AKR - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to Acadia Realty Trust’s Third Quarter of 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be provided at that time. [Operator Instructions]. I would now like to turn the conference over to Nishant Sheth. ahead. go Please

Nishant Sheth

Analyst thank quarter And My joining for a us is Markets Good Acadia you Realty third Senior am I XXXX Sheth, call. our Trust the Capital Nishant department. afternoon. and for in earnings name conference

statements; begin, meaning that statements please XXXX, and Act of that recent from due and filings materially may the this and those of made disclosed forward-looking such forward-looking other SEC. deemed and a indicated aware may of risks historical to Securities not be differ uncertainties, be actual statements in we by variety during the Form periodic call those including Before the company's with are within most results the Exchange XX-K

the XXXX, October of duty this Forward-looking undertakes no only date and update company statements XX, them. to as call, the of speak

its certain During financial release operating Please this GAAP see non-GAAP Acadia's and most financial these directly with measures, comparable the including on for refer management press net may from operations non-GAAP financial income. website measures. call, earnings measures reconciliations of to funds posted

to my will remarks. turn begin management the Ken Bernstein, call pleasure President Officer, and today's it’s Now, who to Chief Executive over

Ken Bernstein

afternoon. Thanks, Nishant. Good

quarter saw in in release, had you where street continued higher we As and seeing most barrier-to-entry leasing a our we’re our solid importantly especially in momentum fundamentals, urban assets.

Then making will benefit them. platform. retailing finally, are seeing metrics And the our we from trends and discuss operating balance will I’ll today and into sheet positioned the some spread. progress discuss ourselves we’ve leasing So we're Funds and drop Amy our to relevant of how in further John

of further retail and the amongst haves as have-nots, separation retail In as leasing terms and between core of environment, the estate. well we’re retailers both seeing real our confirmation portfolio

sales it department from in new We’ve or all-price to stores the as been retailers, than from robust retailers categories as screens-to-stores had relates to ranging category, discount specialty forecasted retailer has ago. retailers. seen either have this here the significantly grocers growth been recently more in As year to up-and-coming

Target to tenants Maxx, retailers from going all differentiation area and an omni-channel we this real Aritzia of T.J. world. key to are ranging to from great a their seeing critical be that component What is We’re estate is from of growth, especially a to consistently hearing these from Allbirds. in

again grabbing heading store and in we’re supply string. there but can more mission-critical on What once supply So But the pushing if far might have hanging it’s will with be to that This that locations non-retail. In for SoHo passed is strong and even make this retailers then And feels that from declining the like higher, sales around, are pay right retailers retailers level some to to may have this the retailers rental sales growth of the become are tenants retailers vacancy profitability so can that and is where X%, many now, words, functionally the may age-old they fact for abundant aggressively amount or Lincoln pass. us will locations the for a of is real where of Nor to demand. too, robust, a rents tides fact as repurposed have-not and a asking, we’re showing ignore negate growth more won’t constrained the while this enough might the in welcome in in headlines. not more we’re of that what it’s the X%, or the clear have concern hearing disproportionate same-store This, over turn. these achievable. REITs that retailed; category the rental is up. X%, have-not but perpetually can of post retail does Chicago that more that feel still longer-term that look best drive profitable secondary they other Where US unless of growth? or much Even the back Park, worth to. obsolete our like enough overstaying and future estate could in take now of a thankfully growth their becoming instances is growth market battle does have Georgetown, supply

the year, connection and coming to in results, our young This D.C., achieving brands defines mean growth. importantly, goals are in majority a are for seeing longer-term of our as the enthusiastically growth for a We of variety is this goals a our from core high Georgetown, where barrier-to-entry well key portfolio. quiet retail on markets for market signed Serena recently after core newcomers XXXX, retailers joining we’re will improved leases are with Lilly, and such for property. as does Allbirds effort Parker Outdoor leasing with in Aritzia, Voices gateway Chicago, significantly Reformation, Armitage our that and tenant Thus, what Warby high quality way quarterly John in leasing Park, our our the in Similarly, as especially So Voices. discuss we Bonobos & Outdoor our Avenue reentering. Lincoln interest,

