|                                                
|------------------------------------------------
|UNITED STATES SECURITIES AND EXCHANGE COMMISSION
|Washington,
 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, 2010

|  |                                                                                          
|- | -----------------------------------------------------------------------------------------
|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 $685.6 million, based on a price of $17.08 per
 share, the average sales price for the registrants common shares of
 beneficial interest on the New York Stock Exchange on that date.
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|The number of shares of the registrants common
 shares of beneficial interest outstanding on February 28, 2011 was
 40,320,306.                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|DOCUMENTS
 INCORPORATED BY REFERENCE                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Part III  Portions of the registrants definitive
 proxy statement relating to its 2011 Annual Meeting of Shareholders presently
 scheduled to be held May 10, 2011 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                                                                                                         |  | 19  
|2.       | Properties                                                                                                                        |  | 20  
|3.       | Legal Proceedings                                                                                                                 |  | 29  
|4.       | (Removed and Reserved).                                                                                                           |  | 29  
|        
|         | PART
 II                                                                                                                          |  |     
|5.       | Market for Registrants Common
 Equity, Related Stockholder Matters, Issuer Purchases of Equity Securities
 and Performance Graph |  | 30  
|6.       | Selected Financial Data                                                                                                           |  | 32  
|7.       | Managements Discussion and
 Analysis of Financial Condition and Results of Operations                                            |  | 34  
|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 and Corporate Governance                                                                        |  | 50  
|11.      | Executive Compensation                                                                                                            |  | 50  
|12.      | Security Ownership of Certain
 Beneficial Owners and Management                                                                   |  | 50  
|13.      | Certain Relationships and
 Related Transactions and Director Independence                                                         |  | 50  
|14.      | Principal Accountant Fees and
 Services                                                                                           |  | 50  
|        
|         | PART IV                                                                                                                           |  |     
|15.      | Exhibits and 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 the 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, 2010, the Trust controlled 99% of the
Operating Partnership as the sole general partner. As the general partner, the
Trust is entitled to share, in proportion to its percentage interest, in the
cash distributions and profits and losses of the Operating Partnership. The
limited partners 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 STRATEGIESOur 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 currently invest in through our Core Portfolio. These may also
 include joint ventures with private equity investors for the purpose of
 making investments in operating retailers with significant embedded value in
 their real estate assets.

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 pro-rata return based 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 IDuring 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), in which the investors, including
the Operating Partnership, committed a total of $90.0 million for the purpose
of acquiring real estate assets. The Operating Partnership is 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 they earned a 9% cumulative return (Preferred Return) and of all capital
contributions were returned.

4

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Fund I investors have received a return of all of their capital
invested in Fund I and Mervyns I and their Preferred Return. Accordingly, all
cash flow is now distributed 20% to the Operating Partnership as a Promote and
80% to the partners (including the Operating Partnership). 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.

As of December 31, 2010, there were 20 assets comprising approximately
0.9 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, 2010, $265.2 million of Fund IIs and Mervyns IIs capital was
invested and the balance of $34.8 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, which are more fully described
below.

New York Urban/Infill Redevelopment Initiative

During September of 2004, through Fund II, we launched our New York
Urban/Infill Redevelopment Initiative. We believe that retailers continue to
recognize that many of the nations urban markets are underserved from a retail
standpoint, and we have capitalized on this situation by investing in
redevelopment projects in dense urban areas where retail tenant demand has
effectively surpassed the supply of available sites. 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)

During 2004, through Funds I and II or affiliates thereof, we entered
into an association, known as the RCP Venture, with Klaff Realty, L.P.
(Klaff) and Lubert-Adler Management, Inc. (Lubert-Adler) for the purpose of
making investments in surplus or underutilized properties owned by retailers.
The RCP Venture is neither a single entity nor a specific investment. Any
member of this group has the option of participating, or not, in any individual
investment and each individual investment has been made on a stand-alone basis
through a separate limited liability company. These investments have been made
through different investment vehicles with different affiliated and
unaffiliated investors and different economics to us. The initial size of the
RCP Venture was expected to be approximately $300.0 million in equity, of which
our share would be $60.0 million. Based on the investment opportunities, the
size of the RCP Venture could be and was expanded. Mervyns I and II and Fund II
have invested a total of $62.2 million in the RCP Venture to date on a
non-recourse basis. 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. 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 investment is distributed to the participants until they have received
a 10% cumulative return on and a full return of all capital contributions.
Thereafter, remaining cash flow is distributed 20% to Klaff (Klaffs Promote)
and 80% to the partners (including Klaff). As the participants have received a
return of all of their capital invested and their unpaid cumulative return, all
cash flow is now distributed 20% to Klaff as Klaffs Promote and then 80% to
the partners. 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 services in
reviewing potential acquisitions and operating and redevelopment assistance in
areas where we have both a presence and expertise. We continue to seek to
invest opportunistically with the RCP Venture primarily in any of the following
four ways:

|  |                                                                                                  
|- | -------------------------------------------------------------------------------------------------
| | Invest in operating retailers to control their real estate through
 private equity joint ventures

5

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|  |                                                                                                                          
|- | -------------------------------------------------------------------------------------------------------------------------
| | 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                                                               

Our RCP Venture investments are 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 $502.5 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 agreement. The terms and structure of Fund
III are substantially the same as Fund I and Fund II with the exception that
the Preferred Return is 6%. As of December 31, 2010, $96.5 million of Fund
IIIs capital was invested. To date, Fund III has invested in 15 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 notes receivable, preferred equity investments,
other real estate interests and other investments. As of December 31, 2010, our
notes receivable investments aggregated $89.2 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 24% with maturities that range from demand notes
to January 2017.

Capital Strategy  Balance Sheet Focus and
Access to Capital

Our primary capital objective is to maintain a strong and flexible
balance sheet through conservative financial practices, including 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 as discussed
below 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. Through December 31, 2010, we purchased $65.2 million in
principal amount of the Notes, 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 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.

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

6

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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 supply constrained 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 2010, 2009 and 2008 we sold two non-core properties and
redeployed capital to acquire one retail property as further discussed in
ASSET SALES AND CAPITAL/ASSET RECYCLING below in this Item 1.

PROPERTY ACQUISITIONS

RCP Venture

Mervyns Department Stores

In September 2004, we made our first RCP Venture investment. Through
Mervyns I and Mervyns II, we invested in a consortium to acquire Mervyns
consisting of 262 stores (REALCO) and its retail operation (OPCO) from
Target Corporation. Our share of this investment was $23.2 million. Subsequent
to the initial acquisition of Mervyns, we made additional investments of $2.9
million. To date, REALCO has disposed of a significant portion of the
portfolio. In addition, during November 2007, we sold our interest in, and as a
result, have no further investment in OPCO. Through December 31, 2010, we have
received distributions from this investment totaling $46.0 million.

Through December 31, 2010, we, through Mervyns I and Mervyns II, made
additional investments in locations that are separate from these original
investments (Add-On Investments) in Mervyns totaling $6.5 million and have
received distributions totaling $1.7 million.

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 our
share was $20.7 million. Through December 31, 2010, we have received
distributions from this investment totaling $77.1 million, including $11.4
million received in 2010.

Through December 31, 2010, we, through Mervyns II, made Add-On
Investments in Albertsons totaling $2.4 million and received distributions
totaling $1.2 million.

Other RCP Investments

Through December 31, 2010, we, through Fund II, made investments of
$1.1 million in Shopko, $0.7 million in Marsh, and $2.0 million in Add-On
Investments in Marsh. As of December 31, 2010, we have received distributions
totaling $1.7 million from our Shopko investment and $2.6 million from our
Marsh and Marsh Add-On Investments.

During July of 2007, the RCP Venture acquired a portfolio of 87 retail
properties from Rex Stores Corporation (Rex), in which we invested through
Mervyns II. Our share of this investment was $2.7 million. As of December 31,
2010, we have received distributions from Rex totaling $0.8 million.

The following table summarizes the RCP Venture investments from
inception through December 31, 2010, and the Operating Partnerships share of
this activity:

|                          |  |                                 |  |                |  |                   |      |               |   |                   |  |                             |      |  |   |      | 
|------------------------- |  | ------------------------------- |  | -------------- |  | ----------------- | ---- | ------------- | - | ----------------- |  | --------------------------- | ---- |  | - | ---- | 
|(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      |  |                   | 6.5  |               |   | 1.7               |  |                             | 1.1  |  |   | 0.3  | 
|Mervyns II                |  | Albertsons                     |  | 2006           |  |                   | 20.7 |               |   | 77.1              |  |                             | 4.2  |  |   | 15.4 | 
|Mervyns II                |  | Albertsons
 Add-On Investments |  | 2006/2007      |  |                   | 2.4  |               |   | 1.2               |  |                             | 0.4  |  |   | 0.2  | 
|Fund II                   |  | Shopko                          |  | 2006           |  |                   | 1.1  |               |   | 1.7               |  |                             | 0.2  |  |   | 0.3  | 
|Fund II                   |  | Marsh                           |  | 2006           |  |                   | 2.7  |               |   | 2.6               |  |                             | 0.5  |  |   | 0.5  | 
|Mervyns II                |  | Rex                             |  | 2007           |  |                   | 2.7  |               |   | 0.8               |  |                             | 0.5  |  |   | 0.2  | 
|                          |  |                                 |  |                |  |                   |      |               |   |                   |  |                             |      |  |   |      | 
|Total                     |  |                                 |  |                |  | $                 | 62.2 |               | $ | 131.1             |  | $                           | 11.8 |  | $ | 28.2 | 
|                          |  |                                 |  |                |  |                   |      |               |   |                   |  |                             |      |  |   |      | 

7

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New York Urban/Infill Redevelopment
Initiative

As of December 31, 2010, we had ten New York Urban/Infill Redevelopment
Initiative projects. Construction is substantially complete at seven of the
projects, one is under construction and two 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 30%
occupied. Acadia-P/As total cost of the project was approximately $134.0
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 $64.0
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 $10.0 million, representing approximately half of
their cost of construction. The retail center is currently 91% leased 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 (NYC), which was a tenant at
another of our New York Urban/Infill Redevelopment Initiative projects, to this
location. Acadia-P/As total cost for the project, which also includes a
100-space rooftop parking deck, was 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. Construction of approximately 30,000 square feet of retail anchored
by a CVS drug store and a 98,500 square foot self-storage facility is complete
and Acadia-P/As total cost 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
83% 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 $17.4 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/Infill Redevelopment Initiative 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 $22.0 million.

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 included the construction of a
279,000 square foot mixed-use project consisting of retail and office. The
total cost of the redevelopment, including acquisition costs, was approximately
$90.0 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. Construction was substantially complete in November 2010 and the
property is 85% leased. The project is anchored by BJs Wholesale Club and the
New York City Police Department.

Under Construction

CityPoint  During June of 2007, Acadia-P/A
and an unaffiliated joint venture partner, California Urban Investment
Partners, LLC (CUIP) purchased the leasehold interests in The Gallery at
Fulton Street in downtown Brooklyn for approximately $115.0 million, with an
option to purchase the fee position, which is owned by the City of New York, at
a later date. On June 30, 2010, Acadia-P/A acquired all of CUIPs interest in
CityPoint for a total consideration of $9.2 million and the assumption of
CUIPs share of debt of $19.6 million. The development will proceed in three
phases. Construction has commenced on Phase 1, a four-story retail building of
approximately 50,000 square feet. Phase 2 will consist of approximately 500,000
square feet of additional retail. Phase 2 is also expected to contain an
affordable and market-rate residential component. Phase 3 is anticipated to be
a stand-alone mixed use, but primarily residential building, of approximately
700,000 square feet.

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 NYC and a commercial
parking garage, was acquired for a purchase price of

8

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$25.0 million. During 2007 we relocated NYC to Acadia-P/As 216th
Street redevelopment as discussed above and closed the parking garage. We are
currently reviewing various alternatives to redevelop the site to include
retail and office components.

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-level
community shopping center.

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 February 2011, Fund III, in a joint venture with an unaffiliated
partner, acquired a 64,600 square foot single tenant retail property located in
Silver Springs, Maryland, for approximately $9.8 million.

During February 2011, Fund III, in a joint venture with an unaffiliated
partner, acquired a three property portfolio (the Portfolio) for an aggregate
purchase price of $51.9 million with $20.6 million of in-place mortgage
financing assumed at closing. The Portfolio consists of three street-retail
properties, aggregating 61,000 square feet, and is located in South Miami
Beach, Florida.

During December 2010, Fund III, in a joint venture with an unaffiliated
partner, purchased the White City Shopping Center for $56.0 million. The
operating property is a 255,000 square foot shopping center located in
Shrewsbury, MA.

During June 2010, Fund III, in a joint venture with an unaffiliated
partner, invested in an entity formed for the purpose of providing management
services to owners of self-storage properties, including the 14 locations
currently owned through Fund II and Fund III. To date, Fund III has invested
$2.1 million in this entity.

During January 2009, we purchased Cortlandt Towne Center for $78.0
million. The operating property is a 641,000 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. Redevelopment efforts have
commenced, at an estimated cost of $8.4 million, with the execution of a lease
with Gap Inc. to anchor the property. Gap is anticipated to open in the second
half of 2011.

9

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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.

Notes Receivable, Preferred Equity 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% and matures on June 30, 2011.

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 September 2010, this
investment was fully liquidated. The Operating Partnership received $40.0
million of invested capital along with $9.4 million of accrued preferred
return. The Operating Partnership has an additional Georgetown loan receivable
of $8.0 million, collateralized by a 5 property portfolio.

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

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 notes receivable investments as of
December 31, 2010:

|                                           |  |           |        |                  |   |       |  |                        |        |                               |  |       |        |                           |                |                                              |  |         |  |  |        |  |   |         |  |  |                           | 
|------------------------------------------ |  | --------- | ------ | ---------------- | - | ----- |  | ---------------------- | ------ | ----------------------------- |  | ----- | ------ | ------------------------- | -------------- | -------------------------------------------- |  | ------- |  |  | ------ |  | - | ------- |  |  | ------------------------- | 
|                                           |  |           |        |                  |   |       |  |                        |        | Weighted Averages             | 
|                                           |  |           |        |                  |   |       |  |                        |        |                               | 
|Notes
 Receivable 
 (dollars in thousands) |  |           |        |                  |   |       |  |                        |        |                               |  |       |        |                           |                | Underlying third-party 
 first mortgage loan | 
|                                           |  |           |        |                  |   |       |  | Stated
 Interest
 rate |        | Effective
 interest
 rate (1) |  |       |        | Extension options (years) |                |                                              | 
|Investment                                 |  | Principal |        | Accrued interest |   | Total |  |                        |        | Maturity
 date                |  |       | Amount |                           | Maturity dates |                                             
|                                           |  |           |        |                  |   |       |  |                        |        |                               |  |       |        |                           |                |                                              |  |         |  |  |        |  |   |         |  |  |                           | 
|                                           |  |           |        |                  |   |       |  |                        |        |                               |  |       |        |                           |                |                                              |  |         |  |  |        |  |   |         |  |  |                           | 
|Georgetown - 5 property portfolio          |  | $         | 8,000  |                  | $ | 675   |  | $                      | 8,675  |                               |  | 9.75  | %      |                           | 10.23          | %                                            |  | 11/2011 |  |  | 1 year |  | $ | 9,596   |  |  | 2012 through 
 2020       | 
|                                           |  |           |        |                  |   |       |  |                        |        |                               |  |       |        |                           |                |                                              |  |         |  |  |        |  |   |         |  |  |                           | 
|72nd Street                                |  |           | 46,715 |                  |   | 6,137 |  |                        | 52,852 |                               |  | 13.00 | %      |                           | 20.85          | %                                            |  | 7/2011  |  |  | 1 year |  |   | 170,727 |  |  | 2011 w/ 1 year
 extension | 
|                                           |  |           |        |                  |   |       |  |                        |        |                               |  |       |        |                           |                |                                              |  |         |  |  |        |  |   |         |  |  |                           | 
|First mortgage and other notes             |  |           | 18,854 |                  |   | 463   |  |                        | 19,317 |                               |  | 11.93 | %      |                           | 12.48          | %                                            |  | 2011    |  |  |       |  |   | n/a     |  |  | n/a                       | 
|Mezzanine notes                            |  |           | 15,633 |                  |   | 330   |  |                        | 15,963 |                               |  | 14.14 | %      |                           | 15.43          | %                                            |  | 2012    |  |  |       |  |   | 272,289 |  |  | 2011 through 
 2019       | 
|                                           |  |           |        |                  |   |       |  |                        |        |                               |  |       |        |                           |                |                                              |  |         |  |  |        |  |   |         |  |  |                           | 
|                                           |  |           |        |                  |   |       |  |                        |        |                               |  |       |        |                           |                |                                              |  |         |  |  |        |  |   |         |  |  |                           | 
|Total notes receivable                     |  | $         | 89,202 |                  | $ | 7,605 |  | $                      | 96,807 |                               |  | 12.68 | %      |                           | 17.18          | %                                            |  |         |  |  |        |  |   |         |  |  |                           | 
|                                           |  |           |        |                  |   |       |  |                        |        |                               |  |       |        |                           |                |                                              |  |         |  |  |        |  |   |         |  |  |                           | 

|                                                    
|----------------------------------------------------
|Note:                                               
|(1)The
 effective rate includes points and exit fees

10

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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 2008, 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 | 
|                    |  |          |                               |           |  |                       |  |                                      |         |  |   |        | 
|Total               |  |          |                               |           |  |                       |  |                                      | 724,370 |  | $ | 25,800 | 
|                    |  |          |                               |           |  |                       |  |                                      |         |  |   |        | 

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

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, 2010 there were 20 assets comprising
0.9 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 | 
|Various Regions           |  |          |                         |                 |  |      |  |  |         | 
|Kroger/Safeway
 Portfolio |  |          | Various (18 properties) |                 |  | 2003 |  |  | 709,400 | 
|                          |  |          |                         |                 |  |      |  |  |         | 
|                          |  |          |                         |                 |  |      |  |  |         | 
|Total                     |  |          |                         |                 |  |      |  |  | 879,688 | 
|                          |  |          |                         |                 |  |      |  |  |         | 

During March 2010, Fund I sold the Sterling Heights Shopping Center for
$2.3 million. The proceeds from the sale along with Fund Is recourse
obligation of $0.6 million were used to fully liquidate the outstanding loan
obligation.

During February 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.

ENVIRONMENTAL LAWS

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

COMPETITION

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

11

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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 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.

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, 2010, we had 116 employees, of which 92
were located at our executive office and 24 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, Vice
President 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 (going dark) as would the departure of a shadow anchor tenant that
owns its own property. In addition, in the event that certain major tenants
cease to occupy a property, such an action may result in a significant number of
other tenants having the right to terminate their leases, or pay a reduced rent
based on a percentage of the tenants sales, at the affected property, which
could adversely affect the future income from such property (co-tenancy). See
Item 2. PropertiesMajor Tenants for quantified information with respect to
the percentage of our minimum rents received from major tenants.

12

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

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

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

Our operations and performance depend on general economic conditions,
including the health of the consumer. The U.S. economy recently experienced a
financial downturn, with a decline in consumer spending, credit tightening and
high unemployment. This economic downturn has had, and may continue to have, an
adverse affect on the businesses of many of our tenants. We and the Opportunity
Funds may experience higher vacancy rates as well as delays in re-leasing
vacant space.

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

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

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

Certain of our tenants have experienced financial difficulties and have
filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code
(Chapter 11 Bankruptcy). Pursuant to bankruptcy law, tenants have the right
to reject their leases. In the event the tenant exercises this right, the
landlord generally has the right to file a claim for lost rent equal to the
greater of either one 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, 2010, there has been one significant tenant
bankruptcy within our portfolio:

On December 12, 2010, the Great Atlantic & Pacific Tea Company,
Inc. (A&P) filed for protection under Chapter 11 Bankruptcy. A&P
operates in four locations in our Core Portfolio, totaling approximately
198,000 square feet. Rental revenues from A&P at these locations totaled
$3.5 million, $3.4 million, and $3.3 million for the years ended December 31,
2010, 2009 and 2008, respectively. In addition, A&P operates in one Fund
III location, totaling approximately 65,000 square feet. Rental revenues from
A&P at this location totaled $1.0 million for each of the years ended
December 31, 2010 and 2009. A&P has availed itself of the statutory maximum
time to assume or reject these leases which is July 10, 2011. With respect to
two of these leases, A&P has received a bankruptcy court order to close the
two locations on or around April 15, 2011 and to exit the locations on or around
April 30, 2011.

There are risks relating to investments in
real estate.

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

13

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

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

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

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

Interest expense on our variable rate debt as of December 31, 2010
would increase by $4.4 million annually for a 100 basis point increase in
interest rates. We may seek additional variable-rate financing if and when
pricing and other commercial and financial terms warrant. As such, we would
consider hedging against the interest rate risk related to such additional
variable rate debt, primarily through interest rate swaps but can use other
means.

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

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

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

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

Our performance depends on the economic conditions in markets in which
our properties are concentrated. We have significant exposure to the greater
New York region, from which we derive 38% of the annual base rents within our
Core Portfolio. Our operating results could be adversely affected if market
conditions, such as an oversupply of space or a reduction in demand for real
estate, in this area occurs.

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

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

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

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

Acquisitions of additional properties entail the risk that investments
will fail to perform in accordance with expectations, including operating and
leasing expectations. Redevelopment is subject to numerous risks, including
risks of construction delays, cost overruns

14

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or uncontrollable events that may increase project costs, new project
commencement risks such as the receipt of zoning, occupancy and other required
governmental approvals and permits, and incurring development costs in
connection with projects that are not pursued to completion.

A component of our growth strategy is through private-equity type
investments made through our RCP Venture. These include investments in
operating retailers. The inability of the retailers to operate profitably would
have an adverse impact on income realized from these investments. Through our
investments in joint ventures we have also invested in operating businesses
that have operational risk in addition to the risks associated with real estate
investments, including among other risks, human capital issues, adequate supply
of product and material, and merchandising issues.

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

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

Exclusivity obligation to our Opportunity
Funds.

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

Risks of joint ventures.

Partnership or joint venture investments
may involve risks not otherwise present for investments made solely by us,
including the possibility that our partner or co-venturer might become
bankrupt, and that our partner or co-venturer may take action contrary to our
instructions, requests, policies or objectives, including our policy with
respect to maintaining our qualification as a REIT. Other risks of joint
venture investments include impasse on decisions, such as a sale, because
neither we nor a joint venture partner would have full control over the joint
venture. Also, there is no limitation under our organizational documents as to
the amount of funds that may be invested in joint ventures.

Any disputes that may arise between joint venture partners and us may
result in litigation or arbitration that would increase our expenses and
prevent our officers and/or directors from focusing their time and effort on
our business. Consequently, actions by or disputes with joint venture partners
might result in subjecting properties owned by the joint venture to additional
risk. In addition, we may in certain circumstances be liable for the actions of
our third-party joint venture partners.

During 2010, 2009 and 2008, our Fund I and Mervyns I joint ventures
provided Promote income. There can be no assurance that the joint ventures will
continue to operate profitably and thus provide additional Promote income in
the future.

These factors could limit the return that we receive from such
investments or cause our cash flows to be lower than our estimates. In
addition, a partner or co-venturer may not have access to sufficient capital to
satisfy its funding obligations to the joint venture.

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

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

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

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

15

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executive level employees.

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

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

Distribution requirements imposed by law
limit our operating flexibility.

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

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

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

Limits on ownership of our capital shares.

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

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

16

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rules for these limits are complex and groups of related individuals or
entities may be deemed a single owner and consequently in violation of the
share ownership limits.

Concentration of ownership by certain investors.

Six institutional shareholders own 5% or more individually, and 53.8%
in the aggregate, of our Common Shares. A significant concentration of
ownership may allow an investor or a group of investors to exert a greater
influence over our management and affairs and may have the effect of delaying,
deferring or preventing a change in control of us.

Restrictions on a potential change of control.

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

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

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

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

Our development and construction activities
could affect our operating results.

We intend to continue the selective
development and construction of retail properties. As opportunities arise, we
expect to delay construction until sufficient pre-leasing is reached and
financing is in place. Our development and construction activities include
risks that:

| |   |                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We may
 abandon development opportunities after expending resources to determine
 feasibility;                                                                                    
| |  | Construction
 costs of a project may exceed our original estimates;                                                                                                               
| |  | Occupancy
 rates and rents at a newly completed property may not be sufficient to make
 the property profitable;                                                                  
| |  | Financing
 for development of a property may not be available to us on favorable terms;                                                                                           
| |  | We may not
 complete construction and lease-up on schedule, resulting in increased debt
 service expense and construction costs; and                                              
| |  | We may not
 be able to obtain, or may experience delays in obtaining necessary zoning,
 land use, building, occupancy and other required governmental permits and
 authorizations.

Additionally, the time frame required for development, construction and
lease-up of these properties means that we may not realize a significant cash
return for several years. If any of the above events occur, the development of
properties may hinder our growth and have an adverse effect on our results of
operations and cash flows. In addition, new development activities, regardless
of whether or not they are ultimately successful, typically require substantial
time and attention from management.

Redevelopments and acquisitions may fail to
perform as expected.

Our investment strategy includes the redevelopment and acquisition of
shopping centers in supply contained markets in densely populated areas with
high average household incomes and significant barriers to entry. The redevelopment
and acquisition of properties entails risks that include the following, any of
which could adversely affect our results of operations and our ability to meet
our obligations:

| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | the property
 may fail to achieve the returns we have projected, either temporarily or for
 extended periods;                              
| |  | we may not
 be able to identify suitable properties to acquire or may be unable to
 complete the acquisition of the properties we identify;
| |  | we may not
 be able to integrate an acquisition into our existing operations
 successfully;                                                

17

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| |   |                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | properties
 we redevelop or acquire may fail to achieve the occupancy or rental rates we
 project, within the time frames we project, at the time we make the decision
 to invest, which may result in the properties failure to achieve the returns
 we projected;                              
| |  | our
 pre-acquisition evaluation of the physical condition of each new investment
 may not detect certain defects or identify necessary repairs until after the
 property is acquired, which could significantly increase our total
 acquisition costs or decrease cash flow from the property; and
| |  | our
 investigation of a property or building prior to our acquisition, and any
 representations we may receive from the seller of such building or property,
 may fail to reveal various liabilities, which could reduce the cash flow from
 the property or increase our acquisition cost.       

Climate change and catastrophic risk from natural perils.

Some of our current
properties could be subject to potential natural or other disasters. We may acquire
properties that are located in areas which are subject to natural disasters.
Any properties located in coastal regions would therefore be affected by any
future increases in sea levels or in the frequency or severity of hurricanes
and tropical storms, whether such increases are caused by global climate
changes or other factors.

Climate change is a long-term change in the
statistical distribution of weather patterns over periods of time that range
from decades to millions of years. It may be a change in the average weather
conditions or a change in the distribution of weather events with respect to an
average, for example, greater or fewer extreme weather events. Climate change
may be limited to a specific region, or may occur across the whole Earth.

There
may be significant physical effects of climate change that have the potential
to have a material effect on our business and operations. These effects can
impact our personnel, physical assets, tenants and overall operations.

Physical
impacts of climate change may include:

| |                                                                                                             |                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                            | Increased
 storm intensity and severity of weather (e.g., floods or hurricanes);                                                                                                                                                                                                
| |                                                                                                            | Sea level rise; and                                                                                                                                                                                                                                                             
| |                                                                                                            | Extreme temperatures.                                                                                                                                                                                                                                                           
| |                                                                                                            
| | As a result
 of these physical impacts from climate-related events, we may be vulnerable
 to the following:
| |                                                                                                            
| |                                                                                                            | Risks of
 property damage to our shopping centers;                                                                                                                                                                                                                              
| |                                                                                                            | Indirect
 financial and operational impacts from disruptions to the operations of major
 tenants located in our shopping centers from severe weather, such as
 hurricanes or floods;                                                                                            
| |                                                                                                            | Increased
 insurance premiums and deductibles, or a decrease in the availability of
 coverage, for properties in areas subject to severe weather;                                                                                                                               
| |                                                                                                            | Increased
 insurance claims and liabilities;                                                                                                                                                                                                                                    
| |                                                                                                            | Increase in
 energy cost impacting operational returns;                                                                                                                                                                                                                         
| |                                                                                                            | Changes in
 the availability or quality of water, or other natural resources on which the
 tenants business depends;                                                                                                                                                           
| |                                                                                                            | Decreased
 consumer demand for consumer products or services resulting from physical
 changes associated with climate change (e.g., warmer temperatures or
 decreasing shoreline could reduce demand for residential and commercial
 properties previously viewed as desirable);
| |                                                                                                            | Incorrect
 long term valuation of an equity investment due to changing conditions not
 previously anticipated at the time of the investment; and                                                                                                                                
| |                                                                                                            | Economic
 disruptions arising from the above.                                                                                                                                                                                                                                   

Possible liability relating to environmental matters.

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

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

18

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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.

Future
terrorist attacks or civil unrest could harm the demand for, and the value of,
our properties.

Future terrorist attacks or civil unrest, such as the attacks that
occurred in New York, Pennsylvania and Washington, D.C. on September 11,
2001, and other acts of terrorism or war, could harm the demand for, and the
value of, our properties. Terrorist attacks could directly impact the value of
our properties through damage, destruction, loss or increased security costs,
and the availability of insurance for such acts may be limited or may be
subject to substantial cost increases. To the extent that our tenants are
impacted by future attacks, their ability to continue to honor obligations
under their existing leases could be adversely affected. A decrease in retail
demand could make it difficult for us to renew or re-lease our properties at
lease rates equal to or above historical rates. These acts might erode business
and consumer confidence and spending, and might result in increased volatility
in national and international financial markets and economies. Any one of these
events might decrease demand for real estate, decrease or delay the occupancy of
our properties, and limit our access to capital or increase our cost of raising
capital.

Outages,
computer viruses and similar events could disrupt our operations.

We rely on information technology networks
and systems, some of which are owned and operated by third parties, to process,
transmit and store electronic information. Any of these systems may be
susceptible to outages due to fire, floods, power loss, telecommunications
failures, terrorist attacks and similar events. Despite the implementation of
network security measures, our systems and those of third parties on which we
rely may also be vulnerable to computer viruses and similar disruptions. If we
and the third parties on whom we rely are unable to prevent such outages and
breaches, our operations could be disrupted.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

19

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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, 2010, excluding two properties under
redevelopment, there are 32 operating properties in our Core Portfolio totaling
approximately 4.8 million square feet of gross leasable area (GLA). The Core
Portfolio properties are located in 12 states and are generally
well-established community and neighborhood shopping centers anchored by
supermarkets or value-oriented retail. The properties are diverse in size,
ranging from approximately 10,000 to 875,000 square feet and as of
December 31, 2010, were, in total, 92% occupied.

As of December 31, 2010, we owned and operated 27 properties totaling
2.5 million square feet of GLA in our Opportunity Funds, excluding five
properties under redevelopment. In addition to shopping centers, the
Opportunity Funds have invested in mixed-use properties, which generally
include retail activities and self-storage properties. The Opportunity Fund
properties are located in 13 states and as of December 31, 2010, were, in
total, 87% occupied.

Within our Core Portfolio and Opportunity Funds, we had approximately
550 leases as of December 31, 2010. A majority of our rental revenues were
from national tenants. A majority of the income from the properties consists of
rent received under long-term leases. These leases generally provide for the
payment of fixed minimum rent monthly in advance and for the payment by tenants
of a pro-rata share of the real estate taxes, insurance, utilities and common
area maintenance of the shopping centers. Minimum rents and expense
reimbursements accounted for approximately 85% of our total revenues for the
year ended December 31, 2010.

Certain of our leases also provided for the payment of percentage rents
either in addition to, or in place of, minimum rents. These arrangements
generally provide for payment to us of a certain percentage of a tenants gross
sales in excess of a stipulated annual amount. Percentage rents accounted for
less than 1% of the total 2010 revenues of the Company.

Four of our Core Portfolio properties and 21 of our Opportunity Fund
properties are subject to long-term ground leases in which a third party owns
and has leased the underlying land to us. We pay rent for the use of the land
and are responsible for all costs and expenses associated with the building and
improvements at all 25 locations.

No individual property contributed in excess of 10% of our total
revenues for the years ended December 31, 2010, 2009 or 2008. Reference is
made to Note 8 to our Consolidated Financial Statements, which begin on page
F-1 of this Form 10-K, for information on the mortgage debt pertaining to our
properties. The following sets forth more specific information with respect to
each of our shopping centers at December 31, 2010:

20

---



|                                |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|------------------------------- |  | ------------- |  | ------------------------------------- |  | ------------------- |  | --- | --------- | -------------------------- | --- | -------------------- | - | ----------------------- |  | --------------------------------------------------------------------- | ------ |  | ------------------------------------------------------------------------------------------------------------
|Shopping Center                 |  | Location      |  | Year
 Constructed
 (C)
 Acquired
 (A) |  | Ownership
 Interest |  | GLA |           | Occupancy
 %
 12/31/10 (1) |     | Annual 
 Base 
 Rent |   | Annual
 Base
 Rent
 PSF |  | Anchor Tenants
 Current Lease 
 Expiration/
 Lease Option
 Expiration
|                                |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                      
|Core
 Portfolio                 |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|New York                        |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|Connecticut                     |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|239 Greenwich Avenue            |  | Greenwich     |  | 1998
 (A)                             |  | Fee/JV              |  |     | 16,834    | (2)                        | 100 | %                    | $ | 1,554,663               |  | $                                                                     | 92.35  |  | Restoration Hardware
 2014/2024 Coach 2016/2021                                                             
|                                |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|New Jersey                      |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|Elmwood Park Shopping Center    |  | Elmwood Park  |  | 1998
 (A)                             |  | Fee                 |  |     | 149,491   |                            | 92  | %                    |   | 3,397,955               |  |                                                                       | 24.75  |  | A&P 2017/2052
 Walgreens 2022/2062                                                                         
|A&P Shopping Plaza              |  | Boonton       |  | 2006
 (A)                             |  | Fee/JV              |  |     | 62,908    |                            | 90  | %                    |   | 1,166,305               |  |                                                                       | 20.58  |  | A&P 2024/2054                                                                                               
|                                |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|New York                        |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|Village Commons Shopping Center |  | Smithtown     |  | 1998
 (A)                             |  | Fee                 |  |     | 87,330    |                            | 75  | %                    |   | 2,065,110               |  |                                                                       | 31.60  |  |                                                                                                             
|Branch Shopping Plaza           |  | Smithtown     |  | 1998
 (A)                             |  | LI
 (3)             |  |     | 125,712   |                            | 99  | %                    |   | 2,681,144               |  |                                                                       | 21.46  |  | A&P 2013/2028 CVS
 2020/                                                                                   
|Amboy Road                      |  | Staten Island |  | 2005
 (A)                             |  | LI
 (3)             |  |     | 60,090    |                            | 100 | %                    |   | 1,605,791               |  |                                                                       | 26.72  |  | King Kullen 2028/2043 Duane
 Reade 2013/2018                                                                
|Bartow Avenue                   |  | Bronx         |  | 2005
 (C)                             |  | Fee                 |  |     | 14,676    |                            | 89  | %                    |   | 439,249                 |  |                                                                       | 33.43  |  |                                                                                                             
|                                |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|Pacesetter Park Shopping Center |  | Pomona        |  | 1999
 (A)                             |  | Fee                 |  |     | 96,380    |                            | 91  | %                    |   | 1,108,621               |  |                                                                       | 12.67  |  | Stop & Shop 2020/2040                                                                                       
|West Shore Expressway           |  | Staten Island |  | 2007
 (A)                             |  | Fee                 |  |     | 55,000    |                            | 100 | %                    |   | 1,265,000               |  |                                                                       | 23.00  |  | LA Fitness 2021/2036                                                                                        
|West 54th Street                |  | Manhattan     |  | 2007
 (A)                             |  | Fee                 |  |     | 9,693     |                            | 100 | %                    |   | 2,564,844               |  |                                                                       | 264.61 |  | Stage Deli 2013/                                                                                           
|East 17th Street                |  | Manhattan     |  | 2008
 (A)                             |  | Fee                 |  |     | 19,622    |                            | 100 | %                    |   | 625,000                 |  |                                                                       | 31.85  |  | Barnes & Noble
 2013/2018                                                                                   
|Crossroads Shopping Center      |  | White Plains  |  | 1998
 (A)                             |  | Fee/JV
 (4)         |  |     | 309,487   |                            | 94  | %                    |   | 6,093,005               |  |                                                                       | 21.00  |  | A&P 2012/2032 
 Kmart 2012/2032 
 B. Dalton 2012/2022
 Modells 2014/2019
 Pier 1 2012/Home Goods 2018/2033
|                                |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             
|Total New
 York Region          |  |               |  |                                       |  |                     |  |     | 1,007,223 |                            | 93  | %                    | $ | 24,566,687              |  | $                                                                     | 26.24  |  |                                                                                                             
|                                |  |               |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |        |  |                                                                                                             

21

---



|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|--------------------------- |  | ---------------- |  | ------------------------------------- |  | ------------------- |  | --- | --------- | -------------------------- | --- | -------------------- | - | ----------------------- |  | --------------------------------------------------------------------- | ----- |  | -----------------------------------------------------------------------------------------------------------------------
|Shopping Center             |  | Location         |  | Year
 Constructed
 (C)
 Acquired
 (A) |  | Ownership
 Interest |  | GLA |           | Occupancy
 %
 12/31/10 (1) |     | Annual 
 Base 
 Rent |   | Annual
 Base
 Rent
 PSF |  | Anchor Tenants
 Current Lease 
 Expiration/
 Lease Option
 Expiration
|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                      
|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Core
 Portfolio, continued  |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|New England                 |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Connecticut                 |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Town Line Plaza             |  | Rocky Hill       |  | 1998
 (A)                             |  | Fee                 |  |     | 206,346   | (5)                        | 98  | %                    | $ | 1,632,831               |  | $                                                                     | 15.55 |  | Stop & Shop 2024/2064
 Wal-Mart(5)                                                                                     
|Massachusetts               |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Methuen Shopping Center     |  | Methuen          |  | 1998
 (A)                             |  | Fee                 |  |     | 130,021   |                            | 100 | %                    |   | 958,689                 |  |                                                                       | 7.37  |  | Demoulas Market 2015/
 Wal-Mart 2012/2052                                                                             
|Crescent Plaza              |  | Brockton         |  | 1984
 (A)                             |  | Fee                 |  |     | 218,141   |                            | 91  | %                    |   | 1,585,619               |  |                                                                       | 8.02  |  | Supervalu 2012/2042 Home
 Depot 2021/2056                                                                              
|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|New York                    |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|New Loudon Center           |  | Latham           |  | 1982
 (A)                             |  | Fee                 |  |     | 255,673   |                            | 74  | %                    |   | 1,535,346               |  |                                                                       | 8.06  |  | Price Chopper 2015/2035
 Marshalls 2014/2029 Raymour and Flanigan 2019/2034 AC Moore 2014/2024                        
|Rhode Island                |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Walnut Hill Plaza           |  | Woonsocket       |  | 1998
 (A)                             |  | Fee                 |  |     | 284,717   |                            | 94  | %                    |   | 2,354,928               |  |                                                                       | 8.84  |  | Supervalu 2013/2028 Sears
 2013/2033 CVS 2011/2014                                                                     
|Vermont                     |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|The Gateway Shopping Center |  | South Burlington |  | 1999
 (A)                             |  | Fee                 |  |     | 101,784   |                            | 92  | %                    |   | 1,798,042               |  |                                                                       | 19.16 |  | Supervalu 2024/2053                                                                                                    
|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Total New
 England Region   |  |                  |  |                                       |  |                     |  |     | 1,196,682 |                            | 90  | %                    | $ | 9,865,455               |  | $                                                                     | 10.03 |  |                                                                                                                        
|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Midwest                     |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Illinois                    |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Hobson West Plaza           |  | Naperville       |  | 1998
 (A)                             |  | Fee                 |  |     | 99,126    |                            | 92  | %                    | $ | 1,087,179               |  |                                                                       | 11.92 |  | Garden Fresh Markets
 2012/2032                                                                                        
|Clark Diversey              |  | Chicago          |  | 2006
 (A)                             |  | Fee                 |  |     | 19,265    |                            | 92  | %                    |   | 799,766                 |  |                                                                       | 45.34 |  |                                                                                                                        
|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Indiana                     |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Merrillville Plaza          |  | Merrillville     |  | 1998
 (A)                             |  | Fee                 |  |     | 235,904   |                            | 93  | %                    |   | 2,859,030               |  |                                                                       | 13.08 |  | TJ Maxx 2019/2029 JC Penney
 2013/2018 OfficeMax 2013/2028 Pier 1 2014/K&G Fashion 2017/2027 Davids
 Bridal 2011/2021
|Michigan                    |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Bloomfield Town Square      |  | Bloomfield Hills |  | 1998
 (A)                             |  | Fee                 |  |     | 234,095   |                            | 98  | %                    |   | 2,841,021               |  |                                                                       | 12.37 |  | TJ Maxx 2019/2029 Marshalls
 2011/2026 Home Goods 2011/2021 OfficeMax 2011/2026 Best Buy 2021/2041                     
|Ohio                        |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Mad River Station           |  | Dayton           |  | 1999
 (A)                             |  | Fee                 |  |     | 125,984   |                            | 88  | %                    |   | 1,397,908               |  |                                                                       | 12.66 |  | Babies R Us 2015/2020
 Office Depot 2015/ Pier 1 2015/                                                             
|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        
|Total
 Midwest Region       |  |                  |  |                                       |  |                     |  |     | 714,374   |                            | 93  | %                    | $ | 8,984,904               |  | $                                                                     | 13.46 |  |                                                                                                                        
|                            |  |                  |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                        

