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    2015 ANNUAL REPORT INTEGRITY // INTENSITY // INTELLIGENCE // INNOVATION


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    Dear Fellow Shareholders: Last year, while we continued to see steady improvements in operating fundamentals and asset values, we also observed aggressive leverage, leasing projections, and exit assumptions among buyers that often outstripped reality. Accordingly, we “stuck to our knitting” and remained focused on driving the growth of our existing assets, only adding new investments with compelling accretion. More recently, the increase in volatility in the global financial markets, especially the debt markets, reminds us that real estate is a cyclical business and reaffirms our disciplined approach to capital allocation. At the same time, the changes in the retailing industry – both cyclical challenges as well as the multi-year secular evolution driven by e- commerce growth and the rise of omnichannel retailing – reaffirm our focus on those retail properties best positioned to thrive today as well as 3, 5, and 10 years into the future. From our perspective, these cyclical and secular shifts bring challenges but, more importantly, opportunities. With this in mind, during 2015, we remained focused on executing our goals through our dual-platform model: Solid Core Portfolio We continued to build a best-in-class core retail real estate portfolio that responds to the changes in retailing and addresses demands for live-work-play locations, by:  acquiring $237.4 million of primarily urban retail properties in our nation’s gateway cities, including New York City and San Francisco, including $38.8 million acquired in January 2016. We delivered solid core operating results that further evidenced the strength of our core portfolio and its ability to produce above-average operating results by:  generating 4.0% same-property NOI growth for the year, excluding redevelopment activities; and  maintaining a well-leased portfolio (96.9% as of year-end). Profitable Fund Platform In response to capital markets tailwinds, we were net sellers of assets in our buy-fix-sell fund platform, opportunistically harvesting embedded profits by:  completing $295.3 million of dispositions in Fund III (including $107.3 million sold in January 2016), which generated a blended 39.1% IRR and 2.60x multiple on invested equity;  monetizing $139.8 million of assets across the balance of our fund platform, most notably, the residential air rights for Phase 3 of our City Point development project in downtown Brooklyn ($115.6 million);  distributing the capital gains attributed to these sales to our shareholders in the form of a special cash dividend, which totaled $0.25 per share; and  subsequent to year-end, generating approximately $0.05 per share of net promote income from the recapitalization of Fund III’s Cortlandt Town Center. We planted the seeds for future fund profit-taking by:  acquiring $173.9 million of opportunistic investments or value-add street-retail properties on behalf of Fund IV, including $27.8 million acquired subsequent to year-end; and  continuing to execute on the strategic business plans for our existing pool of lease-up and development assets.


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    Solid Balance Sheet And, similar to prior years, we protected shareholder value by growing our company on a substantially leverage-neutral basis by:  flexibly funding our acquisition activities through a combination of disciplined common share and operating partnership unit issuance, opportunistic capital recycling, and conservative borrowing. More importantly, we believe that our company is well positioned to repeat this success during 2016, due to: Our Differentiated Core Investment Strategy: Urban and Street Retail Even as retailers reevaluate their bricks-and-mortar strategy in light of technological and other secular shifts impacting the retail industry, we are seeing that well-located urban and street-retail properties are actually becoming more important to our retailers. Whether it is Warby Parker at one of our Lincoln Park, Chicago properties or Target and Trader Joe’s who are opening soon at City Point in Brooklyn, our properties are attracting strong interest due to dense urban demographics and the higher sales productivity, profitability, and brand awareness that can be generated by these high-traffic locations. In light of the foregoing, we purposefully focused our core acquisition activities on urban and street retail. As a result, over the past five years, we have increased our street-retail segment from 13% of estimated gross asset value to roughly 45% and increased our urban-retail segment from 4% to 19%. That being said, we also remain committed to traditional suburban shopping centers when they are located in supply- constrained, high-barrier-to-entry trade areas. We now have an ideal blend of properties, both by product type and geography. As such, we believe that our core portfolio remains well positioned from both an offensive and defensive perspective. It is positioned for growth because:  street-retail leases generally have superior contractual growth and more frequent opportunities to mark rents to market rates; and  we can supplement our solid internal growth with a disciplined acquisition program. At the same time, we believe that our core portfolio is highly recession resistant, because:  approximately half of our portfolio is comprised of high-quality, live-work-play retail, predominantly anchored by supermarkets, drug stores, other necessity retailers, and discounters; and  strong growth in market rents has created a cushion to our in-place street-retail rents. Our Dual Platforms A second point of differentiation is our complementary fund platform. In 2001, we launched our first fund as a public company, and, since then, we have raised $1.4 billion of capital commitments to invest in opportunistic and value-add investments. Today, we continue to implement our location-driven investment strategy, targeting: (i) street retail redevelopments; (ii) next-generation street retail; (iii) distressed-retailer real estate; and (iv) other opportunistic retail real estate investments. Over the past few years, the capital markets have been pricing returns on generic shopping centers below the level that we believe is appropriate on a risk-adjusted basis. Accordingly, we have allocated the majority of Fund IV’s capital commitments to street retail redevelopments and next-generation street retail locations, which we believe have greater potential for asymmetric returns – that is, we believe that there are more


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    muted downside risks and that there is outsized potential for outperformance, driven by limited supply, barriers to entry, and strong retailer demand. Last fall, the widening of borrowing spreads led to disruption among high-leverage buyers and a renewed desire for certainty of closing among sellers. This is beginning to lead to more investment opportunities for our funds. Looking ahead, we are closely tracking borrowing spreads, which could cause a pause in the private market, thereby decreasing liquidity for commercial real estate and (possibly) increasing our fund platform’s opportunistic investment activity. Unlike our core platform, our fund acquisition program is not correlated to the REIT market. If anything, there is probably a negative correlation, with some of the best buying opportunities arising when REITs are sidelined. Importantly, given our dual structure, we are not overly beholden to the public markets for equity. That is, when public equity is unavailable, we can still be active acquirers through our fund platform. And, if the overall acquisition market is unattractive, we can fix and sell fund assets instead, which the fund structure rewards. Above all, we can remain flexible, profitably pursuing a broader scope of buy-fix-sell investments than we would on behalf of our “infinite-life” core portfolio. Moreover, by purposefully concentrating our “heavy-lift” value-add activities in our fund platform, where capital is committed by our institutional partners and on call, we are protecting our shareholders from ill- timed public equity raises necessitated by capital-intensive redevelopments. Our Dry Powder (An Under-rated Differentiator) Overall, we firmly believe that companies seeking long-term, responsible growth should also be focused on maintaining low leverage and appropriate levels of liquidity. We are, on all counts. For example, our net debt to EBITDA ratio was 5.1x at year-end 2015 – one of the lowest in the industry – and our fixed-charge coverage ratio was 4.1x. Likewise, our debt to total market capitalization was 22%. We also have ample dry powder in our fund platform, enabling us to quickly take advantage of interesting investment opportunities, regardless of the state of the capital markets. Our Dedicated Team However, our most valuable asset is our team, who is dedicated to delivering long-term, profitable growth on behalf of all of our stakeholders. This year, there are a few team members that I would like to recognize:  Our CFO – Jon Grisham, who, in November, announced that he plans to retire during 2016. Jon and I began working together nearly two decades ago. He has played an important role in the transformation of our balance sheet and the profitable growth of this company. Jon, you will be missed!  Our new Senior Vice Presidents – Tim Collier (Leasing), Mark O’Connor (Property Management), Amy Racanello (Capital Markets & Investments), and John Swagerty (Development). Not only have each of these talented individuals played an integral role in Acadia’s ability to deliver on its long-term growth goals, but also, they clearly embody the core values on which this company was founded: integrity, intensity, intelligence, and innovation.  And, our two newest Trustees, both of whom were elected to the Board within the past eight months – C. David Zoba, senior real estate strategy advisor of Gap, Inc. and Gap’s former senior vice president of global real estate, who has valuable experience from the front lines of retailing, and Lynn C. Thurber, Chairman, and former CEO, of LaSalle Investment Management, who has significant private


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    and public real estate investment experience. The perspectives of these industry leaders will surely be a valuable addition to our executive-level conversations. In conclusion, as we welcome several new members to Acadia’s executive team, it reminds us that Acadia is still in its early innings. And, I am pleased to report that we remain well positioned, well capitalized, and highly motivated. On behalf of the Acadia team, we look forward to continuing to grow this company together with you, our shareholders, and thank you for your support. Kenneth F. Bernstein President & CEO March 2016


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    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-12002 ACADIA REALTY TRUST (Exact name of registrant as specified in its charter) Maryland 23-2715194 (State of incorporation) (I.R.S. employer identification no.) 411 Theodore Fremd Avenue, Suite 300 Rye, NY 10580 (Address of principal executive offices) (914) 288-8100 (Registrant’s telephone number) Securities registered pursuant to Section 12(b) of the Act: Common Shares of Beneficial Interest, $.001 par value (Title of Class) New York Stock Exchange (Name of Exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES x NO o Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Securities Act. YES o NO x Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES x NO o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act). Large Accelerated Filer x Accelerated Filer o Non-accelerated Filer o Smaller Reporting Company o Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) YES o NO x The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $2,011.2 million, based on a price of $29.22 per share, the average sales price for the registrant’s common shares of beneficial interest on the New York Stock Exchange on that date. The number of shares of the registrant’s common shares of beneficial interest outstanding on February 19, 2016 was 70,462,368. DOCUMENTS INCORPORATED BY REFERENCE Part III – Portions of the registrant’s definitive proxy statement relating to its 2016 Annual Meeting of Shareholders presently scheduled to be held May 9, 2016 to be filed pursuant to Regulation 14A.


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    TABLE OF CONTENTS Form 10-K Report Item No. Page PART I 1. Business 4 1A. Risk Factors 9 1B. Unresolved Staff Comments 20 2. Properties 21 3. Legal Proceedings 30 4. Mine Safety Disclosures 30 PART II 5. Market for Registrant’s Common Equity, Related Stockholder Matters, Issuer Purchases of Equity Securities and Performance 31 Graph 6. Selected Financial Data 33 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 7A. Quantitative and Qualitative Disclosures about Market Risk 51 8. Financial Statements and Supplementary Data 53 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 53 9A. Controls and Procedures 53 9B. Other Information 55 PART III 10. Directors, Executive Officers and Corporate Governance 56 11. Executive Compensation 56 12. Security Ownership of Certain Beneficial Owners and Management 56 13. Certain Relationships and Related Transactions and Director Independence 56 14. Principal Accounting Fees and Services 56 PART IV 15. Exhibits and Financial Statement Schedule 56 2


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    SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in this Annual Report on Form 10-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or the negative thereof or other variations thereon or comparable terminology. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to those set forth under the headings "Item 1A. Risk Factors" and "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-K. These risks and uncertainties should be considered in evaluating any forward- looking statements contained or incorporated by reference herein. 3


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    PART I ITEM 1. BUSINESS. GENERAL Acadia Realty Trust (the "Trust") was formed on March 4, 1993 as a Maryland real estate investment trust ("REIT"). All references to "Acadia," "we," "us," "our" and "Company" refer to the Trust and its consolidated subsidiaries. We are a fully integrated REIT focused on the ownership, acquisition, redevelopment and management of high-quality retail properties located primarily in high-barrier-to-entry, supply-constrained, densely-populated metropolitan areas in the United States. We currently own, or have an ownership interest in these properties through our Core Portfolio (as defined below) and our Funds (as defined in Item 1. of this Form 10-K). All of our assets are held by, and all of our operations are conducted through, Acadia Realty Limited Partnership (the "Operating Partnership") and entities in which the Operating Partnership owns an interest. As of December 31, 2015, the Trust controlled 95% of the Operating Partnership as the sole general partner. As the general partner, the Trust is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership. The limited partners primarily represent entities or individuals that contributed their interests in certain properties or entities to the Operating Partnership in exchange for common or preferred units of limited partnership interest ("Common OP Units" or "Preferred OP Units," respectively, and collectively, "OP Units") and employees who have been awarded restricted Common OP Units as long-term incentive compensation ("LTIP Units"). Limited partners holding Common OP and LTIP Units are generally entitled to exchange their units on a one-for-one basis for our common shares of beneficial interest of the Trust ("Common Shares"). This structure is referred to as an umbrella partnership REIT, or "UPREIT." BUSINESS OBJECTIVES AND STRATEGIES Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective: • Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas. Our goal is to create value through accretive redevelopment and re-tenanting activities within our existing portfolio and grow this platform through the acquisition of high-quality assets that have the long-term potential to outperform the asset class. • Generate additional growth through our Funds in which we co-invest with high-quality institutional investors. Our Fund strategy focuses on opportunistic yet disciplined acquisitions with high inherent opportunity for the creation of additional value, execution on this opportunity and the realization of value through the sale of these assets. In connection with this strategy, we focus on: ◦ value-add investments in street retail properties, located in established and "next-generation" submarkets, with re-tenanting or repositioning opportunities, ◦ opportunistic acquisitions of well-located real estate anchored by distressed retailers, and ◦ other opportunistic acquisitions, which vary based on market conditions and may include high-yield acquisitions and purchases of distressed debt. Some of these investments historically have also included, and may in the future include, joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets. • Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth. Investment Strategy — Generate External Growth through our Dual Platforms; Core Portfolio and Funds The requirements that acquisitions be accretive on a long-term basis based on our cost of capital, as well as increase the overall Core Portfolio quality and value, are key strategic considerations to the growth of our Core Portfolio. As such, we constantly evaluate the blended cost of equity and debt and adjust the amount of acquisition activity to align the level of investment activity with capital flows. 4


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    Given the growing importance of technology and e-commerce, many of our retail tenants are appropriately focused on omni-channel sales and how to best utilize e-commerce initiatives to drive sales at their stores. In light of these initiatives, we have found retailers are becoming more selective as to the location, size and format of their next-generation stores and are focused on dense, high-traffic retail corridors, where they can utilize smaller and more productive formats closer to their shopping population. Accordingly, our focus for Core Portfolio and Fund acquisitions is on those properties which we believe will not only remain relevant to our tenants, but become even more so in the future. In addition to our Core Portfolio investments in real estate assets, we have also capitalized on our expertise in the acquisition, redevelopment, leasing and management of retail real estate by establishing discretionary opportunity funds. Our Fund platform is an investment vehicle where the Operating Partnership invests, along with outside institutional investors, including, but not limited to, endowments, foundations, pension funds and investment management companies, in primarily opportunistic and value-add retail real estate. To date, we have launched four funds ("Funds"); Acadia Strategic Opportunity Fund, LP ("Fund I"), Acadia Strategic Opportunity Fund II, LLC ("Fund II"), Acadia Strategic Opportunity Fund III LLC ("Fund III") and Acadia Strategic Opportunity Fund IV LLC ("Fund IV"). Due to our level of control, we consolidate these Funds for financial reporting purposes. Fund I and Fund II also include investments in operating companies through Acadia Mervyn Investors I, LLC ("Mervyns I"), Acadia Mervyn Investors II, LLC ("Mervyns II") and, in certain instances, directly through Fund II, all on a non-recourse basis. These investments comprise and are referred to as the Company's Retailer Controlled Property Venture ("RCP Venture"). As of December 31, 2015, Fund I has been liquidated. The Operating Partnership is the sole general partner or managing member of the Funds and Mervyns I and II and earns priority distributions or fees for asset management, property management, construction, redevelopment, leasing and legal services. Cash flows from the Funds and the RCP Venture are distributed pro-rata to their respective partners and members (including the Operating Partnership) until each receives a certain cumulative return ("Preferred Return"), and the return of all capital contributions. Thereafter, remaining cash flow is distributed 20% to the Operating Partnership ("Promote") and 80% to the partners or members (including the Operating Partnership). See Note 1 in the Notes to Consolidated Financial Statements, which begin on page F-1 of this Form 10-K ("Notes to Consolidated Financial Statements"), for a detailed discussion of the Funds and RCP Venture. Capital Strategy — Balance Sheet Focus and Access to Capital Our primary capital objective is to maintain a strong and flexible balance sheet through conservative financial practices, including moderate use of leverage, while ensuring access to sufficient capital to fund future growth. We intend to continue financing acquisitions and property redevelopment with sources of capital determined by management to be the most appropriate based on, among other factors, availability in the current capital markets, pricing and other commercial and financial terms. The sources of capital may include the issuance of public equity, unsecured debt, mortgage and construction loans, and other capital alternatives including the issuance of OP Units. We manage our interest rate risk through the use of fixed rate debt and, where we use variable rate debt, through the use of certain derivative instruments, including London Interbank Offered Rate ("LIBOR") swap agreements and interest rate caps as discussed further in Item 7A. of this Form 10-K. During January 2012, we launched an at-the-market ("ATM") equity issuance program which provides us an efficient and low-cost vehicle for raising public equity to fund our capital needs. Through this program, we have been able to effectively "match-fund" a portion of the required equity for our Core Portfolio and Fund acquisitions through the issuance of Common Shares over extended periods employing a price averaging strategy. In addition, from time to time, we have issued and intend to continue to issue equity in follow-on offerings separate from our ATM program. Net proceeds raised through our ATM program and follow-on offerings are primarily used for acquisitions, both for our Core Portfolio and our pro-rata share of Fund acquisitions and for other general corporate purposes. Common Share issuances for each of the years ended December 31, 2015, 2014 and 2013 are summarized as follows: 5


