Securities and Exchange Commission
Washington, DC 20549
FORM 10-K/A-1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
[ ] 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 as specified in its charter)
Maryland 23-2715194
(State of incorporation) (I.R.S. employer identification no.)
20 Soundview Marketplace
Port Washington, NY 11050 (516)767-8830
(Address of principal executive offices) (Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Common Shares of Beneficial Interest, $.001 par value
(Title of Class)
New York Stock Exchange
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: NONE
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] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting common equity stock held by
non-affiliates of the Registrant was approximately $176.5 million based on the
closing price on the New York Stock Exchange for such stock on March 21, 2001
(the Company has no non-voting common equity).
The number of shares of the Registrant's Common Shares of Beneficial Interest
outstanding was 28,015,672 on March 21, 2001.
DOCUMENTS INCORPORATED BY REFERENCE
Part III - Definitive proxy statement for the Annual Meeting of Shareholders
presently scheduled to be held May 31, 2001, to be filed pursuant to Regulation
14A.
PURPOSE OF AMMENDMENT
- ---------------------
This Amendment to the Annual Report on Form 10-K for Acadia Realty Trust for the
year ended December 31, 2000 is being filed for the purpose of reflecting
modifications to the following items:
- -Part II, Item 6, Selected Financial Data (amended to modify information
regarding Funds from Operations and disclose cash flows information)
- -Part II, Item 7, Management's Discussion and Analysis of Financial Condition
and Results of Operations (amended to modify information regarding Funds from
Operations)
- -Part IV, Items 14(a)(1) and 14(a)(2), Exhibits, Financial Statements and
Schedules (amended to modify presentation of Consolidated Statement of
Operations and note 1 thereto)
PART II
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth, on a historical basis, selected financial
data for the Company. This information should be read in conjunction with the
audited consolidated financial statements of the Company and Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing elsewhere in this Annual Report on Form 10-K.
Year ended December 31,
-----------------------------------------------------------------------------------
2000 1999 1998(1) 1997 1996
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OPERATING DATA:
Revenues $ 96,758 $ 92,709 $ 59,771 $ 44,498 $ 43,796
-----------------------------------------------------------------------------------
Operating expenses 39,723 38,483 28,485 17,055 17,868
Interest and other financing expense 25,163 23,314 18,302 15,444 12,733
Depreciation and amortization 20,460 19,887 15,795 13,768 13,398
-----------------------------------------------------------------------------------
Total 85,346 81,684 62,582 46,267 43,999
-----------------------------------------------------------------------------------
11,412 11,025 (2,811) (1,769) (203)
Non-recurring charges (2) - - (2,249) - -
Equity in earnings of unconsolidated
partnerships 645 584 256 - -
Adjustment of carrying value of property
held for sale - - (11,560) - (392)
-----------------------------------------------------------------------------------
Income (loss) before gain (loss) on sale,
extraordinary items and minority interest 12,057 11,609 (16,364) (1,769) (595)
Gain (loss) on sale of properties 13,742 (1,284) (175) (12) 21
Extraordinary item - loss on early
extinguishment of debt - - (707) - (190)
Minority interest (5,892) (3,130) 3,348 217 40
-----------------------------------------------------------------------------------
Net income (loss) $ 19,907 $ 7,195 $ (13,898) $ (1,564) $ (724)
===================================================================================
Net income (loss) per Common Share
- basic and diluted $ 0.75 $ 0.28 $ (0.91) $ (0.18) $ (0.08)
===================================================================================
Weighted average number of Common
Shares outstanding
- basic 26,437,265 25,708,787 15,205,962 8,551,930 8,546,553
- diluted (3) 26,437,265 25,708,787 15,205,962 8,551,930 8,546,553
===================================================================================
BALANCE SHEET DATA:
Real estate before accumulated
depreciation $ 514,139 $ 569,521 $ 551,249 $ 311,688 $ 307,411
Total assets 523,611 570,803 528,512 254,500 258,517
Total mortgage indebtedness 277,112 326,651 277,561 183,943 172,823
Minority interest - Operating
Partnership 48,959 74,462 79,344 9,244 10,752
Total equity 179,317 152,487 154,591 48,800 56,806
OTHER:
Funds from Operations (4) $ 31,789 $ 31,160 $ 15,073 $ 11,003 $ 12,536
Cash flows provided by (used in):
Operating activities 32,573 25,886 7,459 8,934 13,364
Investing activities 8,249 (19,930) (24,822) (10,475) (20,019)
Financing activities (53,995) 14,201 31,259 (1,084) 7,499
1
Notes:
(1) Activity for the year ended December 31, 1998 includes the operations of
the properties acquired in the RDC Transaction from August 12, 1998 through
December 31, 1998.
(2) Non-recurring charges represent expenses incurred in 1998 related to the
RDC Transaction including payments made to certain officers and key
employees pursuant to change in control provisions of employment contracts,
severance paid to Mr. Slomowitz, retention bonuses for certain employees
and transaction-related consulting and professional fees.
(3) For 2000 through 1996, the weighted average number of shares outstanding on
a diluted basis is not presented as the inclusion of additional shares is
anti-dilutive.
(4) The Company considers 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 the
performance of the Company. However, the Company's 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 accounting principles generally
accepted in the United States ("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
the Company's performance or to cash flows as a measure of liquidity.
NAREIT defines FFO as net income (computed in accordance with GAAP),
excluding gains (or losses) from sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and
joint ventures. Effective January 1, 2000, NAREIT clarified the definition
of FFO to include non-recurring events except those that are defined as
"extraordinary items" under GAAP. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Funds from Operations"
for the reconciliation of net income to FFO.
2
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements of the Company (including the related notes thereto)
appearing elsewhere in this Annual Report. Certain statements contained in this
report constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions, which
will, among other things, affect demand for rental space, the availability and
creditworthiness of prospective tenants, lease rents and the availability of
financing; adverse changes in the Company's real estate markets, including,
among other things, competition with other companies; risks of real estate
development and acquisition; governmental actions and initiatives; and
environmental/safety requirements.
RESULTS OF OPERATIONS
Comparison of the year ended December 31, 2000 ("2000") to the year ended
December 31, 1999 ("1999")
Total revenues increased $4.1 million, or 4%, to $96.8 million for 2000 compared
to $92.7 million for 1999.
Minimum rents increased $1.2 million, or 2%, to $74.2 million for 2000 compared
to $73.0 million for 1999. Of this increase, $2.0 million was attributable to
the redevelopment of 239 Greenwich Avenue and re-anchoring of the Ledgewood Mall
(the "1999 Redevelopments"). Additionally, the full year effect in 2000 of the
acquisition of the Mad River Shopping Center in February 1999, the Gateway
Shopping Center in May 1999 and the Pacesetter Park Shopping Center in November
1999 (the "1999 Acquisitions") resulted in an increase of $1.3 million. These
increases were partially offset by $1.4 million of non-recurring income received
in 1999 related to two settlements with former tenants and a $1.0 million
decrease in rents resulting from the planned termination of various tenant
leases at the Abington Towne Center as part of the redevelopment and partial
sale of the center.
Expense reimbursements increased $444,000, or 3%, from $13.8 million for 1999 to
$14.2 million for 2000. An increase in real estate tax reimbursements of
$601,000 was primarily the result of the 1999 Acquisitions and 1999
Redevelopments. This was partially offset by a $157,000 decrease in common area
maintenance ("CAM") expense reimbursements. This net decrease in CAM
reimbursements was primarily a result of a $379,000 decrease in reimbursements
following the termination of tenant leases in connection with the redevelopment
of the Abington Towne Center, partially offset against an increase in
reimbursements related to the 1999 Acquisitions.
Other income increased $2.4 million, or 83%, from $2.9 million in 1999 to $5.3
million in 2000. $2.0 million of this increase was attributable to lease
termination income received from former tenants at the Abington Towne Center.
Total operating expenses increased $1.8 million, or 3%, to $60.2 million for
2000, from $58.4 million for 1999.
Property operating expenses increased $1.6 million, or 7%, to $23.2 million for
2000 compared to $21.6 million for 1999. This increase was primarily
attributable to higher payroll costs and CAM expenses throughout the portfolio
as well as a $557,000 increase due to the 1999 Acquisitions. These increases
were partially offset against a decrease in bad debt expense in 2000.
Real estate taxes increased $928,000, or 9%, from $10.5 million for 1999 to
$11.4 million for 2000. Of this increase, $759,000 was a result of a higher
assessment at the Ledgewood Mall following the re-anchoring of Wal*Mart and
Circuit City and the 1999 Acquisitions. The balance of this increase was
experienced throughout the portfolio.
Depreciation and amortization increased $573,000, or 3%, from $19.9 million for
1999 to $20.5 million for 2000. This increase was attributable to a $633,000
increase in depreciation expense, which was primarily related to the
redevelopment of 239 Greenwich Avenue and the 1999 Acquisitions.
General and administrative expense decreased $1.3 million, or 21%, from $6.3
million for 1999 to $5.0 million for 2000. This variance was primarily the
result of a $766,000 decrease in third party professional fees in 2000 and a
$189,000 decrease in office rent expense following the relocation of the
Pennsylvania regional office.
3
RESULTS OF OPERATIONS, continued
Interest expense of $25.2 million for 2000 increased $1.9 million, or 8%, from
$23.3 million for 1999. Of the increase, $532,000 was a result of higher average
outstanding borrowings related to property redevelopments, $418,000 was due to a
higher weighted average interest rate on the portfolio and $899,000 was
attributable to less capitalized interest in 2000.
Comparison of the year ended December 31, 1999 ("1999") to the year ended
December 31, 1998 ("1998")
The following comparison references the effect of the properties acquired on
August 12, 1998 as a result of the RDC Transaction (the "RDC Properties").
Total revenues increased $32.9 million, or 55%, to $92.7 million for 1999
compared to $59.8 million for 1998.
Minimum rents increased $26.1 million, or 56%, to $73.0 million for 1999
compared to $46.9 million for 1998. $21.4 million, or 82%, of the increase was
attributable to the RDC Properties. $1.4 million, or 5%, of the increase was
attributable to amounts received as a result of two settlements. The first
settlement was related to the liability of a tenant-assignor of a lease to a
former tenant who had filed for bankruptcy protection under Chapter 11 of the
United States Bankruptcy laws ("Chapter 11") and the second was with respect to
certain claims related to the Chapter 11 proceedings for the Penn Traffic
Company. The remaining increase was primarily due to two property acquisitions,
a redevelopment project placed in service subsequent to 1998, and anchor
replacements at the Ledgewood Mall.
Percentage rents increased $343,000, or 13%, to $3.0 million for 1999 compared
to $2.7 million for 1998. This increase was primarily attributable to the RDC
Properties and the impact from the Company's adopting the Emerging Issue Task
Force ("EITF") Issue No. 98-9 "Accounting for Contingent Rent in Interim
Financial Periods" as of April 1, 1998 (subsequently codified with Staff
Accounting Bulletin No. 101 "Revenue Recognition").
Expense reimbursements increased $5.1 million, or 59%, for 1999, of which $3.8
million resulted from the RDC Properties. The remaining increase was primarily
attributable to anchor replacements at the Ledgewood Mall and an increase in
expense recoveries resulting from increased contract services, primarily snow
removal, as a result of the comparatively mild winter season in 1998.
Other income increased $1.4 million, of which $625,000 resulted from the RDC
Properties and $442,000 was due to management fees which were earned under four
contracts acquired in the RDC Transaction. The remaining increase was
attributable to additional interest income resulting from a higher balance of
interest earning assets in 1999.
Total operating expenses increased $11.9 million, or 26%, to $58.4 million for
1999, from $46.5 million for 1998.
Property operating expenses increased $7.4 million, or 52%, to $21.6 million for
1999 compared to $14.2 million for 1998. $6.4 million, or 86% of the increase,
was attributable to the RDC Properties. The remaining increase was due to
additional staffing in the leasing and property management departments following
the RDC Transaction and an increase in contract services, primarily snow
removal, as a result of the comparatively mild winter season in 1998. This
increase was partially offset against a decrease in estimated claims related to
the Company's property-related liability insurance policies.
Real estate taxes increased $3.0 million, or 40%, from $7.5 million for 1998 to
$10.5 million for 1999. This increase was primarily attributable to the RDC
Properties.
