AKR 2012.12.31 10K


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2012
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from        to
Commission File Number 1-12002
ACADIA REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland
23-2715194
(State of incorporation)
(I.R.S. employer identification no.)
1311 Mamaroneck Avenue, Suite 260 White Plains, NY 10605
(Address of principal executive offices)
(914) 288-8100
(Registrant’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Common Shares of Beneficial Interest, $.001 par value
(Title of Class)
New York Stock Exchange
(Name of Exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES x    NO o
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Securities Act.
YES o    NO x
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
YES x    NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES x    NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act).
Large Accelerated Filer x     Accelerated Filer o      Non-accelerated Filer o      Smaller Reporting Company o
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)
YES o    NO x
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $1,056.0 million, based on a price of $23.11 per share, the average sales price for the registrant’s common shares of beneficial interest on the New York Stock Exchange on that date.
The number of shares of the registrant’s common shares of beneficial interest outstanding on February 27, 2013 was 53,468,275.
DOCUMENTS INCORPORATED BY REFERENCE
Part III – Portions of the registrant’s definitive proxy statement relating to its 2013 Annual Meeting of Shareholders presently scheduled to be held May 16, 2013 to be filed pursuant to Regulation 14A.




TABLE OF CONTENTS
Form 10-K Report
 
 
 
 
Item No.
 
 
Page
 
PART I
 
 
1.
Business
 
1A.
Risk Factors
 
1B.
Unresolved Staff Comments
 
2.
Properties
 
3.
Legal Proceedings
 
4.
Mine Safety Disclosures
 
 
 
 
 
 
PART II
 
 
5.
Market for Registrant’s Common Equity, Related Stockholder Matters, Issuer Purchases of Equity Securities and Performance Graph
 
6.
Selected Financial Data
 
7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
7A.
Quantitative and Qualitative Disclosures about Market Risk
 
8.
Financial Statements and Supplementary Data
 
9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
9A.
Controls and Procedures
 
9B.
Other Information
 
 
 
 
 
 
PART III
 
 
10.
Directors and Executive Officers and Corporate Governance
 
11.
Executive Compensation
 
12.
Security Ownership of Certain Beneficial Owners and Management
 
13.
Certain Relationships and Related Transactions and Director Independence
 
14.
Principal Accountant Fees and Services
 
 
 
 
 
 
PART IV
 
 
15.
Exhibits and Financial Statement Schedules
 



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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report on Form 10-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative thereof or other variations thereon or comparable terminology. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to those set forth under the headings “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation” in this Form 10-K. These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein.

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PART I
ITEM 1. BUSINESS.
GENERAL
Acadia Realty Trust (the “Trust”) was formed on March 4, 1993 as a Maryland real estate investment trust (“REIT”). All references to “Acadia,” “we,” “us,” “our,” and “Company” refer to the Trust and its consolidated subsidiaries. We are a fully integrated REIT focused on the ownership, acquisition, redevelopment, and management of high-quality retail properties and urban/infill mixed-use properties with a strong retail component located primarily in high-barrier-to-entry, supply constrained, densely-populated metropolitan areas in the United States along the East Coast and in Chicago. We currently own, or have an ownership interest in these properties through our Core Portfolio (as defined in Item 2. of this Form 10-K) and our Opportunity Funds (as defined in Item 1 of this Form 10-K). We also have private equity investments in other retail real estate related opportunities in which we have a minority equity interest.
All of our assets are held by, and all of our operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and entities in which the Operating Partnership owns an interest. As of December 31, 2012, 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 primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest (“Common OP Units” or “Preferred OP Units”, respectively, and collectively, “OP Units”) and employees who have been awarded restricted Common OP Units ("LTIP Units") as long-term incentive compensation. Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for our common shares of beneficial interest of the Trust (“Common Shares”). This structure is referred to as an umbrella partnership REIT, or “UPREIT”.
BUSINESS OBJECTIVES AND STRATEGIES
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 high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas. Our goal is to create value through accretive redevelopment and re-anchoring activities within our existing portfolio and grow this platform through the acquisition of high-quality assets that have the long-term potential to outperform the asset class.

Generate additional external growth through an opportunistic yet disciplined acquisition program within our Opportunity Funds (as defined below). We target transactions with high inherent opportunity for the creation of additional value through:

value-add investments in high-quality urban and/or street retail properties with re-tenanting or repositioning opportunities,
opportunistic acquisitions of well-located real-estate anchored by distressed retailers or by motivated sellers and
opportunistic purchases of debt which may include restructuring.

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.

Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth.
Investment Strategy — Generate External Growth through our Dual Platforms; Core Portfolio and Opportunity Funds
The requirements that acquisitions be accretive on a long-term basis based on our cost of capital, as well as increase the overall Core Portfolio quality and value, are key strategic considerations to the growth of our Core Portfolio. As such, we constantly evaluate the blended cost of equity and debt and adjust the amount of acquisition activity to align the level of investment activity with capital flows.


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Given the growing importance of technology and e-commerce, many of our retail tenants are appropriately focused on multi-channel sales and how to best utilize e-commerce initiatives to drive sales at their stores. In light of these initiatives, we have found retailers are becoming more selective as to the location, size and format of their next-generation stores and are focused on dense, high-traffic retail corridors, where they can utilize smaller and more productive formats closer to their shopping population. In addition to retailer multi-channeling initiatives, we also believe that retailers continue to recognize that many of the nation’s urban markets are under-served from a retail standpoint, and we have capitalized on this situation by investing in redevelopment projects in dense urban areas where retail tenant demand has effectively surpassed the supply of available sites. Accordingly, our focus for Core Portfolio and Opportunity Fund acquisitions is on those properties which we believe will not only remain relevant to our tenants, but become even more so in the future. In connection with our Core Portfolio acquisition activity, we may also engage in discussions with public and private entities regarding business combinations.
In addition to our Core Portfolio investments in real estate assets, we have also capitalized on our expertise in the acquisition, redevelopment, leasing and management of retail real estate by establishing discretionary opportunity funds. Our opportunity fund platform is an investment vehicle where the Operating Partnership invests, along with outside institutional investors, including, but not limited to, endowments, foundations, pension funds, and investment management companies, in primarily opportunistic and value-add retail real estate. To date, we have launched four opportunity funds (“Opportunity Funds”); Acadia Strategic Opportunity Fund, LP (“Fund I”), Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”) and Acadia Strategic Opportunity Fund IV LLC ("Fund IV"). Due to the level of our control, we consolidate these Opportunity Funds for financial reporting purposes. The Opportunity Funds also include investments in operating companies through Acadia Mervyn Investors I, LLC ("Mervyns I"), Acadia Mervyn Investors II, LLC ("Mervyns II") and Fund II, all on a non-recourse basis. These investments comprise and are referred to as the Company's Retailer Controlled Property Initiative ("RCP Venture").
The Operating Partnership is the sole general partner or managing member of the Opportunity Funds and earns fees or priority distributions for asset management, property management, construction, redevelopment, leasing and legal services. Cash flows from the Opportunity Funds are distributed pro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return ("Preferred Return"), and the return of all capital contributions. Thereafter, remaining cash flow is distributed 20% to the Operating Partnership ("Promote") and 80% to the partners or members (including the Operating Partnership).
Reference is made to Note 1 in the Notes to Consolidated Financial Statements, which begin on page F-1 of this Form 10-K ("Notes to Consolidated Financial Statements"), for a detailed discussion of the Opportunity Funds and RCP Venture.
Capital Strategy — Balance Sheet Focus and Access to Capital
Our primary capital objective is to maintain a strong and flexible balance sheet through conservative financial practices, including a moderate use of leverage, while ensuring access to sufficient capital to fund future growth. We intend to continue financing acquisitions and property redevelopment with sources of capital determined by management to be the most appropriate based on, among other factors, availability in the current capital markets, pricing and other commercial and financial terms. The sources of capital may include the issuance of public equity, unsecured debt, mortgage and construction loans, and other capital alternatives including the issuance of OP Units. We manage our interest rate risk primarily through the use of fixed rate debt and, where we use variable rate debt, we use certain derivative instruments, including London Interbank Offered Rate (“LIBOR”) swap agreements and interest rate caps as discussed further in Item 7A. of this Form 10-K.
During January 2012, we established an at-the-market (“ATM”) equity program with an aggregate offering of up to $75.0 million of gross proceeds from the sale of Common Shares. Under this program, we issued approximately 3.3 million Common Shares which generated net proceeds of $73.7 million.