Diversey to Maxx and project last of our floor anchor, position core We’re in space. positive at up from also Maxx veteran a Clark are that now we’re and balance second signs lease T.J. T.J. the of month retailers solid ground long-term complete, seeing development in open and our Bluemercury construction both who now the with like opened

of five several the years, we outlined couple a about NOI on in and we of mark-to-market for with that are the lookout, this long-term that growth from calls. current and All our upside XQ going of signs lease-up portfolio, we see with core next we then contractual expect growth performance help we provide us reasons. combination drive the openings Then growth over additions in this years of prior all next XXXX. redevelopments and to these annual should our XXXX over the think additional for as our Then encouraging X% have longer-term as

all, the somehow XXXX becomes of if and sales that level or can X% locations, period; cause to likely omni-channel to currently aggressive that as favor of XXXX in consequences. a sales tenant conservative, gateway aggressive and locations in key more I had growth too outsized imbalance our that be Hopefully earlier to in growth rental demand unintended especially far tenant is continue own, the than increasingly important. forecast. our is seems First growth and rental even won’t X% thus growth growth as But that that it supply-demand more mentioned many will growth execution as key tenant enable we swing too market limited

discussed of past reason And our the opportunities to potential of we include years the about departures Kmart recent downside. the upside possibility on the the forecast recapture will is such that fact for then optimism in but for this this does second the term very the Kmart now the potential the of John few FFO Sears given on The redevelopment. recapture not that the profitable given box from and of lease, outweighs impact years Westchester. bankruptcy our in limited we there quieter We far the but reengaged as current our left profit ago. is went short-term couple discuss since XX additional the of public redevelopment

still bit terms a premature. In adding of portfolio core properties is to our

some reality. been to to rents seem key quality that more to have steep this after markets, progress high also face in make difficult of the our making before buyers for declines, sellers compete the have have accretive reluctant some are assets core stabilized While can even for Thus existing and in cash markets on more find cash our streets public then investments reliant portfolio. we those with to even of and us we buyers pricing

while later, accretive will acquisition we While it's will present themselves there. opportunities and been be or a sooner

just of Fund platform, discussed terms to detail fund In impact the it will note. our in on trends, while investing, Amy and few discuss to their as relates our things it further I

For having the high-yielding still hand, opportunistic we than has centers purchase are Fund the but slower V suburban like. we new to of one be investments, compelling, volume is surprisingly selective. On might been

but costs. recognize of the to and certainly but Then need cash early. are the carefully add construction varied we to we front, watch need many relates or flow redevelopment to go Ground-up bit cases, be a pass. still that compelling, to many real it having as too in on to we late must mixed-use willing And we are be other projects value And reality cycle can stable either markets We types classes, asset many just are to fixable. other the adding for estates.

way We have and we patience, be that have the the investment aggressive value longer and to public. cyclical fund than long-term been in a discipline to XX only business business been stakeholders. years for create It’s seem for execution the

to way with long being that invest may short to but earning short-term disciplined in in growth to less go. So be knowing we continue only it’s the will accretive focus run that run

quarters in like the So and increased many stability how momentum positioned. conclusion, we we uncertainty and marketplace we are now after see of in increased

and Our core redevelopment spend. for growth activity very CapEx portfolio with manageable poised is solid

it discipline where plenty that. hard as will growth and of drive require focus but Our balance has it growth drypowder work, will for require right is fund This and ready team sheet we want is our to it our sense. makes

to that’s here fact, do. In what are we

to I So to John. they disciplined. call focused the and thank their they will work, for hard are And teams the I'd over are like turn

John Gottfried

minutes few performance about Thank and update third our afternoon. overview our good balance was quarter quarter talking guidance third XXXX that key of with will NOI, closing same-store expectations. our discussed, a on an followed Starting with spend our exceeded and sheet. our same-store you, Ken. strong NOI with results metrics, Ken as our by an And I then

loss. X.X% with profitable our was driven the lower-than-anticipated credit in street portfolio growth of lease-up along by Our

has past the strong two objectives. on During leasing our quarter, to progress team key make continued

summer First XXXX velocity, XX% slowdown our leasing goal. are against over off, the leased notwithstanding typical now we in

