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”, “Acadia”, “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.
The Company operates through two primary platforms:
REIT Portfolio : The REIT Portfolio consists of open-air and street retail properties located in premier urban retail corridors and select suburban markets characterized by strong demographics and limited new supply. These assets generate recurring rental revenues and benefit from contractual rent escalations and leasing activity.
Investment Management (“IM”) : Through its investment management platform, the Company manages opportunistic and value-add retail real estate investments alongside institutional partners through its strategic opportunity funds (Fund II, Fund III, Fund IV, and Fund V) and select co-investment ventures. From time to time, assets previously held in the Company’s opportunity funds may be recapitalized or transitioned into new joint ventures with third-party partners as part of the portfolio lifecycle, while the Company retains an ownership interest and continues its role as operator and manager. The Company earns management fees and, in certain cases, incentive-based performance fees.
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 its subsidiaries. As of March 31, 2026, the Trust controlled approximately 96% of the Operating Partnership as its sole general partner.
As of March 31, 2026, the Company owned or had an ownership interest in 231 properties, including development or redevelopment projects ( Note 1 ). The Company’s operating income is primarily derived from rental revenues from operating properties, including tenant expense recoveries, net of property operating and corporate overhead expenses.
In addition, the Company maintains a Structured Financing (“SF”) program through which it selectively invests in first mortgage loans and other real estate-backed notes.
The following table summarizes the Company’s wholly owned and partially owned retail properties and related physical occupancy as of March 31, 2026:
Number of Properties
Operating Properties
Development or
Redevelopment (1)
Operating
GLA
Occupancy
REIT Portfolio:
Chicago Metro
2
38
595,660
88.8
%
New York Metro
1
45
404,473
95.8
%
Los Angeles Metro
—
2
23,757
100.0
%
San Francisco Metro
2
—
—
—
Dallas Metro
20
8
59,522
85.3
%
Washington D.C. Metro
—
33
407,644
92.0
%
Boston Metro
—
1
1,051
0.0
%
South Florida Metro
—
1
10,118
100.0
%
Suburban
4
23
3,737,281
95.2
%
Total REIT Portfolio
29
151
5,239,506
94.2
%
Acadia Share of Total REIT Portfolio
29
151
4,978,793
94.1
%
Investment Management:
Fund II
—
1
529,372
80.7
%
Fund III
—
1
—
—
Fund IV
1
21
288,521
81.5
%
Fund V
—
15
5,185,785
90.9
%
Other
—
12
3,303,362
95.0
%
Total Investment Management
1
50
9,307,040
91.5
%
Acadia Share of Total Investment Management
1
50
2,092,222
90.0
%
Total REIT and Investment Management
30
201
14,546,546
92.5
%
Acadia Share of Total REIT and Investment Management
30
201
7,071,015
92.9
%
(1) Includes 11 pre-stabilized properties in the REIT Portfolio.
37
SIGNIFICANT ACTIVITIES DURING 2026 AND SUBSEQUENT EVENTS
See Note 12 in the Notes to Condensed Consolidated Financial Statements for an overview of our three reportable segments: REIT Portfolio, Investment Management and Structured Financing. For purposes of the tables included below, these segments are abbreviated as “REIT”, “IM” and “SF”, respectively.
During the first quarter of 2026, the Company completed a number of transactions across its REIT Portfolio and Investment Management segments reflecting continued portfolio growth and deepening of relationships with key institutional partners.
REIT Portfolio
Within the REIT Portfolio, the Company continued to selectively deploy capital into retail assets located in established, high-barrier markets. During the quarter, the Company completed consolidated acquisitions totaling approximately $78.7 million, including:
• $43.5 million acquisition of retail units at 225 Worth Avenue in Palm Beach, Florida;
• $21.3 million acquisition of retail condominium units at 1045 and 1165 Madison Avenue in New York City;
• $9.5 million strategic add-on acquisition of ground-lease interests at Rhode Island Place in Washington, D.C.; and
• $4.4 million strategic add-on acquisition of a retail property and residential units at 846 West Armitage Avenue in Chicago.
These acquisitions were integrated into the Company’s existing REIT Portfolio and are consolidated.
In April 2026, the Company closed a $108.9 million acquisition of retail condominium units at 4-6 and 28 Newbury Street in Boston ( Note 16 ).
