Good day, ladies and gentlemen and welcome to the Acadia Realty Trust Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s program is being recorded. And now I will hand the call over to Lynn Belfiore, from Acadia Realty Trust.

Good afternoon and thank you for joining us for the third quarter 2015 Acadia Realty Trust earnings conference call. My name is Lynn Belfiore and I am Property Accountant in our Accounting Department. Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934, and actual results may differ materially from those indicated by such forward-looking statements. Due to a variety of risks and uncertainties, including those disclosed in the Company’s most recent Form 10-K and other periodic filings with the SEC, forward-looking statements speak only as of the date of this call, November 4, 2015, and the Company undertakes no duty to update them. During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia’s earnings press release, posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. President and Chief Executive Officer, Ken Bernstein will kick off today’s management remarks with a discussion of the Company’s core portfolio, followed by Amy Racanello, Vice President of Capital Markets and Investments who will discuss the Company’s Funds platform. Then Chief Financial Officer, Jon Grisham will conclude today’s prepared remarks with a review of the Company’s balance sheet as well as its earnings and operating results. Once the call becomes open for questions we ask that you limit your first around to two questions per callers to get everyone the opportunity to participate. You may ask further questions by reinserting yourself into the queue and we will answer as time permits. At this time, it is my pleasure to introduce Ken.

Thanks Lynn. Lynn was our summer associate in 2012, went out got CPA rejoined our accounting division this year and thank you for taking on the thankless task of reading the mind-numbing forward-looking statements. Good afternoon, everyone let me get me get down to business. During the third quarter we saw significant volatility in the public markets with REITs seemingly impacted by both concerns on one hand of potential interest rate increases from an improving economy causing an increase in cap rates and thus decrease in real estate values. And then on the other hand concerns of a global economic slowdown causing the clients and property fundamentals and thus also a decrease in real estate values. Meanwhile in the private real estate market fundamentals and valuation held firm with retailer demand for high-quality space remaining strong and investor desire for yield remaining solid. So with these conflicting and somewhat contradictory concerns in mind I'd like to spend a few minutes discussing how our company is positioned from both a defensive or recession resistant perspective as well as from a future growth perspective. Beginning with our core portfolio and it defensive attributes as you may recall about half of our portfolio is comprised of high quality more traditional urban and suburban retail predominantly anchored by supermarkets other necessity retailers as well as discounters. Top tenants in this half of the portfolio range from Stop & Shop to Target from T.J. Maxx to Home Depot. These properties are primarily in high barrier to entry supply constrained markets ranging from Queens here in New York to San Francisco from Cambridge, Massachusetts to Westchester. Over the past five years we've seen a healthy recovery in the performance of these assets with market rents now re-approaching pre-session highs. These properties in the retailers that occupy…

Thanks Ken. Consistent with Ken’s discussion of our core portfolio, today I’d like to discuss how our complementary fund platforms enables us to create value for all of our stakeholders at all points in the cycle. In doing so we will review our new acquisition, the status of existing projects and our recent asset sales. First, on the acquisition front, unlike our core portfolio, our fund acquisition program is not correlated to the REIT market. If anything, there is probably a negative correlations with some of the best buying opportunities seeming to arise when REITs are sidelined. Over the last several weeks, disruption among high leverage buyers and the renewed desire among sellers for uncertainty of clothing have led to increased deals. Accordingly subsequent to third quarter, Fund IV acquired two properties totaling $18 million. First in October, Fund IV in partnership with MCB real estate opportunistically acquired a retail condominium at a former enclosed mall that shadow anchored by Walmart and Kohl's, in Warwick, Rhode Island for $9 million. We planned to invest another $21 million into this 160,000 square foot property in order to reconfigure its way out to accommodate both anchor and junior anchor tenancy. In fact the partnership has already executed a lease with Burlington Coat Factory for roughly a third of the space. Also in October, Fund IV in partnership with Prado Group began building a portfolio of street retail properties in one of the San Francisco’s key corridors. The property that we acquired which includes three retail shops on the street level and two residential apartments on the second is located on Fillmore Street in the affluent Pacific Heights neighborhood. This is an authentic shopping and dining corridor, with an eclectic mix of trendy boutiques and restaurants including local favorites such as Elizabeth Charles,…

