FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

x ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period endedSeptember 30, ~~2017~~2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the transition period from ~~_______~~ to ~~_______~~

Commission File Number 1-12002

ACADIA REALTY TRUST

(Exact name of registrant in its charter)



~~MARYLAND~~

Maryland (State or other jurisdiction of incorporation or organization)		23-2715194 (I.R.S. Employer Identification No.)

411 THEODORE FREMD AVENUE, SUITE 300, RYE, NY (Address of principal executive offices)		10580 (Zip Code)

(914) 288-8100

(Registrant’s telephone number, including area code)


Title of class of registered securities	Trading symbol	Name of exchange on which registered
Common shares of beneficial interest, par value $0.001 per share	AKR	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



~~YES~~ x

YES☒		NOo☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).



~~YES~~ x

YES☒		NOo☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer x	☒	Accelerated Filero	☐	Emerging Growth Company o	☐

Non-accelerated Filer o	☐	Smaller Reporting Companyo	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes o ☐No x

☒

As of October ~~31, 2017~~21, 2019 there were ~~83,705,835~~86,948,888 common shares of beneficial interest, par value $0.001 per share (“Common Shares”), outstanding.

ACADIA REALTY TRUST AND SUBSIDIARIES

FORM 10-Q

INDEX



Item No.	Description	Page
	PART I - FINANCIAL INFORMATION
1.	Financial Statements	4
	Consolidated Balance Sheets as of September 30, 2019 (Unaudited) and December 31, 2018	4
	Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	5
	Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	6
	Consolidated Statements of Shareholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	7
	Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2019 and 2018	9
	Notes to Consolidated Financial Statements (Unaudited)	11

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
3.	Quantitative and Qualitative Disclosures about Market Risk	58
4.	Controls and Procedures	61

	PART II - OTHER INFORMATION
1.	Legal Proceedings	61
1A.	Risk Factors	61
2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
3.	Defaults Upon Senior Securities	61
4.	Mine Safety Disclosures	61
5.	Other Information	61
6.	Exhibits	62
	Signatures	63

~~INDEX~~

Item No. Description Page

PART I - FINANCIAL INFORMATION

1.
Financial Statements

4

Consolidated Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016

4

Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2017 and 2016

5

Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2017 and 2016

6

Consolidated Statements of Shareholders’ Equity (Unaudited) for the Nine Months Ended September 30, 2017 and 2016

7

Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2017 and 2016

8

Notes to Consolidated Financial Statements (Unaudited)

10

2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

42
3.
Quantitative and Qualitative Disclosures about Market Risk

55
4.
Controls and Procedures

56

PART II - OTHER INFORMATION

1.
Legal Proceedings

57
1A.
Risk Factors

57
2.
Unregistered Sales of Equity Securities and Use of Proceeds

57
3.
Defaults Upon Senior Securities

57
4.
Mine Safety Disclosures

57
5.
Other Information

57
6.
Exhibits

57

Signatures

59



	2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q (the “Report”) may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative thereof or other variations thereon or comparable terminology. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to those set forth under the headings “Item 1A. Risk Factors” and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ~~Part II of~~ this Report. These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein.

SPECIAL NOTE REGARDING CERTAIN REFERENCES

All references to “Notes” throughout the document refer to the footnotes to the consolidated financial statements of the registrant referenced in Part I, Item 1. Financial Statements ~~below.~~

PART I – FINANCIAL INFORMATION


ITEM 1.
	3	FINANCIAL STATEMENTS.

~~PART I—FINANCIAL INFORMATION~~


~~ITEM 1.~~	~~FINANCIAL STATEMENTS.~~

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
(dollars in thousands, except per share amounts)	2019			2018
ASSETS	(Unaudited)
Investments in real estate, at cost
Operating real estate, net	$	3,288,377		$	3,160,851
Real estate under development		250,278			120,297
Net investments in real estate		3,538,655			3,281,148
Notes receivable, net		94,807			109,613
Investments in and advances to unconsolidated affiliates		372,478			262,410
Other assets, net		200,588			208,570
Cash and cash equivalents		48,140			21,268
Restricted cash		12,867			13,580
Rents receivable		59,071			62,191
Assets of properties held for sale		2,939			—
Total assets	$	4,329,545		$	3,958,780

LIABILITIES
Mortgage and other notes payable, net	$	1,029,678		$	1,017,288
Unsecured notes payable, net		625,677			533,257
Accounts payable and other liabilities		403,297			286,072
Dividends and distributions payable		26,017			24,593
Distributions in excess of income from, and investments in, unconsolidated affiliates		15,353			15,623
Total liabilities		2,100,022			1,876,833
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 shares, issued and outstanding 86,644,196 and 81,557,472 shares, respectively		87			82
Additional paid-in capital		1,692,659			1,548,603
Accumulated other comprehensive (loss) income		(44,138	)		516
Distributions in excess of accumulated earnings		(129,026	)		(89,696	)
Total Acadia shareholders’ equity		1,519,582			1,459,505
Noncontrolling interests		709,941			622,442
Total equity		2,229,523			2,081,947
Total liabilities and equity	$	4,329,545		$	3,958,780

September 30, 2017 December 31, 2016
(dollars in thousands, except per share amounts)
ASSETS (Unaudited)
Investments in real estate, at cost

Operating real estate, net $ 2,905,000
$ 2,551,448
Real estate under development, at cost 237,434
543,486
Net investments in real estate 3,142,434
3,094,934
Notes receivable, net 250,194
276,163
Investments in and advances to unconsolidated affiliates 270,245
272,028
Other assets, net 213,018
192,786
Cash and cash equivalents 48,255
71,805
Rents receivable, net 53,479
43,842
Restricted cash 19,473
22,904
Assets of properties held for sale 95,859
21,498
Total assets $ 4,092,957
$ 3,995,960

LIABILITIES

Mortgage and other notes payable, net $ 1,045,877
$ 1,055,728
Unsecured notes payable, net 497,970
432,990
Unsecured line of credit 59,000
—
Accounts payable and other liabilities 211,206
208,672
Capital lease obligation 70,498
70,129
Dividends and distributions payable 23,350
36,625
Distributions in excess of income from, and investments in, unconsolidated affiliates 15,262
13,691
Total liabilities 1,923,163
1,817,835
Commitments and contingencies

EQUITY

Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 and 100,000,000 shares, issued and outstanding 83,680,337 and 83,597,741 shares, respectively 84
84
Additional paid-in capital 1,594,332
1,594,926
Accumulated other comprehensive loss (553 ) (798 )
Distributions in excess of accumulated earnings (30,325 ) (5,635 )
Total Acadia shareholders’ equity 1,563,538
1,588,577
Noncontrolling interests 606,256
589,548
Total equity 2,169,794
2,178,125
Total liabilities and equity $ 4,092,957
$ 3,995,960

The accompanying notes are an integral part of these consolidated financial statements



	4

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME ~~(Unaudited)~~

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands except per share amounts)	2019			2018			2019			2018
Revenues
Rental income	$	72,191		$	51,003		$	214,490		$	150,838
Expense reimbursements		—			13,194			—			35,000
Other		1,136			1,330			3,053			4,116
Total revenues		73,327			65,527			217,543			189,954
Operating expenses
Depreciation and amortization		32,170			28,676			92,807			86,755
General and administrative		8,222			7,982			25,579			24,359
Real estate taxes		10,225			11,538			29,680			27,528
Property operating		13,180			10,113			37,267			30,709
Impairment charge		321			—			1,721			—
Other operating		—			270			—			655
Total operating expenses		64,118			58,579			187,054			170,006

Gain on disposition of properties		12,056			5,107			14,070			5,140
Operating income		21,265			12,055			44,559			25,088
Equity in earnings of unconsolidated affiliates		1,299			376			7,129			7,079
Interest income		1,748			3,513			6,247			10,539
Other income		5,034			—			6,947			—
Interest expense		(19,103	)		(18,077	)		(56,721	)		(50,882	)
Income (loss) from continuing operations before income taxes		10,243			(2,133	)		8,161			(8,176	)
Income tax provision		(1,403	)		(464	)		(1,622	)		(851	)
Net income (loss)		8,840			(2,597	)		6,539			(9,027	)
Net loss attributable to noncontrolling interests		1,618			11,822			25,196			33,336
Net income attributable to Acadia	$	10,458		$	9,225		$	31,735		$	24,309

Basic and diluted earnings per share	$	0.12		$	0.11		$	0.38		$	0.29

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands except per share amounts) 2017 2016 2017 2016
Revenues
Rental income $ 51,707
$ 35,710
$ 148,760
$ 109,486
Expense reimbursements 9,957
7,192
32,347
22,920
Other 1,014
953
3,074
3,412
Total revenues 62,678
43,855
184,181
135,818
Operating expenses

Depreciation and amortization 26,652
15,217
77,245
46,744
General and administrative 7,953
12,869
25,286
30,742
Real estate taxes 8,822
6,195
27,462
18,000
Property operating 9,417
5,055
26,978
15,697
Other operating 250
3,265
987
4,094
Impairment of an asset 3,840
—
3,840
—
Total operating expenses 56,934
42,601
161,798
115,277
Operating income 5,744
1,254
22,383
20,541
Equity in earnings (losses) and gains (losses) of unconsolidated affiliates inclusive of gains (losses) on disposition of properties of $0, ($726), $14,771 and ($726), respectively 4,001
(102 ) 21,044
3,592
Interest income 6,461
7,245
23,648
19,298
Interest expense (15,428 ) (7,982 ) (39,666 ) (24,917 )
Income from continuing operations
before income taxes 778
415
27,409
18,514
Income tax provision (465 ) (89 ) (1,017 ) (123 )
Income from continuing operations before gain
on disposition of properties 313
326
26,392
18,391
Gain on disposition of properties, net of tax 12,972
—
12,972
81,965
Net income 13,285
326
39,364
100,356
Net loss (income) attributable to noncontrolling interests (418 ) 5,786
1,194
(47,401 )
Net income attributable to Acadia $ 12,867
$ 6,112
$ 40,558
$ 52,955

Basic and diluted earnings per share $ 0.15
$ 0.08
$ 0.48
$ 0.71

The accompanying notes are an integral part of these consolidated financial statements



	5

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME ~~(Unaudited)~~

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018			2019			2018
Net income (loss)	$	8,840		$	(2,597	)	$	6,539		$	(9,027	)
Other comprehensive (loss) income:
Unrealized (loss) income on valuation of swap agreements		(15,388	)		3,973			(51,347	)		12,576
Reclassification of realized interest on swap agreements		(288	)		(55	)		(1,374	)		417
Other comprehensive (loss) income		(15,676	)		3,918			(52,721	)		12,993
Comprehensive (loss) income		(6,836	)		1,321			(46,182	)		3,966
Comprehensive loss attributable to noncontrolling interests		2,726			11,033			33,263			30,996
Comprehensive (loss) income attributable to Acadia	$	(4,110	)	$	12,354		$	(12,919	)	$	34,962

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2017 2016 2017 2016

Net income $ 13,285
$ 326
$ 39,364
$ 100,356
Other comprehensive income (loss):

Unrealized (loss) income on valuation of swap agreements (644 ) 1,474
(2,652 ) (12,624 )
Reclassification of realized interest on swap agreements 734
1,210
2,637
3,396
Other comprehensive income (loss) 90
2,684
(15 ) (9,228 )
Comprehensive income 13,375
3,010
39,349
91,128
Comprehensive (income) loss attributable to noncontrolling interests (541 ) 5,478
1,454
(46,554 )
Comprehensive income attributable to Acadia $ 12,834
$ 8,488
$ 40,803
$ 44,574

The accompanying notes are an integral part of these consolidated financial statements.



	6

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Three Months Ended September 30, 2019 and 2018

	Acadia Shareholders
(in thousands, except per share amounts)	Common Shares		Share Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Distributions in Excess of Accumulated Earnings			Total Common Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at July 1, 2019		84,453	$	84	$	1,625,906	$	(29,570	)	$	(115,224	)	$	1,481,196		$	618,910		$	2,100,106
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership		42		—		720		—			—			720			(720	)		—
Issuance of Common Shares		2,149		3		60,634		—			—			60,637			—			60,637
Dividends/distributions declared ($0.28 per Common Share/OP Unit)		—		—		—		—			(24,260	)		(24,260	)		(1,765	)		(26,025	)
Employee and trustee stock compensation, net		—		—		148		—			—			148			1,768			1,916
Noncontrolling interest distributions		—		—		—		—			—			—			(29,713	)		(29,713	)
Noncontrolling interest contributions		—		—		—		—			—			—			129,438			129,438
Comprehensive (loss) income		—		—		—		(14,568	)		10,458			(4,110	)		(2,726	)		(6,836	)
Reallocation of noncontrolling interests		—		—		5,251		—			—			5,251			(5,251	)		—
Balance at September 30, 2019		86,644	$	87	$	1,692,659	$	(44,138	)	$	(129,026	)	$	1,519,582		$	709,941		$	2,229,523

Balance at July 1, 2018		81,503	$	82	$	1,543,651	$	10,138		$	(61,196	)	$	1,492,675		$	619,874		$	2,112,549
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership		47		—		834		—			—			834			(834	)		—
Dividends/distributions declared ($0.27 per Common Share/OP Unit)		—		—		—		—			(22,019	)		(22,019	)		(1,692	)		(23,711	)
Employee and trustee stock compensation, net		—		—		137		—			—			137			2,082			2,219
Noncontrolling interest distributions		—		—		—		—			—			—			(9,014	)		(9,014	)
Noncontrolling interest contributions		—		—		—		—			—			—			40,440			40,440
Comprehensive income (loss)		—		—		—		3,129			9,225			12,354			(11,033	)		1,321
Reallocation of noncontrolling interests		—		—		1,783		—			—			1,783			(1,783	)		—
Balance at September 30, 2018		81,550	$	82	$	1,546,405	$	13,267		$	(73,990	)	$	1,485,764		$	638,040		$	2,123,804

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY ~~(Unaudited)~~

(Continued)

Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018

	Acadia Shareholders
(in thousands, except per share amounts)	Common Shares			Share Amount			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Distributions in Excess of Accumulated Earnings			Total Common Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at January 1, 2019		81,557		$	82		$	1,548,603		$	516		$	(89,696	)	$	1,459,505		$	622,442		$	2,081,947
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership		250			—			4,230			—			—			4,230			(4,230	)		—
Issuance of Common Shares		4,816			5			135,746			—			—			135,751			—			135,751
Dividends/distributions declared ($0.84 per Common Share/OP Unit)		—			—			—			—			(71,065	)		(71,065	)		(5,322	)		(76,387	)
Employee and trustee stock compensation, net		21			—			396			—			—			396			6,965			7,361
Noncontrolling interest distributions		—			—			—			—			—			—			(34,595	)		(34,595	)
Noncontrolling interest contributions		—			—			—			—			—			—			161,628			161,628
Comprehensive (loss) income		—			—			—			(44,654	)		31,735			(12,919	)		(33,263	)		(46,182	)
Reallocation of noncontrolling interests		—			—			3,684			—			—			3,684			(3,684	)		—
Balance at September 30, 2019		86,644		$	87		$	1,692,659		$	(44,138	)	$	(129,026	)	$	1,519,582		$	709,941		$	2,229,523

Balance at January 1, 2018		83,708		$	84		$	1,596,514		$	2,614		$	(32,013	)	$	1,567,199		$	648,440		$	2,215,639
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership		111			—			1,957			—			—			1,957			(1,957	)		—
Repurchase of Common Shares		(2,294	)		(2	)		(55,055	)		—			—			(55,057	)		—			(55,057	)
Dividends/distributions declared ($0.81 per Common Share/OP Unit)		—			—			—			—			(66,286	)		(66,286	)		(5,126	)		(71,412	)
Employee and trustee stock compensation, net		25			—			408			—			—			408			7,924			8,332
Noncontrolling interest distributions		—			—			—			—			—			—			(24,654	)		(24,654	)
Noncontrolling interest contributions		—			—			—			—			—			—			46,990			46,990
Comprehensive income (loss)		—			—			—			10,653			24,309			34,962			(30,996	)		3,966
Reallocation of noncontrolling interests		—			—			2,581			—			—			2,581			(2,581	)		—
Balance at September 30, 2018		81,550		$	82		$	1,546,405		$	13,267		$	(73,990	)	$	1,485,764		$	638,040		$	2,123,804

Acadia Shareholders
(in thousands, except per share amounts) Common Shares Share Amount
Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
(Loss) Income
(Distributions in Excess of Accumulated Earnings) Retained Earnings
Total
Common
Shareholders’
Equity

Noncontrolling
Interests

Total
Equity
Balance at
January 1, 2017 83,598
$ 84
$ 1,594,926
$ (798 ) $ (5,635 ) $ 1,588,577
$ 589,548
$ 2,178,125
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership 61
—
1,086
—
—
1,086
(1,086 ) —
Dividends/distributions declared ($0.78 per Common Share/OP Unit) —
—
—
—
(65,248 ) (65,248 ) (4,805 ) (70,053 )
Employee and trustee stock compensation, net 21
—
425
—
—
425
8,704
9,129
Noncontrolling interest distributions —
—
—
—
—
—
(7,278 ) (7,278 )
Noncontrolling interest contributions —
—
—
—
—
—
20,522
20,522
Reallocation of noncontrolling interests —
—
(2,105 ) —
—
(2,105 ) 2,105
—
Comprehensive income —
—
—
245
40,558
40,803
(1,454 ) 39,349
Balance at
September 30, 2017 83,680

$ 84

$ 1,594,332

$ (553 )
$ (30,325 )
$ 1,563,538

$ 606,256

$ 2,169,794

Balance at
January 1, 2016
70,258
$ 70
$ 1,092,239
$ (4,463 ) $ 12,642
$ 1,100,488
$ 420,866
$ 1,521,354
Conversion of OP Units to Common Shares by limited partners of the Operating Partnership 350
1
7,874
—
—
7,875
(7,875 ) —
Issuance of Common Shares, net of issuance costs 10,228
10
357,252
—
—
357,262
—
357,262
Issuance of OP Units to acquire real estate —
—
—
—
—
—
29,336
29,336
Dividends/distributions declared ($0.75 per Common Share/OP Unit) —
—
—
—
(56,782 ) (56,782 ) (4,398 ) (61,180 )
Acquisition of noncontrolling interests —
—
7,546
—
—
7,546
(25,925 ) (18,379 )
Employee and trustee stock compensation, net 27
—
699
—
—
699
10,983
11,682
Change in control of previously unconsolidated investment —
—
—
—
—
—
(75,713 ) (75,713 )
Noncontrolling interest distributions —
—
—
—
—
—
(50,849 ) (50,849 )
Noncontrolling interest contributions —
—
—
—
—
—
204,412
204,412
Comprehensive (loss) income —
—
—
(8,381 ) 52,955
44,574
46,554
91,128
Reallocation of noncontrolling interests —
—
35,254
—
—
35,254
(35,254 ) —
Balance at
September 30, 2016 80,863

$ 81

$ 1,500,864

$ (12,844 )
$ 8,815

$ 1,496,916

$ 512,137

$ 2,009,053

The accompanying notes are an integral part of these consolidated financial statements.




	7

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
(in thousands)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	6,539		$	(9,027	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		92,807			86,755
Distributions of operating income from unconsolidated affiliates		8,654			12,906
Equity in earnings and gains of unconsolidated affiliates		(7,129	)		(7,079	)
Stock compensation expense		7,361			8,332
Amortization of financing costs		5,769			4,350
Impairment charge		1,721			—
Gain on disposition of properties		(14,070	)		(5,140	)
Deferred gain on tax credits		(5,034	)		—
Other, net		(7,804	)		(6,331	)
Changes in assets and liabilities:
Other liabilities		(6,071	)		(61	)
Prepaid expenses and other assets		10,271			(4,860	)
Rents receivable		870			(7,452	)
Accounts payable and accrued expenses		1,303			(5,210	)
Net cash provided by operating activities		95,187			67,183
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate		(256,647	)		(104,902	)
Development, construction and property improvement costs		(77,636	)		(66,238	)
Issuance of or advances on notes receivable		—			(3,002	)
Proceeds from the disposition of properties, net		80,120			52,759
Investments in and advances to unconsolidated affiliates and other		(154,256	)		(3,481	)
Return of capital from unconsolidated affiliates and other		38,359			23,777
Proceeds from notes receivable		15,250			26,000
Return of deposits for properties under contract		1,060			1,750
Payment of deferred leasing costs		(5,874	)		(2,981	)
Net cash used in investing activities		(359,624	)		(76,318	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and other notes		(166,865	)		(69,050	)
Principal payments on unsecured debt		(352,195	)		(578,600	)
Proceeds received on mortgage and other notes		183,556			122,332
Proceeds from unsecured debt		444,575			578,800
Payments for repurchase of Common Shares		—			(55,057	)
Payments of finance lease obligations		(2,125	)		—
Proceeds from the sale of Common Stock, net		135,750			—
Capital contributions from noncontrolling interests		161,628			46,990
Distributions to noncontrolling interests		(39,917	)		(29,731	)
Dividends paid to Common Shareholders		(69,641	)		(66,869	)
Deferred financing and other costs		(4,170	)		(3,316	)
Net cash provided by (used in) financing activities		290,596			(54,501	)
Increase (decrease) in cash and restricted cash		26,159			(63,636	)
Cash of $21,268 and $74,823 and restricted cash of $13,580 and $10,846, respectively, beginning of period		34,848			85,669
Cash of $48,140 and $9,525 and restricted cash of $12,867 and $12,508, respectively, end of period	$	61,007		$	22,033

ACADIA REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS ~~(Unaudited)~~(Continued)

	Nine Months Ended September 30,
(in thousands)	2019			2018
Supplemental disclosure of cash flow information
Cash paid during the period for interest, net of capitalized interest of $8,430 and $4,366 respectively	$	53,586		$	45,251
Cash paid for income taxes, net of refunds	$	730		$	1,227

Supplemental disclosure of non-cash investing and financing activities
Assumption of accounts payable and accrued expenses through acquisition of real estate	$	3,697		$	1,014
Right-of-use assets, finance leases obtained in exchange for finance lease liabilities	$	16,349		$	—
Right-of-use assets, finance leases obtained in exchange for assets under capital lease	$	76,965		$	—
Right-of-use assets, operating leases obtained in exchange for operating lease liabilities	$	57,165		$	—
Capital lease obligation exchanged for finance lease liability	$	71,111		$	—
Other liabilities exchanged for operating lease liabilities	$	946		$	—
Assumption of debt through investments in unconsolidated affiliates	$	4,688		$	—
Acquisition of undivided interest in a property through conversion of notes receivable	$	—		$	22,201
Debt exchanged for deferred gain on tax credits	$	(5,262	)	$	—
Other assets exchanged for deferred gain on tax credits	$	228		$	—

Nine Months Ended September 30,
(in thousands) 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 39,364
$ 100,356
Adjustments to reconcile net income to net cash
provided by operating activities:

Gain on disposition of properties (12,972 ) (81,965 )
Depreciation and amortization 77,245
46,744
Distributions of operating income from unconsolidated affiliates 7,412
4,917
Equity in earnings and gains of unconsolidated affiliates (21,044 ) (3,592 )
Stock compensation expense 9,129
9,729
Amortization of financing costs 3,996
2,025
Impairment of asset 3,840
—
Other, net (8,435 ) (5,577 )
Changes in assets and liabilities:

Other liabilities (1,556 ) 134
Prepaid expenses and other assets (8,723 ) (11,642 )
Rents receivable, net (6,646 ) (4,858 )
Restricted cash 3,538
1,733
Accounts payable and accrued expenses (736 ) (1,511 )
Net cash provided by operating activities 84,412
56,493
CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of real estate (138,429 ) (292,136 )
Development and property improvement costs (84,554 ) (94,459 )
Issuance of or advances on notes receivable (10,449 ) (148,203 )
Proceeds from the disposition of properties 47,025
150,379
Investments in and advances to unconsolidated affiliates (4,555 ) (68,153 )
Return of capital from unconsolidated affiliates 12,300
50,622
Proceeds from notes receivable 12,000
42,819
Deposits for properties under contract —
(8,576 )
Proceeds from disposition of properties of unconsolidated affiliates 25,735
—
Payment of deferred leasing costs (5,381 ) (5,451 )
Change in control of previously consolidated affiliate —
(2,578 )
Net cash used in investing activities (146,308 ) (375,736 )



	8

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)~~

Nine Months Ended September 30,
(Continued) 2017 2016
CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments on mortgage and other notes (130,736 ) (292,815 )
Principal payments on unsecured debt (143,215 ) (516,790 )
Proceeds received on mortgage and other notes 120,252
70,437
Proceeds from unsecured debt 267,200
616,315
Proceeds from issuance of Common Shares, net of
issuance costs of $0 and $1,654, respectively —
357,262
Capital contributions from noncontrolling interests 20,522
204,412
Distributions to noncontrolling interests (12,813 ) (74,612 )
Dividends paid to Common Shareholders (77,770 ) (71,674 )
Deferred financing and other costs (4,987 ) (5,288 )
Loan proceeds held as restricted cash (107 ) 8,462
Net cash provided by financing activities 38,346
295,709

Decrease in cash and cash equivalents (23,550 ) (23,534 )
Cash and cash equivalents, beginning of the period 71,805
72,776
Cash and cash equivalents, end of the period $ 48,255
$ 49,242

Supplemental disclosure of cash flow information

Cash paid during the period for interest, net of
capitalized interest of $12,246 and $14,936, respectively $ 39,626
$ 28,116
Cash paid for income taxes, net of (refunds) $ 773
$ 1,267

Supplemental disclosure of non-cash investing activities

Acquisition of real estate through assumption of debt $ —
$ 60,668
Acquisition of real estate through issuance of OP Units $ —
$ 29,336
Acquisition of capital lease obligation $ —
$ 76,461
Assumption of accounts payable and accrued expenses
through acquisition of real estate $ 2,161
$ 1,809
Acquisition of real estate through conversion of note receivable $ 9,142
$ —
Acquisition of undivided interest in a property through conversion of notes receivable $ 16,005
$ —

Change in control of previously consolidated investment
Real estate, net $ —
$ 90,559
Investments in and advances to unconsolidated affiliates —
(21,421 )
Other assets and liabilities —
3,997
Noncontrolling interest —
(75,713 )
Cash removed in de-consolidation of previously consolidated investment $ —
$ (2,578 )

The accompanying notes are an integral part of these consolidated financial statements.



	9

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization

Acadia Realty Trust ~~and~~(collectively with its subsidiaries, ~~(collectively,~~ the “Company”) is a fully-integrated equity real estate investment trust (“REIT”) focused on the ownership, acquisition, development, and management of retail properties located primarily in high-barrier-to-entry, supply-constrained, densely-populated metropolitan areas in the United States.

All of the Company’s assets are held by, and all of its operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and entities in which the Operating Partnership owns an interest. As of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the Company controlled approximately ~~95%~~94% of the Operating Partnership as the sole general partner and is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest (“Common OP Units” or “Preferred OP Units”) and employees who have been awarded restricted Common OP Units (“LTIP Units”) as long-term incentive compensation (Note 13). Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a ~~one-for-one~~1-for-one basis for common shares of beneficial interest of the Company (“Common Shares”). This structure is referred to as an umbrella partnership REIT or “UPREIT.”

As of September 30, ~~2017,~~2019, the Company has ownership interests in ~~118~~125 properties within its core portfolio, which consist of those properties either 100% owned, or partially owned through joint venture interests, by the Operating Partnership, or subsidiaries thereof, not including those properties owned through its funds (“Core Portfolio”). The Company also has ownership interests in 6457 properties within its opportunity funds, Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”), and Acadia Strategic Opportunity Fund V LLC (“Fund V”~~). Acadia Strategic Opportunity~~and, collectively with Fund ~~I, LP (“~~II, Fund ~~I,” together with Funds II,~~ III ~~IV,~~ and V,Fund IV, the “Funds”) ~~was liquidated in 2015.~~. The 182 Core Portfolio and Fund properties primarily consist of street and urban retail, and suburban shopping centers. In addition, the Company, together with the investors in the Funds, ~~invest~~invested in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns ~~I”),~~I,” which was liquidated in 2018) and Acadia Mervyn Investors II, LLC (“Mervyns II”) ~~and Fund II,~~, all on a non-recourse basis. The Company consolidates the Funds as it has (i) the power to direct the activities that most significantly impact the Funds’ economic performance, (ii) is obligated to absorb the Funds’ losses and (iii) has the right to receive benefits from the Funds that could potentially be significant.

The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns ~~I and~~ II and earns fees or priority distributions for asset management, property management, construction, development, leasing, and legal services. Cash flows from the Funds and Mervyns ~~I and~~ II are distributed pro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return (“Preferred Return”) and the return of all capital contributions. Thereafter, remaining cash flow is distributed 20% to the Operating Partnership (“Promote”) and 80% to the partners or members (including the Operating Partnership). All transactions between the Funds and the Operating Partnership have been eliminated in consolidation.

The following table summarizes the general terms and Operating Partnership’s equity interests in the Funds and Mervyns II (dollars in millions):

Entity	Formation Date	Operating Partnership Share of Capital			Capital Called as of September 30, 2019		Unfunded Commitment		Equity Interest Held By Operating Partnership^(a)			Preferred Return			Total Distributions as of September 30, 2019 ^(b)
Fund II and Mervyns II ^(c)	6/2004		28.33	%	$	347.1	$	15.0		28.33	%		8	%	$	146.6
Fund III	5/2007		24.54	%		436.4		13.6		24.54	%		6	%		568.8
Fund IV	5/2012		23.12	%		438.1		91.9		23.12	%		6	%		172.1
Fund V	8/2016		20.10	%		258.6		261.4		20.10	%		6	%		2.0

Entity Formation Date Operating Partnership Share of Capital Capital Called as of September 30, 2017 Unfunded Commitment
Equity Interest Held By Operating Partnership ^(a)
Preferred Return
Total Distributions as of September 30, 2017 ^(b)
Fund II and Mervyns II 6/2004 28.33% $ 347.1
$ —
28.33% 8% $ 131.6
Fund III 5/2007 24.54% 396.7
53.3
39.63% 6% 553.7
Fund IV 5/2012 23.12% 390.7
139.3
23.12% 6% 101.9
Fund V 8/2016 20.10% —
520.0
20.10% 6% —

~~__________~~

(a)
~~(a)~~	Amount represents the current economic ownership at September 30, ~~2017,~~2019, which could differ from the stated legal ownership based upon the cumulative preferred returns of the respective ~~fund.~~Fund.

(b)
~~(b)~~	Represents the total for the Funds, including the Operating Partnership and noncontrolling interests’ shares.


(c)
	10	During April 2018, a distribution of $15.0 million was made to the Fund II investors, including $4.3 million to the Operating Partnership. This amount remains subject to re-contribution to Fund II until April 2021.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Basis of Presentation

Segments

At September 30, ~~2017,~~2019, the Company had ~~three~~3 reportable operating segments: Core Portfolio, Funds and Structured Financing. The Company’s chief operating decision maker may review operational and financial data on a ~~property~~property-level basis and does not differentiate properties on a geographical basis for purposes of allocating resources or capital. Each property is considered a separate operating segment; however, each property on a stand-alone basis represents less than 10% of revenues, profit or loss, and assets of the combined reported operating segment and meets the majority of the aggregations criteria under the applicable standard.

Principles of Consolidation

The interim consolidated financial statements include the consolidated accounts of the Company and its investments in partnerships and limited liability companies in which the Company has control in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810 “Consolidation” (“ASC Topic 810”). The ownership interests of other investors in these entities are recorded as noncontrolling interests. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities for which the Company has the ability to exercise significant influence over, but does not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings (or losses) of these entities are included in consolidated net income.

The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and ~~with~~ the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. The information furnished in the accompanying consolidated financial statements reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the aforementioned consolidated financial statements for the interim periods. Such adjustments consisted of normal recurring items.

These interim consolidated financial statements should be read in conjunction with the Company’s ~~2016~~2018 Annual Report on Form 10-K, as filed with the SEC on February ~~24, 2017 and amended on February 27, 2017.~~

19, 2019.

Use of Estimates

GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the interim consolidated financial statements and accompanying notes. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition and the collectability of notes receivable and rents receivable. Application of these estimates and assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

Reclassifications

Certain prior period amounts with regard to gains on dispositions of properties and credit losses have been reclassified to conform to the current period presentation.

Recently ~~Issued~~Adopted Accounting Pronouncements

~~In May 2014, the FASB issued~~

Lease Accounting ~~Standards Update(“ASU”) No. 2014-09, Revenue from Contracts with Customers.~~ ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to the Company’s lease revenues, but will apply to reimbursed tenant costs. Additionally, this guidance modifies disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for all entities by one year, until years beginning in 2018, with early adoption permitted but not before 2017. Entities may adopt ASU 2014-09 using either a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients or a retrospective approach with the cumulative effect recognized at the date of adoption. Management believes the majority of the Company’s revenue falls outside of the scope of this guidance and does not anticipate any significant changes to the timing of the Company’s revenue recognition. The Company intends to implement the standard retrospectively with the cumulative effect recognized in retained earnings at the date of application.