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    (shares and dollars in millions) 2015 2014 2013 ATM Issuance (1) Common Shares issued 2.0 4.7 3.0 Gross proceeds $ 65.6 $ 128.9 $ 82.2 Net proceeds $ 64.4 $ 126.8 $ 80.7 Follow-on Offering Issuances Common Shares issued — 7.6 — Gross proceeds $ — $ 237.4 $ — Net proceeds $ — $ 230.7 $ — Note: (1) This activity includes 1.2 million shares issued during the fourth quarter of 2015, which generated gross proceeds of $38.0 million and net proceeds of $37.5 million. During 2013 and 2014, we also issued 1.2 million and 1.6 million OP Units, respectively, in connection with the acquisition of properties. During January 2016, we issued 0.9 million OP Units in connection with the acquisition of a property. Operating Strategy — Experienced Management Team with Proven Track Record Our senior management team has decades of experience in the real estate industry. We have capitalized on our expertise in the acquisition, redevelopment, leasing and management of retail real estate by creating value through property redevelopment, re-tenanting and establishing joint ventures, such as the Funds, in which we earn, in addition to a return on our equity interest, Promotes, priority distributions and fees. Operating functions such as leasing, property management, construction, finance and legal (collectively, the "Operating Departments") are generally provided by our personnel, providing for a vertically integrated operating platform. By incorporating the Operating Departments in the acquisition process, acquisitions are appropriately priced giving effect to each asset’s specific risks and returns and transition time is minimized allowing management to immediately execute on its strategic plan for each asset. INVESTING ACTIVITIES Core Portfolio Our Core Portfolio consists primarily of high-quality street retail and urban assets, as well as suburban properties located in high-barrier-to-entry, densely- populated trade areas. For the year ended December 31, 2015, we continued to execute on our strategy of owning a superior Core Portfolio by acquiring, through our Operating Partnership and its subsidiaries, properties consistent with our existing portfolio for an aggregate purchase price of $204.2 million. See Note 2 in the Notes to Consolidated Financial Statements, for a detailed discussion of these acquisitions and Item 2. Properties for a description of the other properties in our Core Portfolio. Additionally, subsequent to December 31, 2015, we acquired a 49% interest in a property for $39.8 million. As we typically hold our Core Portfolio properties for long-term investment, we periodically review the portfolio and implement programs to renovate and re- tenant targeted properties to enhance their market position. This in turn is expected to strengthen the competitive position of the leasing program to attract and retain quality tenants, increasing cash flow, and consequently, property values. From time to time, we also identify certain properties for disposition and redeploy the capital for acquisitions and for the repositioning of existing properties with greater potential for capital appreciation. During 2015, there were no dispositions within the Core Portfolio. We also make investments in first mortgages, preferred equity and other notes receivable collateralized by real estate, ("Structured Finance Program") either directly or through entities having an ownership interest therein. During 2015, we made investments 6


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    totaling $41.4 million in this program and as of December 31, 2015 had $147.2 million invested in this program. See Note 5 in the Notes to Consolidated Financial Statements, for a detailed discussion of our Structured Finance Program. Funds During 2015, the Operating Partnership acquired an additional 4.6% interest in Fund III from a limited partner for $7.3 million, giving the Company an aggregate 24.5% interest in Fund III. During January 2016, the Operating Partnership acquired an additional 8.3% interest in Fund II from a limited partner for $18.4 million, giving the Company an aggregate 28.3% interest in Fund II. Acquisitions Fund II During 2015, Fund II acquired an additional 43% interest in Tower I of its City Point Development located in Brooklyn, NY. Fund II now owns 95% of this development project. See Note 2 in the Notes to Consolidated Financial Statements for a detailed discussion of this acquisition. Fund IV During 2015, Fund IV acquired seven properties for an aggregate purchase price of $146.1 million. See Note 2 in the Notes to Consolidated Financial Statements for a detailed discussion of these acquisitions. During February 2016, Fund IV closed on a $14.0 million preferred equity investment in a development site in Chicago, Illinois. Dispositions Fund II During 2015, Fund II sold the residential air rights in Phase III of its City Point project located in Brooklyn, NY for a sales price of $115.6 million, and a property located in Queens, NY for $24.0 million. See Note 2 in the Notes to Consolidated Financial Statements for a detailed discussion of these dispositions. Fund III During 2015, Fund III sold three properties located in Chicago, IL, Shrewsbury, MA and Baltimore, MD for an aggregate sales price of $188.0 million. See Note 2 in the Notes to Consolidated Financial Statements, for a detailed discussion of these dispositions. Subsequent to December 31, 2015, Fund III sold a 65% interest in Cortlandt Town Center for $107.3 million. Redevelopment Activities As part of our Fund strategy, we invest in real estate assets that may require significant redevelopment. As of December 31, 2015, the Funds had 10 redevelopment projects, consisting of 30 individual properties, four of which are under construction and six are in various stages of the redevelopment process as follows: 7


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    (dollars in millions) Anticipated Square Costs additional feet upon Anticipated Property Owner to date costs (1) Status completion completion date City Point (2) Fund II $ 341.9 $48.1 - $68.1 (3) Construction commenced 763,000 2016/2020 (4) Sherman Plaza (2) Fund II 35.8 TBD Pre-construction TBD TBD Cortlandt Crossing Fund III 14.6 32.4 - 41.4 Pre-construction 150,000 - 170,000 2017 3104 M Street NW (2) Fund III 7.3 0.7 - 1.7 Construction commenced 10,000 2016 Broad Hollow Commons Fund III 14.4 35.6 - 45.6 Pre-construction 180,000 - 200,000 2016 210 Bowery Fund IV 13.2 5.3 - 9.3 Pre-construction 16,000 2016 Broughton Street Portfolio (2) Fund IV 61.3 23.7 - 28.7 Construction commenced 200,000 2016 27 E. 61st Street Fund IV 21.3 1.5 - 5.5 Construction commenced 9,500 2016 801 Madison Avenue Fund IV 33.6 2.4 - 7.4 Pre-construction 5,000 2016 650 Bald Hill Road Fund IV 10.5 17.0 - 22.0 Pre-construction 161,000 2016 Total $ 553.9 Notes: TBD – To be determined (1) Anticipated additional costs are estimated ranges for completing the projects and include costs for tenant improvements and leasing commissions. (2) These projects are being redeveloped in joint ventures with unaffiliated entities. (3) Net of actual and anticipated contributions from retail tenants and proceeds from residential tower sales. (4) Phases I and II have an estimated completion date of 2016. Phase III has an estimated completion date of 2020. RCP Venture Through Mervyns I and II, and in certain instances, Fund II, we have opportunistically made investments through our RCP Venture in surplus or underutilized properties owned by retailers. While we are primarily a passive partner in the investments made through the RCP Venture, historically we have provided our services in reviewing potential acquisitions and operating and redevelopment assistance in areas where we have both a presence and expertise. To date, we have invested an aggregate $63.2 million in our RCP Venture on a non-recourse basis. See Note 4 in the Notes to Consolidated Financial Statements for a detailed discussion of the RCP Venture. ENVIRONMENTAL LAWS For information relating to environmental laws that may have an impact on our business, please see "Item 1A. Risk Factors - Possible liability relating to environmental matters." COMPETITION There are numerous entities that compete with us in seeking properties for acquisition and tenants that will lease space in our properties. Our competitors include other REITs, financial institutions, insurance companies, pension funds, private companies and individuals. Our properties compete for tenants with similar properties primarily on the basis of location, total occupancy costs (including base rent and operating expenses) and the design and condition of the improvements. FINANCIAL INFORMATION ABOUT MARKET SEGMENTS We have three reportable segments: Core Portfolio, Funds and Structured Financing. Structured Financing consists of our notes receivable and related interest income. The accounting policies of the segments are the same as those described in the summary of significant accounting policies set forth in Note 1 in the Notes to Consolidated Financial Statements. We evaluate property 8


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    performance primarily based on net operating income before depreciation, amortization and certain nonrecurring items. Investments in our Core Portfolio are typically held long-term. Given the contemplated finite life of our Funds, these investments are typically held for shorter terms. Priority distributions and fees earned by us as general partner or managing member of the Funds are eliminated in our Consolidated Financial Statements. See Note 3 in the Notes to Consolidated Financial Statements for information regarding, among other things, revenues from external customers, a measure of profit and loss and total assets with respect to each of our segments. Our profits and losses for both our business and each of our segments are not seasonal. CORPORATE HEADQUARTERS AND EMPLOYEES Our executive office is located at 411 Theodore Fremd Avenue, Suite 300, Rye, New York 10580, and our telephone number is (914) 288-8100. As of December 31, 2015, we had 116 employees, of which 97 were located at our executive office and 19 were located at regional property management offices. None of our employees are covered by collective bargaining agreements. Management believes that its relationship with employees is good. COMPANY WEBSITE All of our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available at no cost at our website at www.acadiarealty.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. These filings can also be accessed through the Securities and Exchange Commission’s website at www.sec.gov. Alternatively, we will provide paper copies of our filings at no cost upon request. If you wish to receive a copy of the Form 10-K, you may contact Robert Masters, Corporate Secretary, at Acadia Realty Trust, 411 Theodore Fremd Avenue, Suite 300, Rye, NY 10580. You may also call (914) 288-8100 to request a copy of the Form 10-K. Information included or referred to on our website is not incorporated by reference in or otherwise a part of this Form 10-K. CODE OF ETHICS AND WHISTLEBLOWER POLICIES The Board of Trustees adopted a Code of Business Conduct and Ethics applicable to all employees, as well as a "Whistleblower Policy." Copies of these documents are available in the Investor Information section of our website. We intend to disclose future amendments to, or waivers from (with respect to our senior executive financial officers), our Code of Ethics in the Investor Information section of our website within four business days following the date of such amendment or waiver. ITEM 1A. RISK FACTORS. If any of the following risks occur, the impact on our business, results of operations and financial condition could be material. This section includes or refers to certain forward-looking statements. Refer to the explanation of the qualifications and limitations on such forward-looking statements discussed in the beginning of this Form 10-K. We rely on revenues derived from key tenants. We derive significant revenues from a concentration of certain key tenants that occupy space at more than one property. We could be adversely affected in the event of the bankruptcy or insolvency of, or a downturn in the business of, any of our key tenants, or in the event that any such tenant does not renew its leases as they expire or renews such leases at lower rental rates. See "Item 2. Properties-Major Tenants" in this Annual Report on Form 10-K for quantified information with respect to the percentage of our minimum rents received from major tenants. Anchor tenants and co-tenancy are crucial to the success of retail properties. Vacated anchor space not only directly reduces rental revenues, but if not re-tenanted with a similar tenant, or one with equal consumer attraction, could adversely affect the entire shopping center primarily through the loss of customer drawing power. This can also occur through the exercise of the right that most anchors have, to vacate and prevent re-tenanting by paying rent for the balance of the lease term ("going dark"), as would the departure of a "shadow" anchor tenant that is owned by another landlord. In addition, in the event that certain anchor tenants cease to occupy a property, such an action may result in a significant number of other tenants having the contractual right to terminate their leases, or pay a reduced rent based on a percentage of the tenant's sales, at the affected property, which could adversely affect the future income from such property ("co-tenancy"). Although, it may not directly reduce our rental revenues, and there are no contractual co-tenancy conditions, vacant retail space adjacent to, or even on the same block as our street and urban properties may similarly affect shopper traffic and re-tenanting activities at our 9


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    properties. See "Item 2. Properties-Major Tenants" in this Annual Report on Form 10-K for quantified information with respect to the percentage of our minimum rents received from major tenants. The bankruptcy of, or a downturn in the business of, any of our major tenants or a significant number of our smaller tenants may adversely affect our cash flows and property values. The bankruptcy of, or a downturn in the business of, any of our major tenants causing them to reject their leases, or to not renew their leases as they expire, or renew at lower rental rates, may adversely affect our cash flows and property values. Furthermore, the impact of vacated anchor space and the potential reduction in customer traffic may adversely impact the balance of tenants at a shopping center. Historically and from time to time, certain of our tenants experienced financial difficulties and filed for bankruptcy protection, typically under Chapter 11 of the United States Bankruptcy Code ("Chapter 11 Bankruptcy"). Pursuant to bankruptcy law, tenants have the right to reject some or all of their leases. In the event a tenant exercises this right, the landlord generally has the right to file a claim for lost rent equal to the greater of either one year's rent (including tenant expense reimbursements) for remaining terms greater than one year, or 15% of the rent remaining under the balance of the lease term, but not to exceed three years rent. Actual amounts to be received in satisfaction of those claims will be subject to the tenant's final bankruptcy plan and the availability of funds to pay its creditors. Although currently none of our major tenants are in bankruptcy, experience shows that there can be no assurance that one or more of our major tenants will be immune from bankruptcy. We may not be able to renew current leases or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms. Upon the expiration of current leases for space located in our properties, we may not be able to re-let all or a portion of that space, or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms. If we are unable to re-let promptly all or a substantial portion of the space located in our properties or if the rental rates we receive upon re-letting are significantly lower than current rates, our net income and ability to make expected distributions to our shareholders will be adversely affected due to the resulting reduction in revenues. There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases. See "Item 2. Properties - Lease Expirations" in this Annual Report on Form 10-K for additional information as to the scheduled lease expirations in our portfolio. E-commerce can have an impact on our business. The use of the internet by consumers continues to gain in popularity. The migration toward e-commerce is expected to continue. This increase in internet sales could result in a downturn in the business of our current tenants in their "brick and mortar" locations and could affect the way future tenants lease space. While we devote considerable effort and resources to analyze and respond to tenant trends, preferences and consumer spending patterns, we cannot predict with certainty what future tenants will want, what future retail spaces will look like and how much revenue will be generated at traditional "bricks and mortar" locations. If we are unable to anticipate and respond promptly to trends in the market because of the illiquid nature of real estate (See the Risk Factor entitled, "Our ability to change our portfolio is limited because real estate investments are illiquid" below), our occupancy levels and financial results could suffer. The economic environment may cause us to lose tenants and may impair our ability to borrow money to purchase properties, refinance existing debt or finance our current redevelopment projects. Our operations and performance depend on general economic conditions, including the health of the consumer. The U.S. economy has historically experienced financial downturns from time to time, including a decline in consumer spending, credit tightening and high unemployment. While we currently believe we have adequate sources of liquidity, there can be no assurance that we will be able to obtain secured or unsecured loan facilities to meet our needs, including to purchase additional properties, to complete current redevelopment projects, or to successfully refinance our properties as loans become due. To the extent that the availability of credit is limited, it would also adversely impact our notes receivable as counterparties may not be able to obtain the financing required to repay the loans upon maturity. 10