Investment Management
During the first quarter of 2026, the Company completed several transactions through its Investment Management segment, consisting of equity investments in unconsolidated joint ventures and recapitalizations of existing assets ( Note 2 , Note 4 ).
In January 2026, the Company acquired a 20% equity interest in a joint venture that purchased the Shops at Skyview, a retail shopping center located in Queens, New York, for a total purchase price of $424.1 million. At closing, the joint venture secured a mortgage loan with a total commitment of $290.0 million, of which $277.0 million was funded at closing. Additionally, the Company provided a preferred equity investment of approximately $41.7 million. The Company’s equity contribution to the joint venture totaled approximately $22.5 million.
In February 2026, the Company completed a $435.8 million recapitalization of a seven-property, open-air retail portfolio. Six of the properties were previously held in Fund V, while one property (Avenue at West Cobb) was previously held in the Company’s wholly-owned portfolio. In connection with the transaction, the properties were contributed to two newly formed joint ventures and the Company retained a 20% non-controlling equity interest. Additionally, the Company provided seller financing to the Atlantic Portfolio joint venture in the form of a $27.5 million preferred equity investment. The transaction resulted in the deconsolidation of the properties and the recognition of a gain on disposition and deconsolidation of $112.3 million, of which the Company’s proportionate share was $22.1 million.
In March 2026, the Company completed a recapitalization of Pinewood Square, an open-air retail center in Lake Worth, Florida, with a gross transaction value of $68.4 million. The property was contributed to a newly formed joint venture, with the Company retaining a 20% non-controlling equity interest. The transaction resulted in the deconsolidation of the property and the recognition of a gain on deconsolidation of $4.1 million.
During the first quarter of 2026, the Company completed consolidated property dispositions within its Investment Management platform totaling approximately $104.6 million, including the sale of Landstown Commons for $102.0 million and the sale of 1964 Union Street for $2.6 million ( Note 2 ).
These transactions reflect the Company’s continued execution of its strategic objectives, including portfolio growth, balance sheet optimization, and the expansion of its Investment Management platform.
38
Financing and Capital Activity
In connection with the Investment Management disposition and recapitalization activity, the Company retired approximately $269.5 million of property-level mortgage loans associated with assets sold or contributed to joint ventures. The Company also terminated related interest rate hedges in conjunction with these repayments.
On April 17, 2026, the Company entered into the Fourth Amended and Restated Credit Facility, which extended the maturity of our $525.0 million revolving credit facility (the size of which remained unchanged) from April 15, 2028 to April 17, 2030 (subject to two six-month extension options), increased our existing $400.0 million term loan to $512.5 million and extended its maturity from April 15, 2028 to April 17, 2031, and provided for a new $137.5 million term loan maturing April 17, 2031. The existing $250.0 million term loan maturing May 29, 2030 remained unchanged. The Fourth Amended and Restated Credit Facility also includes an accordion feature permitting the Operating Partnership, at its option and subject to customary conditions, to increase total capacity to up to $2.0 billion. We believe the refinancing extended our weighted average debt maturity and enhanced our liquidity position.
Common Share Activity
In March 2026, we settled 2,445,106 outstanding forward shares under the Company’s $500.0 million “at-the-market” program (the “ATM Program”) and received proceeds of $55.9 million, which were used to reduce outstanding borrowings and fund investment activity.
Economic and Other Considerations
Macroeconomic conditions, including inflationary pressures, elevated energy prices, higher interest rates, and broader geopolitical developments, continue to present risks for our business and the businesses of our tenants. While inflation has moderated from prior periods, certain operating and capital costs remain elevated. However, the majority of our leases include contractual rent escalations and expense recovery provisions, which help mitigate the impact of inflation on operating results. We also seek to manage operating expenses through cost-conscious property management practices and the use of multi-year service contracts where appropriate.
We seek to drive value across our portfolio through leasing momentum, active development and redevelopment projects, and strategic deployment of capital into high-quality assets. The Company manages its exposure to interest rate fluctuations primarily through the use of fixed-rate debt and interest rate derivative instruments, including interest rate swaps and caps that are designated as hedging instruments (Note 8 ). While higher interest rates have increased borrowing costs, we believe our capital structure and hedging strategy provide meaningful protection against interest rate volatility.
In addition, evolving trade policies, tariffs, sanctions and related geopolitical developments could impact certain tenants’ operations or consumer demand in our markets. The ultimate impact of these factors remains uncertain, and the Company continues to monitor these developments closely.