	11

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

In February 2016, the FASB issued ASU No. 2016-02, ~~Leases.~~Leases (Topic 842). ASU 2016-02 outlines a new model for accounting by lessees, whereby their rights and obligations under substantially all leases, existing and new, ~~would~~will be capitalized and recorded on the balance sheet. ~~As a lessee, the Company is party to various equipment, ground, and office leases with future payment obligations aggregating $207.7 million at September 30, 2017 (Note 11) for which the Company expects to record right-of-use assets upon adoption of ASU 2016-02.~~ For lessors, however, the accounting remains largely unchanged from the ~~current~~former model, with the distinction between operating, sales-type and ~~financing~~direct-financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard, ~~discussed~~ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”). To ease the transition, the new lease accounting guidance permits companies to utilize certain practical expedients in their implementation of the new standard:

•

A package of three practical expedients that must be elected together for all leases and includes: (i) not reassessing expired or existing contracts as to whether they are or contain leases; (ii) not reassessing lease classification of existing leases and (iii) not reassessing the amount of capitalized initial direct costs for existing leases;

•

A practical expedient to use hindsight in determining the lease term or assessing purchase options for existing leases and in assessing impairment of right of use assets;

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

•

Lessees may make an accounting policy election by class of underlying asset not to separate lease components from non-lease components; and

•

Lessees may make an accounting policy election not to apply the recognition and measurement requirements to short-term leases.

ASU 2016-02 was modified by the following subsequently issued ASU’s (together with ASU 2016-02, “Topic 842”), many of which provided additional transition practical expedients:

•

ASU 2018-01, Land Easements Practical Expedient for Transition to Topic 842 added a transition practical expedient to not reassess existing or expired land easement agreements not previously accounted for as leases

•

ASU No. 2018-10, Codification Improvements to Topic 842, Leases. These amendments provide minor clarifications and corrections to ASU 2016-02.

•

ASU 2018-11, Leases (Topic 842): Targeted Improvements.

The amendments in this Update provide entities with an additional optional transition method to adopt ASU 2016-02. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting under this additional transition method for the comparative periods presented in the financial statements in which it adopts the new leases standard would continue to be in accordance with former GAAP (Topic 840, Leases).

The amendments in this Update also provide lessors with a practical expedient, by class of underlying asset, to make a policy election to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606). Conditions are required to elect the practical expedient, and if met, the single component will be accounted for under either under Topic 842 or Topic 606 depending on which component(s) are predominant. The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases.

•

ASU 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors. This ASU modifies ASU No. 2016-02 to permit lessors, as an accounting policy election, not to evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, those lessors will account for those costs as if they are lessee costs. Consequently, a lessor making this election will exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all collections from lessees of taxes within the scope of the election and will provide certain disclosures (includes sales, use, value added, and some excise taxes and excludes real estate taxes).

•

ASU 2019-01, Leases (Topic 842), Codification Improvements. There are three codification updates to Topic 842 covered by this ASU: Issue 1 provides guidance on how to compute fair value of leased items for lessors who are non-dealers or manufacturers; Issue 2 relates to cash flow presentation for lessors of sales-type and direct financing leases; and Issue 3 clarifies that certain transition disclosures will only be required in annual disclosures.

Under the new leasing guidance, contract consideration shall be allocated to its lease components (such as the lease of retail properties) and non-lease components (such as maintenance). For lessors, any non-lease components will be accounted for under Topic 606unless the entity elects the lessor practical expedient to not separate the non-lease components from the associated lease component as described above. The new guidance also ~~requires~~includes a definition of initial directcosts that ~~internal leasing costs be expensed as incurred, as opposed to capitalized and deferred.~~ is narrower than the prior definition in former GAAP (Topic 840, Leases). Topic 842 was effective for the Company beginning January 1, 2019.

The Company ~~expects that~~adopted Topic 842 effective January 1, 2019 utilizing the new transition method described in ASU 2018-11 and has availed itself of all the available practical expedients described above except it ~~will no longer capitalize~~did not use hindsight in determining the lease term or assessing purchase options for existing leases and in assessing impairment of right of use assets.

As lessor, the Company has more than 1,000 leases primarily with retail tenants and to a lesser extent with office and residential tenants. A significant ~~portion~~majority of ~~internal leasing costs that were previously~~its leases are on a triple-net basis. The impact of adoption of ASU 2016-02 for the Company as lessor was as follows:

•

The Company has elected the lessor practical expedient to not separate common area maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. Common area maintenance is considered a non-lease component within the scope of Topic 606 and reimbursements of taxes and insurance are considered contractual payments that do not transfer a good or service to the tenant; however, such revenues related to leases, which were formerly reported as reimbursed expenses, will be reported within lease revenues in the presentation of the statement of income subsequent to the implementation of ASC 842. Prior year classifications under ASC 840 will not be adjusted.

•

Due to its election of available practical expedients, the Company expects that post-adoption substantially all existing leases, and new leases compared to similar existing leases, will have no change in the timing of revenue recognition.

•

The Company’s internal leasing costs will be expensed as incurred, as opposed to being capitalized and deferred. Commissions subsequent to successful lease execution will continue to be capitalized. After adoption, the Company will no longer capitalize internal

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

leasing costs that were previously capitalized (the Company capitalized $1.8 million of internal leasing costs during the year ended December 31, 2018).

•

The Company has existing easement arrangements that have not been previously identified as leases. The Company expects that its existing and similar future easement arrangements will not be classified as rental revenue but as other revenues as these arrangements do not transfer control to the counterparty.

•

The Company makes a policy election to continue to account for only those taxes described under ASU 2018-20 that it pays on behalf of the tenant as reimbursable costs and will not account for those taxes paid directly by the lessee which are considered lessee costs.

As lessee, the Company was party to 13 ground, office and equipment leases with future payment obligations aggregating $203.1 million at December 31, 2018. The impact of adoption of ASU 2016-02 for the Company as lessee was as follows (Note 11):

•

As lessee, the Company has applied the following practical expedients in the implementation ASU 2016-02: (i) to not separate non-lease components from the associated lease component as described above and (ii) to not apply the right-of-use recognition requirements to short-term leases. As such, there were no changes in the timing of recognition of expenses related to its operating leases.

•

The Company recognized right-of-use assets and lease liabilities of $11.9 million and $12.8 million, respectively, related to its operating leases.

•

The Company reclassified its existing capital lease asset of $77.0 million and capital lease liability of $71.1 million to a right-of-use asset and a lease liability, respectively, pertaining to finance leases.

•

Subsequent to the adoption of and in accordance with Topic 842, the Company reassessed the circumstances surrounding three of its operating ground leases and determined that it had made significant leasehold improvements and was now reasonably certain to exercise their purchase options. Accordingly, the Company reclassified the existing right-of-use assets and lease liabilities from operating leases to finance leases and adjusted the leases’ right-of-use assets and corresponding lease liabilities to $5.7 million and $5.7 million, respectively, to incorporate the present value of the purchase options, which totaled $4.7 million at January 1, 2019.

•

With the adoption of ASC Topic 842, the Company will first apply the guidance under ASC 842 in assessing its rents receivable: if collection of rents under specific operating leases is not probable, then the Company recognizes the lesser of that lease’s rental income on a straight-line basis or cash received, plus variable rents as earned. Once this initial assessment is completed, the Company may apply a general reserve, as provided under ASC 450-20, if applicable.

The Company ~~capitalized $0.8 million~~did not record any cumulative effect of ~~internal leasing costs during~~change in accounting principle upon the adoption of ASC Topic 842 as lessor or lessee. Consistent with the transition guidance under ASU 2018-11, all prior period disclosures remain in accordance with ASC Topic 840.

Other Accounting Topics

In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. These amendments provide financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the ~~nine months ended September 30, 2017~~change in the U.S. federal corporate income tax rate in the Tax Cuts and ~~2016, respectively. ASU 2016-02 will also require extensive quantitative and qualitative disclosures and~~Jobs Act is recorded. This guidance is effective for fiscal years beginning after December 15, 2018, ~~but~~and interim periods therein. The Company adopted this guidance effective January 1, 2019, which had no effect on the Company’s financial statements.

In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements. These amendments provide clarifications and corrections to certain ASC subtopics including the following: 220-10 (Income Statement - Reporting Comprehensive Income - Overall), 470-50 (Debt - Modifications and Extinguishments), 480-10 (Distinguishing Liabilities from Equity - Overall), 718-740 (Compensation - Stock Compensation - Income Taxes), 805-740 (Business Combinations - Income Taxes), 815-10 (Derivatives and Hedging - Overall), and 820-10 (Fair Value Measurement - Overall). Some of the amendments in ASU 2018-09 do not require transition guidance and were effective upon issuance; however, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018. For those amendments that were effective January 1, 2019 or earlier, there was no material effect on the Company’s financial statements.

Recently Issued Accounting Pronouncements

In April 2019, the FASB issued ASU No. 2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which provides updates and clarifications to three previously-issued ASUs: 2016-01 Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities; 2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, described further below and which the Company has not yet adopted; and 2017-12 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which the Company early adopted effective January 1, 2018.The updates related to ASU 2016-13 have the same transition as ASU 2016-13 and are effective for periods beginning after December 15, 2019, with adoption permitted after the issuance of ASU 2019-04. The

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

updates related to ASU 2017-12 are effective for the Company on January 1, 2020.The updates related to ASU 2016-01 are effective for fiscal years beginning after December 15, 2019. The Company is ~~permitted.~~

currently evaluating the impact of this new standard on its consolidated financial statements.

In May 2019, the FASB issued ASU No. 2019-05 Financial Instruments — Credit Losses (Topic 326) which provides relief to certain entities adopting ASU 2016-13 (discussed below). The amendments accomplish those objectives by providing entities with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments, that are within the scope of Subtopic 326-20, upon adoption of Topic 326. The fair value option election does not apply to held-to-maturity debt securities. ASU 2019-05 has the same transition as ASU 2016-13 and is effective for periods beginning after December 15, 2019, with adoption permitted after this update. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments — Credit Losses. This ASU modifies ASU 2016-13 (discussed below). The amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20, Financial Instruments – Credit Losses – Measure at Amortized Cost. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. ASU 2018-19 is effective for periods beginning after December 15, 2019, with adoption permitted for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13,, Financial Instruments –— Credit ~~Losses.~~ Losses. ASU 2016-13 introduces a new model for estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. ASU 2016-13 is effective for periods beginning after December 15, 2019, with adoption permitted for fiscal years beginning after December 15, 2018. Retrospective adjustments shall be applied through a cumulative-effect adjustment to retained earnings. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. These amendments provide specific guidance for transactions for acquiring goods and services from nonemployees and specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (i) financing to the issuer or (ii) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods beginning after December 15, 2020. Early adoption is permitted but not earlier than the adoption of Topic 606. The Company does not believe that this guidance will have a material effect on its consolidated financial statements as it has not historically issued share-based payments in exchange for goods or services to be consumed within its operations.

In August 2018, the FASB issued ASU ~~2016-13~~No. 2018-13, Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. This guidance is effective for public companies in fiscal years beginning after December 15, 2019 with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract to provide guidance on implementation costs incurred in a cloud computing arrangement that is a service contract. The ASU aligns the accounting for such costs with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of such arrangements that are service contracts and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized. This ASU, which is effective for fiscal years beginning after December 15, 2019, is not expected to have a material impact on the Company’s ~~consolidated~~ financial ~~statements.~~

~~In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments.~~ ASU 2016-15 provides guidance on certain specific cash flow issues, including, but not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investees. ASU 2016-15 is effective for periods beginning after December 15, 2017, with early adoption permitted and shall be applied retrospectively where practicable. The Company expects to elect the “cumulative distribution approach” whereby distributions received from equity method investments would be classifiedstatements as cash flows from operations to the extent of equity earnings and then as cash flows from investing activities thereafter. The Company is currently evaluating the impact of this guidance on its consolidated financial statements; however, upon the adoption of ASU 2016-15, the Company expects to reclassify a portion of its cash flows between investing activities and cash flows from operating activities in its historical presentation of cash flows related to its equity method investments.

~~In January 2017, the FASB issued ASU No. 2017-01,~~ ~~Business Combinations – Clarifying the Definition of a Business.~~ ASU 2017-01 clarifies that to be considered a business, the elements must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. The new standard illustrates the circumstances under which real estatehas not incurred any significant costs associated with in-place leases would be considered a business and provides guidance for the identification of assets and liabilities in purchase accounting. ASU 2017-01 is effective for periods beginning after December cloud computing arrangements.

15 2017 and early adoption is permitted. It is expected that the new standard will reduce the number of future real estate acquisitions that will be accounted for as business combinations and, therefore, reduce the amount of acquisition costs that will be expensed. The Company expensed $0.9 million and $5.5 million of acquisition costs during the nine months ended September 30, 2017 and 2016, respectively.

~~In January 2017, the FASB issued ASU No. 2017-03~~ ~~Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323).~~ ASU 2017-03 amends certain SEC guidance in the FASB Accounting Standards Codification in response to SEC staff announcements made during 2016 Emerging Issues Task Force (“EITF”) meetings which addressed (i) the additional qualitative disclosures that a registrant is expected to provide when it cannot reasonably estimate the impact that ASUs 2014-09, 2016-02 and 2016-13 will have in applying the guidance in Staff Accounting Bulletin Topic 11.M and (ii) guidance in ASC 323 related to the amendments made by ASU 2014-01 regarding use of the proportional amortization method in accounting for investments in qualified affordable housing projects (announcement made at the November 17, 2016, EITF meeting). The adoption of ASU 2017-03 is not expected to have a material impact on the Company’s consolidated financial statements.

~~In February 2017, the FASB issued ASU 2017-05,~~ Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which amends the guidance on nonfinancial assets in ASC 610-20. The amendments clarify that (i) a financial asset is within the scope of ASC 610-20 if it meets the definition of an in substance nonfinancial asset and may include nonfinancial assets transferred within a legal entity to a counter-party, (ii) an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counter-party and de-recognize each asset when a counter-party obtains control of it, and (iii) an entity should allocate consideration to each distinct asset by applying the guidance in ASC 606 on allocating the transaction price to performance obligations. Further, ASU 2017-05 provides guidance on accounting for partial sales of nonfinancial assets. The



	12

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~amendments are effective at the same time as the amendments in ASU 2014-09. The adoption of ASU 2017-05 is not expected to have a material impact on the Company's consolidated financial statements.~~

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,~~ which clarifies the scope of modification accounting with respect to changes to the terms or conditions of a share-based payment award. Modification accounting would not apply if a change to an award does not affect the total current fair value (or other applicable measurement), vesting conditions, or the classification of the award. For all entities, ASU 2017-09 is effective prospectively for awards modified in fiscal years beginning after December 15, 2017, and interim periods within those annual periods and early adoption is permitted. The adoption of ASU 2017-09 is not expected to have a material impact on the Company's consolidated financial statements because the Company has not historically had significant modifications of its awards.

~~In August 2017, the Financial Accounting Standards Board issued ASU 2017-12,~~ ~~Derivatives and Hedging:Targeted Improvements to Accounting for Hedging Activities~~. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company plans to adopt ASU 2017-12 effective January 1, 2018. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. While the Company continues to assess all potential impacts of the standard, the adoption is not expected to have a material impact on the Company’s consolidated financial statements.

2. Real Estate

The Company’s consolidated real estate is comprised of the following (in thousands):

	September 30, 2019			December 31, 2018
Land	$	733,679		$	710,469
Buildings and improvements		2,669,992			2,594,828
Tenant improvements		170,214			151,154
Construction in progress		38,458			44,092
Properties under capital lease (Note 11)		—			76,965
Right-of-use assets - finance leases (Note 11)		93,796			—
Right-of-use assets - operating leases (Note 11)		55,717			—
Total		3,761,856			3,577,508
Less: Accumulated depreciation and amortization		(473,479	)		(416,657	)
Operating real estate, net		3,288,377			3,160,851
Real estate under development, at cost		250,278			120,297
Net investments in real estate	$	3,538,655		$	3,281,148

September 30, 2017 December 31, 2016

Land $ 659,547
$ 693,252
Buildings and improvements 2,344,370
1,916,288
Tenant improvements 140,027
132,220
Construction in progress 22,052
19,789
Properties under capital lease 76,965
76,965
Total 3,242,961
2,838,514
Less: Accumulated depreciation (337,961 ) (287,066 )
Operating real estate, net 2,905,000
2,551,448
Real estate under development, at cost 237,434
543,486
Net investments in real estate $ 3,142,434
$ 3,094,934



	13

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Acquisitions

and Conversions

During the nine months ended September 30, ~~2017~~2019 and the year ended December 31, ~~2016,~~2018, the Company acquired the following consolidated retail properties (dollars in thousands):

Property and Location	Percent Acquired	Date of Acquisition	Purchase Price
2019 Acquisitions
Core
Soho Acquisitions - 41, 47, 51 and 53 Greene Street - New York, NY ^(a)	100%	Mar 15, 2019 Mar 27, 2019 May 29, 2019 July 30, 2019	$	74,638
849 and 912 W. Armitage - Chicago, IL	100%	Sept 11, 2019		7,802
Subtotal Core				82,440

Fund V
Palm Coast Landing - Palm Coast, FL	100%	May 6, 2019		36,644
Lincoln Commons - Lincoln, RI	100%	June 21, 2019		54,299
Landstown Commons - Virginia Beach, VA	100%	Aug 2, 2019		86,961
Subtotal Fund V				177,904
Total 2019 Acquisitions			$	260,344

2018 Acquisitions and Conversions
Core
Bedford Green Land Parcel - Bedford Hills, NY	100%	Mar 23, 2018	$	1,337
Subtotal Core				1,337

Fund IV
Broughton Street Partners I - Savannah, GA (Conversion) (Note 4)	100%	Oct 11, 2018		36,104
Subtotal Fund IV				36,104

Fund V
Trussville Promenade - Trussville, AL	100%	Feb 21, 2018		45,259
Elk Grove Commons - Elk Grove, CA	100%	Jul 18, 2018		59,320
Hiram Pavilion - Hiram, GA	100%	Oct 23, 2018		44,443
Subtotal Fund V				149,022
Total 2018 Acquisitions and Conversions			$	186,463

Property and Location Percent Acquired Date of Acquisition Purchase Price Debt Assumed
2017 Acquisitions
Fund IV:
Lincoln Place - Fairview Heights, IL 100% Mar 13, 2017 $ 35,350
$ —
Shaw's Plaza - Windham, ME (Note 3)
100% Jun 30, 2017 9,142
—
Subtotal Fund IV 44,492
��

Fund V:
Plaza Santa Fe - Santa Fe, NM 100% Jun 5, 2017 35,220
—
Hickory Ridge - Hickory, NC 100% Jul 27, 2017 44,020
—
New Towne Plaza - Canton, MI 100% Aug 4, 2017 26,000
—
Subtotal Fund V 105,240
—
Total 2017 Acquisitions $ 149,732
$ —

2016 Acquisitions
Core Portfolio:
991 Madison Avenue - New York, NY ^(a)
100% Mar 26, 2016 $ 76,628
$ —
165 Newbury Street - Boston, MA 100% May 13, 2016 6,250
—
Concord & Milwaukee - Chicago, IL 100% Jul 28, 2016 6,000
2,902
151 North State Street - Chicago, IL 100% Aug 10, 2016 30,500
14,556
State & Washington - Chicago, IL 100% Aug 22, 2016 70,250
25,650
North & Kingsbury - Chicago, IL 100% Aug 29, 2016 34,000
13,409
Sullivan Center - Chicago, IL 100% Aug 31, 2016 146,939
—
California & Armitage - Chicago, IL 100% Sep 12, 2016 9,250
2,692
555 9th Street - San Francisco, CA 100% Nov 2, 2016 139,775
60,000
Subtotal Core Portfolio 519,592
119,209

Fund IV:
Restaurants at Fort Point - Boston, MA 100% Jan 14, 2016 11,500
—
1964 Union Street - San Francisco, CA^(a)
90% Jan 28, 2016 2,250
1,463
Wake Forest Crossing - Wake Forest, NC 100% Sep 27, 2016 36,600
—
Airport Mall - Bangor, ME 100% Oct 28, 2016 10,250
—
Colonie Plaza - Albany, NY 100% Oct 28, 2016 15,000
—
Dauphin Plaza - Harrisburg, PA 100% Oct 28, 2016 16,000
—
JFK Plaza - Waterville, ME 100% Oct 28, 2016 6,500
—
Mayfair Shopping Center - Philadelphia, PA 100% Oct 28, 2016 16,600
—
Shaw's Plaza - Waterville, ME 100% Oct 28, 2016 13,800
—
Wells Plaza - Wells, ME 100% Oct 28, 2016 5,250
—
717 N Michigan - Chicago, IL 100% Dec 1, 2016 103,500
—
Subtotal Fund IV 237,250
1,463
Total 2016 Acquisitions $ 756,842
$ 120,672

~~__________~~


	(a)
	14	The Soho Acquisitions are a collection of 7 properties located in New York, NY with an aggregate purchase price of approximately $122.0 million under two separate contracts. The acquisitions of the remaining three properties are expected to be finalized through early 2020.No assurance can be given that the Company will successfully close on the remaining acquisitions under contract, which are subject to customary closing conditions.

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~(a)~~

~~These acquisitions were accounted for~~

The 2019 Acquisitions and 2018 Acquisitions and Conversions were considered asset acquisitions based on accounting guidance effective as ~~asset acquisitions as the underlying properties did not meet the definition of a business.~~

~~All~~ of ~~the above acquisitions were deemed to be business combinations except 991 Madison Avenue and 1964 Union Street.~~ ~~The Company expensed~~ ~~$0.9 million of acquisition costs for~~January 1, 2018. For the nine months ended September 30, ~~2017, of which $0.3~~2019 and 2018, the Company capitalized $1.4 million ~~related to the Core Portfolio~~ and ~~$0.6~~$0.2 million, ~~related to the Funds and $5.5 million~~respectively, of acquisition ~~costs for~~costs. NaN debt was assumed in any of the ~~nine months ended September 30, 2016, of which $5.1 million related to the Core Portfolio and $0.4 million related to the~~ ~~Funds.~~

2019 Acquisitions or 2018 Acquisitions or Conversions.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Purchase Price Allocations

The purchase prices for the ~~business combinations~~2019 Acquisitions and the 2018 Acquisitions and Conversions were allocated to the acquired assets and assumed liabilities based on their estimated fair values at the dates of acquisition.

The following table summarizes the allocation of the purchase price of properties acquired during the nine months ended September 30, ~~2017~~2019 and the year ended December 31, ~~2016~~2018 (in thousands):

	Nine Months Ended September 30, 2019			Year Ended December 31, 2018
Net Assets Acquired
Land	$	54,171		$	38,086
Buildings and improvements		183,829			129,586
Acquisition-related intangible assets (Note 6)		31,883			26,693
Acquisition-related intangible liabilities (Note 6)		(9,539	)		(7,902	)
Net assets acquired	$	260,344		$	186,463

Consideration
Cash	$	256,647		$	147,985
Liabilities assumed		3,697			2,597
Existing interest in previously unconsolidated investment		—			35,881
Total consideration	$	260,344		$	186,463

Nine Months Ended
September 30, 2017 Year Ended December 31, 2016

Net Assets Acquired:
Land $ 21,917
$ 225,729
Buildings and improvements 104,729
458,525
Other assets —
3,481
Acquisition-related intangible assets (in Acquired lease intangibles, net) 31,378
63,606
Acquisition-related intangible liabilities (in Acquired lease intangibles, net) (8,292 ) (72,985 )
Above and below market debt assumed (included in Mortgages and other notes payable, net) —
(119,601 )
Net assets acquired $ 149,732
$ 558,755

Consideration:
Cash $ 138,429
$ 439,546
Conversion of note receivable 9,142
—
Debt assumed —
119,209
Liabilities assumed 2,161
—
Total Consideration $ 149,732
$ 558,755

Dispositions

During the nine months ended September 30, ~~2017~~2019 and the year ended December 31, ~~2016,~~2018, the Company disposed of the following consolidated properties (in thousands):

Property and Location	Owner	Date Sold	Sale Price		Gain (Loss) on Sale
2019 Dispositions
3104 M Street - Washington, DC (Note 4)	Fund III	Jan 24, 2019	$	10,500	$	2,014
210 Bowery - 2 Residential Condos - New York, NY	Fund IV	May 17, 2019, Sept 23, 2019		5,900		(242	)
JFK Plaza - Waterville, ME	Fund IV	July 24, 2019		7,800		2,012
3780-3858 Nostrand Avenue - New York, NY	Fund III	Aug 22, 2019		27,650		3,079
938 W North Avenue - Chicago, IL	Fund IV	Sept 27, 2019		32,000		7,207
Total 2019 Dispositions			$	83,850	$	14,070


2018 Dispositions
Sherman Avenue - New York, NY	Fund II	Apr 17, 2018	$	26,000	$	33
Lake Montclair - Dumfries, VA	Fund IV	Aug 27, 2018		22,450		2,923
1861 Union Street - San Francisco, CA	Fund IV	Aug 29, 2018		6,000		2,184
210 Bowery - 4 Residential Condos - New York, NY	Fund IV	Nov 30, 2018, Dec 10, 2018, Dec 17, 2018, Dec 21, 2018		12,050		—
Total 2018 Dispositions			$	66,500	$	5,140

Property and Location Owner Date Sold Sale Price Gain on Sale
2017 Dispositions:
New Hyde Park Shopping Center - New Hyde Park, NY Fund III Jul 6, 2017 $ 22,075
$ 6,433
216th Street - New York, NY Fund II Sep 11, 2017 30,579
6,539
Total 2017 Dispositions $ 52,654
$ 12,972

2016 Dispositions:
Cortlandt Town Center (65%) - Mohegan Lake, NY (Note 4)
Fund III Jan 28, 2016 $ 107,250
$ 65,393
Heritage Shops - Chicago, IL Fund III Apr 26, 2016 46,500
16,572
Total 2016 Dispositions $ 153,750
$ 81,965



	15

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The aggregate rental revenue, expenses and pre-tax income reported within continuing operations for the aforementioned consolidated properties that were sold during the nine months ended September 30, ~~2017~~2019 and year ended December 31, ~~2016~~2018 were as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues	$	1,071		$	2,919		$	5,652		$	7,542
Expenses		(1,322	)		(2,192	)		(4,595	)		(6,368	)
Gain on disposition of properties		12,056			5,107			14,070			5,140
Net income attributable to noncontrolling interests		(8,675	)		(4,089	)		(11,045	)		(4,155	)
Net income attributable to Acadia	$	3,130		$	1,745		$	4,082		$	2,159

Three Months Ended September 30,
Nine Months Ended
September 30,
2017 2016 2017 2016
Rental revenues $ 503
$ 1,122
$ 2,136
$ 7,378
Expenses (523 ) (1,095 ) (2,343 ) (4,745 )
Loss on extinguishment of debt (10 ) —
(10 ) (15 )
Income from continuing operations of
disposed properties before gain on disposition of properties (30 ) 27
(217 ) 2,618
Gain on disposition of properties, net of tax 12,972
—
12,972
81,965
Net income attributable to noncontrolling interests (9,166 ) (18 ) (9,034 ) (70,410 )
Net income attributable to Acadia $ 3,776
$ 9
$ 3,721
$ 14,173

Properties Held ~~For~~for Sale

At ~~December 31, 2016,~~June 30, 2019, the Company had ~~one~~1 property in Fund IIIV classified as held-for-sale, JFK Plaza, with total assets of ~~$21.5 million and subject to a mortgage of $25.5~~$6.3 million.

~~At September 30, 2017, the Company had one~~ The property, ~~in Fund II classified as held-for-sale, City Point Condominium Tower I, with total assets of $95.9 million and subject to mortgages aggregating $81.0 million,~~ which ~~will be repaid at closing. Upon classification as held for sale, the Company recognized an impairment charge of approximately $3.8 million (Note 8~~) relating to expected transaction costs associated with the sale. Additionally, the Company recognized a charge to income attributable to Acadia of approximately $1.1 million to adjust the non-controlling interest holder’s ownership in this property to its estimated redemption amount as a result of the sale at September 30, 2017. This property had a net loss of $4.3 million excluding losses attributable to noncontrolling interests of $3.9 million for the three and nine months ended September 30, 2017. On October 13, 2017, this property was sold ~~and~~during the ~~associated mortgage was repaid (Note 15~~).

~~Pro Forma Financial Information~~

~~The following unaudited pro forma consolidated operating data is presented~~third quarter of 2019, had insignificant net income for ~~the three and nine months ended September 30, 2017, as if the acquisitions~~each of ~~the properties acquired during that period were completed on January 1, 2016 and as if the acquisition of the properties acquired during~~ the nine months ended September 30, ~~2016 were completed on January~~2019 and 2018.

At September 30, 2019, the Company had 1 ~~2015.~~property in Fund IV classified as held-for-sale, a residential condo at 210 Bowery, with total assets of $2.9 million. The ~~related acquisition expenses~~property had an insignificant loss for each of ~~$0.9 million and $5.5 million reported during~~ the nine months ended September 30, ~~2017~~2019 and 2016, respectively have been reflected as pro forma charges at January 1, 2016 and January 1, 2015, respectively. The unaudited supplemental pro forma operating data is not necessarily indicative of what the actual results of operations of the Company would have been, assuming the transactions had been completed as set forth above, nor do they purport to represent the Company’s results of operations for future periods.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Pro forma revenues $ 63,253
$ 51,871
$ 191,673
$ 164,410
Pro forma income from continuing operations 368
1,092
26,439
19,504
Pro forma net income attributable to Acadia 12,912
6,839
40,608
54,201
Pro forma basic and diluted earnings per share 0.15
0.08
0.48
0.66

2018.

Real Estate Under Development and Construction in Progress

Real estate under development represents the Company’s consolidated properties that have not yet been placed into service while undergoing substantial development or construction.



	16

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~Depreciation and amortization expense~~

Development activity for the ~~nine months ended September 30, 2017 includes $2.0 million of accelerated depreciation related to a building under development that was demolished.~~

~~Development activity~~Company’s consolidated properties comprised the following during the periods presented (dollars in thousands):

	December 31, 2018				Nine Months Ended 2019						September 30, 2019
	Number of Properties		Carrying Value		Transfers In		Capitalized Costs		Transfers Out		Number of Properties		Carrying Value
Core		1	$	7,759	$	57,342	$	9,663	$	9,819		1	$	64,945
Fund II		—		7,462		—		1,626		—		—		9,088
Fund III		1		21,242		12,313		1,969		—		1		35,524
Fund IV		1		83,834		47,166		9,721		—		2		140,721
Total		3	$	120,297	$	116,821	$	22,979	$	9,819		4	$	250,278

December 31, 2016 Nine Months Ended September 30, 2017 September 30, 2017
Number of Properties Carrying Value Transfers In Capitalized Costs Transfers Out Number of Properties Carrying Value

Core 1
$ 2,530
$ 7,258
$ 3,852
$ 5,441
2
$ 8,199
Fund II 2
443,012
—
7,677
414,000
1
36,689
Fund III 3
51,421
—
13,838
8,146
2
57,113
Fund IV 8
46,523
79,624
13,883
4,597
8
135,433

Total 14
$ 543,486
$ 86,882
$ 39,250
$ 432,184
13
$ 237,434

The number of properties in the table above refers to projects comprising the entire property; however, certain projects represent a portion of a property. During the nine months ended September 30, ~~2017,~~2019, the Company placed ~~substantially all~~the following projects into development:

•

a portion of City Center (Core)

•

a portion of Cortlandt Crossing (Fund III)

•

its 1238 Wisconsin Avenue property (Core, Note 11)

•

a portion of 110 University Place (Fund IV, Note 11)

•

its 146 Geary Street property (Fund IV)

During the nine months ended September 30, 2019, the Company placed 1 Core development project, 56 E. Walton, into service. Fund II amounts relate to the City Point Phase III project.

During the year ended December 31, 2018, the Company placed 1 Core development project into service.

In addition to the consolidated projects noted above, the Company had 1 unconsolidated project in development at December 31, 2017, which it placed into service during the year ended December 31, 2018.

Construction in progress pertains to construction activity at the Company’s operating properties ~~which~~that are in service and continue to operate during the construction period.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

3. Notes Receivable, Net

The Company’s notes receivable, net were generally collateralized either by the underlying properties or the borrower’s ownership interest in the entities that own the properties, and were as follows (dollars in thousands):

	September 30,		December 31,		September 30, 2019
Description	2019		2018		Number		Maturity Date	Interest Rate
Core Portfolio	$	56,475	$	56,475		2	Oct 2019 - Apr 2020	6.0% - 8.1%
Fund II		33,026		32,582		1	Dec 2020	1.75%
Fund III		5,306		5,306		1	Jul 2020	18.0%
Fund IV		—		15,250		—	Feb 2021	15.3%
	$	94,807	$	109,613		4

September 30, December 31, September 30, 2017
Description 2017 2016 Number Maturity Date Interest Rate
Core Portfolio $ 198,395
$ 216,400
4 June 2018 - September 2019 6.0% - 8.7%
Fund II 31,593
31,007
1 May 2020 2.5%
Fund III 4,956
4,506
1 July 2020 18.0%
Fund IV 15,250
24,250
1 February 2021 15.3%
$ 250,194
$ 276,163
7

During the nine months ended September 30, ~~2017,~~2019, the Company:

•

increased the balance of a Fund II note receivable by the interest accrued of $0.4 million;

•

redeemed its $15.25 million Fund IV investment plus accrued interest of $10.0 million;

~~recovered~~

•

stopped accruing interest on one Fund III loan, due to the estimated market value of the collateral. The note had $4.7 million of accrued interest at each of December 31, 2018 and September 30, 2019;

•

extended the maturity for Brandywine’s note receivable to October 31, 2019; and

•

modified one Core loan to defer $0.4 million of interest until maturity.

