ACADIA REALTY TRUST (AKR)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

Acadia Realty Trust (the “Trust”, collectively with its consolidated subsidiaries, the “Company”, “Acadia”, “we”, “us” or “our”), a Maryland real estate investment trust (“REIT”), is a fully-integrated equity REIT focused on the ownership, acquisition, development, and management of retail properties located primarily in high-barrier-to-entry, supply-constrained, densely populated metropolitan areas in the United States.

The Company operates through two primary platforms:

REIT Portfolio: The REIT Portfolio consists of open-air and street retail properties located in premier urban retail corridors and select suburban markets characterized by strong demographics and limited new supply. These assets generate recurring rental revenues and benefit from contractual rent escalations and leasing activity.

Investment Management (“IM”): Through its Investment Management platform, the Company manages opportunistic and value-add retail real estate investments through its strategic opportunity funds (Fund II, Fund III, Fund IV, and Fund V) and select co-investment ventures. While Fund III, Fund IV and Fund V currently include institutional partner capital, Fund II is presently wholly owned by the Company and is being managed within the IM platform, with the potential for future third-party capital participation. From time to time, assets previously held in the Company’s strategic opportunity funds may be recapitalized or transitioned into new joint ventures with third-party partners as part of the portfolio lifecycle, while the Company retains an ownership interest and continues its role as operator and manager. The Company earns management fees and, in certain cases, incentive-based performance fees.

All of the Company’s assets are held by, and all of its operations are conducted through, Acadia Realty Limited Partnership (the “Operating Partnership”) and its subsidiaries. As of June 30, 2026, the Trust controlled approximately 96% of the Operating Partnership as its sole general partner.

As of June 30, 2026, the Company owned or had an ownership interest in 231 properties, including development or redevelopment projects (Note 1). The Company’s operating income is primarily derived from rental revenues from operating properties, including tenant expense recoveries, net of property operating and corporate overhead expenses.

In addition, the Company maintains a Structured Financing (“SF”) program through which it selectively invests in first mortgage loans and other real estate-backed notes.

The following table summarizes the Company’s wholly owned and partially owned retail properties and related physical occupancy as of June 30, 2026:

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(1)
Includes 12 pre-stabilized properties in the REIT Portfolio.

SIGNIFICANT ACTIVITIES DURING 2026

See Note 12 in the Notes to Condensed Consolidated Financial Statements for an overview of our three reportable segments: REIT Portfolio, Investment Management and Structured Financing. For purposes of the tables included below, these segments are abbreviated as “REIT”, “IM” and “SF”, respectively.

During the six months ended June 30, 2026, the Company completed a number of transactions across its REIT Portfolio and Investment Management segments reflecting continued portfolio growth and deepening of relationships with key institutional partners.

REIT Portfolio

Within the REIT Portfolio, the Company continued to selectively deploy capital into retail assets located in established, high-barrier markets. During six months ended June 30, 2026, the Company completed consolidated acquisitions totaling approximately $198.4 million, including:

•
$110.2 million acquisition of retail condominium units at 4-6 and 28 Newbury Street in Boston, MA;

•
$43.5 million acquisition of retail units at 225 Worth Avenue in Palm Beach, Florida;

•
$21.3 million acquisition of retail condominium units at 1045 and 1165 Madison Avenue in New York City;

•
$9.6 million acquisition of a retail unit at 129 Fifth Avenue in New York City;

•
$9.5 million strategic add-on acquisition of ground-lease interests at Rhode Island Place in Washington, D.C.; and

•
$4.4 million strategic add-on acquisition of a retail property and residential units at 846 West Armitage Avenue in Chicago.

These acquisitions were integrated into the Company’s existing REIT Portfolio and are consolidated (Note 2).

In July 2026, the Company acquired a single-tenant retail building at 8800-8804 Melrose Avenue in West Hollywood, California for $29.0 million, which was added to the REIT Portfolio. During the same period, the Company disposed of the parking garage at 1035 Third Avenue in New York, New York, a consolidated Fund IV Investment Management property, for $8.3 million (Note 16).

