Acadia Realty Trust

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the KDF Realty Trust Board Quarter 2025 earnings conference call. At this time, all participants are on 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host for today, Will Delps. Please go ahead.

Good afternoon. Thank you for joining us for the fourth quarter 2025 Acadia Realty Trust Earnings Conference Call. My name is Will Delves, and I'm an analyst in our Asset Management 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 for the SEC, forward-looking statements speak only as of the date of this call, February 11th, 2026, 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 will answer as time permits. Now, it is my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks.

Thank you, Will. Great job. Welcome, everyone. Our strong fourth quarter results added to an overall strong year with both solid internal and external growth. And this momentum is continuing as we head into 2026. AJ, Reggie, and John will discuss our performance last quarter and our outlook going forward. But before diving into the details, I'd like to take a step back and discuss the key initiatives we put in place over the past few years and how they have positioned us for not only strong current performance, but also for strong long-term growth. few years ago after the very painful multi-year headwinds, first from the retail Armageddon, then from COVID and related issues, it became clear that the strong rebound in our portfolio performance was likely more than just a COVID rebound and was setting up for a longer-term positive fundamental shift for retail real estate. As we've discussed on prior calls, These tailwinds benefited most open-air retail, but they have been especially beneficial for the street retail component of our portfolio and for several reasons. First, the lack of new development of retail real estate for almost a decade has caused a rebalancing of supply and demand and has been a powerful tailwind for all open-air retail. But more importantly, the additional shift by retailers away from a heavy reliance on selling through wholesale and department stores. And they're recognizing the need for their own physical stores has been an additional important driver of demand. And this increased demand has applied much more to discretionary retail, especially in key must-have corridors. Then second, while the consumer has generally been more resilient than anticipated, The so-called K-shaped economy has meant that tenant demand and tenant performance by discretionary retailers who serve the upper segment of the economy has continued unabated. Thus, the general bias in the equity markets last year to pivot to necessity-based retail following Liberation Day appears overdone as the street retail portion of our portfolio continued to outperform our other segments. Then third, the structure of street retail leases enables us to capture higher rental growth sooner than in our suburban assets. While increasing market rents are good for all real estate, it is most beneficial for those properties, like street retail, that have a combination of stronger contractual growth, fair market value rent resets, and lighter relative capex on retenanting. Sooner or later, all retail real estate will benefit from increases in market rents. We just prefer sooner. So as we saw these trends unfolding, we positioned ourselves to capture this growth. As we stated, our goal has been to deliver multi-year NOI growth of 5% and for this growth to hit the bottom line, both in terms of earnings growth, and net asset value growth. Consistent with this goal, we have now delivered four consecutive years of same property NOI in excess of 5%. And we want to make sure that we are not only producing strong current results, but are positioned to do so for the foreseeable future. We are delivering on this growth goal through several different initiatives or levers. First and foremost is leasing up a vacancy. Over the past four years, We have increased our economic shop occupancy from approximately 81% at the end of 2021 to over 90% today. And at 90%, we still have room to run. Then beyond this lease up, a second lever is our ability to capture rental growth on our streets from both our Pry Loose strategy and our fair market value resets. And AJ Levine will discuss the opportunities we're seeing here. Then a third lever will come from the meaningful growth coming out of our redevelopment pipeline, most immediately from our two assets in San Francisco, as well as our development on Henderson Avenue in Dallas. John and AJ will also give further color on these needle movers as well. And then finally, to supplement this internal growth, and to better ensure that we can continue to deliver our long-term growth goals has been our external growth initiatives. For our on-balance sheet REIT acquisitions, our focus here has been primarily on street retail investments where we can benefit from building operating scale on must-have streets. While we have found the benefits of scale on the suburban side of our business to be somewhat elusive, are seeing the benefits more clearly through owning multiple stores on given key streets where we are able to better both curate a street and then drive incremental growth. We saw this playing out on several of our existing corridors such as Armitage Avenue in Chicago and M Street in Georgetown and this gave us the conviction to focus our future street retail investments on those corridors where we can own enough concentration to create benefits of scale. So we doubled our ownership stake in Georgetown and DC, and now control nearly 50% of the street retail in this key corridor. And last year, we delivered an excess of 10% NOI growth. We also doubled down in Williamsburg, Brooklyn, investing approximately $160 million by adding 10 storefronts on North 6th Street. We also doubled down on Green Street in SoHo, investing over $80 million. And we more than doubled down in Henderson Avenue in Dallas, where we will be increasing our investment there by almost $200 million by adding additional assets and commencing our 170,000 square foot development there. We also expanded into new corridors, such as Bleecker Street in the West Village, and just this quarter, Upper Madison Avenue in New York City. All told, over the past 24 months, between our street acquisitions and planned investments into Henderson Avenue, we have invested about $700 million. And all of these investments are with a view towards further recognizing the benefits of scale and of extending our long-term growth goals well into the future. And while the benefits of scale are important on a corridor by corridor basis, they also benefit our overall platform as we are well on our way to being the premier owner-operator of street retail in the United States. Then complementing the street retail side of our business is our investment management platform. For as long as Acadia has been in business, we have leveraged our institutional capital relationships to pursue alternative complementary investment opportunities more recently our investment management model has shifted from running single traditional closed-end funds into multiple JV channels and as Reggie Livingston will walk through including our most recent activity we have successfully executed over 800 million dollars in JV acquisitions over the past 24 months big picture we have been deploying our capital using a barbell approach on one side and Our on-balance sheet activity has been focused on high growth street retail, well-suited to long-term ownership. And then for our investment management platform, we are focusing on opportunistic and higher yielding investments for this buy-fix-sell side of our business. So to conclude, the internal and external opportunities we see provide a clear line of sight into providing multi-year top line growth of 5%, and having that growth drop to the bottom line. Then with ample balance sheet capacity, we're in a position to capitalize on the exciting opportunities that we have in front of us. With that, I'd like to thank the team for their hard work last quarter and last year, and I'll hand the call over to AJ Levine. That's great. Thanks, Ken.