Good afternoon. Along with the strength and stability from our core portfolio in the profitability from our Fund business the third key component of our business is our balance sheet which continues to serve as a strong platform for both the core and funds. We have historically been disciplined users of our equity in 2015 is been no exception. Given the choppy REIT market between April and September, we significantly curtailed our activity under the ATM. Since we initiated this program back in 2012, we've averaged roughly $25 million of quarterly issuance. For the second and third quarters of this year in aggregate we did only $8 million what stock we did issue over that six-month period was it an average gross price of $32.88 a share. We are also disciplined in our use of debt; we use very conservative leverage as reflected in our current net debt-to-EBITDA of about five times. This is nothing new for us in fact we've averaged about five multiple over the last 10 years. That being said even though we don't have much debt, we remain focused on continually minimizing any risks associated with interest rates and maturities as well as diversifying our capabilities to access all the credit markets including the unsecured market. To these goals we just completed forward starting swaps for a total of $100 million, fixing base interest at an average 1.3%. We did these in anticipation of closing on $100 million of new unsecured term loans within the next 90 days. Proceeds from these financings will be used to replace maturing CMBS debt $59 million of which has already been paid off in 2015 with our line, and the remaining proceeds will be used to pay off maturing secure debt in the next 90 days. The all-in interest cost…

[Operator Instructions] Our first question comes from the line of Todd Thomas from KeyBanc. Your question please.

Yes. Hi. Thanks. Good morning. Ken, thanks for the detail around the $5 million of incremental NOI that you expect to realize over the next couple of years. Just a question on that. If I look at some of the street leases that are set to expire next year, in 2016, there are nine, with average rents of $43. This seems to be a separate pool from everything that you mentioned in that $5 million bucket. Any color on the seasoning of those leases, maybe when they were acquired, on average? And what the expected lease spread on that pool might look like?

Yes, first of all those all have options that then take us into that next five years period along with the $5 million Todd as you recall I did mention that, in years 5 to 10 is when we will start seeing those leases and a bunch of others mature without options or reset the fair market value given the timing of the acquisitions, given the vintage of those leases you want to expect that those get exercise that you continue to see the strong same-store NOI that we posted this quarter, but it’s going to be more along those lines.

Okay. And then, I just wanted to go back to some of the comments around the disruption in the market during the quarter. The comments that the fund dispositions are on track, I guess it doesn't - it seems like the net promote income is going to be recognized now in 2016, versus the end of 2015. So I guess what caused the timing delay there? And what gives you confidence that those assets will be monetized in early 2016?

Yes, so the confidence is based on contracts in place and so if you read into our press release, we say we have over $100 million in place be exact timing whether it's a Monday, Wednesday, Friday or a December versus January is really what's driving this and it would be taking you way too much inside the sausage factory to go through all the different ins and outs of what it takes to actually get the deal closed funded et cetera, but not only based on the deals under contract, but those that are being bid high quality assets once we have stabilized them and have gone to market the bids remained very strong. The area of volatility that we are seeing separate of REIT market, separate of the emerging markets et cetera. The one area of volatility and I think Amy referenced it is in the high levered barrower, high levered buyer and they are getting somewhat squeezed because their rates have gapped out, but for the general institutional buyer notwithstanding all the noise on either direction there's plenty of strong bids out there. What we’ve been able to do on the buy side and the reason we are seeing some of our deal flow increase is some of those high levered buyers are getting marginalized. But for the institutions that we are selling to so far so good and everything remains on track.

Okay. So sounds like, now that some of those concerns have abated, we should expect, on the buy side, maybe, to see some increased activity over the next quarter or two?

Yes, the real estate is a cyclical business there are times when having dry powder and discretionary capital like we do at Acadia is really valuable and at times one is less so it does feel given some of the uncertainties in the marketplace that were heading into a time period were feels really good to have high quality assets, strong cash flow and plenty of dry powder on hand and that certainly over the past month or two what is what feels it’s coming into place.

Okay. Thank you.

Sure.

Thank you. Our next question comes from the line of Craig Schmidt from Bank of America.

Thank you. Good afternoon. I just want to talk a little bit about the food elements that you are bringing into City Point. What is the size of the DeKalb market?

The DeKalb market is about 26,000 square feet of food halls and real great fresh food there will be about 33 to 45 vendors. So think it’s a great complement to Trader Joe's, which also has some great used for the underserved Brooklyn market which doesn't have as many grocery option.

And is Katz Deli still a possibility to be part of the DeKalb market?

Absolutely. I can’t wait and won’t just be about cats or anyone or two other great vendors that is certainly one that were very excited about. Brooklyn is about food this new population when you look at the new amount of housing coming to downtown Brooklyn when you look at how vibrant, how it’s become a borough choice it's going to be amazing and this area of Fulton Street, this area of downtown Brooklyn, is significantly underserved from a food perspective at Trader Joe's and the food hall are going to response that really well.

No, I think this is a great direction you've taken it to. And even as jaded as Brooklyn is used to wonderful things opening, I think this will be really nice for the surrounding community.

Yes, absolutely.

And do you know when either Trader Joe's or DeKalb market are hoping to open in 2016?

Trader Joe’s is planning to open along with or other retail anchors and DeKalb for more likely open that is beginning of the fall with the opening of the street details.

And I guess just longer-term, obviously, this is a fund investment. But would this ever be part of the core holdings, at some point?

Yes, ever than was an asset that have the type of profile consistent with our core this certainly would fall into meaning that we are very bullish as to not just what feels like over the few years, but over the next over five years, 10 years, 15 years as we see what a wide variety of developers are doing a downtime Brooklyn and seeing these retailers come into play there. So stay tuned.

Okay thanks a lot.

Sure.

Thank you. Our next question comes from the line of Jay Carlington from Green Street Advisors. Your question please.

Hey. Ken, has there been a reason it's been quiet on the - in terms of core dispositions this year? And maybe related to that, what are your non-core asset pool like in the core portfolio?

Yes, so within the core Jay thankfully and if you think about the fact we double the size of our core portfolio that vast majority of that has been either street retail or urban a few dense or hybrid entry suburban none of which were acquired with a view towards any near-term disposition. So you really back to a smaller sliver of our portfolio. There is 5% or 10% of our portfolio that the team is in the process of fixing up. Once they do then we can talk about the disposition of it, but all caution you that it’s not going to move our NAV it’s just to going prevent thus us from having to talk about that during Q&A and while these assets are more kind a commodity like mainstream once we fix them there are going to be fine asset and even how much we have improved and change the profile of the overall core portfolio just not all that relevant. And so we never guided towards court dispositions 15 sooner or later though we will dispose of them and talk about.

Okay. Thanks. And maybe switching gears, a big-picture question on San Francisco. Now that you've got one - or I guess one legit street retail acquisition under your belt, is there anything - I don't know - unique about the market, from a cap rate, or a rent growth, or a CapEx perspective that you can talk about? And how you're underwriting San Fran versus your other street retail properties?

Yes, I mean in some ways each city and each street within each dynamic city is different. And then in some ways they are similar in that there are very high barriers to entry in San Francisco, very good fundamentals in terms of young vibrant shoppers coming into the city. There are zoning constraints within San Francisco that are unique, unlike just about any other city we do business with and that increases the barriers to entry. And that, in fact, forces our retailers to reach more and reach to these certain streets where they can get a toehold, whether it's Fillmore or Geary, et cetera. We need to be careful in any city we do business in, that we’re capturing all the different dynamics - less about CapEx that make sure we understand real estate taxes. Make sure we understand sales, make sure we understand population growth, and all the other factors. But Fillmore, which we have a small toehold in and we look forward to growing is the right kind of assets for Acadia to be accumulating, it’s a profile not that different than what you have seen us do in some of the other markets we’ve been active in and our dialogues with our retailers, when we say we can provide them with access to a street like Fillmore that’s a great place as they think about coming to San Francisco, as they think about getting their brand positioned correctly, Fillmore is a perfect spot.

