Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
Acadia Realty Trust (the “Trust”, collectively with its consolidated subsidiaries, the “Company”, “we”, “us” or “our”), a Maryland real estate investment trust (“REIT”), is a fully-integrated equity REIT focused on the ownership, acquisition, development, and management of retail properties located primarily in high-barrier-to-entry, supply-constrained, densely populated metropolitan areas in the United States. 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, 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 our “Core Portfolio”) located in the nation’s most dynamic retail corridors, complemented by an investment management platform (“Investment Management”). Through the Investment Management platform, we have active investments through the following opportunity funds, including: Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”), and Acadia Strategic Opportunity Fund V LLC (“Fund V” and, collectively with Fund II, Fund III and Fund IV, “the Funds”). In addition, we hold equity method investments in three unconsolidated co-investment vehicles, through strategic partnerships with large institutional investors. We hold significant equity ownership, typically ranging from 5% to 20%, in each venture.
We continue to execute on a focused strategy designed to drive long-term, profitable growth by leveraging the strength of our Core Portfolio and Investment Management platform. Our strategic priorities include:
• Maximizing Internal Growth: During the six months ended June 30, 2025, the Core Portfolio achieved 4.1% same-property NOI growth. We remain focused on optimizing tenant mix, executing time-sensitive re-tenanting, and enhancing operational efficiency across our portfolio.
• Executing Accretive Acquisitions: Year-to-date, we have completed approximately $423.7 million of acquisitions in Core and Investment Management, including high-quality street retail assets in key urban corridors. These acquisitions are fully funded and aligned with our strategy of targeting high-growth, residentially dense, and destination retail locations.
• Advancing Development/Redevelopment and Re-Tenanting: We continue to capitalize on value-enhancing development and redevelopment opportunities.
• Scaling Investment Management: Through our institutional co-investment vehicles, we pursue opportunistic and value-add investments that complement our Core Portfolio. We maintain meaningful ownership stakes in these ventures, aligning our interests with those of our partners.
• Maintaining Financial Flexibility: We are committed to maintaining a strong and flexible balance sheet through conservative financial practices. Our capital position supports continued investment while preserving liquidity and access to capital markets.
As of June 30, 2025, we own or have an ownership interest in 218 properties held through our Core Portfolio and Investment Management platform ( Note 1 ). Our Core Portfolio consists of those properties either wholly 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. These properties primarily consist of street and urban retail, and suburban shopping centers. The Investment Management platform consists of investment vehicles through which our Operating Partnership and outside institutional investors invest in primarily opportunistic and value-add retail real estate. 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.
44
A summary of our wholly-owned and partially-owned retail properties and their physical occupancies as of June 30, 2025 is as follows:
Number of Properties
Operating Properties
Development or
Redevelopment (1)
Operating
GLA
Occupancy
Core Portfolio:
Chicago Metro
3
36
577,005
83.5
%
New York Metro
3
41
375,450
94.3
%
Los Angeles Metro
—
2
23,757
100.0
%
San Francisco Metro
2
—
—
0.0
%
Dallas Metro
5
14
84,734
89.7
%
Washington D.C. Metro
—
32
359,825
80.9
%
Boston Metro
—
1
1,050
100.0
%
Suburban
5
23
3,708,864
94.2
%
Total Core Portfolio
18
149
5,130,685
92.0
%
Acadia Share of Total Core Portfolio
18
149
4,870,100
92.2
%
Investment Management:
Fund II
—
1
536,414
78.7
%
Fund III
1
1
4,547
93.4
%
Fund IV
1
21
297,199
82.9
%
Fund V
—
22
7,467,978
93.7
%
Other
—
4
624,521
96.0
%
Total Investment Management
2
49
8,930,659
92.6
%
Acadia Share of Total Investment Management
2
49
2,090,698
91.8
%
Total Core and Investment Management
20
198
14,061,344
92.4
%
Acadia Share of Total Core and Investment Management
20
198
6,960,798
92.1
%
(1) Includes eight pre-stabilized properties in the Core Portfolio.
SIGNIFICANT ACTIVITIES DURING 2025
Investments
Acquisitions
The following properties were acquired during the six months ended June 30, 2025 ( Note 2 ) (dollars in thousands):
Property Name
Portfolio
Ownership
Acquisition Date
Location
GLA
Purchase Price
106 Spring Street
Core
100%
January 9, 2025
New York Metro
5,936
$
55,137
73 Wooster Street
Core
100%
January 9, 2025
New York Metro
8,896
25,459
Renaissance Portfolio
Core
48%
January 23, 2025
Washington DC Metro
225,865
245,700
Pinewood Square
IM
100%
March 19, 2025
Southeast
204,002
68,207
95, 97, and 107 North 6th Street
Core
100%
April 9, 2025
New York Metro
21,100
59,668
85 5th Avenue
Core
100%
April 11, 2025
New York Metro
13,092
47,014
70 and 93 North 6th Street
Core
100%
June 4, 2025
New York Metro
21,713
50,323
On January 23, 2025, we acquired an additional 48% economic ownership interest, increasing our existing 20% interest to 68%, in the Renaissance Portfolio, which is 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 aggregate mortgage loan indebtedness of $156.1 million ( 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
45
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 ).
