ACADIA REALTY TRUST Q4 FY2024 earnings call

• Active acquisition front: Last year and to date, over $600 million of acquisitions completed, with half for Core Portfolio (street retail in key markets) and half for Investment Management Platform. - Portfolio performance: Over 5% same-store NOI growth for three years, driven by street retail. Drivers include strong contractual growth, lower CapEx, fair market value resets, shift to individual stores, halo benefits, and increasing retailer demand. - Leasing success: Signed over $13.5 million of annual rent in 2024, with high-growth streets leading, adding category-leading tenants and replacing underperforming ones. - Suburban performance: Strong demand and stability, with additions like ALDI Supermarkets and Dick's House of Sport driving leasing volume and rents.

The street retail portion of Acadia Realty Trust's Core Portfolio is the majority and has proven to be the best segment, delivering over 5% same-store NOI growth for each of the last three years. The suburban portfolio is in the Investment Management Platform, with strong demand and stability; last year, they added category-leading anchors and junior anchors, and saw leasing volume and rent lifts from new tenants. Revenue contribution: street retail is the majority of the Core Portfolio.

• 2025 FFO guidance is $1.35 at midpoint, representing ~5.5% growth over 2024. - Upside potential from external growth, leasing (team has signed deals for 2025 results, with opportunity to sign new leases during the year), and credit reserves (conservative bad debt assumption). - Balance sheet: Completed ~$740 million of common equity and over $1 billion of debt transactions, with dry powder for further growth. - Same-store NOI growth projected at 5%-6% in 2025, factoring in 7+% from new street retail additions.

• Higher-yielding bond market impacts valuations. - Increasing likelihood of higher for longer interest rates and inflationary environment. - Retailer weakness in bankruptcies, concentrated in certain junior anchor retailers in suburban shopping centers.

Q: How do you think about the concept of scale in your street portfolio? How do you build it and how do you know when you're achieving it? Are there certain metrics or indicators?

A: Ken Bernstein said scale works when owning right assets in right corridors; acquisitions must be accretive. A.J. Levine added about 10% upside in rent growth with scale, emphasizing curation and combination of scale, experience, capital, and data.

Q: In terms of acquisition volume in 2025, what is the percentage split of Core and Investment Management and how are you thinking about the opportunity set?

A: Reggie Livingston said Core could duplicate last year's volume, while Investment Management Platform is more opportunistic and hard to predict specific split.

Q: I'm intrigued by your low occupancy on your street and urban portfolio of 90.6%. And maybe if you can talk a little bit -- it seems like average rents of $81 or something like that, presumably market rents are higher, what's the impact of every 1% increase in your occupancy? And what was your peak street and urban occupancy in the previous cycles?

A: John Gottfried said peak occupancy was in the 97% range, and impact of 1% occupancy increase varies by space, but street growth is expected to be in 10+% range until occupancy nears 95%.

Q: On the external side, there's been some talk lately just about broader buyer pools and increasing competition for certain retail assets. But just curious if you could talk about how competition for street retail M&A is evolving?

A: Ken Bernstein said increased competition for open-air retail is a net positive, with more sellers and smart buyers; Reggie Livingston added sellers are more focused on reputation, relationships, and speed, and Acadia is built for those things.