39
RESULTS OF OPERATIONS
Comparison of Results for the Three Months Ended March 31, 2026 to the Three Months Ended March 31, 2025
The results of operations by reportable segment for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 are summarized in the table below (in millions, totals may not add due to rounding):
Three Months Ended
Three Months Ended
March 31, 2026
March 31, 2025
Change
REIT
IM
SF
Total
REIT
IM
SF
Total
REIT
IM
SF
Total
Rental revenue
$
62.6
$
36.0
$
—
$
98.6
$
63.8
$
38.9
$
—
$
102.6
$
(1.2
)
$
(2.9
)
$
—
$
(4.0
)
Other revenue
0.6
3.8
—
4.4
0.7
1.1
—
1.8
(0.1
)
2.7
—
2.6
Depreciation and amortization
(24.4
)
(15.8
)
—
(40.2
)
(23.7
)
(15.8
)
—
(39.4
)
0.7
—
—
0.8
Property operating expenses
(10.3
)
(8.0
)
—
(18.2
)
(9.6
)
(8.7
)
—
(18.3
)
0.7
(0.7
)
—
(0.1
)
Real estate taxes
(9.4
)
(3.6
)
—
(12.9
)
(9.0
)
(4.3
)
—
(13.3
)
0.4
(0.7
)
—
(0.4
)
General and administrative expenses
—
—
—
(15.3
)
—
—
—
(11.6
)
—
—
—
3.7
Impairment charges
—
—
—
—
—
(6.5
)
—
(6.5
)
—
(6.5
)
—
6.5
Gain on disposition of properties
—
142.1
—
142.1
—
—
—
—
—
142.1
—
142.1
Operating income (loss)
19.2
154.6
—
158.5
22.3
4.7
—
15.3
(3.1
)
149.9
—
143.2
Interest income
—
—
4.8
4.8
—
—
6.1
6.1
—
—
(1.3
)
(1.3
)
Equity in earnings (losses) of unconsolidated affiliates
0.1
(1.6
)
—
(1.5
)
0.3
(2.0
)
—
(1.7
)
(0.2
)
0.4
—
0.2
Interest expense
(12.3
)
(9.7
)
—
(22.1
)
(9.4
)
(13.9
)
—
(23.2
)
2.9
(4.2
)
—
(1.1
)
Loss on change in control
—
—
—
—
(9.6
)
—
—
(9.6
)
(9.6
)
—
—
(9.6
)
Realized and unrealized holding (losses) gains on investments and other
(0.6
)
—
—
(0.6
)
1.8
—
(0.2
)
1.6
(2.4
)
—
0.2
(2.2
)
Income tax provision
—
—
—
—
—
—
—
(0.1
)
—
—
—
(0.1
)
Net income (loss)
6.3
143.3
4.8
139.1
5.4
(11.2
)
5.9
(11.7
)
0.9
132.1
(1.1
)
127.4
Net loss (income) attributable to redeemable noncontrolling interests
—
0.7
—
0.7
—
1.7
—
1.7
—
(1.0
)
—
(1.0
)
Net (income) loss attributable to noncontrolling interests
(1.2
)
(108.1
)
—
(109.3
)
0.2
11.4
—
11.6
(1.4
)
(119.5
)
—
(120.9
)
Net income (loss) attributable to Acadia shareholders
$
5.1
$
35.9
$
4.8
$
30.5
$
5.6
$
1.8
$
5.9
$
1.6
$
(0.5
)
$
34.1
$
(1.1
)
$
28.9
REIT Portfolio
Segment net income attributable to Acadia shareholders for our REIT Portfolio decreased $0.5 million for the three months ended March 31, 2026 compared to the prior year period as a result of the changes further described below.
Rental revenues for our REIT Portfolio decreased $1.2 million for the three months ended March 31, 2026 compared to the prior year period, primarily reflecting $8.4 million of non-recurring rental and termination income recognized in 2025 from Whole Foods at City Center in San Francisco, CA, partially offset by (i) $4.8 million from REIT acquisitions completed in 2025 and 2026 and (ii) $1.7 million related to the acquisition of an additional interest in, and consolidation of, the Renaissance Portfolio in 2025.
