the carrying value at the balance sheet date.Interest income recognition is generally suspended for investments when, in the opinion of management, a full recovery of income and principal becomesdoubtful. Income recognition is resumed when the suspended investment becomes contractually current and performance is demonstrated to be resumed.During January 2014, we received a $1.5 million payment on a previously reserved for investment in our Structured Financing Portfolio, which had a netcarrying value of $0.8 million. Accordingly, we recognized $0.7 million of income related to this repayment.During 2013, we recognized income of $2.5 million relating to the repayment of a note receivable that had previously been written off.During 2014, we recognized income of $2.0 million relating to the repayment in full of a note receivable for which we had previously established a reserve.INFLATIONOur long-term leases contain provisions designed to mitigate the adverse impact of inflation on our net income. Such provisions include clauses enabling usto receive percentage rents based on tenants’ gross sales, which generally increase as prices rise, and/or, in certain cases, escalation clauses, which generallyincrease rental rates during the terms of the leases. Such escalation clauses are often related to increases in the consumer price index or similar inflationindexes. 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 currentrents are below the then existing market rates. Most of our leases require the tenants to pay their share of operating expenses, including common areamaintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation.RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTSReference is made to the Notes to Consolidated Financial Statements.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.Information as of December 31, 2015Our primary market risk exposure is to changes in interest rates related to our mortgage and other debt. See Notes 8 and 9 in the Notes to ConsolidatedFinancial Statements, for certain quantitative details related to our mortgage and other debt.Currently, we manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap agreements. As ofDecember 31, 2015, we had total mortgage and other notes payable of $1,369.0 million, excluding the unamortized premium of $1.4 million andunamortized loan costs of $(11.7) million, of which $808.7 million, or 59% was fixed-rate, inclusive of debt with rates fixed through the use of derivativefinancial instruments, and $560.3 million, or 41%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of December 31, 2015, we werea party to 15 interest rate swap transactions and one interest rate cap transaction to hedge our exposure to changes in interest rates with respect to $256.5million and $29.5 million of LIBOR-based variable-rate debt, respectively. We were also a party to one forward-starting interest rate swap for $50.0 million ofnotional principal.The following table sets forth information as of December 31, 2015 concerning our long-term debt obligations, including principal cash flows by scheduledmaturity and weighted average interest rates of maturing amounts (dollars in millions):Consolidated mortgage and other debt:51Year Scheduledamortization Maturities Total Weighted averageinterest rate2016 $5.0 $573.5 $578.5 3.5%2017 3.9 191.7 195.6 4.0%2018 2.5 90.4 92.9 2.1%2019 1.6 82.0 83.6 1.7%2020 1.6 268.5 270.1 4.0%Thereafter 4.0 144.3 148.3 2.3% $18.6 $1,350.4 $1,369.0 Mortgage debt in unconsolidated partnerships (at our pro-rata share):Year Scheduledamortization Maturities Total Weighted averageinterest rate2016 $0.2 $5.7 $5.9 1.6%2017 0.3 8.1 8.4 2.5%2018 0.8 0.9 1.7 3.2%2019 0.8 — 0.8 —%2020 0.8 — 0.8 —%Thereafter 4.1 99.9 104.0 4.3% $7.0 $114.6 $121.6 $578.5 million of our total consolidated debt and $5.9 million of our pro-rata share of unconsolidated outstanding debt will become due in 2016. $195.6million of our total consolidated debt and $8.4 million of our pro-rata share of unconsolidated debt will become due in 2017. As we intend on refinancingsome or all of such debt at the then-existing market interest rates, which may be greater than the current interest rate, our interest expense would increase byapproximately $7.9 million annually if the interest rate on the refinanced debt increased by 100 basis points. After giving effect to noncontrolling interests,our share of this increase would be $2.6 million. Interest expense on our variable-rate debt of $560.3 million, net of variable to fixed-rate swap agreementscurrently in effect, as of December 31, 2015 would increase $5.6 million if LIBOR increased by 100 basis points. After giving effect to noncontrollinginterests, our share of this increase would be $1.3 million. We may seek additional variable-rate financing if and when pricing and other commercial andfinancial terms warrant. As such, we would consider hedging against the interest rate risk related to such additional variable-rate debt through interest rateswaps and protection agreements, or other means.Based on our outstanding debt balances as of December 31, 2015, the fair value of our total consolidated outstanding debt would decrease by approximately$12.8 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding debt would increase byapproximately $13.6 million.As of December 31, 2015 and 2014, we had notes receivable of $147.2 million and $102.3 million, respectively. We determined the estimated fair value ofour notes receivable equated the carrying values by discounting future cash receipts utilizing a discount rate equivalent to the rate at which similar notesreceivable would be originated under conditions then existing.Based on our outstanding notes receivable balances as of December 31, 2015, the fair value of our total outstanding notes receivable would decrease byapproximately $3.3 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding notesreceivable would increase by approximately $3.4 million.Summarized Information as of December 31, 2014As of December 31, 2014, we had total mortgage and convertible notes payable of $1,127.5 million, excluding the unamortized premium of $2.9 million andunamortized loan costs of $(11.9) million, of which $801.3 million, or 71% was fixed-rate, inclusive of interest rate swaps, and $326.2 million, or 29%, wasvariable-rate based upon LIBOR plus certain spreads. As of December 31, 2014, we were a party to 14 interest rate swap transactions and four interest rate captransactions to hedge our exposure to changes in interest rates with respect to $223.8 million and $139.6 million of LIBOR-based variable-rate debt,respectively. We were also a party to two forward-starting interest rate swaps with respect to $50.0 million of LIBOR-based variable-rate debt.Interest expense on our variable debt of $326.2 million as of December 31, 2014 would have increased $3.3 million if LIBOR increased by 100 basis points.Based on our outstanding debt balances as of December 31, 2014, the fair value of our total52outstanding debt would have decreased by approximately $13.7 million if interest rates increased by 1%. Conversely, if interest rates decreased by 1%, thefair value of our total outstanding debt would have increased by approximately $12.6 million.Changes in Market Risk Exposures from 2014 to 2015Our interest rate risk exposure from December 31, 2014 to December 31, 2015 has increased on an absolute basis, as the $326.2 million of variable-rate debtas of December 31, 2014 has increased to $560.3 million as of December 31, 2015. As a percentage of our overall debt, our interest rate risk exposure hasincreased as our variable-rate debt accounted for 29% of our consolidated debt as of December 31, 2014 and was increased to 41% as of December 31, 2015.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 ProceduresWe conducted an evaluation, under the supervision and with the participation of management including our Chief Executive Officer and Chief FinancialOfficer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officerconcluded that our disclosure controls and procedures were effective as of December 31, 2015 to provide reasonable assurance that information required to bedisclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified inSEC rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, asappropriate to allow timely decisions regarding required disclosure.(ii) Internal Control Over Financial Reporting(a) Management’s Annual Report on Internal Control Over Financial ReportingManagement of Acadia Realty Trust is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is definedin the Securities Exchange Act of 1934 Rule 13(a)-15(f). Under the supervision and with the participation of our management, including our principalexecutive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as ofDecember 31, 2015 as required by the Securities Exchange Act of 1934 Rule 13(a)-15(c). In making this assessment, we used the criteria set forth in theframework in Internal Control–Integrated Framework (2013 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 control over financial reporting waseffective as of December 31, 2015 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statementsfor external reporting purposes in accordance with U.S. generally accepted accounting principles.BDO USA, LLP, an independent registered public accounting firm that audited our Financial Statements included in this Annual Report, has issued anattestation report on our internal control over financial reporting as of December 31, 2015, which appears in paragraph (b) of this Item 9A.Acadia Realty TrustRye, New YorkFebruary 19, 201653(b) Attestation report of the independent registered public accounting firmThe Shareholders and Trustees ofAcadia Realty TrustRye, New YorkWe have audited Acadia Realty Trust’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Acadia Realty Trust’smanagement is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal controlover financial reporting, included in the accompanying Item 9(a), Management’s Annual Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on the 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 thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such otherprocedures 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 reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely 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 ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, Acadia Realty Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based onthe COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof Acadia Realty Trust as of December 31, 2015 and 2014, 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, 2015, and our report dated February 19, 2016, expressed an unqualified opinionthereon./s/ BDO USA, LLPNew York, New YorkFebruary 19, 201654(c) Changes in internal control over financial reportingThere was no change in our internal control over financial reporting during our fourth fiscal quarter ended December 31, 2015 that has materially affected, oris reasonably likely to materially affect, our internal control over financial reporting.ITEM 9B. OTHER INFORMATION.None55PART IIIIn 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 ourdefinitive proxy statement relating to our 2016 annual meeting of stockholders (our "2016 Proxy Statement") that we intend to file with the SEC no later thanMarch 30, 2016.ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.The information under the following headings in the 2016 Proxy Statement is incorporated herein by reference:•"PROPOSAL 1 — ELECTION OF TRUSTEES"•"MANAGEMENT"•"SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE"ITEM 11. EXECUTIVE COMPENSATION.The information under the following headings in the 2016 Proxy Statement is incorporated herein by reference:•"ACADIA REALTY TRUST COMPENSATION COMMITTEE REPORT"•"COMPENSATION DISCUSSION AND ANALYSIS"•"BOARD OF TRUSTEES COMPENSATION"•"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 2016 Proxy Statement isincorporated 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 incorporatedherein by reference.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.The information under the following headings in the 2016 Proxy Statement is incorporated herein by reference:•"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"•"PROPOSAL 1 — ELECTION OF TRUSTEES—Trustee Independence"ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.The information under the heading "AUDIT COMMITTEE INFORMATION" in the 2016 Proxy Statement is incorporated herein by reference.PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.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-48 below.3. Exhibits: The index of exhibits below is incorporated herein by reference.56SIGNATURESPursuant 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 itsbehalf by the undersigned, thereto duly authorized. ACADIA REALTY TRUST (Registrant) By:/s/ Kenneth F. Bernstein Kenneth F. Bernstein Chief Executive Officer, President and Trustee By:/s/ Jonathan W. Grisham Jonathan W. Grisham Senior Vice President and Chief Financial Officer By:/s/ Richard Hartmann Richard Hartmann Senior Vice President and Chief Accounting OfficerDated: February 19, 2016Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrantand in the capacities and on the dates indicated. Signature Title Date /s/ Kenneth F. Bernstein(Kenneth F. Bernstein) Chief Executive Officer,President and Trustee(Principal Executive Officer) February 19, 2016 /s/ Jonathan W. Grisham(Jonathan W. Grisham) Senior Vice Presidentand Chief Financial Officer(Principal Financial Officer) February 19, 2016 /s/ Richard Hartmann(Richard Hartmann) Senior Vice Presidentand Chief Accounting Officer(Principal Accounting Officer) February 19, 2016 /s/ Douglas Crocker II(Douglas Crocker II) Trustee February 19, 2016 /s/ Lorrence T. Kellar(Lorrence T. Kellar) Trustee February 19, 2016 /s/ Wendy Luscombe(Wendy Luscombe) Trustee February 19, 2016 /s/ William T. Spitz(William T. Spitz) Trustee February 19, 2016 /s/ Lee S. Wielansky(Lee S. Wielansky) Trustee February 19, 2016 /s/ C. David Zoba(C. David Zoba) Trustee February 19, 201657EXHIBIT INDEXThe following is an index to all exhibits including (i) those filed with this Annual Report on Form 10-K and (ii) those incorporated by reference herein:Exhibit No.Description3.1Declaration of Trust of the Company (incorporated by reference to the copy thereof filed as Exhibit 3.1 to the Company's Annual Report onForm 10-K filed for the year ended December 31, 2012.) 3.2First Amendment to Declaration of Trust of the Company (incorporated by reference to the copy thereof filed as Exhibit 3.2 to the Company'sAnnual Report on Form 10-K filed for the year ended December 31, 2012.) 3.3Second Amendment to Declaration of Trust of the Company (incorporated by reference to the copy thereof filed as Exhibit 3.3 to theCompany's Annual Report on Form 10-K filed for the year ended December 31, 2012.) 3.4Third Amendment to Declaration of Trust of the Company (incorporated by reference to the copy thereof filed as Exhibit 3.4 to the Company'sAnnual Report on Form 10-K filed for the year ended December 31, 2012.) 3.5Fourth Amendment to Declaration of Trust (incorporated by reference to the copy thereof filed as Exhibit 3.1 (a) to the Company's QuarterlyReport on Form 10-Q filed for the quarter ended September 30, 1998.) 3.6Fifth Amendment to Declaration of Trust (incorporated by reference to the copy thereof filed as Exhibit 3.4 to the Company's Quarterly Reporton Form 10-Q filed for the quarter ended March 31, 2009.) 3.7Amended and Restated Bylaws of the Company (incorporated by reference to the copy thereof filed as Exhibit 3.1 to the Company's CurrentReport on Form 8-K filed on November 18, 2013.) 3.8Amendment No. 1 to Amended and Restated Bylaws of the Company (incorporated by reference to the copy thereof filed as Exhibit 3.1 to theCompany's Current Report on Form 8-K filed on April 1, 2014.) 10.1Amended and Restated Acadia Realty Trust 2006 Share Incentive Plan (incorporated by reference to the copy thereof filed as Appendix A tothe Company's Definitive Proxy Statement on Schedule 14A filed on April 5, 2012.) (2) 10.2Certain information regarding the compensation arrangements with certain officers of registrant (incorporated by reference to the copy thereoffiled as to Item 5.02 of the registrant's Form 8-K filed with the SEC on February 4, 2008.) 10.3Description of Long Term Investment Alignment Program (incorporated by reference to the copy thereof filed as Exhibit 10.13 to theCompany's Quarterly Report on Form 10-Q filed for the quarter ended March 31, 2009.) 10.4Form of Share Award Agreement (incorporated by reference to the copy thereof filed as Exhibit 99.1 to the Company's Current Report on FormS-8 filed on July 2, 2003.) (2) 10.5Form of 2014-15 Long-Term Incentive Plan Award Agreement (1) (2) 10.6Registration Rights and Lock-Up Agreement (RD Capital Transaction) (incorporated by reference to the copy thereof filed as Exhibit 99.1 (a)to the Company's Registration Statement on Form S-3 filed on March 3, 2000.) 10.7Contribution and Share Purchase Agreement dated as of April 15, 1998 among Mark Centers Trust, Mark Centers Limited Partnership, theContributing Owners and Contributing Entities named therein, RD Properties, L.P. VI, RD Properties, L.P. VIA and RD Properties, L.P. VIB(incorporated by reference to the copy thereof filed as Exhibit 10.1 to the Company's Form 8-K filed on April 20, 1998.) 