Depreciation and amortization increased $4.1 million, or 26%, for 1999 primarily
attributable to the RDC Properties. This increase was partially offset by the
effect from the sale of two properties during the first quarter of 1999 and the
sale of a property in December 1998.
General and administrative expense increased $1.9 million, or 44%, from $4.4
million for 1998 to $6.3 million for 1999, which was primarily attributable to
additional staffing and administration costs following the RDC Transaction.
Non-recurring charges of $2.2 million in 1998 were related primarily to payments
made to certain officers and key employees pursuant to change in control
provisions of employment contracts, severance paid to the Former Principal
Shareholder, retention bonuses for certain employees and RDC Transaction related
consulting and professional fees.
4
RESULTS OF OPERATIONS, continued
Settlement of litigation of $2.4 million in 1998 resulted from the agreement
between the Company and its former President whereby the Company paid $1.0
million in 1998 and recorded a liability of $1.4 million based on future
contractual payments to be made commencing April 1999 through January 2004.
The adjustment of carrying value of properties held for sale represents a 1998
non-cash charge of $11.6 million to write-down three properties to their
estimated net realizable value pursuant to a disposition plan. One of these
properties was sold in 1998 and the remaining two were sold in 1999.
Interest expense of $23.3 million for 1999 increased $5.0 million, or 27%, from
$18.3 million for 1998. This increase was primarily attributable to the mortgage
debt associated with the RDC Properties partially offset by the paydown of
certain existing debt with the proceeds from the RDC Transaction. Contributing
further to this increase was an additional $49.1 million of outstanding debt as
of December 31, 1999 as a result of new borrowings made subsequent to 1998.
The $707,000 extraordinary loss in 1998 was a result of the write-off of
deferred financing fees as a result of the repayment of the related debt.
Funds from Operations
The Company considers 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 its
widespread acceptance and use within the REIT and analyst communities. FFO is
presented to assist investors in analyzing the performance of the Company.
However, the Company's 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 accounting
principles generally accepted in the United States ("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 the Company's performance or to cash flows as a measure of liquidity.
NAREIT defines FFO as net income (computed in accordance with GAAP), excluding
gains (or losses) from sales of property, plus depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint ventures.
Effective January 1, 2000, NAREIT clarified the definition of FFO to include
non-recurring events except those that are defined as "extraordinary items"
under GAAP.
The reconciliation of net income to FFO for the years ended December 31, 2000,
1999, 1998, 1997 and 1996 is as follows:
Reconciliation of Net Income (Loss) to Funds from Operations
For the Year Ended December 31,
2000 1999 1998(a) 1997(a) 1996(a)
------- --------- --------- --------- ---------
Net income (loss) $19,907 $ 7,195 $(13,898) $(1,564) $ (724)
Depreciation of real estate and
amortization of leasing costs:
Wholly owned and consolidated partnerships 19,325 18,949 14,925 12,993 12,268
Unconsolidated partnerships 625 626 231 -- --
Non-recurring RDC transaction charges (b) -- -- 2,249 -- --
Settlement of Litigation -- -- 2,358 -- --
Income (loss) attributable to minority
interest (c) 5,674 3,106 (3,348) (217) (40)
(Gain)loss on sale of properties (13,742) 1,284 175 12 (21)
Adjustment of carrying value of
properties held for sale -- -- 11,560 -- 392
Other adjustments -- -- 114 (221) 471
Extraordinary item - loss on
extinguishment of debt -- -- 707 -- 190
------- ------- ------- ------- -------
Funds from operations $31,789 $31,160 $15,073 $11,003 $12,536
======= ======= ======= ======= =======
5
RESULTS OF OPERATIONS, continued
Notes:
(a) Effective January 1, 2000, NAREIT clarified the definition of FFO
to include non-recurring events except those that are defined as
"extraordinary items" under GAAP. Under this current definition,
FFO for the years ended December 31, 1998, 1997 and 1996 would have
been $10,352, $11,224 and $12,065, respectively.
(b) The Company acquired substantially all of the interests of RD
Capital on August 12, 1998.
(c) Does not include distributions paid to Preferred OP Unitholders.
6
LIQUIDITY AND CAPITAL RESOURCES
Uses of Liquidity
The Company's principal uses of its liquidity are expected to be for
distributions to its shareholders and OP unitholders, debt service and loan
repayments, and property investment which includes acquisition, redevelopment,
expansion and retenanting activities. In order to qualify as a REIT for Federal
income tax purposes, the Company must currently distribute at least 95% of its
taxable income to its shareholders. Effective 2001, the requirement will be
reduced to 90% pursuant to the REIT Modernization Act passed in 1999. On
December 13, 2000, the Board of Trustees of the Company approved and declared a
cash quarterly dividend for the quarter ended December 31, 2000 of $0.12 per
Common Share and Common OP Unit. The dividend was paid on January 15, 2001 to
the shareholders of record as of December 29, 2000. The Board of Trustees also
approved a distribution of $22.50 per Preferred OP Unit which was paid on
January 15, 2001.
Property Redevelopment and Expansion
The Company's redevelopment program focuses on selecting well-located
neighborhood and community shopping centers and creating significant value
through retenanting and property redevelopment. The Company currently has four
properties under redevelopment as follows:
Abington Towne Center - The Company has completed the first phase of
redevelopment of this previously enclosed multi-level mall located in the
Philadelphia suburb of Abington, Pennsylvania. In December 2000, the Company
sold approximately 160,000 square feet representing the top two floors and the
rear portion of the ground level and the related parking area to the Target
Corp. ("Target") for $11.5 million. Target is currently building out the space
and is expected to open prior to the end of 2001. The Company has "de-malled"
the balance of the center consisting of approximately 46,000 square feet of the
main building and 14,000 square feet of store space in outparcel buildings which
it will continue to own and operate. An existing anchor, T.J. Maxx, was
relocated to a 27,000 square foot space in the Company's portion of the main
building and reopened for business during November 2000. As of December 31,
2000, costs incurred on this project totaled $3.6 million. Remaining costs
projected to complete the redevelopment of this property are approximately
$370,000.
Elmwood Park Shopping Center - During 2000, the Company commenced with the
sitework on the redevelopment of this center located in Elmwood Park, New
Jersey, approximately ten miles west of New York City. The redevelopment
consists of reanchoring, renovating and expanding the existing 125,000 square
foot shopping center by 30,000 square feet. The new anchor, a 48,000 square foot
free-standing A&P supermarket, will replace an undersized (28,000 square feet)
in-line Grand Union supermarket when completed. The project also includes the
expansion of an existing Walgreens drug store. As of December 31, 2000, costs
incurred on this project totaled $563,000. The Company expects remaining
redevelopment costs of approximately $8.7 million to complete this project in
2002. In conjunction with the A&P supermarket rent commencement, the Operating
Partnership is also obligated to issue OP Units equal to $2.75 million as
discussed in Item 8, Note 2 to the Consolidated Financial Statements.
Methuen Shopping Center - This center, located in Methuen, Massachusetts (part
of the Boston metropolitan statistical area) was formally anchored by a Caldor
department store. The Company acquired this lease out of bankruptcy and is
currently in final lease negotiations with a national discount retailer for an
89,000 square foot department store. Projected costs to complete this project
are approximately $400,000.
Gateway Shopping Center - The redevelopment of the Gateway Shopping Center, a
partially enclosed mall located in Burlington, Vermont, includes the recapture
of a 32,000 square foot former Grand Union store, demolition of 70% of the
property and the construction of a new anchor tenant. Following the bankruptcy
of Grand Union, the lease was assigned to Shaw's supermarket which has resulted
in a temporary delay of the planned de-malling and redevelopment.
Additionally, the Company currently estimates that for the remaining portfolio,
capital outlays of approximately $3.0 million will be required for tenant
improvements, related renovations and other property improvements related to
executed leases.
7
LIQUIDITY AND CAPITAL RESOURCES, continued
Share Repurchase Plan
The Company's repurchase of its Common Shares is an additional use of liquidity.
In January 2001, the Board of Trustees approved a continuation and expansion of
the Company's existing stock repurchase program. Management is authorized, at
its discretion, to repurchase up to an additional $10.0 million of the Company's
outstanding Common Shares. Through March 9, 2001, the Company had repurchased
1,781,742 (net of 86,063 shares reissued) at a total cost of $10.5 million under
the expanded share repurchase program which allows for the repurchase of up to
$20.0 million of the Company's outstanding Common Shares. The program may be
discontinued or extended at any time and there is no assurance that the Company
will purchase the full amount authorized.
Sources of Liquidity
Sources of capital for funding property acquisition, redevelopment, expansion
and retenanting, as well as repurchase of Common Shares are expected to be
obtained primarily from cash on hand, additional debt financings and sales of
existing properties. As of December 31, 2000, the Company has a total of $27.9
million of additional capacity with three lenders, of which $23.0 million is
available under a financing line with a bank which must be drawn by April 2001.
The Company also has thirteen properties that are currently unencumbered and
therefore available as potential collateral for future borrowings. The Company
anticipates that cash flow from operating activities will continue to provide
adequate capital for all debt service payments, recurring capital expenditures
and REIT distribution requirements.
Financing and Debt
At December 31, 2000, mortgage notes payable aggregated $277.1 million and were
collateralized by 45 properties and related tenant leases. Interest on the
Company's mortgage indebtedness ranged from 7.5% to 9.6% with maturities that
ranged from January 2001 to November 2021. Of the total outstanding debt, $153.2
million, or 55%, was carried at fixed interest rates with a weighted average of
8.3% and $123.9 million, or 45%, was carried at variable rates with a weighted
average of 8.5%. Of the total outstanding debt, $83.6 million will become due by
2002, with scheduled maturities of $18.0 million at a weighted average interest
rate of 7.8% in 2001 and $65.6 million with a weighted average interest rate of
8.2% in 2002. As the Company does not anticipate having sufficient cash on hand
to repay such indebtedness, it will need to refinance this indebtedness or
select other alternatives based on market conditions at that time.
The following summarizes the financing and refinancing transactions since
December 31, 1999:
On January 8, 2001, the Company partially repaid $10.1 million of fixed-rate
mortgage debt, which was secured by two of the Company's properties, with a life
insurance company. Following this repayment from working capital, the remaining
balance of $7.9 million was converted to a variable-rate facility which is
secured by one of the Company's properties, requires the monthly payments of
interest at LIBOR plus 200 basis points and principal amortized over 25 years,
and matures January 10, 2002.
On December 22, 2000, the Company closed on two fixed-rate financings with a
bank for $11.1 million and $5.6 million, each of which are secured by one of the
Company's properties. The loans, which mature January 1, 2011, require monthly
payments of interest at 7.55% and principal amortized over 30 years.
Approximately $13.2 million of the proceeds were used to retire existing debt,
$454,000 for various closing costs and funding of escrows, and the balance of
$3.0 million was available for working capital.
On December 11, 2000, the Company fully repaid $10.1 million of outstanding debt
with a life insurance company following the sale of a portion of the property
which secured the debt.
8
LIQUIDITY AND CAPITAL RESOURCES, continued
On October 13, 2000, the Company refinanced $36.0 million of maturing debt with
a life insurance company, with two new loans from the same lender. The Company
repaid $5.0 million prior to refinancing the balance of the maturing debt. The
first loan, which is a fixed-rate facility secured by two of the Company's
properties, was for $25.2 million and requires the monthly payment of interest
at a rate of 8.13% and principal amortized over 25 years. The loan matures in
November 2010. The second loan, which is a variable-rate facility secured by
three of the Company's properties, was for $10.8 million and requires the
monthly payment of interest at LIBOR plus 200 basis points and matures in
November 2003. Commencing 18 months after the closing, the loan also requires
the monthly payment of principal amortized over 25 years. Both loans are
cross-collateralized with all five properties. Furthermore, with respect to the
variable-rate facility, the Company is required to deposit 50% of the monthly
net cash flow after debt service, which will be used to fund future property and
tenant improvements at the collateral properties.
On July 19, 2000, the Company closed on a facility with a bank, which provides
for the borrowing of up to $10.0 million. The variable-rate facility, which is
secured by one of the Company's properties, matures in August 2003 and requires
the monthly payment of interest at the rate of LIBOR plus 175 basis points and
principal amortized over 25 years. At closing, the Company borrowed $9.0 million
under this facility, of which $7.1 million of proceeds were used to retire
existing debt with another lender, $149,000 for various closing costs and the
balance was available for working capital. The Company may draw the additional
$1.0 million subject to certain lender requirements including debt-service and
collateral value.
