What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-28 compared with 2024-07-31 · 168 added, 136 removed, 294 unchanged (51% of the section changed)

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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 entities in which the Operating Partnership owns an interest.

As of June 30, 2024 and December 31, 2023, the Trust controlled approximately 96% and 95%, respectively, of the Operating Partnership as the sole general partner and is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership.

As of September 30, 2024 and December 31, 2023, the Trust controlled approximately 96% and 95%, respectively, of the Operating Partnership as the sole general partner and is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership.

We own and operate a high-quality core real estate portfolio (“Core” or “Core Portfolio”) in the nation’s most dynamic retail corridors, along with an investment management platform (“Investment Management”).

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• maintain a strong and flexible balance sheet to support our business activities through conservative financial practices while ensuring access to sufficient capital to fund future growth.

As of June 30, 2024, we own or have an ownership interest in 199 properties held through our Core Portfolio and Investment Management platform.

As of September 30, 2024, we own or have an ownership interest in 204 properties held through our Core Portfolio and Investment Management platform.

Our Core Portfolio consists of those properties either 100% owned, or partially owned through joint venture interests, by the Operating Partnership, or subsidiaries thereof, not including those properties owned through the Investment Management platform.

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The majority of our operating income is derived from rental revenues from operating properties, including expense recoveries from tenants, offset by operating and overhead expenses.

A summary of our wholly-owned and partially-owned retail properties and their physical occupancies as of June 30, 2024 is as follows:

A summary of our wholly-owned and partially-owned retail properties and their physical occupancies as of September 30, 2024 is as follows:

Number of Properties

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Acadia Share of Total Core and Investment Management

SIGNIFICANT DEVELOPMENTS DURING THE SIX MONTHS ENDED JUNE 30, 2024 AND SUBSEQUENT EVENTS

(1) Includes four pre-stabilized properties in the Core Portfolio.

SIGNIFICANT DEVELOPMENTS DURING THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND SUBSEQUENT EVENTS

Segment Reporting

We renamed our historical Funds segment as the Investment Management segment.

During the second quarter of 2024 we renamed our historical Funds segment as the Investment Management segment.

No prior period information was recast and the designation change did not impact our condensed consolidated financial statements.

Refer to Note 12 .

During the six months ended June 30, 2024, we deconsolidated one Core property, two consolidated Investment Management properties and one outparcel, and one unconsolidated investment, as follows:

During the nine months ended September 30, 2024, we acquired four Core properties, one Core land parcel, and one consolidated Investment Management property, as follows ( Note 2 ):

• On July 3, 2024, we acquired an Investment Management shopping center, the Walk at Highwoods Preserve, located in Tampa, Florida for $30.8 million, inclusive of transaction costs.

• On September 19, 2024, we acquired a Core development land parcel as part of the overall Henderson Avenue development project in Dallas, Texas for $1.1 million, inclusive of transaction costs.

• On September 19, 2024, we acquired the Bleecker Street Portfolio in the Core, a four-property retail portfolio in Manhattan, New York for $20.3 million, inclusive of transaction costs.

In October 2024, we acquired three Core properties for $96.7 million ( Note 16 ).

During the nine months ended September 30, 2024, we deconsolidated one Core property, disposed of two consolidated Investment Management properties and one outparcel, and disposed of two unconsolidated investments, as follows:

• On April 3, 2024, Fund IV sold its consolidated 2207 and 2208-2216 Fillmore Street properties for a total sales price of $14.1 million and repaid the related $6.4 million of debt at closing.

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Fund IV recognized a gain of $4.1 million, of which the Company’s proportionate share was $1.0 million ( Note 4 ).

In July 2024, the Company acquired a shopping center, the Walk at Highwoods Preserve, located in Tampa, Florida for $30.7 million, inclusive of transaction costs ( Note 16 ).

• On September 25, 2024, Fund V sold its unconsolidated Frederick Crossing property for a total of $47.2 million and repaid the related debt of $23.2 million.

Fund V recognized a gain of $11.6 million, of which the Company’s proportionate share was $2.3 million ( Note 4 ).

Financing Activity

In April 2024, the Operating Partnership entered into a Third Amended and Restated Credit Agreement, with Bank of America, N.A., as administrative agent, to amend its existing senior unsecured credit facility (the “Amended Credit Facility”).

The Amended Credit Facility provides for an increase in the existing unsecured revolving credit facility from $300.0 million to $350.0 million, which includes the capacity to issue letters of credit in an amount up to $60.0 million, and the extension of the term from June 29, 2025 to April 15, 2028, with two additional six-month extension options.

The Amended Credit Facility also provides for the extension of the term on the existing $400.0 million unsecured term loan from June 29, 2026 to April 15, 2028, with two additional six-month extension options.

The Amended Credit Facility has an accordion feature to increase its capacity up to $900 million at the option of the Operating Partnership, subject to customary conditions.

Borrowings under the revolving credit facility and the term loan will accrue interest at a floating rate based on SOFR with margins based on leverage or credit rating.

During the six months ended June 30, 2024, we ( Note 7 ):

• repaid a Core mortgage loan totaling $7.3 million at maturity;

• extended a Core mortgage loan of $60.0 million (excluding principal reductions of $2.5 million);

On September 12, 2024, the Operating Partnership and the Company entered into a Consent and Second Amendment (the “Amendment”) to the Third Amended and Restated Credit Agreement, with Bank of America, N.A.

as administrative agent, dated as of April 15, 2024, to amend its existing senior unsecured credit facility (the “Credit Facility”).

The Amendment provides for an increase in the existing unsecured revolving credit facility under the Credit Facility (the “Revolver”) from $350.0 million to $525.0 million, on the same terms and conditions as the existing Revolver, which includes the capacity to issue letters of credit in an amount up to $60.0 million.

The Amendment also increases the capacity limit on the accordion feature under the existing Credit Facility from $900.0 million to $1.1 billion, on the same terms and conditions otherwise set forth in the Credit Facility.

The Credit Facility and existing $400.0 million unsecured term loan (“Term Loan”) have a maturity date of April 15, 2028, with two additional six-month extension options.

Borrowings under the Revolver and the Term Loan will accrue interest at a floating rate based on SOFR with margins based on leverage or credit rating ( Note 7 ).