Dispositions
In June 2025, the joint venture that owned the Eden Square property, of which Fund IV has a 90% ownership interest, sold the property to a third-party for $28.0 million and repaid the related $23.3 million property mortgage loan.
In addition to the above disposition, a 4,547 square foot Investment Management retail property located in New York, NY, was classified as held for sale as of June 30, 2025.
Impairment
We recognized the following impairment charges during the six months ended June 30, 2025 ( Note 8 ) (dollars in thousands):
Impairment Charge
Property Location
Owner
Triggering Event
Effective Date
Total
Acadia's Share
New York, NY
Fund III
Reduced holding period
June 30, 2025
$
7,240
$
1,777
New York, NY
Fund IV
Reduced holding period
June 30, 2025
17,400
3,991
Financing Activity
In the second quarter of 2025, the Operating Partnership and the Company entered into the Third Amendment to the Third Amended and Restated Credit Agreement (the “Amendment”) to the existing senior unsecured credit facility (the “Credit Facility”). The Amendment established a new five-year $250.0 million incremental delayed draw term loan (the “$250.0 Million Term Loan”), of which $175.0 million was drawn at closing. The Amendment also increased the accordion feature limit to $1.5 billion and reduced the borrowing rate on the entire $925.0 million Credit Facility by 10 basis points. The $250.0 Million Term Loan bears interest at the Secured Overnight Financing Rate (“SOFR”) + 1.20% and matures on May 29, 2030.
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 SOFR + 2.65% 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 ).
Structured Financing Investments
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 3 ).
Issuance of Common Shares
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 prior $400.0 million ATM Program.
We did not issue any shares during the three months ended June 30, 2024. During the six months ended June 30, 2025, we issued the following forward shares under the 2025 ATM Program (in thousands except share and per share data):
46
Number of Shares
Average Share Price
Aggregate Value
Average Net Share Price
Aggregate Net Value
ATM Forward Sale Agreements
2,445,106
$
22.60
$
56,333
$
22.71
$
55,536
In March 2025, we settled 11,172,699 outstanding forward shares under the 2025 ATM Program and received proceeds of $277.9 million. As of June 30, 2025, $443.7 million remains available for future share issuance under the 2025 ATM Program.
Economic and Other Considerations
Macroeconomic conditions, including elevated levels of inflation, higher interest rates, and recent tariff policies, present risks for our business and the business of our tenants. The elevated levels of inflation in recent years have led to increased costs for certain goods and services and cost of borrowing. However, 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, which help mitigate inflationary impacts on costs and operating expenses. 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.
We also continue to see rising consumer confidence and expect to drive value to our portfolio through leasing momentum, active development and redevelopment projects, and our leasing pipeline. 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.
Recent U.S. tariffs, sanctions, and related geopolitical developments could affect our tenants’ operations or tourism in key markets such as New York, Chicago, Washington, D.C., Los Angeles and San Francisco. While the ultimate impact remains uncertain, we continue to monitor these developments closely.
47
RESULTS OF OPERATIONS
See Note 12 in the Notes to Condensed Consolidated Financial Statements for an overview of our three reportable segments: Core Portfolio, Investment Management and Structured Financing. For purposes of the tables included below, these segments are abbreviated as “Core”, “IM” and “SF”, respectively.
Comparison of Results for the Three Months Ended June 30, 2025 to the Three Months Ended June 30, 2024
The results of operations by reportable segment for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 are summarized in the table below (in millions, totals may not add due to rounding):
Three Months Ended
Three Months Ended
June 30, 2025
June 30, 2024
Increase (Decrease)
Core
IM
SF
Total
Core
IM
SF
Total
Core
IM
SF
Total
Rental revenue
$
57.7
$
40.6
$
—
$
98.3
$
47.8
$
37.8
$
—
$
85.6
$
9.9
$
2.8
$
—
$
12.7
Other revenue
0.6
1.7
—
2.3
1.1
0.5
—
1.6
(0.5
)
1.2
—
0.7
Depreciation and amortization
(22.4
)
(16.8
)
—
(39.3
)
(18.0
)
(16.3
)
—
(34.3
)
(4.4
)
(0.5
)
—
(5.0
)
Property operating expenses
(8.6
)
(8.9
)
—
(17.5
)
(7.7
)
(8.1
)
—
(15.8
)
(0.9
)
(0.8
)
—
(1.7
)
Real estate taxes
(8.8
)
(4.5
)
—
(13.3
)