22

---



|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|------------------------------- |  | ------------ |  | ------------------------------------- |  | ------------------- |  | --- | --------- | -------------------------- | --- | -------------------- | - | ----------------------- |  | --------------------------------------------------------------------- | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|Shopping Center                 |  | Location     |  | Year
 Constructed
 (C)
 Acquired
 (A) |  | Ownership
 Interest |  | GLA |           | Occupancy
 %
 12/31/10 (1) |     | Annual 
 Base 
 Rent |   | Annual
 Base
 Rent
 PSF |  | Anchor Tenants
 Current Lease 
 Expiration/
 Lease Option
 Expiration
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                      
|Core Portfolio, continued       |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Mid-Atlantic                    |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|New Jersey                      |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Marketplace of Absecon          |  | Absecon      |  | 1998
 (A)                             |  | Fee                 |  |     | 104,718   |                            | 72  | %                    |   | 1,128,904               |  |                                                                       | 15.05 |  | Rite Aid 2020/2040 Dollar
 Tree 2015/2030                                                                                                     
|Delaware                        |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Brandywine Town Center          |  | Wilmington   |  | 2003
 (A)                             |  | Fee/JV
 (7)         |  |     | 874,989   |                            | 94  | %                    |   | 12,901,436              |  |                                                                       | 15.68 |  | Bed, Bath & Beyond
 2014/2029 Dicks Sporting Goods 2013/2028 Lowes Home Centers 2018/2048
 Target 2018/2058                                 
|Market Square Shopping Center   |  | Wilmington   |  | 2003
 (A)                             |  | Fee/JV
 (7)         |  |     | 102,047   |                            | 100 | %                    |   | 2,450,846               |  |                                                                       | 24.02 |  | TJ Maxx 2011/2021 Trader
 Joes 2019/2034                                                                                                     
|Route 202 Shopping Center       |  | Wilmington   |  | 2006
 (C)                             |  | LI/JV
 (3) (7)      |  |     | 19,970    |                            | 55  | %                    |   | 558,340                 |  |                                                                       | 50.89 |  |                                                                                                                                               
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Pennsylvania                    |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Mark Plaza                      |  | Edwardsville |  | 1968
 (C)                             |  | LI/Fee
 (3)         |  |     | 216,401   |                            | 86  | %                    |   | 829,922                 |  |                                                                       | 4.46  |  | Redners Markets 2018/2028
 Kmart 2014/2049                                                                                                   
|Plaza 422                       |  | Lebanon      |  | 1972
 (C)                             |  | Fee                 |  |     | 156,279   |                            | 100 | %                    |   | 795,852                 |  |                                                                       | 5.09  |  | Home Depot 2028/2058
 Dunhams 2016/2031                                                                                                      
|Route 6 Mall                    |  | Honesdale    |  | 1994
 (C)                             |  | Fee                 |  |     | 175,519   |                            | 100 | %                    |   | 1,171,690               |  |                                                                       | 6.68  |  | Kmart 2020/2070 Rite Aid
 2011/2026                                                                                                           
|Chestnut Hill                   |  | Philadelphia |  | 2006
 (A)                             |  | Fee
 (8)            |  |     | 40,570    |                            | 23  | %                    |   | 325,483                 |  |                                                                       | 35.57 |  |                                                                                                                                               
|                               
|Abington Towne Center           |  | Abington     |  | 1998
 (A)                             |  | Fee                 |  |     | 216,369   | (6)                        | 99  | %                    |   | 1,093,775               |  |                                                                       | 19.16 |  | TJ Maxx 2016/2026 Target
 (6)                                                                                                                 
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Total Mid-Atlantic Region       |  |              |  |                                       |  |                     |  |     | 1,906,862 |                            | 92  | %                    | $ | 21,256,248              |  | $                                                                     | 13.33 |  |                                                                                                                                               
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Total Core Operating Properties |  |              |  |                                       |  |                     |  |     | 4,825,141 |                            | 92  | %                    | $ | 64,673,294              |  | $                                                                     | 15.46 |  |                                                                                                                                               
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Properties under Redevelopment  |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|2914 Third Avenue               |  | Bronx        |  | 2006 (A)                              |  | Fee                 |  |     | 42,400    |                            | 24  | %                    |   | 180,000                 |  |                                                                       | 17.45 |  |                                                                                                                                               
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Ledgewood Mall                  |  | Ledgewood    |  | 1983 (A)                              |  | Fee                 |  |     | 517,151   |                            | 79  | %                    |   | 3,466,745               |  |                                                                       | 8.44  |  | Wal-Mart 2019/2049 Macys
 2015/2025 The Sports Authority 2012/2037 Marshalls 2014/2035 Ashley Furniture
 2015/2020 Barnes and Noble 2015/2035
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               
|Total Core
 Properties          |  |              |  |                                       |  |                     |  |     | 5,384,692 |                            | 90  | %                    | $ | 68,320,039              |  | $                                                                     | 14.84 |  |                                                                                                                                               
|                                |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                                                                                                               

23

---



|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|------------------------------------------- |  | ------------ |  | ------------------------------------- |  | ------------------- |  | --- | --------- | -------------------------- | --- | -------------------- | - | ----------------------- |  | --------------------------------------------------------------------- | ----- |  | -----------------------------------------------------------
|Shopping Center                             |  | Location     |  | Year
 Constructed
 (C)
 Acquired
 (A) |  | Ownership
 Interest |  | GLA |           | Occupancy
 %
 12/31/10 (1) |     | Annual 
 Base 
 Rent |   | Annual
 Base
 Rent
 PSF |  | Anchor Tenants
 Current Lease 
 Expiration/
 Lease Option
 Expiration
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                      
|Opportunity
 Fund Portfolio                 |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Fund I Properties                           |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Ohio                                        |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Granville Centre                            |  | Columbus     |  | 2002
 (A)                             |  | Fee                 |  |     | 134,997   |                            | 36  | %                    |   | 593,022                 |  |                                                                       | 12.37 |  | Lifestyle Family Fitness
 2017/2027                        
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|New York                                    |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Tarrytown Shopping Center                   |  | Tarrytown    |  | 2004
 (A)                             |  | Fee                 |  |     | 34,979    |                            | 85  | %                    |   | 891,483                 |  |                                                                       | 29.97 |  | Walgreens 2080/                                          
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|VARIOUS
 REGIONS                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Kroger/Safeway Portfolio                    |  | Various      |  | 2003
 (A)                             |  | LI/JV
 (3)          |  |     | 709,400   |                            | 100 | %                    |   | 3,560,326               |  |                                                                       | 5.02  |  | 18 Kroger/Safeway
 Supermarkets Various                    
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Total Fund
 I Properties                    |  |              |  |                                       |  |                     |  |     | 879,376   |                            | 90  | %                    | $ | 5,044,831               |  | $                                                                     | 6.41  |  |                                                            
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Fund II Properties                          |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|New York                                    |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Pelham Plaza                                |  | Pelham Manor |  | 2004
 (A)                             |  | LI/JV
 (3)          |  |     | 228,521   |                            | 78  | %                    |   | 4,751,941               |  |                                                                       | 26.67 |  | BJs Wholesale Club
 2033/2053 Michaels 2013/2033          
|Fordham Place                               |  | Bronx        |  | 2004(A)                               |  | Fee/JV              |  |     | 119,446   |                            | 100 | %                    |   | 5,519,760               |  |                                                                       | 46.21 |  | Best Buy 2019/2039 Sears
 2023/2033                        
|Liberty Avenue                              |  | New York     |  | 2005
 (A)                             |  | LI/JV
 (3)          |  |     | 26,125    |                            | 83  | %                    |   | 730,377                 |  |                                                                       | 33.72 |  | CVS 2032/2052                                              
|Canarsie Plaza                              |  | Brooklyn     |  | 2007
 (A)                             |  | Fee/JV              |  |     | 278,737   |                            | 64  | %                    |   | 5,100,000               |  |                                                                       | 28.79 |  | BJs Wholesale Club
 2030/2055                             
|216th Street                                |  | New York     |  | 2005
 (A)                             |  | Fee/JV              |  |     | 60,000    |                            | 100 | %                    |   | 2,460,000               |  |                                                                       | 41.00 |  | NYC 2027/2032                                              
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Total Fund
 II Properties                   |  |              |  |                                       |  |                     |  |     | 712,829   |                            | 78  | %                    | $ | 18,562,078              |  | $                                                                     | 33.36 |  |                                                            
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Fund III Properties                         |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|New York                                    |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Cortlandt Towne Center                      |  | Mohegan Lake |  | 2009
 (A)                             |  | Fee                 |  |     | 641,254   |                            | 91  | %                    |   | 9,139,440               |  |                                                                       | 15.72 |  | Walmart 2018/2048 A&P 2022/2047 Best Buy 2017/2032         
|Massachusetts                               |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|White City Shopping Center                  |  | Shrewsbury   |  | 2010
 (A)                             |  | Fee/JV              |  |     | 255,199   |                            | 93  | %                    |   | 4,880,720               |  |                                                                       | 20.51 |  | Shaws 2018/2033 Michaels
 2012/2022 Core Fitness 2016/2021
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Total Fund
 III Properties                  |  |              |  |                                       |  |                     |  |     | 896,453   |                            | 91  | %                    | $ | 14,020,160              |  | $                                                                     | 17.11 |  |                                                            
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Total Opportunity Fund Operating Properties |  |              |  |                                       |  |                     |  |     | 2,488,658 |                            | 87  | %                    | $ | 37,627,069              |  | $                                                                     | 17.40 |  |                                                            
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Properties under Redevelopment              |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Sherman Plaza                               |  | New York     |  | 2005
 (A)                             |  | Fee/JV              |  |     |          |                            |    |                      |   |                        |  |                                                                       |      |  |                                                            
|CityPoint                                   |  | Brooklyn     |  | 2007
 (A)                             |  | LI/JV               |  |     |          |                            |    |                      |   |                        |  |                                                                       |      |  |                                                            
|Westport                                    |  | Westport     |  | 2007
 (A)                             |  | Fee/JV              |  |     |          |                            |    |                      |   |                        |  |                                                                       |      |  |                                                            
|Sheepshead Bay                              |  | Brooklyn     |  | 2007
 (A)                             |  | Fee/JV              |  |     |          |                            |    |                      |   |                        |  |                                                                       |      |  |                                                            
|161st Street                                |  | Bronx        |  | 2005
 (A)                             |  | Fee/JV              |  |     | 230,218   |                            | 83  | %                    |   | 4,384,824               |  |                                                                       | 23.07 |  | City of New York 2011/                                    
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            
|Total Redevelopment Properties              |  |              |  |                                       |  |                     |  |     | 230,218   |                            | 83  | %                    | $ | 4,384,824               |  | $                                                                     | 23.07 |  |                                                            
|                                            |  |              |  |                                       |  |                     |  |     |           |                            |     |                      |   |                         |  |                                                                       |       |  |                                                            

24

---



|       |                                                                                                                           
|------ | --------------------------------------------------------------------------------------------------------------------------
|Notes:
|(1)    | Does not include space for
 which lease term had not yet commenced as of December 31, 2010.                               
|       |                                                                                                                           
|(2)    | In addition to the 16,834
 square feet of retail GLA, this property also has 21 apartments comprising
 14,434 square feet.
|       |                                                                                                                           
|(3)    | We are a ground lessee
 under a long-term ground lease.                                                                   
|       |                                                                                                                           
|(4)    | We have a 49% investment in
 this property.                                                                               
|       |                                                                                                                           
|(5)    | Includes a 97,300 square
 foot Wal-Mart which is not owned by us.                                                         
|       |                                                                                                                           
|(6)    | Includes a 157,616 square
 foot Target Store that is not owned by us.                                                     
|       |                                                                                                                           
|(7)    | We have a 22% investment in
 this property.                                                                               
|       |                                                                                                                           
|(8)    | Property consists of two
 buildings.                                                                                      

MAJOR TENANTS

No individual retail tenant accounted for more than 5.7% of minimum
rents for the year ended December 31, 2010 or occupied more than 6.8% of
total leased GLA as of December 31, 2010. The following table sets forth
certain information for the 20 largest retail tenants based upon minimum rents
in place as of December 31, 2010. The amounts below include our pro-rata
share of GLA and annualized base rent for the Operating Partnerships partial
ownership interest in properties, including the Opportunity Funds:

|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|----------------------------------------------- |  | -------------------------------- | -- | --------- | ---------------------- | -------------------------- | -------------------------- | ------------------------------------------------- | ---------- |  |  | ---- | - |  | ---- | -
|                                                |  | Number of
 Stores in 
 Portfolio |    | Total GLA |                        | Annualized Base 
 Rent (1) |                            | Percentage of Total
 Represented by Retail Tenant |           
|                                                |  |                                  |    |           |                        |                           
|Retail
 Tenant                                  |  |                                  |    |           | Total PortfolioGLA (2) |                            | Annualized Base 
 Rent (2) |                                                  
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  | 
|A&P (A&P, Pathmark)                             |  |                                  | 5  |           |                        | 191,899                    |                            | $                                                 | 3,468,080  |  |  | 3.8  | % |  | 5.7  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Supervalu (Shaws)                              |  |                                  | 4  |           |                        | 186,500                    |                            |                                                   | 2,563,590  |  |  | 3.7  | % |  | 4.2  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|TJX Companies (T.J. Maxx, Marshalls, Homegoods) |  |                                  | 10 |           |                        | 249,771                    |                            |                                                   | 2,161,722  |  |  | 5.0  | % |  | 3.6  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Wal-Mart                                        |  |                                  | 3  |           |                        | 235,991                    |                            |                                                   | 1,713,365  |  |  | 4.7  | % |  | 2.8  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Sears (Kmart, Sears)                            |  |                                  | 5  |           |                        | 341,708                    |                            |                                                   | 1,654,280  |  |  | 6.8  | % |  | 2.7  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|BJs Wholesale Club                             |  |                                  | 2  |           |                        | 54,223                     |                            |                                                   | 1,476,000  |  |  | 1.1  | % |  | 2.4  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Ahold (Stop & Shop)                             |  |                                  | 2  |           |                        | 117,911                    |                            |                                                   | 1,363,237  |  |  | 2.3  | % |  | 2.3  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|LA Fitness                                      |  |                                  | 1  |           |                        | 55,000                     |                            |                                                   | 1,265,000  |  |  | 1.1  | % |  | 2.1  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Restoration Hardware                            |  |                                  | 1  |           |                        | 12,293                     |                            |                                                   | 1,166,090  |  |  | 0.2  | % |  | 1.9  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Barnes & Noble                                  |  |                                  | 4  |           |                        | 43,259                     |                            |                                                   | 1,146,079  |  |  | 0.9  | % |  | 1.9  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Home Depot                                      |  |                                  | 2  |           |                        | 211,003                    |                            |                                                   | 1,099,996  |  |  | 4.2  | % |  | 1.8  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Stage Deli                                      |  |                                  | 1  |           |                        | 4,211                      |                            |                                                   | 999,996    |  |  | 0.1  | % |  | 1.7  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Walgreens                                       |  |                                  | 3  |           |                        | 22,692                     |                            |                                                   | 854,313    |  |  | 0.5  | % |  | 1.4  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Sleepys                                        |  |                                  | 5  |           |                        | 34,543                     |                            |                                                   | 848,761    |  |  | 0.7  | % |  | 1.4  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Price Chopper                                   |  |                                  | 1  |           |                        | 87,709                     |                            |                                                   | 836,660    |  |  | 1.7  | % |  | 1.4  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|King Kullen                                     |  |                                  | 1  |           |                        | 37,266                     |                            |                                                   | 745,320    |  |  | 0.7  | % |  | 1.2  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Pier 1 Imports                                  |  |                                  | 4  |           |                        | 25,454                     |                            |                                                   | 646,154    |  |  | 0.5  | % |  | 1.1  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Safeway                                         |  |                                  | 12 |           |                        | 123,626                    |                            |                                                   | 630,177    |  |  | 2.5  | % |  | 1.0  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|CVS                                             |  |                                  | 3  |           |                        | 36,476                     |                            |                                                   | 619,808    |  |  | 0.7  | % |  | 1.0  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Payless Shoesource                              |  |                                  | 9  |           |                        | 28,466                     |                            |                                                   | 561,220    |  |  | 0.6  | % |  | 0.9  | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  
|Total                                           |  |                                  | 78 |           |                        | 2,100,001                  |                            | $                                                 | 25,819,848 |  |  | 41.8 | % |  | 42.5 | %
|                                                |  |                                  |    |           |                        |                            |                            |                                                   |            |  |  |      |   |  |      |  

|       |                                                                                                                                                                                                            
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes:
|(1)    | Base rents
 do not include percentage rents, additional rents for property expense
 reimbursements and contractual rent escalations due after December 31, 2010.                                           
|       |                                                                                                                                                                                                            
|(2)    | Represents
 percentage of total GLA and annualized base rent for our retail properties
 including the Operating Partnerships pro-rata share of joint venture
 properties, including the Opportunity Funds.

25

---



LEASE EXPIRATIONS

The following
table shows scheduled lease expirations for retail tenants in place as of
December 31, 2010, assuming that none of the tenants exercise renewal options.
(GLA and Annualized Base Rent in thousands):

Core Portfolio:

|                   |  |                   |  |  |                          |        |                      |     |              |       |                      |     |  
|------------------ |  | ----------------- |  |  | ------------------------ | ------ | -------------------- | --- | ------------ | ----- | -------------------- | --- | -
|                   |  |                   |  |  | Annualized Base Rent (1) |        | GLA                  |    
|                   |  |                   |  |  |                          |        |                      |    
|Leases maturing in |  | Number of
 Leases |  |  | Current Annual
 Rent     |        | Percentage of
 Total |     | Square
 Feet |       | Percentage
 of Total |    
|                   |  |                   |  |  |                          |        |                      |     |              |       |                      |    
|Month
 to Month    |  | 13                |  |  | $                        | 466    |                      | 1   | %            | 34    |                      | 1   | %
|2011               |  | 61                |  |  |                          | 7,798  |                      | 11  | %            | 446   |                      | 10  | %
|2012               |  | 57                |  |  |                          | 6,706  |                      | 10  | %            | 561   |                      | 12  | %
|2013               |  | 63                |  |  |                          | 10,109 |                      | 15  | %            | 553   |                      | 12  | %
|2014               |  | 61                |  |  |                          | 8,192  |                      | 12  | %            | 497   |                      | 11  | %
|2015               |  | 44                |  |  |                          | 7,685  |                      | 11  | %            | 572   |                      | 12  | %
|2016               |  | 12                |  |  |                          | 1,852  |                      | 3   | %            | 133   |                      | 3   | %
|2017               |  | 18                |  |  |                          | 4,633  |                      | 7   | %            | 202   |                      | 4   | %
|2018               |  | 24                |  |  |                          | 5,639  |                      | 8   | %            | 401   |                      | 9   | %
|2019               |  | 20                |  |  |                          | 2,746  |                      | 4   | %            | 286   |                      | 6   | %
|Thereafter         |  | 39                |  |  |                          | 12,494 |                      | 18  | %            | 921   |                      | 20  | %
|                   |  |                   |  |  |                          |        |                      |     |              |       |                      |     |  
|Total              |  | 412               |  |  | $                        | 68,320 |                      | 100 | %            | 4,606 |                      | 100 | %
|                   |  |                   |  |  |                          |        |                      |     |              |       |                      |     |  

Opportunity
Funds:

|                   |  |                   |     |  |                          |        |                      |     |            |       |                      |     |  
|------------------ |  | ----------------- | --- |  | ------------------------ | ------ | -------------------- | --- | ---------- | ----- | -------------------- | --- | -
|                   |  |                   |     |  | Annualized Base Rent (1) |        | GLA                  |    
|                   |  |                   |     |  |                          |        |                      |    
|Leases maturing in |  | Number of
 Leases |     |  | Current Annual
 Rent     |        | Percentage of
 Total |     | SquareFeet |       | Percentage
 of Total |    
|                   |  |                   |     |  |                          |        |                      |     |            |       |                      |     |  
|Month
 to Month    |  | 3                 |     |  | $                        | 156    |                      | 0   | %          | 17    |                      | 1   | %
|2011               |  | 29                | (2) |  |                          | 7,699  |                      | 18  | %          | 882   |                      | 37  | %
|2012               |  | 21                |     |  |                          | 2,421  |                      | 6   | %          | 107   |                      | 5   | %
|2013               |  | 10                |     |  |                          | 2,321  |                      | 6   | %          | 105   |                      | 4   | %
|2014               |  | 14                |     |  |                          | 2,310  |                      | 5   | %          | 115   |                      | 5   | %
|2015               |  | 11                |     |  |                          | 980    |                      | 2   | %          | 49    |                      | 2   | %
|2016               |  | 9                 |     |  |                          | 1,107  |                      | 3   | %          | 48    |                      | 2   | %
|2017               |  | 5                 |     |  |                          | 1,586  |                      | 4   | %          | 97    |                      | 4   | %
|2018               |  | 9                 |     |  |                          | 3,185  |                      | 8   | %          | 258   |                      | 11  | %
|2019               |  | 9                 |     |  |                          | 2,588  |                      | 6   | %          | 62    |                      | 3   | %
|Thereafter         |  | 23                |     |  |                          | 17,659 |                      | 42  | %          | 613   |                      | 26  | %
|                   |  |                   |     |  |                          |        |                      |     |            |       |                      |     |  
|Total              |  | 143               |     |  | $                        | 42,012 |                      | 100 | %          | 2,353 |                      | 100 | %
|                   |  |                   |     |  |                          |        |                      |     |            |       |                      |     |  

|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note:
|(1)   | Base rents do not include percentage rents, additional rents for
 property expense reimbursements, nor contractual rent escalations.                                                                                                                                                                                                                                                                                                                                                              
|(2)   | Includes the master lease term for all 18 Kroger/Safeway leases
 representing annualized base rent of $3,560 and GLA of 709 square feet. The
 underlying operating leases at fourteen of these locations representing 547
 square feet and rents aggregating $2,743 expire during 2014. The operating
 leases at two locations, representing 92 square feet and rents aggregating
 $426, expire during 2019. Reference is made to page 28 below for a discussion
 of the Kroger/Safeway portfolio.

26

---



GEOGRAPHIC CONCENTRATIONS

The following table summarizes our retail properties by region as of
December 31, 2010. The amounts below also reflect properties that we invest in
through joint ventures and that are held in our Opportunity Funds (GLA and
Annualized Base Rent in thousands):

|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|------------------------------------------- |  | ------- |  | --------------- | - | -------------------------- | ------ | ------------------------------------------------ | - | ------------------------------------------- |  | --------------------- | - | --- | -
|                                            |  |         |  |                 |   |                            |        |                                                  |   | Percentage of Total
 Represented by
 Region | 
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             | 
|Region                                      |  | GLA (1) |  | Occupied %
 (2) |   | Annualized
 Base
 Rent (2) |        | Annualized Base
 Rent per
 Occupied Square
 Foot |   | GLA                                         |  | Annualized
 Base Rent |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |  
|Core Properties:                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Operating Properties:                       |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|New York Region                             |  | 1,007   |  | 93              | % | $                          | 24,567 |                                                  | $ | 26.24                                       |  | 20                    | % | 38  | %
|New England                                 |  | 1,197   |  | 90              | % |                            | 9,865  |                                                  |   | 10.03                                       |  | 25                    | % | 15  | %
|Midwest                                     |  | 714     |  | 93              | % |                            | 8,985  |                                                  |   | 13.46                                       |  | 15                    | % | 14  | %
|Mid-Atlantic                                |  | 1,907   |  | 92              | % |                            | 21,256 |                                                  |   | 13.33                                       |  | 40                    | % | 33  | %
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Total Core Operating Properties             |  | 4,825   |  | 92              | % | $                          | 64,673 |                                                  | $ | 15.46                                       |  | 100                   | % | 100 | %
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Redevelopment Properties:                   |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Mid-Atlantic                                |  | 517     |  | 79              | % | $                          | 3,467  |                                                  | $ | 8.44                                        |  | 92                    | % | 95  | %
|New York Region                             |  | 42      |  | 24              | % |                            | 180    |                                                  |   | 17.45                                       |  | 8                     | % | 5   | %
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Total Core Redevelopment Properties         |  | 559     |  | 75              | % | $                          | 3,647  |                                                  | $ | 8.66                                        |  | 100                   | % | 100 | %
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Opportunity Funds:                          |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Operating Properties:                       |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Midwest                                     |  | 135     |  | 36              | % | $                          | 593    |                                                  | $ | 12.37                                       |  | 5                     | % | 2   | %
|New York Region                             |  | 1,389   |  | 84              | % |                            | 28,593 |                                                  |   | 24.49                                       |  | 56                    | % | 76  | %
|Various (Kroger/Safeway Portfolio)          |  | 709     |  | 100             | % |                            | 3,560  |                                                  |   | 5.02                                        |  | 29                    | % | 9   | %
|New England                                 |  | 255     |  | 93              | % |                            | 4,881  |                                                  |   | 20.51                                       |  | 10                    | % | 13  | %
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Total Opportunity Fund Operating Properties |  | 2,488   |  | 87              | % | $                          | 37,627 |                                                  | $ | 17.40                                       |  | 100                   | % | 100 | %
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|Redevelopment Properties:                   |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  
|New York Region                             |  | 230     |  | 83              | % | $                          | 4,385  |                                                  | $ | 23.07                                       |  | 100                   | % | 100 | %
|                                            |  |         |  |                 |   |                            |        |                                                  |   |                                             |  |                       |   |     |  

|       |                                                                                                                                                                              
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes:
|(1)    | Property GLA includes a total of 255,000 square feet, which is not
 owned by us. This square footage has been excluded for calculating annualized
 base rent per square foot.
|       |                                                                                                                                                                              
|(2)    | The above occupancy and rent amounts do not include space that is
 currently leased, but for which payment of rent had not commenced as of
 December 31, 2010.               

27

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SELF-STORAGE PORTFOLIO

During February 2008, we, through Fund III, acquired a 95% controlling
interest in a portfolio of eleven self-storage properties from Storage 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 1,127,490 net rentable square feet, and is operating at various stages
of stabilization as detailed in the table below. The portfolio is operated by Self
Storage Management, a joint venture entity formed by Fund III and an
unaffiliated partner.

|         |  |                               |  |                         |  |                             |  |                                      |  
|-------- |  | ----------------------------- |  | ----------------------- |  | --------------------------- |  | ------------------------------------ | -
|Owner    |  | Operating Properties          |  | Location                |  | Net
 Rentable
 Square
 Feet |  | Occupancy
 as of
 December 31,
 2010 |  
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  | Stabilized                    |  |                         |  |                             |  |                                      |  
|Fund III |  | Suffern                       |  | Suffern, New York       |  | 78,950                      |  |                                      |  
|Fund III |  | Yonkers                       |  | Westchester, New York   |  | 100,643                     |  |                                      |  
|Fund III |  | Jersey City                   |  | Jersey City, New Jersey |  | 76,920                      |  |                                      |  
|Fund III |  | Webster Ave                   |  | Bronx, New York         |  | 36,175                      |  |                                      |  
|Fund III |  | Linden                        |  | Linden, New Jersey      |  | 84,035                      |  |                                      |  
|Fund III |  | Bruckner
 Blvd                |  | Bronx, New York         |  | 89,473                      |  |                                      |  
|Fund III |  | New Rochelle                  |  | Westchester, New York   |  | 42,158                      |  |                                      |  
|Fund III |  | Lawrence                      |  | Lawrence, New York      |  | 97,743                      |  |                                      |  
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  | Subtotal
 Stabilized          |  |                         |  | 606,097                     |  | 87.5                                 | %
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  | Redeveloped - in Lease-up     |  |                         |  |                             |  |                                      |  
|Fund III |  | Long Island
 City             |  | Queens, New York        |  | 135,558                     |  |                                      |  
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  | Subtotal in
 Lease-up         |  |                         |  | 135,558                     |  | 75.3                                 | %
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  | Total
 Operating Properties   |  |                         |  | 741,655                     |  | 85.3                                 | %
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  | In Initial Lease-up           |  |                         |  |                             |  |                                      |  
|         |  |                               |  |                         |  |                             |  |                                      |  
|Fund III |  | Fordham Road                  |  | Bronx, New York         |  | 85,155                      |  |                                      |  
|Fund III |  | Ridgewood                     |  | Queens, New York        |  | 88,789                      |  |                                      |  
|Fund II  |  | Liberty
 Avenue               |  | Queens, New York        |  | 72,925                      |  |                                      |  
|Fund II  |  | Pelham Plaza                  |  | Pelham Manor, New York  |  | 62,020                      |  |                                      |  
|Fund II  |  | Atlantic
 Avenue              |  | Brooklyn, New York      |  | 76,946                      |  |                                      |  
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  | Subtotal in
 Initial Lease-up |  |                         |  | 385,835                     |  | 66.1                                 | %
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  |                               |  |                         |  |                             |  |                                      |  
|         |  | Total
 Self-Storage Portfolio |  |                         |  | 1,127,490                   |  |                                      |  
|         |  |                               |  |                         |  |                             |  |                                      |  

KROGER/SAFEWAY PORTFOLIO

At December 31, 2010, Fund I, together with an unaffiliated joint
venture partner (Kroger/Safeway JV), owns interests, through two master
leases with an unaffiliated entity (Master Lessee), in 18 triple-net Kroger
and Safeway supermarket leases (Operating Leases) aggregating approximately
0.7 million square feet. There are six Kroger and twelve Safeway locations in
eleven states averaging approximately 39,000 square feet at rents ranging from
approximately $3.70 to $7.00 per square foot. The master leases expire in
January 2011 with the Master Lessee having the option of extending the term of
either or both of the master leases. The Master Lessee exercised the option to
cancel the master lease in the first quarter of 2011. As a result, the
Kroger/Safeway JV became the operating landlord of the locations. The
Kroger/Safeway JV holds its interest through long-term ground leases, which
have a term in excess of 80 years, inclusive of multiple renewal options.
Although there is no obligation for the Kroger/Safeway JV to pay ground rent
during the initial term of the master lease, to the extent it exercises an
option to renew a ground lease for a property thereafter, it will be obligated
to pay an average ground rent of approximately $2.00 per square foot.

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

The initial Operating Leases expired during 2009. Options on these
leases provide for extensions through 2049 at an average rent of approximately
$5.00 per square foot upon the commencement of the initial option period during
2009. Of the remaining 18 locations, 15 are currently occupied and paying rent,
one is unoccupied and paying rent, and two remain vacant.

28

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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 exposure to loss contingencies, if any, will not
have a significant effect on our consolidated financial position, results of
operations, or liquidity.

During September 2008, we, and certain of our subsidiaries, and other
unrelated entities were named as defendants in an adversary proceeding brought
by 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, consolidated financial condition, or liquidity.

During August 2009, we terminated the employment of a former Senior
Vice President (the Former Employee) for engaging in conduct that fell within
the definition of cause in his severance agreement with us. Had the Former
Employee not been terminated for cause, he would have been eligible to
receive approximately $0.9 million under the severance agreement. Because we
terminated him for cause, we did not pay the Former Employee any severance
benefits under the agreement. The Former Employee has brought a lawsuit against
us in New York State Supreme Court, alleging breach of the severance agreement.
The suit is in the pre-trial discovery stage. We believe we have meritorious
defenses to the suit.

ITEM
4. REMOVED AND RESERVED.

29

---



PART II


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


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

The following table shows, for the period indicated, the high and low
sales price for our Common Shares as reported on the New York Stock Exchange,
and cash dividends declared during the two years ended December 31, 2010
and 2009:

|                    |  |      |       |     |   |                      |  |   |        | 
|------------------- |  | ---- | ----- | --- | - | -------------------- |  | - | ------ | 
|Quarter Ended
 2010 |  | High |       | Low |   | Dividend 
 Per Share | 
|                    |  |      |       |     |   |                      | 
|March 31,
 2010     |  | $    | 18.40 |     | $ | 14.88                |  | $ | 0.1800 | 
|June 30,
 2010      |  |      | 19.80 |     |   | 16.22                |  |   | 0.1800 | 
|September
 30, 2010 |  |      | 19.77 |     |   | 15.87                |  |   | 0.1800 | 
|December 31,
 2010  |  |      | 20.17 |     |   | 17.72                |  |   | 0.1800 | 
|                    |  |      |       |     |   |                      |  |   |        | 
|2009                |  |      |       |     |   |                      |  |   |        | 
|                    |  |      |       |     |   |                      |  |   |        | 
|March 31,
 2009     |  | $    | 14.69 |     | $ | 8.50                 |  | $ | 0.2100 | 
|June 30,
 2009      |  |      | 15.44 |     |   | 10.37                |  |   | 0.1800 | 
|September
 30, 2009 |  |      | 16.51 |     |   | 11.55                |  |   | 0.1800 | 
|December 31,
 2009  |  |      | 17.69 |     |   | 13.31                |  |   | 0.1800 | 

At February 28, 2011, there were 309 holders of record of our Common
Shares.

We have determined for income tax purposes that 100% of the total
dividends distributed to shareholders during 2010 represented ordinary income.
The dividend for the quarter ended December 31, 2010 was paid on February 1,
2011 and will be taxable in 2011. Our cash flow is affected by a number of
factors, including the revenues received from rental properties, our operating
expenses, the interest expense on our borrowings, the ability of lessees to
meet their obligations to us and unanticipated capital expenditures. Future
dividends paid by us will be at the discretion of the Trustees and will depend
on our actual cash flows, our financial condition, capital requirements, the
annual distribution requirements under the REIT provisions of the Code and such
other factors as the Trustees deem relevant. In addition, we have the ability
to pay dividends in cash, Common Shares or in any combination of cash (minimum
10%) and Common Shares (maximum 90%).

(b) Issuer purchases of equity securities

We have an existing share repurchase program that authorizes
management, at its discretion, to repurchase up to $20.0 million of our
outstanding Common Shares. The program may be discontinued or extended at any
time and there is no assurance that we will purchase the full amount
authorized. There were no Common Shares repurchased by us during the year ended
December 31, 2010.

30

---



(c) Securities authorized for issuance under equity compensation
plans

The following table provides information related to our 1999 Share
Incentive Plan (the 1999 Plan), 2003 Share Incentive Plan (the 2003 Plan)
and the 2006 Share Incentive Plan (the 2006 Plan) as of December 31,
2010:

|                                                           |  |                                                                                                   |         |                                                                                     |   |                                                                                                                                                       |  |  |         |    
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- | ------- | ----------------------------------------------------------------------------------- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------- | ---
|                                                           |  | Equity Compensation Plan Information                                                              |         |                                                                                     |  
|                                                           |  | (a)                                                                                               |         | (b)                                                                                 |   | (c)                                                                                                                                                   | 
|                                                           |  | Number of securities to 
 be issued upon exercise 
 of outstanding options, 
 warrants and rights |         | Weighted - average 
 exercise price of 
 outstanding options, 
 warrants and rights |   | Number of securities 
 remaining available 
 for future issuance under 
 equity compensation plans 
 (excluding securities 
 reflected in column (a)) | 
|                                                           |  |                                                                                                   |         |                                                                                     |   |                                                                                                                                                       | 
|Equity compensation plans approved by security holders     |  |                                                                                                   | 152,283 |                                                                                     | $ | 18.20                                                                                                                                                 |  |  | 763,444 | (1)
|Equity compensation plans not approved by security holders |  |                                                                                                   |        |                                                                                     |   |                                                                                                                                                      |  |  |        |    
|                                                           |  |                                                                                                   |         |                                                                                     |   |                                                                                                                                                       |  |  |         |    
|Total                                                      |  |                                                                                                   | 152,283 |                                                                                     | $ | 18.20                                                                                                                                                 |  |  | 763,444 | (1)
|                                                           |  |                                                                                                   |         |                                                                                     |   |                                                                                                                                                       |  |  |         |    

|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes:
|(1)    | The 1999 Plan authorizes the issuance of options equal to up to 8% of
 the total Common Shares outstanding from time to time on a fully diluted
 basis. However, not more than 4,000,000 of the Common Shares in the aggregate
 may be issued pursuant to the exercise of options and no participant may
 receive more than 5,000,000 Common Shares during the term of the 1999 Plan.
 The 2003 Plan authorizes the issuance of options equal to up to 4% of the
 total Common Shares outstanding from time to time on a fully diluted basis.
 However, no participant may receive more than 1,000,000 Common Shares during
 the term of the 2003 Plan. The 2006 Plan authorizes the issuance of a maximum
 number of 500,000 Common Shares. No participant may receive more than 500,000
 Common Shares during the term of the 2006 Plan. We have also issued LTIP
 Units, which are generally exchangeable on a one-for-one basis for our
 Operating Partnership Units which in turn are convertible into Common Shares.
 Reference is made to Note 15 to our Consolidated Financial Statements, which
 begin on Page F-1 of this Form 10-K, for a summary of our Share Incentive
 Plans.

Remaining
Common Shares available under our share incentive plans is as follows:

|                                                                       |  |  |            |  
|---------------------------------------------------------------------- |  |  | ---------- | -
|Outstanding Common Shares
 as of December 31, 2010                     |  |  | 40,254,525 |  
|Outstanding OP Units as of
 December 31, 2010                          |  |  | 360,114    |  
|                                                                       |  |  |            |  
|Total Outstanding Common Shares and OP Units                           |  |  | 40,614,639 |  
|                                                                       |  |  |            |  
|12% of Common Shares and OP
 Units pursuant to the 1999 and 2003 Plans |  |  | 4,873,757  |  
|Common Shares pursuant to
 the 2006 Plan                               |  |  | 500,000    |  
|                                                                       |  |  |            |  
|Total Common Shares available under equity compensation plans          |  |  | 5,373,757  |  
|                                                                       |  |  |            |  
|Less: Issuance of
 Restricted Shares and LTIP Units Granted            |  |  | (1,834,794 | )
|Issuance
 of Options Granted                                           |  |  | (2,775,519 | )
|                                                                       |  |  |            |  
|Number of Common Shares
 remaining available                           |  |  | 763,444    |  
|                                                                       |  |  |            |  

(d) Share Price Performance Graph (1)

The following graph compares the cumulative total shareholder return
for our Common Shares for the period commencing December 31, 2005 through
December 31, 2010 with the cumulative total return on the Russell 2000
Index (Russell 2000), the NAREIT All Equity REIT Index (the NAREIT) and the
SNL Shopping Center REITs (the SNL) over the same period. Total return values
for the Russell 2000, the NAREIT, the SNL and the Common Shares were calculated
based upon cumulative total return assuming the investment of $100.00 in each
of the Russell 2000, the NAREIT, the SNL and our Common Shares on
December 31, 2005, and assuming reinvestment of dividends. The shareholder
return as set forth in the table below is not necessarily indicative of future
performance.

Note:


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


31

---



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

(BAR CHART)

|                                    |  |              |  |          |  |          |  |          |  |          |  |         
|----------------------------------- |  | ------------ |  | -------- |  | -------- |  | -------- |  | -------- |  | --------
|                                    |  | Period Ended
|                                    |  |             
|Index                               |  | 12/31/05     |  | 12/31/06 |  | 12/31/07 |  | 12/31/08 |  | 12/31/09 |  | 12/31/10
|                                    |  |              |  |          |  |          |  |          |  |          |  |         
|Acadia
 Realty Trust                |  | 100.00       |  | 128.74   |  | 137.06   |  | 83.20    |  | 103.95   |  | 116.96  
|Russell 2000                        |  | 100.00       |  | 118.37   |  | 116.51   |  | 77.15    |  | 98.11    |  | 124.46  
|NAREIT All
 Equity REIT Index       |  | 100.00       |  | 135.06   |  | 113.87   |  | 70.91    |  | 90.76    |  | 116.12  
|SNL REIT
 Retail Shopping Ctr Index |  | 100.00       |  | 134.61   |  | 110.82   |  | 66.72    |  | 65.86    |  | 85.53   

---

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,
2010 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.