On March 30, 2000, the Company closed on a $59.0 million secured financing line
with a bank (the "Line"). The Line is secured by five of the seven properties
that collateralized a loan with a life insurance company which was retired using
$30.7 million of the proceeds from the initial $36.0 million funding. The
balance of the Line must be drawn by April 2001. The Line matures April 1, 2005
and requires the monthly payment of interest at a variable-rate of LIBOR plus
175 basis points and principal amortized over 30 years. After September 2001,
the debt can be prepaid without prepayment or yield maintenance fees. As of
December 31, 2000, $35.8 million was outstanding under the Line.
On March 23, 2000, the Company fully repaid $4.6 million of outstanding debt
with a bank which was collateralized by one of the Company's properties.
On February 8, 2000, the Company closed on a revolving credit facility with a
bank, which provides for the borrowing of up to $7.4 million. The variable-rate
facility, which is secured by one of the Company's properties, matures in March
2003 and requires the monthly payment of interest at the rate of LIBOR plus 150
basis points (the rate increases by an additional 25 basis points if the amount
outstanding under the facility exceeds 50% of the value of the collateral). The
monthly repayment of principal amortized over 25 years is required only if the
Company draws the full amount available under the facility. As of December 31,
2000, the Company had $3.5 million outstanding under this facility.
On January 31, 2000, the Company repaid $23.1 million of outstanding debt with a
life insurance company from working capital. The remaining outstanding debt of
$30.8 with this lender was fully repaid with the proceeds from the March 30,
2000 bank financing as described above.
9
LIQUIDITY AND CAPITAL RESOURCES, continued
Asset Sales
Asset sales are an additional source of liquidity for the Company. During 2000,
the Company sold a non-core asset in connection with its ongoing program of
evaluatingand optimizing the property portfolio with respect to property
locations, tenant profiles, cash flows and future capital appreciation. On
December 14, 2000, the Company sold the Northwood Centre, located in
Tallahassee, Florida, for $31.5 million. The buyer assumed the mortgage balance
of $22.1 million and acquired various mortgage-related escrows for $1.8 million
that, following additional net closing adjustments and costs resulted in net
proceeds of $11.0 million to the Company. Additionally, there were two sales to
anchor tenants as part of the Company's reanchoring and retenenating programs
during 2000. On December 11, 2000, the Company sold approximately 160,000 square
feet of the main building and related parking lot at the Abington Towne Center
to the Target Corporation for $11.5 million as previously discussed. Net
proceeds from the sale were $1.4 million following the repayment of the mortgage
balance of $10.1 million and additional net closing adjustments and costs. On
August 25, 2000, the Company sold 13 acres at the Union Plaza, located in New
Castle, Pennsylvania, to Lowes Home Center, Inc., which is constructing a
130,000 square foot store at the location. Proceeds from this sale totaled $1.9
million.
HISTORICAL CASH FLOW
The following discussion of historical cash flow compares the Company's cash
flow for the year ended December 31, 2000 ("2000") with the Company's cash flow
for the year ended December 31, 1999 ("1999").
Net cash provided by operating activities increased from $25.9 million for 1999
to $32.6 million for 2000. This variance was primarily attributable to an
increase in cash provided by changes in operating assets and liabilities,
primarily accounts receivable and accounts payable, for 2000.
Net cash provided by investing activities of $8.2 million for 2000 increased
$28.2 million compared to $19.9 million used during 1999. This was the result of
an increase in net sales proceeds of $18.3 million received in 2000 versus 1999,
a $9.2 million decrease in expenditures for real estate acquisitions,
development and tenant installations in 2000 and $688,000 of additional
distributions received from investments in unconsolidated partnerships in 2000.
Net cash used in financing activities of $54.0 million for 2000 increased $68.2
million compared to $14.2 million provided in 1999. The increased use of cash
resulted primarily from $116.2 million of additional cash used in 2000 for the
repayment of debt, partially offset by an increase of $58.2 million of cash
provided by additional borrowings in 2000. Additionally, dividends and
distributions used an additional $4.1 million in 2000 and $5.7 million of
additional cash was used in 2000 for the repurchase of Common Shares.
INFLATION
The Company's long-term leases contain provisions designed to mitigate the
adverse impact of inflation on the Company's net income. Such provisions include
clauses enabling the Company to receive percentage rents based on tenants' gross
sales, which generally increase as prices rise, and/or, in certain cases,
escalation clauses, which generally increase rental rates during the terms of
the leases. Such escalation clauses are often related to increases in the
consumer price index or similar inflation indexes. In addition, many of the
Company's leases are for terms of less than ten years, which permits the Company
to seek to increase rents upon re-rental at market rates if current rents are
below the then existing market rates. Most of the Company's leases require the
tenants to pay their share of operating expenses, including common area
maintenance, real estate taxes, insurance and utilities, thereby reducing the
Company's exposure to increases in costs and operating expenses resulting from
inflation.
10
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (the "Statement"). In June 1999, the FASB issued Statement No. 137,
which deferred the effective date of Statement No. 133 requiring it to be
adopted for all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company will adopt the Statement effective January 1, 2001. The
Statement will require the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If a derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of the derivative will either be offset against
the change in fair value of the hedged asset, liability, or firm commitment
through earnings, or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. The Company does not
anticipate that the adoption of this Statement will have a significant effect on
its results of operations or financial position.
In December 1999, the Securities and Exchange Commission (the "SEC") released
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition", to provide
guidance on the recognition, presentation and disclosure of revenue in financial
statements. Specifically, SAB No. 101 provides guidance on lessors' accounting
for contingent rent. SAB No. 101 did not require the Company to change existing
revenue recognition policies and therefore had no impact on the Company's
financial position at or results of operations for the year ended December 31,
2000.
11
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AMD REPORTS ON FORM 8-K
(a) 1. Financial Statements - Form 10-K
The following consolidated financial Report Page
information is included as a separate
section of this annual report on
Form 10-K
ACADIA REALTY TRUST
Report of Independent Auditors F-2
Consolidated Balance Sheets as of
December 31, 2000 and 1999 F-3
Consolidated Statements of Operations
for the years ended December 31, 2000,
1999 and 1998 F-4
Consolidated Statements of Shareholders'
Equity for the years ended December 31, 2000, 1999
and 1998 F-5
Consolidated Statements of Cash Flows for
the years ended December 31, 2000, 1999
and 1998 F-6
Notes to Consolidated Financial Statements F-8
2. Financial Statement Schedule
Schedule III - Real Estate and
Accumulated Depreciation F-28
All other schedules are omitted since the required information
is not present or is not present in amounts sufficient to
require submission of the schedule.
3. Exhibits
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment on Form 10-K/A to its
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereto duly authorized.
ACADIA REALTY TRUST
(Registrant)
By: /s/ Perry Kamerman
Senior Vice President and
Chief Financial Officer
Dated: July 24, 2001
13
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Trustees of
Acadia Realty Trust
We have audited the accompanying consolidated balance sheets of Acadia Realty
Trust (a Maryland Trust) and subsidiaries (the "Company") as of December 31,
2000 and 1999, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2000. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and the
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Acadia Realty
Trust and subsidiaries as of December 31, 2000 and 1999, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ ERNST & YOUNG LLP
New York, New York
March 2, 2001
F-2
Part I. Financial Information
Item 1. Financial Statements
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
December 31,
2000 1999
---- ----
ASSETS
Real estate
Land $ 69,206 $ 81,956
Buildings and improvements 444,933 487,565
-------- --------
514,139 569,521
Less: accumulated depreciation 102,461 90,932
-------- --------
Net real estate 411,678 478,589
Properties held for sale 49,445 13,227
Cash and cash equivalents 22,167 35,340
Cash in escrow 5,213 9,707
Investments in unconsolidated
partnerships 6,784 7,463
Rents receivable, net 9,667 8,865
Prepaid expenses 2,905 2,952
Due from related parties -- 19
Deferred charges, net 13,026 12,374
Other assets 2,726 2,267
-------- --------
$523,611 $570,803
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $277,112 $326,651
Accounts payable and accrued expenses 7,495 6,385
Due to related parties 111 --
Dividends and distributions payable 4,241 4,371
Other liabilities 4,179 4,224
-------- --------
Total liabilities 293,138 341,631
-------- --------
Minority interest in Operating
Partnership 48,959 74,462
Minority interests in majority-
owned partnerships 2,197 2,223
-------- --------
Total minority interests 51,156 76,685
-------- --------
Shareholders' equity:
Common shares, $.001 par value,
authorized 100,000,000 shares,
issued and outstanding 28,150,472
and 25,724,315 shares, respectively 28 26
Additional paid-in capital 188,392 168,641
Deficit (9,103) (16,180)
-------- --------
Total shareholders' equity 179,317 152,487
-------- --------
$523,611 $570,803
======== ========
See accompanying notes
F-3
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Years ended December 31,
2000 1999 1998
---- ---- ----
Revenues
Minimum rents $ 74,161 $ 73,021 $ 46,940
Percentage rents 3,048 2,994 2,651
Expense reimbursements 14,230 13,786 8,655
Other 5,319 2,908 1,525
-------- -------- --------
Total revenues 96,758 92,709 59,771
-------- -------- --------
Operating Expenses
Property operating 23,198 21,606 14,182
Real estate taxes 11,468 10,540 7,536
Depreciation and amortization 20,460 19,887 15,795
General and administrative 5,057 6,337 4,409
Non-recurring charges -- -- 2,249
Settlement of litigation -- -- 2,358
Adjustment of carrying value of properties held for sale -- -- 11,560
-------- -------- --------
Total operating expenses 60,183 58,370 58,089
-------- -------- --------
Operating income 36,575 34,339 1,682
Equity in earnings of unconsolidated partnerships 645 584 256
Gain (loss) on sale of properties 13,742 (1,284) (175)
Interest expense (25,163) (23,314) (18,302)
-------- -------- --------
Income (loss) before extraordinary item and minority interest 25,799 10,325 (16,539)
Extraordinary item - loss on early extinguishment of debt -- -- (707)
Minority interests (5,892) (3,130) 3,348
-------- -------- --------
Net income (loss) $ 19,907 $ 7,195 $(13,898)
======== ======== ========
Net income (loss) per Common Share:
Income (loss) before extraordinary item $ .75 $ .28 $ (.86)
Extraordinary item -- -- (.05)
-------- -------- --------
Net income (loss) per Common Share $ .75 $ .28 $ (.91)
======== ======== ========
See accompanying notes
F-4
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except per share amounts)
Common Shares Total
------------- Additional Shareholders'
Shares Amount Paid-in Capital Deficit Equity
-------------------------------------------------------------------------------
Balance, December 31, 1997 8,554,177 $ 9 $ 51,073 $ (2,282) $ 48,800
Issuance of shares pursuant to the
Company's restricted share plan 3,800 - 29 - 29
Conversion of 800,000 OP Units
by limited partner of the Operating
Partnership 800,000 1 4,367 - 4,368
Issuance of 13,333,333 Common
Shares in connection with the RDC
Transaction, net of issuance costs 13,333,333 13 95,909 - 95,922
Issuance of 1,989,048 Common Shares in
connection with the RDC Transaction 1,989,048 1 13,965 - 13,966
Conversion of 738,857 OP Units by
limited partners of the Operating
Partnership in connection with the
RDC Transaction 738,857 1 5,403 - 5,404
Loss before minority interest - - - (17,246) (17,246)
Minority interest's equity - - - 3,348 3,348
---------- --- -------- --------- ---------
Balance, December 31, 1998 25,419,215 25 170,746 (16,180) 154,591
Conversion of 700,000 OP Units
by limited partner of the Operating
Partnership 700,000 1 5,012 - 5,013
Dividends declared ($.48 per
Common Share) - - (5,133) (7,195) (12,328)
Repurchase of Common Shares (394,900) - (1,984) - (1,984)
Income before minority interest - - - 10,325 10,325
Minority interest's equity - - - (3,130) (3,130)
---------- --- -------- --------- ---------
Balance, December 31, 1999 25,724,315 26 168,641 (16,180) 152,487
Conversion of 3,679,999 OP Units
by limited partners of the Operating
Partnership 3,679,999 3 26,999 - 27,002
Dividends declared ($.48 per
Common Share) - - - (12,830) (12,830)
Repurchase of Common Shares (1,339,905) (1) (7,691) - (7,692)
Reissuance of Common Shares 86,063 - 443 - 443
Income before minority interest - - - 25,799 25,799
Minority interest's equity - - - (5,892) (5,892)
---------- --- -------- --------- ---------
Balance, December 31, 2000 28,150,472 $ 28 $188,392 $ (9,103) $179,317
========== === ======== ========= =========
F-5
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share amounts)
Years ended December 31,
2000 1999 1998
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 19,907 $ 7,195 $(13,898)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 20,460 19,887 15,795
Extraordinary item - loss on early extinguishment of debt -- -- 707
Minority interests 5,892 3,130 (3,348)
Equity in earnings of unconsolidated partnerships (645) (584) (256)
Provision for bad debts 453 1,404 1,275
(Gain) loss on sale of properties (13,742) 1,284 175
Stock-based compensation 443 -- --
Adjustment to carrying value of properties held for sale -- -- 11,560
Other -- -- 29
Changes in assets and liabilities:
Funding of escrows, net 1,250 2,943 (4,744)
Rents receivable (1,255) (4,263) (2,495)
Prepaid expenses 47 (155) (1,556)
Due to/from related parties 130 (195) 163
Other assets (792) (879) (975)
Accounts payable and accrued expenses 470 (4,288) 3,120
Other liabilities (45) 407 1,907
------- ------- --------
Net cash provided by operating activities 32,573 25,886 7,459
------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for real estate and improvements (15,865) (25,091) (23,253)
Net proceeds from sale of properties 24,413 6,128 2,193
Investments in unconsolidated partnerships -- -- (861)
Distributions from unconsolidated partnerships 1,324 637 --
Payment of deferred leasing costs (1,623) (1,604) (2,901)
-------- -------- --------
Net cash provided by (used in) investing activities 8,249 (19,930) (24,822)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Common Shares -- -- 95,923
Principal payments on mortgage notes (133,838) (17,598) (80,493)
Proceeds received on mortgage notes 106,350 48,168 19,877
Payment of note payable to shareholder -- -- (3,050)
Payment of deferred financing and other costs (1,435) (1,091) (967)
Dividends paid (12,545) (9,238) --
Distributions to minority interests in Operating Partnership (4,617) (3,929) (31)
Distributions on Preferred Operating Partnership Units (173)
Distributions to minority interest in majority-owned partnership (45) (127) --
Repurchase of Common Shares (7,692) (1,984) --
-------- -------- --------
Net cash (used in) provided by financing activities (53,995) 14,201 31,259
-------- -------- --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (13,173) 20,157 13,896
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 35,340 15,183 1,287
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 22,167 $ 35,340 $ 15,183
======== ======== ========
See accompanying notes
F-6
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share amounts)
Years ended December 31,
2000 1999 1998
---- ---- ----
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for interest, net of amounts
capitalized of $439, $1,299, and $857, respectively $ 25,035 $ 23,793 $ 17,650
======== ======== =========
Supplemental Disclosures of Non-Cash
Investing and Financing Activities:
Disposition of real estate through assignment of debt $ 22,051
========
Acquisition of real estate by assumption of debt $ 18,521
========
Acquisition of real estate by issuance of Preferred
Operating Partnership Units $ 2,212
========
The following activity was recorded in connection with the RDC Transaction (Note
2).
