Acadia Realty Trust(US:AKR)2024-04-30 20:16PART I - FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements, management's discussion and analysis of financial condition, market risk disclosures, and controls and procedures for the company Financial Statements This section presents the unaudited condensed consolidated financial statements for Acadia Realty Trust as of March 31, 2024, and for the three months then ended, including balance sheets, statements of income, comprehensive income, changes in equity, and cash flows, with accompanying notes detailing accounting policies and significant financial activities Condensed Consolidated Balance Sheet Highlights (Unaudited) | (in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total assets | $4,271,782 | $4,291,154 | | Total liabilities | $2,000,251 | $2,157,598 | | Total equity | $2,226,069 | $2,083,217 | Condensed Consolidated Statement of Income Highlights (Unaudited) | (in thousands, except per share) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total revenues | $91,356 | $81,839 | | Net (loss) income | $(6,857) | $22,002 | | Net income attributable to Acadia shareholders | $3,269 | $13,360 | | Diluted income per share | $0.03 | $0.14 | Condensed Consolidated Statement of Cash Flows Highlights (Unaudited) | (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $25,988 | $59,432 | | Net cash used in investing activities | $(3,829) | $(3,612) | | Net cash used in financing activities | $(20,539) | $(56,659) | Notes to Condensed Consolidated Financial Statements (Unaudited) The notes provide detailed explanations for the financial statements, covering the company's UPREIT structure, real estate portfolio activity, debt structure, fair value measurements, commitments, contingencies, and segment reporting, with a significant subsequent event being the April 2024 credit facility amendment and extension - The company operates as a fully-integrated equity REIT through an UPREIT structure, with assets held by the Operating Partnership, and its business is divided into a Core Portfolio and several opportunity Funds (Fund II, III, IV, and V)2627 - In Q1 2024, the company did not acquire or dispose of any consolidated retail properties, and a $1.2 million loss was recorded related to a post-closing dispute from a property sold in 20193940 - In January 2024, the company completed an underwritten offering of 6.9 million Common Shares, generating net proceeds of $113.0 million98 - Subsequent to the quarter end, in April 2024, the company amended its credit facility to increase the revolver from $300 million to $350 million and extend the maturity of both the revolver and the $400 million term loan to 2028, and also sold two Fund IV properties for $14.1 million143144 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and Q1 2024 results, highlighting performance across its Core and Fund portfolios, significant financing activities, liquidity, capital resources, and non-GAAP measures like FFO and NOI, while noting continued leasing momentum and value-add strategies amidst a volatile macroeconomic environment - As of March 31, 2024, the company's portfolio consisted of 201 properties, with the Core Portfolio 91.6% occupied and the Fund Portfolio 90.8% occupied146 Key Performance Metrics (Q1 2024) | Metric | Value | YoY Change | | :--- | :--- | :--- | | Diluted FFO per Share | $0.28 | Down from $0.40 | | Core Same-Property NOI | $32.0M | +5.7% | | Core New/Renewal Rent Spread (Cash) | +5.2% | N/A | | Core New/Renewal Rent Spread (Straight-line) | +10.7% | N/A | - In April 2024, the company amended its credit facility, increasing the revolver to $350 million and extending maturities to 2028, and in Q1 2024, it repaid an $80.6 million Fund V subscription line and a $7.3 million Core mortgage149152 Results of Operations This section analyzes operating results by segment for Q1 2024 compared to Q1 2023, showing an increase in the Core Portfolio's net income due to higher revenue from a forfeited deposit, and a decrease in the Funds segment's net income primarily due to a non-recurring dividend from its Albertsons investment in Q1 2023, alongside increased interest expense across both segments Net Income Attributable to Acadia by Segment (in millions) | Segment | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Core Portfolio | $7.2 | $6.7 | +$0.5 | | Funds | $0.8 | $11.6 | -$10.8 | | Structured Financing | $5.0 | $5.1 | -$0.1 | - The Funds segment's results were significantly impacted by a $25.0 million decrease in 'Realized and unrealized holding gains on investments and other', mainly due to a $28.2 million dividend from Albertsons received in Q1 2023 that was not repeated in Q1 2024163 Non-GAAP Financial Measures This section details key non-GAAP metrics used to evaluate performance, including Net Operating Income (NOI), rent spreads, and Funds