UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

|  |                                                                                          
|- | -----------------------------------------------------------------------------------------
|x | ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|  |                                                                                          
|  | For the fiscal year ended December 31, 2009                                              
|  |                                                                                          
|o | TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period
from          toCommission File Number 1-12002

ACADIA
REALTY TRUST(Exact name of registrant as specified in its charter)

|                         |                                     
|------------------------ | ------------------------------------
|Maryland                 | 23-2715194                          
|(State of incorporation) | (I.R.S. employer identification no.)

1311 Mamaroneck Avenue, Suite 260
White Plains, NY 10605
(Address of principal executive offices)(914) 288-8100
(Registrants telephone number)

Securities registered pursuant to Section
12(b) of the Act:

Common Shares of Beneficial Interest, $.001
par value
(Title of Class)
New York Stock Exchange
(Name of Exchange on which registered)

Securities registered pursuant to Section
12(g) of the Act:
None

Indicate by
check mark if the Registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


YES o  NO
x


Indicate by
check mark if the Registrant is not required to file reports pursuant to
Section 13 or Section 15 (d) of the Securities Act.


YES o  NO
x


Indicate by
check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.


YES x  NO
o


Indicate by
check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


YES o  NO
o


Indicate by
check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.            x


Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act).


|                           |                      |                          |                             
|-------------------------- | -------------------- | ------------------------ | ----------------------------
|Large
 Accelerated Filer 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


The aggregate
market value of the voting and non-voting common equity held by non-affiliates
of the registrant as of the last business day of the registrants most recently
completed second fiscal quarter was approximately $523.5 million, based on a
price of $13.05 per share, the average sales price for the registrants common
shares of beneficial interest on the New York Stock Exchange on that date.


The number of
shares of the registrants common shares of beneficial interest outstanding
on March 1, 2010 was 40,111,565.

DOCUMENTS INCORPORATED BY REFERENCE

Part III 
Portions of the registrants definitive proxy statement relating to its 2010
Annual Meeting of Shareholders presently scheduled to be held May 10, 2010 to
be filed pursuant to Regulation 14A.

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TABLE OF CONTENTS

Form 10-K Report

|         |                                                                                                                                  |  |     
|-------- | -------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Item No. |                                                                                                                                  |  | Page
|         |                                                                                                                                  |  |     
|         | PART I                                                                                                                           |  |     
|1.       | Business                                                                                                                         |  | 4   
|1A.      | Risk Factors                                                                                                                     |  | 12  
|1B.      | Unresolved Staff Comments                                                                                                        |  | 18  
|2.       | Properties                                                                                                                       |  | 19  
|3.       | Legal Proceedings                                                                                                                |  | 28  
|4.       | Submission of Matters to a Vote of Security Holders                                                                              |  | 28  
|         | PART II                                                                                                                          |  |     
|5.       | Market for Registrants Common Equity, Related Shareholder Matters,
 Issuer Purchases of Equity Securities and Performance Graph |  | 29  
|6.       | Selected Financial Data                                                                                                          |  | 31  
|7.       | Managements Discussion and Analysis of Financial Condition and
 Results of Operations                                           |  | 33  
|7A.      | Quantitative and Qualitative Disclosures about Market Risk                                                                       |  | 47  
|8.       | Financial Statements and Supplementary Data                                                                                      |  | 48  
|9.       | Changes in and Disagreements with Accountants on Accounting and
 Financial Disclosure                                            |  | 48  
|9A.      | Controls and Procedures                                                                                                          |  | 48  
|9B.      | Other Information                                                                                                                |  | 49  
|         | PART III                                                                                                                         |  |     
|10.      | Directors and Executive Officers of the Registrant                                                                               |  | 50  
|11.      | Executive Compensation                                                                                                           |  | 50  
|12.      | Security Ownership of Certain Beneficial Owners and Management                                                                   |  | 50  
|13.      | Certain Relationships and Related Transactions                                                                                   |  | 50  
|14.      | Principal Accountant Fees and Services                                                                                           |  | 50  
|         | PART IV                                                                                                                          |  |     
|15.      | Exhibits, Financial Statements, Schedules                                                                                        |  | 50  

2

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SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS

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

3

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PART I

ITEM 1. BUSINESS.

GENERAL

Acadia Realty
Trust (the Trust) was formed on March 4, 1993 as a Maryland real estate
investment trust (REIT). All references to Acadia, we, us, our, and
Company refer to Acadia Realty Trust and its consolidated subsidiaries. We
are a fully integrated, self-managed and self-administered equity REIT focused
primarily on the ownership, acquisition, redevelopment and management of retail
properties, including neighborhood and community shopping centers and mixed-use
properties with retail components. We currently operate 79 properties, which we
own or have an ownership interest in. These assets are located primarily in the
Northeast, Mid-Atlantic and Midwestern regions of the United States and, in
total, comprise approximately eight million square feet. We also have private
equity investments in other retail real estate related opportunities including
investments for which we provide operational support to the operating ventures
in which we have a minority equity interest.

All of our
investments are held by, and all of our operations are conducted through,
Acadia Realty Limited Partnership (the Operating Partnership) and entities in
which the Operating Partnership owns a controlling interest. As of December 31,
2009, the Trust controlled 98% 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 generally represent entities or
individuals, which contributed their interests in certain assets or entities to
the Operating Partnership in exchange for common or preferred units of limited
partnership interest (Common OP Units or Preferred OP Units, respectively,
and collectively, OP Units). Limited partners holding Common OP Units are
generally entitled to exchange their units on a one-for-one basis for our
common shares of beneficial interest (Common Shares). This structure is
referred to as an umbrella partnership REIT or UPREIT.

BUSINESS OBJECTIVES AND STRATEGIES

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

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Own and
 operate a Core Portfolio (as defined in Item 2 of this Form 10-K) 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.

Investment Strategy  External Growth through
Opportunistic Acquisition Platforms

The
requirements that acquisitions be accretive on a long-term basis based on our
cost of capital, as well as increase the overall portfolio quality and value,
are core to our acquisition program. As such, we constantly evaluate the
blended cost of equity and debt and adjust the amount of acquisition activity
to align the level of investment activity with capital flows. We may also
engage in discussions with public and private entities regarding business
combinations. In addition to our direct investments in real estate assets, we
have also capitalized on our expertise in the acquisition, redevelopment,
leasing and management of retail real estate by establishing discretionary
opportunity funds in which we earn, in addition to a return on our equity
interest and carried interest (Promote), fees and priority distributions for
our services. To date, we have launched three opportunity funds (Opportunity
Funds), Acadia Strategic Opportunity Fund, LP (Fund I), Acadia Strategic
Opportunity Fund II, LLC (Fund II) and Acadia Strategic Opportunity Fund III,
LLC (Fund III). Due to the level of our control, we consolidate these Opportunity
Funds for financial reporting purposes.

Fund I

During
September of 2001, we and four of our institutional shareholders formed Fund I,
and during August of 2004 formed a limited liability company, Acadia Mervyn
Investors I, LLC (Mervyns I), whereby the investors committed $70.0 million
for the purpose of acquiring real estate assets. The Operating Partnership
committed an additional $20.0 million in the aggregate to Fund I and Mervyns I,
as the general partner or managing member with a 22.2% interest. In addition to
a pro-rata return on its invested equity, the Operating Partnership is entitled
to a Promote based upon certain investment return thresholds. Cash flow was
distributed pro-rata to the partners (including the Operating Partnership) until
a 9% cumulative return was achieved (Preferred Return) on, and a return of
all capital contributions.

4

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During 2006,
the Fund I investors received a return of all of their capital invested in Fund
I and their unpaid preferred. Accordingly, all cash flow is now distributed 80%
to the partners (including the Operating Partnership) and 20% to the Operating
Partnership as a Promote. The Operating Partnership also earns fees and/or
priority distributions for asset management services equal to 1.5% of the allocated
invested equity, as well as for property management, leasing, legal and
construction services. All such fees and priority distributions are reflected
as a reduction in the noncontrolling interest share in income from Opportunity
Funds in the Consolidated Financial Statements beginning on page F-1 of this
Form 10-K.

Our
acquisition program was executed primarily through Fund I through June 2004.
Fund I focused on targeting assets for acquisition that had superior in-fill
locations, restricted competition due to high barriers to entry and in-place
below-market anchor leases with the potential to create significant additional
value through re-tenanting, timely capital improvements and property
redevelopment.

As of December
31, 2009, there were 21 assets comprising approximately 1.0 million square feet
remaining in Fund I in which the Operating Partnerships interest in cash flow
and income is 37.8% as a result of the Promote.

Fund II

Following our
success with Fund I, during June of 2004 we formed a second, larger Opportunity
Fund, Fund II, and during August of 2004, formed Acadia Mervyn Investors II,
LLC (Mervyns II), with the investors from Fund I as well as two additional
institutional investors, whereby the investors, including the Operating Partnership,
committed capital totaling $300.0 million. The Operating Partnership is the
managing member with a 20% interest in Fund II and Mervyns II and can invest
the committed equity on a discretionary basis within the parameters defined in
the Fund II and Mervyns II operating agreements. The terms and structure of
Fund II and Mervyns II are substantially the same as Fund I and Mervyns I with
the exception that the Preferred Return is 8%. As of December 31, 2009, $223.3
million of Fund IIs and Mervyns IIs capital was invested and the balance of
$76.7 million is expected to be utilized to complete development activities for
existing Fund II investments.

Given the
market conditions for commercial real estate at the time Fund II was formed, we
channeled our acquisition efforts through Fund II in two opportunistic
strategies described below  the New York Urban Infill Redevelopment Initiative
and the Retailer Controlled Property Venture.

New York Urban/Infill Redevelopment Initiative

During
September of 2004, through Fund II, we launched our New York Urban Infill
Redevelopment Initiative. Despite the current economy, we believe that
retailers continue to recognize that many of the nations urban markets are
underserved from a retail standpoint, and we capitalized on this situation by
investing in redevelopment projects in dense urban areas where retail tenant
demand has effectively surpassed the supply of available sites. During 2004,
Fund II, together with an unaffiliated partner, P/A Associates, LLC (P/A),
formed Acadia-P/A Holding Company, LLC (Acadia-P/A) for the purpose of
acquiring, constructing, developing, owning, operating, leasing and managing
certain retail or mixed-use real estate properties in the New York City
metropolitan area. P/A agreed to invest 10% of required capital up to a maximum
of $2.2 million and Fund II, the managing member, agreed to invest the balance
to acquire assets in which Acadia-P/A agreed to invest. See Item 7 of this Form
10-K for further information on the Acadia-P/A Joint Venture as detailed in
Liquidity and Capital Resources  New York Urban/Infill Redevelopment
Initiative. To date, Fund II has invested in nine projects, eight of which are
in conjunction with P/A, as discussed further in PROPERTY ACQUISITIONS New York
Urban/Infill Redevelopment Initiative below in this Item 1.

Retailer Controlled Property Venture (the RCP Venture)

On January 27,
2004, through Funds I and II, we entered into an association, known as the RCP
Venture, with Klaff Realty, L.P. (Klaff) and Lubert-Adler Management, Inc.
(Lubert-Adler) for the purpose of making investments in surplus or
underutilized properties owned by retailers. The initial expected size of the
RCP Venture is approximately $300.0 million in equity, of which our share is
$60.0 million. Each participant in the RCP Venture has the right to opt out of
any potential investment. We would consider expanding the size of the RCP
Venture and our share thereof based on investment opportunities. 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 us. Affiliates of Mervyns I and II and Fund II have invested
$60.8 million in the RCP Venture to date on a non-recourse basis. While we are
not required to invest any additional capital into any of these investments,
should additional capital be required and we elect not to contribute our share,
our proportionate share in the investment will be reduced. Cash flow from any
RCP Venture investments is to be distributed to the participants until they
have received a 10% cumulative return and a full return of all contributions.
Thereafter, remaining cash flow is to be distributed 20% to Klaff (Klaffs
Promote) and 80% to the partners (including Klaff). The Operating Partnership
may also earn market-rate fees for property management, leasing and
construction services on behalf of the RCP Venture. While we are primarily a
passive partner in the investments made through the RCP Venture, historically
we have provided our support in reviewing potential acquisitions and operating
and redevelopment assistance in areas where we have both a presence and
expertise. We seek to invest opportunistically with the RCP Venture primarily
in any of the following four ways:

5

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|  |                                                                                                                           
|- | --------------------------------------------------------------------------------------------------------------------------
| | Invest in
 operating retailers to control their real estate through private equity joint
 ventures                        
|  |                                                                                                                           
| | Work with
 financially healthy retailers to create value from their surplus real estate                                   
|  |                                                                                                                           
| | Acquire
 properties, designation rights or other control of real estate or leases
 associated with retailers in bankruptcy
|  |                                                                                                                           
| | Complete
 sale leasebacks with retailers in need of capital                                                               

During 2004,
we made our first RCP Venture investment with our participation in the
acquisition of Mervyns. From 2006 through 2009, we made additional investments
as further discussed in PROPERTY ACQUISITIONS  RCP Venture below in this
Item 1.

Fund III

Following the
success of Fund I and the full commitment of Fund II, Fund III was formed
during 2007, with fourteen institutional investors, including a majority of the
investors from Fund I and Fund II, whereby the investors, including the
Operating Partnership, committed capital totaling $503.0 million. The Operating
Partnerships share of the committed capital is $100.0 million and it is the
sole managing member with a 19.9% interest in Fund III and can invest the
committed equity on a discretionary basis within the parameters defined in the
Fund III operating agreements. The terms and structure of Fund III are
substantially the same as the previous Funds with the exception that the
Preferred Return is 6%. As of December 31, 2009, $96.5 million of Fund IIIs
capital was invested. To date, Fund III has invested in 14 projects as
discussed further in PROPERTY ACQUISITIONS below in this Item 1.

Notes Receivable, Preferred Equity and Other Real Estate Related
Investments

We may also
invest in mortgage loans, preferred equity investments, other real estate
interests and other investments. As of December 31, 2009, our notes receivable
and preferred equity investments aggregated $125.2 million, and were
collateralized by either the properties (either first or second mortgage liens)
or the borrowers ownership interest in the properties. In addition, certain
notes receivable are personally guaranteed by principals of the borrowers.
Interest rates on our notes receivable, mezzanine loan investments and
preferred equity investment, ranged from 10% to 22.4% with maturities that range
from demand notes to January 2017.

Capital Strategy  Balance Sheet Focus and
Access to Capital

Given the
significant turmoil in the capital markets and the current post recessionary
    period, our primary capital objective is to maintain a strong and flexible
    balance sheet through conservative financial practices, including moderate
    leverage levels, while ensuring access to sufficient capital to fund future
    growth. We intend to continue financing acquisitions and property redevelopment
    with sources of capital determined by management to be the most appropriate
    based on, among other factors, availability in the current capital markets,
    pricing and other commercial and financial terms. The sources of capital
    may include the issuance of public equity, unsecured debt, mortgage and construction
    loans, and other capital alternatives including the issuance of OP Units.
    We manage our interest rate risk primarily through the use of fixed rate-debt
    and, where we use variable rate debt, we use certain derivative instruments,
    including London Interbank Offered Rate (LIBOR) swap agreements
    and interest rate caps as discussed further in Item 7A of this Form 10-K.

During April
2009, we issued 5.75 million Common Shares and generated net proceeds of
approximately $65.0 million. The proceeds were primarily used to purchase a
portion of our outstanding convertible notes payable and pay down existing
lines of credit.

During
December of 2006 and January of 2007, we issued $115.0 million of 3.75%
unsecured Convertible Notes (the Notes). See Note 9 to our Consolidated
Financial Statements, which begin on page F-1 of this Form 10-K for a
discussion of the terms and conditions of the Notes. The $112.1 million in
proceeds, net of related costs, were used to retire variable rate debt, provide
for future Opportunity Fund capital commitments and for general working capital
purposes. During 2008, we purchased $8.0 million in principal amount of the
Notes and purchased an additional $57.0 million in principal amount during
2009, all at an average discount of approximately 19%.

Operating Strategy  Experienced Management
Team with Proven Track Record

Our senior
management team has decades of experience in the real estate industry. We
believe our management team has demonstrated the ability to create value
internally through anchor recycling, property redevelopment and strategic
non-core dispositions. We have capitalized on our expertise in the acquisition,
redevelopment, leasing and management of retail real estate by establishing
joint ventures, such as the Opportunity Funds, in which we earn, in addition to
a return on our equity interest and Promote, fees and priority distributions.
In connection with these joint ventures we have launched several successful
acquisition platforms including our New York Urban Infill Redevelopment
Initiative and RCP Venture.

Operating
functions such as leasing, property management, construction, finance and legal
(collectively, the Operating Departments) are generally provided by our
personnel, providing for fully integrated property management and development.
By incorporating the Operating Departments in the acquisition process,
acquisitions are appropriately priced giving effect to each assets specific
risks and returns. Also, because of the Operating Departments involvement with,
and corresponding understanding of, the acquisition process, transition time is
minimized and management can immediately execute on its strategic plan for each
asset.

6

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We typically
hold our Core Portfolio properties for long-term investment. As such, we
continuously review the existing portfolio and implement programs to renovate
and modernize targeted centers to enhance the propertys market position.
This in turn strengthens the competitive position of the leasing program to attract
and retain quality tenants, increasing cash flow and consequently property
value. We also periodically identify certain properties for disposition and
redeploy the capital to existing centers or acquisitions with greater potential
for capital appreciation. Our Core Portfolio consists primarily of neighborhood
and community shopping centers, which are generally dominant centers in high
barrier-to-entry markets and are principally anchored by supermarkets and
necessity-based retailers. We believe these attributes enable our properties
to better withstand the current post recessionary
period.

During 2009,
2008 and 2007 we sold three non-core properties and redeployed capital to
acquire three retail properties as further discussed in ASSET SALES AND
CAPITAL/ASSET RECYCLING below in this Item 1.

PROPERTY ACQUISITIONS

RCP Venture

Albertsons

In June 2006,
the RCP Venture, as part of an investment consortium, participated in the
acquisition of 699 stores from Albertsons and 26 Cub Food stores. Mervyns IIs
share of equity invested totaled $20.7 million. The Operating Partnerships
share was $4.2 million.

During
February of 2007, Mervyns II received cash distributions totaling approximately
$44.4 million from its ownership position in Albertsons. The Operating
Partnerships share of this distribution amounted to approximately $8.9
million. Mervyns II received additional distributions from this investment
totaling $8.8 million in 2007, $10.6 million in 2008, and $2.0 million in 2009.
The Operating Partnerships share of these distributions aggregated $4.3
million.

Through
December 31, 2009, Mervyns II has made additional add-on investments in
Albertsons totaling $2.4 million and received distributions totaling $1.2
million. The Operating Partnerships share of these combined amounts was $0.4
million and $0.2 million, respectively.

Mervyns Department Stores

In September
2004, we made our first RCP Venture investment. Through Mervyns I and Mervyns
II, we invested in a consortium to acquire the Mervyns Department Store chain
(Mervyns) consisting of 262 stores (REALCO) and its retail operation
(OPCO) from Target Corporation. To date, REALCO has disposed of a significant
portion of the portfolio. In addition, in November 2007, we sold our interest
in OPCO and, as a result, have no further investment in OPCO. During 2008 and
2007, Mervyns I and Mervyns II made additional investments in Mervyns totaling
$2.9 million. The Operating Partnerships share of the total investment in
Mervyns was $4.9 million.

Through
December 31, 2009, Mervyns I and Mervyns II have also made add-on investments
in Mervyns properties totaling $5.1 million including $1.7 million in 2009. The
Operating Partnerships share of this amount was $0.8 million.

During 2005,
Mervyns made a distribution to the investors from the proceeds from the sale of
a portion of the portfolio and the refinancing of existing debt, of which a
total of $42.7 million was distributed to Mervyns I and Mervyns II. The
Operating Partnerships share of this distribution amounted to $10.2 million.
Subsequently, Mervyns and Mervyns add-ons distributed additional cash totaling
$5.0 million. The Operating Partnerships share of this distribution totaled
$1.4 million.

Other RCP Venture Investments

During 2006,
Fund II invested $1.1 million in Shopko and $0.7 million in Marsh. The
Operating Partnerships share of these investment totaled $0.3 million. Fund II
received a $1.1 million distribution from the Shopko investment during 2007 and
a $1.0 million distribution from the Marsh investment during 2008, of which the
Operating Partnerships share totaled $0.4 million. During 2008, Fund II made
additional investments of $2.0 million in Marsh. The Operating Partnerships
share was $0.4 million. During 2009, Fund II received additional distributions
of $1.6 million from Marsh, of which the Operating Partnerships share was $0.3
million.

During 2007,
Mervyns II invested $2.7 million in REX Stores Corporation. The Operating
Partnerships share was $0.5 million. During 2009, Fund II received a distribution
of $0.4 million from REX, of which the Operating Partnerships share was $0.1
million.

7

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The following
table summarizes the RCP Venture investments from inception through December
31, 2009:

|                          |  |                                 |  |                |           |                   |   |               |                             |                   |       |               |   |      |  |   |      |  | 
|------------------------- |  | ------------------------------- |  | -------------- | --------- | ----------------- | - | ------------- | --------------------------- | ----------------- | ----- | ------------- | - | ---- |  | - | ---- |  | 
|(dollars in
 millions)    |  |                                 |  |                |           |                   |   |               |                             |                  
|                         
|                          |  |                                 |  |                |           |                   |   |               | Operating Partnership Share |                  
|Investor                  |  | Investment                      |  | Year
 acquired |           | Invested
 Capital |   | Distributions |                             | Invested
 Capital |       | Distributions |  
|                          |  |                                 |  |                |           |                   |   |               |                             |                   |       |               |  
|Mervyns I
 and Mervyns II |  | Mervyns                         |  |                | 2004      |                   | $ | 26.1          |                             | $                 | 46.0  |               | $ | 4.9  |  | $ | 11.3 | 
|Mervyns I
 and Mervyns II |  | Mervyns
 add-on investments     |  |                | 2005/2008 |                   |   | 5.1           |                             |                   | 1.7   |               |   | 0.8  |  |   | 0.3  | 
|Mervyns II                |  | Albertsons                     |  |                | 2006      |                   |   | 20.7          |                             |                   | 65.8  |               |   | 4.2  |  |   | 13.2 | 
|Mervyns II                |  | Albertsons
 add-on investments |  |                | 2006/2007 |                   |   | 2.4           |                             |                   | 1.2   |               |   | 0.4  |  |   | 0.2  | 
|Fund II                   |  | Shopko                          |  |                | 2006      |                   |   | 1.1           |                             |                   | 1.1   |               |   | 0.2  |  |   | 0.2  | 
|Fund II                   |  | Marsh                           |  |                | 2006      |                   |   | 2.7           |                             |                   | 2.6   |               |   | 0.5  |  |   | 0.5  | 
|Mervyns II                |  | Rex                             |  |                | 2007      |                   |   | 2.7           |                             |                   | 0.4   |               |   | 0.5  |  |   | 0.1  | 
|                          |  |                                 |  |                |           |                   |   |               |                             |                   |       |               |   |      |  |   |      | 
|Total                     |  |                                 |  |                |           |                   | $ | 60.8          |                             | $                 | 118.8 |               | $ | 11.5 |  | $ | 25.8 | 
|                          |  |                                 |  |                |           |                   |   |               |                             |                   |       |               |   |      |  |   |      | 

New York Urban/Infill Redevelopment
Initiative

As of December
31, 2009, we had ten New York Urban/Infill projects. Construction is
substantially complete at six of the projects, one is under construction and
three are in the design phase as follows:

Construction Substantially Complete

Fordham Place  During September of 2004,
Acadia-P/A purchased 400 East Fordham Road, Bronx, New York. Construction of a
119,000 square foot retail component and 157,000 square foot office tower are
complete. The retail component is 100% occupied and the office component is 34%
occupied. The total cost of the project to Acadia-P/A was approximately $130.0
million.

Pelham Manor Shopping Plaza  During October
of 2004, Acadia-P/A entered into a 95-year, inclusive of extension options,
ground lease to redevelop a 16-acre site in Pelham Manor, Westchester County,
New York. We demolished the existing industrial and warehouse buildings, and
completed construction of a 229,000 square foot community retail center and a
90,000 square foot self-storage facility at a total cost of approximately $62.0
million. Home Depot was originally slated to anchor the project, but announced
its decision to curtail plans for expansion. As part of our lease termination
agreement with Home Depot, we purchased the building that Home Depot had
constructed on the site for $10 million, representing approximately half of
their cost of construction. The retail center is currently 74% occupied and
anchored by a BJs Wholesale Club.

216th Street  During December of
2005, Acadia-P/A acquired a parking garage located at 10th Avenue
and 216th Street in the Inwood section of Manhattan. During 2007, we
completed the construction of a 60,000 square foot office building and we
relocated an agency of the City of New York, which was a tenant at another of
our Urban/Infill Redevelopment projects, to this location. The total cost to
Acadia-P/A for the project, which also includes a 100-space rooftop parking
deck, were approximately $28.0 million.

Liberty Avenue  During December of 2005,
Acadia-P/A acquired the remaining 40-year term of a leasehold interest in land
located at Liberty Avenue and 98th Street in Ozone Park (Queens),
New York. The property is currently operating and includes approximately 30,000
square feet of retail anchored by a CVS drug store and a 98,500 square foot
self-storage facility. The total cost to Acadia-P/A of the redevelopment was
approximately $15.0 million.

161st Street - During August of
2005, Acadia-P/A purchased 244-268 161st Street located in the
Bronx, New York for $49.3 million. The redevelopment plan for this currently
99% leased and 84% occupied, 10-story office building, is to recapture and
convert street level office space into retail. Additional redevelopment costs
to Acadia-P/A are anticipated to be approximately $16.0 million.

Atlantic Avenue  During May of 2007, we,
through Fund II and in partnership with Post Management, LLC (Storage Post),
acquired a property on Atlantic Avenue in Brooklyn, New York. Storage Post is
our unaffiliated partner in our self-storage portfolio (see below) and at two
of our other New York urban projects with a self-storage component. During
2009, we completed construction of the 110,000 square feet, six-story storage
facility and commenced operations. The total cost of the project was
approximately $23.0 million.

8

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Under Construction

Canarsie - During October of 2007, Acadia-P/A
acquired a 530,000 square foot warehouse building in Canarsie, Brooklyn for
approximately $21.0 million. The development plan for this property includes
the demolition of a portion of the warehouse and the construction of a 265,000
square foot mixed-use project consisting of retail and office. The total cost
of the redevelopment, including acquisition costs, is expected to be
approximately $77.0 million. We had executed a lease with Home Depot to anchor
the project. However, during 2008, Home Depot terminated their lease and paid
us a fee of $24.5 million. The project is currently under construction and 80%
pre-leased to BJs Wholesale Club and the New York City Police Department.

In Design

Sherman Plaza - During April of 2005,
Acadia-P/A acquired 4650 Broadway located in the Washington Heights/Inwood
section of Manhattan. The property, which was occupied by an agency of the City
of New York (NYC) and a commercial parking garage, was acquired for a
purchase price of $25.0 million. During 2007 we relocated NYC to Acadia-P/As
216th St. redevelopment as discussed above. We are currently
reviewing various alternatives to redevelop the site to include retail and
office components.

CityPoint - During June of 2007, Acadia-P/A
and an unaffiliated joint venture partner purchased the leasehold interests in
The Gallery at Fulton Street in downtown Brooklyn for approximately $115.0
million, with an option to purchase the fee position, which is owned by the
City of New York, at a later date. Redevelopment plans for the property,
renamed CityPoint, include the demolition of the existing structure
(completed) and the development of a 1.3 million square foot project to include
retail and residential components. Acadia-P/A will participate in the
development of the retail component. Acadia-P/A does not plan on participating
in the development of, or have an ownership interest in, the residential
component of the project. The current plan calls for the commencement during
2010 of the first of four phases of redevelopment which is expected to include
between 40,000 and 50,000 square feet of retail space on five levels.
Development of the balance of the project, including the residential component,
is expected to occur over multiple years. The project has been conditionally
awarded $20.0 million of federal stimulus bond financing to fund construction
of the first phase. Please refer to the discussion under the heading Off
Balance  Sheet Arrangments in Item 7 of this Form 10-K for a discussion
of $26.0 million of debt on this property that will mature in August 2010 and
potential additional capital requirements Fund II may have if our unaffiliated
joint venture partner determines  not to fund its requisite share of capital.

Sheepshead Bay - During November of 2007, Fund
III acquired a property in Sheepshead Bay, Brooklyn for approximately $20.0
million. The project is currently in the design phase and we have demolished
one of two buildings on the existing site and expect to develop a multi-story
retail center with approximately 240,000 square feet of gross leasable area.

Self-Storage Portfolio

On February
29, 2008, Fund III, in conjunction with Storage Post, acquired a portfolio of
eleven self-storage properties from Storage Posts existing institutional
investors for approximately $174.0 million. In addition, we, through Fund II,
developed three self-storage properties as discussed above. The fourteen
self-storage property portfolio, located throughout New York and New Jersey,
totals approximately 1,127,000 net rentable square feet, and is operating at
various stages of stabilization.

Other Investments

In addition to
the RCP Venture, the New York Urban/Infill and Self-Storage Portfolio
investments as discussed above, through Fund III, we have also acquired the
following:

During January
2009, we purchased Cortlandt Towne Center for $78.0 million. The operating
property is a 642,000 square foot shopping center located in Westchester
County, New York.

During
November 2007, we acquired 125 Main Street, Westport, Connecticut for
approximately $17.0 million. Our plan is to redevelop the existing building
into 30,000 square feet of retail and office space.

Core Portfolio

See Item 2.
PROPERTIES for the definition of our Core Portfolio.

During April
of 2008, the Operating Partnership acquired a 20,000 square foot single tenant
retail property located on 17th Street near 5th Avenue in
Manhattan, New York for $9.7 million.

During March
of 2007, the Operating Partnership purchased a 52,000 square foot single-tenant
building located at 1545 East Service Road in Staten Island, New York for $17.0
million and a 10,000 square foot retail commercial condominium at 200 West 54th Street located in Manhattan, New
York for $36.4 million.

9

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Preferred Equity, Notes Receivable and Other
Real Estate Related Investments

During
December 2009, the Operating Partnership made a loan for $8.6 million which
bears interest at 14.5% with a one year term and one six month extension.

During
June 2008, the Operating Partnership made a $40.0 million preferred
equity investment in a portfolio of 18 properties located primarily in
Georgetown, Washington D.C. The portfolio consists of 306,000 square feet of
principally retail space.

During
July 2008, the Operating Partnership made a $34.0 million mezzanine
loan, which is collateralized by a mixed-use retail and residential development
at 72nd
Street and Broadway on the Upper West Side of Manhattan.

During
September 2008, Fund III made a $10.0 million first mortgage loan, which is
collateralized by land located on Long Island, New York.

The following
table sets forth our preferred equity and notes receivable investments as of
December 31, 2009:

Notes
Receivable 
(dollars in thousands)

|                                     |  |           |         |                 |       |        |  |                    |         |                         |  |       |        |                         |                 |                                              |         |  |            |  |         |     |                          | 
|------------------------------------ |  | --------- | ------- | --------------- | ----- | ------ |  | ------------------ | ------- | ----------------------- |  | ----- | ------ | ----------------------- | --------------- | -------------------------------------------- | ------- |  | ---------- |  | ------- | --- | ------------------------ | 
|                                     |  |           |         |                 |       |        |  |                    |         | Weighted Averages       | 
|                                     |  |           |         |                 |       |        |  |                    |         |                         | 
|                                     |  |           |         |                 |       |        |  |                    |         |                         |  |       |        |                         |                 | Underlying third-party 
 first mortgage loan |        
|                                     |  |           |         |                 |       |        |  | StatedInterestrate |         | Effectiveinterestrate 1 |  |       |        | Extensionoptions(years) |                 |                                              |        
|                                     |  |           |         | Accruedinterest |       |        |  |                    |         | Maturitydate            |  |       | Amount |                         | Maturity
 dates |                                             
|Investment                           |  | Principal |         |                 | Total |        |  |                    |         |                         |  |      
|                                     |  |           |         |                 |       |        |  |                    |         |                         |  |       |        |                         |                 |                                              |         |  |            |  |         |     |                          | 
|                                     |  |           |         |                 |       |        |  |                    |         |                         |  |       |        |                         |                 |                                              |         |  |            |  |         |     |                          | 
|Georgetown A - 5 property portfolio  |  | $         | 8,000   |                 | $     | 994    |  | $                  | 8,994   |                         |  | 9.75  | %      |                         | 10.19           | %                                            | 11/2010 |  | 2 x 1 year |  | 8,375   |     | 2010 through 2012        | 
|Georgetown B - 18 property portfolio |  |           | 40,000  |                 |       | 5,405  |  |                    | 45,405  |                         |  | 13.00 | %      |                         | 13.44           | %                                            | 6/2010  |  | 2 x 1 year |  | 115,454 |     | 2011 through 2016        | 
|72nd Street                          |  |           | 40,975  |                 |       | 3,637  |  |                    | 44,612  |                         |  | 13.00 | %      |                         | 19.48           | %                                            | 7/2011  |  | 1 year     |  | 185,000 | (2) | 2011 w/ 1 year extension | 
|First mortgage
     and other notes  |  |           | 20,853  |                 |       | 72     |  |                    | 20,925  |                         |  | 12.87 | %      |                         | 13.42           | %                                            | 2010    |  | 1 year     |  | n/a     |     | n/a                      | 
|Mezzanine notes                      |  |           | 15,393  |                 |       | 145    |  |                    | 15,538  |                         |  | 13.97 | %      |                         | 14.83           | %                                            | 2013    |  |           |  | 272,559 |     | 2011 through 2019        | 
|                                     |  |           |         |                 |       |        |  |                    |         |                         |  |       |        |                         |                 |                                              |         |  |            |  |         |     |                          | 
|Total notes receivable               |  | $         | 125,221 |                 | $     | 10,253 |  | $                  | 135,474 |                         |  | 12.89 | %      |                         | 15.38           | %                                            |         |  |            |  |         |     |                          | 
|                                     |  |           |         |                 |       |        |  |                    |         |                         |  |       |        |                         |                 |                                              |         |  |            |  |         |     |                          | 

|  |                                                                                               
|- | ----------------------------------------------------------------------------------------------
| 
|1 | The
 effective rate includes upfront points and exit fees                                     
|  |                                                                                               
|2 | The first
 mortgage amount for 72nd Street represents the maximum availability under the
 loan

ASSET SALES AND CAPITAL/ASSET RECYCLING

Core Portfolio

We
periodically identify certain core properties for disposition and redeploy the
capital to existing centers or acquisitions with greater potential for capital
appreciation. Since January of 2007, we have sold the following Core
Portfolio assets:

|                           |  |                                |  |                |  |                       |           |                                      |   |        | 
|-------------------------- |  | ------------------------------ |  | -------------- |  | --------------------- | --------- | ------------------------------------ | - | ------ | 
|Property                   |  | Location                       |  | Date sold      |  | Gross
 leasable
 area |           | Sales price
 (dollars in
 thousands) |  
|                           |  |                                |  |                |  |                       |           |                                      |  
|Blackman
 Plaza            |  | Wilkes-Barre,
 Pennsylvania    |  | November
 2009 |  |                       | 125,264   |                                      | $ | 2,500  | 
|Village
 Apartments        |  | Winston-Salem,
 North Carolina |  | April 2008     |  |                       | 599,106   |                                      |   | 23,300 | 
|Colony and
 GHT Apartments |  | Columbia,
 Missouri            |  | December
 2007 |  |                       | 625,545   |                                      |   | 15,500 | 
|                           |  |                                |  |                |  |                       |           |                                      |   |        | 
|                           |  |                                |  |                |  |                       |           |                                      |   |        | 
|Total                      |  |                                |  |                |  |                       | 1,349,915 |                                      | $ | 41,300 | 
|                           |  |                                |  |                |  |                       |           |                                      |   |        | 

Proceeds from
these sales in part have been used to fund the Core Portfolio acquisitions as
discussed in PROPERTY ACQUISITIONS above.

10

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Monetization of Fund I

Given that
Fund I was established as a finite life entity, we are currently engaged in the
multi-year process of monetizing the funds investments. As of December 31,
2009 there were 21 assets comprising 1.0 million square feet remaining in
Fund I as summarized by region below

|                                  |  |                         |  |                |  |           | 
|--------------------------------- |  | ----------------------- |  | -------------- |  | --------- | 
|Shopping Center                   |  | Location                |  | Year
 acquired |  | GLA       | 
|                                  |  |                         |  |                |  |           | 
|New York Region                   |  |                         |  |                |  |           | 
|New York                          |  |                         |  |                |  |           | 
|Tarrytown
 Centre                 |  | Tarrytown               |  | 2004           |  | 35,291    | 
|Midwest Region                    |  |                         |  |                |  |           | 
|Ohio                              |  |                         |  |                |  |           | 
|Granville
 Centre                 |  | Columbus                |  | 2002           |  | 134,997   | 
|Michigan                          |  |                         |  |                |  |           | 
|Sterling
 Heights Shopping Center |  | Detroit                 |  | 2004           |  | 154,835   | 
|Various Regions                   |  |                         |  |                |  |           | 
|Kroger/Safeway
 Portfolio         |  | Various (18 properties) |  | 2003           |  | 709,400   | 
|                                  |  |                         |  |                |  |           | 
|                                  |  |                         |  |                |  |           | 
|Total                             |  |                         |  |                |  | 1,034,523 | 
|                                  |  |                         |  |                |  |           | 

On February 2,
2009, The Kroger Co. purchased the fee at six locations in Fund Is
Kroger/Safeway Portfolio for $14.6 million, resulting in a $5.6 million gain.
The Operating Partnerships share of the gain was $1.6 million.

During April
2008, Fund I sold Haygood Shopping Center located in Virginia Beach, Virginia,
for $24.9 million, resulting in a $6.8 million gain. The Operating
Partnerships share of the gain was $1.3 million.

During
November 2007, Fund I sold Amherst Marketplace and Sheffield Crossing,
community shopping centers in Ohio, for $26.0 million, resulting in a
$7.5 million gain. The Operating Partnerships share of the gain was $2.8
million.

PROPERTY REDEVELOPMENT AND EXPANSION

Our
redevelopment program focuses on selecting well-located neighborhood and
community shopping centers within our Core Portfolio and creating significant
value through re-tenanting and property redevelopment.

ENVIRONMENTAL LAWS

For
information relating to environmental laws that may have an impact on our
business, please see Item 1A. Risk Factors-- Possible liability relating to
environmental matters.

COMPETITION

There are
numerous entities that compete with us in seeking properties for acquisition
and tenants that will lease space in our properties. Our competitors include
other REITs, financial institutions, insurance companies, pension funds,
private companies and individuals. Our properties compete for tenants with similar
properties primarily on the basis of location, total occupancy costs (including
base rent and operating expenses) and the design and condition of the
improvements.

FINANCIAL INFORMATION ABOUT MARKET SEGMENTS

We have five reportable
segments: Core Portfolio, Opportunity Funds, Self-Storage Portfolio, Notes
Receivable and Other. Notes Receivable consists of the Companys notes
receivable and preferred equity investments and related interest income, Other
primarily consists of management fees and interest income. The accounting
policies of the segments are the same as those described in the summary of
significant accounting policies set forth in Note 1 to our Consolidated
Financial Statements, which begin on page F-1 of this Form 10-K. We evaluate
property performance primarily based on net operating income before
depreciation, amortization and certain nonrecurring items. Investments in our
Core Portfolio are typically held long-term. Given the contemplated finite life
of our Opportunity Funds, these investments are typically held for shorter
terms. Fees earned by us as general partner/member of the Opportunity Funds are
eliminated in our Consolidated Financial Statements. See Note 3 to our
Consolidated Financial Statements, which begin on page F-1 of this Form 10-K
for information regarding, among other things, revenues from external
customers, a measure of profit and loss and total assets with respect to each
of our segments.

11

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CORPORATE HEADQUARTERS AND EMPLOYEES

Our executive
offices are located at 1311 Mamaroneck Avenue, Suite 260, White Plains, New
York 10605, and our telephone number is (914) 288-8100. As of December 31,
2009, we had 118 employees, of which 90 were located at our executive office
and 28 were located at regional property management offices. None of our
employees are covered by collective bargaining agreements. Management believes
that its relationship with employees is good.

COMPANY WEBSITE

All of our
filings with the Securities and Exchange Commission, including our annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of
charge at our website at www.acadiarealty.com, as soon as reasonably
practicable after we electronically file such material with, or furnish it to,
the Securities and Exchange Commission. These filings can also be accessed
through the Securities and Exchange Commissions website at www.sec.gov.
Alternatively, we will provide paper copies of our filings free of charge upon
request. If you wish to receive a copy of the Form 10-K, you may contact Robert
Masters, Corporate Secretary, at Acadia Realty Trust, 1311 Mamaroneck Avenue,
Suite 260, White Plains, NY 10605. You may also call (914) 288-8100 to request
a copy of the Form 10-K. Information included or referred to on our website is
not incorporated by reference in or otherwise a part of this Form 10-K.

CODE OF ETHICS AND WHISTLEBLOWER POLICIES

The Board of
Trustees adopted a Code of Ethics for Senior Financial Officers that applies to
our Chief Executive Officer, Senior Vice President-Chief Financial Officer, Senior
Vice President-Chief Accounting Officer, Vice President-Controller, Vice
President- Financial Reporting, Director of Taxation and Assistant Controllers.
The Board also adopted a Code of Business Conduct and Ethics applicable to all
employees, as well as a Whistleblower Policy. Copies of these documents are
available in the Investor Information section of our website. We intend to
disclose future amendments to, or waivers from, our Code of Ethics for Senior
Financial Officers in the Investor Information section of our website within
four business days following the date of such amendment or waiver.

ITEM 1A. RISK FACTORS.

If any of the
following risks actually occur, our business, results of operations and
financial condition would likely suffer. This section includes or refers to
certain forward-looking statements. Refer to the explanation of the
qualifications and limitations on such forward-looking statements discussed in
the beginning of this Form 10-K.

We rely on revenues derived from major tenants.

We derive
significant revenues from certain anchor tenants that occupy space in more than
one center. We could be adversely affected in the event of the bankruptcy or
insolvency of, or a downturn in the business of, any of our major tenants, or
in the event that any such tenant does not renew its leases as they expire or
renews at lower rental rates. Vacated anchor space not only would reduce rental
revenues if not re-tenanted at the same rental rates but also could adversely
affect the entire shopping center because of the loss of the departed anchor
tenants customer drawing power. Loss of customer drawing power also can occur
through the exercise of the right that most anchors have to vacate and prevent
re-tenanting by paying rent for the balance of the lease term, or the departure
of a shadow anchor tenant that owns its own property. In addition, in the
event that certain major tenants cease to occupy a property, such an action may
result in a significant number of other tenants having the right to terminate
their leases, or pay a reduced rent based on a percentage of the tenants
sales, at the affected property, which could adversely affect the future income
from such property. See Item 2. PropertiesMajor Tenants for quantified
information with respect the percentage of our minimum rents received from
major tenants.

We may not be able to renew current leases
and the terms of re-letting (including the cost of concessions to tenants) may
be less favorable to us than current lease terms.

Upon the expiration
of current leases for space located in our properties, we may not be able to
re-let all or a portion of that space, or the terms of re-letting (including
the cost of concessions to tenants) may be less favorable to us than current
lease terms. If we are unable to re-let promptly all or a substantial portion
of the space located in our properties or if the rental rates we receive upon
re-letting are significantly lower than current rates, our net income and
ability to make expected distributions to our shareholders will be adversely
affected due to the resulting reduction in rent receipts. There can be no
assurance that we will be able to retain tenants in any of our properties upon
the expiration of their leases. See Item 2. Properties  Lease Expirations in
this Annual Report on Form 10-K for additional information as to the scheduled
lease expirations in our portfolio.

12

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The current economic environment, while
improving, may cause us to lose tenants and may impair our ability to borrow
money to purchase properties, refinance existing debt or finance our current
redevelopment projects.

Our operations
and performance depend on general economic conditions. The U.S. economy has
recently experienced a financial downturn, with consumer spending on the
decline, credit tightening and unemployment rising. Many financial and economic
analysts are predicting that the world economy has entered a prolonged economic
downturn characterized by high unemployment, limited availability of credit and
decreased consumer and business spending. This economic downturn has and may
continue to adversely affect the businesses of many of our tenants. We and the
Opportunity Funds may experience higher vacancy rates as well as delays in
re-leasing vacant space.

The current
downturn has had, and may continue to have, an unprecedented impact on the
global credit markets. In general, credit is currently difficult to obtain.
While we currently believe we have adequate sources of liquidity, there can be
no assurance that we will be able to obtain mortgage loans to purchase
additional properties, obtain financing to complete current redevelopment
projects, or successfully refinance our properties as loans become due. To the
extent that the availability of credit continues to be limited, it will also
adversely impact our preferred equity and mezzanine investments as
counterparties may not be able to obtain the financing required to repay the
loans upon maturity.

The bankruptcy of, or a downturn in the
business of, any of our major tenants or a significant number of our smaller
tenants may adversely affect our cash flows and property values.

The bankruptcy
of, or a downturn in the business of, any of our major tenants causing them to
reject their leases, or not renew their leases as they expire, or renew at
lower rental rates may adversely affect our cash flows and property values.
Furthermore, the impact of vacated anchor space and the potential reduction in
customer traffic may adversely impact the balance of tenants at the center.

Certain of our
tenants have experienced financial difficulties and have filed for bankruptcy
under Chapter 11 of the United States Bankruptcy Code (Chapter 11
Bankruptcy). Pursuant to bankruptcy law, tenants have the right to reject
their leases. In the event the tenant exercises this right, the landlord
generally has the right to file a claim for lost rent equal to the greater of
either one years rent (including tenant expense reimbursements) for remaining
terms greater than one year, or 15% of the rent remaining under the balance of
the lease term, but not to exceed three years rent. Actual amounts to be
received in satisfaction of those claims will be subject to the tenants final
plan of reorganization and the availability of funds to pay its creditors.

Since January
1, 2007, there have been two significant tenant bankruptcies within our
portfolio:

On December
11, 2008, KB Toys (KB) filed for protection under Chapter 11 Bankruptcy. KB
operated in two locations in our Core Portfolio, totaling approximately 12,000
square feet. Rental revenues from KB at these locations totaled $0.03 million,
$0.3 million, and $0.3 million for the years ended December 31, 2009, 2008 and
2007, respectively. Both leases were rejected by KB in February 2009.

On November
10, 2008, Circuit City Stores Inc. (Circuit City) filed for protection under
Chapter 11 Bankruptcy. Circuit City operated at two of our Core Portfolio
locations totaling approximately 59,278 square feet. Rental revenues from
Circuit City at these locations totaled $0.1 million, $1.0 million and $0.7
million for the years ended December 31, 2009, 2008 and 2007 respectively.
Circuit City has rejected both leases. In addition, Circuit City executed a
lease at a property owned by Acadia-P/A Holding Company. Circuit City has
rejected that lease. On January 16, 2009, Circuit City sought Bankruptcy Court
approval to liquidate its assets.

13

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There are risks relating to investments in
real estate.

Real property
investments are subject to varying degrees of risk. Real estate values are
affected by a number of factors, including: changes in the general economic
climate, local conditions (such as an oversupply of space or a reduction in
demand for real estate in an area), the quality and philosophy of management,
competition from other available space, the ability of the owner to provide
adequate maintenance and insurance and to control variable operating costs.
Shopping centers, in particular, may be affected by changing perceptions of
retailers or shoppers regarding the safety, convenience and attractiveness of
the shopping center and by the overall climate for the retail industry
generally. Real estate values are also affected by such factors as government
regulations, interest rate levels, the availability of financing and potential
liability under, and changes in, environmental, zoning, tax and other laws. A
significant portion of our income is derived from rental income from real
property. Our income and cash flow would be adversely affected if a significant
number of our tenants were unable to meet their obligations, or if we were
unable to lease on economically favorable terms a significant amount of space
in our properties. In the event of default by a tenant, we may experience
delays in enforcing, and incur substantial costs to enforce, our rights as a
landlord. In addition, certain significant expenditures associated with each
equity investment (such as mortgage payments, real estate taxes and maintenance
costs) are generally not reduced when circumstances cause a reduction in income
from the investment.

Our ability to change our portfolio is
limited because real estate investments are illiquid.

Equity
investments in real estate are relatively illiquid and, therefore, our ability
to change our portfolio promptly in response to changed conditions will be
limited. Our Board of Trustees may establish investment criteria or limitations
as it deems appropriate, but currently does not limit the number of properties
in which we may seek to invest or on the concentration of investments in any
one geographic region. We could change our investment, disposition and
financing policies without a vote of our shareholders.

We could become highly leveraged, resulting
in increased risk of default on our obligations and in an increase in debt
service requirements, which could adversely affect our financial condition and
results of operations and our ability to pay distributions.

We have
incurred, and expect to continue to incur, indebtedness in furtherance of our
activities. Neither our Declaration of Trust nor any policy statement formally
adopted by our Board of Trustees limits either the total amount of indebtedness
or the specified percentage of indebtedness that we may incur. Accordingly, we
could become more highly leveraged, resulting in increased risk of default on
our obligations and in an increase in debt service requirements, which could
adversely affect our financial condition and results of operations and our
ability to make distributions.

Our loan
agreements contain customary representations, covenants and events of default.
Certain loan agreements require us to comply with certain affirmative and
negative covenants, including the maintenance of certain debt service coverage
and leverage ratios.

Interest expense
on our variable debt as of December 31, 2009 would increase by $3.4 million
annually for a 100 basis point increase in interest rates. We may seek
additional variable-rate financing if and when pricing and other commercial and
financial terms warrant. As such, we would consider hedging against the
interest rate risk related to such additional variable-rate debt through
interest rate swaps and protection agreements, or other means.

We enter into
interest-rate hedging transactions, including interest rate swaps and cap
agreements, with counterparties. There can be no guarantee that the financial
condition of these counterparties will enable them to fulfill their obligations
under these agreements.

Competition may adversely affect our ability
to purchase properties and to attract and retain tenants.

There are
numerous commercial developers, real estate companies, financial institutions
and other investors with greater financial resources than we have that compete
with us in seeking properties for acquisition and tenants who will lease space
in our properties. Our competitors include other REITs, financial
institutions, insurance companies, pension funds, private companies and
individuals. This competition may result in a higher cost for properties that we
wish to purchase. In addition, retailers at our properties face increasing
competition from outlet malls, discount shopping clubs, Internet commerce,
direct mail and telemarketing, which could (i) reduce rents payable to us; (ii)
reduce our ability to attract and retain tenants at our properties; and (iii)
lead to increased vacancy rates at our properties.

We could be adversely affected by poor market
conditions where properties are geographically concentrated.

Our
performance depends on the economic conditions in markets in which our
properties are concentrated. We have significant exposure to the greater New
York region, from which we derive 36% of the annual base rents within our Core
Portfolio. Our operating results could be adversely affected if market
conditions, such as an oversupply of space or a reduction in demand for real
estate, in this area become more competitive relative to other geographic
areas.

14

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We have pursued, and may in the future
continue to pursue extensive growth opportunities, which may result in
significant demands on our operational, administrative and financial resources.

We have
pursued extensive growth opportunities. This expansion has placed significant
demands on our operational, administrative and financial resources. The
continued growth of our real estate portfolio can be expected to continue to
place a significant strain on our resources. Our future performance will depend
in part on our ability to successfully attract and retain qualified management
personnel to manage the growth and operations of our business and to finance
such acquisitions. In addition, acquired properties may fail to operate at
expected levels due to the numerous factors that may affect the value of real
estate. There can be no assurance that we will have sufficient resources to
identify and manage acquired properties or otherwise be able to maintain our
historic rate of growth.

Our inability to carry out our growth
strategy could adversely affect our financial condition and results of
operations.

Our earnings
growth strategy is based on the acquisition and development of additional
properties, including acquisitions through co-investment programs such as our
Opportunity Funds. In the context of our business plan, redevelopment
generally means an expansion or renovation of an existing property. The
consummation of any future acquisitions will be subject to satisfactory
completion of our extensive valuation analysis and due diligence review and to
the negotiation of definitive documentation. We cannot be sure that we will be
able to implement our strategy because we may have difficulty finding new
properties, negotiating with new or existing tenants or securing acceptable
financing.

Acquisitions
of additional properties entail the risk that investments will fail to perform
in accordance with expectations, including operating and leasing expectations.
Redevelopment is subject to numerous risks, including risks of construction
delays, cost overruns or uncontrollable events that may increase project costs,
new project commencement risks such as the receipt of zoning, occupancy and
other required governmental approvals and permits, and the incurrence of
development costs in connection with projects that are not pursued to
completion.

A component of
our growth strategy is through private-equity type investments made through our
RCP Venture. These include investments in operating retailers. The inability of
the retailers to operate profitably would have an adverse impact on income
realized from these investments.

We operate through a partnership structure,
which could have an adverse effect on our ability to manage our assets.

Our primary
property-owning vehicle is the Operating Partnership, of which we are the
general partner. Our acquisition of properties through the Operating
Partnership in exchange for interests in the Operating Partnership may permit
certain tax deferral advantages to limited partners who contribute properties
to the Operating Partnership. Since properties contributed to the Operating
Partnership may have unrealized gain attributable to the difference between the
fair market value and adjusted tax basis in such properties prior to
contribution, the sale of such properties could cause adverse tax consequences
to the limited partners who contributed such properties. Although we, as the
general partner of the Operating Partnership, generally have no obligation to
consider the tax consequences of our actions to any limited partner, there can
be no assurance that the Operating Partnership will not acquire properties in
the future subject to material restrictions designed to minimize the adverse
tax consequences to the limited partners who contribute such properties. Such
restrictions could result in significantly reduced flexibility to manage our
assets.

Limited control over joint venture
investments.

Under the
terms of our Fund III joint venture, which is similar to the terms of Fund I
and Fund II, we are required to first offer to Fund III all of our
opportunities to acquire retail shopping centers. We may only pursue
opportunities to acquire retail shopping centers directly if (i) our joint
venture partner elects not to approve Fund IIIs pursuit of an acquisition
opportunity; (ii) the ownership of the acquisition opportunity by Fund III would
create a material conflict of interest for us; (iii) we require the acquisition
opportunity for a like-kind exchange; or (iv) the consideration payable for
the acquisition opportunity is our Common Shares, OP Units or other securities.
As a result, we may not be able to make attractive acquisitions directly and
may only receive a minority interest in such acquisitions through Fund III.

Our joint
venture investments, including our Opportunity Fund investments may involve
risks not otherwise present for investments made solely by us, including the
possibility that our joint venture partner might have different interests or
goals than we do. Other risks of joint venture investments include impasse on
decisions, such as a sale, because neither we nor a joint venture partner would
have full control over the joint venture. Also, there is no limitation under
our organizational documents as to the amount of funds that may be invested in
joint ventures. Please refer to the discussion under the heading Off Balance Sheet
Arrangements in Item 7 of this Form 10-K for a discussion of $26.0 million
of debt on the CityPoint property that will mature in August 2010 and potential additional
capital requirements Fund II may have if our unaffiliated joint venture partner
determines not to fund its requisite share of capital.

Through our
investments in joint ventures we have also invested in operating businesses
that have operational risk in addition to the risks associated with real estate
investments, including among other risks, human capital issues, adequate supply
of product and material, and merchandising issues.