10.8Amended and Restated Employment agreement between the Company and Kenneth F. Bernstein (incorporated by reference to the copythereof filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 1, 2014.) (2)58 10.9Form of Amended and Restated Severance Agreement, dated June 12, 2008, that was entered into with each of Joel Braun, Executive VicePresident and Chief Investment Officer; Michael Nelsen, Senior Vice President and Chief Financial Officer; Robert Masters, Senior VicePresident, Senior Legal Counsel, Chief Compliance Officer and Secretary; and Joseph Hogan, Senior Vice President and Director ofConstruction (incorporated by reference to the copy thereof filed as Exhibit 10.1 to the Company's Form 8-K filed on June 12, 2008.) (2) 10.10Amended and Restated Severance Agreement, dated April 19, 2011, that was entered into with Christopher Conlon, Senior Vice President,Leasing and Development (incorporated by reference to the copy thereof filed as Exhibit 10.43 to the Company's Quarterly Report on Form10-Q filed for the quarter ended March 31, 2011.) (2) 10.11Revolving Credit Agreement Dated as of November 21, 2012 by and among Acadia Strategic Opportunity Fund IV LLC as Borrower, AcadiaRealty Acquisition IV LLC as Borrowers Managing Member, Acadia Realty Limited Partnership as Guarantor, Acadia Realty Trust asGuarantor General Partner, Acadia Investors IV Inc. as Pledgor and Bank of America, N.A. as Administrative Agent, Structuring Agent, SoleBookrunner, Sole Lead Arranger, Letter of Credit Issuer, and Lender (incorporated by reference to the copy thereof filed as Exhibit 10.23 to theCompany's Annual Report on Form 10-K filed for the year ended December 31, 2012.) 10.12Credit Agreement, dated as of January 31, 2013, among Acadia Realty Limited Partnership, as the Borrower, and Acadia Realty Trust andCertain Subsidiaries of Acadia Realty Limited Partnership from time to time party thereto, as Guarantors, Bank of America, N.A., asAdministrative Agent, Swing Line Lender, L/C Issuer, and as a Lender, PNC Bank, National Association and Wells Fargo Bank, NationalAssociation, as Co-Documentation Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as a Joint Lead Arranger and Sole Bookrunnerand PNC Bank, National Association and Wells Fargo Securities, LLC, as Joint Lead Arrangers (incorporated by reference to the copy thereoffiled as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 5, 2013.) 10.13First Amendment to Credit Agreement, among Acadia Realty Limited Partnership, as the Borrower, and Acadia Realty Trust and CertainSubsidiaries of Acadia Realty Limited Partnership from time to time party thereto, as Guarantors, Bank of America, N.A., as AdministrativeAgent, Swing Line Lender, L/C Issuer, and as a Lender, PNC Bank, National Association and Wells Fargo Bank, National Association, as Co-Documentation Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as a Joint Lead Arranger and Sole Bookrunner and PNC Bank,National Association and Wells Fargo Securities, LLC, as Joint Lead Arrangers, dated September 30, 2014 (incorporated by reference to thecopy thereof filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed for the quarter ended June 30, 2015.) 10.14Second Amendment to Credit Agreement, among Acadia Realty Limited Partnership, as the Borrower, and Acadia Realty Trust and CertainSubsidiaries of Acadia Realty Limited Partnership from time to time party thereto, as Guarantors, Bank of America, N.A., as AdministrativeAgent, Swing Line Lender, L/C Issuer, and as a Lender, PNC Bank, National Association and Wells Fargo Bank, National Association, as Co-Documentation Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as a Joint Lead Arranger and Sole Bookrunner and PNC Bank,National Association and Wells Fargo Securities, LLC, as Joint Lead Arrangers, dated May 22, 2015 (incorporated by reference to the copythereof filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed for the quarter ended June 30, 2015.) 10.15Agreement 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 BHLLC, Samuel Ginsburg 2000 Trust Agreement #1, Martin Ginsburg 2000 Trust Agreement #1, Martin Ginsburg, Samuel Ginsburg and AdamGinsburg, and GDC SMG, LLC, GDC Beechwood, LLC, Aspen Cove Apartments, LLC and SMG Celebration, LLC (incorporated by referenceto the copy thereof filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on January 4, 2006.) 10.16Form of Assignments and Assumptions of Carried Interest with respect to the Company's Long-Term Incentive Alignment Program(incorporated by reference to the copy thereof filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed for the quarterended June 30, 2015.) 10.17Form of Omnibus Amendment to the Series of Assignments and Assumptions of Carried Interest with respect to the Company's Long-TermIncentive Alignment Program (incorporated by reference to the copy thereof filed as Exhibit 10.5 to the Company's Quarterly Report on Form10-Q filed for the quarter ended June 30, 2015.) 21List of Subsidiaries of Acadia Realty Trust (1) 5923.1Consent of Registered Public Accounting Firm to incorporation by reference its reports into Forms S-3 and Forms S-8 (1) 31.1Certification of Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 2002 (1) 31.2Certification of Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 2002 (1) 32.1Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002 (1) 32.2Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002 (1) 99.1Amended and Restated Agreement of Limited Partnership of the Operating Partnership (not including immaterial amendments) (incorporatedby reference to the copy thereof filed as Exhibit 10.1 (c) to the Company's Registration Statement on Form S-3 filed on March 3, 2000.) 99.2Third Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership (incorporated by reference to thecopy thereof filed as Exhibit 99.2 to the Company's Quarterly Report on Form 10-Q filed for the quarter ended June 30, 2015.) 99.3Eighth Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership (incorporated by reference to thecopy thereof filed as Exhibit 10.8 to the Company's Registration Statement on Form S-3 filed on March 12, 2009.) 99.4Certificate of Designation of Series A Preferred Operating Partnership Units of Limited Partnership Interest of Acadia Realty LimitedPartnership (incorporated by reference to the copy thereof filed as Exhibit 99.5 to the Company's Quarterly Report on Form 10-Q filed for thequarter ended June 30, 1997.) 101.INSXBRL Instance Document* (1)101.SCHXBRL Taxonomy Extension Schema Document* (1)101.CALXBRL Taxonomy Extension Calculation Document* (1)101.DEFXBRL Taxonomy Extension Definitions Document* (1)101.LABXBRL Taxonomy Extension Labels Document* (1)101.PREXBRL Taxonomy Extension Presentation Document* (1)*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes ofSections 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, andotherwise is not subject to liability under these sections. Notes: (1)Filed herewith. (2)Management contract or compensatory plan or arrangement.60ACADIA REALTY TRUST AND SUBSIDIARIESINDEX TO FINANCIAL STATEMENTSReport of Independent Registered Public Accounting Firm F-2Consolidated Balance Sheets as of December 31, 2015 and 2014 F-3Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013 F-4Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013 F-5Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2015, 2014 and 2013 F-6Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013 F-9Notes to Consolidated Financial Statements F-11Schedule III – Real Estate and Accumulated Depreciation F-48 F-1Report of Independent Registered Public Accounting FirmThe Shareholders and Trustees ofAcadia Realty TrustRye, New YorkWe have audited the accompanying consolidated balance sheets of Acadia Realty Trust (the “Company”) as of December 31, 2015 and 2014, and the relatedconsolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31,2015. In connection with our audits of the financial statements, we have also audited the financial statement schedule listed in the accompanying index.These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements and schedules 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 thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedules. We believe that ouraudits 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 atDecember 31, 2015 and 2014, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, inconformity with accounting principles generally accepted in the United States of America.Also, in our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presentfairly, in all material respects, the information set forth therein.As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for and disclosure of debt issuance costsfor the years ended December 31, 2015 and 2014, due to the adoption of Accounting Standards Update 2015-03, “Interest - Imputation of Interest -Simplifying the Presentation of Debt Issuance Costs,” and has also changed its method of accounting for and disclosure of measurement period adjustmentsfor the year ended December 31, 2015, due to the adoption of Accounting Standards Update 2015-06, “Business Combinations - Simplifying the Accountingfor Measurement-Period Adjustments.”We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Acadia Realty Trust’s internalcontrol over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 19, 2016, expressed an unqualified opinionthereon./s/ BDO USA, LLPNew York, New YorkFebruary 19, 2016F-2ACADIA REALTY TRUST AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS December 31,(dollars in thousands) 2015 2014ASSETS Operating real estate Land $514,120 $424,661Buildings and improvements 1,593,350 1,329,080Construction in progress 19,239 7,464 2,126,709 1,761,205Less: accumulated depreciation 298,703 256,015Net operating real estate 1,828,006 1,505,190Real estate under development 609,574 447,390Notes receivable and preferred equity investments 147,188 102,286Investments in and advances to unconsolidated affiliates 173,277 184,352Cash and cash equivalents 72,776 217,580Cash in escrow 26,444 20,358Restricted cash 10,840 30,604Rents receivable, net 40,425 36,962Deferred charges, net 22,568 18,800Acquired lease intangibles, net 52,593 44,618Prepaid expenses and other assets 48,628 56,508Assets of discontinued operations and properties held for sale — 56,073Total assets $3,032,319 $2,720,721 LIABILITIES Mortgage and other notes payable, net $1,050,051 $991,502Unsecured notes payable, net 308,555 127,100Distributions in excess of income from, and investments in, unconsolidated affiliates 13,244 12,564Accounts payable and accrued expenses 38,754 34,026Dividends and distributions payable 37,552 39,339Acquired lease intangibles, net 31,809 29,585Other liabilities 31,000 25,148Liabilities of discontinued operations and properties held for sale — 25,500Total liabilities 1,510,965 1,284,764EQUITY Shareholders' Equity Common shares, $.001 par value, authorized 100,000,000 shares, issued and outstanding 70,258,415 and68,109,287 shares, respectively 70 68Additional paid-in capital 1,092,239 1,027,861Accumulated other comprehensive loss (4,463) (4,005)Retained earnings 12,642 31,617Total shareholders’ equity 1,100,488 1,055,541Noncontrolling interests 420,866 380,416Total equity 1,521,354 1,435,957Total liabilities and equity $3,032,319 $2,720,721The accompanying notes are an integral part of these consolidated financial statementsF-3ACADIA REALTY TRUST AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME Years ended December 31,(dollars in thousands except per share amounts) 2015 2014 2013Revenues Rental income $158,632 $145,103 $122,730Interest income 16,603 12,607 11,800Expense reimbursements 36,306 32,642 28,373Other 5,721 4,660 5,383Total revenues 217,262 195,012 168,286Operating Expenses Property operating 28,423 24,833 21,026Other operating 4,675 3,776 4,605Real estate taxes 25,384 23,062 20,922General and administrative 30,368 27,433 25,555Depreciation and amortization 60,751 49,645 40,299Impairment of asset 5,000 — 1,500Total operating expenses 154,601 128,749 113,907Operating income 62,661 66,263 54,379Equity in earnings of unconsolidated affiliates 13,287 8,723 12,382Gain on disposition of properties of unconsolidated affiliates 24,043 102,855 —Loss on debt extinguishment (135) (335) (765)Interest and other finance expense (37,162) (39,091) (39,474)Gain on disposition of properties 89,063 13,138 —Income from continuing operations before income taxes 151,757 151,553 26,522Income tax provision (1,787) (629) (19)Income from continuing operations 149,970 150,924 26,503Discontinued operations Operating income from discontinued operations — — 6,818Impairment of asset — — (6,683)Loss on debt extinguishment — — (800)Gain on disposition of properties — 1,222 18,802Income from discontinued operations — 1,222 18,137Net income 149,970 152,146 44,640Noncontrolling interests Continuing operations (84,262) (80,059) 7,523Discontinued operations — (1,023) (12,048)Net income attributable to noncontrolling interests (84,262) (81,082) (4,525)Net income attributable to Common Shareholders $65,708 $71,064 $40,115Basic earnings per share Income from continuing operations $0.94 $1.18 $0.61Income from discontinued operations — — 0.11Basic earnings per share $0.94 $1.18 $0.72Diluted earnings per share Income from continuing operations $0.94 $1.18 $0.61Income from discontinued operations — — 0.11Diluted earnings per share $0.94 $1.18 $0.72The accompanying notes are an integral part of these consolidated financial statementsF-4ACADIA REALTY TRUST AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31, 2015 2014 2013(dollars in thousands) Net income $149,970 $152,146 $44,640Other comprehensive (loss) income: Unrealized (loss) gain on valuation of swap agreements (5,061) (9,061) 3,610Reclassification of realized interest on swap agreements 5,524 3,776 2,892Other comprehensive income (loss) 463 (5,285) 6,502Comprehensive income 150,433 146,861 51,142Comprehensive income attributable to noncontrolling interests (85,183) (80,934) (5,588)Comprehensive income attributable to Common Shareholders $65,250 $65,927 $45,554The accompanying notes are an integral part of these consolidated financial statements.F-5ACADIA REALTY TRUST AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY(amounts in thousands, except pershare amounts)CommonShares ShareAmount AdditionalPaid-inCapital AccumulatedOtherComprehensive(Loss) Income RetainedEarnings TotalCommonShareholders’Equity NoncontrollingInterests TotalEquityBalance at January 1, 201352,482 $52 $581,925 $(4,307) $45,127 $622,797 $447,459 $1,070,256Conversion of OP Units toCommon Shares by limitedpartners of the OperatingPartnership93 — 1,548 — — 1,548 (1,548) —Issuance of Common Shares, netof issuance costs3,013 4 80,686 — — 80,690 — 80,690Dividends declared ($0.86 perCommon Share)— — — — (47,495) (47,495) (1,664) (49,159)Issuance of OP Units to acquirereal estate— — — — — — 33,300 33,300Employee and trustee stockcompensation, net55 — 1,142 — — 1,142 6,530 7,672Consolidation of previouslyunconsolidated investment— — — — — — (33,949) (33,949)Noncontrolling interestdistributions— — — — — — (87,688) (87,688)Noncontrolling interestcontributions— — — — — — 49,324 49,324 55,643 56 665,301 (4,307) (2,368) 658,682 411,764 1,070,446Comprehensive income (loss): Net income— — — — 40,115 40,115 4,525 44,640Unrealized income on valuationof swap agreements— — — 3,541 — 3,541 69 3,610Reclassification of realizedinterest on swap agreements— — — 1,898 — 1,898 994 2,892Total comprehensive income— — — 5,439 40,115 45,554 5,588 51,142Balance at December 31, 201355,643 56 665,301 1,132 37,747 704,236 417,352 1,121,588F-6ACADIA REALTY TRUST AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY(amounts in thousands,except per share amounts)CommonShares ShareAmount AdditionalPaid-inCapital AccumulatedOtherComprehensive(Loss) Income RetainedEarnings TotalCommonShareholders’Equity NoncontrollingInterests TotalEquityConversion of OP Units toCommon Shares by limitedpartners of the OperatingPartnership136 — 3,181 — — 3,181 (3,181) —Issuance of CommonShares, net of issuancecosts12,237 12 357,447 — — 357,459 — 357,459Dividends declared ($1.23per Common Share)— — — — (77,194) (77,194) (5,085) (82,279)Issuance of OP Units toacquire real estate— — — — — — 44,051 44,051Employee and trustee stockcompensation, net93 — 1,932 — — 1,932 6,528 8,460Noncontrolling interestdistributions— — — — — — (218,152) (218,152)Noncontrolling interestcontributions— — — — — — 57,969 57,969 68,109 68 1,027,861 1,132 (39,447) 989,614 299,482 1,289,096Comprehensive income: Net income— — — — 71,064 71,064 81,082 152,146Unrealized loss onvaluation of swapagreements— — — (7,814) — (7,814) (1,247) (9,061)Reclassification of realizedinterest on swap agreements— — — 2,677 — 2,677 1,099 3,776Total comprehensiveincome— — — (5,137) 71,064 65,927 80,934 146,861Balance at December 31,201468,109 68 1,027,861 (4,005) 31,617 1,055,541 380,416 1,435,957F-7ACADIA REALTY TRUST AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY(amounts in thousands, except pershare amounts)CommonShares ShareAmount AdditionalPaid-inCapital AccumulatedOtherComprehensive(Loss) Income RetainedEarnings TotalCommonShareholders’Equity NoncontrollingInterests TotalEquityConversion of OP Units toCommon Shares by limitedpartners of the OperatingPartnership101 — 2,451 — — 2,451 (2,451) —Issuance of Common Shares, netof issuance costs1,973 2 64,415 — — 64,417 — 64,417Dividends declared ($1.22 perCommon Share)— — — — (84,683) (84,683) (5,983) (90,666)Acquisition of noncontrollinginterests— — (4,409) — — (4,409) (3,561) (7,970)Employee and trustee stockcompensation, net75 — 1,921 — — 1,921 6,723 8,644Noncontrolling interestdistributions— — — — — — (74,950) (74,950)Noncontrolling interestcontributions— — — — — — 35,489 35,489 70,258 70 1,092,239 (4,005) (53,066) 1,035,238 335,683 1,370,921Comprehensive income: Net income— — — — 65,708 65,708 84,262 149,970Unrealized loss on valuation ofswap agreements— — — (4,047) — (4,047) (1,014) (5,061)Reclassification of realizedinterest on swap agreements— — — 3,589 — 3,589 1,935 5,524Total comprehensive (loss)income— — — (458) 65,708 65,250 85,183 150,433Balance at December 31, 201570,258 $70 $1,092,239 $(4,463) $12,642 $1,100,488 $420,866 $1,521,354 The accompanying notes are an integral part of these consolidated financial statements.F-8ACADIA REALTY TRUST AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31,(dollars in thousands) 2015 2014 2013CASH FLOWS FROM OPERATING ACTIVITIES Net income $149,970 $152,146 $44,640Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 60,751 49,645 43,071Amortization of financing costs 3,537 3,003 3,082Gain on disposition of property (89,063) (14,360) (18,802)Loss on debt extinguishment 135 335 1,565Impairment of asset 5,000 — 8,183Share compensation expense 7,438 6,744 7,667Equity in earnings of unconsolidated affiliates (13,287) (8,723) (12,382)Gain on disposition of properties of unconsolidated affiliates (24,043) (102,855) —Distributions of operating income from unconsolidated affiliates 12,291 9,579 9,829Other, net (6,618) (4,147) (4,771)Changes in assets and