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Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2024-10-28 · 173 added, 257 removed, 205 unchanged (68% 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 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.

As of March 31, 2025 and December 31, 2024, the Trust controlled approximately 96% 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 September 30, 2024, we own or have an ownership interest in 204 properties held through our Core Portfolio and Investment Management platform.

As of March 31, 2025, we own or have an ownership interest in 213 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 September 30, 2024 is as follows:

A summary of our wholly-owned and partially-owned retail properties and their physical occupancies as of March 31, 2025 is as follows:

Number of Properties

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Acadia Share of Total Core and Investment Management

(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

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 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.

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 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 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 ).

• 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 ).

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

SIGNIFICANT DEVELOPMENTS DURING THE THREE MONTHS ENDED MARCH 31, 2025 AND SUBSEQUENT EVENTS

On January 23, 2025, we acquired an additional 48% economic ownership interest, increasing our existing 20% interest to 68%, in the Renaissance Portfolio primarily located in Washington D.C.

The 48% interest was acquired for a purchase price of $117.9 million, based upon a gross portfolio fair value of $245.7 million, which included existing mortgage loan indebtedness of $156.1 million in aggregate ( Note 7 ).

Prior to the acquisition, we accounted for our 20% interest under the equity method of accounting.

We gained a controlling financial interest as a result of this acquisition, and determined we should consolidate our investment within our Core Portfolio effective January 23, 2025.

As such, we measured and recognized 100% of the identifiable assets acquired, the liabilities assumed and any noncontrolling interests of the Renaissance Portfolio, at fair value and recognized a $9.6 million loss on change in control representing the difference between the carrying value and fair value of its existing equity method interest immediately before consolidation of the portfolio ( Note 2 ).

Additionally, during the three months ended March 31, 2025, we acquired two Core Portfolio retail properties, 106 Spring Street and 73 Wooster Street, and one Investment Management shopping center, Pinewood Square, for $55.1 million, $25.5 million and $68.2 million, inclusive of transaction costs, respectively ( Note 2 ).

In April 2025, we acquired two Core properties for approximately $107.5 million ( Note 16 ).

At March 31, 2025, we evaluated the expected hold period and intended use for 640 Broadway, a Fund III property, located in Manhattan, New York.

Based on the shortened hold period as we market this asset for sale, we reduced the carrying value of the property that we anticipate selling to a third-party at its estimated fair value of $48.1 million.

As a result, we recognized an impairment charge of $6.5 million, or $1.6 million at our proportionate share ( Note 8 ).

Financing Activity

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.

On January 23, 2025, we acquired an additional 48% economic ownership interest in the Renaissance Portfolio ( Note 2 ).

At acquisition, the properties were subject to existing mortgage indebtedness with an aggregate outstanding principal balance of $156.1 million, bore interest at the Secured Overnight Financing Rate (“SOFR”) + 2.55% and was scheduled to mature on November 6, 2026.

The property mortgage loans were recorded at a fair value of approximately $156.1 million.

On January 24, 2025, the venture modified the property mortgage loans to reduce the interest rate to SOFR + 1.55%.

This reduction was achieved through a $50.0 million principal paydown, which was funded by the Company as a note receivable from the venture.

The note bears interest at 9.11%, matures in November 2026, and has been eliminated in consolidation ( Note 7 ).

During the three months ended March 31, 2025, we made scheduled principal payments totaling $0.5 million ( Note 7 ).

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;

• 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 );

During the three months ended March 31, 2025, we ( Note 7 ):

• extended two consolidated Investment Management property mortgage loans totaling $61.5 million;

• made scheduled principal payments totaling $1.2 million.

Structured Financing Investments

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

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 ).

During the three months ended March 31, 2025, we extended the maturity date of one note receivable of $1.4 million from September 2024 to July 2025 ( Note 3 ).

In April 2025, the Company modified a redeemable preferred equity investment in a property that is accounted for as a note receivable, which had a principal balance of $54.0 million as of March 31, 2025, to extend the maturity date from February 25, 2025 to February 9, 2027, with an option for a one-year extension.

As part of this modification, the borrower repaid the accrued interest balance of $25.3 million.

Additionally, the Company provided a mezzanine loan and additional advances under the preferred equity related to the same asset in the aggregate amount of $28.5 million, which also matures on February 9, 2027 and bears interest at a fixed rate of 9.00% ( Note 16 ).

Issuance of Common Shares

We have an active at-the-market equity issuance program (“ATM Program”) that provides us with an efficient vehicle for raising public equity capital to fund our needs.

