Acadia Realty Trust (NYSE:AKR) reported third-quarter results marked by strong leasing activity, double-digit same-property net operating income growth in its street retail portfolio, and continued acquisitions in key retail corridors.
President and Chief Executive Officer Ken Bernstein said the company’s street retail strategy is benefiting from limited new development, rising market rents and demand from direct-to-consumer brands expanding their physical store footprints. He said market rents in Acadia’s street retail portfolio have grown at an annual compounded rate above 12% over the past three years.
“The demand backdrop, the structure of our leases, and our focus and scale on key streets are driving our results today,” Bernstein said.
Street Retail Drives Same-Property Growth
Executive Vice President and Chief Financial Officer John Gottfried said same-property NOI increased 10.2% in the third quarter, led by more than 15% growth in the company’s street retail properties. Acadia’s stabilized suburban portfolio posted 2.5% growth, which management said was in line with expectations.
Performance across the street portfolio was broad-based, according to Gottfried. Chicago same-property NOI rose more than 20%, SoHo increased 16%, and Williamsburg grew about 10%. Street properties added more than $3 million of NOI year over year, equivalent to roughly $0.02 of funds from operations, or FFO.
Acadia raised its full-year 2026 same-property NOI growth outlook to a range of 7.5% to 8.5%, compared with its previous range of 5% to 9%. The updated outlook reflects management’s expectation for continued strength during the fourth quarter.
Third-quarter FFO as adjusted was $0.31 per share, up 7% from $0.29 per share a year earlier. For the first nine months of 2026, FFO as adjusted totaled $0.92 per share, up nearly 10% from $0.84 per share in the comparable 2025 period. The company maintained its full-year FFO as adjusted guidance of $1.24 to $1.26 per share.
Gottfried said stronger core portfolio results and accretive street retail acquisitions had offset the impact of investment management asset dispositions and a less favorable interest-rate environment. He characterized the impact of dispositions as timing-related, as Acadia expects to redeploy capital over time.
Leasing Pipeline Reaches Record Level
Executive Vice President and Head of Leasing and Development A.J. Levine said Acadia executed approximately $8.4 million in annualized base rent, or ABR, from new leases during the quarter. About 75% of that leasing volume came from street and urban markets.
The company’s signed-not-open pipeline increased more than 30% during the quarter to approximately $22 million of ABR at Acadia’s share, a record level. Nearly 90% of the REIT’s signed-not-open pipeline is concentrated in street and urban properties.
More than one-third of that pipeline is expected to commence in the fourth quarter, including openings by T&T Supermarket and LA Fitness’ Club Studio at redevelopment projects in San Francisco. Another one-third is expected to commence in the first quarter of 2027, and nearly all of the pipeline is expected to be open by the end of 2027.
At full run rate, Gottfried said the signed-not-open pipeline represents approximately $0.11 per share of incremental FFO, net of about $0.04 per share currently capitalized in development and redevelopment projects. Acadia expects about $0.01 per share of incremental FFO in the fourth quarter, $0.06 to $0.08 per share in 2027, and the remainder in 2028.
The company also has more than $15 million of potential ABR in active lease negotiations. Levine cited negotiations for spaces in Williamsburg, the West Village, Chicago, Georgetown, Dallas and San Francisco.
Levine said six spaces on Upper Madison Avenue, in SoHo and on Melrose Place were marked to market during the third quarter at an average leasing spread of 54%. Those spaces were leased at rents approximately 90% higher than the last time they rolled to market about five and a half years earlier.
Management estimates that the street retail portfolio remains approximately 25% below market rents. In SoHo, Bernstein said Acadia’s portfolio remains about 30% below market despite rent increases achieved through lease expirations and fair-market-value resets.
Dallas Development and Urban Market Recovery
Acadia said its Henderson Avenue development in Dallas remains on time and on budget, with more than 90% of retail space spoken for. The tenant roster includes Lululemon, Vuori, Rag & Bone, Jenni Kayne, Moscot, Zadig & Voltaire, Frankies Bikinis, Catbird, PopUp Bagels, Salt & Straw Ice Cream and Prince Street Pizza.
Management also pointed to improved activity in larger-format urban markets. Levine said San Francisco has added leases with T&T, Club Studio and Sprouts, while North Michigan Avenue in Chicago has seen recent activity from Nike, Lululemon and Levi’s.
Gottfried said North Michigan Avenue currently creates a drag of “a couple of pennies” on earnings from taxes and carrying costs. However, management said it sees the corridor as a potential source of growth in 2027 and 2028 as leasing activity moves north along the avenue.
Acquisitions Add Scale in Key Corridors
Executive Vice President and Chief Investment Officer Reggie Livingston said Acadia acquired approximately $150 million of street retail properties during the quarter, bringing year-to-date acquisitions to $350 million and total acquisitions over the past two years to $850 million.
The third-quarter purchases included:
- Two storefronts at 69 to 73 Greene Street in SoHo for $66 million.
- Three storefronts at 385 and 371 to 373 Bleecker Street in the West Village for an aggregate $20 million.
- Four storefronts at 44 Main Street in Westport, Connecticut, for $23 million.
- 171 Greenwich Avenue in Greenwich, Connecticut, for $10 million.
- 8800 Melrose Avenue in West Hollywood for $30 million.
Livingston said the acquisitions were selected for near-term lease-up, below-market rents or redevelopment opportunities. He said Acadia is routinely achieving cash yields above 6% within three years of acquisition and above 7% upon stabilization, though results vary by asset.
As an example, the company acquired a vacant property at 129 Fifth Avenue in Manhattan’s Flatiron District during the second quarter and leased it within 30 days. The asset is now projected to generate a yield on cost above 9%, according to Livingston.
Liquidity and Interest-Rate Position
Acadia ended the quarter with more than $600 million of available liquidity, Gottfried said. The company has no significant debt maturities until 2031 and has approximately $1.2 billion of interest-rate swaps and caps in place.
About $350 million of variable-rate debt was unhedged at quarter-end, though roughly $100 million of that relates to investment management assets the company expects to sell in the near term. Gottfried said Acadia has approximately $45 million of cash and $350 million of unsettled forward equity available, providing flexibility to reduce floating-rate exposure while retaining capacity for future investments.
About Acadia Realty Trust (NYSE:AKR)
Acadia Realty Trust (NYSE: AKR) is a real estate investment trust that owns, operates, acquires, and develops retail properties in the United States. Its portfolio includes grocery-anchored shopping centers, neighborhood and community retail centers, urban street retail properties, and mixed-use assets.
The company focuses on retail locations in densely populated and high-barrier-to-entry markets, serving tenants that include national retailers, restaurants, service providers, and other consumer-oriented businesses.