32

---



|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|--------------------------------------------------------------------------- |  | ------------------------ | --------- | ---- | - | --------- | - | ---- | --------- | ---- | - | -------- | - | - | ------- | -
|                                                                            |  | Years ended December 31, |          
|                                                                            |  |                          |          
|(dollars in thousands,
 except per share amounts)                           |  | 2010                     |           | 2009 |   | 2008      |   | 2007 |           | 2006 |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |  
|OPERATING DATA:                                                             |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Revenues                                                                    |  | $                        | 151,958   |      | $ | 145,703   |   | $    | 133,566   |      | $ | 88,259   |   | $ | 85,577  |  
|Operating expenses, excluding depreciation and reserves                     |  |                          | 69,379    |      |   | 70,963    |   |      | 61,215    |      |   | 46,090   |   |   | 40,227  |  
|Interest expense                                                            |  |                          | 34,471    |      |   | 32,154    |   |      | 28,893    |      |   | 24,564   |   |   | 19,929  |  
|Depreciation and amortization                                               |  |                          | 40,115    |      |   | 36,634    |   |      | 32,749    |      |   | 24,529   |   |   | 22,431  |  
|Gain on sale of land                                                        |  |                          |          |      |   |          |   |      | 763       |      |   |         |   |   |        |  
|Equity in earnings (losses) of unconsolidated partnerships                  |  |                          | 10,971    |      |   | (1,529    | ) |      | 19,906    |      |   | 6,619    |   |   | 2,559   |  
|Impairment of investment in unconsolidated affiliate                        |  |                          |          |      |   | (3,768    | ) |      |          |      |   |         |   |   |        |  
|Reserve for notes receivable                                                |  |                          |          |      |   | (1,734    | ) |      | (4,392    | )    |   |         |   |   |        |  
|Other interest income                                                       |  |                          | 408       |      |   | 642       |   |      | 3,370     |      |   | 5,833    |   |   | 2,318   |  
|Gain from bargain purchase                                                  |  |                          | 33,805    |      |   |          |   |      |          |      |   |         |   |   |        |  
|Gain on debt extinguishment                                                 |  |                          |          |      |   | 7,057     |   |      | 1,523     |      |   |         |   |   |        |  
|Income tax expense (benefit)                                                |  |                          | 2,890     |      |   | 1,541     |   |      | 3,362     |      |   | 297      |   |   | (508    | )
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Income from continuing operations                                           |  |                          | 50,287    |      |   | 5,079     |   |      | 28,517    |      |   | 5,231    |   |   | 8,375   |  
|Income from discontinued operations                                         |  |                          | 380       |      |   | 7,627     |   |      | 8,920     |      |   | 7,486    |   |   | 25,780  |  
|Income from extraordinary item (1)                                          |  |                          |          |      |   |          |   |      |          |      |   | 27,844   |   |   |        |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Net income                                                                  |  |                          | 50,667    |      |   | 12,706    |   |      | 37,437    |      |   | 40,561   |   |   | 34,155  |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|(Income) loss attributable to noncontrolling interests in
 subsidiaries:    |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Continuing operations                                                       |  |                          | (20,307   | )    |   | 23,472    |   |      | (11,438   | )    |   | 9,750    |   |   | 6,039   |  
|Discontinued operations                                                     |  |                          | (303      | )    |   | (5,045    | ) |      | (931      | )    |   | (798     | ) |   | (1,274  | )
|Extraordinary item                                                          |  |                          |          |      |   |          |   |      |          |      |   | (24,167  | ) |   |        |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Net (income) loss attributable to noncontrolling interests in
 subsidiaries |  |                          | (20,610   | )    |   | 18,427    |   |      | (12,369   | )    |   | (15,215  | ) |   | 4,765   |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Net income attributable to Common Shareholders                              |  | $                        | 30,057    |      | $ | 31,133    |   | $    | 25,068    |      | $ | 25,346   |   | $ | 38,920  |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Supplemental Information:                                                   |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Income from continuing operations attributable to Common Shareholders       |  | $                        | 29,980    |      | $ | 28,551    |   | $    | 17,079    |      | $ | 14,981   |   | $ | 14,414  |  
|Income from discontinued operations attributable to Common
 Shareholders    |  |                          | 77        |      |   | 2,582     |   |      | 7,989     |      |   | 6,688    |   |   | 24,506  |  
|Income from extraordinary item attributable to Common Shareholders          |  |                          |          |      |   |          |   |      |          |      |   | 3,677    |   |   |        |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Net income attributable to Common Shareholders                              |  | $                        | 30,057    |      | $ | 31,133    |   | $    | 25,068    |      | $ | 25,346   |   | $ | 38,920  |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Basic earnings per share:                                                   |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Income from continuing operations                                           |  | $                        | 0.75      |      | $ | 0.75      |   | $    | 0.51      |      | $ | 0.45     |   | $ | 0.43    |  
|Income from discontinued operations                                         |  |                          |          |      |   | 0.07      |   |      | 0.23      |      |   | 0.20     |   |   | 0.72    |  
|Income from extraordinary item                                              |  |                          |          |      |   |          |   |      |          |      |   | 0.11     |   |   |        |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Basic earnings per share                                                    |  | $                        | 0.75      |      | $ | 0.82      |   | $    | 0.74      |      | $ | 0.76     |   | $ | 1.15    |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Diluted earnings per share:                                                 |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Income from continuing operations                                           |  | $                        | 0.74      |      | $ | 0.75      |   | $    | 0.50      |      | $ | 0.44     |   | $ | 0.42    |  
|Income from discontinued operations                                         |  |                          |          |      |   | 0.07      |   |      | 0.23      |      |   | 0.19     |   |   | 0.71    |  
|Income from extraordinary item                                              |  |                          |          |      |   |          |   |      |          |      |   | 0.11     |   |   |        |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Diluted earnings per share                                                  |  | $                        | 0.74      |      | $ | 0.82      |   | $    | 0.73      |      | $ | 0.74     |   | $ | 1.13    |  
|                                                                            |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Weighted average number of Common Shares outstanding                        |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|- basic                                                                     |  |                          | 40,136    |      |   | 38,005    |   |      | 33,813    |      |   | 33,600   |   |   | 33,789  |  
|- diluted                                                                   |  |                          | 40,406    |      |   | 38,242    |   |      | 34,267    |      |   | 34,282   |   |   | 34,440  |  
|Cash dividends declared per Common Share (3)                                |  | $                        | 0.7200    |      | $ | 0.7500    |   | $    | 0.8951    |      | $ | 1.0325   |   | $ | 0.7550  |  
|BALANCE SHEET DATA:                                                         |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Real estate before accumulated depreciation                                 |  | $                        | 1,386,299 |      | $ | 1,200,483 |   | $    | 1,085,072 |      | $ | 810,697  |   | $ | 606,905 |  
|Total assets                                                                |  |                          | 1,524,806 |      |   | 1,382,464 |   |      | 1,291,383 |      |   | 998,783  |   |   | 851,396 |  
|Total mortgage indebtedness                                                 |  |                          | 806,212   |      |   | 732,287   |   |      | 653,543   |      |   | 399,997  |   |   | 315,147 |  
|Total convertible notes payable                                             |  |                          | 48,712    |      |   | 47,910    |   |      | 100,403   |      |   | 105,790  |   |   | 90,256  |  
|Total Common Shareholders equity                                           |  |                          | 318,212   |      |   | 312,185   |   |      | 227,722   |      |   | 249,717  |   |   | 250,567 |  
|Noncontrolling interests in subsidiaries                                    |  |                          | 269,310   |      |   | 220,292   |   |      | 214,506   |      |   | 171,111  |   |   | 113,737 |  
|Total equity                                                                |  |                          | 587,522   |      |   | 532,477   |   |      | 442,228   |      |   | 420,828  |   |   | 364,304 |  
|OTHER:                                                                      |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Funds from Operations, adjusted for                                         |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|extraordinary item (1) (2)                                                  |  |                          | 50,440    |      |   | 49,613    |   |      | 37,964    |      |   | 42,094   |   |   | 39,860  |  
|Cash flows provided by (used in):                                           |  |                          |           |      |   |           |   |      |           |      |   |          |   |   |         |  
|Operating activities                                                        |  |                          | 44,377    |      |   | 47,462    |   |      | 66,517    |      |   | 105,294  |   |   | 39,627  |  
|Investing activities                                                        |  |                          | (60,745   | )    |   | (123,380  | ) |      | (302,265  | )    |   | (208,998 | ) |   | (58,890 | )
|Financing activities                                                        |  |                          | 43,152    |      |   | 83,035    |   |      | 199,096   |      |   | 87,476   |   |   | 68,359  |  

|       |                                                                                                                                                                                                                                                                                                                                                                                                                
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes:
|(1)    | The
 extraordinary item relates to 2007 and represents our share of an
 extraordinary gain from our investment in Albertsons. We consider this to be
 a private-equity style investment in an operating businesses as opposed to
 real estate. Accordingly, all gains and losses from this investment is
 included in FFO, which we believe provides a more accurate reflection of our
 operating performance.

33

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | We
 consider funds from operations (FFO) as defined by the National Association
 of Real Estate Investment Trusts (NAREIT) to be an appropriate supplemental
 disclosure of operating performance for an equity REIT due to its widespread
 acceptance and use within the REIT and analyst communities. FFO is presented
 to assist investors in analyzing our performance. It is helpful as it
 excludes various items included in net income that are not indicative of the
 operating performance, such as gains (losses) from sales of depreciated
 property and depreciation and amortization. However, our method of
 calculating FFO may be different from methods used by other REITs and,
 accordingly, may not be comparable to such other REITs. FFO does not
 represent cash generated from operations as defined by generally accepted
 accounting principles (GAAP) and is not indicative of cash available to fund
 all cash needs, including distributions. It should not be considered as an
 alternative to net income for the purpose of evaluating our performance or to
 cash flows as a measure of liquidity. Consistent with the NAREIT definition,
 we define FFO as net income (computed in accordance with GAAP), excluding
 gains (losses) from sales of depreciated property, plus depreciation and
 amortization, and after adjustments for unconsolidated partnerships and joint
 ventures.
|(3) | In
 addition to the $0.8951 cash dividends declared in 2008, we declared a Common
 Share dividend of $0.4949.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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

OVERVIEW

As of December 31, 2010, we operated 79 properties, which we own or
have an ownership interest in, within our Core Portfolio or within our three
Opportunity Funds. Our Core Portfolio consists of those properties either 100%
owned by, or partially owned through joint venture interests by the Operating
Partnership, or subsidiaries thereof, not including those properties owned
through our Opportunity Funds. These 79 properties consist of commercial
properties, primarily neighborhood and community shopping centers, self-storage
and mixed-use properties with a retail component. The properties we operate are
located primarily in the Northeast, Mid-Atlantic and Midwestern regions of the
United States. Excluding two properties under redevelopment, there are 32
properties in our Core Portfolio totaling approximately 4.8 million square
feet. Fund I has 20 properties comprising approximately 0.9 million square
feet. Fund II has 10 properties, eight of which (representing 1.2 million
square feet) are currently operating, one is under construction, and one is in
the design phase. Three of the properties also include self-storage facilities.
We expect the Fund II portfolio will have approximately 2.0 million square feet
upon completion of all current construction and anticipated redevelopment
activities. Fund III has 15 properties totaling approximately 1.8 million
square feet, of which 11 locations representing 0.9 million net rentable square
feet are self-storage facilities and one is in the design phase. The majority
of our operating income is derived from rental revenues from these 79
properties, including recoveries from tenants, offset by operating and overhead
expenses. As our RCP Venture invests in operating companies, we consider these
investments to be private-equity style, as opposed to real estate, investments.
Since these are not traditional investments in operating rental real estate but
investments in operating businesses, the Operating Partnership invests in these
through a taxable REIT subsidiary (TRS).

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

 Own and operate a Core Portfolio of community
and neighborhood shopping centers and main street retail located in markets
with strong demographics and generate internal growth within the Core Portfolio
through aggressive redevelopment, re-anchoring and/or leasing activities


 Maintain a strong and flexible balance
sheet through conservative financial practices while ensuring access to
sufficient capital to fund future growth


 Generate external growth through an
opportunistic yet disciplined acquisition program. We target transactions with
high inherent opportunity for the creation of additional value through
redevelopment and leasing and/or transactions requiring creative capital
structuring to facilitate the transactions. These transactions may include
other types of commercial real estate besides those which we currently invest
in through our Core Portfolio. These may also include joint ventures with
private equity investors for the purpose of making investments in operating
retailers with significant embedded value in their real estate assets


BUSINESS OUTLOOK

The U.S. economy is currently in a post recessionary period, which has
resulted in a significant decline in retail sales due to reduced consumer
spending. Although the occupancy and net operating income within our portfolio
has not been materially adversely affected through December 31, 2010, should
retailers continue to experience deteriorating sales performance, the
likelihood of additional tenant bankruptcy filings may increase, which would
negatively impact our results of operations. In addition to the impact on
retailers, this period has had an unprecedented impact on the U.S. credit
markets. Traditional sources of financing, such as the commercial-mortgage
backed security market, have become severely curtailed. If these conditions
continue, our ability to finance new acquisitions or refinance existing debts
as they mature will be adversely affected. Accordingly, our ability to generate
external growth in income, as well as maintain existing operating income, could
be limited.

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

34

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RESULTS OF OPERATIONS

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

Comparison of the year ended December 31, 2010 (2010) to
the year ended December 31, 2009 (2009)

|                          |  |                |      |                   |   |                        |  |                            |      |                |   |                   |  |                         |      |                            |   |      |  |   |      |  |   |     
|------------------------- |  | -------------- | ---- | ----------------- | - | ---------------------- |  | -------------------------- | ---- | -------------- | - | ----------------- |  | ----------------------- | ---- | -------------------------- | - | ---- |  | - | ---- |  | - | ----
|Revenues                  |  | 2010           |      | 2009             
|                          |  |                |      |                  
|(dollars in millions)     |  | Core
Portfolio |      | Opportunity
Funds |   | Self-Storage
Portfolio |  | Notes
Receivable
and Other |      | Core
Portfolio |   | Opportunity
Funds |  | Self-
Storage
Portfolio |      | Notes
Receivable
and Other
|                          |  |                |      |                   |   |                        |  |                            |      |                |   |                   |  |                         |      |                           
|Rental income             |  | $              | 48.3 |                   | $ | 39.0                   |  | $                          | 19.6 |                | $ |                  |  | $                       | 51.2 |                            | $ | 34.7 |  | $ | 9.8  |  | $ |    
|Mortgage interest income  |  |                |     |                   |   |                       |  |                            |     |                |   | 19.2              |  |                         |     |                            |   |     |  |   |     |  |   | 19.7
|Expense reimbursements    |  |                | 13.3 |                   |   | 8.7                    |  |                            |     |                |   |                  |  |                         | 13.7 |                            |   | 7.2  |  |   |     |  |   |    
|Lease termination income  |  |                | 0.3  |                   |   |                       |  |                            |     |                |   |                  |  |                         | 2.8  |                            |   |     |  |   |     |  |   |    
|Management fee income (1) |  |                |     |                   |   |                       |  |                            |     |                |   | 1.4               |  |                         |     |                            |   |     |  |   |     |  |   | 2.0 
|Other                     |  |                | 0.3  |                   |   | 0.2                    |  |                            | 1.7  |                |   |                  |  |                         | 1.9  |                            |   | 1.4  |  |   | 1.3  |  |   |    
|                          |  |                |      |                   |   |                        |  |                            |      |                |   |                   |  |                         |      |                            |   |      |  |   |      |  |   |     
|Total revenues            |  | $              | 62.2 |                   | $ | 47.9                   |  | $                          | 21.3 |                | $ | 20.6              |  | $                       | 69.6 |                            | $ | 43.3 |  | $ | 11.1 |  | $ | 21.7
|                          |  |                |      |                   |   |                        |  |                            |      |                |   |                   |  |                         |      |                            |   |      |  |   |      |  |   |     

Note:


|    |                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fees earned by us as general partner/managing member of the
Opportunity Funds are eliminated in consolidation and adjust the loss
(income) attributable to noncontrolling interests and are not reflected
above. The balance reflected in the table represents third party fees that
are not eliminated in consolidation.

The decrease in rental income in the Core Portfolio was primarily
attributable to tenant vacancies at Chestnut Hill and Third Avenue. The
increase in rental income in the Opportunity Funds primarily related to
additional rents following the acquisition of Cortlandt Towne Center (2009
Fund Acquisition) of $1.0 million and additional rents at Fordham Place,
Pelham Manor and Canarsie for leases that commenced in 2009 and 2010 (Fund
Redevelopment Properties). The increase in rental income in the Storage
Portfolio related to the full amortization of acquired lease intangible costs
during 2009, increased occupancy in the Storage Portfolio as well as our
discontinued practice of reporting the Storage Portfolio one month in arrears
which was based on the historical unavailability of timely financial
information. Based on improvements in the Storage Portfolio accounting systems,
we report this activity on a current basis. Accordingly, the year ended
December 31, 2010 reflects thirteen months of storage activity while the year
ended December 31, 2009 reflects twelve months of storage activity (Storage
Portfolio Activity).

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

Lease
termination income in the Core Portfolio for 2009 related to termination fee
income received from a former tenant at Absecon Marketplace.

Other
in the Core Portfolio in 2009 included $1.7 million resulting from a forfeited
sales contract deposit.

Other
in the Opportunity Funds during 2009 included $0.9 million received by Fund II
in settlement of litigation in connection with a property acquisition.

|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |   |      |  |   |      |  |   |       |  
|----------------------------- |  | -------------- | ---- | ----------------- | - | ----------------------- |  | -------------------------- | ---- | -------------- | - | ----------------- | - | ----------------------- | ---- | -------------------------- | - | ---- |  | - | ---- |  | - | ----- | -
|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |  
|Operating Expenses            |  | 2010           |      | 2009              |  
|                              |  |                |      |                   |  
|(dollars in millions)         |  | Core
Portfolio |      | Opportunity
Funds |   | Self-
Storage
Portfolio |  | Notes
Receivable
and Other |      | Core
Portfolio |   | Opportunity
Funds |   | Self-
Storage
Portfolio |      | Notes
Receivable
and Other |  
|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |  
|Property operating            |  | $              | 10.5 |                   | $ | 11.8                    |  | $                          | 10.2 |                | $ | (1.5              | ) | $                       | 12.1 |                            | $ | 10.1 |  | $ | 8.7  |  | $ | (1.2  | )
|Real estate taxes             |  |                | 9.0  |                   |   | 6.3                     |  |                            | 2.9  |                |   |                  |   |                         | 9.3  |                            |   | 5.3  |  |   | 2.2  |  |   |      |  
|General and administrative    |  |                | 22.4 |                   |   | 13.5                    |  |                            | 0.1  |                |   | (15.8             | ) |                         | 24.0 |                            |   | 13.5 |  |   | 0.1  |  |   | (15.6 | )
|Depreciation and amortization |  |                | 16.2 |                   |   | 19.4                    |  |                            | 5.1  |                |   | (0.6              | ) |                         | 17.2 |                            |   | 16.5 |  |   | 4.4  |  |   | (1.5  | )
|Abandonment of project costs  |  |                |     |                   |   |                        |  |                            |     |                |   |                  |   |                         |     |                            |   | 2.5  |  |   |     |  |   |      |  
|Reserve for notes receivable  |  |                |     |                   |   |                        |  |                            |     |                |   |                  |   |                         |     |                            |   |     |  |   |     |  |   | 1.7   |  
|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |   |      |  |   |      |  |   |       |  
|Total operating expenses      |  | $              | 58.1 |                   | $ | 51.0                    |  | $                          | 18.3 |                | $ | (17.9             | ) | $                       | 62.6 |                            | $ | 47.9 |  | $ | 15.4 |  | $ | (16.6 | )
|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |   |      |  |   |      |  |   |       |  

The decrease in property operating expenses in the Core Portfolio was
primarily attributable to a decrease in bad debt expense in 2010. The increase
in property operating expenses in the Opportunity Funds was primarily
attributable to the 2009 Fund Acquisition and Fund Redevelopment Properties.
The increase in property operating expenses in the Storage Portfolio primarily
related to higher

35

---



operating costs in 2010 following increased occupancy as well as the
Storage Portfolio Activity.

The increase in real estate taxes in the Opportunity Funds was
primarily attributable to the 2009 Fund Acquisition as well as Fund
Redevelopment Properties.

The
decrease in general and administrative expense in the Core Portfolio was
primarily attributable to reduced compensation expense following staff
reductions in 2009.

Depreciation
and amortization expense in the Core Portfolio decreased as a result of the
write-off of lease intangible costs in connection with a terminated lease in
2009. Depreciation expense in the Opportunity Funds increased $0.3 million as
result of the 2009 Acquisition. Amortization expense in the Opportunity Funds
increased $2.6 million primarily due to the write-off of deferred financing
costs related to refinanced debt in 2010. Depreciation and amortization expense
in the Storage Portfolio increased $0.7 million primarily as a result of two
self storage properties placed in service during the second quarter 2009.

The
$2.5 million abandonment of project costs in the Opportunity Funds in 2009 was
attributable to our determination that we most likely would not participate in
a specific future development project.

The
reserve for notes receivable of $1.7 million in 2009 related to the loss of an
anchor tenant at the underlying collateral property.

|                                                                        |  |                |       |                   |   |                         |   |                            |      |                |   |                   |   |                         |       |                            |   |      |   |   |      |   |   |      |  
|----------------------------------------------------------------------- |  | -------------- | ----- | ----------------- | - | ----------------------- | - | -------------------------- | ---- | -------------- | - | ----------------- | - | ----------------------- | ----- | -------------------------- | - | ---- | - | - | ---- | - | - | ---- | -
|Other                                                                   |  | 2010           |       | 2009              |  
|                                                                        |  |                |       |                   |  
|(dollars in millions)                                                   |  | Core
Portfolio |       | Opportunity
Funds |   | Self-
Storage
Portfolio |   | Notes
Receivable
and Other |      | Core
Portfolio |   | Opportunity
Funds |   | Self-
Storage
Portfolio |       | Notes
Receivable
and Other |  
|                                                                        |  |                |       |                   |   |                         |   |                            |      |                |   |                   |   |                         |       |                            |  
|                                                                       
|Equity in earnings (losses) of unconsolidated affiliates                |  | $              | 0.6   |                   | $ | 11.8                    |   |                            | (1.4 | )              | $ |                  |   | $                       | 0.7   |                            | $ | (2.2 | ) | $ |     |   | $ |     |  
|Impairment of investment in unconsolidated affiliate                    |  |                |      |                   |   |                        |   |                            |     |                |   |                  |   |                         |      |                            |   | (3.8 | ) |   |     |   |   |     |  
|Other interest income                                                   |  |                |      |                   |   |                        |   |                            |     |                |   | 0.4               |   |                         |      |                            |   |     |   |   |     |   |   | 0.6  |  
|Gain from bargain purchase                                              |  |                |      |                   |   | 33.8                    |   |                            |     |                |   |                  |   |                         |      |                            |   |     |   |   |     |   |   |     |  
|Gain on debt extinguishment                                             |  |                |      |                   |   |                        |   |                            |     |                |   |                  |   |                         | 7.1   |                            |   |     |   |   |     |   |   |     |  
|Interest and other finance expense                                      |  |                | (17.1 | )                 |   | (13.4                   | ) |                            | (4.1 | )              |   | 0.1               |   |                         | (18.7 | )                          |   | (8.4 | ) |   | (5.0 | ) |   |     |  
|Income tax expense                                                      |  |                | (3.2  | )                 |   | (0.1                    | ) |                            | 0.4  |                |   |                  |   |                         | (1.4  | )                          |   | (0.1 | ) |   |     |   |   |     |  
|Income from discontinued operations                                     |  |                |      |                   |   |                        |   |                            |     |                |   | 0.4               |   |                         |      |                            |   |     |   |   |     |   |   | 7.6  |  
|(Income) loss attributable to noncontrolling interests in
subsidiaries: |  |                |       |                   |   |                         |   |                            |      |                |   |                   |   |                         |       |                            |   |      |   |   |      |   |   |      |  
|- Continuing operations                                                 |  |                | (0.3  | )                 |   | (22.6                   | ) |                            | 0.1  |                |   | 2.5               |   |                         | (0.4  | )                          |   | 22.5 |   |   | (0.5 | ) |   | 1.9  |  
|- Discontinued operations                                               |  |                |      |                   |   |                        |   |                            |     |                |   | (0.3              | ) |                         |      |                            |   |     |   |   |     |   |   | (5.0 | )

Equity
in earnings (losses) of unconsolidated affiliates in the Opportunity Funds
increased primarily as a result of an increase in distributions in excess of
basis from our Albertsons investment of $9.5 million in 2010 and an increase
in our pro-rata share of income from Mervyns in 2010. Equity in earnings
(losses) in the Self Storage Portfolio represents the pro-rata share of losses
from our unconsolidated investment in the newly-formed self storage management
company.

The $3.8 million impairment of investment in unconsolidated affiliate
during 2009 was the result of the reduction in value of the underlying property
due to the recession and the related reduction in Fund Is carrying value of
this investment including a partial guarantee of the mortgage debt.

The
$33.8 million gain from bargain purchase was attributable to Fund IIs purchase
of an unaffiliated membership interest in CityPoint in 2010. Reference is made
to Note 2 of the Notes to Consolidated Financial Statements which begin on page
F-1 of this Form 10-K for a discussion of this transaction.

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

Total interest expense in the Core Portfolio decreased $1.6 million in
2010. This was the result of a $2.5 million decrease attributable to lower
average outstanding borrowings in 2010 offset by a $0.9 million increase
attributable to higher average interest rates in 2010. Interest expense in the
Opportunity Funds increased $5.0 million in 2010. This was the result of an
increase of $2.9 million due to higher average interest rates in 2010, an
increase of $1.8 million due to higher average outstanding borrowings in 2010
and $0.3 million of lower capitalized interest in 2010. Interest expense in the
Storage Portfolio decreased $0.9 million in 2010. This was

36

---



primarily attributable to a $1.4 million decrease due to lower average
interest rates in 2010. This decrease was offset by $0.3 million of lower
capitalized interest in 2010 and an increase of $0.2 million due to higher
average outstanding borrowings in 2010.

The variance in the income tax expense in the Core Portfolio primarily
related to income taxes at the TRS level for our pro-rata share of income from
our Albertsons investment in 2010.

Income
from discontinued operations represents activity related to property held for
sale in 2010 and property sales in 2009.

(Income)
loss attributable to noncontrolling interests in subsidiaries  Continuing
operations and Discontinued operations primarily represents the noncontrolling
interests share of all the Opportunity Funds variances discussed above.

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

|                          |  |                |      |                   |   |                         |  |                            |      |                |   |                   |  |                         |      |                            |   |      |  |   |     |  |   |      | 
|------------------------- |  | -------------- | ---- | ----------------- | - | ----------------------- |  | -------------------------- | ---- | -------------- | - | ----------------- |  | ----------------------- | ---- | -------------------------- | - | ---- |  | - | --- |  | - | ---- | 
|Revenues                  |  | 2009           |      | 2008              |  
|                          |  |                |      |                   |  
|                         
|(dollars in millions)     |  | Core
Portfolio |      | Opportunity
Funds |   | Self-
Storage
Portfolio |  | Notes
Receivable
and Other |      | Core
Portfolio |   | Opportunity
Funds |  | Self-
Storage
Portfolio |      | Notes
Receivable
and Other |  
|                          |  |                |      |                   |   |                         |  |                            |      |                |   |                   |  |                         |      |                            |  
|Rental income             |  | $              | 51.2 |                   | $ | 34.7                    |  | $                          | 9.8  |                | $ |                  |  | $                       | 51.0 |                            | $ | 21.4 |  | $ | 4.7 |  | $ |     | 
|Mortgage interest income  |  |                |     |                   |   |                        |  |                            |     |                |   | 19.7              |  |                         |     |                            |   |     |  |   |    |  |   | 11.2 | 
|Expense reimbursements    |  |                | 13.7 |                   |   | 7.2                     |  |                            |     |                |   |                  |  |                         | 14.1 |                            |   | 2.7  |  |   |    |  |   |     | 
|Lease termination income  |  |                | 2.8  |                   |   |                        |  |                            |     |                |   |                  |  |                         |     |                            |   | 24.0 |  |   |    |  |   |      | 
|Management fee income (1) |  |                |     |                   |   |                        |  |                            |     |                |   | 2.0               |  |                         |     |                            |   |     |  |   |    |  |   | 3.4  | 
|Other                     |  |                | 1.9  |                   |   | 1.4                     |  |                            | 1.3  |                |   |                  |  |                         | 0.3  |                            |   |     |  |   | 0.8 |  |   |     | 
|                          |  |                |      |                   |   |                         |  |                            |      |                |   |                   |  |                         |      |                            |   |      |  |   |     |  |   |      | 
|Total revenues            |  | $              | 69.6 |                   | $ | 43.3                    |  | $                          | 11.1 |                | $ | 21.7              |  | $                       | 65.4 |                            | $ | 48.1 |  | $ | 5.5 |  | $ | 14.6 | 
|                          |  |                |      |                   |   |                         |  |                            |      |                |   |                   |  |                         |      |                            |   |      |  |   |     |  |   |      | 

Note:


|    |                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fees earned by us as general partner/managing member of the
Opportunity Funds are eliminated in consolidation and adjust the loss
(income) attributable to noncontrolling interests and are not reflected
above. The balance reflected in the table represents third party fees that
are not eliminated in consolidation.

The
increase in rental income in the Opportunity Funds primarily related to
additional rents from the 2009 Fund Acquisition of $7.5 million and certain Fund
Redevelopment Properties. The increase in rental income in the Storage
Portfolio related to the February
2008 acquisition of the Storage Post Portfolio (Storage Acquisition) versus a
full year of activity for 2009. In addition, the increase in minimum rents in
the Storage Portfolio was also attributable to the full amortization of
acquired lease intangible costs during 2009.

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

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

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

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

Other
in the Core Portfolio in 2009 included $1.7 million resulting from a forfeited
sales contract deposit.

Other
in the Opportunity Funds during 2009 included $0.9 million received by Fund II
in settlement of litigation in connection with a property acquisition.

|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |   |      |  |   |     |  |   |       |  
|----------------------------- |  | -------------- | ---- | ----------------- | - | ----------------------- |  | -------------------------- | ---- | -------------- | - | ----------------- | - | ----------------------- | ---- | -------------------------- | - | ---- |  | - | --- |  | - | ----- | -
|Operating Expenses            |  | 2009           |      | 2008              |  
|                              |  |                |      |                   |  
|                             
|(dollars in millions)         |  | Core
Portfolio |      | Opportunity
Funds |   | Self-
Storage
Portfolio |  | Notes
Receivable
and Other |      | Core
Portfolio |   | Opportunity
Funds |   | Self-
Storage
Portfolio |      | Notes
Receivable
and Other |  
|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |  
|Property operating            |  | $              | 12.1 |                   | $ | 10.1                    |  | $                          | 8.7  |                | $ | (1.2              | ) | $                       | 12.2 |                            | $ | 6.8  |  | $ | 5.3 |  | $ | (0.4  | )
|Real estate taxes             |  |                | 9.3  |                   |   | 5.3                     |  |                            | 2.2  |                |   |                  |   |                         | 8.8  |                            |   | 2.0  |  |   | 1.4 |  |   |      |  
|General and administrative    |  |                | 24.0 |                   |   | 13.5                    |  |                            | 0.1  |                |   | (15.6             | ) |                         | 26.0 |                            |   | 16.1 |  |   | 0.1 |  |   | (17.7 | )
|Depreciation and amortization |  |                | 17.2 |                   |   | 16.5                    |  |                            | 4.4  |                |   | (1.5              | ) |                         | 20.3 |                            |   | 9.5  |  |   | 3.0 |  |   |      |  
|Abandonment of project costs  |  |                |     |                   |   | 2.5                     |  |                            |     |                |   |                  |   |                         |     |                            |   | 0.6  |  |   |    |  |   |      |  
|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |   |      |  |   |     |  |   |       |  
|Reserve for notes receivable  |  |                |     |                   |   |                        |  |                            |     |                |   | 1.7               |   |                         |     |                            |   |     |  |   |    |  |   | 4.4   |  
|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |   |      |  |   |     |  |   |       |  
|Total operating expenses      |  | $              | 62.6 |                   | $ | 47.9                    |  | $                          | 15.4 |                | $ | (16.6             | ) | $                       | 67.3 |                            | $ | 35.0 |  | $ | 9.8 |  | $ | (13.7 | )
|                              |  |                |      |                   |   |                         |  |                            |      |                |   |                   |   |                         |      |                            |   |      |  |   |     |  |   |       |  

37

---



The
increase in property operating expenses in the Opportunity Funds was primarily
the result of the 2009 Fund Acquisition and certain Fund Redevelopment
Properties. The increase in property operating expenses in the Storage
Portfolio related to the Storage Acquisition.

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

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

Depreciation
expense in the Core Portfolio decreased $2.4 million in 2009. This was
principally a result of increased depreciation expense in 2008 resulting from
the write-down of tenant improvements at two properties attributable to the
bankruptcy of Circuit City. Amortization expense in the Core Portfolio
decreased $0.7 million primarily as a result of lower amortization expense in
2009 associated with the Klaff management contracts. Depreciation expense
increased $5.0 million and amortization expense increased $2.0 million in the
Opportunity Funds primarily due to the 2009 Fund Acquisition and certain Fund
Redevelopment Properties. Depreciation expense and amortization expense
increased $1.4 million in the Storage Portfolio primarily as a result of the
Storage Acquisition. Depreciation and amortization expense decreased $1.5
million in Other as a result of depreciation associated with the elimination of
capitalizable costs within the consolidated group.

The
$2.5 million abandonment of project costs in 2009 was attributable to our
determination that we most likely would not participate in a specific future
development project.

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

|                                                                        |  |                |       |                   |   |                         |   |                            |      |                |   |                   |   |                         |       |                            |   |       |   |   |      |   |   |      |  
|----------------------------------------------------------------------- |  | -------------- | ----- | ----------------- | - | ----------------------- | - | -------------------------- | ---- | -------------- | - | ----------------- | - | ----------------------- | ----- | -------------------------- | - | ----- | - | - | ---- | - | - | ---- | -
|Other                                                                   |  | 2009           |       | 2008              |  
|                                                                        |  |                |       |                   |  
|                                                                       
|(dollars in millions)                                                   |  | Core
Portfolio |       | Opportunity
Funds |   | Self-
Storage
Portfolio |   | Notes
Receivable
and Other |      | Core
Portfolio |   | Opportunity
Funds |   | Self-
Storage
Portfolio |       | Notes
Receivable
and Other |  
|                                                                        |  |                |       |                   |   |                         |   |                            |      |                |   |                   |   |                         |       |                            |  
|                                                                       
|Equity in earnings (losses) of unconsolidated affiliates                |  | $              | 0.7   |                   | $ | (2.2                    | ) | $                          |     |                | $ |                  |   | $                       |      |                            | $ | 19.9  |   | $ |     |   | $ |     |  
|Impairment of investment in unconsolidated affiliate                    |  |                |      |                   |   | (3.8                    | ) |                            |     |                |   |                  |   |                         |      |                            |   |      |   |   |     |   |   |     |  
|Other interest income                                                   |  |                |      |                   |   |                        |   |                            |     |                |   | 0.6               |   |                         |      |                            |   |      |   |   |     |   |   | 3.4  |  
|Gain on debt extinguishment                                             |  |                | 7.1   |                   |   |                        |   |                            |     |                |   |                  |   |                         | 1.5   |                            |   |      |   |   |     |   |   |     |  
|Interest and other finance expense                                      |  |                | (18.7 | )                 |   | (8.4                    | ) |                            | (5.0 | )              |   |                  |   |                         | (19.8 | )                          |   | (5.7  | ) |   | (3.4 | ) |   |     |  
|Gain on sale of land                                                    |  |                |      |                   |   |                        |   |                            |     |                |   |                  |   |                         | 0.8   |                            |   |      |   |   |     |   |   |     |  
|Income tax expense                                                      |  |                | (1.4  | )                 |   | (0.1                    | ) |                            |     |                |   |                  |   |                         | (3.4  | )                          |   |      |   |   |     |   |   |     |  
|Income from discontinued operations                                     |  |                |      |                   |   |                        |   |                            |     |                |   | 7.6               |   |                         |      |                            |   |      |   |   |     |   |   | 8.9  |  
|(Income) loss attributable to noncontrolling interests in
subsidiaries: |  |                |       |                   |   |                         |   |                            |      |                |   |                   |   |                         |       |                            |   |       |   |   |      |   |   |      |  
|- Continuing operations                                                 |  |                | (0.4  | )                 |   | 22.5                    |   |                            | (0.5 | )              |   | 1.9               |   |                         | 0.2   |                            |   | (15.8 | ) |   | 0.4  |   |   | 3.6  |  
|- Discontinued operations                                               |  |                |      |                   |   |                        |   |                            |     |                |   | (5.0              | ) |                         |      |                            |   |      |   |   |     |   |   | (0.9 | )

Equity
in earnings (losses) of unconsolidated affiliates in the Opportunity Funds
decreased primarily as a result of our pro-rata share of gains from the sale of
Mervyns locations in 2008 of $10.4 million, a decrease in distributions in
excess of basis from our 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 impairment of investment in unconsolidated affiliate during 2009
was the result of the reduction in value of the underlying property due to the
recession and the related reduction in Fund Is carrying value of this
investment including a partial guarantee of the mortgage debt.

38

---



Other
interest income decreased in 2009 as a result of lower cash balances during the
year and lower average interest rates on cash and cash equivalents.

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

Interest
expense in the Core Portfolio decreased $1.1 million in 2009. This was
primarily the result of lower interest expense related to the purchase of the
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 $2.7 million in 2009.
This was primarily attributable to an increase of $4.2 million due to higher
average outstanding borrowings in 2009 and $0.6 million of lower capitalized
interest in 2009. These increases were offset by a $2.2 million decrease
related to lower average interest rates in 2009. Interest expense in the
Storage Portfolio increased $1.6 million in 2009. This was primarily due to an
increase of $0.9 million due to higher average outstanding borrowings in 2009
as well as an increase of $0.8 million due to higher average interest rates in
2009.

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

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

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

(Income)
loss attributable to noncontrolling interests in subsidiaries  Continuing
operations and Discontinued operations primarily represents the noncontrolling
interests share of all the Opportunity Funds variances discussed above.

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

|                                                                                 |  |                                  |        |      |   |        |   |      |        |      |   |        |   |   |         |  
|-------------------------------------------------------------------------------- |  | -------------------------------- | ------ | ---- | - | ------ | - | ---- | ------ | ---- | - | ------ | - | - | ------- | -
|                                                                                 |  | For the
Years Ended December 31, |       
|(dollars in
thousands)                                                           |  | 2010                             |        | 2009 |   | 2008   |   | 2007 |        | 2006 |  
|                                                                                 |  |                                  |        |      |   |        |   |      |        |      |  
|Net income
attributable to Common Shareholders                                   |  | $                                | 30,057 |      | $ | 31,133 |   | $    | 25,068 |      | $ | 25,346 |   | $ | 38,920  |  
|Depreciation
of real estate and amortization of leasing costs:                   |  |                                  |        |      |   |        |   |      |        |      |   |        |   |   |         |  
|Consolidated affiliates, net of
noncontrolling interests share                  |  |                                  | 18,445 |      |   | 18,847 |   |      | 18,519 |      |   | 19,669 |   |   | 20,206  |  
|Unconsolidated affiliates                                                        |  |                                  | 1,561  |      |   | 1,604  |   |      | 1,687  |      |   | 1,736  |   |   | 1,806   |  
|Income attributable to noncontrolling
interests in operating partnership (1)     |  |                                  | 377    |      |   | 464    |   |      | 437    |      |   | 614    |   |   | 803     |  
|Gain on sale of properties (net of
noncontrolling interests share)              |  |                                  |        |      |   |        |   |      |        |      |   |        |   |   |         |  
|Consolidated affiliates                                                          |  |                                  |       |      |   | (2,435 | ) |      | (7,182 | )    |   | (5,271 | ) |   | (20,974 | )
|Unconsolidated affiliates                                                        |  |                                  |       |      |   |       |   |      | (565   | )    |   |       |   |   | (901    | )
|Extraordinary item (net of noncontrolling
interests share and income taxes) (3) |  |                                  |       |      |   |       |   |      |       |      |   | (3,677 | ) |   |        |  
|                                                                                 |  |                                  |        |      |   |        |   |      |        |      |   |        |   |   |         |  
|Funds from operations (2)                                                        |  |                                  | 50,440 |      |   | 49,613 |   |      | 37,964 |      |   | 38,417 |   |   | 39,860  |  
|Add back: Extraordinary item, net (3)                                            |  |                                  |       |      |   |       |   |      |       |      |   | 3,677  |   |   |        |  
|                                                                                 |  |                                  |        |      |   |        |   |      |        |      |   |        |   |   |         |  
|Funds from operations, adjusted for
extraordinary item                           |  | $                                | 50,440 |      | $ | 49,613 |   | $    | 37,964 |      | $ | 42,094 |   | $ | 39,860  |  
|                                                                                 |  |                                  |        |      |   |        |   |      |        |      |   |        |   |   |         |  
|Adjusted Funds From Operations per Share -
Diluted                               |  |                                  |        |      |   |        |   |      |        |      |  
|Weighted average number of Common Shares
and OP Units                            |  |                                  | 40,876 |      |   | 38,913 |   |      | 34,940 |      |   | 34,924 |   |   | 35,087  |  
|                                                                                 |  |                                  |        |      |   |        |   |      |        |      |   |        |   |   |         |  
|                                                                                 |  |                                  |        |      |   |        |   |      |        |      |   |        |   |   |         |  
|Diluted funds from operations, per share                                         |  | $                                | 1.23   |      | $ | 1.28   |   | $    | 1.09   |      | $ | 1.21   |   | $ | 1.14    |  
|                                                                                 |  |                                  |        |      |   |        |   |      |        |      |   |        |   |   |         |  

39

---



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

LIQUIDITY AND CAPITAL RESOURCES

Uses of Liquidity

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

Distributions

In order to qualify as a REIT for Federal income tax purposes, we must
currently distribute at least 90% of our taxable income to our shareholders.
For the year ended December 31, 2010, we paid dividends and distributions on
our Common Shares and Common OP Units totaling $29.7 million. In addition, in
December of 2008, our Board of Trustees approved a special dividend of approximately
$0.55 per share, or $18.0 million in the aggregate, which was associated with
taxable gains arising from property dispositions in 2008, which was paid on
January 30, 2009, to shareholders of record on December 31, 2008. Ninety
percent of the special dividend was paid with the issuance of 1.3 million
Common Shares and 10%, or $1.8 million, was paid in cash.

Investments

Fund I and Mervyns I

Fund I and Mervyns I have returned all invested capital and accumulated
preferred return thus triggering our Promote in all future Fund I and Mervyns I
earnings and distributions. As of December 31, 2010, $86.6 million has been
invested in Fund I and Mervyns I, of which the Operating Partnership
contributed $19.2 million.

As of December 31, 2010, Fund I currently owned, or had ownership
interests in 20 assets comprising approximately 0.9 million square feet as
further discussed in PROPERTY ACQUISITIONS in Item 1 of this Form 10-K.

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

Fund II and Mervyns II

To date, Fund IIs primary investment focus has been in the New York
Urban/Infill Redevelopment Initiative and the Retailer Controlled Property
Venture. As of December 31, 2010, $265.2 million has been invested in Fund II,
of which the Operating Partnership contributed $53.0 million. The remaining
capital balance of $34.8 million is expected to be utilized to complete
development activities for existing Fund II investments.

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

New York Urban/Infill Redevelopment
Initiative

40

---



In September 2004, we, through Fund II, launched our New York
Urban/Infill Redevelopment Initiative. During 2004, Fund II, together with an
unaffiliated partner, P/A Associates, LLC (P/A), formed Acadia P/A Holding
Company, LLC (Acadia-P/A) for the purpose of acquiring, constructing, developing,
owning, operating, leasing and managing certain mixed-use real estate
properties in the New York City metropolitan area which include a retail
component. To date P/A has invested $2.2 million and Fund II, the managing
member, has agreed to invest the balance.

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

|                                |  |             |  |              |  |   |              |  |                                     |                            |  |                                 |  |                           | 
|------------------------------- |  | ----------- |  | ------------ |  | - | ------------ |  | ----------------------------------- | -------------------------- |  | ------------------------------- |  | ------------------------- | 
|                                |  |             |  |              |  |   |              |  | Redevelopment (dollars in millions) |                           
|                                |  |             |  |              |  |   |              |  |                                     |                           
|Property                        |  | Location    |  | Yearacquired |  |   | Coststo date |  |                                     | Anticipatedadditionalcosts |  | Estimatedconstructioncompletion |  | Squarefeet uponcompletion | 
|                                |  |             |  |              |  |   |              |  |                                     |                            |  |                                 |  |                          
|Liberty Avenue (1)              |  | Queens      |  | 2005         |  | $ | 15.5         |  | $                                   |                           |  | Completed                       |  | 125,000                   | 
|216th Street                    |  | Manhattan   |  | 2005         |  |   | 27.7         |  |                                     |                           |  | Completed                       |  | 60,000                    | 
|Fordham Place                   |  | Bronx       |  | 2004         |  |   | 124.5        |  |                                     | 9.8                        |  | Completed                       |  | 276,000                   | 
|Pelham Manor Shopping Plaza (1) |  | Westchester |  | 2004         |  |   | 61.4         |  |                                     | 2.6                        |  | Completed                       |  | 320,000                   | 
|161st Street (2)                |  | Bronx       |  | 2005         |  |   | 61.6         |  |                                     | 5.1                        |  | TBD                             |  | 230,000                   | 
|Atlantic Avenue (3)             |  | Brooklyn    |  | 2007         |  |   | 22.0         |  |                                     | 0.1                        |  | Completed                       |  | 110,000                   | 
|Canarsie Plaza                  |  | Brooklyn    |  | 2007         |  |   | 80.3         |  |                                     | 9.8                        |  | Completed                       |  | 279,000                   | 
|CityPoint (4)                   |  | Brooklyn    |  | 2007         |  |   | 81.8         |  |                                     | 118.2                      |  | TBD                             |  | 550,000                   | 
|Sherman Plaza                   |  | Manhattan   |  | 2005         |  |   | 33.4         |  |                                     | TBD                        |  | TBD                             |  | TBD                       | 
|                                |  |             |  |              |  |   |              |  |                                     |                            |  |                                 |  |                           | 
|Total                           |  |             |  |              |  | $ | 508.2        |  | $                                   | 145.6                      |  |                                 |  | 1,950,000                 | 
|                                |  |             |  |              |  |   |              |  |                                     |                            |  |                                 |  |                           | 

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

On June 30, 2010, Fund II acquired all of CUIPs 75.25% interests in
CityPoint for $9.2 million, consisting of a current cash payment of $2.0
million and deferred payments, potentially through 2020, aggregating $7.2
million, as well as the assumption of CUIPs share of the first mortgage debt
representing $19.6 million. Reference is made to Note 2 in our Consolidated
Financial Statements, which begin on Page F-1 of this Form 10-K for a further
discussion of this transaction.