liabilities Cash in escrow (6,168) (686) 218Rents receivable, net (5,673) (8,097) 997Prepaid expenses and other assets 12,690 852 (22,524)Accounts payable and accrued expenses 1,284 (4,016) 5,586Other liabilities 5,354 3,099 (1,126)Net cash provided by operating activities 113,598 82,519 65,233CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of real estate (344,476) (250,353) (220,041)Redevelopment and property improvement costs (164,315) (140,118) (106,883)Deferred leasing costs (8,207) (3,914) (4,617)Investments in and advances to unconsolidated affiliates (24,168) (156,972) (56,171)Return of capital from unconsolidated affiliates 11,892 74,371 108,899Proceeds from disposition of properties of unconsolidated affiliates 38,392 190,356 —Consolidation of previously unconsolidated investment — — 1,864Proceeds from notes receivable 15,984 18,095 29,583Issuance of notes receivable (48,500) (31,169) (45,050)Proceeds from disposition of properties 168,895 31,188 204,537Net cash used in investing activities (354,503) (268,516) (87,879)F-9ACADIA REALTY TRUST AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31,(dollars in thousands) 2015 2014 2013CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes (383,238) (176,323) (437,257)Proceeds received on mortgage and other notes 507,659 284,303 572,443Loan proceeds held as restricted cash 48,676 79,191 (109,795)Purchase of convertible notes payable (380) — (550)Deferred financing and other costs (4,376) (3,672) (11,741)Capital contributions from noncontrolling interests 35,489 57,970 49,324Distributions to noncontrolling interests (84,610) (221,330) (88,975)Dividends paid to Common Shareholders (86,353) (53,210) (44,115)Proceeds from issuance of Common Shares, net of issuance costs of $1,150, $2,112 and $1,645respectively 63,234 357,459 80,688Net cash provided by financing activities 96,101 324,388 10,022 (Decrease) increase in cash and cash equivalents (144,804) 138,391 (12,624)Cash and cash equivalents, beginning of period 217,580 79,189 91,813Cash and cash equivalents, end of period $72,776 $217,580 $79,189 Supplemental disclosure of cash flow information Cash paid during the period for interest, net of capitalized interest of $16,447, $12,650 and $9,193,respectively $47,960 $46,542 $41,543 Cash paid for income taxes, net of refunds received of $0, $2,045 and $0, respectively $2,038 $(1,772) $301 Supplemental disclosure of non-cash investing activities Acquisition of real estate through assumption of debt $91,885 $29,794 $—Disposition of real estate through forgiveness of debt $— $(22,865) $—Acquisition of real estate through issuance of OP Units $— $38,937 $33,300Investments in and advances to unconsolidated affiliates through issuance of OP Units $— $5,114 $—Acquisition of real estate through conversion of notes receivable $13,386 $38,000 $18,500Acquisition of real estate through assumption of restricted cash $(28,912) $— $—Disposition of air rights through issuance of notes receivable $(29,539) $— $— Consolidation of previously unconsolidated investment Real estate, net $— $— $(118,484)Mortgage notes payable — — 166,200Distributions in excess of income from, and investments in, unconsolidated affiliates — — (10,298)Other assets and liabilities — — (1,605)Noncontrolling interest — — (33,949)Cash included in consolidation of previously unconsolidated investment $— $— $1,864The accompanying notes are an integral part of these consolidated financial statements.F-10ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Organization, Basis of Presentation and Summary of Significant Accounting PoliciesAcadia Realty Trust (the "Trust") and subsidiaries (collectively, the "Company"), is a fully-integrated equity real estate investment trust ("REIT") focused onthe ownership, acquisition, redevelopment, and management of high-quality retail properties located primarily in high-barrier-to-entry, supply-constrained,densely-populated metropolitan areas in the United States.All of the Company’s assets are held by, and all of its operations are conducted through, Acadia Realty Limited Partnership (the "Operating Partnership") andentities in which the Operating Partnership owns an interest. As of December 31, 2015, the Trust controlled approximately 95% of the Operating Partnershipas 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 profitsand losses of the Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties orentities 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 holdingCommon OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for common shares of beneficial interest of the Trust("Common Shares"). This structure is referred to as an umbrella partnership REIT or "UPREIT."As of December 31, 2015, the Company has ownership interests in 90 properties within its core portfolio, which consist of those properties either 100%owned, or partially owned through joint venture interests, by the Operating Partnership, or subsidiaries thereof, not including those properties owned throughits funds ("Core Portfolio"). The Company also has ownership interests in 57 properties within its opportunity funds, Acadia Strategic Opportunity Fund I, LP("Fund I"), Acadia Strategic Opportunity II, LLC ("Fund II"), Acadia Strategic Opportunity Fund III LLC ("Fund III") and Acadia Strategic Opportunity FundIV LLC (("Fund IV") and together with Funds I, II, and III, the "Funds"). The 147 Core Portfolio and Fund properties primarily consist of street and urbanretail, and dense suburban shopping centers. In addition, the Company, together with the investors in the Funds, invest in operating companies throughAcadia Mervyn Investors I, LLC ("Mervyns I"), Acadia Mervyn Investors II, LLC ("Mervyns II") and Fund II, all on a non-recourse basis.The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns I and II and earns fees or priority distributions for assetmanagement, property management, construction, redevelopment, leasing, and legal services. Cash flows from the Funds and Mervyns I and II are distributedpro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return ("Preferred Return"),and the return of all capital contributions. Thereafter, remaining cash flow is distributed 20% to the Operating Partnership ("Promote") and 80% to thepartners or members (including the Operating Partnership).Following is a table summarizing the general terms and Operating Partnership's equity interests in the Funds and Mervyns I and II:EntityFormationDateOperatingPartnership Share ofCapitalFund SizeCapital Called asof December 31,2015 (4)Unfunded CommitmentEquity Interest HeldBy OperatingPartnershipPreferredReturnTotal Distributions asof December 31,2015 (4)Fund I andMervyns I (1)9/200122.22%$90.0$86.6$—37.78%9%$194.5Fund II andMervyns II (2)6/200420.00%300.0300.047.120.00%8%131.6Fund III (3)5/200724.54%502.5387.562.524.54%6%445.7Fund IV5/201223.12%540.6179.4361.223.12%6%101.9F-11ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Organization, Basis of Presentation and Summary of Significant Accounting Policies, continuedNotes:(1) Fund I and Mervyns I have returned all capital and preferred return. The Operating Partnership is now entitled to a Promote on all future cash distributions.(2) During 2013, a distribution of $47.1 million was made to the Fund II investors, including the Operating Partnership. This amount is subject to recontribution to Fund II untilDecember 2016, if needed to fund the on-going development and construction of existing projects.(3)During 2015, the Company acquired an additional 4.6% interest in Fund III from a limited partner for $7.3 million, giving the Company an aggregate 24.54% interest.(4) Represents the total for the Funds, including the Operating Partnership and noncontrolling interests' shares.Principles of ConsolidationThe consolidated financial statements include the consolidated accounts of the Company and its controlling investments in partnerships and limited liabilitycompanies in which the Company has control in accordance with 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 which the Company has the abilityto exercise significant influence over, but does not have financial or operating control, are accounted for using the equity method of accounting.Accordingly, the Company’s share of the earnings (or 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 primarybeneficiary of a variable interest entity is the enterprise that has the power to direct the activities that most significantly impact the variable interest entity’seconomic performance and the obligation to absorb losses or the right to receive benefits of the variable interest entity that could be significant to thevariable interest entity. Management has evaluated the applicability of ASC Topic 810 to its investments in certain joint ventures and determined that thesejoint ventures are not variable interest entities or that the Company is not the primary beneficiary and, therefore, consolidation of these ventures is notrequired. These investments are accounted for using the equity method of accounting.Investments in and Advances to Unconsolidated Joint VenturesThe Company primarily accounts for its investments in unconsolidated joint ventures using the equity method as it does not exercise control over significantasset decisions such as buying, selling or financing nor is it the primary beneficiary under ASC Topic 810, as discussed above. The Company does havesignificant influence over most of these investments, which requires equity method accounting. Under the equity method, the Company increases itsinvestment for its proportionate share of net income and contributions to the joint venture and decreases its investment balance by recording itsproportionate share of net loss and distributions. The Company accounts for some of its investments under the cost method. Due to its minor ownership ofthree investments as well as the terms of the underlying operating agreements, the Company has no influence over such entities' operating and financialpolicies. Other than the minority investor rights to which the Company is entitled pursuant to statute, it has no rights other than to receive its pro-rata share ofcash distributions as declared by the managers of these investments. The Company recognizes income for distributions in excess of its investment where thereis no recourse to the Company. For investments in which there is recourse to the Company, distributions in excess of the investment are recorded as aliability. Although the Company accounts for its investment in Albertson’s (Note 4) under the equity method of accounting, the Company adopted the policyof not recording its equity in earnings or losses of this unconsolidated affiliate until it receives the audited financial statements of Albertson’s to support theequity in earnings or losses in accordance with ASC Topic 323, "Investments – Equity Method and Joint Ventures."The Company periodically reviews its investments in unconsolidated joint ventures for other-than-temporary losses in investment value. Any decline that isnot expected to be recovered based on the underlying assets of the investment, is considered other than temporary and an impairment charge is recorded as areduction in the carrying value of the investment. During the years ended December 31, 2015, 2014 and 2013, there were no impairment charges related tothe Company’s investments in unconsolidated joint ventures.F-12ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Organization, Basis of Presentation and Summary of Significant Accounting Policies, continuedUse of EstimatesAccounting principles generally accepted in the United States of America ("GAAP") require the Company’s management to make estimates and assumptionsthat affect the amounts reported in the financial statements and accompanying notes. The most significant assumptions and estimates relate to the valuationof real estate, depreciable lives, revenue recognition and the collectability of notes receivable and rents receivable. Application of these estimates andassumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.Real Estate and Real Estate Under DevelopmentReal estate assets are stated at cost less accumulated depreciation. Real estate under development includes costs for significant property expansion andredevelopment. 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 orlease term for tenant improvements and five years for furniture, fixtures and equipment. Expenditures for maintenance and repairs are charged to operations asincurred.Upon acquisitions of real estate, the Company assesses the fair value of acquired assets and assumed liabilities (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 inaccordance with ASC Topic 805 "Business Combinations" and ASC Topic 350 "Intangibles – Goodwill and Other," and allocates the acquisition price basedon these assessments. Fixed-rate renewal options have been included in the calculation of the fair value of acquired leases where applicable. To the extentthere were fixed-rate options at below-market rental rates, the Company included these along with the current term below-market rent in arriving at the fairvalue of the acquired leases. The discounted difference between contract and market rents is being amortized over the remaining applicable lease term,inclusive of any option periods. The Company assesses fair value based on estimated cash flow projections that utilize appropriate discount andcapitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operatingresults, known trends, and market/economic conditions that may affect the property.The Company capitalizes certain costs related to the development and redevelopment of real estate including initial project acquisition costs, pre-construction costs, interest, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved with the specificproject. Additionally, the Company capitalizes interest costs related to development and redevelopment activities. Capitalization of these costs begin whenthe activities and related expenditures commence, and cease when the property is held available for occupancy upon substantial completion of tenantimprovements, but no later than one year from the completion of major construction activity at which time the project is placed in service and depreciationcommences.The Company reviews its long-lived assets for impairment when there is an event or a change in circumstances that indicates that the carrying amount maynot be recoverable. The Company measures and records impairment losses and reduces the carrying value of properties when indicators of impairment arepresent and the expected undiscounted cash flows related to those properties are less than their carrying amounts. In cases where the Company does notexpect to recover its carrying costs on properties held for use, the Company reduces its carrying costs to fair value, and for properties held for sale, theCompany reduces its carrying value to the fair value less costs to sell. During the year ended December 31, 2015, as a result of the loss of a key anchor tenant,one of the properties in the Company's Brandywine Portfolio, in which an unaffiliated third party has a 77.78% noncontrolling interest, did not generatesufficient cash flow to meet the full debt service requirements leading to a default on the mortgage loan. Management performed an analysis and determinedthat the carrying amount of this property was not recoverable. Accordingly, the Company recorded an impairment charge of $5.0 million, which is includedin the statement of income for the year ended December 31, 2015. The Operating Partnership's share of this charge, net of the noncontrolling interest, was$1.1 million. The property is collateral for $26.3 million of non-recourse mortgage debt which matures July 1, 2016. During the year ended December 31,2013, the Company determined that the values of the Walnut Hill Plaza and Fund III's Sheepshead Bay property were impaired. Accordingly, impairmentcharges of $1.5 million and $6.7 million, respectively were recorded. The Operating Partnership's share of the impairment charge related to Sheepshead Baywas $1.3 million. During the year ended December 31, 2014, no impairment charges were recorded. Management does not believe that the values of any otherproperties within the portfolio are impaired as of December 31, 2015.F-13ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Organization, Basis of Presentation and Summary of Significant Accounting Policies, continuedThe Company recognizes property sales in accordance with ASC Topic 970 "Real Estate." The Company generally records the sales of operating propertiesand outparcels using the full accrual method at closing when the earnings process is deemed to be complete. Sales not qualifying for full recognition at thetime of sale are accounted for under other appropriate deferral methods. The Company evaluates the held-for-sale classification of its real estate each quarter.Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. Assets are generally classified as heldfor sale once management has initiated an active program to market them for sale and has received a firm purchase commitment.On occasion, the Company will receive unsolicited offers from third parties to buy individual Company properties. Under these circumstances, the Companywill 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 ensureperformance.Deferred CostsFees 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 andcosts incurred in connection with obtaining financing are deferred and amortized as a component of interest expense over the term of the related debtobligation. The Company capitalizes salaries, commissions and benefits related to time spent by leasing and legal department personnel involved inoriginating leases.Revenue Recognition and Accounts ReceivableLeases with tenants are accounted for as operating leases. Minimum rents are recognized, net of any rent concessions or tenant lease incentives, including freerent, on a straight-line basis over the term of the respective leases, beginning when the tenant is entitled to take possession of the space. As of December 31,2015 and 2014, unbilled rents receivable relating to the straight-lining of rents of $31.3 million and $28.0 million, respectively, are included in RentsReceivable, net on the accompanying consolidated balance sheets. Certain of these leases also provide for percentage rents based upon the level of salesachieved by the tenant. Percentage rent is recognized in the period when the tenants’ sales breakpoint is met. In addition, leases typically provide for thereimbursement to the Company of real estate taxes, insurance and other property operating expenses. These reimbursements are recognized as revenue in theperiod the related expenses are incurred.The Company makes estimates of the uncollectability of its accounts receivable related to tenant revenues. An allowance for doubtful accounts has beenprovided against certain tenant accounts receivable that are estimated to be uncollectible. Once the amount is ultimately deemed to be uncollectible, it iswritten off. Rents receivable at December 31, 2015 and 2014 are shown net of an allowance for doubtful accounts of $7.5 million and $6.0 million,respectively.Notes Receivable and Preferred EquityNotes receivable and preferred equity investments are intended to be held to maturity and are carried at amortized cost. Interest income from notes receivableand preferred equity investments are recognized using the effective interest method over the expected life of the loan. Under the effective interest method,interest or fees collected at the origination of the investment or the payoff of the investment are recognized over the term of the loan as an adjustment toyield.Allowances for real estate notes receivable 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 statusof any senior debt, and the prospects for the borrower. Because this determination is based upon projections of future economic events, which are inherentlysubjective, the amounts ultimately realized from the loans may differ materially from their carrying values at the balance sheet date. Interest incomerecognition is generally suspended for loans when, in the opinion of management, a full recovery of income and principal becomes doubtful. Incomerecognition is resumed when the suspended loan becomes contractually current and performance is demonstrated to be resumed.During 2014, the Company recognized income of $2.7 million as a result of collections on notes that previously had reserves.F-14ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Organization, Basis of Presentation and Summary of Significant Accounting Policies, continuedCash and Cash EquivalentsThe Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cashequivalents are maintained at financial institutions and, at times, balances may exceed the limits insured by the Federal Deposit Insurance Corporation. TheCompany has never experienced any losses related to these balances.Restricted Cash and Cash in EscrowRestricted cash and cash in escrow consist principally of cash held for real estate taxes, construction costs, property maintenance, insurance, minimumoccupancy and property operating income requirements at specific properties as required by certain loan agreements.Income TaxesThe Company has made an election to be taxed, and believes it qualifies, as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, asamended (the "Code"). To maintain REIT status for Federal income tax purposes, the Company is generally required to distribute at least 90% of its REITtaxable income to its shareholders as well as comply with certain other income, asset and organizational requirements as defined in the Code. Accordingly,the Company is generally not subject to Federal corporate income tax to the extent that it distributes 100% of its REIT taxable income each year.Although it may qualify for REIT status for Federal income tax purposes, the Company is subject to state income or franchise taxes in certain states in whichsome of its properties are located. In addition, taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiaries ("TRS")is fully subject to Federal, state and local income taxes.The Company accounts for TRS income taxes under the liability method as required by ASC Topic 740, "Income Taxes." Under the liability method, deferredincome taxes are recognized for the temporary differences between the GAAP basis and tax basis of the TRS 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 anyuncertain tax positions that, if successfully challenged, could result in a material impact on the Company's financial position or results of operation. The priorthree years' income tax returns are subject to review by the Internal Revenue Service. The Company recognizes potential interest and penalties related touncertain tax positions as a component of the provision for income taxes.Stock-based CompensationThe Company accounts for stock-based compensation pursuant to ASC Topic 718, "Compensation – Stock Compensation." As such, all equity based awardsare reflected as compensation expense in the Company’s consolidated financial statements over their vesting period based on the fair value at the date ofgrant.F-15ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Organization, Basis of Presentation and Summary of Significant Accounting Policies, continuedRecent Accounting PronouncementsDuring September 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-16, "Business Combinations - Simplifying the Accounting forMeasurement-Period Adjustments." ASU 2015-16 requires an entity to recognize adjustments to provisional amounts that are identified during themeasurement period in the reporting period in which the adjustment amounts are determined as if the accounting had been completed at the acquisition date.ASU 2015-16 also requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded incurrent-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had beenrecognized as of the acquisition date. ASU 2015-16 is effective for periods beginning after December 15, 2015, with early adoption permitted and shall beapplied prospectively. ASU 2015-16 was adopted by the Company and did not have a material impact on the Company's consolidated financial statements.During August 2015, the FASB issued ASU No. 2015-14, "Revenues from Contracts with Customers - Deferral of the Effective Date." ASU 2015-14 defers theeffective date of ASU No. 2014-09 "Revenues from Contracts with Customers" from annual reporting periods beginning after December 15, 2016 to annualreporting periods beginning after December 15, 2017. Early adoption of ASU 2014-09 is permitted only for annual reporting periods beginning afterDecember 15, 2016. The Company is in the process of evaluating the impact the adoption of ASU 2014-09 will have on the consolidated financialstatements.During April 2015, the FASB issued ASU No. 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software." ASU 2015-05 provides guidance to helpan entity evaluate the accounting for fees paid in a cloud computing arrangement. ASU 2015-05 is effective for periods beginning after December 15, 2015,with early adoption permitted and may be applied either prospectively or retrospectively. ASU 2015-05 is not expected to have a material impact on theCompany's consolidated financial statements.During April 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest - Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03modifies the treatment of debt issuance costs from a deferred charge to a deduction of the carrying value of the financial liability. ASU 2015-03 is effectivefor periods beginning after December 15, 2015, with early adoption permitted and retrospective application. During August 2015, the FASB issued ASU No.2015-15 which clarifies that under ASU 2015-03, the SEC staff would not object to an entity deferring and presenting debt issuance costs relating to line-of-credit arrangements as assets. The Company adopted ASU 2015-15 and ASU 2015-03 during 2015, resulting in the reclassification of $11.7 million and$11.9 million from deferred charges, net to mortgages and other notes payable, net as of December 31, 2015 and 2014, respectively. There was no effect onthe results of operations for any period presented.During February 2015, the FASB issued ASU No. 2015-02, "Consolidation - Amendments to the Consolidation Analysis." ASU 2015-02 (i) modifies theevaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIE’s"), (ii) eliminates the presumption that a generalpartner should consolidate a limited partnership and (iii) affects the consolidation analysis of reporting entities that are involved with VIE’s, particularlythose with fee arrangements and related party relationships. ASU 2015-02 is effective for periods beginning after December 15, 2015, with early adoptionpermitted. ASU 2015-02 is not expected to have a material impact on the Company's consolidated financial statements.During January 2015, the FASB issued ASU No. 2015-01, "Income Statement - Extraordinary and Unusual Items." ASU 2015-01 eliminates the concept ofextraordinary items. However, the presentation and disclosure requirements for items that are either unusual in nature or infrequent in occurrence remain andwill be expanded to include items that are both unusual in nature and infrequent in occurrence. ASU 2015-01 is effective for periods beginning afterDecember 15, 2015. ASU 2015-01 is not expected to have a material impact on the Company's consolidated financial statements.F-16ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS2. Acquisition and Disposition of Properties, Discontinued Operations and Properties Held For SaleA. Acquisition and Disposition of PropertiesAcquisitionsDuring 2015, the Company acquired the following properties through its Core Portfolio and Funds as follows:Core Portfolio(dollars in millions) PropertyGLAPercentOwnedTypeMonth ofAcquisitionPurchasePriceDebt AssumptionLocationCity Center205,000100%Urban Retail CenterMarch$155.0$—San Francisco, CA163 Highland Avenue40,500100%Suburban ShoppingCenterMarch24.09.8Needham, MARoute 202 Shopping Center (1)20,000100%Suburban ShoppingCenterApril5.6—Wilmington, DERoosevelt Galleria40,300100%Urban Retail CenterSeptember19.6—Chicago, ILTotal305,800$204.2$9.8Note:(1) Purchase price represents the 77.78% interest acquired from an unaffiliated third party.The Company expensed $1.3 million of acquisition costs for the year ended December 31, 2015 related to the Core Portfolio.Fund II(dollars in millions) PropertyGLAPercentOwnedTypeMonth ofAcquisitionPurchasePriceDebt AssumptionLocationCity Point - Tower I (1)—95%Urban DevelopmentMay$100.8$81.0Brooklyn, NYTotal— $100.8$81.0 Note:(1) Fund II previously held a 52% interest in this unconsolidated affiliate. In connection with the disposition of Phase III of this project discussed below,Fund II acquired an additional 43% interest in Tower I of this development project, which is accounted for as an asset acquisition. In total, Fund II now owns95% of this investment, which is a residential project anticipated to include 250 residential units.F-17ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS2. Acquisition and Disposition of Properties, Discontinued Operations and Properties Held For Sale, continuedFund IV(dollars in millions) PropertyGLAPercentOwnedTypeMonth ofAcquisitionPurchasePriceDebt AssumptionLocation1035 Third Avenue (1)53,294100%Street RetailJanuary$51.0$—New York, NY801 Madison Avenue6,375100%Street RetailApril33.0—New York, NY650 Bald Hill Road225,00090%Suburban ShoppingCenterOctober9.2—Warwick, RI2208-2216 Fillmore Street7,37590%Street RetailOctober8.6—San Francisco, CA146 Geary Street12,400100%Street RetailNovember38.0—San Francisco, CA2207 Fillmore Street3,87090%Street RetailNovember2.81.1San Francisco, CA1861 Union Street4,27590%Street RetailDecember3.5—San Francisco, CATotal312,589$146.1$1.1Note:(1) GLA includes a portion of office space and a below-grade operator controlled parking garage.The Company expensed $3.5 million of acquisition costs for the year ended December 31, 2015 related to Fund IV.Purchase Price AllocationsWith the exception of the asset acquisitions, the above acquisitions have been accounted for as business combinations. The purchase prices were allocated tothe acquired assets and assumed liabilities based on their estimated fair values at the dates of acquisition. The preliminary measurements of fair valuereflected below are subject to change. The Company expects to finalize the valuations and complete the purchase price allocations within one year from thedates of acquisition.The following table summarizes both the Company's preliminary allocations of the purchase prices of assets acquired and liabilities assumed during 2015:(dollars in thousands)Preliminary PurchasePrice AllocationLand$83,890Buildings and improvements258,926Above and below market debt assumed (included in Mortgages and other notes payable, net)(10,885)Total Consideration$331,931F-18ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS2. Acquisition and Disposition of Properties, Discontinued Operations and Properties Held For Sale, continuedDuring 2014, the Company acquired properties and recorded the preliminary allocation of the purchase price to the assets acquired based on provisionalmeasurements of fair value. During 2015, the Company finalized the allocation of the purchase price and made certain measurement period adjustments. Thefollowing table summarizes the preliminary allocation of the purchase price of properties as recorded as of December 31, 2014, and the finalized allocation ofthe purchase price as adjusted as of December 31, 2015:(dollars in thousands)Preliminary PurchasePrice AllocationAdjustmentsFinalized PurchasePrice AllocationLand$149,609$(12,489)$137,120Buildings and improvements418,720(5,705)413,015Acquisition-related intangible assets (in Acquired lease intangibles,net)—41,81241,812Acquisition-related intangible liabilities (in Acquired leaseintangibles, net)(6,434)(22,630)(29,064)Above and below market debt assumed (included in Mortgages andother notes payable)(2,100)(988)(3,088)Total Consideration$559,795$—$559,795DispositionsDuring 2015, the Company disposed of the following properties:(dollars in thousands) DispositionsGLASale PriceGain on SaleMonth SoldOwnerLincoln Park Centre61,761$64,000$27,143JanuaryFund IIIWhite City Shopping Center (1)249,54996,75017,105AprilFund IIICity Point - Air Rights (2)—115,60049,884MayFund IILiberty Avenue26,11724,00011,957MayFund IIParkway Crossing (1)260,24127,2756,938JulyFund IIIKroger-Safeway (3)97,50027879AugustFund ITotal695,168$327,903$113,106 Notes:(1) Fund III's White City Shopping Center and Parkway Crossing were unconsolidated and as such, the Company's share of gains related to these sales isincluded in gain on disposition of properties of unconsolidated affiliates in the 2015 Consolidated Statement of Income.(2) Represents the disposition of air rights at Phase III of Fund II's City Point project.(3) During August 2015, Fund I terminated its ground lease interest at two of the three remaining properties in the portfolio and sold its ground lease interestin the third location.F-19ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS2. Acquisition and Disposition of Properties, Discontinued Operations and Properties Held For Sale, continuedB. Discontinued OperationsThe Company previously reported properties sold as discontinued operations. The results of operations of discontinued operations are reflected as a separatecomponent within the accompanying consolidated Consolidated Statements of Income for the years ended December 31, 2014 and 2013. There were noassets or liabilities classified as discontinued operations as of December 31, 2015.The combined results of operations of the properties classified as discontinued operations for the years ended December 31, 2014 and 2013, are summarizedas follows:(dollars in thousands) Years ended December31,STATEMENTS OF INCOME 2014 2013Total revenues $— $20,920Total expenses — 14,102Operating income — 6,818Impairment of assets — (6,683)Loss on debt extinguishment — (800)Gain on disposition of properties 1,222 18,802Income from discontinued operations 1,222 18,137Income from discontinued operations attributable to noncontrolling interests (1,023) (12,048)Income from discontinued operations attributable to Common Shareholders $199 $6,089C. Properties Held For SaleAt December 31, 2015, the Company had no properties classified as held for sale.F-20ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS3. Segment ReportingThe Company has three reportable segments: Core Portfolio, Funds and Structured Financing. The accounting policies of the segments are the same as thosedescribed in the summary of significant accounting policies. The Company evaluates property performance primarily based on net operating income beforedepreciation, amortization and certain nonrecurring items. Investments in the Core Portfolio are typically held long-term. Given the contemplated finite lifeof the Funds, these investments are typically held for shorter terms. Fees earned by the Company as the general partner or managing member of the Funds areeliminated in the Company’s consolidated financial statements. The following table sets forth certain segment information for the Company, reclassified fordiscontinued operations, as of and for the years ended December 31, 2015, 2014 and 2013:2015(dollars in thousands) Core Portfolio Funds Structured Financing TotalRevenues $150,015 $49,048 $18,199 $217,262Property operating expenses, other operating and real estate taxes (37,259) (21,223) — (58,482)General and administrative expenses (28,600) (1,768) — (30,368)Depreciation and amortization (46,223) (14,528) — (60,751)Impairment of asset (5,000) — — (5,000)Operating income 32,933 11,529 18,199 62,661Equity in earnings of unconsolidated affiliates 1,169 12,118 — 13,287Gain on disposition of properties of unconsolidated affiliates — 24,043 — 24,043Loss on debt extinguishment — (135) — (135)Interest and other finance expense (27,945) (9,217) — (37,162)Gain on disposition of property — 89,063 — 89,063Income tax provision (604) (1,183) — (1,787)Net income 5,553 126,218 18,199 149,970Noncontrolling interests Income from continuing operations (140) (84,122) — (84,262)Net income attributable to noncontrolling interests (140) (84,122) — (84,262)Net income attributable to Common Shareholders $5,413 $42,096 $18,199 $65,708 Real estate at cost $1,572,681 $1,163,602 $— $2,736,283Total assets $1,662,092 $1,223,039 $147,188 $3,032,319Acquisition of real estate $188,835 $155,641 $— $344,476Redevelopment and property