EDGAR 10-K Filing

Company CIK: 899629
Filing Year: 2022
Filename: 899629_10-K_2022_0000950170-22-002570.json

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ITEM 1. BUSINESS

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS.
Set forth below are the risk factors that we believe are material to our investors. You should carefully consider these risk factors, together with all of the other information included in this Report, including our consolidated financial statements and related notes thereto, before you decide whether to make an investment in our securities. The occurrence of any of the following risks could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. In such case, the trading price of our Common Shares could decline, and you may lose all or a significant part of your investment. This section includes or refers to certain forward-looking statements. See “Special Note Regarding Forward-Looking Statements”.
The following risk factors are not exhaustive. Other sections of this Report may include additional factors that could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may affect our business. Investors should also refer to our quarterly reports on Form 10-Q and current reports on Form 8-K for future periods for material updates to these risk factors.
Risk factors pertaining to our Company generally fall within the following broad areas:
•risks related to our business, properties and tenants;
•risks related to litigation, environmental matters and government regulation;
•risks related to our management and structure;
•risks related to our REIT status; and
•general risk factors.
RISKS RELATED TO OUR BUSINESS, OUR PROPERTIES AND OUR TENANTS
Actual or perceived threats associated with epidemics, pandemics or other public health crises, including the COVID-19 Pandemic, had had and could continue to have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity, and ability to access the capital markets and satisfy debt service obligations.
Epidemics, pandemics or other public health crises, including the current COVID-19 Pandemic, that impact economic and market conditions, particularly in the markets where our properties are located, and preventative measures taken to alleviate their impact may have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity, and ability to access capital markets and satisfy debt service obligations.
Our retail tenants depend on in-person interactions with their customers to generate unit-level profitability, and an epidemic, pandemic or other public health crisis may decrease customer willingness to frequent, and mandated “shelter-in-place” or “stay-at-home” orders may prevent customers from frequenting, our tenants’ businesses, which may result in their inability to maintain profitability and make timely rental payments to us under their leases. Such restrictions may also affect customer behavior longer term by, among others, creating a preference for e-commerce. As of December 31, 2021, we collected approximately 98% and 94% of Core Portfolio and Fund Portfolio pre-COVID billings (original contract rents without regard to deferral or abatement agreements excluding the impact of any security deposits applied against tenant accounts), respectively, for the fourth quarter 2021 compared to 91% and 82% for the fourth quarter of 2020. We have negotiated rent concessions with selected tenants during 2021 and 2020 (Note 12).
Moreover, the ongoing COVID-19 Pandemic and restrictions intended to prevent and mitigate its spread could have additional adverse effects on our business, including with regards to:
•the ability and willingness of our tenants to renew their leases upon expiration, our ability to re-lease the properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant;
•anticipated returns from development and redevelopment projects, which were previously temporarily suspended;
•to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices,
•macroeconomic conditions, such as a disruption of or lack of access to the capital markets as well as a potential decline in our share price;
•our ability to obtain additional indebtedness or pay down, refinance, restructure or extend our indebtedness as it becomes due, and the negative impact of reductions in rent on financial covenants related to corporate and/or property-level debt; and
•potential reduction in our operating effectiveness as employees work remotely or if key personnel become unavailable due to illness or other personal circumstances related to COVID-19, as well as increased cybersecurity risks relating to the use of remote technology.
While the U.S. economy has shown signs of improvement compared to fiscal year 2020 and the use of vaccines has alleviated COVID-19 restrictions, the spread of new COVID-19 virus strains is likely to pose additional challenges. Accordingly, developments around the COVID-19 Pandemic preclude prediction as to its ultimate economic, political and social impact, and may continue to present material risks and uncertainties with respect to our and our tenants’ business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy debt service obligations. Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks described herein.
There are risks relating to investments in real estate that could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and make distributions to our shareholders.
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), the quality and philosophy of management, competition from other available space, and the ability to provide adequate maintenance and insurance and to control variable operating costs. Retail properties, in particular, may be affected by changing perceptions of retailers or shoppers regarding the convenience and attractiveness of the property 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 we were unable to rent our vacant space to viable tenants on economically favorable terms or at all. In the event of default by a tenant, we may experience delays in enforcing, as well as incur substantial costs to enforce, our rights as a landlord. In addition, certain significant expenditures associated with each equity investment (such as mortgage payments, real estate taxes and maintenance costs) are generally not reduced even though there may be a reduction in income from the investment.
We rely on revenues derived from tenants, in particular our key tenants, and a decrease in those revenues could adversely affect our ability to make distributions to our shareholders.
Revenue from our properties depends primarily on the ability of our tenants to pay the full amount of rent and other charges due under their leases on a timely basis. We derive significant revenues from a concentration of 20 key tenants which occupy space at more than one property and collectively account for approximately 21.0% of our consolidated revenue. We could be adversely affected in the event of the bankruptcy or insolvency of, or a downturn in the business of, any of our key tenants, or in the event that any such tenant does not renew its leases as they expire or renews such leases at lower rental rates. See “Item 2. Properties-Major Tenants” for quantified information with respect to the percentage of our minimum rents received from major tenants.
Anchor tenants and co-tenancy are crucial to the success of retail properties and vacated anchor space directly and indirectly affects our rental revenues.
Certain of our properties are supported by “anchor” tenants. Anchor tenants pay a significant portion of the total rents at a property and contribute to the success of other tenants by drawing large numbers of customers to a property. Vacated anchor space not only directly reduces rental revenues, but, if not re-tenanted with a tenant with comparable consumer attraction, could adversely affect the rest of the property primarily through the loss of customer drawing power. This can also 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”), such as the case of the departure of a “shadow” anchor tenant that is owned by another landlord. In addition, in the event that certain anchor tenants cease to occupy a property, such an action results in a significant number of other tenants having the contractual 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, also known as “co-tenancy.” Although it may not directly reduce our rental revenues, and there are no contractual co-tenancy conditions, vacant retail space adjacent to, or even on the same block as our street and urban properties may similarly affect shopper traffic and re-tenanting activities at our properties. See “Item 2. Properties-Major Tenants”.
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 financial condition, cash flows, results of operations 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 to not renew their leases as they expire, or renew at lower rental rates, may adversely affect our cash flows and property values. Furthermore, the impact of vacated anchor space and the potential reduction in customer traffic may adversely impact the balance of tenants at a shopping center.
Historically and from time to time, certain of our tenants experienced financial difficulties and filed for bankruptcy protection, typically under Chapter 11 of the United States Bankruptcy Code (“Chapter 11 Bankruptcy”). Pursuant to bankruptcy law, tenants have the right to reject some or all of their leases. In the event a 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 bankruptcy plan and the availability of funds to pay its creditors. There can be no assurance that our major tenants will not declare bankruptcy, in which case we may be unable to recoup past and future rent in full, and to re-lease a terminated or rejected space on comparable terms or at all.
We may not be able to renew current leases or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms.
Upon the expiration of current leases for space located in our properties, we may not be able to re-let all or a portion of that space, or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms. If we are unable to re-let promptly all or a substantial portion of the space located in our properties or if the rental rates we receive upon re-letting are significantly lower than current rates, our net income and ability to make expected distributions to our shareholders will be adversely affected due to the resulting reduction in revenues. There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases. See “Item 2. Properties-Lease Expirations” for additional information regarding the scheduled lease expirations in our portfolio.
Our business is significantly influenced by demand for retail space generally, and a decrease in such demand may have a greater adverse effect on our business than if we owned a more diversified real estate portfolio.
A decrease in the demand for retail space may have a greater adverse effect on our business and financial condition than if we owned a more diversified real estate portfolio. The market for retail space has been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retailing companies and bankruptcy incidence, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets, and increasing consumer purchases through the Internet. To the extent that any of these conditions occur, they are likely to negatively affect market rents for retail space and could adversely affect our financial condition, cash flows, results of operations, the trading price of our Common Shares and our ability to satisfy our debt service obligations and to pay distributions to our shareholders.
E-commerce can have an impact on our business because it may cause a downturn in the business of our current tenants and affect future leases.
The use of the Internet by retail consumers continues to gain in popularity and the migration toward e-commerce is expected to continue. The increase in Internet sales could result in a downturn in the business of our current tenants in their “brick and mortar” locations, adversely impacting their ability to satisfy their rent obligations, and could affect the way future tenants lease space.
While we devote considerable effort and resources to analyze and respond to tenant trends, preferences and consumer spending patterns, we cannot predict with certainty what future tenants will want, what future retail spaces will look like and how much revenue will be generated at traditional “bricks and mortar” locations. If we are unable to anticipate and respond promptly to trends in the market because of the illiquid nature of real estate our occupancy levels and financial results could suffer. See the Risk Factor entitled, “Our ability to change our portfolio is limited because real estate investments are illiquid” below.
Many of our real estate costs are fixed, even if income from our properties decreases, which would cause a decrease in net income.
Our financial results depend primarily on leasing space at our properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes, insurance and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the property. As a result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to fully lease our properties on favorable terms. Additionally, properties that we develop or redevelop may not produce any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with such projects until they are fully occupied.
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, which could adversely affect our financial condition, cash flows, and ability to satisfy our debt service obligations and to make distributions to our shareholders. In addition, the Code contains restrictions on a REITs ability to dispose of properties that are not applicable to other types of real estate companies. Our Board may establish investment criteria or limitations as it deems appropriate, but it 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. As discussed under the heading “Our Board may change our investment policy without shareholder approval” below, we could change our investment, disposition and financing policies and objectives without a vote of our shareholders, but such change may be delayed or more difficult to implement due to the illiquidity of real estate.
We could be adversely affected by conditions in the markets where our properties are geographically concentrated.
Our performance depends on the economic conditions in markets where our properties are geographically concentrated. We have significant exposure to the greater New York and Chicago metropolitan regions, from which we derive 36.5% and 28.0% of the annual base rents within our Core Portfolio, respectively, and 16.9% and 2.6% of annual base rents within our Funds, respectively. In addition, our Funds derive 30.2% of their annual base rents in the Southeast region of the United States. Our operating results could be adversely affected if market conditions, such as an oversupply of space or a reduction in demand for real estate, occur in these areas.
Our development and construction activities could affect our operating results.
We intend to continue the selective development and construction of retail properties (See “Item 1. Business -Investing Activities-Funds-Development Activities”).
As opportunities arise, we may delay construction until sufficient pre-leasing is reached and financing is in place. Our development and construction activities include the risk 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, including labor and material costs; and
•we may not be able to obtain, or may experience delays in obtaining necessary zoning and land use approvals as well as building, occupancy and other required governmental permits and authorizations.
In addition, the entitlement and development of real estate entails extensive approval processes, sometimes involving multiple regulatory jurisdictions. It is common for a project to require multiple approvals, permits and consents from U.S. federal, state and local governing and regulatory bodies. Compliance with these and other regulations and standards is time intensive and costly and may require additional long range infrastructure review and approvals which can add to project cost. In addition, development of properties containing delineated wetlands may require one or more permits from the U.S. federal government and/or state and local governmental agencies. Any of these issues can materially affect the cost, timing and economic viability of our development and redevelopment projects.
At times, we may also be required to use unionized construction workers or to pay the prevailing wage in a jurisdiction to unionized workers, which could increase projects costs and the risk of a strike, thereby affecting construction timelines.
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 could have an adverse effect on our financial condition, cash flows and results of operations. In addition, new development activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management.
Developments and acquisitions may fail to perform as expected, which could adversely affect our results of operations.
Our investment strategy includes the development and acquisition of retail properties in supply constrained markets in densely populated areas with high average household incomes and significant barriers to entry. The acquisition of such properties is highly competitive. Additionally, the development and acquisition of such properties entails risks that include the following, any of which could adversely affect our financial condition, cash flows, results of operations, and our ability to meet our debt obligations and make distributions to shareholders:
•The property may fail to achieve the returns we have projected, either temporarily or for extended periods;
•We may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the properties we identify;
•We may not be able to integrate an acquisition into our existing operations successfully;
•Properties we redevelop or acquire may fail to achieve the occupancy or rental rates we project or within the time frames we project 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.
Historically, Fund I, Mervyns I and Fund III have provided Promote income. There can be no assurance that our 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.
Our real estate assets may be subject to impairment charges.
We periodically assess whether there are any indicators that the value of our real estate assets and other investments may be impaired. A property’s value is considered to be impaired only if the estimated aggregate future undiscounted property cash flows are less than the carrying value of the property. In our estimate of cash flows, we consider factors such as trends and prospects and the effects of demand and competition on expected future operating income. If we are evaluating the potential sale of an asset or redevelopment alternatives, the undiscounted future cash flows consider the most likely course of action as of the balance sheet date based on current plans, intended holding periods and available market information. We are required to make subjective assessments as to whether there are impairments in the value of our real estate assets and other investments. Impairment charges have an immediate direct impact on our earnings. There can be no assurance that we will not take additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our operating results in the period in which the charge is taken.
If a third-party vendor fails to provide agreed upon services, we may suffer losses.
We are dependent and rely on third party vendors, including Cloud providers, for redundancy of our network, system data, security and data integrity. If a vendor fails to provide services as agreed, suffers outages, business interruptions, financial difficulties or bankruptcy, we may experience service interruption, delays or loss of information. Cloud computing is dependent upon having access to an Internet connection in order to retrieve data. If a natural disaster, blackout or other unforeseen event were to occur that disrupted the ability to obtain an Internet connection, we may experience a slowdown or delay in our operations. We conduct appropriate due diligence on all services providers and restrict access, use and disclosure of personal information. We engage vendors with formal written agreements clearly defining the roles of the parties specifying privacy and data security responsibilities.
RISKS RELATED TO OUR LIQUIDITY AND INDEBTEDNESS
If we decided to employ higher leverage levels, we would be subject to increased debt service requirements and a higher risk of default on our debt obligations, which could adversely affect our financial conditions, cash flows and ability to make distributions to our shareholders. In addition, increases or changes in interest rates could cause our borrowing costs to rise and may limit our ability to refinance debt.
Although we have historically used moderate levels of leverage, we have incurred, and expect to continue to incur, indebtedness to support our activities. As of December 31, 2021, our outstanding indebtedness was $1,819.7 million, of which $780.9 million was variable-rate indebtedness.
None of our Declaration of Trust, our bylaws or any policy statement formally adopted by our Board 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 debt service requirements and a higher risk of default on our debt obligations. This in turn could adversely affect our financial condition, cash flows and ability to make distributions to our shareholders.
Although approximately 57.1% of our outstanding debt has fixed or effectively fixed interest rates, we also borrow funds at variable interest rates. Variable-rate debt exposes us to changes in interest rates, which could cause our borrowing costs to rise and may limit our ability to refinance debt. Interest expense on our variable-rate debt as of December 31, 2021 would increase by approximately $7.8 million annually for a 100-basis-point increase in interest rates. This exposure would increase if we sought additional variable-rate financing based on pricing and other commercial and financial terms. We enter into interest rate hedging transactions, including interest rate swap and cap agreements, with counterparties, generally, the same lenders who made the loan in question. There can be no guarantee that the future financial condition of these counterparties will enable them to fulfill their obligations under these agreements.
In 2017, U.K. regulators announced the discontinuation of LIBOR after December 2021. While U.S. official guidance states that there should be no new LIBOR trading after December 31, 2021, USD LIBOR will continue to be published until June 2023.
Additionally, U.S. regulators identified the Secured Overnight Financing Rate (“SOFR”) as their preferred alternative to USD LIBOR in derivatives and other financial contracts. We have contracts indexed to LIBOR and are monitoring and evaluating the risks related to potential discontinuation of LIBOR, including transitioning contracts to a new alternative rate and any resulting value transfer that may occur. When USD LIBOR is discontinued, the interest rates of our LIBOR-indexed debt following such event will be based on either alternate base rates, such as SOFR, or agreed upon replacement rates. While the discontinuation of USD LIBOR would not affect our ability to borrow or maintain already outstanding borrowings, it could result in higher interest rates and/or payments under our debt agreements. Additionally, adjustments to systems and mathematical models to properly process and account for alternative rates will be required, which may strain the model risk management and information technology functions and result in substantial incremental costs to the Company.
Our inability to raise capital for new Funds or to carry out our growth strategy could adversely affect our financial condition, cash flows and results of operations.
Our earnings growth strategy is based on the acquisition and development of additional properties, including acquisitions of core properties through our Operating Partnership and our high return investment programs through our Fund platform. The consummation of any future acquisitions will be subject to satisfactory completion of our extensive valuation analysis and due diligence review and to the negotiation of definitive documentation. We cannot be sure that we will be able to implement our strategy because we may have difficulty finding new properties, obtaining necessary entitlements, negotiating with new or existing tenants or securing acceptable financing.
Acquisitions of additional properties entail the risk that investments will fail to perform in accordance with expectations, including operating and leasing expectations. In the context of our business plan, “development” generally means an expansion or renovation of an existing property. Development is subject to numerous risks, including risks of construction delays, cost overruns or uncontrollable events that may increase project costs, new project commencement risks such as the receipt of zoning, occupancy and other required governmental approvals and permits, and incurring development costs in connection with projects that are not pursued to completion.
Historically, a component of our growth strategy has been through private-equity type investments made through our RCP Venture, which have included investments in operating retailers. The inability of such 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 human capital issues, adequate supply of product and material, and merchandising issues.
Furthermore, if we were unable to obtain sufficient investor capital commitments in order to initiate future Funds, this would adversely impact our current growth strategy would be adversely impacted. Because the Operating Partnership is the sole general partner or managing member of our Funds and earns promote distributions or fees for asset management, property management, construction, development, leasing and legal services, such a situation would also adversely impact the amount or ability to earn such promotes or fees.
Our structured financing portfolio is subject to specific risks relating to the structure and terms of the instruments and the underlying collateral.
We invest in notes receivables and preferred equity investments that are collateralized by the underlying real estate, a direct interest or the borrower’s ownership interest in the entities that own the properties and/or by the borrower’s personal guarantee. The underlying assets are sometimes subordinate in payment and collateral to more senior loans. The ability of a borrower or entity to make payments on these investments may be subject to the senior lender and/or the performance of the underlying real estate. In the event of a default by the borrower or entity on its senior loan, our investment will only be satisfied after the senior loan and we may not be able to recover the full value of the investment. In the event of a bankruptcy of an entity in which we have a preferred equity interest, or in which the borrower has pledged its interest, the assets of the entity may not be sufficient to satisfy our investment.
RISKS RELATED TO LITIGATION, ENVIRONMENTAL MATTERS AND GOVERNMENTAL REGULATION
We are exposed to possible liability relating to environmental matters.
Under various Federal, state and local environmental laws, statutes, ordinances, rules and regulations, as an owner of real property, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under our property, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on us in connection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect our ability to sell or rent that property or to borrow using that property as collateral, which, in turn, could reduce our revenues and affect our ability to make distributions.
A property can also be adversely affected either through physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of any of our tenants to satisfy any obligations with respect to the property leased to that tenant, we may be required to satisfy such obligations. In addition, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease.
From time to time, in connection with the conduct of our business, and prior to the acquisition of any property from a third party or as required by our financing sources, we authorize the preparation of Phase I environmental reports and, when necessary, Phase II environmental reports, with respect to our properties. Based upon these environmental reports and our ongoing review of our properties, we are currently not aware of any environmental condition with respect to any of our properties that we believe would be reasonably likely to have a material adverse effect on us. There can be no assurance, however, that the environmental reports will reveal all environmental conditions at our properties or that the following will not expose us to material liability in the future:
•The discovery of previously unknown environmental conditions;
•Changes in law;
•Activities of tenants; and
•Activities relating to properties in the vicinity of our properties.
Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of our tenants, which could adversely affect our financial condition, cash flows and results of operations.
Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition, cash flows and results of operations.
We carry comprehensive general liability, all-risk property, extended coverage, loss of rent insurance, and environmental liability on our properties, with policy specifications and insured limits customarily carried for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, we maintain a minimum of twelve months 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 could adversely affect our financial condition, cash flows and results of operations.
We may from time to time be subject to litigation that could negatively impact our financial condition, cash flows, results of operations and the trading price of our Common Shares.
We may from time to time be a defendant in lawsuits and regulatory proceedings relating to our business. Such litigation and proceedings may result in defense costs, settlements, fines or judgments against us, some of which may not be covered by insurance. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such litigation or proceedings. An unfavorable outcome may result in our having to pay significant fines, judgments or settlements, which, if uninsured, or if exceeding insurance coverage, could adversely impact our financial condition, cash flows, results of operations and the trading price of our Common Shares. Additionally, certain proceedings or the resolution of certain proceedings may affect the availability or cost of some of our insurance coverage and expose us to increased risks that would be uninsured. See Item 3 - Legal Proceedings and Notes to Consolidated Financial Statements as updated by our subsequent filings with the SEC, for pending litigation, if any.
Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unplanned expenditures that could adversely affect our financial condition, cash flows and results of operations.
All of our properties are required to comply with the Americans with Disabilities Act (the “ADA”). The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While the tenants to whom we lease properties are obligated by law to comply with applicable ADA provisions, and are typically obligated to cover costs of compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs could be adversely affected. As a result of the foregoing or if a tenant is not obligated to cover the cost of compliance, we could be required to expend funds to comply with the provisions of the ADA, which could adversely affect our financial condition, cash flows and results of operations. In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to the properties. We may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could also adversely affect our financial condition, cash flows and results of operations.
RISKS RELATED TO OUR MANAGEMENT AND STRUCTURE
The loss of key management members could have an adverse effect on our business, financial condition and results of operations.
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 business, financial condition and results of operations. Management continues to strengthen our team and we have CEO succession planning in place, but there can be no assurance that such planning will be capable of implementation or that our efforts will be successful. We have obtained key-man life insurance for Mr. Bernstein. In addition, we have entered into an employment agreement with Mr. Bernstein and into severance agreements with other senior executives; however, Mr. Bernstein and such executives may terminate their employment with us at will.
We have pursued, and may in the future continue to pursue extensive growth opportunities, including investing in new markets, which may result in significant demands on our operational, administrative and financial resources.
We have pursued and may pursue growth opportunities, some of which have been, and in the future may be, in locations in which we have not historically invested. 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 newly acquired properties.
Our Board may change our investment policy or objectives without shareholder approval.
Our Board may determine to change our investment and financing policies or objectives, our growth strategy and our debt, capitalization, distribution, acquisition, disposition and operating policies. Our Board 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 the concentration of investments in any one geographic region. Although our Board 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 as implemented by management may or may not serve the interests of all of our shareholders and could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders.
Concentration of ownership by certain investors.
As of December 31, 2021, six institutional shareholders own 5% or more individually, and 57.4% in the aggregate, of our Common Shares. While this ownership concentration does not jeopardize our qualification as a REIT for U.S. federal income tax purposes (due to certain “look-through provisions”), 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. Additionally, our Board may, in its sole discretion, waive or modify the 9.8% Common Shares ownership limit in our Declaration of Trust with respect to one or more persons if it is satisfied that ownership in excess of the limit will not jeopardize our qualification as a REIT for U.S. federal income tax purposes. From time to time, we have entered into waivers with certain institutional investors, subject to certain representations from such investors, including that the common Shares held by the investors will be held in the ordinary course of business and not with the purpose or effect of changing or influencing control of us.
Restrictions on a potential change of control could prevent changes that would be beneficial to our shareholders.
Our Board is authorized by our Declaration of Trust to establish and issue one or more series of preferred shares of beneficial interest without shareholder approval. We have not established any series of preferred shares other than the Series A and Series C Preferred OP Units in the Operating Partnership. However, the establishment and issuance of a class or series of preferred shares could make a change of control of us that could be in the best interests of the shareholders more difficult. In addition, we have entered into an employment agreement with our Chief Executive Officer and severance agreements with certain of 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), such executive officers would be entitled to certain termination or severance payments made by us (which may include a lump sum payment equal to defined percentages of annual salary and prior years' average bonuses, paid in accordance with the terms and conditions of the respective agreement), which could deter a change of control of us that could be in the best interests of our shareholders generally.
Certain provisions of Maryland law may limit the ability of a third party to acquire control of our Company.
Under the provisions of the Maryland General Corporation Law (the “MGCL”) applicable to REITs, certain business combinations, including certain mergers, consolidations, share exchanges and asset transfers and certain issuances and reclassifications of equity securities, between a Maryland REIT and any person who beneficially owns 10% or more of the voting power of the REIT's outstanding voting shares or an affiliate or an associate, as defined in the MGCL, of the REIT who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding shares of beneficial interest of the REIT (an “interested shareholder”) or an affiliate of the interested shareholder, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. After that five-year period, any such business combination must be recommended by the Board of the REIT and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the REIT and (ii) two-thirds of the votes entitled to be cast by holders of voting shares of the REIT other than shares held by the interested shareholder with whom, or with whose affiliate, the business combination is to be effected or held by an affiliate or associate of the interested shareholder, unless, among other conditions, the REIT's common shareholders receive a minimum price, as defined in the MGCL, for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its common shares.
These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of trustees of the REIT before the interested shareholder becomes an interested shareholder, and a person is not an interested shareholder if the board of trustees approved in advance the transaction by which the person otherwise would have become an interested shareholder. In approving a transaction, our Board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board. We have not elected to opt out of the business combination statute.
The MGCL also provides that holders of “control shares” of a Maryland REIT (defined as voting shares that, when aggregated with all other shares owned by the acquirer or in respect of which the acquirer is entitled to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired
in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by the affirmative vote of holders of at least two-thirds of all the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by officers or by employees who are also trustees of the REIT. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares of beneficial interest. Our Bylaws can be amended by our Board by majority vote, and there can be no assurance that this provision will not be amended or eliminated at any time in the future.
Additionally, Title 3, Subtitle 8 of the MGCL permits our Board, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or Bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring or preventing a transaction or a change of control of our Company that might involve a premium to the market price of our Common Shares or otherwise be in the best interests of our shareholders. We are subject to some of these provisions (for example, a two-thirds vote requirement for removing a trustee) by provisions of our Declaration of Trust and Bylaws unrelated to Subtitle 8. However, pursuant to the Articles Supplementary filed with the State Department of Assessments and Taxation of Maryland on November 9, 2017, which are referenced in Part IV Item 15 hereto, the Board approved a resolution to opt out of Section 3-803 of Subtitle 8 of Title 3 of the MGCL that allows the Board, without shareholder approval, to elect to classify into three classes with staggered three-year terms. The Articles Supplementary prohibit the Company, without the affirmative vote of a majority of the votes cast on the matter by shareholders entitled to vote generally in the election of trustees, from classifying the Board under Subtitle 8.
Becoming subject to, or the potential to become subject to, these provisions of the MGCL could inhibit, delay or prevent a transaction or a change of control of our Company that might involve a premium price for our shareholders or otherwise be in our or their best interests. In addition, the provisions of our Declaration of Trust on removal of trustees and the provisions of our Bylaws regarding advance notice of shareholder nominations of trustees and other business proposals and restricting shareholder action outside of a shareholders meeting unless such action is taken by unanimous written consent could have a similar effect.
Our rights and shareholders' rights to take action against trustees and officers are limited, which could limit recourse in the event of actions not in the best interests of shareholders.
As permitted by Maryland law, our Declaration of Trust eliminates the liability of our trustees and officers to the Company and its shareholders for money damages, except for liability resulting from:
•actual receipt of an improper benefit or profit in money, property or services; or
•a final judgment based upon a finding of active and deliberate dishonesty by the trustee or officer that was material to the cause of action adjudicated.
In addition, our Declaration of Trust authorizes, and our Bylaws obligate, us to indemnify each present or former trustee or officer, to the maximum extent permitted by Maryland law, who is made a party to any proceeding because of his or her service to our Company in those or certain other capacities. As part of these indemnification obligations, we may be obligated to fund the defense costs incurred by our trustees and officers.
We operate through a partnership structure, which could have an adverse effect on our ability to manage our assets.
Our primary property-owning vehicle is the Operating Partnership, of which we are the general partner. Our acquisition of properties through the Operating Partnership in exchange for interests in the Operating Partnership may permit certain tax deferral advantages to limited partners who contribute properties to the Operating Partnership. Since properties contributed to the Operating Partnership may have unrealized gains attributable to the differences between the fair market value and adjusted tax basis in such properties prior to contribution, the sale of such properties could cause adverse tax consequences to the limited partners who contributed such properties. Although we, as the general partner of the Operating Partnership, generally have no obligation to consider the tax consequences of our actions to any limited partner, we own several properties subject to material contractual restrictions for varying periods of time designed to minimize the adverse tax consequences to the limited partners who contributed such properties. Such restrictions may result in significantly reduced flexibility to manage some of our assets.
We currently have an exclusive obligation to seek investments for our Funds, which may prevent us from making acquisitions directly.
Under the terms of the organizational documents of our Funds, our primary goal is to seek investments for the Funds, subject to certain exceptions. We may only pursue opportunities to acquire retail properties directly through the Operating Partnership if (i) the ownership of the acquisition opportunity by the Funds would create a material conflict of interest for us; (ii) we require the acquisition opportunity for a “like-kind” exchange; (iii) the consideration payable for the acquisition opportunity is our Common Shares, OP Units or other securities or (iv) the investment is outside the parameters of our investment goals for the Funds (which, in general, seek more opportunistic level returns). As a result, we may not be able to make attractive acquisitions directly and instead may only receive a minority interest in such acquisitions through the Funds.
Our joint venture investments carry additional risks not present in our direct investments
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 with respect to maintaining our qualification as a REIT. Actions by, or disputes with, joint venture partners might result in subjecting properties owned by the joint venture to additional risks. Other risks of joint venture investments include impasse on decisions, such as a sale, because neither we nor a joint venture partner may have full control over the joint venture. Also, there is no limitation under our organizational documents as to the amount of our funds that may be invested in joint ventures.
Additionally, our partners or co-venturers may engage in malfeasance in spite of our efforts to perform a high level of due diligence on them, which may jeopardize an investment and/or subject us to reputational risk. Such acts may or may not be covered by insurance.
Any disputes that may arise between joint venture partners and us may result in potentially costly litigation or arbitration that would prevent our officers and/or trustees from focusing their time and effort on our business. In addition, we may in certain circumstances be liable for the actions of our third-party joint venture partners.
RISKS RELATED TO OUR REIT STATUS
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 may be 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 entities. 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. Also, we 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.
Legislative or regulatory tax changes could have an adverse effect on us.
There are a number of issues associated with an investment in a REIT that are related to the Federal income tax laws, including, but not limited to, the consequences of our failing to continue to qualify as a REIT. At any time, the Federal income tax laws governing REITs or the administrative interpretations of those laws may be amended or modified. Any new laws or interpretations may take effect retroactively and could adversely affect us or our shareholders.
We may be required to borrow funds or sell assets to satisfy our REIT distribution requirements.
Our cash flows may be insufficient to fund distributions required to maintain our qualification as a REIT as a result of differences in timing between the actual receipt of income and the recognition of income for U.S. Federal income tax purposes, or as a result of our inability to currently deduct certain expenditures that we must currently pay, such as capital expenditures, payments of compensation for which Section 162(m) of the Code denies a deduction, any business interest expense that is disallowed under Section 163 (j) of the Code (unless we elect to be an “electing real property trade or business”), and the creation of reserves or required amortization payments. If we do not have other funds available in these situations, we may need to borrow funds on a short-term basis or sell assets, even if the then- prevailing market conditions are not favorable for these borrowings or sales, in order to satisfy our REIT distribution requirements. Such actions could adversely affect our cash flow and results of operations.
Dividends payable by REITs generally do not qualify for reduced tax rates.
Certain qualified dividends paid by corporations to individuals, trusts and estates that are U.S. shareholders are taxed at capital gain rates, which are lower than ordinary income rates. Dividends of current and accumulated earnings and profits payable by REITs, however, are taxed at ordinary income rates as opposed to the capital gain rates. Pursuant to section 199A of the Code, from 2018 through 2025, certain REIT shareholders will be permitted to deduct 20% of ordinary REIT dividends received. Dividends payable by REITs in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof and thereafter as taxable gain. The more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in
REITs, including us, to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which may negatively impact the trading prices of our securities.
Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our Common Shares. In order to meet these tests, we may be required to forego investments we might otherwise make and refrain from engaging in certain activities. Thus, compliance with the REIT requirements may hinder our performance.
In addition, if we fail to comply with certain asset ownership tests at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification. As a result, we may be required to liquidate otherwise attractive investments.
We have limits on ownership of our shares of beneficial interest.
For us to qualify as a REIT for Federal income tax purposes, among other requirements, not more than 50% of the value of our shares of beneficial interest may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of each taxable year, and such shares of beneficial interest 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 shares of beneficial interest and ownership limits that are intended to assist us in satisfying these limitations, among other purposes. These restrictions and limits may not be adequate in all cases, however, to prevent the transfer of our shares of beneficial interest in violation of the ownership limitations. The ownership limits contained in our Declaration of Trust may have the effect of delaying, deferring or preventing a change of control of us.
Actual or constructive ownership of our shares of beneficial interest in excess of the share ownership limits contained in our Declaration of Trust would cause the violative transfer or ownership to be null and void from the beginning and subject to purchase by us at a price equal to the fair market value of such shares (determined in accordance with the rules set forth in our Declaration of Trust). As a result, if a violative transfer were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex and groups of related individuals or entities may be deemed a single owner and consequently in violation of the share ownership limits.
Distribution requirements imposed by law limit our operating flexibility.
To maintain our status as a REIT for Federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for each calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to Federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year; (ii) 95% of our capital gain net income for that year; and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Internal Revenue Code and to minimize exposure to Federal income and 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.
GENERAL RISK FACTORS
The economic environment may cause us to lose tenants and may impair our ability to borrow money to purchase properties, refinance existing debt or finance our current development projects.
Our operations and performance depend on general economic conditions, including consumer health. The U.S. economy has historically experienced financial downturns from time to time, including a decline in consumer spending, credit tightening and high unemployment.
While we currently believe we have adequate sources of liquidity, there can be no assurance that, in the event of a financial downturn, we will be able to obtain secured or unsecured loan facilities to meet our needs, including to purchase additional properties, to complete current development projects, or to 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.
Certain sectors of the U. S. economy are still experiencing weakness. Over the past several years, this structural weakness has resulted in periods of high unemployment, the bankruptcy or weakened financial condition of a number of retailers, decreased consumer spending, increased home foreclosures, low consumer confidence, and reduced demand and rental rates for certain retail space. There can be no assurance that the recovery will continue. General economic factors that are beyond our control, including, but not limited to, economic recessions, decreases in consumer confidence, reductions in consumer credit availability, increasing consumer debt levels, rising energy costs, higher tax rates, continued business layoffs, downsizing and industry slowdowns, and/or rising inflation, could have a negative impact on the business of our retail tenants. In turn, this could have a material adverse effect on our business because current or prospective tenants may, among other things, (i) have difficulty paying their rent obligations as they struggle to sell goods and services to consumers, (ii) be unwilling to enter into or renew leases with us on favorable terms or at all, (iii) seek to terminate their existing leases with us or request rental concessions on such leases, or (iv) be forced to curtail operations or declare bankruptcy.
Political and economic uncertainty could have an adverse effect on our business.
We cannot predict how current political and economic uncertainty will affect our critical tenants, joint venture partners, lenders, financial institutions and general economic conditions, including the health and confidence of the consumer and the volatility of the stock market.
Political and economic uncertainty poses a risk to us in that it may cause consumers to postpone discretionary spending in response to tighter credit, reduced consumer confidence and other macroeconomic factors affecting consumer spending behavior, resulting in a downturn in the business of our tenants. In the event current political and economic uncertainty results in financial turmoil affecting the banking system and financial markets generally or significant financial service institution failures, there could be a new or incremental tightening in the credit markets, low liquidity, and extreme volatility in fixed income, credit, currency and equity markets. Each of these factors could adversely affect our financial condition, cash flows and results of operations.
Inflation may adversely affect our financial condition, cash flows and results of operations.
Increased inflation could have a more pronounced negative impact on our mortgage and debt interest and general and administrative expenses, as these costs could increase at a rate higher than our rents. Also, inflation may adversely affect tenant leases with stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses, which could be lower than the increase in inflation at any given time. It may also limit our ability to recover all of our operating expenses. Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our average rents, and in some cases, our percentage rents, where applicable. In addition, renewals of leases or future leases may not be negotiated on current terms, in which event we may recover a smaller percentage of our operating expenses.
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, private funds, insurance companies, pension funds, private companies, family offices, sovereign wealth funds and individuals. This competition may result in a higher cost for properties than we wish to pay. In addition, retailers at our properties (both in our Core Portfolio and in the portfolios of the Funds) face increasing competition from outlet malls, discount shopping clubs, e-commerce, direct mail and telemarketing, which could (i) reduce rents payable to us and (ii) reduce our ability to attract and retain tenants at our properties leading to increased vacancy rates at our properties.
Market factors could have an adverse effect on our share price and our ability to access the public equity markets.
The market price of our Common Shares may fluctuate significantly in response to many factors, including:
•actual or anticipated variations in our operating results, funds from operations, cash flows or liquidity;
•changes in our earnings estimates or those of analysts;
•changes in our dividend policy;
•impairment charges affecting the carrying value of one or more of our properties or other assets;
•publication of research reports about us, the retail industry or the real estate industry generally;
•increases in market interest rates that lead purchasers of our securities to seek higher dividend or interest rate yields;
•changes in market valuations of similar companies;
•adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt in the near and medium term and our ability to refinance such debt and the terms thereof or our plans to incur additional debt in the future;
•additions or departures of key management personnel;
•actions by institutional security holders;
•proposed or adopted regulatory or legislative changes or developments;
•speculation in the press or investment community;
•the occurrence of any of the other risk factors included in, or incorporated by reference in, this report; and
•general market and economic conditions.
Many of the factors listed above are beyond our control. Those factors may cause the market price of our Common Shares to decline significantly, regardless of our financial performance, condition and prospects. We may not provide any assurance that the market price of our Common Shares will not fall in the future, and it may be difficult for holders to sell such securities at prices they find attractive, or at all. 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.
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 or cyber-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 or the third parties on whom we rely are unable to prevent such outages and breaches, our operations could be disrupted.
Increased Information Technology (“IT”) security threats and more sophisticated computer crime could pose a risk to our systems, networks and services.
Cyber incidents can result from deliberate attacks or unintentional events. There have been an increased number of significant cyber-attacks targeted at the retail, insurance, financial and banking industries that include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as by causing denial-of-service attacks on websites. Cyber-attacks by third parties or insiders utilize techniques that range from highly sophisticated efforts to electronically circumvent network security or overwhelm a website to more traditional intelligence gathering and social engineering aimed at obtaining information necessary to gain access.
Increased global IT security threats are more sophisticated and targeted computer crimes pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. The open nature of interconnected technologies may allow for a network or Web outage or a privacy breach that reveals sensitive data or transmission of harmful/malicious code to business partners and clients. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures.
Cyber-attacks may result in substantial financial and reputational cost, including but are not limited to:
•Compromising of confidential information;
•Manipulation and destruction of data;
•Loss of trade secrets;
•System downtimes and operational disruptions;
•Remediation costs that may include liability for stolen assets or information and repairing system damage, as well as incentives offered to customers, tenants or other business partners in an effort to maintain business relationships;
•Loss of revenues resulting from unauthorized use of proprietary information;
•Cost to deploy additional protection strategies, training employees and engaging third party experts and consultants;
•Reputational damage adversely affecting investor and tenant confidence; and
•Costly litigation.
The control environment for cyber security is an ever changing risk landscape across the entire attack surface which includes risks from on-premise, cloud infrastructure, software as a service and mobile applications. While we attempt to mitigate these risks by employing a number of measures, including a dedicated IT team, employee training and background checks, maintenance of backup systems, utilization of third-party service providers to provide redundancy over multiple locations, and comprehensive monitoring of our networks and systems along with purchasing cyber security insurance coverage, our systems, networks and services remain potentially vulnerable to advanced threats.
Use of social media may adversely impact our reputation and business.
There has been a significant increase in the use of social media platforms, including weblogs, social media websites and other forms of Internet-based communications, which allow individuals access to a broad audience, including our significant business constituents. The availability of information through these platforms is virtually immediate as is its impact and may be posted at any time without affording us an opportunity to redress or correct it timely. This information may be adverse to our interests, may be inaccurate and may harm our reputation, brand image, goodwill, performance, prospects or business. Furthermore, these platforms increase the risk of unauthorized disclosure of material non-public Company information.
Climate change, natural disasters or health crises could adversely affect our properties and business.
Some of our current or future properties could be subject to natural disasters and may be impacted by climate change. To the extent climate change causes adverse changes in weather patterns, rising sea levels or extreme temperatures, our properties in certain markets may be adversely affected. Specifically, properties located in coastal regions could be affected by any future increases in sea levels or in the frequency or severity of hurricanes and storms, whether caused by climate change or other factors. Additionally, we own properties in Southern California, which in recent years has experienced intense draught and wildfires and has had earthquake activity.
Climate change could have a variety of direct or indirect adverse effects on our properties and business, including:
•Property damage to our retail properties;
•Indirect financial and operational impacts from disruptions to the operations of major tenants located in our retail properties from severe weather, such as hurricanes, floods, wildfires or other natural disasters;
•Increased insurance premiums and deductibles, or a decrease in or unavailability of coverage, for properties in areas subject to severe weather, such as hurricanes, floods, wildfires or other natural disasters;
•Increased insurance claims and liabilities;
•Increases in energy costs 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 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.
Moreover, compliance with new laws or regulations related to climate change, including compliance with “green” building codes, may require us to make improvements to our existing properties or pay additional taxes and fees assessed on us or our properties. Although we strive to identify, analyze, and respond to the risk and opportunities that climate change presents, at this time there can be no assurance that climate change will have an adverse effect on us.
Public health crises, pandemics and epidemics, such as those caused by new strains of viruses such as H5N1 (avian flu), severe acute respiratory syndrome (SARS) and, most recently, the novel coronavirus (COVID-19), may increase as international travel continues to rise and could adversely impact our business by interrupting our tenants’ business, supply chains and transactional activities, disrupting travel, and negatively impacting local, national or global economies.
Future terrorist attacks or civil unrest could harm the demand for, and the value of, our properties.
Over the past several years, a number of highly publicized terrorist acts and shootings have occurred at domestic and international retail properties. Future terrorist attacks, civil unrest 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.
Increased scrutiny and changing expectations from investors, tenants, employees, and others regarding our ESG practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our reputation, tenant and employee acquisition and retention, and access to capital.
Companies across all industries are facing increasing scrutiny related to their ESG practices and reporting. Investors, tenants, employees, and other stakeholders have begun to focus increasingly on ESG practices and to place increasing importance on the implications and social cost of their investments, business decisions and consumer choices. For example, an increasing number of investment funds focus on positive ESG practices and sustainability scores when making an investment decision. In addition, investors, particularly institutional investors, use ESG practices and scores to benchmark companies against their peers and if a company is perceived as lagging, such investors may engage with a company to improve ESG disclosure or performance and may also make voting decisions on this basis. Given this increased focus and demand, public reporting regarding ESG practices is becoming more broadly expected. If our ESG practices and reporting do not meet investor, tenant, or employee expectations, which continue to evolve, our reputation and tenant and employee retention may be negatively impacted. Any disclosure we make may include our policies and practices on a variety of ESG matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, and workforce inclusion and diversity. It is possible that stakeholders may not be satisfied with our ESG reporting, our ESG practices or our speed of adoption. We could also incur additional costs and devote additional resources to monitoring, reporting and implementing various ESG practices. Our failure, or perceived failure, to meet the goals and objectives we set in any sustainability disclosure or the expectations of our various stakeholders, it could negatively impact our reputation, tenant and employee retention, and access to capital.
We identified a material weakness in our internal control over financial reporting related to the Restatement described in the Explanatory Note to this Annual Report on Form 10-K. If we do not effectively remediate the material weakness or if we otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately report our financial results.
Effective internal controls over financial reporting are necessary for us to provide reliable and accurate financial reports. Management identified a deficiency in internal control over financial reporting as of December 31, 2021 and determined that the Company did not maintain effective internal control over financial reporting because of an error in accounting treatment at the time of formation related to the improper consolidation of two investments that are less-than-wholly-owned through the Company’s opportunity funds. As a consequence, these two Fund Investments, which were formed in 2012 and 2013, have been adjusted from consolidated investments to investments in unconsolidated affiliates within the restated financial statements included within this Annual Report. See Item 9A, “Controls and Procedures”, in this Annual Report on Form 10-K for additional information regarding the identified material weakness and our actions to date to remediate the material weakness.
We reached a determination to restate certain of our previously issued consolidated financial statements as a result of the identification of accounting errors in previously issued financial statements, which resulted in unanticipated costs and may affect investor confidence and raise reputational issues.
As discussed in the Explanatory Note to this Annual Report on Form 10-K, management and the Audit Committee, in consultation with BDO, reached a determination to restate the Company’s previously issued financial statements and the audit reports thereon, as of and for the years ended December 31, 2020 and 2019, and as of and for each of the quarterly periods ended March 31, 2021 and 2020, June 30, 2021 and 2020, September 30, 2021 and 2020, and December 31, 2020. The Restatement also included corrections for certain immaterial unrecorded adjustments in the Company’s previously issued financial statements. The Restatement may affect investor confidence in the accuracy of our financial disclosure and may raise reputational risks for our business, both of which could harm our business and financial results.

---

ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.