Core Portfolio

During the nine months ended September 30, 2024, we ( Note 7 ):

• issued $100.0 million aggregate principal amount of senior unsecured notes in a private placement;

• extended a Core property mortgage loan of $60.0 million (excluding principal reductions of $2.5 million);

• repaid a Core property mortgage loan totaling $7.3 million at maturity;

• repaid in full the $175.0 million term loan;

• made scheduled principal payments totaling $3.8 million.

Investment Management

During the nine months ended September 30, 2024, we ( Note 7 ):

• entered into a new Investment Management property mortgage loan of $43.4 million;

• extended two Investment Management property mortgage loans totaling $67.7 million;

• repaid the Fund V subscription line totaling $80.6 million;

• entered into a new Investment Management mortgage loan of $43.4 million;

• repaid two consolidated Investment Management mortgage loans of $6.4 million upon disposition of the properties ( Note 2 );

• repaid a portion of one consolidated Investment Management mortgage loan of $1.5 million in connect with an outparcel disposition ( Note 2 );

• extended two Investment Management mortgage loans totaling $67.7 million;

• repaid one unconsolidated Investment Management mortgage loan of $27.9 million upon disposition of the property ( Note 4 );

• repaid two consolidated Investment Management property mortgage loans of $6.4 million upon disposition of the properties ( Note 2 );

• repaid a portion of one consolidated Investment Management property mortgage loan of $1.5 million in connect with an outparcel disposition ( Note 2 );

• r epaid two unconsolidated Investment Management property mortgage loans of $51.1M upon dispositions of the properties ( Note 4 );

• made scheduled principal payments totaling $4.1 million.

Structured Financing Investments

During the six months ended June 30, 2024, we originated one Core note receivable of $7.6 million to a related party, which is collateralized by the borrower’s equity interest in various partnerships, bears interest at 12% and matures on December 31, 2025.

During the nine months ended September 30, 2024, we originated one Core note receivable of $7.6 million to a related party, which is collateralized by the borrower’s equity interest in various partnerships, bears interest at 12% and matures on December 31, 2025.

Common Shares

During the six months ended June 30, 2024, we sold 1,739,288 Common Shares under our ATM Program generating $29.9 million of net proceeds after related issuance costs ( Note 10 ).

In January 2024, the Company completed an underwritten offering of 6,900,000 Common Shares (inclusive of the underwriters’ option to purchase 900,000 additional shares) for net proceeds of $113.0 million.

During the nine months ended September 30, 2024, we sold 10,273,250 Common Shares under our ATM Program generating $216.9 million of net proceeds after related issuance costs ( Note 10 ).

In September 2024, the Company entered into an underwriting agreement and forward sales agreements with various underwriters and forward purchasers (the “Forward Sales Agreements”), which is accounted for in equity, to offer and sell 5,750,000 (inclusive of the underwriters exercised option to purchase 750,000 additional shares) of its Common Shares on a forward basis.

On October 16, 2024, the Company physically settled the Forward Sale Agreements and received net proceeds of $131.8 million ( Note 16 ).

Economic and Other Considerations

Heightened levels of inflation and higher interest rates present risks for our business and our tenants.

We continue to monitor and address risks related to the economy.

In recent years, inflation levels were elevated resulting in increased costs for certain goods and services and cost of borrowing.

Inflation began to decrease in the second quarter of 2023 but still remains at elevated levels compared to the years preceding 2021.

While the Federal Reserve reduced interest rates in September 2024 and may lower interest rates further in 2024 or later periods, we cannot provide any assurance that further interest rate reductions, if any, or other monetary policy changes, will positively affect our business, results of operations or consolidated financial statements.

Most of our leases include contractual rent escalations and require tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation.

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We also continue to see rising consumer confidence and we expect to continue to add value to our portfolio by executing on our current leasing momentum, our active development and redevelopment projects, and leasing pipeline.

In response to the rising rate of inflation, the Federal Reserve raised benchmark interest rates, resulting in an increase in the cost of borrowing, which could remain at elevated levels in the near-term and long-term.

The rate hikes enacted by the Federal Reserve have had a significant impact on interest rate indexes such as SOFR and the Prime Rate and cost of borrowing.

We manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap and cap agreements, which qualify for, and are designated as, hedging instruments.

Except for increased interest costs, we have not experienced any material negative impacts at this time, and we intend to actively manage our business to respond to the ongoing economic and social impact from such events.

Except for increased interest costs, we have not experienced any material negative impacts at this time.

RESULTS OF OPERATIONS

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Core Portfolio (“Core”), Investment Management (“IM”) and Structured Financing (“SF”).

Comparison of Results for the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

The results of operations by reportable segment for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 are summarized in the table below (in millions, totals may not add due to rounding):

Comparison of Results for the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023

The results of operations by reportable segment for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 are summarized in the table below (in millions, totals may not add due to rounding):

Three Months Ended

June 30, 2024

June 30, 2023

September 30, 2024

September 30, 2023

Increase (Decrease)

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General and administrative expenses

(Loss) gain on disposition of properties

Impairment charges

Operating income

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Core Portfolio

The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio decreased $9.6 million for the three months ended June 30, 2024 compared to the prior year period as a result of the changes further described below.

Revenues for our Core Portfolio decreased $7.5 million for the three months ended June 30, 2024 compared to the prior year period primarily due to the accelerated amortization of a below market lease for a bankrupt tenant in 2023.

Depreciation and amortization for our Core Portfolio decreased $2.0 million for the three months ended June 30, 2024 compared to the prior year period primarily due to the acceleration of in-place lease intangible assets for a bankrupt tenant in 2023.

Loss on disposition of property for our Core Portfolio relates to the deconsolidation of the Shops at Grand property in 2024 ( Note 2 ).

Realized and unrealized holding (losses) gains on investments and other for our Core Portfolio decreased $4.0 million for the three months ended June 30, 2024 compared to the prior year period primarily due to a change in the mark-to-market adjustment on the Investment in Albertsons ( Note 8 ).

Interest expense for our Core Portfolio decreased $1.1 million for the three months ended June 30, 2024 compared to the prior year period primarily due to lower average outstanding borrowings in 2024.

