Acadia Realty Trust (NYSE: AKR) today reported operating results
for the quarter and year ended December 31, 2011. All per share
amounts are on a fully diluted basis.
Fourth Quarter and Full Year 2011
Highlights
Earnings - Consistent With Guidance
- Funds from operations (“FFO”) of $0.25
per share for fourth quarter 2011 and $0.97 for full year 2011
- Earnings per share (“EPS”) from
continuing operations of $0.09 for fourth quarter 2011 and $0.49
for full year 2011
Core Portfolio – Acquisition Pipeline and Re-anchoring
Progress
- During fourth quarter, entered into
contracts to acquire two properties aggregating approximately $22.7
million
- Year-to-date closed on $73.8 million of
approximately $181.1 million of acquisitions under contract
- Re-anchoring progress continues on
three core portfolio re-anchoring projects which are 77% leased on
an aggregate basis at year-end 2011
- December 31, 2011 physical occupancy of
89.8%; leased occupancy of 92.7% including executed re-anchoring
leases
- Excluding the impact of re-anchoring
activities, same store net operating income (“NOI”) for the fourth
quarter up 1.3% compared to 2010; including this impact, same store
NOI decreased 4.7%
Opportunity Funds – Fund III Acquisition Pipeline; Fund I
Continues Monetization
- Fund III acquired three properties
during fourth quarter for an aggregate purchase price of $46.5
million
- Year-to-date, Fund III closed on $139.8
million of approximately $171.3 million of acquisitions under
contract
- During fourth quarter, Fund I sold 16
properties for an aggregate gross sales price of $19.8 million
which generated a net gain of $4.0 million, net of noncontrolling
interests’ share
Balance Sheet – Securing Capital to Fund Acquisition
Pipelines
- Raised approximately $45.0 million of
net proceeds during the fourth quarter from public equity
offering
- During the fourth quarter, repurchased
$24.0 million of the Company’s outstanding convertible debt
- Core portfolio debt net of cash on hand
(“Net Debt”) to EBITDA ratio of 4.0x at December 31, 2011
- Combined Net Debt to Total Market
Capitalization of 27% at December 31, 2011
- Cash on hand and availability under
current credit facilities of $126 million at December 31, 2011
Fourth Quarter 2011 Operating
Results
FFO and Net Income from Continuing Operations for the quarter
ended December 31, 2011 were $10.8 million and $3.8 million,
respectively, as compared to $12.1 million and $6.6 million,
respectively, for the quarter ended December 31, 2010. For the year
ended December 31, 2011, FFO and Net Income from Continuing
Operations were $40.3 million and $20.1 million, respectively,
compared to $50.5 million and $28.3 million, respectively, for the
year ended December 31, 2010.
Earnings for the quarters and years ended December 31, 2011 and
2010, on a per share basis, were as follows:
Quarters ended December
31, Years ended December 31,
2011 2010
Variance 2011
2010 Variance FFO per share
$ 0.25 $ 0.30
$ (0.05 ) $
0.97 $ 1.23 $
(0.26 ) EPS from continuing operations
$ 0.09 $ 0.16
$ (0.07 ) $
0.49 $ 0.70 $
(0.21 ) EPS
$
0.19 $ 0.17 $
0.02 $ 1.26
$ 0.74 $ 0.52
The following significant items contributed to the above
variances in EPS from continuing operations:
Variance 2011 v. 2010
Quarter Year 2010 additional
mortgage interest income $ (0.04 ) $ (0.19 ) 2011 gain on
extinguishment of debt
--
0.03
2011 rents from new acquisitions and redevelopment projects placed
in service 0.03 0.08 Income tax provision (0.01 ) 0.04 2010 RCP
Venture income, net of noncontrolling interests’ share and income
taxes (0.04 ) (0.03 ) 2010 non-cash gain on purchase of interest in
City Point, net of noncontrolling interests -- (0.16 ) Other items,
net
(0.01 )
0.02 Total variance
$
(0.07 ) $ (0.21
)
EPS from discontinued operations of $0.77 for the year ended
December 31, 2011 was primarily attributable to (i) a $4.0 million
gain, net of noncontrolling interests’ share, on the sale of 16
Fund I properties, (ii) a $28.6 million gain from the sale of the
Ledgewood Mall and (iii) a $0.8 million gain, net of noncontrolling
interests’ share, on the sale of a Fund II leasehold interest at
the Oakbrook Center.