During August 2012, we established a new ATM equity program with an additional aggregate offering of up to $125.0 million of gross proceeds from the sale of Common Shares. Through December 31, 2012, we issued approximately 2.8 million Common Shares which generated net proceeds of $67.8 million. We intend to use the future net proceeds of this or potential future ATM offerings primarily to fund acquisitions directly in the Core Portfolio and through its capital contributions to the Opportunity Funds.

During October 2012, we issued approximately 3.5 million Common Shares in a separate follow-on offering, for $86.9 million. Net proceeds after expenses were approximately $85.8 million. The proceeds were primarily used for acquisitions, including our pro-rata share of acquisitions in Fund IV and for general corporate purposes.

During January 2013, we closed on a new unsecured revolving credit facility of up to $150 million, which matures on January 31, 2016 with an additional one year extension option. As of February 27, 2013, no proceeds have been drawn on this facility.


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Operating Strategy — Experienced Management Team with Proven Track Record
Our senior management team has decades of experience in the real estate industry. We have capitalized on our expertise in the acquisition, redevelopment, leasing and management of retail real estate by creating value through property redevelopment, re-anchoring and establishing joint ventures, such as the Opportunity Funds, in which we earn, in addition to a return on our equity interest, Promotes, fees and priority distributions.
Operating functions such as leasing, property management, construction, finance and legal (collectively, the “Operating Departments”) are generally provided by our personnel, providing for a vertically integrated operating platform. By incorporating the Operating Departments in the acquisition process, acquisitions are appropriately priced giving effect to each asset’s specific risks and returns and transition time is minimized allowing management to immediately execute on its strategic plan for each asset.
Our Core Portfolio consists primarily of urban/street retail properties and neighborhood and community shopping centers located in high barrier-to-entry supply constrained markets. As we typically hold our Core Portfolio properties for long-term investment, we periodically review the existing portfolio and implement programs to renovate and modernize targeted properties to enhance their market position. This in turn strengthens the competitive position of the leasing program to attract and retain quality tenants, increasing cash flow, and consequently, property values. From time to time, we also identify certain properties for disposition and redeploy the capital for acquisitions and for the repositioning of existing centers with greater potential for capital appreciation.
INVESTING ACTIVITIES
Core Portfolio
See Item 2. PROPERTIES for the definition of our Core Portfolio.
For the year ended December 31, 2012, we continued to execute on our strategy of owning a superior Core Portfolio by acquiring, through our Operating Partnership, high-quality, street/urban and suburban retail assets located in densely populated areas for an aggregate purchase price of $224.3 million. Reference is made to Note 2 in the Notes to Consolidated Financial Statements, for a detailed discussion of these acquisitions.
In addition, as of December 31, 2012 we have a current acquisition pipeline of $86.6 million under contract, which is subject to certain closing conditions and as such, no assurance can be given that closing will be successfully completed. See Item 2. PROPERTIES for a description of the other properties in our Core Portfolio.
Since 2010, we have sold one Core Portfolio asset, the Ledgewood Mall. This 517,151 square foot center located in Ledgewood, New Jersey was sold during May 2011 for $37.0 million.
We also make investments in first mortgages and other notes receivable collateralized by real estate, either directly or through entities having an ownership interest therein. During 2012, we invested $43.3 million in first mortgage notes and $46.9 million in other notes receivable. Reference is made to Note 5 in the Notes to Consolidated Financial Statements, for a detailed discussion of our notes receivable and other real estate related investments.
Opportunity Funds
Acquisitions
Fund III
During 2012, Fund III acquired properties for an aggregate purchase price of $108.0 million. Reference is made to Note 2 in the Notes to Consolidated Financial Statements, for a detailed discussion of these acquisitions.
Fund IV
During 2012, Fund IV acquired its first properties for an aggregate purchase price of $151.2 million. Reference is made to Note 2 in the Notes to Consolidated Financial Statements, for a detailed discussion of these acquisitions.

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Dispositions
Self-Storage Portfolio
During February 2008, Fund III, in conjunction with Storage Post, acquired a portfolio of eleven self-storage properties from Storage Post’s existing institutional investors for approximately $174.0 million. In addition, we, through Fund II, developed three self-storage properties. The 14 self-storage property portfolio, located throughout New York and New Jersey, totaled approximately 1.1 million net rentable square feet, and was operating at various stages of stabilization. During the fourth quarter of 2012, we sold 12 of the 14 properties in this portfolio for an aggregate sales price of $261.6 million. The remaining two properties are under contract, which we anticipate closing during 2013.
Other Dispositions
During 2012, Funds I, II and III sold four additional shopping centers for an aggregate sales price of $184.1 million. Reference is made to Note 2 in the Notes to Consolidated Financial Statements, for a detailed discussion of these dispositions.
Redevelopment Activities
As part of our Opportunity Fund strategy, we invest in real estate assets that require significant redevelopment. As of December 31, 2012, the Company had eight redevelopment projects, one of which is under construction and seven are in the design phase as follows:
(dollars in millions)
 
 
 
 
 
 
 
 
Property
 
Owner
 
Costs
to date
 
Anticipated
additional
costs (1)
 
Status
 
Square
feet upon
completion
Anticipated completion dates
City Point (2)
 
Fund II
 
$
142.9

 
$107.1 - $197.1
 
Under construction
 
675,000

2015
Sherman Plaza (2)
 
Fund II
 
34.7

 
TBD
 
In design
 
TBD

TBD
Sheepshead Bay
 
Fund III
 
22.8

 
TBD
 
In design
 
TBD

TBD
723 N. Lincoln Lane
 
Fund III
 
6.7

 
TBD
 
In design
 
TBD

TBD
Cortlandt Crossing
 
Fund III
 
11.2

 
35.8 - 44.8
 
In design
 
150,000 - 170,000

2016
3104 M Street NW
 
Fund III
 
3.0

 
4.0 - 5.5
 
In design
 
10,000

2014
Broad Hollow Commons
 
Fund III
 
11.1

 
38.9 - 48.9
 
In design
 
180,000 - 200,000

2016
210 Bowery
 
Fund IV
 
7.5

 
4.0 - 4.5
 
In design
 
10,000

2015
Total
 
 
 