Interest expense for our REIT Portfolio increased $2.9 million for the three months ended March 31, 2026 compared to the prior year period primarily due to higher average outstanding borrowings in 2026 to partially fund investment activity.
Loss on change in control of $9.6 million recognized in the prior year period resulted from the remeasurement to fair value of the Company’s previously held equity method investment upon acquiring an additional 48% controlling interest in the Renaissance Portfolio in 2025 ( Note 2 ).
Realized and unrealized holding gains on investments and other of $1.8 million in the prior-year period resulted from a change in the mark-to-market adjustment on the investment in marketable securities, which was liquidated in 2025.
Net income attributable to noncontrolling interests for our REIT Portfolio increased $1.4 million for the three months ended March 31, 2026 compared to the prior year period based on the noncontrolling interests’ share of the variances discussed above.
Investment Management
(all amounts below are consolidated amounts and are not representative of our proportionate share)
Segment net income attributable to Acadia shareholders for Investment Management increased $34.1 million for the three months ended March 31, 2026 compared to the prior year period as a result of the changes described below.
40
Rental revenues for Investment Management decreased $2.9 million for the three months ended March 31, 2026 compared to the prior year period due to Fund V property sales completed in 2026.
Other revenues for Investment Management increased $2.7 million for the three months ended March 31, 2026 compared to the prior year period primarily reflecting higher fee income from new Investment Management acquisitions in 2025 and 2026.
An impairment charge of $6.5 million was recognized in 2025 related to a shortened expected hold period at one Fund III property ( Note 8 ).
Gain on disposition of properties of $142.1 million recognized in 2026 was related to the Fund V recapitalization and the dispositions of Landstown Commons and Avenue at West Cobb.
Interest expense for Investment Management decreased $4.2 million for the three months ended March 31, 2026 compared to the prior year period primarily due to the Fund V recapitalization and disposition of Landstown Commons in 2026.
Net income attributable to noncontrolling interests for Investment Management increased $119.5 million for the three months ended March 31, 2026 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 $2.0 million for the three months ended March 31, 2026 compared to $2.3 million for the prior year period.
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 $3.7 million for the three months ended March 31, 2026 compared to the prior year period primarily due to higher compensation expenses, legal expenses, and other transaction costs in 2026. The increase in expense for the three months ended March 31, 2026 includes accelerated compensation cost related to a modification of vesting provisions in connection with a change in expected service period.
Structured Financing
Interest income for our Structured Financing portfolio decreased $1.3 million for the three months ended March 31, 2026 compared to the prior year period primarily due to the partial redemption of the redeemable noncontrolling interest of the City Point Loan in 2025 ( Note 10 ).
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 REIT Portfolio. We do not consider NOI and rent spreads to be 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.
We use NOI, a non-GAAP financial measure, to evaluate the performance of our properties. We define NOI as income from our REIT portfolio real estate, less our property operating expenses, excluding lease termination income received from tenants and other amounts such as above- or below-market rent, and straight-line rent. We consider NOI and rent spreads on new and renewal leases for our REIT 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.
41
A reconciliation of consolidated operating income to net operating income - REIT Portfolio follows (in thousands):
Three Months Ended March 31,
2026
2025
Consolidated operating income
$
158,511
$
15,324
Add back:
General and administrative
15,303
11,597
Depreciation and amortization
40,155
39,440
Impairment charges
—
6,450
Gain on disposition of properties
(142,148
)
—
Less:
Above/below-market rent, straight-line rent and other accounts (a)
(6,985
)
(2,704
)
Termination income (b)
—
(8,366
)
Consolidated NOI
64,836
61,741
Redeemable noncontrolling interest in consolidated NOI
(1,840
)
(1,888
)
Noncontrolling interest in consolidated NOI
(14,997
)
(17,655
)
Less: Operating Partnership's interest in Investment Management NOI included above
(7,542
)
(6,747
)
Add: Operating Partnership's share of unconsolidated joint ventures NOI (c)
1,358
1,279
REIT Portfolio NOI
$
41,815
$
36,730
(a) Includes other accounts such as straight-line rent reserves and fee income.
(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.
