Acadia Realty Trust (NYSE: AKR � �Acadia� or the �Company�), a real
estate investment trust (�REIT�), today reported operating results
for the quarter ended June 30, 2007. All per share amounts
discussed below are on a fully diluted basis. Second Quarter 2007
Highlights Earnings - 2007 second quarter FFO $0.26 and EPS of
$0.09 Funds from operations (�FFO�) per share of $0.26 for the
second quarter 2007 compared to $0.30 for second quarter 2006
Earnings per share (�EPS�) for second quarter 2007 of $0.09
compared to $0.15 for second quarter 2006 Portfolio performance
Year-to-date 2007 same store net operating income for the retail
portfolio decreased $0.5 million or 1.8% compared to 2006 Including
pro-rata share of joint venture properties, June 30, 2007 occupancy
at 93.2%, a decrease of 0.8% from first quarter 2007 Fund III �
Formation of third discretionary investment fund vehicle Formed
Fund III with $500 million of discretionary institutional capital
Continued progress on external growth initiatives Completed the
acquisition of the Albee Square redevelopment project in downtown
Brooklyn, New York Acquired additional urban/infill investment
Additional RCP Venture investment made in second quarter 2007
Second Quarter Operating Results For the quarter ended June 30,
2007, FFO, a widely accepted measure of REIT performance, was $8.8
million, or $0.26 per share, compared to $10.3 million, or $0.30
per share for the quarter ended June 30, 2006. Contributing to the
$0.04 per share variance between these quarters was a $0.02 decline
in fee income primarily as a result of the timing of fees earned
and a $0.02 net decline in same store net operating income, as
further discussed below. For the six months ended June 30, 2007,
FFO was $20.9 million or $0.62 per share compared to $19.9 million,
or $0.59 per share for the six months ended June 30, 2006. The
year-to-date increase is primarily the result of income from
Acadia�s RCP Venture investment in Albertson�s received during the
first quarter of 2007. EPS was $0.09 for the second quarter 2007
compared to $0.15 for the second quarter 2006 and $0.29 for the six
months ended June 30, 2007 compared to $0.28 for the six months
ended June 30, 2006. Portfolio performance Including its pro-rata
share of joint venture operating properties, Acadia�s portfolio
occupancy was 93.2% for the quarter ended June 30, 2007. This
represents a decrease of 80 basis points from 94% at March 31,
2007. Of this decrease, approximately 40 basis points resulted from
Acadia�s buy-out of an anchor lease at a core property. A lease
with a replacement anchor has been executed at a base rent of
approximately three times that of the former tenant. For the six
months ended June 30, 2007, same store net operating income (�NOI�)
for the retail portfolio decreased approximately $0.5 million, or
1.8%, compared with the same period in 2006. For the quarter ended
June 30, 2007, same store NOI declined $0.4 million, or 2.8% from
the year ago quarter. These unfavorable variances were principally
driven by the settlement of prior year common area maintenance
(�CAM�) reimbursement billings with certain tenants and the
reversal of prior year over-accruals impacting same store NOI by
$0.5 million and $0.8 million for the quarter and six months ended
June 30, 2007, respectively. During the second quarter of 2007,
Acadia executed 17,000 square feet of new leases at an average rent
increase of 64% and 68,000 square feet of renewal leases at an
average rent increase of 5% from the previous rents on a cash
basis. Including the effect of the straight-lining of rents, new
and renewal leases had an average rent increase of 75% and 13%,
respectively. Balance Sheet � Portfolio debt is now 95% fixed-rate
The following reflects the Company�s ongoing focus on maintaining a
strong balance sheet: Fixed-charge coverage ratio (EBITDA /
interest expense plus preferred distributions) of 2.6 to 1 for the
second quarter 2007 Debt to total market capitalization of 34%
Dividend payout ratio for the second quarter 2007 of 76% of FFO;
year-to-date payout ratio is 64% Approximately $157 million
available under existing credit facilities 95% of the Company�s
total mortgage debt is now fixed-rate, inclusive of long-term
interest rate swaps and adjusted for its pro-rata share of
consolidated joint venture debt Fund III � Formation of $500
million discretionary investment fund On May, 16, 2007, Acadia
announced the formation of its third discretionary investment fund,
Acadia Strategic Opportunity Fund III LLC ("Fund III"). Fund III
will be capitalized with $500 million of discretionary
institutional capital, which will enable Fund III to acquire or
develop approximately $1.5 billion of assets on a leveraged basis.