The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio increased $1.9 million for the three months ended September 30, 2024 compared to the prior year period as a result of the changes further described below.

Revenues for our Core Portfolio decreased $1.7 million for the three months ended September 30, 2024 compared to the prior year period primarily due to (i) $1.5 million from the strategic recapture of tenant space subsequent to September 30, 2023 and (ii) $0.9 million from the sale of the Shops at Grand property in 2024.

These decreases were partially offset by (i) $1.0 million from new tenant lease up.

Depreciation and amortization for our Core Portfolio decreased $1.0 million for the three months ended September 30, 2024 compared to the prior year period primarily due to the acceleration of in-place lease intangible assets for a bankrupt tenant in 2023.

Property operating expenses and real estate taxes decreased $2.4 million for the three months ended September 30, 2024 compared to the prior year period primarily due to an increase in repairs and maintenance, utility and insurance costs in 2023.

Equity in earnings of unconsolidated affiliates increased $1.6 million for the three months ended September 30, 2024 compared to the prior year period primarily due to $0.9 million from tenant lease up and $0.8 million from the restructuring of debt at a property.

Realized and unrealized holding (losses) gains on investments and other for our Core Portfolio decreased $2.8 million for the three months ended September 30, 2024 compared to the prior year period primarily due to a change in the mark-to-market adjustment on the Investment in Albertsons ( Note 8 ).

Interest expense for our Core Portfolio decreased $1.9 million for the three months ended September 30, 2024 compared to the prior year period primarily due to lower average outstanding borrowings in 2024.

Investment Management (all amounts below are consolidated amounts and are not representative of our proportionate share)

The results of operations for our Investment Management segment are depicted in the table above under the headings labeled “IM.” Segment net income attributable to Acadia for Investment Management increased $1.1 million for the three months ended June 30, 2024 compared to the prior year period as a result of the changes described below.

Revenues for Investment Management increased $4.8 million for the three months ended June 30, 2024 compared to the prior year period primarily due to property acquisitions in the second half of 2023.

Depreciation and amortization for Investment Management increased $2.3 million for the three months ended June 30, 2024 compared to the prior year period primarily due to property acquisitions in the second half of 2023.

Gain on disposition of properties for Investment Management increased $3.0 million for the three months ended June 30, 2024 compared to the prior year period due to the sale of two properties at Fund IV and an outparcel at Fund V ( Note 2 ).

Equity in earnings (losses) of unconsolidated affiliates for Investment Management increased $6.2 million for the three months ended June 30, 2024 compared to the prior year period primarily due to the gain on sale of Paramus Plaza in 2024 ( Note 4 ).

Interest expense for Investment Management increased $2.5 million for the three months ended June 30, 2024 compared to the prior year period primarily due to higher average interest rates in 2024.

Net (income) loss attributable to noncontrolling interests for Investment Management decreased $8.4 million for the three months ended June 30, 2024 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above.

Net income attributable to noncontrolling interests in Investment Management includes asset management fees earned by the Company of $2.4 million and $2.3 million for the three months ended June 30, 2024 and 2023, respectively.

The results of operations for our Investment Management segment are depicted in the table above under the headings labeled “IM.” Segment net income attributable to Acadia for Investment Management increased $5.5 million for the three months ended September 30, 2024 compared to the prior year period as a result of the changes described below.

Revenues for Investment Management increased $8.1 million for the three months ended September 30, 2024 compared to the prior year period primarily due to (i) $2.8 million from property acquisitions in the second half of 2023 and 2024, (ii) $2.4 million from new tenant lease up, and (iii) $1.3 million from higher recoveries as a result of higher property operating expenses in 2024.

Depreciation and amortization for Investment Management increased $1.8 million for the three months ended September 30, 2024 compared to the prior year period primarily due to property acquisitions in the second half of 2023.

Impairment charges for our Investment Management of $3.7 million related to 146 Geary in Fund IV during 2023.

Equity in earnings (losses) of unconsolidated affiliates for Investment Management increased $15.0 million for the three months ended September 30, 2024 compared to the prior year period primarily due to the gain on sale of Frederick Crossing in 2024 ( Note 4 ).

Net (income) loss attributable to noncontrolling interests for Investment Management decreased $17.4 million for the three months ended September 30, 2024 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above.

Net income attributable to noncontrolling interests in Investment Management includes asset management fees earned by the Company of $3.6 million and $2.4 million for the three months ended September 30, 2024 and 2023, respectively.

Structured Financing

Interest income for our Structured Financing portfolio increased $2.8 million for the three months ended September 30, 2024 compared to the prior year period primarily due to higher cash balances and compounding interest on certain of our notes.

The Company does not allocate general and administrative expenses and income taxes to its reportable segments.

These unallocated amounts are depicted in the table above under the headings labeled “Total.”

Comparison of Results for the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

The results of operations by reportable segment for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 are summarized in the table below (in millions, totals may not add due to rounding):

Six Months Ended

June 30, 2024

June 30, 2023

Comparison of Results for the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

The results of operations by reportable segment for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 are summarized in the table below (in millions, totals may not add due to rounding):

Nine Months Ended

September 30, 2024

September 30, 2023

Increase (Decrease)

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(Loss) gain on disposition of properties

Impairment charges

Operating income (loss)

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Core Portfolio

The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio decreased $9.2 million for the six months ended June 30, 2024 compared to the prior year period as a result of the changes further described below.

Revenues for our Core Portfolio decreased $3.8 million for the six months ended June 30, 2024 compared to the prior year period primarily due to $7.8 million accelerated amortization of a below market lease for a bankrupt tenant in 2023, offset by $3.5 million for the recognition of a forfeited deposit within Other revenues in the Condensed Consolidated Statements of Operations for a property previously under contract for sale in 2024.

Depreciation and amortization for our Core Portfolio decreased $2.5 million for the six months ended June 30, 2024 compared to the prior year period primarily due to the write-off of in-place lease intangible assets for a bankrupt tenant in 2023.

Property operating expenses and real estate taxes for our Core Portfolio increased $1.1 million for the six months ended June 30, 2024 compared to the prior year period primarily due to increased legal expense reserves in the current year.

The results of operations for our Core Portfolio segment are depicted in the table above under the headings labeled “Core.” Segment net income attributable to Acadia for our Core Portfolio decreased $7.4 million for the nine months ended September 30, 2024 compared to the prior year period as a result of the changes further described below.

