Acadia Realty Trust(AKR) - 2018 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a same-store NOI growth of 4.1% for Q4 2018, driven by profitable leasing within the street and urban portfolio [21] - Full-year earnings were in line with expectations at $0.36 per share, with the core portfolio performing at the high end [24] - The company anticipates 2019 FFO ranging from $1.34 to $1.46, with solid NOI growth expected [25] Business Line Data and Key Metrics Changes - The company achieved over 95% of its $8 million NOI goal for 2018, with remaining inventory projected to yield approximately $1 million of NOI [21][22] - New leases in the street and urban portfolio showed cash and GAAP spreads of approximately 9.4% and 16.5% respectively [24] Market Data and Key Metrics Changes - The company noted a significant improvement in tenant interest from 2017 to 2018, particularly in key urban markets [10] - Retailers are increasingly selective about locations, with a notable shift in sentiment and activity observed in the leasing market [9] Company Strategy and Development Direction - The company is focused on high barrier to entry retail assets in key gateway markets, aiming for 4% annual NOI growth over the next several years [10][18] - Redevelopment projects are underway, including a lease with Whole Foods at City Center in San Francisco, which is expected to enhance the property [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing separation between successful and struggling retailers, indicating a positive outlook for the leasing fundamentals [5][10] - The company is cautious about construction costs and tenant demand, emphasizing the need for discipline in development projects [17] Other Important Information - The company announced the retirement of a key acquisition team member, Joel Braun, while expressing confidence in the new leadership [19] - The balance sheet remains strong, with no unfunded capital commitments and a focus on maintaining a disciplined approach to acquisitions [26] Q&A Session Summary Question: Investment opportunity set and acquisition strategy - Management indicated a pipeline equivalent to the previous year's volume, focusing on higher-yielding assets while remaining selective [30][31] Question: Impact of recaptured lease on economic trajectory - Management clarified that the $0.07 impact has no effect on same-store NOI and projected a downtime of six to seven months for the lease [34][35] Question: Same-store NOI spreads between portfolios - Management explained that suburban rent growth is historically low, while street and urban portfolios are experiencing stronger growth due to improved retailer interest [39][40] Question: Pricing movement in the private market - Management noted that rents have become more realistic, with a willingness among sellers to recognize market conditions, potentially allowing for new acquisitions [46][47] Question: Update on City Point leasing - Management highlighted significant demand for Alamo Drafthouse and DeKalb Market, indicating a positive shift in leasing momentum [52][53] Question: Suburban portfolio growth expectations - Management expressed cautious optimism for suburban growth, projecting it to be better than flat, but acknowledging potential headwinds from market conditions [60]