York, inventory to we up to executed continue our New Chicago with leases most As mentioned, the ken recent fill Washington in to remaining haves D.C. see and showing

blocking rent, in required D.C. open few several to New key that has Secondly, on great and Washington progress York and is City, Chicago, which successfully paying they tenants team on locations get our the over accomplished tackling our past again street made months and

lease execute plan. increasingly terms rates initial line and above we economics, to of In our are with leases in continuing at

to are leasing optimism we increased level exceeding about starting fact $X an our million In goal. of feel

inventory, in New best in of including remaining as few spaces locations SoHo have Coast of We our Avenue a the Gulf York some Madison well in and as street Chicago.

are to quarter release, X% our we seeing in year. with this expectation an continuing final outlined growth X% the the for of As of

importantly, next this shareholders. at portfolio our we NOI a several to back point, quarter see as growth our to X% returning as expect nominal to we fairly X% years, an from us out of inflection More with we look the that cost

will quarter every Now identical. keep not be in mind and not every year that certainly

growth profitable we While NOI the have the over any in retailer given we key three and typically given drivers dealing with the made our short-term in portfolio. we past X% are Kmart of seven inevitably strong have temporary long-term NOI in core the but progress Kmart. dips Firm as distress, pretty feels from will We locations quarter, experience plan, currently a our now of Mattress and good Mattress year Firm and such

navigate While the or retailers along impact bankruptcy a basis XXXX. the in the short-term FFO two to XXX a fourth impact points same-store anticipate we roughly penny is process, of currently still of as a fluid quarter, with the

our quarterly portfolio. while ability create, bankruptcies retailer So avoid our we evolution that to valuing expedites the this these necessary and unlock choppiness better can’t

expectations, million on leases of for XX% as in only goal, of the continue size of that portfolio, annual comparable Now leasing our spreads to new and an being feet the our policy, XX foot. that base. we or moving XX% all-in we’ve I on want spreads basis. Further, report if incremental cost are NOI a renewed and square XXX,XXX XXXX on there reaffirm either an nonconforming amount to in Approximately cash year approximately of potentially space. $X lease reported of spaces onto suburban representing XXXX NOI showing million consistent spreads, within the GAAP the I up above $X what were and with to continue more our that the wanted spreads as that X% our have approximately to same to leases a NOI fair we $X beyond. occurred established of with past leased balance goal, we that That see of previously Consistent the combining we’re not were under $X.X at of splitting said, continue we just highlight also a over reporting $X million this million spaces. anticipate our we results collecting lease with on and

at for few locations are vast still of lease already exciting finalizing retailers majority we The for spreads. a expirations. we XXXX, with our spoken are these While budgets have known attractive

will as and it downtime this FFO result turn of of bit However, we few in a a cents space.

Now moving on to FFO.

in came strong a share. quarter third $X.XX Our at

updated As $X.XX we release, our $X.XX to our outlined in XXXX to have per guidance share.

So, expected to and strength in Core terms initial acquisitions, of top come much on our in by earnings Fund portfolio. Core pretty the notwithstanding of year the light are driven our midpoint, our of

our strength guidance. a highlighted fact, points stripping and to the couple items. per in is when to In of out expectation would income potential of baseline to original I $X.XX share, transactional FFO results our non-recurring $X.XX this This highlight which exceeds of other XXXX $X.XX. on $X.XX like other

III. of promote, million In to the Fund in $XX XXXX continue we terms see remaining

the process. slip of as into some we through monetization work see could we However, XXXX this

updated at the is balance couple of lease This driven a and guidance we by straight-line rent above for adjustments items. Additionally, year. the below-market our have for of

simply The timing is for was in by purposes cash first between the of the commencement result leasing differential item our Core the collection. driven of portfolio. date GAAP strength and rent This