We also use same-property NOI (“Same-Property NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. Same-Property NOI includes REIT 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 REIT Portfolio (dollars in thousands):
Three Months Ended March 31,
2026
2025
REIT Portfolio NOI
$
41,815
$
36,730
Less properties excluded from Same-Property NOI
(2,973
)
(52
)
Same-Property NOI
$
38,842
$
36,678
Percent change from prior year period
5.9
%
Components of Same-Property NOI:
Same-Property Revenues
$
54,709
$
51,442
Same-Property Operating Expenses
(15,867
)
(14,764
)
Same-Property NOI
$
38,842
$
36,678
42
Rent Spreads on REIT 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 REIT 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 March 31, 2026
REIT Portfolio New and Renewal Leases
Cash Basis
Straight-
Line Basis
Number of new and renewal leases executed
12
12
GLA commencing
182,374
182,374
New base rent
$45.86
$48.52
Expiring base rent
$41.15
$39.48
Percent growth in base rent
11.4%
22.9%
Average cost per square foot (a)
$22.53
$22.53
Weighted average lease term (years)
6.0
6.0
(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 for an equity REIT due to its widespread acceptance and use within the REIT 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 assets related to the Company’s main business and land held for the development of property for its operating portfolio, plus depreciation and amortization, 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 in FFO. A reconciliation of net income attributable to Acadia shareholders to FFO follows (dollars in thousands, except per share amounts):
Three Months Ended March 31,
2026
2025
Net income attributable to Acadia shareholders
$
30,477
$
1,608
Depreciation of real estate and amortization of leasing costs (net of
noncontrolling interests' share)
35,851
31,607
Impairment charges (net of noncontrolling interests' share)
—
1,583
Net gain on disposition of properties (net of noncontrolling interests' share)
(30,954
)
—
Loss on change in control
—
9,622
Income attributable to Common OP Unit holders
1,496
96
Distributions - Preferred OP Units
5
67
Funds from operations attributable to Common Shareholders and
Common OP Unit holders - Basic and Diluted
$
36,875
$
44,583
43
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 capital committed to our Investment Management platform and property acquisitions and development/re-tenanting activities within our REIT 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 three months ended March 31, 2026, we paid dividends and distributions on our Common Shares and preferred units of limited partnership interest (“Preferred OP Units”) totaling $28.4 million.
Investments
As previously discussed, during the three months ended March 31, 2026, we deployed approximately $181.3 million in cash outlays related to acquisitions within our REIT Portfolio and equity investments and recapitalizations completed through our Investment Management platform.
Structured Financing Investments
During the three months ended March 31, 2026, we provided advances under preferred equity investments aggregating to $69.2 million ( Note 4 ).
Capital Commitments
As of March 31, 2026, our share of the remaining capital commitments to the Funds aggregated $11.5 million as follows:
• $0.2 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.
• $5.8 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 the Funds other than the remaining amounts described above.
Additionally, the Company has committed to fund tenant improvements under executed leases totaling approximately $49.8 million and $44.1 million, as of March 31, 2026 and December 31, 2025, respectively. The Company’s share of these obligations is approximately $37.7 million and $37.1 million, respectively ( Note 9 ).
Development Activities
During the three months ended March 31, 2026, capitalized costs associated with development activities totaled $11.0 million ( Note 2 ). As of March 31, 2026, 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 $91.3 million to $122.2 million, respectively. These estimates exclude assets for which redevelopment or development plans are still being evaluated and for which costs are not yet determinable.
Substantially all remaining development and redevelopment costs are discretionary, other than the construction and tenant improvement commitments disclosed in Note 9 , and could be affected by various risks and uncertainties, including, but not limited to, the effects of the current inflationary environment, elevated interest rates, global macroeconomic conditions, 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, 2025.
44
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):
March 31,
December 31,
2026
2025
Total Debt - Fixed and Effectively Fixed Rate
$
1,305,470
$
1,502,753
Total Debt - Variable Rate
298,790
370,614
1,604,260
1,873,367
Net unamortized debt issuance costs
(8,684
)
(11,387
)
Unamortized premium
700
926
Total Indebtedness
$
1,596,276
$
1,862,906
As of March 31, 2026, our consolidated indebtedness aggregated $1,604.3 million, excluding $0.7 million of unamortized premium and $8.7 million of net unamortized loan costs, and was secured by 37 properties and related tenant leases. Maturities on our outstanding indebtedness ranged from May 1, 2026 to April 15, 2035, excluding available extension options.
