Acadia Realty Trust(US:AKR) Seeking Alphaยท2024-04-12 17:20Core Viewpoint - Acadia Realty Trust (AKR) is focusing on street retail, with a unique position in the retail REIT space, aiming for growth through its core portfolio and co-investment funds [2][3] Portfolio and Occupancy - AKR operates 139 properties with a total gross leasable area of 5.4 million square feet, achieving 93% occupancy and 95% leased status by the end of Q4 2023 [2] - The Funds co-invest with institutional investors, owning 50 properties across approximately 9 million square feet, with an occupancy rate of 89.6% and 92.4% leased [2][5] Financial Performance - In Q4 2023, AKR reported revenue of $85.51 million, a 6.1% increase year-over-year, exceeding consensus estimates by $8.15 million [4] - The fourth-quarter FFO was $0.28 per share, up $0.01 from the previous year, providing 156% coverage for the dividend [3][6] - Same-property net operating income (NOI) grew by 4.2% in Q4 and 5.8% for the full year 2023, with street retail portfolio NOI growth at 10% [4] Dividend and Growth Outlook - AKR declared a quarterly cash dividend of $0.18 per share, unchanged sequentially, resulting in a 4.2% dividend yield, though still 38% below pre-pandemic levels [3][6] - The REIT expects multi-year annual NOI growth exceeding 10%, driven by rent spreads ranging from 10% to 50% [5] - Projected FFO for fiscal 2024 is $1.28, indicating a 5% growth year-over-year, with same-property NOI growth expected between 5% to 6% [6] Market Position and Future Expectations - AKR is currently trading at a 6% premium to book value, with a distinctive portfolio poised for double-digit NOI growth in the coming years [4][8] - The market anticipates that the Federal Reserve will maintain high interest rates throughout 2024, impacting potential near-term returns for AKR [8] - Despite a lower dividend yield compared to larger retail REITs, AKR's focus on street retail is expected to support continued recovery of dividends that have been stalled since early 2022 [8]