UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 10-Q


 

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended June 30, 2011

 

 

or

 

 

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 in its charter)

 

 

MARYLAND

23-2715194

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

 

1311 MAMARONECK AVENUE, SUITE 260

10605

WHITE PLAINS, NY

(Zip Code)

(Address of principal executive offices)

 

(914) 288-8100

(Registrant’s telephone number, including area code)

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

Large Accelerated Filer  o     Accelerated Filer x

 

 

 

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

As of August 5, 2011 there were 40,332,554 common shares of beneficial interest, par value $.001 per share, outstanding.


ACADIA REALTY TRUST AND SUBSIDIARIES

FORM 10-Q

INDEX

 

 

 

 

 

Page

 

 


 

Part I:

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets as of June 30, 2011 (unaudited) and December 31, 2010

1

 

 

 

 

Consolidated Statements of Income for the three and six months ended June 30, 2011 and 2010 (unaudited)

2

 

 

 

 

Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the six months ended June 30, 2011 and 2010 (unaudited)

3

 

 

 

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010 (unaudited)

4

 

 

 

 

Notes to Consolidated Financial Statements

6

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

 

 

 

Item 4.

Controls and Procedures

31

 

 

 

Part II:

Other Information

 

 

 

 

Item 1.

Legal Proceedings

31

 

 

 

Item 1A.

Risk Factors

31

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

 

 

 

Item 3.

Defaults Upon Senior Securities

31

 

 

 

Item 4.

(Removed and Reserved)

31

 

 

 

Item 5.

Other Information

31

 

 

 

Item 6.

Exhibits

31

 

 

 

 

Signatures

32

 

 

 

 

Exhibit Index

33



Part I. Financial Information

Item 1. Financial Statements.

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

(dollars in thousands)

 

June 30,
2011

 

December 31,
2010

 

 

 


 


 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Operating real estate

 

 

 

 

 

 

 

Land

 

$

252,039

 

$

222,167

 

Building and improvements

 

 

936,514

 

 

876,588

 

Construction in progress

 

 

2,871

 

 

4,236

 

 

 



 



 

 

 

 

1,191,424

 

 

1,102,991

 

Less: accumulated depreciation

 

 

199,982

 

 

185,878

 

 

 



 



 

Net operating real estate

 

 

991,442

 

 

917,113

 

Real estate under development

 

 

237,373

 

 

243,892

 

Notes receivable, net

 

 

45,457

 

 

89,202

 

Investments in and advances to unconsolidated affiliates

 

 

68,523

 

 

31,036

 

Cash and cash equivalents

 

 

148,859

 

 

120,592

 

Cash in escrow

 

 

30,831

 

 

28,610

 

Rents receivable, net

 

 

21,646

 

 

17,621

 

Deferred charges, net

 

 

24,345

 

 

23,715

 

Acquired lease intangibles, net

 

 

20,808

 

 

18,622

 

Prepaid expenses and other assets

 

 

23,583

 

 

22,354

 

Assets of discontinued operations

 

 

 

 

12,049

 

 

 



 



 

Total assets

 

$

1,612,867

 

$

1,524,806

 

 

 



 



 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage notes payable

 

$

831,320

 

$

806,212

 

Convertible notes payable, net of unamortized discount of $523 and $1,063, respectively

 

 

39,221

 

 

48,712

 

Distributions in excess of income from, and investments in, unconsolidated affiliates

 

 

21,356

 

 

20,884

 

Accounts payable and accrued expenses

 

 

36,336

 

 

27,648

 

Dividends and distributions payable

 

 

7,506

 

 

7,427

 

Acquired lease and other intangibles, net

 

 

5,867

 

 

5,737

 

Other liabilities

 

 

16,963

 

 

20,492

 

Liabilities of discontinued operations

 

 

 

 

172

 

 

 



 



 

Total liabilities

 

 

958,569

 

 

937,284

 

 

 



 



 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Common shares, $.001 par value, authorized 100,000,000 shares; issued and outstanding 40,331,366 and 40,254,525 shares, respectively

 

 

40

 

 

40

 

Additional paid-in capital

 

 

303,536

 

 

303,823

 

Accumulated other comprehensive loss

 

 

(2,350

)

 

(2,857

)

Retained earnings

 

 

42,346

 

 

17,206

 

 

 



 



 

Total shareholders’ equity

 

 

343,572

 

 

318,212

 

Noncontrolling interests

 

 

310,726

 

 

269,310

 

 

 



 



 

Total equity

 

 

654,298

 

 

587,522

 

 

 



 



 

Total liabilities and equity

 

$

1,612,867

 

$

1,524,806

 

 

 



 



 

See accompanying notes

1


ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

(dollars in thousands, except per share amounts)

 

2011

 

2010

 

2011

 

2010

 

 

 


 


 


 


 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

29,016

 

$

24,662

 

$

56,423

 

$

49,345

 

Interest income

 

 

3,370

 

 

5,238

 

 

7,908

 

 

10,231

 

Expense reimbursements

 

 

5,635

 

 

4,574

 

 

10,889

 

 

10,150

 

Management fee income

 

 

288

 

 

436

 

 

917

 

 

836

 

Other

 

 

495

 

 

557

 

 

1,183

 

 

1,074

 

 

 



 



 



 



 

Total revenues

 

 

38,804

 

 

35,467

 

 

77,320

 

 

71,636

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

7,654

 

 

6,302

 

 

15,376

 

 

13,575

 

Real estate taxes

 

 

4,702

 

 

4,144

 

 

8,886

 

 

8,469

 

General and administrative

 

 

5,699

 

 

5,416

 

 

11,389

 

 

10,535

 

Depreciation and amortization

 

 

8,449

 

 

6,472

 

 

16,346

 

 

15,074

 

Impairment of asset

 

 

6,925

 

 

 

 

6,925

 

 

 

 

 



 



 



 



 

Total operating expenses

 

 

33,429

 

 

22,334

 

 

58,922

 

 

47,653

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

5,375

 

 

13,133

 

 

18,398

 

 

23,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings (losses) of unconsolidated affiliates

 

 

63

 

 

80

 

 

(85

)

 

467

 

Other interest income

 

 

80

 

 

153

 

 

114

 

 

287

 

Gain from bargain purchase

 

 

 

 

33,805

 

 

 

 

33,805

 

(Loss) gain on debt extinguishment

 

 

(102

)

 

 

 

1,571

 

 

 

Interest and other finance expense

 

 

(8,903

)

 

(9,502

)

 

(17,856

)

 

(19,157

)

 

 



 



 



 



 

(Loss) income from continuing operations before income taxes

 

 

(3,487

)

 

37,669

 

 

2,142

 

 

39,385

 

Income tax provision

 

 

(233

)

 

(645

)

 

(495

)

 

(1,084

)

 

 



 



 



 



 

(Loss) income from continuing operations

 

 

(3,720

)

 

37,024

 

 

1,647

 

 

38,301

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income from discontinued operations

 

 

185

 

 

473

 

 

548

 

 

703

 

Gain on sale of property

 

 

28,576

 

 

 

 

32,498

 

 

 

 

 



 



 



 



 

Income from discontinued operations

 

 

28,761

 

 

473

 

 

33,046

 

 

703

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

25,041

 

 

37,497

 

 

34,693

 

 

39,004

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

 

5,525

 

 

(24,647

)

 

8,478

 

 

(20,974

)

Discontinued operations

 

 

(332

)

 

(52

)

 

(3,514

)

 

(102

)

 

 



 



 



 



 

Net loss (income) attributable to noncontrolling interests

 

 

5,193

 

 

(24,699

)

 

4,964

 

 

(21,076

)

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Common Shareholders

 

$

30,234

 

$

12,798

 

$

39,657

 

$

17,928

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.04

 

$

0.31

 

$

0.25

 

$

0.43

 

Income from discontinued operations

 

 

0.71

 

 

0.01

 

 

0.73

 

 

0.02

 

 

 



 



 



 



 

Basic earnings per share

 

$

0.75

 

$

0.32

 

$

0.98

 

$

0.45

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.04

 

$

0.31

 

$

0.25

 

$

0.43

 

Income from discontinued operations

 

 

0.70

 

 

0.01

 

 

0.73

 

 

0.02

 

 

 



 



 



 



 

Diluted earnings per share

 

$

0.74

 

$

0.32

 

$

0.98

 

$

0.45

 

 

 



 



 



 



 

See accompanying notes

2


ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional
Paid-in
Capital

 

Accumulated
Other
Comprehensive
Loss

 

Retained
Earnings

 

Total
Shareholders’
Equity

 

Noncontrolling
Interests

 

Total
Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares

 

 

 

 

 

 

(Amounts in thousands, except per share amounts)

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 


 


 


 


 


 


 


 


 

Balance at December 31, 2010

 

 

40,254

 

$

40

 

$

303,823

 

$

(2,857

)

$

17,206

 

$

318,212

 

$

269,310

 

$

587,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of 11 OP Units to Common Shares by limited partners of the Operating Partnership

 

 

11

 

 

 

 

49

 

 

 

 

 

 

49

 

 

(49

)

 

 

Dividends declared ($0.36 per Common Share)

 

 

 

 

 

 

 

 

 

 

(14,517

)

 

(14,517

)

 

(492

)

 

(15,009

)

Vesting of employee Restricted Share and LTIP awards

 

 

95

 

 

 

 

257

 

 

 

 

 

 

257

 

 

1,966

 

 

2,223

 

Common Shares issued under Employee Share Purchase Plan

 

 

2

 

 

 

 

45

 

 

 

 

 

 

45

 

 

 

 

45

 

Issuance of LTIP Unit awards to employees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,441

 

 

2,441

 

Issuance of Common Shares to trustees

 

 

8

 

 

 

 

79

 

 

 

 

 

 

79

 

 

 

 

79

 

Exercise of trustees options

 

 

1

 

 

 

 

7

 

 

 

 

 

 

7

 

 

 

 

7

 

Employee Restricted Shares cancelled

 

 

(40

)

 

 

 

(724

)

 

 

 

 

 

(724

)

 

 

 

(724

)

Noncontrolling interest distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(705

)

 

(705

)

Noncontrolling interest contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43,646

 

 

43,646

 

 

 
























 

 

 

 

40,331

 

 

40

 

 

303,536

 

 

(2,857

)

 

2,689

 

 

303,408

 

 

316,117

 

 

619,525

 

 

 
























 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

39,657

 

 

39,657

 

 

(4,964

)

 

34,693

 

Unrealized loss on valuation of swap agreements

 

 

 

 

 

 

 

 

(803

)

 

 

 

(803

)

 

(754

)

 

(1,557

)

Reclassification of realized interest on swap agreements

 

 

 

 

 

 

 

 

1,310

 

 

 

 

1,310

 

 

327

 

 

1,637

 

 

 
























 

Total comprehensive income (loss)

 

 

 

 

 

 

 

 

507

 

 

39,657

 

 

40,164

 

 

(5,391

)

 

34,773

 

 

 
























 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2011

 

 

40,331

 

$

40

 

$

303,536

 

$

(2,350

)

$

42,346

 

$

343,572

 

$

310,726

 

$

654,298

 

 

 
























 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2009

 

 

39,787

 

$

40

 

$

299,014

 

$

(2,994

)

$

16,125

 

$

312,185

 

$

220,292

 

$

532,477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of 257 OP Units to Common Shares by limited partners of the Operating Partnership

 

 

257

 

 

 

 

2,174

 

 

 

 

 

 

2,174

 

 

(2,174

)

 

 

Dividends declared ($0.36 per Common Share)

 

 

 

 

 

 

 

 

 

 

(14,466

)

 

(14,466

)

 

(381

)

 

(14,847

)

Vesting of employee Restricted Share and LTIP awards

 

 

133

 

 

 

 

1,062

 

 

 

 

 

 

1,062

 

 

888

 

 

1,950

 

Common Shares issued under Employee Share Purchase Plan

 

 

3

 

 

 

 

50

 

 

 

 

 

 

50

 

 

 

 

50

 

Issuance of Common Shares to trustees

 

 

13

 

 

 

 

190

 

 

 

 

 

 

190

 