Investment Management

During the six months ended June 30, 2026, the Company completed several transactions through its Investment Management segment, consisting of equity investments in unconsolidated joint ventures and recapitalizations of existing assets (Note 2, Note 4).

In January 2026, the Company acquired a 20% equity interest in a joint venture that purchased the Shops at Skyview, a retail shopping center located in Queens, New York, for a total purchase price of $424.1 million. At closing, the joint venture secured a mortgage loan with a total commitment of $290.0 million, of which $277.0 million was funded at closing. Additionally, the Company provided a preferred equity investment of approximately $41.7 million. The Company’s equity contribution to the joint venture totaled approximately $22.5 million.

In February 2026, the Company completed a $435.8 million recapitalization of a seven-property, open-air retail portfolio. Six of the properties were previously held in Fund V, while one property (Avenue at West Cobb) was previously held in the Company’s wholly-owned portfolio. In connection with the transaction, the properties were contributed to two newly formed joint ventures and the Company retained a 20% non-controlling equity interest. Additionally, the Company provided seller financing to the Atlantic Portfolio joint venture in the form of a $27.5 million preferred equity investment. The transaction resulted in the deconsolidation of the properties and the recognition of a gain on disposition and deconsolidation of $112.3 million, of which the Company’s proportionate share was $22.1 million.

In March 2026, the Company completed a recapitalization of Pinewood Square, an open-air retail center in Lake Worth, Florida, with a gross transaction value of $68.4 million. The property was contributed to a newly formed joint venture, with the Company retaining a 20% non-controlling equity interest. The transaction resulted in the deconsolidation of the property and the recognition of a gain on deconsolidation of $4.1 million.

During the six months ended June 30, 2026, the Company completed consolidated property dispositions within its Investment Management platform totaling approximately $128.1 million, including the sale of Landstown Commons for $102.0 million, the sale of 1964 Union Street for $2.6 million and the sale of New Towne Center for $23.5 million (Note 2).

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During the six months ended June 30, 2026, the Company completed unconsolidated property dispositions within its Investment Management platform totaling approximately $83.0 million, including the sale of 650 Bald Hill Road for $20.5 million, and the sale of Tri-City Plaza for $62.5 million (Note 4).

These transactions reflect the Company’s continued execution of its strategic objectives, including portfolio growth, balance sheet optimization, and the expansion of its Investment Management platform.

Financing and Capital Activity

In connection with the Investment Management disposition and recapitalization activity, the Company retired approximately $334.3 million of property-level mortgage loans associated with assets sold or contributed to joint ventures. The Company also terminated related interest rate hedges in conjunction with these repayments.

On April 17, 2026, we entered into the Fourth Amended and Restated Credit Facility, which extended the maturity of our $525.0 million revolving credit facility (the size of which remained unchanged) from April 15, 2028 to April 17, 2030 (subject to two six-month extension options), increased our existing $400.0 million term loan to $512.5 million and extended its maturity from April 15, 2028 to April 17, 2031, and provided for a new $137.5 million term loan maturing April 17, 2031. The existing $250.0 million term loan maturing May 29, 2030 remained unchanged. The Fourth Amended and Restated Credit Facility also includes an accordion feature permitting the Operating Partnership, at its option and subject to customary conditions, to increase total capacity to up to $2.0 billion. We believe the refinancing extended our weighted average debt maturity and enhanced our liquidity position (Note 7).

Common Share Activity

On June 11, 2026, we completed a forward equity offering of 9,000,000 Common Shares at an initial forward sale price of $21.80 per share. In July 2026, the underwriters partially exercised their over-allotment option for an additional 242,996 Common Shares. We did not receive any proceeds at the time of the offering and related underwriters’ option exercise; upon settlement of the forward sale agreements, which must occur within one-year of the effective date, we expect to receive net proceeds of approximately $201.1 million, which we intend to use to fund acquisition opportunities, repay outstanding indebtedness, and for general corporate purposes. We believe the offering provides additional flexibility to manage the timing of our capital raising activities relative to our capital needs.