Fund III consists of 13 institutional investors, including a
majority of the investors from prior funds. Acadia will invest 20%
or $100 million of the required capital in Fund III, which is fully
committed. The terms and structure of Fund III are substantially
the same as Funds I and II. Acadia will earn a pro-rata return on
its invested equity in Fund III, as well as fees for asset
management, development/redevelopment services, leasing,
construction management and property management. Acadia also has
the opportunity to earn additional amounts based on certain
investment return thresholds. Fund III will continue to pursue the
investment initiatives of Acadia's first two discretionary
investment funds. In line with this strategy, Fund III anticipates
expanding the Urban-Infill Redevelopment platform which currently
has nine urban-infill projects aggregating in excess of 2.0 million
square feet upon completion and approximately $700 million in
projected total costs. This includes Acadia's joint-venture with
P/A Associates in New York City. Fund III will also continue to
make investments in the Retailer Controlled Property initiative,
which currently has invested in Mervyns and Albertson's among other
investments. External Growth Continues with Focus on New York
Urban/Infill Redevelopments New York Urban/Infill Redevelopment
Program Acadia, through its Fund II New York Urban-Infill
Redevelopment Initiative with P/A Associates and Washington Square
Partners (collectively, �Acadia P/A�Travis�), together with
MacFarlane Partners (�MacFarlane�), acquired the leasehold interest
in The Gallery at Fulton Street and adjacent parking garage in
downtown Brooklyn on June 13, 2007. Initial plans for the property
call for a mixed-use development that will play a key role in the
ongoing renaissance and resurgence of Downtown Brooklyn. The
project, called Albee Square, will consist of retail, office and a
residential component and will be the first major commercial
project constructed as a result of New York City�s 2004 Downtown
Brooklyn Plan. Acadia P/A-Travis, a majority partner, together with
MacFarlane, will develop and operate the retail component, which is
anticipated to total 475,000 square feet of prime retail space.
Acadia P/A-Travis will also participate in the development of the
office component with MacFarlane, which is expected to include at
least 125,000 square feet of Class A office space. MacFarlane will
also develop and operate the residential component of the project,
which will include a mix of affordable and market rate housing and
ample parking. Additionally, on May 31, 2007, Acadia, through Fund
II and in partnership with its self-storage partner at several of
the other New York urban projects, acquired a property on Atlantic
Avenue in Brooklyn, New York for $5.0 million. Plans for the
property call for the demolition of the existing structure and the
construction of a modern climate controlled self-storage facility
consisting of approximately 110,000 square feet. Retailer
Controlled Property Initiative (�RCP Venture�) � Additional
Investment During the second quarter, Acadia, through Fund II, made
an additional investment of approximately $2.7 million in its RCP
Venture for the acquisition of a portfolio of 87 retail properties
from Rex Stores Corporation. The properties are located in 27
states with concentrations in Florida, Ohio, Michigan, Texas and
South Carolina. Management Team As previously announced, Numa
Jerome joined the Acadia executive management team in the position
of Senior Vice President and Director of Leasing to continue to
drive core portfolio performance and lead the Company�s external
growth leasing activities. Outlook - Earnings Guidance for 2007 As
a result of several factors, including the previously mentioned
resolution in tenant CAM reimbursements, the impact of senior
management changes and the timing of other potential transactions,
which management will discuss on its quarterly earnings conference
call, the Company currently anticipates that its earnings for the
year ending December 31, 2007 will approach the lower end of its
previously announced guidance of FFO ranging from $1.30 to $1.35
per share and EPS ranging from $0.65 to $0.70. The lower end of
this range represents a 9% growth rate over 2006 annual FFO of
$1.19 and 35% growth in annual EPS. Management Comments Commenting
on the results for the second quarter, Kenneth F. Bernstein,
President and CEO, stated, �The key components of our business are
continuing to provide solid value creation for our shareholders.
Complimenting a solid and stable core portfolio, the launching of
our third investment fund should give us plenty of discretionary
investment capital to continue to execute on our external growth
platform. With respect to our current pipeline, the Albee Square
and Atlantic Avenue acquisitions are contributing to an exciting
portfolio of unique urban mixed-use properties that should help
drive significant future growth for the next several years.�
Investor Conference Call Management will conduct a conference call
on Thursday, July 26, 2007 at 2:00 PM ET to review the Company's
earnings and operating results. The live conference call can be
accessed by dialing 888-482-0024 (internationally 617-801-9702).