In February 2025, we entered into our current $500.0 million ATM Program (the “2025 ATM Program”), which includes an optional “forward sale” component, and concurrently terminated our existing $400.0 million ATM Program.

During the three months ended March 31, 2025, we issued 2,445,106 forward shares under the 2025 ATM Program.

All forward sales during the first quarter of 2025 remain outstanding as of March 31, 2025.

All forward sales agreements require settlement within one-year of the various effective dates.

The net forward sales price per share of the forward shares under the 2025 ATM program was $22.81.

In March 2025, we settled 11,172,699 shares outstanding under the ATM forward and received proceeds of $277.9 million.

As of March 31, 2025, $443.7 million remains available for future share issuance under the 2025 ATM Program.

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.

Heightened levels of inflation, higher interest rates, and recent tariff policies present risks for our business and our tenants.

During 2024, inflation levels began to decrease but remained elevated relative to the years preceding 2021.

While the Federal Reserve made several cuts to interest rates in the second half of 2024 in response to these decreases in inflation levels, it continues to indicate that it will remain data-dependent in determining whether to hold its benchmark rate at current levels or continue to slowly ease interest rates through 2025.

In recent years, the elevated level of inflation resulted in increased costs for certain goods and services and cost of borrowing.

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.

We believe we manage our properties in a cost-conscious manner to minimize recurring operational expenses and utilize multi-year contracts to alleviate the impact of inflation on our business and our tenants.

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

government's recently imposed tariffs, sanctions, and other restrictions on goods exported from or imported into the U.S.

or countermeasures imposed in response to such governmental actions could negatively impact our tenants, reduce our tenant’s ability to sell products, or negatively impact tourism to areas where we have a concentration of properties, such as New York, Chicago, and Washington D.C.

We do not yet know the impact of the recent government actions or the potential changes in global political conditions on our business due to uncertainties as the situation continues to evolve, and we continue to monitor its impact.

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 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):

Comparison of Results for the Three Months Ended March 31, 2025 to the Three Months Ended March 31, 2024

The results of operations by reportable segment for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 are summarized in the table below (in millions, totals may not add due to rounding):

Three Months Ended

September 30, 2024

September 30, 2023

Increase (Decrease)

Depreciation and amortization

Property operating expenses and real estate taxes

General and administrative expenses

Impairment charges

Operating income

Equity in earnings (losses) of unconsolidated affiliates

Interest income

Realized and unrealized holding (losses) gains on investments and other

Interest expense

Income (loss) from continuing operations before income taxes

Income tax provision

Net income (loss)

Net loss attributable to redeemable noncontrolling interests

Net (income) loss attributable to noncontrolling interests

Net income attributable to Acadia

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 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 $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 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

March 31, 2025

March 31, 2024

Increase (Decrease)

Rental revenue

Other revenue

Depreciation and amortization

Property operating expenses and real estate taxes

Property operating expenses

Real estate taxes

General and administrative expenses

(Loss) gain on disposition of properties

Impairment charges

Loss on disposition of property

Operating income (loss)

Equity in earnings (losses) of unconsolidated affiliates

Interest income

Realized and unrealized holding (losses) gains on investments and other

Equity in earnings (losses) of unconsolidated affiliates

Interest expense

Income (loss) from continuing operations before income taxes

Loss on change in control

Realized and unrealized holding gains (losses) on investments and other

Income tax provision

Net income (loss)

Net loss attributable to redeemable noncontrolling interests

Net income attributable to noncontrolling interests

Net income (loss) attributable to Acadia

Net loss (income) attributable to redeemable noncontrolling interests

Net loss (income) attributable to noncontrolling interests

Net income (loss) attributable to Acadia shareholders

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 $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 ).

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.

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 shareholders for our Core Portfolio decreased $1.6 million for the three months ended March 31, 2025 compared to the prior year period as a result of the changes further described below.

Rental revenue for our Core Portfolio increased $15.0 million for the three months ended March 31, 2025 compared to the prior year period primarily due to (i) $8.4 million received from Whole Foods that we recognized as rental and termination income at City Center in San Francisco, CA in 2025, (ii) $4.0 million from new property acquisitions, and (iii) $2.8 million from the acquisition of an additional interest and consolidation of the Renaissance Portfolio in 2025 ( Note 2 ).

Other revenue for our Core Portfolio decreased $4.1 million for the three months ended March 31, 2025 compared to the prior year period primarily due to the recognition of a forfeited deposit in 2024.

