Market Overview

Acadia Realty Trust Reports Third Quarter 2018 Operating Results

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Acadia Realty Trust (NYSE:AKR) ("Acadia" or the "Company") today
reported operating results for the quarter ended September 30, 2018. All
per share amounts are on a fully-diluted basis.

Acadia operates dual platforms, comprised of a high-quality core real
estate portfolio ("Core Portfolio"), which owns and operates assets in
the nation's most dynamic urban and street-retail corridors, and a
series of discretionary, institutional funds ("Funds") that target
opportunistic and value-add investments.

Please refer to the tables and notes accompanying this press release
for further details on operating results and additional disclosures
related to net income, funds from operations ("FFO") and net operating
income ("NOI").

Highlights

  • Earnings: Generated GAAP earnings per share of $0.11 for the
    third quarter; FFO per share was $0.35 for the third quarter driven by
    the strength of its Core Portfolio
  • Core Portfolio Operating Results: Solid Core operating
    fundamentals

◦ Strong same-property net operating income growth of 3.4% for the third
quarter (excluding redevelopments) driven by profitable lease up in its
street and urban portfolio

◦ Achieved over 85% of its 2018 leasing goals

◦ Rent growth of 8.0% and 15.5% on new and renewal leases for the
quarter on a cash and GAAP basis, respectively

◦ Reported 95.5% leased occupancy as of September 30, 2018

  • Fund Acquisition Activity: During July, Fund V completed a
    $59.3 million acquisition. Year-to-date Fund acquisition volume totals
    $104.6 million
  • Fund Disposition Activity: Completed $30.5 million of Fund
    dispositions during the third quarter. Year-to-date Fund disposition
    volume totals $64.5 million
  • Balance Sheet: The Company repurchased $55.1 million of its
    shares during the nine months ended September 30, 2018 at an average
    cost of approximately $24 per share on a leverage-neutral basis. No
    shares were issued or purchased during the third quarter
  • Guidance: Following the successful execution of its leasing
    efforts and the strength of its Core Portfolio performance to date,
    the Company expects same property net operating income growth of 3% to
    5% for the fourth quarter and has updated its annual 2018 guidance of
    FFO per share to $1.36 to $1.40

"Our third-quarter operating results exceeded our expectations driven by
strong leasing activity and the performance of our Core Portfolio,"
stated Kenneth F. Bernstein, President and CEO of Acadia Realty Trust.
"With respect to our Core Portfolio, our long-term growth plan remains
on track, with continued progress during the third quarter on our two
key redevelopments, Clark and Diversey in Chicago and City Center in San
Francisco. In the fund platform, we continued to execute on all aspects
of our buy-fix-sell mandate. Most importantly, while we have and will
continue to remain disciplined in our investment strategy, our
significant dry powder, both on balance sheet and in our fund platform,
keeps us well-positioned to capitalize on future compelling
opportunities as they arise."

FINANCIAL RESULTS

A complete reconciliation, in dollars and per share amounts, of net
income attributable to common shareholders to FFO attributable to common
shareholders is included in the financial tables of this release.

Net Income

Net income attributable to common shareholders for the quarter ended
September 30, 2018 was $9.2 million, or $0.11 per share. Net income
attributable to common shareholders for the quarter ended September 30,
2017 was $12.9 million, or $0.15 per share, which included $3.0 million,
or $0.04 per share, attributable to an aggregate gain on dispositions of
Fund properties which was partially offset by the proportionate share of
aggregate impairment and other charges of $2.2 million, or $0.03 per
share, consisting primarily of transaction costs related to the sale of
a Fund property.

Net income attributable to common shareholders for the nine months ended
September 30, 2018 was $24.3 million, or $0.29 per share. Net income
attributable to common shareholders for the nine months ended
September 30, 2017 was $40.6 million, or $0.48 per share, of which $6.9
million, or $0.08 per share, was attributable to an aggregate gain on
dispositions of Fund properties which was partially offset by the
proportionate share of aggregate impairment and other charges of $2.2
million, or $0.03 per share, consisting primarily of transaction costs
related to the sale of a Fund property.

FFO

Driven by the strength of its core operations, FFO for the quarter ended
September 30, 2018 was $30.1 million, or $0.35 per share compared to
$32.9 million, or $0.37 per share for the quarter ended September 30,
2017. The decrease in FFO for the quarter is due primarily to a decrease
of $2.9 million, or $0.04 per share, of interest income following the
repayments within the Structured Finance business.

FFO for the nine months ended September 30, 2018 was $89.1 million, or
$1.01 per share compared to $101.6 million, or $1.14 per share, for the
nine months ended September 30, 2017 which was net of $0.4 million of
acquisition costs. The decrease in FFO for the nine months is due
primarily to a decrease of $13.1 million, or $0.16 per share, of
interest income following the repayments within the Structured Finance
business.

CORE PORTFOLIO

Core Operating Results

The Company experienced higher-than-anticipated same-property net
operating income growth of 3.4% for the third quarter (excluding
redevelopment), driven by the profitable re-leasing of key street and
urban properties along with lower than anticipated credit loss.

As previously discussed, the Company's 2018 leasing goal is to execute
leases comprising approximately $8 million of NOI on a run rate basis.
To date, the Company has executed leases comprising approximately $7
million of annualized NOI, or over 85% of its goal, at its key street
and urban locations at rents in line with its expectations.

The Core Portfolio was 94.7% occupied and 95.5% leased as of
September 30, 2018, compared to 94.8% occupied and 95.3% leased as of
June 30, 2018. The leased rate includes space that is leased but not yet
occupied and excludes development and redevelopment properties.