During 2009,
2008 and 2007, our Fund I and Mervyns I joint ventures provided Promote income.
There can be no assurance that the joint ventures will continue to operate
profitably and thus provide additional Promote income in the future.

15

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Market factors could have an adverse effect
on our share price.

One of the
factors that may influence the trading price of our Common Shares is the annual
dividend rate on our Common Shares as a percentage of its market price. An
increase in market interest rates may lead purchasers of our Common Shares to
seek a higher annual dividend rate, which could adversely affect the market
price of our Common Shares. A decline in our share price, as a result of this
or other market factors, could unfavorably impact our ability to raise additional
equity in the public markets.

The loss of a key executive officer could
have an adverse effect on us.

Our success
depends on the contribution of key management members. The loss of the services
of Kenneth F. Bernstein, President and Chief Executive Officer, or other key
executive-level employees could have a material adverse effect on our results
of operations. We have obtained key-man life insurance for Mr. Bernstein. In
addition, we have entered into an employment agreement with Mr. Bernstein; however,
it could be terminated by Mr. Bernstein. We have not entered into employment
agreements with other key executive level employees.

Possible liability relating to environmental
matters.

Under various
federal, state and local environmental laws, statutes, ordinances, rules and
regulations, as an owner of real property, we may be liable for the costs of
removal or remediation of certain hazardous or toxic substances at, on, in or
under our property, as well as certain other potential costs relating to
hazardous or toxic substances (including government fines and penalties and
damages for injuries to persons and adjacent property). These laws may impose
liability without regard to whether we knew of, or were responsible for, the
presence or disposal of those substances. This liability may be imposed on us
in connection with the activities of an operator of, or tenant at, the
property. The cost of any required remediation, removal, fines or personal or
property damages and our liability therefore could exceed the value of the
property and/or our aggregate assets. In addition, the presence of those
substances, or the failure to properly dispose of or remove those substances,
may adversely affect our ability to sell or rent that property or to borrow
using that property as collateral, which, in turn, would reduce our revenues
and ability to make distributions.

A property can
also be adversely affected either through physical contamination or by virtue
of an adverse effect upon value attributable to the migration of hazardous or
toxic substances, or other contaminants that have or may have emanated from
other properties. Although our tenants are primarily responsible for any
environmental damages and claims related to the leased premises, in the event
of the bankruptcy or inability of any of our tenants to satisfy any obligations
with respect to the property leased to that tenant, we may be required to
satisfy such obligations. In addition, we may be held directly liable for any
such damages or claims irrespective of the provisions of any lease.

From time to
time, in connection with the conduct of our business, and prior to the
acquisition of any property from a third party or as required by our financing
sources, we authorize the preparation of Phase I environmental reports and,
when necessary, Phase II environmental reports, with respect to our properties.
Based upon these environmental reports and our ongoing review of our
properties, we are currently not aware of any environmental condition with
respect to any of our properties that we believe would be reasonably likely to
have a material adverse effect on us. There can be no assurance, however, that
the environmental reports will reveal all environmental conditions at our
properties or that the following will not expose us to material liability in
the future:

| |   |                                                                      
| | - | ---------------------------------------------------------------------
| |  | The
 discovery of previously unknown environmental conditions;       
| |   |                                                                      
| |  | Changes in
 law;                                                     
| |   |                                                                      
| |  | Activities
 of tenants; and                                          
| |   |                                                                      
| |  | Activities
 relating to properties in the vicinity of our properties.

Changes in
laws increasing the potential liability for environmental conditions existing
on properties or increasing the restrictions on discharges or other conditions
may result in significant unanticipated expenditures or may otherwise adversely
affect the operations of our tenants, which could adversely affect our
financial condition or results of operations.

Uninsured losses or a loss in excess of
insured limits could adversely affect our financial condition.

We carry
comprehensive general liability, fire, extended coverage, loss of rent
insurance, and environmental liability on most of our properties, with policy
specifications and insured limits customarily carried for similar properties.
However, with respect to those properties where the leases do not provide for
abatement of rent under any circumstances, we generally do not maintain loss of
rent insurance. In addition, there are certain types of losses, such as losses
resulting from wars, terrorism or acts of God that generally are not insured
because they are either uninsurable or not economically insurable. Should an
uninsured loss or a loss in excess of insured limits occur, we could lose
capital invested in a property, as well as the anticipated future revenues from
a property, while remaining obligated for any mortgage indebtedness or other
financial obligations related to the property. Any loss of these types would
adversely affect our financial condition.

16

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Our Board of Trustees may change our
investment policy without shareholder approval.

Our Board of
Trustees will determine our investment and financing policies, our growth
strategy and our debt, capitalization, distribution, acquisition, disposition
and operating policies. Our Board of Trustees may establish investment criteria
or limitations as it deems appropriate, but currently does not limit the number
of properties in which we may seek to invest or on the concentration of
investments in any one geographic region. Although our Board of Trustees has no
present intention to revise or amend our strategies and policies, it may do so
at any time without a vote by our shareholders. Accordingly, our shareholders
control over changes in our strategies and policies is limited to the election
of trustees, and changes made by our Board of Trustees may not serve the
interests of all of our shareholders and could adversely affect our financial
condition or results of operations, including our ability to distribute cash to
shareholders or qualify as a REIT.

Distribution requirements imposed by law
limit our operating flexibility.

To maintain
our status as a REIT for federal income tax purposes, we are generally required
to distribute to our shareholders at least 90% of our taxable income for each
calendar year. Pursuant to recent IRS pronouncements, up to 90% of such
distribution may be made in Common Shares rather than cash. Our taxable income
is determined without regard to any deduction for dividends paid and by
excluding net capital gains. To the extent that we satisfy the distribution requirement,
but distribute less than 100% of our taxable income, we will be subject to
federal corporate income tax on our undistributed income. In addition, we will
incur a 4% nondeductible excise tax on the amount, if any, by which our
distributions in any year are less than the sum of (i) 85% of our ordinary
income for that year; (ii) 95% of our capital gain net income for that year
and; (iii) 100% of our undistributed taxable income from prior years. We intend
to continue to make distributions to our shareholders to comply with the
distribution requirements of the Internal Revenue Code and to minimize exposure
to federal income and nondeductible excise taxes. Differences in timing between
the receipt of income and the payment of expenses in determining our income as
well as required debt amortization payments and the capitalization of certain
expenses could require us to borrow funds on a short-term basis to meet the
distribution requirements that are necessary to achieve the tax benefits
associated with qualifying as a REIT. The distribution requirements also
severely limit our ability to retain earnings to acquire and improve properties
or retire outstanding debt.

There can be no assurance we have qualified
or will remain qualified as a REIT for federal income tax purposes.

We believe
that we have consistently met the requirements for qualification as a REIT for
federal income tax purposes beginning with our taxable year ended December 31,
1993, and we intend to continue to meet these requirements in the future.
However, qualification as a REIT involves the application of highly technical
and complex provisions of the Internal Revenue Code, for which there are only
limited judicial or administrative interpretations. No assurance can be given
that we have qualified or will remain qualified as a REIT. The Internal Revenue
Code provisions and income tax regulations applicable to REITs differ
significantly from those applicable to other corporations. The determination
of various factual matters and circumstances not entirely within our control
can potentially affect our ability to continue to qualify as a REIT. In addition,
no assurance can be given that future legislation, regulations, administrative
interpretations or court decisions will not significantly change the
requirements for qualification as a REIT or adversely affect the federal income
tax consequences of such qualification. Under current law, if we fail to qualify
as a REIT, we would not be allowed a deduction for dividends paid to shareholders
in computing our net taxable income. In addition, our income would be subject
to tax at the regular corporate rates. We also could be disqualified from
treatment as a REIT for the four taxable years following the year during which
qualification was lost. Cash available for distribution to our shareholders
would be significantly reduced for each year in which we do not qualify as a
REIT. In that event, we would not be required to continue to make
distributions. Although we currently intend to continue to qualify as a REIT,
it is possible that future economic, market, legal, tax or other considerations
may cause us, without the consent of our shareholders, to revoke the REIT
election or to otherwise take action that would result in disqualification.

Limits on ownership of our capital shares.

For the
Company to qualify as a REIT for federal income tax purposes, among other
requirements, not more than 50% of the value of our capital shares may be
owned, directly or indirectly, by five or fewer individuals (as defined in the
Internal Revenue Code to include certain entities) during the last half of each
taxable year after 1993, and such capital shares must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year (in each case, other than
the first such year). Our Declaration of Trust includes certain restrictions
regarding transfers of our capital shares and ownership limits that are
intended to assist us in satisfying these limitations. These restrictions and
limits may not be adequate in all cases, however, to prevent the transfer of
our capital shares in violation of the ownership limitations. The ownership
limit discussed above may have the effect of delaying, deferring or preventing
someone from taking control of us.

Actual or
constructive ownership of our capital shares in excess of the share ownership
limits contained in our Declaration of Trust would cause the violative transfer
or ownership to be null and void from the beginning and subject to purchase by
us at a price equal to the lesser of (i) the price stipulated in the challenged
transaction; and (ii) the fair market value of such shares (determined in
accordance with the rules set forth in our Declaration of Trust). As a result,
    if a violative transfer were made, the recipient of the shares would not
    acquire any economic or voting rights attributable to the transferred shares.
Additionally, the constructive ownership rules for these limits are complex and
groups of related individuals or entities may be deemed a single owner and
consequently in violation of the share ownership limits.

17

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Concentration of ownership by certain
investors.

Six
institutional shareholders own 5% or more individually, and 48.8% in the
aggregate, of our Common Shares. A significant concentration of ownership may
allow an investor or a group of investors to exert a greater influence over our
management and affairs and may have the effect of delaying, deferring or
preventing a change in control of us.

Restrictions on a potential change of
control.

Our Board of
Trustees is authorized by our Declaration of Trust to establish and issue one
or more series of preferred shares without shareholder approval. We have not
established any series of preferred shares. However, the establishment and
issuance of a series of preferred shares could make more difficult a change of
control of us that could be in the best interest of the shareholders.

In addition,
we have entered into an employment agreement with our Chief Executive Officer
and severance agreements are in place with our senior vice presidents which
provide that, upon the occurrence of a change in control of us and either the
termination of their employment without cause (as defined) or their resignation
for good reason (as defined), those executive officers would be entitled to
certain termination or severance payments made by us (which may include a lump
sum payment equal to defined percentages of annual salary and prior years
average bonuses, paid in accordance with the terms and conditions of the
respective agreement), which could deter a change of control of us that could
be in our best interest.

Legislative or regulatory tax changes could
have an adverse effect on us.

There are a
number of issues associated with an investment in a REIT that are related to
the federal income tax laws, including, but not limited to, the consequences of
a companys failing to continue to qualify as a REIT. At any time, the federal
income tax laws governing REITs or the administrative interpretations of those
laws may be amended or modified. Any new laws or interpretations may take
effect retroactively and could adversely affect us or our shareholders. Reduced
tax rates applicable to certain corporate dividends paid to most domestic
noncorporate shareholders are not generally available to REIT shareholders
since a REITs income generally is not subject to corporate level tax. As a
result, investment in non-REIT corporations may be viewed as relatively more
attractive than investment in REITs by domestic noncorporate investors. This
could adversely affect the market price of the Companys shares.

ITEM 1B. UNRESOLVED STAFF
COMMENTS.

None.

18

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ITEM 2. PROPERTIES.

SHOPPING CENTER PROPERTIES

The discussion
and tables in this Item 2 include properties held through our Core Portfolio
and our Opportunity Funds. We define our Core Portfolio as those properties
either 100% owned by, or partially owned through joint venture interests by,
the Operating Partnership, or subsidiaries thereof, not including those
properties owned through our Opportunity Funds. The discussion of the
Opportunity Funds does not include our investment in a portfolio of
self-storage properties, which are detailed separately within this Item 2.

As of December
31, 2009, excluding two properties under redevelopment, there are 32 properties
in our Core Portfolio totaling approximately 4.8 million square feet of gross
leasable area (GLA). Adjusting for our pro-rata ownership share of
partially-owned centers, we own approximately 3.9 million square feet of GLA.
The Core Portfolio properties are located in 12 states and are generally
well-established community and neighborhood shopping centers anchored by
supermarkets or value-oriented retail. The properties are diverse in size,
ranging from approximately 10,000 to 875,000 square feet. As of December 31,
2009, our Core Portfolio was 92.9% occupied and 92.6% on a pro-rata ownership
basis.

As of December
31, 2009, we owned and operated 26 properties totaling 2.1 million square feet
of GLA, excluding properties under redevelopment, in our Opportunity Funds. In
addition to shopping centers, the Opportunity Funds have invested in mixed-use
properties, which generally include retail activities, and self-storage properties.
The Opportunity Fund properties are located in 15 states. As of December 31,
2009, the properties owned by our Opportunity Funds were, in total, 86.8%
occupied.

Within our
Core Portfolio and Opportunity Funds, we had approximately 500 leases as of December
31, 2009. A majority of our rental revenues were from national tenants. A
majority of the income from the properties consists of rent received under
long-term leases. These leases generally provide for the payment of fixed
minimum rent monthly in advance and for the payment by tenants of a pro-rata
share of the real estate taxes, insurance, utilities and common area
maintenance of the shopping centers. Minimum rents and expense reimbursements
accounted for approximately 80% of our total revenues for the year ended
December 31, 2009.

As of December
31, 2009, approximately 34% of our existing leases also provided for the
payment of percentage rents either in addition to, or in place of, minimum
rents. These arrangements generally provide for payment to us of a certain
percentage of a tenants gross sales in excess of a stipulated annual amount.
Percentage rents accounted for approximately 0.3% of the total 2009 revenues of
the Company.

Four of our
Core Portfolio properties and two of our Opportunity Fund properties are
subject to long-term ground leases in which a third party owns and has leased
the underlying land to us. We pay rent for the use of the land at and are
responsible for all costs and expenses associated with the building and
improvements at all six locations.

No individual
property contributed in excess of 10% of our total revenues for the years ended
December 31, 2009, 2008 and 2007. Reference is made to Note 8 to our
Consolidated Financial Statements, which begin on page F-1 of this Form 10-K,
for information on the mortgage debt pertaining to our properties. The
following sets forth more specific information with respect to each of our
shopping centers at December 31, 2009:

19

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|                                |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|------------------------------- |  | ------------- |  | ------------------------------- |  | ----------------- |  | --------- | --- | -------------------------- | --- | ------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------
|Shopping Center                 |  | Location      |  | YearConstructed (C)Acquired (A) |  | OwnershipInterest |  | GLA       |     | Occupancy (1)
 %
 12/31/09 |     | Anchor Tenants
 Current Lease Expiration/
 Lease Option Expiration
|                                |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                   
|Core
 Portfolio                 |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|New York                        |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|Connecticut                     |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|239 Greenwich Avenue            |  | Greenwich     |  | 1998
 (A)                       |  | Fee               |  | 16,834    | (2) |                            | 100 | %                                                                  | Restoration Hardware
 2014/2024 Coach 2016/2021                                                                    
|                                |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|New Jersey                      |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|Elmwood Park Shopping Center    |  | Elmwood Park  |  | 1998
 (A)                       |  | Fee               |  | 149,491   |     |                            | 92  | %                                                                  | A&P 2017/2052
 Walgreens 2022/2062                                                                                
|A&P Shopping Plaza              |  | Boonton       |  | 2006
 (A)                       |  | Fee               |  | 62,908    |     |                            | 92  | %                                                                  | A&P 2024/2069                                                                                                      
|                                |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|New York                        |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|Village Commons Shopping Center |  | Smithtown     |  | 1998
 (A)                       |  | Fee               |  | 87,237    |     |                            | 73  | %                                                                  |                                                                                                                    
|Branch Shopping Plaza           |  | Smithtown     |  | 1998
 (A)                       |  | LI
 (3)           |  | 125,751   |     |                            | 95  | %                                                                  | A&P 2013/2028 CVS
 2010/                                                                                          
|Amboy Road                      |  | Staten Island |  | 2005
 (A)                       |  | LI
 (3)           |  | 60,090    |     |                            | 100 | %                                                                  | King Kullen 2028/Duane
 Reade 2013/2018                                                                           
|Bartow Avenue                   |  | Bronx         |  | 2005
 (C)                       |  | Fee               |  | 14,676    |     |                            | 76  | %                                                                  |                                                                                                                    
|                                |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|Pacesetter Park Shopping Center |  | Pomona        |  | 1999
 (A)                       |  | Fee               |  | 96,353    |     |                            | 89  | %                                                                  | Stop & Shop 2020/2040                                                                                              
|West Shore Expressway           |  | Staten Island |  | 2007
 (A)                       |  | Fee               |  | 55,000    |     |                            | 100 | %                                                                  | LA Fitness 2021/2036                                                                                               
|West 54th Street                |  | Manhattan     |  | 2007
 (A)                       |  | Fee               |  | 9,693     |     |                            | 100 | %                                                                  | Stage Deli 2018/                                                                                                  
|East 17th Street                |  | Manhattan     |  | 2008
 (A)                       |  | Fee               |  | 19,622    |     |                            | 100 | %                                                                  | Barnes & Noble
 2011/2016                                                                                          
|Crossroads Shopping Center      |  | White Plains  |  | 1998
 (A)                       |  | JV
 (4)           |  | 310,742   |     |                            | 94  | %                                                                  | A&P/Waldbaums
 2012/2032 Kmart 2012/2032 B. Dalton 2012/2022 Modells 2014/2019 Pier 1
 2012/Home Goods 2018/2033
|                                |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    
|Total New York Region           |  |               |  |                                 |  |                   |  | 1,008,397 |     |                            | 92  | %                                                                  |                                                                                                                    
|                                |  |               |  |                                 |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                    

20

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|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|--------------------------- |  | ---------------- |  | ----------------------------------- |  | ----------------- |  | --------- | --- | -------------------------- | --- | ------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------
|Shopping Center             |  | Location         |  | Year
 Constructed (C)
 Acquired (A) |  | OwnershipInterest |  | GLA       |     | Occupancy (1)
 %
 12/31/09 |     | Anchor Tenants
 Current Lease Expiration/
 Lease Option Expiration
|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                   
|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Core Portfolio, continued   |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|New
 England                |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Connecticut                 |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Town Line Plaza             |  | Rocky Hill       |  | 1998
 (A)                           |  | Fee               |  | 206,346   | (5) |                            | 98  | %                                                                  | Stop & Shop 2024/2064
 Wal-Mart(5)                                                                                             
|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Massachusetts               |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Methuen Shopping Center     |  | Methuen          |  | 1998
 (A)                           |  | Fee               |  | 130,021   |     |                            | 100 | %                                                                  | Demoulas Market 2010/2015 
 Wal-Mart 2012/2052                                                                                 
|Crescent Plaza              |  | Brockton         |  | 1984
 (A)                           |  | Fee               |  | 218,141   |     |                            | 91  | %                                                                  | Supervalu 2012/2042 
 Home Depot 2021/2056                                                                                     
|New York                    |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|New Loudon Center           |  | Latham           |  | 1982
 (A)                           |  | Fee               |  | 255,826   |     |                            | 100 | %                                                                  | Price Chopper 2015/2035 
 Marshalls 2014/2029 
 Bon Ton 2014/2034 
 Raymour and Flanigan 2019/2034 
 AC Moore 2014/2024       
|Rhode Island                |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Walnut Hill Plaza           |  | Woonsocket       |  | 1998
 (A)                           |  | Fee               |  | 284,717   |     |                            | 96  | %                                                                  | Supervalu 2013/2028 
 Sears 2013/2033 
 CVS 2011/2014                                                                          
|Vermont                     |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|The Gateway Shopping Center |  | South Burlington |  | 1999
 (A)                           |  | Fee               |  | 101,784   |     |                            | 94  | %                                                                  | Supervalu 2024/2053                                                                                                            
|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Total New England Region    |  |                  |  |                                     |  |                   |  | 1,196,835 |     |                            | 97  | %                                                                  |                                                                                                                                
|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Midwest                     |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Illinois                    |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Hobson West Plaza           |  | Naperville       |  | 1998
 (A)                           |  | Fee               |  | 99,126    |     |                            | 93  | %                                                                  | Garden Fresh Markets
 2012/2032                                                                                                
|Clark Diversey              |  | Chicago          |  | 2006
 (A)                           |  | Fee               |  | 19,265    |     |                            | 92  | %                                                                  |                                                                                                                                
|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Indiana                     |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Merrillville Plaza          |  | Merrillville     |  | 1998
 (A)                           |  | Fee               |  | 235,026   |     |                            | 94  | %                                                                  | TJ Maxx 2019/2029 
 JC Penney 2013/2018 
 Office Max 2013/2028 
 Pier 1 2014 
 Davids Bridal 2010/2020 
 K&G Fashion 2017/2027
|Michigan                    |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Bloomfield Town Square      |  | Bloomfield Hills |  | 1998
 (A)                           |  | Fee               |  | 232,181   |     |                            | 87  | %                                                                  | TJ Maxx 2019/2029 
 Marshalls 2011/2026 
 Home Goods 2010/2020 
 Office Max 2010/2025                                          
|Ohio                        |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Mad River Station           |  | Dayton           |  | 1999
 (A)                           |  | Fee               |  | 125,984   |     |                            | 88  | %                                                                  | Babies R Us 2010/2020 Office
 Depot 2010/Pier 1 2010/                                                                      
|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                
|Total Midwest Region        |  |                  |  |                                     |  |                   |  | 711,582   |     |                            | 91  | %                                                                  |                                                                                                                                
|                            |  |                  |  |                                     |  |                   |  |           |     |                            |     |                                                                    |                                                                                                                                

21

---



|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|------------------------------- |  | ------------ |  | ----------------------------------- |  | ----------------- |  | --------- | --- | -------------------------- | ---- | ------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Shopping Center                 |  | Location     |  | Year
 Constructed (C)
 Acquired (A) |  | OwnershipInterest |  | GLA       |     | Occupancy (1)
 %
 12/31/09 |      | Anchor Tenants
 Current Lease Expiration/
 Lease Option Expiration
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                   
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Core Portfolio, continued       |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Mid-Atlantic                    |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|New Jersey                      |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Marketplace of Absecon          |  | Absecon      |  | 1998
 (A)                           |  | Fee               |  | 104,718   |     |                            | 65   | %                                                                  | Rite Aid 2020/2040                                                                                                                                                                                                                                                                                                                                                                           
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Delaware                        |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Brandywine Town Center          |  | Wilmington   |  | 2003
 (A)                           |  | JV
 (7)           |  | 874,908   |     |                            | 95   | %                                                                  | Michaels 2011/2026
 Old Navy (The Gap) 2011/2016
 PetSmart 2017/2042
 Thomasville Furniture 2011/2021
 Access Group 2015/2025
 Bed, Bath & Beyond 2014/2029
 Dicks Sporting Goods 2013/2028
 Lowes Home Centers 2018/2048
 Regal Cinemas 2017/2037
 Target 2018/2058
 TransUnion Settlement 2013/2018
 Lane Home Furnishings 2015/
 MJM Designer 2015/2035
 Christmas Tree Shops 2028/2048
|Market Square Shopping Center   |  | Wilmington   |  | 2003
 (A)                           |  | JV
 (7)           |  | 102,047   |     |                            | 96   | %                                                                  | TJ Maxx 2011/2016
 Trader Joes 2019/2034                                                                                                                                                                                                                                                                                                                                                    
|Route 202 Shopping Center       |  | Wilmington   |  | 2006
 (C)                           |  | LI/JV
 (3) (7)    |  | 19,970    |     |                            | 55   | %                                                                  |                                                                                                                                                                                                                                                                                                                                                                                              
|Pennsylvania                    |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Mark Plaza                      |  | Edwardsville |  | 1968
 (C)                           |  | LI/Fee
 (3)       |  | 216,401   |     |                            | 81   | %                                                                  | Redners Markets 2018/2028 
 Kmart 2014/2049                                                                                                                                                                                                                                                                                                                                                 
|Plaza 422                       |  | Lebanon      |  | 1972
 (C)                           |  | Fee               |  | 156,279   |     |                            | 100  | %                                                                  | Home Depot 2028/2058 
 Dunhams 2016/2031                                                                                                                                                                                                                                                                                                                                                    
|Route 6 Mall                    |  | Honesdale    |  | 1994
 (C)                           |  | Fee               |  | 175,519   |     |                            | 99   | %                                                                  | Kmart 2020/2070
 Rite Aid 2011/2026 Fashion Bug 2016/                                                                                                                                                                                                                                                                                                                                       
|Chestnut Hill                   |  | Philadelphia |  | 2006
 (A)                           |  | Fee
 (8)          |  | 40,570    |     |                            | 68   | %                                                                  | Borders 2010/2020
 TJ Maxx 2010/2020                                                                                                                                                                                                                                                                                                                                                         
|Abington Towne Center           |  | Abington     |  | 1998
 (A)                           |  | Fee               |  | 216,369   | (6) |                            | 99   | %                                                                  | Target (6)                                                                                                                                                                                                                                                                                                                                                                                   
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Total Mid-Atlantic Region       |  |              |  |                                     |  |                   |  | 1,906,781 |     |                            | 93   | %                                                                  |                                                                                                                                                                                                                                                                                                                                                                                              
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Total Core Operating Properties |  |              |  |                                     |  |                   |  | 4,823,595 |     |                            | 92.9 | %                                                                  |                                                                                                                                                                                                                                                                                                                                                                                              
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Properties under Redevelopment  |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|2914 Third Avenue               |  | Bronx        |  | 2006
 (A)                           |  | Fee               |  | 42,400    |     |                            | 79   | %                                                                  | Dr. Js 2021/                                                                                                                                                                                                                                                                                                                                                                               
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Ledgewood Mall                  |  | Ledgewood    |  | 1983
 (A)                           |  | Fee               |  | 517,151   |     |                            | 86   | %                                                                  | Wal-Mart 2019/2049
 Macys 2010/2025
 The Sports Authority 2012/2037
 Marshalls 2014/2034
 Ashley Furniture 2010/2020
 Barnes and Noble 2010/2035                                                                                                                                                                                                                                            
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              
|Total Core Properties           |  |              |  |                                     |  |                   |  | 5,383,146 |     |                            | 92   | %                                                                  |                                                                                                                                                                                                                                                                                                                                                                                              
|                                |  |              |  |                                     |  |                   |  |           |     |                            |      |                                                                    |                                                                                                                                                                                                                                                                                                                                                                                              

22

---



|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|-------------------------------------------- |  | ------------ |  | ----------------------------------- |  | ----------------- |  | ------- | -- | -------------------------- | --- | ------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Shopping Center                              |  | Location     |  | Year
 Constructed (C)
 Acquired (A) |  | OwnershipInterest |  | GLA     |    | Occupancy (1)
 %
 12/31/09 |     | Anchor Tenants
 Current Lease Expiration/
 Lease Option Expiration
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                   
|Opportunity Fund Portfolio                   |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Fund I
 Properties                           |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Ohio                                         |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Granville Centre                             |  | Columbus     |  | 2002
 (A)                           |  | Fee               |  | 134,997 |    |                            | 36  | %                                                                  | Lifestyle Family Fitness
 2017/2027                                                                                                                                                                                                       
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|New York                                     |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Tarrytown Shopping Center                    |  | Tarrytown    |  | 2004
 (A)                           |  | Fee               |  | 35,291  |    |                            | 85  | %                                                                  | Walgreens 2080/                                                                                                                                                                                                                         
|VARIOUS REGIONS                              |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Kroger/Safeway Portfolio                     |  | Various      |  | 2003
 (A)                           |  | JV                |  | 709,400 |    |                            | 100 | %                                                                  | 18 Kroger/Safeway
 Supermarkets Various                                                                                                                                                                                                   
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Total Fund I Properties                      |  |              |  |                                     |  |                   |  | 879,688 |    |                            | 90  | %                                                                  |                                                                                                                                                                                                                                           
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Fund II
 Properties                          |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Illinois                                     |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Oakbrook                                     |  | Oakbrook     |  | 2005
 (A)                           |  | LI
 (3)           |  | 112,000 |    |                            | 100 | %                                                                  | Neiman Marcus 2011/2036                                                                                                                                                                                                                   
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|New York                                     |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Liberty Avenue                               |  | New York     |  | 2005
 (A)                           |  | LI/JV
 (3)        |  | 26,125  |    |                            | 100 | %                                                                  | CVS 2032/2052                                                                                                                                                                                                                             
|216th Street                                 |  | New York     |  | 2005
 (A)                           |  | JV                |  | 60,000  |    |                            | 100 | %                                                                  | City of New York 2027/2032                                                                                                                                                                                                                
|Fordham Place                                |  | Bronx        |  | 2004(A)                             |  | JV                |  | 119,446 |    |                            | 82  | %                                                                  | Best Buy 2019/2039 
 Sears 2023/2033                                                                                                                                                                                                      
|Pelham Manor Shopping Plaza                  |  | Pelham Manor |  | 2004
 (A)                           |  | LI/JV
 (3)        |  | 229,183 |    |                            | 74  | %                                                                  | BJs Wholesale Club
 2033/2053
 Michaels 2013/2033                                                                                                                                                                                        
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Total Fund II Properties                     |  |              |  |                                     |  |                   |  | 546,754 |    |                            | 85  | %                                                                  |                                                                                                                                                                                                                                           
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Fund III
 Properties                         |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|New York                                     |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Cortlandt Towne Center                       |  | Mohegan Lake |  | 2009
 (A)                           |  |                   |  | 641,797 |    |                            | 85  | %                                                                  | Walmart 2018/2048
 A&P 2022/2047
 United Artists Theatre 2018/2038
 Barnes & Noble 2013/2028
 Officemax 2013/2028
 Petsmart 2014/2034
 Modells 2013/2023
 Michaels 2017/2037
 Old Navy 2014/2019
 Marshalls 2014/2024
 Best Buy 2017/2032
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Total Fund III Properties                    |  |              |  |                                     |  |                   |  | 641,797 |    |                            | 85  | %                                                                  |                                                                                                                                                                                                                                           
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Total
 Opportunity Fund Operating Properties |  |              |  |                                     |  | 2,068,239         |  |         | 87 | %                          |    
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Properties
 under Redevelopment              |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Sterling Heights Shopping                    |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Center                                       |  | Detroit      |  | 2004
 (A)                           |  | JV
 (9)           |  | 154,835 |    |                            | 60  | %                                                                  |                                                                                                                                                                                                                                           
|Sherman Plaza                                |  | New York     |  | 2005
 (A)                           |  | JV                |  |        |    |                            |    |                                                                    |                                                                                                                                                                                                                                           
|CityPoint                                    |  | Brooklyn     |  | 2007
 (A)                           |  | JV                |  |        |    |                            |    |                                                                    | Target                                                                                                                                                                                                                                    
|Atlantic Ave                                 |  | Brooklyn     |  | 2007
 (A)                           |  | JV                |  |        |    |                            |    |                                                                    |                                                                                                                                                                                                                                           
|Canarsie Plaza                               |  | Brooklyn     |  | 2007
 (A)                           |  | JV                |  |        |    |                            |    |                                                                    |                                                                                                                                                                                                                                           
|Westport                                     |  | Westport     |  | 2007
 (A)                           |  | JV                |  |        |    |                            |    |                                                                    |                                                                                                                                                                                                                                           
|Sheeepshead Bay                              |  | Brooklyn     |  | 2007
 (A)                           |  | JV                |  |        |    |                            |    |                                                                    |                                                                                                                                                                                                                                           
|161st Street                                 |  | Bronx        |  | 2005
 (A)                           |  | JV                |  | 227,379 |    |                            | 84  | %                                                                  | City of New York 2011/                                                                                                                                                                                                                   
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           
|Total Redevelopment Properties               |  |              |  |                                     |  |                   |  | 382,214 |    |                            | 74  | %                                                                  |                                                                                                                                                                                                                                           
|                                             |  |              |  |                                     |  |                   |  |         |    |                            |     |                                                                    |                                                                                                                                                                                                                                           

23

---



Notes:

|    |                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------
|(1) | Does not include space leased for which rent had not
 yet commenced as of December 31, 2009.                             
|    |                                                                                                                          
|(2) | In addition to the 16,834 square feet of retail GLA,
 this property also has 21 apartments comprising 14,434 square feet.
|    |                                                                                                                          
|(3) | We are a ground lessee under a long-term ground
 lease.                                                                  
|    |                                                                                                                          
|(4) | We have a 49% investment in this property.                                                                               
|    |                                                                                                                          
|(5) | Includes a 97,300 square foot Wal-Mart which is not
 owned by us.                                                        
|    |                                                                                                                          
|(6) | Includes a 157,616 square foot Target Store that is
 not owned by us.                                                    
|    |                                                                                                                          
|(7) | We have a 22% investment in this property.                                                                               
|    |                                                                                                                          
|(8) | Property consists of two buildings.                                                                                      
|    |                                                                                                                          
|(9) | Fund I has a 50% interest in this property.                                                                              

MAJOR TENANTS

No individual
retail tenant accounted for more than 5.8% of minimum rents for the year ended
December 31, 2009 or occupied more than 6.8% of total leased GLA as of
December 31, 2009. The following table sets forth certain information for
the 20 largest retail tenants based upon minimum rents in place as of
December 31, 2009. The amounts below include our pro-rata share of GLA and
annualized base rent for the Operating Partnerships partial ownership interest
in properties, including the Opportunity Funds (GLA and rent in thousands):

|                                                |  |                                  |    |           |  |                            |  |                           |            |                            |                                                    |      |   |  |      |  
|----------------------------------------------- |  | -------------------------------- | -- | --------- |  | -------------------------- |  | ------------------------- | ---------- | -------------------------- | -------------------------------------------------- | ---- | - |  | ---- | -
|                                                |  |                                  |    |           |  |                            |  |                           |            |                            | Percentage
 of Total
 Represented by Retail Tenant |     
|                                                |  |                                  |    |           |  |                            |  |                           |            |                            |                                                    |     
|Retail Tenant                                   |  | Number of
 Stores in 
 Portfolio |    | Total GLA |  | Annualized
 Base
 Rent (1) |  | Total
 Portfolio
 GLA (2) |            | Annualized
 Base
 Rent (2) |                                                   
|                                                |  |                                  |    |           |  |                            |  |                           |            |                            |                                                   
|A&P (Waldbaums, Pathmark)                      |  |                                  | 5  |           |  | 191,902                    |  | $                         | 3,468,127  |                            |                                                    | 3.8  | % |  | 5.8  | %
|Supervalu (Shaws)                              |  |                                  | 3  |           |  | 175,801                    |  |                           | 2,420,980  |                            |                                                    | 3.5  | % |  | 4.0  | %
|TJX Companies (T.J. Maxx, Marshalls, Homegoods) |  |                                  | 10 |           |  | 255,843                    |  |                           | 2,254,281  |                            |                                                    | 5.1  | % |  | 3.8  | %
|Wal-Mart                                        |  |                                  | 3  |           |  | 235,996                    |  |                           | 1,713,410  |                            |                                                    | 4.7  | % |  | 2.9  | %
|Sears (Sears, Kmart)                            |  |                                  | 5  |           |  | 341,708                    |  |                           | 1,653,320  |                            |                                                    | 6.8  | % |  | 2.8  | %
|Stage Deli                                      |  |                                  | 1  |           |  | 4,211                      |  |                           | 1,403,822  |                            |                                                    | 0.1  | % |  | 2.3  | %
|Ahold (Stop & Shop)                             |  |                                  | 2  |           |  | 117,911                    |  |                           | 1,363,237  |                            |                                                    | 2.4  | % |  | 2.3  | %
|L.A. Fitness                                    |  |                                  | 1  |           |  | 55,000                     |  |                           | 1,265,000  |                            |                                                    | 1.1  | % |  | 2.1  | %
|Safeway                                         |  |                                  | 12 |           |  | 123,626                    |  |                           | 1,212,747  |                            |                                                    | 2.5  | % |  | 2.0  | %
|Barnes & Noble                                  |  |                                  | 4  |           |  | 43,260                     |  |                           | 1,146,102  |                            |                                                    | 0.9  | % |  | 1.9  | %
|Home Depot                                      |  |                                  | 2  |           |  | 211,003                    |  |                           | 1,099,996  |                            |                                                    | 4.2  | % |  | 1.8  | %
|Restoration Hardware                            |  |                                  | 1  |           |  | 12,293                     |  |                           | 1,041,152  |                            |                                                    | 0.2  | % |  | 1.7  | %
|Walgreens                                       |  |                                  | 3  |           |  | 22,692                     |  |                           | 854,313    |                            |                                                    | 0.5  | % |  | 1.4  | %
|Sleepys                                        |  |                                  | 5  |           |  | 33,635                     |  |                           | 828,474    |                            |                                                    | 0.7  | % |  | 1.4  | %
|Price Chopper                                   |  |                                  | 1  |           |  | 77,450                     |  |                           | 802,105    |                            |                                                    | 1.6  | % |  | 1.3  | %
|BJs Wholesale Club                             |  |                                  | 1  |           |  | 25,881                     |  |                           | 772,834    |                            |                                                    | 0.5  | % |  | 1.3  | %
|King Kullen                                     |  |                                  | 1  |           |  | 37,266                     |  |                           | 745,320    |                            |                                                    | 0.7  | % |  | 1.2  | %
|Macys                                          |  |                                  | 1  |           |  | 73,349                     |  |                           | 651,245    |                            |                                                    | 1.5  | % |  | 1.1  | %
|Kroger                                          |  |                                  | 6  |           |  | 77,383                     |  |                           | 626,822    |                            |                                                    | 1.5  | % |  | 1.0  | %
|Payless Shoesource                              |  |                                  | 8  |           |  | 27,739                     |  |                           | 603,259    |                            |                                                    | 0.6  | % |  | 1.0  | %
|                                                |  |                                  |    |           |  |                            |  |                           |            |                            |                                                    |      |   |  |      |  
|Total                                           |  |                                  | 75 |           |  | 2,143,949                  |  | $                         | 25,926,546 |                            |                                                    | 42.9 | % |  | 43.1 | %
|                                                |  |                                  |    |           |  |                            |  |                           |            |                            |                                                    |      |   |  |      |  

Notes:

|    |                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Base rents
 do not include percentage rents (except where noted), additional rents for
 property expense reimbursements, and contractual rent escalations due after
 December 31, 2009.      
|    |                                                                                                                                                                                              
|(2) | Represents
 total GLA and annualized base rent for our retail properties including the
 Operating Partnerships pro-rata share of joint venture properties, including
 the Opportunity Funds.

24

---



LEASE EXPIRATIONS

The following
table shows scheduled lease expirations for retail tenants in place as of
December 31, 2009, assuming that none of the tenants exercise renewal options.
(GLA and Annualized Base Rent in thousands):

Core Portfolio:

|                   |  |                   |     |                      |                          |                      |     |              |     |                      |  |       |  |  |     |  
|------------------ |  | ----------------- | --- | -------------------- | ------------------------ | -------------------- | --- | ------------ | --- | -------------------- |  | ----- |  |  | --- | -
|                   |  |                   |     |                      | Annualized Base Rent (1) |                      | GLA |             
|                   |  |                   |     |                      |                          |                      |     |             
|Leases maturing in |  | Number of
 Leases |     | Current Annual
 Rent |                          | Percentage of
 Total |     | Square
 Feet |     | Percentage
 of Total | 
|                   |  |                   |     |                      |                          |                      |     |              |     |                      | 
|Month
 to Month    |  |                   | 11  |                      | $                        | 355                  |     |              | 1   | %                    |  | 17    |  |  | 0   | %
|2010               |  |                   | 62  |                      |                          | 6,013                |     |              | 9   | %                    |  | 543   |  |  | 12  | %
|2011               |  |                   | 62  |                      |                          | 7,107                |     |              | 10  | %                    |  | 379   |  |  | 8   | %
|2012               |  |                   | 52  |                      |                          | 6,468                |     |              | 9   | %                    |  | 555   |  |  | 12  | %
|2013               |  |                   | 55  |                      |                          | 8,803                |     |              | 13  | %                    |  | 524   |  |  | 11  | %
|2014               |  |                   | 57  |                      |                          | 7,842                |     |              | 12  | %                    |  | 556   |  |  | 12  | %
|2015               |  |                   | 22  |                      |                          | 5,000                |     |              | 7   | %                    |  | 285   |  |  | 6   | %
|2016               |  |                   | 12  |                      |                          | 1,940                |     |              | 3   | %                    |  | 123   |  |  | 3   | %
|2017               |  |                   | 18  |                      |                          | 4,592                |     |              | 7   | %                    |  | 202   |  |  | 4   | %
|2018               |  |                   | 25  |                      |                          | 7,013                |     |              | 10  | %                    |  | 403   |  |  | 9   | %
|Thereafter         |  |                   | 47  |                      |                          | 13,055               |     |              | 19  | %                    |  | 1,128 |  |  | 23  | %
|                   |  |                   |     |                      |                          |                      |     |              |     |                      |  |       |  |  |     |  
|Total              |  |                   | 423 |                      | $                        | 68,188               |     |              | 100 | %                    |  | 4,715 |  |  | 100 | %
|                   |  |                   |     |                      |                          |                      |     |              |     |                      |  |       |  |  |     |  

Opportunity Funds:

|                   |  |                   |     |                      |                          |                      |     |              |     |                      |  |       |  |  |     |  
|------------------ |  | ----------------- | --- | -------------------- | ------------------------ | -------------------- | --- | ------------ | --- | -------------------- |  | ----- |  |  | --- | -
|                   |  |                   |     |                      | Annualized Base Rent (1) |                      | GLA |             
|                   |  |                   |     |                      |                          |                      |     |             
|Leases maturing in |  | Number of
 Leases |     | Current Annual
 Rent |                          | Percentage of
 Total |     | Square
 Feet |     | Percentage
 of Total | 
|                   |  |                   |     |                      |                          |                      |     |              |     |                      | 
|Month
 to Month    |  |                   | 9   |                      | $                        | 428                  |     |              | 1   | %                    |  | 31    |  |  | 1   | %
|2010               |  |                   | 6   |                      |                          | 239                  |     |              | 1   | %                    |  | 13    |  |  | 1   | %
|2011               |  |                   | 27  | (2)                  |                          | 11,172               |     |              | 31  | %                    |  | 980   |  |  | 47  | %
|2012               |  |                   | 8   |                      |                          | 859                  |     |              | 2   | %                    |  | 38    |  |  | 2   | %
|2013               |  |                   | 6   |                      |                          | 2,086                |     |              | 6   | %                    |  | 95    |  |  | 5   | %
|2014               |  |                   | 13  |                      |                          | 2,160                |     |              | 6   | %                    |  | 107   |  |  | 5   | %
|2015               |  |                   | 4   |                      |                          | 221                  |     |              | 1   | %                    |  | 9     |  |  | 0   | %
|2016               |  |                   | 1   |                      |                          | 177                  |     |              | 0   | %                    |  | 9     |  |  | 0   | %
|2017               |  |                   | 5   |                      |                          | 1,583                |     |              | 4   | %                    |  | 97    |  |  | 5   | %
|2018               |  |                   | 10  |                      |                          | 2,383                |     |              | 7   | %                    |  | 198   |  |  | 9   | %
|Thereafter         |  |                   | 22  |                      |                          | 14,595               |     |              | 41  | %                    |  | 522   |  |  | 25  | %
|                   |  |                   |     |                      |                          |                      |     |              |     |                      |  |       |  |  |     |  
|Total              |  |                   | 111 |                      | $                        | 35,903               |     |              | 100 | %                    |  | 2,099 |  |  | 100 | %
|                   |  |                   |     |                      |                          |                      |     |              |     |                      |  |       |  |  |     |  

Note:

|    |                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Base rents do not include percentage rents,
         additional rents for property expense reimbursements, nor contractual
         rent escalations due after December 31, 2009.             
|(2) | Includes 18 Kroger/Safeway leases representing annualized
base rent of $6,492 and GLA of 709 square feet. Reference is made to page 27
below for a discussion of the Kroger/Safeway portfolio.

25

---



GEOGRAPHIC CONCENTRATIONS

The following
table summarizes our retail properties by region as of December 31, 2009.
(GLA and Annualized Base Rent in thousands):

|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|----------------------------------------------- |  | ------- | ----- | --------------- |  | -------------------------- | - | ------------------------------------------------ | ------ | ------------------------------------------- | - | --------------------- |  |  | --- | - |  | --- | -
|                                                |  |         |       |                 |  |                            |   |                                                  |        | Percentage of Total
 Represented by
 Region |  
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |  
|Region                                          |  | GLA (1) |       | Occupied %
 (2) |  | Annualized
 Base
 Rent (2) |   | Annualized Base
 Rent per
 Occupied Square
 Foot |        | GLA                                         |   | Annualized
 Base Rent | 
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       | 
|Core
 Properties:                               |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|New York Region (3)                             |  |         | 1,051 |                 |  | 92                         | % | $                                                | 24,453 |                                             | $ | 25.42                 |  |  | 20  | % |  | 36  | %
|New England                                     |  |         | 1,197 |                 |  | 97                         | % |                                                  | 10,225 |                                             |   | 9.66                  |  |  | 22  | % |  | 15  | %
|Midwest                                         |  |         | 711   |                 |  | 91                         | % |                                                  | 8,666  |                                             |   | 13.45                 |  |  | 13  | % |  | 13  | %
|Mid-Atlantic                                    |  |         | 2,424 |                 |  | 91                         | % |                                                  | 24,844 |                                             |   | 12.19                 |  |  | 45  | % |  | 36  | %
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|Total core properties                           |  |         | 5,383 |                 |  | 92                         | % | $                                                | 68,188 |                                             | $ | 14.50                 |  |  | 100 | % |  | 100 | %
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|Opportunity
 Funds:                             |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|Operating Properties:                           |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|Midwest (4)                                     |  |         | 247   |                 |  | 65                         | % | $                                                | 1,418  |                                             | $ | 8.87                  |  |  | 12  | % |  | 5   | %
|New York Region (5)                             |  |         | 1,112 |                 |  | 83                         | % |                                                  | 23,044 |                                             |   | 24.87                 |  |  | 54  | % |  | 74  | %
|Various (Kroger/Safeway Portfolio) (6)          |  |         | 709   |                 |  | 100                        | % |                                                  | 6,492  |                                             |   | 9.15                  |  |  | 34  | % |  | 21  | %
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|Total Opportunity Fund operating properties     |  |         | 2,068 |                 |  | 87                         | % | $                                                | 30,954 |                                             | $ | 17.23                 |  |  | 100 | % |  | 100 | %
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|Redevelopment Properties:                       |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|Midwest (7)                                     |  |         | 155   |                 |  | 61                         | % | $                                                | 563    |                                             | $ | 6.02                  |  |  | 41  | % |  | 11  | %
|New York Region (8)                             |  |         | 227   |                 |  | 84                         | % |                                                  | 4,385  |                                             |   | 23.09                 |  |  | 59  | % |  | 89  | %
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  
|Total Opportunity Fund redevelopment properties |  |         | 382   |                 |  | 74                         | % | $                                                | 4,948  |                                             | $ | 17.46                 |  |  | 100 | % |  | 100 | %
|                                                |  |         |       |                 |  |                            |   |                                                  |        |                                             |   |                       |  |  |     |   |  |     |  

Notes:

|    |                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Property GLA
 includes a total of 255,000 square feet, which is not owned by us. This
 square footage has been excluded for calculating annualized base rent per
 square foot.                                                             
|    |                                                                                                                                                                                                                                            
|(2) | The above
 occupancy and rent amounts do not include space that is currently leased, but
 for which payment of rent had not commenced as of December 31, 2009.                                                                             
|    |                                                                                                                                                                                                                                            
|(3) | We have a
 49% interest in two partnerships, which together, own the Crossroads Shopping
 Center.                                                                                                                                          
|    |                                                                                                                                                                                                                                            
|(4) | We have a
 37.78% interest in future earnings and distributions from Fund I, which owns
 one property, and a 20% interest in Fund II, which owns one property.                                                                             
|    |                                                                                                                                                                                                                                            
|(5) | We have a
 37.78% interest in future earnings and distributions from Fund I, which owns
 one property, a 20% interest in Fund II, which has a 99.01% interest in four
 properties, and a 20% interest in Fund III, which owns one property.
|    |                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                            
|(6) | Fund I
 portfolio of 18 triple-net, anchor-only leases with Kroger and Safeway
 supermarkets.                                                                                                                                              
|    |                                                                                                                                                                                                                                            
|(7) | We have a
 37.78% interest in future earnings and distributions from Fund I, which has a
 50% interest in one property.                                                                                                                    
|    |                                                                                                                                                                                                                                            
|(8) | We have a
 20% interest in Fund II, which has a 99.01% interest in one property.                                                                                                                                                           

26

---



SELF-STORAGE PORTFOLIO

During
February 2008, through Fund III, we acquired a 95% controlling interest in a
portfolio of eleven self-storage properties from Storage Posts existing
institutional investors for approximately $174.0 million. In addition, we,
through Fund II, developed three self-storage properties. The fourteen
self-storage property portfolio, located throughout New York and New Jersey, totals
1,126,708 net rentable square feet, and is operating at various stages of
stabilization as detailed in the table below. The portfolio is operated by
Storage Post, which is an equity partner.

|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|-------- |  | ----------------------------- |  | ----------------------- |  | --------------------------- | --------- | ------------------------------------ |  | ---- | -
|Owner    |  | Operating Properties          |  | Location                |  | Net
 Rentable
 Square
 Feet |           | Occupancy
 as of
 December 31,
 2009 | 
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  | Stabilized                    |  |                         |  |                             |           |                                      |  |      |  
|Fund III |  | Suffern                       |  | Suffern, New York       |  |                             | 78,950    |                                      |  |      |  
|Fund III |  | Yonkers                       |  | Westchester, New York   |  |                             | 100,523   |                                      |  |      |  
|Fund III |  | Jersey City                   |  | Jersey City, New Jersey |  |                             | 76,720    |                                      |  |      |  
|Fund III |  | Webster Ave                   |  | Bronx, New York         |  |                             | 36,535    |                                      |  |      |  
|Fund III |  | Linden                        |  | Linden, New Jersey      |  |                             | 84,235    |                                      |  |      |  
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  | Subtotal
 Stabilized          |  |                         |  |                             | 376,963   |                                      |  | 85.3 | %
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  | Redeveloped - in Lease-up     |  |                         |  |                             |           |                                      |  |      |  
|Fund III |  | Bruckner
 Blvd                |  | Bronx, New York         |  |                             | 89,448    |                                      |  |      |  
|Fund III |  | New Rochelle                  |  | Westchester, New York   |  |                             | 42,203    |                                      |  |      |  
|Fund III |  | Long Island
 City             |  | Queens, New York        |  |                             | 134,816   |                                      |  |      |  
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  | Subtotal in
 Lease-up         |  |                         |  |                             | 266,467   |                                      |  | 70.9 | %
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  | Total Operating Properties    |  |                         |  |                             | 643,430   |                                      |  | 79.3 | %
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  | In Initial Lease-up           |  |                         |  |                             |           |                                      |  |      |  
|Fund III |  | Fordham Road                  |  | Bronx, New York         |  |                             | 84,955    |                                      |  |      |  
|Fund III |  | Ridgewood                     |  | Queens, New York        |  |                             | 88,839    |                                      |  |      |  
|Fund III |  | Lawrence                      |  | Lawrence, New York      |  |                             | 97,693    |                                      |  |      |  
|Fund II  |  | Liberty
 Avenue               |  | Queens, New York        |  |                             | 72,850    |                                      |  |      |  
|Fund II  |  | Pelham Plaza                  |  | Pelham Manor, New York  |  |                             | 62,020    |                                      |  |      |  
|Fund II  |  | Atlantic
 Avenue              |  | Brooklyn, New York      |  |                             | 76,921    |                                      |  |      |  
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  | Subtotal in
 Initial Leaseup  |  |                         |  |                             | 483,278   |                                      |  | 51.7 | %
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  
|         |  | Total
 Self-Storage Portfolio |  |                         |  |                             | 1,126,708 |                                      |  |      |  
|         |  |                               |  |                         |  |                             |           |                                      |  |      |  

KROGER/SAFEWAY PORTFOLIO

At December
31, 2009, Fund I, together with an unaffiliated joint venture partner
(Kroger/Safeway JV), owns interests, through two master leases with
an unaffiliated entity (Master Lessee), in 18 triple-net Kroger and
Safeway supermarket leases (Operating Leases) aggregating approximately
0.7 million square feet. There are six Kroger and twelve Safeway locations in
eleven states averaging approximately 39,000 square feet at rents ranging from
approximately $3.90 to $7.00 per square foot. The master leases expire in 2011
with the Master Lessee having the option of extending the term of either or both
of the master leases. The Kroger/Safeway JV acquired its interest subject to
long-term ground leases, which have a term in excess of 80 years inclusive of
multiple renewal options. Although there is no obligation for the Kroger/Safeway
JV to pay ground rent during the initial term of the master lease, to the extent
it exercises an option to renew a ground lease for a property thereafter, it
will be obligated to pay an average ground rent of approximately $2.00 per square
foot.

The Kroger Co. purchased six locations comprising 277,700 square feet,
or 28% of the portfolio, during February of 2009 for $14.6 million, resulting
in a gain of approximately $5.6 million.

The initial Operating Leases
expired during 2009. Options on these leases provide for extensions through
2049 at an average rent of approximately $5.00 per square foot upon the
commencement of the initial option period during 2009. All of the remaining
locations

27

---



exercised
their extension options during 2009.

ITEM 3. LEGAL PROCEEDINGS.

We are
involved in other various matters of litigation arising in the normal course of
business. While we are unable to predict with any certainty the amounts
involved, management is of the opinion that, when such litigation is resolved,
our resulting net liability, if any, will not have a significant effect on our
consolidated financial position or results of operations.

In September
2008, we, and certain of our subsidiaries, and other unrelated entities were
named as defendants in an adversary proceeding brought by Mervyns LLC
(Mervyns) in the United States Bankruptcy Court for the District of Delaware.
This lawsuit involves five claims alleging fraudulent transfers. The first claim
is that, at the time of the sale of Mervyns by Target Corporation to a
consortium of investors including Acadia, a transfer of assets was made in an
effort to defraud creditors. We believe this aspect of the case is without
merit. There are four other claims relating to transfers of assets of Mervyns
at various times. We believe there are substantial defenses to these claims.
The matter is in the early stages of discovery and we believe the lawsuit will
not have a material adverse effect on our results of operations or consolidated
financial condition.

ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS.

No matter was
submitted to a vote of security holders through the solicitation of proxies or
otherwise during the fourth quarter of 2009.

28

---



PART II

ITEM 5. MARKET FOR
REGISTRANTS COMMON EQUITY, RELATED STOCK MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.

(a) Market Information, dividends and record
holders of our Common Shares

The following
table shows, for the period indicated, the high and low sales price for our
Common Shares as reported on the New York Stock Exchange, and cash dividends
declared during the two years ended December 31, 2009 and 2008:

|                   |  |      |       |     |   |                     |  |   |        | 
|------------------ |  | ---- | ----- | --- | - | ------------------- |  | - | ------ | 
|Quarter Ended      |  | High |       | Low |   | Dividend
 Per Share | 
|                   |  |      |       |     |   |                     | 
|2009               |  |      |       |     |   |                     |  |   |        | 
|March 31, 2009     |  | $    | 14.69 |     | $ | 8.50                |  | $ | 0.2100 | 
|June 30, 2009      |  |      | 15.44 |     |   | 10.37               |  |   | 0.1800 | 
|September 30, 2009 |  |      | 16.51 |     |   | 11.55               |  |   | 0.1800 | 
|December 31, 2009  |  |      | 17.69 |     |   | 13.31               |  |   | 0.1800 | 
|2008               |  |      |       |     |   |                     |  |   |        | 
|March 31, 2008     |  | $    | 26.09 |     | $ | 21.17               |  | $ | 0.2100 | 
|June 30, 2008      |  |      | 26.78 |     |   | 22.54               |  |   | 0.2100 | 
|September 30, 2008 |  |      | 26.14 |     |   | 21.38               |  |   | 0.2100 | 
|December 31, 2008  |  |      | 25.23 |     |   | 9.04                |  |   | 0.7600 | 

At March 1, 2010, there were 326 holders of record of our Common
Shares.

