Sign in

You're signed outSign in or to get full access.

AR

ACADIA REALTY TRUST (AKR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid operating momentum: diluted EPS $0.07, NAREIT FFO/share $0.30, and FFO Before Special Items/share $0.32, with Core same‑property NOI up 5.7% and street portfolio growth >12% .
  • Occupancy inflected higher: Core leased 95.8% (+110 bps q/q) and occupied 93.1% (+140 bps), SNO pipeline at $7.7M ABR (~5.1% of in‑place rents), and leasing spreads remained positive (GAAP +46%, cash +13%) .
  • External growth accelerated: ~$611M of acquisitions completed in Q4 and early‑Q1 (Core ~$306M; Investment Management ~$305M) across Georgetown, SoHo, Williamsburg, Henderson Ave (Dallas), and LINQ Promenade JV; dividend raised 5.3% to $0.20 for Q1 2025 .
  • 2025 guidance set at FFO Before Special Items/share $1.30–$1.39 (midpoint $1.35, ~5.5% y/y), same‑property NOI +5–6%, and pro‑rata net debt/EBITDA improved to 5.5x with no significant Core maturities until 2028—key positive for multiple expansion and funding optionality .
  • Estimates comparison was unavailable today due to S&P Global API limits; we will update consensus beat/miss analytics upon access restoration*.

What Went Well and What Went Wrong

What Went Well

  • Street retail led performance: Core same‑property NOI +5.7% in Q4 driven by >12% street growth; management reiterated durability from contractual growth, mark‑to‑market, and lower CapEx needs .
    • “We delivered same‑property NOI growth of 5.7%, driven by the strong performance of our street portfolio” – CEO Ken Bernstein .
  • Scale strategy compounding: Expanded dominant positions in Georgetown (to ~68% interest), SoHo (20 storefronts), and Williamsburg, enabling curation and outsized rent growth via halo effects and fair market resets .
    • “We are positioning Acadia to be the dominant owner‑operator of street retail in the United States…” – CEO Ken Bernstein .
  • Balance sheet and dividend momentum: Pro‑rata net debt/EBITDA improved to 5.5x; dividend increased to $0.20 (Q1 2025) reflecting confidence in internal/external growth .

What Went Wrong

  • Suburban junior anchors showing weakness: Management noted reemerging retailer bankruptcies concentrated in suburban centers—partially offset by robust tenant demand .
  • Near‑term NOI friction from “pry‑loose” strategy: 2025 includes ~$4M ABR downtime to turnover below‑market tenants, though already backfilled with ~$6.5M new deals (net ~$2.5M or ~$0.02 FFO uplift), with outsized benefit in 2026+ .
  • Rate backdrop: Management highlighted “higher‑for‑longer” risk; however, Core maturities are limited until 2028 and the debt stack is well‑hedged, mitigating near‑term rate pressure .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Millions)$87.254 $87.745 $93.334
Diluted EPS ($)$0.01 $0.07 $0.07
NAREIT FFO per share ($)$0.25 $0.28 $0.30
FFO Before Special Items per share ($)$0.31 $0.32 $0.32
Core Same‑Property NOI Growth (%)+5.5% +5.9% +5.7%

Segment/NOI breakdown:

MetricQ2 2024Q3 2024Q4 2024
Consolidated NOI ($USD Millions)$58.623 $56.709 $59.267
Core Portfolio NOI ($USD Millions)$35.039 $33.289 $35.991
Same‑Property NOI ($USD Millions)$32.078 $31.773 $32.651

KPIs and operating metrics:

KPIQ2 2024Q3 2024Q4 2024
Core Leased Occupancy (%)94.8% 94.7% 95.8%
Core Physical Occupancy (%)91.8% 91.7% 93.1%
SNO Pipeline (Core excl. redev) ($USD Millions ABR)$8.1 $10.0 $7.7
New Lease Spreads (GAAP / Cash)82% / 55% 73% / 46% 46% / 13%
Pro‑rata Net Debt/EBITDA (x)5.8x (Core) 5.6x (Core+IM) 5.5x (Core+IM)
Quarterly Dividend ($/share)$0.19 $0.19 $0.20 (Q1’25)

Notes:

  • Q4 FFO Before Special Items includes ~$3.7M realized gains from sale of Albertsons shares; Company excludes unrealized marks from FFO Before Special Items .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net earnings per shareFY 2025N/A$0.22–$0.27 Initial
NAREIT FFO per shareFY 2025N/A$1.19–$1.24 Initial
FFO Before Special Items per shareFY 2025N/A$1.30–$1.39 Initial
Same‑Property NOI GrowthFY 2025N/A+5–6% Initial
Realized gains & promotes (Albertsons)FY 2025N/A$0.11–$0.15/share Initial
Net earnings per shareFY 2024$0.07–$0.13 (Apr) $0.07–$0.11 (Jul) Narrowed
NAREIT FFO per shareFY 2024$1.09–$1.15 (Apr) $1.09–$1.13 (Jul) Maintained/Narrowed
FFO Before Special Items per shareFY 2024$1.24–$1.32 (Apr) $1.26–$1.32 (Jul) Raised