$
239.9

 
 
 
 
 
 
 

Notes:
TBD – To be determined
(1) Anticipated additional costs are estimated ranges for completing the projects and include costs for tenant improvements and leasing commissions.
(2) These projects are being redeveloped by Acadia Urban Development LLC ("Acadia Urban Development"), or subsidiaries thereof, in connection with Fund II's New York Urban/Infill Redevelopment Initiative. See Item 7. of this Form 10-K for further information on the Acadia Urban Development joint venture as detailed in “Liquidity and Capital Resources – New York Urban/Infill Redevelopment Initiative.”
Under Construction
CityPoint — During June of 2007, Acadia-Washington Square Albee and an unaffiliated joint venture partner, California Urban Investment Partners, LLC (“CUIP”) purchased the leasehold interests in The Gallery at Fulton Street in downtown Brooklyn for approximately $115.0 million, with an option to purchase the fee position, which is owned by the City of New York, at a later date. On June 30, 2010, Acadia-Washington Square Albee acquired all of CUIP’s interest in CityPoint for total consideration of $9.2 million and the assumption of CUIP’s share of debt of $19.6 million. The redevelopment will proceed in three phases. Construction is completed on Phase 1, a five-story retail building of approximately 50,000 square feet. Phase 2, which is currently under construction, will consist of approximately 625,000 square feet of additional retail when completed. Phase 2 will also contain an affordable and market-rate residential component. Phase 3 is anticipated to be a stand-alone mixed use, but primarily residential building, of approximately 650,000 square feet. Completion of the construction of this project is anticipated to be during 2015.


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RCP Venture
During 2004, through Funds I and II, or affiliates thereof, we entered into an association, known as the RCP Venture, with Klaff Realty, L.P. (“Klaff”) and Lubert-Adler Management, Inc. (“Lubert-Adler”) for the purpose of making investments in surplus or underutilized properties owned by retailers. Mervyns I and II along with Fund II have invested a total of $62.2 million in the RCP Venture to date on a non-recourse basis. Reference is made to Note 4 in the Notes to Consolidated Financial Statements, for a detailed discussion of the RCP Venture.
While we are primarily a passive partner in the investments made through the RCP Venture, historically we have provided our services in reviewing potential acquisitions and operating and redevelopment assistance in areas where we have both a presence and expertise. In the future, we may seek to opportunistically invest either on our own, with the RCP Venture or with other partners in similar investments, which may include:
- Investment in operating retailers to control their real estate through private equity joint ventures
- Collaboration with financially healthy retailers to create value from their surplus real estate
- Investment in properties, designation rights or other control of real estate or leases associated with retailers in bankruptcy
- Completion of sale-leasebacks with retailers in need of capital
Mervyns Department Stores
In September 2004, we made our first RCP Venture investment. Through Mervyns I and Mervyns II, we invested in a consortium to acquire Mervyns consisting of 262 stores (“REALCO”) and its retail operation (“OPCO”) from Target Corporation. To date, REALCO has disposed of a significant portion of the portfolio. In addition, during November 2007, we sold our interest in, and as a result, have no further investment in OPCO. During 2012, a legal proceeding relating to the disposition of OPCO was settled. Reference is made to Item 3. Part 1 of this Form 10-K for a detailed description of this settlement.
Through December 31, 2012, we, through Mervyns I and Mervyns II, made additional investments in locations that are separate from these original investments (“Add-On Investments”) in Mervyns.
Albertson’s
During June of 2006, the RCP Venture made its second investment as part of an investment consortium, acquiring Albertson’s and Cub Foods. In addition, we have since made Add-On Investments in Albertson’s.
Other RCP Investments
We have also made other RCP investments in Shopko, Marsh, Rex Stores and in Add-On Investments in Marsh.
Reference is made to Note 4 in the Notes to Consolidated Financial Statements, for a detailed discussion of these investments.
ENVIRONMENTAL LAWS
For information relating to environmental laws that may have an impact on our business, please see “Item 1A. Risk Factors - Possible liability relating to environmental matters.”
COMPETITION
There are numerous entities that compete with us in seeking properties for acquisition and tenants that will lease space in our properties. Our competitors include other REITs, financial institutions, insurance companies, pension funds, private companies and individuals. Our properties compete for tenants with similar properties primarily on the basis of location, total occupancy costs (including base rent and operating expenses) and the design and condition of the improvements.
FINANCIAL INFORMATION ABOUT MARKET SEGMENTS
We have four reportable segments: Core Portfolio, Opportunity Funds, Notes Receivable and Other. Notes Receivable consists of our notes receivable and related interest income. Other primarily consists 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 set forth in Note 1 in the Notes to Consolidated Financial Statements. We evaluate property performance primarily based on net operating income before depreciation, amortization and certain nonrecurring items. Investments in our Core Portfolio are typically held long-term. Given the contemplated finite life of our Opportunity Funds, these investments are typically held for shorter terms. Fees earned by us as general partner or managing member of the Opportunity Funds are eliminated in our Consolidated Financial Statements. See Note 3 in the Notes to Consolidated Financial Statements, for information regarding, among other things, revenues from external

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customers, a measure of profit and loss and total assets with respect to each of our segments. Our profits and losses for both our business and each of our segments are not seasonal.
CORPORATE HEADQUARTERS AND EMPLOYEES
Our executive office is located at 1311 Mamaroneck Avenue, Suite 260, White Plains, New York 10605, and our telephone number is (914) 288-8100. As of December 31, 2012, we had 126 employees, of which 101 were located at our executive office and 25 were located at regional property management offices. None of our employees are covered by collective bargaining agreements. Management believes that its relationship with employees is good.
COMPANY WEBSITE
All of our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available at no cost at our website at www.acadiarealty.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. These filings can also be accessed through the Securities and Exchange Commission’s website at www.sec.gov. Alternatively, we will provide paper copies of our filings at no cost upon request. If you wish to receive a copy of the Form 10-K, you may contact Robert Masters, Corporate Secretary, at Acadia Realty Trust, 1311 Mamaroneck Avenue, Suite 260, White Plains, NY 10605. You may also call (914) 288-8100 to request a copy of the Form 10-K. Information included or referred to on our website is not incorporated by reference in or otherwise a part of this Form 10-K.
CODE OF ETHICS AND WHISTLEBLOWER POLICIES
The Board of Trustees adopted a Code of Business Conduct and Ethics applicable to all employees, as well as a “Whistleblower Policy.” Copies of these documents are available in the Investor Information section of our website. We intend to disclose future amendments to, or waivers from (with respect to our senior executive financial officers), our Code of Ethics in the Investor Information section of our website within four business days following the date of such amendment or waiver.
ITEM 1A. RISK FACTORS.
If any of the following risks actually occur, our business, results of operations and financial condition would likely suffer. This section includes or refers to certain forward-looking statements. Refer to the explanation of the qualifications and limitations on such forward-looking statements discussed in the beginning of this Form 10-K.
We rely on revenues derived from major tenants.
We derive significant revenues from certain anchor tenants that occupy space in more than one center. We could be adversely affected in the event of the bankruptcy or insolvency of, or a downturn in the business of, any of our major tenants, or in the event that any such tenant does not renew its leases as they expire or renews such leases at lower rental rates. Vacated anchor space not only would reduce rental revenues, but if not re-tenanted at the same rental rates could adversely affect the entire shopping center because of the loss of the departed anchor tenant's customer drawing power. Loss of customer drawing power also can occur through the exercise of the right, that most anchors have, to vacate and prevent re-tenanting by paying rent for the balance of the lease term (“going dark”) as would the departure of a “shadow” anchor tenant that owns its own property. In addition, in the event that certain major tenants cease to occupy a property, such an action may result in a significant number of other tenants having the right to terminate their leases, or pay a reduced rent based on a percentage of the tenant's sales, at the affected property, which could adversely affect the future income from such property (“co-tenancy”). See “Item 2. Properties-Major Tenants” in this Annual Report on Form 10-K for quantified information with respect to the percentage of our minimum rents received from major tenants.
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 revenues. 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.

