Acadia Realty Trust (NYSE:AKR), today reported operating results
for the quarter and year ended December 31, 2010. All per share
amounts are on a fully diluted basis.
Fourth Quarter and Full Year 2010
Highlights
Earnings Consistent With Guidance
- Funds from operations (“FFO”) per share
of $0.30 for fourth quarter 2010 and $1.23 for full year 2010
- Earnings per share (“EPS”) from
continuing operations for fourth quarter 2010 of $0.17 and $0.74
for full year 2010
Core Portfolio
- Current occupancy of 91.5% increased 30
basis points from third quarter 2010
- Same store net operating income (“NOI”)
decreased 0.9% for the full year and decreased 1.3% for the fourth
quarter 2010 compared to 2009
Balance Sheet
- Core portfolio debt, net of cash on
hand (“Net Debt”) to EBIDTA ratio of 3.9x
- Net Debt to Total Market Capitalization
of 32%
- Cash on hand and availability under
current credit facilities of $145 million at December 31,
2010
External Growth Initiatives
- Fund III acquired White City Shopping
Center for $56 million and has an additional acquisition under
contract for approximately $52 million which is anticipated to
close during the first quarter 2011
- BJ’s Wholesale Club opened at Fund II’s
Canarsie Plaza, which is currently 85% leased
- Fund II received an $11.1 million
distribution from its Albertsons investment, which has now realized
a cumulative equity multiple of 3.4 x on its investment
- Fund II’s leasehold interest in the
Neiman Marcus location at Oakbrook Center, which was held for sale
as of year-end, was subsequently sold for $8.2 million, resulting
in an unleveraged 16.5% IRR
Fourth Quarter and Full Year 2010
Operating Results
For the quarter ended December 31, 2010, FFO was $12.1 million,
compared to $10.0 million for the quarter ended December 31, 2009.
For the year ended December 31, 2010, FFO was $50.5 million
compared to $49.6 million for the year ended December 31, 2009.
Earnings for the quarters and years ended December 31, 2010 and
2009 were as follows:
Quarters
ended
Years
ended
December
31,
December
31,
2010 2009
Variance 2010
2009 Variance FFO
per share
$ 0.30 $
0.25 $ 0.05 $
1.23 $ 1.28 $
(0.05 ) EPS from continuing operations
$ 0.17 $ 0.12
$ 0.05 $ 0.74
$ 0.75 $ (0.01
) EPS
$ 0.17 $
0.16 $ 0.01 $
0.74 $ 0.82 $
(0.08 )
Following are the factors which contributed to the variance in
EPS from continuing operations for the quarter and year ended
December 31, 2010 as compared to the corresponding periods in
2009:
Variance 2010 v. 2009
Quarter
Year
2010 RCP Venture income, net of noncontrolling interests’
share and income taxes $0.03 $0.05 2010 lower general and
administrative costs 0.03 0.05 2010 non-cash gain on bargain
purchase of CityPoint
--
0.15 2010 decrease in mezzanine interest income (0.03) (0.01) 2009
reserve for mezzanine loan and development costs -- 0.06 2009
impairment charge related to a Fund I unconsolidated investment,
net of noncontrolling interests’ share -- 0.04 2009 gain on
extinguishment of convertible debt -- (0.19) 2009 lease termination
income -- (0.06) 2009 income from forfeited contract deposit --
(0.05) Other items, net
0.02 (0.05) Total
variance
$0.05 $(0.01)
EPS from discontinued operations decreased $0.07 for the full
year 2010 as compared to 2009 primarily as a result of gains
recognized on the sale of six Kroger Supermarket locations and a
core property during 2009.