The pass-code is �Acadia�. The call will also be webcast and can be
accessed in a listen-only mode at Acadia's web site at
www.acadiarealty.com. If you are unable to participate during the
live webcast, the call will be archived and available on Acadia's
website. Alternatively, to access the replay by phone, dial
888-286-8010 (internationally 617-801-6888). The pass-code will be
78758690. The phone replay will be available through Wednesday,
August 1, 2007. Acadia Realty Trust, headquartered in White Plains,
NY, is a fully integrated, self-managed and self-administered
equity REIT focused primarily on the ownership, acquisition,
redevelopment and management of retail properties, including
neighborhood/community shopping centers and mixed-use properties
with retail components. Certain matters in this press release may
constitute forward-looking statements within the meaning of federal
securities law and as such may involve known and unknown risk,
uncertainties and other factors which may cause the actual results,
performances or achievements of Acadia to be materially different
from any future results, performances or achievements expressed or
implied by such forward-looking statements. These forward-looking
statements include statements regarding our future earnings,
estimates regarding the timing of completion of, and costs relating
to, our real estate redevelopment projects. Factors that could
cause our forward-looking statements to differ from our future
results include, but are not limited to, those discussed under the
headings "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and �Risk Factors� in the
Company�s most recent annual report on Form 10-K filed with the SEC
on March 1, 2007 (�Form 10-K�) and other periodic reports filed
with the SEC, including risks related to: (i) the Company�s
reliance on revenues derived from major tenants; (ii) the Company�s
limited control over joint venture investments; (iii) the Company�s
partnership structure; (iv) real estate and the geographic
concentration of our properties; (v) market interest rates; (vi)
leverage; (vii) liability for environmental matters;(viii) the
Company�s growth strategy; (ix) the Company�s status as a REIT (x)
uninsured losses and (xi) the loss of key executives. Copies of the
Form 10-K and the other periodic reports Acadia files with the SEC
are available on the Company�s website at www.acadiarealty.com. Any
forward-looking statements in this press release speak only as of
the date hereof. Acadia expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in Acadia's expectations with regard thereto or change in events,
conditions or circumstances on which any such statement is based.
ACADIA REALTY TRUST AND SUBSIDIARIES Financial Highlights For the
Quarters and Six Months ended June 30, 2007 and 2006 (dollars in
thousands, except per share data) � � For the quarters ended For
the six months ended June 30, June 30, Revenues 2007 2006 2007 2006
Minimum rents $ 18,973 $ 17,010 $ 37,827 $ 34,297 Percentage rents
145 126 283 311 Expense reimbursements 2,872 3,373 6,214 7,250
Other property income 289 247 553 456 Management fee income 736
1,281 1,811 2,482 Interest income 2,226 1,907 5,086 3,653 Other --
-- 165 1,141 Total revenues 25,241 23,944 51,939 49,590 � Operating
expenses � Property operating 3,982 3,478 8,888 7,345 Real estate
taxes 2,515 2,354 4,713 5,054 General and administrative 5,542
4,779 10,990 10,086 Depreciation and amortization 6,873 6,336
13,410 12,566 Total operating expenses 18,912 16,947 38,001 35,051
Operating income 6,329 6,997 13,938 14,539 Equity in earnings of
unconsolidated affiliates 3,583 3,028 3,713 5,999 Interest expense
(5,900) (5,654) (12,047) (10,839) Minority interest (587) 330 1,701
(746) Income from continuing operations before income taxes 3,425
4,701 7,305 8,953 Income taxes (391) (363) (435) (812) Income from
continuing operations 3,034 4,338 6,870 8,141 ACADIA REALTY TRUST
AND SUBSIDIARIES Financial Highlights For the Quarters and Six
Months ended June 30, 2007 and 2006 (dollars in thousands, except
per share data) � � For the quarters ended For the six months ended
June 30, June 30, 2007 2006 2007 2006 Discontinued operations: � �
� � Operating income from discontinued operations $ -- � $ 520 $ --
$ 1,081 Minority interest � -- � (10) � -- � (21) Income from
discontinued operations � -- � 510 � -- � 1,060 Net income before
extraordinary item � 3,034 � 4,848 � 6,870 � 9,201 � Extraordinary
item: Share of extraordinary gain from investment in unconsolidated
affiliate -- -- 23,690 -- Minority interest -- -- (18,959) --
Income taxes � -- � -- � (1,848) � -- Income from extraordinary
item � -- � -- � 2,883 � -- Net income $ 3,034 $ 4,848 $ 9,753 $
9,201 � Net income per Common Share � Basic Net income per Common
Share � Continuing operations $ 0.09 $ 0.14 $ 0.21 $ 0.26 Net
income per Common Share � Discontinued operations -- 0.01 -- 0.02
Net income per Common Share � Extraordinary item � -- � -- � 0.09 �
-- Net income per Common Share $ 0.09 $ 0.15 $ 0.30 $ 0.28 Weighted
average Common Shares � 32,935 � 32,509 � 32,845 � 32,489 � Net
income per Common Share � Diluted 1 Net income per Common Share �
Continuing operations $ 0.09 $ 0.14 $ 0.20 $ 0.26 Net income per
Common Share � Discontinued operations -- 0.01 -- 0.02 Net income