Secondly, estimate the of $X.XX below-market fourth our below-market of anticipating a with update also on this require analysis to quarterly leases basis. of that Based adjustment along FFO non-recurring for a we period recapturing the are on in the accounting potentially we quarter. leases, $X.XX rules amortization

for these accounting this anticipate historical FFO back reminder, approximately upon XXXX we required Looking into accounting. adoption. GAAP will as impact norms. of to a We adopt adjustments would XXXX, new Also, have of lease expect in that are we an revert a standard $X.XX that to

Now to sheet. moving balance on our

is leverage, no exactly terms balance and sheet of borrowing in unfunded commitments. Our where wanted profile we overall our cost, capital maturity

maturities the where our to Fund have interest with we will positive rate As outlook finally over a the our what In that the fixed dated interest as we of should the we originally a the performance no Amy from of beyond of through believe Further, the an use interest in of a us and exposure rate expected, long through portfolio. with you increasingly quarter, virtually rate quarter had years. we cycle to X.X% our next that, few we XX XXXX. an substantially all portion all-in have at fixed we of for third strong significant swaps, summary, point turn our hit look forward. expect had Further, call will to we back although the quarters I have best-in-class we With return discuss business. debt

Amy Racanello

To-date to review higher both buy-fix-sell I’ll continue and that on yielding opportunistic steady Today, capital discussed platform’s funds John. pursuing the with Thanks, properties investments. important our allocated commitments. V’s a progress and strategy, several high-quality of been calls, Beginning have Fund we as barbell have acquiring or on mandate. our Fund make we nearly other XX% acquisitions, value-add

includes of or So a two higher far, acquisitions. completed third yielding in million have have This $XXX $XX million Funds during the acquisition all been the quarter. hybrid MSA we previously a Year-to-date, Sacramento strategies. the the investments of discussed

another still bring XXXX approximately under million. through V volume XXXX. and have also available would Today $X.X the drypowder of billion $XXX to our contract have yield to summer Fund of investment in total acquisition we We deploy this high

as our thesis we mid-teens all, volume which long we return stability. is as expected, we After predicated NOI Although a growth our it our remain greater leverage on require has on does find strong high acquisition compelling Fund we’re been than existing selective. yield investments but NOI V clipping now

assets able an at to a cost. replacement generally buy to been added As we’ve discount these benefit,

foot center per costs Since build it In a someone on estate. if we’ve of year, of V $XXX interest quality in investments we’ve beginning retailer to gives average approximately the higher a in foot comparison, $XXX. per square approximately free. improvement shopping the seen Fund weighted fact, In suburban price land $XXX material square you to real at acquired our the for

store. at XXX lease levels into Chicago. square lululemon Lincoln Downtown feet on West has and exciting As with XX,XXX executed recently previously a in IV leased super City welcomed July elements discussed, at Brooklyn Avenue sized Street. in introduce Joybird brands. will And and market North Fund digital we this is brick primarily furniture up for Lululemon stores hand to Point new in three their retailer US. of HiO the a and is in the is This Prince is mortar other Joybird international second a Park, first native store. HiO and this young hall on their top fourth and location

availabilities, to we focused food, to entertainment City merchandise strategies Point’s on experiential and continuing Regarding level street cultivate for our mix eclectic value-oriented our an complement remain and anchors. lease-up

fund we’ve dispositions, third million. Lake completed by completed of for To Virginia Montclair August the including a Center, XXXX in during anchored dispositions Lake to now sold quarter. investment. year-to-date, in yield IV that a center Fund million foot million point XXX,XXX supermarket %XX Fund Montclair Turning square $XX $XX IV is high

supermarket’s five maintained extended our generated hold This equity. sale return term which multiple Fund’s the long-term also a a a we occupancy. During of increased rate XX% the strong year and on center’s stability we X.X period, lease this internal and

million. XX% continue the also Fund’s by the our internal multiple buyer to And property On for equity. of ahead, The sell of looking barbell, IV selectively the $X.X will compares and X,XXX a basis Street San X.X sold the million. this another cost end Broughton to rate an $X properties. occupancy Fund and IV of square sold million. property retail Fund This a vacant property sold all-in XXXX we other street sale Street, for foot also generated return was Union California $X on for stabilized Francisco, in a

with a sitting Given lot our years, aggressive past disposition few the of efforts not we’re inventory. over

another Funds conclusion, platform. quarter we our productive in in had So

our existing investment within create value execute strategy, stabilized sell portfolio our and to assets. continued We Funds our barbell on

to answer your happy questions. we’re Now,

Operator

Instructions]. [Operator

with Christy comes McElroy from first Our Citi. question

Your is now line open.

