Acadia Realty Trust (AKR)

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Acadia Realty Trust (AKR)

Q4 2013 Earnings Conference Call

February 13, 2014 12:00 PM ET


Amy Rancanello – VP, Capital Markets and Investments

Ken Bernstein – President and CEO

Jon Grisham – SVP and CFO


Jay Carlton – Green Street Advisors

Todd Thomas – KeyBanc

Craig Schmidt – Bank of America

Christine McElroy – Citi

Rich Moore – RBC Capital Markets

Mike Mueller – JPMorgan



Welcome to Fourth Quarter 2013 Acadia Realty Trust Earnings Conference Call. As a reminder, this conference is being recorded. At this time, all audience lines have been placed on mute. We will conduct a question-and-answer session following the formal presentation. (Operator Instructions).

I will now turn the call over to Amy Rancanello, Vice President of Capital Markets and Investments. Please proceed.

Amy Rancanello

Good afternoon and thank you for joining us, for the fourth quarter 2013 Acadia Realty Trust earnings conference call. Participating in today’s call will be Kenneth Bernstein, President and Chief Executive Officer; and Jon Grisham, Chief Financial Officer.

Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934, and actual results may differ materially from those indicated by such forward-looking statements.

Due to a variety of risks and uncertainties including those disclosed in the company’s most recent Form 10-K and other periodic filings with the SEC, forward-looking statements speak only as of the date of this call, February 13, 2014 and the company undertakes no duty to update them.

During this call, management may refer to certain non-GAAP financial measures including Funds from operations and net operating income. Please see Acadia’s earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

With that, I will now turn the call over to Ken Bernstein.

Ken Bernstein

Thank you, Amy. Good afternoon. Thank you for joining us. Today, I’ll start with an overview of our 2013 accomplishments then Jon will review our fourth quarter and year-end operating results as well as our guidance for this year.

Last year, notwithstanding a fair amount of volatility in the REIT markets, we experienced steady and significant value enhancement to our real-estate portfolios across both our Core and our Fund platforms.

First, the assets in our existing Core portfolio achieved strong same-store NOI growth of more than 7%. Then on top of that, this portfolio also benefited from well observed cap rate compression which was most noticeable for the types of high-quality retail assets that we now own. Then furthermore, we grew that portfolio by roughly 20% with over $220 million of accretive street retail acquisitions.

With respect to our Fund platform, during the year we continued to make important leasing and development progress at asset including City Point in Downtown Brooklyn, Lincoln Park Center in Chicago. And similar to our Core portfolio, our operating Fund assets ranging from our Lincoln Road properties in Miami Beach to our Cortlandt Town Center in Westchester New York, they also benefited from cap rate compression.

And then finally, we completed $123 million of additional Fund acquisitions as well. So, not only did our portfolio’s values increase but most importantly looking ahead, both platforms are well positioned and well capitalized to build on last year’s value with a solid collection of existing assets, strong embedded growth as well as plenty of powder.

So, with that in mind, let’s begin with a review of our Core portfolio. I’m going to leave a detailed discussion of our operating results to Jon. But overall our Core portfolio performed well in 2013, and that was on the heels of a strong 2012 and looks very promising for 2014 as well.

And with more of our recent acquisitions joining the same-store pool, our operating results are beginning to validate our thesis that high-quality assets located on the nation’s key street retail corridors such as those that now comprise a significant portion of our existing portfolio. That those assets are well positioned to provide both reliable and ultimately superior growth.

In terms of our Core portfolio acquisition activity last year, consistent with our goals, we added $221 million of high-quality properties to our Core portfolio with about $100 million of these acquisitions closing during or subsequent to the fourth quarter.

We acquired these assets at a blended going in yield of about 5% with strong embedded growth potential. These acquisitions strengthened our existing foothold in the vibrant live work play cities of New York, Chicago, Washington DC, as you’re aware, in recent years, our acquisition activities have been weighted towards street retail and response to the continued evolution of retailing.

Over the next several years, we expect to see a further separation between the have locations and they have not with the key locations capturing a larger percentage of tenant sales and therefore able to sustain more robust growth.

First in Chicago, in early 2013, we made an important acquisition in the North Michigan Avenue. Later in the year we added two more gold post assets located in the nearby Rush and Walton corridor. We now control a significant stretch of Walton Street including two of the key corners were to intersect with Rush Street.

Tenants at our properties include Mark Jacobs, YSL, Brioni, Barber, Lululemon. We’re also achieving similar scalability in several other markets such as in Georgetown and Washington DC where earlier this year we added our seventh asset there, which is located at the market’s best corner of M Street in Wisconsin Avenue.

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