We have
determined for income tax purposes that the composition of dividends for 2009
are as follows. 95% of the total dividends distributed to shareholders
represented ordinary income, 4% represented unrecaptured Section 1250 gain and
1% represented Section 1231 gain. The dividend for the quarter ended December 31,
2009 was paid on February 1, 2010 and will be taxable in 2010. Our cash flow is
affected by a number of factors, including the revenues received from rental
properties, our operating expenses, the interest expense on our borrowings, the
ability of lessees to meet their obligations to us and unanticipated capital
expenditures. Future dividends paid by us will be at the discretion of the
Trustees and will depend on our actual cash flows, our financial condition,
capital requirements, the annual distribution requirements under the REIT
provisions of the Code and such other factors as the Trustees deem relevant. In
addition, we have the ability to pay dividends in cash, Common Shares or in any
combination of cash (minimum 10%) and Common Shares (maximum 90%).

(b) Issuer purchases of equity securities

We have an
existing share repurchase program that authorizes management, at its
discretion, to repurchase up to $20.0 million of our outstanding Common Shares.
The program may be discontinued or extended at any time and there is no
assurance that we will purchase the full amount authorized. There were no
Common Shares repurchased by us during the fiscal year ended December 31, 2009.

29

---



(c) Securities authorized for issuance under
equity compensation plans

The following
table provides information related to our 1999 Share Incentive Plan (the 1999
Plan), 2003 Share Incentive Plan (the 2003 Plan) and the 2006 Share
Incentive Plan (the 2006 Plan) as of December 31, 2009:

|                                                           |  |                                                                                                |         |                                                                                  |   |                                                                                                                                                |  |  |           |    
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------- | ------- | -------------------------------------------------------------------------------- | - | ---------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --------- | ---
|                                                           |  | Equity Compensation Plan Information                                                           |         |                                                                                  |  
|                                                           |  | (a)                                                                                            |         | (b)                                                                              |   | (c)                                                                                                                                            | 
|                                                           |  | Number of securities to
 be issued upon exercise
 of outstanding options,
 warrants and rights |         | Weighted - average
 exercise price of
 outstanding options,
 warrants and rights |   | Number of securities
 remaining available
 for future issuance under
 equity compensation plans
 (excluding securities
 reflected in column a) | 
|                                                           |  |                                                                                                |         |                                                                                  |   |                                                                                                                                                | 
|Equity compensation plans approved by security holders     |  |                                                                                                | 159,283 |                                                                                  | $ | 18.04                                                                                                                                          |  |  | 1,037,444 | (1)
|Equity compensation plans not approved by security holders |  |                                                                                                |        |                                                                                  |   |                                                                                                                                               |  |  |          |    
|                                                           |  |                                                                                                |         |                                                                                  |   |                                                                                                                                                |  |  |           |    
|Total                                                      |  |                                                                                                | 159,283 |                                                                                  | $ | 18.04                                                                                                                                          |  |  | 1,037,444 | (1)
|                                                           |  |                                                                                                |         |                                                                                  |   |                                                                                                                                                |  |  |           |    

Notes:

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The 1999
 Plan authorizes the issuance of options equal to up to 8% of the total Common
 Shares outstanding from time to time on a fully diluted basis. However, not
 more than 4,000,000 of the Common Shares in the aggregate may be issued
 pursuant to the exercise of options and no participant may receive more than
 5,000,000 Common Shares during the term of the 1999 Plan. The 2003 Plan
 authorizes the issuance of options equal to up to 4% of the total Common
 Shares outstanding from time to time on a fully diluted basis. However, no
 participant may receive more than 1,000,000 Common Shares during the term of
 the 2003 Plan. The 2006 Plan authorizes the issuance of a maximum number of
 500,000 Common Shares. No participant may receive more than 500,000 Common
 Shares during the term of the 2006 Plan.

Remaining
Common Shares available is as follows:

|                                                                       |  |  |            |  
|---------------------------------------------------------------------- |  |  | ---------- | -
|Outstanding Common Shares
 as of December 31, 2009                     |  |  | 39,787,018 |  
|Outstanding OP Units as of
 December 31, 2009                          |  |  | 657,786    |  
|                                                                       |  |  |            |  
|Total Outstanding Common Shares and OP Units                           |  |  | 40,444,804 |  
|                                                                       |  |  |            |  
|12% of Common Shares and OP
 Units pursuant to the 1999 and 2003 Plans |  |  | 4,853,376  |  
|Common Shares pursuant to
 the 2006 Plan                               |  |  | 500,000    |  
|                                                                       |  |  |            |  
|Total Common Shares available under equity compensation plans          |  |  | 5,353,376  |  
|                                                                       |  |  |            |  
|Less: Issuance of
 Restricted Shares and LTIP Units Granted            |  |  | (1,540,413 | )
|Issuance of Options Granted                                            |  |  | (2,775,519 | )
|                                                                       |  |  |            |  
|Number of Common Shares
 remaining available                           |  |  | 1,037,444  |  
|                                                                       |  |  |            |  

(d) Share Price Performance Graph (1)

The following
graph compares the cumulative total shareholder return for our Common Shares
for the period commencing December 31, 2004 through December 31, 2009 with the cumulative
total return on the Russell 2000 Index (Russell 2000), the NAREIT All Equity
REIT Index (the NAREIT) and the SNL Shopping Center REITs (the SNL) over
the same period. Total return values for the Russell 2000, the NAREIT, the SNL
and the Common Shares were calculated based upon cumulative total return
assuming the investment of $100.00 in each of the Russell 2000, the NAREIT, the
SNL and our Common Shares on December 31, 2004, and assuming reinvestment of
dividends. The shareholder return as set forth in the table below is not
necessarily indicative of future performance.

30

---



Comparison of
5 Year Cumulative Total Return among Acadia Realty Trust, the Russell 2000, the
NAREIT and the SNL:

(LINE GRAPH)

|                                    |  |              |        |          |  |          |  |          |        |          |  |          |  |  |        |  |  |        | 
|----------------------------------- |  | ------------ | ------ | -------- |  | -------- |  | -------- | ------ | -------- |  | -------- |  |  | ------ |  |  | ------ | 
|                                    |  | Period Ended |       
|                                    |  |              |       
|Index                               |  | 12/31/04     |        | 12/31/05 |  | 12/31/06 |  | 12/31/07 |        | 12/31/08 |  | 12/31/09 | 
|                                    |  |              |        |          |  |          |  |          |        |          |  |          | 
|Acadia
 Realty Trust                |  |              | 100.00 |          |  | 127.93   |  |          | 164.70 |          |  | 175.34   |  |  | 106.43 |  |  | 132.98 | 
|Russell 2000                        |  |              | 100.00 |          |  | 104.55   |  |          | 123.76 |          |  | 121.82   |  |  | 80.66  |  |  | 102.58 | 
|NAREIT All
 Equity REIT Index       |  |              | 100.00 |          |  | 112.16   |  |          | 151.49 |          |  | 127.72   |  |  | 79.53  |  |  | 101.79 | 
|SNL REIT
 Retail Shopping Ctr Index |  |              | 100.00 |          |  | 109.12   |  |          | 146.88 |          |  | 120.93   |  |  | 72.81  |  |  | 71.87  | 

|                                                                                                                                                                                                                                                                                                                                                               |  | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|                                                                                                                                                                                                                                                                                                                                                               | 
|(1) The
 information is this section is not soliciting material, is not deemed
 filed with the SEC, and is not to be incorporated by reference into any
 filing of the Trust under the Securities Act or the Exchange Act, whether
 made before or after the date hereof and irrespective of any general
 incorporation language contained in such filing.

ITEM 6. SELECTED FINANCIAL
DATA

The following
table sets forth, on a historical basis, our selected financial data. This
information should be read in conjunction with our audited Consolidated
Financial Statements and Managements Discussion and Analysis of Financial
Condition and Results of Operations appearing elsewhere in this Form 10-K.
Funds from operations (FFO) amounts for the year ended December 31, 2009 have
been adjusted as set forth in Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations  Reconciliation of Net Income to
Funds from Operations and Adjusted Funds From Operations.

31

---



|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|--------------------------------------------------------------------------- |  | ---- | --------- | ---- | ------------------------- | --------- | --- | ---- | -------- | ---- | - | ------- | - | - | -------- | -
|                                                                            |  |      |           |      | Years
 ended December 31, |           |     |      |         
|(dollars
 in thousands, except per share amounts)                           |  | 2009 |           | 2008 |                           | 2007      |     | 2006 |          | 2005 |  
|OPERATING DATA:                                                             |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Revenues                                                                    |  | $    | 147,345   |      | $                         | 137,936   |     | $    | 95,092   |      | $ | 89,335  |   | $ | 87,592   |  
|Operating expenses                                                          |  |      | 71,141    |      |                           | 61,390    |     |      | 46,265   |      |   | 40,525  |   |   | 36,250   |  
|Interest expense                                                            |  |      | 32,154    |      |                           | 28,893    |     |      | 24,564   |      |   | 19,929  |   |   | 16,166   |  
|Depreciation and amortization                                               |  |      | 37,218    |      |                           | 33,334    |     |      | 25,114   |      |   | 23,016  |   |   | 22,375   |  
|Gain on sale of land                                                        |  |      |          |      |                           | 763       |     |      |         |      |   |        |   |   |         |  
|Equity in (losses) earnings of
 unconsolidated partnerships                 |  |      | (5,297    | )    |                           | 19,906    |     |      | 6,619    |      |   | 2,559   |   |   | 21,280   |  
|Impairment of notes receivable                                              |  |      | (1,734    | )    |                           | (4,392    | )   |      |         |      |   |        |   |   |         |  
|Gain on extinguishment of debt                                              |  |      | 7,057     |      |                           | 1,523     |     |      |         |      |   |        |   |   |         |  
|Income tax provision (benefit)                                              |  |      | 1,541     |      |                           | 3,362     |     |      | 297      |      |   | (508    | ) |   | 2,140    |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Income from continuing operations                                           |  |      | 5,317     |      |                           | 28,757    |     |      | 5,471    |      |   | 8,932   |   |   | 31,941   |  
|Income from discontinued operations                                         |  |      | 7,389     |      |                           | 8,680     |     |      | 7,246    |      |   | 25,223  |   |   | 2,657    |  
|Income from extraordinary item (1)                                          |  |      |          |      |                           |          |     |      | 27,844   |      |   |        |   |   |         |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Net income                                                                  |  |      | 12,706    |      |                           | 37,437    |     |      | 40,561   |      |   | 34,155  |   |   | 34,598   |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Loss (income) attributable to
 noncontrolling interests in subsidiaries:    |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Continuing operations                                                       |  |      | 23,282    |      |                           | (11,630   | )   |      | 9,558    |      |   | 5,594   |   |   | (13,650  | )
|Discontinued operations                                                     |  |      | (4,855    | )    |                           | (739      | )   |      | (606     | )    |   | (829    | ) |   | (322     | )
|Extraordinary item                                                          |  |      |          |      |                           |          |     |      | (24,167  | )    |   |        |   |   |         |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Net loss (income) attributable to
 noncontrolling interests in subsidiaries |  |      | 18,427    |      |                           | (12,369   | )   |      | (15,215  | )    |   | 4,765   |   |   | (13,972  | )
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Net income attributable to Common
 Shareholders                             |  | $    | 31,133    |      | $                         | 25,068    |     | $    | 25,346   |      | $ | 38,920  |   | $ | 20,626   |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Supplemental Information:                                                   |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Income from continuing operations
 attributable to Common Shareholders      |  | $    | 28,599    |      | $                         | 17,127    |     | $    | 15,029   |      | $ | 14,526  |   | $ | 18,291   |  
|Income from discontinued operations
 attributable to Common Shareholders    |  |      | 2,534     |      |                           | 7,941     |     |      | 6,640    |      |   | 24,394  |   |   | 2,335    |  
|Income from extraordinary item attributable
 to Common Shareholders         |  |      |          |      |                           |          |     |      | 3,677    |      |   |        |   |   |         |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Net income attributable to Common
 Shareholders                             |  | $    | 31,133    |      | $                         | 25,068    |     | $    | 25,346   |      | $ | 38,920  |   | $ | 20,626   |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Basic earnings per share:                                                   |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Income from continuing operations                                           |  | $    | 0.75      |      | $                         | 0.51      |     | $    | 0.45     |      | $ | 0.43    |   | $ | 0.55     |  
|Income from discontinued operations                                         |  |      | 0.07      |      |                           | 0.23      |     |      | 0.20     |      |   | 0.72    |   |   | 0.07     |  
|Income from extraordinary item                                              |  |      |          |      |                           |          |     |      | 0.11     |      |   |        |   |   |         |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Basic earnings per share                                                    |  | $    | 0.82      |      | $                         | 0.74      |     | $    | 0.76     |      | $ | 1.15    |   | $ | 0.62     |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Diluted earnings per share:                                                 |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Income from continuing operations                                           |  | $    | 0.75      |      | $                         | 0.50      |     | $    | 0.44     |      | $ | 0.42    |   | $ | 0.55     |  
|Income from discontinued operations                                         |  |      | 0.07      |      |                           | 0.23      |     |      | 0.19     |      |   | 0.71    |   |   | 0.07     |  
|Income from extraordinary item                                              |  |      |          |      |                           |          |     |      | 0.11     |      |   |        |   |   |         |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Diluted earnings per share                                                  |  | $    | 0.82      |      | $                         | 0.73      |     | $    | 0.74     |      | $ | 1.13    |   | $ | 0.62     |  
|                                                                            |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Weighted average number of Common Shares
 outstanding                       |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|- basic                                                                     |  |      | 38,005    |      |                           | 33,813    |     |      | 33,600   |      |   | 33,789  |   |   | 33,236   |  
|- diluted                                                                   |  |      | 38,242    |      |                           | 34,267    |     |      | 34,282   |      |   | 34,440  |   |   | 33,501   |  
|Cash dividends declared per Common Share                                    |  | $    | 0.7500    |      | $                         | 0.8951    | (3) | $    | 1.0325   |      | $ | 0.7550  |   | $ | 0.7025   |  
|BALANCE SHEET DATA:                                                         |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Real estate before accumulated depreciation                                 |  | $    | 1,207,406 |      | $                         | 1,091,995 |     | $    | 817,620  |      | $ | 613,828 |   | $ | 634,871  |  
|Total assets                                                                |  |      | 1,382,464 |      |                           | 1,291,383 |     |      | 998,783  |      |   | 851,396 |   |   | 841,204  |  
|Total mortgage indebtedness                                                 |  |      | 732,287   |      |                           | 653,543   |     |      | 399,997  |      |   | 315,147 |   |   | 372,957  |  
|Total convertible notes payable                                             |  |      | 47,910    |      |                           | 100,403   |     |      | 105,790  |      |   | 90,256  |   |   |         |  
|Total Common Shareholders equity                                           |  |      | 312,185   |      |                           | 227,722   |     |      | 249,717  |      |   | 250,567 |   |   | 220,576  |  
|Noncontrolling interests in subsidiaries                                    |  |      | 220,292   |      |                           | 214,506   |     |      | 171,111  |      |   | 113,737 |   |   | 146,290  |  
|Total equity                                                                |  |      | 532,477   |      |                           | 442,228   |     |      | 420,828  |      |   | 364,304 |   |   | 366,866  |  
|OTHER:                                                                      |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Funds from Operations, adjusted for
 extraordinary item (1) (2)             |  |      | 49,613    |      |                           | 37,964    |     |      | 42,094   |      |   | 39,860  |   |   | 35,842   |  
|Cash flows provided by (used in):                                           |  |      |           |      |                           |           |     |      |          |      |   |         |   |   |          |  
|Operating activities                                                        |  |      | 47,462    |      |                           | 66,517    |     |      | 105,294  |      |   | 39,627  |   |   | 50,239   |  
|Investing activities                                                        |  |      | (123,380  | )    |                           | (302,265  | )   |      | (208,998 | )    |   | (58,890 | ) |   | (135,470 | )
|Financing activities                                                        |  |      | 83,035    |      |                           | 199,096   |     |      | 87,476   |      |   | 68,359  |   |   | 159,425  |  

|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes:
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(1)    | The extraordinary item only
 relates to 2007 and represents the Companys share of an extraordinary gain
 from its private-equity investment in Albertsons. The Company considers its
 private-equity investments to be investments in operating businesses as
 opposed to real estate. Accordingly, all gains and losses from private-equity
 investments are included in FFO, which management believes provides a more
 accurate reflection of the operating performance of the Company.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(2)    | The Company considers funds
 from operations (FFO) as defined by the National Association of Real Estate
 Investment Trusts (NAREIT) to be an appropriate supplemental disclosure of
 operating performance for an equity REIT due to its widespread acceptance and
 use within the REIT and analyst communities. FFO is presented to assist
 investors in analyzing the performance of the Company. It is helpful as it
 excludes various items included in net                        

32

---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | income that are not
 indicative of the operating performance, such as gains (losses) from
 sales of depreciated property and depreciation and amortization. However, the
 Companys method of calculating FFO may be different from methods used by
 other REITs and, accordingly, may not be comparable to such other REITs. FFO
 does not represent cash generated from operations as defined by generally
 accepted accounting principles (GAAP) and is not indicative of cash
 available to fund all cash needs, including distributions. It should not be
 considered as an alternative to net income for the purpose of evaluating the
 Companys performance or to cash flows as a measure of liquidity. Consistent
 with the NAREIT definition, the Company defines FFO as net income (computed
 in accordance with GAAP), excluding gains (losses) from sales of depreciated
 property, plus depreciation and amortization, and after adjustments for
 unconsolidated partnerships and joint ventures.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) | In addition to the $0.8951
 cash dividends declared in 2008, the Company declared a Common Share
 dividend of $0.4949.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

As of December
31, 2009, we operated 79 properties, which we own or have an ownership interest
in, within our Core Portfolio or within our three Opportunity Funds. Our Core
Portfolio consists of those properties either 100% owned by, or partially owned
through joint venture interests by the Operating Partnership, or subsidiaries
thereof, not including those properties owned through our Opportunity Funds.
These 79 properties consist of commercial properties, primarily neighborhood
and community shopping centers, self-storage and mixed-use properties with a
retail component. The properties we operate are located primarily in the
Northeast, Mid-Atlantic and Midwestern regions of the United States. Excluding
two properties under redevelopment, there are 32 properties in our Core
Portfolio totaling approximately 4.8 million square feet. Fund I has 21
properties comprising approximately 1.0 million square feet. Fund II has 10
properties, seven of which (representing 1.2 million square feet) are currently
operating, one is under construction, and two are in 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 14
properties totaling approximately 1.8 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 79 properties, including recoveries from tenants, offset by
operating and overhead expenses. As our RCP Venture invests in operating
companies, we consider these investments to be private-equity style, as opposed
to real estate, investments. Since these are not traditional investments in
operating rental real estate but investments in operating businesses, the
Operating Partnership invests in these through a taxable REIT subsidiary
(TRS).

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

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

BUSINESS OUTLOOK

The U.S. economy is currently in a post recessionary period,
    which has resulted in a significant decline in retail sales due to reduced
    consumer spending. Many financial and economic analysts are predicting that
    this period will extend beyond 2009. Although the occupancy and
    net operating income within our portfolio has not been materially adversely
    affected through December 31, 2009, should retailers continue to experience
    deteriorating sales performance, the likelihood of additional tenant bankruptcy
    filings may increase, which would negatively impact our results of operations.
    In addition to the impact on retailers, this period has had an
    unprecedented impact on the U.S. credit markets. Traditional sources of financing,
    such as the commercial-mortgage backed security market, have become severely
    curtailed, if not eliminated. If these conditions continue, our ability to
    finance new acquisitions or refinance existing debts as they mature will
    be adversely affected. Accordingly, our ability to generate external growth
    in income, as well as maintain existing operating income, could be limited.

See the Item
1A. Risk Factors, including the discussions under the headings The current
economic environment, while improving, may cause us to lose tenants and may
impair our ability to borrow money to purchase properties, refinance existing
debt or finance our current redevelopment projects and The bankruptcy of, or
a downturn in the business of, any of our major tenants or a significant number of our smaller tenants may adversely
affect our cash flows and property values.

33

---



RESULTS OF OPERATIONS

Reference is made to Note 3 to the Notes to Consolidated Financial
Statements beginning on page F-1 of this Form 10-K for an overview of our five
reportable segments.

Comparison of the year ended
December 31, 2009 (2009) to the year ended December 31, 2008 (2008)

|                          |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |  |                            |      |                                |   |      |   |   |     |  |   |      | 
|------------------------- |  | ---------------- | ---- | ------------------- | - | -------------------------- |  | ------------------------------ | ---- | ---------------- | - | ------------------- |  | -------------------------- | ---- | ------------------------------ | - | ---- | - | - | --- |  | - | ---- | 
|Revenues                  |  | 2009             |      | 2008                |  
|                          |  |                  |      |                     |  
|                          |  |                  |      |                     |  
|(dollars in millions)     |  | Core 
 Portfolio |      | Opportunity 
 Funds |   | Self-
 Storage 
 Portfolio |  | Notes 
 Receivable 
 and Other |      | Core 
 Portfolio |   | Opportunity 
 Funds |  | Self-
 Storage 
 Portfolio |      | Notes 
 Receivable 
 and Other |  
|                          |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |  |                            |      |                                |  
|Minimum rents             |  | $                | 50.7 |                     | $ | 35.7                       |  | $                              | 9.8  |                  | $ |                    |  | $                          | 50.4 |                                | $ | 22.4 |   | $ | 4.8 |  | $ |     | 
|Percentage rents          |  |                  | 0.5  |                     |   |                           |  |                                |     |                  |   |                    |  |                            | 0.5  |                                |   |     |   |   |    |  |   |     | 
|Expense reimbursements    |  |                  | 13.7 |                     |   | 7.2                        |  |                                |     |                  |   |                    |  |                            | 14.1 |                                |   | 2.7  |   |   |    |  |   |     | 
|Lease termination income  |  |                  | 2.8  |                     |   |                           |  |                                |     |                  |   |                    |  |                            |     |                                |   | 24.0 |   |   |    |  |   |     | 
|Other property income     |  |                  | 0.2  |                     |   | 1.4                        |  |                                | 1.3  |                  |   |                    |  |                            | 0.3  |                                |   | (0.6 | ) |   | 0.8 |  |   | 0.6  | 
|                          |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |  |                            |      |                                |   |      |   |   |     |  |   |      | 
|Management fee income (1) |  |                  |     |                     |   |                           |  |                                |     |                  |   | 2.0                 |  |                            |     |                                |   |     |   |   |    |  |   | 3.4  | 
|Interest income           |  |                  |     |                     |   |                           |  |                                |     |                  |   | 20.3                |  |                            |     |                                |   |     |   |   |    |  |   | 14.5 | 
|Other income              |  |                  | 1.7  |                     |   |                           |  |                                |     |                  |   |                    |  |                            |     |                                |   |     |   |   |    |  |   |     | 
|                          |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |  |                            |      |                                |   |      |   |   |     |  |   |      | 
|                          |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |  |                            |      |                                |   |      |   |   |     |  |   |      | 
|Total revenues            |  | $                | 69.6 |                     | $ | 44.3                       |  | $                              | 11.1 |                  | $ | 22.3                |  | $                          | 65.3 |                                | $ | 48.5 |   | $ | 5.6 |  | $ | 18.5 | 
|                          |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |  |                            |      |                                |   |      |   |   |     |  |   |      | 

|      |                                                                                                                                                                                                                                                                                                                                                              
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note:
|     
|(1)   | Includes fees
 earned by the Company as general partner/managing member of the Opportunity
 Funds that are eliminated in consolidation. The Operating Partnerships share
 of these fees are recognized as a reduction in noncontrolling interests. The
 net balance reflected herein represents third party fees which are not
 eliminated in consolidation.

The increase in minimum
rents in the Opportunity Funds primarily relates to additional rents following
the acquisition of Cortlandt Towne Center (2009 Fund Acquisition) of $7.5
million and additional leases at Fordham Place and Pelham Manor Shopping Plaza
commencing in 2009 (Fordham and Pelham). The increase in minimum rents in the
Storage Portfolio relates to the February 2008 acquisition of the Storage Post Portfolio and the
Companys election in 2008 to report the Storage Portfolio activity one month
in arrears to enhance the accuracy and timeliness of reporting. Accordingly,
the year ended December 31, 2008 reflects nine months of activity while the
year ended December 31, 2009 reflects twelve months of activity (Storage
Acquisition). In addition, the increase in minimum rents in the Storage
Portfolio was also attributable to the full amortization of acquired lease
intangible cost during 2009.

Expense reimbursements in
the Opportunity Funds increased for both real estate taxes and common area
maintenance as a result of the 2009 Fund Acquisition as well as Fordham and
Pelham.

Lease termination income in
the Core Portfolio for 2009 relates to a termination fee earned from Acme at
Absecon Marketplace. Lease termination income in the Opportunity Funds for 2008
relates to a termination fee earned, net of costs, from Home Depot at Canarsie
Plaza.

Management fee income
decreased primarily as a result of lower fees earned of $0.9 million from the
CityPoint development project and lower fees from our Klaff management
contracts.

The increase in interest
income was the result of higher interest earning assets in 2009, primarily from
new notes/mezzanine financing investments originated during the second half of
2008.

Other income of $1.7 million
in the Core Portfolio was the result of the Companys retention of a sales
contract deposit forfeited during 2009.

|                              |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |   |                            |      |                                |   |      |  |   |     |  |   |       |  
|----------------------------- |  | ---------------- | ---- | ------------------- | - | -------------------------- |  | ------------------------------ | ---- | ---------------- | - | ------------------- | - | -------------------------- | ---- | ------------------------------ | - | ---- |  | - | --- |  | - | ----- | -
|Operating Expenses            |  | 2009             |      | 2008                |  
|                              |  |                  |      |                     |  
|                              |  |                  |      |                     |  
|(dollars in millions)         |  | Core 
 Portfolio |      | Opportunity 
 Funds |   | Self-
 Storage 
 Portfolio |  | Notes 
 Receivable 
 and Other |      | Core 
 Portfolio |   | Opportunity 
 Funds |   | Self-
 Storage 
 Portfolio |      | Notes 
 Receivable 
 and Other |  
|                              |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |   |                            |      |                                |  
|Property operating            |  | $                | 12.1 |                     | $ | 10.2                       |  | $                              | 8.7  |                  | $ | (1.2                | ) | $                          | 12.2 |                                | $ | 7.0  |  | $ | 5.3 |  | $ | (0.4  | )
|Real estate taxes             |  |                  | 9.3  |                     |   | 5.3                        |  |                                | 2.2  |                  |   |                    |   |                            | 8.8  |                                |   | 2.0  |  |   | 1.3 |  |   |      |  
|General and administrative    |  |                  | 24.0 |                     |   | 13.5                       |  |                                | 0.1  |                  |   | (15.6               | ) |                            | 26.0 |                                |   | 16.1 |  |   | 0.1 |  |   | (17.6 | )
|Depreciation and amortization |  |                  | 17.2 |                     |   | 17.1                       |  |                                | 4.4  |                  |   | (1.5                | ) |                            | 20.3 |                                |   | 10.0 |  |   | 3.0 |  |   |      |  
|Abandonment of project costs  |  |                  |     |                     |   | 2.5                        |  |                                |     |                  |   |                    |   |                            |     |                                |   | 0.6  |  |   |    |  |   |      |  
|                              |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |   |                            |      |                                |   |      |  |   |     |  |   |       |  
|Reserve for notes receivable  |  |                  |     |                     |   |                           |  |                                |     |                  |   | 1.7                 |   |                            |     |                                |   |     |  |   |    |  |   | 4.4   |  
|                              |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |   |                            |      |                                |   |      |  |   |     |  |   |       |  
|Total operating expenses      |  | $                | 62.6 |                     | $ | 48.6                       |  | $                              | 15.4 |                  | $ | (16.6               | ) | $                          | 67.3 |                                | $ | 35.7 |  | $ | 9.7 |  | $ | (13.6 | )
|                              |  |                  |      |                     |   |                            |  |                                |      |                  |   |                     |   |                            |      |                                |   |      |  |   |     |  |   |       |  

34

---



The increase in property
operating expenses in the Opportunity Funds was primarily the result of the
2009 Fund Acquisition as well as Fordham and Pelham. The increase in property
operating expenses in the Storage Portfolio relates to the Storage Acquisition.

The increase in real estate
taxes in the Opportunity Funds was primarily attributable to the 2009 Fund
Acquisition. The increase in real estate taxes in the Storage Portfolio relates
to the Storage Acquisition.

The decrease in general and
administrative expense in the Core Portfolio was primarily attributable to
reduced compensation expense following staff reductions in the second half of
2008 and in the first half of 2009. The decrease in general and administrative
expense in the Opportunity Funds relates to the reduction in Promote expense
attributable to Fund I and Mervyns I. The increase in general and
administrative expense in Other primarily relates to the reduction in Fund I
and Mervyns I Promote expense eliminated for consolidated financial statement
presentation purposes.

Depreciation expense in the
Core Portfolio decreased $2.4 million in 2009. This was principally a result of
increased depreciation expense in 2008 resulting from the write-down of tenant
improvements at two properties attributable to the bankruptcy of Circuit City.
Amortization expense in the Core Portfolio decreased $0.7 million primarily as
a result of lower amortization expense in 2009 associated with the Klaff
management contracts. Depreciation expense increased $5.0 million and
amortization expense increased $2.1 million in the Opportunity Funds primarily
due to the 2009 Fund Acquisition as well as Fordham and Pelham. Depreciation
expense and amortization expense increased $1.4 million in the Storage
Portfolio primarily as a result of the Storage Acquisition as previously
discussed. Depreciation and amortization expense decreased $1.5 million in
Other as a result of depreciation associated with the elimination of
capitalizable costs within the consolidated group.

The $2.5 million abandonment
of project costs in 2009 is attributable to the Companys determination that it
most likely will not participate in a specific future development project.

The reserve for notes
receivable of $1.7 million in 2009 relates to the establishment of a reserve
for a notes receivable due to the loss of an anchor tenant at the underlying
property. The 2008 reserve for notes receivable of $4.4 million relates to a
mezzanine loan.

|                                                                         |  |                  |       |                     |   |                            |   |                                |      |                  |   |                     |   |                            |       |                                |   |       |   |   |      |   |   |      |  
|------------------------------------------------------------------------ |  | ---------------- | ----- | ------------------- | - | -------------------------- | - | ------------------------------ | ---- | ---------------- | - | ------------------- | - | -------------------------- | ----- | ------------------------------ | - | ----- | - | - | ---- | - | - | ---- | -
|Other                                                                    |  | 2009             |       | 2008                |  
|                                                                         |  |                  |       |                     |  
|                                                                         |  |                  |       |                     |   |                            |   |                                |      |                  |   |                     |   |                            |       |                                |  
|(dollars in millions)                                                    |  | Core 
 Portfolio |       | Opportunity 
 Funds |   | Self-
 Storage 
 Portfolio |   | Notes 
 Receivable 
 and Other |      | Core 
 Portfolio |   | Opportunity 
 Funds |   | Self-
 Storage 
 Portfolio |       | Notes 
 Receivable 
 and Other |  
|                                                                         |  |                  |       |                     |   |                            |   |                                |      |                  |   |                     |   |                            |       |                                |  
|                                                                         |  |                  |       |                     |   |                            |   |                                |      |                  |   |                     |   |                            |       |                                |   |       |   |   |      |   |   |      |  
|Equity in (losses) earnings of unconsolidated affiliates                 |  | $                | 0.7   |                     | $ | (2.2                       | ) | $                              |     |                  | $ |                    |   | $                          |      |                                | $ | 19.9  |   | $ |     |   | $ |     |  
|Unconsolidated affiliate impairment reserve                              |  |                  |      |                     |   | (3.8                       | ) |                                |     |                  |   |                    |   |                            |      |                                |   |      |   |   |     |   |   |     |  
|                                                                         |  |                  |       |                     |   |                            |   |                                |      |                  |   |                     |   |                            |       |                                |   |       |   |   |      |   |   |      |  
|Interest expense                                                         |  |                  | (18.7 | )                   |   | (8.4                       | ) |                                | (5.0 | )                |   |                    |   |                            | (19.8 | )                              |   | (5.5  | ) |   | (3.6 | ) |   |     |  
|Gain on debt extinguishment                                              |  |                  | 7.1   |                     |   |                           |   |                                |     |                  |   |                    |   |                            | 1.5   |                                |   |      |   |   |     |   |   |     |  
|Gain on sale of land                                                     |  |                  |      |                     |   |                           |   |                                |     |                  |   |                    |   |                            | 0.8   |                                |   |      |   |   |     |   |   |     |  
|Income tax provision                                                     |  |                  | (1.5  | )                   |   |                           |   |                                |     |                  |   |                    |   |                            | (3.4  | )                              |   |      |   |   |     |   |   |     |  
|Income from discontinued operations                                      |  |                  |      |                     |   |                           |   |                                |     |                  |   | 7.4                 |   |                            |      |                                |   |      |   |   |     |   |   | 8.7  |  
|Loss (income) attributable to noncontrolling interests in
 subsidiaries: |  |                  |       |                     |   |                            |   |                                |      |                  |   |                     |   |                            |       |                                |   |       |   |   |      |   |   |      |  
|- Continuing operations                                                  |  |                  | (0.4  | )                   |   | 22.3                       |   |                                | (0.5 | )                |   | 1.9                 |   |                            | 0.2   |                                |   | (15.8 | ) |   | 0.4  |   |   | 3.6  |  
|- Discontinued operations                                                |  |                  |      |                     |   |                           |   |                                |     |                  |   | (4.9                | ) |                            |      |                                |   |      |   |   |     |   |   | (0.7 | )

Equity in (losses) earnings
of unconsolidated affiliates in the Opportunity Funds decreased primarily as a
result of our pro-rata share of gains from the sale of Mervyns locations in
2008 of $10.4 million, a decrease in distributions in excess of basis from our
Albertsons investment of $7.9 million in 2009 and our pro-rata share of gain
from the sale of the Haygood Shopping Center of $3.4 million in 2008.

The $3.8 million
unconsolidated affiliate impairment reserve in 2009 relates to a Fund I
unconsolidated investment.

Interest expense in the Core
Portfolio decreased $1.1 million in 2009. This was primarily the result of
lower interest expense related to the purchase of the Companys convertible
notes payable offset by a $0.7 million write-off of the unamortized premium
related to the repayment of a mortgage note payable during 2008. Interest
expense in the Opportunity Funds increased $2.9 million in 2009. This was
primarily attributable to an increase of $4.2 million due to higher average
outstanding borrowings in 2009 and $0.6 million of lower capitalized interest
in 2009. These increases were offset by a $2.2 million decrease related to
lower average interest rates in

35

---



2009. Interest expense in
the Storage Portfolio increased $1.4 million in 2009. This was primarily due to
an increase of $0.9 million due to higher average outstanding borrowings in
2009 as well as an increase of $0.8 million due to higher interest rates in
2009.

The gain on debt
extinguishment of $7.1 million in 2009 and $1.5 million in 2008 is attributable
to the purchase of our convertible debt at a discount.

The gain on sale of land of
$0.8 million in the Core Portfolio relates to a land sale at Bloomfield Town
Square in 2008.

The variance in the income
tax provision in the Core Portfolio primarily relates to income taxes at the
TRS level for our share of income/gains from Mervyns and Albertsons in 2008.

Income from discontinued
operations represents activity related to properties sold in 2009 and 2008.

Loss (income) attributable
to noncontrolling interests in subsidiaries - Continuing operations for the
Opportunity Funds primarily represents the noncontrolling interests share of
all Opportunity Fund activity and ranges from a 77.8% interest in Fund I to an
80.1% interest in Fund III. The variance between 2009 and 2008 represents the
noncontrolling interests share of all the Opportunity Funds variances
discussed above. Loss (income) attributable to noncontrolling interests in
subsidiaries - Continuing operations in Other relates to the noncontrolling
interests share of capitalized construction, leasing and legal fees.

Loss (income)
attributable to noncontrolling interests in subsidiaries - Discontinued
operations primarily represents the noncontrolling interests share of activity
related to properties sold in 2009 and 2008.

Comparison of the year ended December 31,
2008 (2008) to the year ended December 31, 2007 (2007)

|                          |  |                  |      |                     |   |                            |   |                                |     |                  |   |                     |  |                            |      |                                |   |      |  |   |     |  |   |      | 
|------------------------- |  | ---------------- | ---- | ------------------- | - | -------------------------- | - | ------------------------------ | --- | ---------------- | - | ------------------- |  | -------------------------- | ---- | ------------------------------ | - | ---- |  | - | --- |  | - | ---- | 
|Revenues                  |  | 2008             |      | 2007                |  
|                          |  |                  |      |                     |  
|                          |  |                  |      |                     |   |                            |   |                                |     |                  |   |                     |  |                            |      |                                |  
|(dollars in millions)     |  | Core 
 Portfolio |      | Opportunity 
 Funds |   | Self-
 Storage 
 Portfolio |   | Notes 
 Receivable 
 and Other |     | Core 
 Portfolio |   | Opportunity 
 Funds |  | Self-
 Storage 
 Portfolio |      | Notes 
 Receivable 
 and Other |  
|                          |  |                  |      |                     |   |                            |   |                                |     |                  |   |                     |  |                            |      |                                |  
|                          |  |                  |      |                     |   |                            |   |                                |     |                  |   |                     |  |                            |      |                                |   |      |  |   |     |  |   |      | 
|Minimum rents             |  | $                | 50.4 |                     | $ | 22.4                       |   | $                              | 4.8 |                  | $ |                    |  | $                          | 48.6 |                                | $ | 17.0 |  | $ | 0.3 |  | $ |     | 
|Percentage rents          |  |                  | 0.5  |                     |   |                           |   |                                |    |                  |   |                    |  |                            | 0.5  |                                |   |     |  |   |    |  |   |     | 
|Expense reimbursements    |  |                  | 14.1 |                     |   | 2.7                        |   |                                |    |                  |   |                    |  |                            | 12.4 |                                |   | 0.9  |  |   |    |  |   |     | 
|Lease termination income  |  |                  |     |                     |   | 24.0                       |   |                                |    |                  |   |                    |  |                            |     |                                |   |     |  |   |    |  |   |     | 
|Other property income     |  |                  | 0.3  |                     |   | (0.6                       | ) |                                | 0.8 |                  |   | 0.6                 |  |                            | 0.8  |                                |   | 0.1  |  |   |    |  |   |     | 
|                          |  |                  |      |                     |   |                            |   |                                |     |                  |   |                     |  |                            |      |                                |   |      |  |   |     |  |   |      | 
|Management fee income (1) |  |                  |     |                     |   |                           |   |                                |    |                  |   | 3.4                 |  |                            |     |                                |   |     |  |   |    |  |   | 4.1  | 
|Interest income           |  |                  |     |                     |   |                           |   |                                |    |                  |   | 14.5                |  |                            |     |                                |   |     |  |   |    |  |   | 10.3 | 
|Other income              |  |                  |     |                     |   |                           |   |                                |    |                  |   |                    |  |                            | 0.2  |                                |   |     |  |   |    |  |   |     | 
|                          |  |                  |      |                     |   |                            |   |                                |     |                  |   |                     |  |                            |      |                                |   |      |  |   |     |  |   |      | 
|                          |  |                  |      |                     |   |                            |   |                                |     |                  |   |                     |  |                            |      |                                |   |      |  |   |     |  |   |      | 
|Total revenues            |  | $                | 65.3 |                     | $ | 48.5                       |   | $                              | 5.6 |                  | $ | 18.5                |  | $                          | 62.5 |                                | $ | 18.0 |  | $ | 0.3 |  | $ | 14.4 | 
|                          |  |                  |      |                     |   |                            |   |                                |     |                  |   |                     |  |                            |      |                                |   |      |  |   |     |  |   |      | 

Note:

|    |                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes
 fees earned by the Company as general partner/managing member of the
 Opportunity Funds that are eliminated in consolidation. The Operating
 Partnerships share of these fees are recognized as a reduction in
 noncontrolling interests. The net balance reflected herein represents third
 party fees which are not eliminated in consolidation.

The increase in minimum rents
in the Core Portfolio was attributable to additional rents following the
acquisitions of 200 West 54th Street, 145 East Service Road and East
17th Street (2007/2008 Core Acquisitions) of $1.8 million. The
increase in rents in the Opportunity Funds primarily relates to additional
rents following the acquisition of 125 Main Street (2007 Fund Acquisitions)
of $0.5 million, 216th Street being placed in service October 1,
2007 of $2.1 million, and Pelham Manor Shopping Plaza and Fordham Plaza being
partially placed in service in 2008. The increase in minimum rents in the
Storage Portfolio relates to the acquisition of the Storage Post Portfolio
(2008 Storage Acquisition).

Expense reimbursements in the
Core Portfolio increased for both real estate taxes and common area maintenance
(CAM). Real estate tax reimbursements increased $0.7 million in the Core
Portfolio as a result of the 2007/2008 Core Acquisitions as well as general
increases in real estate taxes experienced across the Core Portfolio in 2008. CAM
expense reimbursements in the Core Portfolio increased $1.0 million. As a
result of the completion of a multi-year review of CAM billings during 2007 and
the resolution of the majority of all outstanding CAM billing issues with our
tenants, 2007 CAM expense reimbursements were adversely impacted by charges
related to this settlement and the related accrual adjustments totaling $1.0
million. The increase in expense reimbursements in the Opportunity Funds
relates primarily to the billing in 2008 of previous years operating expenses
at 161st Street for $1.2 million and the billing of previous years
utility charges to an anchor tenant for $0.3 million.

36

---



Lease termination income in the Opportunity Funds for
2008 relates to a termination fee earned, net of costs, from Home Depot at Canarsie Plaza.

The increase in interest
income was the result of higher interest earning assets in 2008, primarily from
new notes/mezzanine financing investments.

Operating Expenses

|                              |  |                 |      |                    |   |                           |  |                               |     |                 |   |                    |   |                           |      |                               |   |      |  |   |     |  |   |       |  
|----------------------------- |  | --------------- | ---- | ------------------ | - | ------------------------- |  | ----------------------------- | --- | --------------- | - | ------------------ | - | ------------------------- | ---- | ----------------------------- | - | ---- |  | - | --- |  | - | ----- | -
|                              |  | 2008            |      | 2007               |  
|                              |  |                 |      |                    |  
|(dollars in millions)         |  | Core
 Portfolio |      | Opportunity
 Funds |   | Self-
 Storage
 Portfolio |  | Notes
 Receivable 
 and Other |     | Core
 Portfolio |   | Opportunity
 Funds |   | Self-
 Storage
 Portfolio |      | Notes
 Receivable 
 and Other |  
|                              |  |                 |      |                    |   |                           |  |                               |     |                 |   |                    |   |                           |      |                               |  
|Property operating            |  | $               | 12.2 |                    | $ | 7.0                       |  | $                             | 5.3 |                 | $ | (0.4               | ) | $                         | 10.4 |                               | $ | 3.0  |  | $ | 0.7 |  | $ | (0.3  | )
|Real estate taxes             |  |                 | 8.8  |                    |   | 2.0                       |  |                               | 1.3 |                 |   |                   |   |                           | 8.1  |                               |   | 1.3  |  |   |    |  |   |      |  
|General and administrative    |  |                 | 26.0 |                    |   | 16.1                      |  |                               | 0.1 |                 |   | (17.6              | ) |                           | 25.1 |                               |   | 13.0 |  |   |    |  |   | (15.2 | )
|Depreciation and amortization |  |                 | 20.3 |                    |   | 10.0                      |  |                               | 3.0 |                 |   |                   |   |                           | 17.4 |                               |   | 7.4  |  |   | 0.3 |  |   |      |  
|Abandonment of project costs  |  |                 |     |                    |   | 0.6                       |  |                               |    |                 |   |                   |   |                           |     |                               |   | 0.1  |  |   |    |  |   |      |  
|Reserve for notes receivable  |  |                 |     |                    |   |                          |  |                               |    |                 |   | 4.4                |   |                           |     |                               |   |     |  |   |    |  |   |      |  
|                              |  |                 |      |                    |   |                           |  |                               |     |                 |   |                    |   |                           |      |                               |   |      |  |   |     |  |   |       |  
|                              |  |                 |      |                    |   |                           |  |                               |     |                 |   |                    |   |                           |      |                               |   |      |  |   |     |  |   |       |  
|Total operating expenses      |  | $               | 67.3 |                    | $ | 35.7                      |  | $                             | 9.7 |                 | $ | (13.6              | ) | $                         | 61.0 |                               | $ | 24.8 |  | $ | 1.0 |  | $ | (15.5 | )
|                              |  |                 |      |                    |   |                           |  |                               |     |                 |   |                    |   |                           |      |                               |   |      |  |   |     |  |   |       |  

The increase in property
operating expenses in the Core Portfolio relates to additional reserves for
tenant receivables, including straight line rent. The increase in property
operating expenses in the Opportunity Funds was attributable to 216th
Street being placed in service October 1, 2007 of $0.6 million, allocated
property operating expenses related to Pelham Manor Shopping Plaza and Fordham
Plaza being partially placed in service in 2008 of $2.3 million as well as
additional reserves for tenant receivables, which was primarily for straight line
rent receivables. The increase in property operating expenses in the Storage
Portfolio relates to the 2008 Storage Acquisition.

The increase in real
estate taxes in the Core Portfolio was due to the 2007/2008 Core Acquisitions
as well as general increases in real estate taxes experienced across the Core
Portfolio. The increase in real estate taxes in the Opportunity Funds was
primarily attributable to allocated real estate taxes related to Pelham Manor
Shopping Plaza and Fordham being partially placed in service in 2008. The
increase in real estate taxes in the Storage Portfolio relates to the
acquisition of the 2008 Storage Acquisition.

The increase in general
and administrative expense in the Core Portfolio was primarily attributable to
increased compensation expense of $1.1 million for additional personnel hired
in the second half of 2007 and in 2008 as well as increases in existing
employee salaries. In addition, there was an increase of $0.3 million for other
overhead expenses following the expansion of our infrastructure related to
increased activity in Opportunity Fund assets and asset management services.
The increase in general and administrative expense in the Opportunity Funds
primarily related to additional Fund III asset management fees of $2.8 million
in 2008 as well as an increase in other professional fees. These increases were
offset by a $0.8 million decrease in Promote expense related to Fund I and
Mervyns I. The decrease in general and administrative in Other primarily
relates to the elimination of the Fund III asset management fees offset by the
elimination of the Fund I and Mervyns I Promote expense for consolidated
financial statement presentation purposes.

Depreciation expense in
the Core Portfolio increased $2.9 million in 2008. This was principally a
result of increased depreciation expense following the full depreciation of
tenant improvements at two properties following the bankruptcy of Circuit City
of $2.4 million and increased depreciation expense resulting from the 2007/2008
Core Acquisitions. The increase in depreciation and amortization expense for
the Opportunity Funds is primarily related to 216th Street being
placed in service October 1, 2007 as well as Pelham Manor Shopping Plaza and
Fordham Plaza being partially placed in service in 2008. The increase in
depreciation and amortization in the Storage Portfolio relates to the
acquisition of the 2008 Storage Acquisition.

The reserve for notes
receivable of $4.4 million in 2008 relates to the impairment of a mezzanine
loan.

37

---



Other

|                                                                         |  |                 |       |                    |   |                            |   |                               |      |                 |   |                    |   |                            |       |                               |   |       |   |   |      |   |   |      |  
|------------------------------------------------------------------------ |  | --------------- | ----- | ------------------ | - | -------------------------- | - | ----------------------------- | ---- | --------------- | - | ------------------ | - | -------------------------- | ----- | ----------------------------- | - | ----- | - | - | ---- | - | - | ---- | -
|                                                                         |  | 2008            |       | 2007               |  
|                                                                         |  |                 |       |                    |  
|(dollars in
 millions)                                                   |  | Core
 Portfolio |       | Opportunity
 Funds |   | Self-
 Storage 
 Portfolio |   | Notes 
 Receivable
 and Other |      | Core
 Portfolio |   | Opportunity
 Funds |   | Self-
 Storage 
 Portfolio |       | Notes 
 Receivable
 and Other |  
|                                                                         |  |                 |       |                    |   |                            |   |                               |      |                 |   |                    |   |                            |       |                               |  
|Equity in (losses) earnings of unconsolidated affiliates                 |  | $               |      |                    | $ | 19.9                       |   | $                             |     |                 | $ |                   |   | $                          | 0.6   |                               | $ | 5.8   |   | $ |     |   | $ | 0.2  |  
|Interest expense                                                         |  |                 | (19.8 | )                  |   | (5.5                       | ) |                               | (3.6 | )               |   |                   |   |                            | (19.4 | )                             |   | (5.3  | ) |   | (0.4 | ) |   | 0.5  |  
|Gain on debt extinguishment                                              |  |                 | 1.5   |                    |   |                           |   |                               |     |                 |   |                   |   |                            |      |                               |   |      |   |   |     |   |   |     |  
|Gain on sale of land                                                     |  |                 | 0.8   |                    |   |                           |   |                               |     |                 |   |                   |   |                            |      |                               |   |      |   |   |     |   |   |     |  
|Income tax provision                                                     |  |                 | (3.4  | )                  |   |                           |   |                               |     |                 |   |                   |   |                            | (0.3  | )                             |   |      |   |   |     |   |   |     |  
|Income from discontinued operations                                      |  |                 |      |                    |   |                           |   |                               |     |                 |   | 8.7                |   |                            |      |                               |   |      |   |   |     |   |   | 7.2  |  
|Extraordinary item                                                       |  |                 |      |                    |   |                           |   |                               |     |                 |   |                   |   |                            |      |                               |   | 27.8  |   |   |     |   |   |     |  
|Loss (income) attributable to noncontrolling interests in
 subsidiaries: |  |                 |       |                    |   |                            |   |                               |      |                 |   |                    |   |                            |       |                               |   |       |   |   |      |   |   |      |  
|- Continuing operations                                                  |  |                 | 0.2   |                    |   | (15.8                      | ) |                               | 0.4  |                 |   | 3.6                |   |                            |      |                               |   | 6.5   |   |   |     |   |   | 3.0  |  
|- Discontinued operations                                                |  |                 |      |                    |   |                           |   |                               |     |                 |   | (0.7               | ) |                            |      |                               |   |      |   |   |     |   |   | (0.6 | )
|- Extraordinary item                                                     |  |                 |      |                    |   |                           |   |                               |     |                 |   |                   |   |                            |      |                               |   | (24.2 | ) |   |     |   |   |     |  

Equity in earnings of
unconsolidated affiliates in the Opportunity Funds increased primarily as a
result of our pro-rata share of gains from the sale of Mervyns locations in
2008 of $5.2 million, additional distributions in excess of basis from our
Albertsons investment of $7.9 million and our pro-rata share of gain from the
sale of the Haygood Shopping Center of $3.3 million. These increases were
partially offset by a decrease in our pro-rata share of distributions in excess
of basis from our investment in Hitchcock Plaza of $2.7 million as compared to
2007.

Interest expense in the
Core Portfolio increased $0.4 million in 2008. This was primarily the result of
a $1.1 million increase attributable to higher average outstanding borrowings
in 2008 and a $0.2 million increase related to higher average interest rates in
2008. These increases were offset by a $0.7 million write-off of the
unamortized premium related to the repayment of a mortgage note payable in 2008
and a $0.4 million decrease resulting from costs associated with a loan payoff
in 2007. Interest expense in the Opportunity Funds increased $0.2 million in
2008. This was the result of an increase of $3.2 million due to higher average
outstanding borrowings in 2008 offset by a $3.1 million decrease related to
lower average interest rates in 2008. Interest expense in the Storage Portfolio
increased $3.2 million as a result of the 2008 Storage Acquisition.

The gain on debt
extinguishment of $1.5 million is attributable to the purchase of the Companys
convertible debt at a discount in 2008.

The gain on sale of land
in 2008 in the Core Portfolio relates to a land parcel sale at Bloomfield Town
Square.

The variance in income
tax provision in the Core Portfolio primarily relates to income taxes at the
TRS level for our share of gains from the sale of Mervyns locations in 2008.

Income from discontinued
operations represents activity related to properties sold in 2009, 2008 and
2007.

The extraordinary item in
2007 in the Opportunity Funds relates to the extraordinary gain, net of income
taxes, from our Albertsons investment.

Loss (income)
attributable to noncontrolling interests in subsidiaries - Continuing
operations for the Opportunity Funds primarily represents the noncontrolling
interests share of all Opportunity Fund activity and ranges from a 77.8%
interest in Fund I to an 80.1% interest in Fund III. The variance between 2008
and 2007 represents the noncontrolling interests share of all the Opportunity
Funds variances discussed above. Loss (income) attributable to noncontrolling
interests in subsidiaries - Continuing operations in Notes Receivable and Other
relates to the noncontrolling interests share of capitalized construction, leasing
and legal fees.

Loss (income)
attributable to noncontrolling interests in subsidiaries - Discontinued
operations primarily represents the noncontrolling interests share of activity
related to properties sold in 2009, 2008 and 2007.

Loss (income) attributable
to noncontrolling interests in subsidiaries  Extraordinary item represents the
noncontrolling interests share of the extraordinary gain from the Albertsons
investment.