(6.7
)
(3.3
)
—
(10.0
)
(2.1
)
(1.2
)
—
(3.3
)
General and administrative expenses
—
—
—
(11.5
)
—
—
—
(10.2
)
—
—
—
(1.3
)
Impairment charges
—
(18.2
)
—
(18.2
)
—
—
—
—
—
(18.2
)
—
(18.2
)
(Loss) gain on disposition of property
—
—
—
—
(2.2
)
3.0
—
0.8
2.2
(3.0
)
—
(0.8
)
Operating income
18.4
(6.1
)
—
0.8
14.3
13.6
—
17.8
4.1
(19.7
)
—
(17.0
)
Interest income
—
—
6.4
6.4
—
—
5.4
5.4
—
—
1.0
1.0
Equity in earnings (losses) of unconsolidated affiliates
(0.5
)
(3.7
)
—
(4.2
)
0.6
3.8
—
4.5
(1.1
)
(7.5
)
—
(8.7
)
Interest expense
(9.6
)
(14.0
)
—
(23.6
)
(9.9
)
(13.6
)
—
(23.6
)
0.3
(0.4
)
—
—
Realized and unrealized holding (losses) gains on investments and other
(0.4
)
—
0.4
(0.1
)
(2.2
)
—
(0.2
)
(2.4
)
1.8
—
0.6
2.3
Income tax provision
—
—
—
(0.2
)
—
—
—
(0.2
)
—
—
—
—
Net income (loss)
8.0
(23.9
)
6.7
(20.9
)
2.9
3.8
5.2
1.6
5.1
(27.7
)
1.5
(22.5
)
Net loss (income) attributable to redeemable noncontrolling interests
—
1.7
—
1.7
—
2.3
—
2.3
—
(0.6
)
—
(0.6
)
Net loss (income) attributable to noncontrolling interests
0.1
21.0
—
21.2
(0.2
)
(2.2
)
—
(2.4
)
0.3
23.2
—
23.6
Net income (loss) attributable to Acadia shareholders
$
8.1
$
(1.1
)
$
6.7
$
2.0
$
2.7
$
3.9
$
5.2
$
1.4
$
5.4
$
(5.0
)
$
1.5
$
0.6
Core Portfolio
Segment net income attributable to Acadia shareholders for our Core Portfolio increased $5.4 million for the three months ended June 30, 2025 compared to the prior year period as a result of the changes further described below.
Rental revenue for our Core Portfolio increased $9.9 million for the three months ended June 30, 2025 compared to the prior year period primarily due to (i) $4.6 million from new property acquisitions, (ii) $3.7 million from the acquisition of an additional interest and consolidation of the Renaissance Portfolio in 2025 and (iii) $1.0 million from new tenant lease up ( Note 2 ).
Depreciation and amortization for our Core Portfolio increased $4.4 million for the three months ended June 30, 2025 compared to the prior year period primarily due to (i) $2.8 million from new property acquisitions and (ii) $2.1 million from the acquisition of an additional interest and consolidation of the Renaissance Portfolio. ( Note 2 , Note 6 ).
Real estate taxes for our Core Portfolio increased $2.1 million for the three months ended June 30, 2025 compared to the prior year period primarily due to (i) $1.2 million from the acquisition of an additional interest and consolidation of the Renaissance Portfolio in 2025 and (ii) $0.6 million from new property acquisitions ( Note 2 ).
Equity in earnings of unconsolidated affiliates for our Core Portfolio decreased $1.1 million for the three months ended June 30, 2025 compared to the prior year period primarily due to tenants vacating subsequent to June 30, 2024.
Realized and unrealized holding losses on investments and other for our Core Portfolio decreased $1.8 million for the three months ended June 30, 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 ).
48
Investment Management (all amounts below are consolidated amounts and are not representative of our proportionate share)
Segment net income attributable to Acadia shareholders for Investment Management decreased $5.0 million for the three months ended June 30, 2025 compared to the prior year period as a result of the changes described below.
Rental revenue for Investment Management increased $2.8 million for the three months ended June 30, 2025 compared to the prior year period primarily due to a new property acquisition in 2025.
An impairment charge of $18.2 million for Investment Management is due to the shortened hold periods at one Fund III property and one Fund IV property ( Note 8 ).
Gain on disposition of properties of $3.0 million for Investment Management in 2024 was due to the sale of two Fund IV properties and a Fund V outparcel. The Company did not dispose of any consolidated properties for the three months ended June 30, 2025.
Equity in earnings of unconsolidated affiliates for Investment Management decreased $7.5 million for the three months ended June 30, 2025 compared to the prior year period primarily due to the loss on sale on Eden Square in 2025 compared to the gain on sale of Paramus in 2024 ( Note 4 ).
Net income attributable to noncontrolling interests for Investment Management increased $23.2 million for the three months ended June 30, 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 $2.4 million for each of the three months ended June 30, 2025 and 2024.
Unallocated
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.” General and administrative expenses increased $1.3 million for the three months ended June 30, 2025 compared to the prior year period primarily due to higher compensation expenses in 2025.
Comparison of Results for the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024
The results of operations by reportable segment for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 are summarized in the table below (in millions, totals may not add due to rounding):
Six Months Ended
Six Months Ended
June 30, 2025
June 30, 2024
Increase (Decrease)
Core
IM
SF
Total
Core
IM
SF
Total
Core
IM
SF
Total
Rental revenue
$
121.5
$
79.5
$
—
$
200.9
$
96.6
$
75.1
$
—
$
171.7
$
24.9
$
4.4
$
—
$
29.2
Other revenue
1.3
2.8
—
4.0
5.9
1.1
—
6.9
(4.6
)
1.7
—
(2.9
)
Depreciation and amortization
(46.1
)
(32.6
)
—
(78.7
)
(36.2
)
(33.0
)
—
(69.2
)
(9.9
)
0.4
—
(9.5
)
Property operating expenses
(18.2
)
(17.6
)
—
(35.8
)
(17.4
)
(17.4
)
—
(34.9
)
(0.8
)
(0.2
)
—
(0.9
)
Real estate taxes
(17.7
)
(8.9
)
—
(26.6
)
(14.9
)
(7.5
)
—
(22.3
)
(2.8
)
(1.4
)
—
(4.3
)
General and administrative expenses
—
—
—
(23.1
)
—
—
—
(19.9
)
—
—
—
(3.2
)
Impairment charges
—
(24.6
)
—
(24.6
)
—
—
—
—
—
(24.6
)
—
(24.6
)
Loss on disposition of property
—
—
—
—
(2.2
)
1.8
—
(0.4
)
2.2
(1.8
)
—
0.4
Operating income (loss)
40.7
(1.5
)
—
16.1
31.7
20.1
—
31.8
9.0
(21.6
)
—
(15.7
)
Interest income
—
—
12.5
12.5
—
—
10.7
10.7
—
—
1.8
1.8
Equity in earnings (losses) of unconsolidated affiliates
(0.2
)
(5.7
)
—
(5.9
)
2.7
1.4
—
4.2
(2.9
)
(7.1
)
—
(10.1
)
Interest expense
(18.9
)
(27.9
)
—
(46.9
)
(20.0
)
(27.3
)
—
(47.3
)
1.1
(0.6
)
—
0.4
Loss on change in control
(9.6
)
—
—
(9.6
)
—
—
—
—
(9.6
)
—
—
(9.6
)
Realized and unrealized holding gains (losses) on investments and other
1.4
—
0.2
1.6
(4.0
)
—
(0.4
)
(4.4
)
5.4
—
(0.6
)
6.0
Income tax provision
—
—
—
(0.3
)
—
—
—
(0.2
)
—
—
—
(0.1
)
Net income (loss)
13.3
(35.1
)
12.6
(32.6
)
10.4
(5.8
)
10.3
(5.3
)
2.9
(29.3
)
2.3
(27.3
)
Net loss (income) attributable to redeemable noncontrolling interests
—
3.4
—
3.4
—
4.8
—
4.8
—
(1.4
)
—
(1.4
)
Net loss (income) attributable to noncontrolling interests
0.3
32.4
—
32.8
(0.6
)
5.7
—
5.1
0.9
26.7
—
27.7
Net income (loss) attributable to Acadia shareholders
$
13.7
$
0.7
$
12.6
$
3.6
$
9.9
$
4.7
$
10.3
$
4.7
$
3.8
$
(4.0
)
$
2.3
$
(1.1
)
49
Core Portfolio
Segment net income attributable to Acadia shareholders for our Core Portfolio increased $3.8 million for the six months ended June 30, 2025 compared to the prior year period as a result of the changes further described below.
Rental revenue for our Core Portfolio increased $24.9 million for the six months ended June 30, 2025 compared to the prior year period primarily due to (i) $8.6 million from new property acquisitions, (ii) $8.4 million received from Whole Foods that we recognized as rental and termination income at City Center in San Francisco, CA in 2025, (iii) $6.5 million from the acquisition of an additional interest and consolidation of the Renaissance Portfolio in 2025 and (iv) $1.0 million from new tenant lease up ( Note 2 ).
Other revenue for our Core Portfolio decreased $4.6 million for the six months ended June 30, 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 $9.9 million for the six months ended June 30, 2025 compared to the prior year period primarily due to (i) $4.2 million from the acquisition of an additional interest and consolidation of the Renaissance Portfolio, (ii) $3.6 million from new property acquisitions and (iii) $1.5 million from the acceleration of in-place lease intangible assets for bankrupt tenants in 2025 ( Note 2 , Note 6 ).
Real estate taxes for our Core Portfolio increased $2.8 million for the six months ended June 30, 2025 compared to the prior year period primarily due to (i) $2.0 million from the acquisition of an additional interest and consolidation of the Renaissance Portfolio in 2025, and (ii) $1.1 million from new property acquisitions ( Note 2 ).
Loss on disposition of property of $2.2 million for our Core Portfolio relates to the deconsolidation of the Shops at Grand property in 2024.
Equity in earnings of unconsolidated affiliates for our Core Portfolio decreased $2.9 million for the six months ended June 30, 2025 due to tenants vacating subsequent to June 30, 2024.
Interest expense for our Core Portfolio decreased $1.1 million for the six months ended June 30, 2025 compared to the prior year period primarily due to higher loan balances in 2025 compared to 2024.
Loss on change in control of $9.6 million for our Core Portfolio for the six months ended June 30, 2025 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 on investments and other for our Core Portfolio increased $5.4 million for the six months ended June 30, 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)
Segment net income attributable to Acadia shareholders for Investment Management decreased $4.0 million for the six months ended June 30, 2025 compared to the prior year period as a result of the changes described below.
Rental revenue for Investment Management increased $4.4 million for the six months ended June 30, 2025 compared to the prior year period primarily due to new property acquisitions in 2025 and tenant lease up subsequent to June 30, 2024.
Other revenue for Investment Management increased $1.7 million for the six months ended June 30, 2025 compared to the prior year period primarily due to higher fees earn from related to the newly acquired Investment Management properties.
Real estate taxes for Investment Management increased $1.4 million for the six months ended June 30, 2025 compared to the prior year period primarily due to refunds received in the prior year.
Impairment charges for Investment Management of $24.6 million for the six months ended June 30, 2025 are due to the shortened hold periods at one Fund III property and one Fund IV property ( Note 8 ).
Loss on disposition of property for Investment Management decreased $1.8 million for the six months ended June 30, 2025 compared to the prior year period due to (i) $3.0 million gain on disposition of two Fund IV properties and a Fund V outparcel, (ii) offset by a $1.2 million loss related to a previously disposed property ( Note 2 ).
50
Equity in earnings of unconsolidated affiliates for Investment Management decreased $7.1 million for the six months ended June 30, 2025 compared to the prior year period primarily due to the loss on sale on Eden Square in 2025 compared to the gain on sale of Paramus in 2024 ( Note 4 ).
Net income attributable to noncontrolling interests for Investment Management increased $26.7 million for the six months ended June 30, 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 $4.6 million and $4.7 million for the six months ended June 30, 2025 and 2024, respectively.
Structured Financing
Interest income for Structured Finance increased $1.8 million for the six months ended June 30, 2025 compared to the prior year period due to the effect of compounding interest on notes.
Unallocated
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.” General and administrative expenses increased $3.2 million for the six months ended June 30, 2025 compared to the prior year period primarily due to higher compensation expenses in 2025.
NON-GAAP FINANCIAL MEASURES
Net Property Operating Income
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. 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. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriate supplemental disclosures of portfolio operating performance due to their widespread acceptance and use within the REIT investor and analyst communities. NOI and rent spreads on new and renewal leases are presented to assist investors in analyzing our property performance, however, our method of calculating these may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
51
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,
2025
2024
2025
2024
Consolidated operating income
$
760
$
17,789
$
16,084
$
31,797
Add back:
General and administrative
11,532
10,179
23,129
19,947
Depreciation and amortization
39,269
34,281
78,709
69,221
Impairment charges
18,190
—
24,640
—
(Gain) Loss related to a previously disposed property
—
(757
)
—
441
Less:
Above/below-market rent, straight-line rent and other accounts (a)
(3,194
)
(2,869
)
(5,906
)
(7,477
)
Termination income (b)
—
—
(8,366
)
—
Consolidated NOI
66,557
58,623
128,290
113,929
Redeemable noncontrolling interest in consolidated NOI
(1,376
)
(1,381
)
(3,264
)
(2,422
)
Noncontrolling interest in consolidated NOI
(19,489
)
(18,322
)
(37,144
)
(35,253
)
Less: Operating Partnership's interest in Investment Management NOI included above
(7,936
)
(6,132
)
(14,683
)
(11,473
)
Add: Operating Partnership's share of unconsolidated joint ventures NOI (c)
873
2,251
2,160
6,212
Core Portfolio NOI
$
38,629
$
35,039
$
75,359
$
70,993
(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 June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Core Portfolio NOI
$
38,629
$
35,039
$
75,359
$
70,993
Less properties excluded from Same-Property NOI
(4,152
)
(1,941
)
(7,041
)
(5,392
)
Same-Property NOI
$
34,477
$
33,098
$
68,318
$
65,601
Percent change from prior year period
4.2
%
4.1
%
Components of Same-Property NOI:
Same-Property Revenues
$
48,109
$
46,626
$
95,745
$
93,071
Same-Property Operating Expenses
(13,632
)
(13,528
)
(27,427
)
(27,470
)
Same-Property NOI
$
34,477
$
33,098
$
68,318
$
65,601
52
Rent Spreads on Core Portfolio New and Renewal Leases
The following table summarizes rent spreads on both a cash basis and straight-line basis for new and renewal leases based on leases executed within our Core Portfolio for the periods presented. Cash basis represents a comparison of rent most recently paid on the previous lease as compared to the initial rent paid on the new lease. Straight-line basis represents a comparison of rents as adjusted for contractual escalations, abated rent, and lease incentives for the same comparable leases. 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, 2025
Six Months Ended June 30, 2025
Core Portfolio New and Renewal Leases
Cash Basis
Straight-
Line Basis
Cash Basis
Straight-
Line Basis
Number of new and renewal leases executed
25
25
41
41
GLA commencing
168,265
168,265
283,266
283,266
New base rent
$
64.68
$
67.27
$
53.45
$
55.67
Expiring base rent
$
68.51
$
65.39
$
53.21
$
50.29
Percent growth in base rent
(5.6
)%
2.9
%
0.4
%
10.7
%
Average cost per square foot (a)
$
15.20
$
15.20
$
10.28
$
10.28
Weighted average lease term (years)
10.7
10.7
8.9
8.9
(a) The average cost per square foot includes tenant improvement costs, leasing commissions and tenant allowances.
Funds from Operations
We consider funds from operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be an appropriate supplemental disclosure of operating performance due to its widespread acceptance and use within the REIT investor and analyst communities. FFO is presented to assist investors in analyzing our performance. It is helpful as it excludes various items included in net income that are not indicative of the operating performance, such as gains (losses) from sales of depreciated property, depreciation and amortization, and impairment of real estate. 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 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 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 June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Net income attributable to Acadia shareholders
$
1,963
$
1,443
$
3,571
$
4,712
Depreciation of real estate and amortization of leasing costs (net of
noncontrolling interests' share)
31,665
26,291
63,272
53,378
Impairment charges (net of noncontrolling interests' share)
4,185
—
5,768
—
Net loss on disposition of properties (net of noncontrolling interests' share)
86
568
86
843
Loss on change in control
—
—
9,622
—
Income attributable to Common OP Unit holders
108
103
204
306
Distributions - Preferred OP Units
67
84
134
207
Funds from operations attributable to Common Shareholders and
Common OP Unit holders - Basic and Diluted
$
38,074
$
28,489
$
82,657
$
59,446
53
LIQUIDITY AND CAPITAL RESOURCES
Uses of Liquidity and Cash Requirements
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 six months ended June 30, 2025, we paid dividends and distributions on our Common Shares and preferred units of limited partnership interest (“Preferred OP Units”) totaling $52.1 million.
Investments
On January 23, 2025, we acquired an additional 48% economic ownership interest, increasing our existing 20% interest to 68%, in the Renaissance Portfolio, which is 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 aggregate mortgage loan indebtedness of $156.1 million ( 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 ).
In addition, during the six months ended June 30, 2025, we acquired nine properties totaling $305.8 million ( Note 2 ).
Structured Financing Investments
During the six months ended June 30, 2025, we provided a mezzanine loan and additional advances under a preferred equity investment in the aggregate amount of $28.5 million ( Note 3 ).
Capital Commitments
During the six months ended June 30, 2025, we made capital contributions aggregating $2.1 million to the Funds.
As of June 30, 2025, our share of the remaining capital commitments to the Funds aggregated $14.1 million as follows:
• $0.3 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. During 2015, we acquired an additional interest, which had an original capital commitment of $20.9 million.
• $5.5 million to Fund IV – Fund IV was launched in May 2012 with total committed capital of $530.0 million, of which our original share was $122.5 million.
• $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 Investment Management.
Additionally, the Company has committed to fund tenant improvements under executed leases totaling approximately $45.7 million and $41.4 million, as of June 30, 2025 and December 31, 2024, respectively. The Company’s share of these obligations is approximately $38.9 million and $32.3 million, respectively ( Note 9 ).
Development Activities
During the six months ended June 30, 2025, capitalized costs associated with development activities totaled $22.5 million ( Note 2 ). As of June 30, 2025, we had a total of 20 consolidated projects under development or redevelopment, for which the estimated total cost to complete these projects through 2028 was $25.6 million to $137.6 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
54
interest rates, the imposition of tariffs 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.
Debt
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):
June 30,
December 31,
2025
2024
Total Debt - Fixed and Effectively Fixed Rate
$
1,362,547
$
1,142,592
Total Debt - Variable Rate
451,925
405,355
1,814,472
1,547,947
Net unamortized debt issuance costs
(11,713
)
(10,893
)
Unamortized premium
1,378
212
Total Indebtedness
$
1,804,137
$
1,537,266
As of June 30, 2025, our consolidated indebtedness aggregated $1,814.5 million, excluding unamortized premium of $1.4 million and net unamortized loan costs of $11.7 million, and was collateralized by 50 properties and related tenant leases. As of June 30, 2025, stated interest rates on our outstanding indebtedness ranged from 3.99% to SOFR + 3.75% with maturities that ranged from August 1, 2025 to April 15, 2035, excluding 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 $1,072.8 million of notional principal under variable to fixed-rate swap agreements currently in effect, $1,362.5 million of the portfolio debt, or 75.1%, was fixed at a 4.92% weighted average interest rate and $451.9 million, or 24.9%, was floating at a 6.99% weighted average interest rate as of June 30, 2025. Our variable-rate debt includes $111.2 million of debt subject to interest rate caps.
Without regard to available extension options, as of June 30, 2025, we had (i) $285.1 million of debt maturing in 2025 at a weighted-average interest rate of 6.99%, (ii) $3.4 million of scheduled principal amortization due in the remainder of 2025 and (iii) $9.6 million of remaining scheduled 2025 principal payments and maturities, representing our pro rata share of our unconsolidated debt. In addition, $473.6 million of our total consolidated debt and $13.9 million of our pro-rata share of unconsolidated debt will come due by June 30, 2026. With respect to the debt maturing in 2025 and 2026, we have options to extend consolidated debt aggregating $238.0 million and $205.3 million as of June 30, 2025; however, 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, the imposition of tariffs and other risks, including, but not limited to those 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 June 30, 2025 ( Note 10 ). We did not repurchase any shares under this program during the six months ended June 30, 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 June 30, 2025 totaled $42.8 million. Our remaining sources of liquidity are described further below. Depending upon the availability and cost of external capital, we believe our sources of capital are sufficient to meet our liquidity needs. Our historical cash flows uses are reflected in our Condensed Consolidated Statements of Cash Flows and are discussed in further detail below.
55
Issuances of Common Shares
The 2025 ATM Program ( Note 10 ) 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 the 2025 ATM Program. Net proceeds raised through the 2025 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.
As of June 30, 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 $22.71 and would result in $55.5 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 six months ended June 30, 2025, Funds III and V called for capital contributions of $10.5 million, of which our aggregate share was $2.1 million. As of June 30, 2025, unfunded capital commitments from noncontrolling interests within Funds II, III, IV and V were $0, $1.1 million, $18.5 million and $32.9 million, respectively.
Other Transactions
During the first quarter of 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 June 30, 2025, we held 0.5 million shares of Albertsons which had a fair value of $10.9 million ( Note 8 ). In addition, during the six months ended June 30, 2025, we sold 0.2 million shares generating $5.4 million in net proceeds and recognized dividend income of $0.2 million ( Note 8 ).
Financing and Debt
During the second quarter of 2025, we drew $175.0 million on our new $250.0 Million Term Loan, and have $75.0 million available. As of June 30, 2025, we had $471.5 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 136 unleveraged consolidated properties with an aggregate carrying value of approximately $2.2 billion, although there can be no assurance that we would be able to obtain financing for these properties at favorable terms, if at all ( Note 7 ).
HISTORICAL CASH FLOW
The following table compares the historical cash flow for the six months ended June 30, 2025 with the cash flow for the six months ended June 30, 2024 (in millions, totals may not add due to rounding):
Six Months Ended June 30,
2025
2024
Variance
Net cash provided by operating activities
$
90.7
$
58.0
$
32.7
Net cash (used in) provided by investing activities
(394.7
)
20.0
(414.7
)
Net cash provided by (used in) financing activities
332.1
(48.2
)
380.3
Increase in cash and cash equivalents and restricted cash
$
28.1
$
29.8
$
(1.7
)
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 $32.7 million more cash for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 primarily due to the repayment of accrued interest on a note receivable.
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.
56
Our investing activities used $414.7 million more cash during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to (i) $333.5 million more cash used for the acquisition of real estate, (ii) $58.7 million less cash received from the disposition of properties, (iii) $12.2 million more cash used for the issuance of notes receivable, (iv) $10.1 million more cash used for development, construction and property improvement costs, and (v) $5.2 million less cash received from the repayment of notes receivable.
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 $380.3 million more cash during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily from (i) $283.8 million more cash from proceeds on debt, (ii) $135.4 million more cash provided by the sale of Common Shares, (iii) $5.8 million more cash used for financing costs and (iv) $3.4 million less capital distributed to noncontrolling interests. These increases were offset by (i) $35.3 million less cash provided by contributions from noncontrolling interests and (ii) $13.2 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
June 30, 2025
Investment
Ownership
Percentage
Pro-rata Share of
Mortgage Debt
Effective Interest Rate (a)
Maturity Date
Tri-City Plaza
18.1
%
$
6.4
6.16
%
Oct 2025
Frederick County Square
90.0
%
4.5
6.84
%
Jan 2026
650 Bald Hill Rd
20.8
%
3.1
3.75
%
Jun 2026
840 N. Michigan
94.4
%
36.8
6.50
%
Dec 2026
Wood Ridge Plaza
18.1
%
6.5
7.20
%
Mar 2027
La Frontera
18.1
%
10.0
6.11
%
Jun 2027
Riverdale FC
89.4
%
6.8
6.87
%
Nov 2027
Georgetown Portfolio
50.0
%
6.8
4.72
%
Dec 2027
LINQ Promenade (e)
15.0
%
26.3
6.06
%
Dec 2027
Shoppes at South Hills (b)
18.1
%
5.9
5.95
%
Mar 2028
Mohawk Commons
18.1
%
7.1
5.80
%
Mar 2028
The Walk at Highwoods Preserve (b)
20.0
%
4.1
6.25
%
Oct 2028
Crossroads Shopping Center (c)
49.0
%
36.8
5.78
%
Nov 2029
Gotham Plaza
49.0
%
13.7
5.90
%
Oct 2034
Total
$
174.8
(a) Effective interest rates incorporate the effect of interest rate swaps and caps that were in effect as of June 30, 2025, where applicable.
(b) The debt has one available 12-month extension option.
(c) The debt has two available 12-month extension options.
(d) The debt has one available three-month extension option.
(e) The debt has one available 24-month extension option.
CRITICAL ACCOUNTING POLICIES
Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Report is based upon the Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of Condensed Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe there have been no material changes to the items that we disclosed as our critical accounting policies under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2024 Annual Report on Form 10-K.
Recently Issued and Adopted Accounting Pronouncements
57
Reference is made to Note 1 in the Notes to Condensed Consolidated Financial Statements for information about recently issued accounting pronouncements.
SUPPLEMENTAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following supplements the discussion contained under the heading “Certain U.S. Federal Income Tax Considerations” in our prospectus dated November 6, 2023.
The One Big Beautiful Bill Act
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, or the OBBBA. The OBBBA made significant changes to the U.S. federal income tax laws in various areas. Among the relevant changes:
• The OBBBA permanently extended certain provisions that were enacted in the Tax Cuts and Jobs Act of 2017, most of which were set to expire after December 31, 2025. In particular, such extensions included the permanent extension of (i) the 37% tax rate as the highest marginal individual income tax rate on ordinary income and (ii) the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers.
• The OBBBA increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries, or TRSs, from 20% to 25% for taxable years beginning after December 31, 2025. As a result, for taxable years beginning after December 31, 2025, the aggregate value of all securities of TRSs held by a REIT may be equal to up to 25% of the value of its gross assets without causing the REIT to fail to qualify as a real estate investment trust.
• Finally, the OBBBA modified the calculation of the business interest deduction limitation under section 163(j) of the Code. Such limitation is equal to 30% of the taxpayer’s “adjusted taxable income.” Prior to the passage of the OBBBA, for tax years beginning after December 31, 2021, a taxpayer’s “adjusted taxable income” was reduced by depreciation, amortization and depletion. Pursuant to the OBBBA, “adjusted taxable income” is calculated without regard to such items.
The OBBBA contain complex revisions to the U.S. federal income tax laws. Holders of our Common Shares are urged to consult with their tax advisors with respect to the OBBBA and its potential effect on the acquisition, ownership and disposition of our Common Shares.
ITEM 3. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK.
Information as of June 30, 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 June 30, 2025, we had total property mortgage loans and other notes payable of $1,814.5 million, excluding the unamortized premium of $1.4 million and net unamortized debt issuance costs of $11.7 million, of which $1,362.5 million, or 75.1% was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $451.9 million, or 24.9%, was variable-rate based upon SOFR or Prime rates plus certain spreads. As of June 30, 2025, we were party to 31 interest rate swaps and three interest rate cap agreements to hedge our exposure to changes in interest rates with respect to $1,072.8 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.
58
The following table sets forth information as of June 30, 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
Year
Scheduled
Amortization
Maturities
Total
Weighted Average
Interest Rate
2025 (Remainder)
$
1.1
$
—
$
1.1
—
%
2026
4.9
102.0
106.9
6.1
%
2027
4.8
45.1
49.9
4.8
%
2028
1.8
523.9
525.7
4.1
%
2029
1.2
172.1
173.3
5.3
%
Thereafter
1.3
176.6
177.9
4.4
%
$
15.1
$
1,019.7
$
1,034.8
Investment Management Consolidated Mortgage and Other Debt
Year
Scheduled
Amortization
Maturities
Total
Weighted Average
Interest Rate
2025 (Remainder)
$
2.3
$
285.1
$
287.4
7.0
%
2026
2.9
237.2
240.1
6.4
%
2027
1.7
165.7
167.4
6.6
%
2028
0.3
84.5
84.8
5.9
%
2029
—
—
—
—
%
Thereafter
—
—
—
—
%
$
7.2
$
772.5
$
779.7
Mortgage Debt in Unconsolidated Partnerships (at our Pro-Rata Share)
Year
Scheduled
Amortization
Maturities
Total
Weighted Average
Interest Rate
2025 (Remainder)
$
3.2
$
6.4
$
9.6
6.2
%
2026
6.2
35.8
42.0
6.3
%
2027
1.1
55.0
56.1
6.1
%
2028
0.1
16.6
16.7
6.0
%
2029
0.3
36.4
36.7
5.8
%
Thereafter
—
13.7
13.7
5.9
%
$
10.9
$
163.9
$
174.8
Without regard to available extension options, in the remainder of 2025, $288.5 million of our total consolidated debt and $9.6 million of our pro-rata share of unconsolidated outstanding debt will become due. In addition, $346.9 million of our total consolidated debt and $42.0 million of our pro-rata share of unconsolidated debt will become due in 2026. As it relates to the aforementioned maturing debt in 2025 and 2026, we have options to extend consolidated debt aggregating $238.0 million and $205.3 million at June 30, 2025, respectively; however, there can be no assurance that the Company will be able successfully execute any or all of its available extension options. As we intend on refinancing some or all of such debt at the then-existing market interest rates, which may be greater than the current interest rates, our interest expense would increase by approximately $6.8 million annually if the interest rate on the refinanced debt increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $2.8 million. Interest expense on our variable-rate debt of $451.9 million, net of variable to fixed-rate swap agreements currently in effect, as of June 30, 2025, would increase $4.5 million if corresponding rate indices increased by 100 basis points. After giving effect to noncontrolling interests, our share of this increase would be $1.3 million. We may seek additional variable-rate financing if and when pricing and other commercial and financial terms warrant. 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.
59
Based on our outstanding debt balances as of June 30, 2025, the fair value of our total consolidated outstanding debt would decrease by approximately $11.5 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 $6.4 million.
As of June 30, 2025, and December 31, 2024, we had consolidated notes receivable of $154.7 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 June 30, 2025, the fair value of our total outstanding notes receivable would decrease by approximately $1.5 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 $1.5 million.
Summarized Information as of December 31, 2024
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, 2024 to June 30, 2025
Our interest rate risk exposure from December 31, 2024, to June 30, 2025, has increased on an absolute basis, as the $405.4 million of variable-rate debt as of December 31, 2024 has increased to $451.9 million as of June 30, 2025. Our interest rate exposure as a percentage of total debt has decreased, as our variable-rate debt accounted for 26.2% of our consolidated debt as of December 31, 2024 compared to 24.9% as of June 30, 2025.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.