---

ITEM 2. PROPERTIES
ITEM 2.	PROPERTIES.
Retail Properties
The discussion and tables in this Item 2. include wholly-owned and partially-owned properties held through our Core Portfolio and our 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 Funds.
As of December 31, 2021, our Core Portfolio consisted of 128 operating properties in totaling approximately 5.6 million square feet (or 5.2 million at our pro rata share) of gross leasable area (“GLA”) excluding four properties under redevelopment and one property in development. The Core Portfolio properties are located in 12 states and the District of Columbia and primarily consist of street retail and dense suburban shopping centers. These properties are diverse in size, ranging from approximately 1,000 to 800,000 square feet and as of December 31, 2021, were 88.3% occupied and 92.2% leased (or 90.0% occupied and 93.2% leased at our pro rata share), excluding properties under development or redevelopment.
As of December 31, 2021, we owned and operated 51 properties totaling approximately 7.9 million square feet in total (or 1.6 million square feet at our pro rata share) of GLA in our Funds, excluding two properties under development. In addition to shopping centers, the Funds have invested in mixed-use properties, which generally include retail activities. The Fund properties are located in 18 states and the District of Columbia and, as of December 31, 2021, were 88.2% occupied and 91.5% leased (or 87.7% occupied and 91.6% leased at our pro rata share), excluding the properties under development.
Within our Core Portfolio and Funds, we had more than 1,100 retail leases as of December 31, 2021. A significant portion of our rental revenues are from national retailers and consist of rents received under long-term leases. These leases generally provide for the monthly payment of fixed minimum rent and the tenants' pro-rata share of the real estate taxes, insurance, utilities and common area maintenance of the shopping centers. An insignificant portion of our leases also provide for the payment of rent based on a percentage of a tenant's gross sales in excess of a stipulated annual amount, either in addition to, or in place of, minimum rents, which we refer to as percentage rents. Minimum rents and expense reimbursements accounted for substantially all of our total revenues for the year ended December 31, 2021.
Six of our Core Portfolio properties and two of our 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 of these locations.
No individual property or tenant contributed in excess of 10% of our total revenues for the years ended December 31, 2021, 2020 or 2019. See Note 8 for information on the mortgage debt pertaining to our properties.
The following table sets forth more specific information with respect to each of our Core properties at December 31, 2021:
Property (a)
Key Tenants
Year
Acquired
Acadia's
Interest
Gross Leasable
Area (GLA)
In Place
Occupancy
Leased
Occupancy
Annualized Base
Rent (ABR)
ABR/ Per
Square Foot
STREET AND URBAN RETAIL
Chicago Metro
664 N. Michigan Avenue
Tommy Bahama,
Ann Taylor Loft
100.0
%
18,141
100.0
%
100.0
%
$
3,282,187
$
180.93
840 N. Michigan Avenue
H & M, Verizon
Wireless
88.4
%
87,135
100.0
%
100.0
%
8,450,630
96.98
Rush and Walton Streets
Collection (6 properties)
Lululemon, BHLDN,
Reformation,
Sprinkles
100.0
%
40,384
88.2
%
88.2
%
6,750,144
189.58
651-671 West Diversey
Trader Joe's,
Urban Outfitters
100.0
%
46,259
86.2
%
86.2
%
1,574,714
39.50
Clark Street and W. Diversey
Collection (4 properties)
Starbucks
100.0
%
53,277
64.6
%
68.3
%
1,399,585
40.64
Halsted and Armitage
Collection (13 properties)
Serena and Lily,
Bonobos, Allbirds
Warby Parker,
Marine Layer,
Kiehl's
100.0
%
52,804
91.2
%
95.7
%
2,335,749
48.52
North Lincoln Park Chicago
Collection (6 properties)
Champion,
Carhartt
100.0
%
49,921
63.5
%
63.5
%
942,020
29.70
State and Washington
Nordstrom Rack,
Uniqlo
100.0
%
78,771
100.0
%
100.0
%
3,346,235
42.48
151 N. State Street
Walgreens
100.0
%
27,385
100.0
%
100.0
%
1,430,000
52.22
North and Kingsbury
Old Navy
100.0
%
41,791
68.9
%
100.0
%
1,153,437
40.08
Concord and Milwaukee
-
100.0
%
13,105
100.0
%
100.0
%
437,248
33.36
California and Armitage
-
100.0
%
18,275
70.6
%
70.6
%
680,594
52.79
Roosevelt Galleria
Petco, Vitamin
Shoppe
100.0
%
37,995
47.7
%
47.7
%
613,881
33.86
Sullivan Center
Target, DSW
100.0
%
176,181
95.4
%
95.4
%
6,427,349
38.26
741,424
86.6
%
89.2
%
$
38,823,773
$
60.46
New York Metro
Soho Collection
(11 properties)
Faherty, ALC
Stone Island, Taft,
Frame, Theory
100.0
%
35,035
75.8
%
75.8
%
8,201,107
308.89
5-7 East 17th Street
-
100.0
%
9,536
0.0
%
0.0
%
-
-
200 West 54th Street
-
100.0
%
5,862
78.2
%
78.2
%
1,284,894
280.42
61 Main Street
-
100.0
%
3,470
100.0
%
100.0
%
303,798
87.55
181 Main Street
TD Bank
100.0
%
11,514
100.0
%
100.0
%
980,044
85.12
4401 White Plains Road
Walgreens
100.0
%
12,964
100.0
%
100.0
%
625,000
48.21
Bartow Avenue
-
100.0
%
14,590
80.0
%
80.0
%
368,873
31.59
239 Greenwich Avenue
Betteridge Jewelers
75.0
%
16,553
100.0
%
100.0
%
1,741,068
105.18
252-256 Greenwich Avenue
Veronica Beard,
The RealReal,
Blue Mercury
100.0
%
7,986
100.0
%
100.0
%
846,873
106.04
2914 Third Avenue
Planet Fitness
100.0
%
40,603
73.9
%
100.0
%
768,172
25.60
868 Broadway
Dr. Martens
100.0
%
2,031
100.0
%
100.0
%
838,855
413.03
313-315 Bowery (b)
John Varvatos,
Patagonia
100.0
%
6,600
100.0
%
100.0
%
527,076
79.86
120 West Broadway
HSBC Bank
100.0
%
13,838
79.8
%
100.0
%
2,052,536
185.94
2520 Flatbush Avenue
Bob's Disc. Furniture,
Capital One
100.0
%
29,114
100.0
%
100.0
%
1,175,271
40.37
991 Madison Avenue
Vera Wang,
Gabriella Hearst
100.0
%
7,513
91.1
%
91.1
%
2,919,899
426.45
Shops at Grand
Stop & Shop (Ahold)
100.0
%
99,685
100.0
%
100.0
%
3,335,738
33.46
Gotham Plaza
Bank of America,
Footlocker
49.0
%
25,922
83.4
%
91.5
%
1,521,808
70.42
342,816
88.2
%
92.7
%
27,491,012
90.96
Los Angeles Metro
Melrose Place Collection
The Row, Chloe,
Oscar de la Renta
100.0
%
14,000
100.0
%
100.0
%
2,583,061
184.50
14,000
100.0
%
100.0
%
2,583,061
184.50
District of Columbia Metro
1739-53 & 1801-03
Connecticut Avenue
TD Bank
100.0
%
20,669
58.7
%
58.7
%
781,727
64.46
14th Street Collection
-
100.0
%
19,461
100.0
%
100.0
%
1,291,240
66.35
Rhode Island Place
Shopping Center
Ross Dress for Less
100.0
%
57,667
93.4
%
100.0
%
1,757,107
32.61
M Street and Wisconsin Corridor
(26 Properties) (c)
Lululemon, CB2
Rag and Bone,
The Reformation
24.8
%
242,562
72.6
%
72.6
%
11,660,223
66.17
340,359
76.9
%
78.0
%
15,490,297
59.20
Boston Metro
330-340 River Street
Whole Foods
100.0
%
54,226
100.0
%
100.0
%
1,320,045
24.34
165 Newbury Street
Starbucks
100.0
%
1,050
100.0
%
100.0
%
294,632
280.60
55,276
100.0
%
100.0
%
1,614,677
29.21
Total Street and Urban Retail
1,493,875
85.4
%
88.0
%
$
86,002,820
$
67.44
Acadia Share Total Street and Urban Retail
1,280,488
87.5
%
90.1
%
$
75,590,607
$
67.48
SUBURBAN PROPERTIES
New Jersey
Elmwood Park Shopping Center
Walgreens, Lidl
100.0
%
143,910
79.3
%
87.1
%
2,977,028
26.08
Marketplace of Absecon
Walgreens, Dollar Tree
100.0
%
104,556
92.2
%
92.2
%
1,431,609
14.85
New York
Village Commons
Shopping Center
-
100.0
%
87,128
96.1
%
98.1
%
2,860,744
34.15
Branch Plaza
LA Fitness,
The Fresh Market
100.0
%
123,345
94.7
%
98.8
%
3,240,432
27.74
Amboy Center
Stop & Shop (Ahold)
100.0
%
63,290
86.1
%
86.1
%
1,858,892
34.12
.
LA Fitness
100.0
%
55,000
100.0
%
100.0
%
1,485,287
27.01
Crossroads Shopping Center
HomeGoods,Pet-
Smart
49.0
%
311,794
49.8
%
84.5
%
5,401,920
34.82
New Loudon Center
Price Chopper,
Marshalls
100.0
%
258,701
95.2
%
95.2
%
2,237,910
9.09
28 Jericho Turnpike
Kohl's
100.0
%
96,363
100.0
%
100.0
%
1,815,000
18.84
Bedford Green
Shop Rite, CVS
100.0
%
90,589
75.1
%
75.1
%
2,363,423
34.75
Connecticut
Town Line Plaza (d)
Wal-Mart, Stop
& Shop (Ahold)
100.0
%
206,089
100.0
%
100.0
%
1,900,191
17.47
Massachusetts
Methuen Shopping Center
Wal-Mart,
Market Basket
100.0
%
130,021
100.0
%
100.0
%
1,450,268
11.15
Crescent Plaza
Home Depot, Shaw's
(Supervalu)
100.0
%
218,148
96.0
%
96.0
%
2,036,176
9.72
201 Needham Street
Michael's
100.0
%
20,409
100.0
%
100.0
%
646,965
31.70
163 Highland Avenue
Staples, Petco
100.0
%
40,505
100.0
%
100.0
%
1,490,575
36.80
Vermont
The Gateway Shopping Center
Shaw's (Supervalu)
100.0
%
101,474
98.6
%
98.6
%
2,175,331
21.75
Illinois
Hobson West Plaza
Garden Fresh
Markets
100.0
%
98,962
96.4
%
97.8
%
1,252,645
13.13
Indiana
Merrillville Plaza
Room Place, Jo-Ann Fabrics, TJ Maxx
100.0
%
236,134
78.3
%
78.8
%
2,670,678
14.45
Michigan
Bloomfield Town Square
HomeGoods,
TJ Maxx
100.0
%
234,920
76.7
%
97.7
%
3,042,388
16.88
Delaware
Town Center and Other
(2 properties)
Lowes, Bed Bath &
Beyond, Target
100.0
%
800,063
94.0
%
94.0
%
12,735,493
16.94
Market Square Shopping Center
Trader Joe's,
TJ Maxx
100.0
%
102,047
97.4
%
100.0
%
3,157,072
31.77
Naamans Road
-
100.0
%
19,850
30.1
%
30.1
%
433,785
72.60
Pennsylvania
Mark Plaza
Kmart
100.0
%
106,856
100.0
%
100.0
%
246,274
2.30
Plaza 422
Home Depot
100.0
%
156,279
100.0
%
100.0
%
909,901
5.82
Chestnut Hill
-
100.0
%
36,492
100.0
%
100.0
%
954,833
26.17
Abington Towne Center (e)
Target, TJ Maxx
100.0
%
216,871
100.0
%
100.0
%
1,308,178
22.08
Total Suburban Properties
4,059,796
89.3
%
93.8
%
$
62,082,998
$
18.26
Acadia Share Total Suburban Properties
3,900,781
91.0
%
94.2
%
$
59,328,019
$
17.89
Total Core Properties
5,553,671
88.3
%
92.2
%
$
148,085,818
$
31.66
Acadia Share Total Core Properties
5,184,838
90.0
%
93.2
%
$
134,918,626
$
30.40
a)Excludes properties under development or redevelopment, see “Development and Redevelopment Activities” section below. The above occupancy and rent amounts do not include space that is currently leased, but for which rent payment has not yet commenced as of December 31, 2021 (other than under “Leased Occupancy). Residential and office GLA are excluded.
b)Represents the annual base rent paid to the Company pursuant to a master lessee and does not reflect the rent paid by the retail tenants at the property.
c)Excludes 94,000 square feet of office GLA.
d)Anchor GLA includes a 97,300 square foot Wal-Mart store that is not owned by the Company. This square footage has been excluded for calculating annualized base rent per square foot.
e)Anchor GLA includes a 157,616 square foot Target store that is not owned by the Company. This square footage has been excluded for calculating annualized base rent per square foot.
The following table sets forth more specific information with respect to each of our Fund properties at December 31, 2021:
Property (a)
Key Tenants
Year
Acquired
Acadia's
Interest
Gross Leasable
Area (GLA)
In Place
Occupancy
Leased
Occupancy
Annualized Base
Rent (ABR)
ABR/Per
Square Foot
Fund II Portfolio Detail
New York
City Point
Target, Alamo Drafthouse
26.7
%
541,070
50.0
%
74.1
%
$
9,453,208
$
34.94
Total - Fund II
541,070
50.0
%
74.1
%
$
9,453,208
$
34.94
Fund III Portfolio Detail
New York
640 Broadway
Swatch
15.5
%
4,637
76.3
%
91.6
%
$
895,245
$
252.90
Cortlandt Crossing
ShopRite, HomeSense
24.5
%
122,226
87.0
%
95.1
%
2,988,753
28.12
Total - Fund III
126,863
86.6
%
95.0
%
$
3,883,998
$
35.36
Fund IV Portfolio Detail
New York
801 Madison Avenue
─
23.1
%
2,522
-
%
-
%
$
-
$
-
210 Bowery
─
23.1
%
2,538
-
%
-
%
-
-
27 East 61st Street
─
23.1
%
4,177
-
%
-
%
-
-
17 East 71st Street
The Row
23.1
%
8,432
100.0
%
100.0
%
2,087,557
247.58
1035 Third Avenue (b)
─
23.1
%
7,634
100.0
%
100.0
%
1,162,553
152.29
New Jersey
Paramus Plaza
Ashley Furniture, Marshalls
11.6
%
153,494
100.0
%
100.0
%
3,233,834
21.07
Massachusetts
Restaurants at Fort Point
─
23.1
%
15,711
100.0
%
100.0
%
1,030,234
65.57
Pennsylvania
Dauphin Plaza
Price Rite, Ashley Furniture
23.1
%
215,735
92.2
%
93.3
%
1,911,873
9.61
Mayfair Shopping Center
Planet Fitness, Dollar Tree
23.1
%
115,411
94.7
%
94.7
%
1,912,416
17.50
Rhode Island
650 Bald Hill Road
Dick's Sporting Goods,
Burlington Coat Factory
20.8
%
160,448
85.4
%
85.4
%
2,025,172
14.79
Virginia
Promenade at Manassas
Home Depot
22.8
%
280,760
99.6
%
100.0
%
3,632,158
12.99
Delaware
Eden Square
Giant Food, LA Fitness
22.8
%
229,936
89.7
%
91.0
%
3,121,691
15.14
Illinois
Lincoln Place
Kohl's, Marshall's, Ross
23.1
%
272,060
95.6
%
95.6
%
3,059,622
11.77
Georgia
Broughton Street Portfolio
(13 properties)
H&M, Lululemon,
Kendra Scott, Starbucks
23.1
%
96,331
86.3
%
88.4
%
2,953,649
35.54
North Carolina
Wake Forest Crossing
Lowe's, TJ Maxx
23.1
%
202,325
97.6
%
99.6
%
3,096,528
15.68
California
146 Geary Street
─
23.1
%
11,436
-
%
-
%
-
-
Union and Fillmore
Collection (3 properties)
Eileen Fisher, Bonobos
20.8
%
7,148
66.7
%
77.9
%
524,919
110.16
Total - Fund IV
1,786,098
93.0
%
93.8
%
$
29,752,206
$
17.91
Fund V Portfolio Detail
New Mexico
Plaza Santa Fe
TJ Maxx, Best Buy,
Ross Dress for Less
20.1
%
224,152
97.3
%
97.3
%
$
3,890,540
$
17.83
Michigan
New Towne Plaza
Kohl's, Jo-Ann's, DSW
20.1
%
193,446
97.6
%
97.6
%
2,349,445
12.44
Fairlane Green
TJ Maxx, Michaels,
Bed Bath & Beyond
20.1
%
270,151
80.3
%
80.3
%
4,374,514
20.17
Maryland
Frederick County (2 properties)
Kohl's, Best Buy,
Ross Dress for Less
18.1
%
531,101
87.4
%
88.0
%
6,678,463
14.39
Connecticut
Tri-City Plaza
TJ Maxx, HomeGoods
18.1
%
302,888
90.4
%
90.4
%
3,991,187
14.58
New Jersey
Midstate
ShopRite, Best Buy, DSW, PetSmart
-
385,116
83.8
%
83.8
%
6,605,480
20.47
Pennsylvania
Monroe Marketplace
Kohl's, Dick's Sporting Goods,
Giant Food
23.1
%
371,652
98.8
%
100.0
%
4,109,789
11.19
Rhode Island
Lincoln Commons
Stop and Shop, Marshalls,
HomeGoods
20.1
%
462,021
82.3
%
90.2
%
5,037,955
13.25
Virginia
Landstown Commons
Best Buy, Bed Bath & Beyond,
Ross Dress for Less
20.1
%
404,808
84.2
%
91.6
%
7,294,784
21.40
Florida
Palm Coast Landing
TJ Maxx, PetSmart,
Ross Dress for Less
20.1
%
171,799
96.3
%
98.6
%
3,350,746
20.26
North Carolina
Hickory Ridge
Kohl's, Best Buy, Dick's
20.1
%
380,565
98.3
%
100.0
%
4,599,468
12.30
Alabama
Trussville Promenade
Wal-Mart, Regal Cinemas
20.1
%
463,681
95.4
%
95.4
%
4,467,562
10.10
Georgia
Canton Marketplace
Dick's, TJ Maxx, Best Buy
23.1
%
351,978
87.9
%
89.1
%
5,296,217
17.11
Hiram Pavilion
Kohl's, HomeGoods
20.1
%
362,675
98.6
%
100.0
%
4,336,661
12.12
California
Elk Grove Commons
Kohl's, HomeGoods
20.1
%
242,078
92.6
%
97.0
%
4,717,908
21.04
Utah
Family Center at Riverdale
Target, Sportman's
Warehouse
18.0
%
372,061
85.9
%
85.9
%
3,335,015
10.43
Total - Fund V
5,490,172
90.4
%
92.4
%
$
74,435,734
$
14.99
TOTAL FUND PROPERTIES
7,944,203
88.2
%
91.5
%
117,525,146
$
16.77
Acadia Share of Total Fund Properties
1,588,012
87.7
%
91.6
%
$
23,449,602
$
16.84
a)Excludes properties under development, see “Development and Redevelopment Activities” section below. The above occupancy and rent amounts do not include space which is currently leased, but for which rent payment has not yet commenced other than “leased occupancy. Residential and office GLA are excluded.
b)Property also includes 12,371 square feet of 2nd floor office space and a 29,760 square-foot parking garage (131 spaces).
Major Tenants
No individual retail tenant accounted for more than 5.3% of total Core Portfolio and Fund base rents for the year ended December 31, 2021, or occupied more than 6.9% of total Core Portfolio and Fund leased GLA as of December 31, 2021. The following table sets forth certain information for our 20 largest retail tenants by base rent for leases in place as of December 31, 2021. 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 Funds (GLA and Annualized Base Rent in thousands):
Percentage of Total
Represented by Retail Tenant
Retail Tenant
Number of
Stores in Portfolio (a)
Total GLA
Annualized
Base
Rent (a)
Total
Portfolio
GLA
Annualized
Base
Rent
Target
$
8,457
6.9
%
5.3
%
H&M
5,140
0.9
%
3.2
%
Walgreens (b)
4,086
1.4
%
2.6
%
Bed, Bath, and Beyond (c)
3,999
2.6
%
2.5
%
TJX Companies (d)
3,889
4.7
%
2.5
%
Royal Ahold (e)
3,600
2.7
%
2.3
%
PetSmart, Inc.
3,161
1.4
%
2.0
%
Verizon
2,793
0.4
%
1.8
%
Trader Joe's
2,748
0.7
%
1.7
%
Lululemon
2,570
0.1
%
1.6
%
LA Fitness International LLC
2,525
1.5
%
1.6
%
Kohl's
2,525
3.0
%
1.6
%
Gap(f)
2,474
1.0
%
1.6
%
Fast Retailing (g)
2,327
0.5
%
1.5
%
Ulta Salon Cosmetic & Fragrance
1,983
0.7
%
1.3
%
Albertsons Companies(h)
1,981
1.8
%
1.3
%
Dick's Sporting Goods, Inc
1,880
1.9
%
1.2
%
Wakefern Food Corporation (i)
1,860
1.2
%
1.2
%
Bob's Discount Furniture
1,843
1.0
%
1.2
%
DSW
1,687
1.6
%
1.1
%
Total
2,441
61,528
36.0
%
39.1
%
a)Does not include tenants that operate at only one Company location
b)Walgreens (5 locations), Rite Aid (2 locations)
c)Bed Bath and Beyond (3 locations), Christmas Tree Shops (1 location)
d)TJ Maxx (12 locations), Marshalls (7 locations), HomeGoods (5 locations), HomeSense (1 location)
e)Stop and Shop (4 locations), Giant (1 location)
f)Old Navy (8 locations), Banana Republic (1 location)
g)Uniqlo (1 location), Theory (1 location)
h)Shaw’s (2 locations)
i)ShopRite (3 locations), Price Rite (1 location)
Lease Expirations
The following tables show scheduled lease expirations on a pro rata basis for retail tenants in place as of December 31, 2021, assuming that none of the tenants exercise renewal options (GLA and Annualized Base Rent in thousands):
Core Portfolio
Annualized Base Rent (a, b)
GLA
Leases Maturing in
Number of
Leases
Current
Annual
Rent
Percentage
of Total
Square
Feet
Percentage
of Total
Month to Month
$
0.1
%
0.1
%
8,689
6.4
%
5.8
%
23,997
17.8
%
15.5
%
16,251
12.0
%
15.8
%
21,285
15.8
%
13.4
%
19,574
14.5
%
15.0
%
5,267
3.9
%
2.5
%
14,648
10.9
%
15.2
%
7,017
5.2
%
5.6
%
3,331
2.5
%
1.9
%
5,502
4.1
%
4.8
%
Thereafter
9,254
6.8
%
4.4
%
Total
$
134,919
100.0
%
4,413
100.0
%
Funds
Annualized Base Rent (a, b)
GLA
Leases Maturing in
Number of
Leases
Current
Annual
Rent
Percentage
of Total
Square
Feet
Percentage
of Total
Month to Month
$
0.3
%
0.5
%
1,035
4.4
%
3.8
%
1,744
7.4
%
6.7
%
2,678
11.4
%
12.6
%
3,541
15.1
%
15.0
%
2,100
9.0
%
7.1
%
1,376
5.9
%
8.6
%
1,809
7.7
%
6.4
%
1,784
7.6
%
9.4
%
1,102
4.7
%
4.9
%
1,548
6.6
%
7.3
%
Thereafter
4,662
19.9
%
17.7
%
Total
$
23,450
100.0
%
1,392
100.0
%
a)Base rents do not include percentage rents, additional rents for property expense reimbursements, or contractual rent escalations.
b)No single market, except as discussed below under Geographic Concentrations, represents a material amount of rent exposure to the Company. Given the diversity of our markets, properties and characteristics of the individual spaces, the Company cannot make any general representations relating to the expiring rents and the rates at which these spaces may be re-leased.
Geographic Concentrations
The following table summarizes our operating retail properties by region, excluding redevelopment properties, as of December 31, 2021. 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 Funds (GLA and Annualized Base Rent in thousands):
Percentage of Total
Represented by
Region
Region
GLA (a,c)
% Occupied (b)
Annualized
Base
Rent (b, c)
Annualized Base
Rent per
Occupied
Square Foot (c)
GLA
Annualized
Base Rent
Core Portfolio:
New York Metro (d)
1,501
86.2
%
$
49,197
$
38.01
28.9
%
36.5
%
Chicago Metro
86.4
%
37,843
59.88
14.1
%
28.0
%
Mid-Atlantic
1,439
95.5
%
19,746
16.14
27.8
%
14.6
%
New England
98.7
%
11,314
17.00
14.9
%
8.4
%
Washington D.C. Metro
83.4
%
7,270
55.16
3.0
%
5.4
%
Midwest
80.8
%
6,966
15.13
11.0
%
5.2
%
Los Angeles Metro
100.0
%
2,583
184.50
0.3
%
1.9
%
Total Core Operating Properties
5,185
90.0
%
$
134,919
$
30.40
100.0
%
100.0
%
Fund Portfolio:
Southeast
2,434
93.3
%
$
35,396
$
15.59
30.7
%
30.2
%
Northeast
2,560
88.6
%
33,303
14.68
32.3
%
28.3
%
New York Metro
64.9
%
19,821
36.04
10.7
%
16.9
%
West
88.6
%
8,053
14.80
7.7
%
6.9
%
Midwest
87.5
%
6,724
16.57
5.8
%
5.7
%
Mid-Atlantic
95.1
%
6,754
13.91
6.4
%
5.7
%
Southwest
97.3
%
3,891
17.83
2.8
%
3.3
%
Chicago Metro
95.6
%
3,060
11.77
3.4
%
2.6
%
San Francisco Metro
25.6
%
110.16
0.2
%
0.4
%
Total Fund Operating Properties
7,945
88.2
%
$
117,527
$
16.77
100.0
%
100.0
%
a)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.
b)The above occupancy and rent amounts do not include space that is currently leased, but for which payment of rent had not yet commenced as of December 31, 2021.
c)The amounts presented reflect the Operating Partnership's pro-rata shares of properties included within each region.
d) New York Metro includes the tri-state and surrounding states.
Development and Redevelopment Activities
As part of our strategy, we invest in retail real estate assets that may require significant development. As of December 31, 2021, we had the following development or redevelopment projects in various stages of the development process (dollars in millions):
Acquisition and Development Costs (a)
Property
Ownership (a)
Location
Estimated
Stabilization
Estimated Square
Feet Upon
Completion
Occupied /Leased
Rate
Key
Tenants
Description
Incurred (b)
Estimated Future Range
Estimated Total Range
Development:
CORE
1238 Wisconsin
80.0
%
Washington DC
29,000
-
%
TBD
Redevelopment/addition to existing building with ground level retail, upper floor office and residential units upon completion. Discretionary spend upon securing tenant(s)
$
7.8
$
24.9
to
$
25.7
$
32.7
to
$
33.5
FUND III
Broad Hollow Commons
100.0
%
Farmingdale, NY
TBD
TBD
-
%
TBD
Discretionary spend upon securing necessary approvals and tenant(s) for lease up
24.3
25.7
to
35.7
50.0
to
60.0
FUND IV
717 N. Michigan Avenue
100.0
%
Chicago, IL
62,000
-
%
TBD
Discretionary spend upon securing tenant(s) for lease up
116.5
12.0
to
19.5
128.5
to
136.0
$
148.6
$
62.6
$
80.9
$
211.2
$
229.5
Major Redevelopment:
CORE
City Center
100.0
%
San Francisco, CA
241,000
72%/99%
Target, Whole Foods, PetSmart
Ground up development of pad sites and street level retail and re-tenanting/redevelopment for Whole Foods
$
201.3
$
8.7
to
$
11.7
$
210.0
to
$
213.0
555 9th Street
100.0
%
San Francisco, CA
149,000
69%/69%
TBD
Re-tenanting and potential split of former 46,000 square foot Nordstrom; façade upgrade and possible vertical expansion
-
TBD
to
TBD
TBD
to
TBD
Route 6 Mall
100.0
%
Honesdale, PA
TBD
TBD
23%/34%
TBD
Discretionary spend for re-tenanting former 120,000 square foot Kmart anchor space once tenant(s) are secured
-
6.0
to
9.0
6.0
to
9.0
Mad River
100.0
%
Dayton, OH
TBD
TBD
48%/48%
TBD
Discretionary spend for the re-tenanting former 33,000 square foot Babies R Us space once tenant(s) are secured
-
1.9
to
2.3
1.9
to
2.3
$
201.3
$
16.6
$
23.0
$
217.9
$
224.3
a)Ownership percentages and costs represent total Core Portfolio or Fund level ownership and not our pro rata share.
b)Incurred amounts include costs associated with the initial carrying value.

---

ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS.
From time to time, we are a party to various legal proceedings, claims or regulatory inquiries and investigations arising out of, or incident to, our ordinary course of business. While we are unable to predict with certainty the outcome of any particular matter, management does not currently expect, when such matters are resolved, that our resulting exposure to loss contingencies, if any, will have a material adverse effect on our consolidated financial position.

---

ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information, Dividends and Holders of Record of our Common Shares
At February 18, 2022, there were 248 holders of record of our Common Shares, which are traded on the New York Stock Exchange under the symbol “AKR.” Our quarterly dividends are discussed in Note 11 and the characterization of such dividends for federal income tax purposes is discussed in Note 15.
Securities Authorized for Issuance Under Equity Compensation Plans
Our 2020 Share Incentive Plan (the “2020 Plan”) which was approved by our shareholders at the 2020 annual shareholders’ meeting, authorizes us to issue options, restricted shares, LTIP Units and other securities (collectively, the “Awards”) to, among others, the Company’s officers, trustees and employees up to a total of 2,829,953 Common Shares (on a converted basis). See Note 14, for a discussion of the 2020 Plan.
The following table provides information related to the 2020 Plan as of December 31, 2021:
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
-
$
-
1,911,558
Equity compensation plans not approved by security holders
-
-
-
Total
-
$
-
1,911,558
Remaining Common Shares available under the 2020 Plan are as follows:
Outstanding Common Shares as of December 31, 2021
89,303,545
Outstanding OP Units as of December 31, 2021
5,059,025
Total Outstanding Common Shares and OP Units
94,362,570
Common Shares and OP Units pursuant to the 2020 Plan
2,829,953
Less: Issuance of Restricted Shares and LTIP Units Granted
(918,395
)
Number of Common Shares remaining available
1,911,558
Share Price Performance
The following graph compares the cumulative total shareholder return for our Common Shares for the period commencing December 31, 2016, through December 31, 2021, with the cumulative total return on the Russell 2000 Index (“Russell 2000”), the NAREIT All Equity REIT Index (the “All Equity”) and the NAREIT Equity Shopping Centers (the “Equity Shopping Centers”) over the same period. Total return values for the Russell 2000, the All Equity, the Equity Shopping Centers and the Common Shares were calculated based upon cumulative total return assuming the investment of $100.00 in each of the Russell 2000, the All Equity, the Equity Shopping Centers and our Common Shares on December 31, 2016, and assuming reinvestment of dividends. The shareholder return as set forth in the table below is not necessarily indicative of future performance. 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 of our filings 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.
At December 31,
Index
Acadia Realty Trust
$
100.00
$
86.87
$
78.71
$
89.55
$
50.06
$
79.28
Russell 2000
100.00
114.65
102.02
128.06
153.62
176.39
NAREIT All Equity REIT Index
100.00
108.67
104.28
134.17
127.30
179.87
NAREIT Equity Shopping Centers
100.00
88.63
75.74
94.70
68.52
113.09
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
None.
Issuer Purchases of Equity Securities
The Company maintains a share repurchase program which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program may be discontinued or extended at any time. The Company repurchased 1,219,065 shares for $22.4 million, inclusive of fees, during the year ended December 31, 2020. The Company did not repurchase any shares during the years ended December 31, 2021 or 2019. As of December 31, 2021, management may repurchase up to approximately $122.6 million of the Company’s outstanding Common Shares under this program.

---

ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
Year Ended December 31,
(dollars in thousands, except per share amounts)
OPERATING DATA:
(As Restated) (a)
(As Restated) (a)
(As Revised) (a)
(As Revised) (a)
Revenues (b)
$
292,497
$
250,908
$
289,585
$
254,452
$
243,126
Operating expenses, excluding depreciation and impairment charges
(138,998
)
(133,826
)
(122,530
)
(113,722
)
(109,892
)
Depreciation and amortization
(123,439
)
(147,229
)
(122,580
)
(114,124
)
(102,674
)
Impairment charges
(9,925
)
(85,598
)
(1,721
)
-
(14,455
)
Gain on disposition of properties
10,521
30,324
5,140
48,886
Equity in earnings (losses) of unconsolidated affiliates inclusive
of gains on disposition of properties
5,330
(3,057
)
5,899
6,761
21,467
Interest income
9,065
8,979
7,988
13,231
29,143
Realized and unrealized holding gains on investments and other
49,120
113,362
6,947
-
5,571
Interest expense
(68,048
)
(69,671
)
(69,213
)
(65,085
)
(54,849
)
Income (loss) from continuing operations before income taxes
26,123
(65,449
)
24,699
(13,347
)
66,323
Income tax (provision) benefit
(93
)
(269
)
(1,465
)
(931
)
(1,001
)
Net income (loss)
26,030
(65,718
)
23,234
(14,278
)
65,322
Loss (income) loss attributable to noncontrolling interests
(2,482
)
56,742
30,483
45,061
(3,875
)
Net income (loss) attributable to Acadia
$
23,548
$
(8,976
)
$
53,717
$
30,783
$
61,447
Basic and diluted earnings per share, basic (loss) per share
$
0.26
$
(0.11
)
$
0.63
$
0.37
$
0.73
Weighted-average number of Common Shares outstanding, basic
87,654
86,442
84,436
82,080
83,683
Weighted-average number of Common Shares outstanding, diluted
87,654
86,442
84,436
82,080
83,685
Cash dividends declared per Common Share
$
0.60
$
0.29
$
1.13
$
1.09
$
1.05
BALANCE SHEET DATA:
Real estate before accumulated depreciation
$
4,071,607
$
4,011,326
$
3,960,411
$
3,620,583
$
3,391,306
Total assets
4,261,746
4,131,069
4,251,695
3,892,942
3,890,626
Total indebtedness, net
1,812,238
1,707,844
1,650,645
1,484,683
1,358,531
Total common shareholders’ equity
1,521,613
1,441,039
1,541,951
1,458,777
1,567,127
Noncontrolling interests
628,322
609,165
646,439
623,980
647,512
Total equity
2,149,935
2,050,204
2,188,390
2,082,757
2,214,639
OTHER:
Funds from operations attributable to Common Shareholders
and Common OP Unit holders (c)
117,143
114,401
127,472
118,870
134,667
Cash flows provided by (used in):
Operating activities
104,983
103,947
131,382
97,035
114,213
Investing activities
(198,538
)
(100,924
)
(410,538
)
(137,679
)
8,698
Financing activities
91,319
(1,257
)
273,956
(10,003
)
(132,413
)
a)For a description of the Restatement and details of the related adjustments, see Note 2. Revised amounts have been adjusted to conform periods prior to the restatement period.
b)Amounts for credit losses have been reclassified from operating expenses to revenues for the years ended December 31, 2018 and 2017.
c)Funds from operations is a non-GAAP measure. For an explanation of the measure and a reconciliation to the nearest GAAP measure, see “Item 7. Management’s Discussion and Analysis - Supplemental Financial Measures.”