 

 

 

190

 

Exercise of trustees options

 

 

7

 

 

 

 

101

 

 

 

 

 

 

101

 

 

 

 

101

 

Employee Restricted Shares cancelled

 

 

(57

)

 

 

 

(966

)

 

 

 

 

 

(966

)

 

 

 

(966

)

Noncontrolling interest distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(523

)

 

(523

)

Noncontrolling interest contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,476

 

 

19,476

 

 

 
























 

 

 

 

40,143

 

 

40

 

 

301,625

 

 

(2,994

)

 

1,659

 

 

300,330

 

 

237,578

 

 

537,908

 

 

 
























 

Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

17,928

 

 

17,928

 

 

21,076

 

 

39,004

 

Unrealized loss on valuation of swap agreements

 

 

 

 

 

 

 

 

(1,701

)

 

 

 

(1,701

)

 

(26

)

 

(1,727

)

Reclassification of realized interest on swap agreements

 

 

 

 

 

 

 

 

1,324

 

 

 

 

1,324

 

 

177

 

 

1,501

 

 

 
























 

Total comprehensive income (loss)

 

 

 

 

 

 

 

 

(377

)

 

17,928

 

 

17,551

 

 

21,227

 

 

38,778

 

 

 
























 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2010

 

 

40,143

 

$

40

 

$

301,625

 

$

(3,371

)

$

19,587

 

$

317,881

 

$

258,805

 

$

576,686

 

 

 
























 

See accompanying notes

3


ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Six months ended
June 30,

 

 

 

2011

 

2010

 

 

 




 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

34,693

 

$

39,004

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

 

Depreciation and amortization

 

 

16,689

 

 

16,119

 

Amortization of financing costs

 

 

1,817

 

 

2,086

 

Gain from bargain purchase

 

 

 

 

(33,805

)

Gain on sale of property

 

 

(32,498

)

 

 

Gain on debt extinguishment

 

 

(1,571

)

 

 

Impairment of asset

 

 

6,925

 

 

 

Non-cash accretion of notes receivable

 

 

(504

)

 

(2,961

)

Share compensation expense

 

 

2,304

 

 

2,141

 

Equity in losses (earnings) of unconsolidated affiliates

 

 

85

 

 

(467

)

Other, net

 

 

2,303

 

 

2,107

 

Changes in assets and liabilities

 

 

 

 

 

 

 

Cash in escrow

 

 

(2,543

)

 

484

 

Rents receivable, net

 

 

(4,252

)

 

(1,441

)

Prepaid expenses and other assets, net

 

 

(1,223

)

 

(1,094

)

Accounts payable and accrued expenses

 

 

1,077

 

 

(2,216

)

Other liabilities

 

 

(3,053

)

 

280

 

 

 






 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

20,249

 

 

20,237

 

 

 






 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Investment in real estate

 

 

(91,918

)

 

(36,934

)

Deferred acquisition and leasing costs

 

 

(2,554

)

 

(1,802

)

Investments in and advances to unconsolidated affiliates

 

 

(41,572

)

 

(2,182

)

Return of capital from unconsolidated affiliates

 

 

3,141

 

 

617

 

Repayments of notes receivable

 

 

47,932

 

 

2,011

 

Increase in notes receivable

 

 

(3,834

)

 

 

Proceeds from sale of property

 

 

43,791

 

 

 

 

 






 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(45,014

)

 

(38,290

)

 

 






 

4


ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

 

 

 

 

 

 

 

Six months ended
June 30,

 

(dollars in thousands)

 

2011

 

2010

 

 

 




 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Principal payments on mortgage notes

 

 

(24,260

)

 

(26,254

)

Proceeds received on mortgage notes

 

 

51,223

 

 

29,035

 

Increase in deferred financing and other costs

 

 

(1,268

)

 

(2,945

)

Capital contributions from noncontrolling interests

 

 

43,646

 

 

19,476

 

Distributions to noncontrolling interests

 

 

(1,123

)

 

(903

)

Dividends paid to Common Shareholders

 

 

(14,513

)

 

(14,419

)

Repurchase and cancellation of Common Shares

 

 

(725

)

 

(966

)

Common Shares issued under Employee Share Purchase Plan

 

 

45

 

 

50

 

Exercise of options to purchase Common Shares

 

 

7

 

 

101

 

 

 






 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

53,032

 

 

3,175

 

 

 






 

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

 

28,267

 

 

(14,878

)

Cash and cash equivalents, beginning of period

 

 

120,592

 

 

93,808

 

 

 






 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

148,859

 

$

78,930

 

 

 






 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

Cash paid during the period for interest, net of capitalized interest of $2,464 and $876, respectively

 

$

16,683

 

$

15,597

 

 

 






 

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

3,701

 

$

1,095

 

 

 






 

 

 

 

 

 

 

 

 

Acquisition of interest in unconsolidated affiliate:

 

 

 

 

 

 

 

Real estate, net

 

$

 

$

(108,000

)

Assumption of mortgage debt

 

 

 

 

25,990

 

Gain on bargain purchase

 

 

 

 

33,805

 

Other assets and liabilities

 

 

 

 

7,532

 

Investment in unconsolidated affiliates

 

 

 

 

37,824

 

 

 






 

Cash included in investment in real estate

 

$

 

$

(2,849

)

 

 






 

See accompanying notes

5


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

Business and Organization

Acadia Realty Trust (the “Trust”) and subsidiaries (collectively, the “Company”), is a fully-integrated equity real estate investment trust (“REIT”) focused on the ownership, management and redevelopment of retail properties and urban/infill mixed-use properties with a retail component concentration located primarily in high-barrier-to-entry, densely-populated metropolitan areas in the United States along the East Coast and in Chicago.

All of the Company’s assets are held by, and all of its operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and entities in which the Operating Partnership owns an interest. As of June 30, 2011, the Trust controlled approximately 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 or Preferred OP Units”) and restricted OP units (“LTIP Units”) awarded to employees as long-term compensation (Note 13). Limited partners holding Common OP Units are generally entitled to exchange their units on a one-for-one basis for common shares of beneficial interest of the Trust (“Common Shares”).

As of June 30, 2011, the Company has ownership interests in 35 properties within its core portfolio (“Core Portfolio”) and 49 properties within its three opportunity funds, Acadia Strategic Opportunity Fund L.P. (“Fund I”), Acadia Strategic Opportunity Fund II, LLC (“Fund II”) and Acadia Strategic Opportunity Fund III, LLC (“Fund III” and together with Fund I and Fund II, the “Opportunity Funds”). The 84 properties consist of commercial properties, primarily neighborhood and community shopping centers, mixed-use properties with a retail component and self-storage properties. In addition, the Company also invests in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I”) and Acadia Mervyn Investors II, LLC (“Mervyns II”) or 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 has the following equity interests in the Opportunity Funds, Mervyns I and Mervyns II:

 

 

 

 

Entity

 

 

Equity Interest Held By Operating Partnership


 

 


Fund I and Mervyns I

 

22.2%

Fund II and Mervyns II

 

20.0%

Fund III

 

19.9%

In addition, with respect to each of the Opportunity Funds, Mervyns I and Mervyns II, the Operating Partnership is entitled to a profit participation in excess of its equity interest percentage based on certain investment return thresholds (“Promote”).

Basis of Presentation

The consolidated financial statements include the consolidated accounts of the Company and its investments in partnerships and limited liability companies in which the Company is presumed to have control in accordance with the consolidation guidance of the Financial Accounting Statements Board (“FASB”) Accounting Standards Codification (“ASC”). Investments in entities for which the Company has the ability to exercise significant influence but does not have financial or operating control, are accounted for under the equity method of accounting. Accordingly, the Company’s share of the net earnings (or losses) of entities accounted for under the equity method are included in consolidated net income under the caption, Equity in Earnings (Losses) of Unconsolidated Affiliates. Investments in entities for which the Company does not have the ability to exercise any influence are accounted for under the cost method.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2011. The information furnished in the accompanying consolidated financial statements reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the aforementioned consolidated financial statements for the interim periods. These consolidated financial statements should be read in conjunction with the Company’s 2010 Annual Report on Form 10-K, as filed with the SEC on February 28, 2011.

6


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

Reclassifications

Certain reclassifications have been made to the 2010 financial statements to conform to the 2011 presentation.

Real Estate

The Company reviews its long-lived assets used in operations for impairment when there is an event, or change in circumstances that indicates that the carrying amount may not be recoverable. The Company records impairment losses and reduces the carrying value of properties when indicators of impairment are present and the expected undiscounted cash flows related to those properties are less than their carrying amounts. In cases where the Company does not expect to recover its carrying costs on properties held for use, the Company reduces its carrying cost to fair value, and for properties held for sale, the Company reduces its carrying value to the fair value less costs to sell. During the quarter ended June 30, 2011, the Company determined that the value of the Granville Centre owned by Fund I was impaired. Accordingly, it recorded an impairment loss of $6.9 million. Management does not believe that the values of any of its other properties within the portfolio are impaired as of June 30, 2011.

Recent Accounting Pronouncements

During April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-02 “A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.” ASU 2011-02 requires a creditor to evaluate whether a restructuring constitutes a troubled debt restructuring by concluding that the restructuring constitutes a concession and that the debtor is experiencing financial difficulties and was effective for the first interim or annual period beginning on or after June 15, 2011. The adoption of ASU 2011-02 did not have a material impact on the Company’s financial condition or results of operations.

During May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU No. 2011-04 amended ASC 820, Fair Value Measurements and Disclosures, to converge the fair value measurement guidance in GAAP and International Financial Reporting Standards (“IFRS”). The amendments, which primarily require additional fair value disclosure, are to be applied prospectively. The Company is currently evaluating the impact of adopting ASU 2011-04 which is effective for interim and annual periods beginning after December 15, 2011.

During June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” which revises the manner in which companies present comprehensive income. Under ASU No. 2011-05, companies may present comprehensive income, which is net income adjusted for the components of other comprehensive income, either in a single continuous statement of comprehensive income or by using two separate but consecutive statements. Regardless of the alternative chosen, companies must display adjustments for items reclassified from other comprehensive income into net income within the presentation of both net income and other comprehensive income. ASU 2011-05 is effective for interim and annual periods beginning after December 15, 2011, on a retrospective basis. The Company is currently evaluating the impact of the adoption of ASU 2011-05 on its consolidated financial statements.

2. EARNINGS PER COMMON SHARE

Basic earnings per Common Share is computed using net income attributable to common shareholders and the weighted average Common Shares outstanding. Diluted earnings per Common Share reflect the conversion of obligations and the assumed exercises of securities including the effects of awards issuable under the Company’s Share Incentive Plans. The following table sets forth the computation of basic and diluted earnings per share from continuing operations for the periods indicated:

7


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

2. EARNINGS PER COMMON SHARE (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

(dollars in thousands, except per share amounts)

 

2011

 

2010

 

2011

 

2010

 






 


 


 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to Common Shareholders

 

$

1,805

 

$

12,377

 

$

10,125

 

$

17,327

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred OP Unit distributions

 

 

5

 

 

5

 

 

9

 

 

9

 

 

 



 



 



 



 

Numerator for diluted earnings per Common Share

 

$

1,810

 

$

12,382

 

$

10,134

 

$

17,336

 

 

 



 



 



 



 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares for basic earnings per share

 

 

40,334

 

 

40,135

 

 

40,326

 

 

40,058

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee share options

 

 

274

 

 

212

 

 

256

 

 

191

 

Convertible Preferred OP Units

 

 

25

 

 

25

 

 

25

 

 

25

 

 

 



 



 



 



 

Dilutive potential Common Shares

 

 

299

 

 

237

 

 

281

 

 

216

 

 

 



 



 



 



 

Denominator for diluted earnings per share

 

 

40,633

 

 

40,372

 

 

40,607

 

 

40,274

 

 

 



 



 



 



 

Basic earnings per Common Share from continuing operations attributable to Common Shareholders

 

$

0.04

 

$

0.31

 

$

0.25

 

$

0.43

 

 

 



 



 



 



 

Diluted earnings per Common Share from continuing operations attributable to Common Shareholders

 

$

0.04

 

$

0.31

 

$

0.25

 

$

0.43

 

 

 



 



 



 



 

The weighted average shares used in the computation of diluted earnings per share include unvested restricted Common Shares (“Restricted Shares”) and restricted OP units (“LTIP Units”) (Note 13) that are entitled to receive dividend equivalent payments. The effect of the conversion of Common OP Units is not reflected in the above table, as they are exchangeable for Common Shares on a one-for-one basis. The income allocable to such units is allocated on this same basis and reflected as noncontrolling interests in subsidiaries in the accompanying consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings per share. The conversion of the convertible notes payable (Note 9) is not reflected in the table above as such conversion, based on the current market price of the Common Shares, would be settled with cash.