RCP Venture

See Property Acquisitions in Item 1. of this Form 10-K for a table
summarizing the RCP Venture investments from inception through December 31,
2010.

Fund III

During 2007, we formed Fund III with 14 institutional investors,
including all of the investors from Fund I and a majority of the investors from
Fund II with $502.5 million of committed discretionary capital. As of December
31, 2010, $96.5 million has been invested in Fund III, of which the Operating
Partnership contributed $19.2 million.

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

|                 |  |          |              |                |  |                |  |                                |      |                                     |   |                               |  |  |                |  |  |        | 
|---------------- |  | -------- | ------------ | -------------- |  | -------------- |  | ------------------------------ | ---- | ----------------------------------- | - | ----------------------------- |  |  | -------------- |  |  | ------ | 
|Property         |  | Location |              | Year
 acquired |  | Costs
 to date |  | Anticipated
 additional
 costs |      | Estimated
 construction
 completion |   | Square
 feet upon
 completion | 
|                 |  |          |              |                |  |                |  |                                |      |                                     |   |                               | 
|Sheepshead
 Bay  |  |          | Brooklyn, NY |                |  | 2007           |  | $                              | 22.8 |                                     | $ | TBD                           |  |  | TBD            |  |  | TBD    | 
|125 Main
 Street |  |          | Westport, CT |                |  | 2007           |  |                                | 18.7 |                                     |   | 6.7                           |  |  | 2nd
 half 2011 |  |  | 26,000 | 
|                 |  |          |              |                |  |                |  |                                |      |                                     |   |                               |  |  |                |  |  |        | 
|Total            |  |          |              |                |  |                |  | $                              | 41.5 |                                     | $ | 6.7                           |  |  |                |  |  | 26,000 | 
|                 |  |          |              |                |  |                |  |                                |      |                                     |   |                               |  |  |                |  |  |        | 

Notes:
TBD  To be determined

41

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Other Fund III Investments

During February 2008, Acadia, through Fund III, and in conjunction with
an unaffiliated partner, Storage Post, acquired a portfolio of eleven
self-storage properties from Storage Posts institutional investors for
approximately $174.0 million. The properties are located throughout New York
and New Jersey.

During January 2009, Fund III purchased Cortlandt Towne Center for
$78.0 million. The property is a 642,000 square foot shopping center located in
Westchester County, NY, a trade area with high barriers to entry for regional
and national retailers.

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

During February 2011, Fund III, in a joint venture with an unaffiliated
partner, acquired a three property portfolio (the Portfolio) for an aggregate
purchase price of $51.9 million with $20.6 million of in-place mortgage
financing assumed at closing. The Portfolio consists of three street-retail
properties, aggregating 61,000 square feet, and is located in South Miami
Beach, Florida.

During February 2011, Fund III, in a joint venture with an unaffiliated
partner, acquired a 64,600 square foot single tenant retail property located in
Silver Springs, Maryland, for approximately $9.8 million.

Notes
Receivable

At December 31, 2010, our notes receivable, net aggregated $89.2
million, with accrued interest thereon of $7.6 million, and were collateralized
by the underlying properties, the borrowers ownership interest in the entities
that own the properties and/or by the borrowers personal guarantee. Effective
interest rates on our notes receivable ranged from 10.0% to 24.0% with
maturities through January 2017.

During December 2009, we made a loan for $8.6 million which bears
interest at 14.5% and matures on June 30, 2011.

Other Investments

Acquisitions made during 2010, 2009 and 2008 are discussed in PROPERTY
ACQUISITIONS in Item 1 of this Form 10-K:

Core
Portfolio Property Redevelopment and
Expansion

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

Purchase of Convertible Notes

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

Share Repurchase

We have an existing share repurchase program that authorizes
management, at its discretion, to repurchase up to $20.0 million of our
outstanding Common Shares. The program may be discontinued or extended at any
time and there is no assurance that we will purchase the full amount
authorized. Under this program we have repurchased 2.1 million Common Shares,
none of which were repurchased after December 2001. As of December 31, 2010,
management may repurchase up to approximately $7.5 million of our outstanding
Common Shares under this program.

SOURCES OF LIQUIDITY

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

During 2010, Fund II received capital contributions of $41.9 million to
fund redevelopment projects and partially pay down a line of credit facility.

42

---



As of December 31, 2010, we had cash and cash equivalents on hand of
$120.6 million and $103.9 million of additional capacity under existing debt facilities.

Shelf Registration Statements and Issuance of Equity

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

Asset Sales

Asset sales are an additional source of liquidity for us. In March
2010, we sold the Sterling Heights Shopping Center, which was owned through
Fund I, for $2.3 million. During November 2009, we sold Blackman Plaza for $2.5
million, which resulted in a gain on sale of $1.5 million. During February 2009, we sold six locations in our
Fund 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. These sales are discussed in
ASSET SALES AND CAPITAL/ASSET RECYCLING in Item 1 of this Form 10-K.

Notes Receivable and Preferred Equity Repayment

Reference
is made to Note 5 in our Consolidated Financial Statements, which begin on Page
F-1 of this Form 10-K, for an overview of our notes receivable and preferred
equity investment. During 2010, the following payments were received on these
investements:

During April 2010, we received a $2.1 million
first mortgage loan payment.

During September 2010, we received the full
repayment of our $40.0 million preferred equity investment, which was secured
by a portfolio of 18 properties located in Georgetown, Washington D.C., along
with $9.4 million of preferred return.

Financing and Debt

At December 31, 2010, mortgage and convertible notes payable
aggregated $854.9 million, net of unamortized premium of
$0.1 million, and unamortized discount of $1.1 million, and were
collateralized by 29 properties and related tenant leases. Interest rates on
our outstanding indebtedness ranged from 0.86% to 7.34% with maturities that
ranged from March 2011 to November 2032. Taking into consideration $71.5
million of notional principal under variable to fixed-rate swap agreements
currently in effect, $415.0 million of the portfolio, or 49%, was fixed at a
5.7% weighted average interest rate and $439.9 million, or 51% was floating at
a 3.4% weighted average interest rate. There is $385.7 million of debt maturing
in 2011 at weighted average interest rates of 2.8%. Of this amount, $4.8
million represents scheduled annual amortization. The loans relating to $159.7
million of the 2011 maturities provide for extension options, which we believe
we will be able to exercise. As it relates to maturities, we may not have
sufficient cash on hand to repay such indebtedness and, as such, we may have to
refinance this indebtedness or select other alternatives based on market
conditions at that time.

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

|                              |  |                                      |       |                                       |   |                                                                     |  |                                          |       |                                                           |   |                                                                |  |   |     |  |   |       | 
|----------------------------- |  | ------------------------------------ | ----- | ------------------------------------- | - | ------------------------------------------------------------------- |  | ---------------------------------------- | ----- | --------------------------------------------------------- | - | -------------------------------------------------------------- |  | - | --- |  | - | ----- | 
|(dollars in millions)Borrower |  | Total
 available
 credit
 facilities |       | Amountborrowedas ofDecember 31,
 2009 |   | 2010 netborrowings(repayments)during the yearended December31, 2010 |  | Amountborrowed 
 as ofDecember 31,
 2010 |       | Lettersof credit
 outstanding
 as 
 of December
 31, 2010 |   | Amount
 availableundercreditfacilitiesas of December 31,
 2010 | 
|                              |  |                                      |       |                                       |   |                                                                     |  |                                          |       |                                                           |   |                                                                | 
|Acadia Realty, LP             |  | $                                    | 64.5  |                                       | $ | 30.0                                                                |  | $                                        | (29.0 | )                                                         | $ | 1.0                                                            |  | $ | 8.6 |  | $ | 54.9  | 
|Acadia Realty, LP             |  |                                      |      |                                       |   | 2.0                                                                 |  |                                          | (2.0  | )                                                         |   |                                                               |  |   |    |  |   |      | 
|Fund II                       |  |                                      | 40.0  |                                       |   | 48.2                                                                |  |                                          | (8.2  | )                                                         |   | 40.0                                                           |  |   |    |  |   |      | 
|Fund III                      |  |                                      | 221.0 |                                       |   | 139.5                                                               |  |                                          | 32.0  |                                                           |   | 171.5                                                          |  |   | 0.5 |  |   | 49.0  | 
|                              |  |                                      |       |                                       |   |                                                                     |  |                                          |       |                                                           |   |                                                                |  |   |     |  |   |       | 
|Total                         |  | $                                    | 325.5 |                                       | $ | 219.7                                                               |  | $                                        | (7.2  | )                                                         | $ | 212.5                                                          |  | $ | 9.1 |  | $ | 103.9 | 
|                              |  |                                      |       |                                       |   |                                                                     |  |                                          |       |                                                           |   |                                                                |  |   |     |  |   |       | 

Reference is made to Note 8 and Note 9 to our Consolidated Financial
Statements, which begin on Page F-1 of this Form 10-K, for a summary of the
financing and refinancing transactions since December 31, 2009.

43

---



CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

At December 31, 2010, maturities on our mortgage notes ranged from
March 2011 to November 2032. In addition, we have non-cancelable ground
leases at 24 of our shopping centers. We lease space for our White Plains
corporate office for a term expiring in 2015. The following table summarizes
our debt maturities, obligations under non-cancelable operating leases and
construction commitments as of December 31, 2010:

|                             |  |                        |         |                 |   |             |  |             |       |                  |   |       |  |   |       | 
|---------------------------- |  | ---------------------- | ------- | --------------- | - | ----------- |  | ----------- | ----- | ---------------- | - | ----- |  | - | ----- | 
|                             |  | Payments due by period
|Contractual obligations:     |  | Total                  |         | Less than1 year |   | 1 to 3years |  | 3 to 5years |       | More than5 years |  
|(dollars in millions)        |  |                        |         |                 |   |             |  |             |       |                  |  
|Future debt maturities (1)   |  | $                      | 855.9   |                 | $ | 385.7       |  | $           | 156.8 |                  | $ | 143.7 |  | $ | 169.7 | 
|Interest obligations on debt |  |                        | 120.7   |                 |   | 33.2        |  |             | 42.1  |                  |   | 28.4  |  |   | 17.0  | 
|Operating lease obligations  |  |                        | 171.6   |                 |   | 5.4         |  |             | 12.0  |                  |   | 11.0  |  |   | 143.2 | 
|Construction commitments (2) |  |                        | 31.1    |                 |   | 31.1        |  |             |      |                  |   |      |  |   |      | 
|                             |  |                        |         |                 |   |             |  |             |       |                  |   |       |  |   |       | 
|Total                        |  | $                      | 1,179.3 |                 | $ | 455.4       |  | $           | 210.9 |                  | $ | 183.1 |  | $ | 329.9 | 
|                             |  |                        |         |                 |   |             |  |             |       |                  |   |       |  |   |       | 

| |                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Notes:                                                                                                                                                                                                                                   
| | (1) Includes $1.0 million of unamortized
 discount related to our convertible notes payable.                                                                                                                                             
| | (2) In conjunction with the redevelopment
 of our Core Portfolio and Opportunity Fund properties, we have entered into
 construction commitments with general contractors. We intend to fund these
 requirements with existing liquidity.

OFF BALANCE SHEET ARRANGEMENTS

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

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

|                      |  |                                                          |                                   |               |  |      |   |  |               | 
|--------------------- |  | -------------------------------------------------------- | --------------------------------- | ------------- |  | ---- | - |  | ------------- | 
|                      |  | Pro-rata share of
 mortgage debt
 Operating
 Partnership |                                   |               |  |      |  
|(dollars in millions) |  |                                                          | Interest rate atDecember
 31,2010 |               |  |     
|                      |  |                                                          |                                   |               | 
|Investment            |  |                                                          |                                   | Maturity date | 
|                      |  |                                                          |                                   |               |  |      |  
|Crossroads            |  | $                                                        | 30.1                              |               |  | 5.37 | % |  | December 2014 | 
|Brandywine            |  |                                                          | 36.9                              |               |  | 5.99 | % |  | July 2016     | 
|White City            |  |                                                          | 6.7                               |               |  | 2.86 | % |  | December 2017 | 
|                      |  |                                                          |                                   |               |  |      |   |  |               | 
|Total                 |  | $                                                        | 73.7                              |               |  |      |   |  |               | 
|                      |  |                                                          |                                   |               |  |      |   |  |               | 

In addition, we have arranged for the provision of three separate
letters of credit in connection with certain leases and investments. As of
December 31, 2010 there were no outstanding balances under any of the
letters of credit. If the letters of credit were fully drawn, the combined
maximum amount of exposure would be $9.1 million.

In addition to our derivative financial
instruments, one of our unconsolidated affiliates, White City, was a party to
an interest rate LIBOR swap with a notional value of $20 million, which
effectively fixes the interest rate at 5.5% and expires in December 2017. Our
pro-rata share of the fair value of the derivative liability totaled $0.1
million at December 31, 2010.

HISTORICAL CASH FLOW

The following table compares the historical cash flow for the year
ended December 31, 2010 (2010) with the cash flow for the year ended
December 31, 2009 (2009).

|                                          |  |                          |       |      |   |          |   |   |       |  
|----------------------------------------- |  | ------------------------ | ----- | ---- | - | -------- | - | - | ----- | -
|                                          |  | Years Ended December 31, |      
|                                          |  | 2010                     |       | 2009 |   | Variance |  
|                                          |  |                          |       |      |   |          |  
|(dollars in millions)                     |  |                          |       |      |   |          |   |   |       |  
|                                          |  |                          |       |      |   |          |   |   |       |  
|Net cash provided by operating activities |  | $                        | 44.4  |      | $ | 47.5     |   | $ | (3.1  | )
|Net cash used in investing activities     |  |                          | (60.7 | )    |   | (123.4   | ) |   | 62.7  |  
|Net cash provided by financing activities |  |                          | 43.1  |      |   | 83.0     |   |   | (39.9 | )
|                                          |  |                          |       |      |   |          |   |   |       |  
|Totals                                    |  | $                        | 26.8  |      | $ | 7.1      |   | $ | 19.7  |  
|                                          |  |                          |       |      |   |          |   |   |       |  

44

---



A discussion of the significant changes in cash flow for 2010 versus
2009 is as follows:

The decrease of $3.1 million in net cash provided by operating
activities was primarily attributable to the following:

| |                                                                            |                                                                                                                     
| | -------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------
| | Items which
 contributed to a decrease in cash from operating activities: 
| |                                                                           | Additional
 cash used during 2010 to fund an escrow account with the proceeds from the
 CityPoint bond financing    
| |                                                                            |                                                                                                                     
| | Items which
 contributed to an increase in cash from operating activities:
| |                                                                           | An increase
 in distribution (primarily Albertsons) of operating income from
 unconsolidated affiliates during 2010

The decrease of $62.7 million of net cash used in investing activities
primarily resulted from the following:

| |                                                                            |                                                                                                                
| | -------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------
| | Items which
 contributed to a decrease in cash from investing activities: 
| |                                                                           | An
 additional $13.5 million in investments and advances to unconsolidated
 affiliates during 2010             
| |                                                                           | An
 additional $12.0 million in proceeds from the sale of properties during 2009                               
| |                                                                            |                                                                                                                
| | Items which
 contributed to an increase in cash from investing activities:
| |                                                                           | A decrease
 of $54.3 million in expenditures for real estate, development and tenant
 installations during 2010
| |                                                                           | An increase
 of $28.4 million in repayments of notes receivable during 2010                                    
| |                                                                           | A decrease
 of $9.4 million in advances of notes receivable during 2010                                        

The $39.9 million decrease in net cash provided by financing activities
resulted primarily from the following:

| |                                                                            |                                                                                                 
| | -------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------
| | Items which
 contributed to a decrease in cash from financing activities: 
| |                                                                           | A decrease
 of $84.2 million in borrowings during 2010                                          
| |                                                                           | $65.2
 million of additional cash from the issuance of Common Shares, net of costs,
 during 2009
| |                                                                            |                                                                                                 
| | Items which
 contributed to an increase in cash from financing activities:
| |                                                                           | A decrease
 of $54.8 million in repayments of mortgage debt during 2010                         
| |                                                                           | A decrease
 of $46.5 million in repayments of convertible notes during 2010                     
| |                                                                           | $7.9 million
 of additional contributions from noncontrolling interests during 2010             

CRITICAL ACCOUNTING POLICIES

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, 2010, 2009 and 2008, no
impairment losses on our properties were recognized. Management does not
believe that the value of any properties in its portfolio was impaired as of
December 31, 2010.

Investments in and Advances to Unconsolidated
Joint Ventures

The Company periodically reviews its investment in unconsolidated joint
ventures for other than temporary declines in market value. Any decline that is
not expected to be recovered in the next twelve months is considered other than
temporary and an impairment charge is recorded as a reduction in the carrying
value of the investment. During the year ended December 31, 2009, the Company
recorded a $3.8 million impairment reserve related to a Fund I unconsolidated
joint venture. No impairment charges related to the Companys investment in
unconsolidated joint ventures were recognized for the years ended
December 31, 2010 and 2008.

45

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Bad Debts

We maintain an allowance for doubtful accounts for estimated losses
resulting from the inability of tenants to make payments on arrearages in
billed rents, as well as the likelihood that tenants will not have the ability
to make payments on unbilled rents including estimated expense recoveries. We
also maintain a reserve for straight-line rent receivables. For the years ended
December 31, 2010 and 2009, the allowance for doubtful accounts totaled
$7.5 million and $7.0 million, respectively. If the financial condition of
our tenants were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.

Real Estate

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

Upon acquisitions of real estate, we assess the fair value of acquired
assets (including land, buildings and improvements, and identified intangibles
such as above and below market leases and acquired in-place leases and customer
relationships) and acquired liabilities in accordance with the Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 805 Business Combinations and ASC Topic 350 Intangibles  Goodwill and
Other, and allocate purchase price based on these assessments. We assess fair
value based on estimated cash flow projections that utilize appropriate
discount and capitalization rates and available market information. Estimates
of future cash flows are based on a number of factors including the historical
operating results, known trends, and market/economic conditions that may affect
the property.

Revenue Recognition and Accounts Receivable

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

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

Notes
Receivable and Preferred Equity Investment

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

Allowances for real estate notes receivable and preferred equity investments
are established based upon 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

46

---



ten years, which permits us to seek to increase rents upon re-rental at
market rates if current rents are below the then existing market rates. Most of
our leases require the tenants to pay their share of operating expenses,
including common area maintenance, real estate taxes, insurance and utilities,
thereby reducing our exposure to increases in costs and operating expenses
resulting from inflation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

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

Information
as of December 31, 2010

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

Currently, we manage our exposure to fluctuations in interest rates
primarily through the use of fixed-rate debt and interest rate swap agreements.
As of December 31, 2010, we had total mortgage and convertible notes
payable of $854.9 million of which $415.0 million, or 49% was fixed-rate,
inclusive of debt with rates fixed through the use of derivative financial
instruments, and $439.9 million, or 51%, was variable-rate based upon LIBOR
rates plus certain spreads. As of December 31, 2010, we were a party to
seven interest rate swap transactions and one interest rate cap transaction to
hedge our exposure to changes in interest rates with respect to
$71.5 million and $28.9 million of LIBOR-based variable-rate debt,
respectively. In addition, one of our unconsolidated partnerships was a party
to an interest rate swap transaction with respect to $20.0 million of
LIBOR-based variable-rate debt.

The following table sets forth information as of December 31, 2010
concerning our long-term debt obligations, including principal cash flows by
scheduled maturity and weighted average interest rates of maturing amounts
(dollars in millions):

Consolidated mortgage debt:

|           |  |                          |      |            |   |       |  |                                  |       |  |  |     |  
|---------- |  | ------------------------ | ---- | ---------- | - | ----- |  | -------------------------------- | ----- |  |  | --- | -
|Year       |  | Scheduled 
 amortization |      | Maturities |   | Total |  | Weighted average 
 interest rate |      
|           |  |                          |      |            |   |       |  |                                  |       |  |  |     |  
|2011       |  | $                        | 4.8  |            | $ | 379.8 |  | $                                | 384.6 |  |  | 2.8 | %
|2012       |  |                          | 4.1  |            |   | 49.3  |  |                                  | 53.4  |  |  | 5.6 | %
|2013       |  |                          | 4.3  |            |   | 99.2  |  |                                  | 103.5 |  |  | 3.6 | %
|2014       |  |                          | 2.2  |            |   | 62.3  |  |                                  | 64.5  |  |  | 5.2 | %
|2015       |  |                          | 1.9  |            |   | 77.4  |  |                                  | 79.3  |  |  | 3.2 | %
|Thereafter |  |                          | 7.6  |            |   | 162.0 |  |                                  | 169.6 |  |  | 5.8 | %
|           |  |                          |      |            |   |       |  |                                  |       |  |  |     |  
|           |  | $                        | 24.9 |            | $ | 830.0 |  | $                                | 854.9 |  |  |     |  
|           |  |                          |      |            |   |       |  |                                  |       |  |  |     |  

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

|           |  |                          |     |            |   |       |  |                                  |      |  |  |     |  
|---------- |  | ------------------------ | --- | ---------- | - | ----- |  | -------------------------------- | ---- |  |  | --- | -
|Year       |  | Scheduled 
 amortization |     | Maturities |   | Total |  | Weighted average 
 interest rate |     
|           |  |                          |     |            |   |       |  |                                  |      |  |  |     |  
|2011       |  | $                        | 0.1 |            | $ |      |  | $                                | 0.1  |  |  | n/a | %
|2012       |  |                          | 0.5 |            |   |      |  |                                  | 0.5  |  |  | n/a | %
|2013       |  |                          | 0.5 |            |   |      |  |                                  | 0.5  |  |  | n/a | %
|2014       |  |                          | 0.5 |            |   |      |  |                                  | 0.5  |  |  | n/a | %
|2015       |  |                          | 0.5 |            |   | 28.0  |  |                                  | 28.5 |  |  | 5.4 | %
|Thereafter |  |                          |    |            |   | 43.6  |  |                                  | 43.6 |  |  | 5.5 | %
|           |  |                          |     |            |   |       |  |                                  |      |  |  |     |  
|           |  | $                        | 2.1 |            | $ | 71.6  |  | $                                | 73.7 |  |  |     |  
|           |  |                          |     |            |   |       |  |                                  |      |  |  |     |  

$384.6 million of our total consolidated debt and $0.1 million of our
pro-rata share of unconsolidated outstanding debt will become due in 2011.
$53.4 million of our total consolidated debt and $0.5 million of our
pro-rata share of unconsolidated debt will become due in 2012. As we intend on
refinancing some or all of such debt at the then-existing market interest
rates, which may be greater than the current interest rate, our interest
expense would increase by approximately $4.4 million annually if the interest
rate on the refinanced debt increased by 100 basis points. After giving effect
to noncontrolling interests, the Companys share of this increase would be $1.5
million. Interest expense on our variable debt of $439.9 million, net of
variable to fixed-rate swap agreements currently in effect, as of
December 31, 2010 would increase $4.4 million if LIBOR increased by 100
basis points. After giving effect to noncontrolling interests, the 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, 2010,
the fair value of our total consolidated outstanding debt would decrease by
approximately $12.6 million if interest rates increase by 1%. Conversely,
if interest rates decrease by 1%, the fair value of our total outstanding debt
would increase by approximately $13.8 million.

As of December 31, 2010 and 2009, we had notes receivable and preferred
equity investments of $89.2 million and $125.2 million, respectively. We
determined the estimated fair value of our notes receivable and preferred
equity investments as of December 31,

47

---



2010 and 2009 were $90.6 million and $126.4 million, respectively, by
discounting future cash receipts utilizing a discount rate equivalent to the
rate at which similar notes receivable would be originated under conditions
then existing.

Based on our outstanding notes receivable and preferred equity
investments balances as of December 31, 2010, the fair value of our total
outstanding notes receivable and preferred equity investments would decrease by
approximately $0.5 million if interest rates increase by 1%. Conversely,
if interest rates decrease by 1%, the fair value of our total outstanding notes
receivable and preferred equity investments would increase by approximately
$0.5 million.

Summarized
Information as of December 31, 2009

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

Interest expense on our variable debt of $341.1 million as of December
31, 2009 would have increased $3.4 million if LIBOR increased by 100 basis
points. Based on our outstanding debt balances as of December 31, 2009, the
fair value of our total outstanding debt would have decreased by approximately
$18.3 million if interest rates increased by 1%. Conversely, if interest rates
decreased by 1%, the fair value of our total outstanding debt would have
increased by approximately $20.5 million.

Changes
in Market Risk Exposures from 2009 to 2010

Our interest rate risk exposure from December 31, 2009 to December 31,
2010 has increased, as we had $341.1 million in variable-rate debt (or 44% of
our total debt) at December 31, 2009, as compared to $439.9 million (or 51% of
our total debt) in variable-rate debt at December 31, 2010. In addition, the
amount of our total debt increased from $780.1 million at December 31, 2009 to
$854.9 million at December 31, 2010. This increased amount of debt could expose
us to greater fluctuations in the fair value of our debt.

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, 2010 to provide reasonable assurance that
information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in SEC rules and forms, and is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.

(ii) Internal Control Over Financial
Reporting

(a) 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, 2010 as required by the Securities Exchange
Act of 1934 Rule 13(a)-15(c). In making this assessment, we used the
criteria set forth in the framework in Internal 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, 2010 to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with U.S.
generally accepted accounting principles.

48

---



BDO USA, LLP, an independent registered public accounting firm that
audited our Financial Statements included in this Annual Report, has issued an
attestation report on our internal control over financial reporting as of
December 31, 2010, which appears in paragraph (b) of this Item 9A.

Acadia Realty
Trust
White Plains, New York February 28, 2011

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

The
Shareholders and Trustees of
Acadia Realty Trust

We have audited Acadia Realty Trust and subsidiaries internal control
over financial reporting as of December 31, 2010, based on criteria
established in Internal 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, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheets of Acadia Realty Trust and subsidiaries as of December 31, 2010 and
2009 and the related consolidated statements of income, shareholders equity
and comprehensive income, and cash flows for each of the three years in the
period ended December 31, 2010 and our report dated February 28, 2011
expressed an unqualified opinion thereon.

/s/ BDO USA,
LLP
New York, New York
February 28, 2011

(c) Changes in internal control over
financial reporting

There was no change in our internal control over financial reporting
during our fourth fiscal quarter ended December 31, 2010 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 9B. OTHER
INFORMATION.

None

49

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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 2011 annual meeting of stockholders (our 2011 Proxy
Statement) that we intend to file with the SEC no later than April 29, 2011.

ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The
information under the following headings in the 2011 Proxy Statement is
incorporated herein by reference:

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

ITEM 11.
EXECUTIVE COMPENSATION.

The
information under the following headings in the 2011 Proxy Statement is
incorporated herein by reference:

| |   |                                                               
| | - | --------------------------------------------------------------
| |  | ACADIA
 REALTY TRUST COMPENSATION COMMITTEE REPORT          
| |  | COMPENSATION
 DISCUSSION AND ANALYSIS                       
| |  | 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 2011 Proxy Statement is incorporated herein by
reference.

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

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

The
information under the following headings in the 2011 Proxy Statement is
incorporated herein by reference:

| |   |                                                          
| | - | ---------------------------------------------------------
| |  | 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 2011 Proxy
Statement is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES.

1. Financial Statements: See Index to
Financial Statements at page F-1 below.
2. Financial Statement Schedule:
See Schedule IIIReal Estate and Accumulated Depreciation at page F-40 below.
3. Exhibits: The index of
exhibits below is incorporated herein by reference.

50

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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:
February 28, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|                                                  |  |                                                                                       |  |                   
|------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | ------------------
|Signature                                         |  | Title                                                                                 |  | Date              
|                                                  |  |                                                                                       |  |                   
|/s/ Kenneth
 F. Bernstein
 (Kenneth F. Bernstein) |  | Chief
 Executive Officer,
 President and Trustee
 (Principal Executive Officer)       |  | February 28,
 2011
|                                                  |  |                                                                                       |  |                   
|/s/ Michael
 Nelsen
 (Michael Nelsen)             |  | Senior Vice
 President 
 and Chief Financial Officer
 (Principal Financial Officer)   |  | February 28,
 2011
|                                                  |  |                                                                                       |  |                   
|/s/ Jonathan
 W. Grisham
 (Jonathan W. Grisham)   |  | Senior Vice
 President 
 and Chief Accounting Officer
 (Principal Accounting Officer) |  | February 28,
 2011
|                                                  |  |                                                                                       |  |                   
|/s/ Douglas Crocker
 II
 (Douglas Crocker II)     |  | Trustee                                                                               |  | February 28,
 2011
|                                                  |  |                                                                                       |  |                   
|/s/ Lorrence
 T. Kellar
 (Lorrence T. Kellar)     |  | Trustee                                                                               |  | February 28,
 2011
|                                                  |  |                                                                                       |  |                   
|/s/ Wendy
 Luscombe
 (Wendy Luscombe)             |  | Trustee                                                                               |  | February 28,
 2011
|                                                  |  |                                                                                       |  |                   
|/s/ William
 T. Spitz
 (William T. Spitz)         |  | Trustee                                                                               |  | February 28,
 2011
|                                                  |  |                                                                                       |  |                   
|/s/ Lee S.
 Wielansky
 (Lee S. Wielansky)         |  | Trustee                                                                               |  | February 28,
 2011

51

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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

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|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.17       | Mortgage,
 Assignment of Leases and Rents and Security Agreement from Acadia Cortlandt
 LLC to Bank of America, N.A. dated July 29, 2009 [Initial Advance], Note made
 by Acadia Cortlandt LLC in favor of Bank of America, N.A. dated July 29, 2009
 [Initial Advance], Mortgage, Assignment of Leases and Rents and Security
 Agreement from Acadia Cortlandt LLC to Bank of America, N.A. dated July 29,
 2009 [Future Advance] and Note made by Acadia Cortlandt LLC in favor of Bank
 of America, N.A. dated July 29, 2009 [Future Advance] (33)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.18       | Consolidated,
 Amended and Restated Term Loan Agreement among Acadia-PA East Fordham
 Acquisitions, LLC, and Fordham Place Office LLC as borrower and The lenders
 Party Hereto as lenders and Eurohypo AG, New York Branch as Administrative
 Agent; Mortgage, Assignment of Leases and Rents, Security Agreement and
 Fixture Filing made by Acadia-PA East Fordham Acquisitions, LLC, and Fordham
 Place Office LLC in favor of Eurohypo AG, New York Branch as Administrative
 Agent; Replacement Note between Acadia-PA East Fordham Acquisitions, LLC, and
 Fordham Place Office LLC and Amalgamated Bank; Replacement Note between
 Acadia-PA East Fordham Acquisitions, LLC, and Fordham Place Office LLC and
 Deutsche Genossenschafts  Hypothekenbank AG; Replacement Note between
 Acadia-PA East Fordham Acquisitions, LLC, and Fordham Place Office LLC and
 Eurohypo AG, New York Branch; and Replacement Note between Acadia-PA East Fordham
 Acquisitions, LLC, and Fordham Place Office LLC and TD Bank. All dated
 November 4, 2009. (35)                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.19       | Fifth
 Amendment to Employment Agreement between the Company and Kenneth F.
 Bernstein dated August 5, 2008 (34)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.20       | Secured
 Promissory Note between RD Absecon Associates, L.P. and Fleet Bank, N.A.
 dated February 8, 2000 (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.21       | Promissory
 Note between 239 Greenwich Associates, L.P. and Greenwich Capital Financial
 Products, Inc. dated May 30, 2003 (18)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.22       | Open-End
 Mortgage, Assignment of Leases and Rents, and Security Agreement between 239
 Greenwich Associates, L.P. and Greenwich Capital Financial Products, Inc.
 dated May 30, 2003 (18)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.23       | Promissory
 Note between Merrillville Realty, L.P. and Sun America Life Insurance Company
 dated July 7, 1999 (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.24       | Secured
 Promissory Note between Acadia Town Line, LLC and Fleet Bank, N.A. dated
 March 21, 1999 (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.25       | Promissory
 Note between RD Village Associates Limited Partnership and Sun America Life
 Insurance Company Dated September 21, 1999 (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.26       | First
 Amendment to Severance Agreements between the Company and Joel Braun
 Executive Vice President and Chief Investment Officer, Michael Nelsen, Senior
 Vice President and Chief Financial Officer, Robert Masters, Senior Vice
 President, General Counsel, Chief Compliance Officer and Secretary and Joseph
 Hogan, Senior Vice President and Director of Construction dated January 19,
 2007 (21) (26)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.27       | Mortgage
 Agreement, $25.0 million Mortgage Note, $23.0 million Mortgage Note, Building
 Loan Agreement and General Assignment of Rents between Manufacturers and
 Traders Trust Company and Capital One, N.A. (the Lending Group) and
 Canarsie Plaza, LLC, all dated January 12, 2010 (34)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.28       | Third
 Amended and Restated Credit Agreement and Note among Acadia Strategic
 Opportunity Fund II, LLC and Bank of America, N.A., dated March 3, 2010 (34)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.29       | Loan
 Agreement between New York City Capital Resource Corporation (the Issuer)
 and Albee Retail Development LLC (the Company), Copy of the Promissory Note
 from the Company to the Issuer and The Bank of New York Mellon, as trustee
 (the Trustee), Indenture of Trust (the Indenture) between the Issuer and
 the Trustee, Mortgage and Security Agreement and Assignment of Leases and
 Rents (Acquisition Loan) from the Company to the Trustee, Mortgage and
 Security Agreement and Assignment of Leases and Rents (Building Loan) from
 the Company to the Trustee, Mortgage and Security Agreement and Assignment of
 Leases and Rents (Indirect Loan) from the Company to the Trustee, Building
 Loan Agreement among the Issuer, the Trustee and the Company, Pledge and
 Security Agreement from the Company to the Trustee, Bond Guarantee Agreement
 from the Company and Acadia Strategic Opportunity Fund II LLC (the Parent)
 to the Trustee, Project Completion Guarantee Agreement from the Company and
 the Parent to the Trustee, all dated as of July 1, 2010 (35)
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.30       | Amended and
 Restated Note Agreement made by Albee Development LLC in favor of Bank of
 America, N.A., dated August 19, 2010 (35)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

53

---



|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.31       | Third Loan
 Extension and Modification Agreement by and among Acadia-P/A 161ST
 Street, LLC (Borrower), Acadia-P/A Holdings Company, LLC (Guarantor) and
 Bank of America, N.A., dated July 9, 2010 (35)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.32       | Fourth
 Amendment to Project Loan Agreement and Amendment of Certain Other Loan
 Documents by and between P/A-Acadia Pelham Manor, LLC and U.S. Bank National
 Association, Not Individually but Solely as Trustee for the Maiden Lane
 Commercial Mortgage-Backed Securities Trust 2008-1 dated August 26, 2010 (35)                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.33       | Term Loan
 Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York,
 dated March 30, 2000 (10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.34       | Mortgage
 Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York,
 dated March 30, 2000 (10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.35       | Second
 Mortgage Modification Agreement by and between Acadia-P/A Liberty LLC and PNC
 Bank, National Association dated September 17, 2010 (35)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.36       | Amended and Restated
 Loan Agreement among Acadia Cortlandt LLC and Bank of America, N.A., Note
 between Acadia Cortlandt LLC and Bank of America, N.A., Note Consolidation
 and Modification Agreement between Acadia Cortlandt LLC and Bank of America,
 N.A., Note between Acadia Cortlandt LLC and Bank of America, N.A., Mortgage
 Consolidation and Modification Agreement between Acadia Cortlandt LLC and
 Bank of America, N.A., Mortgage Security Agreement between Acadia Cortlandt
 LLC and Bank of America, N.A. and Amended and Restated Guaranty Agreement
 between Acadia Cortlandt LLC and Bank of America, N.A., all dated October 26,
 2010 (36)                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.37       | Agreement of
 Modification of Note Consolidation and Modification Agreement between Acadia
 Tarrytown LLC and Anglo Irish Bank Corporation Limited dated November 5, 2010
 but deemed effective as of October 30, 2010 (36)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.38       | Second
 Amendment to Building Loan Agreement and the Second Amendment to Project Loan
 Agreement and Amendment of Certain Other Loan Documents by and between Acadia
 Atlantic Avenue, LLC and U.S. Bank National Association, Not Individually But
 Solely as Trustee for the Maiden Lane Commercial Mortgage-Backed Securities
 Trust 2008-1, both dated October 20, 2010 (36)                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.39       | Fourth
 Amended and Restated Credit Agreement among Acadia Strategic Opportunity Fund
 II, LLC and Bank of America, N.A. dated December 22, 2010 (36)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.40       | Loan
 Agreement among P/A-Acadia Pelham Manor, LLC and Bank of America, N.A., Note
 between P/A-Acadia Pelham Manor, LLC and Bank of America, N.A., Note between
 P/A-Acadia Pelham Manor, LLC and Bank of America, N.A., Note Consolidation
 and Modification Agreement between P/A-Acadia Pelham Manor, LLC and Bank of
 America, N.A., Fee and Leasehold Mortgage, Assignment of Leases and Rents and
 Security Agreement between P/A-Acadia Pelham Manor, LLC and Bank of America,
 N.A., Fee and Leasehold Mortgage Consolidation and Modification Agreement
 between P/A-Acadia Pelham Manor, LLC and Bank of America, N.A. and Guaranty
 Agreement between P/A-Acadia Pelham Manor, LLC and Bank of America, N.A., all
 dated December 1, 2010 (36)
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.44       | Prospectus
 Supplement Regarding Options Issued under the Acadia Realty Trust 1999 Share
 Incentive Plan and 2003 Share Incentive Plan (19) (21)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.45       | Acadia
 Realty Trust 1999 Share Incentive Plan and 2003 Share Incentive Plan Deferral
 and Distribution Election Form (19) (21)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.46       | Amended,
 Restated And Consolidated Promissory Note between Acadia New Loudon, LLC and
 Greenwich Capital Financial Products, Inc. dated August 13, 2004 (19)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.47       | Amended,
 Restated And Consolidated Mortgage, Assignment Of Leases And Rents And
 Security Agreement between Acadia New Loudon, LLC and Greenwich Capital
 Financial Products, Inc. dated August 13, 2004 (19)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.51       | Mortgage,
 Assignment of Leases and Rents and Security Agreement between Acadia Crescent
 Plaza, LLC and Greenwich Capital Financial Products, Inc. dated August 31,
 2005 (22)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

54

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|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.52       | Mortgage,
 Assignment of Leases and Rents and Security Agreement between
 Pacesetter/Ramapo Associates and Greenwich Capital Financial Products, Inc.
 dated October 17, 2005 (22)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.53       | Loan
 Agreement between RD Elmwood Associates, L.P. and Bear Stearns Commercial
 Finance Mortgage, Inc. dated December 9, 2005 (35)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.54       | Mortgage and
 Security Agreement between RD Elmwood Associates, L.P. and Bear Stearns
 Commercial Finance Mortgage, Inc. dated December 9, 2005 (22)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.55       | Agreement
 and Plan Of Merger Dated as of December 22, 2005 by and among Acadia Realty
 Acquisition I, LLC, Ara Btc LLC, ARA MS LLC, ARA BS LLC, ARA BC LLC and ARA
 BH LLC, Acadia Investors, Inc., AII BTC LLC, AII MS LLC, AII BS LLC, AII BC
 LLC And AII BH LLC, Samuel Ginsburg 2000 Trust Agreement #1, Martin Ginsburg
 2000 Trust Agreement #1, Martin Ginsburg, Samuel Ginsburg and Adam Ginsburg,
 and GDC SMG, LLC, GDC Beechwood, LLC, Aspen Cove Apartments, LLC and SMG
 Celebration, LLC (23)                                                                                                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.56       | Amended and
 Restated Loan Agreement between Acadia Realty Limited Partnership, as lender,
 and Levitz SL Woodbridge, L.L.C., Levitz SL St. Paul, L.L.C., Levitz SL La
 Puente, L.L.C., Levitz SL Oxnard, L.L.C., Levitz SL Willowbrook, L.L.C.,
 Levitz SL Northridge, L.L.C., Levitz SL San Leandro, L.L.C., Levitz SL
 Sacramento, L.L.C., HL Brea, L.L.C., HL Deptford, L.L.C., HL Hayward, L.L.C.,
 HL San Jose, L.L.C., HL Scottsdale, L.L.C., HL Torrance, L.L.C., HL Irvine 1,
 L.L.C., HL West Covina, L.L.C., HL Glendale, L.L.C. and HL Northridge,
 L.L.C., each a Delaware limited liability company, Levitz SL Langhorne, L.P.
 and HL Fairless Hills, L.P., each a Delaware limited partnership (each,
 together with its permitted successors and assigns, aBorrower, and collectively, together
 with their respective permitted successors and assigns, Borrowers ), dated June 1, 2006 (24)
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.57       | Consent and
 Assumption Agreement between Thor Chestnut Hill, LP, Thor Chestnut Hill II,
 LP, Acadia Chestnut, LLC, Acadia Realty Limited Partnership and Wells Fargo
 Bank, N.A. dated June 9, 2006, original Mortgage and Security Agreement
 between Thor Chestnut Hill, LP and Thor Chestnut Hill II, LP and Column
 Financial, Inc. dated June 5, 2003 and original Assignment of Leases and
 Rents from Thor Chestnut Hill, LP and Thor Chestnut Hill II, LP to Column
 Financial, Inc. dated June 2003. (24)                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.58       | Loan
 Agreement and Promissory Note between RD Woonsocket Associates, L.P. and
 Merrill Lynch Mortgage Lending, Inc. dated September 8, 2006 (25)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.59       | Amended and
 Restated Revolving Loan Agreement dated as of December 19, 2006 by and among
 RD Abington Associates LP, Acadia Town Line, LLC, RD Methuen Associates LP,
 RD Absecon Associates, LP, RD Bloomfield Associates, LP, RD Hobson
 Associates, LP, and RD Village Associates LP, and Bank of America, N.A. and
 the First Amendment to Amended and Restated Revolving Loan Agreement dated
 February, 2007. (26)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.60       | Loan
 Agreement between Bank of America, N.A. and RD Branch Associates, LP dated
 December 19, 2006. (26)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.61       | Loan
 Agreement between 239 Greenwich Associates Limited Partnership and Wachovia
 Bank, National Association dated January 25, 2007. (35)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.62       | Revolving
 Credit Agreement between Acadia Realty Limited Partnership and Washington
 Mutual Bank dated March 29, 2007. (28)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.63       | Loan
 Agreement between Acadia Merrillville Realty, L.P. and Bear Stearns
 Commercial Mortgage, Inc dated July 2, 2007. (35)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.64       | Promissory
 Note between Acadia Merrillville Realty, L.P. and Bear Stearns Commercial
 Mortgage, Inc dated July 2, 2007. (29)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.65       | Loan
 Agreement Note between APA 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 (35)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

55

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|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.68       | Building
 Loan Agreement between Acadia  PA East Fordham Acquisitions, LLC and
 Eurohypo AG, New York Branch dated October 5, 2007 (30)                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.69       | Revolving
 credit agreement between Acadia Strategic Opportunity Fund III, LLC. and Bank
 of America, N.A. dated October 10, 2007 (35)                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.70       | Mortgage
 Consolidation and Modification Agreement between Acadia Tarrytown LLC and
 Anglo Irish Bank Corporation, PLC dated October 30, 2007 (35)                                                                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.71       | Project Loan
 Agreement between P/A  Acadia Pelham Manor, LLC and Bear Stearns Commercial
 Mortgage, Inc. dated December 10, 2007 (35)                                                                                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.72       | Building
 Loan Agreement P/A  Acadia Pelham Manor, LLC and Bear Stearns Commercial
 Mortgage, Inc. dated December 10, 2007 (35)                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.73       | Project Loan
 Agreement between Acadia Atlantic Avenue, LLC and Bear Stearns Commercial
 Mortgage, Inc. dated December 26, 2007 (35)                                                                                                                                                                                                                                                                                                                 
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.74       | Building
 Loan Agreement between Acadia Atlantic Avenue, LLC and Bear Stearns
 Commercial Mortgage, Inc. dated December 26, 2007 (35)                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.75       | Certain
 information regarding the compensation arrangements with certain officers of
 registrant (Incorporated by reference to Item 5.02 of the 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 (36)                                                                                                                                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|23.1        | Consent of
 Registered Public Accounting Firm to incorporation by reference its reports
 into Forms S-3 and Forms S-8 (36)                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|31.1        | Certification
 of Chief Executive Officer pursuant to rule 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 (36)                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|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 (36)                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|32.1        | Certification
 of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (36)                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|32.2        | Certification
 of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (36)                                                                                                                                                                                                                                                                                             

56

---





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

|       |                                                                                                                                                                   
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes: |                                                                                                                                                                   
|       |                                                                                                                                                                   
|(1)    | Incorporated
 by reference to the copy thereof filed as an Exhibit to the 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                          

57

---



|     |                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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) | 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, 2010.    
|     |                                                                                                                                                                   
|(35) | 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, 2010.
|     |                                                                                                                                                                   
|(36) | Filed
 herewith.                                                                                                                                                  
|     |                                                                                                                                                                   

58

---



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, 2010 and 2009                                                                   |  | F-3 
|Consolidated Statements of Income for the years ended
 December 31, 2010, 2009 and 2008                                        |  | F-4 
|Consolidated Statements of Shareholders Equity and Comprehensive
 Income for the years ended December 31, 2010, 2009 and 2008 |  | F-5 
|Consolidated Statements of Cash Flows for the years ended
 December 31, 2010, 2009 and 2008                                    |  | F-7 
|Notes to Consolidated Financial Statements                                                                                     |  | F-9 
|Schedule III  Real Estate and Accumulated Depreciation                                                                        |  | F-40
|                                                                                                                               |  |     

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, 2010 and
2009 and the related consolidated statements of income, shareholders equity
and comprehensive income, and cash flows for each of the three years in the
period ended December 31, 2010. In connection with our audits of the financial
statements we have also audited the accompanying financial statement schedule
listed on page F-1. These financial statements and schedule are the
responsibility of the 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, 2010, and 2009 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2010, in conformity with generally accepted accounting
principles in the United States of America.