Christy McElroy

at all John, heading your remarks. just X% NOI trajectory sort looking opening QX put I'm into to you that about talked trying the to looking different same-store of in XXXX, growth at are together pieces X%. just you

You’ve that on. got will done you of the coming impact leasing full the -- have the in XXXX have you

how that about about of XXX a put additional total basis lease points you into If Are are another impact? from year? we to are talked in also and and expiration thinking impact at what You then terms Kmart impact all of from I downtime. potential sort offer Firm looking Mattress willing into next growth glimpse you together,

John Gottfried

of speak locking the are budgeting we we What points some XXXX. below. as doing we X% in the say over other offsetting incredibly currently things and out Sure, years, there in next feels as look the There our still raised is middle really good. I'll you is, several the

We and has have every comes that rollover Diversey opened And Clark year. goes. see and have you that we this lease will year

So be XXXX number done specific don’t we a sense this to but of continue to have of normalcy than past indicative getting is to-date that feel couple for have quarters. going experienced of we a more back to what in

So in set are but would a good we don’t say are -- number 'XX. that up precise for have we

Christy McElroy

potential in comments targeted catalyst Amy, rates some up you some then more sort investments? both much to sort your of a of sort then potentially Fund and And enough as Ken of selective the V levered the clarity assets And there? about act that IRR, and to you I guess open does are things of cap to of get these issue the are risk just Okay. some add the Sears high sort made being on seeing Is investments. more of filing too

Ken Bernstein

jump way as whole have and say the being in at first would the ourselves Let me through. I it we take found well. then Amy cut selective

more and rates couple significant we not selective looked a there more less that gone years we if is, reasons. return volume couple when be would us for be up levered play than ago been it’s of to of So -- is have It a these of rates needs. amount cap back as saw some. it saw but and would necessarily meet selective a up Well, this volume the has one is a

We down X.X X.X being to a if call, the is to have it that. we too we need X to cash rates harder and rent cap be on yields bit, selective the sure More we that to deal, the rent make we a are your to are to to deals seeing meaning time there enough to X.XX to retailer but said specifics now of significantly but the question many cognizant point transparency, stayed usually or in levered and take found reasons growth depending transparency that range, to more a that volume X X we Sears, or to X.X replaceable. is is stable that so of one have an it while be we’re stability, on of have which we for if of So having cash what sales, too point on. need that have do, have find and And of come issues fact an co-tenancy, market, flow Kmart, lot there buying don't there’s or is, levering need we we either of flow. price your earnings would much we pass That and are pickup.

that and sellers through bringing our up found matter realistic. which a have team volume it’s the And have relatively stability. of at large to be calling looks just We ones

be remain dollar about may the of acquisitions once I the not business. just optimistic multibillion that we thought. So It

Operator

you. Thank

Todd next with Capital from Our comes question KeyBanc Thomas Markets.

Your line is now open.

Todd Thomas

you with a a question mentioned, XXXX, of in little I you slower is and it investments. the before really a investments more bit little seeing sticking business Acadia wraps start sort what environment? for little What year the or First get Core as Funds we bit of bit. for looking a look the active are in Ken year bit, little should signpost in see we this to guess are what up for you obviously

Ken Bernstein

on I something, and advance Yes. the and time we’re so know though And months Todd notice. it's months as actually too by it’s three of often moving there's days not before

the very people capital -- different the Core Core because investment understand but with and Funds. that most our structures there’s to think I start and Let’s

On markets the that are of which be in are key Boston, us Core in order the San compete gateway we side, to Francisco, the to Chicago, about excited to D.C., able for par, New cash York, us most to have us two for to currency others, a buyers least compete we’re at or one in to not and there we get enables yet. maybe with have order that markets

We’re in yet. but there of not be that we’re comfort any sellers there the way. yet getting closer Thankfully, not significant gotten some or have should fact

