Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
AKR > SEC Filings for AKR > Form 10-K on 26-Feb-2014All Recent SEC Filings

Show all filings for ACADIA REALTY TRUST

Form 10-K for ACADIA REALTY TRUST


26-Feb-2014

Annual Report


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

OVERVIEW

As of December 31, 2013, we operated 112 properties, which we own or have an ownership interest in, within our Core Portfolio or within our 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 112 properties primarily consist of street retail, dense suburban neighborhood and community shopping centers and mixed-use properties with a strong retail component. The properties we operate are located primarily in high-barrier-to-entry, densely-populated metropolitan areas in the United States along the East Coast and in Chicago. There are 77 properties in our Core Portfolio totaling approximately 5.3 million square feet. Fund I has three remaining properties comprising approximately 0.1 million square feet. Fund II has five properties, three of which (representing 0.3 million square feet) are currently operating, one is under construction, and one is in the design phase. Fund III has 16 properties, 12 of which (representing 1.7 million square feet) are currently operating and four of which are in the design phase. Fund IV has 11 properties, 10 of which (representing 0.7 million square feet) are operating with one under design. The majority of our operating income is derived from rental revenues from these 112 properties, including recoveries from tenants, offset by operating and overhead expenses. As our RCP Venture invests in operating companies, we consider these investments to be private-equity style, as opposed to real estate, investments. Since these are not traditional investments in operating rental real estate but investments in operating businesses, the Operating Partnership invests in these through a taxable REIT subsidiary ("TRS").

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


Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas and create value through accretive redevelopment 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:

            value-add investments in high-quality urban and/or street retail
             properties with re-tenanting or repositioning opportunities,


            opportunistic acquisitions of well-located real-estate anchored by
             distressed retailers or by motivated sellers and


            opportunistic purchases of debt which may include restructuring or
             the opportunity to convert the investment into an equity interest.

These may also include joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets.

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

RESULTS OF OPERATIONS

See Note 3 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments.

A discussion of the significant variances and primary factors contributing thereto within the results of operations for the years ended December 31, 2013, 2012 and 2011 are addressed below:

Comparison of the year ended December 31, 2013 ("2013") to the year ended December 31, 2012 ("2012")

Revenues                                      2013                                             2012
                             Core                         Structured          Core                         Structured
(dollars in millions)      Portfolio        Funds         Financings        Portfolio        Funds         Financings
Rental income            $      90.2     $    32.5     $            -     $      56.0     $    28.0     $             -
Interest income                    -             -               11.8               -             -                 8.0
Expense reimbursements          19.1           9.3                  -            12.8           7.6                   -
Other                            1.1           4.3                  -             1.6           1.0                   -
Total revenues           $     110.4     $    46.1     $         11.8     $      70.4     $    36.6     $           8.0

Rental income in the Core Portfolio increased $34.2 million primarily as a result of additional rents of (i) $16.5 million following the consolidation of our Brandywine investment formerly presented under the equity method ("Consolidation of Brandywine"), (ii) $11.4 million related to the acquisitions of 1520 Milwaukee Avenue, 330-340 River Street, our Chicago Street Retail Portfolio, 930 Rush Street, 28 Jericho Turnpike, Rhode Island Shopping Center, 83 Spring Street, 60 Orange Street, 181 Main Street, Connecticut Avenue, and 639 West Diversey ("2012 Core Acquisitions"), (iii) $5.1 million related to 2013 Core Portfolio property acquisitions as detailed in Note 2 in the Notes to Consolidated Financial Statements ("2013 Core Acquisitions") and (iv) $1.1 million as a result of re-anchoring and leasing activities at Bloomfield Town Square and Branch Plaza ("Core Re-tenanting"). Rental income in the Funds increased $4.5 million primarily as a result of additional rents of (i) $2.9 million related to 2013 Fund property acquisitions as detailed in Note 2 in the Notes to Consolidated Financial Statements ("2013 Fund Acquisitions") and (ii) $0.7 million related to the acquisitions of 640 Broadway, Lincoln Park Centre and 3104 M Street ("2012 Fund Acquisitions").

