Acadia Realty Trust Reports Second Quarter 2007 Operating Results

Business Wire,  July 25, 2007  

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NEW YORK -- Acadia Realty Trust (NYSE: AKR - "Acadia" or the "Company"), a real estate investment trust ("REIT"), today reported operating results for the quarter ended June 30, 2007. All per share amounts discussed below are on a fully diluted basis.

Second Quarter 2007 Highlights

Earnings - 2007 second quarter FFO $0.26 and EPS of $0.09

* Funds from operations ("FFO") per share of $0.26 for the second quarter 2007 compared to $0.30 for second quarter 2006

* Earnings per share ("EPS") for second quarter 2007 of $0.09 compared to $0.15 for second quarter 2006

Portfolio performance

* Year-to-date 2007 same store net operating income for the retail portfolio decreased $0.5 million or 1.8% compared to 2006

* Including pro-rata share of joint venture properties, June 30, 2007 occupancy at 93.2%, a decrease of 0.8% from first quarter 2007

Fund III - Formation of third discretionary investment fund vehicle

* Formed Fund III with $500 million of discretionary institutional capital

Continued progress on external growth initiatives

* Completed the acquisition of the Albee Square redevelopment project in downtown Brooklyn, New York

* Acquired additional urban/infill investment

* Additional RCP Venture investment made in second quarter 2007

Second Quarter Operating Results

For the quarter ended June 30, 2007, FFO, a widely accepted measure of REIT performance, was $8.8 million, or $0.26 per share, compared to $10.3 million, or $0.30 per share for the quarter ended June 30, 2006. Contributing to the $0.04 per share variance between these quarters was a $0.02 decline in fee income primarily as a result of the timing of fees earned and a $0.02 net decline in same store net operating income, as further discussed below. For the six months ended June 30, 2007, FFO was $20.9 million or $0.62 per share compared to $19.9 million, or $0.59 per share for the six months ended June 30, 2006. The year-to-date increase is primarily the result of income from Acadia's RCP Venture investment in Albertson's received during the first quarter of 2007.

EPS was $0.09 for the second quarter 2007 compared to $0.15 for the second quarter 2006 and $0.29 for the six months ended June 30, 2007 compared to $0.28 for the six months ended June 30, 2006.

Portfolio performance

Including its pro-rata share of joint venture operating properties, Acadia's portfolio occupancy was 93.2% for the quarter ended June 30, 2007. This represents a decrease of 80 basis points from 94% at March 31, 2007. Of this decrease, approximately 40 basis points resulted from Acadia's buy-out of an anchor lease at a core property. A lease with a replacement anchor has been executed at a base rent of approximately three times that of the former tenant. For the six months ended June 30, 2007, same store net operating income ("NOI") for the retail portfolio decreased approximately $0.5 million, or 1.8%, compared with the same period in 2006. For the quarter ended June 30, 2007, same store NOI declined $0.4 million, or 2.8% from the year ago quarter. These unfavorable variances were principally driven by the settlement of prior year common area maintenance ("CAM") reimbursement billings with certain tenants and the reversal of prior year over-accruals impacting same store NOI by $0.5 million and $0.8 million for the quarter and six months ended June 30, 2007, respectively.

During the second quarter of 2007, Acadia executed 17,000 square feet of new leases at an average rent increase of 64% and 68,000 square feet of renewal leases at an average rent increase of 5% from the previous rents on a cash basis. Including the effect of the straight-lining of rents, new and renewal leases had an average rent increase of 75% and 13%, respectively.

Balance Sheet - Portfolio debt is now 95% fixed-rate

The following reflects the Company's ongoing focus on maintaining a strong balance sheet:

* Fixed-charge coverage ratio (EBITDA / interest expense plus preferred distributions) of 2.6 to 1 for the second quarter 2007

* Debt to total market capitalization of 34%

* Dividend payout ratio for the second quarter 2007 of 76% of FFO; year-to-date payout ratio is 64%

* Approximately $157 million available under existing credit facilities

* 95% of the Company's total mortgage debt is now fixed-rate, inclusive of long-term interest rate swaps and adjusted for its pro-rata share of consolidated joint venture debt

Fund III - Formation of $500 million discretionary investment fund

On May, 16, 2007, Acadia announced the formation of its third discretionary investment fund, Acadia Strategic Opportunity Fund III LLC ("Fund III"). Fund III will be capitalized with $500 million of discretionary institutional capital, which will enable Fund III to acquire or develop approximately $1.5 billion of assets on a leveraged basis.

Fund III consists of 13 institutional investors, including a majority of the investors from prior funds. Acadia will invest 20% or $100 million of the required capital in Fund III, which is fully committed.