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

We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), Acadia Realty Trust and
subsidiaries internal control over financial reporting as of December 31,
2010, based on criteria established in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and our report dated February 28, 2011 expressed an unqualified opinion
thereon.

/s/ BDO USA, LLP

New York, New
York
February 28, 2011

F-2

---



ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                                                                                                                       |  |                        |           |      |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | --------- | ---- | - | --------- | -
|                                                                                                                                       |  | December 31,           |          
|                                                                                                                                       |  | 2010                   |           | 2009 |  
|                                                                                                                                       |  |                        |           |      |  
|                                                                                                                                       |  | (dollars in thousands) |          
|ASSETS                                                                                                                                 |  |                        |           |      |   |           |  
|Operating real estate                                                                                                                  |  |                        |           |      |   |           |  
|Land                                                                                                                                   |  | $                      | 222,786   |      | $ | 221,740   |  
|Buildings and improvements                                                                                                             |  |                        | 915,221   |      |   | 838,828   |  
|Construction in progress                                                                                                               |  |                        | 4,400     |      |   | 2,575     |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|                                                                                                                                       |  |                        | 1,142,407 |      |   | 1,063,143 |  
|Less: accumulated depreciation                                                                                                         |  |                        | 219,920   |      |   | 191,307   |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Net operating real estate                                                                                                              |  |                        | 922,487   |      |   | 871,836   |  
|Real estate under development                                                                                                          |  |                        | 243,892   |      |   | 137,340   |  
|Notes receivable and preferred equity
 investment, net                                                                                 |  |                        | 89,202    |      |   | 125,221   |  
|Investments in and advances to
 unconsolidated affiliates                                                                              |  |                        | 31,036    |      |   | 51,712    |  
|Cash and cash equivalents                                                                                                              |  |                        | 120,592   |      |   | 93,808    |  
|Cash in escrow                                                                                                                         |  |                        | 28,610    |      |   | 8,582     |  
|Rents receivable, net                                                                                                                  |  |                        | 18,044    |      |   | 16,713    |  
|Deferred charges, net of amortization                                                                                                  |  |                        | 25,730    |      |   | 28,311    |  
|Acquired lease intangibles, net of
 amortization                                                                                       |  |                        | 18,622    |      |   | 22,382    |  
|Prepaid expenses and other assets                                                                                                      |  |                        | 22,463    |      |   | 22,003    |  
|Assets of discontinued operations                                                                                                      |  |                        | 4,128     |      |   | 4,556     |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Total assets                                                                                                                           |  | $                      | 1,524,806 |      | $ | 1,382,464 |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                   |  |                        |           |      |   |           |  
|Mortgages payable                                                                                                                      |  | $                      | 806,212   |      | $ | 732,287   |  
|Convertible notes payable, net of
 unamortized discount of $1,063 and $2,105, respectively                                             |  |                        | 48,712    |      |   | 47,910    |  
|Distributions in excess of income from, and
 investments in, unconsolidated affiliates                                                 |  |                        | 20,884    |      |   | 20,589    |  
|Accounts payable and accrued expenses                                                                                                  |  |                        | 27,691    |      |   | 17,548    |  
|Dividends and distributions payable                                                                                                    |  |                        | 7,427     |      |   | 7,377     |  
|Acquired lease intangibles, net of
 amortization                                                                                       |  |                        | 5,737     |      |   | 6,753     |  
|Other liabilities                                                                                                                      |  |                        | 20,621    |      |   | 17,523    |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Total liabilities                                                                                                                      |  |                        | 937,284   |      |   | 849,987   |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|SHAREHOLDERS EQUITY                                                                                                                   |  |                        |           |      |   |           |  
|Common shares, $.001 par value, authorized
 100,000,000 shares, issued and outstanding 40,254,525 and 39,787,018 shares,
 respectively |  |                        | 40        |      |   | 40        |  
|Additional paid-in capital                                                                                                             |  |                        | 303,823   |      |   | 299,014   |  
|Accumulated other comprehensive loss                                                                                                   |  |                        | (2,857    | )    |   | (2,994    | )
|Retained earnings                                                                                                                      |  |                        | 17,206    |      |   | 16,125    |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Total Shareholders equity                                                                                                             |  |                        | 318,212   |      |   | 312,185   |  
|Noncontrolling interests                                                                                                               |  |                        | 269,310   |      |   | 220,292   |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Total equity                                                                                                                           |  |                        | 587,522   |      |   | 532,477   |  
|                                                                                                                                       |  |                        |           |      |   |           |  
|Total liabilities and equity                                                                                                           |  | $                      | 1,524,806 |      | $ | 1,382,464 |  
|                                                                                                                                       |  |                        |           |      |   |           |  

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

F-3

---



ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|--------------------------------------------------------------------------- |  | ------------------------------------------------ | ------- | ---- | - | ------- | - | - | ------- | -
|                                                                            |  | Years ended December 31,                         |        
|                                                                            |  | 2010                                             |         | 2009 |   | 2008    |  
|                                                                            |  |                                                  |         |      |   |         |  
|                                                                            |  | (dollars
 in thousands except per share amounts) |        
|Revenues                                                                    |  |                                                  |         |      |   |         |   |   |         |  
|Rental income                                                               |  | $                                                | 106,913 |      | $ | 95,716  |   | $ | 77,120  |  
|Mortgage interest income                                                    |  |                                                  | 19,161  |      |   | 19,698  |   |   | 11,163  |  
|Expense reimbursements                                                      |  |                                                  | 22,030  |      |   | 20,982  |   |   | 16,789  |  
|Lease termination income                                                    |  |                                                  | 290     |      |   | 2,751   |   |   | 23,961  |  
|Management fee income                                                       |  |                                                  | 1,424   |      |   | 1,961   |   |   | 3,434   |  
|Other                                                                       |  |                                                  | 2,140   |      |   | 4,595   |   |   | 1,099   |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Total revenues                                                              |  |                                                  | 151,958 |      |   | 145,703 |   |   | 133,566 |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Operating Expenses                                                          |  |                                                  |         |      |   |         |   |   |         |  
|Property operating                                                          |  |                                                  | 30,914  |      |   | 29,651  |   |   | 23,917  |  
|Real estate taxes                                                           |  |                                                  | 18,245  |      |   | 16,812  |   |   | 12,123  |  
|General and administrative                                                  |  |                                                  | 20,220  |      |   | 22,013  |   |   | 24,545  |  
|Depreciation and amortization                                               |  |                                                  | 40,115  |      |   | 36,634  |   |   | 32,749  |  
|Abandonment of project costs                                                |  |                                                  |        |      |   | 2,487   |   |   | 630     |  
|Reserve for notes receivable                                                |  |                                                  |        |      |   | 1,734   |   |   | 4,392   |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Total operating expenses                                                    |  |                                                  | 109,494 |      |   | 109,331 |   |   | 98,356  |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Operating income                                                            |  |                                                  | 42,464  |      |   | 36,372  |   |   | 35,210  |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Equity in earnings (losses) of unconsolidated affiliates                    |  |                                                  | 10,971  |      |   | (1,529  | ) |   | 19,906  |  
|Impairment of investment in unconsolidated affiliate                        |  |                                                  |        |      |   | (3,768  | ) |   |        |  
|Other interest income                                                       |  |                                                  | 408     |      |   | 642     |   |   | 3,370   |  
|Gain from bargain purchase                                                  |  |                                                  | 33,805  |      |   |        |   |   |        |  
|Gain on debt extinguishment                                                 |  |                                                  |        |      |   | 7,057   |   |   | 1,523   |  
|Interest and other finance expense                                          |  |                                                  | (34,471 | )    |   | (32,154 | ) |   | (28,893 | )
|Gain on sale of land                                                        |  |                                                  |        |      |   |        |   |   | 763     |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Income from continuing operations before income taxes                       |  |                                                  | 53,177  |      |   | 6,620   |   |   | 31,879  |  
|Income tax expense                                                          |  |                                                  | (2,890  | )    |   | (1,541  | ) |   | (3,362  | )
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Income from continuing operations                                           |  |                                                  | 50,287  |      |   | 5,079   |   |   | 28,517  |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Discontinued operations                                                     |  |                                                  |         |      |   |         |   |   |         |  
|Operating income from discontinued operations                               |  |                                                  | 380     |      |   | 484     |   |   | 1,738   |  
|Gain on sale of property                                                    |  |                                                  |        |      |   | 7,143   |   |   | 7,182   |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Income from discontinued operations                                         |  |                                                  | 380     |      |   | 7,627   |   |   | 8,920   |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Net income                                                                  |  |                                                  | 50,667  |      |   | 12,706  |   |   | 37,437  |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|(Income) loss attributable to noncontrolling interests in subsidiaries:     |  |                                                  |         |      |   |         |   |   |         |  
|Continuing operations                                                       |  |                                                  | (20,307 | )    |   | 23,472  |   |   | (11,438 | )
|Discontinued operations                                                     |  |                                                  | (303    | )    |   | (5,045  | ) |   | (931    | )
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Net (income) loss attributable to noncontrolling interests in
 subsidiaries |  |                                                  | (20,610 | )    |   | 18,427  |   |   | (12,369 | )
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Net income attributable to Common Shareholders                              |  | $                                                | 30,057  |      | $ | 31,133  |   | $ | 25,068  |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Basic earnings per share                                                    |  |                                                  |         |      |   |         |   |   |         |  
|Income from continuing operations                                           |  | $                                                | 0.75    |      | $ | 0.75    |   | $ | 0.51    |  
|Income from discontinued operations                                         |  |                                                  |        |      |   | 0.07    |   |   | 0.23    |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Basic earnings per share                                                    |  | $                                                | 0.75    |      | $ | 0.82    |   | $ | 0.74    |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Diluted earnings per share                                                  |  |                                                  |         |      |   |         |   |   |         |  
|Income from continuing operations                                           |  | $                                                | 0.74    |      | $ | 0.75    |   | $ | 0.50    |  
|Income from discontinued operations                                         |  |                                                  |        |      |   | 0.07    |   |   | 0.23    |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  
|Diluted earnings per share                                                  |  | $                                                | 0.74    |      | $ | 0.82    |   | $ | 0.73    |  
|                                                                            |  |                                                  |         |      |   |         |   |   |         |  

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

F-4

---



ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME

|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|------------------------------------------------------------------------------------------------ |  | ------------- | ------ | ---------------------------- | - | --------------------------------------- |  | ------------------ | ------- | ------------------------------------ | - | ------------------------- | - | ----------------------------- | ------- | - | - | ------- | - | - | ------- | - | - | ------- | -
|                                                                                                 |  |               |        | Additional
 Paid-in
 Capital |   | Accumulated
 Other
 Comprehensive
 Loss |  | Retained
 Earnings |         | Total
 Common
 Shareholders
 Equity |   | Noncontrolling
 Interests |   | Total
 Share-holders
 Equity |        
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |        
|                                                                                                 |  | Common Shares |        |                              |   |                                         |  |                    |        
|(amounts in thousands,
 except per share amounts)                                                |  | Shares        |        | Amount                       |   |                                         |  |                    |         |                                      |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Balance at January 1, 2008                                                                       |  |               | 32,184 |                              | $ | 32                                      |  | $                  | 236,967 |                                      | $ | (953                      | ) | $                             | 13,671  |   | $ | 249,717 |   | $ | 171,111 |   | $ | 420,828 |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Employee Restricted Share awards                                                                 |  |               | 137    |                              |   |                                        |  |                    | 2,917   |                                      |   |                          |   |                               |        |   |   | 2,917   |   |   | 1,863   |   |   | 4,780   |  
|Dividends declared ($1.39 per Common Share)                                                      |  |               |       |                              |   |                                        |  |                    | (20,385 | )                                    |   |                          |   |                               | (25,068 | ) |   | (45,453 | ) |   | (1,192  | ) |   | (46,645 | )
|Employee exercise of 110,245 options to purchase Common Shares                                   |  |               | 110    |                              |   |                                        |  |                    | 841     |                                      |   |                          |   |                               |        |   |   | 841     |   |   |        |   |   | 841     |  
|Common Shares issued under Employee Share Purchase Plan                                          |  |               | 7      |                              |   |                                        |  |                    | 180     |                                      |   |                          |   |                               |        |   |   | 180     |   |   |        |   |   | 180     |  
|Issuance of Common Shares to Trustees                                                            |  |               | 2      |                              |   |                                        |  |                    | 81      |                                      |   |                          |   |                               |        |   |   | 81      |   |   |        |   |   | 81      |  
|Employee Restricted Shares cancelled                                                             |  |               | (83    | )                            |   |                                        |  |                    | (1,997  | )                                    |   |                          |   |                               |        |   |   | (1,997  | ) |   |        |   |   | (1,997  | )
|Conversion options on Convertible Notes purchased (Note 9)                                       |  |               |       |                              |   |                                        |  |                    | (77     | )                                    |   |                          |   |                               |        |   |   | (77     | ) |   |        |   |   | (77     | )
|Noncontrolling interest distributions                                                            |  |               |       |                              |   |                                        |  |                    |        |                                      |   |                          |   |                               |        |   |   |        |   |   | (15,347 | ) |   | (15,347 | )
|Noncontrolling interest contributions                                                            |  |               |       |                              |   |                                        |  |                    |        |                                      |   |                          |   |                               |        |   |   |        |   |   | 46,014  |   |   | 46,014  |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                 |  |               | 32,357 |                              |   | 32                                      |  |                    | 218,527 |                                      |   | (953                      | ) |                               | (11,397 | ) |   | 206,209 |   |   | 202,449 |   |   | 408,658 |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Comprehensive income:                                                                            |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Net income                                                                                       |  |               |       |                              |   |                                        |  |                    |        |                                      |   |                          |   |                               | 25,068  |   |   | 25,068  |   |   | 12,369  |   |   | 37,437  |  
|Unrealized loss on valuation of swap agreements                                                  |  |               |       |                              |   |                                        |  |                    |        |                                      |   | (4,179                    | ) |                               |        |   |   | (4,179  | ) |   | (421    | ) |   | (4,600  | )
|Reclassification of realized interest on swap agreements                                         |  |               |       |                              |   |                                        |  |                    |        |                                      |   | 624                       |   |                               |        |   |   | 624     |   |   | 109     |   |   | 733     |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Total comprehensive income                                                                       |  |               |       |                              |   |                                        |  |                    |        |                                      |   | (3,555                    | ) |                               | 25,068  |   |   | 21,513  |   |   | 12,057  |   |   | 33,570  |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Balance at December 31, 2008                                                                     |  |               | 32,357 |                              | $ | 32                                      |  | $                  | 218,527 |                                      | $ | (4,508                    | ) | $                             | 13,671  |   | $ | 227,722 |   | $ | 214,506 |   | $ | 442,228 |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Conversion of 15,666 OP Units to Common Shares by limited partners of
 the Operating Partnership |  |               | 16     |                              |   |                                        |  |                    | 90      |                                      |   |                          |   |                               |        |   |   | 90      |   |   | (90     | ) |   |        |  
|Issuance of Common Shares, net of issuance costs                                                 |  |               | 5,750  |                              |   | 6                                       |  |                    | 65,216  |                                      |   |                          |   |                               |        |   |   | 65,222  |   |   |        |   |   | 65,222  |  
|Issuance of Common Shares through special dividend                                               |  |               | 1,287  |                              |   | 2                                       |  |                    | 16,190  |                                      |   |                          |   |                               |        |   |   | 16,192  |   |   |        |   |   | 16,192  |  
|Employee Restricted Share awards                                                                 |  |               | 253    |                              |   |                                        |  |                    | 2,957   |                                      |   |                          |   |                               |        |   |   | 2,957   |   |   | 890     |   |   | 3,847   |  
|Dividends declared ($0.75 per Common Share)                                                      |  |               |       |                              |   |                                        |  |                    |        |                                      |   |                          |   |                               | (28,679 | ) |   | (28,679 | ) |   | (795    | ) |   | (29,474 | )
|Employee exercise of 258,900 options to purchase Common Shares                                   |  |               | 259    |                              |   |                                        |  |                    | 1,556   |                                      |   |                          |   |                               |        |   |   | 1,556   |   |   |        |   |   | 1,556   |  
|Common Shares issued under Employee Share Purchase Plan                                          |  |               | 9      |                              |   |                                        |  |                    | 106     |                                      |   |                          |   |                               |        |   |   | 106     |   |   |        |   |   | 106     |  
|Issuance of Common Shares to Trustees                                                            |  |               | 25     |                              |   |                                        |  |                    | 635     |                                      |   |                          |   |                               |        |   |   | 635     |   |   |        |   |   | 635     |  
|Employee Restricted Shares cancelled                                                             |  |               | (359   | )                            |   |                                        |  |                    | (5,423  | )                                    |   |                          |   |                               |        |   |   | (5,423  | ) |   |        |   |   | (5,423  | )
|Deferred shares converted to Common Shares                                                       |  |               | 190    |                              |   |                                        |  |                    |        |                                      |   |                          |   |                               |        |   |   |        |   |   |        |   |   |        |  
|Conversion options on Convertible Notes                                                          |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|purchased (Note 9)                                                                               |  |               |       |                              |   |                                        |  |                    | (840    | )                                    |   |                          |   |                               |        |   |   | (840    | ) |   |        |   |   | (840    | )
|Noncontrolling interest distributions                                                            |  |               |       |                              |   |                                        |  |                    |        |                                      |   |                          |   |                               |        |   |   |        |   |   | (1,624  | ) |   | (1,624  | )
|Noncontrolling interest contributions                                                            |  |               |       |                              |   |                                        |  |                    |        |                                      |   |                          |   |                               |        |   |   |        |   |   | 25,653  |   |   | 25,653  |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                 |  |               | 39,787 |                              |   | 40                                      |  |                    | 299,014 |                                      |   | (4,508                    | ) |                               | (15,008 | ) |   | 279,538 |   |   | 238,540 |   |   | 518,078 |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Comprehensive income (loss):                                                                     |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Net income (loss)                                                                                |  |               |       |                              |   |                                        |  |                    |        |                                      |   |                          |   |                               | 31,133  |   |   | 31,133  |   |   | (18,427 | ) |   | 12,706  |  
|Unrealized loss on valuation of swap agreements                                                  |  |               |       |                              |   |                                        |  |                    |        |                                      |   | (912                      | ) |                               |        |   |   | (912    | ) |   | (140    | ) |   | (1,052  | )
|Reclassification of realized interest on swap agreements                                         |  |               |       |                              |   |                                        |  |                    |        |                                      |   | 2,426                     |   |                               |        |   |   | 2,426   |   |   | 319     |   |   | 2,745   |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Total comprehensive income (loss)                                                                |  |               |       |                              |   |                                        |  |                    |        |                                      |   | 1,514                     |   |                               | 31,133  |   |   | 32,647  |   |   | (18,248 | ) |   | 14,399  |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  
|Balance at December 31, 2009                                                                     |  |               | 39,787 |                              | $ | 40                                      |  | $                  | 299,014 |                                      | $ | (2,994                    | ) | $                             | 16,125  |   | $ | 312,185 |   | $ | 220,292 |   | $ | 532,477 |  
|                                                                                                 |  |               |        |                              |   |                                         |  |                    |         |                                      |   |                           |   |                               |         |   |   |         |   |   |         |   |   |         |  

F-5

---



ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME

|                                                                                                  |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |         |   |   |         |   |   |         |  
|------------------------------------------------------------------------------------------------- |  | ------------- | - | ---------- | -- | ------------- | - | ----------- | - | ------------- | ------ | -------------- | - | --------- | - | ------ | ------- | - | - | ------- | - | - | ------- | -
|                                                                                                  |  |               |   |            |    |               |   | Accumulated |   |               |        | Total          |   |           |   | Total  |        
|                                                                                                  |  |               |   | Additional |    | Other         |   |             |   | Common        |        |                |   | Share-    |  
|                                                                                                  |  | Common Shares |   | Paid-in    |    | Comprehensive |   | Retained    |   | Shareholders |        | Noncontrolling |   | holders  |  
|(amounts in thousands,
 except per share amounts)                                                 |  | Shares        |   | Amount     |    | Capital       |   | Loss        |   | Earnings      |        | Equity         |   | Interests |   | Equity |        
|                                                                                                  |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |        
|Conversion of 364,615 OP Units to Common Shares by limited partners of
 the Operating Partnership |  | 365           |   |            |   |               |   | 3,240       |   |               |       |                |   |          |   |        | 3,240   |   |   | (3,240  | ) |   |        |  
|Employee Restricted Share awards                                                                  |  | 133           |   |            |   |               |   | 2,060       |   |               |       |                |   |          |   |        | 2,060   |   |   | 1,778   |   |   | 3,838   |  
|Dividends declared ($0.72 per Common Share)                                                       |  |              |   |            |   |               |   |            |   |               |       |                |   | (28,976   | ) |        | (28,976 | ) |   | (723    | ) |   | (29,699 | )
|Exercise of Trustees options                                                                      |  | 7             |   |            |   |               |   | 109         |   |               |       |                |   |          |   |        | 109     |   |   |        |   |   | 109     |  
|Common Shares issued under Employee Share Purchase Plan                                           |  | 6             |   |            |   |               |   | 100         |   |               |       |                |   |          |   |        | 100     |   |   |        |   |   | 100     |  
|Issuance of Common Shares to Trustees                                                             |  | 13            |   |            |   |               |   | 266         |   |               |       |                |   |          |   |        | 266     |   |   |        |   |   | 266     |  
|Employee Restricted Shares cancelled                                                              |  | (57           | ) |            |   |               |   | (966        | ) |               |       |                |   |          |   |        | (966    | ) |   |        |   |   | (966    | )
|Noncontrolling interest distributions                                                             |  |              |   |            |   |               |   |            |   |               |       |                |   |          |   |        |        |   |   | (2,892  | ) |   | (2,892  | )
|Noncontrolling interest contributions                                                             |  |              |   |            |   |               |   |            |   |               |       |                |   |          |   |        |        |   |   | 33,556  |   |   | 33,556  |  
|                                                                                                  |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |         |   |   |         |   |   |         |  
|                                                                                                  |  | 40,254        |   |            | 40 |               |   | 303,823     |   |               | (2,994 | )              |   | (12,851   | ) |        | 288,018 |   |   | 248,771 |   |   | 536,789 |  
|                                                                                                  |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |         |   |   |         |   |   |         |  
|                                                                                                  |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |         |   |   |         |   |   |         |  
|Comprehensive income:                                                                             |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |         |   |   |         |   |   |         |  
|Net income                                                                                        |  |              |   |            |   |               |   |            |   |               |       |                |   | 30,057    |   |        | 30,057  |   |   | 20,610  |   |   | 50,667  |  
|Unrealized loss on valuation of swap agreements                                                   |  |              |   |            |   |               |   |            |   |               | (2,329 | )              |   |          |   |        | (2,329  | ) |   | (354    | ) |   | (2,683  | )
|Reclassification of realized interest on swap agreements                                          |  |              |   |            |   |               |   |            |   |               | 2,466  |                |   |          |   |        | 2,466   |   |   | 283     |   |   | 2,749   |  
|                                                                                                  |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |         |   |   |         |   |   |         |  
|Total comprehensive income                                                                        |  |              |   |            |   |               |   |            |   |               | 137    |                |   | 30,057    |   |        | 30,194  |   |   | 20,539  |   |   | 50,733  |  
|                                                                                                  |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |         |   |   |         |   |   |         |  
|                                                                                                  |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |         |   |   |         |   |   |         |  
|Balance at December 31, 2010                                                                      |  | 40,254        |   | $          | 40 |               | $ | 303,823     |   | $             | (2,857 | )              | $ | 17,206    |   | $      | 318,212 |   | $ | 269,310 |   | $ | 587,522 |  
|                                                                                                  |  |               |   |            |    |               |   |             |   |               |        |                |   |           |   |        |         |   |   |         |   |   |         |  

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

F-6

---



ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                   |  |                          |         |      |   |          |   |   |          |  
|---------------------------------------------------------------------------------- |  | ------------------------ | ------- | ---- | - | -------- | - | - | -------- | -
|                                                                                   |  | Years ended December 31, |        
|                                                                                   |  | 2010                     |         | 2009 |   | 2008     |  
|                                                                                   |  |                          |         |      |   |          |  
|                                                                                   |  | (dollars in thousands)   |        
|                                                                                   |  |                          |         |      |   |          |   |   |          |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                              |  |                          |         |      |   |          |   |   |          |  
|Net income                                                                         |  | $                        | 50,667  |      | $ | 12,706   |   | $ | 37,437   |  
|Adjustments to reconcile net income to net
 cash provided by operating activities: |  |                          |         |      |   |          |   |   |          |  
|Depreciation and amortization                                                      |  |                          | 40,553  |      |   | 37,242   |   |   | 34,908   |  
|Gain from bargain purchase                                                         |  |                          | (33,805 | )    |   |         |   |   |         |  
|Gain on sale of property                                                           |  |                          |        |      |   | (7,143   | ) |   | (7,945   | )
|Gain on debt extinguishment                                                        |  |                          |        |      |   | (7,057   | ) |   | (1,523   | )
|Amortization of discount on convertible
 debt                                      |  |                          | 1,042   |      |   | 1,280    |   |   | 2,101    |  
|Non-cash accretion of notes receivable                                             |  |                          | (6,164  | )    |   | (5,352   | ) |   | (2,367   | )
|Share compensation expense                                                         |  |                          | 4,104   |      |   | 3,969    |   |   | 3,434    |  
|Equity in (earnings) losses of unconsolidated
 affiliates                          |  |                          | (10,971 | )    |   | 1,529    |   |   | (19,906  | )
|Impairment of investment in unconsolidated
 affiliate                              |  |                          |        |      |   | 3,768    |   |   |         |  
|Distributions of operating income from
 unconsolidated affiliates                  |  |                          | 12,124  |      |   | 880      |   |   | 14,420   |  
|Reserve for notes receivable                                                       |  |                          |        |      |   | 1,734    |   |   | 4,392    |  
|Provision for bad debt                                                             |  |                          | 3,331   |      |   | 4,132    |   |   | 3,593    |  
|Other, net                                                                         |  |                          | 906     |      |   | 7,457    |   |   | 6,704    |  
|Changes in assets and liabilities:                                                 |  |                          |         |      |   |          |   |   |          |  
|Cash in escrows                                                                    |  |                          | (20,028 | )    |   | (1,788   | ) |   | (157     | )
|Rents receivable                                                                   |  |                          | (4,662  | )    |   | (8,370   | ) |   | (2,305   | )
|Prepaid expenses and other assets, net                                             |  |                          | 1,889   |      |   | 8,156    |   |   | (15,865  | )
|Accounts payable and accrued expenses                                              |  |                          | 1,874   |      |   | (5,902   | ) |   | 8,368    |  
|Other liabilities                                                                  |  |                          | 3,517   |      |   | 221      |   |   | 1,228    |  
|                                                                                   |  |                          |         |      |   |          |   |   |          |  
|                                                                                   |  |                          |         |      |   |          |   |   |          |  
|Net cash provided by operating activities                                          |  |                          | 44,377  |      |   | 47,462   |   |   | 66,517   |  
|                                                                                   |  |                          |         |      |   |          |   |   |          |  
|                                                                                   |  |                          |         |      |   |          |   |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                              |  |                          |         |      |   |          |   |   |          |  
|Investments in real estate                                                         |  |                          | (80,520 | )    |   | (127,322 | ) |   | (245,033 | )
|Deferred acquisition and leasing costs                                             |  |                          | (3,904  | )    |   | (11,368  | ) |   | (6,068   | )
|Investments in and advances to unconsolidated
 affiliates                          |  |                          | (19,116 | )    |   | (5,603   | ) |   | (7,918   | )
|Return of capital from unconsolidated
 affiliates                                  |  |                          | 785     |      |   | 4,705    |   |   | 4,052    |  
|Repayments of notes receivable                                                     |  |                          | 42,010  |      |   | 13,614   |   |   | 19,922   |  
|Increase in notes receivable                                                       |  |                          |        |      |   | (9,362   | ) |   | (90,847  | )
|Proceeds from sale of property                                                     |  |                          |        |      |   | 11,956   |   |   | 23,627   |  
|                                                                                   |  |                          |         |      |   |          |   |   |          |  
|                                                                                   |  |                          |         |      |   |          |   |   |          |  
|Net cash used in investing activities                                              |  |                          | (60,745 | )    |   | (123,380 | ) |   | (302,265 | )
|                                                                                   |  |                          |         |      |   |          |   |   |          |  

F-7

---



ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|--------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | -------- | ---- | - | -------- | - | - | ------- | -
|                                                                                                                      |  | Years ended December 31, |         
|                                                                                                                      |  | 2010                     |          | 2009 |   | 2008     |  
|                                                                                                                      |  |                          |          |      |   |          |  
|                                                                                                                      |  | (dollars in thousands)   |         
|                                                                                                                      |  |                          |         
|CASH FLOWS
 FROM FINANCING ACTIVITIES:                                                                                |  |                          |          |      |   |          |   |   |         |  
|Principal payments on mortgage notes                                                                                  |  |                          | (127,823 | )    |   | (182,610 | ) |   | (68,412 | )
|Proceeds received on mortgage notes                                                                                   |  |                          | 175,793  |      |   | 260,065  |   |   | 281,192 |  
|Redemption of convertible notes payable                                                                               |  |                          | (240     | )    |   | (46,736  | ) |   | (6,042  | )
|Increase in deferred financing and other
 costs                                                                       |  |                          | (6,830   | )    |   | (1,755   | ) |   | (1,763  | )
|Capital contributions from noncontrolling
 interests                                                                  |  |                          | 33,556   |      |   | 25,653   |   |   | 46,014  |  
|Distributions to noncontrolling interests                                                                             |  |                          | (1,638   | )    |   | (2,879   | ) |   | (16,183 | )
|Dividends paid to Common Shareholders                                                                                 |  |                          | (28,909  | )    |   | (30,163  | ) |   | (34,710 | )
|Proceeds from issuance of Common Shares,
 net of issuance costs                                                       |  |                          |         |      |   | 65,222   |   |   |        |  
|Repurchase and cancellation of Common
 Shares                                                                         |  |                          | (966     | )    |   | (5,424   | ) |   | (2,102  | )
|Common Shares issued under Employee Share
 Purchase Plan                                                              |  |                          | 100      |      |   | 106      |   |   | 261     |  
|Exercise of options to purchase Common
 Shares                                                                        |  |                          | 109      |      |   | 1,556    |   |   | 841     |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Net cash provided by
 financing activities                                                                            |  |                          | 43,152   |      |   | 83,035   |   |   | 199,096 |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Increase
 (decrease) in cash and cash equivalents                                                                     |  |                          | 26,784   |      |   | 7,117    |   |   | (36,652 | )
|Cash and cash equivalents,
 beginning of period                                                                       |  |                          | 93,808   |      |   | 86,691   |   |   | 123,343 |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Cash and cash equivalents,
 end of period                                                                             |  | $                        | 120,592  |      | $ | 93,808   |   | $ | 86,691  |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Supplemental
 disclosure of cash flow information:                                                                    |  |                          |          |      |   |          |   |   |         |  
|Cash paid during the period for interest,
 including capitalized interest of $2,903, $3,516, and $6,779, respectively |  | $                        | 34,823   |      | $ | 33,699   |   | $ | 33,778  |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Cash paid for income taxes                                                                                            |  | $                        | 1,263    |      | $ | 777      |   | $ | 6,633   |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Supplemental disclosure of non-cash
 investing and financing activities:                                              |  |                          |          |      |   |          |   |   |         |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Acquisition of real estate through assumption of debt                                                                 |  | $                        |         |      | $ |         |   | $ | 39,967  |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Dividends paid through the issuance of Common Shares                                                                  |  | $                        |         |      | $ | 16,192   |   | $ |        |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Acquisition of interest in unconsolidated affiliates:                                                                 |  |                          |          |      |   |          |   |   |         |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Real Estate, net                                                                                                      |  | $                        | (108,000 | )    | $ |         |   | $ |        |  
|Assumption of mortgage debt                                                                                           |  |                          | 25,990   |      |   |         |   |   |        |  
|Gain from bargain purchase                                                                                            |  |                          | 33,805   |      |   |         |   |   |        |  
|Other assets and liabilities                                                                                          |  |                          | 7,532    |      |   |         |   |   |        |  
|Investment in unconsolidated affiliates                                                                               |  |                          | 37,824   |      |   |         |   |   |        |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  
|Cash included in investment in real estate                                                                            |  | $                        | (2,849   | )    | $ |         |   | $ |        |  
|                                                                                                                      |  |                          |          |      |   |          |   |   |         |  

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

F-8

---



ACADIA REALTY
TRUST AND SUBSIDIARIES

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, 2010, the Company operated 79 properties, which
it owns or has an ownership interest in, principally located in the Northeast,
Mid-Atlantic and Midwest regions of the United States.

All of the 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, 2010, the Trust controlled 99% of the
Operating Partnership as the sole general partner. As the general partner, the
Trust is entitled to share, in proportion to its percentage interest, in the
cash distributions and profits and losses of the Operating Partnership. The
limited partners represent entities or individuals who contributed their
interests in certain properties or entities to the Operating Partnership in
exchange for common or preferred units of limited partnership interest (Common
or Preferred OP Units). Limited partners holding Common OP Units are generally
entitled to exchange their units on a one-for-one basis for common shares of
beneficial interest of the Trust (Common Shares). This structure is referred
to as an umbrella partnership REIT or UPREIT.

The Company formed Acadia Strategic Opportunity Fund I, LP (Fund I),
and formed Acadia Mervyn Investors I, LLC (Mervyns I), with four
institutional investors. The Operating Partnership committed a total of
$20.0 million to Fund I and Mervyns I, and the four institutional
shareholders committed a total of $70.0 million for the purpose of
acquiring real estate investments. As of December 31, 2010, Fund I was fully
invested, with the Operating Partnership having contributed $16.5 million
to Fund I and $2.7 million to Mervyns I.

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

The Company formed Acadia Strategic Opportunity Fund II, LLC (Fund
II), and formed Acadia Mervyn Investors II, LLC (Mervyns II), with the
investors from Fund I as well as two additional institutional investors with a
total of $300.0 million of committed discretionary capital. The Operating
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, 2010, the
Operating Partnership had contributed $45.4 million to Fund II and
$7.6 million to Mervyns II.

The Company formed Acadia Strategic Opportunity Fund III LLC (Fund
III) with fourteen institutional investors, including a majority of the
investors from Fund I and Fund II with a total of $502.5 million of committed
discretionary capital. The Operating 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, 2010, the
Operating Partnership had contributed $19.2 million to Fund III.

Principles of Consolidation

The consolidated financial statements include the consolidated accounts
of the Company and its controlling investments in partnerships and limited
liability companies in which the Company has control in accordance Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 810 Consolidation (ASC Topic 810). The ownership interests of other
investors in these entities are recorded as noncontrolling interests. All
significant intercompany balances and transactions have been eliminated in
consolidation. Investments in entities for which the Company has the ability to
exercise significant influence over, but does not have financial or operating
control, are accounted for using the equity method of accounting. Accordingly,
the Companys share of the earnings (or losses) of these entities are included
in consolidated net income.

F-9

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Principles of Consolidation, continued

Variable interest entities are accounted for within the scope of ASC
Topic 810 and are required to be consolidated by their primary beneficiary. The
primary beneficiary of a variable interest entity is the enterprise that has
the power to direct the activities that most significantly impact the variable
interest entitys economic performance and the obligation to absorb losses or
the right to receive benefits of the variable interest entity that could be
significant to the variable interest entity. Management has evaluated the
applicability of ASC Topic 810 to its investments in certain joint ventures and
determined that these joint ventures are not variable interest entities or that
the Company is not the primary beneficiary and, therefore, consolidation of
these ventures is not required. These investments are accounted for using the
equity method.

Investments in and Advances to Unconsolidated
Joint Ventures

The Company accounts for its investments in unconsolidated joint
ventures using the equity method as it does not exercise control over
significant asset decisions such as buying, selling or financing nor is it the
primary beneficiary under ASC Topic 810, as discussed above. The Company does
have significant influence over the investments which requires equity method
accounting. Under the equity method, the Company increases its investment for
its proportionate share of net income and contributions to the joint venture
and decreases its investment balance by recording its proportionate share of
net loss and distributions. The Company recognizes income for distributions in
excess of its investment where there is no recourse to the Company. For
investments in which there is recourse to the Company, distributions in excess
of the investment are recorded as a liability. Although the Company accounts
for its investment in 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.

The Company periodically reviews its investment in unconsolidated joint
ventures for other than temporary losses in investment value. Any decline that
is not expected to be recovered is considered other than temporary and an
impairment charge is recorded as a reduction in the carrying value of the
investment. During the years ended December 31, 2010, 2009 and 2008, impairment
charges related to the Companys investment in unconsolidated joint ventures
were $0.0 million, $3.8 million and $0.0 million, respectively.

Use of Estimates

Accounting principles generally accepted in the United States of
America (GAAP) require the 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 and the real
estate is ready for its intended use. Construction in progress includes costs
for significant property expansion and redevelopment. Depreciation is computed
on the straight-line basis over estimated useful lives of 30 to 40 years
for buildings, the shorter of the useful life or lease term for tenant
improvements and five years for furniture, fixtures and equipment. Expenditures
for maintenance and repairs are charged to operations as incurred.