Taking into consideration $1,054.4 million of notional principal under variable-to-fixed interest rate swap agreements currently in effect, $1,305.5 million, or 81.4%, of the Company’s consolidated debt was fixed at a weighted-average interest rate of 4.67%, and $298.8 million, or 18.6%, was floating at a weighted-average interest rate of 5.73% as of March 31, 2026. Variable-rate debt included $32.2 million subject to interest rate cap agreements.
Without regard to available extension options, as of March 31, 2026, we had (i) $233.4 million of consolidated debt maturing in 2026 at a weighted-average interest rate of 6.11%, (ii) $2.5 million of scheduled principal amortization due during the remainder of 2026, and (iii) $46.7 million representing the Company’s pro-rata share of scheduled principal payments and maturities on unconsolidated debt during 2026. In addition, $281.4 million of consolidated debt and $48.5 million representing the Company’s pro-rata share of unconsolidated debt will mature by March 31, 2027.
The Company has extension options on consolidated debt aggregating $134.2 million maturing in 2026 and $96.3 million maturing in 2027; however, there can be no assurance that the Company will be able to successfully execute any or all of its available extension options. With respect to the debt maturing in the remainder of 2026, 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. For the remaining indebtedness, we may not have sufficient cash on hand to repay such obligations, 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 current inflationary environment, elevated interest rates, tariff policies, 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, 2025.
Share Repurchase Program
We maintain a share repurchase program under which $122.5 million remains available as of March 31, 2026 ( Note 10 ). We did not repurchase any shares under this program during the three months ended March 31, 2026.
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, and (vi) cash on hand and future cash flow from operating activities.
Our cash on hand in our consolidated subsidiaries as of March 31, 2026 totaled $31.4 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 flow uses are reflected in our Condensed Consolidated Statements of Cash Flows and are discussed in further detail below.
45
Issuances of Common Shares
Our 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.
As of March 31, 2026, we physically settled 2,445,106 forward shares under the ATM Program in exchange for aggregate net proceeds of $55.9 million, which were used to reduce outstanding borrowings and fund investment activity. As of March 31, 2026, we had unsettled forward equity contracts to sell 12,293,731 shares for estimated aggregate net cash proceeds of $239.2 million. We also had $199.1 million of remaining availability for future share issuance under the ATM program.
Investment Management Capital
As of March 31, 2026, unfunded capital commitments from noncontrolling interests within Funds II, III, IV and V were zero, $0.6 million, $18.5 million and $22.9 million, respectively.
Financing and Debt
As of March 31, 2026, we had $433.5 million of capacity under existing REIT Portfolio debt facilities. In addition, our REIT Portfolio and Investment Management platform included 146 unleveraged consolidated properties with an aggregate carrying value of approximately $2.3 billion; however, there can be no assurance that financing would be available for these properties at favorable terms, if at all ( Note 7 ). See also “—Financing and Capital Activity” for details on our Fourth Amended and Restated Credit Facility entered into in April 2026.
HISTORICAL CASH FLOW
The following table compares the historical cash flow for the three months ended March 31, 2026 with the cash flow for the three months ended March 31, 2025 (in millions, totals may not add due to rounding):
Three Months Ended March 31,
2026
2025
Variance
Net cash provided by operating activities
$
31.4
$
25.9
$
5.5
Net cash provided by (used in) investing activities
367.6
(196.0
)
563.6
Net cash (used in) provided by financing activities
(407.1
)
186.7
(593.8
)
(Decrease) increase in cash and cash equivalents and restricted cash
$
(8.1
)
$
16.6
$
(24.7
)
Operating Activities
Net cash provided by operating activities primarily reflects the Company’s operating results, adjusted for non-cash items and changes in working capital.
Net cash provided by operating activities increased by $5.5 million for the three months ended March 31, 2026 compared to the prior year period, primarily reflecting improved operating performance driven by acquisition activity and additional lease‑up activity across the portfolio.
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.
Net cash provided by investing activities increased by $563.6 million for the three months ended March 31, 2026 compared to the prior year period, primarily due to (i) $543.7 million of higher cash inflows from real estate dispositions and (ii) $102.7 million of lower cash outflows for acquisitions. These increases were partially offset by (i) $62.8 million of higher cash used for investments in unconsolidated affiliates and (ii) $12.6 million of increased spending on development, construction, and property improvements.
Financing Activities
Net cash provided by 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.