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
As of December 31, 2021, there were 186 properties, which we own or have an ownership interest in, within our Core Portfolio and Funds. Our Core Portfolio consists of those properties either 100% owned, or partially owned through joint venture interests by the Operating Partnership, or subsidiaries thereof, not including those properties owned through our Funds. These properties primarily consist of street and urban retail, and suburban shopping centers. See Item 2. Properties for a summary of our wholly-owned and partially-owned retail properties and their physical occupancies at December 31, 2021.
The majority of our operating income is derived from rental revenues from operating properties, including expense recoveries from tenants, offset by operating and overhead expenses.
Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective:
•Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas and create value through accretive development and re-tenanting activities coupled with the acquisition of high-quality assets that have the long-term potential to outperform the asset class as part of our Core asset recycling and acquisition initiative.
•Generate additional external growth through an opportunistic yet disciplined acquisition program within our Funds. We target transactions with high inherent opportunity for the creation of additional value through:
ovalue-add investments in street retail properties, located in established and “next generation” submarkets, with re-tenanting or repositioning opportunities,
oopportunistic acquisitions of well-located real-estate anchored by distressed retailers, and
oother opportunistic acquisitions which may include high-yield acquisitions and purchases of distressed debt.
•Some of these investments historically have also included, and may in the future include, joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets.
•Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth.
SIGNIFICANT DEVELOPMENTS DURING THE year ended December 31, 2021
Restatement of Previously Issued Financial Statements
On February 14, 2022, the management and the audit committee of the board of trustees (the “Audit Committee”) of the Company, in consultation with BDO USA LLP (“BDO”), the Company’s independent registered public accounting firm, determined that the Company’s previously issued financial statements and the audit reports thereon, as of and for the years ended December 31, 2020 and 2019, and as of and for each of the quarterly periods ended March 31, 2021 and 2020, June 30, 2021 and 2020, September 30, 2021 and 2020, and December 31, 2020 (collectively, the “Prior Period Financial Statements”), should no longer be relied upon due to an error in accounting treatment at the time of formation related to the improper consolidation of two Fund investments that are less-than-wholly-owned through the Company's opportunity funds (the "Fund Investments"). The Fund Investments, which were formed in 2012 and 2013, have been adjusted from consolidated investments to investments in unconsolidated affiliates. Management and the Audit Committee have determined that these accounting changes required a restatement of the Prior Period Financial Statements (the "Restatement").
As part of the Company’s normal annual reporting process prior to releasing its 2021 fourth quarter and year-to-date December 31, 2021 results and prior to completion of the related audit, the Company and BDO identified the Restatement items described in more detail below. The Company has since reevaluated its accounting and determined that it needs to correct the previous accounting for such items. The Restatement:
•is based on an error in the application of generally accepted accounting principles ("GAAP") as they relate to the consolidation of subsidiaries, which involves significant judgment and is related to the presentation of the Fund Investments within the Company’s consolidated balance sheets, statements of operations and statements of cash flows. The consolidation error, excluding the immaterial previously unrecorded adjustments noted below, had no impact on net income, funds from operations ("FFO"), or distributions in excess of accumulated earnings. However, substantially all of the changes to the consolidated balance sheets at each of December 31, 2020 and 2019 were due to the consolidation error as follows:
oa $55.8 million and $57.4 million reduction in total assets, which includes a $23.0 million and $14.5 million increase to investments in unconsolidated affiliates; a $57.5 million and $58.8 million reduction in total liabilities; and a $1.9 million and $1.8 million increase to noncontrolling interests.
•also includes other immaterial previously unrecorded adjustments, which had a minor impact on previously-reported net income (loss) and net earnings (loss) per share, FFO and FFO per share:
othe impact on net income (loss) attributable to Acadia for the nine months ended September 30, 2021, the year ended December 31, 2020 and the year ended December 31, 2019 was a (reduction) increase of ($0.6) million or ($0.01) per share, ($0.2) million or ($0.01) per share, and $0.7 million or $0.01 per share, respectively;
othe impact on FFO for the nine months ended September 30, 2021, the year ended December 31, 2020 and the year ended December 31, 2019 was a (reduction) increase of ($0.6) million or ($0.01) per share, ($0.2) million or ($0.01) per share, and $0.6 million or $0.01 per share, respectively;
•is illustrated in detail in Note 2 and Note 17 to the consolidated financial statements.
Acquisitions
During the year ended December 31, 2021, we made one Core Portfolio investment for $26.3 million and Fund V acquired three shopping centers totaling $168.6 million, inclusive of transaction costs, as described below (Note 3).
•On August 20, 2021, Fund V acquired a shopping center referred to as Canton Marketplace, located in Canton Georgia, for $51.0 million, inclusive of transaction costs, less the assumption of $31.8 million of first mortgage debt.
•On September 9, 2021, Fund V acquired a shopping center referred to as Monroe Marketplace, located in Selinsgrove Pennsylvania, for $44.8 million, inclusive of transaction costs. On November 12, 2021, Fund V acquired a land parcel adjacent to the shopping center for $1.0 million.
•On December 14, 2021, Fund V acquired a shopping center referred to as Midstate, located in East Brunswick, New Jersey, for $71.9 million, inclusive of transaction costs.
•On December 23, 2021, we acquired three retail buildings, referred to as the 14th Street Portfolio, in northwest Washington, D.C. for a total of $26.3 million, inclusive of transaction costs.
Dispositions of Real Estate
During the year ended December 31, 2021, we disposed of one consolidated Core property for $16.4 million, five consolidated Fund properties for total proceeds of $49.9 million, two unconsolidated Fund land parcels for $10.5 million, and terminated one Fund ground lease recognizing an aggregate gain of $10.5 million, of which the Company's share was $6.6 million, as follows:
•
On January 29, 2021, we sold one Core Portfolio consolidated property, 60 Orange Street, for $16.4 million, repaid the related mortgage of $6.7 million and recognized a gain of $4.6 million (Note 3).
•On January 4, 2021, Fund V sold two land parcels at its unconsolidated Family Center at Riverdale property for a total of $10.5 million, repaid $7.9 million of the related mortgage, and the venture recognized a gain of $3.2 million, of which the Company’s share was $0.6 million (Note 5).
•On May 19, 2021, Fund III sold its consolidated 654 Broadway property for $10.0 million and recognized a gain on the sale of $0.1 million (Note 3), of which the Company's share was insignificant.
•On June 18, 2021, Fund IV sold four consolidated properties located in Maine within its NE Grocer Portfolio (the Airport Mall, Shaw's Waterville, Shaw's Windham and Wells properties) for aggregate proceeds of $39.9 million, repaid the related mortgages totaling $23.5 million, and recognized an aggregate gain on sale of $5.1 million of which the Company's share was $1.2 million (Note 3).
•On June 25, 2021, Fund IV terminated its ground lease at 110 University Place and returned the property to the lessor, recognizing a gain on lease termination of $0.7 million, of which the Company's share was $0.2 million (Note 12).
In addition, during the fourth quarter of 2021, we entered into agreements to sell two Fund properties for aggregate proceeds of approximately $89.2 million. As these dispositions are deemed likely of completion within one year, these properties have been classified as "held-for-sale" on the Company's consolidated balance sheet (Note 3, Note 18).
Financing Activity
During the year ended December 31, 2021, we effected the following financing activities (Note 8):
•entered into a new amended and restated credit facility on June 29, 2021, increasing the capacity under our revolving credit facility by $50.0 million and under our term loan by $50.0 million;
•entered into a new $29.2 million Fund mortgage collateralized by Monroe Marketplace;
•assumed a $31.8 million mortgage upon Fund V's acquisition of Canton Marketplace (Note 3);
•extended 11 Fund mortgages, two during the first quarter with aggregate balances of $37.7 million (after principal reductions of $1.7 million), five during the second quarter totaling $125.7 million (after principal reductions of $6.5 million), two during the third quarter totaling $53.1 million (after principal reductions of $10.2 million), and two during the fourth quarter totaling $14.8 million (after principal reductions of $3.0 million);
•modified and extended the Fund II term loan resulting in a one-year extension, the Fund IV bridge facility resulting in a six-month extension and a $15.0 million repayment, and the Fund V subscription line resulting in a one-year extension;
•refinanced a Fund II loan for $18.5 million with a new loan for $16.8 million; and
•made repayments of mortgages underlying property dispositions as noted above.
Structured Financing Investments
During the year ended December 31, 2021, we made two Core Portfolio loans totaling $59.0 million within our Structured Financing portfolio, of which $58.0 million was funded as follows (Note 4):
•On April 20, 2021, we made a $16.0 million first mortgage loan collateralized by a retail building in Silver Spring, Maryland.
•On September 17, 2021, we made a $43.0 million first mortgage loan collateralized by a retail condominium in Soho, New York, of which $42.0 million was funded.
In addition, one Core Portfolio and one Fund loan receivable remain in default (Note 4) at December 31, 2021.
ATM Program Activity
We sold 2,889,371 Common Shares under our ATM Program during the year ended December 31, 2021 for gross proceeds of $64.9 million, or $63.9 million net of issuance costs, at a weighted-average gross price per share of $22.46 (Note 11). During January 2022, we sold 4,281,576 common shares under our ATM program for gross proceeds of $96.3 million, at an average gross price of $22.48, or $92.5 million net of issuance costs (Note 18).
RESULTS OF OPERATIONS
See Note 13 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments.
Comparison of Results for the Year Ended December 31, 2021 to the Year Ended December 31, 2020 (As Restated)
The results of operations by reportable segment for the year ended December 31, 2021 compared to the year ended December 31, 2020 (As Restated) are summarized in the table below (in millions, totals may not add due to rounding):
Year Ended
Year Ended
December 31, 2021
December 31, 2020 (As Restated)
Increase (Decrease)
Core
Funds
SF
Total
Core
Funds
SF
Total
Core
Funds
SF
Total
Revenues
$
181.3
$
111.2
$
-
$
292.5
$
160.3
$
90.6
$
-
$
250.9
$
21.0
$
20.6
$
-
$
41.6
Depreciation and amortization
(69.1
)
(54.3
)
-
(123.4
)
(76.1
)
(71.1
)
-
(147.2
)
(7.0
)
(16.8
)
-
(23.8
)
Property operating expenses, other
operating and real estate taxes
(57.0
)
(41.9
)
-
(98.9
)
(57.2
)
(40.8
)
-
(98.0
)
(0.2
)
1.1
-
0.9
General and administrative expenses
-
-
-
(40.1
)
-
-
-
(35.8
)
-
-
-
4.3
Impairment charges
-
(9.9
)
-
(9.9
)
(0.4
)
(85.2
)
-
(85.6
)
(0.4
)
(75.3
)
-
(75.7
)
Gain on disposition of properties
4.6
5.9
-
10.5
0.2
0.5
-
0.7
4.4
5.4
-
9.8
Operating income (loss)
59.9
10.9
-
30.7
26.6
(105.9
)
-
(115.1
)
33.3
116.8
-
145.8
Interest income
-
-
9.1
9.1
-
-
9.0
9.0
-
-
0.1
0.1
Equity in earnings (losses) of
unconsolidated affiliates
0.4
5.0
-
5.3
(0.9
)
(2.2
)
-
(3.1
)
1.3
7.2
-
8.4
Interest expense
(29.5
)
(38.6
)
-
(68.0
)
(33.2
)
(36.5
)
-
(69.7
)
(3.7
)
2.1
-
(1.7
)
Realized and unrealized holding gains
on investments and other
-
53.7
(4.5
)
49.1
18.6
95.4
(0.6
)
113.4
(18.6
)
(41.7
)
(3.9
)
(64.3
)
Income tax provision
-
-
-
(0.1
)
-
-
-
(0.3
)
-
-
-
0.2
Net income (loss)
30.8
30.9
4.5
26.0
11.2
(49.2
)
8.4
(65.7
)
19.6
80.1
(3.9
)
91.7
Net loss (income) attributable
to noncontrolling interests
(2.3
)
(0.2
)
-
(2.5
)
(5.8
)
62.6
-
56.7
(3.5
)
62.8
-
59.2
Net income attributable to Acadia
$
28.5
$
30.7
$
4.5
$
23.5
$
5.3
$
13.4
$
8.4
$
(9.0
)
$
23.2
$
17.3
$
(3.9
)
$
32.5
Core Portfolio
The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio increased $23.2 million for the year ended December 31, 2021 compared to the prior year as a result of the changes further described below.
Revenues for our Core Portfolio increased $21.0 million for the year ended December 31, 2021 compared to the prior year primarily due to (i) $14.9 million decrease in credit loss reserves in 2021 primarily related to additional COVID-19 Pandemic reserves in 2020 (Note 12), (ii) $5.1 million from the reversal of reserved amounts for cash received on past due balances, (iii) $2.5 million related to the consolidation of Town Center in 2020 (Note 5), (iv) $2.5 million for the write-off of a below-market lease at a property, (v) $2.2 million from increased tenant recoveries due to higher operating expenses including real estate taxes, and (vi) $1.8 million for higher termination income in 2021 for vacated tenants. These increases were partially offset by (i) decreases in revenues of $4.8 million for tenants that vacated during 2020, (ii) $2.0 million from an additional increase in abatements due to the COVID-19 Pandemic in 2021 and (iii) $1.0 million for property dispositions in 2021.
Depreciation and amortization for our Core Portfolio decreased $7.0 million for the year ended December 31, 2021 compared to the prior year primarily due to the write off of deferred leasing and tenant improvement costs associated with tenants that vacated during 2020 (Note 7).
The gain on disposition of properties for our Core Portfolio of $4.4 million for the year ended December 31, 2021 relates to the sale of 60 Orange Street (Note 3).
Equity in earnings (losses) of unconsolidated affiliates for our Core Portfolio increased $1.3 million for the year ended December 31, 2021 compared to the prior year as a result of a $2.5 million decrease in credit loss reserves at unconsolidated properties related to the COVID-19 Pandemic (Note 12) in 2021 offset by $1.4 million from the consolidation of Town Center in 2020.
Interest expense for our Core Portfolio decreased $3.7 million for the year ended December 31, 2021 compared to the prior year primarily due to (i) $1.8 million from default interest on a loan that was paid off in 2020, (ii) $1.2 million from higher average outstanding borrowings in 2020 and (iii) $1.2 million from the modification of a financing lease to an operating lease in 2020. These decreases were offset by $0.7 million due to higher loan cost amortization in 2021.
Realized and unrealized holding gains on investments and other for our Core Portfolio of $18.6 million in 2020 is due to a gain on debt extinguishment of $18.3 million related to the Brandywine Holdings note (Note 8).
Net loss (income) attributable to noncontrolling interests for our Core Portfolio decreased $3.5 million for the year ended December 31, 2021 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above.
Funds
The results of operations for our Funds segment are depicted in the table above under the headings labeled “Funds.” Segment net income attributable to Acadia for the Funds increased $17.3 million for the year ended December 31, 2021 compared to the prior year as a result of the changes described below.
Revenues for the Funds increased $20.6 million for the year ended December 31, 2021 compared to the prior year primarily due to (i) $22.2 million from a decrease in credit loss reserves in 2021 primarily related to additional COVID-19 Pandemic reserves in 2020 (Note 12), (ii) $4.5 million from the reversal of reserved amounts for cash received on past due balances (iii) $3.6 million from property acquisitions in 2021, and (iv) $1.4 million from an increase in percentage rent in 2021. These increases were partially offset by decreases of (i) $3.3 million for tenants that vacated during 2020, (ii) $3.1 million from property dispositions in 2021, and (iii) $2.5 million from an increase in rent abatements related to the COVID-19 Pandemic in 2021.
Depreciation and amortization for the Funds decreased $16.8 million for the year ended December 31, 2021 compared to the prior year primarily due to the write-off of costs associated with tenants that vacated during 2020 (Note 7).
Property operating expenses, other operating and real estate taxes for the Funds increased $1.1 million for the year ended December 31, 2021 compared to the prior year primarily due to an overall increase of operating expenses across our properties in 2021 following reduced levels in 2020 as a result of the COVID-19 Pandemic (Note 12).
Impairment charges for the Funds decreased $75.3 million for the year ended December 31, 2021 compared to the prior year (Note 9). Impairment charges totaling $9.9 million for the Funds in 2021 relate to 27 East 61st and 210 Bowery in Fund IV. Impairment charges totaling $85.2 million during 2020 for the Funds relate to $33.8 million for 654 Broadway and Cortlandt Crossing in Fund III and $51.4 million for 717 N Michigan, 801 Madison and 146 Geary Street in Fund IV.
Gain on disposition of properties for the Funds increased $5.4 million for the year ended December 31, 2021 compared to the prior year due to dispositions of 654 Broadway at Fund III, and the NE Grocer Portfolio and 110 University at Fund IV in 2021 compared to the sale of Colonie Plaza in 2020 at Fund IV (Note 3, Note 12).
Equity in earnings (losses) of unconsolidated affiliates for the Funds increased $7.2 million for the year ended December 31, 2021 compared to the prior year primarily due to the $3.3 million due to COVID-19 Pandemic related reserves at properties in 2020 (Note 12) and $3.2 million gain on sale related to two land parcels at Riverdale Family Center in Fund V (Note 5) in 2021.
Interest expense for the Funds increased $2.1 million for the year ended December 31, 2021 compared to the prior year due to a $3.7 million decrease in interest capitalized in 2021, $0.7 million from increased loan cost amortization in 2021 and a $0.4 million increase related to higher average outstanding borrowings in 2021. These increases were primarily offset by $2.3 million from lower average interest rates in 2021.
Realized and unrealized holding gains on investments and other for the Funds decreased $41.7 million for the year ended December 31, 2021 compared to the prior year . Realized and unrealized holding losses on investments and other includes primarily a $51.9 million mark-to-market adjustment on the Investment in Albertsons (Note 5) during the year ended December 31, 2021 compared to a $72.4 million mark-to-market adjustment and a $23.2 million net realized gain on disposition of shares related to the Investment in Albertsons in 2020.
Net loss (income) attributable to noncontrolling interests for the Funds increased $62.8 million for the year ended December 31, 2021 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above. Net loss attributable to noncontrolling interests in the Funds includes asset management fees earned by the Company of $11.1 million and $15.2 million for the year ended December 31, 2021 and 2020, respectively.
Structured Financing
The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” Realized and unrealized holding gains on investments and other for the Structured Financing portfolio decreased $3.9 million for the year ended December 31, 2021 compared to the prior year primarily due to the increase in a CECL allowance on a note in 2021.
Unallocated
The Company does not allocate general and administrative expense and income taxes to its reportable segments. These unallocated amounts are depicted in the table above under the headings labeled “Total.” Unallocated general and administrative expense increased $4.3 million for the year ended December 31, 2021 compared to the prior year due to increased compensation expense primarily attributable to an increase in the number of employees and the valuation of equity grants in 2021.
Comparison of Results for the Year Ended December 31, 2020 (As Restated) to the Year Ended December 31, 2019 (As Restated)
The results of operations by reportable segment for the year ended December 31, 2020 (As Restated) compared to the year ended December 31, 2019 (As Restated) are summarized in the table below (in millions, totals may not add due to rounding):
Year Ended
Year Ended
December 31, 2020 (As Restated)
December 31, 2019 (As Restated)
Increase (Decrease)
Core
Funds
SF
Total
Core
Funds
SF
Total
Core
Funds
SF
Total
Revenues
$
160.3
$
90.6
$
-
$
250.9
$
173.2
$
116.4
$
-
$
289.6
$
(12.9
)
$
(25.8
)
$
-
$
(38.7
)
Depreciation and amortization
(76.1
)
(71.1
)
-
(147.2
)
(61.8
)
(60.8
)
-
(122.6
)
14.3
10.3
-
24.6
Property operating expenses, other
operating and real estate taxes
(57.2
)
(40.8
)
-
(98.0
)
(47.0
)
(41.2
)
-
(88.2
)
10.2
(0.4
)
-
9.8
General and administrative expenses
-
-
-
(35.8
)
-
-
-
(34.3
)
-
-
-
1.5
Impairment charges
(0.4
)
(85.2
)
-
(85.6
)
-
(1.7
)
-
(1.7
)
0.4
83.5
-
83.9
Gain on disposition of properties
0.2
0.5
-
0.7
16.8
13.6
-
30.3
(16.6
)
(13.1
)
-
(29.6
)
Operating income (loss)
26.6
(105.9
)
-
(115.1
)
81.1
26.3
-
73.1
(54.5
)
(132.2
)
-
(188.2
)
Interest income
-
-
9.0
9.0
-
-
8.0
8.0
-
-
1.0
1.0
Equity in earnings (losses) of
unconsolidated affiliates
(0.9
)
(2.2
)
-
(3.1
)
9.0
(3.1
)
-
5.9
(9.9
)
0.9
-
(9.0
)
Interest expense
(33.2
)
(36.5
)
-
(69.7
)
(28.3
)
(40.9
)
-
(69.2
)
4.9
(4.4
)
-
0.5
Realized and unrealized holding gains
on investments and other
18.6
95.4
(0.6
)
113.4
0.3
6.6
-
6.9
18.3
88.8
(0.6
)
106.5
Income tax provision
-
-
-
(0.3
)
-
-
-
(1.5
)
-
-
-
1.2
Net income (loss)
11.2
(49.2
)
8.4
(65.7
)
62.1
(11.1
)
8.0
23.2
(50.9
)
(38.1
)
0.4
(88.9
)
Net loss (income) attributable
to noncontrolling interests
(5.8
)
62.6
-
56.7
0.3
30.1
-
30.5
6.1
(32.5
)
-
(26.2
)
Net income attributable to Acadia
$
5.3
$
13.4
$
8.4
$
(9.0
)
$
62.5
$
19.0
$
8.0
$
53.7
$
(57.2
)
$
(5.6
)
$
0.4
$
(62.7
)
Core Portfolio
The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio decreased $57.2 million for the year ended December 31, 2020 compared to the prior year as a result of the changes further described below.
Revenues for our Core Portfolio decreased $12.9 million for the year ended December 31, 2020 compared to the prior year primarily due to (i) a $21.3 million increase in credit loss reserves (comprised of $12.9 million and $8.4 million of billed rent and straight-line rent, respectively) in 2020 related to the COVID-19 Pandemic (Note 12); (ii) the write-off of a below-market lease in the prior year period related to a tenant that vacated for $5.7 million, (iii) $4.0 million from tenant bankruptcies and (iv) $1.0 million from property dispositions in 2019. These decreases were partially offset by (i) $8.9 million related to the consolidation of Town Center in 2020 (Note 5) and (ii) additional rents of $8.1 million from Core Portfolio property acquisitions during 2019 and 2020 (Note 3).
Depreciation and amortization for our Core Portfolio increased $14.3 million for the year ended December 31, 2020 compared to the prior year primarily due to $6.1 million from the consolidation of Town Center, $5.1 million from the write-off of unamortized tenant improvements and leasing commissions related to a vacating tenant in 2020, and $4.2 million from Core Portfolio property acquisitions in 2019 and 2020.
Property operating expenses, other operating and real estate taxes for our Core Portfolio increased $10.2 million for the year ended December 31, 2020 compared to the prior year primarily due to $7.1 million for Brandywine Holdings litigation (Note 8), $1.8 million related to the consolidation of Town Center and $1.1 million from Core Portfolio property acquisitions in 2019 and 2020.
Gain on disposition of properties for our Core Portfolio decreased $16.6 million for the year ended December 31, 2020 compared to the prior year Gain on disposition of properties of $0.2 million in 2020 was related to two land parcel sales compared to $16.8 million for the sale of Pacesetter Park in 2019 (Note 3).
Equity in earnings (losses) of unconsolidated affiliates for our Core Portfolio decreased $9.9 million for the year ended December 31, 2020 compared to the prior year due to $5.4 million from the consolidation of Town Center in 2020 as well as a $4.5 million increase in credit loss reserves at unconsolidated properties related to the COVID-19 Pandemic (Note 12).
Interest expense for our Core Portfolio increased $4.9 million for the year ended December 31, 2020 compared to the prior year primarily due to higher average outstanding borrowings in 2020.
Realized and unrealized holding gains on investments and other for our Core Portfolio of $18.3 million in 2020 is due to a gain on debt extinguishment related to the Brandywine Holdings note (Note 8).
Net loss (income) attributable to noncontrolling interests for our Core Portfolio increased $6.1 million for the year ended December 31, 2020 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above.
Funds
The results of operations for our Funds segment are depicted in the table above under the headings labeled “Funds.” Segment net income attributable to Acadia for the Funds decreased $5.6 million for the year ended December 31, 2020 compared to the prior year as a result of the changes described below.
Revenues for the Funds decreased $25.8 million for the year ended December 31, 2020 compared to the prior year primarily due to (i) a $25.6 million increase in credit loss reserves (comprised of $11.9 million and $13.7 million of billed rent and straight-line rent, respectively) in 2020 primarily related to the COVID-19 Pandemic (Note 12); (ii) $5.1 million from the acceleration of amortization on a below-market lease in 2019, (iii) $4.3 million from Fund property dispositions (Note 3) and (iv) $1.4 million from tenant bankruptcies. These decreases were partially offset $8.8 million from Fund property acquisitions in 2019.
Depreciation and amortization for the Funds increased $10.3 million for the year ended December 31, 2020 compared to the prior year primarily due to $11.3 million from the write-off of tenant improvements and leasing commissions related to vacated tenants in 2020 and $4.5 million from Fund property acquisitions in 2019 partially offset by $3.5 million for write-offs due to tenant bankruptcies in 2019 and $2.1 million from Fund property dispositions in 2019 and 2020.
Impairment charges for the Funds increased $83.5 million for the year ended December 31, 2020 compared to the prior year (Note 9). Impairment of $85.2 million during 2020 for the Funds relates to $33.8 million in Fund III and $51.4 million in Fund IV. Charges during 2019 relate to $1.7 million in Fund IV.
Gain on disposition of properties for the Funds decreased $13.1 million for the year ended December 31, 2020 compared to the prior year due to $13.6 million for the sale of 3104 M Street and Nostrand Avenue in Fund III and 938 W. North and JFK Plaza in Fund IV during 2019 compared to the sale of Fund IV’s Colonie Plaza during 2020 (Note 3, Note 5).
Interest expense for the Funds decreased $4.4 million for the year ended December 31, 2020 compared to the prior year due to $9.4 million from lower average interest rates in 2020 and $2.7 million from lower loan cost amortization in 2020. These decreases were offset by a $4.5 million decrease in interest capitalized in 2020 due to ceasing capitalization interest on Fund III’s Cortlandt Crossing and Fund IV’s 717 N. Michigan Avenue and a $0.4 million increase related to higher average outstanding borrowings in 2020.
Realized and unrealized holding gains on investments and other for the Funds increased $88.8 million for the year ended December 31, 2020 compared to the prior year due to a $72.4 million mark-to-market adjustment on the Albertson’s IPO shares and a $23.2 million net realized gain on disposition of Albertson’s shares during 2020 (Note 5). These increases were primarily offset by a $5.0 million New Market Tax Credit transaction at Fund II’s City Point investment and $1.6 million from an incentive fee earned from Fund III’s Storage investment during 2019.
Net loss (income) attributable to noncontrolling interests for the Funds decreased $32.5 million for the year ended December 31, 2020 compared to the prior year based on the noncontrolling interests’ share of the variances discussed above. Net loss attributable to noncontrolling interests in the Funds includes asset management fees earned by the Company of $15.2 million and $17.5 million for the year ended December 31, 2020 and 2019, respectively.
Structured Financing
The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.” Interest income for the Structured Financing portfolio increased $0.4 million for the year ended December 31, 2020 compared to the prior year primarily due to $5.9 million of additional interest income from new notes issued in 2020 and 2019 partially offset by $4.1 million from the conversion of the Brandywine Note Receivable to equity in 2020 (Note 5) and the payoff of a Fund IV note during 2019 (Note 4).
Unallocated
The Company does not allocate general and administrative expense and income taxes to its reportable segments. These unallocated amounts are depicted in the table above under the headings labeled “Total.” Unallocated general and administrative expense increased $1.5 million for the year ended December 31, 2020 compared to the prior year due to an increase in stock based compensation in 2020. Unallocated income taxes increased $1.2 million for the year ended December 31, 2020 compared to the prior year due to the establishment of a $1.0 million deferred tax asset reserve at the Fund III Taxable REIT Subsidiary (“TRS”) which was primarily offset by the newly available carryback of net operating losses under Federal rules in 2020. In 2019, the Company established a $1.7 million deferred tax asset reserve at the Core TRS.
Restatement of Quarterly Financial Data
As announced on February 15, 2022, the Company has restated its unaudited interim financial statements for the three months ended March 31, 2021 and 2020, the three and six months ended June 30, 2021 and 2020, the three and nine months ended September 30, 2021 and 2020 and the three months ended December 31, 2020. Detailed restatements of the Company's consolidated quarterly financial statements are provided in Note 17. The Company determined that a comprehensive restatement of the results of operations and liquidity for each quarterly period was not as meaningful to the reader of the financial statements as the summary below.
All adjustments relate to one of the following categories:
(a)an error in accounting treatment at the time of formation related to the improper consolidation of the two Fund Investments that have been adjusted from consolidated investments to equity in earnings from unconsolidated affiliates. These corrections had no impact on net income (loss), FFO, Core NOI or distributions in excess of accumulated earnings. Additionally, during the Restatement periods, the Fund Investments did not have any significant transactions (new borrowings, acquisitions, or dispositions) other than their ongoing rental operations in the normal course of business that would otherwise be discussed in management's discussion of results of operations or liquidity.
(b)errors related to other immaterial previously unrecorded adjustments, which were also recorded as part of the Restatement. These adjustments were primarily adjustments which the Company deemed immaterial in prior periods. The total impact of these previously unrecorded adjustments was:
oa reduction in each of net income attributable to Acadia and FFO of $0.3 million ($0.01 per share for net income and $0.00 for FFO) and $0.0 million ($0.00 per share), for the three months ended March 31, 2021 and 2020, respectively;
oa reduction in each of net income attributable to Acadia and FFO of $0.2 million ($0.00 per share for net income and $0.01 for FFO) and $0.6 million ($0.01 per share) for the three and six months ended June 30, 2021, respectively;
oa reduction in net income attributable to Acadia of $0.1 million ($0.00 per share) and $0.1 million ($0.00 per share) for the three and six months ended June 30, 2020, respectively; a reduction in FFO of $0.0 million ($0.00 per share) and $0.0 million ($0.00 per share) for the three and six months ended June 30, 2020, respectively;
oa reduction in each of net income attributable to Acadia and FFO of $0.1 million ($0.00 per share) and $0.6 million ($0.01 per share), for the three and nine months ended September 30, 2021, respectively;
oa reduction in net income attributable to Acadia of $0.0 million ($0.00 per share) and $0.1 million ($0.00 per share), for the three and nine months ended September 30, 2020, respectively; a reduction in FFO of $0.0 million ($0.00 per share) and $0.0 million ($0.00 per share), for the three and nine months ended September 30, 2020, respectively;
oa reduction in each of net income attributable to Acadia and FFO of $0.1 million ($0.01 per share) for the three months ended December 31, 2020; and
oThe immaterial previously unrecorded adjustments include the recognition of additional reserves for the Company's Structured Financing notes receivable (Note 4) of $1.4 million or $0.3 million at the Company's share, for the three months ended March 31, 2021; $0.7 million and $2.3 million, or $0.2 million and $0.5 million at the Company's share for the three and six months ended June 30, 2021; $0.8 million and $3.1 million, or $0.2 million and $0.7 million at the Company's share, for the three and nine months ended September 30, 2021; and $0.7 million or $0.1 million at the Company's share for the three months ended December 31, 2020.
None of the errors significantly impacted Core NOI for any of the Restatement Periods.
SUPPLEMENTAL FINANCIAL MEASURES
Net Property Operating Income
The following discussion of net property operating income (“NOI”) and rent spreads on new and renewal leases includes the activity from both our consolidated and our pro-rata share of unconsolidated properties within our Core Portfolio. Our Funds invest primarily in properties that typically require significant leasing and development. Given that the Funds are finite-life investment vehicles, these properties are sold following stabilization. For these reasons, we believe NOI and rent spreads are not meaningful measures for our Fund investments.
NOI represents property revenues less property expenses. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriate supplemental disclosures of Core Portfolio operating performance due to their widespread acceptance and use within the REIT investor and analyst communities. NOI and rent spreads on new and renewal leases are presented to assist investors in analyzing our property performance, however, our method of calculating these may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
A reconciliation of consolidated operating income to net operating income (loss) - Core Portfolio follows (in thousands):
Year Ended December 31,
(As Restated)
(As Restated)
Consolidated operating income (loss) (a)
$
30,656
$
(115,062
)
$
73,078
Add back:
General and administrative
40,125
35,798
34,299
Depreciation and amortization
123,439
147,229
122,580
Impairment charges
9,925
85,598
1,721
Less:
Above/below-market rent, straight-line rent and other adjustments (a)
(19,488
)
13,581
(23,292
)
Gain on disposition of properties
(10,521
)
(683
)
(30,324
)
Consolidated NOI
174,136
166,461
178,062
Noncontrolling interest in consolidated NOI
(48,401
)
(46,316
)
(50,213
)
Less: Operating Partnership's interest in Fund NOI included above
(12,337
)
(11,518
)
(13,556
)
Add: Operating Partnership's share of unconsolidated joint ventures NOI (b)
13,811
15,659
25,949
NOI - Core Portfolio
$
127,209
$
124,286
$
140,242
a)Includes straight-line rent reserves. See Note 1 for additional information about straight-line rent reserves and adjustments for the periods presented.
b)Does not include the Operating Partnership’s share of NOI from unconsolidated joint ventures within the Funds.
Same-Property NOI includes Core Portfolio properties that we owned for both the current and prior periods presented, but excludes those properties which we acquired, sold or expected to sell, and developed during these periods. The following table summarizes Same-Property NOI for our Core Portfolio (in thousands):
Three Months Ended December 31,
Year Ended December 31,
Core Portfolio NOI
$
32,476
$
30,556
$
127,209
$
124,286
Less properties excluded from Same-Property NOI
(3,832
)
(2,798
)
(9,992
)
(8,856
)
Same-Property NOI
$
28,644
$
27,758
$
117,217
$
115,430
Percent change from prior year period
3.2
%
1.5
%
Components of Same-Property NOI:
Same-Property Revenues
$
42,525
$
40,424
$
171,028
$
164,499
Same-Property Operating Expenses
(13,881
)
(12,666
)
(53,811
)
(49,069
)
Same-Property NOI
$
28,644
$
27,758
$
117,217
$
115,430
Rent Spreads on Core Portfolio New and Renewal Leases
The following table summarizes rent spreads on both a cash basis and straight-line basis for new and renewal leases based on leases executed within our Core Portfolio for the periods presented. Cash basis represents a comparison of rent most recently paid on the previous lease as compared to the initial rent paid on the new lease. Straight-line basis represents a comparison of rents as adjusted for contractual escalations, abated rent and lease incentives for the same comparable leases.
Three Months Ended December 31, 2021
Year Ended December 31, 2021
Core Portfolio New and Renewal Leases
Cash Basis
Straight-
Line Basis
Cash Basis
Straight-
Line Basis
Number of new and renewal leases executed
GLA commencing
118,679
118,679
449,095
449,095
New base rent
$
28.82
$
30.29
$
26.73
$
27.80
Expiring base rent
$
19.27
$
18.95
$
23.47
$
22.43
Percent growth in base rent
49.5
%
59.9
%
13.9
%
23.9
%
Average cost per square foot (a)
$
29.22
$
29.22
$
12.41
$
12.41
Weighted average lease term (years)
11.3
11.3
7.1
7.1
a)The average cost per square foot includes tenant improvement costs, leasing commissions and tenant allowances.
Funds from Operations
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, depreciation and amortization, and impairment of real estate. 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 and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Also consistent with NAREIT’s definition of FFO, the Company has elected to include gains and losses incidental to its main business (including those related to its RCP investments such as Albertsons) in FFO. A reconciliation of net income attributable to Acadia to FFO follows (dollars in thousands, except per share amounts):
Year Ended December 31,
(As Restated)
(As Restated)
Net income (loss) attributable to Acadia
$
23,548
$
(8,976
)
$
53,717
Depreciation of real estate and amortization of leasing costs (net of
noncontrolling interests' share)
93,388
106,220
89,311
Impairment charges (net of noncontrolling interests' share)
2,294
17,323
Gain on disposition of properties (net of noncontrolling interests' share)
(4,163
)
(291
)
(19,786
)
Income (loss) attributable to Common OP Unit holders
1,584
(370
)
3,295
Distributions - Preferred OP Units
Funds from operations attributable to Common Shareholders and
Common OP Unit holders
$
117,143
$
114,401
$
127,472
Funds From Operations per Share - Diluted
Basic weighted-average shares outstanding, GAAP earnings
87,653,818
86,441,922
84,435,826
Weighted-average OP Units outstanding
5,115,319
4,993,267
5,111,262
Basic weighted-average shares and OP Units outstanding, FFO
92,769,137
91,435,189
89,547,088
Assumed conversion of Preferred OP Units to common shares
464,623
464,623
499,345
Diluted weighted-average number of Common Shares and Common
OP Units outstanding, FFO
93,233,760
91,899,812
90,046,433
Diluted Funds from operations, per Common Share and Common OP Unit
$
1.26
$
1.24
$
1.42
LIQUIDITY AND CAPITAL RESOURCES
Impact of Restatement
The Restatement (Note 2, Note 17) had the following impact on the Company's liquidity since the last report in which liquidity was discussed:
•consolidated debt for the Fund Investments (with a balance of $59.7 million at September 30, 2021) is now reported within our unconsolidated (off-balance sheet) debt. See "Off-Balance Sheet Arrangements" section which follows
•cash of and restricted cash for the Fund Investments (with balances of $1.2 million and $3.5 million, respectively, at September 30, 2021) is no longer included on the Company's balance sheet
Uses of Liquidity and Cash Requirements
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 Funds and property acquisitions and development/re-tenanting activities within our Core Portfolio, (iii) distributions to our Fund investors, (iv) debt service and loan repayments and (v) share repurchases.
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. During the year ended December 31, 2021, we paid dividends and distributions on our Common Shares, Common OP Units and Preferred OP Units totaling $42.7 million.
Investments in Real Estate
During the year ended December 31, 2021, we made one Core Portfolio investment for $26.3 million and Fund V acquired three shopping centers totaling $168.6 million, inclusive of transaction costs.
Structured Financing Investments
During the year ended December 31, 2021, we made two Core Portfolio loans totaling $59.0 million within our Structured Financing portfolio, of which $58.0 million was funded (Note 4).
Capital Commitments
During the year ended December 31, 2021, we made capital contributions aggregating $9.5 million to our Funds. At December 31, 2021, our share of the remaining capital commitments to our Funds aggregated $70.3 million as follows:
•$1.1 million to Fund II. During August 2020, a recallable distribution of $15.7 million was made by Mervyn’s II to its investors, of which our share is $4.5 million. During 2021, Mervyn’s II recalled $11.9 million of the $15.7 million of which our share is $3.4 million.
•$0.5 million to Fund III. Fund III was launched in May 2007 with total committed capital of $450.0 million of which our share was $89.6 million. During 2015, we acquired an additional interest, which had an original capital commitment of $20.9 million.
•$9.7 million to Fund IV. Fund IV was launched in May 2012 with total committed capital of $530.0 million of which our share was $122.5 million.
•$59.0 million to Fund V. Fund V was launched in August 2016 with total committed capital of $520.0 million of which our share is $104.5 million.
Development Activities
During the year ended December 31, 2021, capitalized costs associated with development activities totaled $9 million (Note 3). At December 31, 2021, we had a total of six consolidated and one unconsolidated projects under development or redevelopment for which the estimated total cost to complete these projects through 2025 was $79.2 million to $103.9 million and our share was approximately $45.6 million to $56.8 million.
Debt
A summary of our consolidated debt, which includes the full amount of Fund related obligations and excludes our pro rata share of debt at our unconsolidated subsidiaries, is as follows (in thousands):
December 31,
(As Restated)
Total Debt - Fixed and Effectively Fixed Rate
$
1,038,803
$
1,124,255
Total Debt - Variable Rate
780,935
589,019
1,819,738
1,713,274
Net unamortized debt issuance costs
(7,946
)
(5,978
)
Unamortized premium
Total Indebtedness
$
1,812,238
$
1,707,844
As of December 31, 2021, our consolidated outstanding mortgage and notes payable aggregated $1,819.7 million, excluding unamortized premium of $0.4 million and unamortized loan costs of $7.9 million, and were collateralized by 37 properties and related tenant leases. Interest rates on our outstanding indebtedness ranged from 1.49% to 5.89% with maturities that ranged from February 2022 to April 2035. Taking into consideration $860.4 million of notional principal under variable to fixed-rate swap agreements currently in effect, $1,038.8 million of the portfolio debt, or 57.1%, was fixed at a 3.91% weighted-average interest rate and $780.9 million, or 42.9% was floating at a 2.44% weighted average interest rate as of December 31, 2021. Our variable-rate debt includes $110.5 million of debt subject to interest rate caps.
Without regard to available extension options, there is $749.5 million of debt maturing in 2022 at a weighted-average interest rate of 3.44%; there is $7.7 million of scheduled principal amortization due in 2022; and our share of scheduled 2022 principal payments and maturities on our unconsolidated debt was $22.7 million at December 31, 2021. In addition, $110.5 million of our total consolidated debt and $42.0 million of our pro-rata share of unconsolidated debt will come due in 2023. As it relates to the aforementioned maturing debt in 2022 and 2023, we have options to extend consolidated debt aggregating $187.2 million and $41.5 million, respectively; however, there can be no assurance that we will be able to successfully execute any or all of its available extension options. As it relates to the remaining maturing debt in 2022 and 2023, we may not have sufficient liquidity on hand to repay such indebtedness, and, therefore, we expect to refinance at least a portion of this indebtedness or select other alternatives based on market conditions as these loans mature; however, there can be no assurance that we will be able to obtain financing at acceptable terms.
Share Repurchase Program
We maintain a share repurchase program under which $122.6 million remains available as of December 31, 2021 (Note 11). The Company did not repurchase any of its Common Shares during the year ended December 31, 2021.
Sources of Liquidity
Our primary sources of capital for funding our short-term (less than 12 months) and long-term (12 months and longer) liquidity needs include (i) the issuance of both public equity and OP Units, (ii) the issuance of both secured and unsecured debt, (iii) unfunded capital commitments from noncontrolling interests within our Funds, (iv) future sales of existing properties, (v) repayments of structured financing investments, and (vi) cash on hand and future cash flow from operating activities. Our cash on hand in our consolidated subsidiaries at December 31, 2021 totaled $17.7 million. Our remaining sources of liquidity are described further below.
ATM Program
We have an ATM Program (Note 11) that provides us with an efficient and low-cost vehicle for raising capital through public equity issuances on an as-we-go basis to fund our capital needs. Through this program, we have been able to effectively “match-fund” the required capital for our Core Portfolio and Fund acquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time, we have issued and intend to continue to issue, equity in follow-on offerings separate from our ATM Program. Net proceeds raised through our ATM Program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions, and for general corporate purposes. During the year ended December 31, 2021, we sold 2,889,371 shares under our ATM Program for gross proceeds of $64.9 million, or $63.9 million net of issuance costs, at a weighted-average gross price per share of $22.46. During January 2022, we sold 4,281,576 Common Shares under our ATM program for gross proceeds of $96.3 million, or $92.5 million net of issuance costs, at a weighted-average gross price per share of $22.48, (Note 18).
Fund Capital
During the year ended December 31, 2021, Funds II, IV and V called for capital contributions of $11.9 million, $18.7 million and $9.1 million, respectively, of which our aggregate share was $9.5 million. At December 31, 2021, unfunded capital commitments from noncontrolling interests within our Funds II, III, IV and V were $2.7 million, $1.4 million, $32.2 million and $234.8 million, respectively.
Asset Sales and Exchanges
During the year ended December 31, 2021, we disposed of one consolidated Core property for $16.4 million, five consolidated Fund properties for total proceeds of $49.9 million, two unconsolidated Fund land parcels for $10.5 million, and terminated one Fund ground lease recognizing an aggregate gain of $10.5 million, of which the Company's share was $6.6 million (Note 3, Note 12).
Structured Financing Repayments
As previously discussed, during the year ended December 31, 2021, we received no Structured Financing repayments. A Core Portfolio note for $17.8 million matured on April 1, 2020 and one $5.3 million Fund note matured on July 1, 2020, but neither has been repaid. The Company foreclosed on the $5.3 million note in 2022 (Note 18). Scheduled maturities of Structured Financing loans include $30.0 million maturing during 2022 (Note 4).
Financing and Debt
As of December 31, 2021, we had $199.4 million of additional capacity under existing consolidated Core and Fund revolving debt facilities. In addition, at that date within our Core and Fund portfolios, we had 84 unleveraged consolidated properties with an aggregate carrying value of approximately $1.7 billion, although there can be no assurance that we would be able to obtain financing for these properties at favorable terms, if at all.
HISTORICAL CASH FLOW
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
The following table compares the historical cash flow for the year ended December 31, 2021 with the cash flow for the year ended December 31, 2020 (in millions, totals may not add due to rounding):
Year Ended December 31,
Variance
(As Restated)
Net cash provided by operating activities
$
105.0
$
103.9
$
1.1
Net cash used in investing activities
(198.5
)
(100.9
)
(97.6
)
Net cash provided by (used in) financing activities
91.3
(1.3
)
92.6
(Decrease) increase in cash and restricted cash
$
(2.2
)
$
1.8
$
(4.0
)
Operating Activities
Our operating activities provided $1.1 million more cash during the year ended December 31, 2021 as compared to the year ended December 31, 2020, primarily due to an increase in cash receipts from tenants in 2021 offset by a decrease from the monetization of the Company's Investment in Albertsons in 2020.
Investing Activities
During the year ended December 31, 2021 as compared to the year ended December 31, 2020, our investing activities used $97.6 million more cash, primarily due to (i) $140.8 million more cash used to acquire properties in 2021 offset by $43.0 million more cash received from the disposition of properties.
Financing Activities
Our financing activities provided $92.6 million more cash during the year ended December 31, 2021 as compared to the year ended December 31, 2020, primarily from (i) $63.9 million more cash provided by the sale of Common Shares, (ii) $22.4 million less cash from the repurchase of common shares (iii) $20.9 million more cash provided from net borrowings and (iii) $10.7 million less cash used in dividends paid to Common Shareholders. These sources of cash were partially offset by (i) $22.0 million less cash provided from contributions from noncontrolling interests and (ii) $5.2 million more cash used for financing costs.
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
The following table compares the historical cash flow for the year ended December 31, 2020 year ended with the cash flow for the year ended December 31, 2019 (in millions, totals may not add due to rounding):
Year Ended December 31,
Variance
(As Restated)
(As Restated)
Net cash provided by operating activities
$
103.9
$
131.4
$
(27.5
)
Net cash used in investing activities
(100.9
)
(410.5
)
309.6
Net cash (used in) provided by financing activities
(1.3
)
274.0
(275.3
)
Increase (decrease) in cash and restricted cash
$
1.8
$
(5.2
)
$
7.0
Operating Activities
Our operating activities provided $27.5 million less cash during the year ended December 31, 2020 as compared to the year ended December 31, 2019, primarily due to a decrease in cash receipts from tenants because of the COVID-19 Pandemic partially offset by the monetization of the Company's Investment in Albertsons in 2020, and $10.0 million from the collection of accrued interest on a note receivable in 2019.
Investing Activities
During the year ended December 31, 2020 as compared to the year ended December 31, 2019, our investing activities used $309.6 million less cash, primarily due to (i) $334.8 million less cash used in acquisition and lease of properties, (ii) $150.4 million less cash used in investments in unconsolidated affiliates, and (iii) $50.8 million less cash used in development, construction and property improvement costs. These sources of cash were partially offset by (i) $91.3 million less cash received from return of capital from unconsolidated affiliates, (ii) $67.8 million less cash received from the disposition of properties, (iii) $55.4 million more cash used to issue notes receivable, and (iv) $15.3 million less cash received from proceeds of notes receivable.
Financing Activities
Our financing activities provided $275.3 million less cash during the year ended December 31, 2020 as compared to the year ended December 31, 2019, primarily from (i) $145.5 million less cash received from the sale of Common Shares, (ii) $117.8 million less cash provided from net borrowings, (iii) $69.9 million less cash used for distributions to noncontrolling interests, (iv) $43.7 million less cash used in dividends paid to Common Shareholders and (v) $22.4 million more cash used to repurchase Common Shares. These sources of cash were partially offset by (i) $109.2 million less cash provided from contributions from noncontrolling interests and (ii) $4.4 million less cash used for financing costs.
OFF-BALANCE SHEET ARRANGEMENTS
We have the following investments made through joint ventures for the purpose of investing in operating properties. We account for these investments using the equity method of accounting. As such, our financial statements reflect our investment and our share of income and loss from, but not the individual assets and liabilities, of these joint ventures.
See Note 5 in the Notes to Consolidated Financial Statements, for a discussion of our unconsolidated investments. The Operating Partnership’s pro-rata share of unconsolidated non-recourse debt related to those investments is as follows (dollars in millions):
Operating Partnership
December 31, 2021
Investment
Ownership
Percentage
Pro-rata Share of
Mortgage Debt
Effective Interest Rate (a)
Maturity Date
Eden Square
22.8
%
$
5.2
2.46
%
Mar 2022
Family Center at Riverdale (b)
18.0
%
4.4
3.68
%
May 2022
640 Broadway (c)
15.5
%
5.6
3.00
%
July 2022
Promenade at Manassas (c)
22.8
%
6.3
4.57
%
Dec 2022
Gotham Plaza
49.0
%
9.0
5.09
%
Jun 2023
Renaissance Portfolio
20.0
%
32.0
3.81
%
Aug 2023
3104 M Street
20.0
%
0.8
3.75
%
Jan 2024
Crossroads
49.0
%
30.5
3.94
%
Oct 2024
Tri-City Plaza (c)
18.1
%
7.0
3.01
%
Oct 2024
Frederick Crossing (c)
18.1
%
4.4
3.26
%
Dec 2024
Paramus Plaza (b)
11.6
%
3.3
2.41
%
Dec 2024
Frederick County Square (c)
18.1
%
4.0
4.00
%
Jan 2025
840 N. Michigan
88.4
%
65.0
4.36
%
Feb 2025
650 Bald Hill Road
20.8
%
3.3
3.75
%
Jun 2026
Georgetown Portfolio
50.0
%
7.7
4.72
%
Dec 2027
Total
$
188.5
a)Effective interest rates incorporate the effect of interest rate swaps and caps that were in effect at December 31, 2021, where applicable.
b)The debt has two available 12-month extension options.
c)The debt has one available 12-month extension option.
CRITICAL ACCOUNTING ESTIMATES
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.
Impairment of Properties
On a periodic basis, we assess whether there are any indicators that the value of real estate assets, including undeveloped land and construction in progress, may be impaired. A property’s value is impaired only if the estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. The determination of undiscounted cash flows requires significant estimates by management. In management’s estimate of cash flows, it considers factors such as expected future sale of an asset or development alternatives, capitalization rates and the undiscounted future cash flows analysis, which is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action. Expected future cash flows and recoverability conclusions could be materially impacted by changes in items such as future leasing activity, occupancy, property operating costs, market pricing, our view or strategy relative to a tenant’s business or industry, the manner in which a property is used and the expected hold period of an asset. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated actions could affect the determination of whether an impairment exists and whether the effects could have a material impact on the Company’s net income. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property.
The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties and other investments. These assessments have a direct impact on the Company’s estimates of the projected future cash flows, anticipated holding periods or market conditions change, its evaluation of the impairment charges may be different, and such differences could be material to the Company’s consolidated financial statements. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.
During 2021, 2020 and 2019, the Company recognized impairment charges on properties (including right-of-use assets) of $9.9 million, $85.6 million and $1.7 million, respectively, reflecting additional impairments during 2020 due to the impact of the COVID-19 Pandemic. See Note 9 for a discussion of impairments recognized during the periods presented.
Investments in and Advances to Unconsolidated Joint Ventures
We periodically review our investment in unconsolidated joint ventures and other cost-method investments for other-than-temporary declines in market value. An impairment charge is recorded for a decline that is considered to be other-than-temporary as a reduction in the carrying value of the investment.
During 2020, the Company impaired an investment in an unconsolidated venture resulting in a charge of $0.4 million. See Note 9 for a discussion of impairments recognized during the periods presented.
Bad Debts
We assess the collectability of our accounts receivable related to tenant revenues under ASC Topic 842 “Leases” (“ASC 842”). Management exercises judgment in assessing collectability and considers customer credit worthiness, assessment of risk associated with the tenant, and current economic trends, among other factors. In addition to the lease-specific collectability assessment performed under ASC 842, the Company may also recognize a general reserve based on the Company’s historical collection experience, as provided under ASC 450-20, as a reduction to Lease income for its portfolio of operating lease receivables which are not expected to be fully collectible. Billed tenant receivables, and receivables arising from the straight-lining of rents, are reserved when management deems the collectability of substantially all future lease payments from a specific lease is not probable, at which point, the Company will begin recognizing revenue from such leases prospectively on a cash basis, based on actual amounts received. If the Company subsequently determines that it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term, the Company will reinstate the receivables balance, including those arising from the straight-lining of rents, adjusting for the amount related to the period when the lease was accounted for on a cash basis.
Rents receivable at December 31, 2021 and 2020 are shown net of an allowance for doubtful accounts of $38.5 million and $45.0 million, respectively. Rental income for the years ended December 31, 2021, 2020 and 2019 are reported net of adjustments to allowances for doubtful
accounts of $0.1 million, $46.4 million and $4.5 million, respectively, reflecting additional reserves and write-offs during 2020 due to the impact of the COVID-19 Pandemic.
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 development. Depreciation is computed on the straight-line basis over estimated useful lives of 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 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. When acquisitions of properties do not meet the criteria for business combinations, as is the case for the majority of the Company’s acquisitions, no goodwill is recorded and acquisition costs are capitalized. 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 non-cancelable term of the respective leases. 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 assess the collectability of our accounts receivable related to tenant revenues as described under the heading “Bad Debts” above.
Structured Financings
Real estate notes receivable investments and preferred equity investments (“Structured Financings”) are intended to be held to maturity and are carried at cost less an allowance for credit loss. Interest income from Structured Financings is 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 Structured Financing investment is recognized over the term of the loan as an adjustment to yield. Changes in cash flows from previous estimates are included in future interest income on a prospective basis and a new effective interest rate is computed based on the current cost basis of the instrument and remaining cash flows.
Allowances for credit loss related to our Structured Financing 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 investment 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 Structured Financings may differ materially from the carrying value at the balance sheet date. Interest income recognition is generally suspended for investments when, in the opinion of management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the suspended investment becomes contractually current and performance is demonstrated to be resumed.
Notes receivable at December 31, 2021 and 2020 are reported net of an allowance for credit loss of $5.8 million and $1.2 million, respectively (Note 4).
Recently Issued Accounting Pronouncements
Reference is made to Note 1 for information about recently issued and recently adopted accounting pronouncements.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Information as of December 31, 2021
Our primary market risk exposure is to changes in interest rates related to our mortgage and other debt. See Note 8 in the Notes to Consolidated Financial Statements, for certain quantitative details related to our mortgage and other debt.
Currently, we manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap and cap agreements. As of December 31, 2021, we had total mortgage and other notes payable of $1,819.7 million, excluding the unamortized premium of $0.4 million and unamortized debt issuance costs of $7.9 million, of which $1,038.8 million, or 57.1% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $780.9 million, or 42.9%, was variable-rate based upon LIBOR rates plus certain spreads. As of December 31, 2021, we were party to 28 interest rate swap and three interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $860.4 million and $110.5 million of LIBOR-based variable-rate debt, respectively.
The following table sets forth information as of December 31, 2021 concerning our long-term debt obligations, including principal cash flows by scheduled maturity and weighted average interest rates of maturing amounts (dollars in millions):
Core Consolidated Mortgage and Other Debt
Year
Scheduled
Amortization
Maturities
Total
Weighted-Average
Interest Rate
$
3.3
$
-
$
3.3
-
%
2.9
11.8
14.7
3.8
%
2.7
7.3
10.0
4.7
%
2.8
172.9
175.7
4.1
%
2.7
409.3
412.0
4.1
%
Thereafter
7.6
107.9
115.5
4.3
%
$
22.0
$
709.2
$
731.2
Fund Consolidated Mortgage and Other Debt
Year
Scheduled
Amortization
Maturities
Total
Weighted-Average
Interest Rate
$
4.4
$
749.5
$
753.9
3.4
%
3.8
92.1
95.9
3.8
%
2.6
199.5
202.1
3.2
%
0.2
2.4
2.6
3.8
%
0.1
33.9
34.0
2.9
%
Thereafter
-
-
-
-
%
$
11.1
$
1,077.4
$
1,088.5
Mortgage Debt in Unconsolidated Partnerships (at our Pro-Rata Share)
Year
Scheduled
Amortization
Maturities
Total
Weighted-Average
Interest Rate
$
1.4
$
21.3
$
22.7
3.5
%
1.4
40.6
42.0
4.1
%
1.1
43.7
44.8
3.6
%
0.3
69.0
69.3
4.3
%
0.3
3.0
3.3
3.8
%
Thereafter
0.3
6.1
6.4
4.7
%
$
4.8
$
183.7
$
188.5
Without regard to available extension options, in 2022, $757.2 million of our total consolidated debt and $22.7 million of our pro-rata share of unconsolidated outstanding debt will become due. In addition, $110.5 million of our total consolidated debt and $42.0 million of our pro-rata share of unconsolidated debt will become due in 2023. As it relates to the aforementioned maturing debt in 2022 and 2023, we have options to extend consolidated debt aggregating $187.2 million and $41.5 million, respectively; however, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options. 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 $7.7 million annually if the interest rate on the refinanced debt increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $2.2 million. Interest expense on our variable-rate debt of $780.9 million, net of variable to fixed-rate swap agreements currently in effect, as of December 31, 2021, would increase $7.8 million if interest rates increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $1.8 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, 2021, the fair value of our total consolidated outstanding debt would decrease by approximately $8.4 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 $16.0 million.
As of December 31, 2021, and 2020, we had consolidated notes receivable of $153.9 million and $100.9 million, respectively. We determined the estimated fair value of our notes receivable 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 balances as of December 31, 2021, the fair value of our total outstanding notes receivable would decrease by approximately $2.2 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding notes receivable would increase by approximately $2.2 million.
Summarized Information as of December 31, 2020 (As Restated)
As of December 31, 2020, we had total mortgage and other notes payable of $1,713.3 million, excluding the unamortized premium of $0.5 million and unamortized debt issuance costs of $6.0 million, of which $1,124.3 million, or 65.6% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $589.0 million, or 34.4%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of December 31, 2020, we were party to 38 interest rate swap and three interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $969.7 million and $103.2 million of LIBOR-based variable-rate debt, respectively.
Interest expense on our variable-rate debt of $589.0 million as of December 31, 2020, would have increased $5.9 million if LIBOR increased by 100 basis points. Based on our outstanding debt balances as of December 31, 2020, the fair value of our total outstanding debt would have decreased by approximately $9.2 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 $26.3 million.
Changes in Market Risk Exposures from December 31, 2020 to December 31, 2021
Our interest rate risk exposure from December 31, 2020, to December 31, 2021, has increased on an absolute basis, as the $589.0 million of variable-rate debt as of December 31, 2020, has increased to $780.9 million as of December 31, 2021. As a percentage of our overall debt, our interest rate risk exposure has increased as our variable-rate debt accounted for 34.4% of our consolidated debt as of December 31, 2020 compared to 42.9% as of December 31, 2021.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS.
ACADIA REALTY TRUST AND SUBSIDIARIES
Page
Financial Statements:
Report of Independent Registered Public Accounting Firm (BDO USA, LLP; New York, New York, PCAOB ID #243)
Consolidated Balance Sheets as of December 31, 2021 and 2020 (As Restated)
Consolidated Statements of Operations for the years ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated)
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated)
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated)
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated)
Notes to Consolidated Financial Statements
Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts
Schedule III - Real Estate and Accumulated Depreciation
Schedule IV - Mortgage Loans on Real Estate
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Trustees
Acadia Realty Trust
Rye, New York
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Acadia Realty Trust (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 1, 2022 expressed an adverse opinion thereon.
Restatement to Correct 2020 and 2019 Misstatements
As discussed in Note 2 to the consolidated financial statements, the 2020 and 2019 financial statements have been restated to correct misstatements.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Purchase Price Allocation
As described in Note 3 to the consolidated financial statements, during the year ended December 31, 2021, the Company acquired approximately $211.3 million of tangible and intangible real estate assets and $16.3 million of related intangible liabilities. The Company allocates the purchase price of real estate investments to the identifiable assets acquired and liabilities assumed based on their relative fair values. The determination of fair value requires significant judgment by management to develop significant estimates and market-based assumptions used in the cash flow projections.
We identified the purchase price allocation process for certain acquisitions as a critical audit matter. Auditing management’s judgments regarding market-based assumptions used in the determination of fair values, including comparable market land values, market rental rates and market capitalization rates, involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.
The primary procedures we performed to address this critical audit matter included:
•Understanding of certain controls relating to management’s purchase price allocation process, including controls over assessment of the reasonableness of market-based assumptions.
•Assessing the reasonableness of significant market-based assumptions through benchmarking against third-party market data, industry metrics, and reviewing relevant supporting documentation.
•Evaluating the accuracy of base-year information, where applicable, for the purposes of forecasting future market rental rates by comparing it to historical information.
•Utilizing personnel with specialized knowledge and skill to assist in evaluating the reasonableness of the market-based assumptions used in the preparation of the purchase price allocations, including market land values, market rental rates and market capitalization rates.
Assessment of Impairment of Real Estate and Real Estate Related Investments
As described in Notes 3, 5 and 7 to the consolidated financial statements, as of December 31, 2021, the Company’s net investment in real estate was $3.4 billion, the net carrying value of intangible lease assets was $0.1 billion, and the carrying value of investments in and advances to unconsolidated affiliates was $0.3 billion. The Company tests the recoverability of the real estate and intangible lease assets held by the Company and its unconsolidated affiliates, whenever events or changes in circumstances indicate that amounts may not be recoverable. The Company identified impairment indicators, which resulted in the Company recording impairment charges of $9.9 million in 2021 related to its real estate investments.
We identified the assessment of impairment of the real estate and intangible lease assets held by the Company and its unconsolidated affiliates as a critical audit matter due to the complexity of management’s judgments relating to: (i) the assessment of impairment indicators for the real estate and intangible lease assets held by the Company and its unconsolidated affiliates, including long-term vacancy, recurring negative cash flows and tenant bankruptcies, and (ii) the assessment of assumptions used in the expected future undiscounted cash flows for certain properties under development and pre-stabilized properties, given the inherent uncertainties that exist related to the Company’s forecasts and how various economic and other factors could affect the Company’s forecasted future undiscounted cash flows. Auditing management’s assumptions relating to its assessment of potential impairment indicators, and market-based assumptions used in the cash flow projections, including market rent assumptions and market capitalization rates, involve especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge required.
The primary procedures we performed to address this critical audit matter included:
•Understanding of certain controls related to management's assessment of the potential impairment of real estate assets and intangible lease assets held by the Company and its unconsolidated affiliates, which included management's assumptions regarding which properties required recoverability tests to be performed, as well as the assumptions management used in performing the recoverability tests.
•Evaluating management's assessment of potential impairment indicators which could result in impairment, including long-term vacancy, recurring negative cash flows and tenant bankruptcies.
•Evaluating management's assumptions, including market rent assumptions and market capitalization rates used in forecasting future undiscounted cash flows.
•Utilizing professionals with specialized skills and knowledge to assist in evaluating the reasonableness of the market-based assumptions utilized by the management (including market rents and market capitalization rates) for certain properties under development and pre-stabilized properties, for which impairment indicators have been identified.
/s/ BDO USA, LLP
We have served as the Company’s auditor since 2005.
New York, New York
March 1, 2022
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
(dollars in thousands, except per share amounts)
ASSETS
(As Restated)
Investments in real estate, at cost
Operating real estate, net
$
3,219,373
$
3,190,761
Real estate under development
203,773
247,201
Net investments in real estate
3,423,146
3,437,962
Notes receivable, net
153,886
100,882
Investments in and advances to unconsolidated affiliates
322,326
272,829
Other assets, net
186,509
170,281
Right-of-use assets - operating leases, net
40,743
76,268
Cash and cash equivalents
17,746
18,699
Restricted cash
9,813
11,096
Rents receivable, net
43,625
43,052
Assets of properties held for sale
63,952
-
Total assets
$
4,261,746
$
4,131,069
LIABILITIES
Mortgage and other notes payable, net
$
1,140,293
$
1,148,586
Unsecured notes payable, net
559,040
420,858
Unsecured line of credit
112,905
138,400
Accounts payable and other liabilities
236,415
268,442
Lease liability - operating leases, net
38,759
88,816
Dividends and distributions payable
14,460
Distributions in excess of income from, and investments in, unconsolidated affiliates
9,939
15,616
Total liabilities
2,111,811
2,080,865
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 89,303,545 and 86,268,303 shares, respectively
Additional paid-in capital
1,754,383
1,683,165
Accumulated other comprehensive loss
(36,214
)
(74,891
)
Distributions in excess of accumulated earnings
(196,645
)
(167,321
)
Total Acadia shareholders’ equity
1,521,613
1,441,039
Noncontrolling interests
628,322
609,165
Total equity
2,149,935
2,050,204
Total liabilities and equity
$
4,261,746
$
4,131,069
The accompanying notes are an integral part of these consolidated financial statements
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
(in thousands except per share amounts)
Revenues
(As Restated)
(As Restated)
Rental income
$
285,898
$
246,432
$
285,470
Other
6,599
4,476
4,115
Total revenues
292,497
250,908
289,585
Operating expenses
Depreciation and amortization
123,439
147,229
122,580
General and administrative
40,125
35,798
34,299
Real estate taxes
45,357
42,477
38,333
Property operating
53,516
55,551
49,898
Impairment charges
9,925
85,598
1,721
Total operating expenses
272,362
366,653
246,831
Gain on disposition of properties
10,521
30,324
Operating Income (loss)
30,656
(115,062
)
73,078
Equity in earnings (losses) of unconsolidated affiliates
5,330
(3,057
)
5,899
Interest income
9,065
8,979
7,988
Realized and unrealized holding gains on investments and other
49,120
113,362
6,947
Interest expense
(68,048
)
(69,671
)
(69,213
)
Income (loss) from continuing operations before income taxes
26,123
(65,449
)
24,699
Income tax provision
(93
)
(269
)
(1,465
)
Net income (loss)
26,030
(65,718
)
23,234
Net (income) loss attributable to noncontrolling interests
(2,482
)
56,742
30,483
Net income (loss) attributable to Acadia
$
23,548
$
(8,976
)
$
53,717
Basic and diluted earnings (loss) per share
$
0.26
$
(0.11
)
$
0.63
The accompanying notes are an integral part of these consolidated financial statements
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Year Ended December 31,
(in thousands)
(As Restated)
(As Restated)
Net income (loss)
$
26,030
$
(65,718
)
$
23,234
Other comprehensive income (loss):
Unrealized gain (loss) on valuation of swap agreements
30,500
(73,686
)
(35,883
)
Reclassification of realized interest on swap agreements
21,407
15,059
(870
)
Other comprehensive income (loss)
51,907
(58,627
)
(36,753
)
Comprehensive income (loss)
77,937
(124,345
)
(13,519
)
Comprehensive (income) loss attributable to noncontrolling interests
(15,712
)
71,952
35,246
Comprehensive income (loss) attributable to Acadia
$
62,225
$
(52,393
)
$
21,727
The accompanying notes are an integral part of these consolidated financial statements.
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Years Ended December 31, 2021, 2020 (As Restated) and 2019 (As Restated)
Acadia Shareholders
(in thousands, except per share amounts)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2021
86,269
$
$
1,683,165
$
(74,891
)
$
(167,321
)
$
1,441,039
$
609,165
$
2,050,204
Issuance of Common Shares
2,889
63,873
-
-
63,876
-
63,876
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
1,431
-
-
1,431
(1,431
)
-
Cancellation of OP Units
-
-
-
-
-
-
(568
)
(568
)
Dividends/distributions declared ($0.60 per Common Share/OP Unit)
-
-
-
-
(52,872
)
(52,872
)
(4,185
)
(57,057
)
Employee and trustee stock compensation, net
-
1,146
-
-
1,146
11,284
12,430
Noncontrolling interest distributions
-
-
-
-
-
-
(27,051
)
(27,051
)
Noncontrolling interest contributions
-
-
-
-
-
-
30,164
30,164
Comprehensive income
-
-
-
38,677
23,548
62,225
15,712
77,937
Reallocation of noncontrolling interests
-
-
4,768
-
-
4,768
(4,768
)
-
Balance at December 31, 2021
89,304
$
$
1,754,383
$
(36,214
)
$
(196,645
)
$
1,521,613
$
628,322
$
2,149,935
As Restated
Balance at January 1, 2020
87,050
$
$
1,706,357
$
(31,474
)
$
(133,019
)
$
1,541,951
$
646,439
$
2,188,390
Cumulative effect of change in accounting principle
-
-
-
-
(389
)
(389
)
(11
)
(400
)
Acquisition of noncontrolling interest
-
-
(15,330
)
-
-
(15,330
)
15,918
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
6,544
-
-
6,544
(6,544
)
-
Repurchase of Common Shares
(1,219
)
(1
)
(22,385
)
-
-
(22,386
)
-
(22,386
)
Dividends/distributions declared ($0.29 per Common Share/OP Unit)
-
-
-
-
(24,937
)
(24,937
)
(2,218
)
(27,155
)
Employee and trustee stock compensation, net
-
-
-
10,130
10,912
Noncontrolling interest distributions
-
-
-
-
-
-
(27,574
)
(27,574
)
Noncontrolling interest contributions
-
-
-
-
-
-
52,174
52,174
Comprehensive loss
-
-
-
(43,417
)
(8,976
)
(52,393
)
(71,952
)
(124,345
)
Reallocation of noncontrolling interests
-
-
7,197
-
-
7,197
(7,197
)
-
Balance at December 31, 2020
86,269
$
$
1,683,165
$
(74,891
)
$
(167,321
)
$
1,441,039
$
609,165
$
2,050,204
As Restated
Balance at January 1, 2019
81,557
$
$
1,548,603
$
$
(90,426
)
$
1,458,775
$
623,982
$
2,082,757
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
5,104
-
-
5,104
(5,104
)
-
Issuance of Common Shares
5,164
145,493
-
-
145,498
-
145,498
Dividends/distributions declared ($1.13 per Common Share/OP Unit)
-
-
-
-
(96,310
)
(96,310
)
(7,124
)
(103,434
)
Employee and trustee stock compensation, net
-
-
-
9,460
10,006
Repurchase of Common Shares
-
-
-
-
-
-
-
-
Noncontrolling interest distributions
-
-
-
-
-
-
(94,283
)
(94,283
)
Noncontrolling interest contributions
-
-
-
-
-
-
161,365
161,365
Comprehensive (loss) income
-
-
-
(31,990
)
53,717
21,727
(35,246
)
(13,519
)
Reallocation of noncontrolling interests
-
-
6,611
-
-
6,611
(6,611
)
-
Balance at December 31, 2019
87,050
$
$
1,706,357
$
(31,474
)
$
(133,019
)
$
1,541,951
$
646,439
$
2,188,390
The accompanying notes are an integral part of these consolidated financial statements.
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
(As Restated)
(As Restated)
Net income (loss)
$
26,030
$
(65,718
)
$
23,234
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
123,439
147,229
122,580
Straight-line rents
(6,726
)
(4,869
)
(4,185
)
Non-cash lease expense
3,721
3,392
-
Net unrealized holding gains on investments
(51,925
)
(72,391
)
-
Distributions of operating income from unconsolidated affiliates
3,828
3,286
11,273
Equity in earnings (losses) of unconsolidated affiliates
(5,330
)
3,057
(5,899
)
Stock compensation expense
12,430
10,912
10,006
Amortization of financing costs
4,396
5,038
6,718
Impairment charges
9,925
85,598
1,721
Gain on disposition of properties
(10,521
)
(683
)
(30,324
)
Allowance for credit loss
(2,796
)
24,569
2,742
Termination of ground lease
(3,615
)
-
-
Adjustments to straight-line rent reserves
2,682
21,871
1,961
Gain on debt extinguishment
-
(18,339
)
-
Deferred gain on tax credits
-
-
(5,034
)
Other, net
(5,304
)
(8,155
)
(11,575
)
Changes in assets and liabilities:
Other liabilities
7,856
(3,959
)
(4,850
)
Lease liability - operating leases
(3,636
)
(1,579
)
2,014
Prepaid expenses and other assets
(7,427
)
8,206
Rents receivable, net
7,384
(28,321
)
1,089
Accounts payable and accrued expenses
3,005
1,705
Net cash provided by operating activities
104,983
103,947
131,382
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate
(161,846
)
(21,208
)
(319,673
)
Acquisition of leasehold interests
-
-
(39,031
)
Development, construction and property improvement costs
(40,671
)
(36,579
)
(89,385
)
Proceeds from the disposition of properties, net
63,901
20,930
88,738
Investments in and advances to unconsolidated affiliates and other
(14,835
)
(14,483
)
(164,922
)
Return of capital from unconsolidated affiliates and other
17,722
14,686
106,005
Issuance of or advances on notes receivable
(57,895
)
(59,000
)
(3,608
)
Proceeds from notes receivable
-
-
15,250
Return of deposits for properties under contract
-
2,870
Payment of deferred leasing costs
(4,914
)
(6,407
)
(6,782
)
Change in control of previously unconsolidated affiliate
-
-
Net cash used in investing activities
(198,538
)
(100,924
)
(410,538
)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes
(98,602