improvement costs $16,505 $147,810 $— $164,315F-21ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS3. Segment Reporting, continued2014(dollars in thousands) Core Portfolio Funds StructuredFinancing TotalRevenues $125,022 $54,659 $15,331 $195,012Property operating expenses, other operating and real estatetaxes (33,097) (18,574) — (51,671)General and administrative expenses (24,853) (1,665) (915) (27,433)Depreciation and amortization (35,875) (13,770) — (49,645)Operating income 31,197 20,650 14,416 66,263Equity in (losses) earnings of unconsolidated affiliates (77) 8,800 — 8,723Gain on disposition of properties of unconsolidated affiliates — 102,855 — 102,855Loss on debt extinguishment (3) (332) — (335)Interest and other finance expense (27,021) (12,070) — (39,091)Gain on disposition of property 12,577 561 — 13,138Income tax provision (176) (453) — (629)Income from continuing operations 16,497 120,011 14,416 150,924Discontinued operations Gain on disposition of properties — 1,222 — 1,222Income from discontinued operations — 1,222 — 1,222Net income 16,497 121,233 14,416 152,146Noncontrolling interests Income from continuing operations (3,213) (76,846) — (80,059)Income from discontinued operations (9) (1,014) — (1,023)Net income attributable to noncontrolling interests (3,222) (77,860) — (81,082)Net income attributable to Common Shareholders $13,275 $43,373 $14,416 $71,064 Real estate at cost $1,366,017 $842,578 $— $2,208,595Total assets $1,613,290 $1,005,145 $102,286 $2,720,721Acquisition of real estate $203,103 $47,250 $— $250,353Redevelopment and property improvement costs $5,432 $134,686 $— $140,118F-22ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS3. Segment Reporting, continued2013(dollars in thousands) Core Portfolio Funds StructuredFinancing TotalRevenues $110,355 $46,131 $11,800 $168,286Property operating expenses, other operating and real estatetaxes (29,040) (17,513) — (46,553)General and administrative expenses (24,387) (1,168) — (25,555)Depreciation and amortization (28,989) (11,310) — (40,299)Impairment of asset (1,500) — — (1,500)Operating income 26,439 16,140 11,800 54,379Equity in (losses) earnings of unconsolidated affiliates (99) 12,481 — 12,382Loss on debt extinguishment (309) (456) — (765)Interest and other finance expense (26,158) (13,316) — (39,474)Income tax benefit (provision) 131 (150) — (19)Income from continuing operations 4 14,699 11,800 26,503Discontinued operations Operating income from discontinued operations 535 6,283 — 6,818Impairment of asset — (6,683) — (6,683)Loss on debt extinguishment (145) (655) — (800)Gain on disposition of properties 6,488 12,314 — 18,802Income from discontinued operations 6,878 11,259 — 18,137Net income 6,882 25,958 11,800 44,640Noncontrolling interests (Income) loss from continuing operations (1,002) 8,525 — 7,523Income from discontinued operations (2,406) (9,642) — (12,048)Net income attributable to noncontrolling interests (3,408) (1,117) — (4,525)Net income attributable to Common Shareholders $3,474 $24,841 $11,800 $40,115 Real estate at cost $1,059,257 $759,796 $— $1,819,053Total assets $1,012,553 $1,105,264 $126,706 $2,244,523Acquisition of real estate $143,616 $76,425 $— $220,041Redevelopment and property improvement costs $10,611 $96,272 $— $106,883F-23ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS4. Investments In and Advances to Unconsolidated AffiliatesCore PortfolioThe Company owns a 49% interest in a 311,000 square foot shopping center located in White Plains, New York ("Crossroads"), a 50% interest in a 28,000square foot retail portfolio located in Georgetown, Washington D.C. (the "Georgetown Portfolio"), and a 88.43% tenancy-in-common interest in an 87,000square foot retail property located in Chicago, Illinois. The Company accounts for these investments under the equity method as it has the ability to exercisesignificant influence, but does not have any rights with respect to financial or operating control.During 2015, the Company acquired the remaining 77.78% outstanding interest of an approximately 20,000 square foot retail property located inWilmington, Delaware ("Route 202 Shopping Center") that was previously accounted for under the equity method from an unaffiliated partner. As a result ofthe transaction, the Company now consolidates this investment.FundsFund InvestmentsDuring 2015, Fund II acquired an additional 43% interest in City Point - Tower I that was previously accounted for under the equity method from anunaffiliated partner (Note 2). As a result of the transaction, the Company now consolidates this investment.During 2015, Fund III's Parkway Crossing was sold for $27.3 million. Fund III's $6.9 million share of the gain was recognized in gain on disposition ofproperties of unaffiliated affiliates within the Consolidated Statements of Income.During 2015, Fund IV, entered into a joint venture with an unaffiliated entity, to acquire and redevelop a property located in Warwick, Rhode Island ("650Bald Hill Road") for $8.3 million.The unaffiliated partners in Fund II's tenancy in common in City Point Phase III, Fund III's investments in Arundel Plaza as well as Fund IV's investments in1701 Belmont Avenue, 2819 Kennedy Boulevard, Promenade at Manassas, Eden Square, the Broughton Street Portfolio and 650 Bald Hill Road maintaincontrol over these entities. The Company accounts for these investments under the equity method as it has the ability to exercise significant influence, butdoes not have any rights with respect to financial or operating control.Self-Storage Management, a Fund III investment, was determined to be a variable interest entity. Management has evaluated the applicability of ASC Topic810 to this joint venture and determined that the Company is not the primary beneficiary and, therefore, consolidation of this venture is not required. TheCompany accounts for this investment using the equity method of accounting.RCP VentureFunds I and II, together with two unaffiliated partners formed an investment group, the RCP Venture, for the purpose of making investments in surplus orunderutilized properties owned by retailers and, in some instances, the retailers' operating company. The RCP Venture is neither a single entity nor a specificinvestment and the Company has no control or rights with respect to the formation and operation of these investments. The Company has made theseinvestments through its subsidiaries, Mervyns I, Mervyns II and Fund II, (together the "Acadia Investors"), all on a non-recourse basis. Through December 31,2015, the Acadia Investors have made investments in Mervyns Department Stores ("Mervyns") and Albertsons including additional investments in locationsthat are separate from these original investments ("Add-On Investments"). Additionally, they have invested in Shopko, Marsh and Rex Stores Corporation(collectively "Other RCP Investments"). The Company accounts for its investments in Mervyns and Albertsons on the equity method as it has the ability toexercise significant influence, but does not have any rights with respect to financial or operating control. The Company accounts for its investments in itsAdd-On Investments and Other RCP Investments on the cost method as it does not have any influence over such entities' operating and financial policies norany rights with respect to the control and operation of these entities. During the year ended December 31, 2015, the Company received distributions from itsRCP Venture of $5.9 million, of which the Operating Partnership's aggregate share was $1.2 million.F-24ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS4. Investments In and Advances to Unconsolidated Affiliates, continuedThe following table summarizes activity related to the RCP Venture investments from inception through December 31, 2015: Operating Partnership ShareInvestment YearAcquired InvestedCapitaland Advances Distributions InvestedCapitaland Advances DistributionsMervyns 2004 $26,058 $48,547 $4,901 $11,801Mervyns Add-On investments 2005/2008 7,547 9,272 1,252 2,017Albertsons 2006 20,717 81,594 4,239 16,318Albertsons Add-On investments 2006/2007 2,416 4,864 388 972Shopko 2006 1,110 3,358 222 672Marsh and Add-On investments 2006/2008 2,667 2,941 533 588Rex Stores 2007 2,701 4,927 535 986Total $63,216 $155,503 $12,070 $33,354The Acadia Investors have non controlling interests in the individual investee LLC’s as follows: Acadia InvestorsOwnership % in:Investment Investee LLC Acadia InvestorsEntity InvesteeLLC Underlyingentity(s)Mervyns KLA/Mervyn's, L.L.C Mervyns I and Mervyns II 10.5% 5.8%Mervyns Add-On Investments KLA/Mervyn's, L.L.C Mervyns I and Mervyns II 10.5% 5.8%Albertsons KLA A Markets, LLC Mervyns II 18.9% 5.7%Albertsons Add-On Investments KLA A Markets, LLC Mervyns II 20.0% 6.0%Shopko KA-Shopko, LLC Fund II 20.0% 2.0%Marsh and Add-On Investments KA Marsh, LLC Fund II 20.0% 3.3%Rex Stores KLAC Rex Venture, LLC Mervyns II 13.3% 13.3%F-25ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS4. Investments In and Advances to Unconsolidated Affiliates, continuedSummary of Investments in Unconsolidated AffiliatesThe following combined and condensed Balance Sheets and Statements of Income, in each period, summarize the financial information of the Company’sinvestments in unconsolidated affiliates.(dollars in thousands) December 31, 2015 December 31, 2014Combined and Condensed Balance Sheets Assets: Rental property, net $302,976 $387,739Real estate under development 35,743 60,476Investment in unconsolidated affiliates 6,853 11,154Other assets 47,083 62,862Total assets $392,655 $522,231Liabilities and partners’ equity: Mortgage notes payable $192,684 $315,897Other liabilities 21,945 66,116Partners’ equity 178,026 140,218Total liabilities and partners’ equity $392,655 $522,231Company’s investment in and advances to unconsolidated affiliates $173,277 $184,352Company's share of distributions in excess of income and investments inunconsolidated affiliates $(13,244) $(12,564)F-26ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS4. Investments In and Advances to Unconsolidated Affiliates, continued Years Ended December 31,(dollars in thousands) 2015 2014 2013Combined and Condensed Statements of Income Total revenues $43,990 $44,422 $51,638Operating and other expenses (13,721) (17,069) (18,700)Interest expense (9,178) (9,363) (8,943)Equity in earnings (losses) of unconsolidated affiliates 66,655 (328) 13,651Depreciation and amortization (12,154) (10,967) (10,599)Loss on debt extinguishment — (187) —Gain on disposition of properties 32,623 142,615 —Net income $108,215 $149,123 $27,047 Company’s share of net income $37,722 $111,970 $12,774Amortization of excess investment (392) (392) (392)Company’s equity in earnings of unconsolidated affiliates $37,330 $111,578 $12,3825. Notes Receivable, Preferred Equity and Other Real Estate Related InvestmentsDuring 2015, the Company made total investments in notes receivable and preferred equity investments of $48.5 million and had total collections of $16.0million.The following table reconciles notes receivable investments from January 1, 2013 to December 31, 2015: For the years ended December 31,(dollars in thousands) 2015 2014 2013Beginning Balance $102,286 $126,656 $129,278Additions during period: New investments 48,500 31,169 45,000Disposition of air rights through issuance of notes 29,539 — —Deductions during period: Collections of principal (15,984) (18,095) (29,583)Conversion to real estate through receipt of deed or throughforeclosure (13,386) (38,000) (18,500)Other (3,767) 556 461Ending Balance $147,188 $102,286 $126,656As of December 31, 2015, the Company’s notes receivable, net, approximated $147.2 million and were collateralized by the underlying properties, theborrower’s ownership interest in the entities that own the properties and/or by the borrower’s personal guarantee. Notes receivable were as follows atDecember 31, 2015:F-27ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS5. Notes Receivable, Preferred Equity and Other Real Estate Related Investments, continuedDescription Notes Effectiveinterest rate (1) First PriorityLiens Net Carrying Amountof Notes Receivable asof December 31, 2015 Net Carrying Amountof Notes Receivable asof December 31, 2014 Maturity Date ExtensionOptions(dollars in thousands) Mezzanine Loan (2) 12.7% $18,900 $— $8,000 10/3/2015 First Mortgage Loan 8.8% — 7,500 7,500 11/1/2016 Zero Coupon Loan (3) (4) 24.0% 166,200 — 4,986 1/3/2016 First Mortgage Loan 5.5% — 4,000 4,000 4/1/2016 1 x 6 MonthsFirst Mortgage Loan (5) 6.0% — 15,000 — 5/1/2016 1 x 12 MonthsPreferred Equity 13.5% — 4,000 4,000 5/9/2016 Other (6) 17.0% — — — 6/1/2016 Other (7) 18.0% — 3,907 3,307 7/1/2017 Preferred Equity 8.1% 20,855 13,000 13,000 9/1/2017 First Mortgage Loan (8) LIBOR + 7.1% — 26,000 — 6/25/2018 1 x 12 MonthsZero Coupon Loan (3) (9) 2.5% — 30,234 — 5/31/2020 Mezzanine Loan 15.0% — 30,879 30,879 11/9/2020 Other LIBOR + 2.5% — — 4,000 12/30/2020 Mezzanine Loan (10) 10.0% 87,477 — 7,983 Demand First Mortgage Loan (11) 7.7% — 12,000 12,000 Demand Individually less than 3% (12) (13)(14) 2.5% to 11.6% — 668 2,631 12/31/2016 Total $147,188 $102,286 Notes:(1) Includes origination and exit fees(2) During July 2015, the Company received repayment in full of this $8.0 million note.(3) The principal balances for these accrual-only loans are increased by the interest accrued.(4) During April 2015, the Company converted a $5.6 million loan into an equity interest in the Route 202 Shopping Center (Note 2).(5) During May 2015, the Company made a $15.0 million loan, which is collateralized by a property, bears interest at 6.0% and matures May 1, 2016.(6) During June 2015, the Company made a $6.5 million loan, which bore interest at 17.0% and was scheduled to mature June 1, 2016. During October 2015,this loan was converted into an equity interest in 650 Bald Hill Road (Note 2).(7) During 2015, the Company advanced an additional $0.6 million on this loan collateralized by a property.(8) During June 2015, the Company made a $26.0 million loan, which is collateralized by a property.F-28ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS5. Notes Receivable, Preferred Equity and Other Real Estate Related Investments, continued(9) During June 2015, the Company made a $29.8 million loan in connection with the disposition of City Point's Phase III (Note 2), which is collateralized bythe purchaser's interest in the property.(10) Comprised of three cross-collateralized loans from one borrower, which were non-performing. During July 2015, the Company received repayment ofthese notes in full as well as all accrued interest and default interest and additional penalties.(11) Loan was non-performing as of December 31, 2015. Based on the value of the underlying collateral, no reserve has been established against this loan.(12) Consists of one loan as of December 31, 2015 and three loans as of December 31, 2014.(13) During February 2015, the Company advanced an additional $0.4 million on this loan collateralized by a property.(14) During June 2015, the Company converted a $1.9 million loan into an equity interest in the remaining 10% of 152-154 Spring Street.The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity,the estimated fair value of the underlying collateral, the seniority of the Company's loan in relation to other debt secured by the collateral, the personalguarantees of the borrower and the prospects of the borrower. As of December 31, 2015, the Company held one non-performing note.The following table reconciles the activity in the allowance for notes receivable from December 31, 2013 to December 31, 2015: Allowance for(dollars in thousands) Notes ReceivableBalance at December 31, 2013 $3,681Additional reserves —Recoveries (2,724)Charge-offs and reclassifications (957)Balance at December 31, 2014 $—Additional reserves —Recoveries —Charge-offs and reclassifications —Balance at December 31, 2015 $—F-29ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS6. Deferred ChargesDeferred charges consist of the following as of December 31, 2015 and 2014: December 31,(dollars in thousands) 2015 2014Deferred financing costs $4,072 $3,216Deferred leasing and other costs 39,310 37,275 43,382 40,491Accumulated amortization (20,814) (21,691)Total $22,568 $18,8007. Acquired Lease IntangiblesUpon acquisitions of real estate accounted for as business combinations, the Company assesses the fair value of acquired assets (including land, buildingsand improvements, and identified intangibles such as above and below market leases, including below market options, acquired in-place leases and customerrelationships) and assumed liabilities in accordance with ASC Topic 805. The lease intangibles are amortized over the remaining terms of the respectiveleases, including option periods where applicable.The scheduled amortization of acquired lease intangible assets and assumed liabilities as of December 31, 2015 is as follows:(dollars in thousands) Acquired lease intangibles Assets Liabilities2016 $9,032 $6,2332017 7,245 5,4292018 6,518 4,4812019 5,923 3,7862020 4,849 2,772Thereafter 19,026 9,108Total $52,593 $31,809F-30ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS8. Mortgage and Other Notes PayableAt December 31, 2015 and 2014, mortgage and other notes payable, excluding the net valuation premium on the assumption of debt and unamortized loancosts, aggregated $1,369.0 million and $1,127.5 million respectively, and were collateralized by 39 and 40 properties, respectively and the related tenantleases. Interest rates on the Company’s outstanding mortgage indebtedness ranged from 1.0% to 6.65% with maturities that ranged from February 2016 toOctober 2025. Certain loans are cross-collateralized and contain cross-default provisions. The loan agreements contain customary representations, covenantsand events of default. Certain loan agreements require the Company to comply with affirmative and negative covenants, including the maintenance of debtservice coverage and leverage ratios.The following table reflects mortgage loan activity for the year ended December 31, 2015:(dollars in thousands) Borrowings RepaymentsPropertyDateDescriptionAmountInterest RateMaturity DateAmountInterest Rate1035 Third AvenueJanuaryNew Borrowing$42,000 LIBOR+2.35%1/27/2021$— Lincoln Park CentreJanuaryRepayment— 28,000 LIBOR+1.45%163 Highland AvenueMarchAssumption9,7654.66%2/1/2024— Broughton