We may not be able to renew current leases
and the terms of re-letting (including the cost of concessions to tenants) may
be less favorable to us than current lease terms.
Upon the expiration of current leases for space located in our
properties, we may not be able to re-let all or a portion of that space, or the
terms of re-letting (including the cost of concessions to tenants) may be less
favorable to us than current lease terms. If we are unable to re-let promptly
all or a substantial portion of the space located in our properties or if the
rental rates we receive upon re-letting are significantly lower than current
rates, our net income and ability to make expected distributions to our
shareholders will be adversely affected due to the resulting reduction in rent
receipts. There can be no assurance that we will be able to retain tenants in
any of our properties upon the expiration of their leases. See Item 2.
Properties Lease Expirations in this Annual Report on Form 10-K for
additional information as to the scheduled lease expirations in our portfolio.
The current economic environment, while
improving, may cause us to lose tenants and may impair our ability to borrow
money to purchase properties, refinance existing debt or finance our current
redevelopment projects.
Our operations and performance depend on general economic conditions,
including the health of the consumer. The U.S. economy recently experienced a
financial downturn, with a decline in consumer spending, credit tightening and
high unemployment. This economic downturn has had, and may continue to have, an
adverse affect on the businesses of many of our tenants. We and the Opportunity
Funds may experience higher vacancy rates as well as delays in re-leasing
vacant space.
The current downturn has had, and may continue to have, an
unprecedented impact on the global credit markets. While we currently believe
we have adequate sources of liquidity, there can be no assurance that we will
be able to obtain mortgage loans to purchase additional properties, obtain
financing to complete current redevelopment projects, or successfully refinance
our properties as loans become due. To the extent that the availability of
credit is limited, it would also adversely impact our notes receivable as
counterparties may not be able to obtain the financing required to repay the
loans upon maturity.
The bankruptcy of, or a downturn in the business
of, any of our major tenants or a significant number of our smaller tenants may
adversely affect our cash flows and property values.
The bankruptcy of, or a downturn in the business of, any of our major
tenants causing them to reject their leases, or not renew their leases as they
expire, or renew at lower rental rates may adversely affect our cash flows and
property values. Furthermore, the impact of vacated anchor space and the
potential reduction in customer traffic may adversely impact the balance of
tenants at a shopping center.
Certain of our tenants have experienced financial difficulties and have
filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code
(Chapter 11 Bankruptcy). Pursuant to bankruptcy law, tenants have the right
to reject their leases. In the event the tenant exercises this right, the
landlord generally has the right to file a claim for lost rent equal to the
greater of either one years rent (including tenant expense reimbursements) for
remaining terms greater than one year, or 15% of the rent remaining under the
balance of the lease term, but not to exceed three years rent. Actual amounts
to be received in satisfaction of those claims will be subject to the tenants
final plan of reorganization and the availability of funds to pay its
creditors.
Since January 1, 2010, there has been one significant tenant
bankruptcy within our portfolio:
On December 12, 2010, the Great Atlantic & Pacific Tea Company,
Inc. (A&P) filed for protection under Chapter 11 Bankruptcy. A&P
operates in four locations in our Core Portfolio, totaling approximately
198,000 square feet. Rental revenues from A&P at these locations totaled
$3.5 million, $3.4 million, and $3.3 million for the years ended December 31,
2010, 2009 and 2008, respectively. In addition, A&P operates in one Fund
III location, totaling approximately 65,000 square feet. Rental revenues from
A&P at this location totaled $1.0 million for each of the years ended
December 31, 2010 and 2009. A&P has availed itself of the statutory maximum
time to assume or reject these leases which is July 10, 2011. With respect to
two of these leases, A&P has received a bankruptcy court order to close the
two locations on or around April 15, 2011 and to exit the locations on or around
April 30, 2011.
There are risks relating to investments in
real estate.
Real property investments are subject to multiple risks. Real estate
values are affected by a number of factors, including: changes in the general
economic climate, local conditions (such as an oversupply of space or a
reduction in demand for real estate in an area), the quality and philosophy of
management, competition from other available space, the ability of the owner to
provide adequate maintenance and insurance and to control variable operating
costs. Shopping centers, in particular, may be affected by changing perceptions
of retailers or shoppers regarding the safety, convenience and attractiveness
of the shopping center and by the overall climate for the retail industry. Real
estate values are also affected by such factors as government regulations,
interest rate levels, the availability of financing and potential liability
under, and changes in, environmental, zoning, tax and other laws. A significant
portion of our income is derived from rental income from real property. Our
income and cash flow would be adversely affected if a significant number of our
tenants were unable to rent our vacant space to viable tenants on economically
favorable terms. In the event of default by a tenant, we may experience delays
in enforcing, and incur substantial costs to enforce, our rights as a landlord.
In addition, certain significant expenditures associated with each equity
investment (such as mortgage payments, real estate taxes and maintenance costs)
are generally not reduced even though there may be a reduction in income from
the investment.
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Our ability to change our portfolio is
limited because real estate investments are illiquid.
Equity investments in real estate are relatively illiquid and,
therefore, our ability to change our portfolio promptly in response to changed
conditions is limited. Our Board of Trustees may establish investment criteria
or limitations as it deems appropriate, but currently does not limit the number
of properties in which we may seek to invest or on the concentration of
investments in any one geographic region. We could change our investment,
disposition and financing policies without a vote of our shareholders.
We could become highly leveraged, resulting
in increased risk of default on our obligations and in an increase in debt
service requirements, which could adversely affect our financial condition and
results of operations and our ability to pay distributions.
We have incurred, and expect to continue to incur, indebtedness to
support our activities. Neither our Declaration of Trust nor any policy
statement formally adopted by our Board of Trustees limits either the total
amount of indebtedness or the specified percentage of indebtedness that we may
incur. Accordingly, we could become more highly leveraged, resulting in
increased risk of default on our obligations and in an increase in debt service
requirements, which could adversely affect our financial condition and results
of operations and our ability to make distributions.
Interest expense on our variable rate debt as of December 31, 2010
would increase by $4.4 million annually for a 100 basis point increase in
interest rates. We may seek additional variable-rate financing if and when
pricing and other commercial and financial terms warrant. As such, we would
consider hedging against the interest rate risk related to such additional
variable rate debt, primarily through interest rate swaps but can use other
means.
We enter into interest rate hedging transactions, including interest
rate swaps and cap agreements, with counterparties. There can be no guarantee
that the future financial condition of these counterparties will enable them to
fulfill their obligations under these agreements.
Competition may adversely affect our ability
to purchase properties and to attract and retain tenants.
There are numerous commercial developers, real estate companies,
financial institutions and other investors with greater financial resources
than we have that compete with us in seeking properties for acquisition and
tenants who will lease space in our properties. Our competitors include other
REITs, financial institutions, insurance companies, pension funds, private
companies and individuals. This competition may result in a higher cost for
properties that we wish to pay. In addition, retailers at our properties face
increasing competition from outlet malls, discount shopping clubs, Internet
commerce, direct mail and telemarketing, which could (i) reduce rents
payable to us; (ii) reduce our ability to attract and retain tenants at
our properties leading to increased vacancy rates at our properties.
We could be adversely affected by poor market
conditions where properties are geographically concentrated.
Our performance depends on the economic conditions in markets in which
our properties are concentrated. We have significant exposure to the greater
New York region, from which we derive 38% of the annual base rents within our
Core Portfolio. Our operating results could be adversely affected if market
conditions, such as an oversupply of space or a reduction in demand for real
estate, in this area occurs.
We have pursued, and may in the future
continue to pursue extensive growth opportunities, which may result in
significant demands on our operational, administrative and financial resources.
We are pursuing extensive growth opportunities. This expansion places
significant demands on our operational, administrative and financial resources.
The continued growth of our real estate portfolio can be expected to continue
to place a significant strain on our resources. Our future performance will
depend in part on our ability to successfully attract and retain qualified
management personnel to manage the growth and operations of our business. In
addition, the acquired properties may fail to operate at expected levels due to
the numerous factors that may affect the value of real estate. There can be no
assurance that we will have sufficient resources to identify and manage the
properties.
Our inability to carry out our growth
strategy could adversely affect our financial condition and results of
operations.
Our earnings growth strategy is based on the acquisition and
development of additional properties, including acquisitions through
co-investment programs such as our Opportunity Funds. In the context of our
business plan, redevelopment generally means an expansion or renovation of an
existing property. The consummation of any future acquisitions will be subject
to satisfactory completion of our extensive valuation analysis and due
diligence review and to the negotiation of definitive documentation. We cannot
be sure that we will be able to implement our strategy because we may have
difficulty finding new properties, negotiating with new or existing tenants or
securing acceptable financing.
Acquisitions of additional properties entail the risk that investments
will fail to perform in accordance with expectations, including operating and
leasing expectations. Redevelopment is subject to numerous risks, including
risks of construction delays, cost overruns
14
or uncontrollable events that may increase project costs, new project
commencement risks such as the receipt of zoning, occupancy and other required
governmental approvals and permits, and incurring development costs in
connection with projects that are not pursued to completion.
A component of our growth strategy is through private-equity type
investments made through our RCP Venture. These include investments in
operating retailers. The inability of the retailers to operate profitably would
have an adverse impact on income realized from these investments. Through our
investments in joint ventures we have also invested in operating businesses
that have operational risk in addition to the risks associated with real estate
investments, including among other risks, human capital issues, adequate supply
of product and material, and merchandising issues.
We operate through a partnership structure,
which could have an adverse effect on our ability to manage our assets.
Our primary property-owning vehicle is the Operating Partnership, of
which we are the general partner. Our acquisition of properties through the
Operating Partnership in exchange for interests in the Operating Partnership
may permit certain tax deferral advantages to limited partners who contribute
properties to the Operating Partnership. Since properties contributed to the
Operating Partnership may have unrealized gain attributable to the difference
between the fair market value and adjusted tax basis in such properties prior
to contribution, the sale of such properties could cause adverse tax
consequences to the limited partners who contributed such properties. Although
we, as the general partner of the Operating Partnership, generally have no
obligation to consider the tax consequences of our actions to any limited
partner, there can be no assurance that the Operating Partnership will not
acquire properties in the future subject to material restrictions designed to
minimize the adverse tax consequences to the limited partners who contribute
such properties. Such restrictions could result in significantly reduced
flexibility to manage our assets.
Exclusivity obligation to our Opportunity
Funds.
Under the terms of our Fund III joint venture, which is similar to the
terms of Fund I and Fund II, we are required to first offer to Fund III all of
our opportunities to acquire retail shopping centers with limited exceptions.
We may only pursue opportunities to acquire retail shopping centers directly if
(i) the ownership of the acquisition opportunity by Fund III would create a
material conflict of interest for us; (ii) we require the acquisition
opportunity for a like-kind exchange; or (iii) the consideration payable
for the acquisition opportunity is our Common Shares, OP Units or other
securities. As a result, we may not be able to make attractive acquisitions
directly and may only receive a minority interest in such acquisitions through
Fund III.
Risks of joint ventures.
Partnership or joint venture investments
may involve risks not otherwise present for investments made solely by us,
including the possibility that our partner or co-venturer might become
bankrupt, and that our partner or co-venturer may take action contrary to our
instructions, requests, policies or objectives, including our policy with
respect to maintaining our qualification as a REIT. Other risks of joint
venture investments include impasse on decisions, such as a sale, because
neither we nor a joint venture partner would have full control over the joint
venture. Also, there is no limitation under our organizational documents as to
the amount of funds that may be invested in joint ventures.
Any disputes that may arise between joint venture partners and us may
result in litigation or arbitration that would increase our expenses and
prevent our officers and/or directors from focusing their time and effort on
our business. Consequently, actions by or disputes with joint venture partners
might result in subjecting properties owned by the joint venture to additional
risk. In addition, we may in certain circumstances be liable for the actions of
our third-party joint venture partners.
During 2010, 2009 and 2008, our Fund I and Mervyns I joint ventures
provided Promote income. There can be no assurance that the joint ventures will
continue to operate profitably and thus provide additional Promote income in
the future.
These factors could limit the return that we receive from such
investments or cause our cash flows to be lower than our estimates. In
addition, a partner or co-venturer may not have access to sufficient capital to
satisfy its funding obligations to the joint venture.
Market factors could have an adverse effect
on our share price.
One of the factors that may influence the trading price of our Common
Shares is the annual dividend rate on our Common Shares as a percentage of its
market price. An increase in market interest rates may lead purchasers of our
Common Shares to seek a higher annual dividend rate, which could adversely
affect the market price of our Common Shares. A decline in our share price, as
a result of this or other market factors, could unfavorably impact our ability
to raise additional equity in the public markets.
The loss of a key executive officer could have
an adverse effect on us.
Our success depends on the contribution of key management members. The
loss of the services of Kenneth F. Bernstein, President and Chief Executive
Officer, or other key executive-level employees could have a material adverse effect
on our results of operations. We have obtained key-man life insurance for Mr.
Bernstein. In addition, we have entered into an employment agreement with
Mr. Bernstein; however, it could be terminated by Mr. Bernstein. We have
not entered into employment agreements with other key
15
executive level employees.
Our Board of Trustees may change our
investment policy without shareholder approval.
Our Board of Trustees may determine to change our investment and
financing policies, our growth strategy and our debt, capitalization,
distribution, acquisition, disposition and operating policies. Our Board of
Trustees may establish investment criteria or limitations as it deems
appropriate, but currently does not limit the number of properties in which we
may seek to invest or on the concentration of investments in any one geographic
region. Although our Board of Trustees has no present intention to revise or
amend our strategies and policies, it may do so at any time without a vote by
our shareholders. Accordingly, the results of decisions made by our Board of
Trustees and implemented by management may or may not serve the interests of
all of our shareholders and could adversely affect our financial condition or
results of operations, including our ability to distribute cash to shareholders
or qualify as a REIT.
Distribution requirements imposed by law
limit our operating flexibility.
To maintain our status as a REIT for federal income tax purposes, we
are generally required to distribute to our shareholders at least 90% of our
taxable income for each calendar year. Pursuant to IRS pronouncements, up to
90% of such distribution may be made in Common Shares rather than cash. Our
taxable income is determined without regard to any deduction for dividends paid
and by excluding net capital gains. To the extent that we satisfy the
distribution requirement, but distribute less than 100% of our taxable income,
we will be subject to federal corporate income tax on our undistributed income.
In addition, we will incur a 4% nondeductible excise tax on the amount, if any,
by which our distributions in any year are less than the sum of (i) 85% of
our ordinary income for that year; (ii) 95% of our capital gain net income
for that year and; (iii) 100% of our undistributed taxable income from
prior years. We intend to continue to make distributions to our shareholders to
comply with the distribution requirements of the Internal Revenue Code and to
minimize exposure to federal income and nondeductible excise taxes. Differences
in timing between the receipt of income and the payment of expenses in
determining our income as well as required debt amortization payments and the
capitalization of certain expenses could require us to borrow funds on a
short-term basis to meet the distribution requirements that are necessary to
achieve the tax benefits associated with qualifying as a REIT. The distribution
requirements also severely limit our ability to retain earnings to acquire and
improve properties or retire outstanding debt.
There can be no assurance we have qualified
or will remain qualified as a REIT for federal income tax purposes.
We believe that we have consistently met the requirements for
qualification as a REIT for federal income tax purposes beginning with our
taxable year ended December 31, 1993, and we intend to continue to meet
these requirements in the future. However, qualification as a REIT involves the
application of highly technical and complex provisions of the Internal Revenue
Code, for which there are only limited judicial or administrative
interpretations. No assurance can be given that we have qualified or will
remain qualified as a REIT. The Internal Revenue Code provisions and income tax
regulations applicable to REITs differ significantly from those applicable to other
corporations. The determination of various factual matters and circumstances
not entirely within our control can potentially affect our ability to continue
to qualify as a REIT. In addition, no assurance can be given that future
legislation, regulations, administrative interpretations or court decisions
will not significantly change the requirements for qualification as a REIT or
adversely affect the federal income tax consequences of such qualification.
Under current law, if we fail to qualify as a REIT, we would not be allowed a
deduction for dividends paid to shareholders in computing our net taxable
income. In addition, our income would be subject to tax at the regular
corporate rates. We also could be disqualified from treatment as a REIT for the
four taxable years following the year during which qualification was lost. Cash
available for distribution to our shareholders would be significantly reduced
for each year in which we do not qualify as a REIT. In that event, we would not
be required to continue to make distributions. Although we currently intend to
continue to qualify as a REIT, it is possible that future economic, market,
legal, tax or other considerations may cause us, without the consent of our
shareholders, to revoke the REIT election or to otherwise take action that
would result in disqualification.
Limits on ownership of our capital shares.
For the Company to qualify as a REIT for federal income tax purposes,
among other requirements, not more than 50% of the value of our capital shares
may be owned, directly or indirectly, by five or fewer individuals (as defined
in the Internal Revenue Code to include certain entities) during the last half
of each taxable year after 1993, and such capital shares must be beneficially
owned by 100 or more persons during at least 335 days of a taxable year of
12 months or during a proportionate part of a shorter taxable year (in
each case, other than the first such year). Our Declaration of Trust includes
certain restrictions regarding transfers of our capital shares and ownership
limits that are intended to assist us in satisfying these limitations. These
restrictions and limits may not be adequate in all cases, however, to prevent
the transfer of our capital shares in violation of the ownership limitations.
The ownership limit discussed above may have the effect of delaying, deferring
or preventing someone from taking control of us.
Actual or constructive ownership of our capital shares in excess of the
share ownership limits contained in our Declaration of Trust would cause the
violative transfer or ownership to be null and void from the beginning and
subject to purchase by us at a price equal to the lesser of (i) the price
stipulated in the challenged transaction; and (ii) the fair market value of
such shares (determined in accordance with the rules set forth in our
Declaration of Trust). As a result, if a violative transfer were made, the
recipient of the shares would not acquire any economic or voting rights
attributable to the transferred shares. Additionally, the constructive
ownership
16
rules for these limits are complex and groups of related individuals or
entities may be deemed a single owner and consequently in violation of the
share ownership limits.
Concentration of ownership by certain investors.
Six institutional shareholders own 5% or more individually, and 53.8%
in the aggregate, of our Common Shares. A significant concentration of
ownership may allow an investor or a group of investors to exert a greater
influence over our management and affairs and may have the effect of delaying,
deferring or preventing a change in control of us.
Restrictions on a potential change of control.
Our Board of Trustees is authorized by our Declaration of Trust to
establish and issue one or more series of preferred shares without shareholder
approval. We have not established any series of preferred shares. However, the
establishment and issuance of a series of preferred shares could make more
difficult a change of control of us that could be in the best interest of the
shareholders.
In addition, we have entered into an employment agreement with our
Chief Executive Officer and severance agreements are in place with our
executives which provide that, upon the occurrence of a change in control of us
and either the termination of their employment without cause (as defined) or
their resignation for good reason (as defined), those executive officers would
be entitled to certain termination or severance payments made by us (which may
include a lump sum payment equal to defined percentages of annual salary and
prior years average bonuses, paid in accordance with the terms and conditions
of the respective agreement), which could deter a change of control of us that
could be in our best interest.
Legislative or regulatory tax changes could
have an adverse effect on us.
There are a number of issues associated with an investment in a REIT
that are related to the federal income tax laws, including, but not limited to,
the consequences of a companys failing to continue to qualify as a REIT. At
any time, the federal income tax laws governing REITs or the administrative
interpretations of those laws may be amended or modified. Any new laws or
interpretations may take effect retroactively and could adversely affect us or
our shareholders. Reduced tax rates applicable to certain corporate dividends
paid to most domestic noncorporate shareholders are not generally available to
REIT shareholders since a REITs income generally is not subject to corporate
level tax. As a result, investment in non-REIT corporations may be viewed as
relatively more attractive than investment in REITs by domestic noncorporate
investors. This could adversely affect the market price of the Companys
shares.
Our development and construction activities
could affect our operating results.
We intend to continue the selective
development and construction of retail properties. As opportunities arise, we
expect to delay construction until sufficient pre-leasing is reached and
financing is in place. Our development and construction activities include
risks that:
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We may
abandon development opportunities after expending resources to determine
feasibility;
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Construction
costs of a project may exceed our original estimates;
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Occupancy
rates and rents at a newly completed property may not be sufficient to make
the property profitable;
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Financing
for development of a property may not be available to us on favorable terms;
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We may not
complete construction and lease-up on schedule, resulting in increased debt
service expense and construction costs; and
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We may not
be able to obtain, or may experience delays in obtaining necessary zoning,
land use, building, occupancy and other required governmental permits and
authorizations.
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Additionally, the time frame required for development, construction and
lease-up of these properties means that we may not realize a significant cash
return for several years. If any of the above events occur, the development of
properties may hinder our growth and have an adverse effect on our results of
operations and cash flows. In addition, new development activities, regardless
of whether or not they are ultimately successful, typically require substantial
time and attention from management.
Redevelopments and acquisitions may fail to
perform as expected.
Our investment strategy includes the redevelopment and acquisition of
shopping centers in supply contained markets in densely populated areas with
high average household incomes and significant barriers to entry. The redevelopment
and acquisition of properties entails risks that include the following, any of
which could adversely affect our results of operations and our ability to meet
our obligations:
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the property
may fail to achieve the returns we have projected, either temporarily or for
extended periods;
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we may not
be able to identify suitable properties to acquire or may be unable to
complete the acquisition of the properties we identify;
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we may not
be able to integrate an acquisition into our existing operations
successfully;
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properties
we redevelop or acquire may fail to achieve the occupancy or rental rates we
project, within the time frames we project, at the time we make the decision
to invest, which may result in the properties failure to achieve the returns
we projected;
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our
pre-acquisition evaluation of the physical condition of each new investment
may not detect certain defects or identify necessary repairs until after the
property is acquired, which could significantly increase our total
acquisition costs or decrease cash flow from the property; and
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our
investigation of a property or building prior to our acquisition, and any
representations we may receive from the seller of such building or property,
may fail to reveal various liabilities, which could reduce the cash flow from
the property or increase our acquisition cost.
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Climate change and catastrophic risk from natural perils.
Some of our current
properties could be subject to potential natural or other disasters. We may acquire
properties that are located in areas which are subject to natural disasters.
Any properties located in coastal regions would therefore be affected by any
future increases in sea levels or in the frequency or severity of hurricanes
and tropical storms, whether such increases are caused by global climate
changes or other factors.
Climate change is a long-term change in the
statistical distribution of weather patterns over periods of time that range
from decades to millions of years. It may be a change in the average weather
conditions or a change in the distribution of weather events with respect to an
average, for example, greater or fewer extreme weather events. Climate change
may be limited to a specific region, or may occur across the whole Earth.
There
may be significant physical effects of climate change that have the potential
to have a material effect on our business and operations. These effects can
impact our personnel, physical assets, tenants and overall operations.
Physical
impacts of climate change may include:
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Increased
storm intensity and severity of weather (e.g., floods or hurricanes);
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Sea level rise; and
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Extreme temperatures.
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As a result
of these physical impacts from climate-related events, we may be vulnerable
to the following:
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Risks of
property damage to our shopping centers;
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Indirect
financial and operational impacts from disruptions to the operations of major
tenants located in our shopping centers from severe weather, such as
hurricanes or floods;
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Increased
insurance premiums and deductibles, or a decrease in the availability of
coverage, for properties in areas subject to severe weather;
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Increased
insurance claims and liabilities;
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Increase in
energy cost impacting operational returns;
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Changes in
the availability or quality of water, or other natural resources on which the
tenants business depends;
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Decreased
consumer demand for consumer products or services resulting from physical
changes associated with climate change (e.g., warmer temperatures or
decreasing shoreline could reduce demand for residential and commercial
properties previously viewed as desirable);
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Incorrect
long term valuation of an equity investment due to changing conditions not
previously anticipated at the time of the investment; and
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Economic
disruptions arising from the above.
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Possible liability relating to environmental matters.
Under various federal, state and local environmental laws, statutes,
ordinances, rules and regulations, as an owner of real property, we may be
liable for the costs of removal or remediation of certain hazardous or toxic
substances at, on, in or under our property, as well as certain other potential
costs relating to hazardous or toxic substances (including government fines and
penalties and damages for injuries to persons and adjacent property). These
laws may impose liability without regard to whether we knew of, or were
responsible for, the presence or disposal of those substances. This liability
may be imposed on us in connection with the activities of an operator of, or
tenant at, the property. The cost of any required remediation, removal, fines
or personal or property damages and our liability therefore could exceed the
value of the property and/or our aggregate assets. In addition, the presence of
those substances, or the failure to properly dispose of or remove those
substances, may adversely affect our ability to sell or rent that property or
to borrow using that property as collateral, which, in turn, could reduce our
revenues and affect our ability to make distributions.
A property can also be adversely affected either through physical
contamination or by virtue of an adverse effect upon value attributable to the
migration of hazardous or toxic substances, or other contaminants that have or
may have emanated from other properties. Although our tenants are primarily
responsible for any environmental damages and claims related to the leased
premises, in the event of the bankruptcy or inability of any of our tenants to
satisfy any obligations with respect to the property leased to that tenant, we
may be required to satisfy such obligations. In addition, we may be held
directly liable for any such damages or claims
18
irrespective of the provisions of any lease.
From time to time, in connection with the conduct of our business, and
prior to the acquisition of any property from a third party or as required by
our financing sources, we authorize the preparation of Phase I environmental
reports and, when necessary, Phase II environmental reports, with respect to
our properties. Based upon these environmental reports and our ongoing review
of our properties, we are currently not aware of any environmental condition
with respect to any of our properties that we believe would be reasonably
likely to have a material adverse effect on us. There can be no assurance,
however, that the environmental reports will reveal all environmental
conditions at our properties or that the following will not expose us to
material liability in the future:
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The
discovery of previously unknown environmental conditions;
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Changes in
law;
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Activities
of tenants; and
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Activities
relating to properties in the vicinity of our properties.
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Changes in laws increasing the potential liability for environmental
conditions existing on properties or increasing the restrictions on discharges
or other conditions may result in significant unanticipated expenditures or may
otherwise adversely affect the operations of our tenants, which could adversely
affect our financial condition or results of operations.
Uninsured losses or a loss in excess of
insured limits could adversely affect our financial condition.
We carry comprehensive general liability, fire, extended coverage, loss
of rent insurance, and environmental liability on most of our properties, with
policy specifications and insured limits customarily carried for similar
properties. However, with respect to those properties where the leases do not
provide for abatement of rent under any circumstances, we generally do not
maintain loss of rent insurance. In addition, there are certain types of
losses, such as losses resulting from wars, terrorism or acts of God that
generally are not insured because they are either uninsurable or not
economically insurable. Should an uninsured loss or a loss in excess of insured
limits occur, we could lose capital invested in a property, as well as the
anticipated future revenues from a property, while remaining obligated for any
mortgage indebtedness or other financial obligations related to the property.
Any loss of these types would adversely affect our financial condition.
Future
terrorist attacks or civil unrest could harm the demand for, and the value of,
our properties.
Future terrorist attacks or civil unrest, such as the attacks that
occurred in New York, Pennsylvania and Washington, D.C. on September 11,
2001, and other acts of terrorism or war, could harm the demand for, and the
value of, our properties. Terrorist attacks could directly impact the value of
our properties through damage, destruction, loss or increased security costs,
and the availability of insurance for such acts may be limited or may be
subject to substantial cost increases. To the extent that our tenants are
impacted by future attacks, their ability to continue to honor obligations
under their existing leases could be adversely affected. A decrease in retail
demand could make it difficult for us to renew or re-lease our properties at
lease rates equal to or above historical rates. These acts might erode business
and consumer confidence and spending, and might result in increased volatility
in national and international financial markets and economies. Any one of these
events might decrease demand for real estate, decrease or delay the occupancy of
our properties, and limit our access to capital or increase our cost of raising
capital.
Outages,
computer viruses and similar events could disrupt our operations.
We rely on information technology networks
and systems, some of which are owned and operated by third parties, to process,
transmit and store electronic information. Any of these systems may be
susceptible to outages due to fire, floods, power loss, telecommunications
failures, terrorist attacks and similar events. Despite the implementation of
network security measures, our systems and those of third parties on which we
rely may also be vulnerable to computer viruses and similar disruptions. If we
and the third parties on whom we rely are unable to prevent such outages and
breaches, our operations could be disrupted.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
19
I
TEM 2. PROPERTIES.
SHOPPING CENTER PROPERTIES
The discussion and tables in this Item 2 include properties held
through our Core Portfolio and our Opportunity Funds. We define our Core
Portfolio as those properties either 100% owned by, or partially owned through
joint venture interests by, the Operating Partnership, or subsidiaries thereof,
not including those properties owned through our Opportunity Funds. The
discussion of the Opportunity Funds does not include our investment in a
portfolio of self-storage properties, which are detailed separately within this
Item 2.
As of December 31, 2010, excluding two properties under
redevelopment, there are 32 operating properties in our Core Portfolio totaling
approximately 4.8 million square feet of gross leasable area (GLA). The Core
Portfolio properties are located in 12 states and are generally
well-established community and neighborhood shopping centers anchored by
supermarkets or value-oriented retail. The properties are diverse in size,
ranging from approximately 10,000 to 875,000 square feet and as of
December 31, 2010, were, in total, 92% occupied.
As of December 31, 2010, we owned and operated 27 properties totaling
2.5 million square feet of GLA in our Opportunity Funds, excluding five
properties under redevelopment. In addition to shopping centers, the
Opportunity Funds have invested in mixed-use properties, which generally
include retail activities and self-storage properties. The Opportunity Fund
properties are located in 13 states and as of December 31, 2010, were, in
total, 87% occupied.
Within our Core Portfolio and Opportunity Funds, we had approximately
550 leases as of December 31, 2010. A majority of our rental revenues were
from national tenants. A majority of the income from the properties consists of
rent received under long-term leases. These leases generally provide for the
payment of fixed minimum rent monthly in advance and for the payment by tenants
of a pro-rata share of the real estate taxes, insurance, utilities and common
area maintenance of the shopping centers. Minimum rents and expense
reimbursements accounted for approximately 85% of our total revenues for the
year ended December 31, 2010.
Certain of our leases also provided for the payment of percentage rents
either in addition to, or in place of, minimum rents. These arrangements
generally provide for payment to us of a certain percentage of a tenants gross
sales in excess of a stipulated annual amount. Percentage rents accounted for
less than 1% of the total 2010 revenues of the Company.
Four of our Core Portfolio properties and 21 of our Opportunity Fund
properties are subject to long-term ground leases in which a third party owns
and has leased the underlying land to us. We pay rent for the use of the land
and are responsible for all costs and expenses associated with the building and
improvements at all 25 locations.