Upon acquisitions of real estate, the Company assesses the fair value
of acquired assets (including land, buildings and improvements, and identified
intangibles such as above and below market leases and acquired in-place leases
and customer relationships) and acquired liabilities in accordance with ASC
Topic 805 Business Combinations and ASC Topic 350 Intangibles  Goodwill and

F-10

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Real Estate, continued

Other, and allocates acquisition price based on these assessments.
Fixed-rate renewal options have been included in the calculation of the fair
value of acquired leases. To the extent there were fixed-rate options at
below-market rental rates, the Company included these along with the current
term below-market rent in arriving at the fair value of the acquired leases.
The discounted difference between contract and market rents is being amortized
over the remaining applicable lease term, inclusive of any option periods. The
Company assesses fair value based on estimated cash flow projections that
utilize appropriate discount and capitalization rates and available market
information. Estimates of future cash flows are based on a number of factors
including the historical operating results, known trends, and market/economic
conditions that may affect the property.

The Company reviews its long-lived assets used in operations for
impairment when there is an event, or change in circumstances that indicates
that the carrying amount may not be recoverable. The Company records impairment
losses and reduces the carrying value of properties when indicators of
impairment are present and the expected undiscounted cash flows related to
those properties are less than their carrying amounts. In cases where the
Company does not expect to recover its carrying costs on properties held for
use, the Company reduces its carrying cost to fair value, and for properties
held for sale, the Company reduces its carrying value to the fair value less
costs to sell. During the years ended December 31, 2010, 2009 and 2008, no
impairment losses were recognized. Management does not believe that the values
of its properties within the portfolio are impaired as of December 31,
2010.

Sale of Real Estate

The Company recognizes property sales in accordance with ASC Topic 970
Real Estate. The Company generally records the sales of operating properties
and outparcels using the full accrual method at closing when the earnings
process is deemed to be complete. Sales not qualifying for full recognition at
the time of sale are accounted for under other appropriate deferral methods.

Real Estate Held for Sale

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

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

Deferred Costs

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

Management Contracts

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

Revenue Recognition and Accounts Receivable

Leases with tenants are accounted for as operating leases. Minimum
rents are recognized on a straight-line basis over the term of the respective
leases, beginning when the tenant is entitled to take possession of the space.
As of December 31, 2010 and 2009, included in rents receivable, net on the
accompanying consolidated balance sheets, unbilled rents receivable relating to
straight-lining of rents were $17.1 million and $12.7 million, respectively.
Certain of these leases also provide for percentage rents based upon the level
of sales achieved by the tenant. Percentage rent is recognized in the period
when the tenants sales breakpoint is met. In addition, leases typically
provide for the reimbursement to the Company of real estate taxes, insurance
and other property operating expenses. These reimbursements are recognized as
revenue in the period the expenses are incurred.

The Company makes estimates of the uncollectability of its accounts
receivable related to tenant revenues. An allowance for doubtful accounts has
been provided against certain tenant accounts receivable that are estimated to
be uncollectible. Once the amount is ultimately deemed to be uncollectible, it
is written off. Rents receivable at December 31, 2010 and 2009 are shown
net of an allowance for doubtful accounts of $7.5 million and
$7.0 million, respectively.

F-11

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Notes Receivable and Preferred Equity
Investments

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

Allowances for real estate notes receivable are established based upon
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 an interest in an entity owning retail complexes
associated with seven public rest stops along the toll roads in and around
Chicago, Illinois. The note and all accrued interest was subsequently cancelled
during 2009. Management believes that the balance of notes receivable are
collectible as of December 31, 2010.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash equivalents. Cash
and cash equivalents are maintained at financial institutions and, at times,
balances may exceed the federally insured limit by the Federal Deposit
Insurance Corporation. The Company has never experienced any losses related to
these balances.

Restricted Cash and Cash in Escrow

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

Income Taxes

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

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

The Company accounts for TRS income taxes under the liability method as
required by ASC Topic 740 Income Taxes. Under the liability method, deferred
income taxes are recognized for the temporary differences between GAAP basis
and the tax basis of the TRS income, assets and liabilities.

In accordance with ASC Topic 740 Income Taxes (formerly FASB
Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes 
an interpretation of SFAS No. 109), the Company believes that it has
appropriate support for the income tax positions taken and, as such, does not
have any uncertain tax positions that result in a material impact on the
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 will recognize potential interest and penalties related to uncertain
tax positions, if any, as a component of the provision for income taxes.

F-12

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Stock-based Compensation

The Company accounts for stock-based compensation pursuant to ASC Topic
718 Compensation  Stock Compensation. As such, all equity based awards are
reflected as compensation expense in the Companys consolidated financial
statements over their vesting period based on the fair value at the date of
grant.

Recent Accounting Pronouncements

During June 2009, the FASB issued a new accounting standard, which
provided certain changes to the evaluation of a variable interest entity
(VIE) including requiring a qualitative rather than a quantitative analysis
to determine the primary beneficiary of a VIE, continuous assessments of
whether an enterprise is the primary beneficiary of a VIE and enhanced
disclosures about an enterprises involvement with a VIE. Under the new
standard, the primary beneficiary has both the power to direct the activities
that most significantly impact economic performance of the VIE and the
obligation to absorb losses or the right to receive benefits that could
potentially be significant to the VIE. The adoption of the standard on January
1, 2010 did not have a material impact on the Companys consolidated financial
statements.

During January 2010, the FASB issued Accounting Standards Update
(ASU) No. 2010-06 Improving
Disclosures about Fair Value Measurements, which provides for new disclosures,
as well as clarification of existing disclosures on fair value measurements.
The adoption of the standard on January 1, 2010 did not have a material impact
on the Companys financial position and results of operations.

During February 2010, the FASB issued ASU No. 2010-09 Subsequent
Events (ASC Topic 855) Amendments to Certain Recognition and Disclosure
Requirements, which requires an entity that is an SEC filer to evaluate
subsequent events through the date that the financial statements are issued and
removes the requirement for an SEC filer to disclose a date through which
subsequent events have been evaluated. The adoption did not have an impact on
the Companys financial position and results of operations.

During July 2010, the FASB issued ASU No. 2010-20 Receivables (ASC
Topic 310) Disclosures about the Credit Quality of Financing Receivables and
the Allowance for Credit Losses, which requires companies to provide more
information about the credit quality of their financing receivables in the
disclosures to financial statements including, but not limited to, significant
purchases and sales of financing receivables, aging information and credit
quality indicators. The adoption of this accounting guidance did not have a significant
impact on the Companys consolidated financial statements.

Comprehensive income

The following table sets forth comprehensive income for the years ended
December 31, 2010, 2009 and 2008:

|                                                          |  |                          |        |      |   |        |  |   |        |  
|--------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ |  | - | ------ | -
|                                                          |  | Years ended December 31, |       
|                                                          |  |                          |       
|(dollars in thousands)                                    |  | 2010                     |        | 2009 |   | 2008   | 
|                                                          |  |                          |        |      |   |        | 
|Net income
 attributable to Common Shareholders           |  | $                        | 30,057 |      | $ | 31,133 |  | $ | 25,068 |  
|Other
 comprehensive income (loss)                        |  |                          | 137    |      |   | 1,514  |  |   | (3,555 | )
|                                                          |  |                          |        |      |   |        |  |   |        |  
|Comprehensive
 income attributable to Common Shareholders |  | $                        | 30,194 |      | $ | 32,647 |  | $ | 21,513 |  
|                                                          |  |                          |        |      |   |        |  |   |        |  

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

F-13

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table sets forth the change in accumulated other
comprehensive loss for the years ended December 31, 2010 and 2009:

Accumulated other comprehensive loss

|                                                                                       |  |                          |        |      |   |        |  
|-------------------------------------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ | -
|                                                                                       |  | Years ended December 31, |       
|                                                                                       |  |                          |       
|(dollars in
 thousands)                                                                |  | 2010                     |        | 2009 |  
|                                                                                       |  |                          |        |      |  
|Beginning balance                                                                      |  | $                        | (2,994 | )    | $ | (4,508 | )
|Unrealized loss on valuation of derivative
 instruments and amortization of derivative |  |                          | (2,329 | )    |   | (912   | )
|Reclassification of loss on derivative
 instruments to interest expense                |  |                          | 2,466  |      |   | 2,426  |  
|                                                                                       |  |                          |        |      |   |        |  
|Ending balance                                                                         |  | $                        | (2,857 | )    | $ | (2,994 | )
|                                                                                       |  |                          |        |      |   |        |  

2. Acquisition and Disposition of Properties
and Discontinued Operations

A. Acquisition and Disposition of Properties

Acquisitions

On December 23, 2010, the Company, through Fund III in a joint venture
with an unaffiliated partner, acquired White City Shopping Center, a 255,000
square foot center located in Shrewsbury, Massachusetts for $56.0 million.

Prior to June 30, 2010, the Company, through Fund II in a joint venture
with an unaffiliated partner, California Urban Investment Partners, LLC
(CUIP), owned a leasehold interest in CityPoint, a mixed-use, redevelopment
project located in downtown Brooklyn, New York. Fund II owned a 75% interest in
the retail component, a 50% interest in the office component and no interest in
the residential component of CityPoint. CUIP owned the remaining interests in
the retail and office components and 100% of the residential component of the
project. Accordingly, Fund IIs investment represented 24.75% of the overall
original acquisition cost and subsequent carry and pre-development costs and
was accounted for using the equity method.

On June 30, 2010, Fund II acquired all of CUIPs interest in CityPoint
for $9.2 million (the Transaction), consisting of a current payment of $2.0
million and deferred payments, potentially through 2020, aggregating $7.2
million. Fund II also assumed CUIPs share of the first mortgage debt, $19.6
million.

The Transaction was a business combination achieved
    in stages, and as a result, Fund II was required to report its entire investment
    in CityPoint at fair market value. Based on a June 30, 2010 third-party appraisal,
    CityPoint was valued at $108.0 million which resulted in Fund II recording
    a non-cash gain from bargain purchase of approximately $33.8 million. A majority
    of the gain was attributable to the components of CityPoint that was acquired
    as the book value of the Companys original investment approximated
    fair value. The Operating Partnerships
    share of this gain, net of the noncontrolling interests share,
totaled $6.3 million.

As a result of the Transaction, the Company changed its method of
accounting for CityPoint from the equity method and now consolidates CityPoint
in its consolidated financial statements. As CityPoint is currently in the
redevelopment stage, there are no revenues or earnings from CityPoint included
in the Companys Consolidated Statements of Income for the years ended December
31, 2010, 2009 and 2008.

On January 29, 2009, the Company acquired the 641,000 square foot
Cortlandt Towne Center in Cortlandt, NY for $78.0 million.

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

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

F-14

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dispositions

During 2010,
2009 and 2008, the Company disposed of the following properties:

|                                |  |            |  |             |        |      |   |        |  |  |           | 
|------------------------------- |  | ---------- |  | ----------- | ------ | ---- | - | ------ |  |  | --------- | 
|(dollars in
 thousands)Property |  | Year
 Sold |  | Sales Price |        | Gain |   | GLA    | 
|                                |  |            |  |             |        |      |   |        | 
|                               
|Blackman
 Plaza                 |  | 2009       |  | $           | 2,500  |      | $ | 1,506  |  |  | 125,264   | 
|Six Kroger
 locations           |  | 2009       |  |             | 9,481  |      |   | 5,637  |  |  | 277,700   | 
|Village
 Apartments             |  | 2008       |  |             | 23,300 |      |   | 7,182  |  |  | 599,106   | 
|                                |  |            |  |             |        |      |   |        |  |  |           | 
|Total                           |  |            |  | $           | 35,281 |      | $ | 14,325 |  |  | 1,002,070 | 
|                                |  |            |  |             |        |      |   |        |  |  |           | 

Subsequent to December 31, 2010, the Company sold a property in
Oakbrook, Illinois for $8.2 million which resulted in a gain of $3.9 million.
Reference is made to Note 23 for an overview of the sale.

B. Discontinued Operations

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

The combined assets and liabilities as of December 31, 2010 and
December 31, 2009 and results of operations of the properties classified as
discontinued operations for the years ended December 31, 2010, 2009 and 2008
are summarized as follows:

|                                              |  |                    |       |                    |   |       | 
|--------------------------------------------- |  | ------------------ | ----- | ------------------ | - | ----- | 
|BALANCE SHEETS                                |  |                    |       |                    |   |       | 
|                                              |  |                    |       |                    |   |       | 
|ASSETS                                        |  | December 31,
 2010 |       | December 31,
 2009 |  
|                                              |  |                    |       |                    |  
|(dollars in
 thousands)                       |  |                    |       |                    |   |       | 
|Net real
 estate                              |  | $                  | 4,046 |                    | $ | 4,485 | 
|Rents
 receivable, net                        |  |                    | 69    |                    |   | 69    | 
|Prepaid
 expenses and other assets, net       |  |                    | 13    |                    |   | 2     | 
|                                              |  |                    |       |                    |   |       | 
|Total assets
 of discontinued operations      |  | $                  | 4,128 |                    | $ | 4,556 | 
|                                              |  |                    |       |                    |   |       | 
|LIABILITIES                                   |  |                    |       |                    |   |       | 
|Mortgage
 Notes Payable                       |  |                    |      |                    |   |      | 
|Accounts
 payable and accrued expenses        |  |                    |      |                    |   |      | 
|Other
 liabilities                            |  |                    |      |                    |   |      | 
|                                              |  |                    |       |                    |   |       | 
|Total
 liabilities of discontinued operations |  | $                  |      |                    | $ |      | 
|                                              |  |                    |       |                    |   |       | 

|                                                                                              |  |                          |       |      |   |        |   |   |       |  
|--------------------------------------------------------------------------------------------- |  | ------------------------ | ----- | ---- | - | ------ | - | - | ----- | -
|                                                                                              |  | Years ended December 31, |      
|STATEMENTS OF OPERATIONS                                                                      |  | 2010                     |       | 2009 |   | 2008   |  
|                                                                                              |  |                          |       |      |   |        |  
|(dollars in
 thousands)                                                                       |  |                          |       |      |   |        |   |   |       |  
|Total revenues                                                                                |  | $                        | 1,000 |      | $ | 1,644  |   | $ | 5,136 |  
|Total expenses                                                                                |  |                          | 620   |      |   | 1,160  |   |   | 3,398 |  
|                                                                                              |  |                          |       |      |   |        |   |   |       |  
|Operating Income                                                                              |  |                          | 380   |      |   | 484    |   |   | 1,738 |  
|Gain on sale of property                                                                      |  |                          |      |      |   | 7,143  |   |   | 7,182 |  
|                                                                                              |  |                          |       |      |   |        |   |   |       |  
|Income from discontinued operations                                                           |  |                          | 380   |      |   | 7,627  |   |   | 8,920 |  
|                                                                                              |  |                          |       |      |   |        |   |   |       |  
|Income from discontinued operations
 attributable to noncontrolling interests in subsidiaries |  |                          | (303  | )    |   | (5,045 | ) |   | (931  | )
|                                                                                              |  |                          |       |      |   |        |   |   |       |  
|Income from discontinued operations
 attributable to Common Shareholders                      |  | $                        | 77    |      | $ | 2,582  |   | $ | 7,989 |  
|                                                                                              |  |                          |       |      |   |        |   |   |       |  

F-15

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Segment Reporting

The Company has five reportable segments: Core Portfolio, Opportunity
Funds, Self-Storage Portfolio, Notes Receivable and Other. Notes Receivable
consists of the 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, 2010, 2009, and 2008 (does not include unconsolidated
affiliates):

2010

|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|-------------------------------------------------------------------------------- |  | --------------- | ------- | ------------------ | - | ------------------ |  | ------------------ | ------- | ----- | - | ----------- | - | ------ | ------ |  | - | -------- | - | - | --------- | -
|(dollars in thousands)                                                           |  | Core
 Portfolio |         | Opportunity
 Funds |   | Storage
 Portfolio |  | Notes 
 Receivable |         | Other |   | Elimination |   | Total  |       
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |       
|Revenues                                                                         |  | $               | 62,121  |                    | $ | 47,938             |  | $                  | 21,314  |       | $ | 19,161      |   | $      | 22,479 |  | $ | (21,055  | ) | $ | 151,958   |  
|Property operating expenses and real estate taxes                                |  |                 | 19,470  |                    |   | 18,118             |  |                    | 13,107  |       |   |            |   |        |       |  |   | (1,536   | ) |   | 49,159    |  
|Other expenses                                                                   |  |                 | 22,439  |                    |   | 13,588             |  |                    |        |       |   |            |   |        |       |  |   | (15,807  | ) |   | 20,220    |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Income before depreciation and amortization                                      |  | $               | 20,212  |                    | $ | 16,232             |  | $                  | 8,207   |       | $ | 19,161      |   | $      | 22,479 |  | $ | (3,712   | ) | $ | 82,579    |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Depreciation and amortization                                                    |  | $               | 16,251  |                    | $ | 19,423             |  | $                  | 5,083   |       | $ |            |   | $      |       |  | $ | (642     | ) | $ | 40,115    |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Interest and other finance expense                                               |  | $               | 17,137  |                    | $ | 13,445             |  | $                  | 4,129   |       | $ |            |   | $      |       |  | $ | (240     | ) | $ | 34,471    |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Real estate at cost                                                              |  | $               | 481,130 |                    | $ | 708,501            |  | $                  | 210,017 |       | $ |            |   | $      |       |  | $ | (13,349  | ) | $ | 1,386,299 |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Total assets                                                                     |  | $               | 574,497 |                    | $ | 772,715            |  | $                  | 194,003 |       | $ | 89,202      |   | $      |       |  | $ | (105,611 | ) | $ | 1,524,806 |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Expenditures for real estate and improvements                                    |  | $               | 4,137   |                    | $ | 77,309             |  | $                  | 1,376   |       | $ |            |   | $      |       |  | $ | (2,302   | ) | $ | 80,520    |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Reconciliation
 to net income and net income attributable to Common Shareholders
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Net property income before
 depreciation and amortization                        |  |                 |         |                    |   |                    |  |                    |         |       |   |             | $ | 82,579 |       
|Other interest income                                                            |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   | 408       |  
|Depreciation and
 amortization                                                   |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   | (40,115   | )
|Equity in earnings of
 unconsolidated affiliates                                 |  |                 |         |                    |   |                    |  |                    |         |       |   | 10,971      |  
|Interest and other finance
 expense                                              |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   | (34,471   | )
|Income tax expense                                                               |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   | (2,890    | )
|Gain from bargain purchase                                                       |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   | 33,805    |  
|Income from discontinued
 operations                                             |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   | 380       |  
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Net income                                                                       |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   | 50,667    |  
|Net (income) attributable
 to noncontrolling interests                           |  |                 |         |                    |   |                    |  |                    |         |       |   | (20,610     | )
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  
|Net income attributable to
 Common Shareholders                                  |  |                 |         |                    |   |                    |  |                    |         |       |   |             | $ | 30,057 |       
|                                                                                 |  |                 |         |                    |   |                    |  |                    |         |       |   |             |   |        |        |  |   |          |   |   |           |  

F-16

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Segment Reporting, continued

2009

|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|-------------------------------------------------------------------------------- |  | ---------------- | ------- | ------------------- | - | ------------------- |  | ------------------ | ------- | ----- | - | ----------- |  | ----- | ------ |  | - | -------- | - | - | --------- | -
|(dollars
 in thousands)                                                          |  | Core 
 Portfolio |         | Opportunity 
 Funds |   | Storage 
 Portfolio |  | Notes 
 Receivable |         | Other |   | Elimination |  | Total |       
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |       
|Revenues                                                                         |  | $                | 69,556  |                     | $ | 43,326              |  | $                  | 11,166  |       | $ | 19,698      |  | $     | 23,265 |  | $ | (21,308  | ) | $ | 145,703   |  
|Property operating expenses and real estate taxes                                |  |                  | 21,266  |                     |   | 15,362              |  |                    | 10,985  |       |   |            |  |       |       |  |   | (1,150   | ) |   | 46,463    |  
|Reserve for notes receivable                                                     |  |                  |        |                     |   |                    |  |                    |        |       |   | 1,734       |  |       |       |  |   |         |   |   | 1,734     |  
|Abandonment of project costs                                                     |  |                  | 12      |                     |   | 2,475               |  |                    |        |       |   |            |  |       |       |  |   |         |   |   | 2,487     |  
|Other expenses                                                                   |  |                  | 23,983  |                     |   | 13,600              |  |                    |        |       |   |            |  |       |       |  |   | (15,570  | ) |   | 22,013    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Income before depreciation and amortization                                      |  | $                | 24,295  |                     | $ | 11,889              |  | $                  | 181     |       | $ | 17,964      |  | $     | 23,265 |  | $ | (4,588   | ) | $ | 73,006    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Depreciation and amortization                                                    |  | $                | 17,201  |                     | $ | 16,466              |  | $                  | 4,437   |       | $ |            |  | $     |       |  | $ | (1,470   | ) | $ | 36,634    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Interest and other finance expense                                               |  | $                | 18,744  |                     | $ | 8,404               |  | $                  | 5,006   |       | $ |            |  | $     |       |  | $ |         |   | $ | 32,154    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Real estate at cost                                                              |  | $                | 475,486 |                     | $ | 527,342             |  | $                  | 208,702 |       | $ |            |  | $     |       |  | $ | (11,047  | ) | $ | 1,200,483 |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Total assets                                                                     |  | $                | 558,240 |                     | $ | 607,706             |  | $                  | 196,658 |       | $ | 125,221     |  | $     |       |  | $ | (105,361 | ) | $ | 1,382,464 |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Expenditures for real estate and improvements                                    |  | $                | 3,161   |                     | $ | 116,734             |  | $                  | 10,996  |       | $ |            |  | $     |       |  | $ | (3,569   | ) | $ | 127,322   |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Reconciliation to net
 income and net income attributable to Common Shareholders |  |                  |         |                     |   |                     |  |                    |         |       |   |            
|Net property income before depreciation and amortization                         |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   | $ | 73,006    |  
|Other interest income                                                            |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | 642       |  
|Depreciation and amortization                                                    |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | (36,634   | )
|Equity in losses of unconsolidated affiliates                                    |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | (1,529    | )
|Impairment of investment in unconsolidated affiliates                            |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | (3,768    | )
|Interest and other finance expense                                               |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | (32,154   | )
|Gain on debt extinguishment                                                      |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | 7,057     |  
|Income tax expense                                                               |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | (1,541    | )
|Gain on sale of property                                                         |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | 7,143     |  
|Income from discontinued operations                                              |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | 484       |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Net income                                                                       |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | 12,706    |  
|Net loss attributable to noncontrolling interests                                |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   | 18,427    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  
|Net income attributable to Common Shareholders                                   |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   | $ | 31,133    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |          |   |   |           |  

2008

|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|-------------------------------------------------------------------------------- |  | ---------------- | ------- | ------------------- | - | ------------------- |  | ------------------ | ------- | ----- | - | ----------- |  | ----- | ------ |  | - | ------- | - | - | --------- | -
|                                                                                 |  | Core 
 Portfolio |         | Opportunity 
 Funds |   | Storage 
 Portfolio |  | Notes 
 Receivable |         | Other |   | Elimination |  | Total |       
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |       
|Revenues                                                                         |  | $                | 65,349  |                     | $ | 47,400              |  | $                  | 5,589   |       | $ | 11,163      |  | $     | 27,296 |  | $ | (23,231 | ) | $ | 133,566   |  
|Property operating expenses and real estate taxes                                |  |                  | 20,974  |                     |   | 8,829               |  |                    | 6,618   |       |   |            |  |       |       |  |   | (381    | ) |   | 36,040    |  
|Reserve for notes receivable                                                     |  |                  |        |                     |   |                    |  |                    |        |       |   | 4,392       |  |       |       |  |   |        |   |   | 4,392     |  
|Abandonment of project costs                                                     |  |                  |        |                     |   | 630                 |  |                    |        |       |   |            |  |       |       |  |   |        |   |   | 630       |  
|Other expenses                                                                   |  |                  | 26,007  |                     |   | 16,131              |  |                    | 58      |       |   |            |  |       |       |  |   | (17,651 | ) |   | 24,545    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Income (loss) before depreciation and amortization                               |  | $                | 18,368  |                     | $ | 21,810              |  | $                  | (1,087  | )     | $ | 6,771       |  | $     | 27,296 |  | $ | (5,199  | ) | $ | 67,959    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Depreciation and amortization                                                    |  | $                | 20,295  |                     | $ | 9,452               |  | $                  | 3,002   |       | $ |            |  | $     |       |  | $ |        |   | $ | 32,749    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Interest and other finance expense                                               |  | $                | 19,698  |                     | $ | 5,797               |  | $                  | 3,402   |       | $ |            |  | $     |       |  | $ | (4      | ) | $ | 28,893    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Real estate at cost                                                              |  | $                | 474,684 |                     | $ | 433,189             |  | $                  | 186,529 |       | $ |            |  | $     |       |  | $ | (7,478  | ) | $ | 1,086,924 |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Total assets                                                                     |  | $                | 567,882 |                     | $ | 487,182             |  | $                  | 194,992 |       | $ | 125,587     |  | $     |       |  | $ | (84,260 | ) | $ | 1,291,383 |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Expenditures for real estate and improvements                                    |  | $                | 18,424  |                     | $ | 94,191              |  | $                  | 135,391 |       | $ |            |  | $     |       |  | $ | (2,973  | ) | $ | 245,033   |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Reconciliation to net
 income and net income attributable to Common Shareholders |  |                  |         |                     |   |                     |  |                    |         |      
|Net property income before depreciation and amortization                         |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   | $ | 67,959    |  
|Other interest income                                                            |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | 3,370     |  
|Depreciation and amortization                                                    |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | (32,749   | )
|Equity in earnings of unconsolidated affiliates                                  |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | 19,906    |  
|Interest and other finance expense                                               |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | (28,893   | )
|Gain on debt extinguishment                                                      |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | 1,523     |  
|Income tax expense                                                               |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | (3,362    | )
|Gain on sale of land                                                             |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | 763       |  
|Gain on sale of property                                                         |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | 7,182     |  
|Income from discontinued operations                                              |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | 1,738     |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Net income                                                                       |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | 37,437    |  
|Net income attributable to noncontrolling interests                              |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   | (12,369   | )
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  
|Net income attributable to Common Shareholders                                   |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   | $ | 25,068    |  
|                                                                                 |  |                  |         |                     |   |                     |  |                    |         |       |   |             |  |       |        |  |   |         |   |   |           |  

F-17

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Investments In and Advances to
Unconsolidated Affiliates

Core Portfolio

Brandywine Portfolio

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

Crossroads

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

Opportunity Funds

RCP Venture

The Company along with Klaff Realty, LP (Klaff) and Lubert-Adler
Management, Inc., formed an investment group, the RCP Venture, for the purpose
of making investments in surplus or underutilized properties owned by
retailers. The RCP Venture is neither
a single entity nor a specific investment. Any member of this group has the
option of participating, or not, in any individual investment and each
individual investment has been made on a stand-alone basis through a separate
limited liability company (LLC). These investments have been made through
different investment vehicles with different affiliated and unaffiliated
investors and different economics to the Company. Investments under the
RCP Venture are structured as separate joint ventures as there may be other
investors participating in certain investments in addition to Klaff,
Lubert-Adler and Acadia. The Company
has made these investments through its subsidiaries, Mervyns I, Mervyns II and
Fund II, (together the Acadia Investors), all on a non-recourse basis.
Through December 31, 2010, the Acadia
Investors have made investments in Mervyns Department Stores (Mervyns)
and Albertsons including additional investments in locations that are separate
from these original investments (Add-On Investments). Additionally, they have
invested in Shopko, Marsh and Rex Stores Corporation (collectively Other RCP
Investments).

Mervyns Department Stores

Through Mervyns I and Mervyns II, the Company invested in a consortium
to acquire Mervyns consisting of 262 stores (REALCO) and its retail operation
(OPCO) from Target Corporation. The Companys share of this investment was
$23.2 million. Subsequent to the initial acquisition, the Company, through
Mervyns I and Mervyns II, made additional investments of $2.9 million. To date,
REALCO has disposed of a significant portion of the portfolio. In addition, in November
2007, the Company sold its interest in OPCO and, as a result, has no further
investment in OPCO. Through December 31, 2010, the Company has received
distributions from this investment totaling $46.0 million.

Through December 31, 2010, the Company, through Mervyns I and Mervyns
II, made Add-On Investments in Mervyns totaling $6.5 million and have received
distributions totaling $1.7 million.

Albertsons

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. Through December 31, 2010, the Company has received
distributions from this investment totaling $77.1 million, including $11.4
million received in 2010.

Through December 31, 2010, the Company, through Mervyns II, made Add-On
Investments in Albertsons totaling $2.4 million and received
distributions totaling $1.2 million.

F-18

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Investments In and Advances to Unconsolidated
Affiliates, continued

Other RCP Investments

Through December 31, 2010, the Company, through Fund II, made
investments of $1.1 million in Shopko, $0.7 million in Marsh, and
$2.0 million in Add-On Investments in Marsh. As of December 31, 2010, the
Company has received distributions totaling $1.7 million from its Shopko
investment and $2.6 million from its Marsh and Marsh Add-On Investments.

During July of 2007, the RCP Venture acquired a portfolio of 87 retail
properties from Rex Stores Corporation, which the Company invested through
Mervyns II. The Companys share of this investment was $2.7 million. As of
December 31, 2010, the Company has received distributions totaling $0.8
million.

The following table summarizes activity related to the RCP Venture
investments from inception through December 31, 2010:

|                               |  |                |  |                                 |        |               |   |                                  |  |               |        |  |   |        | 
|------------------------------ |  | -------------- |  | ------------------------------- | ------ | ------------- | - | -------------------------------- |  | ------------- | ------ |  | - | ------ | 
|                               |  |                |  |                                 |        |               |   | Operating Partnership Share      | 
|                               |  |                |  |                                 |        |               |   |                                  | 
|Investment                     |  | Year
 Acquired |  | Invested
 Capital
 and Advances |        | Distributions |   | Invested 
 Capital
 and Advances |  | Distributions |       
|                               |  |                |  |                                 |        |               |   |                                  |  |               |       
|Mervyns                        |  | 2004           |  | $                               | 26,058 |               | $ | 45,966                           |  | $             | 4,901  |  | $ | 11,251 | 
|Mervyns Add-On Investments     |  | 2005/2008      |  |                                 | 6,517  |               |   | 1,703                            |  |               | 1,046  |  |   | 283    | 
|Albertsons                    |  | 2006           |  |                                 | 20,717 |               |   | 77,053                           |  |               | 4,239  |  |   | 15,410 | 
|Albertsons Add-On Investments |  | 2006/2007      |  |                                 | 2,412  |               |   | 1,215                            |  |               | 387    |  |   | 243    | 
|Shopko                         |  | 2006           |  |                                 | 1,108  |               |   | 1,655                            |  |               | 222    |  |   | 331    | 
|Marsh and Add-on Investments   |  | 2006/2008      |  |                                 | 2,667  |               |   | 2,639                            |  |               | 533    |  |   | 528    | 
|Rex Stores                     |  | 2007           |  |                                 | 2,701  |               |   | 840                              |  |               | 535    |  |   | 168    | 
|                               |  |                |  |                                 |        |               |   |                                  |  |               |        |  |   |        | 
|                               |  |                |  | $                               | 62,180 |               | $ | 131,071                          |  | $             | 11,863 |  | $ | 28,214 | 
|                               |  |                |  |                                 |        |               |   |                                  |  |               |        |  |   |        | 

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

The Company accounts for the Add-On Investments and Other RCP
Investments under the cost method. Due to its minor ownership interest based on
the size of the investments as well as the terms of the underlying operating
agreements, the Company has no influence over such entities operating and
financial policies. Other than the minority investor rights to which the
Company is entitled pursuant to statute, it has no rights other than to receive
its pro-rata share of cash distributions as declared by the managers. The
Company has no rights with respect to the control and operation of the
investment vehicles, and the formulation and execution of business and
investment policies. The Acadia
Investors have interests in the individual investee LLCs as follows:

|                               |  |                       |  |                          |  |                                   |   |                       |  
|------------------------------ |  | --------------------- |  | ------------------------ |  | --------------------------------- | - | --------------------- | -
|                               |  |                       |  |                          |  | Acadia Investors
 Ownership % in: |  
|Investment                     |  | Investee LLC          |  | Acadia Investors
 Entity |  | Investee
 LLC                     |   | Underlying
 entity(s) |  
|                               |  |                       |  |                          |  |                                   |   |                       |  
|Mervyns                        |  | KLA/Mervyns, L.L.C.  |  | Mervyns I and Mervyns II |  | 10.5                              | % | 5.8                   | %
|Mervyns Add-On Investments     |  | KLA/Mervyns, L.L.C.  |  | Mervyns I and Mervyns II |  | 10.5                              | % | 5.8                   | %
|Albertsons                    |  | KLA A Markets, LLC    |  | Mervyns II               |  | 18.9                              | % | 5.7                   | %
|Albertsons Add-On Investments |  | KLA A Markets, LLC    |  | Mervyns II               |  | 20.0                              | % | 6.0                   | %
|Shopko                         |  | KLA-Shopko, LLC       |  | Fund II                  |  | 20.0                              | % | 2.0                   | %
|Marsh and Add-On Investments   |  | KLA Marsh, LLC        |  | Fund II                  |  | 20.0                              | % | 3.3                   | %
|Rex stores                     |  | KLAC Rex Venture, LLC |  | Mervyns II               |  | 13.3                              | % | 13.3                  | %

F-19

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Investments In and Advances to
Unconsolidated Affiliates continued

Other Opportunity Fund Investments

Fund I Investments

Fund I owned a 50% interest in the Sterling Heights Shopping Center,
which was accounted for under the equity method of accounting. During the year
ended December 31, 2009, Fund I recorded an impairment reserve of $3.7 million
related to this investment. On March 25, 2010, the Sterling Heights Shopping
Center was sold for $2.3 million. The proceeds from this sale together with the
balance of Fund Is recourse obligation of $0.6 million were used to fully
liquidate the outstanding mortgage loan obligation.

Fund II Investments

Fund II had a 24.75% interest in CityPoint, a redevelopment project
located in downtown Brooklyn, NY, which was accounted for under the equity
method. On June 30, 2010, Fund II acquired the remaining interests in the
project from its unaffiliated partner, as discussed in Note 2 and, as a result,
now consolidates the CityPoint investment.

Fund III Investments

On December 23, 2010, Fund III, in a joint venture with an unaffiliated
partner, acquired the 255,200 square foot White City Shopping Center in
Shrewsbury, Massachusetts for $56.0 million. Fund III has an 84% interest in
the property. The unaffiliated joint venture partner will maintain control over
this entity, and as such, the Company accounts for this investment under the
equity method.

During June
2010, Fund III, in a joint venture with an unaffiliated partner, invested in an
entity for the purpose of providing management services to owners of
self-storage properties, including the 14 locations currently owned through
Fund II and Fund III. Fund III has a 50% interest in the entity. This entity
was determined to be a variable interest entity for which the Company was
determined not to be the primary beneficiary. As such, the Company accounts for
this investment under the equity method.

Summary of Investments in Unconsolidated
Affiliates

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

|                                                                                                  |  |                    |         |                    |   |         |  
|------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ------------------ | - | ------- | -
|(dollars in
 thousands)                                                                           |  | December 31,
 2010 |         | December 31,
 2009 |  
|                                                                                                  |  |                    |         |                    |  
|Combined/Condensed Balance Sheets                                                                 |  |                    |         |                    |   |         |  
|Assets:                                                                                           |  |                    |         |                    |   |         |  
|Rental property, net                                                                              |  | $                  | 186,802 |                    | $ | 142,690 |  
|Real estate under development                                                                     |  |                    |        |                    |   | 100,346 |  
|Investment in unconsolidated affiliates                                                           |  |                    | 192,002 |                    |   | 209,407 |  
|Other assets                                                                                      |  |                    | 27,841  |                    |   | 20,951  |  
|                                                                                                  |  |                    |         |                    |   |         |  
|                                                                                                  |  |                    |         |                    |   |         |  
|Total assets                                                                                      |  | $                  | 406,645 |                    | $ | 473,394 |  
|                                                                                                  |  |                    |         |                    |   |         |  
|                                                                                                  |  |                    |         |                    |   |         |  
|Liabilities and partners equity:                                                                 |  |                    |         |                    |   |         |  
|Mortgage note payable                                                                             |  | $                  | 267,565 |                    | $ | 258,685 |  
|Other liabilities                                                                                 |  |                    | 13,815  |                    |   | 12,085  |  
|Partners equity                                                                                  |  |                    | 125,265 |                    |   | 202,624 |  
|                                                                                                  |  |                    |         |                    |   |         |  
|                                                                                                  |  |                    |         |                    |   |         |  
|Total liabilities and partners equity                                                            |  | $                  | 406,645 |                    | $ | 473,394 |  
|                                                                                                  |  |                    |         |                    |   |         |  
|Companys investment in and advances to
 unconsolidated affiliates                                |  | $                  | 31,036  |                    | $ | 51,712  |  
|                                                                                                  |  |                    |         |                    |   |         |  
|Share of distributions in excess of share
 of income and investments in unconsolidated affiliates |  | $                  | (20,884 | )                  | $ | (20,589 | )
|                                                                                                  |  |                    |         |                    |   |         |  

F-20

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Investments In and Advances to
Unconsolidated Affiliates, continued

Summary of Investments in Unconsolidated
Affiliates, continued

|                                                          |  |                          |        |      |   |         |   |   |         |  
|--------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------- | - | - | ------- | -
|                                                          |  | Years Ended December 31, |       
|                                                          |  |                          |        |      |   |         |  
|(dollars in
 thousands)                                   |  | 2010                     |        | 2009 |   | 2008    |  
|                                                          |  |                          |        |      |   |         |  
|Combined/Condensed Statements of Operations               |  |                          |        |      |   |         |   |   |         |  
|Total revenues                                            |  | $                        | 29,460 |      | $ | 30,835  |   | $ | 30,457  |  
|Operating and other expenses                              |  |                          | 10,617 |      |   | 9,851   |   |   | 11,560  |  
|Interest expense                                          |  |                          | 13,525 |      |   | 13,786  |   |   | 14,133  |  
|Equity in earnings (losses) of unconsolidated
 affiliates |  |                          | 56,482 |      |   | (30,568 | ) |   | 177,775 |  
|Depreciation and amortization                             |  |                          | 4,839  |      |   | 5,152   |   |   | 5,333   |  
|(Loss) gain on sale of property, net                      |  |                          | (2,957 | )    |   | (390    | ) |   | 6,838   |  
|                                                          |  |                          |        |      |   |         |   |   |         |  
|Net income (loss)                                         |  | $                        | 54,004 |      | $ | (28,912 | ) | $ | 184,044 |  
|                                                          |  |                          |        |      |   |         |   |   |         |  
|                                                          |  |                          |        |      |   |         |   |   |         |  
|Companys share of net income (loss)                      |  | $                        | 11,363 |      | $ | (1,141  | ) | $ | 20,297  |  
|Impairment reserve                                        |  |                          |       |      |   | (3,768  | ) |   |        |  
|Amortization of excess investment                         |  |                          | (392   | )    |   | (388    | ) |   | (391    | )
|                                                          |  |                          |        |      |   |         |   |   |         |  
|Companys share of net income (loss)                      |  | $                        | 10,971 |      | $ | (5,297  | ) | $ | 19,906  |  
|                                                          |  |                          |        |      |   |         |   |   |         |  

5. Notes Receivable and Preferred Equity
Investment

At December 31, 2010, the Companys notes receivable, net aggregated
$89.2 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. Notes receivable are as follows:

|                           |  |                          |  |                        |  |                            |  |               |         |                            |   |                                  |  |   |        | 
|-------------------------- |  | ------------------------ |  | ---------------------- |  | -------------------------- |  | ------------- | ------- | -------------------------- | - | -------------------------------- |  | - | ------ | 
|Description                |  | Effective
 interest rate |  | Final maturity 
 date  |  | Periodic 
 payment 
 terms |  | Prior 
 liens |         | Face amount 
 of mortgages |   | Carrying 
 amount of 
 mortgages | 
|                           |  |                          |  |                        |  |                            |  |               |         |                            |   |                                  | 
|(dollars in thousands)     |  |                          |  |                        |  |                            |  |               |         |                            |   |                                  | 
|                           |  |                          |  |                        |  |                            |  |               |         |                            |   |                                  | 
|72nd Street                |  | 20.85%                   |  | 7/18/2011              |  | (1)                        |  | $             | 170,727 |                            | $ | 47,000                           |  | $ | 46,715 | 
|Georgetown                 |  | 10.23%                   |  | 11/12/2011             |  | (3)                        |  |               | 9,596   |                            |   | 8,000                            |  |   | 8,000  | 
|Mezzanine
 Loan            |  | 14.50%                   |  | 6/30/2011              |  | (2)                        |  |               |        |                            |   | 8,585                            |  |   | 8,585  | 
|Zero Coupon
 Loan          |  | 24.00%                   |  | 1/3/2016               |  | (3)                        |  |               | 166,200 |                            |   | 5,644                            |  |   | 3,225  | 
|Mezzanine
 Loan            |  | 13.00%                   |  | 9/11/2011              |  | (3)                        |  |               |        |                            |   | 2,980                            |  |   | 2,980  | 
|First
 Mortgage Loan       |  | 10.77%                   |  | 9/11/2011              |  | (3)                        |  |               |        |                            |   | 10,000                           |  |   | 10,000 | 
|Individually
 less than 3% |  | 10.00% - 17.50%          |  | Demand note  1/1/2017 |  |                            |  |               | 106,089 |                            |   | 15,722                           |  |   | 9,697  | 
|                           |  |                          |  |                        |  |                            |  |               |         |                            |   |                                  |  |   |        | 
|Total                      |  |                          |  |                        |  |                            |  |               |         |                            | $ | 97,931                           |  | $ | 89,202 | 
|                           |  |                          |  |                        |  |                            |  |               |         |                            |   |                                  |  |   |        | 

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

F-21

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Notes Receivable and Preferred Equity
Investment, continued

During April 2010, the Company received a payment of $2.1 million and
during December 2009 received a payment of $4.7 million, both representing
paydowns on its first mortgage loan secured by three retail properties,
following the sale of two of the collateralized properties.

During December 2009, the Company made a loan of $8.6 million which
bears interest at 14.5% and matures on June 30, 2011.

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

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

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

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

During June 2008, the Company made a $40.0 million preferred equity
investment in an entity that owns a portfolio of 18 properties located
primarily in Georgetown, Washington D.C. The portfolio consists of 306,000
square feet of principally retail space. The original term of this investment
was for two years, with two one year extensions, and provided a 13% preferred
return. During September 2010, the Company received its entire $40.0 million of
invested equity and $9.4 million of accrued preferred return.