During the third quarter, the Company generated an 8.0% and 15.5%
increase in rent on a cash and GAAP basis, respectively, on 21
conforming new and renewal leases aggregating 163,000 square feet
primarily within its suburban portfolio.

Redevelopment Update

City Center, San Francisco, CA. The Company has commenced
construction on the 40,000-square foot expansion of City Center, its
Target-anchored urban shopping center located in San Francisco. The
expansion space is approximately 90% pre-leased, with anticipated tenant
delivery and rent commencement in late 2019.

Clark and Diversey, Lincoln Park, Chicago, IL. Construction has
been completed on the Company's 30,000-square foot development located
at the corner of Clark Street and Diversey Parkway in Lincoln Park,
Chicago. During June and September 2018, Blue Mercury and T.J. Maxx
opened their 2,100 and 20,600 square foot stores, respectively.

FUND PLATFORM

Fund Acquisitions

Fund V completed $104.6 million in acquisitions during the nine months
ended September 30, 2018. In July 2018, Fund V completed a
previously-reported $59.3 million acquisition as follows:

Elk Grove Commons, Elk Grove, CA (Fund V). In July 2018, Fund V
acquired a 242,000-square foot shopping center, located in Elk Grove, CA
(Sacramento MSA), for $59.3 million. The property is anchored by Trader
Joe's, HomeGoods and Kohl's. During its hold period, the Fund expects to
have an opportunity to re-anchor certain spaces to further strengthen
the tenancy at this high-performing shopping center. This investment
combines the Fund platform's "high-yield opportunistic" and "value-add"
strategies.

Fund Dispositions

Through September 30, 2018, the Company has completed $64.5 million of
Fund dispositions including $30.5 million completed during the third
quarter as follows:

Lake Montclair Center, Dumfries, VA (Fund IV). In August 2018,
Fund IV sold Lake Montclair Center, a 106,000-square foot
supermarket-anchored shopping center located in Dumfries, VA, for $22.5
million. This compares to an all-in cost basis of $21.3 million. In
October 2013, the Fund acquired this high-yield investment at an
opportunistic cap rate. At acquisition, the property was 97% occupied.
During its 4.8-year hold period, the Fund (i) executed a six-year
extension of Food Lion's lease term to November 2023, increasing the
center's long-term stability, and (ii) maintained strong occupancy (99%
at exit). This sale generated a 26% IRR and 2.0x multiple on the
Fund's equity investment.

1861 Union Street, San Francisco, CA (Fund IV). The Fund, in
partnership with the Prado Group, sold 1861 Union St, a 5,000-square
foot street-retail property located in San Francisco, CA, for $6.0
million. This compares to an all-in cost basis of $3.7 million. This
property is part of the partnership's Fillmore-Union Collection. The
property was sold vacant for occupancy by the buyer. It contains a
3,000-square foot retail space and second-floor office space. At
acquisition, both spaces were leased at below-market rents. This sale
generated a 24% IRR and 1.7x multiple on the Fund's equity investment.

Broughton St Collection (1 of 23 properties), Savannah, GA (Fund
IV). In August 2018, Fund IV completed the sale of its 118 E Broughton
St property within its Broughton St Collection in Savannah, GA for $2.1
million. The total Broughton St Collection originally contained 23
properties and approximately 200,000 square feet of retail, residential,
and office space; to date, 10 properties have been sold.

BALANCE SHEET

The Company has maintained its solid, low-leveraged balance sheet, with
substantially all of its Core Portfolio debt fixed at an average rate of
3.59%. As of September 30, 2018, the Company's net debt to EBITDA ratio
for the Core Portfolio was 4.8x.

The Company repurchased $55.1 million of its common shares (2.3 million
shares) during the nine months ended September 30, 2018 at an average
cost of approximately $24 per share on a leverage-neutral basis. No
shares were issued or purchased during the third quarter.

2018 GUIDANCE

The Company's core earnings and FFO, separate from transactional
activity, performed at the upper end of its range for the first nine
months of 2018, driven by the profitable lease up and operating
performance of its Core Portfolio.

The Company is updating its 2018 earnings guidance to reflect various
timing items involving transactional activity within its dual platform,
including: lower than initially anticipated acquisition volumes in its
Core, Structured Finance and Fund businesses, profitable dispositions
within its Fund business and a revision in the expected timing of
promote income from Fund III. Such amounts were partially offset by an
increase in anticipated straight-line rent and below-market lease
income. The table below presents the revised earnings guidance (together
with a reconciliation of per share net income to FFO):

     
Previous Guidance Updated Guidance
   
Net income per share attributable to common shareholders $0.37 to $0.48 $0.39 to $0.43
 
Depreciation of real estate and amortization of leasing costs
(net of noncontrolling interests' share) $0.94 to $0.95 $0.97
Gain on disposition of properties (net of noncontrolling interests'
share)
$(0.01)
Noncontrolling interest in Operating Partnership $0.02 $0.01
Funds from operations, after transactional activity, per share $1.33 to $1.45 $1.36 to $1.40
 
Core acquisitions, structured financing investments and share
repurchases
$0 to $(0.03)
Fund acquisitions and related fees $(0.01) to $(0.02)
Net Promote and other transactional income and nonrecurring items
(a)
$(0.03) to $(0.06) $(0.03) to $(0.06)
Funds from operations, before transactional activity, per share $1.29 to $1.34 $1.33 to $1.34
 

__________

(a)   Nonrecurring items include income from the potential recapture of
below market leases as further outlined on page 17 of the
supplemental report.
 

The Company is projecting same property net operating income growth
(excluding redevelopment) of 3% to 5% for the fourth quarter.

Please refer to the Company's third quarter 2018 supplemental
information package for a complete list of updates.

CONFERENCE CALL

Management will conduct a conference call

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