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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.
Historically and from time to time, certain of our tenants experienced financial difficulties and 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 year's 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 tenant's final plan of reorganization and the availability of funds to pay its creditors.
Although currently none of our critical tenants are in bankruptcy, experience shows that there can be no assurance that one or more of our major tenants will be immune from bankruptcy.
Internet sales can have an impact on our business.
The use of the internet by consumers continues to gain in popularity. The migration toward internet sales is likely to continue. This increase in internet sales could result in a downturn in the business of our current tenants and could affect the way future tenants lease space.
While we devote considerable effort and resources to analyze and respond to tenant trends, preferences and consumer spending patterns, we cannot predict with certainty what future tenants will want, what future retail spaces will look like and how much revenue will be generated at traditional “bricks and mortar” locations. If we are unable to anticipate and respond promptly to trends in the market due to the illiquid nature of real estate (See the Risk Factor entitled, “Our ability to change our portfolio is limited because real estate investments are illiquid” below), our occupancy levels and financial results could suffer.
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's recently experienced financial downturn, included a decline in consumer spending, credit tightening and high unemployment.
The current economic environment also had, and continues to have, an 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.
Political and economic uncertainty could have an adverse effect on us.
We cannot predict how current political and economic uncertainty, including uncertainty related to taxation, will affect our critical tenants, joint venture partners, lenders, financial institutions and general economic conditions, including the health and confidence of the consumer and the volatility of the stock market.
Political and economic uncertainty poses a risk to the Company in that it may cause consumers to postpone discretionary spending in response to tighter credit, reduced consumer confidence and other macroeconomic factors affecting consumer spending behavior, resulting in a downturn in the business of our tenants. In the event current political and economic uncertainty results in financial turmoil affecting the banking system and financial markets or significant financial service institution failures, there could be a new or incremental tightening in the credit markets, low liquidity, and extreme volatility in fixed income, credit, currency and equity markets. Each of these could have an adverse effect on our business, financial condition and operating results.
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.

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A significant portion of our income is derived from rental income from real property. Our income and cash flow would be adversely affected if we 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, as well as 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.
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. In addition, the viability of the interest rate hedges we use is subject to the strength of the counterparties.
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, 2012 would increase by $2.9 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, generally, the same lenders who made the loan in question. 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 than we wish to pay. In addition, retailers at our properties (both in our Core Portfolio and in the portfolios of the Opportunity Funds) face increasing competition from outlet malls, discount shopping clubs, internet commerce, direct mail and telemarketing, which could (i) reduce rents payable to us and (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 our 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 33% of the annual base rents within our Core Portfolio and 61% of annual base rents within our Opportunity Funds. 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.

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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 redevelopment of additional properties, including acquisitions of core properties through our Operating Partnership and our high return investment programs through Acadia Strategic Opportunity Fund IV LLC (“Fund IV“). 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, obtaining necessary entitlements, 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. In the context of our business plan, “redevelopment” generally means an expansion or renovation of an existing property. Redevelopment is subject to numerous risks, including risks of construction delays, cost overruns 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 redevelopment 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 gains attributable to the differences 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, we own several properties subject to material restrictions designed to minimize the adverse tax consequences to the limited partners who contributed such properties. Such restrictions may result in significantly reduced flexibility to manage some of our assets.
Exclusivity obligation to our Opportunity Funds.
Under the terms of Fund IV, our primary goal is to seek investments for Fund IV, subject to certain exceptions. We may only pursue opportunities to acquire retail properties directly through the Operating Partnership if (i) the ownership of the acquisition opportunity by Fund IV would create a material conflict of interest for us; (ii) we require the acquisition opportunity for a “like-kind” exchange; (iii) the consideration payable for the acquisition opportunity is our Common Shares, OP Units or other securities or (iv) the investment is outside the parameters of our investment goals for Fund IV (which, in general, seeks more opportunistic level returns). As a result, we may not be able to make attractive acquisitions directly and instead may only receive a minority interest in such acquisitions through Fund IV.
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 our funds that may be invested in joint ventures.
Additionally, our partners or co-venturers may engage in malfeasance in spite of our efforts to perform a high level of due diligence on them. Such acts may or may not be covered by insurance. Finally, partners and co-venturers may engage in illegal activities which may jeopardize an investment and/or subject us to reputational risk.
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.

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During 2012, 2011 and 2010, 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 and our ability to access the public equity markets.
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 can be terminated by Mr. Bernstein in his discretion. We have not entered into employment agreements with other key 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. 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

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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 us 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) at any time 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, among other purposes. 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 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 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.
As of December 31, 2012, seven institutional shareholders own 5% or more individually, and 62.1% 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 interests 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 the best interests of the shareholders.
Certain provisions of Maryland law may limit the ability of a third party to acquire control of our Company.
Under the Maryland General Corporation Law, as amended, which we refer to as the “MGCL,” as applicable to REITs, certain “business combinations,” including certain mergers, consolidations, share exchanges and asset transfers and certain issuances and reclassifications of equity securities, between a Maryland REIT and any person who beneficially owns 10% or more of the voting power of the trust's outstanding voting shares or an affiliate or an associate, as defined in the MGCL, of the trust who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding shares of beneficial interest of the trust, which we refer to as an “interested shareholder,” or an affiliate of the interested shareholder, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. After that five-year period, any such business combination must be recommended by the board of trustees of the trust and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the trust and (2) two-thirds of the votes entitled to be cast by holders of voting shares of the trust other than shares held by the interested shareholder with whom, or with whose affiliate, the business combination is to be effected or held by an affiliate or associate of the interested shareholder, unless, among other conditions, the trust's common shareholders receive a minimum price, as defined in the MGCL, for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its common shares.
These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of trustees of the trust before the interested shareholder becomes an interested shareholder, and a person is not an interested shareholder if the board of trustees approved in advance the transaction by which the person otherwise would have become an interested