Strong Balance Sheet with Low Leverage
and Access to Available Capital
As of December 31, 2010, Acadia’s solid balance sheet was
evidenced by the following:
Available Liquidity
- Total liquidity of $145 million,
including $86 million of cash on hand and $59 million available
under existing lines of credit, excluding the cash and credit
facilities of the Company’s opportunity funds (“Funds”)
- Approximately $250 million of committed
and unallocated Fund III investor capital as of December 31, 2010
available to fund Fund III’s future acquisitions and to repay
outstanding subscription line borrowings. Acadia’s pro-rata share
amounts to approximately $50 million
Low Leverage
- Core portfolio Net Debt to EBIDTA ratio
of 3.9 x
- Including the Company’s pro-rata share
of the Fund debt, a Net Debt to EBITDA ratio of 4.4 x
- Including the Company’s pro-rata share
of the Fund debt, Net Debt to Total Market Capitalization of 32%
and Debt to Total Market Capitalization of 38%
- Core portfolio fixed-charge coverage
ratio of 3.2 to 1 for the quarter ended December 31, 2010
- Combined fixed-charge coverage ratio,
including core portfolio and Funds, was 3.5 to 1 for the quarter
ended December 31, 2010
Limited Exposure to Interest Rate
Variability
- 100% of the Company’s core portfolio
debt is fixed at an average interest rate of 6.2%
- Including the Company’s pro-rata share
of Fund debt, 86% of the Company’s debt is fixed at an average
interest rate of 5.4%
Portfolio Performance
Occupancy and Same Store NOI
At December 31, 2010, Acadia’s core portfolio occupancy was
91.5%. This represents an increase of 30 basis points over the
91.2% occupancy at September 30, 2010 and a 110 basis point
decrease from year-end 2009 occupancy of 92.6%.
Acadia’s combined portfolio occupancy, including its core
portfolio and Funds, was 90.9% as of December 31, 2010, which
represents an increase of 10 basis points over occupancy at
September 30, 2010 and a decrease of 100 basis points from year-end
2009.
For the year ended December 31, 2010, core portfolio same store
NOI decreased 0.9% from 2009. Fourth quarter 2010 same store NOI
decreased 1.3% from fourth quarter 2009.
As previously discussed by the Company, 2010 occupancy and NOI
were negatively impacted on a short-term basis as a result of the
successful re-anchoring of the New Loudon Shopping Center in
Latham, NY. Acadia has executed leases for the entire 65,000 square
feet, including the expansion of the existing Price Chopper
supermarket, at a 50% increase in rents. The tenants are
anticipated to open during the first half of 2011. Adjusting for
the effects of the short-term downtime from this accretive
re-tenanting, portfolio occupancy at December 31, 2010 would have
been 93.2% and 2010 same store NOI for the core portfolio would
have decreased by 0.6% for the year.
Leasing Activity
For the year ended December 31, 2010, the Company realized an
increase in average rents of 5.1% in its core portfolio on 308,000
square feet of new and renewal leases. Excluding the effect of the
straight-lining of rents, the Company experienced a 1.9% decrease
in average rents.
During the fourth quarter of 2010, the Company realized an
increase in average rents of 0.5% in its core portfolio on 67,000
square feet of new and renewal leases. Excluding the effect of the
straight-lining of rents, the Company experienced a 4.1% decrease
in average rents.
External Growth Initiatives - Fund
Acquisitions, Disposition and RCP Income
Fund III – Acquisitions
During December 2010, a joint venture between Fund III and an
unaffiliated partner, Charter Realty & Development Corp.,
acquired White City Shopping Center for $56.0 million at an initial
unlevered yield of approximately 8.5%. At closing, the joint
venture also obtained $40.0 million of first mortgage financing.
The 255,000 square foot shopping center is located on Route 9, the
region’s main retail artery, and adjacent to the Worcester,
Massachusetts city line. The property also presents long term
re-anchoring and redevelopment opportunities.
In addition, Fund III has entered into a purchase agreement for
the acquisition of a portfolio of three properties for
approximately $52.0 million. It is expected that this transaction
will be completed during the first quarter of 2011. As the closing
of this transaction is subject to lender approval of the assignment
of existing debt and other customary closing conditions no
assurance can be given that the Fund will successfully complete
this transaction.
RCP Venture – Albertsons Distributions
During the fourth quarter of 2010, Fund II recognized income of
$11.1 million in connection with distributions from its Albertsons
investment. Acadia’s share of this income, after allocation to
noncontrolling interests, was $1.3 million, net of taxes. Through
December 31, 2010, Fund II has realized a cumulative equity
multiple of 3.4 x on this investment.