Core Portfolio
Acadia’s core portfolio is comprised of properties that are
owned in whole or in part by Acadia outside of its three
opportunity funds (the “Funds”).
Asset Recycling and Acquisition Activity –
Investments in Urban/Street Retail
During the fourth quarter 2011, Acadia entered into contracts to
acquire two properties for an aggregate purchase price of $22.7
million. Year-to-date, the Company has entered into contracts or
closed on 31 street and urban retail properties located primarily
in Chicago, Washington, DC (Georgetown), Cambridge, Massachusetts
and New York City for an aggregate purchase price of $181.1
million. Acadia has closed on 15 of these properties for an
aggregate purchase price of $73.8 million through year-end.
The Company is currently awaiting lender’s approval for the
assumption of $51.7 million of first mortgage debt collateralized
by 15 of the remaining 16 locations under contract prior to closing
on these properties.
The closings of these transactions currently under contract,
which are anticipated to be completed during the first quarter of
2012, are subject to customary closing conditions and in certain
instances, lender approval. As such, no assurance can be given that
the Company will successfully complete these transactions.
Core Portfolio Anchor Recycling
As previously announced during 2011, Acadia commenced the
re-anchoring of the Bloomfield Town Square, located in Bloomfield
Hills, Michigan, and two former A&P supermarket locations
located in the New York City metropolitan area (collectively, the
“Re-anchoring Activities”). As of December 31, 2011, 77% of this
aggregate space has been leased with tenants at the Bloomfield Town
Square expected to open during the second half of 2012.
Occupancy and Same-Store NOI
At December 31, 2011, Acadia’s core portfolio occupancy was
89.8% which was consistent with third quarter 2011. Including the
square footage leased, but not yet occupied, in connection with the
Re-Anchoring Activities, the core portfolio is 92.7% leased. The
remaining space anticipated to be leased in connection with the
Re-Anchoring Activities represents an additional 90 basis points of
portfolio occupancy.
Excluding the impact of the Re-anchoring Activities, core
portfolio same-store NOI increased 1.3% for the fourth quarter 2011
over fourth quarter 2010 and increased 0.1% for the year ended
December 31, 2011, compared to 2010. Including the impact of the
Re-anchoring Activities, core portfolio same-store NOI decreased
4.7% for the fourth quarter 2011 and decreased 4.1% for the year
ended December 31, 2011, compared to 2010.
Rent Spreads on New and Renewal
Leases
The Company realized an increase in average rents of 14.1% in
its core portfolio on 100,000 square feet of new and renewal leases
executed during the fourth quarter of 2011. Excluding the effect of
the straight-lining of rents, the Company experienced an increase
of 2.2% in average rents in its core portfolio.
Opportunity Funds – Fund III Acquisition Pipeline; Fund I
Continues Monetization
Fund III Acquisitions
During the fourth quarter, Fund III acquired three properties
for an aggregate purchase price of $46.5 million and was under
contract to purchase one property for $31.5 million as follows:
- New Hyde Park Shopping Center - a
31,500 square foot planned redevelopment located in New Hyde Park,
New York,
- Parkway Crossing - a 260,000 square
foot project located in Baltimore, Maryland which includes the
re-anchoring of a former A&P store with a Shop Rite supermarket
,
- 654 Broadway - an 18,700 square foot
urban/street retail property located in the Noho district of New
York City with redevelopment potential, and
- Lincoln Park Centre (currently under
contract) – a 62,700 square foot re-anchoring project (former
Border Books store) located in Lincoln Park’s Clybourn Corridor in
Chicago, Illinois adjacent to the newly developed Apple store.
Year-to-date, Fund III has closed on, or is under contract for,
seven acquisitions aggregating $171.3 million. The closing of the
transaction currently under contract is subject to customary
closing conditions and in certain instances, lender approval. As
such, no assurance can be given that the Company will successfully
complete this transaction.