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shareholder. In approving a transaction, our Board of Trustees may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board.
The MGCL also provides that holders of “control shares” of a Maryland REIT (defined as voting shares that, when aggregated with all other shares owned by the acquirer or in respect of which the acquirer is entitled to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by the affirmative vote of holders of at least two-thirds of all the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by officers or by employees who are also trustees of the trust. Our Bylaws provide that the control share acquisition statute shall not apply to shares acquired or owned, directly or indirectly, by any person acting in concert with any group (as defined in Section 13 of the Exchange Act and the rules thereunder). Our Bylaws can be amended by our Board of Trustees by majority vote, and there can be no assurance that this provision will not be amended or eliminated at any time in the future.
Additionally, Title 3, Subtitle 8 of the MGCL permits our Board of Trustees, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or Bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring or preventing a transaction or a change of control of our Company that might involve a premium to the market price of our Common Shares or otherwise be in the best interests of our shareholders. We are subject to some of these provisions (for example, a two-thirds vote requirement for removing a trustee) by provisions of our Declaration of Trust and Bylaws unrelated to Subtitle 8.
Becoming subject to, or the potential to become subject to, these provisions of the MGCL could inhibit, delay or prevent a transaction or a change of control of our Company that might involve a premium price for our shareholders or otherwise be in our or their best interests. In addition, the provisions of our Declaration of Trust on removal of trustees and the provisions of our Bylaws regarding advance notice of shareholder nominations of trustees and other business proposals and restricting shareholder action outside of a shareholders meeting unless such action is taken by unanimous written consent could have a similar effect.
Our rights and shareholders' rights to take action against trustees and officers are limited, which could limit recourse in the event of actions not in the best interests of shareholders.
As permitted by Maryland law, our Declaration of Trust eliminates the liability of our trustees and officers to the Company and its shareholders for money damages, except for liability resulting from:
actual receipt of an improper benefit or profit in money, property or services; or
a final judgment based upon a finding of active and deliberate dishonesty by the trustee or officer that was material to the cause of action adjudicated.

In addition, our Declaration of Trust authorizes, and our Bylaws obligate, us to indemnify each present or former trustee or officer, to the maximum extent permitted by Maryland law, who is made a party to any proceeding because of his or her service to our Company. As part of these indemnification obligations, we may be obligated to fund the defense costs incurred by our trustees and officers.
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 our 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 our shares.
Our redevelopment and construction activities could affect our operating results.
We intend to continue the selective redevelopment and construction of retail properties, with our project at CityPoint currently being our largest redevelopment project (see “Item 1. BUSINESS - INVESTING ACTIVITIES - Opportunity Funds - Redevelopment Activities” for a description of the CityPoint project).
As opportunities arise, we expect to delay construction until sufficient pre-leasing is reached and financing is in place. Our redevelopment and construction activities include risks that:
We may abandon redevelopment opportunities after expending resources to determine feasibility;
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;
Financing for redevelopment of a property may not be available to us on favorable terms;
We may not complete construction and lease-up on schedule, resulting in increased debt service expense and construction costs; and
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.
Additionally, the time frame required for redevelopment, 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 redevelopment of properties may hinder our growth and have an adverse effect on our results of operations and cash flows. In addition, new redevelopment 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 and other retail properties in supply constrained 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:
The property may fail to achieve the returns we have projected, either temporarily or for extended periods;
We may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the properties we identify;
We may not be able to integrate an acquisition into our existing operations successfully;
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;
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
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.
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:
Increased storm intensity and severity of weather (e.g., floods or hurricanes);
Sea level rise; and
Extreme temperatures.
As a result of these physical impacts from climate-related events, we may be vulnerable to the following:
Risks of property damage to our shopping centers;
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;
Increased insurance premiums and deductibles, or a decrease in the availability of coverage, for properties in areas subject to severe weather;
Increased insurance claims and liabilities;
Increases in energy costs impacting operational returns;

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Changes in the availability or quality of water, or other natural resources on which the tenant's business depends;
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);
Incorrect long term valuation of an equity investment due to changing conditions not previously anticipated at the time of the investment; and
Economic disruptions arising from the above.
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 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:
The discovery of previously unknown environmental conditions;
Changes in law;
Activities of tenants; and
Activities relating to properties in the vicinity of our properties.
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, all-risk property, extended coverage, loss of rent insurance, and environmental liability on 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.

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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.
Increased Information Technology ("IT") security threats and more sophisticated computer crime could pose a risk to our systems, networks and services.

Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. The open nature of interconnected technologies may allow for a network or Web outage or a privacy breach that reveals sensitive data or transmission of harmful/malicious code to business partners and clients resulting in liability claims. While we attempt to mitigate these risks by employing a number of measures, including a dedicated IT team, employee training and background checks, comprehensive monitoring of our networks and systems, and maintenance of backup systems and redundancy along with purchasing available insurance coverage, our systems, networks and services remain potentially vulnerable to advanced threats. Depending on their nature and scope, such threats could potentially lead to the compromising of confidential information, improper use of our systems and networks, manipulation and destruction of data, loss of trade secrets, system downtimes and operational disruptions, which in turn could adversely affect our reputation, competitiveness and results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 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.
As of December 31, 2012, there are 72 operating properties in our Core Portfolio totaling approximately 5.3 million square feet of gross leasable area (“GLA”). The Core Portfolio properties are located in 12 states and the District of Columbia and primarily consist of urban/street retail, dense suburban neighborhood and community shopping centers and mixed-use properties with a strong retail component. Our shopping centers are predominately anchored by supermarkets or value-oriented retail. The properties are diverse in size, ranging from approximately 3,000 to 875,000 square feet and as of December 31, 2012, were, in total, 94% occupied.
As of December 31, 2012, we owned and operated 20 properties totaling approximately 2.5 million square feet of GLA in our Opportunity Funds, excluding eight properties under redevelopment. In addition to shopping centers, the Opportunity Funds have invested in mixed-use properties, which generally include retail activities. The Opportunity Fund properties are located in eight states and the District of Columbia and as of December 31, 2012, were, in total, 88% occupied.
Within our Core Portfolio and Opportunity Funds, we had approximately 650 leases as of December 31, 2012. A majority of our rental revenues were from national retailers and consist of rents received under long-term leases. These leases generally provide for the monthly payment of fixed minimum rent and the tenants' pro-rata share of the real estate taxes, insurance, utilities and common area maintenance of the shopping centers. Certain of our leases also provide for the payment of rent based on a percentage of a tenant's gross sales in excess of a stipulated annual amount, either in addition to, or in place of, minimum rents. Minimum rents, percentage rents and expense reimbursements accounted for approximately 92% of our total revenues for the year ended December 31, 2012.


18



Three of our Core Portfolio properties and five 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 eight locations.
No individual property contributed in excess of 10% of our total revenues for the years ended December 31, 2012, 2011 or 2010. Reference is made to Note 8 in the Notes to Consolidated Financial Statements, 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, 2012:
Shopping Center
 
Location
 
Year
Constructed
(C)
Acquired
(A)
 
Ownership
Interest
 
GLA
 
Occupancy
%
12/31/12 (1)
 
Annual
Base
Rent (2)
 
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

(3)
100
%
 
$
1,554,663

 
$
92.35

 

181 Main Street
 
Westport
 
2012 (A)
 
Fee
 
11,350

 
100
%
 
772,000

 
68.02

 

New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Elmwood Park Shopping Center
 
Elmwood Park
 
1998 (A)
 
Fee
 
149,262

 
97
%
 
3,596,396

 
24.87

 
A&P 2017/2052
Walgreen’s 2022/2062
A&P Shopping Plaza
 
Boonton
 
2006 (A)
 
Fee/JV
 
62,741

 
100
%
 
1,343,723

 
21.42

 
A&P 2024/2054
60 Orange Street
 
Bloomfield
 
2012 (A)
 
Fee/JV
 
101,715

 
100
%
 
907,500

 
8.92

 
Home Depot 2032/2052
New York
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Village Commons Shopping Center
 
