Acadia Realty Trust Q1 FY2026 earnings call

Key managerial messages include: - Continued strong quarter with solid internal and external growth initiatives. Open-air retail, especially street retail, benefits from tailwinds like limited supply, increasing tenant demand, resilient consumer, lighter CapEx in re-tenanting, and stronger annual income growth. - Internal growth: Strong leasing across the board, with $3.5 million in signed leases in Q1 and $11.5 million in pipeline of new leases in advanced negotiation. Steady rise in market rents on high-growth streets. Building conviction in recovery of markets like San Francisco and North Michigan Avenue, and progress on Henderson Avenue in Dallas. - External growth: Completed over $2.5 billion of transactional activity including $600 million of new investments, over $500 million of recapitalizations within investment management platform, and new $1.4 billion corporate borrowing facility. Activity in markets like Palm Beach and Boston with acquisitions of key assets, and recapitalizations in investment management side with joint ventures and transactions with respected investors.

The firm delivered 11% year-over-year earnings growth driven by nearly 6% same-store growth. Key product segments include street retail. Street retail is driven by factors like limited supply, increasing demand from retailers for physical locations, resilient consumer, lighter relative CapEx in re-tenanting, and stronger annual income growth. For example, the street retail portfolio showed continued strong results with leasing activity, growing pipeline of new leases in advanced negotiation, and rising market rents on high-growth streets. Specific assets like Worth Avenue in Palm Beach and Newbury in Boston were acquired, with these assets having potential for mark-to-market opportunities and meeting accretion metrics.

Raised full-year 2026 earnings guidance to $1.22 to $1.26, representing 9% growth at the midpoint over 2025's $1.14 of FFO. Internal NOI growth inclusive of redevelopments expected to contribute about $0.07 to $0.09 of FFO. External growth projected to add $0.04 to $0.05 driven by full-year impact of 2025 deals and those closed in 2026. Continued expansion and scaling of investment management program expected to add another $0.01 to $0.02. Approximately $0.04 embedded in guidance from anticipated conversion of CityPoint loan in second quarter, which is dilutive in near term but ultimately accretive as asset stabilizes. Anticipated quarterly run rate in $0.30 to $0.32 range for balance of 2026, with rent commencements from signed-not-open portfolio weighted to back half of year. Same-store growth expected to land at midpoint of guidance, 7%, with street and urban portfolio anticipated to outperform suburban by 400 to 500 basis points.

Geopolitical events add unwanted uncertainty to the global economy. Competition in retail investment landscape has increased, though supply remains constrained and institutional capital flows into quality retail continue to grow. Macro noise could potentially impact the business, but underlying dynamics of street retail segment with fewer capable buyers still provide opportunities. Uncertainty in timing and realization of mark-to-market opportunities and lease-up of developments like Henderson Avenue could impact returns. Variability in costs, timing of openings, and tenant sales performance could affect returns for projects like Henderson Avenue.

Q: Craig Mailman with Citi asked about acquisition magnitude and earnings impact.

A: Reginald Livingston said REIT portfolio side could do same volume as last year, investment management side could do similar to past few years, and John Gottfried mentioned penny of accretion target for REIT and investment management acquisitions.

Q: Andrew Reale with Bank of America asked about new corridors like Palm Beach and prime Newbury.

A: Reginald Livingston said there's an active pipeline and these markets have rent growth drivers. John Gottfried added about modeling and timeline for mark-to-market.

Q: Floris van Dijkum with Ladenburg Thalmann asked about Henderson Avenue development.

A: John Gottfried said expected 8% - 10% return, timeline and leasing status, and Alexander J. Levine talked about leasing progress.

Q: Todd Michael Thomas with KeyBanc Capital Markets asked about additional markets and competition.

A: Kenneth F. Bernstein talked about evaluating additional markets and competition in street retail.

Q: Michael William Mueller with JPMorgan asked about returns for Henderson expansion and scaling of markets.

A: Kenneth F. Bernstein talked about moving parts affecting returns and need for scale on corridors to pull levers for higher rents