Acadia Realty Trust
Annual Report 2021

Plain-text annual report

2021 ANNUAL REPORT Dear Fellow Shareholders: Our nation has just passed the two-year anniversary of the start of the Covid pandemic. Prior to that, market participants were asking, “Is there a future for physical retail in an increasingly digital world?” Now that we are climbing out of the pandemic, the answer is a resounding “Yes!” And while the past two years have had their challenges, we – our nation, our company, our portfolio – are now experiencing a significant recovery. A Decade’s Worth of Perspective In fact, the recovery from Covid setbacks in many of our retail nodes has been stronger and speedier than many predicted. Encouragingly, in many instances, retailer performance is already exceeding pre-Covid levels. Why? Here’s my view – a decade ago, while our nation’s economy was beginning a slow but steady recovery, retail and retail real estate started experiencing what would become a decade-long set of challenges that collectively contributed to the so-called “Retail Apocalypse.” First among these challenges was price deflation. More specifically, indiscriminate “friends and family” and other highly promotional sales became a permanent fixture of the retail landscape. This environment made it difficult for many retailers to grow their top lines, much less their bottom lines. In our nation’s key street retail corridors, as rents continued to rise, this began turning occupancy cost metrics upside down. Second, product ubiquity and lack of originality became problematic. After decades of development, the U.S. had too many stores (approximately 55 sf per capita by 2015), and those stores were less differentiated than they used to be. Third, e-commerce’s share of total retail sales – approximately 5% in 2010 – began its exponential growth and contributed to the perception that physical retail real estate was structurally doomed. Many wondered if physical retail could overcome the ease of online shopping, free shipping, and sales tax savings. Then, along came Covid. In its early days, the global pandemic led to a massive spike in online sales as many sheltered at home. Our major cities were disproportionately impacted. Many wondered if in-store shopping, especially in our nation’s key corridors, was a thing of the past. We strongly disagreed. We believed that those retailers using both physical stores and online channels would be most effective. And we believed that the consumer would reward those retailers that provided both channels. And as life is beginning to return to a new normal, we are seeing validation that the future is omnichannel. For most retailers, the store is the most profitable channel. This is true for retailers ranging from established brands like Target to digitally native ones like Warby Parker. For example, Target can eliminate 90% of its online order cost when customers select store pick-up. Furthermore, online and physical channels are complementary. For example, when Warby Parker opens a first store in a new market, on average, they see a 250% lift in sales in the overall market. Combined with limited new development from landlords and more limited retailer inventories, we are finally seeing positive momentum for the retail real estate sector. Heading into 2022, as mentioned, business is already better than “before Covid” for many of our retailers and on many of our key corridors. Accordingly, retailers are making long-term commitments to capture this growth. We are seeing this across our portfolio. For example, in 2021, we: • • expanded YSL on Rush St in Chicago; and executed new leases with Watches of Switzerland on Spring St in Soho, The Real Real on Greenwich Ave in Greenwich, CT, and J.Crew on W Diversey Pkwy in Chicago. Perhaps the best example of this renewed “positive momentum” is in Soho. Here, a combination of the Retail Apocalypse and Covid brought vacancy rates to record high levels. For example, along a three- block stretch of Greene St in 2019, we counted 14 vacancies. As of this letter, 13 of the 14 vacancies have been re-leased. And this recovery is before the return of international tourism and a more normalized return to work schedule. As pleased as we are with the recovery, it is the potential for longer-term growth that is more encouraging. Whereas six to twelve months ago, we began seeing “green shoots” in street retail and were simply hoping for a return to pre-Covid performance, we are now beginning to see the potential for this recovery to be much more powerful as it rebuilds from a cyclical low. Again, take Soho as an example. A decade ago, rents on certain streets were roughly $500 psf. At the peak of the market, rents for similar spaces grew to $800-900 psf. Then, in 2017, rents began falling and by 2019/20 were back below $500 psf. Today, while still in the early stages of a cyclical recovery, rents and tenant demand are already stronger than pre-Covid. What’s even more encouraging is Soho market rents could double and still won’t be back to the prior peak. And, from Acadia’s perspective, we can afford to be patient, because the average rent in our Soho portfolio is roughly $300 psf. Our Core Portfolio Recall that approximately 40% of our core portfolio is comprised of street retail in our nation’s key cities. So, looking ahead, the component that was hit the hardest before and during Covid, now seems poised to have the strongest (and perhaps longest!) recovery. Overall, our existing core portfolio is projected to deliver attractive, multi-year internal NOI growth of 5-10% annually. How? First, contractual growth should contribute approximately 2%, driven by a combination of approximately 3% street-retail growth and 1-2% suburban/urban growth. Second, an increase in our occupancy rate (from approximately 90% to 95%) should contribute another 3%. Third, an equivalent amount should periodically come from market rent growth and/or re-anchorings and redevelopments. Add a sprinkle – or a heaping, as the case may be – of inflation, and the growth will look even more compelling. After all, our street-retail leases usually have stronger annual contractual growth rates and more frequent fair market value resets, enabling more bites at the apple. Furthermore, growing sales should keep retailers’ occupancy costs in check. In addition to strong organic growth, last year, we jumpstarted our core acquisition activity after an approximate 14-month, Covid-induced pause. During 2021, we completed nearly $85 million of investments (including approximately $60 million of structured finance investments), and so far, we have completed another approximately $160 million in 2022. Growth is one of our key goals. Recall that we have tripled the size of our core portfolio since 2011. During that time, we continued to aggregate properties in our nation’s well-trafficked live-work-play corridors – ranging from Armitage Ave in Chicago to Soho in New York. We also planted two West Coast flags, with acquisitions in San Francisco (in 2015) and Los Angeles (in 2019). More recently, we have: • expanded our Washington, DC footprint, by adding three properties in the burgeoning 14th St retail corridor; added a 12th property – a flagship at the corner of Spring and Greene St – to our Soho portfolio; invested along Beverly Blvd, a second street-retail corridor in Los Angeles, a five-minute drive from our properties on Melrose Pl; and • • • planted a flag in Williamsburg, Brooklyn with the acquisition of a series of 11 retail storefronts and 23 residential units on Bedford Ave. We believe that these acquisitions will positively contribute to the future organic growth of our existing portfolio. Importantly, as we think about the impact of our activities, every $100 million of acquisitions adds roughly $0.01 of FFO. Our Fund Portfolio Our core portfolio is complemented by our fund platform, Acadia’s opportunistic and value-add vehicle. Over the past two decades, our fund investment strategies have included re-anchoring street retail, building ground-up urban developments, and buying real estate from retailers. More recently, in 2016, and in response to the capital markets, we chose to focus our Fund V acquisition activities on out-of-favor suburban shopping centers, where most of our return comes from existing cash flow. Our thesis was to buy at an 8% cap rate, use two-thirds leverage, and clip a mid-teens coupon. We did not anticipate any material growth in NOI, nor was it required to make an attractive return at an 8% going-in yield. So far, we have assembled a nearly $1 billion portfolio of these shopping centers. Due to our selectivity at acquisition, these assets have held up well during the pandemic. Looking ahead, we see a tangible opportunity for outsized performance in this fund due to cap rate compression. In fact, based on our current projections, an eventual sale of the Fund V portfolio at a blended 7% cap rate would bring our projected IRR into the low 20’s and our projected multiple to a 2x on equity. While it’s still too early to declare victory, our cost basis in these assets is attractive, and we are well positioned to execute on a variety of opportunistic transactions at the right time. The fund platform is structured so that success at the fund level results in profit participation for Acadia as the managing member. In fact, we are projecting that the overall fund platform should contribute $0.06 to $0.10 per year in profits over the next several years – be it from Fund V, the sale of 4 million shares of Albertsons stock owned by Fund II or the monetization of other fund investments. In the meantime, we continue to: • lease available space – for example, in 2021, we executed two Burlington leases (at Hickory Ridge in Hickory, NC and Landstown Commons in Virginia Beach, VA), executed several “blend and extend” amendments with Kohl’s to aid upcoming dispositions, and re-anchored the majority of the former Century 21 space at City Point (Primark, welcome to Downtown Brooklyn!); sell stabilized properties – for example, over the past 12 months, we leaned into tailwinds in the grocery space by selling a total of five supermarket-anchored properties in Funds III and IV; and clip our mid-teens coupon in Fund V, while continuing to add assets to that portfolio (including approximately $170 million added in 2021 and another $120 million in our 2022 pipeline). Our investment period ends in August 2022, and we expect to deploy the fund’s remaining approximately $200 million of gross buying power. • • Our Balance Sheet Importantly, our healthy balance sheet keeps us well positioned for growth. We have: • no material scheduled core debt maturities through 2026; • long-term hedges mitigating interest rate exposure; • no material construction or development cost commitments; and • increased liquidity, with a new $700 million unsecured credit facility. We even increased our dividend by 20% to $0.18 per common share. Our People & Platform Finally, by prioritizing ESG (Environmental, Social, and Governance), we have built a strong foundation for our company’s continued success. Each year, we continue to build out our sustainability platform. For example, we: • incorporated a sustainability clause into our standard form of retail lease – of the new retail leases executed in the first three quarters of 2021, 50% include a “green” provision that aligns tenant and landlord interests in promoting the efficiency of our properties; • are on track to complete LED upgrades for parking lot lighting at substantially all existing assets with landlord-controlled parking lots by the end of 2022 – currently, we are at more than 85%; signed our first solar lease in 2020, and had the rooftop panels installed in late 2021, at Cortlandt Crossing in Westchester County, NY – in doing so, not only are we promoting renewable energy, but also, we are increasing value by adding a new income stream; and • • are committed to sharing our quantitative year-over-year performance data for energy, water and greenhouse gas emissions from our operations and increasing transparency through our goals and through alignment with the Task Force on Climate-related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB), and Global Reporting Initiative (GRI). We have cultivated a (certified) Great Place to Work! For example, we: • embrace diversity – 56% of our company, and 30% of our management team, is female; and 25% of our company, and 21% of our management team, is diverse; • grow talent from within – we recently launched a cross-departmental mentoring program for new hires and an internal Women’s Network; we have also hosted a summer internship program since 2012, most recently partnering with Sponsors for Educational Opportunity (SEO) and the ICSC Foundation Launch Academy to help us diversify our summer internship program and our future workforce; • promote wellness – for example, our headquarters is equipped with an 800 sf wellness room where • employees can participate in company-sponsored fitness classes and other wellness initiatives and our benefits include paid parental leave for eligible employees; and reward hard work – we promoted 11 team members at the end of last year in recognition of their outstanding contributions: John Gottfried (Executive Vice President, CFO); Jason Blacksberg (Senior Vice President, Chief Legal Officer); German Velez Rodriguez (Vice President, Construction); Tracey Mitnick (Vice President, Leasing); Christina Lamendola (Senior Director, Lease Administration); John McMahon (Director, Leasing); Samuel Payette (Director, Acquisitions); Brandon Clark (Senior Associate, Acquisitions); Kevin Kaplan (Senior Property Accountant); Devin Russell (Senior Lease Administration Analyst); and Maria Carneiro (Construction Project Coordinator). We are committed to maintaining high standards of ethics and integrity. For example, we: • communicate transparently – we are proud that Acadia has received the 2021 NAREIT Gold Investor Care award recognizing the quality of our investor reports for the third consecutive year; • value diversity – we seek to maintain a diverse Board that represents a mix of varied experience, tenure, skills, and backgrounds – one third of Acadia’s Board identify as women or ethnically diverse; and • plan for succession – we didn’t miss a beat with the departure of our Chief Operating Officer, Chris Conlon, at the beginning of the year. Chris built a tremendous team, and in January, we elevated two existing team members – Senior Vice President of Leasing AJ Levine was promoted to add Development to his portfolio of responsibilities and Senior Vice President of Capital Markets Amy Racanello was promoted to add Head of Asset Management to hers. Also, a big “THANK YOU!” to our entire team of approximately 120 people and our Board, who have all worked hard this past year on behalf of all our company’s stakeholders. Together, we accomplished a lot! In Conclusion, As a nation, we’ve been through a lot over the past few years. And, over the past decade, those of us in the retail real estate industry have had to navigate some additional challenges too. As we head into 2022, challenges remain – including inflation, Covid variants and political and geopolitical conflict. But our well-located portfolio (with its strong growth potential) and our team are well positioned to thrive in these choppy waters and beyond. So, here’s to the year ahead – to health, to peace, to growth and to continued recovery. Thank you for your continued support, and healthy regards, Kenneth F. Bernstein President & CEO March 2022 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-12002 ACADIA REALTY TRUST (Exact name of registrant in its charter) Maryland (State or Other Jurisdiction of Incorporation or Organization) 23-2715194 (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, including area code) Trading symbol AKR Name of exchange on which registered The New York Stock Exchange Title of class of registered securities Common shares of beneficial interest, par value $0.001 per share Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☒ NO ☐ YES ☐ NO ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐ Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer ☒ Accelerated Filer ☐ Emerging Growth Company ☐ ☐ ☐ Smaller Reporting Company Non-accelerated Filer If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) YES ☐ NO ☒ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2021, the last business day of the registrant’s most recently completed second fiscal quarter was approximately $3,145.0 million, based on a price of $21.96 per share, the average sales price for the registrant’s common shares of beneficial interest on the New York Stock Exchange on that date. The number of shares of the registrant’s common shares of beneficial interest outstanding on February 18, 2022 was 93,596,943. DOCUMENTS INCORPORATED BY REFERENCE Part III – Portions of the registrant’s definitive proxy statement relating to its 2022 Annual Meeting of Shareholders presently scheduled to be held May 5, 2022 to be filed pursuant to Regulation 14A. 1 ACADIA REALTY TRUST AND SUBSIDIARIES FORM 10-K INDEX Item No. Description 1. 1A. 1B. 2. 3. 4. 5. 6. 7. 7A. 8. 9. 9A. 9B. 9C. 10. 11. 12. 13. 14. 15. 16. PART I Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures PART II Market for Registrant’s Common Equity, Related Stockholder Matters, Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures about Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Disclosure Regarding Foreign Jurisdictions that Prevent Inspections PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions and Director Independence Principal Accounting Fees and Services PART IV Exhibits and Financial Statement Schedules Form 10-K Summary SIGNATURES Page 5 12 27 28 38 38 38 40 41 59 61 172 172 175 175 175 175 175 175 175 176 178 179 2 EXPLANATORY NOTE - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS Due to the Restatement of previously issued financial statements, as defined and described in more detail below, in this Annual Report on Form 10-K, Acadia Realty Trust (the “Company”): • • • • restates its audited annual financial statements and the audit reports thereon, as of and for the years ended December 31, 2020 and 2019; restates its unaudited quarterly financial statements as of and for each of the quarterly periods ended March 31, 2021 and 2020, June 30, 2021 and 2020, September 30, 2021, and 2020 and December 31, 2020; amends its Management’s Discussion and Analysis of Financial Condition and Results of Operations as it relates to the fiscal years ended December 31, 2020 and 2019; amends its Management's Discussion and Analysis of Financial Condition and Results of Operations as it relates to the three months ended March 31, 2021 and 2020, the three and six months ended June 30, 2021 and 2020, the three and nine months ended September 30, 2021 and 2020, and the three months ended December 31, 2020 for certain affected items; and • restates or revises its “Selected Financial Data” in Part II, Item 6 for fiscal years 2020, 2019, 2018 and 2017. Previously filed Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q for the periods affected by the Restatement have not been amended. Accordingly, investors should no longer rely upon the Company’s previously released financial statements and any earnings releases or other financial communications relating to these periods, and should rely solely on the financial statements and other financial data for the affected periods included in this Annual Report on Form 10-K. See Note 2 and Note 17 to the consolidated financial statements included in this Annual Report on Form 10-K, as well as “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Restatement Background On February 14, 2022, the management and the audit committee of the board of trustees (the “Audit Committee”) of the Company, in consultation with BDO USA LLP (“BDO”), the Company’s independent registered public accounting firm, determined that the Company’s previously issued financial statements and the audit reports thereon, as of and for the years ended December 31, 2020 and 2019, and as of and for each of the quarterly periods ended March 31, 2021 and 2020, June 30, 2021 and 2020, September 30, 2021 and 2020, and December 31, 2020 (collectively, the “Prior Period Financial Statements”), should no longer be relied upon due to an error in accounting treatment at the time of formation related to the improper consolidation of two Fund investments that are less-than-wholly-owned through the Company's opportunity funds (the "Fund Investments"). The Fund Investments, which were formed in 2012 and 2013, have been adjusted from consolidated investments to investments in unconsolidated affiliates. Management and the Audit Committee have determined that these accounting changes required a restatement of the Prior Period Financial Statements (the "Restatement"). As part of the Company’s normal annual reporting process prior to releasing its 2021 fourth quarter and year-to-date December 31, 2021 results and prior to completion of the related audit, the Company and BDO identified the Restatement items described in more detail below. The Company has since reevaluated its accounting and determined that it needs to correct the previous accounting for such items. The Restatement: • is based on an error in the application of generally accepted accounting principles ("GAAP") as they relate to the consolidation of subsidiaries, which involves significant judgment and is related to the presentation of the Fund Investments within the Company’s consolidated balance sheets, statements of operations and statements of cash flows. The consolidation error, excluding the immaterial previously unrecorded adjustments noted below, had no impact on net income, funds from operations ("FFO"), or distributions in excess of accumulated earnings. However, substantially all of the changes to the consolidated balance sheets at each of December 31, 2020 and 2019 were due to the consolidation error as follows:  a $55.8 million and $57.4 million reduction in total assets, which includes a $23.0 million and $14.5 million increase to investments in unconsolidated affiliates; a $57.5 million and $58.8 million reduction in total liabilities; and a $1.9 million and $1.8 million increase to noncontrolling interests. • also includes other immaterial previously unrecorded adjustments, which had a minor impact on previously-reported net income (loss) and net earnings (loss) per share, FFO and FFO per share:  the impact on net income (loss) attributable to Acadia for the nine months ended September 30, 2021, the year ended December 31, 2020 and the year ended December 31, 2019 was a (reduction) increase of ($0.6) million or ($0.01) per share, ($0.2) million or ($0.01) per share, and $0.7 million or $0.01 per share, respectively; 3  the impact on FFO for the nine months ended September 30, 2021, the year ended December 31, 2020 and the year ended December 31, 2019 was a (reduction) increase of ($0.6) million or ($0.01) per share, ($0.2) million or ($0.01) per share, and $0.6 million or $0.01 per share, respectively; • is illustrated in detail in Note 2 and Note 17 to the consolidated financial statements. See Part II, Item 9A, “Controls and Procedures”, for information related to the identified material weakness in internal control over financial reporting in connection with the Restatement and related remediation measures. Internal Control Considerations In connection with the restatement, management has assessed the effectiveness of internal control over financial reporting. Based on this assessment, management identified a material weakness in our internal control over financial reporting, resulting in the conclusion by our Chief Executive Officer and Chief Financial Officer that our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2021. Management is taking steps to remediate the material weakness in our internal control over financial reporting, as described in Part II, Item 9A, “Controls and Procedures.” See Part II, Item 9A, “Controls and Procedures,” for additional information related to the identified material weakness in internal control over financial reporting and the related remediation measures. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in this Annual Report on Form 10-K (this “Report”) of Acadia Realty Trust, a Maryland real estate investment trust, (the “Company”) may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations are generally identifiable by the use of the words such as “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project,” or the negative thereof, or other variations thereon or comparable terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results and financial performance to be materially different from future results and financial performance expressed or implied by such forward-looking statements, including, but not limited to: (i) the economic, political and social impact of, and uncertainty surrounding the COVID-19 pandemic (the “COVID-19 Pandemic”), including its impact on our tenants and their ability to make rent and other payments or honor their commitments under existing leases; (ii) macroeconomic conditions, such as a disruption of or lack of access to the capital markets; (iii) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (iv) changes in general economic conditions or economic conditions in the markets in which we may, from time to time, compete, and their effect on our revenues, earnings and funding sources; (v) increases in our borrowing costs as a result of changes in interest rates and other factors, including the discontinuation of USD LIBOR, which is currently anticipated to occur in 2023; (vi) our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due; (vii) our investments in joint ventures and unconsolidated entities, including our lack of sole decision-making authority and our reliance on our joint venture partners’ financial condition; (viii) our ability to obtain the financial results expected from our development and redevelopment projects; (ix) our tenants’ ability and willingness to renew their leases with us upon expiration, our ability to re-lease our properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant; (x) our potential liability for environmental matters; (xi) damage to our properties from catastrophic weather and other natural events, and the physical effects of climate change; (xii) uninsured losses; (xiii) our ability and willingness to maintain our qualification as a real estate investment trust (REIT) in light of economic, market, legal, tax and other considerations; (xiv) information technology security breaches, including increased cybersecurity risks relating to the use of remote technology during the COVID-19 Pandemic; (xv) the loss of key executives; (xvi) the accuracy of our methodologies and estimates regarding environmental, social and governance (“ESG”) metrics, goals and targets, tenant willingness and ability to collaborate towards reporting ESG metrics and meeting ESG goals and targets, and the impact of governmental regulation on our ESG efforts; and (xvii) the risk that the determination to restate the Prior Period Financial Statements could negatively affect investor confidence and raise reputational issues. The factors described above are not exhaustive and additional factors could adversely affect the Company’s future results and financial performance, including the risk factors discussed under the section captioned “Risk Factors set forth under the headings “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report. These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein. Any forward- looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any changes in the Company’s expectations with regard thereto or changes in the events, conditions or circumstances on which such forward-looking statements are based. 4 SPECIAL NOTE REGARDING CERTAIN REFERENCES All references to “Notes” throughout the document refer to the footnotes to the consolidated financial statements of the registrant referenced in Part II, Item 8. Financial Statements. ITEM.1. BUSINESS. GENERAL PART I Acadia Realty Trust (the “Trust”) was formed on March 4, 1993 as a Maryland real estate investment trust (“REIT”). All references to “Acadia,” “we,” “us,” “our” and “Company” refer to the Trust and its consolidated subsidiaries. We are a fully integrated REIT focused on the ownership, acquisition, development and management of high-quality retail properties located primarily in high-barrier-to-entry, supply-constrained, densely-populated metropolitan areas in the United States. We currently own or have an ownership interest in these properties through our Core Portfolio (as defined below). We generate additional growth through our Funds (as defined below) in which we co-invest with high-quality institutional investors. All of our assets are held by, and all of our operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and entities in which the Operating Partnership owns an interest. As of December 31, 2021, 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 Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest (“Common OP Units” or “Preferred OP Units,” respectively, and collectively, “OP Units”) and employees who have been awarded restricted Common OP Units as long-term incentive compensation (“LTIP Units”). Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for our common shares of beneficial interest of the Trust (“Common Shares”). This structure is referred to as an umbrella partnership REIT, or “UPREIT.” BUSINESS OBJECTIVES AND STRATEGIES Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective: • Own and operate a portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas (“Core Portfolio”). Our goal is to create value through accretive development and re-tenanting activities within our existing portfolio and grow this platform through the acquisition of high-quality assets that have the long-term potential to outperform the asset class. • Generate additional growth through our Funds (as defined below) in which we co-invest with high-quality institutional investors. Our Fund strategy focuses on opportunistic yet disciplined acquisitions with high inherent opportunity for the creation of additional value, execution on this opportunity and the realization 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 or repositioning 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 of distressed debt. o o o Some of these investments historically have also included, and may in the future include, joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets. • Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth. 5 Investment Strategy — Generate External Growth through our Dual Platforms: Core Portfolio and Funds The requirements that acquisitions be accretive on a long-term basis based on our cost of capital, as well as increase the overall Core Portfolio quality and value, are key strategic considerations to the growth of our Core Portfolio. As such, we constantly evaluate the blended cost of equity and debt and adjust the amount of acquisition activity to align the level of investment activity with capital flows. Given the growing importance of technology and e-commerce, many of our retail tenants are appropriately focused on omni-channel sales and how to best utilize 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 productive formats closer to their shopping population. Accordingly, our focus for Core Portfolio and Fund acquisitions is on those properties which we believe will not only 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, development, leasing and management of retail real estate by establishing discretionary opportunity funds. Our Fund platform is an investment vehicle where the Operating Partnership invests, along with outside institutional investors, including, but not limited to, endowments, foundations, pension funds and investment management companies, in primarily opportunistic and value-add retail real estate. To date, we have launched five funds (“Funds”); Acadia Strategic Opportunity Fund, LP (“Fund I,” which was liquidated in 2015), Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”) and Acadia Strategic Opportunity Fund V LLC (“Fund V,” and our “current fund”). Due to our level of control, we consolidate these Funds for financial reporting purposes. Fund I and Fund II have also included investments in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I”, which was liquidated in 2018), Acadia Mervyn Investors II, LLC (“Mervyns II”) and, in certain instances, directly through Fund II, all on a non- recourse basis. These investments comprise, and are referred to as, the Company's Retailer Controlled Property Venture (“RCP Venture”). The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns II and earns priority distributions or fees for asset management, property management, construction, development, leasing and legal services. Cash flows from the Funds and the RCP Venture are distributed pro-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 flows are distributed 20% to the Operating Partnership (“Promote”) and 80% to the partners or members (including the Operating Partnership). See Note 1 to Consolidated Financial Statements for a detailed discussion of the Funds. Capital Strategy — Balance Sheet Focus and Access to Capital Our primary capital objective is to maintain a strong and flexible balance sheet through conservative financial practices, including moderate use of leverage within our Core Portfolio, while ensuring access to sufficient capital to fund future growth. We intend to continue financing acquisitions and property development and redevelopment with sources of capital determined by management to be the most appropriate based on, among other factors, availability in current capital markets, pricing and other commercial and financial terms. Such sources of capital may include the issuance of public equity, unsecured debt, mortgage and construction loans, and other capital alternatives including the issuance of OP Units. We manage our interest rate risk through the use of fixed-rate debt and, where we use variable-rate debt, through the use of certain derivative instruments, including London Interbank Offered Rate (“LIBOR”) swap agreements and interest rate caps as discussed further in Item 7A of this Report. We maintain a share repurchase program that authorizes management, at its discretion, to repurchase up to $200.0 million of outstanding Common Shares. The program may be discontinued or extended at any time. We repurchased 1,219,065 shares for $22.4 million, inclusive of fees, during the year ended December 31, 2020. We did not repurchase any shares during the years ended December 31, 2021 or 2019. As of December 31, 2021, management may repurchase up to approximately $122.6 million of Common Shares under the program. See Note 11. We also maintain an at-the-market equity issuance program (the "ATM Program") that provides us with an efficient and low-cost vehicle for raising capital through public equity issuances on an as-we-go basis to fund our capital needs. Through the ATM Program, we have been able to effectively “match-fund” a portion of the required capital for our Core Portfolio and 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 Program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions and for other general corporate purposes. During the year ended December 31, 2021, we issued 2,889,371 Common Shares under our ATM Program for gross proceeds of $64.9 million. During January 2022, we sold 4,281,576 common shares under our ATM program for gross proceeds of $96.3 million (Note 18). No such issuances were made during 2020. During the year ended December 31, 2019, we sold 5,164,055 shares under its ATM Program for gross proceeds of $147.7 million. See Note 11. 6 Operating Strategy — Experienced Management Team with Proven Track Record Our senior management team has decades of experience in the real estate industry. We have capitalized on our expertise in the acquisition, development/redevelopment, leasing and management of retail real estate by creating value through property development/redevelopment, re- tenanting and establishing joint ventures, such as the Funds, 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 generally provided by our personnel, providing for a vertically integrated operating platform. By incorporating the Operating Departments in the acquisition process, the Company believes that its acquisitions are appropriately evaluated giving effect to each asset’s specific risks and returns. INVESTING ACTIVITIES See Item 2. Properties for a description of the properties in our Core and Fund portfolios. See "Significant Developments" under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a detailed discussion of our consolidated and unconsolidated acquisitions, dispositions and financing activity for the year ended December 31, 2021. Core Portfolio Our Core Portfolio consists primarily of high-quality street retail and urban assets, as well as suburban properties located in high-barrier-to-entry, trade areas. As we typically hold our Core Portfolio properties for long-term investment, we review our 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 our leasing department to attract and retain quality tenants, increasing cash flow, and consequently, property values. From time to time, we also identify certain properties for disposition and redeploy the capital for acquisitions and for the repositioning of existing properties with greater potential for capital appreciation. Funds Our Fund investments consist primarily of suburban shopping centers and urban retail assets on a limited-term, high-yield basis structured as wholly-owned or jointly-owned investments. Structured Finance Program We also make investments in first mortgages and other notes receivable collateralized by real estate, (which we refer to as our Structured Finance Program) either directly or through entities having an ownership interest therein. Development and Redevelopment Activities As part of our investing strategy, we invest in real estate assets that may require significant development. In addition, certain assets may require redevelopment to meet the demand of changing markets. As of December 31, 2021, there were two Fund and one Core Portfolio development projects and four Core Portfolio redevelopment projects. During the year ended December 31, 2021, we placed a portion of a Fund development property and one Core redevelopment property into service and placed one Core property into redevelopment. See Item 2. Properties— Development Activities and Note 3. GOVERNMENT REGULATIONS AND ENVIRONMENTAL LAWS We are subject to federal, state and local laws and regulations, including environmental laws and regulations. As of the date of this Report, we do not expect the cost of compliance with such laws and regulations to have a material impact on our capital expenditures, earnings or competitive position. see “Item 1A. Risk Factors — Risks Related to Litigation, Environmental Matters and Governmental Regulation". We may be liable for the costs of removal or remediation of certain hazardous or toxic substances at our property sites, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on us in connection with the activities of an operator of, or tenant at our properties. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of such substances, or the failure to properly dispose of or remove such substances, may adversely impact our ability to sell or rent an affected property or to borrow using that property as collateral, which, in turn, would reduce our revenues and ability to make distributions. 7 Our existing properties, as well as properties we may acquire, as commercial facilities, are required to comply with the Americans with Disabilities Act of 1990. See “Item 1A. Risk Factors — Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unplanned expenditures that could adversely affect our financial condition, cash flows and results of operations.” CORPORATE HEADQUARTERS Our executive office is located at 411 Theodore Fremd Avenue, Suite 300, Rye, New York 10580, and our telephone number is (914) 288-8100. HUMAN CAPITAL We recognize that our ability to achieve the high standards we set for our company can best be accomplished by curating a diverse team of top talent. We are committed to fostering an energized and motivated workforce through programs and benefits that promote employee satisfaction, advancement, equity and inclusion. As of December 31, 2021, we had 123 employees, of whom 102 were located at our executive office and 21 were located at regional property management offices. During 2021, our total turnover rate was approximately 11%. None of our employees are covered by collective bargaining agreements and management believes that its relationship with employees is good. Diversity, Equity and Inclusion Diversity, equity and inclusion (“DEI”) are fundamental values of our business. We believe that our potential for success is maximized by having a diverse workforce that is reflective of our society and the communities we serve. As of December 31, 2021, women represent 55% of our employees, 34% of our management-level positions and 25% of the independent trustees on our Board, and racially and ethnically diverse individuals represent 23% of our employees, 21% of our management-level positions, and 13% of the independent trustees on our Board. Our DEI Program is focused on fostering a professional environment that fully embraces individuals with varied backgrounds, cultures, races, identities, ages, perspectives, beliefs and values. The four pillars of our DEI Program are awareness, acknowledgment, acceptance and advancement, and our mission is to raise awareness of systemic inequities and promote initiatives to dismantle any such inequities. Through education and awareness – including compulsory unconscious bias training for all employees conducted in 2020 – we are working to establish a corporate culture that is characterized by respect and acceptance. We believe that we have an individual and institutional responsibility to observe, promote and protect DEI principles. As part of our commitment to promoting DEI principles, we signed the CEO Action for Diversity & Inclusion pledge in 2020. We are committed to providing equal employment opportunities without regard to any actual or perceived characteristic protected by applicable local, state or federal laws, rules or regulations. Employee Engagement In 2021, we invited our employees to participate in an external employee satisfaction survey and achieved a 91% response rate. Our overall satisfaction score was 94% and our employee engagement score was 84%. Training and Development We believe in investing in talent at all levels within our organization. Whether through property tours that allow employees to learn about the projects they work on, or through access to online learning tutorials, employees are encouraged to take full advantage of professional development opportunities. Our senior management team focuses on succession planning for senior leadership and business unit lead roles and presents a succession plan to our Board annually. We are committed to building our own talent pipeline. Through our summer internship program, we hope to plant the seeds for future growth and innovation. This program offers hands-on experience to students looking to specialize in the retail real estate industry and offers our company a fresh perspective. We attempt to recruit diverse candidates for our internship program through partnerships with external organizations. 8 Health and Wellness All employees are eligible to participate in our Wellness Program which advocates and provides resources regarding nutrition, exercise, mental health and workplace ergonomics. We value the importance of personal growth and encourage employees to participate in company events, health initiatives and training courses. We offer a comprehensive benefits package to all employees. We adopted a “people first” approach to prioritize the safety and well-being of our employees in response to the COVID-19 pandemic. Effective March 20, 2020, we closed our offices and our employees successfully transitioned to working from their homes. Effective June 29, 2020, we have reopened our main office and have put robust protocols in place for protecting our employees against the spread of the COVID-19 virus that include UV sanitation lighting in restrooms and mandatory temperature screening for employees at entrances. To support our employees in the transition to remote work, we provided employees with the technology and training required to work from home and implemented video conferencing to maintain lines of communication across the organization. Further, we enhanced our benefit offerings by implementing an assistance program for employees and their families that includes, among other features, short-term counseling and limited legal and financial services at no cost to our employees or their families. We also provided employees with additional information on available resources to support mental health and emotional well-being and implemented wellness initiatives such as virtual meditation and yoga. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) Achievements and Initiatives We believe that responsible environmental and social stewardship and responsible corporate governance are an essential part of our mission to build a successful business and create long-term value for our company and our stakeholders. We have established both ESG and human rights policies. We have a multi-disciplinary ESG Committee, including several senior executives, steering our ESG Program, which is overseen by our Nominating and Corporate Governance Committee. Below are some highlights of our commitment to ESG principles. Environmental Sustainability We are committed to understanding the environmental impact of our operations and promoting environmental sustainability while maintaining high standards for our company and our stakeholders. We have undertaken numerous green initiatives, including the following: • LED Lighting and Smart Lighting Controls. Since 2014, we have been working to upgrade lighting within the parking lots and common areas of our properties to high efficiency LED lighting and to install smart lighting controls to ensure lights are on only when necessary. All existing properties and newly-purchased assets are evaluated to determine their suitability for such upgrades. LED lighting and smart lighting controls upgrades are expected to reduce the energy consumption and operational costs of our properties. • Renewable Energy. While we will prioritize the minimization of our energy consumption, for the consumption we cannot reduce, our goal is to procure green energy for a minimum of 50% of the electricity used to power landlord-controlled common areas within the deregulated energy markets in our portfolio by the end of 2023. We are actively exploring the installation of solar projects and battery storage pods at select locations within our portfolio, which would promote renewable energy while providing our properties with an additional income stream from project leases. • Electric Vehicle Charging Stations. Many of our properties are in mixed-use, urban centers that are highly walkable or bikeable and provide access to public transit and bike racks on site. In locations where personal vehicles are necessary, we seek to provide options for electric vehicles (“EVs”), fuel-efficient vehicles, or carpools. We recognize the shift in personal vehicle transportation towards EVs and its positive impact on reducing greenhouse gas emissions. We expect EV charging stations to be an important amenity for our tenants and their employees and customers in the years to come. • Energy-Saving Roofs. In select locations, we reduce the energy consumption of our properties through the use of white roofs that reflect sunlight to reduce heat buildup and lower the cooling needs of a building in hotter months. As of December 31, 2021, approximately 52% of our properties had white reflective roofs and 17% had at least a partially white roof. An additional 2% had green/living roofs that collect rainwater and provide better insulation to our properties • Climate Change. We are aware of the risk climate change presents to real estate investments generally and of the importance of developing a resilient portfolio in this regard. For standing investments, we analyze climate-related risks and we consider any identified risks as part of our Enterprise Risk Management and budgeting and capital improvements processes. Climate-related risks are also assessed as part of the due diligence process for acquisitions. Understanding the climate change risk in our portfolio enables 9 us to implement mitigation measures, such as increased insurance and physical measures such as waterproofing systems, as necessary. • Water Conservation. We recognize the importance of reducing water consumption to mitigate burdens on the water supply and municipal wastewater systems, as well as to reduce the costs of operating our properties. Our water management program focuses on monitoring and reducing common area water consumption, while encouraging best water management practices by our tenants. We leverage technology to track, visualize and analyze our water consumption to identify and decrease excessive use. A majority of our properties benefit from the use of a landscape design focused on drought-resistant, native, pollinator-friendly plantings that save water. For substantially all of our properties with landlord-controlled irrigation, our goal is to install smart irrigation systems with features like rain sensors, to ensure the irrigation is turned on only when necessary, by the end of 2022. As of December 31, 2021, 88% of our eligible properties have smart irrigation systems. Through the use of submeters at our properties, as of December 31, 2021, we provided over 600 of our retail tenants with visibility into their water consumption and a financial incentive to decrease their consumption, thereby guiding our tenants towards sustainable practices and operational cost savings. • Green Leasing. In late 2020, we introduced a “green” clause into our standard form of retail lease to align tenant and landlord interests in promoting the sustainability of our properties. • Corporate Office Initiatives. Our sustainable practices extend to our corporate offices where we have adopted energy reduction, waste management and water conservation initiatives. These initiatives include, for example, installing LED lighting and automatic occupancy sensors for lighting and equipment, recycling programs, implementing electronic communication systems for tenant billing, and using low-flow faucets. Our corporate headquarters are easily accessible by public transit due to their close proximity to two train stations, helping to reduce air pollution and greenhouse gas emissions from employee travel. As a result of sustainability efforts made at our corporate headquarters, we were awarded the Outstanding Achievement in Land Use Award by the Green Business Partnership in 2019. Social DEI are fundamental values of our business. For additional details regarding our DEI Program, as well as employee engagement, employee training and development, and employee health and wellness initiatives, see Item 1. Human Capital. Employee volunteerism and philanthropy program are key areas of focus for our company. We engage with local charitable and volunteer organizations to connect with those in need and provide support. We also encourage our employees to participate in company-sponsored events and to give back through time, effort, or monetary donations. We value the importance of community engagement through the facilitation of events at our properties. We engage in partnerships with local communities and non-profit organizations to host community events and fundraisers throughout our portfolio. The health and well-being of our tenants and their employees and customers are important to us. Our property operations professionals conduct regular inspections, repairs and improvements to maintain safe and secure shopping centers and enhance the retail experience. Recognizing the impact of the COVID-19 pandemic on our communities, we have engaged in various philanthropic and community-focused activities, including sponsoring meals for frontline workers, donating space at certain of our centers for the collection and distribution of personal protective equipment for healthcare providers, and making a monetary donation to a public hospital in New York City. In addition, we have engaged with our tenants on a regular basis throughout the pandemic to offer assistance such as appropriate modifications to lease agreement terms, where possible, and accommodating requests for tenant outdoor seating and curbside pickup areas. For additional details on the impact of the COVID-19 pandemic on our tenants and our business, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. We strive to respect and promote human rights in accordance with the UN Guiding Principles on Business and Human Rights. We support freedom of association as proclaimed in the Universal Declaration of Human Rights. Governance We are dedicated to maintaining a high standard for corporate governance predicated on integrity, ethics, diversity and transparency. All of our board members stand for re-election every year. We seek to maintain a diverse board primarily comprised of independent trustees who represent a mix of varied experience, backgrounds, tenure and skills to ensure a broad range of perspectives is represented. In 2021, our Nominating and Corporate Governance Committee formally committed in its charter to seek to include candidates with a diversity of race, ethnicity and gender in the pool from which it selects trustee candidates. As of December 31, 2021, two of our eight independent trustees are female and one 10 independent trustee represents racial and ethnic diversity. We have been rated in the 50/50 Women on Boards (formerly known as 2020 Women on Boards) gender diversity directory for two consecutive years. Additionally, we regularly monitor developments in the area of corporate governance and seek to enhance our corporate governance structure based upon a review of new developments and recommended best practices, taking into account investor feedback. We believe that sound corporate governance strengthens the accountability of our board and management, and promotes the long-term interests of our shareholders. Governance highlights include: opt-out of the board self-classification provisions of Subtitle 8; no shareholder rights plan; annual election of trustees; majority voting standard for trustees with resignation policy if majority is not achieved; independent and diverse board with a lead independent trustee; regular succession planning; risk oversight by full board and committees; claw-back, anti-hedging and anti-pledging policies; annual Say-on-Pay vote; and shareholders’ ability to call a special meeting. Our Corporate Governance Guidelines and associated policies mandate an elevated level of excellence from our company, the Board and management. Through transparency, alignment of interests, and removal of potential conflicts of interests, we ensure that our decisions and actions advance the interests of our shareholders, employees and other stakeholders. COMPANY WEBSITE All of our filings with the Securities and Exchange Commission (the "SEC"), including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to such reports, are available at no cost on the Investors page of our website at www.acadiarealty.com, as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. These filings can also be accessed through the Securities and SEC’s website at www.sec.gov. Alternatively, we will provide paper copies of our filings, including this Report, at no cost upon request addressed to Investor Relations at Acadia Realty Trust, 411 Theodore Fremd Avenue, Suite 300, Rye, NY 10580, phone number (914) 288-8100 or email investorrelations@acadiarealty.com. We use, and intend to use, the Investors page of our website as a means of disclosing material nonpublic information and of complying with our disclosure obligations under Regulation FD, including, without limitation, through the posting of investor presentations that may include material nonpublic information. Accordingly, investors should monitor the Investors page, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this Report. CODE OF ETHICS AND WHISTLEBLOWER POLICIES Our board of trustees (the “Board”), adopted a Code of Business Conduct and Ethics applicable to all employees, as well as a “Whistleblower Policy.” Copies of these documents are available in the Investors – Corporate Governance page of our website at www.acadiarealty.com. We will disclose future amendments to, or waivers from (with respect to our senior executive financial officers), our Code of Business Conduct and Ethics on our website within four business days following the date of such amendment or waiver. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this Report. 11 ITEM 1A. RISK FACTORS. Set forth below are the risk factors that we believe are material to our investors. You should carefully consider these risk factors, together with all of the other information included in this Report, including our consolidated financial statements and related notes thereto, before you decide whether to make an investment in our securities. The occurrence of any of the following risks could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. In such case, the trading price of our Common Shares could decline, and you may lose all or a significant part of your investment. This section includes or refers to certain forward-looking statements. See “Special Note Regarding Forward-Looking Statements”. The following risk factors are not exhaustive. Other sections of this Report may include additional factors that could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may affect our business. Investors should also refer to our quarterly reports on Form 10-Q and current reports on Form 8-K for future periods for material updates to these risk factors. Risk factors pertaining to our Company generally fall within the following broad areas: • • • • • risks related to our business, properties and tenants; risks related to litigation, environmental matters and government regulation; risks related to our management and structure; risks related to our REIT status; and general risk factors. RISKS RELATED TO OUR BUSINESS, OUR PROPERTIES AND OUR TENANTS Actual or perceived threats associated with epidemics, pandemics or other public health crises, including the COVID-19 Pandemic, had had and could continue to have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity, and ability to access the capital markets and satisfy debt service obligations. Epidemics, pandemics or other public health crises, including the current COVID-19 Pandemic, that impact economic and market conditions, particularly in the markets where our properties are located, and preventative measures taken to alleviate their impact may have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity, and ability to access capital markets and satisfy debt service obligations. Our retail tenants depend on in-person interactions with their customers to generate unit-level profitability, and an epidemic, pandemic or other public health crisis may decrease customer willingness to frequent, and mandated “shelter-in-place” or “stay-at-home” orders may prevent customers from frequenting, our tenants’ businesses, which may result in their inability to maintain profitability and make timely rental payments to us under their leases. Such restrictions may also affect customer behavior longer term by, among others, creating a preference for e-commerce. As of December 31, 2021, we collected approximately 98% and 94% of Core Portfolio and Fund Portfolio pre-COVID billings (original contract rents without regard to deferral or abatement agreements excluding the impact of any security deposits applied against tenant accounts), respectively, for the fourth quarter 2021 compared to 91% and 82% for the fourth quarter of 2020. We have negotiated rent concessions with selected tenants during 2021 and 2020 (Note 12). Moreover, the ongoing COVID-19 Pandemic and restrictions intended to prevent and mitigate its spread could have additional adverse effects on our business, including with regards to: • • • the ability and willingness of our tenants to renew their leases upon expiration, our ability to re-lease the properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant; anticipated returns from development and redevelopment projects, which were previously temporarily suspended; to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices, 12 • macroeconomic conditions, such as a disruption of or lack of access to the capital markets as well as a potential decline in our share price; • • our ability to obtain additional indebtedness or pay down, refinance, restructure or extend our indebtedness as it becomes due, and the negative impact of reductions in rent on financial covenants related to corporate and/or property-level debt; and potential reduction in our operating effectiveness as employees work remotely or if key personnel become unavailable due to illness or other personal circumstances related to COVID-19, as well as increased cybersecurity risks relating to the use of remote technology. While the U.S. economy has shown signs of improvement compared to fiscal year 2020 and the use of vaccines has alleviated COVID-19 restrictions, the spread of new COVID-19 virus strains is likely to pose additional challenges. Accordingly, developments around the COVID- 19 Pandemic preclude prediction as to its ultimate economic, political and social impact, and may continue to present material risks and uncertainties with respect to our and our tenants’ business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy debt service obligations. Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks described herein. There are risks relating to investments in real estate that could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and make distributions to our shareholders. Real property investments are subject to multiple risks. Real estate values are affected by a number of factors, including: changes in the general economic climate, local conditions (such as an oversupply of space or a reduction in demand), the quality and philosophy of management, competition from other available space, and the ability 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 convenience and attractiveness of the property 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 is derived 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 viable tenants on economically favorable terms or at all. In the event of default by a tenant, we may experience delays in enforcing, as well as incur substantial costs to enforce, our rights as a landlord. In addition, certain significant expenditures associated with each equity investment (such as mortgage payments, real estate taxes and maintenance costs) are generally not reduced even though there may be a reduction in income from the investment. We rely on revenues derived from tenants, in particular our key tenants, and a decrease in those revenues could adversely affect our ability to make distributions to our shareholders. Revenue from our properties depends primarily on the ability of our tenants to pay the full amount of rent and other charges due under their leases on a timely basis. We derive significant revenues from a concentration of 20 key tenants which occupy space at more than one property and collectively account for approximately 21.0% of our consolidated revenue. We could be adversely affected in the 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 its leases as they expire or renews such leases at lower rental rates. See “Item 2. Properties—Major Tenants” for quantified information 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 and vacated anchor space directly and indirectly affects our rental revenues. Certain of our properties are supported by “anchor” tenants. Anchor tenants pay a significant portion of the total rents at a property and contribute to the success of other tenants by drawing large numbers of customers to a property. Vacated anchor space not only directly reduces rental revenues, but, if not re-tenanted with a tenant with comparable consumer attraction, could adversely affect the rest of the property primarily through the loss of customer drawing power. This can also occur through the exercise of the right that most anchors have, to vacate and prevent re-tenanting by paying rent for the balance of the lease term (“going dark”), such as the case of 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 results in a 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, at the affected property, which could adversely affect the future income from such property, also known as “co-tenancy.” Although it may not directly reduce our rental revenues, and there are no contractual co-tenancy conditions, vacant retail space adjacent to, or even on the same block as our street and urban properties may similarly affect shopper traffic and re-tenanting activities at our properties. See “Item 2. Properties— Major Tenants”. 13 The bankruptcy of, or a downturn in the business of, any of our major tenants or a significant number of our smaller tenants may adversely affect our financial condition, cash flows, results of operations 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, or renew at lower rental rates, may adversely affect our cash flows and property values. Furthermore, the impact of vacated anchor space and the potential reduction in customer traffic may adversely impact the balance of tenants at a shopping center. Historically and from time to time, certain of our tenants experienced financial difficulties and filed for bankruptcy protection, typically under Chapter 11 of the United States Bankruptcy Code (“Chapter 11 Bankruptcy”). Pursuant to bankruptcy law, tenants have the right to reject some or all of their leases. In the event 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 tenant expense 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 three years 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 to pay its creditors. There can be no assurance that our major tenants will not declare bankruptcy, in which case we may be unable to recoup past and future rent in full, and to re-lease a terminated or rejected space on comparable terms or at all. 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 than current lease terms. Upon the expiration of current leases for space located in our properties, we may not be able to re-let all or a portion of that space, or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms. If we are unable to re-let promptly all or a substantial portion of the space located in our properties or if the rental rates we receive upon re-letting are significantly lower than current rates, our net income and ability to make expected distributions to our shareholders will be adversely affected due to the resulting reduction in revenues. There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases. See “Item 2. Properties—Lease Expirations” for additional information regarding the scheduled lease expirations in our portfolio. Our business is significantly influenced by demand for retail space generally, and a decrease in such demand may have a greater adverse effect on our business than if we owned a more diversified real estate portfolio. A decrease in the demand for retail space may have a greater adverse effect on our business and financial condition than if we owned a more diversified real estate portfolio. The market for retail space has been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retailing companies and bankruptcy incidence, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets, and increasing consumer purchases through the Internet. To the extent that any of these conditions occur, they are likely to negatively affect market rents for retail space and could adversely affect our financial condition, cash flows, results of operations, the trading price of our Common Shares and our ability to satisfy our debt service obligations and to pay distributions to our shareholders. E-commerce can have an impact on our business because it may cause a downturn in the business of our current tenants and affect future leases. The use of the Internet by retail consumers continues to gain in popularity and the migration toward e-commerce is expected to continue. The increase in Internet sales could result in a downturn in the business of our current tenants in their “brick and mortar” locations, adversely impacting their ability to satisfy their rent obligations, 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 predict with 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 our occupancy levels and financial results could suffer. See the Risk Factor entitled, “Our ability to change our portfolio is limited because real estate investments are illiquid” below. Many of our real estate costs are fixed, even if income from our properties decreases, which would cause a decrease in net income. Our financial results depend primarily on leasing space at our properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes, insurance and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the property. As a result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to fully lease our properties on favorable terms. Additionally, properties that we develop or redevelop may not produce any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with such projects until they are fully occupied. 14 Our ability to change our portfolio is limited because real estate investments are illiquid. Equity investments in real estate are relatively illiquid and, therefore, our ability to change our portfolio promptly in response to changed conditions is limited, which could adversely affect our financial condition, cash flows, and ability to satisfy our debt service obligations and to make distributions to our shareholders. In addition, the Code contains restrictions on a REITs ability to dispose of properties that are not applicable to other types of real estate companies. Our Board may establish investment criteria or limitations as it deems appropriate, but it 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. As discussed under the heading “Our Board may change our investment policy without shareholder approval” below, we could change our investment, disposition and financing policies and objectives without a vote of our shareholders, but such change may be delayed or more difficult to implement due to the illiquidity of real estate. We could be adversely affected by conditions in the markets where our properties are geographically concentrated. Our performance depends on the economic conditions in markets where our properties are geographically concentrated. We have significant exposure to the greater New York and Chicago metropolitan regions, from which we derive 36.5% and 28.0% of the annual base rents within our Core Portfolio, respectively, and 16.9% and 2.6% of annual base rents within our Funds, respectively. In addition, our Funds derive 30.2% of their annual base rents in the Southeast region of the United States. Our operating results could be adversely affected if market conditions, such as an oversupply of space or a reduction in demand for real estate, occur in these areas. Our development and construction activities could affect our operating results. We intend to continue the selective development and construction of retail properties (See “Item 1. Business —Investing Activities–Funds– Development Activities”). As opportunities arise, we may delay construction until sufficient pre-leasing is reached and financing is in place. Our development and construction activities include the risk that: • • • • • • we may abandon development 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 development 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, including labor and material 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 and other required governmental permits and authorizations. In addition, the entitlement and development of real estate entails extensive approval processes, sometimes involving multiple regulatory jurisdictions. It is common for a project to require multiple approvals, permits and consents from U.S. federal, state and local governing and regulatory bodies. Compliance with these and other regulations and standards is time intensive and costly and may require additional long range infrastructure review and approvals which can add to project cost. In addition, development of properties containing delineated wetlands may require one or more permits from the U.S. federal government and/or state and local governmental agencies. Any of these issues can materially affect the cost, timing and economic viability of our development and redevelopment projects. At times, we may also be required to use unionized construction workers or to pay the prevailing wage in a jurisdiction to unionized workers, which could increase projects costs and the risk of a strike, thereby affecting construction timelines. Additionally, the time frame required for development, construction and lease-up of these properties means that we may not realize a significant cash return for several years. If any of the above events occur, the development of properties may hinder our growth and could have an adverse effect on our financial condition, cash flows and results of operations. In addition, new development activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management. 15 Developments and acquisitions may fail to perform as expected, which could adversely affect our results of operations. Our investment strategy includes the development and acquisition of retail properties in supply constrained markets in densely populated areas with high average household incomes and significant barriers to entry. The acquisition of such properties is highly competitive. Additionally, the development and acquisition of such properties entails risks that include the following, any of which could adversely affect our financial condition, cash flows, results of operations, and our ability to meet our debt obligations and make distributions to shareholders: • 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 or within the time frames we project 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 until after 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 or property, may fail to reveal various liabilities, which could reduce the cash flow from the property or increase our acquisition cost. Historically, Fund I, Mervyns I and Fund III have provided Promote income. There can be no assurance that our joint ventures will continue to operate profitably and thus provide additional Promote income in the future. These factors could limit the return that we receive from such investments or cause our cash flows to be lower than our estimates. In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture. Our real estate assets may be subject to impairment charges. We periodically assess whether there are any indicators that the value of our real estate assets and other investments may be impaired. A property’s value is considered to be impaired only if the estimated aggregate future undiscounted property cash flows are less than the carrying value of the property. In our estimate of cash flows, we consider factors such as trends and prospects and the effects of demand and competition on expected future operating income. If we are evaluating the potential sale of an asset or redevelopment alternatives, the undiscounted future cash flows consider the most likely course of action as of the balance sheet date based on current plans, intended holding periods and available market information. We are required to make subjective assessments as to whether there are impairments in the value of our real estate assets and other investments. Impairment charges have an immediate direct impact on our earnings. There can be no assurance that we will not take additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our operating results in the period in which the charge is taken. If a third-party vendor fails to provide agreed upon services, we may suffer losses. We are dependent and rely on third party vendors, including Cloud providers, for redundancy of our network, system data, security and data integrity. If a vendor 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 our operations. We conduct appropriate due diligence on all services providers and restrict access, use and disclosure of personal information. We engage vendors with formal written agreements clearly defining the roles of the parties specifying privacy and data security responsibilities. RISKS RELATED TO OUR LIQUIDITY AND INDEBTEDNESS If we decided to employ higher leverage levels, we would be subject to increased debt service requirements and a higher risk of default on our debt obligations, which could adversely affect our financial conditions, cash flows and ability to make distributions to our shareholders. In addition, increases or changes in interest rates could cause our borrowing costs to rise and may limit our ability to refinance debt. Although we have historically used moderate levels of leverage, we have incurred, and expect to continue to incur, indebtedness to support our activities. As of December 31, 2021, our outstanding indebtedness was $1,819.7 million, of which $780.9 million was variable-rate indebtedness. 16 None of our Declaration of Trust, our bylaws or any policy statement formally adopted by our Board 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 debt service requirements and a higher risk of default on our debt obligations. This in turn could adversely affect our financial condition, cash flows and ability to make distributions to our shareholders. Although approximately 57.1% of our outstanding debt has fixed or effectively fixed interest rates, we also borrow funds at variable interest rates. Variable-rate debt exposes us to changes in interest rates, which could cause our borrowing costs to rise and may limit our ability to refinance debt. Interest expense on our variable-rate debt as of December 31, 2021 would increase by approximately $7.8 million annually for a 100-basis-point increase in interest rates. This exposure would increase if we sought additional variable-rate financing based on pricing and other commercial and financial terms. We enter into interest rate hedging transactions, including interest rate swap and cap agreements, with counterparties, generally, the same lenders who made the loan in question. There can be no guarantee that the future financial condition of these counterparties will enable them to fulfill their obligations under these agreements. In 2017, U.K. regulators announced the discontinuation of LIBOR after December 2021. While U.S. official guidance states that there should be no new LIBOR trading after December 31, 2021, USD LIBOR will continue to be published until June 2023. Additionally, U.S. regulators identified the Secured Overnight Financing Rate (“SOFR”) as their preferred alternative to USD LIBOR in derivatives and other financial contracts. We have contracts indexed to LIBOR and are monitoring and evaluating the risks related to potential discontinuation of LIBOR, including transitioning contracts to a new alternative rate and any resulting value transfer that may occur. When USD LIBOR is discontinued, the interest rates of our LIBOR-indexed debt following such event will be based on either alternate base rates, such as SOFR, or agreed upon replacement rates. While the discontinuation of USD LIBOR would not affect our ability to borrow or maintain already outstanding borrowings, it could result in higher interest rates and/or payments under our debt agreements. Additionally, adjustments to systems and mathematical models to properly process and account for alternative rates will be required, which may strain the model risk management and information technology functions and result in substantial incremental costs to the Company. Our inability to raise capital for new Funds or to carry out our growth strategy could adversely affect our financial condition, cash flows and results of operations. Our earnings growth strategy is based on the acquisition and development of additional properties, including acquisitions of core properties through our Operating Partnership and our high return investment programs through our Fund platform. The consummation of any future acquisitions will be subject to satisfactory completion of our extensive valuation analysis and due diligence review and to the negotiation of definitive documentation. We cannot be sure that we will be able to implement our strategy because we may have difficulty finding new properties, obtaining necessary entitlements, negotiating with new or existing tenants or securing acceptable financing. Acquisitions of additional properties entail the risk that investments will fail to perform in accordance with expectations, including operating and leasing expectations. In the context of our business plan, “development” generally means an expansion or renovation of an existing property. Development is subject to numerous risks, including risks of construction delays, cost overruns or uncontrollable events that may increase project costs, new project commencement risks such as the receipt of zoning, occupancy and other required governmental approvals and permits, and incurring development costs in connection with projects that are not pursued to completion. Historically, a component of our growth strategy has been through private-equity type investments made through our RCP Venture, which have included investments in operating retailers. The inability of such retailers to operate profitably would have an adverse impact on income realized from these investments. Through our investments in joint ventures we have also invested in operating businesses that have operational risk in addition to the risks associated with real estate investments, including human capital issues, adequate supply of product and material, and merchandising issues. Furthermore, if we were unable to obtain sufficient investor capital commitments in order to initiate future Funds, this would adversely impact our current growth strategy would be adversely impacted. Because the Operating Partnership is the sole general partner or managing member of our Funds and earns promote distributions or fees for asset management, property management, construction, development, leasing and legal services, such a situation would also adversely impact the amount or ability to earn such promotes or fees. 17 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’s ownership interest in the entities that own the properties and/or by the borrower’s personal guarantee. The underlying assets are sometimes subordinate in payment 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 lender and/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 satisfied after 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 preferred equity interest, or in which the borrower has pledged its interest, the assets of the entity may not be sufficient to satisfy our investment. RISKS RELATED TO LITIGATION, ENVIRONMENTAL MATTERS AND GOVERNMENTAL REGULATION We are exposed to 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 the costs 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 to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on us in connection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect our ability to sell or rent that property or to borrow using that property as collateral, which, in turn, could reduce our revenues and affect our ability to make 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 of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of any of our tenants to satisfy any obligations with respect to the property leased to that tenant, we may be required to satisfy such obligations. In addition, we may be held directly liable for any 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 our financing sources, we authorize the preparation of Phase I environmental reports and, when necessary, Phase II environmental reports, with respect to our properties. Based upon these environmental reports and our ongoing review of our properties, we are currently not aware of any environmental condition with respect to any of our properties that we believe would be reasonably likely to have a material adverse effect on us. There can be no assurance, however, that the environmental reports will reveal all environmental conditions at our properties or that the following will not expose us to material liability in the future: • • • • The discovery of previously unknown environmental conditions; Changes in law; Activities of tenants; and Activities relating to properties in the vicinity of our properties. Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of our tenants, which could adversely affect our financial condition, cash flows and results of operations. Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition, cash flows and results of operations. We carry comprehensive general liability, all-risk property, extended coverage, loss of rent insurance, and environmental liability on our properties, with policy specifications and insured limits customarily carried for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, we 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 revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types could adversely affect our financial condition, cash flows and results of operations. 18 We may from time to time be subject to litigation that could negatively impact our financial condition, cash flows, results of operations and the trading price of our Common Shares. We may from time to time be a defendant in lawsuits and regulatory proceedings relating to our business. Such litigation and proceedings may result in defense costs, settlements, fines or judgments against us, some of which may not be covered by insurance. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such litigation or proceedings. An unfavorable outcome may result in our having to pay significant fines, judgments or settlements, which, if uninsured, or if exceeding insurance coverage, could adversely impact our financial condition, cash flows, results of operations and the trading price of our Common Shares. Additionally, certain proceedings or the resolution of certain proceedings may affect the availability or cost of some of our insurance coverage and expose us to increased risks that would be uninsured. See Item 3 — Legal Proceedings and Notes to Consolidated Financial Statements as updated by our subsequent filings with the SEC, for pending litigation, if any. Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unplanned expenditures that could adversely affect our financial condition, cash flows and results of operations. All of our properties are required to comply with the Americans with Disabilities Act (the “ADA”). The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While the tenants to whom we lease properties are obligated by law to comply with applicable ADA provisions, and are typically obligated to cover costs of compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs could be adversely affected. As a result of the foregoing or if a tenant is not obligated to cover the cost of compliance, we could be required to expend funds to comply with the provisions of the ADA, which could adversely affect our financial condition, cash flows and results of operations. In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to the properties. We may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could also adversely affect our financial condition, cash flows and results of operations. RISKS RELATED TO OUR MANAGEMENT AND STRUCTURE The loss of key management members could have an adverse effect on our business, financial condition and results of operations. Our success depends on the contribution of key management members. The loss of the services of Kenneth F. Bernstein, President and Chief Executive Officer, or other key executive-level employees could have a material adverse effect on our business, financial condition and results of operations. Management continues to strengthen our team and we have CEO succession planning in place, but there can be no assurance that such planning will be capable of implementation or that our efforts will be successful. We have obtained key-man life insurance for Mr. Bernstein. In addition, we have entered into an employment agreement with Mr. Bernstein and into severance agreements with other senior executives; however, Mr. Bernstein and such executives may terminate their employment with us at will. We have pursued, and may in the future continue to pursue extensive growth opportunities, including investing in new markets, which may result in significant demands on our operational, administrative and financial resources. We have pursued and may pursue 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 can be expected to continue to place a significant strain on our resources. Our future performance will depend in part on our ability to successfully attract and retain qualified management personnel to manage the growth and operations of our business. In addition, the acquired properties may fail to operate at expected levels due to the numerous factors that may affect the value of real estate. There can be no assurance that we will have sufficient resources to identify and manage the newly acquired properties. 19 Our Board may change our investment policy or objectives without shareholder approval. Our Board 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 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 the concentration of investments in any one geographic region. Although our Board has no present intention to revise or amend our strategies and policies, it may do so at any time without a vote by our shareholders. Accordingly, the results of decisions made by our Board as implemented by management may or may not serve the interests of all of our shareholders and could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. Concentration of ownership by certain investors. As of December 31, 2021, six institutional shareholders own 5% or more individually, and 57.4% in the aggregate, of our Common Shares. While this ownership concentration does not jeopardize our qualification as a REIT for U.S. federal income tax purposes (due to certain “look-through provisions”), a significant concentration of ownership may allow an investor or a group of investors to exert a greater influence over our management and affairs and may have the effect of delaying, deferring or preventing a change in control of us. Additionally, our Board may, in its sole discretion, waive or modify the 9.8% Common Shares ownership limit in our Declaration of Trust with respect to one or more persons if it is satisfied that ownership in excess of the limit will not jeopardize our qualification as a REIT for U.S. federal income tax purposes. From time to time, we have entered into waivers with certain institutional investors, subject to certain representations from such investors, including that the common Shares held by the investors will be held in the ordinary course of business and not with the purpose or effect of changing or influencing control of us. Restrictions on a potential change of control could prevent changes that would be beneficial to our shareholders. Our Board is authorized by our Declaration of Trust to establish and issue one or more series of preferred shares of beneficial interest without shareholder approval. We have not established any series of preferred shares other than the Series A and Series C Preferred OP Units in the Operating Partnership. However, the establishment and issuance of a class or series of preferred shares could make a change of control of us that could be in the best interests of the shareholders more difficult. In addition, we have entered into an employment agreement with our Chief Executive Officer and severance agreements with certain of our executives, which provide that, upon the occurrence of a change in control of us and either the termination of their employment without cause (as defined) or their resignation for good reason (as defined), such executive officers would be entitled to certain termination or severance payments made by us (which may include a lump sum payment equal to defined percentages of annual salary and prior years' average bonuses, paid in accordance with the terms and conditions of the respective agreement), which could deter a change of control of us that could be in the best interests of our shareholders generally. Certain provisions of Maryland law may limit the ability of a third party to acquire control of our Company. Under the provisions of the Maryland General Corporation Law (the “MGCL”) applicable to REITs, certain business combinations, including certain mergers, consolidations, share exchanges and asset transfers and certain issuances and reclassifications of equity securities, between a Maryland REIT and any person who beneficially owns 10% or more of the voting power of the REIT's outstanding voting shares or an affiliate or an associate, as defined in the MGCL, of the REIT 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 REIT (an “interested shareholder”) or an affiliate of the interested shareholder, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. After that five-year period, any such business combination must be recommended by the Board of the REIT and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the REIT and (ii) two-thirds of the votes entitled to be cast by holders of voting shares of the REIT other than shares held by the interested shareholder with whom, or with whose affiliate, the business combination is to be effected or held by an affiliate or associate of the interested shareholder, unless, among other conditions, the REIT's common shareholders 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 previously paid 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 REIT before the interested shareholder becomes an interested shareholder, and a person is not an interested shareholder if the board of trustees approved in advance the transaction by which the person otherwise would have become an interested shareholder. In approving a transaction, our Board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board. We have not elected to opt out of the business combination statute. The MGCL also provides that holders of “control shares” of a Maryland REIT (defined as voting shares that, when aggregated with all other shares owned by the acquirer or in respect of which the acquirer is entitled to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired 20 in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by the affirmative vote of holders of at least two-thirds of all the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by officers or by employees who are also trustees of the REIT. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares of beneficial interest. Our Bylaws can be amended by our Board by majority vote, and there can be no assurance that this provision will not be amended or eliminated at any time in the future. Additionally, Title 3, Subtitle 8 of the MGCL permits our Board, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or Bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring or preventing 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 in the best interests of our shareholders. We are subject to some of these provisions (for example, a two-thirds vote requirement for removing a trustee) by provisions of our Declaration of Trust and Bylaws unrelated to Subtitle 8. However, pursuant to the Articles Supplementary filed with the State Department of Assessments and Taxation of Maryland on November 9, 2017, which are referenced in Part IV Item 15 hereto, the Board approved a resolution to opt out of Section 3-803 of Subtitle 8 of Title 3 of the MGCL that allows the Board, without shareholder approval, to elect to classify into three classes with staggered three-year terms. The Articles Supplementary prohibit the Company, without the affirmative vote of a majority of the votes cast on the matter by shareholders entitled to vote generally in the election of trustees, from classifying the Board under 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 control of 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 our Declaration of Trust on removal of trustees and the provisions of our Bylaws regarding advance notice of shareholder nominations of trustees and other business proposals and restricting shareholder action outside of a shareholders meeting unless such action is taken by unanimous written consent could have a 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 the best 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 money damages, 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 action adjudicated. In addition, our Declaration of Trust authorizes, and our Bylaws obligate, us to indemnify each present or former trustee or officer, to the maximum extent permitted by Maryland law, who is made a party to any proceeding because of his or her service to our Company in those or certain other capacities. As part of these indemnification obligations, we may be obligated to fund the defense costs incurred by our trustees and officers. We operate through a partnership structure, which could have an adverse effect on our ability to manage our assets. Our primary property-owning vehicle is the Operating Partnership, of which we are the general partner. Our acquisition of properties through the Operating Partnership in exchange for interests in the Operating Partnership may permit certain tax deferral advantages to limited partners who contribute properties to the Operating Partnership. Since properties contributed to the Operating Partnership may have unrealized gains attributable to the differences between the fair market value and adjusted tax basis in such properties prior to contribution, the sale of such properties could cause adverse tax consequences to the limited partners who contributed such properties. Although we, as the general partner of the Operating Partnership, generally have no obligation to consider the tax consequences of our actions to any limited partner, we own several properties subject to material contractual restrictions for varying periods of time designed to minimize the adverse tax consequences to the limited partners who contributed such properties. Such restrictions may result in significantly reduced flexibility to manage some of our assets. We currently have an exclusive obligation to seek investments for our Funds, which may prevent us from making acquisitions directly. Under the terms of the organizational documents of our Funds, our primary goal is to seek investments for the Funds, subject to certain exceptions. We may only pursue opportunities to acquire retail properties directly through the Operating Partnership if (i) the ownership of the acquisition opportunity by the Funds would create a material conflict of interest for us; (ii) we require the acquisition opportunity for a “like-kind” exchange; (iii) the consideration payable for the acquisition opportunity is our Common Shares, OP Units or other securities or (iv) the investment is outside the parameters of our investment goals for the Funds (which, in general, seek more opportunistic level returns). As a result, we may not be able to make attractive acquisitions directly and instead may only receive a minority interest in such acquisitions through the Funds. 21 Our joint venture investments carry additional risks not present in our direct investments Partnership or joint venture investments may involve risks not otherwise present for investments made solely by us, including the possibility that our partner or co-venturer might become bankrupt, and that our partner or co-venturer may take action contrary to our instructions, requests, policies or objectives, including with respect to maintaining our qualification as a REIT. Actions by, or disputes with, joint venture partners might result in subjecting properties owned by the joint venture to additional risks. Other risks of joint venture investments include impasse on decisions, such as a sale, because neither we nor a joint venture partner may have full control over the joint venture. Also, there is no limitation under our organizational documents as to the amount of our funds that may be invested in joint ventures. 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, which may jeopardize an investment and/or subject us to reputational risk. Such acts may or may not be covered by insurance. Any disputes that may arise between joint venture partners and us may result in potentially costly litigation or arbitration that would prevent our officers and/or trustees from focusing their time and effort on our business. In addition, we may in certain circumstances be liable for the actions of our third-party joint venture partners. RISKS RELATED TO OUR REIT STATUS There can be no assurance we have qualified or will remain qualified as a REIT for Federal income tax purposes. We believe that we have consistently met the requirements for qualification as a REIT for Federal income tax purposes beginning with our taxable year ended December 31, 1993, and we intend to continue to meet these requirements in the future. However, qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code, for which there may be only limited judicial or administrative interpretations. No assurance can be given that we have qualified or will remain qualified as a REIT. The Internal Revenue Code provisions and income tax regulations applicable to REITs differ significantly from those applicable to other entities. The determination of various factual matters and circumstances not entirely within our control can potentially affect our ability to continue to qualify as a REIT. In addition, no assurance can be given that future legislation, regulations, administrative interpretations or court decisions will not significantly change the requirements for qualification as a REIT or adversely affect the Federal income tax consequences of such qualification. Under current law, if we fail to qualify as a REIT, we would not be allowed a deduction for dividends paid to shareholders in computing our net taxable income. In addition, our income would be subject to tax at the regular corporate rates. Also, we could be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. Cash available for distribution to our shareholders would be significantly reduced for each year in which we do not qualify as a REIT. In that event, we would not be required to continue to make distributions. Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us, without the consent of our 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, the consequences of our failing to continue to qualify as a REIT. At any time, the Federal income tax laws governing REITs or the administrative interpretations of those laws may be amended or modified. Any new laws or interpretations may take effect retroactively and could adversely affect us or our shareholders. We may be required to borrow funds or sell assets to satisfy our REIT distribution requirements. Our cash flows may be insufficient to fund distributions required to maintain our qualification as a REIT as a result of differences in timing between the actual receipt of income and the recognition of income for U.S. Federal income tax purposes, or as a result of our inability to currently deduct certain expenditures that we must currently pay, such as capital expenditures, payments of compensation for which Section 162(m) of the Code denies a deduction, any business interest expense that is disallowed under Section 163 (j) of the Code (unless we elect to be an “electing real property trade or business”), and the creation of reserves or required amortization payments. If we do not have other funds available in these situations, we may need to borrow funds on a short-term basis or sell assets, even if the then- prevailing market conditions are not favorable for these borrowings or sales, in order to satisfy our REIT distribution requirements. Such actions could adversely affect our cash flow and results of operations. Dividends payable by REITs generally do not qualify for reduced tax rates. Certain qualified dividends paid by corporations to individuals, trusts and estates that are U.S. shareholders are taxed at capital gain rates, which are lower than ordinary income rates. Dividends of current and accumulated earnings and profits payable by REITs, however, are taxed at ordinary income rates as opposed to the capital gain rates. Pursuant to section 199A of the Code, from 2018 through 2025, certain REIT shareholders will be permitted to deduct 20% of ordinary REIT dividends received. Dividends payable by REITs in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof and thereafter as taxable gain. The more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in 22 REITs, including us, to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which may negatively impact the trading prices of our securities. Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments. To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our Common Shares. In order to meet these tests, we may be required to forego investments we might otherwise make and refrain from engaging in certain activities. Thus, compliance with the REIT requirements may hinder our performance. In addition, if we fail to comply with certain asset ownership tests at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification. As a result, we may be required to liquidate otherwise attractive investments. We have limits on ownership of our shares of beneficial interest. For us to qualify as a REIT for Federal income tax purposes, among other requirements, not more than 50% of the value of our shares of beneficial interest 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 each taxable year, and such shares of beneficial interest must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (in each case, other than the first such year). Our Declaration of Trust includes certain restrictions regarding transfers of our shares of beneficial interest and ownership limits that are intended to assist us in satisfying these limitations, among other purposes. These restrictions and limits may not be adequate in all cases, however, to prevent the transfer of our shares of beneficial interest in violation of the ownership limitations. The ownership limits contained in our Declaration of Trust may have the effect of delaying, deferring or preventing a change of control of us. Actual or constructive ownership of our shares of beneficial interest in excess of the share ownership limits contained in our Declaration of Trust would cause the violative transfer or ownership to be null and void from the beginning and subject to purchase by us at a price equal to the fair market value of such shares (determined in accordance with the rules set forth in our Declaration of Trust). As a result, if a violative transfer were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex and groups of related individuals or entities may be deemed a single owner and consequently in violation of the share ownership limits. Distribution requirements imposed by law limit our operating flexibility. To maintain our status as a REIT for Federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for each calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to Federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year; (ii) 95% of our capital gain net income for that year; and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Internal Revenue Code and to minimize exposure to Federal income and excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our income as well as required debt amortization payments and the capitalization of certain expenses could require us to borrow funds on a short-term basis to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT. The distribution requirements also severely limit our ability to retain earnings to acquire and improve properties or retire outstanding debt. GENERAL RISK FACTORS The economic environment may cause us to lose tenants and may impair our ability to borrow money to purchase properties, refinance existing debt or finance our current development projects. Our operations and performance depend on general economic conditions, including consumer health. The U.S. economy has historically experienced financial downturns from time to time, including a decline in consumer spending, credit tightening and high unemployment. 23 While we currently believe we have adequate sources of liquidity, there can be no assurance that, in the event of a financial downturn, we will be able to obtain secured or unsecured loan facilities to meet our needs, including to purchase additional properties, to complete current development projects, or to successfully refinance our properties as loans become due. To the extent that the availability of credit is limited, it would also adversely impact our notes receivable as counterparties may not be able to obtain the financing required to repay the loans upon maturity. Certain sectors of the U. S. economy are still experiencing weakness. Over the past several years, this structural weakness has resulted in periods of high unemployment, the bankruptcy or weakened financial condition of a number of retailers, decreased consumer spending, increased home foreclosures, low consumer confidence, and reduced demand and rental rates for certain retail space. There can be no assurance that the recovery will continue. General economic factors that are beyond our control, including, but not limited to, economic recessions, decreases in consumer confidence, reductions in consumer credit availability, increasing consumer debt levels, rising energy costs, higher tax rates, continued business layoffs, downsizing and industry slowdowns, and/or rising inflation, could have a negative impact on the business of our retail tenants. In turn, this could have a material adverse effect on our business because current or prospective tenants may, among other things, (i) have difficulty paying their rent obligations as they struggle to sell goods and services to consumers, (ii) be unwilling to enter into or renew leases with us on favorable terms or at all, (iii) seek to terminate their existing leases with us or request rental concessions on such leases, or (iv) be forced to curtail operations or declare bankruptcy. Political and economic uncertainty could have an adverse effect on our business. We cannot predict how current political and economic uncertainty will affect our critical tenants, joint venture partners, lenders, financial institutions and general economic conditions, including the health and confidence of the consumer and the volatility of the stock market. Political and economic uncertainty poses a risk to us in that it may cause consumers to postpone discretionary spending in response to tighter credit, reduced consumer confidence and other macroeconomic factors affecting consumer spending behavior, resulting in a downturn in the business of our tenants. In the event current political and economic uncertainty results in financial turmoil affecting the banking system and financial markets generally or significant financial service 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 factors could adversely affect our financial condition, cash flows and results of operations. Inflation may adversely affect our financial condition, cash flows and results of operations. Increased inflation could have a more pronounced negative impact on our mortgage and debt interest and general and administrative expenses, as these costs could increase at a rate higher than our rents. Also, inflation may adversely affect tenant leases with stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses, which could be lower than the increase in inflation at any given time. It may also limit our ability to recover all of our operating expenses. Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our average rents, and in some cases, our percentage rents, where applicable. In addition, renewals of leases or future leases may not be negotiated on current terms, in which event we may recover a smaller percentage of our operating expenses. Competition may adversely affect our ability to purchase properties and to attract and retain tenants. There are numerous commercial developers, real estate companies, financial institutions and other investors with greater financial resources than we have that compete with us in seeking properties for acquisition and tenants who will lease space in our properties. Our competitors include other REITs, financial institutions, private funds, insurance companies, pension funds, private companies, family offices, sovereign wealth funds and individuals. This competition may result in a higher cost for properties than we wish to pay. In addition, retailers at our properties (both in our Core Portfolio and in the portfolios of the Funds) face increasing competition from outlet malls, discount shopping clubs, e-commerce, direct mail and telemarketing, which could (i) reduce rents payable to us and (ii) reduce our ability to attract and retain tenants at our properties leading to increased vacancy rates at our properties. Market factors could have an adverse effect on our share price and our ability to access the public equity markets. The market price of our Common Shares may fluctuate significantly in response to many factors, including: • • • • • actual or anticipated variations in our operating results, funds from operations, cash flows or liquidity; changes in our earnings estimates or those of analysts; changes in our dividend policy; impairment charges affecting the carrying value of one or more of our properties or other assets; publication of research reports about us, the retail industry or the real estate industry generally; 24 • • • • • • • • • increases in market interest rates that lead purchasers of our securities to seek higher dividend or interest rate yields; changes in market valuations of similar companies; adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt in the near and medium term and our ability to refinance such debt and the terms thereof or our plans to incur additional debt in the future; additions or departures of key management personnel; actions by institutional security holders; proposed or adopted regulatory or legislative changes or developments; speculation in the press or investment community; the occurrence of any of the other risk factors included in, or incorporated by reference in, this report; and general market and economic conditions. Many of the factors listed above are beyond our control. Those factors may cause the market price of our Common Shares to decline significantly, regardless of our financial performance, condition and prospects. We may not provide any assurance that the market price of our Common Shares will not fall in the future, and it may be difficult for holders to sell such securities at prices they find attractive, or at all. A decline in our share price, as a result of this or other market factors, could unfavorably impact our ability to raise additional equity in the public markets. Outages, computer viruses and similar events could disrupt our operations. We rely on information technology networks and systems, some of which are owned and operated by third parties, to process, transmit and store electronic information. Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist or cyber-attacks and similar events. Despite the implementation of network security measures, our systems and those of third parties on which we rely may also be vulnerable to computer viruses and similar disruptions. If we or the third parties on whom we rely are unable to prevent such outages and breaches, our operations could be disrupted. Increased Information Technology (“IT”) security threats and more sophisticated computer crime could pose a risk to our systems, networks and services. Cyber incidents can result from deliberate attacks or unintentional events. There have been an increased number of significant cyber-attacks targeted at the retail, insurance, financial and banking industries that include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as by causing denial-of-service attacks on websites. Cyber-attacks by third parties or insiders utilize techniques that range from highly sophisticated efforts to electronically circumvent network security or overwhelm a website to more traditional intelligence gathering and social engineering aimed at obtaining information necessary to gain access. Increased global IT security threats are more sophisticated and targeted computer crimes pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. The open nature of interconnected technologies may allow for a network or Web outage or a privacy breach that reveals sensitive data or transmission of harmful/malicious code to business partners and clients. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures. Cyber-attacks may result in substantial financial and reputational cost, including but are not limited to: • Compromising of confidential information; • Manipulation and destruction of data; • • • • • Loss of trade secrets; System downtimes and operational disruptions; Remediation costs that may include liability for stolen assets or information and repairing system damage, as well as incentives offered to customers, tenants or other business partners in an effort to maintain business relationships; 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; 25 • • Reputational damage adversely affecting investor and tenant confidence; and Costly litigation. The control environment for cyber security is an ever changing risk landscape across the entire attack surface which includes risks from on- premise, cloud infrastructure, software as a service and mobile applications. 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, utilization of third-party service providers to provide redundancy over multiple locations, and comprehensive monitoring of our networks and systems along with purchasing cyber security insurance coverage, our systems, networks and services remain potentially vulnerable to advanced threats. 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- based communications, which allow individuals access to a broad audience, including our significant business constituents. The availability of information through these 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. This information 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, natural disasters or health crises could adversely affect our properties and business. Some of our current or future properties could be subject to natural disasters and may be impacted by climate change. To the extent climate change causes adverse changes in weather patterns, rising sea levels or extreme temperatures, our properties in certain markets may be adversely affected. Specifically, properties located in coastal regions could be affected by any future increases in sea levels or in the frequency or severity of hurricanes and storms, whether caused by climate change or other factors. Additionally, we own properties in Southern California, which in recent years has experienced intense draught and wildfires and has had earthquake activity. Climate change could have a variety of direct or indirect adverse effects on our properties and business, including: • • • • • • • • • 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, floods, wildfires or other natural disasters; Increased insurance premiums and deductibles, or a decrease in or unavailability of coverage, for properties in areas subject to severe weather, such as hurricanes, floods, wildfires or other natural disasters; 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 products or services resulting from physical changes associated with climate change (e.g., warmer temperatures or decreasing shoreline could reduce demand for residential and commercial properties previously viewed as desirable); 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. Moreover, compliance with new laws or regulations related to climate change, including compliance with “green” building codes, may require us to make improvements to our existing properties or pay additional taxes and fees assessed on us or our properties. Although we strive to identify, analyze, and respond to the risk and opportunities that climate change presents, at this time there can be no assurance that climate change will have an adverse effect on us. Public health crises, pandemics and epidemics, such as those caused by new strains of viruses such as H5N1 (avian flu), severe acute respiratory syndrome (SARS) and, most recently, the novel coronavirus (COVID-19), may increase as international travel continues to rise and could adversely impact our business by interrupting our tenants’ business, supply chains and transactional activities, disrupting travel, and negatively impacting local, national or global economies. 26 Future terrorist attacks or civil unrest could harm the demand for, and the value of, our properties. Over the past several years, a number of highly publicized terrorist acts and shootings have occurred at domestic and international retail 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 could directly impact the value of our properties through damage, destruction, loss or increased security costs, and the availability of insurance for such acts may be limited or may be subject to substantial cost increases. To the extent that our tenants are impacted by future attacks, their ability to continue to honor obligations under their existing leases could be adversely affected. A decrease in retail demand could make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates. These acts might erode business and consumer confidence and spending, and might result in increased volatility in national and international financial markets and economies. Any one of these events might decrease demand for real estate, decrease or delay the occupancy of our properties, and limit our access to capital or increase our cost of raising capital. Increased scrutiny and changing expectations from investors, tenants, employees, and others regarding our ESG practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our reputation, tenant and employee acquisition and retention, and access to capital. Companies across all industries are facing increasing scrutiny related to their ESG practices and reporting. Investors, tenants, employees, and other stakeholders have begun to focus increasingly on ESG practices and to place increasing importance on the implications and social cost of their investments, business decisions and consumer choices. For example, an increasing number of investment funds focus on positive ESG practices and sustainability scores when making an investment decision. In addition, investors, particularly institutional investors, use ESG practices and scores to benchmark companies against their peers and if a company is perceived as lagging, such investors may engage with a company to improve ESG disclosure or performance and may also make voting decisions on this basis. Given this increased focus and demand, public reporting regarding ESG practices is becoming more broadly expected. If our ESG practices and reporting do not meet investor, tenant, or employee expectations, which continue to evolve, our reputation and tenant and employee retention may be negatively impacted. Any disclosure we make may include our policies and practices on a variety of ESG matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, and workforce inclusion and diversity. It is possible that stakeholders may not be satisfied with our ESG reporting, our ESG practices or our speed of adoption. We could also incur additional costs and devote additional resources to monitoring, reporting and implementing various ESG practices. Our failure, or perceived failure, to meet the goals and objectives we set in any sustainability disclosure or the expectations of our various stakeholders, it could negatively impact our reputation, tenant and employee retention, and access to capital. We identified a material weakness in our internal control over financial reporting related to the Restatement described in the Explanatory Note to this Annual Report on Form 10-K. If we do not effectively remediate the material weakness or if we otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately report our financial results. Effective internal controls over financial reporting are necessary for us to provide reliable and accurate financial reports. Management identified a deficiency in internal control over financial reporting as of December 31, 2021 and determined that the Company did not maintain effective internal control over financial reporting because of an error in accounting treatment at the time of formation related to the improper consolidation of two investments that are less-than-wholly-owned through the Company’s opportunity funds. As a consequence, these two Fund Investments, which were formed in 2012 and 2013, have been adjusted from consolidated investments to investments in unconsolidated affiliates within the restated financial statements included within this Annual Report. See Item 9A, “Controls and Procedures”, in this Annual Report on Form 10-K for additional information regarding the identified material weakness and our actions to date to remediate the material weakness. We reached a determination to restate certain of our previously issued consolidated financial statements as a result of the identification of accounting errors in previously issued financial statements, which resulted in unanticipated costs and may affect investor confidence and raise reputational issues. As discussed in the Explanatory Note to this Annual Report on Form 10-K, management and the Audit Committee, in consultation with BDO, reached a determination to restate the Company’s previously issued financial statements and the audit reports thereon, as of and for the years ended December 31, 2020 and 2019, and as of and for each of the quarterly periods ended March 31, 2021 and 2020, June 30, 2021 and 2020, September 30, 2021 and 2020, and December 31, 2020. The Restatement also included corrections for certain immaterial unrecorded adjustments in the Company’s previously issued financial statements. The Restatement may affect investor confidence in the accuracy of our financial disclosure and may raise reputational risks for our business, both of which could harm our business and financial results. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. 27 ITEM 2. PROPERTIES. Retail Properties The discussion and tables in this Item 2. include wholly-owned and partially-owned properties held through our Core Portfolio and our Funds. We define our Core Portfolio as those properties either 100% owned by, or partially owned through joint venture interests by the Operating Partnership or subsidiaries thereof, not including those properties owned through our Funds. As of December 31, 2021, our Core Portfolio consisted of 128 operating properties in totaling approximately 5.6 million square feet (or 5.2 million at our pro rata share) of gross leasable area (“GLA”) excluding four properties under redevelopment and one property in development. The Core Portfolio properties are located in 12 states and the District of Columbia and primarily consist of street retail and dense suburban shopping centers. These properties are diverse in size, ranging from approximately 1,000 to 800,000 square feet and as of December 31, 2021, were 88.3% occupied and 92.2% leased (or 90.0% occupied and 93.2% leased at our pro rata share), excluding properties under development or redevelopment. As of December 31, 2021, we owned and operated 51 properties totaling approximately 7.9 million square feet in total (or 1.6 million square feet at our pro rata share) of GLA in our Funds, excluding two properties under development. In addition to shopping centers, the Funds have invested in mixed-use properties, which generally include retail activities. The Fund properties are located in 18 states and the District of Columbia and, as of December 31, 2021, were 88.2% occupied and 91.5% leased (or 87.7% occupied and 91.6% leased at our pro rata share), excluding the properties under development. Within our Core Portfolio and Funds, we had more than 1,100 retail leases as of December 31, 2021. A significant portion of our rental revenues are from national retailers 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. An insignificant portion of our leases also provide for the payment 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, which we refer to as percentage rents. Minimum rents and expense reimbursements accounted for substantially all of our total revenues for the year ended December 31, 2021. Six of our Core Portfolio properties and two of our Fund properties are subject to long-term ground leases in which a third party owns and has leased the underlying land to us. We pay rent for the use of the land and are responsible for all costs and expenses associated with the building and improvements at all of these locations. No individual property or tenant contributed in excess of 10% of our total revenues for the years ended December 31, 2021, 2020 or 2019. See Note 8 for information on the mortgage debt pertaining to our properties. 28 The following table sets forth more specific information with respect to each of our Core properties at December 31, 2021: Property (a) Key Tenants Year Acquired Acadia's Interest Gross Leasable Area (GLA) In Place Occupancy Leased Occupancy Annualized Base Rent (ABR) ABR/ Per Square Foot STREET AND URBAN RETAIL Chicago Metro 664 N. Michigan Avenue 840 N. Michigan Avenue Rush and Walton Streets Collection (6 properties) 651-671 West Diversey Clark Street and W. Diversey Collection (4 properties) Halsted and Armitage Collection (13 properties) North Lincoln Park Chicago Collection (6 properties) State and Washington 151 N. State Street North and Kingsbury Concord and Milwaukee California and Armitage Roosevelt Galleria Sullivan Center New York Metro Soho Collection (11 properties) 5-7 East 17th Street 200 West 54th Street 61 Main Street 181 Main Street 4401 White Plains Road Bartow Avenue 239 Greenwich Avenue 252-256 Greenwich Avenue 2914 Third Avenue 868 Broadway 313-315 Bowery (b) 120 West Broadway 2520 Flatbush Avenue 991 Madison Avenue Shops at Grand Gotham Plaza Los Angeles Metro Melrose Place Collection Tommy Bahama, Ann Taylor Loft H & M, Verizon Wireless Lululemon, BHLDN, Reformation, Sprinkles Trader Joe's, Urban Outfitters Starbucks Serena and Lily, Bonobos, Allbirds Warby Parker, Marine Layer, Kiehl's Champion, Carhartt Nordstrom Rack, Uniqlo Walgreens Old Navy — — Petco, Vitamin Shoppe Target, DSW Faherty, ALC Stone Island, Taft, Frame, Theory — — — TD Bank Walgreens — Betteridge Jewelers Veronica Beard, The RealReal, Blue Mercury Planet Fitness Dr. Martens John Varvatos, Patagonia HSBC Bank Bob's Disc. Furniture, Capital One Vera Wang, Gabriella Hearst Stop & Shop (Ahold) Bank of America, Footlocker The Row, Chloe, Oscar de la Renta District of Columbia Metro 1739-53 & 1801-03 Connecticut Avenue 14th Street Collection TD Bank — 2013 2014 2011 2012 2011 2011 2012 2011 2012 2019 2020 2011 2014 2016 2016 2016 2016 2016 2015 2016 2011 2014 2019 2020 2008 2007 2014 2012 2011 2005 1998 2014 2006 2013 2013 2013 2014 2016 2014 2016 2019 2012 2021 100.0 % 88.4 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 75.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 49.0 % 100.0 % 18,141 100.0 % 100.0 % $ 3,282,187 $ 180.93 87,135 100.0 % 100.0 % 8,450,630 96.98 40,384 88.2 % 88.2 % 6,750,144 189.58 46,259 53,277 86.2 % 64.6 % 86.2 % 1,574,714 68.3 % 1,399,585 52,804 91.2 % 95.7 % 2,335,749 49,921 63.5 % 63.5 % 942,020 78,771 27,385 41,791 13,105 18,275 37,995 176,181 741,424 35,035 9,536 5,862 3,470 11,514 12,964 14,590 16,553 7,986 40,603 2,031 6,600 13,838 100.0 % 100.0 % 68.9 % 100.0 % 70.6 % 47.7 % 95.4 % 86.6 % 75.8 % 0.0 % 78.2 % 100.0 % 100.0 % 100.0 % 80.0 % 100.0 % 100.0 % 73.9 % 100.0 % 100.0 % 79.8 % 100.0 % 100.0 % 100.0 % 100.0 % 70.6 % 47.7 % 95.4 % 89.2 % 75.8 % 0.0 % 78.2 % 100.0 % 100.0 % 100.0 % 80.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 3,346,235 1,430,000 1,153,437 437,248 680,594 613,881 6,427,349 $ 38,823,773 $ 8,201,107 — 1,284,894 303,798 980,044 625,000 368,873 1,741,068 846,873 768,172 838,855 527,076 2,052,536 39.50 40.64 48.52 29.70 42.48 52.22 40.08 33.36 52.79 33.86 38.26 60.46 308.89 — 280.42 87.55 85.12 48.21 31.59 105.18 106.04 25.60 413.03 79.86 185.94 29,114 100.0 % 100.0 % 1,175,271 40.37 7,513 99,685 25,922 342,816 91.1 % 100.0 % 83.4 % 88.2 % 91.1 % 100.0 % 2,919,899 3,335,738 91.5 % 92.7 % 1,521,808 27,491,012 426.45 33.46 70.42 90.96 14,000 14,000 100.0 % 100.0 % 100.0 % 100.0 % 2,583,061 2,583,061 184.50 184.50 100.0 % 100.0 % 20,669 19,461 58.7 % 100.0 % 58.7 % 100.0 % 781,727 1,291,240 64.46 66.35 29 Property (a) Key Tenants Year Acquired Acadia's Interest Gross Leasable Area (GLA) In Place Occupancy Leased Occupancy Annualized Base Rent (ABR) ABR/ Per Square Foot Rhode Island Place Shopping Center M Street and Wisconsin Corridor (26 Properties) (c) Ross Dress for Less Lululemon, CB2 Rag and Bone, The Reformation Boston Metro 330-340 River Street 165 Newbury Street Whole Foods Starbucks Total Street and Urban Retail Acadia Share Total Street and Urban Retail SUBURBAN PROPERTIES New Jersey Elmwood Park Shopping Center Walgreens, Lidl Marketplace of Absecon Walgreens, Dollar Tree New York Village Commons Shopping Center Branch Plaza Amboy Center . Crossroads Shopping Center New Loudon Center 28 Jericho Turnpike Bedford Green Connecticut Town Line Plaza (d) Massachusetts Methuen Shopping Center Crescent Plaza 201 Needham Street 163 Highland Avenue Vermont The Gateway Shopping Center Illinois Hobson West Plaza Indiana Merrillville Plaza Michigan Bloomfield Town Square — LA Fitness, The Fresh Market Stop & Shop (Ahold) LA Fitness HomeGoods,Pet- Smart Price Chopper, Marshalls Kohl's Shop Rite, CVS Wal-Mart, Stop & Shop (Ahold) Wal-Mart, Market Basket Home Depot, Shaw's (Supervalu) Michael's Staples, Petco Garden Fresh Markets Room Place, Jo-Ann Fabrics, TJ Maxx HomeGoods, TJ Maxx Delaware Town Center and Other (2 properties) Market Square Shopping Center Naamans Road Lowes, Bed Bath & Beyond, Target Trader Joe's, TJ Maxx — 2012 2011 2016 2019 2012 2016 1998 1998 1998 1998 2005 2007 1998 1993 2012 2014 1998 1998 1993 2014 2015 100.0 % 57,667 93.4 % 100.0 % 1,757,107 32.61 24.8 % 100.0 % 100.0 % 242,562 340,359 54,226 1,050 55,276 72.6 % 76.9 % 100.0 % 100.0 % 100.0 % 72.6 % 78.0 % 11,660,223 15,490,297 100.0 % 100.0 % 100.0 % 1,320,045 294,632 1,614,677 66.17 59.20 24.34 280.60 29.21 1,493,875 85.4 % 88.0 % $ 86,002,820 $ 67.44 1,280,488 87.5 % 90.1 % $ 75,590,607 $ 67.48 100.0 % 100.0 % 143,910 104,556 79.3 % 92.2 % 87.1 % 92.2 % 2,977,028 1,431,609 26.08 14.85 100.0 % 100.0 % 100.0 % 100.0 % 87,128 96.1 % 98.1 % 2,860,744 123,345 63,290 55,000 94.7 % 86.1 % 100.0 % 98.8 % 86.1 % 100.0 % 3,240,432 1,858,892 1,485,287 49.0 % 311,794 49.8 % 84.5 % 5,401,920 100.0 % 100.0 % 100.0 % 258,701 96,363 90,589 95.2 % 100.0 % 75.1 % 95.2 % 100.0 % 75.1 % 2,237,910 1,815,000 2,363,423 34.15 27.74 34.12 27.01 34.82 9.09 18.84 34.75 100.0 % 206,089 100.0 % 100.0 % 1,900,191 17.47 100.0 % 130,021 100.0 % 100.0 % 1,450,268 100.0 % 100.0 % 100.0 % 218,148 20,409 40,505 96.0 % 100.0 % 100.0 % 96.0 % 100.0 % 100.0 % 2,036,176 646,965 1,490,575 11.15 9.72 31.70 36.80 1998 1998 1998 2003 2003 2006 100.0 % 98,962 96.4 % 97.8 % 1,252,645 13.13 100.0 % 236,134 78.3 % 78.8 % 2,670,678 14.45 100.0 % 234,920 76.7 % 97.7 % 3,042,388 16.88 100.0 % 800,063 100.0 % 100.0 % 102,047 19,850 94.0 % 97.4 % 30.1 % 94.0 % 12,735,493 100.0 % 30.1 % 3,157,072 433,785 16.94 31.77 72.60 30 Shaw's (Supervalu) 1999 100.0 % 101,474 98.6 % 98.6 % 2,175,331 21.75 Property (a) Key Tenants Year Acquired Acadia's Interest Gross Leasable Area (GLA) In Place Occupancy Leased Occupancy Annualized Base Rent (ABR) ABR/ Per Square Foot Pennsylvania Mark Plaza Plaza 422 Chestnut Hill Abington Towne Center (e) Total Suburban Properties Acadia Share Total Suburban Properties Total Core Properties Acadia Share Total Core Properties Kmart Home Depot — Target, TJ Maxx 1993 1993 2006 1998 100.0 % 100.0 % 100.0 % 100.0 % 106,856 156,279 36,492 216,871 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 246,274 909,901 954,833 1,308,178 2.30 5.82 26.17 22.08 4,059,796 89.3 % 93.8 % $ 62,082,998 $ 18.26 3,900,781 91.0 % 94.2 % $ 59,328,019 $ 17.89 5,553,671 88.3 % 92.2 % $ 148,085,818 $ 31.66 5,184,838 90.0 % 93.2 % $ 134,918,626 $ 30.40 a) b) c) d) e) Excludes properties under development or redevelopment, see “Development and Redevelopment Activities” section below. The above occupancy and rent amounts do not include space that is currently leased, but for which rent payment has not yet commenced as of December 31, 2021 (other than under “Leased Occupancy). Residential and office GLA are excluded. Represents the annual base rent paid to the Company pursuant to a master lessee and does not reflect the rent paid by the retail tenants at the property. Excludes 94,000 square feet of office GLA. Anchor GLA includes a 97,300 square foot Wal-Mart store that is not owned by the Company. This square footage has been excluded for calculating annualized base rent per square foot. Anchor GLA includes a 157,616 square foot Target store that is not owned by the Company. This square footage has been excluded for calculating annualized base rent per square foot. 31 The following table sets forth more specific information with respect to each of our Fund properties at December 31, 2021: Property (a) Key Tenants Year Acquired Acadia's Interest Gross Leasable Area (GLA) In Place Occupancy Leased Occupancy Annualized Base Rent (ABR) ABR/Per Square Foot Fund II Portfolio Detail New York City Point Total - Fund II Fund III Portfolio Detail New York 640 Broadway Cortlandt Crossing Total - Fund III Fund IV Portfolio Detail New York 801 Madison Avenue 210 Bowery 27 East 61st Street 17 East 71st Street 1035 Third Avenue (b) New Jersey Paramus Plaza Massachusetts Restaurants at Fort Point Pennsylvania Dauphin Plaza Mayfair Shopping Center Rhode Island 650 Bald Hill Road Virginia Promenade at Manassas Delaware Eden Square Illinois Lincoln Place Georgia Broughton Street Portfolio (13 properties) North Carolina Wake Forest Crossing California 146 Geary Street Union and Fillmore Collection (3 properties) Total - Fund IV Fund V Portfolio Detail New Mexico Plaza Santa Fe Michigan New Towne Plaza Fairlane Green Maryland Frederick County (2 properties) Connecticut Tri-City Plaza New Jersey Midstate Pennsylvania Monroe Marketplace Target, Alamo Drafthouse 2007 26.7 % 541,070 541,070 50.0 % 50.0 % 74.1 % 74.1 % $ $ 9,453,208 9,453,208 $ $ 34.94 34.94 Swatch ShopRite, HomeSense ─ ─ ─ The Row ─ Ashley Furniture, Marshalls ─ Price Rite, Ashley Furniture Planet Fitness, Dollar Tree Dick's Sporting Goods, Burlington Coat Factory Home Depot Giant Food, LA Fitness Kohl's, Marshall's, Ross H&M, Lululemon, Kendra Scott, Starbucks Lowe's, TJ Maxx ─ Eileen Fisher, Bonobos TJ Maxx, Best Buy, Ross Dress for Less Kohl's, Jo-Ann's, DSW TJ Maxx, Michaels, Bed Bath & Beyond Kohl's, Best Buy, Ross Dress for Less TJ Maxx, HomeGoods ShopRite, Best Buy, DSW, PetSmart Kohl's, Dick's Sporting Goods, Giant Food 2012 2012 2015 2012 2014 2014 2015 2013 2016 2016 2016 2015 2013 2014 2017 2014 2016 2015 2015 2017 2017 2017 2019 2019 15.5 % 24.5 % 4,637 122,226 126,863 76.3 % 87.0 % 86.6 % 91.6 % 95.1 % 95.0 % $ $ 895,245 2,988,753 3,883,998 $ 252.90 28.12 35.36 $ 23.1 % 23.1 % 23.1 % 23.1 % 23.1 % 2,522 2,538 4,177 8,432 7,634 — % — % — % 100.0 % 100.0 % $ — % — % — % 100.0 % 100.0 % — — — 2,087,557 1,162,553 $ — — — 247.58 152.29 11.6 % 153,494 100.0 % 100.0 % 3,233,834 21.07 23.1 % 15,711 100.0 % 100.0 % 1,030,234 65.57 23.1 % 23.1 % 215,735 115,411 20.8 % 160,448 22.8 % 280,760 22.8 % 229,936 23.1 % 272,060 23.1 % 96,331 23.1 % 202,325 23.1 % 11,436 20.8 % 7,148 1,786,098 20.1 % 224,152 20.1 % 193,446 20.1 % 270,151 18.1 % 531,101 18.1 % 302,888 92.2 % 94.7 % 85.4 % 99.6 % 89.7 % 95.6 % 86.3 % 97.6 % — % 66.7 % 93.0 % 97.3 % 97.6 % 80.3 % 87.4 % 90.4 % 93.3 % 94.7 % 1,911,873 1,912,416 9.61 17.50 85.4 % 2,025,172 14.79 100.0 % 3,632,158 12.99 91.0 % 95.6 % 88.4 % 99.6 % — % 3,121,691 15.14 3,059,622 11.77 2,953,649 35.54 3,096,528 15.68 — — 77.9 % 93.8 % $ 524,919 29,752,206 110.16 17.91 $ 97.3 % $ 3,890,540 $ 17.83 97.6 % 80.3 % 88.0 % 90.4 % 2,349,445 12.44 4,374,514 20.17 6,678,463 14.39 3,991,187 14.58 2021 — 385,116 83.8 % 83.8 % 6,605,480 20.47 2021 23.1 % 371,652 98.8 % 100.0 % 4,109,789 11.19 32 Property (a) Key Tenants Year Acquired Acadia's Interest Gross Leasable Area (GLA) In Place Occupancy Leased Occupancy Annualized Base Rent (ABR) ABR/Per Square Foot Rhode Island Lincoln Commons Virginia Landstown Commons Florida Palm Coast Landing North Carolina Hickory Ridge Alabama Trussville Promenade Georgia Canton Marketplace Hiram Pavilion California Elk Grove Commons Utah Family Center at Riverdale Total - Fund V Stop and Shop, Marshalls, HomeGoods Best Buy, Bed Bath & Beyond, Ross Dress for Less TJ Maxx, PetSmart, Ross Dress for Less Kohl's, Best Buy, Dick's Wal-Mart, Regal Cinemas Dick's, TJ Maxx, Best Buy Kohl's, HomeGoods Kohl's, HomeGoods Target, Sportman's Warehouse 2019 20.1 % 462,021 82.3 % 90.2 % 5,037,955 13.25 2019 20.1 % 404,808 84.2 % 91.6 % 7,294,784 21.40 2019 2017 2018 2021 2018 2018 20.1 % 171,799 20.1 % 380,565 20.1 % 463,681 23.1 % 20.1 % 351,978 362,675 20.1 % 242,078 2019 18.0 % 372,061 5,490,172 96.3 % 98.3 % 95.4 % 87.9 % 98.6 % 92.6 % 85.9 % 90.4 % 98.6 % 3,350,746 20.26 100.0 % 4,599,468 12.30 95.4 % 4,467,562 10.10 89.1 % 100.0 % 5,296,217 4,336,661 17.11 12.12 97.0 % 4,717,908 21.04 85.9 % 92.4 % $ 3,335,015 74,435,734 $ 10.43 14.99 TOTAL FUND PROPERTIES Acadia Share of Total Fund Properties 7,944,203 88.2 % 91.5 % 117,525,146 $ 16.77 1,588,012 87.7 % 91.6 % $ 23,449,602 $ 16.84 a) b) Excludes properties under development, see “Development and Redevelopment Activities” section below. The above occupancy and rent amounts do not include space which is currently leased, but for which rent payment has not yet commenced other than “leased occupancy. Residential and office GLA are excluded. Property also includes 12,371 square feet of 2nd floor office space and a 29,760 square-foot parking garage (131 spaces). 33 Major Tenants No individual retail tenant accounted for more than 5.3% of total Core Portfolio and Fund base rents for the year ended December 31, 2021, or occupied more than 6.9% of total Core Portfolio and Fund leased GLA as of December 31, 2021. The following table sets forth certain information for our 20 largest retail tenants by base rent for leases in place as of December 31, 2021. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in properties including the Funds (GLA and Annualized Base Rent in thousands): Retail Tenant Number of Stores in Portfolio (a) Total GLA Annualized Base Rent (a) Target H&M Walgreens (b) Bed, Bath, and Beyond (c) TJX Companies (d) Royal Ahold (e) PetSmart, Inc. Verizon Trader Joe's Lululemon LA Fitness International LLC Kohl's Gap(f) Fast Retailing (g) Ulta Salon Cosmetic & Fragrance Albertsons Companies(h) Dick's Sporting Goods, Inc Wakefern Food Corporation (i) Bob's Discount Furniture DSW Total 4 2 7 4 25 5 11 4 5 4 2 2 9 2 12 2 5 4 2 4 115 $ 465 60 98 177 323 183 95 29 48 8 100 201 67 32 50 123 128 78 69 107 2,441 8,457 5,140 4,086 3,999 3,889 3,600 3,161 2,793 2,748 2,570 2,525 2,525 2,474 2,327 1,983 1,981 1,880 1,860 1,843 1,687 61,528 Percentage of Total Represented by Retail Tenant Annualized Base Rent Total Portfolio GLA 6.9 % 0.9 % 1.4 % 2.6 % 4.7 % 2.7 % 1.4 % 0.4 % 0.7 % 0.1 % 1.5 % 3.0 % 1.0 % 0.5 % 0.7 % 1.8 % 1.9 % 1.2 % 1.0 % 1.6 % 36.0 % 5.3 % 3.2 % 2.6 % 2.5 % 2.5 % 2.3 % 2.0 % 1.8 % 1.7 % 1.6 % 1.6 % 1.6 % 1.6 % 1.5 % 1.3 % 1.3 % 1.2 % 1.2 % 1.2 % 1.1 % 39.1 % a) b) c) d) e) f) g) h) i) Does not include tenants that operate at only one Company location Walgreens (5 locations), Rite Aid (2 locations) Bed Bath and Beyond (3 locations), Christmas Tree Shops (1 location) TJ Maxx (12 locations), Marshalls (7 locations), HomeGoods (5 locations), HomeSense (1 location) Stop and Shop (4 locations), Giant (1 location) Old Navy (8 locations), Banana Republic (1 location) Uniqlo (1 location), Theory (1 location) Shaw’s (2 locations) ShopRite (3 locations), Price Rite (1 location) 34 Lease Expirations The following tables show scheduled lease expirations on a pro rata basis for retail tenants in place as of December 31, 2021, assuming that none of the tenants exercise renewal options (GLA and Annualized Base Rent in thousands): Core Portfolio Leases Maturing in Month to Month 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Thereafter Total Funds Leases Maturing in Month to Month 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Thereafter Total Annualized Base Rent (a, b) GLA Number of Leases Current Annual Rent Percentage of Total Square Feet Percentage of Total 4 43 69 59 65 73 33 36 28 19 21 30 480 $ $ 104 8,689 23,997 16,251 21,285 19,574 5,267 14,648 7,017 3,331 5,502 9,254 134,919 0.1 % 6.4 % 17.8 % 12.0 % 15.8 % 14.5 % 3.9 % 10.9 % 5.2 % 2.5 % 4.1 % 6.8 % 100.0 % 3 258 684 698 592 663 111 669 249 82 210 194 4,413 0.1 % 5.8 % 15.5 % 15.8 % 13.4 % 15.0 % 2.5 % 15.2 % 5.6 % 1.9 % 4.8 % 4.4 % 100.0 % Annualized Base Rent (a, b) GLA Number of Leases Current Annual Rent Percentage of Total Square Feet Percentage of Total 12 57 80 90 98 86 42 41 38 35 40 38 657 $ $ 71 1,035 1,744 2,678 3,541 2,100 1,376 1,809 1,784 1,102 1,548 4,662 23,450 0.3 % 4.4 % 7.4 % 11.4 % 15.1 % 9.0 % 5.9 % 7.7 % 7.6 % 4.7 % 6.6 % 19.9 % 100.0 % 6 53 94 176 209 99 120 90 131 68 101 245 1,392 0.5 % 3.8 % 6.7 % 12.6 % 15.0 % 7.1 % 8.6 % 6.4 % 9.4 % 4.9 % 7.3 % 17.7 % 100.0 % a) b) Base rents do not include percentage rents, additional rents for property expense reimbursements, or contractual rent escalations. No single market, except as discussed below under Geographic Concentrations, represents a material amount of rent exposure to the Company. Given the diversity of our markets, properties and characteristics of the individual spaces, the Company cannot make any general representations relating to the expiring rents and the rates at which these spaces may be re-leased. 35 Geographic Concentrations The following table summarizes our operating retail properties by region, excluding redevelopment properties, as of December 31, 2021. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in properties, including the Funds (GLA and Annualized Base Rent in thousands): Region GLA (a,c) % Occupied (b) Annualized Base Rent (b, c) Percentage of Total Represented by Region GLA Annualized Base Rent Annualized Base Rent per Occupied Square Foot (c) Core Portfolio: New York Metro (d) Chicago Metro Mid-Atlantic New England Washington D.C. Metro Midwest Los Angeles Metro Total Core Operating Properties Fund Portfolio: Southeast Northeast New York Metro West Midwest Mid-Atlantic Southwest Chicago Metro San Francisco Metro Total Fund Operating Properties 1,501 731 1,439 772 158 570 14 5,185 2,434 2,560 847 614 464 511 224 272 19 7,945 86.2 % 86.4 % 95.5 % 98.7 % 83.4 % 80.8 % 100.0 % 90.0 % 93.3 % 88.6 % 64.9 % 88.6 % 87.5 % 95.1 % 97.3 % 95.6 % 25.6 % 88.2 % $ $ $ $ 49,197 $ 37,843 19,746 11,314 7,270 6,966 2,583 134,919 $ 35,396 $ 33,303 19,821 8,053 6,724 6,754 3,891 3,060 525 117,527 $ 38.01 59.88 16.14 17.00 55.16 15.13 184.50 30.40 15.59 14.68 36.04 14.80 16.57 13.91 17.83 11.77 110.16 16.77 28.9 % 14.1 % 27.8 % 14.9 % 3.0 % 11.0 % 0.3 % 100.0 % 30.7 % 32.3 % 10.7 % 7.7 % 5.8 % 6.4 % 2.8 % 3.4 % 0.2 % 100.0 % 36.5 % 28.0 % 14.6 % 8.4 % 5.4 % 5.2 % 1.9 % 100.0 % 30.2 % 28.3 % 16.9 % 6.9 % 5.7 % 5.7 % 3.3 % 2.6 % 0.4 % 100.0 % a) b) c) d) Property GLA includes a total of 255,000 square feet, which is not owned by us. This square footage has been excluded for calculating annualized base rent per square foot. The above occupancy and rent amounts do not include space that is currently leased, but for which payment of rent had not yet commenced as of December 31, 2021. The amounts presented reflect the Operating Partnership's pro-rata shares of properties included within each region. New York Metro includes the tri-state and surrounding states. 36 Development and Redevelopment Activities As part of our strategy, we invest in retail real estate assets that may require significant development. As of December 31, 2021, we had the following development or redevelopment projects in various stages of the development process (dollars in millions): Ownership (a) Location Estimated Stabilization Estimated Square Feet Upon Completion Occupied /Leased Rate Key Tenants Description Incurred (b) Estimated Future Range Estimated Total Range Acquisition and Development Costs (a) 80.0 % Washington DC 2023 29,000 — % TBD Redevelopment/addition to existing building with ground level retail, upper floor office and residential units upon completion. Discretionary spend upon securing tenant(s) $ 7.8 $ 24.9 to $ 25.7 $ 32.7 to $ 33.5 100.0 % Farmingdale, NY TBD TBD — % TBD Discretionary spend upon securing necessary approvals and tenant(s) for lease up 24.3 25.7 to 35.7 50.0 to 60.0 100.0 % Chicago, IL 2025 62,000 — % TBD Discretionary spend upon securing tenant(s) for lease up 116.5 $ 148.6 $ to 12.0 62.6 $ 128.5 19.5 80.9 $ 211.2 to 136.0 $ 229.5 Property Development: CORE 1238 Wisconsin FUND III Broad Hollow Commons FUND IV 717 N. Michigan Avenue Major Redevelopment: CORE City Center 100.0 % San Francisco, CA 2024 241,000 72%/99% Target, Whole Foods, PetSmart 555 9th Street 100.0 % San Francisco, CA 2023 149,000 69%/69% Route 6 Mall 100.0 % Honesdale, PA TBD TBD 23%/34% Mad River 100.0 % Dayton, OH TBD TBD 48%/48% TBD TBD TBD Ground up development of pad sites and street level retail and re- tenanting/redevelopment for Whole Foods $ 201.3 $ Re-tenanting and potential split of former 46,000 square foot Nordstrom; façade upgrade and possible vertical expansion Discretionary spend for re-tenanting former 120,000 square foot Kmart anchor space once tenant(s) are secured Discretionary spend for the re-tenanting former 33,000 square foot Babies R Us space once tenant(s) are secured — — — TBD 8.7 to $ 11.7 $ 210.0 to $ 213.0 to TBD TBD to TBD 6.0 to 9.0 6.0 to 9.0 to 1.9 16.6 $ 2.3 1.9 23.0 $ 217.9 to 2.3 $ 224.3 a) Ownership percentages and costs represent total Core Portfolio or Fund level ownership and not our pro rata share. b) Incurred amounts include costs associated with the initial carrying value. $ 201.3 $ 37 ITEM 3. LEGAL PROCEEDINGS. From time to time, we are a party to various legal proceedings, claims or regulatory inquiries and investigations arising out of, or incident to, our ordinary course of business. While we are unable to predict with certainty the outcome of any particular matter, management does not currently expect, when such matters are resolved, that our resulting exposure to loss contingencies, if any, will have a material adverse effect on our consolidated financial position. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information, Dividends and Holders of Record of our Common Shares At February 18, 2022, there were 248 holders of record of our Common Shares, which are traded on the New York Stock Exchange under the symbol “AKR.” Our quarterly dividends are discussed in Note 11 and the characterization of such dividends for federal income tax purposes is discussed in Note 15. Securities Authorized for Issuance Under Equity Compensation Plans Our 2020 Share Incentive Plan (the “2020 Plan”) which was approved by our shareholders at the 2020 annual shareholders’ meeting, authorizes us to issue options, restricted shares, LTIP Units and other securities (collectively, the “Awards”) to, among others, the Company’s officers, trustees and employees up to a total of 2,829,953 Common Shares (on a converted basis). See Note 14, for a discussion of the 2020 Plan. The following table provides information related to the 2020 Plan as of December 31, 2021: Equity Compensation Plan Information (c) (b) (a) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Weighted-average exercise price of outstanding options, warrants and rights Number of securities to be issued upon exercise of outstanding options, warrants and rights Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total — — — $ $ — — — 1,911,558 — 1,911,558 Remaining Common Shares available under the 2020 Plan are as follows: Outstanding Common Shares as of December 31, 2021 Outstanding OP Units as of December 31, 2021 Total Outstanding Common Shares and OP Units Common Shares and OP Units pursuant to the 2020 Plan Less: Issuance of Restricted Shares and LTIP Units Granted Number of Common Shares remaining available 38 89,303,545 5,059,025 94,362,570 2,829,953 (918,395 ) 1,911,558 Share Price Performance The following graph compares the cumulative total shareholder return for our Common Shares for the period commencing December 31, 2016, through December 31, 2021, with the cumulative total return on the Russell 2000 Index (“Russell 2000”), the NAREIT All Equity REIT Index (the “All Equity”) and the NAREIT Equity Shopping Centers (the “Equity Shopping Centers”) over the same period. Total return values for the Russell 2000, the All Equity, the Equity Shopping Centers and the Common Shares were calculated based upon cumulative total return assuming the investment of $100.00 in each of the Russell 2000, the All Equity, the Equity Shopping Centers and our Common Shares on December 31, 2016, and assuming reinvestment of dividends. The shareholder return as set forth in the table below is not necessarily indicative of future performance. The information in this section is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing. Index Acadia Realty Trust Russell 2000 NAREIT All Equity REIT Index NAREIT Equity Shopping Centers 2016 $ 100.00 $ 100.00 100.00 100.00 2017 At December 31, 2019 2018 2020 2021 86.87 $ 114.65 108.67 88.63 78.71 $ 102.02 104.28 75.74 89.55 $ 128.06 134.17 94.70 50.06 $ 153.62 127.30 68.52 79.28 176.39 179.87 113.09 Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities None. Issuer Purchases of Equity Securities The Company maintains a share repurchase program which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program may be discontinued or extended at any time. The Company repurchased 1,219,065 shares for $22.4 million, inclusive of fees, during the year ended December 31, 2020. The Company did not repurchase any shares during the years ended December 31, 2021 or 2019. As of December 31, 2021, management may repurchase up to approximately $122.6 million of the Company’s outstanding Common Shares under this program. 39 ITEM 6. SELECTED FINANCIAL DATA (dollars in thousands, except per share amounts) OPERATING DATA: Revenues (b) Operating expenses, excluding depreciation and impairment charges Depreciation and amortization Impairment charges Gain on disposition of properties Equity in earnings (losses) of unconsolidated affiliates inclusive of gains on disposition of properties Interest income Realized and unrealized holding gains on investments and other Interest expense Income (loss) from continuing operations before income taxes Income tax (provision) benefit Net income (loss) Loss (income) loss attributable to noncontrolling interests Net income (loss) attributable to Acadia Basic and diluted earnings per share, basic (loss) per share Weighted-average number of Common Shares outstanding, basic Weighted-average number of Common Shares outstanding, diluted Cash dividends declared per Common Share BALANCE SHEET DATA: Real estate before accumulated depreciation Total assets Total indebtedness, net Total common shareholders’ equity Noncontrolling interests Total equity OTHER: Funds from operations attributable to Common Shareholders and Common OP Unit holders (c) Cash flows provided by (used in): Operating activities Investing activities Financing activities 2021 2020 Year Ended December 31, 2019 (As Restated) (a) (As Restated) (a) $ 292,497 $ (138,998 ) (123,439 ) (9,925 ) 10,521 250,908 $ (133,826 ) (147,229 ) (85,598 ) 683 289,585 $ (122,530 ) (122,580 ) (1,721 ) 30,324 2018 (As Revised) (a) 2017 (As Revised) (a) 243,126 (109,892 ) (102,674 ) (14,455 ) 48,886 254,452 $ (113,722 ) (114,124 ) — 5,140 5,330 9,065 49,120 (68,048 ) 26,123 (93 ) 26,030 (2,482 ) 23,548 $ 0.26 $ 87,654 87,654 0.60 $ (3,057 ) 8,979 113,362 (69,671 ) (65,449 ) (269 ) (65,718 ) 56,742 (8,976 ) $ (0.11 ) $ 86,442 86,442 0.29 $ 5,899 7,988 6,947 (69,213 ) 24,699 (1,465 ) 23,234 30,483 53,717 $ 0.63 $ 84,436 84,436 1.13 $ 6,761 13,231 — (65,085 ) (13,347 ) (931 ) (14,278 ) 45,061 30,783 $ 0.37 $ 82,080 82,080 1.09 $ 21,467 29,143 5,571 (54,849 ) 66,323 (1,001 ) 65,322 (3,875 ) 61,447 0.73 83,683 83,685 1.05 4,071,607 $ 4,261,746 1,812,238 1,521,613 628,322 2,149,935 4,011,326 $ 4,131,069 1,707,844 1,441,039 609,165 2,050,204 3,960,411 $ 4,251,695 1,650,645 1,541,951 646,439 2,188,390 3,620,583 $ 3,892,942 1,484,683 1,458,777 623,980 2,082,757 3,391,306 3,890,626 1,358,531 1,567,127 647,512 2,214,639 $ $ $ $ 117,143 114,401 127,472 118,870 134,667 104,983 (198,538 ) 91,319 103,947 (100,924 ) (1,257 ) 131,382 (410,538 ) 273,956 97,035 (137,679 ) (10,003 ) 114,213 8,698 (132,413 ) a) b) c) For a description of the Restatement and details of the related adjustments, see Note 2. Revised amounts have been adjusted to conform periods prior to the restatement period. Amounts for credit losses have been reclassified from operating expenses to revenues for the years ended December 31, 2018 and 2017. Funds from operations is a non-GAAP measure. For an explanation of the measure and a reconciliation to the nearest GAAP measure, see “Item 7. Management’s Discussion and Analysis — Supplemental Financial Measures.” 40 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW As of December 31, 2021, there were 186 properties, which we own or have an ownership interest in, within our Core Portfolio and Funds. Our Core Portfolio consists 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 through our Funds. These properties primarily consist of street and urban retail, and suburban shopping centers. See Item 2. Properties for a summary of our wholly-owned and partially-owned retail properties and their physical occupancies at December 31, 2021. 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. Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective: • • Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas and create value through accretive development 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 with high 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 repositioning opportunities, 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. • Some of these investments historically have also included, and may in the future include, joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets. • Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth. SIGNIFICANT DEVELOPMENTS DURING THE YEAR ENDED DECEMBER 31, 2021 Restatement of Previously Issued Financial Statements On February 14, 2022, the management and the audit committee of the board of trustees (the “Audit Committee”) of the Company, in consultation with BDO USA LLP (“BDO”), the Company’s independent registered public accounting firm, determined that the Company’s previously issued financial statements and the audit reports thereon, as of and for the years ended December 31, 2020 and 2019, and as of and for each of the quarterly periods ended March 31, 2021 and 2020, June 30, 2021 and 2020, September 30, 2021 and 2020, and December 31, 2020 (collectively, the “Prior Period Financial Statements”), should no longer be relied upon due to an error in accounting treatment at the time of formation related to the improper consolidation of two Fund investments that are less-than-wholly-owned through the Company's opportunity funds (the "Fund Investments"). The Fund Investments, which were formed in 2012 and 2013, have been adjusted from consolidated investments to investments in unconsolidated affiliates. Management and the Audit Committee have determined that these accounting changes required a restatement of the Prior Period Financial Statements (the "Restatement"). As part of the Company’s normal annual reporting process prior to releasing its 2021 fourth quarter and year-to-date December 31, 2021 results and prior to completion of the related audit, the Company and BDO identified the Restatement items described in more detail below. The Company has since reevaluated its accounting and determined that it needs to correct the previous accounting for such items. The Restatement: • is based on an error in the application of generally accepted accounting principles ("GAAP") as they relate to the consolidation of subsidiaries, which involves significant judgment and is related to the presentation of the Fund Investments within the Company’s consolidated balance sheets, statements of operations and statements of cash flows. The consolidation error, excluding the immaterial previously unrecorded adjustments noted below, had no impact on net income, funds from operations ("FFO"), or distributions in excess of accumulated earnings. However, substantially all of the changes to the consolidated balance sheets at each of December 31, 2020 and 2019 were due to the consolidation error as follows: 41  a $55.8 million and $57.4 million reduction in total assets, which includes a $23.0 million and $14.5 million increase to investments in unconsolidated affiliates; a $57.5 million and $58.8 million reduction in total liabilities; and a $1.9 million and $1.8 million increase to noncontrolling interests. • also includes other immaterial previously unrecorded adjustments, which had a minor impact on previously-reported net income (loss) and net earnings (loss) per share, FFO and FFO per share:   the impact on net income (loss) attributable to Acadia for the nine months ended September 30, 2021, the year ended December 31, 2020 and the year ended December 31, 2019 was a (reduction) increase of ($0.6) million or ($0.01) per share, ($0.2) million or ($0.01) per share, and $0.7 million or $0.01 per share, respectively; the impact on FFO for the nine months ended September 30, 2021, the year ended December 31, 2020 and the year ended December 31, 2019 was a (reduction) increase of ($0.6) million or ($0.01) per share, ($0.2) million or ($0.01) per share, and $0.6 million or $0.01 per share, respectively; • is illustrated in detail in Note 2 and Note 17 to the consolidated financial statements. Acquisitions During the year ended December 31, 2021, we made one Core Portfolio investment for $26.3 million and Fund V acquired three shopping centers totaling $168.6 million, inclusive of transaction costs, as described below (Note 3). • • • • On August 20, 2021, Fund V acquired a shopping center referred to as Canton Marketplace, located in Canton Georgia, for $51.0 million, inclusive of transaction costs, less the assumption of $31.8 million of first mortgage debt. On September 9, 2021, Fund V acquired a shopping center referred to as Monroe Marketplace, located in Selinsgrove Pennsylvania, for $44.8 million, inclusive of transaction costs. On November 12, 2021, Fund V acquired a land parcel adjacent to the shopping center for $1.0 million. On December 14, 2021, Fund V acquired a shopping center referred to as Midstate, located in East Brunswick, New Jersey, for $71.9 million, inclusive of transaction costs. On December 23, 2021, we acquired three retail buildings, referred to as the 14th Street Portfolio, in northwest Washington, D.C. for a total of $26.3 million, inclusive of transaction costs. Dispositions of Real Estate During the year ended December 31, 2021, we disposed of one consolidated Core property for $16.4 million, five consolidated Fund properties for total proceeds of $49.9 million, two unconsolidated Fund land parcels for $10.5 million, and terminated one Fund ground lease recognizing an aggregate gain of $10.5 million, of which the Company's share was $6.6 million, as follows: • • • On January 29, 2021, we sold one Core Portfolio consolidated property, 60 Orange Street, for $16.4 million, repaid the related mortgage of $6.7 million and recognized a gain of $4.6 million (Note 3). On January 4, 2021, Fund V sold two land parcels at its unconsolidated Family Center at Riverdale property for a total of $10.5 million, repaid $7.9 million of the related mortgage, and the venture recognized a gain of $3.2 million, of which the Company’s share was $0.6 million (Note 5). On May 19, 2021, Fund III sold its consolidated 654 Broadway property for $10.0 million and recognized a gain on the sale of $0.1 million (Note 3), of which the Company's share was insignificant. 42 • • On June 18, 2021, Fund IV sold four consolidated properties located in Maine within its NE Grocer Portfolio (the Airport Mall, Shaw's Waterville, Shaw's Windham and Wells properties) for aggregate proceeds of $39.9 million, repaid the related mortgages totaling $23.5 million, and recognized an aggregate gain on sale of $5.1 million of which the Company's share was $1.2 million (Note 3). On June 25, 2021, Fund IV terminated its ground lease at 110 University Place and returned the property to the lessor, recognizing a gain on lease termination of $0.7 million, of which the Company's share was $0.2 million (Note 12). In addition, during the fourth quarter of 2021, we entered into agreements to sell two Fund properties for aggregate proceeds of approximately $89.2 million. As these dispositions are deemed likely of completion within one year, these properties have been classified as "held-for-sale" on the Company's consolidated balance sheet (Note 3, Note 18). Financing Activity During the year ended December 31, 2021, we effected the following financing activities (Note 8): • • • • • • • entered into a new amended and restated credit facility on June 29, 2021, increasing the capacity under our revolving credit facility by $50.0 million and under our term loan by $50.0 million; entered into a new $29.2 million Fund mortgage collateralized by Monroe Marketplace; assumed a $31.8 million mortgage upon Fund V's acquisition of Canton Marketplace (Note 3); extended 11 Fund mortgages, two during the first quarter with aggregate balances of $37.7 million (after principal reductions of $1.7 million), five during the second quarter totaling $125.7 million (after principal reductions of $6.5 million), two during the third quarter totaling $53.1 million (after principal reductions of $10.2 million), and two during the fourth quarter totaling $14.8 million (after principal reductions of $3.0 million); modified and extended the Fund II term loan resulting in a one-year extension, the Fund IV bridge facility resulting in a six-month extension and a $15.0 million repayment, and the Fund V subscription line resulting in a one-year extension; refinanced a Fund II loan for $18.5 million with a new loan for $16.8 million; and made repayments of mortgages underlying property dispositions as noted above. 43 Structured Financing Investments During the year ended December 31, 2021, we made two Core Portfolio loans totaling $59.0 million within our Structured Financing portfolio, of which $58.0 million was funded as follows (Note 4): • • On April 20, 2021, we made a $16.0 million first mortgage loan collateralized by a retail building in Silver Spring, Maryland. On September 17, 2021, we made a $43.0 million first mortgage loan collateralized by a retail condominium in Soho, New York, of which $42.0 million was funded. In addition, one Core Portfolio and one Fund loan receivable remain in default (Note 4) at December 31, 2021. ATM Program Activity We sold 2,889,371 Common Shares under our ATM Program during the year ended December 31, 2021 for gross proceeds of $64.9 million, or $63.9 million net of issuance costs, at a weighted-average gross price per share of $22.46 (Note 11). During January 2022, we sold 4,281,576 common shares under our ATM program for gross proceeds of $96.3 million, at an average gross price of $22.48, or $92.5 million net of issuance costs (Note 18). 44 RESULTS OF OPERATIONS See Note 13 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments. Comparison of Results for the Year Ended December 31, 2021 to the Year Ended December 31, 2020 (As Restated) The results of operations by reportable segment for the year ended December 31, 2021 compared to the year ended December 31, 2020 (As Restated) are summarized in the table below (in millions, totals may not add due to rounding): Core $ 181.3 Year Ended December 31, 2021 Funds $ 111.2 SF $ — — (54.3 ) Total $ 292.5 (123.4 ) Year Ended December 31, 2020 (As Restated) Core Funds SF $ 160.3 $ (76.1 ) 90.6 $ (71.1 ) Total — $ 250.9 (147.2 ) — Core $ 21.0 (7.0 ) Increase (Decrease) Funds $ 20.6 SF $ — — (16.8 ) Total $ 41.6 (23.8 ) (69.1 ) (57.0 ) — — 4.6 59.9 — — — 30.8 (2.3 ) (41.9 ) — (9.9 ) 5.9 10.9 — — — — — — 9.1 — — 53.7 — 30.9 (4.5 ) — 4.5 (98.9 ) (40.1 ) (9.9 ) 10.5 30.7 9.1 5.3 (68.0 ) 49.1 (0.1 ) 26.0 (57.2 ) — (0.4 ) 0.2 26.6 — (40.8 ) — (85.2 ) 0.5 (105.9 ) — — — — — — 9.0 (98.0 ) (35.8 ) (85.6 ) 0.7 (115.1 ) 9.0 (0.2 ) — (0.4 ) 4.4 33.3 — 1.1 — (75.3 ) 5.4 116.8 — (0.9 ) (33.2 ) (2.2 ) (36.5 ) — — (3.1 ) (69.7 ) 1.3 (3.7 ) 7.2 2.1 — — — — — 0.1 — — 0.9 4.3 (75.7 ) 9.8 145.8 0.1 8.4 (1.7 ) 18.6 — 11.2 95.4 — (49.2 ) (0.6 ) — 8.4 113.4 (0.3 ) (65.7 ) (18.6 ) — 19.6 (41.7 ) — 80.1 (3.9 ) — (3.9 ) (64.3 ) 0.2 91.7 0.4 (29.5 ) 5.0 (38.6 ) $ 28.5 (0.2 ) $ $ 30.7 — 4.5 $ (2.5 ) 23.5 $ (5.8 ) 5.3 $ 62.6 13.4 $ — 8.4 $ 56.7 (9.0 ) (3.5 ) 62.8 $ 17.3 — 59.2 (3.9 ) $ 32.5 $ $ 23.2 Revenues Depreciation and amortization Property operating expenses, other operating and real estate taxes General and administrative expenses Impairment charges Gain on disposition of properties Operating income (loss) Interest income Equity in earnings (losses) of unconsolidated affiliates Interest expense Realized and unrealized holding gains on investments and other Income tax provision Net income (loss) Net loss (income) attributable to noncontrolling interests Net income attributable to Acadia Core Portfolio The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio increased $23.2 million for the year ended December 31, 2021 compared to the prior year as a result of the changes further described below. Revenues for our Core Portfolio increased $21.0 million for the year ended December 31, 2021 compared to the prior year primarily due to (i) $14.9 million decrease in credit loss reserves in 2021 primarily related to additional COVID-19 Pandemic reserves in 2020 (Note 12), (ii) $5.1 million from the reversal of reserved amounts for cash received on past due balances, (iii) $2.5 million related to the consolidation of Town Center in 2020 (Note 5), (iv) $2.5 million for the write-off of a below-market lease at a property, (v) $2.2 million from increased tenant recoveries due to higher operating expenses including real estate taxes, and (vi) $1.8 million for higher termination income in 2021 for vacated tenants. These increases were partially offset by (i) decreases in revenues of $4.8 million for tenants that vacated during 2020, (ii) $2.0 million from an additional increase in abatements due to the COVID-19 Pandemic in 2021 and (iii) $1.0 million for property dispositions in 2021. Depreciation and amortization for our Core Portfolio decreased $7.0 million for the year ended December 31, 2021 compared to the prior year primarily due to the write off of deferred leasing and tenant improvement costs associated with tenants that vacated during 2020 (Note 7). The gain on disposition of properties for our Core Portfolio of $4.4 million for the year ended December 31, 2021 relates to the sale of 60 Orange Street (Note 3). Equity in earnings (losses) of unconsolidated affiliates for our Core Portfolio increased $1.3 million for the year ended December 31, 2021 compared to the prior year as a result of a $2.5 million decrease in credit loss reserves at unconsolidated properties related to the COVID-19 Pandemic (Note 12) in 2021 offset by $1.4 million from the consolidation of Town Center in 2020. Interest expense for our Core Portfolio decreased $3.7 million for the year ended December 31, 2021 compared to the prior year primarily due to (i) $1.8 million from default interest on a loan that was paid off in 2020, (ii) $1.2 million from higher average outstanding borrowings in 2020 and (iii) $1.2 million from the modification of a financing lease to an operating lease in 2020. These decreases were offset by $0.7 million due to higher loan cost amortization in 2021. Realized and unrealized holding gains on investments and other for our Core Portfolio of $18.6 million in 2020 is due to a gain on debt extinguishment of $18.3 million related to the Brandywine Holdings note (Note 8). 45 Net loss (income) attributable to noncontrolling interests for our Core Portfolio decreased $3.5 million for the year ended December 31, 2021 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above. Funds The results of operations for our Funds segment are depicted in the table above under the headings labeled “Funds.” Segment net income attributable to Acadia for the Funds increased $17.3 million for the year ended December 31, 2021 compared to the prior year as a result of the changes described below. Revenues for the Funds increased $20.6 million for the year ended December 31, 2021 compared to the prior year primarily due to (i) $22.2 million from a decrease in credit loss reserves in 2021 primarily related to additional COVID-19 Pandemic reserves in 2020 (Note 12), (ii) $4.5 million from the reversal of reserved amounts for cash received on past due balances (iii) $3.6 million from property acquisitions in 2021, and (iv) $1.4 million from an increase in percentage rent in 2021. These increases were partially offset by decreases of (i) $3.3 million for tenants that vacated during 2020, (ii) $3.1 million from property dispositions in 2021, and (iii) $2.5 million from an increase in rent abatements related to the COVID-19 Pandemic in 2021. Depreciation and amortization for the Funds decreased $16.8 million for the year ended December 31, 2021 compared to the prior year primarily due to the write-off of costs associated with tenants that vacated during 2020 (Note 7). Property operating expenses, other operating and real estate taxes for the Funds increased $1.1 million for the year ended December 31, 2021 compared to the prior year primarily due to an overall increase of operating expenses across our properties in 2021 following reduced levels in 2020 as a result of the COVID-19 Pandemic (Note 12). Impairment charges for the Funds decreased $75.3 million for the year ended December 31, 2021 compared to the prior year (Note 9). Impairment charges totaling $9.9 million for the Funds in 2021 relate to 27 East 61st and 210 Bowery in Fund IV. Impairment charges totaling $85.2 million during 2020 for the Funds relate to $33.8 million for 654 Broadway and Cortlandt Crossing in Fund III and $51.4 million for 717 N Michigan, 801 Madison and 146 Geary Street in Fund IV. Gain on disposition of properties for the Funds increased $5.4 million for the year ended December 31, 2021 compared to the prior year due to dispositions of 654 Broadway at Fund III, and the NE Grocer Portfolio and 110 University at Fund IV in 2021 compared to the sale of Colonie Plaza in 2020 at Fund IV (Note 3, Note 12). Equity in earnings (losses) of unconsolidated affiliates for the Funds increased $7.2 million for the year ended December 31, 2021 compared to the prior year primarily due to the $3.3 million due to COVID-19 Pandemic related reserves at properties in 2020 (Note 12) and $3.2 million gain on sale related to two land parcels at Riverdale Family Center in Fund V (Note 5) in 2021. Interest expense for the Funds increased $2.1 million for the year ended December 31, 2021 compared to the prior year due to a $3.7 million decrease in interest capitalized in 2021, $0.7 million from increased loan cost amortization in 2021 and a $0.4 million increase related to higher average outstanding borrowings in 2021. These increases were primarily offset by $2.3 million from lower average interest rates in 2021. Realized and unrealized holding gains on investments and other for the Funds decreased $41.7 million for the year ended December 31, 2021 compared to the prior year . Realized and unrealized holding losses on investments and other includes primarily a $51.9 million mark-to-market adjustment on the Investment in Albertsons (Note 5) during the year ended December 31, 2021 compared to a $72.4 million mark-to-market adjustment and a $23.2 million net realized gain on disposition of shares related to the Investment in Albertsons in 2020. Net loss (income) attributable to noncontrolling interests for the Funds increased $62.8 million for the year ended December 31, 2021 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above. Net loss attributable to noncontrolling interests in the Funds includes asset management fees earned by the Company of $11.1 million and $15.2 million for the year ended December 31, 2021 and 2020, respectively. Structured Financing The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” Realized and unrealized holding gains on investments and other for the Structured Financing portfolio decreased $3.9 million for the year ended December 31, 2021 compared to the prior year primarily due to the increase in a CECL allowance on a note in 2021. 46 Unallocated The Company does not allocate general and administrative expense and income taxes to its reportable segments. These unallocated amounts are depicted in the table above under the headings labeled “Total.” Unallocated general and administrative expense increased $4.3 million for the year ended December 31, 2021 compared to the prior year due to increased compensation expense primarily attributable to an increase in the number of employees and the valuation of equity grants in 2021. Comparison of Results for the Year Ended December 31, 2020 (As Restated) to the Year Ended December 31, 2019 (As Restated) The results of operations by reportable segment for the year ended December 31, 2020 (As Restated) compared to the year ended December 31, 2019 (As Restated) are summarized in the table below (in millions, totals may not add due to rounding): Year Ended Year Ended Revenues Depreciation and amortization Property operating expenses, other operating and real estate taxes General and administrative expenses Impairment charges Gain on disposition of properties Operating income (loss) Interest income Equity in earnings (losses) of unconsolidated affiliates Interest expense Realized and unrealized holding gains on investments and other Income tax provision Net income (loss) Net loss (income) attributable to noncontrolling interests Net income attributable to Acadia Core Portfolio December 31, 2020 (As Restated) Core $ 160.3 $ (76.1 ) Total — $ 250.9 (147.2 ) — 90.6 $ (71.1 ) Funds SF December 31, 2019 (As Restated) Total Core — $ 289.6 (122.6 ) — $ 173.2 $ 116.4 $ (60.8 ) Funds (61.8 ) SF Increase (Decrease) Core Funds SF Total $ (12.9 ) $ 14.3 (25.8 ) $ 10.3 — $ — (38.7 ) 24.6 (57.2 ) — (0.4 ) 0.2 26.6 — (40.8 ) — (85.2 ) 0.5 (105.9 ) — — — — — — 9.0 (98.0 ) (35.8 ) (85.6 ) 0.7 (115.1 ) 9.0 (47.0 ) — — 16.8 81.1 — (41.2 ) — (1.7 ) 13.6 26.3 — — — — — — 8.0 (88.2 ) (34.3 ) (1.7 ) 30.3 73.1 8.0 10.2 — 0.4 (16.6 ) (54.5 ) — (0.4 ) — 83.5 (13.1 ) (132.2 ) — (0.9 ) (33.2 ) (2.2 ) (36.5 ) — — (3.1 ) (69.7 ) 9.0 (28.3 ) (3.1 ) (40.9 ) — — 5.9 (69.2 ) (9.9 ) 4.9 0.9 (4.4 ) — — — — — 1.0 — — 9.8 1.5 83.9 (29.6 ) (188.2 ) 1.0 (9.0 ) 0.5 18.6 — 11.2 95.4 — (49.2 ) (0.6 ) — 8.4 113.4 (0.3 ) (65.7 ) 0.3 — 62.1 6.6 — (11.1 ) — — 8.0 6.9 (1.5 ) 23.2 18.3 — (50.9 ) 88.8 — (38.1 ) (0.6 ) — 0.4 106.5 1.2 (88.9 ) (5.8 ) 5.3 $ 62.6 13.4 $ $ — 8.4 $ 56.7 (9.0 ) 0.3 30.1 $ 62.5 $ 19.0 $ — 8.0 $ 30.5 53.7 6.1 $ (57.2 ) $ (32.5 ) (5.6 ) $ — 0.4 $ (26.2 ) (62.7 ) The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio decreased $57.2 million for the year ended December 31, 2020 compared to the prior year as a result of the changes further described below. Revenues for our Core Portfolio decreased $12.9 million for the year ended December 31, 2020 compared to the prior year primarily due to (i) a $21.3 million increase in credit loss reserves (comprised of $12.9 million and $8.4 million of billed rent and straight-line rent, respectively) in 2020 related to the COVID-19 Pandemic (Note 12); (ii) the write-off of a below-market lease in the prior year period related to a tenant that vacated for $5.7 million, (iii) $4.0 million from tenant bankruptcies and (iv) $1.0 million from property dispositions in 2019. These decreases were partially offset by (i) $8.9 million related to the consolidation of Town Center in 2020 (Note 5) and (ii) additional rents of $8.1 million from Core Portfolio property acquisitions during 2019 and 2020 (Note 3). Depreciation and amortization for our Core Portfolio increased $14.3 million for the year ended December 31, 2020 compared to the prior year primarily due to $6.1 million from the consolidation of Town Center, $5.1 million from the write-off of unamortized tenant improvements and leasing commissions related to a vacating tenant in 2020, and $4.2 million from Core Portfolio property acquisitions in 2019 and 2020. Property operating expenses, other operating and real estate taxes for our Core Portfolio increased $10.2 million for the year ended December 31, 2020 compared to the prior year primarily due to $7.1 million for Brandywine Holdings litigation (Note 8), $1.8 million related to the consolidation of Town Center and $1.1 million from Core Portfolio property acquisitions in 2019 and 2020. Gain on disposition of properties for our Core Portfolio decreased $16.6 million for the year ended December 31, 2020 compared to the prior year Gain on disposition of properties of $0.2 million in 2020 was related to two land parcel sales compared to $16.8 million for the sale of Pacesetter Park in 2019 (Note 3). 47 Equity in earnings (losses) of unconsolidated affiliates for our Core Portfolio decreased $9.9 million for the year ended December 31, 2020 compared to the prior year due to $5.4 million from the consolidation of Town Center in 2020 as well as a $4.5 million increase in credit loss reserves at unconsolidated properties related to the COVID-19 Pandemic (Note 12). Interest expense for our Core Portfolio increased $4.9 million for the year ended December 31, 2020 compared to the prior year primarily due to higher average outstanding borrowings in 2020. Realized and unrealized holding gains on investments and other for our Core Portfolio of $18.3 million in 2020 is due to a gain on debt extinguishment related to the Brandywine Holdings note (Note 8). Net loss (income) attributable to noncontrolling interests for our Core Portfolio increased $6.1 million for the year ended December 31, 2020 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above. Funds The results of operations for our Funds segment are depicted in the table above under the headings labeled “Funds.” Segment net income attributable to Acadia for the Funds decreased $5.6 million for the year ended December 31, 2020 compared to the prior year as a result of the changes described below. Revenues for the Funds decreased $25.8 million for the year ended December 31, 2020 compared to the prior year primarily due to (i) a $25.6 million increase in credit loss reserves (comprised of $11.9 million and $13.7 million of billed rent and straight-line rent, respectively) in 2020 primarily related to the COVID-19 Pandemic (Note 12); (ii) $5.1 million from the acceleration of amortization on a below-market lease in 2019, (iii) $4.3 million from Fund property dispositions (Note 3) and (iv) $1.4 million from tenant bankruptcies. These decreases were partially offset $8.8 million from Fund property acquisitions in 2019. Depreciation and amortization for the Funds increased $10.3 million for the year ended December 31, 2020 compared to the prior year primarily due to $11.3 million from the write-off of tenant improvements and leasing commissions related to vacated tenants in 2020 and $4.5 million from Fund property acquisitions in 2019 partially offset by $3.5 million for write-offs due to tenant bankruptcies in 2019 and $2.1 million from Fund property dispositions in 2019 and 2020. Impairment charges for the Funds increased $83.5 million for the year ended December 31, 2020 compared to the prior year (Note 9). Impairment of $85.2 million during 2020 for the Funds relates to $33.8 million in Fund III and $51.4 million in Fund IV. Charges during 2019 relate to $1.7 million in Fund IV. Gain on disposition of properties for the Funds decreased $13.1 million for the year ended December 31, 2020 compared to the prior year due to $13.6 million for the sale of 3104 M Street and Nostrand Avenue in Fund III and 938 W. North and JFK Plaza in Fund IV during 2019 compared to the sale of Fund IV’s Colonie Plaza during 2020 (Note 3, Note 5). Interest expense for the Funds decreased $4.4 million for the year ended December 31, 2020 compared to the prior year due to $9.4 million from lower average interest rates in 2020 and $2.7 million from lower loan cost amortization in 2020. These decreases were offset by a $4.5 million decrease in interest capitalized in 2020 due to ceasing capitalization interest on Fund III’s Cortlandt Crossing and Fund IV’s 717 N. Michigan Avenue and a $0.4 million increase related to higher average outstanding borrowings in 2020. Realized and unrealized holding gains on investments and other for the Funds increased $88.8 million for the year ended December 31, 2020 compared to the prior year due to a $72.4 million mark-to-market adjustment on the Albertson’s IPO shares and a $23.2 million net realized gain on disposition of Albertson’s shares during 2020 (Note 5). These increases were primarily offset by a $5.0 million New Market Tax Credit transaction at Fund II’s City Point investment and $1.6 million from an incentive fee earned from Fund III’s Storage investment during 2019. Net loss (income) attributable to noncontrolling interests for the Funds decreased $32.5 million for the year ended December 31, 2020 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above. Net loss attributable to noncontrolling interests in the Funds includes asset management fees earned by the Company of $15.2 million and $17.5 million for the year ended December 31, 2020 and 2019, respectively. Structured Financing The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” Interest income for the Structured Financing portfolio increased $0.4 million for the year ended December 31, 2020 compared to the prior year primarily due to $5.9 million of additional interest income from new notes issued in 2020 and 2019 partially offset by $4.1 million from the conversion of the Brandywine Note Receivable to equity in 2020 (Note 5) and the payoff of a Fund IV note during 2019 (Note 4). 