Smithtown
 
1998 (A)
 
Fee
 
87,330

 
95
%
 
2,552,470

 
30.68

 
 
Branch Shopping Center
 
Smithtown
 
1998 (A)
 
LI (4)
 
126,273

 
81
%
 
2,551,407

 
25.06

 
CVS 2020/—
LA Fitness 2027/2042
Amboy Road
 
Staten Island
 
2005 (A)
 
LI (4)
 
60,090

 
100
%
 
1,632,178

 
27.16

 
Stop & Shop 2028/2043
Bartow Avenue
 
Bronx
 
2005 (C)
 
Fee
 
14,676

 
93
%
 
420,687

 
30.90

 
 
Pacesetter Park Shopping Center
 
Ramapo
 
1999 (A)
 
Fee
 
97,583

 
94
%
 
1,151,105

 
12.58

 
Stop & Shop 2020/2040
West Shore Expressway
 
Staten Island
 
2007 (A)
 
Fee
 
55,000

 
100
%
 
1,391,500

 
25.30

 
LA Fitness 2022/2037
West 54th Street
 
Manhattan
 
2007 (A)
 
Fee
 
9,797

 
48
%
 
1,245,680

 
264.56

 

East 17th 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 (5)
 
309,523

 
78
%
 
5,139,479

 
21.31

 
Kmart 2017/2032
Modell’s 2014/2019
Home Goods 2018/2033
Party City 2024/2034
Third Avenue
 
Bronx
 
2006 (A)
 
Fee
 
40,320

 
79
%
 
666,631

 
20.85

 
Planet Fitness 2027/2042
Mercer Street
 
Manhattan
 
2011 (A)
 
Fee
 
6,225

 
100
%
 
383,160

 
61.55

 

28 Jericho Turnpike
 
Westbury
 
2012 (A)
 
Fee
 
96,363

 
100
%
 
1,650,000

 
17.12

 
Kohl's 2020/2050
4401 White Plains Road
 
Bronx
 
2011 (A)
 
Fee
 
12,964

 
100
%
 
625,000

 
48.21

 
Walgreens 2060/-
83 Spring Street
 
Manhattan
 
2012 (A)
 
Fee
 
3,000

 
100
%
 
623,884

 
207.96

 

Total New York Region
 
 
 
 
 
 
 
1,280,668

 
91
%
 
$
28,832,463

 
$
24.74

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New England
 
 
 
 
 
 
 
 

 
 
 
 

 
 

 
 
Connecticut
 
 
 
 
 
 
 
 

 
 
 
 

 
 

 
 
Town Line Plaza
 
Rocky Hill
 
1998 (A)
 
Fee
 
206,346


98
%
 
$
1,636,374

 
$
15.69

 
Stop & Shop 2024/2064
Wal-Mart(6)

19



Shopping Center
 
Location
 
Year
Constructed
(C)
Acquired
(A)
 
Ownership
Interest
 
GLA
 
Occupancy
%
12/31/12 (1)
 
Annual
Base
Rent (2)
 
Annual
Base
Rent
PSF
 
Anchor Tenants
Current Lease
Expiration/
Lease Option
Expiration
Core Portfolio, continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Massachusetts
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Methuen Shopping Center
 
Methuen
 
1998 (A)
 
Fee
 
130,021

 
100
%
 
1,027,936

 
7.91

 
Demoulas Market 2015/—
Wal-Mart 2016/2051
Crescent Plaza
 
Brockton
 
1993 (A)
 
Fee
 
218,137

 
94
%
 
1,658,255

 
8.08

 
Supervalu 2014/2044
Home Depot 2021/2056
330-340 River Street
 
Cambridge
 
2012 (A)
 
Fee
 
54,226

 
100
%
 
1,130,470

 
20.85

 
Whole Foods 2021/2051
Rite Aid 2028/2068
New York
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
New Loudon Center
 
Latham
 
1993 (A)
 
Fee
 
255,673

 
100
%
 
1,959,124

 
7.66

 
Price Chopper 2015/2035
Marshall’s 2014/2029
Raymour and Flanigan 2019/2034
AC Moore 2014/2024 Hobby Lobby 2021/-
Rhode Island
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Walnut Hill Plaza
 
Woonsocket
 
1998 (A)
 
Fee
 
284,717

 
90
%
 
2,136,086

 
8.38

 
Supervalu 2013/2028 Sears 2013/2033
Savers 2013/2018
Ocean State Job Lot 2012/-
Woonsocket Bowling 2021/-
Vermont
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
The Gateway Shopping Center
 
South Burlington
 
1999 (A)
 
Fee
 
101,655

 
100
%
 
1,969,413

 
19.37

 
Supervalu 2024/2053
Total New England Region
 
 
 
 
 
 
 
1,250,775

 
96
%
 
$
11,517,658

 
$
10.41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
 
 
 
 
 
 
 
 

 
 
 
 

 
 

 
 
Illinois
 
 
 
 
 
 
 
 

 
 
 
 

 
 

 
 
Hobson West Plaza
 
Naperville
 
1998 (A)
 
Fee
 
99,137

 
96
%
 
$
1,138,122

 
$
11.94

 
Garden Fresh Markets 2017/2037
Clark Diversey
 
Chicago
 
2006 (A)
 
Fee
 
19,265

 
100
%
 
858,248

 
44.55

 
 
West Diversey
 
Chicago
 
2011 (A)
 
Fee
 
46,259

 
100
%
 
1,884,925

 
40.75

 
Trader Joe's 2021/2041
639 West Diversey
 
Chicago
 
2012 (A)
 
Fee
 
12,557

 
100
%
 
666,091

 
53.05

 

930 North Rush Street
 
Chicago
 
2012 (A)
 
Fee
 
2,930

 
100
%
 
1,113,948

 
380.19

 

Chicago Street Retail Portfolio (7)
 
Chicago
 
2011 (A)
 
Fee
 
115,287

 
89
%
 
4,536,341

 
44.26

 


20



Shopping Center
 
Location
 
Year
Constructed
(C)
Acquired
(A)
 
Ownership
Interest
 
GLA
 
Occupancy
%
12/31/12 (1)
 
Annual
Base
Rent (2)
 
Annual
Base
Rent
PSF
 
Anchor Tenants
Current Lease
Expiration/
Lease Option
Expiration
Core Portfolio, continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indiana
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Merrillville Plaza
 
Hobart
 
1998 (A)
 
Fee
 
235,824

 
92
%
 
2,918,290

 
13.52

 
TJ Maxx 2019/2029
JC Penney 2013/2018 OfficeMax 2013/2028 K&G Fashion 2017/2027
Michigan
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Bloomfield Town Square
 
Bloomfield Hills
 
1998 (A)
 
Fee
 
236,676

 
97
%
 
3,396,624

 
14.81

 
TJ Maxx 2019/2029 Home Goods 2016/2026
Best Buy 2021/2041 Dick's Sporting Goods 2023/2043
Ohio
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Mad River Station (8)
 
Dayton
 
1999 (A)
 
Fee
 
126,129

 
83
%
 
1,315,006

 
12.54

 
Babies ‘R’ Us 2015/2020
Office Depot 2015/—
Total Midwest Region
 
 
 
 
 
 
 
894,064

 
93
%
 
$
17,827,595

 
$
21.51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mid-Atlantic
 
 
 