Real estate and investment in
partnerships acquired $(253,801)
Mortgage notes payable assumed 154,234
Operating partnership units issued 83,250
Common Shares issued 13,967
Minority interests in acquired properties 2,350
---------
Net Cash $ --
=========
See accompanying notes
F-7
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies
Acadia Realty Trust (the "Company"), formerly known as Mark Centers Trust, is a
fully integrated and self-managed real estate investment trust ("REIT") focused
primarily on the ownership, acquisition, redevelopment and management of
neighborhood and community shopping centers.
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 its
majority owned subsidiaries. As of December 31, 2000, the Company controlled 81%
of the Operating Partnership as the sole general partner.
As of December 31, 2000, the Company operated fifty-seven properties, which it
owned or had an ownership interest in, consisting of forty-seven neighborhood
and community shopping centers, four redevelopment retail properties, one
enclosed shopping mall and five multi-family properties, all of which are
located in the Eastern and Midwestern regions of the United States.
Principles of Consolidation
The consolidated financial statements include the consolidated accounts of the
Company and its majority owned subsidiaries, including the Operating
Partnership. Non-controlling investments in partnerships are accounted for under
the equity method of accounting as the Company exercises significant influence.
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Properties
Real estate assets are stated at cost less accumulated depreciation.
Expenditures for acquisition, development, construction and improvement of
properties, as well as significant renovations are capitalized. Interest costs
are capitalized until construction is substantially complete. Depreciation is
computed on the straight-line method over estimated useful lives of 30 to 40
years for buildings and the shorter of the useful life or lease term for
improvements, furniture, fixtures and equipment. Expenditures for maintenance
and repairs are charged to operations as incurred. The Company records
impairment losses and reduces the carrying value of properties when indicators
of impairment are present and the expected undiscounted cash flows related to
those properties are less than their carrying amounts. In cases where the
Company does not expect to recover its carrying costs on properties held for
use, the Company reduces its carrying cost to fair value, and for properties
held for sale, the Company reduces its carrying value to the fair value less
costs to sell. Management does not believe that the value of any properties held
for use or sale are impaired as of December 31, 2000. As of December 31, 2000,
one shopping center and two multi-family properties were held for sale.
Deferred Costs
Fees and costs incurred in the successful negotiation of leases have been
deferred and are being amortized on a straight-line basis over the terms of the
respective leases. Fees and costs incurred in connection with obtaining
financing have been deferred and are being amortized over the term of the
related debt obligation.
F-8
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies, continued
Revenue Recognition
Leases with tenants are accounted for as operating leases. Minimum rents are
recognized on a straight-line basis over the term of the respective leases. As
of December 31, 2000 and 1999, unbilled rents receivable relating to
straight-lining of rents were $4,098 and $3,057, respectively.
Percentage rents are recognized in the period when the tenant sales breakpoint
is met.
Reimbursements from tenants for real estate taxes, insurance and other property
operating expenses are recognized as revenue in the period the expenses are
incurred.
An allowance for doubtful accounts has been provided against certain tenant
accounts receivable which are estimated to be uncollectible. Rents receivable at
December 31, 2000 and 1999 are shown net of an allowance for doubtful accounts
of $1,738 and $1,588, respectively.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less when purchased to be cash and cash equivalents.
Cash in Escrow
Cash in escrow consists principally of cash held for real estate taxes, property
maintenance, insurance, minimum occupancy and property operating income
requirements at specific properties as required by certain loan agreements.
Non-Recurring Charges
In connection with the RDC Transaction (note 2), the Company incurred
non-recurring costs in 1998 of $2,249 related primarily to payments made to
certain officers and key employees pursuant to change in control provisions of
employment contracts, severance paid to the Former Principal Shareholder (note
8), retention bonuses for certain employees and transaction-related consulting
and professional fees.
Income Taxes
The Company has made an election to be taxed, and believes it qualifies as a
real estate investment trust ("REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended. A REIT will generally not be subject
to federal income taxation on that portion of its income that qualifies as REIT
taxable income to the extent that it distributes at least 95% (90% commencing in
2001) of its taxable income to its shareholders and complies with certain other
requirements. Accordingly, no provision has been made for federal income taxes
for the Company in the accompanying consolidated financial statements. The
Company is subject to state income or franchise taxes in certain states in which
some of its properties are located. These state taxes, which in total are not
significant, are included in general and administrative expenses in the
accompanying consolidated financial statements.
F-9
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies, continued
Earnings Per Common Share
Basic earnings per share was determined by dividing the net applicable income or
loss to common shareholders for the year by the weighted average number of
common shares of beneficial interest ("Common Shares") outstanding during each
year consistent with the Financial Accounting Standards Board Statement No. 128.
The weighted average number of shares outstanding for the years ended December
31, 2000, 1999, and 1998 were 26,437,265, 25,708,787 and 15,205,962,
respectively.
Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue Common Shares were exercised or converted
into Common Shares or resulted in the issuance of Common Shares that then shared
in the earnings of the Company. For the years ended December 31, 2000, 1999, and
1998 no additional shares were reflected as the impact would be anti-dilutive in
such years.
Share Repurchase Plan
As of December 31, 2000, the Company had repurchased 1,648,742 Common Shares
(net of 86,063 Common Shares reissued) at a total cost of $9,675 under a share
repurchase program which allows for the repurchase of up to $10,000 of the
Company's outstanding Common Shares. The repurchased shares are reflected as a
reduction of par value and additional paid-in capital. In January 2001, the
Board of Trustees approved a continuation and expansion of the Company's
existing stock repurchase program. Management is authorized, at its discretion,
to repurchase up to an additional $10,000 of the Company's outstanding Common
Shares. The program may be discontinued or extended at any time and there is no
assurance that the Company will purchase the full amount authorized.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (the "Statement"). In June 1999, the FASB issued Statement No. 137,
which deferred the effective date of Statement No. 133 requiring it to be
adopted for all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company will adopt the Statement effective January 1, 2001. The
Statement will require the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If a derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of the derivative will either be offset against
the change in fair value of the hedged asset, liability, or firm commitment
through earnings, or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. The Company does not
anticipate that the adoption of this Statement will have a significant effect on
its results of operations or financial position.
In December 1999, the Securities and Exchange Commission (the "SEC") released
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition", to provide
guidance on the recognition, presentation and disclosure of revenue in financial
statements. Specifically, SAB No. 101 provides guidance on lessors' accounting
for contingent rent. SAB No. 101 did not require the Company to change existing
revenue recognition policies and therefore had no impact on the Company's
financial position at or results of operations for the year ended December 31,
2000.
Reclassifications
Certain 1999 and 1998 amounts were reclassified to conform to the 2000
presentation.
F-10
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
2. Acquisition and Disposition of Properties and Related Transactions
2000 Dispositions
On December 14, 2000, the Company sold the Northwood Centre, located in
Tallahassee, Florida, for $31,500. The buyer assumed the mortgage balance of
$22,051 and acquired various mortgage-related escrows for $1,784 which,
following additional net closing adjustments and costs, resulted in net proceeds
of $11,026 to the Company.
On December 11, 2000, the Company sold approximately 160,000 square feet of the
main building and related parking lot at the Abington Towne Center for $11,500.
The Company retained ownership of approximately 50,000 square feet of the main
building, as well as the outparcels (14,000 square feet) and related parking
areas. Total sales proceeds were $1,366 following the repayment of the mortgage
balance of $10,137 and additional net closing adjustments and costs.
On August 25, 2000, the Company sold 13 acres at the Union Plaza, located in New
Castle, Pennsylvania, for $1,900. Proceeds from the sale totaled $1,882 after
net closing costs and adjustments.
The Company recognized a gain of $13,742 for the year ended December 31, 2000 as
a result of the above property sales.
1999 Acquisitions and Dispositions
On November 16, 1999, the Company acquired 100% of the partnership interests of
the limited partnership which owns the Pacesetter Park Shopping Center, a 96,000
square foot community shopping center located in Rockland County, New York. The
aggregate purchase price of $7,400 consisted of the assumption of $4,637 in
first mortgage debt and the issuance of $2,212 in preferred Operating
Partnership units with the balance funded from working capital.
On May 5, 1999, the Company acquired the sole general partner's interest in the
limited partnership owning the Gateway Shopping Center , a 122,000 square foot
shopping center located in Burlington, Vermont, for $6,547. The interest was
acquired out of bankruptcy by restructuring and assuming the mortgage debt of
$6,222. The balance of the purchase was funded from working capital.
On February 24, 1999, the Company acquired the Mad River Station, a 154,000
square foot shopping center located in Dayton, Ohio for $11,500. The Company
assumed $7,661 in mortgage debt and funded the remaining purchase from working
capital.
Pursuant to its continuing plan to dispose of certain non-core properties, the
Company sold two properties during 1999, the Searstown Mall on February 1, 1999
for a sale price of $3,300 and the Auburn Plaza on March 29, 1999 for $3,500.