Depreciation and amortization for our Core Portfolio increased $5.4 million for the three months ended March 31, 2025 compared to the prior year period primarily due to (i) $2.1 million from the acquisition of an additional interest and consolidation of the Renaissance Portfolio, (ii) $1.5 million from the acceleration of in-place lease intangible assets for bankrupt tenants in 2025 and (iii) $0.8 million from new property acquisitions ( Note 2 , Note 6 ).

Equity in earnings (losses) of unconsolidated affiliates for our Core Portfolio decreased $1.8 million for the three months ended March 31, 2025 due to tenants vacating subsequent to March 31, 2024.

Loss on change in control is due to the Company gaining a controlling financial interest as a result of the acquisition of the incremental 48% interest in the Renaissance Portfolio in 2025 ( Note 2 ).

Realized and unrealized holding gains (losses) on investments and other increased $3.7 million for the three months ended March 31, 2025 compared to the prior year period primarily due to a change in the mark-to-market adjustment on the investment in Albertsons ( Note 8 ).

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 $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.

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 shareholders for Investment Management increased $1.0 million for the three months ended March 31, 2025 compared to the prior year period as a result of the changes described below.

Rental revenue for Investment Management increased $1.6 million for the three months ended March 31, 2025 compared to the prior year period primarily due to tenant lease up subsequent to March 31, 2024.

Impairment charge of $6.5 million is due to the shortened hold period at 640 Broadway, a Fund III property ( Note 8 ).

Loss on disposition of property in 2024 is due to a loss related to a previously disposed property.

The Company did not dispose of any properties for the three months ended March 31, 2025.

Net loss (income) attributable to noncontrolling interests for Investment Management increased $3.5 million for the three months ended March 31, 2025 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 $2.3 million and $2.4 million for the three months ended March 31, 2025 and 2024, 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 results of operations for our Structured Financing segment are depicted in the table above under the headings labeled “SF.”

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.”

These unallocated amounts are depicted in the table above under the headings labeled “Total.” General and administrative expenses increased $1.8 million for the three months ended March 31, 2025 compared to the prior year period primarily due to higher compensation expenses in 2025.

NON-GAAP FINANCIAL MEASURES

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The following discussion of net property operating income (“NOI”) and rent spreads on new and renewal leases includes the activity from both our consolidated and our pro-rata share of unconsolidated properties within our Core Portfolio.

Investment Management invests primarily in properties that typically require significant leasing and development.

Given that Investment Management is primarily comprised of finite-life investment vehicles, these properties are sold following stabilization.

For these reasons, we believe NOI and rent spreads are not meaningful measures for our Investment Management investments.

We believe NOI and rent spreads are not meaningful measures for our Investment Management investments as Investment Management invests primarily in properties that typically require significant leasing and development, and is primarily comprised of finite-life investment vehicles.

NOI represents property revenues less property expenses.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Consolidated operating income

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Impairment charges

Loss on disposition of properties

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

Loss related to a previously disposed property

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

Termination income (b)

Consolidated NOI

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Operating Partnership's interest in Investment Management NOI included above

Operating Partnership's share of unconsolidated joint ventures NOI (b)

Operating Partnership's share of unconsolidated joint ventures NOI (c)

Core Portfolio NOI

a) Includes straight-line rent reserves.

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

Same-Property NOI includes Core Portfolio properties that we owned for both the current and prior periods presented, but excludes those properties that we acquired, sold or expected to sell, redeveloped and developed during these periods.

a) Includes other accounts such as straight-line rent reserves, fee income, CECL, and dividend income received on our investment in Albertsons ( Note 8 ).

b) Termination income related to an early lease termination at City Center.

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

Same-Property NOI includes Core Portfolio properties that we owned for both the current and prior periods presented, but excludes those properties which we acquired, sold or expected to sell, redeveloped and developed during these periods.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Core Portfolio NOI

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

Three Months Ended September 30, 2024

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Core Portfolio New and Renewal Leases

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Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

FFO does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions.

FFO does not represent cash generated from operations as defined by accounting principles generally accepted in the United States (“GAAP”) and is not indicative of cash available to fund all cash needs, including distributions.

It should not be considered as an alternative to net income for the purpose of evaluating our performance or to cash flows as a measure of liquidity.