Interest income increased $3.8 million as a result of the origination of two notes during December 2012. This was partially offset by the repayment of four notes during 2012 and 2013.

Expense reimbursements in the Core Portfolio increased $6.3 primarily million as a result of (i) $2.9 million from the Consolidation of Brandywine, (ii) $1.5 million from 2012 Core Acquisitions and (iii) $0.6 million from 2013 Core Acquisitions. Expense reimbursements in the Funds increased $1.7 million as a result of 2013 and 2012 Fund Acquisitions.


Other income in the Funds increased $3.3 million primarily as a result of the 2013 collection of a note receivable originated in 2010, which had been written off prior to 2013.

Operating Expenses                            2013                                               2012
                            Core                          Structured            Core                         Structured
(dollars in millions)     Portfolio        Funds          Financings          Portfolio        Funds         Financings
Property operating      $      13.5     $     7.5     $               -     $      10.3     $     7.1     $             -
Other operating                 2.7           1.9                     -             1.8           2.1                   -
Real estate taxes              12.8           8.1                     -             9.7           6.7                   -
General and
administrative                 23.6           2.0                     -            19.6           1.6                   -
Reserve for notes
receivable                        -             -                     -               -             -                 0.4
Depreciation and
amortization                   29.0          11.3                     -            17.1          10.8                   -
Total operating
expenses                $      81.6     $    30.8     $               -     $      58.5     $    28.3     $           0.4

Property operating expenses for the Core Portfolio increased $3.2 million as a result of $2.0 million from (i) the Consolidation of Brandywine and (ii) $1.2 million from 2013 and 2012 Core Acquisitions.

Real estate tax expense in the Core Portfolio increased $3.1 million as a result of (i) $1.4 million from the Consolidation of Brandywine and (ii) $1.7 million from 2013 and 2012 Core Acquisitions. Real estate tax expense in the Funds increased $1.4 million as a result of 2013 and 2012 Fund Acquisitions.

General and administrative expense in the Core Portfolio increased $3.8 million primarily due to non-cash executive retirement expenses as well as additional hiring during 2013.

Depreciation and amortization for the Core Portfolio increased $11.9 million primarily as a result of (i) $4.8 million from 2012 Core Acquisitions, (ii) $3.6 million from the Consolidation of Brandywine and (iii) $2.0 million from 2013 Core Acquisitions.

Other                                         2013                                               2012
                            Core                         Structured            Core                          Structured
(dollars in millions)    Portfolio        Funds          Financings         Portfolio        Funds           Financings
Equity in (losses)
earnings of
unconsolidated
affiliates              $     (0.1 )   $    12.5     $               -     $      0.2     $      0.3     $               -
Gain on sale of
unconsolidated
affiliates                       -             -                     -              -            3.1                     -
Impairment of
investment in
unconsolidated
affiliate                        -             -                     -              -           (2.0 )                   -
Impairment of asset           (1.5 )           -                     -              -              -                     -
Loss on debt
extinguishment                (0.3 )        (0.5 )                   -              -           (0.2 )                   -
Gain on involuntary
conversion of asset              -             -                     -            2.4              -                     -
Interest and other
finance expense              (26.2 )       (13.3 )                   -          (15.4 )         (7.4 )                   -
Income tax
(provision) benefit            0.1          (0.1 )                   -           (0.2 )          0.8                     -
Income from
discontinued
operations                     6.9          11.2                     -            0.3           80.4                     -
(Loss) income
attributable to
noncontrolling
interests:
 - Continuing
operations                    (1.0 )         8.5                     -            0.1           14.3                     -
 - Discontinued
operations                    (2.4 )        (9.6 )                   -           (0.1 )        (64.5 )                   -

Equity in (losses) earnings of unconsolidated affiliates in the Funds increased $12.2 million primarily as a result of (i) $8.2 million from the acquisitions of Arundel Plaza, Lincoln Road Portfolio, 1701 Belmont Avenue, 2819 Kennedy Boulevard and Promenade


at Manassas ("2012 and 2013 Fund Unconsolidated Acquisitions") and (ii) $4.0 million from our share of earnings from our investment in the Self-Storage Management company during 2013 ("Self-Storage Management").

