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.
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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.
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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.
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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
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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
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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.
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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,
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• 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”.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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.
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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
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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.
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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:
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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;
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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;
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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;
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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:
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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.
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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.
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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