Additional assumptions: fully diluted shares ~119.0M; fully diluted shares+OP units ~128.0M; interest income and termination income components detailed in supplemental .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Street retail scale & curationAccelerating street leasing; pipeline building in Georgetown/NYC; dividend raised Formal emphasis on becoming dominant street owner; scale enabling rent growth and curation across M Street, SoHo, Williamsburg, Dallas Strengthening
Leasing spreads & occupancyGAAP/cash spreads +82%/+55% (Q2), +73%/+46% (Q3); SNO rose to $10M Spreads +46%/+13% (mix skewed to suburban in Q4), SNO $7.7M; leased +110 bps, occupied +140 bps q/q Positive, with mix effects
External growth & capital~$150M transactions in Q3; pipeline $425M; credit facility upsized ~$611M acquisitions completed (Core+IM) incl. LINQ JV with TPG; $276.8M forward ATM proceeds; ~$740M equity raised FY24+YTD Accelerating & diversified
Rate backdrop & maturitiesFacility expanded; $100M unsecured notes; limited 2024–2027 maturities No significant Core maturities until 2028; debt well‑hedged; net debt/EBITDA down to 5.5x De‑risking
Suburban anchors & creditPortfolio stability, new anchors added (ALDI, Hobby Lobby, etc.) Acknowledged junior‑anchor weakness; 125 bps bad‑debt embedded in guide Watchlist, manageable

Management Commentary

  • Strategic positioning: “We are setting up for a strong 2025… our focus has been to position Acadia to be the dominant owner‑operator of street retail in the United States…” – CEO Ken Bernstein .
  • Leasing momentum and halo effects: “Overall spreads for the year totaled ~35%… Halo effect… opening and renovating stores has a meaningful impact on overall brand performance” – A.J. Levine .
  • Accretive acquisitions: “We hit on all cylinders… going‑in GAAP yield in the mid‑6s and five‑year CAGR in excess of 7%” – CIO Reg Livingston .
  • Guidance & building blocks: “Q4 earnings $0.32/share… expecting 5.5% FFO growth in 2025… $9M incremental ABR from Q4 commencements and SNO, partially offset by $4M pry‑loose downtime” – CFO John Gottfried .

Q&A Highlights

  • Scale benefits quantified: Street scale can add ~10% rent growth upside via curated co‑tenancy and data‑driven merchandising; Armitage rents up ~50% over 12 months as example .
  • External growth cadence: Team aims to replicate prior year’s Core volume if markets remain supportive; IM is opportunistic; ~$275M forward ATM “on call” to fund accretive deals .
  • Occupancy trajectory: Street physical occupancy targeted “in the 90s” by YE 2025; peak historical ~97%; expect ~10% street NOI growth while leasing back to mid‑90s .
  • Competition in open‑air retail: More buyers and sellers emerging; Acadia’s reputation, speed, and relationships key to winning while maintaining accretion and NAV creation .
  • Cost of capital: 10‑year money ~6% (as of call); equity use reserved for assets with growth exceeding Core’s +5% to avoid long‑term dilution .

Estimates Context

  • S&P Global consensus estimates could not be retrieved today due to API daily limit; therefore, comparisons versus Wall Street consensus are unavailable in this recap*. We will supplement beat/miss analysis once access is restored.
  • Management’s FY 2025 guidance implies FFO Before Special Items/share $1.30–$1.39 and same‑property NOI +5–6%; use as near‑term anchor pending consensus refresh .

Key Takeaways for Investors

  • Internal growth durable: Street portfolio drives 5–6% same‑property NOI, supported by mark‑to‑market spreads, rising occupancy, and lower CapEx intensity—supportive of multiple resilience .
  • External growth accretive: Recent Core street acquisitions (Georgetown/SoHo/Williamsburg/Dallas) underwrite mid‑6s GAAP yields and 7%+ CAGR—positive for 2025–2026 cash flow ramps .
  • Balance sheet flexibility: Net debt/EBITDA down to 5.5x, hedged debt stack, and no significant Core maturities until 2028—reduces rate‑path sensitivity and supports incremental deployment .
  • Near‑term modeling: ~$9M ABR tailwind in 2025 from Q4 commencements and SNO, with ~$4M pry‑loose downtime yielding net $2.5M ($0.02 FFO); outsized uplift should carry into 2026 as new tenants open .
  • Watch suburban exposure: Junior‑anchor stress exists but appears manageable with limited credit hit assumed (125 bps bad‑debt in 2025 guide) and active re‑tenanting strategy .
  • Narrative catalysts: Dividend increase to $0.20, dominant street scale in must‑have corridors, and high‑quality JV partnerships (TPG, Cohen & Steers) enhance platform credibility and fee/promote upside .
  • Actionable: Monitor leasing velocity on M Street/SoHo/Williamsburg and timing of SNO commencements; track external deals funded with forward ATM; reassess valuation versus consensus once S&P Global data resumes*.

* Values from S&P Global consensus were unavailable at time of writing due to access limits; we will update estimate comparisons when accessible.