RDC Transaction
On August 12, 1998 the Company completed the transactions contemplated by the
Contribution and Share Purchase Agreement dated April 15, 1998 (the "RDC
Transaction") involving affiliates of RD Capital, Inc. ("RDC"). In connection
with the RDC Transaction, the Operating Partnership acquired (i) fee title to or
all, or substantially all, of the ownership interests in twelve shopping
centers, five multi-family properties and one redevelopment property, (ii) a 49%
interest in one shopping center, (iii) certain third party management contracts,
and (iv) certain promissory notes from real estate investment partnerships and
related entities, which were not under common control, in which RDC served as
general partner or in another similar management capacity, for approximately
11.1 million Operating Partnership units ("OP Units") and approximately 2.0
million Common Shares valued at $97,217. In addition, the Company assumed
mortgage debt aggregating $154,234 and incurred other capitalized transaction
costs of $5,757 resulting in an aggregate purchase price of $257,208. As part of
the RDC Transaction, the Company also issued approximately 13.3 million Common
Shares to three real estate investment limited partnerships (collectively "RDC
Funds"), in which affiliates of RDC served as general partner, in exchange for
$100,000. These Common Shares were subsequently distributed to the limited
partners of the RDC Funds in March 2000.
F-11
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
2. Acquisition and Disposition of Properties and Related Transactions, continued
RDC Transaction, continued
The Company accounted for the RDC Transaction as (i) a purchase of properties
and other related assets in exchange for OP Units and Common Shares and the
assumption of certain mortgage debt and other liabilities using the purchase
method of accounting and (ii) an issuance of Common Shares for cash.
Accordingly, the accompanying 1998 consolidated financial statements include the
operations of the properties acquired in the RDC Transaction from August 12,
1998 through December 31, 1998 (note 20).
The Operating Partnership is also obligated to issue additional OP Units valued
at $2,750 upon the completion of certain improvements and the commencement of
rental payments from a designated tenant at one of the properties acquired in
the RDC Transaction.
Following the completion of the RDC Transaction, the Company changed its name
from Mark Centers Trust to Acadia Realty Trust and the name of the Operating
Partnership was changed from Mark Centers Limited Partnership to Acadia Realty
Limited Partnership. Management also adopted a plan to dispose of three non-core
properties following the RDC Transaction. As a result, the Company recorded a
non-cash charge of $11,560 to write-down these properties to their estimated net
realizable value as the anticipated sales proceeds (net of selling costs) were
expected to be insufficient to recover the associated carrying values. On
December 30, 1998, the Company completed the sale of the Normandale Mall for
$2,350. The remaining two properties (the Searstown Mall and Auburn Plaza) were
sold in 1999.
F-12
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
3. Segment Reporting
The Company has two reportable segments: retail properties and multi-family
properties. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The Company
evaluates property performance primarily based on net operating income before
depreciation, amortization and certain nonrecurring items. The reportable
segments are managed separately due to the differing nature of the leases and
property operations associated with the retail versus residential tenants. All
the multi-family units were acquired in 1998 as part of the RDC Transaction. The
following table sets forth certain segment information for the Company as of and
for the years ended December 31, 2000, 1999, and 1998 (does not include
unconsolidated partnerships):
2000
----
Retail Multi-Family All
Properties Properties Other Total
---------- ------------ ----- --------
Revenues $ 79,229 $ 15,396 $ 2,133 $ 96,758
Property operating expenses and
real estate taxes 28,547 6,119 -- 34,666
Net property income before depreciation,
amortization and certain nonrecurring items 50,682 9,277 2,133 62,092
Depreciation and amortization 18,064 2,066 330 20,460
Interest expense 20,802 4,361 -- 25,163
Real estate at cost 430,841 83,298 -- 514,139
Total assets 435,287 81,540 6,784 523,611
Gross leasable area (multi-family - 2,273 units) 8,371 2,039 -- 10,410
Expenditures for real estate and improvements 14,712 1,153 -- 15,865
Revenues
Total revenues for reportable segments $ 97,710
Elimination of intersegment management fee income (952)
--------
Total consolidated revenues $ 96,758
========
Property operating expenses and real estate taxes
Total property operating expenses and real estate
taxes for reportable segments $ 35,618
Elimination of intersegment management fee expense (952)
--------
Total consolidated expense $ 34,666
========
Reconciliation to income before extraordinary
item and minority interest
Net property income before depreciation,
amortization and certain nonrecurring items $ 62,092
Depreciation and amortization (20,460)
General and administrative (5,057)
Equity in earnings of unconsolidated
partnerships 645
Gain on sale of properties 13,742
Interest expense (25,163)
--------
Income before minority interest $ 25,799
========
F-13
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
3. Segment Reporting, continued
1999
----
Retail Multi-Family All
Properties Properties Other Total
---------- ------------ ----- --------
Revenues $ 75,823 $ 14,915 $ 1,971 $ 92,709
Property operating expenses and
real estate taxes 26,190 5,956 -- 32,146
Net property income before depreciation,
amortization and certain nonrecurring items 49,633 8,959 1,971 60,563
Depreciation and amortization 17,817 1,829 241 19,887
Interest expense 19,199 4,115 23,314
Real estate at cost 487,376 82,145 -- 569,521
Total assets 481,175 82,165 7,463 570,803
Gross leasable area (multi-family - 2,273 units) 8,817 2,039 -- 10,856
Expenditures for real estate and improvements 23,912 1,179 -- 25,091
Revenues
Total revenues for reportable segments $ 93,766
Elimination of intersegment management fee income (1,057)
--------
Total consolidated revenues $ 92,709
========
Property operating expenses and real estate taxes
Total property operating expenses and real estate
taxes for reportable segments $ 33,203
Elimination of intersegment management fee expense (1,057)
--------
Total consolidated expense $ 32,146
========
Reconciliation to income before extraordinary
item and minority interest
Net property income before depreciation,
amortization and certain nonrecurring items $ 60,563
Depreciation and amortization (19,887)
General and administrative (6,337)
Equity in earnings of unconsolidated
partnerships 584
Loss on sale of properties (1,284)
Interest expense (23,314)
--------
Income before minority interest $ 10,325
========
F-14
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
3. Segment Reporting, continued
1998
----
Retail Multi-Family All
Properties Properties Other Total
---------- ------------ ----- --------
Revenues $ 53,507 $ 5,644 $ 620 $ 59,771
Property operating expenses and
real estate taxes 19,573 2,145 -- 21,718
Net property income before depreciation,
amortization and certain nonrecurring items 33,934 3,499 620 38,053
Depreciation and amortization 14,963 629 203 15,795
Interest expense 16,685 1,606 11 18,302
Real estate at cost 470,438 80,811 -- 551,249
Total assets 438,163 82,833 7,516 528,512
Gross leasable area (multi-family - 2,273 units) 8,931 2,039 -- 10,970
Expenditures for real estate and improvements 22,844 409 -- 23,253
Revenues
Total revenues for reportable segments $ 60,204
Elimination of intersegment ground rent and
management fee income (433)
--------
Total consolidated revenues $ 59,771
========
Property operating expenses and real estate taxes Total property operating
expenses and real estate
taxes for reportable segments $ 22,151
Elimination of intersegment ground rent and
management fee expense (433)
--------
Total consolidated expense $ 21,718
========
Reconciliation to loss before extraordinary
item and minority interest
Net property income before depreciation,
amortization and certain nonrecurring items $ 38,053
Depreciation and amortization (15,795)
General and administrative (4,409)
Non-recurring charges (2,249)
Settlement of litigation (2,358)
Equity in earnings of unconsolidated
partnerships 256
Loss on sale of property (175)
Adjustment of carrying value of property
held for sale (11,560)
Interest expense (18,302)
--------
Loss before extraordinary item and
minority interest $(16,539)
========
F-15
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
4. Investment in Partnerships
In connection with the RDC Transaction, the Company acquired a 49% interest in
each of the Crossroads Joint Venture and Crossroads II Joint Venture
(collectively "Crossroads") which collectively own a 311,000 square foot
shopping center in Greenburgh, New York. The Company accounts for its investment
in Crossroads using the equity method. Summary financial information of
Crossroads and the Company's investment in and share of income from Crossroads
follows:
December 31,
2000 1999
---- ----
Balance Sheet
Assets:
Rental property, net $ 8,446 $ 8,801
Other assets 4,655 5,204
----- -----
Total assets $13,101 $14,005
======= =======
Liabilities and partners' equity
Mortgage note payable $34,642 $35,105
Other liabilities 736 777
Partners' equity (22,277) (21,877)
-------- --------
Total liabilities and partners'
equity $13,101 $14,005
======= =======
Company's investment in
partnerships $ 6,784 $ 7,463
======= =======
Years Ended December 31,
2000 1999 1998
---- ---- ----
Statement of Operations
Total revenue $ 7,242 $ 7,003 $ 2,680
Operating and other expenses 1,895 1,910 643
Interest expense 2,699 2,568 1,022
Depreciation and amortization 532 534 192
------- ------- -------
Net income $ 2,116 $ 1,991 $ 823
======= ======= =======
Company's share of net income $ 1,037 $ 976 $ 403
Amortization of excess investment
(See below) 392 392 147
--- --- ---
Income from Partnerships $ 645 $ 584 $ 256
======== ======== =======
The unamortized excess of the Company's investment over its share of the net
equity in Crossroads at the date of acquisition was $19,580. The portion of this
excess attributable to buildings and improvements is being amortized over the
life of the related property.
F-16
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
5. Deferred Charges
Deferred charges consist of the following as of December 31, 2000 and 1999:
2000 1999
---- ----
Deferred financing costs $ 7,091 $ 7,563
Deferred leasing and other costs 13,092 12,279
------- -------
20,183 19,842
Accumulated amortization (7,157) (7,468)
------- -------
$13,026 $12,374
======= =======
6. Mortgage Loans
At December 31, 2000, mortgage notes payable aggregated $277,112 and were
collateralized by 45 properties and related tenant leases. Interest rates ranged
from 7.50% to 9.60%. Mortgage payments are due in monthly installments of
principal and/or interest and mature on various dates through 2021. Certain
loans are cross-collateralized and cross-defaulted as part of a group of
properties. The loan agreements contain customary representations, covenants and
events of default. Certain loan agreements require the Company to comply with
certain affirmative and negative covenants, including the maintenance of certain
debt service coverage and leverage ratios.
On December 22, 2000, the Company closed on two fixed-rate financings with a
bank for $11,100 and $5,550, each of which are secured by one of the Company's
properties. The loans, which mature January 1, 2011, require monthly payments of
interest at 7.55% and principal amortized over 30 years. Approximately $13,181
of the proceeds were used to retire existing debt, $454 for various closing
costs and funding of escrows, and the balance of $3,015 was available for
working capital.
On December 11, 2000, the Company fully repaid $10,137 of outstanding debt with
a life insurance company following the sale of a portion of the property which
secured the debt (Note 2).
On October 13, 2000, the Company refinanced $36,000 of maturing debt with a life
insurance company, with two new loans from the same lender. The Company repaid
$5,000 prior to refinancing the balance of the maturing debt. The first loan,
which is a fixed-rate facility secured by two of the Company's properties, was
for $25,200 and requires the monthly payment of interest at a rate of 8.13% and
principal amortized over 25 years. The loan matures in November 2010. The second
loan, which is a variable-rate facility secured by three of the Company's
properties, was for $10,800 and requires the monthly payment of interest at
LIBOR plus 200 basis points and matures in November 2003. Commencing 18 months
after the closing, the loan also requires the monthly payment of principal
amortized over 25 years. Both loans are cross-collateralized with all five
properties. Furthermore, with respect to the variable-rate facility, the Company
is required to deposit 50% of the monthly net cash flow after debt service,
which will be used to fund future property and tenant improvements at the
collateral properties.
On July 19, 2000, the Company closed on a facility with a bank, which provides
for the borrowing of up to $10,000. The variable-rate facility, which is secured
by one of the Company's properties, matures in August 2003 and requires the
monthly payment of interest at the rate of LIBOR plus 175 basis points and
principal amortized over 25 years. At closing, the Company borrowed $9,000 under
this facility, of which $7,060 of proceeds were used to retire existing debt
with another lender, $149 for various closing costs and the balance was
available for working capital. The Company may draw the additional $1,000
subject to certain lender requirements including debt-service and collateral
value.