Consistent with the NAREIT definition, we define FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

Also consistent with NAREIT’s definition of FFO, the Company has elected to include gains and losses incidental to its main business (including those related to its RCP investments, such as Albertsons) in FFO.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Net income (loss) attributable to Acadia

Also consistent with NAREIT’s definition of FFO, the Company has elected to include gains and losses incidental to its main business (including those related to its investments in Albertsons) in FFO.

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

Three Months Ended March 31,

Net income attributable to Acadia shareholders

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

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Impairment charges (net of noncontrolling interests' share)

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

Net gain on disposition of properties (net of noncontrolling interests' share)

Loss on change in control

Income attributable to Common OP Unit holders

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Common OP Unit holders - Basic and Diluted

Funds From Operations per Share - Diluted

Basic weighted-average shares outstanding, GAAP earnings

Weighted-average OP Units outstanding

Basic weighted-average shares and OP Units outstanding, FFO

Assumed conversion of Preferred OP Units to Common Shares

Assumed conversion of LTIP units and Restricted Share Units to

Common Shares

Diluted weighted-average number of Common Shares and Common

OP Units outstanding, FFO

Diluted Funds from operations, per Common Share and Common OP Unit

LIQUIDITY AND CAPITAL RESOURCES

Uses of Liquidity and Cash Requirements

Generally, our principal uses of liquidity are (i) distributions to our shareholders and OP unit holders, (ii) investments, which include the funding of our capital committed to the Funds in our Investment Management platform and property acquisitions and development/re-tenanting activities within our Core Portfolio, (iii) distributions to our Fund investors, (iv) debt service and loan repayments and (v) share repurchases.

Generally, our principal uses of liquidity are (i) distributions to our shareholders and holders of our units of limited partnership interest (“OP units”), (ii) investments, which include the funding of our capital committed to our Investment Management platform and property acquisitions and development/re-tenanting activities within our Core Portfolio, (iii) distributions to our Investment Management investors, (iv) debt service and loan repayments and (v) share repurchases.

Distributions

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 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.

During the three months ended March 31, 2025, we paid dividends and distributions on our Common Shares and preferred units of limited partnership interest (“Preferred OP Units”) totaling $24.5 million.

On January 23, 2025, we acquired an additional 48% economic ownership interest, and increased our existing 20% interest to 68%, in the Renaissance Portfolio primarily located in Washington D.C.

Prior to the acquisition, we accounted for our 20% interest under the equity method of accounting.

We gained a controlling financial interest as a result of this acquisition, and determined we should consolidate our investment within our Core Portfolio effective January 23, 2025.

Structured Financing Investments

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 ).

During the three months ended March 31, 2025, we extended the maturity date of one note receivable of $1.4 million from September 2024 to July 2025 ( Note 3 ).

Capital Commitments

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:

During the three months ended March 31, 2025, we made capital contributions aggregating $2.0 million to our Funds.

As of March 31, 2025, our share of the remaining capital commitments to our Funds aggregated $14.3 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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• $8.3 million to Fund V – Fund V was launched in August 2016 with total committed capital of $520.0 million, of which our original share was $104.5 million.

We do not have any additional capital commitments to our Investment Management portfolio.

Development Activities

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.

During the three months ended March 31, 2025, capitalized costs associated with development activities totaled $11.4 million ( Note 2 ).

As of March 31, 2025, we had a total of 18 consolidated projects under development or redevelopment, for which the estimated total cost to complete these projects through 2028 was $35.0 million to $147.0 million.

Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024.

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 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.

As of March 31, 2025, our consolidated indebtedness aggregated $1,634.3 million, excluding unamortized premium of $1.9 million and net unamortized loan costs of $10.4 million, and was collateralized by 51 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 April 28, 2025 to April 15, 2035, without regard to available extension options.

With respect to the debt maturing in 2025, 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 $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.

Taking into consideration $939.3 million of notional principal under variable to fixed-rate swap agreements currently in effect, $1,229.4 million of the portfolio debt, or 75.2%, was fixed at a 5.10% weighted average interest rate and $404.8 million, or 24.8%, was floating at a 7.04% weighted average interest rate as of March 31, 2025.

Our variable-rate debt includes $111.2 million of debt subject to interest rate caps.

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%;

Without regard to available extension options, as of March 31, 2025, we had $471.8 million of debt maturing in 2025 at a weighted-average interest rate of 6.71%;

$4.1 million of scheduled principal amortization due in the remainder of 2025;

and our share of scheduled remaining 2025 principal payments and maturities on our unconsolidated debt was $15.9 million.

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.

In addition, $499.4 million of our total consolidated debt and $15.8 million of our pro-rata share of unconsolidated debt will come due by March 31, 2026.