38

---



RECONCILIATION
OF NET INCOME TO FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

|                                                                                  |  |                                   |        |      |   |        |   |      |        |      |   |         |   |   |        |  
|--------------------------------------------------------------------------------- |  | --------------------------------- | ------ | ---- | - | ------ | - | ---- | ------ | ---- | - | ------- | - | - | ------ | -
|                                                                                  |  | For the
 Years Ended December 31, |       
|(dollars in thousands)                                                            |  | 2009                              |        | 2008 |   | 2007   |   | 2006 |        | 2005 |  
|                                                                                  |  |                                   |        |      |   |        |   |      |        |      |  
|Net income
 attributable to Common Shareholders                                   |  | $                                 | 31,133 |      | $ | 25,068 |   | $    | 25,346 |      | $ | 38,920  |   | $ | 20,626 |  
|Depreciation of
 real estate and amortization of leasing costs:                   |  |                                   |        |      |   |        |   |      |        |      |   |         |   |   |        |  
|Consolidated
 affiliates, net of noncontrolling interests share                  |  |                                   | 18,847 |      |   | 18,519 |   |      | 19,669 |      |   | 20,206  |   |   | 16,676 |  
|Unconsolidated
 affiliates                                                        |  |                                   | 1,603  |      |   | 1,687  |   |      | 1,736  |      |   | 1,806   |   |   | 746    |  
|Income
 attributable to noncontrolling interests in operating partnership (1)     |  |                                   | 465    |      |   | 437    |   |      | 614    |      |   | 803     |   |   | 416    |  
|Gain on sale of
 properties (net of noncontrolling interests share)              |  |                                   |        |      |   |        |   |      |        |      |   |         |   |   |        |  
|Consolidated
 affiliates                                                          |  |                                   | (2,435 | )    |   | (7,182 | ) |      | (5,271 | )    |   | (20,974 | ) |   | 50     |  
|Unconsolidated
 affiliates                                                        |  |                                   |       |      |   | (565   | ) |      |       |      |   | (901    | ) |   | (2,672 | )
|Extraordinary
 item (net of noncontrolling interests share and income taxes) (3) |  |                                   |       |      |   |       |   |      | (3,677 | )    |   |        |   |   |       |  
|                                                                                  |  |                                   |        |      |   |        |   |      |        |      |   |         |   |   |        |  
|Funds from
 operations (2)                                                        |  |                                   | 49,613 |      |   | 37,964 |   |      | 38,417 |      |   | 39,860  |   |   | 35,842 |  
|Add back:
 Extraordinary item, net (3)                                            |  |                                   |       |      |   |       |   |      | 3,677  |      |   |        |   |   |       |  
|                                                                                  |  |                                   |        |      |   |        |   |      |        |      |   |         |   |   |        |  
|Funds from
 operations, adjusted for extraordinary item                           |  | $                                 | 49,613 |      | $ | 37,964 |   | $    | 42,094 |      | $ | 39,860  |   | $ | 35,842 |  
|                                                                                  |  |                                   |        |      |   |        |   |      |        |      |   |         |   |   |        |  

|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes:
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(1)    | Represents income
 attributable to Common OP Units and does not include distributions paid to
 Series A and B Preferred OP Unitholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(2)    | The Company considers funds
 from operations (FFO) as defined by NAREIT to be an appropriate supplemental
 disclosure of operating performance for an equity REIT due to its widespread
 acceptance and use within the REIT and analyst communities. FFO is presented
 to assist investors in analyzing the performance of the Company. It is
 helpful as it excludes various items included in net income that are not
 indicative of the operating performance, such as gains (losses) from
 sales of depreciated property and depreciation and amortization. However, the
 Companys method of calculating FFO may be different from methods used by
 other REITs and, accordingly, may not be comparable to such other REITs. FFO
 does not represent cash generated from operations as defined by generally
 accepted accounting principles (GAAP) and is not indicative of cash
 available to fund all cash needs, including distributions. It should not be
 considered as an alternative to net income for the purpose of evaluating the
 Companys performance or to cash flows as a measure of liquidity. Consistent
 with the NAREIT definition, the Company defines FFO as net income (computed
 in accordance with GAAP), excluding gains (losses) from sales of
 depreciated property, plus depreciation and amortization, and after
 adjustments for unconsolidated partnerships and joint ventures.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(3)    | The extraordinary item represents
 the Companys share of estimated extraordinary gain related to its
 private-equity investment in Albertsons. The Albertsons entity has recorded
 an extraordinary gain in connection with the allocation of purchase price to
 assets acquired. The Company considers its private-equity investments to be
 investments in operating businesses as opposed to real estate. Accordingly,
 all gains and losses from private-equity investments are included in adjusted
 FFO, which management believes provides a more accurate reflection of the
 operating performance of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

LIQUIDITY
AND CAPITAL RESOURCES

Uses of
Liquidity

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

Distributions

In order to qualify as a
REIT for Federal income tax purposes, we must currently distribute at least 90%
of our taxable income to our shareholders. For the year ended December 31,
2009, we paid dividends and distributions on our Common Shares and Common OP
Units totaling $29.1 million. In addition, in December of 2008, our Board of
Trustees approved a special dividend of approximately $0.55 per share, or $18.0
million in the aggregate, which was associated with taxable gains arising from
property dispositions in 2008, which was paid on January 30, 2009, to
shareholders of record on December 31, 2008. Ninety percent of the special
dividend was paid with the issuance of 1.3 million Common Shares and 10%, or
$1.8 million, was paid in cash.

39

---



Fund I
and Mervyns I

In September 2001,
the Operating Partnership committed $20.0 million to a newly formed
Opportunity Fund with four of our institutional shareholders, who committed
$70.0 million for the purpose of acquiring a total of approximately $300.0 million
of community and neighborhood shopping centers on a leveraged basis. During
2006, the Fund I investors received a return of all their invested capital in
Fund I and their unpaid preferred return. The Operating Partnership is entitled
to 37.8% of all future income and distributions (Promote and pro-rata share of
the remaining 80%).

As of December 31, 2009, Fund I has a total of 21
properties totaling 1.0 million square feet as further discussed in
PROPERTY ACQUISITIONS in Item 1 of this Form 10-K.

|                                     |  |           |  |               |  |           | 
|------------------------------------ |  | --------- |  | ------------- |  | --------- | 
|Shopping
 Center                     |  | Location  |  | Year acquired |  | GLA       | 
|                                     |  |           |  |               |  |           | 
|New York Region                      |  |           |  |               |  |           | 
|New York                             |  |           |  |               |  |           | 
|Tarrytown Shopping Center            |  | Tarrytown |  | 2004          |  | 35,291    | 
|                                     |  |           |  |               |  |           | 
|Mid-Atlantic Region                  |  |           |  |               |  |           | 
|                                     |  |           |  |               |  |           | 
|Ohio                                 |  |           |  |               |  |           | 
|Granville Centre                     |  | Columbus  |  | 2002          |  | 134,997   | 
|Michigan                             |  |           |  |               |  |           | 
|Sterling Heights Shopping Center (1) |  | Detroit   |  | 2004          |  | 154,835   | 
|                                     |  |           |  |               |  |           | 
|Various Regions                      |  |           |  |               |  |           | 
|Kroger/Safeway Portfolio             |  | Various   |  | 2003          |  | 709,400   | 
|                                     |  |           |  |               |  |           | 
|Total                                |  |           |  |               |  | 1,034,523 | 
|                                     |  |           |  |               |  |           | 

| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | Notes:                                                                                             
| |                                                                                                    
| | (1) During 2009, Fund I recorded an impairment
 reserve of $3.8 million related to this investment.

In addition, we, along with our Fund I investors have
invested in Mervyns as discussed in Item 1 of this form 10-K.

Fund II
and Mervyns II

On June 15, 2004, we
formed our second opportunity fund, Fund II, and during August
2004, formed Mervyns II with the investors from Fund I as well as two
additional institutional investors, whereby the investors, including the
Operating Partnership, committed capital totaling $300.0 million. The Operating
Partnership is the managing member with a 20% interest in the joint venture.
The terms and structure of Fund II are substantially the same as Fund I with
the exception that the preferred return is 8%. As of December 31, 2009,
$223.3 million had been contributed to Fund II, of which the Operating
Partnerships share was $44.7 million.

Fund II has invested in
the New York Urban/Infill Redevelopment and the RCP Venture initiatives and
other investments as further discussed in PROPERTY ACQUISITIONS in
Item 1 of this Form 10-K.

New York
Urban/ Infill Redevelopment Initiative

In September 2004, we, through Fund II, launched our New York
Urban Infill Redevelopment initiative. During 2004, Fund II, together with an
unaffiliated partner, P/A Associates, LLC (P/A), formed Acadia-P/A Holding
Company, LLC (Acadia-P/A) for the purpose of acquiring, constructing, developing,
owning, operating, leasing and managing certain retail or mixed-use real estate
properties in the New York City metropolitan area. P/A agreed to invest 10% of
required capital up to a maximum of $2.2 million and Fund II, the managing
member, agreed to invest the balance to acquire assets in which Acadia-P/A
agrees to invest. Operating cash flow is generally to be distributed pro-rata
to Fund II and P/A until each has received a 10% cumulative return and then 60%
to Fund II and 40% to P/A. Distributions of net refinancing and net sales
proceeds, as defined, follow the distribution of operating cash flow except
that unpaid original capital is returned before the 60%/40% split between Fund
II and P/A. Upon the liquidation of the last property investment of Acadia-P/A,
to the extent that Fund II has not received an 18% internal rate of return
(IRR) on all of its capital contributions, P/A is obligated to return a
portion of its previous distributions, as defined, until Fund II has received
an 18% IRR. To date, Fund II has invested in nine New York Urban Infill
Redevelopment construction projects, eight of which were made through
Acadia-P/A, as follows:

40

---



|                                 |  |             |  |                |  |                |       |                                     |   |                                     |     |                               |     |           |    
|-------------------------------- |  | ----------- |  | -------------- |  | -------------- | ----- | ----------------------------------- | - | ----------------------------------- | --- | ----------------------------- | --- | --------- | ---
|                                 |  |             |  |                |  |                |       | 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           |  | $              | 15.2  |                                     | $ |                                    |     | Completed                     |     | 125,000   |    
|216th
 Street                    |  | Manhattan   |  | 2005           |  |                | 27.7  |                                     |   |                                    |     | Completed                     |     | 60,000    |    
|Fordham
 Place                   |  | Bronx       |  | 2004           |  |                | 123.5 |                                     |   | 6.5                                 |     | Substantially completed       |     | 276,000   |    
|Pelham Manor
 Shopping Plaza (1) |  | Westchester |  | 2004           |  |                | 58.0  |                                     |   | 4.0                                 |     | Substantially completed       |     | 320,000   |    
|161st
 Street                    |  | Bronx       |  | 2005           |  |                | 55.3  |                                     |   | 9.7                                 |     | (2)                           | (4) | 230,000   |    
|Atlantic
 Avenue (3)             |  | Brooklyn    |  | 2007           |  |                | 21.0  |                                     |   | 2.0                                 |     | Completed                     |     | 110,000   |    
|Canarsie
 Plaza                  |  | Brooklyn    |  | 2007           |  |                | 32.1  |                                     |   | 44.9                                |     | 1st half 2011                 |     | 265,000   |    
|Sherman
 Plaza                   |  | Manhattan   |  | 2005           |  |                | 34.1  |                                     |   |                                    | (2) | (2)                           |     |          | (2)
|CityPoint (1)                    |  | Brooklyn    |  | 2007           |  |                | 43.7  |                                     |   |                                    | (2) | (2)                           |     |          | (2)
|                                 |  |             |  |                |  |                |       |                                     |   |                                     |     |                               |     |           |    
|Total                            |  |             |  |                |  | $              | 410.6 |                                     | $ | 67.1                                |     |                               |     | 1,386,000 |    
|                                 |  |             |  |                |  |                |       |                                     |   |                                     |     |                               |     |           |    

Notes:

| |     |                                                                  
| | --- | -----------------------------------------------------------------
| | (1) | Acadia-P/A
 acquired a ground lease interest at this property.   
| |     |                                                                  
| | (2) | To be
 determined.                                               
| |     |                                                                  
| | (3) | P/A is not a
 partner in this project.                           
| |     |                                                                  
| | (4) | Currently
 operating but redevelopment activities have commenced.

RCP Venture

See Property
Acquisitions in Item 1 of this Form 10-K for a table summarizing the RCP Venture
investments from inception through December 31, 2009.

Fund III

In May 2007,
we formed Fund III with fourteen institutional investors, including a majority
of the investors from Fund I and Fund II with a total of $503.0 million of
committed discretionary capital. The Operating Partnerships share of the
committed capital is $100.0 million and it is the sole managing member with a
19.9% interest in Fund III. The terms and structure of Fund III are
substantially the same as the previous Funds, including the Promote structure,
with the exception that the Preferred Return is 6%. As of December 31, 2009,
$96.5 million has been invested in Fund III, of which the Operating Partnership
contributed $19.2 million.

Fund III has
invested in the New York Urban/Infill Redevelopment initiatives and other
investments as further discussed in PROPERTY ACQUISITIONS in Item 1 of
this Form 10-K. The projects are as follows:

|                 |  |              |  |                |  |                |      |                                     |      |                               |     |     |        |  |        | 
|---------------- |  | ------------ |  | -------------- |  | -------------- | ---- | ----------------------------------- | ---- | ----------------------------- | --- | --- | ------ |  | ------ | 
|                 |  |              |  |                |  |                |      | Redevelopment (dollars in millions) |     
|                 |  |              |  |                |  |                |      |                                     |     
|Property         |  | Location     |  | Year
 acquired |  | Costs
 to date |      | Anticipated
 additional
 costs      |      | Square
 feet upon
 completion |    
|                 |  |              |  |                |  |                |      |                                     |      |                               |    
|Sheepshead
 Bay  |  | Brooklyn, NY |  | 2007           |  | $              | 22.7 |                                     | $    |                              | (1) |     |       | 
|125 Main
 Street |  | Westport, CT |  | 2007           |  |                | 17.6 |                                     |      | 5.4                           | (2) |     | 30,000 | 
|                 |  |              |  |                |  |                |      |                                     |      |                               |     |     |        | 
|Total            |  |              |  |                |  |                |      | $                                   | 40.3 |                               | $   | 5.4 |        |  | 30,000 | 
|                 |  |              |  |                |  |                |      |                                     |      |                               |     |     |        |  |        | 

Notes:

| |     |                             
| | --- | ----------------------------
| | (1) | To be
 determined           
| |     |                             
| | (2) | Completion
 to be determined

During
February 2008, Acadia, through Fund III, and in conjunction with an
unaffiliated partner, Storage Post, acquired a portfolio of eleven self-storage
properties from Storage Posts existing institutional investors for
approximately $174.0 million. The properties are located throughout New York
and New Jersey. The portfolio continues to be operated by Storage Post, which
is a 5% equity partner. During January 2009, Fund III purchased Cortlandt Towne
Center for $78.0 million. The property is a 642,000 square foot shopping center
located in Westchester County, NY, a trade area with high barriers to entry for
regional and national retailers.

Preferred Equity
Investment, Mezzanine Loan Investments and Notes Receivable

At December
31, 2009, our preferred equity investment, mezzanine loan investments and notes
receivable, net aggregated $125.2 million, with accrued interest thereon of
$10.3 million, and were collateralized by the underlying properties, the
borrowers ownership interest in the entities that own the properties and/or by
the borrowers personal guarantee. Effective interest rates on our preferred
equity investment, mezzanine loan investments and notes receivable ranged from
10.0% to 22.4% with maturities through January 2017.

41

---



During
December 2009, we made a loan for $8.6 million which bears interest at 14.5%
with a one year term and one six month extension.

Other Investments

Acquisitions
made during 2007, 2008 and 2009 are discussed in PROPERTY ACQUISITIONS in
Item 1 of this Form 10-K:

Property Redevelopment and Expansion

Our
redevelopment program focuses on selecting well-located neighborhood and
community shopping centers and creating significant value through re-tenanting
and property redevelopment.

Purchase of Convertible Notes

Repurchase of the Notes is another use of our liquidity. During 2009,
we purchased an additional $57.0 million in face amount of our outstanding
convertible notes for $46.7 million.

Share Repurchase

We have an
existing share repurchase program that authorizes management, at its
discretion, to repurchase up to $20.0 million of our outstanding Common Shares.
The program may be discontinued or extended at any time and there is no
assurance that we will purchase the full amount authorized. Under this program
we have repurchased 2.1 million Common Shares, none of which were repurchased
after December 2001. As of December 31, 2009, management may repurchase up to
approximately $7.5 million of our outstanding Common Shares under this program.

SOURCES OF LIQUIDITY

We intend on
using Fund III, as well as new funds that we may establish in the future, as
the primary vehicles for our future acquisitions, including investments in the
RCP Venture and New York Urban/Infill Redevelopment Initiative. Additional
sources of capital for funding property acquisitions, redevelopment, expansion
and re-tenanting and RCP Venture investments, are expected to be obtained
primarily from (i) the issuance of public equity or debt instruments, (ii) cash
on hand and cash flow from operating activities, (iii) additional debt
financings, (iv) noncontrolling interests unfunded capital commitments of
$61.3 million and $325.2 million for Funds II and III, respectively, and (v)
future sales of existing properties.

During 2009,
Fund II received capital contributions of $31.2 million to fund redevelopment
projects and paydown the line of credit of Fund II.

As of December
31, 2009, we had approximately $139.5 million of additional capacity under
existing debt facilities and cash and cash equivalents on hand of $93.8
million.

Issuance of Convertible Notes

During
December of 2006 and January of 2007, we issued $115.0 million of
3.75% Convertible Notes. These notes were issued at par and are due in 2026.
The $112.1 million in proceeds, net of related costs, was used to retire
variable rate debt, fund capital commitments and general corporate purposes.

Shelf Registration Statements and Issuance of
Equity

During April
2009, we filed a shelf registration on Form S-3 providing for offerings of up
to a total of $500.0 million of Common Shares, Preferred Shares and debt
securities. During April 2009, we issued 5.75 million Common Shares and generated
net proceeds of approximately $65.0 million. The proceeds were primarily used
to purchase a portion of our outstanding convertible notes payable and pay down
existing lines of credit. Following this issuance, we have remaining capacity
under this registration statement to issue up to approximately $430.0 million
of these securities.

Asset Sales

Asset sales
are an additional source of liquidity for us. During November 2009, we sold
Blackman Plaza for $2.5 million, which resulted in a gain on sale of $1.5
million. During February 2009, The
Kroger Co. purchased the fee at six locations in Fund Is Kroger/Safeway
Portfolio for $14.6 million of which Fund Is share of the sales proceeds
amounted to $8.1 million after the repayment of the mortgage debt on these
properties. During April 2008, we sold a residential complex located in
Winston-Salem, North Carolina. During December of 2007, we sold an apartment
complex in Columbia Missouri. These sales are discussed in ASSET SALES AND
CAPITAL/ASSET RECYCLING in Item 1 of this Form 10-K.

42

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Notes Receivable Repayment and Mezzanine Loan
Paydowns

During the year ended December 31, 2009, we received $12.6 million in
loan repayments on several first mortgage notes and $1.0 million in paydowns on
mezzanine loans.

Financing and Debt

At
December 31, 2009, mortgage and convertible notes payable aggregated
$780.1 million, net of unamortized premium of $0.1 million, and the
mortgage notes were collateralized by 28 properties and related tenant leases.
Interest rates on our outstanding indebtedness ranged from 0.72% to 7.18% with
maturities that ranged from March 2010 to November 2032. Taking into
consideration $83.4 million of notional principal under variable to
fixed-rate swap agreements currently in effect, as of December 31, 2009, $439.0
million of the portfolio, or 56%, was fixed at a 5.8% weighted average interest
rate and $341.1 million, or 44% was floating at a 3.1% weighted average
interest rate. There is $132.6 million of debt maturing in 2010 at weighted average
interest rates of 2.2%. Of this amount, $2.1 million represents scheduled
annual amortization. The loans relating to $80.3 million of the 2010 maturities
provide for extension options, which we believe we will be able to exercise.
If we are unable to extend these loans and refinance the balance of $52.3 million,
we believe we will be able to repay this debt with existing liquidity,
including unfunded capital commitments from the Opportunity Fund investors. As
it relates to maturities after 2010, we may not have sufficient cash on hand
to repay such indebtedness, we may have to refinance this indebtedness or select
other alternatives based on market conditions at that time. Given the current
post recessionary period, refinancing this debt will be very difficult. See Item 1A.
Risk FactorsThe current economic environment, while improving, may cause
us to lose tenants and may impair our ability to borrow money to purchase properties,
refinance existing debt or finance our current redevelopment projects.

The following
table sets forth certain information pertaining to the Companys secured credit
facilities:

|                                 |  |                                      |       |                                              |   |                                                                               |  |                                                 |       |                                                            |   |                                                                         |  |   |     |  |   |       | 
|-------------------------------- |  | ------------------------------------ | ----- | -------------------------------------------- | - | ----------------------------------------------------------------------------- |  | ----------------------------------------------- | ----- | ---------------------------------------------------------- | - | ----------------------------------------------------------------------- |  | - | --- |  | - | ----- | 
|(dollars
 in millions)
 Borrower |  | Total
 available
 credit
 facilities |       | Amount
 borrowed 
 as of
 December 31,
 2008 |   | 2009 net
 borrowings
 (repayments)
 during the year
 ended December
 31, 2009 |  | Amount 
 borrowed 
 as of 
 December 31, 
 2009 |       | Letters
 of credit
 outstanding as
 of December 
 31, 2009 |   | Amount
 available
 under
 credit
 facilities
 as of December 
 31, 2009 | 
|                                 |  |                                      |       |                                              |   |                                                                               |  |                                                 |       |                                                            |   |                                                                         | 
|Acadia
 Realty, LP               |  | $                                    | 64.5  |                                              | $ | 48.9                                                                          |  | $                                               | (18.9 | )                                                          | $ | 30.0                                                                    |  | $ | 4.0 |  | $ | 30.5  | 
|Acadia
 Realty, LP               |  |                                      | 30.0  |                                              |   |                                                                              |  |                                                 | 2.0   |                                                            |   | 2.0                                                                     |  |   |    |  |   | 28.0  | 
|Fund II                          |  |                                      | 53.5  |                                              |   | 34.7                                                                          |  |                                                 | 13.6  |                                                            |   | 48.3                                                                    |  |   | 5.2 |  |   |      | 
|Fund III                         |  |                                      | 221.0 |                                              |   | 62.3                                                                          |  |                                                 | 77.2  |                                                            |   | 139.5                                                                   |  |   | 0.5 |  |   | 81.0  | 
|                                 |  |                                      |       |                                              |   |                                                                               |  |                                                 |       |                                                            |   |                                                                         |  |   |     |  |   |       | 
|Total                            |  | $                                    | 369.0 |                                              | $ | 145.9                                                                         |  | $                                               | 73.9  |                                                            | $ | 219.8                                                                   |  | $ | 9.7 |  | $ | 139.5 | 
|                                 |  |                                      |       |                                              |   |                                                                               |  |                                                 |       |                                                            |   |                                                                         |  |   |     |  |   |       | 

Reference is
made to Note 8 and Note 9 to our Consolidated Financial Statements, which begin
on Page F-1 of this Form 10-K, for a summary of the financing and refinancing
transactions since December 31, 2008.

43

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CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

At
December 31, 2009, maturities on our mortgage notes ranged from March 2010
to November 2032. In addition, we have non-cancelable ground leases at six
of our shopping centers. We lease space for our White Plains corporate office
for a term expiring in 2015. The following table summarizes our debt
maturities, obligations under non-cancelable operating leases and construction
commitments as of December 31, 2009:

|                              |  |                         |         |                    |   |               |  |               |       |                     |   |      |  |   |       | 
|----------------------------- |  | ----------------------- | ------- | ------------------ | - | ------------- |  | ------------- | ----- | ------------------- | - | ---- |  | - | ----- | 
|                              |  | Payments
 due by period |        
|Contractual
 obligations:     |  | Total                   |         | Less
 than
 1 year |   | 1 to 3
 years |  | 3 to 5
 years |       | More
 than
 5 years |  
|                              |  |                         |         |                    |   |               |  |               |       |                     |  
|(dollars in millions)         |  |                         |         |                    |   |               |  |               |       |                     |  
|Future debt
 maturities       |  | $                       | 782.1   |                    | $ | 132.6         |  | $             | 388.5 |                     | $ | 31.8 |  | $ | 229.2 | 
|Interest obligations
 on debt |  |                         | 145.2   |                    |   | 31.2          |  |               | 46.0  |                     |   | 29.7 |  |   | 38.3  | 
|Operating
 lease obligations  |  |                         | 111.6   |                    |   | 4.8           |  |               | 9.8   |                     |   | 10.0 |  |   | 87.0  | 
|Construction
 commitments 1   |  |                         | 32.3    |                    |   | 32.3          |  |               |      |                     |   |     |  |   |      | 
|                              |  |                         |         |                    |   |               |  |               |       |                     |   |      |  |   |       | 
|Total                         |  | $                       | 1,071.2 |                    | $ | 200.9         |  | $             | 444.3 |                     | $ | 71.5 |  | $ | 354.5 | 
|                              |  |                         |         |                    |   |               |  |               |       |                     |   |      |  |   |       | 

|                                                                                                                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes:                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                       
|1
 In conjunction with the redevelopment of our Core Portfolio and Opportunity
 Fund properties, we have entered into construction commitments with general
 contractors. We intend to fund these requirements with existing liquidity.

OFF BALANCE SHEET ARRANGEMENTS

We have
investments in four joint ventures for the purpose of investing in operating
properties. We account for these investments using the equity method of
accounting as we have a noncontrolling interest. As such, our financial
statements reflect our share of income and loss from but not the assets and
liabilities of these joint ventures.

Reference is
made to Note 4 to our Consolidated Financial Statements, which begin on page
F-1 of this Form 10-K, for a discussion of our unconsolidated investments. Our
pro-rata share of unconsolidated debt related to those investments is as
follows:

|                      |  |                                 |     |                                      |   |      |               |  |      |   |               | 
|--------------------- |  | ------------------------------- | --- | ------------------------------------ | - | ---- | ------------- |  | ---- | - | ------------- | 
|(dollars in millions) |  | Pro-rata share of mortgage debt |     | Interest rate at
 December 31,
 2009 |   |      |              
|Investment            |  | Opportunity Funds               |     | Operating Partnership                |   |      | Maturity date | 
|                      |  |                                 |     |                                      |   |      |               |  |     
|Crossroads            |  | $                               | n/a |                                      | $ | 30.6 |               |  | 5.37 | % | December 2014 | 
|Brandywine            |  |                                 | n/a |                                      |   | 36.9 |               |  | 5.99 | % | July 2016     | 
|CityPoint             |  |                                 | 6.1 |                                      |   | 1.2  |               |  | 2.73 | % | August 2010   | 
|Sterling
 Heights     |  |                                 | 2.1 |                                      |   | 0.8  |               |  | 2.08 | % | August 2010   | 
|                      |  |                                 |     |                                      |   |      |               |  |      |   |               | 
|Total                 |  | $                               | 8.2 |                                      | $ | 69.5 |               |  |      |   |               | 
|                      |  |                                 |     |                                      |   |      |               |  |      |   |               | 

As of December
31, 2009, there was $26.0 million of debt at CityPoint scheduled to mature
during August of 2010. There are no options to extend this debt. Fund II and
its unaffiliated joint venture partners (JV Partner) share of this debt was
$6.1 million and $19.9 million, respectively. If CityPoint is unable to extend
the maturity date of this debt, Fund II and its JV Partner may be required to
fund their requisite share of capital to repay this obligation. In the event
that the JV Partner does not fund its requisite share of capital, pursuant to
the joint venture agreement, Fund II would have the option to fund the JV
Partners share of capital to repay this debt either as a loan to the JV
Partner or as additional equity in CityPoint.

In addition,
we have arranged for the provision of four separate letters of credit in
connection with certain leases and investments. As of December 31, 2009,
there were no outstanding balances under any of the letters of credit. If the
letters of credit were fully drawn, the combined maximum amount of exposure
would be $9.7 million.

HISTORICAL CASH FLOW

The following
table compares the historical cash flow for the year ended December 31, 2009
(2009) with the cash flow for the year ended December 31, 2008 (2008).

|                                           |  |                           |        |      |   |          |   |   |        |  
|------------------------------------------ |  | ------------------------- | ------ | ---- | - | -------- | - | - | ------ | -
|                                           |  | Years
 Ended December 31, |       
|                                           |  |                           |        |      |   |          |  
|                                           |  | 2009                      |        | 2008 |   | Variance |  
|                                           |  |                           |        |      |   |          |  
|(dollars
in millions)                      |  |                           |        |      |   |          |   |   |        |  
|Net cash
 provided by operating activities |  | $                         | 47.5   |      | $ | 66.5     |   | $ | (19.0  | )
|Net cash
 used in investing activities     |  |                           | (123.4 | )    |   | (302.3   | ) |   | 178.9  |  
|Net cash
 provided by financing activities |  |                           | 83.0   |      |   | 199.1    |   |   | (116.1 | )
|                                           |  |                           |        |      |   |          |   |   |        |  
|Totals                                     |  | $                         | 7.1    |      | $ | (36.7    | ) | $ | 43.8   |  
|                                           |  |                           |        |      |   |          |   |   |        |  

44

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A discussion
of the significant changes in cash flow for 2009 versus 2008 is as follows:

A decrease of $19.0 million in net cash provided by
operating activities resulted from the following: (i) lease termination income
of $24.0 million from Home Depot at Canarsie Plaza in 2008 and (ii) a $13.5 million
decrease in distributions (primarily Albertsons) of operating income from
unconsolidated affiliates in 2009. These 2009 decreases were offset by a $24.0
million increase in other assets primarily related to additional cash used for
the purchase of short term financial instruments in 2008 and the subsequent
redemption of these financial instruments in 2009.

A decrease of
$178.9 million of net cash used in investing activities resulted from the
following: (i) a decrease of $112.4 million in expenditures for real estate,
development and tenant installations in 2009 and (ii) a decrease of $81.5
million in advances of notes receivable in 2009. These decreases in cash used
were offset by (i) an additional $11.7 million in proceeds from the sale of
properties in 2008 and (ii) a decrease of $6.3 million in collections of notes
receivable in 2009.

The $116.1
million decrease in net cash provided by financing activities resulted from the
following decreases in cash for 2009: (i) $114.2 million of additional cash used
for repayment of debt in 2009, (ii) an additional $40.7 million of cash used
for the purchase of convertible notes in 2009, (iii) a decrease of $21.1
million of proceeds received on borrowings of debt in 2009, and (iv) a decrease
of $20.4 million in capital contributions from noncontrolling interests in
2009. These 2009 cash decreases were offset by the following: (i) $65.2 million
of additional cash from the issuance of Common Shares, net of costs, in 2009,
(ii) an additional $13.7 million of distributions to noncontrolling interests
in 2008, and (iii) an additional $4.5 million of dividends paid to Common
Shareholders in 2008.

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 U.S. GAAP. The preparation of these Consolidated Financial
Statements requires management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses. We base our
estimates on historical experience and assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We believe the following
critical accounting policies affect the significant judgments and estimates
used by us in the preparation of our Consolidated Financial Statements.

Valuation of Property Held for Use and Sale

On a quarterly
basis, we review the carrying value of both properties held for use and for
sale. We perform the impairment analysis by calculating and reviewing net
operating income on a property-by-property basis. We evaluate leasing
projections and perform other analyses to conclude whether an asset is
impaired. We record impairment losses and reduce the carrying value of
properties when indicators of impairment are present and the expected
undiscounted cash flows related to those properties are less than their
carrying amounts. In cases where we do not expect to recover our carrying costs
on properties held for use, we reduce our carrying cost to fair value. For
properties held for sale, we reduce our carrying value to the fair value less
costs to sell. For the years ended December 31, 2009, 2008 and 2007, no
impairment losses were recognized. Management does not believe that the value
of any properties in its portfolio was impaired as of December 31, 2009.

Investments in and Advances to Unconsolidated
Joint Ventures

The Company
periodically reviews its investment in unconsolidated joint ventures for other
than temporary declines in market value. Any decline that is not expected to be
recovered in the next twelve months is considered other than temporary and an
impairment charge is recorded as a reduction in the carrying value of the
investment. During the year ended December 31, 2009, the Company recorded a
$3.8 million impairment reserve related to a Fund I unconsolidated joint
venture. No impairment charges related to the Companys investment in
unconsolidated joint ventures were recognized for the years ended
December 31, 2008 and 2007.

Bad Debts

We maintain an
allowance for doubtful accounts for estimated losses resulting from the
inability of tenants to make payments on arrearages in billed rents, as well as
the likelihood that tenants will not have the ability to make payments on
unbilled rents including estimated expense recoveries. We also maintain a
reserve for straight-line rent receivables. For the years ended
December 31, 2009 and 2008, we had recorded an allowance for doubtful
accounts of $7.0 million and $5.7 million, respectively. If the financial
condition of our tenants were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required.

45

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Real Estate

Real estate
assets are stated at cost less accumulated depreciation. Expenditures for acquisition,
development, construction and improvement of properties, as well as significant
renovations are capitalized. Interest costs are capitalized until construction
is substantially complete. Construction in progress includes costs for
significant property expansion and redevelopment. Depreciation is computed on
the straight-line basis over estimated useful lives of 30 to 40 years for
buildings, the shorter of the useful life or lease term for tenant improvements
and five years for furniture, fixtures and equipment. Expenditures for
maintenance and repairs are charged to operations as incurred.

Upon
acquisitions of real estate, we assess the fair value of acquired assets
(including land, buildings and improvements, and identified intangibles such as
above and below market leases and acquired in-place leases and customer
relationships) and acquired liabilities in accordance with the Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 805 Business Combinations (formerly Statement of Financial Accounting
Standards (SFAS) No. 141, Business Combinations) and ASC Topic 350
Intangibles  Goodwill and Other (formerly SFAS No. 142, Goodwill and
Other Intangible Assets), and allocate purchase price based on these
assessments. We assess fair value based on estimated cash flow projections that
utilize appropriate discount and capitalization rates and available market
information. Estimates of future cash flows are based on a number of factors
including the historical operating results, known trends, and market/economic
conditions that may affect the property.

Revenue Recognition and Accounts Receivable

Leases with
tenants are accounted for as operating leases. Minimum rents are recognized on
a straight-line basis over the term of the respective leases, beginning when
the tenant takes possession of the space. Certain of these leases also provide
for percentage rents based upon the level of sales achieved by the tenant.
Percentage rent is recognized in the period when the tenants sales breakpoint
is met. In addition, leases typically provide for the reimbursement to us of
real estate taxes, insurance and other property operating expenses. These
reimbursements are recognized as revenue in the period the expenses are incurred.

We make
estimates of the uncollectability of our accounts receivable related to tenant
revenues. An allowance for doubtful accounts has been provided against certain
tenant accounts receivable that are estimated to be uncollectible. See Bad
Debts above. Once the amount is ultimately deemed to be uncollectible, it is
written off.

Notes Receivable and
Preferred Equity Investment

Real estate
notes receivable and preferred equity investments are intended to be held to
maturity and are carried at cost. Interest income from notes receivable and
preferred equity investments are recognized on the effective interest method
over the expected life of the loan. Under the effective interest method,
interest or fees to be collected at the origination of the loan or the payoff
of the loan is recognized over the term of the loan as an adjustment to yield.

Allowances for
real estate notes receivable and preferred equity investments are established
based upon 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. Interest
income recognition is generally suspended for loans when, in the opinion of
management, a full recovery of income and principal becomes doubtful. Income
recognition is resumed when the suspended loan becomes contractually current
and performance is demonstrated to be resumed.

During 2009, we
provided a $1.7 million reserve on a note receivable as a result of the loss of
an anchor tenant at the underlying collateral property.

During 2008,
we provided a $4.4 million reserve on a note receivable collateralized by an
interest in an entity owning retail complexes associated with seven public rest
stops along the toll roads in and around Chicago, Illinois. The note and all
accrued interest was subsequently cancelled during 2009.

INFLATION

Our long-term
leases contain provisions designed to mitigate the adverse impact of inflation
on our net income. Such provisions include clauses enabling us to receive
percentage rents based on tenants gross sales, which generally increase as
prices rise, and/or, in certain cases, escalation clauses, which generally
increase rental rates during the terms of the leases. Such escalation clauses
are often related to increases in the consumer price index or similar inflation
indexes. In addition, many of our leases are for terms of less than ten years,
which permits us to seek to increase rents upon re-rental at market rates if
current rents are below the then existing market rates. Most of our leases
require the tenants to pay their share of operating expenses, including common
area maintenance, real estate taxes, insurance and utilities, thereby reducing
our exposure to increases in costs and operating expenses resulting from
inflation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Reference is made to Notes to
our Consolidated Financial Statements, which begin on page F-1 of this Form
10-K.

46

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ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Information as of December 31, 2009

Our primary
market risk exposure is to changes in interest rates related to our mortgage
debt. See Note 8 to our Consolidated Financial Statements, which begin on page
F-1 of this Form 10-K, for certain quantitative details related to our mortgage
debt.

Currently, we
manage our exposure to fluctuations in interest rates primarily through the use
of fixed-rate debt and interest rate swap agreements. As of December 31, 2009,
we had total mortgage and convertible notes payable of $780.1 million of which
$439.0 million, or 56% was fixed-rate, inclusive of debt with rates fixed
through the use of derivative financial instruments, and $341.1 million, or 44%,
was variable-rate based upon LIBOR or commercial paper rates plus certain
spreads. As of December 31, 2009, we were a party to eight interest rate swap
transactions and one interest rate cap transaction to hedge our exposure to
changes in interest rates with respect to $83.4 million and $30.0 million of
LIBOR-based variable-rate debt, respectively.

The following
table sets forth information as of December 31, 2009 concerning our long-term
debt obligations, including principal cash flows by scheduled maturity and
weighted average interest rates of maturing amounts (dollars in millions):
Consolidated mortgage debt:

|           |  |                         |      |            |   |       |  |                                  |       |  |  |     |  
|---------- |  | ----------------------- | ---- | ---------- | - | ----- |  | -------------------------------- | ----- |  |  | --- | -
|Year       |  | Scheduled
 amortization |      | Maturities |   | Total |  | Weighted
 average
 interest rate |      
|           |  |                         |      |            |   |       |  |                                  |      
|2010       |  | $                       | 2.1  |            | $ | 130.5 |  | $                                | 132.6 |  |  | 2.2 | %
|2011       |  |                         | 2.5  |            |   | 328.6 |  |                                  | 331.1 |  |  | 2.9 | %
|2012       |  |                         | 2.5  |            |   | 52.9  |  |                                  | 55.4  |  |  | 3.8 | %
|2013       |  |                         | 2.9  |            |   | 8.8   |  |                                  | 11.7  |  |  | 5.5 | %
|2014       |  |                         | 2.8  |            |   | 17.3  |  |                                  | 20.1  |  |  | 5.8 | %
|Thereafter |  |                         | 14.2 |            |   | 215.0 |  |                                  | 229.2 |  |  | 5.9 | %
|           |  |                         |      |            |   |       |  |                                  |       |  |  |     |  
|           |  | $                       | 27.0 |            | $ | 753.1 |  | $                                | 780.1 |  |  |     |  
|           |  |                         |      |            |   |       |  |                                  |       |  |  |     |  

Mortgage debt in unconsolidated
partnerships (at our pro-rata share):

|           |  |                         |     |            |   |       |  |                                  |      |  |  |     |  
|---------- |  | ----------------------- | --- | ---------- | - | ----- |  | -------------------------------- | ---- |  |  | --- | -
|Year       |  | Scheduled
 amortization |     | Maturities |   | Total |  | Weighted
 average
 interest rate |     
|           |  |                         |     |            |   |       |  |                                  |     
|2010       |  | $                       | 0.5 |            | $ | 2.0   |  | $                                | 2.5  |  |  | 2.5 | %
|2011       |  |                         | 0.5 |            |   |      |  |                                  | 0.5  |  |  | n/a | %
|2012       |  |                         | 0.5 |            |   |      |  |                                  | 0.5  |  |  | n/a | %
|2013       |  |                         | 0.5 |            |   |      |  |                                  | 0.5  |  |  | n/a | %
|2014       |  |                         | 0.6 |            |   | 28.0  |  |                                  | 28.6 |  |  | 5.4 | %
|Thereafter |  |                         |    |            |   | 36.9  |  |                                  | 36.9 |  |  | 6.0 | %
|           |  |                         |     |            |   |       |  |                                  |      |  |  |     |  
|           |  | $                       | 2.6 |            | $ | 66.9  |  | $                                | 69.5 |  |  |     |  
|           |  |                         |     |            |   |       |  |                                  |      |  |  |     |  

$132.6 million of  our total
consolidated debt and $2.5 million of our pro-rata share of unconsolidated outstanding
    debt will become due in 2010. $331.1 million of our total consolidated debt
    and $0.5 million of our pro-rata share of uncolidated debt will become due
    in 2011. As we intend on refinancing some or all of such debt at the then-existing
    market interest rates, which may be greater than the current interest rate,
    our interest expense would increase by approximately $4.7 million annually
    if the interest rate on the refinanced debt increased by 100 basis points.
    After giving effect to noncontrolling interests, the Companys share
    of this increase would be $1.7 million. Interest expense on our variable
    debt of $341.1 million, net of variable to fixed-rate swap agreements currently
    in effect, as of December 31, 2009 would increase $3.4 million if LIBOR increased
    by 100 basis points. After giving effect to noncontrolling interests, the
    Companys share
of this increase would be $0.6 million. We may seek additional variable-rate
financing if and when pricing and other commercial and financial terms warrant.
As such, we would consider hedging against the interest rate risk related to
such additional variable-rate debt through interest rate swaps and protection
agreements, or other means.

Based on our
outstanding debt balances as of December 31, 2009, the fair value of our total
consolidated outstanding debt would decrease by approximately $18.3 million if
interest rates increase by 1%. Conversely, if interest rates decrease by 1%,
the fair value of our total outstanding debt would increase by approximately
$20.5 million.

As of December
31, 2009 and 2008, we had preferred equity investments and notes receivable of
$125.2 million and $125.6 million, respectively. We determined the estimated
fair value of our preferred equity investment and notes receivable as of
December 31, 2009 and 2008 were $126.4 million and $122.3 million,
respectively, by discounting future cash receipts utilizing a discount rate
equivalent to the rate at which similar notes receivable would be originated
under conditions then existing.

47

---



Based on our
outstanding preferred equity investments and notes receivable balances as of
December 31, 2009, the fair value of our total outstanding preferred equity
investments and notes receivable would decrease by approximately $0.7 million
if interest rates increase by 1%. Conversely, if interest rates decrease by 1%,
the fair value of our total outstanding preferred equity investments and notes
receivable would increase by approximately $0.7 million.

Summarized Information as of December 31,
2008

As of December
31, 2008, we had total mortgage and convertible notes payable of $753.8 million
of which $505.6 million, or 67% was fixed-rate, inclusive of interest rate
swaps, and $248.2 million, or 33%, was variable-rate based upon LIBOR plus
certain spreads. As of December 31, 2008, we were a party to seven interest
rate swap transactions and one interest rate cap transaction to hedge our
exposure to changes in interest rates with respect to $73.4 million and $30.0
million of LIBOR-based variable-rate debt, respectively.

Interest
expense on our variable debt of $248.2 million as of December 31, 2008 would
have increased $2.5 million if LIBOR increased by 100 basis points. Based on
our outstanding debt balances as of December 31, 2008, the fair value of our
total outstanding debt would have decreased by approximately $18.1 million if
interest rates increased by 1%. Conversely, if interest rates decreased by 1%,
the fair value of our total outstanding debt would have increased by
approximately $19.3 million.

Changes in Market Risk Exposures from 2008 to
2009

Our interest
rate risk exposure from December 31, 2008 to December 31, 2009 has increased,
as we had $248.2 million in variable-rate debt (or 33% of our total debt) at
December 31, 2008, as compared to $341.1 million (or 44% of our total debt) in
variable-rate debt at December 31, 2009. In addition, the amount of our total
debt increased from $753.8 million at December 31, 2008 to $780.1 million at
December 31, 2009. This increased amount of debt could expose us to greater
fluctuations in the fair value of our debt.

ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA.

The financial
statements beginning on page F-1 are incorporated herein by reference.

ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND
PROCEDURES.

(i) Disclosure Controls and Procedures

We conducted
an evaluation, under the supervision and with the participation of management
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective as of December 31,
2009 to provide reasonable assurance that information required to be disclosed
by us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in SEC
rules and forms, and is accumulated and communicated to management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosure.

(ii) Internal Control Over Financial
Reporting

(a) Managements Annual Report on Internal
Control Over Financial Reporting

Management of
Acadia Realty Trust is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in the
Securities Exchange Act of 1934 Rule 13(a)-15(f). Under the supervision and
with the participation of our management, including our principal executive
officer and principal financial officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting as of December
31, 2009 as required by the Securities Exchange Act of 1934 Rule 13(a)-15(c).
In making this assessment, we used the criteria set forth in the framework in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Based on our
evaluation under the COSO criteria, our management concluded that our internal
control over financial reporting was effective as of December 31, 2009 to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external reporting purposes in
accordance with U.S. generally accepted accounting principles.

BDO Seidman,
LLP, an independent registered public accounting firm that audited our
Financial Statements included in this Annual Report, has issued an attestation
report on our internal control over financial reporting as of December 31,
2009, which appears in paragraph (b) of this Item 9A.

Acadia Realty
Trust
White Plains, New York 
March 1, 2010

48

---



(b) Attestation report of the independent
registered public accounting firm

The
Shareholders and Trustees of
Acadia Realty Trust

We have
audited Acadia Realty Trust and subsidiaries internal control over financial
reporting as of December 31, 2009, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Acadia Realty
Trust and subsidiaries management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the
accompanying Managements Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on a companys internal control
over financial reporting based on our audit.

We conducted
our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal
control, based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.

A companys
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A companys internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the companys assets that could have a material effect on the financial
statements.

Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our
opinion, Acadia Realty Trust and subsidiaries maintained in all material
respects effective internal control over financial reporting as of December 31,
2009, based on the COSO criteria.

We also have
audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Acadia
Realty Trust and subsidiaries as of December 31, 2009 and 2008 and the related
consolidated statements of income, shareholders equity, and cash flows
for each of the three years in the period ended December 31, 2009 and our report
dated March 1, 2010 expressed an unqualified opinion thereon.

/s/ BDO
Seidman, LLP
New York, New York 
March 1, 2010

(c) Changes in internal control over
financial reporting

There was no
change in our internal control over financial reporting during our fourth
fiscal quarter ended December 31, 2009 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 9B. OTHER INFORMATION.

None

49

---



PART III

In accordance
with the rules of the SEC, certain information required by Part III is omitted
and is incorporated by reference into this Form 10-K from our definitive proxy
statement relating to our 2010 annual meeting of stockholders (our 2010 Proxy
Statement) that we intend to file with the SEC no later than April 30, 2010.

ITEM 10. DIRECTORS;
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The
information under the following headings in the 2010 Proxy Statement is incorporated
herein by reference:

| |   |                                                           
| | - | ----------------------------------------------------------
| |  | PROPOSAL 1
  ELECTION OF TRUSTEES                      
| |   |                                                           
| |  | MANAGEMENT                                              
| |   |                                                           
| |  | SECTION
 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

ITEM 11. EXECUTIVE
COMPENSATION.

The
information under the following headings in the 2010 Proxy Statement is
incorporated herein by reference:

| |   |                                                               
| | - | --------------------------------------------------------------
| |  | ACADIA
 REALTY TRUST COMPENSATION COMMITTEE REPORT          
| |   |                                                               
| |  | COMPENSATION
 DISCUSSION AND ANALYSIS                       
| |   |                                                               
| |  | EXECUTIVE
 AND TRUSTEE COMPENSATION                         
| |   |                                                               
| |  | COMPENSATION
 COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The
information under the heading SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT in the 2010 Proxy Statement is incorporated herein by
reference.

The
information under Item 5 of this Form 10-K under the heading (c) Securities
authorized for issuance under equity compensation plans is incorporated herein
by reference.

ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The
information under the following headings in the 2010 Proxy Statement is
incorporated herein by reference:

| |   |                                                          
| | - | ---------------------------------------------------------
| |  | CERTAIN
 RELATIONSHIPS AND RELATED TRANSACTIONS        
| |   |                                                          
| |  | PROPOSAL 1
  ELECTION OF TRUSTEESTrustee Independence

ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES.

The
information under the heading AUDIT COMMITTEE INFORMATION in the 2010 Proxy
Statement is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL
STATEMENT SCHEDULES.