 
 
 
 
 

 
 
 
 

 
 

 
 
New Jersey
 
 
 
 
 
 
 
 

 
 
 
 

 
 

 
 
Marketplace of Absecon
 
Absecon
 
1998 (A)
 
Fee
 
104,762

 
76
%
 
$
1,334,497

 
$
16.78

 
Rite Aid 2020/2040 White Horse Liquors 2019/-
Delaware
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Brandywine Town Center
 
Wilmington
 
2003 (A)
 
Fee/JV (9)
 
875,679

 
97
%
 
13,080,972

 
15.44

 
Bed, Bath & Beyond 2014/2029
Dick’s Sporting Goods 2013/2028
Lowe’s Home Centers 2018/2048
Target 2018/2058
HH Gregg 2020/2035
Market Square Shopping Center
 
Wilmington
 
2003 (A)
 
Fee/JV (9)
 
102,047

 
98
%
 
2,507,840

 
25.02

 
TJ Maxx 2016/2021 Trader Joe’s 2019/2034
Route 202 Shopping Center
 
Wilmington
 
2006 (C)
 
LI/JV (4) (9)
 
19,984

 
100
%
 
837,541

 
41.91

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

21



Shopping Center
 
Location
 
Year
Constructed
(C)
Acquired
(A)
 
Ownership
Interest
 
GLA
 
Occupancy
%
12/31/12 (1)
 
Annual
Base
Rent (2)
 
Annual
Base
Rent
PSF
 
Anchor Tenants
Current Lease
Expiration/
Lease Option
Expiration
Core Portfolio, continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pennsylvania
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Mark Plaza
 
Edwardsville
 
1993 (C)
 
LI/Fee (4)
 
106,856

 
100
%
 
240,664

 
2.25

 
Kmart 2014/2049
Plaza 422
 
Lebanon
 
1993 (C)
 
Fee
 
156,279

 
100
%
 
795,852

 
5.09

 
Home Depot 2028/2058
Dunham’s 2016/2031
Route 6 Mall
 
Honesdale
 
1994 (C)
 
Fee
 
175,519

 
99
%
 
1,160,112

 
6.67

 
Kmart 2020/2070 Fashion Bug 2016/- Advance Auto 2013/-
Chestnut Hill (10)
 
Philadelphia
 
2006 (A)
 
Fee
 
37,581

 
76
%
 
513,425

 
17.93

 
 
Abington Towne Center
 
Abington
 
1998 (A)
 
Fee
 
216,369


95
%
 
955,324

 
20.02

 
TJ Maxx 2016/2021 Target (11)
District of Columbia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rhode Island Place Shopping Center
 
Washington D.C.
 
2012 (A)
 
Fee
 
57,529

 
100
%
 
1,622,629

 
28.21

 
TJ Maxx 2017/-
179-53 & 1801-03 Connecticut Avenue
 
Washington D.C.
 
2012 (A)
 
Fee
 
22,907

 
93
%
 
1,090,701

 
51.39

 

Georgetown Portfolio (11)
 
Washington D.C.
 
2011 (A)
 
Fee/JV
 
27,666

 
96
%
 
1,799,387

 
67.48

 

Total Mid-Atlantic Region
 
 
 
 
 
1,903,178

 
96
%
 
$
25,938,944

 
$
15.57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Core Properties
 
 
 
 
 
 
 
5,328,685

 
94
%
 
$
84,116,660

 
$
17.66

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Opportunity Fund Portfolio
 
 
 
 
 
 

 
 
 
 

 
 

 
 
Fund I Properties
 
 
 
 
 
 
 
 

 
 
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VARIOUS REGIONS
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Kroger/Safeway Portfolio
 
3 locations (13)
 
2003 (A)
 
LI/JV (4)
 
97,500

 
69
%
 
$
302,076

 
$
4.48

 
Kroger 2014/2049
Safeway 2014/2044
Total Fund I Properties
 
 
 
 
 
 
 
97,500

 
69
%
 
$
302,076

 
$
4.48

 
 
Fund II Properties
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
New York
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Pelham Plaza
 
Pelham Manor
 
2004 (A)
 
LI/JV (4)
 
228,493

 
94
%
 
$
5,887,611

 
$
27.29

 
BJ’s Wholesale Club 2033/2053
Michaels 2013/2033 Petsmart 2021/2036
Fordham Place
 
Bronx
 
2004(A)
 
Fee/JV
 
119,446

 
100
%
 
5,519,760

 
46.21

 
Best Buy 2019/2039 Sears 2023/2033
216th Street
 
Manhattan
 
2005 (A)
 
Fee/JV
 
60,000

 
100
%
 
2,694,000

 
44.90

 
City of New York 2027/2032
161st Street (17)
 
Bronx
 
2005 (A)
 
Fee/JV
 
232,402

 
85
%
 
5,255,201

 
26.72

 
City of New York 2013/-
Total Fund II Properties
 
 
 
 
 
 
 
640,341

 
92
%
 
$
19,356,572

 
$
32.71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

22



Shopping Center
 
Location
 
Year
Constructed
(C)
Acquired
(A)
 
Ownership
Interest
 
GLA
 
Occupancy
%
12/31/12 (1)
 
Annual
Base
Rent (2)
 
Annual
Base
Rent
PSF
 
Anchor Tenants
Current Lease
Expiration/
Lease Option
Expiration
Opportunity Funds, continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fund III Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New York
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
Cortlandt Towne Center
 
Mohegan Lake
 
2009 (A)
 
Fee
 
641,225

 
92
%
 
$
9,449,199

 
$
15.98

 
Walmart 2018/2048 A&P 2022/2047
Best Buy 2017/2032 Petsmart 2014/2034
640 Broadway
 
Manhattan
 
2012 (A)
 
Fee/JV
 
4,409

 
74
%
 
662,103

 
203.54

 

New Hyde Park Shopping Center
 
New Hyde Park
 
2011 (A)
 
Fee
 
31,431

 
91
%
 
904,986

 
31.56

 
 
Massachusetts
 
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 
White City Shopping Center
 
Shrewsbury
 
2010 (A)
 
Fee/JV (14)
 
257,288

 
76
%
 
4,841,673

 
24.89

 
Shaw’s 2018/2033 Iparty 2015/-
Austin's Liquor 2015/-
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parkway Crossing
 
Baltimore
 
2011 (A)
 
Fee/JV (15)
 
260,241

 
93
%
 
1,897,981

 
7.84

 
Home Depot 2032/- Big Lots 2016/-
Shop Rite 2032/-
Arundel Plaza
 
Glen Burnie
 
2012 (A)
 
Fee/JV (15)
 
265,116

 
97
%
 
1,445,276

 
5.60

 
Giant Food 2015/2025 Lowes 2019/2059
Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lincoln Road
 
Miami
 
2011 (A)
 
Fee/JV (16)
 
61,443

 
49
%
 
3,257,573

 
108.31

 

Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Heritage Shops
 
Chicago
 
2011 (A)
 
Fee
 
105,585

 
77
%
 
3,103,565

 
38.29

 
LA Fitness 2025/2040
Lincoln Park Centre
 
Chicago
 
2012 (A)
 
Fee
 
62,745

 
60
%
 
1,607,359

 
42.87

 

Total Fund III Properties
 
 
 