During July 2008, the Company made a $34.0 million loan, which is
collateralized by an interest in a mixed-use retail and residential development
at 72nd Street and Broadway on the Upper West Side of Manhattan. The term of
the loan is for a period of three years, with a one year extension with an
effective yield, inclusive of all fees, of 20%.

During September 2008, the Company, through Fund III, made a $10.0
million first mortgage loan, which is collateralized by land located on Long
Island, New York. The term of the loan was for a period of two years, and
provides an effective yield of 13%. During September 2010, the loan was
extended for one year at an effective yield of 11%.

The following table reconciles notes receivable and preferred equity
investments from January 1, 2008 to December 31, 2010:

|                                |  |                                  |         |      |   |         |   |   |         |  
|------------------------------- |  | -------------------------------- | ------- | ---- | - | ------- | - | - | ------- | -
|                                |  | For the years ended December 31, |        
|                                |  |                                  |        
|(dollars in thousands)          |  | 2010                             |         | 2009 |   | 2008    |  
|                                |  |                                  |         |      |   |         |  
|                               
|Balance at beginning of
 period |  | $                                | 125,221 |      | $ | 125,587 |   | $ | 57,662  |  
|Additions during period:        |  |                                  |         |      |   |         |   |   |         |  
|New mortgage loans              |  |                                  |        |      |   | 9,362   |   |   | 88,480  |  
|                                |  |                                  |         |      |   |         |   |   |         |  
|Deductions during period:       |  |                                  |         |      |   |         |   |   |         |  
|Collections of principal        |  |                                  | (42,010 | )    |   | (13,614 | ) |   | (19,922 | )
|Amortization of premium         |  |                                  | 6,164   |      |   | 5,352   |   |   | 2,367   |  
|Reserves                        |  |                                  | (93     | )    |   | (1,466  | ) |   | (3,000  | )
|Other                           |  |                                  | (80     | )    |   |        |   |   |        |  
|                                |  |                                  |         |      |   |         |   |   |         |  
|Balance at close of period      |  | $                                | 89,202  |      | $ | 125,221 |   | $ | 125,587 |  
|                                |  |                                  |         |      |   |         |   |   |         |  

F-22

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Deferred Charges

Deferred charges consist of the following as of December 31, 2010 and
2009:

|                                  |  |              |         |      |   |         |  
|--------------------------------- |  | ------------ | ------- | ---- | - | ------- | -
|                                  |  | December 31, |        
|(dollars in thousands)            |  | 2010         |         | 2009 |  
|                                  |  |              |         |      |  
|Deferred financing costs          |  | $            | 29,692  |      | $ | 22,852  |  
|Deferred leasing and other
 costs |  |              | 32,501  |      |   | 33,169  |  
|                                  |  |              |         |      |   |         |  
|                                  |  |              | 62,193  |      |   | 56,021  |  
|Accumulated amortization          |  |              | (36,463 | )    |   | (27,710 | )
|                                  |  |              |         |      |   |         |  
|                                  |  | $            | 25,730  |      | $ | 28,311  |  
|                                  |  |              |         |      |   |         |  

7. Acquired Lease Intangibles

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

The scheduled amortization of acquired lease intangible assets and
liabilities as of December 31, 2010 is as follows:

|                        |  |                           |        |             |   |       | 
|----------------------- |  | ------------------------- | ------ | ----------- | - | ----- | 
|(dollars
 in thousands) |  | Acquired lease intangible |       
|                       
|                        |  | Assets                    |        | Liabilities |  
|                        |  |                           |        |             |  
|2011                    |  | $                         | 3,029  |             | $ | 994   | 
|2012                    |  |                           | 2,578  |             |   | 923   | 
|2013                    |  |                           | 1,999  |             |   | 730   | 
|2014                    |  |                           | 1,631  |             |   | 451   | 
|2015                    |  |                           | 1,520  |             |   | 313   | 
|Thereafter              |  |                           | 7,865  |             |   | 2,326 | 
|                        |  |                           |        |             |   |       | 
|                        |  | $                         | 18,622 |             | $ | 5,737 | 
|                        |  |                           |        |             |   |       | 

F-23

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Mortgages Payable

At December 31, 2010 and 2009, mortgage notes payable, excluding the
net valuation premium on the assumption of debt, aggregated $806.1 million and
$732.2 million, respectively, and were collateralized by 29 and 28 properties
and related tenant leases, respectively. Interest rates on the Companys
outstanding mortgage indebtedness ranged from 0.86% to 7.34% with maturities
that ranged from March 2011 to November 2032. Certain loans are
cross-collateralized and contain cross-default provisions. The loan agreements contain
customary representations, covenants and events of default. Certain loan
agreements require the Company to comply with affirmative and negative
covenants, including the maintenance of debt service coverage and leverage
ratios.

The following reflects mortgage loan activity for the year ended
December 31, 2010:

i) During January 2010, the Company closed on a $48.0 million
construction loan that bears interest at LIBOR plus 400 basis points, subject
to an interest rate floor of 6.50% which matures on January 12, 2012. As of
December 31, 2010, $40.2 million was drawn on this facility.

ii) During March 2010, the Company extended the Fund II subscription
line of credit, which was collateralized by a pledge of investors unfunded
capital commitments, from March 1, 2010 to March 1, 2011 and adjusted the
interest rate from LIBOR plus 250 basis points to LIBOR plus 325 basis points.
In connection with the extension, the Company made an $8.2 million payment on
the outstanding $48.2 million line of credit and the line of credits maximum
capacity was reduced to $40.0 million. During December 2010, the line of credit
was extended further to December 22, 2014 and the interest rate reduced to
LIBOR plus 290 basis points. This modification also requires principal reductions
to (a) $15.0 million on October 31, 2013, (b) $11.3 million on February 1,
2014, (c) $7.5 million on May 1, 2014, and (d) $3.8 million on August 1, 2014.
Additionally, a Company guarantee has replaced the unfunded capital commitments
of the investors as collateral for this loan and the Company has agreed to
maintain various restrictive covenants.

iii) During February of 2010, the Company paid off an outstanding line
of credit balance of $2.0 million, which was collateralized by a property and
scheduled to mature on March 29, 2010 and terminated the line of credit.

iv) During 2010, the Company made payments of $29.0 million on an
outstanding $30.0 million credit facility collateralized by six properties.

v) During 2010, the Company made draws of $32.0 million on the Fund III
subscription line of credit. As of December 31, 2010, the total outstanding
amount on this line of credit was $171.5 million.

vi) During May of 2010, the Company borrowed an additional $2.0 million
on an existing mortgage loan collateralized by a property.

vii) During July 2010, the Company amended and extended a $30.0 million
loan, collateralized by a Fund II property located on 161st Street
in the Bronx, NY. The agreement required a $1.1 million payment on the
outstanding principal balance and extended the maturity date to April 1, 2013.
The interest rate has been adjusted retroactively to LIBOR plus 400 basis
points for the period April 1, 2010 through March 31, 2011, LIBOR plus 550
basis points for the period April 1, 2011 through March 31, 2012, and LIBOR
plus 600 basis points for the period April 1, 2012 through March 31, 2013.

viii) During July of 2010, the Company closed on a $20.0 million bond
financing that bears interest at a fixed rate of 7.25% that is due November 1,
2042 and has a mandatory put date of November 1, 2014.

ix) During August of 2010, the Company amended and extended the
maturity date of a $25.9 million loan that was scheduled to mature in August of
2010. In connection with the release of a portion of the collateral for this
loan, the Company was required to pay down the principal by $5.3 million. The
amendment provided for a three year extension of the loan maturity date to
August 12, 2013 with two one-year extension options.

x) Also during August of 2010, the Company completed an amendment of a
$31.7 million construction loan. Previously, the servicer, on behalf of the
lender of this loan, had previously alleged that non-monetary defaults had
occurred, however it has subsequently agreed to dismiss all allegations of
default. The loan continued to bear interest at 7.38% and had a maturity date
of January 1, 2020. During December 2010, the Company closed on a new $34.0
million loan and used the proceeds to pay off this construction loan. The loan
bears interest at LIBOR plus 275 basis points and matures on December 1, 2013.
$31.6 million of the loan was funded at the closing and an additional $2.4
million was available for tenant improvements and leasing commissions.

F-24

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Mortgages Payable, continued

xi) During September of 2010, the Company amended and extended the
maturity date of a $10.5 million loan that was scheduled to mature during
September 2010. The amendment required a $0.5 million principal pay down and
provided for a one year extension of the loan maturity date to September 1,
2011 with a one year extension option and bears interest at LIBOR plus 325
basis points.

xii) During June 2009, the servicer, on behalf of the lender of one of
the Companys loans alleged that a non-monetary default had occurred on an
$11.5 million construction loan collateralized by Atlantic Avenue. The servicer
alleged that the Company did not substantially complete the improvements in
accordance with the required completion date as defined in the loan agreement
and, accordingly, did not meet the requirements for the final draw. During
October 2010, the Company and the servicer reached an agreement to amend the
loan whereby all alleged events of default were waived.

xiii) During October 2010, the Company modified and extended the
maturity date of a $9.8 million loan that was scheduled to mature during
October 2010. The amendment required a $1.4 million principal pay down and
provided for a one year extension of the loan maturity date to October 31,
2011.

xiv) During October 2010, the Company closed on a $50.0 million loan
collateralized by a property. The loan bears interest at LIBOR plus 190 basis
points and matures on October 26, 2015. The proceeds of this loan were used to
repay the existing $46.6 million mortgage note payable. There is an additional
$25.0 million available, based on the property attaining certain debt service
coverage ratio levels and the lender being able to syndicate the loan. The
second tranche will bear interest at LIBOR plus 230 basis points.

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

|                               |  |                                    |         |                                             |   |                                                                          |  |                                             |         |                                                          |   |                                                                      |  |   |       |  |   |        
|------------------------------ |  | ---------------------------------- | ------- | ------------------------------------------- | - | ------------------------------------------------------------------------ |  | ------------------------------------------- | ------- | -------------------------------------------------------- | - | -------------------------------------------------------------------- |  | - | ----- |  | - | -------
|(dollars in thousands)Borrower |  | Total
 amount of
 credit
 facility |         | Amount
 borrowed
 as of
 December 31,
 2009 |   | Net borrowings
 (repayments)
 during the
 year ended
 December 31,
 2010 |  | Amount 
 borrowed as of
 December 31,
 2010 |         | Letters of credit
 outstanding as of
 December 31,
 2010 |   | Amount available
 under credit
 facilities as of
 December 31,
 2010
|                               |  |                                    |         |                                             |   |                                                                          |  |                                             |         |                                                          |   |                                                                     
|Acadia Realty, LP              |  | $                                  | 64,498  |                                             | $ | 30,000                                                                   |  | $                                           | (29,000 | )                                                        | $ | 1,000                                                                |  | $ | 8,610 |  | $ | 54,888 
|Acadia Realty, LP              |  |                                    |        |                                             |   | 2,000                                                                    |  |                                             | (2,000  | )                                                        |   |                                                                     |  |   |      |  |   |       
|Fund II                        |  |                                    | 40,000  |                                             |   | 48,245                                                                   |  |                                             | (8,245  | )                                                        |   | 40,000                                                               |  |   |      |  |   |       
|Fund III                       |  |                                    | 221,000 |                                             |   | 139,450                                                                  |  |                                             | 32,000  |                                                          |   | 171,450                                                              |  |   | 500   |  |   | 49,050 
|                               |  |                                    |         |                                             |   |                                                                          |  |                                             |         |                                                          |   |                                                                      |  |   |       |  |   |        
|Total                          |  | $                                  | 325,498 |                                             | $ | 219,695                                                                  |  | $                                           | (7,245  | )                                                        | $ | 212,450                                                              |  | $ | 9,110 |  | $ | 103,938
|                               |  |                                    |         |                                             |   |                                                                          |  |                                             |         |                                                          |   |                                                                      |  |   |       |  |   |        

F-25

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Mortgages Payable, continued

The following table summarizes the Companys mortgage and other secured
indebtedness as of December 31, 2010 and December 31, 2009:

|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|----------------------------------------------- |  | ------------------ | ------- | ------------------ | - | ----------------------------------- | - | --------------------------------------------- |  | -------------- |  | -------------------------------------------------------------------------------------------------------
|(dollars in thousands)                          |  |                    |         |                    |   |                                     |   |                                               |  |               
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |               
|Description
 of Debt and Collateral             |  | December 31,
 2010 |         | December 31,
 2009 |   | Interest Rate
 at December 31, 2010 |   | Maturity                                      |  | Payment
 Terms
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |               
|Mortgage notes payable 
 variable-rate         |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Liberty Avenue                                  |  | $                  | 10,000  |                    | $ | 10,450                              |   | 3.51%
 (LIBOR +3.25%)                         |  | 9/1/2011       |  | Interest only monthly.                                                                                 
|Fordham Place                                   |  |                    | 85,910  |                    |   | 86,000                              |   | Greater
 of 1.5%+3.5% or
 5.00% (LIBOR +3.5%) |  | 10/4/2011      |  | Interest only monthly.                                                                                 
|Tarrytown Shopping Center                       |  |                    | 8,427   |                    |   | 9,800                               |   | 1.91%
 (LIBOR +1.65%)                         |  | 10/30/2011     |  | Interest only monthly.                                                                                 
|Branch Shopping Plaza                           |  |                    | 13,932  |                    |   | 14,179                              |   | 1.56%
 (LIBOR +1.30%)                         |  | 12/1/2011      |  | Monthly principal and
 interest.                                                                       
|Canarsie Plaza                                  |  |                    | 40,243  |                    |   |                                    |   | Greater
 of 6.50% or
 4.26% (LIBOR +4.00%)    |  | 1/12/2012      |  | Interest only monthly.                                                                                 
|Village Commons Shopping
 Center                |  |                    | 9,305   |                    |   | 9,467                               |   | 1.66%
 (LIBOR +1.40%)                         |  | 6/29/2012      |  | Monthly principal and
 interest.                                                                       
|161st Street                                    |  |                    | 28,900  |                    |   | 30,000                              |   | 4.26%
 (LIBOR +4.00%)                         |  | 4/1/2013       |  | Interest only monthly.                                                                                 
|CityPoint                                       |  |                    | 20,650  |                    |   |                                    |   | 2.76%
 (LIBOR +2.50%)                         |  | 8/12/2013      |  | Interest only monthly.                                                                                 
|Pelham Manor                                    |  |                    | 31,554  |                    |   |                                    |   | 3.01%
 (LIBOR +2.75%)                         |  | 12/1/2013      |  | Monthly principal and
 interest.                                                                       
|Cortlandt Towne Center                          |  |                    | 50,000  |                    |   | 44,878                              |   | 2.16%
 (LIBOR +1.90%)                         |  | 10/26/2015     |  | Monthly principal and
 interest.                                                                       
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Sub-total mortgage notes
 payable               |  |                    | 298,921 |                    |   | 204,774                             |   |                                               |  |                |  |                                                                                                        
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Secured credit facilities 
 variable-rate:     |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Fund III unfunded investor
 capital commitments |  |                    | 171,450 |                    |   | 139,450                             |   | 0.86%
 (LIBOR +0.60%)                         |  | 10/9/2011      |  | Interest only monthly.                                                                                 
|Six Core Portfolio
 properties                  |  |                    | 1,000   |                    |   | 30,000                              |   | 1.51%
 (LIBOR +1.25%)                         |  | 12/1/2011      |  | Annual principal and monthly
 interest.                                                                
|Fund II                                         |  |                    | 40,000  |                    |   | 48,245                              |   | 3.16%
 (LIBOR +2.90%)                         |  | 12/22/2014     |  | Interest only monthly.                                                                                 
|Ledgewood Mall                                  |  |                    |        |                    |   | 2,000                               |   | 1.51%
 (LIBOR +1.25%)                         |  |               |  |                                                                                                       
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Sub-total secured credit
 facilities            |  |                    | 212,450 |                    |   | 219,695                             |   |                                               |  |                |  |                                                                                                        
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Interest rate swaps (1)                         |  |                    | (71,535 | )                  |   | (83,416                             | ) |                                               |  |                |  |                                                                                                        
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Total variable-rate debt                        |  |                    | 439,836 |                    |   | 341,053                             |   |                                               |  |                |  |                                                                                                        
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Mortgage notes payable 
 fixed-rate            |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Five Self-Storage properties                    |  |                    | 41,500  |                    |   | 41,500                              |   | 5.30%                                         |  | 3/16/2011      |  | Interest only monthly.                                                                                 
|Chestnut Hill                                   |  |                    | 9,338   |                    |   | 9,481                               |   | 5.45%                                         |  | 6/11/2013      |  | Monthly principal and
 interest.                                                                       
|Clark Diversey                                  |  |                    | 4,625   |                    |   | 4,751                               |   | 6.35%                                         |  | 7/1/2014       |  | Monthly principal and
 interest.                                                                       
|New Loudon Center                               |  |                    | 14,119  |                    |   | 14,343                              |   | 5.64%                                         |  | 9/6/2014       |  | Monthly principal and
 interest.                                                                       
|CityPoint                                       |  |                    | 20,000  |                    |   |                                    |   | 7.25%                                         |  | 11/1/2014      |  | Interest only quarterly.                                                                               
|Crescent Plaza                                  |  |                    | 17,539  |                    |   | 17,600                              |   | 4.98%                                         |  | 9/6/2015       |  | Monthly principal and
 interest.                                                                       
|Pacesetter Park Shopping
 Center                |  |                    | 12,132  |                    |   | 12,313                              |   | 5.12%                                         |  | 11/6/2015      |  | Monthly principal and
 interest.                                                                       
|Elmwood Park Shopping Center                    |  |                    | 34,197  |                    |   | 34,600                              |   | 5.53%                                         |  | 1/1/2016       |  | Monthly principal and
 interest.                                                                       
|The Gateway Shopping Center                     |  |                    | 20,500  |                    |   | 20,500                              |   | 5.44%                                         |  | 3/1/2016       |  | Interest only monthly.                                                                                 
|Walnut Hill Plaza                               |  |                    | 23,500  |                    |   | 23,500                              |   | 6.06%                                         |  | 10/1/2016      |  | Interest only monthly until
 10/11; monthly principal and interest thereafter.                         
|239 Greenwich Avenue                            |  |                    | 26,000  |                    |   | 26,000                              |   | 5.42%                                         |  | 2/11/2017      |  | Interest only monthly.                                                                                 
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Merrillville Plaza                              |  |                    | 26,250  |                    |   | 26,250                              |   | 5.88%                                         |  | 8/1/2017       |  | Interest only monthly until
 7/12 monthly principal and interest thereafter.                           
|216th Street                                    |  |                    | 25,500  |                    |   | 25,500                              |   | 5.80%                                         |  | 10/1/2017      |  | Interest only monthly.                                                                                 
|Pelham Manor Shopping Plaza                     |  |                    |        |                    |   | 31,652                              |   | 7.18%                                         |  |               |  |                                                                                                       
|Atlantic Avenue                                 |  |                    | 11,540  |                    |   | 11,543                              |   | 7.34%                                         |  | 1/1/2020       |  | Interest only upon drawdown
 on construction loan until 1/15 monthly principal and interest thereafter.
|A&P Shopping Plaza                              |  |                    | 8,033   |                    |   | 8,182                               |   | 6.40%                                         |  | 11/1/2032      |  | Monthly principal and
 interest.                                                                       
|Interest rate swaps (1)                         |  |                    | 71,535  |                    |   | 83,416                              |   | 5.46%                                         |  |                |  |                                                                                                        
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Total fixed-rate debt                           |  |                    | 366,308 |                    |   | 391,131                             |   |                                               |  |                |  |                                                                                                        
|Unamortized premium                             |  |                    | 68      |                    |   | 103                                 |   |                                               |  |                |  |                                                                                                        
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        
|Total                                           |  | $                  | 806,212 |                    | $ | 732,287                             |   |                                               |  |                |  |                                                                                                        
|                                                |  |                    |         |                    |   |                                     |   |                                               |  |                |  |                                                                                                        

|    |                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the amount of the Companys variable-rate debt that
 has been fixed through certain cash flow hedge transactions. (Note 10).

F-26

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Mortgages Payable, continued

The scheduled principal repayments of all indebtedness including
Convertible Notes as of December 31, 2010 are as follows (does not include
$68,000 net valuation premium on assumption of debt):

|                        |  |   |         | 
|----------------------- |  | - | ------- | 
|(dollars in
 thousands) | 
|2011                    |  | $ | 384,668 | 
|2012                    |  |   | 53,374  | 
|2013                    |  |   | 103,443 | 
|2014                    |  |   | 64,452  | 
|2015                    |  |   | 79,268  | 
|Thereafter              |  |   | 169,651 | 
|                        |  |   |         | 
|                        |  | $ | 854,856 | 
|                        |  |   |         | 

9. Convertible Notes Payable

In December 2006 and January 2007, the Company issued a total of
$115.0 million in principal of convertible notes with a fixed interest
rate of 3.75% due 2026 (the Convertible Notes). The Convertible Notes were
issued at par and require interest payments semi-annually in arrears on
June 15 and December 15 of each year. The Convertible Notes are
unsecured unsubordinated obligations and rank equally with all other unsecured
and unsubordinated indebtedness. The Convertible Notes have an effective
interest rate of 6.03% giving effect to the accounting treatment required by
ASC Topic 470-20 Debt with Conversion and Other Options (ASC Topic 470-20).
The Convertible Notes had an initial conversion price of $30.86 per share. The
conversion rate may be adjusted under certain circumstances, including the
payment of cash dividends in excess of the regular quarterly cash dividend in
place at the time the Convertible Notes were issued. As of December 31, 2010,
the adjusted conversion price is $29.26. Upon conversion of the Convertible
Notes, the Company will deliver cash and, in some circumstances, Common Shares,
as specified in the indenture relating to the Convertible Notes. In general,
the Convertible Notes may only be converted prior to maturity during any
calendar quarter beginning after December 31, 2006 if the 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.

The Convertible Notes if-converted value does
not exceed its principal amount as of December 31, 2010 and there are no
derivative transactions that were entered into in connection with the issuance
of the Convertible Notes.

During 2010, 2009 and 2008 the Company purchased $0.2 million, $57.0
million and $8.0 million in principal amount, respectively, of its convertible
debt at an average discount of approximately 19%. The transactions resulted in
a gain on debt extinguishment of $7.1 million and $1.5 million for the years
ended December 31, 2009 and 2008, respectively. The outstanding Convertible
Note principal amount as of December 31, 2010 and 2009 was $49.8 million and
$50.0 million, respectively. The outstanding Convertible Note net carrying
amount as of December 31, 2010 and 2009 was $48.7 million and $47.9 million,
respectively.

Effective January 1, 2009, the Company adopted ASC Topic 470-20 which
required it to retrospectively restate and reclassify previously disclosed
consolidated financial statements to allocate the proceeds from the issuance of
convertible debt between a debt component and an equity component. The
resulting discount on the debt component is amortized over the period the
convertible debt is expected to be outstanding, which is December 11, 2006 to
December 20, 2011, as additional non-cash interest expense. The equity
component recorded as additional paid-in capital was $11.3 million, which
represented the difference between the proceeds from the issuance of the
convertible notes payable and the fair value of the liability at the time of
issuance.

F-27

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Convertible Notes Payable, continued

The carrying amount of the equity component included in additional
paid-in capital totaled $1.1 million at December 31, 2010 and $2.1 million at
December 31, 2009. Interest expense relating to the contractual interest coupon
recognized in the Consolidated Statements of Income was $1.9 million, $2.5
million and $4.3 million for the years ended December 31, 2010, 2009, and 2008,
respectively, The additional non-cash interest expense recognized in the
Consolidated Statements of Income was $1.0 million, $1.3 million and $2.1
million for the years ended December 31, 2010, 2009, and 2008, respectively.
Accumulated amortization related to the convertible notes payable was $1.0
million and $0.7 million as of December 31, 2010 and December 31, 2009,
respectively, after giving effect to repurchases.

The following table shows the effect of the retrospective application
and reclassification of the consolidated statement of income for the year ended
December 31, 2008 and consolidated statement of cash flow accounts for the year
ended December 31, 2008:

|                                                      |  |                              |        |               |   |                  |   |   |        |  
|----------------------------------------------------- |  | ---------------------------- | ------ | ------------- | - | ---------------- | - | - | ------ | -
|(dollars in
 thousands, except per share amounts)     |  | Year ended December 31, 2008 |       
|                                                      |  |                              |       
|Affected Consolidated Income Statement Accounts       |  | Before Adjustment            |        | As 
 Adjusted |   | Effect of Change |  
|                                                      |  |                              |        |               |   |                  |  
|Depreciation
 and amortization                        |  | $                            | 32,805 |               | $ | 32,749           |   | $ | 56     |  
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Interest
 expense                                     |  | $                            | 26,792 |               | $ | 28,893           |   | $ | (2,101 | )
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Gain on debt
 extinguishment                          |  | $                            | 1,958  |               | $ | 1,523            |   | $ | (435   | )
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Income from
 continuing operations                    |  | $                            | 30,997 |               | $ | 28,517           |   | $ | (2,480 | )
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Net income                                            |  | $                            | 39,917 |               | $ | 37,437           |   | $ | (2,480 | )
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Net income
 attributable to Common Shareholders       |  | $                            | 27,548 |               | $ | 25,068           |   | $ | (2,480 | )
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Basic
 earnings per share                             |  | $                            | 0.81   |               | $ | 0.74             |   | $ | (0.07  | )
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Diluted
 earnings per share                           |  | $                            | 0.80   |               | $ | 0.73             |   | $ | (0.07  | )
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Affected
Consolidated Statement of Cash Flow Accounts |  | Year ended December 31, 2008 |       
|                                                      |  |                              |       
|                                                      |  | Before Adjustment            |        | As Adjusted   |   | Effect of Change |  
|                                                      |  |                              |        |               |   |                  |  
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Depreciation
 and amortization                        |  | $                            | 34,964 |               | $ | 34,908           |   | $ | (56    | )
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Gain on debt
 extinguishment                          |  | $                            | (1,958 | )             | $ | (1,523           | ) | $ | 435    |  
|                                                      |  |                              |        |               |   |                  |   |   |        |  
|Amortization
 of discount on convertible debt         |  | $                            |       |               | $ | 2,101            |   | $ | 2,101  |  
|                                                      |  |                              |        |               |   |                  |   |   |        |  

F-28

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Financial Instruments and Fair Value
Measurements

Derivative Financial Instruments

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

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

As of December 31, 2010, the Companys derivative financial instruments
consisted of seven interest rate LIBOR swaps with an aggregate notional value
of $71.5 million, which fix interest at rates from 0.5% to 5.1% and mature
between September 2011 and November 2012. The Company also has one derivative
financial instrument with a notional value of $28.9 million which caps interest
at 6% and matures in April 2013. The fair value of the derivative liability of
these instruments, which is included in other liabilities in the Consolidated
Balance Sheets, totals $2.8 million at December 31, 2010. The notional value
does not represent exposure to credit, interest rate or market risks.

These derivative instruments have been designated as cash flow hedges
and hedge the future cash outflows on variable rate mortgage debt. Such
instruments are reported at the fair value reflected above. As of December 31,
2010 and 2009, unrealized losses totaling $2.8 and $3.3 million, respectively
were reflected in accumulated other comprehensive loss. It is estimated that
approximately $2.5 million included in accumulated other comprehensive loss
related to derivatives will be reclassified to interest expense in the 2011
results of operations.

As of December 31, 2010 and 2009, no derivatives were designated as
fair value hedges or hedges of net investments in foreign operations.
Additionally, the Company does not use derivatives for trading or speculative
purposes and currently does not have any derivatives that are not designated as
hedges. As of December 31, 2010, none of the Companys hedges were ineffective.

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

The following table presents the Companys fair value hierarchy for
those assets and liabilities measured at fair value on a recurring basis as of
December 31, 2010:

|                                  |  |         |   |         |   |         |  |   |   | 
|--------------------------------- |  | ------- | - | ------- | - | ------- |  | - | - | 
|(dollars in
 thousands)           |  | Level 1 |   | Level 2 |   | Level 3 | 
|                                  |  |         |   |         |   |         | 
|Liabilities                       |  |         |   |         |   |         |  |   |   | 
|Derivative
 financial instruments |  | $       |  |         | $ | 2,816   |  | $ |  | 
|                                  |  |         |   |         |   |         |  |   |   | 

F-29

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Financial Instruments and Fair Value
Measurements, continued

Financial Instruments

Certain of the Companys assets and liabilities meet the definition of
financial instruments. Except as disclosed below, the carrying amounts of these
financial instruments approximates their fair value due to the short-term
nature of such accounts.

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

|                                                      |  |                   |         |                         |   |                   |  |                         |         |  |   |         | 
|----------------------------------------------------- |  | ----------------- | ------- | ----------------------- | - | ----------------- |  | ----------------------- | ------- |  | - | ------- | 
|                                                      |  | December 31, 2010 |         | December 31, 2009       |  
|                                                      |  |                   |         |                         |  
|(dollars in
 thousands)                               |  | Carrying 
 Amount |         | Estimated
 Fair 
 Value |   | Carrying 
 Amount |  | Estimated
 Fair 
 Value |        
|                                                      |  |                   |         |                         |   |                   |  |                         |        
|                                                      |  |                   |         |                         |   |                   |  |                         |         |  |   |         | 
|Notes
 Receivable and Preferred Equity Investments    |  | $                 | 89,202  |                         | $ | 90,612            |  | $                       | 125,221 |  | $ | 126,403 | 
|                                                      |  |                   |         |                         |   |                   |  |                         |         |  |   |         | 
|                                                      |  |                   |         |                         |   |                   |  |                         |         |  |   |         | 
|Mortgage
 Notes Payable and Convertible Notes Payable |  | $                 | 854,924 |                         | $ | 863,639           |  | $                       | 780,197 |  | $ | 751,043 | 
|                                                      |  |                   |         |                         |   |                   |  |                         |         |  |   |         | 

11. Shareholders Equity and Noncontrolling
Interests

Common Shares

During the first quarter of 2010, 57,476 employee Restricted Shares
were cancelled to pay the employees income taxes due on the value of the
portion of the Restricted Shares that vested. During the year ended
December 31, 2010, the Company recognized accrued Common Share and Common
OP Unit-based compensation totaling $3.8 million in connection with the vesting
of Restricted Shares and Units (Note 15).

Noncontrolling Interests

The following
table summarizes the change in the noncontrolling interests since December 31,
2009:

|                                                                                                  |  |                                                      |        |                                                           |   |         |  
|------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------- | ------ | --------------------------------------------------------- | - | ------- | -
|                                                                                                  |  | Noncontrolling
 Interests
 in Operating
 Partnership |        | Noncontrolling
 Interests
 in Partially-Owned
 Affiliates |  
|                                                                                                  |  |                                                      |        |                                                           |  
|(dollars in
 thousands)                                                                           |  |                                                      |        |                                                           |   |         |  
|                                                                                                  |  |                                                      |        |                                                           |   |         |  
|Balance at December 31, 2009                                                                      |  | $                                                    | 6,176  |                                                           | $ | 214,116 |  
|Distributions declared of $0.72 per Common
 OP Unit                                               |  |                                                      | (723   | )                                                         |   |        |  
|Net income for the period January 1 through
 December 31, 2010                                    |  |                                                      | 394    |                                                           |   | 20,216  |  
|Conversion of 364,615 OP Units to Common
 Shares by limited partners of the Operating Partnership |  |                                                      | (3,240 | )                                                         |   |        |  
|Other comprehensive income  unrealized
 loss on valuation of swap agreements                     |  |                                                      | 22     |                                                           |   | 261     |  
|Reclassification of realized interest
 expense on swap agreements                                 |  |                                                      | 2      |                                                           |   | (356    | )
|Noncontrolling interest contributions                                                             |  |                                                      |       |                                                           |   | 33,556  |  
|Noncontrolling interest distributions and
 other reductions                                       |  |                                                      |       |                                                           |   | (2,892  | )
|Employee Long-term Incentive Plan Unit
 Awards                                                    |  |                                                      | 1,778  |                                                           |   |        |  
|                                                                                                  |  |                                                      |        |                                                           |   |         |  
|Balance at December 31, 2010                                                                      |  | $                                                    | 4,409  |                                                           | $ | 264,901 |  
|                                                                                                  |  |                                                      |        |                                                           |   |         |  

Noncontrolling interest in the Operating Partnership represents
(i) the limited partners 281,294 and 626,606 Common OP Units at
December 31, 2010 and 2009, (ii) 188 Series A Preferred OP Units
at December 31, 2010 and 2009, with a stated value of $1,000 per unit,
which are entitled to a preferred quarterly distribution of the greater of (a)
$22.50 (9% annually) per Series A Preferred OP Unit or (b) the
quarterly distribution attributable to a Series A Preferred OP Unit if
such unit were converted into a Common OP Unit, and (iii) 641,534 and 393,909
LTIP units as of December 31, 2010 and December 31, 2009 respectively, as
discussed in Share Incentive Plan (Note 15).

F-30

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Shareholders Equity and Noncontrolling
Interests, continued

Noncontrolling Interests, continued

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

In 2005, the Company issued 250,000 Restricted Common OP Units to Klaff
in consideration for an interest in certain management contract rights. During
2010, Klaff converted the 250,000 Restricted Common OP Units into Common
Shares.

The Series A Preferred OP Units were issued in 1999 in connection
with the acquisition of a property. Through December 31, 2010, 1,204
Series A Preferred OP Units were converted into 160,533 Common OP Units
and then into Common Shares. The 188 remaining Series A Preferred OP Units
are currently convertible into Common OP Units based on the stated value
divided by $7.50. Either the Company or the holders can currently call for the
conversion of the Series A Preferred OP Units at the lesser of $7.50 or
the market price of the Common Shares as of the conversion date.

12. Related Party Transactions

During February 2010, Klaff converted all 250,000 of its Restricted
Common OP Units into 250,000 Common Shares.

In 2008 and 2009 the Company earned asset management, leasing,
disposition, development and construction fees for providing services to an
existing portfolio of retail properties and/or leasehold interests in which
Klaff had an interest. Fees earned by the Company in connection with this
portfolio were $0.0 million, $0.4 million and $0.8 million for the years ended
December 31, 2010, 2009 and 2008 respectively.

The Company earns fees from two of its investments in unconsolidated
partnerships (Note 4). The Company earned property management, construction,
legal and leasing fees from the Brandywine Portfolio totaling $0.8 million,
$0.7 million and $1.1 million for the years ended December 31, 2010, 2009 and
2008, respectively. In addition, the Company earned property management and
development fees from CityPoint totaling $1.0 million for the year ended
December 31, 2008.

Lee Wielansky, the Lead Trustee of the Company, was paid a consulting
fee of $0.1 million for each of the years ended December 31, 2010, 2009,
and 2008.

13. Tenant Leases

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

Minimum future rentals to be received under non-cancelable leases for
shopping centers and other retail properties as of December 31, 2010 are
summarized as follows:

|                        |  |   |         | 
|----------------------- |  | - | ------- | 
|(dollars in
 thousands) | 
|2011                    |  | $ | 94,214  | 
|2012                    |  |   | 88,108  | 
|2013                    |  |   | 80,087  | 
|2014                    |  |   | 68,512  | 
|2015                    |  |   | 60,244  | 
|Thereafter              |  |   | 546,444 | 
|                        |  |   |         | 
|                        |  | $ | 937,609 | 
|                        |  |   |         | 

During the years ended December 31, 2010, 2009 and 2008, no single
tenant collectively accounted for more than 10% of the Companys total
revenues.

F-31

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Lease Obligations

The Company leases land at 24 of its shopping centers, which are
accounted for as operating leases and generally provide the Company with
renewal options. Ground rent expense was $3.7 million, $2.5 million, and
$2.3 million (including capitalized ground rent at properties under
development of $0.5 million, $0.6 million and $1.1 million) for
the years ended December 31, 2010, 2009 and 2008, respectively. The leases
terminate at various dates between 2020 and 2078. These leases provide the
Company with options to renew for additional terms aggregating from 20 to
60 years. The Company leases space for its White Plains corporate office
for a term expiring in 2015. Office rent expense under this lease was
$1.5 million, $1.5 million and $1.2 million for the years ended
December 31, 2010, 2009 and 2008, respectively. Future minimum rental
payments required for leases having remaining non-cancelable lease terms are as
follows:

|                        |  |   |         | 
|----------------------- |  | - | ------- | 
|(dollars in
 thousands) | 
|2011                    |  | $ | 5,372   | 
|2012                    |  |   | 6,008   | 
|2013                    |  |   | 6,033   | 
|2014                    |  |   | 5,574   | 
|2015                    |  |   | 5,375   | 
|Thereafter              |  |   | 143,216 | 
|                        |  |   |         | 
|                        |  | $ | 171,578 | 
|                        |  |   |         | 

15. Share Incentive Plan

During 2003, the Company adopted the 2003 Share Incentive Plan (the
2003 Plan). The 2003 Plan authorizes the issuance of options, share
appreciation rights, restricted shares (Restricted Shares), restricted OP
Units (LTIP Units) and performance units (collectively, Awards) to
officers, employees and trustees of the Company and consultants to the Company
equal to up to four percent of the total Common Shares of the Company
outstanding from time to time on a fully diluted basis. However, no participant
may receive more than the equivalent of 1,000,000 Common Shares during the term
of the 2003 Plan with respect to Awards. Options are granted by the Compensation
Committee (the Committee), which currently consists of three non-employee
Trustees, and will not have an exercise price less than 100% of the fair market
value of the Common Shares and a term of greater than ten years at the grant
date. Vesting of options is at the discretion of the Committee. Share
appreciation rights provide for the participant to receive, upon exercise, cash
and/or Common Shares, at the discretion of the Committee, equal to the excess
of the market value of the Common Shares at the exercise date over the market
value of the Common Shares at the grant date. The Committee determines the
restrictions placed on Awards, including the dividends or distributions thereon
and the term of such restrictions. The Committee also determines the award and
vesting of performance units and performance shares based on the attainment of
specified performance objectives of the Company within a specified performance
period. Through December 31, 2010, no share appreciation rights or
performance units/shares had been awarded. In connection with the Awards, to
the extent that a portion of senior managements cash bonus is converted into
elective Awards, the number of shares issued are at a 25% discount and vest
over time.

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

On March 1, 2010 and March 10, 2010, the Company issued 265,517 LTIP
Units and 1,462 Restricted Shares to officers of the Company and 15,011
Restricted Shares and 1,411 LTIP Units to employees of the Company. Vesting
with respect to these awards is recognized ratably over the five annual
anniversaries following the issuance date. Vesting on 23% of the awards issued
to officers are also generally subject to achieving certain Company performance
measures. LTIP Units are similar to Restricted Shares but provide for a
quarterly partnership distribution in a like amount as paid to Common OP Units.
This distribution is paid on both unvested and vested LTIP Units. The LTIP
Units are convertible into Common OP Units and Common Shares upon vesting and a
revaluation of the book capital accounts.

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

The total value of the above Restricted Shares and LTIP Units as of the
grant date was $4.7 million. The weighted average fair value for Restricted
Shares and LTIP Units granted for the years ended December 31, 2010, 2009 and
2008 were $16.73, $10.31 and $24.51, respectively.

Total long-term incentive compensation expense, including the expense
related to the above mentioned plans, was $3.8 million, $3.7 million and $3.5
million for the years ended December 31, 2010, 2009 and 2008, respectively.

F-32

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. Share Incentive Plan, continued

On May 10, 2010, the Company issued 4,180 unrestricted Common Shares to
Trustees of the Company in connection with Trustee fees. The Company also
issued 8,000 Restricted Shares to Trustees, which vest over three years with
33% vesting on each of the three anniversaries following the issuance date. The
Restricted Shares do not carry voting rights or other rights of Common Shares
until vesting and may not be transferred, assigned or pledged until the
recipients have a vested non-forfeitable right to such shares. Dividends are
not paid currently on unvested Restricted Shares, but are paid cumulatively,
from the issuance date through the applicable vesting date of such Restricted
Shares vesting. Trustee fee expense of $0.1 million for the year ended December
31, 2010 has been recognized in the accompanying consolidated financial
statements related to this issuance.

During 2009, the Company adopted the Long Term Investment Alignment
Program (the Program) pursuant to which the Company may award units primarily
to senior executives which would entitle them to receive up to 25% of any
future Fund III Promote when and if such Promote is ultimately realized. As of
December 31, 2010, the Company has awarded units representing 61% of the
Program, which were determined to have no value at issuance or as of December
31, 2010. In accordance with ASC Topic 718 Compensation - Stock Compensation,
compensation relating to these awards will be recorded based on the change in
the estimated fair value at each reporting period.

As of December 31, 2010, the Company had 101,283 options outstanding to
officers and employees all of which have vested. In addition, 58,000 options
have been issued, of which all have vested, to non-employee Trustees. During
2010, 7,000 options were exercised by the Trustees at various exercise prices.
As of December 31, 2010, there are 51,000 options outstanding to Trustees of
the Company. These options are for ten-year terms from the grant date and
vested in three equal annual installments, which began on their respective
grant dates.

A summary of option activity under all option arrangements as of
December 31, 2009 and 2010, and changes during the years then ended is
presented below:

|                                                  |  |        |          |                               |   |                                                  |  |                                                 |     |  |   |       | 
|------------------------------------------------- |  | ------ | -------- | ----------------------------- | - | ------------------------------------------------ |  | ----------------------------------------------- | --- |  | - | ----- | 
|Options                                           |  | Shares |          | WeightedAverageExercise Price |   | Weighted AverageRemainingContractualTerm (years) |  | Aggregate IntrinsicValue(dollars in
 thousands) |    
|                                                  |  |        |          |                               |   |                                                  |  |                                                 |    
|Outstanding at January 1, 2009                    |  |        | 421,244  |                               | $ | 10.65                                            |  |                                                 | 3.7 |  | $ | 1,527 | 
|Granted                                           |  |        |         |                               |   |                                                 |  |                                                 |    |  |   |      | 
|Exercised                                         |  |        | (258,900 | )                             |   | 5.99                                             |  |                                                 |    |  |   | 2,816 | 
|Forfeited or Expired                              |  |        | (3,061   | )                             |   | 19.67                                            |  |                                                 |    |  |   |      | 
|                                                  |  |        |          |                               |   |                                                  |  |                                                 |     |  |   |       | 
|Outstanding and exercisable at December 31,
 2009 |  |        | 159,283  |                               |   | 18.04                                            |  |                                                 | 5.5 |  |   |      | 
|Granted                                           |  |        |         |                               |   |                                                 |  |                                                 |    |  |   |      | 
|Exercised                                         |  |        | (7,000   | )                             |   | 14.46                                            |  |                                                 |    |  |   | 26    | 
|Forfeited or Expired                              |  |        |         |                               |   |                                                 |  |                                                 |    |  |   |      | 
|                                                  |  |        |          |                               |   |                                                  |  |                                                 |     |  |   |       | 
|Outstanding and exercisable at
 December 31, 2010 |  |        | 152,283  |                               | $ | 18.20                                            |  |                                                 | 4.5 |  | $ | 6     | 
|                                                  |  |        |          |                               |   |                                                  |  |                                                 |     |  |   |       | 

The total
intrinsic value of options exercised during the years ended December 31,
2010, 2009 and 2008 was $0.03 million, $2.8 million and $0.8 million,
respectively.