Revenues for our Core Portfolio decreased $5.5 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to (i) $7.8 million accelerated amortization of a below-market lease for a bankrupt tenant in 2023, (ii) $2.3 million from the strategic recapture of tenant space subsequent to September 30, 2023, and (iii) $0.9 million from the sale of the Shops at Grand property in 2024.

These decreases were offset by (i) $3.5 million for the recognition of a forfeited deposit within Other revenues in the Condensed Consolidated Statements of Operations for a property previously under contract for sale in 2024, and (ii) $1.0 million from new tenant lease up.

Depreciation and amortization for our Core Portfolio decreased $3.5 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to the write-off of in-place lease intangible assets for a bankrupt tenant in 2023.

Property operating expenses and real estate taxes for our Core Portfolio decreased $1.2 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to an increase in repairs and maintenance, utility and insurance costs in 2023 offset by increased legal expense reserves in the current year.

Loss on disposition of property for our Core Portfolio relates to the deconsolidation of the Shops at Grand property in 2024 ( Note 2 ).

Realized and unrealized holding (losses) gains on investments and other for our Core Portfolio decreased $7.4 million for the six months ended June 30, 2024 compared to the prior year period primarily due to a change in the mark-to-market adjustment on the Investment in Albertsons ( Note 8 ).

Interest expense for our Core Portfolio decreased $1.7 million for the six months ended June 30, 2024 compared to the prior year period due to lower average outstanding borrowings in 2024.

Net income attributable to noncontrolling interests for our Core Portfolio increased $1.0 million for the six months ended June 30, 2024 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above.

Equity in earnings of unconsolidated affiliates increased $1.6 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to $0.9 million from tenant lease up and $0.8 million from the restructuring of debt at a property.

Realized and unrealized holding (losses) gains on investments and other for our Core Portfolio decreased $10.3 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to a change in the mark-to-market adjustment on the Investment in Albertsons ( Note 8 ).

Interest expense for our Core Portfolio decreased $3.5 million for the nine months ended September 30, 2024 compared to the prior year period due to lower average outstanding borrowings in 2024.

Net income attributable to noncontrolling interests for our Core Portfolio increased $0.7 million for the nine months ended September 30, 2024 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above.

Investment Management (all amounts below are consolidated amounts and are not representative of our proportionate share)

The results of operations for our Investment Management segment are depicted in the table above under the headings labeled “IM.” Segment net income attributable to Acadia for Investment Management decreased $9.7 million for the six months ended June 30, 2024 compared to the prior year period as a result of the changes described below.

Revenues for Investment Management increased $10.6 million for the six months ended June 30, 2024 compared to the prior year period primarily due to (i) $9.6 million from acquisitions in 2023, and (ii) $1.7 million from new tenant lease-up within Investment Management in 2023 and 2024.

Depreciation and amortization for Investment Management increased $4.5 million for the six months ended June 30, 2024 compared to the prior year period primarily due to property acquisitions in 2023.

Property operating expenses and real estate taxes for Investment Management increased $3.9 million for the six months ended June 30, 2024 compared to the prior year period primarily due to property acquisitions in 2023 and non-recurring property operating expenses within Investment Management.

(Loss) gain on disposition of property for Investment Management increased $1.8 million for the six months ended June 30, 2024 compared to the prior year period due to the $3.0 million gain on disposition of two properties at Fund IV and an outparcel at Fund V, offset by a $1.2 million loss related to a previously disposed property ( Note 2 ).

Equity in earnings (losses) of unconsolidated affiliates for Investment Management increased $5.5 million for the six months ended June 30, 2024 compared to the prior year period primarily due to the gain on disposition of Paramus Plaza in 2024 ( Note 4 ).

Realized and unrealized holding (losses) gains on investments and other for the Investment Management decreased $25.0 million for the six months ended June 30, 2024 compared to the prior year period primarily due to a $28.2 million increase in dividend income from Albertsons in 2023 offset by a $2.0 million mark-to-market loss in 2023 ( Note 8 ).

Interest expense for Investment Management increased $5.3 million for the six months ended June 30, 2024 compared to the prior year period primarily due to higher average interest rates in 2024.

Net loss attributable to redeemable noncontrolling interests for Investment Management increased $1.6 million for the six months ended June 30, 2024 compared to the prior year period due to the receipt of past due rents for a tenant in 2023.

Segment net income attributable to Acadia for Investment Management decreased $9.7 million for the six months ended June 30, 2024 compared to the prior year period as a result of the changes described below.

Net loss attributable to noncontrolling interests in Investment Management includes asset management fees earned by the Company of $4.7 million and $4.8 million for the six months ended June 30, 2024 and 2023, respectively.

The results of operations for our Investment Management segment are depicted in the table above under the headings labeled “IM.” Segment net income attributable to Acadia for Investment Management decreased $4.3 million for the nine months ended September 30, 2024 compared to the prior year period as a result of the changes described below.

Revenues for Investment Management increased $18.6 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to (i) $12.4 million from acquisitions in 2023 and 2024, (ii) $4.1 million from new tenant lease-up within Investment Management in 2023 and 2024, and (iii) $1.3 million from higher recoveries as a result of higher property operating expenses in 2024.

Depreciation and amortization for Investment Management increased $6.3 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to property acquisitions in 2023.

Property operating expenses and real estate taxes for Investment Management increased $4.8 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to property acquisitions in 2023 and higher property operating expenses within Investment Management in 2024.

Gain on disposition of properties for Investment Management increased $1.8 million for the nine months ended September 30, 2024 compared to the prior year period due to the $3.0 million gain on disposition of two properties at Fund IV and an outparcel at Fund V, offset by a $1.2 million loss related to a previously disposed property ( Note 2 ).

Equity in earnings (losses) of unconsolidated affiliates for Investment Management increased $20.6 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to the gain on disposition of Frederick Crossing and Paramus Plaza in 2024 ( Note 4 ).

Realized and unrealized holding (losses) gains on investments and other for the Investment Management decreased $25.0 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to a $28.2 million increase in dividend income from Albertsons in 2023 offset by the mark-to-market adjustment on the investment in Albertsons in 2023 and 2024 ( Note 8 ).