No individual property contributed in excess of 10% of our total
revenues for the years ended December 31, 2010, 2009 or 2008. Reference is
made to Note 8 to our Consolidated Financial Statements, which begin on page
F-1 of this Form 10-K, for information on the mortgage debt pertaining to our
properties. The following sets forth more specific information with respect to
each of our shopping centers at December 31, 2010:
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping Center
|
|
Location
|
|
Year
Constructed
(C)
Acquired
(A)
|
|
Ownership
Interest
|
|
GLA
|
|
Occupancy
%
12/31/10 (1)
|
|
Annual
Base
Rent
|
|
Annual
Base
Rent
PSF
|
|
Anchor Tenants
Current Lease
Expiration/
Lease Option
Expiration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Connecticut
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
239 Greenwich Avenue
|
|
Greenwich
|
|
1998
(A)
|
|
Fee/JV
|
|
|
16,834
|
(2)
|
100
|
%
|
$
|
1,554,663
|
|
$
|
92.35
|
|
Restoration Hardware
2014/2024 Coach 2016/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Jersey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elmwood Park Shopping Center
|
|
Elmwood Park
|
|
1998
(A)
|
|
Fee
|
|
|
149,491
|
|
92
|
%
|
|
3,397,955
|
|
|
24.75
|
|
A&P 2017/2052
Walgreens 2022/2062
|
A&P Shopping Plaza
|
|
Boonton
|
|
2006
(A)
|
|
Fee/JV
|
|
|
62,908
|
|
90
|
%
|
|
1,166,305
|
|
|
20.58
|
|
A&P 2024/2054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Village Commons Shopping Center
|
|
Smithtown
|
|
1998
(A)
|
|
Fee
|
|
|
87,330
|
|
75
|
%
|
|
2,065,110
|
|
|
31.60
|
|
|
Branch Shopping Plaza
|
|
Smithtown
|
|
1998
(A)
|
|
LI
(3)
|
|
|
125,712
|
|
99
|
%
|
|
2,681,144
|
|
|
21.46
|
|
A&P 2013/2028 CVS
2020/
|
Amboy Road
|
|
Staten Island
|
|
2005
(A)
|
|
LI
(3)
|
|
|
60,090
|
|
100
|
%
|
|
1,605,791
|
|
|
26.72
|
|
King Kullen 2028/2043 Duane
Reade 2013/2018
|
Bartow Avenue
|
|
Bronx
|
|
2005
(C)
|
|
Fee
|
|
|
14,676
|
|
89
|
%
|
|
439,249
|
|
|
33.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacesetter Park Shopping Center
|
|
Pomona
|
|
1999
(A)
|
|
Fee
|
|
|
96,380
|
|
91
|
%
|
|
1,108,621
|
|
|
12.67
|
|
Stop & Shop 2020/2040
|
West Shore Expressway
|
|
Staten Island
|
|
2007
(A)
|
|
Fee
|
|
|
55,000
|
|
100
|
%
|
|
1,265,000
|
|
|
23.00
|
|
LA Fitness 2021/2036
|
West 54
th
Street
|
|
Manhattan
|
|
2007
(A)
|
|
Fee
|
|
|
9,693
|
|
100
|
%
|
|
2,564,844
|
|
|
264.61
|
|
Stage Deli 2013/
|
East 17
th
Street
|
|
Manhattan
|
|
2008
(A)
|
|
Fee
|
|
|
19,622
|
|
100
|
%
|
|
625,000
|
|
|
31.85
|
|
Barnes & Noble
2013/2018
|
Crossroads Shopping Center
|
|
White Plains
|
|
1998
(A)
|
|
Fee/JV
(4)
|
|
|
309,487
|
|
94
|
%
|
|
6,093,005
|
|
|
21.00
|
|
A&P 2012/2032
Kmart 2012/2032
B. Dalton 2012/2022
Modells 2014/2019
Pier 1 2012/Home Goods 2018/2033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total New
York Region
|
|
|
|
|
|
|
|
|
1,007,223
|
|
93
|
%
|
$
|
24,566,687
|
|
$
|
26.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping Center
|
|
Location
|
|
Year
Constructed
(C)
Acquired
(A)
|
|
Ownership
Interest
|
|
GLA
|
|
Occupancy
%
12/31/10 (1)
|
|
Annual
Base
Rent
|
|
Annual
Base
Rent
PSF
|
|
Anchor Tenants
Current Lease
Expiration/
Lease Option
Expiration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
Portfolio, continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New England
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Connecticut
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Town Line Plaza
|
|
Rocky Hill
|
|
1998
(A)
|
|
Fee
|
|
|
206,346
|
(5)
|
98
|
%
|
$
|
1,632,831
|
|
$
|
15.55
|
|
Stop & Shop 2024/2064
Wal-Mart(5)
|
Massachusetts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Methuen Shopping Center
|
|
Methuen
|
|
1998
(A)
|
|
Fee
|
|
|
130,021
|
|
100
|
%
|
|
958,689
|
|
|
7.37
|
|
Demoulas Market 2015/
Wal-Mart 2012/2052
|
Crescent Plaza
|
|
Brockton
|
|
1984
(A)
|
|
Fee
|
|
|
218,141
|
|
91
|
%
|
|
1,585,619
|
|
|
8.02
|
|
Supervalu 2012/2042 Home
Depot 2021/2056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Loudon Center
|
|
Latham
|
|
1982
(A)
|
|
Fee
|
|
|
255,673
|
|
74
|
%
|
|
1,535,346
|
|
|
8.06
|
|
Price Chopper 2015/2035
Marshalls 2014/2029 Raymour and Flanigan 2019/2034 AC Moore 2014/2024
|
Rhode Island
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walnut Hill Plaza
|
|
Woonsocket
|
|
1998
(A)
|
|
Fee
|
|
|
284,717
|
|
94
|
%
|
|
2,354,928
|
|
|
8.84
|
|
Supervalu 2013/2028 Sears
2013/2033 CVS 2011/2014
|
Vermont
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Gateway Shopping Center
|
|
South Burlington
|
|
1999
(A)
|
|
Fee
|
|
|
101,784
|
|
92
|
%
|
|
1,798,042
|
|
|
19.16
|
|
Supervalu 2024/2053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total New
England Region
|
|
|
|
|
|
|
|
|
1,196,682
|
|
90
|
%
|
$
|
9,865,455
|
|
$
|
10.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midwest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Illinois
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hobson West Plaza
|
|
Naperville
|
|
1998
(A)
|
|
Fee
|
|
|
99,126
|
|
92
|
%
|
$
|
1,087,179
|
|
|
11.92
|
|
Garden Fresh Markets
2012/2032
|
Clark Diversey
|
|
Chicago
|
|
2006
(A)
|
|
Fee
|
|
|
19,265
|
|
92
|
%
|
|
799,766
|
|
|
45.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indiana
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrillville Plaza
|
|
Merrillville
|
|
1998
(A)
|
|
Fee
|
|
|
235,904
|
|
93
|
%
|
|
2,859,030
|
|
|
13.08
|
|
TJ Maxx 2019/2029 JC Penney
2013/2018 OfficeMax 2013/2028 Pier 1 2014/K&G Fashion 2017/2027 Davids
Bridal 2011/2021
|
Michigan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bloomfield Town Square
|
|
Bloomfield Hills
|
|
1998
(A)
|
|
Fee
|
|
|
234,095
|
|
98
|
%
|
|
2,841,021
|
|
|
12.37
|
|
TJ Maxx 2019/2029 Marshalls
2011/2026 Home Goods 2011/2021 OfficeMax 2011/2026 Best Buy 2021/2041
|
Ohio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mad River Station
|
|
Dayton
|
|
1999
(A)
|
|
Fee
|
|
|
125,984
|
|
88
|
%
|
|
1,397,908
|
|
|
12.66
|
|
Babies R Us 2015/2020
Office Depot 2015/ Pier 1 2015/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Midwest Region
|
|
|
|
|
|
|
|
|
714,374
|
|
93
|
%
|
$
|
8,984,904
|
|
$
|
13.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping Center
|
|
Location
|
|
Year
Constructed
(C)
Acquired
(A)
|
|
Ownership
Interest
|
|
GLA
|
|
Occupancy
%
12/31/10 (1)
|
|
Annual
Base
Rent
|
|
Annual
Base
Rent
PSF
|
|
Anchor Tenants
Current Lease
Expiration/
Lease Option
Expiration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Portfolio, continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Atlantic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Jersey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketplace of Absecon
|
|
Absecon
|
|
1998
(A)
|
|
Fee
|
|
|
104,718
|
|
72
|
%
|
|
1,128,904
|
|
|
15.05
|
|
Rite Aid 2020/2040 Dollar
Tree 2015/2030
|
Delaware
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brandywine Town Center
|
|
Wilmington
|
|
2003
(A)
|
|
Fee/JV
(7)
|
|
|
874,989
|
|
94
|
%
|
|
12,901,436
|
|
|
15.68
|
|
Bed, Bath & Beyond
2014/2029 Dicks Sporting Goods 2013/2028 Lowes Home Centers 2018/2048
Target 2018/2058
|
Market Square Shopping Center
|
|
Wilmington
|
|
2003
(A)
|
|
Fee/JV
(7)
|
|
|
102,047
|
|
100
|
%
|
|
2,450,846
|
|
|
24.02
|
|
TJ Maxx 2011/2021 Trader
Joes 2019/2034
|
Route 202 Shopping Center
|
|
Wilmington
|
|
2006
(C)
|
|
LI/JV
(3) (7)
|
|
|
19,970
|
|
55
|
%
|
|
558,340
|
|
|
50.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pennsylvania
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Plaza
|
|
Edwardsville
|
|
1968
(C)
|
|
LI/Fee
(3)
|
|
|
216,401
|
|
86
|
%
|
|
829,922
|
|
|
4.46
|
|
Redners Markets 2018/2028
Kmart 2014/2049
|
Plaza 422
|
|
Lebanon
|
|
1972
(C)
|
|
Fee
|
|
|
156,279
|
|
100
|
%
|
|
795,852
|
|
|
5.09
|
|
Home Depot 2028/2058
Dunhams 2016/2031
|
Route 6 Mall
|
|
Honesdale
|
|
1994
(C)
|
|
Fee
|
|
|
175,519
|
|
100
|
%
|
|
1,171,690
|
|
|
6.68
|
|
Kmart 2020/2070 Rite Aid
2011/2026
|
Chestnut Hill
|
|
Philadelphia
|
|
2006
(A)
|
|
Fee
(8)
|
|
|
40,570
|
|
23
|
%
|
|
325,483
|
|
|
35.57
|
|
|
|
Abington Towne Center
|
|
Abington
|
|
1998
(A)
|
|
Fee
|
|
|
216,369
|
(6)
|
99
|
%
|
|
1,093,775
|
|
|
19.16
|
|
TJ Maxx 2016/2026 Target
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Mid-Atlantic Region
|
|
|
|
|
|
|
|
|
1,906,862
|
|
92
|
%
|
$
|
21,256,248
|
|
$
|
13.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Core Operating Properties
|
|
|
|
|
|
|
|
|
4,825,141
|
|
92
|
%
|
$
|
64,673,294
|
|
$
|
15.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Properties under Redevelopment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2914 Third Avenue
|
|
Bronx
|
|
2006 (A)
|
|
Fee
|
|
|
42,400
|
|
24
|
%
|
|
180,000
|
|
|
17.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ledgewood Mall
|
|
Ledgewood
|
|
1983 (A)
|
|
Fee
|
|
|
517,151
|
|
79
|
%
|
|
3,466,745
|
|
|
8.44
|
|
Wal-Mart 2019/2049 Macys
2015/2025 The Sports Authority 2012/2037 Marshalls 2014/2035 Ashley Furniture
2015/2020 Barnes and Noble 2015/2035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Core
Properties
|
|
|
|
|
|
|
|
|
5,384,692
|
|
90
|
%
|
$
|
68,320,039
|
|
$
|
14.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping Center
|
|
Location
|
|
Year
Constructed
(C)
Acquired
(A)
|
|
Ownership
Interest
|
|
GLA
|
|
Occupancy
%
12/31/10 (1)
|
|
Annual
Base
Rent
|
|
Annual
Base
Rent
PSF
|
|
Anchor Tenants
Current Lease
Expiration/
Lease Option
Expiration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opportunity
Fund Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund I Properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granville Centre
|
|
Columbus
|
|
2002
(A)
|
|
Fee
|
|
|
134,997
|
|
36
|
%
|
|
593,022
|
|
|
12.37
|
|
Lifestyle Family Fitness
2017/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tarrytown Shopping Center
|
|
Tarrytown
|
|
2004
(A)
|
|
Fee
|
|
|
34,979
|
|
85
|
%
|
|
891,483
|
|
|
29.97
|
|
Walgreens 2080/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VARIOUS
REGIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kroger/Safeway Portfolio
|
|
Various
|
|
2003
(A)
|
|
LI/JV
(3)
|
|
|
709,400
|
|
100
|
%
|
|
3,560,326
|
|
|
5.02
|
|
18 Kroger/Safeway
Supermarkets Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fund
I Properties
|
|
|
|
|
|
|
|
|
879,376
|
|
90
|
%
|
$
|
5,044,831
|
|
$
|
6.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund II Properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pelham Plaza
|
|
Pelham Manor
|
|
2004
(A)
|
|
LI/JV
(3)
|
|
|
228,521
|
|
78
|
%
|
|
4,751,941
|
|
|
26.67
|
|
BJs Wholesale Club
2033/2053 Michaels 2013/2033
|
Fordham Place
|
|
Bronx
|
|
2004(A)
|
|
Fee/JV
|
|
|
119,446
|
|
100
|
%
|
|
5,519,760
|
|
|
46.21
|
|
Best Buy 2019/2039 Sears
2023/2033
|
Liberty Avenue
|
|
New York
|
|
2005
(A)
|
|
LI/JV
(3)
|
|
|
26,125
|
|
83
|
%
|
|
730,377
|
|
|
33.72
|
|
CVS 2032/2052
|
Canarsie Plaza
|
|
Brooklyn
|
|
2007
(A)
|
|
Fee/JV
|
|
|
278,737
|
|
64
|
%
|
|
5,100,000
|
|
|
28.79
|
|
BJs Wholesale Club
2030/2055
|
216
th
Street
|
|
New York
|
|
2005
(A)
|
|
Fee/JV
|
|
|
60,000
|
|
100
|
%
|
|
2,460,000
|
|
|
41.00
|
|
NYC 2027/2032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fund
II Properties
|
|
|
|
|
|
|
|
|
712,829
|
|
78
|
%
|
$
|
18,562,078
|
|
$
|
33.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund III Properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cortlandt Towne Center
|
|
Mohegan Lake
|
|
2009
(A)
|
|
Fee
|
|
|
641,254
|
|
91
|
%
|
|
9,139,440
|
|
|
15.72
|
|
Walmart 2018/2048 A&P 2022/2047 Best Buy 2017/2032
|
Massachusetts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
White City Shopping Center
|
|
Shrewsbury
|
|
2010
(A)
|
|
Fee/JV
|
|
|
255,199
|
|
93
|
%
|
|
4,880,720
|
|
|
20.51
|
|
Shaws 2018/2033 Michaels
2012/2022 Core Fitness 2016/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fund
III Properties
|
|
|
|
|
|
|
|
|
896,453
|
|
91
|
%
|
$
|
14,020,160
|
|
$
|
17.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Opportunity Fund Operating Properties
|
|
|
|
|
|
|
|
|
2,488,658
|
|
87
|
%
|
$
|
37,627,069
|
|
$
|
17.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Properties under Redevelopment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sherman Plaza
|
|
New York
|
|
2005
(A)
|
|
Fee/JV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CityPoint
|
|
Brooklyn
|
|
2007
(A)
|
|
LI/JV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westport
|
|
Westport
|
|
2007
(A)
|
|
Fee/JV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheepshead Bay
|
|
Brooklyn
|
|
2007
(A)
|
|
Fee/JV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
161
st
Street
|
|
Bronx
|
|
2005
(A)
|
|
Fee/JV
|
|
|
230,218
|
|
83
|
%
|
|
4,384,824
|
|
|
23.07
|
|
City of New York 2011/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Redevelopment Properties
|
|
|
|
|
|
|
|
|
230,218
|
|
83
|
%
|
$
|
4,384,824
|
|
$
|
23.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
|
|
Notes:
|
(1)
|
Does not include space for
which lease term had not yet commenced as of December 31, 2010.
|
|
|
(2)
|
In addition to the 16,834
square feet of retail GLA, this property also has 21 apartments comprising
14,434 square feet.
|
|
|
(3)
|
We are a ground lessee
under a long-term ground lease.
|
|
|
(4)
|
We have a 49% investment in
this property.
|
|
|
(5)
|
Includes a 97,300 square
foot Wal-Mart which is not owned by us.
|
|
|
(6)
|
Includes a 157,616 square
foot Target Store that is not owned by us.
|
|
|
(7)
|
We have a 22% investment in
this property.
|
|
|
(8)
|
Property consists of two
buildings.
|
MAJOR TENANTS
No individual retail tenant accounted for more than 5.7% of minimum
rents for the year ended December 31, 2010 or occupied more than 6.8% of
total leased GLA as of December 31, 2010. The following table sets forth
certain information for the 20 largest retail tenants based upon minimum rents
in place as of December 31, 2010. The amounts below include our pro-rata
share of GLA and annualized base rent for the Operating Partnerships partial
ownership interest in properties, including the Opportunity Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Stores in
Portfolio
|
|
Total GLA
|
|
Annualized Base
Rent
(1)
|
|
Percentage of Total
Represented by Retail Tenant
|
|
|
|
|
|
|
|
|
Retail
Tenant
|
|
|
|
|
Total Portfolio
GLA
(2)
|
|
Annualized Base
Rent
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A&P (A&P, Pathmark)
|
|
|
5
|
|
|
191,899
|
|
$
|
3,468,080
|
|
|
3.8
|
%
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supervalu (Shaws)
|
|
|
4
|
|
|
186,500
|
|
|
2,563,590
|
|
|
3.7
|
%
|
|
4.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TJX Companies (T.J. Maxx, Marshalls, Homegoods)
|
|
|
10
|
|
|
249,771
|
|
|
2,161,722
|
|
|
5.0
|
%
|
|
3.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wal-Mart
|
|
|
3
|
|
|
235,991
|
|
|
1,713,365
|
|
|
4.7
|
%
|
|
2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sears (Kmart, Sears)
|
|
|
5
|
|
|
341,708
|
|
|
1,654,280
|
|
|
6.8
|
%
|
|
2.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BJs Wholesale Club
|
|
|
2
|
|
|
54,223
|
|
|
1,476,000
|
|
|
1.1
|
%
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ahold (Stop & Shop)
|
|
|
2
|
|
|
117,911
|
|
|
1,363,237
|
|
|
2.3
|
%
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LA Fitness
|
|
|
1
|
|
|
55,000
|
|
|
1,265,000
|
|
|
1.1
|
%
|
|
2.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restoration Hardware
|
|
|
1
|
|
|
12,293
|
|
|
1,166,090
|
|
|
0.2
|
%
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barnes & Noble
|
|
|
4
|
|
|
43,259
|
|
|
1,146,079
|
|
|
0.9
|
%
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Depot
|
|
|
2
|
|
|
211,003
|
|
|
1,099,996
|
|
|
4.2
|
%
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage Deli
|
|
|
1
|
|
|
4,211
|
|
|
999,996
|
|
|
0.1
|
%
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens
|
|
|
3
|
|
|
22,692
|
|
|
854,313
|
|
|
0.5
|
%
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sleepys
|
|
|
5
|
|
|
34,543
|
|
|
848,761
|
|
|
0.7
|
%
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Chopper
|
|
|
1
|
|
|
87,709
|
|
|
836,660
|
|
|
1.7
|
%
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
King Kullen
|
|
|
1
|
|
|
37,266
|
|
|
745,320
|
|
|
0.7
|
%
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pier 1 Imports
|
|
|
4
|
|
|
25,454
|
|
|
646,154
|
|
|
0.5
|
%
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safeway
|
|
|
12
|
|
|
123,626
|
|
|
630,177
|
|
|
2.5
|
%
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVS
|
|
|
3
|
|
|
36,476
|
|
|
619,808
|
|
|
0.7
|
%
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payless Shoesource
|
|
|
9
|
|
|
28,466
|
|
|
561,220
|
|
|
0.6
|
%
|
|
0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
78
|
|
|
2,100,001
|
|
$
|
25,819,848
|
|
|
41.8
|
%
|
|
42.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(1)
|
Base rents
do not include percentage rents, additional rents for property expense
reimbursements and contractual rent escalations due after December 31, 2010.
|
|
|
(2)
|
Represents
percentage of total GLA and annualized base rent for our retail properties
including the Operating Partnerships pro-rata share of joint venture
properties, including the Opportunity Funds.
|
25
LEASE EXPIRATIONS
The following
table shows scheduled lease expirations for retail tenants in place as of
December 31, 2010, assuming that none of the tenants exercise renewal options.
(GLA and Annualized Base Rent in thousands):
Core Portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Base Rent (1)
|
|
GLA
|
|
|
|
|
|
|
|
|
|
|
Leases maturing in
|
|
Number of
Leases
|
|
|
Current Annual
Rent
|
|
Percentage of
Total
|
|
Square
Feet
|
|
Percentage
of Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month
to Month
|
|
13
|
|
|
$
|
466
|
|
1
|
%
|
34
|
|
1
|
%
|
2011
|
|
61
|
|
|
|
7,798
|
|
11
|
%
|
446
|
|
10
|
%
|
2012
|
|
57
|
|
|
|
6,706
|
|
10
|
%
|
561
|
|
12
|
%
|
2013
|
|
63
|
|
|
|
10,109
|
|
15
|
%
|
553
|
|
12
|
%
|
2014
|
|
61
|
|
|
|
8,192
|
|
12
|
%
|
497
|
|
11
|
%
|
2015
|
|
44
|
|
|
|
7,685
|
|
11
|
%
|
572
|
|
12
|
%
|
2016
|
|
12
|
|
|
|
1,852
|
|
3
|
%
|
133
|
|
3
|
%
|
2017
|
|
18
|
|
|
|
4,633
|
|
7
|
%
|
202
|
|
4
|
%
|
2018
|
|
24
|
|
|
|
5,639
|
|
8
|
%
|
401
|
|
9
|
%
|
2019
|
|
20
|
|
|
|
2,746
|
|
4
|
%
|
286
|
|
6
|
%
|
Thereafter
|
|
39
|
|
|
|
12,494
|
|
18
|
%
|
921
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
412
|
|
|
$
|
68,320
|
|
100
|
%
|
4,606
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opportunity
Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Base Rent (1)
|
|
GLA
|
|
|
|
|
|
|
|
|
|
|
Leases maturing in
|
|
Number of
Leases
|
|
|
Current Annual
Rent
|
|
Percentage of
Total
|
|
Square
Feet
|
|
Percentage
of Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month
to Month
|
|
3
|
|
|
$
|
156
|
|
0
|
%
|
17
|
|
1
|
%
|
2011
|
|
29
|
(2)
|
|
|
7,699
|
|
18
|
%
|
882
|
|
37
|
%
|
2012
|
|
21
|
|
|
|
2,421
|
|
6
|
%
|
107
|
|
5
|
%
|
2013
|
|
10
|
|
|
|
2,321
|
|
6
|
%
|
105
|
|
4
|
%
|
2014
|
|
14
|
|
|
|
2,310
|
|
5
|
%
|
115
|
|
5
|
%
|
2015
|
|
11
|
|
|
|
980
|
|
2
|
%
|
49
|
|
2
|
%
|
2016
|
|
9
|
|
|
|
1,107
|
|
3
|
%
|
48
|
|
2
|
%
|
2017
|
|
5
|
|
|
|
1,586
|
|
4
|
%
|
97
|
|
4
|
%
|
2018
|
|
9
|
|
|
|
3,185
|
|
8
|
%
|
258
|
|
11
|
%
|
2019
|
|
9
|
|
|
|
2,588
|
|
6
|
%
|
62
|
|
3
|
%
|
Thereafter
|
|
23
|
|
|
|
17,659
|
|
42
|
%
|
613
|
|
26
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
143
|
|
|
$
|
42,012
|
|
100
|
%
|
2,353
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
(1)
|
Base rents do not include percentage rents, additional rents for
property expense reimbursements, nor contractual rent escalations.
|
(2)
|
Includes the master lease term for all 18 Kroger/Safeway leases
representing annualized base rent of $3,560 and GLA of 709 square feet. The
underlying operating leases at fourteen of these locations representing 547
square feet and rents aggregating $2,743 expire during 2014. The operating
leases at two locations, representing 92 square feet and rents aggregating
$426, expire during 2019. Reference is made to page 28 below for a discussion
of the Kroger/Safeway portfolio.
|
26
GEOGRAPHIC CONCENTRATIONS
The following table summarizes our retail properties by region as of
December 31, 2010. The amounts below also reflect properties that we invest in
through joint ventures and that are held in our Opportunity Funds (GLA and
Annualized Base Rent in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total
Represented by
Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Region
|
|
GLA (1)
|
|
Occupied %
(2)
|
|
Annualized
Base
Rent (2)
|
|
Annualized Base
Rent per
Occupied Square
Foot
|
|
GLA
|
|
Annualized
Base Rent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York Region
|
|
1,007
|
|
93
|
%
|
$
|
24,567
|
|
$
|
26.24
|
|
20
|
%
|
38
|
%
|
New England
|
|
1,197
|
|
90
|
%
|
|
9,865
|
|
|
10.03
|
|
25
|
%
|
15
|
%
|
Midwest
|
|
714
|
|
93
|
%
|
|
8,985
|
|
|
13.46
|
|
15
|
%
|
14
|
%
|
Mid-Atlantic
|
|
1,907
|
|
92
|
%
|
|
21,256
|
|
|
13.33
|
|
40
|
%
|
33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Core Operating Properties
|
|
4,825
|
|
92
|
%
|
$
|
64,673
|
|
$
|
15.46
|
|
100
|
%
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redevelopment Properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Atlantic
|
|
517
|
|
79
|
%
|
$
|
3,467
|
|
$
|
8.44
|
|
92
|
%
|
95
|
%
|
New York Region
|
|
42
|
|
24
|
%
|
|
180
|
|
|
17.45
|
|
8
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Core Redevelopment Properties
|
|
559
|
|
75
|
%
|
$
|
3,647
|
|
$
|
8.66
|
|
100
|
%
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opportunity Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midwest
|
|
135
|
|
36
|
%
|
$
|
593
|
|
$
|
12.37
|
|
5
|
%
|
2
|
%
|
New York Region
|
|
1,389
|
|
84
|
%
|
|
28,593
|
|
|
24.49
|
|
56
|
%
|
76
|
%
|
Various (Kroger/Safeway Portfolio)
|
|
709
|
|
100
|
%
|
|
3,560
|
|
|
5.02
|
|
29
|
%
|
9
|
%
|
New England
|
|
255
|
|
93
|
%
|
|
4,881
|
|
|
20.51
|
|
10
|
%
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Opportunity Fund Operating Properties
|
|
2,488
|
|
87
|
%
|
$
|
37,627
|
|
$
|
17.40
|
|
100
|
%
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redevelopment Properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York Region
|
|
230
|
|
83
|
%
|
$
|
4,385
|
|
$
|
23.07
|
|
100
|
%
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(1)
|
Property GLA includes a total of 255,000 square feet, which is not
owned by us. This square footage has been excluded for calculating annualized
base rent per square foot.
|
|
|
(2)
|
The above occupancy and rent amounts do not include space that is
currently leased, but for which payment of rent had not commenced as of
December 31, 2010.
|
27
SELF-STORAGE PORTFOLIO
During February 2008, we, through Fund III, acquired a 95% controlling
interest in a portfolio of eleven self-storage properties from Storage Posts
existing institutional investors for approximately $174.0 million. In addition,
we, through Fund II, developed three self-storage properties. The fourteen
self-storage property portfolio, located throughout New York and New Jersey,
totals 1,127,490 net rentable square feet, and is operating at various stages
of stabilization as detailed in the table below. The portfolio is operated by Self
Storage Management, a joint venture entity formed by Fund III and an
unaffiliated partner.
|
|
|
|
|
|
|
|
|
|
Owner
|
|
Operating Properties
|
|
Location
|
|
Net
Rentable
Square
Feet
|
|
Occupancy
as of
December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stabilized
|
|
|
|
|
|
|
|
Fund III
|
|
Suffern
|
|
Suffern, New York
|
|
78,950
|
|
|
|
Fund III
|
|
Yonkers
|
|
Westchester, New York
|
|
100,643
|
|
|
|
Fund III
|
|
Jersey City
|
|
Jersey City, New Jersey
|
|
76,920
|
|
|
|
Fund III
|
|
Webster Ave
|
|
Bronx, New York
|
|
36,175
|
|
|
|
Fund III
|
|
Linden
|
|
Linden, New Jersey
|
|
84,035
|
|
|
|
Fund III
|
|
Bruckner
Blvd
|
|
Bronx, New York
|
|
89,473
|
|
|
|
Fund III
|
|
New Rochelle
|
|
Westchester, New York
|
|
42,158
|
|
|
|
Fund III
|
|
Lawrence
|
|
Lawrence, New York
|
|
97,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
Stabilized
|
|
|
|
606,097
|
|
87.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeveloped - in Lease-up
|
|
|
|
|
|
|
|
Fund III
|
|
Long Island
City
|
|
Queens, New York
|
|
135,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal in
Lease-up
|
|
|
|
135,558
|
|
75.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Operating Properties
|
|
|
|
741,655
|
|
85.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Initial Lease-up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund III
|
|
Fordham Road
|
|
Bronx, New York
|
|
85,155
|
|
|
|
Fund III
|
|
Ridgewood
|
|
Queens, New York
|
|
88,789
|
|
|
|
Fund II
|
|
Liberty
Avenue
|
|
Queens, New York
|
|
72,925
|
|
|
|
Fund II
|
|
Pelham Plaza
|
|
Pelham Manor, New York
|
|
62,020
|
|
|
|
Fund II
|
|
Atlantic
Avenue
|
|
Brooklyn, New York
|
|
76,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal in
Initial Lease-up
|
|
|
|
385,835
|
|
66.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Self-Storage Portfolio
|
|
|
|
1,127,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KROGER/SAFEWAY PORTFOLIO
At December 31, 2010, Fund I, together with an unaffiliated joint
venture partner (Kroger/Safeway JV), owns interests, through two master
leases with an unaffiliated entity (Master Lessee), in 18 triple-net Kroger
and Safeway supermarket leases (Operating Leases) aggregating approximately
0.7 million square feet. There are six Kroger and twelve Safeway locations in
eleven states averaging approximately 39,000 square feet at rents ranging from
approximately $3.70 to $7.00 per square foot. The master leases expire in
January 2011 with the Master Lessee having the option of extending the term of
either or both of the master leases. The Master Lessee exercised the option to
cancel the master lease in the first quarter of 2011. As a result, the
Kroger/Safeway JV became the operating landlord of the locations. The
Kroger/Safeway JV holds its interest through long-term ground leases, which
have a term in excess of 80 years, inclusive of multiple renewal options.
Although there is no obligation for the Kroger/Safeway JV to pay ground rent
during the initial term of the master lease, to the extent it exercises an
option to renew a ground lease for a property thereafter, it will be obligated
to pay an average ground rent of approximately $2.00 per square foot.
The Kroger Co. purchased six locations comprising 277,700 square feet,
or 28% of the portfolio, during February of 2009 for $14.6 million, resulting
in a gain of approximately $5.6 million.
The initial Operating Leases expired during 2009. Options on these
leases provide for extensions through 2049 at an average rent of approximately
$5.00 per square foot upon the commencement of the initial option period during
2009. Of the remaining 18 locations, 15 are currently occupied and paying rent,
one is unoccupied and paying rent, and two remain vacant.
28
IT
EM 3. LEGAL PROCEEDINGS.
We are involved in other various matters of litigation arising in the
normal course of business. While we are unable to predict with any certainty
the amounts involved, management is of the opinion that, when such litigation
is resolved, our resulting exposure to loss contingencies, if any, will not
have a significant effect on our consolidated financial position, results of
operations, or liquidity.
During September 2008, we, and certain of our subsidiaries, and other
unrelated entities were named as defendants in an adversary proceeding brought
by Mervyns LLC (Mervyns) in the United States Bankruptcy Court for the
District of Delaware. This lawsuit involves five claims alleging fraudulent
transfers. The first claim is that, at the time of the sale of Mervyns by
Target Corporation to a consortium of investors including Acadia, a transfer of
assets was made in an effort to defraud creditors. We believe this aspect of
the case is without merit. There are four other claims relating to transfers of
assets of Mervyns at various times. We believe there are substantial defenses
to these claims. The matter is in the early stages of discovery and we believe
the lawsuit will not have a material adverse effect on our results of
operations, consolidated financial condition, or liquidity.
During August 2009, we terminated the employment of a former Senior
Vice President (the Former Employee) for engaging in conduct that fell within
the definition of cause in his severance agreement with us. Had the Former
Employee not been terminated for cause, he would have been eligible to
receive approximately $0.9 million under the severance agreement. Because we
terminated him for cause, we did not pay the Former Employee any severance
benefits under the agreement. The Former Employee has brought a lawsuit against
us in New York State Supreme Court, alleging breach of the severance agreement.
The suit is in the pre-trial discovery stage. We believe we have meritorious
defenses to the suit.
ITEM
4. REMOVED AND RESERVE
D.
29
I
TEM 5. MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
(a) Market Information, dividends and
record holders of our Common Shares
The following table shows, for the period indicated, the high and low
sales price for our Common Shares as reported on the New York Stock Exchange,
and cash dividends declared during the two years ended December 31, 2010
and 2009:
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
2010
|
|
High
|
|
Low
|
|
Dividend
Per Share
|
|
|
|
|
|
|
|
|
|
March 31,
2010
|
|
$
|
18.40
|
|
$
|
14.88
|
|
$
|
0.1800
|
|
June 30,
2010
|
|
|
19.80
|
|
|
16.22
|
|
|
0.1800
|
|
September
30, 2010
|
|
|
19.77
|
|
|
15.87
|
|
|
0.1800
|
|
December 31,
2010
|
|
|
20.17
|
|
|
17.72
|
|
|
0.1800
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2009
|
|
$
|
14.69
|
|
$
|
8.50
|
|
$
|
0.2100
|
|
June 30,
2009
|
|
|
15.44
|
|
|
10.37
|
|
|
0.1800
|
|
September
30, 2009
|
|
|
16.51
|
|
|
11.55
|
|
|
0.1800
|
|
December 31,
2009
|
|
|
17.69
|
|
|
13.31
|
|
|
0.1800
|
|
At February 28, 2011, there were 309 holders of record of our Common
Shares.
We have determined for income tax purposes that 100% of the total
dividends distributed to shareholders during 2010 represented ordinary income.
The dividend for the quarter ended December 31, 2010 was paid on February 1,
2011 and will be taxable in 2011. Our cash flow is affected by a number of
factors, including the revenues received from rental properties, our operating
expenses, the interest expense on our borrowings, the ability of lessees to
meet their obligations to us and unanticipated capital expenditures. Future
dividends paid by us will be at the discretion of the Trustees and will depend
on our actual cash flows, our financial condition, capital requirements, the
annual distribution requirements under the REIT provisions of the Code and such
other factors as the Trustees deem relevant. In addition, we have the ability
to pay dividends in cash, Common Shares or in any combination of cash (minimum
10%) and Common Shares (maximum 90%).
(b) Issuer purchases of equity securities
We have an existing share repurchase program that authorizes
management, at its discretion, to repurchase up to $20.0 million of our
outstanding Common Shares. The program may be discontinued or extended at any
time and there is no assurance that we will purchase the full amount
authorized. There were no Common Shares repurchased by us during the year ended
December 31, 2010.
30
(c) Securities authorized for issuance under equity compensation
plans
The following table provides information related to our 1999 Share
Incentive Plan (the 1999 Plan), 2003 Share Incentive Plan (the 2003 Plan)
and the 2006 Share Incentive Plan (the 2006 Plan) as of December 31,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plan Information
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
Weighted - average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available
for future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
152,283
|
|
$
|
18.20
|
|
|
763,444
|
(1)
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
152,283
|
|
$
|
18.20
|
|
|
763,444
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(1)
|
The 1999 Plan authorizes the issuance of options equal to up to 8% of
the total Common Shares outstanding from time to time on a fully diluted
basis. However, not more than 4,000,000 of the Common Shares in the aggregate
may be issued pursuant to the exercise of options and no participant may
receive more than 5,000,000 Common Shares during the term of the 1999 Plan.
The 2003 Plan authorizes the issuance of options equal to up to 4% of the
total Common Shares outstanding from time to time on a fully diluted basis.
However, no participant may receive more than 1,000,000 Common Shares during
the term of the 2003 Plan. The 2006 Plan authorizes the issuance of a maximum
number of 500,000 Common Shares. No participant may receive more than 500,000
Common Shares during the term of the 2006 Plan. We have also issued LTIP
Units, which are generally exchangeable on a one-for-one basis for our
Operating Partnership Units which in turn are convertible into Common Shares.
Reference is made to Note 15 to our Consolidated Financial Statements, which
begin on Page F-1 of this Form 10-K, for a summary of our Share Incentive
Plans.
|
Remaining
Common Shares available under our share incentive plans is as follows:
|
|
|
|
|
Outstanding Common Shares
as of December 31, 2010
|
|
|
40,254,525
|
|
Outstanding OP Units as of
December 31, 2010
|
|
|
360,114
|
|
|
|
|
|
|
Total Outstanding Common Shares and OP Units
|
|
|
40,614,639
|
|
|
|
|
|
|
12% of Common Shares and OP
Units pursuant to the 1999 and 2003 Plans
|
|
|
4,873,757
|
|
Common Shares pursuant to
the 2006 Plan
|
|
|
500,000
|
|
|
|
|
|
|
Total Common Shares available under equity compensation plans
|
|
|
5,373,757
|
|
|
|
|
|
|
Less: Issuance of
Restricted Shares and LTIP Units Granted
|
|
|
(1,834,794
|
)
|
Issuance
of Options Granted
|
|
|
(2,775,519
|
)
|
|
|
|
|
|
Number of Common Shares
remaining available
|
|
|
763,444
|
|
|
|
|
|
|
(d) Share Price Performance Graph (1)
The following graph compares the cumulative total shareholder return
for our Common Shares for the period commencing December 31, 2005 through
December 31, 2010 with the cumulative total return on the Russell 2000
Index (Russell 2000), the NAREIT All Equity REIT Index (the NAREIT) and the
SNL Shopping Center REITs (the SNL) over the same period. Total return values
for the Russell 2000, the NAREIT, the SNL and the Common Shares were calculated
based upon cumulative total return assuming the investment of $100.00 in each
of the Russell 2000, the NAREIT, the SNL and our Common Shares on
December 31, 2005, and assuming reinvestment of dividends. The shareholder
return as set forth in the table below is not necessarily indicative of future
performance.
Note:
(1) The information in this section is not soliciting material, is
not deemed filed with the SEC, and is not to be incorporated by reference
into any filing of the Trust under the Securities Act or the Exchange Act,
whether made before or after the date hereof and irrespective of any general
incorporation language contained in such filing.
31
Comparison of 5 Year Cumulative Total Return among Acadia Realty Trust,
the Russell 2000, the NAREIT and the SNL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ended
|
|
|
|
Index
|
|
12/31/05
|
|
12/31/06
|
|
12/31/07
|
|
12/31/08
|
|
12/31/09
|
|
12/31/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadia
Realty Trust
|
|
100.00
|
|
128.74
|
|
137.06
|
|
83.20
|
|
103.95
|
|
116.96
|
Russell 2000
|
|
100.00
|
|
118.37
|
|
116.51
|
|
77.15
|
|
98.11
|
|
124.46
|
NAREIT All
Equity REIT Index
|
|
100.00
|
|
135.06
|
|
113.87
|
|
70.91
|
|
90.76
|
|
116.12
|
SNL REIT
Retail Shopping Ctr Index
|
|
100.00
|
|
134.61
|
|
110.82
|
|
66.72
|
|
65.86
|
|
85.53
|
I
TEM 6. SELECTED FINANCIAL DATA
The following table sets forth, on a historical basis, our selected
financial data. This information should be read in conjunction with our audited
Consolidated Financial Statements and Managements Discussion and Analysis of
Financial Condition and Results of Operations appearing elsewhere in this Form
10-K. Funds from operations (FFO) amounts for the year ended December 31,
2010 have been adjusted as set forth in Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations Reconciliation of
Net Income to Funds from Operations and Adjusted Funds From Operations.
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
|
|
(dollars in thousands,
except per share amounts)
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
151,958
|
|
$
|
145,703
|
|
$
|
133,566
|
|
$
|
88,259
|
|
$
|
85,577
|
|
Operating expenses, excluding depreciation and reserves
|
|
|
69,379
|
|
|
70,963
|
|
|
61,215
|
|
|
46,090
|
|
|
40,227
|
|
Interest expense
|
|
|
34,471
|
|
|
32,154
|
|
|
28,893
|
|
|
24,564
|
|
|
19,929
|
|
Depreciation and amortization
|
|
|
40,115
|
|
|
36,634
|
|
|
32,749
|
|
|
24,529
|
|
|
22,431
|
|
Gain on sale of land
|
|
|
|
|
|
|
|
|
763
|
|
|
|
|
|
|
|
Equity in earnings (losses) of unconsolidated partnerships
|
|
|
10,971
|
|
|
(1,529
|
)
|
|
19,906
|
|
|
6,619
|
|
|
2,559
|
|
Impairment of investment in unconsolidated affiliate
|
|
|
|
|
|
(3,768
|
)
|
|
|
|
|
|
|
|
|
|
Reserve for notes receivable
|
|
|
|
|
|
(1,734
|
)
|
|
(4,392
|
)
|
|
|
|
|
|
|
Other interest income
|
|
|
408
|
|
|
642
|
|
|
3,370
|
|
|
5,833
|
|
|
2,318
|
|
Gain from bargain purchase
|
|
|
33,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on debt extinguishment
|
|
|
|
|
|
7,057
|
|
|
1,523
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
|
|
2,890
|
|
|
1,541
|
|
|
3,362
|
|
|
297
|
|
|
(508
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
50,287
|
|
|
5,079
|
|
|
28,517
|
|
|
5,231
|
|
|
8,375
|
|
Income from discontinued operations
|
|
|
380
|
|
|
7,627
|
|
|
8,920
|
|
|
7,486
|
|
|
25,780
|
|
Income from extraordinary item (1)
|
|
|
|
|
|
|
|
|
|
|
|
27,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
50,667
|
|
|
12,706
|
|
|
37,437
|
|
|
40,561
|
|
|
34,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Income) loss attributable to noncontrolling interests in
subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(20,307
|
)
|
|
23,472
|
|
|
(11,438
|
)
|
|
9,750
|
|
|
6,039
|
|
Discontinued operations
|
|
|
(303
|
)
|
|
(5,045
|
)
|
|
(931
|
)
|
|
(798
|
)
|
|
(1,274
|
)
|
Extraordinary item
|
|
|
|
|
|
|
|
|
|
|
|
(24,167
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (income) loss attributable to noncontrolling interests in
subsidiaries
|
|
|
(20,610
|
)
|
|
18,427
|
|
|
(12,369
|
)
|
|
(15,215
|
)
|
|
4,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Common Shareholders
|
|
$
|
30,057
|
|
$
|
31,133
|
|
$
|
25,068
|
|
$
|
25,346
|
|
$
|
38,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to Common Shareholders
|
|
$
|
29,980
|
|
$
|
28,551
|
|
$
|
17,079
|
|
$
|
14,981
|
|
$
|
14,414
|
|
Income from discontinued operations attributable to Common
Shareholders
|
|
|
77
|
|
|
2,582
|
|
|
7,989
|
|
|
6,688
|
|
|
24,506
|
|
Income from extraordinary item attributable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
3,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Common Shareholders
|
|
$
|
30,057
|
|
$
|
31,133
|
|
$
|
25,068
|
|
$
|
25,346
|
|
$
|
38,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.75
|
|
$
|
0.75
|
|
$
|
0.51
|
|
$
|
0.45
|
|
$
|
0.43
|
|
Income from discontinued operations
|
|
|
|
|
|
0.07
|
|
|
0.23
|
|
|
0.20
|
|
|
0.72
|
|
Income from extraordinary item
|
|
|
|
|
|
|
|
|
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.75
|
|
$
|
0.82
|
|
$
|
0.74
|
|
$
|
0.76
|
|
$
|
1.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.74
|
|
$
|
0.75
|
|
$
|
0.50
|
|
$
|
0.44
|
|
$
|
0.42
|
|
Income from discontinued operations
|
|
|
|
|
|
0.07
|
|
|
0.23
|
|
|
0.19
|
|
|
0.71
|
|
Income from extraordinary item
|
|
|
|
|
|
|
|
|
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
0.74
|
|
$
|
0.82
|
|
$
|
0.73
|
|
$
|
0.74
|
|
$
|
1.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Common Shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- basic
|
|
|
40,136
|
|
|
38,005
|
|
|
33,813
|
|
|
33,600
|
|
|
33,789
|
|
- diluted
|
|
|
40,406
|
|
|
38,242
|
|
|
34,267
|
|
|
34,282
|
|
|
34,440
|
|
Cash dividends declared per Common Share (3)
|
|
$
|
0.7200
|
|
$
|
0.7500
|
|
$
|
0.8951
|
|
$
|
1.0325
|
|
$
|
0.7550
|
|
BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate before accumulated depreciation
|
|
$
|
1,386,299
|
|
$
|
1,200,483
|
|
$
|
1,085,072
|
|
$
|
810,697
|
|
$
|
606,905
|
|
Total assets
|
|
|
1,524,806
|
|
|
1,382,464
|
|
|
1,291,383
|
|
|
998,783
|
|
|
851,396
|
|
Total mortgage indebtedness
|
|
|
806,212
|
|
|
732,287
|
|
|
653,543
|
|
|
399,997
|
|
|
315,147
|
|
Total convertible notes payable
|
|
|
48,712
|
|
|
47,910
|
|
|
100,403
|
|
|
105,790
|
|
|
90,256
|
|
Total Common Shareholders equity
|
|
|
318,212
|
|
|
312,185
|
|
|
227,722
|
|
|
249,717
|
|
|
250,567
|
|
Noncontrolling interests in subsidiaries
|
|
|
269,310
|
|
|
220,292
|
|
|
214,506
|
|
|
171,111
|
|
|
113,737
|
|
Total equity
|
|
|
587,522
|
|
|
532,477
|
|
|
442,228
|
|
|
420,828
|
|
|
364,304
|
|
OTHER:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from Operations, adjusted for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
extraordinary item (1) (2)
|
|
|
50,440
|
|
|
49,613
|
|
|
37,964
|
|
|
42,094
|
|
|
39,860
|
|
Cash flows provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
44,377
|
|
|
47,462
|
|
|
66,517
|
|
|
105,294
|
|
|
39,627
|
|
Investing activities
|
|
|
(60,745
|
)
|
|
(123,380
|
)
|
|
(302,265
|
)
|
|
(208,998
|
)
|
|
(58,890
|
)
|
Financing activities
|
|
|
43,152
|
|
|
83,035
|
|
|
199,096
|
|
|
87,476
|
|
|
68,359
|
|
|
|
Notes:
|
(1)
|
The
extraordinary item relates to 2007 and represents our share of an
extraordinary gain from our investment in Albertsons. We consider this to be
a private-equity style investment in an operating businesses as opposed to
real estate. Accordingly, all gains and losses from this investment is
included in FFO, which we believe provides a more accurate reflection of our
operating performance.
|
33
|
|
(2)
|
We
consider funds from operations (FFO) as defined by the National Association
of Real Estate Investment Trusts (NAREIT) to be an appropriate supplemental
disclosure of operating performance for an equity REIT due to its widespread
acceptance and use within the REIT and analyst communities. FFO is presented
to assist investors in analyzing our performance. It is helpful as it
excludes 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. However, our method of
calculating FFO 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 our performance or to
cash flows as a measure of liquidity. Consistent with the NAREIT definition,
we define 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.
|
(3)
|
In
addition to the $0.8951 cash dividends declared in 2008, we declared a Common
Share dividend of $0.4949.
|
IT
EM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
OVERVIEW
As of December 31, 2010, we operated 79 properties, which we own or
have an ownership interest in, within our Core Portfolio or within our three
Opportunity Funds. Our Core Portfolio consists of those properties either 100%
owned by, or partially owned through joint venture interests by the Operating
Partnership, or subsidiaries thereof, not including those properties owned
through our Opportunity Funds. These 79 properties consist of commercial
properties, primarily neighborhood and community shopping centers, self-storage
and mixed-use properties with a retail component. The properties we operate are
located primarily in the Northeast, Mid-Atlantic and Midwestern regions of the
United States. Excluding two properties under redevelopment, there are 32
properties in our Core Portfolio totaling approximately 4.8 million square
feet. Fund I has 20 properties comprising approximately 0.9 million square
feet. Fund II has 10 properties, eight of which (representing 1.2 million
square feet) are currently operating, one is under construction, and one is in
the design phase. Three of the properties also include self-storage facilities.
