Acadia Realty Trust Q1 Earnings Show Strength in Retail Growth and Strategic Acquisitions

Acadia Realty Trust (NYSE: AKR) delivered a solid first quarter of 2025, with its adjusted funds from operations (FFO) and revenue both rising year-over-year, despite headwinds from non-cash charges and macroeconomic uncertainty. The REIT’s focus on high-growth retail corridors and disciplined acquisitions has positioned it to capitalize on tenant demand in prime urban markets, as evidenced by its 4.1% same-property NOI growth and a robust pipeline of signed leases.

Core Metrics Highlight Operational Momentum

Acadia’s Q1 2025 FFO per share rose to $0.34, up from $0.28 in the prior-year period, driven by strong performance in its core portfolio. This growth outpaced a decline in GAAP net earnings to $0.01 per share, which included a $0.08 per share non-cash charge tied to its increased ownership in the Georgetown Renaissance Portfolio in Washington, D.C. Excluding such items, FFO before special charges was $0.34 per share, slightly ahead of 2024’s $0.33 when adjusted for realized gains.

Revenue also surged, reaching $104.39 million, a 14% increase from $91.36 million in Q1 2024. This reflected a $16.6 million jump in rental income, as the company’s acquisitions in high-demand areas like New York’s SoHo and Brooklyn’s Williamsburg began contributing to its bottom line.

Strategic Acquisitions and Leasing Activity Fuel Growth

Acadia’s Q1 was marked by significant acquisitions totaling $373 million, including $305 million in core investments. Notable deals included:
- A $61 million purchase of three retail properties on North 6th Street in Brooklyn’s Williamsburg, expanding ownership to seven properties on this prime retail strip.
- A $117 million stake in Washington, D.C.’s Georgetown Renaissance Portfolio, increasing ownership to 68% and enabling higher leasing spreads (e.g., 74% for new tech and apparel tenants).
- A $47 million acquisition of 85 5th Avenue in Manhattan’s Flatiron District, fully leased to a high-credit tenant.

These moves bolstered the company’s Street Portfolio, which saw 6.8% same-property NOI growth in Q1, a key driver of the overall 4.1% increase. Management reaffirmed its full-year 2025 guidance of 5-6% same-property NOI growth, underscoring confidence in its strategy.

Leasing activity also showed resilience. While occupancy dipped slightly to 91.7% (due to an expiring suburban anchor lease), the space was re-leased at higher rates, with rent set to begin in Q3. The signed not open (SNO) pipeline grew to $8.9 million (6% of in-place rents), up from $7.7 million, reflecting strong demand for new leases. Notably, the terminated Whole Foods lease at San Francisco’s City Center was replaced by T&T Supermarket, a Canadian grocery chain, with rent expected to start in late 2026.

Balance Sheet Strength and Updated Guidance

Acadia maintained a conservative balance sheet, with pro-rata net debt-to-EBITDA falling to 5.7x in Q1 2025, down from 6.6x in 2024. Near-term debt maturities are minimal, with only 0.2% of core debt due in 2025, reducing refinancing risks.

The company also raised its full-year 2025 FFO guidance to $1.22–$1.26 per share, up from $1.19–$1.24, while revising net earnings guidance lower due to one-time charges. CEO Kenneth Bernstein emphasized the importance of scale in high-growth corridors, noting that “our street portfolio’s performance reflects the power of owning critical mass in prime retail markets.”

Risks and Outlook

Despite these positives, risks remain. Macroeconomic volatility, inflation, and potential lease renewals pose challenges, particularly in suburban markets. However, Acadia’s focus on urban cores with strong tenant demand—such as SoHo and Georgetown—should mitigate these risks. The company’s $500 million ATM equity program, which raised $55.8 million in Q1, provides flexibility to fund acquisitions and deleverage further.

Conclusion: A REIT Positioned for Urban Retail Resurgence

Acadia Realty Trust’s Q1 results demonstrate the rewards of its strategy to concentrate in high-growth urban retail corridors. With same-property NOI growth outperforming expectations, a $373 million acquisition pipeline in prime markets, and a strengthened balance sheet, the company is well-positioned to sustain its trajectory. While near-term headwinds like non-cash charges and macroeconomic uncertainty linger, the revised FFO guidance and expanding SNO pipeline suggest confidence in its ability to deliver long-term value. Investors seeking exposure to resilient urban retail real estate may find Acadia’s disciplined approach and asset quality compelling.

As the REIT continues to scale its presence in markets like New York and D.C., its performance will hinge on executing on its leasing pipeline and maintaining occupancy in a competitive retail environment. With pro-rata debt metrics improving and core NOI growth reaffirmed, Acadia appears poised to capitalize on its strategic advantages in 2025 and beyond.