The effect of the assumed conversion of 188 Series A Preferred OP Units into 25,067 Common Shares would be dilutive for the three and six months ended June 30, 2011 and 2010 and are accordingly included in the table above.

3. NONCONTROLLING INTERESTS

Noncontrolling interests represent the portion of equity in entities consolidated in the accompanying financial statements that the Company does not own. Such noncontrolling interests are reported on the Consolidated Balance Sheets within equity, separately from shareholders’ equity.

Noncontrolling interests include third party interests in the Company’s Opportunity Funds and other entities. It also include interests in the Operating Partnership which represent (i) the limited partners’ 280,349 and 281,294 Common OP Units at June 30, 2011 and December 31, 2010, respectively; (ii) 188 Series A Preferred OP Units at both June 30, 2011 and December 31, 2010; and (iii) 1,060,225 and 641,534 LTIP Units at June 30, 2011 and December 31, 2010, respectively.

4. ACQUISITION AND DISPOSITION OF REAL ESTATE AND DISCONTINUED OPERATIONS

Acquisitions

During June 2011, the Company acquired 15 Mercer Street, a 6,000 square foot single-tenant retail condominium located in New York, New York for $4.8 million.

During May 2011, the Company acquired 651-671 West Diversey Parkway, a 44,000 square foot retail property located in Chicago, Illinois, for $28.4 million.

During April 2011, the Company, through Fund III, acquired The Heritage Shops at Millennium Park, a 105,000 square foot property located in the East Loop section of downtown Chicago, Illinois, for $31.6 million.

8


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

4. ACQUISITION AND DISPOSITION OF REAL ESTATE AND DISCONTINUED OPERATIONS (continued)

During February 2011, Fund III, in a venture with an unaffiliated partner, acquired three retail properties (“Lincoln Road”), aggregating 61,400 square feet located in the Lincoln Road area of South Miami Beach, Florida for $51.9 million, which included the assumption of $20.6 million of in-place mortgage debt. Fund III has a 95% interest in these properties.

During February 2011, Fund III, in a venture with an unaffiliated partner, acquired a 64,600 square foot single-tenant retail property (“White Oak”) located in Silver Spring, Maryland for $9.8 million. Fund III has a 90% interest in the property.

Discontinued Operations

The Company reports properties held-for-sale and properties sold during the periods as discontinued operations. The results of operations of discontinued operations are reflected as a separate component within the accompanying Consolidated Financial Statements for all periods presented.

During May 2011, the Company sold the Ledgewood Mall, a 517,000 square foot, unencumbered enclosed mall located in Ledgewood, New Jersey, for $37.0 million. The sale resulted in a gain of $28.6 million.

During January 2011, the Company completed the sale of a Fund II leasehold interest in the Neiman Marcus location at Oakbrook Center, located in Oak Brook, Illinois, for $8.2 million. The sale resulted in a gain of $3.9 million.

The combined assets and liabilities as of December 31, 2010 and results of operations of the properties classified as discontinued operations for the three and six months ended June 30, 2011 and 2010, respectively are summarized as follows:

 

 

 

 

 

BALANCE SHEET

 

December 31,

 

(dollars in thousands)

 

2010

 

 

 


 

ASSETS

 

 

 

 

Net real estate

 

$

9,420

 

Rents receivable, net

 

 

492

 

Deferred charges, net of amortization

 

 

2,015

 

Prepaid expenses and other assets, net

 

 

122

 

 

 



 

Total assets of discontinued operations

 

$

12,049

 

 

 



 

LIABILITIES

 

 

 

 

Accounts payable and accrued expenses

 

$

43

 

Other liabilities

 

 

129

 

 

 



 

Total liabilities of discontinued operations

 

$

172

 

 

 



 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF OPERATIONS

 

Three months ended
June 30,

 

Six months ended
June 30,

 

(dollars in thousands)

 

2011

 

2010

 

2011

 

2010

 

 

 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

468

 

$

1,465

 

$

1,803

 

$

3,023

 

Total expenses

 

 

283

 

 

992

 

 

1,255

 

 

2,320

 

 

 



 



 



 



 

Operating income

 

 

185

 

 

473

 

 

548

 

 

703

 

Gain on sale of property

 

 

28,576

 

 

 

 

32,498

 

 

 

 

 



 



 



 



 

Income from discontinued operations

 

 

28,761

 

 

473

 

 

33,046

 

 

703

 

Income from discontinued operations attributable to noncontrolling interests

 

 

(332

)

 

(52

)

 

(3,514

)

 

(102

)

 

 



 



 



 



 

Income from discontinued operations attributable to Common Shareholders

 

$

28,429

 

$

421

 

$

29,532

 

$

601

 

 

 



 



 



 



 

5. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

Core Portfolio

The Company owns a 22.2% interest in an approximately one million square foot retail portfolio (the “Brandywine Portfolio”) located in Wilmington, Delaware and a 49% interest in Crossroads Joint Venture and Crossroads II (collectively, “Crossroads”), which own a 311,000 square foot shopping center located in White Plains, New York. These investments are accounted for under the equity method.

9



ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

5. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES (continued)

Opportunity Funds

RCP Venture

During 2004, the Company along with Klaff Realty, LP (“Klaff”) and Lubert-Adler Management, Inc. (“Lubert-Adler”) formed an investment group, the RCP Venture, for the purpose of making investments in surplus or underutilized properties owned by retailers. The RCP Venture is neither a single entity nor a specific investment. Any member of this group has the option of participating, or not, in any individual investment and each individual investment has been made on a stand-alone basis through a separate limited liability company (“LLC”). These investments have been made through different investment vehicles with different affiliated and unaffiliated investors and different economics to the Company. Investments under the RCP Venture are structured as separate joint ventures as there may be other investors participating in certain investments in addition to Klaff, Lubert-Adler and Acadia. The Company has made these investments through its subsidiaries, Mervyns I, Mervyns II and Fund II, (together the “Acadia Investors”), all on a non-recourse basis. Through June 30, 2011, the Acadia Investors have made investments in Mervyns Department Stores (“Mervyns”) and Albertsons including additional investments in locations that are separate from these original investments (“Add-On Investments”). Additionally, the Acadia Investors have invested in Shopko, Marsh and Rex Stores Corporation (collectively “Other RCP Investments”).

The Acadia Investors have noncontrolling interests in the individual investee LLC’s as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acadia Investors
Ownership % in:

 

Investment

 

 

Investee LLC

 

 

Acadia Investors
Entity

 

 

Investee
LLC

 

 

Underlying
entity(s)

 















Mervyns

 

 

KLA/Mervyn’s, LLC

 

 

Mervyns I and Mervyns II

 

 

10.5

%

 

5.8

%

Mervyns Add-On investments

 

 

KLA/Mervyn’s, LLC

 

 

Mervyns I and Mervyns II

 

 

10.5

%

 

5.8

%

Albertsons

 

 

KLA A Markets, LLC

 

 

Mervyns II

 

 

18.9

%

 

5.7

%

Albertsons Add-On investments

 

 

KLA A Markets, LLC

 

 

Mervyns II

 

 

20.0

%

 

6.0

%

Shopko

 

 

KLA-Shopko, LLC

 

 

Fund II

 

 

20.0

%

 

2.0

%

Marsh and Add-On investments

 

 

KLA Marsh, LLC

 

 

Fund II

 

 

20.0

%

 

3.3

%

Rex Stores

 

 

KLAC Rex Venture, LLC

 

 

Mervyns II

 

 

13.3

%

 

13.3

%

The Company accounts for the original investments in Mervyns and Albertsons under the equity method of accounting as the Company has the ability to exercise significant influence, but does not have financial or operating control.

The Company accounts for the Add-On Investments and Other RCP Investments under the cost method. Due to its minor ownership interest, based on the size of the investments as well as the terms of the underlying operating agreements, the Company has no influence over such entities operating and financial policies. Other than the minority investor rights to which the Company is entitled pursuant to statute, it has no rights other than to receive its pro-rata share of cash distributions as declared by the managers of the Add-On Investments and Other RCP Investments. The Company has no rights with respect to the control and operation of these investment vehicles, nor with the formulation and execution of business and investment policies.

The following table summarizes activity related to the RCP Venture investments from inception through June 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Operating Partnership Share

 

 

 

 

 

 

 

 

 

 

 

 


 

Investment

 

Year
Acquired

 

Invested
Capital
and Advances

 

Distributions

 

Invested
Capital
and Advances

 

Distributions

 












 

Mervyns

 

2004

 

$

26,058

 

$

45,966

 

$

4,901

 

$

11,251

 

Mervyns Add-On investments

 

2005/2008

 

 

6,517

 

 

3,558

 

 

1,046

 

 

819

 

Albertsons

 

2006

 

 

20,717

 

 

77,053

 

 

4,239

 

 

15,410

 

Albertsons Add-On investments

 

2006/2007

 

 

2,416

 

 

1,679

 

 

388

 

 

336

 

Shopko

 

2006

 

 

1,108

 

 

1,659

 

 

222

 

 

332

 

Marsh and Add-on investments

 

2006/2008

 

 

2,667

 

 

2,639

 

 

533

 

 

528

 

Rex Stores

 

2007

 

 

2,701

 

 

840

 

 

535

 

 

168

 

 

 

 

 












 

 

 

 

 

$

62,184

 

$

133,394

 

$

11,864

 

$

28,844

 

 

 

 

 












 

10



ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

5. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES (continued)

Other Opportunity Fund Investments

Fund II Investments

Prior to June 30, 2010, Fund II had a 24.75% interest in CityPoint, a redevelopment project located in downtown Brooklyn, NY, which was accounted for under the equity method. On June 30, 2010, Fund II acquired the remaining interest in the project from its unaffiliated partner and, as a result, now consolidates the CityPoint investment.

Fund III Investments

The unaffiliated venture partners for the Lincoln Road (Note 4), White Oak (Note 4) and the White City Shopping Center investments maintain control over these entities and, as such, the Company accounts for these investments using the equity method.

During June 2010, Fund III, together with an unaffiliated partner, invested in an entity for the purpose of providing management services to owners of self-storage properties, including the 14 locations currently owned through Fund II and Fund III. The entity was determined to be a variable interest entity for which the Company was determined not to be the primary beneficiary. As such, the Company accounts for this investment under the equity method.

Summary of Investments in Unconsolidated Affiliates

The following combined/condensed Balance Sheets and Statements of Operations, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates.