During the six months ended June 30, 2026, we settled 6,209,562 outstanding fo

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

As of December 31, 2025, we owned or held an ownership interest in 228 properties through our REIT Portfolio and Investment Management platform, including properties in development or redevelopment. These properties primarily consist of street and urban retail, and suburban shopping centers located in high-barrier to entry, supply-constrained markets. For a detailed summary of our wholly owned and partially owned properties and their physical occupancy as of December 31, 2025, see Item 2. Properties.

Our revenues are predominantly derived from rental income from operating properties, including tenant expense reimbursements, and are offset by property-level operating costs and corporate overhead. This recurring income stream reflects the stability of our core REIT portfolio and is complemented by value creation through development, redevelopment, and our Investment Management activities.

We also invest selectively in first mortgage loans and other real estate-backed notes through our Structured Finance program, either directly or via affiliated entities. This program serves as an additional source of returns and enhances portfolio diversification.

We engage in development and redevelopment initiatives to unlock inherent property value and address shifting tenant and market requirements. As of December 31, 2025, our REIT Portfolio included 13 development properties and 12 redevelopment properties, along with one redevelopment project within Investment Management. For further information, refer to Item 2. Properties—Development Activities and Note 2.

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SIGNIFICANT ACTIVITIES DURING THE year ended December 31, 2025 AND SUBSEQUENT EVENTS

See Note 12 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments: REIT Portfolio, Investment Management and Structured Financing. For purposes of the tables included below, these segments are abbreviated as “REIT”, “IM” and “SF”, respectively.

Investments

Acquisitions

During the year ended December 31, 2025, the following properties were acquired (Note 2) (dollars in thousands):

(a)
On January 23, 2025, we acquired an additional 48% economic ownership interest, increasing our existing 20% interest to 68%, in the Renaissance Portfolio, which is primarily located in Washington D.C. The 48% interest was acquired for a purchase price of $117.9 million, based upon a gross portfolio fair value of $245.7 million, which included existing aggregate mortgage loan indebtedness of $156.1 million (Note 7). Prior to the acquisition, we accounted for our 20% interest under the equity method of accounting. We gained a controlling financial interest as a result of this acquisition, and determined we should consolidate our investment within our REIT Portfolio effective January 23, 2025. As such, we measured and recognized 100% of the identifiable assets acquired, the liabilities assumed and any noncontrolling interests of the Renaissance Portfolio, at fair value and recognized a $9.6 million loss on change in control representing the difference between the carrying value and fair value of its existing equity method interest immediately before consolidation of the portfolio (Note 2).

(b)
As of December 31, 2025, we had two wholly-owned assets within the Investment Management platform that we intend to recapitalize with an institutional investor as part of our Investment Management strategy.

During the third quarter of 2025, we increased our ownership of Fund II from 61.67% to 80.0%. Additional details are provided in Note 10.

In January 2026, we acquired, through Investment Management, a 20% interest in a real estate venture that purchased a retail shopping center in Queens, New York for $424.4 million ($84.8 million at our share). In connection with the acquisition, the venture entered into a $277.0 million property mortgage loan at closing. We also provided a $41.7 million preferred equity investment to the venture (Note 17).

Dispositions

The following properties were disposed of (Note 2) (dollars in thousands):

In addition, in June 2025, the joint venture that owned the Eden Square property, of which Fund IV has a 90% ownership interest, sold the property to a third-party for $28.0 million and repaid the related $23.3 million property mortgage loan (Note 4).

