ACADIA REALTY TRUST Q1 FY2025 earnings call

• Internal growth: Street retail segment drove strong performance with long-term contractual growth and incremental lease-up. Sales in key street markets like SoHo, The Gold Coast, etc., saw double-digit growth. Leasing velocity was accelerating with a robust pipeline of over $6 million in advanced lease negotiations.
• External growth: Completed over $370 million in acquisitions year-to-date, including $175 million in previously unannounced deals. Focus on adding street retail properties in key mission-critical corridors and leveraging investment management platform. Closed over $800 million in core and investment management transactions in the last 12 months.
• Balance sheet: Rock solid with untapped revolver and forward equity contracts, providing liquidity and flexibility to navigate headwinds and fund external growth.

The key segment is Street retail. In the first quarter, Street retail showed outsized growth. Same-store growth in the street retail portfolio was 6.8%. Leasing velocity was strong, with over $5 million in new core leases signed in the year-to-date, 95% from streets. Street retail outperformed suburban assets, with growth in key markets like SoHo, The Gold Coast, etc.

• Raised full-year guidance due to strong street retail performance and successful external acquisitions. First quarter earnings were $0.34 per share. Expected 5% to 6% full-year same-store NOI growth. Anticipated year-end core physical occupancy to increase to 94%-95% range. Confident in achieving five-plus percent core internal NOI growth in 2026, driven by signed not-yet-open pipeline and ongoing leasing activity.

• Macroeconomic uncertainty and volatility in capital markets. Potential impact of tariffs and stagflation on retailers. Risk of economic slowdown affecting tenant demand and leasing activity. Uncertainty around policy-driven inflationary disruptions and their impact on costs and consumer spending.

Q: Todd Thomas asked about risk in the SNO pipeline and impact of policy uncertainty.

A: Ken Bernstein said retailers see mission-critical locations as must-have, and while there's risk in a hard landing, so far concerns are about tenant build-out costs and supply chain. A.J. Levine added advantage of lower build costs relative to rent in street markets.

Q: Michael Mueller asked about Street portfolio percentage and risk of changes in spending.

A: Ken Bernstein and A.J. Levine discussed that Street portfolio is a key driver, with good visibility into tenant performance and proactive management of underperformers.

Q: Ki Bin Kim asked about going-in cap rate and traffic in Washington, DC market.

A: Reggie Livingston said they stay away from specific cap rate details, and traffic in Washington, DC market hasn't shown impact from DOGE cuts as sales in M Street were up.

Q: Paulina Rojas Schmidt asked about international tourism impact on tenants and balance of scale vs diversification in New York.

A: Ken Bernstein said international tourism hasn't materially impacted tenants, and there's still room to add in New York key corridors while diversifying into other markets as per retailer needs