Street Portfolio (1)MayNew Borrowing20,000 LIBOR+3.00%5/5/2016— City PointJuneAssumption19,0001.25%12/23/2016— City PointJuneAssumption62,000 SIFMA+1.60%12/23/2016— City PointJuneRepayment— 20,650 LIBOR+4.00%17 E. 71st StreetJuneNew Borrowing19,000 LIBOR+1.90%6/9/2020— Crescent PlazaJuneRepayment— 16,3264.98%Pacesetter Park ShoppingCenterSeptemberRepayment— 11,1525.13%Elmwood Park ShoppingCenterOctoberRepayment— 1/1/201631,7235.53%210 BoweryOctoberRefinancing4,600LIBOR+2.75%10/15/20174,600LIBOR+1.95%2207 FilmoreNovemberAssumption1,1204.50%10/31/2025— Gateway Shopping CenterDecemberRepayment— 3/1/201619,1175.44%Total $177,485 $131,568 Note:(1) This loan is collateralized by properties in an unconsolidated joint venture. Fund IV has fully indemnified the unaffiliated joint venture partner and assuch, this loan is included as consolidated debt.F-31ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS8. Mortgage and Other Notes Payable, continuedThe Company completed the following transactions related to its other notes payable during the year ended December 31, 2015:During May 2015, Fund II closed on a $25.0 million unsecured credit facility. At closing, Fund II drew $12.5 million. The facility bears interest at LIBORplus 275 basis points and bears an unused fee of 275 basis points if the unused amount is greater than $12.5 million. The loan matures October 19, 2016.Along with a guarantee with respect to customary non-recourse carve outs, the Operating Partnership, as the managing member of Fund II, has provided aguarantee of principal, interest and fees upon a default as a result of Fund II’s breach of certain specified financial covenants.During March 2015, Fund IV closed on a $50.0 million unsecured credit facility. The current balance outstanding at December 31, 2015 is $34.5 million. Thefacility bears interest at LIBOR plus 275 basis points, bears an unused fee of 100 basis points if the unused amount is less than $20.0 million and an unusedfee of 275 basis points if the unused amount is greater than $20.0 million. The loan matures February 9, 2017 with one 6-month extension option. Along witha guarantee with respect to customary non-recourse carve outs, the Operating Partnership, as the managing member of Fund IV, has provided a guarantee ofprincipal, interest and fees upon a default as a result of Fund IV’s breach of certain specified financial covenants.During July 2015, the Company closed on a $50.0 million unsecured term loan. The note bears interest at LIBOR plus 130 basis points and matures in July 2,2020.During December 2015, the Company closed on a $50.0 million unsecured term loan. The note bears interest at LIBOR plus 160 basis points and maturesDecember 18, 2022.During 2015, the Company redeemed the remaining $0.4 million of its outstanding convertible notes at par value.The following table sets forth certain information pertaining to our secured and unsecured credit facilities as of December 31, 2015:(dollars in thousands)BorrowerTotal Amount ofCredit Facility Amountborrowedas ofDecember 31,2014 Netborrowings(repayments)during the yearended December 31,2015 Amountborrowedas ofDecember 31,2015 Letters ofCredit Amount availableundercreditfacilitiesas of December 31,2015Unsecured Line (1)$150,000 $— $20,800 $20,800 $17,500 $111,700Term Loan50,000 50,000 — 50,000 — —Term Loan50,000 — 50,000 50,000 — —Term Loan50,000 — 50,000 50,000 — —Fund II Line25,000 — 12,500 12,500 — 12,500Fund IV Revolving Loan50,000 — 34,500 34,500 — 15,500Fund IV revolvingsubscription line (2)150,000 77,100 14,810 91,910 — 58,090Total$525,000 $127,100 $182,610 $309,710 $17,500 $197,790Notes:(1) This is an unsecured revolving credit facility.(2) The Fund IV revolving subscription line of credit is secured by unfunded investor capital commitments.F-32ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS8. Mortgage and Other Notes Payable, continuedThe following table summarizes the Company’s mortgage and other indebtedness as of December 31, 2015 and December 31, 2014:(dollars in thousands) Description of Debt and Collateral 12/31/2015 12/31/2014 Interest Rate at December31, 2015 Maturity PaymentTermsVariable Liberty Avenue $— $8,973 LIBOR+2.75% 4/30/2015 Monthly principal and interestCity Point — 20,650 LIBOR+4.00% 8/12/2015 Interest only monthlyCortlandt Towne Center (1) 83,070 83,936 LIBOR+1.65% 10/26/2015 Monthly principal and interestNostrand Avenue 11,527 12,046 LIBOR+2.65% 2/1/2016 Monthly principal and interestHeritage Shops 24,500 24,500 LIBOR+1.55% 2/28/2016 Interest only monthlyBroughton Street Portfolio 20,000 — LIBOR+3.00% 5/5/2016 Interest only monthly640 Broadway 22,109 22,564 LIBOR+2.95% 7/1/2016 Monthly principal and interestCity Point 20,000 20,000 LIBOR+1.70% 8/23/2016 Interest only monthlyCity Point 62,000 — SIFMA+1.60% 12/1/2016 Interest only monthlyLincoln Park Centre — 28,000 LIBOR+1.45% 12/3/2016 Interest only monthly654 Broadway 8,835 9,000 LIBOR+1.88% 3/1/2017 Monthly principal and interestNew Hyde Park Shopping Center 11,240 11,720 LIBOR+1.85% 5/1/2017 Monthly principal and interest938 W. North Avenue 12,500 12,500 LIBOR+2.35% 5/1/2017 Interest only monthly1151 Third Avenue 12,481 12,481 LIBOR+1.75% 6/3/2017 Interest only monthly210 Bowery 4,600 4,600 LIBOR+2.12% 10/15/2017 Interest only monthly161st Street 29,500 29,500 LIBOR+2.50% 4/1/2018 Interest only monthly664 North Michigan Avenue 43,107 44,369 LIBOR+1.65% 6/28/2018 Monthly principal and interestParamus Plaza 13,339 12,600 LIBOR+1.70% 2/20/2019 Interest only monthlyLake Montclair 14,904 15,284 LIBOR+2.15% 5/1/2019 Monthly principal and interest17 E. 71st Street 19,000 — LIBOR+1.90% 6/9/2020 Interest only monthly1035 Third Avenue 42,000 — LIBOR+2.29% 1/27/2021 Interest only monthlyCity Point 19,984 20,000 LIBOR+1.39% 11/1/2021 Interest only monthly3104 M Street 2,999 103 Prime+0.50% 12/10/2021 Interest only monthly4401 White Plains Road 6,015 6,141 LIBOR+1.90% 9/1/2022 Monthly principal and interest28 Jericho Turnpike 15,315 15,747 LIBOR+1.90% 1/23/2023 Monthly principal and interest60 Orange Street 8,006 8,236 LIBOR+1.75% 4/3/2023 Monthly principal and interestSub-total mortgage notes payable 507,031 422,950 Unsecured Debt Fund IV revolving subscription line 91,910 77,100 LIBOR+1.65% 11/20/2015 Interest only monthlyFund II Line 12,500 — LIBOR+2.75% 10/9/2016 Interest only monthlyFund IV Term Loan 34,500 — LIBOR+2.75% 2/9/2017 Interest only monthlyUnsecured Line 20,800 — LIBOR+1.40% 1/31/2018 Interest only monthlyTerm Loan 50,000 50,000 LIBOR+1.30% 11/25/2019 Interest only monthlyTerm Loan 50,000 — LIBOR+1.40% 7/2/2020 Interest only monthlyTerm Loan 50,000 — LIBOR+1.60% 12/18/2020 Interest only monthlySub-total unsecured debt309,710 127,100 Interest rate swaps (3) (256,491) (223,829) Total variable-rate debt, net of swaps560,250 326,221 F-33ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS8. Mortgage and Other Notes Payable, continued(dollars in thousands) Description of Debt and Collateral 12/31/2015 12/31/2014 Interest Rate at December31, 2015 Maturity PaymentTermsMortgage notes payable – fixed-rate Crescent Plaza — 16,455 4.98% 9/6/2015 Monthly principal and interestPacesetter Park Shopping Center — 11,307 5.13% 11/6/2015 Monthly principal and interestElmwood Park Shopping Center — 32,201 5.53% 1/1/2016 Monthly principal and interestChicago Street Retail Portfolio (1) 14,955 15,265 5.61% 2/1/2016 Monthly principal and interestThe Gateway Shopping Center — 19,440 5.44% 3/1/2016 Monthly principal and interest330-340 River Street 10,421 10,668 5.24% 5/1/2016 Monthly principal and interestBrandywine (2) 166,200 166,200 6.00% 7/1/2016 Interest only monthlyRhode Island Place Shopping Center 15,727 15,975 6.35% 12/1/2016 Monthly principal and interestCity Point 19,000 — 1.25% 12/1/2016 Interest only monthlyConvertible Note — 380 3.75% 12/15/2016 Interest only monthly239 Greenwich Avenue 26,000 26,000 5.42% 2/11/2017 Interest only monthly639 West Diversey 4,142 4,245 6.65% 3/1/2017 Monthly principal and interestMerrillville Plaza 25,150 25,504 5.88% 8/1/2017 Monthly principal and interestBedford Green 29,151 29,586 5.10% 9/5/2017 Monthly principal and interest216th Street 25,500 — 5.80% 10/1/2017 Interest only monthlyCity Point 5,262 5,262 1.00% 8/23/2019 Interest only monthlyCity Point 200,000 199,000 4.75% 5/29/2020 Interest only monthly163 Highland Avenue 9,595 — 4.66% 2/1/2024 Monthly principal and interest2207 Filmore Street 1,120 — 4.50% 10/31/2025 Interest only monthlyInterest rate swaps (3) 256,491 223,829 2.15% Total fixed-rate debt 808,714801,317 Unamortized loan costs (11,722) (11,879) Unamortized premium 1,364 2,943 Total $1,358,606 $1,118,602 Notes:(1)Loan was repaid subsequent to December 31, 2015.(2)Comprised of four loans, one of which was in default as of December 31, 2015.(3)Represents the amount of the Company's variable-rate debt that has been fixed through certain cash flow hedge transactions (Note 11).F-34ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS8. Mortgage and Other Notes Payable, continuedThe scheduled principal repayments of all indebtedness, as of December 31, 2015 are as follows (excludes $1.4 million net valuation premium on assumptionof debt and ($11.7 million) of unamortized loan costs):(dollars in thousands)2016$578,4502017195,541201892,904201983,6212020270,105Thereafter148,343 $1,368,9649. Convertible Notes PayableAs of December 31, 2015, all $115.0 million of the convertible notes issued by the Company in December 2006 and January 2007 with a fixed interest rate of3.75% due 2026 (the "Convertible Notes") have been repurchased, including $0.4 million repurchased during 2015. The Convertible Notes were issued at parand require interest payments semi-annually in arrears on June 15 and December 15 of each year. The Convertible Notes were unsecured, unsubordinatedobligations and ranked equally with all other unsecured and unsubordinated indebtedness. The Convertible Notes were accounted for under ASC Topic 470-20, “Debt with Conversion and Other Options,” which required the Company to allocate the proceeds from the issuance between a debt component and anequity component. The resulting discount on the debt component was amortized over the period the convertible debt was expected to be outstanding, whichwas December 11, 2006 to December 20, 2011, as additional non-cash interest expense. Until December 20, 2011, the Convertible Notes had an effectiveinterest rate of 6.03% after giving effect to ASC Topic 470-20.10. Financial Instruments and Fair Value MeasurementsThe FASB’s fair value measurements and disclosure guidance requires the valuation of certain of the Company’s financial assets and liabilities, based on athree-level fair value hierarchy. Market participant assumptions obtained from sources independent of the Company are observable inputs that are classifiedwithin Levels 1 and 2 of the hierarchy, and the Company’s own assumptions about market participant assumptions are unobservable inputs classified withinLevel 3 of the 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 31,2015:(dollars in thousands) Level 1 Level 2 Level 3Assets Derivative financial instruments $— $818 $—Liabilities Derivative financial instruments $— $5,876 $—During the year ended December 31, 2013, the Company determined that the value of the Walnut Hill Plaza was impaired and recorded an impairment loss of$1.5 million (Note 1). The Company estimated the fair value by using discounted future cash flows and applying a market-specific capitalization rate to theproperty's net operating income. The inputs used to determine this fair value are classified within Level 3 under authoritative guidance for fair valuemeasurements.During the year ended December 31, 2013, the Company entered into a firm contract to sell Sheepshead Bay for $20.2 million. As this amount was less thanthe carrying cost, the Company recorded an impairment loss of $6.7 million (Note 1).F-35ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS10. Financial Instruments and Fair Value Measurements, continuedDuring the year ended December 31, 2015, the Company determined that the value of one of the properties in its Brandywine Portfolio was impaired andrecorded an impairment loss of $5.0 million (Note 1). The Company estimated the fair value by using discounted future cash flows and applying a market-specific capitalization rate to the property's net operating income. The inputs used to determine this fair value are classified within Level 3 of the hierarchy.Derivative Financial InstrumentsThe FASB’s derivative and hedging guidance establishes accounting and reporting standards for derivative instruments, including certain derivativeinstruments embedded in other contracts, and for hedging activities. As required by the FASB guidance, the Company records all derivatives on the balancesheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation.Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interestrate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasttransactions, are considered cash flow hedges.For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized inearnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in othercomprehensive (loss) income (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffectiveportion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationshipby 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 designatedhedged item or transaction. For derivatives not designated as hedges, changes in fair value would be recognized in earnings.As of December 31, 2015, the Company’s derivative financial instruments consisted of 15 interest rate LIBOR swaps with an aggregate notional value of$256.5 million, which fix interest at rates from 0.70% to 5.62%, and mature between May 2015 and March 2025. The Company also has one derivativefinancial instruments with a notional value of $29.5 million which caps the interest rate at 4.0% and matures April 2018. The fair value of the Company'sderivative financial instruments are determined based on third-party pricing and pricing models utilizing observable inputs. The Company considers thecredit worthiness of the counter party, as well as its own credit worthiness in determining fair value. No credit-related adjustments have been made indetermining fair value. Certain derivative financial instruments have negative values, and therefore represent liabilities to the Company, and others havepositive values, and therefore represent assets to the Company. The fair value of the derivative liabilities, which is included in other liabilities in theConsolidated Balance Sheets, totaled $5.9 million and $4.6 million at December 31, 2015 and 2014, respectively. The fair value of the derivative assets,included in prepaid expenses and other assets in the Consolidated Balance Sheets, totaled $0.8 million and $0.2 million at December 31, 2015 and 2014,respectively. The notional value does not represent exposure to credit, interest rate or market risks. The Company is also a party to one forward startinginterest rate swap transaction with respect to $50.0 million of LIBOR-based variable debt.These derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable rate mortgage debt. Such instrumentsare reported at the fair values reflected above. As of December 31, 2015 and 2014, unrealized losses totaling $4.5 million and $4.0 million, respectively, werereflected in accumulated other comprehensive (loss) income. It is estimated that approximately $4.3 million included in accumulated other comprehensive(loss) income related to derivatives will be reclassified to interest expense in the 2016 results of operations.As of December 31, 2015 and 2014, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, theCompany does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges. As ofDecember 31, 2015, none of the Company’s hedges were ineffective.F-36ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS10. Financial Instruments and Fair Value Measurements, continuedFinancial InstrumentsCertain of the Company’s assets and liabilities meet the definition of financial instruments. Except as disclosed below, the carrying amounts of thesefinancial 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 within Level 2 of the hierarchy by discounting future cashflows utilizing a discount rate equivalent to the rate at which similar financial instruments would be originated at the reporting date: December 31, 2015 December 31, 2014(dollars in thousands) CarryingAmount EstimatedFairValue CarryingAmount EstimatedFairValueNotes Receivable and Preferred Equity Investments $147,188 $147,188 $102,286 $102,286Mortgage, Convertible Notes and Other Notes Payable $1,358,606 $1,382,318 $1,118,602 $1,141,37111. Shareholders’ Equity and Noncontrolling InterestsCommon SharesDuring 2015, 2,481 Restricted Shares were canceled to pay the employees’ income taxes due on the value of the portion of their Restricted Shares that vested.During 2015, the Company recognized accrued Common Share and Common OP Unit-based compensation totaling $6.8 million in connection with thevesting of Restricted Shares and Units (Note 15).During 2015, the Company issued approximately 2.0 million Common Shares from the ATM program generating net proceeds of approximately $64.4million.During 2014, the Company issued approximately 4.7 million Common Shares from the ATM program generating net proceeds of approximately $127.1million and completed two public share offerings aggregating approximately 7.6 million Common Shares generating net proceeds of approximately $230.7million.During 2014, the Company issued approximately 1.6 million OP units to acquire real estate.During 2013, the Company issued approximately 3.0 million Common Shares from the ATM program generating net proceeds of approximately $80.7million.During 2013, the Company issued approximately 1.2 million OP units to acquire real estate.Noncontrolling InterestsThe following table summarizes the change in the noncontrolling interests since December 31, 2014:F-37ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS11. Shareholders’ Equity and Noncontrolling Interests, continued NoncontrollingInterestsin OperatingPartnership NoncontrollingInterestsin Partially-OwnedAffiliates(dollars in thousands) Balance at December 31, 2014 $94,235 $286,181Distributions declared of $1.22 per