46
Net cash used in financing activities increased by $593.8 million for the three months ended March 31, 2026 compared to the prior year period, primarily due to (i) $221.7 million of lower proceeds from the issuance of Common Shares, (ii) $199.3 million of increased repayments of debt, (iii) $158.6 million of higher capital distributions to noncontrolling interests, (iv) $8.0 million of lower contributions from noncontrolling interests, and (v) $3.5 million of higher dividend payments.
Unconsolidated Indebtedness
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 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
March 31, 2026
Investment
Ownership
Percentage
Pro-rata Share of
Mortgage Debt
Effective Interest Rate (a)
Maturity Date
Tri-City Plaza
18.1
%
$
6.3
6.00
%
Apr 2026
Frederick County Square
18.1
%
4.4
6.18
%
May 2026
650 Bald Hill Rd
20.8
%
3.0
3.75
%
Jun 2026
840 N. Michigan
94.4
%
32.7
6.50
%
Dec 2026
Wood Ridge Plaza
18.1
%
6.5
7.14
%
Mar 2027
La Frontera
18.1
%
10.0
6.11
%
Jun 2027
Riverdale FC
18.0
%
6.8
6.62
%
Nov 2027
Georgetown Portfolio
50.0
%
6.7
4.72
%
Dec 2027
LINQ Promenade (d)
15.0
%
26.3
5.42
%
Dec 2027
Shoppes at South Hills (b)
18.1
%
5.9
5.95
%
Mar 2028
Mohawk Commons
18.1
%
7.0
5.80
%
Mar 2028
The Walk at Highwoods Preserve (b)
20.0
%
4.1
6.25
%
Oct 2028
Shops at Skyview (c)
20.0
%
55.3
5.17
%
Jan 2029
Atlantic Portfolio (c)
20.0
%
51.1
4.98
%
Feb 2029
Avenue at West Cobb (c)
20.0
%
8.5
4.98
%
Feb 2029
Crossroads Shopping Center (c)
49.0
%
36.8
5.78
%
Nov 2029
Pinewood Square (b)
20.0
%
9.0
5.51
%
Mar 2030
Gotham Plaza
49.0
%
13.7
5.90
%
Oct 2034
Total
$
294.1
(a) Effective interest rates incorporate the effect of interest rate swaps and caps that were in effect as of March 31, 2026, 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 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 Annual Report on Form 10-K for the year ended December 31, 2025.
Recently Issued and Adopted Accounting Pronouncements
47
Reference is made to Note 1 in the Notes to Condensed Consolidated Financial Statements for information about recently issued accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK.
Information as of March 31, 2026
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 the 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 March 31, 2026, total property mortgage loans and other notes payable aggregated $1,604.3 million, excluding $0.7 million of unamortized premium and $8.7 million of net unamortized debt issuance costs. Of this amount $1,305.5 million, or 81.4%, was fixed-rate, including debt with rates effectively fixed through the use of derivative financial instruments, and $298.8 million, or 18.6%, was variable-rate based upon the Secured Overnight Financing Rate (“SOFR”) or Prime rates plus applicable spreads.
As of March 31, 2026, we were party to 30 interest rate swap agreements and one interest rate cap agreement, which together hedged interest rate exposure on $1,054.4 million and $32.2 million of variable-rate debt, respectively.
If the Company decided to employ higher leverage levels, it would be subject to higher debt service requirements and an increased risk of default, which could adversely affect financial condition, cash flows and ability to make distributions to shareholders. In addition, increases or changes in interest rates could increase borrowing costs and may limit the Company’s ability to refinance its indebtedness.