48 Unallocated The Company does not allocate general and administrative expense and income taxes to its reportable segments. These unallocated amounts are depicted in the table above under the headings labeled “Total.” Unallocated general and administrative expense increased $1.5 million for the year ended December 31, 2020 compared to the prior year due to an increase in stock based compensation in 2020. Unallocated income taxes increased $1.2 million for the year ended December 31, 2020 compared to the prior year due to the establishment of a $1.0 million deferred tax asset reserve at the Fund III Taxable REIT Subsidiary (“TRS”) which was primarily offset by the newly available carryback of net operating losses under Federal rules in 2020. In 2019, the Company established a $1.7 million deferred tax asset reserve at the Core TRS. Restatement of Quarterly Financial Data As announced on February 15, 2022, the Company has restated its unaudited interim financial statements for the three months ended March 31, 2021 and 2020, the three and six months ended June 30, 2021 and 2020, the three and nine months ended September 30, 2021 and 2020 and the three months ended December 31, 2020. Detailed restatements of the Company's consolidated quarterly financial statements are provided in Note 17. The Company determined that a comprehensive restatement of the results of operations and liquidity for each quarterly period was not as meaningful to the reader of the financial statements as the summary below. All adjustments relate to one of the following categories: (a) an error in accounting treatment at the time of formation related to the improper consolidation of the two Fund Investments that have been adjusted from consolidated investments to equity in earnings from unconsolidated affiliates. These corrections had no impact on net income (loss), FFO, Core NOI or distributions in excess of accumulated earnings. Additionally, during the Restatement periods, the Fund Investments did not have any significant transactions (new borrowings, acquisitions, or dispositions) other than their ongoing rental operations in the normal course of business that would otherwise be discussed in management's discussion of results of operations or liquidity. (b) errors related to other immaterial previously unrecorded adjustments, which were also recorded as part of the Restatement. These adjustments were primarily adjustments which the Company deemed immaterial in prior periods. The total impact of these previously unrecorded adjustments was:        a reduction in each of net income attributable to Acadia and FFO of $0.3 million ($0.01 per share for net income and $0.00 for FFO) and $0.0 million ($0.00 per share), for the three months ended March 31, 2021 and 2020, respectively; a reduction in each of net income attributable to Acadia and FFO of $0.2 million ($0.00 per share for net income and $0.01 for FFO) and $0.6 million ($0.01 per share) for the three and six months ended June 30, 2021, respectively; a reduction in net income attributable to Acadia of $0.1 million ($0.00 per share) and $0.1 million ($0.00 per share) for the three and six months ended June 30, 2020, respectively; a reduction in FFO of $0.0 million ($0.00 per share) and $0.0 million ($0.00 per share) for the three and six months ended June 30, 2020, respectively; a reduction in each of net income attributable to Acadia and FFO of $0.1 million ($0.00 per share) and $0.6 million ($0.01 per share), for the three and nine months ended September 30, 2021, respectively; a reduction in net income attributable to Acadia of $0.0 million ($0.00 per share) and $0.1 million ($0.00 per share), for the three and nine months ended September 30, 2020, respectively; a reduction in FFO of $0.0 million ($0.00 per share) and $0.0 million ($0.00 per share), for the three and nine months ended September 30, 2020, respectively; a reduction in each of net income attributable to Acadia and FFO of $0.1 million ($0.01 per share) for the three months ended December 31, 2020; and The immaterial previously unrecorded adjustments include the recognition of additional reserves for the Company's Structured Financing notes receivable (Note 4) of $1.4 million or $0.3 million at the Company's share, for the three months ended March 31, 2021; $0.7 million and $2.3 million, or $0.2 million and $0.5 million at the Company's share for the three and six months ended June 30, 2021; $0.8 million and $3.1 million, or $0.2 million and $0.7 million at the Company's share, for the three and nine months ended September 30, 2021; and $0.7 million or $0.1 million at the Company's share for the three months ended December 31, 2020. None of the errors significantly impacted Core NOI for any of the Restatement Periods. 49 SUPPLEMENTAL FINANCIAL MEASURES Net Property Operating Income The following discussion of net property operating income (“NOI”) and rent spreads on new and renewal leases includes the activity from both our consolidated and our pro-rata share of unconsolidated properties within our Core Portfolio. Our Funds invest primarily in properties that typically require significant leasing and development. Given that the Funds are finite-life investment vehicles, these properties are sold following stabilization. For these reasons, we believe NOI and rent spreads are not meaningful measures for our Fund investments. NOI represents property revenues less property expenses. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriate supplemental disclosures of Core 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 calculating these may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. A reconciliation of consolidated operating income to net operating income (loss) - Core Portfolio follows (in thousands): Year Ended December 31, 2020 2021 2019 Consolidated operating income (loss) (a) Add back: General and administrative Depreciation and amortization Impairment charges Less: Above/below-market rent, straight-line rent and other adjustments (a) Gain on disposition of properties Consolidated NOI Noncontrolling interest in consolidated NOI Less: Operating Partnership's interest in Fund NOI included above Add: Operating Partnership's share of unconsolidated joint ventures NOI (b) NOI - Core Portfolio $ $ (As Restated) (As Restated) 73,078 (115,062 ) $ $ 30,656 40,125 123,439 9,925 (19,488 ) (10,521 ) 174,136 (48,401 ) (12,337 ) 13,811 127,209 $ 35,798 147,229 85,598 13,581 (683 ) 166,461 (46,316 ) (11,518 ) 15,659 124,286 $ 34,299 122,580 1,721 (23,292 ) (30,324 ) 178,062 (50,213 ) (13,556 ) 25,949 140,242 a) b) Includes straight-line rent reserves. See Note 1 for additional information about straight-line rent reserves and adjustments for the periods presented. Does not include the Operating Partnership’s share of NOI from unconsolidated joint ventures within the Funds. Same-Property NOI includes Core Portfolio properties that we owned for both the current and prior periods presented, but excludes those properties which we acquired, sold or expected to sell, and developed during these periods. The following table summarizes Same-Property NOI for our Core Portfolio (in thousands): Core Portfolio NOI Less properties excluded from Same-Property NOI Same-Property NOI $ $ 32,476 (3,832 ) 28,644 $ $ $ 30,556 (2,798 ) 27,758 $ Three Months Ended December 31, 2021 2020 Year Ended December 31, 2021 127,209 (9,992 ) 117,217 $ $ 2020 124,286 (8,856 ) 115,430 Percent change from prior year period 3.2 % 1.5 % Components of Same-Property NOI: Same-Property Revenues Same-Property Operating Expenses Same-Property NOI $ $ 42,525 (13,881 ) 28,644 $ $ 50 $ 40,424 (12,666 ) 27,758 $ 171,028 (53,811 ) 117,217 $ $ 164,499 (49,069 ) 115,430 Rent Spreads on Core Portfolio New and Renewal Leases The 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 Core Portfolio for the periods presented. Cash basis represents a comparison of rent most recently paid on the previous lease as compared to the initial rent paid on the new lease. Straight-line basis represents a comparison of rents as adjusted for contractual escalations, abated rent and lease incentives for the same comparable leases. Three Months Ended December 31, 2021 Year Ended December 31, 2021 Core Portfolio New and Renewal Leases Number of new and renewal leases executed GLA commencing New base rent Expiring base rent Percent growth in base rent Average cost per square foot (a) Weighted average lease term (years) Cash Basis Straight- Line Basis 21 118,679 28.82 19.27 $ $ 49.5 % $ 29.22 11.3 $ $ $ Cash Basis 66 449,095 26.73 23.47 $ $ Straight- Line Basis 66 449,095 27.80 22.43 $ $ 21 118,679 30.29 18.95 59.9 % 13.9 % 29.22 11.3 $ 12.41 7.1 $ 23.9 % 12.41 7.1 a) The average cost per square foot includes tenant improvement costs, leasing commissions and tenant allowances. Funds from Operations We consider funds from operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO is presented to assist investors in analyzing our performance. It is helpful as it excludes various items included in net income that are not indicative of the operating performance, such as gains (losses) from sales of depreciated property, depreciation and amortization, and impairment of real estate. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generated from operations as defined by generally accepted accounting principles (“GAAP”) and is not indicative of cash available to fund all cash needs, including distributions. It should not be considered as an alternative to net income for the purpose of evaluating our performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, we define FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Also consistent with NAREIT’s definition of FFO, the Company has elected to include gains and losses incidental to its main business (including those related to its RCP investments such as Albertsons) in FFO. A reconciliation of net income attributable to Acadia to FFO follows (dollars in thousands, except per share amounts): Net income (loss) attributable to Acadia Depreciation of real estate and amortization of leasing costs (net of noncontrolling interests' share) Impairment charges (net of noncontrolling interests' share) Gain on disposition of properties (net of noncontrolling interests' share) Income (loss) attributable to Common OP Unit holders Distributions - Preferred OP Units Funds from operations attributable to Common Shareholders and Common OP Unit holders Funds From Operations per Share - Diluted Basic weighted-average shares outstanding, GAAP earnings Weighted-average OP Units outstanding Basic weighted-average shares and OP Units outstanding, FFO Assumed conversion of Preferred OP Units to common shares Diluted weighted-average number of Common Shares and Common OP Units outstanding, FFO 2021 Year Ended December 31, 2020 (As Restated) 2019 (As Restated) $ 23,548 $ (8,976 ) $ 53,717 93,388 2,294 (4,163 ) 1,584 492 106,220 17,323 (291 ) (370 ) 495 89,311 395 (19,786 ) 3,295 540 $ 117,143 $ 114,401 $ 127,472 87,653,818 5,115,319 92,769,137 464,623 86,441,922 4,993,267 91,435,189 464,623 84,435,826 5,111,262 89,547,088 499,345 93,233,760 91,899,812 90,046,433 Diluted Funds from operations, per Common Share and Common OP Unit $ 1.26 $ 1.24 $ 1.42 51 LIQUIDITY AND CAPITAL RESOURCES Impact of Restatement The Restatement (Note 2, Note 17) had the following impact on the Company's liquidity since the last report in which liquidity was discussed: • • consolidated debt for the Fund Investments (with a balance of $59.7 million at September 30, 2021) is now reported within our unconsolidated (off-balance sheet) debt. See "Off-Balance Sheet Arrangements" section which follows cash of and restricted cash for the Fund Investments (with balances of $1.2 million and $3.5 million, respectively, at September 30, 2021) is no longer included on the Company's balance sheet Uses of Liquidity and Cash Requirements Our principal uses of liquidity are (i) distributions to our shareholders and OP unit holders, (ii) investments which include the funding of our capital committed to the Funds and property acquisitions and development/re-tenanting activities within our Core Portfolio, (iii) distributions to our Fund investors, (iv) debt service and loan repayments and (v) share repurchases. Distributions In order to qualify as a REIT for federal income tax purposes, we must currently distribute at least 90% of our taxable income to our shareholders. During the year ended December 31, 2021, we paid dividends and distributions on our Common Shares, Common OP Units and Preferred OP Units totaling $42.7 million. Investments in Real Estate During the year ended December 31, 2021, we made one Core Portfolio investment for $26.3 million and Fund V acquired three shopping centers totaling $168.6 million, inclusive of transaction costs. Structured Financing Investments During the year ended December 31, 2021, we made two Core Portfolio loans totaling $59.0 million within our Structured Financing portfolio, of which $58.0 million was funded (Note 4). Capital Commitments During the year ended December 31, 2021, we made capital contributions aggregating $9.5 million to our Funds. At December 31, 2021, our share of the remaining capital commitments to our Funds aggregated $70.3 million as follows: • • • • $1.1 million to Fund II. During August 2020, a recallable distribution of $15.7 million was made by Mervyn’s II to its investors, of which our share is $4.5 million. During 2021, Mervyn’s II recalled $11.9 million of the $15.7 million of which our share is $3.4 million. $0.5 million to Fund III. Fund III was launched in May 2007 with total committed capital of $450.0 million of which our share was $89.6 million. During 2015, we acquired an additional interest, which had an original capital commitment of $20.9 million. $9.7 million to Fund IV. Fund IV was launched in May 2012 with total committed capital of $530.0 million of which our share was $122.5 million. $59.0 million to Fund V. Fund V was launched in August 2016 with total committed capital of $520.0 million of which our share is $104.5 million. Development Activities During the year ended December 31, 2021, capitalized costs associated with development activities totaled $9 million (Note 3). At December 31, 2021, we had a total of six consolidated and one unconsolidated projects under development or redevelopment for which the estimated total cost to complete these projects through 2025 was $79.2 million to $103.9 million and our share was approximately $45.6 million to $56.8 million. 52 Debt A summary of our consolidated debt, which includes the full amount of Fund related obligations and excludes our pro rata share of debt at our unconsolidated subsidiaries, is as follows (in thousands): Total Debt - Fixed and Effectively Fixed Rate Total Debt - Variable Rate Net unamortized debt issuance costs Unamortized premium Total Indebtedness December 31, 2021 2020 (As Restated) $ 1,038,803 780,935 1,819,738 (7,946 ) 446 1,812,238 $ 1,124,255 589,019 1,713,274 (5,978 ) 548 1,707,844 $ $ As of December 31, 2021, our consolidated outstanding mortgage and notes payable aggregated $1,819.7 million, excluding unamortized premium of $0.4 million and unamortized loan costs of $7.9 million, and were collateralized by 37 properties and related tenant leases. Interest rates on our outstanding indebtedness ranged from 1.49% to 5.89% with maturities that ranged from February 2022 to April 2035. Taking into consideration $860.4 million of notional principal under variable to fixed-rate swap agreements currently in effect, $1,038.8 million of the portfolio debt, or 57.1%, was fixed at a 3.91% weighted-average interest rate and $780.9 million, or 42.9% was floating at a 2.44% weighted average interest rate as of December 31, 2021. Our variable-rate debt includes $110.5 million of debt subject to interest rate caps. Without regard to available extension options, there is $749.5 million of debt maturing in 2022 at a weighted-average interest rate of 3.44%; there is $7.7 million of scheduled principal amortization due in 2022; and our share of scheduled 2022 principal payments and maturities on our unconsolidated debt was $22.7 million at December 31, 2021. In addition, $110.5 million of our total consolidated debt and $42.0 million of our pro-rata share of unconsolidated debt will come due in 2023. As it relates to the aforementioned maturing debt in 2022 and 2023, we have options to extend consolidated debt aggregating $187.2 million and $41.5 million, respectively; however, there can be no assurance that we will be able to successfully execute any or all of its available extension options. As it relates to the remaining maturing debt in 2022 and 2023, we may not have sufficient liquidity on hand to repay such indebtedness, and, therefore, we expect to refinance at least a portion of this indebtedness or select other alternatives based on market conditions as these loans mature; however, there can be no assurance that we will be able to obtain financing at acceptable terms. Share Repurchase Program We maintain a share repurchase program under which $122.6 million remains available as of December 31, 2021 (Note 11). The Company did not repurchase any of its Common Shares during the year ended December 31, 2021. Sources of Liquidity Our primary sources of capital for funding our short-term (less than 12 months) and long-term (12 months and longer) liquidity needs include (i) the issuance of both public equity and OP Units, (ii) the issuance of both secured and unsecured debt, (iii) unfunded capital commitments from noncontrolling interests within our Funds, (iv) future sales of existing properties, (v) repayments of structured financing investments, and (vi) cash on hand and future cash flow from operating activities. Our cash on hand in our consolidated subsidiaries at December 31, 2021 totaled $17.7 million. Our remaining sources of liquidity are described further below. ATM Program We have an ATM Program (Note 11) that provides us with an efficient and low-cost vehicle for raising capital through public equity issuances on an as-we-go basis to fund our capital needs. Through this program, we have been able to effectively “match-fund” the required capital for our Core Portfolio and 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 Program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro- rata share of Fund acquisitions, and for general corporate purposes. During the year ended December 31, 2021, we sold 2,889,371 shares under our ATM Program for gross proceeds of $64.9 million, or $63.9 million net of issuance costs, at a weighted-average gross price per share of $22.46. During January 2022, we sold 4,281,576 Common Shares under our ATM program for gross proceeds of $96.3 million, or $92.5 million net of issuance costs, at a weighted-average gross price per share of $22.48, (Note 18). 53 Fund Capital During the year ended December 31, 2021, Funds II, IV and V called for capital contributions of $11.9 million, $18.7 million and $9.1 million, respectively, of which our aggregate share was $9.5 million. At December 31, 2021, unfunded capital commitments from noncontrolling interests within our Funds II, III, IV and V were $2.7 million, $1.4 million, $32.2 million and $234.8 million, respectively. Asset Sales and Exchanges During the year ended December 31, 2021, we disposed of one consolidated Core property for $16.4 million, five consolidated Fund properties for total proceeds of $49.9 million, two unconsolidated Fund land parcels for $10.5 million, and terminated one Fund ground lease recognizing an aggregate gain of $10.5 million, of which the Company's share was $6.6 million (Note 3, Note 12). Structured Financing Repayments As previously discussed, during the year ended December 31, 2021, we received no Structured Financing repayments. A Core Portfolio note for $17.8 million matured on April 1, 2020 and one $5.3 million Fund note matured on July 1, 2020, but neither has been repaid. The Company foreclosed on the $5.3 million note in 2022 (Note 18). Scheduled maturities of Structured Financing loans include $30.0 million maturing during 2022 (Note 4). Financing and Debt As of December 31, 2021, we had $199.4 million of additional capacity under existing consolidated Core and Fund revolving debt facilities. In addition, at that date within our Core and Fund portfolios, we had 84 unleveraged consolidated properties with an aggregate carrying value of approximately $1.7 billion, although there can be no assurance that we would be able to obtain financing for these properties at favorable terms, if at all. HISTORICAL CASH FLOW Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 The following table compares the historical cash flow for the year ended December 31, 2021 with the cash flow for the year ended December 31, 2020 (in millions, totals may not add due to rounding): Net cash provided by operating activities Net cash used in investing activities Net cash provided by (used in) financing activities (Decrease) increase in cash and restricted cash Operating Activities 2021 Year Ended December 31, 2020 (As Restated) Variance $ $ 105.0 $ (198.5 ) 91.3 (2.2 ) $ 103.9 $ (100.9 ) (1.3 ) 1.8 $ 1.1 (97.6 ) 92.6 (4.0 ) Our operating activities provided $1.1 million more cash during the year ended December 31, 2021 as compared to the year ended December 31, 2020, primarily due to an increase in cash receipts from tenants in 2021 offset by a decrease from the monetization of the Company's Investment in Albertsons in 2020. Investing Activities During the year ended December 31, 2021 as compared to the year ended December 31, 2020, our investing activities used $97.6 million more cash, primarily due to (i) $140.8 million more cash used to acquire properties in 2021 offset by $43.0 million more cash received from the disposition of properties. 54 Financing Activities Our financing activities provided $92.6 million more cash during the year ended December 31, 2021 as compared to the year ended December 31, 2020, primarily from (i) $63.9 million more cash provided by the sale of Common Shares, (ii) $22.4 million less cash from the repurchase of common shares (iii) $20.9 million more cash provided from net borrowings and (iii) $10.7 million less cash used in dividends paid to Common Shareholders. These sources of cash were partially offset by (i) $22.0 million less cash provided from contributions from noncontrolling interests and (ii) $5.2 million more cash used for financing costs. Year Ended December 31, 2020 Compared to Year Ended December 31, 2019 The following table compares the historical cash flow for the year ended December 31, 2020 year ended with the cash flow for the year ended December 31, 2019 (in millions, totals may not add due to rounding): Net cash provided by operating activities Net cash used in investing activities Net cash (used in) provided by financing activities Increase (decrease) in cash and restricted cash Operating Activities 2020 (As Restated) Year Ended December 31, 2019 (As Restated) Variance $ $ 103.9 $ (100.9 ) (1.3 ) 1.8 $ 131.4 $ (410.5 ) 274.0 (5.2 ) $ (27.5 ) 309.6 (275.3 ) 7.0 Our operating activities provided $27.5 million less cash during the year ended December 31, 2020 as compared to the year ended December 31, 2019, primarily due to a decrease in cash receipts from tenants because of the COVID-19 Pandemic partially offset by the monetization of the Company's Investment in Albertsons in 2020, and $10.0 million from the collection of accrued interest on a note receivable in 2019. Investing Activities During the year ended December 31, 2020 as compared to the year ended December 31, 2019, our investing activities used $309.6 million less cash, primarily due to (i) $334.8 million less cash used in acquisition and lease of properties, (ii) $150.4 million less cash used in investments in unconsolidated affiliates, and (iii) $50.8 million less cash used in development, construction and property improvement costs. These sources of cash were partially offset by (i) $91.3 million less cash received from return of capital from unconsolidated affiliates, (ii) $67.8 million less cash received from the disposition of properties, (iii) $55.4 million more cash used to issue notes receivable, and (iv) $15.3 million less cash received from proceeds of notes receivable. Financing Activities Our financing activities provided $275.3 million less cash during the year ended December 31, 2020 as compared to the year ended December 31, 2019, primarily from (i) $145.5 million less cash received from the sale of Common Shares, (ii) $117.8 million less cash provided from net borrowings, (iii) $69.9 million less cash used for distributions to noncontrolling interests, (iv) $43.7 million less cash used in dividends paid to Common Shareholders and (v) $22.4 million more cash used to repurchase Common Shares. These sources of cash were partially offset by (i) $109.2 million less cash provided from contributions from noncontrolling interests and (ii) $4.4 million less cash used for financing costs. 55 OFF-BALANCE SHEET ARRANGEMENTS We have the following investments made through joint ventures for the purpose of investing in operating properties. We account for these investments using the equity method of accounting. As such, our financial statements reflect our investment and our share of income and loss from, but not the individual assets and liabilities, of these joint ventures. See Note 5 in the Notes to Consolidated Financial Statements, for a discussion of our unconsolidated investments. The Operating Partnership’s pro-rata share of unconsolidated non-recourse debt related to those investments is as follows (dollars in millions): Investment Eden Square Family Center at Riverdale (b) 640 Broadway (c) Promenade at Manassas (c) Gotham Plaza Renaissance Portfolio 3104 M Street Crossroads Tri-City Plaza (c) Frederick Crossing (c) Paramus Plaza (b) Frederick County Square (c) 840 N. Michigan 650 Bald Hill Road Georgetown Portfolio Total Operating Partnership December 31, 2021 Ownership Percentage Pro-rata Share of Mortgage Debt Effective Interest Rate (a) Maturity Date 22.8 % $ 18.0 % 15.5 % 22.8 % 49.0 % 20.0 % 20.0 % 49.0 % 18.1 % 18.1 % 11.6 % 18.1 % 88.4 % 20.8 % 50.0 % $ 5.2 4.4 5.6 6.3 9.0 32.0 0.8 30.5 7.0 4.4 3.3 4.0 65.0 3.3 7.7 188.5 2.46 % 3.68 % 3.00 % 4.57 % 5.09 % 3.81 % 3.75 % 3.94 % 3.01 % 3.26 % 2.41 % 4.00 % 4.36 % 3.75 % 4.72 % Mar 2022 May 2022 July 2022 Dec 2022 Jun 2023 Aug 2023 Jan 2024 Oct 2024 Oct 2024 Dec 2024 Dec 2024 Jan 2025 Feb 2025 Jun 2026 Dec 2027 a) b) c) Effective interest rates incorporate the effect of interest rate swaps and caps that were in effect at December 31, 2021, where applicable. The debt has two available 12-month extension options. The debt has one available 12-month extension option. 56 CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis of financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect the significant judgments and estimates used by us in the preparation of our Consolidated Financial Statements. Impairment of Properties On a periodic basis, we assess whether there are any indicators that the value of real estate assets, including undeveloped land and construction in progress, may be impaired. A property’s value is impaired only if the estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. The determination of undiscounted cash flows requires significant estimates by management. In management’s estimate of cash flows, it considers factors such as expected future sale of an asset or development alternatives, capitalization rates and the undiscounted future cash flows analysis, which is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action. Expected future cash flows and recoverability conclusions could be materially impacted by changes in items such as future leasing activity, occupancy, property operating costs, market pricing, our view or strategy relative to a tenant’s business or industry, the manner in which a property is used and the expected hold period of an asset. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated actions could affect the determination of whether an impairment exists and whether the effects could have a material impact on the Company’s net income. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property. The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties and other investments. These assessments have a direct impact on the Company’s estimates of the projected future cash flows, anticipated holding periods or market conditions change, its evaluation of the impairment charges may be different, and such differences could be material to the Company’s consolidated financial statements. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. During 2021, 2020 and 2019, the Company recognized impairment charges on properties (including right-of-use assets) of $9.9 million, $85.6 million and $1.7 million, respectively, reflecting additional impairments during 2020 due to the impact of the COVID-19 Pandemic. See Note 9 for a discussion of impairments recognized during the periods presented. Investments in and Advances to Unconsolidated Joint Ventures We periodically review our investment in unconsolidated joint ventures and other cost-method investments for other-than-temporary declines in market value. An impairment charge is recorded for a decline that is considered to be other-than-temporary as a reduction in the carrying value of the investment. During 2020, the Company impaired an investment in an unconsolidated venture resulting in a charge of $0.4 million. See Note 9 for a discussion of impairments recognized during the periods presented. Bad Debts We assess the collectability of our accounts receivable related to tenant revenues under ASC Topic 842 “Leases” (“ASC 842”). Management exercises judgment in assessing collectability and considers customer credit worthiness, assessment of risk associated with the tenant, and current economic trends, among other factors. In addition to the lease-specific collectability assessment performed under ASC 842, the Company may also recognize a general reserve based on the Company’s historical collection experience, as provided under ASC 450-20, as a reduction to Lease income for its portfolio of operating lease receivables which are not expected to be fully collectible. Billed tenant receivables, and receivables arising from the straight-lining of rents, are reserved when management deems the collectability of substantially all future lease payments from a specific lease is not probable, at which point, the Company will begin recognizing revenue from such leases prospectively on a cash basis, based on actual amounts received. If the Company subsequently determines that it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term, the Company will reinstate the receivables balance, including those arising from the straight- lining of rents, adjusting for the amount related to the period when the lease was accounted for on a cash basis. Rents receivable at December 31, 2021 and 2020 are shown net of an allowance for doubtful accounts of $38.5 million and $45.0 million, respectively. Rental income for the years ended December 31, 2021, 2020 and 2019 are reported net of adjustments to allowances for doubtful 57 accounts of $0.1 million, $46.4 million and $4.5 million, respectively, reflecting additional reserves and write-offs during 2020 due to the impact of the COVID-19 Pandemic. Real Estate Real estate assets are stated at cost less accumulated depreciation. Expenditures for acquisition, development, construction and improvement of properties, as well as significant renovations are capitalized. Interest costs are capitalized until construction is substantially complete. Construction in progress includes costs for significant property expansion and development. Depreciation is computed on the straight-line basis over estimated useful lives of 40 years for buildings, the shorter of the useful life or lease term for tenant improvements and five years for furniture, fixtures and equipment. Expenditures for maintenance and repairs are charged to operations as incurred. Upon acquisitions of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above and below-market leases and acquired in-place leases) and acquired liabilities in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 “Business Combinations” and ASC Topic 350 “Intangibles – Goodwill and Other,” and allocate purchase price based on these assessments. When acquisitions of properties do not meet the criteria for business combinations, as is the case for the majority of the Company’s acquisitions, no goodwill is recorded and acquisition costs are capitalized. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. Revenue Recognition and Accounts Receivable Leases with tenants are accounted for as operating leases. Minimum rents are recognized on a straight-line basis over the non-cancelable term of the respective leases. Certain of these leases also provide for percentage rents based upon the level of sales achieved by the tenant. Percentage rent is recognized in the period when the tenants’ sales breakpoint is met. In addition, leases typically provide for the reimbursement to us of real estate taxes, insurance and other property operating expenses. These reimbursements are recognized as revenue in the period the expenses are incurred. We assess the collectability of our accounts receivable related to tenant revenues as described under the heading “Bad Debts” above. Structured Financings Real estate notes receivable investments and preferred equity investments (“Structured Financings”) are intended to be held to maturity and are carried at cost less an allowance for credit loss. Interest income from Structured Financings is recognized on the effective interest method over the expected life of the loan. Under the effective interest method, interest or fees to be collected at the origination of the Structured Financing investment is recognized over the term of the loan as an adjustment to yield. Changes in cash flows from previous estimates are included in future interest income on a prospective basis and a new effective interest rate is computed based on the current cost basis of the instrument and remaining cash flows. Allowances for credit loss related to our 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 amount and status of any senior debt, and the prospects for the borrower. Because this determination is based upon projections of future economic events, which are inherently subjective, the amounts ultimately realized from the 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 becomes doubtful. Income recognition is resumed when the suspended investment becomes contractually current and performance is demonstrated to be resumed. Notes receivable at December 31, 2021 and 2020 are reported net of an allowance for credit loss of $5.8 million and $1.2 million, respectively (Note 4). Recently Issued Accounting Pronouncements Reference is made to Note 1 for information about recently issued and recently adopted accounting pronouncements. 58 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Information as of December 31, 2021 Our primary market risk exposure is to changes in interest rates related to our mortgage and other debt. See Note 8 in the Notes to Consolidated Financial 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 and cap agreements. As of December 31, 2021, we had total mortgage and other notes payable of $1,819.7 million, excluding the unamortized premium of $0.4 million and unamortized debt issuance costs of $7.9 million, of which $1,038.8 million, or 57.1% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $780.9 million, or 42.9%, was variable-rate based upon LIBOR rates plus certain spreads. As of December 31, 2021, we were party to 28 interest rate swap and three interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $860.4 million and $110.5 million of LIBOR-based variable-rate debt, respectively. The following table sets forth information as of December 31, 2021 concerning our long-term debt obligations, including principal cash flows by scheduled maturity and weighted average interest rates of maturing amounts (dollars in millions): Core Consolidated Mortgage and Other Debt Year 2022 2023 2024 2025 2026 Thereafter Fund Consolidated Mortgage and Other Debt Year 2022 2023 2024 2025 2026 Thereafter Scheduled Amortization Maturities Total Weighted-Average Interest Rate $ $ 3.3 $ 2.9 2.7 2.8 2.7 7.6 22.0 $ — $ 11.8 7.3 172.9 409.3 107.9 709.2 $ 3.3 14.7 10.0 175.7 412.0 115.5 731.2 — % 3.8 % 4.7 % 4.1 % 4.1 % 4.3 % Scheduled Amortization Maturities Total Weighted-Average Interest Rate $ $ 4.4 $ 3.8 2.6 0.2 0.1 — 11.1 $ 749.5 $ 92.1 199.5 2.4 33.9 — 753.9 95.9 202.1 2.6 34.0 — 1,077.4 $ 1,088.5 3.4 % 3.8 % 3.2 % 3.8 % 2.9 % — % Mortgage Debt in Unconsolidated Partnerships (at our Pro-Rata Share) Year 2022 2023 2024 2025 2026 Thereafter Scheduled Amortization Maturities Total Weighted-Average Interest Rate 21.3 $ 40.6 43.7 69.0 3.0 6.1 183.7 $ 22.7 42.0 44.8 69.3 3.3 6.4 188.5 3.5 % 4.1 % 3.6 % 4.3 % 3.8 % 4.7 % $ $ 1.4 $ 1.4 1.1 0.3 0.3 0.3 4.8 $ 59 Without regard to available extension options, in 2022, $757.2 million of our total consolidated debt and $22.7 million of our pro-rata share of unconsolidated outstanding debt will become due. In addition, $110.5 million of our total consolidated debt and $42.0 million of our pro-rata share of unconsolidated debt will become due in 2023. As it relates to the aforementioned maturing debt in 2022 and 2023, we have options to extend consolidated debt aggregating $187.2 million and $41.5 million, respectively; however, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options. As we intend on refinancing some 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 by approximately $7.7 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 $2.2 million. Interest expense on our variable-rate debt of $780.9 million, net of variable to fixed-rate swap agreements currently in effect, as of December 31, 2021, would increase $7.8 million if interest rates increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $1.8 million. We may seek additional variable-rate financing if and when pricing and other commercial and financial terms warrant. As such, we would consider hedging against the interest rate risk related to such additional variable-rate debt through interest rate swaps and protection agreements, or other means. Based on our outstanding debt balances as of December 31, 2021, the fair value of our total consolidated outstanding debt would decrease by approximately $8.4 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding debt would increase by approximately $16.0 million. As of December 31, 2021, and 2020, we had consolidated notes receivable of $153.9 million and $100.9 million, respectively. We determined the estimated fair value of our notes receivable by discounting future cash receipts utilizing a discount rate equivalent to the rate at which similar notes receivable would be originated under conditions then existing. Based on our outstanding notes receivable balances as of December 31, 2021, the fair value of our total outstanding notes receivable would decrease by approximately $2.2 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding notes receivable would increase by approximately $2.2 million. Summarized Information as of December 31, 2020 (As Restated) As of December 31, 2020, we had total mortgage and other notes payable of $1,713.3 million, excluding the unamortized premium of $0.5 million and unamortized debt issuance costs of $6.0 million, of which $1,124.3 million, or 65.6% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $589.0 million, or 34.4%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of December 31, 2020, we were party to 38 interest rate swap and three interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $969.7 million and $103.2 million of LIBOR-based variable-rate debt, respectively. Interest expense on our variable-rate debt of $589.0 million as of December 31, 2020, would have increased $5.9 million if LIBOR increased by 100 basis points. Based on our outstanding debt balances as of December 31, 2020, the fair value of our total outstanding debt would have decreased by approximately $9.2 million if interest rates increased by 1%. Conversely, if interest rates decreased by 1%, the fair value of our total outstanding debt would have increased by approximately $26.3 million. Changes in Market Risk Exposures from December 31, 2020 to December 31, 2021 Our interest rate risk exposure from December 31, 2020, to December 31, 2021, has increased on an absolute basis, as the $589.0 million of variable-rate debt as of December 31, 2020, has increased to $780.9 million as of December 31, 2021. As a percentage of our overall debt, our interest rate risk exposure has increased as our variable-rate debt accounted for 34.4% of our consolidated debt as of December 31, 2020 compared to 42.9% as of December 31, 2021. 60 ITEM 8. FINANCIAL STATEMENTS. ACADIA REALTY TRUST AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS Financial Statements: Report of Independent Registered Public Accounting Firm (BDO USA, LLP; New York, New York, PCAOB ID #243) Consolidated Balance Sheets as of December 31, 2021 and 2020 (As Restated) Consolidated Statements of Operations for the years ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated) Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated) Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated) Notes to Consolidated Financial Statements Financial Statement Schedules: Schedule II – Valuation and Qualifying Accounts Schedule III – Real Estate and Accumulated Depreciation Schedule IV – Mortgage Loans on Real Estate Page 62 65 66 67 68 69 71 165 166 171 61 Report of Independent Registered Public Accounting Firm Shareholders and Board of Trustees Acadia Realty Trust Rye, New York Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Acadia Realty Trust (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 1, 2022 expressed an adverse opinion thereon. Restatement to Correct 2020 and 2019 Misstatements As discussed in Note 2 to the consolidated financial statements, the 2020 and 2019 financial statements have been restated to correct misstatements. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. 62 Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Purchase Price Allocation As described in Note 3 to the consolidated financial statements, during the year ended December 31, 2021, the Company acquired approximately $211.3 million of tangible and intangible real estate assets and $16.3 million of related intangible liabilities. The Company allocates the purchase price of real estate investments to the identifiable assets acquired and liabilities assumed based on their relative fair values. The determination of fair value requires significant judgment by management to develop significant estimates and market-based assumptions used in the cash flow projections. We identified the purchase price allocation process for certain acquisitions as a critical audit matter. Auditing management’s judgments regarding market-based assumptions used in the determination of fair values, including comparable market land values, market rental rates and market capitalization rates, involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed. The primary procedures we performed to address this critical audit matter included: • Understanding of certain controls relating to management’s purchase price allocation process, including controls over assessment of the reasonableness of market-based assumptions. • Assessing the reasonableness of significant market-based assumptions through benchmarking against third-party market data, industry metrics, and reviewing relevant supporting documentation. • Evaluating the accuracy of base-year information, where applicable, for the purposes of forecasting future market rental rates by comparing it to historical information. • Utilizing personnel with specialized knowledge and skill to assist in evaluating the reasonableness of the market-based assumptions used in the preparation of the purchase price allocations, including market land values, market rental rates and market capitalization rates. Assessment of Impairment of Real Estate and Real Estate Related Investments As described in Notes 3, 5 and 7 to the consolidated financial statements, as of December 31, 2021, the Company’s net investment in real estate was $3.4 billion, the net carrying value of intangible lease assets was $0.1 billion, and the carrying value of investments in and advances to unconsolidated affiliates was $0.3 billion. The Company tests the recoverability of the real estate and intangible lease assets held by the Company and its unconsolidated affiliates, whenever events or changes in circumstances indicate that amounts may not be recoverable. The Company identified impairment indicators, which resulted in the Company recording impairment charges of $9.9 million in 2021 related to its real estate investments. We identified the assessment of impairment of the real estate and intangible lease assets held by the Company and its unconsolidated affiliates as a critical audit matter due to the complexity of management’s judgments relating to: (i) the assessment of impairment indicators for the real estate and intangible lease assets held by the Company and its unconsolidated affiliates, including long-term vacancy, recurring negative cash flows and tenant bankruptcies, and (ii) the assessment of assumptions used in the expected future undiscounted cash flows for certain properties under development and pre-stabilized properties, given the inherent uncertainties that exist related to the Company’s forecasts and how various economic and other factors could affect the Company’s forecasted future undiscounted cash flows. Auditing management’s assumptions relating to its assessment of potential impairment indicators, and market-based assumptions used in the cash flow projections, including market rent assumptions and market capitalization rates, involve especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge required. 63 The primary procedures we performed to address this critical audit matter included: • Understanding of certain controls related to management's assessment of the potential impairment of real estate assets and intangible lease assets held by the Company and its unconsolidated affiliates, which included management's assumptions regarding which properties required recoverability tests to be performed, as well as the assumptions management used in performing the recoverability tests. • Evaluating management's assessment of potential impairment indicators which could result in impairment, including long-term vacancy, recurring negative cash flows and tenant bankruptcies. • Evaluating management's assumptions, including market rent assumptions and market capitalization rates used in forecasting future undiscounted cash flows. • Utilizing professionals with specialized skills and knowledge to assist in evaluating the reasonableness of the market-based assumptions utilized by the management (including market rents and market capitalization rates) for certain properties under development and pre-stabilized properties, for which impairment indicators have been identified. /s/ BDO USA, LLP We have served as the Company’s auditor since 2005. New York, New York March 1, 2022 64 ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share amounts) ASSETS Investments in real estate, at cost Operating real estate, net Real estate under development Net investments in real estate Notes receivable, net Investments in and advances to unconsolidated affiliates Other assets, net Right-of-use assets - operating leases, net Cash and cash equivalents Restricted cash Rents receivable, net Assets of properties held for sale Total assets LIABILITIES Mortgage and other notes payable, net Unsecured notes payable, net Unsecured line of credit Accounts payable and other liabilities Lease liability - operating leases, net Dividends and distributions payable Distributions in excess of income from, and investments in, unconsolidated affiliates Total liabilities Commitments and contingencies EQUITY Acadia Shareholders' Equity Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 89,303,545 and 86,268,303 shares, respectively Additional paid-in capital Accumulated other comprehensive loss Distributions in excess of accumulated earnings Total Acadia shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity December 31, 2021 2020 (As Restated) $ $ $ $ 3,219,373 $ 203,773 3,423,146 153,886 322,326 186,509 40,743 17,746 9,813 43,625 63,952 4,261,746 $ 1,140,293 $ 559,040 112,905 236,415 38,759 14,460 9,939 2,111,811 89 1,754,383 (36,214 ) (196,645 ) 1,521,613 628,322 2,149,935 4,261,746 $ 3,190,761 247,201 3,437,962 100,882 272,829 170,281 76,268 18,699 11,096 43,052 — 4,131,069 1,148,586 420,858 138,400 268,442 88,816 147 15,616 2,080,865 86 1,683,165 (74,891 ) (167,321 ) 1,441,039 609,165 2,050,204 4,131,069 The accompanying notes are an integral part of these consolidated financial statements 65 ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share amounts) Revenues Rental income Other Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating Income (loss) Equity in earnings (losses) of unconsolidated affiliates Interest income Realized and unrealized holding gains on investments and other Interest expense Income (loss) from continuing operations before income taxes Income tax provision Net income (loss) Net (income) loss attributable to noncontrolling interests Net income (loss) attributable to Acadia Basic and diluted earnings (loss) per share $ $ 2021 Year Ended December 31, 2020 (As Restated) 2019 (As Restated) $ 285,898 $ 6,599 292,497 246,432 $ 4,476 250,908 123,439 40,125 45,357 53,516 9,925 272,362 10,521 30,656 5,330 9,065 49,120 (68,048 ) 26,123 (93 ) 26,030 (2,482 ) 23,548 $ 147,229 35,798 42,477 55,551 85,598 366,653 683 (115,062 ) (3,057 ) 8,979 113,362 (69,671 ) (65,449 ) (269 ) (65,718 ) 56,742 (8,976 ) $ 285,470 4,115 289,585 122,580 34,299 38,333 49,898 1,721 246,831 30,324 73,078 5,899 7,988 6,947 (69,213 ) 24,699 (1,465 ) 23,234 30,483 53,717 0.26 $ (0.11 ) $ 0.63 The accompanying notes are an integral part of these consolidated financial statements 66 ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Net income (loss) Other comprehensive income (loss): Unrealized gain (loss) on valuation of swap agreements Reclassification of realized interest on swap agreements Other comprehensive income (loss) Comprehensive income (loss) Comprehensive (income) loss attributable to noncontrolling interests Comprehensive income (loss) attributable to Acadia $ 2021 Year Ended December 31, 2020 (As Restated) 2019 (As Restated) $ 26,030 $ (65,718 ) $ 23,234 30,500 21,407 51,907 77,937 (15,712 ) 62,225 $ (73,686 ) 15,059 (58,627 ) (124,345 ) 71,952 (52,393 ) $ (35,883 ) (870 ) (36,753 ) (13,519 ) 35,246 21,727 The accompanying notes are an integral part of these consolidated financial statements. 67 ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Years Ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated) (in thousands, except per share amounts) Common Shares Share Amount Acadia Shareholders Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Total Common Shareholders’ Equity Noncontrolling Interests Total Equity Balance at January 1, 2021 Issuance of Common Shares Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Cancellation of OP Units Dividends/distributions declared ($0.60 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income Reallocation of noncontrolling interests Balance at December 31, 2021 As Restated Balance at January 1, 2020 Cumulative effect of change in accounting principle Acquisition of noncontrolling interest Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Dividends/distributions declared ($0.29 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Reallocation of noncontrolling interests Balance at December 31, 2020 As Restated Balance at January 1, 2019 Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Issuance of Common Shares Dividends/distributions declared ($1.13 per Common Share/OP Unit) Employee and trustee stock compensation, net Repurchase of Common Shares Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive (loss) income Reallocation of noncontrolling interests Balance at December 31, 2019 1,441,039 63,876 $ 609,165 — $ 2,050,204 63,876 86,269 $ 2,889 86 $ 3 1,683,165 $ 63,873 (74,891 ) $ — 90 — — 56 — — — — — — — — — — 1,431 — — 1,146 — — — — — — — — — 38,677 (167,321 ) $ — — — 1,431 — (52,872 ) (52,872 ) — — — 23,548 1,146 — — 62,225 — 89,304 $ — 89 $ 4,768 1,754,383 $ — (36,214 ) $ — (196,645 ) $ 4,768 1,521,613 $ 628,322 $ 87,050 $ 87 $ 1,706,357 $ (31,474 ) $ (133,019 ) $ 1,541,951 $ 646,439 $ 2,188,390 (389 ) (11 ) (15,330 ) 15,918 — — 408 (1,219 ) — 30 — — — — — — (1 ) — — — — — — (15,330 ) 6,544 (22,385 ) — 782 — — — — — — — — — — — (43,417 ) (389 ) — — — 6,544 (22,386 ) (24,937 ) (24,937 ) — — — (8,976 ) 782 — — (52,393 ) — 86,269 $ — 86 $ 7,197 1,683,165 $ — (74,891 ) $ — (167,321 ) $ 7,197 1,441,039 $ 609,165 $ 81,557 $ 82 $ 1,548,603 $ 516 $ (90,426 ) $ 1,458,775 $ 623,982 $ 2,082,757 308 5,164 — 21 — — — — — 5 — — — — — — 5,104 145,493 — 546 — — — — — — — — — — — — 5,104 145,498 (96,310 ) (96,310 ) — — — 546 — — — 21,727 — (31,990 ) — 53,717 — 87,050 $ — 87 $ 6,611 1,706,357 $ — (31,474 ) $ — (133,019 ) $ 6,611 1,541,951 $ 646,439 $ (1,431 ) (568 ) (4,185 ) 11,284 (27,051 ) 30,164 15,712 (4,768 ) (6,544 ) — (2,218 ) 10,130 (27,574 ) 52,174 (71,952 ) (7,197 ) (5,104 ) — (7,124 ) 9,460 — (94,283 ) 161,365 (35,246 ) (6,611 ) — (568 ) (57,057 ) 12,430 (27,051 ) 30,164 77,937 — 2,149,935 (400 ) 588 — (22,386 ) (27,155 ) 10,912 (27,574 ) 52,174 (124,345 ) — 2,050,204 — 145,498 (103,434 ) 10,006 — (94,283 ) 161,365 (13,519 ) — 2,188,390 The accompanying notes are an integral part of these consolidated financial statements. 68 ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: 2021 Year Ended December 31, 2020 (As Restated) 2019 (As Restated) $ 26,030 $ (65,718 ) $ 23,234 Depreciation and amortization Straight-line rents Non-cash lease expense Net unrealized holding gains on investments Distributions of operating income from unconsolidated affiliates Equity in earnings (losses) of unconsolidated affiliates Stock compensation expense Amortization of financing costs Impairment charges Gain on disposition of properties Allowance for credit loss Termination of ground lease Adjustments to straight-line rent reserves Gain on debt extinguishment Deferred gain on tax credits Other, net Changes in assets and liabilities: Other liabilities Lease liability - operating leases Prepaid expenses and other assets Rents receivable, net Accounts payable and accrued expenses Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of real estate Acquisition of leasehold interests Development, construction and property improvement costs Proceeds from the disposition of properties, net Investments in and advances to unconsolidated affiliates and other Return of capital from unconsolidated affiliates and other Issuance of or advances on notes receivable Proceeds from notes receivable Return of deposits for properties under contract Payment of deferred leasing costs Change in control of previously unconsolidated affiliate Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes Principal payments on unsecured debt Proceeds received on mortgage and other notes Proceeds from unsecured debt Payments of finance lease obligations Proceeds from the sale (repurchase) of Common Shares Capital contributions from noncontrolling interests Distributions to noncontrolling interests Dividends paid to Common Shareholders Deferred financing and other costs Net cash provided by (used in) financing activities (Decrease) increase in cash and restricted cash Cash of $18,699, $14,149 and $20,074 and restricted cash of $11,096, $13,880 and $13,155, respectively, beginning of year Cash of $17,746, $18,699 and $14,149 and restricted cash of $9,813, $11,096 and $13,880, respectively, end of year 69 123,439 (6,726 ) 3,721 (51,925 ) 3,828 (5,330 ) 12,430 4,396 9,925 (10,521 ) (2,796 ) (3,615 ) 2,682 — — (5,304 ) 7,856 (3,636 ) (7,427 ) 7,384 572 104,983 (161,846 ) — (40,671 ) 63,901 (14,835 ) 17,722 (57,895 ) — — (4,914 ) — (198,538 ) (98,602 ) (206,781 ) 56,847 323,200 (63 ) 63,876 30,164 (30,410 ) (39,476 ) (7,436 ) 91,319 (2,236 ) 147,229 (4,869 ) 3,392 (72,391 ) 3,286 3,057 10,912 5,038 85,598 (683 ) 24,569 — 21,871 (18,339 ) — (8,155 ) (3,959 ) (1,579 ) 4 (28,321 ) 3,005 103,947 (21,208 ) — (36,579 ) 20,930 (14,483 ) 14,686 (59,000 ) — 187 (6,407 ) 950 (100,924 ) (51,949 ) (136,490 ) 5,351 236,804 (903 ) (22,386 ) 52,174 (31,461 ) (50,182 ) (2,215 ) (1,257 ) 1,766 29,795 28,029 $ 27,559 $ 29,795 $ 122,580 (4,185 ) — — 11,273 (5,899 ) 10,006 6,718 1,721 (30,324 ) 2,742 — 1,961 — (5,034 ) (11,575 ) (4,850 ) 2,014 8,206 1,089 1,705 131,382 (319,673 ) (39,031 ) (89,385 ) 88,738 (164,922 ) 106,005 (3,608 ) 15,250 2,870 (6,782 ) — (410,538 ) (158,211 ) (521,600 ) 324,995 526,400 (2,749 ) 145,498 161,365 (101,364 ) (93,902 ) (6,476 ) 273,956 (5,200 ) 33,229 28,029 ACADIA REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued (in thousands) Supplemental disclosure of cash flow information Cash paid during the period for interest, net of capitalized interest of $3,421 and $7,110 and $12,586 respectively Cash paid for income taxes, net of (refunds) Supplemental disclosure of non-cash investing and financing activities Adjustment to equity as a result of the implementation of CECL Assumption of accounts payable and accrued expenses through acquisition of real estate Note receivable exchanged for real estate Acquisition of real estate through assumption of debt Distribution declared and payable on January 14, 2022, and January 15, 2021 and 2020, respectively Right-of-use assets, finance leases (modified) obtained in exchange for finance lease liabilities Right-of-use assets, finance leases obtained in exchange for assets under capital lease Right-of-use assets, operating leases exchanged for operating lease liabilities Capital lease obligation exchanged for finance lease liability Other liabilities exchanged for operating lease liabilities Assumption of debt through investments in unconsolidated affiliates Debt exchanged for deferred gain on tax credits Other assets exchanged for deferred gain on tax credits Settlement of note receivable through cancellation of OP Units Right of use assets, operating leases terminated in exchange for finance lease liabilities Change in control of previously unconsolidated (consolidated) investment Increase in real estate Decrease in investments in and advances to unconsolidated affiliates Change in other assets and liabilities Acquisition of noncontrolling interest asset Decrease in notes receivable Decrease in right-of-use assets, finance leases Decrease in finance lease liability Increase in cash and restricted cash upon change of control $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2021 Year Ended December 31, 2020 2019 44,663 $ 147 $ 70,383 (329 ) $ $ — $ 1,319 $ — $ 31,801 $ 400 116 72,430 — $ $ $ $ 69,076 730 — 4,666 13,530 — 14,314 $ 123 $ 26,914 — $ — $ 412 $ — $ — $ — $ — $ — $ 479 $ — $ — $ — — — — — — — $ (70,427 ) — 33,189 — — — — — — (1,432 ) $ $ $ $ $ $ $ $ $ $ (135,190 ) $ 96,816 1,238 (588 ) 38,674 — — 950 $ 16,349 76,965 57,165 71,111 946 4,688 (5,262 ) 228 — — 828 (1,189 ) 12 — — 11,051 (10,702 ) — The accompanying notes are an integral part of these consolidated financial statements. 70 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization, Basis of Presentation and Summary of Significant Accounting Policies Organization Acadia Realty Trust, a Maryland real estate investment trust (collectively with its subsidiaries, the “Company”) is a fully-integrated equity real estate investment trust (“REIT”) focused on the ownership, acquisition, development, and management of 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”) and entities in which the Operating Partnership owns an interest. As of December 31, 2021 and 2020, the Company controlled approximately 95% of the Operating Partnership as the sole general partner and is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest (“Common OP Units” or “Preferred OP Units”) and employees who have been awarded restricted Common OP Units (“LTIP Units”) as long-term incentive compensation (Note 14). Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for common shares of beneficial interest, par value $0.001 per share of the Company (“Common Shares”). This structure is referred to as an umbrella partnership REIT or “UPREIT.” As of December 31, 2021, the Company has ownership interests in 133 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 through its funds (“Core Portfolio”). The Company also has ownership interests in 53 properties within its opportunity funds, Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”), and Acadia Strategic Opportunity Fund V LLC (“Fund V” and collectively with Fund II, Fund III, and Fund IV, the “Funds”). The 186 Core Portfolio and Fund properties primarily consist of street and urban retail, and suburban shopping centers. In addition, the Company, together with the investors in the Funds, invested in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I,” which was liquidated in 2018) and Acadia Mervyn Investors II, LLC (“Mervyns II”), all on a non-recourse basis. The Company consolidates the Funds as it has (i) the power to direct the activities that most significantly impact the Funds’ economic performance, (ii) is obligated to absorb the Funds’ losses and (iii) has the right to receive benefits from the Funds that could potentially be significant. The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns II and earns fees or priority distributions for asset management, property management, construction, development, leasing, and legal services. Cash flows from the Funds and Mervyns II are distributed pro-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 the partners or members (including the Operating Partnership). All transactions between the Funds and the Operating Partnership have been eliminated in consolidation. The following table summarizes the general terms and Operating Partnership’s equity interests in the Funds and Mervyns II (dollars in millions): Operating Partnership Share of Capital Capital Called as of December 31, 2021 (b) Unfunded Commitment (b, c) Equity Interest Held By Operating Partnership (a) $ 28.33 % 24.54 % 23.12 % 20.10 % 381.5 $ 448.1 488.1 226.2 3.8 1.9 41.9 293.8 28.33 % 24.54 % 23.12 % 20.10 % Formation Date 6/2004 5/2007 5/2012 8/2016 Total Distributions as of December 31, 2021 (b, c) 169.8 576.0 193.1 51.4 $ Preferred Return 8 % 6 % 6 % 6 % Entity Fund II and Mervyns II (c) Fund III Fund IV Fund V (d) a) b) c) d) Amount represents the current economic ownership at December 31, 2021, which could differ from the stated legal ownership based upon the cumulative preferred returns of the respective Fund. Represents the total for the Funds, including the Operating Partnership and noncontrolling interests’ shares. During August 2020, a recallable distribution of $15.7 million was made by Mervyn’s II to its investors, of which $4.5 million was the Company’s share. During 2021, Mervyn’s II recalled $11.9 million of the $15.7 million of which our share is $3.4 million. As of April 8, 2021, Fund V's investment period was extended to August 25, 2022. 71 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Basis of Presentation Segments At December 31, 2021, the Company had three reportable operating segments: Core Portfolio, Funds and Structured Financing. The Company’s chief operating decision maker may review operational and financial data on a property-level basis and does not differentiate properties on a geographical basis for purposes of allocating resources or capital. Principles of Consolidation The consolidated financial statements include the consolidated accounts of the Company and its investments in partnerships and limited liability companies in which the Company has control in accordance with FASB Accounting Standards Codification Topic 810 “Consolidation.” 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 ability to exercise significant influence over, but does not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings (or losses) of these entities are included in consolidated net income (loss). Use of Estimates GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition and the collectability of notes receivable and rents receivable. Application of these estimates and assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates. Summary of Significant Accounting Policies Real Estate Land, buildings, and personal property are carried at cost less accumulated depreciation. Improvements and significant renovations that extend the useful life of the properties are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Real estate under development includes costs for significant property expansion and development. Depreciation is computed on the straight-line basis over estimated useful lives of the assets as follows: Buildings and improvements Furniture and fixtures Tenant improvements Useful lives of 40 years for buildings and 15 years for improvements Useful lives, ranging from five years to 10 years Shorter of economic life or lease terms Purchase Accounting – 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 assumed liabilities in accordance with ASC Topic 805, “Business Combinations” and ASC Topic 350 “Intangibles – Goodwill and Other,” and allocates the acquisition price based on these assessments. When acquisitions of properties do not meet the criteria for business combinations, they are accounted for as asset acquisitions; therefore, no goodwill is recorded and acquisition costs are capitalized. The Company assesses fair value of its tangible assets acquired and assumed liabilities based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information at the measurement period. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. In determining the value of above- and below-market leases, the Company estimates the present value difference between contractual rent obligations and estimated market rate of leases at the time of the transaction. To the extent there were fixed-rate options at below-market rental rates, the Company included these periods along with the current term below-market rent in arriving at the fair value of the acquired leases. The discounted difference between contract and market rents is being amortized to rental income over the remaining applicable lease term, inclusive of any option periods. In determining the value of acquired in-place leases, the Company considers market conditions at the time of the transaction and values the costs to execute similar leases during the expected lease-up period from vacancy to existing occupancy, including carrying costs. The value assigned 72 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS to in-place leases and tenant relationships is amortized over the estimated remaining term of the leases. If a lease were to be terminated prior to its scheduled expiration, all unamortized costs (e.g. lease intangibles) relating to that lease would be written off. The Company estimates the value of any assumption of mortgage debt based on market conditions at the time of acquisitions including prevailing interest rates, terms and ability to obtain financing for a similar asset. Mortgage debt discounts or premiums are amortized into interest expense over the remaining term of the related debt instrument. Real Estate Under Development – The Company capitalizes certain costs related to the development of real estate. Interest and real estate taxes incurred during the period of the construction, expansion or development of real estate are capitalized and depreciated over the estimated useful life of the building. The Company will cease the capitalization of these costs when construction activities are substantially completed and the property is available for occupancy by tenants, but no later than one year from the completion of major construction activity at which time the project is placed in service and depreciation commences. If the Company suspends substantially all activities related to the development of a qualifying asset, the Company will cease capitalization of interest and taxes until activities are resumed. Real Estate Impairment – The Company reviews its real estate, real estate under development and right-of-use assets for impairment when there is an event or a change in circumstances that indicates that the carrying amount may not be recoverable. In cases where the Company does not expect to recover its carrying costs on properties held for use, the Company reduces its carrying costs to fair value. The determination of anticipated undiscounted cash flows is inherently subjective, requiring significant estimates made by management, and considers the most likely expected course of action at the balance sheet date based on current plans, intended holding periods and available market information. If the Company is evaluating the potential sale of an asset, the undiscounted future cash flows analysis is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action as of the balance sheet date. Such cash flow projections consider factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. If an impairment is indicated, an impairment loss is recognized based on the excess of the carrying amount of the asset over its estimated fair value. See Note 9 for information about impairment charges recorded during the periods presented. Dispositions of Real Estate – The Company recognizes property sales in accordance with ASC Topic 610-20 “Other Income—Gains and losses from the derecognition of nonfinancial assets.” Sales of real estate include the sale of land, operating properties and investments in real estate joint ventures. Gains on sale of investment properties are recognized, and the related real estate derecognized, when the Company has satisfied its performance obligations by transferring control of the property. Typically, the timing of payment and satisfaction of performance obligations occur simultaneously on the disposition date upon transfer of the property’s ownership. Real Estate Held for Sale – The Company generally considers assets to be held for sale when it has entered into a contract to sell the property, all material due diligence requirements have been satisfied, and management believes it is probable that the disposition will occur within one year. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value, less cost to sell. Notes Receivable Notes receivable include certain loans that are held for investment and are collateralized by real estate-related investments and may be subordinate to other senior loans. Notes receivable are reported net of allowance for credit loss and are recorded at stated principal amounts or at initial investment less accretive yield for loans purchased at a discount, which is accreted over the life of the note. The Company defers loan origination and commitment fees, net of origination costs, and amortizes them over the term of the related loan. Changes in cash flows from previous estimates are included in future interest income on a prospective basis and a new effective interest rate is computed based on the current cost basis of the instrument and remaining cash flows. The Company evaluates the collectability of both principal and interest based upon an assessment of the underlying collateral value to determine whether it is impaired. Allowance for credit loss represents management’s estimate of future losses based on national historical economic loss rates for similar obligations, management’s estimate of future economic impacts and factors specific to the borrower. Certain of the Company’s loans are considered “collateral dependent” in that settlement of the amount is likely to be achieved by obtaining access to the collateral (e.g. notes in default). The same valuation techniques are used to value the collateral for such collateral dependent instruments as those used to determine the fair value of real estate investments for impairment purposes. Given the small number of notes outstanding, the Company believes the characteristics of its notes are not sufficiently similar to allow an evaluation as a group for credit loss allowance. As such, all of the Company’s notes are evaluated individually for this purpose. Interest income on performing notes is accrued as earned. A note is placed on non-accrual status when, based upon current information and events, it is probable that the Company will not be able to collect all amounts due according to the existing contractual terms. Income accrual is generally suspended for loans when recovery of income and principal becomes doubtful. Interest received is then recorded as a reduction in the outstanding principal balance until the accrual is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms of the notes. 73 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Investments in and Advances to Unconsolidated Joint Ventures Some of the Company’s joint ventures obtain non-recourse third-party financing on their property investments, contractually limiting the Company’s exposure to losses. The Company recognizes income for distributions in excess of its investment where there is no recourse to the Company and no intention or obligation to contribute additional capital. For investments in which there is recourse to the Company or an obligation or intention to contribute additional capital exists, distributions in excess of the investment are recorded as a liability. When characterizing distributions from equity investees within the Company's consolidated statements of cash flows, all distributions received are first applied as returns on investment to the extent there are cumulative earnings related to the respective investment and are classified as cash inflows from operating activities. If cumulative distributions are in excess of cumulative earnings, distributions are considered return of investment. In such cases, the distribution is classified as cash inflows from investing activities. To the extent that the Company’s carrying basis in an unconsolidated affiliate is different from the basis reflected at the joint venture level, the basis difference is amortized over the life of the related assets and included in the Company’s share of equity in earnings (losses) of unconsolidated affiliates the joint venture. The Company periodically reviews its investments in unconsolidated joint ventures for other-than-temporary losses in investment value. Any decline that is not expected to be recovered based on the underlying assets of the investment, is considered other than temporary and an impairment charge is recorded as a reduction in the carrying value of the investment. During the periods presented there were no impairment charges related to the Company’s investments in unconsolidated joint ventures. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed the limits insured by the Federal Deposit Insurance Corporation. Restricted Cash Restricted cash consists principally of cash held for real estate taxes, construction costs, property maintenance, insurance, minimum occupancy and property operating income requirements at specific properties as required by certain loan agreements. Deferred Costs External fees and costs paid in the successful negotiation of leases are deferred and amortized on a straight-line basis over the terms of the respective leases. External fees and costs incurred in connection with obtaining financing are deferred and amortized as a component of interest expense over the term of the related debt obligation on a straight-line basis, which approximates the effective interest method. Derivative Instruments and Hedging Activities The Company measures derivative instruments at fair value and records them as assets or liabilities, depending on its rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated and that qualified as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in Accumulated other comprehensive loss until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. Although the Company's derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both the Company and its counterparties under certain situations, the Company does not net its derivative fair values or any existing rights or obligations to cash collateral on the consolidated balance sheets. The Company does not use derivatives for trading or speculative purposes. For the periods presented, all of the Company's derivatives qualified and were designated as cash flow hedges, and none of its derivatives were deemed ineffective. Noncontrolling Interests Noncontrolling interests represent the portion of equity that the Company does not own in those entities it consolidates. The Company identifies its noncontrolling interests separately within the equity section on the Company’s consolidated balance sheets. The amounts of consolidated net 74 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS earnings attributable to the Company and to the noncontrolling interests are presented separately on the Company’s consolidated statements of operations. Noncontrolling interests also include amounts related to common and preferred OP Units issued to unrelated third parties in connection with certain property acquisitions. In addition, the Company periodically issues common OP Units and LTIPs to certain employees of the Company under its share-based incentive program. Unit holders generally have the right to redeem their units for Common Shares subject to blackout and other limitations. Common and restricted OP Units are included in the caption Noncontrolling interest within the equity section on the Company’s consolidated balance sheets. Revenue Recognition and Accounts Receivable The Company accounts for its leases under ASC 842. Pursuant to ASC 842, the Company has made an accounting policy election to not separate the non-lease components from its leases, such as common area maintenance, and has accounted for each of its leases as a single lease component. In addition, the Company has elected to account only for those taxes that it pays on behalf of the tenant as reimbursable costs and will not account for those taxes paid directly by the tenant. Minimum rents from tenants are recognized using the straight-line method over the non-cancelable lease term of the respective leases. Lease termination fees are recognized upon the effective termination of a tenant’s lease when the Company has no further obligations under the lease. As of December 31, 2021 and 2020, unbilled rents receivable relating to the straight-lining of rents of $43.4 million and $40.2 million, respectively, are included in Rents Receivable, net on the accompanying consolidated balance sheets. Certain of these leases also provide for percentage rents based upon the level of sales achieved by the tenant. Percentage rent is recognized in the period when the tenants’ sales breakpoint is met. In addition, leases typically provide for the reimbursement to the Company of real estate taxes, insurance and other property operating expenses. These reimbursements are recognized as revenue in the period the related expenses are incurred. The Company assesses the collectability of its accounts receivable related to tenant revenues under ASC 842. The Company estimates the collectability of the accounts receivable related to billed rents, straight-line rents, recoveries from tenants, and other revenue taking into consideration the Company's historical write-off experience, tenant credit-worthiness, current economic trends, and remaining lease terms. Rents receivable at December 31, 2021 and 2020 are shown net of an allowance for doubtful accounts of $38.5 million and $45.0 million, respectively. Rental income for the years ended December 31, 2021, 2020 and 2019 are reported net of adjustments of $0.1 million, $46.4 million (reflecting additional reserves, net of write-offs and recoveries due to the impact of the COVID-19 Pandemic, see Note 12) and $4.5 million respectively, to allowance for doubtful accounts. Stock-Based Compensation Stock-based compensation expense for all equity-classified stock-based compensation awards is based on the grant date fair value estimated in accordance with current accounting guidance for share-based payments. The Company recognizes these compensation costs for only those shares or units expected to vest on a straight-line or graded-vesting basis, as appropriate, over the requisite service period of the award. The Company includes stock-based compensation within general and administrative expense on the consolidated statements of operations. Income Taxes The Company has made an election to be taxed, and believes it qualifies, as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). To maintain REIT status for Federal income tax purposes, the Company is generally required to distribute at least 90% of its REIT taxable 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. The Company is permitted to participate in certain activities and still maintain its qualification as a REIT, so long as these activities are conducted in entities that elect to be treated as taxable subsidiaries under the Code. As such, the Company is subject to Federal and state income taxes on the income from these activities. Although it may qualify for REIT status for federal income tax purposes, the Company is subject to state or local income or franchise taxes in certain jurisdictions in which some of its properties are located. In addition, taxable income from non-REIT activities managed through the Company’s Taxable REIT Subsidiary (“TRS”) is fully subject to federal, state and local income taxes. The Company accounts for TRS income taxes under the liability method as required by ASC Topic 740, “Income Taxes.” Under the liability method, deferred income taxes are recognized for the temporary differences between the GAAP basis and tax basis of the TRS income, assets and liabilities. 75 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) temporarily relaxes existing limitations on the use and carryback of net operating losses incurred by our TRSs. Net operating losses generated in taxable years beginning in 2019, 2020 or 2021 can be carried back to the preceding 5 years. In addition, TRSs can fully offset their taxable income for taxable years beginning before 2022 using net operating loss carrybacks and carryforwards and can fully offset their taxable income for taxable years beginning after 2021 using pre- 2019 net operating loss carryforwards. Any post-2018 net operating loss carryforwards can be used to offset up to 80% of taxable income after using pre-2019 net operating loss carryforwards. In 2020, the Company carried back $3.1 million of net operating losses, resulting in a refund of $1.0 million. The Company records net deferred tax assets to the extent it believes it is more likely than not that these assets will be realized. In 2019 and 2020, the Company recorded valuation allowances to reduce deferred tax assets when it determined that an uncertainty existed regarding their realization, which increased the provision for income taxes. In making such determination, the Company considered all available positive and negative evidence, including forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carry-forwards, tax planning strategies and recent results of operations. Several of these considerations require assumptions and significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is utilizing to manage its business. To the extent facts and circumstances change in the future, further adjustments to the valuation allowances may be required. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The amendments in this Update provide guidance for interim period and intra period tax accounting; provide tax accounting guidance for foreign subsidiaries; require that an entity recognize a franchise (or similar) tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; as well as other changes to tax accounting. This ASU is effective for fiscal years beginning after December 15, 2020. As a REIT, the Company usually does not have significant income taxes. Accordingly, the implementation of this guidance did not have a material effect on the Company’s consolidated financial statements. In January 2020, the FASB issued ASU 2020-01 Investments—Equity securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. The amendments in this Update affect all entities that apply the guidance in Topics 321, 323, and 815 and (i) elect to apply the measurement alternative or (ii) enter into a forward contract or purchase an option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting. This ASU is effective for fiscal years beginning after December 15, 2020. Currently, the Company does not apply the measurement alternative and does not have any such forward contracts or purchase options. As a result, the implementation of this guidance did not have any effect on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Effective in the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation and did not have a material impact on the consolidated financial statements. The Company has been incorporating alternate rates into its debt agreements as they mature and does not anticipate the need to modify any existing debt agreements solely as a result of reference rate reform. If any modification is executed as a result of reference rate reform, the Company will elect the optional practical expedient under ASU 2020-04 and 2021-01, which allows entities to account for the modification as if the modification was not substantial. As a result, the implementation of this guidance is not expected to have any effect on the Company’s consolidated financial statements. In October 2020, the FASB issued ASU 2020-08 Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs. The amendments in this Update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. Currently, the Company does not have any such callable debt securities. As a result, the implementation of this guidance did not have any effect on the Company’s consolidated financial statements. On April 8, 2020, the FASB issued a Q&A allowing for reporting entities to make an accounting policy election to account for lease concessions related to the effects of COVID-19 consistent with how those concessions would be accounted for under Topic 842, which is as though the enforceable rights and obligations for those concessions existed regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract. This election is available for concessions that result in the total cash flows required by the modified contract being substantially the same or less than total cash flows required by the original contract. Effective April 1, 2020, the Company made the accounting 76 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS policy election noted above. The Company entered into concession agreements as lessor during the year ended December 31, 2021 (Note 12). The Company may grant further concessions during subsequent periods. Recently Issued Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06—Debt with conversion and other options (Subtopic 470-20) and derivatives and hedging— contracts in entity's own equity (Subtopic 815-40)—accounting for convertible instruments and contracts in an entity's own equity. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU simplifies accounting for convertible instruments and simplifies the diluted earnings per share (EPS) calculation in certain areas. This ASU is effective for fiscal years beginning after December 15, 2021. Currently, the Company does not have any such debt instruments and, as a result, the implementation of this guidance is not expected to have a material effect on the Company’s consolidated financial statements. In January 2021, the FASB issued ASU 2021-01 Reference Rate Reform (Topic 848) which modifies ASC 848 (ASU 2020-04 discussed above), which was intended to provide relief related to “contracts and transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform.” ASU 2021-01 expands the scope of ASC 848 to include all affected derivatives and give reporting entities the ability to apply certain aspects of the contract modification and hedge accounting expedients to derivative contracts affected by the discounting transition. ASU 2021-01 also adds implementation guidance to clarify which optional expedients in ASC 848 may be applied to derivative instruments that do not reference LIBOR or a reference rate that is expected to be discontinued, but that are being modified as a result of the discounting transition. The Company does not currently have any applicable derivatives. As a result, the implementation of this guidance is not expected to have any effect on the Company's consolidated financial statements. In May 2021, the FASB issued ASU 2021-04 Modification of Equity-Classified Written Call Options — Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity- Classified Written Call Options — to codify how an issuer should account for modifications made to equity-classified written call options (a warrant to purchase the issuer’s common stock). The guidance in the ASU requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange whether structured as an amendment or reissuance and is effective for all periods beginning after December 15, 2021 with early application permitted. The Company does not currently have any outstanding equity awards with written call options. As a result, the implementation of this guidance is not expected to have any effect on the Company’s consolidated financial statements. In July 2021, the FASB issued ASU 2021-05 Leases (Topic 842): Lessors — Certain Leases with Variable Lease Payments. This Update requires a lessor to classify a lease with entirely or partially variable payments that do not depend on an index or rate as an operating lease if another classification (i.e. sales-type or direct financing) would trigger a commencement date selling loss. The guidance in the ASU is effective for all periods beginning after December 15, 2021 with early application permitted and may be applied either retrospectively or prospectively. The Company does not currently have any sales-type or direct financing leases as lessor. As a result, the implementation of this guidance is not expected to have any effect on the Company’s consolidated financial statements. In November 2021, the FASB issued ASU 2021-08 Business Combinations (Topic ASC 805) — Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update provides an exception to the fair value measurement for contract assets and contract liabilities acquired in a business combination. Instead, they will be recognized and measured by the acquirer in accordance with ASC 606, Revenue from Contracts with Customers. The guidance in this ASU is effective for all periods beginning after December 15, 2022, with early adoption permitted and must be applied prospectively. The Company does not expect this amendment to have a material effect on the Company's consolidated financial statements as most of the Company's acquisitions of properties do not meet the criteria for business combinations and are accounted for as asset acquisitions, which are excluded from the scope of this amendment. 77 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Restatement of Previously Issued Consolidated Financial Statements As announced on February 15, 2022, the Company has restated its (i) audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 as illustrated in this note to the consolidated financial statements; and (ii) its unaudited interim financial statements for the three months ended March 31, 2021 and 2020, the three and six months ended June 30, 2021 and 2020, the three and nine months ended September 30, 2021 and 2020, and the three months ended December 31, 2020 as illustrated in Note 17; collectively referred to as the "Restatement". Amounts depicted as "As Restated" throughout the accompanying consolidated financial statements and footnotes include the impact of the Restatement. As part of the Company’s normal annual reporting process prior to releasing its 2021 fourth quarter and year-to-date December 31, 2021 results and prior to completion of the related audit, the Company identified two areas of restatement errors. All adjustments depicted in the tables below relate to one of the following categories: (a) (b) an error in accounting treatment at the time of formation related to the improper consolidation of two Fund investments that are less- than-wholly-owned through the Company's opportunity funds (the "Fund Investments"). These two Fund Investments, 640 Broadway and Paramus Plaza, which were formed in 2012 and 2013, respectively, have been adjusted from consolidated investments to investments in unconsolidated affiliates (Note 5) with no impact on net income (loss) or distributions in excess of accumulated earnings. It should also be noted that during the Restatement periods, the Fund Investments did not have any significant transactions (new borrowings, acquisitions, or dispositions) other than their ongoing rental operations in the normal course of business. errors related to other immaterial previously unrecorded adjustments, which were also recorded as part of the Restatement. These adjustments were primarily adjustments which the Company deemed immaterial in prior periods. The total impact of these adjustments for the years ended December 31, 2020 and 2019 was a reduction in net income (loss) attributable to Acadia of ($0.2) million or ($0.01) per share, and $0.7 million, or $0.01 per share, respectively. These adjustments include the recognition of additional reserves for one of the Company's notes receivable, 640 Broadway (Note 4) of $0.6 million. or $0.1 million at the Company's share, for the year ended December 31, 2020. (c) reclassifications of certain prior period amounts to conform to the current period presentation. Reclassifications have no impact on net income (loss), do not relate to the Restatement errors and are included here in order to conform the presentation across the periods presented. i. On the balance sheet at December 31, 2020, Unsecured notes payable, net of $79.2 million were reclassified to mortgage and other notes payable, net. On the balance sheet at December 31, 2019, $60.0 million was reclassified from Operating real estate, net to Right-of-use assets - operating leases, net and the corresponding Lease liability - operating leases, net of $58.0 million was reclassified from Accounts payable and other liabilities. ii. On the statement of cash flows for the year ended December 31, 2019, Straight-line rents of ($5.2) million, Allowance for credit loss of $2.7 million and Adjustments to straight-line rent reserves of $1.8 million were all reclassified from the change in Rents receivable. 78 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) ASSETS Investments in real estate, at cost Operating real estate, net Real estate under development Net investments in real estate Notes receivable, net Investments in and advances to unconsolidated affiliates Other assets, net Right-of-use assets - operating leases, net Cash and cash equivalents Restricted cash Rents receivable, net Total assets LIABILITIES Mortgage and other notes payable, net Unsecured notes payable, net Unsecured line of credit Accounts payable and other liabilities Lease liability - operating leases, net Dividends and distributions payable Distributions in excess of income from, and investments in, unconsolidated affiliates Total liabilities Commitments and contingencies EQUITY Acadia Shareholders' Equity As Reported Adjustments As Restated December 31, 2020 $ $ $ 3,260,139 $ 247,349 3,507,488 101,450 249,807 173,809 76,268 19,232 14,692 44,136 4,186,882 $ $ (69,378 ) (a) (148 ) (a) (69,526 ) (568 ) (b) 23,022 (a,b) (3,528 ) (a) — (533 ) (a) (3,596 ) (a) (1,084 ) (a) (55,813 ) $ 1,125,356 $ 500,083 138,400 269,911 88,816 147 23,230 (a,b,c) $ (79,225 ) (c) — (1,469 ) (a) — — 15,616 2,138,329 — (57,464 ) 3,190,761 247,201 3,437,962 100,882 272,829 170,281 76,268 18,699 11,096 43,052 4,131,069 1,148,586 420,858 138,400 268,442 88,816 147 15,616 2,080,865 Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,268,303 shares Additional paid-in capital Accumulated other comprehensive loss Distributions in excess of accumulated earnings Total Acadia shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity $ 86 1,683,165 (74,891 ) (167,046 ) 1,441,314 607,239 2,048,553 4,186,882 $ — — — (275 ) (b) (275 ) 1,926 (a,b) 1,651 (55,813 ) $ 86 1,683,165 (74,891 ) (167,321 ) 1,441,039 609,165 2,050,204 4,131,069 79 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts) Revenues Rental income Other Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating loss Equity in losses of unconsolidated affiliates Interest and other income Realized and unrealized holding gains on investments and other Interest expense Loss from continuing operations before income taxes Income tax provision Net loss Net loss attributable to noncontrolling interests Net loss attributable to Acadia Net income attributable to participating securities Shares for basic loss per share Basic loss per share Year Ended December 31, 2020 As Reported Adjustments As Restated 251,002 $ 4,482 255,484 149,793 36,055 43,505 56,595 85,598 371,546 683 (115,379 ) (1,237 ) 8,979 113,930 (72,060 ) (65,767 ) (271 ) (66,038 ) 57,279 (8,759 ) $ 233 $ 86,442 $ (4,570 ) (a) (6 ) (a) (4,576 ) (2,564 ) (a) (257 ) (a) (1,028 ) (a) (1,044 ) (a) — (4,893 ) — 317 (1,820 ) (a) — (568 ) (b) 2,389 (a,b) 318 2 (a) 320 (537 ) (a,b) (217 ) — — $ $ 246,432 4,476 250,908 147,229 35,798 42,477 55,551 85,598 366,653 683 (115,062 ) (3,057 ) 8,979 113,362 (69,671 ) (65,449 ) (269 ) (65,718 ) 56,742 (8,976 ) 233 86,442 (0.10 ) $ (0.01 ) $ (0.11 ) $ $ $ $ 80 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Net loss Other comprehensive loss As Reported Adjustments As Restated Year Ended December 31, 2020 $ (66,038 ) $ 320 $ (65,718 ) Unrealized loss on valuation of swap agreements Reclassification of realized interest on swap agreements Other comprehensive loss Comprehensive loss Comprehensive loss attributable to noncontrolling interests Loss attributable to Acadia $ (74,236 ) 15,203 (59,033 ) (125,071 ) 72,596 (52,475 ) $ 550 (a) (144 ) (a) 406 726 (644 ) 82 $ (73,686 ) 15,059 (58,627 ) (124,345 ) 71,952 (52,393 ) 81 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Year Ended December 31, 2020 Share Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Total Common Shareholders’ Equity Noncontrolling Interests Total Equity $ 87 $ 1,706,357 $ (31,175 ) $ (132,961 ) $ 1,542,308 $ 644,657 $ 2,186,965 Common Shares 87,050 (389 ) (389 ) (11 ) — (15,330 ) 15,918 (400 ) 588 — — 6,544 (6,544 ) — (22,386 ) — (22,386 ) (24,937 ) (24,937 ) (2,218 ) — — 782 10,130 — (27,574 ) — (43,716 ) — (8,759 ) — (52,475 ) 52,674 (72,596 ) (27,155 ) 10,912 (27,574 ) 52,674 (125,071 ) 7,197 — — 7,197 (7,197 ) — 86,269 — — — — 87,050 $ 86 $ 1,683,165 $ (74,891 ) $ (167,046 ) $ 1,441,314 $ 607,239 $ 2,048,553 — — — — $ — $ (299 ) $ (58 ) $ (357 ) $ 1,782 $ 1,425 — — — $ — 299 — $ — (217 ) (275 ) — 82 (275 ) (500 ) (a) 644 1,926 (500 ) 726 1,651 87 $ 1,706,357 $ (31,474 ) $ (133,019 ) $ 1,541,951 $ 646,439 $ 2,188,390 $ $ (in thousands, except per share amounts) Balance at January 1, 2020 Cumulative effect of change in accounting principle Acquisition of noncontrolling interest Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Dividends/distributions declared ($0.29 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Reallocation of noncontrolling interests Balance at December 31, 2020 Adjustments Balance at January 1, 2020 Noncontrolling interest contributions Comprehensive loss Total Adjustments As Restated Balance at January 1, 2020 - As Restated Cumulative effect of change in accounting principle Acquisition of noncontrolling interest Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Dividends/distributions declared ($0.29 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Reallocation of noncontrolling interests Balance at December 31, 2020 -As Restated — — 408 (1,219 ) — 30 — — — — — — — (1 ) — — — — — — — — 408 (1,219 ) — 30 — — — — — — — (1 ) — — — — — — — (15,330 ) 6,544 (22,385 ) — 782 — — — — (15,330 ) 6,544 (22,385 ) — 782 — — — — — — — — — — — — — — — — — (389 ) (389 ) (11 ) — (15,330 ) 15,918 (400 ) 588 — — 6,544 (6,544 ) — (22,386 ) — (22,386 ) (24,937 ) (24,937 ) (2,218 ) — — 782 10,130 — (27,574 ) — (43,417 ) — (8,976 ) — (52,393 ) 52,174 (71,952 ) (27,155 ) 10,912 (27,574 ) 52,174 (124,345 ) 7,197 — — 7,197 (7,197 ) — 86,269 $ 86 $ 1,683,165 $ (74,891 ) $ (167,321 ) $ 1,441,039 $ 609,165 $ 2,050,204 82 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net loss Adjustments to reconcile net loss to net cash provided by operating activities: As Reported Adjustments As Restated Year Ended December 31, 2020 $ (66,038 ) 320 $ (65,718 ) Depreciation and amortization Straight-line rents Non-cash lease expense Net unrealized holding gains on investments Distributions of operating income from unconsolidated affiliates Equity in (earnings) losses of unconsolidated affiliates Stock compensation expense Amortization of financing costs Impairment charges Gain on disposition of properties Allowance for credit loss Adjustments to straight-line rent reserves Gain on debt extinguishment Other, net Changes in assets and liabilities: Other liabilities Lease liability - operating leases Prepaid expenses and other assets Rents receivable Accounts payable and accrued expenses Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of real estate Development, construction and property improvement costs Proceeds from the disposition of properties, net Investments in and advances to unconsolidated affiliates and other Return of capital from unconsolidated affiliates and other Issuance of notes receivable Return of deposits for properties under contract Payment of deferred leasing costs Change in control of previously unconsolidated affiliate Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes Principal payments on unsecured debt Proceeds received on mortgage and other notes Proceeds from unsecured debt Payments of finance lease obligations Proceeds from the sale (repurchase) of Common Shares Capital contributions from noncontrolling interests Distributions to noncontrolling interests Dividends paid to Common Shareholders Deferred financing and other costs Net cash used in financing activities Increase in cash and restricted cash Cash of $14,149 and restricted cash of $13,880 beginning of period Cash of $18,699 and restricted cash of $11,096 end of period 149,793 (5,096 ) 3,392 (72,391 ) 3,286 1,237 10,912 5,169 85,598 (683 ) 24,770 22,074 (18,339 ) (8,753 ) (4,208 ) (1,579 ) 32 (29,810 ) 3,199 102,565 (21,208 ) (40,483 ) 20,930 (4,291 ) 14,686 (59,000 ) 187 (7,979 ) 950 (96,208 ) (55,449 ) (136,490 ) 7,261 236,804 (903 ) (22,386 ) 52,674 (31,461 ) (50,182 ) (2,311 ) (2,443 ) 3,914 30,010 33,924 $ (2,564 ) (a,b) 227 (a) — — — 1,820 (a) — (131 ) (a,b) — (b) — (201 ) (a) (203 ) (a) — 598 (a,b) 249 (a) — (28 ) (a) 1,489 (a) (194 ) (a) 1,382 — 3,904 (a) — (10,192 ) (a) — — — 1,572 (a) — (4,716 ) 3,500 (a) — (1,910 ) (a) — — — (500 ) (a) — — 96 (a) 1,186 (2,148 ) (1,981 ) (4,129 ) $ 147,229 (4,869 ) 3,392 (72,391 ) 3,286 3,057 10,912 5,038 85,598 (683 ) 24,569 21,871 (18,339 ) (8,155 ) (3,959 ) (1,579 ) 4 (28,321 ) 3,005 103,947 (21,208 ) (36,579 ) 20,930 (14,483 ) 14,686 (59,000 ) 187 (6,407 ) 950 (100,924 ) (51,949 ) (136,490 ) 5,351 236,804 (903 ) (22,386 ) 52,174 (31,461 ) (50,182 ) (2,215 ) (1,257 ) 1,766 28,029 29,795 $ 83 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Supplemental disclosure of cash flow information Cash paid during the period for interest, net of capitalized interest of $7,110 Cash paid for income taxes, net of (refunds) As Reported Adjustments As Restated Year Ended December 31, 2020 $ $ 72,392 $ (329 ) $ (2,009 ) (a) — $ $ 70,383 (329 ) 400 $ — $ 400 116 $ 72,430 $ — $ — $ (70,427 ) $ — $ 33,189 $ — $ — $ — $ — $ — $ — $ (1,432 ) $ (135,190 ) $ 96,816 1,238 (588 ) 38,674 — — 950 $ — — — 123 (c) — — — — — — — — — — — — — — — — — — $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 116 72,430 — 123 (70,427 ) — 33,189 — — — — — — (1,432 ) (135,190 ) 96,816 1,238 (588 ) 38,674 — — 950 $ Supplemental disclosure of non-cash investing and financing activities Adjustment to equity as a result of the implementation of CECL Assumption of accounts payable and accrued expenses through acquisition of real estate Note receivable exchanged for real estate Acquisition of real estate through assumption of debt Distribution declared and payable Right-of-use assets, finance leases (modified) obtained in exchange for finance lease $ liabilities $ Right-of-use assets, finance leases obtained in exchange for assets under capital lease $ Right-of-use assets, operating leases exchanged for operating lease liabilities $ Capital lease obligation exchanged for finance lease liability $ Other liabilities exchanged for operating lease liabilities $ Assumption of debt through investments in unconsolidated affiliates $ Debt exchanged for deferred gain on tax credits $ Other assets exchanged for deferred gain on tax credits Settlement of note receivable through cancellation of OP Units $ Right of use assets, operating leases terminated in exchange for finance lease liabilities $ $ $ $ $ Change in control of previously unconsolidated (consolidated) investment Increase in real estate Decrease in investments in and advances to unconsolidated affiliates Change in other assets and liabilities Acquisition of noncontrolling interest asset Decrease in notes receivable Decrease in right-of-use assets, finance leases Decrease in finance lease liability Increase in cash and restricted cash upon change of control $ $ 84 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) ASSETS Investments in real estate, at cost Operating real estate, net Real estate under development Net investments in real estate Notes receivable, net Investments in and advances to unconsolidated affiliates Other assets, net Right-of-use assets - operating leases, net Cash and cash equivalents Restricted cash Rents receivable, net Total assets LIABILITIES Mortgage and other notes payable, net Unsecured notes payable, net Unsecured line of credit Accounts payable and other liabilities Lease liability - operating leases, net Dividends and distributions payable Distributions in excess of income from, and investments in, unconsolidated affiliates Total liabilities Commitments and contingencies EQUITY Acadia Shareholders' Equity As Reported Adjustments As Restated December 31, 2019 $ $ $ 3,355,913 $ 253,402 3,609,315 114,943 305,097 190,658 — 15,845 14,165 59,091 4,309,114 $ (127,888 ) (a,b,c) $ (6 ) (a) (127,894 ) — (b) 14,453 (a,b) (2,225 ) (a) 60,006 (c) (1,696 ) (a) (285 ) (a) 222 (a) (57,419 ) $ 1,170,076 $ 477,320 60,800 371,516 — 27,075 (57,551 ) (a,b) $ — — (58,055 ) (a,c) 56,762 (c) — 15,362 2,122,149 — (58,844 ) 3,228,025 253,396 3,481,421 114,943 319,550 188,433 60,006 14,149 13,880 59,313 4,251,695 1,112,525 477,320 60,800 313,461 56,762 27,075 15,362 2,063,305 Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 87,050,465 shares Additional paid-in capital Accumulated other comprehensive loss Distributions in excess of accumulated earnings Total Acadia shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity $ 87 1,706,357 (31,175 ) (132,961 ) 1,542,308 644,657 2,186,965 4,309,114 $ — — (299 ) (b) (58 ) (b) (357 ) 1,782 (a,b) 1,425 (57,419 ) $ 87 1,706,357 (31,474 ) (133,019 ) 1,541,951 646,439 2,188,390 4,251,695 85 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts) Revenues Rental income Other Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating income Equity in earnings of unconsolidated affiliates Interest and other income Realized and unrealized holding gains on investments and other Interest expense Income from continuing operations before income taxes Income tax provision Net income Net loss attributable to noncontrolling interests Net income attributable to Acadia Net income attributable to participating securities Shares for basic and diluted income per share Basic and diluted income per share Year Ended December 31, 2019 As Reported Adjustments As Restated 291,190 $ 4,137 295,327 125,443 35,416 39,315 51,153 1,721 253,048 30,324 72,603 8,922 7,988 6,947 (73,788 ) 22,672 (1,468 ) 21,204 31,841 53,045 $ 413 $ 84,436 (5,720 ) (a,b) $ (22 ) (a) (5,742 ) (2,863 ) (a,b) (1,117 ) (a,b) (982 ) (a) (1,255 ) (a) — (6,217 ) — 475 (3,023 ) (a) — — (b) 4,575 (a,b) 2,027 3 (a) 2,030 (1,358 ) (a,b) 672 — — $ $ 285,470 4,115 289,585 122,580 34,299 38,333 49,898 1,721 246,831 30,324 73,078 5,899 7,988 6,947 (69,213 ) 24,699 (1,465 ) 23,234 30,483 53,717 413 84,436 0.62 $ 0.01 $ 0.63 $ $ $ $ 86 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Net income Other comprehensive loss As Reported Adjustments As Restated Year Ended December 31, 2019 $ 21,204 $ 2,030 $ 23,234 Unrealized loss on valuation of swap agreements Reclassification of realized interest on swap agreements Other comprehensive loss Comprehensive loss Comprehensive loss attributable to noncontrolling interests Comprehensive Income attributable to Acadia $ (35,674 ) (872 ) (36,546 ) (15,342 ) 36,696 21,354 $ (209 ) (a) 2 (a) (207 ) 1,823 (1,450 ) 373 $ (35,883 ) (870 ) (36,753 ) (13,519 ) 35,246 21,727 87 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Year Ended December 31, 2019 Share Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Total Common Shareholders’ Equity Noncontrolling Interests Total Equity Common Shares 81,557 5,164 $ $ 82 5 1,548,603 145,493 $ 516 — $ (89,696 ) — $ 1,459,505 $ 145,498 622,442 — $ 2,081,947 145,498 (in thousands, except per share amounts) Balance at January 1, 2019 Issuance of Common Shares Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Dividends/distributions declared ($1.13 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Reallocation of noncontrolling interests Balance at December 31, 2019 Adjustments Balance at January 1, 2019 Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Total Adjustments As Restated Balance at January 1, 2019 - As Restated Issuance of Common Shares Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Dividends/distributions declared ($1.13 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Reallocation of noncontrolling interests Balance at December 31, 2019 -As Restated 308 — 21 — — — — — — — — — — — 5,104 — 546 — — — — — — — — 81,557 5,164 $ $ 308 — 21 — — — — — — — — — 82 5 — — — — — — — — — — — — 1,548,603 145,493 $ $ $ $ 5,104 — 546 — — — — — — — — — — (299 ) (299 ) 516 — — — — — — 5,104 (5,104 ) — (96,310 ) (96,310 ) (7,124 ) (103,434 ) — — 546 10,411 — (94,289 ) — (31,691 ) — 53,045 — 21,354 161,628 (36,696 ) 6,611 — — 6,611 (6,611 ) 87,050 $ 87 $ 1,706,357 $ (31,175 ) $ (132,961 ) $ 1,542,308 $ 644,657 $ 2,186,965 — $ — $ — $ — $ (730 ) $ (730 ) $ 1,540 $ 10,957 (94,289 ) 161,628 (15,342 ) — 810 (951 ) 6 (263 ) 1,823 1,425 10,006 (94,283 ) 161,365 (13,519 ) — — — — 373 (357 ) $ (951 ) (b) 6 (a) (263 ) (a) 1,450 (a,b) $ 1,782 — — — 672 (58 ) (90,426 ) — $ $ $ $ 1,458,775 $ 145,498 623,982 — $ 2,082,757 145,498 — 5,104 (5,104 ) — (96,310 ) (96,310 ) (7,124 ) (103,434 ) — — 546 9,460 — (94,283 ) — (31,990 ) — 53,717 — 21,727 161,365 (35,246 ) 6,611 — — 6,611 (6,611 ) 87,050 $ 87 $ 1,706,357 $ (31,474 ) $ (133,019 ) $ 1,541,951 $ 646,439 $ 2,188,390 88 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: As Reported Adjustments As Restated Year Ended December 31, 2019 $ 21,204 2,030 $ 23,234 Depreciation and amortization Straight-line rents Distributions of operating income from unconsolidated affiliates Equity in (earnings) losses of unconsolidated affiliates Stock compensation expense Amortization of financing costs Impairment charges Gain on disposition of properties Allowance for credit loss Adjustments to straight-line rent reserves Deferred gain on tax credits Other, net Changes in assets and liabilities: Other liabilities Lease liability - operating leases Prepaid expenses and other assets Rents receivable Accounts payable and accrued expenses Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of real estate Acquisition of leasehold interests Development, construction and property improvement costs Proceeds from the disposition of properties, net Investments in and advances to unconsolidated affiliates and other Return of capital from unconsolidated affiliates and other Issuance of notes receivable Proceeds from notes receivable Return of deposits for properties under contract Payment of deferred leasing costs Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes Principal payments on unsecured debt Proceeds received on mortgage and other notes Proceeds from unsecured debt Payments of finance lease obligations Proceeds from the sale (repurchase) of Common Shares Capital contributions from noncontrolling interests Distributions to noncontrolling interests Dividends paid to Common Shareholders Deferred financing and other costs Net cash provided by financing activities Decrease in cash and restricted cash Cash of $20,074 and restricted cash of $13,155 beginning of period Cash of $14,149 and restricted cash of $13,880 end of period 125,443 — 11,273 (8,922 ) 10,957 7,577 1,721 (30,324 ) — — (5,034 ) (11,627 ) (4,466 ) — 8,198 (455 ) 1,632 127,177 (319,673 ) (39,031 ) (89,270 ) 88,738 (151,281 ) 105,999 (3,608 ) 15,250 2,870 (7,051 ) (397,057 ) (168,211 ) (521,600 ) 326,268 526,400 (2,749 ) 145,498 161,628 (101,370 ) (93,902 ) (6,920 ) 265,042 (4,838 ) 34,848 30,010 $ (2,863 ) (a,b) (4,185 ) (c) — 3,023 (a) (951 ) (b) (859 ) (a,b) — — 2,742 (a,c) 1,961 (a,b,c) — 52 (a) (384 ) (a) 2,014 (b) 8 (a) 1,544 (c) 73 (a) 4,205 — — (115 ) (a) — (13,641 ) (a) 6 — — — 269 (a) (13,481 ) 27,627 (a) — (18,900 ) (a) — — — (263 ) (a) 6 (a) — 444 (a) 8,914 (362 ) (1,619 ) (1,981 ) $ 122,580 (4,185 ) 11,273 (5,899 ) 10,006 6,718 1,721 (30,324 ) 2,742 1,961 (5,034 ) (11,575 ) (4,850 ) 2,014 8,206 1,089 1,705 131,382 (319,673 ) (39,031 ) (89,385 ) 88,738 (164,922 ) 106,005 (3,608 ) 15,250 2,870 (6,782 ) (410,538 ) (140,584 ) (521,600 ) 307,368 526,400 (2,749 ) 145,498 161,365 (101,364 ) (93,902 ) (6,476 ) 273,956 (5,200 ) 33,229 28,029 $ 89 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Supplemental disclosure of cash flow information Cash paid during the period for interest, net of capitalized interest of $12,586 Cash paid for income taxes, net of (refunds) As Reported Adjustments As Restated Year Ended December 31, 2019 $ $ 53,586 $ 730 $ 15,490 — $ $ 69,076 730 — $ — $ — $ Supplemental disclosure of non-cash investing and financing activities Adjustment to equity as a result of the implementation of CECL Assumption of accounts payable and accrued expenses through acquisition of real estate Note receivable exchanged for real estate Acquisition of real estate through assumption of debt Distribution declared and payable Right-of-use assets, finance leases (modified) obtained in exchange for finance lease $ liabilities $ Right-of-use assets, finance leases obtained in exchange for assets under capital lease $ Right-of-use assets, operating leases exchanged for operating lease liabilities $ Capital lease obligation exchanged for finance lease liability $ Other liabilities exchanged for operating lease liabilities $ Assumption of debt through investments in unconsolidated affiliates $ Debt exchanged for deferred gain on tax credits $ Other assets exchanged for deferred gain on tax credits Settlement of note receivable through cancellation of OP Units $ Right of use assets, operating leases terminated in exchange for finance lease liabilities $ $ $ $ $ 4,666 $ 13,530 $ — $ — $ 16,349 $ 76,965 $ 57,165 $ 71,111 $ 946 $ 4,688 $ — $ — $ — $ — $ Change in control of previously unconsolidated (consolidated) investment Increase in real estate Decrease in investments in and advances to unconsolidated affiliates Change in other assets and liabilities Acquisition of noncontrolling interest asset Decrease in notes receivable Decrease in right-of-use assets, finance leases Decrease in finance lease liability Increase in cash and restricted cash upon change of control $ 828 $ (1,189 ) 12 — — 11,051 (10,702 ) $ — $ — — — 26,914 (c) — — — — — — (5,262 ) (c) 228 (c) — — — — — — — — — — $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 4,666 13,530 — 26,914 16,349 76,965 57,165 71,111 946 4,688 (5,262 ) 228 — — 828 (1,189 ) 12 — — 11,051 (10,702 ) — 3. Real Estate The Company’s consolidated real estate is comprised of the following for the periods presented (in thousands): Land Buildings and improvements Tenant improvements Construction in progress Right-of-use assets - finance leases (Note 12) Total Less: Accumulated depreciation and amortization Operating real estate, net Real estate under development Net investments in real estate 90 December 31, 2021 2020 (As Restated) 739,641 $ 2,892,051 199,925 11,131 25,086 3,867,834 (648,461 ) 3,219,373 203,773 3,423,146 $ 752,721 2,802,253 178,918 5,147 25,086 3,764,125 (573,364 ) 3,190,761 247,201 3,437,962 $ $ ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Acquisitions and Conversions During the years ended December 31, 2021 and 2020, the Company acquired the following consolidated retail properties and other real estate investments (dollars in thousands): Property and Location 2021 Acquisitions Core 14th Street Portfolio - Washington, DC Subtotal Core Fund V Canton Marketplace - Canton, GA Monroe Marketplace - Selinsgrove, PA Monroe Marketplace (Parcel) - Selinsgrove, PA Midstate - East Brunswick, NJ Subtotal Fund V Total 2021 Acquisitions 2020 Acquisitions and Conversions Core Soho Acquisitions - 37 Greene Street - New York, NY 917 W. Armitage - Chicago, IL Town Center - Wilmington, DE (Conversion) (Note 5) Subtotal Core Fund IV 230-240 W. Broughton Street - Savannah, GA 102 E. Broughton Street - Savannah, GA Subtotal Fund IV Total 2020 Acquisitions and Conversions Percent Acquired Date of Acquisition Purchase Price 100% Dec 23, 2021 $ 100% 100% 100% 100% Aug 20, 2021 Sept 9, 2021 Nov 12, 2021 Dec 14, 2021 100% 100% 100% Jan 9, 2020 Feb 13, 2020 Apr 1, 2020 100% 100% May 26, 2020 May 26, 2020 $ $ $ $ 26,320 26,320 50,954 44,796 1,029 71,867 168,646 194,966 15,689 3,515 138,939 158,143 13,219 790 14,009 172,152 For the years ended December 31, 2021 and 2020, the Company capitalized acquisition costs of $3.6 million and $1.3 million, respectively. During the year ended December 31, 2021, the Company assumed a $31.8 million mortgage upon the acquisition of Canton Marketplace (Note 8). No debt was assumed in any of the 2020 Acquisitions and Conversions. Conversions represent notes receivable that were converted to an equity interest in the underlying collateral property in a non-cash transaction. 91 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Purchase Price Allocations The purchase prices for the 2021 Acquisitions and 2020 Acquisitions and Conversions were allocated to the acquired assets and assumed liabilities based on their estimated relative fair values at the dates of acquisition. The following table summarizes the allocation of the purchase price of properties acquired during the years ended December 31, 2021 and 2020 (in thousands): Net Assets Acquired Land Buildings and improvements Accounts receivable, prepaids and other assets Acquisition-related intangible assets (Note 7) Right-of-use asset - Operating lease (Note 12) Acquisition-related intangible liabilities (Note 7) Lease liability - Operating lease (Note 12) Accounts payable and other liabilities Net assets acquired Consideration Cash Conversion of note receivable Conversion of accrued interest Debt assumed Liabilities assumed Existing interest in previously unconsolidated investment Acquisition of noncontrolling interests Total consideration Year Ended December 31, 2021 2020 $ $ $ 37,290 $ 134,065 — 39,953 — (16,342 ) — — 194,966 $ 161,846 $ — — 31,801 1,319 — — $ 194,966 $ 25,440 123,459 5,770 23,061 234 (4,569 ) (234 ) (1,009 ) 172,152 21,208 38,674 1,995 — 116 109,571 588 172,152 92 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Dispositions During the years ended December 31, 2021, 2020 and 2019, the Company disposed of the following consolidated properties and other real estate investments (in thousands): Property and Location 2021 Dispositions 60 Orange St - Bloomfield, NJ 654 Broadway - New York, NY NE Grocer Portfolio (Selected Assets) - Maine Total 2021 Dispositions (a) Owner Date Sold Sale Price Gain on Sale Core Fund III Fund IV Jan 29, 2021 $ May 19, 2021 Jun 18, 2021 $ 16,400 10,000 39,925 66,325 $ $ 2020 Dispositions Core 163 Highland Ave. (Easement) - Needham, MA Fund IV Colonie Plaza - Albany, NY Airport Mall (Parcel) - Bangor, ME Fund IV Cortlandt Crossing (Sewer Project and Retention Pond) - Cortlandt, NY Fund III Union Township (Parcel) - New Castle, PA Total 2020 Dispositions Core Mar 19, 2020 $ Apr 13, 2020 Sep 10, 2020 Nov 30, 2020 Dec 11, 2020 $ 238 15,250 400 6,325 200 22,413 $ $ 4,612 111 5,064 9,787 88 485 24 — 86 683 2019 Dispositions 3104 M Street - Washington, DC 210 Bowery - 3 Residential Condos - New York, NY JFK Plaza - Waterville, ME 3780-3858 Nostrand Avenue - New York, NY 938 W North Avenue - Chicago, IL Pacesetter Park - Pomona, NY Total 2019 Dispositions Fund III Fund IV Fund IV Fund III Fund IV Core Jan 24, 2019 $ May 17, 2019 Sep 23, 2019 Nov 7, 2019 Jul 24, 2019 Aug 22, 2019 Sep 27, 2019 Oct 28, 2019 $ 10,500 $ 2,014 8,826 7,800 27,650 32,000 22,550 109,326 $ (242 ) 2,075 2,562 7,144 16,771 30,324 a) Does not include the gain on lease termination of $0.7 million related to the Fund IV lease at 110 University Place (Note 12). Properties Held for Sale or Sold At December 31, 2021, the Company had two properties under contract for sale with assets totaling $64.0 million, which were probable of disposition. These properties were classified as "held for sale" on the Company's consolidated balance sheets at December 31, 2021. The Company sold both properties in January and February 2022 and repaid the related debt upon disposition (Note 18). The aggregate rental revenue, expenses and pre-tax income reported within continuing operations for the aforementioned consolidated properties that were sold as well as the lease that was terminated during the years ended December 31, 2021, 2020 and 2019 were as follows (in thousands): Revenues Expenses Gain on disposition of properties Net income attributable to noncontrolling interests Net income attributable to Acadia Real Estate Under Development and Construction in Progress 2021 Year Ended December 31, 2020 2019 $ $ 3,270 $ (3,784 ) 10,521 (4,151 ) 5,856 $ 8,847 $ (8,625 ) 683 (323 ) 582 $ 17,282 1,212 30,324 (10,967 ) 37,851 Real estate under development represents the Company’s consolidated properties that have not yet been placed into service while undergoing substantial development or construction. 