from Operations (FFO), noting that Core Portfolio Same-Property NOI grew 5.7% year-over-year, rent spreads on new and renewal leases were positive, and diluted FFO per share decreased to $0.28 from $0.40 in the prior-year period due to non-recurring investment income - Core Portfolio Same-Property NOI increased by 5.7% in Q1 2024 compared to Q1 2023, rising from $30.3 million to $32.0 million170 Core Portfolio Rent Spreads (Q1 2024) | Basis | Percent Growth | | :--- | :--- | | Cash Basis | 5.2% | | Straight-Line Basis | 10.7% | Funds From Operations (FFO) Reconciliation (in thousands) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income attributable to Acadia | $3,269 | $13,360 | | Adjustments (Depreciation, etc.) | $27,485 | $27,361 | | FFO attributable to Common Shareholders/OP Unit holders | $30,957 | $40,721 | | Diluted FFO per Share | $0.28 | $0.40 | Liquidity and Capital Resources Management details the company's liquidity position, capital sources, and uses, reporting $18.8 million in cash, $185.3 million of credit facility capacity, and 92 unencumbered properties as of March 31, 2024, alongside $113.0 million raised from a share offering, $1.73 billion in total consolidated debt (81% fixed-rate), and active management of upcoming debt maturities and interest rate volatility - As of March 31, 2024, total consolidated debt was $1.73 billion, with 81.0% being fixed or effectively fixed rate, and the company had $18.8 million in cash and $185.3 million of available capacity under its credit facilities179180183189 - Net cash from operating activities decreased by $33.4 million year-over-year, primarily due to a $28.2 million dividend from Albertsons received in Q1 2023, while net cash used in financing activities decreased by $36.2 million, mainly due to the $113.8 million from the Q1 2024 common share offering194199 - The company has $222.8 million of consolidated debt and $65.6 million of pro-rata unconsolidated debt maturing in the remainder of 2024207 Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate exposure on its debt, with 81.0% of its $1.73 billion in consolidated debt fixed-rate or effectively fixed through derivatives as of March 31, 2024, and a hypothetical 100 basis point increase in rates would raise annual interest expense by $3.3 million on its variable-rate debt - The company's variable-rate debt exposure decreased from $426.4 million (22.7% of total debt) at year-end 2023 to $329.8 million (19.0% of total debt) as of March 31, 2024206213 - A hypothetical 100 basis point increase in interest rates would increase annual interest expense on variable-rate debt by $3.3 million, with the company's share of this increase being $1.0 million after noncontrolling interests207 Consolidated Debt Maturities (as of March 31, 2024, in millions) | Year | Total Maturing Debt | | :--- | :--- | | 2024 (Remainder) | $222.8 | | 2025 | $583.9 | | 2026 | $454.4 | | 2027 | $246.2 | | 2028 | $131.0 | | Thereafter | $96.2 | Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable level of assurance as of March 31, 2024, with no material changes to internal control over financial reporting during the first quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2024214 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls215 PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, other standard disclosures, and an index of exhibits filed with the Form 10-Q Legal Proceedings The company is party to various legal proceedings arising from its ordinary course of business but does not anticipate that their resolution will have a material adverse effect on its consolidated financial position - Management does not expect ongoing legal proceedings to have a material adverse effect on the company's financial position217 Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023 - There were no material changes to the risk factors disclosed in the company's 2023 Annual Report on Form 10-K218 Other Information (Items 2-5) This section covers several standard disclosure items, reporting that Items 2, 3, and 4 (Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, and Mine Safety Disclosures) are not applicable, and no officers or trustees adopted, terminated, or modified any Rule 10b5-1 trading plans during the quarter - Items 2, 3, and 4 of Part II are not applicable to the company for this reporting period219220221 - No officers or trustees adopted, terminated, or modified any Rule 10b5-1 trading arrangements during the first quarter of 2024222 Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including new forms of Long-Term Incentive Plan award agreements, certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and the XBRL interactive data files - The report includes newly filed forms for Long-Term Incentive Plan awards and the required CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906224