During the ~~full value~~year ended December 31, 2018, the Company:

•

exchanged $22.0 million of a ~~$12.0 million Core note receivable, which was previously in default, plus accrued interest and fees aggregating $16.8 million as further described below;~~
•
~~exchanged a $16.0 million~~ Core note receivable plus accrued interest thereon of $0.3 million for an additional undivided interest in ~~one~~the Town Center property (Note 4);

•

received full payment on $26.0 million of ~~the properties in the Brandywine Portfolio (Note 4~~);

~~funded an additional $10.0 million on an existing Core note receivable, which had a total commitment of $20.0 million;~~

~~entered into an agreement to extend the maturity of a $15.0 million Core note receivable to June 1, 2018;~~

~~increased the balance of a Fund II note receivable by the interest accrued of $0.6 million;~~

~~advanced an additional $0.5 million on a Fund III note receivable; and~~


•	~~exchanged a $9.0 million Fund IV note~~Core notes receivable plus accrued interest of ~~$0.1 million thereon for an investment in a shopping center in Windham, Maine (Note 2~~). $0.2 million;


	•
	17	funded an additional $2.8 million to its existing $15.0 million Core note receivable and entered into an agreement to extend the maturity to April 1, 2020;

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~During the year ended December 31, 2016, the Company:~~

issued one Core note receivable and three Fund IV notes receivable aggregating $47.5 million with a weighted-average effective interest rate of 9.8%, which were collateralized by four mixed-use real estate properties;

~~received total collections of $42.8 million, including full repayment of five notes issued in prior periods aggregating $29.6 million; and~~


•	~~restructured~~ advanced an additional $0.2 million on a ~~$30.9 million Core mezzanine loan, which bore interest at 15.0%,~~Fund III note receivable; and ~~replaced it with a new $153.4 million loan collateralized by a first mortgage in the borrower’s tenancy-in-common interest. The loan bears interest at 8.1% (Note 4~~).

At December 31, 2016, one of the Core notes receivable in the amount of $12.0 million was in default; however, no principal reserve was established because the estimated fair value of the real estate collateral exceeded the estimated carrying value of the note. In February 2017, there was an auction pursuant to an Order of the United States Bankruptcy Court for the Southern District of New York for the property which is collateral for this note. The winning bid was in excess of the Company’s carrying value and accrued interest. The sale of this property was approved by Order of the Bankruptcy Court confirming the Chapter 11 Plan of Reorganization of the note issuer and closed during the second quarter of 2017. In connection with this sale, the Company recovered its full carrying value of principal and interest and recognized additional interest income and expense reimbursements of $2.2 million in the first quarter of 2017 and $1.4 million in the second quarter of 2017 upon settlement of this transaction.

•

increased the balance of a Fund II note receivable by the interest accrued of $0.8 million.

The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company’s loan in relation to other debt secured by the collateral and the prospects of the borrower.

Earnings from these notes and mortgages receivable are reported within the Company’s Structured Financing segment (Note 12).



	18

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

4. Investments Inin and Advances to Unconsolidated Affiliates

The Company accounts for its investments in and advances to unconsolidated affiliates primarily under the equity method of accounting as it has the ability to exercise significant influence, but does not have financial or operating control over the investment, which is maintained by each of the unaffiliated partners who co-invest with the Company. The Company’s investments in and advances to unconsolidated affiliates consist of the following (dollars in thousands):

		Ownership Interest	September 30,			December 31,
Portfolio	Property	September 30, 2019	2019			2018
Core:
	840 N. Michigan^(a)	88.43%	$	63,925		$	65,013
	Renaissance Portfolio	20%		32,458			32,458
	Gotham Plaza	49%		29,463			29,550
	Town Center^{(a, b)}	75.22%		98,243			99,758
	Georgetown Portfolio	50%		4,738			4,653
				228,827			231,432

Mervyns I & II:	KLA/Mervyn's, LLC ^(c)	10.5%		—			—

Fund III:
	Fund III Other Portfolio	90%		17			21
	Self Storage Management ^(d)	95%		206			206
				223			227
Fund IV:
	Broughton Street Portfolio ^(e)	50%		12,650			3,236
	Fund IV Other Portfolio	90%		14,353			14,540
	650 Bald Hill Road	90%		12,504			12,880
				39,507			30,656

Fund V:	Family Center at Riverdale ^(a)	89.42%		13,818			—
	Tri-City Plaza	90%		36,106			—
	Washington REIT Portfolio	90%		52,463			—
				102,387			—

Various:	Due (to) from Related Parties			(827	)		(461	)
	Other ^(f)			2,361			556
	Investments in and advances to unconsolidated affiliates		$	372,478		$	262,410

Core:
	Crossroads ^(g)	49%	$	15,353		$	15,623
	Distributions in excess of income from, and investments in, unconsolidated affiliates		$	15,353		$	15,623

Nominal Ownership Interest September 30, 2017 December 31, 2016
Fund Property September 30, 2017
Core:

840 N. Michigan ^(a)
88.43% $ 70,859
$ 74,131
Renaissance Portfolio 20% 35,139
36,437
Gotham Plaza 49% 29,196
29,421

Brandywine Market Square ^{(a, b)}
61.11% 20,642
5,469

Brandywine Portfolio ^{(a, b)}
22.22% 15,948
15,286
Georgetown Portfolio 50% 3,751
4,287
175,535
165,031

Mervyns I & II:
KLA/Mervyn's, LLC^(c)
10.5% —
—

Fund III:
Fund III Other Portfolio 90% 168
8,108

Self Storage Management ^(d)
95% 241
241
409
8,349
Fund IV:

Broughton Street Portfolio ^(e)
50% 57,368
54,839
Fund IV Other Portfolio 90% 20,392
21,817
650 Bald Hill Road 90% 13,642
18,842
91,402
95,498

Various Funds:
Due from Related Parties ^(f)
2,343
2,193

Other^(g)
556
957
Investments in and advances to unconsolidated affiliates $ 270,245
$ 272,028

Core:

Crossroads ^(h)
49% $ 15,262
$ 13,691
Distributions in excess of income from,
and investments in, unconsolidated affiliates $ 15,262
$ 13,691

~~__________~~


(a)	Represents a tenancy-in-common interest.


(b)	During ~~May~~November 2017 and March 2018, as discussed below, the Company increased its ownership in ~~Brandywine Market Square, which was formerly included within the Brandywine Portfolio.~~Town Center.


(c)	Distributions, discussed below, have exceeded the Company’s non-recourse investment, therefore the carrying value is ~~zero.~~0.


(d)	Represents a variable interest ~~entity.~~entity for which the Company was determined not to be the primary beneficiary.

(e)

The Company is entitled to a 15% return on its cumulative capital contribution which was ~~$15.2~~$5.9 million and ~~$14.5~~$3.0 million at September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively. In addition, the Company is entitled to a 9% preferred return on a portion of its equity, which was ~~$47.0~~$9.4 million and ~~$45.4~~$2.8 million at September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively.


(f)	~~Represents deferred fees.~~


~~(g)~~	Includes a cost-method ~~investment~~investments in Albertson’s (Note 8), Storage Post, Fifth Wall and other investments.


	(g)
	19

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~


~~(h)~~	Distributions have exceeded the Company’s investment; however, the Company recognizes a liability balance as it may be required to return distributions to fund future obligations of the entity.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Core Portfolio

The Company owns a 49% interest in a 311,000 square foot shopping center located in White Plains, New York (“Crossroads”), a 50% interest in a 28,000 square foot retail portfolio located in Georgetown, Washington D.C. (the “Georgetown Portfolio”), an 88.43% tenancy-in-common interest in an 87,000 square foot retail property located in Chicago, Illinois (“840 N. Michigan”), and a 49% interest in an approximately 123,000 square foot retail property located in Manhattan, New York (“Gotham Plaza”).

2019 Acquisition of Unconsolidated ~~Investment~~

Investments

On January ~~4, 2017, an entity~~24, 2019, the Renaissance Portfolio, in which the Company owns a 20% noncontrolling interest, ~~(the “Renaissance Portfolio”),~~ acquired a ~~6,200~~7,300 square foot property in ~~Alexandria, Virginia referred to as (“907 King Street”~~Fund III’s 3104 M Street property located in Washington, D.C. for $10.7 million (Note 2) ~~for $3.0~~less the assumption of the outstanding mortgage of $4.7 million.

On August 8, 2019, the Company invested $1.8 million in Fifth Wall Ventures Retail Fund, L.P. The Company’s total commitment is $5.0 million. The ~~Renaissance Portfolio~~Company accounts for its interest using the cost method of accounting given its ownership is ~~now a 213,000 square-foot portfolio of 18 mixed-use properties, 16 of which are located in Georgetown, Washington D.C.~~approximately 5 percent and ~~two of which are located in Alexandria, Virginia.~~

it does not have significant influence over the investment.

Brandywine Portfolio, ~~and Brandywine~~ Market Square

and Town Center

The Company owns an interest in an approximately one million square foot retail portfolio (the “Brandywine Portfolio” joint venture) located in Wilmington, Delaware, which includes ~~a property~~two properties referred to as ~~“Brandywine Market Square.~~“Market Square” and “Town Center.” Prior to the second quarter of 2016, the Company had a controlling interest in the Brandywine Portfolio, and it was therefore consolidated within the Company’s financial statements. During April 2016, the arrangement with the partners of the Brandywine Portfolio was modified to change the legal ownership from a partnership to a tenancy-in-common interest, as well as to provide certain participating rights to the outside partners. As a result of these modifications, the Company de-consolidated the Brandywine Portfolio and ~~accounts~~accounted for its interest under the equity method of accounting effective May 1, 2016. Furthermore, as the owners of the Brandywine Portfolio had consistent ownership interests before and after the modification and the underlying net assets ~~are~~were unchanged, the Company ~~has~~ reflected the change from consolidation to equity method based upon its historical cost. The Brandywine Portfolio and ~~Brandywine~~ Market Square ventures do not include the property held by Acadia Brandywine Holdings, LLC (“Brandywine Holdings”), an entity in which the Company has a 22.22% interest and which is consolidated by the Company.

Additionally, in April 2016, the Company repaid the outstanding balance of $140.0 million of non-recourse debt collateralized by the Brandywine Portfolio and provided a note receivable collateralized by the partners’ tenancy-in-common interest in the Brandywine Portfolio for their proportionate share of the repayment. On May 1, 2017, the Company exchanged $16.0 million of the $153.4 million ~~note~~notes receivable (the “Brandywine Notes Receivable”) (Note 3) plus accrued interest of $0.3 million for one of the partner’s 38.89% tenancy-in-common interests in ~~Brandywine~~ Market Square. The Company already had a 22.22% interest in ~~Brandywine~~ Market Square and ~~continues~~continued to apply the equity method of accounting for its aggregate 61.11% noncontrolling interest in ~~Brandywine~~ Market Square and its 22.22% interest in ~~the rest of the Brandywine Portfolio.~~Town Center through November 16, 2017. The incremental investment in ~~Brandywine~~ Market Square was recorded at ~~$16.6~~$16.3 million and the excess of this amount over the venture’s book value associated with this interest, or $9.8 million, ~~will be~~was being amortized over the remaining depreciable lives of the venture’s ~~assets.~~

~~Fund Investments~~

~~Fund III Other Portfolio includes~~assets through November 16, 2017. On November 16, 2017, the ~~Company’s investment~~Company exchanged an additional $16.0 million of Brandywine Notes Receivable plus accrued interest of $0.6 million for the remaining 38.89% interest in ~~Arundel Plaza through its date of sale~~Market Square, thereby obtaining a 100% controlling interest in ~~February 2017. Fund IV Other Portfolio includes~~ the ~~Company’s investment in Promenade at Manassas and Eden Square as well as 2819 Kennedy Boulevard and 1701 Belmont Avenue through their dates of sale. Self-Storage Management, a Fund III investment,~~property. The exchange was ~~determined~~deemed to be a ~~variable interest entity. Management has evaluated~~business combination and as a result, the ~~applicability~~property was consolidated and a gain on change of ~~ASC Topic 810 to this joint venture and determined that~~control of $5.6 million was recorded (Note 2).

On November 16, 2017, the Company ~~is not~~exchanged $60.7 million of the ~~primary beneficiary~~Brandywine Notes Receivable plus accrued interest of $0.9 million for one of the partner’s 38.89% tenancy-in-common interests in Town Center. The incremental investment in Town Center was recorded at $61.6 million and ~~therefore, consolidation~~the excess of this ~~venture~~amount over the venture’s book value associated with this interest, or $34.5 million, is ~~not required.~~

~~Mervyn’s I & II~~

~~During July 2017, Mervyn’s I and Mervyn’s II received a total~~being amortized over the remaining depreciable lives of ~~$1.0 million in distributions from certain investments.~~the venture’s assets. The Company previously had ~~already reduced~~a 22.22% interest in Town Center which then became 61.11% following the ~~carrying amount~~November 2017 transaction.

On March 28, 2018, the Company exchanged $22.0 million of its ~~investments~~Brandywine Notes Receivable plus accrued interest of $0.3 million for one of the partner’s 14.11% tenancy-in-common interests in ~~Mervyn’s I~~Town Center. The incremental investment in Town Center was recorded at $ 22.3 million and ~~Mervyn’s II~~the excess of this amount over the venture’s book value associated with this interest, or $12.7 million, is being amortized over the remaining depreciable lives of the venture’s assets. The Company continues to ~~zero, and consequently~~apply the ~~entire amount received has been reflected as~~ equity method of accounting for its aggregate 75.22% noncontrolling interest in ~~earnings (losses) and gains~~Town Center after the March 2018 transaction.

At September 30, 2019, $38.7 million of ~~unconsolidated affiliates~~the Brandywine Note Receivable remains outstanding (Note 3), which is collateralized by the remaining 24.78% undivided interest in ~~the consolidated statement of income.~~



	20

Town Center.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~Albertson’s~~

~~“Other” includes~~

Fund ~~II’s cost method investment~~Investments

2019 Acquisitions of Unconsolidated Investments

On March 19, 2019, Fund V obtained an 99.35% interest in ~~Albertson’s supermarkets among other investments. During July 2017,~~a joint venture which in turn obtained a 90% undivided interest in the ~~Company received $2.3 million~~property and invested in ~~distributions from Albertson’s.~~a 428,000 square-foot property located in Riverdale, Utah referred to as “Family Center at Riverdale” for $48.5 million. The property is held by the venture as a tenancy in common. The Company ~~reduced~~accounts for its interest in the ~~carrying amount~~Family Center at Riverdale under the equity method of accounting as it does not control but exercises significant influence over the investment.

On April 30, 2019, Fund V acquired an interest in a venture which invested in a 300,000 square-foot property located in Vernon, Connecticut referred to as “Tri-City Plaza” for $36.7 million. The Company accounts for its interest in Tri-City Plaza under the equity method of accounting as it does not control but exercises significant influence over the investment.

On August 21, 2019, Fund V acquired an interest in a venture which invested in a 225,000 square foot property and a 300,000 square foot property, both located in Frederick County, Maryland collectively referred to as the “Washington REIT Portfolio” for $21.8 million and $33.1 million, respectively. The Company accounts for its interest in the Washington REIT Portfolio under the equity method of accounting as it does not control but exercises significant influence over the investment.

Broughton Street Portfolio

During 2014, Fund IV acquired 50% interests in 2 joint ventures referred to as “BSP I” and “BSP II” with the same venture partner to acquire and operate a total of 23 properties in Savannah, Georgia referred to as the “Broughton Street Portfolio.” Since that time, as described below, the ventures have sold 8 of the properties and terminated the master leases on 2 of the properties. In October 2018, the venture partner relinquished its interest in BSP I resulting in Fund IV becoming the 100% owner of the BSP I venture, which holds 11 consolidated properties (Note 2). Fund IV accounted for this transaction as an asset purchase at fair value whereby its existing preferred and common interests were deemed consideration for the properties and no gain or loss was recognized. At September 30, 2019, the Broughton Street portfolio had 13 remaining properties, 2 of which are unconsolidated and are held within the BSP II venture.

Storage Post

On June 29, 2019, Fund III’s Storage Post venture, which is a cost-method investment ~~to zero and reflected~~with 0 carrying value, distributed $1.6 million of which the ~~remaining $1.9~~Operating Partnership’s share was $0.4 million. On May 15, 2018, the Storage Post venture,distributed $3.2 million ~~as equity in earnings (losses) and gains~~ of ~~unconsolidated affiliates in~~which the ~~consolidated statement of income.~~

Operating Partnership’s share was $0.8 million.

2018 Dispositions of Unconsolidated Investments

On January ~~31, 2017,~~18, 2018, Fund ~~IV completed the disposition of 2819 Kennedy Boulevard,~~IV’s Broughton Street Portfolio venture sold 2 properties for ~~$19.0 million less $8.4 million debt repayment for net~~aggregate proceeds of ~~$10.6~~$8.0 million, resulting in a ~~gain on disposition~~net loss of ~~$6.3~~$0.4 million at the property level of which the Fund’s share ~~was $6.2 million, which is included in equity in earnings~~ and ~~gains from unconsolidated affiliates in~~ the ~~consolidated financial statements. The~~ Operating Partnership’s proportionate share of the ~~gain~~loss was ~~$1.4~~0, due to Fund IV’s preferred return.

On June 29, 2018, Fund IV’s Broughton Street Portfolio venture terminated its master leases on 2 of its properties resulting in a net loss of $1.0 million ~~net of noncontrolling interests.~~

at the property level for which the Operating Partnership’s share was less than $0.1 million.

On ~~February 15, 2017,~~August 29, 2018, Fund ~~III completed the disposition of Arundel Plaza,~~IV’s Broughton Street Portfolio venture sold a property for ~~$28.8 million less $10.0 million debt repayments for net~~ proceeds of ~~$18.8~~$2.1 million, resulting in a ~~gain on disposition~~net loss of ~~$8.2~~$0.3 million at the property level, of which the Fund’s share was $5.3 million, which is included in equity in earnings and gains from unconsolidated affiliates in the consolidated financial statements. The Operating Partnership’s proportionate share of the gain was $1.3 million, net of noncontrolling interests.

On June 30, 2017, Fund IV completed the disposition of 1701 Belmont Avenue, for $5.6 million less $2.9 million debt repayments for net proceeds of $2.7 million, resulting in a gain on disposition of $3.3 million at the property level, of which the Fund’s share was $3.3 million, which is included in equity in earnings and gains from unconsolidated affiliates in the consolidated financial statements. The Operating Partnership’s proportionate share of the gain was $0.8 million, net of noncontrolling interests.

On January 28, 2016, Fund III completed the disposition of a 65% interest in Cortlandt Town Center for $107.3 million resulting in a gain of $65.4 million and the deconsolidation of its remaining interest (~~Note 2~~). On December 21, 2016, Fund III completed the disposition of its remaining 35% interest in Cortlandt Town Center for $57.8 million less $32.6 million debt repayment for a net sales price of $25.2 million resulting in a gain on sale of $36.0 million, of which the Operating Partnership’s share was ~~$8.8 million, which is included in equity in earnings and gains from unconsolidated affiliates in the consolidated financial statements.~~

~~During October 2017, Fund IV’s Broughton Street Portfolio venture sold several properties (Note 15~~).

less than $0.1 million.

Fees from Unconsolidated Affiliates

The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling ~~$0.4~~$0.2 million and $0.3 million for each of the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$1.0~~$0.7 million and ~~$0.9~~$0.8 million for each of the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, which is included in other revenues in the consolidated financial statements.

In addition, the Company paid to certain unaffiliated partners of its joint ventures, ~~$0.5~~$0.3 million and ~~$0.6~~$0.4 million ~~during~~for the three months ended September 30, ~~2017~~2019 and ~~2016, respectively,~~2018, and ~~$1.4~~$1.0 million and ~~$1.8~~$1.3 million ~~during~~for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, for leasing commissions, development, management, construction and overhead fees.



	21

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Summarized Financial Information of Unconsolidated Affiliates

The following combined and condensed Balance Sheets and Statements of Income, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates (in thousands):

	September 30, 2019			December 31, 2018
Combined and Condensed Balance Sheets
Assets:
Rental property, net	$	644,970		$	487,846
Investment in unconsolidated affiliates		—			—
Other assets		82,302			89,890
Total assets	$	727,272		$	577,736
Liabilities and partners’ equity:
Mortgage notes payable	$	496,371		$	408,967
Other liabilities		63,478			54,585
Partners’ equity		167,423			114,184
Total liabilities and partners’ equity	$	727,272		$	577,736

Company's share of accumulated equity	$	249,480		$	139,028
Basis differential		101,658			103,812
Deferred fees, net of portion related to the Company's interest		4,247			3,646
Amounts payable by the Company		(827	)		(461	)
Investments in and advances to unconsolidated affiliates, net of Company's share of distributions in excess of income from and investments in unconsolidated affiliates		354,558			246,025
Cost method investments		2,567			762
Company's share of distributions in excess of income from and investments in unconsolidated affiliates		15,353			15,623
Investments in and advances to unconsolidated affiliates	$	372,478		$	262,410

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Combined and Condensed Statements of Income
Total revenues	$	22,310		$	19,971		$	65,023		$	59,730
Operating and other expenses		(6,746	)		(6,028	)		(17,088	)		(17,479	)
Interest expense		(5,888	)		(5,240	)		(16,303	)		(15,365	)
Depreciation and amortization		(7,321	)		(5,502	)		(17,908	)		(17,340	)
Loss on disposition of properties		—			(263	)		—			(1,673	)
Net income attributable to unconsolidated affiliates	$	2,355		$	2,938		$	13,724		$	7,873

Company’s share of equity in net income of unconsolidated affiliates	$	2,006		$	1,136		$	9,283		$	9,396
Basis differential amortization		(707	)		(760	)		(2,154	)		(2,317	)
Company’s equity in earnings of unconsolidated affiliates	$	1,299		$	376		$	7,129		$	7,079

September 30, December 31,
2017 2016
Combined and Condensed Balance Sheets

Assets:

Rental property, net $ 540,609
$ 576,505
Real estate under development 22,359
18,884
Investment in unconsolidated affiliates 6,854
6,853
Other assets 103,335
75,254
Total assets $ 673,157
$ 677,496
Liabilities and partners’ equity:

Mortgage notes payable $ 401,768
$ 407,344
Other liabilities 57,125
30,117
Partners’ equity 214,264
240,035
Total liabilities and partners’ equity $ 673,157
$ 677,496

Company's share of accumulated equity $ 177,251
$ 191,049
Basis differential 69,728
61,827
Deferred fees, net of portion related to the Company's interest 5,662
3,268
Amounts receivable by the Company 2,342
2,193
Investments in and advances to unconsolidated affiliates, net of Company's share of distributions in excess of income from and investments in unconsolidated affiliates $ 254,983
$ 258,337

Three Months Ended September 30,
Nine Months Ended
September 30,
2017 2016 2017 2016
Combined and Condensed Statements of Income

Total revenues $ 20,883
$ 26,590
$ 63,460
$ 58,984
Operating and other expenses (6,847 ) (7,066 ) (18,985 ) (18,082 )
Interest expense (4,788 ) (5,242 ) (13,967 ) (11,355 )
Depreciation and amortization (6,208 ) (15,398 ) (18,720 ) (24,262 )
Loss on debt extinguishment —
—
(154 ) —
(Loss) gain on disposition of properties —
(1,452 ) 17,778
(1,452 )
Net income attributable to unconsolidated affiliates $ 3,040
$ (2,568 ) $ 29,412
$ 3,833

Company’s share of equity in
net income of unconsolidated affiliates $ 4,544
$ 377
$ 23,156
$ 4,267
Basis differential amortization (543 ) (479 ) (2,112 ) (675 )
Company’s equity in earnings (losses)
of unconsolidated affiliates $ 4,001
$ (102 ) $ 21,044
$ 3,592



	22

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

5. Other Assets, Net and Accounts Payable and Other Liabilities

Other assets, net and accounts payable and other liabilities are comprised of the following for the periods presented:

(in thousands)	September 30, 2019			December 31, 2018
Other Assets, Net:
Lease intangibles, net (Note 6)	$	121,171		$	115,939
Deferred charges, net ^(a)		28,520			28,619
Prepaid expenses		18,301			18,422
Other receivables		10,361			5,058
Accrued interest receivable		9,898			17,046
Due from seller		3,682			4,000
Deposits		3,673			4,611
Corporate assets		1,666			1,953
Income taxes receivable		1,443			2,070
Derivative financial instruments (Note 8)		1,217			7,018
Deferred tax assets		656			2,032
Due from related parties		—			1,802
	$	200,588		$	208,570

(a) Deferred Charges, Net:
Deferred leasing and other costs	$	47,984		$	45,011
Deferred financing costs related to line of credit		9,489			8,960
		57,473			53,971
Accumulated amortization		(28,953	)		(25,352	)
Deferred charges, net	$	28,520		$	28,619

Accounts Payable and Other Liabilities:
Lease intangibles, net (Note 6)	$	89,832		$	95,045
Lease liability - finance leases, net (Note 11)		88,137			—
Accounts payable and accrued expenses		71,732			65,215
Lease liability - operating leases, net (Note 11)		57,093			—
Derivative financial instruments (Note 8)		53,194			7,304
Deferred income		31,392			34,052
Tenant security deposits, escrow and other		11,780			10,588
Other		137			2,757
Capital lease obligations (Note 11)		—			71,111
	$	403,297		$	286,072

(in thousands) September 30, 2017 December 31, 2016
Other assets, net:
Lease intangibles, net (Note 6)
$ 123,593
$ 114,584
Deferred charges, net ^(a)
28,365
25,221
Prepaid expenses 18,173
14,351
Other receivables 9,440
9,514
Accrued interest receivable 12,030
9,354
Deposits 4,422
4,412
Due from seller 4,300
4,300
Deferred tax assets 3,719
3,733
Derivative financial instruments (Note 8)
2,661
2,921
Due from related parties 1,773
1,655
Corporate assets 2,408
1,241
Income taxes receivable 2,134
1,500
$ 213,018
$ 192,786

(a) Deferred charges, net:
      Deferred leasing and other costs $ 44,484
$ 40,728
      Deferred financing costs 7,678
5,915
52,162
46,643
      Accumulated amortization (23,797 ) (21,422 )
      Deferred charges, net $ 28,365
$ 25,221

Accounts payable and other liabilities:
Lease intangibles, net (Note 6)
$ 104,663
$ 105,028
Accounts payable and accrued expenses 57,326
48,290
Deferred income 32,717
35,267
Tenant security deposits, escrow and other 11,214
14,975
Derivative financial instruments (Note 8)
3,468
3,590
Income taxes payable 1,818
1,287
Other —
235
$ 211,206
$ 208,672



	23

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

6. Lease Intangibles

Upon acquisitions of real estate ~~accounted for as business combinations,~~(Note 2), the Company assesses the fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above- and below-market leases, including ~~below- market~~below-market options and acquired in-place leases) and assumed ~~liabilities in accordance with ASC Topic 805.~~liabilities. The lease intangibles are amortized over the remaining terms of the respective leases, including option periods where applicable.

Intangible assets and liabilities are included in other assets and other liabilities (Note 5) on the consolidated balance sheet and summarized as follows (in thousands):

	September 30, 2019									December 31, 2018
	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Amortizable Intangible Assets
In-place lease intangible assets	$	245,221		$	(128,237	)	$	116,984		$	216,021		$	(105,972	)	$	110,049
Above-market rent		17,118			(12,931	)		4,187			18,169			(12,279	)		5,890
	$	262,339		$	(141,168	)	$	121,171		$	234,190		$	(118,251	)	$	115,939

Amortizable Intangible Liabilities
Below-market rent	$	(159,814	)	$	70,516		$	(89,298	)	$	(152,188	)	$	57,721		$	(94,467	)
Above-market ground lease		(671	)		137			(534	)		(671	)		93			(578	)
	$	(160,485	)	$	70,653		$	(89,832	)	$	(152,859	)	$	57,814		$	(95,045	)

September 30, 2017 December 31, 2016
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Amortizable Intangible Assets
In-place lease intangible assets $ 185,273
$ (67,747 ) $ 117,526
$ 156,420
$ (47,827 ) $ 108,593
Above-market rent 18,239
(12,172 ) 6,067
16,649
(10,658 ) 5,991
$ 203,512
$ (79,919 ) $ 123,593
$ 173,069
$ (58,485 ) $ 114,584

Amortizable Intangible Liabilities
Below-market rent $ (144,218 ) $ 40,207
$ (104,011 ) $ (137,032 ) $ 32,004
$ (105,028 )
Above-market ground lease (671 ) 19
(652 ) —
—
—
$ (144,889 ) $ 40,226
$ (104,663 ) $ (137,032 ) $ 32,004
$ (105,028 )

During the nine months ended September 30, ~~2017,~~2019, the Company acquired in-place lease intangible assets of ~~$29.6~~$31.4 million, above-market rents of ~~$1.8~~$0.5 million, and below-market rents of ~~$7.6 million, and an above-market ground lease of $0.7~~$9.5 million with weighted-average useful lives of ~~4.1, 4.6, 11.5,~~8.5, 6.7, and ~~11.5~~23.4 years, respectively.

During the year ended December 31, 2018, the Company acquired in-place lease intangible assets of $24.2 million, above-market rents of $2.5 million, and below-market rents of $7.9 million with weighted-average useful lives of 5.2, 5.1, and 20.5 years, respectively.

Amortization of in-place lease intangible assets is recorded in depreciation and amortization expense and amortization of above-market rent and below-market rent is recorded as a reduction to and increase to rental income, respectively, in the consolidated statements of income. Amortization of above-market ground leases are recorded as a reduction to rent expense in the consolidated statements of income.