The following table sets forth information as of March 31, 2026 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):
REIT Portfolio Consolidated Mortgage and Other Debt
Year
Scheduled
Amortization
Maturities
Total
Weighted Average
Interest Rate
2026 (Remainder)
$
1.8
$
102.0
$
103.8
6.1
%
2027
4.8
45.1
49.9
4.8
%
2028
1.8
561.9
563.7
4.1
%
2029
1.2
97.1
98.3
5.5
%
2030
0.3
326.6
326.9
4.4
%
Thereafter
1.0
—
1.0
5.9
%
$
10.9
$
1,132.7
$
1,143.6
Investment Management Consolidated Mortgage and Other Debt
Year
Scheduled
Amortization
Maturities
Total
Weighted Average
Interest Rate
2026 (Remainder)
$
0.7
$
131.4
$
132.1
6.2
%
2027
0.5
103.3
103.8
6.4
%
2028
—
224.8
224.8
5.3
%
2029
—
—
—
—
%
2030
—
—
—
—
%
Thereafter
—
—
—
—
%
$
1.2
$
459.5
$
460.7
48
Mortgage Debt in Unconsolidated Partnerships (at our Pro-Rata Share)
Year
Scheduled
Amortization
Maturities
Total
Weighted Average
Interest Rate
2026 (Remainder)
$
4.7
$
42.0
$
46.7
6.2
%
2027
1.1
55.0
56.1
5.8
%
2028
0.1
16.8
16.9
6.0
%
2029
0.3
151.4
151.7
5.2
%
2030
—
9.0
9.0
5.5
%
Thereafter
—
13.7
13.7
5.9
%
$
6.2
$
287.9
$
294.1
Without regard to available extension options, during the remainder of 2026, $235.9 million of our total consolidated debt and $46.7 million representing our pro-rata share of unconsolidated debt will mature. In addition, $153.8 million of consolidated debt and $56.1 million representing our pro-rata share of unconsolidated debt will mature in 2027. With respect to this maturing debt, we have extension options on consolidated debt aggregating $134.2 million maturing in 2026 and $96.3 million maturing in 2027 as of March 31, 2026; however, there can be no assurance that the Company will be able successfully execute any or all of its available extension options.
The Company expects to refinance some or all of such debt at the then-prevailing market interest rates, which may be greater than the current interest rates. Based on outstanding balances, a 100 basis point increase in interest rates on refinanced debt would increase annual interest expense by approximately $4.9 million, of which the Company’s pro-rata share would be $2.6 million.
As of March 31, 2026, the Company had variable-rate debt of $298.8 million, net of variable-to-fixed interest rate swap agreements currently in effect. A 100 basis point increase in applicable interest rate indices would increase annual interest expense on such debt by approximately $3.0 million, of which the Company’s pro-rata share would be $1.2 million. We may seek additional variable-rate financing if pricing and other commercial and financial terms are favorable and would consider hedging associated interest rate risk through interest rate swaps and protection agreements, or other means.
Based on our outstanding debt balances as of March 31, 2026, the estimated fair value of our total consolidated outstanding debt would decrease by approximately $7.6 million assuming a 100 basis point increase in interest rates. Conversely, a 100 basis point decrease in interest rates would increase the estimated fair value of our total outstanding debt by approximately $5.1 million.
As of March 31, 2026, and December 31, 2025, we had consolidated notes receivable of $154.4 million and $154.9 million, respectively. The estimated fair value of our notes receivable was determined 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 March 31, 2026, a 100 basis point increase in interest rates would decrease the estimated fair value of our total outstanding notes receivable by approximately $1.1 million, while a 100 basis point decrease would increase the estimated fair value by approximately $1.1 million.
Summarized Information as of December 31, 2025
As of December 31, 2025, we had total property mortgage loans and other notes payable of $1.9 billion, excluding the unamortized premium of $0.9 million and unamortized debt issuance costs of $11.4 million, of which $1.5 billion, or 80.2%, was fixed-rate, inclusive of debt with rates fixed through the use of derivative financial instruments, and $370.6 million, or 19.8%, was variable-rate based upon SOFR rates plus applicable spreads. As of December 31, 2025, we were party to 35 interest rate swap and one interest rate cap agreement to hedge our exposure to changes in interest rates with respect to $1.2 billion and $32.2 million of SOFR-based variable-rate debt, respectively.
Interest expense on our variable-rate debt of $370.6 million, net of variable to fixed-rate swap agreements currently in effect, as of December 31, 2025, would have increased $3.7 million if corresponding rate indices increased by 100 basis points. Based on our outstanding debt balances as of December 31, 2025, the fair value of our total outstanding debt would have decreased by approximately $9.4 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 $6.1 million.
Changes in Market Risk Exposures from December 31, 2025 to March 31, 2026
Our interest rate risk exposure from December 31, 2025, to March 31, 2026, has decreased on an absolute basis, as the $370.6 million of variable-rate debt as of December 31, 2025 has decreased to $298.8 million as of March 31, 2026. Our interest rate exposure as a percentage of total debt has decreased, as our variable-rate debt accounted for 19.8% of our consolidated debt as of December 31, 2025 compared to 18.6% as of March 31, 2026.
49
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.