93 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Development activity for the Company’s consolidated properties comprised the following during the periods presented (dollars in thousands): January 1, 2021 Year Ended December 31, 2021 December 31, 2021 Core Fund II Fund III Fund IV (a) Total Number of Properties Carrying Value — $ — 1 2 3 $ 63,875 74,657 23,104 85,565 247,201 $ Transfers In $ Capitalized Costs Transfers Out Number of Properties Carrying Value — $ — — 29,758 29,758 $ 1,855 $ 3,921 1,192 2,026 8,994 $ 23,213 43,453 — 15,514 82,180 42,517 — $ 35,125 — 24,296 1 1 101,835 2 $ 203,773 a) Transfers in include $29.8 million related to the remaining portion of one Fund IV property that was placed into development. January 1, 2020 Number of Properties Carrying Value (As Restated) Year Ended December 31, 2020 Capitalized Costs Transfers Out Transfers In Core Fund II (a) Fund III Fund IV (b) Total — $ — 1 2 3 $ 60,863 10,703 36,240 145,590 253,396 $ $ — $ 66,812 — — 66,812 $ 3,012 $ 3,612 35 1,261 7,920 $ — 6,470 13,171 61,286 80,927 a) Transfers in include $33.8 million of non-cash Fund II additions obtained through the conversion of a note receivable (Note 4). b) Transfers out include impairment charges totaling $16.5 million on two Fund IV development properties (Note 9). December 31, 2020 Number of Properties Carrying Value (As Restated) 63,875 74,657 23,104 85,565 247,201 — $ — 1 2 3 $ The number of properties in the tables above refers to projects comprising the entire property under development; however, certain projects represent a portion of a property. At December 31, 2021, consolidated development projects included: a portion of City Center for Core, portions of City Point Phase I and II at Fund II, Broad Hollow Commons at Fund III and 717 N. Michigan Avenue at Fund IV. In addition, at December 31, 2021, the Company had one Core unconsolidated development project, 1238 Wisconsin Avenue. During the year ended December 31, 2021, the Company: • • • • placed portions of one Core project, City Center, into service in the first and second quarter of 2021 disposed of building improvements related to one Fund IV project, 110 University Place, in connection with a lease termination in the second quarter of 2021 (Note 12) placed the remaining portion of one Fund IV property, 717 N. Michigan Avenue, into development in the fourth quarter of 2021 placed a portion of Fund II’s City Point Phase III into service in the fourth quarter of 2021 During the year ended December 31, 2020, the Company: • • • • • • placed a portion of one Fund III property, Cortlandt Crossing, into service in the first quarter of 2020 converted, in a non-cash transaction, a note receivable in exchange for construction improvements at a Fund II property in the amount of $33.8 million in the fourth quarter of 2020 (Note 4) recognized impairment charges totaling $16.5 million on two Fund IV properties (Note 9) including 717 N. Michigan Avenue and 110 University Place in the fourth quarter of 2020 placed a portion of one Fund IV property, 146 Geary Street, which was also impaired, into service in the first quarter of 2020 (Note 9) placed a portion of Fund II’s City Point Phase II into development in the second quarter of 2020 suspended certain development projects due to aforementioned disruptions related to the COVID-19 Pandemic. Substantially all remaining development and redevelopment costs were discretionary and dependent upon the resumption of tenant interest. Construction in progress pertains to construction activity at the Company’s operating properties that are in service and continue to operate during the construction period. 94 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Notes Receivable, Net The Company’s notes receivable, net are generally collateralized either by the underlying properties or the borrowers’ ownership interests in the entities that own the properties, and were as follows (dollars in thousands): December 31, December 31, 2021 Description 2021 Core Portfolio (a) Fund III Total notes receivable Allowance for credit loss Notes receivable, net $ $ 2020 (As Restated) 96,794 5,306 102,100 (1,218 ) 100,882 154,332 $ 5,306 159,638 (5,752 ) 153,886 $ Number Maturity Date Interest Rate 7 1 Apr 2020 - Dec 2027 Jul 2020 5.00% - 12.00% 18.00% 8 (a) Includes one and two notes receivable from OP Unit holders, for $6.0 million and $6.5 million at December 31, 2021 and 2020, respectively. During the year ended December 31, 2021, the Company: • • • • • originated a new Core Portfolio note for $16.0 million with a stated interest rate of 9% and a maturity date of October 20, 2022 collateralized by a single tenant property in Silver Spring, Maryland on April 20, 2021; exchanged 21,109 OP Units in settlement of a note receivable in the amount of $0.5 million on July 12, 2021 (Note 11); originated a new Core Portfolio note for $43.0 million, of which $42.0 million was funded, with three tranches with stated interest rates ranging from 5% to 12% and a maturity date of September 17, 2024 collateralized by a retail condominium in Soho, New York on September 17, 2021; extended the maturity date of one Core note receivable of $13.5 million from October 28, 2021 to June 1, 2022; and recorded an increase in its allowance for credit loss of approximately $4.5 million primarily attributable to the Fund III note that matured in July 2020. During the year ended December 31, 2020, the Company: • • • exchanged its Brandywine Note Receivable of $38.7 million plus accrued interest of $2.0 million for the remaining 24.78% undivided interest in Town Center on April 1, 2020 (Note 5); recorded credit loss reserves of $0.4 million upon the adoption of ASC 326 (Note 1); converted $33.8 million balance of a Fund II note receivable for interest in real estate on November 2, 2020 (Note 3). Prior to the exchange, the note had been increased by the interest accrued during 2020 of $0.6 million; • made a Core loan for $54.0 million with an interest rate of 9% structured as a redeemable preferred equity investment in a property at 850 Third Avenue in Brooklyn, New York on January 14, 2020; originated a new Core Portfolio note for $5.0 million with an interest rate of 8% collateralized by our partner’s 50% share of the LUF (Georgetown) Portfolio (Note 5) in Washington, D.C. effective February 1, 2020; and recorded additional credit loss reserves of $0.8 million primarily attributable to the Fund III note discussed above. • • Defaults One Core Portfolio note aggregating $21.6 million including accrued interest (exclusive of default interest and other amounts due on the loan that have not been recognized) was in default at December 31, 2021 and December 31, 2020. On April 1, 2020, the loan matured and was not repaid. There is a personal guarantee associated with the note receivable. The Company expects to take appropriate actions to recover the amounts due under the loan, and has issued a reservation of rights letter to the borrowers and guarantor, reserving all of its rights and remedies under the applicable loan documents and otherwise. The Company has determined that the collateral for this loan is sufficient to cover the loan’s carrying value at December 31, 2021 and 2020. In addition, one Fund III note receivable aggregating $10.0 million, including accrued interest (exclusive of default interest and other amounts due on the loan that have not been recognized) matured on July 1, 2020 and was not repaid; however, in January 2022, Fund III obtained the remaining interest in the collateral via a foreclosure auction (Note 18). The Company has determined that the collateral is not sufficient to cover the loan’s carrying value at December 31, 2021 and 2020, and therefore recorded an additional allowance of $4.6 million and $0.6 million, respectively. 95 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Allowance for Credit Losses 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 and the prospects of the borrower. Earnings from these notes and mortgages receivable are reported within the Company’s Structured Financing segment (Note 13). The Company’s estimated allowance for credit losses related to its Structured Financing segment has been computed for its amortized cost basis in the portfolio, including accrued interest (Note 6), factoring historical loss experience in the United States for similar loans, as adjusted for current conditions, as well as the Company’s expectations related to future economic conditions. Due to the lack of comparability across the Structured Financing portfolio, each loan was evaluated separately. As a result, there were five non-collateral-dependent loans with a total amortized cost of $142.8 million, inclusive of accrued interest of $12.3 million, for which an allowance for credit losses has been recorded aggregating $1.2 million at December 31, 2021. For three loans in this portfolio, aggregating $37.9 million, inclusive of accrued interest of $8.8 million at December 31, 2021, the Company has elected to apply a practical expedient in accordance with ASC 326. For two Core loans, the Company did not establish an allowance for credit losses because (i) these loans are collateral-dependent loans, which due to their settlement terms are not expected to be settled in cash but rather by the Company’s possession of the real estate collateral; and (ii) at December 31, 2021, the Company determined that the estimated fair value of the collateral at the expected realization date for these loans was sufficient to cover the carrying value of its investments in these notes receivable. An allowance was established for one Fund III loan for $4.6 million at December 31, 2021, because it was determined that the fair value of this collateral-dependent loan was not sufficient to cover the carrying value of its investments in this note receivable. Impairment charges may be required if and when such amounts are estimated to be nonrecoverable upon a realization event, which is generally at the time a loan is repaid, or in the case of foreclosure, when the underlying asset is sold; however, non- recoverability may also be concluded if it is reasonably certain that all amounts due will not be collected. 96 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Investments in and Advances to Unconsolidated Affiliates The Company accounts for its investments in and advances to unconsolidated affiliates primarily under the equity method of accounting as it has the ability to exercise significant influence, but does not have financial or operating control over the investment, which is maintained by each of the unaffiliated partners who co-invest with the Company. The Company’s investments in and advances to unconsolidated affiliates consist of the following (dollars in thousands): Portfolio Property Ownership Interest December 31, 2021 Core: 840 N. Michigan (a) Renaissance Portfolio Gotham Plaza Georgetown Portfolio 1238 Wisconsin Avenue Mervyns I & II: KLA/ABS (b) Fund III: Self Storage Management (c) 640 Broadway (d) Fund IV: Fund V: Various: Fund IV Other Portfolio 650 Bald Hill Road Paramus Plaza Family Center at Riverdale (a) Tri-City Plaza Frederick County Acquisitions Due from (to) Related Parties Other (e) Investments in and advances to unconsolidated affiliates 88.43% 20% 49% 50% 80% 36.7% 95% 63.13% 98.57% 90% 50% 89.42% 90% 90% Core: Crossroads (f) 49% Distributions in excess of income from, and investments in, unconsolidated affiliates $ December 31, 2021 2020 (As Restated) 55,863 29,270 28,683 4,624 2,571 121,011 51,513 $ 28,466 29,187 4,089 5,895 119,150 124,316 72,391 207 17,825 18,032 12,675 11,677 1,975 26,327 12,449 6,827 10,748 30,024 666 3,811 207 17,457 17,664 11,719 12,550 5,565 29,834 11,824 7,024 10,837 29,685 363 1,881 $ $ $ 322,326 $ 272,829 9,939 $ 15,616 9,939 $ 15,616 a) b) c) d) e) f) Represents a tenancy-in-common interest. Includes an interest in Albertsons (at fair value, as described below). Represents a variable interest entity for which the Company was determined not to be the primary beneficiary. In January 2022, the Company obtained the partner's interest and now owns 100% and consolidates the entity (Note 18). Includes cost-method investments in, Storage Post, Fifth Wall and other investments. Distributions have exceeded the Company’s investment; however, the Company recognizes a liability balance as it may be required to return distributions to fund future obligations of the entity. 97 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the year ended December 31, 2021, the Company: • • • • received dividends of $1.7 million at Mervyns II related to distributions from its Investment in Albertsons and recorded a net unrealized holding gain of $51.9 million reflecting the change in fair value of its Investment in Albertsons on January 4, 2021, Fund V sold two land parcels at its unconsolidated Family Center at Riverdale property for a total of $10.5 million, repaid $7.9 million of the related mortgage and the venture recognized a gain of $3.2 million, of which the Company's share was $0.6 million; called capital for its Crossroads investment of $7.5 million, of which the venture partner's share was $5.4 million; and increased its investment in Fifth Wall by $1.9 million pursuant to its subscription agreement. During the year ended December 31, 2020, the Company: • • • • • • • exchanged the remaining $38.7 million of Brandywine Notes Receivable (Note 4), plus accrued interest of $2.0 million for the remaining 24.78% interest in Town Center on April 1, 2020, thereby obtaining a 100% controlling interest in the property. The property was then consolidated (Note 3) and the Company recorded the remaining interest in the property investment at the carrying value of the notes; increased its investment in Fifth Wall by $0.4 million pursuant to its subscription agreement; impaired $0.4 million of its investment in Fifth Wall (Note 9) during the fourth quarter of 2020, reflecting management’s estimate of fair value at that date; recorded realized gains at Mervyns II of approximately $22.8 million and $0.4 million, during the second and fourth quarters of 2020, respectively, from its Investment in Albertsons. The realized gains during the second quarter of 2020 resulted from the issuance and distribution of proceeds from a preferred equity investment and a sale of a portion of its investment in an initial public offering of Albertsons, both of which occurred in June 2020; recorded an unrealized gain of approximately $64.9 million during the second quarter of 2020 at Mervyns II reflecting the initial market value of its ownership of approximately 4.1 million shares (approximately 1% interest) through its Investment in Albertsons, which it has accounted for at fair value following the initial public offering; recorded an additional net unrealized holding gain of $7.5 million at Mervyns II reflecting the change in fair value of its Investment in Albertsons from the initial public offering through December 31, 2020; and acquired all of the third-party equity of BSP II at Fund IV, which underlies two properties within Broughton Street Portfolio, for $1.3 million on May 26, 2020, pursuant to the buy-sell provisions of the operating agreement of the Broughton Street Portfolio. These two BSP II properties were consolidated during the second quarter of 2020. Core Portfolio Fifth Wall On August 8, 2019, the Company invested $1.8 million in Fifth Wall Ventures Retail Fund, L.P. (“Fifth Wall”). During the fourth quarter of 2019, the Company invested another $0.2 million. During 2021 and 2020, the Company increased its investment in Fifth Wall by $1.9 million and $0.4 million, respectively. The Company’s total commitment is $5.0 million. The Company accounts for its interest at cost less impairment given its ownership is less than five percent, and the Company has virtually no influence over the partnership’s operating and financial policies. During the fourth quarter of 2020, the Company impaired $0.4 million for this investment (Note 9) reflecting management’s estimate of fair value at that date. At December 31, 2021, the Company’s investment was $3.7 million. Brandywine Portfolio, Market Square and Town Center The Company now owns a 100% interest in an approximately one million square-foot retail portfolio (the “Brandywine Portfolio” joint venture) located in Wilmington, Delaware, which includes two properties referred to as “Market Square” and “Town Center.” Through a series of exchange transactions from 2017 through 2020, the Company converted a $140.0 million non-recourse note receivable and interest thereon (Note 4), which was collateralized by the Brandywine Portfolio, into ownership of the tenancy-in-common interests held by co-investors in the property ventures. The Brandywine Portfolio and Market Square ventures do not include the property held by Acadia Brandywine Holdings, LLC (“Brandywine Holdings”), an entity in which the Company had a 22.22% controlling interest (until it acquired the noncontrolling interest during 2020 as discussed in Note 8) and which is consolidated by the Company. 98 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1238 Wisconsin Avenue On December 28, 2021, the Company provided a $12.8 million construction loan commitment to an unconsolidated entity, collateralized by the membership interest in the joint venture that owns the property. The loan, which had not been funded at December 31, 2021, matures in December 2023 with one twelve-month extension option. The Company earned an origination fee of $0.1 million at closing. Fund Investments Broughton Street Portfolio During 2014, Fund IV acquired 50% interests in two joint ventures referred to as “BSP I” and “BSP II” with the same venture partner to acquire and operate a total of 23 properties in Savannah, Georgia referred to as the “Broughton Street Portfolio.” Since that time, as described below, the ventures have sold eight of the properties and terminated the master leases on two of the properties. In October 2018, the venture partner relinquished its interest in BSP I, resulting in Fund IV becoming the 100% owner of the BSP I venture, which holds 11 consolidated properties (Note 3). On May 26, 2020, pursuant to the buy-sell provisions of the operating agreement of the Broughton Street Portfolio, Fund IV acquired all of the third-party equity of BSP II, which underlies two properties within Broughton Street Portfolio, for $1.3 million in a non-monetary exchange. These two BSP II properties were consolidated during the second quarter of 2020. Storage Post On June 29, 2019, Fund III’s Storage Post venture, which is a cost method investment with no carrying value distributed $1.6 million, of which the Operating Partnership’s share was $0.4 million. Albertsons During 2006, as part of a series of investments with a consortium of other investors known as the “RCP Venture”, Mervyns II acquired an indirect interest in Albertsons Companies, Inc., a private chain of grocery stores (“Albertsons”) through two 36.67% owned entities (KLA A Investments, LLC and ABS Opportunities, LLC, “KLA/ABS”). The investment (the “Investment in Albertsons”) has been accounted for under the cost method as Mervyns II has no influence over operating and financial policies of KLA/ABS. Subsequent to the initial investment in 2006, Mervyns II received distributions from its Investment in Albertsons in excess of its initial contribution, which have been recognized in earnings. During the second and fourth quarters of 2020, Mervyns II realized gains of approximately $22.8 million and $0.4 million, respectively, from its Investment in Albertsons. The realized gains during the second quarter of 2020 resulted from the issuance and distribution of proceeds from a preferred equity investment and a sale of a portion of its investment in an initial public offering of Albertsons, both of which occurred in June 2020. Following these transactions, Mervyns II has retained an effective indirect ownership of approximately 4.1 million shares (approximately 1% interest) through its Investment in Albertsons, which it has accounted for at fair value following the initial public offering given the readily determinable fair value. During 2021, Mervyns II realized gains of approximately $1.7 million related to distributions from its Investment in Albertsons. The Company has an effective ownership interest of 28.33% in Mervyns II. Fees from Unconsolidated Affiliates The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling $0.6 million, $1.1 million and $0.7 million for the years ended December 31, 2021, 2020 and 2019, respectively, which is included in other revenues in the consolidated statements of operations. In addition, the Company paid certain unaffiliated partners of its joint ventures, $1.4 million and $2.1 million and $1.4 million for the years ended December 31, 2021, 2020 and 2019, respectively, for leasing commissions, development, management, construction and overhead fees. 99 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Summarized Financial Information of Unconsolidated Affiliates The following combined and condensed Balance Sheets and Statements of Operations, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates that were held as of December 31, 2021, and accordingly exclude the results of any investments disposed of or consolidated prior to that date (in thousands): Combined and Condensed Balance Sheets Assets: Rental property, net Real estate under development Other assets Total assets Liabilities and partners’ equity: Mortgage notes payable Other liabilities Partners’ equity Total liabilities and partners’ equity Company's share of accumulated equity Basis differential Deferred fees, net of portion related to the Company's interest Amounts receivable/payable by the Company Investments in and advances to unconsolidated affiliates, net of Company's share of distributions in excess of income from and investments in unconsolidated affiliates Investments carried at fair value or cost Company's share of distributions in excess of income from and investments in unconsolidated affiliates Investments in and advances to unconsolidated affiliates December 31, 2021 2020 631,661 $ 8,112 78,300 718,073 $ 571,461 $ 69,166 77,446 718,073 $ 113,285 $ 66,031 4,071 666 184,053 128,334 9,939 322,326 $ 633,375 14,664 70,710 718,749 569,040 76,341 73,368 718,749 112,088 66,724 3,559 363 182,734 74,479 15,616 272,829 $ $ $ $ $ $ Combined and Condensed Statements of Operations Total revenues Operating and other expenses Interest expense Depreciation and amortization Loss on extinguishment of debt Gain on disposition of properties (a) Net income (loss) attributable to unconsolidated affiliates Company’s share of equity in net income (loss) of unconsolidated affiliates Income attributable to unconsolidated affiliates recently sold or consolidated Basis differential amortization Company’s equity in earnings (losses) of unconsolidated affiliates Year Ended December 31, 2021 2020 2019 $ $ $ $ 80,823 $ (28,572 ) (21,228 ) (30,518 ) (35 ) 3,206 3,676 $ 6,023 $ — (693 ) 5,330 $ 78,054 $ (28,718 ) (22,651 ) (30,917 ) — — (4,232 ) $ (2,503 ) $ 1,280 $ (1,834 ) (3,057 ) $ 77,507 (24,894 ) (25,660 ) (25,012 ) — — 1,941 1,118 6,155 (1,374 ) 5,899 a) Represents the gain on the sale of two land parcels by the Family Center at Riverdale on January 4, 2021. 100 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Other Assets, Net and Accounts Payable and Other Liabilities Other assets, net and accounts payable and other liabilities are comprised of the following for the periods presented: (in thousands) Other Assets, Net: Lease intangibles, net (Note 7) Deferred charges, net (a) Accrued interest receivable Prepaid expenses Due from seller Income taxes receivable Other receivables Deposits Corporate assets, net Derivative financial instruments (Note 9) (a) Deferred Charges, Net: Deferred leasing and other costs Deferred financing costs related to line of credit Accumulated amortization Deferred charges, net Accounts Payable and Other Liabilities: Lease intangibles, net (Note 7) Accounts payable and accrued expenses Derivative financial instruments (Note 9) Deferred income Tenant security deposits, escrow and other Lease liability - finance leases, net (Note 12) December 31, 2021 2020 (As Restated) 108,918 $ 28,438 21,148 17,230 3,364 2,279 1,830 1,647 1,648 7 186,509 $ 58,281 $ 9,953 68,234 (39,796 ) 28,438 $ 76,778 $ 56,580 45,027 38,373 13,045 6,612 236,415 $ 100,426 27,634 13,917 17,117 3,682 2,433 2,065 1,704 1,302 1 170,281 53,443 11,341 64,784 (37,150 ) 27,634 76,434 52,399 89,612 31,785 11,925 6,287 268,442 $ $ $ $ $ $ 101 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Lease Intangibles Upon acquisitions of real estate, the Company assesses the relative fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above- and below-market leases, including below-market options and acquired in-place leases) and assumed liabilities. The lease intangibles are amortized over the remaining terms of the respective leases, including option periods where applicable. Intangible assets and liabilities are included in Other assets and Accounts payable and other liabilities (Note 6) on the consolidated balance sheets and summarized as follows (in thousands): Amortizable Intangible Assets In-place lease intangible assets Above-market rent Amortizable Intangible Liabilities Below-market rent Above-market ground lease $ $ $ $ Gross Carrying Amount December 31, 2021 Accumulated Amortization Net Carrying Amount 290,819 $ 24,191 315,010 $ (189,981 ) $ (16,111 ) (206,092 ) $ 100,838 8,080 108,918 $ $ Gross Carrying Amount (As Restated) December 31, 2020 Accumulated Amortization Net Carrying Amount 265,063 $ 19,010 284,073 $ (As Restated) (As Restated) 96,172 4,254 100,426 (168,891 ) $ (14,756 ) $ (183,647 ) $ (171,245 ) $ (671 ) (171,916 ) $ 94,871 $ 267 95,138 $ (76,374 ) $ (404 ) (76,778 ) $ (162,238 ) $ (671 ) (162,909 ) $ 86,266 209 86,475 $ (75,972 ) (462 ) (76,434 ) During the year ended December 31, 2021, the Company: • • acquired in-place lease intangible assets of $34.7 million, above-market rents of $5.3 million, and below-market rents of $16.3 million with weighted-average useful lives of 5.8, 5.4, and 27.7 years, respectively (Note 3); and derecognized in-place lease intangible assets of $2.2 million and below-market rent of $4.4 million, of which the Company's share was $1.7 million and $3.0 million, respectively, related to disposed properties (Note 3). In addition, the Company recorded accelerated amortization related to in-place lease intangible assets of $1.6 million and below-market rents of $3.6 million, of which the Company's share was $1.1 million and $3.1 million, respectively, related to tenant non-renewals and early tenant lease terminations. During the year ended December 31, 2020, the Company: • • acquired in-place lease intangible assets of $21.0 million, above-market rents of $2.0 million, and below-market rents of $4.6 million with weighted-average useful lives of 4.9, 5.8, and 20.2 years, respectively (Note 3); and derecognized in-place lease intangible assets of $1.5 million, of which the Company's share was $0.4 million, related to disposed properties (Note 3). In addition, the Company recorded accelerated amortization related to in-place lease intangible assets of $3.7 million and below-market rents of $1.9 million, of which the Company's share was $2.2 million and $1.1 million, respectively, related to tenant non-renewals and early tenant lease terminations. Amortization of in-place lease intangible assets is recorded in depreciation and amortization expense and amortization of above-market rent and below-market rent is recorded as a reduction to and increase to rental income, respectively, in the consolidated statements of operations. Amortization of above-market ground leases are recorded as a reduction to rent expense in the consolidated statements of operations. 102 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The scheduled amortization of acquired lease intangible assets and assumed liabilities as of December 31, 2021 is as follows (in thousands): Years Ending December 31, 2022 2023 2024 2025 2026 Thereafter Total Net Increase in Lease Revenues Increase to Amortization Reduction of Rent Expense Net (Expense) Income $ $ 5,215 $ 4,768 4,700 4,287 3,992 45,332 68,294 $ (26,371 ) $ (19,902 ) (14,046 ) (9,804 ) (7,433 ) (23,282 ) (100,838 ) $ 58 $ 58 58 58 58 114 404 $ (21,098 ) (15,076 ) (9,288 ) (5,459 ) (3,383 ) 22,164 (32,140 ) 103 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. Debt A summary of the Company’s consolidated indebtedness is as follows (dollars in thousands): Mortgages Payable Core Fixed Rate Core Variable Rate - Swapped (a) Total Core Mortgages Payable Fund II Variable Rate Fund II Variable Rate - Swapped Total Fund II Mortgages Payable Fund III Variable Rate Fund IV Fixed Rate Fund IV Variable Rate Fund IV Variable Rate - Swapped (a) Total Fund IV Mortgages and Other Notes Payable Fund V Fixed Rate Fund V Variable Rate Fund V Variable Rate - Swapped (a) Total Fund V Mortgages Payable Net unamortized debt issuance costs Unamortized premium Total Mortgages Payable Unsecured Notes Payable Core Variable Rate Credit Facility Core Variable Rate Unsecured Term Loans - Swapped (a) Total Core Unsecured Notes Payable Fund II Unsecured Notes Payable Fund IV Subscription Facility Fund V Subscription Facility Net unamortized debt issuance costs Total Unsecured Notes Payable Unsecured Line of Credit Core Unsecured Line of Credit - Variable Rate Core Unsecured Line of Credit - Swapped (a) Total Unsecured Line of Credit Total Debt - Fixed Rate (b, c) Total Debt - Variable Rate (d) Total Debt Net unamortized debt issuance costs Unamortized premium Total Indebtedness Interest Rate at December 31, 2021 3.88%-5.89% 3.41%-4.54% December 31, 2020 3.88%-5.89% 3.41%-4.54% Maturity Date at December 31, 2021 Carrying Value at December 31, December 31, 2021 2020 (As Restated) Feb 2024 - Apr 2035 Jan 2023 - Nov 2028 $ LIBOR+2.75% - PRIME+2.00% LIBOR+3.00% - PRIME+2.00% Mar 2022 - August 2022 LIBOR+1.60%-LIBOR+3.65% LIBOR+1.60%-LIBOR+3.40% LIBOR+2.75% 4.50% 2.88% LIBOR+2.75% 3.40%-4.50% 3.48%-4.61% 3.48%-4.61% 3.35% LIBOR + 1.85% - SOFR + 2.76% LIBOR+1.50%-LIBOR+2.20% 2.43%-4.78% 2.95%-4.78% Jun 2022 Oct 2025 Feb 2022 - Jun 2026 Apr 2022 - Dec 2022 May 2023 Jun 2022 - Nov 2026 Feb 2022 - Dec 2024 145,464 $ 72,957 218,421 255,978 — 255,978 34,728 1,120 221,832 23,316 246,268 31,801 58,878 297,731 388,410 147,810 80,500 228,310 228,282 18,803 247,085 35,948 6,726 252,324 47,690 306,740 — 1,354 334,323 335,677 3.65%-5.32% 2.49%-5.02% Jun 2026 LIBOR+2.55% LIBOR+2.25% SOFR+2.01% LIBOR+1.90% LIBOR+1.65% LIBOR+1.90% LIBOR+1.60% Sep 2022 Dec 2022 May 2022 LIBOR + 1.40% 3.65%-5.32% 2.49%-5.02% Jun 2025 Jun 2025 (3,958 ) 446 1,140,293 $ (5,722 ) 548 1,148,586 — $ 30,000 $ $ 400,000 400,000 40,000 5,000 118,028 350,000 380,000 40,000 864 250 $ (3,988 ) 559,040 $ (256 ) 420,858 $ 46,491 $ — 66,414 112,905 1,038,803 780,935 1,819,738 (7,946 ) 446 1,812,238 $ $ $ 138,400 138,400 1,124,255 589,019 1,713,274 (5,978 ) 548 1,707,844 $ $ $ a) b) c) d) At December 31, 2021, the stated rates ranged from LIBOR + 1.50% to LIBOR +1.90% for Core variable-rate debt; LIBOR + 2.75% for Fund III variable-rate debt; LIBOR +2.00% for Fund IV variable-rate debt; LIBOR + 1.50% to LIBOR + 2.20% for Fund V variable-rate debt; LIBOR + 1.55% for Core variable-rate unsecured term loans; and LIBOR + 1.40%for Core variable-rate unsecured lines of credit. Includes $860.4 million and $969.7 million, respectively, of variable-rate debt that has been fixed with interest rate swap agreements as of the periods presented. Fixed-rate debt at December 31, 2021 and 2020 includes $0.0 million and $3.2 million, respectively of Core swaps that may be used to hedge debt instruments of the Funds. Includes $110.5 million and $103.2 million, respectively, of variable-rate debt that is subject to interest cap agreements. 104 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Credit Facility Since February 2018 and as subsequently amended, the Company has had a senior unsecured credit facility (the “Credit Facility”) comprised of a $250.0 million senior unsecured revolving credit facility (the “Revolver”) which bore interest at LIBOR + 1.40%, and a $350.0 million senior unsecured term loan (the “Term Loan”) which bore interest at LIBOR + 1.30%. The Revolver was scheduled to mature on March 31, 2022, subject to two six-month extension options, and the $350.0 million Term Loan was scheduled to expire on March 31, 2023. During June 2021, the Company modified the Credit Facility, providing for a $50.0 million increase in the Revolver and a $50.0 million increase in the Term Loan. This amendment resulted in borrowing capacity of up to $700.0 million in principal amount, which includes a $300.0 million Revolver maturing on June 29, 2025, subject to two six-month extension options, and a $400.0 million Term Loan expiring on June 29, 2026. In addition, the amendment provides for revisions to the accordion feature, which allows for one or more increases in the revolving credit facility or term loan facility, for a maximum aggregate principal amount not to exceed $900.0 million. The $300.0 million Revolver bears interest at LIBOR + 1.40% and the $400.0 million Term Loan bears interest at LIBOR + 1.55% at December 31, 2021, all of which were swapped to fixed rates. In connection with the amendment to the Credit Facility, during the second quarter of 2021, the Company (i) capitalized $2.7 million of debt issuance costs associated with the amended Revolver, which are included in deferred financing costs within other assets (Note 6); (ii) capitalized $3.1 million associated with the amended Term Loan, which are included in net unamortized debt issuance costs in the table above; and (iii) expensed $0.1 million of third-party costs associated with the Term Loan. Mortgages and Other Notes Payable During the year ended December 31, 2021, the Company: • • • • • • • assumed a $31.8 million mortgage upon the acquisition of Canton Marketplace (Note 3) with an interest rate of 3.35% and a maturity date of May 1, 2023; Entered into a $29.2 million mortgage collateralized by Monroe Marketplace (Note 3) with an interest rate of SOFR+2.76% and a maturity date of November 12, 2026; extended 11 Fund mortgages, two of which were extended during the first quarter totaling $37.7 million (after principal reductions of $1.7 million), five of which were extended during the second quarter totaling $125.7 million (after principal reductions of $6.5 million), two of which were extended during the third quarter totaling $53.1 million (after principal reductions of $10.2 million), and two of which were extended during the fourth quarter totaling $14.8 million (after principal reductions of $3.0 million); modified the terms of the Fund IV Bridge facility during the fourth quarter reflecting an extension of maturity to June 30, 2022 which had an outstanding balance of $64.2 million prior to modification. The facility had an outstanding balance of $59.2 million and $79.2 million at December 31, 2021 and 2020, respectively, reflecting repayments during 2021. In addition, during the first quarter of 2021, the interest rate was changed from LIBOR plus 2.00% to LIBOR plus 2.50% with a floor of 0.25%; refinanced a Fund II loan for $18.5 million with a new loan of $16.8 million at an interest rate of LIBOR + 2.75% maturing August 11, 2022; entered into a swap agreement during the first quarter with a notional value of $16.7 million, for its New Towne Plaza mortgage replacing the existing swap which expired. In addition, the Company terminated two forward-starting interest rate swaps resulting in cash proceeds of approximately $3.4 million during the first quarter (Note 9); repaid one Core mortgage of $6.7 million in connection with the sale of 60 Orange Street during the first quarter and four Fund mortgages in the aggregate amount of $23.5 million in connection with the sale of the properties during the second quarter (Note 3); and made scheduled principal payments of $8.6 million. During the year ended December 31, 2020, the Company: • • • extended the maturity date of a $200.0 million Fund II loan from May 2020 to May 2022. In addition, the Company extended seven Fund mortgages, two of which were extended for one year during the first quarter with aggregate outstanding balances of $46.0 million at December 31, 2020, two of which were extended for one year during the second quarter with an aggregate outstanding balance of $51.3 million at December 31, 2020, one of which was extended for one year during the third quarter with aggregate outstanding balances of $40.0 million at December 31, 2020, and one of which were extended for a minimum of one year during the fourth quarter with an outstanding balances of $52.0 million at December 31, 2020; modified two Fund IV loans aggregating $67.4 million requiring the repayment of $8.0 million; entered into two swap agreements in February 2020 each with notional values of $50.0 million, which are not effective until April 2022 and April 2023 and were later terminated in the first quarter of 2021. In July 2020, two previously-executed forward swap agreements took effect with current notional values as of December 31, 2020 of $30.4 million each (Note 9); 105 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • • repaid one Core mortgage of $26.3 million in connection with the litigation settlement discussed below and one Fund IV mortgage of $11.6 million in connection with the sale of Colonie Plaza in April 2020 (Note 3); and made scheduled principal payments of $6.1 million. At December 31, 2021 and 2020, the Company’s mortgages were collateralized by 37 and 40 properties, respectively, and the related tenant leases. Certain loans are cross-collateralized and contain cross-default provisions. The loan agreements contain customary representations, covenants and events of default. Certain loan agreements require the Company to comply with affirmative and negative covenants, including the maintenance of debt service coverage and leverage ratios. The Company is not in default on any of its loan agreements, except as noted below. A portion of the Company’s variable-rate mortgage debt has been effectively fixed through certain cash flow hedge transactions (Note 9). The mortgage loan collateralized by the property held by Brandywine Holdings in the Core Portfolio, was in default and subject to litigation at December 31, 2019. On October 30, 2020, the Company settled the litigation for approximately $30.0 million resulting in a gain on debt extinguishment of $18.3 million reflected in Realized and unrealized holding gains on investments and other in the consolidated statements of operations, of which the Company’s proportionate share was $4.1 million. Upon settlement of this litigation, the Company obtained its partner’s 78.22% noncontrolling interest for nominal consideration, resulting in a reduction of additional paid-in capital of $15.9 million (Note 11). During the third quarter of 2019, the Company recognized income of $5.0 million related to Fund II’s New Market Tax Credit transaction (“NMTC”) involving its City Point project. NMTCs were created to encourage economic development in low income communities and provided for a 39% tax credit on certain qualifying invested equity/loans. In 2012, the NMTCs were transferred to a group of investors (“Investors”) in exchange for $5.2 million. The NMTCs were subject to recapture under various circumstances, including redemption of the loan/investment prior to a requisite seven-year hold period, and recognition of income was deferred. Upon the expiration of the seven-year period and there being no further obligations, the Company recognized income of $5.0 million, of which the Company’s proportionate share was $1.4 million, which is included in Realized and unrealized holding gains on investments and other in the consolidated statements of operations. Unsecured Notes Payable Unsecured notes payable for which total availability was $16.3 million and $128.7 million at December 31, 2021 and 2020, respectively, are comprised of the following: • The outstanding balance of the Core term loan was $400.0 million and $350.0 million at December 31, 2021 and 2020, respectively. The Company previously entered into swap agreements fixing the rates of the Core term loan balance. • On July 1, 2020, the Company obtained a $30.0 million Core term loan, with an accordion option to increase up to $90.0 million. This term loan was scheduled to mature on June 30, 2021 and bore interest at LIBOR plus 2.55% with a LIBOR floor of 0.75%. The term loan was repaid during June 2021. The outstanding balance at December 31, 2021 and December 31, 2020 was $0 and $30.0 million, respectively. • Fund II has a $40.0 million term loan secured by the real estate assets of City Point Phase II and guaranteed by the Operating Partnership. In September 2021, the Company modified the term loan, extending the maturity to September 2022 and the interest rate was increased from LIBOR plus 1.65% to LIBOR plus 2.25%. The outstanding balance of the Fund II term loan was $40.0 million at each of December 31, 2021 and 2020. There was no availability at each of December 31, 2021 and 2020. • Fund IV has a $5.0 million subscription line with an outstanding balance and total available credit of $5.0 million and $0, respectively at December 31, 2021. In December 2021, Fund IV modified the line to extend the maturity to December 29, 2022 at new interest rate of SOFR + 2.01%. The outstanding balance and total availability at December 31, 2020 were $0.9 million and $0.5 million, respectively, reflecting letters of credit of $3.6 million. • Fund V has a $150.0 million subscription line collateralized by Fund V’s unfunded capital commitments, and, to the extent of Acadia’s capital commitments, is guaranteed by the Operating Partnership. In April 2021, the Company modified the subscription line, extending the maturity to May 2022 and the interest rate was increased from LIBOR plus 1.60% to LIBOR plus 1.90%. The outstanding balance and total available credit of the Fund V subscription line was $118.0 and $16.3 million, respectively at December 31, 2021 reflecting outstanding letters of credit of $15.7 million. The outstanding balance and total available credit were $0.3 million and $128.2 million at December 31, 2020, respectively, reflecting outstanding letters of credit of $21.5 million. 106 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Unsecured Revolving Line of Credit The Company had a total of $183.1 million and $101.1 million, respectively, available under its $300.0 million Core Revolver, reflecting borrowings of $112.9 and $138.4 million and letters of credit of $4.0 million and $10.5 million at December 31, 2021 and 2020, respectively. At each of December 31, 2021 and 2020, $66.4 million and $138.4 million, respectively, of the Core unsecured revolving line of credit was swapped to a fixed rate. Scheduled Debt Principal Payments The scheduled principal repayments, without regard to available extension options (described further below), of the Company’s consolidated indebtedness, as of December 31, 2021 are as follows (in thousands): Year Ending December 31, 2022 2023 2024 2025 2026 Thereafter Unamortized premium Net unamortized debt issuance costs Total indebtedness $ $ 757,199 110,541 212,020 178,236 445,967 115,775 1,819,738 446 (7,946 ) 1,812,238 The table above does not reflect available extension options (subject to customary conditions) on consolidated debt of $187.2 million contractually due in 2022, $41.5 million contractually due in 2023, $0.0 million contractually due in 2024 and $112.9 million contractually due in 2025; all for which the Company has available options to extend by up to 12 months and for some an additional 12 months thereafter. However, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options. See Note 5 for information about liabilities of the Company’s unconsolidated affiliates. 9. Financial Instruments and Fair Value Measurements The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and interest rate swaps; and Level 3, for financial instruments or other assets/liabilities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring the Company to develop its own assumptions. Items Measured at Fair Value on a Recurring Basis The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, the Company has also provided the unobservable inputs along with their weighted-average ranges. Money Market Funds — The Company has money market funds, which at times have zero balances and are included in Cash and cash equivalents in the consolidated balance sheets, and are comprised of government securities and/or U.S. Treasury bills. These funds were classified as Level 1 as we used quoted prices from active markets to determine their fair values. Equity Investments –Albertsons became publicly traded during 2020 (Note 5). Upon Albertsons’ IPO, the Company’s Investment in Albertsons has a readily determinable market value (traded on an exchange) and is being accounted for as a Level 1 investment. Derivative Assets — The Company has derivative assets, which are included in Other assets, net on the consolidated balance sheets, and comprised of interest rate swaps and caps. The derivative instruments were measured at fair value using readily observable market inputs, such 107 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below. Derivative Liabilities — The Company has derivative liabilities, which are included in Accounts payable and other liabilities on the consolidated balance sheets and are comprised of interest rate swaps. These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below. Other than the Investment in Albertsons described above, the Company did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the year ended December 31, 2021 or 2020. The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands): Assets Money market funds Derivative financial instruments Investment in Albertsons (Note 5) Liabilities Derivative financial instruments December 31, 2021 December 31, 2020 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 $ — $ — 124,316 — $ 7 — — 45,027 — — — — $ — $ — 72,391 — $ 1 — — 89,612 — — — — In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. 108 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Items Measured at Fair Value on a Nonrecurring Basis (Including Impairment Charges) During 2020 and 2021, the Company was impacted by the COVID-19 Pandemic (Note 12), which caused the Company to reduce its holding periods and forecasted operating income at certain properties. As a result, several impairments were recorded. Impairment charges for the periods presented are as follows (in thousands): Property and Location 2021 Impairment Charges 210 Bowery commercial unit, New York, NY 27 E. 61st Street New York, NY Owner Triggering Event Level 3 Inputs Effective Date Total Acadia's Share Fund IV Fund IV Reduced projected operating income Reduced projected operating income Projections of: holding period, net operating income, cap rate, incremental costs Projections of: holding period, net operating income, cap rate, incremental costs Sept 30, 2021 $ 3,016 $ 697 Sept 30, 2021 6,909 1,597 $ 9,925 $ 2,294 Reduced holding period, Projections of: holding Mar 31, 2020 $ 27,402 $ 6,726 reduced projected operating income period, net operating income, cap rate, incremental costs Reduced holding period Projections of: holding Mar 31, 2020 6,398 1,570 period, net operating income, cap rate, incremental costs Reduced holding period, Projections of: holding Mar 31, 2020 6,718 1,553 reduced projected operating income period, net operating income, cap rate, incremental costs Reduced holding period, Projections of: holding Mar 31, 2020 11,031 2,551 reduced projected operating income period, net operating income, cap rate, incremental costs Reduced holding period, Projections of: holding Dec 31, 2020 17,392 4,021 reduced projected operating income period, net operating income, cap rate, incremental costs Reduced holding period, Projections of: holding Dec 31, 2020 16,238 3,754 Fifth Wall Investment Core Decline in fair value reduced projected operating income period, net operating income, cap rate, incremental costs Projections of: reported fair value of net assets Dec 31, 2020 419 419 $ 85,598 $ 20,594 Total 2021 Impairment Charges 2020 Impairment Charges Cortlandt Crossing, Mohegan Lake, NY 654 Broadway, New York, NY Fund III Fund III 146 Geary Street, San Francisco, CA Fund IV 801 Madison Avenue, New York, NY Fund IV 717 N. Michigan Avenue, Chicago, IL 110 University, New York, NY Fund IV Fund IV Total 2020 Impairment Charges 2019 Impairment Charges 210 Bowery residential units, New York, NY 210 Bowery residential units, New York, NY Total 2019 Impairment Charges Fund IV Fund IV Reduced selling price Offering price Jun 30, 2019 $ 1,400 $ 321 Reduced selling price Contract sales price Sep 30, 2019 321 74 $ 1,721 $ 395 109 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Derivative Financial Instruments The Company had the following interest rate swaps and caps for the periods presented (dollars in thousands): Strike Rate Fair Value Derivative Instrument Aggregate Notional Amount Effective Date Maturity Date Low High Balance Sheet Location December 31, 2021 539,369 539,369 Dec 2012- Jul 2020 Mar 2022- Jul 2030 1.71 % — 3.77 % Other Liabilities Oct 2014 Mar 2019 Nov 2021 Mar 2022 1.49 % — 3.50 % — 1.49 % 3.50 % Other Liabilities Other Assets Mar 2017- Dec 2019 Dec 2020 - Jul 2021 Apr 2022- Dec 2022 Dec 2022- Jul 2023 1.48 % — 2.61 % Other Liabilities $ (167 ) $ (1,186 ) 3.00 % — 3.50 % Other Assets 7 1 297,731 297,731 Jun 2018- Feb 2021 Feb 2022- Oct 2024 0.23 % — 2.88 % Other Liabilities December 31, 2020 (As Restated) $ $ $ $ (40,650 ) $ (74,990 ) (40,650 ) $ (74,990 ) — $ — — $ (219 ) — (219 ) $ $ $ $ $ (160 ) $ (1,185 ) (4,210 ) $ (13,217 ) (4,210 ) $ (13,217 ) 7 $ (45,027 ) $ 1 (89,612 ) Core Interest Rate Swaps Fund II Interest Rate Swap Interest Rate Cap Fund IV Interest Rate Swaps Interest Rate Caps Fund V Interest Rate Swaps $ $ $ $ $ $ $ $ Total asset derivatives Total liability derivatives — 45,000 45,000 23,316 71,338 94,654 All of the Company’s derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable-rate debt (Note 8). It is estimated that approximately $15.3 million included in Accumulated other comprehensive loss related to derivatives will be reclassified to interest expense within the next twelve months. As of December 31, 2021 and 2020, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated hedges. During the first quarter of 2021, the Company terminated two interest rate swaps with forward effective dates with an aggregate notional value of $100.0 million (Note 8) for cash proceeds of $3.4 million. As the hedged forecasted transaction is still expected, amounts deferred in Accumulated other comprehensive loss will be amortized into earnings as a reduction of interest expense over the original term of the swaps beginning in 2022. Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, through the use of derivative financial instruments. The Company enters into derivative financial instruments to manage exposures that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings. The Company is exposed to credit risk in the event of non-performance by the counterparties to the swaps if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions. 110 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Credit Risk-Related Contingent Features The Company has agreements with each of its swap counterparties that contain a provision whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its swaps, resulting in an acceleration of payment under the swaps. Other Financial Instruments The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands, inclusive of amounts attributable to noncontrolling interests where applicable): December 31, 2021 December 31, 2020 Level Carrying Amount Estimated Fair Value Carrying Amount (As Restated) Estimated Fair Value (As Restated) Notes Receivable (a) Mortgage and Other Notes Payable (a) Investment in non-traded equity securities (b) Unsecured notes payable and Unsecured line of credit (c) 3 3 3 2 $ 153,886 $ 1,143,805 3,656 675,933 154,093 1,125,571 4,062 680,171 $ 100,882 $ 1,153,760 1,726 559,514 101,567 1,134,560 1,456 544,532 a) b) c) The Company determined the estimated fair value of these financial instruments using a discounted cash flow model with rates that take into account the credit of the borrower or tenant, where applicable, and interest rate risk. The Company also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the borrower, the time until maturity and the current market interest rate environment. Represents the Operating Partnership’s cost-method investment in Fifth Wall (Note 5). The Company determined the estimated fair value of the unsecured notes payable and unsecured line of credit using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, the Company determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants. The Company’s cash and cash equivalents, restricted cash, rents receivable, accounts payable and certain financial instruments included in other assets and other liabilities had fair values that approximated their carrying values due to their short maturity profiles at December 31, 2021. 10. Commitments and Contingencies The Company is involved in various matters of litigation arising out of, or incident to, its business. While the Company is unable to predict with certainty the outcome of any particular matter, management does not expect, when such litigation is resolved, that the Company’s resulting exposure to loss contingencies, if any, will have a material adverse effect on its consolidated financial position or results of operations. Commitments and Guaranties In conjunction with the development and expansion of various properties, the Company has entered into agreements with general contractors for the construction or development of properties aggregating approximately $38.1 million and $32.7 million as of December 31, 2021 and 2020, respectively. At December 31, 2021 and 2020, the Company had Core and Fund letters of credit outstanding of $19.7 million and $35.6 million, respectively. The Company has not recorded any obligation associated with these letters of credit. The majority of the letters of credit are collateral for existing indebtedness and other obligations of the Company. 111 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11. Shareholders’ Equity, Noncontrolling Interests and Other Comprehensive Loss Common Shares and Units In addition to the ATM Program activity discussed below, the Company completed the following transactions in its Common Shares during the year ended December 31, 2021: • The Company withheld 3,050 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested. • The Company recognized Common Share and Common OP Unit-based compensation expense totaling $9.4 million in connection with Restricted Shares and Units (Note 14). In addition to the ATM Program and share repurchase activity discussed below, the Company completed the following transactions in its Common Shares during the year ended December 31, 2020: • The Company withheld 2,075 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested. • The Company recognized Common Share and Common OP Unit-based compensation expense totaling $8.4 million in connection with Restricted Shares and Units (Note 14). ATM Program The Company has an at-the-market equity issuance program (“ATM Program”) which provides the Company an efficient and low-cost vehicle for raising public equity to fund its capital needs. The Company entered into its current $250.0 million ATM Program (which replaced its prior program) in the second quarter of 2019 and also added an optional “forward purchase” component. The Company has not issued any shares on a forward basis during the year ended December 31, 2021 or 2020. During the year ended December 31, 2021 the Company sold 2,889,371 Common Shares under its ATM Program for gross proceeds of $64.9 million, or $63.9 million net of issuance costs, at a weighted-average gross price per share of $22.46. During the year ended December 31, 2019, the Company sold 5,164,055 Common Shares under its ATM Program for gross proceeds of $147.7 million, or $145.5 million net of issuance costs, at a weighted-average gross price per share of $28.61. During the year ended December 31, 2020, the Company did not sell any Common Shares under its ATM Program. Refer to Note 18 for additional sales under the ATM program. Share Repurchase Program During 2018, the Company’s board of trustees (the “Board”) approved a new share repurchase program, which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program does not obligate the Company to repurchase any specific number of Common Shares and may be discontinued or extended at any time. The Company did not repurchase any shares during the year ended December 31, 2021. During the first quarter of 2020, the Company repurchased 1,219,065 Common Shares for $22.4 million, inclusive of $0.1 million of fees, at a weighted average price per share of $18.29, under the share repurchase program, under which $122.6 million remains available at December 31, 2021. Dividends and Distributions The following table sets forth the distributions declared and/or paid during the periods presented: Date Declared Amount Per Share Record Date Payment Date November 5, 2019 February 26, 2020 March 15, 2021 May 5, 2021 August 5, 2021 November 3, 2021 $ $ $ $ $ $ 0.29 0.29 0.15 0.15 0.15 0.15 December 31, 2019 March 31, 2020 March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021 January 15, 2020 April 15, 2020 April 15, 2021 July 15, 2021 October 15, 2021 January 14, 2022 112 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Beginning with the second quarter of 2020, the Board temporarily suspended distributions on its Common Shares and Common OP Units, which suspension the Board determined to continue through the fourth quarter of 2020; however, distributions of $0.1 million were payable to preferred unit holders at each of June 30, 2020, September 30, 2020 and December 31, 2020. Accumulated Other Comprehensive Loss The following tables set forth the activity in accumulated other comprehensive loss for the years ended December 31, 2021, 2020 and 2019 (in thousands): Balance at January 1, 2021 Other comprehensive income before reclassifications - swap agreements Reclassification of realized interest on swap agreements Net current period other comprehensive income Net current period other comprehensive income attributable to noncontrolling interests Balance at December 31, 2021 Balance at January 1, 2020 Other comprehensive loss before reclassifications - swap agreements Reclassification of realized interest on swap agreements Net current period other comprehensive loss Net current period other comprehensive loss attributable to noncontrolling interests Balance at December 31, 2020 Balance at January 1, 2019 Other comprehensive loss before reclassifications Reclassification of realized interest on swap agreements Net current period other comprehensive loss Net current period other comprehensive income attributable to noncontrolling interests Balance at December 31, 2019 Acadia's Share $ (74,891 ) 30,500 21,407 51,907 (13,230 ) (36,214 ) (31,474 ) (73,686 ) 15,059 (58,627 ) 15,210 (74,891 ) 516 (35,883 ) (870 ) (36,753 ) 4,763 (31,474 ) $ $ $ $ $ 113 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Noncontrolling Interests The following tables summarize the change in the noncontrolling interests for the years ended December 31, 2021, 2020 and 2019 (dollars in thousands): Noncontrolling Interests in Operating Partnership (a) 89,431 $ Noncontrolling Interests in Partially- Owned Affiliates (b) Total $ 519,734 $ 609,165 Balance at January 1, 2021 Distributions declared of $0.60 per Common OP Unit and distributions on Preferred OP Units Net income for the year ended December 31, 2021 Conversion of 89,765 Common OP Units to Common Shares by limited partners of the Operating Partnership Cancellation of OP Units (c) Other comprehensive income - unrealized gain on valuation of swap agreements Reclassification of realized interest expense on swap agreements Noncontrolling interest contributions Noncontrolling interest distributions Employee Long-term Incentive Plan Unit Awards Reallocation of noncontrolling interests (d) Balance at December 31, 2021 Balance at January 1, 2020 Distributions declared of $0.29 per Common OP Unit Net income (loss) for the year ended December 31, 2020 Conversion of 407,594 Common OP Units to Common Shares by limited partners of the Operating Partnership Other comprehensive loss - unrealized loss on valuation of swap agreements Reclassification of realized interest expense on swap agreements Noncontrolling interest contributions Noncontrolling interest distributions Employee Long-term Incentive Plan Unit Awards Reallocation of noncontrolling interests (d) Acquisition of noncontrolling interest Cumulative effect of change in accounting principle Balance at December 31, 2020 Balance at January 1, 2019 Distributions declared of $1.13 per Common OP Unit Net income (loss) for the year ended December 31, 2019 Conversion of 307,663 Common OP Units to Common Shares by limited partners of the Operating Partnership Other comprehensive loss - unrealized loss on valuation of swap agreements Reclassification of realized interest (income) expense on swap agreements Noncontrolling interest contributions Noncontrolling interest distributions Employee Long-term Incentive Plan Unit Awards Rebalancing adjustment (c) Balance at December 31, 2019 $ $ $ $ $ (4,185 ) 2,075 (1,431 ) (568 ) 2,072 210 — — 11,284 (4,768 ) 94,120 $ $ 97,670 (2,218 ) 125 (6,544 ) (2,709 ) 174 — — 10,130 (7,197 ) — — 89,431 $ 104,223 $ (7,124 ) 3,836 (5,104 ) (1,899 ) (62 ) — — 9,460 (6,611 ) 96,719 $ — 407 — — 3,918 7,030 30,164 (27,051 ) — — 534,202 $ $ 548,769 — (56,867 ) — (17,995 ) 5,320 52,174 (27,574 ) — — 15,918 (11 ) 519,734 $ $ 519,759 — (34,319 ) — (2,946 ) 144 161,365 (94,283 ) — — 549,720 $ (4,185 ) 2,482 (1,431 ) (568 ) 5,990 7,240 30,164 (27,051 ) 11,284 (4,768 ) 628,322 646,439 (2,218 ) (56,742 ) (6,544 ) (20,704 ) 5,494 52,174 (27,574 ) 10,130 (7,197 ) 15,918 (11 ) 609,165 623,982 (7,124 ) (30,483 ) (5,104 ) (4,845 ) 82 161,365 (94,283 ) 9,460 (6,611 ) 646,439 114 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS a) b) c) Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ 3,076,849, 3,101,958, and 3,250,603 Common OP Units at December 31, 2021, 2020 and 2019, respectively; (ii) 188 Series A Preferred OP Units at December 31, 2021, 2020 and 2019; (iii) 126,593 Series C Preferred OP Units at December 31, 2021 and 2020, and 136,593 at December 31, 2019; and (iv) 3,371,296, 2,886,207, and 2,673,484 LTIP units at December 31, 2021, 2020 and 2019, respectively, as discussed in Share Incentive Plan (Note 14). Distributions declared for Preferred OP Units are reflected in net income (loss) in the table above. Noncontrolling interests in partially-owned affiliates comprise third-party interests in Funds II, III, IV and V, and Mervyns II, and five other subsidiaries. Adjustment reflects the difference between the fair value of the consideration received or paid and the book value of the Common Shares, Common OP Units, Preferred OP Units, and LTIP Units involving changes in ownership. Preferred OP Units There were no issuances of Preferred OP Units during the year ended December 31, 2021. In 1999 the Operating Partnership issued 1,580 Series A Preferred OP Units in connection with the acquisition of a property, which have a stated value of $1,000 per unit, and are entitled to a preferred quarterly distribution of the greater of (i) $22.50 (9.00% annually) per Series A Preferred OP Unit or (ii) the quarterly distribution attributable to a Series A Preferred OP Unit if such unit was converted into a Common OP Unit. Through December 31, 2021, 1,392 Series A Preferred OP Units were converted into 185,600 Common OP Units and then into Common Shares. The 188 remaining Series A Preferred OP Units are currently convertible 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 the Series A Preferred OP Units at the lesser of $7.50 or the market price of the Common Shares as of the conversion date. During 2016, the Operating Partnership issued 442,478 Common OP Units and 141,593 Series C Preferred OP Units to a third party to acquire Gotham Plaza (Note 5). The Series C Preferred OP Units have a value of $100.00 per unit and are entitled to a preferred quarterly distribution of $0.9375 per unit and are convertible into Common OP Units at a rate based on the share price at the time of conversion. If the share price is below $28.80 on the conversion date, each Series C Preferred OP Unit will be convertible into 3.4722 Common OP Units. If the share price is between $28.80 and $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into a number of Common OP Units equal to $100.00 divided by the closing share price. If the share price is above $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into 2.8409 Common OP Units. The Series C Preferred OP Units have a mandatory conversion date of December 31, 2025, at which time all units that have not been converted will automatically be converted into Common OP Units based on the same calculations. Through December 31, 2021, 15,000 Series C Preferred OP Units were converted into 51,887 Common OP Units and then into Common Shares. 