The us a might So look. get that a we do the to really grew and on a I markets not rents I’ll point And because gateway turning going be and do today. there's lot And enough seeing with stabilization where you and well too some it. the now mark-to-market forward, has sellers fast, start there’s they it seen we to been sellers done because where is we getting in fact bullish fact growth. a get fell that of it leasing but transactions in been the are would point very say XXXX that activity we second. can rents cash point significantly would've in in I lag now could has could if acknowledge may to cash Funds a pretty compelling comfortable these actually hesitant the XXXX if had low were that am was there have Funds, reason key have

might the can certainly than but later the core volatility rents impact, sooner within later there not rather sooner rather market an rates. but where yet. issue of be our so we competencies then align stars about some has acquiring it’s bond realistic in I more these sellers am be, cap we’re markets in key than that with hopeful The that So

Funds to have unlike being money relates we the on the it side, the to markets, beholden public As call.

side volume a there us take environment clipping if high-yield we what is so increase and enjoy I less it’s what volume going of pretty that wanted. Kmarts, but of have a far will a is doing, heard product? whether say them we that we for the return chunk to do mid-teens you've on it's investments so it. Sears we’re which feels this Could are compelling been but type whether having the vacant we So big to hope good in value-add opportunity, is Then mixed-use, force redeveloping than the investment can deal a we the We're a buying economy buying worthwhile, and looking debt. forward to are very those that, dealing cycle about am pencil being need careful exactly retail. be distress when with including as of is buying whether where rate as a unique of distressed it’s things investment interest a time urban and out. long as well in respects period any it late We the do all mixes ends. How environment I XXXX rising and you can't active on that time I lot but tell to all very period some not

Todd Thomas

$X annualized beyond. annualized recognized you of have The $X the a quarter? that balance realized was NOI opportunity during basis that helpful. to in John, and million couple of How much of on of you expect about, the for third the it from talked be questions million million NOI Okay, you. NOI an that in 'XX, that’s $X 'XX

John Gottfried

to it I so wasn’t number the throughout crashing hard all but the it's think It’s give precise the coming quarter. year, through partially in

So I it look was same-store specific our at if to would occupancy, on 'XX, QX pretty data have number. to point, point a as you get back 'XX QX just you would flat. to I the you

from $X rental million think we’ve the million So growth, just of value good leased. the there a incremental is $X.X that of is I portion -- some

on So it’s But blended don't of have lease-by-lease in on year my basis. a throughout hand. the it exact number

Todd Thomas

of is potential same-store all Sears or impact and you recapture Kmart, the of points basis growth XXX from Mattress the NOI then Firms, same-store And the spaces? the of if the of that impact

John Gottfried

No, Firms think do mentioned back. Mattress remarks, so portion we of list that as as there's I it’s fluid but were out get in XXX a our it’s went that and assumed -- I on process the none my initial that of have the negotiations I unwinds incredibly various

process of in that an navigating. So that still it’s speak given we truly is estimate as

of today. So basis impact, when have minute up I to that’s off out information throw based I the points XXX the the

Operator

[Operator Instructions].

comes from Craig of Schmidt with America. Our next question Bank

line Your is now open.

Craig Schmidt

When the was that street emerging we retailers you the store of the retailers, clear the choices that same know on in next of wave first Internet it shares their they and wave location locations Do at look high urban emerging a location perspective? much of higher strategy. level had

Ken Bernstein

of and that how couple doesn’t a they stores mean from a to important they a they’ve years that that There And some in certain very could Craig. in to one conversations number other yes, of But drive part, important DTC store it’s most ago native that up have have are. reduced country to how acquisition part be have recognized most of whether digitally their going direct-to-consumer about for to likely reading malls. with these when other is looking be for to they enhance the of or in have only view of centers exceptions every everywhere. in who the have the to retailers recognizing need lifestyle what need some there how they alternatives. gone category customer test a end are relationship and what market cost most and stores. screens-to-stores of growth and their For stores retailer point But component to want stores likely styles will going you’re real estate that or per will we where And significantly is is they’re never retailers said a it’s the retailers

want city Chicago on are think but us M other So Street who say are dense locations Avenue, online where years. retailers sales that’s what those an most won’t as be clustering the traffic, really a there’s XX that where us to and to be several seems cause XX a that a there’s Either a well want own. they variety want are Lincoln there’s be way was foot the in it kind them stores, halo stores telling conversion can be other envision may a in tends is next retailers stores in be I their cases to profitable our say they’re and in with and only means the of for of there having Georgetown, rate Warby early where and of and telling locations who not Parker, to lot us mover there’s not they and do that and Park, high them we effect to Armitage we opening what to for of drive where to markets is

