• Same-Store NOI Growth: 5.7% for both the quarter and the full year 2024.
• FFO Growth: 5% year-over-year in 2024, with an expectation of 5.5% growth in 2025.
• Acquisitions: Over $600 million completed, split evenly between core and investment management businesses.
• Fourth-Quarter Earnings: $0.32 per share, a 15% increase from the prior-year quarter.
• Leased Occupancy: Increased by 110 basis points to 95.8%.
• Signed Not-Yet-Open Pipeline: $7.7 million, representing over 5% of core ABR.
• Debt-to-GAV Ratio: Reduced to under 30%.
• Debt-to-EBITDA Ratio: Reduced to 5.5 times, including pro rata share of non-recourse debt.
• 2025 Earnings Guidance: Initiated at $1.35 per share at the midpoint, representing approximately 5.5% growth over 2024.

• Warning! GuruFocus has detected 8 Warning Sign with AKR.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Acadia Realty Trust (NYSE:AKR) reported over 5% same-store NOI growth for each of the last three years, driven significantly by Street Retail performance.
• The company completed over $600 million in acquisitions, with strategic additions in key markets like Georgetown, SoHo, and Williamsburg.
• Acadia's Street Retail portfolio is positioned to capture growth due to strong contractual growth, lower CapEx, and increasing retailer demand.
• The company has a strong balance sheet, having raised approximately $740 million of common equity and completed over $1 billion of debt transactions.
• Acadia's investment management platform is leveraging institutional capital relationships for opportunistic investments, enhancing long-term growth.

Negative Points

• The company acknowledges potential headwinds from a higher-for-longer interest rate and inflationary environment.
• There is some retailer weakness and bankruptcies, particularly among junior anchor retailers in suburban shopping centers.
• Acadia's suburban portfolio faces challenges, although it remains stable with strong demand.
• The company's guidance for 2025 does not include any accretion from external growth, indicating potential uncertainty in achieving higher growth.
• Acadia's Street Retail portfolio has a lower occupancy rate of around 90%, indicating room for improvement in leasing activity.

Q & A Highlights

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: Kenneth Bernstein, President and CEO, explained that scale is beneficial when owning the right assets in key corridors, allowing for better rent driving and curation. Alexander Levine, VP of Leasing and Development, added that scale can lead to about a 10% upside in rent growth, emphasizing that it's about improving co-tenancy and promoting sales growth rather than convincing tenants to overpay.

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: Reginald Livingston, CIO, stated that for core investments, they aim to replicate last year's success, while the investment management platform remains opportunistic, focusing on deals that deliver outsized returns.

Q: What is the impact of every 1% increase in your occupancy, and what was your peak street and urban occupancy in previous cycles? A: John Gottfried, CFO, noted that peak occupancy was around 97%, and they are targeting 94-95% in the future. The impact of occupancy gains depends on the specific lease and location, but they expect continued growth in the 10% range as they increase occupancy.

Q: Could you discuss the swing factors that will drive 2025 to the top or bottom of your guidance range? A: John Gottfried mentioned that core NOI has a narrow range due to locked-in leasing, but variability exists in promotions and external growth. Kenneth Bernstein added that the high end of the guidance range could include external growth.

Q: How is competition for Street Retail M&A evolving, and how are you navigating it? A: Kenneth Bernstein noted increased competition for Open-Air Retail, with institutions realizing they are under-allocated. Reginald Livingston added that more sellers are entering the market, and Acadia's reputation and speed give them an advantage in securing deals.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.