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    Political and economic uncertainty could have an adverse effect on us. We cannot predict how current political and economic uncertainty, including uncertainty related to taxation, will affect our critical tenants, joint venture partners, lenders, financial institutions and general economic conditions, including the health and confidence of the consumer and the volatility of the stock market. Political and economic uncertainty poses a risk to us in that it may cause consumers to postpone discretionary spending in response to tighter credit, reduced consumer confidence and other macroeconomic factors affecting consumer spending behavior, resulting in a downturn in the business of our tenants. In the event current political and economic uncertainty results in financial turmoil affecting the banking system and financial markets or significant financial service institution failures, there could be a new or incremental tightening in the credit markets, low liquidity, and extreme volatility in fixed income, credit, currency and equity markets. Each of these could have an adverse effect on our business, financial condition and operating results. There are risks relating to investments in real estate. Real property investments are subject to multiple risks. Real estate values are affected by a number of factors, including: changes in the general economic climate, local conditions (such as an oversupply of space or a reduction in demand for real estate in an area), the quality and philosophy of management, competition from other available space, the ability of the owner to provide adequate maintenance and insurance and to control variable operating costs. Retail properties, in particular, may be affected by changing perceptions of retailers or shoppers regarding the safety, convenience and attractiveness of the property and by the overall climate for the retail industry. Real estate values are also affected by such factors as government regulations, interest rate levels, the availability of financing and potential liability under, and changes in, environmental, zoning, tax and other laws. A significant portion of our income is derived from rental income from real property. Our income and cash flow would be adversely affected if we were unable to rent our vacant space to viable tenants on economically favorable terms. In the event of default by a tenant, we may experience delays in enforcing, as well as incur substantial costs to enforce, our rights as a landlord. In addition, certain significant expenditures associated with each equity investment (such as mortgage payments, real estate taxes and maintenance costs) are generally not reduced even though there may be a reduction in income from the investment. Our ability to change our portfolio is limited because real estate investments are illiquid. Equity investments in real estate are relatively illiquid and, therefore, our ability to change our portfolio promptly in response to changed conditions is limited, which could adversely affect our financial condition and results of operations and our ability to pay dividends and make distributions. Our Board of Trustees may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number of properties in which we may seek to invest or on the concentration of investments in any one geographic region. As discussed under the heading "Our Board of Trustees may change our investment policy without shareholder approval" below, we could change our investment, disposition and financing policies and objectives without a vote of our shareholders, but such change may be delayed or more difficult to implement due to the illiquidity of real estate. Although we have historically used moderate levels of leverage, if we employed higher levels of leverage, it would result in increased risk of default on our obligations and in an increase in debt service requirements, which could adversely affect our financial condition and results of operations and our ability to pay dividends and make distributions. In addition, the viability of the interest rate hedges we use is subject to the strength of the counterparties. We have incurred, and expect to continue to incur, indebtedness to support our activities. Neither our Declaration of Trust nor any policy statement formally adopted by our Board of Trustees limits either the total amount of indebtedness or the specified percentage of indebtedness that we may incur. Accordingly, we could become more highly leveraged, resulting in increased risk of default on our financial obligations and in an increase in debt service requirements. This in turn could adversely affect our financial condition, results of operations and our ability to make distributions. Variable rate debt exposes us to changes in interest rates. Interest expense on our variable rate debt as of December 31, 2015 would increase by $5.6 million annually for a 100 basis point increase in interest rates. This exposure would increase if we seek additional variable rate financing based on pricing and other commercial and financial terms. We enter into interest rate hedging transactions, including interest rate swap and cap agreements, with counterparties, generally, the same lenders who made the loan in question. There can be no guarantee that the future financial condition of these counterparties will enable them to fulfill their obligations under these agreements. 11


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    Competition may adversely affect our ability to purchase properties and to attract and retain tenants. There are numerous commercial developers, real estate companies, financial institutions and other investors with greater financial resources than we have that compete with us in seeking properties for acquisition and tenants who will lease space in our properties. Our competitors include other REITs, financial institutions, private funds, insurance companies, pension funds, private companies, family offices, sovereign wealth funds and individuals. This competition may result in a higher cost for properties than we wish to pay. In addition, retailers at our properties (both in our Core Portfolio and in the portfolios of the Funds) face increasing competition from outlet malls, discount shopping clubs, e-commerce, direct mail and telemarketing, which could (i) reduce rents payable to us and (ii) reduce our ability to attract and retain tenants at our properties leading to increased vacancy rates at our properties. We could be adversely affected by poor market conditions where our properties are geographically concentrated. Our performance depends on the economic conditions in markets in which our properties are concentrated. We have significant exposure to the greater New York and Chicago metropolitan regions, from which we derive 41% and 23% of the annual base rents within our Core Portfolio, respectively and 63% and 8% of annual base rents within our Funds, respectively. Our operating results could be adversely affected if market conditions, such as an oversupply of space or a reduction in demand for real estate, in these areas occur. We have pursued, and may in the future continue to pursue extensive growth opportunities, including investing in new markets, which may result in significant demands on our operational, administrative and financial resources. We are pursuing extensive growth opportunities, some of which have been, and in the future may be, in locations in which we have not historically invested. This expansion places significant demands on our operational, administrative and financial resources. The continued growth of our real estate portfolio can be expected to continue to place a significant strain on our resources. Our future performance will depend in part on our ability to successfully attract and retain qualified management personnel to manage the growth and operations of our business. In addition, the acquired properties may fail to operate at expected levels due to the numerous factors that may affect the value of real estate. There can be no assurance that we will have sufficient resources to identify and manage the properties. Our inability to carry out our growth strategy could adversely affect our financial condition and results of operations. Our earnings growth strategy is based on the acquisition and redevelopment of additional properties, including acquisitions of core properties through our Operating Partnership and our high return investment programs through our Fund platform. The consummation of any future acquisitions will be subject to satisfactory completion of our extensive valuation analysis and due diligence review and to the negotiation of definitive documentation. We cannot be sure that we will be able to implement our strategy because we may have difficulty finding new properties, obtaining necessary entitlements, negotiating with new or existing tenants or securing acceptable financing. Furthermore, if we were unable to obtain sufficient investor capital commitments in order to initiate future Funds, this would adversely impact our current growth strategy. Acquisitions of additional properties entail the risk that investments will fail to perform in accordance with expectations, including operating and leasing expectations. In the context of our business plan, "redevelopment" generally means an expansion or renovation of an existing property. Redevelopment is subject to numerous risks, including risks of construction delays, cost overruns or uncontrollable events that may increase project costs, new project commencement risks such as the receipt of zoning, occupancy and other required governmental approvals and permits, and incurring redevelopment costs in connection with projects that are not pursued to completion. Historically, a component of our growth strategy has been through private-equity type investments made through our RCP Venture. These have included investments in operating retailers. The inability of the retailers to operate profitably would have an adverse impact on income realized from these investments. Through our investments in joint ventures we have also invested in operating businesses that have operational risk in addition to the risks associated with real estate investments, including among other risks, human capital issues, adequate supply of product and material, and merchandising issues. Our redevelopment and construction activities could affect our operating results. We intend to continue the selective redevelopment and construction of retail properties, with our project at City Point currently being our largest redevelopment project (see "Item 1. BUSINESS - INVESTING ACTIVITIES - Funds - Redevelopment Activities" for a description of the City Point project). 12


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    As opportunities arise, we may delay construction until sufficient pre-leasing is reached and financing is in place. Our redevelopment and construction activities include risks that: • We may abandon redevelopment opportunities after expending resources to determine feasibility; • Construction costs of a project may exceed our original estimates; • Occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable; • Financing for redevelopment of a property may not be available to us on favorable terms; • We may not complete construction and lease-up on schedule, resulting in increased debt service expense and construction costs; and • We may not be able to obtain, or may experience delays in obtaining necessary zoning and land use approvals as well as building, occupancy and other required governmental permits and authorizations. Additionally, the time frame required for redevelopment, construction and lease-up of these properties means that we may not realize a significant cash return for several years. If any of the above events occur, the redevelopment of properties may hinder our growth and have an adverse effect on our results of operations and cash flows. In addition, new redevelopment activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management. Redevelopments and acquisitions may fail to perform as expected. Our investment strategy includes the redevelopment and acquisition of retail properties in supply constrained markets in densely populated areas with high average household incomes and significant barriers to entry. The redevelopment and acquisition of properties entails risks that include the following, any of which could adversely affect our results of operations and our ability to meet our obligations: • The property may fail to achieve the returns we have projected, either temporarily or for extended periods; • We may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the properties we identify; • We may not be able to integrate an acquisition into our existing operations successfully; • Properties we redevelop or acquire may fail to achieve the occupancy or rental rates we project, within the time frames we project, at the time we make the decision to invest, which may result in the properties' failure to achieve the returns we projected; • Our pre-acquisition evaluation of the physical condition of each new investment may not detect certain defects or identify necessary repairs until after the property is acquired, which could significantly increase our total acquisition costs or decrease cash flow from the property; and • Our investigation of a property or building prior to our acquisition, and any representations we may receive from the seller of such building or property, may fail to reveal various liabilities, which could reduce the cash flow from the property or increase our acquisition cost. We operate through a partnership structure, which could have an adverse effect on our ability to manage our assets. Our primary property-owning vehicle is the Operating Partnership, of which we are the general partner. Our acquisition of properties through the Operating Partnership in exchange for interests in the Operating Partnership may permit certain tax deferral advantages to limited partners who contribute properties to the Operating Partnership. Since properties contributed to the Operating Partnership may have unrealized gains attributable to the differences between the fair market value and adjusted tax basis in such properties prior to contribution, the sale of such properties could cause adverse tax consequences to the limited partners who contributed such properties. Although we, as the general partner of the Operating Partnership, generally have no obligation to consider the tax consequences of our actions to any limited partner, we own several properties subject to material contractual restrictions for varying periods of time designed to minimize the adverse tax consequences to the limited partners who contributed such properties. Such restrictions may result in significantly reduced flexibility to manage some of our assets. Exclusivity obligation to our Funds. Under the terms of our current Fund (Fund IV), our primary goal is to seek investments for the Fund, subject to certain exceptions. We may only pursue opportunities to acquire retail properties directly through the Operating Partnership if (i) the ownership of the acquisition opportunity by the Fund would create a material conflict of interest for us; (ii) we require the acquisition opportunity for a "like-kind" exchange; (iii) the consideration payable for the acquisition opportunity is our Common Shares, OP Units or other securities or (iv) the investment is outside the parameters of our investment goals for the Fund (which, in general, seeks more opportunistic level returns). As a result, we may not be able to make attractive acquisitions directly and instead may only receive a minority interest in such acquisitions through the Fund. 13


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    Risks of joint ventures. Partnership or joint venture investments may involve risks not otherwise present for investments made solely by us, including the possibility that our partner or co-venturer might become bankrupt, and that our partner or co-venturer may take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT. Other risks of joint venture investments include impasse on decisions, such as a sale, because neither we nor a joint venture partner would have full control over the joint venture. Also, there is no limitation under our organizational documents as to the amount of our funds that may be invested in joint ventures. Additionally, our partners or co-venturers may engage in malfeasance in spite of our efforts to perform a high level of due diligence on them. Such acts may or may not be covered by insurance. Finally, partners and co-venturers may engage in illegal activities which may jeopardize an investment and/or subject us to reputational risk. Any disputes that may arise between joint venture partners and us may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business. Consequently, actions by or disputes with joint venture partners might result in subjecting properties owned by the joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party joint venture partners. Historically our Fund I and Mervyns I joint ventures provided Promote income. There can be no assurance that the joint ventures will continue to operate profitably and thus provide additional Promote income in the future. These factors could limit the return that we receive from such investments or cause our cash flows to be lower than our estimates. In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture. Our structured financing portfolio is subject to specific risks relating to the structure and terms of the instruments and the underlying collateral. We invest in notes receivables and preferred equity investments that are collateralized by the underlying real estate, a direct interest or the borrower’s ownership interest in the entities that own the properties and/or by the borrower’s personal guarantee. The underlying assets are sometimes subordinate in payment and collateral to more senior loans. The ability of a borrower or entity to make payments on these investments may be subject to the senior lender and/or the performance of the underlying real estate. In the event of a default by the borrower or entity on its senior loan, our investment will only be satisfied after the senior loan and we may not be able to recover the full value of the investment. In the event of a bankruptcy of an entity in which we have a preferred equity interest, or in which the borrower has pledged its interest, the assets of the entity may not be sufficient to satisfy our investment. Market factors could have an adverse effect on our share price and our ability to access the public equity markets. One of the factors that may influence the trading price of our Common Shares is the annual dividend rate on our Common Shares as a percentage of its market price. An increase in market interest rates may lead purchasers of our Common Shares to seek a higher annual dividend rate, which could adversely affect the market price of our Common Shares. A decline in our share price, as a result of this or other market factors, could unfavorably impact our ability to raise additional equity in the public markets. The loss of a key executive officer could have an adverse effect on us. Our success depends on the contribution of key management members. The loss of the services of Kenneth F. Bernstein, President and Chief Executive Officer, or other key executive-level employees could have a material adverse effect on our results of operations. Management continues to strengthen our team and provide for succession planning, but there can be no assurance that such planning will be capable of implementation or of the success of such efforts. We have obtained key-man life insurance for Mr. Bernstein. In addition, we have entered into an employment agreement with Mr. Bernstein; however, it can be terminated by Mr. Bernstein at his discretion. We have not entered into employment agreements with other key executive-level employees. Our Board of Trustees may change our investment policy or objectives without shareholder approval. Our Board of Trustees may determine to change our investment and financing policies or objectives, our growth strategy and our debt, capitalization, distribution, acquisition, disposition and operating policies. Our Board of Trustees may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number of properties in which we may seek to invest or on the concentration of investments in any one geographic region. Although our Board of Trustees has no present intention to revise or amend our strategies and policies, it may do so at any time without a vote by our shareholders. Accordingly, the results 14


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    of decisions made by our Board of Trustees as implemented by management may or may not serve the interests of all of our shareholders and could adversely affect our financial condition or results of operations, including our ability to distribute cash to shareholders or qualify as a REIT. Distribution requirements imposed by law limit our operating flexibility. To maintain our status as a REIT for Federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for each calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to Federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year; (ii) 95% of our capital gain net income for that year; and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Internal Revenue Code and to minimize exposure to Federal income and excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our income as well as required debt amortization payments and the capitalization of certain expenses could require us to borrow funds on a short-term basis to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT. The distribution requirements also severely limit our ability to retain earnings to acquire and improve properties or retire outstanding debt. There can be no assurance we have qualified or will remain qualified as a REIT for Federal income tax purposes. We believe that we have consistently met the requirements for qualification as a REIT for Federal income tax purposes beginning with our taxable year ended December 31, 1993, and we intend to continue to meet these requirements in the future. However, qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code, for which there may be only limited judicial or administrative interpretations. No assurance can be given that we have qualified or will remain qualified as a REIT. The Internal Revenue Code provisions and income tax regulations applicable to REITs differ significantly from those applicable to other corporations. The determination of various factual matters and circumstances not entirely within our control can potentially affect our ability to continue to qualify as a REIT. In addition, no assurance can be given that future legislation, regulations, administrative interpretations or court decisions will not significantly change the requirements for qualification as a REIT or adversely affect the Federal income tax consequences of such qualification. Under current law, if we fail to qualify as a REIT, we would not be allowed a deduction for dividends paid to shareholders in computing our net taxable income. In addition, our income would be subject to tax at the regular corporate rates. Also, we could be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. Cash available for distribution to our shareholders would be significantly reduced for each year in which we do not qualify as a REIT. In that event, we would not be required to continue to make distributions. Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us, without the consent of our shareholders, to revoke the REIT election or to otherwise take action that would result in disqualification. Legislative or regulatory tax changes could have an adverse effect on us. There are a number of issues associated with an investment in a REIT that are related to the Federal income tax laws, including, but not limited to, the consequences of our failing to continue to qualify as a REIT. At any time, the Federal income tax laws governing REITs or the administrative interpretations of those laws may be amended or modified. Any new laws or interpretations may take effect retroactively and could adversely affect us or our shareholders. Reduced tax rates applicable to certain corporate dividends paid to most domestic noncorporate shareholders are not generally available to REIT shareholders since a REITs income generally is not subject to corporate level tax. As a result, investment in non-REIT corporations may be viewed as relatively more attractive than investment in REITs by domestic noncorporate investors. This could adversely affect the market price of our shares. Changes in accounting standards may adversely impact our financial results. The Financial Accounting Standards Board (the "FASB"), in conjunction with the U.S. Securities and Exchange Commission, has several key projects on its agenda that could impact how we currently account for our material transactions, including, but not limited to, lease accounting and other convergence projects with the International Accounting Standards Board. In addition, the FASB has the ability to introduce new projects to its agenda which may also impact how we account for our material transactions. At this time, we are unable to predict with certainty which, if any, proposals may be passed, what new legislation may be implemented or what level of impact any such proposal could have on the presentation of our consolidated financial statements, our results of operations and our financial ratios required by our debt covenants. 15