Fund I – Dispositions
During the fourth quarter 2011, Fund I sold 15 of its remaining
18 Kroger/Safeway locations for approximately $17.5 million and the
Granville Centre for $2.3 million. These sales generated a net gain
of $4.0 million, net of noncontrolling interests’ share.
Balance Sheet – Securing Capital to Fund Acquisition
Pipelines
During the fourth quarter, Acadia issued 2.25 million Common
Shares, which generated net proceeds of approximately $45.0
million. In addition, during January 2012, the Company established
an at-the-market (“ATM”) equity program with an aggregate offering
price up to $75.0 million. Acadia intends to use the net proceeds
of these offerings, in part, to fund the core and its share of the
Fund acquisition activities as discussed above.
During December 2011, Acadia repurchased $24.0 million of its
outstanding convertible debt. Following this repurchase, the
Company’s outstanding convertible notes payable balance was $0.9
million as of December 31, 2011.
Acadia continues to maintain a secure balance sheet with
available liquidity, low leverage and limited interest rate
exposure as evidenced by the following:
- As of December 31, 2011, the Company
had total liquidity of $126 million, including $63 million of cash
on hand and $63 million available under existing lines of credit,
excluding the Funds’ cash and credit facilities
- Core portfolio Net Debt to EBITDA ratio
of 4.0x
- Including the Company’s pro-rata share
of the Fund debt (“Combined”), a Net Debt to EBITDA ratio of
4.9x
- Combined Net Debt to Total Market
Capitalization of 27% and Combined Debt to Total Market
Capitalization of 31%
- Core portfolio fixed-charge coverage
ratio of 2.6 to 1
- Combined fixed-charge coverage ratio,
including the core portfolio and the Company’s pro- rata share of
the Funds, was 3.0 to 1
- 100% of the Company’s core portfolio
debt is fixed at an average interest rate of 6.1%
- 82% of the Company’s Combined debt is
fixed at an average interest rate of 5.5%
Outlook - Earnings Guidance for
2012
The Company forecasts its 2012 annual FFO will range from $1.00
to $1.05 per share and 2012 EPS from $0.54 to $0.60. The following
table summarizes management’s 2012 guidance (dollars in millions,
except per share amounts):
2012 2011 Low High Actual
Core and pro-rata share of Fund portfolio income $ 49.5 $
52.5 $ 43.9 Asset and property management fee income, net of taxes
14.0 14.5 12.1 Transactional fee income, net of taxes 5.0 6.5 6.2
Promote income from Funds, RCP Venture and other income, net of
taxes 0.5 1.0 1.5 General and administrative expense (23.5 )
(24.0 ) (23.4 ) FFO $ 45.5 $ 50.5 $
40.3 FFO per share $ 1.00 $ 1.05 $ 0.97
The following is a reconciliation of the calculation of
forecasted FFO per diluted share and earnings per diluted
share:
Guidance Range for
2012
Low High Earnings per diluted share $ 0.54 $ 0.60
Depreciation of real estate and amortization of leasing costs:
Wholly owned and consolidated partnerships 0.41 0.40 Unconsolidated
partnerships 0.04 0.04 Noncontrolling interest in Operating
Partnership 0.01 0.01 FFO $ 1.00 $ 1.05
For the core portfolio, the Company is assuming occupancy to
increase up to 400 basis points by the end of 2012 and for
same-store NOI to increase, on average, between 2% and 3% for the
year. During the first half of 2012, the Re-Anchoring Activities as
discussed above will continue to impact same-store NOI unfavorably,
but are expected to contribute positively to this portfolio measure
during the second half of 2012. Similarly, the Re-Anchoring
Activities and forecasted 2012 core and Fund investments are
anticipated to be key drivers to earnings growth, primarily in the
second half of 2012. Management will discuss its 2012 earnings
guidance and related assumptions in further detail on its scheduled
year-end investor conference call.