We expect the Fund II portfolio will have approximately 2.0 million square feet
upon completion of all current construction and anticipated redevelopment
activities. Fund III has 15 properties totaling approximately 1.8 million
square feet, of which 11 locations representing 0.9 million net rentable square
feet are self-storage facilities and one is in the design phase. The majority
of our operating income is derived from rental revenues from these 79
properties, including recoveries from tenants, offset by operating and overhead
expenses. As our RCP Venture invests in operating companies, we consider these
investments to be private-equity style, as opposed to real estate, investments.
Since these are not traditional investments in operating rental real estate but
investments in operating businesses, the Operating Partnership invests in these
through a taxable REIT subsidiary (TRS).
Our primary business objective is to acquire and manage commercial
retail properties that will provide cash for distributions to shareholders
while also creating the potential for capital appreciation to enhance investor
returns. We focus on the following fundamentals to achieve this objective:
Own and operate a Core Portfolio of community
and neighborhood shopping centers and main street retail located in markets
with strong demographics and generate internal growth within the Core Portfolio
through aggressive redevelopment, re-anchoring and/or leasing activities
Maintain a strong and flexible balance
sheet through conservative financial practices while ensuring access to
sufficient capital to fund future growth
Generate external growth through an
opportunistic yet disciplined acquisition program. We target transactions with
high inherent opportunity for the creation of additional value through
redevelopment and leasing and/or transactions requiring creative capital
structuring to facilitate the transactions. These transactions may include
other types of commercial real estate besides those which we currently invest
in through our Core Portfolio. These may also include joint ventures with
private equity investors for the purpose of making investments in operating
retailers with significant embedded value in their real estate assets
BUSINESS OUTLOOK
The U.S. economy is currently in a post recessionary period, which has
resulted in a significant decline in retail sales due to reduced consumer
spending. Although the occupancy and net operating income within our portfolio
has not been materially adversely affected through December 31, 2010, should
retailers continue to experience deteriorating sales performance, the
likelihood of additional tenant bankruptcy filings may increase, which would
negatively impact our results of operations. In addition to the impact on
retailers, this period has had an unprecedented impact on the U.S. credit
markets. Traditional sources of financing, such as the commercial-mortgage
backed security market, have become severely curtailed. If these conditions
continue, our ability to finance new acquisitions or refinance existing debts
as they mature will be adversely affected. Accordingly, our ability to generate
external growth in income, as well as maintain existing operating income, could
be limited.
See the Item 1A. Risk Factors, including the discussions under the
headings The current economic environment, while improving, may cause us to
lose tenants and may impair our ability to borrow money to purchase properties,
refinance existing debt or finance our current redevelopment projects and The
bankruptcy of, or a downturn in the business of, any of our major tenants or a
significant number of our smaller tenants may adversely affect our cash flows
and property values.
34
RESULTS OF OPERATIONS
Reference is
made to Note 3 to the Notes to Consolidated Financial Statements beginning on
page F-1 of this Form 10-K for an overview of our five reportable segments.
Comparison of the year ended December 31, 2010 (2010) to
the year ended December 31, 2009 (2009)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
2010
|
|
2009
|
|
|
|
|
|
(dollars in millions)
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
48.3
|
|
$
|
39.0
|
|
$
|
19.6
|
|
$
|
|
|
$
|
51.2
|
|
$
|
34.7
|
|
$
|
9.8
|
|
$
|
|
Mortgage interest income
|
|
|
|
|
|
|
|
|
|
|
|
19.2
|
|
|
|
|
|
|
|
|
|
|
|
19.7
|
Expense reimbursements
|
|
|
13.3
|
|
|
8.7
|
|
|
|
|
|
|
|
|
13.7
|
|
|
7.2
|
|
|
|
|
|
|
Lease termination income
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
Management fee income (1)
|
|
|
|
|
|
|
|
|
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
2.0
|
Other
|
|
|
0.3
|
|
|
0.2
|
|
|
1.7
|
|
|
|
|
|
1.9
|
|
|
1.4
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
62.2
|
|
$
|
47.9
|
|
$
|
21.3
|
|
$
|
20.6
|
|
$
|
69.6
|
|
$
|
43.3
|
|
$
|
11.1
|
|
$
|
21.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
(1)
|
Fees earned by us as general partner/managing member of the
Opportunity Funds are eliminated in consolidation and adjust the loss
(income) attributable to noncontrolling interests and are not reflected
above. The balance reflected in the table represents third party fees that
are not eliminated in consolidation.
|
The decrease in rental income in the Core Portfolio was primarily
attributable to tenant vacancies at Chestnut Hill and Third Avenue. The
increase in rental income in the Opportunity Funds primarily related to
additional rents following the acquisition of Cortlandt Towne Center (2009
Fund Acquisition) of $1.0 million and additional rents at Fordham Place,
Pelham Manor and Canarsie for leases that commenced in 2009 and 2010 (Fund
Redevelopment Properties). The increase in rental income in the Storage
Portfolio related to the full amortization of acquired lease intangible costs
during 2009, increased occupancy in the Storage Portfolio as well as our
discontinued practice of reporting the Storage Portfolio one month in arrears
which was based on the historical unavailability of timely financial
information. Based on improvements in the Storage Portfolio accounting systems,
we report this activity on a current basis. Accordingly, the year ended
December 31, 2010 reflects thirteen months of storage activity while the year
ended December 31, 2009 reflects twelve months of storage activity (Storage
Portfolio Activity).
Expense
reimbursements in the Opportunity Funds increased for both real estate taxes
and common area maintenance primarily as a result of the 2009 Fund Acquisition
and Fund Redevelopment Properties.
Lease
termination income in the Core Portfolio for 2009 related to termination fee
income received from a former tenant at Absecon Marketplace.
Other
in the Core Portfolio in 2009 included $1.7 million resulting from a forfeited
sales contract deposit.
Other
in the Opportunity Funds during 2009 included $0.9 million received by Fund II
in settlement of litigation in connection with a property acquisition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
|
|
$
|
10.5
|
|
$
|
11.8
|
|
$
|
10.2
|
|
$
|
(1.5
|
)
|
$
|
12.1
|
|
$
|
10.1
|
|
$
|
8.7
|
|
$
|
(1.2
|
)
|
Real estate taxes
|
|
|
9.0
|
|
|
6.3
|
|
|
2.9
|
|
|
|
|
|
9.3
|
|
|
5.3
|
|
|
2.2
|
|
|
|
|
General and administrative
|
|
|
22.4
|
|
|
13.5
|
|
|
0.1
|
|
|
(15.8
|
)
|
|
24.0
|
|
|
13.5
|
|
|
0.1
|
|
|
(15.6
|
)
|
Depreciation and amortization
|
|
|
16.2
|
|
|
19.4
|
|
|
5.1
|
|
|
(0.6
|
)
|
|
17.2
|
|
|
16.5
|
|
|
4.4
|
|
|
(1.5
|
)
|
Abandonment of project costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.5
|
|
|
|
|
|
|
|
Reserve for notes receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
58.1
|
|
$
|
51.0
|
|
$
|
18.3
|
|
$
|
(17.9
|
)
|
$
|
62.6
|
|
$
|
47.9
|
|
$
|
15.4
|
|
$
|
(16.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in property operating expenses in the Core Portfolio was
primarily attributable to a decrease in bad debt expense in 2010. The increase
in property operating expenses in the Opportunity Funds was primarily
attributable to the 2009 Fund Acquisition and Fund Redevelopment Properties.
The increase in property operating expenses in the Storage Portfolio primarily
related to higher
35
operating costs in 2010 following increased occupancy as well as the
Storage Portfolio Activity.
The increase in real estate taxes in the Opportunity Funds was
primarily attributable to the 2009 Fund Acquisition as well as Fund
Redevelopment Properties.
The
decrease in general and administrative expense in the Core Portfolio was
primarily attributable to reduced compensation expense following staff
reductions in 2009.
Depreciation
and amortization expense in the Core Portfolio decreased as a result of the
write-off of lease intangible costs in connection with a terminated lease in
2009. Depreciation expense in the Opportunity Funds increased $0.3 million as
result of the 2009 Acquisition. Amortization expense in the Opportunity Funds
increased $2.6 million primarily due to the write-off of deferred financing
costs related to refinanced debt in 2010. Depreciation and amortization expense
in the Storage Portfolio increased $0.7 million primarily as a result of two
self storage properties placed in service during the second quarter 2009.
The
$2.5 million abandonment of project costs in the Opportunity Funds in 2009 was
attributable to our determination that we most likely would not participate in
a specific future development project.
The
reserve for notes receivable of $1.7 million in 2009 related to the loss of an
anchor tenant at the underlying collateral property.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings (losses) of unconsolidated affiliates
|
|
$
|
0.6
|
|
$
|
11.8
|
|
|
(1.4
|
)
|
$
|
|
|
$
|
0.7
|
|
$
|
(2.2
|
)
|
$
|
|
|
$
|
|
|
Impairment of investment in unconsolidated affiliate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3.8
|
)
|
|
|
|
|
|
|
Other interest income
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
Gain from bargain purchase
|
|
|
|
|
|
33.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on debt extinguishment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.1
|
|
|
|
|
|
|
|
|
|
|
Interest and other finance expense
|
|
|
(17.1
|
)
|
|
(13.4
|
)
|
|
(4.1
|
)
|
|
0.1
|
|
|
(18.7
|
)
|
|
(8.4
|
)
|
|
(5.0
|
)
|
|
|
|
Income tax expense
|
|
|
(3.2
|
)
|
|
(0.1
|
)
|
|
0.4
|
|
|
|
|
|
(1.4
|
)
|
|
(0.1
|
)
|
|
|
|
|
|
|
Income from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
7.6
|
|
(Income) loss attributable to noncontrolling interests in
subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Continuing operations
|
|
|
(0.3
|
)
|
|
(22.6
|
)
|
|
0.1
|
|
|
2.5
|
|
|
(0.4
|
)
|
|
22.5
|
|
|
(0.5
|
)
|
|
1.9
|
|
- Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
(5.0
|
)
|
Equity
in earnings (losses) of unconsolidated affiliates in the Opportunity Funds
increased primarily as a result of an increase in distributions in excess of
basis from our Albertsons investment of $9.5 million in 2010 and an increase
in our pro-rata share of income from Mervyns in 2010. Equity in earnings
(losses) in the Self Storage Portfolio represents the pro-rata share of losses
from our unconsolidated investment in the newly-formed self storage management
company.
The $3.8 million impairment of investment in unconsolidated affiliate
during 2009 was the result of the reduction in value of the underlying property
due to the recession and the related reduction in Fund Is carrying value of
this investment including a partial guarantee of the mortgage debt.
The
$33.8 million gain from bargain purchase was attributable to Fund IIs purchase
of an unaffiliated membership interest in CityPoint in 2010. Reference is made
to Note 2 of the Notes to Consolidated Financial Statements which begin on page
F-1 of this Form 10-K for a discussion of this transaction.
The
gain on debt extinguishment of $7.1 million was attributable to the purchase of
our convertible debt at a discount in 2009.
Total interest expense in the Core Portfolio decreased $1.6 million in
2010. This was the result of a $2.5 million decrease attributable to lower
average outstanding borrowings in 2010 offset by a $0.9 million increase
attributable to higher average interest rates in 2010. Interest expense in the
Opportunity Funds increased $5.0 million in 2010. This was the result of an
increase of $2.9 million due to higher average interest rates in 2010, an
increase of $1.8 million due to higher average outstanding borrowings in 2010
and $0.3 million of lower capitalized interest in 2010. Interest expense in the
Storage Portfolio decreased $0.9 million in 2010. This was
36
primarily attributable to a $1.4 million decrease due to lower average
interest rates in 2010. This decrease was offset by $0.3 million of lower
capitalized interest in 2010 and an increase of $0.2 million due to higher
average outstanding borrowings in 2010.
The variance in the income tax expense in the Core Portfolio primarily
related to income taxes at the TRS level for our pro-rata share of income from
our Albertsons investment in 2010.
Income
from discontinued operations represents activity related to property held for
sale in 2010 and property sales in 2009.
(Income)
loss attributable to noncontrolling interests in subsidiaries Continuing
operations and Discontinued operations primarily represents the noncontrolling
interests share of all the Opportunity Funds variances discussed above.
Comparison of the year ended December 31, 2009 (2009) to
the year ended December 31, 2008 (2008)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
51.2
|
|
$
|
34.7
|
|
$
|
9.8
|
|
$
|
|
|
$
|
51.0
|
|
$
|
21.4
|
|
$
|
4.7
|
|
$
|
|
|
Mortgage interest income
|
|
|
|
|
|
|
|
|
|
|
|
19.7
|
|
|
|
|
|
|
|
|
|
|
|
11.2
|
|
Expense reimbursements
|
|
|
13.7
|
|
|
7.2
|
|
|
|
|
|
|
|
|
14.1
|
|
|
2.7
|
|
|
|
|
|
|
|
Lease termination income
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.0
|
|
|
|
|
|
|
|
Management fee income (1)
|
|
|
|
|
|
|
|
|
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
3.4
|
|
Other
|
|
|
1.9
|
|
|
1.4
|
|
|
1.3
|
|
|
|
|
|
0.3
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
69.6
|
|
$
|
43.3
|
|
$
|
11.1
|
|
$
|
21.7
|
|
$
|
65.4
|
|
$
|
48.1
|
|
$
|
5.5
|
|
$
|
14.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
(1)
|
Fees earned by us as general partner/managing member of the
Opportunity Funds are eliminated in consolidation and adjust the loss
(income) attributable to noncontrolling interests and are not reflected
above. The balance reflected in the table represents third party fees that
are not eliminated in consolidation.
|
The
increase in rental income in the Opportunity Funds primarily related to
additional rents from the 2009 Fund Acquisition of $7.5 million and certain Fund
Redevelopment Properties. The increase in rental income in the Storage
Portfolio related to the February
2008 acquisition of the Storage Post Portfolio (Storage Acquisition) versus a
full year of activity for 2009. In addition, the increase in minimum rents in
the Storage Portfolio was also attributable to the full amortization of
acquired lease intangible costs during 2009.
The
increase in mortgage interest income was the result of higher interest earning
assets in 2009, primarily from new notes/mezzanine financing investments
originated during the second half of 2008.
Expense
reimbursements in the Opportunity Funds increased for both real estate taxes
and common area maintenance as a result of the 2009 Fund Acquisition as well as
certain Fund Redevelopment Properties.
Lease
termination income in the Core Portfolio for 2009 related to a termination fee
earned from a tenant at Absecon Marketplace. Lease termination income in the
Opportunity Funds for 2008 related to a termination fee earned, net of costs,
from a tenant at Canarsie Plaza.
Management
fee income decreased primarily as a result of lower fees earned of $0.9 million
from the CityPoint development project and lower fees from our Klaff management
contracts.
Other
in the Core Portfolio in 2009 included $1.7 million resulting from a forfeited
sales contract deposit.
Other
in the Opportunity Funds during 2009 included $0.9 million received by Fund II
in settlement of litigation in connection with a property acquisition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
|
|
$
|
12.1
|
|
$
|
10.1
|
|
$
|
8.7
|
|
$
|
(1.2
|
)
|
$
|
12.2
|
|
$
|
6.8
|
|
$
|
5.3
|
|
$
|
(0.4
|
)
|
Real estate taxes
|
|
|
9.3
|
|
|
5.3
|
|
|
2.2
|
|
|
|
|
|
8.8
|
|
|
2.0
|
|
|
1.4
|
|
|
|
|
General and administrative
|
|
|
24.0
|
|
|
13.5
|
|
|
0.1
|
|
|
(15.6
|
)
|
|
26.0
|
|
|
16.1
|
|
|
0.1
|
|
|
(17.7
|
)
|
Depreciation and amortization
|
|
|
17.2
|
|
|
16.5
|
|
|
4.4
|
|
|
(1.5
|
)
|
|
20.3
|
|
|
9.5
|
|
|
3.0
|
|
|
|
|
Abandonment of project costs
|
|
|
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for notes receivable
|
|
|
|
|
|
|
|
|
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
62.6
|
|
$
|
47.9
|
|
$
|
15.4
|
|
$
|
(16.6
|
)
|
$
|
67.3
|
|
$
|
35.0
|
|
$
|
9.8
|
|
$
|
(13.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
The
increase in property operating expenses in the Opportunity Funds was primarily
the result of the 2009 Fund Acquisition and certain Fund Redevelopment
Properties. The increase in property operating expenses in the Storage
Portfolio related to the Storage Acquisition.
The
increase in real estate taxes in the Opportunity Funds was primarily attributable
to the 2009 Fund Acquisition.
The
decrease in general and administrative expense in the Core Portfolio was
primarily attributable to reduced compensation expense following staff
reductions in the second half of 2008 and in the first half of 2009. The
decrease in general and administrative expense in the Opportunity Funds related
to the reduction in Promote expense attributable to Fund I and Mervyns I. The
increase in general and administrative expense in Other primarily related to
the reduction in Fund I and Mervyns I Promote expense eliminated for
consolidated financial statement presentation purposes.
Depreciation
expense in the Core Portfolio decreased $2.4 million in 2009. This was
principally a result of increased depreciation expense in 2008 resulting from
the write-down of tenant improvements at two properties attributable to the
bankruptcy of Circuit City. Amortization expense in the Core Portfolio
decreased $0.7 million primarily as a result of lower amortization expense in
2009 associated with the Klaff management contracts. Depreciation expense
increased $5.0 million and amortization expense increased $2.0 million in the
Opportunity Funds primarily due to the 2009 Fund Acquisition and certain Fund
Redevelopment Properties. Depreciation expense and amortization expense
increased $1.4 million in the Storage Portfolio primarily as a result of the
Storage Acquisition. Depreciation and amortization expense decreased $1.5
million in Other as a result of depreciation associated with the elimination of
capitalizable costs within the consolidated group.
The
$2.5 million abandonment of project costs in 2009 was attributable to our
determination that we most likely would not participate in a specific future
development project.
The
reserve for notes receivable of $1.7 million in 2009 related to the loss of an
anchor tenant at the underlying collateral property. The 2008 reserve for notes
receivable of $4.4 million related to a mezzanine loan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Self-
Storage
Portfolio
|
|
Notes
Receivable
and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings (losses) of unconsolidated affiliates
|
|
$
|
0.7
|
|
$
|
(2.2
|
)
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
19.9
|
|
$
|
|
|
$
|
|
|
Impairment of investment in unconsolidated affiliate
|
|
|
|
|
|
(3.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other interest income
|
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
3.4
|
|
Gain on debt extinguishment
|
|
|
7.1
|
|
|
|
|
|
|
|
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
Interest and other finance expense
|
|
|
(18.7
|
)
|
|
(8.4
|
)
|
|
(5.0
|
)
|
|
|
|
|
(19.8
|
)
|
|
(5.7
|
)
|
|
(3.4
|
)
|
|
|
|
Gain on sale of land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(1.4
|
)
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
(3.4
|
)
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
7.6
|
|
|
|
|
|
|
|
|
|
|
|
8.9
|
|
(Income) loss attributable to noncontrolling interests in
subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Continuing operations
|
|
|
(0.4
|
)
|
|
22.5
|
|
|
(0.5
|
)
|
|
1.9
|
|
|
0.2
|
|
|
(15.8
|
)
|
|
0.4
|
|
|
3.6
|
|
- Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
(5.0
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.9
|
)
|
Equity
in earnings (losses) of unconsolidated affiliates in the Opportunity Funds
decreased primarily as a result of our pro-rata share of gains from the sale of
Mervyns locations in 2008 of $10.4 million, a decrease in distributions in
excess of basis from our Albertsons investment of $7.9 million in 2009 and our
pro-rata share of gain from the sale of the Haygood Shopping Center of $3.4
million in 2008.
The
$3.8 million impairment of investment in unconsolidated affiliate during 2009
was the result of the reduction in value of the underlying property due to the
recession and the related reduction in Fund Is carrying value of this
investment including a partial guarantee of the mortgage debt.
38
Other
interest income decreased in 2009 as a result of lower cash balances during the
year and lower average interest rates on cash and cash equivalents.
The
gain on debt extinguishment of $7.1 million in 2009 and $1.5 million in 2008
was attributable to the purchase of our convertible debt at a discount.
Interest
expense in the Core Portfolio decreased $1.1 million in 2009. This was
primarily the result of lower interest expense related to the purchase of the
Companys convertible notes payable offset by a $0.7 million write-off of the
unamortized premium related to the repayment of a mortgage note payable during
2008. Interest expense in the Opportunity Funds increased $2.7 million in 2009.
This was primarily attributable to an increase of $4.2 million due to higher
average outstanding borrowings in 2009 and $0.6 million of lower capitalized
interest in 2009. These increases were offset by a $2.2 million decrease
related to lower average interest rates in 2009. Interest expense in the
Storage Portfolio increased $1.6 million in 2009. This was primarily due to an
increase of $0.9 million due to higher average outstanding borrowings in 2009
as well as an increase of $0.8 million due to higher average interest rates in
2009.
The
gain on sale of land of $0.8 million in the Core Portfolio related to the sale
of a land parcel at Bloomfield Town Square in 2008.
The
variance in the income tax expense in the Core Portfolio primarily related to
income taxes at the TRS level for our share of income/gains from our Mervyns
and Albertsons investments in 2008.
Income
from discontinued operations represents activity related to properties sold in
2009 and 2008.
(Income)
loss attributable to noncontrolling interests in subsidiaries Continuing
operations and Discontinued operations primarily represents the noncontrolling
interests share of all the Opportunity Funds variances discussed above.
RECONCILIATION OF NET INCOME TO FUNDS FROM
OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
Years Ended December 31,
|
|
(dollars in
thousands)
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Common Shareholders
|
|
$
|
30,057
|
|
$
|
31,133
|
|
$
|
25,068
|
|
$
|
25,346
|
|
$
|
38,920
|
|
Depreciation
of real estate and amortization of leasing costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated affiliates, net of
noncontrolling interests share
|
|
|
18,445
|
|
|
18,847
|
|
|
18,519
|
|
|
19,669
|
|
|
20,206
|
|
Unconsolidated affiliates
|
|
|
1,561
|
|
|
1,604
|
|
|
1,687
|
|
|
1,736
|
|
|
1,806
|
|
Income attributable to noncontrolling
interests in operating partnership (1)
|
|
|
377
|
|
|
464
|
|
|
437
|
|
|
614
|
|
|
803
|
|
Gain on sale of properties (net of
noncontrolling interests share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated affiliates
|
|
|
|
|
|
(2,435
|
)
|
|
(7,182
|
)
|
|
(5,271
|
)
|
|
(20,974
|
)
|
Unconsolidated affiliates
|
|
|
|
|
|
|
|
|
(565
|
)
|
|
|
|
|
(901
|
)
|
Extraordinary item (net of noncontrolling
interests share and income taxes) (3)
|
|
|
|
|
|
|
|
|
|
|
|
(3,677
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations (2)
|
|
|
50,440
|
|
|
49,613
|
|
|
37,964
|
|
|
38,417
|
|
|
39,860
|
|
Add back: Extraordinary item, net (3)
|
|
|
|
|
|
|
|
|
|
|
|
3,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations, adjusted for
extraordinary item
|
|
$
|
50,440
|
|
$
|
49,613
|
|
$
|
37,964
|
|
$
|
42,094
|
|
$
|
39,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Funds From Operations per Share -
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Common Shares
and OP Units
|
|
|
40,876
|
|
|
38,913
|
|
|
34,940
|
|
|
34,924
|
|
|
35,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted funds from operations, per share
|
|
$
|
1.23
|
|
$
|
1.28
|
|
$
|
1.09
|
|
$
|
1.21
|
|
$
|
1.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
Notes
:
|
(1)
|
Represents
income attributable to Common OP Units and does not include distributions
paid to Series A and B Preferred OP Unitholders.
|
|
|
(2)
|
We
consider funds from operations (FFO) as defined by the National Association
of Real Estate Investment Trusts (NAREIT) to be an appropriate supplemental
disclosure of operating performance for an equity REIT due to its widespread
acceptance and use within the REIT and analyst communities. FFO is presented
to assist investors in analyzing our performance. It is helpful as it
excludes 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. However, our method of calculating
FFO 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 our performance or to cash flows as a
measure of liquidity. Consistent with the NAREIT definition, we define 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.
|
|
|
(3)
|
This
item represents our share of an extraordinary gain from our investment in
Albertsons, which recorded an extraordinary gain in connection with the
allocation of purchase price to assets acquired. We consider this to be a
private-equity style investment in an operating businesses as opposed to real
estate. Accordingly, all gains and losses from this investment are included
in FFO, which we believe provides a more accurate reflection of our operating
performance.
|
LIQUIDITY AND CAPITAL RESOURCES
Uses of Liquidity
Our principal uses of liquidity are (i) distributions to our
shareholders and OP unit holders, (ii) investments which include the funding of
our capital committed to the Opportunity Funds and property acquisitions and
redevelopment/re-tenanting activities within our Core Portfolio, and (iii) debt
service and loan repayments, including the repurchase of our Convertible Notes.
Distributions
In order to qualify as a REIT for Federal income tax purposes, we must
currently distribute at least 90% of our taxable income to our shareholders.
For the year ended December 31, 2010, we paid dividends and distributions on
our Common Shares and Common OP Units totaling $29.7 million. In addition, in
December of 2008, our Board of Trustees approved a special dividend of approximately
$0.55 per share, or $18.0 million in the aggregate, which was associated with
taxable gains arising from property dispositions in 2008, which was paid on
January 30, 2009, to shareholders of record on December 31, 2008. Ninety
percent of the special dividend was paid with the issuance of 1.3 million
Common Shares and 10%, or $1.8 million, was paid in cash.
Investments
Fund I and Mervyns I
Fund I and Mervyns I have returned all invested capital and accumulated
preferred return thus triggering our Promote in all future Fund I and Mervyns I
earnings and distributions. As of December 31, 2010, $86.6 million has been
invested in Fund I and Mervyns I, of which the Operating Partnership
contributed $19.2 million.
As of December 31, 2010, Fund I currently owned, or had ownership
interests in 20 assets comprising approximately 0.9 million square feet as
further discussed in PROPERTY ACQUISITIONS in Item 1 of this Form 10-K.
In addition, we, along with our Fund I investors have invested in
Mervyns as discussed in Item 1. of this Form 10-K.
Fund II and Mervyns II
To date, Fund IIs primary investment focus has been in the New York
Urban/Infill Redevelopment Initiative and the Retailer Controlled Property
Venture. As of December 31, 2010, $265.2 million has been invested in Fund II,
of which the Operating Partnership contributed $53.0 million. The remaining
capital balance of $34.8 million is expected to be utilized to complete
development activities for existing Fund II investments.
Fund II has invested in the New York Urban/Infill Redevelopment and the
RCP Venture initiatives and other investments as further discussed in PROPERTY
ACQUISITIONS in Item 1, of this Form 10-K.
New York Urban/Infill Redevelopment
Initiative
40
In September 2004, we, through Fund II, launched our New York
Urban/Infill Redevelopment Initiative. During 2004, Fund II, together with an
unaffiliated partner, P/A Associates, LLC (P/A), formed Acadia P/A Holding
Company, LLC (Acadia-P/A) for the purpose of acquiring, constructing, developing,
owning, operating, leasing and managing certain mixed-use real estate
properties in the New York City metropolitan area which include a retail
component. To date P/A has invested $2.2 million and Fund II, the managing
member, has agreed to invest the balance.
To date, Fund II has invested in nine New York Urban/Infill
Redevelopment Initiative construction projects, eight of which were made
through Acadia-P/A, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redevelopment (dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
Location
|
|
Year
acquired
|
|
|
Costs
to date
|
|
|
Anticipated
additional
costs
|
|
Estimated
construction
completion
|
|
Square
feet upon
completion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Avenue (1)
|
|
Queens
|
|
2005
|
|
$
|
15.5
|
|
$
|
|
|
Completed
|
|
125,000
|
|
216
th
Street
|
|
Manhattan
|
|
2005
|
|
|
27.7
|
|
|
|
|
Completed
|
|
60,000
|
|
Fordham Place
|
|
Bronx
|
|
2004
|
|
|
124.5
|
|
|
9.8
|
|
Completed
|
|
276,000
|
|
Pelham Manor Shopping Plaza (1)
|
|
Westchester
|
|
2004
|
|
|
61.4
|
|
|
2.6
|
|
Completed
|
|
320,000
|
|
161
st
Street (2)
|
|
Bronx
|
|
2005
|
|
|
61.6
|
|
|
5.1
|
|
TBD
|
|
230,000
|
|
Atlantic Avenue (3)
|
|
Brooklyn
|
|
2007
|
|
|
22.0
|
|
|
0.1
|
|
Completed
|
|
110,000
|
|
Canarsie Plaza
|
|
Brooklyn
|
|
2007
|
|
|
80.3
|
|
|
9.8
|
|
Completed
|
|
279,000
|
|
CityPoint (4)
|
|
Brooklyn
|
|
2007
|
|
|
81.8
|
|
|
118.2
|
|
TBD
|
|
550,000
|
|
Sherman Plaza
|
|
Manhattan
|
|
2005
|
|
|
33.4
|
|
|
TBD
|
|
TBD
|
|
TBD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
508.2
|
|
$
|
145.6
|
|
|
|
1,950,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
TBD To be
determined
(1) Acadia-P/A acquired a ground lease
interest at this property.
(2) Currently operating but
redevelopment activities have commenced.
(3) P/A is not a partner in this
project.
(4) Fund II acquired a ground lease
interest at this property.
On June 30, 2010, Fund II acquired all of CUIPs 75.25% interests in
CityPoint for $9.2 million, consisting of a current cash payment of $2.0
million and deferred payments, potentially through 2020, aggregating $7.2
million, as well as the assumption of CUIPs share of the first mortgage debt
representing $19.6 million. Reference is made to Note 2 in our Consolidated
Financial Statements, which begin on Page F-1 of this Form 10-K for a further
discussion of this transaction.
RCP Venture
See Property Acquisitions in Item 1. of this Form 10-K for a table
summarizing the RCP Venture investments from inception through December 31,
2010.
Fund III
During 2007, we formed Fund III with 14 institutional investors,
including all of the investors from Fund I and a majority of the investors from
Fund II with $502.5 million of committed discretionary capital. As of December
31, 2010, $96.5 million has been invested in Fund III, of which the Operating
Partnership contributed $19.2 million.
Fund III has invested in the New York Urban/Infill Redevelopment
Initiatives and other investments as further discussed in PROPERTY
ACQUISITIONS in Item 1 of this Form 10-K. The projects are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
Location
|
|
Year
acquired
|
|
Costs
to date
|
|
Anticipated
additional
costs
|
|
Estimated
construction
completion
|
|
Square
feet upon
completion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheepshead
Bay
|
|
|
Brooklyn, NY
|
|
|
2007
|
|
$
|
22.8
|
|
$
|
TBD
|
|
|
TBD
|
|
|
TBD
|
|
125 Main
Street
|
|
|
Westport, CT
|
|
|
2007
|
|
|
18.7
|
|
|
6.7
|
|
|
2
nd
half 2011
|
|
|
26,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
$
|
41.5
|
|
$
|
6.7
|
|
|
|
|
|
26,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
TBD To be determined
41
Other Fund III Investments
During February 2008, Acadia, through Fund III, and in conjunction with
an unaffiliated partner, Storage Post, acquired a portfolio of eleven
self-storage properties from Storage Posts institutional investors for
approximately $174.0 million. The properties are located throughout New York
and New Jersey.
During January 2009, Fund III purchased Cortlandt Towne Center for
$78.0 million. The property is a 642,000 square foot shopping center located in
Westchester County, NY, a trade area with high barriers to entry for regional
and national retailers.
During December 2010, Fund III, in a joint venture
with an unaffiliated partner, acquired the 255,200 square foot White City
Shopping Center in Shrewsbury, Massachusetts for $56.0 million.
During February 2011, Fund III, in a joint venture with an unaffiliated
partner, acquired a three property portfolio (the Portfolio) for an aggregate
purchase price of $51.9 million with $20.6 million of in-place mortgage
financing assumed at closing. The Portfolio consists of three street-retail
properties, aggregating 61,000 square feet, and is located in South Miami
Beach, Florida.
During February 2011, Fund III, in a joint venture with an unaffiliated
partner, acquired a 64,600 square foot single tenant retail property located in
Silver Springs, Maryland, for approximately $9.8 million.
Notes
Receivable
At December 31, 2010, our notes receivable, net aggregated $89.2
million, with accrued interest thereon of $7.6 million, and were collateralized
by the underlying properties, the borrowers ownership interest in the entities
that own the properties and/or by the borrowers personal guarantee. Effective
interest rates on our notes receivable ranged from 10.0% to 24.0% with
maturities through January 2017.
During December 2009, we made a loan for $8.6 million which bears
interest at 14.5% and matures on June 30, 2011.
Other Investments
Acquisitions made during 2010, 2009 and 2008 are discussed in PROPERTY
ACQUISITIONS in Item 1 of this Form 10-K:
Core
Portfolio Property Redevelopment and
Expansion
Our Core Portfolio redevelopment program focuses on selecting
well-located neighborhood and community shopping centers and creating
significant value through re-tenanting and property redevelopment. We currently
have two properties in the early stages of redevelopment, Ledgewood Mall and
Third Avenue.
Purchase of Convertible Notes
Purchases of the Notes has been another use
of our liquidity. During 2009, we purchased an additional $57.0 million in face
amount of our outstanding convertible notes for $46.7 million.
Share Repurchase
We have an existing share repurchase program that authorizes
management, at its discretion, to repurchase up to $20.0 million of our
outstanding Common Shares. The program may be discontinued or extended at any
time and there is no assurance that we will purchase the full amount
authorized. Under this program we have repurchased 2.1 million Common Shares,
none of which were repurchased after December 2001. As of December 31, 2010,
management may repurchase up to approximately $7.5 million of our outstanding
Common Shares under this program.
SOURCES OF LIQUIDITY
We intend on using Fund III, as well as new funds that we may establish
in the future, as the primary vehicles for our future acquisitions, including
potential investments in the RCP Venture and New York Urban/Infill
Redevelopment Initiative. Additional sources of capital for funding property
acquisitions, redevelopment, expansion and re-tenanting and RCP Venture
investments, are expected to be obtained primarily from (i) the issuance of
public equity or debt instruments, (ii) cash on hand and cash flow from
operating activities, (iii) additional debt financings, (iv) noncontrolling
interests unfunded capital commitments of $325.2 million for Fund III and (v)
future sales of existing properties.
During 2010, Fund II received capital contributions of $41.9 million to
fund redevelopment projects and partially pay down a line of credit facility.
42
As of December 31, 2010, we had cash and cash equivalents on hand of
$120.6 million and $103.9 million of additional capacity under existing debt facilities.
Shelf Registration Statements and Issuance of Equity
During April 2009, we filed a shelf registration on Form S-3 providing
for offerings of up to a total of $500.0 million of Common Shares,
Preferred Shares and debt securities. During April 2009, we issued 5.75 million
Common Shares and generated net proceeds of approximately $65.0 million. The
proceeds were primarily used to purchase a portion of our outstanding
convertible notes payable and pay down existing lines of credit. Following this
issuance, we have remaining capacity under this registration statement to issue
up to approximately $430.0 million of these securities.