Interest expense for Investment Management increased $5.6 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to higher average interest rates in 2024.

Net (income) loss attributable to noncontrolling interests for Investment Management decreased $8.1 million for the nine months ended September 30, 2024 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above.

Net income attributable to noncontrolling interests in Investment Management includes asset management fees earned by the Company of $8.3 million and $7.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Structured Financing

Interest income for our Structured Financing portfolio increased $3.6 million for the nine months ended September 30, 2024 compared to the prior year period primarily due to higher cash balances and compounding interest on certain of our notes.

The Company does not allocate general and administrative expenses and income taxes to its reportable segments.

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A reconciliation of consolidated operating income to net operating income - Core Portfolio follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Consolidated operating income

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Depreciation and amortization

Gain (loss) on disposition of properties

Impairment charges

Loss on disposition of properties

Above/below-market rent, straight-line rent and other adjustments (a)

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a) Includes straight-line rent reserves.

See Note 11 for additional information about straight-line rent reserves and adjustments for the periods presented.

b) Does not include the Operating Partnership’s share of NOI from unconsolidated joint ventures within Investment Management.

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The following table summarizes Same-Property NOI for our Core Portfolio (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Core Portfolio NOI

11 unchanged sentences

The table below includes embedded option renewals for which the renewed rent was equal to or approximated existing base rent.

Three Months Ended June 30, 2024

Six Months Ended June 30, 2024

Three Months Ended September 30, 2024

Nine Months Ended September 30, 2024

Core Portfolio New and Renewal Leases

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A reconciliation of net income (loss) attributable to Acadia to FFO follows (dollars in thousands, except per share data):

Three Months Ended June 30,

Six Months Ended June 30,

Net income attributable to Acadia

Three Months Ended September 30,

Nine Months Ended September 30,

Net income (loss) attributable to Acadia

Depreciation of real estate and amortization of leasing costs (net of

noncontrolling interests' share)

Loss on disposition of property (net of noncontrolling interests' share)

Impairment charges (net of noncontrolling interests' share)

Gain on disposition of properties (net of noncontrolling interests' share)

Income attributable to Common OP Unit holders

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In order to qualify as a REIT for federal income tax purposes, we must distribute at least 90% of our taxable income to our shareholders.

During the six months ended June 30, 2024, we paid dividends and distributions on our Common Shares and Preferred OP Units totaling $37.5 million.

In July 2024, through Investment Management, we acquired a shopping center, the Walk at Highwoods Preserve, located in Tampa, Florida for $30.7 million, inclusive of transaction costs ( Note 16 ).

During the nine months ended September 30, 2024, we paid dividends and distributions on our Common Shares and Preferred OP Units totaling $58.7 million.

During the nine months ended September 30, 2024, we acquired four Core properties, one Core land parcel, and one consolidated Investment Management property, as described below ( Note 2 ):

• In July 2024, through Investment Management, we acquired a shopping center, the Walk at Highwoods Preserve, located in Tampa, Florida for $30.8 million, inclusive of transaction costs.

• In September 2024, we acquired a Core development land parcel as part of the overall Henderson Avenue development project in Dallas, Texas for $1.1 million, inclusive of transaction costs.

• In September 2024, we acquired the Bleecker Street Portfolio in the Core, a four property retail portfolio (inclusive of a parking garage) in New York, New York for $20.3 million, inclusive of transaction costs.

Structured Financing Investments

During the six months ended June 30, 2024, we originated one Core note receivable of $7.6 million to a related party, which is secured by the borrower’s equity interest in the Renaissance Portfolio, 1238 Wisconsin Avenue, and another Georgetown property, bears interest at 12% and matures on December 31, 2025 ( Note 3 ).

During the nine months ended September 30, 2024, we originated one Core note receivable of $7.6 million to a related party, which is secured by the borrower’s equity interest in the Renaissance Portfolio, 1238 Wisconsin Avenue, and another Georgetown property, bears interest at 12% and matures on December 31, 2025 ( Note 3 ).

Capital Commitments

During the six months ended June 30, 2024, we made capital contributions aggregating $11.1 million to our Funds.

As of June 30, 2024, our share of the remaining capital commitments to our Funds aggregated $18.1 million as follows:

During the nine months ended September 30, 2024, we made capital contributions aggregating $11.7 million to our Funds.

As of September 30, 2024, our share of the remaining capital commitments to our Funds aggregated $17.5 million as follows:

• $0.5 million to Fund III – Fund III was launched in May 2007 with total committed capital of $450.0 million, of which our original share was $89.6 million.

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Development Activities

During the six months ended June 30, 2024, capitalized costs associated with development activities totaled $7 million ( Note 2 ).

As of June 30, 2024, we had a total of 13 consolidated projects under development or redevelopment, for which the estimated total cost to complete these projects through 2025 was $35.0 million to $61.2 million, and our estimated share was approximately $18.9 million to $33.7 million.

During the nine months ended September 30, 2024, capitalized costs associated with development activities totaled $13.9 million ( Note 2 ).

As of September 30, 2024, we had a total of 10 consolidated projects under development or redevelopment, for which the estimated total cost to complete these projects through 2028 was $54.0 million to $168.0 million, and our estimated share was approximately $54.0 million to $168.0 million.

Substantially all remaining development and redevelopment costs are discretionary, and could be affected by various risks and uncertainties, including, but not limited to, the effects of the current inflationary environment, rising interest rates, and other risks detailed in Part I, Item 1A.

Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023.

A summary of our consolidated debt, which includes the full amount of Fund related obligations and excludes our pro rata share of debt at our unconsolidated subsidiaries, is as follows (in thousands):

A summary of our consolidated debt, which includes the full amount of Investment Management related obligations and excludes our pro rata share of debt at our unconsolidated subsidiaries, is as follows (in thousands):

September 30,

Total Debt - Fixed and Effectively Fixed Rate

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Total Indebtedness

As of June 30, 2024, our consolidated indebtedness aggregated $1,707.7 million, excluding unamortized premium of $0.2 million and net unamortized loan costs of $12.1 million, and was collateralized by 31 properties and related tenant leases.