The scheduled amortization of acquired lease intangible assets and assumed liabilities as of September 30, ~~2017~~2019 is as follows (in thousands):

Years Ending December 31,	Net Increase in Lease Revenues		Increase to Amortization			Reduction of Rent Expense		Net (Expense) Income
2019 (Remainder)	$	2,233	$	(8,454	)	$	15	$	(6,206	)
2020		8,120		(27,446	)		58		(19,268	)
2021		7,672		(20,486	)		58		(12,756	)
2022		7,312		(14,970	)		58		(7,600	)
2023		7,386		(11,432	)		58		(3,988	)
Thereafter		52,388		(34,196	)		287		18,479
Total	$	85,111	$	(116,984	)	$	534	$	(31,339	)

Years Ending December 31, Net Increase in Lease Revenues Increase to Amortization Reduction of Rent Expense Net Income (Expense)
2017 (Remainder) $ 3,046
$ (7,596 ) $ 15
$ (4,535 )
2018 9,874
(26,009 ) 58
(16,077 )
2019 9,512
(18,849 ) 58
(9,279 )
2020 7,860
(14,011 ) 58
(6,093 )
2021 7,457
(11,286 ) 58
(3,771 )
Thereafter 60,195
(39,775 ) 405
20,825
Total $ 97,944
$ (117,526 ) $ 652
$ (18,930 )



	24

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

7. Debt

A summary of the Company’s consolidated indebtedness is as follows (dollars in thousands):

	Interest Rate at						Carrying Value at
	September 30,		December 31,		Maturity Date at		September 30,			December 31,
	2019		2018		September 30, 2019		2019			2018
Mortgages Payable
Core Fixed Rate	3.88%-6.00%		3.88%-6.00%		Feb 2024 - Apr 2035		$	176,714		$	178,271
Core Variable Rate - Swapped ^(a)	3.41%-5.67%		3.41%-5.67%		Jan 2023 - Nov 2028			81,819			82,583
Total Core Mortgages Payable								258,533			260,854
Fund II Fixed Rate	4.75%		1.00%-4.75%		May 2020			200,000			205,262
Fund II Variable Rate	LIBOR+3.00%			—	March 2022			23,925			—
Fund II Variable Rate - Swapped ^(a)	4.27%		4.27%		Nov 2021			19,138			19,325
Total Fund II Mortgages Payable								243,063			224,587
Fund III Variable Rate	LIBOR+3.00%-LIBOR+3.10%		Prime+0.50%-LIBOR+4.65%		Jan 2020 - Jun 2020			74,145			90,096
Fund IV Fixed Rate	3.40%-4.50%		3.40%-4.50%		Oct 2025 - Jun 2026			8,189			8,189
Fund IV Variable Rate	LIBOR+1.60%-LIBOR+3.40%		LIBOR+1.60%-LIBOR+3.95%		Dec 2019 - Apr 2022			157,200			233,065
Fund IV Variable Rate - Swapped ^(a)	3.67%-4.61%		3.67%-4.23%		Mar 2020 - Dec 2022			88,601			71,841
Total Fund IV Mortgages Payable								253,990			313,095
Fund V Variable Rate	LIBOR+2.15%-LIBOR+2.25%		LIBOR+2.25%		Oct 2020 - Jan 2021			51,506			51,506
Fund V Variable Rate - Swapped ^(a)	4.01%-4.78%		4.61%-4.78%		Feb 2021 - Mar 2024			156,900			86,570
Total Fund V Mortgage Payable								208,406			138,076
Net unamortized debt issuance costs								(9,135	)		(10,173	)
Unamortized premium								676			753
Total Mortgages Payable							$	1,029,678		$	1,017,288
Unsecured Notes Payable
Core Term Loans		—	LIBOR+1.25%		Mar 2023		$	—		$	383
Core Variable Rate Unsecured Term Loans - Swapped ^(a)	2.49%-4.05%		2.54%-3.59%		Mar 2023			350,000			349,617
Total Core Unsecured Notes Payable								350,000			350,000
Fund II Unsecured Notes Payable	LIBOR+1.65%		LIBOR+1.40%		Sep 2020			40,000			40,000
Fund IV Term Loan/Subscription Facility	LIBOR+1.65%-LIBOR+2.00%		LIBOR+1.65%-LIBOR+2.75%		Dec 2019 - June 2021			87,625			40,825
Fund V Subscription Facility	LIBOR+1.60%		LIBOR+1.60%		May 2020			148,380			102,800

Net unamortized debt issuance costs								(328	)		(368	)
Total Unsecured Notes Payable							$	625,677		$	533,257
Unsecured Line of Credit
Core Unsecured Line of Credit		—		—		—	$	—		$	—

Total Debt - Fixed Rate ^(b)(c)							$	1,236,805		$	1,001,658
Total Debt - Variable Rate ^(d)								427,337			558,675
Total Debt								1,664,142			1,560,333
Net unamortized debt issuance costs								(9,463	)		(10,541	)
Unamortized premium								676			753
Total Indebtedness							$	1,655,355		$	1,550,545

Interest Rate Maturity Date at
September 30, 2017 Carrying Value
September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
Mortgages Payable
Core Fixed Rate 3.88%-5.89% 3.88%-5.89% February 2024 - April 2035 $ 180,259
$ 234,875
Core Variable Rate - Swapped^(a)
1.71%-3.77% 1.71%-3.77% June 2018 - June 2026 80,492
82,250
   Total Core Mortgages Payable 260,751
317,125
Fund II Fixed Rate 1.00%-4.75% 1.00%-5.80% October 2017 - May 2020 224,262
249,762
Fund II Variable Rate LIBOR+0.79% -LIBOR+2.50% LIBOR+0.62% -LIBOR+2.50% December 2017 - November 2021 126,077
142,750
Fund II Variable Rate - Swapped^(a)
2.88% 2.88% November 2021 19,616
19,779
   Total Fund II Mortgages Payable 369,955
412,291
Fund III Variable Rate Prime+0.50% -LIBOR+4.65% Prime+0.50% -LIBOR+4.65% March 2018 - December 2021 69,632
83,467
Fund IV Fixed Rate 3.40%-4.50% 3.40%-4.50% October 2025-June 2026 10,503
10,503
Fund IV Variable Rate LIBOR+1.70% -LIBOR+3.95% LIBOR+1.70% - LIBOR+3.95% October 2017 - April 2022 268,554
233,139
Fund IV Variable Rate - Swapped^(a)
1.78% 1.78% May 2019 - April 2022 81,156
14,509
   Total Fund IV Mortgages Payable 360,213
258,151
Net unamortized debt issuance costs (15,555 ) (16,642 )
Unamortized premium 881
1,336
   Total Mortgages Payable $ 1,045,877
$ 1,055,728
Unsecured Notes Payable
Core Unsecured Term Loans LIBOR+1.30% -LIBOR+1.60% LIBOR+1.30% -LIBOR+1.60% July 2020 - December 2022 $ 26,459
$ 51,194
Core Variable Rate Unsecured
Term Loans - Swapped^(a)
1.24%-3.77% 1.24%-3.77% July 2018 - March 2025 273,541
248,806
  Total Core Unsecured Notes Payable 300,000
300,000
Fund II Unsecured Notes Payable LIBOR+1.65% September 2020 31,500
—
Fund IV Term Loan/Subscription Facility LIBOR+1.65% -LIBOR+2.75% LIBOR+1.65% -LIBOR+2.75% October 2017- December 2017 54,920
134,636
Fund V Subscription Facility LIBOR+1.60% LIBOR+1.60% May 2020 113,200
—
Net unamortized debt issuance costs (1,650 ) (1,646 )
  Total Unsecured Notes Payable $ 497,970
$ 432,990
Unsecured Line of Credit
Core Unsecured Line of Credit LIBOR+1.40% LIBOR+1.40% June 2020 $ 59,000
$ —
  Total Unsecured Line of Credit $ 59,000
$ —

Total Debt - Fixed Rate ^(b)
$ 869,829
$ 860,484
Total Debt - Variable Rate 749,342
645,186
Total Debt 1,619,171
1,505,670
Net unamortized debt issuance costs (17,205 ) (18,288 )
Unamortized premium 881
1,336
Total Indebtedness $ 1,602,847
$ 1,488,718

~~__________~~

(a)

At September 30, ~~2017,~~2019, the stated rates ranged from LIBOR + ~~1.08%~~1.50% to LIBOR +1.90% for Core variable-rate debt; LIBOR + ~~0.79% to LIBOR +2.50%~~1.39% for Fund II variable-rate debt; ~~PRIME~~LIBOR + ~~0.50%~~3.00% to LIBOR ~~+4.65%~~+ 3.10% for Fund III variable-rate debt; LIBOR + ~~1.70%~~1.60% to LIBOR ~~+3.95%~~+3.40% for Fund IV variable-rate ~~debt and~~debt; LIBOR + ~~1.30%~~2.15% to LIBOR ~~+1.60%~~+ 2.25% for Fund V variable-rate debt; LIBOR + 1.25% for Core variable-rate unsecured ~~notes.~~term loans; and LIBOR + 1.35% for Core variable-rate unsecured lines of credit.


(b)	Includes ~~$454,805~~$696.5 million and ~~$365,343,~~$609.9 million, respectively, of variable-rate debt that has been fixed with interest rate swap agreements as of the periods presented.


	(c)
	25	Fixed-rate debt at September 30, 2019 includes $155.4 million of Core swaps that may be used to hedge debt instruments of the Funds.

(d)

Includes $143.0 million and $143.8 million, respectively, of variable-rate debt that is subject to interest cap agreements.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Credit Facility

On February 20, 2018, the Company entered into a $500.0 million senior unsecured credit facility (the “Credit Facility”), comprised of a $150.0 million senior unsecured revolving credit facility (the “Revolver”) which bears interest at LIBOR + 1.35%, and a $350.0 million senior unsecured term loan (the “Term Loan”) which bears interest at LIBOR + 1.25%. The Credit Facility refinanced the Company’s existing $300.0 million credit facility (comprised of the $150.0 million Core unsecured revolving line of credit and the $150.0 million term loan), $150.0 million in Core unsecured term loans and repaid a $40.4 million mortgage secured by its 664 North Michigan Property. The Revolver and Term Loans mature on March 31, 2022 and March 31, 2023, respectively.

The Company’s Credit Facility was amended, and the capacity of the unsecured revolving line of credit was increased on October 8, 2019 (Note 15).

Mortgages Payable

During the nine months ended September 30, 2017, the Company obtained nine new non-recourse mortgages totaling $128.3 million with a weighted-average interest rate of LIBOR + 3.43% collateralized by nine properties, which mature between February 14, 2020 and April 1, 2022. The Company entered into interest rate swap contracts to effectively fix the variable portion of the interest rates of seven of these obligations with a notional value of $67.3 million at a weighted-average rate of 1.92%. During 2017, the Company repaid six mortgages in full, which had a total balance of $112.5 million and a weighted-average interest rate of 4.76%, and made scheduled principal payments of $5.8 million. 2019:

•

The Company obtained 4 new Fund mortgages totaling $118.3 million with a weighted-average interest rate of LIBOR + 1.65% collateralized by four properties and maturing in 2022 through 2024.

•

The Company refinanced a Fund IV loan in the amount of $23.8 million, of which $18.9 million had been drawn at September 30, 2019, and which bears interest at a rate of LIBOR + 1.75% and matures in 2022.

•

Fund III mortgage, which had a balance of $4.7 million and an interest rate of Prime + 0.5%, was assumed by the purchasing venture in a property sale (Note 2). The Company also repaid a Fund IV loan in full, which had a balance of $38.2 million and an interest rate of LIBOR + 2.35%. The Company repaid one Fund III loan in the amount of $9.8 million and two Fund IV loans in the aggregate amount of $18.4 million in connection with the sale of the properties. The Company also made scheduled principal payments of $4.6 million.

•

The Company re-borrowed $49.0 million in the third quarter pursuant to the requirements of a loan amendment entered into during the second quarter and the Company also drew down $8.7 million on a Fund III construction loan

•

The Company modified two Fund IV loans to increase the commitment of BSP Venture I’s mortgage by $9.4 million; and to decrease the 717 North Michigan Avenue mortgage balance by $9.9 million, decrease future availability by $3.9 million and reduce the interest rate to LIBOR + 3.10%. The Company also modified a Fund III loan to decrease the balance by $10.0 million to $39.5 million and reduce the interest rate to LIBOR plus 3.10% from LIBOR plus 4.65%.

•

The Company entered into interest rate swap contracts to effectively fix the variable portion of the interest rates of four of the new obligations with a notional value of $91.5 million at a weighted-average interest rate of 2.74%.

At September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the Company’s mortgages were collateralized by 4541 and 3943 properties, respectively, and the related tenant leases. Certain loans are cross-collateralized and contain cross-default provisions. The loan agreements contain customary representations, covenants and events of default. Certain loan agreements require the Company to comply with affirmative and negative covenants, including the maintenance of debt service coverage and leverage ratios. A portion of the Company’s variable-rate mortgage debt has been effectively fixed through certain cash flow hedge transactions (Note 8).

The mortgage loan ~~related to~~collateralized by the property held by Brandywine Holdings in the ~~Company’s~~ Core Portfolio, ~~amounted~~was in default and subject to litigation at September 30, 2019 and December 31, 2018. This loan was originated in June 2006 and had an original principal amount of $26.3 million and ~~was in default at September 30, 2017 and December 31,~~a scheduled maturity of July 1, 2016. ~~This~~The loan bears interest at ~~5.99%~~a stated rate of approximately 6.00%, ~~excluding~~and is subject to additional default interest of 5%~~, and is collateralized by a property, in which the Company holds a 22% controlling interest.~~. In April 2017, the successor to the lender, Wilmington – 5190 Brandywine Parkway, LLC, initiated lawsuits against Brandywine Holdings in Delaware Superior Court and Delaware Chancery Court for, among other things, judgment on ~~this mortgage~~the note (the “Note Complaint”) and foreclosure on the property. In a contemporaneously filed action in Delaware Superior Court (the “Guaranty Complaint”), the successor lender initiated a lawsuit against the ~~Company~~Operating Partnership as guarantor of certain guaranteed obligations of Brandywine Holdings set forth in a non-recourse carve-out guaranty executed by the Operating Partnership. The Guaranty Complaint alleges that the Operating Partnership is liable for the full balance of the principal, accrued interest as well as ~~penalties~~fees and costs under the note, which the lender alleges was approximately $33.0 million as of November 9, 2017 (exclusive of accruing interest, default interest, fees ~~aggregating approximately $31.0~~and costs). In August 2019, the Delaware Superior Court heard arguments on the parties’ cross-motions for summary judgement regarding both the Guaranty Complaint and the Note Complaint. The Company believes it has valid defenses regarding the Guaranty Complaint and the Note Complaint and has been vigorously defending itself. A decision on the cross-motions for summary judgment is expected before the end of 2019.

During the third quarter of 2019, the company recognized income of $5.0 million related to Fund II’s New Market Tax Credit transaction (“NMTC”) involving its City Point project. NMTCs were created to encourage economic development in low income communities and provided for a 39% tax credit on certain qualifying invested equity/loans. In 2012, the NMTCs were transferred to a group of investors (“Investors”) in

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

exchange for $5.2 million. The ~~Company’s management believes that~~NMTCs were subject to recapture under various circumstances, including redemption of the ~~mortgage is not recourse~~loan/investment prior to a requisite seven-year hold period, and recognition of income was deferred. Upon the expiration of the seven-year period and no further obligations, the Company ~~and that the suit is without merit.~~

~~In addition, at September 30, 2017, a mortgage loan in the amount~~recognized income of ~~$14.3~~$5.0 million ~~and collateralized by a Fund II property, was in default because its liquidity covenant had been breached.~~

~~See~~ ~~Note 15~~ ~~for information about additional financing obtaining after September 30, 2017.~~

~~Unsecured Notes Payable~~

~~The Company completed the following transactions related to its unsecured notes payable~~ during the ~~nine~~three months ended September 30, ~~2017:~~

~~The Company reduced its maximum commitment available on~~2019, which is included in Other income in the ~~Fund IV subscription line~~consolidated statements of ~~credit from $100.0~~income.

Unsecured Notes Payable

Unsecured notes payable for which total availability was $17.6 million ~~to $21.5 million. The balance was $20.4~~and $62.3 million at September 30, ~~2017 and $94.5 million at December 31, 2016. Total available credit at September 30, 2017~~2019 and December 31, ~~2016 was $1.1 million and $5.5 million,~~2018, respectively, ~~on this line.~~

are comprised of the following:

•

~~Fund IV also has a $50.0~~

As discussed above, the Core unsecured term loans totaling $300.0 million ~~bridge facility.~~were refinanced in February 2018, into one $350.0 million term loan with an interest rate of LIBOR+ 1.25% and maturing in March 2023. The outstanding balance of the Core term loans was ~~$34.5~~$350.0 million at September 30, ~~2017~~2019 and ~~$40.1~~December 31, 2018. During the nine months ended September 30, 2019, the Company entered into interest rate swap contracts to effectively fix the variable portion of the interest rate with a notional value of $156.0 million at ~~December 31, 2016.~~a weighted-average interest rate of 2.43%, which may be used to swap the Company’s unhedged, unsecured, LIBOR-based variable-rate debt. The Company previously entered into swap agreements fixing the rates of the remaining Core term loan balance.

•

Fund II has a $40.0 million term loan secured by the real estate assets of City Point Phase II and guaranteed by the Company and the Operating Partnership. The outstanding balance of the Fund II term loan was ~~in compliance with the liquidity covenant for this facility at September 30, 2017, but was not in compliance at December 31, 2016. Total available credit~~$40.0 million at each of September 30, ~~2017~~2019 and December 31, ~~2016~~2018. Total availability was $0.0 ~~on this facility. In October 2017, this~~million at each of September 30, 2019 and December 31, 2018.

•

At Fund IV there is a $80.2 million bridge facility and a $27.0 million subscription line, which were modified from their previous limits of $41.8 million and $15.0 million, respectively, during the second quarter of 2019. The outstanding balance of the Fund IV bridge facility was ~~refinanced (Note 15~~)$79.2 million at September 30, 2019 and $40.8 million at December 31, 2018. Total availability was $1.0 million at each of September 30, 2019 and December 31, 2018. The outstanding balance of the Fund IV subscription line was $8.4 million at September 30, 2019 and $0 at December 31, 2018. Total availability was $15.0 million at both September 30, 2019 and December 31, 2018, reflecting letters of credit of $3.6 million and $7.4 million, respectively.

The Company obtained a new Fund V subscription line in the amount of $150.0 million secured by Fund V’s unfunded capital commitments with an interest rate of LIBOR plus 160 basis points and maturing in May 2020. The Fund V subscription line is also guaranteed by the Operating Partnership. The outstanding balance was $113.2 million and total available credit was $36.8 million at September 30, 2017.

•

Fund V has a $150.0 million subscription line collateralized by Fund V’s unfunded capital commitments and guaranteed by the Operating Partnership. The outstanding balance and total available credit of the Fund V subscription line was $148.4 million and $1.6 million, respectively at September 30, 2019. The outstanding balance and total available credit of the Fund V subscription line was $102.8 million and $47.2 million, respectively at December 31, 2018.

The Company obtained a new Fund II loan in the amount of $40.0 million secured by the real estate assets of City Point Phase II with an interest rate of LIBOR plus 140 basis points and maturing in September 2020. The Fund II loan is also guaranteed by the Company and the Operating Partnership. The outstanding balance was ~~$31.5 million~~ ~~and total available credit was~~ ~~$8.5 million~~ ~~at September 30, 2017.~~

Unsecured Revolving Line of Credit

~~At September 30, 2017 and December 31, 2016, the~~

The Company had a total of ~~$79.7~~$133.2 million and ~~$147.5~~$137.7 million ~~respectively~~ available under its $150.0 million Core unsecured ~~line of credit. The Company completed the following transactions related to its unsecured~~revolving line of credit ~~during~~reflecting the ~~nine months ended September 30, 2017:~~



	26

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~In connection with the repayments~~issuance of ~~two secured mortgage notes payable, the Company drew down $59.0 million through September 30, 2017. The total available balance was $79.7 million reflecting $11.3 million of outstanding~~ letters of credit asof $16.8 million and $12.3 million at September 30, 2019 and December 31, 2018, respectively. At each of September 30, ~~2017.~~

2019 and December 31, 2018, all of the Core unsecured revolving line of credit was swapped to a fixed rate.

The capacity of the Company’s unsecured revolving line of credit was increased on October 8, 2019 (Note 15).

Scheduled Debt Principal Payments

The scheduled principal repayments of the Company’s consolidated indebtedness, as of September 30, ~~2017~~2019 are as follows (in thousands):

Year Ending December 31,
2019 (Remainder)	$	121,846
2020		561,472
2021		240,659
2022		91,357
2023		412,305
Thereafter		236,503
		1,664,142
Unamortized premium		676
Net unamortized debt issuance costs		(9,463	)
Total indebtedness	$	1,655,355

Year Ending December 31,
2017 (Remainder) $ 174,707
2018 88,308
2019 228,523
2020 573,807
2021 255,055
Thereafter 298,771
1,619,171
Unamortized fair market value of assumed debt 881
Net unamortized debt issuance costs (17,205 )
Total indebtedness $ 1,602,847

See Note 4 for information about liabilities of the Company’s unconsolidated affiliates.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

8. Financial Instruments and Fair Value Measurements

The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and interest rate swaps; and Level 3, for financial instruments or other assets/liabilities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring the Company to develop its own assumptions.

Items Measured at Fair Value on a Recurring Basis

The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, the Company has also provided the unobservable inputs along with their weighted-average ranges.

Money Market Funds — The Company has money market funds, which are included in Cash and cash equivalents in the consolidated financial statements, are comprised of government securities and/or U.S. Treasury bills. These funds were classified as Level 1 as we used quoted prices from active markets to determine their fair values.

Derivative Assets — The Company has derivative assets, which are included in Other assets, net in the consolidated financial statements, ~~are~~and comprised of interest rate ~~swaps.~~swaps and caps. The ~~interest rate swaps~~derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.

Derivative Liabilities — The Company has derivative liabilities, which are included in Accounts payable and other liabilities in the consolidated financial statements, ~~are~~and comprised of interest rate swaps. These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.

The Company did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the nine months ended September 30, ~~2017~~2019 or ~~2016.~~



	27

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

2018.

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands):

	September 30, 2019						December 31, 2018
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Money Market Funds	$	10,000	$	—	$	—	$	4,504	$	—	$	—
Derivative financial instruments		—		1,217		—		—		7,018		—
Liabilities
Derivative financial instruments		—		53,194		—		—		7,304		—

September 30, 2017 December 31, 2016
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets
Money Market Funds $ 3
$ —
$ —
$ 20,001
$ —
$ —
Derivative financial instruments —
2,661
—
—
2,921
—
Liabilities
Derivative financial instruments —
3,468
—
—
3,590
—

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Items Measured at Fair Value on a Nonrecurring Basis (Including Impairment Charges)

During 2018, the Company began selling the residential units of its 210 Bowery property in Fund IV. As the projected aggregate selling prices net of selling costs were in line with the carrying amount of the property through the first quarter 2019, 0 gain or loss had been recognized on the units sold through that date and 0 impairment was previously deemed necessary. During the second quarter 2019, the Company revised its estimate of the expected selling price of the remaining three ~~and nine months ended September 30, 2017,~~units. Accordingly, the Company recognized ana $1.4 million impairment charge, ~~of $3.8 million,~~ inclusive of an amount attributable to a noncontrolling interest of ~~$2.7~~$1.1 million, ~~on a property classified as held for sale at September 30, 2017 (Note 2), in order~~ to ~~reduce~~adjust the carrying value ~~of the property~~ to ~~its estimated fair value. The fair value measurement approximated~~ the estimated selling price less estimated costs to sell.



	28

During the third quarter 2019, upon execution of a contract for sale (Note 2) the Company recognized an additional $0.3

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

million impairment charge for the remaining condominium unit, inclusive of an amount attributable to a noncontrolling interest of $0.2 million, to adjust the carrying value to the estimated selling price less estimated costs to sell.

The Company did 0t record any impairment charges during the nine months ended September 30, 2018.

Derivative Financial Instruments

The Company had the following interest rate swaps and caps for the periods presented (dollars in thousands):

							Strike Rate								Fair Value
Derivative Instrument	Aggregate Notional Amount		Effective Date		Maturity Date		Low				High			Balance Sheet Location	September 30, 2019			December 31, 2018
Core
Interest Rate Swaps	$	423,761	Dec 2012-July 2020		Mar 2022-July 2030			1.71	%	—		3.77	%	Other Liabilities ^(a)	$	(46,395	)	$	(6,332	)
Interest Rate Swaps		163,500	Oct 2014 - July 2016		Nov 2019-June 2021			1.24	%	—		1.70	%	Other Assets		581			6,022
	$	587,261													$	(45,814	)	$	(310	)

Fund II
Interest Rate Swap	$	19,138	Oct 2014		Nov 2021			2.88	%	—		2.88	%	Other Liabilities	$	(180	)	$	—
Interest Rate Swap		—		—		—		—		—		—		Other Assets		—			108
Interest Rate Cap		23,300	Mar 2019		Mar 2022			3.50	%	—		3.50	%	Other Assets		3			—
	$	42,438													$	(177	)	$	108

Fund III
Interest Rate Cap	$	58,000	Dec 2016		Jan 2020			3.00	%	—		3.00	%	Other Assets	$	—		$	8

Fund IV
Interest Rate Swap	$	23,100	Mar 2017		Mar 2020			1.82	%	—		1.82	%	Other Assets	$	2		$	851
Interest Rate Swaps		65,501	Mar 2017 - May 2019		Apr 2022 - Dec 2022			1.97	%	—		4.00	%	Other Liabilities		(1,068	)		—
Interest Rate Caps		104,400	Nov 2016 - July 2019		Dec 2019 - July 2021			3.00	%	—		3.50	%	Other Assets		—			8
	$	193,001													$	(1,066	)	$	859

Fund V
Interest Rate Swaps	$	—	Nov 2019		Sept 2024 - Oct 2024			1.25	%	—		1.28	%	Other Assets ^(b)	$	631		$	21
Interest Rate Swaps		156,900	Jan 2018-Oct 2019		Feb 2021-Oct 2024			1.45	%	—		2.88	%	Other Liabilities ^(c)		(5,551	)		(972	)
	$	156,900													$	(4,920	)	$	(951	)

Total asset derivatives															$	1,217		$	7,018
Total liability derivatives															$	(53,194	)	$	(7,304	)

(a)

Includes 2 swaps with an aggregate fair value of ($15.7) million and ($2.9) million at September 30, 2019 and December 31, 2018, respectively, which were acquired during July 2018 and are not effective until July 2020. At September 30, 2019 and December 31, 2018, $155.4 million and $0.0 million of the Core swaps were available, respectively to hedge debt at the Funds.

(b)

Includes 3 swaps with an aggregate fair value of $0.6 million at September 30, 2019, which were acquired during August 2019 and are not effective until November 2019.

Aggregate
Notional
Amount Strike Rate Balance Sheet Location Fair Value
Derivative Instrument Effective Date Maturity Date Low High September 30, 2017 December 31, 2016
Core
Interest Rate Swaps $ 149,440
Oct 2011 - March 2015 July 2018 - Mar 2025 1.38% — 3.77% Other Liabilities $ (2,936 ) $ (3,218 )
Interest Rate Swaps 204,593
Sep 2012 - July 2017 July 2020 - July 2027 1.24% — 3.77% Other Assets 2,622
2,609
$ 354,033
$ (314 ) $ (609 )

Fund II
Interest Rate Swap $ 19,616
October 2014 November 2021 2.88% — 2.88% Other Liabilities $ (168 ) $ (228 )
Interest Rate Cap 29,500
April 2013 April 2018 4.00% — 4.00% Other Assets —
—
$ 49,116
$ (168 ) $ (228 )

Fund III
Interest Rate Cap $ 58,000
Dec 2016 Jan 2020 3.00% — 3.00% Other Assets $ 17
$ 127

Fund IV
Interest Rate Swaps $ 81,156
May 2014 - March 2017 May 2019 - April 2022 1.78% — 1.98% Other Liabilities $ (364 ) $ (144 )
Interest Rate Caps 108,900
July 2016 - November 2016 August 2019 - December 2019 3.00% — 3.00% Other Assets 22
185
$ 190,056
$ (342 ) $ 41

Total asset derivatives $ 2,661
$ 2,921
Total liability derivatives $ (3,468 ) $ (3,590 )

(c)

Includes 2 swaps with an aggregate fair value of ($0.1) million at September 30, 2019, which were acquired during September 2019 and are not effective until October 2019.

All of the Company’s derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on ~~variable rate mortgage~~variable-rate debt (Note 7).

It is estimated that approximately $4.8 million included in accumulated other comprehensive (loss) income related to derivatives will be reclassified to interest expense within the next twelve months. As of September 30, 2019 and December 31, 2018, 0 derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated hedges.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, through the use of derivative financial instruments. The Company enters into derivative financial instruments to manage exposures that result in the receipt or payment of future known and uncertain cash amounts, thevalues of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

The Company is exposed to credit risk in the event of non-performance by the counterparties to the ~~Swaps~~swaps if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into ~~Swaps~~swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions. ~~The Company has not entered, and does not plan to enter, into any derivative financial instruments for trading or speculative purposes.~~



	29

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~The following table presents the location in the financial statements of the income (losses) recognized related to the Company’s cash flow hedges (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Amount of (loss) income related to the effective portion recognized in other comprehensive income $ (644 ) $ 1,474
$ (2,652 ) (12,624 )
Amount of loss related to the effective portion subsequently reclassified to earnings $ —
$ —
$ —
$ —
Amount of gain (loss) related to the ineffective portion and amount excluded from effectiveness testing $ —
$ —
$ —
$ —

Credit Risk-Related Contingent Features

The Company has agreements with each of its ~~Swap~~swap counterparties that contain a provision whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its swaps, resulting in an acceleration of payment under the swaps.

Other Financial Instruments

The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in ~~thousands)~~thousands, inclusive of amounts attributable to noncontrolling interests where applicable):

			September 30, 2019				December 31, 2018
	Level		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Notes Receivable ^(a)		3	$	94,807	$	94,180	$	109,613	$	107,370
Mortgage and Other Notes Payable ^(a)		3		1,038,137		1,048,580		1,026,708		1,021,075
Investment in non-traded equity securities ^(b)		3		—		56,337		—		56,337
Unsecured notes payable and Unsecured line of credit ^(c)		2		626,005		626,785		533,625		533,954

September 30, 2017 December 31, 2016
Level Carrying
Amount Estimated
Fair
Value Carrying
Amount Estimated
Fair
Value
Notes Receivable^(a)
3 $ 250,194
$ 247,143
$ 276,163
$ 272,052
Mortgage and Other Notes Payable, net^(a)
3 1,060,550
1,066,539
1,071,034
1,077,926
Investment in non-traded equity securities ^(b)
3 —
22,904
802
25,194
Unsecured notes payable and Unsecured line of credit, net^(c)
2 558,620
559,978
434,636
435,779

~~__________~~

(a)

~~(a)~~

The Company determined the estimated fair value of these financial instruments using a discounted cash flow model with rates that take into account the credit of the borrower or tenant, where applicable, and interest rate risk. The Company also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the borrower, the time until maturity and the current market interest rate environment.

(b)
~~(b)~~	Represents Fund II’s cost-method investment in Albertson’s supermarkets (Note 4). The fair values for September 30, 2019 and December 31, 2018 are based on a valuation at December 31, 2018.

(c)

~~(c)~~

The Company determined the estimated fair value of the unsecured notes payable and unsecured line of credit using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, the Company determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants.

The Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and certain financial instruments included in other assets and other liabilities had fair values that approximated their carrying values due to their short maturity profiles at September 30, ~~2017.~~



	30

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

2019.

9. Commitments and Contingencies

The Company is involved in various matters of litigation arising out of, or incident to, its business, including the litigation described in Note 7. While the Company is unable to predict with certainty the outcome of any particular matter, management does not expect, when such litigation is resolved, that the Company’s resulting exposure to loss contingencies, if any, will have a material adverse effect on its consolidated financial position.

Commitments and Guaranties

In conjunction with the development and expansion of various properties, the Company has entered into agreements with general contractors for the construction or development of properties aggregating approximately ~~$93.1~~$42.9 million and ~~$85.4~~$55.5 million as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

At ~~each of~~ September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the Company had letters of credit outstanding of ~~$11.3 million.~~$20.4 million and $19.7 million, respectively. The Company has not recorded any obligation associated with these letters of credit. The majority of the letters of credit are collateral for existing indebtedness and other obligations of the Company.

10. Shareholders’ Equity, Noncontrolling Interests and Other Comprehensive Income

Common Shares

~~The~~ and Units

In addition to the ATM Program activity discussed below, the Company completed the following transactions in its common shares during the nine months ended September 30, ~~2017:~~

2019:

~~The Company withheld 4,314 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.~~

•

The Company withheld 2,468 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.

•

The Company recognized Common Share and Common OP Unit-based compensation totaling ~~$6.5~~$5.4 million and $6.3 million in connection with Restricted Shares and Units (Note 13). for the nine months ended September 30, 2019 and 2018, respectively.

~~At the May 10 Shareholder Meeting, Shareholders approved an amendment~~

In addition to the ~~Company’s Declaration of Trust to increase~~share repurchase activity discussed below, the ~~authorized share capital of the Company from 100 million shares of beneficial interest to 200 million shares which became effective on July 24, 2017.~~

~~The~~ Company completed the following transactions in its common shares during the year ended December 31, ~~2016:~~

2018:

The Company issued 4,500,000 Common Shares under its at-the-market (“ATM”) equity programs, generating gross proceeds of $157.6 million and net proceeds of $155.7 million. The Company has established a new ATM equity program, effective July 2016, with an additional aggregate offering amount of up to $250.0 million of gross proceeds from the sale of Common Shares, replacing its $200.0 million program that was launched in 2014. As of December 31, 2016 and September 30, 2017, there was $218.0 million remaining under this $250.0 million program.

The Company entered into a forward sale agreement to issue 3,600,000 Common Shares for gross proceeds of $126.8 million and net proceeds of $124.5 million. As of December 31, 2016, these shares have been physically settled.

~~The Company issued 4,830,000 Common Shares in a public offering, generating gross proceeds of $175.2 million and net proceeds of $172.1 million.~~

~~The Company withheld 3,152 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.~~

•

The Company withheld 3,288 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.

•

The Company recognized ~~accrued~~ Common Share and Common OP Unit-based compensation totaling ~~$10.9~~$8.4 million in connection with ~~the vesting of~~ Restricted Shares and Units (Note 13).

~~Share Repurchases~~

ATM Program

The Company has an at-the-market equity issuance program (“ATM Program”) which provides the Company an efficient and low-cost vehicle for raising public equity to fund its capital needs. The Company entered into its current $250.0 million ATM Program (which replaced its prior program) in the second quarter of 2019 and also added an optional “forward purchase” component. The Company has not issued any shares on a forward basis during the nine months ended September 30, 2019. During the three months ended September 30, 2019, the Company sold 2,149,154 Common Shares under its ATM Program for gross proceeds of $61.6 million, or $60.6 million net of issuance costs, at a weighted-average gross price per share of $28.64. During the nine months ended September 30, 2019, the Company sold 4,816,505 Common Shares under its ATM Program for gross proceeds of $137.8 million, or $135.8 million net of issuance costs, at a weighted-average gross price per share of $28.61.

Share Repurchase Program

During 2018, the Company’s board of trustees approved a new share repurchase program, ~~that~~which authorizes management, at its discretion, to repurchase up to ~~$20.0~~$200.0 million of its outstanding Common Shares. The program does not obligate the Company to repurchase any specific number of Common Shares, and may be discontinued or extended at any time. ~~There were no~~The Company repurchased 2,294,235 Common Shares for $55.1 million, inclusive of $0.1 million of fees, during the year ended December 31, 2018. The Company repurchased ~~by the Company~~2,294,235 shares for $55.1 million, inclusive of $0.1 million of fees, during the nine months ended September 30, ~~2017 or~~2018. During the ~~year~~nine months ended ~~December 31, 2016. Under this program~~September 30, 2019 the Company ~~has repurchased 2.1~~made 0 repurchases under the share repurchase program, under which $144.9 million ~~Common Shares, none of which were repurchased after December 2001. As of~~currently remains available.