1. Financial Statements: See Index to
Financial Statements at page F-1 below.

2. Financial Statement Schedule: See
Schedule IIIReal Estate and Accumulated Depreciation at page F-43 below.

3. Exhibits: The index of exhibits below is
incorporated herein by reference.

50

---



SIGNATURES

Pursuant to
the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.

| |     |                           
| | --- | --------------------------
| |     | ACADIA REALTY TRUST       
| |     | (Registrant)              
| |     |                           
| | By: | /s/ Kenneth
 F. Bernstein 
| |     | Kenneth F.
 Bernstein     
| |     | Chief
 Executive Officer, 
| |     | President
 and Trustee    
| |     |                           
| | By: | /s/ Michael
 Nelsen       
| |     | Michael
 Nelsen           
| |     | Senior Vice
 President and
| |     | Chief
 Financial Officer  
| |     |                           
| | By: | /s/ Jonathan
 W. Grisham  
| |     | Jonathan W.
 Grisham      
| |     | Senior Vice
 President and
| |     | Chief
 Accounting Officer 

Dated:
March 1, 2010

Pursuant to
the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

|                          |  |                                 |  |               
|------------------------- |  | ------------------------------- |  | --------------
|Signature                 |  | Title                           |  | Date          
|                          |  |                                 |  |               
|/s/ Kenneth
 F. Bernstein |  | Chief
 Executive Officer,       |  | March 1,
 2010
|(Kenneth F.
 Bernstein)   |  | President
 and Trustee          |  |               
|                          |  | (Principal
 Executive Officer)  |  |               
|                          |  |                                 |  |               
|/s/ Michael
 Nelsen       |  | Senior Vice
 President          |  | March 1,
 2010
|(Michael
 Nelsen)         |  | and Chief
 Financial Officer    |  |               
|                          |  | (Principal
 Financial Officer)  |  |               
|                          |  |                                 |  |               
|/s/ Jonathan
 W. Grisham  |  | Senior Vice
 President          |  | March 1,
 2010
|(Jonathan W.
 Grisham)    |  | and Chief
 Accounting Officer   |  |               
|                          |  | (Principal
 Accounting Officer) |  |               
|                          |  |                                 |  |               
|/s/ Douglas
 Crocker II   |  | Trustee                         |  | March 1,
 2010
|(Douglas
 Crocker II)     |  |                                 |  |               
|                          |  |                                 |  |               
|/s/ Suzanne
 Hopgood      |  | Trustee                         |  | March 1,
 2010
|(Suzanne
 Hopgood)        |  |                                 |  |               
|                          |  |                                 |  |               
|/s/ Lorrence
 T. Kellar   |  | Trustee                         |  | March 1,
 2010
|(Lorrence T.
 Kellar)     |  |                                 |  |               
|                          |  |                                 |  |               
|/s/ Wendy
 Luscombe       |  | Trustee                         |  | March 1,
 2010
|(Wendy
 Luscombe)         |  |                                 |  |               
|                          |  |                                 |  |               
|/s/ William
 T. Spitz     |  | Trustee                         |  | March 1,
 2010
|(William T.
 Spitz)       |  |                                 |  |               
|                          |  |                                 |  |               
|/s/ Lee S.
 Wielansky     |  | Trustee                         |  | March 1,
 2010
|(Lee S.
 Wielansky)       |  |                                 |  |               

51

---



EXHIBIT INDEX

The following
is an index to all exhibits filed with the Annual Report on Form 10-K other
than those incorporated by reference herein:

|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.1         | Declaration
 of Trust of the Company, as amended (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.2         | Fourth Amendment
 to Declaration of Trust (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.3         | Amended and
 Restated By-Laws of the Company (22)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.4         | Fifth
 Amendment to Declaration of Trust (32)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.5         | First
 Amendment the Amended and Restated Bylaws of the Company (32)                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.1         | Voting Trust
 Agreement between the Company and Yale University dated February 27,
 2002 (14)                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.1        | 1999 Share
 Option Plan (8) (21)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.2        | 2003 Share
 Option Plan (16) (21)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.3        | Form of
 Share Award Agreement (17) (21)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.4        | Form of
 Registration Rights Agreement and Lock-Up Agreement (18)                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.5        | Registration
 Rights and Lock-Up Agreement (RD Capital Transaction) (11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.6        | Registration
 Rights and Lock-Up Agreement (Pacesetter Transaction) (11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.7        | Contribution
 and Share Purchase Agreement dated as of April 15, 1998 among Mark
 Centers Trust, Mark Centers Limited Partnership, the Contributing Owners and
 Contributing Entities named therein, RD Properties, L.P. VI, RD Properties,
 L.P. VIA and RD Properties, L.P. VIB (9)                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.8        | Agreement of
 Contribution among Acadia Realty Limited Partnership, Acadia Realty Trust and
 Klaff Realty, LP and Klaff Realty, Limited (18)                                                                                                                                                                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.9        | Employment
 agreement between the Company and Kenneth F. Bernstein dated
 October 1998 (6) (21)                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.11       | Amendment to
 employment agreement between the Company and Kenneth F. Bernstein dated
 January 19, 2007 (26) (21)                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.12       | First
 Amendment to Employment Agreement between the Company and Kenneth Bernstein
 dated as of January 1, 2001 (12) (21)                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.13       | Description
 of Long Term Investment Alignment Program (32)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.14       | Letter of
 employment offer between the Company and Michael Nelsen, Sr. Vice President
 and Chief Financial Officer dated February 19, 2003 (15) (21)                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.15       | Form of
 Amended and Restated Severance Agreement, dated June 12, 2008, that was
 entered into with each of Joel Braun, Executive Vice President and Chief
 Investment Officer; Michael Nelsen, Senior Vice President and Chief Financial
 Officer; Robert Masters, Senior Vice President, General Counsel, Chief
 Compliance Officer and Secretary; and Joseph Hogan, Senior Vice President and
 Director of Construction. (Incorporated by reference to the Exhibit 10.1 to
 the Companys Form 8-K filed with the SEC on June 12, 2008) (21)
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.16       | Note
 Modification Agreement, Note, Mortgage Modification Agreement, Mortgage,
 Assignment of Leases and Rents and Security Agreement between Acadia-P/A
 Sherman Avenue LLC and Bank of America N. A. dated January 15, 2009 (32)                                                                                                                                                                                                                                                                                                             

52

---



|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.17       | Mortgage,
 Assignment of Leases and Rents and Security Agreement from Acadia Cortlandt
 LLC to Bank of America, N.A. dated July 29, 2009 [Initial Advance], Note made
 by Acadia Cortlandt LLC in favor of Bank of America, N.A. dated July 29, 2009
 [Initial Advance], Mortgage, Assignment of Leases and Rents and Security
 Agreement from Acadia Cortlandt LLC to Bank of America, N.A. dated July 29,
 2009 [Future Advance] and Note made by Acadia Cortlandt LLC in favor of Bank
 of America, N.A. dated July 29, 2009 [Future Advance] (33)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.18       | Consolidated,
 Amended and Restated Term Loan Agreement among Acadia-PA East Fordham
 Acquisitions, LLC, and Fordham Place Office LLC as borrower and The lenders
 Party Hereto as lenders and Eurohypo AG, New York Branch as Administrative
 Agent; Mortgage, Assignment of Leases and Rents, Security Agreement and
 Fixture Filing made by Acadia-PA East Fordham Acquisitions, LLC, and Fordham
 Place Office LLC in favor of Eurohypo AG, New York Branch as Administrative
 Agent; Replacement Note between Acadia-PA East Fordham Acquisitions, LLC, and
 Fordham Place Office LLC and Amalgamated Bank; Replacement Note between
 Acadia-PA East Fordham Acquisitions, LLC, and Fordham Place Office LLC and
 Deutsche Genossenschafts  Hypothekenbank AG; Replacement Note between
 Acadia-PA East Fordham Acquisitions, LLC, and Fordham Place Office LLC and
 Eurohypo AG, New York Branch; and Replacement Note between Acadia-PA East
 Fordham Acquisitions, LLC, and Fordham Place Office LLC and TD Bank. All
 dated November 4, 2009. (34)
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.20       | Secured
 Promissory Note between RD Absecon Associates, L.P. and Fleet Bank, N.A.
 dated February 8, 2000 (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.21       | Promissory
 Note between 239 Greenwich Associates, L.P. and Greenwich Capital Financial
 Products, Inc. dated May 30, 2003 (18)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.22       | Open-End
 Mortgage, Assignment of Leases and Rents, and Security Agreement between 239
 Greenwich Associates, L.P. and Greenwich Capital Financial Products, Inc.
 dated May 30, 2003 (18)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.23       | Promissory
 Note between Merrillville Realty, L.P. and Sun America Life Insurance Company
 dated July 7, 1999 (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.24       | Secured
 Promissory Note between Acadia Town Line, LLC and Fleet Bank, N.A. dated
 March 21, 1999 (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.25       | Promissory
 Note between RD Village Associates Limited Partnership and Sun America Life
 Insurance Company Dated September 21, 1999 (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.26       | First
 Amendment to Severance Agreements between the Company and Joel Braun
 Executive Vice President and Chief Investment Officer, Michael Nelsen, Senior
 Vice President and Chief Financial Officer, Robert Masters, Senior Vice President,
 General Counsel, Chief Compliance Officer and Secretary and Joseph Hogan,
 Senior Vice President and Director of Construction dated January 19,
 2007 (21) (26)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.33       | Term Loan
 Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York,
 dated March 30, 2000 (10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.34       | Mortgage
 Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York,
 dated March 30, 2000 (10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.44       | Prospectus
 Supplement Regarding Options Issued under the Acadia Realty Trust 1999 Share
 Incentive Plan and 2003 Share Incentive Plan (19) (21)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.45       | Acadia
 Realty Trust 1999 Share Incentive Plan and 2003 Share Incentive Plan Deferral
 and Distribution Election Form (19) (21)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.46       | Amended,
 Restated And Consolidated Promissory Note between Acadia New Loudon, LLC and
 Greenwich Capital Financial Products, Inc. dated August 13, 2004 (19)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.47       | Amended,
 Restated And Consolidated Mortgage, Assignment Of Leases And Rents And
 Security Agreement between Acadia New Loudon, LLC and Greenwich Capital
 Financial Products, Inc. dated August 13, 2004 (19)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.51       | Mortgage,
 Assignment of Leases and Rents and Security Agreement between Acadia Crescent
 Plaza, LLC and Greenwich Capital Financial Products, Inc. dated
 August 31, 2005 (22)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

53

---



|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.52       | Mortgage,
 Assignment of Leases and Rents and Security Agreement between
 Pacesetter/Ramapo Associates and Greenwich Capital Financial Products, Inc.
 dated October 17, 2005 (22)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.53       | Loan
 Agreement between RD Elmwood Associates, L.P. and Bear Stearns Commercial
 Finance Mortgage, Inc. dated December 9, 2005 (22)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.54       | Mortgage and
 Security Agreement between RD Elmwood Associates, L.P. and Bear Stearns
 Commercial Finance Mortgage, Inc. dated December 9, 2005 (22)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.55       | Agreement
 and Plan Of Merger Dated as of December 22, 2005 by and among Acadia
 Realty Acquisition I, LLC, Ara Btc LLC, ARA MS LLC, ARA BS LLC, ARA BC LLC
 and ARA BH LLC, Acadia Investors, Inc., AII BTC LLC, AII MS LLC, AII BS LLC,
 AII BC LLC And AII BH LLC, Samuel Ginsburg 2000 Trust Agreement #1, Martin
 Ginsburg 2000 Trust Agreement #1, Martin Ginsburg, Samuel Ginsburg and Adam
 Ginsburg, and GDC SMG, LLC, GDC Beechwood, LLC, Aspen Cove Apartments, LLC
 and SMG Celebration, LLC (23)                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.56       | Amended and
 Restated Loan Agreement between Acadia Realty Limited Partnership, as lender,
 and Levitz SL Woodbridge, L.L.C., Levitz SL St. Paul, L.L.C., Levitz SL La
 Puente, L.L.C., Levitz SL Oxnard, L.L.C., Levitz SL Willowbrook, L.L.C.,
 Levitz SL Northridge, L.L.C., Levitz SL San Leandro, L.L.C., Levitz SL
 Sacramento, L.L.C., HL Brea, L.L.C., HL Deptford, L.L.C., HL Hayward, L.L.C.,
 HL San Jose, L.L.C., HL Scottsdale, L.L.C., HL Torrance, L.L.C., HL Irvine 1,
 L.L.C., HL West Covina, L.L.C., HL Glendale, L.L.C. and HL Northridge,
 L.L.C., each a Delaware limited liability company, Levitz SL Langhorne, L.P.
 and HL Fairless Hills, L.P., each a Delaware limited partnership (each,
 together with its permitted successors and assigns, aBorrower, and collectively, together
 with their respective permitted successors and assigns, Borrowers ), dated June 1, 2006
 (24)
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.57       | Consent and
 Assumption Agreement between Thor Chestnut Hill, LP, Thor Chestnut Hill II,
 LP, Acadia Chestnut, LLC, Acadia Realty Limited Partnership and Wells Fargo
 Bank, N.A. dated June 9, 2006, original Mortgage and Security Agreement
 between Thor Chestnut Hill, LP and Thor Chestnut Hill II, LP and Column
 Financial, Inc. dated June 5, 2003 and original Assignment of Leases and
 Rents from Thor Chestnut Hill, LP and Thor Chestnut Hill II, LP to Column
 Financial, Inc. dated June 2003. (24)                                                                                                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.58       | Loan
 Agreement and Promissory Note between RD Woonsocket Associates, L.P. and
 Merrill Lynch Mortgage Lending, Inc. dated September 8, 2006 (25)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.59       | Amended and
 Restated Revolving Loan Agreement dated as of December 19, 2006 by and
 among RD Abington Associates LP, Acadia Town Line, LLC, RD Methuen Associates
 LP, RD Absecon Associates, LP, RD Bloomfield Associates, LP, RD Hobson
 Associates, LP, and RD Village Associates LP, and Bank of America, N.A. and
 the First Amendment to Amended and Restated Revolving Loan Agreement dated
 February, 2007. (26)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.60       | Loan
 Agreement between Bank of America, N.A. and RD Branch Associates, LP dated
 December 19, 2006. (26)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.61       | Loan
 Agreement between 239 Greenwich Associates Limited Partnership and Wachovia
 Bank, National Association dated January 25, 2007. (28)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.62       | Revolving
 Credit Agreement between Acadia Realty Limited Partnership and Washington
 Mutual Bank dated March 29, 2007. (28)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.63       | Loan
 Agreement between Acadia Merrillville Realty, L.P. and Bear Stearns
 Commercial Mortgage, Inc dated July 2, 2007. (29)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.64       | Promissory
 Note between Acadia Merrillville Realty, L.P. and Bear Stearns Commercial
 Mortgage, Inc dated July 2, 2007. (29)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.65       | Loan
 Agreement Note between APA 216th Street and Bank of America, N.A.
 dated September 11, 2007. (29)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.66       | Promissory
 Note between APA 216th Street and Bank of America, N.A. dated
 September 11, 2007. (29)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.67       | Acquisition
 and Project Loan agreement between Acadia  PA East Fordham Acquisitions, LLC
 and Eurohypo AG, New York Branch dated October 5, 2007 (30)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

54

---



|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.68       | Building
 Loan Agreement between Acadia  PA East Fordham Acquisitions, LLC and
 Eurohypo AG, New York Branch dated October 5, 2007 (30)                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.69       | Revolving
 credit agreement between Acadia Strategic Opportunity Fund III, LLC. and Bank
 of America, N.A. dated October 10, 2007 (30)                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.70       | Mortgage
 Consolidation and Modification Agreement between Acadia Tarrytown LLC and
 Anglo Irish Bank Corporation, PLC dated October 30, 2007 (30)                                                                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.71       | Project Loan
 Agreement between P/A  Acadia Pelham Manor, LLC and Bear Stearns Commercial
 Mortgage, Inc. dated December 10, 2007 (30)                                                                                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.72       | Building
 Loan Agreement P/A  Acadia Pelham Manor, LLC and Bear Stearns Commercial
 Mortgage, Inc. dated December 10, 2007 (30)                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.73       | Project Loan
 Agreement between Acadia Atlantic Avenue, LLC and Bear Stearns Commercial
 Mortgage, Inc. dated December 26, 2007 (30)                                                                                                                                                                                                                                                                                                                 
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.74       | Building
 Loan Agreement between Acadia Atlantic Avenue, LLC and Bear Stearns
 Commercial Mortgage, Inc. dated December 26, 2007 (30)                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.75       | Certain
 information regarding the compensation arrangements with certain officers of
 registrant (Incorporated by reference to Item 5.02 of the registrants Form
 8-K filed with the SEC on
 February 4, 2008)                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.76       | Real Estate
 Purchase and Sale Agreement between Suffern Self Storage, L.L.C., Jersey City
 Self Storage, L.L.C., Linden Self Storage, L.L.C., Webster Self Storage,
 L.L.C., Bronx Self Storage, L.L.C., American Storage Properties North LLC,
 and The Storage Company LLC (collectively, as Seller) and Acadia Storage Post
 LLC, a Delaware limited liability company, as Buyer, for ten Properties and
 Storage Facilities located thereon (31)
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.77       | Real Estate
 Purchase and Sale Agreement between American Storage Properties North LLC,
 as Seller and Acadia Storage Post Metropolitan Avenue LLC, as Buyer for 4805
 Metropolitan Avenue, Unit 2, Maspeth, Queens, New York (31)                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.78       | First
 Amendment to Real Estate Purchase and Sale Agreement between Suffern Self
 Storage, L.L.C., Jersey City Self Storage, L.L.C., Linden Self Storage,
 L.L.C., Webster Self Storage, L.L.C., Bronx Self Storage, L.L.C., American
 Storage Properties North LLC, and The Storage Company LLC (collectively,
 Seller) and Acadia Storage Post LLC (Buyer) (31)                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.79       | Amended and
 Restated Agreement of Limited Partnership of the Operating Partnership (11)                                                                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.80       | First and
 Second Amendments to the Amended and Restated Agreement of Limited
 Partnership of the Operating Partnership (11)                                                                                                                                                                                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.81       | Third
 Amendment to Amended and Restated Agreement of Limited Partnership of the
 Operating Partnership (18)                                                                                                                                                                                                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.82       | Fourth
 Amendment to Amended and Restated Agreement of Limited Partnership of the
 Operating Partnership (18)                                                                                                                                                                                                                                                                                                                                        
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|21          | List of
 Subsidiaries of Acadia Realty Trust (34)                                                                                                                                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|23.1        | Consent of
 Registered Public Accounting Firm to incorporation by reference its reports into
 Forms S-3 and Forms S-8 (34)                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|31.1        | Certification
 of Chief Executive Officer pursuant to rule 13a14(a)/15d-14(a) of the
 Securities Exchange Act of 1934, as adopted pursuant to Section 302 of
 the Sarbanes-Oxley Act of 2002 (34)                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|31.2        | Certification
 of Chief Financial Officer pursuant to rule 13a14(a)/15d-14(a) of the
 Securities Exchange Act of 1934, as adopted pursuant to Section 302 of
 the Sarbanes-Oxley Act of 2002 (34)                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|32.1        | Certification
 of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (34)                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|32.2        | Certification
 of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (34)                                                                                                                                                                                                                                                                                             

55

---



|            |                                                                                                                                                         
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                             
|            |                                                                                                                                                         
|99.1        | Certificate
 of Designation of Series A Preferred Operating Partnership Units of
 Limited Partnership Interest of Acadia Realty Limited Partnership (2) 
|            |                                                                                                                                                         
|99.2        | Certificate
 of Designation of Series B Preferred Operating Partnership Units of
 Limited Partnership Interest of Acadia Realty Limited Partnership (18)

|       |                                                                                                                                                                   
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes: |                                                                                                                                                                   
|       |                                                                                                                                                                   
|(1)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form 10-K filed for the fiscal Year ended December 31, 1994 
|       |                                                                                                                                                                   
|(2)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to Companys Quarterly
 Report on Form 10-Q filed for the quarter ended June 30, 1997          
|       |                                                                                                                                                                   
|(3)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to Companys Quarterly
 Report on Form 10-Q filed for the quarter ended September 30, 1998     
|       |                                                                                                                                                                   
|(4)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to Companys Quarterly
 Report on Form 10-Q filed for the quarter ended September 30, 1998     
|       |                                                                                                                                                                   
|(5)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Registration Statement on Form S-11 (File No.33-60008)                       
|       |                                                                                                                                                                   
|(6)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form10-K filed for the fiscal year ended December 31, 1998  
|       |                                                                                                                                                                   
|(7)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form10-K filed for the fiscal year ended December 31, 1999  
|       |                                                                                                                                                                   
|(8)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Registration Statement on Form S-8 filed September 28, 1999                  
|       |                                                                                                                                                                   
|(9)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Form
 8-K filed on April 20, 1998                                             
|       |                                                                                                                                                                   
|(10)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Form
 10-K filed for the fiscal year ended December 31, 2000                  
|       |                                                                                                                                                                   
|(11)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Registration Statement on Form S-3 filed on March 3, 2000                    
|       |                                                                                                                                                                   
|(12)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to Companys Quarterly
 Report on Form 10-Q filed for the quarter ended September 30, 2001     
|       |                                                                                                                                                                   
|(13)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form 10-K filed for the fiscal year ended December 31, 2001 
|       |                                                                                                                                                                   
|(14)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to Yale Universitys
 Schedule 13D filed on September 25, 2002                                 
|       |                                                                                                                                                                   
|(15)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form 10-K filed for the fiscal year ended December 31, 2002 
|       |                                                                                                                                                                   
|(16)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Definitive Proxy Statement on Schedule 14A filed April 29, 2003.             
|       |                                                                                                                                                                   
|(17)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Current
 Report on Form 8-K filed on July 2, 2003                             
|       |                                                                                                                                                                   
|(18)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form 10-K filed for the fiscal year ended December 31, 2003 
|       |                                                                                                                                                                   
|(19)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form 10-K filed for the fiscal year ended December 31, 2004.
|       |                                                                                                                                                                   
|(20)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form 10-K filed for the fiscal year ended December 31, 2004.
|       |                                                                                                                                                                   
|(21)   | Management
 contract or compensatory plan or arrangement.                                                                                                         
|       |                                                                                                                                                                   
|(22)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form 10-K filed for the fiscal year ended December 31, 2005.
|       |                                                                                                                                                                   
|(23)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Current
 Report on Form 8-K filed on January 4, 2006                          

56

---



|       |                                                                                                                                                                   
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes: |                                                                                                                                                                   
|(24)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to Companys Quarterly
 Report on Form 10-Q filed for the quarter ended June 30, 2006          
|       |                                                                                                                                                                   
|(25)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to Companys Quarterly
 Report on Form 10-Q filed for the quarter ended September 30, 2006     
|       |                                                                                                                                                                   
|       |                                                                                                                                                                   
|(26)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Current
 Report on Form 8-K filed on January 19, 2007                         
|       |                                                                                                                                                                   
|(27)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys Annual
 Report on Form 10-K filed for the fiscal year ended December 31, 2006.
|       |                                                                                                                                                                   
|(28)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Quarterly Report on Form 10-Q filed for the quarter ended March 31, 2007.    
|       |                                                                                                                                                                   
|(29)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2007.
|       |                                                                                                                                                                   
|(30)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Quarterly Report on Form 10-K filed for the year ended December 31, 2007.    
|       |                                                                                                                                                                   
|(31)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Quarterly Report on Form 10-Q filed for the quarter ended March 31, 2008.    
|       |                                                                                                                                                                   
|(32)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Quarterly Report on Form 10-Q filed for the quarter ended March 31, 2009.    
|       |                                                                                                                                                                   
|(33)   | Incorporated
 by reference to the copy thereof filed as an Exhibit to the Companys
 Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2009.
|       |                                                                                                                                                                   
|(34)   | Filed
 herewith.                                                                                                                                                  

57

---



ACADIA REALTY TRUST AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

|                                                                                                      |  |     
|----------------------------------------------------------------------------------------------------- |  | ----
|Report of Independent Registered Public Accounting Firm                                               |  | F-2 
|Consolidated Balance Sheets as of December 31, 2009 and 2008                                          |  | F-3 
|Consolidated Statements of Income for the years ended December 31,
 2009, 2008 and 2007               |  | F-4 
|Consolidated Statements of Shareholders Equity for the years ended
 December 31, 2009, 2008 and 2007 |  | F-5 
|Consolidated Statements of Cash Flows for the years ended December
 31, 2009, 2008 and 2007           |  | F-7 
|Notes to Consolidated Financial Statements                                                            |  | F-9 
|Schedule III  Real Estate and Accumulated Depreciation                                               |  | F-43

F-1

---



Report of Independent
Registered Public Accounting Firm

The
Shareholders and Trustees of 
Acadia Realty Trust

We have
audited the accompanying consolidated balance sheets of Acadia Realty Trust and
subsidiaries (the Company) as of December 31, 2009 and 2008 and the related
consolidated statements of income, shareholders equity, and cash flows for
each of the three years in the period ended December 31, 2009. In connection
with our audits of the financial statements we have also audited the
accompanying financial statement schedule listed on page F-1. These financial
statements and schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted
our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the financial statements and schedules. We believe that our audits provide a
reasonable basis for our opinion.

In our
opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Acadia Realty Trust
and subsidiaries at December 31, 2009, and 2008 and the results of their
operations and their cash flows for each of the three years in the period ended
    December 31, 2009, in conformity with generally accepted accounting principles
in the United States of America.

Also, in our
opinion, the financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

As discussed
in Note 1 to the consolidated financial statements, the Company retrospectively
changed its method of accounting for its convertible debt instruments with the
adoption of the guidance originally issued in FSP APB 14-1 Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement) (ASC Topic 470-20, Debt with Conversion
and Other Options) effective January 1, 2009. The Company also retrospectively
changed its presentation of non-controlling interests with the adoption of the
guidance originally issued in SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements (ASC Topic 810-10, Consolidation)
effective January 1, 2009.

We also have
audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Acadia Realty Trust and subsidiaries internal
control over financial reporting as of December 31, 2009, based on criteria
established in Internal ControlIntegrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) and our report
dated March 1, 2010 expressed an unqualified opinion thereon.

/s/ BDO Seidman, LLP

New York, New
York
March 1, 2010

F-2

---



ACADIA REALTY TRUST
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                                                                                                                       |  |                        |           |      |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | --------- | ---- | - | --------- | -
|                                                                                                                                       |  | December 31,           |          
|                                                                                                                                       |  | 2009                   |           | 2008 |  
|                                                                                                                                       |  |                        |           |      |  
|                                                                                                                                       |  | (dollars in thousands) |          
|ASSETS                                                                                                                                 |  |                        |           |      |   |           |  
|Operating real estate                                                                                                                  |  |                        |           |      |   |           |  
|Land                                                                                                                                   |  | $                      | 221,740   |      | $ | 192,496   |  
|Buildings and improvements                                                                                                             |  |                        | 845,751   |      |   | 648,112   |  
|Construction in progress                                                                                                               |  |                        | 2,575     |      |   | 16,618    |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|                                                                                                                                       |  |                        | 1,070,066 |      |   | 857,226   |  
|Less: accumulated depreciation                                                                                                         |  |                        | 193,745   |      |   | 165,067   |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Net operating real estate                                                                                                              |  |                        | 876,321   |      |   | 692,159   |  
|Real estate under development                                                                                                          |  |                        | 137,340   |      |   | 234,769   |  
|Cash and cash equivalents                                                                                                              |  |                        | 93,808    |      |   | 86,691    |  
|Cash in escrow                                                                                                                         |  |                        | 8,582     |      |   | 6,794     |  
|Investments in and advances to
 unconsolidated affiliates                                                                              |  |                        | 51,712    |      |   | 54,978    |  
|Rents receivable, net                                                                                                                  |  |                        | 16,782    |      |   | 12,648    |  
|Notes receivable and preferred equity
 investment, net                                                                                 |  |                        | 125,221   |      |   | 125,587   |  
|Deferred charges, net of amortization                                                                                                  |  |                        | 28,311    |      |   | 21,899    |  
|Acquired lease intangibles, net of
 amortization                                                                                       |  |                        | 22,382    |      |   | 19,476    |  
|Prepaid expenses and other assets, net of
 amortization                                                                                |  |                        | 22,005    |      |   | 31,692    |  
|Assets of discontinued operations                                                                                                      |  |                        |          |      |   | 4,690     |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|                                                                                                                                       |  | $                      | 1,382,464 |      | $ | 1,291,383 |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                   |  |                        |           |      |   |           |  
|Mortgage notes payable                                                                                                                 |  | $                      | 732,287   |      | $ | 653,543   |  
|Convertible notes payable, net of
 unamortized discount of $2,105 and $6,597, respectively                                             |  |                        | 47,910    |      |   | 100,403   |  
|Acquired lease and other intangibles, net
 of amortization                                                                             |  |                        | 6,753     |      |   | 6,506     |  
|Accounts payable and accrued expenses                                                                                                  |  |                        | 17,548    |      |   | 22,179    |  
|Dividends and distributions payable                                                                                                    |  |                        | 7,377     |      |   | 25,514    |  
|Distributions in excess of income from, and
 investments in, unconsolidated affiliates                                                 |  |                        | 20,589    |      |   | 20,633    |  
|Other liabilities                                                                                                                      |  |                        | 17,523    |      |   | 18,896    |  
|Liabilities of discontinued operations                                                                                                 |  |                        |          |      |   | 1,481     |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Total liabilities                                                                                                                      |  |                        | 849,987   |      |   | 849,155   |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Shareholders equity:                                                                                                                  |  |                        |           |      |   |           |  
|Common shares, $.001 par value, authorized
 100,000,000 shares, issued and outstanding 39,787,018 and 32,357,530 shares,
 respectively |  |                        | 40        |      |   | 32        |  
|Additional paid-in capital                                                                                                             |  |                        | 299,014   |      |   | 218,527   |  
|Accumulated other comprehensive loss                                                                                                   |  |                        | (2,994    | )    |   | (4,508    | )
|Retained earnings                                                                                                                      |  |                        | 16,125    |      |   | 13,671    |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Total Common Shareholders equity                                                                                                       |  |                        | 312,185   |      |   | 227,722   |  
|Noncontrolling interests in subsidiaries                                                                                               |  |                        | 220,292   |      |   | 214,506   |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Total equity                                                                                                                           |  |                        | 532,477   |      |   | 442,228   |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|                                                                                                                                       |  | $                      | 1,382,464 |      | $ | 1,291,383 |  
|                                                                                                                                       |  |                        |           |      |   |           |  

The accompanying notes are an integral part
of these consolidated financial statements

F-3

---



ACADIA REALTY TRUST AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|--------------------------------------------------------------------------- |  | ----------------------------------------------- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                                            |  | Years ended December 31,                        |        
|                                                                            |  | 2009                                            |         | 2008 |   | 2007    |  
|                                                                            |  |                                                 |         |      |   |         |  
|                                                                            |  | (dollars in thousands except per share amounts) |        
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Revenues                                                                    |  |                                                 |         |      |   |         |   |   |         |  
|Minimum rents                                                               |  | $                                               | 96,239  |      | $ | 77,610  |   | $ | 65,908  |  
|Percentage rents                                                            |  |                                                 | 477     |      |   | 510     |   |   | 526     |  
|Expense reimbursements                                                      |  |                                                 | 20,982  |      |   | 16,789  |   |   | 13,259  |  
|Lease termination income                                                    |  |                                                 | 2,751   |      |   | 23,961  |   |   |        |  
|Other property income                                                       |  |                                                 | 2,895   |      |   | 1,099   |   |   | 855     |  
|Management fee income                                                       |  |                                                 | 1,961   |      |   | 3,434   |   |   | 4,064   |  
|Interest income                                                             |  |                                                 | 20,340  |      |   | 14,533  |   |   | 10,315  |  
|Other income                                                                |  |                                                 | 1,700   |      |   |        |   |   | 165     |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Total revenues                                                              |  |                                                 | 147,345 |      |   | 137,936 |   |   | 95,092  |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Operating Expenses                                                          |  |                                                 |         |      |   |         |   |   |         |  
|Property operating                                                          |  |                                                 | 29,829  |      |   | 24,092  |   |   | 13,792  |  
|Real estate taxes                                                           |  |                                                 | 16,812  |      |   | 12,123  |   |   | 9,415   |  
|General and administrative                                                  |  |                                                 | 22,013  |      |   | 24,545  |   |   | 22,929  |  
|Depreciation and amortization                                               |  |                                                 | 37,218  |      |   | 33,334  |   |   | 25,114  |  
|Abandonment of project costs                                                |  |                                                 | 2,487   |      |   | 630     |   |   | 129     |  
|Reserve for notes receivable                                                |  |                                                 | 1,734   |      |   | 4,392   |   |   |        |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Total operating expenses                                                    |  |                                                 | 110,093 |      |   | 99,116  |   |   | 71,379  |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Operating income                                                            |  |                                                 | 37,252  |      |   | 38,820  |   |   | 23,713  |  
|Equity in (losses) earnings of unconsolidated affiliates                    |  |                                                 | (1,529  | )    |   | 19,906  |   |   | 6,619   |  
|Impairment of investment in unconsolidated affiliate                        |  |                                                 | (3,768  | )    |   |        |   |   |        |  
|Interest and other finance expense                                          |  |                                                 | (32,154 | )    |   | (28,893 | ) |   | (24,564 | )
|Gain on debt extinguishment                                                 |  |                                                 | 7,057   |      |   | 1,523   |   |   |        |  
|Gain on sale of land                                                        |  |                                                 |        |      |   | 763     |   |   |        |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Income from continuing operations before income taxes                       |  |                                                 | 6,858   |      |   | 32,119  |   |   | 5,768   |  
|Income tax expense                                                          |  |                                                 | (1,541  | )    |   | (3,362  | ) |   | (297    | )
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Income from continuing operations                                           |  |                                                 | 5,317   |      |   | 28,757  |   |   | 5,471   |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Discontinued operations                                                     |  |                                                 |         |      |   |         |   |   |         |  
|Operating income from discontinued operations                               |  |                                                 | 246     |      |   | 1,498   |   |   | 1,975   |  
|Gain on sale of property                                                    |  |                                                 | 7,143   |      |   | 7,182   |   |   | 5,271   |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Income from discontinued operations                                         |  |                                                 | 7,389   |      |   | 8,680   |   |   | 7,246   |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Extraordinary item                                                          |  |                                                 |         |      |   |         |   |   |         |  
|Share of extraordinary gain from investment in unconsolidated
 affiliate    |  |                                                 |        |      |   |        |   |   | 30,200  |  
|Income tax provision                                                        |  |                                                 |        |      |   |        |   |   | (2,356  | )
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Income from extraordinary item                                              |  |                                                 |        |      |   |        |   |   | 27,844  |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Net income                                                                  |  |                                                 | 12,706  |      |   | 37,437  |   |   | 40,561  |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Loss (income) attributable to noncontrolling interests in
 subsidiaries:    |  |                                                 |         |      |   |         |   |   |         |  
|Continuing operations                                                       |  |                                                 | 23,282  |      |   | (11,630 | ) |   | 9,558   |  
|Discontinued operations                                                     |  |                                                 | (4,855  | )    |   | (739    | ) |   | (606    | )
|Extraordinary item                                                          |  |                                                 |        |      |   |        |   |   | (24,167 | )
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Net loss (income) attributable to noncontrolling interests in
 subsidiaries |  |                                                 | 18,427  |      |   | (12,369 | ) |   | (15,215 | )
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Net income attributable to Common Shareholders                              |  | $                                               | 31,133  |      | $ | 25,068  |   | $ | 25,346  |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Income from continuing operations attributable to Common Shareholders       |  | $                                               | 28,599  |      | $ | 17,127  |   | $ | 15,029  |  
|Income from discontinued operations attributable to Common
 Shareholders    |  |                                                 | 2,534   |      |   | 7,941   |   |   | 6,640   |  
|Income from extraordinary item attributable to Common Shareholders          |  |                                                 |        |      |   |        |   |   | 3,677   |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Net income attributable to Common Shareholders                              |  | $                                               | 31,133  |      | $ | 25,068  |   | $ | 25,346  |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Basic earnings per share                                                    |  |                                                 |         |      |   |         |   |   |         |  
|Income from continuing operations                                           |  | $                                               | 0.75    |      | $ | 0.51    |   | $ | 0.45    |  
|Income from discontinued operations                                         |  |                                                 | 0.07    |      |   | 0.23    |   |   | 0.20    |  
|Income from extraordinary item                                              |  |                                                 |        |      |   |        |   |   | 0.11    |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Basic earnings per share                                                    |  | $                                               | 0.82    |      | $ | 0.74    |   | $ | 0.76    |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Diluted earnings per share                                                  |  |                                                 |         |      |   |         |   |   |         |  
|Income from continuing operations                                           |  | $                                               | 0.75    |      | $ | 0.50    |   | $ | 0.44    |  
|Income from discontinued operations                                         |  |                                                 | 0.07    |      |   | 0.23    |   |   | 0.19    |  
|Income from extraordinary item                                              |  |                                                 |        |      |   |        |   |   | 0.11    |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  
|Diluted earnings per share                                                  |  | $                                               | 0.82    |      | $ | 0.73    |   | $ | 0.74    |  
|                                                                            |  |                                                 |         |      |   |         |   |   |         |  

The accompanying notes are an integral part
of these consolidated financial statements

F-4

---



ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(amounts in thousands, except per share amounts)


|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------ | ----------------- | - | --------------------------------------- | -------- | - | -------- | ------------------------------------ | - | ------------------ | - | ------ | ------- | - | - | ------- | - | - | ------- | - | - | ------- | -
|                                                                                                                   |  |               |        |                   |   | Accumulated
 Other
 Comprehensive
 Loss |          |   |          | Total
 Common
 Shareholders
 Equity |   |                    |   |        |        
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |  
|                                                                                                                   |  | Common Shares |        | AdditionalPaid-in |   |                                         | Retained |   |          | Noncontrolling                       |   | TotalShareholders |  
|                                                                                                                   |  | Shares        |        | Amount            |   | Capital                                 |          |   | Earnings |                                      |   | Interests          |   | Equity |        
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |  
|Balance as originally stated at January 1, 2007                                                                    |  |               | 31,773 |                   | $ | 31                                      |          | $ | 227,555  |                                      | $ | (234               | ) | $      | 13,767  |   | $ | 241,119 |   | $ | 113,736 |   | $ | 354,855 |  
|Adjustment Due to ASC 470-20 cumulative effect of accounting change                                                |  |               |        |                   |   |                                         |          |   | 9,544    |                                      |   |                    |   |        | (96     | ) |   | 9,448   |   |   |         |   |   | 9,448   |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|Revised balance as of January 1, 2007                                                                              |  |               | 31,773 |                   |   | 31                                      |          |   | 237,099  |                                      |   | (234               | ) |        | 13,671  |   |   | 250,567 |   |   | 113,736 |   |   | 364,303 |  
|Conversion of 4,000 Series B Preferred OP Units to Common Shares by
 limited partners of the Operating Partnership |  |               | 312    |                   |   |                                        |          |   | 4,000    |                                      |   |                   |   |        |        |   |   | 4,000   |   |   | (4,000  | ) |   |        |  
|Employee Restricted Share awards                                                                                   |  |               | 103    |                   |   | 1                                       |          |   | 3,151    |                                      |   |                   |   |        |        |   |   | 3,152   |   |   | 134     |   |   | 3,286   |  
|Dividends declared ($1.0325 per Common Share)                                                                      |  |               |       |                   |   |                                        |          |   | (8,349   | )                                    |   |                   |   |        | (25,346 | ) |   | (33,695 | ) |   | (690    | ) |   | (34,385 | )
|Employee exercise of 17,474 options to purchase Common Shares                                                      |  |               | 17     |                   |   |                                        |          |   | 174      |                                      |   |                   |   |        |        |   |   | 174     |   |   |        |   |   | 174     |  
|Common Shares issued under Employee Share Purchase Plan                                                            |  |               | 7      |                   |   |                                        |          |   | 183      |                                      |   |                   |   |        |        |   |   | 183     |   |   |        |   |   | 183     |  
|Issuance of Common Shares to Trustees                                                                              |  |               | 13     |                   |   |                                        |          |   | 346      |                                      |   |                   |   |        |        |   |   | 346     |   |   |        |   |   | 346     |  
|Employee Restricted Shares cancelled                                                                               |  |               | (41    | )                 |   |                                        |          |   | (1,094   | )                                    |   |                   |   |        |        |   |   | (1,094  | ) |   |        |   |   | (1,094  | )
|Conversion options on Convertible Notes issued (Note 11)                                                           |  |               |       |                   |   |                                        |          |   | 1,457    |                                      |   |                   |   |        |        |   |   | 1,457   |   |   |        |   |   | 1,457   |  
|Noncontrolling interest distributions                                                                              |  |               |       |                   |   |                                        |          |   |         |                                      |   |                   |   |        |        |   |   |        |   |   | (63,691 | ) |   | (63,691 | )
|Noncontrolling interest contributions                                                                              |  |               |       |                   |   |                                        |          |   |         |                                      |   |                   |   |        |        |   |   |        |   |   | 110,542 |   |   | 110,542 |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|Net income                                                                                                         |  |               |       |                   |   |                                        |          |   |         |                                      |   |                   |   |        | 25,346  |   |   | 25,346  |   |   | 15,216  |   |   | 40,562  |  
|Unrealized loss on valuation of swap agreements                                                                    |  |               |       |                   |   |                                        |          |   |         |                                      |   | (921               | ) |        |        |   |   | (921    | ) |   | (136    | ) |   | (1,057  | )
|Amortization of derivative instrument                                                                              |  |               |       |                   |   |                                        |          |   |         |                                      |   | 202                |   |        |        |   |   | 202     |   |   |        |   |   | 202     |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|Total comprehensive income                                                                                         |  |               |       |                   |   |                                        |          |   |         |                                      |   |                   |   |        |        |   |   | 24,627  |   |   | 15,080  |   |   | 39,707  |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|Balance at December 31, 2007                                                                                       |  |               | 32,184 |                   |   | 32                                      |          |   | 236,967  |                                      |   | (953               | ) |        | 13,671  |   |   | 249,717 |   |   | 171,111 |   |   | 420,828 |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|Employee Restricted Share awards                                                                                   |  |               | 137    |                   |   |                                        |          |   | 2,917    |                                      |   |                   |   |        |        |   |   | 2,917   |   |   | 1,863   |   |   | 4,780   |  
|Dividends declared ($1.39 per Common Share)                                                                        |  |               |       |                   |   |                                        |          |   | (20,385  | )                                    |   |                   |   |        | (25,068 | ) |   | (45,453 | ) |   | (1,192  | ) |   | (46,645 | )
|Employee exercise of 110,245 options to purchase Common Shares                                                     |  |               | 110    |                   |   |                                        |          |   | 841      |                                      |   |                   |   |        |        |   |   | 841     |   |   |        |   |   | 841     |  
|Common Shares issued under Employee Share Purchase Plan                                                            |  |               | 7      |                   |   |                                        |          |   | 180      |                                      |   |                   |   |        |        |   |   | 180     |   |   |        |   |   | 180     |  
|Issuance of Common Shares to Trustees                                                                              |  |               | 2      |                   |   |                                        |          |   | 81       |                                      |   |                   |   |        |        |   |   | 81      |   |   |        |   |   | 81      |  
|Employee Restricted Shares cancelled                                                                               |  |               | (83    | )                 |   |                                        |          |   | (1,997   | )                                    |   |                   |   |        |        |   |   | (1,997  | ) |   |        |   |   | (1,997  | )
|Conversion options on Convertible Notes purchased (Note 11)                                                        |  |               |       |                   |   |                                        |          |   | (77      | )                                    |   |                   |   |        |        |   |   | (77)    |   |   |        |   |   | (77     | )
|Noncontrolling interest distributions                                                                              |  |               |       |                   |   |                                        |          |   |         |                                      |   |                   |   |        |        |   |   |        |   |   | (15,347 | ) |   | (15,347 | )
|Noncontrolling interest contributions                                                                              |  |               |       |                   |   |                                        |          |   |         |                                      |   |                   |   |        |        |   |   |        |   |   | 46,014  |   |   | 46,014  |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|Net income                                                                                                         |  |               |       |                   |   |                                        |          |   |         |                                      |   |                   |   |        | 25,068  |   |   | 25,068  |   |   | 12,369  |   |   | 37,437  |  
|Unrealized loss on valuation of swap agreements                                                                    |  |               |       |                   |   |                                        |          |   |         |                                      |   | (4,179             | ) |        |        |   |   | (4,179  | ) |   | (421    | ) |   | (4,600  | )
|Reclassification of realized interest on swap agreements                                                           |  |               |       |                   |   |                                        |          |   |         |                                      |   | 624                |   |        |        |   |   | 624     |   |   | 109     |   |   | 733     |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|Total comprehensive income                                                                                         |  |               |       |                   |   |                                        |          |   |         |                                      |   |                   |   |        |        |   |   | 21,513  |   |   | 12,057  |   |   | 33,570  |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                                   |  |               |        |                   |   |                                         |          |   |          |                                      |   |                    |   |        |         |   |   |         |   |   |         |   |   |         |  
|Balance at December 31, 2008                                                                                       |  |               | 32,357 |                   |   | 32                                      |          |   | 218,527  |                                      |   | (4,508             | ) |        | 13,671  |   |   | 227,722 |   |   | 214,506 |   |   | 442,228 |  

F-5

---



ACADIA REALTY TRUST AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY 
(amounts in thousands, except per share amounts)

|                                                                                                 |  |               |        |        |   |                              |  |                                         |                         |   |   |                                |   |   |         |                          |   |         |   |   |         |   |   |         |  
|------------------------------------------------------------------------------------------------ |  | ------------- | ------ | ------ | - | ---------------------------- |  | --------------------------------------- | ----------------------- | - | - | ------------------------------ | - | - | ------- | ------------------------ | - | ------- | - | - | ------- | - | - | ------- | -
|                                                                                                 |  |               |        |        |   | Additional
 Paid-in
 Capital |  | Accumulated
 Other
 Comprehensive
 Loss |                         |   |   | TotalCommonShareholdersEquity |   |   |         | TotalShareholdersEquity |  
|                                                                                                 |  |               |        |        |   |                              |  |                                         |                         |   |   |                                |  
|                                                                                                 |  | Common Shares |        |        |   | Retained
 Earnings           |  |                                         | NoncontrollingInterests |   |  
|                                                                                                 |  | Shares        |        | Amount |   |                              |  |                                         |                         |   |  
|                                                                                                 |  |               |        |        |   |                              |  |                                         |                         |   |   |                                |   |   |         |                          |  
|Conversion of 15,666 OP Units to Common Shares by limited partners of
 the Operating Partnership |  |               | 16     |        |   |                             |  |                                         | 90                      |   |   |                               |   |   |        |                          |   | 90      |   |   | (90     | ) |   |        |  
|Issuance of Common Shares through special dividend                                               |  |               | 1,287  |        |   | 2                            |  |                                         | 16,190                  |   |   |                               |   |   |        |                          |   | 16,192  |   |   |        |   |   | 16,192  |  
|Employee Restricted Share awards                                                                 |  |               | 253    |        |   |                             |  |                                         | 2,957                   |   |   |                               |   |   |        |                          |   | 2,957   |   |   | 890     |   |   | 3,847   |  
|Dividends declared ($0.75 per Common Share)                                                      |  |               |       |        |   |                             |  |                                         |                        |   |   |                               |   |   | (28,679 | )                        |   | (28,679 | ) |   | (795    | ) |   | (29,474 | )
|Employee exercise of 258,900 options to purchase Common Shares                                   |  |               | 259    |        |   |                             |  |                                         | 1,556                   |   |   |                               |   |   |        |                          |   | 1,556   |   |   |        |   |   | 1,556   |  
|Common Shares issued under Employee Share Purchase Plan                                          |  |               | 9      |        |   |                             |  |                                         | 106                     |   |   |                               |   |   |        |                          |   | 106     |   |   |        |   |   | 106     |  
|Issuance of Common Shares to Trustees                                                            |  |               | 25     |        |   |                             |  |                                         | 635                     |   |   |                               |   |   |        |                          |   | 635     |   |   |        |   |   | 635     |  
|Employee Restricted Shares cancelled                                                             |  |               | (359   | )      |   |                             |  |                                         | (5,423                  | ) |   |                               |   |   |        |                          |   | (5,423  | ) |   |        |   |   | (5,423  | )
|Issuance of Common Shares, net of issuance costs                                                 |  |               | 5,750  |        |   | 6                            |  |                                         | 65,216                  |   |   |                               |   |   |        |                          |   | 65,222  |   |   |        |   |   | 65,222  |  
|Deferred shares converted to Common Shares                                                       |  |               | 190    |        |   |                             |  |                                         |                        |   |   |                               |   |   |        |                          |   |        |   |   |        |   |   |        |  
|Conversion options on Convertible Notes purchased (Note 11)                                      |  |               |       |        |   |                             |  |                                         | (840                    | ) |   |                               |   |   |        |                          |   | (840    | ) |   |        |   |   | (840    | )
|Noncontrolling interest distributions                                                            |  |               |       |        |   |                             |  |                                         |                        |   |   |                               |   |   |        |                          |   |        |   |   | (1,624  | ) |   | (1,624  | )
|Noncontrolling interest contributions                                                            |  |               |       |        |   |                             |  |                                         |                        |   |   |                               |   |   |        |                          |   |        |   |   | 25,653  |   |   | 25,653  |  
|Net income                                                                                       |  |               |       |        |   |                             |  |                                         |                         |   |   |                               |   |   | 31,133  |                          |   | 31,133  |   |   | (18,427 | ) |   | 12,706  |  
|Unrealized loss on valuation of swap agreements                                                  |  |               |       |        |   |                             |  |                                         |                        |   |   | (912                           | ) |   |        |                          |   | (912    | ) |   | 319     |   |   | (593    | )
|Reclassification of realized interest on swap agreements                                         |  |               |       |        |   |                             |  |                                         |                        |   |   | 2,426                          |   |   |        |                          |   | 2,426   |   |   | (140    | ) |   | 2,286   |  
|                                                                                                 |  |               |        |        |   |                              |  |                                         |                         |   |   |                                |   |   |         |                          |   |         |   |   |         |   |   |         |  
|Total comprehensive income (loss)                                                                |  |               |       |        |   |                             |  |                                         |                        |   |   |                               |   |   |        |                          |   | 32,647  |   |   | (18,248 | ) |   | 14,399  |  
|                                                                                                 |  |               |        |        |   |                              |  |                                         |                         |   |   |                                |   |   |         |                          |   |         |   |   |         |   |   |         |  
|Balance at December 31, 2009                                                                     |  |               | 39,787 |        | $ | 40                           |  | $                                       | 299,014                 |   | $ | (2,994                         | ) | $ | 16,125  |                          | $ | 312,185 |   | $ | 220,292 |   | $ | 532,477 |  
|                                                                                                 |  |               |        |        |   |                              |  |                                         |                         |   |   |                                |   |   |         |                          |   |         |   |   |         |   |   |         |  
|                                                                                                 |  |               |        |        |   |                              |  |                                         |                         |   |   |                                |   |   |         |                          |   |         |   |   |         |   |   |         |  

The accompanying notes are an integral part
of these consolidated financial statements.

F-6

---



ACADIA REALTY TRUST AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                   |  |                          |          |      |   |          |   |   |          |  
|---------------------------------------------------------------------------------- |  | ------------------------ | -------- | ---- | - | -------- | - | - | -------- | -
|                                                                                   |  | Years ended December 31, |         
|                                                                                   |  | 2009                     |          | 2008 |   | 2007     |  
|                                                                                   |  |                          |          |      |   |          |  
|                                                                                   |  | (dollars
in thousands)   |         
|CASH FLOWS FROM OPERATING ACTIVITIES:                                              |  |                          |          |      |   |          |   |   |          |  
|Net income                                                                         |  | $                        | 12,706   |      | $ | 37,437   |   | $ | 40,561   |  
|Adjustments to reconcile net income to net cash provided by operating
 activities: |  |                          |          |      |   |          |   |   |          |  
|Depreciation and amortization                                                      |  |                          | 37,242   |      |   | 34,908   |   |   | 28,361   |  
|Gain on sale of property                                                           |  |                          | (7,143   | )    |   | (7,945   | ) |   | (5,271   | )
|Gain on debt extinguishment                                                        |  |                          | (7,057   | )    |   | (1,523   | ) |   |         |  
|Amortization of lease intangibles                                                  |  |                          | 5,006    |      |   | 6,856    |   |   | 722      |  
|Amortization of mortgage note premium                                              |  |                          | (36      | )    |   | (782     | ) |   | (111     | )
|Amortization of discount on convertible
 debt                                      |  |                          | 1,280    |      |   | 2,101    |   |   | 1,991    |  
|Non-cash accretion of notes receivable                                             |  |                          | (5,352   | )    |   | (2,367   | ) |   | (148     | )
|Share compensation expense                                                         |  |                          | 3,969    |      |   | 3,434    |   |   | 3,285    |  
|Equity
     in (earnings) losses of unconsolidated affiliates                      |  |                          | 1,529    |      |   | (19,906  | ) |   | (36,819  | )
|Impairment of investment in unconsolidated
 affiliate                              |  |                          | 3,768    |      |   |         |   |   |         |  
|Distributions of operating income from
 unconsolidated affiliates                  |  |                          | 880      |      |   | 14,420   |   |   | 36,666   |  
|Abandonment of project costs                                                       |  |                          | 2,487    |      |   | 630      |   |   | 129      |  
|Amortization of derivative settlement
 included in interest expense                |  |                          |         |      |   |         |   |   | 202      |  
|Reserve for notes receivable                                                       |  |                          | 1,734    |      |   | 4,392    |   |   |         |  
|Provision for bad debt                                                             |  |                          | 4,132    |      |   | 3,593    |   |   | 881      |  
|Changes in assets and liabilities:                                                 |  |                          |          |      |   |          |   |   |          |  
|Changes in
 assets and liabilities                                                 |  |                          |          |      |   |          |   |   |          |  
|Cash in escrows                                                                    |  |                          | (1,788   | )    |   | (157     | ) |   | 667      |  
|Rents receivable                                                                   |  |                          | (8,370   | )    |   | (2,305   | ) |   | (2,061   | )
|Prepaid expenses and other assets, net                                             |  |                          | 8,156    |      |   | (15,865  | ) |   | 24,074   |  
|Accounts payable and accrued expenses                                              |  |                          | (5,902   | )    |   | 8,368    |   |   | 4,962    |  
|Other liabilities                                                                  |  |                          | 221      |      |   | 1,228    |   |   | 7,203    |  
|                                                                                   |  |                          |          |      |   |          |   |   |          |  
|                                                                                   |  |                          |          |      |   |          |   |   |          |  
|Net cash
 provided by operating activities                                         |  |                          | 47,462   |      |   | 66,517   |   |   | 105,294  |  
|                                                                                   |  |                          |          |      |   |          |   |   |          |  
|                                                                                   |  |                          |          |      |   |          |   |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                              |  |                          |          |      |   |          |   |   |          |  
|Investment in real estate and improvements                                         |  |                          | (127,322 | )    |   | (245,033 | ) |   | (210,356 | )
|Deferred acquisition and leasing costs                                             |  |                          | (11,368  | )    |   | (6,068   | ) |   | (1,746   | )
|Investments in and advances to
 unconsolidated affiliates                          |  |                          | (5,603   | )    |   | (7,918   | ) |   | (39,712  | )
|Return of capital from unconsolidated affiliates                                   |  |                          | 4,705    |      |   | 4,052    |   |   | 26,625   |  
|Repayments of notes receivable                                                     |  |                          | 13,614   |      |   | 19,922   |   |   | 11,071   |  
|Advances on notes receivable                                                       |  |                          | (9,362   | )    |   | (90,847  | ) |   | (14,548  | )
|Proceeds from sale of property                                                     |  |                          | 11,956   |      |   | 23,627   |   |   | 19,668   |  
|                                                                                   |  |                          |          |      |   |          |   |   |          |  
|                                                                                   |  |                          |          |      |   |          |   |   |          |  
|Net cash
 used in investing activities                                             |  |                          | (123,380 | )    |   | (302,265 | ) |   | (208,998 | )
|                                                                                   |  |                          |          |      |   |          |   |   |          |  

F-7

---



ACADIA REALTY TRUST AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|--------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | -------- | ---- | - | ------- | - | - | -------- | -
|                                                                                                                      |  | Years ended December 31, |         
|                                                                                                                      |  | 2009                     |          | 2008 |   | 2007    |  
|                                                                                                                      |  |                          |          |      |   |         |  
|                                                                                                                      |  | (dollars
in thousands)   |         
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                 |  |                          |          |      |   |         |   |   |          |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Principal payments on mortgage notes                                                                                  |  |                          | (182,610 | )    |   | (68,412 | ) |   | (165,451 | )
|Proceeds received on mortgage notes                                                                                   |  |                          | 260,065  |      |   | 281,192 |   |   | 222,218  |  
|Purchase of convertible notes                                                                                         |  |                          | (46,736  | )    |   | (6,042  | ) |   |         |  
|Proceeds received on convertible notes                                                                                |  |                          |         |      |   |        |   |   | 15,000   |  
|Increase in deferred financing and other
 costs                                                                       |  |                          | (1,755   | )    |   | (1,763  | ) |   | (4,128   | )
|Capital contributions from noncontrolling
 interests in partially-owned affiliates                                    |  |                          | 25,653   |      |   | 46,014  |   |   | 110,542  |  
|Distributions to noncontrolling interests
 in partially-owned affiliates                                              |  |                          | (1,624   | )    |   | (15,347 | ) |   | (63,662  | )
|Dividends paid to Common Shareholders                                                                                 |  |                          | (30,163  | )    |   | (34,710 | ) |   | (26,039  | )
|Distributions to noncontrolling interests
 in Operating Partnership                                                   |  |                          | (1,222   | )    |   | (809    | ) |   | (527     | )
|Distributions on preferred Operating
 Partnership Units to noncontrolling interests                                   |  |                          | (33      | )    |   | (27     | ) |   | (86      | )
|Proceeds from issuance of Common Shares,
 net of issuance costs                                                       |  |                          | 65,222   |      |   |        |   |   |         |  
|Cancellation of Common Shares                                                                                         |  |                          | (5,424   | )    |   | (2,102  | ) |   | (1,094   | )
|Common Shares issued under Employee Share
 Purchase Plan                                                              |  |                          | 106      |      |   | 261     |   |   | 529      |  
|Exercise of options to purchase Common
 Shares                                                                        |  |                          | 1,556    |      |   | 841     |   |   | 174      |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Net cash provided by financing activities                                                                             |  |                          | 83,035   |      |   | 199,096 |   |   | 87,476   |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Increase (decrease) in cash and cash
 equivalents                                                                     |  |                          | 7,117    |      |   | (36,652 | ) |   | (16,228  | )
|Cash and cash equivalents, beginning of period                                                                        |  |                          | 86,691   |      |   | 123,343 |   |   | 139,571  |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Cash and cash equivalents, end of period                                                                              |  | $                        | 93,808   |      | $ | 86,691  |   | $ | 123,343  |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Supplemental disclosure of cash flow information:                                                                     |  |                          |          |      |   |         |   |   |          |  
|Cash paid during the period for interest,
 including capitalized interest of $3,516, $6,779, and $3,031, respectively |  | $                        | 33,699   |      | $ | 33,778  |   | $ | 26,705   |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Cash paid for income taxes                                                                                            |  | $                        | 777      |      | $ | 6,633   |   | $ | 348      |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Supplemental disclosure of non-cash
 investing and financing activities:                                              |  |                          |          |      |   |         |   |   |          |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Acquisition of real estate through assumption of debt                                                                 |  | $                        |         |      | $ | 39,967  |   | $ |         |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Issuance of notes receivable in connection with sale of real estate                                                   |  | $                        |         |      | $ |        |   | $ | (18,000  | )
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  
|Dividends paid through the issuance of Common Shares                                                                  |  | $                        | 16,192   |      | $ |        |   | $ |         |  
|                                                                                                                      |  |                          |          |      |   |         |   |   |          |  

The accompanying notes are an integral part
of these consolidated financial statements.

F-8

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies

Acadia Realty
Trust (the Trust) and subsidiaries (collectively, the Company) is a fully
integrated, self-managed and self-administered equity real estate investment
trust (REIT) focused primarily on the ownership, acquisition, redevelopment
and management of retail properties, including neighborhood and community
shopping centers and mixed-use properties with retail components.

As of December
31, 2009, the Company operated 79 properties, which it owns or has an ownership
interest in, principally located in the Northeast, Mid-Atlantic and Midwest
regions of the United States.

All of the
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 a controlling interest. As of December 31,
2009, the Trust controlled 98% of the Operating Partnership as the sole general
partner. As the general partner, the Trust is entitled to share, in proportion
to its percentage interest, in the cash distributions and profits and losses of
the Operating Partnership. The limited partners represent entities or
individuals who contributed their interests in certain properties or entities
to the Operating Partnership in exchange for common or preferred units of
limited partnership interest (Common or Preferred OP Units). Limited partners
holding Common OP Units are generally entitled to exchange their units on a
one-for-one basis for common shares of beneficial interest of the Trust
(Common Shares). This structure is referred to as an umbrella partnership
REIT or UPREIT.

During
September of 2001, the Company formed a partnership, Acadia Strategic
Opportunity Fund I, LP (Fund I), and during August of 2004 formed a limited
liability company, Acadia Mervyn Investors I, LLC (Mervyns I), with four
institutional investors. The Operating Partnership committed a total of $20.0
million to Fund I and Mervyns I, and the four institutional shareholders
committed a total of $70.0 million for the purpose of acquiring real estate
investments. As of December 31, 2009, Fund I was fully invested, with the
Operating Partnership having contributed $16.5 million to Fund I and $2.7
million to Mervyns I.

The Operating
Partnership is the general partner of Fund I and sole managing member of
Mervyns I, with a 22.2% interest in both Fund I and Mervyns I and is also
entitled to a profit participation in excess of its invested capital based on
certain investment return thresholds (Promote). Cash flow is distributed
pro-rata to the partners and members (including the Operating Partnership)
until they receive a 9% cumulative return (Preferred Return), and the return
of all capital contributions. Thereafter, remaining cash flow (which is net of
distributions and fees to the Operating Partnership for management, asset
management, leasing, construction and legal services) is distributed 80% to the
partners (including the Operating Partnership) and 20% to the Operating
Partnership as a Promote. As all contributed capital and accumulated preferred return
has been distributed to investors, the Operating Partnership is currently
entitled to a Promote on all earnings and distributions.

During June of
2004, the Company formed Acadia Strategic Opportunity Fund II, LLC (Fund II),
and during August 2004 formed Acadia Mervyn Investors II, LLC (Mervyns II),
with the investors from Fund I as well as two additional institutional
investors with a total of $300.0 million of committed discretionary capital.
The Operating Partnerships share of committed capital is $60.0 million. The
Operating Partnership is the managing member with a 20% interest in both Fund
II and Mervyns II. The terms and structure of Fund II and Mervyns II are
substantially the same as Fund I and Mervyns I, including the Promote structure,
with the exception that the Preferred Return is 8%. As of December 31, 2009,
the Operating Partnership had contributed $37.1 million to Fund II and $7.6
million to Mervyns II.