)
(51,949
)
(158,211
)
Principal payments on unsecured debt
(206,781
)
(136,490
)
(521,600
)
Proceeds received on mortgage and other notes
56,847
5,351
324,995
Proceeds from unsecured debt
323,200
236,804
526,400
Payments of finance lease obligations
(63
)
(903
)
(2,749
)
Proceeds from the sale (repurchase) of Common Shares
63,876
(22,386
)
145,498
Capital contributions from noncontrolling interests
30,164
52,174
161,365
Distributions to noncontrolling interests
(30,410
)
(31,461
)
(101,364
)
Dividends paid to Common Shareholders
(39,476
)
(50,182
)
(93,902
)
Deferred financing and other costs
(7,436
)
(2,215
)
(6,476
)
Net cash provided by (used in) financing activities
91,319
(1,257
)
273,956
(Decrease) increase in cash and restricted cash
(2,236
)
1,766
(5,200
)
Cash of $18,699, $14,149 and $20,074 and restricted cash of $11,096, $13,880 and $13,155, respectively, beginning of year
29,795
28,029
33,229
Cash of $17,746, $18,699 and $14,149 and restricted cash of $9,813, $11,096 and $13,880, respectively, end of year
$
27,559
$
29,795
$
28,029
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
Year Ended December 31,
(in thousands)
Supplemental disclosure of cash flow information
Cash paid during the period for interest, net of capitalized interest of $3,421 and $7,110 and $12,586 respectively
$
44,663
$
70,383
$
69,076
Cash paid for income taxes, net of (refunds)
$
$
(329
)
$
Supplemental disclosure of non-cash investing and financing activities
Adjustment to equity as a result of the implementation of CECL
$
-
$
$
-
Assumption of accounts payable and accrued expenses through acquisition of real estate
$
1,319
$
$
4,666
Note receivable exchanged for real estate
$
-
$
72,430
$
13,530
Acquisition of real estate through assumption of debt
$
31,801
$
-
$
-
Distribution declared and payable on January 14, 2022, and January 15, 2021 and 2020, respectively
$
14,314
$
$
26,914
Right-of-use assets, finance leases (modified) obtained in exchange for finance lease liabilities
$
-
$
(70,427
)
$
16,349
Right-of-use assets, finance leases obtained in exchange for assets under capital lease
$
-
$
-
$
76,965
Right-of-use assets, operating leases exchanged for operating lease liabilities
$
$
33,189
$
57,165
Capital lease obligation exchanged for finance lease liability
$
-
$
-
$
71,111
Other liabilities exchanged for operating lease liabilities
$
-
$
-
$
Assumption of debt through investments in unconsolidated affiliates
$
-
$
-
$
4,688
Debt exchanged for deferred gain on tax credits
$
-
$
-
$
(5,262
)
Other assets exchanged for deferred gain on tax credits
$
-
$
-
$
Settlement of note receivable through cancellation of OP Units
$
$
-
$
-
Right of use assets, operating leases terminated in exchange for finance lease liabilities
$
-
$
(1,432
)
$
-
Change in control of previously unconsolidated (consolidated) investment
Increase in real estate
$
-
$
(135,190
)
$
Decrease in investments in and advances to unconsolidated affiliates
-
96,816
(1,189
)
Change in other assets and liabilities
-
1,238
Acquisition of noncontrolling interest asset
-
(588
)
-
Decrease in notes receivable
-
38,674
-
Decrease in right-of-use assets, finance leases
-
-
11,051
Decrease in finance lease liability
-
-
(10,702
)
Increase in cash and restricted cash upon change of control
$
-
$
$
-
The accompanying notes are an integral part of these consolidated financial statements.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Basis of Presentation and Summary of Significant Accounting Policies
Organization
Acadia Realty Trust, a Maryland real estate investment trust (collectively with its subsidiaries, the “Company”) is a fully-integrated equity real estate investment trust (“REIT”) focused on the ownership, acquisition, development, and management of retail properties located primarily in high-barrier-to-entry, supply-constrained, densely-populated metropolitan areas in 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 an interest. As of December 31, 2021 and 2020, the Company controlled approximately 95% of the Operating Partnership as the sole general partner and is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest (“Common OP Units” or “Preferred OP Units”) and employees who have been awarded restricted Common OP Units (“LTIP Units”) as long-term incentive compensation (Note 14). Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for common shares of beneficial interest, par value $0.001 per share of the Company (“Common Shares”). This structure is referred to as an umbrella partnership REIT or “UPREIT.”
As of December 31, 2021, the Company has ownership interests in 133 properties within its core portfolio, which consist of those properties either 100% owned, or partially owned through joint venture interests, by the Operating Partnership, or subsidiaries thereof, not including those properties owned through its funds (“Core Portfolio”). The Company also has ownership interests in 53 properties within its opportunity funds, Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”), and Acadia Strategic Opportunity Fund V LLC (“Fund V” and collectively with Fund II, Fund III, and Fund IV, the “Funds”). The 186 Core Portfolio and Fund properties primarily consist of street and urban retail, and suburban shopping centers. In addition, the Company, together with the investors in the Funds, invested in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I,” which was liquidated in 2018) and Acadia Mervyn Investors II, LLC (“Mervyns II”), all on a non-recourse basis. The Company consolidates the Funds as it has (i) the power to direct the activities that most significantly impact the Funds’ economic performance, (ii) is obligated to absorb the Funds’ losses and (iii) has the right to receive benefits from the Funds that could potentially be significant.
The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns II and earns fees or priority distributions for asset management, property management, construction, development, leasing, and legal services. Cash flows from the Funds and Mervyns II are distributed pro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return (“Preferred Return”) and the return of all capital contributions. Thereafter, remaining cash flow is distributed 20% to the Operating Partnership (“Promote”) and 80% to the partners or members (including the Operating Partnership). All transactions between the Funds and the Operating Partnership have been eliminated in consolidation.
The following table summarizes the general terms and Operating Partnership’s equity interests in the Funds and Mervyns II (dollars in millions):
Entity
Formation
Date
Operating
Partnership
Share of
Capital
Capital Called
as of December 31, 2021 (b)
Unfunded
Commitment (b, c)
Equity Interest
Held By
Operating
Partnership (a)
Preferred
Return
Total
Distributions
as of December 31, 2021 (b, c)
Fund II and Mervyns II (c)
6/2004
28.33
%
$
381.5
$
3.8
28.33
%
%
$
169.8
Fund III
5/2007
24.54
%
448.1
1.9
24.54
%
%
576.0
Fund IV
5/2012
23.12
%
488.1
41.9
23.12
%
%
193.1
Fund V (d)
8/2016
20.10
%
226.2
293.8
20.10
%
%
51.4
a)Amount represents the current economic ownership at December 31, 2021, which could differ from the stated legal ownership based upon the cumulative preferred returns of the respective Fund.
b)Represents the total for the Funds, including the Operating Partnership and noncontrolling interests’ shares.
c)During August 2020, a recallable distribution of $15.7 million was made by Mervyn’s II to its investors, of which $4.5 million was the Company’s share. During 2021, Mervyn’s II recalled $11.9 million of the $15.7 million of which our share is $3.4 million.
d)As of April 8, 2021, Fund V's investment period was extended to August 25, 2022.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
Segments
At December 31, 2021, the Company had three reportable operating segments: Core Portfolio, Funds and Structured Financing. The Company’s chief operating decision maker may review operational and financial data on a property-level basis and does not differentiate properties on a geographical basis for purposes of allocating resources or capital.
Principles of Consolidation
The consolidated financial statements include the consolidated accounts of the Company and its investments in partnerships and limited liability companies in which the Company has control in accordance with FASB Accounting Standards Codification Topic 810 “Consolidation.” 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 (loss).
Use of Estimates
GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the consolidated 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 notes receivable and rents receivable. Application of these estimates and assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.
Summary of Significant Accounting Policies
Real Estate
Land, buildings, and personal property are carried at cost less accumulated depreciation. Improvements and significant renovations that extend the useful life of the properties are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Real estate under development includes costs for significant property expansion and development.
Depreciation is computed on the straight-line basis over estimated useful lives of the assets as follows:
Buildings and improvements
Useful lives of 40 years for buildings and 15 years for improvements
Furniture and fixtures
Useful lives, ranging from five years to 10 years
Tenant improvements
Shorter of economic life or lease terms
Purchase Accounting - Upon acquisitions of real estate, the Company assesses the fair value of acquired assets and assumed liabilities (including land, buildings and improvements, and identified intangibles such as above- and below-market leases and acquired in-place leases) and assumed liabilities in accordance with ASC Topic 805, “Business Combinations” and ASC Topic 350 “Intangibles - Goodwill and Other,” and allocates the acquisition price based on these assessments. When acquisitions of properties do not meet the criteria for business combinations, they are accounted for as asset acquisitions; therefore, no goodwill is recorded and acquisition costs are capitalized.
The Company assesses fair value of its tangible assets acquired and assumed liabilities based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information at the measurement period. 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.
In determining the value of above- and below-market leases, the Company estimates the present value difference between contractual rent obligations and estimated market rate of leases at the time of the transaction. To the extent there were fixed-rate options at below-market rental rates, the Company included these periods 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 to rental income over the remaining applicable lease term, inclusive of any option periods.
In determining the value of acquired in-place leases, the Company considers market conditions at the time of the transaction and values the costs to execute similar leases during the expected lease-up period from vacancy to existing occupancy, including carrying costs. The value assigned
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
to in-place leases and tenant relationships is amortized over the estimated remaining term of the leases. If a lease were to be terminated prior to its scheduled expiration, all unamortized costs (e.g. lease intangibles) relating to that lease would be written off.
The Company estimates the value of any assumption of mortgage debt based on market conditions at the time of acquisitions including prevailing interest rates, terms and ability to obtain financing for a similar asset. Mortgage debt discounts or premiums are amortized into interest expense over the remaining term of the related debt instrument.
Real Estate Under Development - The Company capitalizes certain costs related to the development of real estate. Interest and real estate taxes incurred during the period of the construction, expansion or development of real estate are capitalized and depreciated over the estimated useful life of the building. The Company will cease the capitalization of these costs when construction activities are substantially completed and the property is available for occupancy by tenants, but no later than one year from the completion of major construction activity at which time the project is placed in service and depreciation commences. If the Company suspends substantially all activities related to the development of a qualifying asset, the Company will cease capitalization of interest and taxes until activities are resumed.
Real Estate Impairment - The Company reviews its real estate, real estate under development and right-of-use assets for impairment when there is an event or a change in circumstances that indicates that the carrying amount may not be recoverable. In cases where the Company does not expect to recover its carrying costs on properties held for use, the Company reduces its carrying costs to fair value. The determination of anticipated undiscounted cash flows is inherently subjective, requiring significant estimates made by management, and considers the most likely expected course of action at the balance sheet date based on current plans, intended holding periods and available market information. If the Company is evaluating the potential sale of an asset, the undiscounted future cash flows analysis is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action as of the balance sheet date. Such cash flow projections consider factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. If an impairment is indicated, an impairment loss is recognized based on the excess of the carrying amount of the asset over its estimated fair value. See Note 9 for information about impairment charges recorded during the periods presented.
Dispositions of Real Estate - The Company recognizes property sales in accordance with ASC Topic 610-20 “Other Income-Gains and losses from the derecognition of nonfinancial assets.” Sales of real estate include the sale of land, operating properties and investments in real estate joint ventures. Gains on sale of investment properties are recognized, and the related real estate derecognized, when the Company has satisfied its performance obligations by transferring control of the property. Typically, the timing of payment and satisfaction of performance obligations occur simultaneously on the disposition date upon transfer of the property’s ownership.
Real Estate Held for Sale - The Company generally considers assets to be held for sale when it has entered into a contract to sell the property, all material due diligence requirements have been satisfied, and management believes it is probable that the disposition will occur within one year. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value, less cost to sell.
Notes Receivable
Notes receivable include certain loans that are held for investment and are collateralized by real estate-related investments and may be subordinate to other senior loans. Notes receivable are reported net of allowance for credit loss and are recorded at stated principal amounts or at initial investment less accretive yield for loans purchased at a discount, which is accreted over the life of the note. The Company defers loan origination and commitment fees, net of origination costs, and amortizes them over the term of the related loan. Changes in cash flows from previous estimates are included in future interest income on a prospective basis and a new effective interest rate is computed based on the current cost basis of the instrument and remaining cash flows. The Company evaluates the collectability of both principal and interest based upon an assessment of the underlying collateral value to determine whether it is impaired. Allowance for credit loss represents management’s estimate of future losses based on national historical economic loss rates for similar obligations, management’s estimate of future economic impacts and factors specific to the borrower. Certain of the Company’s loans are considered “collateral dependent” in that settlement of the amount is likely to be achieved by obtaining access to the collateral (e.g. notes in default). The same valuation techniques are used to value the collateral for such collateral dependent instruments as those used to determine the fair value of real estate investments for impairment purposes. Given the small number of notes outstanding, the Company believes the characteristics of its notes are not sufficiently similar to allow an evaluation as a group for credit loss allowance. As such, all of the Company’s notes are evaluated individually for this purpose. Interest income on performing notes is accrued as earned. A note is placed on non-accrual status when, based upon current information and events, it is probable that the Company will not be able to collect all amounts due according to the existing contractual terms. Income accrual is generally suspended for loans when recovery of income and principal becomes doubtful. Interest received is then recorded as a reduction in the outstanding principal balance until the accrual is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms of the notes.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments in and Advances to Unconsolidated Joint Ventures
Some of the Company’s joint ventures obtain non-recourse third-party financing on their property investments, contractually limiting the Company’s exposure to losses. The Company recognizes income for distributions in excess of its investment where there is no recourse to the Company and no intention or obligation to contribute additional capital. For investments in which there is recourse to the Company or an obligation or intention to contribute additional capital exists, distributions in excess of the investment are recorded as a liability.
When characterizing distributions from equity investees within the Company's consolidated statements of cash flows, all distributions received are first applied as returns on investment to the extent there are cumulative earnings related to the respective investment and are classified as cash inflows from operating activities. If cumulative distributions are in excess of cumulative earnings, distributions are considered return of investment. In such cases, the distribution is classified as cash inflows from investing activities.
To the extent that the Company’s carrying basis in an unconsolidated affiliate is different from the basis reflected at the joint venture level, the basis difference is amortized over the life of the related assets and included in the Company’s share of equity in earnings (losses) of unconsolidated affiliates the joint venture.
The Company periodically reviews its investments in unconsolidated joint ventures for other-than-temporary losses in investment value. Any decline that is not expected to be recovered based on the underlying assets of the investment, is considered other than temporary and an impairment charge is recorded as a reduction in the carrying value of the investment. During the periods presented there were no impairment charges related to the Company’s investments in unconsolidated joint ventures.
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 limits insured by the Federal Deposit Insurance Corporation.
Restricted Cash
Restricted cash consists 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.
Deferred Costs
External 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. External fees and costs incurred in connection with obtaining financing are deferred and amortized as a component of interest expense over the term of the related debt obligation on a straight-line basis, which approximates the effective interest method.
Derivative Instruments and Hedging Activities
The Company measures derivative instruments at fair value and records them as assets or liabilities, depending on its rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated and that qualified as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in Accumulated other comprehensive loss until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings.
Although the Company's derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both the Company and its counterparties under certain situations, the Company does not net its derivative fair values or any existing rights or obligations to cash collateral on the consolidated balance sheets. The Company does not use derivatives for trading or speculative purposes. For the periods presented, all of the Company's derivatives qualified and were designated as cash flow hedges, and none of its derivatives were deemed ineffective.
Noncontrolling Interests
Noncontrolling interests represent the portion of equity that the Company does not own in those entities it consolidates. The Company identifies its noncontrolling interests separately within the equity section on the Company’s consolidated balance sheets. The amounts of consolidated net
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
earnings attributable to the Company and to the noncontrolling interests are presented separately on the Company’s consolidated statements of operations. Noncontrolling interests also include amounts related to common and preferred OP Units issued to unrelated third parties in connection with certain property acquisitions. In addition, the Company periodically issues common OP Units and LTIPs to certain employees of the Company under its share-based incentive program. Unit holders generally have the right to redeem their units for Common Shares subject to blackout and other limitations. Common and restricted OP Units are included in the caption Noncontrolling interest within the equity section on the Company’s consolidated balance sheets.
Revenue Recognition and Accounts Receivable
The Company accounts for its leases under ASC 842. Pursuant to ASC 842, the Company has made an accounting policy election to not separate the non-lease components from its leases, such as common area maintenance, and has accounted for each of its leases as a single lease component. In addition, the Company has elected to account only for those taxes that it pays on behalf of the tenant as reimbursable costs and will not account for those taxes paid directly by the tenant. Minimum rents from tenants are recognized using the straight-line method over the non-cancelable lease term of the respective leases. Lease termination fees are recognized upon the effective termination of a tenant’s lease when the Company has no further obligations under the lease. As of December 31, 2021 and 2020, unbilled rents receivable relating to the straight-lining of rents of $43.4 million and $40.2 million, respectively, are included in Rents Receivable, net on the accompanying consolidated balance sheets. 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 related expenses are incurred.
The Company assesses the collectability of its accounts receivable related to tenant revenues under ASC 842. The Company estimates the collectability of the accounts receivable related to billed rents, straight-line rents, recoveries from tenants, and other revenue taking into consideration the Company's historical write-off experience, tenant credit-worthiness, current economic trends, and remaining lease terms. Rents receivable at December 31, 2021 and 2020 are shown net of an allowance for doubtful accounts of $38.5 million and $45.0 million, respectively. Rental income for the years ended December 31, 2021, 2020 and 2019 are reported net of adjustments of $0.1 million, $46.4 million (reflecting additional reserves, net of write-offs and recoveries due to the impact of the COVID-19 Pandemic, see Note 12) and $4.5 million respectively, to allowance for doubtful accounts.
Stock-Based Compensation
Stock-based compensation expense for all equity-classified stock-based compensation awards is based on the grant date fair value estimated in accordance with current accounting guidance for share-based payments. The Company recognizes these compensation costs for only those shares or units expected to vest on a straight-line or graded-vesting basis, as appropriate, over the requisite service period of the award. The Company includes stock-based compensation within general and administrative expense on the consolidated statements of operations.
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 shareholders 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.
The Company is permitted to participate in certain activities and still maintain its qualification as a REIT, so long as these activities are conducted in entities that elect to be treated as taxable subsidiaries under the Code. As such, the Company is subject to Federal and state income taxes on the income from these activities.
Although it may qualify for REIT status for federal income tax purposes, the Company is subject to state or local income or franchise taxes in certain jurisdictions 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 the GAAP basis and tax basis of the TRS income, assets and liabilities.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) temporarily relaxes existing limitations on the use and carryback of net operating losses incurred by our TRSs. Net operating losses generated in taxable years beginning in 2019, 2020 or 2021 can be carried back to the preceding 5 years. In addition, TRSs can fully offset their taxable income for taxable years beginning before 2022 using net operating loss carrybacks and carryforwards and can fully offset their taxable income for taxable years beginning after 2021 using pre-2019 net operating loss carryforwards. Any post-2018 net operating loss carryforwards can be used to offset up to 80% of taxable income after using pre-2019 net operating loss carryforwards. In 2020, the Company carried back $3.1 million of net operating losses, resulting in a refund of $1.0 million.
The Company records net deferred tax assets to the extent it believes it is more likely than not that these assets will be realized. In 2019 and 2020, the Company recorded valuation allowances to reduce deferred tax assets when it determined that an uncertainty existed regarding their realization, which increased the provision for income taxes. In making such determination, the Company considered all available positive and negative evidence, including forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carry-forwards, tax planning strategies and recent results of operations. Several of these considerations require assumptions and significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is utilizing to manage its business. To the extent facts and circumstances change in the future, further adjustments to the valuation allowances may be required.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The amendments in this Update provide guidance for interim period and intra period tax accounting; provide tax accounting guidance for foreign subsidiaries; require that an entity recognize a franchise (or similar) tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; as well as other changes to tax accounting. This ASU is effective for fiscal years beginning after December 15, 2020. As a REIT, the Company usually does not have significant income taxes. Accordingly, the implementation of this guidance did not have a material effect on the Company’s consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01 Investments-Equity securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. The amendments in this Update affect all entities that apply the guidance in Topics 321, 323, and 815 and (i) elect to apply the measurement alternative or (ii) enter into a forward contract or purchase an option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting. This ASU is effective for fiscal years beginning after December 15, 2020. Currently, the Company does not apply the measurement alternative and does not have any such forward contracts or purchase options. As a result, the implementation of this guidance did not have any effect on the Company’s consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848)-Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Effective in the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation and did not have a material impact on the consolidated financial statements. The Company has been incorporating alternate rates into its debt agreements as they mature and does not anticipate the need to modify any existing debt agreements solely as a result of reference rate reform. If any modification is executed as a result of reference rate reform, the Company will elect the optional practical expedient under ASU 2020-04 and 2021-01, which allows entities to account for the modification as if the modification was not substantial. As a result, the implementation of this guidance is not expected to have any effect on the Company’s consolidated financial statements.
In October 2020, the FASB issued ASU 2020-08 Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs. The amendments in this Update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. Currently, the Company does not have any such callable debt securities. As a result, the implementation of this guidance did not have any effect on the Company’s consolidated financial statements.
On April 8, 2020, the FASB issued a Q&A allowing for reporting entities to make an accounting policy election to account for lease concessions related to the effects of COVID-19 consistent with how those concessions would be accounted for under Topic 842, which is as though the enforceable rights and obligations for those concessions existed regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract. This election is available for concessions that result in the total cash flows required by the modified contract being substantially the same or less than total cash flows required by the original contract. Effective April 1, 2020, the Company made the accounting
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
policy election noted above. The Company entered into concession agreements as lessor during the year ended December 31, 2021 (Note 12). The Company may grant further concessions during subsequent periods.
Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06-Debt with conversion and other options (Subtopic 470-20) and derivatives and hedging-contracts in entity's own equity (Subtopic 815-40)-accounting for convertible instruments and contracts in an entity's own equity. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU simplifies accounting for convertible instruments and simplifies the diluted earnings per share (EPS) calculation in certain areas. This ASU is effective for fiscal years beginning after December 15, 2021. Currently, the Company does not have any such debt instruments and, as a result, the implementation of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.
In January 2021, the FASB issued ASU 2021-01 Reference Rate Reform (Topic 848) which modifies ASC 848 (ASU 2020-04 discussed above), which was intended to provide relief related to “contracts and transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform.” ASU 2021-01 expands the scope of ASC 848 to include all affected derivatives and give reporting entities the ability to apply certain aspects of the contract modification and hedge accounting expedients to derivative contracts affected by the discounting transition. ASU 2021-01 also adds implementation guidance to clarify which optional expedients in ASC 848 may be applied to derivative instruments that do not reference LIBOR or a reference rate that is expected to be discontinued, but that are being modified as a result of the discounting transition. The Company does not currently have any applicable derivatives. As a result, the implementation of this guidance is not expected to have any effect on the Company's consolidated financial statements.
In May 2021, the FASB issued ASU 2021-04 Modification of Equity-Classified Written Call Options - Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options - to codify how an issuer should account for modifications made to equity-classified written call options (a warrant to purchase the issuer’s common stock). The guidance in the ASU requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange whether structured as an amendment or reissuance and is effective for all periods beginning after December 15, 2021 with early application permitted. The Company does not currently have any outstanding equity awards with written call options. As a result, the implementation of this guidance is not expected to have any effect on the Company’s consolidated financial statements.
In July 2021, the FASB issued ASU 2021-05 Leases (Topic 842): Lessors - Certain Leases with Variable Lease Payments. This Update requires a lessor to classify a lease with entirely or partially variable payments that do not depend on an index or rate as an operating lease if another classification (i.e. sales-type or direct financing) would trigger a commencement date selling loss. The guidance in the ASU is effective for all periods beginning after December 15, 2021 with early application permitted and may be applied either retrospectively or prospectively. The Company does not currently have any sales-type or direct financing leases as lessor. As a result, the implementation of this guidance is not expected to have any effect on the Company’s consolidated financial statements.
In November 2021, the FASB issued ASU 2021-08 Business Combinations (Topic ASC 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update provides an exception to the fair value measurement for contract assets and contract liabilities acquired in a business combination. Instead, they will be recognized and measured by the acquirer in accordance with ASC 606, Revenue from Contracts with Customers. The guidance in this ASU is effective for all periods beginning after December 15, 2022, with early adoption permitted and must be applied prospectively. The Company does not expect this amendment to have a material effect on the Company's consolidated financial statements as most of the Company's acquisitions of properties do not meet the criteria for business combinations and are accounted for as asset acquisitions, which are excluded from the scope of this amendment.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Restatement of Previously Issued Consolidated Financial Statements
As announced on February 15, 2022, the Company has restated its (i) audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 as illustrated in this note to the consolidated financial statements; and (ii) its unaudited interim financial statements for the three months ended March 31, 2021 and 2020, the three and six months ended June 30, 2021 and 2020, the three and nine months ended September 30, 2021 and 2020, and the three months ended December 31, 2020 as illustrated in Note 17; collectively referred to as the "Restatement". Amounts depicted as "As Restated" throughout the accompanying consolidated financial statements and footnotes include the impact of the Restatement.
As part of the Company’s normal annual reporting process prior to releasing its 2021 fourth quarter and year-to-date December 31, 2021 results and prior to completion of the related audit, the Company identified two areas of restatement errors. All adjustments depicted in the tables below relate to one of the following categories:
(a)an error in accounting treatment at the time of formation related to the improper consolidation of two Fund investments that are less-than-wholly-owned through the Company's opportunity funds (the "Fund Investments"). These two Fund Investments, 640 Broadway and Paramus Plaza, which were formed in 2012 and 2013, respectively, have been adjusted from consolidated investments to investments in unconsolidated affiliates (Note 5) with no impact on net income (loss) or distributions in excess of accumulated earnings. It should also be noted that during the Restatement periods, the Fund Investments did not have any significant transactions (new borrowings, acquisitions, or dispositions) other than their ongoing rental operations in the normal course of business.
(b)errors related to other immaterial previously unrecorded adjustments, which were also recorded as part of the Restatement. These adjustments were primarily adjustments which the Company deemed immaterial in prior periods. The total impact of these adjustments for the years ended December 31, 2020 and 2019 was a reduction in net income (loss) attributable to Acadia of ($0.2) million or ($0.01) per share, and $0.7 million, or $0.01 per share, respectively. These adjustments include the recognition of additional reserves for one of the Company's notes receivable, 640 Broadway (Note 4) of $0.6 million. or $0.1 million at the Company's share, for the year ended December 31, 2020.
(c)reclassifications of certain prior period amounts to conform to the current period presentation. Reclassifications have no impact on net income (loss), do not relate to the Restatement errors and are included here in order to conform the presentation across the periods presented.
i.On the balance sheet at December 31, 2020, Unsecured notes payable, net of $79.2 million were reclassified to mortgage and other notes payable, net. On the balance sheet at December 31, 2019, $60.0 million was reclassified from Operating real estate, net to Right-of-use assets - operating leases, net and the corresponding Lease liability - operating leases, net of $58.0 million was reclassified from Accounts payable and other liabilities.
ii.On the statement of cash flows for the year ended December 31, 2019, Straight-line rents of ($5.2) million, Allowance for credit loss of $2.7 million and Adjustments to straight-line rent reserves of $1.8 million were all reclassified from the change in Rents receivable.
December 31, 2020
(dollars in thousands, except per share amounts)
As Reported
Adjustments
As Restated
ASSETS
Investments in real estate, at cost
Operating real estate, net
$
3,260,139
$
(69,378
)
(a)
$
3,190,761
Real estate under development
247,349
(148
)
(a)
247,201
Net investments in real estate
3,507,488
(69,526
)
3,437,962
Notes receivable, net
101,450
(568
)
(b)
100,882
Investments in and advances to unconsolidated affiliates
249,807
23,022
(a,b)
272,829
Other assets, net
173,809
(3,528
)
(a)
170,281
Right-of-use assets - operating leases, net
76,268
-
76,268
Cash and cash equivalents
19,232
(533
)
(a)
18,699
Restricted cash
14,692
(3,596
)
(a)
11,096
Rents receivable, net
44,136
(1,084
)
(a)
43,052
Total assets
$
4,186,882
$
(55,813
)
$
4,131,069
LIABILITIES
Mortgage and other notes payable, net
$
1,125,356
$
23,230
(a,b,c)
$
1,148,586
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unsecured notes payable, net
500,083
(79,225
)
(c)
420,858
Unsecured line of credit
138,400
-
138,400
Accounts payable and other liabilities
269,911
(1,469
)
(a)
268,442
Lease liability - operating leases, net
88,816
-
88,816
Dividends and distributions payable
-
Distributions in excess of income from, and investments in, unconsolidated affiliates
15,616
-
15,616
Total liabilities
2,138,329
(57,464
)
2,080,865
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,268,303 shares
-
Additional paid-in capital
1,683,165
-
1,683,165
Accumulated other comprehensive loss
(74,891
)
-
(74,891
)
Distributions in excess of accumulated earnings
(167,046
)
(275
)
(b)
(167,321
)
Total Acadia shareholders’ equity
1,441,314
(275
)
1,441,039
Noncontrolling interests
607,239
1,926
(a,b)
609,165
Total equity
2,048,553
1,651
2,050,204
Total liabilities and equity
$
4,186,882
$
(55,813
)
$
4,131,069
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2020
(in thousands except per share amounts)
As Reported
Adjustments
As Restated
Revenues
Rental income
$
251,002
$
(4,570
)
(a)
$
246,432
Other
4,482
(6
)
(a)
4,476
Total revenues
255,484
(4,576
)
250,908
Operating expenses
Depreciation and amortization
149,793
(2,564
)
(a)
147,229
General and administrative
36,055
(257
)
(a)
35,798
Real estate taxes
43,505
(1,028
)
(a)
42,477
Property operating
56,595
(1,044
)
(a)
55,551
Impairment charges
85,598
-
85,598
Total operating expenses
371,546
(4,893
)
366,653
Gain on disposition of properties
-
Operating loss
(115,379
)
(115,062
)
Equity in losses of unconsolidated affiliates
(1,237
)
(1,820
)
(a)
(3,057
)
Interest and other income
8,979
-
8,979
Realized and unrealized holding gains on investments and other
113,930
(568
)
(b)
113,362
Interest expense
(72,060
)
2,389
(a,b)
(69,671
)
Loss from continuing operations before income taxes
(65,767
)
(65,449
)
Income tax provision
(271
)
(a)
(269
)
Net loss
(66,038
)
(65,718
)
Net loss attributable to noncontrolling interests
57,279
(537
)
(a,b)
56,742
Net loss attributable to Acadia
$
(8,759
)
$
(217
)
$
(8,976
)
Net income attributable to participating securities
$
$
-
$
Shares for basic loss per share
86,442
-
86,442
Basic loss per share
$
(0.10
)
$
(0.01
)
$
(0.11
)
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2020
(in thousands)
As Reported
Adjustments
As Restated
Net loss
$
(66,038
)
$
$
(65,718
)
Other comprehensive loss
Unrealized loss on valuation of swap agreements
(74,236
)
(a)
(73,686
)
Reclassification of realized interest on swap agreements
15,203
(144
)
(a)
15,059
Other comprehensive loss
(59,033
)
(58,627
)
Comprehensive loss
(125,071
)
(124,345
)
Comprehensive loss attributable to noncontrolling interests
72,596
(644
)
71,952
Loss attributable to Acadia
$
(52,475
)
$
$
(52,393
)
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Year Ended December 31, 2020
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2020
87,050
$
$
1,706,357
$
(31,175
)
$
(132,961
)
$
1,542,308
$
644,657
$
2,186,965
Cumulative effect of change in accounting principle
-
-
-
-
(389
)
(389
)
(11
)
(400
)
Acquisition of noncontrolling interest
-
-
(15,330
)
-
-
(15,330
)
15,918
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
6,544
-
-
6,544
(6,544
)
-
Repurchase of Common Shares
(1,219
)
(1
)
(22,385
)
-
-
(22,386
)
-
(22,386
)
Dividends/distributions declared ($0.29 per Common Share/OP Unit)
-
-
-
-
(24,937
)
(24,937
)
(2,218
)
(27,155
)
Employee and trustee stock compensation, net
-
-
-
10,130
10,912
Noncontrolling interest distributions
-
-
-
-
-
-
(27,574
)
(27,574
)
Noncontrolling interest contributions
-
-
-
-
-
-
52,674
52,674
Comprehensive loss
-
-
-
(43,716
)
(8,759
)
(52,475
)
(72,596
)
(125,071
)
Reallocation of noncontrolling interests
-
-
7,197
-
-
7,197
(7,197
)
-
Balance at December 31, 2020
86,269
$
$
1,683,165
$
(74,891
)
$
(167,046
)
$
1,441,314
$
607,239
$
2,048,553
Adjustments
Balance at January 1, 2020
-
-
-
$
(299
)
$
(58
)
$
(357
)
$
1,782
$
1,425
Noncontrolling interest contributions
-
-
-
-
-
-
(500
)
(a)
(500
)
Comprehensive loss
-
-
-
(217
)
Total Adjustments
-
$
-
$
-
$
-
$
(275
)
(275
)
1,926
1,651
As Restated
Balance at January 1, 2020 - As Restated
87,050
$
$
1,706,357
$
(31,474
)
$
(133,019
)
$
1,541,951
$
646,439
$
2,188,390
Cumulative effect of change in accounting principle
-
-
-
-
(389
)
(389
)
(11
)
(400
)
Acquisition of noncontrolling interest
-
-
(15,330
)
-
-
(15,330
)
15,918
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
6,544
-
-
6,544
(6,544
)
-
Repurchase of Common Shares
(1,219
)
(1
)
(22,385
)
-
-
(22,386
)
-
(22,386
)
Dividends/distributions declared ($0.29 per Common Share/OP Unit)
-
-
-
-
(24,937
)
(24,937
)
(2,218
)
(27,155
)
Employee and trustee stock compensation, net
-
-
-
10,130
10,912
Noncontrolling interest distributions
-
-
-
-
-
-
(27,574
)
(27,574
)
Noncontrolling interest contributions
-
-
-
-
-
-
52,174
52,174
Comprehensive loss
-
-
-
(43,417
)
(8,976
)
(52,393
)
(71,952
)
(124,345
)
Reallocation of noncontrolling interests
-
-
7,197
-
-
7,197
(7,197
)
-
Balance at December 31, 2020 -As Restated
86,269
$
$
1,683,165
$
(74,891
)
$
(167,321
)
$
1,441,039
$
609,165
$
2,050,204
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2020
(in thousands)
As Reported
Adjustments
As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(66,038
)
$
(65,718
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
149,793
(2,564
)
(a,b)
147,229
Straight-line rents
(5,096
)
(a)
(4,869
)
Non-cash lease expense
3,392
-
3,392
Net unrealized holding gains on investments
(72,391
)
-
(72,391
)
Distributions of operating income from unconsolidated affiliates
3,286
-
3,286
Equity in (earnings) losses of unconsolidated affiliates
1,237
1,820
(a)
3,057
Stock compensation expense
10,912
-
10,912
Amortization of financing costs
5,169
(131
)
(a,b)
5,038
Impairment charges
85,598
-
(b)
85,598
Gain on disposition of properties
(683
)
-
(683
)
Allowance for credit loss
24,770
(201
)
(a)
24,569
Adjustments to straight-line rent reserves
22,074
(203
)
(a)
21,871
Gain on debt extinguishment
(18,339
)
-
(18,339
)
Other, net
(8,753
)
(a,b)
(8,155
)
Changes in assets and liabilities:
Other liabilities
(4,208
)
(a)
(3,959
)
Lease liability - operating leases
(1,579
)
-
(1,579
)
Prepaid expenses and other assets
(28
)
(a)
Rents receivable
(29,810
)
1,489
(a)
(28,321
)
Accounts payable and accrued expenses
3,199
(194
)
(a)
3,005
Net cash provided by operating activities
102,565
1,382
103,947
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate
(21,208
)
-
(21,208
)
Development, construction and property improvement costs
(40,483
)
3,904
(a)
(36,579
)
Proceeds from the disposition of properties, net
20,930
-
20,930
Investments in and advances to unconsolidated affiliates and other
(4,291
)
(10,192
)
(a)
(14,483
)
Return of capital from unconsolidated affiliates and other
14,686
-
14,686
Issuance of notes receivable
(59,000
)
-
(59,000
)
Return of deposits for properties under contract
-
Payment of deferred leasing costs
(7,979
)
1,572
(a)
(6,407
)
Change in control of previously unconsolidated affiliate
-
Net cash used in investing activities
(96,208
)
(4,716
)
(100,924
)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes
(55,449
)
3,500
(a)
(51,949
)
Principal payments on unsecured debt
(136,490
)
-
(136,490
)
Proceeds received on mortgage and other notes
7,261
(1,910
)
(a)
5,351
Proceeds from unsecured debt
236,804
-
236,804
Payments of finance lease obligations
(903
)
-
(903
)
Proceeds from the sale (repurchase) of Common Shares
(22,386
)
-
(22,386
)
Capital contributions from noncontrolling interests
52,674
(500
)
(a)
52,174
Distributions to noncontrolling interests
(31,461
)
-
(31,461
)
Dividends paid to Common Shareholders
(50,182
)
-
(50,182
)
Deferred financing and other costs
(2,311
)
(a)
(2,215
)
Net cash used in financing activities
(2,443
)
1,186
(1,257
)
Increase in cash and restricted cash
3,914
(2,148
)
1,766
Cash of $14,149 and restricted cash of $13,880 beginning of period
30,010
(1,981
)
28,029
Cash of $18,699 and restricted cash of $11,096 end of period
$
33,924
$
(4,129
)
$
29,795
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2020
(in thousands)
As Reported
Adjustments
As Restated
Supplemental disclosure of cash flow information
Cash paid during the period for interest, net of capitalized interest of $7,110
$
72,392
$
(2,009
)
(a)
$
70,383
Cash paid for income taxes, net of (refunds)
$
(329
)
$
-
$
(329
)
Supplemental disclosure of non-cash investing and financing activities
Adjustment to equity as a result of the implementation of CECL
$
$
-
$
Assumption of accounts payable and accrued expenses through acquisition of real estate
$
$
-
$
Note receivable exchanged for real estate
$
72,430
$
-
$
72,430
Acquisition of real estate through assumption of debt
$
-
$
-
$
-
Distribution declared and payable
$
-
$
(c)
$
Right-of-use assets, finance leases (modified) obtained in exchange for finance lease liabilities
$
(70,427
)
$
-
$
(70,427
)
Right-of-use assets, finance leases obtained in exchange for assets under capital lease
$
-
$
-
$
-
Right-of-use assets, operating leases exchanged for operating lease liabilities
$
33,189
$
-
$
33,189
Capital lease obligation exchanged for finance lease liability
$
-
$
-
$
-
Other liabilities exchanged for operating lease liabilities
$
-
$
-
$
-
Assumption of debt through investments in unconsolidated affiliates
$
-
$
-
$
-
Debt exchanged for deferred gain on tax credits
$
-
$
-
$
-
Other assets exchanged for deferred gain on tax credits
$
-
$
-
$
-
Settlement of note receivable through cancellation of OP Units
$
-
$
-
$
-
Right of use assets, operating leases terminated in exchange for finance lease liabilities
$
(1,432
)
$
-
$
(1,432
)
Change in control of previously unconsolidated (consolidated) investment
Increase in real estate
$
(135,190
)
$
-
$
(135,190
)
Decrease in investments in and advances to unconsolidated affiliates
96,816
-
96,816
Change in other assets and liabilities
1,238
-
1,238
Acquisition of noncontrolling interest asset
(588
)
-
(588
)
Decrease in notes receivable
38,674
-
38,674
Decrease in right-of-use assets, finance leases
-
-
-
Decrease in finance lease liability
-
-
-
Increase in cash and restricted cash upon change of control
$
$
-
$
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019
(dollars in thousands, except per share amounts)
As Reported
Adjustments
As Restated
ASSETS
Investments in real estate, at cost
Operating real estate, net
$
3,355,913
$
(127,888
)
(a,b,c)
$
3,228,025
Real estate under development
253,402
(6
)
(a)
253,396
Net investments in real estate
3,609,315
(127,894
)
3,481,421
Notes receivable, net
114,943
-
(b)
114,943
Investments in and advances to unconsolidated affiliates
305,097
14,453
(a,b)
319,550
Other assets, net
190,658
(2,225
)
(a)
188,433
Right-of-use assets - operating leases, net
-
60,006
(c)
60,006
Cash and cash equivalents
15,845
(1,696
)
(a)
14,149
Restricted cash
14,165
(285
)
(a)
13,880
Rents receivable, net
59,091
(a)
59,313
Total assets
$
4,309,114
$
(57,419
)
$
4,251,695
LIABILITIES
Mortgage and other notes payable, net
$
1,170,076
$
(57,551
)
(a,b)
$
1,112,525
Unsecured notes payable, net
477,320
-
477,320
Unsecured line of credit
60,800
-
60,800
Accounts payable and other liabilities
371,516
(58,055
)
(a,c)
313,461
Lease liability - operating leases, net
-
56,762
(c)
56,762
Dividends and distributions payable
27,075
-
27,075
Distributions in excess of income from, and investments in, unconsolidated affiliates
15,362
-
15,362
Total liabilities
2,122,149
(58,844
)
2,063,305
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 87,050,465 shares
-
Additional paid-in capital
1,706,357
-
1,706,357
Accumulated other comprehensive loss
(31,175
)
(299
)
(b)
(31,474
)
Distributions in excess of accumulated earnings
(132,961
)
(58
)
(b)
(133,019
)
Total Acadia shareholders’ equity
1,542,308
(357
)
1,541,951
Noncontrolling interests
644,657
1,782
(a,b)
646,439
Total equity
2,186,965
1,425
2,188,390
Total liabilities and equity
$
4,309,114
$
(57,419
)
$
4,251,695
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2019
(in thousands except per share amounts)
As Reported
Adjustments
As Restated
Revenues
Rental income
$
291,190
$
(5,720
)
(a,b)
$
285,470
Other
4,137
(22
)
(a)
4,115
Total revenues
295,327
(5,742
)
289,585
Operating expenses
Depreciation and amortization
125,443
(2,863
)
(a,b)
122,580
General and administrative
35,416
(1,117
)
(a,b)
34,299
Real estate taxes
39,315
(982
)
(a)
38,333
Property operating
51,153
(1,255
)
(a)
49,898
Impairment charges
1,721
-
1,721
Total operating expenses
253,048
(6,217
)
246,831
Gain on disposition of properties
30,324
-
30,324
Operating income
72,603
73,078
Equity in earnings of unconsolidated affiliates
8,922
(3,023
)
(a)
5,899
Interest and other income
7,988
-
7,988
Realized and unrealized holding gains on investments and other
6,947
-
(b)
6,947
Interest expense
(73,788
)
4,575
(a,b)
(69,213
)
Income from continuing operations before income taxes
22,672
2,027
24,699
Income tax provision
(1,468
)
(a)
(1,465
)
Net income
21,204
2,030
23,234
Net loss attributable to noncontrolling interests
31,841
(1,358
)
(a,b)
30,483
Net income attributable to Acadia
$
53,045
$
$
53,717
Net income attributable to participating securities
$
$
-
$
Shares for basic and diluted income per share
84,436
-
84,436
Basic and diluted income per share
$
0.62
$
0.01
$
0.63
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2019
(in thousands)
As Reported
Adjustments
As Restated
Net income
$
21,204
$
2,030
$
23,234
Other comprehensive loss
Unrealized loss on valuation of swap agreements
(35,674
)
(209
)
(a)
(35,883
)
Reclassification of realized interest on swap agreements
(872
)
(a)
(870
)
Other comprehensive loss
(36,546
)
(207
)
(36,753
)
Comprehensive loss
(15,342
)
1,823
(13,519
)
Comprehensive loss attributable to noncontrolling interests
36,696
(1,450
)
35,246
Comprehensive Income attributable to Acadia
$
21,354
$
$
21,727
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Year Ended December 31, 2019
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2019
81,557
$
$
1,548,603
$
$
(89,696
)
$
1,459,505
$
622,442
$
2,081,947
Issuance of Common Shares
5,164
145,493
-
-
145,498
-
145,498
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
5,104
-
-
5,104
(5,104
)
-
Dividends/distributions declared ($1.13 per Common Share/OP Unit)
-
-
-
-
(96,310
)
(96,310
)
(7,124
)
(103,434
)
Employee and trustee stock compensation, net
-
-
-
10,411
10,957
Noncontrolling interest distributions
-
-
-
-
-
-
(94,289
)
(94,289
)
Noncontrolling interest contributions
-
-
-
-
-
-
161,628
161,628
Comprehensive loss
-
-
-
(31,691
)
53,045
21,354
(36,696
)
(15,342
)
Reallocation of noncontrolling interests
-
-
6,611
-
-
6,611
(6,611
)
-
Balance at December 31, 2019
87,050
$
$
1,706,357
$
(31,175
)
$
(132,961
)
$
1,542,308
$
644,657
$
2,186,965
Adjustments
Balance at January 1, 2019
-
$
-
$
-
$
-
$
(730
)
$
(730
)
$
1,540
$
Employee and trustee stock compensation, net
-
-
-
-
-
-
(951
)
(b)
(951
)
Noncontrolling interest distributions
-
-
-
-
-
-
(a)
Noncontrolling interest contributions
-
-
-
-
-
-
(263
)
(a)
(263
)
Comprehensive loss
-
-
-
(299
)
1,450
(a,b)
1,823
Total Adjustments
-
$
-
$
-
$
(299
)
$
(58
)
$
(357
)
$
1,782
$
1,425
As Restated
Balance at January 1, 2019 - As Restated
81,557
$
$
1,548,603
$
$
(90,426
)
$
1,458,775
$
623,982
$
2,082,757
Issuance of Common Shares
5,164
145,493
-
-
145,498
-
145,498
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
5,104
-
-
5,104
(5,104
)
-
Dividends/distributions declared ($1.13 per Common Share/OP Unit)
-
-
-
-
(96,310
)
(96,310
)
(7,124
)
(103,434
)
Employee and trustee stock compensation, net
-
-
-
9,460
10,006
Noncontrolling interest distributions
-
-
-
-
-
-
(94,283
)
(94,283
)
Noncontrolling interest contributions
-
-
-
-
-
-
161,365
161,365
Comprehensive loss
-
-
-
(31,990
)
53,717
21,727
(35,246
)
(13,519
)
Reallocation of noncontrolling interests
-
-
6,611
-
-
6,611
(6,611
)
-
Balance at December 31, 2019 -As Restated
87,050
$
$
1,706,357
$
(31,474
)
$
(133,019
)
$
1,541,951
$
646,439
$
2,188,390
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2019
(in thousands)
As Reported
Adjustments
As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
21,204
2,030
$
23,234
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
125,443
(2,863
)
(a,b)
122,580
Straight-line rents
-
(4,185
)
(c)
(4,185
)
Distributions of operating income from unconsolidated affiliates
11,273
-
11,273
Equity in (earnings) losses of unconsolidated affiliates
(8,922
)
3,023
(a)
(5,899
)
Stock compensation expense
10,957
(951
)
(b)
10,006
Amortization of financing costs
7,577
(859
)
(a,b)
6,718
Impairment charges
1,721
-
1,721
Gain on disposition of properties
(30,324
)
-
(30,324
)
Allowance for credit loss
-
2,742
(a,c)
2,742
Adjustments to straight-line rent reserves
-
1,961
(a,b,c)
1,961
Deferred gain on tax credits
(5,034
)
-
(5,034
)
Other, net
(11,627
)
(a)
(11,575
)
Changes in assets and liabilities:
Other liabilities
(4,466
)
(384
)
(a)
(4,850
)
Lease liability - operating leases
-
2,014
(b)
2,014
Prepaid expenses and other assets
8,198
(a)
8,206
Rents receivable
(455
)
1,544
(c)
1,089
Accounts payable and accrued expenses
1,632
(a)
1,705
Net cash provided by operating activities
127,177
4,205
131,382
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate
(319,673
)
-
(319,673
)
Acquisition of leasehold interests
(39,031
)
-
(39,031
)
Development, construction and property improvement costs
(89,270
)
(115
)
(a)
(89,385
)
Proceeds from the disposition of properties, net
88,738
-
88,738
Investments in and advances to unconsolidated affiliates and other
(151,281
)
(13,641
)
(a)
(164,922
)
Return of capital from unconsolidated affiliates and other
105,999
106,005
Issuance of notes receivable
(3,608
)
-
(3,608
)
Proceeds from notes receivable
15,250
-
15,250
Return of deposits for properties under contract
2,870
-
2,870
Payment of deferred leasing costs
(7,051
)
(a)
(6,782
)
Net cash used in investing activities
(397,057
)
(13,481
)
(410,538
)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes
(168,211
)
27,627
(a)
(140,584
)
Principal payments on unsecured debt
(521,600
)
-
(521,600
)
Proceeds received on mortgage and other notes
326,268
(18,900
)
(a)
307,368
Proceeds from unsecured debt
526,400
-
526,400
Payments of finance lease obligations
(2,749
)
-
(2,749
)
Proceeds from the sale (repurchase) of Common Shares
145,498
-
145,498
Capital contributions from noncontrolling interests
161,628
(263
)
(a)
161,365
Distributions to noncontrolling interests
(101,370
)
(a)
(101,364
)
Dividends paid to Common Shareholders
(93,902
)
-
(93,902
)
Deferred financing and other costs
(6,920
)
(a)
(6,476
)
Net cash provided by financing activities
265,042
8,914
273,956
Decrease in cash and restricted cash
(4,838
)
(362
)
(5,200
)
Cash of $20,074 and restricted cash of $13,155 beginning of period
34,848
(1,619
)
33,229
Cash of $14,149 and restricted cash of $13,880 end of period
$
30,010
$
(1,981
)
$
28,029
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2019
(in thousands)
As Reported
Adjustments
As Restated
Supplemental disclosure of cash flow information
Cash paid during the period for interest, net of capitalized interest of $12,586
$
53,586
$
15,490
$
69,076
Cash paid for income taxes, net of (refunds)
$
$
-
$
Supplemental disclosure of non-cash investing and financing activities
Adjustment to equity as a result of the implementation of CECL
$
-
$
-
$
-
Assumption of accounts payable and accrued expenses through acquisition of real estate
$
4,666
$
-
$
4,666
Note receivable exchanged for real estate
$
13,530
$
-
$
13,530
Acquisition of real estate through assumption of debt
$
-
$
-
$
-
Distribution declared and payable
$
-
$
26,914
(c)
$
26,914
Right-of-use assets, finance leases (modified) obtained in exchange for finance lease liabilities
$
16,349
$
-
$
16,349
Right-of-use assets, finance leases obtained in exchange for assets under capital lease
$
76,965
$
-
$
76,965
Right-of-use assets, operating leases exchanged for operating lease liabilities
$
57,165
$
-
$
57,165
Capital lease obligation exchanged for finance lease liability
$
71,111
$
-
$
71,111
Other liabilities exchanged for operating lease liabilities
$
$
-
$
Assumption of debt through investments in unconsolidated affiliates
$
4,688
$
-
$
4,688
Debt exchanged for deferred gain on tax credits
$
-
$
(5,262
)
(c)
$
(5,262
)
Other assets exchanged for deferred gain on tax credits
$
-
$
(c)
$
Settlement of note receivable through cancellation of OP Units
$
-
$
-
$
-
Right of use assets, operating leases terminated in exchange for finance lease liabilities
$
-
$
-
$
-
Change in control of previously unconsolidated (consolidated) investment
Increase in real estate
$
$
-
$
Decrease in investments in and advances to unconsolidated affiliates
(1,189
)
-
(1,189
)
Change in other assets and liabilities
-
Acquisition of noncontrolling interest asset
-
-
-
Decrease in notes receivable
-
-
-
Decrease in right-of-use assets, finance leases
11,051
-
11,051
Decrease in finance lease liability
(10,702
)
-
(10,702
)
Increase in cash and restricted cash upon change of control
$
-
$
-
$
-
3. Real Estate
The Company’s consolidated real estate is comprised of the following for the periods presented (in thousands):
December 31,
(As Restated)
Land
$
739,641
$
752,721
Buildings and improvements
2,892,051
2,802,253
Tenant improvements
199,925
178,918
Construction in progress
11,131
5,147
Right-of-use assets - finance leases (Note 12)
25,086
25,086
Total
3,867,834
3,764,125
Less: Accumulated depreciation and amortization
(648,461
)
(573,364
)
Operating real estate, net
3,219,373
3,190,761
Real estate under development
203,773
247,201
Net investments in real estate
$
3,423,146
$
3,437,962
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Acquisitions and Conversions
During the years ended December 31, 2021 and 2020, the Company acquired the following consolidated retail properties and other real estate investments (dollars in thousands):
Property and Location
Percent
Acquired
Date of
Acquisition
Purchase
Price
2021 Acquisitions
Core
14th Street Portfolio - Washington, DC
100%
Dec 23, 2021
$
26,320
Subtotal Core
26,320
Fund V
Canton Marketplace - Canton, GA
100%
Aug 20, 2021
$
50,954
Monroe Marketplace - Selinsgrove, PA
100%
Sept 9, 2021
44,796
Monroe Marketplace (Parcel) - Selinsgrove, PA
100%
Nov 12, 2021
1,029
Midstate - East Brunswick, NJ
100%
Dec 14, 2021
71,867
Subtotal Fund V
168,646
Total 2021 Acquisitions
$
194,966
2020 Acquisitions and Conversions
Core
Soho Acquisitions - 37 Greene Street - New York, NY
100%
Jan 9, 2020
$
15,689
917 W. Armitage - Chicago, IL
100%
Feb 13, 2020
3,515
Town Center - Wilmington, DE (Conversion) (Note 5)
100%
Apr 1, 2020
138,939
Subtotal Core
158,143
Fund IV
230-240 W. Broughton Street - Savannah, GA
100%
May 26, 2020
13,219
102 E. Broughton Street - Savannah, GA
100%
May 26, 2020
Subtotal Fund IV
14,009
Total 2020 Acquisitions and Conversions
$
172,152
For the years ended December 31, 2021 and 2020, the Company capitalized acquisition costs of $3.6 million and $1.3 million, respectively. During the year ended December 31, 2021, the Company assumed a $31.8 million mortgage upon the acquisition of Canton Marketplace (Note 8). No debt was assumed in any of the 2020 Acquisitions and Conversions. Conversions represent notes receivable that were converted to an equity interest in the underlying collateral property in a non-cash transaction.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Purchase Price Allocations
The purchase prices for the 2021 Acquisitions and 2020 Acquisitions and Conversions were allocated to the acquired assets and assumed liabilities based on their estimated relative fair values at the dates of acquisition. The following table summarizes the allocation of the purchase price of properties acquired during the years ended December 31, 2021 and 2020 (in thousands):
Year Ended December 31,
Net Assets Acquired
Land
$
37,290
$
25,440
Buildings and improvements
134,065
123,459
Accounts receivable, prepaids and other assets
-
5,770
Acquisition-related intangible assets (Note 7)
39,953
23,061
Right-of-use asset - Operating lease (Note 12)
-
Acquisition-related intangible liabilities (Note 7)
(16,342
)
(4,569
)
Lease liability - Operating lease (Note 12)
-
(234
)
Accounts payable and other liabilities
-
(1,009
)
Net assets acquired
$
194,966
$
172,152
Consideration
Cash
$
161,846
$
21,208
Conversion of note receivable
-
38,674
Conversion of accrued interest
-
1,995
Debt assumed
31,801
-
Liabilities assumed
1,319
Existing interest in previously unconsolidated investment
-
109,571
Acquisition of noncontrolling interests
-
Total consideration
$
194,966
$
172,152
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dispositions
During the years ended December 31, 2021, 2020 and 2019, the Company disposed of the following consolidated properties and other real estate investments (in thousands):
Property and Location
Owner
Date Sold
Sale Price
Gain
on Sale
2021 Dispositions
60 Orange St - Bloomfield, NJ
Core
Jan 29, 2021
$
16,400
$
4,612
654 Broadway - New York, NY
Fund III
May 19, 2021
10,000
NE Grocer Portfolio (Selected Assets) - Maine
Fund IV
Jun 18, 2021
39,925
5,064
Total 2021 Dispositions (a)
$
66,325
$
9,787
2020 Dispositions
163 Highland Ave. (Easement) - Needham, MA
Core
Mar 19, 2020
$
$
Colonie Plaza - Albany, NY
Fund IV
Apr 13, 2020
15,250
Airport Mall (Parcel) - Bangor, ME
Fund IV
Sep 10, 2020
Cortlandt Crossing (Sewer Project and Retention Pond) - Cortlandt, NY
Fund III
Nov 30, 2020
6,325
-
Union Township (Parcel) - New Castle, PA
Core
Dec 11, 2020
Total 2020 Dispositions
$
22,413
$
2019 Dispositions
3104 M Street - Washington, DC
Fund III
Jan 24, 2019
$
10,500
$
2,014
210 Bowery - 3 Residential Condos - New York, NY
Fund IV
May 17, 2019
Sep 23, 2019
Nov 7, 2019
8,826
(242
)
JFK Plaza - Waterville, ME
Fund IV
Jul 24, 2019
7,800
2,075
3780-3858 Nostrand Avenue - New York, NY
Fund III
Aug 22, 2019
27,650
2,562
938 W North Avenue - Chicago, IL
Fund IV
Sep 27, 2019
32,000
7,144
Pacesetter Park - Pomona, NY
Core
Oct 28, 2019
22,550
16,771
Total 2019 Dispositions
$
109,326
$
30,324
a)Does not include the gain on lease termination of $0.7 million related to the Fund IV lease at 110 University Place (Note 12).
Properties Held for Sale or Sold
At December 31, 2021, the Company had two properties under contract for sale with assets totaling $64.0 million, which were probable of disposition. These properties were classified as "held for sale" on the Company's consolidated balance sheets at December 31, 2021. The Company sold both properties in January and February 2022 and repaid the related debt upon disposition (Note 18).
The aggregate rental revenue, expenses and pre-tax income reported within continuing operations for the aforementioned consolidated properties that were sold as well as the lease that was terminated during the years ended December 31, 2021, 2020 and 2019 were as follows (in thousands):
Year Ended December 31,
Revenues
$
3,270
$
8,847
$
17,282
Expenses
(3,784
)
(8,625
)
1,212
Gain on disposition of properties
10,521
30,324
Net income attributable to noncontrolling interests
(4,151
)
(323
)
(10,967
)
Net income attributable to Acadia
$
5,856
$
$
37,851
Real Estate Under Development and Construction in Progress
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Real estate under development represents the Company’s consolidated properties that have not yet been placed into service while undergoing substantial development or construction.
Development activity for the Company’s consolidated properties comprised the following during the periods presented (dollars in thousands):
January 1, 2021
Year Ended December 31, 2021
December 31, 2021
Number of
Properties
Carrying
Value
Transfers In
Capitalized
Costs
Transfers Out
Number of
Properties
Carrying
Value
Core
-
$
63,875
$
-
$
1,855
$
23,213
-
$
42,517
Fund II
-
74,657
-
3,921
43,453
-
35,125
Fund III
23,104
-
1,192
-
24,296
Fund IV (a)
85,565
29,758
2,026
15,514
101,835
Total
$
247,201
$
29,758
$
8,994
$
82,180
$
203,773
a)Transfers in include $29.8 million related to the remaining portion of one Fund IV property that was placed into development.
January 1, 2020
Year Ended December 31, 2020
December 31, 2020
Number of
Properties
Carrying
Value
Transfers In
Capitalized
Costs
Transfers Out
Number of
Properties
Carrying
Value
(As Restated)
(As Restated)
Core
-
$
60,863
$
-
$
3,012
$
-
-
$
63,875
Fund II (a)
-
10,703
66,812
3,612
6,470
-
74,657
Fund III
36,240
-
13,171
23,104
Fund IV (b)
145,590
-
1,261
61,286
85,565
Total
$
253,396
$
66,812
$
7,920
$
80,927
$
247,201
a)Transfers in include $33.8 million of non-cash Fund II additions obtained through the conversion of a note receivable (Note 4).
b)Transfers out include impairment charges totaling $16.5 million on two Fund IV development properties (Note 9).
The number of properties in the tables above refers to projects comprising the entire property under development; however, certain projects represent a portion of a property.
At December 31, 2021, consolidated development projects included: a portion of City Center for Core, portions of City Point Phase I and II at Fund II, Broad Hollow Commons at Fund III and 717 N. Michigan Avenue at Fund IV. In addition, at December 31, 2021, the Company had one Core unconsolidated development project, 1238 Wisconsin Avenue. During the year ended December 31, 2021, the Company:
•placed portions of one Core project, City Center, into service in the first and second quarter of 2021
•disposed of building improvements related to one Fund IV project, 110 University Place, in connection with a lease termination in the second quarter of 2021 (Note 12)
•placed the remaining portion of one Fund IV property, 717 N. Michigan Avenue, into development in the fourth quarter of 2021
•placed a portion of Fund II’s City Point Phase III into service in the fourth quarter of 2021
During the year ended December 31, 2020, the Company:
•placed a portion of one Fund III property, Cortlandt Crossing, into service in the first quarter of 2020
•converted, in a non-cash transaction, a note receivable in exchange for construction improvements at a Fund II property in the amount of $33.8 million in the fourth quarter of 2020 (Note 4)
•recognized impairment charges totaling $16.5 million on two Fund IV properties (Note 9) including 717 N. Michigan Avenue and 110 University Place in the fourth quarter of 2020
•placed a portion of one Fund IV property, 146 Geary Street, which was also impaired, into service in the first quarter of 2020 (Note 9)
•placed a portion of Fund II’s City Point Phase II into development in the second quarter of 2020
•suspended certain development projects due to aforementioned disruptions related to the COVID-19 Pandemic. Substantially all remaining development and redevelopment costs were discretionary and dependent upon the resumption of tenant interest.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Construction in progress pertains to construction activity at the Company’s operating properties that are in service and continue to operate during the construction period.
4. Notes Receivable, Net
The Company’s notes receivable, net are generally collateralized either by the underlying properties or the borrowers’ ownership interests in the entities that own the properties, and were as follows (dollars in thousands):
December 31,
December 31, 2021
Description
Number
Maturity Date
Interest Rate
(As Restated)
Core Portfolio (a)
$
154,332
$
96,794
Apr 2020 - Dec 2027
5.00% - 12.00%
Fund III
5,306
5,306
Jul 2020
18.00%
Total notes receivable
159,638
102,100
Allowance for credit loss
(5,752
)
(1,218
)
Notes receivable, net
$
153,886
$
100,882
(a)Includes one and two notes receivable from OP Unit holders, for $6.0 million and $6.5 million at December 31, 2021 and 2020, respectively.
During the year ended December 31, 2021, the Company:
•originated a new Core Portfolio note for $16.0 million with a stated interest rate of 9% and a maturity date of October 20, 2022 collateralized by a single tenant property in Silver Spring, Maryland on April 20, 2021;
•exchanged 21,109 OP Units in settlement of a note receivable in the amount of $0.5 million on July 12, 2021 (Note 11);
•originated a new Core Portfolio note for $43.0 million, of which $42.0 million was funded, with three tranches with stated interest rates ranging from 5% to 12% and a maturity date of September 17, 2024 collateralized by a retail condominium in Soho, New York on September 17, 2021;
•extended the maturity date of one Core note receivable of $13.5 million from October 28, 2021 to June 1, 2022; and
•recorded an increase in its allowance for credit loss of approximately $4.5 million primarily attributable to the Fund III note that matured in July 2020.
During the year ended December 31, 2020, the Company:
•exchanged its Brandywine Note Receivable of $38.7 million plus accrued interest of $2.0 million for the remaining 24.78% undivided interest in Town Center on April 1, 2020 (Note 5);
•recorded credit loss reserves of $0.4 million upon the adoption of ASC 326 (Note 1);
•converted $33.8 million balance of a Fund II note receivable for interest in real estate on November 2, 2020 (Note 3). Prior to the exchange, the note had been increased by the interest accrued during 2020 of $0.6 million;
•made a Core loan for $54.0 million with an interest rate of 9% structured as a redeemable preferred equity investment in a property at 850 Third Avenue in Brooklyn, New York on January 14, 2020;
•originated a new Core Portfolio note for $5.0 million with an interest rate of 8% collateralized by our partner’s 50% share of the LUF (Georgetown) Portfolio (Note 5) in Washington, D.C. effective February 1, 2020; and
•recorded additional credit loss reserves of $0.8 million primarily attributable to the Fund III note discussed above.
Defaults
One Core Portfolio note aggregating $21.6 million including accrued interest (exclusive of default interest and other amounts due on the loan that have not been recognized) was in default at December 31, 2021 and December 31, 2020. On April 1, 2020, the loan matured and was not repaid. There is a personal guarantee associated with the note receivable. The Company expects to take appropriate actions to recover the amounts due under the loan, and has issued a reservation of rights letter to the borrowers and guarantor, reserving all of its rights and remedies under the applicable loan documents and otherwise. The Company has determined that the collateral for this loan is sufficient to cover the loan’s carrying value at December 31, 2021 and 2020. In addition, one Fund III note receivable aggregating $10.0 million, including accrued interest (exclusive of default interest and other amounts due on the loan that have not been recognized) matured on July 1, 2020 and was not repaid; however, in January 2022, Fund III obtained the remaining interest in the collateral via a foreclosure auction (Note 18). The Company has determined that the collateral is not sufficient to cover the loan’s carrying value at December 31, 2021 and 2020, and therefore recorded an additional allowance of $4.6 million and $0.6 million, respectively.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Allowance for Credit Losses
The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company’s loan in relation to other debt secured by the collateral and the prospects of the borrower.
Earnings from these notes and mortgages receivable are reported within the Company’s Structured Financing segment (Note 13).
The Company’s estimated allowance for credit losses related to its Structured Financing segment has been computed for its amortized cost basis in the portfolio, including accrued interest (Note 6), factoring historical loss experience in the United States for similar loans, as adjusted for current conditions, as well as the Company’s expectations related to future economic conditions. Due to the lack of comparability across the Structured Financing portfolio, each loan was evaluated separately. As a result, there were five non-collateral-dependent loans with a total amortized cost of $142.8 million, inclusive of accrued interest of $12.3 million, for which an allowance for credit losses has been recorded aggregating $1.2 million at December 31, 2021. For three loans in this portfolio, aggregating $37.9 million, inclusive of accrued interest of $8.8 million at December 31, 2021, the Company has elected to apply a practical expedient in accordance with ASC 326. For two Core loans, the Company did not establish an allowance for credit losses because (i) these loans are collateral-dependent loans, which due to their settlement terms are not expected to be settled in cash but rather by the Company’s possession of the real estate collateral; and (ii) at December 31, 2021, the Company determined that the estimated fair value of the collateral at the expected realization date for these loans was sufficient to cover the carrying value of its investments in these notes receivable. An allowance was established for one Fund III loan for $4.6 million at December 31, 2021, because it was determined that the fair value of this collateral-dependent loan was not sufficient to cover the carrying value of its investments in this note receivable. Impairment charges may be required if and when such amounts are estimated to be nonrecoverable upon a realization event, which is generally at the time a loan is repaid, or in the case of foreclosure, when the underlying asset is sold; however, non-recoverability may also be concluded if it is reasonably certain that all amounts due will not be collected.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Investments in and Advance s to Unconsolidated Affiliates
The Company accounts for its investments in and advances to unconsolidated affiliates primarily under the equity method of accounting as it has the ability to exercise significant influence, but does not have financial or operating control over the investment, which is maintained by each of the unaffiliated partners who co-invest with the Company. The Company’s investments in and advances to unconsolidated affiliates consist of the following (dollars in thousands):
Ownership Interest
December 31,
Portfolio
Property
December 31, 2021
(As Restated)
Core:
840 N. Michigan (a)
88.43%
$
51,513
$
55,863
Renaissance Portfolio
20%
28,466
29,270
Gotham Plaza
49%
29,187
28,683
Georgetown Portfolio
50%
4,089
4,624
1238 Wisconsin Avenue
80%
5,895
2,571
119,150
121,011
Mervyns I & II:
KLA/ABS (b)
36.7%
124,316
72,391
Fund III:
Self Storage Management (c)
95%
640 Broadway (d)
63.13%
17,825
17,457
18,032
17,664
Fund IV:
Fund IV Other Portfolio
98.57%
12,675
11,719
650 Bald Hill Road
90%
11,677
12,550
Paramus Plaza
50%
1,975
5,565
26,327
29,834
Fund V:
Family Center at Riverdale (a)
89.42%
12,449
11,824
Tri-City Plaza
90%
6,827
7,024
Frederick County Acquisitions
90%
10,748
10,837
30,024
29,685
Various:
Due from (to) Related Parties
Other (e)
3,811
1,881
Investments in and advances to
unconsolidated affiliates
$
322,326
$
272,829
Core:
Crossroads (f)
49%
$
9,939
$
15,616
Distributions in excess of income from,
and investments in, unconsolidated affiliates
$
9,939
$
15,616
a)Represents a tenancy-in-common interest.
b)Includes an interest in Albertsons (at fair value, as described below).
c)Represents a variable interest entity for which the Company was determined not to be the primary beneficiary.
d)In January 2022, the Company obtained the partner's interest and now owns 100% and consolidates the entity (Note 18).
e)Includes cost-method investments in, Storage Post, Fifth Wall and other investments.
f)Distributions have exceeded the Company’s investment; however, the Company recognizes a liability balance as it may be required to return distributions to fund future obligations of the entity.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the year ended December 31, 2021, the Company:
•received dividends of $1.7 million at Mervyns II related to distributions from its Investment in Albertsons and recorded a net unrealized holding gain of $51.9 million reflecting the change in fair value of its Investment in Albertsons
•on January 4, 2021, Fund V sold two land parcels at its unconsolidated Family Center at Riverdale property for a total of $10.5 million, repaid $7.9 million of the related mortgage and the venture recognized a gain of $3.2 million, of which the Company's share was $0.6 million;
•called capital for its Crossroads investment of $7.5 million, of which the venture partner's share was $5.4 million; and
•increased its investment in Fifth Wall by $1.9 million pursuant to its subscription agreement.
During the year ended December 31, 2020, the Company:
•exchanged the remaining $38.7 million of Brandywine Notes Receivable (Note 4), plus accrued interest of $2.0 million for the remaining 24.78% interest in Town Center on April 1, 2020, thereby obtaining a 100% controlling interest in the property. The property was then consolidated (Note 3) and the Company recorded the remaining interest in the property investment at the carrying value of the notes;
•increased its investment in Fifth Wall by $0.4 million pursuant to its subscription agreement;
•impaired $0.4 million of its investment in Fifth Wall (Note 9) during the fourth quarter of 2020, reflecting management’s estimate of fair value at that date;
•recorded realized gains at Mervyns II of approximately $22.8 million and $0.4 million, during the second and fourth quarters of 2020, respectively, from its Investment in Albertsons. The realized gains during the second quarter of 2020 resulted from the issuance and distribution of proceeds from a preferred equity investment and a sale of a portion of its investment in an initial public offering of Albertsons, both of which occurred in June 2020;
•recorded an unrealized gain of approximately $64.9 million during the second quarter of 2020 at Mervyns II reflecting the initial market value of its ownership of approximately 4.1 million shares (approximately 1% interest) through its Investment in Albertsons, which it has accounted for at fair value following the initial public offering;
•recorded an additional net unrealized holding gain of $7.5 million at Mervyns II reflecting the change in fair value of its Investment in Albertsons from the initial public offering through December 31, 2020; and
•acquired all of the third-party equity of BSP II at Fund IV, which underlies two properties within Broughton Street Portfolio, for $1.3 million on May 26, 2020, pursuant to the buy-sell provisions of the operating agreement of the Broughton Street Portfolio. These two BSP II properties were consolidated during the second quarter of 2020.
Core Portfolio
Fifth Wall
On August 8, 2019, the Company invested $1.8 million in Fifth Wall Ventures Retail Fund, L.P. (“Fifth Wall”). During the fourth quarter of 2019, the Company invested another $0.2 million. During 2021 and 2020, the Company increased its investment in Fifth Wall by $1.9 million and $0.4 million, respectively. The Company’s total commitment is $5.0 million. The Company accounts for its interest at cost less impairment given its ownership is less than five percent, and the Company has virtually no influence over the partnership’s operating and financial policies. During the fourth quarter of 2020, the Company impaired $0.4 million for this investment (Note 9) reflecting management’s estimate of fair value at that date. At December 31, 2021, the Company’s investment was $3.7 million.
Brandywine Portfolio, Market Square and Town Center
The Company now owns a 100% interest in an approximately one million square-foot retail portfolio (the “Brandywine Portfolio” joint venture) located in Wilmington, Delaware, which includes two properties referred to as “Market Square” and “Town Center.” Through a series of exchange transactions from 2017 through 2020, the Company converted a $140.0 million non-recourse note receivable and interest thereon (Note 4), which was collateralized by the Brandywine Portfolio, into ownership of the tenancy-in-common interests held by co-investors in the property ventures.
The Brandywine Portfolio and Market Square ventures do not include the property held by Acadia Brandywine Holdings, LLC (“Brandywine Holdings”), an entity in which the Company had a 22.22% controlling interest (until it acquired the noncontrolling interest during 2020 as discussed in Note 8) and which is consolidated by the Company.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1238 Wisconsin Avenue
On December 28, 2021, the Company provided a $12.8 million construction loan commitment to an unconsolidated entity, collateralized by the membership interest in the joint venture that owns the property. The loan, which had not been funded at December 31, 2021, matures in December 2023 with one twelve-month extension option. The Company earned an origination fee of $0.1 million at closing.