With respect to the debt maturing in 2025 and 2026, we have options to extend consolidated debt aggregating $363.8 million and $155.4 million as of March 31, 2025 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;

however, there can be no assurance that we will be able to obtain financing on acceptable terms or at all.

Our ability to obtain financing 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, 2024.

Share Repurchase Program

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.

We maintain a share repurchase program under which $122.5 million remains available as of March 31, 2025 ( Note 10 ).

We did not repurchase any shares under this program during the three months ended March 31, 2025.

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 September 30, 2024 totaled $46.2 million.

Our cash on hand in our consolidated subsidiaries as of March 31, 2025 totaled $32.0 million.

Our remaining sources of liquidity are described further below.

Issuance of Common Shares

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.

Issuances of Common Shares

We have an active 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 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 intend to continue to 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 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.

As of March 31, 2025, we had 2,445,106 forward shares outstanding under the 2025 ATM Program.

The net forward sales price per share of the forward shares under the 2025 ATM program was $22.81 and would result in us receiving $55.8 million in net cash proceeds if we were to physically settle the shares.

In March 2025, we settled 11,172,699 shares outstanding under the 2025 ATM forward and received proceeds of $277.9 million.

Investment Management Capital

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 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 ).

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 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 ).

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

During the three months ended March 31, 2025, Fund V called for capital contributions of $10.0 million, of which our aggregate share was $2.0 million.

As of March 31, 2025, unfunded capital commitments from noncontrolling interests within Funds II, III, IV and V were $0, $1.4 million, $18.5 million and $32.9 million, respectively.

Other Transactions

During the three months ended March 31, 2025 we recognized payments of $8.4 million as rental and termination income related to a lease at City Center in San Francisco ( Note 11 ).

As of March 31, 2025, we held 0.8 million shares of Albertsons which had a fair value of $16.5 million ( Note 8 ).

In addition, during the three months ended March 31, 2025, we recognized dividend income of $0.1 million ( Note 8 ).

Financing and Debt

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.

As of March 31, 2025, we had $525.0 million of capacity under existing Core Portfolio debt facilities.

In addition, as of that date within our Core Portfolio and Investment Management portfolio, we had 117 unleveraged consolidated properties with an aggregate carrying value of approximately $1.9 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 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,

The following table compares the historical cash flow for the three months ended March 31, 2025 with the cash flow for the three months ended March 31, 2024 (in millions, totals may not add due to rounding):

Three Months Ended March 31,

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Increase (decrease) in cash and cash equivalents and restricted cash

Net cash provided by (used in) financing activities

Increase in cash and cash equivalents and restricted cash

Operating Activities

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 $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.

Our operating activities provided $0.1 million less cash for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

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 $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.

Our investing activities used $192.2 million more cash during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to (i) $180.5 million more cash used for the acquisition of real estate, (ii) $6.8 million more cash used for development, construction and property improvement costs, (iii) $5.2 million less cash received from the repayment of note receivable and (iv) 4.0 million less cash received from the sale of marketable securities.

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 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

We have the following investments made through joint ventures (that may include, among others, tenancy-in common and other similar investments) for the purpose of investing in operating properties.

We account for these investments using the equity method of accounting.

As such, our financial statements reflect our investment and our share of income and loss from, but not the individual assets and liabilities, of these joint ventures.

See Note 4 in the Notes to Condensed Consolidated Financial Statements, for a discussion of our unconsolidated investments.

Our financing activities provided $207.2 million more cash during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily from (i) $163.7 million more cash provided by the sale of Common Shares and (ii) $76.9 million more cash from proceeds on mortgages.

These increases were offset by (i) $29.6 million less cash provided by contributions from noncontrolling interests and (ii) $5.6 million more used to pay dividends.

See Note 4 for a discussion of our unconsolidated investments.

The Operating Partnership’s pro-rata share of unconsolidated non-recourse debt related to those investments is as follows (dollars in millions):

Operating Partnership

September 30, 2024

March 31, 2025

Pro-rata Share of

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Maturity Date

Tri-City Plaza (b)

Crossroads Shopping Center

Frederick County Square (b)

Eden Square (d)

Tri-City Plaza

Frederick County Square

650 Bald Hill Rd

Renaissance Portfolio (c)

3104 M Street (c)

Wood Ridge Plaza

Georgetown Portfolio

LINQ Promenade (e)

Shoppes at South Hills (b)

Mohawk Commons

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

The Walk at Highwoods Preserve (b)

Crossroads Shopping Center (c)

(a) Effective interest rates incorporate the effect of interest rate swaps and caps that were in effect as of March 31, 2025, where applicable.