Stated interest rates on our outstanding indebtedness ranged from 3.99% to SOFR + 3.75% with maturities that ranged from July 8, 2024 to April 15, 2035, without regard to available extension options.

As of September 30, 2024, our consolidated indebtedness aggregated $1,590.4 million, excluding unamortized premium of $0.2 million and net unamortized loan costs of $11.0 million, and was collateralized by 31 properties and related tenant leases.

Stated interest rates on our outstanding indebtedness ranged from 3.99% to SOFR + 3.75% with maturities that ranged from October 5, 2024 to April 15, 2035, without regard to available extension options.

With respect to the debt maturing in 2024, we are actively pursuing refinancing the remaining obligations, though there can be no assurance that we can refinance such obligations on favorable terms or at all.

Taking into consideration $1,188.3 million of notional principal under variable to fixed-rate swap agreements currently in effect, $1,379.8 million of the portfolio debt, or 80.8%, was fixed at a 4.74% weighted average interest rate and $327.9 million, or 19.2%%, was floating at a 8.10% weighted average interest rate as of June 30, 2024.

Taking into consideration $875.1 million of notional principal under variable to fixed-rate swap agreements currently in effect, $1,166.1 million of the portfolio debt, or 73.3%, was fixed at a 5.02% weighted average interest rate and $424.3 million, or 26.7%%, was floating at a 7.76% weighted average interest rate as of September 30, 2024.

Our variable-rate debt includes $151.0 million of debt subject to interest rate caps.

Without regard to available extension options, as of June 30, 2024, we had $211.8 million of debt maturing in 2024 at a weighted-average interest rate of 4.18%;

Without regard to available extension options, as of September 30, 2024, we had $171.9 million of debt maturing in 2024 at a weighted-average interest rate of 5.71%;

$1.2 million of scheduled principal amortization due in the remainder of 2024;

and our share of scheduled remaining 2024 principal payments and maturities on our unconsolidated debt was $43.4 million.

In addition, $373.6 million of our total consolidated debt and $57.7 million of our pro-rata share of unconsolidated debt will come due by June 30, 2025.

With respect to the debt maturing in 2024 and 2025, we have options to extend consolidated debt aggregating $40.0 million and $327.3 million as of June 30, 2024 and;

however, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options.

In addition, $542.1 million of our total consolidated debt and $44.8 million of our pro-rata share of unconsolidated debt will come due by September 30, 2025.

With respect to the debt maturing in 2024 and 2025, we have options to extend consolidated debt aggregating $0.0 million and $327.0 million as of September 30, 2024 and there can be no assurance that the Company will be able to successfully execute any or all of its available extension options.

For the remaining indebtedness, we may not have sufficient cash on hand to repay such indebtedness, and, therefore, we expect to refinance at least a portion of this indebtedness or select other alternatives based on market conditions as these loans mature;

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Share Repurchase Program

We maintain a share repurchase program under which $122.5 million remains available as of June 30, 2024 ( Note 10 ).

We did not repurchase any shares under this program during the six months ended June 30, 2024.

We maintain a share repurchase program under which $122.5 million remains available as of September 30, 2024 ( Note 10 ).

We did not repurchase any shares under this program during the nine months ended September 30, 2024.

Sources of Liquidity

Our primary sources of capital for funding our short-term (less than 12 months) and long-term (12 months and longer) liquidity needs include (i) the issuance of both public equity and OP Units, (ii) the issuance of both secured and unsecured debt, (iii) unfunded capital commitments from noncontrolling interests within Investment Management, (iv) future sales of existing properties, (v) repayments of structured financing investments, (vi) liquidation of marketable securities, and (vii) cash on hand and future cash flow from operating activities.

Our cash on hand in our consolidated subsidiaries as of June 30, 2024 totaled $31.9 million.

Our cash on hand in our consolidated subsidiaries as of September 30, 2024 totaled $46.2 million.

Our remaining sources of liquidity are described further below.

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exercised option to purchase 750,000 additional shares) of its Common Shares on a forward basis.

On October 16, 2024, the Company physically settled the Forward Sale Agreements and received net proceeds of $131.8 million.

We have an ATM Program ( Note 10 ) that provides us with an efficient and low-cost vehicle for raising capital through public equity issuances on an as-we-go basis to fund our capital needs.

Through this program, we have been able to effectively “match-fund” the required capital for our Core Portfolio and our share of Investment Management acquisitions through the issuance of Common Shares over extended periods employing

a price averaging strategy.

In addition, from time to time, we have issued and may issue, equity in follow-on offerings separate from our ATM Program.

Net proceeds raised through our ATM Program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Investment Management acquisitions, and for general corporate purposes.

The Company sold 1,739,288 Common Shares under its ATM Program during the six months ended June 30, 2024 generating $29.9 million of net proceeds after related issuance costs.

The Company sold 8,533,962 and 10,273,250 Common Shares under its ATM Program during the three and nine months ended September 30, 2024 generating $187.0 million and $216.9 million of net proceeds after related issuance costs, respectively.

Investment Management Capital

During the six months ended June 30, 2024, Fund V called for capital contributions of $52.2 million, of which our aggregate share was $11.1 million.

As of June 30, 2024, unfunded capital commitments from noncontrolling interests within Funds II, III, IV and V were $0, $1.4 million, $18.5 million and $48.3 million, respectively.

During the nine months ended September 30, 2024, Fund V called for capital contributions of $57.8 million, of which our aggregate share was $11.7 million.

As of September 30, 2024, unfunded capital commitments from noncontrolling interests within Funds II, III, IV and V were $0, $1.4 million, $18.5 million and $45.9 million, respectively.

Asset Sales and Other Transactions

During the six months ended June 30, 2024, we deconsolidated one Core property, two consolidated Investment Management properties and one outparcel, and one unconsolidated investment, as follows:

During the nine months ended September 30, 2024, we deconsolidated one Core property, two consolidated Investment Management properties and one outparcel, and one unconsolidated investment, as follows:

• On April 3, 2024, Fund IV sold its consolidated 2207 and 2208-2216 Fillmore Street properties for a total sales price of $14.1 million and repaid the related $6.4 million of debt at closing.

Fund IV recognized a gain of $2.4 million, of which the Company’s proportionate share was $0.5 million ( Note 2 ).

