Executive Summary / Key Takeaways

• Acadia Realty Trust is at an inflection point, with its highly differentiated street retail portfolio poised for accelerating Net Operating Income (NOI) and earnings growth, driven by secular tailwinds and strategic operational advantages.
• The company's "differentiated operational platform," leveraging scale, data, and deep tenant relationships in high-barrier-to-entry urban corridors, provides a significant competitive moat, enabling superior rent growth and acquisition opportunities.
• Strong financial performance in Q3 2025, including 8.2% same-property NOI growth (13% for street retail) and double-digit rent spreads, underpins confidence in achieving 8-12% total same-store growth in 2026.
• A robust balance sheet, with a pro rata debt-to-EBITDA of 5x and over $800 million in liquidity, supports an aggressive acquisition pipeline, with management targeting to double year-to-date acquisition volume to nearly $1 billion by year-end 2025.
• Acadia is simplifying its 2026 FFO reporting to "FFO as adjusted," excluding Investment Management gains, to provide clearer visibility into the core real estate business's bottom-line growth, which is projected to increase in excess of 10% for 2026.

A Differentiated Approach to Retail Real Estate Dominance

Acadia Realty Trust (AKR) operates as a fully-integrated equity real estate investment trust, strategically focused on the ownership, acquisition, development, and management of retail properties. Its core business centers on high-barrier-to-entry, supply-constrained, densely populated metropolitan areas across the United States. This focus is executed through a dual-platform model: the REIT Portfolio (formerly Core Portfolio), comprising high-quality street and open-air retail assets, and an Investment Management platform, which pursues opportunistic and value-add investments with institutional partners.

The company's historical journey, dating back to 1999 with the establishment of its umbrella partnership REIT (UPREIT) structure and the subsequent formation of multiple opportunity funds from 2004 to 2016, has consistently shaped its current strategic positioning. This evolution has culminated in a refined strategy to become the "dominant owner-operator of street retail in the United States." This ambition is not merely about asset accumulation but about leveraging a differentiated operational platform that provides a distinct competitive edge.

The Operational Platform: Acadia's Technological Moat

For a real estate investment trust, "technology" often manifests not in physical hardware, but in sophisticated operational methodologies, data analytics, and proprietary relationship networks that drive superior performance. Acadia's competitive moat is built on such a differentiated operational platform, which allows it to outperform in the highly competitive retail real estate sector.

This platform's core components include:

• Scale and Concentration: Acadia strategically builds significant ownership concentration in key retail corridors like SoHo, Williamsburg, M Street in Georgetown, and Henderson Avenue in Dallas. This scale provides "operating leverage" and "increased visibility into the accretion potential" of investments. Management estimates that owning enough stores in a given corridor can yield approximately "10% more rent" than owning isolated properties.
• Data-Driven Curation: By being a dominant landlord, Acadia can actively curate tenant mixes, selecting "category-leading tenants" and "relevant and highest-performing tenants" to enhance foot traffic and sales growth across its properties. This is supported by extensive tenant performance data, including unofficial monthly sales figures for nearly 100% of its street retail tenants, enabling proactive asset management.
• Relationship-Based Sourcing and Underwriting: Acadia's long-standing reputation and deep relationships with retailers and sellers position it as a "buyer of choice" and "landlord of choice". This often leads to "off-market transactions," with all $350 million of balance sheet acquisitions in 2025 being either off-market or buyouts of existing partners. The platform allows for "underwriting faster" due to proprietary tenant and market information.
• "Pry Loose" Strategy: An operational innovation, this strategy involves proactively identifying underperforming tenants with below-market leases and replacing them with higher-performing brands at current market rents. This accelerates mark-to-market opportunities and improves overall merchandising and credit quality.

The tangible benefits of this platform are quantifiable. For instance, on Armitage Avenue in Chicago, this approach has led to a "50% increase in rents over the last 12 months". The "pry loose" strategy has generated an average GAAP spread of 36% in high-growth markets. This operational sophistication directly contributes to Acadia's competitive moat, driving higher average selling prices (ASPs) on leases, optimizing costs through efficient re-tenanting, and ultimately enhancing profitability and sustained long-term growth.

Competitive Landscape and Market Dynamics

Acadia operates in the retail REIT sector, competing with larger, more diversified players like Simon Property Group (SPG), Kimco Realty (KIM), Federal Realty Investment Trust (FRT), and Regency Centers (REG). While these competitors often boast greater overall market presence and financial scale, Acadia carves out a distinct niche through its specialized focus and operational platform.

• Against SPG: Acadia's agile, location-driven strategy in dynamic urban corridors contrasts with SPG's mall-centric approach. While SPG benefits from broader market reach, Acadia's platform allows for potentially greater efficiency in targeted asset selection and management, leading to stronger long-term profitability in high-growth urban areas.
• Against KIM and REG: Acadia's emphasis on high-barrier street retail offers potentially greater growth opportunities compared to KIM's open-air shopping centers or REG's grocery-anchored model. Acadia's ability to build meaningful asset concentrations provides a strategic advantage in driving rents and curating tenancy, which may translate to superior long-term profitability in its chosen segments.
• Against FRT: Acadia's balanced approach to core and opportunistic investments, coupled with its "pry loose" strategy, positions it as more innovative in market positioning compared to FRT's more conservative focus on established suburban properties.