 

 

 

 

 

 

 

 

(dollars in thousands)

 

June 30,
2011

 

December 31,
2010

 

 

 


 


 

Combined and Condensed Balance Sheets

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Rental property, net

 

$

246,972

 

$

186,802

 

Investment in unconsolidated affiliates

 

 

171,478

 

 

192,002

 

Other assets

 

 

29,046

 

 

27,841

 

 

 



 



 

 

 

 

 

 

 

 

 

Total assets

 

$

447,496

 

$

406,645

 

 

 



 



 

 

 

 

 

 

 

 

 

Liabilities and partners’ equity

 

 

 

 

 

 

 

Mortgage notes payable

 

$

288,345

 

$

267,565

 

Other liabilities

 

 

14,758

 

 

13,815

 

Partners’ equity

 

 

144,393

 

 

125,265

 

 

 



 



 

 

 

 

 

 

 

 

 

Total liabilities and partners’ equity

 

$

447,496

 

$

406,645

 

 

 



 



 

Company’s investment in and advances to unconsolidated affiliates

 

$

68,523

 

$

31,036

 

 

 



 



 

Company’s share of distributions in excess of share of income and
investments in unconsolidated affiliates

 

$

(21,356

)

$

(20,884

)

 

 



 



 

11


ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

5. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

(dollars in thousands)

 

June 30,
2011

 

June 30,
2010

 

June 30,
2011

 

June 30,
2010

 

 

 


 


 


 


 

Combined and Condensed Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

10,917

 

$

7,401

 

$

20,499

 

$

14,470

 

Operating and other expenses

 

 

3,528

 

 

2,074

 

 

7,294

 

 

4,611

 

Interest expense

 

 

4,242

 

 

3,391

 

 

8,258

 

 

6,777

 

Equity in (losses) earnings of unconsolidated affiliates

 

 

(1,370

)

 

(159

)

 

(412

)

 

2,764

 

Depreciation and amortization

 

 

2,376

 

 

1,557

 

 

4,245

 

 

2,624

 

Loss on sale of property, net

 

 

 

 

 

 

 

 

(2,957

)

 

 



 



 



 



 

Net (loss) income

 

$

(599

)

$

220

 

$

290

 

$

265

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company’s share of net income

 

$

160

 

$

177

 

$

110

 

$

661

 

Amortization of excess investment

 

 

(97

)

 

(97

)

 

(195

)

 

(194

)

 

 



 



 



 



 

Company’s share of net income (loss)

 

$

63

 

$

80

 

$

(85

)

$

467

 

 

 



 



 



 



 

6. NOTES RECEIVABLE

At June 30, 2011, the Company’s notes receivable, net, aggregated $45.5 million, and were collateralized either by the underlying properties or the borrowers’ ownership interest in the entities that own the properties and/or by the borrowers’ personal guarantee as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Description

 

Effective
interest
rate

 

Maturity date

 

First
priority
liens

 

Net carrying
amount of
notes
receivable

 

Extension
options

 










 


 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mezzanine Loan

 

 

10.0

%

7/2011

 

$

 

$

2,530

 

 

 

Mezzanine Loan

 

 

13.0

%

9/2011

 

 

28,925

 

 

2,980

 

 

 

Mezzanine Loan

 

 

13.0

%

9/2011

 

 

6,000

 

 

1,964

 

 

 

First Mortgage Loan

 

 

10.8

%

9/2011

 

 

 

 

10,000

 

 

 

Mezzanine Loan

 

 

10.2

%

11/2011

 

 

9,348

 

 

8,000

 

 

1 x 1 year

 

Other Loan

 

 

14.5

%

12/2011

 

 

 

 

8,585

 

 

 

Other Loan

 

 

24.0

%

1/2016

 

 

166,200

 

 

3,394

 

 

 

Mezzanine Loan

 

 

17.5

%

1/2017

 

 

37,700

 

 

2,173

 

 

 

Mezzanine Loan

 

 

15.0

%

Upon Capital Event

 

 

11,925

 

 

3,834

 

 

 

Individually less than 3%

 

 

10% to 13.0

%

9/2011 to 12/2011

 

 

17,334

 

 

1,997

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

Total

 

 

 

 

 

 

 

 

 

$

45,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

During May 2011, the Company received a payment of $54.7 million on a mezzanine loan, representing $33.8 million of principal, $13.4 million of accrued interest, and a $7.5 million exit fee.

During February 2011, the Company made a mezzanine loan for $3.8 million which accrues interest at 15% and is payable upon a capital event. The Company also received a payment of $1.9 million on a mezzanine loan.

Allowances for real estate notes receivable are established based upon management’s quarterly review of the investments. In performing this review, management considers the estimated net recoverable value of the loan as well as other factors, including the fair value of any collateral, the amount and status of any senior debt, and the prospects for the borrower. Because this determination is based upon projections of future economic events, which are inherently subjective, the amounts ultimately realized from the loans may differ materially from the carrying value at the balance sheet date.

12


ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

6. NOTES RECEIVABLE (continued)

The activity in the allowance for notes receivable for the six months ended June 30, 2011 is as follows:

 

 

 

 

 

(dollars in thousands)

 

Allowance for
Notes Receivable

 

 

 



 

 

 

 

 

 

Balance at December 31, 2010

 

$

4,964

 

Provision for losses on notes receivable

 

 

180

 

 

 



 

Balance at June 30, 2011

 

$

5,144

 

 

 



 

7. DERIVATIVE FINANCIAL INSTRUMENTS

As of June 30, 2011, the Company’s derivative financial instruments consisted of seven interest rate swaps with an aggregate notional value of $71.3 million, which effectively fix LIBOR at rates ranging from 0.4% to 5.1% and mature between September 2011 and November 2012. The Company also has a derivative financial instrument with a notional value of $28.9 million which caps LIBOR at 6.0% and matures in April 2013. The fair value of the net derivative liability of these instruments, which is included in other liabilities in the Consolidated Balance Sheets, totaled $2.2 million and $2.8 million at June 30, 2011 and December 31, 2010, respectively. The notional value does not represent exposure to credit, interest rate, or market risks.

These derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable rate mortgage debt. Such instruments are reported at the fair value reflected above. As of June 30, 2011 and December 31, 2010, unrealized losses totaling $2.4 million and $2.8 million, respectively, were reflected in accumulated other comprehensive loss.

As of June 30, 2011 and December 31, 2010, no derivatives were designated as fair value hedges, hedges of net investments in foreign operations or considered to be ineffective. Additionally, the Company does not use derivatives for trading or speculative purposes.

8. MORTGAGE NOTES PAYABLE

The Company completed the following transactions related to mortgage loans and credit facilities during the six months ended June 30, 2011:

During June 2011, the Company modified an existing $85.3 million loan collateralized by a property. The modification extended the maturity date from October 4, 2011 to September 30, 2012. The loan continues to bear interest at LIBOR plus 350 basis points subject to an interest rate floor of 5.00%.

During June 2011, the Company modified an existing $9.4 million loan collateralized by a property. The modification extended the maturity date from June 29, 2012 to June 30, 2018. The loan continues to bear interest at LIBOR plus 140 basis points.

During February 2011, the Company borrowed $39.0 million under the Fund III subscription line of credit. During April 2011, the Company repaid $15.1 million of the Fund III subscription line of credit. As of June 30, 2011, the total outstanding amount on this line of credit was $195.4 million.

During January 2011, the Company liquidated a $9.3 million mortgage loan for $7.6 million, resulting in a $1.7 million gain on extinguishment of debt.

During January 2011, the Company borrowed the remaining $2.4 million of a $34.0 million loan collateralized by a property.

During January 2011, the Company amended an existing $48.0 million construction loan collateralized by a property. The amendment provided for an additional $3.0 million supplemental loan and a $7.0 million subordinate loan. The amended loan continues to bear interest at LIBOR plus 400 basis points, subject to an interest rate floor of 6.50% and matures on January 12, 2012. During the first six months of 2011, the Company drew down an additional $9.7 million on this construction loan. As of June 30, 2011, the total outstanding amount on this loan was $49.9 million.

13


ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

9. CONVERTIBLE NOTES PAYABLE

In December 2006 and January 2007, the Company issued $115.0 million of convertible notes with a fixed interest rate of 3.75% due 2026 (the “Convertible Notes”). The Convertible Notes were issued at par and require interest payments semi-annually in arrears on June 15th and December 15th of each year. The Convertible Notes are unsecured obligations and rank equally with all other unsecured and unsubordinated indebtedness. The Convertible Notes have an effective interest rate of 6.03% giving effect to the accounting treatment required by ASC Topic 470-20 “Debt with Conversion and Other Options.” Holders of the Convertible Notes may require the Company to repurchase the Convertible Notes at par on December 20, 2011, December 15, 2016 and December 15, 2021. The Company determined that the Convertible Notes will mature on December 20, 2011.

The carrying amount of the equity component included in additional paid-in capital totaled $0.5 million at June 30, 2011 and $1.1 million at December 31, 2010. The additional non-cash interest expense recognized in the Consolidated Statements of Income was $0.3 million for each of the three months ended June 30, 2011 and 2010, and $0.5 million for each of the six months ended June 30, 2011 and 2010, respectively. The if-converted value of the Convertible Notes does not exceed their aggregate principal amount as of June 30, 2011 and there are no derivative transactions that were entered into in connection with the issuance of the Convertible Notes.

During June 2011, the Company purchased $10.0 million in face amount of its Convertible Notes for $10.1 million and recognized a loss on debt extinguishment of $0.1 million.

Through June 30, 2011, the Company has purchased $75.3 million in face amount of its Convertible Notes at an average discount of approximately 16%. The outstanding Convertible Notes face amount as of June 30, 2011 was $39.7 million.

10. FAIR VALUE MEASUREMENTS

The FASB’s fair value measurements and disclosure guidance requires the valuation of certain of the Company’s financial assets and liabilities, based on a three-level fair value hierarchy. Market participant assumptions obtained from sources independent of the Company are observable inputs that are classified within Levels 1 and 2 of the hierarchy, and the Company’s own assumptions about market participant assumptions are unobservable inputs classified within Level 3 of the hierarchy.

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Level 1

 

Level 2

 

Level 3

 

 

 


 


 


 

Liabilities

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments (Note 7)

 

$

 

$

2,199

 

$

 

 

 



 



 



 

During the quarter ended June 30, 2011, the Company determined that the value of the Granville Centre owned by Fund I was impaired and recorded an impairment loss of $6.9 million (Note 1). The Company estimated the Granville Centre’s fair value by using projected future cash flows, which it determined were not sufficient to recover the property’s net book value. The inputs used to determine the fair value of the Granville Centre are classified as Level 3 under authoritative guidance for fair value measurements.

Financial Instruments

Certain of the Company’s assets and liabilities meet the definition of financial instruments. Except as disclosed below, the carrying amounts of these financial instruments approximates their fair value.

14


ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

10. FAIR VALUE MEASUREMENTS (continued)

The Company has determined the estimated fair values of the following financial instruments by discounting future cash flows utilizing a discount rate equivalent to the rate at which similar financial instruments would be originated at the reporting date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2011

 

December 31, 2010

 

 

 


 


 

(dollars in thousands)

 

Carrying
Amount

 

Estimated
Fair
Value

 

Carrying
Amount

 

Estimated
Fair
Value

 

 

 


 


 


 


 

 

Notes Receivable

 

$

45,457

 

$

45,457

 

$

89,202

 

$

90,612

 

 

 



 



 



 



 

Mortgage Notes Payable and Convertible Notes Payable

 

$

870,541

 

$

849,944

 

$

854,924

 

$

863,639

 

 

 



 



 



 



 

11. RELATED PARTY TRANSACTIONS

The Company earned property management fees, legal and leasing fees from the Brandywine portfolio totaling $0.2 million for each of the three months ended June 30, 2011 and 2010 and $0.7 million and $0.4 million for the six months ended June 30, 2011 and June 30, 2010, respectively.

Related party receivables due from an unconsolidated affiliate totaled $2.7 million at June 30, 2011 and $2.5 million at December 31, 2010.

Lee Wielansky, the Lead Trustee of the Company, was paid a consulting fee of $25,000 for each of the three months ended June 30, 2011 and 2010 and $50,000 for each of the six months ended June 30, 2011 and 2010.

