ACADIA REALTY TRUST Q3 FY2024 earnings call

Key managerial messages include: 1. Internal growth: Continued strong same-store NOI growth, with over 6% average in the past three years and expectation of growth continuing. 2. Balance sheet: Secured over $1 billion of non-dilutive debt and equity capital, achieving targeted ratios and liquidity. 3. External growth: On-balance sheet, closed or under contract for $270 million in core portfolio acquisitions, including properties in Manhattan's West Village and Brooklyn's Williamsburg. On the investment management platform, completed an acquisition in Tampa, formed a partnership with Cohen & Steers, and is close to finalizing a $275 million opportunistic investment. Additionally, progress on the Henderson portfolio in Dallas, with plans for phased development and strong tenant demand.

In the third quarter, Acadia Realty Trust achieved strong same-store NOI growth, averaging over 6% in the past three years. For the core portfolio, they have closed or are under contract for a total of $270 million of acquisitions, with $120 million already closed and the remaining closing over the next few quarters. The Street retail portfolio remains a key driver of internal growth.

Management indicates that capital market conditions have improved, enabling accretive acquisitions. The $270 million core portfolio acquisitions are slated to meet or exceed 1% earnings accretion upon closing and nearly 3% upon stabilization in 2027-2028. The investment management platform is expected to have roughly $0.01 per $200 million of gross acquisition volume. The Henderson portfolio expansion is projected to stabilize to north of an 8% yield on cost and could contribute over 2% incremental long-term earnings upon stabilization.

Risks discussed include capital market uncertainties affecting on-balance sheet acquisitions, competition in the street retail market, and potential risks associated with new developments like Henderson Avenue if tenant demand shifts.

Q: Linda Tsai asked about the pace of opportunities going forward and dealing with competition.

A: Ken Bernstein said yes, the team has been working to tee up deals, and with professional competition, they can identify transactions.

Q: Floris van Dijkum asked about OCR and Henderson comparison.

A: Ken and A.J. Levine discussed OCR varying by market, with established markets like SoHo having mid-teens occupancy costs and younger markets like Bleecker having lower, and Henderson's yields are attractive with phased development.

Q: Jeffrey Spector asked about renewal rental spread.

A: John Gottfried responded it was from a single small space.

Q: Seth Bergey asked about acquisition mix and debt equity.

A: Ken and John Gottfried discussed leverage neutral approach, asset sales from investment management platform, and Henderson's phased development for risk mitigation.

Q: Todd Thomas asked about accretion math.

A: John Gottfried said they can beat the 1% per $200 million and growth rates are higher.

Q: Ki Bin Kim asked about occupancy costs.

A: A.J. Levine said fair market value resets help move to higher costs.

Q: Paulina Rojas Schmidt asked about Henderson development costs.

A: Ken Bernstein said it's in phases with strong tenant demand.

Q: Michael Mueller asked about Henderson location.

A: Ken Bernstein and A.J. Levine said it's an extension of existing holdings.

Q: Michael Mueller asked about occupancy settling.

A: Ken Bernstein said it's expected to reach around 90% by year-end '25 and full occupancy by '26.