Dividends and Distributions

The following table sets forth the dividends declared and/or paid during the nine months ended September 30, ~~2017, management may repurchase up to approximately $7.5 million of the Company’s outstanding Common Shares under this program.~~2019:

Date Declared	Amount Per Share		Record Date	Payment Date

November 15, 2018	$	0.28	December 31, 2018	January 15, 2019
February 28, 2019	$	0.28	March 29, 2019	April 15, 2019
May 9, 2019	$	0.28	June 28, 2019	July 15, 2019
August 13, 2019	$	0.28	September 30, 2019	October 15, 2019

~~Dividends and Distributions~~

~~On August 8, 2017, the Board of Trustees declared a regular quarterly cash dividend of $0.26 per Common Share, which was paid on October 13, 2017 to holders of record as of September 29, 2017.~~

On November 8, 2016, the Board of Trustees declared an increase of $0.01 to the regular quarterly cash dividend of $0.25 to $0.26 per Common Share, which was paid on January 13, 2017 to holders of record as of December 30, 2016. In addition, on November 8, 2016, the Board of Trustees declared a special cash dividend of $0.15 per Common Share with the same record and payment



	31

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~date as the regular quarterly dividend. The special dividend is a result of the taxable capital gains for 2016 arising from property dispositions within the Funds.~~

Accumulated Other Comprehensive Income

The following ~~table sets~~tables set forth the activity in accumulated other comprehensive ~~(loss)~~ income for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 (in thousands):

	Gains or Losses on Derivative Instruments
Balance at July 1, 2019	$	(29,570	)

Other comprehensive loss before reclassifications		(15,388	)
Reclassification of realized interest on swap agreements		(288	)
Net current period other comprehensive loss		(15,676	)
Net current period other comprehensive loss attributable to noncontrolling interests		1,108
Balance at September 30, 2019	$	(44,138	)

Balance at July 1, 2018	$	10,138

Other comprehensive income before reclassifications		3,973
Reclassification of realized interest on swap agreements		(55	)
Net current period other comprehensive income		3,918
Net current period other comprehensive income attributable to noncontrolling interests		(789	)
Balance at September 30, 2018	$	13,267

	Gains or Losses on Derivative Instruments
Balance at January 1, 2019	$	516

Other comprehensive loss before reclassifications		(51,347	)
Reclassification of realized interest on swap agreements		(1,374	)
Net current period other comprehensive loss		(52,721	)
Net current period other comprehensive loss attributable to noncontrolling interests		8,067
Balance at September 30, 2019	$	(44,138	)

Balance at January 1, 2018	$	2,614

Other comprehensive income before reclassifications		12,576
Reclassification of realized interest on swap agreements		417
Net current period other comprehensive income		12,993
Net current period other comprehensive income attributable to noncontrolling interests		(2,340	)
Balance at September 30, 2018	$	13,267

Gains or Losses on Derivative Instruments
Balance at January 1, 2017 $ (798 )

Other comprehensive loss before reclassifications (2,652 )
Reclassification of realized interest on swap agreements 2,637
Net current period other comprehensive loss (15 )
Net current period other comprehensive loss attributable to noncontrolling interests 260
Balance at September 30, 2017 $ (553 )

Balance at January 1, 2016 $ (4,463 )

Other comprehensive loss before reclassifications (12,624 )
Reclassification of realized interest on swap agreements 3,396
Net current period other comprehensive loss (9,228 )
Net current period other comprehensive loss attributable to noncontrolling interests 847
Balance at September 30, 2016 $ (12,844 )



	32

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Noncontrolling Interests

The following ~~table summarizes~~tables summarize the change in the noncontrolling interests for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 (dollars in thousands):

	Noncontrolling Interests in Operating Partnership ^(a)			Noncontrolling Interests in Partially-Owned Affiliates ^(b)			Total
Balance at July 1, 2019	$	103,705		$	515,205		$	618,910
Distributions declared of $0.28 per Common OP Unit		(1,765	)		—			(1,765	)
Net income (loss) for the three months ended September 30, 2019		785			(2,403	)		(1,618	)
Conversion of 41,646 Common OP Units to Common Shares by limited partners of the Operating Partnership		(720	)		—			(720	)
Other comprehensive loss - unrealized loss on valuation of swap agreements		(864	)		(251	)		(1,115	)
Reclassification of realized interest expense on swap agreements		(16	)		23			7
Noncontrolling interest contributions		—			129,438			129,438
Noncontrolling interest distributions		—			(29,713	)		(29,713	)
Employee Long-term Incentive Plan Unit Awards		1,768			—			1,768
Reallocation of noncontrolling interests ^(c)		(5,251	)		—			(5,251	)
Balance at September 30, 2019	$	97,642		$	612,299		$	709,941

Balance at July 1, 2018	$	105,100		$	514,774		$	619,874
Distributions declared of $0.27 per Common OP Unit		(1,692	)		—			(1,692	)
Net income (loss) for the three months ended September 30, 2018		732			(12,554	)		(11,822	)
Conversion of 46,950 Common OP Units to Common Shares by limited partners of the Operating Partnership		(834	)		—			(834	)
Other comprehensive income - unrealized gain on valuation of swap agreements		197			505			702
Reclassification of realized interest expense on swap agreements		(9	)		96			87
Noncontrolling interest contributions		—			40,440			40,440
Noncontrolling interest distributions		—			(9,014	)		(9,014	)
Employee Long-term Incentive Plan Unit Awards		2,082			—			2,082
Reallocation of noncontrolling interests ^(c)		(1,783	)		—			(1,783	)
Balance at September 30, 2018	$	103,793		$	534,247		$	638,040

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Noncontrolling Interests in Operating Partnership ^(a)			Noncontrolling Interests in Partially-Owned Affiliates ^(b)			Total
Balance at January 1, 2019	$	104,223		$	518,219		$	622,442
Distributions declared of $0.84 per Common OP Unit		(5,322	)		—			(5,322	)
Net income (loss) for the nine months ended September 30, 2019		2,437			(27,633	)		(25,196	)
Conversion of 249,464 Common OP Units to Common Shares by limited partners of the Operating Partnership		(4,230	)		—			(4,230	)
Other comprehensive loss - unrealized loss on valuation of swap agreements		(2,686	)		(5,320	)		(8,006	)
Reclassification of realized interest expense on swap agreements		(61	)		—			(61	)
Noncontrolling interest contributions		—			161,628			161,628
Noncontrolling interest distributions		—			(34,595	)		(34,595	)
Employee Long-term Incentive Plan Unit Awards		6,965			—			6,965
Reallocation of noncontrolling interests ^(c)		(3,684	)		—			(3,684	)
Balance at September 30, 2019	$	97,642		$	612,299		$	709,941

Balance at January 1, 2018	$	102,921		$	545,519		$	648,440
Distributions declared of $0.81 per Common OP Unit		(5,126	)		—			(5,126	)
Net income (loss) for the nine months ended September 30, 2018		1,977			(35,313	)		(33,336	)
Conversion of 111,588 Common OP Units to Common Shares by limited partners of the Operating Partnership		(1,957	)		—			(1,957	)
Other comprehensive income - unrealized gain on valuation of swap agreements		625			1,435			2,060
Reclassification of realized interest expense on swap agreements		10			270			280
Noncontrolling interest contributions		—			46,990			46,990
Noncontrolling interest distributions		—			(24,654	)		(24,654	)
Employee Long-term Incentive Plan Unit Awards		7,924			—			7,924
Reallocation of noncontrolling interests ^(c)		(2,581	)		—			(2,581	)
Balance at September 30, 2018	$	103,793		$	534,247		$	638,040

Noncontrolling Interests in Operating Partnership ^(a)

Noncontrolling Interests in Partially-Owned Affiliates ^(b)
Total

Balance at January 1, 2017 $ 95,422
$ 494,126
$ 589,548
Distributions declared of $0.78 per Common OP Unit (4,805 ) —
(4,805 )
Net income (loss) for the period January 1 through September 30, 2017 2,816
(4,010 ) (1,194 )
Conversion of 61,150 Common OP Units to Common Shares
by limited partners of the Operating Partnership (1,086 ) —
(1,086 )
Other comprehensive income - unrealized loss
on valuation of swap agreements (68 ) (726 ) (794 )
Reclassification of realized interest expense on swap agreements 116
418
534
Noncontrolling interest contributions —
20,522
20,522
Noncontrolling interest distributions —
(7,278 ) (7,278 )
Employee Long-term Incentive Plan Unit Awards 8,704
—
8,704
Rebalancing adjustment ^(d)
2,105
—
2,105
Balance at September 30, 2017 $ 103,204
$ 503,052
$ 606,256

Balance at January 1, 2016 $ 96,340
$ 324,526
$ 420,866
Distributions declared of $0.75 per Common OP Unit (4,398 ) —
(4,398 )
Net income for the period January 1 through September 30, 2016 3,757
43,644
47,401
Conversion of 350,240 Common OP Units to Common Shares
by limited partners of the Operating Partnership (7,875 ) —
(7,875 )
Issuance of Common and Preferred OP Units to acquire real estate 29,336
—
29,336
Acquisition of noncontrolling interests ^(c)
—
(25,925 ) (25,925 )
Other comprehensive income - unrealized loss
on valuation of swap agreements (640 ) (633 ) (1,273 )
Change in control of previously unconsolidated investment —
(75,713 ) (75,713 )
Reclassification of realized interest expense on swap agreements 166
260
426
Noncontrolling interest contributions —
204,412
204,412
Noncontrolling interest distributions —
(50,849 ) (50,849 )
Employee Long-term Incentive Plan Unit Awards 10,983
—
10,983
Rebalancing adjustment ^(d)
(35,254 ) —
(35,254 )
Balance at September 30, 2016 $ 92,415
$ 419,722
$ 512,137

~~__________~~

(a)

~~(a)~~

Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ ~~3,341,397~~3,306,879 and ~~3,308,875~~3,331,440 Common OP Units at September 30, ~~2017~~2019 and ~~2016, respectively;~~September 30, 2018; (ii) 188 Series A Preferred OP Units at September 30, ~~2017~~2019 and ~~2016;~~September 30, 2018; (iii) ~~140,343 and 141,593~~136,593 Series C Preferred OP Units at September 30, ~~2017~~2019 and ~~2016, respectively;~~September 30, 2018; and (iv) ~~2,274,147~~2,673,608 and ~~1,997,099~~2,547,002 LTIP units ~~as of~~at September 30, ~~2017~~2019 and ~~2016,~~September 30, 2018, respectively, as discussed in Share Incentive Plan (Note 13). Distributions declared for Preferred OP Units are reflected in net income (loss) in the table above.

(b)
~~(b)~~	Noncontrolling interests in partially-owned affiliates comprise third-party interests in Funds II, III, IV and V, and Mervyns ~~I and~~ II, and six other subsidiaries.


~~(c)~~	During the first quarter of 2016, the Company acquired an additional 8.3% interest in Fund II from a limited partner for $18.4 million, giving the Company an aggregate 28.33% interest. Amount in the table above represents the book value of this transaction.


(c)
	33

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~


~~(d)~~	Adjustment reflects the difference between the fair value of the consideration received or paid and the book value of the Common Shares, Common OP Units, Preferred OP Units, and LTIP Units involving changes in ~~ownership (the "Rebalancing").~~ownership.

Preferred OP Units

There were no0 issuances of Preferred OP Units ~~and 1,250 Series C Preferred OP Units were exchanged for common shares of the Company~~ during the nine months ended September 30, ~~2017.~~

2019.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

In 1999, the Operating Partnership issued 1,580 Series A Preferred OP Units in connection with the acquisition of a property, which have a stated value of $1,000 per unit, and are entitled to a preferred quarterly distribution of the greater of (i) $22.50 (9% annually) per Series A Preferred OP Unit or (ii) the quarterly distribution attributable to a Series A Preferred OP Unit if such unit was converted into a Common OP Unit. Through ~~December 31, 2016,~~ September 30, 2019, 1,392 Series A Preferred OP Units were converted into 185,600 Common OP Units and then into Common Shares. The 188 remaining Series A Preferred OP Units are currently convertible into Common OP Units based on the stated value divided by ~~$7.50~~.$7.50. Either the Company or the holders can currently call for the conversion of the Series A Preferred OP Units at the lesser of ~~$7.50~~$7.50 or the market price of the Common Shares as of the conversion date.

During ~~the first quarter of~~ 2016, the Operating Partnership issued 442,478 Common OP Units and 141,593 Series C Preferred OP Units to a third party to acquire Gotham Plaza (Note 4). The Series C Preferred OP Units have a value of $100.00 per unit and are entitled to a preferred quarterly distribution of $0.9375 per unit and are convertible into Common OP Units at a rate based on the share price at the time of conversion. If the share price is below $28.80 on the conversion date, each Series C Preferred OP Unit will be convertible into 3.4722 Common OP Units. If the share price is between $28.80 and $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into a number of Common OP Units equal to $100.00 divided by the closing share price. If the share price is above $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into 2.8409 Common OP Units. The Series C Preferred OP Units have a mandatory conversion date of December 31, 2025, at which time all units that have not been converted will automatically be converted into Common OP Units based on the same calculations.

Through September 30, 2019, 5,000 Series C Preferred OP Units were converted into 17,165 Common OP Units and then into Common Shares.

11. Leases

~~Operating~~

As Lessor

The Company implemented ASC Topic 842, Leases

, effective January 1, 2019 (Note 1). As lessor, there were no accounting adjustments required, however, the presentation of the Company’s lease revenues in 2019 includes amounts previously reported as reimbursed expenses. There was 0 cumulative effect adjustment to retained earnings required upon adoption of the new standard. In addition, the Company began expensing internal leasing costs, which have historically been capitalized.

The Company is engaged in the operation of shopping centers and other retail properties that are either owned or, with respect to certain shopping centers, operated under long-term ground leases (see below) that expire at various dates through June 20, 2066, with renewal options. Space in the shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to ~~ninety-nine~~sixty years and generally provide for additional rents based on certain operating expenses as well as tenants’ sales volumes. During the three and nine months ended September 30, 2019, the Company earned $14.7 million and $41.2 million, respectively, in variable lease revenues, primarily for real estate taxes and common area maintenance charges, which are included in lease revenues in the consolidated statements of income.

As Lessee

As lessee, upon implementation of ASC Topic 842, the Company recorded right-of-use assets and corresponding lease liabilities of $11.9 million and $12.8 million, respectively, for 9 existing operating leases (for ground, office and equipment leases) and $82.6 million and $76.6 million, respectively, for 4 finance leases related to ground rentals including an existing capital lease which represented $77.0 million and $71.1 million, respectively, of the total. Three finance leases were recorded post-implementation upon assessment of triggering events whereby the Company’s cumulative leasehold investment made it reasonably certain that the Company would exercise its purchase options.

During the three months ended June 30, 2019, the Company

•

Entered into a new master lease that is a finance lease, (1238 Wisconsin Avenue, acquired on May 2, 2019 within the Core Portfolio) and recorded a Right-of-use asset–finance lease of $11.2 million and a corresponding Lease liability–finance lease of $10.7 million; and

•

Entered into a new master lease that is an operating lease (110 University Place, acquired on May 1, 2019 by Fund IV for $10.5 million) and recorded a Right of use asset–operating lease of $45.3 million and a corresponding Lease liability–operating lease of $45.3 million.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Three Months Ended September 30,			Nine Months Ended September 30,
	2019		2018	2019			2018
Lease Cost			(Not applicable)				(Not applicable)
Finance lease cost:
Amortization of right-of-use assets	$	565		$	1,603
Interest on lease liabilities		978			2,755
Subtotal		1,543			4,358
Operating lease cost		1,394			3,037
Variable lease cost		62			119
Total lease cost	$	2,999		$	7,514

Other Information
Weighted-average remaining lease term - finance leases (years)					42.9
Weighted-average remaining lease term - operating leases (years)					33.7
Weighted-average discount rate - finance leases					4.5	%
Weighted-average discount rate - operating leases					5.8	%

Right-of-use assets are included in Operating real estate (Note 2) in the consolidated balance sheet. Lease liabilities are included in Accounts payable and other liabilities in the consolidated balance sheet (Note 5). Operating lease cost comprises amortization of right-of-use assets for operating properties (related to ground rents) or amortization of right-of-use assets for office and corporate assets and is included in Property operating expense or General and administrative expense, respectively,in the consolidated statements of income. Finance lease cost comprises amortization of right-of-use assets for certain ground leases, which is included in Property operating expense, as well as interest on lease liabilities, which is included in Interest expense in the consolidated statements of income.

Lease Disclosures Related to Prior Periods

The Company ~~leases~~leased land at ~~seven~~6 of its shopping centers, which ~~are~~were accounted for as operating leases ~~and~~through December 31, 2018 which generally ~~provide~~provided the Company with renewal options. Ground rent expense was ~~$2.8 million and $1.7~~$1.2 million (including capitalized ground rent at ~~properties~~a property under development of ~~$0.4 million and $0.2~~$0.5 million) for the nine months ended September 30, ~~2017 and 2016, respectively.~~2018. The leases terminate at various dates between 2020 and 2066. These leases provide the Company with options to renew for additional terms aggregating ~~from~~up to 25 to 71 years. The Company also leases space for its corporate office. Office rent expense under this lease was $0.7 million for ~~each of~~ the nine months ended September 30, ~~2017 and 2016, respectively.~~

~~Capital Lease~~

2018.

During 2016, the Company entered into a 49-year master lease, ~~at 991 Madison Avenue,~~ which iswas accounted for as a capital ~~lease.~~lease through December 31, 2018 and was later reclassified as a finance lease upon implementation of ASC 842 as described above. During the nine months ended September 30, ~~2017 and 2016,~~2018, payments for this lease ~~expense~~ totaled $1.9 ~~million and $1.0 million, respectively for this lease. The lease was initially valued at $76.6 million, which represents the total discounted payments to be made under the lease.~~million. The property under the capital lease is included in Note 2.



	34

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Lease Obligations

The scheduled future minimum (i) rental revenues from rental properties under the terms of ~~all~~ non-cancelable tenant leases ~~assuming~~greater than one year (assuming no new or renegotiated leases or option extensions for such ~~premises~~premises) and (ii) rental payments under the terms of all non-cancelable operating and ~~capital~~finance leases in which the Company is the lessee, principally for office space, land and ~~ground leases,~~equipment, as of September 30, ~~2017,~~2019, are summarized as follows (in thousands):

Year Ending December 31,	Minimum Rental Revenues		Minimum Rental Payments ^{(a, b)}
2019 (Remainder)	$	48,697	$	1,821
2020		205,710		7,139
2021		193,653		7,073
2022		173,664		7,082
2023		152,273		7,075
Thereafter		652,003		334,761
Total	$	1,426,000	$	364,951

(a)

A ground lease expiring during 2078 provides the Company with an option to purchase the underlying land during 2031. If the Company does not exercise the option, the rents that will be due are based on future values and as such are not determinable at this time. Accordingly, the above table does not include rents for this lease beyond 2031.

(b)	Minimum rental payments include $220.8 million of interest related to finance leases.

Year Ending December 31, Minimum Rental Revenues Minimum Rental Payments
2017 (Remainder) $ 37,492
$ 1,144
2018 158,612
4,478
2019 153,722
4,488
2020 141,485
4,283
2021 125,794
4,240
Thereafter 666,865
189,051
Total $ 1,283,970
$ 207,684

During the three and nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, no single tenant or property collectively comprised more than 10% of the Company’s consolidated total revenues.

12. Segment Reporting

The Company has ~~three~~3 reportable segments: Core Portfolio, Funds and Structured Financing. The Company’s Core Portfolio consists primarily of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas with a long-term investment horizon. The Company’s Funds hold primarily retail real estate in which the Company co-invests with high-quality institutional investors. The Company’s Structured Financing segment consists of earnings and expenses related to notes and mortgages receivable which are held within the Core Portfolio or the Funds (Note 3). Fees earned by the Company as the general partner or managing member of the Funds are eliminated in the Company’s consolidated financial statements and are not presented in the Company’s segments. During 2016, the Company revised how it allocates general and administrative and income tax expenses among its segments to reflect all such expenses as unallocated corporate expenses. The presentation of the 2016 interim periods have been revised to reflect this change.



	35

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

The following tables set forth certain segment information for the Company (in thousands):

	For the Three Months Ended September 30, 2019
	Core Portfolio			Funds			Structured Financing		Unallocated			Total
Revenues	$	42,142		$	31,185		$	—	$	—		$	73,327
Depreciation and amortization		(15,179	)		(16,991	)		—		—			(32,170	)
Property operating expenses, other operating and real estate taxes		(11,205	)		(12,200	)		—		—			(23,405	)
General and administrative expenses		—			—			—		(8,222	)		(8,222	)
Impairment charge		—			(321	)		—		—			(321	)
Gain on disposition of properties		—			12,056			—		—			12,056
Operating income (loss)		15,758			13,729			—		(8,222	)		21,265
Interest income		—			—			1,748		—			1,748
Other income		—			5,034			—		—			5,034
Equity in earnings (losses) of unconsolidated affiliates		1,798			(499	)		—		—			1,299
Interest expense		(7,333	)		(11,770	)		—		—			(19,103	)
Income tax provision		—			—			—		(1,403	)		(1,403	)
Net income (loss)		10,223			6,494			1,748		(9,625	)		8,840
Net loss attributable to noncontrolling interests		263			1,355			—		—			1,618
Net income attributable to Acadia	$	10,486		$	7,849		$	1,748	$	(9,625	)	$	10,458

As of or for the Three Months Ended September 30, 2017

Core Portfolio Funds Structured Financing Unallocated Total
Revenues $ 41,196
$ 21,482
$ —
$ —
$ 62,678
Depreciation and amortization (14,746 ) (11,906 ) —
—
(26,652 )
Property operating expenses, other operating and real estate taxes (10,327 ) (8,162 ) —
—
(18,489 )
Impairment of an asset —
(3,840 ) —
—
(3,840 )
General and administrative expenses —
—
—
(7,953 ) (7,953 )
Operating income (loss) 16,123
(2,426 ) —
(7,953 ) 5,744
Gain on disposition of properties —
12,972
—
—
12,972
Interest income —
—
6,461
—
6,461
Equity in earnings (losses) of unconsolidated affiliates 805
3,196
—
—
4,001
Interest expense (6,695 ) (8,733 ) —
—
(15,428 )
Income tax provision —
—
—
(465 ) (465 )
Net income (loss) 10,233
5,009
6,461
(8,418 ) 13,285
Net (income) loss attributable to noncontrolling interests (353 ) (65 ) —
—
(418 )
Net income attributable to Acadia $ 9,880
$ 4,944
$ 6,461
$ (8,418 ) $ 12,867

Real estate at cost $ 1,987,501
$ 1,492,894
$ —
$ —
$ 3,480,395
Total assets $ 2,237,334
$ 1,605,429
$ 250,194
$ —
$ 4,092,957
Acquisition of real estate $ —
$ 70,020
$ —
$ —
$ 70,020
Development and property improvement costs $ 3,359
$ 54,180
$ —
$ —
$ 57,539

As of or for the Three Months Ended September 30, 2016
Core Portfolio Funds Structured Financing Unallocated Total
Revenues $ 36,376
$ 7,479
$ —
$ —
$ 43,855
Depreciation and amortization (12,428 ) (2,789 ) —
—
(15,217 )
Property operating expenses, other operating and real estate taxes (11,612 ) (2,903 ) —
—
(14,515 )
General and administrative expenses —
—
—
(12,869 ) (12,869 )
Operating income 12,336
1,787
—
(12,869 ) 1,254
Interest income —
—
7,245
—
7,245
Equity in earnings (losses) of unconsolidated affiliates 1,495
(1,597 ) —
—
(102 )
Interest expense (6,431 ) (1,551 ) —
—
(7,982 )
Income tax provision —
—
—
(89 ) (89 )
Net income 7,400
(1,361 ) 7,245
(12,958 ) 326
Net income attributable to noncontrolling interests 60
5,726
—
—
5,786
Net income attributable to Acadia $ 7,460
$ 4,365
$ 7,245
$ (12,958 ) $ 6,112

Real estate at cost $ 1,832,863
$ 1,186,926
$ —
$ —
$ 3,019,789
Total assets $ 2,097,386
$ 1,214,317
$ 266,816
$ —
$ 3,578,519
Acquisition of real estate $ 237,729
$ 36,600
$ —
$ —
$ 274,329
Development and property improvement costs $ 7,296
$ 31,235
$ —
$ —
$ 38,531



	36

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	For the Three Months Ended September 30, 2018
	Core Portfolio			Funds			Structured Financing		Unallocated			Total
Revenues	$	41,742		$	23,785		$	—	$	—		$	65,527
Depreciation and amortization		(14,856	)		(13,820	)		—		—			(28,676	)
Property operating expenses, other operating and real estate taxes		(11,910	)		(10,011	)		—		—			(21,921	)
General and administrative expenses		—			—			—		(7,982	)		(7,982	)
Gain on disposition of properties		—			5,107			—		—			5,107
Operating income (loss)		14,976			5,061			—		(7,982	)		12,055
Interest income		—			—			3,513		—			3,513
Equity in earnings (losses) of unconsolidated affiliates		2,005			(1,629	)		—		—			376
Interest expense		(6,972	)		(11,105	)		—		—			(18,077	)
Income tax provision		—			—			—		(464	)		(464	)
Net income (loss)		10,009			(7,673	)		3,513		(8,446	)		(2,597	)
Net loss attributable to noncontrolling interests		115			11,707			—		—			11,822
Net income attributable to Acadia	$	10,124		$	4,034		$	3,513	$	(8,446	)	$	9,225

	As of or for the Nine Months Ended September 30, 2019
	Core Portfolio			Funds			Structured Financing		Unallocated			Total
Revenues	$	131,356		$	86,187		$	—	$	—		$	217,543
Depreciation and amortization		(45,949	)		(46,858	)		—		—			(92,807	)
Property operating expenses, other operating and real estate taxes		(34,730	)		(32,217	)		—		—			(66,947	)
General and administrative expenses		—			—			—		(25,579	)		(25,579	)
Impairment charge		—			(1,721	)		—		—			(1,721	)
Gain on disposition of properties		—			14,070			—		—			14,070
Operating income (loss)		50,677			19,461			—		(25,579	)		44,559
Interest income		—			—			6,247		—			6,247
Other income		327			6,620			—		—			6,947
Equity in earnings (losses) of unconsolidated affiliates		7,322			(193	)		—		—			7,129
Interest expense		(20,866	)		(35,855	)		—		—			(56,721	)
Income tax provision		—			—			—		(1,622	)		(1,622	)
Net income (loss)		37,460			(9,967	)		6,247		(27,201	)		6,539
Net loss attributable to noncontrolling interests		648			24,548			—		—			25,196
Net income attributable to Acadia	$	38,108		$	14,581		$	6,247	$	(27,201	)	$	31,735

Real estate at cost	$	2,190,281		$	1,821,853		$	—	$	—		$	4,012,134
Total assets	$	2,316,683		$	1,918,055	��	$	94,807	$	—		$	4,329,545
Cash paid for acquisition of real estate	$	82,125		$	174,522		$	—	$	—		$	256,647
Cash paid for development and property improvement costs	$	19,059		$	58,577		$	—	$	—		$	77,636

As of or for the Nine Months Ended September 30, 2017

Core Portfolio Funds Structured Financing Unallocated Total
Revenues $ 127,130
$ 57,051
$ —
$ —
$ 184,181
Depreciation and amortization (46,719 ) (30,526 ) —
—
(77,245 )
Property operating expenses, other operating and real estate taxes (33,339 ) (22,088 ) —
—
(55,427 )
Impairment of an asset —
(3,840 ) —
—
(3,840 )
General and administrative expenses —
—
—
(25,286 ) (25,286 )
Operating income 47,072
597
—
(25,286 ) 22,383
Gain on disposition of properties —
12,972
—
—
12,972
Interest income —
—
23,648
—
23,648
Equity in earnings of unconsolidated affiliates 2,348
18,696
—
—
21,044
Interest expense (20,783 ) (18,883 ) —
—
(39,666 )
Income tax provision —
—
—
(1,017 ) (1,017 )
Net income 28,637
13,382
23,648
(26,303 ) 39,364
Net (income) loss attributable to noncontrolling interests (1,157 ) 2,351
—
—
1,194
Net income attributable to Acadia $ 27,480
$ 15,733
$ 23,648
$ (26,303 ) $ 40,558

Real estate at cost $ 1,987,501
$ 1,492,894
$ —
$ —
$ 3,480,395
Total assets $ 2,237,334
$ 1,605,429
$ 250,194
$ —
$ 4,092,957
Acquisition of real estate $ —
$ 138,429
$ —
$ —
$ 138,429
Development and property improvement costs $ 4,355
$ 80,199
$ —
$ —
$ 84,554

As of or for the Nine Months Ended September 30, 2016
Core Portfolio Funds Structured Financing Unallocated Total
Revenues $ 109,176
$ 26,642
$ —
$ —
$ 135,818
Depreciation and amortization (37,629 ) (9,115 ) —
—
(46,744 )
Property operating expenses, other operating and real estate taxes (28,460 ) (9,331 ) —
—
(37,791 )
General and administrative expenses —
—
—
(30,742 ) (30,742 )
Operating income 43,087
8,196
—
(30,742 ) 20,541
Gain on disposition of properties —
81,965
—
—
81,965
Interest income —
—
19,298
—
19,298
Equity in earnings of unconsolidated affiliates 2,668
924
—
—
3,592
Interest expense (20,308 ) (4,609 ) —
—
(24,917 )
Income tax provision —
—
—
(123 ) (123 )
Net income 25,447
86,476
19,298
(30,865 ) 100,356
Net income attributable to noncontrolling interests (2,771 ) (44,630 ) —
—
(47,401 )
Net income attributable to Acadia $ 22,676
$ 41,846
$ 19,298
$ (30,865 ) $ 52,955

Real estate at cost $ 1,832,863
$ 1,186,926
$ —
$ —
$ 3,019,789
Total assets $ 2,097,386
$ 1,214,317
$ 266,816
$ —
$ 3,578,519
Acquisition of real estate $ 244,022
$ 48,887
$ —
$ —
$ 292,909
Development and property improvement costs $ 17,518
$ 76,903
$ —
$ —
$ 94,421



	37

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	As of or for the Nine Months Ended September 30, 2018
	Core Portfolio			Funds			Structured Financing		Unallocated			Total
Revenues	$	122,959		$	66,995		$	—	$	—		$	189,954
Depreciation and amortization		(45,283	)		(41,472	)		—		—			(86,755	)
Property operating expenses, other operating and real estate taxes		(32,102	)		(26,790	)		—		—			(58,892	)
General and administrative expenses		—			—			—		(24,359	)		(24,359	)
Gain on disposition of properties		—			5,140			—		—			5,140
Operating income (loss)		45,574			3,873			—		(24,359	)		25,088
Interest and other income		—			—			10,539		—			10,539
Equity in earnings of unconsolidated affiliates		5,171			1,908			—		—			7,079
Interest expense		(20,475	)		(30,407	)		—		—			(50,882	)
Income tax provision		—			—			—		(851	)		(851	)
Net income (loss)		30,270			(24,626	)		10,539		(25,210	)		(9,027	)
Net loss attributable to noncontrolling interests		241			33,095			—		—			33,336
Net income attributable to Acadia	$	30,511		$	8,469		$	10,539	$	(25,210	)	$	24,309

Real estate at cost	$	2,060,024		$	1,553,150		$	—	$	—		$	3,613,174
Total assets	$	2,234,521		$	1,574,785		$	109,410	$	—		$	3,918,716
Cash paid for acquisition of real estate	$	1,343		$	103,559		$	—	$	—		$	104,902
Cash paid for development and property improvement costs	$	22,892		$	43,346		$	—	$	—		$	66,238

13. Share Incentive and Other Compensation

Share Incentive Plan

The Second Amended and Restated 2006 Incentive Plan (the “Share Incentive Plan”) authorizes the Company to issue options, Restricted Shares, LTIP Units and other securities (collectively “Awards”) to, among others, the Company’s officers, trustees and employees. At September 30, ~~2017~~2019 a total of ~~1,756,288~~704,479 shares remained available to be issued under the Share Incentive Plan.

Restricted Shares and LTIP Units

During the nine months ended September 30, ~~2017,~~2019, the Company issued ~~306,635~~330,718 LTIP Units and ~~7,628~~8,041 Restricted Share Units to employees of the Company pursuant to the Share Incentive Plan. These awards were measured at their fair value on the grant date, ~~which~~incorporating the following factors:

•

A portion of these annual equity awards is granted in performance-based Restricted Share Units or LTIP Units that may be earned based on the Company’s attainment of specified relative total shareholder returns (“Relative TSR”) hurdles.

•

In the event the Relative TSR percentile falls between the 25th percentile and the 50th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 50% and 100% and in the event that the Relative TSR percentile falls between the 50th percentile and 75th percentile, the Relative TSR vesting percentage is determined using a straight-line linear interpolation between 100% and 200%.

•

Two-thirds (2/3) of the performance-based LTIP Units will vest based on the Company’s total shareholder return (“TSR”) for the three-year forward-looking performance period ending December 31, 2021 relative to the constituents of the SNL U.S. REIT Retail Shopping Center Index and one-third (1/3) on the Company’s TSR for the three-year forward-looking performance period as compared to the constituents of the SNL U.S. REIT Retail Index (both on a non-weighted basis).

•

If the Company’s performance fails to achieve the aforementioned hurdles at the culmination of the three-year performance period, all performance-based shares will be forfeited. Any earned performance-based shares vest 60% at the end of the performance period, with the remaining 40% of shares vesting ratably over the next two years.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For valuation of the 2019 Performance Shares, a Monte Carlo simulation was ~~established as~~used to estimate the fair values based on probability of satisfying the market ~~price~~conditions and the projected share prices at the time of payments, discounted to the ~~Company’s Common Shares as of~~valuation dates over the ~~close of trading on the day preceding the grant date.~~ three-year performance periods. The assumptions include volatility (19.60%) and risk-free interest rates (2.5%).

The total value of the above Restricted Share Units and LTIP Units as of the grant date was ~~$9.0 million, of which $2.2 million was recognized as compensation expense in 2016, and $6.8 million will be recognized as compensation expense over the remaining vesting period.~~$ 11.1 million. Total long-term incentive compensation expense, including the expense related to the Share Incentive Plan, was ~~$6.5~~$1.7 million, $5.4 million, $2.0 million and ~~$9.1~~$6.3 million for the three and nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively and is recorded in General and Administrative on the Consolidated Statements of Income.