Fund II – Update and Disposition
During the fourth quarter of 2010, BJ’s Wholesale Club occupying
177,000 square feet, opened for business at Fund II’s Canarsie
Plaza. In addition, the New York Police Department and Planet
Fitness occupying a total of 48,000 square feet are anticipated to
commence operations during the first quarter of 2011. Including
these leases and other small shop leases, the 275,000 square foot
project is currently 85% leased.
During January 2011, Fund II completed the sale of its leasehold
interest in the Neiman Marcus location at Oakbrook Center, located
in Oak Brook, IL, for $8.2 million. Acquired in November 2005, this
investment has yielded an unleveraged 16.5% IRR.
Outlook - Earnings Guidance for
2011
The Company forecasts its 2011 annual FFO will range from $0.94
to $1.05 per share and 2011 EPS from $0.44 to $0.55. The following
table summarizes management’s 2011 guidance (dollars in millions,
except per share amounts):
2011 2010 Low High
Actual Core and pro-rata share of opportunity fund portfolio income
$ 42.5 $ 44.0 $ 48.2 Asset and property management
fee income, net of taxes 11.0 11.5 10.5 Transactional fee income,
net of taxes 6.0 7.0 5.7 Promote income from Funds, RCP Venture and
other income, net of taxes 2.0 3.0 1.9 General and administrative
expense (23.0 ) (22.5 ) (22.2 ) Gain on bargain purchase --
-- 6.4
FFO $ 38.5 $ 43.0
$ 50.5 FFO per share $ 0.94 $ 1.05
$ 1.23
The following is a reconciliation of the calculation of FFO per
diluted share and earnings per diluted share:
Guidance Range for
2011
Low High Earnings per diluted share $ 0.44
$ 0.55 Depreciation of real estate and amortization
of leasing costs: Wholly owned and consolidated partnerships 0.45
0.45 Unconsolidated partnerships 0.04 0.04 Noncontrolling interest
in Operating Partnership 0.01 0.01
Funds from operations $ 0.94 $ 1.05
For the core portfolio, the Company is assuming occupancy to
increase up to 50 basis points by the end of 2011 and for
same-store NOI to be between -1% and +1% for the year, before any
contemplated accretive re-anchoring activities. Additionally, the
forecast assumes the repayment of certain mezzanine capital
investments and potential redeployment into core and fund
investments. Management will discuss its 2011 earnings guidance and
related assumptions in further detail on its scheduled year-end
investor conference call.
Management Comments
“During the fourth quarter, along with continued progress within
our existing portfolio, we were able to execute on two exciting
Fund acquisitions,” stated Kenneth F. Bernstein, President and CEO
of Acadia Realty Trust. “With this re-acceleration of our
acquisition activity, as well as our healthy balance sheet, Acadia
is well-positioned for long-term growth.”
Investor Conference Call
Management will conduct a conference call on Wednesday, February
9, 2011 at 12:00 PM ET to review the Company's earnings and
operating results. The live conference call can be accessed by
dialing 866-800-8651 (internationally 617-614-2704). 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), and the passcode will be 30369487. The phone replay
will be available through Wednesday, February 16, 2011.
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 and mixed-use properties, including
neighborhood and community shopping centers located in dense urban
and suburban markets in major metropolitan areas.