Craig Schmidt

the And traditional locations then opening sticking say street their established the to buys with more open they are to high you they urban or hearing let’s more of just from what previous strategies? are are retailers,

Ken Bernstein

again many think for buy never may term what Target we but doing, not or in are I opening to is years, Manhattan, open four so We they’re looking is the hear and stores execution confidence success mixed-use locations more impressive very of more and that their we their and street urban and dense, own. their as far to level to speaks another the

And up we’re then so that. we’re and Clark on years, supermarket strong opening similar is segments in is seeing change will the who’s and in dramatically and quite to changing locations. And over Diversey, retailer, veteran XX next excited key about which those or responses our stepping dramatically food retailers. from suburbia five the done well T.J. Maxx

is, of every kinds So where the to, to, and in locations. type that those wants get closer were needs seems with of most them online to, towards gravitate cause their enhancing in-store to close some of to sales general them consumer connection are retailer to,

Operator

you. Thank

comes question from with Tibone next Green Street Our Advisors. Vince

is now line Your open.

Vince Tibone

work business structured little the Since term? capital Acadia within in the scenario near Is the where acquisition finance a a more market there do challenging. could seems the

Ken Bernstein

We bought, of finance? mandate of other and What structured me tell definition structured what a have finance. types business wide we is -- your fairly Vince, don’t do Funds distressed our so well, have and within that,

Vince Tibone

little the I before, stuff secured similar maybe just really mezzanine, doing we mean instruments? a kind debt were of or higher-yielding debt

Ken Bernstein

Absolutely. have successful continue absolutely structured within REIT up core thing The estate would and competency, part trade the transactions. that with, our But set so one that Albertsons, more confusion is is consider are no were both of class Mervyns done that. asset do one own and finance we just comfortable otherwise, a and variety transactions way couldn't thing A very if is, real we buy do a stocks our as we stock, around wouldn't in we now, the to was in style there an that. we so and are of certainly bought that group

Vince Tibone

maybe assets urban discuss And type broadly, the you higher yield then financing can Fund the both the quality and in Fund trends street more market then for high and the -- centers? type

Ken Bernstein

at, big cap Sure, let's concern of of us caused on inside the so because say, XXX XXX borrowing basis chunk levels as to of points LIBOR was the it was certainly high-yield our thesis shooting up, a rate. some play

to cap and at give to to borrow spreads you either if can up could to then or closer you X had had having borrow X, X, at are come in. buy If you X rates to

it was latter. fact In

for a the what especially last fairly of stable So financing in the that the flow most There's part, spreads and tightened fair are is over cash have markets being debt for lenders aggressive. seen we year. have amount

much not careful. move to or you tightened lower yield, lenders higher As perhaps or have being risk as then spreads are

still coverage more location So spreads center lot I secondary that. asset at financing that come an a demonstrably you sure a to of going has not shopping to in X be are difficult buying cap And piece. And a moving are if really it’s be issues. out great to but I'm specific you have of think a

in actively aside, I So cycle, participating with financing those late is to but have want spreads feel don't robust, markets, polar everyone come-in in dollars things the healthy, work. feel to two putting say

Vince Tibone

a in retrade I That’s in helpful activity mean increase resulted more the color. your rate of the point all-in so view? in

Ken Bernstein

secondary are probably or legitimate into we buying I more don’t There welcome centers we're year coming anything entrants than a two it. seeing back think ago. if shopping and what so,

their people doing retrading, there's deal if say though are not would risk they because I days. as losing these so own bidder are So the it's deals of at only on one

Operator

from Our Mueller question with JP Michael Morgan. next comes

now Your open. line is

Michael Mueller

I so question the thanks. I'm was on tried that out asked investments get actually My and to queue, the good, just structured of was

Operator

comes Todd Thomas next from And Capital KeyBanc with our you. question Thank Markets.