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    Limits on ownership of our capital shares. For us to qualify as a REIT for Federal income tax purposes, among other requirements, not more than 50% of the value of our capital shares may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of each taxable year, and such capital shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (in each case, other than the first such year). Our Declaration of Trust includes certain restrictions regarding transfers of our capital shares and ownership limits that are intended to assist us in satisfying these limitations, among other purposes. These restrictions and limits may not be adequate in all cases, however, to prevent the transfer of our capital shares in violation of the ownership limitations. The ownership limit discussed above may have the effect of delaying, deferring or preventing someone from taking control of us. Actual or constructive ownership of our capital shares in excess of the share ownership limits contained in our Declaration of Trust would cause the violative transfer or ownership to be null and void from the beginning and subject to purchase by us at a price equal to the fair market value of such shares (determined in accordance with the rules set forth in our Declaration of Trust). As a result, if a violative transfer were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex and groups of related individuals or entities may be deemed a single owner and consequently in violation of the share ownership limits. Concentration of ownership by certain investors. As of December 31, 2015, four institutional shareholders own 5% or more individually, and 45.6% in the aggregate, of our Common Shares. A significant concentration of ownership may allow an investor or a group of investors to exert a greater influence over our management and affairs and may have the effect of delaying, deferring or preventing a change in control of us. Restrictions on a potential change of control. Our Board of Trustees is authorized by our Declaration of Trust to establish and issue one or more series of preferred shares without shareholder approval. We have not established any series of preferred shares. However, the establishment and issuance of a series of preferred shares could make more difficult a change of control of us that could be in the best interests of the shareholders. In addition, we have entered into an employment agreement with our Chief Executive Officer and severance agreements are in place with our executives which provide that, upon the occurrence of a change in control of us and either the termination of their employment without cause (as defined) or their resignation for good reason (as defined), those executive officers would be entitled to certain termination or severance payments made by us (which may include a lump sum payment equal to defined percentages of annual salary and prior years' average bonuses, paid in accordance with the terms and conditions of the respective agreement), which could deter a change of control of us that could be in the best interests of the shareholders. Certain provisions of Maryland law may limit the ability of a third party to acquire control of our Company. Under the Maryland General Corporation Law, as amended, which we refer to as the "MGCL," as applicable to REITs, certain "business combinations," including certain mergers, consolidations, share exchanges and asset transfers and certain issuances and reclassifications of equity securities, between a Maryland REIT and any person who beneficially owns 10% or more of the voting power of the trust's outstanding voting shares or an affiliate or an associate, as defined in the MGCL, of the trust who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding shares of beneficial interest of the trust, which we refer to as an "interested shareholder," or an affiliate of the interested shareholder, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. After that five-year period, any such business combination must be recommended by the board of trustees of the trust and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the trust and (2) two-thirds of the votes entitled to be cast by holders of voting shares of the trust other than shares held by the interested shareholder with whom, or with whose affiliate, the business combination is to be effected or held by an affiliate or associate of the interested shareholder, unless, among other conditions, the trust's common shareholders receive a minimum price, as defined in the MGCL, for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its Common Shares. These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of trustees of the trust before the interested shareholder becomes an interested shareholder, and a person is not an interested shareholder if the board of trustees approved in advance the transaction by which the person otherwise would have become an interested shareholder. In approving a transaction, our Board of Trustees may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board. 16


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    The MGCL also provides that holders of "control shares" of a Maryland REIT (defined as voting shares that, when aggregated with all other shares owned by the acquirer or in respect of which the acquirer is entitled to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of "control shares") have no voting rights except to the extent approved by the affirmative vote of holders of at least two-thirds of all the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by officers or by employees who are also trustees of the trust. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares of beneficial interest. Our Bylaws can be amended by our Board of Trustees by majority vote, and there can be no assurance that this provision will not be amended or eliminated at any time in the future. Additionally, Title 3, Subtitle 8 of the MGCL permits our Board of Trustees, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or Bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring or preventing a transaction or a change of control of our Company that might involve a premium to the market price of our Common Shares or otherwise be in the best interests of our shareholders. We are subject to some of these provisions (for example, a two-thirds vote requirement for removing a trustee) by provisions of our Declaration of Trust and Bylaws unrelated to Subtitle 8. Becoming subject to, or the potential to become subject to, these provisions of the MGCL could inhibit, delay or prevent a transaction or a change of control of our Company that might involve a premium price for our shareholders or otherwise be in our or their best interests. In addition, the provisions of our Declaration of Trust on removal of trustees and the provisions of our Bylaws regarding advance notice of shareholder nominations of trustees and other business proposals and restricting shareholder action outside of a shareholders meeting unless such action is taken by unanimous written consent could have a similar effect. Our rights and shareholders' rights to take action against trustees and officers are limited, which could limit recourse in the event of actions not in the best interests of shareholders. As permitted by Maryland law, our Declaration of Trust eliminates the liability of our trustees and officers to the Company and its shareholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • a final judgment based upon a finding of active and deliberate dishonesty by the trustee or officer that was material to the cause of action adjudicated. In addition, our Declaration of Trust authorizes, and our Bylaws obligate, us to indemnify each present or former trustee or officer, to the maximum extent permitted by Maryland law, who is made a party to any proceeding because of his or her service to our Company. As part of these indemnification obligations, we may be obligated to fund the defense costs incurred by our trustees and officers. Outages, computer viruses and similar events could disrupt our operations. We rely on information technology networks and systems, some of which are owned and operated by third parties, to process, transmit and store electronic information. Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist or cyber attacks and similar events. Despite the implementation of network security measures, our systems and those of third parties on which we rely may also be vulnerable to computer viruses and similar disruptions. If we and the third parties on whom we rely are unable to prevent such outages and breaches, our operations could be disrupted. Increased Information Technology ("IT") security threats and more sophisticated computer crime could pose a risk to our systems, networks and services. Cyber incidents can result from deliberate attacks or unintentional events. There have been an increased number of significant cyber attacks targeted at the retail, insurance, financial and banking industries that include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. Cyber attacks may also be carried out in a manner that does not require gaining unauthorized access, such as by causing denial-of-service attacks on websites. Cyber attacks by third parties or insiders utilizes techniques that range from highly sophisticated efforts to electronically circumvent network security or overwhelm website to more traditional intelligence gathering and social engineering aimed at obtaining information necessary to gain access. 17


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    Increased global IT security threats are more sophisticated and targeted computer crimes pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. The open nature of interconnected technologies may allow for a network or Web outage or a privacy breach that reveals sensitive data or transmission of harmful/malicious code to business partners and clients. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures. Cyber attacks may cause substantial cost and other negative consequences, which may include, but are not limited to: • Compromising of confidential information; • Manipulation and destruction of data; • Loss of trade secrets; • System downtimes and operational disruptions; • Remediation cost that may include liability for stolen assets or information and repairing system damage that may have been caused. Remediation may include incentives offered to customers, tenants or other business partners in an effort to maintain the business relationships or due to legal requirements imposed by the Gramm-Leach-Bliley Act of 1999 or the Privacy of Consumer Financial Information Rule; • Loss of revenues resulting from unauthorized use of proprietary information; • Cost to deploy additional protection strategies, training employees and engaging third party experts and consultants; • Reputational damage adversely affecting investor confidence; and • Litigation. While we attempt to mitigate these risks by employing a number of measures, including a dedicated IT team, employee training and background checks, maintenance of backup systems and utilization of third party service providers to provide redundancy over multiple locations, and comprehensive monitoring of our networks and systems along with purchasing cyber security insurance coverage, our systems, networks and services remain potentially vulnerable to advanced threats. Third Party Vendor Risk - Network and Data redundancy We are dependent and rely on third party vendors including Cloud providers for redundancy of our network, system data, security and data integrity. If a vendor fails to provide services as agreed, suffers outages, business interruptions, financial difficulties or bankruptcy we may experience service interruption, delays or loss of information. Cloud computing is dependent upon having access to an internet connection in order to retrieve data. If a natural disaster, blackout or other unforeseen event were to occur that disrupted the ability to obtain an internet connection we may experience a slowdown or delay in our operations. We conduct appropriate due diligence on all services providers and restrict access, use and disclosure of personal information. We engage vendors with formal written agreements clearly defining the roles of the parties specifying privacy and data security responsibilities. Use of social media may adversely impact our reputation and business. There has been a significant increase in the use of social media platforms, including weblogs, social media websites and other forms of Internet-based communications, which allow individuals access to a broad audience including our significant business constituents. The availability of information through these platforms is virtually immediate as is its impact and may be posted at any time without affording us an opportunity to redress or correct it timely. This information may be adverse to our interests, may be inaccurate and may harm our reputation, brand image, goodwill, performance, prospects or business. Furthermore, these platforms increase the risk of unauthorized disclosure of material non-public Company information. Climate change and catastrophic risk from natural perils. Some of our current properties could be subject to potential natural or other disasters. We may acquire properties that are located in areas which are subject to natural disasters. Any properties located in coastal regions would therefore be affected by any future increases in sea levels or in the frequency or severity of hurricanes and tropical storms, whether such increases are caused by global climate changes or other factors. Climate change is a long-term change in the statistical distribution of weather patterns over periods of time that range from decades to millions of years. It may be a change in the average weather conditions or a change in the distribution of weather events with respect to an average, for example, greater or fewer extreme weather events. Climate change may be limited to a specific region, or may occur across the whole Earth. 18


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    There may be significant physical effects of climate change that have the potential to have a material effect on our business and operations. These effects can impact our personnel, physical assets, tenants and overall operations. Physical impacts of climate change may include: • Increased storm intensity and severity of weather (e.g., floods or hurricanes); • Sea level rise; and • Extreme temperatures. As a result of these physical impacts from climate-related events, we may be vulnerable to the following: • Risks of property damage to our retail properties; • Indirect financial and operational impacts from disruptions to the operations of major tenants located in our retail properties from severe weather, such as hurricanes or floods; • Increased insurance premiums and deductibles, or a decrease in the availability of coverage, for properties in areas subject to severe weather; • Increased insurance claims and liabilities; • Increases in energy costs impacting operational returns; • Changes in the availability or quality of water, or other natural resources on which the tenant's business depends; • Decreased consumer demand for consumer products or services resulting from physical changes associated with climate change (e.g., warmer temperatures or decreasing shoreline could reduce demand for residential and commercial properties previously viewed as desirable); • Incorrect long-term valuation of an equity investment due to changing conditions not previously anticipated at the time of the investment; and • Economic disruptions arising from the above. Possible liability relating to environmental matters. Under various Federal, state and local environmental laws, statutes, ordinances, rules and regulations, as an owner of real property, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under our property, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may impose liability without regard to whether, we knew of or were responsible for, the presence or disposal of those substances. This liability may be imposed on us in connection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect our ability to sell or rent that property or to borrow using that property as collateral, which, in turn, could reduce our revenues and affect our ability to make distributions. A property can also be adversely affected either through physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of any of our tenants to satisfy any obligations with respect to the property leased to that tenant, we may be required to satisfy such obligations. In addition, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease. From time to time, in connection with the conduct of our business, and prior to the acquisition of any property from a third party or as required by our financing sources, we authorize the preparation of Phase I environmental reports and, when necessary, Phase II environmental reports, with respect to our properties. Based upon these environmental reports and our ongoing review of our properties, we are currently not aware of any environmental condition with respect to any of our properties that we believe would be reasonably likely to have a material adverse effect on us. There can be no assurance, however, that the environmental reports will reveal all environmental conditions at our properties or that the following will not expose us to material liability in the future: • The discovery of previously unknown environmental conditions; • Changes in law; • Activities of tenants; and • Activities relating to properties in the vicinity of our properties. 19


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    Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of our tenants, which could adversely affect our financial condition or results of operations. Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition. We carry comprehensive general liability, all-risk property, extended coverage, loss of rent insurance, and environmental liability on our properties, with policy specifications and insured limits customarily carried for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, we maintain a minimum of twelve months loss of rent insurance. In addition, there are certain types of losses, such as losses resulting from wars, terrorism or acts of God that generally are not insured because they are either uninsurable or not economically insurable. Should an uninsured loss or a loss in excess of insured limits occur, we could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types would adversely affect our financial condition. Future terrorist attacks or civil unrest could harm the demand for, and the value of, our properties. Future terrorist attacks, civil unrest and other acts of terrorism or war, could harm the demand for, and the value of, our properties. Terrorist attacks could directly impact the value of our properties through damage, destruction, loss or increased security costs, and the availability of insurance for such acts may be limited or may be subject to substantial cost increases. To the extent that our tenants are impacted by future attacks, their ability to continue to honor obligations under their existing leases could be adversely affected. A decrease in retail demand could make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates. These acts might erode business and consumer confidence and spending, and might result in increased volatility in national and international financial markets and economies. Any one of these events might decrease demand for real estate, decrease or delay the occupancy of our properties, and limit our access to capital or increase our cost of raising capital. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. 20


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    ITEM 2. PROPERTIES. RETAIL PROPERTIES The discussion and tables in this Item 2. include properties held through our Core Portfolio and our Funds. We define our Core Portfolio as those properties either 100% owned by, or partially owned through joint venture interests by, the Operating Partnership, or subsidiaries thereof, not including those properties owned through our Funds. As of December 31, 2015, there are 90 operating properties in our Core Portfolio totaling approximately 5.6 million square feet of gross leasable area ("GLA"). The Core Portfolio properties are located in 12 states and the District of Columbia and primarily consist of street retail and dense suburban shopping centers. These properties are diverse in size, ranging from approximately 2,000 to 900,000 square feet and as of December 31, 2015, were, in total, 96% occupied. As of December 31, 2015, we owned and operated 27 properties totaling approximately 2.3 million square feet of GLA in our Funds, excluding 30 properties under redevelopment. In addition to shopping centers, the Funds have invested in mixed-use properties, which generally include retail activities. The Fund properties are located in 9 states and the District of Columbia and as of December 31, 2015, were, in total, 83% occupied. Within our Core Portfolio and Funds, we had approximately 700 leases as of December 31, 2015. A majority of our rental revenues were from national retailers and consist of rents received under long-term leases. These leases generally provide for the monthly payment of fixed minimum rent and the tenants' pro-rata share of the real estate taxes, insurance, utilities and common area maintenance of the shopping centers. Certain of our leases also provide for the payment of rent based on a percentage of a tenant's gross sales in excess of a stipulated annual amount, either in addition to, or in place of, minimum rents. Minimum rents, percentage rents and expense reimbursements accounted for approximately 89% of our total revenues for the year ended December 31, 2015. Four of our Core Portfolio properties and one of our Fund properties are subject to long-term ground leases in which a third party owns and has leased the underlying land to us. We pay rent for the use of the land and are responsible for all costs and expenses associated with the building and improvements at all five locations. No individual property contributed in excess of 10% of our total revenues for the years ended December 31, 2015, 2014 or 2013. See Note 8 in the Notes to Consolidated Financial Statements, for information on the mortgage debt pertaining to our properties. The following sets forth more specific information with respect to each of our shopping centers at December 31, 2015: Retail Property Location Year Ownership GLA Occupancy Annual Annual Anchor Tenants Constructed Interest % Base Base Current Lease (C) 12/31/15 (1) Rent (2) Rent Expiration/ Acquired PSF Lease Option (A) Expiration Core Portfolio STREET AND URBAN RETAIL Chicago Metro 664 N. Michigan Chicago 2013 (A) Fee 18,141 100% $ 4,399,313 $ 242.51 Tommy Bahama 2029/2039 Ann Taylor Loft 2028/2033 840 N. Michigan Chicago 2014 (A) Fee/JV 87,135 100% 7,548,895 86.63 H&M 2018/2028 Verizon 2024/2034 Rush and Walton Streets Chicago 2011/14 (A) Fee 41,533 100% 6,205,858 156.00 Lululemon (4) 2019/2029 Brioni 2023/2033 BHLDN 2023/2033 Marc Jacobs 613-623 West Diversey Chicago 2006 (A) Fee 19,265 26% 428,662 88.16 651-671 West Diversey Chicago 2011 (A) Fee 46,259 100% 1,922,016 41.55 Trader Joe's 2021/2041 Urban Outfitters 2021/2031 Clark Street and W. Chicago 2011/12 (A) Fee 23,531 96% 1,232,791 54.82 Ann Taylor Diversey (5) 2021/2031 Akira 2018/2028 21