In addition, members of the Board of Trustees (the “Board”) have been issued shares and units under the Share Incentive Plan. During ~~2017,~~2019, the Company issued ~~11,814~~18,009 LTIP Units and 17,318 Restricted Shares ~~and 11,105 LTIP Units~~ to Trustees of the Company in connection with Trustee fees. Vesting with respect to ~~3,864~~6,463 of the LTIP Units and 3,996 of the Restricted Shares ~~and 5,805 of the LTIP Units~~ will be on the first anniversary of the date of issuance and ~~7,950~~11,546 of the LTIP Units and 13,322 of the Restricted Shares ~~and 5,300 of the LTIP Units~~ vest over three years with 33% vesting on each of the next three anniversaries of the issuance date. The Restricted Shares do not carry voting rights or other rights of Common Shares until vesting and may not be transferred, assigned or pledged until the recipients have a vested non-forfeitable right to such shares. Dividends are not paid currently on unvested Restricted Shares, but are paid cumulatively from the issuance date through the applicable vesting date of such Restricted Shares. Total trustee fee expense, including the expense related to the Share Incentive Plan, was ~~$0.7~~$1.7 million and ~~$0.6~~$0.9 million for the nine months ended September 30, ~~2017~~2019 and ~~2016, respectively.~~

2018.

In 2009, the Company adopted the ~~Long Term~~Long-Term Investment Alignment Program (the “Program”) pursuant to which the Company may grant awards to employees, entitling them to receive up to 25% of any potential future payments of Promote to the Operating Partnership from Funds III, IV and ~~IV.~~V. The Company has granted such awards to employees representing 25% of the potential Promote payments from Fund III to the Operating Partnership, ~~and 14.4%~~22.8% of the potential Promote payments from Fund IV to the Operating Partnership and 2.2% of the potential Promote payments from Fund V to the Operating Partnership. Payments to senior executives under the Program require further Board approval at the time any potential payments are due pursuant to these grants. Compensation relating to these awards will be recognized in each reporting period in which Board approval is granted.

As payments to other employees are not subject to further Board approval, compensation relating to these awards will be recorded based on the estimated fair value at each reporting period in accordance with ASC Topic 718, Compensation– Stock Compensation.The awards in connection with Fund IV and Fund V were determined to have no0 intrinsic value as of September 30, ~~2017.~~

~~Compensation~~2019.

NaN compensation expense ~~of $0.5 million and $1.5 million~~ was recognized for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, related to the Program in connection with Fund ~~III.~~



	38

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

III, Fund IV or Fund V.

A summary of the status of the Company’s unvested Restricted Shares and LTIP Units is presented below:

Unvested Restricted Shares and LTIP Units	Common Restricted Shares			Weighted Grant-Date Fair Value		LTIP Units			Weighted Grant-Date Fair Value
Unvested at January 1, 2018		41,327		$	26.92		910,099		$	28.28
Granted		22,817			23.65		425,880			26.80
Vested		(25,261	)		30.79		(431,827	)		29.72
Forfeited		(428	)		27.25		(12,266	)		28.57
Unvested at December 31, 2018		38,455			22.44		891,886			26.87
Granted		25,359			28.56		348,726			32.78
Vested		(21,424	)		27.12		(290,753	)		29.30
Forfeited		—			—		(15,679	)		31.49
Unvested at September 30, 2019		42,390		$	23.73		934,180		$	28.24

Unvested Restricted Shares
and LTIP Units Common Restricted
Shares Weighted
Grant-Date
Fair Value LTIP Units Weighted
Grant-Date
Fair Value
Unvested at January 1, 2016 49,899
$ 25.90
1,020,121
$ 23.92
Granted 24,583
33.35
359,484
34.40
Vested (24,886 ) 29.17
(522,680 ) 26.08
Forfeited (189 ) 35.37
(48 ) 35.37
Unvested at December 31, 2016 49,407
27.92
856,877
26.99
Granted 19,442
29.85
317,740
29.12
Vested (21,771 ) 30.91
(257,515 ) 28.58
Forfeited (356 ) 35.56
—
—
Unvested at September 30, 2017 46,722
$ 27.28
917,102
$ 27.29

The weighted-average grant date fair value for Restricted Shares and LTIP Units granted for the nine months ended September 30, ~~2017~~2019 and the year ended December 31, ~~2016~~2018 were ~~$32.18~~$32.50 and ~~$34.50,~~$26.64, respectively. As of September 30, ~~2017,~~2019, there was ~~$16.3~~$18.2 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Share Incentive Plan. That cost is expected to be recognized over a weighted-average period of ~~2.2~~1.9 years. The total fair value of Restricted Shares that vested for ~~each of~~ the nine months ended September 30, ~~2017~~2019 and the year ended December 31, ~~2016,~~2018, was ~~$0.7 million.~~$0.6 million and $0.8 million, respectively. The total fair value of LTIP Units that vested (LTIP units vest primarily during the first quarter) during the nine months ended September 30, ~~2017~~2019 and the year ended December 31, ~~2016,~~2018, was ~~$7.4~~$8.5 million and ~~$13.6~~$12.8 million, respectively.

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Other Plans

On a combined basis, the Company incurred a total of $0.3 million related to the following employee benefit plans for each of the nine months ended September 30, ~~2017~~2019 and ~~2016, respectively:~~

2018:

Employee Share Purchase Plan

The Acadia Realty Trust Employee Share Purchase Plan (the “Purchase Plan”), allows eligible employees of the Company to purchase Common Shares through payroll deductions. The Purchase Plan provides for employees to purchase Common Shares on a quarterly basis at a 15% discount to the closing price of the Company’s Common Shares on either the first day or the last day of the quarter, whichever is lower. A participant may not purchase more the $25,000 in Common Shares per year. Compensation expense will be recognized by the Company to the extent of the above discount to the closing price of the Common Shares with respect to the applicable quarter. ~~During the nine months ended September 30, 2017 and 2016, a~~A total of ~~3,392~~1,803 and ~~3,143~~2,836 Common Shares ~~respectively,~~ were purchased by employees under the Purchase ~~Plan.~~

Plan for the nine months ended September 30, 2019 and 2018, respectively.

Deferred Share Plan

During ~~May of~~ 2006, the Company adopted a Trustee Deferral and Distribution Election, under which the participating Trustees earn deferred compensation.

Employee 401(k) Plan

The Company maintains a 401(k) plan for employees under which the Company currently matches 50% of a plan participant’s contribution up to 6% of the employee’s annual salary. A plan participant may contribute up to a maximum of 15% of their compensation, up to ~~$18,000,~~$19,000, for the year ~~ended~~ending December 31, ~~2017.~~



	39

~~ACADIA REALTY TRUST AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

2019.

14. Earnings Per Common Share

Basic earnings per Common Share is computed by dividing net income attributable to Common Shareholders by the ~~weighted average~~weighted-average Common Shares ~~outstanding.~~outstanding (Note 10). During the periods presented, the Company had unvested LTIP Units which provide for non-forfeitable rights to dividend equivalent payments. Accordingly, these unvested LTIP Units are considered participating securities and are included in the computation of basic earnings per Common Share pursuant to the two-class method.

Diluted earnings per Common Share reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including the effects of restricted share units (“Restricted Share Units”) ~~and share option awards~~ issued under the Company’s Share Incentive Plans (Note 13). The effect of such shares is excluded from the calculation of earnings per share when anti-dilutive as indicated in the table below.

The effect of the conversion of Common OP Units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable for Common Shares on a ~~one-for-one~~1-for-one basis. The income allocable to such units is allocated on this same basis and reflected as noncontrolling interests in the accompanying consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings per share.

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2017 2016 2017 2016
Numerator:

Net income attributable to Acadia $ 12,867
$ 6,112
$ 40,558
$ 52,955
Less: net income attributable to participating securities (135 ) (58 ) (488 ) (617 )
Income from continuing operations net of income
attributable to participating securities $ 12,732
$ 6,054
$ 40,070
$ 52,338

Denominator:
Weighted average shares for basic earnings per share 83,699,850
78,448,643
83,665,749
74,049,523
Effect of dilutive securities:
Employee unvested restricted shares —
3,034
3,577
7,861
Future equity issuance —
169,020
—
75,582
Denominator for diluted earnings per share 83,699,850
78,620,697
83,669,326
74,132,966

Basic and diluted earnings per Common Share from
continuing operations attributable to Acadia $ 0.15
$ 0.08
$ 0.48
$ 0.71

Anti-Dilutive Shares Excluded from Denominator:
Series A Preferred OP Units 188
188
188
188
Series A Preferred OP Units - Common share equivalent 25,067
25,067
25,067
25,067

Series C Preferred OP Units 140,343
141,593
140,343
141,593
Series C Preferred OP Units - Common share equivalent 487,299
402,252
481,878
402,519



	40

ACADIA REALTY TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)	2019			2018			2019			2018
Numerator:
Net income attributable to Acadia	$	10,458		$	9,225		$	31,735		$	24,309
Less: net income attributable to participating securities		(38	)		(66	)		(134	)		(158	)
Income from continuing operations net of income attributable to participating securities	$	10,420		$	9,159		$	31,601		$	24,151

Denominator:
Weighted average shares for basic earnings per share		84,888,445			81,565,805			83,552,182			82,245,020
Effect of dilutive securities:
Employee unvested restricted shares		—			—			—			—
Denominator for diluted earnings per share		84,888,445			81,565,805			83,552,182			82,245,020

Basic and diluted earnings per Common Share from continuing operations attributable to Acadia	$	0.12		$	0.11		$	0.38		$	0.29

Anti-Dilutive Shares Excluded from Denominator:
Series A Preferred OP Units		188			188			188			188
Series A Preferred OP Units - Common share equivalent		25,067			25,067			25,067			25,067

Series C Preferred OP Units		136,593			136,593			136,593			136,593
Series C Preferred OP Units - Common share equivalent		474,278			474,278			474,278			474,278
Restricted shares		40,821			38,450			40,821			37,180

15. Subsequent Events

Financings

On October 8, 2019, the Operating Partnership amended its revolving senior unsecured credit facility which it originally entered into on February 20, ~~2017,~~2018 (Note 7). Prior to this amendment, the credit agreement provided for a principal amount of up to $500.0 million, which consisted of a $150.0 million revolving credit facility and a $350.0 million term loan facility. The amendment provides for a $100.0 million increase in the revolving credit facility, resulting in borrowing capacity of up to $600.0 million in principal amount, which includes the $250.0 million revolving credit facility and the $350.0 million term loan facility. In addition, the amendment provides for an accordion feature, which allows for one or more increases in the revolving credit facility or term loan facility, for a maximum aggregate principal amount not to exceed $750.0 million.

During October 2019, Fund V’s property entities entered into new mortgages for certain of its consolidated (Note 2) and unconsolidated (Note 4) properties totaling $140.4 million for which Fund V ~~obtained mortgage financing of $28.6 million for its recently acquired Hickory Ridge property~~had previously entered into forward swaps effective November 1 (Note 28). as follows:

•

Landstown Commons – $60.9 million at LIBOR plus 1.7%, swapped to a fixed rate of 2.949%, maturing on October 24, 2024.

•

Lincoln Commons – $40.8 million at LIBOR plus 1.7%, swapped to a fixed rate of 2.949%, maturing on October 24, 2024. At closing, $38.8 million was funded.

•

Tri-City Plaza – $38.7 million at LIBOR plus 1.9%, swapped to a fixed rate of 3.0935%, maturing on October 18, 2024. At closing, $25.4 million was funded.

Fund Distribution

On October ~~31, 2017, Fund IV refinanced its bridge facility (Note 7), increasing its available credit to $41.8 million.~~

~~Dispositions~~

On October 13, 2017, Fund II sold its consolidated City Point Condominium Tower I property for $96.0 million, and repaid debt of $81.0 million. This property was classified as held for sale at September 30, 2017 (~~Note 2~~).

~~On October 3, 2017, Fund IV’s Broughton Street Portfolio venture (Note 4) sold its 301 W. Broughton, 101-103 W. Broughton and 125 E. Broughton properties for a total of $9.5 million.~~

~~Other~~

~~On October 25, 2017,~~11, 2019, Fund V ~~called $45.8~~distributed $6.3 million ~~of capital,~~to investors, of which the ~~Operating Partnership’s~~Company’s share was ~~$9.2~~$1.3 million.



	41


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

As of September 30, ~~2017, we owned 182 properties, which~~2019, we own or have an ownership interest in ~~within~~182 properties held through our Core Portfolio orand Funds. Our Core Portfolio consists of those properties either 100% owned, or partially owned through joint venture interests, by the Operating Partnership or its subsidiaries, ~~thereof,~~ not including those properties owned through our Funds. These properties primarily consist of street and urban retail, and dense suburban shopping centers. ~~The following sets forth a~~Our Funds are investment vehicles through which our Operating Partnership and outside institutional investors invest in primarily opportunistic and value-add retail real estate. Currently, we have active investments in four Funds. A summary of our wholly-owned and partially-owned retail properties and their physical occupancies at September 30, ~~2017:~~2019 is as follows:

	Number of Properties				Operating Properties
	Development or Redevelopment		Operating		GLA		Occupancy
Core Portfolio:
Chicago Metro		—		36		707,911		88.0	%
New York Metro		—		24		335,239		92.4	%
San Francisco Metro		1		1		148,832		100.0	%
Washington DC Metro		1		28		323,189		91.8	%
Boston Metro		—		3		55,276		100.0	%
Suburban		2		29		4,257,989		93.7	%
Total Core Portfolio		4		121		5,828,436		93.0	%
Acadia Share of Total Core Portfolio		4		121		5,207,696		93.5	%

Fund Portfolio:
Fund II		—		1		469,518		65.2	%
Fund III		1		3		134,434		75.2	%
Fund IV		3		35		2,487,995		85.5	%
Fund V		—		14		4,381,658		90.9	%
Total Fund Portfolio		4		53		7,473,605		87.2	%
Acadia Share of Total Fund Portfolio		4		53		1,598,960		87.0	%

Total Core and Funds		8		174		13,302,041		89.8	%
Acadia Share of Total Core and Funds		8		174		6,806,656		92.0	%

Number of Properties Operating Properties
Development Operating GLA Occupancy
Core Portfolio:
Chicago Metro 2
33
696,646
93.1 %
New York Metro —
20
322,171
95.3 %
San Francisco Metro —
2
353,480
98.9 %
Washington DC Metro —
28
319,380
82.4 %
Boston Metro —
3
55,276
100.0 %
Suburban —
30
4,581,885
93.8 %
Total Core Portfolio 2
116
6,328,838
93.6 %
Acadia Share of Total Core Portfolio 2
116
5,279,121
94.2 %

Fund Portfolio:
Fund II 1
2
740,667
64.6 %
Fund III 2
4
53,379
80.8 %
Fund IV 8
44
2,626,378
85.3 %
Fund V —
3
795,318
95.2 %
Total Fund Portfolio 11
53
4,215,742
83.5 %
Acadia Share of Total Fund Portfolio 11
53
4,041,652
83.8 %

Total Core and Funds 13
169
10,544,580
89.6 %
Acadia Share of Total Core and Funds 13
169
9,320,773
89.7 %

The majority of our operating income is derived from rental revenues from operating properties, including expense recoveries from tenants, offset by operating and overhead expenses. As our RCP Venture invests in operating companies, we consider these investments to be private-equity style, as opposed to real estate, investments. Since these are not traditional investments in operating rental real estate but investments in operating businesses, the Operating Partnership typically invests in these through a taxable REIT subsidiary (“TRS”).

Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective:

Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas and create value through accretive development and re-tenanting activities coupled with the acquisition of high-quality assets that have the long-term potential to outperform the asset class as part of our Core asset recycling and acquisition initiative.

Generate additional external growth through an opportunistic yet disciplined acquisition program within our Funds. We target transactions with high inherent opportunity for the creation of additional value through:


	•
	42	Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas and create value through accretive development and re-tenanting activities coupled with the acquisition of high-quality assets that have the long-term potential to outperform the asset class as part of our Core asset recycling and acquisition initiative.

•

◦

•

value-add investments in street retail properties, located in established and “next generation” submarkets, with re-tenanting or repositioning opportunities,


◦ •	opportunistic acquisitions of well-located real-estate anchored by distressed retailers, and


◦ •	other opportunistic acquisitions which may include high-yield acquisitions and purchases of distressed debt.

Some of these investments historically have also included, and may in the future include, joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets.

•

Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth.

~~Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth.~~

SIGNIFICANT DEVELOPMENTS DURING THE NINE MONTHS ENDED SEPTEMBER 30, ~~2017~~

2019

Investments

During the nine months ended September 30, ~~2017,~~2019, within our Core ~~and Fund portfolios~~portfolio we invested in ~~six~~eight properties aggregating $93.2 million as ~~follows (Note 2~~):

follows:

~~On August 4, 2017, Fund V acquired a consolidated suburban shopping center in Canton, Michigan for $26.0 million referred to as “New Towne Plaza.”~~

~~On July 27, 2017, Fund V acquired a consolidated suburban shopping center in Hickory, North Carolina for $44.0 million referred to as “Hickory Ridge.”~~


•	On ~~June 30, 2017,~~January 24, 2019, our unconsolidated Renaissance Portfolio venture acquired Fund ~~IV exchanged a $9.0~~III’s 3104 M Street property located in Washington, D.C. for $10.7 million ~~note receivable~~ (Note 34) for ~~a shopping center~~which our share was $2.1 million as discussed further below.

•

On March 15, March 27, May 29, 2019 and July 30, 2019, we acquired four retail condominiums located in ~~Windham, Maine~~the Soho section of New York City for a total of $74.7 million as part of a collection of seven properties referred to as ~~“Shaw’s Plaza – Windham.”~~the “Soho Acquisitions” with an aggregate purchase price of approximately $122.0 million (Note 2). The acquisitions of the remaining three properties are expected to be finalized through early 2020. No assurance can be given that we will successfully close on the remaining acquisitions under contract, which are subject to customary closing conditions.

~~On June 5, 2017, Fund V acquired a consolidated suburban shopping center in Santa Fe, New Mexico for $35.2 million referred to as “Plaza Santa Fe.”~~

~~On March 13, 2017 Fund IV acquired a consolidated shopping center for $35.4 million referred to as “Lincoln Place.”~~


•	~~In our Core portfolio one of our investments, in which~~ On May 2, 2019, we ~~hold~~entered into a ~~20% interest~~ground lease (Note 411)~~, acquired~~ on a development property in ~~Alexandria, Virginia for $3.0 million~~Washington, D.C. referred to as ~~“907 King Street” on January 4, 2017.~~ “1238 Wisconsin Avenue.”

~~Dispositions of Real Estate~~

•

On September 11, we acquired two mixed-use buildings in Chicago, Illinois, referred to as “849 and 912 W. Armitage” for a total of $7.8 million (Note 2).

During the nine months ended September 30, ~~2017,~~2019, within our ~~Funds~~Fund portfolio we ~~sold five~~invested in eight properties ~~for an aggregate sales price of $106.1 million and our proportionate share of the aggregate gains was $6.9~~aggregating $328.5 million as ~~follows (Note 2~~, ~~Note 4~~):follows:

•

On March 19, 2019, Fund V’s unconsolidated venture (Note 4) acquired a suburban shopping center in Riverdale, Utah for $48.5 million referred to as “Family Center at Riverdale” for which Fund V’s share was $43.7 million.

•

On April 30, 2019, Fund V’s unconsolidated venture (Note 4) acquired a suburban shopping center in Vernon, Connecticut for $36.7 million referred to as “Tri-City Plaza” for which Fund V’s share was $33.0 million

~~On September 11, 2017, Fund II sold a consolidated property, 216th Street, for $30.6 million and recognized a gain~~

•

On May 1, 2019, Fund IV acquired a leasehold interest (Note 11) in a retail and parking condominium in a building in New York, New York for $10.5 million referred to as “110 University Place.”

•

On May 6, 2019, Fund V acquired a suburban shopping center (Note 2) in Palm Coast, Florida for $36.6 million referred to as “Palm Coast Landing.”

•

On June 21, 2019, Fund V acquired a suburban shopping center (Note 2) in Lincoln, Rhode Island for $54.3 million referred to as “Lincoln Commons.”

•

On August 2, Fund V acquired a suburban shopping center (Note 2) in Virginia Beach, Virginia for $87.0 million referred to as “Landstown Commons.”

•

On August 21, Fund V’s unconsolidated venture (Note 4) acquired two suburban shopping centers in Frederick County, Maryland for a total of $54.9 million collectively referred to as the “Washington REIT Portfolio” for which Fund V’s share was $49.4 million.

Dispositions of ~~$6.5 million, of which our share was $1.8 million net of amounts attributable to noncontrolling interests.~~

On July 6, 2017, Fund III sold a consolidated property, New Hyde Park Shopping Center, for $22.1 million and recognized a gain of $6.4 million, of which our share was $1.6 million net of amounts attributable to noncontrolling interests.

On June 30, 2017, Fund IV sold an unconsolidated property, 1701 Belmont Avenue, for $5.6 million for which the gain was $3.3 million of which our pro-rata share was $0.8 million and was recognized within equity in earnings of unconsolidated affiliates in the consolidated statement of income.

On February 15, 2017, Fund III sold an unconsolidated property, Arundel Plaza, for $28.8 million for which the gain was $8.2 million of which our pro-rata share was $1.3 million and was recognized within equity in earnings of unconsolidated affiliates in the consolidated statement of income.

On January 31, 2017, Fund IV sold an unconsolidated property, 2819 Kennedy Boulevard, for $19.0 million, for which the gain was $6.3 million of which our pro-rata share was $1.4 million and was recognized within equity in earnings of unconsolidated affiliates in the consolidated statement of income.

~~Financings~~

Real Estate

During the nine months ended September 30, ~~2017,~~2019, we ~~obtained aggregate financing of $318.3~~sold four consolidated properties (Note 2) from our Fund Portfolio for gross proceeds totaling $83.9 million ~~including (Note 7~~):as follows:

•

On January 24, 2019, a venture in which Fund III holds an 80% interest sold its 3104 M Street property to an unconsolidated venture (Note 4) in which the Core Portfolio holds a 20% interest for $10.5 million. The acquiring venture assumed the property’s mortgage in the amount of $4.7 million.

•

On July 24, 2019, Fund IV sold its JFK Plaza property for $7.8 million.

•

On August 22, 2019, Fund III sold its Nostrand Avenue property for $27.7 million.

•

On May 17 and September 23, 2019, Fund IV sold two residential condominium units for a total of $5.9 million.

•

On September 27, 2019 Fund IV sold its 938 W. North Street property for $32.0 million.

~~We obtained an~~

The Funds recognized a net aggregate gain on the sales of ~~$128.3~~these consolidated properties of $14.1 million ~~in financings with nine new non-recourse mortgages, primarily for Fund IV.~~

~~On September 30, 2017, Fund II closed on a new $40.0~~and our share was $3.1 million, ~~loan.~~

~~On May 4, 2017, Fund V closed on a new $150.0 million subscription line.~~

~~We also repaid six mortgages aggregating $112.5 million.~~



	43

~~Structured Financing~~

net of noncontrolling interests.

Financings

During the nine months ended September 30, ~~2017~~2019, we obtained aggregate new financing of $137.2 million including (Note 7):

•

An aggregate of $70.3 million in financings with two new mortgages for Fund V.

•

An aggregate of $21.9 million in financings, with one new mortgage of $3.0 million and a refinancing of an $18.9 million mortgage for Fund IV.

•

A $45.0 million loan for Fund II, of which $23.9 million was drawn at September 30, 2019.

In addition, Funds III and IV modified two mortgages by repaying a total of $14.8 million and reducing borrowing costs (Note 7).

Structured Financing

During the nine months ended September 30, 2019, the Company redeemed its $15.3 million Fund IV Structured Financing investment (Note 3):


•	~~We exchanged $16.0 million of our $153.4 million note receivable plus accrued interest for an additional 38.89% undivided interest in Brandywine Market Square (Note 4~~).

~~We received full settlement~~.

Equity Issuance

During the three months ended September 30, 2019, the Company sold 2,149,154 shares under its ATM program (Note 10) for gross proceeds of $61.6 million, or $60.6 million net of issuance costs, at a ~~$12.0~~weighted-average gross price per share of $28.64. During the nine months ended September 30, 2019, the Company sold 4,816,505 shares under its ATM program for gross proceeds of $137.8 million, ~~note receivable plus $4.8~~or $135.8 million ~~interest and fees thereon. The note had previously been in default and was settled in bankruptcy proceedings during the second quarter.~~

~~We funded an additional $10.0 million on an existing note receivable.~~


•	~~Fund IV exchanged a $9.0 million note receivable plus accrued interest of $0.1 million thereon for an investment in a shopping center in Windham, Maine (Note 2~~).

net of issuance costs, at a weighted-average gross price per share of $28.61.

RESULTS OF OPERATIONS

See Note 12 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments. During the year ended December 31, 2016, we revised how we allocate general and administrative and income tax expenses among our segments. All prior periods presented herein have been revised to conform to this new presentation.

Comparison of Results for theThree Months Ended September 30, ~~2017~~ 2019to theThree Months Ended September 30, ~~2016~~

2018

The results of operations by reportable segment for the three months ended September 30, ~~2017~~2019 compared to the three months ended September 30, ~~2016~~2018 are summarized in the table below (in millions, totals may not add due to rounding):

	Three Months Ended											Three Months Ended
	September 30, 2019											September 30, 2018											Increase (Decrease)
	Core			Funds			SF		Total			Core			Funds			SF		Total			Core			Funds			SF			Total
Revenues	$	42.1		$	31.2		$	—	$	73.3		$	41.7		$	23.8		$	—	$	65.5		$	0.4		$	7.4		$	—		$	7.8
Depreciation and amortization		(15.2	)		(17.0	)		—		(32.2	)		(14.9	)		(13.8	)		—		(28.7	)		0.3			3.2			—			3.5
Property operating expenses, other operating and real estate taxes		(11.2	)		(12.2	)		—		(23.4	)		(11.9	)		(10.0	)		—		(21.9	)		(0.7	)		2.2			—			1.5
General and administrative expenses		—			—			—		(8.2	)		—			—			—		(8.0	)		—			—			—			0.2
Impairment charge		—			(0.3	)		—		(0.3	)		—			—			—		—			—			0.3			—			0.3
Gain on disposition of properties		—			12.1			—		12.1			—			5.1			—		5.1			—			7.0			—			7.0
Operating income		15.8			13.7			—		21.3			15.0			5.1			—		12.1			0.8			8.6			—			9.2
Interest income		—			—			1.7		1.7			—			—			3.5		3.5			—			—			(1.8	)		(1.8	)
Other income		—			5.0			—		5.0			—			—			—		—			—			5.0			—			(5.0	)
Equity in earnings (losses) of unconsolidated affiliates		1.8			(0.5	)		—		1.3			2.0			(1.6	)		—		0.4			(0.2	)		1.1			—			0.9
Interest expense		(7.3	)		(11.8	)		—		(19.1	)		(7.0	)		(11.1	)		—		(18.1	)		0.3			0.7			—			1.0
Income tax provision		—			—			—		(1.4	)		—			—			—		(0.5	)		—			—			—			(0.9	)
Net income (loss)		10.2			6.5			1.7		8.8			10.0			(7.7	)		3.5		(2.6	)		0.2			14.2			(1.8	)		11.4
Net loss attributable to noncontrolling interests		0.3			1.4			—		1.6			0.1			11.7			—		11.8			0.2			(10.3	)		—			(10.2	)
Net income attributable to Acadia	$	10.5		$	7.8		$	1.7	$	10.5		$	10.1		$	4.0		$	3.5	$	9.2		$	0.4		$	3.8		$	(1.8	)	$	1.3

Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Increase (Decrease)
Core Funds SF Total Core Funds SF Total Core Funds SF Total

Revenues $ 41.2
$ 21.5
$ —
$ 62.7
$ 36.4
$ 7.5
$ —
$ 43.9
$ 4.8
$ 14.0
$ —
$ 18.8
Depreciation and amortization (14.7 ) (11.9 ) —
(26.7 ) (12.4 ) (2.8 ) —
(15.2 ) 2.3
9.1
—
11.5
Property operating expenses, other operating and real estate taxes (10.3 ) (8.2 ) —
(18.5 ) (11.6 ) (2.9 ) —
(14.5 ) (1.3 ) 5.3
—
4.0
Impairment of an asset —
(3.8 ) —
(3.8 ) —
—
—
—
—
3.8
—
3.8
General and administrative expenses —
—
—
(8.0 ) —
—
—
(12.9 ) —
—
—
(4.9 )
Operating income (loss) 16.1
(2.4 ) —
5.7
12.3
1.8
—
1.3
3.8
(4.2 ) —
4.4
Gain on disposition of properties —
13.0
—
13.0
—
—
—
—
—
13.0
—
13.0
Interest income —
—
6.5
6.5
—
—
7.2
7.2
—
—
(0.7 ) (0.7 )
Equity in earnings (losses) of unconsolidated affiliates 0.8
3.2
—
4.0
1.5
(1.6 ) —
(0.1 ) (0.7 ) 4.8
—
4.1
Interest expense (6.7 ) (8.7 ) —
(15.4 ) (6.4 ) (1.6 ) —
(8.0 ) 0.3
7.1
—
7.4
Income tax provision —
—
—
(0.5 ) —
—
—
(0.1 ) —
—
—
(0.4 )
Net income (loss) 10.2
5.0
6.5
13.3
7.4
(1.4 ) 7.2
0.3
2.8
6.4
(0.7 ) 13.0
Net (income) loss attributable to noncontrolling interests (0.4 ) (0.1 ) —
(0.4 ) 0.1
5.7
—
5.8
0.5
5.8
—
6.2
Net income attributable to Acadia $ 9.9
$ 4.9
$ 6.5
$ 12.9
$ 7.5
$ 4.4
$ 7.2
$ 6.1
$ 2.4
$ 0.5
$ (0.7 ) $ 6.8



	44

Core Portfolio

The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio increased ~~by $2.4~~$0.4 million for the three months ended September 30, ~~2017~~2019 compared to the prior year ~~period as a result of the changes as further described below.~~

~~Revenues from our Core Portfolio increased by~~ ~~$4.8 million~~ ~~for the three months ended September 30, 2017 compared to the prior year period due to property acquisitions in 2016 (Note 2~~).

~~Depreciation and amortization for our Core Portfolio increased by~~ ~~$2.3 million~~ ~~for the three months ended September 30, 2017 compared to the prior year period due to property acquisitions in 2016.~~

~~Property operating, other operating expenses and real estate taxes for our Core Portfolio decreased by~~ ~~$1.3 million~~ ~~for the three months ended September 30, 2017 compared to the prior year period primarily due to acquisition related costs attributable to property acquisitions in 2016.~~

period.

Funds

The results of operations for our Funds segment are depicted in the table above under the headings labeled “Funds.” Segment net income attributable to Acadia for the Funds increased by ~~$0.5~~$3.8 million for the three months ended September 30, ~~2017~~2019 compared to the prior year period as a result of the changes described below.

Revenues ~~from~~for the Funds increased by ~~$14.0~~$7.4 million for the three months ended September 30, ~~2017~~2019 compared to the prior year period primarily due to Fund property acquisitions in ~~2016~~2019 and ~~2017 as well as substantially all of the City Point development project being placed in service in 2017 (Note 2~~).

2018.

Depreciation and amortization expense for the Funds increased by ~~$9.1~~$3.2 million for the three months ended September 30, ~~2017~~2019 compared to the prior year period primarily due to Fund property acquisitions in 2019 and 2018.

Property operating expenses, other operating and real estate taxes for the Funds increased $2.2 million for the three months ended September 30, 2019 compared to the prior year period primarily due to Fund property acquisitions in 2019 and 2018.

Other income for the Funds increased $5.0 million for the three months ended September 30, 2019 compared to the prior year period due to the ~~acquisitions in 2016 and 2017 as well as substantially all~~recognition of ~~the~~income associated with its New Market Tax Credit transaction within Fund II’s City Point ~~development project being placed~~investment (Note 7).

Equity in ~~service in 2017.~~

~~Property operating, other operating expenses and real estate taxes~~earnings of unconsolidated affiliates for ~~the~~our Funds increased by ~~$5.3~~$1.1 million for the three months ended September 30, ~~2017~~2019 compared to the prior period primarily due to the recognition of 100% of the net loss generated from Broughton Street portfolio venture (Note 4) in 2018 as our partner is no longer being allocated their share of the losses.

Interest expense for the Funds increased $0.7 million for the three months ended September 30, 2019 compared to the prior year period due to ~~the acquisitions in 2016 and 2017.~~

~~Impairment of an asset during the three months ended September 30, 2017 was comprised of~~ a ~~$3.8 million charge related to a property classified as held for sale in 2017 (Note 8~~).

~~Gain on disposition of properties for the Funds increased by~~ ~~$13.0 million~~ ~~for the three months ended September 30, 2017 compared to the prior year period due to the sale of 216th street in Fund II and New Hyde Park Shopping Center in Fund III in 2017 (Note 2~~).

~~Equity in earnings of unconsolidated affiliates for the Funds increased by~~ ~~$4.8 million~~ ~~for the three months ended September 30, 2017 compared to the prior year period due to distribution in excess of our carrying value related to Fund II’s investment in Mervyns and Albertson’s.~~

~~Interest expense for the Funds increased~~ ~~$7.1 million~~ ~~for the three months ended September 30, 2017 compared to the prior year period due to $2.6 million less interest capitalized in 2017, a $2.4~~$2.0 million increase related to higher average outstanding borrowings in ~~2017, a $1.4~~2019 partially offset by $1.1 million ~~increase related~~of additional interest capitalized in 2019.