On March 30, 2000, the Company closed on a $59,000 secured financing line with a
bank (the "Line"). The Line is secured by five of the seven properties that
collateralized a loan with a life insurance company which was retired using
$30,735 of the proceeds from the initial $36,000 funding. The balance of the
Line must be drawn by April 2001. The Line matures April 1, 2005 and requires
the monthly payment of interest at a variable-rate of LIBOR plus 175 basis
points and principal amortized over 30 years. After September 2001, the debt can
be prepaid without prepayment or yield maintenance fees. As of December 31,
2000, $35,814 was outstanding under the Line.
F-17
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
6. Mortgage Loans, continued
On March 23, 2000, the Company fully repaid $4,600 of outstanding debt with a
bank which was collateralized by one of the Company's properties.
On February 8, 2000, the Company closed on a revolving credit facility with a
bank, which provides for the borrowing of up to $7,400. The variable-rate
facility, which is secured by one of the Company's properties, matures in March
2003 and requires the monthly payment of interest at the rate of LIBOR plus 150
basis points (the rate increases by an additional 25 basis points if the amount
outstanding under the facility exceeds 50% of the value of the collateral). The
monthly repayment of principal amortized over 25 years is required only if the
Company draws the full amount available under the facility. As of December 31,
2000, the Company had $3,500 outstanding under this facility.
On January 31, 2000, the Company repaid $23,090 of outstanding debt with a life
insurance company from working capital. The remaining outstanding debt of
$30,735 with this lender was fully repaid with the proceeds from the March 30,
2000 bank financing as described above.
The following table summarizes the Company's mortgage indebtedness as of
December 31, 2000 and 1999:
December 31, December 31, Interest
2000 1999 Rate
------- ------- ------
Mortgage notes payable - variable-rate
General Electric Capital Corp. $ -- $ 7,126 --
Fleet Bank, N.A. 4,110 3,966 8.51% (LIBOR + 1.75%)
Fleet Bank, N.A. 9,216 9,326 8.54% (LIBOR + 1.78%)
Sun America Life Insurance Company 13,774 13,931 8.55% (LIBOR + 2.05%)
Sun America Life Insurance Company 9,856 9,979 8.55% (LIBOR + 2.05%)
KBC Bank 14,238 14,508 8.07% (LIBOR + 1.25%)
Fleet Bank, N.A. 3,500 -- 8.13% (LIBOR + 1.50%)
Fleet Bank, N.A. 8,965 -- 8.49% (LIBOR + 1.75%)
Metropolitan Life Insurance Company 10,800 -- 8.80% (LIBOR + 2.00%)
First Union National Bank 13,636 13,750 8.21% (LIBOR + 1.45%)
Dime Savings Bank of NY 35,814 -- 8.56% (LIBOR + 1.75%)
------- ------
Total variable-rate debt 123,909 72,586
------- ------
Mortgage notes payable - fixed rate
Sun America Life Insurance Company 17,999 42,143 7.75%
Huntoon Hastings Capital Corp. 6,222 6,222 7.50%
North Fork Bank 9,887 5,000 7.75%
Anchor National Life Insurance Company 3,775 3,866 7.93%
Lehman Brothers Holdings, Inc. 17,792 17,973 8.32%
Mellon Mortgage Company 7,442 7,566 9.60%
Northern Life Insurance Company 2,895 3,173 7.70%
Reliastar Life Insurance Company 1,996 2,189 7.70%
Metropolitan Life Insurance Company 25,148 -- 8.13%
Bank of America, N.A. 11,100 -- 7.55%
Bank of America, N.A. 5,550 -- 7.55%
Morgan Stanley Mortgage Capital 43,397 44,092 8.84%
Nomura Asset Capital Corporation -- 22,335 9.02%
John Hancock Mutual Life Insurance Company -- 53,878 9.11%
Metropolitan Life Insurance Company -- 41,000 7.75%
M&T Real Estate Inc. -- 4,628 8.18%
-------- --------
Total fixed-rate debt 153,203 254,065
-------- --------
$277,112 $326,651
======== ========
F-18
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
6. Mortgage Loans, continued
Properties Payment
Maturity Encumbered Terms
---------- ---------- -------
Mortgage notes payable - variable-rate
General Electric Capital Corp. -- -- --
Fleet Bank, N.A. 03/15/02 (1) (2)
Fleet Bank, N.A. 05/31/02 (3) (2)
Sun America Life Insurance Company 08/01/02 (4) (2)
Sun America Life Insurance Company 10/01/02 (5) (2)
KBC Bank 12/31/02 (6) (2)
Fleet Bank, N.A. 03/01/03 (7) (2)
Fleet Bank, N.A. 08/01/03 (8) (2)
Metropolitan Life Insurance Company 11/01/03 (9) (24)
First Union National Bank 01/01/05 (10) (2)
Dime Savings Bank of NY 04/01/05 (11) (2)
Mortgage notes payable - fixed rate
Sun America Life Insurance Company 01/10/01 (12) $161(2)
Huntoon Hastings Capital Corp. 09/01/02 (13) (14)
North Fork Bank 12/01/02 (15) $76(2)
Anchor National Life Insurance Company 01/01/04 (16) $33(2)
Lehman Brothers Holdings, Inc. 03/01/04 (17) $139(2)
Mellon Mortgage Company 05/23/05 (18) $70(2)
Northern Life Insurance Company 12/01/08 (19) $41(2)
Reliastar Life Insurance Company 12/01/08 (19) $28(2)
Metropolitan Life Insurance Company 11/01/10 (20) $197(2)
Bank of America, N.A. 01/01/11 (21) $78(2)
Bank of America, N.A. 01/01/11 (22) $39(2)
Morgan Stanley Mortgage Capital 11/01/21 (23) $380(2)
Nomura Asset Capital Corporation -- -- --
John Hancock Mutual Life Insurance Company -- -- --
Metropolitan Life Insurance Company -- -- --
M&T Real Estate Inc. -- -- --
Notes:
(1) Town Line Plaza (11) Ledgewood Mall (20) Crescent Plaza
New Louden Center East End Centre
(2) Monthly principal and interest Route 6 Plaza
Bradford Towne Centre (21) GHT Apartments
(3) Smithtown Shopping Center Berlin Shopping Center
(22) Colony Apartments
(4) Merrillville Plaza (12) Bloomfield Town Square
Walnut Hill Shopping Center (23) Midway Plaza
(5) Village Apartments (note 20) Kings Fairgrounds
Shillington Plaza
(6) Marley Run Apartments (13) Gateway Shopping Center Dunmore Plaza
Kingston Plaza
(7) Marketplace of Absecon (14) Interest only until 5/01; monthly 25th Street Shopping Center
principal and interest thereafter Circle Plaza
(8) Soundview Marketplace Northside Mall
(15) The Branch Shopping Center Monroe Plaza
(9) Green Ridge Plaza New Smyrna Beach
Luzerne Street Plaza (16) Pittston Plaza Mountainville Plaza
Valmont Plaza Cloud Springs Plaza
(17) Glen Oaks Apartments Birney Plaza
(10) 239 Greenwich Avenue Troy Plaza
(18) Mad River Station Shopping Martintown Plaza
Center Plaza 15
Ames Plaza
(19) Manahawkin Shopping Center
(24) Interest only until 5/02; monthly
Principal and interest thereafter
F-19
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
6. Mortgage Loans, continued
The scheduled principal repayments of all mortgage indebtedness as of December
31, 2000 are as follows:
2001 $ 21,595
2002 69,291
2003 25,916
2004 23,440
2005 56,912
Thereafter 79,958
--------
$277,112
========
7. Minority Interests
Minority interest represents the limited partners' interest of 6,804,144 and
10,484,143 Common Operating Partnership ("Common OP") Units in the Operating
Partnership at December 31, 2000 and 1999, respectively, and 2,212 units of
Preferred Limited Partnership Interests designated as Series A Preferred Units
("Preferred OP Units") issued November 16, 1999 in connection with the
acquisition of all the partnership interests of the limited partnership which
owns the Pacesetter Park Shopping Center (note 2).
The Preferred OP Units, which have a stated value of $1,000 each, are entitled
to a quarterly preferred distribution of the greater of (i) $22.50 (9% annually)
per Preferred OP Unit or (ii) the quarterly distribution attributable to a
Preferred OP Unit if such unit were converted into a Common OP Unit. The
Preferred OP Units are currently convertible into Common OP Units based on the
stated value divided by $7.50. After the seventh anniversary following their
issuance, either the Company or the holders can call for the conversion of the
Preferred OP Units at the lesser of $7.50 or the market price of the Common
Shares as of the conversion date.
On December 12, 2000 and August 15, 2000, 220,300 and 3,459,699 Common OP Units,
respectively, were converted into Common Shares by certain limited partners.
Minority interests at December 31, 2000 and 1999 also include an aggregate
amount of $2,197 and $2,223, respectively, representing interests held by third
parties in four of the properties acquired in the RDC Transaction in which the
Company has a majority ownership position.
8. Related Party Transactions
During 1998, the Company entered into the following transactions with Mr.
Slomowitz, a former trustee and former principal shareholder, in connection with
the RDC Transaction: (i) repaid a $3,030 note related to the Company's 1996
purchase of the Union Plaza, (ii) paid $600 in severance pay, (iii) paid $100 on
the closing of the RDC Transaction and agreed to pay $100 on each of the
following two anniversary dates of the closing of the RDC Transaction for his
agreement not to compete with the Company and for certain consulting services,
(iv) granted ten year options to purchase 300,000 Common Shares at an exercise
price of $9.00 per Common Share, (v) cancelled formerly issued options to
purchase 200,000 Common Shares at $12.00 per Common Share and (vi) agreed to pay
a brokerage commission of 2% of the sales price of nine designated properties
currently comprising a portion of the Company's portfolio, provided such
commissions would not exceed $600 in the aggregate.
On December 30, 1999, the Company and Mr. Slomowitz terminated certain of the
obligations described above which were incurred in connection with the RDC
Transaction. The principal terms included cancellation of the lease for the
Company's prior headquarters in a building owned by Mr. Slomowitz. Rent expenses
for this office space was $119 and $112 for the years ended December 31, 1999
and 1998, respectively. The Company paid Mr. Slomowitz the sum of $329 in
connection with the lease cancellation. Additionally, Mr. Slomowitz terminated
his options to acquire 301,000 common shares and waived the final $100
installment payment due August, 2000. The Company agreed to indemnify Mr.
Slomowitz with respect to certain contingent liabilities. Mr. Slomowitz retains
the right to continue to guarantee Company debt up to $55,000.
F-20
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
8. Related Party Transactions, continued
Mr. Slomowitz also removed all restrictions on the sale of any properties which
he had originally contributed to the Company, waived his claims for present and
future brokerage commissions and agreed to absorb up to $1,250 of tax
liabilities resulting in event of the sale thereof. Mr. Slomowitz also resigned
from the Company's Board of Trustees effective December 8, 1999.
On July 16, 1999, and April 9, 1999, Mr. Slomowitz converted 600,000 and 100,000
Common OP Units, respectively, into Common Shares.
In connection with the RDC Transaction, the Company acquired certain property
management contracts for three properties in which certain current shareholders
of the Company or their affiliates have ownership interests. Management fees
earned by the Company under these contracts are at rates ranging from 3% to 3.5%
of collections. Such fees aggregated $853, $639 and $225 for the years ended
December 31, 2000, 1999 and 1998, respectively. Management fees earned under
management contracts on properties owned by Mr. Slomowitz aggregated $8 for the
year ended December 31, 1998.
In connection with the RDC Transaction, the Company is obligated, for a period
of five years following the transaction, to reimburse the partners of the real
estate partnerships which contributed properties as part of the transaction, for
any tax liabilities resulting from the sale of any of the contributed
properties. As a result, in connection with the sale of a portion of the
Abington Towne Center (note 2), the Company estimated that it was obligated to
reimburse the partners of the partnership which contributed this property a
total of approximately $640. Of this amount, Mssrs. Dworman and Berstein are
owed approximately $275 as a result of their interests in the contributing
partnership. The total estimated obligation was included in the determination of
the gain on sale of the property.
9. Tenant Leases
Space in the shopping centers and other retail properties is leased to various
tenants under operating leases which usually grant tenants renewal options and
generally provide for additional rents based on certain operating expenses as
well as tenants' sales volume.
Minimum future rentals to be received under non-cancelable leases for shopping
centers and other retail properties as of December 31, 2000 are summarized as
follows:
2001 $ 51,025
2002 47,495
2003 44,179
2004 39,308
2005 32,589
Thereafter 201,162
--------
$415,758
========
Minimum future rentals above include a total of $5,110 for four tenants (with
six leases), which have filed for bankruptcy protection. None of these leases
have been rejected nor affirmed. During the years ended December 31, 2000, 1999
and 1998, no single tenant collectively accounted for more than 10% of the
Company's total revenues.