Asset Sales
Asset sales are an additional source of liquidity for us. In March
2010, we sold the Sterling Heights Shopping Center, which was owned through
Fund I, for $2.3 million. During November 2009, we sold Blackman Plaza for $2.5
million, which resulted in a gain on sale of $1.5 million. During February 2009, we sold six locations in our
Fund Is Kroger/Safeway Portfolio for $14.6 million of which Fund Is share of
the sales proceeds amounted to $8.1 million after the repayment of the mortgage
debt on these properties. During April 2008, we sold a residential
complex located in Winston-Salem, North Carolina. These sales are discussed in
ASSET SALES AND CAPITAL/ASSET RECYCLING in Item 1 of this Form 10-K.
Notes Receivable and Preferred Equity Repayment
Reference
is made to Note 5 in our Consolidated Financial Statements, which begin on Page
F-1 of this Form 10-K, for an overview of our notes receivable and preferred
equity investment. During 2010, the following payments were received on these
investements:
During April 2010, we received a $2.1 million
first mortgage loan payment.
During September 2010, we received the full
repayment of our $40.0 million preferred equity investment, which was secured
by a portfolio of 18 properties located in Georgetown, Washington D.C., along
with $9.4 million of preferred return.
Financing and Debt
At December 31, 2010, mortgage and convertible notes payable
aggregated $854.9 million, net of unamortized premium of
$0.1 million, and unamortized discount of $1.1 million, and were
collateralized by 29 properties and related tenant leases. Interest rates on
our outstanding indebtedness ranged from 0.86% to 7.34% with maturities that
ranged from March 2011 to November 2032. Taking into consideration $71.5
million of notional principal under variable to fixed-rate swap agreements
currently in effect, $415.0 million of the portfolio, or 49%, was fixed at a
5.7% weighted average interest rate and $439.9 million, or 51% was floating at
a 3.4% weighted average interest rate. There is $385.7 million of debt maturing
in 2011 at weighted average interest rates of 2.8%. Of this amount, $4.8
million represents scheduled annual amortization. The loans relating to $159.7
million of the 2011 maturities provide for extension options, which we believe
we will be able to exercise. As it relates to maturities, we may not have
sufficient cash on hand to repay such indebtedness and, as such, we may have to
refinance this indebtedness or select other alternatives based on market
conditions at that time.
The following table sets forth certain information pertaining to the
Companys secured credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions)
Borrower
|
|
Total
available
credit
facilities
|
|
Amount
borrowed
as of
December 31,
2009
|
|
2010 net
borrowings
(repayments)
during the year
ended December
31, 2010
|
|
Amount
borrowed
as of
December 31,
2010
|
|
Letters
of credit
outstanding
as
of December
31, 2010
|
|
Amount
available
under
credit
facilities
as of December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadia Realty, LP
|
|
$
|
64.5
|
|
$
|
30.0
|
|
$
|
(29.0
|
)
|
$
|
1.0
|
|
$
|
8.6
|
|
$
|
54.9
|
|
Acadia Realty, LP
|
|
|
|
|
|
2.0
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
|
|
|
Fund II
|
|
|
40.0
|
|
|
48.2
|
|
|
(8.2
|
)
|
|
40.0
|
|
|
|
|
|
|
|
Fund III
|
|
|
221.0
|
|
|
139.5
|
|
|
32.0
|
|
|
171.5
|
|
|
0.5
|
|
|
49.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
325.5
|
|
$
|
219.7
|
|
$
|
(7.2
|
)
|
$
|
212.5
|
|
$
|
9.1
|
|
$
|
103.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reference is made to Note 8 and Note 9 to our Consolidated Financial
Statements, which begin on Page F-1 of this Form 10-K, for a summary of the
financing and refinancing transactions since December 31, 2009.
43
CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
At December 31, 2010, maturities on our mortgage notes ranged from
March 2011 to November 2032. In addition, we have non-cancelable ground
leases at 24 of our shopping centers. We lease space for our White Plains
corporate office for a term expiring in 2015. The following table summarizes
our debt maturities, obligations under non-cancelable operating leases and
construction commitments as of December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
Contractual obligations:
|
|
Total
|
|
Less than
1 year
|
|
1 to 3
years
|
|
3 to 5
years
|
|
More than
5 years
|
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Future debt maturities
(1)
|
|
$
|
855.9
|
|
$
|
385.7
|
|
$
|
156.8
|
|
$
|
143.7
|
|
$
|
169.7
|
|
Interest obligations on debt
|
|
|
120.7
|
|
|
33.2
|
|
|
42.1
|
|
|
28.4
|
|
|
17.0
|
|
Operating lease obligations
|
|
|
171.6
|
|
|
5.4
|
|
|
12.0
|
|
|
11.0
|
|
|
143.2
|
|
Construction commitments
(2)
|
|
|
31.1
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,179.3
|
|
$
|
455.4
|
|
$
|
210.9
|
|
$
|
183.1
|
|
$
|
329.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
(1)
Includes $1.0 million of unamortized
discount related to our convertible notes payable.
|
|
(2)
In conjunction with the redevelopment
of our Core Portfolio and Opportunity Fund properties, we have entered into
construction commitments with general contractors. We intend to fund these
requirements with existing liquidity.
|
OFF BALANCE SHEET ARRANGEMENTS
We have investments in the following joint ventures for the purpose of
investing in operating properties. We account for these investments using the
equity method of accounting as we have noncontrolling interests. As such, our
financial statements reflect our share of income and loss from but not the
assets and liabilities of these joint ventures.
Reference is made to Note 4 to our Consolidated Financial Statements,
which begin on page F-1 of this Form 10-K, for a discussion of our
unconsolidated investments. Our pro-rata share of unconsolidated debt related
to those investments is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro-rata share of
mortgage debt
Operating
Partnership
|
|
|
|
|
|
(dollars in millions)
|
|
|
Interest rate at
December
31,
2010
|
|
|
|
|
|
|
|
|
|
Investment
|
|
|
|
Maturity date
|
|
|
|
|
|
|
|
|
|
Crossroads
|
|
$
|
30.1
|
|
|
5.37
|
%
|
|
December 2014
|
|
Brandywine
|
|
|
36.9
|
|
|
5.99
|
%
|
|
July 2016
|
|
White City
|
|
|
6.7
|
|
|
2.86
|
%
|
|
December 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
73.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition, we have arranged for the provision of three separate
letters of credit in connection with certain leases and investments. As of
December 31, 2010 there were no outstanding balances under any of the
letters of credit. If the letters of credit were fully drawn, the combined
maximum amount of exposure would be $9.1 million.
In addition to our derivative financial
instruments, one of our unconsolidated affiliates, White City, was a party to
an interest rate LIBOR swap with a notional value of $20 million, which
effectively fixes the interest rate at 5.5% and expires in December 2017. Our
pro-rata share of the fair value of the derivative liability totaled $0.1
million at December 31, 2010.
HISTORICAL CASH FLOW
The following table compares the historical cash flow for the year
ended December 31, 2010 (2010) with the cash flow for the year ended
December 31, 2009 (2009).
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
2009
|
|
Variance
|
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
44.4
|
|
$
|
47.5
|
|
$
|
(3.1
|
)
|
Net cash used in investing activities
|
|
|
(60.7
|
)
|
|
(123.4
|
)
|
|
62.7
|
|
Net cash provided by financing activities
|
|
|
43.1
|
|
|
83.0
|
|
|
(39.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
26.8
|
|
$
|
7.1
|
|
$
|
19.7
|
|
|
|
|
|
|
|
|
|
|
|
|
44
A discussion of the significant changes in cash flow for 2010 versus
2009 is as follows:
The decrease of $3.1 million in net cash provided by operating
activities was primarily attributable to the following:
|
|
|
|
Items which
contributed to a decrease in cash from operating activities:
|
|
|
Additional
cash used during 2010 to fund an escrow account with the proceeds from the
CityPoint bond financing
|
|
|
|
|
Items which
contributed to an increase in cash from operating activities:
|
|
|
An increase
in distribution (primarily Albertsons) of operating income from
unconsolidated affiliates during 2010
|
The decrease of $62.7 million of net cash used in investing activities
primarily resulted from the following:
|
|
|
|
Items which
contributed to a decrease in cash from investing activities:
|
|
|
An
additional $13.5 million in investments and advances to unconsolidated
affiliates during 2010
|
|
|
An
additional $12.0 million in proceeds from the sale of properties during 2009
|
|
|
|
|
Items which
contributed to an increase in cash from investing activities:
|
|
|
A decrease
of $54.3 million in expenditures for real estate, development and tenant
installations during 2010
|
|
|
An increase
of $28.4 million in repayments of notes receivable during 2010
|
|
|
A decrease
of $9.4 million in advances of notes receivable during 2010
|
The $39.9 million decrease in net cash provided by financing activities
resulted primarily from the following:
|
|
|
|
Items which
contributed to a decrease in cash from financing activities:
|
|
|
A decrease
of $84.2 million in borrowings during 2010
|
|
|
$65.2
million of additional cash from the issuance of Common Shares, net of costs,
during 2009
|
|
|
|
|
Items which
contributed to an increase in cash from financing activities:
|
|
|
A decrease
of $54.8 million in repayments of mortgage debt during 2010
|
|
|
A decrease
of $46.5 million in repayments of convertible notes during 2010
|
|
|
$7.9 million
of additional contributions from noncontrolling interests during 2010
|
CRITICAL ACCOUNTING POLICIES
Managements discussion and analysis of financial condition and results
of operations is based upon our Consolidated Financial Statements, which have
been prepared in accordance with U.S. GAAP. The preparation of these
Consolidated Financial Statements requires management to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses. We base our estimates on historical experience and assumptions that
are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions. We
believe the following critical accounting policies affect the significant
judgments and estimates used by us in the preparation of our Consolidated
Financial Statements.
Valuation of Property Held for Use and Sale
On a quarterly basis, we review the carrying value of both properties
held for use and for sale. We perform the impairment analysis by calculating
and reviewing net operating income on a property-by-property basis. We evaluate
leasing projections and perform other analyses to conclude whether an asset is
impaired. We record impairment losses and reduce the carrying value of
properties when indicators of impairment are present and the expected
undiscounted cash flows related to those properties are less than their
carrying amounts. In cases where we do not expect to recover our carrying costs
on properties held for use, we reduce our carrying cost to fair value. For
properties held for sale, we reduce our carrying value to the fair value less
costs to sell. For the years ended December 31, 2010, 2009 and 2008, no
impairment losses on our properties were recognized. Management does not
believe that the value of any properties in its portfolio was impaired as of
December 31, 2010.
Investments in and Advances to Unconsolidated
Joint Ventures
The Company periodically reviews its investment in unconsolidated joint
ventures for other than temporary declines in market value. Any decline that is
not expected to be recovered in the next twelve months is considered other than
temporary and an impairment charge is recorded as a reduction in the carrying
value of the investment. During the year ended December 31, 2009, the Company
recorded a $3.8 million impairment reserve related to a Fund I unconsolidated
joint venture. No impairment charges related to the Companys investment in
unconsolidated joint ventures were recognized for the years ended
December 31, 2010 and 2008.
45
Bad Debts
We maintain an allowance for doubtful accounts for estimated losses
resulting from the inability of tenants to make payments on arrearages in
billed rents, as well as the likelihood that tenants will not have the ability
to make payments on unbilled rents including estimated expense recoveries. We
also maintain a reserve for straight-line rent receivables. For the years ended
December 31, 2010 and 2009, the allowance for doubtful accounts totaled
$7.5 million and $7.0 million, respectively. If the financial condition of
our tenants were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.
Real Estate
Real estate assets are stated at cost less accumulated depreciation.
Expenditures for acquisition, development, construction and improvement of
properties, as well as significant renovations are capitalized. Interest costs
are capitalized until construction is substantially complete. Construction in
progress includes costs for significant property expansion and redevelopment.
Depreciation is computed on the straight-line basis over estimated useful lives
of 30 to 40 years for buildings, the shorter of the useful life or lease
term for tenant improvements and five years for furniture, fixtures and
equipment. Expenditures for maintenance and repairs are charged to operations
as incurred.
Upon acquisitions of real estate, we assess the fair value of acquired
assets (including land, buildings and improvements, and identified intangibles
such as above and below market leases and acquired in-place leases and customer
relationships) and acquired liabilities in accordance with the Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 805 Business Combinations and ASC Topic 350 Intangibles Goodwill and
Other, and allocate purchase price based on these assessments. We assess fair
value based on estimated cash flow projections that utilize appropriate
discount and capitalization rates and available market information. Estimates
of future cash flows are based on a number of factors including the historical
operating results, known trends, and market/economic conditions that may affect
the property.
Revenue Recognition and Accounts Receivable
Leases with tenants are accounted for as operating leases. Minimum
rents are recognized on a straight-line basis over the term of the respective
leases, beginning when the tenant takes possession of the space. Certain of
these leases also provide for percentage rents based upon the level of sales
achieved by the tenant. Percentage rent is recognized in the period when the
tenants sales breakpoint is met. In addition, leases typically provide for the
reimbursement to us of real estate taxes, insurance and other property operating
expenses. These reimbursements are recognized as revenue in the period the
expenses are incurred.
We make estimates of the uncollectability of our accounts receivable
related to tenant revenues. An allowance for doubtful accounts has been
provided against certain tenant accounts receivable that are estimated to be
uncollectible. See Bad Debts above. Once the amount is ultimately deemed to
be uncollectible, it is written off.
Notes
Receivable and Preferred Equity Investment
Real estate notes receivable and preferred equity investments are
intended to be held to maturity and are carried at cost. Interest income from
notes receivable and preferred equity investments are recognized on the
effective interest method over the expected life of the loan. Under the
effective interest method, interest or fees to be collected at the origination
of the loan or the payoff of the loan is recognized over the term of the loan
as an adjustment to yield.
Allowances for real estate notes receivable and preferred equity investments
are established based upon managements quarterly review of the investments. In
performing this review, management considers the estimated net recoverable
value of the loan as well as other factors, including the fair value of any
collateral, the amount and status of any senior debt, and the prospects for the
borrower. Because this determination is based upon projections of future
economic events, which are inherently subjective, the amounts ultimately
realized from the loans may differ materially from the carrying value at the
balance sheet date. Interest income recognition is generally suspended for
loans when, in the opinion of management, a full recovery of income and
principal becomes doubtful. Income recognition is resumed when the suspended
loan becomes contractually current and performance is demonstrated to be
resumed.
During 2009, we provided a $1.7 million reserve on a note receivable as
a result of the loss of an anchor tenant at the underlying collateral property.
During 2008, we provided a $4.4 million reserve on a note receivable
collateralized by an interest in an entity owning retail complexes associated
with seven public rest stops along the toll roads in and around Chicago,
Illinois. The note and all accrued interest was subsequently cancelled during
2009.
INFLATION
Our long-term leases contain provisions designed to mitigate the
adverse impact of inflation on our net income. Such provisions include clauses
enabling us to receive percentage rents based on tenants gross sales, which
generally increase as prices rise, and/or, in certain cases, escalation
clauses, which generally increase rental rates during the terms of the leases.
Such escalation clauses are often related to increases in the consumer price
index or similar inflation indexes. In addition, many of our leases are for
terms of less than
46
ten years, which permits us to seek to increase rents upon re-rental at
market rates if current rents are below the then existing market rates. Most of
our leases require the tenants to pay their share of operating expenses,
including common area maintenance, real estate taxes, insurance and utilities,
thereby reducing our exposure to increases in costs and operating expenses
resulting from inflation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Reference is made to Notes to our Consolidated Financial Statements,
which begin on page F-1 of this Form 10-K.
IT
EM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Information
as of December 31, 2010
Our primary market risk exposure is to changes in interest rates
related to our mortgage debt. See Note 8 to our Consolidated Financial
Statements, which begin on page F-1 of this Form 10-K, for certain quantitative
details related to our mortgage debt.
Currently, we manage our exposure to fluctuations in interest rates
primarily through the use of fixed-rate debt and interest rate swap agreements.
As of December 31, 2010, we had total mortgage and convertible notes
payable of $854.9 million of which $415.0 million, or 49% was fixed-rate,
inclusive of debt with rates fixed through the use of derivative financial
instruments, and $439.9 million, or 51%, was variable-rate based upon LIBOR
rates plus certain spreads. As of December 31, 2010, we were a party to
seven interest rate swap transactions and one interest rate cap transaction to
hedge our exposure to changes in interest rates with respect to
$71.5 million and $28.9 million of LIBOR-based variable-rate debt,
respectively. In addition, one of our unconsolidated partnerships was a party
to an interest rate swap transaction with respect to $20.0 million of
LIBOR-based variable-rate debt.
The following table sets forth information as of December 31, 2010
concerning our long-term debt obligations, including principal cash flows by
scheduled maturity and weighted average interest rates of maturing amounts
(dollars in millions):
Consolidated mortgage debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Scheduled
amortization
|
|
Maturities
|
|
Total
|
|
Weighted average
interest rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
$
|
4.8
|
|
$
|
379.8
|
|
$
|
384.6
|
|
|
2.8
|
%
|
2012
|
|
|
4.1
|
|
|
49.3
|
|
|
53.4
|
|
|
5.6
|
%
|
2013
|
|
|
4.3
|
|
|
99.2
|
|
|
103.5
|
|
|
3.6
|
%
|
2014
|
|
|
2.2
|
|
|
62.3
|
|
|
64.5
|
|
|
5.2
|
%
|
2015
|
|
|
1.9
|
|
|
77.4
|
|
|
79.3
|
|
|
3.2
|
%
|
Thereafter
|
|
|
7.6
|
|
|
162.0
|
|
|
169.6
|
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
24.9
|
|
$
|
830.0
|
|
$
|
854.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage debt in unconsolidated partnerships (at our pro-rata share):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Scheduled
amortization
|
|
Maturities
|
|
Total
|
|
Weighted average
interest rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
$
|
0.1
|
|
$
|
|
|
$
|
0.1
|
|
|
n/a
|
%
|
2012
|
|
|
0.5
|
|
|
|
|
|
0.5
|
|
|
n/a
|
%
|
2013
|
|
|
0.5
|
|
|
|
|
|
0.5
|
|
|
n/a
|
%
|
2014
|
|
|
0.5
|
|
|
|
|
|
0.5
|
|
|
n/a
|
%
|
2015
|
|
|
0.5
|
|
|
28.0
|
|
|
28.5
|
|
|
5.4
|
%
|
Thereafter
|
|
|
|
|
|
43.6
|
|
|
43.6
|
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2.1
|
|
$
|
71.6
|
|
$
|
73.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$384.6 million of our total consolidated debt and $0.1 million of our
pro-rata share of unconsolidated outstanding debt will become due in 2011.
$53.4 million of our total consolidated debt and $0.5 million of our
pro-rata share of unconsolidated debt will become due in 2012. As we intend on
refinancing some or all of such debt at the then-existing market interest
rates, which may be greater than the current interest rate, our interest
expense would increase by approximately $4.4 million annually if the interest
rate on the refinanced debt increased by 100 basis points. After giving effect
to noncontrolling interests, the Companys share of this increase would be $1.5
million. Interest expense on our variable debt of $439.9 million, net of
variable to fixed-rate swap agreements currently in effect, as of
December 31, 2010 would increase $4.4 million if LIBOR increased by 100
basis points. After giving effect to noncontrolling interests, the Companys
share of this increase would be $0.6 million. We may seek additional
variable-rate financing if and when pricing and other commercial and financial
terms warrant. As such, we would consider hedging against the interest rate
risk related to such additional variable-rate debt through interest rate swaps
and protection agreements, or other means.
Based on our outstanding debt balances as of December 31, 2010,
the fair value of our total consolidated outstanding debt would decrease by
approximately $12.6 million if interest rates increase by 1%. Conversely,
if interest rates decrease by 1%, the fair value of our total outstanding debt
would increase by approximately $13.8 million.
As of December 31, 2010 and 2009, we had notes receivable and preferred
equity investments of $89.2 million and $125.2 million, respectively. We
determined the estimated fair value of our notes receivable and preferred
equity investments as of December 31,
47
2010 and 2009 were $90.6 million and $126.4 million, respectively, by
discounting future cash receipts utilizing a discount rate equivalent to the
rate at which similar notes receivable would be originated under conditions
then existing.
Based on our outstanding notes receivable and preferred equity
investments balances as of December 31, 2010, the fair value of our total
outstanding notes receivable and preferred equity investments would decrease by
approximately $0.5 million if interest rates increase by 1%. Conversely,
if interest rates decrease by 1%, the fair value of our total outstanding notes
receivable and preferred equity investments would increase by approximately
$0.5 million.
Summarized
Information as of December 31, 2009
As of December 31, 2009, we had total mortgage and convertible notes
payable of $780.1 million of which $439.0 million, or 56% was fixed-rate,
inclusive of interest rate swaps, and $341.1 million, or 44%, was variable-rate
based upon LIBOR plus certain spreads. As of December 31, 2009, we were a party
to eight interest rate swap transactions and one interest rate cap transaction
to hedge our exposure to changes in interest rates with respect to $83.4
million and $30.0 million of LIBOR-based variable-rate debt, respectively.
Interest expense on our variable debt of $341.1 million as of December
31, 2009 would have increased $3.4 million if LIBOR increased by 100 basis
points. Based on our outstanding debt balances as of December 31, 2009, the
fair value of our total outstanding debt would have decreased by approximately
$18.3 million if interest rates increased by 1%. Conversely, if interest rates
decreased by 1%, the fair value of our total outstanding debt would have
increased by approximately $20.5 million.
Changes
in Market Risk Exposures from 2009 to 2010
Our interest rate risk exposure from December 31, 2009 to December 31,
2010 has increased, as we had $341.1 million in variable-rate debt (or 44% of
our total debt) at December 31, 2009, as compared to $439.9 million (or 51% of
our total debt) in variable-rate debt at December 31, 2010. In addition, the
amount of our total debt increased from $780.1 million at December 31, 2009 to
$854.9 million at December 31, 2010. This increased amount of debt could expose
us to greater fluctuations in the fair value of our debt.
ITE
M 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements beginning on page F-1 are incorporated herein
by reference.
IT
EM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
IT
EM 9A. CONTROLS
AND PROCEDURES.
(i) Disclosure Controls and Procedures
We conducted an evaluation, under the supervision and with the
participation of management including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of our disclosure controls and
procedures. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were
effective as of December 31, 2010 to provide reasonable assurance that
information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in SEC rules and forms, and is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.
(ii) Internal Control Over Financial
Reporting
(a) Managements Annual Report on
Internal Control Over Financial Reporting
Management of Acadia Realty Trust is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is
defined in the Securities Exchange Act of 1934 Rule 13(a)-15(f). Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of our internal control over financial
reporting as of December 31, 2010 as required by the Securities Exchange
Act of 1934 Rule 13(a)-15(c). In making this assessment, we used the
criteria set forth in the framework in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(the COSO criteria). Based on our evaluation under the COSO criteria, our
management concluded that our internal control over financial reporting was
effective as of December 31, 2010 to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with U.S.
generally accepted accounting principles.
48
BDO USA, LLP, an independent registered public accounting firm that
audited our Financial Statements included in this Annual Report, has issued an
attestation report on our internal control over financial reporting as of
December 31, 2010, which appears in paragraph (b) of this Item 9A.
Acadia Realty
Trust
White Plains, New York
February 28, 2011
(b) Attestation report of the
independent registered public accounting firm
The
Shareholders and Trustees of
Acadia Realty Trust
We have audited Acadia Realty Trust and subsidiaries internal control
over financial reporting as of December 31, 2010, based on criteria
established in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria). Acadia
Realty Trust and subsidiaries management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the
accompanying Managements Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on a companys internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of
internal control, based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A companys internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A companys internal
control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
In our opinion, Acadia Realty Trust and subsidiaries maintained in all
material respects effective internal control over financial reporting as of
December 31, 2010, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheets of Acadia Realty Trust and subsidiaries as of December 31, 2010 and
2009 and the related consolidated statements of income, shareholders equity
and comprehensive income, and cash flows for each of the three years in the
period ended December 31, 2010 and our report dated February 28, 2011
expressed an unqualified opinion thereon.
/s/ BDO USA,
LLP
New York, New York
February 28, 2011
(c) Changes in internal control over
financial reporting
There was no change in our internal control over financial reporting
during our fourth fiscal quarter ended December 31, 2010 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
IT
EM 9B. OTHER
INFORMATION.
None
49
P
ART III
In accordance
with the rules of the SEC, certain information required by Part III is omitted
and is incorporated by reference into this Form 10-K from our definitive proxy
statement relating to our 2011 annual meeting of stockholders (our 2011 Proxy
Statement) that we intend to file with the SEC no later than April 29, 2011.
I
TEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The
information under the following headings in the 2011 Proxy Statement is
incorporated herein by reference:
|
|
|
|
|
PROPOSAL 1
ELECTION OF TRUSTEES
|
|
|
MANAGEMENT
|
|
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
|
I
TEM 11.
EXECUTIVE COMPENSATION.
The
information under the following headings in the 2011 Proxy Statement is
incorporated herein by reference:
|
|
|
|
|
ACADIA
REALTY TRUST COMPENSATION COMMITTEE REPORT
|
|
|
COMPENSATION
DISCUSSION AND ANALYSIS
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|
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EXECUTIVE
AND TRUSTEE COMPENSATION
|
|
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COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
|
I
TEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The
information under the heading SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT in the 2011 Proxy Statement is incorporated herein by
reference.
The
information under Item 5 of this Form 10-K under the heading (c) Securities
authorized for issuance under equity compensation plans is incorporated herein
by reference.
I
TEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The
information under the following headings in the 2011 Proxy Statement is
incorporated herein by reference:
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
|
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PROPOSAL 1
ELECTION OF TRUSTEESTrustee Independence
|
I
TEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES.
The
information under the heading AUDIT COMMITTEE INFORMATION in the 2011 Proxy
Statement is incorporated herein by reference.
P
ART IV
I
TEM 15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES.
1.
Financial Statements
: See Index to
Financial Statements at page F-1 below.
2.
Financial Statement Schedule
:
See Schedule IIIReal Estate and Accumulated Depreciation at page F-40 below.
3.
Exhibits
: The index of
exhibits below is incorporated herein by reference.
50
SIGNATURES
Pursuant to
the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
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ACADIA REALTY TRUST
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|
|
(Registrant)
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|
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|
|
By:
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/s/ Kenneth
F. Bernstein
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|
Kenneth F.
Bernstein
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|
|
Chief
Executive Officer,
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|
|
President
and Trustee
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|
|
|
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By:
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/s/ Michael
Nelsen
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Michael
Nelsen
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Senior Vice
President and
|
|
|
Chief
Financial Officer
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|
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|
By:
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/s/ Jonathan
W. Grisham
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|
|
Jonathan W.
Grisham
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Senior Vice
President and
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|
|
Chief
Accounting Officer
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Dated:
February 28, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
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|
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Signature
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Title
|
|
Date
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|
/s/ Kenneth
F. Bernstein
(Kenneth F. Bernstein)
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|
Chief
Executive Officer,
President and Trustee
(Principal Executive Officer)
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|
February 28,
2011
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|
|
|
|
|
/s/ Michael
Nelsen
(Michael Nelsen)
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|
Senior Vice
President
and Chief Financial Officer
(Principal Financial Officer)
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|
February 28,
2011
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|
|
|
|
|
/s/ Jonathan
W. Grisham
(Jonathan W. Grisham)
|
|
Senior Vice
President
and Chief Accounting Officer
(Principal Accounting Officer)
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|
February 28,
2011
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/s/ Douglas Crocker
II
(Douglas Crocker II)
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Trustee
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|
February 28,
2011
|
|
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|
|
|
/s/ Lorrence
T. Kellar
(Lorrence T. Kellar)
|
|
Trustee
|
|
February 28,
2011
|
|
|
|
|
|
/s/ Wendy
Luscombe
(Wendy Luscombe)
|
|
Trustee
|
|
February 28,
2011
|
|
|
|
|
|
/s/ William
T. Spitz
(William T. Spitz)
|
|
Trustee
|
|
February 28,
2011
|
|
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/s/ Lee S.
Wielansky
(Lee S. Wielansky)
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Trustee
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February 28,
2011
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51
EXHIBIT INDEX
The following
is an index to all exhibits filed with the Annual Report on Form 10-K other
than those incorporated by reference herein:
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|
Exhibit No.
|
Description
|
|
|
3.1
|
Declaration
of Trust of the Company, as amended (1)
|
|
|
3.2
|
Fourth
Amendment to Declaration of Trust (4)
|
|
|
3.3
|
Amended and
Restated By-Laws of the Company (22)
|
|
|
3.4
|
Fifth
Amendment to Declaration of Trust (32)
|
|
|
3.5
|
First
Amendment the Amended and Restated Bylaws of the Company (32)
|
|
|
4.1
|
Voting Trust
Agreement between the Company and Yale University dated February 27, 2002
(14)
|
|
|
10.1
|
1999 Share
Option Plan (8) (21)
|
|
|
10.2
|
2003 Share
Option Plan (16) (21)
|
|
|
10.3
|
Form of
Share Award Agreement (17) (21)
|
|
|
10.4
|
Form of
Registration Rights Agreement and Lock-Up Agreement (18)
|
|
|
10.5
|
Registration
Rights and Lock-Up Agreement (RD Capital Transaction) (11)
|
|
|
10.6
|
Registration
Rights and Lock-Up Agreement (Pacesetter Transaction) (11)
|
|
|
10.7
|
Contribution
and Share Purchase Agreement dated as of April 15, 1998 among Mark Centers
Trust, Mark Centers Limited Partnership, the Contributing Owners and
Contributing Entities named therein, RD Properties, L.P. VI, RD Properties,
L.P. VIA and RD Properties, L.P. VIB (9)
|
|
|
10.8
|
Agreement of
Contribution among Acadia Realty Limited Partnership, Acadia Realty Trust and
Klaff Realty, LP and Klaff Realty, Limited (18)
|
|
|
10.9
|
Employment
agreement between the Company and Kenneth F. Bernstein dated October 1998 (6)
(21)
|
|
|
10.11
|
Amendment to
employment agreement between the Company and Kenneth F. Bernstein dated
January 19, 2007 (26) (21)
|
|
|
10.12
|
First
Amendment to Employment Agreement between the Company and Kenneth Bernstein
dated as of January 1, 2001 (12) (21)
|
|
|
10.13
|
Description
of Long Term Investment Alignment Program (32)
|
|
|
10.14
|
Letter of
employment offer between the Company and Michael Nelsen, Sr. Vice President
and Chief Financial Officer dated February 19, 2003 (15) (21)
|
|
|
10.15
|
Form of
Amended and Restated Severance Agreement, dated June 12, 2008, that was
entered into with each of Joel Braun, Executive Vice President and Chief
Investment Officer; Michael Nelsen, Senior Vice President and Chief Financial
Officer; Robert Masters, Senior Vice President, General Counsel, Chief
Compliance Officer and Secretary; and Joseph Hogan, Senior Vice President and
Director of Construction. (Incorporated by reference to the Exhibit 10.1 to the
Companys Form 8-K filed with the SEC on June 12, 2008) (21)
|
|
|
10.16
|
Note
Modification Agreement, Note, Mortgage Modification Agreement, Mortgage,
Assignment of Leases and Rents and Security Agreement between Acadia-P/A
Sherman Avenue LLC and Bank of America N. A. dated January 15, 2009 (32)
|
52
|
|
Exhibit No.
|
Description
|
|
|
10.17
|
Mortgage,
Assignment of Leases and Rents and Security Agreement from Acadia Cortlandt
LLC to Bank of America, N.A. dated July 29, 2009 [Initial Advance], Note made
by Acadia Cortlandt LLC in favor of Bank of America, N.A. dated July 29, 2009
[Initial Advance], Mortgage, Assignment of Leases and Rents and Security
Agreement from Acadia Cortlandt LLC to Bank of America, N.A. dated July 29,
2009 [Future Advance] and Note made by Acadia Cortlandt LLC in favor of Bank
of America, N.A. dated July 29, 2009 [Future Advance] (33)
|
|
|
10.18
|
Consolidated,
Amended and Restated Term Loan Agreement among Acadia-PA East Fordham
Acquisitions, LLC, and Fordham Place Office LLC as borrower and The lenders
Party Hereto as lenders and Eurohypo AG, New York Branch as Administrative
Agent; Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing made by Acadia-PA East Fordham Acquisitions, LLC, and Fordham
Place Office LLC in favor of Eurohypo AG, New York Branch as Administrative
Agent; Replacement Note between Acadia-PA East Fordham Acquisitions, LLC, and
Fordham Place Office LLC and Amalgamated Bank; Replacement Note between
Acadia-PA East Fordham Acquisitions, LLC, and Fordham Place Office LLC and
Deutsche Genossenschafts Hypothekenbank AG; Replacement Note between
Acadia-PA East Fordham Acquisitions, LLC, and Fordham Place Office LLC and
Eurohypo AG, New York Branch; and Replacement Note between Acadia-PA East Fordham
Acquisitions, LLC, and Fordham Place Office LLC and TD Bank. All dated
November 4, 2009. (35)
|
|
|
10.19
|
Fifth
Amendment to Employment Agreement between the Company and Kenneth F.