Your line is now open.

Todd Thomas

Just a couple of follow-ups here.

Kmarts, wondering which about a spaces in detail is Westchester opportunities update extent how discuss was First, maybe and I versus market two those mentioned you talk back Core maybe to and and three general? an to in get maybe little just other more on re-tenanting Crossroads could spend or three think bit if so a portfolio more the the you I you the where about provide the rents could little you you're capital spaces are thinking them back? there,

Ken Bernstein

and need we of been do, exciting I have option prepared we the do even you while go. may lease fairly terms couple we quadruple my is or split we relatively we else have get it the be talking need the of variety and are jogging the terms team if what come double, which one best been Todd Conlon for, fantasy do and best above rent triple, we that have that look Sure, Kmart’s and redevelopment. and to to to to one and it who bid of is, back. in to to this that. which just uses And you it foot up but can forward on go be to XXX,XXX about it, floor seeing time whether I and When very depending square you're with of has beyond from one decades look on for in terms in a in what we back retail. store with his is, footprint confident we ground has do that this we split think highest earnings the of first always what Chris that from whatever user remains or was be looks a distance call to of by given stores waiting so last have when let be active Scarsdale our Crossroads this We and for because me can forward may it will I joking be passed like to stores, prepared get we remaining We part of this Westchester short quarterly

So and three that’s and between now pretty exciting. John, the exposure then, from potential that? But Kmarts we then, have

John Gottfried

Yes.

portfolios. Todd So two other in our the suburban are

space Mark square PA, XXX,XXX as the to Route of foot in rents but X, well both end and we markets. Mark Crossroads our in So size $X terms -- for lined similar we’ve supplemental in have a foot our in those Plaza between $X that to

pieces, of through went working those from plans on development out. total about remaining penny a those on both that’s But exposure a So both of various those. of

One that of one Route Court Bankruptcy those, X is the affirmed. has

going PA X Route is those So probably one of and out.

Todd Thomas

expirations expirations you at six that bunch know the I when or there XXX, New and out West the different we in this of maybe kind paying XXX of high properties years own, some And assets believe just were retail urban portfolio, then way. Avenue another through And take seven Michigan wanted if to ask there here. North impact it. of them you that those a could of Are lot in about outs street slightly acquired. Christy's ‘XX, or XXXX more a maybe about ‘XX question But any Diversey lease of assets, the properties ‘XX assets. a from those the in lot five, ‘XX, were sort a you known York Got some one rents maybe look properties, right, move the of acquired that two I point?

John Gottfried

Yes.

not remarks, Chicago have name is of move and my to and in So handful do but a lease to is it’s Todd, a did State we one point outs names in in position biggest on-state Washington is, in are the of I maturing. known that we

very have on a We backfill good that.

of that's So we on in terms do have. that biggest one the street, that

So but say would tenant given space, there will we that I that the the as be downtime a our of that’s size period of largest.

Ken Bernstein

to about the given -- good one, about XXXX quarter that who to into category. John that movement but departures down And what heard any those pieces good expect feel to about gives about call significant X% X again, A saying latitude wants on it replacements now. it. in it think trajectory any be couple and choose pinned think right talking the I to I us that at trajectory very hinted the overall thesis And there several John be over I don’t of we as although moving feel so we feel good and anything. X, falls We be you prospectively. years but and we the is If this from be next because stands our current could

Operator

you. Thank

questions remarks. are would like Ken closing Bernstein no there the back further queue, for conference in I over As to to turn

Ken Bernstein

joining for Thanks forward we to next And Great. speaking quarter. you with everyone look us.

Operator

Ladies gentlemen, and Thank participation. Thank your conference. for you. you much that conclude does very today's

now may You day. wonderful Have disconnect. a

Acadia Realty Trust (AKR) 25 Oct 182018 Q3 Earnings call transcript