Gain on sale of unconsolidated affiliates represents our share of a $3.4 million gain on sale of an unconsolidated Fund investment during 2012.

Impairment of investment in unconsolidated affiliate represents the settlement of legal proceedings from our Mervyns investment during 2012.

Impairment of asset in the Core Portfolio represents an impairment charge on Walnut Hill Plaza during 2013. See Note 1 in the Notes to Consolidated Financial Statements for a discussion of the impairment charge.

Gain on involuntary conversion of asset of $2.4 million related to insurance proceeds received in excess of net basis for flood damage at Mark Plaza during 2012.

Interest expense in the Core Portfolio increased $10.8 million primarily as a result of the Consolidation of Brandywine. Interest expense in the Funds increased $5.9 million primarily due to an increase of $9.4 million related to higher average outstanding borrowings offset by an increase in capitalized interest related to redevelopment activities during 2013.

Income from discontinued operations primarily represents activity related to a property held for sale in 2013 and properties sold during 2013 and 2012.

(Loss) income attributable to noncontrolling interests - Continuing operations and Discontinued operations represents the noncontrolling interests' share of all the Funds variances discussed above.

Comparison of the year ended December 31, 2012 ("2012") to the year ended December 31, 2011 ("2011")

Revenues                                      2012                                              2011
                             Core                         Structured           Core                         Structured
(dollars in millions)      Portfolio        Funds         Financings         Portfolio        Funds         Financings
Rental income            $      56.0     $    28.0     $             -     $      44.9     $    20.9     $            -
Interest income                    -             -                 8.0               -             -               11.7
Expense reimbursements          12.8           7.6                   -            11.1           6.8                  -
Other                            1.6           1.0                   -             2.2           0.3                  -
Total revenues           $      70.4     $    36.6     $           8.0     $      58.2     $    28.0     $         11.7

Rental income in the Core Portfolio increased $11.1 million primarily as a result of (i) $6.9 million related to 2012 Core Acquisitions, (ii) $2.5 million from the acquisitions of 651 West Diversey, Chicago Retail Portfolio, 4401 White Plains Road, and Mercer Street ("2011 Core Acquisitions"), and (iii) $1.3 million related to Core Re-tenanting. Rental income in the Funds increased $7.1 million primarily from (i) $3.0 million related to 2012 Fund Acquisitions, (ii) $2.2 million from the acquisitions of New Hyde Park, 654 Broadway, and Heritage Shops ("2011 Fund Acquisitions"), and (iii) $1.1 million from leases that commenced during 2011 and 2012 at 161st Street ("Fund Redevelopment Property").

Interest income decreased $3.7 million as a result of the full repayment of two notes during 2011. This was partially offset by five new notes originated during 2012.

Expense reimbursements in the Core Portfolio increased $1.7 million as a result of the 2012 and 2011 Core Acquisitions and an increase in common area maintenance ("CAM") expenses during 2012.


Operating Expenses                            2012                                                2011
                            Core                          Structured            Core                          Structured
(dollars in millions)     Portfolio        Funds          Financings          Portfolio        Funds          Financings
Property operating      $      10.3     $     7.1     $               -     $       7.4     $     6.0     $               -
Other operating                 1.8           2.1                     -             0.7           0.7                     -
Real estate taxes               9.7           6.7                     -             8.4           4.8                     -
General and
administrative                 19.6           1.6                     -            20.9           2.1                     -
Reserve for notes
receivable                      0.4             -                     -               -             -                     -
Depreciation and
amortization                   17.1          10.8                     -            13.1           7.9                     -
Total operating
expenses                $      58.9     $    28.3     $               -     $      50.5     $    21.5     $               -

The increase in property operating expenses was the result of the 2012 and 2011 Core Acquisitions and an $1.2 million increase in credit loss during 2012. Property operating expenses in the Funds increased $1.1 million from 2012 and 2011 Fund Acquisitions as well as an increase in credit loss during 2012.