Management Comments
“I am pleased with our fourth quarter results, which continued
to show the progress that we made throughout 2011 with our key
growth initiatives,” stated Kenneth F. Bernstein, President and CEO
of Acadia Realty Trust. “This includes progress in our core
portfolio through both the profitable re-anchoring of several
important projects as well as meaningful additions to our street
and urban retail portfolio. Upon the anticipated closing of these
investments, we will have added $181 million of high quality
properties, located in New York City, Chicago, Washington, DC and
Cambridge, Massachusetts to our already strong core portfolio. We
also added several exciting value-add investments through our Fund
III platform. The contributions from all of these activities will
have an important impact to our earnings in the second half of this
year and will make important long-term contributions to our
portfolio going forward.”
Investor Conference Call
Management will conduct a conference call on Wednesday, February
8, 2012 at 12:00 PM ET to review the Company's earnings and
operating results. The live conference call can be accessed by
dialing 866-362-4666 (internationally 617-597-5313). The pass code
is “Acadia”. The call will also be webcast and can be accessed in a
listen-only mode at Acadia's web site at www.acadiarealty.com. If
you are unable to participate during the live webcast, the call
will be archived and available on Acadia's website. Alternatively,
to access the replay by phone, dial 888-286-8010 (internationally
617-801-6888), and the passcode will be 72203050. The phone replay
will be available through Wednesday, February 15, 2012.
About Acadia Realty Trust
Acadia Realty Trust, a fully-integrated equity real estate
investment trust, is focused on the acquisition, ownership,
management and redevelopment of high-quality retail properties and
urban/infill mixed-use properties with a strong retail component
located primarily in high-barrier-to-entry, densely-populated
metropolitan areas along the East Coast and in Chicago. Acadia
owns, or has an ownership interest in, 83 properties through its
core portfolio and three opportunistic/value-add investment funds.
Additional information may be found on the Company’s website at
www.acadiarealty.com.
Certain matters in this press release may constitute
forward-looking statements within the meaning of federal securities
law and as such may involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performances
or achievements of Acadia to be materially different from any
future results, performances or achievements expressed or implied
by such forward-looking statements. These forward-looking
statements include statements regarding Acadia’s future financial
results and its ability to capitalize on potential opportunities
arising from continued economic uncertainty. Factors that could
cause the Company’s forward-looking statements to differ from its
future results include, but are not limited to, those discussed
under the headings “Risk Factors” and “Management's Discussion and
Analysis of Financial Condition and Results of Operations” in the
Company’s most recent annual report on Form 10-K filed with the SEC
on February 28, 2011 (“Form 10-K”) and other periodic reports filed
with the SEC, including risks related to: (i) the current global
financial environment and its effect on retail tenants; (ii) the
Company’s reliance on revenues derived from major tenants; (iii)
the Company’s limited control over joint venture investments; (iv)
the Company’s partnership structure; (v) real estate and the
geographic concentration of our properties; (vi) market interest
rates; (vii) leverage; (viii) liability for environmental matters;
(ix) the Company’s growth strategy; (x) the Company’s status as a
REIT; (xi) uninsured losses and (xii) the loss of key executives.
Copies of the Form 10-K and the other periodic reports Acadia files
with the SEC are available on the Company’s website at
www.acadiarealty.com. Any forward-looking statements in this press
release speak only as of the date hereof. Acadia expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in Acadia's expectations with regard
thereto or change in events, conditions or circumstances on which
any such statement is based.