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 that 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 Acadia’s future financial
results and its ability to capitalize on potential opportunities
arising from continued economic uncertainty. Factors that could
cause the Company’s forward-looking statements to differ from its
future results include, but are not limited to, those discussed
under the headings “Risk Factors” and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the
Company’s most recent annual report on Form 10-K filed with the SEC
on March 1, 2010 (“Form 10-K”) and other periodic reports filed
with the SEC, including risks related to: (i) the current global
financial environment and its effect on retail tenants; (ii) the
Company’s reliance on revenues derived from major tenants; (iii)
the Company’s limited control over joint venture investments; (iv)
the Company’s partnership structure; (v) real estate and the
geographic concentration of our properties; (vi) market interest
rates; (vii) leverage; (viii) liability for environmental matters;
(ix) the Company’s growth strategy; (x) the Company’s status as a
REIT; (xi) uninsured losses and (xii) 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 1
For the Quarters and Years ended
December 31, 2010 and 2009
(dollars in thousands, except per share
data)
For the
Quarters ended For the Years ended
December
31,
December
31,
Revenues 2010 2009 2010
2009 Minimum rents $ 27,776 $ 25,067 $
106,440 $ 95,239 Percentage rents 153 85 473 477 Mortgage interest
income 3,724 4,831 19,161 19,698 Expense reimbursements 6,191 5,730
22,030 20,982 Lease termination income 225 25 290 2,751 Other
property income 477 1,345 2,140 2,895 Management fee income 242 444
1,424 1,961 Other
--
--
-- 1,700 Total revenues
38,788 37,527 151,958
145,703
Operating expenses Property operating 9,379
8,819 30,914 29,651 Real estate taxes 4,601 4,507 18,245 16,812
General and administrative 4,365 5,438 20,217 22,013 Depreciation
and amortization 12,008 9,660 40,115 36,634 Abandonment of project
costs -- 3 3 2,487 Reserve for notes receivable --
-- -- 1,734 Total
operating expenses 30,353 28,427
109,494 109,331 Operating income 8,435 9,100
42,464 36,372 Equity in earnings (losses) of unconsolidated
affiliates 10,361 1,922 10,971 (1,529 ) Impairment of investment in
unconsolidated affiliate -- (113 ) -- (3,768 ) Other interest
(expense)/income (54 ) 269 408 642 Interest expense and other
finance costs (8,544 ) (8,372 ) (34,471 ) (32,154 ) Gain from
bargain purchase -- -- 33,805 -- Gain on extinguishment of debt
-- -- -- 7,057
Income from continuing operations before income taxes 10,198
2,806 53,177 6,620 Income tax expense (1,021 ) (192 )
(2,890 ) (1,541 ) Income from continuing operations
9,177 2,614 50,287
5,079
ACADIA REALTY TRUST AND
SUBSIDIARIES
Financial Highlights 1
For the Quarters and Years ended
December 31, 2010 and 2009
(dollars in thousands, except per share
data)
For the
Quarters ended For the Years ended
December
31,
December
31,
2010 2009 2010
2009 Discontinued operations: Operating income from
discontinued operations 205 80 380 484 Gain on sale of property
--
1,506 -- 7,143
Income from discontinued operations 205 1,586
380 7,627 Net income
9,382 4,200 50,667 12,706
(Income) loss attributable to noncontrolling interests in
subsidiaries: Continuing operations (2,206 ) 2,228 (20,307 ) 23,472
Discontinued operations (164 ) (36 ) (303 )
(5,045 ) Net (income) loss attributable to noncontrolling
interests in subsidiaries (2,370 ) 2,192
(20,610 ) 18,427 Net income
attributable to Common Shareholders $ 7,012 $ 6,392 $
30,057 $ 31,133
Supplemental
Information Income from continuing operations attributable to
Common Shareholders $ 6,971 $ 4,842 $ 29,980 $ 28,551 Income from
discontinued operations attributable to Common Shareholders
41 1,550 77 2,582
Net income attributable to Common Shareholders $ 7,012 $
6,392 $ 30,057 $ 31,133
Net income attributable to Common
Shareholders per
Common Share – Basic
Net income per Common Share – Continuing operations $ 0.17 $ 0.12 $
0.75 $ 0.75 Net income per Common Share – Discontinued operations
-- 0.04 -- 0.07
Net income per Common Share $ 0.17 $ 0.16 $