A summary of
the status of the Companys unvested Restricted Shares and LTIP Units as of
December 31, 2009 and 2010 and changes during the years ended
December 31, 2009 and 2010, is presented below:

|                                |  |                  |          |                              |   |            |  |                              |         |   |   |       | 
|------------------------------- |  | ---------------- | -------- | ---------------------------- | - | ---------- |  | ---------------------------- | ------- | - | - | ----- | 
|Unvested
 Shares and LTIP Units |  | 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 | 
|Granted                         |  |                  | 24,473   |                              |   | 17.32      |  |                              | 266,928 |   |   | 16.73 | 
|Vested                          |  |                  | (143,042 | )                            |   | 21.26      |  |                              | (67,022 | ) |   | 15.69 | 
|Forfeited                       |  |                  | (513     | )                            |   | 13.74      |  |                              |        |   |   |      | 
|                                |  |                  |          |                              |   |            |  |                              |         |   |   |       | 
|Unvested at
 December 31, 2010  |  |                  | 153,430  |                              | $ | 19.75      |  |                              | 562,739 |   | $ | 16.61 | 
|                                |  |                  |          |                              |   |            |  |                              |         |   |   |       | 

F-33

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16. Employee Share Purchase and Deferred
Share Plan

As of December 31, 2010, there was $7.4 million of total
unrecognized compensation cost related to unvested share-based compensation
arrangements granted under share incentive plans. That cost is expected to be
recognized over a weighted-average period of 1.7 years. The total fair
value of Restricted Shares that vested during the years ended December 31,
2010, 2009 and 2008 was $3.0 million, $5.0 million and $2.7 million,
respectively.

The Acadia Realty Trust Employee Share Purchase Plan (the Purchase
Plan), allows eligible employees of the Company to purchase Common Shares
through payroll deductions. The Purchase Plan provides for employees to
purchase Common Shares on a quarterly basis at a 15% discount to the closing
price of the 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 2010, 2009 and
2008, 6,184, 8,744 and 7,499 Common Shares, respectively, were purchased by
employees under the Purchase Plan. Associated compensation expense of
$0.02 million was recorded in 2010 and 2009 and $0.03 million was recorded
in 2008.

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

During May of 2006, the Company adopted a Trustee Deferral and
Distribution Election (Trustee Deferral Plan) whereby the participating
Trustees have deferred compensation of $0.06 million, $0.05 million and $0.4
million for 2010, 2009 and 2008, respectively. During 2009, certain trustees
elected to receive 14,722 Common Shares, which were previously deferred, from
the Trustee Deferral Plan.

17. Employee 401(k) Plan

The Company maintains a 401(k) plan for employees under which the
Company currently matches 50% of a plan 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, 2010. The Company contributed $0.2 million, $0.2 million
and $0.3 million for the years ended December 31, 2010, 2009 and
2008, respectively.

18. Dividends and Distributions Payable

On November 9, 2010, the Board of Trustees declared a cash dividend for
the quarter ended December 31, 2010, of $0.18 per Common Share, which was paid
on February 1, 2011 to holders of record as of December 31, 2010.

19. Federal Income Taxes

The Company has elected to qualify as a REIT in accordance with
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended
(the Code), and intends at all times to qualify as a REIT under the Code. To
qualify as a REIT, the Company must meet a number of organizational and
operational requirements, including a requirement that it currently distribute
at least 90% of its annual REIT taxable income to its shareholders. As a REIT,
the Company generally will not be subject to corporate Federal income tax,
provided that distributions to its shareholders equal at least the amount of
its REIT taxable income as defined under the Code. As the Company distributed
sufficient taxable income for the years ended December 31, 2010, 2009 and
2008, no U.S. Federal income or excise taxes were incurred. If the Company
fails to qualify as a REIT in any taxable year, it will be subject to Federal income
taxes at the regular corporate rates (including any applicable alternative
minimum tax) and may not be able to qualify as a REIT for the four subsequent
taxable years. Even though the Company qualifies for taxation as a REIT, the
Company is subject to certain state and local taxes on its income and property
and Federal income and excise taxes on any undistributed taxable income. In
addition, taxable income from non-REIT activities managed through the Companys
Taxable REIT Subsidiary (TRS) is subject to Federal, state and local income
taxes.

F-34

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. Federal Income Taxes, continued

Characterization of Distributions:

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

|                 |  |                                  |     |      |  |      |   |  |     |  
|---------------- |  | -------------------------------- | --- | ---- |  | ---- | - |  | --- | -
|                 |  | For the years ended December 31, |    
|                 |  | 2010                             |     | 2009 |  | 2008 |  
|                 |  |                                  |     |      |  |      |  
|Ordinary
 income |  |                                  | 100 | %    |  | 95   | % |  | 54  | %
|Capital gain     |  |                                  |    |      |  | 5    | % |  | 46  | %
|                 |  |                                  |     |      |  |      |   |  |     |  
|                 |  |                                  | 100 | %    |  | 100  | % |  | 100 | %
|                 |  |                                  |     |      |  |      |   |  |     |  

Taxable REIT Subsidiaries

Income taxes have been provided for using the liability method as
required by ASC Topic 740 Income Taxes. The Companys TRS income and
provision for income taxes for the years ended December 31, 2010, 2009 and
2008 are summarized as follows:

|                                               |  |      |       |      |   |       |  |   |       | 
|---------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|(dollars in
 thousands)                        |  | 2010 |       | 2009 |   | 2008  | 
|                                               |  |      |       |      |   |       | 
|TRS income
 before income taxes                |  | $    | 5,716 |      | $ | 2,671 |  | $ | 5,870 | 
|Provision
 for income taxes:                   |  |      |       |      |   |       |  |   |       | 
|Federal                                        |  |      | 2,164 |      |   | 1,025 |  |   | 2,441 | 
|State and local                                |  |      | 543   |      |   | 292   |  |   | 763   | 
|                                               |  |      |       |      |   |       |  |   |       | 
|TRS net
 income before noncontrolling interest |  |      | 3,009 |      |   | 1,354 |  |   | 2,666 | 
|Noncontrolling
 interest                       |  |      | 545   |      |   |      |  |   |      | 
|                                               |  |      |       |      |   |       |  |   |       | 
|TRS net
 income                                |  | $    | 2,464 |      | $ | 1,354 |  | $ | 2,666 | 
|                                               |  |      |       |      |   |       |  |   |       | 

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

|                                                |  |      |       |      |   |       |  |   |       | 
|----------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|(dollars in thousands)                          |  | 2010 |       | 2009 |   | 2008  | 
|                                                |  |      |       |      |   |       | 
|Federal provision at
 statutory tax rate        |  | $    | 1,943 |      | $ | 908   |  | $ | 1,996 | 
|State and local taxes, net of federal benefit   |  |      | 358   |      |   | 193   |  |   | 504   | 
|Tax effect of:                                  |  |      |       |      |   |       |  |   |       | 
|Permanent differences, net                      |  |      | 406   |      |   | 138   |  |   | 514   | 
|Other                                           |  |      |      |      |   | 78    |  |   | 190   | 
|REIT state and local income and franchise taxes |  |      | 183   |      |   | 224   |  |   | 158   | 
|                                                |  |      |       |      |   |       |  |   |       | 
|Total provision for income taxes                |  | $    | 2,890 |      | $ | 1,541 |  | $ | 3,362 | 
|                                                |  |      |       |      |   |       |  |   |       | 

F-35

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20. Earnings Per Common Share

Basic earnings per Common Share is computed using net income
attributable to common shareholders and the weighted average Common Shares
outstanding. Diluted earnings per Common Share reflect the conversion of
obligations and the assumed exercises of securities including the effects of
awards issuable under the Companys Share Incentive Plans. In accordance with
GAAP, all Common Shares used to calculate earnings per Common Share have been
adjusted to reflect a special dividend paid on January 30, 2009, which resulted
in the issuance of approximately 1.3 million additional Common Shares. The
following table sets forth the computation of basic and diluted earnings per
share from continuing operations for the periods indicated:

|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|------------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ |  | - | ------ | 
|                                                                                                  |  | Years ended December 31, |       
|                                                                                                  |  |                          |       
|(dollars in thousands, except per share
 amounts)                                                 |  | 2010                     |        | 2009 |   | 2008   | 
|                                                                                                  |  |                          |        |      |   |        | 
|Numerator:                                                                                        |  |                          |        |      |   |        |  |   |        | 
|Income from continuing operations
 attributable to Common Shareholders                            |  | $                        | 29,980 |      | $ | 28,551 |  | $ | 17,079 | 
|Effect of dilutive securities:                                                                    |  |                          |        |      |   |        |  |   |        | 
|Preferred OP Unit distributions                                                                   |  |                          | 18     |      |   | 19     |  |   |       | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Numerator for diluted earnings per Common
 Share                                                  |  |                          | 29,998 |      |   | 28,570 |  |   | 17,079 | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Denominator:                                                                                      |  |                          |        |      |   |        |  |   |        | 
|Weighted average shares for basic earnings
 per share                                             |  |                          | 40,136 |      |   | 38,005 |  |   | 33,813 | 
|Effect of dilutive securities:                                                                    |  |                          |        |      |   |        |  |   |        | 
|Employee share options                                                                            |  |                          | 245    |      |   | 212    |  |   | 454    | 
|Convertible Preferred OP Units                                                                    |  |                          | 25     |      |   | 25     |  |   |       | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Dilutive potential Common Shares                                                                  |  |                          | 270    |      |   | 237    |  |   | 454    | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Denominator for diluted earnings per share                                                        |  |                          | 40,406 |      |   | 38,242 |  |   | 34,267 | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Basic earnings per Common Share from
 continuing operations attributable to Common Shareholders   |  | $                        | 0.75   |      | $ | 0.75   |  | $ | 0.51   | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 
|Diluted earnings per Common Share from
 continuing operations attributable to Common Shareholders |  | $                        | 0.74   |      | $ | 0.75   |  | $ | 0.50   | 
|                                                                                                  |  |                          |        |      |   |        |  |   |        | 

The weighted average shares used in the computation of dilutive
earnings per share include unvested restricted Common Shares (Restricted
Shares) and restricted OP Units (LTIP Units) (Note 15) that are entitled to
receive dividend equivalent payments. The effect of the conversion of Common OP
Units is not reflected in the above table, as they are exchangeable for Common
Shares on a one-for-one basis. The income allocable to such units is allocated
on this same basis and reflected as noncontrolling interest in subsidiaries in
the accompanying consolidated financial statements. As such, the assumed
conversion of these units would have no net impact on the determination of
diluted earnings per share. The conversion of the convertible notes payable
(Note 9) is not reflected in the table above as such conversion, based on the
market price of the Common Shares, would be settled with cash.

The effect of the assumed conversion of 188 Series A Preferred OP Units
into 25,067 Series A Preferred OP Units for the year ended December 31, 2010
and December 31, 2009 would be dilutive and they are included in the table. The
effect of the assumed conversion of 188 Series A Preferred OP Units into 25,067
Common Shares for the year ended December 31, 2008 would be anti-dilutive and
they are not included in the table.

F-36

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21. Summary of Quarterly Financial
Information (unaudited)

The quarterly
results of operations of the Company for the years ended December 31, 2010
and 2009 are as follows:

|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|--------------------------------------------------------------------------- |  | --------------- | ---------- | -------------- | - | ------------------- |  | ------------------ | ---------- |  | - | ---------- | 
|(dollars in
 thousands, except per share amounts)                           |  | March 31,
 2010 |            | June 30,
 2010 |   | September 30,
 2010 |  | December 31,
 2010 |           
|                                                                            |  |                 |            |                |   |                     |  |                    |           
|Revenue                                                                     |  | $               | 37,461     |                | $ | 36,698              |  | $                  | 39,011     |  | $ | 38,788     | 
|Income from continuing operations
 attributable to Common Shareholders      |  | $               | 5,118      |                | $ | 12,786              |  | $                  | 5,105      |  | $ | 6,971      | 
|Income from discontinued operations
 attributable to Common Shareholders    |  | $               | 12         |                | $ | 12                  |  | $                  | 12         |  | $ | 41         | 
|Net income attributable to Common
 Shareholders                             |  | $               | 5,130      |                | $ | 12,798              |  | $                  | 5,117      |  | $ | 7,012      | 
|Net income attributable to Common
 Shareholders per Common Share  basic:   |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Income from continuing operations                                           |  | $               | 0.13       |                | $ | 0.32                |  | $                  | 0.13       |  | $ | 0.17       | 
|Income from discontinued operations                                         |  |                 |           |                |   |                    |  |                    |           |  |   |           | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Net income per share                                                        |  | $               | 0.13       |                | $ | 0.32                |  | $                  | 0.13       |  | $ | 0.17       | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Net income attributable to Common
 Shareholders per Common Share  diluted: |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Income from continuing operations                                           |  | $               | 0.13       |                | $ | 0.32                |  | $                  | 0.13       |  | $ | 0.17       | 
|Income from discontinued operations                                         |  |                 |           |                |   |                    |  |                    |           |  |   |           | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Net income per share                                                        |  | $               | 0.13       |                | $ | 0.32                |  | $                  | 0.13       |  | $ | 0.17       | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Cash dividends declared per Common Share                                    |  | $               | 0.18       |                | $ | 0.18                |  | $                  | 0.18       |  | $ | 0.18       | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Weighted average Common Shares outstanding:                                 |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Basic                                                                       |  |                 | 39,980,646 |                |   | 40,134,706          |  |                    | 40,169,141 |  |   | 40,257,378 | 
|Diluted                                                                     |  |                 | 40,149,931 |                |   | 40,371,812          |  |                    | 40,430,998 |  |   | 40,594,009 | 

|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|--------------------------------------------------------------------------- |  | --------------- | ---------- | -------------- | - | ------------------- |  | ------------------ | ---------- |  | - | ---------- | 
|(dollars in
 thousands, except per share amounts)                           |  | March 31,
 2009 |            | June 30,
 2009 |   | September 30,
 2009 |  | December 31,
 2009 |           
|                                                                            |  |                 |            |                |   |                     |  |                    |           
|Revenue                                                                     |  | $               | 34,650     |                | $ | 34,881              |  | $                  | 38,645     |  | $ | 37,527     | 
|Income from continuing operations
 attributable to Common Shareholders      |  | $               | 9,341      |                | $ | 7,104               |  | $                  | 7,264      |  | $ | 4,842      | 
|Income from discontinued operations
 attributable to Common Shareholders    |  | $               | 958        |                | $ | 31                  |  | $                  | 43         |  | $ | 1,550      | 
|Net income attributable to Common
 Shareholders                             |  | $               | 10,299     |                | $ | 7,135               |  | $                  | 7,307      |  | $ | 6,392      | 
|Net income attributable to Common
 Shareholders per Common Share  basic:   |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Income from continuing operations                                           |  | $               | 0.27       |                | $ | 0.18                |  | $                  | 0.18       |  | $ | 0.12       | 
|Income from discontinued operations                                         |  | $               | 0.03       |                |   |                    |  |                    |           |  | $ | 0.04       | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Net income per share                                                        |  | $               | 0.30       |                | $ | 0.18                |  | $                  | 0.18       |  | $ | 0.16       | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Net income attributable to Common
 Shareholders per Common Share  diluted: |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Income from continuing operations                                           |  | $               | 0.27       |                | $ | 0.18                |  | $                  | 0.18       |  | $ | 0.12       | 
|Income from discontinued operations                                         |  | $               | 0.03       |                |   |                    |  |                    |           |  | $ | 0.04       | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Net income per share                                                        |  | $               | 0.30       |                | $ | 0.18                |  | $                  | 0.18       |  | $ | 0.16       | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Cash dividends declared per Common Share                                    |  | $               | 0.21       |                | $ | 0.18                |  | $                  | 0.18       |  | $ | 0.18       | 
|                                                                            |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Weighted average Common Shares outstanding:                                 |  |                 |            |                |   |                     |  |                    |            |  |   |            | 
|Basic                                                                       |  |                 | 33,902,958 |                |   | 38,592,289          |  |                    | 39,685,623 |  |   | 39,756,060 | 
|Diluted                                                                     |  |                 | 34,050,446 |                |   | 38,804,108          |  |                    | 39,967,714 |  |   | 40,037,555 | 

F-37

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22. Commitments and Contingencies

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

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

The Company believes that it is in compliance in all material respects
with all Federal, state and local ordinances and regulations regarding
hazardous or toxic substances. Management is not aware of any environmental
liability that it believes would have a material adverse impact on the
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, results of operations, or liquidity.

In September 2008, the Company, certain of its subsidiaries, and other
unrelated entities were named as defendants in an adversary proceeding brought
by 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, consolidated financial condition, or
liquidity.

During August 2009, the Company terminated the employment of a former
Senior Vice President (the Former Employee) for engaging in conduct that fell
within the definition of cause in his severance agreement with the Company.
Had the Former Employee not been terminated for cause, he would have been
eligible to receive approximately $0.9 million under the severance agreement.
Because the Company terminated him for cause, it did not pay the Former
Employee any severance benefits under the agreement. The Former Employee has
brought a lawsuit against the Company in New York State Supreme Court, alleging
breach of the severance agreement. The suit is in the pre-trial discovery
stage. The Company believes it has meritorious defenses to the suit.

The Company has arranged for the provision of three separate letters of
credit in connection with certain leases and investments. As of December 31,
2010, there were no outstanding balances under any of the letters of credit. If
the letters of credit were fully drawn, the combined maximum amount of exposure
would be $9.1 million.

F-38

---



ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

23. Subsequent Events

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

During January 2011, the Company paid off a $9.3 million loan secured
by one of the Companys properties for $7.5 million, resulting in a $1.8
million gain.

During February 2011, the Company, through Fund III in a joint venture
with an unaffiliated partner, acquired a three property portfolio (the
Portfolio) for an aggregate purchase price of $51.9 million with $20.6
million of in-place mortgage financing assumed at closing. The Portfolio
consists of three street-retail properties, aggregating 61,000 square feet, and
is located in South Miami Beach, Florida.

During February 2011, the Company, through Fund III in a joint venture
with an unaffiliated partner, acquired a 64,600 square foot single tenant
retail property located in Silver Springs, Maryland, for approximately $9.8
million.

F-39

---



ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED
DEPRECIATION

December 31, 2010

|                                                 |  |              |        |                        |   |                                          |  |                                             |        |  |                                        |        |       |   |                         |  |   |        |  |   |        |  |   |        |  |  |      |    
|------------------------------------------------ |  | ------------ | ------ | ---------------------- | - | ---------------------------------------- |  | ------------------------------------------- | ------ |  | -------------------------------------- | ------ | ----- | - | ----------------------- |  | - | ------ |  | - | ------ |  | - | ------ |  |  | ---- | ---
|                                                 |  |              |        |                        |   |                                          |  |                                             |        |  |                                        |        |       |   |                         |  |   |        |  |   |        |  |   |        |  |  |      |    
|                                                 |  |              |        |                        |   |                                          |  |                                             |        |  |                                        |        |       |   |                         |  |   |        |  |   |        |  |   |        |  |  |      |    
|                                                 |  |              |        | Initial Costto Company |   | CostsCapitalizedSubsequent toAcquisition |  | Amount at whichCarried at December 31, 2010 |        |  |                                        |        |      
|                                                 |  |              |        |                        |   |                                          |  |                                             |        | 
|                                                 |  |              |        |                        |   |                                          |  |                                             |        |  | Date ofAcquisition (a)Construction (c) |       
|                                                 |  |              |        | Land                   |   | Buildings &Improvements                  |  |                                             | Land   |  | Buildings &Improvements                |        | Total |   | AccumulatedDepreciation |  |  
|Description                                      |  | Encumbrances |        |                        |   |                                          |  |                                             |        |  |                                       
|                                                 |  |              |        |                        |   |                                          |  |                                             |        |  |                                        |        |       |   |                         |  |   |        | 
|Shopping Centers                                 |  |              |        |                        |   |                                          |  |                                             |        |  |                                        |        |       |   |                         |  |   |        |  |   |        |  |   |        |  |  |      |    
|Core Portfolio:                                  |  |              |        |                        |   |                                          |  |                                             |        |  |                                        |        |       |   |                         |  |   |        |  |   |        |  |   |        |  |  |      |    
|Crescent Plaza
Brockton, MA                      |  | $            | 17,539 |                        | $ | 1,147                                    |  | $                                           | 7,425  |  | $                                      | 1,219  |       | $ | 1,147                   |  | $ | 8,644  |  | $ | 9,791  |  | $ | 5,849  |  |  | 1984 | (a)
|New Loudon Center
Latham, NY                     |  |              | 14,119 |                        |   | 505                                      |  |                                             | 4,161  |  |                                        | 11,375 |       |   | 505                     |  |   | 15,536 |  |   | 16,041 |  |   | 11,266 |  |  | 1982 | (a)
|Ledgewood Mall
Ledgewood, NJ                     |  |              |       |                        |   | 619                                      |  |                                             | 5,434  |  |                                        | 33,199 |       |   | 619                     |  |   | 38,633 |  |   | 39,252 |  |   | 34,042 |  |  | 1983 | (a)
|Mark Plaza
Edwardsville, PA                      |  |              |       |                        |   |                                         |  |                                             | 4,268  |  |                                        | 4,690  |       |   |                        |  |   | 8,958  |  |   | 8,958  |  |   | 6,655  |  |  | 1968 | (c)
|Plaza 422
Lebanon, PA                            |  |              |       |                        |   | 190                                      |  |                                             | 3,004  |  |                                        | 2,192  |       |   | 190                     |  |   | 5,196  |  |   | 5,386  |  |   | 3,690  |  |  | 1972 | (c)
|Route 6 Mall
Honesdale, PA                       |  |              |       |                        |   | 1,664                                    |  |                                             |       |  |                                        | 11,166 |       |   | 1,664                   |  |   | 11,166 |  |   | 12,830 |  |   | 6,020  |  |  | 1994 | (c)
|Bartow Avenue
Bronx, NY                          |  |              |       |                        |   | 1,691                                    |  |                                             | 5,803  |  |                                        | 560    |       |   | 1,691                   |  |   | 6,363  |  |   | 8,054  |  |   | 1,459  |  |  | 2005 | (c)
|Amboy Rd.
Shopping Ctr.
Staten Island, NY        |  |              |       |                        |   |                                         |  |                                             | 11,909 |  |                                        | 1,519  |       |   |                        |  |   | 13,428 |  |   | 13,428 |  |   | 1,843  |  |  | 2005 | (a)
|Abington Towne
Center1Abington, PA               |  |              |       |                        |   | 799                                      |  |                                             | 3,197  |  |                                        | 2,007  |       |   | 799                     |  |   | 5,204  |  |   | 6,003  |  |   | 2,304  |  |  | 1998 | (a)
|Bloomfield Town
Square1Bloomfield Hills, MI      |  |              |       |                        |   | 3,207                                    |  |                                             | 13,774 |  |                                        | 12,189 |       |   | 3,207                   |  |   | 25,963 |  |   | 29,170 |  |   | 8,805  |  |  | 1998 | (a)
|Walnut Hill Plaza
Woonsocket, RI                 |  |              | 23,500 |                        |   | 3,122                                    |  |                                             | 12,488 |  |                                        | 1,840  |       |   | 3,122                   |  |   | 14,328 |  |   | 17,450 |  |   | 4,963  |  |  | 1998 | (a)
|Elmwood Park
Plaza
Elmwood Park, NJ              |  |              | 34,197 |                        |   | 3,248                                    |  |                                             | 12,992 |  |                                        | 14,715 |       |   | 3,798                   |  |   | 27,157 |  |   | 30,955 |  |   | 10,946 |  |  | 1998 | (a)
|Merrillville
Plaza
Hobart, IN                    |  |              | 26,250 |                        |   | 4,288                                    |  |                                             | 17,152 |  |                                        | 1,653  |       |   | 4,288                   |  |   | 18,805 |  |   | 23,093 |  |   | 6,579  |  |  | 1998 | (a)
|Marketplace of
Absecon1Absecon, NJ               |  |              |       |                        |   | 2,573                                    |  |                                             | 10,294 |  |                                        | 3,529  |       |   | 2,577                   |  |   | 13,819 |  |   | 16,396 |  |   | 4,628  |  |  | 1998 | (a)
|Clark Diversey
Chicago, IL                       |  |              | 4,625  |                        |   | 10,061                                   |  |                                             | 2,773  |  |                                        | 83     |       |   | 10,061                  |  |   | 2,856  |  |   | 12,917 |  |   | 360    |  |  | 2006 | (a)
|Boonton
Boonton, NJ                              |  |              | 8,033  |                        |   | 1,328                                    |  |                                             | 7,188  |  |                                        |       |       |   | 1,328                   |  |   | 7,188  |  |   | 8,516  |  |   | 883    |  |  | 2006 | (a)
|Chestnut Hill
Philadelphia, PA                   |  |              | 9,338  |                        |   | 8,289                                    |  |                                             | 5,691  |  |                                        | 44     |       |   | 8,289                   |  |   | 5,735  |  |   | 14,024 |  |   | 650    |  |  | 2006 | (a)
|Third Avenue
Bronx, NY                           |  |              |       |                        |   | 11,108                                   |  |                                             | 8,038  |  |                                        | 440    |       |   | 11,855                  |  |   | 7,731  |  |   | 19,586 |  |   |       |  |  | 2006 | (a)
|Hobson West Plaza1Naperville, IL                 |  |              |       |                        |   | 1,793                                    |  |                                             | 7,172  |  |                                        | 1,567  |       |   | 1,793                   |  |   | 8,739  |  |   | 10,532 |  |   | 2,943  |  |  | 1998 | (a)
|Village Commons
Shopping Center
Smithtown, NY    |  |              | 9,305  |                        |   | 3,229                                    |  |                                             | 12,917 |  |                                        | 2,462  |       |   | 3,229                   |  |   | 15,379 |  |   | 18,608 |  |   | 5,632  |  |  | 1998 | (a)
|Town Line Plaza1Rocky Hill, CT                   |  |              |       |                        |   | 878                                      |  |                                             | 3,510  |  |                                        | 7,303  |       |   | 907                     |  |   | 10,784 |  |   | 11,691 |  |   | 7,668  |  |  | 1998 | (a)
|Branch Shopping
Center
Village of the Branch, NY |  |              | 13,932 |                        |   | 3,156                                    |  |                                             | 12,545 |  |                                        | 865    |       |   | 3,156                   |  |   | 13,410 |  |   | 16,566 |  |   | 4,454  |  |  | 1998 | (a)
|The Methuen
Shopping Center1Methuen, MA          |  |              |       |                        |   | 956                                      |  |                                             | 3,826  |  |                                        | 594    |       |   | 961                     |  |   | 4,415  |  |   | 5,376  |  |   | 1,510  |  |  | 1998 | (a)
|Gateway Shopping
Center
Burlington, VT           |  |              | 20,500 |                        |   | 1,273                                    |  |                                             | 5,091  |  |                                        | 11,536 |       |   | 1,273                   |  |   | 16,627 |  |   | 17,900 |  |   | 4,947  |  |  | 1999 | (a)
|Mad River Station
Dayton, OH                     |  |              |       |                        |   | 2,350                                    |  |                                             | 9,404  |  |                                        | 1,046  |       |   | 2,350                   |  |   | 10,450 |  |   | 12,800 |  |   | 3,215  |  |  | 1999 | (a)
|Pacesetter Park
Shopping Center
Ramapo, NY       |  |              | 12,132 |                        |   | 1,475                                    |  |                                             | 5,899  |  |                                        | 1,121  |       |   | 1,475                   |  |   | 7,020  |  |   | 8,495  |  |   | 2,544  |  |  | 1999 | (a)
|239 Greenwich
Greenwich, CT                      |  |              | 26,000 |                        |   | 1,817                                    |  |                                             | 15,846 |  |                                        | 549    |       |   | 1,817                   |  |   | 16,395 |  |   | 18,212 |  |   | 4,852  |  |  | 1998 | (a)
|West Shore
Expressway
Staten Island, NY          |  |              |       |                        |   | 3,380                                    |  |                                             | 13,554 |  |                                        | 10     |       |   | 3,380                   |  |   | 13,564 |  |   | 16,944 |  |   | 1,429  |  |  | 2007 | (a)
|West 54th Street
Manhattan, NY                   |  |              |       |                        |   | 16,699                                   |  |                                             | 18,704 |  |                                        | 28     |       |   | 16,699                  |  |   | 18,732 |  |   | 35,431 |  |   | 1,751  |  |  | 2007 | (a)
|Acadia 5-7 East
17th Street
Manhattan, NY        |  |              |       |                        |   | 3,048                                    |  |                                             | 7,281  |  |                                        |       |       |   | 3,048                   |  |   | 7,281  |  |   | 10,329 |  |   | 540    |  |  | 2008 | (a)

F-40

---



ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED
DEPRECIATION

December 31, 2010

|                                          |  |              |         |                        |   |                                          |  |                                             |         |  |                                        |         |       |   |                         |  |   |           |  |   |           |  |   |         |  |  |      |    
|----------------------------------------- |  | ------------ | ------- | ---------------------- | - | ---------------------------------------- |  | ------------------------------------------- | ------- |  | -------------------------------------- | ------- | ----- | - | ----------------------- |  | - | --------- |  | - | --------- |  | - | ------- |  |  | ---- | ---
|                                          |  |              |         |                        |   |                                          |  |                                             |         |  |                                        |         |       |   |                         |  |   |           |  |   |           |  |   |         |  |  |      |    
|                                          |  |              |         |                        |   |                                          |  |                                             |         |  |                                        |         |       |   |                         |  |   |           |  |   |           |  |   |         |  |  |      |    
|                                          |  |              |         | Initial Costto Company |   | CostsCapitalizedSubsequent toAcquisition |  | Amount at whichCarried at December 31, 2010 |         |  |                                        |         |      
|                                          |  |              |         |                        |   |                                          |  |                                             |         | 
|                                          |  |              |         |                        |   |                                          |  |                                             |         |  | Date ofAcquisition (a)Construction (c) |        
|                                          |  |              |         | Land                   |   | Buildings &Improvements                  |  |                                             | Land    |  | Buildings &Improvements                |         | Total |   | AccumulatedDepreciation |  |  
|Description                               |  | Encumbrances |         |                        |   |                                          |  |                                             |         |  |                                       
|                                          |  |              |         |                        |   |                                          |  |                                             |         |  |                                        |         |       |   |                         |  |   |           | 
|Fund I:                                   |  |              |         |                        |   |                                          |  |                                             |         |  |                                        |         |       |   |                         |  |   |           |  |   |           |  |   |         |  |  |      |    
|Tarrytown Centre
Westchester, NY          |  | $            | 8,427   |                        | $ | 2,323                                    |  | $                                           | 7,396   |  | $                                      | 359     |       | $ | 2,323                   |  | $ | 7,755     |  | $ | 10,078    |  | $ | 1,379   |  |  | 2004 | (a)
|Granville Center
Columbus, OH             |  |              |        |                        |   | 2,186                                    |  |                                             | 8,744   |  |                                        | 71      |       |   | 2,186                   |  |   | 8,815     |  |   | 11,001    |  |   | 1,864   |  |  | 2002 | (a)
|Kroger/SafewayVarious                     |  |              |        |                        |   |                                         |  |                                             | 34,586  |  |                                        |        |       |   |                        |  |   | 34,586    |  |   | 34,586    |  |   | 31,926  |  |  | 2003 | (a)
|Fund II:                                  |  |              |         |                        |   |                                          |  |                                             |         |  |                                        |         |       |   |                         |  |   |           |  |   |           |  |   |         |  |  |      |    
|Liberty Avenue
New York, NY               |  |              | 10,000  |                        |   |                                         |  |                                             | 12,627  |  |                                        | 540     |       |   |                        |  |   | 13,167    |  |   | 13,167    |  |   | 1,372   |  |  | 2005 | (a)
|Pelham ManorWestchester, NY               |  |              | 31,554  |                        |   |                                         |  |                                             |        |  |                                        | 61,648  |       |   |                        |  |   | 61,648    |  |   | 61,648    |  |   | 3,639   |  |  | 2004 | (a)
|400 E. Fordham
Road
Bronx, NY             |  |              | 85,910  |                        |   | 11,144                                   |  |                                             | 18,010  |  |                                        | 93,356  |       |   | 16,254                  |  |   | 106,256   |  |   | 122,510   |  |   | 6,327   |  |  | 2004 | (a)
|4650
Broadway/Sherman Ave
New York, NY    |  |              |        |                        |   | 25,267                                   |  |                                             |        |  |                                        | 7,744   |       |   | 25,267                  |  |   | 7,744     |  |   | 33,011    |  |   |        |  |  | 2005 | (a)
|216th Street
New York, NY                 |  |              | 25,500  |                        |   | 7,261                                    |  |                                             |        |  |                                        | 19,146  |       |   | 7,261                   |  |   | 19,146    |  |   | 26,407    |  |   | 1,882   |  |  | 2005 | (a)
|161st Street
Bronx, NY                    |  |              | 28,900  |                        |   | 16,679                                   |  |                                             | 28,410  |  |                                        | 10,574  |       |   | 16,679                  |  |   | 38,984    |  |   | 55,663    |  |   | 3,914   |  |  | 2005 | (a)
|Atlantic Avenue
Brooklyn, NY              |  |              | 11,540  |                        |   | 5,322                                    |  |                                             |        |  |                                        | 15,176  |       |   | 5,322                   |  |   | 15,176    |  |   | 20,498    |  |   | 553     |  |  | 2007 | (a)
|Canarsie Plaza
Brooklyn, NY               |  |              | 40,243  |                        |   | 32,543                                   |  |                                             |        |  |                                        | 80,036  |       |   | 32,543                  |  |   | 80,036    |  |   | 112,579   |  |   | 287     |  |  | 2007 | (a)
|CityPoint
Brooklyn, NY                    |  |              | 40,650  |                        |   |                                         |  |                                             | 2,564   |  |                                        | 112,047 |       |   |                        |  |   | 114,611   |  |   | 114,611   |  |   |        |  |  |      |    
|ASOF II, LLC                              |  |              | 40,000  |                        |   |                                         |  |                                             |        |  |                                        |        |       |   |                        |  |   |          |  |   |          |  |   |        |  |  |      |    
|Fund III:                                 |  |              |         |                        |   |                                          |  |                                             |         |  |                                        |         |       |   |                         |  |   |           |  |   |           |  |   |         |  |  |      |    
|125 Main Street
Assoc.
Westport, CT       |  |              |        |                        |   | 12,993                                   |  |                                             | 4,316   |  |                                        | 2,598   |       |   | 12,993                  |  |   | 6,914     |  |   | 19,907    |  |   | 91      |  |  | 2007 | (a)
|Sheepshead Bay
Brooklyn, NY               |  |              |        |                        |   | 20,391                                   |  |                                             |        |  |                                        | 4,257   |       |   | 20,391                  |  |   | 4,257     |  |   | 24,648    |  |   |        |  |  | 2007 | (a)
|Suffern Self
Storage
Suffern, NY          |  |              |        |                        |   | 4,561                                    |  |                                             | 7,484   |  |                                        | 11      |       |   | 4,561                   |  |   | 7,495     |  |   | 12,056    |  |   | 597     |  |  | 2008 | (a)
|Linden Self
Storage2Linden, NJ            |  |              |        |                        |   | 3,515                                    |  |                                             | 6,139   |  |                                        | 15      |       |   | 3,515                   |  |   | 6,154     |  |   | 9,669     |  |   | 528     |  |  | 2008 | (a)
|Webster Self
Storage2Bronx, NY            |  |              |        |                        |   | 959                                      |  |                                             | 5,506   |  |                                        | 27      |       |   | 959                     |  |   | 5,533     |  |   | 6,492     |  |   | 431     |  |  | 2008 | (a)
|Jersey City Self
Storage2Jersey City, NJ  |  |              |        |                        |   | 2,377                                    |  |                                             | 9,654   |  |                                        | 12      |       |   | 2,377                   |  |   | 9,666     |  |   | 12,043    |  |   | 779     |  |  | 2008 | (a)
|Bronx Self
Storage2Bronx, NY              |  |              |        |                        |   | 10,835                                   |  |                                             | 5,936   |  |                                        | 22      |       |   | 10,835                  |  |   | 5,958     |  |   | 16,793    |  |   | 502     |  |  | 2008 | (a)
|Lawrence Self
Storage2Lawrence, NY        |  |              |        |                        |   | 6,977                                    |  |                                             | 12,688  |  |                                        | 6       |       |   | 6,977                   |  |   | 12,694    |  |   | 19,671    |  |   | 938     |  |  | 2008 | (a)
|Starr Avenue Self
Storage
Queens, NY      |  |              |        |                        |   | 7,597                                    |  |                                             | 22,391  |  |                                        | 189     |       |   | 7,597                   |  |   | 22,580    |  |   | 30,177    |  |   | 1,768   |  |  | 2008 | (a)
|New Rochelle Self
Storage
Westchester, NY |  |              |        |                        |   | 1,977                                    |  |                                             | 4,769   |  |                                        | 339     |       |   | 1,977                   |  |   | 5,108     |  |   | 7,085     |  |   | 391     |  |  | 2008 | (a)
|Yonkers Self
Storage
Westchester, NY      |  |              |        |                        |   | 3,121                                    |  |                                             | 17,457  |  |                                        | 93      |       |   | 3,121                   |  |   | 17,550    |  |   | 20,671    |  |   | 1,295   |  |  | 2008 | (a)
|Bruckner Blvd.
Self Storage
Bronx, NY     |  |              |        |                        |   | 6,244                                    |  |                                             | 10,551  |  |                                        | 38      |       |   | 6,244                   |  |   | 10,589    |  |   | 16,833    |  |   | 806     |  |  | 2008 | (a)
|Ridgewood Self
Storage
Queens, NY         |  |              |        |                        |   | 8,000                                    |  |                                             |        |  |                                        | 13,859  |       |   | 8,000                   |  |   | 13,859    |  |   | 21,859    |  |   | 589     |  |  | 2008 | (c)
|Document Storage
New York City, NY        |  |              |        |                        |   |                                         |  |                                             |        |  |                                        | 1,080   |       |   |                        |  |   | 1,080     |  |   | 1,080     |  |   | 134     |  |  | 2008 | (a)
|Cortlandt Towne
Center
Cortlandt, NY      |  |              | 50,000  |                        |   | 7,293                                    |  |                                             |        |  |                                        | 64,878  |       |   | 7,293                   |  |   | 64,878    |  |   | 72,171    |  |   | 5,501   |  |  | 2009 | (a)
|ASOF III, LLC                             |  |              | 171,450 |                        |   |                                         |  |                                             |        |  |                                        |        |       |   |                        |  |   |          |  |   |          |  |   |        |  |  |      |    
|Undeveloped land                          |  |              |        |                        |   | 251                                      |  |                                             |        |  |                                        |        |       |   | 251                     |  |   |          |  |   | 251       |  |   |        |  |  |      |    
|Properties under
development              |  |              |        |                        |   |                                         |  |                                             |        |  |                                        |        |       |   |                        |  |   | 4,400     |  |   | 4,400     |  |   |        |  |  |      |    
|                                          |  |             
|Total                                     |  | $            | 806,144 |                        | $ | 293,709                                  |  | $                                           | 470,568 |  | $                                      | 617,622 |       | $ | 300,154                 |  | $ | 1,086,145 |  | $ | 1,386,299 |  | $ | 219,920 |  |  |      |    
|                                          |  |             

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

F-41

---



ACADIA REALTY TRUST 
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2010

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

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

2. The
aggregate gross cost of property included above for Federal income tax purposes
was $1,292.0 million as of December 31, 2010

3. (a)
Reconciliation of Real Estate Properties:

The following
table reconciles the real estate properties from January 1, 2008 to December
31, 2010:

|                              |  |                                  |           |      |   |           |  |   |           | 
|----------------------------- |  | -------------------------------- | --------- | ---- | - | --------- |  | - | --------- | 
|                              |  | For the years ended December 31, |          
|                              |  |                                  |          
|(dollars
 in thousands)       |  | 2010                             |           | 2009 |   | 2008      | 
|                              |  |                                  |           |      |   |           | 
|Balance at beginning of
 year |  | $                                | 1,200,483 |      | $ | 1,085,072 |  | $ | 811,893   | 
|Other improvements            |  |                                  | 185,816   |      |   | 46,723    |  |   | 103,476   | 
|Property Acquired             |  |                                  |          |      |   | 68,688    |  |   | 169,703   | 
|                              |  |                                  |           |      |   |           |  |   |           | 
|Balance at end of year        |  | $                                | 1,386,299 |      | $ | 1,200,483 |  | $ | 1,085,072 | 
|                              |  |                                  |           |      |   |           |  |   |           | 

3. (b)
Reconciliation of Accumulated Depreciation:

The following
table reconciles accumulated depreciation from January 1, 2008 to December 31,
2010:

|                                     |  |                                  |         |      |   |         |  |   |         | 
|------------------------------------ |  | -------------------------------- | ------- | ---- | - | ------- |  | - | ------- | 
|                                     |  | For the years ended December 31, |        
|                                     |  |                                  |        
|(dollars
 in thousands)              |  | 2010                             |         | 2009 |   | 2008    | 
|                                     |  |                                  |         |      |   |         | 
|Balance at beginning of
 year        |  | $                                | 191,307 |      | $ | 163,214 |  | $ | 141,044 | 
|Depreciation related to
 real estate |  |                                  | 28,613  |      |   | 28,093  |  |   | 22,170  | 
|                                     |  |                                  |         |      |   |         |  |   |         | 
|Balance at end of year               |  | $                                | 219,920 |      | $ | 191,307 |  | $ | 163,214 | 
|                                     |  |                                  |         |      |   |         |  |   |         | 

F-42

---