ACADIA REALTY TRUST AND
SUBSIDIARIES
Financial Highlights (1)
For the Quarters and Years ended December 31, 2011 and 2010
(dollars and Common Shares in thousands,
except per share data)
For the Quarters ended For the Years ended
December
31,
December
31,
Revenues
2011
2010
2011
2010
Minimum rents $ 28,924 $ 25,399 $ 111,862 $ 97,002
Percentage rents 75 201 361 473 Mortgage interest income 1,936
3,724 11,429 19,161 Expense reimbursements 6,175 5,778 22,388
20,499 Other property income 595 700 2,444 2,486 Management fee
income 508 242 1,677
1,424 Total revenues 38,213
36,044 150,161 141,045
Operating expenses Property operating 7,574 8,892 29,371
29,223 Real estate taxes 4,894 4,353 18,686 17,255 General and
administrative 5,939 4,368 23,086 20,220 Depreciation and
amortization 8,597 7,785 32,986
28,808 Total operating expenses 27,004
25,398 104,129 95,506
Operating income 11,209 10,646 46,032 45,539
Equity in (loss) earnings of unconsolidated affiliates (1,470 )
10,361 1,555 10,971 Other interest income (expense) 57 (54 ) 276
408 Gain from bargain purchase
--
-- -- 33,805 Interest expense and other finance costs (9,511 )
(11,437 ) (37,109 ) (40,498 ) Gain on extinguishment of debt
-- -- 1,268 --
Income from continuing operations before Income taxes 285 9,516
12,022 50,225 Income tax provision 467 1,021
474 2,890 (Loss) income from
continuing operations (182 ) 8,495
11,548 47,335
ACADIA REALTY TRUST AND
SUBSIDIARIES
Financial Highlights (1)
For the Quarters and Years ended December 31, 2011 and 2010
(dollars and Common Shares in thousands,
except per share data)
For the Quarters ended For the Years ended
December
31,
December
31,
2011
2010
2011
2010
Discontinued operations: Operating income from discontinued
operations 225 887 2,262 3,332
Impairment of asset
--
--
(6,925
)
--
Gain on sale of property 14,332 --
46,830 -- Income from discontinued
operations 14,557 887 42,167
3,332 Net income 14,375
9,382 53,715 50,667 (Income)
loss attributable to noncontrolling interests: Continuing
operations 3,971 (1,906 ) 8,514 (19,075 ) Discontinued operations
(10,459 ) (464 ) (10,674 ) (1,535 ) Net
(income) loss attributable to noncontrolling interests
(6,488 ) (2,370 ) (2,160 ) (20,610 )
Net income attributable to Common Shareholders $ 7,887 $
7,012 $ 51,555 $ 30,057
Supplemental
Information Income from continuing operations attributable to
Common Shareholders $ 3,789 $ 6,589 $ 20,062 $ 28,260 Income from
discontinued operations attributable to Common Shareholders
4,098 423 31,493 1,797
Net income attributable to Common Shareholders $ 7,887
$ 7,012 $ 51,555 $ 30,057 Net
income attributable to Common Shareholders per Common Share – Basic
Net income per Common Share – Continuing operations $ 0.09 $ 0.16 $
0.50 $ 0.70 Net income per Common Share – Discontinued operations
0.10 0.01 0.77
0.05 Net income per Common Share $ 0.19 $ 0.17
$ 1.27 $ 0.75 Weighted average Common Shares
41,785 40,257 40,697
40,136 Net income attributable to Common Shareholders per
Common Share – Diluted
2 Net income per Common Share –
Continuing operations $ 0.09 $ 0.16 $ 0.49 $ 0.70 Net income per
Common Share – Discontinued operations 0.10
0.01 0.77 0.04 Net income per
Common Share $ 0.19 $ 0.17 $ 1.26 $ 0.74
Weighted average Common Shares 42,066
40,594 40,986 40,406
ACADIA REALTY TRUST AND
SUBSIDIARIES
Financial Highlights (1)
For the Quarters and Years ended December 31, 2011 and 2010
(dollars and Common Shares in thousands,
except per share data)
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS (3)
For the Quarters ended For the Years ended
December
31,
December
31,
2011 2010
2011 2010 Net
income attributable to Common Shareholders $ 7,887 $ 7,012 $ 51,555
$ 30,057 Depreciation of real estate and amortization of
leasing costs (net of noncontrolling interests' share):
Consolidated affiliates 4,692 4,687 18,274 18,445 Unconsolidated
affiliates 477 374 1,549 1,561 Gain on sale (net of noncontrolling
interests' share): Consolidated affiliates
(2,356
)
--
(31,716
)
--
Unconsolidated affiliates -- -- -- -- Income attributable to
noncontrolling interests’ in Operating Partnership 99 68 635 377
Distributions – Preferred OP Units 5 5
18 18 Funds from operations $ 10,804 $ 12,146
$ 40,315 $ 50,458 Funds from operations per share – Diluted
Weighted average Common Shares and OP Units
4 42,559
40,979 41,467 40,876 Funds from
operations, per share $ 0.25 $ 0.30 $ 0.97 $ 1.23
ACADIA REALTY TRUST AND
SUBSIDIARIES
Financial Highlights (1)