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    Retail Property Location Year Ownership GLA Occupancy Annual Annual Anchor Tenants Constructed Interest % Base Base Current Lease (C) 12/31/15 (1) Rent (2) Rent Expiration/ Acquired PSF Lease Option (A) Expiration Halsted and Armitage Chicago 2011/12 (A) Fee 44,658 95% 1,831,119 43.07 Intermix 2017/2022 (6) BCBG 2018/2028 Club Monaco 2016/2021 North Lincoln Park (7) Chicago 2011/14 (A) Fee 51,255 82% 1,659,944 39.68 Aldo 2019/2024 Carhartt 2021/2031 Roosevelt Galleria Chicago 2015 (A) Fee 37,995 100% 1,066,439 28.07 Petco 2024/2039 Vitamin Shoppe 2028/2038 Total Chicago Metro 369,772 92% 26,295,037 77.09 New York Metro 83 Spring Street Manhattan 2012 (A) Fee 3,000 100% 686,272 228.76 Paper Source 2022/2027 152-154 Spring Street Manhattan 2014 (A) Fee 2,936 100% 2,209,681 752.62 Kate Spade Saturday 2025/— 15 Mercer Street Manhattan 2011 (A) Fee 3,375 100% 418,689 124.06 3 x 1 Denim 2021/ — East 17th Street Manhattan 2008 (A) Fee 11,467 100% 1,300,014 113.37 Union Fare 2036/— West 54th Street Manhattan 2007 (A) Fee 5,773 86% 2,058,708 413.46 Stage Coach Tavern 2033/— 61 Main Street Westport 2014 (A) Fee 3,400 100% 351,560 103.40 181 Main Street Westport 2012 (A) Fee 11,350 100% 852,150 75.08 TD Bank 2026/2041 4401 White Plains Road Bronx 2011 (A) Fee 12,964 100% 625,000 48.21 Walgreens 2060/— Bartow Avenue Bronx 2005 (C) Fee 14,676 100% 371,379 25.31 Sleepy's 2019/— 239 Greenwich Avenue Greenwich 1998 (A) Fee/JV 16,553 (8) 100% 1,469,653 88.78 252-256 Greenwich Greenwich 2014 (A) Fee 9,172 100% 1,238,827 135.07 Calypso 2016/2026 Avenue Jack Wills 2020/2025 Madewell 2020/2025 2914 Third Avenue Bronx 2006 (A) Fee 40,320 100% 898,890 22.29 Planet Fitness 2027/2042 868 Broadway Manhattan 2013 (A) Fee 2,031 100% 702,531 345.90 Dr Martens 2022/2027 313-315 Bowery Manhattan 2013 (A) Fee 6,600 100% 435,600 66.00 120 West Broadway Manhattan 2013 (A) Fee 13,838 91% 1,873,981 148.28 HSBC Bank 2021/2031 Citibank 2022/2037 131-135 Prince Street Manhattan 2014 (A) Fee 3,200 100% 1,269,324 396.66 Follie Follie 2020/2030 Uno de 50 2017/2022 Shops at Grand Queens 2014 (A) Fee 99,975 91% 2,736,357 29.99 Stop and Shop 2023/2043 2520 Flatbush Avenue Brooklyn 2014 (A) Fee 29,114 100% 1,054,338 36.21 Bob's Discount Furniture 2028/2033 Capital One 2024/2034 Total New York Metro 289,744 96% 20,552,954 73.67 22


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    Retail Property Location Year Ownership GLA Occupancy Annual Annual Anchor Tenants Constructed Interest % Base Base Current Lease (C) 12/31/15 (1) Rent (2) Rent Expiration/ Acquired PSF Lease Option (A) Expiration San Francisco Metro City Center San Francisco 2015 (A) Fee 204,648 98% 7,333,292 36.76 City Target 2025/2035 Best Buy 2018/2042 Total San Francisco 204,648 98% 7,333,292 36.76 Metro District of Columbia Metro 1739-53 & 1801-03 Washington 2012 (A) Fee 22,907 100% 1,321,630 57.70 Ruth Chris Connecticut Avenue D.C. Steakhouse 2020/— TD Bank 2024/2044 Rhode Island Place Washington 2012 (A) Fee 57,529 90% 1,460,379 28.07 Shopping Center D.C. TJ Maxx 2017/— M Street and Wisonsin Washington 2011/14 (A) Fee/JV 31,629 100% 2,715,244 85.85 Lacoste 2019/2025 Corridor (9) D.C. Juicy Couture 2018/2028 Coach 2017/— Total District of Columbia Metro 112,065 95% 5,497,253 51.59 Boston Metro Whole Foods 330-340 River Street Cambridge 2012 (A) Fee 54,226 100% 1,130,470 20.85 2021/2051 Total Boston Metro 54,226 100% 1,130,470 20.85 TOTAL STREET AND URBAN RETAIL 1,030,455 95% 60,809,006 62.03 SUBURBAN PROPERTIES New Jersey Elmwood Park Elmwood Park 1998 (A) Fee 149,070 97% 3,833,276 26.43 Acme 2017/2052 Shopping Center Walgreen’s 2022/2062 Marketplace of Absecon Absecon 1998 (A) Fee 104,556 95% 1,416,309 14.30 Rite Aid 2020/2040 White Horse Liquors 2019/202024 60 Orange Street Bloomfield 2012 (A) Fee/JV 101,715 100% 695,000 6.83 Home Depot 2032/2052 New York Village Commons Smithtown 1998 (A) Fee 87,330 98% 2,737,535 31.96 Shopping Center Branch Shopping Smithtown 1998 (A) LI (3) 124,439 92% 2,915,843 25.61 CVS 2020/— Center LA Fitness 2027/2042 Amboy Road Staten Island 2005 (A) LI (3) 63,290 100% 2,046,520 32.34 Stop & Shop 2028/2043 Pacesetter Park Ramapo 1999 (A) Fee 98,159 85% 1,047,708 12.54 Stop & Shop Shopping Center 2020/2040 West Shore Expressway Staten Island 2007 (A) Fee 55,000 100% 1,391,500 25.30 LA Fitness 2022/2037 Crossroads Shopping White Plains 1998 (A) Fee/JV (10) 310,762 94% 6,846,836 23.36 Kmart 2017/2032 Center Home Goods 2018/2033 PetSmart 2024/2039 23


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    Retail Property Location Year Ownership GLA Occupancy Annual Annual Anchor Tenants Constructed Interest % Base Base Current Lease (C) 12/31/15 (1) Rent (2) Rent Expiration/ Acquired PSF Lease Option (A) Expiration New Loudon Center Latham 1993 (A) Fee 255,673 100% 2,033,458 7.95 Price Chopper 2020/2035 AC Moore 2016/— Hobby Lobby 2021/2031 28 Jericho Turnpike Westbury 2012 (A) Fee 96,363 100% 1,650,000 17.12 Kohl's 2020/2050 Bedford Green Bedford Hills 2014 (A) Fee 90,472 81% 2,188,367 29.99 Shop Rite 2016/2031 Connecticut Town Line Plaza Rocky Hill 1998 (A) Fee 206,346 99% 1,720,212 16.18 Stop & Shop 2024/2064 Wal-Mart(11) Massachusetts Methuen Shopping Methuen 1998 (A) Fee 130,021 100% 1,257,627 9.67 Market Basket Center 2025/2035 Wal-Mart 2016/2051 Crescent Plaza Brockton 1993 (A) Fee 218,148 96% 1,812,245 8.65 Supervalu 2017/2047 Home Depot 2021/2056 201 Needham Street Newton 2014 (A) Fee 20,409 100% 591,861 29.00 Michael's 2023/2033 163 Highland Needham 2015 (A) Fee 40,505 100% 1,275,673 31.49 Staples 2020/2035 Petco 2025/2040 Vermont Gateway Shopping South 1999 (A) Fee 101,655 100% 2,037,757 20.05 Supervalu Center Burlington 2024/2053 Illinois Hobson West Plaza Naperville 1998 (A) Fee 99,137 96% 1,158,605 12.14 Garden Fresh Markets 2017/2022 Indiana Merrillville Plaza Hobart 1998 (A) Fee 236,087 100% 3,384,713 14.40 TJ Maxx 2019/2034 Art Van 2023/2038 Michigan Bloomfield Town Bloomfield Hills 1998 (A) Fee 235,786 100% 3,576,014 15.17 TJ Maxx Square 2019/2034 Home Goods 2016/2026 Best Buy 2021/2041 Dick's Sporting Goods 2023/2043 Ohio Mad River Station (12) Dayton 1999 (A) Fee 123,335 83% 1,396,788 13.69 Babies ‘R’ Us 2020/ — Delaware Brandywine Town Wilmington 2003 (A) Fee/JV (13) 824,411 93% 12,328,789 16.06 Bed, Bath & Center Beyond 2019/2029 Dick’s Sporting Goods 2018/2033 Lowe’s Home Centers 2018/2048 Target 2018/2058 HH Gregg 2020/2035 24


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    Retail Property Location Year Ownership GLA Occupancy Annual Annual Anchor Tenants Constructed Interest % Base Base Current Lease (C) 12/31/15 (1) Rent (2) Rent Expiration/ Acquired PSF Lease Option (A) Expiration Market Square Wilmington 2003 (A) Fee/JV (13) 102,047 95% 2,490,003 25.67 TJ Maxx Shopping Center 2016/2021 Trader Joe’s 2019/2034 Route 202 Shopping Wilmington 2006 (C) LI (3) 19,984 75% 637,701 42.55 Center Pennsylvania Mark Plaza Edwardsville 1993 (C) LI (3) 106,856 100% 240,664 2.25 Kmart 2019/2049 Plaza 422 Lebanon 1993 (C) Fee 156,279 100% 835,956 5.35 Home Depot 2028/2058 Route 6 Plaza Honesdale 1994 (C) Fee 175,589 100% 1,295,907 7.38 Kmart 2020/2070 Dollar Tree 2018/2033 Peebles 2024/2034 Chestnut Hill (14) Philadelphia 2006 (A) Fee 37,646 100% 908,141 24.12 Abington Towne Center Abington 1998 (A) Fee 216,278 96% 1,023,468 20.76 TJ Maxx 2016/2021 Target (15) TOTAL SUBURBAN PROPERTIES 4,587,348 96% 66,774,476 16.10 Total Core Portfolio 5,617,803 96% 127,583,482 24.88 Fund Portfolio Fund II Properties New York 216th Street Manhattan 2005 (A) Fee/JV 60,000 100% 2,574,000 42.90 City of New York 2027/2032 161st Street Manhattan 2005 (A) Fee/JV 249,336 41% 3,238,376 31.91 Total Fund II Properties 309,336 52% 5,812,376 35.99 Fund III Properties New York Cortlandt Towne Center Mohegan Lake 2009 (A) Fee 635,457 93% 10,134,945 17.14 Walmart 2018/2048 A&P 2022/2047 Best Buy 2017/2032 Petsmart 2019/2034 654 Broadway Manhattan 2011 (A) Fee 2,896 100% 583,495 201.48 Penguin 2023/2033 640 Broadway Manhattan 2012 (A) Fee/JV (16) 4,251 79% 818,375 245.17 Swatch 2023/2028 New Hyde Park New Hyde Park 2011 (A) Fee 32,602 83% 1,172,792 43.41 Shopping Center Petsmart 2024/2039 3780-3858 Nostrand Brooklyn 2013 (A) Fee 42,912 78% 1,559,139 46.45 Avenue Maryland Arundel Plaza Glen Burnie 2012 (A) Fee/JV (17) 265,116 95% 1,320,784 5.25 Giant Food 2016/2026 Lowes 2019/2059 Illinois Heritage Shops Chicago 2011 (A) Fee 82,098 97% 3,279,138 41.20 LA Fitness 2025/2040 Ann Taylor 2016/2026 Total Fund III Properties 1,065,332 93% 18,868,668 19.07 25


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    Retail Property Location Year Ownership GLA Occupancy Annual Annual Anchor Tenants Constructed Interest % Base Base Current Lease (C) 12/31/15 (1) Rent (2) Rent Expiration/ Acquired PSF Lease Option (A) Expiration Fund IV Properties New York 1151 Third Avenue Manhattan 2013 (A) Fee 13,250 100% 1,700,850 128.37 Vineyard Vines 2025/2035 17 East 71st Street Manhattan 2014 (A) Fee 8,432 100% 1,792,487 212.58 1035 Third Avenue Manhattan 2015 (A) Fee 7,617 71% 918,500 168.94 New Jersey 2819 Kennedy North Bergen 2013 (A) Fee/JV (17) 47,539 48% 605,558 26.75 Aldi 2030/2050 Boulevard Paramus Plaza Paramus 2013 (A) Fee/JV (18) 154,409 63% 1,847,945 18.89 Babies R Us 2019/2044 Ashley Furniture 2024/2034 Virginia Promenade at Manassas Manassas 2013 (A) Fee/JV (17) 265,442 99% 3,480,754 13.30 Home Depot 2031/2071 HH Gregg 2020/2030 Lake Montclair Center Dumfries 2013 (A) Fee 105,832 95% 1,893,136 18.85 Food Lion 2023/2043 Maryland 1701 Belmont Avenue Catonsville 2012 (A) Fee/JV (17) 58,674 100% 936,166 15.96 Best Buy 2017/2032 Delaware Eden Square Bear 2014 (A) Fee/JV (17) 231,392 73% 2,393,735 14.09 Giant, 2024/2059 Lowe's 2017/2032 Illinois 938 W. North Avenue Chicago 2013 (A) Fee/JV (19) 33,228 16% 326,350 61.00 Sephora 2024/2029 Georgia Broughton Street Savannah 2014 (A) Fee/JV (20) 24,961 100% 981,469 33.48 J. Crew 2025/2035 Portfolio L'Occitane 2025/2030 California 146 Geary Street San Francisco 2015 (A) Fee 11,436 100% 300,000 26.23 Union and Fillmore San Francisco 2015 (A) Fee/JV (21) 9,104 100% 635,279 69.78 Collection Total Fund IV Properties 971,316 81% 17,812,229 22.24 Total Fund Operating Properties (22) 2,345,984 83% $ 42,493,273 $ 21.77 Notes: (1) Does not include space for which lease term had not yet commenced as of December 31, 2015. (2) These amounts include, where material, the effective rent, net of concessions, including free rent. (3) We are a ground lessee under a long-term ground lease. (4) Includes 6 properties (8-12 E. Walton, 11 E. Walton, 50-54 E. Walton, 56 E. Walton, 930 Rush Street and 21 E. Chestnut). (5) Includes 3 properties (639 W. Diversey, 662 W. Diversey and 2731 N. Clark). (6) Includes 9 properties (819 W. Armitage, 823 W. Armitage, 837 W. Armitage, 841 W. Armitage, 843-45 W. Armitage, 851 W. Armitage, 853 W. Armitage, 2206-08 N. Halsted and 2633 N. Halsted). (7) Includes 6 properties (2140 N. Clybourn, 2299 N. Clybourn, 1520 Milwaukee Avenue, 1240 W. Belmont, 1521 W. Belmont and 865 W. North Avenue). (8) In addition to the 16,834 square feet of retail GLA, this property also has 21 apartments comprising 14,434 square feet. (9) Includes seven properties (1533 Wisconsin Ave., 2809 M St, 3025 M St., 3034 M St., 3146 M St and 3259-61 M St., in which we have a 50% investment, and 3200 M St. in which we have a 100% investment). (10) We have a 49% investment in this property. (11) Includes a 97,300 square foot Wal-Mart which is not owned by us. 26