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

(d) The debt has one available three-month extension option.

(e) The debt has one available 24-month extension option.

CRITICAL ACCOUNTING POLICIES

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QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK.

Information as of September 30, 2024

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

See Note 7 in the Notes to Condensed Consolidated Financial Statements, for certain quantitative details related to our mortgage and other debt.

Information as of March 31, 2025

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

See Note 7 in the Notes to Condensed Consolidated Financial Statements, for certain quantitative details related to our property mortgage loans and other debt.

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 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.

“Risk Factors—Risks Related to Our Liquidity and Indebtedness on our Annual Report on Form 10-K for the year ended December 31, 2023 — If we decided to employ higher leverage levels, we would be subject to increased debt service requirements and a higher risk of default on our debt obligations, which could adversely affect our financial conditions, cash flows and ability to make distributions to our shareholders.

As of March 31, 2025, we had total property mortgage loans and other notes payable of $1,634.3 million, excluding the unamortized premium of $1.9 million and net unamortized debt issuance costs of $10.4 million, of which $1,229.4 million, or 75.2% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $404.8 million, or 24.8%, was variable-rate based upon SOFR or Prime rates plus certain spreads.

As of March 31, 2025, we were party to 28 interest rate swaps and three interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $939.3 million and $111.2 million of variable-rate debt, respectively.

If we decided to employ higher leverage levels, we would be subject to increased debt service requirements and a higher risk of default on our debt obligations, which could adversely affect our financial conditions, cash flows and ability to make distributions to our shareholders.

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 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):

The following table sets forth information as of March 31, 2025 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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In addition, $185.7 million of our total consolidated debt and $42.1 million of our pro-rata share of unconsolidated debt will become due in 2025.

As it relates to the aforementioned maturing debt in 2024 and 2025, we

have options to extend consolidated debt aggregating $0.0 million and $327.0 million, respectively;

As it relates to the aforementioned maturing debt in 2025 and 2026, we have options to extend consolidated debt aggregating $363.8 million and $155.4 million at March 31, 2025, respectively;

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

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After giving effect to noncontrolling interests, our share of this increase would be $2.9 million.

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.

Interest expense on our variable-rate debt of $404.8 million, net of variable to fixed-rate swap agreements currently in effect, as of March 31, 2025, would increase $4.0 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 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%.

Based on our outstanding debt balances as of March 31, 2025, the fair value of our total consolidated outstanding debt would decrease by approximately $12.5 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 $6.1 million.

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

As of March 31, 2025, and December 31, 2024, we had consolidated notes receivable of $125.7 million and $126.6 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 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%.

Based on our outstanding notes receivable balances as of March 31, 2025, the fair value of our total outstanding notes receivable would decrease by approximately $0.6 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 $0.6 million.

Summarized Information as of December 31, 2024

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 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.

As of December 31, 2024, we had total property mortgage loans and other notes payable of $1,547.9 million, excluding the unamortized premium of $0.2 million and unamortized debt issuance costs of $10.9 million, of which $1,142.6 million, or 73.8%, was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $405.4 million, or 26.2%, was variable-rate based upon SOFR rates plus certain spreads.

As of December 31, 2024, we were party to 30 interest rate swap and four interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $852.0 million and $111.2 million of SOFR-based variable-rate debt, respectively.

Interest expense on our variable-rate debt of $405.4 million, net of variable to fixed-rate swap agreements currently in effect, as of December 31, 2024, would have increased $4.1 million if corresponding rate indices increased by 100 basis points.

Based on our outstanding debt balances as of December 31, 2024, the fair value of our total outstanding debt would have decreased by approximately $9.8 million if interest rates increased by 1%.

Conversely, if interest rates decreased by 1%, the fair value of our total outstanding debt would have increased by approximately $9.8 million.

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.

Changes in Market Risk Exposures from December 31, 2024 to March 31, 2025

Our interest rate risk exposure from December 31, 2024, to March 31, 2025, has decreased on an absolute basis, as the $405.4 million of variable-rate debt as of December 31, 2024 has decreased to $404.8 million as of March 31, 2025.

Our interest rate exposure as a percentage of total debt has increased, as our variable-rate debt accounted for 26.2% of our consolidated debt as of December 31, 2024 compared to 24.8% as of March 31, 2025.

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