Acadia Realty Trust

Good day and welcome to the Acadia Realty Trust second quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 1-1 on your touchtone telephone. As a reminder, this call is being recorded. I would like to turn the conference over to George Horst, summer intern. Please go ahead.

Good morning and thank you for joining us for the second quarter 2026 Acadia Realty Trust earnings conference call. My name is George Horst and I'm a summer intern for property management. 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 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 of the date of this call, July 29, 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, George. Great job.

Welcome, everyone. As you can see in our press release, we had another strong quarter driven by continued momentum across both internal as well as external growth initiatives. And while geopolitical events have certainly added unwanted uncertainty to the global economy, our results tell a different story. In fact, It's worth pausing at this point for a moment. For instance, the tariffs of Liberation Day were announced on April 2nd of last year. So this is really the natural quarter to compare against to see what's actually happened to our business. And since then, we delivered earnings growth of 11% year over year. Last quarter, same property NOI came in ahead of our projections at 8.7%. We produced Record leasing activity with rent spreads exceeding 90% this quarter compared to single digits a year ago. So while the headlines have been relentless, what our retailers are telling us is a very different story. The U.S. has become increasingly relevant, the consumer has remained resilient, and retailers are doubling down on must-have real estate. That strength shows up across the key drivers of our business. First, with respect to internal growth, which AJ Levine will discuss in more detail, our operating metrics continue to reflect the strength of our street retail thesis. Second, with respect to external growth, as Reggie Livingston will discuss, we were busy last quarter on the transactional front with important street retail additions to our REIT portfolio and more to come. Simultaneously, we were harvesting profits from several assets in our investment management platform, where we've now disposed of or recapitalized over $500 million year to date at a nearly two times equity multiple. And then third, as John Gottfried will discuss, our balance sheet metrics are right where we want them with plenty of dry powder to fuel future growth. But taking a step back, what this quarter really reflects is our street retail thesis being validated in real time. On previous calls, we discussed why tenant demand and tenant performance in street retail is so strong, and those same drivers remain firmly in place. Limited new supply, strong tenant performance driven by the affluent consumers who shop our corridors, and then most significantly, the increasing demand due to the long-term migration of brands away from wholesale or department stores. and towards their own direct-to-consumer stores. This DTC shift has been gaining steam over the past few years and it appears we're still in the early stages of this important multi-year demand driver. It's an important reason why we are seeing the strongest growth coming from the street retail portion of our portfolio. But this increased demand and ensuing market rent growth is only half the story. The other key driver of our results comes from the differentiated structure of our street retail leases. That allows us to capture this growth faster than in other formats. First, our street retail leases generate higher contractual rent escalators, generally with 3% annual growth. They also require a lighter relative capital on retenanting, so more of that top line growth drops to the bottom line. but most importantly, our street retail leases carry fair market value resets that allow us to have faster and more frequent mark-to-market opportunities, a structural advantage that simply does not exist in other formats. This means that to the extent that we are now operating in a longer-term inflationary environment as we have experienced over the past couple years, these resets provide for inflation protection as well. The combination of superior contractual growth and more frequent mark to market opportunities means our street retail portfolio is positioned to generate 200 to 300 basis points of incremental same store growth above what we achieve in our suburban portfolio. In fact, over the last three years, we have delivered closer to 400 basis points of superior growth. And given that demand seems to be increasing, We expect this outperformance to continue. We're also seeing proof of concept where our performance is being further enhanced when we achieve scale in a given corridor. We have found that once we own about 20%, 25% of the retail on one of our key streets, we can better drive curation, better drive sales performance, market intelligence, and operating efficiencies that results in about a 10% Incremental NOI increase for our properties. Thus, with these tailwinds and goals in mind, our acquisitions are focused on those deals that both stand on their own from a return perspective, but also position us to further recognize the benefits of scale. Since the third quarter of 2024, we have invested approximately $700 million in street retail acquisitions in our REIT portfolio. and with our current pipeline, our goal is to hit 1 billion by year end, nearly doubling the size of our street retail portfolio. These investments have already created approximately 3% FFO accretion per share and an even higher percentage of NAV accretion. Importantly, this focus is bringing us closer to our goal of being the premier owner-operator of street retail in the U.S., which is also bringing scale benefits to our platform. Now, to be clear, our discipline here is unchanged. Our investments continue to be accretive to earnings and accretive to net asset value from day one and continue to deliver on our target of initial accretion of one penny of FFO for every $200 million we deployed. As a result, the benefits of scale that we hope to recognize in the future are additive to what these deals already deliver on their own. So in conclusion, the results we are delivering today are a direct reflection of the strategy we have been executing for several years now, both with respect to our focus on street retail for our REIT portfolio, as well as our execution through our investment management platform. internal and external opportunities in front of us give us a clear line of sight into multi-year top line growth with increasing confidence that this growth will continue to drop to the bottom line. And with that, I'd like to thank the team for their continued hard work and I will turn the call over to AJ Levine.