Okay. And maybe a quick follow-up to that is, I guess, you partnered up in San Francisco. Is that a way to make it easier to delay maybe staffing hires there, versus your monthly cross-country flight?

Yes, yes, as we've done throughout the country, throughout our portfolio over time, we try not to say we’re the only people who can do this ourselves, you’ve seen us do this successfully down in South Florida, successfully with MCB down in Baltimore. And this appears to be a great group we’re partnering with out there. Sometimes, people not only are better because we’re not they are just better and sometimes it's a matter of time. Let’s see how this all plays out but we’re very happy with that partnership.

Okay, thank you.

Sure.

Thank you. Our next question comes from the line of Christine McElroy from Citi. Your question please.

Hey. Good afternoon, guys. Ken, just following up on the $5 million of incremental NOI potential, what sort of downtime associated with the re-tenanting should we be thinking about? And therefore the impact to NOI, over the next few years, before you get to that incremental size? Is this something that will potentially introduce some volatility to your same-store NOI growth rate?

I doubt it Christy, or let me put it this way I hope it does in that I hope we can get back some of these spaces earlier. But for the most part if you think about it the first third is dominated by lease-up of space that we already have in inventory and so there will be no volatility without first third. Then the next third which is Prince Street in Soho, the rents are low if we can get them back sooner rather than later there may be a slight bump in the same store NOI but I don't think it will be material. And the win will be huge whether it happens in 2017, 2016, 2018 et cetera, that’s what I'm really focused on. So I don't think that that will impact in a negative view of the numbers. And the some final pieces are really add-ons, redevelopments. In City Center there will be no loss of in-place NOI, it’s a matter of - we have this huge parking field and we’re going to figure out something pretty interesting to do their to add incremental NOI. And in White Plains, it’s recapturing a very below market lease, which sooner or later, we’re going to get back and while with a little bit of rent my guess is that as I said that’s several years out and well past all of our forecasting models.

Okay. Perfect, thanks. And then give the small amount of equity that you've raised through the ATM in Q2 and Q3, I think the price is slightly lower, or maybe in line with where the stock is today. Can you disclose whether or not you've issued any equity, post-quarter end? And you talked about the potential for higher acquisition activity coming up. What's your appetite to raise equity, at the current level, given where you see opportunities to match funds?

So as to the raising of equity post third quarter we have raised none. In terms of pricing again if you just look historically that what we issue that $32 plus that would be a logical floor to expect in terms of future issuance.

And let me just chime in we've been pretty successful at utilizing OP units and pretty disciplined when and how we issue equity, so whether it's OP units or otherwise what we have shown is a willingness to not raise equity and put our feet on the breaks when it makes sense to slow down and then we understand how we can increase our value through external acquisitions, but you need to be very careful about how are you doing.

Thank you.

Sure.

Thank you. Our next question comes from the line of Jeremy Metz from UBS. Your question please.

Hey, Ken. It's Ross Nussbaum here with Jeremy. On the acquisition you did, the San Fran acquisition, I'm a little confused as to why that made its way into the fund, as opposed to your balance sheet. Can you help me un-blur that decision?

Yes, and every now and then Ross we come up with assets that are a bit blurry and when we do if there's enough growth profile and in this one there happens to be because of below-market leases that we’re going to get and turn around and some other growth it. They go into the fund and are risk-adjusted returns their feel appropriate. Keeping in mind we’re co-investing 20 plus percent into it, we’re getting the carry above so that would be a let’s hope high class problem not unlike Baltimore et cetera. where we put up 20% return and get closer to 40% returns on our equity and we feel pretty good about that.