F-21
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
10. Lease Obligations
The Company leases land at six of its shopping centers, which are accounted for
as operating leases and generally provide the Company with renewal options. The
leases terminate during the years 2016 to 2066. Four of these leases provide the
Company with options to renew for additional terms aggregating from 20 to 44
years. The Company leases space for its New York City corporate office for a
term expiring in 2002. Future minimum rental payments required for leases having
remaining non-cancelable lease terms in excess of one year are as follows:
2001 $ 714
2002 668
2003 642
2004 642
2005 642
Thereafter 20,641
-------
$23,949
=======
11. Share Incentive Plan
During 1999, the Company adopted the 1999 Share Incentive Plan (the "1999 Plan")
which replaced both the 1994 Share Option Plan and the 1994 Non-Employee
Trustees' Share Option Plan. The 1999 Plan authorizes the issuance of options
equal to up to 8% of the total Common Shares outstanding from time to time on a
fully diluted basis. However, not more than 4,000,000 of the Common Shares in
the aggregate may be issued pursuant to the exercise of options and no
participant may receive more than 5,000,000 Common Shares during the term of the
1999 Plan. Options are granted by the Share Option Plan Committee (the
"Committee"), which currently consists of two non-employee Trustees, and will
not have an exercise price less than 100% of the fair market value of the Common
shares and a term of greater than 10 years at the grant date. Vesting of options
is at the discretion of the Committee with the exception of options granted to
non-employee Trustees, which vest in five equal annual installments beginning on
the date of grant. Pursuant to the 1999 Plan, non-employee Trustees receive an
automatic grant of 1,000 options following each Annual Meeting of Shareholders.
As of December 31, 2000, the Company has issued 2,115,600 options to officers
and employees, which are for ten-year terms and vest in three equal annual
installments beginning on the grant date. In addition, 9000 options have been
issued to non-employee Trustees.
The 1999 Plan also provides for the granting of Share Appreciation Rights,
Restricted Shares and Performance Units/Shares. Share Appreciation Rights
provide for the participant to receive, upon exercise, cash and/or Common
Shares, at the discretion of the committee, equal to in value to the excess of
the option exercise price over the fair market value of the Common Shares at the
exercise date. The Committee will determine the award and restrictions placed on
Restricted Shares, including the dividends thereon and the term of such
restrictions. The Committee also determines the award and vesting of Performance
Units and Performance Shares based on the attainment of specified performance
objectives of the Company within a specified performance period. As of December
31, 2000, the Company issued 86,063 Restricted Shares to employees, which vest
equally over three years. No awards of Share Appreciation Rights or Performance
Units/Shares were granted for the years ended December 31, 2000 and 1999.
F-22
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
11. Share Incentive Plan, continued
The Company accounts for stock-based compensation pursuant to Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"), and related interpretations. Under APB 25, no compensation expense
has been recognized in the accompanying financial statements related to the
issuance of stock options because the exercise price of the Company's employee
stock options equaled or exceeded the market price of the underlying stock on
the date of grant. The alternative fair value accounting provided for under
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), has not been elected by the Company.
Accordingly, pro forma information regarding net income and earnings per share
as required by SFAS 123 has been determined as if the Company had accounted for
its employee stock options under the fair value method. The fair value for these
options was estimated at the date of the grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions:
Year ended December 31,
2000 1999 1998
---- ---- ----
Risk-free interest rate 4.9% 6.4% 5.2%
Dividend Yield 7.8% 9.5% 9.4%
Expected Life 7.7 years 8.6 years 9.7 Years
Expected volatility 30.0% 32.4% 37.7%
For purposes of pro forma disclosure, the estimated fair value of the options
are amortized to expense over the options vesting period. For the years ended
December 31, 2000 and 1999, pro forma net income is $19,038, or $0.72 per Share,
and $6,573, or $0.26 per Common Share, respectively. For the year ended December
31, 1998, the Company has elected not to present proforma information because
the impact on the reported net loss per Common Share is immaterial.
Changes in the number of shares under all option arrangements are summarized as
follows:
Year ended December 31,
2000 1999 1998
---- ---- ----
Outstanding at beginning
of period 2,071,600 300,000 329,500
Granted 55,000 2,071,600 305,000
Option price per share
granted $5.00-$5.75 $4.89-$7.50 $8.88-$9.00
Cancelled 2,000 300,000 334,500
Exercisable at end
of period 2,108,200 1,368,733 300,000
Exercised -- -- --
-- -- --
Expired -- -- --
Outstanding at end
of period 2,124,600 2,071,600 300,000
Option prices per
share outstanding $4.89-$7.50 $4.89-$7.50 $9.00
As of December 31, 2000 the outstanding options had a weighted average remaining
contractual life of approximately 7.7 years.
F-23
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
12. 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 but not in excess of $11 for the year ended December
31, 2000. The Company contributed $143, $93 and $77 for the years ended December
31, 2000, 1999 and 1998, respectively.
13. Dividends and Distributions Payable
On December 13, 2000, the Company declared a cash dividend for the quarter ended
December 31, 2000 of $0.12 per Common Share. The dividend was paid on January
15, 2001 to shareholders of record as of December 29, 2000.
The Company has determined that the cash distributed to the shareholders is
characterized as follows for federal income tax purposes:
2000 1999 1998
---- ---- ----
Ordinary income 100% 41% n/a
Return of capital - 59% n/a
---- ---- ----
100% 100% n/a
==== ==== ====
14. Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 "Disclosures About Fair
Value of Financial Instruments", requires disclosure on the fair value of
financial instruments. Certain of the Company's assets and liabilities are
considered financial instruments. Fair value estimates, methods and assumptions
are set forth below.
Cash and Cash Equivalents, Cash in Escrow, Rents Receivable, Prepaid Expenses,
Other Assets, Accounts Payable and Accrued Expenses, Dividends Payable and Other
Liabilities. The carrying amount of these assets and liabilities approximates
fair value due to the short-term nature of such accounts.
Mortgage Notes Payable
As of December 31, 2000 and 1999, the Company has determined the estimated fair
value of its mortgage notes payable are approximately $287,588 and $326,797,
respectively, by discounting future cash payments utilizing a discount rate
equivalent to the rate at which similar mortgage notes payable would be
originated under conditions then existing.
F-24
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
15. Summary of Quarterly Financial Information (unaudited)
The separate results of operations of the Company for the years ended December
31, 2000 and 1999 are as follows:
March 31, June 30, September 30, December 31, Total for
2000 2000 2000 2000 Year
--------- -------- ------------- ------------ ---------
Revenue $23,863 $24,969 $23,489 $24,437 $96,758
===================================================================
Income before minority interest $2,701 $4,238 $1,527 $17,333 $25,799
===================================================================
Net income $1,874 $2,964 $1,105 $13,964 $19,907
===================================================================
Net income per Common Share - basic and diluted $0.07 $0.12 $0.04 $0.49 $0.75
===================================================================
Cash dividends declared per Common Share $0.12 $0.12 $0.12 $0.12 $0.48
===================================================================
Weighted average Common Shares outstanding - basic
and diluted 25,476,098 25,241,794 26,789,666 28,218,059 26,437,265
===================================================================
March 31, June 30, September 30, December 31, Total for
1999 1999 1999 1999 Year
-------- -------- ------------- ------------ ---------
Revenue $22,251 $21,904 $24,428 $ 24,126 $92,709
=================================================================
Income before minority interest $ 1,141 $ 1,886 $ 4,362 $ 2,936 $10,325
=================================================================
Net income $ 765 $ 1,289 $ 3,083 $ 2,058 $ 7,195
=================================================================
Net income per Common Share - basic and diluted $ 0.03 $ 0.05 $ 0.12 $ 0.08 $ 0.28
=================================================================
Cash dividends declared per Common Share $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.48
=================================================================
Weighted average Common Shares outstanding - basic
and diluted 25,419,215 25,510,424 25,988,860 25,908,199 25,708,787
=================================================================
F-25
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
16. Legal Proceedings
On November 20, 1995, Jack Wertheimer, a former President of the Company, filed
a complaint against the Company, its Trustees, including Mr. Slomowitz, and the
Company's former in-house General Counsel and former Chief Financial Officer in
the United States District Court for the Middle District of Pennsylvania. The
complaint, which was filed in connection with the termination of Mr.
Wertheimer's employment, included many of the allegations raised in a state
court proceeding commenced by Mr. Wertheimer in November 1994. The Federal court
complaint also included a civil RICO action in which Mr. Wertheimer alleged that
the Board of Trustees of the Company conspired with Mr. Slomowitz to terminate
Mr. Wertheimer's employment as part of the Mr. Slomowitz's breach of his duty of
good faith and fair dealing. Further, Mr. Wertheimer alleged that the above
defendants engaged in securities fraud in connection with the initial public
offering and that Mr. Slomowitz defrauded or overcharged the Company in
corporate transactions. The Federal complaint sought treble damages under RICO,
as well as damages arising from Mr. Wertheimer's alleged termination of
employment, invasion of privacy, intentional infliction of emotional distress,
fraud and misrepresentation.
On December 31, 1998, the Company and Mr. Wertheimer settled this litigation and
entered into an agreement whereby the Company paid Mr. Wertheimer $1,000 on
December 31, 1998 and $900 on April 1, 1999 and agreed to pay him five annual
payments of $200 which commenced January 10, 2000. Pursuant to this agreement,
the Company has obtained a standby letter of credit to collateralize the
remaining future payments.
The Company is involved in other various matters of litigation arising in the
normal course of business. While the Company is unable to predict with certainty
the amounts involved, the Company's management and counsel are of the opinion
that, when such litigation is resolved, the Company's resulting liability, if
any, will not have a significant effect on the Company's consolidated financial
position.
17. Contingencies
Upon conducting environmental site inspections in connection with obtaining the
Morgan Stanley Mortgage Capital ("Morgan Stanley") financing during October
1996, certain environmental contamination was identified at the Troy Plaza in
Troy, New York. The Company entered into a voluntary remedial agreement with the
State of New York for the remediation of the property. During 2000, the Company
satisfied all conditions to the voluntary remedial agreement and received final
approval from the State of New York. All remaining amounts held by Morgan
Stanley pertaining to environmental remediation were released in October 2000.
Management is not aware of any other environmental liability that they believe
would have a material adverse impact on the Company's financial position or
results of operations. Management is unaware of any instances in which it would
incur significant environmental costs if any or all properties were sold,
disposed of or abandoned.
F-26
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
18. Extraordinary Item - Loss on Early Extinguishment of Debt
The consolidated statements of operations for the year ended December 31, 1998
includes the write-off of $707 in net deferred financing fees as a result of the
repayment of the related mortgage debts.
19. Pro Forma Information
The following unaudited pro forma condensed consolidated information for the
year ended December 31, 1998 is presented as if the RDC Transaction had occurred
on January 1, 1997.
Revenue $ 84,053
========
Loss income before
extraordinary item $ (5,886)
Net loss income $ (6,067)
Net (loss) income per Common Share-
basic and diluted $ (0.24)
Weighted average number of
Common Shares outstanding 24,677,928
==========
Weighted average number of
Common Shares outstanding-
assuming dilution 24,677,928
==========
20. Subsequent Events
On January 8, 2001, the Company partially repaid $10,087 of fixed-rate mortgage
debt, which was secured by two of the Company's properties, with a life
insurance company. Following this repayment from working capital, the remaining
balance of $7,912 was converted to a variable-rate facility which is secured by
one of the Company's properties, requires the monthly payments of interest at
LIBOR plus 200 basis points and principal amortized over 25 years, and matures
January 10, 2002.
On January 4, 2001, the Company announced that Kenneth F. Bernstein, President,
was elected by the Board of Trustees to the additional post of Chief Executive
Officer and that Ross Dworman, former Chairman and Chief Executive Officer, is
to remain as Chairman of the Board.