Common OP Unit (5,983) —Net income for the period January 1 through December 31, 2015 3,836 80,426Conversion of 100,620 OP Units to Common Shares by limited partners of the Operating Partnership (2,451) —Other comprehensive income - unrealized loss on valuation of swap agreements (117) (897)Reclassification of realized interest expense on swap agreements 97 1,838Noncontrolling interest contributions — 35,489Noncontrolling interest distributions and other reductions — (78,511)Employee Long-term Incentive Plan Unit Awards 6,723 —Balance at December 31, 2015 $96,340 $324,526Noncontrolling interests in the Operating Partnership represents (i) the limited partners’ 2,931,198 and 2,988,277 Common OP Units at December 31, 2015and 2014, respectively, (ii) 188 Series A Preferred OP Units at both December 31, 2015 and 2014, with a stated value of $1,000 per unit, which are entitled toa 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 aSeries A Preferred OP Unit if such unit was converted into a Common OP Unit and (iii) 1,922,623 and 1,719,206 LTIP units as of December 31, 2015 and2014, respectively, as discussed in Share Incentive Plan (Note 15).Noncontrolling interests in partially-owned affiliates include third-party interests in Fund I, II, III and IV, and Mervyns I and II, and five other entities.The Series A Preferred OP Units were issued in 1999 in connection with the acquisition of a property. Through December 31, 2015, 1,392 Series A PreferredOP Units were converted into 185,600 Common OP Units and then into Common Shares. The 188 remaining Series A Preferred OP Units are currentlyconvertible into Common OP Units based on the stated value divided by $7.50. Either the Company or the holders can currently call for the conversion of theSeries A Preferred OP Units at the lesser of $7.50 or the market price of the Common Shares as of the conversion date.12. Related Party TransactionsThe Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling$0.3 million, $0.2 million and $0.1 million for the years ended December 31, 2015, 2014 and 2013, respectively.Lee Wielansky, the Lead Trustee of the Company, was paid a consulting fee of $0.1 million for the year ended December 31, 2013. The consulting agreementwas terminated as of December 31, 2013.F-38ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS13. Tenant LeasesSpace in the shopping centers and other retail properties is leased to various tenants under operating leases that usually grant tenants renewal options andgenerally provide for additional rents based on certain operating expenses as well as tenants’ sales volume.Minimum future rentals to be received under non-cancelable leases for shopping centers and other retail properties as of December 31, 2015 are summarizedas follows: (dollars in thousands)2016$141,7192017134,9632018120,6902019108,230202095,945Thereafter471,777Total$1,073,324During the years ended December 31, 2015, 2014 and 2013, no single tenant collectively accounted for more than 10% of the Company’s total revenues.14. Lease ObligationsThe Company leases land at five of its shopping centers, which are accounted for as operating leases and generally provide the Company with renewaloptions. Ground rent expense was $1.7 million, $1.8 million, and $1.8 million (including capitalized ground rent at properties under redevelopment of $0.9million, $0.8 million and $0.8 million) for the years ended December 31, 2015, 2014 and 2013, respectively. The leases terminate at various dates between2020 and 2078. These leases provide the Company with options to renew for additional terms aggregating from 25 to 71 years. The Company also leasesspace for its corporate office. Office rent expense under this lease was $1.4 million, $1.5 million and $1.4 million for the years ended December 31, 2015,2014 and 2013, respectively. Future minimum rental payments required for leases having remaining non-cancelable lease terms are as follows: (dollars in thousands) 2016$1,83720175,82120181,83820191,73120204,040Thereafter (1)7,369Total$22,636Note:(1) The ground lease expiring during 2078 has an option to purchase the underlying land during 2031. If we do not exercise the option, the rents that will bedue are based on future values and as such are not determinable at this time. Accordingly, the above table does not include rents for this lease beyond 2031.F-39ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS15. Share Incentive PlanDuring 2012, the Company terminated the 1999 and 2003 Plans and adopted the Amended 2006 Plan (the "Share Incentive Plan"). The Share Incentive Planincreased the authorization to issue options, Restricted Shares and LTIP Units (collectively "Awards") available to officers and employees by 1.9 millionshares to 2.1 million shares. Options are granted by the Compensation Committee (the "Committee"), which currently consists of three non-employeeTrustees, 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 grantdate. Vesting of options is at the discretion of the Committee. The Committee determines the restrictions placed on Awards, including the dividends ordistributions thereon and the term of such restrictions. The Committee also determines the award and vesting of the Awards based on the attainment ofspecified performance objectives of the Company within a specified performance period.During 2015, the Company issued 247,863 LTIP Units and 8,640 Restricted Share Units to employees of the Company pursuant to the Share Incentive Plan.These awards were measured at their fair value on the grant date, which was established as the market price of the Company's Common Shares as of the closeof trading on the day preceding the grant date. The total value of the above Restricted Share Units and LTIP Units as of the grant date was $8.6 million. Totallong-term incentive compensation expense, including the expense related to the above mentioned plans, was $6.8 million, $6.2 million and $7.3 million forthe years ended December 31, 2015, 2014 and 2013, respectively and is recorded in General and Administrative on the Consolidated Statements of Income.In addition, members of the Board of Trustees (the "Board") have been issued units under the Share Incentive Plan. During 2015, the Company issued 14,179Restricted Shares and 10,601 LTIP Units to Trustees of the Company in connection with Trustee fees. Vesting with respect to 6,469 of the Restricted Sharesand 6,131 of the LTIP Units will be on the first anniversary of the date of issuance and 7,710 of the Restricted Shares and 4,470 of the LTIP Unites vest overthree years with 33% vesting on each of the next three anniversaries of the issuance date. The Restricted Shares do not carry voting rights or other rights ofCommon Shares until vesting and may not be transferred, assigned or pledged until the recipients have a vested non-forfeitable right to such shares.Dividends are not paid currently on unvested Restricted Shares, but are paid cumulatively from the issuance date through the applicable vesting date of suchRestricted Shares. Trustee fee expense related to this issuance was $0.3 million for the year ended December 31, 2015.The weighted average fair value for Restricted Shares and LTIP Units granted for the years ended December 31, 2015, 2014 and 2013 were $33.90, $26.30and $26.40, respectively.In 2009, the Company adopted the Long Term Investment Alignment Program (the "Program") pursuant to which the Company may award units primarily tosenior executives which would entitle them to receive up to 25% of any future Fund III Promote or Fund IV Promote when and if such Promotes are ultimatelyrealized. The Company has awarded all of the units under the Program related to the Fund III Promote and 20% of the units related to the Fund IV Promote.During the quarter ended September 30, 2015, the Company amended the Program to require Board approval for all amounts paid in connection with unitsawarded to senior executives. Compensation relating to these awards will be recognized in each reporting period in which Board approval is granted.This amendment to the Program was not applicable to awards issued to non-senior executives of the Company. In accordance with ASC Topic 718,"Compensation - Stock Compensation," compensation relating to these non-senior executive awards will be recorded based on the change in the estimatedfair value at each reporting period. During the year ended December 31, 2015, compensation expense of $0.7 million was recognized in connection with theFund III awards and the units awarded in connection with Fund IV were determined to have no value.As of December 31, 2015, the Company had 249 options outstanding to officers and employees and 3,000 options outstanding to non-employee Trustees ofthe Company all of which have vested. These options are for ten-year terms from the grant date and vested in three equal annual installments, which began ontheir respective grant dates.A summary of option activity under all option arrangements as of December 31, 2015 and 2014, and changes during the years then ended, is presented below:F-40ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS15. Share Incentive Plan, continuedOptions Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (dollars in thousands)Outstanding and exercisable at December 31, 2013 113,086 $19.28 3.5 $628Granted — — — —Exercised (57,739) 17.68 — 828Forfeited or Expired — — — —Outstanding and exercisable at December 31, 2014 55,347 20.93 1.1 614Granted — — — —Exercised (49,098) 20.76 — 608Forfeited or Expired (3,000) 22.40 — —Outstanding and exercisable at December 31, 2015 3,249 $22.27 1.1 $35The total intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was $0.6 million, $0.8 million and $0.2 million,respectively.A summary of the status of the Company’s unvested Restricted Shares and LTIP Units as of December 31, 2015 and 2014 and changes during the years thenended is presented below:Unvested Restricted Shares and LTIP Units Restricted Shares Weighted Grant-Date Fair Value LTIP Units Weighted Grant-Date Fair ValueUnvested at December 31, 2013 63,737 $23.34 884,334 $21.62Granted 28,563 27.18 441,946 26.24Vested (34,598) 23.40 (263,556) 20.23Forfeited (2,684) 23.54 (800) 24.66Unvested at December 31, 2014 55,018 25.90 1,061,924 23.92Granted 22,819 32.78 258,464 34.00Vested (24,744) 25.44 (292,544) 22.82Forfeited (3,194) 26.25 (7,723) 25.90Unvested at December 31, 2015 49,899 $25.90 1,020,121 $23.92As of December 31, 2015, there was $17.0 million of total unrecognized compensation cost related to unvested share-based compensation arrangementsgranted under share incentive plans. That cost is expected to be recognized over a weighted-average period of 2.4 years. The total fair value of RestrictedShares that vested during the years ended December 31, 2015, 2014 and 2013 was $0.6 million, $0.8 million and $0.5 million, respectively. The total fairvalue of LTIP Units that vested during the years ended December 31, 2015, 2014 and 2013 was $6.7 million, $5.3 million and $6.8 million, respectively.F-41ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS16. Employee Share Purchase and Deferred Share PlanThe Acadia Realty Trust Employee Share Purchase Plan (the "Purchase Plan"), allows eligible employees of the Company to purchase Common Sharesthrough payroll deductions. The Purchase Plan provides for employees to purchase Common Shares on a quarterly basis at a 15% discount to the closingprice of the Company’s Common Shares on either the first day or the last day of the quarter, whichever is lower. A participant may not purchase more the$25,000 in Common Shares per year. Compensation expense will be recognized by the Company to the extent of the above discount to the closing price ofthe Common Shares with respect to the applicable quarter. During 2015, 2014 and 2013, a total of 3,761, 4,668 and 3,678 Common Shares, respectively, werepurchased by employees under the Purchase Plan. Associated compensation expense of $0.02 million, $0.02 million and $0.01 million was recorded in eachof the years ended December 31, 2015, 2014 and 2013.During May of 2006, the Company adopted a Trustee Deferral and Distribution Election ("Trustee Deferral Plan"), under which the participating Trusteeshave deferred compensation of $0.1 million for each of the three years ended December 31, 2015.17. Employee 401(k) PlanThe 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 theemployee’s annual salary. A plan participant may contribute up to a maximum of 15% of their compensation, up to $18,000, for the year ended December 31,2015. The Company contributed $0.3 million for each of the years ended December 31, 2015, 2014 and 2013.18. Dividends and Distributions PayableOn November 10, 2015, the Board of Trustees declared a regular quarterly cash dividend of $0.25 per Common Share, which was paid on January 15, 2016 toholders of record as of December 31, 2015. In addition, on November 10, 2015, the Board of Trustees declared a special cash dividend of $0.25 per CommonShare with the same record and payment date as the regular quarterly dividend. The special dividend is a result of the taxable capital gains for 2015 arisingfrom property dispositions within the Funds.19. Federal Income TaxesThe Company has elected to qualify as a REIT in accordance with Sections 856 through 860 of the Code, and intends at all times to qualify as a REIT underthe Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currentlydistribute at least 90% of its annual REIT taxable income to its shareholders. As a REIT, the Company generally will not be subject to corporate Federalincome tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Code. As the Companydistributed sufficient taxable income for the years ended December 31, 2015, 2014 and 2013, no U.S. Federal income or excise taxes were incurred. If theCompany fails to qualify as a REIT in any taxable year, it will be subject to Federal income taxes at the regular corporate rates (including any applicablealternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even though the Company qualifies for taxation asa REIT, the Company is subject to certain state and local taxes on its income and property and Federal income and excise taxes on any undistributed taxableincome. In addition, taxable income from non-REIT activities managed through the Company’s TRS's is subject to Federal, state and local income taxes. Fortaxable years beginning after 2017, no more than 20% of the value of our total assets may consist of the securities of one or more taxable REIT subsidiaries.F-42ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS19. Federal Income Taxes, continuedCharacterization of Distributions:The Company has determined that the cash distributed to the shareholders is characterized as follows for Federal income tax purposes: For the years ended December 31, 2015 2014 2013Ordinary income 68% 69% 87%Qualified dividend —% —% —%Capital gain 32% 31% 13% 100% 100% 100%Taxable REIT SubsidiariesIncome taxes have been provided for using the liability method as required by ASC Topic 740, "Income Taxes." The Company’s TRS income and provisionfor income taxes associated with the TRS for the years ended December 31, 2015, 2014 and 2013 are summarized as follows:(dollars in thousands) 2015 2014 2013TRS income (loss) before income taxes $1,008 $(36) $(2,225)(Provision) benefit for income taxes: Federal (526) (377) 276State and local (134) (97) 71TRS net income (loss) before noncontrolling interests 348 (510) (1,878)Noncontrolling interests (208) (508) 267TRS net income (loss) $140 $(1,018) $(1,611)The income tax provision for the Company differs from the amount computed by applying the statutory Federal income tax rate to income before incometaxes as follows (not adjusted for temporary book/tax differences):(dollars in thousands) 2015 2014 2013Federal tax provision (benefit) at statutory tax rate $343 $(12) $(757)TRS state and local taxes, net of Federal benefit 53 (2) (117)Tax effect of: Permanent differences, net 396 446 496Prior year underaccrual, net 938 1 128Restricted stock vesting (5) (20) (2)Other (126) 61 127REIT state and local income and franchise taxes 188 155 144Total provision for income taxes $1,787 $629 $19F-43ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS20. Earnings Per Common ShareBasic earnings per Common Share is computed by dividing net income attributable to Common Shareholders by the weighted average Common Sharesoutstanding. At December 31, 2015, the Company has unvested LTIP Units (Note 16) which provide for non-forfeitable rights to dividend equivalentpayments. Accordingly, these unvested LTIP Units are considered participating securities and are included in the computation of basic earnings per CommonShare pursuant to the two-class method.Diluted earnings per Common Share reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including theeffects of restricted share unit ("Restricted Share Units") and share option awards issued under the Company’s Share Incentive Plans (Note 16). The effect ofthe assumed conversion of 188 Series A Preferred OP Units into 25,067 Common Shares would be anti-dilutive and therefore is not included in thecomputation of diluted earnings per share for the years ended December 2015, 2014 and 2013.The effect of the conversion of Common OP Units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable forCommon Shares on a one-for-one basis. The income allocable to such units is allocated on this same basis and reflected as noncontrolling interests in theaccompanying consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination of dilutedearnings per share. Years ended December 31,(dollars in thousands, except per share amounts) 2015 2014 2013Numerator: Income from continuing operations $65,708 $70,865 $34,026Less: net income attributable to participating securities 927 1,152 581Income from continuing operations net of income 64,781 69,713 33,445attributable to participating securities Denominator: Weighted average shares for basic earnings per share 68,851 59,402 54,919Effect of dilutive securities: Employee share options 19 24 38Denominator for diluted earnings per share 68,870 59,426 54,957Basic earnings per Common Share from continuing operationsattributable to Common Shareholders $0.94 $1.18 $0.61Diluted earnings per Common Share from continuing operationsattributable to Common