Acadia Realty Trust(AKR) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The company's Q1 2021 financial statements show a turnaround to profitability, driven by the absence of prior-year impairment charges, with total assets slightly decreasing and equity increasing Consolidated Balance Sheets As of March 31, 2021, total assets were $4.15 billion, a slight decrease from $4.19 billion at December 31, 2020, with liabilities decreasing and equity increasing Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $4,153,682 | $4,186,882 | | Net investments in real estate | $3,472,369 | $3,507,488 | | Cash and cash equivalents | $15,424 | $19,232 | | Total Liabilities | $2,069,313 | $2,138,329 | | Mortgage and other notes payable, net | $1,188,695 | $1,204,581 | | Unsecured line of credit | $105,400 | $138,400 | | Total Equity | $2,084,369 | $2,048,553 | Consolidated Statements of Operations For Q1 2021, the company reported a net income of $1.86 million, a significant improvement from a $60.04 million net loss in Q1 2020, primarily due to the absence of impairment charges Q1 2021 vs Q1 2020 Statement of Operations (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total Revenues | $69,394 | $71,420 | | Impairment Charges | $0 | $51,549 | | Operating Income (Loss) | $8,681 | $(46,343) | | Net Income (Loss) | $1,860 | $(60,039) | | Net Income (Loss) Attributable to Acadia | $5,162 | $(8,414) | | Basic and Diluted EPS | $0.06 | $(0.10) | Consolidated Statements of Cash Flows Net cash from operating activities was $30.9 million for Q1 2021, with investing activities providing $11.5 million and financing activities using $45.2 million, primarily for debt repayments Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $30,934 | $27,978 | | Net cash provided by (used in) investing activities | $11,492 | $(90,728) | | Net cash (used in) provided by financing activities | $(45,203) | $70,356 | | (Decrease) increase in cash and restricted cash | $(2,777) | $7,606 | Notes to Consolidated Financial Statements The notes detail the company's REIT structure, real estate transactions, debt, COVID-19 impact, and segment performance, providing context for its financial position - The company operates as a fully-integrated equity REIT with assets held through the Acadia Realty Limited Partnership (UPREIT structure) As of March 31, 2021, its portfolio consisted of 130 Core Portfolio properties and 56 properties within its four opportunity Funds[20][21] - The company has three reportable operating segments: Core Portfolio, Funds, and Structured Financing[26] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the ongoing impact of COVID-19, a $13.6 million increase in net income attributable to Acadia, and the company's liquidity position, focusing on debt maturities and extension options Overview and Significant Developments The company's portfolio comprises 186 properties, with Q1 2021 developments including a $16.4 million property sale and $3.7 million in COVID-19 related pro-rata charges - The company incurred pro-rata charges of $3.7 million in Q1 2021 due to the COVID-19 pandemic, compared to $16.7 million in the prior-year period These charges included credit loss, straight-line rent reserves, and abatements[174] - During Q1 2021, the company sold one Core Portfolio property for $16.4 million, recognizing a gain of $4.6 million[176] Results of Operations Net income attributable to Acadia increased by $13.6 million year-over-year, driven by the absence of prior-year impairment charges in the Funds segment, despite a slight decline in total revenues Change in Net Income Attributable to Acadia by Segment (in millions) | Segment | Q1 2021 | Q1 2020 | Increase / (Decrease) | | :--- | :--- | :--- | :--- | | Core Portfolio | $7.5 | $5.7 | $1.8 | | Funds | $5.2 | $(8.4) | $13.6 | | Structured Financing (SF) | $1.7 | $2.4 | $(0.7) | | Total | $5.2 | $(8.4) | $13.6 | - The absence of the $51.5 million impairment charge recorded in Q1 2020 was the primary driver for the year-over-year improvement in the Funds segment's results[190] Supplemental Financial Measures (NOI & FFO) Core Portfolio Same-Property NOI decreased by 14.5% in Q1 2021, while Diluted FFO per share was $0.26, down from $0.30 in the prior-year period Core Portfolio Same-Property NOI (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Same-Property NOI | $28,357 | $33,156 | | Percent change | (14.5)% | N/A | Funds from Operations (FFO) (in thousands, except per share) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | FFO attributable to Common Shareholders | $24,343 | $27,738 | | Diluted FFO per Share | $0.26 | $0.30 | Liquidity and Capital Resources The company's liquidity is supported by various sources, with total consolidated debt at $1.72 billion and significant maturities in 2021 and 2022, partially mitigated by extension options - At March 31, 2021, the company's share of remaining capital commitments to its Funds aggregated $76.3 million[209] Consolidated Debt Summary (in thousands) | Debt Type | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Debt - Fixed and Effectively Fixed Rate | $1,102,250 | $1,143,152 | | Total Debt - Variable Rate | $618,493 | $626,902 | | Total Indebtedness | $1,715,055 | $1,763,839 | - Excluding extension options, $360.6 million of consolidated debt is maturing in the remainder of 2021, and $535.6 million is maturing in 2022 The company has options to extend $260.5 million and $250.6 million of this debt, respectively[214] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate exposure on its $1.72 billion consolidated debt, with 35.9% being variable-rate, where a 100 basis point LIBOR increase would raise annual interest expense by $6.2 million - As of March 31, 2021, 64.1% ($1.10 billion) of the company's consolidated debt was fixed-rate or hedged, while 35.9% ($618.5 million) was variable-rate[233] - A 100 basis point increase in LIBOR would increase annual interest expense on the variable-rate debt by $6.2 million After accounting for noncontrolling interests, the company's share of this increase would be $1.7 million[237] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[245] - No material changes were made to the internal control over financial reporting during the most recently completed fiscal quarter[246] PART II - OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings but does not expect their outcomes to have a material adverse effect on its financial position - The company states that it does not expect any ongoing legal proceedings to have a material adverse effect on its consolidated financial position[248] Risk Factors No material changes were reported to the risk factors previously disclosed in the 2020 Annual Report on Form 10-K - No material changes were reported to the risk factors previously disclosed in the 2020 Annual Report on Form 10-K[249]