0.75 $ 0.82 Weighted average Common Shares
40,257 39,756 40,136
38,005
Net income attributable to Common
Shareholders per
Common Share – Diluted 2
Net income per Common Share – Continuing operations $ 0.17 $ 0.12 $
0.74 $ 0.75 Net income per Common Share – Discontinued operations
-- 0.04 -- 0.07
Net income per Common Share $ 0.17 $ 0.16 $
0.74 $ 0.82 Weighted average Common Shares
40,594 40,038 40,406
38,242
ACADIA REALTY TRUST AND
SUBSIDIARIES
Financial Highlights 1
For the Quarters and Years ended
December 31, 2010 and 2009
(dollars in thousands, except per share
data)
RECONCILIATION OF NET INCOME TO FUNDS
FROM OPERATIONS 3
For the Quarters ended For the Years ended
December
31,
December
31,
2010 2009 2010
2009 Net income attributable to Common
Shareholders $ 7,012 $ 6,392 $ 30,057 $ 31,133 Depreciation
of real estate and amortization of leasing costs
(net of noncontrolling interests'
share):
Consolidated affiliates 4,688 4,608 18,445 18,847 Unconsolidated
affiliates 374 372 1,561 1,604 Gain on sale (net of noncontrolling
interests' share): Consolidated affiliates
--
(1,506 ) -- (2,436 ) Unconsolidated affiliates -- -- -- -- Income
attributable to noncontrolling interests’ in Operating Partnership
68 120 377 464 Distributions – Preferred OP Units 5
5 18 19 Funds from
operations $ 12,147 $ 9,991 $ 50,458 $ 49,631 Funds
from operations per share – Diluted Weighted average Common Shares
and OP Units
4 40,979 40,728
40,876 38,913 Funds from operations, per share $ 0.30
$ 0.25 $ 1.23 $ 1.28
ACADIA REALTY TRUST AND
SUBSIDIARIES
Financial Highlights 1
For the Quarters and Years ended
December 31, 2010 and 2009
(dollars in thousands)
RECONCILIATION OF OPERATING INCOME TO
NET PROPERTY
OPERATING INCOME (“NOI”)
3
For the Quarters ended For the Years ended
December
31,
December
31,
2010 2009 2010
2009 Operating income $ 8,435 $ 9,100 $ 42,464 $
36,372 Add back: General and administrative 4,365 5,438
20,217 22,013 Depreciation and amortization 12,008 9,660 40,115
36,634 Abandonment of project costs
--
3 3 2,487 Reserve for notes receivable
--
-- -- 1,734 Less: Management fee income (242 ) (444 ) (1,424 )
(1,961 ) Mortgage interest income (3,724 ) (4,831 ) (19,161 )
(19,698 ) Other -- -- -- (1,700 ) Lease termination income (225 )
(25 ) (290 ) (2,751 ) Straight line rent and other adjustments
(1,158 ) 99 (3,830 ) (1,562 )
Consolidated NOI 19,459 19,000
78,094 71,568 Noncontrolling
interest in NOI (5,724 ) (5,383 ) (22,640 )
(15,543 ) Pro-rata share of NOI $ 13,735 $ 13,617
$ 55,454 $ 56,025
SELECTED BALANCE SHEET INFORMATION As
of December 31,
2010
December 31,
2009
Cash and cash equivalents $ 120,592 $ 93,808
Rental property, at cost 1,142,407 1,063,143 Total assets 1,524,806
1,382,464 Notes payable 854,924 780,197 Total liabilities 937,284
849,987
Notes:
1
For additional information and analysis concerning the
Company’s results of operations, reference is made to the Company’s
Quarterly Supplemental Disclosure furnished on Form 8-K to the SEC
and included on the Company’s website at www.acadiarealty.com.
2
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
noncontrolling interests 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.
3
The Company considers funds from operations (“FFO”) as defined by
the National Association of Real Estate Investment Trusts
(“NAREIT”) and net property 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.
4
In addition to the weighted average Common Shares outstanding,
basic and diluted FFO also assumes full conversion of a weighted
average 360 and 665 OP Units into Common Shares for the quarters
ended December 31, 2010 and 2009, respectively and 470 and 671 OP
Units into Common Shares for the years ended December 31, 2010 and
2009, respectively. Diluted FFO also includes the assumed
conversion of Preferred OP Units into 25 Common Shares for the
quarters and years ended December 31, 2010 and 2009, respectively.
In addition, diluted FFO also includes the effect of employee share
options of 337 and 281 Common Shares for the quarters ended
December 31, 2010 and 2009, respectively, and 245 and 212 Common
Shares for the years ended December 31, 2010 and 2009,
respectively.
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