For the Quarters and Years ended December 31, 2011 and 2010
(dollars in thousands)
RECONCILIATION OF OPERATING INCOME TO NET PROPERTY
OPERATING INCOME (“NOI”) (3) For the Quarters
ended For the Years ended
December
31,
December
31,
2011 2010
2011 2010
Operating income $ 11,209 $ 10,646 $ 46,032 $ 45,539 Add
back: General and administrative 5,939 4,368 23,086 20,220
Depreciation and amortization 8,597 7,785 32,986 28,808 Less:
Management fee income (508 ) (242 ) (1,677 ) (1,424 ) Mortgage
interest income (1,936 ) (3,724 ) (11,429 ) (19,161 ) Straight line
rent and other adjustments (1,785 ) (955 )
(8,712 ) (3,627 ) Consolidated NOI 21,516
17,878 80,286 70,355
Noncontrolling interest in NOI (7,255 )
(4,962 ) (25,195 ) (18,308 ) Pro-rata share of NOI $
14,261 $ 12,916 $ 55,091 $ 52,047
SELECTED BALANCE SHEET INFORMATION
As of December 31,
2011
December 31,
2010
(dollars in thousands) Cash and cash equivalents $ 89,812 $
120,592 Rental property, at cost 1,252,100 1,061,669 Total assets
1,653,319 1,524,806 Notes payable 788,840 854,924 Total liabilities
883,221 937,284
Notes:
1 For additional information and analysis concerning the
Company’s results of operations, reference is made to the Company’s
Quarterly Supplemental Disclosure furnished on Form 8-K to the SEC
and included on the Company’s website at www.acadiarealty.com.
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial HighlightsFor the Quarters and Years ended December
31, 2011 and 2010 (dollars and Common Shares in thousands,
except per share data)
Notes (continued):
2 Reflects the potential dilution that could occur if
securities or other contracts to issue Common Shares were exercised
or converted into Common Shares. The effect of the conversion of
Common OP Units is not reflected in the above table as they are
exchangeable for Common Shares on a one-for-one basis. The income
allocable to such units is allocated on this same basis and
reflected as noncontrolling interests in the consolidated financial
statements. As such, the assumed conversion of these units would
have no net impact on the determination of diluted earnings per
share.
3 The Company considers funds from operations (“FFO”) as
defined by the National Association of Real Estate Investment
Trusts (“NAREIT”) and net property operating income (“NOI”) to be
appropriate supplemental disclosures of operating performance for
an equity REIT due to its widespread acceptance and use within the
REIT and analyst communities. FFO and NOI are presented to assist
investors in analyzing the performance of the Company. They are
helpful as they exclude various items included in net income that
are not indicative of the operating performance, such as gains
(losses) from sales of depreciated property and depreciation and
amortization. In addition, NOI excludes interest expense. The
Company’s method of calculating FFO and NOI may be different from
methods used by other REITs and, accordingly, may not be comparable
to such other REITs. FFO does not represent cash generated from
operations as defined by generally accepted accounting principles
(“GAAP”) and is not indicative of cash available to fund all cash
needs, including distributions. It should not be considered as an
alternative to net income for the purpose of evaluating the
Company’s performance or to cash flows as a measure of liquidity.
Consistent with the NAREIT definition, the Company defines FFO as
net income (computed in accordance with GAAP), excluding gains
(losses) from sales of depreciated property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships
and joint ventures.
4 In addition to the weighted average Common Shares
outstanding, basic and diluted FFO also assumes full conversion of
a weighted average 493 and 360 OP Units into Common Shares for the
quarters ended December 31, 2011 and 2010, respectively and 480 and
469 OP Units into Common Shares for the years ended December 31,
2011 and 2010, respectively. Diluted FFO also includes the assumed
conversion of Preferred OP Units into 25 Common Shares for each of
the quarters ended December 31, 2011 and 2010, and for each of the
years ended December 31, 2011 and 2010. In addition, diluted FFO
also includes the effect of employee share options of 256 and 337
Common Shares for the quarters ended December 31, 2011 and 2010,
respectively and 264 and 245 Common Shares for the years ended
December 31, 2011 and 2010, respectively.
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