F-27
ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2000
Costs capitalized
Buildings & Subsequent
Description Encumbrances Land Improvements to Acquisition Land
- ---------------------------------------------------------------------------------------------------------------------------------
Shopping Centers
Circle Plaza (1) $ - $ 3,435 $ 152 $ 2
Shamokin Dam, PA
Martintown Plaza (1) - 4,625 1,648 -
North Augusta, SC
Midway Plaza (1) 196 1,647 3,171 196
Opelika, AL
Northside Mall (1) 1,604 7,080 4,103 1,604
Dothan, AL
New Smyrna Beach (1) 246 2,219 3,982 246
New Smyrna Beach FL
King's Fairground (1) - 1,426 338 -
Danville, VA
Cloud Springs Plaza (1) 159 2,712 1,177 159
Ft Ogelthorpe, GA
Crescent Plaza 8,882 1,147 7,425 512 1,147
Brockton, MA
New Louden Centre (2) 505 4,161 10,130 505
Latham, NY
Ledgewood Mall (2) 619 5,434 31,415 619
Ledgewood, NJ
Troy Plaza (1) 479 1,976 1,094 479
Troy, NY
Birney Plaza (1) 210 2,979 803 210
Moosic, PA
Dunmore Plaza (1) 100 506 137 100
Dunmore, PA
Mark Plaza - - 4,268 4,111 -
Edwardsville, PA
Kingston Plaza (1) 305 1,745 463 284
Kingston, PA
Luzerne Street Plaza 1,600 35 315 1,208 35
Scranton, PA
Blackman Plaza - 120 - 1,383 120
Wilkes- Barre, PA
East End Centre 16,266 1,086 8,661 3,559 1,086
Wilkes-Barre, PA
Greenridge Plaza 6,100 1,335 6,314 655 1,335
Scranton, PA
Plaza 15 (1) 171 81 1,481 171
Lewisburg, PA
[RESTUB]
Date of
Buildings & Accumulated Acquisition (a)
Description Improvements Total Depreciation Construction (c)
- ----------------------------------------------------------------------------------------------------------
Shopping Centers
Circle Plaza $ 3,585 $ 3,587 $ 1,470 1978(c)
Shamokin Dam, PA
Martintown Plaza 6,273 6,273 2,755 1985(a)
North Augusta, SC
Midway Plaza 4,818 5,014 2,384 1984(a)
Opelika, AL
Northside Mall 11,192 12,796 4,653 1986(a)
Dothan, AL
New Smyrna Beach 6,201 6,447 3,338 1983(a)
New Smyrna Beach FL
King's Fairground 1,764 1,764 552 1992(a)
Danville, VA
Cloud Springs Plaza 3,889 4,048 1,795 1985(a)
Ft Ogelthorpe, GA
Crescent Plaza 7,937 9,084 3,207 1984(a)
Brockton, MA
New Louden Centre 14,291 14,796 4,871 1982(a)
Latham, NY
Ledgewood Mall 36,849 37,468 16,238 1983(a)
Ledgewood, NJ
Troy Plaza 3,070 3,549 1,692 1982(a)
Troy, NY
Birney Plaza 3,782 3,992 3,374 1968(c)
Moosic, PA
Dunmore Plaza 643 743 331 1975(a)
Dunmore, PA
Mark Plaza 8,379 8,379 4,140 1968(c)
Edwardsville, PA
Kingston Plaza 2,229 2,513 1,324 1982(c)
Kingston, PA
Luzerne Street Plaza 1,523 1,558 865 1983(a)
Scranton, PA
Blackman Plaza 1,383 1,503 122 1968(c)
Wilkes- Barre, PA
East End Centre 12,220 13,306 5,834 1986(c)
Wilkes-Barre, PA
Greenridge Plaza 6,969 8,304 3,176 1986(c)
Scranton, PA
Plaza 15 1,562 1,733 609 1976(c)
Lewisburg, PA
ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2000
Costs capitalized
Buildings & Subsequent
Description Encumbrances Land Improvements to Acquisition Land
- ---------------------------------------------------------------------------------------------------------------------------------
Shopping Centers (cont.)
Plaza 422 - 190 3,004 517 190
Lebanon, PA
Tioga West - 48 1,238 3,215 48
Tunkhannock,PA
Mountainville Plaza (1) 420 2,390 486 420
Allentown, PA
Monroe Plaza (1) 70 2,083 288 150
Stroudsburg, PA
Ames Plaza (1) 57 1,958 316 57
Shamokin, PA
Route 6 Mall (2) - - 12,696 1,664
Honesdale , PA
Pittston Mall 3,775 1,500 - 5,956 1,521
Pittston , PA
Valmont Plaza 3,100 522 5,591 1,030 522
West Hazelton , PA
Manahawkin 4,891 2,360 9,396 4,890 3,065
Stafford Township, NJ
Twenty Fifth Street (1) 2,280 9,276 199 2,280
Easton, PA
Berlin Shopping Centre (2) 1,331 5,351 205 1,331
Berlin, NJ
Shillington Plaza (1) 809 3,268 322 809
Reading, PA
Union Plaza - - - 19,127 4,312
New Castle, PA
Bradford Towne Centre (2) - - 16,100 817
Towanda, PA
Atrium Mall - 799 3,197 24 799
Abington, PA
Bloomfield Town Square 8,894 3,443 13,774 245 3,443
Bloomfield Hills, MI
Walnut Hill Plaza 9,104 3,122 12,488 418 3,122
Woonsocket, RI
Elmwood Park Plaza - 3,248 12,992 218 3,248
Elmwood Park, NJ
Merrillville Plaza 13,775 4,288 17,152 829 4,288
Hobart, IN
Soundview Marketplace 8,965 2,428 9,711 1,332 2,428
Port Washington, NY
Marketplace of Absecon 3,500 2,573 10,294 2,316 2,577
Absecon, NJ
[RESTUB]
Date of
Buildings & Accumulated Acquisition (a)
Description Improvements Total Depreciation Construction (c)
- --------------------------------------------------------------------------------------------------------
Shopping Centers (cont.)
Plaza 422 3,521 3,711 2,168 1972(c)
Lebanon, PA
Tioga West 4,453 4,501 2,246 1965(c)
Tunkhannock,PA
Mountainville Plaza 2,876 3,296 1,649 1983(a)
Allentown, PA
Monroe Plaza 2,291 2,441 1,120 1964(c)
Stroudsburg, PA
Ames Plaza 2,274 2,331 1,772 1966(c)
Shamokin, PA
Route 6 Mall 11,032 12,696 2,385 1995(c)
Honesdale , PA
Pittston Mall 5,935 7,456 1,114 1995(c)
Pittston , PA
Valmont Plaza 6,621 7,143 3,257 1985(a)
West Hazelton , PA
Manahawkin 13,581 16,646 2,167 1993(a)
Stafford Township, NJ
Twenty Fifth Street 9,475 11,755 2,314 1993(a)
Easton, PA
Berlin Shopping Centre 5,556 6,887 1,322 1994 (a)
Berlin, NJ
Shillington Plaza 3,590 4,399 724 1994 (a)
Reading, PA
Union Plaza 14,815 19,127 1,987 1996 (c)
New Castle, PA
Bradford Towne Centre 15,283 16,100 3,483 1994 (c)
Towanda, PA
Atrium Mall 3,221 4,020 193 1998(a)
Abington, PA
Bloomfield Town Square 14,019 17,462 834 1998(a)
Bloomfield Hills, MI
Walnut Hill Plaza 12,906 16,028 948 1998(a)
Woonsocket, RI
Elmwood Park Plaza 13,210 16,458 772 1998(a)
Elmwood Park, NJ
Merrillville Plaza 17,981 22,269 1,137 1998(a)
Hobart, IN
Soundview Marketplace 11,043 13,471 712 1998(a)
Port Washington, NY
Marketplace of Absecon 12,606 15,183 704 1998(a)
Absecon, NJ
ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2000
Costs capitalized
Buildings & Subsequent
Description Encumbrances Land Improvements to Acquisition Land
- ---------------------------------------------------------------------------------------------------------------------------------
Shopping Centers (cont.)
Hobson West Plaza - 1,793 7,172 353 1,793
Naperville, IL
Smithtown Shopping Center 9,216 3,229 12,917 933 3,229
Smithtown, NY
Town Line Plaza 4,110 878 3,510 6,578 909
Rocky Hill, CT
Branch Shopping Center 9,887 3,156 12,545 100 3,156
Village of the Branch, NY
The Caldor Shopping Center - 956 3,826 0 956
Methuen, MA
Gateway Mall 6,222 1,273 5,091 - 1,273
Burlington, VT
Mad River Station 7,442 2,350 9,404 53 2,350
Dayton, OH
Pacesetter Park Shopping Center - 1,475 5,899 212 1,475
Ramapo, NY
239 Greenwich 13,636 1,817 15,846 163 1,817
Greenwich, CT
Residential Properties
Gate House, Holiday House, Tiger Village 11,100 2,312 9,247 910 2,312
Columbia, MO
Village Apartments 9,856 3,429 13,716 615 3,429
Winston Salem, NC
Colony Apartments 5,550 1,118 4,470 264 1,118
Columbia, MO
Properties under development - - - 6,301 -
---------- ---------------------------------------------------------------
$ 277,112 (5) $ 61,591 $ 293,815 $ 158,733 $ 69,206
========== ===============================================================
[RESTUB]
Date of
Buildings & Accumulated Acquisition (a)
Description Improvements Total Depreciation Construction (c)
- ----------------------------------------------------------------------------------------------------------
Shopping Centers (cont.)
Hobson West Plaza 7,525 9,318 503 1998(a)
Naperville, IL
Smithtown Shopping Center 13,850 17,079 1,028 1998(a)
Smithtown, NY
Town Line Plaza 10,057 10,966 1,020 1998(a)
Rocky Hill, CT
Branch Shopping Center 12,645 15,801 746 1998(a)
Village of the Branch, NY
The Caldor Shopping Center 3,826 4,782 227 1998(a)
Methuen, MA
Gateway Mall 5,091 6,364 96 1999(a)
Burlington, VT
Mad River Station 9,457 11,807 436 1999(a)
Dayton, OH
Pacesetter Park Shopping Center 6,111 7,586 166 1999(a)
Ramapo, NY
239 Greenwich 16,009 17,826 527 1999(c)
Greenwich, CT
Residential Properties
Gate House, Holiday House, Tiger Village 10,157 12,469 703 1998(a)
Columbia, MO
Village Apartments 14,331 17,760 958 1998(a)
Winston Salem, NC
Colony Apartments 4,734 5,852 313 1998(a)
Columbia, MO
Properties under development 6,301 6,301 -
----------------------------------------
444,933 $ 514,139 $ 102,461
========================================
F-28
Acadia Realty Trust
Notes To Schedule 3
December 31, 2000
1. These seventeen properties serve as collateral for the financing with Morgan
Stanley (note 6).
2. These five properties serve as collateral for the financing with Dime Savings
Bank (note 6).
3. Depreciation and investments in buildings and improvements reflected in the
statements of operations is calculated over the estimated useful life of the
assets as follows:
Buildings 30 to 40 years
Improvements Shorter of lease term or useful life
4. The aggregate gross cost of property included above for Federal income tax
purposes was $453,994 as of December 31, 2000.
5. Total encumbrances include $14,238 and $17,792 for Marley Run Apartments and
Glen Oaks Apartments which are separately disclosed as Property held for sale
in the balance sheet.
6.(a) Reconciliation of Real Estate Properties:
The following table reconciles the real estate properties from January 1, 1998
to December 31, 2000:
For the year ended December 31,
2000 1999 1998
---- ---- ----
Balance at beginning of period $ 569,521 $ 551,249 $ 311,688
Other improvements 13,998 19,728 16,647
Properties acquired - 25,905 254,164
Adjustment of carrying value of property held for sale - - (11,560)
Property held for sale (54,819) (27,301) (11,991)
Fully depreciated assets written off (11) (60) (3,350)
Sale of property (14,550) - (4,349)
-------------------------------------------
Balance at end of period $ 514,139 $ 569,521 $ 551,249
===========================================
(b) Reconciliation of accumulated Depreciation:
The following table reconciles accumulated depreciation from January 1, 1998 to
December 31, 2000:
For the year ended December 31,
2000 1999 1998
---- ---- ----
Balance at beginning of period $ 90,932 $ 87,202 $ 83,326
Sale of property (453) - (2,035)
Property held for sale (5,374) (14,074) (4,918)
Fully depreciated assets written off (11) (60) (3,350)
Depreciation related to real estate 17,367 17,864 14,179
Balance at end of period $ 102,461 $ 90,932 $ 87,202
F-29