Net loss attributable to ~~higher average interest rates in 2017, and $0.7~~noncontrolling interests for the Funds decreased $10.3 million ~~increase related~~for the three months ended September 30, 2019 compared to ~~amortization~~the prior year period based on the noncontrolling interests’ share of ~~higher loan costs in 2017.~~

the variances discussed above. Net loss attributable to noncontrolling interests in the Funds ~~decreased~~includes asset management fees earned by ~~$5.8~~the Company of $4.4 million and $4.5 million for the three months ended September 30, ~~2017 compared to the prior year period primarily due to the gain on disposition of properties discussed above.~~

2019 and 2018, respectively.

Structured Financing

The results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.”



	45

Interest income for the Structured Financing portfolio decreased $1.8 million for the three months ended September 30, 2019 compared to the prior year period primarily due to $1.0 million from the payoff of a Fund IV note in 2019 along with the conversion of a portion of a note receivable into increased ownership in the real estate in 2018 (Note 4).

Unallocated

The Company does not allocate general and administrative expense and income taxes to its reportable segments. ~~General and administrative expenses decreased by $4.9 million primarily as a result of~~These unallocated amounts are depicted in the ~~acceleration of equity-based compensation awards related to retirements in 2016.~~

table above under the headings labeled “Total.”

Comparison of Results for theNine Months Ended September 30, ~~2017~~2019 to theNine Months Ended September 30, ~~2016~~

2018

The results of operations by reportable segment for the nine months ended September 30, ~~2017~~2019 compared to the nine months ended September 30, ~~2016~~2018 are summarized in the table below (in millions, totals may not add due to rounding):

	Nine Months Ended											Nine Months Ended
	September 30, 2019											September 30, 2018											Increase (Decrease)
	Core			Funds			SF		Total			Core			Funds			SF		Total			Core			Funds			SF			Total
Revenues	$	131.4		$	86.2		$	—	$	217.5		$	123.0		$	67.0		$	—	$	190.0		$	8.4		$	19.2		$	—		$	27.5
Depreciation and amortization		(45.9	)		(46.9	)		—		(92.8	)		(45.3	)		(41.5	)		—		(86.8	)		0.6			5.4			—			6.0
Property operating expenses, other operating and real estate taxes		(34.7	)		(32.2	)		—		(66.9	)		(32.1	)		(26.8	)		—		(58.9	)		2.6			5.4			—			8.0
General and administrative expenses		—			—			—		(25.6	)		—			—			—		(24.4	)		—			—			—			1.2
Impairment charge		—			(1.7	)		—		(1.7	)		—			—			—		—			—			1.7			—			1.7
Gain on disposition of properties		—			14.1			—		14.1			—			5.1			—		5.1			—			9.0			—			9.0
Operating income		50.7			19.5			—		44.6			45.6			3.9			—		25.1			5.1			15.6			—			19.5
Interest income		—			—			6.2		6.2			—			—			10.5		10.5			—			—			(4.3	)		(4.3	)
Other income		0.3			6.6			—		6.9			—			—			—		—			(0.3	)		6.6			—			(6.9	)
Equity in earnings (losses) of unconsolidated affiliates		7.3			(0.2	)		—		7.1			5.2			1.9			—		7.1			2.1			(2.1	)		—			-
Interest expense		(20.9	)		(35.9	)		—		(56.7	)		(20.5	)		(30.4	)		—		(50.9	)		0.4			5.5			—			5.8
Income tax provision		—			—			—		(1.6	)		—			—			—		(0.9	)		—			—			—			(0.7	)
Net income		37.5			(10.0	)		6.2		6.5			30.3			(24.6	)		10.5		(9.0	)		7.2			14.6			(4.3	)		15.5
Net loss attributable to noncontrolling interests		0.6			24.5			—		25.2			0.2			33.1			—		33.3			0.4			(8.6	)		—			(8.1	)
Net income attributable to Acadia	$	38.1		$	14.6		$	6.2	$	31.7		$	30.5		$	8.5		$	10.5	$	24.3		$	7.6		$	6.1		$	(4.3	)	$	7.4

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Increase (Decrease)
Core Funds SF Total Core Funds SF Total Core Funds SF Total

Revenues $ 127.1
$ 57.1
$ —
$ 184.2
$ 109.2
$ 26.6
$ —
$ 135.8
$ 17.9
$ 30.5
$ —
$ 48.4
Depreciation and amortization (46.7 ) (30.5 ) —
(77.2 ) (37.6 ) (9.1 ) —
(46.7 ) 9.1
21.4
—
30.5
Property operating expenses, other operating and real estate taxes (33.3 ) (22.1 ) —
(55.4 ) (28.5 ) (9.3 ) —
(37.8 ) 4.8
12.8
—
17.6
Impairment of an asset —
(3.8 ) —
(3.8 ) —
—
—
—
—
3.8
—
3.8
General and administrative expenses —
—
—
(25.3 ) —
—
—
(30.7 ) —
—
—
(5.4 )
Operating income 47.1
0.6
—
22.4
43.1
8.2
—
20.5
4.0
(7.6 ) —
1.9
Gain on disposition of properties —
13.0
—
13.0
—
82.0
—
82.0
—
(69.0 ) —
(69.0 )
Interest income —
—
23.6
23.6
—
—
19.3
19.3
—
—
4.3
4.3
Equity in earnings of unconsolidated affiliates 2.3
18.7
—
21.0
2.7
0.9
—
3.6
(0.4 ) 17.8
—
17.4
Interest expense (20.8 ) (18.9 ) —
(39.7 ) (20.3 ) (4.6 ) —
(24.9 ) 0.5
14.3
—
14.8
Income tax provision —
—
—
(1.0 ) —
—
—
(0.1 ) —
—
—
(0.9 )
Net income 28.6
13.4
23.6
39.4
25.4
86.5
19.3
100.4
3.2
(73.1 ) 4.3
(61.0 )
Net (income) loss attributable to noncontrolling interests (1.2 ) 2.4
—
1.2
(2.8 ) (44.6 ) —
(47.4 ) (1.6 ) (47.0 ) —
(48.6 )
Net income attributable to Acadia $ 27.5
$ 15.7
$ 23.6
$ 40.6
$ 22.7
$ 41.8
$ 19.3
$ 53.0
$ 4.8
$ (26.1 ) $ 4.3
$ (12.4 )

Core Portfolio

Segment net income attributable to Acadia for our Core Portfolio increased ~~by $4.8~~$7.6 million for the nine months ended September 30, ~~2017~~2019 compared to the prior year period as a result of the changes as further described below.

Revenues ~~from~~for our Core Portfolio increased ~~by $17.9~~$8.4 million for the nine months ended September 30, ~~2017~~2019 compared to the prior year period primarily due to ~~property acquisitions in 2016 as well as~~$5.8 million from the ~~accrual~~write-off of ~~reimbursements in the current year period~~a below market lease related to a ~~real estate tax reassessment for certain properties for $1.8~~tenant that vacated in 2019, a $1.3 million ~~see below.~~

~~Depreciation and amortization for our~~related to Core ~~Portfolio increased by $9.1 million for the nine months ended September 30, 2017 compared to the prior year period due to~~ property acquisitions ~~in 2016.~~

and approximately $1.0 million from improved credit loss experience and recoveries.

Property operating expenses, other operating ~~expenses~~ and real estate taxes for our Core Portfolio increased ~~by $4.8~~$2.6 million for the nine months ended September 30, ~~2017 compared to the prior year period with $3.0 million due to property acquisitions in 2016 and $1.8 million due to an increased real estate tax reassessment for certain properties.~~



	46

~~Net income attributable to noncontrolling interests in our Core Portfolio decreased by~~ ~~$1.6 million~~ ~~for the nine months ended~~2019 compared to the prior year period primarily due to $1.3 million from a reduced real estate tax assessment at City Center in 2018 and $1.1 million from increased legal expenses in the ~~change~~portfolio in ~~control~~2019.

Equity in earnings of unconsolidated affiliates for our Core Portfolio increased $2.1 million for the ~~Brandywine Portfolio~~nine months ended September 30, 2019 compared to the prior year period due to $1.1 million from lease up at various joint ventures in 2019 along with $1.0 million from the conversion of a portion of a note receivable into increased ownership in real estate during ~~2016~~ (~~Note 4~~).

2018.

Funds

Segment net income attributable to Acadia for the Funds ~~decreased by $26.1~~increased $6.1 million for the nine months ended September 30, ~~2017~~2019 compared to the prior year period as a result of the changes described below.

Revenues ~~from~~for the Funds increased ~~by $30.5~~$19.2 million for the nine months ended September 30, ~~2017~~2019 compared to the prior year period due to $13.0 million from Fund property acquisitions in 2019 and 2018, $4.7 million from lease up at City Point and 938 W North, $2.2 million from the consolidation of the Broughton Street Portfolio and $2.5 million related to Cortlandt Crossing being placed into service. These increases were partially offset $1.8 million due to property sales in 2019 and $1.4 million from a write off of a below market lease related to a bankruptcy in 2018.

Depreciation and amortization for the Funds increased $5.4 million for the nine months ended September 30, 2019 compared to the prior year period due to Fund property acquisitions in 2019 and 2018.

Property operating expenses, other operating and real estate taxes for the Funds increased $5.4 million for the nine months ended September 30, 2019 compared to the prior year period due to Fund property acquisitions in 2019 and 2018.

The $1.7 million impairment charge in 2019 relates to residential condominium units at Fund IV’s 210 Bowery (Note 8).

Gain on disposition of properties for the Funds increased $9.0 million for the nine months ended September 30, 2019 compared to the prior year period due to the sale of 938 W North and JFK Plaza in Fund IV and Nostrand Avenue and 3104 M Street in Fund III during 2019 compared to the sales of Lake Montclair and 1861 Union in Fund IV in 2018. (Note 2, Note 4).

Other income for the Funds increased $6.6 million for the nine months ended September 30, 2019 compared to the prior year period due to $5.0 million from the New Market Tax Credit transaction at Fund II’s City Point investment (Note 7) and $1.6 million from an incentive fee earned from Fund III’s Storage investment.

Equity in earnings of unconsolidated affiliates for the Funds decreased $2.1 million for the nine months ended September 30, 2019 compared to the prior year period due to a $3.2 million distribution from Fund III’s Storage Post venture in 2018 (Note 4) offset by $1.1 million from the recognition of 100% of the net loss from the Broughton Street Portfolio venture in 2018 as our partner is no longer being allocated their share of the losses.

Interest expense for the Funds increased $5.5 million for the nine months ended September 30, 2019 compared to the prior year period due to a $4.9 million increase related to higher average outstanding borrowings in 2019, a $1.5 million increase related to higher average interest rates during 2019 and $1.4 million from higher loan cost amortization in 2019. These increases were partially offset by $2.4 million more interest capitalized in 2019.

Net loss attributable to noncontrolling interests for the Funds decreased $8.6 million for the nine months ended September 30, 2019 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above. Net loss attributable to noncontrolling interests in the Funds includes asset management fees earned by the Company of $13.2 million and $13.5 million for the nine months ended September 30, 2019 and 2018, respectively.

Structured Financing

Interest income for the Structured Financing portfolio decreased $4.3 million for the nine months ended September 30, 2019 compared to the prior year period due to the conversion of a portion of two notes receivable into increased ownership in the real estate (Note 4) during 2018 along with the payoff of a note made by Fund IV during 2019.

Unallocated

Unallocated general and administrative expense increased $1.2 million for the nine months ended September 30, 2019 compared to the prior year period primarily due to ~~$16.0 million from property acquisitions~~internal leasing salaries no longer being capitalized in ~~2016 and 2017 as well as $11.6 million from~~ ~~substantially all~~ ~~of the City Point development project being placed in service during 2017 (Note 2~~).

~~Depreciation and amortization for the Funds increased by $21.4 million for the nine months ended~~ ~~September 30, 2017~~ compared to the prior year period primarily due to $12.5 million from the acquisitions in 2016 and 2017 as well as $9.3 million from substantially all of the City Point development project being placed in service during 2017.

Property operating, other operating expenses and real estate taxes for the Funds increased by $12.8 million for the nine months ended September 30, 2017 compared to the prior year period due to acquisitions in 2016 and 2017 as well as ~~substantially all~~ ~~of the City Point development project being placed in service during 2017.~~

~~Impairment of an asset during the nine months ended September 30, 2017 was comprised of a $3.8 million charge related to a property classified as held for sale in 2017 (Note 8~~).

~~Gain on disposition of properties for the Funds decreased by~~ ~~$69.0 million~~ ~~for the nine months ended September 30, 2017 compared to the prior year period (Note 2~~). Gains during the current year period comprised $6.5 million from the sale of Fund II’s 216th Street and $6.4 million from the sale of Fund III’s New Hyde Park. Gains during the prior year period comprised $16.6 million from the sale of Fund III’s Heritage Shops and $65.4 million from the sale of a 65% interest in Cortlandt Town Center.

Equity in earnings of unconsolidated affiliates for the Funds increased by $17.8 million for the nine months ended September 30, 2017 compared to the prior year period primarily due to the Fund’s proportionate share of $11.5 million from the sales of 1701 Belmont Avenue, Arundel Plaza and 2819 Kennedy Boulevard during the current year period as well as distributions in excess of our carrying value related to investments in Mervyn’s and Albertsons (~~Note 4~~).

Interest expense for the Funds increased by $14.3 million for the nine months ended September 30, 2017 compared to the prior year period due to a $5.1 million increase related to higher average outstanding borrowings in 2017, a $4.6 million increase related to higher average interest rates in 2017, and $2.7 million less interest capitalized and a $1.9 million increase in amortization of additional loan costs in 2017.

~~Net income attributable to noncontrolling interests in the Funds decreased by~~ ~~$47.0 million~~ ~~for the nine months ended September 30, 2017 compared to the prior year period primarily due to the gain on disposition of properties discussed above.~~

~~Structured Financing~~

Interest income and segment net income attributable to Acadia from Structured Financing increased by $4.3 million for the nine months ended September 30, 2017 compared to the prior year period primarily due to the recognition of default interest of $3.6 million during the current year period on a past due note (~~Note 3) and new loans originated during 2016.~~

~~Unallocated~~

The Company does not allocate general and administrative expense and income taxes to its reportable segments. General and administrative expenses decreased by $5.4 million primarily as a result of the acceleration of equity-based compensation awards related to retirements as well as increased compensation expense in 2016, which included $3.0 million related to the Program (~~Note 13~~).

2019.

SUPPLEMENTAL FINANCIAL MEASURES

Net Property Operating Income



	47

The following discussion of net property operating income (“NOI”) and rent spreads on new and renewal leases includes the activity from both our consolidated and our pro-rata share of unconsolidated properties within our Core Portfolio. Our Funds invest primarily in properties that typically require significant leasing and development. Given that the Funds are finite-life investment vehicles, these properties are sold following stabilization. For these reasons, we believe NOI and rent spreads are not meaningful measures for our Fund investments.

NOI represents property revenues less property expenses. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriate supplemental disclosures of portfolio operating performance due to their widespread acceptance and use within the REIT investor and analyst communities. NOI and rent spreads on new and renewal leases are presented to assist investors in analyzing our property performance, however, our method of calculating these may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

A reconciliation of consolidated operating income to net operating income - Core Portfolio follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Consolidated operating income	$	21,265		$	12,055		$	44,559		$	25,088
Add back:
General and administrative		8,222			7,982			25,579			24,359
Depreciation and amortization		32,170			28,676			92,807			86,755
Impairment charge		321			—			1,721			—

Less:
Above/below market rent, straight-line rent and other adjustments		(4,338	)		(4,387	)		(16,970	)		(15,491	)
Gain on disposition of properties		(12,056	)		(5,107	)		(14,070	)		(5,140	)
Consolidated NOI		45,584			39,219			133,626			115,571

Noncontrolling interest in consolidated NOI		(13,157	)		(9,482	)		(38,217	)		(26,913	)
Less: Operating Partnership's interest in Fund NOI included above		(3,480	)		(2,477	)		(10,292	)		(6,938	)
Add: Operating Partnership's share of unconsolidated joint ventures NOI ^(a)		6,288			6,280			19,553			18,356
NOI - Core Portfolio	$	35,235		$	33,540		$	104,670		$	100,076

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Consolidated Operating Income $ 5,744
$ 1,254
$ 22,383
$ 20,541
Add back:
  General and administrative 7,953
12,869
25,286
30,742
  Impairment of an asset 3,840
—
3,840
—
  Depreciation and amortization 26,652
15,217
77,245
46,744
Less:
Above/below market rent, straight-line rent and other adjustments (4,728 ) —
(14,671 ) (5,900 )
Consolidated NOI 39,461
29,340
114,083
92,127

Noncontrolling interest in consolidated NOI (8,877 ) (3,400 ) (22,462 ) (15,600 )
Less: Operating Partnership's interest in Fund NOI included above (2,569 ) (900 ) (6,545 ) (3,400 )
Add: Operating Partnership's share of unconsolidated joint ventures NOI ^(a)
4,728
4,764
14,415
11,818
NOI - Core Portfolio $ 32,743
$ 29,804
$ 99,491
$ 84,945

~~__________~~

(a)
~~(a)~~	Does not include the Operating Partnership’s share of NOI from unconsolidated joint ventures within the ~~Funds~~Funds.

Same-Property NOI includes Core Portfolio properties that we owned for both the current and prior periods presented, but excludes those properties which we acquired, sold or expected to sell, and developed during these periods.



	48

The following table summarizes Same-Property NOI for our Core Portfolio (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Core Portfolio NOI	$	35,235		$	33,540		$	104,670		$	100,076
Less properties excluded from Same-Property NOI		(4,046	)		(3,286	)		(11,737	)		(10,844	)
Same-Property NOI	$	31,189		$	30,254		$	92,933		$	89,232

Percent change from prior year period		3.1	%					4.1	%

Components of Same-Property NOI:
Same-Property Revenues	$	41,678		$	42,056		$	125,893		$	121,990
Same-Property Operating Expenses		(10,489	)		(11,802	)		(32,960	)		(32,758	)
Same-Property NOI	$	31,189		$	30,254		$	92,933		$	89,232

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Core Portfolio NOI $ 32,743
$ 29,804
$ 99,491
$ 84,945
Less properties excluded from Same-Property NOI (7,090 ) (4,149 ) (23,159 ) (9,142 )
Same-Property NOI $ 25,653
$ 25,655
$ 76,332
$ 75,803

Percent change from prior year period — % 0.7 %

Components of Same-Property NOI:
Same-Property Revenues $ 34,454
$ 33,479
$ 103,706
$ 99,193
Same-Property Operating Expenses (8,801 ) (7,824 ) (27,374 ) (23,390 )
Same-Property NOI $ 25,653
$ 25,655
$ 76,332
$ 75,803

Rent Spreads on Core Portfolio New and Renewal Leases

The following table summarizes rent spreads on both a cash basis and straight-line basis for new and renewal leases based on leases executed within our Core Portfolio for the three and nine months ended September 30, ~~2017~~.2019. Cash basis represents a comparison of rent most recently paid on the previous lease as compared to the initial rent paid on the new lease. Straight-line basis represents a comparison of rents as adjusted for contractual escalations, abated rent and lease incentives for the same comparable leases.

	Three Months Ended September 30, 2019							Nine Months Ended September 30, 2019
Core Portfolio New and Renewal Leases	Cash Basis			Straight- Line Basis				Cash Basis			Straight- Line Basis
Number of new and renewal leases executed		17			17				33			33
GLA commencing		254,531			254,531				492,444			492,444
New base rent	$	22.96		$	24.17			$	17.08		$	17.80
Expiring base rent	$	21.97		$	20.37			$	16.32		$	15.43
Percent growth in base rent		4.5	%		18.7	%	��		4.7	%		15.4	%
Average cost per square foot ^(a)	$	7.87		$	7.87			$	5.18		$	5.18
Weighted average lease term (years)		8.4			8.4				7.0			7.0

Three Months Ended
September 30, 2017 Nine Months Ended
September 30, 2017

Core Portfolio New and Renewal Leases Cash Basis Straight-Line Basis Cash Basis Straight-Line Basis
Number of new and renewal leases executed 15
15
54
54
GLA commencing $ 61,254
$ 61,254
$ 399,149
$ 399,149
New base rent $ 22.02
$ 22.59
$ 23.47
$ 24.08
Expiring base rent $ 20.62
$ 19.79
$ 21.76
$ 20.54
Percent growth in base rent 6.8 % 14.1 % 7.9 % 17.2 %
Average cost per square foot $ 11.15
$ 11.15
$ 6.87
$ 6.87
Weighted average lease term (years) 6.9
6.9
5.1
5.1

~~__________~~

(a)
~~(a)~~	The average cost per square foot includes tenant improvement costs, leasing commissions and tenant allowances.

Funds from Operations

We consider funds from operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO is presented to assist investors in analyzing our performance. It is helpful as it excludes various items included in net income that are not indicative of the operating performance, such as gains (losses) from sales of depreciated property, depreciation and amortization, and impairment of depreciable real estate. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generated from operations as defined by generally accepted accounting principles (“GAAP”) and is not indicative of cash available to fund all cash needs, including distributions. It should not be considered as an alternative to net income for the purpose of evaluating our performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, we define FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.



	49

A reconciliation of net income attributable to Acadia to FFO follows (dollars in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands except per share data)	2019			2018			2019			2018
Net income attributable to Acadia	$	10,458		$	9,225		$	31,735		$	24,309

Depreciation of real estate and amortization of leasing costs (net of noncontrolling interests' share)		22,436			21,141			66,157			63,812
Impairment charge (net of noncontrolling interests' share)		74			—			395			—
Gain on disposition of properties (net of noncontrolling interests’ share)		(2,758	)		(994	)		(3,142	)		(994	)
Income attributable to Common OP Unit holders		649			596			2,031			1,572
Distributions - Preferred OP Units		135			135			405			404
Funds from operations attributable to Common Shareholders and Common OP Unit holders	$	30,994		$	30,103		$	97,581		$	89,103

Funds From Operations per Share - Diluted
Basic weighted-average shares outstanding, GAAP earnings		84,888,445			81,565,805			83,552,182			82,245,020
Weighted-average OP Units outstanding		5,082,189			4,928,636			5,139,545			4,953,549
Basic weighted-average shares outstanding, FFO		89,970,634			86,494,441			88,691,727			87,198,569
Assumed conversion of Preferred OP Units to common shares		499,345			499,345			499,345			499,345
Assumed conversion of LTIP units and restricted share units to common shares		212,776			257,658			212,776			201,675
Diluted weighted-average number of Common Shares and Common OP Units outstanding, FFO		90,682,755			87,251,444			89,403,848			87,899,589

Diluted Funds from operations, per Common Share and Common OP Unit	$	0.34		$	0.35		$	1.09		$	1.01

(dollars in thousands except per share data) Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income attributable to Acadia $ 12,867
$ 6,112
$ 40,558
$ 52,955

Depreciation of real estate and amortization of leasing costs (net of noncontrolling interests' share) 20,309
16,340
62,935
45,780
Impairment of an asset 1,088
—
1,088
—
Gain on sale (net of noncontrolling interests’ share) (2,294 ) —
(5,789 ) (19,257 )
Income attributable to Common OP Unit holders 758
370
2,400
3,334
Distributions - Preferred OP Units 138
6
415
417
Funds from operations attributable to Common Shareholders and Common OP Unit holders $ 32,866
$ 22,828
$ 101,607
$ 83,229

Funds From Operations per Share - Diluted
Basic weighted-average shares outstanding,
GAAP earnings 83,699,850
78,448,643
83,665,749
74,049,523
Weighted-average OP Units outstanding 4,736,815
4,343,460
4,749,057
4,421,816
Basic weighted-average shares outstanding, FFO 88,436,665
82,792,103
88,414,806
78,471,339
Assumed conversion of Preferred OP Units
to common shares 512,366
25,067
506,944
427,586
Assumed conversion of options, LTIP units and
restricted share units to common shares 51,143
346,105
77,392
239,264
Diluted weighted-average number of Common Shares
and Common OP Units outstanding, FFO 89,000,174
83,163,275
88,999,142
79,138,189

Diluted Funds from operations, per Common Share
and Common OP Unit $ 0.37
$ 0.27
$ 1.14
$ 1.05

LIQUIDITY AND CAPITAL RESOURCES

Uses of Liquidity and Cash Requirements

Our principal uses of liquidity are (i) distributions to our shareholders and OP unit holders, (ii) investments which include the funding of our capital committed to the Funds and property acquisitions and development/re-tenanting activities within our Core Portfolio, (iii) distributions to our Fund investors, ~~and~~ (iv) debt service and loan ~~repayments.~~

repayments and (v) share repurchases.

Distributions

In order to qualify as a REIT for ~~Federal~~federal income tax purposes, we must ~~currently~~ distribute at least 90% of our taxable income to our shareholders. During the nine months ended September 30, ~~2017,~~2019, we paid dividends and distributions on our Common Shares, Common OP Units and Preferred OP Units totaling ~~$77.8~~$74.9 million. This amount included a $13.3 million special dividend that was paid in January 2017, which related to the Operating Partnership’s share of cash proceeds from property distributions during 2016. The balance of the distribution was funded from the Operating Partnership’s share of operating cash flow.

Distributions of $6.3 million were made to noncontrolling interests in Fund III during the nine months ended September 30, 2017. These resulted from proceeds related to the dispositions of New Hyde Park Shopping Center (~~Note 2) and Arundel Plaza (Note 4~~).



	50

Investments in Real Estate

During the nine months ended September 30, ~~2017,~~2019, within our Core portfolio we invested in eight propertiesaggregating $93.2 million and within our Fund ~~portfolios~~portfolio we ~~acquired six~~invested in eight properties aggregating ~~$152.8~~$328.5 million as follows:

•

On January 24, 2019, our unconsolidated Renaissance portfolio venture acquired Fund III’s 3104 M Street property located in Washington, D.C. for $10.7 million (Note 4).

•

On March 15, March 27, May 29, and July 30, 2019, we acquired four retail condominiums located in the Soho section of New York City for a total of $74.7 million as part of a collection of seven properties referred to as the “Soho Acquisitions” with an aggregate purchase price of approximately $122.0 million (Note 2). The acquisitions of the remaining three properties are expected to be finalized through early 2020. No assurance can be given that we will successfully close on the remaining acquisitions under contract, which are subject to customary closing conditions.

•

On March 19, 2019, Fund V acquired ~~three consolidated properties totaling $105.2 million~~an interest in an unconsolidated suburban shopping center (Note 24);in Riverdale, Utah for $48.5 million.

•

On April 30, 2019, Fund V acquired an interest in an unconsolidated (Note 4) suburban shopping center in Vernon, Connecticut for $36.7 million.

•

On May 1, 2019, Fund IV acquired a ~~consolidated~~leasehold interest (Note 11) in a retail and parking condominium in a building in New York, New York for $10.5 million.

•

On May 2, 2019, we entered into a ground lease (Note 11) on a development property ~~for $35.4 million (Note 2~~);in Washington, D.C.


•	On May 6, 2019, Fund IVV acquired a ~~consolidated property~~suburban shopping center (Note 2) in ~~exchange~~Palm Coast, Florida for $36.6 million.

•

On June 21, 2019, Fund V acquired a suburban shopping center (Note 2) in Lincoln, Rhode Island for $54.3 million.

•

On August 2, Fund V acquired a suburban shopping center (Note 2) in Virginia Beach, Virginia for $87.0 million.

•

On August 21, Fund V acquired an interest in a two unconsolidated suburban shopping centers (Note 4) in Frederick County, Maryland for a ~~$9.2 million note receivable and accrued interest (Note 3); and~~total of $54.9 million.


•	~~In our Core portfolio, our Renaissance investment, in which we hold a 20% interest,~~ On September 11, we acquired two buildings (Note 2) in in Chicago, Illinois for a ~~$3.0 million property (Note 4~~). total of $7.8 million.

Capital Commitments

During the nine months ended September 30, ~~2017,~~2019, we made capital contributions ~~of $6.0~~aggregating $41.9 million to ~~Fund IV in connection with acquisitions and development costs. Capital contributed will be used by the Funds to acquire and operate real estate assets.~~our Funds. At September 30, ~~2017,~~2019, our share of the remaining capital commitments to our Funds aggregated ~~$149.9~~$77.0 million as follows:

•

$3.3 million to Fund III. Fund III was launched in May 2007 with total committed capital of $450.0 million, of which our original share was $89.6 million. During 2015, we acquired an additional interest, which had an original capital commitment of $20.9 million.

•

$21.3 million to Fund IV. Fund IV was launched in May 2012 with total committed capital of $530.0 million, of which our original share was $122.5 million.

•

$52.5 million to Fund V. Fund V was launched in August 2016 with total committed capital of $520.0 million, of which our initial share is $104.5 million.

During April 2018, a distribution was made to the Fund II ~~was launched in June 2004 with total committed capital of $300.0 million of which our share was $85.0 million, which has been fully funded.~~

~~$13.1~~investors, including $4.3 million to ~~Fund III. Fund III was launched in May 2007 with total committed capital of $450.0 million of~~the Operating Partnership, which ~~our original share was $89.6 million. During 2015, we acquired an additional interest, which had an original capital commitment of $20.9 million.~~

~~$32.2 million~~amount remains subject to re-contribution to Fund ~~IV. Fund IV was launched in May 2012 with total committed capital of $530.0 million of which our original share was $122.5 million.~~

~~$104.5 million to Fund V. Fund V was launched in August 2016 with total committed capital of $520.0 million of which our initial share is $104.5 million.~~

II until April 2021.

Development Activities

During the nine months ended September 30, ~~2017,~~2019, capitalized costs associated with development activities totaled ~~$84.6~~$23.0 million. ~~These costs primarily related to Fund II’s City Point project.~~ At September 30, ~~2017,~~2019, we had 13a total of eight consolidated properties under development ~~for which~~and redevelopment and the estimated total cost to complete these projects through 2020 was ~~$102.0~~$160.1 million to ~~$144.0~~$201.4 million and our estimated share was approximately ~~$34.1~~$95.5 million to ~~$46.0~~$117.4 million.

Debt

A summary of our consolidated debt, which includes the full amount of Fund related obligations and excludes our pro rata share of debt at our unconsolidated subsidiaries, is as follows (in thousands):

	September 30,			December 31,
	2019			2018
Total Debt - Fixed and Effectively Fixed Rate	$	1,236,805		$	1,001,658
Total Debt - Variable Rate		427,337			558,675
		1,664,142			1,560,333
Net unamortized debt issuance costs		(9,463	)		(10,541	)
Unamortized premium		676			753
Total Indebtedness	$	1,655,355		$	1,550,545

September 30, December 31,
2017 2016
Total Debt - Fixed and Effectively Fixed Rate $ 869,829
$ 860,484
Total Debt - Variable Rate 749,342
645,186
1,619,171
1,505,670
Net unamortized debt issuance costs (17,205 ) (18,288 )
Unamortized premium 881
1,336
Total Indebtedness $ 1,602,847
$ 1,488,718

As of September 30, ~~2017,~~2019, our consolidated outstanding mortgage and notes payable aggregated ~~$1,619.2~~$1,664.1 million, excluding unamortized premium of ~~$0.9~~$0.7 million and unamortized loan costs of ~~$17.2~~$9.5 million, and were collateralized by 4541 properties and related tenant leases. Interest rates on our outstanding indebtedness ranged from ~~1.00%~~3.40% to ~~5.89%~~6.00% with maturities that ranged from ~~October 15, 2017,~~December 9, 2019 to April 15, 2035. Taking into consideration ~~$454.8~~$696.5 million of notional principal under variable to fixed-rate swap agreements currently in effect, ~~$869.8~~$1,236.8 million of the portfolio debt, or ~~53.7%~~74.3%, was fixed at a ~~3.70%~~3.41% weighted-average interest rate and ~~$749.3~~$427.3 million, or ~~46.3%~~25.7% was floating at a ~~3.30%~~4.46% weighted average interest rate as of September 30, ~~2017.~~

2019. Our variable-rate debt includes $143.0 million of debt subject to interest rate caps.

There is ~~$173.0~~$120.5 million of debt maturing in ~~2017~~2019 at a weighted-average interest rate of ~~3.15%~~5.32%; there is ~~$1.7~~$1.3 million of scheduled principal amortization due in ~~2017;~~2019; and our share of scheduled remaining ~~2017~~2019 principal payments and maturities on our



	51

unconsolidated debt was ~~$5.9~~$0.3 million at September 30, ~~2017.~~2019. In addition, ~~$88.3~~$561.5 million of our total consolidated debt and ~~$2.2~~$10.1 million of our pro-rata share of unconsolidated debt will ~~become~~come due in ~~2018.~~2020. As it relates to the maturing debt in ~~2017~~2019 and ~~2018,~~2020, we may not have sufficient cash on hand to repay such indebtedness, and, therefore, we expect to refinance at least a portion of this indebtedness or select other alternatives based on market conditions as these loans mature; however, there can be no assurance that we will be able to obtain financing at acceptable terms.

A mortgage loan in the Company’s Core Portfolio for $26.3 million was in default and subject to litigation at September 30, 2019 and December 31, 2018 (Note 7).

Share Repurchase Program

During the nine months ended September 30, 2019, we made no repurchases under the share repurchase program (Note 10), under which $144.9 million currently remains available.

Sources of Liquidity

Our primary sources of capital for funding our liquidity needs include (i) the issuance of both public equity and OP Units, (ii) the issuance of both secured and unsecured debt, (iii) unfunded capital commitments from noncontrolling interests within our Funds, (iv) future sales of existing properties, (v) repayments of structured financing investments, and ~~(v)~~(vi) cash on hand and future cash flow from operating activities. Our cash on hand in our consolidated subsidiaries at September 30, ~~2017~~2019 totaled ~~$48.3~~$48.1 million. Our remaining sources of liquidity are described further below.