• On May 16, 2024, we sold a 95% interest in the Shops at Grand for a total of $48.3 million and retained a 5% ownership interest through an investment in a newly formed joint venture which was fair valued at $2.4 million.

• On May 16, 2024, we sold a 95% interest in the Shops at Grand property for a total of $48.3 million and retained a 5% ownership interest through an investment in a newly formed joint venture which was fair valued at $2.4 million.

As we now have a noncontrolling interest, we recognized a loss on deconsolidation of $2.2 million related to transaction costs ( Note 2 ).

• On June 28, 2024, Fund V sold an outparcel at Canton Marketplace for $2.2 million and recognized a gain of $0.6 million, of which the Company’s proportionate share was $0.1 million ( Note 2 ).

• On June 28, 2024, Fund V sold an outparcel at Canton Marketplace property for $2.2 million and recognized a gain of $0.6 million, of which the Company’s proportionate share was $0.1 million ( Note 2 ).

• On June 28, 2024, Fund IV sold its unconsolidated Paramus Plaza property for a total of $36.8 million and repaid the related debt of $27.9 million.

Fund IV recognized a gain of $4.1 million, of which the Company’s proportionate share was $1.0 million ( Note 4 ).

During the six months ended June 30, 2024, we sold 350,000 shares of Albertsons, generating net proceeds of $7.6 million.

As of June 30, 2024, we held 1.1 million shares with a fair value of $21.7 million ( Note 8 ).

In addition, during the six months ended June 30, 2024, we recognized dividend income of $0.3 million ( Note 8 ).

• On September 25, 2024, Fund V sold its unconsolidated Frederick Crossing property for $47.2 million and repaid the related debt of $23.2 million.

Fund V recognized a gain of $11.6 million, of which the Company’s proportionate share was $2.3 million ( Note 4 ).

During the nine months ended September 30, 2024, we sold 500,000 shares of Albertsons, generating net proceeds of $10.5 million.

As of September 30, 2024, we held 0.9 million shares of Albertsons which had a fair value of $17.5 million ( Note 8 ).

In addition, during the nine months ended September 30, 2024, we recognized dividend income of $0.4 million ( Note 8 ).

Structured Financing Repayments

During the six months ended June 30, 2024, the Company received full payment on a $6.0 million Core Portfolio note.

During the nine months ended September 30, 2024, the Company received full payment on a $6.0 million Core Portfolio note.

Financing and Debt

As of June 30, 2024, we had $253.6 million of capacity under existing Core Portfolio debt facilities.

As of September 30, 2024, we had $469.0 million of capacity under existing Core Portfolio debt facilities.

In addition, as of that date within our Core Portfolio and Investment Management, we had 132 unleveraged consolidated properties with an aggregate carrying value of approximately $1.8 billion, although there can be no assurance that we would be able to obtain financing for these properties at favorable terms, if at all.

HISTORICAL CASH FLOW

The following table compares the historical cash flow for the six months ended June 30, 2024 with the cash flow for the six months ended June 30, 2023 (in millions, totals may not add due to rounding):

Six Months Ended June 30,

The following table compares the historical cash flow for the nine months ended September 30, 2024 with the cash flow for the nine months ended September 30, 2023 (in millions, totals may not add due to rounding):

Nine Months Ended September 30,

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash used in financing activities

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Net cash provided by operating activities primarily consists of cash inflows from rental revenue, and cash outflows for property operating expenses, general and administrative expenses and interest and debt expense.

Our operating activities provided $31.5 million less cash for the six months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to the $28.2 million dividend received from our investment in Albertsons in 2023.

Our operating activities provided $12.6 million less cash for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to the $28.2 million dividend received from our investment in Albertsons in 2023.

Investing Activities

Net cash used in investing activities is impacted by our investments in and advances to unconsolidated affiliates, the timing and extent of our real estate development, capital improvements, and acquisition and disposition activities during the period.

Our investing activities provided $46.7 million more cash for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to (i) $58.7 million more cash received form the disposition of properties in 2024, (ii) $22.8 million less cash used in our investments in and advances to unconsolidated affiliates, (iii) $7.6 million more cash received from the sale of marketable securities, and (iv) $6.0 million more received from the payment of a note receivable.

These sources of cash were offset by (i) $33.4 million less cash received from return of capital of unconsolidated affiliates, (ii) $7.9 million more cash used to originate a note receivable, and (iii) $6.8 million more cash used for development, construction and property improvement costs.

Our investing activities provided $40.0 million more cash for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to (i) $58.7 million more cash received from the disposition of properties in 2024, (ii) $20.8 million less cash used in our investments in and advances to unconsolidated affiliates, (iii) $8.1 million more cash received from the sale of marketable securities, and (iv) $6.0 million more received from the payment of a note receivable.

These sources of cash were offset by (i) $27.0 million less cash received from return of capital of unconsolidated affiliates, (ii) $11.1 million more cash used for development, construction and property improvement costs, (iii) $8.2 million more cash used to originate a note receivable and (iv) $6.4 million more cash used for the acquisition of real estate.

Financing Activities

Net cash used in financing activities is impacted by the timing and extent of issuances of debt and equity securities, distributions paid to common shareholders and unitholders of the Operating Partnership, as well as principal and other payments associated with our outstanding indebtedness.

Our financing activities used $17.3 million less cash during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily from (i) $142.1 million more cash provided by the sale of Common Shares, (ii) $13.7 million less cash distributed to noncontrolling interests, and (iii) $12.5 million more cash provided by contributions from noncontrolling interests.

These increases were offset by (i) $142.6 million more cash used to repay debt, (ii) $6.8 million more used for payment of deferred financing fees, and (iii) $1.5 million more used to pay dividends.

Our financing activities provided $21.7 million more cash during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily from (i) $328.8 million more cash provided by the sale of Common Shares, (ii) $14.3 million more cash provided by contributions from noncontrolling interests, and (iii) $8.0 million less cash distributed to noncontrolling interests.

These increases were offset by (i) $317.5 million more cash used to repay debt, (ii) $7.2 million more cash used for payment of deferred financing fees, and (iii) $3.3 million more used to pay dividends.