During May of
2007, the Company formed Acadia Strategic Opportunity Fund III LLC (Fund III)
with fourteen institutional investors, including a majority of the investors
from Fund I and Fund II with a total of $503.0 million of committed
discretionary capital. The Operating Partnerships share of the invested
capital is $100.0 million and it is the managing member with a 19.9% interest
in Fund III. The terms and structure of Fund III are substantially the same as
the previous Funds I and II, including the Promote structure, with the
exception that the Preferred Return is 6%. As of December 31, 2009, the
Operating Partnership had contributed $19.2 million to Fund III.

Principles of Consolidation

The
consolidated financial statements include the consolidated accounts of the
Company and its controlling investments in partnerships and limited liability
companies in which the Company is presumed to have control in accordance
Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) Topic 810 Consolidation (formerly Emerging Issues Task Force (EITF)
Issue No. 04-5) (ASC Topic 810). The ownership interests of other investors
in these entities are recorded as noncontrolling interests. All significant
intercompany balances and transactions have been eliminated in consolidation.
Investments in entities for which the Company has the ability to exercise
significant influence over, but does not have financial or operating control,
are accounted for using the equity method of accounting. Accordingly, the
Companys share of the earnings (or loss) of these entities are included in
consolidated net income.

F-9

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued

Principles of Consolidation, continued

Variable
interest entities within the scope of ASC Topic 810 (formerly FASB
Interpretation No. 46-R, Consolidation of Variable Interest Entities) are
required to be consolidated by their primary beneficiary. The primary
beneficiary of a variable interest entity is determined to be the party that
bears a majority of the entitys expected losses, receives a majority of its
expected returns, or both. Management has evaluated the applicability of ASC
Topic 810 to its investments in certain joint ventures and determined that
these joint ventures are not variable interest entities or that the Company is
not the primary beneficiary and, therefore, consolidation of these ventures is
not required. These investments are accounted for using the equity method.

Investments in and Advances to Unconsolidated
Joint Ventures

The Company
accounts for its investments in unconsolidated joint ventures using the equity
method as it does not exercise control over significant asset decisions such
    as buying, selling or financing nor is it the primary beneficiary under ASC
    Topic 810, as discussed above. The Company does have significant influence
    over the investments which requires equity method accounting. Under the equity
    method, the Company increases its investment for its proportionate share
    of net income and contributions to the joint venture and decreases its investment
    balance by recording its proportionate share of net loss and distributions.
    The Company recognizes income for distributions in excess of its investment
    where there is no recourse to the Company. For investments in which there
    is recourse to the Company, distributions in excess of the investment are
    recorded as a liability. Although the Company accounts for its investment
    in Albertsons
    (Note 4) under the equity method of accounting, the Company adopted the policy
    of not recording its equity in earnings or losses of this unconsolidated
    affiliate until it receives the audited financial statements of Albertsons
    to support the equity earnings or losses in accordance with ASC Topic 323 Investments  Equity
    Method and Joint Ventures (formerly Accounting Principles Board (APB)
18 Equity Method of
Accounting for Investments in Common Stock).

The Company
periodically reviews its investment in unconsolidated joint ventures for other
than temporary losses in investment value. Any decline that is not expected to
    be recovered is considered other than temporary and an impairment charge
    is recorded as a reduction in the carrying value of the investment. During
    the year ended December 31, 2009, the Company recorded a $3.8 million impairment
charge related to a Fund I unconsolidated joint venture. No impairment charges
related to the Companys investment in unconsolidated joint ventures were
recognized for the years ended December 31, 2008 and 2007.

Use of Estimates

Accounting
principles generally accepted in the United States of America (GAAP) require
the Companys management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. The most
significant assumptions and estimates relate to the valuation of real estate,
depreciable lives, revenue recognition and the collectability of trade accounts
receivable. Application of these assumptions requires the exercise of judgment
as to future uncertainties and, as a result, actual results could differ from
these estimates.

Real Estate

Real estate
assets are stated at cost less accumulated depreciation. Expenditures for
acquisition, development, construction and improvement of properties, as well
as significant renovations are capitalized. Interest costs are capitalized
until construction is substantially complete. Construction in progress includes
costs for significant property expansion and redevelopment. Depreciation is
computed on the straight-line basis over estimated useful lives of 30 to 40
years for buildings, the shorter of the useful life or lease term for tenant
improvements and five years for furniture, fixtures and equipment. Expenditures
for maintenance and repairs are charged to operations as incurred.

Upon
acquisitions of real estate, the Company assesses the fair value of acquired
assets (including land, buildings and improvements, and identified intangibles
such as above and below market leases and acquired in-place leases and customer
relationships) and acquired liabilities in accordance with ASC Topic 805
Business Combinations (formerly SFAS No. 141, Business Combinations)

F-10

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued

Real Estate, continued

and ASC Topic
350 Intangibles  Goodwill and Other (formerly SFAS No. 142, Goodwill
and Other Intangible Assets), and allocates acquisition price based on
these assessments. The Company assesses fair value based on estimated cash flow
projections that utilize appropriate discount and capitalization rates and
available market information. Estimates of future cash flows are based on a
number of factors including the historical operating results, known trends, and
market/economic conditions that may affect the property.

The Company
reviews its long-lived assets used in operations for impairment when there is
an event, or change in circumstances that indicates that the carrying amount
    may not be recoverable. The Company records impairment losses and reduces
    the carrying value of properties when indicators of impairment are present
    and the expected undiscounted cash flows related to those properties are
    less than their carrying amounts. In cases where the Company does not expect
    to recover its carrying costs on properties held for use, the Company reduces
    its carrying cost to fair value, and for properties held for sale, the Company
    reduces its carrying value to the fair value less costs to sell. During the
    years ended December 31, 2009, 2008 and 2007, no impairment losses were recognized.
    Management does not believe that the values of its properties within the
    portfolio are impaired as of December 31, 2009.

Sale of Real Estate

The Company
recognizes property sales in accordance with ASC Topic 970 Real Estate
(formerly SFAS No. 66, Accounting for Sales of Real Estate). The Company
generally records the sales of operating properties and outparcels using the
full accrual method at closing when the earnings process is deemed to be
complete. Sales not qualifying for full recognition at the time of sale are
accounted for under other appropriate deferral methods.

Real Estate Held for Sale

The Company
evaluates the held-for-sale classification of its real estate each quarter.
Assets that are classified as held for sale are recorded at the lower of their
carrying amount or fair value less cost to sell. Assets are generally
classified as held for sale once management has initiated an active program to
market them for sale and has received a firm purchase commitment. The results
of operations of these real estate properties are reflected as discontinued
operations in all periods reported.

On occasion,
the Company will receive unsolicited offers from third parties to buy
individual Company properties. Under these circumstances, the Company will
classify the properties as held for sale when a sales contract is executed with
no contingencies and the prospective buyer has funds at risk to ensure
performance.

Deferred Costs

Fees and costs
paid in the successful negotiation of leases are deferred and are being
amortized on a straight-line basis over the terms of the respective leases.
Fees and costs incurred in connection with obtaining financing are deferred and
are amortized over the term of the related debt obligation.

Management Contracts

Income from
management contracts is recognized on an accrual basis as such fees are earned.
The initial acquisition cost of the management contracts are amortized over the
estimated lives of the contracts acquired.

Revenue Recognition and Accounts Receivable

Leases with
tenants are accounted for as operating leases. Minimum rents are recognized on
a straight-line basis over the term of the respective leases, beginning when
the tenant takes possession of the space. As of December 31, 2009 and 2008,
included in rents receivable, net on the accompanying consolidated balance
sheet, unbilled rents receivable relating to straight-lining of rents were
$12.7 million and $11.1 million, respectively. Certain of these leases also
provide for percentage rents based upon the level of sales achieved by the
tenant. Percentage rent is recognized in the period when the tenants sales
breakpoint is met. In addition, leases typically provide for the reimbursement
to the Company of real estate taxes, insurance and other property operating
expenses. These reimbursements are recognized as revenue in the period the
expenses are incurred.

The Company
makes estimates of the uncollectability of its accounts receivable related to
tenant revenues. An allowance for doubtful accounts has been provided against
certain tenant accounts receivable that are estimated to be uncollectible. Once
the amount is ultimately deemed to be uncollectible, it is written off. Rents
receivable at December 31, 2009 and 2008 are shown net of an allowance for
doubtful accounts of $7.0 million and $5.7 million, respectively.

F-11

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued

Notes Receivable and Preferred Equity
Investments

Notes
receivable and preferred equity investments are intended to be held to maturity
and are carried at amortized cost. Interest income from notes receivable and
    preferred equity investments are recognized on the effective interest method
    over the expected life of the loan. Under the effective interest method,
    interest or fees to be collected at the origination of the loan or the payoff
    of the loan are recognized over the term of the loan as an adjustment to
    yield.

Allowances for
real estate notes receivable are established
based upon 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. Interest
income recognition is generally suspended for loans when, in the opinion of
management, a full recovery of income and principal becomes doubtful. Income
recognition is resumed when the suspended loan becomes contractually current
and performance is demonstrated to be resumed.

During 2009,
the Company provided a $1.7 million reserve on a note receivable as a result of
the loss of an anchor tenant at the underlying collateral property. During
2008, the Company provided a $4.4 million reserve on a note receivable
collateralized by in interest in an entity owning retail complexes associated
with seven public rest stops along the toll roads in and around Chicago,
Illinois. The note and all accrued interest was subsequently cancelled during
2009. Management believes that the balance of notes receivable are collectible
as of December 31, 2009.

Cash and Cash Equivalents

The Company
considers all highly liquid investments with an original maturity of three
months or less when purchased to be cash equivalents.

Restricted Cash and Cash in Escrow

Restricted
cash and cash in escrow consist principally of cash held for real estate taxes,
property maintenance, insurance, minimum occupancy and property operating
income requirements at specific properties as required by certain loan
agreements.

Income Taxes

The Company
has made an election to be taxed, and believes it qualifies as a REIT under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
Code). To maintain REIT status for Federal income tax purposes, the Company
is generally required to distribute at least 90% of its REIT taxable income to
its stockholders as well as comply with certain other income, asset and
organizational requirements as defined in the Code. Accordingly, the Company is
generally not subject to Federal corporate income tax to the extent that it
distributes 100% of its REIT taxable income each year.

Although it
may qualify for REIT status for Federal income tax purposes, the Company is
subject to state income or franchise taxes in certain states in which some of
its properties are located. In addition, taxable income from non-REIT
activities managed through the Companys taxable REIT subsidiary (TRS) is
fully subject to Federal, state and local income taxes.

TRS income
taxes are accounted for under the liability method as required by ASC Topic 740
Income Taxes (formerly SFAS No. 109, Accounting for Income Taxes). Under
the liability method, deferred income taxes are recognized for the temporary
differences between the financial reporting basis and the tax basis of the TRS
income, assets and liabilities.

In accordance
with ASC Topic 740 Income Taxes (formerly FASB Financial Interpretation No.
48, Accounting for Uncertainty in Income Taxes  an interpretation of SFAS No.
109), the Company believes that it has appropriate support for the income tax
positions taken and, as such, does not have any uncertain tax positions that
result in a material impact on the Companys financial position or results of
operation. The prior three years income tax returns are subject to review by
the Internal Revenue Service. The Companys policy relating to interest and
penalties is to recognize them as a component of the provision for income
taxes.

F-12

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and Summary
of Significant Accounting Policies, continued

Stock-based Compensation

The Company
accounts for stock options pursuant to ASC Topic 718 Compensation  Stock
Compensation (formerly SFAS No. 123R Accounting for Stock-Based
Compensation). As such, all equity based awards are reflected as compensation
expense in the Companys consolidated financial statements over their vesting
period based on the fair value at the date the stock option was granted.

Recent Accounting Pronouncements

In June 2009,
the FASB issued ASC Topic 105 Generally Accepted Accounting Principles
(formerly Statement of Financial Accounting Standards (SFAS) No. 168, The
FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles) (ASC Topic 105).
ASC Topic 105 identifies the sources of accounting principles and the framework
for selecting the principles used in the preparation of financial statements
that are presented in conformity with GAAP. It establishes the FASB Accounting
Standards Codification (ASC) as
the single source of authoritative accounting principles recognized by the FASB
in the preparation of financial statements in conformity with GAAP. The ASC
does not create new accounting and reporting guidance rather it reorganizes GAAP
pronouncements into approximately 90 topics within a consistent structure. All
guidance contained in the ASC carries an equal level of authority. Relevant
portions of authoritative content, issued by the Securities and Exchange
Commission (SEC), for SEC registrants, have been included in the ASC. ASC
Topic 105 was effective for financial statements issued for interim and annual
periods ending after September 15, 2009. The Company adopted ASC Topic 105 on
September 30, 2009.

During
December of 2007, the FASB issued ASC Topic 805 Business Combinations
(formerly SFAS No. 141R, Business Combinations) (ASC Topic 805). ASC Topic
805 establishes principles and requirements for how an acquirer entity
recognizes and measures in its financial statements the identifiable assets
acquired (including intangibles), the liabilities assumed and any
noncontrolling interest in the acquired entity. Effective January 1, 2009, the
Company adopted ASC Topic 805 and it did not have a material impact on the
Companys financial position or results of operations.

During March
of 2008, the FASB issued ASC Topic 815 Derivatives and Hedging (formerly SFAS
No. 161 Disclosures about Derivative Instruments and Hedging Activities  an
amendment of SFAS No. 133) (ASC Topic 815). ASC Topic 815 amends SFAS No.
133 to provide additional information about how derivative and hedging
activities affect an entitys financial position, financial performance, and
cash flows. It requires enhanced disclosures about an entitys derivatives and
hedging activities. ASC 815 was effective for financial statements issued for
fiscal years beginning after November 15, 2008. The adoption of ASC 815 did not
have an impact on the Companys financial condition or results of operations.

During June of
2008, the FASB ratified ASC Topic 815 (formerly EITF Issue 07-5 Determining
Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys Own
Stock. Paragraph 11(a) of SFAS 133 specifies that a contract that would
otherwise meet the definition of a derivative but is both (a) indexed to the
Companys own stock and (b) classified in stockholders equity in the statement
of financial position would not be considered a derivative financial
instrument. ASC Topic 815 provides a new two-step model to be applied in
determining whether a financial instrument or an embedded feature is indexed to
an issuers own stock and thus able to qualify for the SFAF 133 paragraph 11(a)
scope exception. ASC Topic 815 became effective on January 1, 2009. The
adoption of ASC 815 did not have an impact on the Companys financial position
and results of operations.

During October
of 2008, the FASB issued ASC Topic 820 Fair Value Measurements and
Disclosures (formerly FSP FAS 157-3, Determining the Fair Value of a Financial
Asset When the Market for That Asset Is Not Active) (ASC Topic 820). ASC
Topic 820 provides guidance in determining the fair value of a financial asset
when there is not an active market for that financial asset. The adoption of
ASC Topic 820 did not have an impact on the Companys financial position and
results of operations.

Effective
January 1, 2009, the Company adopted the following FASB pronouncements, which
required it to retrospectively restate and reclassify previously disclosed
consolidated financial statements. As such, certain prior period amounts have
been restated or reclassified in the accompanying unaudited consolidated
financial statements to conform to the adoption of these FASB pronouncements.

The Company
adopted ASC Topic 810 (formerly SFAS No. 160, Noncontrolling Interests
in Consolidated Financial Statements). ASC Topic 810, among other things, provides
guidance and establishes amended accounting and reporting standards for
noncontrolling interests in a consolidated subsidiary and the deconsolidation
of a subsidiary. Under ASC Topic 810, the Company now reports noncontrolling
interests in subsidiaries as a separate component of equity in the consolidated
financial statements and shows both net income and net loss attributable to the noncontrolling
interests and net income attributable to the controlling
interests on the face of the Consolidated Statements of Income.

F-13

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and Summary of Significant Accounting Policies, continued

Recent Accounting Pronouncements, continued

The Company
adopted ASC Topic 470-20 Debt with Conversion and Other Options (formerly
FASB Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion Including Partial Cash
Settlement), (ASC Topic 470-20). ASC Topic 470-20 requires the proceeds from
the issuance of convertible debt be allocated between a debt component and an
equity component. The debt component is measured based on the fair value of
similar debt without an equity conversion feature, and the equity component is
determined as the residual of the fair value of the debt deducted from the
original proceeds received. The resulting discount on the debt component is
amortized over the period the convertible debt is expected to be outstanding,
which is December 11, 2006 to December 20, 2011, as additional non-cash
interest expense. The equity component recorded as additional paid-in capital
was $11.3 million, which represented the difference between the proceeds from
the issuance of the convertible notes payable and the fair value of the
liability at the time of issuance. The additional non-cash interest expense
recognized in the Consolidated Statements of Income was $1.3 million and $2.1
million for the fiscal years ended 2009 and 2008, respectively. Accumulated
amortization related to the convertible notes payable was $0.7 million and $1.1
million as of December 31, 2009 and December 31, 2008, respectively, after
giving effect to repurchases.

The following table shows the effect of the retrospective application
    and reclassification of (i) the consolidated balance sheet accounts for the
    year ended December 31, 2008 and (ii) the consolidated statement of income
    for the years ended December 31, 2008 and 2007 and consolidated statement
    of cash flow accounts for the years ended December 31, 2008 and 2007:

|                                                  |  |                    |         |              |   |                   |  |   |          |  
|------------------------------------------------- |  | ------------------ | ------- | ------------ | - | ----------------- |  | - | -------- | -
|(dollars in
 thousands, except per share amounts) |  | December 31, 2008  |        
|                                                  |  |                    |        
|Affected Consolidated Balance Sheet accounts      |  | Before
 Adjustment |         | As
 Adjusted |   | Effect of
 Change | 
|                                                  |  |                    |         |              |   |                   | 
|Deferred
 charges, net of amortization            |  | $                  | 22,072  |              | $ | 21,899            |  | $ | (173     | )
|                                                  |  |                    |         |              |   |                   |  |   |          |  
|Convertible
 notes payable                        |  | $                  | 107,000 |              | $ | 100,403           |  | $ | (6,597   | )
|                                                  |  |                    |         |              |   |                   |  |   |          |  
|Minority
 interests                               |  | $                  | 214,506 |              | $ |                  |  | $ | (214,506 | )
|                                                  |  |                    |         |              |   |                   |  |   |          |  
|Additional
 paid-in capital                       |  | $                  | 212,007 |              | $ | 218,527           |  | $ | 6,520    |  
|                                                  |  |                    |         |              |   |                   |  |   |          |  
|Retained
 earnings                                |  | $                  | 13,767  |              | $ | 13,671            |  | $ | (96      | )
|                                                  |  |                    |         |              |   |                   |  |   |          |  
|Noncontrolling
 interests in subsidiaries         |  | $                  |        |              | $ | 214,506           |  | $ | 214,506  |  
|                                                  |  |                    |         |              |   |                   |  |   |          |  

|                                                |  |                              |        |              |   |                   |  |   |        |  
|----------------------------------------------- |  | ---------------------------- | ------ | ------------ | - | ----------------- |  | - | ------ | -
|                                                |  | Year ended December 31, 2008 |       
|                                                |  |                              |       
|Affected Consolidated Income Statement Accounts |  | Before
 Adjustment           |        | As
 Adjusted |   | Effect of
 Change | 
|                                                |  |                              |        |              |   |                   | 
|                                                |  |                              |        |              |   |                   |  |   |        |  
|Depreciation
 and amortization                  |  | $                            | 33,390 |              | $ | 33,334            |  | $ | 56     |  
|                                                |  |                              |        |              |   |                   |  |   |        |  
|Interest
 expense                               |  | $                            | 26,792 |              | $ | 28,893            |  | $ | (2,101 | )
|                                                |  |                              |        |              |   |                   |  |   |        |  
|Gain on debt
 extinguishment                    |  | $                            | 1,958  |              | $ | 1,523             |  | $ | (435   | )
|                                                |  |                              |        |              |   |                   |  |   |        |  
|Income from continuing operations               |  | $                            | 31,237 |              | $ | 28,757            |  | $ | (2,480 | )
|                                                |  |                              |        |              |   |                   |  |   |        |  
|Net income                                      |  | $                            | 39,917 |              | $ | 37,437            |  | $ | (2,480 | )
|                                                |  |                              |        |              |   |                   |  |   |        |  
|Net income
 attributable to Common Shareholders |  | $                            | 27,548 |              | $ | 25,068            |  | $ | (2,480 | )
|                                                |  |                              |        |              |   |                   |  |   |        |  
|Basic earnings
 per share                       |  | $                            | 0.81   |              | $ | 0.74              |  | $ | (0.07  | )
|                                                |  |                              |        |              |   |                   |  |   |        |  
|Diluted
 earnings per share                     |  | $                            | 0.80   |              | $ | 0.73              |  | $ | (0.07  | )
|                                                |  |                              |        |              |   |                   |  |   |        |  

|                                                |  |                              |        |             |   |                   |  |   |        |  
|----------------------------------------------- |  | ---------------------------- | ------ | ----------- | - | ----------------- |  | - | ------ | -
|                                                |  | Year ended December 31, 2007 |       
|                                                |  |                              |       
|                                                |  | Before
 Adjustment           |        | As Adjusted |   | Effect of
 Change | 
|                                                |  |                              |        |             |   |                   | 
|                                                |  |                              |        |             |   |                   |  |   |        |  
|Depreciation
 and amortization                  |  | $                            | 25,181 |             | $ | 25,114            |  | $ | 67     |  
|                                                |  |                              |        |             |   |                   |  |   |        |  
|Interest
 expense                               |  | $                            | 22,573 |             | $ | 24,564            |  | $ | (1,991 | )
|                                                |  |                              |        |             |   |                   |  |   |        |  
|Income from continuing
         operations      |  | $                            | 7,395  |             | $ | 5,471             |  | $ | (1,924 | )
|                                                |  |                              |        |             |   |                   |  |   |        |  
|Net income                                      |  | $                            | 42,485 |             | $ | 40,561            |  | $ | (1,924 | )
|                                                |  |                              |        |             |   |                   |  |   |        |  
|Net income
 attributable to Common Shareholders |  | $                            | 27,270 |             | $ | 25,346            |  | $ | (1,924 | )
|                                                |  |                              |        |             |   |                   |  |   |        |  
|Basic
 earnings per share                       |  | $                            | 0.81   |             | $ | 0.76              |  | $ | (0.05  | )
|                                                |  |                              |        |             |   |                   |  |   |        |  
|Diluted
 earnings per share                     |  | $                            | 0.80   |             | $ | 0.74              |  | $ | (0.06  | )
|                                                |  |                              |        |             |   |                   |  |   |        |  

F-14

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued

Recent Accounting Pronouncements, continued

|                                                      |  |                              |        |             |   |                   |   |   |       |  
|----------------------------------------------------- |  | ---------------------------- | ------ | ----------- | - | ----------------- | - | - | ----- | -
|Affected Consolidated Statement of Cash Flow Accounts |  | Year ended December 31, 2008 |       
|                                                      |  |                              |       
|                                                      |  | Before
 Adjustment           |        | As Adjusted |   | Effect of
 Change |  
|                                                      |  |                              |        |             |   |                   |  
|                                                      |  |                              |        |             |   |                   |   |   |       |  
|Depreciation
 and amortization                        |  | $                            | 34,964 |             | $ | 34,908            |   | $ | (56   | )
|                                                      |  |                              |        |             |   |                   |   |   |       |  
|Gain on debt
 extinguishment                          |  | $                            | (1,958 | )           | $ | (1,523            | ) | $ | 435   |  
|                                                      |  |                              |        |             |   |                   |   |   |       |  
|Amortization
 of discount on convertible debt         |  | $                            |       |             | $ | 2,101             |   | $ | 2,101 |  
|                                                      |  |                              |        |             |   |                   |   |   |       |  

|                                              |  |                              |        |             |   |                   |  |   |       |  
|--------------------------------------------- |  | ---------------------------- | ------ | ----------- | - | ----------------- |  | - | ----- | -
|                                              |  | Year ended December 31, 2007 |       
|                                              |  |                              |       
|                                              |  | Before
 Adjustment           |        | As Adjusted |   | Effect of
 Change | 
|                                              |  |                              |        |             |   |                   | 
|Depreciation
 and amortization                |  | $                            | 28,428 |             | $ | 28,361            |  | $ | (67   | )
|Amortization
 of discount on convertible debt |  | $                            |       |             | $ | 1,991             |  | $ | 1,991 |  
|                                              |  |                              |        |             |   |                   |  |   |       |  

In April 2009,
the FASB issued ASC Topic 825 Financial Instruments (formerly FSP SFAS 107-1
and APB 28-1, Interim Disclosures About Fair Value of Financial Instruments)
(ASC Topic 825). ASC Topic 825 amends SFAS No. 107, Disclosures about Fair
Values of Financial Instruments and Accounting Principles Board Opinion No.
28, Interim Financial Reporting, to require disclosures about fair value of
financial instruments in interim financial statements. ASC Topic 825 is effective
for interim periods ending after June 15, 2009. The Company adopted ASC Topic
825 and has provided the disclosures in Note 10 to the Consolidated Financial
Statements. The adoption did not have an impact on the Companys financial
position and results of operations.

In May 2009,
the FASB issued ASC Topic 855 Subsequent Events (formerly SFAS No. 165
Subsequent Events) (ASC Topic 855). ASC Topic 855 establishes general
standards of accounting and disclosure for events that occur after the balance
sheet date but before the financial statements are issued and was effective for
interim or annual periods ending after June 15, 2009. The Company adopted ASC
Topic 855 and the adoption did not have an impact on the Companys financial
position and results of operations.

In June 2009,
the FASB issued ASC 810 (formerly SFAS No. 167, Amendments to FASB
Interpretation No. 46(R)), which changes the approach to determining the
primary beneficiary of a variable interest entity and requires companies to
more frequently assess whether they must consolidate a variable interest
entity. ASC 810 is effective on the first annual reporting period that begins
after November 15, 2009. The adoption of ASC 810 on January 1, 2010 did not have
a material impact on the Companys financial position and results of operations.

Comprehensive income

The following
table sets forth comprehensive income for the years ended December 31, 2009,
2008 and 2007:

|                                                          |  |                          |        |      |   |        |   |   |        |  
|--------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ | - | - | ------ | -
|                                                          |  | Years ended December 31, |       
|                                                          |  |                          |       
|(dollars in thousands)                                    |  | 2009                     |        | 2008 |   | 2007   |  
|                                                          |  |                          |        |      |   |        |  
|Net income
 attributable to Common Shareholders           |  | $                        | 31,133 |      | $ | 25,068 |   | $ | 25,346 |  
|Other
 comprehensive income (loss)                        |  |                          | 1,514  |      |   | (3,555 | ) |   | (719   | )
|                                                          |  |                          |        |      |   |        |   |   |        |  
|Comprehensive
 income attributable to Common Shareholders |  | $                        | 32,647 |      | $ | 21,513 |   | $ | 24,627 |  
|                                                          |  |                          |        |      |   |        |   |   |        |  

Other
comprehensive income relates to the changes in the fair value of derivative
instruments accounted for as cash flow hedges and the amortization, which is
included in interest expense, of derivative instruments.

F-15

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and
Summary of Significant Accounting Policies, continued

The following
table sets forth the change in accumulated other comprehensive loss for the
years ended December 31, 2009 and 2008:

Accumulated other comprehensive loss

|                                                                                       |  |                          |        |      |   |        |  
|-------------------------------------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ | -
|                                                                                       |  | Years ended December 31, |       
|                                                                                       |  |                          |       
|(dollars in thousands)                                                                 |  | 2009                     |        | 2008 |  
|                                                                                       |  |                          |        |      |  
|Beginning balance                                                                      |  | $                        | (4,508 | )    | $ | (953   | )
|Unrealized loss on valuation of derivative
 instruments and amortization of derivative |  |                          | (912   | )    |   | (4,179 | )
|                                                                                       |  |                          |        |      |   |        |  
|Reclassification of loss on derivative
 instruments to interest expense                |  |                          | 2,426  |      |   | 624    |  
|                                                                                       |  |                          |        |      |   |        |  
|Ending balance                                                                         |  | $                        | (2,994 | )    | $ | (4,508 | )
|                                                                                       |  |                          |        |      |   |        |  

2. Acquisition and Disposition of Properties
and Discontinued Operations

A. Acquisition and Disposition of Properties

The Company
has historically made acquisitions through its Opportunity Funds and the
Operating Partnership.

Acquisitions

On January 29,
2009, the Company acquired the 642,000 square foot Cortlandt Towne Center in
Cortlandt, NY for $78.0 million.

On February
29, 2008, the Company acquired a portfolio of 11 self-storage properties
located throughout New York and New Jersey for approximately $174.0 million.
The portfolio totals approximately 920,000 net rentable square feet.

On April 22,
2008, the Company acquired a 20,000 square foot single tenant retail property
located in Manhattan, New York for $9.7 million.

On March 20,
2007, the Company purchased a retail commercial condominium at 200 West 54th Street located in Manhattan, New
York. The 10,000 square foot property was acquired for $36.4 million.

Additionally,
on March 20, 2007, the Company purchased a single-tenant building located at
1545 East Service Road in Staten Island, New York for $17.0 million.

On May 31,
2007, the Company purchased a property located on Atlantic Avenue in Brooklyn,
New York for $5.0 million. The property was redeveloped into a 110,000 square
foot, six-story self-storage facility.

On June 13,
2007, the Company (approximately 25% of the invested equity), along with an
unaffiliated partner (approximately 75% of the invested equity), acquired a
leasehold interest in The Gallery at Fulton Street and adjacent parking garage
located in downtown Brooklyn, New York for $115.0 million. The property has
been demolished and redevelopment plans for CityPoint are in the design phase.

On October 31,
2007, the Company, in conjunction with an unaffiliated partner, P/A Associates,
LLC (collectively, Acadia-P/A) acquired a 530,000 square foot warehouse
building in Canarsie, Brooklyn for approximately $21.0 million. Demolition and
construction has commenced on the 320,000 square foot mixed-use project.

On November 1,
2007, the Company, and an unaffiliated partner acquired a property in Westport,
Connecticut for approximately $17.0 million. The plan is to redevelop the
existing building into 30,000 square feet of retail and office use.

On November 5,
2007, the Company acquired a property in Sheepshead Bay,
Brooklyn for approximately $20.0 million. Redevelopment plans for this property
are in the design phase.

F-16

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Acquisition and Disposition of Properties
and Discontinued Operations, continued

Dispositions

During 2009,
2008 and 2007, the Company disposed of the following properties:

(dollars in thousands)

|                                           |  |            |      |              |   |             |  |     |        |   |  |           | 
|------------------------------------------ |  | ---------- | ---- | ------------ | - | ----------- |  | --- | ------ | - |  | --------- | 
|Property                                   |  | Year
 sold |      | Sales
 Price |   | Gain/(Loss) |  | GLA |       
|                                           |  |            |      |              |   |             |  |     |       
|                                          
|Blackman
 Plaza                            |  |            | 2009 |              | $ | 2,500       |  | $   | 1,506  |   |  | 125,264   | 
|Six Kroger
 locations                      |  |            | 2009 |              |   | 9,481       |  |     | 5,637  |   |  | 277,700   | 
|Village
 Apartments                        |  |            | 2008 |              |   | 23,300      |  |     | 7,182  |   |  | 599,106   | 
|Amherst
 Marketplace & Sheffield
 Crossing |  |            | 2007 |              |   | 26,000      |  |     | 7,516  |   |  | 192,479   | 
|Colony &
 GHT Apartments                   |  |            | 2007 |              |   | 15,500      |  |     | (2,245 | ) |  | 625,545   | 
|                                           |  |            |      |              |   |             |  |     |        |   |  |           | 
|Total                                      |  |            |      |              | $ | 76,781      |  | $   | 19,596 |   |  | 1,820,094 | 
|                                           |  |            |      |              |   |             |  |     |        |   |  |           | 

B. Discontinued Operations

In accordance
with ASC 205-20 Presentation of Financial Statements, Discontinued
Operations, which requires discontinued operations presentation for disposals
of a component of an entity, for all periods presented, the Company
reclassified its consolidated statements of income to reflect income and
expenses for properties that were sold prior to
December 31, 2009, as discontinued operations and reclassified its consolidated
balance sheets to reflect assets and liabilities related to such properties as
assets and liabilities related to discontinued operations.

The combined
assets and liabilities as of December 31, 2008 and results of operations of the
properties classified as discontinued operations for the years ended December
31, 2009, 2008 and 2007 are summarized as follows:

|                                              |  |                    |       | 
|--------------------------------------------- |  | ------------------ | ----- | 
|ASSETS                                        |  | December 31,
 2008 |      
|                                              |  |                    |      
|(dollars in thousands)                        |  |                    |       | 
|Net real estate                               |  | $                  | 4,635 | 
|Rents receivable, net                         |  |                    | 12    | 
|Prepaid expenses and other assets, net        |  |                    | 43    | 
|                                              |  |                    |      
|Total assets of discontinued operations       |  | $                  | 4,690 | 
|                                              |  |                    |      
|LIABILITIES                                   |  |                    |       | 
|Mortgage Notes Payable                        |  |                    | 1,325 | 
|Accounts payable and accrued expenses         |  |                    | 57    | 
|Other liabilities                             |  |                    | 99    | 
|                                              |  |                    |      
|Total liabilities of discontinued
 operations |  | $                  | 1,481 | 
|                                              |  |                    |      

|                                                                                             |  |                          |        |      |   |       |   |   |        |  
|-------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ----- | - | - | ------ | -
|                                                                                             |  | Years ended December 31, |       
|STATEMENT
 OF OPERATIONS                                                                     |  | 2009                     |        | 2008 |   | 2007  |  
|                                                                                             |  |                          |        |      |   |       |  
|(dollars in thousands)                                                                       |  |                          |        |      |   |       |   |   |        |  
|Total revenues                                                                               |  | $                        | 644    |      | $ | 4,136 |   | $ | 12,948 |  
|Total expenses                                                                               |  |                          | 398    |      |   | 2,638 |   |   | 10,973 |  
|                                                                                             |  |                          |        |      |   |       |   |   |        |  
|Operating Income                                                                             |  |                          | 246    |      |   | 1,498 |   |   | 1,975  |  
|Gain on sale of property                                                                     |  |                          | 7,143  |      |   | 7,182 |   |   | 5,271  |  
|                                                                                             |  |                          |        |      |   |       |   |   |        |  
|Income from discontinued operations                                                          |  |                          | 7,389  |      |   | 8,680 |   |   | 7,246  |  
|                                                                                             |  |                          |        |      |   |       |   |   |        |  
|Income from discontinued operations
 attributable to noncontrolling interests in subsidaries |  |                          | (4,855 | )    |   | (739  | ) |   | (606   | )
|                                                                                             |  |                          |        |      |   |       |   |   |        |  
|Income from discontinued operations
 attributable to Common Shareholders                     |  | $                        | 2,534  |      | $ | 7,941 |   | $ | 6,640  |  
|                                                                                             |  |                          |        |      |   |       |   |   |        |  

F-17

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Segment Reporting

The Company
has five reportable segments: Core Portfolio, Opportunity Funds, Self-Storage
Portfolio, Notes Receivable and Other. Notes Receivable consists of the
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 table sets forth certain segment information for the Company,
reclassified for discontinued operations, as of and for the years ended
December 31, 2009, 2008, and 2007 (does not include unconsolidated affiliates):

|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|----------------------------------------------------------------- |  | --------------- | ------- | ------------------ | - | ------------------ |  | ----------------- | ------- | ----- | - | ----------- |  | ----- | ------ |  | - | -------- | - | - | --------- | -
|                                                                  |  | 2009            |         |                    |   |                    |  |                   |         |       |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |  
|(dollars in thousands)                                            |  | Core
 Portfolio |         | Opportunity
 Funds |   | Storage
 Portfolio |  | Notes
 Receivable |         | Other |   | Elimination |  | Total |       
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |       
|Revenues                                                          |  | $               | 69,553  |                    | $ | 44,326             |  | $                 | 11,166  |       | $ | 19,156      |  | $     | 23,681 |  | $ | (20,537  | ) | $ | 147,345   |  
|Property operating expenses and real estate taxes                 |  |                 | 21,335  |                    |   | 15,427             |  |                   | 11,029  |       |   |            |  |       |       |  |   | (1,150   | ) |   | 46,641    |  
|Reserve for notes receivable                                      |  |                 |        |                    |   |                   |  |                   |        |       |   | 1,734       |  |       |       |  |   |         |   |   | 1,734     |  
|Abandonment of project costs                                      |  |                 |        |                    |   | 2,487              |  |                   |        |       |   |            |  |       |       |  |   |         |   |   | 2,487     |  
|Other expenses                                                    |  |                 | 23,983  |                    |   | 13,597             |  |                   | 3       |       |   |            |  |       |       |  |   | (15,570  | ) |   | 22,013    |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Income before depreciation and amortization                       |  | $               | 24,235  |                    | $ | 12,815             |  | $                 | 134     |       | $ | 17,422      |  | $     | 23,681 |  | $ | (3,817   | ) | $ | 74,470    |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Depreciation and amortization                                     |  | $               | 17,200  |                    | $ | 17,051             |  | $                 | 4,437   |       | $ |            |  | $     |       |  | $ | (1,470   | ) | $ | 37,218    |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Interest and
     other finance expense                           |  | $               | 18,744  |                    | $ | 8,404              |  | $                 | 5,006   |       | $ |            |  | $     |       |  | $ |         |   | $ | 32,154    |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Real estate at cost                                               |  | $               | 475,486 |                    | $ | 534,393            |  | $                 | 208,574 |       | $ |            |  | $     |       |  | $ | (11,047  | ) | $ | 1,207,406 |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Total assets                                                      |  | $               | 558,240 |                    | $ | 607,706            |  | $                 | 196,658 |       | $ | 125,221     |  | $     |       |  | $ | (105,361 | ) | $ | 1,382,464 |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Expenditures for real estate and improvements                     |  | $               | 1,938   |                    | $ | 119,665            |  | $                 | 10,996  |       | $ |            |  | $     |       |  | $ | (5,277   | ) | $ | 127,322   |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Reconciliation to net income                                      |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Income before depreciation and amortization                       |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   | $ | 74,470    |  
|Depreciation and amortization                                     |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   | (37,218   | )
|Equity in losses
     of unconsolidated partnerships              |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   | (1,529    | )
|Interest and
     other finance expense                           |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   | (32,154   | )
|Gain on debt extinguishment                                       |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   | 7,057     |  
|Impairment of investment in unconsolidated affiliate              |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   | (3,768    | )
|Income tax provision                                              |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   | (1,541    | )
|Income from discontinued operations                               |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   | 7,389     |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Net income                                                        |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   | 12,706    |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Net loss attributable to noncontrolling interests in subsidiaries |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   | 18,427    |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Net income attributable to Common Shareholders                    |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   | $ | 31,133    |  
|                                                                  |  |                 |         |                    |   |                    |  |                   |         |       |   |             |  |       |        |  |   |          |   |   |           |  

F-18

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Segment Reporting, continued

|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|------------------------------------------------------------------- |  | --------------- | ------- | ----------------- | - | ------------------ |  | ----------------- | ------- | ----- | - | ----------- |  | ----- | ------ |  | - | ------- | - | - | --------- | -
|                                                                    |  | 2008            |         |                   |   |                    |  |                   |         |       |   |             |  |       |       
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |       
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|(dollars in thousands)                                              |  | Core
 Portfolio |         | Opportunity Funds |   | Storage
 Portfolio |  | Notes
 Receivable |         | Other |   | Elimination |  | Total |       
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |       
|Revenues                                                            |  | $               | 65,347  |                   | $ | 48,400             |  | $                 | 5,589   |       | $ | 10,903      |  | $     | 30,928 |  | $ | (23,231 | ) | $ | 137,936   |  
|Property operating expenses and real estate taxes                   |  |                 | 20,973  |                   |   | 8,954              |  |                   | 6,669   |       |   |            |  |       |       |  |   | (381    | ) |   | 36,215    |  
|Reserve for notes receivable                                        |  |                 |        |                   |   |                   |  |                   |        |       |   | 4,392       |  |       |       |  |   |        |   |   | 4,392     |  
|Abandonment of project costs                                        |  |                 |        |                   |   | 630                |  |                   |        |       |   |            |  |       |       |  |   |        |   |   | 630       |  
|Other expenses                                                      |  |                 | 26,007  |                   |   | 16,131             |  |                   | 58      |       |   |            |  |       |       |  |   | (17,651 | ) |   | 24,545    |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Income before depreciation and amortization                         |  | $               | 18,367  |                   | $ | 22,685             |  | $                 | (1,138  | )     | $ | 6,511       |  | $     | 30,928 |  | $ | (5,199  | ) | $ | 72,154    |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Depreciation and amortization                                       |  | $               | 20,296  |                   | $ | 10,036             |  | $                 | 3,002   |       | $ |            |  | $     |       |  | $ |        |   | $ | 33,334    |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Interest and
     other finance expense                             |  | $               | 19,698  |                   | $ | 5,549              |  | $                 | 3,650   |       | $ |            |  | $     |       |  | $ | (4      | ) | $ | 28,893    |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Real estate at cost                                                 |  | $               | 474,684 |                   | $ | 438,260            |  | $                 | 186,529 |       | $ |            |  | $     |       |  | $ | (7,478  | ) | $ | 1,091,995 |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Total assets                                                        |  | $               | 567,882 |                   | $ | 487,182            |  | $                 | 194,992 |       | $ | 125,587     |  | $     |       |  | $ | (84,260 | ) | $ | 1,291,383 |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Expenditures for real estate and improvements                       |  | $               | 18,424  |                   | $ | 94,191             |  | $                 | 135,391 |       | $ |            |  | $     |       |  | $ | (2,973  | ) | $ | 245,033   |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Reconciliation to net income                                        |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Income before depreciation and amortization                         |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   | $ | 72,154    |  
|Depreciation and amortization                                       |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   | (33,334   | )
|Equity in earnings of unconsolidated partnerships                   |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   | 19,906    |  
|Interest and
     other finance expense                             |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   | (28,893   | )
|Gain on sale                                                        |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   | 763       |  
|Gain on debt extinguishment                                         |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   | 1,523     |  
|Income tax provision                                                |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   | (3,362    | )
|Income from discontinued operations                                 |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   | 8,680     |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Net income                                                          |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   | 37,437    |  
|Net income attributable to noncontrolling interests in subsidiaries |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   | (12,369   | )
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Net income attributable to Common Shareholders                      |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   | $ | 25,068    |  
|                                                                    |  |                 |         |                   |   |                    |  |                   |         |       |   |             |  |       |        |  |   |         |   |   |           |  

|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|------------------------------------------------------------------- |  | --------------- | ------- | ------------------ | - | ------------------ |  | ----------------- | ------ | ----- | - | ----------- |  | ----- | ------ |  | - | ------- | - | - | ------- | -
|                                                                    |  | 2007            |         |                    |   |                    |  |                   |        |       |   |             |  |      
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |      
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|(dollars in thousands)                                              |  | Core
 Portfolio |         | Opportunity
 Funds |   | Storage
 Portfolio |  | Notes
 Receivable |        | Other |   | Elimination |  | Total |       
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |       
|Revenues                                                            |  | $               | 62,520  |                    | $ | 17,901             |  | $                 | 291    |       | $ | 3,682       |  | $     | 31,065 |  | $ | (20,367 | ) | $ | 95,092  |  
|Property operating expenses and real estate taxes                   |  |                 | 18,467  |                    |   | 4,264              |  |                   | 756    |       |   |            |  |       |       |  |   | (280    | ) |   | 23,207  |  
|Abandonment of project costs                                        |  |                 |        |                    |   | 129                |  |                   |       |       |   |            |  |       |       |  |   |        |   |   | 129     |  
|Other expenses                                                      |  |                 | 25,217  |                    |   | 12,903             |  |                   |       |       |   |            |  |       |       |  |   | (15,191 | ) |   | 22,929  |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Income (loss) before depreciation and amortization                  |  | $               | 18,836  |                    | $ | 605                |  | $                 | (465   | )     | $ | 3,682       |  | $     | 31,065 |  | $ | (4,896  | ) | $ | 48,827  |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Depreciation and amortization                                       |  | $               | 17,394  |                    | $ | 7,409              |  | $                 | 311    |       | $ |            |  | $     |       |  | $ |        |   | $ | 25,114  |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Interest and
     other finance expense                             |  | $               | 19,430  |                    | $ | 5,291              |  | $                 | 359    |       | $ |            |  | $     |       |  | $ | (516    | ) | $ | 24,564  |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Real estate at cost                                                 |  | $               | 458,042 |                    | $ | 350,699            |  | $                 | 12,407 |       | $ |            |  | $     |       |  | $ | (3,528  | ) | $ | 817,620 |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Total assets                                                        |  | $               | 578,310 |                    | $ | 403,844            |  | $                 | 15,200 |       | $ | 57,662      |  | $     |       |  | $ | (56,233 | ) | $ | 998,783 |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Expenditures for real estate and improvements                       |  | $               | 58,575  |                    | $ | 149,453            |  | $                 | 6,626  |       | $ |            |  | $     |       |  | $ | (4,298  | ) | $ | 210,356 |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Reconciliation to net income                                        |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Income before depreciation and amortization                         |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   | $ | 48,827  |  
|Depreciation and amortization                                       |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   | (25,114 | )
|Equity in earnings of unconsolidated partnerships                   |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   | 6,619   |  
|Interest and
     other finance expense                             |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   | (24,564 | )
|Income tax provision                                                |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   | (297    | )
|Income from discontinued operations                                 |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   | 7,246   |  
|Extraordinary item                                                  |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   | 27,844  |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Net and
     other finance income                                   |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   | 40,561  |  
|Net income attributable to noncontrolling interests in subsidiaries |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   | (15,215 | )
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  
|Net income attributable to Common Shareholders                      |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   | $ | 25,346  |  
|                                                                    |  |                 |         |                    |   |                    |  |                   |        |       |   |             |  |       |        |  |   |         |   |   |         |  

F-19

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Investments In and Advances to Unconsolidated
Partnerships

Retailer Controlled Property Venture (RCP
Venture)

During January
of 2004, the Company commenced the RCP Venture with Klaff Realty, LP (Klaff)
and Lubert-Adler Management, Inc., through a limited liability company (KLA),
for the purpose of making investments in surplus or underutilized properties
owned by retailers. As of December 31, 2009, the Company has invested
$60.8 million through the RCP Venture on a non-recourse basis. Upon
formation, it was contemplated the RCP Venture would invest $300.0 million, of
which the Companys share would be $60.0 million. Cash flow from any individual
investment in which the RCP Venture participants elect to invest, is to be
distributed to the participants until they have received a 10% cumulative
return and a full return of all related contributions. Thereafter, remaining
cash flow is to be distributed 20% to Klaff and 80% to the partners (including
Klaff).

The table
below summarizes the Companys invested capital and distributions received from
its RCP Venture investments.

Mervyns Department Stores

In
September 2004, the Company made its first RCP Venture investment. Through
Mervyns I and Mervyns II, the Company invested in a consortium to acquire the
Mervyns Department Store chain (Mervyns) consisting of 262 stores (REALCO)
and its retail operation (OPCO) from Target Corporation. To date, REALCO has
disposed of a significant portion of the portfolio. In addition, in November
2007, the Company sold its interest in OPCO and, as a result, has no further
investment in OPCO. Subsequent to the initial acquisition, the Company, through
Mervyns I and Mervyns II, made additional investments of $2.9 million.

During the
year ended December 31, 2009, REALCO recorded an impairment charge on its investment
in certain locations and leasehold interests of which Mervyns I and II
recognized a combined loss of $3.1 million. The Operating Partnerships share
of this loss, net of taxes, was $0.6 million.

Through
December 31, 2009, the Company, through Mervyns I and Mervyns II, made
additional investments in locations that are separate from the original
investment (Add-On Investments) in Mervyns totaling $5.1 million. The Company
accounts for these Add-On Investments using the cost method due to the minor
ownership interest and the inability to exert influence over KLAs operating
and financial policies.

Albertsons

During June of
2006, the RCP Venture made its second investment as part of an investment
consortium, acquiring Albertsons and Cub Foods, of which the Companys share
was $20.7 million. During February of 2007, the Company received a cash
distribution of $44.4 million from this investment, which was sourced from the
disposition of certain operating stores and a refinancing of the remaining
assets held by Albertsons. The Company recognized distributions in excess of
its invested capital in income, including $30.2 million characterized as
extraordinary consistent with the accounting treatment by Albertsons. Through
December 31, 2009, the Company has received additional distributions from this
investment totaling $21.3 million.

Through
December 31, 2009, the Company, through Mervyns II, made Add-On investments in
Albertsons totaling $2.4 million and received distributions totaling $1.2
million. The Company accounts for these Add-On investments using the cost
method due to the minor ownership interest and the inability to exert influence
over KLAs operating and financial policies.

Other RCP Investments

During 2006,
the Company, through Fund II, made investments of $1.1 million in Shopko
and $0.7 million in Marsh. During 2007, Fund II received a $1.1 million
cash distribution from the Shopko investment representing 100% of its invested
capital. As of December 31, 2009, the Company, through Fund II, made
investments of $2.0 million in additional Add-On investments in Marsh and has
received distributions totaling $2.6 million.

During July of
2007, the RCP Venture acquired a portfolio of 87 retail properties from Rex
Stores Corporation, which the Company invested through Mervyns II. The
Companys share of this investment was $2.7 million. In December of 2009,
the Company received distributions of $0.4 million.

F-20

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Investments In and Advances to
Unconsolidated Partnerships, continued

The Company
accounts for these other investments using the cost method due to its minor
ownership interest and the inability to exert influence over KLAs operating
and financial policies.

The following
table summarizes the Companys RCP Venture investments from inception through
December 31, 2009:

(dollars in thousands)

|                         |  |                                |  |                |  |                                  |        |               |   |                                  |  |                             |        |  |   |        | 
|------------------------ |  | ------------------------------ |  | -------------- |  | -------------------------------- | ------ | ------------- | - | -------------------------------- |  | --------------------------- | ------ |  | - | ------ | 
|                         |  |                                |  |                |  |                                  |        |               |   |                                  |  | Operating Partnership Share |       
|                         |  |                                |  |                |  |                                  |        |               |   |                                  |  |                             |       
|Investor                 |  | Investment                     |  | Year
 Acquired |  | Invested
 Capital
 and
 Advances |        | Distributions |   | Invested
 Capital
 and
 Advances |  | Distributions               |       
|                         |  |                                |  |                |  |                                  |        |               |   |                                  |  |                             |       
|Mervyns I and Mervyns II |  | Mervyns                        |  | 2004           |  | $                                | 26,058 |               | $ | 45,966                           |  | $                           | 4,901  |  | $ | 11,251 | 
|Mervyns I and Mervyns II |  | Mervyns add-on investments     |  | 2005/2008      |  |                                  | 5,126  |               |   | 1,703                            |  |                             | 753    |  |   | 283    | 
|Mervyns II               |  | Albertsons                    |  | 2006           |  |                                  | 20,717 |               |   | 65,757                           |  |                             | 4,239  |  |   | 13,151 | 
|Mervyns II               |  | Albertsons add-on investments |  | 2006/2007      |  |                                  | 2,409  |               |   | 1,215                            |  |                             | 386    |  |   | 243    | 
|Fund II                  |  | Shopko                         |  | 2006           |  |                                  | 1,100  |               |   | 1,100                            |  |                             | 220    |  |   | 220    | 
|Fund II                  |  | Marsh                          |  | 2006           |  |                                  | 2,667  |               |   | 2,639                            |  |                             | 533    |  |   | 528    | 
|Mervyns II               |  | Rex Stores                     |  | 2007           |  |                                  | 2,701  |               |   | 400                              |  |                             | 535    |  |   | 80     | 
|                         |  |                                |  |                |  |                                  |        |               |   |                                  |  |                             |        |  |   |        | 
|Total                    |  |                                |  |                |  | $                                | 60,778 |               | $ | 118,780                          |  | $                           | 11,567 |  | $ | 25,756 | 
|                         |  |                                |  |                |  |                                  |        |               |   |                                  |  |                             |        |  |   |        | 

Brandywine Portfolio

The Company
owns a 22.2% interest in a one million square foot retail portfolio located in
Wilmington, Delaware (the Brandywine Portfolio) that is accounted for using
the equity method.

Crossroads

The Company owns
a 49% interest in the Crossroads Joint Venture and Crossroads II (collectively,
Crossroads), which collectively own a 311,000 square foot shopping center
located in White Plains, New York that is accounted for using the equity
method.

Other Investments

Fund I Investments

Fund I owns a
50% interest in the Sterling Heights Shopping Center which is accounted for
using the equity method of accounting. During 2009, Fund I recorded an
impairment charge of $3.8 million related to this investment.

Fund II Investments

Fund IIs
approximately 25% investment in CityPoint is accounted for using the equity
method. The Company has determined that CityPoint is a variable interest
entity, and the Company is not the primary beneficiary. The Companys maximum
exposure is its current investment balance of $37.4 million.

As of December
31, 2009, there was $26.0 million of debt at CityPoint scheduled to mature
during August of 2010. There are no options to extend this debt. Fund II and
its unaffiliated joint venture partners (JV Partner) share of this debt was
$6.1 million and $19.9 million, respectively. If CityPoint is unable to extend
the maturity date of this debt, Fund II and its JV Partner may be required to
fund their requisite share of capital to repay this obligation. In the event
that the JV Partner does not fund its requisite share of capital, pursuant to
the joint venture agreement, Fund II would have the option to fund the JV
Partners share of capital to repay this debt either as a loan to the JV Partner
or as additional equity in CityPoint.

F-21

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Investments In and Advances to
Unconsolidated Partnerships, continued

The following
tables summarize the Companys investments in unconsolidated affiliates
as of December 31, 2009, December 31, 2008 and December 31, 2007.

|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|------------------------------------------------------------------------------------------------ |  | ----------------- | ------- | --------- | - | --------------------- |  | ---------- | ------- | ------------------ | - | ------- | - | - | ------ |  | - | ------- | -
|                                                                                                 |  | December 31, 2009 |        
|                                                                                                 |  |                   |        
|                                                                                                 |  | RCP
 Venture      |         | CityPoint |   | Brandywine
 Portfolio |  | Crossroads |         | Other
 Investments |   | Total   |  
|                                                                                                 |  |                   |        
|(dollars in thousands)                                                                           |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Balance Sheets                                                                                   |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Assets                                                                                           |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Rental property, net                                                                             |  | $                 |        |           | $ |                      |  | $          | 127,091 |                    | $ | 4,968   |   | $ | 10,631 |  | $ | 142,690 |  
|Real Estate under development                                                                    |  |                   |         |           |   | 166,381               |  |            |        |                    |   |        |   |   |       |  |   | 166,381 |  
|Investment in unconsolidated affiliates                                                          |  |                   | 209,407 |           |   |                      |  |            |        |                    |   |        |   |   |       |  |   | 209,407 |  
|Other assets                                                                                     |  |                   |        |           |   | 3,265                 |  |            | 11,388  |                    |   | 4,322   |   |   | 1,976  |  |   | 20,951  |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Total assets                                                                                     |  | $                 | 209,407 |           | $ | 169,646               |  | $          | 138,479 |                    | $ | 9,290   |   | $ | 12,607 |  | $ | 539,429 |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Liabilities and partners equity                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Mortgage note payable                                                                            |  | $                 |        |           | $ | 25,990                |  | $          | 166,200 |                    | $ | 62,295  |   | $ | 4,200  |  | $ | 258,685 |  
|Other liabilities                                                                                |  |                   |        |           |   | 2,096                 |  |            | 7,762   |                    |   | 977     |   |   | 1,250  |  |   | 12,085  |  
|Partners equity (deficit)                                                                        |  |                   | 209,407 |           |   | 141,560               |  |            | (35,483 | )                  |   | (53,982 | ) |   | 7,157  |  |   | 268,659 |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Total liabilities and partners equity                                                           |  | $                 | 209,407 |           | $ | 169,646               |  | $          | 138,479 |                    | $ | 9,290   |   | $ | 12,607 |  | $ | 539,429 |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Companys investment in and advances to unconsolidated affiliates                                |  | $                 | 12,832  |           | $ | 37,357                |  | $          |        |                    | $ |        |   | $ | 1,523  |  | $ | 51,712  |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Share of distributions in excess of share of income and investment in
 unconsolidated affiliates |  | $                 |        |           | $ |                      |  | $          | (8,212  | )                  | $ | (12,377 | ) | $ |       |  | $ | (20,589 | )
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  

|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|------------------------------------------------------------------------------------------------ |  | ----------------- | ------- | --------- | - | --------------------- |  | ---------- | ------- | ------------------ | - | ------- | - | - | ------ |  | - | ------- | -
|                                                                                                 |  | December 31, 2008 |        
|                                                                                                 |  |                   |        
|                                                                                                 |  | RCP
 Venture      |         | CityPoint |   | Brandywine
 Portfolio |  | Crossroads |         | Other
 Investments |   | Total   |  
|                                                                                                 |  |                  
|(dollars in thousands)                                                                           |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Balance Sheets                                                                                   |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Assets                                                                                           |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Rental property, net                                                                             |  | $                 |        |           | $ |                      |  | $          | 129,679 |                    | $ | 5,143   |   | $ | 11,481 |  | $ | 146,303 |  
|Real Estate under development                                                                    |  |                   |        |           |   | 159,922               |  |            |        |                    |   |        |   |   |       |  |   | 159,922 |  
|Investment in unconsolidated affiliates                                                          |  |                   | 295,168 |           |   |                      |  |            |        |                    |   |        |   |   |       |  |   | 295,168 |  
|Other assets                                                                                     |  |                   |        |           |   | 3,983                 |  |            | 8,769   |                    |   | 5,283   |   |   | 2,770  |  |   | 20,805  |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Total assets                                                                                     |  | $                 | 295,168 |           | $ | 163,905               |  | $          | 138,448 |                    | $ | 10,426  |   | $ | 14,251 |  | $ | 622,198 |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Liabilities and partners equity                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Mortgage note payable                                                                            |  | $                 |        |           | $ | 34,000                |  | $          | 166,200 |                    | $ | 63,176  |   | $ | 5,173  |  | $ | 268,549 |  
|Other liabilities                                                                                |  |                   |        |           |   | 2,307                 |  |            | 7,895   |                    |   | 2,072   |   |   | 1,083  |  |   | 13,357  |  
|Partners equity (deficit)                                                                        |  |                   | 295,168 |           |   | 127,598               |  |            | (35,647 | )                  |   | (54,822 | ) |   | 7,995  |  |   | 340,292 |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Total liabilities and partners equity                                                           |  | $                 | 295,168 |           | $ | 163,905               |  | $          | 138,448 |                    | $ | 10,426  |   | $ | 14,251 |  | $ | 622,198 |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Companys investment in and advances to unconsolidated affiliates                                |  | $                 | 18,066  |           | $ | 33,445                |  | $          |        |                    | $ |        |   | $ | 3,467  |  | $ | 54,978  |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  
|Share of distributions in excess of share of income and investment in
 unconsolidated affiliates |  | $                 |        |           | $ |                      |  | $          | (8,236  | )                  | $ | (12,397 | ) | $ |       |  | $ | (20,633 | )
|                                                                                                 |  |                   |         |           |   |                       |  |            |         |                    |   |         |   |   |        |  |   |         |  

F-22

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Investments In and Advances to
Unconsolidated Partnerships, continued

|                                                               |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|-------------------------------------------------------------- |  | ---------------------------- | ------- | --------------------- | - | ---------- |  | ------------------ | ----- | ----- | - | ------ | - | - | ------- | -
|                                                               |  | Year ended December 31, 2009 |        
|                                                               |  |                              |        
|(dollars in
 thousands)                                        |  | RCP Venture                  |         | Brandywine
 Portfolio |   | Crossroads |  | Other
 Investments |       | Total |  
|                                                               |  |                              |        
|Statements of Operations                                       |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|Total revenue                                                  |  | $                            |        |                       | $ | 20,740     |  | $                  | 8,420 |       | $ | 1,675  |   | $ | 30,835  |  
|Operating and other expenses                                   |  |                              |        |                       |   | 6,045      |  |                    | 2,726 |       |   | 1,080  |   |   | 9,851   |  
|Interest expense                                               |  |                              |        |                       |   | 10,102     |  |                    | 3,437 |       |   | 247    |   |   | 13,786  |  
|Equity in losses of unconsolidated affiliates                  |  |                              | (30,568 | )                     |   |           |  |                    |      |       |   |       |   |   | (30,568 | )
|Depreciation and amortization                                  |  |                              |        |                       |   | 3,479      |  |                    | 568   |       |   | 1,105  |   |   | 5,152   |  
|Gain on sale of property, net                                  |  |                              |        |                       |   |           |  |                    |      |       |   | (390   | ) |   | (390    | )
|                                                               |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|                                                               |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|Net (loss) income                                              |  | $                            | (30,568 | )                     | $ | 1,114      |  | $                  | 1,689 |       | $ | (1,147 | ) | $ | (28,912 | )
|                                                               |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|                                                               |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|Companys share of net (loss) income                           |  | $                            | (2,213  | )                     | $ | 249        |  | $                  | 824   |       | $ | (1     | ) | $ | (1,141  | )
|Impairment reserve                                             |  |                              |        |                       |   |           |  |                    |      |       |   | (3,768 | ) |   | (3,768  | )
|Amortization of excess investment                              |  |                              |        |                       |   |           |  |                    | (388  | )     |   |       |   |   | (388    | )
|                                                               |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|Companys share of net (loss) income before extraordinary gain |  | $                            | (2,213  | )                     | $ | 249        |  | $                  | 436   |       | $ | (3,769 | ) | $ | (5,297  | )
|                                                               |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  

|                                                               |  |                              |         |                     |   |            |   |                    |       |       |   |       |  |   |         |  
|-------------------------------------------------------------- |  | ---------------------------- | ------- | ------------------- | - | ---------- | - | ------------------ | ----- | ----- | - | ----- |  | - | ------- | -
|                                                               |  | Year ended December 31, 2008 |        
|                                                               |  |                              |        
|(dollars in
 thousands)                                        |  | RCP Venture                  |         | BrandywinePortfolio |   | Crossroads |   | Other
 Investments |       | Total |  
|                                                               |  |                              |        
|Statements of Operations                                       |  |                              |         |                     |   |            |   |                    |       |       |   |       |  |   |         |  
|Total revenue                                                  |  | $                            |        |                     | $ | 19,782     |   | $                  | 7,894 |       | $ | 2,781 |  | $ | 30,457  |  
|Operating and other expenses                                   |  |                              |        |                     |   | 6,535      |   |                    | 3,116 |       |   | 1,909 |  |   | 11,560  |  
|Interest expense                                               |  |                              |        |                     |   | 10,130     |   |                    | 3,461 |       |   | 542   |  |   | 14,133  |  
|Equity in earnings of unconsolidated affiliates                |  |                              | 177,775 |                     |   |           |   |                    |      |       |   |      |  |   | 177,775 |  
|Depreciation and amortization                                  |  |                              |        |                     |   | 3,799      |   |                    | 650   |       |   | 884   |  |   | 5,333   |  
|Gain on sale of property, net                                  |  |                              |        |                     |   |           |   |                    |      |       |   | 6,838 |  |   | 6,838   |  
|                                                               |  |                              |         |                     |   |            |   |                    |       |       |   |       |  |   |         |  
|                                                               |  |                              |         |                     |   |            |   |                    |       |       |   |       |  |   |         |  
|Net income (loss)                                              |  | $                            | 177,775 |                     | $ | (682       | ) | $                  | 667   |       | $ | 6,284 |  | $ | 184,044 |  
|                                                               |  |                              |         |                     |   |            |   |                    |       |       |   |       |  |   |         |  
|                                                               |  |                              |         |                     |   |            |   |                    |       |       |   |       |  |   |         |  
|Companys share of net income (loss)                           |  | $                            | 16,784  |                     | $ | (151       | ) | $                  | 326   |       | $ | 3,338 |  | $ | 20,297  |  
|Amortization of excess investment                              |  |                              |        |                     |   |           |   |                    | (391  | )     |   |      |  |   | (391    | )
|                                                               |  |                              |         |                     |   |            |   |                    |       |       |   |       |  |   |         |  
|Companys share of net income (loss) before extraordinary gain |  | $                            | 16,784  |                     | $ | (151       | ) | $                  | (65   | )     | $ | 3,338 |  | $ | 19,906  |  
|                                                               |  |                              |         |                     |   |            |   |                    |       |       |   |       |  |   |         |  

|                                                                  |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|----------------------------------------------------------------- |  | ---------------------------- | ------- | --------------------- | - | ---------- |  | ------------------ | ----- | ----- | - | ------ | - | - | ------- | -
|                                                                  |  | Year ended December 31, 2007 |        
|                                                                  |  |                              |        
|(dollars in
 thousands)                                           |  | RCP Venture                  |         | Brandywine
 Portfolio |   | Crossroads |  | Other
 Investments |       | Total |  
|                                                                  |  |                              |        
|Statements of Operations                                          |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|Total revenue                                                     |  | $                            |        |                       | $ | 19,449     |  | $                  | 8,518 |       | $ | 6,665  |   | $ | 34,632  |  
|Operating and other expenses                                      |  |                              |        |                       |   | 5,223      |  |                    | 3,095 |       |   | 1,793  |   |   | 10,111  |  
|Interest expense                                                  |  |                              |        |                       |   | 10,102     |  |                    | 3,485 |       |   | 2,333  |   |   | 15,920  |  
|Equity in earnings of unconsolidated affiliates                   |  |                              | 46,416  |                       |   |           |  |                    |      |       |   |       |   |   | 46,416  |  
|Equity in earning of unconsolidated affiliates extraordinary gain |  |                              | 151,000 |                       |   |           |  |                    |      |       |   |       |   |   | 151,000 |  
|Depreciation and amortization                                     |  |                              |        |                       |   | 3,081      |  |                    | 475   |       |   | 4,627  |   |   | 8,183   |  
|                                                                  |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|                                                                  |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|Net income (loss)                                                 |  | $                            | 197,416 |                       | $ | 1,043      |  | $                  | 1,463 |       | $ | (2,088 | ) | $ | 197,834 |  
|                                                                  |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|                                                                  |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|Companys share of net income                                     |  | $                            | 3,312   |                       | $ | 232        |  | $                  | 717   |       | $ | 2,750  |   | $ | 7,011   |  
|Amortization of excess investment                                 |  |                              |        |                       |   |           |  |                    | (392  | )     |   |       |   |   | (392    | )
|                                                                  |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|Companys share of net income before extraordinary gain           |  | $                            | 3,312   |                       | $ | 232        |  | $                  | 325   |       | $ | 2,750  |   | $ | 6,619   |  
|                                                                  |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  
|Companys share of extraordinary gain                             |  | $                            | 30,200  |                       | $ |           |  | $                  |      |       | $ |       |   | $ | 30,200  |  
|                                                                  |  |                              |         |                       |   |            |  |                    |       |       |   |        |   |   |         |  

F-23

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Notes Receivable and Preferred Equity
Investment

At December
31, 2009, the Companys preferred equity investment and notes receivable, net
aggregated $125.2 million, and were collateralized by the underlying
properties, the borrowers ownership interest in the entities that own the
properties and/or by the borrowers personal guarantee. Interest rates on the
Companys preferred equity investment and notes receivable ranged from 10.0% to
22.4% with maturities that range from demand notes to January 2017. Notes
receivable and preferred equity investments are as follows:

|                           |  |                          |  |                        |  |                          |  |              |         |                           |   |                                |  |   |         | 
|-------------------------- |  | ------------------------ |  | ---------------------- |  | ------------------------ |  | ------------ | ------- | ------------------------- | - | ------------------------------ |  | - | ------- | 
|Description                |  | Effective
 interest rate |  | Final maturity
 date   |  | Periodic
 payment
 terms |  | Prior
 liens |         | Face amount
 of mortgages |   | Carrying
 amount of
 mortgages | 
|                           |  |                          |  |                        |  |                          |  |              |         |                           |   |                                | 
|(dollars in
 thousands)    |  |                          |  |                        |  |                          |  |              |         |                           |   |                                | 
|                           |  |                          |  |                        |  |                          |  |              |         |                           |   |                                | 
|72nd Street                |  | 19.48%                   |  | 7/18/2011              |  | (1)                      |  | $            | 185,000 |                           | $ | 47,000                         |  | $ | 40,975  | 
|Georgetown A               |  | 10.19%                   |  | 11/12/2010             |  | (3)                      |  |              | 8,375   |                           |   | 8,000                          |  |   | 8,000   | 
|Georgetown B               |  | 13.44%                   |  | 6/27/2010              |  | (2)                      |  |              | 115,454 |                           |   | 40,000                         |  |   | 40,000  | 
|Individually
 less than 3% |  | 10.00% - 22.43%          |  | Demand note  1/1/2017 |  |                          |  |              | 272,559 |                           |   | 24,390                         |  |   | 15,393  | 
|                           |  |                          |  |                        |  |                          |  |              |         |                           |   |                                |  |   |         | 
|Other loan                 |  | 14.50%                   |  | 12/30/2010             |  | (2)                      |  |              |        |                           |   | 8,585                          |  |   | 8,585   | 
|First mortgage loan        |  | 12.75%                   |  | 9/11/2010              |  | (3)                      |  |              |        |                           |   | 10,000                         |  |   | 10,000  | 
|First mortgage loan        |  | 12.29%                   |  | 12/31/2011             |  | (2)                      |  |              |        |                           |   | 7,134                          |  |   | 2,268   | 
|                           |  |                          |  |                        |  |                          |  |              |         |                           |   |                                |  |   |         | 
|Total                      |  |                          |  |                        |  |                          |  |              |         |                           | $ | 145,109                        |  | $ | 125,221 | 
|                           |  |                          |  |                        |  |                          |  |              |         |                           |   |                                |  |   |         | 

Notes:

|    |                                                                                   
|--- | ----------------------------------------------------------------------------------
|(1) | Principal
 and interest, including a $7.5 million exit fee, are due upon maturity.
|   
|(2) | Payable upon
 maturity.                                                           
|   
|(3) | Interest
 only payable monthly, principal due on maturity.                        

During
December 2009, the Company has made a loan of $8.6 million which bears interest
at 14.5% with a one year term and one six month extension.

During
December 2009, the Company received a payment of $4.7 million, representing a
paydown on the first mortgage loan secured by three retail properties,
following the sale of one of the collateralized properties.

During August
2009, the Company received a payment of $2.8 million, representing the entire
balance on the first mortgage loan secured by a property in Pennsylvania.

During August
2009, the Company received a payment of $5.1 million, representing a paydown on
the first mortgage loan secured by a single tenant property located in Long
Island, New York.

During June
2009, the Company received a payment of $0.7 million, representing a paydown on
the mezzanine loan secured by a property in South Carolina.

During March
2009, the Company received a payment of $0.3 million, representing the entire
balance on a mezzanine loan secured by a property in South Carolina.

During June
2008, the Company made a $40.0 million preferred equity investment in an entity
that owns a portfolio of 18 properties located primarily in Georgetown,
Washington D.C. The portfolio consists of 306,000 square feet of principally
retail space. The term of this investment is for two years, with two one-year
extensions, and provides a 13% preferred return.

F-24

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Notes Receivable and Preferred Equity
Investment, continued

During July
2008, the Company made a $34.0 million mezzanine loan, which is collateralized
by a mixed-use retail and residential development at 72nd Street and Broadway
on the Upper West Side of Manhattan. Upon completion, this project is expected
to include approximately 50,000 square feet of retail on three levels and 196
luxury residential rental apartments. The term of the loan is for a period of
three years, with a one year extension, and is expected to yield in excess of
20%.

During
September 2008, the Company, through Fund III, made a $10.0 million first
mortgage loan, which is collateralized by land located on Long Island, New
York. The term of the loan is for a period of two years, and provides an
effective annual return of approximately 13%.

The following
table reconciles notes receivable and preferred equity investments from January
1, 2007 to December 31, 2009:

|                               |  |                                   |         |      |   |         |   |   |         |  
|------------------------------ |  | --------------------------------- | ------- | ---- | - | ------- | - | - | ------- | -
|                               |  | For the
 years ended December 31, |        
|                               |  |                                   |        
|(dollars in thousands)         |  | 2009                              |         | 2008 |   | 2007    |  
|                               |  |                                   |         |      |   |         |  
|                               |  |                                   |         |      |   |         |   |   |         |  
|Balance at beginning of period |  | $                                 | 125,587 |      | $ | 57,662  |   | $ | 36,038  |  
|Additions during period:       |  |                                   |         |      |   |         |   |   |         |  
|New mortgage loans             |  |                                   | 9,362   |      |   | 88,480  |   |   | 32,548  |  
|                               |  |                                   |         |      |   |         |   |   |         |  
|Deductions during period:      |  |                                   |         |      |   |         |   |   |         |  
|Collections of principal       |  |                                   | (13,614 | )    |   | (19,923 | ) |   | (11,071 | )
|Amortization of premium        |  |                                   | 5,352   |      |   | 2,368   |   |   | 147     |  
|Reserves                       |  |                                   | (1,466  | )    |   | (3,000  | ) |   |        |  
|                               |  |                                   |         |      |   |         |   |   |         |  
|Balance at close of period     |  | $                                 | 125,221 |      | $ | 125,587 |   | $ | 57,662  |  
|                               |  |                                   |         |      |   |         |   |   |         |  

6. Deferred Charges

Deferred
charges consist of the following as of December 31, 2009 and 2008:

|                                 |  |               |         |      |   |         |  
|-------------------------------- |  | ------------- | ------- | ---- | - | ------- | -
|                                 |  | December
 31, |        
|(dollars in thousands)           |  | 2009          |         | 2008 |  
|                                 |  |               |         |      |  
|Deferred financing costs         |  | $             | 22,852  |      | $ | 22,750  |  
|Deferred leasing and other costs |  |               | 33,169  |      |   | 22,117  |  
|                                 |  |               |         |      |   |         |  
|                                 |  |               | 56,021  |      |   | 44,867  |  
|Accumulated amortization         |  |               | (27,710 | )    |   | (22,968 | )
|                                 |  |               |         |      |   |         |  
|                                 |  | $             | 28,311  |      | $ | 21,899  |  
|                                 |  |               |         |      |   |         |  

F-25

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Acquired Lease Intangibles

Upon
acquisitions of real estate, the Company assesses the fair value of acquired
assets (including land, buildings and improvements, and identified intangibles
such as above and below market leases, acquired in-place leases and customer
relationships) and acquired liabilities in accordance with ASC Topic 805. The
intangibles are amortized over the remaining non-cancelable terms of the
respective leases.

The scheduled
amortization of acquired lease intangible assets as of December 31, 2009 is as
follows:

|                       |  |   |        | 
|---------------------- |  | - | ------ | 
|(dollars in thousands) |  |   |        | 
|2010                   |  | $ | 3,648  | 
|2011                   |  |   | 3,086  | 
|2012                   |  |   | 2,596  | 
|2013                   |  |   | 2,011  | 
|2014                   |  |   | 1,644  | 
|Thereafter             |  |   | 9,397  | 
|                       |  |   |        | 
|                       |  | $ | 22,382 | 
|                       |  |   |        | 

The scheduled
amortization of acquired lease intangible liabilities as of December 31, 2009
is as follows:

|                       |  |   |       | 
|---------------------- |  | - | ----- | 
|(dollars in thousands) |  |   |       | 
|2010                   |  | $ | 991   | 
|2011                   |  |   | 994   | 
|2012                   |  |   | 948   | 
|2013                   |  |   | 730   | 
|2014                   |  |   | 451   | 
|Thereafter             |  |   | 2,639 | 
|                       |  |   |       | 
|                       |  | $ | 6,753 | 
|                       |  |   |       | 

8. Mortgage Loans

At December
31, 2009 and 2008, mortgage notes payable, excluding the net valuation premium
on the assumption of debt, aggregated $732.2 million and $653.4 million,
respectively, and were collateralized by 28 and 57 properties and related
tenant leases, respectively. Interest rates on the Companys outstanding
mortgage indebtedness ranged from 0.72% to 7.18% with maturities that ranged
from March 2010 to November 2032. Certain loans are cross-collateralized and
cross-defaulted. The loan agreements contain customary representations,
covenants and events of default. Certain loan agreements require the Company to
comply with affirmative and negative covenants, including the maintenance of
debt service coverage and leverage ratios.

The following
reflects mortgage loan activity for the year ended December 31, 2009:

| |      |                                                                                                                                                                                                                       
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | i)   | borrowed
 $20.3 million on three existing construction loans,                                                                                                                                                         
| |      |                                                                                                                                                                                                                       
| | ii)  | paid off
 $4.8 million of self-amortizing debt,                                                                                                                                                                       
| |      |                                                                                                                                                                                                                       
| | iii) | closed on a
 $19.0 million loan that bears interest at a floating rate of LIBOR plus 150
 basis points and matures on January 15, 2010. The proceeds of the loan were
 used to repay a maturing loan of $19.0 million,
| |      |                                                                                                                                                                                                                       
| | iv)  | extended a
 credit facility, with a balance of $53.7 million, to March 1, 2010 and
 adjusted the interest rate spread over LIBOR from 100 basis points to 250
 basis points,                                          

F-26

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Mortgage Loans, continued

| |       |                                                                                                                                                                                                                                                                                                                                    
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | v)    | extended a
 $11.4 million note that was to mature on May 18, 2009 to July 18, 2009. On
 July 18, 2009 this note was paid down by $0.9 million and extended to July
 19, 2010 at an interest rate of LIBOR plus 325 basis points with a one year
 extension option,                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                    
| | vi)   | closed on a $4.8
 million loan that bears interest at a fixed rate of 6.35% and matures on July
 1, 2014,                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                    
| | vii)  | paid off
 $1.1 million of principal on an outstanding loan,                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                    
| | viii) | closed on a
 $45.0 million note that bears interest at a floating rate of LIBOR plus 400
 basis points and matures on July 29, 2012 with a two one-year extension
 options. The loan provides for a future advance of up to $2.0 million to
 finance tenant improvements and leasing commissions incurred in leasing the
 property,
| |       |                                                                                                                                                                                                                                                                                                                                    
| | ix)   | paid off the
 outstanding balance of $33.7 million on a loan that had matured,                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                    
| | x)    | paid off the
 outstanding balance of $4.8 million on a loan that had matured; and                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                    
| | xi)   | paid off the
 balance of $19.0 million on an outstanding loan,                                                                                                                                                                                                                                                                     

The following table sets
 forth certain information pertaining to the Companys secured credit
 facilities:

|                                  |  |                                    |         |                                            |   |                                                                               |  |                                            |         |                                                           |   |                                                                      |  |   |       |  |   |         | 
|--------------------------------- |  | ---------------------------------- | ------- | ------------------------------------------ | - | ----------------------------------------------------------------------------- |  | ------------------------------------------ | ------- | --------------------------------------------------------- | - | -------------------------------------------------------------------- |  | - | ----- |  | - | ------- | 
|(dollars in
 thousands)
 Borrower |  | Total
 amount of
 credit
 facility |         | Amount
 borrowed as of
 December 31,
 2008 |   | 2009 net
 borrowings
 (repayments)
 during the year
 ended December
 31, 2009 |  | Amount
 borrowed as of
 December 31,
 2009 |         | Letters of
 credit
 outstanding as
 of December
 31, 2009 |   | Amount
 available under
 credit facilities
 as of December
 31, 2009 | 
|                                  |  |                                    |         |                                            |   |                                                                               |  |                                            |         |                                                           |   |                                                                      | 
|Acadia Realty, LP                 |  | $                                  | 64,498  |                                            | $ | 48,900                                                                        |  | $                                          | (18,900 | )                                                         | $ | 30,000                                                               |  | $ | 4,000 |  | $ | 30,498  | 
|Acadia Realty, LP                 |  |                                    | 30,000  |                                            |   |                                                                              |  |                                            | 2,000   |                                                           |   | 2,000                                                                |  |   |      |  |   | 28,000  | 
|Fund II                           |  |                                    | 53,455  |                                            |   | 34,681                                                                        |  |                                            | 13,564  |                                                           |   | 48,245                                                               |  |   | 5,210 |  |   |        | 
|Fund III                          |  |                                    | 221,000 |                                            |   | 62,250                                                                        |  |                                            | 77,200  |                                                           |   | 139,450                                                              |  |   | 500   |  |   | 81,050  | 
|                                  |  |                                    |         |                                            |   |                                                                               |  |                                            |         |                                                           |   |                                                                      |  |   |       |  |   |         | 
|Total                             |  | $                                  | 368,953 |                                            | $ | 145,831                                                                       |  | $                                          | 73,864  |                                                           | $ | 219,695                                                              |  | $ | 9,710 |  | $ | 139,548 | 
|                                  |  |                                    |         |                                            |   |                                                                               |  |                                            |         |                                                           |   |                                                                      |  |   |       |  |   |         | 

In June 2009,
the servicer of two of the Companys loans alleged that non-monetary defaults
had occurred on construction loans for $31.7 million and $11.5 million
collateralized by the Pelham Manor Shopping Plaza and Atlantic Avenue,
respectively. The servicer contends that the Company did not substantially
complete the improvements in accordance with the required completion dates as
defined in the loan agreements and, accordingly, did not meet the requirements
for the final draws. The Company does not believe the loans are in default and
will vigorously defend its position and is currently in discussions with the
servicer to resolve these issues. The Company believes that the ultimate
resolution of this matter will not have a material adverse effect on the
Companys financial condition or results of operations.

F-27

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Mortgage Loans, continued

The following
table summarizes our mortgage indebtedness by lender or issuer as of
December 31, 2009 and December 31, 2008:

|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|----------------------------------------------- |  | -------------------- | ------- | -------------------- | - | ------------------------------------- | - | -------------------------- | - | ---------------------- |  | -------------- |  | ----
|(dollars in
thousands)                          |  | December
 31, 
 2009 |         | December
 31, 
 2008 |   | Interest
 Rate at 
 December 31, 2009 |   | Maturity                   |   | Properties
 Encumbered |  | Payment
 Terms
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |               
|Mortgage notes
 payable  variable-rate         |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Bank of America,
 N.A.                          |  | $                    | 9,467   |                      | $ | 9,624                                 |   | 1.63% (LIBOR +1.40%)       |   | 6/29/2012              |  | (1)            |  | (32)
|RBS Greenwich
 Capital                          |  |                      | 30,000  |                      |   | 30,000                                |   | 1.63% (LIBOR +1.40%)       |   | 4/1/2010               |  | (2)            |  | (33)
|PNC Bank,
 National Association                 |  |                      | 10,450  |                      |   | 11,423                                |   | 3.48% (LIBOR +3.25%)       |   | 7/18/2010              |  | (4)            |  | (42)
|Bank of America,
 N.A.                          |  |                      | 14,179  |                      |   | 15,526                                |   | 1.53% (LIBOR +1.30%)       |   | 12/1/2011              |  | (7)            |  | (32)
|Anglo Irish Bank
 Corporation                   |  |                      | 9,800   |                      |   | 9,800                                 |   | 1.88% (LIBOR +1.65%)       |   | 10/30/2010             |  | (11)           |  | (33)
|                                                |  |                      |         |                      |   |                                       |   | Greater of 1.5% + 3.5%
 or |   |                        |  |                |  |     
|Eurohypo AG                                     |  |                      | 86,000  |                      |   | 80,443                                |   | 5.00% (LIBOR +3.50%)       |   | 10/4/2011              |  | (6)            |  | (33)
|Bank of China                                   |  |                      |        |                      |   | 19,000                                |   | 2.29% (LIBOR +1.85%)       |   | 1/15/2009              |  | (23)           |  | (33)
|Bank of America,
 N.A.                          |  |                      | 44,878  |                      |   |                                      |   | 4.23% (LIBOR +4.00%)       |   | 8/1/2012               |  | (5)            |  | (32)
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Sub-total
 mortgage notes payable               |  |                      | 204,774 |                      |   | 175,816                               |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Secured credit
 facilities:                     |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Bank of America,
 N.A.                          |  |                      | 30,000  |                      |   | 48,900                                |   | 1.48% (LIBOR +1.25%)       |   | 12/1/2010              |  | (8)            |  | (34)
|JP Morgan Chase
 Bank, N.A.                     |  |                      | 2,000   |                      |   |                                      |   | 1.48% (LIBOR +1.25%)       |   | 3/29/2010              |  | (31)           |  | (33)
|Bank of America,
 N.A./ Bank of New York        |  |                      | 48,245  |                      |   | 34,681                                |   | 2.73% (LIBOR +2.50%)       |   | 3/1/2010               |  | (9)            |  | (33)
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Bank of America,
 N.A                           |  |                      | 139,450 |                      |   | 62,250                                |   | 0.72% (Base rate +0.50%)   |   | 10/9/2011              |  | (10)           |  | (33)
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Sub-total secured
 credit facilities            |  |                      | 219,695 |                      |   | 145,831                               |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Interest rate
 swaps (43)                       |  |                      | (83,416 | )                    |   | (73,415                               | ) |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Total
 variable-rate debt                       |  |                      | 341,053 |                      |   | 248,232                               |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Mortgage notes
 payable  fixed-rate            |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|RBS Greenwich
 Capital                          |  |                      | 14,343  |                      |   | 14,554                                |   | 5.64                       | % | 9/6/2014               |  | (14)           |  | (32)
|RBS Greenwich
 Capital                          |  |                      | 17,600  |                      |   | 17,600                                |   | 4.98                       | % | 9/6/2015               |  | (15)           |  | (35)
|RBS Greenwich
 Capital                          |  |                      | 12,313  |                      |   | 12,485                                |   | 5.12                       | % | 11/6/2015              |  | (16)           |  | (32)
|Bear Stearns
 Commercial                        |  |                      | 34,600  |                      |   | 34,600                                |   | 5.53                       | % | 1/1/2016               |  | (17)           |  | (36)
|Bear Stearns
 Commercial                        |  |                      | 20,500  |                      |   | 20,500                                |   | 5.44                       | % | 3/1/2016               |  | (18)           |  | (33)
|American United
 Life Insurance Company         |  |                      | 4,751   |                      |   |                                      |   | 6.35                       | % | 7/1/2014               |  | (19)           |  | (32)
|J.P. Morgan Chase                               |  |                      | 8,182   |                      |   | 8,322                                 |   | 6.40                       | % | 11/1/2032              |  | (20)           |  | (32)
|Column Financial,
 Inc.                         |  |                      | 9,481   |                      |   | 9,663                                 |   | 5.45                       | % | 6/11/2013              |  | (21)           |  | (32)
|Merrill Lynch
 Mortgage Lending, Inc.           |  |                      | 23,500  |                      |   | 23,500                                |   | 6.06                       | % | 10/1/2016              |  | (22)           |  | (37)
|Cortlandt Deposit
 Corp                         |  |                      |        |                      |   | 1,150                                 |   | 6.62                       | % | 2/1/2009               |  | (24)           |  | (41)
|Cortlandt Deposit
 Corp                         |  |                      |        |                      |   | 2,318                                 |   | 6.51                       | % | 1/15/2009              |  | (25)           |  | (41)
|Bank of America
 N.A.                           |  |                      | 25,500  |                      |   | 25,500                                |   | 5.80                       | % | 10/1/2017              |  | (3)            |  | (33)
|Bear Stearns
 Commercial                        |  |                      | 26,250  |                      |   | 26,250                                |   | 5.88                       | % | 8/1/2017               |  | (12)           |  | (38)
|Wachovia                                        |  |                      | 26,000  |                      |   | 26,000                                |   | 5.42                       | % | 2/11/2017              |  | (13)           |  | (33)
|Bear Stearns
 Commercial                        |  |                      | 31,652  |                      |   | 25,284                                |   | 7.18                       | % | 1/1/2020               |  | (29)           |  | (39)
|GEMSA Loan
 Services, L.P.                      |  |                      |        |                      |   | 4,944                                 |   | 5.37                       | % | 12/1/2009              |  | (26)           |  | (32)
|Wachovia                                        |  |                      |        |                      |   | 34,322                                |   | 5.86                       | % | 6/11/2009              |  | (27)           |  | (32)
|GEMSA Loan
 Services, L.P.                      |  |                      | 41,500  |                      |   | 41,500                                |   | 5.30                       | % | 3/16/2011              |  | (28)           |  | (33)
|Bear Stearns
 Commercial                        |  |                      | 11,543  |                      |   | 3,265                                 |   | 7.14                       | % | 1/1/2020               |  | (30)           |  | (40)
|Interest rate
 swaps (43)                       |  |                      | 83,416  |                      |   | 73,415                                |   | 5.35                       | % | (45)                   |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Total fixed-rate
 debt                          |  |                      | 391,131 |                      |   | 405,172                               |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Total fixed and
 variable debt                  |  |                      | 732,184 |                      |   | 653,404                               |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Valuation of
 premium, net of amortization (44) |  |                      | 103     |                      |   | 139                                   |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     
|Total                                           |  | $                    | 732,287 |                      | $ | 653,543                               |   |                            |   |                        |  |                |  |     
|                                                |  |                      |         |                      |   |                                       |   |                            |   |                        |  |                |  |     

F-28

---



ACADIA REALTY TRUST AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Mortgage Loans, continued

Notes:

|     |                                                                                                                                                                                                                                                            
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)  | Village Commons Shopping
 Center                                                                                                                                                                                                                           
|(2)  | 161st Street                                                                                                                                                                                                                                               
|(3)  | 216th Street                                                                                                                                                                                                                                               
|(4)  | Liberty Avenue                                                                                                                                                                                                                                             
|(5)  | Cortlandt Towne Center                                                                                                                                                                                                                                     
|(6)  | Fordham Place                                                                                                                                                                                                                                              
|(7)  | Branch Shopping Center                                                                                                                                                                                                                                     
|(8)  | Line of credit secured by
 the following properties:                                                                                                                                                                                                       
|     | Marketplace of Absecon                                                                                                                                                                                                                                     
|     | Bloomfield Town Square                                                                                                                                                                                                                                     
|     | Hobson West Plaza                                                                                                                                                                                                                                          
|     | Town Line Plaza                                                                                                                                                                                                                                            
|     | Methuen Shopping Center                                                                                                                                                                                                                                    
|     | Abington Towne Center                                                                                                                                                                                                                                      
|(9)  | Acadia Strategic
 Opportunity Fund II, LLC line of credit secured by unfunded investor capital
 commitments                                                                                                                                                
|(10) | Acadia Strategic
 Opportunity Fund III, LLC line of credit secured by unfunded investor capital
 commitments                                                                                                                                               
|(11) | Tarrytown Center                                                                                                                                                                                                                                           
|(12) | Merrillville Plaza                                                                                                                                                                                                                                         
|(13) | 239 Greenwich Avenue                                                                                                                                                                                                                                       
|(14) | New Loudon Center                                                                                                                                                                                                                                          
|(15) | Crescent Plaza                                                                                                                                                                                                                                             
|(16) | Pacesetter Park Shopping
 Center                                                                                                                                                                                                                           
|(17) | Elmwood Park Shopping
 Center                                                                                                                                                                                                                              
|(18) | Gateway Shopping Center                                                                                                                                                                                                                                    
|(19) | Clark Diversey                                                                                                                                                                                                                                             
|(20) | Boonton Shopping Center                                                                                                                                                                                                                                    
|(21) | Chestnut Hill                                                                                                                                                                                                                                              
|(22) | Walnut Hill                                                                                                                                                                                                                                                
|(23) | Sherman Avenue                                                                                                                                                                                                                                             
|(24) | Kroger Portfolio                                                                                                                                                                                                                                           
|(25) | Safeway Portfolio                                                                                                                                                                                                                                          
|(26) | Acadia Suffern                                                                                                                                                                                                                                             
|(27) | Acadia Storage Company, LLC                                                                                                                                                                                                                                
|(28) | Acadia Storage Post
 Portfolio CO, LLC                                                                                                                                                                                                                     
|(29) | Pelham Manor                                                                                                                                                                                                                                               
|(30) | Atlantic Avenue                                                                                                                                                                                                                                            
|(31) | Line of credit secured by
 Ledgewood Mall                                                                                                                                                                                                                  
|(32) | Monthly principal and
 interest.                                                                                                                                                                                                                           
|(33) | Interest only monthly.                                                                                                                                                                                                                                     
|(34) | Annual principal and
 monthly interest.                                                                                                                                                                                                                    
|(35) | Interest only monthly until
 9/10; monthly principal and interest thereafter.                                                                                                                                                                              
|(36) | Interest only monthly until
 1/10; monthly principal and interest thereafter.                                                                                                                                                                              
|(37) | Interest only monthly until
 10/11; monthly principal and interest thereafter.                                                                                                                                                                             
|(38) | Interest only monthly until
 7/12 monthly principal and interest thereafter.                                                                                                                                                                               
|(39) | Interest only monthly until
 1/13 monthly principal and interest thereafter.                                                                                                                                                                               
|(40) | Interest only monthly until
 1/15 monthly principal and interest thereafter                                                                                                                                                                                
|(41) | Annual principal and
 semi-annual interest payments.                                                                                                                                                                                                       
|(42) | Interest only upon draw
 down on construction loan.                                                                                                                                                                                                        
|(43) | Maturing between 1/1/10 and
 11/30/2012.                                                                                                                                                                                                                   
|(44) | In connection with the
 assumption of debt in accordance with the requirements of ASC Topic 805, the
     Company has recorded valuation premium that is being amortized to interest
    expense over the remaining terms of the underlying mortgage loans.
|(45) | Represents the amount of
 the Companys variable-rate debt that has been fixed through certain cash
 flow hedge transactions (Note 20).                                                                                                                    

F-29

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Mortgage Loans, continued

The scheduled
principal repayments of all indebtedness included Convertible Notes as of
December 31, 2009 are as follows (does not include $103 net valuation premium
on assumption of debt):

|                       |  |   |         | 
|---------------------- |  | - | ------- | 
|(dollars in thousands) |  |   |         | 
|2010                   |  | $ | 132,620 | 
|2011                   |  |   | 331,047 | 
|2012                   |  |   | 55,379  | 
|2013                   |  |   | 11,692  | 
|2014                   |  |   | 20,117  | 
|Thereafter             |  |   | 229,239 | 
|                       |  |   |         | 
|                       |  | $ | 780,094 | 
|                       |  |   |         | 

9. Convertible Notes Payable

In December
2006 and January 2007, the Company issued a total of $115.0 million in
principal of convertible notes with a fixed interest rate of 3.75% due 2026
(the Convertible Notes). The Convertible Notes were issued at par and require
interest payments semi-annually in arrears on June 15th and December 15th of
each year. The Convertible Notes are unsecured unsubordinated obligations and
rank equally with all other unsecured and unsubordinated indebtedness. The
Convertible Notes had an initial conversion price of $30.86 per share. The
conversion rate may be adjusted under certain circumstances, including the
payment of cash dividends in excess of the regular quarterly cash dividend in
place at the time the Convertible Notes were issued. As of December 31, 2009,
the adjusted conversion price is $29.26. Upon conversion of the Convertible
Notes, the Company will deliver cash and, in some circumstances, Common Shares,
as specified in the indenture relating to the Convertible Notes. In general,
the Convertible Notes may only be converted prior to maturity during any
calendar quarter beginning after December 31, 2006 if the Companys Common
Shares trade at 130% of the conversion price for at least 20 days within a
consecutive 30 day trading period. Prior to December 20, 2011, the Company will
not have the right to redeem Convertible Notes, except to preserve its status
as a REIT. After December 20, 2011, the Company will have the right to redeem
the notes, in whole or in part, at any time and from time to time, for cash
equal to 100% of the principal amount of the notes plus any accrued and unpaid
interest to, but not including, the redemption date. The Holders of notes may
require the Company to repurchase their notes, in whole or in part, on December
20, 2011, December 15, 2016, and December 15, 2021 for cash equal to 100% of
the principal amount of the notes to be repurchased plus any accrued and unpaid
interest to, but not including, the repurchase date.

In general,
upon a conversion of notes, the Company will deliver cash and, at the Companys
election, its Common Shares, with an aggregate value, which the Company refers
to as the conversion value, equal to the conversion rate multiplied by the
average price of the Companys Common Shares. The net amount may be paid, at
the Companys option, in cash, its Common Shares or a combination of cash and
its Common Shares.

During 2009
and 2008, the Company purchased $57.0 million and $8.0 million in face amount,
respectively, of its convertible debt at an average discount of approximately
19%. The transactions resulted in a gain on debt extinguishment of $7.1 million
and $1.5 million for the years ended December 31, 2009 and 2008, respectively.
The outstanding Convertible Note face amount as of December 31, 2009 and 2008
was $50.0 million and $107.0 million, respectively.

F-30

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Fair Value Measurements

ASC Topic 820
Fair Value Measurements and Disclosures defines fair value as the price that
would be received to sell an asset, or paid to transfer a liability, in an
orderly transaction between market participants.

ASC Topic
820s valuation techniques are based on observable or unobservable inputs.
Observable inputs reflect market data obtained from independent sources, while
unobservable inputs reflect the Companys market assumptions. These two types
of inputs have created the following fair value hierarchy:

| |   |                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Level 1 -
 Quoted prices for identical instruments in active markets                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                        
| |  | Level 2 - Quoted prices for similar instruments in active markets; quoted
 prices for identical or similar instruments in markets that are not active;
 and model-derived valuations in which significant value drivers are
 observable
| |   |                                                                                                                                                                                                                                        
| |  | Level 3 -
 Valuations derived from valuation techniques in which significant value drivers
 are unobservable                                                                                                                           

The following
describes the valuation methodologies the Company uses to measure financial
assets and liabilities at fair value:

Derivative
Instruments  The Companys derivative financial liabilities primarily
represent interest rate swaps and a cap and are valued using Level 2 inputs.
The fair value of these instruments is based upon the estimated amounts the
Company would receive to sell an asset or pay to transfer a liability in an
orderly transaction between market participants at the reporting date and is
determined using interest rate market pricing models. With the adoption ASC
Topic 820, the Company has amended the techniques used in measuring the fair
value of its derivative positions. This amendment includes the impact of credit
valuation adjustments on derivatives measured at fair value. The implementation
of this amendment did not have a material impact on the Companys consolidated
financial position or results of operations.

The following
table presents the Companys liabilities measured at fair value based on level
of inputs at December 31, 2009:

|                                          |  |         |   |         |   |         |  |   |   | 
|----------------------------------------- |  | ------- | - | ------- | - | ------- |  | - | - | 
|(dollars
 in thousands)                   |  | Level 1 |   | Level 2 |   | Level 3 | 
|                                          |  |         |   |         |   |         | 
|Liabilities                               |  |         |   |         |   |         |  |   |   | 
|Derivatives                               |  | $       |  |         | $ | 3,256   |  | $ |  | 
|                                          |  |         |   |         |   |         |  |   |   | 
|Total
 liabilities measured at fair value |  | $       |  |         | $ | 3,256   |  | $ |  | 
|                                          |  |         |   |         |   |         |  |   |   | 

11. Shareholders Equity and Noncontrolling
Interests

Common Shares

During the
first quarter of 2009, 107,331 employee Restricted Shares were cancelled to pay
the employees income taxes due on the value of the portion of the Restricted
Shares that vested. During the year ended December 31, 2009, the Company
recognized accrued Common Share and Common OP Unit-based compensation totaling
$3.7 million in connection with the vesting of Restricted Shares and Units
(Note 15).

During April
2009, the Company issued 5.75 million Common Shares and generated net proceeds
of approximately $65.2 million.

On October 29,
2009, Kenneth Bernstein, President and CEO, exercised 250,000 Options and
received 81,897 Common Shares after using shares to pay income tax and exercise
price.

F-31

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Shareholders Equity and Noncontrolling
Interests, continued

Noncontrolling Interests

The following
table summarizes the change in the noncontrolling interests since December 31,
2008:

|                                                                              |  |                                                      |       |                                                            |   |         |  
|----------------------------------------------------------------------------- |  | ---------------------------------------------------- | ----- | ---------------------------------------------------------- | - | ------- | -
|                                                                              |  | Noncontrolling
 Interests in
 Operating
 Partnership |       | Noncontrolling 
 Interests inPartially-
 Owned
 Affiliates |  
|                                                                              |  |                                                      |       |                                                            |  
|(dollars in
thousands)                                                        |  |                                                      |       |                                                            |   |         |  
|Balance at
 December 31, 2008                                                 |  | $                                                    | 5,667 |                                                            | $ | 208,839 |  
|Distributions
 declared of $0.75 per Common OP Unit                           |  |                                                      | (795  | )                                                          |   |        |  
|Net income
 for the period January 1 through December 31, 2009                |  |                                                      | 465   |                                                            |   | (18,892 | )
|Conversion
 of 15,666 Preferred OP Units                                      |  |                                                      | (90   | )                                                          |   |        |  
|Other comprehensive
 income  unrealized loss on valuation of swap agreements |  |                                                      | 40    |                                                            |   | 279     |  
|Reclassification
 of realized interest expense on swap agreements             |  |                                                      | (1    | )                                                          |   | (139    | )
|Noncontrolling
 Interest contributions                                        |  |                                                      |      |                                                            |   | 25,653  |  
|Noncontrolling
 Interest distributions                                        |  |                                                      |      |                                                            |   | (1,624  | )
|Employee
 Long-term Incentive Plan Unit Awards                                |  |                                                      | 890   |                                                            |   |        |  
|                                                                              |  |                                                      |       |                                                            |   |         |  
|Balance at
 December 31, 2009                                                 |  | $                                                    | 6,176 |                                                            | $ | 214,116 |  
|                                                                              |  |                                                      |       |                                                            |   |         |  

Noncontrolling
interest in the Operating Partnership represents (i) the limited partners
626,606 and 642,272 Common OP Units at December 31, 2009 and 2008, (ii) 188
Series A Preferred OP Units at both December 31, 2009 and 2008, with a stated
value of $1,000 per unit, which are entitled to a preferred quarterly
distribution of the greater of (a) $22.50 (9% annually) per Series A Preferred
OP Unit or (b) the quarterly distribution attributable to a Series A Preferred
OP Unit if such unit were converted into a Common OP Unit, and (iii) 393,909
and 186,951 LTIP units as of December 31, 2009 and December 31, 2008 respectively,
as discussed in Share Incentive Plan (Note 15).

Noncontrolling
interests in partially-owned affiliates include third-party interests in Fund
I, II and III, and Mervyns I and II and three other entities.

In 2004 and
2005, the Company issued 4,000 Series B Preferred OP Units and 250,000
Restricted Common OP Units, respectively, to Klaff in consideration for
interest in certain management contract rights. The Preferred OP Units were
convertible into Common OP Units based on the stated value of $1,000 divided by
$12.82 at any time. The Restricted Common OP Units are convertible into the
Companys Common Shares on a one-for-one basis after a five-year lock-up
period. During 2007, Klaff converted all 4,000 Series B Preferred Units into
312,013 Common OP Units and ultimately into Common Shares.

The Series A
Preferred OP Units were issued in 1999 in connection with the acquisition of a
property. Through December 31, 2008, 696 Series A Preferred OP Units were
converted into 92,800 Common OP Units and then into Common Shares. The 188
remaining Series A Preferred OP Units are currently convertible into Common OP
Units based on the stated value divided by $7.50. Either the Company or the
holders can currently call for the conversion of the Series A Preferred OP
Units at the lesser of $7.50 or the market price of the Common Shares as of the
conversion date.

F-32

---



ACADIA
REALTY TRUST AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

12.
Related Party Transactions

During 2007, Klaff converted 4,000 Series B
Preferred OP Units into 312,013 Common Shares (Note 11).

The Company earns asset management, leasing,
disposition, development and construction fees for providing services to an
existing portfolio of retail properties and/or leasehold interests in which
Klaff has an interest. Fees earned by the Company in connection with this
portfolio were $0.4 million, $0.8 million and $2.1 million for the years ended
December 31, 2009, 2008 and 2007 respectively.

The Company earns fees from two of its investments in
unconsolidated partnerships (Note 4). The Company earned property management,
construction, legal and leasing fees from the Brandywine Portfolio totaling
$0.7 million, $1.1 million and $1.7 million for the years ended December 31,
2009, 2008 and 2007, respectively. In addition, the Company earned property
management and development fees from CityPoint totaling $1.0 million and $0.2
million for the years ended December 31, 2008 and 2007, respectively.

Lee Wielansky, the Lead Trustee of the Company, was
paid a consulting fee of $0.1 million for each of the years ended
December 31, 2009, 2008, and 2007.

13.
Tenant Leases

Space in the shopping centers and other retail
properties is leased to various tenants under operating leases that usually
grant tenants renewal options and generally provide for additional rents based
on certain operating expenses as well as tenants sales volume.

Minimum future rentals to be received under
non-cancelable leases for shopping centers and other retail properties as of
December 31, 2009 are summarized as follows:

|                       |  |   |         | 
|---------------------- |  | - | ------- | 
|(dollars in thousands) |  |   |         | 
|2010                   |  | $ | 95,778  | 
|2011                   |  |   | 84,952  | 
|2012                   |  |   | 78,014  | 
|2013                   |  |   | 70,807  | 
|2014                   |  |   | 61,606  | 
|Thereafter             |  |   | 471,436 | 
|                       |  |   |         | 
|                       |  | $ | 862,593 | 
|                       |  |   |         | 

During the years ended December 31, 2009, 2008
and 2007, no single tenant collectively accounted for more than 10% of the
Companys total revenues.

14.
Lease Obligations

The Company leases land at six of its shopping
centers, which are accounted for as operating leases and generally provide the
Company with renewal options. Ground rent expense was $2.7 million,
$2.4 million, and $3.8 million (including capitalized ground rent at
properties under development of $0.6 million, $1.1 million and
$2.7 million) for the years ended December 31, 2009, 2008 and 2007,
respectively. The leases terminate at various dates between 2017 and 2066.
These leases provide the Company with options to renew for additional terms
aggregating from 20 to 60 years. The Company leases space for its White
Plains corporate office for a term expiring in 2015. Office rent expense under
this lease was $1.5 million, $1.2 million and $0.8 million for
the years ended December 31, 2009, 2008 and 2007, respectively. Future
minimum rental payments required for leases having remaining non-cancelable
lease terms are as follows:

|                       |  |   |         | 
|---------------------- |  | - | ------- | 
|(dollars in thousands) |  |   |         | 
|2010                   |  | $ | 4,827   | 
|2011                   |  |   | 4,864   | 
|2012                   |  |   | 4,932   | 
|2013                   |  |   | 5,009   | 
|2014                   |  |   | 5,012   | 
|Thereafter             |  |   | 86,958  | 
|                       |  |   |         | 
|                       |  | $ | 111,602 | 
|                       |  |   |         | 

F-33

---



ACADIA
REALTY TRUST AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

15.
Share Incentive Plan

During 2003, the Company adopted the 2003 Share
Incentive Plan (the 2003 Plan). The 2003 Plan authorizes the issuance of
options, share appreciation rights, restricted shares (Restricted Shares),
restricted OP Units (LTIP Units) and performance units (collectively,
Awards) to officers, employees and trustees of the Company and consultants to
the Company equal to up to four percent of the total Common Shares of the
Company outstanding from time to time on a fully diluted basis. However, no
participant may receive more than the equivalent of 1,000,000 Common Shares during
the term of the 2003 Plan with respect to Awards. Options are granted by the
Compensation Committee (the Committee), which currently consists of three
non-employee Trustees, and will not have an exercise price less than 100% of
the fair market value of the Common Shares and a term of greater than ten years
at the grant date. Vesting of options is at the discretion of the Committee.
Share appreciation rights provide for the participant to receive, upon
exercise, cash and/or Common Shares, at the discretion of the Committee, equal
to the excess of the market value of the Common Shares at the exercise date
over the market value of the Common Shares at the grant date. The Committee
determines the restrictions placed on Awards, including the dividends or distributions
thereon and the term of such restrictions. The Committee also determines the
award and vesting of performance units and performance shares based on the
attainment of specified performance objectives of the Company within a
specified performance period. Through December 31, 2009, no share
appreciation rights or performance units/shares had been awarded.

During 2006, the Company adopted the 2006 Share
Incentive Plan (the 2006 Plan). The 2006 Plan is substantially similar to the
2003 Plan, except that the maximum number of Common Share equivalents that the
Company may issue pursuant to the 2006 Plan is 500,000.

On March 5, 2009, the Company issued 8,612 Restricted
Shares and 200,574 LTIP Units to officers of the Company. Vesting with respect
to these awards is recognized ratably over the next five annual anniversaries
of the issuance date. The vesting on 39% of these awards is also generally
subject to achieving certain total shareholder returns on the Companys Common
Shares or certain Company performance measures. LTIP Units are similar to
Restricted Shares but provide for a quarterly partnership distribution in a
like amount as paid to Common OP Units. This distribution is paid on both
unvested and vested LTIP Units. The LTIP Units are convertible into Common OP
Units and Common Shares upon vesting and a revaluation of the book capital
accounts.

Also on March 5, 2009 and March 10, 2009, the Company
issued a total of 36,347 Restricted Shares and 8,221 LTIP Units to employees of
the Company, other than the Companys officers. Vesting with respect to these
awards is recognized ratably over the next five annual anniversaries of the
issuance date. In addition, the vesting on 1,196 Restricted Shares and 6,258
LTIP Units vest 25% subject to achieving certain total shareholder returns on
the Companys Common Shares or certain Company performance measures.

The total value of the above Restricted Shares and
LTIP Units issued was $2.6 million. The weighted average fair value for
Restricted Shares and LTIP Units granted for the years ended December 31, 2009,
2008 and 2007 were $10.31, $24.51 and $24.91, respectively.

For the years ended December 31, 2009, 2008 and
2007, $3.7 million, $3.5 million and $3.3 million, respectively, were
recognized in compensation expense related to Restricted Share and LTIP Unit
grants.

On May 13, 2009, the Company issued 5,435 unrestricted
Common Shares to Trustees of the Company in connection with Trustee fees. In
addition, on May 28, 2009, the Company issued an additional 1,299 unrestricted
Common Shares to the Lead Trustee of the Company in connection with the Lead
Trustee fee. The Company also issued 10,000 Restricted Shares to Trustees,
which 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 vesting. Trustee
fee expense of $0.2 million for the year ended December 31, 2009 has been
recognized in the accompanying consolidated financial statements related to
this issuance.

During 2009, the Company adopted the Long Term
Investment Alignment Program (the Program) pursuant to which the Company may
award units for up to 25% of its Fund III Promote to senior executives when and
if such Promote is ultimately realized. As of December 31, 2009, the Company
has awarded units representing 60% of the Program, which were determined to
have no value at issuance. In accordance with ASC Topic 718 Compensation-
Stock Compensation (formerly SFAS No. 123R, Share-Based Payments)
compensation relating to these awards will be recorded based on the change in
the estimated fair value at each reporting period.