I just had one in kind of just at the dynamic of the portfolio today being 50-50 urban street versus suburban. I’m just wondering were ultimately you see this trending and how long you think it takes to get there so is that five years from now are going to be more 25% suburban and 75% urban street retail? Or will it a little longer?

Yes, and keeping in mind that our core portfolio is relatively small so every $100 million or $200 million of acquisitions squeeze the numbers one direction or another. That being said it’s not a matter of how long it takes our stated goal and I think we are doing a pretty good job of achieving it is to grow a really high quality portfolio. Today it’s about half street retail, it’s about 20% urban and then the balance is suburban with the vast majority of that being very high quality. What you should expect is we are only going to be adding suburban assets that are of a very high quality nature and so by definition or by math assuming we continue with this 20% a year growth trajectory in the other areas, the suburban will slowly decrease, but whether it goes into urban were street unfortunately that just happens to be very deal by deal specific. And what I would expect to see is street retail continues to slowly grow from 50% to 60%, urban slowly grows from 20% to 30% and then the balance will be the suburban that remaining either through acquisitions and/or disposition as we discussed earlier.

Okay, thank you.

Thank you. Our next question comes from the line of Paul Adornato from BMO Capital Markets.

Hi. Good morning. Was wondering if you could give us an update on the small shop leasing at City Point. And maybe also touch on what's working, and what's not working, at City Point?

So thankfully Paul most is working and what’s especially working is our construction and build-out team getting City Point ready for opening in just under a year. The timing of and Amy walked a little bit, but the timing of it and the strategy that we have leased this is 5432, then Concourse leaving the street retail as much as I would like to early pre-release the Street retail what's required is for these retailers to be able to walk see the space and we will really close now to be able to do that and so I think we’re pretty close to start to sign and negotiate the leases there. And what I said in the past and will stick to it we’ve been very disciplined about how we have offloaded our risks associated with the residential having successfully sold all that how we have offloaded the anchoring of this 543 and two as well as now bringing in Trader Joe’s. And we are being patient and opportunistic as it relates to the Street retail because it is such a vibrant area that I want to make sure recapturing the dollars that we all deserve. That translates through into probably over the next quarter or two you should expect to starting seeing some announcements but in general it will show up as we get closer to grand opening.

Thanks. And just in terms of the size of the stores, any larger boxes on the street level? Or what's the appetite for size?

Thankfully we have a fair amount of flexibility what I would say is that the majority of the demand and the best and highest use for both Prince Street and some of our other funded is going range from the largest junior anchor and 15,000 square feet for the right retailer we would squeeze and figure out how to do something larger but my guess is this is really going to meet the local demands of what is emerging in downtown Brooklyn and some of the smaller retailers associated with that.

Thank you.

Sure.

Thank you. Our next question comes from the line of Michael Mueller from JP Morgan.

Yes. Hi. I was wondering, could you talk a little bit about Savannah, and just the leasing update there? And how it's transitioning?

Sure Amy want to get into that.

So Savannah we bought it about year and half ago again were 50/50 partners with Ben Carter. The retail leasing there has been incredibly strong we discussed last quarter that H&M is opening a new 32,000 square foot store on floor levels and that’s under construction Lululemon and J. Crew and L'Occitane and Lillian Pulitzer are all open. We just signed a lease with Club Monaco. So the retail leasing is exceeding expectation and going well and you know that projects on track.

Okay. And what percentage of the GLA has been transitioned where you have leases, and you know what's going to happen. The leases are signed or executed. And just how far through that process are you?

I believe that’s in the range of third to 50% but we can circle back with the more exact number.

Got it. Okay great thank you.

Sure.

Thank you. This does conclude the question-and-answer of today’s program. I would like to hand the program back to ken Bernstein for further remarks.

Great. Thank you all for joining us I would like to thank our team for their hard work in the third quarter. I look forward to speaking to everyone in the near future.

Thank you ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.