Acadia Realty Trust(AKR) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Acadia Realty Trust's unaudited consolidated financial statements for Q1 2022, showing significant growth in net income and assets Consolidated Balance Sheets As of March 31, 2022, total assets increased to $4.50 billion, driven by real estate investments, while total equity rose to $2.41 billion Consolidated Balance Sheet Highlights (in thousands of dollars) | Balance Sheet Item | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $4,496,181 | $4,261,746 | | Net investments in real estate | $3,598,692 | $3,423,146 | | Cash and cash equivalents | $36,151 | $17,746 | | Total Liabilities | $2,087,975 | $2,111,811 | | Mortgage and other notes payable, net | $1,095,445 | $1,140,293 | | Unsecured line of credit | $194,405 | $112,905 | | Total Equity | $2,408,206 | $2,149,935 | Consolidated Statements of Income Total revenues increased to $81.5 million in Q1 2022, with a $28.8 million gain on property dispositions driving net income to $16.8 million Consolidated Income Statement Highlights (in thousands of dollars, except per share amounts) | Income Statement Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 (As Restated) | | :--- | :--- | :--- | | Total Revenues | $81,507 | $68,187 | | Operating Income | $40,042 | $8,752 | | Gain on disposition of properties | $28,815 | $4,612 | | Net Income Attributable to Acadia | $16,838 | $4,817 | | Basic and Diluted EPS | $0.18 | $0.05 | Consolidated Statements of Cash Flows Net cash from operations decreased to $26.5 million, while investing activities used $150.1 million, and financing activities provided $144.0 million, leading to a $20.5 million cash increase Consolidated Cash Flow Summary (in thousands of dollars) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 (As Restated) | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,543 | $30,974 | | Net cash (used in) provided by investing activities | $(150,056) | $12,612 | | Net cash provided by (used in) financing activities | $143,980 | $(47,193) | | Increase (decrease) in cash and restricted cash | $20,467 | $(3,607) | Notes to Consolidated Financial Statements (Unaudited) These notes detail the company's REIT structure, significant Q1 2022 real estate acquisitions and dispositions, total debt of $1.82 billion, and subsequent strategic acquisitions - The company operates through three reportable segments: Core Portfolio, Funds, and Structured Financing[28] - In Q1 2022, the company acquired properties valued at $220.7 million, including assets in New York and California[46] - Property dispositions in Q1 2022 totaled $113.1 million in sales price, resulting in a gain of $28.8 million[54] - Subsequent to quarter-end, the company acquired the Henderson Portfolio in Dallas, Texas for approximately $85.4 million[186] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's 188-property portfolio, Q1 2022 investments, and financial performance, highlighting increased net income, 9.7% Same-Property NOI growth, and improved FFO per share - As of March 31, 2022, the company owns or has an interest in 188 properties with a total operating GLA of 13.8 million square feet and an occupancy of 88.5%[190][191] - During Q1 2022, the company made three new consolidated investments and two unconsolidated acquisitions totaling $292.2 million[194] Q1 2022 vs Q1 2021 Performance (in millions of dollars, except percentages and per share amounts) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income Attributable to Acadia | $16.8M | $4.8M | | Same-Property NOI Growth (Core) | 9.7% | N/A | | Diluted FFO per Share | $0.36 | $0.26 | - The company sold 5.15 million Common Shares through its At-the-Market (ATM) Program during Q1 2022, generating net proceeds of $111.5 million[200][232] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate exposure on its $1.83 billion debt, with 46.6% being variable-rate, mitigated by swaps, and a 100 basis point rate increase would raise annual interest expense by $8.5 million - The primary market risk exposure stems from changes in interest rates on the company's mortgage and other debt[246] Debt Composition as of March 31, 2022 (in millions of dollars) | Debt Type | Amount (in millions) | Percentage of Total | | :--- | :--- | :--- | | Fixed-Rate (incl. swaps) | $975.9 | 53.4% | | Variable-Rate | $850.3 | 46.6% | | Total Debt | $1,826.3 | 100.0% | - A 100 basis point increase in interest rates would increase annual interest expense by approximately $8.5 million on the variable-rate debt portfolio[253] - The company's interest rate risk exposure increased, with variable-rate debt rising from 42.9% of total debt at year-end 2021 to 46.6% as of March 31, 2022[258] Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to a material weakness in internal control over financial reporting, for which remediation is underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2022[259] - The ineffectiveness stems from a previously reported material weakness related to an error in accounting for the consolidation of two Fund investments[260] - Management is actively remediating the material weakness by implementing additional controls and performing enhanced procedures[260][261] PART II - OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, which management does not expect to have a material adverse effect on its financial position - The company is party to various legal proceedings incidental to its ordinary course of business[264] - Management does not expect these proceedings to have a material adverse effect on the company's financial position[264] Risk Factors No material changes were reported to the risk factors previously disclosed in the company's Annual Report on Form 10-K for 2021 - No material changes were reported to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[265] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the current reporting period - Not applicable[265] Exhibits This section indexes all exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[267] - Interactive Data Files (XBRL documents) are also filed as exhibits[267]