Bernstein dated August 5, 2008 (34)
|
|
|
10.20
|
Secured
Promissory Note between RD Absecon Associates, L.P. and Fleet Bank, N.A.
dated February 8, 2000 (7)
|
|
|
10.21
|
Promissory
Note between 239 Greenwich Associates, L.P. and Greenwich Capital Financial
Products, Inc. dated May 30, 2003 (18)
|
|
|
10.22
|
Open-End
Mortgage, Assignment of Leases and Rents, and Security Agreement between 239
Greenwich Associates, L.P. and Greenwich Capital Financial Products, Inc.
dated May 30, 2003 (18)
|
|
|
10.23
|
Promissory
Note between Merrillville Realty, L.P. and Sun America Life Insurance Company
dated July 7, 1999 (7)
|
|
|
10.24
|
Secured
Promissory Note between Acadia Town Line, LLC and Fleet Bank, N.A. dated
March 21, 1999 (7)
|
|
|
10.25
|
Promissory
Note between RD Village Associates Limited Partnership and Sun America Life
Insurance Company Dated September 21, 1999 (7)
|
|
|
10.26
|
First
Amendment to Severance Agreements between the Company and Joel Braun
Executive Vice President and Chief Investment Officer, Michael Nelsen, Senior
Vice President and Chief Financial Officer, Robert Masters, Senior Vice
President, General Counsel, Chief Compliance Officer and Secretary and Joseph
Hogan, Senior Vice President and Director of Construction dated January 19,
2007 (21) (26)
|
|
|
10.27
|
Mortgage
Agreement, $25.0 million Mortgage Note, $23.0 million Mortgage Note, Building
Loan Agreement and General Assignment of Rents between Manufacturers and
Traders Trust Company and Capital One, N.A. (the Lending Group) and
Canarsie Plaza, LLC, all dated January 12, 2010 (34)
|
|
|
10.28
|
Third
Amended and Restated Credit Agreement and Note among Acadia Strategic
Opportunity Fund II, LLC and Bank of America, N.A., dated March 3, 2010 (34)
|
|
|
10.29
|
Loan
Agreement between New York City Capital Resource Corporation (the Issuer)
and Albee Retail Development LLC (the Company), Copy of the Promissory Note
from the Company to the Issuer and The Bank of New York Mellon, as trustee
(the Trustee), Indenture of Trust (the Indenture) between the Issuer and
the Trustee, Mortgage and Security Agreement and Assignment of Leases and
Rents (Acquisition Loan) from the Company to the Trustee, Mortgage and
Security Agreement and Assignment of Leases and Rents (Building Loan) from
the Company to the Trustee, Mortgage and Security Agreement and Assignment of
Leases and Rents (Indirect Loan) from the Company to the Trustee, Building
Loan Agreement among the Issuer, the Trustee and the Company, Pledge and
Security Agreement from the Company to the Trustee, Bond Guarantee Agreement
from the Company and Acadia Strategic Opportunity Fund II LLC (the Parent)
to the Trustee, Project Completion Guarantee Agreement from the Company and
the Parent to the Trustee, all dated as of July 1, 2010 (35)
|
|
|
10.30
|
Amended and
Restated Note Agreement made by Albee Development LLC in favor of Bank of
America, N.A., dated August 19, 2010 (35)
|
|
|
53
|
|
Exhibit No.
|
Description
|
|
|
10.31
|
Third Loan
Extension and Modification Agreement by and among Acadia-P/A 161
ST
Street, LLC (Borrower), Acadia-P/A Holdings Company, LLC (Guarantor) and
Bank of America, N.A., dated July 9, 2010 (35)
|
|
|
10.32
|
Fourth
Amendment to Project Loan Agreement and Amendment of Certain Other Loan
Documents by and between P/A-Acadia Pelham Manor, LLC and U.S. Bank National
Association, Not Individually but Solely as Trustee for the Maiden Lane
Commercial Mortgage-Backed Securities Trust 2008-1 dated August 26, 2010 (35)
|
|
|
10.33
|
Term Loan
Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York,
dated March 30, 2000 (10)
|
|
|
10.34
|
Mortgage
Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York,
dated March 30, 2000 (10)
|
|
|
10.35
|
Second
Mortgage Modification Agreement by and between Acadia-P/A Liberty LLC and PNC
Bank, National Association dated September 17, 2010 (35)
|
|
|
10.36
|
Amended and Restated
Loan Agreement among Acadia Cortlandt LLC and Bank of America, N.A., Note
between Acadia Cortlandt LLC and Bank of America, N.A., Note Consolidation
and Modification Agreement between Acadia Cortlandt LLC and Bank of America,
N.A., Note between Acadia Cortlandt LLC and Bank of America, N.A., Mortgage
Consolidation and Modification Agreement between Acadia Cortlandt LLC and
Bank of America, N.A., Mortgage Security Agreement between Acadia Cortlandt
LLC and Bank of America, N.A. and Amended and Restated Guaranty Agreement
between Acadia Cortlandt LLC and Bank of America, N.A., all dated October 26,
2010 (36)
|
|
|
10.37
|
Agreement of
Modification of Note Consolidation and Modification Agreement between Acadia
Tarrytown LLC and Anglo Irish Bank Corporation Limited dated November 5, 2010
but deemed effective as of October 30, 2010 (36)
|
|
|
10.38
|
Second
Amendment to Building Loan Agreement and the Second Amendment to Project Loan
Agreement and Amendment of Certain Other Loan Documents by and between Acadia
Atlantic Avenue, LLC and U.S. Bank National Association, Not Individually But
Solely as Trustee for the Maiden Lane Commercial Mortgage-Backed Securities
Trust 2008-1, both dated October 20, 2010 (36)
|
|
|
10.39
|
Fourth
Amended and Restated Credit Agreement among Acadia Strategic Opportunity Fund
II, LLC and Bank of America, N.A. dated December 22, 2010 (36)
|
|
|
10.40
|
Loan
Agreement among P/A-Acadia Pelham Manor, LLC and Bank of America, N.A., Note
between P/A-Acadia Pelham Manor, LLC and Bank of America, N.A., Note between
P/A-Acadia Pelham Manor, LLC and Bank of America, N.A., Note Consolidation
and Modification Agreement between P/A-Acadia Pelham Manor, LLC and Bank of
America, N.A., Fee and Leasehold Mortgage, Assignment of Leases and Rents and
Security Agreement between P/A-Acadia Pelham Manor, LLC and Bank of America,
N.A., Fee and Leasehold Mortgage Consolidation and Modification Agreement
between P/A-Acadia Pelham Manor, LLC and Bank of America, N.A. and Guaranty
Agreement between P/A-Acadia Pelham Manor, LLC and Bank of America, N.A., all
dated December 1, 2010 (36)
|
|
|
10.44
|
Prospectus
Supplement Regarding Options Issued under the Acadia Realty Trust 1999 Share
Incentive Plan and 2003 Share Incentive Plan (19) (21)
|
|
|
10.45
|
Acadia
Realty Trust 1999 Share Incentive Plan and 2003 Share Incentive Plan Deferral
and Distribution Election Form (19) (21)
|
|
|
10.46
|
Amended,
Restated And Consolidated Promissory Note between Acadia New Loudon, LLC and
Greenwich Capital Financial Products, Inc. dated August 13, 2004 (19)
|
|
|
10.47
|
Amended,
Restated And Consolidated Mortgage, Assignment Of Leases And Rents And
Security Agreement between Acadia New Loudon, LLC and Greenwich Capital
Financial Products, Inc. dated August 13, 2004 (19)
|
|
|
10.51
|
Mortgage,
Assignment of Leases and Rents and Security Agreement between Acadia Crescent
Plaza, LLC and Greenwich Capital Financial Products, Inc. dated August 31,
2005 (22)
|
54
|
|
Exhibit No.
|
Description
|
|
|
10.52
|
Mortgage,
Assignment of Leases and Rents and Security Agreement between
Pacesetter/Ramapo Associates and Greenwich Capital Financial Products, Inc.
dated October 17, 2005 (22)
|
|
|
10.53
|
Loan
Agreement between RD Elmwood Associates, L.P. and Bear Stearns Commercial
Finance Mortgage, Inc. dated December 9, 2005 (35)
|
|
|
10.54
|
Mortgage and
Security Agreement between RD Elmwood Associates, L.P. and Bear Stearns
Commercial Finance Mortgage, Inc. dated December 9, 2005 (22)
|
|
|
10.55
|
Agreement
and Plan Of Merger Dated as of December 22, 2005 by and among Acadia Realty
Acquisition I, LLC, Ara Btc LLC, ARA MS LLC, ARA BS LLC, ARA BC LLC and ARA
BH LLC, Acadia Investors, Inc., AII BTC LLC, AII MS LLC, AII BS LLC, AII BC
LLC And AII BH LLC, Samuel Ginsburg 2000 Trust Agreement #1, Martin Ginsburg
2000 Trust Agreement #1, Martin Ginsburg, Samuel Ginsburg and Adam Ginsburg,
and GDC SMG, LLC, GDC Beechwood, LLC, Aspen Cove Apartments, LLC and SMG
Celebration, LLC (23)
|
|
|
10.56
|
Amended and
Restated Loan Agreement between Acadia Realty Limited Partnership, as lender,
and Levitz SL Woodbridge, L.L.C., Levitz SL St. Paul, L.L.C., Levitz SL La
Puente, L.L.C., Levitz SL Oxnard, L.L.C., Levitz SL Willowbrook, L.L.C.,
Levitz SL Northridge, L.L.C., Levitz SL San Leandro, L.L.C., Levitz SL
Sacramento, L.L.C., HL Brea, L.L.C., HL Deptford, L.L.C., HL Hayward, L.L.C.,
HL San Jose, L.L.C., HL Scottsdale, L.L.C., HL Torrance, L.L.C., HL Irvine 1,
L.L.C., HL West Covina, L.L.C., HL Glendale, L.L.C. and HL Northridge,
L.L.C., each a Delaware limited liability company, Levitz SL Langhorne, L.P.
and HL Fairless Hills, L.P., each a Delaware limited partnership (each,
together with its permitted successors and assigns, a
Borrower
, and collectively, together
with their respective permitted successors and assigns,
Borrowers
), dated June 1, 2006 (24)
|
|
|
10.57
|
Consent and
Assumption Agreement between Thor Chestnut Hill, LP, Thor Chestnut Hill II,
LP, Acadia Chestnut, LLC, Acadia Realty Limited Partnership and Wells Fargo
Bank, N.A. dated June 9, 2006, original Mortgage and Security Agreement
between Thor Chestnut Hill, LP and Thor Chestnut Hill II, LP and Column
Financial, Inc. dated June 5, 2003 and original Assignment of Leases and
Rents from Thor Chestnut Hill, LP and Thor Chestnut Hill II, LP to Column
Financial, Inc. dated June 2003. (24)
|
|
|
10.58
|
Loan
Agreement and Promissory Note between RD Woonsocket Associates, L.P. and
Merrill Lynch Mortgage Lending, Inc. dated September 8, 2006 (25)
|
|
|
10.59
|
Amended and
Restated Revolving Loan Agreement dated as of December 19, 2006 by and among
RD Abington Associates LP, Acadia Town Line, LLC, RD Methuen Associates LP,
RD Absecon Associates, LP, RD Bloomfield Associates, LP, RD Hobson
Associates, LP, and RD Village Associates LP, and Bank of America, N.A. and
the First Amendment to Amended and Restated Revolving Loan Agreement dated
February, 2007. (26)
|
|
|
10.60
|
Loan
Agreement between Bank of America, N.A. and RD Branch Associates, LP dated
December 19, 2006. (26)
|
|
|
10.61
|
Loan
Agreement between 239 Greenwich Associates Limited Partnership and Wachovia
Bank, National Association dated January 25, 2007. (35)
|
|
|
10.62
|
Revolving
Credit Agreement between Acadia Realty Limited Partnership and Washington
Mutual Bank dated March 29, 2007. (28)
|
|
|
10.63
|
Loan
Agreement between Acadia Merrillville Realty, L.P. and Bear Stearns
Commercial Mortgage, Inc dated July 2, 2007. (35)
|
|
|
10.64
|
Promissory
Note between Acadia Merrillville Realty, L.P. and Bear Stearns Commercial
Mortgage, Inc dated July 2, 2007. (29)
|
|
|
10.65
|
Loan
Agreement Note between APA 216
th
Street and Bank of America, N.A.
dated September 11, 2007. (29)
|
|
|
10.66
|
Promissory
Note between APA 216
th
Street and Bank of America, N.A. dated
September 11, 2007. (29)
|
|
|
10.67
|
Acquisition
and Project Loan agreement between Acadia PA East Fordham Acquisitions, LLC
and Eurohypo AG, New York Branch dated October 5, 2007 (35)
|
55
|
|
Exhibit No.
|
Description
|
|
|
10.68
|
Building
Loan Agreement between Acadia PA East Fordham Acquisitions, LLC and
Eurohypo AG, New York Branch dated October 5, 2007 (30)
|
|
|
10.69
|
Revolving
credit agreement between Acadia Strategic Opportunity Fund III, LLC. and Bank
of America, N.A. dated October 10, 2007 (35)
|
|
|
10.70
|
Mortgage
Consolidation and Modification Agreement between Acadia Tarrytown LLC and
Anglo Irish Bank Corporation, PLC dated October 30, 2007 (35)
|
|
|
10.71
|
Project Loan
Agreement between P/A Acadia Pelham Manor, LLC and Bear Stearns Commercial
Mortgage, Inc. dated December 10, 2007 (35)
|
|
|
10.72
|
Building
Loan Agreement P/A Acadia Pelham Manor, LLC and Bear Stearns Commercial
Mortgage, Inc. dated December 10, 2007 (35)
|
|
|
10.73
|
Project Loan
Agreement between Acadia Atlantic Avenue, LLC and Bear Stearns Commercial
Mortgage, Inc. dated December 26, 2007 (35)
|
|
|
10.74
|
Building
Loan Agreement between Acadia Atlantic Avenue, LLC and Bear Stearns
Commercial Mortgage, Inc. dated December 26, 2007 (35)
|
|
|
10.75
|
Certain
information regarding the compensation arrangements with certain officers of
registrant (Incorporated by reference to Item 5.02 of the registrants Form
8-K filed with the SEC on February 4, 2008)
|
|
|
10.76
|
Real Estate
Purchase and Sale Agreement between Suffern Self Storage, L.L.C., Jersey City
Self Storage, L.L.C., Linden Self Storage, L.L.C., Webster Self Storage,
L.L.C., Bronx Self Storage, L.L.C., American Storage Properties North LLC,
and The Storage Company LLC (collectively, as Seller) and Acadia Storage Post
LLC, a Delaware limited liability company, as Buyer, for ten Properties and
Storage Facilities located thereon (31)
|
|
|
10.77
|
Real Estate
Purchase and Sale Agreement between American Storage Properties North LLC,
as Seller and Acadia Storage Post Metropolitan Avenue LLC, as Buyer for 4805
Metropolitan Avenue, Unit 2, Maspeth, Queens, New York (31)
|
|
|
10.78
|
First Amendment
to Real Estate Purchase and Sale Agreement between Suffern Self Storage,
L.L.C., Jersey City Self Storage, L.L.C., Linden Self Storage, L.L.C.,
Webster Self Storage, L.L.C., Bronx Self Storage, L.L.C., American Storage
Properties North LLC, and The Storage Company LLC (collectively, Seller)
and Acadia Storage Post LLC (Buyer) (31)
|
|
|
10.79
|
Amended and
Restated Agreement of Limited Partnership of the Operating Partnership (11)
|
|
|
10.80
|
First and
Second Amendments to the Amended and Restated Agreement of Limited
Partnership of the Operating Partnership (11)
|
|
|
10.81
|
Third
Amendment to Amended and Restated Agreement of Limited Partnership of the
Operating Partnership (18)
|
|
|
10.82
|
Fourth
Amendment to Amended and Restated Agreement of Limited Partnership of the
Operating Partnership (18)
|
|
|
21
|
List of
Subsidiaries of Acadia Realty Trust (36)
|
|
|
23.1
|
Consent of
Registered Public Accounting Firm to incorporation by reference its reports
into Forms S-3 and Forms S-8 (36)
|
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to rule 13a14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (36)
|
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to rule 13a14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (36)
|
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (36)
|
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (36)
|
56
|
|
Exhibit No.
|
Description
|
|
|
99.1
|
Certificate
of Designation of Series A Preferred Operating Partnership Units of Limited
Partnership Interest of Acadia Realty Limited Partnership (2)
|
|
|
99.2
|
Certificate
of Designation of Series B Preferred Operating Partnership Units of Limited
Partnership Interest of Acadia Realty Limited Partnership (18)
|
|
|
Notes:
|
|
|
|
(1)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form 10-K filed for the fiscal Year ended December 31, 1994
|
|
|
(2)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to Companys Quarterly
Report on Form 10-Q filed for the quarter ended June 30, 1997
|
|
|
(3)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to Companys Quarterly
Report on Form 10-Q filed for the quarter ended September 30, 1998
|
|
|
(4)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to Companys Quarterly
Report on Form 10-Q filed for the quarter ended September 30, 1998
|
|
|
(5)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Registration Statement on Form S-11 (File No.33-60008)
|
|
|
(6)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form10-K filed for the fiscal year ended December 31, 1998
|
|
|
(7)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form10-K filed for the fiscal year ended December 31, 1999
|
|
|
(8)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Registration Statement on Form S-8 filed September 28, 1999
|
|
|
(9)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Form
8-K filed on April 20, 1998
|
|
|
(10)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Form
10-K filed for the fiscal year ended December 31, 2000
|
|
|
(11)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Registration Statement on Form S-3 filed on March 3, 2000
|
|
|
(12)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to Companys Quarterly
Report on Form 10-Q filed for the quarter ended September 30, 2001
|
|
|
(13)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form 10-K filed for the fiscal year ended December 31, 2001
|
|
|
(14)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to Yale Universitys
Schedule 13D filed on September 25, 2002
|
|
|
(15)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form 10-K filed for the fiscal year ended December 31, 2002
|
|
|
(16)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Definitive Proxy Statement on Schedule 14A filed April 29, 2003.
|
|
|
(17)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Current
Report on Form 8-K filed on July 2, 2003
|
|
|
(18)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form 10-K filed for the fiscal year ended December 31, 2003
|
|
|
(19)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form 10-K filed for the fiscal year ended December 31, 2004.
|
|
|
(20)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form 10-K filed for the fiscal year ended December 31, 2004.
|
|
|
(21)
|
Management
contract or compensatory plan or arrangement.
|
|
|
(22)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form 10-K filed for the fiscal year ended December 31, 2005.
|
|
|
(23)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Current
Report on Form 8-K filed on January 4, 2006
|
57
|
|
(24)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to Companys Quarterly
Report on Form 10-Q filed for the quarter ended June 30, 2006
|
|
|
(25)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to Companys Quarterly
Report on Form 10-Q filed for the quarter ended September 30, 2006
|
|
|
(26)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Current
Report on Form 8-K filed on January 19, 2007
|
|
|
(27)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Annual
Report on Form 10-K filed for the fiscal year ended December 31, 2006.
|
|
|
(28)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys Quarterly
Report on Form 10-Q filed for the quarter ended March 31, 2007.
|
|
|
(29)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2007.
|
|
|
(30)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Quarterly Report on Form 10-K filed for the year ended December 31, 2007.
|
|
|
(31)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Quarterly Report on Form 10-Q filed for the quarter ended March 31, 2008.
|
|
|
(32)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Quarterly Report on Form 10-Q filed for the quarter ended March 31, 2009.
|
|
|
(33)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2009.
|
(34)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Quarterly Report on Form 10-Q filed for the quarter ended March 31, 2010.
|
|
|
(35)
|
Incorporated
by reference to the copy thereof filed as an Exhibit to the Companys
Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2010.
|
|
|
(36)
|
Filed
herewith.
|
|
|
58
ACADIA REALTY TRUST AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
F-1
R
eport of
Independent Registered Public Accounting Firm
The
Shareholders and Trustees of
Acadia Realty Trust
We have audited the accompanying consolidated balance sheets of Acadia
Realty Trust and subsidiaries (the Company) as of December 31, 2010 and
2009 and the related consolidated statements of income, shareholders equity
and comprehensive income, and cash flows for each of the three years in the
period ended December 31, 2010. In connection with our audits of the financial
statements we have also audited the accompanying financial statement schedule
listed on page F-1. These financial statements and schedule are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and schedules. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Acadia
Realty Trust and subsidiaries at December 31, 2010, and 2009 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2010, in conformity with generally accepted accounting
principles in the United States of America.
Also, in our opinion, the financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), Acadia Realty Trust and
subsidiaries internal control over financial reporting as of December 31,
2010, based on criteria established in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and our report dated February 28, 2011 expressed an unqualified opinion
thereon.
/s/ BDO USA, LLP
New York, New
York
February 28, 2011
F-2
ACADIA REALTY TRUST AND SUBSIDIARIES
C
ONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
ASSETS
|
|
|
|
|
|
|
|
Operating real estate
|
|
|
|
|
|
|
|
Land
|
|
$
|
222,786
|
|
$
|
221,740
|
|
Buildings and improvements
|
|
|
915,221
|
|
|
838,828
|
|
Construction in progress
|
|
|
4,400
|
|
|
2,575
|
|
|
|
|
|
|
|
|
|
|
|
|
1,142,407
|
|
|
1,063,143
|
|
Less: accumulated depreciation
|
|
|
219,920
|
|
|
191,307
|
|
|
|
|
|
|
|
|
|
Net operating real estate
|
|
|
922,487
|
|
|
871,836
|
|
Real estate under development
|
|
|
243,892
|
|
|
137,340
|
|
Notes receivable and preferred equity
investment, net
|
|
|
89,202
|
|
|
125,221
|
|
Investments in and advances to
unconsolidated affiliates
|
|
|
31,036
|
|
|
51,712
|
|
Cash and cash equivalents
|
|
|
120,592
|
|
|
93,808
|
|
Cash in escrow
|
|
|
28,610
|
|
|
8,582
|
|
Rents receivable, net
|
|
|
18,044
|
|
|
16,713
|
|
Deferred charges, net of amortization
|
|
|
25,730
|
|
|
28,311
|
|
Acquired lease intangibles, net of
amortization
|
|
|
18,622
|
|
|
22,382
|
|
Prepaid expenses and other assets
|
|
|
22,463
|
|
|
22,003
|
|
Assets of discontinued operations
|
|
|
4,128
|
|
|
4,556
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,524,806
|
|
$
|
1,382,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
Mortgages payable
|
|
$
|
806,212
|
|
$
|
732,287
|
|
Convertible notes payable, net of
unamortized discount of $1,063 and $2,105, respectively
|
|
|
48,712
|
|
|
47,910
|
|
Distributions in excess of income from, and
investments in, unconsolidated affiliates
|
|
|
20,884
|
|
|
20,589
|
|
Accounts payable and accrued expenses
|
|
|
27,691
|
|
|
17,548
|
|
Dividends and distributions payable
|
|
|
7,427
|
|
|
7,377
|
|
Acquired lease intangibles, net of
amortization
|
|
|
5,737
|
|
|
6,753
|
|
Other liabilities
|
|
|
20,621
|
|
|
17,523
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
937,284
|
|
|
849,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
Common shares, $.001 par value, authorized
100,000,000 shares, issued and outstanding 40,254,525 and 39,787,018 shares,
respectively
|
|
|
40
|
|
|
40
|
|
Additional paid-in capital
|
|
|
303,823
|
|
|
299,014
|
|
Accumulated other comprehensive loss
|
|
|
(2,857
|
)
|
|
(2,994
|
)
|
Retained earnings
|
|
|
17,206
|
|
|
16,125
|
|
|
|
|
|
|
|
|
|
Total Shareholders equity
|
|
|
318,212
|
|
|
312,185
|
|
Noncontrolling interests
|
|
|
269,310
|
|
|
220,292
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
587,522
|
|
|
532,477
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,524,806
|
|
$
|
1,382,464
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part
of these consolidated financial statements
F-3
ACADIA REALTY TRUST AND SUBSIDIARIES
C
ONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
(dollars
in thousands except per share amounts)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
106,913
|
|
$
|
95,716
|
|
$
|
77,120
|
|
Mortgage interest income
|
|
|
19,161
|
|
|
19,698
|
|
|
11,163
|
|
Expense reimbursements
|
|
|
22,030
|
|
|
20,982
|
|
|
16,789
|
|
Lease termination income
|
|
|
290
|
|
|
2,751
|
|
|
23,961
|
|
Management fee income
|
|
|
1,424
|
|
|
1,961
|
|
|
3,434
|
|
Other
|
|
|
2,140
|
|
|
4,595
|
|
|
1,099
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
151,958
|
|
|
145,703
|
|
|
133,566
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
Property operating
|
|
|
30,914
|
|
|
29,651
|
|
|
23,917
|
|
Real estate taxes
|
|
|
18,245
|
|
|
16,812
|
|
|
12,123
|
|
General and administrative
|
|
|
20,220
|
|
|
22,013
|
|
|
24,545
|
|
Depreciation and amortization
|
|
|
40,115
|
|
|
36,634
|
|
|
32,749
|
|
Abandonment of project costs
|
|
|
|
|
|
2,487
|
|
|
630
|
|
Reserve for notes receivable
|
|
|
|
|
|
1,734
|
|
|
4,392
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
109,494
|
|
|
109,331
|
|
|
98,356
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
42,464
|
|
|
36,372
|
|
|
35,210
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings (losses) of unconsolidated affiliates
|
|
|
10,971
|
|
|
(1,529
|
)
|
|
19,906
|
|
Impairment of investment in unconsolidated affiliate
|
|
|
|
|
|
(3,768
|
)
|
|
|
|
Other interest income
|
|
|
408
|
|
|
642
|
|
|
3,370
|
|
Gain from bargain purchase
|
|
|
33,805
|
|
|
|
|
|
|
|
Gain on debt extinguishment
|
|
|
|
|
|
7,057
|
|
|
1,523
|
|
Interest and other finance expense
|
|
|
(34,471
|
)
|
|
(32,154
|
)
|
|
(28,893
|
)
|
Gain on sale of land
|
|
|
|
|
|
|
|
|
763
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
53,177
|
|
|
6,620
|
|
|
31,879
|
|
Income tax expense
|
|
|
(2,890
|
)
|
|
(1,541
|
)
|
|
(3,362
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
50,287
|
|
|
5,079
|
|
|
28,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
Operating income from discontinued operations
|
|
|
380
|
|
|
484
|
|
|
1,738
|
|
Gain on sale of property
|
|
|
|
|
|
7,143
|
|
|
7,182
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
|
380
|
|
|
7,627
|
|
|
8,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
50,667
|
|
|
12,706
|
|
|
37,437
|
|
|
|
|
|
|
|
|
|
|
|
|
(Income) loss attributable to noncontrolling interests in subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(20,307
|
)
|
|
23,472
|
|
|
(11,438
|
)
|
Discontinued operations
|
|
|
(303
|
)
|
|
(5,045
|
)
|
|
(931
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net (income) loss attributable to noncontrolling interests in
subsidiaries
|
|
|
(20,610
|
)
|
|
18,427
|
|
|
(12,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Common Shareholders
|
|
$
|
30,057
|
|
$
|
31,133
|
|
$
|
25,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.75
|
|
$
|
0.75
|
|
$
|
0.51
|
|
Income from discontinued operations
|
|
|
|
|
|
0.07
|
|
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.75
|
|
$
|
0.82
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.74
|
|
$
|
0.75
|
|
$
|
0.50
|
|
Income from discontinued operations
|
|
|
|
|
|
0.07
|
|
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
0.74
|
|
$
|
0.82
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an
integral part of these consolidated financial statements
F-4
ACADIA REALTY TRUST AND SUBSIDIARIES
C
ONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
Common
Shareholders
Equity
|
|
Noncontrolling
Interests
|
|
Total
Share-holders
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
|
|
|
|
|
|
(amounts in thousands,
except per share amounts)
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2008
|
|
|
32,184
|
|
$
|
32
|
|
$
|
236,967
|
|
$
|
(953
|
)
|
$
|
13,671
|
|
$
|
249,717
|
|
$
|
171,111
|
|
$
|
420,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Restricted Share awards
|
|
|
137
|
|
|
|
|
|
2,917
|
|
|
|
|
|
|
|
|
2,917
|
|
|
1,863
|
|
|
4,780
|
|
Dividends declared ($1.39 per Common Share)
|
|
|
|
|
|
|
|
|
(20,385
|
)
|
|
|
|
|
(25,068
|
)
|
|
(45,453
|
)
|
|
(1,192
|
)
|
|
(46,645
|
)
|
Employee exercise of 110,245 options to purchase Common Shares
|
|
|
110
|
|
|
|
|
|
841
|
|
|
|
|
|
|
|
|
841
|
|
|
|
|
|
841
|
|
Common Shares issued under Employee Share Purchase Plan
|
|
|
7
|
|
|
|
|
|
180
|
|
|
|
|
|
|
|
|
180
|
|
|
|
|
|
180
|
|
Issuance of Common Shares to Trustees
|
|
|
2
|
|
|
|
|
|
81
|
|
|
|
|
|
|
|
|
81
|
|
|
|
|
|
81
|
|
Employee Restricted Shares cancelled
|
|
|
(83
|
)
|
|
|
|
|
(1,997
|
)
|
|
|
|
|
|
|
|
(1,997
|
)
|
|
|
|
|
(1,997
|
)
|
Conversion options on Convertible Notes purchased (Note 9)
|
|
|
|
|
|
|
|
|
(77
|
)
|
|
|
|
|
|
|
|
(77
|
)
|
|
|
|
|
(77
|
)
|
Noncontrolling interest distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,347
|
)
|
|
(15,347
|
)
|
Noncontrolling interest contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,014
|
|
|
46,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,357
|
|
|
32
|
|
|
218,527
|
|
|
(953
|
)
|
|
(11,397
|
)
|
|
206,209
|
|
|
202,449
|
|
|
408,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,068
|
|
|
25,068
|
|
|
12,369
|
|
|
37,437
|
|
Unrealized loss on valuation of swap agreements
|
|
|
|
|
|
|
|
|
|
|
|
(4,179
|
)
|
|
|
|
|
(4,179
|
)
|
|
(421
|
)
|
|
(4,600
|
)
|
Reclassification of realized interest on swap agreements
|
|
|
|
|
|
|
|
|
|
|
|
624
|
|
|
|
|
|
624
|
|
|
109
|
|
|
733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
(3,555
|
)
|
|
25,068
|
|
|
21,513
|
|
|
12,057
|
|
|
33,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
32,357
|
|
$
|
32
|
|
$
|
218,527
|
|
$
|
(4,508
|
)
|
$
|
13,671
|
|
$
|
227,722
|
|
$
|
214,506
|
|
$
|
442,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of 15,666 OP Units to Common Shares by limited partners of
the Operating Partnership
|
|
|
16
|
|
|
|
|
|
90
|
|
|
|
|
|
|
|
|
90
|
|
|
(90
|
)
|
|
|
|
Issuance of Common Shares, net of issuance costs
|
|
|
5,750
|
|
|
6
|
|
|
65,216
|
|
|
|
|
|
|
|
|
65,222
|
|
|
|
|
|
65,222
|
|
Issuance of Common Shares through special dividend
|
|
|
1,287
|
|
|
2
|
|
|
16,190
|
|
|
|
|
|
|
|
|
16,192
|
|
|
|
|
|
16,192
|
|
Employee Restricted Share awards
|
|
|
253
|
|
|
|
|
|
2,957
|
|
|
|
|
|
|
|
|
2,957
|
|
|
890
|
|
|
3,847
|
|
Dividends declared ($0.75 per Common Share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28,679
|
)
|
|
(28,679
|
)
|
|
(795
|
)
|
|
(29,474
|
)
|
Employee exercise of 258,900 options to purchase Common Shares
|
|
|
259
|
|
|
|
|
|
1,556
|
|
|
|
|
|
|
|
|
1,556
|
|
|
|
|
|
1,556
|
|
Common Shares issued under Employee Share Purchase Plan
|
|
|
9
|
|
|
|
|
|
106
|
|
|
|
|
|
|
|
|
106
|
|
|
|
|
|
106
|
|
Issuance of Common Shares to Trustees
|
|
|
25
|
|
|
|
|
|
635
|
|
|
|
|
|
|
|
|
635
|
|
|
|
|
|
635
|
|
Employee Restricted Shares cancelled
|
|
|
(359
|
)
|
|
|
|
|
(5,423
|
)
|
|
|
|
|
|
|
|
(5,423
|
)
|
|
|
|
|
(5,423
|
)
|
Deferred shares converted to Common Shares
|
|
|
190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion options on Convertible Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
purchased (Note 9)
|
|
|
|
|
|
|
|
|
(840
|
)
|
|
|
|
|
|
|
|
(840
|
)
|
|
|
|
|
(840
|
)
|
Noncontrolling interest distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,624
|
)
|
|
(1,624
|
)
|
Noncontrolling interest contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,653
|
|
|
25,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,787
|
|
|
40
|
|
|
299,014
|
|
|
(4,508
|
)
|
|
(15,008
|
)
|
|
279,538
|
|
|
238,540
|
|
|
518,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,133
|
|
|
31,133
|
|
|
(18,427
|
)
|
|
12,706
|
|
Unrealized loss on valuation of swap agreements
|
|
|
|
|
|
|
|
|
|
|
|
(912
|
)
|
|
|
|
|
(912
|
)
|
|
(140
|
)
|
|
(1,052
|
)
|
Reclassification of realized interest on swap agreements
|
|
|
|
|
|
|
|
|
|
|
|
2,426
|
|
|
|
|
|
2,426
|
|
|
319
|
|
|
2,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
1,514
|
|
|
31,133
|
|
|
32,647
|
|
|
(18,248
|
)
|
|
14,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
|
39,787
|
|
$
|
40
|
|
$
|
299,014
|
|
$
|
(2,994
|
)
|
$
|
16,125
|
|
$
|
312,185
|
|
$
|
220,292
|
|
$
|
532,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-5
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
Total
|
|
|
|
Total
|
|
|
|
|
|
Additional
|
|
Other
|
|
|
|
Common
|
|
|
|
Share-
|
|
|
|
Common Shares
|
|
Paid-in
|
|
Comprehensive
|
|
Retained
|
|
Shareholders
|
|
Noncontrolling
|
|
holders
|
|
(amounts in thousands,
except per share amounts)
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Loss
|
|
Earnings
|
|
Equity
|
|
Interests
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of 364,615 OP Units to Common Shares by limited partners of
the Operating Partnership
|
|
365
|
|
|
|
|
|
3,240
|
|
|
|
|
|
|
|
|
3,240
|
|
|
(3,240
|
)
|
|
|
|
Employee Restricted Share awards
|
|
133
|
|
|
|
|
|
2,060
|
|
|
|
|
|
|
|
|
2,060
|
|
|
1,778
|
|
|
3,838
|
|
Dividends declared ($0.72 per Common Share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28,976
|
)
|
|
(28,976
|
)
|
|
(723
|
)
|
|
(29,699
|
)
|
Exercise of Trustees options
|
|
7
|
|
|
|
|
|
109
|
|
|
|
|
|
|
|
|
109
|
|
|
|
|
|
109
|
|
Common Shares issued under Employee Share Purchase Plan
|
|
6
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
100
|
|
Issuance of Common Shares to Trustees
|
|
13
|
|
|
|
|
|
266
|
|
|
|
|
|
|
|
|
266
|
|
|
|
|
|
266
|
|
Employee Restricted Shares cancelled
|
|
(57
|
)
|
|
|
|
|
(966
|
)
|
|
|
|
|
|
|
|
(966
|
)
|
|
|
|
|
(966
|
)
|
Noncontrolling interest distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,892
|
)
|
|
(2,892
|
)
|
Noncontrolling interest contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,556
|
|
|
33,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,254
|
|
|
40
|
|
|
303,823
|
|
|
(2,994
|
)
|
|
(12,851
|
)
|
|
288,018
|
|
|
248,771
|
|
|
536,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,057
|
|
|
30,057
|
|
|
20,610
|
|
|
50,667
|
|
Unrealized loss on valuation of swap agreements
|
|
|
|
|
|
|
|
|
|
|
(2,329
|
)
|
|
|
|
|
(2,329
|
)
|
|
(354
|
)
|
|
(2,683
|
)
|
Reclassification of realized interest on swap agreements
|
|
|
|
|
|
|
|
|
|
|
2,466
|
|
|
|
|
|
2,466
|
|
|
283
|
|
|
2,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
137
|
|
|
30,057
|
|
|
30,194
|
|
|
20,539
|
|
|
50,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010
|
|
40,254
|
|
$
|
40
|
|
$
|
303,823
|
|
$
|
(2,857
|
)
|
$
|
17,206
|
|
$
|
318,212
|
|
$
|
269,310
|
|
$
|
587,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part
of these consolidated financial statements.
F-6
ACADIA REALTY TRUST AND SUBSIDIARIES
C
ONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
50,667
|
|
$
|
12,706
|
|
$
|
37,437
|
|
Adjustments to reconcile net income to net
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
40,553
|
|
|
37,242
|
|
|
34,908
|
|
Gain from bargain purchase
|
|
|
(33,805
|
)
|
|
|
|
|
|
|
Gain on sale of property
|
|
|
|
|
|
(7,143
|
)
|
|
(7,945
|
)
|
Gain on debt extinguishment
|
|
|
|
|
|
(7,057
|
)
|
|
(1,523
|
)
|
Amortization of discount on convertible
debt
|
|
|
1,042
|
|
|
1,280
|
|
|
2,101
|
|
Non-cash accretion of notes receivable
|
|
|
(6,164
|
)
|
|
(5,352
|
)
|
|
(2,367
|
)
|
Share compensation expense
|
|
|
4,104
|
|
|
3,969
|
|
|
3,434
|
|
Equity in (earnings) losses of unconsolidated
affiliates
|
|
|
(10,971
|
)
|
|
1,529
|
|
|
(19,906
|
)
|
Impairment of investment in unconsolidated
affiliate
|
|
|
|
|
|
3,768
|
|
|
|
|
Distributions of operating income from
unconsolidated affiliates
|
|
|
12,124
|
|
|
880
|
|
|
14,420
|
|
Reserve for notes receivable
|
|
|
|
|
|
1,734
|
|
|
4,392
|
|
Provision for bad debt
|
|
|
3,331
|
|
|
4,132
|
|
|
3,593
|
|
Other, net
|
|
|
906
|
|
|
7,457
|
|
|
6,704
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Cash in escrows
|
|
|
(20,028
|
)
|
|
(1,788
|
)
|
|
(157
|
)
|
Rents receivable
|
|
|
(4,662
|
)
|
|
(8,370
|
)
|
|
(2,305
|
)
|
Prepaid expenses and other assets, net
|
|
|
1,889
|
|
|
8,156
|
|
|
(15,865
|
)
|
Accounts payable and accrued expenses
|
|
|
1,874
|
|
|
(5,902
|
)
|
|
8,368
|
|
Other liabilities
|
|
|
3,517
|
|
|
221
|
|
|
1,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
44,377
|
|
|
47,462
|
|
|
66,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Investments in real estate
|
|
|
(80,520
|
)
|
|
(127,322
|
)
|
|
(245,033
|
)
|
Deferred acquisition and leasing costs
|
|
|
(3,904
|
)
|
|
(11,368
|
)
|
|
(6,068
|
)
|
Investments in and advances to unconsolidated
affiliates
|
|
|
(19,116
|
)
|
|
(5,603
|
)
|
|
(7,918
|
)
|
Return of capital from unconsolidated
affiliates
|
|
|
785
|
|
|
4,705
|
|
|
4,052
|
|
Repayments of notes receivable
|
|
|
42,010
|
|
|
13,614
|
|
|
19,922
|
|
Increase in notes receivable
|
|
|
|
|
|
(9,362
|
)
|
|
(90,847
|
)
|
Proceeds from sale of property
|
|
|
|
|
|
11,956
|
|
|
23,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(60,745
|
)
|
|
(123,380
|
)
|
|
(302,265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
F-7
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Principal payments on mortgage notes
|
|
|
(127,823
|
)
|
|
(182,610
|
)
|
|
(68,412
|
)
|
Proceeds received on mortgage notes
|
|
|
175,793
|
|
|
260,065
|
|
|
281,192
|
|
Redemption of convertible notes payable
|
|
|
(240
|
)
|
|
(46,736
|
)
|
|
(6,042
|
)
|
Increase in deferred financing and other
costs
|
|
|
(6,830
|
)
|
|
(1,755
|
)
|
|
(1,763
|
)
|
Capital contributions from noncontrolling
interests
|
|
|
33,556
|
|
|
25,653
|
|
|
46,014
|
|
Distributions to noncontrolling interests
|
|
|
(1,638
|
)
|
|
(2,879
|
)
|
|
(16,183
|
)
|
Dividends paid to Common Shareholders
|
|
|
(28,909
|
)
|
|
(30,163
|
)
|
|
(34,710
|
)
|
Proceeds from issuance of Common Shares,
net of issuance costs
|
|
|
|
|
|
65,222
|
|
|
|
|
Repurchase and cancellation of Common
Shares
|
|
|
(966
|
)
|
|
(5,424
|
)
|
|
(2,102
|
)
|
Common Shares issued under Employee Share
Purchase Plan
|
|
|
100
|
|
|
106
|
|
|
261
|
|
Exercise of options to purchase Common
Shares
|
|
|
109
|
|
|
1,556
|
|
|
841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
financing activities
|
|
|
43,152
|
|
|
83,035
|
|
|
199,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents
|
|
|
26,784
|
|
|
7,117
|
|
|
(36,652
|
)
|
Cash and cash equivalents,
beginning of period
|
|
|
93,808
|
|
|
86,691
|
|
|
123,343
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents,
end of period
|
|
$
|
120,592
|
|
$
|
93,808
|
|
$
|
86,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest,
including capitalized interest of $2,903, $3,516, and $6,779, respectively
|
|
$
|
34,823
|
|
$
|
33,699
|
|
$
|
33,778
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
1,263
|
|
$
|
777
|
|
$
|
6,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of real estate through assumption of debt
|
|
$
|
|
|
$
|
|
|
$
|
39,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid through the issuance of Common Shares
|
|
$
|
|
|
$
|
16,192
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of interest in unconsolidated affiliates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate, net
|
|
$
|
(108,000
|
)
|
$
|
|
|
$
|
|
|
Assumption of mortgage debt
|
|
|
25,990
|
|
|
|
|
|
|
|
Gain from bargain purchase
|
|
|
33,805
|
|
|
|
|
|
|
|
Other assets and liabilities
|
|
|
7,532
|
|
|
|
|
|
|
|
Investment in unconsolidated affiliates
|
|
|
37,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash included in investment in real estate
|
|
$
|
(2,849
|
)
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part
of these consolidated financial statements.
F-8
ACADIA REALTY
TRUST AND SUBSIDIARIES
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies
Acadia Realty Trust (the Trust) and subsidiaries (collectively, the
Company) is a fully integrated, self-managed and self-administered equity
real estate investment trust (REIT) focused primarily on the ownership,
acquisition, redevelopment and management of retail properties, including
neighborhood and community shopping centers and mixed-use properties with
retail components.
As of December 31, 2010, the Company operated 79 properties, which
it owns or has an ownership interest in, principally located in the Northeast,
Mid-Atlantic and Midwest regions of the United States.
All of the Companys assets are held by, and all of its operations are
conducted through, Acadia Realty Limited Partnership (the Operating
Partnership) and entities in which the Operating Partnership owns a
controlling interest. As of December 31, 2010, the Trust controlled 99% of the
Operating Partnership as the sole general partner. As the general partner, the
Trust is entitled to share, in proportion to its percentage interest, in the
cash distributions and profits and losses of the Operating Partnership. The
limited partners represent entities or individuals who contributed their
interests in certain properties or entities to the Operating Partnership in
exchange for common or preferred units of limited partnership interest (Common
or Preferred OP Units). Limited partners holding Common OP Units are generally
entitled to exchange their units on a one-for-one basis for common shares of
beneficial interest of the Trust (Common Shares). This structure is referred
to as an umbrella partnership REIT or UPREIT.