per Common Share � Extraordinary item � -- � -- � 0.09 � -- Net
income per Common Share $ 0.09 $ 0.15 $ 0.29 $ 0.28 Weighted
average Common Shares � 33,295 � 32,811 � 33,273 � 32,789 ACADIA
REALTY TRUST AND SUBSIDIARIES Financial Highlights For the Quarters
and Six Months ended June 30, 2007 and 2006 (dollars in thousands,
except per share data) RECONCILIATION OF NET INCOME TO FUNDS FROM
OPERATIONS 2 � � For the quarters ended For the six months ended
June 30, June 30, 2007 2006 2007 2006 Net income $ 3,034 $ 4,848 $
9,753 $ 9,201 Depreciation of real estate and amortization of
leasing costs (net of minority interests' share) � � � � Wholly
owned and consolidated affiliates 5,158 5,294 9,955 10,327
Unconsolidated affiliates 513 438 988 850 Income attributable to
minority interest in Operating Partnership 84 104 228 198
Distributions � Preferred OP Units 5 63 13 125 Gain on sale (net of
minority interests' share and income taxes) � -- (460) -- (831)
Extraordinary item (net of minority interests' share and income
taxes) -- -- (2,883) -- Funds from operations 8,794 10,287 18,054
19,870 Add back: Extraordinary item, net 3 -- -- 2,883 -- Funds
from operations, adjusted for extraordinary item $ 8,794 $ 10,287 $
20,937 $ 19,870 Funds from operations per share � Diluted Weighted
average Common Shares and OP Units 4 33,984 33,799 33,960 33,778
Funds from operations, adjusted, per share $ 0.26 $ 0.30 $ 0.62 $
0.59 ACADIA REALTY TRUST AND SUBSIDIARIES Financial Highlights As
of June 30, 2007 and December 31, 2006 (dollars in thousands,
except per share data) � SELECTED BALANCE SHEET INFORMATION June
30, 2007 December 31, 2006 � � Cash and cash equivalents $ 120,759
$ 139,571 Rental property, at cost 811,803 677,238 Total assets
897,694 851,692 Notes payable 476,399 447,402 Total liabilities
524,791 496,836 Notes: 1 Reflects the potential dilution that could
occur if securities or other contracts to issue Common Shares were
exercised or converted into Common Shares. The effect of the
conversion of Common OP Units is not reflected in the above table
as they are exchangeable for Common Shares on a one-for-one basis.
The income allocable to such units is allocated on this same basis
and reflected as minority interest in the consolidated financial
statements. As such, the assumed conversion of these units would
have no net impact on the determination of diluted earnings per
share. 2 The Company considers funds from operations (�FFO�) as
defined by the National Association of Real Estate Investment
Trusts (�NAREIT�) and net operating income (�NOI�) to be
appropriate supplemental disclosures of operating performance for
an equity REIT due to its widespread acceptance and use within the
REIT and analyst communities. FFO and NOI are presented to assist
investors in analyzing the performance of the Company. They are
helpful as they exclude various items included in net income that
are not indicative of the operating performance, such as gains
(losses) from sales of depreciated property and depreciation and
amortization. In addition, NOI excludes interest expense. The
Company�s method of calculating FFO and NOI may be different from
methods used by other REITs and, accordingly, may not be comparable
to such other REITs. FFO does not represent cash generated from
operations as defined by generally accepted accounting principles
(�GAAP�) and is not indicative of cash available to fund all cash
needs, including distributions. It should not be considered as an
alternative to net income for the purpose of evaluating the
Company�s performance or to cash flows as a measure of liquidity.
Consistent with the NAREIT definition, the Company defines FFO as
net income (computed in accordance with GAAP), excluding gains
(losses) from sales of depreciated property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships
and joint ventures. Reference is made to the Company�s Quarterly
Supplemental Disclosure filed on Form 8-K with the SEC for a
reconciliation of the other non-GAAP financial measures used in
this press release (i.e. �net operating income� and �EBITDA�) to
the most comparable GAAP financial measures. 3 The extraordinary
item represents the Company�s share of estimated extraordinary gain
related to its investment in Albertson�s. The Albertson�s entity
has recorded an extraordinary gain in connection with the
allocation of purchase price to assets acquired. The Company
considers this as an investment in an operating business as opposed
to real estate. Accordingly, all gains and losses from this
investment are included in FFO which management believes provide a
more accurate reflection of the operating performance of the
Company. 4 In addition to the weighted average Common Shares
outstanding, basic and diluted FFO also assumes full conversion of
a weighted average 664 and 651 OP Units into Common Shares for the
quarters ended June 30, 2007 and 2006, respectively, and 662 and
652 OP Units into Common Shares for the six months ended June 30,
2007 and 2006, respectively. Diluted FFO also includes the assumed
conversion of Preferred OP Units into 38 and 337 Common Shares for
the quarters ended June 30, 2007 and 2006, respectively, and the
conversion of Preferred OP Units into 108 and 337 Common Shares for
the six months ended June 30, 2007 and 2006, respectively.
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