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    (12) The GLA for this property excludes 29,857 square feet of office space. (13) We have a 22% investment in this property. (14) Property consists of two buildings. (15) Includes a 157,616 square foot Target Store that is not owned by us. (16) The Fund has a 63% investment in this property. (17) The Fund has a 90% investment in this property. (18) The Fund has a 50% investment in this property. (19) The Fund has a 80% investment in this property. (20) The Fund has a 50% investment in this portfolio. (21) The Fund has a 90% investment in this portfolio of 3 properties. (22) In addition to the Fund operating properties, there are 30 properties under redevelopment; Sherman Plaza (Fund II), City Point (Fund II) , Broad Hollow Commons (Fund III), Cortlandt Crossing (Fund III), 3104 M Street (Fund III), Broughton Street Portfolio (Fund IV, includes 21 properties), 27 E. 61st (Fund IV), 210 Bowery (Fund IV), 801 Madison Avenue (Fund IV) and 650 Bald Hill Road (Fund IV). MAJOR TENANTS No individual retail tenant accounted for more than 3.1% of base rents for the year ended December 31, 2015, or occupied more than 6.6% of total leased GLA as of December 31, 2015. The following table sets forth certain information for the 20 largest retail tenants by base rent for leases in place as of December 31, 2015. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in properties, including the Funds (GLA and Annualized Base Rent in thousands): Percentage of Total Number of Represented by Retail Tenant Stores in Portfolio Annualized Base Total Portfolio Retail Tenant (1) Total GLA Rent (2) GLA Annualized Base Rent The Stop & Shop Supermarket Co 5 220 $ 3,643 4.3% 3.1% Best Buy Co., Inc. 4 107 3,628 2.1% 3.1% Supervalu Inc. 4 187 3,425 3.7% 2.9% Target Corp. 2 156 3,225 3.1% 2.8% LA Fitness International LLC 3 112 2,624 2.2% 2.2% Verizon Wireless 2 31 2,331 0.6% 2.0% Ann Inc. 3 16 2,309 0.3% 2.0% TJX Companies, Inc. 9 217 2,131 4.3% 1.8% The Home Depot, Inc. 4 337 2,036 6.6% 1.7% Walgreens 4 40 1,552 0.8% 1.3% Kate Spade & Co. 2 4 1,379 0.1% 1.2% Sleepy's Inc. 11 50 1,321 1.0% 1.1% Citibank 6 18 1,304 0.4% 1.1% Lululemon Athletica, Inc. 2 3 1,267 0.1% 1.1% Kmart 3 274 1,170 5.4% 1.0% JP Morgan Chase Co. 7 19 1,128 0.4% 1.0% Bob's Discount Furniture 2 35 1,064 0.7% 0.9% Toronto-Dominion Bank 2 16 1,061 0.3% 0.9% Trader Joe's Co., Inc. 2 19 967 0.4% 0.8% Gap, Inc. 4 18 964 0.3% 0.8% Total 81 1,879 $ 38,529 37.1% 32.8% Notes: (1) Does not include the following tenants that only operate at one location within the Company's portfolio; Tommy Bahama, H&M, Price Chopper, Union Fare, Marc Jacobs and Kohl's. (2) Base rents do not include percentage rents, additional rents for property expense reimbursements and contractual rent escalations. 27


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    LEASE EXPIRATIONS The following table shows scheduled lease expirations for retail tenants in place as of December 31, 2015, assuming that none of the tenants exercise renewal options. (GLA and Annualized Base Rent in thousands): Core Portfolio: Annualized Base Rent (1) GLA Number of Leases maturing in Leases Current Annual Rent Percentage of Total Square Feet Percentage of Total Month to Month 8 $ 453 —% 23 1% 2016 (2) 66 10,210 8% 575 11% 2017 57 11,473 9% 508 10% 2018 70 19,935 16% 725 14% 2019 45 8,623 7% 446 9% 2020 47 12,296 10% 632 12% 2021 27 7,447 6% 389 8% 2022 28 7,076 6% 176 3% 2023 22 7,599 6% 297 6% 2024 37 15,446 12% 498 10% 2025 34 9,513 8% 279 5% Thereafter 30 17,083 12% 575 11% Total 471 $ 127,154 100% 5,123 100% Fund Portfolio: Annualized Base Rent (1) GLA Number of Leases maturing in Leases Current Annual Rent Percentage of Total Square Feet Percentage of Total Month to Month 8 $ 529 1% 26 1% 2016 (2) 22 1,879 4% 110 6% 2017 23 4,450 11% 178 9% 2018 29 4,807 11% 307 16% 2019 22 4,325 10% 359 19% 2020 16 1,960 5% 69 4% 2021 6 1,274 3% 80 4% 2022 9 2,230 5% 114 6% 2023 10 2,023 5% 76 4% 2024 15 5,021 12% 177 9% 2025 18 5,174 12% 90 5% Thereafter 16 8,820 21% 354 17% Total 194 $ 42,492 100% 1,940 100% Notes: (1) Base rents do not include percentage rents, additional rents for property expense reimbursements, nor contractual rent escalations. (2) The 88 leases scheduled to expire during 2016 are for tenants at 42 properties located in 34 markets. No single market represents a material amount of exposure to the Company as it relates to the rents from these leases. Given the diversity of these markets, properties and characteristics of the individual spaces, the Company cannot make any general representations as it relates to the expiring rents and the rates for which these spaces may be re-leased. 28


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    GEOGRAPHIC CONCENTRATIONS The following table summarizes our retail properties by region as of December 31, 2015. The amounts below include our pro-rata share of GLA and annualized base rent for the Operating Partnership’s partial ownership interest in properties, including the Funds (GLA and Annualized Base Rent in thousands): Percentage of Total Represented by Region Annualized Base Annualized Rent per Occupied % Base Occupied Square Annualized Region GLA (1) (3) (2) Rent (2) (3) Foot (3) GLA Base Rent Core Portfolio: Operating Properties: New York Metro 1,662 96% $ 45,482 $ 28.66 36% 41% New England 771 99% 9,826 12.93 16% 9% Chicago Metro 340 96% 24,991 76.55 7% 23% Midwest 694 96% 9,516 14.24 15% 9% Washington D.C Metro 100 95% 4,476 47.19 2% 4% San Francisco Metro 205 98% 7,333 36.76 4% 7% Mid-Atlantic 918 95% 8,235 9.40 20% 7% Total Core Operating Properties 4,690 97% $ 109,859 $ 24.38 100% 100% Fund Portfolio: Operating Properties: New York Metro 239 77% $ 5,302 $ 28.83 51% 63% San Francisco Metro 5 100% 202 44.41 1% 2% Chicago Metro 22 74% 713 43.05 5% 8% Mid-Atlantic 197 91% 2,208 12.31 43% 26% Total Fund Operating Properties 463 82% $ 8,425 $ 22.02 100% 99% Fund Redevelopment Portfolio: Southeast 14 29% $ 121 $ 30.92 90% 100% Other 1 —% — — 10% —% Total Fund Redevelopment Properties 15 27% $ 121 $ 28.11 100% 100% Notes: (1) Property GLA includes a total of 255,000 square feet, which is not owned by us. This square footage has been excluded for calculating annualized base rent per square foot. (2) The above occupancy and rent amounts do not include space that is currently leased, but for which payment of rent had not commenced as of December 31, 2015. (3) The amounts presented reflect the Operating Partnership's pro-rata shares of properties included within each region. 29


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    ITEM 3. LEGAL PROCEEDINGS. We are involved in various matters of litigation arising in the normal course of business. While we are unable to predict with certainty the outcome of any particular matter, Management is of the opinion that, when such litigation is resolved, our resulting exposure to loss contingencies, if any, will not have a significant effect on our consolidated financial position, results of operations, or liquidity. During August 2009, we terminated the employment of a former Senior Vice President (the "Former Employee") for engaging in conduct that materially violated the Company's employee handbook. We determined that the behavior fell within the definition of "cause" in his severance agreement with us and therefore did not pay him anything thereunder. The Former Employee brought a lawsuit against us in New York State Supreme Court (the "Court"), in the amount of $0.9 million alleging breach of the severance agreement. On August 7, 2014, the Court granted summary judgment in favor of us, as defendant, and against plaintiff, the Former Employee, finding that his conduct in fact and law, constituted "cause" under his severance agreement. The Court rendered two decisions, one granting our motion for summary judgment and a second denying the Former Employee's motion to dismiss our answer as an abuse of judicial discretion. The Former Employee has only appealed the latter decision. We believe that it will be successful on appeal. In addition to the foregoing, we recently settled or are currently involved in the following litigation matters: During July 2013, a lawsuit was brought against us relating to the 2011 flood at Mark Plaza by Kmart Corporation in the Luzerne County Court of Common Pleas, State of Pennsylvania. The lawsuit alleged a breach of contract and negligence relating to landlord responsibility to prevent damage to tenant as a result of the flood and for the subsequent damage to tenant's property, including lost profits. The tenant was seeking judgment in excess of $9.0 million. During the third quarter of 2015, the case was settled for $1.1 million. Of this amount, $0.8 million was paid by insurance and we $0.3 million. During December 2013, in connection with our Fund II’s City Point Project, Albee Development LLC ("Albee") and a non-affiliated construction manager were served with a Summons With Notice as well as a Demand for Arbitration by Casino Development Group, Inc. ("Casino"), the former contractor responsible for the excavation and concrete work at the City Point Project. Albee terminated the contract with Casino for cause prior to completion of the contract. Casino was seeking approximately $7.4 million. During the second quarter of 2015, the case was settled for $3.3 million, of which the Operating Partnership's share was $0.6 million. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 30


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    PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES AND PERFORMANCE GRAPH. (a) Market Information, dividends and record holders of our Common Shares The following table shows, for the period indicated, the high and low sales price for our Common Shares as reported on the New York Stock Exchange, and cash dividends declared during the two years ended December 31, 2015 and 2014: Quarter Ended Dividend 2015 High Low Per Share March 31, 2015 $ 36.82 $ 32.13 $ 0.24 June 30, 2015 35.36 29.05 0.24 September 30, 2015 32.67 28.34 0.24 December 31, 2015 (1) 34.06 29.80 0.50 2014 March 31, 2014 $ 27.06 $ 24.47 $ 0.23 June 30, 2014 28.60 25.98 0.23 September 30, 2014 29.36 27.00 0.23 December 31, 2014 (2) 33.18 27.52 0.54 Note: (1) Includes a special dividend of $0.25 for the quarter ended December 31, 2015 (2) Includes a special dividend of $0.30 for the quarter ended December 31, 2014 At February 19, 2016, there were 208 holders of record of our Common Shares. We have determined for income tax purposes that 68% of the total dividends distributed to shareholders during 2015 represented ordinary income and 32% represented capital gains. The dividend for the quarter ended December 31, 2015, was paid on January 15, 2016, and is taxable in 2015. Our cash flow is affected by a number of factors, including the revenues received from rental properties, our operating expenses, the interest expense on our borrowings, the ability of lessees to meet their obligations to us and unanticipated capital expenditures. Future dividends paid by us will be at the discretion of the Trustees and will depend on our actual cash flows, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as the Trustees deem relevant. In addition, we have the ability to pay dividends in cash, Common Shares or a combination thereof, subject to a minimum of 10% in cash. (b) Issuer purchases of equity securities We have an existing share repurchase program that authorizes management, at its discretion, to repurchase up to $20.0 million of our outstanding Common Shares. The program may be discontinued or extended at any time and there is no assurance that we will purchase the full amount authorized. There were no Common Shares repurchased by us during the year ended December 31, 2015. Under this program we have repurchased 2.1 million Common Shares, none of which were repurchased after December 2001. As of December 31, 2015, management may repurchase up to approximately $7.5 million of our outstanding Common Shares under this program. (c) Securities authorized for issuance under equity compensation plans During 2012, the Company terminated the 1999 and 2003 Share Incentive Plans (the "1999 and 2003 Plans") and adopted the Amended and Restated 2006 Share Incentive Plan (the "Amended 2006 Plan"). The Amended 2006 Plan amended and restated our 2006 Share Incentive Plan and increased the authorization to issue options, Restricted Shares and LTIP Units (collectively "Awards") available to officers and employees by 1.9 million shares, for a total of 2.1 million shares available to be issued. See Note 15 in the Notes to Consolidated Financial Statements, for a summary of our Share Incentive Plans. The following table provides information related to the Amended 2006 Plan as of December 31, 2015: 31


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    Equity Compensation Plan Information (a) (b) (c) Number of securities remaining available Number of securities to Weighted - average for future issuance under be issued upon exercise exercise price of equity compensation plans of outstanding options, outstanding options, (excluding securities warrants and rights warrants and rights reflected in column (a)) Equity compensation plans approved by security holders 3,249 $ 22.27 851,125 Equity compensation plans not approved by security holders — — — Total 3,249 $ 22.27 851,125 Remaining Common Shares available under the Amended 2006 Plan are as follows: Outstanding Common Shares as of December 31, 2015 70,258,415 Outstanding OP Units as of December 31, 2015 3,857,368 Total Outstanding Common Shares and OP Units 74,115,783 Common Shares and OP Units pursuant to the 1999 and 2003 Plans 5,193,681 Common Shares pursuant to the Amended 2006 Plan 2,100,000 Total Common Shares available under equity compensation plans 7,293,681 Less: Issuance of Restricted Shares and LTIP Units Granted (3,670,783) Issuance of Options Granted (2,771,773) Number of Common Shares remaining available 851,125 (d) Share Price Performance Graph The following graph compares the cumulative total shareholder return for our Common Shares for the period commencing December 31, 2010, through December 31, 2015, with the cumulative total return on the Russell 2000 Index ("Russell 2000"), the NAREIT All Equity REIT Index (the "NAREIT") and the SNL Shopping Center REITs (the "SNL") over the same period. Total return values for the Russell 2000, the NAREIT, the SNL and the Common Shares were calculated based upon cumulative total return assuming the investment of $100.00 in each of the Russell 2000, the NAREIT, the SNL and our Common Shares on December 31, 2010, and assuming reinvestment of dividends. The shareholder return as set forth in the table below is not necessarily indicative of future performance. The information in this section is not "soliciting material," is not deemed "filed" with the SEC, and is not to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing. Comparison of five Year Cumulative Total Return among Acadia Realty Trust, the Russell 2000, the NAREIT and the SNL: 32


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    Period Ended Index 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Acadia Realty Trust $ 100.00 $ 114.59 $ 147.08 $ 150.59 $ 202.52 $ 217.68 Russell 2000 100.00 95.82 111.49 154.78 162.35 155.18 NAREIT All Equity REIT Index 100.00 108.28 129.62 133.32 170.68 175.51 SNL REIT Retail Shopping Ctr Index 100.00 97.14 122.65 131.04 169.80 178.88 ITEM 6. SELECTED FINANCIAL DATA The following table sets forth, on a historical basis, our selected financial data. This information should be read in conjunction with our audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this Form 10-K. Funds from operations ("FFO") amounts for the year ended December 31, 2015 have been adjusted as set forth in "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Net Income to Funds from Operations." 33