12. SEGMENT REPORTING

The Company has five reportable segments: Core Portfolio, Opportunity Funds, Self-Storage Investments, Notes Receivable and Other. “Notes Receivable” consists of the Company’s notes receivable and preferred equity investment and related interest income. “Other” consists primarily of management fees and interest income. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates property performance primarily based on net operating income before depreciation, amortization and certain nonrecurring items. Investments in the Core Portfolio are typically held long-term. Given the contemplated finite life of the Opportunity Funds, these investments are typically held for shorter terms. Fees earned by the Company as the general partner/member of the Opportunity Funds are eliminated in the Company’s consolidated financial statements. The following tables set forth certain segment information for the Company, reclassified for discontinued operations, as of and for the three and six months ended June 30, 2011 and 2010 (does not include unconsolidated affiliates):

15


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

12. SEGMENT REPORTING, (continued)

Three Months Ended June 30, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Core
Portfolio

 

Opportunity
Funds

 

Self -
Storage
Investments

 

Notes
Receivable

 

Other

 

Amounts
Eliminated in
Consolidation

 

Total

 

 

 


 


 


 


 


 


 


 

Revenues

 

$

14,121

 

$

15,381

 

$

5,646

 

$

3,370

 

$

4,751

 

$

(4,465

)

$

38,804

 

Property operating expenses and real estate taxes

 

 

4,165

 

 

5,362

 

 

3,506

 

 

 

 

 

 

(677

)

 

12,356

 

Other expenses

 

 

6,058

 

 

2,523

 

 

 

 

 

 

 

 

(2,882

)

 

5,699

 

 

 



 



 



 



 



 



 



 

Income before depreciation, amortization and impairment

 

$

3,898

 

$

7,496

 

$

2,140

 

$

3,370

 

$

4,751

 

$

(906

)

$

20,749

 

 

 



 



 



 



 



 



 



 

Depreciation and amortization

 

$

3,671

 

$

4,005

 

$

1,070

 

$

 

$

 

$

(297

)

$

8,449

 

 

 



 



 



 



 



 



 



 

Interest and other finance expense

 

$

4,145

 

$

3,884

 

$

874

 

$

 

$

 

$

 

$

8,903

 

 

 



 



 



 



 



 



 



 

Real estate at cost

 

$

477,573

 

$

754,483

 

$

210,997

 

$

 

$

 

$

(14,256

)

$

1,428,797

 

 

 



 



 



 



 



 



 



 

Total assets

 

$

641,008

 

$

846,477

 

$

192,713

 

$

45,457

 

$

 

$

(112,788

)

$

1,612,867

 

 

 



 



 



 



 



 



 



 

Expenditures for real estate and improvements

 

$

36,538

 

 

41,116

 

$

1,671

 

$

 

$

 

$

(632

)

$

78,693

 

 

 



 



 



 



 



 



 



 

Reconciliation to net income and net income attributable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

Net property income before depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

$

20,749

 

Other interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,449

)

Equity in earnings of unconsolidated affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63

 

Interest and other finance expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,903

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(233

)

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(102

)

Impairment of asset

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,925

)

Income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

185

 

Gain on sale of property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,041

 

Net loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Net income attributable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

30,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended June 30, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Core
Portfolio

 

Opportunity
Funds

 

Self -
Storage
Investments

 

Notes
Receivable

 

Other

 

Amounts
Eliminated in
Consolidation

 

Total

 

 

 


 


 


 


 


 


 


 

Revenues

 

$

13,632

 

$

11,388

 

$

4,773

 

$

5,238

 

$

5,204

 

$

(4,768

)

$

35,467

 

Property operating expenses and real estate taxes

 

 

3,500

 

 

4,069

 

 

3,298

 

 

 

 

 

 

(421

)

 

10,446

 

Other expenses

 

 

5,347

 

 

3,543

 

 

 

 

 

 

 

 

(3,474

)

 

5,416

 

 

 



 



 



 



 



 



 



 

Income before depreciation and amortization

 

$

4,785

 

$

3,776

 

$

1,475

 

$

5,238

 

$

5,204

 

$

(873

)

$

19,605

 

 

 



 



 



 



 



 



 



 

Depreciation and amortization

 

$

3,365

 

$

2,328

 

$

889

 

$

 

$

 

$

(110

)

$

6,472

 

 

 



 



 



 



 



 



 



 

Interest and other finance expense

 

$

4,510

 

$

3,765

 

$

1,254

 

$

 

$

 

$

(27

)

$

9,502

 

 

 



 



 



 



 



 



 



 

Real estate at cost

 

$

439,489

 

$

667,323

 

$

209,733

 

$

 

$

 

$

(12,015

)

$

1,304,530

 

 

 



 



 



 



 



 



 



 

Total assets

 

$

547,264

 

$

703,900

 

$

196,223

 

$

126,048

 

$

 

$

(111,003

)

$

1,462,432

 

 

 



 



 



 



 



 



 



 

Expenditures for real estate and improvements

 

$

2,348

 

 

23,871

 

$

551

 

$

 

$

 

$

(918

)

$

25,852

 

 

 



 



 



 



 



 



 



 

Reconciliation to net income and net income attributable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

Net property income before depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

$

19,605

 

Other interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

153

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,472

)

Equity in earnings of unconsolidated affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80

 

Interest and other finance expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,502

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(645

)

Gain from bargain purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,805

 

Income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37,497

 

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,699

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Net income attributable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

12,798

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

16


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

12. SEGMENT REPORTING, (continued)

Six Months Ended June 30, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Core
Portfolio

 

Opportunity
Funds

 

Self -
Storage
Investments

 

Notes
Receivable

 

Other

 

Amounts
Eliminated in
Consolidation

 

Total

 

 

 


 


 


 


 


 


 


 

Revenues

 

$

28,541

 

$

28,975

 

$

10,981

 

$

7,921

 

$

11,225

 

$

(10,323

)

$

77,320

 

Property operating expenses and real estate taxes

 

 

8,451

 

 

10,234

 

 

6,699

 

 

 

 

 

 

(1,122

)

 

24,262

 

Other expenses

 

 

11,957

 

 

6,002

 

 

 

 

 

 

 

 

(6,570

)

 

11,389

 

 

 



 



 



 



 



 



 



 

Income before depreciation, amortization and impairment

 

$

8,133

 

$

12,739

 

$

4,282

 

$

7,921

 

$

11,225

 

$

(2,631

)

$

41,669

 

 

 



 



 



 



 



 



 



 

Depreciation and amortization

 

$

6,928

 

$

7,804

 

$

2,019

 

$

 

$

 

$

(405

)

$

16,346

 

 

 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other finance expense

 

$

8,351

 

$

7,552

 

$

1,953

 

$

 

$

 

$

 

$

17,856

 

 

 



 



 



 



 



 



 



 

Real estate at cost

 

$

477,573

 

$

754,483

 

$

210,997

 

$

 

$

 

$

(14,256

)

$

1,428,797

 

 

 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

641,008

 

$

846,477

 

$

192,713

 

$

45,457

 

$

 

$

(112,788

)

$

1,612,867

 

 

 



 



 



 



 



 



 



 

Expenditures for real estate and improvements

 

$

37,923

 

 

52,786

 

$

2,116

 

$

 

$

 

$

(907

)

$

91,918

 

 

 



 



 



 



 



 



 



 

Reconciliation to net income and net income attributable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

Net property income before depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

$

41,669

 

Other interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

114

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,346

)

Equity in losses of unconsolidated affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(85

)

Interest and other finance expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,856

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(495

)

Gain on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,571

 

Impairment of asset

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,925

)

Income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

548

 

Gain on sale of property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34,693

 

Net loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Net income attributable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

$

39,657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Six Months Ended June 30, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Core
Portfolio

 

Opportunity
Funds

 

Self -
Storage
Investments

 

Notes
Receivable

 

Other

 

Amounts
Eliminated in
Consolidation

 

Total

 

 

 


 


 


 


 


 


 


 

Revenues

 

$

28,274

 

$

22,983

 

$

9,312

 

$

10,231

 

$

9,990

 

$

(9,154

)

$

71,636

 

Property operating expenses and real estate taxes

 

 

8,118

 

 

8,434

 

 

6,206

 

 

 

 

 

 

(714

)

 

22,044

 

Other expenses

 

 

11,061

 

 

6,925

 

 

 

 

 

 

 

 

(7,451

)

 

10,535

 

 

 



 



 



 



 



 



 



 

Income before depreciation and amortization

 

$

9,095

 

$

7,624

 

$

3,106

 

$

10,231

 

$

9,990

 

$

(989

)

$

39,057

 

 

 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

6,651

 

$

6,856

 

$

1,757

 

$

 

$

 

$

(190

)

$

15,074

 

 

 



 



 



 



 



 



 



 

Interest and other finance expense

 

$

9,038

 

$

7,502

 

$

2,671

 

$

 

$

 

$

(54

)

$

19,157

 

 

 



 



 



 



 



 



 



 

Real estate at cost

 

$

439,489

 

$

667,323

 

$

209,733

 

$

 

$

 

$

(12,015

)

$

1,304,530

 

 

 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

547,264

 

$

703,900

 

$

196,223

 

$

126,048

 

$

 

$

(111,003

)

$

1,462,432

 

 

 



 



 



 



 



 



 



 

Expenditures for real estate and improvements

 

$

4,308

 

$

32,482

 

$

1,113

 

$

 

$

 

$

(969

)

$

36,934

 

 

 



 



 



 



 



 



 



 

Reconciliation to net income and net income attributable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

Net property income before depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

$

39,057

 

Other interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

287

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,074

)

Equity in earnings of unconsolidated affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

467

 

Interest and other finance expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,157

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,084

)

Gain from bargain purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,805

 

Income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39,004

 

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,076

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Net income attributable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

$

17,928

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

17


ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

13. LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

The Company maintains two share incentive plans, the 2003 Share Incentive Plan and the 2006 Share Incentive Plan (collectively the “Share Incentive Plans”).

On March 3, 2011 and March 22, 2011, the Company issued a combined total of 429,909 LTIP Units and 1,549 Restricted Shares to officers of the Company and 164 LTIP Units and 9,584 Restricted Shares to other employees of the Company. Vesting with respect to these awards are generally recognized ratably over the five annual anniversaries following the issuance date. Vesting with respect to 11% of the awards issued to officers is also generally subject to achieving certain Company performance measures.

These awards were measured at their fair value as if they were vested on the grant date. Fair value was established as the market price of the Company’s Common Shares as of the close of trading on the day preceding the grant date.

The total value of the above Restricted Shares and LTIP Units as of the grant date was $8.4 million, of which $2.4 million was recognized in compensation expense during 2010 and $6.0 million will be recognized in compensation expense over the vesting period. Compensation expense of $0.9 million and $1.2 million has been recognized in the accompanying financial statements related to these awards for the three and six months ended June 30, 2011.

Total long-term incentive compensation expense, including the expense related to the above-mentioned plans, was $1.4 million and $1.0 million for the three months ended June 30, 2011 and 2010, respectively and $2.2 million and $2.0 million for the six months ended June 30, 2011 and 2010, respectively.

On May 10, 2011, the Company issued 24,904 Restricted Shares to Trustees of the Company in connection with Trustee fees. Vesting with respect to 10,279 of the Restricted Shares will be on the first anniversary of the date of issuance and 14,625 of the Restricted Shares vest over three years with 33% vesting on each of the next three anniversaries of the issuance date. The Restricted Shares do not carry voting rights or other rights of Common Shares until vesting and may not be transferred, assigned or pledged until the recipients have a vested non-forfeitable right to such shares. Dividends are not paid currently on unvested Restricted Shares, but are paid cumulatively, from the issuance date through the applicable vesting date of such Restricted Shares. Trustee fee expense of $0.1 million has been recognized for the six months ended June 30, 2011 related to these Restricted Shares.

In 2009, the Company adopted the Long Term Investment Alignment Program (the “Program”) pursuant to which the Company may award units primarily to senior executives which would entitle them to receive up to 25% of any future Fund III Promote when and if such Promote is ultimately realized. The Company has awarded units representing 73% of the Program, which were determined to have no value at issuance or as of June 30, 2011. In accordance with ASC Topic 718, “Compensation - Stock Compensation,” compensation relating to these awards will be recorded based on the change in the estimated fair value at each reporting period.

18


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion is based on the consolidated financial statements of the Company as of June 30, 2011 and 2010 and for the three and six months then ended. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results performance or achievements expressed or implied by such forward-looking statements. Such factors are set forth under the heading “Item 1A. Risk Factors” in our Form 10-K for the year ended December 31, 2010 (our “2010 Form 10-K”) and include, among others, the following: general economic and business conditions, including the current post-recessionary period, which will, among other things, affect demand for rental space, the availability and creditworthiness of prospective tenants, lease rents and the availability of financing; adverse changes in our real estate markets, including, among other things, competition with other companies; risks of real estate development, acquisition and investment; risks related to our use of leverage; demands placed on our resources due to the growth of our business; risks related to operating through a partnership structure; our limited control over joint venture investments; the risk of loss of key members of management; uninsured losses; REIT distribution requirements and ownership limitations; concentration of ownership by certain institutional investors; governmental actions and initiatives; and environmental/safety requirements. Except as required by law, we do not undertake any obligation to update or revise any forward-looking statements contained in this Form 10-Q.