The Company formed Acadia Strategic Opportunity Fund I, LP (Fund I),
and formed Acadia Mervyn Investors I, LLC (Mervyns I), with four
institutional investors. The Operating Partnership committed a total of
$20.0 million to Fund I and Mervyns I, and the four institutional
shareholders committed a total of $70.0 million for the purpose of
acquiring real estate investments. As of December 31, 2010, Fund I was fully
invested, with the Operating Partnership having contributed $16.5 million
to Fund I and $2.7 million to Mervyns I.
The Operating Partnership is the general partner of Fund I and sole
managing member of Mervyns I, with a 22.2% interest in both Fund I and Mervyns
I and is also entitled to a profit participation in excess of its invested
capital based on certain investment return thresholds (Promote). Cash flow is
distributed pro-rata to the partners and members (including the Operating
Partnership) until they receive a 9% cumulative return (Preferred Return),
and the return of all capital contributions. Thereafter, remaining cash flow
(which is net of distributions and fees to the Operating Partnership for
management, asset management, leasing, construction and legal services) is
distributed 20% to the Operating Partnership as a Promote and 80% to the
partners (including the Operating Partnership). As all contributed capital and
accumulated preferred return has been distributed to investors, the Operating
Partnership is currently entitled to a Promote on all earnings and
distributions.
The Company formed Acadia Strategic Opportunity Fund II, LLC (Fund
II), and formed Acadia Mervyn Investors II, LLC (Mervyns II), with the
investors from Fund I as well as two additional institutional investors with a
total of $300.0 million of committed discretionary capital. The Operating
Partnerships share of committed capital is $60.0 million. The Operating
Partnership is the managing member with a 20% interest in both Fund II and
Mervyns II. The terms and structure of Fund II and Mervyns II are substantially
the same as Fund I and Mervyns I, including the Promote structure, with the
exception that the Preferred Return is 8%. As of December 31, 2010, the
Operating Partnership had contributed $45.4 million to Fund II and
$7.6 million to Mervyns II.
The Company formed Acadia Strategic Opportunity Fund III LLC (Fund
III) with fourteen institutional investors, including a majority of the
investors from Fund I and Fund II with a total of $502.5 million of committed
discretionary capital. The Operating Partnerships share of the invested
capital is $100.0 million and it is the managing member with a 19.9% interest
in Fund III. The terms and structure of Fund III are substantially the same as
the previous Funds I and II, including the Promote structure, with the
exception that the Preferred Return is 6%. As of December 31, 2010, the
Operating Partnership had contributed $19.2 million to Fund III.
Principles of Consolidation
The consolidated financial statements include the consolidated accounts
of the Company and its controlling investments in partnerships and limited
liability companies in which the Company has control in accordance Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 810 Consolidation (ASC Topic 810). The ownership interests of other
investors in these entities are recorded as noncontrolling interests. All
significant intercompany balances and transactions have been eliminated in
consolidation. Investments in entities for which the Company has the ability to
exercise significant influence over, but does not have financial or operating
control, are accounted for using the equity method of accounting. Accordingly,
the Companys share of the earnings (or losses) of these entities are included
in consolidated net income.
F-9
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued
Principles of Consolidation, continued
Variable interest entities are accounted for within the scope of ASC
Topic 810 and are required to be consolidated by their primary beneficiary. The
primary beneficiary of a variable interest entity is the enterprise that has
the power to direct the activities that most significantly impact the variable
interest entitys economic performance and the obligation to absorb losses or
the right to receive benefits of the variable interest entity that could be
significant to the variable interest entity. Management has evaluated the
applicability of ASC Topic 810 to its investments in certain joint ventures and
determined that these joint ventures are not variable interest entities or that
the Company is not the primary beneficiary and, therefore, consolidation of
these ventures is not required. These investments are accounted for using the
equity method.
Investments in and Advances to Unconsolidated
Joint Ventures
The Company accounts for its investments in unconsolidated joint
ventures using the equity method as it does not exercise control over
significant asset decisions such as buying, selling or financing nor is it the
primary beneficiary under ASC Topic 810, as discussed above. The Company does
have significant influence over the investments which requires equity method
accounting. Under the equity method, the Company increases its investment for
its proportionate share of net income and contributions to the joint venture
and decreases its investment balance by recording its proportionate share of
net loss and distributions. The Company recognizes income for distributions in
excess of its investment where there is no recourse to the Company. For
investments in which there is recourse to the Company, distributions in excess
of the investment are recorded as a liability. Although the Company accounts
for its investment in Albertsons (Note 4) under the equity method of accounting,
the Company adopted the policy of not recording its equity in earnings or
losses of this unconsolidated affiliate until it receives the audited financial
statements of Albertsons to support the equity earnings or losses in
accordance with ASC Topic 323 Investments Equity Method and Joint Ventures.
The Company periodically reviews its investment in unconsolidated joint
ventures for other than temporary losses in investment value. Any decline that
is not expected to be recovered is considered other than temporary and an
impairment charge is recorded as a reduction in the carrying value of the
investment. During the years ended December 31, 2010, 2009 and 2008, impairment
charges related to the Companys investment in unconsolidated joint ventures
were $0.0 million, $3.8 million and $0.0 million, respectively.
Use of Estimates
Accounting principles generally accepted in the United States of
America (GAAP) require the Companys management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. The most significant assumptions and estimates relate to
the valuation of real estate, depreciable lives, revenue recognition and the
collectability of trade accounts receivable. Application of these assumptions
requires the exercise of judgment as to future uncertainties and, as a result,
actual results could differ from these estimates.
Real Estate
Real estate assets are stated at cost less accumulated depreciation.
Expenditures for acquisition, development, construction and improvement of
properties, as well as significant renovations are capitalized. Interest costs
are capitalized until construction is substantially complete and the real
estate is ready for its intended use. Construction in progress includes costs
for significant property expansion and redevelopment. Depreciation is computed
on the straight-line basis over estimated useful lives of 30 to 40 years
for buildings, the shorter of the useful life or lease term for tenant
improvements and five years for furniture, fixtures and equipment. Expenditures
for maintenance and repairs are charged to operations as incurred.
Upon acquisitions of real estate, the Company assesses the fair value
of acquired assets (including land, buildings and improvements, and identified
intangibles such as above and below market leases and acquired in-place leases
and customer relationships) and acquired liabilities in accordance with ASC
Topic 805 Business Combinations and ASC Topic 350 Intangibles Goodwill and
F-10
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued
Real Estate, continued
Other, and allocates acquisition price based on these assessments.
Fixed-rate renewal options have been included in the calculation of the fair
value of acquired leases. To the extent there were fixed-rate options at
below-market rental rates, the Company included these along with the current
term below-market rent in arriving at the fair value of the acquired leases.
The discounted difference between contract and market rents is being amortized
over the remaining applicable lease term, inclusive of any option periods. The
Company assesses fair value based on estimated cash flow projections that
utilize appropriate discount and capitalization rates and available market
information. Estimates of future cash flows are based on a number of factors
including the historical operating results, known trends, and market/economic
conditions that may affect the property.
The Company reviews its long-lived assets used in operations for
impairment when there is an event, or change in circumstances that indicates
that the carrying amount may not be recoverable. The Company records impairment
losses and reduces the carrying value of properties when indicators of
impairment are present and the expected undiscounted cash flows related to
those properties are less than their carrying amounts. In cases where the
Company does not expect to recover its carrying costs on properties held for
use, the Company reduces its carrying cost to fair value, and for properties
held for sale, the Company reduces its carrying value to the fair value less
costs to sell. During the years ended December 31, 2010, 2009 and 2008, no
impairment losses were recognized. Management does not believe that the values
of its properties within the portfolio are impaired as of December 31,
2010.
Sale of Real Estate
The Company recognizes property sales in accordance with ASC Topic 970
Real Estate. The Company generally records the sales of operating properties
and outparcels using the full accrual method at closing when the earnings
process is deemed to be complete. Sales not qualifying for full recognition at
the time of sale are accounted for under other appropriate deferral methods.
Real Estate Held for Sale
The Company evaluates the held-for-sale classification of its real
estate each quarter. Assets that are classified as held for sale are recorded
at the lower of their carrying amount or fair value less cost to sell. Assets
are generally classified as held for sale once management has initiated an
active program to market them for sale and has received a firm purchase
commitment. The results of operations of these real estate properties are
reflected as discontinued operations in all periods reported.
On occasion, the Company will receive unsolicited offers from third
parties to buy individual Company properties. Under these circumstances, the
Company will classify the properties as held for sale when a sales contract is
executed with no contingencies and the prospective buyer has funds at risk to
ensure performance.
Deferred Costs
Fees and costs paid in the successful negotiation of leases are
deferred and amortized on a straight-line basis over the terms of the
respective leases. Fees and costs incurred in connection with obtaining
financing are deferred and amortized over the term of the related debt
obligation.
Management Contracts
Income from management contracts is recognized on an accrual basis as
such fees are earned. The initial acquisition cost of the management contracts
are amortized over the estimated lives of the contracts acquired.
Revenue Recognition and Accounts Receivable
Leases with tenants are accounted for as operating leases. Minimum
rents are recognized on a straight-line basis over the term of the respective
leases, beginning when the tenant is entitled to take possession of the space.
As of December 31, 2010 and 2009, included in rents receivable, net on the
accompanying consolidated balance sheets, unbilled rents receivable relating to
straight-lining of rents were $17.1 million and $12.7 million, respectively.
Certain of these leases also provide for percentage rents based upon the level
of sales achieved by the tenant. Percentage rent is recognized in the period
when the tenants sales breakpoint is met. In addition, leases typically
provide for the reimbursement to the Company of real estate taxes, insurance
and other property operating expenses. These reimbursements are recognized as
revenue in the period the expenses are incurred.
The Company makes estimates of the uncollectability of its accounts
receivable related to tenant revenues. An allowance for doubtful accounts has
been provided against certain tenant accounts receivable that are estimated to
be uncollectible. Once the amount is ultimately deemed to be uncollectible, it
is written off. Rents receivable at December 31, 2010 and 2009 are shown
net of an allowance for doubtful accounts of $7.5 million and
$7.0 million, respectively.
F-11
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued
Notes Receivable and Preferred Equity
Investments
Notes receivable and preferred equity investments are intended to be
held to maturity and are carried at amortized cost. Interest income from notes
receivable and preferred equity investments are recognized on the effective
interest method over the expected life of the loan. Under the effective
interest method, interest or fees to be collected at the origination of the
loan or the payoff of the loan are recognized over the term of the loan as an
adjustment to yield.
Allowances for real estate notes receivable are established based upon
managements quarterly review of the investments. In performing this review,
management considers the estimated net recoverable value of the loan as well as
other factors, including the fair value of any collateral, the amount and
status of any senior debt, and the prospects for the borrower. Because this
determination is based upon projections of future economic events, which are
inherently subjective, the amounts ultimately realized from the loans may
differ materially from the carrying value at the balance sheet date. Interest
income recognition is generally suspended for loans when, in the opinion of
management, a full recovery of income and principal becomes doubtful. Income
recognition is resumed when the suspended loan becomes contractually current
and performance is demonstrated to be resumed.
During 2009, the Company provided a $1.7 million reserve on a note
receivable as a result of the loss of an anchor tenant at the underlying collateral
property. During 2008, the Company provided a $4.4 million reserve on a note
receivable collateralized by an interest in an entity owning retail complexes
associated with seven public rest stops along the toll roads in and around
Chicago, Illinois. The note and all accrued interest was subsequently cancelled
during 2009. Management believes that the balance of notes receivable are
collectible as of December 31, 2010.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash equivalents. Cash
and cash equivalents are maintained at financial institutions and, at times,
balances may exceed the federally insured limit by the Federal Deposit
Insurance Corporation. The Company has never experienced any losses related to
these balances.
Restricted Cash and Cash in Escrow
Restricted cash and cash in escrow consist principally of cash held for
real estate taxes, construction costs, property maintenance, insurance, minimum
occupancy and property operating income requirements at specific properties as
required by certain loan agreements.
Income Taxes
The Company has made an election to be taxed, and believes it qualifies
as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986,
as amended (the Code). To maintain REIT status for Federal income tax
purposes, the Company is generally required to distribute at least 90% of its
REIT taxable income to its stockholders as well as comply with certain other income,
asset and organizational requirements as defined in the Code. Accordingly, the
Company is generally not subject to Federal corporate income tax to the extent
that it distributes 100% of its REIT taxable income each year.
Although it may qualify for REIT status for Federal income tax
purposes, the Company is subject to state income or franchise taxes in certain
states in which some of its properties are located. In addition, taxable income
from non-REIT activities managed through the Companys taxable REIT subsidiary
(TRS) is fully subject to Federal, state and local income taxes.
The Company accounts for TRS income taxes under the liability method as
required by ASC Topic 740 Income Taxes. Under the liability method, deferred
income taxes are recognized for the temporary differences between GAAP basis
and the tax basis of the TRS income, assets and liabilities.
In accordance with ASC Topic 740 Income Taxes (formerly FASB
Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes
an interpretation of SFAS No. 109), the Company believes that it has
appropriate support for the income tax positions taken and, as such, does not
have any uncertain tax positions that result in a material impact on the
Companys financial position or results of operation. The prior three years
income tax returns are subject to review by the Internal Revenue Service. The
Company will recognize potential interest and penalties related to uncertain
tax positions, if any, as a component of the provision for income taxes.
F-12
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued
Stock-based Compensation
The Company accounts for stock-based compensation pursuant to ASC Topic
718 Compensation Stock Compensation. As such, all equity based awards are
reflected as compensation expense in the Companys consolidated financial
statements over their vesting period based on the fair value at the date of
grant.
Recent Accounting Pronouncements
During June 2009, the FASB issued a new accounting standard, which
provided certain changes to the evaluation of a variable interest entity
(VIE) including requiring a qualitative rather than a quantitative analysis
to determine the primary beneficiary of a VIE, continuous assessments of
whether an enterprise is the primary beneficiary of a VIE and enhanced
disclosures about an enterprises involvement with a VIE. Under the new
standard, the primary beneficiary has both the power to direct the activities
that most significantly impact economic performance of the VIE and the
obligation to absorb losses or the right to receive benefits that could
potentially be significant to the VIE. The adoption of the standard on January
1, 2010 did not have a material impact on the Companys consolidated financial
statements.
During January 2010, the FASB issued Accounting Standards Update
(ASU) No. 2010-06 Improving
Disclosures about Fair Value Measurements, which provides for new disclosures,
as well as clarification of existing disclosures on fair value measurements.
The adoption of the standard on January 1, 2010 did not have a material impact
on the Companys financial position and results of operations.
During February 2010, the FASB issued ASU No. 2010-09 Subsequent
Events (ASC Topic 855) Amendments to Certain Recognition and Disclosure
Requirements, which requires an entity that is an SEC filer to evaluate
subsequent events through the date that the financial statements are issued and
removes the requirement for an SEC filer to disclose a date through which
subsequent events have been evaluated. The adoption did not have an impact on
the Companys financial position and results of operations.
During July 2010, the FASB issued ASU No. 2010-20 Receivables (ASC
Topic 310) Disclosures about the Credit Quality of Financing Receivables and
the Allowance for Credit Losses, which requires companies to provide more
information about the credit quality of their financing receivables in the
disclosures to financial statements including, but not limited to, significant
purchases and sales of financing receivables, aging information and credit
quality indicators. The adoption of this accounting guidance did not have a significant
impact on the Companys consolidated financial statements.
Comprehensive income
The following table sets forth comprehensive income for the years ended
December 31, 2010, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
|
|
(dollars in thousands)
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Common Shareholders
|
|
$
|
30,057
|
|
$
|
31,133
|
|
$
|
25,068
|
|
Other
comprehensive income (loss)
|
|
|
137
|
|
|
1,514
|
|
|
(3,555
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income attributable to Common Shareholders
|
|
$
|
30,194
|
|
$
|
32,647
|
|
$
|
21,513
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income relates to the changes in the fair value of
derivative instruments accounted for as cash flow hedges and the amortization,
which is included in interest expense, of derivative instruments.
F-13
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued
The following table sets forth the change in accumulated other
comprehensive loss for the years ended December 31, 2010 and 2009:
Accumulated other comprehensive loss
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
|
|
(dollars in
thousands)
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
(2,994
|
)
|
$
|
(4,508
|
)
|
Unrealized loss on valuation of derivative
instruments and amortization of derivative
|
|
|
(2,329
|
)
|
|
(912
|
)
|
Reclassification of loss on derivative
instruments to interest expense
|
|
|
2,466
|
|
|
2,426
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(2,857
|
)
|
$
|
(2,994
|
)
|
|
|
|
|
|
|
|
|
2. Acquisition and Disposition of Properties
and Discontinued Operations
A. Acquisition and Disposition of Properties
Acquisitions
On December 23, 2010, the Company, through Fund III in a joint venture
with an unaffiliated partner, acquired White City Shopping Center, a 255,000
square foot center located in Shrewsbury, Massachusetts for $56.0 million.
Prior to June 30, 2010, the Company, through Fund II in a joint venture
with an unaffiliated partner, California Urban Investment Partners, LLC
(CUIP), owned a leasehold interest in CityPoint, a mixed-use, redevelopment
project located in downtown Brooklyn, New York. Fund II owned a 75% interest in
the retail component, a 50% interest in the office component and no interest in
the residential component of CityPoint. CUIP owned the remaining interests in
the retail and office components and 100% of the residential component of the
project. Accordingly, Fund IIs investment represented 24.75% of the overall
original acquisition cost and subsequent carry and pre-development costs and
was accounted for using the equity method.
On June 30, 2010, Fund II acquired all of CUIPs interest in CityPoint
for $9.2 million (the Transaction), consisting of a current payment of $2.0
million and deferred payments, potentially through 2020, aggregating $7.2
million. Fund II also assumed CUIPs share of the first mortgage debt, $19.6
million.
The Transaction was a business combination achieved
in stages, and as a result, Fund II was required to report its entire investment
in CityPoint at fair market value. Based on a June 30, 2010 third-party appraisal,
CityPoint was valued at $108.0 million which resulted in Fund II recording
a non-cash gain from bargain purchase of approximately $33.8 million. A majority
of the gain was attributable to the components of CityPoint that was acquired
as the book value of the Companys original investment approximated
fair value. The Operating Partnerships
share of this gain, net of the noncontrolling interests share,
totaled $6.3 million.
As a result of the Transaction, the Company changed its method of
accounting for CityPoint from the equity method and now consolidates CityPoint
in its consolidated financial statements. As CityPoint is currently in the
redevelopment stage, there are no revenues or earnings from CityPoint included
in the Companys Consolidated Statements of Income for the years ended December
31, 2010, 2009 and 2008.
On January 29, 2009, the Company acquired the 641,000 square foot
Cortlandt Towne Center in Cortlandt, NY for $78.0 million.
On February 29, 2008, the Company acquired a portfolio of 11
self-storage properties located throughout New York and New Jersey for
approximately $174.0 million. The portfolio totals approximately 920,000 net
rentable square feet.
On April 22, 2008, the Company acquired a 20,000 square foot single
tenant retail property located in Manhattan, New York for $9.7 million.
F-14
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dispositions
During 2010,
2009 and 2008, the Company disposed of the following properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
Property
|
|
Year
Sold
|
|
Sales Price
|
|
Gain
|
|
GLA
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackman
Plaza
|
|
2009
|
|
$
|
2,500
|
|
$
|
1,506
|
|
|
125,264
|
|
Six Kroger
locations
|
|
2009
|
|
|
9,481
|
|
|
5,637
|
|
|
277,700
|
|
Village
Apartments
|
|
2008
|
|
|
23,300
|
|
|
7,182
|
|
|
599,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
35,281
|
|
$
|
14,325
|
|
|
1,002,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsequent to December 31, 2010, the Company sold a property in
Oakbrook, Illinois for $8.2 million which resulted in a gain of $3.9 million.
Reference is made to Note 23 for an overview of the sale.
B. Discontinued Operations
The Company reports properties held-for-sale and properties sold during
the periods as discontinued operations. The combined assets and liabilities and
results of operations of discontinued operations are reflected as a separate
component within the accompanying Consolidated Financial Statements for all
periods presented.
The combined assets and liabilities as of December 31, 2010 and
December 31, 2009 and results of operations of the properties classified as
discontinued operations for the years ended December 31, 2010, 2009 and 2008
are summarized as follows:
|
|
|
|
|
|
|
|
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
December 31,
2010
|
|
December 31,
2009
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
Net real
estate
|
|
$
|
4,046
|
|
$
|
4,485
|
|
Rents
receivable, net
|
|
|
69
|
|
|
69
|
|
Prepaid
expenses and other assets, net
|
|
|
13
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Total assets
of discontinued operations
|
|
$
|
4,128
|
|
$
|
4,556
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Mortgage
Notes Payable
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
|
|
|
|
|
Other
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities of discontinued operations
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
STATEMENTS OF OPERATIONS
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
1,000
|
|
$
|
1,644
|
|
$
|
5,136
|
|
Total expenses
|
|
|
620
|
|
|
1,160
|
|
|
3,398
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
380
|
|
|
484
|
|
|
1,738
|
|
Gain on sale of property
|
|
|
|
|
|
7,143
|
|
|
7,182
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
|
380
|
|
|
7,627
|
|
|
8,920
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
attributable to noncontrolling interests in subsidiaries
|
|
|
(303
|
)
|
|
(5,045
|
)
|
|
(931
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
attributable to Common Shareholders
|
|
$
|
77
|
|
$
|
2,582
|
|
$
|
7,989
|
|
|
|
|
|
|
|
|
|
|
|
|
F-15
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Segment Reporting
The Company has five reportable segments: Core Portfolio, Opportunity
Funds, Self-Storage Portfolio, Notes Receivable and Other. Notes Receivable
consists of the Companys notes receivable and preferred equity investment and
related interest income. Other consists primarily of management fees and
interest income. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The Company
evaluates property performance primarily based on net operating income before
depreciation, amortization and certain nonrecurring items. Investments in the
Core Portfolio are typically held long-term. Given the contemplated finite life
of the Opportunity Funds, these investments are typically held for shorter
terms. Fees earned by the Company as the general partner/member of the
Opportunity Funds are eliminated in the Companys consolidated financial
statements. The following table sets forth certain segment information for the
Company, reclassified for discontinued operations, as of and for the years
ended December 31, 2010, 2009, and 2008 (does not include unconsolidated
affiliates):
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Storage
Portfolio
|
|
Notes
Receivable
|
|
Other
|
|
Elimination
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
62,121
|
|
$
|
47,938
|
|
$
|
21,314
|
|
$
|
19,161
|
|
$
|
22,479
|
|
$
|
(21,055
|
)
|
$
|
151,958
|
|
Property operating expenses and real estate taxes
|
|
|
19,470
|
|
|
18,118
|
|
|
13,107
|
|
|
|
|
|
|
|
|
(1,536
|
)
|
|
49,159
|
|
Other expenses
|
|
|
22,439
|
|
|
13,588
|
|
|
|
|
|
|
|
|
|
|
|
(15,807
|
)
|
|
20,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before depreciation and amortization
|
|
$
|
20,212
|
|
$
|
16,232
|
|
$
|
8,207
|
|
$
|
19,161
|
|
$
|
22,479
|
|
$
|
(3,712
|
)
|
$
|
82,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
16,251
|
|
$
|
19,423
|
|
$
|
5,083
|
|
$
|
|
|
$
|
|
|
$
|
(642
|
)
|
$
|
40,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other finance expense
|
|
$
|
17,137
|
|
$
|
13,445
|
|
$
|
4,129
|
|
$
|
|
|
$
|
|
|
$
|
(240
|
)
|
$
|
34,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate at cost
|
|
$
|
481,130
|
|
$
|
708,501
|
|
$
|
210,017
|
|
$
|
|
|
$
|
|
|
$
|
(13,349
|
)
|
$
|
1,386,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
574,497
|
|
$
|
772,715
|
|
$
|
194,003
|
|
$
|
89,202
|
|
$
|
|
|
$
|
(105,611
|
)
|
$
|
1,524,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for real estate and improvements
|
|
$
|
4,137
|
|
$
|
77,309
|
|
$
|
1,376
|
|
$
|
|
|
$
|
|
|
$
|
(2,302
|
)
|
$
|
80,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
to net income and net income attributable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property income before
depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
82,579
|
|
Other interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
408
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(40,115
|
)
|
Equity in earnings of
unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
10,971
|
|
Interest and other finance
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,471
|
)
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,890
|
)
|
Gain from bargain purchase
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,805
|
|
Income from discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,667
|
|
Net (income) attributable
to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
(20,610
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-16
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Segment Reporting, continued
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars
in thousands)
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Storage
Portfolio
|
|
Notes
Receivable
|
|
Other
|
|
Elimination
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
69,556
|
|
$
|
43,326
|
|
$
|
11,166
|
|
$
|
19,698
|
|
$
|
23,265
|
|
$
|
(21,308
|
)
|
$
|
145,703
|
|
Property operating expenses and real estate taxes
|
|
|
21,266
|
|
|
15,362
|
|
|
10,985
|
|
|
|
|
|
|
|
|
(1,150
|
)
|
|
46,463
|
|
Reserve for notes receivable
|
|
|
|
|
|
|
|
|
|
|
|
1,734
|
|
|
|
|
|
|
|
|
1,734
|
|
Abandonment of project costs
|
|
|
12
|
|
|
2,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,487
|
|
Other expenses
|
|
|
23,983
|
|
|
13,600
|
|
|
|
|
|
|
|
|
|
|
|
(15,570
|
)
|
|
22,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before depreciation and amortization
|
|
$
|
24,295
|
|
$
|
11,889
|
|
$
|
181
|
|
$
|
17,964
|
|
$
|
23,265
|
|
$
|
(4,588
|
)
|
$
|
73,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
17,201
|
|
$
|
16,466
|
|
$
|
4,437
|
|
$
|
|
|
$
|
|
|
$
|
(1,470
|
)
|
$
|
36,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other finance expense
|
|
$
|
18,744
|
|
$
|
8,404
|
|
$
|
5,006
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
32,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate at cost
|
|
$
|
475,486
|
|
$
|
527,342
|
|
$
|
208,702
|
|
$
|
|
|
$
|
|
|
$
|
(11,047
|
)
|
$
|
1,200,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
558,240
|
|
$
|
607,706
|
|
$
|
196,658
|
|
$
|
125,221
|
|
$
|
|
|
$
|
(105,361
|
)
|
$
|
1,382,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for real estate and improvements
|
|
$
|
3,161
|
|
$
|
116,734
|
|
$
|
10,996
|
|
$
|
|
|
$
|
|
|
$
|
(3,569
|
)
|
$
|
127,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to net
income and net income attributable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property income before depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
73,006
|
|
Other interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
642
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(36,634
|
)
|
Equity in losses of unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,529
|
)
|
Impairment of investment in unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,768
|
)
|
Interest and other finance expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(32,154
|
)
|
Gain on debt extinguishment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,057
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,541
|
)
|
Gain on sale of property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,143
|
|
Income from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,706
|
|
Net loss attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
31,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
Portfolio
|
|
Opportunity
Funds
|
|
Storage
Portfolio
|
|
Notes
Receivable
|
|
Other
|
|
Elimination
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
65,349
|
|
$
|
47,400
|
|
$
|
5,589
|
|
$
|
11,163
|
|
$
|
27,296
|
|
$
|
(23,231
|
)
|
$
|
133,566
|
|
Property operating expenses and real estate taxes
|
|
|
20,974
|
|
|
8,829
|
|
|
6,618
|
|
|
|
|
|
|
|
|
(381
|
)
|
|
36,040
|
|
Reserve for notes receivable
|
|
|
|
|
|
|
|
|
|
|
|
4,392
|
|
|
|
|
|
|
|
|
4,392
|
|
Abandonment of project costs
|
|
|
|
|
|
630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
630
|
|
Other expenses
|
|
|
26,007
|
|
|
16,131
|
|
|
58
|
|
|
|
|
|
|
|
|
(17,651
|
)
|
|
24,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before depreciation and amortization
|
|
$
|
18,368
|
|
$
|
21,810
|
|
$
|
(1,087
|
)
|
$
|
6,771
|
|
$
|
27,296
|
|
$
|
(5,199
|
)
|
$
|
67,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
20,295
|
|
$
|
9,452
|
|
$
|
3,002
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
32,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other finance expense
|
|
$
|
19,698
|
|
$
|
5,797
|
|
$
|
3,402
|
|
$
|
|
|
$
|
|
|
$
|
(4
|
)
|
$
|
28,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate at cost
|
|
$
|
474,684
|
|
$
|
433,189
|
|
$
|
186,529
|
|
$
|
|
|
$
|
|
|
$
|
(7,478
|
)
|
$
|
1,086,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
567,882
|
|
$
|
487,182
|
|
$
|
194,992
|
|
$
|
125,587
|
|
$
|
|
|
$
|
(84,260
|
)
|
$
|
1,291,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for real estate and improvements
|
|
$
|
18,424
|
|
$
|
94,191
|
|
$
|
135,391
|
|
$
|
|
|
$
|
|
|
$
|
(2,973
|
)
|
$
|
245,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to net
income and net income attributable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
Net property income before depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
67,959
|
|
Other interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,370
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(32,749
|
)
|
Equity in earnings of unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,906
|
|
Interest and other finance expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28,893
|
)
|
Gain on debt extinguishment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,523
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,362
|
)
|
Gain on sale of land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
763
|
|
Gain on sale of property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,182
|
|
Income from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,437
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-17
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Investments In and Advances to
Unconsolidated Affiliates
Core Portfolio
Brandywine Portfolio
The Company owns a 22.2% interest in an approximately one million square
foot retail portfolio (the Brandywine Portfolio) located in Wilmington,
Delaware that is accounted for under the equity method.
Crossroads
The Company owns a 49% interest in the Crossroads Joint Venture and
Crossroads II (collectively, Crossroads), which own a 311,000 square foot
shopping center located in White Plains, New York that is accounted for under
the equity method.
Opportunity Funds
RCP Venture
The Company along with Klaff Realty, LP (Klaff) and Lubert-Adler
Management, Inc., formed an investment group, the RCP Venture, for the purpose
of making investments in surplus or underutilized properties owned by
retailers. The RCP Venture is neither
a single entity nor a specific investment. Any member of this group has the
option of participating, or not, in any individual investment and each
individual investment has been made on a stand-alone basis through a separate
limited liability company (LLC). These investments have been made through
different investment vehicles with different affiliated and unaffiliated
investors and different economics to the Company. Investments under the
RCP Venture are structured as separate joint ventures as there may be other
investors participating in certain investments in addition to Klaff,
Lubert-Adler and Acadia. The Company
has made these investments through its subsidiaries, Mervyns I, Mervyns II and
Fund II, (together the Acadia Investors), all on a non-recourse basis.
Through December 31, 2010, the Acadia
Investors have made investments in Mervyns Department Stores (Mervyns)
and Albertsons including additional investments in locations that are separate
from these original investments (Add-On Investments). Additionally, they have
invested in Shopko, Marsh and Rex Stores Corporation (collectively Other RCP
Investments).
Mervyns Department Stores
Through Mervyns I and Mervyns II, the Company invested in a consortium
to acquire Mervyns consisting of 262 stores (REALCO) and its retail operation
(OPCO) from Target Corporation. The Companys share of this investment was
$23.2 million. Subsequent to the initial acquisition, the Company, through
Mervyns I and Mervyns II, made additional investments of $2.9 million. To date,
REALCO has disposed of a significant portion of the portfolio. In addition, in November
2007, the Company sold its interest in OPCO and, as a result, has no further
investment in OPCO. Through December 31, 2010, the Company has received
distributions from this investment totaling $46.0 million.
Through December 31, 2010, the Company, through Mervyns I and Mervyns
II, made Add-On Investments in Mervyns totaling $6.5 million and have received
distributions totaling $1.7 million.
Albertsons
The RCP Venture made its second investment as part of an investment
consortium, acquiring Albertsons and Cub Foods, of which the Companys share
was $20.7 million. Through December 31, 2010, the Company has received
distributions from this investment totaling $77.1 million, including $11.4
million received in 2010.
Through December 31, 2010, the Company, through Mervyns II, made Add-On
Investments in Albertsons totaling $2.4 million and received
distributions totaling $1.2 million.
F-18
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Investments In and Advances to Unconsolidated
Affiliates, continued
Other RCP Investments
Through December 31, 2010, the Company, through Fund II, made
investments of $1.1 million in Shopko, $0.7 million in Marsh, and
$2.0 million in Add-On Investments in Marsh. As of December 31, 2010, the
Company has received distributions totaling $1.7 million from its Shopko
investment and $2.6 million from its Marsh and Marsh Add-On Investments.
During July of 2007, the RCP Venture acquired a portfolio of 87 retail
properties from Rex Stores Corporation, which the Company invested through
Mervyns II. The Companys share of this investment was $2.7 million. As of
December 31, 2010, the Company has received distributions totaling $0.8
million.
The following table summarizes activity related to the RCP Venture
investments from inception through December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Partnership Share
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
Year
Acquired
|
|
Invested
Capital
and Advances
|
|
Distributions
|
|
Invested
Capital
and Advances
|
|
Distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mervyns
|
|
2004
|
|
$
|
26,058
|
|
$
|
45,966
|
|
$
|
4,901
|
|
$
|
11,251
|
|
Mervyns Add-On Investments
|
|
2005/2008
|
|
|
6,517
|
|
|
1,703
|
|
|
1,046
|
|
|
283
|
|
Albertsons
|
|
2006
|
|
|
20,717
|
|
|
77,053
|
|
|
4,239
|
|
|
15,410
|
|
Albertsons Add-On Investments
|
|
2006/2007
|
|
|
2,412
|
|
|
1,215
|
|
|
387
|
|
|
243
|
|
Shopko
|
|
2006
|
|
|
1,108
|
|
|
1,655
|
|
|
222
|
|
|
331
|
|
Marsh and Add-on Investments
|
|
2006/2008
|
|
|
2,667
|
|
|
2,639
|
|
|
533
|
|
|
528
|
|
Rex Stores
|
|
2007
|
|
|
2,701
|
|
|
840
|
|
|
535
|
|
|
168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
62,180
|
|
$
|
131,071
|
|
$
|
11,863
|
|
$
|
28,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company accounts for the original investments in Mervyns and
Albertsons under the equity method of accounting as the Company has the
ability to exercise significant influence, but does not have financial or
operating control.
The Company accounts for the Add-On Investments and Other RCP
Investments under the cost method. Due to its minor ownership interest based on
the size of the investments as well as the terms of the underlying operating
agreements, the Company has no influence over such entities operating and
financial policies. Other than the minority investor rights to which the
Company is entitled pursuant to statute, it has no rights other than to receive
its pro-rata share of cash distributions as declared by the managers. The
Company has no rights with respect to the control and operation of the
investment vehicles, and the formulation and execution of business and
investment policies. The Acadia
Investors have interests in the individual investee LLCs as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadia Investors
Ownership % in:
|
|
Investment
|
|
Investee LLC
|
|
Acadia Investors
Entity
|
|
Investee
LLC
|
|
Underlying
entity(s)
|
|
|
|
|
|
|
|
|
|
|
|
Mervyns
|
|
KLA/Mervyns, L.L.C.
|
|
Mervyns I and Mervyns II
|
|
10.5
|
%
|
5.8
|
%
|
Mervyns Add-On Investments
|
|
KLA/Mervyns, L.L.C.
|
|
Mervyns I and Mervyns II
|
|
10.5
|
%
|
5.8
|
%
|
Albertsons
|
|
KLA A Markets, LLC
|
|
Mervyns II
|
|
18.9
|
%
|
5.7
|
%
|
Albertsons Add-On Investments
|
|
KLA A Markets, LLC
|
|
Mervyns II
|
|
20.0
|
%
|
6.0
|
%
|
Shopko
|
|
KLA-Shopko, LLC
|
|
Fund II
|
|
20.0
|
%
|
2.0
|
%
|
Marsh and Add-On Investments
|
|
KLA Marsh, LLC
|
|
Fund II
|
|
20.0
|
%
|
3.3
|
%
|
Rex stores
|
|
KLAC Rex Venture, LLC
|
|
Mervyns II
|
|
13.3
|
%
|
13.3
|
%
|
F-19
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Investments In and Advances to
Unconsolidated Affiliates continued
Other Opportunity Fund Investments
Fund I Investments
Fund I owned a 50% interest in the Sterling Heights Shopping Center,
which was accounted for under the equity method of accounting. During the year
ended December 31, 2009, Fund I recorded an impairment reserve of $3.7 million
related to this investment. On March 25, 2010, the Sterling Heights Shopping
Center was sold for $2.3 million. The proceeds from this sale together with the
balance of Fund Is recourse obligation of $0.6 million were used to fully
liquidate the outstanding mortgage loan obligation.
Fund II Investments
Fund II had a 24.75% interest in CityPoint, a redevelopment project
located in downtown Brooklyn, NY, which was accounted for under the equity
method. On June 30, 2010, Fund II acquired the remaining interests in the
project from its unaffiliated partner, as discussed in Note 2 and, as a result,
now consolidates the CityPoint investment.
Fund III Investments
On December 23, 2010, Fund III, in a joint venture with an unaffiliated
partner, acquired the 255,200 square foot White City Shopping Center in
Shrewsbury, Massachusetts for $56.0 million. Fund III has an 84% interest in
the property. The unaffiliated joint venture partner will maintain control over
this entity, and as such, the Company accounts for this investment under the
equity method.
During June
2010, Fund III, in a joint venture with an unaffiliated partner, invested in an
entity for the purpose of providing management services to owners of
self-storage properties, including the 14 locations currently owned through
Fund II and Fund III. Fund III has a 50% interest in the entity. This entity
was determined to be a variable interest entity for which the Company was
determined not to be the primary beneficiary. As such, the Company accounts for
this investment under the equity method.
Summary of Investments in Unconsolidated
Affiliates
The following combined/condensed Balance Sheets and Statements of
Operations, in each period, summarize the financial information of the
Companys investments in unconsolidated affiliates.
