Acadia Realty Trust(AKR) - 2021 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Acadia Realty Trust's unaudited consolidated financial statements for Q2 2021 and 2020, covering balance sheets, income, equity, and cash flows, with detailed notes Consolidated Balance Sheets As of June 30, 2021, Total Assets decreased to $4.09 billion from $4.19 billion, while Total Liabilities decreased to $1.97 billion from $2.14 billion, leading to an increase in Total Equity to $2.12 billion from $2.05 billion Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $4,089,612 | $4,186,882 | | Net investments in real estate | $3,418,792 | $3,507,488 | | Cash and cash equivalents | $34,645 | $19,232 | | Total Liabilities | $1,973,262 | $2,138,329 | | Mortgage and other notes payable, net | $1,162,617 | $1,204,581 | | Unsecured line of credit | $61,405 | $138,400 | | Total Equity | $2,116,350 | $2,048,553 | Consolidated Statements of Income For Q2 2021, total revenues increased to $74.7 million, but net income attributable to Acadia decreased to $3.9 million from $19.4 million in Q2 2020, with diluted EPS at $0.04 Income Statement Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $74,660 | $63,773 | $144,054 | $135,193 | | Rental income | $73,666 | $62,639 | $140,871 | $133,096 | | Operating Income (Loss) | $13,159 | ($5,758) | $21,840 | ($52,101) | | Net Income Attributable to Acadia | $3,918 | $19,410 | $9,080 | $10,996 | | Basic and Diluted EPS | $0.04 | $0.22 | $0.10 | $0.12 | Consolidated Statements of Cash Flows For the six months ended June 30, 2021, net cash from operations decreased to $51.0 million, while investing activities shifted to a $30.9 million provision from an $87.2 million use, and financing activities used $66.2 million Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $51,033 | $59,060 | | Net cash provided by (used in) investing activities | $30,947 | ($87,243) | | Net cash (used in) provided by financing activities | ($66,165) | $46,520 | | Increase in cash and restricted cash | $15,815 | $18,337 | Notes to Consolidated Financial Statements The notes detail the company's REIT structure, real estate transactions, notes receivable status, debt modifications, COVID-19 impacts on rent, and segment financial performance - The company operates through three reportable segments: Core Portfolio, Funds, and Structured Financing[22] - During the six months ended June 30, 2021, the company disposed of several properties for total proceeds of $66.3 million, resulting in a gain of $9.8 million[39] - As of June 30, 2021, two notes receivable with an aggregate balance of $31.6 million (including accrued interest) were in default[48][49] - In June 2021, the company modified its Credit Facility, increasing the Revolver by $50.0 million (to $300.0 million) and the Term Loan by $50.0 million (to $400.0 million)[72] - The company collected or negotiated payment agreements for approximately 95.6% of its Core Portfolio and 92.1% of its Funds' pre-COVID billings for the second quarter[128] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, results of operations, and liquidity, covering Core and Fund portfolios, property dispositions, financing, and rent collections Overview Acadia's portfolio comprises 180 properties across Core and Fund segments, focusing on high-quality retail and opportunistic acquisitions to provide shareholder distributions and capital appreciation - The company's portfolio consists of 180 properties across its Core Portfolio and Funds, with a total of 12.3 million square feet of Gross Leasable Area (GLA)[161][162] - Key business objectives include operating a high-quality Core Portfolio, generating external growth through opportunistic Fund acquisitions, and maintaining a strong, flexible balance sheet[163][164] Results of Operations Core Portfolio net income increased by $9.5 million in Q2 2021 due to lower credit loss reserves, while Funds segment net income decreased by $22.7 million, primarily due to reduced holding gains from the Albertsons investment Net Income (Loss) Attributable to Acadia by Segment (in millions) | Segment | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Core Portfolio | $7.4 | ($2.1) | $9.5 | | Funds | $5.5 | $28.2 | ($22.7) | | Structured Financing | $1.9 | $2.2 | ($0.3) | | Total | $3.9 | $19.4 | ($15.5) | - Core Portfolio revenue for Q2 2021 increased by $7.4 million YoY, primarily due to a $6.4 million decrease in credit loss reserves related to the COVID-19 pandemic[179] - The Funds segment's Q2 2021 results were significantly impacted by an $85.1 million decrease in realized and unrealized holding gains compared to Q2 2020, which included large gains from the Investment in Albertsons[177][187] Supplemental Financial Measures The company provides supplemental metrics including NOI and FFO, with Core Portfolio Same-Property NOI increasing 13.9% for Q2 2021, and diluted FFO per share at $0.31 for Q2 2021 Same-Property NOI - Core Portfolio (in thousands) | Period | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $31,192 | $27,395 | 13.9% | | Six Months Ended June 30 | $59,549 | $60,551 | (1.7)% | Funds From Operations (FFO) per Share - Diluted | Period | 2021 | 2020 | | :--- | :--- | :--- | | Three Months Ended June 30 | $0.31 | $0.49 | | Six Months Ended June 30 | $0.57 | $0.79 | Liquidity and Capital Resources The company's liquidity sources include equity issuance, debt, Fund partner commitments, and asset sales, with total consolidated indebtedness at $1.66 billion as of June 30, 2021 - Primary sources of capital include the ATM equity program, debt issuance, unfunded capital commitments from Fund partners, and property sales[225] - The company sold 2,071,991 common shares through its ATM Program during the first six months of 2021, generating net proceeds of $45.7 million[226] Consolidated Debt Summary (in thousands) | Debt Type | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Debt - Fixed and Effectively Fixed Rate | $1,053,715 | $1,143,152 | | Total Debt - Variable Rate | $619,242 | $626,902 | | Total Indebtedness | $1,664,110 | $1,763,839 | Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate exposure, with 63.0% of its $1.67 billion total debt fixed-rate, and a 100 basis point LIBOR increase impacting annual interest expense by $6.2 million - As of June 30, 2021, 63.0% of the company's total debt of $1.67 billion was fixed-rate or effectively fixed with swaps, while 37.0% was variable-rate[242] - A hypothetical 100 basis point increase in LIBOR would increase annual interest expense on the company's variable-rate debt by approximately $6.2 million[248] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes in 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 June 30, 2021[255] - No material changes were made to the internal control over financial reporting during the most recently completed fiscal quarter[256] PART II - OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings incidental to its ordinary course of business but does not expect material adverse effects on its financial position - The company states that it is not party to any legal proceedings that are expected to have a material adverse effect on its consolidated financial position[257] Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 were reported - No material changes to the risk factors disclosed in the 2020 Annual Report on Form 10-K were reported[258] Other Part II Items Items 2, 3, 4, and 5 of Part II were not applicable for this period, with Item 6 listing the exhibits filed with the report - Items 2, 3, 4, and 5 of Part II are noted as 'Not applicable'[258] - Item 6 provides an index of exhibits filed with the Form 10-Q, including certifications and XBRL data files[259][260]