OVERVIEW

As of June 30, 2011, we operated 84 properties, which we own or have an ownership interest in, within our Core Portfolio or within our three Opportunity Funds. These 84 properties consist of commercial properties, primarily neighborhood and community shopping centers, mixed-use properties with a retail component and self-storage properties. The properties we operate are located primarily in the Northeast, Mid-Atlantic and Midwestern regions of the United States. Our Core Portfolio consists of those properties either 100% owned, or partially owned through joint venture interests, by the Operating Partnership, or subsidiaries thereof, not including those properties owned through our Opportunity Funds. Excluding one property under redevelopment, there are 34 properties in our Core Portfolio totaling approximately 4.9 million square feet. Fund I has 20 properties comprising approximately 0.9 million square feet. Fund II has 9 properties, seven of which (representing 1.2 million square feet) are currently operating, one is under construction, and one is in the design phase. Three of the properties also include self-storage facilities. We expect the Fund II portfolio will have approximately 2.0 million square feet upon completion of all current construction and anticipated redevelopment activities. Fund III has 20 properties totaling approximately 2.0 million square feet, of which 11 locations representing 0.9 million net rentable square feet are self-storage facilities. The majority of our operating income is derived from rental revenues from these 84 properties, including recoveries from tenants, offset by operating and overhead expenses. As our RCP Venture invests in operating companies, we consider these investments to be private-equity style, as opposed to real estate, investments. Since these are not generally traditional investments in operating rental real estate but investments in operating businesses, the Operating Partnership principally invests in these through a taxable REIT subsidiary (“TRS”).

Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective:

– Own and operate a Core Portfolio of community and neighborhood shopping centers and main street retail located in markets with strong demographics and generate internal growth within the Core Portfolio through aggressive redevelopment, re-anchoring and/or leasing activities
– Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth
– Generate external growth through an opportunistic yet disciplined acquisition program. We target transactions with high inherent opportunity for the creation of additional value through redevelopment and leasing and/or transactions requiring creative capital structuring to facilitate the transactions. These transactions may include other types of commercial real estate besides those which we invest in through our Core Portfolio. These may also include joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets

CRITICAL ACCOUNTING POLICIES

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe there have been no material changes to the items that we disclosed as our critical accounting policies under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2010 Form 10-K.

19


RESULTS OF OPERATIONS

Comparison of the three months ended June 30, 2011 (“2011”) to the three months ended June 30, 2010 (“2010”)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

2011

 

2010

 

 

 


 


 

(dollars in millions)

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

 

 


 


 


 


 


 


 


 


 

 

Rental income

 

$

11.2

 

$

12.6

 

$

5.2

 

$

 

$

11.1

 

$

9.1

 

$

4.5

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

3.4

 

 

 

 

 

 

 

 

5.2

 

Expense reimbursements

 

 

2.9

 

 

2.7

 

 

 

 

 

 

2.4

 

 

2.2

 

 

 

 

 

Management fee income (1)

 

 

 

 

 

 

 

 

0.3

 

 

 

 

 

 

 

 

0.4

 

Other

 

 

 

 

 

 

0.5

 

 

 

 

0.2

 

 

0.1

 

 

0.3

 

 

 

 

 



 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

14.1

 

$

15.3

 

$

5.7

 

$

3.7

 

$

13.7

 

$

11.4

 

$

4.8

 

$

5.6

 

 

 



 



 



 



 



 



 



 



 


 

 

 

 

(1)

Includes fees earned by us as general partner/managing member of the Opportunity Funds that are eliminated in consolidation and adjusts the loss (income) attributable to noncontrolling interests. The balance reflected in the table represents third party fees that are not eliminated in consolidation. Reference is made to Note 12 to the Notes to Consolidated Financial Statements in Part 1, Item 1 of this Form 10-Q for an overview of our five reportable segments.

The increase in rental income in the Opportunity Funds primarily related to additional rents at Canarsie, Pelham Manor and 161st Street of $2.8 million for leases that commenced during 2010 (“Fund Redevelopment Properties”) as well as additional rents of $0.7 million following the acquisition of The Heritage Shops at Millennium Park (“2011 Fund Acquisition”) in April 2011.

The decrease in interest income related to the full repayment of two notes during 2010 and 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

2011

 

2010

 

 

 


 


 

(dollars in millions)

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

 

 


 


 


 


 


 


 


 


 

 

Property operating

 

$

2.0

 

$

3.5

 

$

2.8

 

$

(0.7

)

$

1.6

 

$

2.5

 

$

2.6

 

$

(0.4

)

Real estate taxes

 

 

2.1

 

 

1.9

 

 

0.7

 

 

 

 

1.9

 

 

1.6

 

 

0.6

 

 

 

General and administrative

 

 

6.1

 

 

2.5

 

 

 

 

(2.9

)

 

5.4

 

 

3.5

 

 

 

 

(3.5

)

Depreciation and amortization

 

 

3.7

 

 

4.0

 

 

1.1

 

 

(0.3

)

 

3.4

 

 

2.3

 

 

0.9

 

 

(0.1

)

Impairment of asset

 

 

 

 

6.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

13.9

 

$

18.8

 

$

4.6

 

$

(3.9

)

$

12.3

 

$

9.9

 

$

4.1

 

$

(4.0

)

 

 



 



 



 



 



 



 



 



 

The increase in property operating expenses in the Opportunity Funds related primarily to Fund Redevelopment Properties and the 2011 Fund Acquisition.

The decrease in general and administrative expense in the Opportunity Funds related to the reduction in Promote expense attributable to Fund I. The increase in general and administrative expense in the Other category primarily related to the reduction in Fund I Promote expense eliminated for consolidated financial statement presentation purposes.

Depreciation and amortization expense increased $1.7 million in the Opportunity Funds primarily as the result of Fund Redevelopment Properties and the 2011 Fund Acquisition.

The $6.9 million impairment of asset related to the write down of the Granville Centre owned by Fund I to its fair value in the second quarter of 2011.

20



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

2011

 

2010

 

 

 


 


 

(dollars in millions)

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

 

 


 


 


 


 


 


 


 


 

 

Equity in earnings (losses) of unconsolidated affiliates

 

$

0.2

 

$

0.6

 

$

(0.7

)

$

 

$

0.2

 

$

 

$

(0.1

)

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest income

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

 

0.2

 

Gain from bargain purchase

 

 

 

 

 

 

 

 

 

 

 

 

33.8

 

 

 

 

 

Loss on debt extinguishment

 

 

(0.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other finance expense

 

 

(4.1

)

 

(3.9

)

 

(0.9

)

 

 

 

(4.5

)

 

(3.8

)

 

(1.2

)

 

 

Income tax provision

 

 

(0.4

)

 

 

 

0.2

 

 

 

 

(0.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

 

 

 

 

 

 

 

28.8

 

 

 

 

 

 

 

 

0.5

 

Net loss (income) attributable to noncontrolling interests in subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Continuing operations

 

 

(0.4

)

 

5.9

 

 

 

 

 

 

(0.2

)

 

(24.5

)

 

0.1

 

 

 

- Discontinued operations

 

 

 

 

 

 

 

 

(0.3

)

 

 

 

 

 

 

 

(0.1

)

The $33.8 million gain from bargain purchase was attributable to Fund II’s purchase of an unaffiliated member’s interest in CityPoint during 2010.

Income from discontinued operations related to a property sold during the second quarter 2011.

Net loss (income) attributable to noncontrolling interests in subsidiaries – Continuing operations primarily represents the noncontrolling interests’ share of all Opportunity Funds variances discussed above.

Comparison of the six months ended June 30, 2011 (“2011”) to the six months ended June 30, 2010 (“2010”)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

2011

 

2010

 

 

 


 


 

(dollars in millions)

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

 

 


 


 


 


 


 


 


 


 

 

Rental income

 

$

22.4

 

$

23.8

 

$

10.2

 

$

 

$

22.2

 

$

18.5

 

$

8.6

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

7.9

 

 

 

 

 

 

 

 

10.2

 

Expense reimbursements

 

 

5.8

 

 

5.1

 

 

 

 

 

 

5.8

 

 

4.4

 

 

 

 

 

Management fee income (1)

 

 

 

 

 

 

 

 

0.9

 

 

 

 

 

 

 

 

0.8

 

Other

 

 

0.4

 

 

 

 

0.8

 

 

 

 

0.3

 

 

0.1

 

 

0.7

 

 

 

 

 



 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

28.6

 

$

28.9

 

$

11.0

 

$

8.8

 

$

28.3

 

$

23.0

 

$

9.3

 

$

11.0

 

 

 



 



 



 



 



 



 



 



 


 

 

(1)

Includes fees earned by us as general partner/managing member of the Opportunity Funds that are eliminated in consolidation and adjusts the loss (income) attributable to noncontrolling interests. The balance reflected in the table represents third party fees that are not eliminated in consolidation. Reference is made to Note 12 to the Notes to Consolidated Financial Statements in Part 1, Item 1 of this Form 10-Q for an overview of our five reportable segments.

The increase in rental income in the Opportunity Funds primarily related to additional rents from the Fund Redevelopment Properties. The increase in rental income in the Self-Storage Investments related to increased occupancy throughout the portfolio.

21


The decrease in interest income primarily related to the full repayment of a note during 2010.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

2011

 

2010

 

 

 


 


 

(dollars in millions)

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

 

 


 


 


 


 


 


 


 


 

 

Property operating

 

$

4.4

 

$

6.8

 

$

5.3

 

$

(1.1

)

$

4.1

 

$

5.3

 

$

4.9

 

$

(0.7

)

Real estate taxes

 

 

4.1

 

 

3.4

 

 

1.4

 

 

 

 

4.1

 

 

3.1

 

 

1.3

 

 

 

General and administrative

 

 

12.0

 

 

6.0

 

 

 

 

(6.6

)

 

11.1

 

 

6.9

 

 

 

 

(7.5

)

Depreciation and amortization

 

 

6.9

 

 

7.8

 

 

2.0

 

 

(0.4

)

 

6.6

 

 

6.9

 

 

1.8

 

 

(0.2

)

Impairment of asset

 

 

 

 

6.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

27.4

 

$

30.9

 

$

8.7

 

$

(8.1

)

$

25.9

 

$

22.2

 

$

8.0

 

$

(8.4

)

 

 



 



 



 



 



 



 



 



 

The increase in property operating expenses in the Opportunity Funds related primarily to Fund Redevelopment Properties and increased winter related common area expenses during 2011.

The increase in general and administrative expense in the Core Portfolio primarily related to higher cash and stock compensation expense in 2011. The decrease in general and administrative expense in the Opportunity Funds related to the reduction in Promote expense attributable to Fund I. The increase in general and administrative expense in the Other category primarily related to the reduction in Fund I Promote expense eliminated for consolidated financial statement presentation purposes.

The increase in depreciation and amortization expense in the Opportunity Funds primarily related to the Fund Redevelopment Properties.