Shareholders $0.94 $1.18 $0.61F-44ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS21. Summary of Quarterly Financial Information (unaudited)The quarterly results of operations of the Company for the years ended December 31, 2015 and 2014 are as follows:(amounts in thousands, except per share amounts) March 31, 2015 June 30, 2015 September 30, 2015 December 31, 2015Revenue $52,481 $53,161 $56,852 $54,768Income from continuing operations attributable to CommonShareholders $16,547 $26,495 $13,776 $8,890Net income attributable to Common Shareholders $16,547 $26,495 $13,776 $8,890Net income attributable to Common Shareholders perCommon Share - basic: Income from continuing operations $0.24 $0.38 $0.20 $0.13Net income per share $0.24 $0.38 $0.20 $0.13Net income attributable to Common Shareholders perCommon Share - diluted: Income from continuing operations $0.24 $0.38 $0.20 $0.13Net income per share $0.24 $0.38 $0.20 $0.13Cash dividends declared per Common Share $0.24 $0.24 $0.24 $0.50(amounts in thousands, except per share amounts) March 31, 2014 June 30, 2014 September 30, 2014 December 31, 2014Revenue $46,685 $49,511 $47,660 $51,156Income from continuing operations attributable to CommonShareholders $21,595 $11,365 $28,564 $9,341Income from discontinued operations attributable toCommon Shareholders — 99 — 100Net income attributable to Common Shareholders $21,595 $11,464 $28,564 $9,441Net income attributable to Common Shareholders perCommon Share - basic: Income from continuing operations $0.38 $0.19 $0.47 $0.15Income from discontinued operations — — — —Net income per share $0.38 $0.19 $0.47 $0.15Net income attributable to Common Shareholders perCommon Share - diluted: Income from continuing operations $0.38 $0.19 $0.47 $0.15Income from discontinued operations — — — —Net income per share $0.38 $0.19 $0.47 $0.15Cash dividends declared per Common Share $0.23 $0.23 $0.23 $0.54F-45ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS22. Commitments and ContingenciesUnder various Federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operatorof real estate may be liable for the cost of removal or remediation of certain hazardous or toxic substances disposed, stored, generated, released, manufacturedor discharged from, on, at, under, or in a property. As such, the Company may be potentially liable for costs associated with any potential environmentalremediation at any of its formerly or currently owned properties.The Company conducts Phase I environmental reviews with respect to properties it acquires. These reviews include an investigation for the presence ofasbestos, underground storage tanks and polychlorinated biphenyls (PCBs). Although such reviews are intended to evaluate the environmental condition ofthe subject property as well as surrounding properties, there can be no assurance that the review conducted by the Company will be adequate to identifyenvironmental or other problems that may exist. Where a Phase II assessment is so recommended, a Phase II assessment is conducted to further determine theextent of possible environmental contamination. In all instances where a Phase I or II assessment has resulted in specific recommendations for remedialactions, the Company has either taken or scheduled the recommended remedial action. To mitigate unknown risks, the Company has obtained environmentalinsurance for most of its properties, which covers only unknown environmental risks.The Company believes that it is in compliance in all material respects with all Federal, state and local ordinances and regulations regarding hazardous ortoxic substances. Management is not aware of any environmental liability that it believes would have a material adverse impact on the Company’s financialposition or results of operations. Management is unaware of any instances in which the Company would incur significant environmental costs if any or allproperties were sold, disposed of or abandoned. However, there can be no assurance that any such non-compliance, liability, claim or expenditure will notarise in 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 theamounts involved, the Company’s management and counsel are of the opinion that, when such litigation is resolved, the Company’s resulting liability, ifany, will not have a significant effect on the Company’s consolidated financial position, results of operations, or liquidity. The Company's policy is to accruelegal expenses as they are incurred.During August 2009, the Company terminated the employment of a former Senior Vice President (the "Former Employee") for engaging in conduct thatmaterially violated the Company's employee handbook. The Company determined that the behavior fell within the definition of "cause" in his severanceagreement with us and therefore did not pay him anything thereunder. The Former Employee brought a lawsuit against the Company in New York StateSupreme Court (the "Court"), in the amount of $0.9 million alleging breach of the severance agreement. On August 7, 2014, the Court granted summaryjudgment in favor of the Company, as defendant, and against plaintiff, the Former Employee, finding that his conduct in fact and law, constituted "cause"under his severance agreement. The Court rendered two decisions, one granting the Company’s motion for summary judgment and a second denying theFormer Employee's motion to dismiss the Company’s answer as an abuse of judicial discretion. The Former Employee has only appealed the latter decision.The Company believes that it will be successful on appeal.During July 2013, a lawsuit was brought against the Company relating to the 2011 flood at Mark Plaza by Kmart Corporation in the Luzerne County Court ofCommon Pleas, State of Pennsylvania. The lawsuit alleged a breach of contract and negligence relating to landlord responsibility to prevent damage totenant as a result of the flood and for the subsequent damage to tenant's property, including lost profits. The tenant was seeking judgment in excess of $9.0million. During the third quarter of 2015, the case was settled for $1.1 million. Of this amount, $0.8 million was paid by insurance and the Company paid$0.3 million.During December 2013, in connection with Fund II’s City Point Project, Albee Development LLC ("Albee") and a non-affiliated construction manager wereserved with a Summons With Notice as well as a Demand for Arbitration by Casino Development Group, Inc. ("Casino"), the former contractor responsible forthe excavation and concrete work at the City Point Project. Albee terminated the contract with Casino for cause prior to completion of the contract. Casinowas seeking approximately $7.4 million. During the second quarter of 2015, the case was settled for $3.3 million, of which the Operating Partnership's sharewas $0.6 million.F-46ACADIA REALTY TRUST AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS23. Subsequent EventsDuring January 2016, the Company completed the acquisition of a 49% interest in the Gotham Plaza in Manhattan, New York, for a purchase price of $39.8million. Consideration for this purchase consisted of the assumption of 49% of the existing debt of $21.4 million and the issuance of both Common andPreferred OP Units.During January 2016, Fund IV completed the acquisition of the Restaurants at Fort Point in Boston, Massachusetts, for a purchase price of $11.5 million.During January 2016, Fund IV completed the acquisition of a 90% interest in 1964 Union Street in San Francisco, California, for a purchase price of $2.0million.During January 2016, Fund III completed the disposition of a 65% interest in Cortlandt Town Center for a sales price of $107.3 million.During January 2016, the Company closed on a new $50.0 million term loan. The loan, which bears interest at rates ranging from LIBOR plus 130 basispoints to LIBOR plus 190 basis points based on overall Company leverage. The loan matures January 4, 2021.During January 2016, the Company acquired an additional 8.3% interest in Fund II from one of its unaffiliated partners for $18.4 million. As a result, theOperating Partnership's interest in Fund II is now 28.3%.During February 2016, Fund IV closed on a $14.0 million preferred equity investment in a development site in Chicago, Illinois. The investment earns apreferred return of 15.3% and has a maturity of February, 2021.F-47ACADIA REALTY TRUSTSCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATIONDecember 31, 2015 Initial Costto Company Amount at whichCarried at December 31, 2015 Description Encumbrances Land Buildings &Improvements CostsCapitalizedSubsequent toAcquisition Land Buildings &Improvements Total AccumulatedDepreciation Date ofAcquisition (a)Construction (c) Shopping Centers Core Portfolio: Crescent PlazaBrockton, MA $— $1,147 $7,425 $1,502 $1,147 $8,927 $10,074 $7,127 1993 (a)New Loudon CenterLatham, NY — 505 4,161 13,068 505 17,229 17,734 13,535 1993 (a)Mark PlazaEdwardsville, PA — — 3,396 — — 3,396 3,396 2,838 1993 (c)Plaza 422Lebanon, PA — 190 3,004 2,765 190 5,769 5,959 5,108 1993 (c)Route 6 MallHonesdale, PA — 1,664 — 12,276 1,664 12,276 13,940 8,089 1994 (c)Abington Towne CenterAbington, PA — 799 3,197 2,390 799 5,587 6,386 3,539 1998 (a)Bloomfield Town SquareBloomfield Hills, MI — 3,207 13,774 21,869 3,207 35,643 38,850 17,407 1998 (a)Elmwood Park ShoppingCenterElmwood Park, NJ — 3,248 12,992 15,855 3,798 28,297 32,095 16,879 1998 (a)Merrillville PlazaHobart, IN 25,150 4,288 17,152 5,643 4,288 22,795 27,083 10,339 1998 (a)Marketplace of AbseconAbsecon, NJ — 2,573 10,294 4,900 2,577 15,190 17,767 7,116 1998 (a)239 Greenwich AvenueGreenwich, CT 26,000 1,817 15,846 772 1,817 16,618 18,435 6,965 1998 (a)Hobson West PlazaNaperville, IL — 1,793 7,172 1,903 1,793 9,075 10,868 4,574 1998 (a)Village CommonsShopping CenterSmithtown, NY — 3,229 12,917 4,051 3,229 16,968 20,197 8,323 1998 (a)Town Line PlazaRocky Hill, CT — 878 3,510 7,736 907 11,217 12,124 8,761 1998 (a)Branch Shopping CenterSmithtown, NY — 3,156 12,545 15,108 3,401 27,408 30,809 8,225 1998 (a)Methuen ShoppingCenterMethuen, MA — 956 3,826 739 961 4,560 5,521 2,256 1998 (a)Gateway ShoppingCenterSouth Burlington, VT — 1,273 5,091 12,258 1,273 17,349 18,622 8,272 1999 (a)Mad River StationDayton, OH — 2,350 9,404 1,167 2,350 10,571 12,921 4,900 1999 (a)Pacesetter Park ShoppingCenterRamapo, NY — 1,475 5,899 2,828 1,475 8,727 10,202 4,142 1999 (a)Brandywine Town CenterWilmington, DE 141,825 21,993 87,988 13,346 24,213 99,114 123,327 31,686 2003 (a)Brandywine MarketSquareWilmington, DE 24,375 4,308 17,239 1,630 4,262 18,915 23,177 6,468 2003 (a)Bartow AvenueBronx, NY — 1,691 5,803 653 1,691 6,456 8,147 2,520 2005 (c)Amboy RoadStaten Island, NY — — 11,909 2,482 — 14,391 14,391 5,060 2005 (a)613-623 W. DiverseyChicago, IL — 10,061 2,773 592 10,061 3,365 13,426 893 2006 (a)Chestnut HillPhiladelphia, PA — 8,289 5,691 4,514 8,289 10,205 18,494 2,660 2006 (a)2914 Third AvenueBronx, NY — 11,108 8,038 4,581 11,855 11,872 23,727 2,154 2006 (a)F-48 Initial Costto Company Amount at whichCarried at December 31, 2015 Description Encumbrances Land Buildings &Improvements CostsCapitalizedSubsequent toAcquisition Land Buildings &Improvements Total AccumulatedDepreciation Date ofAcquisition (a)Construction(c) Shopping Centers West ShoreExpresswayStaten Island, NY — 3,380 13,499 — 3,380 13,499 16,879 3,351 2007 (a)West 54th StreetManhattan, NY — 16,699 18,704 984 16,699 19,688 36,387 4,253 2007 (a)5-7 East 17th StreetManhattan, NY — 3,048 7,281 3,779 3,048 11,060 14,108 1,653 2008 (a)651-671 W DiverseyChicago, IL — 8,576 17,256 8 8,576 17,264 25,840 1,978 2011 (a)15 Mercer StreetNew York, NY — 1,887 2,483 — 1,887 2,483 4,370 279 2011 (a)4401 White PlainsBronx, NY 6,015 1,581 5,054 — 1,581 5,054 6,635 548 2011 (a)Chicago Street RetailPortfolioChicago, IL 14,955 18,521 55,627 1,670 18,521 57,297 75,818 5,189 2012 (a)330 River StreetCambridge, MA 3,857 3,510 2,886 — 3,510 2,886 6,396 316 2012 (a)Rhode Island PlaceShopping CenterWashington, D.C. 15,727 7,458 15,968 709 7,458 16,677 24,135 1,614 2012 (a)1520 MilwaukeeAvenueChicago, IL — 2,110 1,306 — 2,110 1,306 3,416 128 2012 (a)340 River StreetCambridge, MA 6,564 4,894 11,349 — 4,894 11,349 16,243 1,128 2012 (a)930 Rush StreetChicago, IL — 4,933 14,587 — 4,933 14,587 19,520 1,367 2012 (a)28 Jericho TurnpikeWestbury, NY 15,315 6,220 24,416 — 6,220 24,416 30,636 2,294 2012 (a)181 Main StreetWestport, CT — 1,908 12,158 41 1,908 12,199 14,107 959 2012 (a)83 Spring StreetManhattan, NY — 1,754 9,200 — 1,754 9,200 10,954 805 2012 (a)60 Orange StreetBloomfield, NJ 8,006 3,609 10,790 — 3,609 10,790 14,399 967 2012 (a)179-53 & 1801-03Connecticut AvenueWashington, D.C. — 11,690 10,135 580 11,690 10,715 22,405 878 2012 (a)639 West DiverseyChicago, IL 4,142 4,429 6,102 802 4,429 6,904 11,333 549 2012 (a)664 North MichiganChicago, IL 43,107 15,240 65,331 — 15,240 65,331 80,571 4,717 2013 (a)8-12 E. WaltonChicago, IL — 5,398 15,601 29 5,398 15,630 21,028 1,021 2013 (a)3200-3204 M StreetWashington, DC — 6,899 4,249 — 6,899 4,249 11,148 266 2013 (a)868 BroadwayManhattan, NY — 3,519 9,247 5 3,519 9,252 12,771 479 2013 (a)313-315 BoweryManhattan, NY — — 5,516 — — 5,516 5,516 446 2013 (a)120 West BroadwayManhattan, NY — — 32,819 65 — 32,884 32,884 995 2013 (a)11 E. WaltonChicago, IL — 16,744 28,346 — 16,744 28,346 45,090 1,472 2014 (a)61 Main StreetWestport, CT — 4,578 2,645 — 4,578 2,645 7,223 178 2014 (a)865 W. North AvenueChicago, IL — 1,893 11,594 23 1,893 11,617 13,510 521 2014 (a)152-154 Spring StreetManhattan, NY — 8,544 27,001 — 8,544 27,001 35,545 1,159 2014 (a)2520 Flatbush AvenueBrooklyn, NY — 6,613 10,419 193 6,613 10,612 17,225 482 2014 (a)252-256 GreenwichAvenueGreenwich, CT — 10,175 12,641 119 10,175 12,760 22,935 657 2014 (a)Bedford GreenBedford Hills, NY 29,151 12,425 32,730 1,159 12,425 33,889 46,314 1,356 2014 (a)F-49 Initial Costto Company Amount at whichCarried at December 31, 2015 Description Encumbrances Land Buildings &Improvements CostsCapitalizedSubsequent toAcquisition Land Buildings &Improvements Total AccumulatedDepreciation Date ofAcquisition (a)Construction(c) Shopping Centers 131-135 Prince StreetManhattan, NY — — 57,536 71 — 57,607 57,607 3,719 2014 (a)Shops at Grand AveQueens, NY — 20,264 33,131 230 20,264 33,361 53,625 1,051 2014 (a)201 Needham StreetNewton, MA — 4,550 4,459 — 4,550 4,459 9,009 80 2014 (a)City CenterSan Francisco, CA — 38,750 116,250 321 38,750 116,571 155,321 2,180 2015 (a)163 Highland AvenueNeedham, MA 9,595 6,000 18,000 1 6,000 18,001 24,001 338 2015 (a)Roosevelt GalleriaChicago, IL — 4,900 14,700 — 4,900 14,700 19,600 123 2015 (a)Route 202 ShoppingCenter, Wilmington, DE — — 7,255 — — 7,255 7,255 136 2015 (a)Undeveloped Land — 100 — — 100 — 100 — Fund II: 216th Street 25,500 7,261 — 18,481 7,261 18,481 25,742 4,304 2005 (a)City PointBrooklyn, NY 25,324 — — 13,463 — 13,463 13,463 405 2010 (c)161st StreetBronx, NY 29,500 16,679 28,410 25,590 16,679 54,000 70,679 10,363 2005 (a)Fund III: Cortlandt TowneCenterMohegan Lake, NY 83,070 7,293 61,395 10,087 7,293 71,482 78,775 20,855 2009 (a)Heritage ShopsChicago, IL 24,500 13,131 15,409 325 13,131 15,734 28,865 2,575 2011 (a)654 BroadwayManhattan, NY 8,835 9,040 3,654 2,801 9,040 6,455 15,495 504 2011 (a)New Hyde ParkShopping CenterNew Hyde Park, NY 11,240 3,016 7,733 4,088 3,016 11,821 14,837 1,635 2011 (a)640 BroadwayManhattan, NY 22,109 12,503 19,960 9,786 12,503 29,746 42,249 2,734 2012 (a)3780-3858 NostrandAvenueBrooklyn, NY 11,527 6,229 11,216 4,581 6,229 15,797 22,026 1,009 2013 (a)Fund IV: Paramus PlazaParamus, NJ 13,339 11,052 7,037 2,988 11,052 10,025 21,077 477 2013 (a)1151 Third AveManhattan, NY 12,481 8,306 9,685 1,380 8,306 11,065 19,371 644 2013 (a)Lake Montclair CenterDumfries, VA 14,904 7,077 12,028 422 7,077 12,450 19,527 735 2013 (a)938 W. North AvenueChicago, IL 12,500 2,314 17,067 35 2,314 17,102 19,416 878 2013 (a)17 E. 71st StreetManhattan, NY 19,000 7,391 20,176 245 7,391 20,421 27,812 619 2014 (a)1035 Third Ave Manhattan, NY 42,000 12,759 38,306 797 12,759 39,103 51,862 879 2015 (a)801 Madison Avenue Manhattan, NY — 8,250 24,750 57 8,250 24,807 33,057 464 2015 (a)2208-2216 FillmoreStreet San Francisco, CA — 2,156 6,469 — 2,156 6,469 8,625 27 2015 (a)146 Geary Street San Francisco, CA — 9,500 28,500 — 9,500 28,500 38,000 119 2015 (a)2207 Fillmore Street San Francisco, CA 1,120 700 2,100 — 700 2,100 2,800 4 2015 (a)F-50 Initial Costto Company Amount at whichCarried at December 31, 2015 Description Encumbrances Land Buildings &Improvements CostsCapitalizedSubsequent toAcquisition Land Buildings &Improvements Total AccumulatedDepreciation Date ofAcquisition (a)Construction (c) Shopping Centers 1861 Union StreetSan Francisco, CA — 875 2,625 — 875 2,625 3,500 5 2015 (a)Real Estate UnderDevelopment 328,521 32,705 24,878 551,991 32,705 576,869 609,574 — Unamortized Loan Costs (10,567) — — — — — — — Unamortized Premium 1,364 — — — — — — — Total $1,050,051 $543,034 $1,380,715 $812,534 $546,788 $2,189,495 $2,736,283 $298,703 Notes:(1) Depreciation on buildings and improvements reflected in the consolidated statements of income is calculated over the estimated useful life of the assets asfollows:Buildings: 30 to 40 yearsImprovements: Shorter of lease term or useful life(2) The aggregate gross cost of property included above for Federal income tax purposes was $2,030.6 million as of December 31, 2015(3) (a) Reconciliation of Real Estate Properties:The following table reconciles the activity for real estate properties from January 1, 2013 to December 31, 2015: For the years ended December 31,(dollars in thousands) 2015 2014 2013Balance at beginning of year $2,208,595 $1,819,053 $1,287,198Other improvements 162,760 162,827 112,622Property acquisitions 418,396 299,793 272,661Property dispositions (66,359) (73,078) —Consolidation of previously unconsolidated investments 12,891 — 146,572Balance at end of year $2,736,283 $2,208,595 $1,819,053(3) (b) Reconciliation of Accumulated Depreciation:The following table reconciles accumulated depreciation from January 1, 2013 to December 31, 2015: For the years ended December 31,(dollars in thousands) 2015 2014 2013Balance at beginning of year $256,015 $229,538 $169,718Depreciation related to real estate 49,775 26,477 31,732 (7,087) Consolidation of previously unconsolidated investments — — 28,088Balance at end of year $298,703 $256,015 $229,538F-51

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