OFF-BALANCE SHEET ARRANGEMENTS

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Operating Partnership

June 30, 2024

September 30, 2024

Pro-rata Share of

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Maturity Date

Crossroads Shopping Center

Tri-City Plaza (b)

Frederick Crossing (b)

Crossroads Shopping Center

Frederick County Square (b)

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Mohawk Commons

(a) Effective interest rates incorporate the effect of interest rate swaps and caps that were in effect as of June 30, 2024, where applicable.

(a) Effective interest rates incorporate the effect of interest rate swaps and caps that were in effect as of September 30, 2024, where applicable.

(b) The debt has one available 12-month extension option.

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QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK.

Information as of June 30, 2024

Information as of September 30, 2024

Our primary market risk exposure is to changes in interest rates related to our mortgage and other debt.

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Currently, we manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap and cap agreements.

As of June 30, 2024, we had total mortgage and other notes payable of $1,707.7 million, excluding the unamortized premium of $0.2 million and net unamortized debt issuance costs of $12.1 million, of which $1,379.8 million, or 80.8% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $327.9 million, or 19.2%, was variable-rate based upon LIBOR, SOFR or Prime rates plus certain spreads.

As of June 30, 2024, we were party to 36 interest rate swaps and four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $1,188.3 million and $151.2 million of variable-rate debt, respectively.

As of September 30, 2024, we had total mortgage and other notes payable of $1,590.4 million, excluding the unamortized premium of $0.2 million and net unamortized debt issuance costs of $11.0 million, of which $1,166.1 million, or 73.3% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $424.3 million, or 26.7%, was variable-rate based upon SOFR or Prime rates plus certain spreads.

As of September 30, 2024, we were party to 34 interest rate swaps and four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $875.1 million and $151.0 million of variable-rate debt, respectively.

For a discussion of the risks associated with the discontinuation of LIBOR, see Item 1A.

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In addition, increases or changes in interest rates could cause our borrowing costs to rise and may limit our ability to refinance debt.”

The following table sets forth information as of June 30, 2024 concerning our long-term debt obligations, including principal cash flows by scheduled maturity (without regard to available extension options) and weighted average effective interest rates of maturing amounts (dollars in millions):

The following table sets forth information as of September 30, 2024 concerning our long-term debt obligations, including principal cash flows by scheduled maturity (without regard to available extension options) and weighted average effective interest rates of maturing amounts (dollars in millions):

Core Consolidated Mortgage and Other Debt

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2024 (Remainder)

Fund Consolidated Mortgage and Other Debt

Investment Management Consolidated Mortgage and Other Debt

Weighted Average

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After giving effect to noncontrolling interests, our share of this increase would be $2.3 million.

Interest expense on our variable-rate debt of $327.9 million, net of variable to fixed-rate swap agreements currently in effect, as of June 30, 2024, would increase $3.3 million if corresponding rate indices increased by 100 basis points.

Interest expense on our variable-rate debt of $424.3 million, net of variable to fixed-rate swap agreements currently in effect, as of September 30, 2024, would increase $4.2 million if corresponding rate indices increased by 100 basis points.

After giving effect to noncontrolling interests, our share of this increase would be $1.2 million.

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As such, we would consider hedging against the interest rate risk related to such additional variable-rate debt through interest rate swaps and protection agreements, or other means.

Based on our outstanding debt balances as of June 30, 2024, the fair value of our total consolidated outstanding debt would decrease by approximately $7.1 million if interest rates increased by 1%.

Based on our outstanding debt balances as of September 30, 2024, the fair value of our total consolidated outstanding debt would decrease by approximately $10.9 million if interest rates increased by 1%.

Conversely, if interest rates decreased by 1%, the fair value of our total outstanding debt would increase by approximately $10.9 million.

As of June 30, 2024, and December 31, 2023, we had consolidated notes receivable of $126.7 million and $124.9 million, respectively.

As of September 30, 2024, and December 31, 2023, we had consolidated notes receivable of $126.6 million and $124.9 million, respectively.

We determined the estimated fair value of our notes receivable by discounting future cash receipts utilizing a discount rate equivalent to the rate at which similar notes receivable would be originated under conditions then existing.

Based on our outstanding notes receivable balances as of June 30, 2024, the fair value of our total outstanding notes receivable would decrease by approximately $0.7 million if interest rates increased by 1%.

Based on our outstanding notes receivable balances as of September 30, 2024, the fair value of our total outstanding notes receivable would decrease by approximately $0.8 million if interest rates increased by 1%.

Conversely, if interest rates decreased by 1%, the fair value of our total outstanding notes receivable would increase by approximately $0.9 million.

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As of December 31, 2023, we had total mortgage and other notes payable of $1,881.1 million, excluding the unamortized premium of $0.2 million and unamortized debt issuance costs of $11.2 million, of which $1,454.7 million, or 77.3%, was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $426.4 million, or 22.7%, was variable-rate based upon LIBOR rates plus certain spreads.

As of December 31, 2023, we were party to 36 interest rate swap and three interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $1,249.8 million and $151.4 million of LIBOR or SOFR-based variable-rate debt, respectively.

Interest expense on our variable-rate debt of $426.4 million as of December 31, 2023, would have increased $4.3 million if corresponding rate indices increased by 100 basis points.

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Conversely, if interest rates decreased by 1%, the fair value of our total outstanding debt would have increased by approximately $6.6 million.

Changes in Market Risk Exposures from December 31, 2023 to June 30, 2024

Our interest rate risk exposure from December 31, 2023, to June 30, 2024, has decreased on an absolute basis, as the $426.4 million of variable-rate debt as of December 31, 2023 has decreased to $327.9 million as of June 30, 2024.

As a percentage of our overall debt, our interest rate exposure has decreased as our variable-rate debt accounted for 22.7% of our consolidated debt as of December 31, 2023 compared to 19.2% as of June 30, 2024.

Changes in Market Risk Exposures from December 31, 2023 to September 30, 2024

Our interest rate risk exposure from December 31, 2023, to September 30, 2024, has decreased on an absolute basis, as the $426.4 million of variable-rate debt as of December 31, 2023 has decreased to $424.3 million as of September 30, 2024.

Our interest rate exposure as a percentage of total debt has increased, as our variable-rate debt accounted for 22.7% of our consolidated debt as of December 31, 2023 compared to 26.7% as of September 30, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis