Acadia Realty Trust(AKR) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported NAREIT FFO of $0.27 per share, representing an 8% increase over the $0.25 reported in 2024, with projected year-over-year NAREIT FFO growth of about 10% at the midpoint of guidance [43][39] - Same store NOI growth is expected to be between 5% to 6% for the year, with total core occupancy increasing by 50 basis points to 92.2% [44][39] - The company has over $600 million of available liquidity, with net debt to EBITDA at 5.5 times [52] Business Line Data and Key Metrics Changes - The company completed nearly $160 million in acquisitions during the quarter, focusing on core pillars of external growth [30] - The leasing activity in the street retail portfolio has shown strong momentum, with approximately $7.5 million of new leases executed in 2025, nearly 100% increase over the $3.8 million executed during the comparable period in 2024 [41][39] - The active leasing pipeline now stands at over $7 million in leases in advanced negotiation, with a significant portion coming from high-growth streets [21][39] Market Data and Key Metrics Changes - The company noted that reported comp sales have increased double digits both quarter over quarter and year over year, with year-over-year growth on the majority of their streets well north of 20% [20] - The company is seeing strong demand from affluent consumers, which is reflected in the performance of their street retail portfolio [11][12] Company Strategy and Development Direction - The company aims to build Acadia into the premier owner-operator of street retail in the U.S., focusing on strong contractual growth and frequent accretive mark-to-market opportunities [12][13] - The strategy includes maintaining a solid balance sheet with liquidity and flexibility to drive both internal and external growth [17][16] - The company is focused on acquiring properties in key markets where they can derive benefits of scale [30][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about avoiding serious economic headwinds despite concerns about tariffs and consumer spending [56] - The company is confident in its ability to continue delivering NOI growth in excess of 5% for the next several years, supported by a strong pipeline of external growth opportunities [39][52] - Management highlighted the resilience of the consumer and the ongoing demand for street retail, which is expected to drive future growth [9][11] Other Important Information - The company raised over $800 million prior to the last quarter, providing flexibility for growth [17] - The debt markets remain strong, with the company executing a new five-year $250 million term loan to reduce borrowing costs [52] Q&A Session Summary Question: Disconnect between stock performance and portfolio health - Management noted that leasing is holding up well and that the market may be underestimating the secular tailwinds in street retail [55][56] Question: Comparison of landlord scale in suburban vs. street retail - Management highlighted significant benefits of scale in street retail, allowing for higher rents and better tenant relationships compared to suburban shopping centers [58][59] Question: Mark-to-market opportunities in Williamsburg - Management indicated that there are 20% plus mark-to-market opportunities in Williamsburg and other key markets, with a focus on controlling a meaningful portion of a given street [62][66] Question: Changes in the transaction market for street retail assets - Management observed an increase in seller interest in the market, with more sellers willing to engage due to strong fundamentals [70] Question: Pipeline for investment management deals - Management confirmed that large deals are available in the market, and they are actively underwriting several of those opportunities [72] Question: Performance of suburban assets - Management stated that high-quality suburban retail is holding up well, with strong tenant demand filling watch list items [76] Question: Future occupancy expectations - Management expects street and urban retail occupancy to trend towards 92% by the end of the year [80] Question: Incremental NOI growth expectations - Management projected total incremental NOI of $8.5 million in 2026, with a significant portion coming from the same store pool [82]