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
December 31,
2010
|
|
December 31,
2009
|
|
|
|
|
|
|
|
Combined/Condensed Balance Sheets
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Rental property, net
|
|
$
|
186,802
|
|
$
|
142,690
|
|
Real estate under development
|
|
|
|
|
|
100,346
|
|
Investment in unconsolidated affiliates
|
|
|
192,002
|
|
|
209,407
|
|
Other assets
|
|
|
27,841
|
|
|
20,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
406,645
|
|
$
|
473,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and partners equity:
|
|
|
|
|
|
|
|
Mortgage note payable
|
|
$
|
267,565
|
|
$
|
258,685
|
|
Other liabilities
|
|
|
13,815
|
|
|
12,085
|
|
Partners equity
|
|
|
125,265
|
|
|
202,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and partners equity
|
|
$
|
406,645
|
|
$
|
473,394
|
|
|
|
|
|
|
|
|
|
Companys investment in and advances to
unconsolidated affiliates
|
|
$
|
31,036
|
|
$
|
51,712
|
|
|
|
|
|
|
|
|
|
Share of distributions in excess of share
of income and investments in unconsolidated affiliates
|
|
$
|
(20,884
|
)
|
$
|
(20,589
|
)
|
|
|
|
|
|
|
|
|
F-20
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Investments In and Advances to
Unconsolidated Affiliates, continued
Summary of Investments in Unconsolidated
Affiliates, continued
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
Combined/Condensed Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
29,460
|
|
$
|
30,835
|
|
$
|
30,457
|
|
Operating and other expenses
|
|
|
10,617
|
|
|
9,851
|
|
|
11,560
|
|
Interest expense
|
|
|
13,525
|
|
|
13,786
|
|
|
14,133
|
|
Equity in earnings (losses) of unconsolidated
affiliates
|
|
|
56,482
|
|
|
(30,568
|
)
|
|
177,775
|
|
Depreciation and amortization
|
|
|
4,839
|
|
|
5,152
|
|
|
5,333
|
|
(Loss) gain on sale of property, net
|
|
|
(2,957
|
)
|
|
(390
|
)
|
|
6,838
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
54,004
|
|
$
|
(28,912
|
)
|
$
|
184,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companys share of net income (loss)
|
|
$
|
11,363
|
|
$
|
(1,141
|
)
|
$
|
20,297
|
|
Impairment reserve
|
|
|
|
|
|
(3,768
|
)
|
|
|
|
Amortization of excess investment
|
|
|
(392
|
)
|
|
(388
|
)
|
|
(391
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Companys share of net income (loss)
|
|
$
|
10,971
|
|
$
|
(5,297
|
)
|
$
|
19,906
|
|
|
|
|
|
|
|
|
|
|
|
|
5. Notes Receivable and Preferred Equity
Investment
At December 31, 2010, the Companys notes receivable, net aggregated
$89.2 million, and were collateralized by the underlying properties, the
borrowers ownership interest in the entities that own the properties and/or by
the borrowers personal guarantee. Notes receivable are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Effective
interest rate
|
|
Final maturity
date
|
|
Periodic
payment
terms
|
|
Prior
liens
|
|
Face amount
of mortgages
|
|
Carrying
amount of
mortgages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72nd Street
|
|
20.85%
|
|
7/18/2011
|
|
(1)
|
|
$
|
170,727
|
|
$
|
47,000
|
|
$
|
46,715
|
|
Georgetown
|
|
10.23%
|
|
11/12/2011
|
|
(3)
|
|
|
9,596
|
|
|
8,000
|
|
|
8,000
|
|
Mezzanine
Loan
|
|
14.50%
|
|
6/30/2011
|
|
(2)
|
|
|
|
|
|
8,585
|
|
|
8,585
|
|
Zero Coupon
Loan
|
|
24.00%
|
|
1/3/2016
|
|
(3)
|
|
|
166,200
|
|
|
5,644
|
|
|
3,225
|
|
Mezzanine
Loan
|
|
13.00%
|
|
9/11/2011
|
|
(3)
|
|
|
|
|
|
2,980
|
|
|
2,980
|
|
First
Mortgage Loan
|
|
10.77%
|
|
9/11/2011
|
|
(3)
|
|
|
|
|
|
10,000
|
|
|
10,000
|
|
Individually
less than 3%
|
|
10.00% - 17.50%
|
|
Demand note 1/1/2017
|
|
|
|
|
106,089
|
|
|
15,722
|
|
|
9,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
$
|
97,931
|
|
$
|
89,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(1)
|
Principal
and interest, including a $7.5 million exit fee, are due upon maturity.
|
(2)
|
Payable upon
maturity.
|
(3)
|
Interest
only payable monthly, principal due on maturity.
|
F-21
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Notes Receivable and Preferred Equity
Investment, continued
During April 2010, the Company received a payment of $2.1 million and
during December 2009 received a payment of $4.7 million, both representing
paydowns on its first mortgage loan secured by three retail properties,
following the sale of two of the collateralized properties.
During December 2009, the Company made a loan of $8.6 million which
bears interest at 14.5% and matures on June 30, 2011.
During August 2009, the Company received a payment of $2.8 million,
representing the entire balance on its first mortgage loan secured by an
interest in a property in Pennsylvania.
During August 2009, the Company received a payment of $5.1 million,
representing a paydown on its first mortgage loan secured by an interest in a
single tenant property located in Long Island, New York.
During June 2009, the Company received a payment of $0.7 million,
representing a paydown on its loan secured by an interest in a property in
South Carolina.
During March 2009, the Company received a payment of $0.3 million,
representing the entire balance on a loan secured by an interest in a property
in South Carolina.
During June 2008, the Company made a $40.0 million preferred equity
investment in an entity that owns a portfolio of 18 properties located
primarily in Georgetown, Washington D.C. The portfolio consists of 306,000
square feet of principally retail space. The original term of this investment
was for two years, with two one year extensions, and provided a 13% preferred
return. During September 2010, the Company received its entire $40.0 million of
invested equity and $9.4 million of accrued preferred return.
During July 2008, the Company made a $34.0 million loan, which is
collateralized by an interest in a mixed-use retail and residential development
at 72nd Street and Broadway on the Upper West Side of Manhattan. The term of
the loan is for a period of three years, with a one year extension with an
effective yield, inclusive of all fees, of 20%.
During September 2008, the Company, through Fund III, made a $10.0
million first mortgage loan, which is collateralized by land located on Long
Island, New York. The term of the loan was for a period of two years, and
provides an effective yield of 13%. During September 2010, the loan was
extended for one year at an effective yield of 11%.
The following table reconciles notes receivable and preferred equity
investments from January 1, 2008 to December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
|
|
(dollars in thousands)
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of
period
|
|
$
|
125,221
|
|
$
|
125,587
|
|
$
|
57,662
|
|
Additions during period:
|
|
|
|
|
|
|
|
|
|
|
New mortgage loans
|
|
|
|
|
|
9,362
|
|
|
88,480
|
|
|
|
|
|
|
|
|
|
|
|
|
Deductions during period:
|
|
|
|
|
|
|
|
|
|
|
Collections of principal
|
|
|
(42,010
|
)
|
|
(13,614
|
)
|
|
(19,922
|
)
|
Amortization of premium
|
|
|
6,164
|
|
|
5,352
|
|
|
2,367
|
|
Reserves
|
|
|
(93
|
)
|
|
(1,466
|
)
|
|
(3,000
|
)
|
Other
|
|
|
(80
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at close of period
|
|
$
|
89,202
|
|
$
|
125,221
|
|
$
|
125,587
|
|
|
|
|
|
|
|
|
|
|
|
|
F-22
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Deferred Charges
Deferred charges consist of the following as of December 31, 2010 and
2009:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
(dollars in thousands)
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Deferred financing costs
|
|
$
|
29,692
|
|
$
|
22,852
|
|
Deferred leasing and other
costs
|
|
|
32,501
|
|
|
33,169
|
|
|
|
|
|
|
|
|
|
|
|
|
62,193
|
|
|
56,021
|
|
Accumulated amortization
|
|
|
(36,463
|
)
|
|
(27,710
|
)
|
|
|
|
|
|
|
|
|
|
|
$
|
25,730
|
|
$
|
28,311
|
|
|
|
|
|
|
|
|
|
7. Acquired Lease Intangibles
Upon acquisitions of real estate, the Company assesses the fair value
of acquired assets (including land, buildings and improvements, and identified
intangibles such as above and below market leases, acquired in-place leases and
customer relationships) and acquired liabilities in accordance with ASC Topic
805. The intangibles are amortized over the
remaining non-cancelable terms of the respective leases.
The scheduled amortization of acquired lease intangible assets and
liabilities as of December 31, 2010 is as follows:
|
|
|
|
|
|
|
|
(dollars
in thousands)
|
|
Acquired lease intangible
|
|
|
|
|
Assets
|
|
Liabilities
|
|
|
|
|
|
|
|
2011
|
|
$
|
3,029
|
|
$
|
994
|
|
2012
|
|
|
2,578
|
|
|
923
|
|
2013
|
|
|
1,999
|
|
|
730
|
|
2014
|
|
|
1,631
|
|
|
451
|
|
2015
|
|
|
1,520
|
|
|
313
|
|
Thereafter
|
|
|
7,865
|
|
|
2,326
|
|
|
|
|
|
|
|
|
|
|
|
$
|
18,622
|
|
$
|
5,737
|
|
|
|
|
|
|
|
|
|
F-23
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Mortgages Payable
At December 31, 2010 and 2009, mortgage notes payable, excluding the
net valuation premium on the assumption of debt, aggregated $806.1 million and
$732.2 million, respectively, and were collateralized by 29 and 28 properties
and related tenant leases, respectively. Interest rates on the Companys
outstanding mortgage indebtedness ranged from 0.86% to 7.34% with maturities
that ranged from March 2011 to November 2032. Certain loans are
cross-collateralized and contain cross-default provisions. The loan agreements contain
customary representations, covenants and events of default. Certain loan
agreements require the Company to comply with affirmative and negative
covenants, including the maintenance of debt service coverage and leverage
ratios.
The following reflects mortgage loan activity for the year ended
December 31, 2010:
i) During January 2010, the Company closed on a $48.0 million
construction loan that bears interest at LIBOR plus 400 basis points, subject
to an interest rate floor of 6.50% which matures on January 12, 2012. As of
December 31, 2010, $40.2 million was drawn on this facility.
ii) During March 2010, the Company extended the Fund II subscription
line of credit, which was collateralized by a pledge of investors unfunded
capital commitments, from March 1, 2010 to March 1, 2011 and adjusted the
interest rate from LIBOR plus 250 basis points to LIBOR plus 325 basis points.
In connection with the extension, the Company made an $8.2 million payment on
the outstanding $48.2 million line of credit and the line of credits maximum
capacity was reduced to $40.0 million. During December 2010, the line of credit
was extended further to December 22, 2014 and the interest rate reduced to
LIBOR plus 290 basis points. This modification also requires principal reductions
to (a) $15.0 million on October 31, 2013, (b) $11.3 million on February 1,
2014, (c) $7.5 million on May 1, 2014, and (d) $3.8 million on August 1, 2014.
Additionally, a Company guarantee has replaced the unfunded capital commitments
of the investors as collateral for this loan and the Company has agreed to
maintain various restrictive covenants.
iii) During February of 2010, the Company paid off an outstanding line
of credit balance of $2.0 million, which was collateralized by a property and
scheduled to mature on March 29, 2010 and terminated the line of credit.
iv) During 2010, the Company made payments of $29.0 million on an
outstanding $30.0 million credit facility collateralized by six properties.
v) During 2010, the Company made draws of $32.0 million on the Fund III
subscription line of credit. As of December 31, 2010, the total outstanding
amount on this line of credit was $171.5 million.
vi) During May of 2010, the Company borrowed an additional $2.0 million
on an existing mortgage loan collateralized by a property.
vii) During July 2010, the Company amended and extended a $30.0 million
loan, collateralized by a Fund II property located on 161
st
Street
in the Bronx, NY. The agreement required a $1.1 million payment on the
outstanding principal balance and extended the maturity date to April 1, 2013.
The interest rate has been adjusted retroactively to LIBOR plus 400 basis
points for the period April 1, 2010 through March 31, 2011, LIBOR plus 550
basis points for the period April 1, 2011 through March 31, 2012, and LIBOR
plus 600 basis points for the period April 1, 2012 through March 31, 2013.
viii) During July of 2010, the Company closed on a $20.0 million bond
financing that bears interest at a fixed rate of 7.25% that is due November 1,
2042 and has a mandatory put date of November 1, 2014.
ix) During August of 2010, the Company amended and extended the
maturity date of a $25.9 million loan that was scheduled to mature in August of
2010. In connection with the release of a portion of the collateral for this
loan, the Company was required to pay down the principal by $5.3 million. The
amendment provided for a three year extension of the loan maturity date to
August 12, 2013 with two one-year extension options.
x) Also during August of 2010, the Company completed an amendment of a
$31.7 million construction loan. Previously, the servicer, on behalf of the
lender of this loan, had previously alleged that non-monetary defaults had
occurred, however it has subsequently agreed to dismiss all allegations of
default. The loan continued to bear interest at 7.38% and had a maturity date
of January 1, 2020. During December 2010, the Company closed on a new $34.0
million loan and used the proceeds to pay off this construction loan. The loan
bears interest at LIBOR plus 275 basis points and matures on December 1, 2013.
$31.6 million of the loan was funded at the closing and an additional $2.4
million was available for tenant improvements and leasing commissions.
F-24
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Mortgages Payable, continued
xi) During September of 2010, the Company amended and extended the
maturity date of a $10.5 million loan that was scheduled to mature during
September 2010. The amendment required a $0.5 million principal pay down and
provided for a one year extension of the loan maturity date to September 1,
2011 with a one year extension option and bears interest at LIBOR plus 325
basis points.
xii) During June 2009, the servicer, on behalf of the lender of one of
the Companys loans alleged that a non-monetary default had occurred on an
$11.5 million construction loan collateralized by Atlantic Avenue. The servicer
alleged that the Company did not substantially complete the improvements in
accordance with the required completion date as defined in the loan agreement
and, accordingly, did not meet the requirements for the final draw. During
October 2010, the Company and the servicer reached an agreement to amend the
loan whereby all alleged events of default were waived.
xiii) During October 2010, the Company modified and extended the
maturity date of a $9.8 million loan that was scheduled to mature during
October 2010. The amendment required a $1.4 million principal pay down and
provided for a one year extension of the loan maturity date to October 31,
2011.
xiv) During October 2010, the Company closed on a $50.0 million loan
collateralized by a property. The loan bears interest at LIBOR plus 190 basis
points and matures on October 26, 2015. The proceeds of this loan were used to
repay the existing $46.6 million mortgage note payable. There is an additional
$25.0 million available, based on the property attaining certain debt service
coverage ratio levels and the lender being able to syndicate the loan. The
second tranche will bear interest at LIBOR plus 230 basis points.
The following table sets forth certain information pertaining to our
secured credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
Borrower
|
|
Total
amount of
credit
facility
|
|
Amount
borrowed
as of
December 31,
2009
|
|
Net borrowings
(repayments)
during the
year ended
December 31,
2010
|
|
Amount
borrowed as of
December 31,
2010
|
|
Letters of credit
outstanding as of
December 31,
2010
|
|
Amount available
under credit
facilities as of
December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadia Realty, LP
|
|
$
|
64,498
|
|
$
|
30,000
|
|
$
|
(29,000
|
)
|
$
|
1,000
|
|
$
|
8,610
|
|
$
|
54,888
|
Acadia Realty, LP
|
|
|
|
|
|
2,000
|
|
|
(2,000
|
)
|
|
|
|
|
|
|
|
|
Fund II
|
|
|
40,000
|
|
|
48,245
|
|
|
(8,245
|
)
|
|
40,000
|
|
|
|
|
|
|
Fund III
|
|
|
221,000
|
|
|
139,450
|
|
|
32,000
|
|
|
171,450
|
|
|
500
|
|
|
49,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
325,498
|
|
$
|
219,695
|
|
$
|
(7,245
|
)
|
$
|
212,450
|
|
$
|
9,110
|
|
$
|
103,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-25
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Mortgages Payable, continued
The following table summarizes the Companys mortgage and other secured
indebtedness as of December 31, 2010 and December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
of Debt and Collateral
|
|
December 31,
2010
|
|
December 31,
2009
|
|
Interest Rate
at December 31, 2010
|
|
Maturity
|
|
Payment
Terms
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage notes payable
variable-rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Avenue
|
|
$
|
10,000
|
|
$
|
10,450
|
|
3.51%
(LIBOR +3.25%)
|
|
9/1/2011
|
|
Interest only monthly.
|
Fordham Place
|
|
|
85,910
|
|
|
86,000
|
|
Greater
of 1.5%+3.5% or
5.00% (LIBOR +3.5%)
|
|
10/4/2011
|
|
Interest only monthly.
|
Tarrytown Shopping Center
|
|
|
8,427
|
|
|
9,800
|
|
1.91%
(LIBOR +1.65%)
|
|
10/30/2011
|
|
Interest only monthly.
|
Branch Shopping Plaza
|
|
|
13,932
|
|
|
14,179
|
|
1.56%
(LIBOR +1.30%)
|
|
12/1/2011
|
|
Monthly principal and
interest.
|
Canarsie Plaza
|
|
|
40,243
|
|
|
|
|
Greater
of 6.50% or
4.26% (LIBOR +4.00%)
|
|
1/12/2012
|
|
Interest only monthly.
|
Village Commons Shopping
Center
|
|
|
9,305
|
|
|
9,467
|
|
1.66%
(LIBOR +1.40%)
|
|
6/29/2012
|
|
Monthly principal and
interest.
|
161
st
Street
|
|
|
28,900
|
|
|
30,000
|
|
4.26%
(LIBOR +4.00%)
|
|
4/1/2013
|
|
Interest only monthly.
|
CityPoint
|
|
|
20,650
|
|
|
|
|
2.76%
(LIBOR +2.50%)
|
|
8/12/2013
|
|
Interest only monthly.
|
Pelham Manor
|
|
|
31,554
|
|
|
|
|
3.01%
(LIBOR +2.75%)
|
|
12/1/2013
|
|
Monthly principal and
interest.
|
Cortlandt Towne Center
|
|
|
50,000
|
|
|
44,878
|
|
2.16%
(LIBOR +1.90%)
|
|
10/26/2015
|
|
Monthly principal and
interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total mortgage notes
payable
|
|
|
298,921
|
|
|
204,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured credit facilities
variable-rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund III unfunded investor
capital commitments
|
|
|
171,450
|
|
|
139,450
|
|
0.86%
(LIBOR +0.60%)
|
|
10/9/2011
|
|
Interest only monthly.
|
Six Core Portfolio
properties
|
|
|
1,000
|
|
|
30,000
|
|
1.51%
(LIBOR +1.25%)
|
|
12/1/2011
|
|
Annual principal and monthly
interest.
|
Fund II
|
|
|
40,000
|
|
|
48,245
|
|
3.16%
(LIBOR +2.90%)
|
|
12/22/2014
|
|
Interest only monthly.
|
Ledgewood Mall
|
|
|
|
|
|
2,000
|
|
1.51%
(LIBOR +1.25%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total secured credit
facilities
|
|
|
212,450
|
|
|
219,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps (1)
|
|
|
(71,535
|
)
|
|
(83,416
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total variable-rate debt
|
|
|
439,836
|
|
|
341,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage notes payable
fixed-rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Five Self-Storage properties
|
|
|
41,500
|
|
|
41,500
|
|
5.30%
|
|
3/16/2011
|
|
Interest only monthly.
|
Chestnut Hill
|
|
|
9,338
|
|
|
9,481
|
|
5.45%
|
|
6/11/2013
|
|
Monthly principal and
interest.
|
Clark Diversey
|
|
|
4,625
|
|
|
4,751
|
|
6.35%
|
|
7/1/2014
|
|
Monthly principal and
interest.
|
New Loudon Center
|
|
|
14,119
|
|
|
14,343
|
|
5.64%
|
|
9/6/2014
|
|
Monthly principal and
interest.
|
CityPoint
|
|
|
20,000
|
|
|
|
|
7.25%
|
|
11/1/2014
|
|
Interest only quarterly.
|
Crescent Plaza
|
|
|
17,539
|
|
|
17,600
|
|
4.98%
|
|
9/6/2015
|
|
Monthly principal and
interest.
|
Pacesetter Park Shopping
Center
|
|
|
12,132
|
|
|
12,313
|
|
5.12%
|
|
11/6/2015
|
|
Monthly principal and
interest.
|
Elmwood Park Shopping Center
|
|
|
34,197
|
|
|
34,600
|
|
5.53%
|
|
1/1/2016
|
|
Monthly principal and
interest.
|
The Gateway Shopping Center
|
|
|
20,500
|
|
|
20,500
|
|
5.44%
|
|
3/1/2016
|
|
Interest only monthly.
|
Walnut Hill Plaza
|
|
|
23,500
|
|
|
23,500
|
|
6.06%
|
|
10/1/2016
|
|
Interest only monthly until
10/11; monthly principal and interest thereafter.
|
239 Greenwich Avenue
|
|
|
26,000
|
|
|
26,000
|
|
5.42%
|
|
2/11/2017
|
|
Interest only monthly.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrillville Plaza
|
|
|
26,250
|
|
|
26,250
|
|
5.88%
|
|
8/1/2017
|
|
Interest only monthly until
7/12 monthly principal and interest thereafter.
|
216
th
Street
|
|
|
25,500
|
|
|
25,500
|
|
5.80%
|
|
10/1/2017
|
|
Interest only monthly.
|
Pelham Manor Shopping Plaza
|
|
|
|
|
|
31,652
|
|
7.18%
|
|
|
|
|
Atlantic Avenue
|
|
|
11,540
|
|
|
11,543
|
|
7.34%
|
|
1/1/2020
|
|
Interest only upon drawdown
on construction loan until 1/15 monthly principal and interest thereafter.
|
A&P Shopping Plaza
|
|
|
8,033
|
|
|
8,182
|
|
6.40%
|
|
11/1/2032
|
|
Monthly principal and
interest.
|
Interest rate swaps (1)
|
|
|
71,535
|
|
|
83,416
|
|
5.46%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed-rate debt
|
|
|
366,308
|
|
|
391,131
|
|
|
|
|
|
|
Unamortized premium
|
|
|
68
|
|
|
103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
806,212
|
|
$
|
732,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the amount of the Companys variable-rate debt that
has been fixed through certain cash flow hedge transactions. (Note 10).
|
F-26
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Mortgages Payable, continued
The scheduled principal repayments of all indebtedness including
Convertible Notes as of December 31, 2010 are as follows (does not include
$68,000 net valuation premium on assumption of debt):
|
|
|
|
|
(dollars in
thousands)
|
|
2011
|
|
$
|
384,668
|
|
2012
|
|
|
53,374
|
|
2013
|
|
|
103,443
|
|
2014
|
|
|
64,452
|
|
2015
|
|
|
79,268
|
|
Thereafter
|
|
|
169,651
|
|
|
|
|
|
|
|
|
$
|
854,856
|
|
|
|
|
|
|
9. Convertible Notes Payable
In December 2006 and January 2007, the Company issued a total of
$115.0 million in principal of convertible notes with a fixed interest
rate of 3.75% due 2026 (the Convertible Notes). The Convertible Notes were
issued at par and require interest payments semi-annually in arrears on
June 15 and December 15 of each year. The Convertible Notes are
unsecured unsubordinated obligations and rank equally with all other unsecured
and unsubordinated indebtedness. The Convertible Notes have an effective
interest rate of 6.03% giving effect to the accounting treatment required by
ASC Topic 470-20 Debt with Conversion and Other Options (ASC Topic 470-20).
The Convertible Notes had an initial conversion price of $30.86 per share. The
conversion rate may be adjusted under certain circumstances, including the
payment of cash dividends in excess of the regular quarterly cash dividend in
place at the time the Convertible Notes were issued. As of December 31, 2010,
the adjusted conversion price is $29.26. Upon conversion of the Convertible
Notes, the Company will deliver cash and, in some circumstances, Common Shares,
as specified in the indenture relating to the Convertible Notes. In general,
the Convertible Notes may only be converted prior to maturity during any
calendar quarter beginning after December 31, 2006 if the Companys Common
Shares trade at 130% of the conversion price for at least 20 days within a
consecutive 30 day trading period. Prior to December 20, 2011, the Company
will not have the right to redeem Convertible Notes, except to preserve its
status as a REIT. After December 20, 2011, the Company will have the right
to redeem the notes, in whole or in part, at any time and from time to time,
for cash equal to 100% of the principal amount of the notes plus any accrued
and unpaid interest to, but not including, the redemption date. The Holders of
notes may require the Company to repurchase their notes, in whole or in part,
on December 20, 2011, December 15, 2016, and December 15, 2021 for
cash equal to 100% of the principal amount of the notes to be repurchased plus
any accrued and unpaid interest to, but not including, the repurchase date.
In general, upon a conversion of notes, the Company will deliver cash
and, at the Companys election, its Common Shares, with an aggregate value,
which the Company refers to as the conversion value, equal to the conversion
rate multiplied by the average price of the Companys Common Shares. The net
amount may be paid, at the Companys option, in cash, its Common Shares or a
combination of cash and its Common Shares.
The Convertible Notes if-converted value does
not exceed its principal amount as of December 31, 2010 and there are no
derivative transactions that were entered into in connection with the issuance
of the Convertible Notes.
During 2010, 2009 and 2008 the Company purchased $0.2 million, $57.0
million and $8.0 million in principal amount, respectively, of its convertible
debt at an average discount of approximately 19%. The transactions resulted in
a gain on debt extinguishment of $7.1 million and $1.5 million for the years
ended December 31, 2009 and 2008, respectively. The outstanding Convertible
Note principal amount as of December 31, 2010 and 2009 was $49.8 million and
$50.0 million, respectively. The outstanding Convertible Note net carrying
amount as of December 31, 2010 and 2009 was $48.7 million and $47.9 million,
respectively.
Effective January 1, 2009, the Company adopted ASC Topic 470-20 which
required it to retrospectively restate and reclassify previously disclosed
consolidated financial statements to allocate the proceeds from the issuance of
convertible debt between a debt component and an equity component. The
resulting discount on the debt component is amortized over the period the
convertible debt is expected to be outstanding, which is December 11, 2006 to
December 20, 2011, as additional non-cash interest expense. The equity
component recorded as additional paid-in capital was $11.3 million, which
represented the difference between the proceeds from the issuance of the
convertible notes payable and the fair value of the liability at the time of
issuance.
F-27
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Convertible Notes Payable, continued
The carrying amount of the equity component included in additional
paid-in capital totaled $1.1 million at December 31, 2010 and $2.1 million at
December 31, 2009. Interest expense relating to the contractual interest coupon
recognized in the Consolidated Statements of Income was $1.9 million, $2.5
million and $4.3 million for the years ended December 31, 2010, 2009, and 2008,
respectively, The additional non-cash interest expense recognized in the
Consolidated Statements of Income was $1.0 million, $1.3 million and $2.1
million for the years ended December 31, 2010, 2009, and 2008, respectively.
Accumulated amortization related to the convertible notes payable was $1.0
million and $0.7 million as of December 31, 2010 and December 31, 2009,
respectively, after giving effect to repurchases.
The following table shows the effect of the retrospective application
and reclassification of the consolidated statement of income for the year ended
December 31, 2008 and consolidated statement of cash flow accounts for the year
ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands, except per share amounts)
|
|
Year ended December 31, 2008
|
|
|
|
|
|
Affected Consolidated Income Statement Accounts
|
|
Before Adjustment
|
|
As
Adjusted
|
|
Effect of Change
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
$
|
32,805
|
|
$
|
32,749
|
|
$
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
$
|
26,792
|
|
$
|
28,893
|
|
$
|
(2,101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Gain on debt
extinguishment
|
|
$
|
1,958
|
|
$
|
1,523
|
|
$
|
(435
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
30,997
|
|
$
|
28,517
|
|
$
|
(2,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
39,917
|
|
$
|
37,437
|
|
$
|
(2,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Common Shareholders
|
|
$
|
27,548
|
|
$
|
25,068
|
|
$
|
(2,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$
|
0.81
|
|
$
|
0.74
|
|
$
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$
|
0.80
|
|
$
|
0.73
|
|
$
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affected
Consolidated Statement of Cash Flow Accounts
|
|
Year ended December 31, 2008
|
|
|
|
|
|
|
|
Before Adjustment
|
|
As Adjusted
|
|
Effect of Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
$
|
34,964
|
|
$
|
34,908
|
|
$
|
(56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Gain on debt
extinguishment
|
|
$
|
(1,958
|
)
|
$
|
(1,523
|
)
|
$
|
435
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of discount on convertible debt
|
|
$
|
|
|
$
|
2,101
|
|
$
|
2,101
|
|
|
|
|
|
|
|
|
|
|
|
|
F-28
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Financial Instruments and Fair Value
Measurements
Derivative Financial Instruments
The FASBs derivative and hedging guidance establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. As
required by the FASB guidance, the Company records all derivatives on the
balance sheet at fair value. The accounting for changes in the fair value of
derivatives depends on the intended use of the derivative and the resulting
designation. Derivatives used to hedge the exposure to changes in the fair
value of an asset, liability, or firm commitment attributable to a particular
risk, such as interest rate risk, are considered fair value hedges. Derivatives
used to hedge the exposure to variability in expected future cash flows, or
other types of forecasted transactions, are considered cash flow hedges.
For derivatives designated as fair value hedges, changes in the fair
value of the derivative and the hedged item related to the hedged risk are
recognized in earnings. For derivatives designated as cash flow hedges, the
effective portion of changes in the fair value of the derivative is initially
reported in other comprehensive income (outside of earnings) and subsequently
reclassified to earnings when the hedged transaction affects earnings, and the
ineffective portion of changes in the fair value of the derivative is
recognized directly in earnings. The Company assesses the effectiveness of each
hedging relationship by comparing the changes in fair value or cash flows of
the derivative hedging instrument with the changes in fair value or cash flows
of the designated hedged item or transaction. For derivatives not designated as
hedges, changes in fair value are recognized in earnings.
As of December 31, 2010, the Companys derivative financial instruments
consisted of seven interest rate LIBOR swaps with an aggregate notional value
of $71.5 million, which fix interest at rates from 0.5% to 5.1% and mature
between September 2011 and November 2012. The Company also has one derivative
financial instrument with a notional value of $28.9 million which caps interest
at 6% and matures in April 2013. The fair value of the derivative liability of
these instruments, which is included in other liabilities in the Consolidated
Balance Sheets, totals $2.8 million at December 31, 2010. The notional value
does not represent exposure to credit, interest rate or market risks.
These derivative instruments have been designated as cash flow hedges
and hedge the future cash outflows on variable rate mortgage debt. Such
instruments are reported at the fair value reflected above. As of December 31,
2010 and 2009, unrealized losses totaling $2.8 and $3.3 million, respectively
were reflected in accumulated other comprehensive loss. It is estimated that
approximately $2.5 million included in accumulated other comprehensive loss
related to derivatives will be reclassified to interest expense in the 2011
results of operations.
As of December 31, 2010 and 2009, no derivatives were designated as
fair value hedges or hedges of net investments in foreign operations.
Additionally, the Company does not use derivatives for trading or speculative
purposes and currently does not have any derivatives that are not designated as
hedges. As of December 31, 2010, none of the Companys hedges were ineffective.
The FASBs fair value measurements and disclosure guidance requires the
valuation of certain of the Companys financial assets and liabilities, based
on a three-level fair value hierarchy. Market participant assumptions obtained
from sources independent of the Company are observable inputs that are
classified within Levels 1 and 2 of the hierarchy, and the Companys own
assumptions about market participant assumptions are unobservable inputs
classified within Level 3 of the hierarchy.
The following table presents the Companys fair value hierarchy for
those assets and liabilities measured at fair value on a recurring basis as of
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Derivative
financial instruments
|
|
$
|
|
|
$
|
2,816
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-29
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Financial Instruments and Fair Value
Measurements, continued
Financial Instruments
Certain of the Companys assets and liabilities meet the definition of
financial instruments. Except as disclosed below, the carrying amounts of these
financial instruments approximates their fair value due to the short-term
nature of such accounts.
The Company has determined the estimated fair values of the following
financial instruments by discounting future cash flows utilizing a discount
rate equivalent to the rate at which similar financial instruments would be
originated at the reporting date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
December 31, 2009
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
Receivable and Preferred Equity Investments
|
|
$
|
89,202
|
|
$
|
90,612
|
|
$
|
125,221
|
|
$
|
126,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage
Notes Payable and Convertible Notes Payable
|
|
$
|
854,924
|
|
$
|
863,639
|
|
$
|
780,197
|
|
$
|
751,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11. Shareholders Equity and Noncontrolling
Interests
Common Shares
During the first quarter of 2010, 57,476 employee Restricted Shares
were cancelled to pay the employees income taxes due on the value of the
portion of the Restricted Shares that vested. During the year ended
December 31, 2010, the Company recognized accrued Common Share and Common
OP Unit-based compensation totaling $3.8 million in connection with the vesting
of Restricted Shares and Units (Note 15).
Noncontrolling Interests
The following
table summarizes the change in the noncontrolling interests since December 31,
2009:
|
|
|
|
|
|
|
|
|
|
Noncontrolling
Interests
in Operating
Partnership
|
|
Noncontrolling
Interests
in Partially-Owned
Affiliates
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
6,176
|
|
$
|
214,116
|
|
Distributions declared of $0.72 per Common
OP Unit
|
|
|
(723
|
)
|
|
|
|
Net income for the period January 1 through
December 31, 2010
|
|
|
394
|
|
|
20,216
|
|
Conversion of 364,615 OP Units to Common
Shares by limited partners of the Operating Partnership
|
|
|
(3,240
|
)
|
|
|
|
Other comprehensive income unrealized
loss on valuation of swap agreements
|
|
|
22
|
|
|
261
|
|
Reclassification of realized interest
expense on swap agreements
|
|
|
2
|
|
|
(356
|
)
|
Noncontrolling interest contributions
|
|
|
|
|
|
33,556
|
|
Noncontrolling interest distributions and
other reductions
|
|
|
|
|
|
(2,892
|
)
|
Employee Long-term Incentive Plan Unit
Awards
|
|
|
1,778
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010
|
|
$
|
4,409
|
|
$
|
264,901
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest in the Operating Partnership represents
(i) the limited partners 281,294 and 626,606 Common OP Units at
December 31, 2010 and 2009, (ii) 188 Series A Preferred OP Units
at December 31, 2010 and 2009, with a stated value of $1,000 per unit,
which are entitled to a preferred quarterly distribution of the greater of (a)
$22.50 (9% annually) per Series A Preferred OP Unit or (b) the
quarterly distribution attributable to a Series A Preferred OP Unit if
such unit were converted into a Common OP Unit, and (iii) 641,534 and 393,909
LTIP units as of December 31, 2010 and December 31, 2009 respectively, as
discussed in Share Incentive Plan (Note 15).
F-30
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Shareholders Equity and Noncontrolling
Interests, continued
Noncontrolling Interests, continued
Noncontrolling interests in partially-owned affiliates include
third-party interests in Fund I, II and III, and Mervyns I and II and three
other entities.
In 2005, the Company issued 250,000 Restricted Common OP Units to Klaff
in consideration for an interest in certain management contract rights. During
2010, Klaff converted the 250,000 Restricted Common OP Units into Common
Shares.
The Series A Preferred OP Units were issued in 1999 in connection
with the acquisition of a property. Through December 31, 2010, 1,204
Series A Preferred OP Units were converted into 160,533 Common OP Units
and then into Common Shares. The 188 remaining Series A Preferred OP Units
are currently convertible into Common OP Units based on the stated value
divided by $7.50. Either the Company or the holders can currently call for the
conversion of the Series A Preferred OP Units at the lesser of $7.50 or
the market price of the Common Shares as of the conversion date.
12. Related Party Transactions
During February 2010, Klaff converted all 250,000 of its Restricted
Common OP Units into 250,000 Common Shares.
In 2008 and 2009 the Company earned asset management, leasing,
disposition, development and construction fees for providing services to an
existing portfolio of retail properties and/or leasehold interests in which
Klaff had an interest. Fees earned by the Company in connection with this
portfolio were $0.0 million, $0.4 million and $0.8 million for the years ended
December 31, 2010, 2009 and 2008 respectively.
The Company earns fees from two of its investments in unconsolidated
partnerships (Note 4). The Company earned property management, construction,
legal and leasing fees from the Brandywine Portfolio totaling $0.8 million,
$0.7 million and $1.1 million for the years ended December 31, 2010, 2009 and
2008, respectively. In addition, the Company earned property management and
development fees from CityPoint totaling $1.0 million for the year ended
December 31, 2008.
Lee Wielansky, the Lead Trustee of the Company, was paid a consulting
fee of $0.1 million for each of the years ended December 31, 2010, 2009,
and 2008.
13. Tenant Leases
Space in the shopping centers and other retail properties is leased to
various tenants under operating leases that usually grant tenants renewal
options and generally provide for additional rents based on certain operating
expenses as well as tenants sales volume.
Minimum future rentals to be received under non-cancelable leases for
shopping centers and other retail properties as of December 31, 2010 are
summarized as follows:
|
|
|
|
|
(dollars in
thousands)
|
|
2011
|
|
$
|
94,214
|
|
2012
|
|
|
88,108
|
|
2013
|
|
|
80,087
|
|
2014
|
|
|
68,512
|
|
2015
|
|
|
60,244
|
|
Thereafter
|
|
|
546,444
|
|
|
|
|
|
|
|
|
$
|
937,609
|
|
|
|
|
|
|
During the years ended December 31, 2010, 2009 and 2008, no single
tenant collectively accounted for more than 10% of the Companys total
revenues.