The broader industry is experiencing significant tailwinds that favor Acadia's strategy. Retailers are increasingly recognizing the "critical need to establish their own network of stores" (Direct-to-Consumer or DTC). This shift, moving away from wholesale and department stores, drives demand for mission-critical street locations. The "resilience and increasing importance of the affluent consumer" further bolsters demand, as this demographic is less impacted by broader economic fluctuations. A "noticeable resurgence of foot traffic and energy on these streets" is also evident, with year-to-date comparable soft goods and apparel sales up significantly in key street markets: SoHo (15%), Bleecker Street (over 30%), Gold Coast of Chicago (over 40%), and M Street (16%). This robust demand, coupled with a "favorable supply-demand balance due to lack of new development," creates a compelling environment for Acadia's focused strategy.

Financial Performance and Strategic Growth

Acadia's financial performance reflects the success of its differentiated strategy. For the nine months ended September 30, 2025, the company reported total revenues of $305.99 million, with rental revenue contributing $299.65 million. Net income attributable to Acadia shareholders for the same period was $9.19 million.

The REIT Portfolio segment is the primary engine of internal growth. For the three months ended September 30, 2025, this segment's net income attributable to Acadia shareholders increased by $5.50 million, driven by new property acquisitions, the consolidation of the Renaissance Portfolio, and new tenant lease-up. Same-property NOI for the REIT Portfolio grew by 8.2% in Q3 2025, with the street retail component achieving an impressive 13% growth. Cash basis rent growth for new and renewal leases was 12.1% in Q3 2025, and straight-line basis growth was 28.8%.

The Investment Management segment, while contributing $1.00 million to net income attributable to Acadia shareholders for the nine months ended September 30, 2025, saw a decrease of $10.70 million compared to the prior year, primarily due to impairment charges totaling $37.21 million and losses on property dispositions. This segment, however, is designed for opportunistic, value-add investments, with management anticipating "approximately $30 million of near-term gains".

Acadia's balance sheet remains robust, providing ample liquidity for its growth initiatives. As of September 30, 2025, cash and cash equivalents stood at $49.39 million. The company's pro rata debt-to-EBITDA is 5x, and it boasts over $800 million in available liquidity, including a virtually untapped revolver and forward equity contracts. Consolidated indebtedness was $1.87 billion, with 79.6% fixed-rate and 20.4% floating-rate, and no meaningful core maturities until 2028.

The company successfully raised approximately $212 million of equity at just under $20 per share in Q3 2025 to fund its acquisition pipeline and redevelopment projects.

Outlook and Strategic Initiatives

Management is highly confident in Acadia's future growth trajectory, projecting an "inflection point" for its operating performance. For 2026, the company forecasts total same-store NOI growth, including redevelopments, between 8% to 12%, and 5% to 9% excluding redevelopments, with the street and urban portfolio expected to contribute over 10% growth. This translates to an estimated $12 million to $14 million of incremental NOI in 2026, or roughly $0.09 per share of FFO.

Key drivers for this outlook include:

• Signed Not-Yet-Open (SNO) Pipeline: As of September 30, 2025, the SNO pipeline stands at $11.9 million in ABR, with over 80% residing in the street and urban portfolio. Approximately $7.4 million of this is projected to impact 2026 earnings, with $3.5 million being same-store.
• Redevelopment Projects: Major projects like City Center and 555 9th Street in San Francisco are slated to add roughly 5% to REIT NOI. The Henderson Avenue Redevelopment project in Dallas is on track for an 8% to 10% development yield, contributing $0.02 to $0.04 of incremental FFO growth commencing in 2027-2028.
• Acquisition Pipeline: Year-to-date acquisitions total over $480 million, and management aims to double this to nearly $1 billion by year-end 2025. These deals are expected to yield an attractive going-in GAAP yield in the mid-6s and a 5-year CAGR exceeding 5%.

Acadia is also refining its 2026 FFO definition to "FFO as adjusted," which will exclude Investment Management gains and other non-comparable items. This change aims to provide investors with a clearer metric directly linked to the growth of its core real estate business.

Risks and Considerations

Despite the optimistic outlook, Acadia faces several risks. Macroeconomic conditions, including elevated inflation, higher interest rates, and geopolitical instability (such as tariffs), could impact tenant operations and borrowing costs. The company acknowledges potential challenges in refinancing maturing indebtedness on favorable terms. Development and redevelopment projects carry inherent risks, and their financial results are not assured. While the company's focus on affluent consumers and diversified supply chains mitigates some of these risks, a significant and prolonged economic downturn could still impact discretionary retail spending.

Conclusion

Acadia Realty Trust stands at a pivotal moment, poised to capitalize on its strategic transformation into a premier owner-operator of street retail in the United States. Its differentiated operational platform, characterized by scale, data-driven curation, and strong relationships, provides a robust competitive advantage in a dynamic retail landscape. This unique approach, coupled with a disciplined acquisition strategy and a fortress-like balance sheet, underpins a compelling growth narrative.

With accelerating internal growth, a substantial pipeline of accretive acquisitions, and a clear roadmap for enhancing shareholder value, Acadia is well-positioned to deliver outsized returns. The company's commitment to transparency through its refined FFO reporting further strengthens its investment appeal, signaling a clear focus on the core real estate business that drives its long-term success.