Acadia Realty Trust

Ladies and gentlemen, thank you for standing by. Welcome to the third quarter 2025 Acadia Realty Trust Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. If your question has been answered and you would like to remove yourself from the queue, Press star 11 again. We ask you to limit to one question and one follow-up, and you may get back in the queue as time allows. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Gabriella Betillo, Junior Lease Admin Analyst. Please go ahead.

Good afternoon, and thank you for joining us for the third quarter 2025 Acadia Realty Trust Earnings Conference Call. My name is Gabriella Vitiello and I am a junior lease administration analyst in our lease administration department. Before we begin, please be aware that the 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. The 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 the date of this call, October 29, 2025, 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. Once the call becomes open for questions, we ask that you limit your first round to two questions per caller to give everyone the opportunity to participate. You may ask further questions by reinserting yourself into the queue and we'll answer as time permits. Now it's my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks.

Thank you, Gabriella. Great job. Welcome, everyone. Last quarter, I commented that in the ongoing tug of war between economic uncertainty and resilience, resilience seemed to be winning. Well, looking at our third quarter results, this continues to be the case. Notwithstanding continued noise and uncertainty around the broader economy, tenant performance, and tenant demand at our properties, especially the street retail component, is continuing, and if anything, this positive momentum is accelerating. In fact, we are probably at an inflection point for our portfolio's operating performance. As John Gottfried will explain, as we look at our forecast for 2026, we see both total NOI growth and same-store growth accelerating, keeping us well above our long-term goal of 5% growth. and we remain focused on making sure that this top line growth hits the bottom line with respect to our earnings. As AJ Levine will discuss, we see enough internal growth opportunities beginning to take shape to enable us to maintain this 5% plus annual growth well into the foreseeable future. AJ will walk through in detail our continued progress in the third quarter, but in short, we were busy both harvesting current opportunities as well as planting seeds for longer-term internal growth. This includes realizing a 45% lease spread in SoHo, a 70% mark-to-market on Bleecker Street, while successfully opening new stores representing nearly $7 million from our S&O pipeline, and then positioning us for future growth. We also added nearly $4 million in new leases into our S&O pipeline. I discussed in detail on previous calls, the tailwinds for open air retail demand. They're still continuing and remain encouraging both for our suburban and our street retail portfolio. But the tailwinds for our street retail portfolio seem to have even more momentum for a few reasons. First, is the longer term secular trend of retailers recognizing the critical need to establish their own network of stores, what we refer to as DTC, or direct-to-consumer stores. This trend is increasing the demand from mission-critical locations, especially in the key markets where we are most active. Second is the continued resilience and increasing importance of the affluent consumer who are the majority of the shoppers at our street locations. And then third and perhaps most encouraging is the noticeable resurgence of foot traffic and energy on these streets. This energy and excitement was on full display earlier this month at KISS grand opening at our Walton Street property in the Gold Coast of Chicago. Hundreds of eager customers waited on line for hours to shop this exciting 10,000 square foot flagship store. If you've recently shopped the Gold Coast to Chicago and were impressed by what you saw, you're not alone. Our team consistently hears from investors after touring a giving city how they did not appreciate the vibrancy that is occurring until they saw it firsthand. And if you've not toured some of these markets and are simply relying on your newsfeed, especially depending on what cable channel you watch, you are missing out on the power of these retail markets. Thankfully, Our retailers get this. This is why Melrose Place in L.A. or Green Street in Soho are experiencing the continued tailwinds well in excess of our expectations. And it is expanding beyond a few major markets and in ways that might surprise you. For instance, in Georgetown and D.C., notwithstanding all of the attention and concern around Washington, D.C. and surrounding markets due to Doge or government shutdowns, for the majority of our retailers on M Street, Foot traffic and sales are up year over year, and tenant demand has not been this strong in a decade. New York experienced this rebound earlier than most markets, but now we are seeing this play out across all of our urban markets. San Francisco is the most recent example of this momentum. Driven by the growth in artificial intelligence, accelerating a return to office, and a new who is making important progress on quality of life issues that had burdened the city coming out of COVID. And what we are seeing on the ground is that the live-work-play vibrancy that San Francisco has historically enjoyed is coming back and so are our retailers. That resurgence is coming at the right time for our two significant San Francisco redevelopment projects at City Center We have our new T&T supermarket slated to open in late 2026. And at our 5559 Street redevelopment, we recently expanded our Trader Joe's and have a new lease with LA Fitness' high-end club studio slated to open next year. On a combined basis, these two projects have close to 100,000 square feet of additional space for us to lease and are slated to add roughly 5% to our REIT NOI. And if the positive momentum continues, we'll have even more growth. Along with continuing to drive our internal growth, a key additional driver of our business is adding accretive and complementary external growth, both on balance sheet and then through our investment management platform. While we saw a bit of a pause in investment activity around Liberation Day concerns based on the current status of our pipeline, We are now confident that our 2025 investment activity will match the strength of 2024, which was also a great year for us in terms of external growth. Reggie will walk through our transactions closed last quarter and the opportunities we see going forward. But to reiterate our goals and outlook, given our size, we see our acquisition activity continuing to enable us to move the needle. Our cost of capital increased some last quarter. We are confident that we can still invest accretively and we will. For our on-balance sheet street retail investments, this confidence is due to a few factors. First, Acadia is in somewhat of a unique position of being a buyer of choice. There are certainly private market participants that are active competitors. But we have carved out a niche and a reputation that gives us a competitive advantage in the street retail space, an advantage that does not exist in other segments of open-air retail where there are too many well-capitalized private participants for any one public or private player to have a unique advantage. Second, along with being a buyer of choice, many retailers view us as a landlord of choice, and they are steering acquisition opportunities our way as well. And then finally, as we discussed on the last call, the scale that we continue to build, both in terms of ownership concentration in a given corridor, as well as tenant relationships nationwide, is giving us increased visibility into the accretion potential we can achieve in any given investment and providing us a competitive advantage over other bidders. All of this makes us uniquely well-positioned to continue to attractively add street retail to our portfolio. And it provides further support for why we are focused on building Acadia into the premier owner-operator of street retail in the U.S. Then for our investment management platform, the volatility in the REIT market is less of an issue. Perhaps it's even a tailwind. since we rely on our institutional partners for the majority of the capital and are generally recycling our equity in this complimentary and profitable buy-fix-sell arm of our business. So in conclusion, as we look forward, our peer-leading internal growth looks like it has several years of tailwinds behind it. Coupled with continued strong external growth and a balance sheet with multiple avenues of access to capital, We are well positioned to absorb any speed bumps, and more importantly, capitalize on the exciting opportunities in front of us. I'd like to thank the team for their continued hard work, and with that, I will hand the call over to AJ Levine.