The $6.9 million impairment of asset related to the write down of the Granville Centre owned by Fund I to its fair value in the second quarter of 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

2011

 

2010

 

 

 


 


 

(dollars in millions)

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

Core
Portfolio

 

Opportunity
Funds

 

Self-
Storage
Investments

 

Notes
Receivable
and Other

 

 

 


 


 


 


 


 


 


 


 

 

Equity in earnings (losses) of unconsolidated affiliates

 

$

0.4

 

$

1.1

 

$

(1.6

)

$

 

$

0.3

 

$

0.3

 

$

(0.1

)

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest income

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

 

0.3

 

Gain from bargain purchase

 

 

 

 

 

 

 

 

 

 

 

 

33.8

 

 

 

 

 

Gain on debt extinguishment

 

 

1.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other finance expense

 

 

(8.3

)

 

(7.6

)

 

(2.0

)

 

 

 

(9.0

)

 

(7.5

)

 

(2.7

)

 

 

Income tax provision

 

 

(0.9

)

 

 

 

0.4

 

 

 

 

(1.0

)

 

(0.1

)

 

 

 

 

Income from discontinued operations

 

 

 

 

 

 

 

 

33.0

 

 

 

 

 

 

 

 

0.7

 

Net loss (income) attributable to noncontrolling interests in subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Continuing operations

 

 

(0.4

)

 

9.0

 

 

(0.1

)

 

 

 

(0.3

)

 

(20.8

)

 

0.1

 

 

 

- Discontinued operations

 

 

 

 

 

 

 

 

(3.5

)

 

 

 

 

 

 

 

(0.1

)

Equity in earnings (losses) in the Self-Storage Investments represents the pro-rata share of losses from our unconsolidated investment in a self storage management company which commenced operations in 2010. The losses at the self storage management company are attributable to start-up costs.

22


The $33.8 million gain from bargain purchase was attributable to Fund II’s purchase of an unaffiliated member’s interest in CityPoint in 2010.

The $1.6 million gain on debt extinguishment was attributable to the purchase of mortgage debt at a discount in 2011.

Income from discontinued operations related to property sales during 2011.

Net loss (income) attributable to noncontrolling interests in subsidiaries – Continuing operations primarily represents the noncontrolling interests’ share of all Opportunity Funds variance discussed above.

FUNDS FROM OPERATIONS

Consistent with the National Association of Real Estate Investment Trusts (“NAREIT”) definition, we define funds from operations (“FFO”) as net income attributable to common shareholders (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciated property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

We consider FFO to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO is presented to assist investors in analyzing our performance. It is helpful as it excludes various items included in net income that are not indicative of the operating performance, such as gains (or losses) from sales of operating property and depreciation and amortization. However, our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. FFO should not be considered as an alternative to net income for the purpose of evaluating our performance or to cash flows as a measure of liquidity.

The reconciliation of net income to FFO for the three and six months ended June 30, 2011 and 2010 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in millions, except per share amounts)

 

2011

 

2010

 

2011

 

2010

 


 


 


 


 


 

Funds From Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Common Shareholders

 

$

30.2

 

$

12.8

 

$

39.7

 

$

17.9

 

Depreciation of real estate and amortization of leasing costs
(net of noncontrolling interests’ share)

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated affiliates

 

 

4.6

 

 

4.2

 

 

9.1

 

 

8.8

 

Unconsolidated affiliates

 

 

0.4

 

 

0.5

 

 

0.7

 

 

0.8

 

Gain on sale (net of noncontrolling interests’ share)

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated affiliates

 

 

(28.6

)

 

 

 

(29.4

)

 

 

Income attributable to noncontrolling interests’ in Operating Partnership

 

 

0.4

 

 

0.1

 

 

0.5

 

 

0.3

 

 

 



 



 



 



 

Funds from operations

 

$

7.0

 

$

17.6

 

$

20.6

 

$

27.8

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations per Share - Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of Common Shares and OP Units

 

 

41.1

 

 

40.8

 

 

41.1

 

 

40.8

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted funds from operations, per share

 

$

0.17

 

$

0.43

 

$

0.50

 

$

0.68

 

 

 



 



 



 



 

23


USES OF LIQUIDITY

Our principal uses of liquidity are (i) distributions to our shareholders and OP unit holders, (ii) investments which include the funding of our capital committed to the Opportunity Funds and property acquisitions and redevelopment/re-tenanting activities within our Core Portfolio, and (iii) debt service and loan repayments.

Distributions

In order to qualify as a REIT for Federal income tax purposes, we must currently distribute at least 90% of our taxable income to our shareholders. For the three and six months ended June 30, 2011, we paid dividends and distributions on our Common Shares and Common OP Units totaling $7.5 million and $14.9 million, respectively.

Investments

Fund I and Mervyns I

During 2001, we formed a partnership, Fund I, and in 2004 formed a limited liability company, Mervyns I, with four institutional investors with $90.0 million, in the aggregate, of committed discretionary capital. Fund I and Mervyns I have returned all invested capital and accumulated preferred return thus triggering our Promote in all future Fund I and Mervyns I earnings and distributions. As of June 30, 2011, $86.6 million has been invested in Fund I and Mervyns I, of which the Operating Partnership contributed $19.2 million.

As of June 30, 2011, Fund I currently owned, or had ownership interests in, 20 assets comprising approximately 0.9 million square feet as follows:

 

 

 

 

 

 

 

 

 

 

 

Shopping Center

 

Location

 

Year acquired

 

GLA

 


 


 


 


 

New York Region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York

 

 

 

 

 

 

 

 

 

 

Tarrytown Shopping Center

 

Tarrytown

 

 

2004

 

 

34,979

 

 

 

 

 

 

 

 

 

 

 

 

Mid-Atlantic Region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ohio

 

 

 

 

 

 

 

 

 

 

Granville Centre

 

Columbus

 

 

2002

 

 

134,997

 

 

 

 

 

 

 

 

 

 

 

 

Various Regions

 

 

 

 

 

 

 

 

 

 

Kroger/Safeway Portfolio (18 locations)

 

Various

 

 

2003

 

 

714,776

 

 

 

 

 

 

 

 

 



 

Total

 

 

 

 

 

 

 

 

884,752

 

 

 

 

 

 

 

 

 



 

Reference is made to Note 5 in the Notes to Consolidated Financial Statements in Part 1, Item 1 in this Form 10-Q for a discussion of RCP investments made by Mervyns I to date.

Fund II and Mervyns II

During 2004, we, along with the investors from Fund I as well as two additional institutional investors, formed Fund II, and Mervyns II with $300.0 million, in the aggregate, of committed discretionary capital. Fund II’s primary investment focus has been in the New York Urban/Infill Redevelopment Initiative and the Retailer Controlled Property Venture which are discussed below. As of June 30, 2011, a total of $273.2 million has been invested in Fund II and Mervyns II, of which the Operating Partnership contributed $54.6 million. The remaining capital contribution balance of $26.8 million is expected to be utilized to complete development activities for existing Fund II investments.

New York Urban Infill Redevelopment Initiative

In September 2004, we, through Fund II, launched our New York Urban Infill Redevelopment initiative. Fund II, together with an unaffiliated partner, formed Acadia Urban Development LLC (“Acadia Urban Development”) for the purpose of acquiring, constructing, developing, owning, operating, leasing and managing certain mixed-use real estate properties which include a significant retail component in the New York City metropolitan area. To date our partner has invested its maximum commitment of $2.2 million and Fund II, the managing member, has agreed to invest the balance.

24


To date, Fund II has invested in nine New York Urban Infill Redevelopment construction projects, eight of which were made through Acadia Urban Development, as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redevelopment (dollars in millions)

 

Property

 

 

Location

 

 

Year
acquired

 

Costs
to date

 

Anticipated
additional
costs

 

 

Estimated
construction
completion

 

Square
feet upon
completion

 




















 

Liberty Avenue (1)

 

 

Queens

 

 

2005

 

$

15.5

 

$

0.1

 

 

Completed

 

 

125,000

 

216th Street

 

 

Manhattan

 

 

2005

 

 

27.7

 

 

 

 

Completed

 

 

60,000

 

Fordham Place

 

 

Bronx

 

 

2004

 

 

125.2

 

 

7.9

 

 

Completed

 

 

260,000

 

Pelham Manor Shopping Center (1)

 

 

Westchester

 

 

2004

 

 

62.9

 

 

1.9

 

 

Completed

 

 

320,000

 

161st Street (2)

 

 

Bronx

 

 

2005

 

 

62.8

 

 

3.9

 

 

TBD

 

 

230,000

 

Atlantic Avenue (3)

 

 

Brooklyn

 

 

2007

 

 

22.3

 

 

0.1

 

 

Completed

 

 

110,000

 

Canarsie Plaza

 

 

Brooklyn

 

 

2007

 

 

85.6

 

 

5.4

 

 

Completed

 

 

275,000

 

CityPoint (1)

 

 

Brooklyn

 

 

2007

 

 

88.3

 

 

111.7

 

 

TBD

 

 

550,000

 

Sherman Plaza

 

 

Manhattan

 

 

2005

 

 

33.9

 

 

TBD

 

 

TBD

 

 

TBD

 

 

 

 

 

 

 

 

 












 

Total

 

 

 

 

 

 

 

$

524.2

 

$

131.0

 

 

 

 

 

1,930,000

 

 

 

 

 

 

 

 

 












 


 

Notes:

TBD – To be determined.

(1) Acadia Urban Development acquired a ground lease interest at this property.

(2) Currently operating but redevelopment activities have commenced.

(3) Fund II owns 100% of this project.

Retailer Controlled Property Venture

Reference is made to Note 5 in the Notes to Consolidated Financial Statements in Part 1, Item 1 in this Form 10-Q for a discussion of RCP investments made by Fund II and Mervyns II to date.

Fund III

During 2007, we formed Fund III with 14 institutional investors, including all of the investors from Fund I and a majority of the investors from Fund II with $502.5 million of committed discretionary capital. As of June 30, 2011, $143.0 million has been invested in Fund III, of which the Operating Partnership contributed $28.5 million.

New York Urban Infill Redevelopment Initiative

Fund III has invested in a New York Urban/Infill Redevelopment and a main street retail redevelopment in Westport, Connecticut as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property

 

 

Location

 

 

Year
acquired

 

Costs
to date

 

Anticipated
additional
costs

 

 

Estimated
construction
completion

 

 

Square
feet upon
completion

 


















 

Sheepshead Bay

 

 

Brooklyn, NY

 

 

2007

 

$

22.8

 

$

TBD

 

 

TBD

 

 

TBD

 

125 Main Street

 

 

Westport, CT

 

 

2007

 

 

23.5

 

 

2.1

 

 

2nd half 2011

 

 

26,000

 

 

 

 

 

 

 

 

 






 

 

 

 



 

Total

 

 

 

 

 

 

 

$

46.3

 

$

2.1

 

 

 

 

 

26,000

 

 

 

 

 

 

 

 

 






 

 

 

 



 


 

Notes:

TBD - To be determined

Other Fund III Investments

Fund III, in conjunction with an unaffiliated partner, Storage Post, has a 95% interest in a portfolio of eleven self-storage properties located throughout New York and New Jersey. It also owns the Cortlandt Towne Center, a 642,000 square foot shopping center located in Westchester County, NY.

During December 2010, Fund III, in a joint venture with an unaffiliated partner, acquired the 255,200 square foot White City Shopping Center in Shrewsbury, Massachusetts for $56.0 million.

During the six months ended June 2011, Fund III acquired five properties through three separate ventures for an aggregate purchase price of $93.3 million, including assumed debt of $20.6 million. Reference is made to Notes 4 in the Notes to Consolidated Financial Statements in Part 1, Item 1 in this Form 10-Q for a discussion of these investments.

25


Notes Receivable

Reference is made to Note 6 to the Notes to Consolidated Financial Statements in Part 1, Item 1 in this Form 10-Q for an overview of our notes receivable.

During February 2011, we made a mezzanine loan for $3.8 million which accrues interest at 15% and is payable upon a capital event.

Core Portfolio Property Acquisitions, Redevelopment and Expansion

During the six months ended June 2011, we acquired two properties for an aggregate purchase price of $33.2 million. Reference is made to Note 4 in the Notes to Consolidated Financial Statements in Part 1, Item 1 in this Form 10-Q for a discussion of these investments.

In addition, we currently have entered into purchase and sale agreements with multiple unaffiliated sellers to acquire 26 properties with an aggregate purchase price of $103.3 million. We anticipate assuming debt totaling $33.3 million, issuing OP units totaling $15.0 million and utilizing existing cash on hand of $55.0 million in connection with these acquisitions. The completion of these transactions are subject to customary closing conditions, and, as such, no assurance can be given that we will successfully complete these transactions.

Our Core Portfolio redevelopment program focuses on selecting well-located neighborhood and community shopping centers and creating significant value through re-tenanting and property redevelopment. We currently have one property in the early stages of redevelopment.

