Acadia Realty Trust Q2 Earnings Call Highlights

Key Points

• Acadia reported strong second-quarter results, with FFO of $0.31 per share, 11% year-over-year earnings growth and 8.7% same-property NOI growth. Management raised full-year earnings guidance while maintaining its 5%–9% same-property growth range.
• Leasing activity reached a company record, with $8.9 million in new annual base rent and 91% rent spreads, driven primarily by street and urban retail. Acadia’s signed-but-not-open pipeline climbed nearly 60% to $16.5 million, while its high-growth street portfolio remains about 25% below market rents.
• Acadia completed more than $228 million of REIT acquisitions year to date and plans to expand its street retail portfolio toward $1 billion by year-end. The company reported nearly $1 billion of liquidity, limited near-term debt maturities and said it does not expect to raise additional equity under its current plan.

Acadia Realty Trust NYSE: AKR reported second-quarter funds from operations of $0.31 per share and raised its full-year earnings guidance, citing continued strength in its street retail portfolio, record leasing activity and acquisitions designed to expand its presence in key urban shopping corridors.

President and Chief Executive Officer Ken Bernstein said the company delivered 11% year-over-year earnings growth and same-property net operating income growth of 8.7% in the quarter, ahead of its projections. He said leasing spreads exceeded 90%, compared with single-digit spreads a year earlier.

“Our results tell a different story” than broader economic headlines, Bernstein said, pointing to resilient consumers, retailers’ increasing focus on U.S. expansion and demand for locations that support direct-to-consumer strategies.

Record leasing activity driven by street retail

A.J. Levine, executive vice president of leasing and development, said Acadia signed approximately $8.9 million of new annual base rent during the second quarter, the highest quarterly leasing volume in the company’s history. About 80% of the new annual base rent came from street and urban markets.

Levine said the company had more than $10 million of additional annual base rent under active negotiation. Vacancy rates across several markets, including Madison Avenue, SoHo’s Greene Street, Williamsburg’s North 6th Street, Chicago’s Armitage Avenue and Gold Coast, and Los Angeles’ Melrose Place, were at historical lows, he said.

The company reported rent spreads of 91% for the quarter. Levine cited examples including a 75% spread on a re-leased Armitage Avenue space in Chicago, a 34% spread on a new lease with a European luxury retailer on Greene Street in SoHo, and a 48% spread on a Melrose Place re-tenanting.

Levine said tenants on several Acadia corridors, including Aritzia, Alo Yoga, Violet Grey, DÔEN, Tecovas and Zimmermann locations, recorded average year-over-year sales growth above 25%. The blended occupancy-cost ratio for those tenants was below 9.5%, he said.

Acadia emphasized that its street retail leases generally provide for 3% annual contractual rent increases and fair-market-value resets, which management said allow it to capture market-rent growth more frequently than traditional suburban retail leases. Levine said the average payback period on the quarter’s new conforming street leases was slightly above nine months, including commissions and capital expenditures, compared with a typical five-to-seven-year payback period for a new suburban box lease.

Street retail acquisitions and investment-management sales

Executive Vice President and Chief Investment Officer Reginald Livingston said Acadia had completed more than $228 million of REIT acquisitions year to date, including $149 million during the second quarter. The company is targeting $400 million to $500 million of street retail acquisitions annually and expects to exceed that pace in 2026, he said.

Recent acquisitions included 4 and 28 Newbury Street in Boston, anchored by Chanel and Cartier; 8800 Melrose Avenue in West Hollywood, leased to French retailer Jacquemus; and another storefront in the Flatiron-Union Square area, where Acadia now owns five storefronts.

Livingston said the company focuses less on initial cap rates than on the potential to increase income through lease resets, re-tenanting, redevelopment and corridor-level curation. Acadia is seeking to stabilize acquisitions at yields above 6%, he said, often 100 to 200 basis points above where an asset might trade at the time of purchase.

Since the third quarter of 2024, Acadia has invested about $700 million in street retail acquisitions within its REIT portfolio. Bernstein said the company aims to reach $1 billion by year-end, nearly doubling its street retail portfolio. Management said those investments have generated approximately 3% FFO accretion per share so far.

Separately, Acadia has sold or recapitalized more than $500 million of investment-management platform assets year to date and expects more than $200 million of additional dispositions by year-end. Livingston said those transactions produced a nearly 2x equity multiple and mid-teens internal rates of return this year.

Embedded rent growth and raised outlook

Chief Financial Officer John Gottfried said street retail contributed nearly 16% same-property NOI growth during the quarter, equating to nearly $0.02 of incremental FFO compared with the prior-year period. M Street in Georgetown and Armitage Avenue each generated more than 20% same-property growth, he said.

Same-property growth was 7.3% through the first six months of 2026. While Acadia maintained its 5% to 9% full-year same-property growth range, Gottfried said the company’s internal forecast was trending above the midpoint.

The company’s signed-but-not-open leasing pipeline rose nearly 60% in the quarter to a record $16.5 million, or about 7% of pro rata annual base rent. Acadia expects about half of that pipeline to commence in 2026, with much of it weighted toward the fourth quarter, while the remaining leases are expected to open through 2027.

Gottfried said the pipeline represents roughly $0.08 of incremental FFO, net of about $0.03 being capitalized within development and redevelopment projects. Acadia expects to realize about $0.01 in the second half of 2026, $0.03 to $0.05 in 2027, and the remaining benefit in 2028.

Management estimates its high-growth street portfolio remains about 25% below market rents, representing $20 million to $25 million of potential incremental annual revenue. Acadia identified SoHo, Henderson Avenue in Dallas, Armitage Avenue and North 6th Street as major sources of that embedded opportunity.

Capital position

During the second quarter, Acadia raised approximately $200 million of equity to fund its acquisition pipeline and its Henderson development project. Gottfried said the company has the equity needed to achieve its current external-growth goals and does not expect to raise additional equity under its current plan.

The company reported nearly $1 billion of liquidity and virtually no debt maturities over the next several years. Gottfried said Acadia continues to expect an 8% to 10% yield on cost for the Henderson development project.

Management said the balance sheet and available liquidity provide capacity to continue pursuing street retail acquisitions while funding redevelopment and investment-management activities.

About Acadia Realty Trust (NYSE:AKR)

Acadia Realty Trust NYSE: AKR is a Maryland real estate investment trust (REIT) that focuses on the acquisition, development, ownership and operation of grocery-anchored and necessity-based shopping centers. The company targets retail properties that serve densely populated urban and suburban markets and typically feature essential tenants such as supermarkets, drugstores, fitness centers and other service-oriented retailers. As a self-managed REIT, Acadia oversees leasing, property management, financing and construction activities through its in-house platform.

Acadia's portfolio is diversified across property types and lease structures, with an emphasis on sites that benefit from long-term consumer traffic and resilient tenancy.

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