F-31
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Lease Obligations
The Company leases land at 24 of its shopping centers, which are
accounted for as operating leases and generally provide the Company with
renewal options. Ground rent expense was $3.7 million, $2.5 million, and
$2.3 million (including capitalized ground rent at properties under
development of $0.5 million, $0.6 million and $1.1 million) for
the years ended December 31, 2010, 2009 and 2008, respectively. The leases
terminate at various dates between 2020 and 2078. These leases provide the
Company with options to renew for additional terms aggregating from 20 to
60 years. The Company leases space for its White Plains corporate office
for a term expiring in 2015. Office rent expense under this lease was
$1.5 million, $1.5 million and $1.2 million for the years ended
December 31, 2010, 2009 and 2008, respectively. Future minimum rental
payments required for leases having remaining non-cancelable lease terms are as
follows:
|
|
|
|
|
(dollars in
thousands)
|
|
2011
|
|
$
|
5,372
|
|
2012
|
|
|
6,008
|
|
2013
|
|
|
6,033
|
|
2014
|
|
|
5,574
|
|
2015
|
|
|
5,375
|
|
Thereafter
|
|
|
143,216
|
|
|
|
|
|
|
|
|
$
|
171,578
|
|
|
|
|
|
|
15. Share Incentive Plan
During 2003, the Company adopted the 2003 Share Incentive Plan (the
2003 Plan). The 2003 Plan authorizes the issuance of options, share
appreciation rights, restricted shares (Restricted Shares), restricted OP
Units (LTIP Units) and performance units (collectively, Awards) to
officers, employees and trustees of the Company and consultants to the Company
equal to up to four percent of the total Common Shares of the Company
outstanding from time to time on a fully diluted basis. However, no participant
may receive more than the equivalent of 1,000,000 Common Shares during the term
of the 2003 Plan with respect to Awards. Options are granted by the Compensation
Committee (the Committee), which currently consists of three non-employee
Trustees, and will not have an exercise price less than 100% of the fair market
value of the Common Shares and a term of greater than ten years at the grant
date. Vesting of options is at the discretion of the Committee. Share
appreciation rights provide for the participant to receive, upon exercise, cash
and/or Common Shares, at the discretion of the Committee, equal to the excess
of the market value of the Common Shares at the exercise date over the market
value of the Common Shares at the grant date. The Committee determines the
restrictions placed on Awards, including the dividends or distributions thereon
and the term of such restrictions. The Committee also determines the award and
vesting of performance units and performance shares based on the attainment of
specified performance objectives of the Company within a specified performance
period. Through December 31, 2010, no share appreciation rights or
performance units/shares had been awarded. In connection with the Awards, to
the extent that a portion of senior managements cash bonus is converted into
elective Awards, the number of shares issued are at a 25% discount and vest
over time.
During 2006, the Company adopted the 2006 Share Incentive Plan (the
2006 Plan). The 2006 Plan is substantially similar to the 2003 Plan, except
that the maximum number of Common Share equivalents that the Company may issue
pursuant to the 2006 Plan is 500,000.
On March 1, 2010 and March 10, 2010, the Company issued 265,517 LTIP
Units and 1,462 Restricted Shares to officers of the Company and 15,011
Restricted Shares and 1,411 LTIP Units to employees of the Company. Vesting
with respect to these awards is recognized ratably over the five annual
anniversaries following the issuance date. Vesting on 23% of the awards issued
to officers are also generally subject to achieving certain Company performance
measures. LTIP Units are similar to Restricted Shares but provide for a
quarterly partnership distribution in a like amount as paid to Common OP Units.
This distribution is paid on both unvested and vested LTIP Units. The LTIP
Units are convertible into Common OP Units and Common Shares upon vesting and a
revaluation of the book capital accounts.
These awards were measured at their fair value as if they were vested
on the grant date. Fair value was established as the market price of the
Companys Common Shares as of the close of trading on the day preceding the
grant date.
The total value of the above Restricted Shares and LTIP Units as of the
grant date was $4.7 million. The weighted average fair value for Restricted
Shares and LTIP Units granted for the years ended December 31, 2010, 2009 and
2008 were $16.73, $10.31 and $24.51, respectively.
Total long-term incentive compensation expense, including the expense
related to the above mentioned plans, was $3.8 million, $3.7 million and $3.5
million for the years ended December 31, 2010, 2009 and 2008, respectively.
F-32
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Share Incentive Plan, continued
On May 10, 2010, the Company issued 4,180 unrestricted Common Shares to
Trustees of the Company in connection with Trustee fees. The Company also
issued 8,000 Restricted Shares to Trustees, which vest over three years with
33% vesting on each of the three anniversaries following the issuance date. The
Restricted Shares do not carry voting rights or other rights of Common Shares
until vesting and may not be transferred, assigned or pledged until the
recipients have a vested non-forfeitable right to such shares. Dividends are
not paid currently on unvested Restricted Shares, but are paid cumulatively,
from the issuance date through the applicable vesting date of such Restricted
Shares vesting. Trustee fee expense of $0.1 million for the year ended December
31, 2010 has been recognized in the accompanying consolidated financial
statements related to this issuance.
During 2009, the Company adopted the Long Term Investment Alignment
Program (the Program) pursuant to which the Company may award units primarily
to senior executives which would entitle them to receive up to 25% of any
future Fund III Promote when and if such Promote is ultimately realized. As of
December 31, 2010, the Company has awarded units representing 61% of the
Program, which were determined to have no value at issuance or as of December
31, 2010. In accordance with ASC Topic 718 Compensation - Stock Compensation,
compensation relating to these awards will be recorded based on the change in
the estimated fair value at each reporting period.
As of December 31, 2010, the Company had 101,283 options outstanding to
officers and employees all of which have vested. In addition, 58,000 options
have been issued, of which all have vested, to non-employee Trustees. During
2010, 7,000 options were exercised by the Trustees at various exercise prices.
As of December 31, 2010, there are 51,000 options outstanding to Trustees of
the Company. These options are for ten-year terms from the grant date and
vested in three equal annual installments, which began on their respective
grant dates.
A summary of option activity under all option arrangements as of
December 31, 2009 and 2010, and changes during the years then ended is
presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
Shares
|
|
Weighted
Average
Exercise Price
|
|
Weighted Average
Remaining
Contractual
Term (years)
|
|
Aggregate Intrinsic
Value
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1, 2009
|
|
|
421,244
|
|
$
|
10.65
|
|
|
3.7
|
|
$
|
1,527
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(258,900
|
)
|
|
5.99
|
|
|
|
|
|
2,816
|
|
Forfeited or Expired
|
|
|
(3,061
|
)
|
|
19.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable at December 31,
2009
|
|
|
159,283
|
|
|
18.04
|
|
|
5.5
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(7,000
|
)
|
|
14.46
|
|
|
|
|
|
26
|
|
Forfeited or Expired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable at
December 31, 2010
|
|
|
152,283
|
|
$
|
18.20
|
|
|
4.5
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total
intrinsic value of options exercised during the years ended December 31,
2010, 2009 and 2008 was $0.03 million, $2.8 million and $0.8 million,
respectively.
A summary of
the status of the Companys unvested Restricted Shares and LTIP Units as of
December 31, 2009 and 2010 and changes during the years ended
December 31, 2009 and 2010, is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested
Shares and LTIP Units
|
|
Restricted
Shares
|
|
Weighted
Grant-Date
Fair Value
|
|
LTIP Units
|
|
Weighted
Grant-Date
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at January 1,
2009
|
|
|
487,434
|
|
$
|
21.37
|
|
|
181,350
|
|
$
|
24.55
|
|
Granted
|
|
|
54,960
|
|
|
10.95
|
|
|
208,796
|
|
|
10.30
|
|
Vested
|
|
|
(249,825
|
)
|
|
20.07
|
|
|
(25,472
|
)
|
|
24.60
|
|
Forfeited
|
|
|
(20,057
|
)
|
|
17.35
|
|
|
(1,841
|
)
|
|
24.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at December 31,
2009
|
|
|
272,512
|
|
|
20.76
|
|
|
362,833
|
|
|
16.35
|
|
Granted
|
|
|
24,473
|
|
|
17.32
|
|
|
266,928
|
|
|
16.73
|
|
Vested
|
|
|
(143,042
|
)
|
|
21.26
|
|
|
(67,022
|
)
|
|
15.69
|
|
Forfeited
|
|
|
(513
|
)
|
|
13.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at
December 31, 2010
|
|
|
153,430
|
|
$
|
19.75
|
|
|
562,739
|
|
$
|
16.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-33
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Employee Share Purchase and Deferred
Share Plan
As of December 31, 2010, there was $7.4 million of total
unrecognized compensation cost related to unvested share-based compensation
arrangements granted under share incentive plans. That cost is expected to be
recognized over a weighted-average period of 1.7 years. The total fair
value of Restricted Shares that vested during the years ended December 31,
2010, 2009 and 2008 was $3.0 million, $5.0 million and $2.7 million,
respectively.
The Acadia Realty Trust Employee Share Purchase Plan (the Purchase
Plan), allows eligible employees of the Company to purchase Common Shares
through payroll deductions. The Purchase Plan provides for employees to
purchase Common Shares on a quarterly basis at a 15% discount to the closing
price of the Companys Common Shares on either the first day or the last day of
the quarter, whichever is lower. A participant may not purchase more the
$25,000 in Common Shares per year. Compensation expense will be recognized by
the Company to the extent of the above discount to the closing price of the
Common Shares with respect to the applicable quarter. During 2010, 2009 and
2008, 6,184, 8,744 and 7,499 Common Shares, respectively, were purchased by
employees under the Purchase Plan. Associated compensation expense of
$0.02 million was recorded in 2010 and 2009 and $0.03 million was recorded
in 2008.
During August of 2004, the Company adopted a Deferral and Distribution
Election pursuant to the 1999 Share Incentive Plan and 2003 Share Incentive
Plan, whereby the participants elected to defer receipt of 190,487 Common
Shares (Share Units) that otherwise would have been issued upon the exercise
of certain options. In January 2009, these Share Units were converted to
190,487 Common Shares and issued to the recipients and 83,433 of these Common
Shares were cancelled to pay for the participants income taxes.
During May of 2006, the Company adopted a Trustee Deferral and
Distribution Election (Trustee Deferral Plan) whereby the participating
Trustees have deferred compensation of $0.06 million, $0.05 million and $0.4
million for 2010, 2009 and 2008, respectively. During 2009, certain trustees
elected to receive 14,722 Common Shares, which were previously deferred, from
the Trustee Deferral Plan.
17. Employee 401(k) Plan
The Company maintains a 401(k) plan for employees under which the
Company currently matches 50% of a plan participants contribution up to 6% of
the employees annual salary. A plan participant may contribute up to a maximum
of 15% of their compensation but not in excess of $16,500 for the year ended
December 31, 2010. The Company contributed $0.2 million, $0.2 million
and $0.3 million for the years ended December 31, 2010, 2009 and
2008, respectively.
18. Dividends and Distributions Payable
On November 9, 2010, the Board of Trustees declared a cash dividend for
the quarter ended December 31, 2010, of $0.18 per Common Share, which was paid
on February 1, 2011 to holders of record as of December 31, 2010.
19. Federal Income Taxes
The Company has elected to qualify as a REIT in accordance with
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended
(the Code), and intends at all times to qualify as a REIT under the Code. To
qualify as a REIT, the Company must meet a number of organizational and
operational requirements, including a requirement that it currently distribute
at least 90% of its annual REIT taxable income to its shareholders. As a REIT,
the Company generally will not be subject to corporate Federal income tax,
provided that distributions to its shareholders equal at least the amount of
its REIT taxable income as defined under the Code. As the Company distributed
sufficient taxable income for the years ended December 31, 2010, 2009 and
2008, no U.S. Federal income or excise taxes were incurred. If the Company
fails to qualify as a REIT in any taxable year, it will be subject to Federal income
taxes at the regular corporate rates (including any applicable alternative
minimum tax) and may not be able to qualify as a REIT for the four subsequent
taxable years. Even though the Company qualifies for taxation as a REIT, the
Company is subject to certain state and local taxes on its income and property
and Federal income and excise taxes on any undistributed taxable income. In
addition, taxable income from non-REIT activities managed through the Companys
Taxable REIT Subsidiary (TRS) is subject to Federal, state and local income
taxes.
F-34
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Federal Income Taxes, continued
Characterization of Distributions:
The Company
has determined that the cash distributed to the shareholders is characterized
as follows for Federal income tax purposes:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
Ordinary
income
|
|
|
100
|
%
|
|
95
|
%
|
|
54
|
%
|
Capital gain
|
|
|
|
|
|
5
|
%
|
|
46
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Taxable REIT Subsidiaries
Income taxes have been provided for using the liability method as
required by ASC Topic 740 Income Taxes. The Companys TRS income and
provision for income taxes for the years ended December 31, 2010, 2009 and
2008 are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
TRS income
before income taxes
|
|
$
|
5,716
|
|
$
|
2,671
|
|
$
|
5,870
|
|
Provision
for income taxes:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
2,164
|
|
|
1,025
|
|
|
2,441
|
|
State and local
|
|
|
543
|
|
|
292
|
|
|
763
|
|
|
|
|
|
|
|
|
|
|
|
|
TRS net
income before noncontrolling interest
|
|
|
3,009
|
|
|
1,354
|
|
|
2,666
|
|
Noncontrolling
interest
|
|
|
545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRS net
income
|
|
$
|
2,464
|
|
$
|
1,354
|
|
$
|
2,666
|
|
|
|
|
|
|
|
|
|
|
|
|
The income tax provision differs from the amount computed by applying
the statutory federal income tax rate to income before income taxes as follows
(not adjusted for temporary book/tax differences):
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
Federal provision at
statutory tax rate
|
|
$
|
1,943
|
|
$
|
908
|
|
$
|
1,996
|
|
State and local taxes, net of federal benefit
|
|
|
358
|
|
|
193
|
|
|
504
|
|
Tax effect of:
|
|
|
|
|
|
|
|
|
|
|
Permanent differences, net
|
|
|
406
|
|
|
138
|
|
|
514
|
|
Other
|
|
|
|
|
|
78
|
|
|
190
|
|
REIT state and local income and franchise taxes
|
|
|
183
|
|
|
224
|
|
|
158
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision for income taxes
|
|
$
|
2,890
|
|
$
|
1,541
|
|
$
|
3,362
|
|
|
|
|
|
|
|
|
|
|
|
|
F-35
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Earnings Per Common Share
Basic earnings per Common Share is computed using net income
attributable to common shareholders and the weighted average Common Shares
outstanding. Diluted earnings per Common Share reflect the conversion of
obligations and the assumed exercises of securities including the effects of
awards issuable under the Companys Share Incentive Plans. In accordance with
GAAP, all Common Shares used to calculate earnings per Common Share have been
adjusted to reflect a special dividend paid on January 30, 2009, which resulted
in the issuance of approximately 1.3 million additional Common Shares. The
following table sets forth the computation of basic and diluted earnings per
share from continuing operations for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
|
|
(dollars in thousands, except per share
amounts)
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
attributable to Common Shareholders
|
|
$
|
29,980
|
|
$
|
28,551
|
|
$
|
17,079
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
Preferred OP Unit distributions
|
|
|
18
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for diluted earnings per Common
Share
|
|
|
29,998
|
|
|
28,570
|
|
|
17,079
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares for basic earnings
per share
|
|
|
40,136
|
|
|
38,005
|
|
|
33,813
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
Employee share options
|
|
|
245
|
|
|
212
|
|
|
454
|
|
Convertible Preferred OP Units
|
|
|
25
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive potential Common Shares
|
|
|
270
|
|
|
237
|
|
|
454
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings per share
|
|
|
40,406
|
|
|
38,242
|
|
|
34,267
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per Common Share from
continuing operations attributable to Common Shareholders
|
|
$
|
0.75
|
|
$
|
0.75
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per Common Share from
continuing operations attributable to Common Shareholders
|
|
$
|
0.74
|
|
$
|
0.75
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average shares used in the computation of dilutive
earnings per share include unvested restricted Common Shares (Restricted
Shares) and restricted OP Units (LTIP Units) (Note 15) that are entitled to
receive dividend equivalent payments. 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 interest in subsidiaries in
the accompanying consolidated financial statements. As such, the assumed
conversion of these units would have no net impact on the determination of
diluted earnings per share. The conversion of the convertible notes payable
(Note 9) is not reflected in the table above as such conversion, based on the
market price of the Common Shares, would be settled with cash.
The effect of the assumed conversion of 188 Series A Preferred OP Units
into 25,067 Series A Preferred OP Units for the year ended December 31, 2010
and December 31, 2009 would be dilutive and they are included in the table. The
effect of the assumed conversion of 188 Series A Preferred OP Units into 25,067
Common Shares for the year ended December 31, 2008 would be anti-dilutive and
they are not included in the table.
F-36
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Summary of Quarterly Financial
Information (unaudited)
The quarterly
results of operations of the Company for the years ended December 31, 2010
and 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands, except per share amounts)
|
|
March 31,
2010
|
|
June 30,
2010
|
|
September 30,
2010
|
|
December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
37,461
|
|
$
|
36,698
|
|
$
|
39,011
|
|
$
|
38,788
|
|
Income from continuing operations
attributable to Common Shareholders
|
|
$
|
5,118
|
|
$
|
12,786
|
|
$
|
5,105
|
|
$
|
6,971
|
|
Income from discontinued operations
attributable to Common Shareholders
|
|
$
|
12
|
|
$
|
12
|
|
$
|
12
|
|
$
|
41
|
|
Net income attributable to Common
Shareholders
|
|
$
|
5,130
|
|
$
|
12,798
|
|
$
|
5,117
|
|
$
|
7,012
|
|
Net income attributable to Common
Shareholders per Common Share basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.13
|
|
$
|
0.32
|
|
$
|
0.13
|
|
$
|
0.17
|
|
Income from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
$
|
0.13
|
|
$
|
0.32
|
|
$
|
0.13
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Common
Shareholders per Common Share diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.13
|
|
$
|
0.32
|
|
$
|
0.13
|
|
$
|
0.17
|
|
Income from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
$
|
0.13
|
|
$
|
0.32
|
|
$
|
0.13
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per Common Share
|
|
$
|
0.18
|
|
$
|
0.18
|
|
$
|
0.18
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average Common Shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
39,980,646
|
|
|
40,134,706
|
|
|
40,169,141
|
|
|
40,257,378
|
|
Diluted
|
|
|
40,149,931
|
|
|
40,371,812
|
|
|
40,430,998
|
|
|
40,594,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands, except per share amounts)
|
|
March 31,
2009
|
|
June 30,
2009
|
|
September 30,
2009
|
|
December 31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
34,650
|
|
$
|
34,881
|
|
$
|
38,645
|
|
$
|
37,527
|
|
Income from continuing operations
attributable to Common Shareholders
|
|
$
|
9,341
|
|
$
|
7,104
|
|
$
|
7,264
|
|
$
|
4,842
|
|
Income from discontinued operations
attributable to Common Shareholders
|
|
$
|
958
|
|
$
|
31
|
|
$
|
43
|
|
$
|
1,550
|
|
Net income attributable to Common
Shareholders
|
|
$
|
10,299
|
|
$
|
7,135
|
|
$
|
7,307
|
|
$
|
6,392
|
|
Net income attributable to Common
Shareholders per Common Share basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.27
|
|
$
|
0.18
|
|
$
|
0.18
|
|
$
|
0.12
|
|
Income from discontinued operations
|
|
$
|
0.03
|
|
|
|
|
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
$
|
0.30
|
|
$
|
0.18
|
|
$
|
0.18
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Common
Shareholders per Common Share diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.27
|
|
$
|
0.18
|
|
$
|
0.18
|
|
$
|
0.12
|
|
Income from discontinued operations
|
|
$
|
0.03
|
|
|
|
|
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
$
|
0.30
|
|
$
|
0.18
|
|
$
|
0.18
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per Common Share
|
|
$
|
0.21
|
|
$
|
0.18
|
|
$
|
0.18
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average Common Shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
33,902,958
|
|
|
38,592,289
|
|
|
39,685,623
|
|
|
39,756,060
|
|
Diluted
|
|
|
34,050,446
|
|
|
38,804,108
|
|
|
39,967,714
|
|
|
40,037,555
|
|
F-37
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22. Commitments and Contingencies
Under various Federal, state and local laws, ordinances and regulations
relating to the protection of the environment, a current or previous owner or
operator of real estate may be liable for the cost of removal or remediation of
certain hazardous or toxic substances disposed, stored, generated, released,
manufactured or discharged from, on, at, under, or in a property. As such, the
Company may be potentially liable for costs associated with any potential
environmental remediation at any of its formerly or currently owned properties.
The Company conducts Phase I environmental reviews with respect to
properties it acquires. These reviews include an investigation for the presence
of asbestos, underground storage tanks and polychlorinated biphenyls (PCBs).
Although such reviews are intended to evaluate the environmental condition of
the subject property as well as surrounding properties, there can be no
assurance that the review conducted by the Company will be adequate to identify
environmental or other problems that may exist. Where a Phase II assessment is
so recommended, a Phase II assessment is conducted to further determine the
extent of possible environmental contamination. In all instances where a Phase
I or II assessment has resulted in specific recommendations for remedial
actions, the Company has either taken or scheduled the recommended remedial
action. To mitigate unknown risks, the Company has obtained environmental
insurance for most of its properties, which covers only unknown environmental
risks.
The Company believes that it is in compliance in all material respects
with all Federal, state and local ordinances and regulations regarding
hazardous or toxic substances. Management is not aware of any environmental
liability that it believes would have a material adverse impact on the
Companys financial position or results of operations. Management is unaware of
any instances in which the Company would incur significant environmental costs
if any or all properties were sold, disposed of or abandoned. However, there
can be no assurance that any such non-compliance, liability, claim or
expenditure will not arise in the future.
The Company is involved in various matters of litigation arising in the
normal course of business. While the Company is unable to predict with
certainty the amounts involved, the Companys management and counsel are of the
opinion that, when such litigation is resolved, the Companys resulting
liability, if any, will not have a significant effect on the Companys
consolidated financial position, results of operations, or liquidity.
In September 2008, the Company, certain of its subsidiaries, and other
unrelated entities were named as defendants in an adversary proceeding brought
by Mervyns LLC (Mervyns) in the United States Bankruptcy Court for the
District of Delaware. This lawsuit involves five claims alleging fraudulent
transfers. The first claim is that, at the time of the sale of Mervyns by
Target Corporation to a consortium of investors including Acadia, a transfer of
assets was made in an effort to defraud creditors. The Company believes this
aspect of the case is without merit. There are four other claims relating to
transfers of assets of Mervyns at various times. The Company believes there are
substantial defenses to these claims. The matter is in the early stages of
discovery and the Company believes the lawsuit will not have a material adverse
effect on its results of operations, consolidated financial condition, or
liquidity.
During August 2009, the Company terminated the employment of a former
Senior Vice President (the Former Employee) for engaging in conduct that fell
within the definition of cause in his severance agreement with the Company.
Had the Former Employee not been terminated for cause, he would have been
eligible to receive approximately $0.9 million under the severance agreement.
Because the Company terminated him for cause, it did not pay the Former
Employee any severance benefits under the agreement. The Former Employee has
brought a lawsuit against the Company in New York State Supreme Court, alleging
breach of the severance agreement. The suit is in the pre-trial discovery
stage. The Company believes it has meritorious defenses to the suit.
The Company has arranged for the provision of three separate letters of
credit in connection with certain leases and investments. As of December 31,
2010, there were no outstanding balances under any of the letters of credit. If
the letters of credit were fully drawn, the combined maximum amount of exposure
would be $9.1 million.
F-38
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
23. Subsequent Events
During January 2011, the Company completed the sale of a Fund II
leasehold interest in the Neiman Marcus location at Oakbrook Center, located in
Oak Brook, Illinois, for $8.2 million. The sale resulted in a gain of $3.9
million.
During January 2011, the Company paid off a $9.3 million loan secured
by one of the Companys properties for $7.5 million, resulting in a $1.8
million gain.
During February 2011, the Company, through Fund III in a joint venture
with an unaffiliated partner, acquired a three property portfolio (the
Portfolio) for an aggregate purchase price of $51.9 million with $20.6
million of in-place mortgage financing assumed at closing. The Portfolio
consists of three street-retail properties, aggregating 61,000 square feet, and
is located in South Miami Beach, Florida.
During February 2011, the Company, through Fund III in a joint venture
with an unaffiliated partner, acquired a 64,600 square foot single tenant
retail property located in Silver Springs, Maryland, for approximately $9.8
million.
F-39
ACADIA REALTY TRUST
S
CHEDULE III-REAL ESTATE AND ACCUMULATED
DEPRECIATION
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost
to Company
|
|
Costs
Capitalized
Subsequent to
Acquisition
|
|
Amount at which
Carried at December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of
Acquisition (a)
Construction (c)
|
|
|
|
|
|
Land
|
|
Buildings &
Improvements
|
|
|
Land
|
|
Buildings &
Improvements
|
|
Total
|
|
Accumulated
Depreciation
|
|
|
Description
|
|
Encumbrances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping Centers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crescent Plaza
Brockton, MA
|
|
$
|
17,539
|
|
$
|
1,147
|
|
$
|
7,425
|
|
$
|
1,219
|
|
$
|
1,147
|
|
$
|
8,644
|
|
$
|
9,791
|
|
$
|
5,849
|
|
|
1984
|
(a)
|
New Loudon Center
Latham, NY
|
|
|
14,119
|
|
|
505
|
|
|
4,161
|
|
|
11,375
|
|
|
505
|
|
|
15,536
|
|
|
16,041
|
|
|
11,266
|
|
|
1982
|
(a)
|
Ledgewood Mall
Ledgewood, NJ
|
|
|
|
|
|
619
|
|
|
5,434
|
|
|
33,199
|
|
|
619
|
|
|
38,633
|
|
|
39,252
|
|
|
34,042
|
|
|
1983
|
(a)
|
Mark Plaza
Edwardsville, PA
|
|
|
|
|
|
|
|
|
4,268
|
|
|
4,690
|
|
|
|
|
|
8,958
|
|
|
8,958
|
|
|
6,655
|
|
|
1968
|
(c)
|
Plaza 422
Lebanon, PA
|
|
|
|
|
|
190
|
|
|
3,004
|
|
|
2,192
|
|
|
190
|
|
|
5,196
|
|
|
5,386
|
|
|
3,690
|
|
|
1972
|
(c)
|
Route 6 Mall
Honesdale, PA
|
|
|
|
|
|
1,664
|
|
|
|
|
|
11,166
|
|
|
1,664
|
|
|
11,166
|
|
|
12,830
|
|
|
6,020
|
|
|
1994
|
(c)
|
Bartow Avenue
Bronx, NY
|
|
|
|
|
|
1,691
|
|
|
5,803
|
|
|
560
|
|
|
1,691
|
|
|
6,363
|
|
|
8,054
|
|
|
1,459
|
|
|
2005
|
(c)
|
Amboy Rd.
Shopping Ctr.
Staten Island, NY
|
|
|
|
|
|
|
|
|
11,909
|
|
|
1,519
|
|
|
|
|
|
13,428
|
|
|
13,428
|
|
|
1,843
|
|
|
2005
|
(a)
|
Abington Towne
Center
1
Abington, PA
|
|
|
|
|
|
799
|
|
|
3,197
|
|
|
2,007
|
|
|
799
|
|
|
5,204
|
|
|
6,003
|
|
|
2,304
|
|
|
1998
|
(a)
|
Bloomfield Town
Square
1
Bloomfield Hills, MI
|
|
|
|
|
|
3,207
|
|
|
13,774
|
|
|
12,189
|
|
|
3,207
|
|
|
25,963
|
|
|
29,170
|
|
|
8,805
|
|
|
1998
|
(a)
|
Walnut Hill Plaza
Woonsocket, RI
|
|
|
23,500
|
|
|
3,122
|
|
|
12,488
|
|
|
1,840
|
|
|
3,122
|
|
|
14,328
|
|
|
17,450
|
|
|
4,963
|
|
|
1998
|
(a)
|
Elmwood Park
Plaza
Elmwood Park, NJ
|
|
|
34,197
|
|
|
3,248
|
|
|
12,992
|
|
|
14,715
|
|
|
3,798
|
|
|
27,157
|
|
|
30,955
|
|
|
10,946
|
|
|
1998
|
(a)
|
Merrillville
Plaza
Hobart, IN
|
|
|
26,250
|
|
|
4,288
|
|
|
17,152
|
|
|
1,653
|
|
|
4,288
|
|
|
18,805
|
|
|
23,093
|
|
|
6,579
|
|
|
1998
|
(a)
|
Marketplace of
Absecon
1
Absecon, NJ
|
|
|
|
|
|
2,573
|
|
|
10,294
|
|
|
3,529
|
|
|
2,577
|
|
|
13,819
|
|
|
16,396
|
|
|
4,628
|
|
|
1998
|
(a)
|
Clark Diversey
Chicago, IL
|
|
|
4,625
|
|
|
10,061
|
|
|
2,773
|
|
|
83
|
|
|
10,061
|
|
|
2,856
|
|
|
12,917
|
|
|
360
|
|
|
2006
|
(a)
|
Boonton
Boonton, NJ
|
|
|
8,033
|
|
|
1,328
|
|
|
7,188
|
|
|
|
|
|
1,328
|
|
|
7,188
|
|
|
8,516
|
|
|
883
|
|
|
2006
|
(a)
|
Chestnut Hill
Philadelphia, PA
|
|
|
9,338
|
|
|
8,289
|
|
|
5,691
|
|
|
44
|
|
|
8,289
|
|
|
5,735
|
|
|
14,024
|
|
|
650
|
|
|
2006
|
(a)
|
Third Avenue
Bronx, NY
|
|
|
|
|
|
11,108
|
|
|
8,038
|
|
|
440
|
|
|
11,855
|
|
|
7,731
|
|
|
19,586
|
|
|
|
|
|
2006
|
(a)
|
Hobson West Plaza
1
Naperville, IL
|
|
|
|
|
|
1,793
|
|
|
7,172
|
|
|
1,567
|
|
|
1,793
|
|
|
8,739
|
|
|
10,532
|
|
|
2,943
|
|
|
1998
|
(a)
|
Village Commons
Shopping Center
Smithtown, NY
|
|
|
9,305
|
|
|
3,229
|
|
|
12,917
|
|
|
2,462
|
|
|
3,229
|
|
|
15,379
|
|
|
18,608
|
|
|
5,632
|
|
|
1998
|
(a)
|
Town Line Plaza
1
Rocky Hill, CT
|
|
|
|
|
|
878
|
|
|
3,510
|
|
|
7,303
|
|
|
907
|
|
|
10,784
|
|
|
11,691
|
|
|
7,668
|
|
|
1998
|
(a)
|
Branch Shopping
Center
Village of the Branch, NY
|
|
|
13,932
|
|
|
3,156
|
|
|
12,545
|
|
|
865
|
|
|
3,156
|
|
|
13,410
|
|
|
16,566
|
|
|
4,454
|
|
|
1998
|
(a)
|
The Methuen
Shopping Center
1
Methuen, MA
|
|
|
|
|
|
956
|
|
|
3,826
|
|
|
594
|
|
|
961
|
|
|
4,415
|
|
|
5,376
|
|
|
1,510
|
|
|
1998
|
(a)
|
Gateway Shopping
Center
Burlington, VT
|
|
|
20,500
|
|
|
1,273
|
|
|
5,091
|
|
|
11,536
|
|
|
1,273
|
|
|
16,627
|
|
|
17,900
|
|
|
4,947
|
|
|
1999
|
(a)
|
Mad River Station
Dayton, OH
|
|
|
|
|
|
2,350
|
|
|
9,404
|
|
|
1,046
|
|
|
2,350
|
|
|
10,450
|
|
|
12,800
|
|
|
3,215
|
|
|
1999
|
(a)
|
Pacesetter Park
Shopping Center
Ramapo, NY
|
|
|
12,132
|
|
|
1,475
|
|
|
5,899
|
|
|
1,121
|
|
|
1,475
|
|
|
7,020
|
|
|
8,495
|
|
|
2,544
|
|
|
1999
|
(a)
|
239 Greenwich
Greenwich, CT
|
|
|
26,000
|
|
|
1,817
|
|
|
15,846
|
|
|
549
|
|
|
1,817
|
|
|
16,395
|
|
|
18,212
|
|
|
4,852
|
|
|
1998
|
(a)
|
West Shore
Expressway
Staten Island, NY
|
|
|
|
|
|
3,380
|
|
|
13,554
|
|
|
10
|
|
|
3,380
|
|
|
13,564
|
|
|
16,944
|
|
|
1,429
|
|
|
2007
|
(a)
|
West 54th Street
Manhattan, NY
|
|
|
|
|
|
16,699
|
|
|
18,704
|
|
|
28
|
|
|
16,699
|
|
|
18,732
|
|
|
35,431
|
|
|
1,751
|
|
|
2007
|
(a)
|
Acadia 5-7 East
17th Street
Manhattan, NY
|
|
|
|
|
|
3,048
|
|
|
7,281
|
|
|
|
|
|
3,048
|
|
|
7,281
|
|
|
10,329
|
|
|
540
|
|
|
2008
|
(a)
|
F-40
ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED
DEPRECIATION
December 31, 2010
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Initial Cost
to Company
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Costs
Capitalized
Subsequent to
Acquisition
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Amount at which
Carried at December 31, 2010
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Date of
Acquisition (a)
Construction (c)
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Land
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Buildings &
Improvements
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Land
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Buildings &
Improvements
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Total
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Accumulated
Depreciation
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Description
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Encumbrances
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Fund I:
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Tarrytown Centre
Westchester, NY
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$
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8,427
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$
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2,323
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$
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7,396
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$
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359
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$
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2,323
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$
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7,755
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$
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10,078
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$
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1,379
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2004
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(a)
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Granville Center
Columbus, OH
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2,186
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8,744
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71
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2,186
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8,815
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11,001
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1,864
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2002
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(a)
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Kroger/Safeway
Various
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34,586
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34,586
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34,586
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31,926
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2003
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(a)
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Fund II:
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Liberty Avenue
New York, NY
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10,000
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12,627
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540
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13,167
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13,167
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1,372
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2005
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(a)
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Pelham Manor
Westchester, NY
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31,554
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61,648
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61,648
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61,648
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3,639
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2004
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(a)
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400 E. Fordham
Road
Bronx, NY
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85,910
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11,144
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18,010
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93,356
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16,254
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106,256
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122,510
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6,327
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2004
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(a)
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4650
Broadway/Sherman Ave
New York, NY
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25,267
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7,744
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25,267
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7,744
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33,011
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2005
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(a)
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216th Street
New York, NY
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25,500
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7,261
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19,146
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7,261
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19,146
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26,407
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1,882
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2005
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(a)
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161st Street
Bronx, NY
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28,900
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16,679
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28,410
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10,574
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16,679
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38,984
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55,663
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3,914
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2005
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(a)
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Atlantic Avenue
Brooklyn, NY
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11,540
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5,322
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15,176
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5,322
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15,176
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20,498
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553
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2007
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(a)
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Canarsie Plaza
Brooklyn, NY
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40,243
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32,543
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80,036
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32,543
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80,036
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112,579
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287
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2007
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(a)
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CityPoint
Brooklyn, NY
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40,650
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2,564
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112,047
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114,611
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114,611
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ASOF II, LLC
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40,000
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Fund III:
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125 Main Street
Assoc.
Westport, CT
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12,993
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4,316
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2,598
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12,993
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6,914
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19,907
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91
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2007
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(a)
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Sheepshead Bay
Brooklyn, NY
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20,391
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4,257
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20,391
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4,257
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24,648
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2007
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(a)
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Suffern Self
Storage
Suffern, NY
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4,561
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7,484
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11
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4,561
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7,495
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12,056
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597
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2008
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(a)
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Linden Self
Storage
2
Linden, NJ
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3,515
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6,139
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15
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3,515
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6,154
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9,669
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528
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2008
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(a)
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Webster Self
Storage
2
Bronx, NY
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959
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5,506
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27
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959
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5,533
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6,492
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431
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2008
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(a)
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Jersey City Self
Storage
2
Jersey City, NJ
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2,377
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9,654
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12
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2,377
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9,666
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12,043
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779
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2008
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(a)
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Bronx Self
Storage
2
Bronx, NY
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10,835
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5,936
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22
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10,835
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5,958
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16,793
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502
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2008
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(a)
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Lawrence Self
Storage
2
Lawrence, NY
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6,977
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12,688
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6
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6,977
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12,694
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19,671
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938
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2008
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(a)
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Starr Avenue Self
Storage
Queens, NY
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7,597
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22,391
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189
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7,597
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22,580
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30,177
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1,768
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2008
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(a)
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New Rochelle Self
Storage
Westchester, NY
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1,977
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4,769
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339
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1,977
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5,108
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7,085
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391
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2008
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(a)
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Yonkers Self
Storage
Westchester, NY
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3,121
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17,457
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93
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3,121
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17,550
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20,671
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1,295
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2008
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(a)
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Bruckner Blvd.
Self Storage
Bronx, NY
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6,244
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10,551
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38
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6,244
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10,589
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16,833
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806
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2008
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(a)
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Ridgewood Self
Storage
Queens, NY
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8,000
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13,859
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8,000
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13,859
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21,859
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589
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2008
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(c)
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Document Storage
New York City, NY
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1,080
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1,080
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1,080
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134
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2008
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(a)
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Cortlandt Towne
Center
Cortlandt, NY
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50,000
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7,293
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64,878
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7,293
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64,878
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72,171
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5,501
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2009
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(a)
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ASOF III, LLC
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171,450
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Undeveloped land
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251
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251
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251
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Properties under
development
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4,400
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4,400
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Total
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$
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806,144
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$
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293,709
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$
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470,568
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$
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617,622
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$
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300,154
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$
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1,086,145
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$
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1,386,299
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$
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219,920
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Notes:
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(1)
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These properties serve as collateral for the
financing with Bank of America, N.A. in the amount of $1,000
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(2)
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These properties serve as collateral for the
financing with GEMSA, in the amount of $41,500
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F-41
ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2010
1.
Depreciation on buildings and improvements reflected in the statements of
income is calculated over the estimated useful life of the assets as follows:
Buildings: 30
to 40 years
Improvements: Shorter of lease term or useful life
2. The
aggregate gross cost of property included above for Federal income tax purposes
was $1,292.0 million as of December 31, 2010
3. (a)
Reconciliation of Real Estate Properties:
The following
table reconciles the real estate properties from January 1, 2008 to December
31, 2010:
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For the years ended December 31,
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(dollars
in thousands)
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2010
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2009
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2008
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Balance at beginning of
year
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$
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1,200,483
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$
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1,085,072
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$
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811,893
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Other improvements
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185,816
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46,723
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103,476
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Property Acquired
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68,688
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169,703
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Balance at end of year
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$
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1,386,299
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$
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1,200,483
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$
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1,085,072
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3. (b)
Reconciliation of Accumulated Depreciation:
The following
table reconciles accumulated depreciation from January 1, 2008 to December 31,
2010:
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For the years ended December 31,
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(dollars
in thousands)
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2010
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2009
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2008
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Balance at beginning of
year
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$
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191,307
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$
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163,214
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$
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141,044
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Depreciation related to
real estate
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28,613
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28,093
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22,170
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Balance at end of year
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$
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219,920
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$
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191,307
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$
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163,214
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F-42
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