Fund Investments
Broughton Street Portfolio
During 2014, Fund IV acquired 50% interests in two joint ventures referred to as “BSP I” and “BSP II” with the same venture partner to acquire and operate a total of 23 properties in Savannah, Georgia referred to as the “Broughton Street Portfolio.” Since that time, as described below, the ventures have sold eight of the properties and terminated the master leases on two of the properties. In October 2018, the venture partner relinquished its interest in BSP I, resulting in Fund IV becoming the 100% owner of the BSP I venture, which holds 11 consolidated properties (Note 3). On May 26, 2020, pursuant to the buy-sell provisions of the operating agreement of the Broughton Street Portfolio, Fund IV acquired all of the third-party equity of BSP II, which underlies two properties within Broughton Street Portfolio, for $1.3 million in a non-monetary exchange. These two BSP II properties were consolidated during the second quarter of 2020.
Storage Post
On June 29, 2019, Fund III’s Storage Post venture, which is a cost method investment with no carrying value distributed $1.6 million, of which the Operating Partnership’s share was $0.4 million.
Albertsons
During 2006, as part of a series of investments with a consortium of other investors known as the “RCP Venture”, Mervyns II acquired an indirect interest in Albertsons Companies, Inc., a private chain of grocery stores (“Albertsons”) through two 36.67% owned entities (KLA A Investments, LLC and ABS Opportunities, LLC, “KLA/ABS”). The investment (the “Investment in Albertsons”) has been accounted for under the cost method as Mervyns II has no influence over operating and financial policies of KLA/ABS. Subsequent to the initial investment in 2006, Mervyns II received distributions from its Investment in Albertsons in excess of its initial contribution, which have been recognized in earnings. During the second and fourth quarters of 2020, Mervyns II realized gains of approximately $22.8 million and $0.4 million, respectively, from its Investment in Albertsons. The realized gains during the second quarter of 2020 resulted from the issuance and distribution of proceeds from a preferred equity investment and a sale of a portion of its investment in an initial public offering of Albertsons, both of which occurred in June 2020. Following these transactions, Mervyns II has retained an effective indirect ownership of approximately 4.1 million shares (approximately 1% interest) through its Investment in Albertsons, which it has accounted for at fair value following the initial public offering given the readily determinable fair value. During 2021, Mervyns II realized gains of approximately $1.7 million related to distributions from its Investment in Albertsons. The Company has an effective ownership interest of 28.33% in Mervyns II.
Fees from Unconsolidated Affiliates
The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling $0.6 million, $1.1 million and $0.7 million for the years ended December 31, 2021, 2020 and 2019, respectively, which is included in other revenues in the consolidated statements of operations.
In addition, the Company paid certain unaffiliated partners of its joint ventures, $1.4 million and $2.1 million and $1.4 million for the years ended December 31, 2021, 2020 and 2019, respectively, for leasing commissions, development, management, construction and overhead fees.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summarized Financial Information of Unconsolidated Affiliates
The following combined and condensed Balance Sheets and Statements of Operations, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates that were held as of December 31, 2021, and accordingly exclude the results of any investments disposed of or consolidated prior to that date (in thousands):
December 31,
Combined and Condensed Balance Sheets
Assets:
Rental property, net
$
631,661
$
633,375
Real estate under development
8,112
14,664
Other assets
78,300
70,710
Total assets
$
718,073
$
718,749
Liabilities and partners’ equity:
Mortgage notes payable
$
571,461
$
569,040
Other liabilities
69,166
76,341
Partners’ equity
77,446
73,368
Total liabilities and partners’ equity
$
718,073
$
718,749
Company's share of accumulated equity
$
113,285
$
112,088
Basis differential
66,031
66,724
Deferred fees, net of portion related to the Company's interest
4,071
3,559
Amounts receivable/payable by the Company
Investments in and advances to unconsolidated affiliates, net of Company's
share of distributions in excess of income from and investments in
unconsolidated affiliates
184,053
182,734
Investments carried at fair value or cost
128,334
74,479
Company's share of distributions in excess of income from and
investments in unconsolidated affiliates
9,939
15,616
Investments in and advances to unconsolidated affiliates
$
322,326
$
272,829
Year Ended December 31,
Combined and Condensed Statements of Operations
Total revenues
$
80,823
$
78,054
$
77,507
Operating and other expenses
(28,572
)
(28,718
)
(24,894
)
Interest expense
(21,228
)
(22,651
)
(25,660
)
Depreciation and amortization
(30,518
)
(30,917
)
(25,012
)
Loss on extinguishment of debt
(35
)
-
-
Gain on disposition of properties (a)
3,206
-
-
Net income (loss) attributable to unconsolidated affiliates
$
3,676
$
(4,232
)
$
1,941
Company’s share of equity in net income (loss) of unconsolidated affiliates
$
6,023
$
(2,503
)
$
1,118
Income attributable to unconsolidated affiliates recently sold or consolidated
-
1,280
$
6,155
Basis differential amortization
(693
)
(1,834
)
(1,374
)
Company’s equity in earnings (losses) of unconsolidated affiliates
$
5,330
$
(3,057
)
$
5,899
a)Represents the gain on the sale of two land parcels by the Family Center at Riverdale on January 4, 2021.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Other Assets, Net and Accou nts Payable and Other Liabilities
Other assets, net and accounts payable and other liabilities are comprised of the following for the periods presented:
December 31,
(in thousands)
Other Assets, Net:
(As Restated)
Lease intangibles, net (Note 7)
$
108,918
$
100,426
Deferred charges, net (a)
28,438
27,634
Accrued interest receivable
21,148
13,917
Prepaid expenses
17,230
17,117
Due from seller
3,364
3,682
Income taxes receivable
2,279
2,433
Other receivables
1,830
2,065
Deposits
1,647
1,704
Corporate assets, net
1,648
1,302
Derivative financial instruments (Note 9)
$
186,509
$
170,281
(a) Deferred Charges, Net:
Deferred leasing and other costs
$
58,281
$
53,443
Deferred financing costs related to line of credit
9,953
11,341
68,234
64,784
Accumulated amortization
(39,796
)
(37,150
)
Deferred charges, net
$
28,438
$
27,634
Accounts Payable and Other Liabilities:
Lease intangibles, net (Note 7)
$
76,778
$
76,434
Accounts payable and accrued expenses
56,580
52,399
Derivative financial instruments (Note 9)
45,027
89,612
Deferred income
38,373
31,785
Tenant security deposits, escrow and other
13,045
11,925
Lease liability - finance leases, net (Note 12)
6,612
6,287
$
236,415
$
268,442
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Lease Intangibles
Upon acquisitions of real estate, the Company assesses the relative fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above- and below-market leases, including below-market options and acquired in-place leases) and assumed liabilities. The lease intangibles are amortized over the remaining terms of the respective leases, including option periods where applicable.
Intangible assets and liabilities are included in Other assets and Accounts payable and other liabilities (Note 6) on the consolidated balance sheets and summarized as follows (in thousands):
December 31, 2021
December 31, 2020
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Amortizable Intangible Assets
(As Restated)
(As Restated)
(As Restated)
In-place lease intangible assets
$
290,819
$
(189,981
)
$
100,838
$
265,063
$
(168,891
)
$
96,172
Above-market rent
24,191
(16,111
)
8,080
19,010
(14,756
)
$
4,254
$
315,010
$
(206,092
)
$
108,918
$
284,073
$
(183,647
)
$
100,426
Amortizable Intangible Liabilities
Below-market rent
$
(171,245
)
$
94,871
$
(76,374
)
$
(162,238
)
$
86,266
(75,972
)
Above-market ground lease
(671
)
(404
)
(671
)
(462
)
$
(171,916
)
$
95,138
$
(76,778
)
$
(162,909
)
$
86,475
$
(76,434
)
During the year ended December 31, 2021, the Company:
•acquired in-place lease intangible assets of $34.7 million, above-market rents of $5.3 million, and below-market rents of $16.3 million with weighted-average useful lives of 5.8, 5.4, and 27.7 years, respectively (Note 3); and
•derecognized in-place lease intangible assets of $2.2 million and below-market rent of $4.4 million, of which the Company's share was $1.7 million and $3.0 million, respectively, related to disposed properties (Note 3). In addition, the Company recorded accelerated amortization related to in-place lease intangible assets of $1.6 million and below-market rents of $3.6 million, of which the Company's share was $1.1 million and $3.1 million, respectively, related to tenant non-renewals and early tenant lease terminations.
During the year ended December 31, 2020, the Company:
•acquired in-place lease intangible assets of $21.0 million, above-market rents of $2.0 million, and below-market rents of $4.6 million with weighted-average useful lives of 4.9, 5.8, and 20.2 years, respectively (Note 3); and
•derecognized in-place lease intangible assets of $1.5 million, of which the Company's share was $0.4 million, related to disposed properties (Note 3). In addition, the Company recorded accelerated amortization related to in-place lease intangible assets of $3.7 million and below-market rents of $1.9 million, of which the Company's share was $2.2 million and $1.1 million, respectively, related to tenant non-renewals and early tenant lease terminations.
Amortization of in-place lease intangible assets is recorded in depreciation and amortization expense and amortization of above-market rent and below-market rent is recorded as a reduction to and increase to rental income, respectively, in the consolidated statements of operations. Amortization of above-market ground leases are recorded as a reduction to rent expense in the consolidated statements of operations.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The scheduled amortization of acquired lease intangible assets and assumed liabilities as of December 31, 2021 is as follows (in thousands):
Years Ending December 31,
Net Increase in
Lease Revenues
Increase to
Amortization
Reduction of
Rent Expense
Net (Expense) Income
$
5,215
$
(26,371
)
$
$
(21,098
)
4,768
(19,902
)
(15,076
)
4,700
(14,046
)
(9,288
)
4,287
(9,804
)
(5,459
)
3,992
(7,433
)
(3,383
)
Thereafter
45,332
(23,282
)
22,164
Total
$
68,294
$
(100,838
)
$
$
(32,140
)
8. Debt
A summary of the Company’s consolidated indebtedness is as follows (dollars in thousands):
Interest Rate at
Carrying Value at
December 31,
December 31,
Maturity Date at
December 31,
December 31,
December 31, 2021
Mortgages Payable
(As Restated)
Core Fixed Rate
3.88%-5.89%
3.88%-5.89%
Feb 2024 - Apr 2035
$
145,464
$
147,810
Core Variable Rate - Swapped (a)
3.41%-4.54%
3.41%-4.54%
Jan 2023 - Nov 2028
72,957
80,500
Total Core Mortgages Payable
218,421
228,310
Fund II Variable Rate
LIBOR+2.75% - PRIME+2.00%
LIBOR+3.00% - PRIME+2.00%
Mar 2022 - August 2022
255,978
228,282
Fund II Variable Rate - Swapped
2.88%
-
18,803
Total Fund II Mortgages Payable
255,978
247,085
Fund III Variable Rate
LIBOR+2.75%
LIBOR+2.75%
Jun 2022
34,728
35,948
Fund IV Fixed Rate
4.50%
3.40%-4.50%
Oct 2025
1,120
6,726
Fund IV Variable Rate
LIBOR+1.60%-LIBOR+3.65%
LIBOR+1.60%-LIBOR+3.40%
Feb 2022 - Jun 2026
221,832
252,324
Fund IV Variable Rate - Swapped (a)
3.48%-4.61%
3.48%-4.61%
Apr 2022 - Dec 2022
23,316
47,690
Total Fund IV Mortgages and Other Notes Payable
246,268
306,740
Fund V Fixed Rate
3.35%
May 2023
31,801
-
Fund V Variable Rate
LIBOR + 1.85% - SOFR + 2.76%
LIBOR+1.50%-LIBOR+2.20%
Jun 2022 - Nov 2026
58,878
1,354
Fund V Variable Rate - Swapped (a)
2.43%-4.78%
2.95%-4.78%
Feb 2022 - Dec 2024
297,731
334,323
Total Fund V Mortgages Payable
388,410
335,677
Net unamortized debt issuance costs
(3,958
)
(5,722
)
Unamortized premium
Total Mortgages Payable
$
1,140,293
$
1,148,586
Unsecured Notes Payable
Core Variable Rate Credit Facility
LIBOR+2.55%
$
-
$
30,000
Core Variable Rate Unsecured
Term Loans - Swapped (a)
3.65%-5.32%
2.49%-5.02%
Jun 2026
400,000
350,000
Total Core Unsecured Notes
Payable
400,000
380,000
Fund II Unsecured Notes Payable
LIBOR+2.25%
LIBOR+1.65%
Sep 2022
40,000
40,000
Fund IV Subscription Facility
SOFR+2.01%
LIBOR+1.90%
Dec 2022
5,000
Fund V Subscription Facility
LIBOR+1.90%
LIBOR+1.60%
May 2022
118,028
Net unamortized debt issuance costs
(3,988
)
(256
)
Total Unsecured Notes Payable
$
559,040
$
420,858
Unsecured Line of Credit
Core Unsecured Line of Credit - Variable Rate
LIBOR + 1.40%
Jun 2025
$
46,491
$
-
Core Unsecured Line of Credit -Swapped (a)
3.65%-5.32%
2.49%-5.02%
Jun 2025
66,414
138,400
Total Unsecured Line of Credit
$
112,905
$
138,400
Total Debt - Fixed Rate (b, c)
$
1,038,803
$
1,124,255
Total Debt - Variable Rate (d)
780,935
589,019
Total Debt
1,819,738
1,713,274
Net unamortized debt issuance costs
(7,946
)
(5,978
)
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unamortized premium
Total Indebtedness
$
1,812,238
$
1,707,844
a)At December 31, 2021, the stated rates ranged from LIBOR + 1.50% to LIBOR +1.90% for Core variable-rate debt; LIBOR + 2.75% for Fund III variable-rate debt; LIBOR +2.00% for Fund IV variable-rate debt; LIBOR + 1.50% to LIBOR + 2.20% for Fund V variable-rate debt; LIBOR + 1.55% for Core variable-rate unsecured term loans; and LIBOR + 1.40%for Core variable-rate unsecured lines of credit.
b)Includes $860.4 million and $969.7 million, respectively, of variable-rate debt that has been fixed with interest rate swap agreements as of the periods presented.
c)Fixed-rate debt at December 31, 2021 and 2020 includes $0.0 million and $3.2 million, respectively of Core swaps that may be used to hedge debt instruments of the Funds.
d)Includes $110.5 million and $103.2 million, respectively, of variable-rate debt that is subject to interest cap agreements.
Credit Facility
Since February 2018 and as subsequently amended, the Company has had a senior unsecured credit facility (the “Credit Facility”) comprised of a $250.0 million senior unsecured revolving credit facility (the “Revolver”) which bore interest at LIBOR + 1.40%, and a $350.0 million senior unsecured term loan (the “Term Loan”) which bore interest at LIBOR + 1.30%. The Revolver was scheduled to mature on March 31, 2022, subject to two six-month extension options, and the $350.0 million Term Loan was scheduled to expire on March 31, 2023.
During June 2021, the Company modified the Credit Facility, providing for a $50.0 million increase in the Revolver and a $50.0 million increase in the Term Loan. This amendment resulted in borrowing capacity of up to $700.0 million in principal amount, which includes a $300.0 million Revolver maturing on June 29, 2025, subject to two six-month extension options, and a $400.0 million Term Loan expiring on June 29, 2026. In addition, the amendment provides for revisions to the accordion feature, which allows for one or more increases in the revolving credit facility or term loan facility, for a maximum aggregate principal amount not to exceed $900.0 million. The $300.0 million Revolver bears interest at LIBOR + 1.40% and the $400.0 million Term Loan bears interest at LIBOR + 1.55% at December 31, 2021, all of which were swapped to fixed rates. In connection with the amendment to the Credit Facility, during the second quarter of 2021, the Company (i) capitalized $2.7 million of debt issuance costs associated with the amended Revolver, which are included in deferred financing costs within other assets (Note 6); (ii) capitalized $3.1 million associated with the amended Term Loan, which are included in net unamortized debt issuance costs in the table above; and (iii) expensed $0.1 million of third-party costs associated with the Term Loan.
Mortgages and Other Notes Payable
During the year ended December 31, 2021, the Company:
•assumed a $31.8 million mortgage upon the acquisition of Canton Marketplace (Note 3) with an interest rate of 3.35% and a maturity date of May 1, 2023; Entered into a $29.2 million mortgage collateralized by Monroe Marketplace (Note 3) with an interest rate of SOFR+2.76% and a maturity date of November 12, 2026;
•extended 11 Fund mortgages, two of which were extended during the first quarter totaling $37.7 million (after principal reductions of $1.7 million), five of which were extended during the second quarter totaling $125.7 million (after principal reductions of $6.5 million), two of which were extended during the third quarter totaling $53.1 million (after principal reductions of $10.2 million), and two of which were extended during the fourth quarter totaling $14.8 million (after principal reductions of $3.0 million);
•modified the terms of the Fund IV Bridge facility during the fourth quarter reflecting an extension of maturity to June 30, 2022 which had an outstanding balance of $64.2 million prior to modification. The facility had an outstanding balance of $59.2 million and $79.2 million at December 31, 2021 and 2020, respectively, reflecting repayments during 2021. In addition, during the first quarter of 2021, the interest rate was changed from LIBOR plus 2.00% to LIBOR plus 2.50% with a floor of 0.25%;
•refinanced a Fund II loan for $18.5 million with a new loan of $16.8 million at an interest rate of LIBOR + 2.75% maturing August 11, 2022;
•entered into a swap agreement during the first quarter with a notional value of $16.7 million, for its New Towne Plaza mortgage replacing the existing swap which expired. In addition, the Company terminated two forward-starting interest rate swaps resulting in cash proceeds of approximately $3.4 million during the first quarter (Note 9);
•repaid one Core mortgage of $6.7 million in connection with the sale of 60 Orange Street during the first quarter and four Fund mortgages in the aggregate amount of $23.5 million in connection with the sale of the properties during the second quarter (Note 3); and
•made scheduled principal payments of $8.6 million.
During the year ended December 31, 2020, the Company:
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
•extended the maturity date of a $200.0 million Fund II loan from May 2020 to May 2022. In addition, the Company extended seven Fund mortgages, two of which were extended for one year during the first quarter with aggregate outstanding balances of $46.0 million at December 31, 2020, two of which were extended for one year during the second quarter with an aggregate outstanding balance of $51.3 million at December 31, 2020, one of which was extended for one year during the third quarter with aggregate outstanding balances of $40.0 million at December 31, 2020, and one of which were extended for a minimum of one year during the fourth quarter with an outstanding balances of $52.0 million at December 31, 2020;
•modified two Fund IV loans aggregating $67.4 million requiring the repayment of $8.0 million;
•entered into two swap agreements in February 2020 each with notional values of $50.0 million, which are not effective until April 2022 and April 2023 and were later terminated in the first quarter of 2021. In July 2020, two previously-executed forward swap agreements took effect with current notional values as of December 31, 2020 of $30.4 million each (Note 9);
•repaid one Core mortgage of $26.3 million in connection with the litigation settlement discussed below and one Fund IV mortgage of $11.6 million in connection with the sale of Colonie Plaza in April 2020 (Note 3); and
•made scheduled principal payments of $6.1 million.
At December 31, 2021 and 2020, the Company’s mortgages were collateralized by 37 and 40 properties, respectively, and the related tenant leases. 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 Company is not in default on any of its loan agreements, except as noted below. A portion of the Company’s variable-rate mortgage debt has been effectively fixed through certain cash flow hedge transactions (Note 9).
The mortgage loan collateralized by the property held by Brandywine Holdings in the Core Portfolio, was in default and subject to litigation at December 31, 2019. On October 30, 2020, the Company settled the litigation for approximately $30.0 million resulting in a gain on debt extinguishment of $18.3 million reflected in Realized and unrealized holding gains on investments and other in the consolidated statements of operations, of which the Company’s proportionate share was $4.1 million. Upon settlement of this litigation, the Company obtained its partner’s 78.22% noncontrolling interest for nominal consideration, resulting in a reduction of additional paid-in capital of $15.9 million (Note 11).
During the third quarter of 2019, the Company recognized income of $5.0 million related to Fund II’s New Market Tax Credit transaction (“NMTC”) involving its City Point project. NMTCs were created to encourage economic development in low income communities and provided for a 39% tax credit on certain qualifying invested equity/loans. In 2012, the NMTCs were transferred to a group of investors (“Investors”) in exchange for $5.2 million. The NMTCs were subject to recapture under various circumstances, including redemption of the loan/investment prior to a requisite seven-year hold period, and recognition of income was deferred. Upon the expiration of the seven-year period and there being no further obligations, the Company recognized income of $5.0 million, of which the Company’s proportionate share was $1.4 million, which is included in Realized and unrealized holding gains on investments and other in the consolidated statements of operations.
Unsecured Notes Payable
Unsecured notes payable for which total availability was $16.3 million and $128.7 million at December 31, 2021 and 2020, respectively, are comprised of the following:
•The outstanding balance of the Core term loan was $400.0 million and $350.0 million at December 31, 2021 and 2020, respectively. The Company previously entered into swap agreements fixing the rates of the Core term loan balance.
•On July 1, 2020, the Company obtained a $30.0 million Core term loan, with an accordion option to increase up to $90.0 million. This term loan was scheduled to mature on June 30, 2021 and bore interest at LIBOR plus 2.55% with a LIBOR floor of 0.75%. The term loan was repaid during June 2021. The outstanding balance at December 31, 2021 and December 31, 2020 was $0 and $30.0 million, respectively.
•Fund II has a $40.0 million term loan secured by the real estate assets of City Point Phase II and guaranteed by the Operating Partnership. In September 2021, the Company modified the term loan, extending the maturity to September 2022 and the interest rate was increased from LIBOR plus 1.65% to LIBOR plus 2.25%. The outstanding balance of the Fund II term loan was $40.0 million at each of December 31, 2021 and 2020. There was no availability at each of December 31, 2021 and 2020.
•Fund IV has a $5.0 million subscription line with an outstanding balance and total available credit of $5.0 million and $0, respectively at December 31, 2021. In December 2021, Fund IV modified the line to extend the maturity to December 29, 2022 at new interest rate of SOFR + 2.01%. The outstanding balance and total availability at December 31, 2020 were $0.9 million and $0.5 million, respectively, reflecting letters of credit of $3.6 million.
•Fund V has a $150.0 million subscription line collateralized by Fund V’s unfunded capital commitments, and, to the extent of Acadia’s capital commitments, is guaranteed by the Operating Partnership. In April 2021, the Company modified the subscription line, extending
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the maturity to May 2022 and the interest rate was increased from LIBOR plus 1.60% to LIBOR plus 1.90%. The outstanding balance and total available credit of the Fund V subscription line was $118.0 and $16.3 million, respectively at December 31, 2021 reflecting outstanding letters of credit of $15.7 million. The outstanding balance and total available credit were $0.3 million and $128.2 million at December 31, 2020, respectively, reflecting outstanding letters of credit of $21.5 million.
Unsecured Revolving Line of Credit
The Company had a total of $183.1 million and $101.1 million, respectively, available under its $300.0 million Core Revolver, reflecting borrowings of $112.9 and $138.4 million and letters of credit of $4.0 million and $10.5 million at December 31, 2021 and 2020, respectively. At each of December 31, 2021 and 2020, $66.4 million and $138.4 million, respectively, of the Core unsecured revolving line of credit was swapped to a fixed rate.
Scheduled Debt Principal Payments
The scheduled principal repayments, without regard to available extension options (described further below), of the Company’s consolidated indebtedness, as of December 31, 2021 are as follows (in thousands):
Year Ending December 31,
$
757,199
110,541
212,020
178,236
445,967
Thereafter
115,775
1,819,738
Unamortized premium
Net unamortized debt issuance costs
(7,946
)
Total indebtedness
$
1,812,238
The table above does not reflect available extension options (subject to customary conditions) on consolidated debt of $187.2 million contractually due in 2022, $41.5 million contractually due in 2023, $0.0 million contractually due in 2024 and $112.9 million contractually due in 2025; all for which the Company has available options to extend by up to 12 months and for some an additional 12 months thereafter. However, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options.
See Note 5 for information about liabilities of the Company’s unconsolidated affiliates.
9. Financial Instruments and Fair Value Measurements
The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and interest rate swaps; and Level 3, for financial instruments or other assets/liabilities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring the Company to develop its own assumptions.
Items Measured at Fair Value on a Recurring Basis
The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, the Company has also provided the unobservable inputs along with their weighted-average ranges.
Money Market Funds - The Company has money market funds, which at times have zero balances and are included in Cash and cash equivalents in the consolidated balance sheets, and are comprised of government securities and/or U.S. Treasury bills. These funds were classified as Level 1 as we used quoted prices from active markets to determine their fair values.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Equity Investments -Albertsons became publicly traded during 2020 (Note 5). Upon Albertsons’ IPO, the Company’s Investment in Albertsons has a readily determinable market value (traded on an exchange) and is being accounted for as a Level 1 investment.
Derivative Assets - The Company has derivative assets, which are included in Other assets, net on the consolidated balance sheets, and comprised of interest rate swaps and caps. The derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.
Derivative Liabilities - The Company has derivative liabilities, which are included in Accounts payable and other liabilities on the consolidated balance sheets and are comprised of interest rate swaps. These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.
Other than the Investment in Albertsons described above, the Company did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the year ended December 31, 2021 or 2020.
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands):
December 31, 2021
December 31, 2020
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Assets
Money market funds
$
-
$
-
$
-
$
-
$
-
$
-
Derivative financial instruments
-
-
-
-
Investment in Albertsons (Note 5)
124,316
-
-
72,391
-
-
Liabilities
Derivative financial instruments
-
45,027
-
-
89,612
-
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Items Measured at Fair Value on a Nonrecurring Basis (Including Impairment Charges)
During 2020 and 2021, the Company was impacted by the COVID-19 Pandemic (Note 12), which caused the Company to reduce its holding periods and forecasted operating income at certain properties. As a result, several impairments were recorded. Impairment charges for the periods presented are as follows (in thousands):
Property and Location
Owner
Triggering Event
Level 3 Inputs
Effective Date
Total
Acadia's Share
2021 Impairment Charges
210 Bowery commercial unit,
New York, NY
Fund IV
Reduced projected operating income
Projections of: holding period, net operating income, cap rate, incremental costs
Sept 30, 2021
$
3,016
$
27 E. 61st Street
New York, NY
Fund IV
Reduced projected operating income
Projections of: holding period, net operating income, cap rate, incremental costs
Sept 30, 2021
6,909
1,597
Total 2021 Impairment Charges
$
9,925
$
2,294
2020 Impairment Charges
Cortlandt Crossing,
Mohegan Lake, NY
Fund III
Reduced holding period, reduced projected operating income
Projections of: holding period, net operating income, cap rate, incremental costs
Mar 31, 2020
$
27,402
$
6,726
654 Broadway,
New York, NY
Fund III
Reduced holding period
Projections of: holding period, net operating income, cap rate, incremental costs
Mar 31, 2020
6,398
1,570
146 Geary Street,
San Francisco, CA
Fund IV
Reduced holding period, reduced projected operating income
Projections of: holding period, net operating income, cap rate, incremental costs
Mar 31, 2020
6,718
1,553
801 Madison Avenue,
New York, NY
Fund IV
Reduced holding period, reduced projected operating income
Projections of: holding period, net operating income, cap rate, incremental costs
Mar 31, 2020
11,031
2,551
717 N. Michigan Avenue,
Chicago, IL
Fund IV
Reduced holding period, reduced projected operating income
Projections of: holding period, net operating income, cap rate, incremental costs
Dec 31, 2020
17,392
4,021
110 University,
New York, NY
Fund IV
Reduced holding period, reduced projected operating income
Projections of: holding period, net operating income, cap rate, incremental costs
Dec 31, 2020
16,238
3,754
Fifth Wall Investment
Core
Decline in fair value
Projections of: reported fair value of net assets
Dec 31, 2020
Total 2020 Impairment Charges
$
85,598
$
20,594
2019 Impairment Charges
210 Bowery residential units,
New York, NY
Fund IV
Reduced selling price
Offering price
Jun 30, 2019
$
1,400
$
210 Bowery residential units,
New York, NY
Fund IV
Reduced selling price
Contract sales price
Sep 30, 2019
Total 2019 Impairment Charges
$
1,721
$
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivative Financial Instruments
The Company had the following interest rate swaps and caps for the periods presented (dollars in thousands):
Strike Rate
Fair Value
Derivative
Instrument
Aggregate Notional Amount
Effective Date
Maturity Date
Low
High
Balance Sheet
Location
December 31,
December 31,
Core
(As Restated)
Interest Rate Swaps
$
539,369
Dec 2012-Jul 2020
Mar 2022-Jul 2030
1.71
%
-
3.77
%
Other Liabilities
$
(40,650
)
$
(74,990
)
$
539,369
$
(40,650
)
$
(74,990
)
Fund II
Interest Rate Swap
$
-
Oct 2014
Nov 2021
1.49
%
-
1.49
%
Other Liabilities
$
-
$
(219
)
Interest Rate Cap
45,000
Mar 2019
Mar 2022
3.50
%
-
3.50
%
Other Assets
-
-
$
45,000
$
-
$
(219
)
Fund IV
Interest Rate Swaps
$
23,316
Mar 2017-Dec 2019
Apr 2022-Dec 2022
1.48
%
-
2.61
%
Other Liabilities
$
(167
)
$
(1,186
)
Interest Rate Caps
71,338
Dec 2020 - Jul 2021
Dec 2022-Jul 2023
3.00
%
-
3.50
%
Other Assets
$
94,654
$
(160
)
$
(1,185
)
Fund V
Interest Rate Swaps
$
297,731
Jun 2018-Feb 2021
Feb 2022-Oct 2024
0.23
%
-
2.88
%
Other Liabilities
$
(4,210
)
$
(13,217
)
$
297,731
$
(4,210
)
$
(13,217
)
Total asset derivatives
$
$
Total liability derivatives
$
(45,027
)
$
(89,612
)
All of the Company’s derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable-rate debt (Note 8). It is estimated that approximately $15.3 million included in Accumulated other comprehensive loss related to derivatives will be reclassified to interest expense within the next twelve months. As of December 31, 2021 and 2020, 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 hedges.
During the first quarter of 2021, the Company terminated two interest rate swaps with forward effective dates with an aggregate notional value of $100.0 million (Note 8) for cash proceeds of $3.4 million. As the hedged forecasted transaction is still expected, amounts deferred in Accumulated other comprehensive loss will be amortized into earnings as a reduction of interest expense over the original term of the swaps beginning in 2022.
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, through the use of derivative financial instruments. The Company enters into derivative financial instruments to manage exposures that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.
The Company is exposed to credit risk in the event of non-performance by the counterparties to the swaps if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Credit Risk-Related Contingent Features
The Company has agreements with each of its swap counterparties that contain a provision whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its swaps, resulting in an acceleration of payment under the swaps.
Other Financial Instruments
The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands, inclusive of amounts attributable to noncontrolling interests where applicable):
December 31, 2021
December 31, 2020
Level
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
(As Restated)
(As Restated)
Notes Receivable (a)
$
153,886
$
154,093
$
100,882
$
101,567
Mortgage and Other Notes Payable (a)
1,143,805
1,125,571
1,153,760
1,134,560
Investment in non-traded equity securities (b)
3,656
4,062
1,726
1,456
Unsecured notes payable and Unsecured line of credit (c)
675,933
680,171
559,514
544,532
a)The Company determined the estimated fair value of these financial instruments using a discounted cash flow model with rates that take into account the credit of the borrower or tenant, where applicable, and interest rate risk. The Company also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the borrower, the time until maturity and the current market interest rate environment.
b)Represents the Operating Partnership’s cost-method investment in Fifth Wall (Note 5).
c)The Company determined the estimated fair value of the unsecured notes payable and unsecured line of credit using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, the Company determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants.
The Company’s cash and cash equivalents, restricted cash, rents receivable, accounts payable and certain financial instruments included in other assets and other liabilities had fair values that approximated their carrying values due to their short maturity profiles at December 31, 2021.
10. Commitments and Contingencies
The Company is involved in various matters of litigation arising out of, or incident to, its business. While the Company is unable to predict with certainty the outcome of any particular matter, management does not expect, when such litigation is resolved, that the Company’s resulting exposure to loss contingencies, if any, will have a material adverse effect on its consolidated financial position or results of operations.
Commitments and Guaranties
In conjunction with the development and expansion of various properties, the Company has entered into agreements with general contractors for the construction or development of properties aggregating approximately $38.1 million and $32.7 million as of December 31, 2021 and 2020, respectively.
At December 31, 2021 and 2020, the Company had Core and Fund letters of credit outstanding of $19.7 million and $35.6 million, respectively. The Company has not recorded any obligation associated with these letters of credit. The majority of the letters of credit are collateral for existing indebtedness and other obligations of the Company.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Shareholders’ Equity, Noncontrolling Interests and Other Comprehensive Loss
Common Shares and Units
In addition to the ATM Program activity discussed below, the Company completed the following transactions in its Common Shares during the year ended December 31, 2021:
•The Company withheld 3,050 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.
•The Company recognized Common Share and Common OP Unit-based compensation expense totaling $9.4 million in connection with Restricted Shares and Units (Note 14).
In addition to the ATM Program and share repurchase activity discussed below, the Company completed the following transactions in its Common Shares during the year ended December 31, 2020:
•The Company withheld 2,075 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.
•The Company recognized Common Share and Common OP Unit-based compensation expense totaling $8.4 million in connection with Restricted Shares and Units (Note 14).
ATM Program
The Company has an at-the-market equity issuance program (“ATM Program”) which provides the Company an efficient and low-cost vehicle for raising public equity to fund its capital needs. The Company entered into its current $250.0 million ATM Program (which replaced its prior program) in the second quarter of 2019 and also added an optional “forward purchase” component. The Company has not issued any shares on a forward basis during the year ended December 31, 2021 or 2020. During the year ended December 31, 2021 the Company sold 2,889,371 Common Shares under its ATM Program for gross proceeds of $64.9 million, or $63.9 million net of issuance costs, at a weighted-average gross price per share of $22.46. During the year ended December 31, 2019, the Company sold 5,164,055 Common Shares under its ATM Program for gross proceeds of $147.7 million, or $145.5 million net of issuance costs, at a weighted-average gross price per share of $28.61. During the year ended December 31, 2020, the Company did not sell any Common Shares under its ATM Program. Refer to Note 18 for additional sales under the ATM program.
Share Repurchase Program
During 2018, the Company’s board of trustees (the “Board”) approved a new share repurchase program, which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program does not obligate the Company to repurchase any specific number of Common Shares and may be discontinued or extended at any time. The Company did not repurchase any shares during the year ended December 31, 2021. During the first quarter of 2020, the Company repurchased 1,219,065 Common Shares for $22.4 million, inclusive of $0.1 million of fees, at a weighted average price per share of $18.29, under the share repurchase program, under which $122.6 million remains available at December 31, 2021.
Dividends and Distributions
The following table sets forth the distributions declared and/or paid during the periods presented:
Date Declared
Amount Per Share
Record Date
Payment Date
November 5, 2019
$
0.29
December 31, 2019
January 15, 2020
February 26, 2020
$
0.29
March 31, 2020
April 15, 2020
March 15, 2021
$
0.15
March 31, 2021
April 15, 2021
May 5, 2021
$
0.15
June 30, 2021
July 15, 2021
August 5, 2021
$
0.15
September 30, 2021
October 15, 2021
November 3, 2021
$
0.15
December 31, 2021
January 14, 2022
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Beginning with the second quarter of 2020, the Board temporarily suspended distributions on its Common Shares and Common OP Units, which suspension the Board determined to continue through the fourth quarter of 2020; however, distributions of $0.1 million were payable to preferred unit holders at each of June 30, 2020, September 30, 2020 and December 31, 2020.
Accumulated Other Comprehensive Loss
The following tables set forth the activity in accumulated other comprehensive loss for the years ended December 31, 2021, 2020 and 2019 (in thousands):
Acadia's Share
Balance at January 1, 2021
$
(74,891
)
Other comprehensive income before reclassifications - swap agreements
30,500
Reclassification of realized interest on swap agreements
21,407
Net current period other comprehensive income
51,907
Net current period other comprehensive income attributable to noncontrolling
interests
(13,230
)
Balance at December 31, 2021
$
(36,214
)
Balance at January 1, 2020
$
(31,474
)
Other comprehensive loss before reclassifications - swap agreements
(73,686
)
Reclassification of realized interest on swap agreements
15,059
Net current period other comprehensive loss
(58,627
)
Net current period other comprehensive loss attributable to noncontrolling
interests
15,210
Balance at December 31, 2020
$
(74,891
)
Balance at January 1, 2019
$
Other comprehensive loss before reclassifications
(35,883
)
Reclassification of realized interest on swap agreements
(870
)
Net current period other comprehensive loss
(36,753
)
Net current period other comprehensive income attributable to noncontrolling
interests
4,763
Balance at December 31, 2019
$
(31,474
)
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Noncontrolling Interests
The following tables summarize the change in the noncontrolling interests for the years ended December 31, 2021, 2020 and 2019 (dollars in thousands):
Noncontrolling
Interests in
Operating
Partnership (a)
Noncontrolling
Interests in
Partially-Owned
Affiliates (b)
Total
Balance at January 1, 2021
$
89,431
$
519,734
$
609,165
Distributions declared of $0.60 per Common OP Unit and distributions on Preferred OP Units
(4,185
)
-
(4,185
)
Net income for the year ended December 31, 2021
2,075
2,482
Conversion of 89,765 Common OP Units to Common Shares by limited partners of the Operating Partnership
(1,431
)
-
(1,431
)
Cancellation of OP Units (c)
(568
)
-
(568
)
Other comprehensive income - unrealized gain on valuation of swap agreements
2,072
3,918
5,990
Reclassification of realized interest expense on swap agreements
7,030
7,240
Noncontrolling interest contributions
-
30,164
30,164
Noncontrolling interest distributions
-
(27,051
)
(27,051
)
Employee Long-term Incentive Plan Unit Awards
11,284
-
11,284
Reallocation of noncontrolling interests (d)
(4,768
)
-
(4,768
)
Balance at December 31, 2021
$
94,120
$
534,202
$
628,322
Balance at January 1, 2020
$
97,670
$
548,769
$
646,439
Distributions declared of $0.29 per Common OP Unit
(2,218
)
-
(2,218
)
Net income (loss) for the year ended December 31, 2020
(56,867
)
(56,742
)
Conversion of 407,594 Common OP Units to Common Shares by limited partners of the Operating Partnership
(6,544
)
-
(6,544
)
Other comprehensive loss - unrealized loss on valuation of swap agreements
(2,709
)
(17,995
)
(20,704
)
Reclassification of realized interest expense on swap agreements
5,320
5,494
Noncontrolling interest contributions
-
52,174
52,174
Noncontrolling interest distributions
-
(27,574
)
(27,574
)
Employee Long-term Incentive Plan Unit Awards
10,130
-
10,130
Reallocation of noncontrolling interests (d)
(7,197
)
-
(7,197
)
Acquisition of noncontrolling interest
-
15,918
15,918
Cumulative effect of change in accounting principle
-
(11
)
(11
)
Balance at December 31, 2020
$
89,431
$
519,734
$
609,165
Balance at January 1, 2019
$
104,223
$
519,759
$
623,982
Distributions declared of $1.13 per Common OP Unit
(7,124
)
-
(7,124
)
Net income (loss) for the year ended December 31, 2019
3,836
(34,319
)
(30,483
)
Conversion of 307,663 Common OP Units to Common Shares by limited partners of the Operating Partnership
(5,104
)
-
(5,104
)
Other comprehensive loss - unrealized loss on valuation of swap agreements
(1,899
)
(2,946
)
(4,845
)
Reclassification of realized interest (income) expense on swap agreements
(62
)
Noncontrolling interest contributions
-
161,365
161,365
Noncontrolling interest distributions
-
(94,283
)
(94,283
)
Employee Long-term Incentive Plan Unit Awards
9,460
-
9,460
Rebalancing adjustment (c)
(6,611
)
-
(6,611
)
Balance at December 31, 2019
$
96,719
$
549,720
$
646,439
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
a)Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ 3,076,849, 3,101,958, and 3,250,603 Common OP Units at December 31, 2021, 2020 and 2019, respectively; (ii) 188 Series A Preferred OP Units at December 31, 2021, 2020 and 2019; (iii) 126,593 Series C Preferred OP Units at December 31, 2021 and 2020, and 136,593 at December 31, 2019; and (iv) 3,371,296, 2,886,207, and 2,673,484 LTIP units at December 31, 2021, 2020 and 2019, respectively, as discussed in Share Incentive Plan (Note 14). Distributions declared for Preferred OP Units are reflected in net income (loss) in the table above.
b)Noncontrolling interests in partially-owned affiliates comprise third-party interests in Funds II, III, IV and V, and Mervyns II, and five other subsidiaries.
c)Adjustment reflects the difference between the fair value of the consideration received or paid and the book value of the Common Shares, Common OP Units, Preferred OP Units, and LTIP Units involving changes in ownership.
Preferred OP Units
There were no issuances of Preferred OP Units during the year ended December 31, 2021.
In 1999 the Operating Partnership issued 1,580 Series A Preferred OP Units in connection with the acquisition of a property, which have a stated value of $1,000 per unit, and are entitled to a preferred quarterly distribution of the greater of (i) $22.50 (9.00% annually) per Series A Preferred OP Unit or (ii) the quarterly distribution attributable to a Series A Preferred OP Unit if such unit was converted into a Common OP Unit. Through December 31, 2021, 1,392 Series A Preferred OP Units were converted into 185,600 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.
During 2016, the Operating Partnership issued 442,478 Common OP Units and 141,593 Series C Preferred OP Units to a third party to acquire Gotham Plaza (Note 5). The Series C Preferred OP Units have a value of $100.00 per unit and are entitled to a preferred quarterly distribution of $0.9375 per unit and are convertible into Common OP Units at a rate based on the share price at the time of conversion. If the share price is below $28.80 on the conversion date, each Series C Preferred OP Unit will be convertible into 3.4722 Common OP Units. If the share price is between $28.80 and $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into a number of Common OP Units equal to $100.00 divided by the closing share price. If the share price is above $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into 2.8409 Common OP Units. The Series C Preferred OP Units have a mandatory conversion date of December 31, 2025, at which time all units that have not been converted will automatically be converted into Common OP Units based on the same calculations. Through December 31, 2021, 15,000 Series C Preferred OP Units were converted into 51,887 Common OP Units and then into Common Shares.
12. Leases
Operating Leases
As Lessor
The Company is engaged in the operation of shopping centers and other retail properties that are either owned or, with respect to certain shopping centers, operated under long-term ground leases (see below) that expire at various dates through June 20, 2066, with renewal options. Space in the shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to sixty years and generally provide for additional rents based on certain operating expenses as well as tenants’ sales volumes. During the years ended December 31, 2021 and 2020, the Company earned $58.3 million and $57.1 million, respectively, in variable lease revenues, primarily for real estate taxes and common area maintenance charges, which are included in rental income in the consolidated statements of operations.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reserve Analysis
The activity for the reserves related to billed rents and straight-line rents (including those under specific operating leases where the collection of rents is assessed not to be probable) is as follows:
Year Ended December 31, 2021
Balance at
Beginning of
Period
Provision (Recovery), Net
Write-Offs
Balance at
End of Period
Allowance for credit loss - billed rents
$
30,170
$
(2,796
)
$
(3,788
)
$
23,586
Straight-line rent reserves
14,839
2,682
(2,636
)
14,885
Total - rents receivable
$
45,009
$
(114
)
$
(6,424
)
$
38,471
Year Ended December 31, 2020
Balance at
Beginning of
Period
Provision (Recovery), Net
Write-Offs
Balance at
End of Period
(As Restated)
(As Restated)
Allowance for credit loss - billed rents
$
6,669
$
24,569
$
(1,068
)
$
30,170
Straight-line rent reserves
4,739
21,871
(11,771
)
14,839
Total - rents receivable
$
11,408
$
46,440
$
(12,839
)
$
45,009
Tenant Settlement
On September 24, 2021, the Company entered into a conditional settlement agreement with its former tenant and lease guarantor at one of its Core properties for the payment by such former tenant and guarantor of a minimum of $5.4 million in accordance with a payment schedule set forth and subject to the terms in the conditional settlement agreement. The payments relate to tenant’s default under the lease and its subsequent termination by the Company. Given the inherent uncertainties involving collectability, the Company has only recognized $0.3 million in its consolidated financial statements and the remaining amount will be recognized when realized.
As Lessee
During the year ended December 31, 2021, the Company:
•modified its Rye, New York corporate office lease during the first quarter of 2021. As a result of the modification, the lease was remeasured, and the lease liability and right-of-use asset were each reduced by $0.4 million.
•terminated its Fund IV lease at 110 University Place in New York City during the second quarter of 2021 (which was previously impaired in 2020, Note 9) for $3.6 million, and de-recognized the related right-of-use asset of $31.4 million, lease liability of $46.0 million and building improvements and other assets totaling $10.3 million, resulting in a gain on lease termination of $0.7 million, or $0.2 million at the Company's share, which is reflected within Gain on disposition of properties in the consolidated statements of operations
During the year ended December 31, 2020, the Company:
•entered into one new office lease as lessee for which the lease commenced in the third quarter of 2020. The Company recorded a right-of-use asset and corresponding lease liability of $1.7 million
•modified its 991 Madison master lease by converting the 49-year fixed term to a 15-year term. As a result of the modification, the lease was reclassified from a finance lease to an operating lease during the second quarter of 2020
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
•consolidated one property within the BSP II portfolio, 102 E. Broughton, (Note 3, Note 5), which was subject to a ground lease classified as an operating lease, during the second quarter of 2020
•recorded an impairment charge of $12.3 million on a right-of-use asset for a Fund IV property, 110 University Place (Note 9)
•renewed one ground lease for Branch Plaza, an operating lease, for 22 years; and
•modified its 1238 Wisconsin lease agreement for a reduced purchase price from $14.5 million to $11.5 million. As a result, remeasured and reduced its right-of-use asset and lease liability by $1.9 million in the fourth quarter of 2020.
Additional disclosures regarding the Company’s leases as lessee are as follows:
Year Ended December 31,
Lease Cost
Finance lease cost:
Amortization of right-of-use assets
$
$
1,595
Interest on lease liabilities
1,635
Subtotal
1,291
3,230
Operating lease cost
7,184
7,661
Variable lease cost
Total lease cost
$
8,559
$
11,034
Other Information
Weighted-average remaining lease term - finance leases (years)
32.6
33.4
Weighted-average remaining lease term - operating leases (years)
14.1
26.4
Weighted-average discount rate - finance leases
6.3
%
6.2
%
Weighted-average discount rate - operating leases
5.1
%
5.6
%
Right-of-use assets are included in Operating real estate (Note 3) in the consolidated balance sheet. Lease liabilities are included in Accounts payable and other liabilities in the consolidated balance sheet (Note 6). Operating lease cost comprises amortization of right-of-use assets for operating properties (related to ground rents) or amortization of right-of-use assets for office and corporate assets and is included in Property operating expense or General and administrative expense, respectively, in the consolidated statements of operations. Finance lease cost comprises amortization of right-of-use assets for certain ground leases, which is included in Property operating expense, as well as interest on lease liabilities, which is included in Interest expense in the consolidated statements of operations.
Lease Obligations
The scheduled future minimum (i) rental revenues from rental properties under the terms of non-cancelable tenant leases greater than one year (assuming no new or renegotiated leases or option extensions for such premises) and (ii) rental payments under the terms of all non-cancelable operating and finance leases in which the Company is the lessee, principally for office space, land and equipment, as of December 31, 2021, are summarized as follows (in thousands):
Minimum Rental Payments
Year Ending December 31,
Minimum Rental
Revenues (a)
Operating Leases (b)
Finance
Leases (b)
$
211,660
$
5,368
$
202,890
5,389
-
178,050
5,414
-
146,624
5,329
-
118,052
5,173
-
Thereafter
480,093
24,434
12,515
1,337,369
51,107
12,549
Interest
-
(12,348
)
(5,937
)
Total
$
1,337,369
$
38,759
$
6,612
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
a)Amount represents contractual lease maturities at December 31, 2021 including any extension options that management determined were reasonably certain of exercise. During the end of March 2020, numerous tenants were forced to suspend operations by government mandate as a result of the COVID-19 Pandemic. The Company has negotiated payment agreements with selected tenants which resulted in rent concessions or deferral of rents as discussed further below.
b)Minimum rental payments include $18.3 million of interest related to operating leases and $5.9 million related to finance leases and exclude options or renewals not reasonably certain of exercise.
During the years ended December 31, 2021, 2020 and 2019, no single tenant or property collectively comprised more than 10% of the Company’s consolidated total revenues.
COVID-19 Pandemic Impacts
Beginning in March 2020, the COVID-19 Pandemic has had a material adverse impact on economic and market conditions, and consumer activity, and triggered a period of global and domestic economic slowdown. The COVID-19 Pandemic and government responses created disruption in global supply chains and has been adversely impacting many industries, including the domestic retail sectors in which the Company’s tenants operate. Under governmental restrictions and guidance, certain retailers were considered “essential businesses” and were permitted to remain fully operating during the COVID-19 Pandemic, while other “non-essential businesses” were ordered to decrease or close operations for an indeterminate period of time to protect their employees and customers from the spread of the virus. These disruptions, which have substantially ceased as of the date of these financial statements, have impacted the collectability of rent from the Company’s affected tenants primarily in 2020 and to a lesser extent in 2021. While the Company considers disruptions related to the COVID-19 Pandemic to be substantially over, if such government mandated closures are reinstated, they may have a material, adverse effect on the Company’s revenues, results of operations, financial condition, and liquidity in future periods.
Rent Collections - The Company collected or negotiated payment agreements of approximately 98% and 94% of its fourth quarter 2021 pre-COVID billings (original contract rents without regard to deferral or abatement agreements) for its Core Portfolio and the Funds, respectively. Fourth quarter 2020 rent collections were 91% and 82% for its Core Portfolio and the Funds, respectively, at December 31, 2020.
Earnings Impact - The total impact of the COVID-19 Pandemic on earnings was $16.3 million, or $8.6 million at the Company's pro rata share, for the year ended December 31, 2021 compared to $134.0 million, or $53.1 million at the Company's pro rata share, for the year ended December 31, 2020. The Company incurred aggregate credit losses and rent abatements totaling approximately $6.4 million, or $6.3 million at the Company's pro rata share, for the year ended December 31, 2021, compared to $48.4 million, or $32.5 million at the Company's pro rata share, for the year ended December 31, 2020, respectively, primarily related to the COVID-19 Pandemic. In addition, the Company incurred impairment charges of $9.9 million, or $2.3 million at the Company's pro rata share, for the year ended December 31, 2021 compared to $85.6 million, or $20.6 million at the Company's pro rata share, for the year ended December 31, 2020 primarily related to the COVID-19 Pandemic (Note 9).
Other Impacts
•Rent Concession Agreements - During the year ended December 31, 2021, the Company executed 96 rent concession arrangements with tenants comprised of 18 agreements for rent deferral and 78 agreements for rent abatements. Of these deferral agreements, 16 were accounted for as if no changes to the contract were made and therefore there were no changes to the current or future recognition of revenue and $5.4 million and $10.6 million of deferred receivables are included in Rents receivable in the consolidated balance sheet at December 31, 2021 and 2020, respectively. Rent abatements represented a $6.5 million, or $4.3 million at the Company's pro rata share, reduction in revenues for the year ended December 31, 2021 compared to $1.9 million, or $2.6 million at the Company's pro rata share, for the year ended December 31, 2020. Results for 2020 reflect the impact of 288 rent concession agreements including 60 abatements and 226 deferrals.
•Occupancy (Unaudited) - At December 31, 2021, the Company’s pro rata Core and Fund leased occupancy rates were 93.2% and 91.4%, respectively, compared to 90.9% and 88.3% respectively, at December 31, 2020 reflecting primarily recovery since the COVID-19 Pandemic in 2020.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Segmen t Reporting
The Company has three reportable segments: Core Portfolio, Funds and Structured Financing. The Company’s Core Portfolio consists primarily of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas with a long-term investment horizon. The Company’s Funds hold primarily retail real estate in which the Company co-invests with high-quality institutional investors. The Company’s Structured Financing segment consists of earnings and expenses related to notes and mortgages receivable which are held within the Core Portfolio or the Funds (Note 4). Fees earned by the Company as the general partner or managing member of the Funds are eliminated in the Company’s consolidated financial statements and are not presented in the Company’s segments.
The following tables set forth certain segment information for the Company (in thousands):
As of or for the Year Ended December 31, 2021
Core
Portfolio
Funds
Structured
Financing
Unallocated
Total
Revenues
$
181,332
$
111,165
$
-
$
-
$
292,497
Depreciation and amortization
(69,103
)
(54,336
)
-
-
(123,439
)
Property operating expenses, other operating and real estate taxes
(56,957
)
(41,916
)
-
-
(98,873
)
General and administrative expenses
-
-
-
(40,125
)
(40,125
)
Impairment charges
-
(9,925
)
-
-
(9,925
)
Gain on disposition of properties
4,612
5,909
-
-
10,521
Operating income
59,884
10,897
-
(40,125
)
30,656
Interest income
-
-
9,065
-
9,065
Equity in earnings of unconsolidated affiliates
inclusive of gains on disposition of properties
4,977
-
-
5,330
Interest expense
(29,454
)
(38,594
)
-
-
(68,048
)
Realized and unrealized holding gains on investments and other
-
53,654
(4,534
)
-
49,120
Income tax provision
-
-
-
(93
)
(93
)
Net income
30,783
30,934
4,531
(40,218
)
26,030
Net income attributable to noncontrolling interests
(2,276
)
(206
)
-
-
(2,482
)
Net income attributable to Acadia
$
28,507
$
30,728
$
4,531
$
(40,218
)
$
23,548
Real estate at cost (a)
$
2,356,645
$
1,714,962
$
-
$
-
$
4,071,607
Total Assets (a)
$
2,212,877
$
1,894,983
$
153,886
$
-
$
4,261,746
Cash paid for acquisition of real estate
$
26,176
$
135,670
$
-
$
-
$
161,846
Cash paid for development and property improvement costs
$
13,625
$
27,046
$
-
$
-
$
40,671
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of or for the Year Ended December 31, 2020 As Restated
Core
Portfolio
Funds
Structured
Financing
Unallocated
Total
Revenues
$
160,262
$
90,646
$
-
$
-
$
250,908
Depreciation and amortization
(76,125
)
(71,104
)
-
-
(147,229
)
Property operating expenses, other operating and real estate taxes
(57,246
)
(40,782
)
-
-
(98,028
)
General and administrative expenses
-
-
-
(35,798
)
(35,798
)
Impairment charges
(419
)
(85,179
)
-
-
(85,598
)
Gain on disposition of properties
-
-
Operating income (loss)
26,646
(105,910
)
-
(35,798
)
(115,062
)
Interest income
-
-
8,979
-
8,979
Equity in losses of unconsolidated affiliates
inclusive of gains on disposition of properties
(874
)
(2,183
)
-
-
(3,057
)
Interest expense
(33,185
)
(36,486
)
-
-
(69,671
)
Realized and unrealized holding gains on investments and other
18,564
95,366
(568
)
-
113,362
Income tax provision
-
-
-
(269
)
(269
)
Net income (loss)
11,151
(49,213
)
8,411
(36,067
)
(65,718
)
Net (income) loss attributable to noncontrolling interests
(5,837
)
62,579
-
-
56,742
Net income (loss) attributable to Acadia
$
5,314
$
13,366
$
8,411
$
(36,067
)
$
(8,976
)
Real estate at cost (a)
$
2,330,116
$
1,681,210
$
-
$
-
$
4,011,326
Total Assets (a)
$
2,254,680
$
1,775,507
$
100,882
$
-
$
4,131,069
Cash paid for acquisition of real estate
$
19,963
$
1,245
$
-
$
-
$
21,208
Cash paid for development and property improvement costs
$
11,170
$
25,409
$
-
$
-
$
36,579
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of or for the Year Ended December 31, 2019 As Restated
Core
Portfolio
Funds
Structured
Financing
Unallocated
Total
Revenues
$
173,177
$
116,408
$
-
$
-
$
289,585
Depreciation and amortization
(61,819
)
(60,761
)
-
-
(122,580
)
Property operating expenses, other operating and real estate taxes
(47,032
)
(41,199
)
-
-
(88,231
)
General and administrative expenses
-
-
-
(34,299
)
(34,299
)
Impairment charges
-
(1,721
)
-
-
(1,721
)
Gain on disposition of properties
16,771
13,553
-
-
30,324
Operating income
81,097
26,280
-
(34,299
)
73,078
Interest income
-
-
7,988
-
7,988
Equity in earnings (loss) of unconsolidated affiliates
inclusive of gains on disposition of properties
9,020
(3,121
)
-
-
5,899
Interest expense
(28,304
)
(40,909
)
-
-
(69,213
)
Realized and unrealized holding gains on investments and other
6,620
-
-
6,947
Income tax provision
-
-
-
(1,465
)
(1,465
)
Net income (loss)
62,140
(11,130
)
7,988
(35,764
)
23,234
Net loss attributable to noncontrolling interests
30,146
-
-
30,483
Net income attributable to Acadia
$
62,477
$
19,016
$
7,988
$
(35,764
)
$
53,717
Real estate at cost
$
2,252,230
$
1,708,181
$
-
$
-
$
3,960,411
Total Assets
$
2,350,833
$
1,785,919
$
114,943
$
-
$
4,251,695
Cash paid for acquisition of real estate and leasehold interest
$
173,892
$
184,812
$
-
$
-
$
358,704
Cash paid for development and property improvement costs
$
22,724
$
66,661
$
-
$
-
$
89,385
a)Real estate at cost and total assets for the Funds segment include $657.0 million and $641.7 million, or $190.9 million and $186.5 million net of non-controlling interests, related to Fund II’s City Point property at December 31, 2021 and 2020, respectively.
14. Share Incentive and Other Compensation
Share Incentive Plan
On March 23, 2020, the Company’s Board approved the 2020 Share Incentive Plan (the “2020 Plan”), which increased the aggregate number of Common Shares authorized for issuance by 2,650,000 shares. The 2020 Plan authorizes the Company to issue options, Restricted Shares, LTIP Units and other securities (collectively “Awards”) to, among others, the Company’s officers, trustees and employees. At December 31, 2021 a total of 1,911,558 shares remained available to be issued under the Share Incentive Plan.
Restricted Shares and LTIP Units
During the year ended December 31, 2021, the Company issued 636,646 LTIP Units and 11,244 restricted share units (“Restricted Share Units”) to employees of the Company pursuant to the Share Incentive Plan. Certain of these equity awards were granted in performance-based Restricted Share Units or LTIP Units with market conditions as described below (“2020 Performance Shares”). These awards were measured at their fair value on the grant date, incorporating the following factors:
•A portion of these annual equity awards is granted in performance-based Restricted Share Units or LTIP Units that may be earned based on the Company’s attainment of specified relative total shareholder returns (“Relative TSR”) hurdles.
•In the event the Relative TSR percentile falls between the 25th percentile and the 50th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 50% and 100% and in the event that the Relative TSR percentile falls between the 50th percentile and 75th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 100% and 200%.
•Two-thirds (2/3) of the performance-based LTIP Units will vest based on the Company’s total shareholder return (“TSR”) for the three -year forward-looking performance period relative to the constituents of the SNL U.S. REIT Retail Shopping Center Index and
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
one-third (1/3) on the Company’s TSR for the three-year forward-looking performance period as compared to the constituents of the SNL U.S. REIT Retail Index (both on a non-weighted basis).
•If the Company’s performance fails to achieve the aforementioned hurdles at the culmination of the three-year performance period, all performance-based shares will be forfeited. Any earned performance-based shares vest 60% at the end of the performance period, with the remaining 40% of shares vesting ratably over the next two years.
For valuation of the 2021 and 2020 Performance Shares, a Monte Carlo simulation was used to estimate the fair values based on probability of satisfying the market conditions and the projected share prices at the time of payments, discounted to the valuation dates over the three-year performance periods. The assumptions include volatility (48.0% and 21.0%) and risk-free interest rates of (0.2% and 1.4%) for 2021 and 2020, respectively. The total value of the 2021 and 2020 Performance Shares will be expensed over the vesting period regardless of the Company’s performance.
The total value of the above Restricted Share Units and LTIP Units as of the grant date was $12.6 million. Total long-term incentive compensation expense, including the expense related to the Share Incentive Plan, was $9.4 million, $8.4 million and $8.8 million for the years ended December 31, 2021, 2020, and 2019, respectively and is recorded in General and Administrative on the Consolidated Statements of Operations.
In addition, members of the Board have been issued shares and units under the Share Incentive Plan. During 2021, the Company issued 30,321 LTIP Units and 30,592 Restricted Shares to Trustees of the Company in connection with Trustee fees. A portion of LTIP Units and Restricted Shares vest over three years with 33% vesting May 9, 2022 and the remaining amount vesting ratably on May 9, 2023 and May 9, 2024. The remaining awards vest on May 9, 2022. 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. Total trustee fee expense, including the expense related to the Share Incentive Plan, was $1.6 million for the year ended December 31, 2021 and $1.4 million for 2020 and 2019, respectively.
In 2009, the Company adopted the Long-Term Investment Alignment Program (the “Program”) pursuant to which the Company may grant awards to employees, entitling them to receive up to 25% of any potential future payments of Promote to the Operating Partnership from Funds III, IV and V. As of December 31, 2021, the Company has granted such awards to employees representing 25% of the potential Promote payments from Fund III to the Operating Partnership and 23.1% of the potential Promote payments from Fund IV to the Operating Partnership and 8.4% of the potential Promote payments from Fund V to the Operating Partnership. Payments to senior executives under the Program require further Board approval at the time any potential payments are due pursuant to these grants. Compensation relating to these awards will be recognized in each reporting period in which Board approval is granted.
As payments to other employees are not subject to further Board approval, compensation relating to these awards will be recorded based on the estimated fair value at each reporting period in accordance with ASC Topic 718, Compensation - Stock Compensation. The awards in connection with Funds IV and V were determined to have no intrinsic value as of December 31, 2021.
The Company did not recognize any compensation expense for the years ended December 31, 2021, 2020, and 2019, related to the Program in connection with Fund III, Fund IV or Fund V.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the status of the Company’s unvested Restricted Shares and LTIP Units is presented below:
Unvested Restricted Shares and LTIP Units
Common
Restricted
Shares
Weighted
Grant-Date
Fair Value
LTIP Units
Weighted
Grant-Date
Fair Value
Unvested at January 1, 2019
38,455
$
22.44
891,886
$
26.87
Granted
25,359
28.56
350,726
32.75
Vested
(21,424
)
27.12
(290,753
)
29.30
Forfeited
-
-
(15,679
)
31.49
Unvested at December 31, 2019
42,390
23.73
936,180
28.24
Granted
66,824
13.70
440,829
19.64
Vested
(19,264
)
27.72
(250,241
)
30.44
Forfeited
(39
)
24.77
(3,879
)
24.67
Unvested at December 31, 2020
89,911
15.42
1,122,889
24.38
Granted
43,078
19.94
666,967
19.48
Vested
(43,084
)
16.85
(283,024
)
26.66
Forfeited
(159
)
36.22
(91,637
)
36.22
Unvested at December 31, 2021
89,746
$
16.87
1,415,195
$
20.85
The weighted-average grant date fair value for Restricted Shares and LTIP Units granted for the years ended December 31, 2021 and 2020 were $19.51 and $18.86, respectively. As of December 31, 2021, there was $16.9 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Share Incentive Plan. That cost is expected to be recognized over a weighted-average period of 1.5 years. The total fair value of Restricted Shares that vested for the years ended December 31, 2021 and 2020, was $0.8 million and $0.5 million, respectively. The total fair value of LTIP Units that vested (LTIP units vest primarily in the first quarter) during the years ended December 31, 2021 and 2020, was $7.5 million and $7.6 million, respectively.
Other Plans
On a combined basis, the Company incurred a total of $0.4 million, $0.3 million and $0.3 million of compensation expense related to the following employee benefit plans for the years ended December 31, 2021, 2020 and 2019, respectively:
Employee Share Purchase Plan
The Acadia Realty Trust Employee Share Purchase Plan (the “Purchase Plan”) allows eligible employees of the Company to purchase Common Shares through payroll deductions. The Purchase Plan provides for employees to purchase Common Shares on a quarterly basis at a 15% discount to the closing price of the Company’s Common Shares on either the first day or the last day of the quarter, whichever is lower. A participant may not purchase more than $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. On March 23, 2021, the Board adopted, which was subsequently approved by the Company’s shareholders at the 2021 annual meeting of shareholders, the Acadia Realty Trust 2021 Employee Share Purchase Plan which allows for a maximum aggregate issuance of 200,000 Common Shares. A total of 7,721 and 5,266 Common Shares were purchased by employees under the Purchase Plan for the years ended December 31, 2021 and 2020, respectively.
Deferred Share Plan
During 2006, the Company adopted a Trustee Deferral and Distribution Election, under which the participating Trustees earn deferred compensation.
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, up to $19,500, for the year ended December 31, 2021.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Federal Inc ome Taxes
The Company has elected to qualify as a REIT in accordance with Sections 856 through 860 of 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, 2021, 2020 and 2019, 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 TRS’s is subject to Federal, state and local income taxes. No more than 20% of the value of our total assets may consist of the securities of one or more TRS.
In the normal course of business, the Company or one or more of its subsidiaries is subject to examination by Federal, state and local jurisdictions, in which it operates, where applicable. The Company expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense. For the three years ended December 31, 2021, the Company recognized no material adjustments regarding its tax accounting treatment for uncertain tax provisions. As of December 31, 2021, the tax years that remain subject to examination by the major tax jurisdictions under applicable statutes of limitations are generally the year 2018 and forward.
Reconciliation of Net Income to Taxable Income
Reconciliation of GAAP net income attributable to Acadia to taxable income (loss) is as follows:
Year Ended December 31,
(in thousands)
(As Restated)
(As Restated)
Net income (loss) attributable to Acadia
$
23,548
$
(8,976
)
$
53,717
Deferred rental and other income (loss) (a)
3,209
(2,498
)
1,203
Book/tax difference - depreciation and amortization (a)
24,756
27,052
21,688
Straight-line rent and above- and below-market rent adjustments (a)
(8,588
)
8,630
(10,949
)
Book/tax differences - equity-based compensation
7,663
6,825
7,177
Joint venture equity in earnings, net (a)
3,962
(163
)
15,571
Impairment charges and reserves
2,657
18,734
-
Acquisition costs (a)
Gain on disposition of properties
(2,170
)
4,936
2,375
Book/tax differences - miscellaneous
(1,203
)
(36
)
(2,145
)
Taxable income
$
53,856
$
54,518
$
88,700
Distributions declared (b)
$
52,872
$
24,937
$
96,310
a)Adjustments from certain subsidiaries and affiliates, which are consolidated for financial reporting but not for tax reporting, are included in the reconciliation item “Joint venture equity in earnings, net.”
b)The entire fourth quarter 2021 dividend of $14.4 million (paid in January 2022) was attributed to 2021. Any additional distributions required for REIT qualification may be made through October 15, 2022. The entire fourth quarter 2019 dividend of $25.2 million (paid in January 2020) was attributed to 2020.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Characterization of Distributions
The Company has determined that the cash distributed to the shareholders for the periods presented is characterized as follows for Federal income tax purposes:
Year Ended December 31,
Per Share
%
Per Share
%
Per Share
%
Ordinary income - Non-Section 199A
$
-
-
%
$
-
-
%
$
-
-
%
Ordinary income - Section 199A
0.550
%
0.520
%
0.820
%
Qualified dividend
0.010
%
-
-
%
-
-
%
Capital gain
0.040
%
0.060
%
0.240
%
Total (a)
$
0.600
%
$
0.580
%
$
1.060
%
a)The fourth quarter 2021 regular dividend was $0.15 per common share, all of which is allocable to 2021. The fourth quarter 2019 regular dividend was $0.29 per common share, all of which is allocable to 2020.
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 (loss) and provision for income taxes associated with the TRS for the periods presented are summarized as follows (in thousands):
Year Ended December 31,
(As Restated)
(As Restated)
TRS loss before income taxes
$
(4,240
)
$
(3,856
)
$
(3,117
)
(Provision) benefit for income taxes:
Federal
-
State and local
-
(268
)
TRS net loss before noncontrolling interests
(4,240
)
(3,748
)
(2,046
)
Noncontrolling interests
(369
)
TRS net loss
$
(4,231
)
$
(3,002
)
$
(2,415
)
The income tax provision for the Company differs from the amount computed by applying the statutory Federal income tax rate to income (loss) before income taxes as follows. Amounts are not adjusted for temporary book/tax differences (in thousands):
Year Ended December 31,
(As Restated)
(As Restated)
Federal tax benefit at statutory tax rate
$
(890
)
$
(810
)
$
(655
)
TRS state and local taxes, net of Federal benefit
(268
)
(244
)
(197
)
Tax effect of:
Permanent differences, net
Adjustment to deferred tax reserve
1,061
1,748
Other
(156
)
(132
)
(111
)
REIT state and local income and franchise taxes
Total provision for income taxes
$
$
$
1,465
As of December 31, 2021, and 2020, the Company’s deferred tax assets were $0.0 and $0.0 million net of applicable reserves of $3.7 million and $2.6 million, respectively and were comprised of capital loss carryovers of $0.1 and $0.1 million and net operating loss carryovers of $3.6 million and $2.5 million, respectively.
Under GAAP a reduction of the carrying amounts of deferred tax assets by a valuation allowance is required, if, based on the evidence available, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. During 2020, the Company determined that the realization of its deferred tax assets was not likely and as such, the Company recorded a valuation allowance against its deferred tax assets of $0.9 million.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Earnings (Loss) Per Common Share
Basic earnings (loss) per Common Share is computed by dividing net income (loss) attributable to Common Shareholders by the weighted average Common Shares outstanding (Note 11). During the periods presented, the Company had unvested LTIP Units which provide for non-forfeitable rights to dividend equivalent payments. Accordingly, these unvested LTIP Units are considered participating securities and are included in the computation of basic earnings per Common Share pursuant to the two-class method.
Diluted earnings per Common Share reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including the effects of Restricted Share Units issued under the Company’s Share Incentive Plans (Note 14). The effect of such shares is excluded from the calculation of earnings per share when anti-dilutive as indicated in the table below.
The effect of the conversion of Common OP Units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable for Common Shares on a one-for-one basis. The income allocable to such units is allocated on this same basis and reflected as noncontrolling interests in the 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.
Year Ended December 31,
(dollars in thousands)
Numerator:
(As Restated)
(As Restated)
Net income (loss) attributable to Acadia
$
23,548
$
(8,976
)
$
53,717
Less: net income attributable to participating securities
(624
)
(233
)
(413
)
Income (loss) from continuing operations net of income attributable to participating securities
$
22,924
$
(9,209
)
$
53,304
Denominator:
Weighted average shares for basic earnings (loss) per share
87,653,818
86,441,922
84,435,826
Effect of dilutive securities:
Employee unvested restricted shares
-
-
-
Denominator for diluted earnings per share
87,653,818
86,441,922
84,435,826
Basic income (loss) and diluted earnings per Common Share from continuing operations attributable to Acadia
$
0.26
$
(0.11
)
$
0.63
Anti-Dilutive Shares Excluded from Denominator:
Series A Preferred OP Units
Series A Preferred OP Units - Common share equivalent
25,067
25,067
25,067
Series C Preferred OP Units
126,593
126,593
136,593
Series C Preferred OP Units - Common share equivalent
439,556
439,556
474,278
Restricted shares
70,827
76,394
40,821
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Quarterly Financial Data (Unaudited)
As announced on February 15, 2022, the Company has restated its (i) audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 as illustrated in Note 2; and (ii) its unaudited interim financial statements for the three months ended March 31, 2021 and 2020, the three and six months ended June 30, 2021 and 2020, the three and nine months ended September 30, 2021 and 2020 and the three months ended December 31, 2020 as illustrated in this note; collectively referred to as the Restatement. Amounts depicted as "As Restated" throughout the accompanying consolidated financial statements and footnotes include the impact of the Restatement.
The Company identified two areas of restatement errors, which are depicted in the tables below and relate to one of the following categories:
(a)an error in accounting treatment at the time of formation related to the improper consolidation of the two Fund Investments that have been adjusted from consolidated investments to investments in unconsolidated affiliates (Note 5) with no impact on net income (loss) or distributions in excess of accumulated earnings. During the Restatement periods, the Fund Investments did not have any significant transactions (new borrowings, acquisitions, or dispositions) other than their ongoing rental operations in the normal course of business.
(b)errors related to other immaterial previously unrecorded adjustments, which were also recorded as part of the Restatement. These adjustments were primarily adjustments which the Company deemed immaterial in prior periods. The total impact of these adjustments was:
a.a reduction of net income attributable to Acadia of: $0.3 million ($0.01 per share) and $0.0 million ($0.00 per share), for the three months ended March 31, 2021 and 2020, respectively.
b.a reduction in net income attributable to Acadia of $0.2 million ($0.00 per share) and $0.5 million ($0.01 per share) for the three and six months ended June 30, 2021, respectively;
c.a reduction in net income attributable to Acadia of $0.1 million ($0.00 per share) and $0.1 million ($0.00 per share) for the three and six months ended June 30, 2020, respectively;
d.a reduction in net income attributable to Acadia of $0.1 million ($0.00 per share) and $0.6 million ($0.01 per share), for the three and nine months ended September 30, 2021, respectively;
e.a reduction in net income attributable to Acadia of $0.0 million ($0.00 per share) and $0.1 million ($0.00 per share), for the three and nine months ended September 30, 2020, respectively;
f.a reduction in net income attributable to Acadia of $0.1 million ($0.01 per share) for the three months ended December 31, 2020; and
g.The immaterial previously unrecorded adjustments include the recognition of additional reserves for one of the Company's notes receivable, 640 Broadway (Note 4) of $1.4 million or $0.3 million at the Company's share, for the three months ended March 31, 2021; $0.9 million and $2.3 million, or $0.2 million and $0.5 million at the Company's share for the three and six months ended June 30, 2021; and $0.8 million and $3.1 million, or $0.2 million and $0.7 million at the Company's share, for the three and nine months ended September 30, 2021.
(c)reclassifications of certain prior period amounts to conform to the current period presentation. Reclassifications have no impact on net income (loss) and do not relate to errors and are included here in order to conform the presentation across the periods presented.
a.On the statement of cash flows for the three months ended March 31, 2020: (i) Allowance for credit loss of $1.3 million and Adjustments to straight-line rent reserves of $3.0 million were reclassified from Credit loss reserves; (ii) Straight-line rents of ($1.1) million were reclassified from the change in Rents receivable and (iii) Non-cash lease expense of $0.6 million and the change in Lease liability - operating leases of ($0.4) million was reclassified from Development, construction and property improvement costs.