12. Leases Operating Leases As Lessor The Company is engaged in the operation of shopping centers and other retail properties that are either owned or, with respect to certain shopping centers, operated under long-term ground leases (see below) that expire at various dates through June 20, 2066, with renewal options. Space in the shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to sixty years and generally provide for additional rents based on certain operating expenses as well as tenants’ sales volumes. During the years ended December 31, 2021 and 2020, the Company earned $58.3 million and $57.1 million, respectively, in variable lease revenues, primarily for real estate taxes and common area maintenance charges, which are included in rental income in the consolidated statements of operations. 115 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Reserve Analysis The activity for the reserves related to billed rents and straight-line rents (including those under specific operating leases where the collection of rents is assessed not to be probable) is as follows: Year Ended December 31, 2021 Balance at Beginning of Period Provision (Recovery), Net Write-Offs Balance at End of Period Allowance for credit loss - billed rents Straight-line rent reserves Total - rents receivable $ $ 30,170 $ 14,839 45,009 $ (2,796 ) $ 2,682 (114 ) $ (3,788 ) $ (2,636 ) (6,424 ) $ 23,586 14,885 38,471 Balance at Beginning of Period (As Restated) Year Ended December 31, 2020 Provision (Recovery), Net Write-Offs Balance at End of Period (As Restated) Allowance for credit loss - billed rents Straight-line rent reserves Total - rents receivable $ $ 6,669 $ 4,739 11,408 $ 24,569 $ 21,871 46,440 $ (1,068 ) $ (11,771 ) (12,839 ) $ 30,170 14,839 45,009 Tenant Settlement On September 24, 2021, the Company entered into a conditional settlement agreement with its former tenant and lease guarantor at one of its Core properties for the payment by such former tenant and guarantor of a minimum of $5.4 million in accordance with a payment schedule set forth and subject to the terms in the conditional settlement agreement. The payments relate to tenant’s default under the lease and its subsequent termination by the Company. Given the inherent uncertainties involving collectability, the Company has only recognized $0.3 million in its consolidated financial statements and the remaining amount will be recognized when realized. As Lessee During the year ended December 31, 2021, the Company: • • modified its Rye, New York corporate office lease during the first quarter of 2021. As a result of the modification, the lease was remeasured, and the lease liability and right-of-use asset were each reduced by $0.4 million. terminated its Fund IV lease at 110 University Place in New York City during the second quarter of 2021 (which was previously impaired in 2020, Note 9) for $3.6 million, and de-recognized the related right-of-use asset of $31.4 million, lease liability of $46.0 million and building improvements and other assets totaling $10.3 million, resulting in a gain on lease termination of $0.7 million, or $0.2 million at the Company's share, which is reflected within Gain on disposition of properties in the consolidated statements of operations During the year ended December 31, 2020, the Company: • entered into one new office lease as lessee for which the lease commenced in the third quarter of 2020. The Company recorded a right- of-use asset and corresponding lease liability of $1.7 million • modified its 991 Madison master lease by converting the 49-year fixed term to a 15-year term. As a result of the modification, the lease was reclassified from a finance lease to an operating lease during the second quarter of 2020 116 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • consolidated one property within the BSP II portfolio, 102 E. Broughton, (Note 3, Note 5), which was subject to a ground lease classified as an operating lease, during the second quarter of 2020 recorded an impairment charge of $12.3 million on a right-of-use asset for a Fund IV property, 110 University Place (Note 9) renewed one ground lease for Branch Plaza, an operating lease, for 22 years; and • • • modified its 1238 Wisconsin lease agreement for a reduced purchase price from $14.5 million to $11.5 million. As a result, remeasured and reduced its right-of-use asset and lease liability by $1.9 million in the fourth quarter of 2020. Additional disclosures regarding the Company’s leases as lessee are as follows: Lease Cost Finance lease cost: Amortization of right-of-use assets Interest on lease liabilities Subtotal Operating lease cost Variable lease cost Total lease cost Other Information Weighted-average remaining lease term - finance leases (years) Weighted-average remaining lease term - operating leases (years) Weighted-average discount rate - finance leases Weighted-average discount rate - operating leases Year Ended December 31, 2020 2021 $ $ 903 388 1,291 7,184 84 8,559 $ $ 32.6 14.1 6.3 % 5.1 % 1,595 1,635 3,230 7,661 143 11,034 33.4 26.4 6.2 % 5.6 % Right-of-use assets are included in Operating real estate (Note 3) in the consolidated balance sheet. Lease liabilities are included in Accounts payable and other liabilities in the consolidated balance sheet (Note 6). Operating lease cost comprises amortization of right-of-use assets for operating properties (related to ground rents) or amortization of right-of-use assets for office and corporate assets and is included in Property operating expense or General and administrative expense, respectively, in the consolidated statements of operations. Finance lease cost comprises amortization of right-of-use assets for certain ground leases, which is included in Property operating expense, as well as interest on lease liabilities, which is included in Interest expense in the consolidated statements of operations. Lease Obligations The scheduled future minimum (i) rental revenues from rental properties under the terms of non-cancelable tenant leases greater than one year (assuming no new or renegotiated leases or option extensions for such premises) and (ii) rental payments under the terms of all non-cancelable operating and finance leases in which the Company is the lessee, principally for office space, land and equipment, as of December 31, 2021, are summarized as follows (in thousands): Year Ending December 31, 2022 2023 2024 2025 2026 Thereafter Interest Total Minimum Rental Payments Minimum Rental Revenues (a) $ $ 211,660 $ 202,890 178,050 146,624 118,052 480,093 1,337,369 — 1,337,369 $ Operating Leases (b) Finance Leases (b) 5,368 $ 5,389 5,414 5,329 5,173 24,434 51,107 (12,348 ) 38,759 $ 34 — — — — 12,515 12,549 (5,937 ) 6,612 117 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS a) Amount represents contractual lease maturities at December 31, 2021 including any extension options that management determined were reasonably certain of exercise. During the end of March 2020, numerous tenants were forced to suspend operations by government mandate as a result of the COVID-19 Pandemic. The Company has negotiated payment agreements with selected tenants which resulted in rent concessions or deferral of rents as discussed further below. b) Minimum rental payments include $18.3 million of interest related to operating leases and $5.9 million related to finance leases and exclude options or renewals not reasonably certain of exercise. During the years ended December 31, 2021, 2020 and 2019, no single tenant or property collectively comprised more than 10% of the Company’s consolidated total revenues. COVID-19 Pandemic Impacts Beginning in March 2020, the COVID-19 Pandemic has had a material adverse impact on economic and market conditions, and consumer activity, and triggered a period of global and domestic economic slowdown. The COVID-19 Pandemic and government responses created disruption in global supply chains and has been adversely impacting many industries, including the domestic retail sectors in which the Company’s tenants operate. Under governmental restrictions and guidance, certain retailers were considered “essential businesses” and were permitted to remain fully operating during the COVID-19 Pandemic, while other “non-essential businesses” were ordered to decrease or close operations for an indeterminate period of time to protect their employees and customers from the spread of the virus. These disruptions, which have substantially ceased as of the date of these financial statements, have impacted the collectability of rent from the Company’s affected tenants primarily in 2020 and to a lesser extent in 2021. While the Company considers disruptions related to the COVID-19 Pandemic to be substantially over, if such government mandated closures are reinstated, they may have a material, adverse effect on the Company’s revenues, results of operations, financial condition, and liquidity in future periods. Rent Collections – The Company collected or negotiated payment agreements of approximately 98% and 94% of its fourth quarter 2021 pre- COVID billings (original contract rents without regard to deferral or abatement agreements) for its Core Portfolio and the Funds, respectively. Fourth quarter 2020 rent collections were 91% and 82% for its Core Portfolio and the Funds, respectively, at December 31, 2020. Earnings Impact – The total impact of the COVID-19 Pandemic on earnings was $16.3 million, or $8.6 million at the Company's pro rata share, for the year ended December 31, 2021 compared to $134.0 million, or $53.1 million at the Company's pro rata share, for the year ended December 31, 2020. The Company incurred aggregate credit losses and rent abatements totaling approximately $6.4 million, or $6.3 million at the Company's pro rata share, for the year ended December 31, 2021, compared to $48.4 million, or $32.5 million at the Company's pro rata share, for the year ended December 31, 2020, respectively, primarily related to the COVID-19 Pandemic. In addition, the Company incurred impairment charges of $9.9 million, or $2.3 million at the Company's pro rata share, for the year ended December 31, 2021 compared to $85.6 million, or $20.6 million at the Company's pro rata share, for the year ended December 31, 2020 primarily related to the COVID-19 Pandemic (Note 9). Other Impacts • Rent Concession Agreements – During the year ended December 31, 2021, the Company executed 96 rent concession arrangements with tenants comprised of 18 agreements for rent deferral and 78 agreements for rent abatements. Of these deferral agreements, 16 were accounted for as if no changes to the contract were made and therefore there were no changes to the current or future recognition of revenue and $5.4 million and $10.6 million of deferred receivables are included in Rents receivable in the consolidated balance sheet at December 31, 2021 and 2020, respectively. Rent abatements represented a $6.5 million, or $4.3 million at the Company's pro rata share, reduction in revenues for the year ended December 31, 2021 compared to $1.9 million, or $2.6 million at the Company's pro rata share, for the year ended December 31, 2020. Results for 2020 reflect the impact of 288 rent concession agreements including 60 abatements and 226 deferrals. • Occupancy (Unaudited) – At December 31, 2021, the Company’s pro rata Core and Fund leased occupancy rates were 93.2% and 91.4%, respectively, compared to 90.9% and 88.3% respectively, at December 31, 2020 reflecting primarily recovery since the COVID- 19 Pandemic in 2020. 118 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Segment Reporting The Company has three reportable segments: Core Portfolio, Funds and Structured Financing. The Company’s Core Portfolio consists primarily of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas with a long-term investment horizon. The Company’s Funds hold primarily retail real estate in which the Company co-invests with high-quality institutional investors. The Company’s Structured Financing segment consists of earnings and expenses related to notes and mortgages receivable which are held within the Core Portfolio or the Funds (Note 4). Fees earned by the Company as the general partner or managing member of the Funds are eliminated in the Company’s consolidated financial statements and are not presented in the Company’s segments. The following tables set forth certain segment information for the Company (in thousands): Core Portfolio As of or for the Year Ended December 31, 2021 Structured Financing Unallocated Funds Total Revenues Depreciation and amortization Property operating expenses, other operating and real estate taxes General and administrative expenses Impairment charges Gain on disposition of properties Operating income Interest income Equity in earnings of unconsolidated affiliates inclusive of gains on disposition of properties Interest expense Realized and unrealized holding gains on investments and other Income tax provision Net income Net income attributable to noncontrolling interests Net income attributable to Acadia $ 181,332 $ (69,103 ) 111,165 $ (54,336 ) — $ — — $ 292,497 (123,439 ) — (56,957 ) — — 4,612 59,884 — (41,916 ) — (9,925 ) 5,909 10,897 — 353 (29,454 ) 4,977 (38,594 ) — — — — — 9,065 — — — (40,125 ) — — (40,125 ) — (98,873 ) (40,125 ) (9,925 ) 10,521 30,656 9,065 — — 5,330 (68,048 ) — — 30,783 (2,276 ) 28,507 $ 53,654 — 30,934 (206 ) 30,728 $ (4,534 ) — 4,531 — 4,531 $ — (93 ) (40,218 ) — (40,218 ) $ 49,120 (93 ) 26,030 (2,482 ) 23,548 $ Real estate at cost (a) Total Assets (a) Cash paid for acquisition of real estate Cash paid for development and property improvement costs $ 2,356,645 $ 1,714,962 $ $ 2,212,877 $ 1,894,983 $ 135,670 $ $ 27,046 $ $ 26,176 $ 13,625 $ — $ 153,886 $ — $ — $ — $ 4,071,607 — $ 4,261,746 — $ 161,846 40,671 — $ 119 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of or for the Year Ended December 31, 2020 As Restated Structured Financing Unallocated Funds Core Portfolio Total Revenues Depreciation and amortization Property operating expenses, other operating and real estate taxes General and administrative expenses Impairment charges Gain on disposition of properties Operating income (loss) Interest income Equity in losses of unconsolidated affiliates inclusive of gains on disposition of properties Interest expense Realized and unrealized holding gains on investments and other Income tax provision Net income (loss) Net (income) loss attributable to noncontrolling interests Net income (loss) attributable to Acadia $ 160,262 $ (76,125 ) 90,646 $ (71,104 ) — $ — — $ 250,908 (147,229 ) — (57,246 ) — (419 ) 174 26,646 — (40,782 ) — (85,179 ) 509 (105,910 ) — (874 ) (33,185 ) (2,183 ) (36,486 ) 18,564 — 11,151 (5,837 ) 5,314 $ 95,366 — (49,213 ) 62,579 13,366 $ $ — — — — — 8,979 — — (568 ) — 8,411 — 8,411 $ — (35,798 ) — — (35,798 ) — (98,028 ) (35,798 ) (85,598 ) 683 (115,062 ) 8,979 — — (3,057 ) (69,671 ) — (269 ) (36,067 ) — (36,067 ) $ 113,362 (269 ) (65,718 ) 56,742 (8,976 ) Real estate at cost (a) Total Assets (a) Cash paid for acquisition of real estate Cash paid for development and property improvement costs $ 2,330,116 $ 1,681,210 $ $ 2,254,680 $ 1,775,507 $ 1,245 $ $ 25,409 $ $ 19,963 $ 11,170 $ — $ 100,882 $ — $ — $ — $ 4,011,326 — $ 4,131,069 21,208 — $ 36,579 — $ 120 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of or for the Year Ended December 31, 2019 As Restated Structured Financing Unallocated Funds Core Portfolio Total Revenues Depreciation and amortization Property operating expenses, other operating and real estate taxes General and administrative expenses Impairment charges Gain on disposition of properties Operating income Interest income Equity in earnings (loss) of unconsolidated affiliates inclusive of gains on disposition of properties Interest expense Realized and unrealized holding gains on investments and other Income tax provision Net income (loss) Net loss attributable to noncontrolling interests Net income attributable to Acadia $ 173,177 $ (61,819 ) 116,408 $ (60,761 ) — $ — — $ — 289,585 (122,580 ) (47,032 ) — — 16,771 81,097 — (41,199 ) — (1,721 ) 13,553 26,280 — 9,020 (28,304 ) (3,121 ) (40,909 ) — — — — — 7,988 — — — (34,299 ) — — (34,299 ) — (88,231 ) (34,299 ) (1,721 ) 30,324 73,078 7,988 — — 5,899 (69,213 ) 327 — 62,140 337 62,477 $ 6,620 — (11,130 ) 30,146 19,016 $ — — 7,988 — 7,988 $ — (1,465 ) (35,764 ) — (35,764 ) $ 6,947 (1,465 ) 23,234 30,483 53,717 $ $ Real estate at cost Total Assets $ Cash paid for acquisition of real estate and leasehold interest $ $ Cash paid for development and property improvement costs 2,252,230 $ 1,708,181 $ 2,350,833 $ 1,785,919 $ 184,812 $ 66,661 $ 173,892 $ 22,724 $ — $ 114,943 $ — $ — $ — $ 3,960,411 — $ 4,251,695 358,704 — $ 89,385 — $ a) Real estate at cost and total assets for the Funds segment include $657.0 million and $641.7 million, or $190.9 million and $186.5 million net of non-controlling interests, related to Fund II’s City Point property at December 31, 2021 and 2020, respectively. 14. Share Incentive and Other Compensation Share Incentive Plan On March 23, 2020, the Company’s Board approved the 2020 Share Incentive Plan (the “2020 Plan”), which increased the aggregate number of Common Shares authorized for issuance by 2,650,000 shares. The 2020 Plan authorizes the Company to issue options, Restricted Shares, LTIP Units and other securities (collectively “Awards”) to, among others, the Company’s officers, trustees and employees. At December 31, 2021 a total of 1,911,558 shares remained available to be issued under the Share Incentive Plan. Restricted Shares and LTIP Units During the year ended December 31, 2021, the Company issued 636,646 LTIP Units and 11,244 restricted share units (“Restricted Share Units”) to employees of the Company pursuant to the Share Incentive Plan. Certain of these equity awards were granted in performance-based Restricted Share Units or LTIP Units with market conditions as described below (“2020 Performance Shares”). These awards were measured at their fair value on the grant date, incorporating the following factors: • A portion of these annual equity awards is granted in performance-based Restricted Share Units or LTIP Units that may be earned based • on the Company’s attainment of specified relative total shareholder returns (“Relative TSR”) hurdles. In the event the Relative TSR percentile falls between the 25th percentile and the 50th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 50% and 100% and in the event that the Relative TSR percentile falls between the 50th percentile and 75th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 100% and 200%. • Two-thirds (2/3) of the performance-based LTIP Units will vest based on the Company’s total shareholder return (“TSR”) for the three -year forward-looking performance period relative to the constituents of the SNL U.S. REIT Retail Shopping Center Index and one- 121 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • third (1/3) on the Company’s TSR for the three-year forward-looking performance period as compared to the constituents of the SNL U.S. REIT Retail Index (both on a non-weighted basis). If the Company’s performance fails to achieve the aforementioned hurdles at the culmination of the three-year performance period, all performance-based shares will be forfeited. Any earned performance-based shares vest 60% at the end of the performance period, with the remaining 40% of shares vesting ratably over the next two years. For valuation of the 2021 and 2020 Performance Shares, a Monte Carlo simulation was used to estimate the fair values based on probability of satisfying the market conditions and the projected share prices at the time of payments, discounted to the valuation dates over the three-year performance periods. The assumptions include volatility (48.0% and 21.0%) and risk-free interest rates of (0.2% and 1.4%) for 2021 and 2020, respectively. The total value of the 2021 and 2020 Performance Shares will be expensed over the vesting period regardless of the Company’s performance. The total value of the above Restricted Share Units and LTIP Units as of the grant date was $12.6 million. Total long-term incentive compensation expense, including the expense related to the Share Incentive Plan, was $9.4 million, $8.4 million and $8.8 million for the years ended December 31, 2021, 2020, and 2019, respectively and is recorded in General and Administrative on the Consolidated Statements of Operations. In addition, members of the Board have been issued shares and units under the Share Incentive Plan. During 2021, the Company issued 30,321 LTIP Units and 30,592 Restricted Shares to Trustees of the Company in connection with Trustee fees. A portion of LTIP Units and Restricted Shares vest over three years with 33% vesting May 9, 2022 and the remaining amount vesting ratably on May 9, 2023 and May 9, 2024. The remaining awards vest on May 9, 2022. The Restricted Shares do not carry voting rights or other rights of Common 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 such Restricted Shares. Total trustee fee expense, including the expense related to the Share Incentive Plan, was $1.6 million for the year ended December 31, 2021 and $1.4 million for 2020 and 2019, respectively. In 2009, the Company adopted the Long-Term Investment Alignment Program (the “Program”) pursuant to which the Company may grant awards to employees, entitling them to receive up to 25% of any potential future payments of Promote to the Operating Partnership from Funds III, IV and V. As of December 31, 2021, the Company has granted such awards to employees representing 25% of the potential Promote payments from Fund III to the Operating Partnership and 23.1% of the potential Promote payments from Fund IV to the Operating Partnership and 8.4% of the potential Promote payments from Fund V to the Operating Partnership. Payments to senior executives under the Program require further Board approval at the time any potential payments are due pursuant to these grants. Compensation relating to these awards will be recognized in each reporting period in which Board approval is granted. As payments to other employees are not subject to further Board approval, compensation relating to these awards will be recorded based on the estimated fair value at each reporting period in accordance with ASC Topic 718, Compensation – Stock Compensation. The awards in connection with Funds IV and V were determined to have no intrinsic value as of December 31, 2021. The Company did not recognize any compensation expense for the years ended December 31, 2021, 2020, and 2019, related to the Program in connection with Fund III, Fund IV or Fund V. 122 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of the status of the Company’s unvested Restricted Shares and LTIP Units is presented below: Unvested Restricted Shares and LTIP Units Unvested at January 1, 2019 Granted Vested Forfeited Unvested at December 31, 2019 Granted Vested Forfeited Unvested at December 31, 2020 Granted Vested Forfeited Unvested at December 31, 2021 Common Restricted Shares Weighted Grant-Date Fair Value LTIP Units 891,886 350,726 (290,753 ) (15,679 ) 936,180 440,829 (250,241 ) (3,879 ) 1,122,889 666,967 (283,024 ) (91,637 ) 1,415,195 22.44 28.56 27.12 — 23.73 13.70 27.72 24.77 15.42 19.94 16.85 36.22 16.87 Weighted Grant-Date Fair Value $ $ 26.87 32.75 29.30 31.49 28.24 19.64 30.44 24.67 24.38 19.48 26.66 36.22 20.85 38,455 25,359 (21,424 ) — 42,390 66,824 (19,264 ) (39 ) 89,911 43,078 (43,084 ) (159 ) 89,746 $ $ The weighted-average grant date fair value for Restricted Shares and LTIP Units granted for the years ended December 31, 2021 and 2020 were $19.51 and $18.86, respectively. As of December 31, 2021, there was $16.9 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Share Incentive Plan. That cost is expected to be recognized over a weighted-average period of 1.5 years. The total fair value of Restricted Shares that vested for the years ended December 31, 2021 and 2020, was $0.8 million and $0.5 million, respectively. The total fair value of LTIP Units that vested (LTIP units vest primarily in the first quarter) during the years ended December 31, 2021 and 2020, was $7.5 million and $7.6 million, respectively. Other Plans On a combined basis, the Company incurred a total of $0.4 million, $0.3 million and $0.3 million of compensation expense related to the following employee benefit plans for the years ended December 31, 2021, 2020 and 2019, respectively: Employee Share Purchase Plan The Acadia Realty Trust Employee Share Purchase Plan (the “Purchase Plan”) allows eligible employees of the Company to purchase Common Shares through payroll deductions. The Purchase Plan provides for employees to purchase Common Shares on a quarterly basis at a 15% discount to the closing price of the Company’s Common Shares on either the first day or the last day of the quarter, whichever is lower. A participant may not purchase more than $25,000 in Common Shares per year. Compensation expense will be recognized by the Company to the extent of the above discount to the closing price of the Common Shares with respect to the applicable quarter. On March 23, 2021, the Board adopted, which was subsequently approved by the Company’s shareholders at the 2021 annual meeting of shareholders, the Acadia Realty Trust 2021 Employee Share Purchase Plan which allows for a maximum aggregate issuance of 200,000 Common Shares. A total of 7,721 and 5,266 Common Shares were purchased by employees under the Purchase Plan for the years ended December 31, 2021 and 2020, respectively. Deferred Share Plan During 2006, the Company adopted a Trustee Deferral and Distribution Election, under which the participating Trustees earn deferred compensation. Employee 401(k) Plan The Company maintains a 401(k) plan for employees under which the Company currently matches 50% of a plan participant’s contribution up to 6% of the employee’s annual salary. A plan participant may contribute up to a maximum of 15% of their compensation, up to $19,500, for the year ended December 31, 2021. 123 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15. Federal Income Taxes The 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 under the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its annual REIT taxable income to its shareholders. As a REIT, the Company generally will not be subject to corporate Federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Code. As the Company distributed sufficient taxable income for the years ended December 31, 2021, 2020 and 2019, no U.S. Federal income or excise taxes were incurred. If the Company fails to qualify as a REIT in any taxable year, it will be subject to Federal income taxes at the regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even though the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property and Federal income and excise taxes on any undistributed taxable income. In addition, taxable income from non- REIT activities managed through the Company’s TRS’s is subject to Federal, state and local income taxes. No more than 20% of the value of our total assets may consist of the securities of one or more TRS. In the normal course of business, the Company or one or more of its subsidiaries is subject to examination by Federal, state and local jurisdictions, in which it operates, where applicable. The Company expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense. For the three years ended December 31, 2021, the Company recognized no material adjustments regarding its tax accounting treatment for uncertain tax provisions. As of December 31, 2021, the tax years that remain subject to examination by the major tax jurisdictions under applicable statutes of limitations are generally the year 2018 and forward. Reconciliation of Net Income to Taxable Income Reconciliation of GAAP net income attributable to Acadia to taxable income (loss) is as follows: (in thousands) Net income (loss) attributable to Acadia Deferred rental and other income (loss) (a) Book/tax difference - depreciation and amortization (a) Straight-line rent and above- and below-market rent adjustments (a) Book/tax differences - equity-based compensation Joint venture equity in earnings, net (a) Impairment charges and reserves Acquisition costs (a) Gain on disposition of properties Book/tax differences - miscellaneous Taxable income Distributions declared (b) 2021 Year Ended December 31, 2020 (As Restated) 2019 (As Restated) $ $ $ 23,548 $ 3,209 24,756 (8,588 ) 7,663 3,962 2,657 22 (2,170 ) (1,203 ) 53,856 $ 52,872 $ (8,976 ) $ (2,498 ) 27,052 8,630 6,825 (163 ) 18,734 14 4,936 (36 ) 54,518 $ 24,937 $ 53,717 1,203 21,688 (10,949 ) 7,177 15,571 — 63 2,375 (2,145 ) 88,700 96,310 a) Adjustments from certain subsidiaries and affiliates, which are consolidated for financial reporting but not for tax reporting, are included in the reconciliation item “Joint venture equity in earnings, net.” b) The entire fourth quarter 2021 dividend of $14.4 million (paid in January 2022) was attributed to 2021. Any additional distributions required for REIT qualification may be made through October 15, 2022. The entire fourth quarter 2019 dividend of $25.2 million (paid in January 2020) was attributed to 2020. 124 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Characterization of Distributions The Company has determined that the cash distributed to the shareholders for the periods presented is characterized as follows for Federal income tax purposes: 2021 Year Ended December 31, 2020 2019 Ordinary income - Non-Section 199A Ordinary income - Section 199A Qualified dividend Capital gain Total (a) Per Share % $ Per Share % $ Per Share % $ — 0.550 0.010 0.040 0.600 $ — % 92 % 1 % 7 % 100 % $ — 0.520 — 0.060 0.580 — % 90 % — % 10 % 100 % $ — 0.820 — 0.240 1.060 — % 77 % — % 23 % 100 % a) The fourth quarter 2021 regular dividend was $0.15 per common share, all of which is allocable to 2021. The fourth quarter 2019 regular dividend was $0.29 per common share, all of which is allocable to 2020. Taxable REIT Subsidiaries Income taxes have been provided for using the liability method as required by ASC Topic 740, “Income Taxes.” The Company’s TRS income (loss) and provision for income taxes associated with the TRS for the periods presented are summarized as follows (in thousands): TRS loss before income taxes (Provision) benefit for income taxes: Federal State and local TRS net loss before noncontrolling interests Noncontrolling interests TRS net loss 2021 Year Ended December 31, 2020 (As Restated) 2019 (As Restated) $ (4,240 ) $ (3,856 ) $ (3,117 ) — — (4,240 ) 9 (4,231 ) $ 376 (268 ) (3,748 ) 746 (3,002 ) $ 754 317 (2,046 ) (369 ) (2,415 ) $ The income tax provision for the Company differs from the amount computed by applying the statutory Federal income tax rate to income (loss) before income taxes as follows. Amounts are not adjusted for temporary book/tax differences (in thousands): Federal tax benefit at statutory tax rate TRS state and local taxes, net of Federal benefit Tax effect of: Permanent differences, net Adjustment to deferred tax reserve Other REIT state and local income and franchise taxes Total provision for income taxes 2021 Year Ended December 31, 2020 (As Restated) 2019 (As Restated) $ $ (890 ) $ (268 ) 252 1,061 (156 ) 94 93 $ (810 ) $ (244 ) 227 851 (132 ) 377 269 $ (655 ) (197 ) 239 1,748 (111 ) 441 1,465 As of December 31, 2021, and 2020, the Company’s deferred tax assets were $0.0 and $0.0 million net of applicable reserves of $3.7 million and $2.6 million, respectively and were comprised of capital loss carryovers of $0.1 and $0.1 million and net operating loss carryovers of $3.6 million and $2.5 million, respectively. Under GAAP a reduction of the carrying amounts of deferred tax assets by a valuation allowance is required, if, based on the evidence available, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. During 2020, the Company determined that the realization of its deferred tax assets was not likely and as such, the Company recorded a valuation allowance against its deferred tax assets of $0.9 million. 125 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 16. Earnings (Loss) Per Common Share Basic earnings (loss) per Common Share is computed by dividing net income (loss) attributable to Common Shareholders by the weighted average Common Shares outstanding (Note 11). During the periods presented, the Company had unvested LTIP Units which provide for non-forfeitable rights to dividend equivalent payments. Accordingly, these unvested LTIP Units are considered participating securities and are included in the computation of basic earnings per Common Share 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 the effects of Restricted Share Units issued under the Company’s Share Incentive Plans (Note 14). The effect of such shares is excluded from the calculation of earnings per share when anti-dilutive as indicated in the table below. 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 for Common Shares on a one-for-one basis. The income allocable to such units is allocated on this same basis and reflected as noncontrolling interests in the accompanying consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings per share. (dollars in thousands) Numerator: Net income (loss) attributable to Acadia Less: net income attributable to participating securities Income (loss) from continuing operations net of income attributable to participating securities $ $ Denominator: Weighted average shares for basic earnings (loss) per share Effect of dilutive securities: Employee unvested restricted shares Denominator for diluted earnings per share 2021 Year Ended December 31, 2020 (As Restated) 23,548 $ (624 ) (8,976 ) (233 ) 2019 (As Restated) $ 53,717 (413 ) 22,924 $ (9,209 ) $ 53,304 87,653,818 86,441,922 84,435,826 — 87,653,818 — 86,441,922 — 84,435,826 Basic income (loss) and diluted earnings per Common Share from continuing operations attributable to Acadia $ 0.26 $ (0.11 ) $ 0.63 Anti-Dilutive Shares Excluded from Denominator: Series A Preferred OP Units Series A Preferred OP Units - Common share equivalent Series C Preferred OP Units Series C Preferred OP Units - Common share equivalent Restricted shares 188 25,067 126,593 439,556 70,827 188 25,067 126,593 439,556 76,394 188 25,067 136,593 474,278 40,821 126 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17. Quarterly Financial Data (Unaudited) As announced on February 15, 2022, the Company has restated its (i) audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 as illustrated in Note 2; and (ii) its unaudited interim financial statements for the three months ended March 31, 2021 and 2020, the three and six months ended June 30, 2021 and 2020, the three and nine months ended September 30, 2021 and 2020 and the three months ended December 31, 2020 as illustrated in this note; collectively referred to as the Restatement. Amounts depicted as "As Restated" throughout the accompanying consolidated financial statements and footnotes include the impact of the Restatement. The Company identified two areas of restatement errors, which are depicted in the tables below and relate to one of the following categories: (a) an error in accounting treatment at the time of formation related to the improper consolidation of the two Fund Investments that have been adjusted from consolidated investments to investments in unconsolidated affiliates (Note 5) with no impact on net income (loss) or distributions in excess of accumulated earnings. During the Restatement periods, the Fund Investments did not have any significant transactions (new borrowings, acquisitions, or dispositions) other than their ongoing rental operations in the normal course of business. (b) errors related to other immaterial previously unrecorded adjustments, which were also recorded as part of the Restatement. These adjustments were primarily adjustments which the Company deemed immaterial in prior periods. The total impact of these adjustments was: a. b. c. d. e. f. g. a reduction of net income attributable to Acadia of: $0.3 million ($0.01 per share) and $0.0 million ($0.00 per share), for the three months ended March 31, 2021 and 2020, respectively. a reduction in net income attributable to Acadia of $0.2 million ($0.00 per share) and $0.5 million ($0.01 per share) for the three and six months ended June 30, 2021, respectively; a reduction in net income attributable to Acadia of $0.1 million ($0.00 per share) and $0.1 million ($0.00 per share) for the three and six months ended June 30, 2020, respectively; a reduction in net income attributable to Acadia of $0.1 million ($0.00 per share) and $0.6 million ($0.01 per share), for the three and nine months ended September 30, 2021, respectively; a reduction in net income attributable to Acadia of $0.0 million ($0.00 per share) and $0.1 million ($0.00 per share), for the three and nine months ended September 30, 2020, respectively; a reduction in net income attributable to Acadia of $0.1 million ($0.01 per share) for the three months ended December 31, 2020; and The immaterial previously unrecorded adjustments include the recognition of additional reserves for one of the Company's notes receivable, 640 Broadway (Note 4) of $1.4 million or $0.3 million at the Company's share, for the three months ended March 31, 2021; $0.9 million and $2.3 million, or $0.2 million and $0.5 million at the Company's share for the three and six months ended June 30, 2021; and $0.8 million and $3.1 million, or $0.2 million and $0.7 million at the Company's share, for the three and nine months ended September 30, 2021. (c) reclassifications of certain prior period amounts to conform to the current period presentation. Reclassifications have no impact on net income (loss) and do not relate to errors and are included here in order to conform the presentation across the periods presented. a. On the statement of cash flows for the three months ended March 31, 2020: (i) Allowance for credit loss of $1.3 million and Adjustments to straight-line rent reserves of $3.0 million were reclassified from Credit loss reserves; (ii) Straight-line rents of ($1.1) million were reclassified from the change in Rents receivable and (iii) Non-cash lease expense of $0.6 million and the change in Lease liability - operating leases of ($0.4) million was reclassified from Development, construction and property improvement costs. b. On the statement of cash flows for the six months ended June 30, 2020: (i) Allowance for credit loss of $9.7 million and Adjustments to straight-line rent reserves of $6.5 million were reclassified from Credit loss reserves; (ii) Straight-line rents of $2.9 million were reclassified from the change in Rents receivable and (iii) Non-cash lease expense of $1.4 million and the change in Lease liability - operating leases of ($0.8) million was reclassified from Development, construction and property improvement costs. 127 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS c. On the statement of cash flows for the nine months ended September 30, 2020: (i) Allowance for credit loss of $20.5 million and Adjustments to straight-line rent reserves of $19.7 million were reclassified from Credit loss reserves; (ii) Straight-line rents of $4.0 million were reclassified from the change in Rents receivable and (iii) Non-cash lease expense of $2.4 million and the change in Lease liability - operating leases of ($1.0) million was reclassified from Development, construction and property improvement costs. 128 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts, unaudited) ASSETS Investments in real estate, at cost Operating real estate, net Real estate under development Net investments in real estate Notes receivable, net Investments in and advances to unconsolidated affiliates Other assets, net Right-of-use assets - operating leases, net Cash and cash equivalents Restricted cash Rents receivable, net Total assets LIABILITIES Mortgage and other notes payable, net Unsecured notes payable, net Unsecured line of credit Accounts payable and other liabilities Lease liability - operating leases, net Dividends and distributions payable Distributions in excess of income from, and investments in, unconsolidated affiliates Total liabilities Commitments and contingencies EQUITY Acadia Shareholders' Equity As Reported Adjustments As Restated March 31, 2020 $ $ $ 3,331,043 $ 237,831 3,568,874 173,159 294,195 179,043 — 23,404 14,212 52,251 4,305,138 $ (67,995 ) (a,b) $ (6 ) (a) (68,001 ) — 14,814 (a,b) (1,978 ) (a) — (1,089 ) (a) (479 ) (a) 1,431 (a,b) (55,302 ) $ 1,170,622 $ 480,658 174,700 425,330 — 26,811 (57,592 ) (a,b) $ — — (1,643 ) (a) — — 15,457 2,293,578 — (59,235 ) 3,263,048 237,825 3,500,873 173,159 309,009 177,065 — 22,315 13,733 53,682 4,249,836 1,113,030 480,658 174,700 423,687 — 26,811 15,457 2,234,343 Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 85,989,836 shares Additional paid-in capital Accumulated other comprehensive loss Distributions in excess of accumulated earnings Total Acadia shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity $ 86 1,686,794 (85,715 ) (166,701 ) 1,434,464 577,096 2,011,560 4,305,138 $ — — (299 ) (b) (49 ) (b) (348 ) 4,281 (a,b) 3,933 (55,302 ) $ 86 1,686,794 (86,014 ) (166,750 ) 1,434,116 581,377 2,015,493 4,249,836 129 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts, unaudited) Revenues Rental income Other $ Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating loss Equity in earnings of unconsolidated affiliates Interest and other income Realized and unrealized holding gains on investments and other Interest expense Loss from continuing operations before income taxes Income tax benefit Net loss Net loss attributable to noncontrolling interests Net loss attributable to Acadia Net income attributable to participating securities Shares for basic loss per share Basic loss per share $ $ $ Three Months Ended March 31, 2020 As Reported Adjustments As Restated 70,457 $ 963 71,420 33,377 9,070 10,447 13,320 51,549 117,763 — (46,343 ) 1,255 2,929 (530 ) (18,302 ) (60,991 ) 952 (60,039 ) 51,625 (8,414 ) $ — $ 86,972 676 (a,b) $ (1 ) (a) 675 (729 ) (a) (9 ) (a) (252 ) (a) (283 ) (a) — (1,273 ) — 1,948 (368 ) (a) — — 702 (a,b) 2,282 2 (a) 2,284 (2,275 ) (a,b) 9 — — $ $ 71,133 962 72,095 32,648 9,061 10,195 13,037 51,549 116,490 — (44,395 ) 887 2,929 (530 ) (17,600 ) (58,709 ) 954 (57,755 ) 49,350 (8,405 ) — 86,972 (0.10 ) $ — $ (0.10 ) 130 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) Net loss Other comprehensive loss Three Months Ended March 31, 2020 As Reported Adjustments As Restated $ (60,039 ) $ 2,284 $ (57,755 ) Unrealized loss on valuation of swap agreements Reclassification of realized interest on swap agreements Other comprehensive loss Comprehensive loss Comprehensive loss attributable to noncontrolling interests Comprehensive Loss attributable to Acadia $ (74,774 ) 977 (73,797 ) (133,836 ) 70,882 (62,954 ) $ 239 (a) (15 ) (a) 224 2,508 (2,499 ) 9 $ (74,535 ) 962 (73,573 ) (131,328 ) 68,383 (62,945 ) 131 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Three Months Ended March 31, 2020 — — 11 — 148 (1,219 ) — — 87,050 Common Shares (in thousands, except per share amounts, unaudited) Balance at January 1, 2020 Cumulative effect of change in accounting principle Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Dividends/distributions declared ($0.29 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Reallocation of — noncontrolling interests Balance at March 31, 2020 85,990 Adjustments Balance at January 1, 2020 Comprehensive loss Total Adjustments As Restated Balance at January 1, 2020 - As Restated Cumulative effect of change in accounting principle Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Dividends/distributions declared ($0.29 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Reallocation of noncontrolling interests Balance at March 31, 2020 - As Restated — — — 87,050 85,990 — — (1,219 ) 148 — — — — 11 Share Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Total Common Shareholders’ Equity Noncontrolling Interests Total Equity $ 87 $ 1,706,357 $ (31,175 ) $ (132,961 ) $ 1,542,308 $ 644,657 $ 2,186,965 — — — (389 ) (389 ) (11 ) (400 ) — (1 ) — — — — — — 86 — — — 2,472 (22,351 ) — 171 — — — 145 1,686,794 — — — $ $ $ $ $ $ — — — — — — (54,540 ) — (85,715 ) (299 ) — (299 ) $ $ $ — — 2,472 (2,472 ) — (22,352 ) — (22,352 ) (24,937 ) (24,937 ) (1,849 ) (26,786 ) — — — (8,414 ) — (166,701 ) (58 ) 9 (49 ) $ $ $ 171 3,648 — (3,118 ) — (62,954 ) 7,268 (70,882 ) 3,819 (3,118 ) 7,268 (133,836 ) 145 1,434,464 $ (145 ) 577,096 $ — 2,011,560 (357 ) $ 9 (348 ) $ 1,782 $ 2,499 (a,b) $ 4,281 1,425 2,508 3,933 87 $ 1,706,357 $ (31,474 ) $ (133,019 ) $ 1,541,951 $ 646,439 $ 2,188,390 — — — (389 ) (389 ) (11 ) (400 ) $ $ $ $ — (1 ) — — — — — — 2,472 (22,351 ) — 171 — — — 145 — — — — — — — 2,472 (2,472 ) — (22,352 ) — (22,352 ) (24,937 ) (24,937 ) (1,849 ) (26,786 ) — — 171 3,648 — (3,118 ) — (54,540 ) — (8,405 ) — (62,945 ) 7,268 (68,383 ) 3,819 (3,118 ) 7,268 (131,328 ) — — 145 (145 ) — $ 86 $ 1,686,794 $ (86,014 ) $ (166,750 ) $ 1,434,116 $ 581,377 $ 2,015,493 132 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net loss Adjustments to reconcile net loss to net cash provided by operating activities: Three Months Ended March 31, 2020 As Reported Adjustments As Restated $ (60,039 ) 2,284 $ (57,755 ) Depreciation and amortization Straight-line rents Non-cash lease expense Distributions of operating income from unconsolidated affiliates Equity in (earnings) losses of unconsolidated affiliates Stock compensation expense Amortization of financing costs Impairment charges Credit loss reserves Allowance for credit loss Adjustments to straight-line rent reserves Other, net Changes in assets and liabilities: Other liabilities Lease liability - operating leases Prepaid expenses and other assets Rents receivable Accounts payable and accrued expenses Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of real estate Development, construction and property improvement costs Proceeds from the disposition of properties, net Investments in and advances to unconsolidated affiliates and other Return of capital from unconsolidated affiliates and other Issuance of notes receivable Return of deposits for properties under contract Payment of deferred leasing costs Change in control of previously unconsolidated affiliate Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes Principal payments on unsecured debt Proceeds received on mortgage and other notes Proceeds from unsecured debt Payments of finance lease obligations Proceeds from the sale (repurchase) of Common Shares Capital contributions from noncontrolling interests Distributions to noncontrolling interests Dividends paid to Common Shareholders Deferred financing and other costs Net cash provided by financing activities Increase in cash and restricted cash Cash of $14,149 and restricted cash of $13,880 beginning of period Cash of $22,315 and restricted cash of $13,733 end of period $ 33,377 — — 1,898 (1,255 ) 3,819 1,763 51,549 4,770 — — (1,107 ) (6,844 ) — 2,107 24 (2,327 ) 27,735 (19,088 ) (13,333 ) — (1,525 ) 5,024 (59,000 ) 200 (2,763 ) — (90,485 ) (1,488 ) (5,000 ) 689 122,245 (625 ) (22,352 ) 7,268 (4,914 ) (25,245 ) (222 ) 70,356 7,606 30,010 37,616 $ (729 ) (a,b) (1,094 ) (a,c) 619 (c) — 368 (a) — (42 ) (a,b) — (4,770 ) (c) 1,238 (a,c) 967 (b,c) 1 (a) 122 (a) (376 ) (c) (177 ) (a) 2,457 (a,c) 24 (a) 892 — 489 (a,c) — (951 ) (b) — — — (17 ) (a) — (479 ) — — — — — — — — — — — 413 (1,981 ) (1,568 ) $ 32,648 (1,094 ) 619 1,898 (887 ) 3,819 1,721 51,549 — 1,238 967 (1,106 ) (6,722 ) (376 ) 1,930 2,481 (2,303 ) 28,627 (19,088 ) (12,844 ) — (2,476 ) 5,024 (59,000 ) 200 (2,780 ) — (90,964 ) (1,488 ) (5,000 ) 689 122,245 (625 ) (22,352 ) 7,268 (4,914 ) (25,245 ) (222 ) 70,356 8,019 28,029 36,048 133 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts, unaudited) ASSETS Investments in real estate, at cost Operating real estate, net Real estate under development Net investments in real estate Notes receivable, net Investments in and advances to unconsolidated affiliates Other assets, net Right-of-use assets - operating leases, net Cash and cash equivalents Restricted cash Rents receivable, net Total assets LIABILITIES Mortgage and other notes payable, net Unsecured notes payable, net Unsecured line of credit Accounts payable and other liabilities Lease liability - operating leases, net Dividends and distributions payable Distributions in excess of income from, and investments in, unconsolidated affiliates Total liabilities Commitments and contingencies EQUITY Acadia Shareholders' Equity As Reported June 30, 2020 Adjustments As Restated $ $ $ 3,368,557 $ 264,684 3,633,241 134,692 250,825 196,741 — 34,273 14,074 64,902 4,328,748 $ $ (69,895 ) (a) (183 ) (a) (70,078 ) — 15,074 (a) (3,353 ) (a) — (1,739 ) (a) (609 ) (a) (756 ) (a) (61,461 ) $ 1,161,577 $ 472,507 177,400 408,266 — 147 (58,622 ) (a,b) $ — — (4,953 ) (a) — — 15,520 2,235,417 — (63,575 ) 3,298,662 264,501 3,563,163 134,692 265,899 193,388 — 32,534 13,465 64,146 4,267,287 1,102,955 472,507 177,400 403,313 — 147 15,520 2,171,842 Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,264,641 shares Additional paid-in capital Accumulated other comprehensive loss Distributions in excess of accumulated earnings Total Acadia shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity $ 86 1,693,006 (90,209 ) (147,291 ) 1,455,592 637,739 2,093,331 4,328,748 $ — — (133 ) (133 ) 2,247 (a) 2,114 (61,461 ) $ 86 1,693,006 (90,209 ) (147,424 ) 1,455,459 639,986 2,095,445 4,267,287 134 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts, unaudited) Revenues Rental income Other Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating loss Equity in losses of unconsolidated affiliates Interest and other income Realized and unrealized holding gains on investments and other Interest expense Income from continuing operations before income taxes Income tax (provision) benefit Net income Net (income) loss attributable to noncontrolling interests Net income attributable to Acadia Net income attributable to participating securities Shares for basic and diluted income per share Three Months Ended June 30, 2020 As As Restated Reported Adjustments Six Months Ended June 30, 2020 As Reported Adjustments As Restated $ 62,639 $ 1,134 63,773 (3,218 ) (a,b) $ (11 ) (a) (3,229 ) $ 133,096 $ 2,097 135,193 67,170 17,790 21,144 30,126 51,549 187,779 485 (52,101 ) 59,421 1,123 60,544 33,377 8,682 10,445 16,561 — 69,065 485 (8,036 ) (1,180 ) 2,095 (416 ) (a,b) (38 ) (a) (252 ) (a) (245 ) (a) — (951 ) — (2,278 ) (394 ) (a) — (2,542 ) (a,b) $ 130,554 2,085 132,639 (2,554 ) (12 ) (a) (1,145 ) (a,b) (47 ) (a) (504 ) (a) (528 ) (a) — (2,224 ) 66,025 17,743 20,640 29,598 51,549 185,555 — (330 ) 485 (52,431 ) (293 ) 5,024 469 5,024 (762 ) (a) — — 571 (a,b) 87,811 (17,748 ) 87,281 (36,621 ) — 1,273 (a,b) 87,281 (35,348 ) (2,101 ) — (a) (2,101 ) 62,942 (137 ) 62,805 4,052 815 4,867 181 2 (a) 183 4,233 817 5,050 33,793 8,720 10,697 16,806 — 70,016 485 (5,758 ) (786 ) 2,095 87,811 (18,319 ) 65,043 (137 ) 64,906 (45,496 ) 19,410 $ 2,017 (a,b) (84 ) $ (43,479 ) 19,326 244 $ — $ 244 6,129 10,996 $ (258 ) (a,b) (75 ) $ 5,871 10,921 233 $ — $ 233 $ $ $ $ 86,180 — 86,180 86,576 — 86,576 Basic and diluted income per share $ 0.22 $ — $ 0.22 $ 0.12 $ — $ 0.12 135 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) Net income Other comprehensive loss Unrealized loss on valuation of swap agreements Reclassification of realized interest on swap agreements Other comprehensive loss Comprehensive income (loss) Comprehensive (income) loss attributable to noncontrolling interests Comprehensive income (loss) attributable to Acadia Three Months Ended June 30, 2020 As As Restated Reported Adjustments Six Months Ended June 30, 2020 As As Restated Reported Adjustments $ 64,906 $ (2,101 ) $ 62,805 $ 4,867 $ 183 $ 5,050 (8,621 ) 312 (a,b) (8,309 ) (83,395 ) 551 (a,b) (82,844 ) 3,115 (5,506 ) 59,400 (30 ) (a) 282 (1,819 ) 3,085 (5,224 ) 57,581 4,092 (79,303 ) (74,436 ) (45 ) (a) 506 689 4,047 (78,797 ) (73,747 ) (44,484 ) 2,034 (42,450 ) 26,398 (465 ) 25,933 $ 14,916 $ 215 $ 15,131 $ (48,038 ) $ 224 $ (47,814 ) 136 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Three Months Ended June 30, 2020 Common Shares Share Amount 86 $ Additional Paid-in Capital $ 1,686,794 Accumulated Other Comprehensive Income (Loss) (85,715 ) $ Distributions in Excess of Accumulated Earnings $ (166,701 ) Total Common Shareholders’ Equity 1,434,464 $ $ Noncontrolling Interests Total Equity 577,096 $ 2,011,560 85,990 260 — — — 15 — — — — 86,265 — — — $ $ $ (in thousands, except per share amounts, unaudited) Balance at April 1, 2020 Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Acquisition of noncontrolling interest Dividends/distributions declared ($0.00 Share per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive (loss) income Reallocation of noncontrolling interests Balance at June 30, 2020 Adjustments Balance at April 1, 2020 Comprehensive income (loss) Total Adjustments As Restated Balance at April 1, 2020 - As Restated Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Acquisition of noncontrolling interest Dividends/distributions declared ($0.00 Share per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive (loss) income Reallocation of noncontrolling interests Balance at June 30, 2020 - As Restated — — — — — — — — — 86 4,072 (34 ) — — 175 — — — — — — — — — — — — — — — — — 4,072 (4,072 ) (34 ) — — 175 — — — 588 (123 ) 2,142 (1,418 ) 21,041 (4,494 ) 19,410 14,916 44,484 1,999 1,693,006 $ $ — (90,209 ) $ — (147,291 ) $ 1,999 1,455,592 $ (1,999 ) 637,739 — $ — $ (299 ) $ (49 ) $ (348 ) $ 4,281 $ $ — — $ — — $ 299 — $ (84 ) (133 ) $ 215 (133 ) $ (2,034 ) (a,b) $ 2,247 — (34 ) 588 (123 ) 2,317 (1,418 ) 21,041 59,400 — 2,093,331 3,933 (1,819 ) 2,114 85,990 $ 86 $ 1,686,794 $ (86,014 ) $ (166,750 ) $ 1,434,116 $ 581,377 $ 2,015,493 260 — — — 15 — — — — — — — — — — — — — 4,072 (34 ) — — 175 — — — — — — — — — — — — — — — — — 4,072 (4,072 ) (34 ) — — 175 — — — 588 (123 ) 2,142 (1,418 ) 21,041 (4,195 ) 19,326 15,131 42,450 1,999 — — 1,999 (1,999 ) — (34 ) 588 (123 ) 2,317 (1,418 ) 21,041 57,581 — 86,265 $ 86 $ 1,693,006 $ (90,209 ) $ (147,424 ) $ 1,455,459 $ 639,986 $ 2,095,445 137 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Six Months Ended June 30, 2020 (in thousands, except per share amounts, unaudited) Balance at January 1, 2020 Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Cumulative effect of change in accounting principle Acquisition of noncontrolling interest Dividends/distributions declared ($0.29 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive (loss) income Reallocation of noncontrolling interests Balance at June 30, 2020 Adjustments Balance at January 1, 2020 Comprehensive (loss) income Total Adjustments As Restated Balance at January 1, 2020 - As Restated Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Cumulative effect of change in accounting principle Acquisition of noncontrolling interest Dividends/distributions declared ($0.29 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive (loss) income Reallocation of noncontrolling interests Balance at June 30, 2020 - As Restated Share Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Total Common Shareholders’ Equity Noncontrolling Interests Total Equity 87 1,706,357 (31,175 ) (132,961 ) $ 1,542,308 644,657 $ 2,186,965 — (1 ) — — — — — — — — 86 6,544 (22,385 ) — — — 346 — — — — — — — — — — — — — (389 ) — 6,544 (6,544 ) (22,386 ) (389 ) — — (11 ) 588 — (22,386 ) (400 ) 588 (24,937 ) (24,937 ) (1,972 ) (26,909 ) — — — 346 5,790 — — (4,536 ) 28,309 6,136 (4,536 ) 28,309 (59,034 ) 10,996 (48,038 ) (26,398 ) (74,436 ) 2,144 1,693,006 $ $ — (90,209 ) $ — (147,291 ) $ 2,144 1,455,592 $ (2,144 ) 637,739 $ — 2,093,331 — $ — $ (299 ) $ (58 ) $ (357 ) $ 1,782 $ — — $ — — $ 299 — $ (75 ) (133 ) $ 224 (133 ) $ 465 (a,b) $ 2,247 1,425 689 2,114 87 1,706,357 (31,474 ) (133,019 ) $ 1,541,951 646,439 $ 2,188,390 $ $ $ Common Shares 87,050 408 (1,219 ) — — — 26 — — — — 86,265 — — — 87,050 408 (1,219 ) — — — 26 — — — — — (1 ) — — — — — — — — 6,544 (22,385 ) — — — 346 — — — — — — — — — — — — — (389 ) — 6,544 (6,544 ) (22,386 ) (389 ) — — (11 ) 588 — (22,386 ) (400 ) 588 (24,937 ) (24,937 ) (1,972 ) (26,909 ) — — — 346 5,790 — — (4,536 ) 28,309 6,136 (4,536 ) 28,309 (58,735 ) 10,921 (47,814 ) (25,933 ) (73,747 ) 2,144 — — 2,144 (2,144 ) — 86,265 $ 86 $ 1,693,006 $ (90,209 ) $ (147,424 ) $ 1,455,459 $ 639,986 $ 2,095,445 138 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: Six Months Ended June 30, 2020 As Reported Adjustments As Restated $ 4,867 183 $ 5,050 Depreciation and amortization Straight-line rents Non-cash lease expense Net unrealized holding gains on investments Distributions of operating income from unconsolidated affiliates Equity in (earnings) losses of unconsolidated affiliates Stock compensation expense Amortization of financing costs Impairment charges Gain on disposition of properties Credit loss reserves Allowance for credit loss Adjustments to straight-line rent reserves Other, net Changes in assets and liabilities: Other liabilities Lease liability - operating leases Prepaid expenses and other assets Rents receivable Accounts payable and accrued expenses Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of real estate Development, construction and property improvement costs Proceeds from the disposition of properties, net Investments in and advances to unconsolidated affiliates and other Return of capital from unconsolidated affiliates and other Issuance of notes receivable Return of deposits for properties under contract Payment of deferred leasing costs Change in control of previously unconsolidated affiliate Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes Principal payments on unsecured debt Proceeds received on mortgage and other notes Proceeds from unsecured debt Payments of finance lease obligations Proceeds from the sale (repurchase) of Common Shares Capital contributions from noncontrolling interests Distributions to noncontrolling interests Dividends paid to Common Shareholders Deferred financing and other costs Net cash provided by financing activities Increase in cash and restricted cash Cash of $14,149 and restricted cash of $13,880 beginning of period Cash of $32,534 and restricted cash of $13,465 end of period $ 67,170 — — (64,937 ) 2,206 (469 ) 6,136 2,920 51,549 (485 ) 16,175 — — (2,780 ) (6,684 ) — (4,213 ) (25,177 ) 12,222 58,500 (21,208 ) (20,533 ) 13,925 (3,270 ) 7,151 (59,000 ) 187 (4,885 ) 950 (86,683 ) (14,360 ) (69,930 ) 3,340 181,700 (833 ) (22,386 ) 28,309 (8,178 ) (50,182 ) (960 ) 46,520 18,337 30,010 48,347 $ (1,145 ) (a,b) (2,807 ) (a,c) 1,368 (c) — — 762 (a) — (71 ) (a,b) — — (16,175 ) (c) 9,620 (a,c) 6,404 (a,c) 3 (a) 175 (a) (807 ) (c) (343 ) (a) 3,943 (a,c) (2,375 ) (a) (1,265 ) — 1,555 (a,c) — (1,289 ) (a) — — — 1,631 (a) — 1,897 — — (1,000 ) (a) — — — — — — — (1,000 ) (368 ) (1,981 ) (2,349 ) $ 66,025 (2,807 ) 1,368 (64,937 ) 2,206 293 6,136 2,849 51,549 (485 ) — 9,620 6,404 (2,777 ) (6,509 ) (807 ) (4,556 ) (21,234 ) 9,847 57,235 (21,208 ) (18,978 ) 13,925 (4,559 ) 7,151 (59,000 ) 187 (3,254 ) 950 (84,786 ) (14,360 ) (69,930 ) 2,340 181,700 (833 ) (22,386 ) 28,309 (8,178 ) (50,182 ) (960 ) 45,520 17,969 28,029 45,998 139 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts, unaudited) ASSETS Investments in real estate, at cost Operating real estate, net Real estate under development Net investments in real estate Notes receivable, net Investments in and advances to unconsolidated affiliates Other assets, net Right-of-use assets - operating leases, net Cash and cash equivalents Restricted cash Rents receivable, net Total assets LIABILITIES Mortgage and other notes payable, net Unsecured notes payable, net Unsecured line of credit Accounts payable and other liabilities Lease liability - operating leases, net Dividends and distributions payable Distributions in excess of income from, and investments in, unconsolidated affiliates Total liabilities Commitments and contingencies EQUITY Acadia Shareholders' Equity As Reported September 30, 2020 Adjustments As Restated $ $ $ 3,347,431 $ 268,298 3,615,729 134,798 240,414 183,170 — 16,108 13,673 47,516 4,251,408 $ $ (69,825 ) (a) (55 ) (a) (69,880 ) — 15,248 (a) (3,466 ) (a) — (763 ) (a) (389 ) (a) (322 ) (a) (59,572 ) $ 1,159,688 $ 502,500 127,400 394,111 — 147 (59,560 ) (a,b) $ — — (2,519 ) (a) — — 15,462 2,199,308 — (62,079 ) 3,277,606 268,243 3,545,849 134,798 255,662 179,704 — 15,345 13,284 47,194 4,191,836 1,100,128 502,500 127,400 391,592 — 147 15,462 2,137,229 Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,266,122 shares Additional paid-in capital Accumulated other comprehensive loss Distributions in excess of accumulated earnings Total Acadia shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity $ 86 1,695,338 (85,873 ) (156,321 ) 1,453,230 598,870 2,052,100 4,251,408 $ — — — (138 ) (138 ) 2,645 (a) 2,507 (59,572 ) $ 86 1,695,338 (85,873 ) (156,459 ) 1,453,092 601,515 2,054,607 4,191,836 140 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts, unaudited) Revenues Rental income Other Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating loss Equity in losses of unconsolidated affiliates Interest and other income Realized and unrealized holding gains on investments and other Interest expense Loss from continuing operations before income taxes Income tax (provision) benefit Net loss Net loss attributable to noncontrolling interests Net (loss) income attributable to Acadia Net income attributable to participating securities Shares for basic (loss) and diluted income per share Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 As Reported Adjustments As Restated As Reported Adjustments As Restated $ 50,300 $ 981 51,281 $ (890 ) (a) — (890 ) 34,457 8,625 10,689 11,559 — 65,330 (697 ) (a) (210 ) (a) (261 ) (a) (210 ) (a) — (1,378 ) 49,410 981 50,391 33,760 8,415 10,428 11,349 — 63,952 $ 183,396 $ 3,078 186,474 (3,432 ) (a,b) $ 179,964 3,066 183,030 (3,444 ) (12 ) (a) 101,627 26,415 31,833 41,685 51,549 253,109 (1,842 ) (a,b) (257 ) (a) (765 ) (a) (738 ) (a) — (3,602 ) 99,785 26,158 31,068 40,947 51,549 249,507 24 (14,025 ) — 488 24 (13,537 ) 509 (66,126 ) — 158 (624 ) 2,132 (612 ) (a) — (1,236 ) 2,132 (155 ) 7,156 (1,374 ) (a) — 509 (65,968 ) (1,529 ) 7,156 (7,946 ) (17,752 ) (38,215 ) (74 ) (38,289 ) — 570 (a,b) (7,946 ) (17,182 ) 79,335 (54,373 ) — 1,843 (a,b) 79,335 (52,530 ) 446 — (a) 446 (37,769 ) (74 ) (37,843 ) (34,163 ) 741 (33,422 ) 627 2 (a) 629 (33,536 ) 743 (32,793 ) 29,259 (451 ) (a) 28,808 35,388 (709 ) (a,b) 34,679 $ (9,030 ) $ (5 ) $ (9,035 ) $ 1,966 $ (80 ) $ 1,886 $ — $ — $ — $ 233 $ — $ 233 86,309 — 86,309 86,486 — 86,486 Basic (loss) diluted income per share $ (0.10 ) $ — $ (0.10 ) $ 0.02 $ — $ 0.02 141 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) Net loss Other comprehensive income (loss) Unrealized gain (loss) on valuation of swap agreements Reclassification of realized interest on swap agreements Other comprehensive income (loss) Comprehensive loss Comprehensive loss attributable to noncontrolling interests Comprehensive loss attributable to Acadia Three Months September 30, 2020 As As Restated Reported Adjustments Nine Months Ended September 30, 2020 As Reported Adjustments As Restated $ (38,289 ) $ 446 $ (37,843 ) $ (33,422 ) $ 629 $ (32,793 ) 952 (3 ) (a) 949 (82,444 ) 548 (a,b) (81,896 ) 5,506 6,458 (31,831 ) (50 ) (a) (53 ) 393 5,456 6,405 (31,438 ) 9,598 (72,846 ) (106,268 ) (95 ) (a) 453 1,082 9,503 (72,393 ) (105,186 ) 27,137 (4,694 ) $ $ (398 ) (5 ) $ 26,739 (4,699 ) 53,536 (52,732 ) $ $ (863 ) 219 52,673 (52,513 ) $ 142 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Three Months Ended September 30, 2020 (in thousands, except per share amounts, unaudited) Balance at July 1, 2020 Dividends/distributions declared ($0.00 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income (loss) Reallocation of noncontrolling interests Balance at September 30, 2020 Adjustments Balance at July 1, 2020 Comprehensive income (loss) Total Adjustments As Restated Balance at July 1, 2020 - As Restated Dividends/distributions declared ($0.00 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income (loss) Reallocation of noncontrolling interests Balance at September 30, 2020 Share Amount 86 $ Additional Paid-in Capital $ 1,693,006 Accumulated Other Comprehensive Income (Loss) (90,209 ) $ Distributions in Excess of Accumulated Earnings $ (147,291 ) Total Common Shareholders’ Equity 1,455,592 $ $ Noncontrolling Interests Total Equity 637,739 $ 2,093,331 — — — — — — — 232 — — — — — — — — — — — — 232 — — (123 ) 2,181 (123 ) 2,413 (20,117 ) (20,117 ) 8,427 8,427 4,336 (9,030 ) (4,694 ) (27,137 ) (31,831 ) 2,100 — — 2,100 (2,100 ) — Common Shares 86,265 — 1 — — — — 86,266 — — — $ $ $ 86 $ 1,695,338 $ (85,873 ) $ (156,321 ) $ 1,453,230 $ 598,870 — $ — $ — $ (133 ) $ (133 ) $ 2,247 $ $ — — $ — — $ — — $ (5 ) (138 ) $ (5 ) (138 ) $ 398 (a,b) $ 2,645 2,052,100 2,114 393 2,507 86,265 $ 86 $ 1,693,006 $ (90,209 ) $ (147,424 ) $ 1,455,459 $ 639,986 $ 2,095,445 — 1 — — — — 86,266 $ — — — — — — 86 — 232 — — — — — — — — — — — — 232 — — (123 ) 2,181 (123 ) 2,413 (20,117 ) (20,117 ) 8,427 8,427 4,336 (9,035 ) (4,699 ) (26,739 ) (31,438 ) 2,100 1,695,338 $ $ — (85,873 ) $ — (156,459 ) $ 2,100 $ 1,453,092 (2,100 ) 601,515 $ — 2,054,607 143 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Nine Months Ended September 30, 2020 (in thousands, except per share amounts) Balance at January 1, 2020 Cumulative effect of change in accounting principle Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Issuance of Common Shares Acquisition of noncontrolling interest Dividends/distributions declared ($0.29 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income (loss) Reallocation of noncontrolling interests Balance at September 30, 2020 Adjustments Balance at January 1, 2020 Comprehensive income (loss) Total Adjustments As Restated Balance at January 1, 2020 - As Restated Cumulative effect of change in accounting principle Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Acquisition of noncontrolling interest Dividends/distributions declared ($0.29 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income (loss) Reallocation of noncontrolling interests Balance at September 30, 2020 - As Restated Share Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Total Common Shareholders’ Equity Noncontrolling Interests Total Equity $ 87 $ 1,706,357 $ (31,175 ) $ (132,961 ) $ 1,542,308 $ 644,657 $ 2,186,965 Common Shares 87,050 — — — — (389 ) (389 ) (11 ) (400 ) 408 (1,219 ) — — — 27 — — — — — — — 86,266 87,050 — (1 ) — — — — — — — — 6,544 (22,385 ) — — — 578 — — — — — — — — — — — — — — — 6,544 (6,544 ) (22,386 ) — — — — 588 — (22,386 ) — 588 (24,937 ) (24,937 ) (2,095 ) (27,032 ) — — — 578 7,973 — — (24,654 ) 36,736 8,551 (24,654 ) 36,736 (54,698 ) 1,966 (52,732 ) (53,536 ) (106,268 ) 4,244 — — 4,244 (4,244 ) - 86 $ 1,695,338 $ (85,873 ) $ (156,321 ) $ 1,453,230 $ 598,870 $ 2,052,100 — $ — $ (299 ) $ (58 ) $ (357 ) $ 1,782 $ — — $ — — $ 299 — $ (80 ) (138 ) $ 219 (138 ) $ 863 (a,b) $ 2,645 1,425 1,082 2,507 87 $ 1,706,357 $ (31,474 ) $ (133,019 ) $ 1,541,951 $ 646,439 $ 2,188,390 $ $ $ $ — — — — (389 ) (389 ) (11 ) (400 ) 408 (1,219 ) — — 27 — — — — — (1 ) — — — — — — — 6,544 (22,385 ) — — 578 — — — — — — — — — — — — — 6,544 (6,544 ) (22,386 ) — — 588 — (22,386 ) 588 (24,937 ) (24,937 ) (2,095 ) (27,032 ) — — — 578 7,973 — — (24,654 ) 36,736 8,551 (24,654 ) 36,736 (54,399 ) 1,886 (52,513 ) (52,673 ) (105,186 ) 4,244 — — 4,244 (4,244 ) — 86,266 $ 86 $ 1,695,338 $ (85,873 ) $ (156,459 ) $ 1,453,092 $ 601,515 $ 2,054,607 144 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net loss Adjustments to reconcile net loss to net cash provided by operating activities: Nine Months Ended September 30, 2020 As Reported Adjustments As Restated $ (33,422 ) 629 $ (32,793 ) Depreciation and amortization Straight-line rents Non-cash lease expense Net unrealized holding gains on investments Distributions of operating income from unconsolidated affiliates Equity in (earnings) losses of unconsolidated affiliates Stock compensation expense Amortization of financing costs Impairment charges Gain on disposition of properties Credit loss and straight-line rent reserves Allowance for credit loss Adjustments to straight-line rent reserves Other, net Changes in assets and liabilities: Other liabilities Lease liability - operating leases Prepaid expenses and other assets Rents receivable Accounts payable and accrued expenses Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of real estate Development, construction and property improvement costs Proceeds from the disposition of properties, net Investments in and advances to unconsolidated affiliates and other Return of capital from unconsolidated affiliates and other Issuance of notes receivable Return of deposits for properties under contract Payment of deferred leasing costs Change in control of previously unconsolidated affiliate Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes Principal payments on unsecured debt Proceeds received on mortgage and other notes Proceeds from unsecured debt Payments of finance lease obligations Proceeds from the sale (repurchase) of Common Shares Capital contributions from noncontrolling interests Distributions to noncontrolling interests Dividends paid to Common Shareholders Deferred financing and other costs Net cash provided by financing activities (Decrease) increase in cash and restricted cash Cash of $14,149 and restricted cash of $13,880 beginning of period Cash of $15,345 and restricted cash of $13,284 end of period $ 101,627 — — (57,031 ) 2,829 155 8,551 4,040 51,549 (509 ) 39,882 — — (2,923 ) (7,736 ) — (1,435 ) (31,511 ) 7,015 81,081 (21,208 ) (27,949 ) 14,182 (3,662 ) 9,054 (59,000 ) 187 (5,422 ) 950 (92,868 ) (18,981 ) (123,750 ) 5,523 215,554 (903 ) (22,386 ) 36,736 (28,418 ) (50,182 ) (1,635 ) 11,558 (229 ) 30,010 29,781 $ (1,842 ) (a,b) (3,861 ) (a,c) 2,382 (c) — — 1,374 (a) — (99 ) (a,b) — — (39,882 ) (c) 20,381 (a,c) 19,483 (a,c) (306 ) (a,c) 153 (a) (957 ) (c) (164 ) (a) 4,735 (a,c) 53 (a) 2,079 — 1,064 (a,c) — (2,023 ) (a) — — — 1,620 (a) — 661 — — (1,910 ) (a) — — — — — — — (1,910 ) 830 (1,981 ) (1,151 ) $ 99,785 (3,861 ) 2,382 (57,031 ) 2,829 1,529 8,551 3,941 51,549 (509 ) — 20,381 19,483 (3,229 ) (7,583 ) (957 ) (1,599 ) (26,776 ) 7,068 83,160 (21,208 ) (26,885 ) 14,182 (5,685 ) 9,054 (59,000 ) 187 (3,802 ) 950 (92,207 ) (18,981 ) (123,750 ) 3,613 215,554 (903 ) (22,386 ) 36,736 (28,418 ) (50,182 ) (1,635 ) 9,648 601 28,029 28,630 145 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts, unaudited) Revenues Rental income Other $ Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating loss Equity in losses of unconsolidated affiliates Interest and other income Realized and unrealized holding gains on investments and other Interest expense Loss from continuing operations before income taxes Income tax provision Net (loss) income Net loss attributable to noncontrolling interests Net loss attributable to Acadia Net income attributable to participating securities Shares for basic loss per share Basic loss per share $ $ $ Three Months Ended December 31, 2020 As Reported Adjustments As Restated 67,606 $ 1,404 69,010 48,166 9,640 11,672 14,910 34,049 118,437 174 (49,253 ) (1,082 ) 1,823 34,595 (17,687 ) (31,604 ) (1,012 ) (32,616 ) 21,891 (10,725 ) $ — $ 86,311 $ (1,138 ) (a) 6 (a) (1,132 ) (722 ) (a) — (263 ) (a) (306 ) (a) — (1,291 ) — 159 (446 ) (a) — (568 ) (b) 546 (a,b) (309 ) — (309 ) 172 (a,b) (137 ) — — $ $ 66,468 1,410 67,878 47,444 9,640 11,409 14,604 34,049 117,146 174 (49,094 ) (1,528 ) 1,823 34,027 (17,141 ) (31,913 ) (1,012 ) (32,925 ) 22,063 (10,862 ) — 86,311 (0.12 ) $ (0.01 ) $ (0.13 ) 146 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts, unaudited) ASSETS Investments in real estate, at cost Operating real estate, net Real estate under development Net investments in real estate Notes receivable, net Investments in and advances to unconsolidated affiliates Other assets, net Right-of-use assets - operating leases, net Cash and cash equivalents Restricted cash Rents receivable, net Assets of properties held for sale Total assets LIABILITIES Mortgage and other notes payable, net Unsecured notes payable, net Unsecured line of credit Accounts payable and other liabilities Lease liability - operating leases, net Dividends and distributions payable Distributions in excess of income from, and investments in, unconsolidated affiliates Total liabilities Commitments and contingencies EQUITY Acadia Shareholders' Equity As Reported Adjustments As Restated March 31, 2021 $ $ $ 3,238,031 $ 234,338 3,472,369 101,410 256,332 162,596 74,803 15,424 15,723 46,356 8,669 4,153,682 $ (70,111 ) (a) — (a) (70,111 ) (1,950 ) (b) 22,028 (a) (3,774 ) (a) — (1,339 ) (a) (3,620 ) (a) (1,159 ) (a) — (59,925 ) $ $ 1,188,695 $ 420,960 105,400 237,058 87,910 14,018 (59,003 ) (a,b) $ — — (2,361 ) (a) — — 15,272 2,069,313 — (61,364 ) 3,167,920 234,338 3,402,258 99,460 278,360 158,822 74,803 14,085 12,103 45,197 8,669 4,093,757 1,129,692 420,960 105,400 234,697 87,910 14,018 15,272 2,007,949 Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,302,352 shares Additional paid-in capital Accumulated other comprehensive loss Distributions in excess of accumulated earnings Total Acadia shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity $ 86 1,683,552 (41,962 ) (174,829 ) 1,466,847 617,522 2,084,369 4,153,682 $ — — — (620 ) (b) (620 ) 2,059 (a,b) 1,439 (59,925 ) $ 86 1,683,552 (41,962 ) (175,449 ) 1,466,227 619,581 2,085,808 4,093,757 147 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts, unaudited) Revenues Rental income Other $ Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating income Equity in earnings of unconsolidated affiliates Interest and other income Realized and unrealized holding gains on investments and other Interest expense Income from continuing operations before income taxes Income tax provision Net income Net loss attributable to noncontrolling interests Net income attributable to Acadia Net income attributable to participating securities Shares for basic and diluted income per share Basic and diluted income per share $ $ $ Three Months Ended March 31, 2021 As Reported Adjustments As Restated 67,205 $ 2,189 69,394 31,390 8,996 11,462 13,477 — 65,325 4,612 8,681 2,263 1,700 6,507 (17,141 ) 2,010 (150 ) 1,860 3,302 5,162 $ 156 $ 86,346 $ (1,207 ) (a) — (1,207 ) (750 ) (a) (4 ) (a) (256 ) (a) (268 ) (a) — (1,278 ) — 71 (381 ) (a) — (1,382 ) (b) 527 (a,b) (1,165 ) 2 (a) (1,163 ) 818 (a,b) (345 ) — — $ $ 65,998 2,189 68,187 30,640 8,992 11,206 13,209 — 64,047 4,612 8,752 1,882 1,700 5,125 (16,614 ) 845 (148 ) 697 4,120 4,817 156 86,346 0.06 $ (0.01 ) $ 0.05 148 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) Net income Other comprehensive income Three Months Ended March 31, 2021 As Reported Adjustments As Restated $ 1,860 $ (1,163 ) $ 697 Unrealized gain on valuation of swap agreements Reclassification of realized interest on swap agreements Other comprehensive income Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive Income attributable to Acadia $ 33,556 5,317 38,873 40,733 (2,642 ) 38,091 $ — (a) (49 ) (a) (49 ) (1,212 ) 867 (345 ) $ 33,556 5,268 38,824 39,521 (1,775 ) 37,746 149 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Three Months Ended March 31, 2021 (in thousands, except per share amounts, unaudited) Balance at January 1, 2021 Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Dividends/distributions declared ($0.15 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income Reallocation of noncontrolling interests Balance at March 31, 2021 Adjustments Balance at January 1, 2021 Noncontrolling interest distributions Comprehensive income Total Adjustments As Restated Balance at January 1, 2021 - As Restated Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Dividends/distributions declared ($0.15 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income Reallocation of noncontrolling interests Balance at March 31, 2021 - As Restated Share Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Total Common Shareholders’ Equity Noncontrolling Interests Total Equity Common Shares 86,269 $ 86 $ 1,683,165 $ (74,891 ) $ (167,046 ) $ 1,441,314 $ 607,239 $ 2,048,553 19 — 14 — — — — 86,302 $ — — — — — — — 86 294 — 462 — — — — — — — — 32,929 — 294 (294 ) — (12,945 ) (12,945 ) (1,048 ) (13,993 ) — — — 5,162 462 4,049 — (6,676 ) — 38,091 11,241 2,642 4,511 (6,676 ) 11,241 40,733 (369 ) 1,683,552 $ $ — (41,962 ) $ — (174,829 ) $ (369 ) 1,466,847 $ 369 617,522 $ — 2,084,369 — $ — $ — $ — $ (275 ) $ (275 ) $ 1,926 $ 1,651 — — — $ — — — $ — — — $ — — — $ — (345 ) (620 ) $ — (345 ) (620 ) $ 1,000 (a) (867 ) (a,b) $ 2,059 1,000 (1,212 ) 1,439 86,269 $ 86 $ 1,683,165 $ (74,891 ) $ (167,321 ) $ 1,441,039 $ 609,165 $ 2,050,204 19 — 14 — — — — — — — — — — — 294 — 462 — — — (369 ) — — — — — 32,929 — — 294 (294 ) — (12,945 ) (12,945 ) (1,048 ) (13,993 ) — — — 4,817 — 462 4,049 — (5,676 ) — 37,746 11,241 1,775 (369 ) 369 4,511 (5,676 ) 11,241 39,521 — 86,302 $ 86 $ 1,683,552 $ (41,962 ) $ (175,449 ) $ 1,466,227 $ 619,581 $ 2,085,808 150 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: Three Months Ended March 31, 2021 As Reported Adjustments As Restated $ 1,860 (1,163 ) $ 697 Depreciation and amortization Straight-line rents Non-cash lease expense Net unrealized holding gains on investments Distributions of operating income from unconsolidated affiliates Equity in (earnings) losses of unconsolidated affiliates Stock compensation expense Amortization of financing costs Gain on disposition of properties Allowance for credit loss Adjustments to straight-line rent reserves Other, net Changes in assets and liabilities: Other liabilities Lease liability - operating leases Prepaid expenses and other assets Rents receivable Accounts payable and accrued expenses Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Development, construction and property improvement costs Proceeds from the disposition of properties, net Investments in and advances to unconsolidated affiliates and other Return of capital from unconsolidated affiliates and other Payment of deferred leasing costs Net cash provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes Principal payments on unsecured debt Proceeds received on mortgage and other notes Proceeds from unsecured debt Capital contributions from noncontrolling interests Distributions to noncontrolling interests Deferred financing and other costs Net cash used in financing activities Decrease in cash and restricted cash Cash of $18,699 and restricted cash of $11,096 beginning of period Cash of $14,085 and restricted cash of $12,103 end of period 31,390 (1,128 ) 1,041 (6,135 ) 390 (2,263 ) 4,511 1,269 (4,612 ) 3,065 817 (2,312 ) 3,847 (494 ) 1,859 (2,408 ) 237 30,934 (5,425 ) 15,703 (1,725 ) 4,377 (1,438 ) 11,492 (20,406 ) (33,250 ) 3,809 536 11,241 (6,800 ) (333 ) (45,203 ) (2,777 ) 33,924 31,147 $ (750 ) (a) 36 (a) — — — 381 (a) — (18 ) (a,b) — (123 ) (a) 79 (a) 1,386 (a,b) (48 ) (a) — (105 ) (a) 90 (a) 275 (a) 40 46 (a) — (336 ) (a) 1,000 (a) 410 (a) 1,120 — — (2,990 ) (a) — — 1,000 (a) — (1,990 ) (830 ) (4,129 ) (4,959 ) $ 30,640 (1,092 ) 1,041 (6,135 ) 390 (1,882 ) 4,511 1,251 (4,612 ) 2,942 896 (926 ) 3,799 (494 ) 1,754 (2,318 ) 512 30,974 (5,379 ) 15,703 (2,061 ) 5,377 (1,028 ) 12,612 (20,406 ) (33,250 ) 819 536 11,241 (5,800 ) (333 ) (47,193 ) (3,607 ) 29,795 26,188 $ 151 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts, unaudited) ASSETS Investments in real estate, at cost Operating real estate, net Real estate under development Net investments in real estate Notes receivable, net Investments in and advances to unconsolidated affiliates Other assets, net Right-of-use assets - operating leases, net Cash and cash equivalents Restricted cash Rents receivable, net Total assets LIABILITIES Mortgage and other notes payable, net Unsecured notes payable, net Unsecured line of credit Accounts payable and other liabilities Lease liability - operating leases, net Dividends and distributions payable Distributions in excess of income from, and investments in, unconsolidated affiliates Total liabilities Commitments and contingencies EQUITY Acadia Shareholders' Equity As Reported June 30, 2021 Adjustments As Restated $ $ $ 3,201,172 $ 217,620 3,418,792 117,280 258,063 159,592 42,398 34,645 15,094 43,748 4,089,612 $ $ (69,819 ) (a) — (a) (69,819 ) (2,819 ) (b) 22,177 (a) (3,798 ) (a) — (1,566 ) (a) (3,432 ) (a) (1,062 ) (a) (60,319 ) $ 1,162,617 $ 440,088 61,405 239,056 40,861 14,339 (59,021 ) (a,b) $ — — (1,910 ) (a) — — 14,896 1,973,262 — (60,931 ) 3,131,353 217,620 3,348,973 114,461 280,240 155,794 42,398 33,079 11,662 42,686 4,029,293 1,103,596 440,088 61,405 237,146 40,861 14,339 14,896 1,912,331 Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 88,419,303 shares Additional paid-in capital Accumulated other comprehensive loss Distributions in excess of accumulated earnings Total Acadia shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity $ 88 1,730,686 (47,909 ) (184,174 ) 1,498,691 617,659 2,116,350 4,089,612 $ — — — (827 ) (b) (827 ) 1,439 (a,b) 612 (60,319 ) $ 88 1,730,686 (47,909 ) (185,001 ) 1,497,864 619,098 2,116,962 4,029,293 152 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended June 30, 2021 As As Restated Reported Adjustments Six Months Ended June 30, 2021 As Reported Adjustments As Restated $ 73,666 $ 994 74,660 $ (1,597 ) (a) (6 ) (a) (1,603 ) 31,345 10,671 12,504 12,890 — 67,410 5,909 13,159 1,106 2,054 (805 ) (a) (18 ) (a) (290 ) (a) (254 ) (a) — (1,367 ) — (236 ) (207 ) (a) — 72,069 988 73,057 30,540 10,653 12,214 12,636 — 66,043 5,909 12,923 899 2,054 $ 140,871 $ 3,183 144,054 (2,804 ) (a) (6 ) (a) (2,810 ) $ 138,067 3,177 141,244 62,735 19,667 23,966 26,367 — 132,735 10,521 21,840 3,369 3,754 (1,555 ) (a) (22 ) (a) (546 ) (a) (522 ) (a) — (2,645 ) — (165 ) (588 ) (a) — 61,180 19,645 23,420 25,845 — 130,090 10,521 21,675 2,781 3,754 2,711 (17,605 ) (869 ) (b) 531 (a,b) 1,842 (17,074 ) 9,218 (34,746 ) (2,251 ) (b) 1,058 (a,b) 6,967 (33,688 ) 1,425 (194 ) 1,231 (781 ) 2 (a) (779 ) 644 (192 ) 452 3,435 (344 ) 3,091 (1,946 ) 4 (a) (1,942 ) 1,489 (340 ) 1,149 2,687 3,918 $ 572 (a,b) (207 ) $ 3,259 3,711 156 $ — $ 156 $ $ 5,989 9,080 $ 1,390 (a,b) (552 ) $ 7,379 8,528 312 $ — $ 312 86,824 — 86,824 86,575 — 86,575 (in thousands except per share amounts, unaudited) Revenues Rental income Other Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating income Equity in earnings of unconsolidated affiliates Interest and other income Realized and unrealized holding gains on investments and other Interest expense Income from continuing operations before income taxes Income tax provision Net income Net loss attributable to noncontrolling interests Net income attributable to Acadia Net income attributable to participating securities Shares for basic and diluted income per share $ $ Basic and diluted income per share $ 0.04 $ — $ 0.04 $ 0.10 $ (0.01 ) $ 0.09 153 (in thousands, unaudited) Net income Other comprehensive (loss) income Unrealized (loss) gain on valuation of swap agreements Reclassification of realized interest on swap agreements Other comprehensive (loss) income Comprehensive (loss) income Comprehensive loss attributable to noncontrolling interests Comprehensive (loss) income attributable to Acadia $ ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended June 30, 2021 As As Restated Reported Adjustments Six Months Ended June 30, 2021 As As Restated Reported Adjustments $ 1,231 $ (779 ) $ 452 $ 3,091 $ (1,942 ) $ 1,149 (10,073 ) 4 (a) (10,069 ) 23,483 4 (a) 23,487 5,324 (4,749 ) (3,518 ) (52 ) (a) (48 ) (827 ) 5,272 (4,797 ) (4,345 ) 10,641 34,124 37,215 (101 ) (a) (97 ) (2,039 ) 10,540 34,027 35,176 1,489 620 2,109 (1,153 ) 1,487 334 (2,029 ) $ (207 ) $ (2,236 ) $ 36,062 $ (552 ) $ 35,510 154 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Three Months Ended June 30, 2021 Additional Paid-in Capital 1,683,552 Accumulated Other Comprehensive Income (Loss) (41,962 ) Distributions in Excess of Accumulated Earnings (174,829 ) Share Amount 86 Total Common Shareholders’ Equity 1,466,847 Noncontrolling Interests Total Equity 617,522 2,084,369 Common Shares 86,302 7 2,072 — 38 — — — — 88,419 — — — $ $ $ (in thousands, except per share amounts, unaudited) Balance at April 1, 2021 Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Repurchase of Common Shares Dividends/distributions declared ($0.15 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Reallocation of noncontrolling interests Balance at June 30, 2021 Adjustments Balance at April 1, 2021 Comprehensive loss Total Adjustments As Restated Balance at April 1, 2021 - As Restated Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Issuance of Common Shares Dividends/distributions declared ($0.15 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive loss Reallocation of noncontrolling interests Balance at June 30, 2021 - As Restated — 2 — — — — — — 88 — — — 115 45,675 — 225 — — — 1,119 1,730,686 — — — $ $ $ $ $ $ — — — — — — (5,947 ) — (47,909 ) — — — — — 115 45,677 (115 ) — — 45,677 (13,263 ) (13,263 ) (1,052 ) (14,315 ) — — — 3,918 225 2,399 — (4,355 ) — (2,029 ) 5,868 (1,489 ) 2,624 (4,355 ) 5,868 (3,518 ) — (184,174 ) (620 ) (207 ) (827 ) $ $ $ $ $ $ 1,119 1,498,691 $ (1,119 ) 617,659 $ — 2,116,350 (620 ) $ (207 ) (827 ) $ 2,059 $ (620 ) (a,b) $ 1,439 1,439 (827 ) 612 86,302 $ 86 $ 1,683,552 $ (41,962 ) $ (175,449 ) $ 1,466,227 $ 619,581 $ 2,085,808 7 2,072 — 38 — — — — — 2 — — — — — — 115 45,675 — 225 — — — — — — — — — (5,947 ) — — 115 45,677 (115 ) — — 45,677 (13,263 ) (13,263 ) (1,052 ) (14,315 ) — — — 3,711 225 2,399 — (4,355 ) — (2,236 ) 5,868 (2,109 ) 2,624 (4,355 ) 5,868 (4,345 ) — 1,119 — — 1,119 (1,119 ) 88,419 $ 88 $ 1,730,686 $ (47,909 ) $ (185,001 ) $ 1,497,864 $ 619,098 $ 2,116,962 155 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Six Months Ended June 30, 2021 Share Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Total Common Shareholders’ Equity Noncontrolling Interests Total Equity Common Shares 86,269 $ 86 $ 1,683,165 $ (74,891 ) $ (167,046 ) $ 1,441,314 $ 607,239 $ 2,048,553 — — 409 45,677 (409 ) — — 45,677 (26,208 ) (26,208 ) (2,100 ) (28,308 ) — — — 687 6,448 — — (11,031 ) 17,109 26,982 9,080 36,062 1,153 750 1,730,686 $ $ — (47,909 ) $ — (184,174 ) $ 750 1,498,691 $ (750 ) 617,659 $ — 2,116,350 — $ — $ — $ — $ (275 ) $ (275 ) $ 1,926 $ — — — $ — — — $ — — — — — 1,000 (a) $ (552 ) (827 ) $ (552 ) (827 ) $ (1,487 ) (a,b) $ 1,439 86 $ 1,683,165 $ (74,891 ) $ (167,321 ) $ 1,441,039 $ 609,165 $ 2,050,204 (in thousands, except per share amounts, unaudited) Balance at January 1, 2021 Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Issuance of Common Shares Dividends/distributions declared ($0.30 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive (loss) income Reallocation of noncontrolling interests Balance at June 30, 2021 Adjustments Balance at January 1, 2021 Noncontrolling interest distributions Comprehensive (loss) income Total Adjustments Balance at January 1, 2021 - Restated Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Issuance of Common Shares Dividends/distributions declared ($0.30 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive (loss) income Reallocation of noncontrolling interests Balance at June 31, 2021 - Restated 26 2,072 — 52 — — — — 88,419 $ — 2 — — — — — — 88 409 45,675 — 687 — — — $ $ — — — 86,269 26 2,072 — 52 — — — — — 2 — — — — — — 409 45,675 — 687 — — — 750 — — — — — — — — — — — — — — 409 45,677 (409 ) — — 45,677 (26,208 ) (26,208 ) (2,100 ) (28,308 ) — — — 687 6,448 — — (10,031 ) 17,109 (334 ) (750 ) 26,982 8,528 35,510 — — 750 7,135 (11,031 ) 17,109 37,215 1,651 1,000 (2,039 ) 612 7,135 (10,031 ) 17,109 35,176 — 88,419 $ 88 $ 1,730,686 $ (47,909 ) $ (185,001 ) $ 1,497,864 $ 619,098 $ 2,116,962 156 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: Six Months Ended June 30, 2021 As Reported Adjustments As Restated $ 3,091 (1,942 ) $ 1,149 Depreciation and amortization Straight-line rents Non-cash lease expense Net unrealized holding gains on investments Distributions of operating income from unconsolidated affiliates Equity in (earnings) losses of unconsolidated affiliates Stock compensation expense Amortization of financing costs Gain on disposition of properties Allowance for credit loss Termination of ground lease Adjustments to straight-line rent reserves Other, net Changes in assets and liabilities: Other liabilities Lease liability - operating leases Prepaid expenses and other assets Rents receivable Accounts payable and accrued expenses Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Development, construction and property improvement costs Proceeds from the disposition of properties, net Investments in and advances to unconsolidated affiliates and other Return of capital from unconsolidated affiliates and other Issuance of notes receivable Return of deposits for properties under contract Payment of deferred leasing costs Net cash provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes Principal payments on unsecured debt Proceeds received on mortgage and other notes Proceeds from unsecured debt Proceeds from the sale (repurchase) of Common Shares Capital contributions from noncontrolling interests Distributions to noncontrolling interests Dividends paid to Common Shareholders Deferred financing and other costs Net cash used in financing activities Increase in cash and restricted cash Cash of $18,699 and restricted cash of $11,096 beginning of period Cash of $33,079 and restricted cash of $11,662 end of period 62,735 (2,765 ) 2,066 (8,565 ) 1,387 (3,369 ) 7,135 2,546 (10,521 ) 1,238 (3,615 ) 511 (4,127 ) 3,114 (1,533 ) (487 ) 2,801 (609 ) 51,033 (16,620 ) 63,901 (3,976 ) 7,717 (15,995 ) (1,000 ) (3,080 ) 30,947 (52,408 ) (102,800 ) 8,818 49,295 45,675 17,109 (12,202 ) (12,945 ) (6,707 ) (66,165 ) 15,815 33,924 49,739 $ (1,555 ) (a) 80 (a) — — — 588 (a) — (36 ) (a,b) — (144 ) (a) — 73 (a) 2,258 (a,b) (74 ) (a) — 37 (a) (24 ) (a) 267 (a) (472 ) 880 (a) — (647 ) (a) 1,000 (a) — — 360 (a) 1,593 — — (2,990 ) (a) — — — 1,000 (a) — — (1,990 ) (869 ) (4,129 ) (4,998 ) $ 61,180 (2,685 ) 2,066 (8,565 ) 1,387 (2,781 ) 7,135 2,510 (10,521 ) 1,094 (3,615 ) 584 (1,869 ) 3,040 (1,533 ) (450 ) 2,777 (342 ) 50,561 (15,740 ) 63,901 (4,623 ) 8,717 (15,995 ) (1,000 ) (2,720 ) 32,540 (52,408 ) (102,800 ) 5,828 49,295 45,675 17,109 (11,202 ) (12,945 ) (6,707 ) (68,155 ) 14,946 29,795 44,741 $ 157 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts, unaudited) ASSETS Investments in real estate, at cost Operating real estate, net Real estate under development Net investments in real estate Notes receivable, net Investments in and advances to unconsolidated affiliates Other assets, net Right-of-use assets - operating leases, net Cash and cash equivalents Restricted cash Rents receivable, net Total assets LIABILITIES Mortgage and other notes payable, net Unsecured notes payable, net Unsecured line of credit Accounts payable and other liabilities Lease liability - operating leases, net Dividends and distributions payable Distributions in excess of income from, and investments in, unconsolidated affiliates Total liabilities Commitments and contingencies EQUITY Acadia Shareholders' Equity As Reported September 30, 2021 Adjustments As Restated $ $ $ 3,268,573 $ 219,037 3,487,610 158,468 305,668 174,750 41,577 17,359 14,827 44,386 4,244,645 $ $ (69,334 ) (a) — (a) (69,334 ) (3,619 ) (b) 21,828 (a) (3,477 ) (a) — (1,201 ) (a) (3,463 ) (a) (1,094 ) (a) (60,360 ) $ 1,181,028 $ 503,966 102,905 245,697 39,743 14,339 (59,205 ) (a,b) $ 53 (b) — (1,686 ) (a) — — 15,456 2,103,134 — (60,838 ) 3,199,239 219,037 3,418,276 154,849 327,496 171,273 41,577 16,158 11,364 43,292 4,184,285 1,121,823 504,019 102,905 244,011 39,743 14,339 15,456 2,042,296 Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 88,451,668 shares Additional paid-in capital Accumulated other comprehensive loss Distributions in excess of accumulated earnings Total Acadia shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity $ 88 1,733,448 (43,169 ) (185,373 ) 1,504,994 636,517 2,141,511 4,244,645 $ — — — (889 ) (b) (889 ) 1,367 (a,b) 478 (60,360 ) $ 88 1,733,448 (43,169 ) (186,262 ) 1,504,105 637,884 2,141,989 4,184,285 158 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts, unaudited) Revenues Rental income Other Total revenues Operating expenses Depreciation and amortization General and administrative Real estate taxes Property operating Impairment charges Total operating expenses Gain on disposition of properties Operating (loss) gain Equity in earnings of unconsolidated affiliates Interest and other income Realized and unrealized holding gains on investments and other Interest expense Income from continuing operations before income taxes Income tax provision Net income Net income attributable to noncontrolling interests Net income attributable to Acadia Net income attributable to participating securities Shares for basic and diluted income per share Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 As Reported Adjustments As Restated As Reported Adjustments As Restated $ 71,852 $ 1,594 73,446 $ (1,550 ) (a) — (1,550 ) 70,302 1,594 71,896 30,064 9,910 11,028 12,443 9,925 73,370 — (1,474 ) 372 2,354 $ 212,723 $ 4,777 217,500 (4,354 ) (a) (6 ) (a) (4,360 ) $ 208,369 4,771 213,140 93,601 29,645 35,286 39,065 9,925 207,522 10,521 20,499 4,013 6,108 (2,357 ) (a) (90 ) (a) (838 ) (a) (777 ) (a) — (4,062 ) — (298 ) (860 ) (a) — 91,244 29,555 34,448 38,288 9,925 203,460 10,521 20,201 3,153 6,108 (802 ) (a) (68 ) (a) (292 ) (a) (255 ) (a) — (1,417 ) — (133 ) (272 ) (a) — (800 ) (b) 720 (a,b) 46,493 (16,614 ) 56,511 (52,080 ) (3,051 ) (b) 1,778 (a,b) 53,460 (50,302 ) (485 ) — (485 ) 31,131 (59 ) 31,072 35,051 (403 ) 34,648 (2,431 ) 4 (a) (2,427 ) 32,620 (399 ) 32,221 30,866 9,978 11,320 12,698 9,925 74,787 — (1,341 ) 644 2,354 47,293 (17,334 ) 31,616 (59 ) 31,557 (19,488 ) 12,069 $ 423 (a,b) (62 ) $ (19,065 ) 12,007 $ 156 $ — $ 156 (13,499 ) 21,149 $ 1,813 (a,b) (614 ) $ (11,686 ) 20,535 468 $ — $ 468 $ $ 88,481 — 88,481 87,217 — 87,217 Basic and diluted income per share $ 0.13 $ — $ 0.13 $ 0.24 $ (0.01 ) $ 0.23 159 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) Net income Other comprehensive income Unrealized gain on valuation of swap agreements Reclassification of realized interest on swap agreements Other comprehensive income Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive income attributable to Acadia Three Months September 30, 2021 As As Restated Reported Adjustments Nine Months Ended September 30, 2021 As Reported Adjustments As Restated $ 31,557 $ (485 ) $ 31,072 $ 34,648 $ (2,427 ) $ 32,221 1,045 5,528 6,573 38,130 3 (a) 1,048 (52 ) (a) (49 ) (534 ) 5,476 6,524 37,596 24,528 16,169 40,697 75,345 7 (a) 24,535 (153 ) (a) (146 ) (2,573 ) 16,016 40,551 72,772 (21,321 ) 472 (20,849 ) (22,474 ) 1,959 (20,515 ) $ 16,809 $ (62 ) $ 16,747 $ 52,871 $ (614 ) $ 52,257 160 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Three Months Ended September 30, 2021 Common Shares Share Amount 88 $ Additional Paid-in Capital $ 1,730,686 Accumulated Other Comprehensive Income (Loss) (47,909 ) $ Distributions in Excess of Accumulated Earnings $ (184,174 ) Total Common Shareholders’ Equity 1,498,691 $ $ Noncontrolling Interests Total Equity 617,659 $ 2,116,350 88,419 18 — 13 — 2 — — — — (in thousands, except per share amounts, unaudited) Balance at July 1, 2021 Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Cancellation of OP Units Issuance of Common Shares Dividends/distributions declared ($0.15 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income Reallocation of noncontrolling interests Balance at September 30, 2021 Adjustments Balance at July 1, 2021 Noncontrolling interest distributions Comprehensive income Total Adjustments As Restated Balance at July 1, 2021 - As Restated Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Cancellation of OP Units Issuance of Common Shares Dividends/distributions declared ($0.15 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income Reallocation of noncontrolling interests Balance at September 30, 2021 - As Restated 9,518 38,130 — 2,141,511 612 400 (534 ) 478 — — — — — — — — — 288 — 189 — 225 — — — 2,060 — — — — — — — 4,740 — — — — 288 — 189 (288 ) (479 ) — — (479 ) 189 (13,268 ) (13,268 ) (1,046 ) (14,314 ) — — 225 2,419 2,644 — (10,527 ) (10,527 ) — 12,069 — 16,809 9,518 21,321 — 2,060 (2,060 ) 88,452 — — — — $ $ $ 88 $ 1,733,448 $ (43,169 ) $ (185,373 ) $ 1,504,994 $ 636,517 — $ — $ — $ (827 ) $ (827 ) $ 1,439 $ $ — — — $ — — — $ — — — $ — (62 ) (889 ) $ — (62 ) (889 ) $ 400 (a) (472 ) (a,b) $ 1,367 88,419 $ 88 $ 1,730,686 $ (47,909 ) $ (185,001 ) $ 1,497,864 $ 619,098 $ 2,116,962 18 — 13 — 2 — — — — — — — — — — — — — 288 - 189 — 225 — — — 2,060 — — — — — — — 4,740 — — — — 288 — 189 (288 ) (479 ) — — (479 ) 189 (13,268 ) (13,268 ) (1,046 ) (14,314 ) — — 225 2,419 2,644 — (10,127 ) (10,127 ) — 12,007 — 16,747 9,518 20,849 — 2,060 (2,060 ) 9,518 37,596 — 88,452 $ 88 $ 1,733,448 $ (43,169 ) $ (186,262 ) $ 1,504,105 $ 637,884 $ 2,141,989 161 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As Previously Reported Acadia Shareholders Statement of Changes in Shareholders' Equity - Nine Months Ended September 30, 2021 Share Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Total Common Shareholders’ Equity Noncontrolling Interests Total Equity Common Shares 86,269 $ 86 $ 1,683,165 $ (74,891 ) $ (167,046 ) $ 1,441,314 $ 607,239 $ 2,048,553 (in thousands, except per share amounts, unaudited) Balance at January 1, 2021 Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Cancellation of OP Units Issuance of Common Shares Dividends/distributions declared ($0.45 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income Reallocation of noncontrolling interests Balance at September 30, 2021 Adjustments Balance at January 1, 2021 Noncontrolling interest distributions Comprehensive loss Total Adjustments As Restated Balance at January 1, 2021 Restated Conversion of OP Units to Common Shares by limited partners of the Operating Partnership Cancellation of OP Units Issuance of Common Shares Dividends/distributions declared ($0.45 per Common Share/OP Unit) Employee and trustee stock compensation, net Noncontrolling interest distributions Noncontrolling interest contributions Comprehensive income Reallocation of noncontrolling interests Balance at September 30, 2021 - Restated 44 — 2,085 — 54 — — — — — — 2 — — — — — — 44 — 2,085 — 54 — — — — — — 2 — — — — — — 697 — 45,863 — 914 — — — 697 — 45,863 — 914 — — — — — — — — — — — — 697 — 45,865 (697 ) (479 ) — — (479 ) 45,865 (39,476 ) (39,476 ) (3,146 ) (42,622 ) — — 914 8,866 9,780 — (21,558 ) (21,558 ) — 31,722 — 21,149 — 52,871 26,627 22,474 2,809 — — 2,809 (2,809 ) 26,627 75,345 — 88,452 $ 88 $ 1,733,448 $ (43,169 ) $ (185,373 ) $ 1,504,994 $ 636,517 $ 2,141,511 — $ — $ — $ — $ (275 ) $ (275 ) $ 1,926 $ 1,651 — — — $ — — — $ — — — $ — — — $ — (614 ) (889 ) $ — (614 ) (889 ) $ 1,400 (a) (1,959 ) (a,b) $ 1,367 1,400 (2,573 ) 478 86,269 $ 86 $ 1,683,165 $ (74,891 ) $ (167,321 ) $ 1,441,039 $ 609,165 $ 2,050,204 — — — — — — — — — 697 — 45,865 (697 ) (479 ) — — (479 ) 45,865 (39,476 ) (39,476 ) (3,146 ) (42,622 ) — — 914 8,866 9,780 — (20,158 ) (20,158 ) — 31,722 — 20,535 — 52,257 26,627 20,515 2,809 — — 2,809 (2,809 ) 26,627 72,772 — 88,452 $ 88 $ 1,733,448 $ (43,169 ) $ (186,262 ) $ 1,504,105 $ 637,884 $ 2,141,989 162 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: Nine Months Ended September 30, 2021 As Reported Adjustments As Restated $ 34,648 (2,427 ) $ 32,221 Depreciation and amortization Straight-line rents Non-cash lease expense Net unrealized holding gains on investments Distributions of operating income from unconsolidated affiliates Equity in (earnings) losses of unconsolidated affiliates Stock compensation expense Amortization of financing costs Impairment charges Gain on disposition of properties Allowance for credit loss Termination of ground lease Adjustments to straight-line rent reserves Other, net Changes in assets and liabilities: Other liabilities Lease liability - operating leases Prepaid expenses and other assets Rents receivable Accounts payable and accrued expenses Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of real estate Development, construction and property improvement costs Proceeds from the disposition of properties, net Investments in and advances to unconsolidated affiliates and other Return of capital from unconsolidated affiliates and other Issuance of notes receivable Payment of deferred leasing costs Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage and other notes Principal payments on unsecured debt Proceeds received on mortgage and other notes Proceeds from unsecured debt Payments of finance lease obligations Proceeds from the sale (repurchase) of Common Shares Capital contributions from noncontrolling interests Distributions to noncontrolling interests Dividends paid to Common Shareholders Deferred financing and other costs Net cash provided by financing activities Decrease in cash and restricted cash Cash of $18,699 and restricted cash of $11,096 beginning of period Cash of $16,158 and restricted cash of $11,364 end of period 93,601 (4,244 ) 2,887 (55,796 ) 2,004 (4,013 ) 9,780 3,901 9,925 (10,521 ) 973 (3,615 ) 254 (5,319 ) 1,833 (2,653 ) (5,579 ) 4,104 220 72,390 (63,425 ) (27,197 ) 63,901 (6,111 ) 10,671 (57,957 ) (3,509 ) (83,627 ) (69,766 ) (160,387 ) 12,654 211,854 (63 ) 45,865 26,627 (23,781 ) (26,208 ) (7,296 ) 9,499 (1,738 ) 33,924 32,186 $ (2,357 ) (a) 137 (a) — — — 860 (a) — (239 ) (a,b) — — (200 ) (a) — 66 (a) 3,060 (a,b) (85 ) (a) — (102 ) (a) 14 (a) 269 (a) (1,004 ) — 1,262 (a) — (921 ) (a) 1,400 (a) — 318 (a) 2,059 — — (2,990 ) (a) — — — — 1,400 (a) — — (1,590 ) (535 ) (4,129 ) (4,664 ) $ 91,244 (4,107 ) 2,887 (55,796 ) 2,004 (3,153 ) 9,780 3,662 9,925 (10,521 ) 773 (3,615 ) 320 (2,259 ) 1,748 (2,653 ) (5,681 ) 4,118 489 71,386 (63,425 ) (25,935 ) 63,901 (7,032 ) 12,071 (57,957 ) (3,191 ) (81,568 ) (69,766 ) (160,387 ) 9,664 211,854 (63 ) 45,865 26,627 (22,381 ) (26,208 ) (7,296 ) 7,909 (2,273 ) 29,795 27,522 $ 163 ACADIA REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. Subsequent Events Acquisitions On January 12, 2022, the Company acquired a retail property on 121 Spring Street in the Soho section of New York City, for $39.0 million. On January 24, 2022, an affiliate of Fund III acquired the 36.9% non-controlling membership interest an entity that holds a property, which was collateral for a $5.3 million note receivable ($10.0 million including interest) that was in default at December 31, 2021 (Note 4), through a UCC foreclosure auction thereby obtaining 100% of the entity’s equity. On February 18, 2022, the Company, through an acquisition subsidiary, acquired a 49.99% membership interest in a limited liability company (the "Venture") for $5.0 million. The Venture indirectly owns 11 retail storefronts and 23 residential units located in the Williamsburg section of Brooklyn, New York. The Company also, through a separate lending subsidiary, provided a $64.1 million First Mortgage Loan and a $30.9 million Mezzanine Loan to subsidiaries of the Venture to refinance existing loans related to the properties. Dispositions On January 26, 2022, Fund IV disposed of its Mayfair Shopping Center, located in Philadelphia, Pennsylvania, for $23.7 million and repaid the associated debt of $11.1 million. The property was classified as held for sale at December 31, 2021 (Note 3). On February 1, 2022, Fund V sold a land parcel at its New Towne Center property in Canton, Michigan, for $2.2 million. On February 9, 2022, Fund III disposed of its shopping center, Cortlandt Crossing, located in Westchester County, New York, for $65.5 million and repaid the associated debt of $34.5 million. The property was classified as held for sale at December 31, 2021 (Note 3). Other During 2022 through the date of these financial statements, the Company sold 4,281,576 common shares under its ATM program (Note 11) for gross proceeds of $96.3 million, at an average gross price of $22.48, or $92.5 million net of issuance costs. On February 9, 2022, the Company repaid the loan in the amount of $12.3 million collateralized by its 28 Jericho property and terminated the associated swap. 164 ACADIA REALTY TRUST SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Balance at Beginning of Year Charged to Expenses Adjustments to Valuation Accounts Deductions Balance at End of Year Year Ended December 31, 2021: Allowance for deferred tax asset Allowance for uncollectible accounts Allowance for notes receivable Year Ended December 31, 2020 (As Restated): Allowance for deferred tax asset Allowance for uncollectible accounts Allowance for notes receivable Year Ended December 31, 2019 (As Restated): Allowance for deferred tax asset Allowance for uncollectible accounts Allowance for notes receivable $ $ $ 2,599 $ 45,009 1,218 1,748 $ 11,408 400 — $ 7,921 — $ — (114 ) 4,534 $ $ — 46,440 818 — 4,402 — $ 1,061 (6,424 ) — $ 851 (12,839 ) — 1,748 (915 ) — — $ — — — $ — — — $ — — 3,660 38,471 5,752 2,599 45,009 1,218 1,748 11,408 — 165 ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 Initial Cost to Company Amount at Which Carried at December 31, 2021 Description and Location Encumbrances Land Improvements Buildings & Increase (Decrease) in Net Investments Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Operations is Compared Core Portfolio: Crescent Plaza Brockton, MA New Loudon Center Latham, NY Mark Plaza Edwardsville, PA Plaza 422 Lebanon, PA Route 6 Mall Honesdale, PA Abington Towne Center Abington, PA Bloomfield Town Square Bloomfield Hills, MI Elmwood Park Shopping Center Elmwood Park, NJ Merrillville Plaza Hobart, IN Marketplace of Absecon Absecon, NJ 239 Greenwich Avenue Greenwich, CT Hobson West Plaza Naperville, IL Village Commons Shopping Center Smithtown, NY Town Line Plaza Rocky Hill, CT Branch Shopping Center Smithtown, NY Methuen Shopping Center Methuen, MA The Gateway Shopping Center South Burlington, VT Mad River Station Dayton, OH Brandywine Holdings Wilmington, DE Bartow Avenue Bronx, NY Amboy Road Staten Island, NY Chestnut Hill Philadelphia, PA 2914 Third Avenue Bronx, NY West Shore Expressway Staten Island, NY West 54th Street Manhattan, NY 5-7 East 17th Street Manhattan, NY 651-671 W Diversey Chicago, IL 15 Mercer Street Manhattan, NY 4401 White Plains Bronx, NY 56 E. Walton Chicago, IL 841 W. Armitage Chicago, IL 2731 N. Clark Chicago, IL 2140 N. Clybourn Chicago, IL 853 W. Armitage Chicago, IL 2299 N. Clybourn Avenue Chicago, IL 843-45 W. Armitage Chicago, IL 1525 W. Belmont Avenue Chicago, IL 2206-08 N. Halsted Chicago, IL 2633 N. Halsted Chicago, IL 50-54 E. Walton Chicago, IL — — — — — — — — — — 25,707 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 1,147 505 — 190 1,664 799 3,207 3,248 4,288 2,573 1,817 1,793 3,229 878 7,425 4,161 3,396 3,004 — 3,197 13,774 12,992 17,152 10,294 15,846 7,172 12,917 3,510 3,156 12,545 956 1,273 2,350 5,063 1,691 3,826 5,091 9,404 15,252 5,803 — 11,909 8,289 11,108 3,380 16,699 3,048 8,576 1,887 1,581 994 728 557 306 557 177 731 1,480 1,183 960 5,691 8,038 13,499 18,704 7,281 17,256 2,483 5,054 6,126 1,989 1,839 788 1,946 484 2,730 3,338 3,540 4,096 2,848 12,694 1,147 10,866 505 — 190 20,389 3,396 5,813 1,664 12,761 799 3,207 3,798 4,288 2,577 1,817 1,793 3,229 7,111 39,055 31,814 25,124 15,699 16,932 12,684 18,313 907 11,663 3,401 29,322 961 1,273 2,350 5,201 1,691 5,597 17,932 11,669 17,730 7,259 — 15,168 8,289 10,493 11,855 12,866 3,380 13,573 16,699 20,089 3,048 8,576 1,887 1,581 994 728 557 306 557 177 731 1,480 1,183 998 13,440 17,276 2,484 5,054 8,792 2,411 1,871 842 2,454 484 3,024 4,049 3,894 4,417 12,013 20,894 3,396 6,003 14,425 7,910 42,262 35,612 29,412 18,276 18,749 14,477 21,542 12,570 32,723 6,558 19,205 14,019 22,931 8,950 15,168 18,782 24,721 16,953 36,788 16,488 25,852 4,371 6,635 9,786 3,139 2,428 1,148 3,011 661 3,755 5,529 5,077 5,415 2,848 13,270 16,118 3,441 16,228 — 2,809 12,761 3,914 25,281 19,372 7,972 5,409 1,086 5,512 5,396 8,182 17,022 1,776 12,841 2,265 2,616 1,456 3,259 4,802 5,575 74 1,385 6,159 20 1 — 2,666 422 32 54 508 — 294 711 354 359 576 166 9,090 16,657 3,119 5,334 11,096 4,666 26,685 21,620 15,525 10,011 9,639 6,906 11,621 9,665 17,493 3,252 11,818 7,134 8,406 3,821 9,735 5,848 4,151 5,642 7,879 8,690 4,567 652 1,306 848 777 501 209 820 126 774 1,079 1,214 1,085 3,357 1993 (a) 40 years 1993 (a) 40 years 1993 (c) 40 years 1993 (c) 40 years 1994 (c) 40 years 1998 (a) 40 years 1998 (a) 40 years 1998 (a) 40 years 1998 (a) 40 years 1998 (a) 40 years 1998 (a) 40 years 1998 (a) 40 years 1998 (a) 40 years 1998 (a) 40 years 1998 (a) 40 years 1998 (a) 40 years 1999 (a) 40 years 1999 (a) 40 years 2003 (a) 40 years 2005 (c) 40 years 2005 (a) 40 years 2006 (a) 40 years 2006 (a) 40 years 2007 (a) 40 years 2007 (a) 40 years 2008 (a) 40 years 2011 (a) 40 years 2011 (a) 40 years 2011 (a) 40 years 2011 (a) 40 years 2011 (a) 40 years 2011 (a) 40 years 2011 (a) 40 years 2011 (a) 40 years 2011 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Company Amount at Which Carried at December 31, 2021 Description and Location Encumbrances Land Improvements Buildings & Increase (Decrease) in Net Investments Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Operations is Compared 662 W. Diversey Chicago, IL 837 W. Armitage Chicago, IL 823 W. Armitage Chicago, IL 851 W. Armitage Chicago, IL 1240 W. Belmont Avenue Chicago, IL 21 E. Chestnut Chicago, IL 819 W. Armitage Chicago, IL 1520 Milwaukee Avenue Chicago, IL 330-340 River St Cambridge, MA Rhode Island Place Shopping Center Washington, D.C. 930 Rush Street Chicago, IL 28 Jericho Turnpike Westbury, NY 181 Main Street Westport, CT 83 Spring Street Manhattan, NY 179-53 & 1801-03 Connecticut Avenue Washington, D.C. 639 West Diversey Chicago, IL 664 North Michigan Chicago, IL 8-12 E. Walton Chicago, IL 3200-3204 M Street Washington, DC 868 Broadway Manhattan, NY 313-315 Bowery Manhattan, NY 120 West Broadway Manhattan, NY 11 E. Walton Chicago, IL 61 Main Street Westport, CT 865 W. North Avenue Chicago, IL 152-154 Spring St. Manhattan, NY 2520 Flatbush Ave Brooklyn, NY 252-256 Greenwich Avenue Greenwich, CT Bedford Green Bedford Hills, NY 131-135 Prince Street Manhattan, NY Shops at Grand Ave Queens, NY 201 Needham Street Newton, MA City Center San Francisco, CA 163 Highland Avenue Needham, MA Roosevelt Galleria Chicago, IL Route 202 Shopping Center Wilmington, DE 991 Madison Avenue Manhattan, NY 165 Newbury Street Boston, MA Concord & Milwaukee Chicago, IL State & Washington Chicago, IL 151 N. State Street Chicago, IL North & Kingsbury Chicago, IL Sullivan Center Chicago, IL — — — — — — — — 10,601 — — 12,353 — — — — — — — — — — — — — — — — — — — — — 1,713 780 717 545 2,137 1,318 790 2,110 8,404 7,458 4,933 6,220 1,908 1,754 1,603 1,758 1,149 209 1,589 8,468 1,266 1,306 14,235 15,968 14,587 24,416 12,158 9,200 11,690 10,135 4,429 15,240 5,398 6,899 3,519 — — 16,744 4,578 1,893 8,544 6,613 10,175 12,425 — 20,264 4,550 6,102 65,331 15,601 4,249 9,247 5,516 32,819 28,346 2,645 11,594 27,001 10,419 12,641 32,730 57,536 33,131 4,459 36,063 109,098 10 151 95 139 1,357 44 187 290 — 2,397 — 53 683 — 1,816 1,089 307 977 168 5 — 1,740 1,444 1,818 129 347 303 1,172 4,568 750 1,740 105 5,154 1,713 780 717 545 2,137 1,318 790 2,110 8,404 7,458 4,933 6,220 1,908 1,754 1,613 1,909 1,244 348 2,946 8,512 1,453 1,596 14,235 18,365 14,587 24,469 12,841 9,200 11,690 11,951 4,429 7,191 15,240 65,638 5,398 6,899 3,519 — — 16,578 4,417 9,252 5,516 34,559 16,744 29,790 4,578 1,893 8,544 6,613 4,463 11,723 27,348 10,722 10,175 13,813 13,763 35,960 — 58,286 20,264 34,871 4,550 4,564 3,326 2,689 1,961 893 5,083 9,830 2,243 3,706 22,639 25,823 19,520 30,689 14,749 10,954 23,641 11,620 80,878 21,976 11,316 12,771 5,516 34,559 46,534 9,041 13,616 35,892 17,335 23,988 49,723 58,286 55,135 9,114 365 537 294 146 729 1,931 427 427 3,650 5,324 3,555 6,137 2,988 2,185 2,915 1,967 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 2012 (a) 40 years 14,503 2013 (a) 40 years 3,940 1,071 1,868 1,786 4,619 5,978 813 2,278 5,265 2,134 2,848 7,448 20,235 6,528 884 2013 (a) 40 years 2013 (a) 40 years 2013 (a) 40 years 2013 (a) 40 years 2013 (a) 40 years 2014 (a) 40 years 2014 (a) 40 years 2014 (a) 40 years 2014 (a) 40 years 2014 (a) 40 years 2014 (a) 40 years 2014 (a) 40 years 2014 (a) 40 years 2014 (a) 40 years 2014 (a) 40 years 26,386 123,929 150,315 21,023 2015 (a) 40 years 8,001 12,679 (107 ) 12,529 11,256 76,965 (75,355 ) 4,838 — — 1,918 2,739 3,907 1,941 18,731 11,213 14,574 6,346 3,980 2,746 70,943 25,529 16,292 — — — — 2,483 22,688 12,918 11,332 50,000 197 504 — 321 6,225 — 2,045 1,590 167 4,838 14,771 — — 1,918 2,739 3,907 1,941 6,850 1,610 3,980 3,067 77,168 25,529 18,731 18,337 23,785 19,609 6,850 1,610 5,898 5,806 81,075 27,470 37,068 2,065 2,328 1,628 496 564 525 10,799 3,457 2,336 2015 (a) 40 years 2015 (a) 40 years 2015 (a) 40 years 2016 (a) 40 years 2016 (a) 40 years 2016 (a) 40 years 2016 (a) 40 years 2016 (a) 40 years 2016 (a) 40 years 13,443 137,327 13,443 138,917 152,360 18,762 2016 (a) 40 years Description and Location Encumbrances Land Improvements Buildings & ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Company Amount at Which Carried at December 31, 2021 2,338 60,000 — — — — — — — — — — — — — — — — — — Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Operations is Compared 6,770 2,309 9,079 75,591 73,709 149,300 Increase (Decrease) in Net Investments 17 441 408 6,770 75,591 8,100 10,061 4,488 3,605 6,276 6,265 837 982 2,292 73,268 31,221 2,773 8,992 12,177 9,582 16,758 2,731 2,868 20,490 26,788 2,903 — 700 6,721 901 8,487 22,491 2,081 9,119 2,368 8,100 31,629 11,443 10,061 14,216 100 2 — 6 — — — 4 127 — — — 4,488 3,605 6,276 6,265 837 982 9,092 12,179 9,582 16,764 2,731 2,868 20,490 26,788 2,903 8,491 — 700 6,721 901 22,618 2,081 9,119 2,368 39,729 24,277 13,580 15,784 15,858 23,029 3,568 3,850 47,278 11,394 22,618 2,781 15,840 3,269 338 9,580 3,554 3,976 639 837 619 1,012 168 175 1,456 460 1,171 118 456 123 2016 (a) 40 years 2016 (a) 40 years 2017 (a) 40 years 2018 (c) 40 years 2019 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2020 (a) 40 years 2020 (a) 40 years 15,632 101,861 753 15,632 102,614 118,246 5,134 2020 (a) 40 years 728 1,377 1,485 3,044 6,964 10,411 — — — 728 1,377 1,485 3,044 6,964 3,772 8,341 10,411 11,896 — — — 2021 (a) 40 years 2021 (a) 40 years 2021 (a) 40 years 255,978 — 100,316 521,360 — 621,676 621,676 95,189 2007 (c) 40 years — 12,344 8,895 27,333 19,548 5,533 1,120 19,338 1,417 5,855 20,860 12,114 22,861 1,535 1,001 3,156 6,422 903 2,645 1,850 903 1,875 4,813 7,391 12,759 4,178 3,027 1,498 9,500 563 1,041 7,570 5,290 7,149 609 588 1,324 2,343 547 1,160 619 465 5,625 14,438 20,176 37,431 28,470 6,376 1,735 28,500 1,688 10,905 24,829 9,464 22,201 1,513 937 2,459 6,560 439 2,736 1,799 688 518 3,523 7,391 492 17,384 20,502 14,100 41,871 2,922 3,027 1,498 8,037 563 1,041 7,570 5,290 7,149 609 588 1,324 2,343 547 1,160 619 465 24,653 6,533 1,860 29,178 3,754 11,087 25,381 12,597 24,630 1,537 949 2,823 6,849 486 4,801 2,802 721 (6,490 ) 1,656 326 5,781 (5,073 ) 157 125 (785 ) 2,066 182 552 3,133 2,429 24 12 364 289 47 2,065 1,003 33 168 1,010 20,907 27,893 55,971 27,575 9,560 3,358 37,215 4,317 12,128 32,951 17,887 31,779 2,146 1,537 4,147 9,192 1,033 5,961 3,421 1,186 150 2,272 3,817 8,173 3,216 1,018 302 922 397 1,679 4,271 2,806 3,729 127 77 295 569 45 425 278 56 2012 (c) 40 years 2014 (c) 40 years 2014 (a) 40 years 2015 (a) 40 years 2015 (c) 40 years 2015 (a) 40 years 2015 (a) 40 years 2015 (a) 40 years 2016 (c) 40 years 2016 (a) 40 years 2016 (a) 40 years 2016 (a) 40 years 2017 (a) 40 years 2018 (a) 40 years 2018 (a) 40 years 2018 (a) 40 years 2018 (a) 40 years 2018 (a) 40 years 2018 (a) 40 years 2018 (a) 40 years 2018 (a) 40 years California & Armitage Chicago, IL 555 9th Street San Francisco, CA Market Square Wilmington, DE 613-623 W. Diversey Chicago, IL 51 Greene Street Manhattan, NY 53 Greene Street Manhattan, NY 41 Greene Street Manhattan, NY 47 Greene Street Manhattan, NY 849 W Armitage Chicago, IL 912 W Armitage Chicago, IL Melrose Place Collection Los Angeles, CA 45 Greene Street Manhattan, NY 565 Broadway Manhattan, NY 907 W Armitage Chicago, IL 37 Greene Street Manhattan, NY 917 W Armitage Chicago, IL Brandywine Town Center Wilmington, DE 1324 14th Street Washington, D.C. 1526 14th Street Washington, D.C. 1529 14th Street Washington, D.C. Fund II: City Point Brooklyn, NY Fund IV: 210 Bowery Manhattan, NY 27 E. 61st Street Manhattan, NY 17 E. 71st Street Manhattan, NY 1035 Third Avenue Manhattan, NY 801 Madison Avenue Manhattan, NY 2208-2216 Fillmore Street San Francisco, CA 2207 Fillmore Street San Francisco, CA 146 Geary St. San Francisco, CA 1964 Union Street San Francisco, CA Restaurants at Fort Point Boston, MA Wakeforest Crossing Wake Forest, NC Dauphin Plaza Harrisburg, PA Lincoln Place Fairview Heights, IL 18 E. Broughton St. Savannah, GA 20 E. Broughton St. Savannah, GA 25 E. Broughton St. Savannah, GA 109 W. Broughton St. Savannah, GA 204-206 W. Broughton St. Savannah, GA 216-218 W. Broughton St. Savannah, GA 220 W. Broughton St. Savannah, GA 223 W. Broughton St. Savannah, GA ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Initial Cost to Company Amount at Which Carried at December 31, 2021 Description and Location Encumbrances Land Improvements Buildings & Increase (Decrease) in Net Investments Land Buildings & Improvements Total Accumulated Depreciation Date of Acquisition (a) Construction (c) Life on which Depreciation in Latest Statement of Operations is Compared 226-228 W. Broughton St. Savannah, GA 309/311 W. Broughton St. Savannah, GA 230-240 W. Broughton St. Savannah, GA 102 E. Broughton St. Savannah, GA Fund V: Plaza Santa Fe Santa Fe, NM Hickory Ridge Hickory, NC New Towne Plaza Canton, MI Fairlane Green Allen Park, MI Trussville Promenade Birmingham, AL Elk Grove Commons Elk Grove, CA Hiram Pavilion Hiram, GA Palm Coast Landing Palm Coast, FL Lincoln Commons Lincoln, RI Landstown Commons Virginia Beach, VA Canton Marketplace Canton, GA Monroe Marketplace Selinsgrove, PA Midstate East Brunswick, NJ - 2,329 5,018 — 22,893 29,128 16,232 33,467 29,190 41,500 28,830 26,500 38,820 60,900 31,801 29,150 660 1,160 2,185 — — 7,852 5,040 18,121 7,587 6,204 13,029 7,066 14,429 10,222 11,883 8,755 — 13,062 1,900 2,695 9,597 514 28,214 29,998 17,391 37,143 34,285 48,008 25,446 27,299 34,417 69,005 34,902 35,452 43,290 34 2 6 — 1,384 4,858 780 575 53 1,138 624 433 1,936 1,856 132 229 — 660 1,160 2,185 — — 7,852 5,040 1,934 2,697 9,603 514 29,598 34,856 18,171 18,121 37,718 7,587 6,204 34,338 49,146 13,029 26,070 7,066 27,732 14,429 36,353 10,222 70,861 11,883 35,034 8,755 35,681 13,062 43,290 2,594 3,857 11,788 514 29,598 42,708 23,211 55,839 41,925 55,350 39,099 34,798 50,782 81,083 46,917 44,436 56,352 160 219 380 20 3,746 4,318 2,329 4,220 3,587 4,409 2,663 2,261 2,627 4,537 327 349 104 2018 (a) 40 years 2018 (a) 40 years 2020 (a) 40 years 2020 (a) 40 years 2017 (a) 40 years 2017 (a) 40 years 2017 (a) 40 years 2017 (a) 40 years 2018 (a) 40 years 2018 (a) 40 years 2018 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2019 (a) 40 years 2021 (a) 40 years 2021 (a) 40 years 2021 (a) 40 years Real Estate Under Development Debt of Assets Held for Sale Unamortized Loan Costs Unamortized Premium Total 52,000 46,015 (3,958 ) 446 1,140,293 $ 84,977 — — — 835,376 $ 35,440 — — — 2,449,230 $ 83,356 — — — 787,001 $ 94,654 — — — 834,295 $ 109,119 — — — 3,237,312 $ 203,773 — — — 4,071,607 $ — — — — 648,461 $ Notes: 1. Depreciation on buildings and improvements reflected in the consolidated statements of operations is calculated over the estimated useful life of the assets as follows: Buildings at 40 years and improvements at the shorter of lease term or useful life. 2. The aggregate gross cost of property included above for Federal income tax purposes was approximately $4.2 billion as of December 31, 2021. The following table reconciles the activity for real estate properties from January 1, 2019 to December 31, 2021 (in thousands): Balance at beginning of year Improvements and other Property acquisitions Property dispositions or held for sale assets Right-of-use assets - finance leases obtained and reclassified Capital lease reclassified as Right-of-use assets - finance lease Consolidation of previously unconsolidated investments Impairment charges Balance at end of year 2021 Year Ended December 31, 2020 (As Restated) 2019 (As Restated) $ $ 4,011,326 $ 32,070 172,558 (134,422 ) — — — (9,925 ) 4,071,607 $ 3,960,411 $ 71,409 19,109 (19,659 ) (76,965 ) — 129,863 (72,842 ) 4,011,326 $ 3,620,583 95,097 303,884 (84,243 ) 102,055 (76,965 ) — — 3,960,411 169 ACADIA REALTY TRUST SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION The following table reconciles accumulated depreciation from January 1, 2019 to December 31, 2021 (in thousands): Balance at beginning of year Depreciation related to real estate Property dispositions or held for sale assets Right-of-use assets - finance leases reclassified Balance at end of year 2021 Year Ended December 31, 2020 (As Restated) 2019 (As Restated) $ $ 573,364 $ 90,456 (15,359 ) — 648,461 $ 478,991 $ 101,849 (939 ) (6,537 ) 573,364 $ 407,698 83,040 (11,747 ) — 478,991 170 ACADIA REALTY TRUST SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE December 31, 2021 (in thousands) Description First Mortgage Loan Mezzanine Loan First Mortgage Loan Mezzanine Loan Other Mezzanine Loan First Mortgage Loan First Mortgage Loan Total Allowance for credit loss Net carrying amount of notes receivable Effective Interest Rate 6.00% 18.00% 5.42% 9.00% 4.65% 8.00% 9.00% 6.56% Net Carrying Amount of Notes Receivable as of December 31, 2021 Face Amount of Notes Receivable 17,810 5,306 13,530 54,000 6,000 5,000 16,000 43,000 160,646 $ $ 17,802 5,306 13,530 54,000 6,000 5,000 16,000 42,000 159,638 (5,752 ) 153,886 $ Final Maturity Date 4/1/2020 7/1/2020 6/1/2022 1/13/2023 4/12/2026 12/11/2027 10/20/2022 9/17/2024 $ 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 personal guarantees of the borrower and the prospects of the borrower. The following table reconciles the activity for loans on real estate from January 1, 2019 to December 31, 2021 (in thousands): Reconciliation of Loans on Real Estate Year Ended December 31, 2020 (As Restated) 2019 (As Restated) 2021 Balance at beginning of year Additions Repayments Conversion of OP Units Conversion to real estate through receipt of deed Allowance for credit loss Balance at end of year $ $ 100,882 $ 58,000 — (462 ) — (4,534 ) 153,886 $ 114,943 $ 59,585 — — (72,428 ) (1,218 ) 100,882 $ 111,775 18,418 (15,250 ) — — — 114,943 171 

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