As of December 31, 2009, the Company had 101,283
options outstanding to officers and employees of which all have vested. These
options are for ten-year terms from the grant date and vested in three equal
annual installments, which began on the Grant Date. In addition, 58,000 options
have been issued, of which all have vested, to non-employee Trustees as of
December 31, 2009.

A summary of option activity under all option
arrangements as of December 31, 2009, and changes during the year then
ended is presented below:

F-34

---



ACADIA
REALTY TRUST AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

15.
Share Incentive Plan, continued

|                                                  |  |        |          |                               |   |                                            |  |                                                 |     |  |   |   | 
|------------------------------------------------- |  | ------ | -------- | ----------------------------- | - | ------------------------------------------ |  | ----------------------------------------------- | --- |  | - | - | 
|Options                                           |  | Shares |          | WeightedAverageExercise Price |   | Weighted
 AverageRemainingContractual Term |  | Aggregate
 IntrinsicValue(dollars in thousands) |    
|                                                  |  |        |          |                               |   |                                            |  |                                                 |    
|Outstanding at
 January 1, 2009                   |  |        | 421,244  |                               | $ | 10.65                                      |  |                                                 |    |  |   |  | 
|Granted                                           |  |        |         |                               |   |                                           |  |                                                 |    |  |   |  | 
|Exercised                                         |  |        | (258,900 | )                             |   | 5.99                                       |  |                                                 |    |  |   |  | 
|Forfeited or
 Expired                             |  |        | (3,061   | )                             |   | 19.67                                      |  |                                                 |    |  |   |  | 
|                                                  |  |        |          |                               |   |                                            |  |                                                 |     |  |   |   | 
|Outstanding and
 exercisable at December 31, 2009 |  |        | 159,283  |                               | $ | 18.04                                      |  |                                                 | 5.5 |  | $ |  | 
|                                                  |  |        |          |                               |   |                                            |  |                                                 |     |  |   |   | 

The total intrinsic value of options exercised during
the years ended December 31, 2009, 2008 and 2007 was $2.8 million, $0.8
million and $0.3 million, respectively.

A summary of the status of the Companys unvested
Restricted Shares and LTIP Units as of December 31, 2009 and changes
during the year ended December 31, 2009, is presented below:

|                                |  |                  |          |                              |   |            |  |                              |         |   |   |       | 
|------------------------------- |  | ---------------- | -------- | ---------------------------- | - | ---------- |  | ---------------------------- | ------- | - | - | ----- | 
|Unvested
 Shares and LTIP Units |  | RestrictedShares |          | WeightedGrant-DateFair Value |   | LTIP Units |  | WeightedGrant-DateFair Value |        
|                                |  |                  |          |                              |   |            |  |                              |        
|Unvested at January 1,
 2009    |  |                  | 487,434  |                              | $ | 21.37      |  |                              | 181,350 |   | $ | 24.55 | 
|Granted                         |  |                  | 54,960   |                              |   | 10.95      |  |                              | 208,796 |   |   | 10.30 | 
|Vested                          |  |                  | (249,825 | )                            |   | 20.07      |  |                              | (25,472 | ) |   | 24.60 | 
|Forfeited                       |  |                  | (20,057  | )                            |   | 17.35      |  |                              | (1,841  | ) |   | 24.61 | 
|                                |  |                  |          |                              |   |            |  |                              |         |   |   |       | 
|Unvested at
 December 31, 2009  |  |                  | 272,512  |                              | $ | 20.76      |  |                              | 362,833 |   | $ | 16.35 | 
|                                |  |                  |          |                              |   |            |  |                              |         |   |   |       | 

As of December 31, 2009, there was $6.6 million
of total unrecognized compensation cost related to unvested share-based
compensation arrangements granted under share incentive plans. That cost is
expected to be recognized over a weighted-average period of 1.7 years. The
total fair value of Restricted Shares that vested during the years ended
December 31, 2009, 2008 and 2007 was $5.0 million, $2.7 million and
$1.6 million, respectively.

16.
Employee Share Purchase and Deferred Share Plan

The Acadia Realty Trust Employee Share Purchase Plan
(the Purchase Plan), allows eligible employees of the Company to purchase
Common Shares through payroll deductions. The Purchase Plan provides for
employees to purchase Common Shares on a quarterly basis at a 15% discount to
the closing price of the Companys Common Shares on either the first day or the
last day of the quarter, whichever is lower. A participant may not purchase
more the $25,000 in Common Shares per year. Compensation expense will be
recognized by the Company to the extent of the above discount to the closing
price of the Common Shares with respect to the applicable quarter. During 2009,
2008 and 2007, 8,744, 7,499, and 7,123 Common Shares, respectively, were
purchased by employees under the Purchase Plan. Associated compensation expense
of $0.02 million was recorded in 2009 and $0.03 million was recorded in
2008 and 2007.

During August of 2004, the Company adopted a Deferral
and Distribution Election pursuant to the 1999 Share Incentive Plan and 2003
Share Incentive Plan, whereby the participants elected to defer receipt of
190,487 Common Shares (Share Units) that otherwise would have been issued
upon the exercise of certain options. In January 2009, these Share Units were
converted to 190,487 Common Shares and issued to the recipients and 83,433 of
these Common Shares were cancelled to pay for the participants income taxes.

During May of 2006, the Company adopted a Trustee Deferral and
Distribution Election (Trustee Deferral Plan) whereby the participating
Trustees have deferred compensation of $0.05 million, $0.4 million and $0.2
million for 2009, 2008 and 2007, respectively. During 2009, certain trustees
elected to receive 14,722 Common Shares, which were previously deferred, from
the Trustee Deferral Plan.

F-35

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. Employee 401(k) Plan

The Company
maintains a 401(k) plan for employees under which the Company currently matches
50% of a plan participants contribution up to 6% of the employees annual
salary. A plan participant may contribute up to a maximum of 15% of their
compensation but not in excess of $16,500 for the year ended December 31, 2009.
The Company contributed $0.2 million, $0.3 million and $0.2 million for the
years ended December 31, 2009, 2008 and 2007, respectively.

18. Dividends and Distributions Payable

On December
15, 2009, the Board of Trustees declared a cash dividend for the quarter ended
December 31, 2009, of $0.18 per Common Share, which was paid on February 1,
2010 to holders of record as of December 31, 2009.

19. Federal Income Taxes

The Company
has elected to qualify as a REIT in accordance with Sections 856 through 860 of
the Internal Revenue Code of 1986, as amended (the Code), and intends at all
times to qualify as a REIT under the Code. To qualify as a REIT, the Company
must meet a number of organizational and operational requirements, including a
requirement that it currently distribute at least 90% of its annual REIT
taxable income to its shareholders. As a REIT, the Company generally will not
be subject to corporate Federal income tax, provided that distributions to its
shareholders equal at least the amount of its REIT taxable income as defined
under the Code. As the Company distributed sufficient taxable income for the
years ended December 31, 2009, 2008 and 2007, no U.S. Federal income or excise
taxes were incurred. If the Company fails to qualify as a REIT in any taxable
year, it will be subject to Federal income taxes at the regular corporate rates
(including any applicable alternative minimum tax) and may not be able to
qualify as a REIT for the four subsequent taxable years. Even though the
Company qualifies for taxation as a REIT, the Company is subject to certain
state and local taxes on its income and property and Federal income and excise
taxes on any undistributed taxable income. In addition, taxable income from
non-REIT activities managed through the Companys Taxable REIT Subsidiary
(TRS) is subject to Federal, state and local income taxes.

The difference
between the GAAP and tax reported amounts of the Companys assets and
liabilities is due largely to the higher GAAP basis in the Companys real
estate properties. This variance is primarily the result of assets acquired as
a result of property contributions in exchange for OP Units and the utilization
of Code Section 1031 tax-deferred exchanges.

Reconciliation between GAAP net income and
Federal taxable income

The following
unaudited table reconciles GAAP net income to taxable income for the years
ended December 31, 2009, 2008 and 2007:

|                                                                   |  |                   |        |                |   |                |   |   |        |  
|------------------------------------------------------------------ |  | ----------------- | ------ | -------------- | - | -------------- | - | - | ------ | -
|(dollars
 in thousands)                                            |  | 2009
 (Estimated) |        | 2008
 (Actual) |   | 2007
 (Actual) |  
|                                                                   |  |                   |        |                |   |                |  
|Net income
 (1)                                                    |  | $                 | 31,133 |                | $ | 25,068         |   | $ | 25,346 |  
|Net income
 attributable to TRS                                    |  |                   | 946    |                |   | 1,155          |   |   | 2,514  |  
|                                                                   |  |                   |        |                |   |                |   |   |        |  
|Net income
 attributable to REIT                                   |  |                   | 30,187 |                |   | 23,913         |   |   | 22,832 |  
|GAAP to tax
 difference related to:                                |  |                   |        |                |   |                |   |   |        |  
|Depreciation and amortization (2)                                  |  |                   | 2,383  |                |   | (1,214         | ) |   | 4,155  |  
|Exercise of stock options and vesting of
 Restricted Shares        |  |                   | (2,373 | )              |   | 81             |   |   | (689   | )
|Property dispositions (3)                                          |  |                   | (2,577 | )              |   | 11,960         |   |   | 8,300  |  
|Reserves and impairment loss (4)                                   |  |                   | 1,700  |                |   | 6,779          |   |   | (138   | )
|Gain on repurchase of Convertible Notes (5)                        |  |                   | (7,057 | )              |   |               |   |   |       |  
|Differences pursuant to ASC Topic 805
 Business Combinations (6) |  |                   | 1,300  |                |   | 1,221          |   |   | 1,610  |  
|Convertible Notes (1)                                              |  |                   | 1,280  |                |   | 2,536          |   |   |       |  
|Other
 GAAP/tax differences, net                                   |  |                   | 537    |                |   | (1,602         | ) |   | 919    |  
|                                                                   |  |                   |        |                |   |                |   |   |        |  
|REIT taxable
 income before dividends paid deduction               |  | $                 | 25,380 |                | $ | 43,674         |   | $ | 36,989 |  
|                                                                   |  |                   |        |                |   |                |   |   |        |  

F-36

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



19. Federal Income Taxes, continued

Reconciliation between GAAP net income and
Federal taxable income, continued

Notes:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) Net
 income for 2007 and 2008 has been restated pursuant to ASC Topic 470-20,
 which reclassified a portion of the interest expense on the Companys
 convertible debt as equity distributions. This restatement has no impact on
 the Companys taxable income.                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) Includes
 one-time deduction of $4,907 in 2008, resulting from reclassification of
 certain fixed assets for income tax purposes.                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) 2009
 difference due to higher tax basis on sold properties (net of noncontrolling
 interests). In 2007 and 2008, principally the result of the deferral of the
 gain from the sale of properties for income tax purposes. Also affected by
 special tax allocations pursuant to Code Section 704(c).                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(4) 2009
 impairment loss of $1,700 (net of noncontrolling interest and deduction of
 2008 impairment of $4,286) not recognized for tax. 2008 impairment loss
 includes 100% of mezzanine loans (principal & accrued interest) for
 redevelopment of the retail complexes associated with seven public rest stops
 along the toll roads in and around Chicago, Illinois. Deducted for income tax
 purposes in 2009. Includes difference between bad debt allowance and bad
 debts deducted for income tax purposes.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(5)
 Recognition of the taxable gain has been deferred for five years pursuant to
 Code Section 108(i).                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(6) Formerly
 SFAS No. 141R Business Combinations.                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Characterization of Distributions:

The Company
has determined that the cash distributed to the shareholders is characterized
as follows for Federal income tax purposes:

|                |  |                                  |   |      |   |      |  
|--------------- |  | -------------------------------- | - | ---- | - | ---- | -
|                |  | For the years ended December 31, |  
|                |  | 2009                             |   | 2008 |   | 2007 |  
|                |  |                                  |   |      |   |      |  
|Ordinary income |  | 95                               | % | 54   | % | 51   | %
|Capital gain    |  | 5                                | % | 46   | % | 49   | %
|                |  |                                  |   |      |   |      |  
|                |  | 100                              | % | 100  | % | 100  | %
|                |  |                                  |   |      |   |      |  

Taxable REIT Subsidiaries

Income taxes
have been provided for using the liability method as required by ASC Topic 740
Income Taxes (formerly SFAS No. 109). The Companys TRS income and provision
for income taxes for the years ended December 31, 2009, 2008 and 2007 are
summarized as follows:

|                                |  |                   |       |                |   |                |  |   |       | 
|------------------------------- |  | ----------------- | ----- | -------------- | - | -------------- |  | - | ----- | 
|(dollars
 in thousands)         |  | 2009
 (Estimated) |       | 2008
 (Actual) |   | 2007
 (Actual) | 
|                                |  |                   |       |                |   |                | 
|TRS income
 before income taxes |  | $                 | 2,263 |                | $ | 4,359          |  | $ | 5,077 | 
|Provision
 for income taxes:    |  |                   |       |                |   |                |  |   |       | 
|Federal                         |  |                   | 1,025 |                |   | 2,441          |  |   | 2,097 | 
|State and local                 |  |                   | 292   |                |   | 763            |  |   | 466   | 
|                                |  |                   |       |                |   |                |  |   |       | 
|TRS net
 income                 |  | $                 | 946   |                | $ | 1,155          |  | $ | 2,514 | 
|                                |  |                   |       |                |   |                |  |   |       | 

The income tax
provision differs from the amount computed by applying the statutory federal
income tax rate to income before income taxes as follows (not adjusted for
temporary book/tax differences):

|                                                |  |      |       |      |   |       |  |   |       | 
|----------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|(dollars in
 thousands)                         |  | 2009 |       | 2008 |   | 2007  | 
|                                                |  |      |       |      |   |       | 
|Federal provision at statutory
 tax rate        |  | $    | 908   |      | $ | 1,996 |  | $ | 1,726 | 
|State and local taxes, net of federal benefit   |  |      | 141   |      |   | 277   |  |   | 255   | 
|Tax effect of:                                  |  |      |       |      |   |       |  |   |       | 
|Change in estimate                              |  |      | 268   |      |   | 931   |  |   | 582   | 
|REIT state and local income and franchise taxes |  |      | 224   |      |   | 158   |  |   | 90    | 
|                                                |  |      |       |      |   |       |  |   |       | 
|Total provision for income taxes                |  | $    | 1,541 |      | $ | 3,362 |  | $ | 2,653 | 
|                                                |  |      |       |      |   |       |  |   |       | 

F-37

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20. Financial Instruments

Fair Value of Financial Instruments:

ASC Topic 825
Financial Instruments requires disclosure on the fair value of financial
instruments. Certain of the Companys assets and liabilities are considered
financial instruments. Fair value estimates, methods and assumptions are set
forth below.

Cash and Cash
Equivalents, Restricted Cash, Cash in Escrow, Rents Receivable, Prepaid
Expenses, Other Assets, Accounts Payable and Accrued Expenses, Dividends and
Distributions Payable, and Other Liabilities  the carrying amount of these
assets and liabilities approximates fair value due to the short-term nature of
such accounts.

Notes
Receivable and Preferred Equity Investments  as of December 31, 2009 and 2008,
the Company has determined the estimated fair values of its preferred equity
investments and notes receivable were $126.4 million and $122.3 million,
respectively, by discounting future cash receipts utilizing a discount rate
equivalent to the rate at which similar notes receivable would be originated at
the reporting date.

Derivative
Instruments  the fair value of these instruments is based upon the estimated
amounts the Company would receive to sell an asset or pay to transfer a
liability in an orderly transaction between market participants at the
reporting date and is determined using interest rate market pricing models.

Mortgage Notes
Payable and Notes Payable  As of December 31, 2009 and 2008, the Company has
determined the estimated fair values of its mortgage notes payable, including
those relating to discontinued operations, were $751.0 million and $731.8 million,
respectively, by discounting future cash payments utilizing a discount rate
equivalent to the rate at which similar mortgage notes payable would be
originated at the reporting date.

ASC Topic 815
Derivative and Hedging, as amended and interpreted, establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. As required by ASC Topic 815, the Company records all
derivatives on the balance sheet at fair value. The accounting for changes in
the fair value of derivatives depends on the intended use of the derivative and
the resulting designation. Derivatives used to hedge the exposure to changes in
the fair value of an asset, liability, or firm commitment attributable to a
particular risk, such as interest rate risk, are considered fair value hedges.
Derivatives used to hedge the exposure to variability in expected future cash
flows, or other types of forecasted transactions, are considered cash flow
hedges.

For
derivatives designated as fair value hedges, changes in the fair value of the
derivative and the hedged item related to the hedged risk are recognized in
earnings. For derivatives designated as cash flow hedges, the effective portion
of changes in the fair value of the derivative is initially reported in other
comprehensive income (outside of earnings) and subsequently reclassified to
earnings when the hedged transaction affects earnings, and the ineffective
portion of changes in the fair value of the derivative is recognized directly
in earnings. The Company assesses the effectiveness of each hedging
relationship by comparing the changes in fair value or cash flows of the
derivative hedging instrument with the changes in fair value or cash flows of
the designated hedged item or transaction. For derivatives not designated as
hedges, changes in fair value are recognized in earnings.

As of December 31, 2009 and
2008, no derivatives were designated as fair value hedges or hedges of net
investments in foreign operations. Additionally, the Company does not use
derivatives for trading or speculative purposes and currently does not have any
derivatives that are not designated as hedges. As of December 31, 2009, none of
the Companys hedges were ineffective.

F-38

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20. Financial Instruments, continued

Derivative Financial Instruments:

The following
table summarizes the notional values and fair values of the Companys
derivative financial instruments as of December 31, 2009. The notional
value does not represent exposure to credit, interest rate or market risks:

|                                    |  |                |        |      |      |          |          |            |   |        |  
|----------------------------------- |  | -------------- | ------ | ---- | ---- | -------- | -------- | ---------- | - | ------ | -
|Hedge Type                          |  | Notional Value |        | Rate |      | Maturity |          | Fair Value |  
|                                    |  |                |        |      |      |          |          |            |  
|(dollars in thousands)              |  |                |        |      |      |          |          |            |   |        |  
|Interest rate swaps                 |  |                |        |      |      |          |          |            |   |        |  
|LIBOR Swap                          |  | $              | 4,390  |      | 4.71 | %        | 01/01/10 |            | $ | (2     | )
|LIBOR Swap                          |  |                | 10,741 |      | 4.90 | %        | 10/01/11 |            |   | (674   | )
|LIBOR Swap                          |  |                | 8,035  |      | 5.14 | %        | 03/01/12 |            |   | (607   | )
|LIBOR Swap                          |  |                | 9,800  |      | 4.47 | %        | 10/29/10 |            |   | (319   | )
|LIBOR Swap                          |  |                | 15,000 |      | 3.79 | %        | 11/30/12 |            |   | (783   | )
|LIBOR Swap                          |  |                | 15,000 |      | 3.41 | %        | 11/30/12 |            |   | (628   | )
|LIBOR Swap                          |  |                | 10,000 |      | 2.65 | %        | 11/30/12 |            |   | (211   | )
|LIBOR Swap                          |  |                | 10,450 |      | 0.90 | %        | 07/19/10 |            |   | (32    | )
|                                    |  |                |        |      |      |          |          |            |   |        |  
|Interest rate swaps                 |  | $              | 83,416 |      |      |          |          |            |   | (3,256 | )
|                                    |  |                |        |      |      |          |          |            |   |        |  
|                                    |  |                |        |      |      |          |          |            |   |        |  
|Interest rate LIBOR Cap             |  | $              | 30,000 |      | 6.00 | %        | 04/01/10 |            |   |       |  
|                                    |  |                |        |      |      |          |          |            |   |        |  
|Net Derivative instrument liability |  |                |        |      |      |          |          |            | $ | (3,256 | )
|                                    |  |                |        |      |      |          |          |            |   |        |  

The above
derivative instruments have been designated as cash flow hedges and hedge the
future cash outflows on mortgage debt. Such instruments are reported at the
fair values reflected above. As of December 31, 2009 and 2008, unrealized
losses totaling $3.3 and $4.9 million, respectively were reflected in
accumulated other comprehensive loss. It is estimated that approximately $2.3
million included in accumulated other comprehensive income related to
derivatives will be reclassified to interest expense in the 2010 results of
operations.

F-39

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21. Earnings Per Common Share

Basic earnings
per share was determined by dividing the applicable net income to common
shareholders for the year by the weighted average number of Common Shares
outstanding during each year consistent with ASC Topic 260, Earnings Per Share.
Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue Common Shares were exercised or
converted into Common Shares or resulted in the issuance of Common Shares that
then shared in the earnings of the Company. In accordance with GAAP, all Common
Shares used to calculate EPS have been adjusted to reflect a special dividend
paid on January 30, 2009, which resulted in the issuance of approximately 1.3
million additional Common Shares. The following table sets forth the
computation of basic and diluted earnings per share from continuing operations
for the periods indicated:

|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|------------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ |  | - | ------ | 
|                                                                                                  |  | Years ended December 31, |       
|                                                                                                  |  |                          |       
|(dollars in
 thousands, except per share amounts)                                                 |  | 2009                     |        | 2008 |   | 2007   | 
|                                                                                                  |  |                          |        |      |   |        | 
|Numerator:                                                                                        |  |                          |        |      |   |        |  |   |        | 
|Income from continuing operations attributable to Common Shareholders                             |  | $                        | 28,599 |      | $ | 17,127 |  | $ | 15,029 | 
|Effect of dilutive securities:                                                                    |  |                          |        |      |   |        |  |   |        | 
|Preferred OP Unit distributions                                                                   |  |                          | 19     |      |   |       |  |   | 23     | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Numerator for diluted earnings per Common Share                                                   |  |                          | 28,618 |      |   | 17,127 |  |   | 15,052 | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Denominator:                                                                                      |  |                          |        |      |   |        |  |   |        | 
|Weighted average shares for basic earnings per share                                              |  |                          | 38,005 |      |   | 33,813 |  |   | 33,600 | 
|Effect of dilutive securities:                                                                    |  |                          |        |      |   |        |  |   |        | 
|Employee share options                                                                            |  |                          | 212    |      |   | 454    |  |   | 616    | 
|Convertible Preferred OP Units                                                                    |  |                          | 25     |      |   |       |  |   | 66     | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Dilutive potential Common Shares                                                                  |  |                          | 237    |      |   | 454    |  |   | 682    | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Denominator for diluted earnings per share                                                        |  |                          | 38,242 |      |   | 34,267 |  |   | 34,282 | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Basic earnings per Common Share from continuing operations
 attributable to Common Shareholders   |  | $                        | 0.75   |      | $ | 0.51   |  | $ | 0.45   | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Diluted earnings per Common Share from continuing operations
 attributable to Common Shareholders |  | $                        | 0.75   |      | $ | 0.50   |  | $ | 0.44   | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 

The weighted average shares
used in the computation of basic earnings per share include unvested Restricted
Shares and LTIP Units (Note 15) that are entitled to receive dividend
equivalent payments. The effect of the conversion of Common OP Units is not
reflected in the above table, as they are exchangeable for Common Shares on a
one-for-one basis. The income allocable to such units is allocated on this same
basis and reflected as noncontrolling interest in the accompanying consolidated
financial statements. As such, the assumed conversion of these units would have
no net impact on the determination of diluted earnings per share. The
conversion of the convertible notes payable (Note 9) is not reflected in the
table above as such conversion based on the market price of the Common Shares
would be effected with only cash. The effect of the assumed conversion of
25,067 Series A Preferred OP Units for the year ended December 31, 2009 would
be dilutive and they are included in the table. The effect of the assumed
conversion of 25,067 Series A Preferred OP Units and 41,696 Series B Preferred
OP Units for the year ended December 31, 2007 would be dilutive and they are
included in the table.

F-40

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22. Summary of Quarterly Financial
Information (unaudited)

The quarterly
results of operations of the Company for the years ended December 31, 2009 and
2008 are as follows:

|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|----------------------------------------------------------------------------- |  | ---------------- | ---------- | --------------- | - | -------------------- |  | ------------------- | ---------- |  | - | ---------- | -
|(dollars in
thousands, except per share amounts)                              |  | March
 31,
 2009 |            | June
 30,
 2009 |   | September
 30,
 2009 |  | December
 31,
 2009 |           
|                                                                              |  |                  |            |                 |   |                      |  |                     |           
|Revenue                                                                       |  | $                | 35,018     |                 | $ | 35,226               |  | $                   | 39,055     |  | $ | 38,046     |  
|Income from continuing operations attributable to Common Shareholders         |  | $                | 9,352      |                 | $ | 7,117                |  | $                   | 7,276      |  | $ | 4,854      |  
|Income from discontinued operations attributable to Common
 Shareholders      |  | $                | 947        |                 | $ | 18                   |  | $                   | 31         |  | $ | 1,538      |  
|Net income attributable to Common Shareholders                                |  | $                | 10,299     |                 | $ | 7,135                |  | $                   | 7,307      |  | $ | 6,392      |  
|Net income attributable to Common Shareholders per Common Share 
 basic:     |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Income from continuing operations                                             |  | $                | 0.27       |                 | $ | 0.18                 |  | $                   | 0.18       |  | $ | 0.12       |  
|Income from discontinued operations                                           |  |                  | 0.03       |                 |   |                     |  |                     |           |  |   | 0.04       |  
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Net income                                                                    |  | $                | 0.30       |                 | $ | 0.18                 |  | $                   | 0.18       |  | $ | 0.16       |  
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Net income attributable to Common Shareholders per Common Share 
 diluted:   |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Income from continuing operations                                             |  | $                | 0.27       |                 | $ | 0.18                 |  | $                   | 0.18       |  | $ | 0.12       |  
|Income from discontinued operations                                           |  |                  | 0.03       |                 |   |                     |  |                     |           |  |   | 0.04       |  
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Net income                                                                    |  | $                | 0.30       |                 | $ | 0.18                 |  | $                   | 0.18       |  | $ | 0.16       |  
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Cash dividends declared per Common Share                                      |  | $                | 0.21       |                 | $ | 0.18                 |  | $                   | 0.18       |  | $ | 0.18       |  
|Weighted average Common Shares outstanding:                                   |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Basic                                                                         |  |                  | 33,902,958 |                 |   | 38,592,289           |  |                     | 39,685,623 |  |   | 39,756,060 |  
|Diluted                                                                       |  |                  | 34,050,446 |                 |   | 38,804,108           |  |                     | 39,967,714 |  |   | 40,037,555 |  
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|(dollars in
thousands, except per share amounts)                              |  | March
 31,
 2008 |            | June
 30,
 2008 |   | September
 30,
 2008 |  | December
 31,
 2008 |           
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Revenue                                                                       |  | $                | 27,928     |                 | $ | 51,549               |  | $                   | 28,089     |  | $ | 30,370     |  
|Income (loss) from continuing operations attributable to Common
 Shareholders |  | $                | 7,652      |                 | $ | 10,222               |  | $                   | 4,417      |  | $ | (5,164     | )
|Income from discontinued operations attributable to Common
 Shareholders      |  | $                | 586        |                 | $ | 7,176                |  | $                   | 49         |  | $ | 130        |  
|Net income (loss) attritubale to Common Shareholders                          |  | $                | 8,238      |                 | $ | 17,398               |  | $                   | 4,466      |  | $ | (5,034     | )
|Net income attributable to Common Shareholders per Common Share 
 basic:     |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Income (loss) from continuing operations                                      |  | $                | 0.23       |                 | $ | 0.30                 |  | $                   | 0.13       |  | $ | (0.15      | )
|Income from discontinued operations                                           |  |                  | 0.01       |                 |   | 0.21                 |  |                     |           |  |   |           |  
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Net income (loss)                                                             |  | $                | 0.24       |                 | $ | 0.51                 |  | $                   | 0.13       |  | $ | (0.15      | )
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Net income attributable to Common Shareholders per Common Share  diluted:    |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Income (loss) from continuing operations                                      |  | $                | 0.23       |                 | $ | 0.30                 |  | $                   | 0.13       |  | $ | (0.15      | )
|Income from discontinued operations                                           |  |                  | 0.01       |                 |   | 0.21                 |  |                     |           |  |   |           |  
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Net income (loss)                                                             |  | $                | 0.24       |                 | $ | 0.51                 |  | $                   | 0.13       |  | $ | (0.15      | )
|                                                                              |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Cash dividends declared per Common Share                                      |  | $                | 0.21       |                 | $ | 0.21                 |  | $                   | 0.21       |  | $ | 0.76       |  
|Weighted average Common Shares outstanding:                                   |  |                  |            |                 |   |                      |  |                     |            |  |   |            |  
|Basic                                                                         |  |                  | 33,747,797 |                 |   | 33,806,747           |  |                     | 33,845,368 |  |   | 33,850,271 |  
|Diluted                                                                       |  |                  | 34,244,449 |                 |   | 34,376,530           |  |                     | 34,366,022 |  |   | 33,850,271 |  

F-41

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

23. Commitments and Contingencies

Under various
Federal, state and local laws, ordinances and regulations relating to the
protection of the environment, a current or previous owner or operator of real
estate may be liable for the cost of removal or remediation of certain
hazardous or toxic substances disposed, stored, generated, released,
manufactured or discharged from, on, at, under, or in a property. As such, the
Company may be potentially liable for costs associated with any potential
environmental remediation at any of its formerly or currently owned properties.

The Company
conducts Phase I environmental reviews with respect to properties it acquires.
These reviews include an investigation for the presence of asbestos,
underground storage tanks and polychlorinated biphenyls (PCBs). Although such
reviews are intended to evaluate the environmental condition of the subject
property as well as surrounding properties, there can be no assurance that the
review conducted by the Company will be adequate to identify environmental or
other problems that may exist. Where a Phase II assessment is so recommended, a
Phase II assessment is conducted to further determine the extent of possible
environmental contamination. In all instances where a Phase I or II assessment
has resulted in specific recommendations for remedial actions, the Company has
either taken or scheduled the recommended remedial action. To mitigate unknown
risks, the Company has obtained environmental insurance for most of its
properties, which covers only unknown environmental risks.

The Company
believes that it is in compliance in all material respects with all Federal,
state and local ordinances and regulations regarding hazardous or toxic
substances. Management is not aware of any environmental liability that it
believes would have a material adverse impact on the Companys financial
position or results of operations. Management is unaware of any instances in
which the Company would incur significant environmental costs if any or all
properties were sold, disposed of or abandoned. However, there can be no
assurance that any such non-compliance, liability, claim or expenditure will
not arise in the future.

The Company is
involved in various matters of litigation arising in the normal course of
business. While the Company is unable to predict with certainty the amounts
involved, the Companys management and counsel are of the opinion that, when
such litigation is resolved, the Companys resulting liability, if any, will
not have a significant effect on the Companys consolidated financial position
or results of operations.

In September
2008, the Company, certain of its subsidiaries, and other unrelated entities
were named as defendants in an adversary proceeding brought by Mervyns LLC
(Mervyns) in the United States Bankruptcy Court for the District of Delaware.
This lawsuit involves five claims alleging fraudulent transfers. The first
claim is that, at the time of the sale of Mervyns by Target Corporation to a
consortium of investors including Acadia, a transfer of assets was made in an
effort to defraud creditors. The Company believes this aspect of the case is
without merit. There are four other claims relating to transfers of assets of
Mervyns at various times. The Company believes there are substantial defenses
to these claims. The matter is in the early stages of discovery and the Company
believes the lawsuit will not have a material adverse effect on its results of
operations or consolidated financial condition.

The Company
has arranged for the provision of four separate letters of credit in connection
with certain leases and investments. As of December 31, 2009, there were no
outstanding balances under any of the letters of credit. If the letters of
credit were fully drawn, the combined maximum amount of exposure would be $9.7
million.

24. Subsequent Events

The Company
has evaluated subsequent events from December 31, 2009 through the time of
filing this Form 10-K with the SEC on March 1, 2009. Material subsequent
events that have occurred since December 31, 2009 are discussed below.

On January 12,
2010, the Company closed on a $48.0 million construction loan on its Canarsie
Plaza redevelopment project. The loan bears interest equal to the greater of
(a) LIBOR plus 4% or (b) an interest rate floor of 6.5% and matures on January
12, 2012.

On February
16, 2010, Klaff converted all 250,000 Restricted Common OP Units into 250,000
Common Shares (Note 11).

F-42

---



ACADIA REALTY TRUSTSCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2009

|                                                  |  |              |        |      |   |                            |  |                                                |        |      |   |                            |  |       |        |                           |   |                                            |  |   |        |  |   |        |  |  |      |    
|------------------------------------------------- |  | ------------ | ------ | ---- | - | -------------------------- |  | ---------------------------------------------- | ------ | ---- | - | -------------------------- |  | ----- | ------ | ------------------------- | - | ------------------------------------------ |  | - | ------ |  | - | ------ |  |  | ---- | ---
|                                                  |  |              |        |      |   |                            |  |                                                |        |      |   |                            |  |       |        |                           |   |                                            | 
|Description                                       |  | Encumbrances |        | Land |   | Buildings
 &
 Improvements |  | Costs
 Capitalized
 Subsequent to
 Acquisition |        | Land |   | Buildings
 &
 Improvements |  | Total |        | Accumulated
 Depreciation |   | Date of
 Acquisition (a)
 Construction (c) | 
|                                                  |  |              |        |      |   |                            |  |                                                |        |      |   |                            |  |       |        |                           |   |                                            | 
|Shopping Centers                                  |  |              |        |      |   |                            |  |                                                |        |      |   |                            |  |       |        |                           |   |                                            |  |   |        |  |   |        |  |  |      |    
|Core Portfolio:                                   |  |              |        |      |   |                            |  |                                                |        |      |   |                            |  |       |        |                           |   |                                            |  |   |        |  |   |        |  |  |      |    
|Crescent Plaza
 Brockton, MA                      |  | $            | 17,600 |      | $ | 1,147                      |  | $                                              | 7,425  |      | $ | 1,219                      |  | $     | 1,147  |                           | $ | 8,644                                      |  | $ | 9,791  |  | $ | 5,581  |  |  | 1984 | (a)
|New Loudon Center
 Latham, NY                     |  |              | 14,343 |      |   | 505                        |  |                                                | 4,161  |      |   | 10,879                     |  |       | 505    |                           |   | 15,040                                     |  |   | 15,545 |  |   | 10,321 |  |  | 1982 | (a)
|Ledgewood Mall
 Ledgewood, NJ                     |  |              | 2,000  |      |   | 619                        |  |                                                | 5,434  |      |   | 33,199                     |  |       | 619    |                           |   | 38,633                                     |  |   | 39,252 |  |   | 32,784 |  |  | 1983 | (a)
|Mark Plaza
 Edwardsville, PA                      |  |              |       |      |   |                           |  |                                                | 4,268  |      |   | 4,690                      |  |       |       |                           |   | 8,958                                      |  |   | 8,958  |  |   | 6,496  |  |  | 1968 | (c)
|Plaza 422
 Lebanon, PA                            |  |              |       |      |   | 190                        |  |                                                | 3,004  |      |   | 2,189                      |  |       | 190    |                           |   | 5,193                                      |  |   | 5,383  |  |   | 3,369  |  |  | 1972 | (c)
|Route 6 Mall
 Honesdale, PA                       |  |              |       |      |   |                           |  |                                                |       |      |   | 12,696                     |  |       | 1,664  |                           |   | 11,032                                     |  |   | 12,696 |  |   | 5,667  |  |  | 1994 | (c)
|Bartow Avenue
 Bronx, NY                          |  |              |       |      |   | 1,691                      |  |                                                | 5,803  |      |   | 560                        |  |       | 1,691  |                           |   | 6,363                                      |  |   | 8,054  |  |   | 1,233  |  |  | 2005 | (c)
|Amboy Rd.
 Shopping Ctr. Staten Island, NY        |  |              |       |      |   |                           |  |                                                | 11,909 |      |   | 1,519                      |  |       |       |                           |   | 13,428                                     |  |   | 13,428 |  |   | 1,501  |  |  | 2005 | (a)
|Abington Towne
 Center1 Abington, PA              |  |              |       |      |   | 799                        |  |                                                | 3,197  |      |   | 2,007                      |  |       | 799    |                           |   | 5,204                                      |  |   | 6,003  |  |   | 2,105  |  |  | 1998 | (a)
|Bloomfield Town
 Square1 Bloomfield Hills, MI     |  |              |       |      |   | 3,207                      |  |                                                | 13,774 |      |   | 9,570                      |  |       | 3,207  |                           |   | 23,344                                     |  |   | 26,551 |  |   | 7,721  |  |  | 1998 | (a)
|Walnut Hill Plaza
 Woonsocket, RI                 |  |              | 23,500 |      |   | 3,122                      |  |                                                | 12,488 |      |   | 1,840                      |  |       | 3,122  |                           |   | 14,328                                     |  |   | 17,450 |  |   | 4,555  |  |  | 1998 | (a)
|Elmwood Park
 Plaza Elmwood Park, NJ              |  |              | 34,600 |      |   | 3,248                      |  |                                                | 12,992 |      |   | 14,764                     |  |       | 3,798  |                           |   | 27,206                                     |  |   | 31,004 |  |   | 9,813  |  |  | 1998 | (a)
|Merrillville Plaza
 Hobart, IN                    |  |              | 26,250 |      |   | 4,288                      |  |                                                | 17,152 |      |   | 1,645                      |  |       | 4,288  |                           |   | 18,797                                     |  |   | 23,085 |  |   | 5,996  |  |  | 1998 | (a)
|Marketplace of
 Absecon1 Absecon, NJ              |  |              |       |      |   | 2,573                      |  |                                                | 10,294 |      |   | 3,416                      |  |       | 2,577  |                           |   | 13,706                                     |  |   | 16,283 |  |   | 4,181  |  |  | 1998 | (a)
|Clark Diversey
 Chicago, IL                       |  |              | 4,751  |      |   | 10,061                     |  |                                                | 2,773  |      |   | 9                          |  |       | 10,061 |                           |   | 2,782                                      |  |   | 12,843 |  |   | 282    |  |  | 2006 | (a)
|Boonton Boonton,
 NJ                              |  |              | 8,182  |      |   | 1,328                      |  |                                                | 7,188  |      |   |                           |  |       | 1,328  |                           |   | 7,188                                      |  |   | 8,516  |  |   | 704    |  |  | 2006 | (a)
|Chestnut Hill
 Philadelphia, PA                   |  |              | 9,481  |      |   | 8,289                      |  |                                                | 5,691  |      |   | 44                         |  |       | 8,289  |                           |   | 5,735                                      |  |   | 14,024 |  |   | 505    |  |  | 2006 | (a)
|Third Avenue
 Bronx, NY                           |  |              |       |      |   | 11,108                     |  |                                                | 8,038  |      |   | 1,015                      |  |       | 11,855 |                           |   | 8,306                                      |  |   | 20,161 |  |   | 685    |  |  | 2006 | (a)
|Hobson West Plaza1
 Naperville, IL                |  |              |       |      |   | 1,793                      |  |                                                | 7,172  |      |   | 1,370                      |  |       | 1,793  |                           |   | 8,542                                      |  |   | 10,335 |  |   | 2,599  |  |  | 1998 | (a)
|Village Commons
 Shopping Center Smithtown, NY    |  |              | 9,467  |      |   | 3,229                      |  |                                                | 12,917 |      |   | 2,438                      |  |       | 3,229  |                           |   | 15,355                                     |  |   | 18,584 |  |   | 5,131  |  |  | 1998 | (a)
|Town Line Plaza1
 Rocky Hill, CT                  |  |              |       |      |   | 878                        |  |                                                | 3,510  |      |   | 7,303                      |  |       | 907    |                           |   | 10,784                                     |  |   | 11,691 |  |   | 7,399  |  |  | 1998 | (a)
|Branch Shopping
 Center Village of the Branch, NY |  |              | 14,179 |      |   | 3,156                      |  |                                                | 12,545 |      |   | 777                        |  |       | 3,156  |                           |   | 13,322                                     |  |   | 16,478 |  |   | 4,043  |  |  | 1998 | (a)
|The Methuen
 Shopping Center1 Methuen, MA         |  |              |       |      |   | 956                        |  |                                                | 3,826  |      |   | 594                        |  |       | 961    |                           |   | 4,415                                      |  |   | 5,376  |  |   | 1,331  |  |  | 1998 | (a)
|Gateway Shopping
 Center Burlington, VT           |  |              | 20,500 |      |   | 1,273                      |  |                                                | 5,091  |      |   | 11,536                     |  |       | 1,273  |                           |   | 16,627                                     |  |   | 17,900 |  |   | 4,343  |  |  | 1999 | (a)
|Mad River Station
 Dayton, OH                     |  |              |       |      |   | 2,350                      |  |                                                | 9,404  |      |   | 693                        |  |       | 2,350  |                           |   | 10,097                                     |  |   | 12,447 |  |   | 2,903  |  |  | 1999 | (a)
|Pacesetter Park
 Shopping Center Ramapo, NY       |  |              | 12,313 |      |   | 1,475                      |  |                                                | 5,899  |      |   | 1,121                      |  |       | 1,475  |                           |   | 7,020                                      |  |   | 8,495  |  |   | 2,348  |  |  | 1999 | (a)
|239 Greenwich
 Greenwich, CT                      |  |              | 26,000 |      |   | 1,817                      |  |                                                | 15,846 |      |   | 549                        |  |       | 1,817  |                           |   | 16,395                                     |  |   | 18,212 |  |   | 4,428  |  |  | 1998 | (a)
|West Shore
 Expressway Staten Island, NY          |  |              |       |      |   | 3,380                      |  |                                                | 13,554 |      |   | 10                         |  |       | 3,380  |                           |   | 13,564                                     |  |   | 16,944 |  |   | 1,041  |  |  | 2007 | (a)
|West 54th Street
 Manhattan, NY                   |  |              |       |      |   | 16,699                     |  |                                                | 18,704 |      |   | 28                         |  |       | 16,699 |                           |   | 18,732                                     |  |   | 35,431 |  |   | 1,281  |  |  | 2007 | (a)
|Acadia 5-7 East
 17th Street Manhattan, NY        |  |              |       |      |   | 3,048                      |  |                                                | 7,281  |      |   |                           |  |       | 3,048  |                           |   | 7,281                                      |  |   | 10,329 |  |   | 337    |  |  | 2008 | (a)

F-43

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ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2009

|                                                |  |              |         |      |   |                            |  |                                                |         |      |   |                            |  |       |         |                           |   |                                           |  |   |           |  |   |         |  |  |      |    
|----------------------------------------------- |  | ------------ | ------- | ---- | - | -------------------------- |  | ---------------------------------------------- | ------- | ---- | - | -------------------------- |  | ----- | ------- | ------------------------- | - | ----------------------------------------- |  | - | --------- |  | - | ------- |  |  | ---- | ---
|                                                |  |              |         |      |   |                            |  |                                                |         |      |   |                            |  |       |         |                           |   |                                           |  |   |           |  |   |         |  |  |      |    
|Description                                     |  | Encumbrances |         | Land |   | Buildings
 &
 Improvements |  | Costs
 Capitalized
 Subsequent to
 Acquisition |         | Land |   | Buildings
 &
 Improvements |  | Total |         | Accumulated
 Depreciation |   | Date of
 Acquisition (a)
 Construction(c) | 
|                                                |  |              |         |      |   |                            |  |                                                |         |      |   |                            |  |       |         |                           |   |                                           | 
|Fund I:                                         |  |              |         |      |   |                            |  |                                                |         |      |   |                            |  |       |         |                           |   |                                           |  |   |           |  |   |         |  |  |      |    
|Tarrytown Centre
 Westchester, NY               |  |              | 9,800   |      |   | 2,323                      |  |                                                | 7,396   |      |   | 359                        |  |       | 2,323   |                           |   | 7,755                                     |  |   | 10,078    |  |   | 1,136   |  |  | 2004 | (a)
|Granville Center
 Columbus, OH                  |  |              |        |      |   | 2,186                      |  |                                                | 8,744   |      |   | 59                         |  |       | 2,186   |                           |   | 8,803                                     |  |   | 10,989    |  |   | 1,643   |  |  | 2002 | (a)
|Kroger/Safeway
 Various                         |  |              |        |      |   |                           |  |                                                | 34,586  |      |   |                           |  |       |        |                           |   | 34,586                                    |  |   | 34,586    |  |   | 27,899  |  |  | 2003 | (a)
|Fund II:                                        |  |              |         |      |   |                            |  |                                                |         |      |   |                            |  |       |         |                           |   |                                           |  |   |           |  |   |         |  |  |      |    
|Liberty Avenue
 New York, NY                    |  |              | 10,450  |      |   |                           |  |                                                | 12,627  |      |   | 471                        |  |       |        |                           |   | 13,098                                    |  |   | 13,098    |  |   | 982     |  |  | 2005 | (a)
|Pelham Manor
 Westchester, NY                   |  |              | 31,652  |      |   | 905                        |  |                                                |        |      |   | 49,006                     |  |       | 9,020   |                           |   | 40,891                                    |  |   | 49,911    |  |   | 1,783   |  |  | 2004 | (a)
|400 E. Fordham
 Road Bronx, NY                  |  |              | 86,000  |      |   | 11,144                     |  |                                                | 18,010  |      |   | 93,559                     |  |       | 16,254  |                           |   | 106,459                                   |  |   | 122,713   |  |   | 4,347   |  |  | 2004 | (a)
|4650
 Broadway/Sherman Ave New York, NY         |  |              |        |      |   |                           |  |                                                |        |      |   | 32,020                     |  |       | 25,267  |                           |   | 6,753                                     |  |   | 32,020    |  |   |        |  |  | 2005 | (a)
|216th Street New
 York, NY                      |  |              | 25,500  |      |   | 7,261                      |  |                                                |        |      |   | 19,224                     |  |       | 7,261   |                           |   | 19,224                                    |  |   | 26,485    |  |   | 1,298   |  |  | 2005 | (a)
|161st Street
 Bronx, NY                         |  |              | 30,000  |      |   | 16,679                     |  |                                                | 28,410  |      |   | 4,409                      |  |       | 16,679  |                           |   | 32,819                                    |  |   | 49,498    |  |   | 3,111   |  |  | 2005 | (a)
|Oakbrook
 Oakbrook, IL                          |  |              |        |      |   |                           |  |                                                | 6,906   |      |   | 17                         |  |       |        |                           |   | 6,923                                     |  |   | 6,923     |  |   | 2,438   |  |  | 2005 | (a)
|Atlantic Avenue
 Brooklyn, NY                   |  |              | 11,543  |      |   | 5,322                      |  |                                                |        |      |   | 15,007                     |  |       | 5,322   |                           |   | 15,007                                    |  |   | 20,329    |  |   | 146     |  |  | 2007 | (a)
|Canarsie Plaza
 Brooklyn, NY                    |  |              |        |      |   | 32,543                     |  |                                                |        |      |   | 26,025                     |  |       | 32,543  |                           |   | 26,025                                    |  |   | 58,568    |  |   |        |  |  | 2007 | (a)
|Pelham Manor
 Westchester, NY                   |  |              |        |      |   |                           |  |                                                | 10,161  |      |   | 638                        |  |       | 511     |                           |   | 10,288                                    |  |   | 10,799    |  |   | 442     |  |  | 2004 | (a)
|ASOF II, LLC                                    |  |              | 48,245  |      |   |                           |  |                                                |        |      |   |                           |  |       |        |                           |   |                                          |  |   |          |  |   |        |  |  |      |    
|Fund III:                                       |  |              |         |      |   |                            |  |                                                |         |      |   |                            |  |       |         |                           |   |                                           |  |   |           |  |   |         |  |  |      |    
|125 Main Street
 Assoc. Westport, CT            |  |              |        |      |   | 12,993                     |  |                                                | 4,316   |      |   | 1,687                      |  |       | 12,993  |                           |   | 6,003                                     |  |   | 18,996    |  |   | 62      |  |  | 2007 | (a)
|Sheepshead Bay
 Brooklyn, NY                    |  |              |        |      |   | 20,391                     |  |                                                |        |      |   | 3,313                      |  |       | 20,391  |                           |   | 3,313                                     |  |   | 23,704    |  |   |        |  |  | 2007 | (a)
|Suffern Self
 Storage Suffern, NY               |  |              |        |      |   | 4,561                      |  |                                                | 7,484   |      |   | 3                          |  |       | 4,561   |                           |   | 7,487                                     |  |   | 12,048    |  |   | 368     |  |  | 2008 | (a)
|Linden Self
 Storage2 Linden, NJ                |  |              |        |      |   | 3,515                      |  |                                                | 6,139   |      |   | 10                         |  |       | 3,515   |                           |   | 6,149                                     |  |   | 9,664     |  |   | 324     |  |  | 2008 | (a)
|Webster Self
 Storage2 Bronx, NY                |  |              |        |      |   | 959                        |  |                                                | 5,506   |      |   | 7                          |  |       | 959     |                           |   | 5,513                                     |  |   | 6,472     |  |   | 264     |  |  | 2008 | (a)
|Jersey City Self
 Storage2 Jersey City, NJ      |  |              |        |      |   | 2,377                      |  |                                                | 9,654   |      |   | 2                          |  |       | 2,377   |                           |   | 9,656                                     |  |   | 12,033    |  |   | 480     |  |  | 2008 | (a)
|Bronx Self
 Storage2 Bronx, NY                  |  |              |        |      |   | 10,835                     |  |                                                | 5,936   |      |   | 17                         |  |       | 10,835  |                           |   | 5,953                                     |  |   | 16,788    |  |   | 308     |  |  | 2008 | (a)
|Lawrence Self
 Storage2 Lawrence, NY            |  |              |        |      |   | 6,977                      |  |                                                | 12,688  |      |   |                           |  |       | 6,977   |                           |   | 12,688                                    |  |   | 19,665    |  |   | 579     |  |  | 2008 | (a)
|Starr Avenue Self
 Storage Queens, NY           |  |              |        |      |   | 7,597                      |  |                                                | 22,391  |      |   | 366                        |  |       | 7,597   |                           |   | 22,757                                    |  |   | 30,354    |  |   | 1,092   |  |  | 2008 | (a)
|New Rochelle Self
 Storage Westchester, NY      |  |              |        |      |   | 1,977                      |  |                                                | 4,769   |      |   | 139                        |  |       | 1,977   |                           |   | 4,908                                     |  |   | 6,885     |  |   | 233     |  |  | 2008 | (a)
|Yonkers Self
 Storage Westchester, NY           |  |              |        |      |   | 3,121                      |  |                                                | 17,457  |      |   | 60                         |  |       | 3,121   |                           |   | 17,517                                    |  |   | 20,638    |  |   | 795     |  |  | 2008 | (a)
|Bruckner Blvd.
 Self Storage Bronx, NY          |  |              |        |      |   | 6,244                      |  |                                                | 10,551  |      |   | 25                         |  |       | 6,244   |                           |   | 10,576                                    |  |   | 16,820    |  |   | 487     |  |  | 2008 | (a)
|Ridgewood Self
 Storage Queens, NY              |  |              |        |      |   | 8,000                      |  |                                                |        |      |   | 13,260                     |  |       | 8,000   |                           |   | 13,260                                    |  |   | 21,260    |  |   | 187     |  |  | 2008 | (c)
|Document Storage
 New York City, NY             |  |              |        |      |   |                           |  |                                                |        |      |   | 1,080                      |  |       |        |                           |   | 1,080                                     |  |   | 1,080     |  |   | 55      |  |  | 2008 | (a)
|Cortlandt Towne
 Center Cortlandt, NY           |  |              | 44,878  |      |   | 7,293                      |  |                                                | 61,395  |      |   |                           |  |       | 7,293   |                           |   | 61,395                                    |  |   | 68,688    |  |   | 2,603   |  |  | 2009 | (a)
|ASOF III, LLC                                   |  |              | 139,450 |      |   |                           |  |                                                |        |      |   |                           |  |       |        |                           |   |                                          |  |   |          |  |   |        |  |  |      |    
|Underdeveloped
 land                            |  |              |        |      |   | 251                        |  |                                                |        |      |   |                           |  |       | 251     |                           |   |                                          |  |   | 251       |  |   |        |  |  |      |    
|Construction in
 progress and other investments |  |              |        |      |   |                           |  |                                                |        |      |   |                           |  |       |        |                           |   | 4,814                                     |  |   | 4,814     |  |   |        |  |  |      |    
|                                                |  |              |         |      |   |                            |  |                                                |         |      |   |                            |  |       |         |                           |   |                                           |  |   |           |  |   |         |  |  |      |    
|                                                |  | $            | 732,184 |      | $ | 267,683                    |  | $                                              | 546,466 |      | $ | 388,443                    |  | $     | 309,685 |                           | $ | 897,721                                   |  | $ | 1,207,406 |  | $ | 193,745 |  |  |      |    
|                                                |  |              |         |      |   |                            |  |                                                |         |      |   |                            |  |       |         |                           |   |                                           |  |   |           |  |   |         |  |  |      |    

|       |                                                                                                             
|------ | ------------------------------------------------------------------------------------------------------------
|Notes:
|      
|(1)    | These properties serve as
 collateral for the financing with Bank of America, N.A. in the amount of
 $30,000
|       |                                                                                                             
|(2)    | These
 properties serve as collateral for the financing with GEMSA, in the amount of
 $41,500               

F-44

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ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2009

1.
Depreciation and investments in buildings and improvements reflected in the
statements of income is calculated over the estimated useful life of the assets
as follows:

Buildings: 30
to 40 years
Improvements: Shorter of lease term or useful life

2. The
aggregate gross cost of property included above for Federal income tax purposes
was $1,123.5 million as of December 31, 2009

3. (a)
Reconciliation of Real Estate Properties:

The following
table reconciles the real estate properties from January 1, 2007 to December
31, 2009:

|                             |  |                                  |           |      |   |           |  |   |         | 
|---------------------------- |  | -------------------------------- | --------- | ---- | - | --------- |  | - | ------- | 
|                             |  | For the years ended December 31, |          
|                             |  |                                  |          
|(dollars in
 thousands)      |  | 2009                             |           | 2008 |   | 2007      | 
|                             |  |                                  |           |      |   |           | 
|Balance at beginning of year |  | $                                | 1,091,995 |      | $ | 818,816   |  | $ | 615,024 | 
|Other improvements           |  |                                  | 46,723    |      |   | 103,476   |  |   | 75,776  | 
|Property Acquired            |  |                                  | 68,688    |      |   | 169,703   |  |   | 128,016 | 
|                             |  |                                  |           |      |   |           |  |   |         | 
|Balance at end of year       |  | $                                | 1,207,406 |      | $ | 1,091,995 |  | $ | 818,816 | 
|                             |  |                                  |           |      |   |           |  |   |         | 

3. (b)
Reconciliation of Accumulated Depreciation:

The following
table reconciles accumulated depreciation from January 1, 2007 to December 31,
2009:

|                                     |  |                                  |         |      |   |         |  |   |         | 
|------------------------------------ |  | -------------------------------- | ------- | ---- | - | ------- |  | - | ------- | 
|                                     |  | For the years ended December 31, |        
|                                     |  |                                  |        
|(dollars in
 thousands)              |  | 2009                             |         | 2008 |   | 2007    | 
|                                     |  |                                  |         |      |   |         | 
|Balance at beginning of
 year        |  | $                                | 165,067 |      | $ | 142,312 |  | $ | 124,088 | 
|Depreciation related to
 real estate |  |                                  | 28,678  |      |   | 22,755  |  |   | 18,224  | 
|                                     |  |                                  |         |      |   |         |  |   |         | 
|Balance at end of year               |  | $                                | 193,745 |      | $ | 165,067 |  | $ | 142,312 | 
|                                     |  |                                  |         |      |   |         |  |   |         | 

F-45

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