b.On the statement of cash flows for the six months ended June 30, 2020: (i) Allowance for credit loss of $9.7 million and Adjustments to straight-line rent reserves of $6.5 million were reclassified from Credit loss reserves; (ii) Straight-line rents of $2.9 million were reclassified from the change in Rents receivable and (iii) Non-cash lease expense of $1.4 million and the change in Lease liability - operating leases of ($0.8) million was reclassified from Development, construction and property improvement costs.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
c.On the statement of cash flows for the nine months ended September 30, 2020: (i) Allowance for credit loss of $20.5 million and Adjustments to straight-line rent reserves of $19.7 million were reclassified from Credit loss reserves; (ii) Straight-line rents of $4.0 million were reclassified from the change in Rents receivable and (iii) Non-cash lease expense of $2.4 million and the change in Lease liability - operating leases of ($1.0) million was reclassified from Development, construction and property improvement costs.
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
(dollars in thousands, except per share amounts, unaudited)
As Reported
Adjustments
As Restated
ASSETS
Investments in real estate, at cost
Operating real estate, net
$
3,331,043
$
(67,995
)
(a,b)
$
3,263,048
Real estate under development
237,831
(6
)
(a)
237,825
Net investments in real estate
3,568,874
(68,001
)
3,500,873
Notes receivable, net
173,159
-
173,159
Investments in and advances to unconsolidated affiliates
294,195
14,814
(a,b)
309,009
Other assets, net
179,043
(1,978
)
(a)
177,065
Right-of-use assets - operating leases, net
-
-
-
Cash and cash equivalents
23,404
(1,089
)
(a)
22,315
Restricted cash
14,212
(479
)
(a)
13,733
Rents receivable, net
52,251
1,431
(a,b)
53,682
Total assets
$
4,305,138
$
(55,302
)
$
4,249,836
LIABILITIES
Mortgage and other notes payable, net
$
1,170,622
$
(57,592
)
(a,b)
$
1,113,030
Unsecured notes payable, net
480,658
-
480,658
Unsecured line of credit
174,700
-
174,700
Accounts payable and other liabilities
425,330
(1,643
)
(a)
423,687
Lease liability - operating leases, net
-
-
-
Dividends and distributions payable
26,811
-
26,811
Distributions in excess of income from, and investments in, unconsolidated affiliates
15,457
-
15,457
Total liabilities
2,293,578
(59,235
)
2,234,343
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 85,989,836 shares
-
Additional paid-in capital
1,686,794
-
1,686,794
Accumulated other comprehensive loss
(85,715
)
(299
)
(b)
(86,014
)
Distributions in excess of accumulated earnings
(166,701
)
(49
)
(b)
(166,750
)
Total Acadia shareholders’ equity
1,434,464
(348
)
1,434,116
Noncontrolling interests
577,096
4,281
(a,b)
581,377
Total equity
2,011,560
3,933
2,015,493
Total liabilities and equity
$
4,305,138
$
(55,302
)
$
4,249,836
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2020
(in thousands except per share amounts, unaudited)
As Reported
Adjustments
As Restated
Revenues
Rental income
$
70,457
$
(a,b)
$
71,133
Other
(1
)
(a)
Total revenues
71,420
72,095
Operating expenses
Depreciation and amortization
33,377
(729
)
(a)
32,648
General and administrative
9,070
(9
)
(a)
9,061
Real estate taxes
10,447
(252
)
(a)
10,195
Property operating
13,320
(283
)
(a)
13,037
Impairment charges
51,549
-
51,549
Total operating expenses
117,763
(1,273
)
116,490
Gain on disposition of properties
-
-
-
Operating loss
(46,343
)
1,948
(44,395
)
Equity in earnings of unconsolidated affiliates
1,255
(368
)
(a)
Interest and other income
2,929
-
2,929
Realized and unrealized holding gains on investments and other
(530
)
-
(530
)
Interest expense
(18,302
)
(a,b)
(17,600
)
Loss from continuing operations before income taxes
(60,991
)
2,282
(58,709
)
Income tax benefit
(a)
Net loss
(60,039
)
2,284
(57,755
)
Net loss attributable to noncontrolling interests
51,625
(2,275
)
(a,b)
49,350
Net loss attributable to Acadia
$
(8,414
)
$
$
(8,405
)
Net income attributable to participating securities
$
-
$
-
$
-
Shares for basic loss per share
86,972
-
86,972
Basic loss per share
$
(0.10
)
$
-
$
(0.10
)
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2020
(in thousands, unaudited)
As Reported
Adjustments
As Restated
Net loss
$
(60,039
)
$
2,284
$
(57,755
)
Other comprehensive loss
Unrealized loss on valuation of swap agreements
(74,774
)
(a)
(74,535
)
Reclassification of realized interest on swap agreements
(15
)
(a)
Other comprehensive loss
(73,797
)
(73,573
)
Comprehensive loss
(133,836
)
2,508
(131,328
)
Comprehensive loss attributable to noncontrolling interests
70,882
(2,499
)
68,383
Comprehensive Loss attributable to Acadia
$
(62,954
)
$
$
(62,945
)
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Three Months Ended March 31, 2020
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts, unaudited)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2020
87,050
$
$
1,706,357
$
(31,175
)
$
(132,961
)
$
1,542,308
$
644,657
$
2,186,965
Cumulative effect of change in accounting principle
-
-
-
-
(389
)
(389
)
(11
)
(400
)
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
2,472
-
-
2,472
(2,472
)
-
Repurchase of Common Shares
(1,219
)
(1
)
(22,351
)
-
-
(22,352
)
-
(22,352
)
Dividends/distributions declared ($0.29 per Common Share/OP Unit)
-
-
-
-
(24,937
)
(24,937
)
(1,849
)
(26,786
)
Employee and trustee stock compensation, net
-
-
-
3,648
3,819
Noncontrolling interest distributions
-
-
-
-
-
-
(3,118
)
(3,118
)
Noncontrolling interest contributions
-
-
-
-
-
-
7,268
7,268
Comprehensive loss
-
-
-
(54,540
)
(8,414
)
(62,954
)
(70,882
)
(133,836
)
Reallocation of noncontrolling interests
-
-
-
-
(145
)
-
Balance at March 31, 2020
85,990
$
$
1,686,794
$
(85,715
)
$
(166,701
)
$
1,434,464
$
577,096
$
2,011,560
Adjustments
Balance at January 1, 2020
-
$
-
$
-
$
(299
)
$
(58
)
$
(357
)
$
1,782
$
1,425
Comprehensive loss
-
-
-
-
2,499
(a,b)
2,508
Total Adjustments
-
$
-
$
-
$
(299
)
$
(49
)
$
(348
)
$
4,281
$
3,933
As Restated
Balance at January 1, 2020 - As Restated
87,050
$
$
1,706,357
$
(31,474
)
$
(133,019
)
$
1,541,951
$
646,439
$
2,188,390
Cumulative effect of change in accounting principle
-
-
-
-
(389
)
(389
)
(11
)
(400
)
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
2,472
-
-
2,472
(2,472
)
-
Repurchase of Common Shares
(1,219
)
(1
)
(22,351
)
-
-
(22,352
)
-
(22,352
)
Dividends/distributions declared ($0.29 per Common Share/OP Unit)
-
-
-
-
(24,937
)
(24,937
)
(1,849
)
(26,786
)
Employee and trustee stock compensation, net
-
-
-
3,648
3,819
Noncontrolling interest distributions
-
-
-
-
-
-
(3,118
)
(3,118
)
Noncontrolling interest contributions
-
-
-
-
-
-
7,268
7,268
Comprehensive loss
-
-
-
(54,540
)
(8,405
)
(62,945
)
(68,383
)
(131,328
)
Reallocation of noncontrolling interests
-
-
-
-
(145
)
-
Balance at March 31, 2020 - As Restated
85,990
$
$
1,686,794
$
(86,014
)
$
(166,750
)
$
1,434,116
$
581,377
$
2,015,493
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2020
(in thousands, unaudited)
As Reported
Adjustments
As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(60,039
)
2,284
$
(57,755
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
33,377
(729
)
(a,b)
32,648
Straight-line rents
-
(1,094
)
(a,c)
(1,094
)
Non-cash lease expense
-
(c)
Distributions of operating income from unconsolidated affiliates
1,898
-
1,898
Equity in (earnings) losses of unconsolidated affiliates
(1,255
)
(a)
(887
)
Stock compensation expense
3,819
-
3,819
Amortization of financing costs
1,763
(42
)
(a,b)
1,721
Impairment charges
51,549
-
51,549
Credit loss reserves
4,770
(4,770
)
(c)
-
Allowance for credit loss
-
1,238
(a,c)
1,238
Adjustments to straight-line rent reserves
-
(b,c)
Other, net
(1,107
)
(a)
(1,106
)
Changes in assets and liabilities:
Other liabilities
(6,844
)
(a)
(6,722
)
Lease liability - operating leases
-
(376
)
(c)
(376
)
Prepaid expenses and other assets
2,107
(177
)
(a)
1,930
Rents receivable
2,457
(a,c)
2,481
Accounts payable and accrued expenses
(2,327
)
(a)
(2,303
)
Net cash provided by operating activities
27,735
28,627
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate
(19,088
)
-
(19,088
)
Development, construction and property improvement costs
(13,333
)
(a,c)
(12,844
)
Proceeds from the disposition of properties, net
-
-
-
Investments in and advances to unconsolidated affiliates and other
(1,525
)
(951
)
(b)
(2,476
)
Return of capital from unconsolidated affiliates and other
5,024
-
5,024
Issuance of notes receivable
(59,000
)
-
(59,000
)
Return of deposits for properties under contract
-
Payment of deferred leasing costs
(2,763
)
(17
)
(a)
(2,780
)
Change in control of previously unconsolidated affiliate
-
-
-
Net cash used in investing activities
(90,485
)
(479
)
(90,964
)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes
(1,488
)
-
(1,488
)
Principal payments on unsecured debt
(5,000
)
-
(5,000
)
Proceeds received on mortgage and other notes
-
Proceeds from unsecured debt
122,245
-
122,245
Payments of finance lease obligations
(625
)
-
(625
)
Proceeds from the sale (repurchase) of Common Shares
(22,352
)
-
(22,352
)
Capital contributions from noncontrolling interests
7,268
-
7,268
Distributions to noncontrolling interests
(4,914
)
-
(4,914
)
Dividends paid to Common Shareholders
(25,245
)
-
(25,245
)
Deferred financing and other costs
(222
)
-
(222
)
Net cash provided by financing activities
70,356
-
70,356
Increase in cash and restricted cash
7,606
8,019
Cash of $14,149 and restricted cash of $13,880 beginning of period
30,010
(1,981
)
28,029
Cash of $22,315 and restricted cash of $13,733 end of period
$
37,616
$
(1,568
)
$
36,048
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020
(dollars in thousands, except per share amounts, unaudited)
As Reported
Adjustments
As Restated
ASSETS
Investments in real estate, at cost
Operating real estate, net
$
3,368,557
$
(69,895
)
(a)
$
3,298,662
Real estate under development
264,684
(183
)
(a)
264,501
Net investments in real estate
3,633,241
(70,078
)
3,563,163
Notes receivable, net
134,692
-
134,692
Investments in and advances to unconsolidated affiliates
250,825
15,074
(a)
265,899
Other assets, net
196,741
(3,353
)
(a)
193,388
Right-of-use assets - operating leases, net
-
-
-
Cash and cash equivalents
34,273
(1,739
)
(a)
32,534
Restricted cash
14,074
(609
)
(a)
13,465
Rents receivable, net
64,902
(756
)
(a)
64,146
Total assets
$
4,328,748
$
(61,461
)
$
4,267,287
LIABILITIES
Mortgage and other notes payable, net
$
1,161,577
$
(58,622
)
(a,b)
$
1,102,955
Unsecured notes payable, net
472,507
-
472,507
Unsecured line of credit
177,400
-
177,400
Accounts payable and other liabilities
408,266
(4,953
)
(a)
403,313
Lease liability - operating leases, net
-
-
-
Dividends and distributions payable
-
Distributions in excess of income from, and investments in, unconsolidated affiliates
15,520
-
15,520
Total liabilities
2,235,417
(63,575
)
2,171,842
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,264,641 shares
-
Additional paid-in capital
1,693,006
1,693,006
Accumulated other comprehensive loss
(90,209
)
-
(90,209
)
Distributions in excess of accumulated earnings
(147,291
)
(133
)
(147,424
)
Total Acadia shareholders’ equity
1,455,592
(133
)
1,455,459
Noncontrolling interests
637,739
2,247
(a)
639,986
Total equity
2,093,331
2,114
2,095,445
Total liabilities and equity
$
4,328,748
$
(61,461
)
$
4,267,287
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended June 30, 2020
Six Months Ended June 30, 2020
(in thousands except per share amounts, unaudited)
As Reported
Adjustments
As Restated
As Reported
Adjustments
As Restated
Revenues
Rental income
$
62,639
$
(3,218
)
(a,b)
$
59,421
$
133,096
$
(2,542
)
(a,b)
$
130,554
Other
1,134
(11
)
(a)
1,123
2,097
(12
)
(a)
2,085
Total revenues
63,773
(3,229
)
60,544
135,193
(2,554
)
132,639
Operating expenses
Depreciation and amortization
33,793
(416
)
(a,b)
33,377
67,170
(1,145
)
(a,b)
66,025
General and administrative
8,720
(38
)
(a)
8,682
17,790
(47
)
(a)
17,743
Real estate taxes
10,697
(252
)
(a)
10,445
21,144
(504
)
(a)
20,640
Property operating
16,806
(245
)
(a)
16,561
30,126
(528
)
(a)
29,598
Impairment charges
-
-
-
51,549
-
51,549
Total operating expenses
70,016
(951
)
69,065
187,779
(2,224
)
185,555
Gain on disposition of properties
-
-
Operating loss
(5,758
)
(2,278
)
(8,036
)
(52,101
)
(330
)
(52,431
)
Equity in losses of unconsolidated affiliates
(786
)
(394
)
(a)
(1,180
)
(762
)
(a)
(293
)
Interest and other income
2,095
-
2,095
5,024
-
5,024
Realized and unrealized holding gains on investments and other
87,811
-
87,811
87,281
-
87,281
Interest expense
(18,319
)
(a,b)
(17,748
)
(36,621
)
1,273
(a,b)
(35,348
)
Income from continuing operations before income taxes
65,043
(2,101
)
62,942
4,052
4,233
Income tax (provision) benefit
(137
)
-
(a)
(137
)
(a)
Net income
64,906
(2,101
)
62,805
4,867
5,050
Net (income) loss attributable to noncontrolling interests
(45,496
)
2,017
(a,b)
(43,479
)
6,129
(258
)
(a,b)
5,871
Net income attributable to Acadia
$
19,410
$
(84
)
$
19,326
$
10,996
$
(75
)
$
10,921
Net income attributable to participating securities
$
$
-
$
$
$
-
$
Shares for basic and diluted income per share
86,180
-
86,180
86,576
-
86,576
Basic and diluted income per share
$
0.22
$
-
$
0.22
$
0.12
$
-
$
0.12
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended June 30, 2020
Six Months Ended June 30, 2020
(in thousands, unaudited)
As Reported
Adjustments
As Restated
As Reported
Adjustments
As Restated
Net income
$
64,906
$
(2,101
)
$
62,805
$
4,867
$
$
5,050
Other comprehensive loss
Unrealized loss on valuation of swap agreements
(8,621
)
(a,b)
(8,309
)
(83,395
)
(a,b)
(82,844
)
Reclassification of realized interest on swap agreements
3,115
(30
)
(a)
3,085
4,092
(45
)
(a)
4,047
Other comprehensive loss
(5,506
)
(5,224
)
(79,303
)
(78,797
)
Comprehensive income (loss)
59,400
(1,819
)
57,581
(74,436
)
(73,747
)
Comprehensive (income) loss attributable to noncontrolling interests
(44,484
)
2,034
(42,450
)
26,398
(465
)
25,933
Comprehensive income (loss) attributable to Acadia
$
14,916
$
$
15,131
$
(48,038
)
$
$
(47,814
)
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Three Months Ended June 30, 2020
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts, unaudited)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at April 1, 2020
85,990
$
$
1,686,794
$
(85,715
)
$
(166,701
)
$
1,434,464
$
577,096
$
2,011,560
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
4,072
-
-
4,072
(4,072
)
-
Repurchase of Common Shares
-
-
(34
)
-
-
(34
)
-
(34
)
Acquisition of noncontrolling interest
-
-
-
-
-
-
Dividends/distributions declared ($0.00 Share per Common Share/OP Unit)
-
-
-
-
-
-
(123
)
(123
)
Employee and trustee stock compensation, net
-
-
-
2,142
2,317
Noncontrolling interest distributions
-
-
-
-
-
-
(1,418
)
(1,418
)
Noncontrolling interest contributions
-
-
-
-
-
-
21,041
21,041
Comprehensive (loss) income
-
-
-
(4,494
)
19,410
14,916
44,484
59,400
Reallocation of noncontrolling interests
-
-
1,999
-
-
1,999
(1,999
)
-
Balance at June 30, 2020
86,265
$
$
1,693,006
$
(90,209
)
$
(147,291
)
$
1,455,592
$
637,739
$
2,093,331
Adjustments
Balance at April 1, 2020
-
$
-
$
-
$
(299
)
$
(49
)
$
(348
)
$
4,281
$
3,933
Comprehensive income (loss)
-
-
-
(84
)
(2,034
)
(a,b)
(1,819
)
Total Adjustments
-
$
-
$
-
$
-
$
(133
)
$
(133
)
$
2,247
$
2,114
As Restated
Balance at April 1, 2020 - As Restated
85,990
$
$
1,686,794
$
(86,014
)
$
(166,750
)
$
1,434,116
$
581,377
$
2,015,493
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
4,072
-
-
4,072
(4,072
)
-
Repurchase of Common Shares
-
-
(34
)
-
-
(34
)
-
(34
)
Acquisition of noncontrolling interest
-
-
-
-
-
-
Dividends/distributions declared ($0.00 Share per Common Share/OP Unit)
-
-
-
-
-
-
(123
)
(123
)
Employee and trustee stock compensation, net
-
-
-
2,142
2,317
Noncontrolling interest distributions
-
-
-
-
-
-
(1,418
)
(1,418
)
Noncontrolling interest contributions
-
-
-
-
-
-
21,041
21,041
Comprehensive (loss) income
-
-
-
(4,195
)
19,326
15,131
42,450
57,581
Reallocation of noncontrolling interests
-
-
1,999
-
-
1,999
(1,999
)
-
Balance at June 30, 2020 - As Restated
86,265
$
$
1,693,006
$
(90,209
)
$
(147,424
)
$
1,455,459
$
639,986
$
2,095,445
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Six Months Ended June 30, 2020
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts, unaudited)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2020
87,050
1,706,357
(31,175
)
(132,961
)
$
1,542,308
644,657
$
2,186,965
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
6,544
-
-
6,544
(6,544
)
-
Repurchase of Common Shares
(1,219
)
(1
)
(22,385
)
-
-
(22,386
)
-
(22,386
)
Cumulative effect of change in accounting principle
-
-
-
-
(389
)
(389
)
(11
)
(400
)
Acquisition of noncontrolling interest
-
-
-
-
-
-
Dividends/distributions declared ($0.29 per Common Share/OP Unit)
-
-
-
-
(24,937
)
(24,937
)
(1,972
)
(26,909
)
Employee and trustee stock compensation, net
-
-
-
5,790
6,136
Noncontrolling interest distributions
-
-
-
-
-
-
(4,536
)
(4,536
)
Noncontrolling interest contributions
-
-
-
-
-
-
28,309
28,309
Comprehensive (loss) income
-
-
-
(59,034
)
10,996
(48,038
)
(26,398
)
(74,436
)
Reallocation of noncontrolling interests
-
-
2,144
-
-
2,144
(2,144
)
-
Balance at June 30, 2020
86,265
$
$
1,693,006
$
(90,209
)
$
(147,291
)
$
1,455,592
$
637,739
$
2,093,331
Adjustments
Balance at January 1, 2020
-
$
-
$
-
$
(299
)
$
(58
)
$
(357
)
$
1,782
$
1,425
Comprehensive (loss) income
-
-
-
(75
)
(a,b)
Total Adjustments
-
$
-
$
-
$
-
$
(133
)
$
(133
)
$
2,247
$
2,114
As Restated
Balance at January 1, 2020 - As Restated
87,050
1,706,357
(31,474
)
(133,019
)
$
1,541,951
646,439
$
2,188,390
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
6,544
-
-
6,544
(6,544
)
-
Repurchase of Common Shares
(1,219
)
(1
)
(22,385
)
-
-
(22,386
)
-
(22,386
)
Cumulative effect of change in accounting principle
-
-
-
-
(389
)
(389
)
(11
)
(400
)
Acquisition of noncontrolling interest
-
-
-
-
-
-
Dividends/distributions declared ($0.29 per Common Share/OP Unit)
-
-
-
-
(24,937
)
(24,937
)
(1,972
)
(26,909
)
Employee and trustee stock compensation, net
-
-
-
5,790
6,136
Noncontrolling interest distributions
-
-
-
-
-
-
(4,536
)
(4,536
)
Noncontrolling interest contributions
-
-
-
-
-
-
28,309
28,309
Comprehensive (loss) income
-
-
-
(58,735
)
10,921
(47,814
)
(25,933
)
(73,747
)
Reallocation of noncontrolling interests
-
-
2,144
-
-
2,144
(2,144
)
-
Balance at June 30, 2020 - As Restated
86,265
$
$
1,693,006
$
(90,209
)
$
(147,424
)
$
1,455,459
$
639,986
$
2,095,445
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2020
(in thousands, unaudited)
As Reported
Adjustments
As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
4,867
$
5,050
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
67,170
(1,145
)
(a,b)
66,025
Straight-line rents
-
(2,807
)
(a,c)
(2,807
)
Non-cash lease expense
-
1,368
(c)
1,368
Net unrealized holding gains on investments
(64,937
)
-
(64,937
)
Distributions of operating income from unconsolidated affiliates
2,206
-
2,206
Equity in (earnings) losses of unconsolidated affiliates
(469
)
(a)
Stock compensation expense
6,136
-
6,136
Amortization of financing costs
2,920
(71
)
(a,b)
2,849
Impairment charges
51,549
-
51,549
Gain on disposition of properties
(485
)
-
(485
)
Credit loss reserves
16,175
(16,175
)
(c)
-
Allowance for credit loss
-
9,620
(a,c)
9,620
Adjustments to straight-line rent reserves
-
6,404
(a,c)
6,404
Other, net
(2,780
)
(a)
(2,777
)
Changes in assets and liabilities:
Other liabilities
(6,684
)
(a)
(6,509
)
Lease liability - operating leases
-
(807
)
(c)
(807
)
Prepaid expenses and other assets
(4,213
)
(343
)
(a)
(4,556
)
Rents receivable
(25,177
)
3,943
(a,c)
(21,234
)
Accounts payable and accrued expenses
12,222
(2,375
)
(a)
9,847
Net cash provided by operating activities
58,500
(1,265
)
57,235
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate
(21,208
)
-
(21,208
)
Development, construction and property improvement costs
(20,533
)
1,555
(a,c)
(18,978
)
Proceeds from the disposition of properties, net
13,925
-
13,925
Investments in and advances to unconsolidated affiliates and other
(3,270
)
(1,289
)
(a)
(4,559
)
Return of capital from unconsolidated affiliates and other
7,151
-
7,151
Issuance of notes receivable
(59,000
)
-
(59,000
)
Return of deposits for properties under contract
-
Payment of deferred leasing costs
(4,885
)
1,631
(a)
(3,254
)
Change in control of previously unconsolidated affiliate
-
Net cash used in investing activities
(86,683
)
1,897
(84,786
)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes
(14,360
)
-
(14,360
)
Principal payments on unsecured debt
(69,930
)
-
(69,930
)
Proceeds received on mortgage and other notes
3,340
(1,000
)
(a)
2,340
Proceeds from unsecured debt
181,700
-
181,700
Payments of finance lease obligations
(833
)
-
(833
)
Proceeds from the sale (repurchase) of Common Shares
(22,386
)
-
(22,386
)
Capital contributions from noncontrolling interests
28,309
-
28,309
Distributions to noncontrolling interests
(8,178
)
-
(8,178
)
Dividends paid to Common Shareholders
(50,182
)
-
(50,182
)
Deferred financing and other costs
(960
)
-
(960
)
Net cash provided by financing activities
46,520
(1,000
)
45,520
Increase in cash and restricted cash
18,337
(368
)
17,969
Cash of $14,149 and restricted cash of $13,880 beginning of period
30,010
(1,981
)
28,029
Cash of $32,534 and restricted cash of $13,465 end of period
$
48,347
$
(2,349
)
$
45,998
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(dollars in thousands, except per share amounts, unaudited)
As Reported
Adjustments
As Restated
ASSETS
Investments in real estate, at cost
Operating real estate, net
$
3,347,431
$
(69,825
)
(a)
$
3,277,606
Real estate under development
268,298
(55
)
(a)
268,243
Net investments in real estate
3,615,729
(69,880
)
3,545,849
Notes receivable, net
134,798
-
134,798
Investments in and advances to unconsolidated affiliates
240,414
15,248
(a)
255,662
Other assets, net
183,170
(3,466
)
(a)
179,704
Right-of-use assets - operating leases, net
-
-
-
Cash and cash equivalents
16,108
(763
)
(a)
15,345
Restricted cash
13,673
(389
)
(a)
13,284
Rents receivable, net
47,516
(322
)
(a)
47,194
Total assets
$
4,251,408
$
(59,572
)
$
4,191,836
LIABILITIES
Mortgage and other notes payable, net
$
1,159,688
$
(59,560
)
(a,b)
$
1,100,128
Unsecured notes payable, net
502,500
-
502,500
Unsecured line of credit
127,400
-
127,400
Accounts payable and other liabilities
394,111
(2,519
)
(a)
391,592
Lease liability - operating leases, net
-
-
-
Dividends and distributions payable
-
Distributions in excess of income from, and investments in, unconsolidated affiliates
15,462
-
15,462
Total liabilities
2,199,308
(62,079
)
2,137,229
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,266,122 shares
-
Additional paid-in capital
1,695,338
-
1,695,338
Accumulated other comprehensive loss
(85,873
)
-
(85,873
)
Distributions in excess of accumulated earnings
(156,321
)
(138
)
(156,459
)
Total Acadia shareholders’ equity
1,453,230
(138
)
1,453,092
Noncontrolling interests
598,870
2,645
(a)
601,515
Total equity
2,052,100
2,507
2,054,607
Total liabilities and equity
$
4,251,408
$
(59,572
)
$
4,191,836
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended September 30, 2020
Nine Months Ended September 30, 2020
(in thousands except per share amounts, unaudited)
As Reported
Adjustments
As Restated
As Reported
Adjustments
As Restated
Revenues
Rental income
$
50,300
$
(890
)
(a)
$
49,410
$
183,396
$
(3,432
)
(a,b)
$
179,964
Other
-
3,078
(12
)
(a)
3,066
Total revenues
51,281
(890
)
50,391
186,474
(3,444
)
183,030
Operating expenses
Depreciation and amortization
34,457
(697
)
(a)
33,760
101,627
(1,842
)
(a,b)
99,785
General and administrative
8,625
(210
)
(a)
8,415
26,415
(257
)
(a)
26,158
Real estate taxes
10,689
(261
)
(a)
10,428
31,833
(765
)
(a)
31,068
Property operating
11,559
(210
)
(a)
11,349
41,685
(738
)
(a)
40,947
Impairment charges
-
-
-
51,549
-
51,549
Total operating expenses
65,330
(1,378
)
63,952
253,109
(3,602
)
249,507
Gain on disposition of properties
-
-
Operating loss
(14,025
)
(13,537
)
(66,126
)
(65,968
)
Equity in losses of unconsolidated affiliates
(624
)
(612
)
(a)
(1,236
)
(155
)
(1,374
)
(a)
(1,529
)
Interest and other income
2,132
-
2,132
7,156
-
7,156
Realized and unrealized holding gains on investments and other
(7,946
)
-
(7,946
)
79,335
-
79,335
Interest expense
(17,752
)
(a,b)
(17,182
)
(54,373
)
1,843
(a,b)
(52,530
)
Loss from continuing operations before income taxes
(38,215
)
(37,769
)
(34,163
)
(33,536
)
Income tax (provision) benefit
(74
)
-
(a)
(74
)
(a)
Net loss
(38,289
)
(37,843
)
(33,422
)
(32,793
)
Net loss attributable to noncontrolling interests
29,259
(451
)
(a)
28,808
35,388
(709
)
(a,b)
34,679
Net (loss) income attributable to Acadia
$
(9,030
)
$
(5
)
$
(9,035
)
$
1,966
$
(80
)
$
1,886
Net income attributable to participating securities
$
-
$
-
$
-
$
$
-
$
Shares for basic (loss) and diluted income per share
86,309
-
86,309
86,486
-
86,486
Basic (loss) diluted income per share
$
(0.10
)
$
-
$
(0.10
)
$
0.02
$
-
$
0.02
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months September 30, 2020
Nine Months Ended September 30, 2020
(in thousands, unaudited)
As Reported
Adjustments
As Restated
As Reported
Adjustments
As Restated
Net loss
$
(38,289
)
$
$
(37,843
)
$
(33,422
)
$
$
(32,793
)
Other comprehensive income (loss)
Unrealized gain (loss) on valuation of swap agreements
(3
)
(a)
(82,444
)
(a,b)
(81,896
)
Reclassification of realized interest on swap agreements
5,506
(50
)
(a)
5,456
9,598
(95
)
(a)
9,503
Other comprehensive income (loss)
6,458
(53
)
6,405
(72,846
)
(72,393
)
Comprehensive loss
(31,831
)
(31,438
)
(106,268
)
1,082
(105,186
)
Comprehensive loss attributable to noncontrolling interests
27,137
(398
)
26,739
53,536
(863
)
52,673
Comprehensive loss attributable to Acadia
$
(4,694
)
$
(5
)
$
(4,699
)
$
(52,732
)
$
$
(52,513
)
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Three Months Ended September 30, 2020
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts, unaudited)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at July 1, 2020
86,265
$
$
1,693,006
$
(90,209
)
$
(147,291
)
$
1,455,592
$
637,739
$
2,093,331
Dividends/distributions declared ($0.00 per Common Share/OP Unit)
-
-
-
-
-
-
(123
)
(123
)
Employee and trustee stock compensation, net
-
-
-
2,181
2,413
Noncontrolling interest distributions
-
-
-
-
-
-
(20,117
)
(20,117
)
Noncontrolling interest contributions
-
-
-
-
-
-
8,427
8,427
Comprehensive income (loss)
-
-
-
4,336
(9,030
)
(4,694
)
(27,137
)
(31,831
)
Reallocation of noncontrolling interests
-
-
2,100
-
-
2,100
(2,100
)
-
Balance at September 30, 2020
86,266
$
$
1,695,338
$
(85,873
)
$
(156,321
)
$
1,453,230
$
598,870
$
2,052,100
Adjustments
Balance at July 1, 2020
-
$
-
$
-
$
-
$
(133
)
$
(133
)
$
2,247
$
2,114
Comprehensive income (loss)
-
-
-
-
(5
)
(5
)
(a,b)
Total Adjustments
-
$
-
$
-
$
-
$
(138
)
$
(138
)
$
2,645
$
2,507
As Restated
Balance at July 1, 2020 - As Restated
86,265
$
$
1,693,006
$
(90,209
)
$
(147,424
)
$
1,455,459
$
639,986
$
2,095,445
Dividends/distributions declared ($0.00 per Common Share/OP Unit)
-
-
-
-
-
-
(123
)
(123
)
Employee and trustee stock compensation, net
-
-
-
2,181
2,413
Noncontrolling interest distributions
-
-
-
-
-
-
(20,117
)
(20,117
)
Noncontrolling interest contributions
-
-
-
-
-
-
8,427
8,427
Comprehensive income (loss)
-
-
-
4,336
(9,035
)
(4,699
)
(26,739
)
(31,438
)
Reallocation of noncontrolling interests
-
-
2,100
-
-
2,100
(2,100
)
-
Balance at September 30, 2020
86,266
$
$
1,695,338
$
(85,873
)
$
(156,459
)
$
1,453,092
$
601,515
$
2,054,607
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Nine Months Ended September 30, 2020
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2020
87,050
$
$
1,706,357
$
(31,175
)
$
(132,961
)
$
1,542,308
$
644,657
$
2,186,965
Cumulative effect of change in accounting principle
-
-
-
-
(389
)
(389
)
(11
)
(400
)
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
6,544
-
-
6,544
(6,544
)
-
Repurchase of Common Shares
(1,219
)
(1
)
(22,385
)
-
-
(22,386
)
-
(22,386
)
Issuance of Common Shares
-
-
-
-
-
-
-
-
Acquisition of noncontrolling interest
-
-
-
-
-
-
Dividends/distributions declared ($0.29 per Common Share/OP Unit)
-
-
-
-
(24,937
)
(24,937
)
(2,095
)
(27,032
)
Employee and trustee stock compensation, net
-
-
-
7,973
8,551
Noncontrolling interest distributions
-
-
-
-
-
-
(24,654
)
(24,654
)
Noncontrolling interest contributions
-
-
-
-
-
-
36,736
36,736
Comprehensive income (loss)
-
-
-
(54,698
)
1,966
(52,732
)
(53,536
)
(106,268
)
Reallocation of noncontrolling interests
-
-
4,244
-
-
4,244
(4,244
)
-
Balance at September 30, 2020
86,266
$
$
1,695,338
$
(85,873
)
$
(156,321
)
$
1,453,230
$
598,870
$
2,052,100
Adjustments
Balance at January 1, 2020
-
$
-
$
-
$
(299
)
$
(58
)
$
(357
)
$
1,782
$
1,425
Comprehensive income (loss)
-
-
-
(80
)
(a,b)
1,082
Total Adjustments
-
$
-
$
-
$
-
$
(138
)
$
(138
)
$
2,645
$
2,507
As Restated
Balance at January 1, 2020 - As Restated
87,050
$
$
1,706,357
$
(31,474
)
$
(133,019
)
$
1,541,951
$
646,439
$
2,188,390
Cumulative effect of change in accounting principle
-
-
-
-
(389
)
(389
)
(11
)
(400
)
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
6,544
-
-
6,544
(6,544
)
-
Repurchase of Common Shares
(1,219
)
(1
)
(22,385
)
-
-
(22,386
)
-
(22,386
)
Acquisition of noncontrolling interest
-
-
-
-
-
-
Dividends/distributions declared ($0.29 per Common Share/OP Unit)
-
-
-
-
(24,937
)
(24,937
)
(2,095
)
(27,032
)
Employee and trustee stock compensation, net
-
-
-
7,973
8,551
Noncontrolling interest distributions
-
-
-
-
-
-
(24,654
)
(24,654
)
Noncontrolling interest contributions
-
-
-
-
-
-
36,736
36,736
Comprehensive income (loss)
-
-
-
(54,399
)
1,886
(52,513
)
(52,673
)
(105,186
)
Reallocation of noncontrolling interests
-
-
4,244
-
-
4,244
(4,244
)
-
Balance at September 30, 2020 - As Restated
86,266
$
$
1,695,338
$
(85,873
)
$
(156,459
)
$
1,453,092
$
601,515
$
2,054,607
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2020
(in thousands, unaudited)
As Reported
Adjustments
As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(33,422
)
$
(32,793
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
101,627
(1,842
)
(a,b)
99,785
Straight-line rents
-
(3,861
)
(a,c)
(3,861
)
Non-cash lease expense
-
2,382
(c)
2,382
Net unrealized holding gains on investments
(57,031
)
-
(57,031
)
Distributions of operating income from unconsolidated affiliates
2,829
-
2,829
Equity in (earnings) losses of unconsolidated affiliates
1,374
(a)
1,529
Stock compensation expense
8,551
-
8,551
Amortization of financing costs
4,040
(99
)
(a,b)
3,941
Impairment charges
51,549
-
51,549
Gain on disposition of properties
(509
)
-
(509
)
Credit loss and straight-line rent reserves
39,882
(39,882
)
(c)
-
Allowance for credit loss
-
20,381
(a,c)
20,381
Adjustments to straight-line rent reserves
-
19,483
(a,c)
19,483
Other, net
(2,923
)
(306
)
(a,c)
(3,229
)
Changes in assets and liabilities:
Other liabilities
(7,736
)
(a)
(7,583
)
Lease liability - operating leases
-
(957
)
(c)
(957
)
Prepaid expenses and other assets
(1,435
)
(164
)
(a)
(1,599
)
Rents receivable
(31,511
)
4,735
(a,c)
(26,776
)
Accounts payable and accrued expenses
7,015
(a)
7,068
Net cash provided by operating activities
81,081
2,079
83,160
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate
(21,208
)
-
(21,208
)
Development, construction and property improvement costs
(27,949
)
1,064
(a,c)
(26,885
)
Proceeds from the disposition of properties, net
14,182
-
14,182
Investments in and advances to unconsolidated affiliates and other
(3,662
)
(2,023
)
(a)
(5,685
)
Return of capital from unconsolidated affiliates and other
9,054
-
9,054
Issuance of notes receivable
(59,000
)
-
(59,000
)
Return of deposits for properties under contract
-
Payment of deferred leasing costs
(5,422
)
1,620
(a)
(3,802
)
Change in control of previously unconsolidated affiliate
-
Net cash used in investing activities
(92,868
)
(92,207
)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes
(18,981
)
-
(18,981
)
Principal payments on unsecured debt
(123,750
)
-
(123,750
)
Proceeds received on mortgage and other notes
5,523
(1,910
)
(a)
3,613
Proceeds from unsecured debt
215,554
-
215,554
Payments of finance lease obligations
(903
)
-
(903
)
Proceeds from the sale (repurchase) of Common Shares
(22,386
)
-
(22,386
)
Capital contributions from noncontrolling interests
36,736
-
36,736
Distributions to noncontrolling interests
(28,418
)
-
(28,418
)
Dividends paid to Common Shareholders
(50,182
)
-
(50,182
)
Deferred financing and other costs
(1,635
)
-
(1,635
)
Net cash provided by financing activities
11,558
(1,910
)
9,648
(Decrease) increase in cash and restricted cash
(229
)
Cash of $14,149 and restricted cash of $13,880 beginning of period
30,010
(1,981
)
28,029
Cash of $15,345 and restricted cash of $13,284 end of period
$
29,781
$
(1,151
)
$
28,630
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended December 31, 2020
(in thousands except per share amounts, unaudited)
As Reported
Adjustments
As Restated
Revenues
Rental income
$
67,606
$
(1,138
)
(a)
$
66,468
Other
1,404
(a)
1,410
Total revenues
69,010
(1,132
)
67,878
Operating expenses
Depreciation and amortization
48,166
(722
)
(a)
47,444
General and administrative
9,640
-
9,640
Real estate taxes
11,672
(263
)
(a)
11,409
Property operating
14,910
(306
)
(a)
14,604
Impairment charges
34,049
-
34,049
Total operating expenses
118,437
(1,291
)
117,146
Gain on disposition of properties
-
Operating loss
(49,253
)
(49,094
)
Equity in losses of unconsolidated affiliates
(1,082
)
(446
)
(a)
(1,528
)
Interest and other income
1,823
-
1,823
Realized and unrealized holding gains on investments and other
34,595
(568
)
(b)
34,027
Interest expense
(17,687
)
(a,b)
(17,141
)
Loss from continuing operations before income taxes
(31,604
)
(309
)
(31,913
)
Income tax provision
(1,012
)
-
(1,012
)
Net (loss) income
(32,616
)
(309
)
(32,925
)
Net loss attributable to noncontrolling interests
21,891
(a,b)
22,063
Net loss attributable to Acadia
$
(10,725
)
$
(137
)
$
(10,862
)
Net income attributable to participating securities
$
-
$
-
$
-
Shares for basic loss per share
86,311
-
86,311
Basic loss per share
$
(0.12
)
$
(0.01
)
$
(0.13
)
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021
(dollars in thousands, except per share amounts, unaudited)
As Reported
Adjustments
As Restated
ASSETS
Investments in real estate, at cost
Operating real estate, net
$
3,238,031
$
(70,111
)
(a)
$
3,167,920
Real estate under development
234,338
-
(a)
234,338
Net investments in real estate
3,472,369
(70,111
)
3,402,258
Notes receivable, net
101,410
(1,950
)
(b)
99,460
Investments in and advances to unconsolidated affiliates
256,332
22,028
(a)
278,360
Other assets, net
162,596
(3,774
)
(a)
158,822
Right-of-use assets - operating leases, net
74,803
-
74,803
Cash and cash equivalents
15,424
(1,339
)
(a)
14,085
Restricted cash
15,723
(3,620
)
(a)
12,103
Rents receivable, net
46,356
(1,159
)
(a)
45,197
Assets of properties held for sale
8,669
-
8,669
Total assets
$
4,153,682
$
(59,925
)
$
4,093,757
LIABILITIES
Mortgage and other notes payable, net
$
1,188,695
$
(59,003
)
(a,b)
$
1,129,692
Unsecured notes payable, net
420,960
-
420,960
Unsecured line of credit
105,400
-
105,400
Accounts payable and other liabilities
237,058
(2,361
)
(a)
234,697
Lease liability - operating leases, net
87,910
-
87,910
Dividends and distributions payable
14,018
-
14,018
Distributions in excess of income from, and investments in, unconsolidated affiliates
15,272
-
15,272
Total liabilities
2,069,313
(61,364
)
2,007,949
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,302,352 shares
-
Additional paid-in capital
1,683,552
-
1,683,552
Accumulated other comprehensive loss
(41,962
)
-
(41,962
)
Distributions in excess of accumulated earnings
(174,829
)
(620
)
(b)
(175,449
)
Total Acadia shareholders’ equity
1,466,847
(620
)
1,466,227
Noncontrolling interests
617,522
2,059
(a,b)
619,581
Total equity
2,084,369
1,439
2,085,808
Total liabilities and equity
$
4,153,682
$
(59,925
)
$
4,093,757
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2021
(in thousands except per share amounts, unaudited)
As Reported
Adjustments
As Restated
Revenues
Rental income
$
67,205
$
(1,207
)
(a)
$
65,998
Other
2,189
-
2,189
Total revenues
69,394
(1,207
)
68,187
Operating expenses
Depreciation and amortization
31,390
(750
)
(a)
30,640
General and administrative
8,996
(4
)
(a)
8,992
Real estate taxes
11,462
(256
)
(a)
11,206
Property operating
13,477
(268
)
(a)
13,209
Impairment charges
-
-
-
Total operating expenses
65,325
(1,278
)
64,047
Gain on disposition of properties
4,612
-
4,612
Operating income
8,681
8,752
Equity in earnings of unconsolidated affiliates
2,263
(381
)
(a)
1,882
Interest and other income
1,700
-
1,700
Realized and unrealized holding gains on investments and other
6,507
(1,382
)
(b)
5,125
Interest expense
(17,141
)
(a,b)
(16,614
)
Income from continuing operations before income taxes
2,010
(1,165
)
Income tax provision
(150
)
(a)
(148
)
Net income
1,860
(1,163
)
Net loss attributable to noncontrolling interests
3,302
(a,b)
4,120
Net income attributable to Acadia
$
5,162
$
(345
)
$
4,817
Net income attributable to participating securities
$
$
-
$
Shares for basic and diluted income per share
86,346
-
86,346
Basic and diluted income per share
$
0.06
$
(0.01
)
$
0.05
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2021
(in thousands, unaudited)
As Reported
Adjustments
As Restated
Net income
$
1,860
$
(1,163
)
$
Other comprehensive income
Unrealized gain on valuation of swap agreements
33,556
-
(a)
33,556
Reclassification of realized interest on swap agreements
5,317
(49
)
(a)
5,268
Other comprehensive income
38,873
(49
)
38,824
Comprehensive income
40,733
(1,212
)
39,521
Comprehensive income attributable to noncontrolling interests
(2,642
)
(1,775
)
Comprehensive Income attributable to Acadia
$
38,091
$
(345
)
$
37,746
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Three Months Ended March 31, 2021
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts, unaudited)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2021
86,269
$
$
1,683,165
$
(74,891
)
$
(167,046
)
$
1,441,314
$
607,239
$
2,048,553
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(294
)
-
Dividends/distributions declared ($0.15 per Common Share/OP Unit)
-
-
-
-
(12,945
)
(12,945
)
(1,048
)
(13,993
)
Employee and trustee stock compensation, net
-
-
-
4,049
4,511
Noncontrolling interest distributions
-
-
-
-
-
-
(6,676
)
(6,676
)
Noncontrolling interest contributions
-
-
-
-
-
-
11,241
11,241
Comprehensive income
-
-
-
32,929
5,162
38,091
2,642
40,733
Reallocation of noncontrolling interests
-
-
(369
)
-
-
(369
)
-
Balance at March 31, 2021
86,302
$
$
1,683,552
$
(41,962
)
$
(174,829
)
$
1,466,847
$
617,522
$
2,084,369
Adjustments
Balance at January 1, 2021
-
$
-
$
-
$
-
$
(275
)
$
(275
)
$
1,926
$
1,651
Noncontrolling interest distributions
-
-
-
-
-
-
1,000
(a)
1,000
Comprehensive income
-
-
-
-
(345
)
(345
)
(867
)
(a,b)
(1,212
)
Total Adjustments
-
$
-
$
-
$
-
$
(620
)
$
(620
)
$
2,059
$
1,439
As Restated
Balance at January 1, 2021 - As Restated
86,269
$
$
1,683,165
$
(74,891
)
$
(167,321
)
$
1,441,039
$
609,165
$
2,050,204
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(294
)
-
Dividends/distributions declared ($0.15 per Common Share/OP Unit)
-
-
-
-
(12,945
)
(12,945
)
(1,048
)
(13,993
)
Employee and trustee stock compensation, net
-
-
-
4,049
4,511
Noncontrolling interest distributions
-
-
-
-
-
-
(5,676
)
(5,676
)
Noncontrolling interest contributions
-
-
-
-
-
-
11,241
11,241
Comprehensive income
-
-
-
32,929
4,817
37,746
1,775
39,521
Reallocation of noncontrolling interests
-
-
(369
)
-
-
(369
)
-
Balance at March 31, 2021 - As Restated
86,302
$
$
1,683,552
$
(41,962
)
$
(175,449
)
$
1,466,227
$
619,581
$
2,085,808
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2021
(in thousands)
As Reported
Adjustments
As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
1,860
(1,163
)
$
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
31,390
(750
)
(a)
30,640
Straight-line rents
(1,128
)
(a)
(1,092
)
Non-cash lease expense
1,041
-
1,041
Net unrealized holding gains on investments
(6,135
)
-
(6,135
)
Distributions of operating income from unconsolidated affiliates
-
Equity in (earnings) losses of unconsolidated affiliates
(2,263
)
(a)
(1,882
)
Stock compensation expense
4,511
-
4,511
Amortization of financing costs
1,269
(18
)
(a,b)
1,251
Gain on disposition of properties
(4,612
)
-
(4,612
)
Allowance for credit loss
3,065
(123
)
(a)
2,942
Adjustments to straight-line rent reserves
(a)
Other, net
(2,312
)
1,386
(a,b)
(926
)
Changes in assets and liabilities:
Other liabilities
3,847
(48
)
(a)
3,799
Lease liability - operating leases
(494
)
-
(494
)
Prepaid expenses and other assets
1,859
(105
)
(a)
1,754
Rents receivable
(2,408
)
(a)
(2,318
)
Accounts payable and accrued expenses
(a)
Net cash provided by operating activities
30,934
30,974
CASH FLOWS FROM INVESTING ACTIVITIES
Development, construction and property improvement costs
(5,425
)
(a)
(5,379
)
Proceeds from the disposition of properties, net
15,703
-
15,703
Investments in and advances to unconsolidated affiliates and other
(1,725
)
(336
)
(a)
(2,061
)
Return of capital from unconsolidated affiliates and other
4,377
1,000
(a)
5,377
Payment of deferred leasing costs
(1,438
)
(a)
(1,028
)
Net cash provided by investing activities
11,492
1,120
12,612
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes
(20,406
)
-
(20,406
)
Principal payments on unsecured debt
(33,250
)
-
(33,250
)
Proceeds received on mortgage and other notes
3,809
(2,990
)
(a)
Proceeds from unsecured debt
-
Capital contributions from noncontrolling interests
11,241
-
11,241
Distributions to noncontrolling interests
(6,800
)
1,000
(a)
(5,800
)
Deferred financing and other costs
(333
)
-
(333
)
Net cash used in financing activities
(45,203
)
(1,990
)
(47,193
)
Decrease in cash and restricted cash
(2,777
)
(830
)
(3,607
)
Cash of $18,699 and restricted cash of $11,096 beginning of period
33,924
(4,129
)
29,795
Cash of $14,085 and restricted cash of $12,103 end of period
$
31,147
$
(4,959
)
$
26,188
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2021
(dollars in thousands, except per share amounts, unaudited)
As Reported
Adjustments
As Restated
ASSETS
Investments in real estate, at cost
Operating real estate, net
$
3,201,172
$
(69,819
)
(a)
$
3,131,353
Real estate under development
217,620
-
(a)
217,620
Net investments in real estate
3,418,792
(69,819
)
3,348,973
Notes receivable, net
117,280
(2,819
)
(b)
114,461
Investments in and advances to unconsolidated affiliates
258,063
22,177
(a)
280,240
Other assets, net
159,592
(3,798
)
(a)
155,794
Right-of-use assets - operating leases, net
42,398
-
42,398
Cash and cash equivalents
34,645
(1,566
)
(a)
33,079
Restricted cash
15,094
(3,432
)
(a)
11,662
Rents receivable, net
43,748
(1,062
)
(a)
42,686
Total assets
$
4,089,612
$
(60,319
)
$
4,029,293
LIABILITIES
Mortgage and other notes payable, net
$
1,162,617
$
(59,021
)
(a,b)
$
1,103,596
Unsecured notes payable, net
440,088
-
440,088
Unsecured line of credit
61,405
-
61,405
Accounts payable and other liabilities
239,056
(1,910
)
(a)
237,146
Lease liability - operating leases, net
40,861
-
40,861
Dividends and distributions payable
14,339
-
14,339
Distributions in excess of income from, and investments in, unconsolidated affiliates
14,896
-
14,896
Total liabilities
1,973,262
(60,931
)
1,912,331
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 88,419,303 shares
-
Additional paid-in capital
1,730,686
-
1,730,686
Accumulated other comprehensive loss
(47,909
)
-
(47,909
)
Distributions in excess of accumulated earnings
(184,174
)
(827
)
(b)
(185,001
)
Total Acadia shareholders’ equity
1,498,691
(827
)
1,497,864
Noncontrolling interests
617,659
1,439
(a,b)
619,098
Total equity
2,116,350
2,116,962
Total liabilities and equity
$
4,089,612
$
(60,319
)
$
4,029,293
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended June 30, 2021
Six Months Ended June 30, 2021
(in thousands except per share amounts, unaudited)
As Reported
Adjustments
As Restated
As Reported
Adjustments
As Restated
Revenues
Rental income
$
73,666
$
(1,597
)
(a)
$
72,069
$
140,871
$
(2,804
)
(a)
$
138,067
Other
(6
)
(a)
3,183
(6
)
(a)
3,177
Total revenues
74,660
(1,603
)
73,057
144,054
(2,810
)
141,244
Operating expenses
Depreciation and amortization
31,345
(805
)
(a)
30,540
62,735
(1,555
)
(a)
61,180
General and administrative
10,671
(18
)
(a)
10,653
19,667
(22
)
(a)
19,645
Real estate taxes
12,504
(290
)
(a)
12,214
23,966
(546
)
(a)
23,420
Property operating
12,890
(254
)
(a)
12,636
26,367
(522
)
(a)
25,845
Impairment charges
-
-
-
-
-
-
Total operating expenses
67,410
(1,367
)
66,043
132,735
(2,645
)
130,090
Gain on disposition of properties
5,909
-
5,909
10,521
-
10,521
Operating income
13,159
(236
)
12,923
21,840
(165
)
21,675
Equity in earnings of unconsolidated affiliates
1,106
(207
)
(a)
3,369
(588
)
(a)
2,781
Interest and other income
2,054
-
2,054
3,754
-
3,754
Realized and unrealized holding gains on investments and other
2,711
(869
)
(b)
1,842
9,218
(2,251
)
(b)
6,967
Interest expense
(17,605
)
(a,b)
(17,074
)
(34,746
)
1,058
(a,b)
(33,688
)
Income from continuing operations before income taxes
1,425
(781
)
3,435
(1,946
)
1,489
Income tax provision
(194
)
(a)
(192
)
(344
)
(a)
(340
)
Net income
1,231
(779
)
3,091
(1,942
)
1,149
Net loss attributable to noncontrolling interests
2,687
(a,b)
3,259
5,989
1,390
(a,b)
7,379
Net income attributable to Acadia
$
3,918
$
(207
)
$
3,711
$
9,080
$
(552
)
$
8,528
Net income attributable to participating securities
$
$
-
$
$
$
-
$
Shares for basic and diluted income per share
86,824
-
86,824
86,575
-
86,575
Basic and diluted income per share
$
0.04
$
-
$
0.04
$
0.10
$
(0.01
)
$
0.09
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended June 30, 2021
Six Months Ended June 30, 2021
(in thousands, unaudited)
As Reported
Adjustments
As Restated
As Reported
Adjustments
As Restated
Net income
$
1,231
$
(779
)
$
$
3,091
$
(1,942
)
$
1,149
Other comprehensive (loss) income
Unrealized (loss) gain on valuation of swap agreements
(10,073
)
(a)
(10,069
)
23,483
(a)
23,487
Reclassification of realized interest on swap agreements
5,324
(52
)
(a)
5,272
10,641
(101
)
(a)
10,540
Other comprehensive (loss) income
(4,749
)
(48
)
(4,797
)
34,124
(97
)
34,027
Comprehensive (loss) income
(3,518
)
(827
)
(4,345
)
37,215
(2,039
)
35,176
Comprehensive loss attributable to noncontrolling interests
1,489
2,109
(1,153
)
1,487
Comprehensive (loss) income attributable to Acadia
$
(2,029
)
$
(207
)
$
(2,236
)
$
36,062
$
(552
)
$
35,510
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Three Months Ended June 30, 2021
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts, unaudited)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at April 1, 2021
86,302
1,683,552
(41,962
)
(174,829
)
1,466,847
617,522
2,084,369
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(115
)
-
Repurchase of Common Shares
2,072
45,675
-
-
45,677
-
45,677
Dividends/distributions declared ($0.15 per Common Share/OP Unit)
-
-
-
-
(13,263
)
(13,263
)
(1,052
)
(14,315
)
Employee and trustee stock compensation, net
-
-
-
2,399
2,624
Noncontrolling interest distributions
-
-
-
-
-
-
(4,355
)
(4,355
)
Noncontrolling interest contributions
-
-
-
-
-
-
5,868
5,868
Comprehensive loss
-
-
-
(5,947
)
3,918
(2,029
)
(1,489
)
(3,518
)
Reallocation of noncontrolling interests
-
-
1,119
-
-
1,119
(1,119
)
-
Balance at June 30, 2021
88,419
$
$
1,730,686
$
(47,909
)
$
(184,174
)
$
1,498,691
$
617,659
$
2,116,350
Adjustments
Balance at April 1, 2021
-
$
-
$
-
$
-
$
(620
)
$
(620
)
$
2,059
$
1,439
Comprehensive loss
-
-
-
-
(207
)
(207
)
(620
)
(a,b)
(827
)
Total Adjustments
-
$
-
$
-
$
-
$
(827
)
$
(827
)
$
1,439
$
As Restated
Balance at April 1, 2021 - As Restated
86,302
$
$
1,683,552
$
(41,962
)
$
(175,449
)
$
1,466,227
$
619,581
$
2,085,808
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(115
)
-
Issuance of Common Shares
2,072
45,675
-
-
45,677
-
45,677
Dividends/distributions declared ($0.15 per Common Share/OP Unit)
-
-
-
-
(13,263
)
(13,263
)
(1,052
)
(14,315
)
Employee and trustee stock compensation, net
-
-
-
2,399
2,624
Noncontrolling interest distributions
-
-
-
-
-
-
(4,355
)
(4,355
)
Noncontrolling interest contributions
-
-
-
-
-
-
5,868
5,868
Comprehensive loss
-
-
-
(5,947
)
3,711
(2,236
)
(2,109
)
(4,345
)
Reallocation of noncontrolling interests
-
-
1,119
-
-
1,119
(1,119
)
-
Balance at June 30, 2021 -As Restated
88,419
$
$
1,730,686
$
(47,909
)
$
(185,001
)
$
1,497,864
$
619,098
$
2,116,962
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Six Months Ended June 30, 2021
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts, unaudited)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2021
86,269
$
$
1,683,165
$
(74,891
)
$
(167,046
)
$
1,441,314
$
607,239
$
2,048,553
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(409
)
-
Issuance of Common Shares
2,072
45,675
-
-
45,677
-
45,677
Dividends/distributions declared ($0.30 per Common Share/OP Unit)
-
-
-
-
(26,208
)
(26,208
)
(2,100
)
(28,308
)
Employee and trustee stock compensation, net
-
-
-
6,448
7,135
Noncontrolling interest distributions
-
-
-
-
-
-
(11,031
)
(11,031
)
Noncontrolling interest contributions
-
-
-
-
-
-
17,109
17,109
Comprehensive (loss) income
-
-
-
26,982
9,080
36,062
1,153
37,215
Reallocation of noncontrolling interests
-
-
-
-
(750
)
-
Balance at June 30, 2021
88,419
$
$
1,730,686
$
(47,909
)
$
(184,174
)
$
1,498,691
$
617,659
$
2,116,350
Adjustments
Balance at January 1, 2021
-
$
-
$
-
$
-
$
(275
)
$
(275
)
$
1,926
$
1,651
Noncontrolling interest distributions
-
-
-
-
-
-
1,000
(a)
1,000
Comprehensive (loss) income
-
-
-
-
(552
)
(552
)
(1,487
)
(a,b)
(2,039
)
Total Adjustments
-
$
-
$
-
$
-
$
(827
)
$
(827
)
$
1,439
$
Balance at January 1, 2021 - Restated
86,269
$
$
1,683,165
$
(74,891
)
$
(167,321
)
$
1,441,039
$
609,165
$
2,050,204
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(409
)
-
Issuance of Common Shares
2,072
45,675
-
-
45,677
-
45,677
Dividends/distributions declared ($0.30 per Common Share/OP Unit)
-
-
-
-
(26,208
)
(26,208
)
(2,100
)
(28,308
)
Employee and trustee stock compensation, net
-
-
-
6,448
7,135
Noncontrolling interest distributions
-
-
-
-
-
-
(10,031
)
(10,031
)
Noncontrolling interest contributions
-
-
-
-
-
-
17,109
17,109
Comprehensive (loss) income
-
-
-
26,982
8,528
35,510
(334
)
35,176
Reallocation of noncontrolling interests
-
-
-
-
(750
)
-
Balance at June 31, 2021 - Restated
88,419
$
$
1,730,686
$
(47,909
)
$
(185,001
)
$
1,497,864
$
619,098
$
2,116,962
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2021
(in thousands, unaudited)
As Reported
Adjustments
As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
3,091
(1,942
)
$
1,149
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
62,735
(1,555
)
(a)
61,180
Straight-line rents
(2,765
)
(a)
(2,685
)
Non-cash lease expense
2,066
-
2,066
Net unrealized holding gains on investments
(8,565
)
-
(8,565
)
Distributions of operating income from unconsolidated affiliates
1,387
-
1,387
Equity in (earnings) losses of unconsolidated affiliates
(3,369
)
(a)
(2,781
)
Stock compensation expense
7,135
-
7,135
Amortization of financing costs
2,546
(36
)
(a,b)
2,510
Gain on disposition of properties
(10,521
)
-
(10,521
)
Allowance for credit loss
1,238
(144
)
(a)
1,094
Termination of ground lease
(3,615
)
-
(3,615
)
Adjustments to straight-line rent reserves
(a)
Other, net
(4,127
)
2,258
(a,b)
(1,869
)
Changes in assets and liabilities:
Other liabilities
3,114
(74
)
(a)
3,040
Lease liability - operating leases
(1,533
)
-
(1,533
)
Prepaid expenses and other assets
(487
)
(a)
(450
)
Rents receivable
2,801
(24
)
(a)
2,777
Accounts payable and accrued expenses
(609
)
(a)
(342
)
Net cash provided by operating activities
51,033
(472
)
50,561
CASH FLOWS FROM INVESTING ACTIVITIES
Development, construction and property improvement costs
(16,620
)
(a)
(15,740
)
Proceeds from the disposition of properties, net
63,901
-
63,901
Investments in and advances to unconsolidated affiliates and other
(3,976
)
(647
)
(a)
(4,623
)
Return of capital from unconsolidated affiliates and other
7,717
1,000
(a)
8,717
Issuance of notes receivable
(15,995
)
-
(15,995
)
Return of deposits for properties under contract
(1,000
)
-
(1,000
)
Payment of deferred leasing costs
(3,080
)
(a)
(2,720
)
Net cash provided by investing activities
30,947
1,593
32,540
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes
(52,408
)
-
(52,408
)
Principal payments on unsecured debt
(102,800
)
-
(102,800
)
Proceeds received on mortgage and other notes
8,818
(2,990
)
(a)
5,828
Proceeds from unsecured debt
49,295
-
49,295
Proceeds from the sale (repurchase) of Common Shares
45,675
-
45,675
Capital contributions from noncontrolling interests
17,109
-
17,109
Distributions to noncontrolling interests
(12,202
)
1,000
(a)
(11,202
)
Dividends paid to Common Shareholders
(12,945
)
-
(12,945
)
Deferred financing and other costs
(6,707
)
-
(6,707
)
Net cash used in financing activities
(66,165
)
(1,990
)
(68,155
)
Increase in cash and restricted cash
15,815
(869
)
14,946
Cash of $18,699 and restricted cash of $11,096 beginning of period
33,924
(4,129
)
29,795
Cash of $33,079 and restricted cash of $11,662 end of period
$
49,739
$
(4,998
)
$
44,741
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(dollars in thousands, except per share amounts, unaudited)
As Reported
Adjustments
As Restated
ASSETS
Investments in real estate, at cost
Operating real estate, net
$
3,268,573
$
(69,334
)
(a)
$
3,199,239
Real estate under development
219,037
-
(a)
219,037
Net investments in real estate
3,487,610
(69,334
)
3,418,276
Notes receivable, net
158,468
(3,619
)
(b)
154,849
Investments in and advances to unconsolidated affiliates
305,668
21,828
(a)
327,496
Other assets, net
174,750
(3,477
)
(a)
171,273
Right-of-use assets - operating leases, net
41,577
-
41,577
Cash and cash equivalents
17,359
(1,201
)
(a)
16,158
Restricted cash
14,827
(3,463
)
(a)
11,364
Rents receivable, net
44,386
(1,094
)
(a)
43,292
Total assets
$
4,244,645
$
(60,360
)
$
4,184,285
LIABILITIES
Mortgage and other notes payable, net
$
1,181,028
$
(59,205
)
(a,b)
$
1,121,823
Unsecured notes payable, net
503,966
(b)
504,019
Unsecured line of credit
102,905
-
102,905
Accounts payable and other liabilities
245,697
(1,686
)
(a)
244,011
Lease liability - operating leases, net
39,743
-
39,743
Dividends and distributions payable
14,339
-
14,339
Distributions in excess of income from, and investments in, unconsolidated affiliates
15,456
-
15,456
Total liabilities
2,103,134
(60,838
)
2,042,296
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 88,451,668 shares
-
Additional paid-in capital
1,733,448
-
1,733,448
Accumulated other comprehensive loss
(43,169
)
-
(43,169
)
Distributions in excess of accumulated earnings
(185,373
)
(889
)
(b)
(186,262
)
Total Acadia shareholders’ equity
1,504,994
(889
)
1,504,105
Noncontrolling interests
636,517
1,367
(a,b)
637,884
Total equity
2,141,511
2,141,989
Total liabilities and equity
$
4,244,645
$
(60,360
)
$
4,184,285
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended September 30, 2021
Nine Months Ended September 30, 2021
(in thousands except per share amounts, unaudited)
As Reported
Adjustments
As Restated
As Reported
Adjustments
As Restated
Revenues
Rental income
$
71,852
$
(1,550
)
(a)
$
70,302
$
212,723
$
(4,354
)
(a)
$
208,369
Other
1,594
-
1,594
4,777
(6
)
(a)
4,771
Total revenues
73,446
(1,550
)
71,896
217,500
(4,360
)
213,140
Operating expenses
Depreciation and amortization
30,866
(802
)
(a)
30,064
93,601
(2,357
)
(a)
91,244
General and administrative
9,978
(68
)
(a)
9,910
29,645
(90
)
(a)
29,555
Real estate taxes
11,320
(292
)
(a)
11,028
35,286
(838
)
(a)
34,448
Property operating
12,698
(255
)
(a)
12,443
39,065
(777
)
(a)
38,288
Impairment charges
9,925
-
9,925
9,925
-
9,925
Total operating expenses
74,787
(1,417
)
73,370
207,522
(4,062
)
203,460
Gain on disposition of properties
-
-
-
10,521
-
10,521
Operating (loss) gain
(1,341
)
(133
)
(1,474
)
20,499
(298
)
20,201
Equity in earnings of unconsolidated affiliates
(272
)
(a)
4,013
(860
)
(a)
3,153
Interest and other income
2,354
-
2,354
6,108
-
6,108
Realized and unrealized holding gains on investments and other
47,293
(800
)
(b)
46,493
56,511
(3,051
)
(b)
53,460
Interest expense
(17,334
)
(a,b)
(16,614
)
(52,080
)
1,778
(a,b)
(50,302
)
Income from continuing operations before income taxes
31,616
(485
)
31,131
35,051
(2,431
)
32,620
Income tax provision
(59
)
-
(59
)
(403
)
(a)
(399
)
Net income
31,557
(485
)
31,072
34,648
(2,427
)
32,221
Net income attributable to noncontrolling interests
(19,488
)
(a,b)
(19,065
)
(13,499
)
1,813
(a,b)
(11,686
)
Net income attributable to Acadia
12,069
$
(62
)
$
12,007
$
21,149
$
(614
)
$
20,535
Net income attributable to participating securities
$
$
-
$
$
$
-
$
Shares for basic and diluted income per share
88,481
-
88,481
87,217
-
87,217
Basic and diluted income per share
$
0.13
$
-
$
0.13
$
0.24
$
(0.01
)
$
0.23
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months September 30, 2021
Nine Months Ended September 30, 2021
(in thousands, unaudited)
As Reported
Adjustments
As Restated
As Reported
Adjustments
As Restated
Net income
$
31,557
$
(485
)
$
31,072
$
34,648
$
(2,427
)
$
32,221
Other comprehensive income
Unrealized gain on valuation of swap agreements
1,045
(a)
1,048
24,528
(a)
24,535
Reclassification of realized interest on swap agreements
5,528
(52
)
(a)
5,476
16,169
(153
)
(a)
16,016
Other comprehensive income
6,573
(49
)
6,524
40,697
(146
)
40,551
Comprehensive income
38,130
(534
)
37,596
75,345
(2,573
)
72,772
Comprehensive income attributable to noncontrolling interests
(21,321
)
(20,849
)
(22,474
)
1,959
(20,515
)
Comprehensive income attributable to Acadia
$
16,809
$
(62
)
$
16,747
$
52,871
$
(614
)
$
52,257
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Three Months Ended September 30, 2021
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts, unaudited)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at July 1, 2021
88,419
$
$
1,730,686
$
(47,909
)
$
(184,174
)
$
1,498,691
$
617,659
$
2,116,350
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(288
)
-
Cancellation of OP Units
-
-
-
-
-
-
(479
)
(479
)
Issuance of Common Shares
-
-
-
-
Dividends/distributions declared ($0.15 per Common Share/OP Unit)
-
-
-
-
(13,268
)
(13,268
)
(1,046
)
(14,314
)
Employee and trustee stock compensation, net
-
-
-
2,419
2,644
Noncontrolling interest distributions
-
-
-
-
-
-
(10,527
)
(10,527
)
Noncontrolling interest contributions
-
-
-
-
-
-
9,518
9,518
Comprehensive income
-
-
-
4,740
12,069
16,809
21,321
38,130
Reallocation of noncontrolling interests
-
-
2,060
-
-
2,060
(2,060
)
-
Balance at September 30, 2021
88,452
$
$
1,733,448
$
(43,169
)
$
(185,373
)
$
1,504,994
$
636,517
$
2,141,511
Adjustments
Balance at July 1, 2021
-
$
-
$
-
$
-
$
(827
)
$
(827
)
$
1,439
$
Noncontrolling interest distributions
-
-
-
-
-
-
(a)
Comprehensive income
-
-
-
-
(62
)
(62
)
(472
)
(a,b)
(534
)
Total Adjustments
-
$
-
$
-
$
-
$
(889
)
$
(889
)
$
1,367
$
As Restated
Balance at July 1, 2021 - As Restated
88,419
$
$
1,730,686
$
(47,909
)
$
(185,001
)
$
1,497,864
$
619,098
$
2,116,962
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(288
)
-
Cancellation of OP Units
-
-
-
-
-
-
(479
)
(479
)
Issuance of Common Shares
-
-
-
-
Dividends/distributions declared ($0.15 per Common Share/OP Unit)
-
-
-
-
(13,268
)
(13,268
)
(1,046
)
(14,314
)
Employee and trustee stock compensation, net
-
-
-
2,419
2,644
Noncontrolling interest distributions
-
-
-
-
-
-
(10,127
)
(10,127
)
Noncontrolling interest contributions
-
-
-
-
-
-
9,518
9,518
Comprehensive income
-
-
-
4,740
12,007
16,747
20,849
37,596
Reallocation of noncontrolling interests
-
-
2,060
-
-
2,060
(2,060
)
-
Balance at September 30, 2021 - As Restated
88,452
$
$
1,733,448
$
(43,169
)
$
(186,262
)
$
1,504,105
$
637,884
$
2,141,989
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Statement of Changes in Shareholders' Equity - Nine Months Ended September 30, 2021
As Previously Reported
Acadia Shareholders
(in thousands, except per share amounts, unaudited)
Common
Shares
Share
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Accumulated
Earnings
Total
Common
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2021
86,269
$
$
1,683,165
$
(74,891
)
$
(167,046
)
$
1,441,314
$
607,239
$
2,048,553
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(697
)
-
Cancellation of OP Units
-
-
-
-
-
-
(479
)
(479
)
Issuance of Common Shares
2,085
45,863
-
-
45,865
-
45,865
Dividends/distributions declared ($0.45 per Common Share/OP Unit)
-
-
-
-
(39,476
)
(39,476
)
(3,146
)
(42,622
)
Employee and trustee stock compensation, net
-
-
-
8,866
9,780
Noncontrolling interest distributions
-
-
-
-
-
-
(21,558
)
(21,558
)
Noncontrolling interest contributions
-
-
-
-
-
-
26,627
26,627
Comprehensive income
-
-
-
31,722
21,149
52,871
22,474
75,345
Reallocation of noncontrolling interests
-
-
2,809
-
-
2,809
(2,809
)
-
Balance at September 30, 2021
88,452
$
$
1,733,448
$
(43,169
)
$
(185,373
)
$
1,504,994
$
636,517
$
2,141,511
Adjustments
Balance at January 1, 2021
-
$
-
$
-
$
-
$
(275
)
$
(275
)
$
1,926
$
1,651
Noncontrolling interest distributions
-
-
-
-
-
-
1,400
(a)
1,400
Comprehensive loss
-
-
-
-
(614
)
(614
)
(1,959
)
(a,b)
(2,573
)
Total Adjustments
-
$
-
$
-
$
-
$
(889
)
$
(889
)
$
1,367
$
As Restated
Balance at January 1, 2021 Restated
86,269
$
$
1,683,165
$
(74,891
)
$
(167,321
)
$
1,441,039
$
609,165
$
2,050,204
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership
-
-
-
(697
)
-
Cancellation of OP Units
-
-
-
-
-
-
(479
)
(479
)
Issuance of Common Shares
2,085
45,863
-
-
45,865
-
45,865
Dividends/distributions declared ($0.45 per Common Share/OP Unit)
-
-
-
-
(39,476
)
(39,476
)
(3,146
)
(42,622
)
Employee and trustee stock compensation, net
-
-
-
8,866
9,780
Noncontrolling interest distributions
-
-
-
-
-
-
(20,158
)
(20,158
)
Noncontrolling interest contributions
-
-
-
-
-
-
26,627
26,627
Comprehensive income
-
-
-
31,722
20,535
52,257
20,515
72,772
Reallocation of noncontrolling interests
-
-
2,809
-
-
2,809
(2,809
)
-
Balance at September 30, 2021 - Restated
88,452
$
$
1,733,448
$
(43,169
)
$
(186,262
)
$
1,504,105
$
637,884
$
2,141,989
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2021
(in thousands, unaudited)
As Reported
Adjustments
As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
34,648
(2,427
)
$
32,221
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
93,601
(2,357
)
(a)
91,244
Straight-line rents
(4,244
)
(a)
(4,107
)
Non-cash lease expense
2,887
-
2,887
Net unrealized holding gains on investments
(55,796
)
-
(55,796
)
Distributions of operating income from unconsolidated affiliates
2,004
-
2,004
Equity in (earnings) losses of unconsolidated affiliates
(4,013
)
(a)
(3,153
)
Stock compensation expense
9,780
-
9,780
Amortization of financing costs
3,901
(239
)
(a,b)
3,662
Impairment charges
9,925
-
9,925
Gain on disposition of properties
(10,521
)
-
(10,521
)
Allowance for credit loss
(200
)
(a)
Termination of ground lease
(3,615
)
-
(3,615
)
Adjustments to straight-line rent reserves
(a)
Other, net
(5,319
)
3,060
(a,b)
(2,259
)
Changes in assets and liabilities:
Other liabilities
1,833
(85
)
(a)
1,748
Lease liability - operating leases
(2,653
)
-
(2,653
)
Prepaid expenses and other assets
(5,579
)
(102
)
(a)
(5,681
)
Rents receivable
4,104
(a)
4,118
Accounts payable and accrued expenses
(a)
Net cash provided by operating activities
72,390
(1,004
)
71,386
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate
(63,425
)
-
(63,425
)
Development, construction and property improvement costs
(27,197
)
1,262
(a)
(25,935
)
Proceeds from the disposition of properties, net
63,901
-
63,901
Investments in and advances to unconsolidated affiliates and other
(6,111
)
(921
)
(a)
(7,032
)
Return of capital from unconsolidated affiliates and other
10,671
1,400
(a)
12,071
Issuance of notes receivable
(57,957
)
-
(57,957
)
Payment of deferred leasing costs
(3,509
)
(a)
(3,191
)
Net cash used in investing activities
(83,627
)
2,059
(81,568
)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes
(69,766
)
-
(69,766
)
Principal payments on unsecured debt
(160,387
)
-
(160,387
)
Proceeds received on mortgage and other notes
12,654
(2,990
)
(a)
9,664
Proceeds from unsecured debt
211,854
-
211,854
Payments of finance lease obligations
(63
)
-
(63
)
Proceeds from the sale (repurchase) of Common Shares
45,865
-
45,865
Capital contributions from noncontrolling interests
26,627
-
26,627
Distributions to noncontrolling interests
(23,781
)
1,400
(a)
(22,381
)
Dividends paid to Common Shareholders
(26,208
)
-
(26,208
)
Deferred financing and other costs
(7,296
)
-
(7,296
)
Net cash provided by financing activities
9,499
(1,590
)
7,909
Decrease in cash and restricted cash
(1,738
)
(535
)
(2,273
)
Cash of $18,699 and restricted cash of $11,096 beginning of period
33,924
(4,129
)
29,795
Cash of $16,158 and restricted cash of $11,364 end of period
$
32,186
$
(4,664
)
$
27,522
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Subsequent Events
Acquisitions
On January 12, 2022, the Company acquired a retail property on 121 Spring Street in the Soho section of New York City, for $39.0 million.
On January 24, 2022, an affiliate of Fund III acquired the 36.9% non-controlling membership interest an entity that holds a property, which was collateral for a $5.3 million note receivable ($10.0 million including interest) that was in default at December 31, 2021 (Note 4), through a UCC foreclosure auction thereby obtaining 100% of the entity’s equity.
On February 18, 2022, the Company, through an acquisition subsidiary, acquired a 49.99% membership interest in a limited liability company (the "Venture") for $5.0 million. The Venture indirectly owns 11 retail storefronts and 23 residential units located in the Williamsburg section of Brooklyn, New York. The Company also, through a separate lending subsidiary, provided a $64.1 million First Mortgage Loan and a $30.9 million Mezzanine Loan to subsidiaries of the Venture to refinance existing loans related to the properties.
Dispositions
On January 26, 2022, Fund IV disposed of its Mayfair Shopping Center, located in Philadelphia, Pennsylvania, for $23.7 million and repaid the associated debt of $11.1 million. The property was classified as held for sale at December 31, 2021 (Note 3).
On February 1, 2022, Fund V sold a land parcel at its New Towne Center property in Canton, Michigan, for $2.2 million.
On February 9, 2022, Fund III disposed of its shopping center, Cortlandt Crossing, located in Westchester County, New York, for $65.5 million and repaid the associated debt of $34.5 million. The property was classified as held for sale at December 31, 2021 (Note 3).
Other
During 2022 through the date of these financial statements, the Company sold 4,281,576 common shares under its ATM program (Note 11) for gross proceeds of $96.3 million, at an average gross price of $22.48, or $92.5 million net of issuance costs.
On February 9, 2022, the Company repaid the loan in the amount of $12.3 million collateralized by its 28 Jericho property and terminated the associated swap.
ACADIA REALTY TRUST
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Balance at
Beginning of
Year
Charged to
Expenses
Adjustments
to Valuation
Accounts
Deductions
Balance at
End of Year
Year Ended December 31, 2021:
Allowance for deferred tax asset
$
2,599
$
-
$
1,061
$
-
$
3,660
Allowance for uncollectible accounts
45,009
(114
)
(6,424
)
-
38,471
Allowance for notes receivable
1,218
4,534
-
-
5,752
Year Ended December 31, 2020 (As Restated):
Allowance for deferred tax asset
$
1,748
$
-
$
$
-
$
2,599
Allowance for uncollectible accounts
11,408
46,440
(12,839
)
-
45,009
Allowance for notes receivable
-
-
1,218
Year Ended December 31, 2019 (As Restated):
Allowance for deferred tax asset
$
-
$
-
$
1,748
-
$
1,748
Allowance for uncollectible accounts
7,921
4,402
(915
)
-
11,408
Allowance for notes receivable
-
-
-
-
-
ACADIA REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2021
Initial Cost
to Company
Amount at Which
Carried at December 31, 2021
Description and
Location
Encumbrances
Land
Buildings &
Improvements
Increase
(Decrease)
in Net
Investments
Land
Buildings &
Improvements
Total
Accumulated
Depreciation
Date of
Acquisition (a)
Construction (c)
Life on which
Depreciation
in Latest
Statement of
Operations is
Compared
Core Portfolio:
Crescent Plaza
Brockton, MA
-
1,147
7,425
3,441
1,147
10,866
12,013
9,090
(a)
40 years
New Loudon Center
Latham, NY
-
4,161
16,228
20,389
20,894
16,657
(a)
40 years
Mark Plaza
Edwardsville, PA
-
-
3,396
-
-
3,396
3,396
3,119
(c)
40 years
Plaza 422
Lebanon, PA
-
3,004
2,809
5,813
6,003
5,334
(c)
40 years
Route 6 Mall
Honesdale, PA
-
1,664
-
12,761
1,664
12,761
14,425
11,096
(c)
40 years
Abington Towne Center
Abington, PA
-
3,197
3,914
7,111
7,910
4,666
(a)
40 years
Bloomfield Town Square
Bloomfield Hills, MI
-
3,207
13,774
25,281
3,207
39,055
42,262
26,685
(a)
40 years
Elmwood Park Shopping Center Elmwood Park, NJ
-
3,248
12,992
19,372
3,798
31,814
35,612
21,620
(a)
40 years
Merrillville Plaza
Hobart, IN
-
4,288
17,152
7,972
4,288
25,124
29,412
15,525
(a)
40 years
Marketplace of Absecon
Absecon, NJ
-
2,573
10,294
5,409
2,577
15,699
18,276
10,011
(a)
40 years
239 Greenwich Avenue
Greenwich, CT
25,707
1,817
15,846
1,086
1,817
16,932
18,749
9,639
(a)
40 years
Hobson West Plaza
Naperville, IL
-
1,793
7,172
5,512
1,793
12,684
14,477
6,906
(a)
40 years
Village Commons Shopping Center Smithtown, NY
-
3,229
12,917
5,396
3,229
18,313
21,542
11,621
(a)
40 years
Town Line Plaza
Rocky Hill, CT
-
3,510
8,182
11,663
12,570
9,665
(a)
40 years
Branch Shopping Center
Smithtown, NY
-
3,156
12,545
17,022
3,401
29,322
32,723
17,493
(a)
40 years
Methuen Shopping Center
Methuen, MA
-
3,826
1,776
5,597
6,558
3,252
(a)
40 years
The Gateway Shopping Center
South Burlington, VT
-
1,273
5,091
12,841
1,273
17,932
19,205
11,818
(a)
40 years
Mad River Station
Dayton, OH
-
2,350
9,404
2,265
2,350
11,669
14,019
7,134
(a)
40 years
Brandywine Holdings
Wilmington, DE
-
5,063
15,252
2,616
5,201
17,730
22,931
8,406
(a)
40 years
Bartow Avenue
Bronx, NY
-
1,691
5,803
1,456
1,691
7,259
8,950
3,821
(c)
40 years
Amboy Road
Staten Island, NY
-
-
11,909
3,259
-
15,168
15,168
9,735
(a)
40 years
Chestnut Hill
Philadelphia, PA
-
8,289
5,691
4,802
8,289
10,493
18,782
5,848
(a)
40 years
2914 Third Avenue
Bronx, NY
-
11,108
8,038
5,575
11,855
12,866
24,721
4,151
(a)
40 years
West Shore Expressway
Staten Island, NY
-
3,380
13,499
3,380
13,573
16,953
5,642
(a)
40 years
West 54th Street
Manhattan, NY
-
16,699
18,704
1,385
16,699
20,089
36,788
7,879
(a)
40 years
5-7 East 17th Street
Manhattan, NY
-
3,048
7,281
6,159
3,048
13,440
16,488
8,690
(a)
40 years
651-671 W Diversey
Chicago, IL
-
8,576
17,256
8,576
17,276
25,852
4,567
(a)
40 years
15 Mercer Street
Manhattan, NY
-
1,887
2,483
1,887
2,484
4,371
(a)
40 years
4401 White Plains
Bronx, NY
-
1,581
5,054
-
1,581
5,054
6,635
1,306
(a)
40 years
56 E. Walton
Chicago, IL
-
6,126
2,666
8,792
9,786
(a)
40 years
841 W. Armitage
Chicago, IL
-
1,989
2,411
3,139
(a)
40 years
2731 N. Clark
Chicago, IL
-
1,839
1,871
2,428
(a)
40 years
2140 N. Clybourn
Chicago, IL
-
1,148
(a)
40 years
853 W. Armitage
Chicago, IL
-
1,946
2,454
3,011
(a)
40 years
2299 N. Clybourn Avenue
Chicago, IL
-
-
(a)
40 years
843-45 W. Armitage
Chicago, IL
-
2,730
3,024
3,755
(a)
40 years
1525 W. Belmont Avenue
Chicago, IL
-
1,480
3,338
1,480
4,049
5,529
1,079
(a)
40 years
2206-08 N. Halsted
Chicago, IL
-
1,183
3,540
1,183
3,894
5,077
1,214
(a)
40 years
2633 N. Halsted
Chicago, IL
-
4,096
4,417
5,415
1,085
(a)
40 years
50-54 E. Walton
Chicago, IL
-
2,848
12,694
2,848
13,270
16,118
3,357
(a)
40 years
662 W. Diversey
Chicago, IL
-
1,713
1,603
1,713
1,613
3,326
(a)
40 years
ACADIA REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
837 W. Armitage
Chicago, IL
-
1,758
1,909
2,689
(a)
40 years
823 W. Armitage
Chicago, IL
-
1,149
1,244
1,961
(a)
40 years
851 W. Armitage
Chicago, IL
-
(a)
40 years
1240 W. Belmont Avenue
Chicago, IL
-
2,137
1,589
1,357
2,137
2,946
5,083
(a)
40 years
21 E. Chestnut
Chicago, IL
-
1,318
8,468
1,318
8,512
9,830
1,931
(a)
40 years
819 W. Armitage
Chicago, IL
-
1,266
1,453
2,243
(a)
40 years
1520 Milwaukee Avenue
Chicago, IL
-
2,110
1,306
2,110
1,596
3,706
(a)
40 years
330-340 River St
Cambridge, MA
10,601
8,404
14,235
-
8,404
14,235
22,639
3,650
(a)
40 years
Rhode Island Place Shopping Center Washington, D.C.
-
7,458
15,968
2,397
7,458
18,365
25,823
5,324
(a)
40 years
930 Rush Street
Chicago, IL
-
4,933
14,587
-
4,933
14,587
19,520
3,555
(a)
40 years
28 Jericho Turnpike
Westbury, NY
12,353
6,220
24,416
6,220
24,469
30,689
6,137
(a)
40 years
181 Main Street
Westport, CT
-
1,908
12,158
1,908
12,841
14,749
2,988
(a)
40 years
83 Spring Street
Manhattan, NY
-
1,754
9,200
-
1,754
9,200
10,954
2,185
(a)
40 years
179-53 & 1801-03 Connecticut Avenue Washington, D.C.
-
11,690
10,135
1,816
11,690
11,951
23,641
2,915
(a)
40 years
639 West Diversey
Chicago, IL
-
4,429
6,102
1,089
4,429
7,191
11,620
1,967
(a)
40 years
664 North Michigan
Chicago, IL
-
15,240
65,331
15,240
65,638
80,878
14,503
(a)
40 years
8-12 E. Walton
Chicago, IL
-
5,398
15,601
5,398
16,578
21,976
3,940
(a)
40 years
3200-3204 M Street
Washington, DC
-
6,899
4,249
6,899
4,417
11,316
1,071
(a)
40 years
868 Broadway
Manhattan, NY
-
3,519
9,247
3,519
9,252
12,771
1,868
(a)
40 years
313-315 Bowery
Manhattan, NY
-
-
5,516
-
-
5,516
5,516
1,786
(a)
40 years
120 West Broadway
Manhattan, NY
-
-
32,819
1,740
-
34,559
34,559
4,619
(a)
40 years
11 E. Walton
Chicago, IL
-
16,744
28,346
1,444
16,744
29,790
46,534
5,978
(a)
40 years
61 Main Street
Westport, CT
-
4,578
2,645
1,818
4,578
4,463
9,041
(a)
40 years
865 W. North Avenue
Chicago, IL
-
1,893
11,594
1,893
11,723
13,616
2,278
(a)
40 years
152-154 Spring St.
Manhattan, NY
-
8,544
27,001
8,544
27,348
35,892
5,265
(a)
40 years
2520 Flatbush Ave
Brooklyn, NY
-
6,613
10,419
6,613
10,722
17,335
2,134
(a)
40 years
252-256 Greenwich Avenue
Greenwich, CT
-
10,175
12,641
1,172
10,175
13,813
23,988
2,848
(a)
40 years
Bedford Green
Bedford Hills, NY
-
12,425
32,730
4,568
13,763
35,960
49,723
7,448
(a)
40 years
131-135 Prince Street
Manhattan, NY
-
-
57,536
-
58,286
58,286
20,235
(a)
40 years
Shops at Grand Ave
Queens, NY
-
20,264
33,131
1,740
20,264
34,871
55,135
6,528
(a)
40 years
201 Needham Street
Newton, MA
-
4,550
4,459
4,550
4,564
9,114
(a)
40 years
City Center
San Francisco, CA
-
36,063
109,098
5,154
26,386
123,929
150,315
21,023
(a)
40 years
163 Highland Avenue
Needham, MA
8,001
12,679
11,213
(107
)
12,529
11,256
23,785
2,065
(a)
40 years
Roosevelt Galleria
Chicago, IL
-
4,838
14,574
4,838
14,771
19,609
2,328
(a)
40 years
Route 202 Shopping Center
Wilmington, DE
-
-
6,346
-
6,850
6,850
1,628
(a)
40 years
991 Madison Avenue
Manhattan, NY
-
-
76,965
(75,355
)
-
1,610
1,610
(a)
40 years
165 Newbury Street
Boston, MA
-
1,918
3,980
-
1,918
3,980
5,898
(a)
40 years
Concord & Milwaukee
Chicago, IL
2,483
2,739
2,746
2,739
3,067
5,806
(a)
40 years
State & Washington
Chicago, IL
22,688
3,907
70,943
6,225
3,907
77,168
81,075
10,799
(a)
40 years
151 N. State Street
Chicago, IL
12,918
1,941
25,529
-
1,941
25,529
27,470
3,457
(a)
40 years
North & Kingsbury
Chicago, IL
11,332
18,731
16,292
2,045
18,731
18,337
37,068
2,336
(a)
40 years
Sullivan Center
Chicago, IL
50,000
13,443
137,327
1,590
13,443
138,917
152,360
18,762
(a)
40 years
California & Armitage
Chicago, IL
2,338
6,770
2,292
6,770
2,309
9,079
(a)
40 years
555 9th Street
San Francisco, CA
60,000
75,591
73,268
75,591
73,709
149,300
9,580
(a)
40 years
Market Square
Wilmington, DE
-
8,100
31,221
8,100
31,629
39,729
3,554
(a)
40 years
613-623 W. Diversey
Chicago, IL
-
10,061
2,773
11,443
10,061
14,216
24,277
3,976
(c)
40 years
51 Greene Street
Manhattan, NY
-
4,488
8,992
4,488
9,092
13,580
(a)
40 years
53 Greene Street
Manhattan, NY
-
3,605
12,177
3,605
12,179
15,784
(a)
40 years
ACADIA REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
41 Greene Street
Manhattan, NY
-
6,276
9,582
-
6,276
9,582
15,858
(a)
40 years
47 Greene Street
Manhattan, NY
-
6,265
16,758
6,265
16,764
23,029
1,012
(a)
40 years
849 W Armitage
Chicago, IL
-
2,731
-
2,731
3,568
(a)
40 years
912 W Armitage
Chicago, IL
-
2,868
-
2,868
3,850
(a)
40 years
Melrose Place Collection
Los Angeles, CA
-
20,490
26,788
-
20,490
26,788
47,278
1,456
(a)
40 years
45 Greene Street
Manhattan, NY
-
2,903
8,487
2,903
8,491
11,394
(a)
40 years
565 Broadway
Manhattan, NY
-
-
22,491
-
22,618
22,618
1,171
(a)
40 years
907 W Armitage
Chicago, IL
-
2,081
-
2,081
2,781
(a)
40 years
37 Greene Street
Manhattan, NY
-
6,721
9,119
-
6,721
9,119
15,840
(a)
40 years
917 W Armitage
Chicago, IL
-
2,368
-
2,368
3,269
(a)
40 years
Brandywine Town Center
Wilmington, DE
-
15,632
101,861
15,632
102,614
118,246
5,134
(a)
40 years
1324 14th Street
Washington, D.C.
-
3,044
-
3,044
3,772
-
(a)
40 years
1526 14th Street
Washington, D.C.
-
1,377
6,964
-
1,377
6,964
8,341
-
(a)
40 years
1529 14th Street
Washington, D.C.
-
1,485
10,411
-
1,485
10,411
11,896
-
(a)
40 years
Fund II:
City Point
Brooklyn, NY
255,978
-
100,316
521,360
-
621,676
621,676
95,189
(c)
40 years
Fund IV:
210 Bowery
Manhattan, NY
-
1,875
5,625
(6,490
)
1,010
(c)
40 years
27 E. 61st Street
Manhattan, NY
12,344
4,813
14,438
1,656
3,523
17,384
20,907
2,272
(c)
40 years
17 E. 71st Street
Manhattan, NY
8,895
7,391
20,176
7,391
20,502
27,893
3,817
(a)
40 years
1035 Third Avenue
Manhattan, NY
27,333
12,759
37,431
5,781
14,100
41,871
55,971
8,173
(a)
40 years
801 Madison Avenue
Manhattan, NY
19,548
4,178
28,470
(5,073
)
2,922
24,653
27,575
3,216
(c)
40 years
2208-2216 Fillmore Street
San Francisco, CA
5,533
3,027
6,376
3,027
6,533
9,560
1,018
(a)
40 years
2207 Fillmore Street
San Francisco, CA
1,120
1,498
1,735
1,498
1,860
3,358
(a)
40 years
146 Geary St.
San Francisco, CA
19,338
9,500
28,500
(785
)
8,037
29,178
37,215
(a)
40 years
1964 Union Street
San Francisco, CA
1,417
1,688
2,066
3,754
4,317
(c)
40 years
Restaurants at Fort Point
Boston, MA
5,855
1,041
10,905
1,041
11,087
12,128
1,679
(a)
40 years
Wakeforest Crossing
Wake Forest, NC
20,860
7,570
24,829
7,570
25,381
32,951
4,271
(a)
40 years
Dauphin Plaza
Harrisburg, PA
12,114
5,290
9,464
3,133
5,290
12,597
17,887
2,806
(a)
40 years
Lincoln Place
Fairview Heights, IL
22,861
7,149
22,201
2,429
7,149
24,630
31,779
3,729
(a)
40 years
18 E. Broughton St.
Savannah, GA
1,535
1,513
1,537
2,146
(a)
40 years
20 E. Broughton St.
Savannah, GA
1,001
1,537
(a)
40 years
25 E. Broughton St.
Savannah, GA
3,156
1,324
2,459
1,324
2,823
4,147
(a)
40 years
109 W. Broughton St.
Savannah, GA
6,422
2,343
6,560
2,343
6,849
9,192
(a)
40 years
204-206 W. Broughton St.
Savannah, GA
1,033
(a)
40 years
216-218 W. Broughton St.
Savannah, GA
2,645
1,160
2,736
2,065
1,160
4,801
5,961
(a)
40 years
220 W. Broughton St.
Savannah, GA
1,850
1,799
1,003
2,802
3,421
(a)
40 years
223 W. Broughton St.
Savannah, GA
1,186
(a)
40 years
226-228 W. Broughton St.
Savannah, GA
-
1,900
1,934
2,594
(a)
40 years
309/311 W. Broughton St.
Savannah, GA
2,329
1,160
2,695
1,160
2,697
3,857
(a)
40 years
230-240 W. Broughton St.
Savannah, GA
5,018
2,185
9,597
2,185
9,603
11,788
(a)
40 years
102 E. Broughton St.
Savannah, GA
-
-
-
-
(a)
40 years
Fund V:
Plaza Santa Fe
Santa Fe, NM
22,893
-
28,214
1,384
-
29,598
29,598
3,746
(a)
40 years
Hickory Ridge
Hickory, NC
29,128
7,852
29,998
4,858
7,852
34,856
42,708
4,318
(a)
40 years
New Towne Plaza
Canton, MI
16,232
5,040
17,391
5,040
18,171
23,211
2,329
(a)
40 years
Fairlane Green
Allen Park, MI
33,467
18,121
37,143
18,121
37,718
55,839
4,220
(a)
40 years
Trussville Promenade
Birmingham, AL
29,190
7,587
34,285
7,587
34,338
41,925
3,587
(a)
40 years
Elk Grove Commons
Elk Grove, CA
41,500
6,204
48,008
1,138
6,204
49,146
55,350
4,409
(a)
40 years
ACADIA REALTY TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Hiram Pavilion
Hiram, GA
28,830
13,029
25,446
13,029
26,070
39,099
2,663
(a)
40 years
Palm Coast Landing
Palm Coast, FL
26,500
7,066
27,299
7,066
27,732
34,798
2,261
(a)
40 years
Lincoln Commons
Lincoln, RI
38,820
14,429
34,417
1,936
14,429
36,353
50,782
2,627
(a)
40 years
Landstown Commons
Virginia Beach, VA
60,900
10,222
69,005
1,856
10,222
70,861
81,083
4,537
(a)
40 years
Canton Marketplace
Canton, GA
31,801
11,883
34,902
11,883
35,034
46,917
(a)
40 years
Monroe Marketplace
Selinsgrove, PA
29,150
8,755
35,452
8,755
35,681
44,436
(a)
40 years
Midstate
East Brunswick, NJ
-
13,062
43,290
-
13,062
43,290
56,352
(a)
40 years
Real Estate Under Development
52,000
84,977
35,440
83,356
94,654
109,119
203,773
-
Debt of Assets Held for Sale
46,015
-
-
-
-
-
-
-
Unamortized Loan Costs
(3,958
)
-
-
-
-
-
-
-
Unamortized Premium
-
-
-
-
-
-
-
Total
$
1,140,293
$
835,376
$
2,449,230
$
787,001
$
834,295
$
3,237,312
$
4,071,607
$
648,461
Notes:
1.Depreciation on buildings and improvements reflected in the consolidated statements of operations is calculated over the estimated useful life of the assets as follows: Buildings at 40 years and improvements at the shorter of lease term or useful life.
2.The aggregate gross cost of property included above for Federal income tax purposes was approximately $4.2 billion as of December 31, 2021.
The following table reconciles the activity for real estate properties from January 1, 2019 to December 31, 2021 (in thousands):
Year Ended December 31,
(As Restated)
(As Restated)
Balance at beginning of year
$
4,011,326
$
3,960,411
$
3,620,583
Improvements and other
32,070
71,409
95,097
Property acquisitions
172,558
19,109
303,884
Property dispositions or held for sale assets
(134,422
)
(19,659
)
(84,243
)
Right-of-use assets - finance leases obtained and reclassified
-
(76,965
)
102,055
Capital lease reclassified as Right-of-use assets - finance lease
-
-
(76,965
)
Consolidation of previously unconsolidated investments
-
129,863
-
Impairment charges
(9,925
)
(72,842
)
-
Balance at end of year
$
4,071,607
$
4,011,326
$
3,960,411
The following table reconciles accumulated depreciation from January 1, 2019 to December 31, 2021 (in thousands):
Year Ended December 31,
(As Restated)
(As Restated)
Balance at beginning of year
$
573,364
$
478,991
$
407,698
Depreciation related to real estate
90,456
101,849
83,040
Property dispositions or held for sale assets
(15,359
)
(939
)
(11,747
)
Right-of-use assets - finance leases reclassified
-
(6,537
)
-
Balance at end of year
$
648,461
$
573,364
$
478,991
ACADIA REALTY TRUST
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 2021
(in thousands)
Description
Effective
Interest Rate
Final Maturity
Date
Face Amount
of Notes
Receivable
Net Carrying
Amount of
Notes
Receivable
as of
December 31,
First Mortgage Loan
6.00%
4/1/2020
$
17,810
$
17,802
Mezzanine Loan
18.00%
7/1/2020
5,306
5,306
First Mortgage Loan
5.42%
6/1/2022
13,530
13,530
Mezzanine Loan
9.00%
1/13/2023
54,000
54,000
Other
4.65%
4/12/2026
6,000
6,000
Mezzanine Loan
8.00%
12/11/2027
5,000
5,000
First Mortgage Loan
9.00%
10/20/2022
16,000
16,000
First Mortgage Loan
6.56%
9/17/2024
43,000
42,000
Total
$
160,646
159,638
Allowance for credit loss
(5,752
)
Net carrying amount of notes receivable
$
153,886
The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company's loan in relation to other debt secured by the collateral, the personal guarantees of the borrower and the prospects of the borrower.
The following table reconciles the activity for loans on real estate from January 1, 2019 to December 31, 2021 (in thousands):
Reconciliation of Loans on Real Estate
Year Ended December 31,
(As Restated)
(As Restated)
Balance at beginning of year
$
100,882
$
114,943
$
111,775
Additions
58,000
59,585
18,418
Repayments
-
-
(15,250
)
Conversion of OP Units
(462
)
-
-
Conversion to real estate through receipt of deed
-
(72,428
)
-
Allowance for credit loss
(4,534
)
(1,218
)
-
Balance at end of year
$
153,886
$
100,882
$
114,943