 
 
 
 
1,689,483

 
87
%
 
$
27,169,715

 
$
18.48

 
 
Fund IV Properties
 

 

 

 


 


 


 


 

Maryland
 

 

 

 


 


 


 


 

1701 Belmont Avenue
 
Catonsville
 
2012 (A)
 
Fee/JV (15)
 
58,674

 
100
%
 
$
936,166

 
$
15.96

 
Best Buy 2017/2027
Florida
 

 

 

 


 


 


 


 

Lincoln Road
 
Miami
 
2012 (A)
 
Fee/JV (16)
 
54,453

 
100
%
 
4,949,953

 
90.90

 

Total Fund IV Properties
 

 

 

 
113,127

 
100
%
113,127

$
5,886,119

113,127

$
52.03

 

Total Opportunity Fund Operating Properties (18)
 
 
 
2,540,451

 
88
%
 
$
52,714,482

 
$
23.54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

23



Shopping Center
 
Location
 
Year
Constructed
(C)
Acquired
(A)
 
Ownership
Interest
 
GLA
 
Occupancy
%
12/31/12 (1)
 
Annual
Base
Rent (2)
 
Annual
Base
Rent
PSF
 
Anchor Tenants
Current Lease
Expiration/
Lease Option
Expiration
Notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1
)
Does not include space for which lease term had not yet commenced as of December 31, 2012.
 
 
(2
)
These amounts include, where material, the effective rent, net of concessions, including free rent.
(3
)
In addition to the 16,834 square feet of retail GLA, this property also has 21 apartments comprising 14,434 square feet.
(4
)
We are a ground lessee under a long-term ground lease.
 
 
(5
)
We have a 49% investment in this property.
 
 
(6
)
Includes a 97,300 square foot Wal-Mart which is not owned by us.
 
 
(7
)
Includes 19 properties (56 E. Walton, 841 W. Armitage, 2731 N. Clark, 2140 N. Clybourn, 853 W. Armitage, 2299 N. Clybourn, 1520 Milwaukee Avenue, 843-45 W Armitage,1521 W Belmont, 2206-08 N Halsted, 2633 N Halsted, 50-54 E. Walton, 662 W. Diversey, 837 W. Armitage, 823 W. Armitage, 851 W. Armitage, 1240 W. Belmont, 21 E. Chestnut and 819 W. Armitage).
 
 
(8
)
The GLA for this property excludes 29,857 square feet of office space.
 
 
(9
)
We have a 22% investment in this property.
 
 
(10
)
Property consists of two buildings.
 
 
(11
)
Includes a 157,616 square foot Target Store that is not owned by us.
 
 
(12
)
Includes six properties (1533 Wisconsin Ave., 3025 M St., 3034 M St., 3146 M St, 3259-61 M St., and 2809 M St.). We have a 50% investment in these properties.
 
 
(13
)
Three remaining assets including locations in Benton, AR, Tulsa, OK and Indianapolis, IN.
 
 
(14
)
The Fund has an 84% investment in this property.
 
 
(15
)
The Fund has a 90% investment in this property.
 
 
(16
)
The Fund has a 95% investment in this property.
 
 
(17
)
Currently operating but re-tenanting activities have commenced.
 
 
(18
)
In addition to the Opportunity Fund operating properties, there are eight properties under redevelopment; Sherman Plaza (Fund II), CityPoint (Fund II) , Sheepshead Bay (Fund III), 723 N. Lincoln Lane (Fund III), Broad Hollow Commons (Fund III), Cortlandt Crossing (Fund III), 3104 M Street (Fund III) and 210 Bowery (Fund IV).
 
 

24



MAJOR TENANTS
No individual retail tenant accounted for more than 4.0% of base rents for the year ended December 31, 2012 or occupied more than 7.4% of total leased GLA as of December 31, 2012. The following table sets forth certain information for the 20 largest retail tenants by base rent for leases in place as of December 31, 2012. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in properties, including the Opportunity Funds (GLA and Annualized Base Rent in thousands):
 
 
Number of
 
 
 
 
 
Percentage of Total
Represented by Retail Tenant
Retail Tenant
 
Stores in Portfolio (1)
 
Total GLA
 
Annualized Base Rent (2)
 
Total Portfolio
GLA
 
Annualized Base Rent
LA Fitness
 
4

 
110

 
$
2,551

 
2.4
%
 
4.0
%
Supervalu (Shaw’s)
 
4

 
176

 
2,421

 
3.8
%
 
3.8
%
Home Depot
 
7

 
313

 
2,007

 
6.8
%
 
3.1
%
Ahold (Stop and Shop)
 
3

 
155

 
1,936

 
3.4
%
 
3.0
%
A&P
 
3

 
90

 
1,924

 
2.0
%
 
3.0
%
TJX Companies
 
9

 
215

 
1,709

 
4.6
%
 
2.7
%
Sears
 
5

 
342

 
1,653

 
7.4
%
 
2.6
%
Walgreens
 
4

 
39

 
1,607

 
0.9
%
 
2.5
%
Best Buy
 
4

 
57

 
1,032

 
1.2
%
 
1.6
%
Trader Joe's
 
2

 
19

 
961

 
0.4
%
 
1.5
%
TD Bank
 
2

 
15

 
959

 
0.3
%
 
1.5
%
Walmart
 
3

 
213

 
887

 
4.6
%
 
1.4
%
Sleepy's
 
6

 
35

 
880

 
0.8
%
 
1.4
%
Dicks Sporting Goods
 
2

 
60

 
849

 
1.3
%
 
1.3
%
JP Morgan Chase
 
7

 
28

 
811

 
0.6
%
 
1.3
%
Citibank
 
6

 
15

 
739

 
0.3
%
 
1.1
%
Pier 1 Imports
 
4

 
25

 
690

 
0.5
%
 
1.1
%
Dollar Tree
 
7

 
64

 
653

 
1.4
%
 
1.0
%
Payless Shoesource
 
8

 
20

 
541

 
0.4
%
 
0.8
%
Coach
 
2

 
7

 
530

 
0.1
%
 
0.8
%
Total
 
92

 
1,998

 
$
25,340

 
43.2
%
 
39.5
%
Notes:
 
 
 
 
 
 
 
 
 
(1)
Does not include tenants that only operate at one shopping center.
 
 
 
 
 
 
 
 
 
 
(2)
Base rents do not include percentage rents, additional rents for property expense reimbursements and contractual rent escalations.
 
 
 
 
 
 
 
 
 
 

25



LEASE EXPIRATIONS
The following table shows scheduled lease expirations for retail tenants in place as of December 31, 2012, 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
 
6

 
$
322

 
%
 
17

 
%
2013 (2)
 
72

 
8,588

 
10
%
 
538

 
11
%
2014
 
70

 
9,704

 
12
%
 
541

 
11
%
2015
 
45

 
7,302

 
9
%
 
445

 
9
%
2016
 
59

 
8,499

 
10
%
 
511

 
11
%
2017
 
49

 
10,341

 
12
%
 
499

 
11
%
2018
 
22

 
6,705

 
8
%
 
403

 
8
%
2019
 
23

 
3,422

 
4
%
 
181

 
4
%
2020
 
22

 
5,663

 
7
%
 
367

 
8
%
2021
 
24

 
5,865

 
7
%
 
395

 
8
%
2022
 
23