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    Years ended December 31, (dollars in thousands, except per share amounts) 2015 2014 2013 2012 2011 OPERATING DATA: Revenues $ 217,262 $ 195,012 $ 168,286 $ 114,987 $ 97,857 Operating expenses, excluding depreciation and reserves 88,850 79,104 72,108 58,939 51,024 Interest expense 37,162 39,091 39,474 22,811 23,343 Gain on disposition of properties 89,063 13,138 — — — Depreciation and amortization 60,751 49,645 40,299 27,888 20,975 Equity in earnings of unconsolidated affiliates 13,287 8,723 12,382 550 1,555 Gain on sale of properties of unconsolidated affiliates 24,043 102,855 — 3,061 — Impairment of investment in unconsolidated affiliates — — — (2,032) — Impairment of asset (5,000) — (1,500) — — Reserve for notes receivable — — — (405) — Gain on involuntary conversion of asset — — — 2,368 — (Loss) gain on debt extinguishment (135) (335) (765) (198) 1,268 Income tax (provision) benefit (1,787) (629) (19) 574 (461) Income from continuing operations 149,970 150,924 26,503 9,267 4,877 Income from discontinued operations — 1,222 18,137 80,669 48,838 Net income 149,970 152,146 44,640 89,936 53,715 (Income) loss attributable to noncontrolling interests: Continuing operations (84,262) (80,059) 7,523 14,352 13,734 Discontinued operations — (1,023) (12,048) (64,582) (15,894) Net income attributable to noncontrolling interests (84,262) (81,082) (4,525) (50,230) (2,160) Net income attributable to Common Shareholders $ 65,708 $ 71,064 $ 40,115 $ 39,706 $ 51,555 Supplemental Information: Income from continuing operations attributable to Common Shareholders $ 65,708 $ 70,865 $ 34,026 $ 23,619 $ 18,611 Income from discontinued operations attributable to Common Shareholders — 199 6,089 16,087 32,944 Net income attributable to Common Shareholders $ 65,708 $ 71,064 $ 40,115 $ 39,706 $ 51,555 Basic earnings per share: Income from continuing operations $ 0.94 $ 1.18 $ 0.61 $ 0.51 $ 0.45 Income from discontinued operations — — 0.11 0.34 0.80 Basic earnings per share $ 0.94 $ 1.18 $ 0.72 $ 0.85 $ 1.25 Diluted earnings per share: Income from continuing operations $ 0.94 $ 1.18 $ 0.61 $ 0.51 $ 0.45 Income from discontinued operations — — 0.11 0.34 0.80 Diluted earnings per share $ 0.94 $ 1.18 $ 0.72 $ 0.85 $ 1.25 Weighted average number of Common Shares outstanding basic 68,851 59,402 54,919 45,854 40,697 diluted 68,870 59,426 54,982 46,335 40,986 Cash dividends declared per Common Share $ 1.22 $ 1.23 $ 0.86 $ 0.72 $ 0.72 34


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    Years ended December 31, (dollars in thousands, except per share amounts) 2015 2014 2013 2012 2011 BALANCE SHEET DATA: Real estate before accumulated depreciation $ 2,736,283 $ 2,208,595 $ 1,819,053 $ 1,287,198 $ 897,370 Total assets 3,032,319 2,720,721 2,264,957 1,908,440 1,653,319 Total mortgage indebtedness 1,050,051 991,502 1,039,997 613,181 531,881 Total common shareholders’ equity 1,100,488 1,055,541 704,236 622,797 384,114 Noncontrolling interests 420,866 380,416 417,352 447,459 385,195 Total equity 1,521,354 1,435,957 1,121,588 1,070,256 769,309 OTHER: Funds from operations attributable to Common Shareholders and Common OP Unit holders (1) 111,560 78,882 67,161 48,845 42,931 Cash flows provided by (used in): Operating activities 113,598 82,519 65,233 59,001 65,715 Investing activities (354,503) (268,516) (87,879) (136,745) (153,157) Financing activities 96,101 324,388 10,022 79,745 56,662 Note: (1) The Company considers funds from operations ("FFO") as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and net property operating income ("NOI") to be appropriate supplemental disclosures of operating performance for an equity REIT due to their widespread acceptance and use within the REIT and analyst communities. FFO and NOI are presented to assist investors in analyzing the performance of the Company. They are helpful as they exclude various items included in net income that are not indicative of the operating performance, such as gains (losses) from sales of depreciated property, depreciation and amortization, and impairment of depreciable real estate. In addition, NOI excludes interest expense. The Company's method of calculating FFO and NOI may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generated from operations as defined by generally accepted accounting principles ("GAAP") and is not indicative of cash available to fund all cash needs, including distributions. It should not be considered as an alternative to net income for the purpose of evaluating the Company's performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, the Company defines FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW As of December 31, 2015, we operated 147 properties, which we own or have an ownership interest in, within our Core Portfolio or Funds. Our Core Portfolio consists of those properties either 100% owned, or partially owned through joint venture interests by the Operating Partnership, or subsidiaries thereof, not including those properties owned through our Funds. These 147 properties primarily consist of street and urban retail, and dense suburban shopping centers. The properties we operate are located primarily in markets within the United States' top ten metropolitan areas. There are 90 properties in our Core Portfolio totaling approximately 5.6 million square feet. Fund II has four properties, two of which (representing 0.3 million square feet) are currently operating, one is under construction, and one is in the design phase. Fund III has 10 properties, seven of which (representing 1.1 million square feet) are currently operating and three of which are in the design phase. Fund IV has 43 properties, 18 of which (representing 1.0 million square feet) are operating and 25 are under development. The majority of our operating income is derived from rental revenues from operating properties, including expense recoveries from tenants, offset by operating and overhead expenses. As our RCP Venture invests in operating companies, we consider these investments to be private-equity style, as opposed to real estate, investments. Since these are not traditional investments in operating rental real estate but investments in operating businesses, the Operating Partnership typically invests in these through a taxable REIT subsidiary ("TRS"). Our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns. We focus on the following fundamentals to achieve this objective: 35


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    • Own and operate a Core Portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas and create value through accretive redevelopment and re-tenanting activities coupled with the acquisition of high-quality assets that have the long- term potential to outperform the asset class as part of our Core asset recycling and acquisition initiative. • Generate additional external growth through an opportunistic yet disciplined acquisition program within our Funds. We target transactions with high inherent opportunity for the creation of additional value through: ◦ value-add investments in street retail properties, located in established and "next generation" submarkets, with re-tenanting or repositioning opportunities, ◦ opportunistic acquisitions of well-located real-estate anchored by distressed retailers, and ◦ other opportunistic acquisitions which may include high-yield acquisitions and purchases of distressed debt. These may also include joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets. • Maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth. RESULTS OF OPERATIONS See Note 3 in the Notes to Consolidated Financial Statements for an overview of our three reportable segments. A discussion of the significant variances and primary factors contributing thereto within the results of operations for the years ended December 31, 2015, 2014 and 2013 are addressed below: Comparison of the year ended December 31, 2015 ("2015") to the year ended December 31, 2014 ("2014") Revenues 2015 2014 Core Structured Core Structured (dollars in millions) Portfolio Funds Financings Portfolio Funds Financings Rental income $ 121.2 $ 37.5 $ — $ 102.1 $ 43.0 $ — Interest income — — 16.6 — — 12.6 Expense reimbursements 26.5 9.8 — 22.1 10.6 — Other 2.3 1.8 1.6 0.8 1.1 2.7 Total revenues $ 150.0 $ 49.1 $ 18.2 $ 125.0 $ 54.7 $ 15.3 Rental income in the Core Portfolio increased $19.1 million primarily as a result of additional rents from property acquisitions in 2014 and 2015 ("Core Acquisitions"). Rental income in the Funds decreased $5.5 million due to decreases of $4.7 million relating to property dispositions in 2015 ("Fund Dispositions") and an anticipated significant vacancy at 161st Street in connection with its redevelopment. These decreases were partially offset by property acquisitions in 2015 and 2014 ("Fund Acquisitions"). The $4.0 million increase in interest income in the Structured Financing Portfolio was a result of $2.7 million of additional interest from loans originated in 2014 and 2015 as well as the collection of $1.5 million of interest that was previously reserved. Expense reimbursements in the Core Portfolio increased $4.4 million primarily as a result of Core Acquisitions as well as additional repairs and maintenance during 2015. Other income in the Core Portfolio increased $1.5 million primarily as a result of a gain on the acquisition of the unaffiliated partner's remaining interest in the Route 202 Shopping Center during 2015. Other income in the Structured Financing Portfolio for 2015 relates to the collection of a note receivable in excess of carrying value, including default interest and other costs. In 2014, the $2.7 million relates to the collection of two notes that were previously reserved for. 36


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    Operating Expenses 2015 2014 Core Structured Core Structured (dollars in millions) Portfolio Funds Financings Portfolio Funds Financings Property operating $ 19.2 $ 9.2 $ — $ 15.1 $ 9.7 $ — Other operating 1.1 3.5 — 3.6 0.2 — Real estate taxes 16.9 8.5 — 14.4 8.7 — General and administrative 28.6 1.8 — 24.8 1.7 0.9 Depreciation and amortization 46.2 14.5 — 35.9 13.8 — Impairment of asset 5.0 — — — — — Total operating expenses $ 117.0 $ 37.5 $ — $ 93.8 $ 34.1 $ 0.9 Property operating expenses in the Core Portfolio increased $4.1 million primarily as a result of Core Acquisitions as well as additional repairs and maintenance during 2015. Other operating expenses in the Core Portfolio decreased $2.5 million as a result of lower acquisition costs during 2015. Other operating expenses in the Funds increased $3.3 million as a result of higher acquisition costs during 2015. Real estate taxes in the Core Portfolio increased $2.5 million primarily as a result of Core Acquisitions. General and administrative in the Core Portfolio increased $3.8 million primarily as a result of (i) increased compensation expense of $2.5 million in 2015 and (ii) higher legal and other professional fees of $0.9 million in 2015. General and administrative expenses decreased $0.9 million in Structured Financings primarily as a result of legal fees incurred during 2014 associated with collection efforts on non-performing notes receivable. The $10.3 million increase in depreciation and amortization in the Core Portfolio was attributable to Core Acquisitions. The impairment of asset in the Core Portfolio was a charge at a property within the Brandywine Portfolio. Other 2015 2014 Core Structured Core Structured (dollars in millions) Portfolio Funds Financings Portfolio Funds Financings Equity in earnings (losses) of unconsolidated affiliates $ 1.2 $ 12.2 $ — $ (0.1) $ 8.8 $ — Gain on disposition of properties of unconsolidated affiliates — 24.0 — — 102.9 — Loss on debt extinguishment — (0.1) — — (0.3) — Interest and other finance expense (27.9) (9.2) — (27.0) (12.1) — Gain on disposition of properties — 89.1 — 12.6 0.5 — Income tax provision (0.6) (1.2) — (0.2) (0.4) — Income from discontinued operations — — — — 1.2 — Loss attributable to noncontrolling interests: - Continuing operations (0.1) (84.1) — (3.2) (76.9) — - Discontinued operations — — — — (1.0) — Equity in earnings of unconsolidated affiliates in the Funds increased $3.4 million primarily due to additional distributions in excess of basis from the RCP Venture in 2015. The gain on disposition of properties of unconsolidated affiliates in the Funds during 2015 represents our pro-rata share of gain on sale from Parkway Crossing and the White City Shopping Center. Gain on disposition of properties of unconsolidated affiliates in the Funds in 2014 resulted from our pro-rata share of gain on sale of investments in the Fund III and Fund IV Lincoln Road Portfolios. 37


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    Interest and other finance expense in the Funds decreased $2.9 million from (i) a $3.7 million increase in capitalized interest related to our City Point redevelopment project and (ii) a $3.3 million decrease related to lower average interest rates during 2015. These decreases were offset by a $4.0 million increase related to higher average outstanding borrowings during 2015. Gain on disposition of properties in the Core Portfolio during 2014 represents the gain on the foreclosure of the Walnut Hill Plaza. Gain on disposition of properties in the Funds in 2015 represents our gain on the sales of air rights on Phase III at our City Point development, Lincoln Park Centre and Liberty Avenue. Net income attributable to noncontrolling interests in the Funds represents their share of all Fund variances discussed above. Comparison of the year ended December 31, 2014 ("2014") to the year ended December 31, 2013 ("2013") Revenues 2014 2013 Core Structured Core Structured (dollars in millions) Portfolio Funds Financings Portfolio Funds Financings Rental income $ 102.1 $ 43.0 $ — $ 90.2 $ 32.5 $ — Interest income — — 12.6 — — 11.8 Expense reimbursements 22.1 10.6 — 19.1 9.3 — Other 0.8 1.1 2.7 1.1 4.3 — Total revenues $ 125.0 $ 54.7 $ 15.3 $ 110.4 $ 46.1 $ 11.8 Rental income in the Core Portfolio increased $11.9 million primarily as a result of additional rents from 2013 and 2014 Core Acquisitions. These increases were partially offset by a $1.7 million reduction in rental income following the disposition of Walnut Hill Plaza. Rental income in the Funds increased $10.5 million primarily as a result of additional rents of $6.0 million related to 2014 Fund Portfolio property acquisitions ("2014 Fund Acquisitions") and $4.3 million as a result of re-anchoring and leasing activities within the Fund Portfolio ("Fund Re-tenanting"). Expense reimbursements in the Core Portfolio increased $3.0 million primarily as a result of $2.0 million related to 2013 and 2014 Core Acquisitions as well as $0.7 million related to reimbursement of higher winter related operating costs in 2014. Expense reimbursements in the Funds increased $1.3 million primarily as a result of the 2014 Fund Acquisitions and reimbursement of higher winter related operating costs in 2014. Other income in the Funds decreased $3.2 million primarily due to the recognition of income upon the collection of a note receivable during 2013, which had been previously written off. Other income in Structured Financing increased $2.7 million as a result of the collection of two notes that had been reserved prior to 2014. Operating Expenses 2014 2013 Core Structured Core Structured (dollars in millions) Portfolio Funds Financings Portfolio Funds Financings Property operating $ 15.1 $ 9.7 $ — $ 13.5 $ 7.5 $ — Other operating 3.6 0.2 — 2.7 1.9 — Real estate taxes 14.4 8.7 — 12.8 8.1 — General and administrative 24.8 1.7 0.9 24.4 1.2 — Depreciation and amortization 35.9 13.8 — 29.0 11.3 — Impairment of asset — — — 1.5 — — Total operating expenses $ 93.8 $ 34.1 $ 0.9 $ 83.9 $ 30.0 $ — Property operating expenses in the Core Portfolio increased $1.6 million primarily as a result of the 2013 and 2014 Core Acquisitions. Property operating expenses in the Funds increased $2.2 million primarily as a result of $1.5 million attributable to the 2014 Fund Acquisitions and $0.5 million related to Fund Re-tenanting. Other operating in the Funds decreased $1.3 million as a result of a decrease in acquisition related costs. 38


  • Page 44

    Real estate taxes in the Core Portfolio increased $1.6 million primarily as a result of the 2013 and 2014 Core Acquisitions. General and administrative expenses increased $0.9 million in Structured Financing primarily as a result of legal fees incurred during 2014 associated with collection efforts on non-performing notes receivable. Depreciation and amortization expenses in the Core Portfolio increased $6.9 million primarily as a result of the 2013 and 2014 Core Acquisitions. Depreciation and amortization expenses in the Funds increased $2.5 million primarily as a result of the 2014 Fund Acquisitions. Impairment of asset in the Core Portfolio represents a charge related to Walnut Hill Plaza during 2013. Other 2014 2013 Core Structured Core Structured (dollars in millions) Portfolio Funds Financings Portfolio Funds Financings Equity in earnings (losses) of unconsolidated affiliates $ 0.1 $ 8.8 $ — $ (0.1) $ 12.5 $ — Gain on disposition of properties of unconsolidated affiliates — 102.9 — — — — Loss on debt extinguishment — (0.3) — (0.3) (0.5) — Interest and other finance expense (27.0) (12.1) — (26.2) (13.3) — Gain on disposition of properties 12.6 0.5 — — — — Income tax (provision) benefit (0.2) (0.4) — 0.1 (0.1) — Income from discontinued operations — 1.2 — 6.9 11.2 — (Loss) income attributable to noncontrolling interests: - Continuing operations (3.2) (76.9) — (1.0) 8.5 — - Discontinued operations — (1.0) — (2.4) (9.6) — Equity in earnings (losses) of unconsolidated affiliates in the Funds decreased $3.7 million primarily due to the loss of operating income from the sale of our investments in the Fund III and Fund IV Lincoln Road Portfolios during 2014. The gain on disposition of properties of unconsolidated affiliates in the Funds during 2014 represents our pro-rata share of gain from the sale of the Fund III and Fund IV Lincoln Road Portfolios. Interest expense in the Funds decreased $1.2 million primarily as a result of a (i) $3.4 million increase in capitalized interest related to our City Point redevelopment project during 2014 and (ii) a $1.7 million decrease related to lower average interest rates during 2014. These decreases were partially offset by a (i) $2.8 million increase related to higher average outstanding borrowings during 2014 and (ii) $0.8 million related to an increase in market rate adjustments of assumed debt interest expense during 2014. Gain on disposition of properties in the Core Portfolio during 2014 represents the gain on the foreclosure of the Walnut Hill Plaza (See Note 2 in the Notes to Consolidated Financial Statements). Income from discontinued operations primarily represents activity related to properties sold during 2013. (Loss) income attributable to noncontrolling interests - Continuing operations and Discontinued operations primarily represents the noncontrolling interests' share of all the Funds variances discussed above. CORE PORTFOLIO The following discussion of net property operating income ("NOI") and rent spreads on new and renewal leases includes the activity from both our consolidated and our pro-rata share of unconsolidated properties within our Core Portfolio. Our Funds invest primarily in properties that typically require significant leasing and redevelopment. Given that the Funds are finite-life investment vehicles, these properties are sold following stabilization. For these reasons, we believe NOI and rent spreads are not meaningful measures for our Fund investments. 39