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES.
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 not effective as of December 31, 2021 due to the material weakness in our internal control over financial reporting described below.
As a result of the material weakness identified, we performed additional analysis and other post-closing procedures intended to assess our consolidated financial statements for preparation in accordance with U.S. GAAP. Accordingly, management believes that the consolidated financial statements, including restatements of previous periods, and related notes thereto included in this Annual Report on Form 10-K fairly present, in all material aspects, the Company’s financial condition, results of operations and cash flows for the periods presented and restated.
Management’s 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 assessment of the effectiveness of our internal control over financial reporting as of December 31, 2021 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 (2013 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 not effective as of December 31, 2021 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.
The material weakness is related to an error in accounting treatment at the time of formation related to the improper consolidation of two Fund investments that are less-than-wholly-owned through the Company’s opportunity funds. These two Fund investments, which were formed in 2012 and 2013, have been adjusted from consolidated investments to investments in unconsolidated affiliates within the restated financial statements included within this Annual Report.
BDO USA, LLP, an independent registered public accounting firm that audited our Financial Statements included in this Annual Report, has issued an unqualified opinion on our consolidated financial statements and an adverse opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, which also appears in this Item 9A.
Acadia Realty Trust
Rye, New York
March 1, 2022
Remediation Efforts to Address the Material Weakness
We have performed additional procedures to assess the population of less-than-wholly-owned investments as part of the remediation of the material weakness. Until the material weakness is remediated, we will continue to perform additional analysis and other post-closing procedures to ensure that our consolidated financial statements are prepared in accordance with U.S. GAAP. The material weakness will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective.
Changes in Internal Control Over Financial Reporting
During the three months ended December 31, 2021, other than the identification of the material weakness described above, there were no changes in the Company’s internal control over financial reporting that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Trustees
Acadia Realty Trust
Rye, New York
Opinion on Internal Control over Financial Reporting
We have audited Acadia Realty Trust’s (the “Company’s”) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria. We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the Company after the date of management’s assessment.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedules, and our report dated March 1, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s 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 Item 9A, Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. 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 material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness regarding management’s failure to design and maintain controls related to the consolidation of certain Fund investments has been identified and described in management’s assessment. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 financial statements, and this report does not affect our report dated March 1, 2022, on those financial statements.
Definition and Limitations of Internal Control over Financial Reporting
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.
/s/ BDO USA, LLP
New York, New York
March 1, 2022