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Financing Activity

In January 2025, we acquired an additional 48% economic ownership interest in the Renaissance Portfolio (Note 2). At acquisition, the properties were subject to existing mortgage indebtedness with an aggregate outstanding principal balance of $156.1 million, bore interest at SOFR + 2.65% and was scheduled to mature on November 6, 2026. The property mortgage loans were recorded at a fair value of approximately $156.1 million. On January 24, 2025, the venture modified the property mortgage loans to reduce the interest rate to SOFR + 1.55%. This reduction was achieved through a $50.0 million principal paydown, which was funded by the Company as a note receivable from the venture. The note bears interest at 9.11%, matures in November 2026 and has been eliminated in consolidation (Note 7).

In May 2025, we amended our senior unsecured credit facility to add a new $250.0 million five-year delayed-draw term loan (the “$250.0 Million Term Loan”). The amendment also increased the accordion feature limit to $1.5 billion and reduced the borrowing rate on the entire Credit Facility by 10 basis points. The $250.0 Million Term Loan bore interest at the SOFR + 1.20% and matures on May 29, 2030. As of December 31, 2025, the $250.0 Million Term Loan was fully drawn (Note 7).

In December 2025, the Company, through Investment Management, repaid approximately $21.0 million of the outstanding balance on its Fund IV bridge facility using proceeds from the sale of a Fund IV property. The Company subsequently refinanced the loan, added the operating partnership as a co-borrower, and consolidated the remaining $15.2 million outstanding principal balance with a new $46.1 million supplemental borrowing, resulting in a total outstanding principal balance of $61.3 million (Note 7).

Structured Financing Investments

In April 2025, the Company modified a redeemable preferred equity investment in a property that is accounted for as a note receivable, which had a principal balance of $54.0 million as of March 31, 2025, to extend the maturity date from February 25, 2025 to February 9, 2027, with an option for a one-year extension. As part of this modification, the borrower repaid the accrued interest balance of $25.3 million. Additionally, the Company provided a mezzanine loan and additional advances under the preferred equity related to the same asset which also matures on February 9, 2027 and bears interest at a fixed rate of 9.00% (Note 3). As of December 31, 2025, the Company advanced $28.5 million in aggregate.

In January 2026, the Company provided a $41.7 million preferred equity investment to a retail joint venture to fund the acquisition of a retail shopping center in Queens, New York (Note 17).

Issuance of Common Shares

The following table summarizes forward offering activity under our ATM Program for the year ended December 31, 2025 (dollars in thousands):

(a)
We did not initially receive any proceeds from the sale of the forward shares under the ATM program.

(b)
Amounts received upon settlement are subject to customary adjustments in accordance with the forward sales contracts, which are reflected in current-value settlement adjustments, calculated as of December 31, 2025.

Economic and Other Considerations

Macroeconomic conditions, including elevated levels of inflation, higher interest rates, and recent tariff policies, present risks for our business and the businesses of our tenants. The elevated levels of inflation in recent years have led to increased costs for certain goods and services and cost of borrowing. However, most of our leases include contractual rent escalations and require tenants to pay their share of operating expenses, including common area maintenance, real estate taxes, and insurance, which help mitigate inflationary impacts on costs and operating expenses. We believe we manage our properties in a cost-conscious manner to minimize recurring operational expenses and utilize multi-year contracts to alleviate the impact of inflation on our business and our tenants.

We expect to drive value to our portfolio through leasing momentum, active development and redevelopment projects, and our leasing pipeline. We manage our exposure to fluctuations in interest rates primarily through the use of fixed-rate debt and interest rate swap and cap agreements, which qualify for, and are designated as, hedging instruments (Note 8). Except for increased interest costs, we have not experienced any material negative impacts at this time.

Recent U.S. tariffs, sanctions, and related geopolitical developments could affect our tenants’ operations or tourism in key markets such as New York, Chicago, Washington, D.C., Los Angeles and San Francisco. While the ultimate impact remains uncertain, we continue to monitor these developments closely.

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RESULTS OF OPERATIONS

Comparison of Results for the Year Ended December 31, 2025 to the Year Ended December 31, 2024

The results of operations by reportable segment for the year ended December 31, 2025 compared to the year ended December 31, 2024 are summarized in the table below (in millions, totals may not add due to rounding):

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