Acadia Realty Trust Announces Contract to Acquire One Million Square Foot Retail Complex; Top Tenants Include Target, Lowe's, Bed Bath & Beyond, Dick's, Regal Cinema and T.J. Maxx.Business Editors NEW YORK--(BUSINESS WIRE)--Nov. 21, 2002 Acadia Realty Trust (NYSE NYSE See: New York Stock Exchange : AKR AKR Auroral Kilometric Radiation AKR Vehicle Cargo Ship AKR Address Key Register AKR Anime Kingdom Rebirth - the "Company") announced today that its acquisition joint venture, Acadia Strategic Opportunity Fund, LP ("Acadia Acquisition") has completed its due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. on a contract to purchase Brandywine Town Center and Market Square Shopping Center shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into , a major open-air retail complex located in New Castle County (Wilmington), Delaware. ONE MILLION SQUARE FEET OF VALUE-BASED RETAIL The one million square foot value-based retail complex consists of two components. The first is a 103,000 square foot community shopping center, Market Square Shopping Center, which is 92% leased and anchored by T.J. Maxx T.J. Maxx is a chain of American department stores owned by TJX Companies. It is the largest off-price apparel retailer in the United States offering brand name clothing, footwear, bedding, furniture, jewelry, beauty products, and housewares. and a Trader Joe's Trader Joe's is a privately held chain of specialty grocery stores headquartered in Monrovia, California. As of September 2007, Trader Joe's has a total of 284 stores.[1] market. The second component, Brandywine Town Center, is a two phase regional retail center. The first phase is approximately 450,000 square feet and 97% occupied, with tenants including Lowe's Home Improvement, Bed Bath & Beyond, Regal Cinema, Michaels, Petsmart, Old Navy, Annie Sez, Thomasville Furniture, KB Toys K•B Toys (previously known as Kay Bee Toys) is a chain of mall-based retail toy stores in the United States. It was founded in 1922 by the Kaufman brothers. It currently operates 605 stores in 44 U.S. states, Puerto Rico as well as Guam. and Dick's Sporting Goods Dick's Sporting Goods (NYSE: DKS) is the largest full-line sporting goods retailer in the world. It is headquartered in Pittsburgh, Pennsylvania, USA and has locations in thirty-four states with 314 stores. . The second phase ("Phase II") of the Brandywine Town Center consists of approximately 420,000 square feet of existing space, of which Target occupies 138,000 square feet. The Company is already in late-stage negotiations with a national retailer as an additional anchor to lease approximately 125,000 square feet of the second phase and has received strong interest from other prospective tenants for that box as well as the remaining Phase II space. All of the Phase II leasing is to be paid for on an earnout basis as it is leased (see below). STRONG LOCATION - HIGH BARRIERS TO ENTRY The property is located on Route 202, a prime retail corridor, in Wilmington, Delaware, as well as Route 92. The project is situated on the Delaware/Pennsylvania border and 20 miles south of downtown Philadelphia. The anchor tenants enjoy strong sales due, in part, to the fact that Delaware has no sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. , affording them an advantage over stores in Pennsylvania, which has a sales tax on hard goods, and New Jersey, which taxes both hard and soft goods. It is because of this feature that the complex serves a trade area that exceeds the traditional 5 to 10 mile radius; serving a shopping population in excess of half a million people. Furthermore, barriers to entry into this market for new competing centers are high due to a restrictive entitlement process. Pictures of the property can be viewed on Acadia's web site, starting tomorrow, at www.acadiarealty.com ATTRACTIVE YIELD - ADVANTAGEOUS STRUCTURE - VALUE ADDED Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. OPPORTUNITY The initial purchase price for the complex, including associated closing costs Closing Costs The numerous expenses (over and above the price of the property) that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, , is expected to be approximately $87 million. Acadia Acquisition will also pay additional amounts in conjunction with the lease-up of the current vacant space in Phase II (the "Earnout"). The total purchase price, depending on the Earnout, is projected to be between $130 million and $150 million, which is a significant discount to the estimated replacement cost. Importantly, the Earnout is structured such that Acadia Acquisition has no time requirement or payment obligation for any portion of currently vacant space which it is unable to lease. Acadia has had significant success in redeveloping and re-anchoring quality retail properties and will bring its expertise to the leasing and stabilization of Phase II of the Brandywine Town Center. The purchase price represents in excess of a 10% capitalization rate Capitalization Rate According to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate. (before structural reserves and imputed Attributed vicariously. In the legal sense, the term imputed is used to describe an action, fact, or quality, the knowledge of which is charged to an individual based upon the actions of another for whom the individual is responsible rather than on the individual's management fees) based on the projected 2003 net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . The Company believes this is a favorable rate given the strong location quality of the asset and the credit quality of the anchor tenants. The acquisition is anticipated to generate approximately $0.04 of funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO FFO See: Funds from operations ") during 2003 for the Company, representing approximately 4% growth over projected 2002 FFO. Additional financial details on the acquisition will be made available upon closing of the transaction. Acadia Acquisition will be assuming $38.3 million of existing fixed-rate first mortgage debt with a blended interest rate of 7.1% in connection with the purchase. It is also anticipated that additional fixed-rate first mortgage debt will be placed on a portion of the project at closing. The blended interest rate for all the above fixed-rate debt is projected to approximate 6.0%. The closing is contingent on receiving the lenders' consent permitting the assumption of the existing loans as well as other customary closing conditions. If all conditions to closing are met, the transaction is expected to close within the next 60 days. This acquisition will be the second for Acadia Acquisition. The Company is the general partner with a 22% interest in Acadia Acquisition and, additionally, is entitled to a profit participation in excess of its invested capital based on certain investment return thresholds. The Company will also earn various market-rate property level fees. MANAGEMENT COMMENTS Commenting on the acquisition, Kenneth Bernstein, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated, "We are pleased with the solid execution on all the components of our business plan to date, of which our acquisition program is the primary external growth component. With this acquisition, we will have fulfilled a significant portion of Acadia's total acquisition goals for 2002/2003, with this acquisition representing nearly half of our forecasted external growth as provided in our previous guidance for 2003. We are extremely excited by this pending acquisition not only because of the attractive initial yield, but because it is an ideal blend of strong location, high credit quality, and future growth potential. This retail complex is consistent with our goal of enhancing our core portfolio with strategically located, high barrier-to-entry properties that will create long term shareholder value". Acadia Realty Trust, headquartered on Long Island, NY, is a fully integrated and self-managed real estate investment trust which specializes in the acquisition, redevelopment and operation of shopping centers which are anchored by grocery and value-oriented retail. Acadia currently owns (or has interests in) and operates 36 properties totaling approximately 7 million square feet, located primarily in the Eastern United States. Certain matters in this press release may constitute forward-looking statements within the meaning of the Private Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995 and as such may involve known and unknown risk, uncertainties and other factors which may cause the actual results, performances or achievements of Acadia to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such forward-looking statements speak only as of the date of this document. Acadia expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Acadia's expectations with regard thereto or change in events, conditions or circumstances on which any such statement is based. Estimates of FFO are based upon current operations of the Company's properties and are subject to changes in market conditions, which may affect the actual FFO results. For more information visit Acadia Realty Trust's Web site at www.acadiarealty.com |
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