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ITEM 9B. OTHER INFORMATION
ITEM 9B.	OTHER INFORMATION.
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information under the following headings in the 2022 Proxy Statement is incorporated herein by reference:
•“PROPOSAL 1 - ELECTION OF TRUSTEES”
•“MANAGEMENT”
•“DELINQUENT SECTION 16(a) REPORTS”

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION.
The information under the following headings in the 2022 Proxy Statement is incorporated herein by reference:
•“ACADIA REALTY TRUST COMPENSATION COMMITTEE REPORT”
•“COMPENSATION DISCUSSION AND ANALYSIS”
•“BOARD OF TRUSTEES COMPENSATION”
•“COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION”

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information under the heading “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” in the 2022 Proxy Statement is incorporated herein by reference.
The information under Item 5. of this Report under the heading “(c) Securities authorized for issuance under equity compensation plans” is incorporated herein by reference.

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
The information under the following headings in the 2022 Proxy Statement is incorporated herein by reference:
•“CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”
•“PROPOSAL 1 - ELECTION OF TRUSTEES-Trustee Independence”

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information under the heading “AUDIT COMMITTEE INFORMATION” in the 2022 Proxy Statement is incorporated herein by reference.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
1.
Financial Statements: See “Index to Financial Statements” at Item 8.
2.
Financial Statement Schedule: See “Schedule II-Valuation and Qualifying Accounts” at Item 8.
3.
Financial Statement Schedule: See “Schedule III-Real Estate and Accumulated Depreciation” at Item 8.
4.
Financial Statement Schedule: See “Schedule IV-Mortgage Loans on Real Estate” at Item 8.
5.
Exhibits: The index of exhibits below is incorporated herein by reference.
The following is an index to all exhibits including (i) those filed with this Report and (ii) those incorporated by reference herein:
Exhibit
No.
Description
Method of Filing
3.1
Declaration of Trust of the Company
Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012.
3.2
First Amendment to Declaration of Trust of the Company
Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012.
3.3
Second Amendment to Declaration of Trust of the Company
Incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012.
3.4
Third Amendment to Declaration of Trust of the Company
Incorporated by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012.
3.5
Fourth Amendment to Declaration of Trust
Incorporated by reference to Exhibit 3.1 (a) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.
3.6
Fifth Amendment to Declaration of Trust
Incorporated by reference to Exhibit 3.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.
3.7
Sixth Amendment to Declaration of Trust
Incorporated by reference to Exhibit 3.01 to the Company’s Current Report on Form 8-K filing on July 28, 2017.
3.8
Articles Supplementary
Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 9, 2017.
3.9
Amended and Restated Bylaws of the Company
Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on November 18, 2013.
3.10
Amendment No. 1 to Amended and Restated Bylaws of the Company
Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on April 29, 2014.
4.1
Description of Acadia Realty Trust Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended
Incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
10.1*
Acadia Realty Trust 2020 Share Incentive Plan
Incorporated by reference to page 63 of the Company’s 2020 Definitive Proxy Statement filed with the SEC on March 24, 2020
10.2*
Description of Long-Term Investment Alignment Program
Incorporated by reference to page 20 to the Company’s 2009 Annual Proxy Statement filed with the SEC April 9, 2009.
10.3*
Amended and Restated Employment Agreement between the Company and Kenneth F. Bernstein
Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 1, 2014.
Exhibit
No.
Description
Method of Filing
10.4*
Form of Second Amended and Restated Severance Agreement, effective as of February 26, 2018, with each of: John Gottfried, Senior Vice President and Chief Financial Officer; Jason Blacksberg, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary; Christopher Conlon, Executive Vice President and Chief Operating Officer and Joseph M. Napolitano, Senior Vice President and Chief Administrative Officer
Incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
10.5*
Form of 2018 Long-Term Incentive Plan Award Agreement (time- and performance-based)
Incorporated by reference to Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.
10.6*
Form of Assignments and Assumptions of Carried Interest with respect to the Company's Long-Term Incentive Alignment Program
Incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.
10.7*
Form of Omnibus Amendment to the Series of Assignments and Assumptions of Carried Interest with respect to the Company's Long-Term Incentive Alignment Program
Incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.
10.8*
Form of 2018 Long-Term Incentive Plan Award Agreement (Time-Based Only)
Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017.
10.9
Form of Long-Term Incentive Plan Award Agreement (Time-Based Only) (Chief Executive Officer)
Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
10.10
Form of Long-Term Incentive Plan Award Agreement (Time and Performance Based) (Chief Executive Officer)
Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
10.11
Second Amended and Restated Credit Agreement dated as of June 29, 2021, by and among Bank of America, N.A., as administrative agent, Wells Fargo Bank, National Association, Truist Bank, and PNC Bank, National Association, as syndication agents, BofA Securities, Inc. and Wells Fargo Securities, LLC, as joint bookrunners, and BofA Securities, Inc., Wells Fargo Securities, LLC, Truist Bank and PNC Capital Markets LLC, as joint lead arrangers and the lenders party thereto
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 2, 2021.
Exhibit
No.
Description
Method of Filing
List of Subsidiaries of Acadia Realty Trust
Filed herewith
23.1
Consent of Registered Public Accounting Firm to incorporation by reference its reports into Forms S-3 and Forms S-8
Filed herewith
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
Filed herewith
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
Filed herewith
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
Filed herewith
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
Filed herewith
99.1
Amended and Restated Agreement of Limited Partnership Agreement dated July 23, 2019
Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019
99.2
Certificate of Designation of Series A Preferred Operating Partnership Units of Limited Partnership Interest of Acadia Realty Limited Partnership
Incorporated by reference to Exhibit 10.1(C) to the Company's Annual Report on Form 10-K filed for the year ended December 31, 1999.
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
Filed herewith
101.SCH
Inline XBRL Taxonomy Extension Schema Document
Filed herewith
101.CAL
Inline XBRL Taxonomy Extension Calculation Document
Filed herewith
101.DEF
Inline XBRL Taxonomy Extension Definitions Document
Filed herewith
101.LAB
Inline XBRL Taxonomy Extension Labels Document
Filed herewith
101.PRE
Inline XBRL Taxonomy Extension Presentation Document
Filed herewith
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
Filed herewith
The referenced exhibit is a management contract or compensation plan or arrangement.