  • Page 45

    NOI represents property revenues less property expenses. We consider NOI and rent spreads on new and renewal leases for our Core Portfolio to be appropriate supplemental disclosures of portfolio operating performance due to their widespread acceptance and use within the REIT investor and analyst communities. NOI and rent spreads on new and renewal leases are presented to assist investors in analyzing our property performance, however, our method of calculating these may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. Net Property Operating Income NOI is determined as follows: RECONCILIATION OF CONSOLIDATED OPERATING INCOME TO NET OPERATING INCOME - CORE PORTFOLIO (dollars in millions) Year Ended December 31, 2015 2014 Consolidated Operating Income $ 62.7 $ 66.3 Add back: General and administrative 30.4 27.4 Depreciation and amortization 60.7 49.6 Impairment of asset 5.0 — Less: Interest income (16.6) (12.6) Above/below market rent, straight-line rent and other adjustments (9.8) (8.6) Consolidated NOI 132.4 122.1 Noncontrolling interest in consolidated NOI (34.7) (38.9) Less: Operating Partnership's interest in Fund NOI included above (5.8) (6.3) Add: Operating Partnership's share of unconsolidated joint ventures NOI 1 10.4 4.4 NOI - Core Portfolio $ 102.3 $ 81.3 Note: (1) Does not include the Operating Partnership's share of NOI from unconsolidated joint ventures within the Funds Same-Property NOI includes Core Portfolio properties that we owned for both the current and prior periods presented, but excludes those properties which we acquired, sold or expected to be sold, and redeveloped during these periods. The following table summarizes Same-Property NOI for our Core Portfolio for the years ended December 31, 2015 and 2014: 40


  • Page 46

    SAME-PROPERTY NET OPERATING INCOME - CORE PORTFOLIO Year Ended December 31, (dollars in millions) 2015 2014 Core Portfolio NOI - Continuing Operations $ 102.3 $ 81.3 Less properties excluded from Same-Property NOI (28.7) (10.4) Same-Property NOI $ 73.6 $ 70.9 Percent change from 2014 4.0% Components of Same-Property NOI Same-Property Revenues $ 99.8 $ 96.0 Same-Property Operating Expenses 26.2 25.1 Same-Property NOI $ 73.6 $ 70.9 The 4.0% increase in Same-Property NOI was primarily attributable to increased rents and occupancy gains during 2015. Rent Spreads on Core Portfolio New and Renewal Leases The following table summarizes rent spreads on both a cash basis and straight-line basis for new and renewal leases based on leases executed within our Core Portfolio for the year ended December 31, 2015. Cash basis represents a comparison of rent most recently paid on the previous lease as compared to the initial rent paid on the new lease. Straight-line basis represents a comparison of rents as adjusted for contractual escalations, abated rent and lease incentives for the same comparable leases. Year Ended December 31, 2015 Core Portfolio New and Renewal Leases Cash Basis Straight-Line Basis Number of new and renewal leases executed 53 53 Gross leasable area 325,627 325,627 New base rent $ 19.23 $ 19.95 Previous base rent $ 17.41 $ 16.79 Percent growth in base rent 10.5% 18.8% Average cost per square foot (1) $ 8.5 $ 8.5 Weighted average lease term (years) 6.4 6.4 Note: (1) The average cost per square foot includes tenant improvement costs, leasing commissions and tenant allowances. 41


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    RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS For the Years Ended December 31, (dollars in thousands) 2015 2014 2013 2012 2011 Net income attributable to Common Shareholders $ 65,708 $ 71,064 $ 40,115 $ 39,706 $ 51,555 Depreciation of real estate and amortization of leasing costs: (net of noncontrolling interests' share) 52,013 38,020 31,432 24,671 19,823 Gain on sale (net of noncontrolling interests’ share) (11,114) (33,438) (6,378) (16,060) (31,716) Income attributable to Common OP Unit holders 3,811 3,203 470 510 635 Impairment of asset (net of noncontrolling interests’ share) 1,111 — 1,500 — 2,616 Distributions - Preferred OP Units 31 33 22 18 18 Funds from operations attributable to Common Shareholders and Common OP Unit holders (1) $ 111,560 $ 78,882 $ 67,161 $ 48,845 $ 42,931 Funds From Operations per Share - Diluted Weighted average number of Common Shares and Common OP Units 73,067 62,420 55,954 46,940 41,467 Diluted Funds from operations, per Common Share and Common OP Unit $ 1.53 $ 1.26 $ 1.20 $ 1.04 $ 1.04 Note: (1) We consider funds from operations ("FFO") as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and net property operating income ("NOI") to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO and NOI are presented to assist investors in analyzing our performance. They are helpful as they exclude various items included in net income that are not indicative of the operating performance, such as gains (losses) from sales of depreciated property, depreciation and amortization, and impairment of depreciable real estate. In addition, NOI excludes interest expense. Our method of calculating FFO and NOI may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generated from operations as defined by generally accepted accounting principles ("GAAP") and is not indicative of cash available to fund all cash needs, including distributions. It should not be considered as an alternative to net income for the purpose of evaluating our performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, we define FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment of depreciable real estate, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. LIQUIDITY AND CAPITAL RESOURCES Uses of Liquidity Our principal uses of liquidity are (i) distributions to our shareholders and OP unit holders, (ii) investments which include the funding of our capital committed to the Funds and property acquisitions and redevelopment/re-tenanting activities within our Core Portfolio, (iii) distributions to our Fund investors and (iv) debt service and loan repayments. Distributions In order to qualify as a REIT for Federal income tax purposes, we must currently distribute at least 90% of our taxable income to our shareholders. For the year ended December 31, 2015, we paid dividends and distributions on our Common Shares and Common OP Units totaling $92.5 million, which were primarily funded from the Operating Partnership's share of operating cash flow. This amount included a $21.8 million special dividend that was paid in January 2015, which related to the Operating Partnership's share of cash proceeds from property dispositions during 2014. Distributions of $1.8 million were made to noncontrolling interests in Fund I during the year ended December 31, 2015 primarily as a result of asset sales in the RCP Venture. 42


  • Page 48

    Distributions of $1.4 million were made to noncontrolling interests in Fund II during the year ended December 31, 2015 primarily as a result of operating cash flows. Distributions of $61.8 million were made to noncontrolling interests in Fund III during the year ended December 31, 2015. Of this, $57.9 million resulted from proceeds following the dispositions of Lincoln Park Centre, White City Shopping Center and Parkway Crossing as discussed in Note 2 to the Notes to Consolidated Financial Statements. $3.0 million resulted from operating cash flows and $0.9 million resulted from financing proceeds. Distributions of $4.6 million were made to noncontrolling interests in Fund IV during the year ended December 31, 2015. Of this, $0.2 million was made from operating cash flows and $4.4 million resulted from financing proceeds. Distributions to other noncontrolling interests within Fund joint ventures totaled $1.7 million for the year ended December 31, 2015. Investments During 2015, we acquired an additional 4.6% interest in Fund III from a limited partner for $7.3 million, giving us an aggregate 24.5% interest in Fund III. During January 2016, we acquired an additional 8.3% interest in Fund II from a limited partner for $18.4 million, giving us an aggregate 28.3% interest in Fund II. Fund I and Mervyns I Fund I and Mervyns I have returned all invested capital and accumulated preferred return thus triggering our Promote in all future Fund I and Mervyns I earnings and distributions. As of December 31, 2015, $86.6 million has been invested in Fund I and Mervyns I, of which the Operating Partnership contributed $19.2 million. As of December 31, 2015, Fund I has been liquidated. In addition, we, along with our Fund I investors, have invested in Mervyns as discussed in Note 4 to the Consolidated Financial Statements of this Form 10- K. Fund II and Mervyns II To date, Fund II’s primary investment focus has been in investments involving significant redevelopment activities and the RCP Venture. As of December 31, 2015, $300.0 million has been invested in Fund II and Mervyns II, of which the Operating Partnership contributed $60.0 million. During January 2016, the Operating Partnership acquired an additional 8.3% interest in Fund II from one of the investors for $18.4 million. During September of 2004, through Fund II, we launched our New York Urban/Infill Redevelopment Initiative. Fund II, together with an unaffiliated partner, formed Acadia Urban Development LLC ("Acadia Urban Development") for the purpose of acquiring, constructing, redeveloping, owning, operating, leasing and managing certain retail or mixed-use real estate properties in the New York City metropolitan area. The unaffiliated partner agreed to invest 10% of required capital up to a maximum of $2.2 million and Fund II, the managing member, agreed to invest the balance to acquire assets in which Acadia Urban Development agreed to invest. Of the eight properties acquired by Acadia Urban Development, four have been sold. Of the remaining four assets, one is currently at, or near, stabilization, one is under contract for disposition, one is currently under construction and one is in the pre-construction phase as previously discussed in "-INVESTING ACTIVITIES- REDEVELOPMENT ACTIVITIES" in Item 1. of this Form 10-K. Redevelopment costs incurred during 2015 by Acadia Urban Development in connection with the New York Urban/Infill Redevelopment Initiative totaled $46.3 million. Anticipated additional costs for the property currently under construction are currently estimated to range between $48.1 and $68.1 million. These amounts are net of anticipated contributions from the proceeds of residential tower sales. RCP Venture See Note 4 in the Notes to Consolidated Financial Statements, for a table summarizing the RCP Venture investments from inception through December 31, 2015. Fund III During 2007, we formed Fund III with 14 institutional investors, including all of the investors from Fund I and a majority of the investors from Fund II with $502.5 million of committed discretionary capital. During 2012, the committed capital amount was 43


  • Page 49

    reduced to $475.0 million and during 2015, this amount was further reduced to $450.0 million. As of December 31, 2015, $387.5 million has been invested in Fund III, of which the Operating Partnership contributed $77.1 million. The remaining $62.5 million of unfunded capital will be used to fund current redevelopment projects. During December 2015, the Operating Partnership acquired an additional 4.6% interest in Fund III from one of the investors for $7.3 million. Fund III has invested in three redevelopment projects as previously discussed in "—INVESTING ACTIVITIES-REDEVELOPMENT ACTIVITIES" in Item 1. of this Form 10-K. Remaining anticipated costs for the three projects currently owned by Fund III that can be estimated aggregate between $68.7 million and $88.7 million. In addition to its three redevelopment projects noted above, Fund III also owns, or has ownership interests in, the following seven assets comprising approximately 1.1 million square feet as follows: (dollars in millions) Property Location Date Acquired Purchase Price GLA 3780-3858 Nostrand Avenue Brooklyn, NY February 2013 $ 18.5 40,300 Arundel Plaza Glen Burnie, MD August 2012 17.6 265,100 640 Broadway New York, NY February 2012 32.5 39,600 New Hyde Park New Hyde Park, NY December 2011 11.2 32,600 654 Broadway New York, NY December 2011 13.7 18,700 The Heritage Shops at Millennium Park Chicago, IL April 2011 31.6 81,700 Cortlandt Towne Center (1) Westchester Co. NY January 2009 78.0 639,400 Total $ 203.1 1,117,400 Note: (1) Fund III sold a 65% interest in this property subsequent to December 31, 2015. Fund IV During 2012, we formed Fund IV with 17 principally institutional investors as well as some high-net worth individuals with $540.6 million of committed discretionary capital. As of December 31, 2015, $179.4 million has been invested in Fund IV, of which the Operating Partnership contributed $41.5 million. The remaining $361.2 million of unfunded capital will be used to fund future acquisitions and current redevelopment projects. Fund IV has invested in three redevelopment projects as previously discussed in "—INVESTING ACTIVITIES-REDEVELOPMENT ACTIVITIES" in Item 1. of this Form 10-K. Remaining costs for these projects are currently estimated to aggregate between $49.9 million and $72.9 million. In addition to its redevelopment projects, Fund IV also owns, or has ownership interests in, the following 17 assets compromising 1.0 million square feet as follows: 44


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    (dollars in millions) Property Location Date Acquired Purchase Price GLA Restaurants at Fort Point Boston, MA January 2016 $ 11.5 15,711 1964 Union Street San Francisco, CA January 2016 1.8 3,100 1861 Union Street San Francisco, CA December 2015 3.2 4,275 2207 Fillmore Street San Francisco, CA November 2015 2.5 3,870 146 Geary Street San Francisco, CA November 2015 38.0 11,400 2208-2216 Fillmore Street San Francisco, CA October 2015 7.8 7,375 1035 Third Avenue New York, NY January 2015 51.0 53,294 17 East 71st Street New York, NY October 2014 28.0 9,330 Eden Square Bear, DE July 2014 25.4 235,508 1151 Third Avenue New York, NY October 2013 18.0 12,040 2819 Kennedy Boulevard North Bergen, NJ June 2013 9.0 41,480 Paramus Plaza Paramus, NJ September 2013 18.9 152,060 Promenade at Manassas Manassas, VA July 2013 38.0 265,440 Lake Montclair Center Dumfries, VA October 2013 19.3 105,850 1701 Belmont Avenue Catonsville, MD December 2012 4.7 58,670 938 W. North Avenue Chicago, IL November 2013 20.0 35,400 Broughton Street Savannah, GA 2015 33.9 24,961 Total $ 331.0 1,039,764 Development Activities During the year ended December 31, 2015, costs associated with redevelopment and leasing activities totaled $202.1 million. Of this amount, $193.9 million represented costs associated with redevelopment, primarily related to Fund II's City Point project and Fund IV's Broughton Street portfolio, and re-tenant costs and $8.2 million represented direct leasing costs. Structured Financings As of December 31, 2015, our structured financing portfolio, net of allowances aggregated $147.2 million, with related accrued interest of $13.6 million. The notes were collateralized by the underlying properties, the borrower’s ownership interest in the entities that own the properties and/or by the borrower’s personal guarantee. Effective interest rates on our notes receivable ranged from 2.5% to 18.0% with maturities from April 2016 through November 2020. Investments made in our structured financing portfolio during 2015 are discussed in Note 5 in the Notes to Consolidated Financial Statements. Other Investments Acquisitions made during 2015 are discussed in Note 2 in the Notes to Consolidated Financial Statements. Core Portfolio Property Redevelopment and Re-tenanting Our Core Portfolio redevelopment and re-anchoring programs focus on selecting well-located street retail locations and dense suburban shopping centers and creating significant value through re-tenanting and property redevelopment. Purchase of Convertible Notes Purchases of the Convertible Notes have been another use of our liquidity. As of December 31, 2015, the entire $115.0 million of Convertible Notes originally issued during 2006 have been retired. See Note 9 in the Notes to Consolidated Financial Statements for further discussion of our Convertible Notes. 45

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