Purchase of Convertible Notes

Purchases of our Convertible Notes have been another use of our liquidity. During the six months ended June 30, 2011, we purchased $10.0 million in face amount of our outstanding Convertible Notes for $10.1 million.

Share Repurchase

We have an existing share repurchase program that authorizes management, at its discretion, to repurchase up to $20.0 million of our outstanding Common Shares. The program may be discontinued or extended at any time and there is no assurance that we will purchase the full amount authorized. Under this program we have repurchased 2.1 million Common Shares, none of which were repurchased after December 2001. As of June 30, 2011, management may cause the Company to repurchase up to approximately $7.5 million of our outstanding Common Shares under this program.

SOURCES OF LIQUIDITY

We intend on using Fund III, as well as new funds that we may establish in the future, as the primary vehicles for our future acquisitions, including investments in the RCP Venture and New York Urban/Infill Redevelopment Initiative. Additional sources of capital for funding property acquisitions, redevelopment, expansion, re-tenanting and RCP Venture investments, are expected to be obtained primarily from (i) the issuance of public equity or debt instruments, (ii) cash on hand and cash flow from operating activities, (iii) additional property debt financings, (iv) noncontrolling interests’ unfunded capital commitments of $21.4 million for Fund II and $287.6 million for Fund III, and (v) future sales of existing properties.

During April 2011, Fund III received capital contributions of $46.5 million to fund the acquisition of The Heritage Shops at Millennium Park and to pay down Fund III’s credit facility. During June 2011, Fund II received capital contributions of $8.0 million to fund development costs.

As of June 30, 2011, we had approximately $58.9 million of additional capacity under existing debt facilities and cash and cash equivalents on hand of $148.9 million.

Shelf Registration Statements and Issuance of Equity

During April 2009, we filed a shelf registration on Form S-3 providing for offerings of up to a total of $500.0 million of Common Shares, Preferred Shares and debt securities. We have remaining capacity under this registration statement to issue up to approximately $430.0 million of these securities.

26


Asset Sales

Asset sales are an additional source of liquidity for us. During May 2011, we sold the Ledgewood Mall, a 517,000 square foot, unencumbered enclosed mall located in Ledgewood, New Jersey, for $37.0 million. The sale resulted in a gain of $28.6 million. During January 2011, we completed the sale of a Fund II leasehold interest in the Neiman Marcus location at Oakbrook Center, located in Oak Brook, Illinois, for $8.2 million. The sale resulted in a gain of $3.9 million. In March 2010, the Sterling Heights Shopping Center was sold for $2.3 million.

Notes Receivable

During May 2011, we received a payment of $54.7 million on a mezzanine loan, representing $33.8 million of principal, $13.4 million of accrued interest, and a $7.5 million exit fee. During February 2011, we received a payment of $1.9 million on a mezzanine loan. Reference is made to Note 6 to the Notes to Consolidated Financial Statements in Part 1, Item 1 in this Form 10-Q for an overview of our notes receivable.

Financing and Debt

At June 30, 2011, mortgage and convertible notes payable aggregated $870.5 million, net of unamortized premium of $0.1 million and unamortized discount of $0.5 million, and the mortgages were collateralized by 27 properties and related tenant leases. Interest rates on our outstanding mortgage indebtedness and convertible notes payable ranged from 0.79% to 7.34% with maturities that ranged from August 2011 to November 2032. Taking into consideration $71.3 million of notional principal under variable to fixed-rate swap agreements currently in effect, $395.2 million of the portfolio, or 45.4%, was fixed at a 5.63% weighted average interest rate and $475.3 million, or 54.6% was floating at a 3.24% weighted average interest rate as of June 30, 2011. There is $310.7 million of debt maturing in 2011 at a weighted average interest rate of 1.91%. Of this amount, $1.7 million represents scheduled annual amortization. $33.0 million of loans maturing during 2011 provide for extension options, which we believe we will be able to exercise and $195.4 million represents Fund III subscription line borrowings that are payable from capital calls. As it relates to remaining maturities, we may not have sufficient cash on hand to repay such indebtedness, and, therefore, we expect to refinance at least a portion of this indebtedness or select other alternatives based on market conditions as these loans mature.

Reference is made to Note 8 in the Notes to Consolidated Financial Statements in Part 1, Item 1 in this Form 10-Q for an overview of transactions related to mortgage loans, bond financing and credit facilities during the six months ended June 30, 2011.

The following table sets forth certain information pertaining to our secured credit facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in millions)
Borrower

 

Total
amount of
credit
facility

 

Amount
borrowed
as of
December 31,
2010

 

Net
borrowings
(repayments)
during the six
months ended
June 30, 2011

 

Amount
borrowed
as of
June 30, 2011

 

Letters
of credit
outstanding
as of
June 30, 2011

 

Amount
available
under credit
facilities
as of
June 30, 2011

 


 


 


 


 


 


 


 

Acadia Realty, LP

 

$

64.5

 

$

1.0

 

$

 

$

1.0

 

$

4.6

 

$

58.9

 

Fund II

 

 

40.0

 

 

40.0

 

 

 

 

40.0

 

 

 

 

 

Fund III

 

 

195.9

 

 

171.5

 

 

23.9

 

 

195.4

 

 

0.5

 

 

 

 

 


 


 


 


 


 


 

Total

 

$

300.4

 

$

212.5

 

$

23.9

 

$

236.4

 

$

5.1

 

$

58.9

 

 

 


 


 


 


 


 


 

27


          The following table summarizes the Company’s mortgage and other secured indebtedness as of June 30, 2011 and December 31, 2010:

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Description of Debt and Collateral

 

June 30,
2011

 

December 31,
2010

 

Interest Rate
at June 30, 2011

 

Maturity

 

Payment
Terms

 

 


 


 


 


 


Mortgage notes payable – variable-rate

 

 

 

 

 

 

 

 

 

 

 

 

Liberty Avenue

 

$

10.0

 

$

10.0

 

3.44% (LIBOR +3.25%)

 

9/1/2011

 

Interest only monthly

Tarrytown Shopping Center

 

 

8.2

 

 

8.4

 

1.84% (LIBOR +1.65%)

 

10/30/2011

 

Interest only monthly

Branch Shopping Plaza

 

 

13.8

 

 

13.9

 

1.49% (LIBOR +1.30%)

 

12/1/2011

 

Monthly principal and interest

Canarsie Plaza

 

 

49.9

 

 

40.2

 

Greater of 6.50% or

 

1/12/2012

 

Interest only monthly

 

 

 

 

 

 

 

 

4.19% (LIBOR +4.00%)

 

 

 

 

Fordham Place

 

 

85.3

 

 

85.9

 

Greater of 1.5%+3.5% or

 

9/30/2012

 

Monthly principal and interest

 

 

 

 

 

 

 

 

5.00% (LIBOR +3.5%)

 

 

 

 

161st Street

 

 

28.9

 

 

28.9

 

5.69% (LIBOR +5.50%)

 

4/1/2013

 

Interest only monthly

CityPoint

 

 

20.7

 

 

20.7

 

2.69% (LIBOR +2.50%)

 

8/12/2013

 

Interest only monthly

Pelham Manor

 

 

34.0

 

 

31.6

 

2.94% (LIBOR +2.75%)

 

12/1/2013

 

Monthly principal and interest

Cortlandt Towne Center

 

 

50.0

 

 

50.0

 

2.09% (LIBOR +1.90%)

 

10/26/2015

 

Monthly principal and interest

Village Commons Shopping Center

 

 

9.4

 

 

9.3

 

1.59% (LIBOR +1.40%)

 

6/30/2018

 

Monthly principal and interest

 

 



 



 

 

 

 

 

 

Sub-total mortgage notes payable

 

 

310.2

 

 

298.9

 

 

 

 

 

 

 

 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured credit facilities – variable-rate

 

 

 

 

 

 

 

 

 

 

 

 

Fund III unfunded investor capital commitments

 

 

195.4

 

 

171.5

 

0.79% (LIBOR +0.60%)

 

10/9/2011

 

Interest only monthly

Six Core Portfolio properties

 

 

1.0

 

 

1.0

 

1.44% (LIBOR +1.25%)

 

12/1/2011

 

Annual principal and monthly interest

Fund II

 

 

40.0

 

 

40.0

 

3.09% (LIBOR +2.90%)

 

12/22/2014

 

Interest only monthly

 

 



 



 

 

 

 

 

 

Sub-total secured credit facilities

 

 

236.4

 

 

212.5

 

 

 

 

 

 

 

 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps (1)

 

 

(71.3

)

 

(71.5

)

 

 

 

 

 

 

 



 



 

 

 

 

 

 

Total variable-rate debt

 

 

475.3

 

 

439.9

 

 

 

 

 

 

 

 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage notes payable – fixed-rate:

 

 

 

 

 

 

 

 

 

 

 

 

Five self-storage properties

 

 

41.5

 

 

41.5

 

5.30%

 

8/31/2011

 

Interest only monthly

Clark Diversey

 

 

4.6

 

 

4.6

 

6.35%

 

7/1/2014

 

Monthly principal and interest

New Loudon Center

 

 

14.0

 

 

14.2

 

5.64%

 

9/6/2014

 

Monthly principal and interest

CityPoint

 

 

20.0

 

 

20.0

 

7.25%

 

11/1/2014

 

Interest only quarterly

Crescent Plaza

 

 

17.4

 

 

17.6

 

4.98%

 

9/6/2015

 

Monthly principal and interest

Pacesetter Park Shopping Center

 

 

12.0

 

 

12.1

 

5.12%

 

11/6/2015

 

Monthly principal and interest

Elmwood Park Shopping Center

 

 

34.0

 

 

34.2

 

5.53%

 

1/1/2016

 

Monthly principal and interest

The Gateway Shopping Center

 

 

20.4

 

 

20.5

 

5.44%

 

3/1/2016

 

Monthly principal and interest

Walnut Hill Plaza

 

 

23.5

 

 

23.5

 

6.06%

 

10/1/2016

 

Interest only monthly until 10/11; monthly principal and interest thereafter

239 Greenwich Avenue

 

 

26.0

 

 

26.0

 

5.42%

 

2/11/2017

 

Interest only monthly

Merrillville Plaza

 

 

26.2

 

 

26.2

 

5.88%

 

8/1/2017

 

Interest only monthly until 7/12 monthly principal and interest thereafter

216th Street

 

 

25.5

 

 

25.5

 

5.80%

 

10/1/2017

 

Interest only monthly

Atlantic Avenue

 

 

11.5

 

 

11.5

 

7.34%

 

1/1/2020

 

Interest only upon drawdown on construction loan until 1/15 monthly principal and interest thereafter

A&P Shopping Plaza

 

 

8.0

 

 

8.0

 

6.40%

 

11/1/2032

 

Monthly principal and interest

Chestnut Hill

 

 

 

 

9.3

 

 

 

Interest rate swaps (1)

 

 

71.3

 

 

71.5

 

4.85%

 

 

 

 

 

 



 



 

 

 

 

 

 

Total fixed-rate debt

 

 

355.9

 

 

366.2

 

 

 

 

 

 

Unamortized premium

 

 

0.1

 

 

0.1

 

 

 

 

 

 

 

 



 



 

 

 

 

 

 

Total

 

$

831.3

 

$

806.2

 

 

 

 

 

 

 

 



 



 

 

 

 

 

 

     (1) Represents the amount of the Company’s variable-rate debt that has been fixed through certain cash flow hedge transactions. (Note 7).

28


CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

At June 30, 2011, maturities on our mortgage notes payable and convertible notes payable ranged from August 2011 to November 2032. In addition, we have non-cancelable ground leases at 24 of our shopping centers. We also lease space for our corporate headquarters for a term expiring in 2015. The following table summarizes our debt maturities, obligations under non-cancelable operating leases and construction contracts as of June 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in millions)

 

Payments due by period

 

 

 


 

Contractual obligations

 

Total

 

Less than
1 year

 

1 to 3
years

 

3 to 5
years

 

More than
5 years

 

 

 


 


 


 


 


 

 

Future debt maturities