~~Issuance of Equity~~

ATM Program

We have an ~~at-the-market (“ATM”~~ATM Program (Note 10) ~~equity issuance program~~ which provides us an efficient and low-cost vehicle for raising public equity to fund our capital needs. Through this program, we have been able to effectively “match-fund” the required equity for our Core Portfolio and Fund acquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time, we have issued and intend to continue to issue, equity in follow-on offerings separate from our ATM ~~program.~~Program. Net proceeds raised through our ATM ~~program~~Program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions, and for general

corporate purposes. ~~There were no issuances of equity under~~During the ~~ATM program during the nine~~three months ended September 30, ~~2017.~~

~~Fund Capital~~

2019, the Company sold 2,149,154 shares under its ATM Program for gross proceeds of $61.6 million, or $60.6 million net of issuance costs, at a weighted-average gross price per share of $28.64. During the nine months ended September 30, ~~2017, noncontrolling interest~~2019, the Company sold 4,816,505 shares under its ATM Program for gross proceeds of $137.8 million, or $135.8 million net of issuance costs, at a weighted-average gross price per share of $28.61.

Fund Capital

During the nine months ended September 30, 2019, Funds III, IV and V called capital contributions ~~to Fund IV~~ of ~~$20.1~~$12.5 million, ~~were primarily used to fund recent acquisitions~~$17.3 million and ~~development activities.~~$173.5 million, respectively, of which our aggregate share was $41.9 million. At September 30, ~~2017,~~2019, unfunded capital commitments from noncontrolling interests within our Funds III, IV and V were ~~$40.2~~$10.3 million, ~~$107.1~~$70.6 million and ~~$415.5~~$208.9 million, respectively.

Asset Sales

As previously discussed, during the nine months ended September 30, 2019 the Funds made the following dispositions:

•

On July 24, 2019, Fund IV sold its JFK Plaza property (Note 2) for $7.8 million.

•

On August 22, 2019, Fund III sold its Nostrand Avenue property (Note 2) for $27.7 million.

•

On May 17 and September 23, 2019, Fund IV sold two residential condominium units for a total of $5.9 million.

•

On September 27, 2019 Fund IV sold its 938 W. North Street property (Note 2) for $32.0 million.

We recognized an aggregate net gain on the sales of these consolidated properties of $14.1 million, for which our share was $3.1 million net of noncontrolling interests.

Structured Financing Repayments

During the nine months ended September 30, 2017, within our Fund portfolio we sold two consolidated and three unconsolidated properties for an aggregate sales price of $106.1 million and recognized aggregate gains of $30.7 million as follows (Note 2, ~~Note 4~~):

Fund II sold a consolidated property, 216th Street, for $30.6 million for which the gain was $6.5 million, of which our proportionate share was $1.8 million, net of amounts attributable to noncontrolling interests.

Fund III sold a consolidated property, New Hyde Park Shopping Center, for $22.1 million for which the gain was $6.4 million, of which our proportionate share was $1.6 million, net of amounts attributable to noncontrolling interests.

~~Fund III sold its Arundel Plaza property for $28.8 million and recognized a gain on disposition of properties of $8.2 million of which our proportionate share was $1.3 million;~~

2019, Fund IV ~~sold~~received full payment of $15.3 million plus accrued interest of $10.0 million on its ~~2819 Kennedy Boulevard property for $19.0 million and recognized a gain of $6.3 million of which our proportionate share was $1.4 million; and~~

~~Fund IV sold its 1701 Belmont Avenue property for $5.6 million and recognized a gain of $3.3 million of which our proportionate share was $0.8 million.~~

Structured Financing ~~Repayments~~

~~There~~investment. Notes receivable aggregating $38.7 million are no scheduled ~~principal collections on our structured financing portfolio (Note 3) for~~to be redeemed or converted during the remainder of ~~2017.~~

2019.

Financing and Debt

As of September 30, ~~2017,~~2019, we had ~~$126.1~~$150.8 million of additional capacity under existing Core and Fund revolving debt facilities. In addition, at that date within our Core and Fund portfolios, we had 6578 unleveraged consolidated properties with an aggregate carrying value of approximately ~~$1.4~~$1.5 billion and 26one unleveraged unconsolidated ~~properties~~property for which our share of the carrying value was ~~$94.0~~$99.1 million, although there can be no assurance that we would be able to obtain financing for these properties at favorable terms, if at all.



	52

HISTORICAL CASH FLOW

The following table compares the historical cash flow for the nine months ended September 30, ~~2017~~2019 with the cash flow for the nine months ended September 30, ~~2016~~2018 (in millions):

	Nine Months Ended September 30,
	2019			2018			Variance
Net cash provided by operating activities	$	95.2		$	67.2		$	28.0
Net cash used in investing activities		(359.6	)		(76.3	)		(283.3	)
Net cash provided by (used in) financing activities		290.6			(54.5	)		345.1
Increase (decrease) in cash and restricted cash	$	26.2		$	(63.6	)	$	89.8

Nine Months Ended September 30,
2017 2016 Variance
Net cash provided by operating activities $ 84.4
$ 56.5
$ 27.9
Net cash used in investing activities (146.3 ) (375.7 ) 229.4
Net cash provided by financing activities 38.3
295.7
(257.4 )
(Decrease) increase in cash and cash equivalents $ (23.6 ) $ (23.5 ) $ (0.1 )

Operating Activities

Our operating activities provided ~~$27.9~~$28.0 million more cash during the nine months ended September 30, ~~2017, primarily due to additional cash flow from 2016 and 2017 Core and Fund acquisitions.~~

~~Investing Activities~~

~~During the nine months ended September 30, 2017~~2019 as compared to the nine months ended September 30, ~~2016,~~2018, primarily due to property acquisitions along with $10.0 million from the collection of accrued interest on a note receivable.

Investing Activities

During the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018, our investing activities used ~~$229.4~~$283.3 million ~~less~~more cash, primarily due to (i) ~~$162.3~~$152.4 million more cash used in acquisition of properties, (ii) $150.8 million more cash used in investments in unconsolidated affiliates, (iii) $10.8 million less cash ~~used for the acquisition of real estate, (ii) $137.8 million less cash used for the issuance~~received from repayments of notes receivable ~~(iii) $63.6~~and (iv) $11.4 million ~~less~~more cash used ~~for investments and advances to unconsolidated investments, and (iv) $9.9 million less cash used for~~in development, construction and property improvement costs. These ~~items~~uses of cash were partially offset by (i) ~~$77.7~~$27.4 million ~~less~~more cash received from ~~the~~ disposition of properties ~~including unconsolidated affiliates,~~and (ii) ~~$38.3~~$14.6 million ~~less~~more cash received from return of capital from unconsolidated ~~affiliates, and (iii) $30.8 million less cash received from repayments of notes receivable.~~

affiliates.

Financing Activities

Our financing activities provided ~~$257.4~~$345.1 million ~~less~~more cash during the nine months ended September 30, ~~2017,~~2019 as compared to the nine months ended September 30, 2018, primarily from (i) ~~$357.3~~$135.8 million ~~less~~more cash received from the ~~issuance~~sale of Common Shares, ~~and~~ (ii) ~~a decrease in~~an increase of $114.6 million of cash ~~of $183.9 million~~provided from ~~capital~~ contributions from noncontrolling ~~interests. These items were partially offset by (i) an increase of $236.4~~interests, (iii) $55.6 million ofmore cash provided from net borrowings, and ~~(ii) a decrease~~(iv) $55.1 million less cash used to repurchase Common Shares. These sources of ~~$61.8~~cash were partially offset by $10.2 million more cash used in ~~cash~~ distributions to noncontrolling interests.

CONTRACTUAL OBLIGATIONS

The following table summarizes: (i) principal and interest obligations under mortgage and other notes, (ii) rents due under non-cancelable operating and capital leases, which includes ground leases at seven of our properties and the lease for our corporate office and (iii) construction commitments as of September 30, ~~2017~~2019 (in millions):

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
Principal obligations on debt	$	1,664.1	$	613.4	$	395.5	$	456.0	$	199.2
Interest obligations on debt		238.8		71.7		85.0		39.3		42.8
Lease obligations ^(a)		365.0		1.8		14.2		14.2		334.8
Construction commitments^(b)		42.9		42.9		—		—		—
Total	$	2,310.8	$	729.8	$	494.7	$	509.5	$	576.8

Payments Due by Period
Contractual Obligations Total Less than
1 Year 1 to 3
Years 3 to 5
Years More than
5 Years
Principal obligations on debt $ 1,619.2
$ 261.6
$ 770.9
$ 335.6
$ 251.1
Interest obligations on debt 228.9
61.2
99.2
36.7
31.9
Lease obligations ^(a)
207.7
4.5
8.9
8.5
185.8
Construction commitments ^(b)
93.1
93.1
—
—
—
Total $ 2,148.9
$ 420.4
$ 879.0
$ 380.8
$ 468.8

~~__________~~

(a)
~~(a)~~	A ground lease expiring during 2078 provides the Company with an option to purchase the underlying land during 2031. If we do not exercise the option, the rents that will be due are based on future values and as such are not determinable at this time. Accordingly, the above table does not include rents for this lease beyond ~~2031.~~2020.

(b)
~~(b)~~	In conjunction with the development of our Core Portfolio and Fund properties, we have entered into construction commitments with general contractors. We intend to fund these requirements with existing liquidity.



	53

OFF-BALANCE SHEET ARRANGEMENTS

We have the following investments made through joint ventures for the purpose of investing in operating properties. We account for these investments using the equity method of accounting. As such, our financial statements reflect our investment and our share of income and loss from, but not the individual assets and liabilities, of these joint ventures.

See Note 4 in the Notes to Consolidated Financial Statements, for a discussion of our unconsolidated investments. The Operating Partnership’s pro-rata share of unconsolidated non-recourse debt related to those investments is as follows (dollars in millions):

	Operating Partnership					September 30, 2019
Investment	Ownership Percentage			Pro-rata Share of Mortgage Debt		Interest Rate			Maturity Date
650 Bald Hill		20.8	%	$	3.5		4.74	%	Apr 2020
Eden Square ^(a)		22.8	%		5.6		4.24	%	Jun 2020
Promenade at Manassas ^(b)		22.8	%		5.9		3.84	%	Dec 2021
3104 M Street		20.0	%		0.9		5.75	%	Dec 2021
Family Center at Riverdale ^(c)		18.0	%		5.8		3.79	%	May 2022
Gotham Plaza ^(d)		49.0	%		9.6		3.69	%	Jun 2023
Renaissance Portfolio		20.0	%		32.0		3.79	%	Aug 2023
Crossroads		49.0	%		32.0		3.94	%	Oct 2024
840 N. Michigan		88.4	%		65.0		4.36	%	Feb 2025
Georgetown Portfolio		50.0	%		8.0		4.72	%	Dec 2027
Total				$	168.3

(a)	Our unconsolidated affiliate is a party to two interest rate LIBOR caps. One of the interest rate LIBOR caps effectively fixes the interest rate at 3.00%. The second interest rate LIBOR cap effectively fixes the interest rate at 3.85%.

(b)	Our unconsolidated affiliate is a party to an interest rate LIBOR swap, which effectively fixes the all-in interest rate at 4.57%.

Operating
Partnership
Ownership Percentage

Operating
Partnership
Pro-rata Share of Mortgage Debt

Investment Interest Rate at September 30, 2017 Maturity Date
Promenade at Manassas 22.8 % $ 5.7
2.93 % November 2017
230/240 W. Broughton 11.6 % 1.2
4.23 % May 2018
Eden Square 22.8 % 5.1
3.38 % June 2020
650 Bald Hill 22.8 % 1.5
3.88 % April 2020
Gotham Plaza 49.0 % 10.1
2.83 % June 2023
Renaissance Portfolio 20.0 % 32.0
2.93 % August 2023
Crossroads 49.0 % 33.1
3.94 % October 2024
840 N. Michigan 88.4 % 65.0
4.23 % February 2025
Georgetown Portfolio 50.0 % 8.5
4.72 % December 2027
Total $ 162.2

(c)	Our unconsolidated affiliate is a party to an interest rate LIBOR swap, which effectively fixes the all-in interest rate at 3.68%.

(d)	Our unconsolidated affiliate is a party to an interest rate LIBOR swap, which effectively fixes the all-in interest rate at 5.09%.

~~One of our unconsolidated affiliates is a party to an interest rate LIBOR swap with a notional value of $20.6 million, which effectively fixes the interest rate at 3.49% and matures in June 2023.~~

CRITICAL ACCOUNTING POLICIES

Management’s discussion and analysis of financial condition and results of operations is based upon our ~~consolidated financial statements,~~Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these ~~consolidated financial statements~~Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. ~~Management bases its~~We base our estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about ~~the~~ carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe there have been no material changes to the items that we disclosed as our critical accounting policies under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our ~~2016~~2018 Annual Report on Form 10-K.

Recently Issued and Adopted Accounting Pronouncements

Reference is made to Note 1 for information about recently issued accounting pronouncements.



	54


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Information as ofSeptember 30, ~~2017~~

2019

Our primary market risk exposure is to changes in interest rates related to our mortgage and other debt. See Note 7 in the Notes to Consolidated Financial Statements, for certain quantitative details related to our mortgage and other debt.

Currently, we manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap and cap agreements. As of September 30, ~~2017,~~2019, we had total mortgage and other notes payable of ~~$1,619.2~~$1,664.1 million, excluding the unamortized premium of ~~$0.9~~$0.7 million and unamortized ~~loan~~debt issuance costs of ~~$17.2~~$9.5 million, of which ~~$869.8~~$1,236.8 million, or ~~53.7%~~74.3% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and ~~$749.3~~$427.3 million, or ~~46.3%~~25.7%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of September 30, ~~2017,~~2019, we were party to 2634 interest rate swap and four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to ~~$454.8~~$696.5 million and ~~$196.4~~$143.0 million of LIBOR-based variable-rate debt, respectively.

The following table sets forth information as of September 30, ~~2017~~2019 concerning our long-term debt obligations, ~~on a pro-rata share basis,~~ including principal cash flows by scheduled maturity and weighted average interest rates of maturing amounts (dollars in millions):

Core Consolidated Mortgage and Other Debt

Year	Scheduled Amortization		Maturities		Total		Weighted-Average Interest Rate
2019 (Remainder)	$	0.8	$	26.2	$	27.0		6.0	%
2020		3.2		—		3.2		—	%
2021		3.4		—		3.4		—	%
2022		3.5		—		3.5		—	%
2023		2.9		367.8		370.7		3.4	%
Thereafter		15.4		185.3		200.7		3.9	%
	$	29.2	$	579.3	$	608.5

Year Scheduled
Amortization Maturities Total Weighted-Average
Interest Rate
2017 (Remainder) $ 1.0
$ 5.8
$ 6.8
6.0 %
2018 3.2
40.1
43.3
2.9 %
2019 3.1
—
3.1
— %
2020 3.3
109.0
112.3
2.6 %
2021 3.4
200.0
203.4
2.5 %
Thereafter 20.9
202.7
223.6
3.6 %
$ 34.9
$ 557.6
$ 592.5

Fund Consolidated Mortgage and Other Debt

Year	Scheduled Amortization		Maturities		Total		Weighted-Average Interest Rate
2019 (Remainder)	$	0.5	$	94.3	$	94.8		5.1	%
2020		2.0		556.3		558.3		4.3	%
2021		1.6		235.7		237.3		4.2	%
2022		1.5		86.4		87.9		4.3	%
2023		0.7		40.9		41.6		3.6	%
Thereafter		0.1		35.6		35.7		3.9	%
	$	6.4	$	1,049.2	$	1,055.6

Year Scheduled
Amortization Maturities Total Weighted-Average
Interest Rate
2017 (Remainder) $ 0.2
$ 35.8
$ 36.0
2.6 %
2018 0.6
13.0
13.6
3.8 %
2019 0.6
52.0
52.6
4.0 %
2020 0.5
112.4
112.9
4.1 %
2021 0.4
12.0
12.4
3.7 %
Thereafter 0.1
16.2
16.3
3.1 %
$ 2.4
$ 241.4
$ 243.8

Mortgage Debt in Unconsolidated Partnerships (at our Pro-Rata Share)

Year	Scheduled Amortization		Maturities		Total		Weighted-Average Interest Rate
2019 (Remainder)	$	0.3	$	—	$	0.3		0.0	%
2020		1.1		9.0		10.1		4.4	%
2021		1.1		6.8		7.9		4.1	%
2022		1.2		5.8		7.0		3.8	%
2023		1.0		40.6		41.6		3.8	%
Thereafter		1.6		99.8		101.4		4.3	%
	$	6.3	$	162.0	$	168.3

Scheduled
Amortization Maturities Total Weighted-Average
Interest Rate
2017 (Remainder) $ 0.2
$ 5.7
$ 5.9
2.6 %
2018 1.0
1.2
2.2
4.2 %
2019 1.0
—
1.0
— %
2020 1.6
6.4
8.0
2.2 %
2021 1.1
—
1.1
— %
Thereafter 3.7
140.3
144.0
3.9 %
$ 8.6
$ 153.6
$ 162.2



	55

~~During the remainder of 2017, $174.7~~

In 2019, $121.8 million of our total consolidated debt and ~~$5.9~~$0.3 million of our pro-rata share of unconsolidated outstanding debt will become due. In addition, ~~$88.3~~$561.5 million of our total consolidated debt and ~~$2.2~~$10.1 million of our pro-rata share of unconsolidated debt will become due in ~~2018.~~2020. As we intend on refinancing some or all of such debt at the then-existing market interest rates, which may be greater than the current interest rate, our interest expense would increase by approximately ~~$2.6~~$6.9 million annually if the interest rate on the refinanced debt increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be ~~$1.0~~$1.6 million. Interest expense on our variable-rate debt of ~~$749.3~~$427.3 million, net of variable to fixed-rate swap agreements currently in effect, as of September 30, ~~2017,~~2019, would increase ~~$7.5~~$4.3 million if LIBOR increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be ~~$2.2~~$0.8 million. We may seek additional variable-rate financing if and when pricing and other commercial and financial terms warrant. As such, we would consider hedging against the interest rate risk related to such additional variable-rate debt through interest rate swaps and protection agreements, or other means.

Based on our outstanding debt balances as of September 30, ~~2017,~~2019, the fair value of our total consolidated outstanding debt would decrease by approximately ~~$17.5~~$12.2 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding debt would increase by approximately ~~$19.6~~$14.5 million.

As of September 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, we had consolidated notes receivable of ~~$250.2~~$94.8 million and ~~$276.2~~$109.6 million, respectively. We determined the estimated fair value of our notes receivable by discounting future cash receipts utilizing a discount rate equivalent to the rate at which similar notes receivable would be originated under conditions then existing.

Based on our outstanding notes receivable balances as of September 30, ~~2017,~~2019, the fair value of our total outstanding notes receivable would decrease by approximately ~~$3.5~~$0.5 million if interest rates increase by 1%. Conversely, if interest rates decrease by 1%, the fair value of our total outstanding notes receivable would increase by approximately ~~$3.7~~$0.5 million.

Summarized Information as of December 31, ~~2016~~

2018

As of December 31, ~~2016,~~2018, we had total mortgage and other notes payable of ~~$1,505.7~~$1,560.3 million, excluding the unamortized premium of ~~$1.3~~$0.8 million and unamortized ~~loan~~debt issuance costs of ~~$18.3~~$10.5 million, of which ~~$860.5~~$1,001.7 million, or ~~57.1%~~64.2% was fixed-rate, inclusive of ~~interest rate swaps,~~debt with rates fixed through the use of derivative financial instruments, and ~~$645.2~~$558.7 million, or ~~42.9%~~35.8%, was variable-rate based upon LIBOR or Prime rates plus certain spreads. As of December 31, ~~2016,~~2018, we were party to 1829 interest rate swap and ~~four~~three interest rate cap agreements to hedge our exposure to changes in interest rates with respect to ~~$365.3~~$609.9 million and ~~$196.4~~$143.8 million of LIBOR-based variable-rate debt, respectively.

Interest expense on our variable-rate debt of ~~$645.2~~$558.7 million as of December 31, ~~2016,~~2018, would have increased ~~$6.5~~$5.6 million if LIBOR increased by 100 basis points. Based on our outstanding debt balances as of December 31, ~~2016,~~2018, the fair value of our total outstanding debt would have decreased by approximately ~~$20.3~~$13.5 million if interest rates increased by 1%. Conversely, if interest rates decreased by 1%, the fair value of our total outstanding debt would have increased by approximately ~~$22.8~~$14.7 million.

Changes in Market Risk Exposures from ~~2016~~December 31, 2018 to ~~2017~~

September 30, 2019

Our interest rate risk exposure from December 31, ~~2016,~~2018, to September 30, ~~2017,~~2019, has ~~increased~~decreased on an absolute basis, as the ~~$645.2~~$558.7 million of variable-rate debt as of December 31, ~~2016,~~2018, has ~~increased~~decreased to ~~$749.3~~$427.3 million as of September 30, ~~2017.~~2019. As a percentage of our overall debt, our interest rate risk exposure has ~~increased~~decreased as our variable-rate debt accounted for ~~42.9%~~35.8% of our consolidated debt as of December 31, ~~2016, and was increased~~2018 compared to ~~46.3%~~25.7% as of September 30, ~~2017.~~

2019.


ITEM 4.	CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

~~Disclosure Controls and Procedures~~

Our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Exchange Act, is recorded, processed, summarized, and reported within the required time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls. Our chief executive officer and chief financial officer, after conducting an evaluation, together with members of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, ~~2017,~~2019, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of September 30, ~~2017,~~2019, at a reasonable level of assurance.



	56

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART ~~II—~~II–OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS.

We are involved in various matters of litigation arising out of, or incident to, our business, including the litigation described in ~~the normal course of business.~~Note 7. While we are unable to predict with certainty the outcome of any particular matter, ~~Management is of the opinion that,~~management does not expect, when such litigation is resolved, that our resulting exposure to loss contingencies, if any, will ~~not~~ have a ~~significant~~material adverse effect on our consolidated financial ~~position, results of operations, or liquidity.~~

position.


ITEM 1A.	RISK FACTORS.

The most significant risk factors applicable to us are described in Item 1A. of our ~~2016~~2018 Annual Report on Form 10-K. There have been no material changes to those previously-disclosed risk factors.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

~~None.~~


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.

Not applicable.


ITEM 4.	MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.

OTHER INFORMATION.

Not applicable.

~~Not applicable.~~

ITEM 6.
~~ITEM 5.~~	~~OTHER INFORMATION.~~ EXHIBITS.

~~None.~~


~~ITEM 6.~~	~~EXHIBITS.~~

The following is an index to all exhibits including (i) those filed with this Quarterly Report on Form 10-Q and (ii) those incorporated by reference herein:



	57



Exhibit No.	~~Description~~	Description	Method of Filing
~~3.1~~ 10.1	~~Sixth~~	Second Amendment dated October 8, 2019 to ~~the Declaration of Trust~~Acadia Realty Limited Partnership Credit Agreement dated ~~July 24, 2017.~~February 20, 2018	Incorporated by reference to ~~exhibit 3.1~~the copy thereof filed as Exhibit 10.01 to the Company's Current Report on Form 8-K filed ~~July 28, 2017.~~ on October 11, 2019.
~~31.1~~
10.2		Second Amended and Restated Limited Partnership Agreement dated July 23, 2019	Incorporated by reference to the copy thereof filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on July 25, 2019.

31.1		Certification of Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
~~31.2~~
31.2		Certification of Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
~~32.1~~
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
~~32.2~~
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
~~101.INS~~
101.INS		XBRL Instance Document– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	Filed herewith
~~101.SCH~~
101.SCH		XBRL Taxonomy Extension Schema Document	Filed herewith
~~101.CAL~~
101.CAL		XBRL Taxonomy Extension Calculation Document	Filed herewith
~~101.DEF~~
101.DEF		XBRL Taxonomy Extension Definitions Document	Filed herewith
~~101.LAB~~
101.LAB		XBRL Taxonomy Extension Labels Document	Filed herewith
~~101.PRE~~
101.PRE		XBRL Taxonomy Extension Presentation Document	Filed herewith

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)	Filed herewith



	58

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the ~~Securities~~ Exchange Act, ~~of 1934,~~ the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.



		ACADIA REALTY TRUST
		(Registrant)

By:	~~By:~~	/s/ Kenneth F. Bernstein
		Kenneth F. Bernstein
		Chief Executive Officer,
		President and Trustee

By:	~~By:~~	/s/ John Gottfried
		John Gottfried
		Senior Vice President and
		Chief Financial Officer

By:	~~By:~~	/s/ Richard Hartmann
		Richard Hartmann
		Senior Vice President and
		Chief Accounting Officer

Dated: ~~November 3, 2017~~



	59

October 24, 2019



	September 30, 2017			December 31, 2016
(dollars in thousands, except per share amounts)	September 30, 2017			December 31, 2016
ASSETS	(Unaudited)
Investments in real estate, at cost
Operating real estate, net	$	2,905,000		$	2,551,448
Real estate under development, at cost	237,434			543,486
Net investments in real estate	3,142,434			3,094,934
Notes receivable, net	250,194			276,163
Investments in and advances to unconsolidated affiliates	270,245			272,028
Other assets, net	213,018			192,786
Cash and cash equivalents	48,255			71,805
Rents receivable, net	53,479			43,842
Restricted cash	19,473			22,904
Assets of properties held for sale	95,859			21,498
Total assets	$	4,092,957		$	3,995,960

LIABILITIES
Mortgage and other notes payable, net	$	1,045,877		$	1,055,728
Unsecured notes payable, net	497,970			432,990
Unsecured line of credit	59,000			—
Accounts payable and other liabilities	211,206			208,672
Capital lease obligation	70,498			70,129
Dividends and distributions payable	23,350			36,625
Distributions in excess of income from, and investments in, unconsolidated affiliates	15,262			13,691
Total liabilities	1,923,163			1,817,835
Commitments and contingencies
EQUITY
Acadia Shareholders' Equity
Common shares, $0.001 par value, authorized 200,000,000 and 100,000,000 shares, issued and outstanding 83,680,337 and 83,597,741 shares, respectively	84			84
Additional paid-in capital	1,594,332			1,594,926
Accumulated other comprehensive loss	(553		)	(798		)
Distributions in excess of accumulated earnings	(30,325		)	(5,635		)
Total Acadia shareholders’ equity	1,563,538			1,588,577
Noncontrolling interests	606,256			589,548
Total equity	2,169,794			2,178,125
Total liabilities and equity	$	4,092,957		$	3,995,960



	Nine Months Ended September 30,
(in thousands)	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	39,364		$	100,356
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposition of properties	(12,972		)	(81,965		)
Depreciation and amortization	77,245			46,744
Distributions of operating income from unconsolidated affiliates	7,412			4,917
Equity in earnings and gains of unconsolidated affiliates	(21,044		)	(3,592		)
Stock compensation expense	9,129			9,729
Amortization of financing costs	3,996			2,025
Impairment of asset	3,840			—
Other, net	(8,435		)	(5,577		)
Changes in assets and liabilities:
Other liabilities	(1,556		)	134
Prepaid expenses and other assets	(8,723		)	(11,642		)
Rents receivable, net	(6,646		)	(4,858		)
Restricted cash	3,538			1,733
Accounts payable and accrued expenses	(736		)	(1,511		)
Net cash provided by operating activities	84,412			56,493
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate	(138,429		)	(292,136		)
Development and property improvement costs	(84,554		)	(94,459		)
Issuance of or advances on notes receivable	(10,449		)	(148,203		)
Proceeds from the disposition of properties	47,025			150,379
Investments in and advances to unconsolidated affiliates	(4,555		)	(68,153		)
Return of capital from unconsolidated affiliates	12,300			50,622
Proceeds from notes receivable	12,000			42,819
Deposits for properties under contract	—			(8,576		)
Proceeds from disposition of properties of unconsolidated affiliates	25,735			—
Payment of deferred leasing costs	(5,381		)	(5,451		)
Change in control of previously consolidated affiliate	—			(2,578		)
Net cash used in investing activities	(146,308		)	(375,736		)



Entity	Formation Date	Operating Partnership Share of Capital	Capital Called as of September 30, 2017		Unfunded Commitment		Equity Interest Held By Operating Partnership ^(a)	Preferred Return	Total Distributions as of September 30, 2017 ^(b)
Fund II and Mervyns II	6/2004	28.33%	$	347.1	$	—	28.33%	8%	$	131.6
Fund III	5/2007	24.54%	396.7		53.3		39.63%	6%	553.7
Fund IV	5/2012	23.12%	390.7		139.3		23.12%	6%	101.9
Fund V	8/2016	20.10%	—		520.0		20.10%	6%	—



Property and Location	Percent Acquired	Date of Acquisition	Purchase Price		Debt Assumed
2017 Acquisitions
Fund IV:
Lincoln Place - Fairview Heights, IL	100%	Mar 13, 2017	$	35,350	$	—
Shaw's Plaza - Windham, ME (Note 3)	100%	Jun 30, 2017	9,142		—
Subtotal Fund IV			44,492		��

Fund V:
Plaza Santa Fe - Santa Fe, NM	100%	Jun 5, 2017	35,220		—
Hickory Ridge - Hickory, NC	100%	Jul 27, 2017	44,020		—
New Towne Plaza - Canton, MI	100%	Aug 4, 2017	26,000		—
Subtotal Fund V			105,240		—
Total 2017 Acquisitions			$	149,732	$	—

2016 Acquisitions
Core Portfolio:
991 Madison Avenue - New York, NY ^(a)	100%	Mar 26, 2016	$	76,628	$	—
165 Newbury Street - Boston, MA	100%	May 13, 2016	6,250		—
Concord & Milwaukee - Chicago, IL	100%	Jul 28, 2016	6,000		2,902
151 North State Street - Chicago, IL	100%	Aug 10, 2016	30,500		14,556
State & Washington - Chicago, IL	100%	Aug 22, 2016	70,250		25,650
North & Kingsbury - Chicago, IL	100%	Aug 29, 2016	34,000		13,409
Sullivan Center - Chicago, IL	100%	Aug 31, 2016	146,939		—
California & Armitage - Chicago, IL	100%	Sep 12, 2016	9,250		2,692
555 9th Street - San Francisco, CA	100%	Nov 2, 2016	139,775		60,000
Subtotal Core Portfolio			519,592		119,209

Fund IV:
Restaurants at Fort Point - Boston, MA	100%	Jan 14, 2016	11,500		—
1964 Union Street - San Francisco, CA^(a)	90%	Jan 28, 2016	2,250		1,463
Wake Forest Crossing - Wake Forest, NC	100%	Sep 27, 2016	36,600		—
Airport Mall - Bangor, ME	100%	Oct 28, 2016	10,250		—
Colonie Plaza - Albany, NY	100%	Oct 28, 2016	15,000		—
Dauphin Plaza - Harrisburg, PA	100%	Oct 28, 2016	16,000		—
JFK Plaza - Waterville, ME	100%	Oct 28, 2016	6,500		—
Mayfair Shopping Center - Philadelphia, PA	100%	Oct 28, 2016	16,600		—
Shaw's Plaza - Waterville, ME	100%	Oct 28, 2016	13,800		—
Wells Plaza - Wells, ME	100%	Oct 28, 2016	5,250		—
717 N Michigan - Chicago, IL	100%	Dec 1, 2016	103,500		—
Subtotal Fund IV			237,250		1,463
Total 2016 Acquisitions			$	756,842	$	120,672



	Nine Months Ended September 30, 2017			Year Ended December 31, 2016
	Nine Months Ended September 30, 2017			Year Ended December 31, 2016
Net Assets Acquired:
Land	$	21,917		$	225,729
Buildings and improvements	104,729			458,525
Other assets	—			3,481
Acquisition-related intangible assets (in Acquired lease intangibles, net)	31,378			63,606
Acquisition-related intangible liabilities (in Acquired lease intangibles, net)	(8,292		)	(72,985		)
Above and below market debt assumed (included in Mortgages and other notes payable, net)	—			(119,601		)
Net assets acquired	$	149,732		$	558,755



Consideration:
Cash	$	138,429	$	439,546
Conversion of note receivable	9,142		—
Debt assumed	—		119,209
Liabilities assumed	2,161		—
Total Consideration	$	149,732	$	558,755



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Rental revenues	$	503		$	1,122		$	2,136		$	7,378
Expenses	(523		)	(1,095		)	(2,343		)	(4,745		)
Loss on extinguishment of debt	(10		)	—			(10		)	(15		)
Income from continuing operations of disposed properties before gain on disposition of properties	(30		)	27			(217		)	2,618
Gain on disposition of properties, net of tax	12,972			—			12,972			81,965
Net income attributable to noncontrolling interests	(9,166		)	(18		)	(9,034		)	(70,410		)
Net income attributable to Acadia	$	3,776		$	9		$	3,721		$	14,173



	December 31, 2016			Nine Months Ended September 30, 2017						September 30, 2017
	Number of Properties	Carrying Value		Transfers In		Capitalized Costs		Transfers Out		Number of Properties	Carrying Value

Core	1	$	2,530	$	7,258	$	3,852	$	5,441	2	$	8,199
Fund II	2	443,012		—		7,677		414,000		1	36,689
Fund III	3	51,421		—		13,838		8,146		2	57,113
Fund IV	8	46,523		79,624		13,883		4,597		8	135,433

Total	14	$	543,486	$	86,882	$	39,250	$	432,184	13	$	237,434