Other operating expenses, which represents acquisition costs, increased for the Core Portfolio and Funds as a result of the 2012 Core Acquisitions and 2012 Fund Acquisitions, respectively.

Real estate tax expense in the Core Portfolio increased $1.4 million as a result of the 2012 and 2011 Core Acquisitions. Real estate tax expense in the Funds increased $1.8 million as a result of the 2012 and 2011 Fund Acquisitions and the Fund Redevelopment Property.

The decrease in general and administrative expense in the Core Portfolio was due to an increase in capitalized salaries related to leasing and redevelopment activities in 2012.

Depreciation and amortization expense in the Core Portfolio increased $4.0 million as a result of the 2012 and 2011 Core Acquisitions. Depreciation and amortization expense in the Funds increased $2.9 million due to the 2012 and 2011 Fund Acquisitions and the Fund Redevelopment Property.

Other                                         2012                                                2011
                            Core                          Structured            Core                          Structured
(dollars in millions)    Portfolio        Funds           Financings         Portfolio        Funds           Financings
Equity in earnings of
unconsolidated
affiliates              $      0.2     $      0.3     $               -     $      0.7     $      0.9     $               -
Gain on sale of
unconsolidated
affiliates                       -            3.1                     -              -              -                     -
Impairment of
investment in
unconsolidated
affiliate                        -           (2.0 )                   -              -              -                     -
(Loss) gain on debt
extinguishment                   -           (0.2 )                   -            1.3              -                     -
Gain on involuntary
conversion of asset            2.4              -                     -              -              -                     -
Interest and other
finance expense              (15.4 )         (7.4 )                   -          (16.5 )         (6.9 )                   -
Income tax
(provision) benefit           (0.2 )          0.8                     -           (1.1 )          0.6                     -
Income from
discontinued
operations                     0.3           80.4                     -           29.2           19.6                     -
(Loss) income
attributable to
noncontrolling
interests:
 - Continuing
operations                     0.1           14.3                     -           (0.6 )         14.3                     -
 - Discontinued
operations                    (0.1 )        (64.5 )                   -           (0.1 )        (15.8 )                   -

Gain on sale of unconsolidated affiliates represents our share of a $3.4 million gain on sale of an unconsolidated Fund investment during 2012.


Impairment of investment in unconsolidated affiliate represents the settlement of legal proceedings from our Mervyns investment during 2012.

Gain on debt extinguishment of $1.3 million in the Core Portfolio during 2011 was the result of the purchase of mortgage debt at a discount in 2011.

Gain on involuntary conversion of asset of $2.4 million related to insurance proceeds received in excess of net basis for flood damage at Mark Plaza during 2012.

Interest expense in the Core Portfolio decreased $1.1 million primarily as a result of the Company's purchase of Convertible Notes in December 2011 (Note 9).

Income from discontinued operations represents activity related to properties sold during 2012 and 2011.

(Loss) income attributable to noncontrolling interests - Continuing operations and Discontinued operations represents the noncontrolling interests' share of all the Funds variances discussed above.

CORE PORTFOLIO

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 redevelopment. 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 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.

Net Property Operating Income

NOI is determined as follows:


RECONCILIATION OF CONSOLIDATED OPERATING INCOME TO NET OPERATING INCOME - CORE
PORTFOLIO
(dollars in millions)                                                  Year Ended December 31,
                                                                        2013             2012
Consolidated Operating Income                                      $      55.9       $      27.8
Add back:
 General and administrative                                               25.5              21.2
 Depreciation and amortization                                            40.3              27.9
Less:
 Management fee income                                                    (0.1 )            (1.5 )
 Interest income                                                         (11.8 )            (8.0 )
 Straight-line rent and other adjustments                                 (5.8 )             2.8
Consolidated NOI                                                         104.0              70.2

Noncontrolling interest in consolidated NOI                              (33.9 )           (19.4 )
Less: Operating Partnership's interest in Fund NOI included
above                                                                     (5.3 )            (4.2 )
Add: Operating Partnership's share of unconsolidated joint
ventures NOI 1                                                             2.8               6.1
NOI - Core Portfolio                                               $      67.6       $      52.7

  Add AKR to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for AKR - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.