avatar Acadia Realty Trust Finance, Insurance, And Real Estate

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    SULLIVAN CENTER , CHICAGO, IL 2020 A N N UA L REP ORT


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    Dear Fellow Shareholders, 2020 – a year like no other, thankfully. I hope this letter finds you and your loved ones well. COVID-19 PANDEMIC A year of Covid. For those in the NY Metro region, “normalcy” ended on Wednesday, March 11, 2020. After that, the Covid closures quickly piled up – Broadway (March 12th) and the NYC public schools (March 16th), followed by NYC bars and restaurants (March 17th) and the beginning of “NYS on Pause Program,” which required all non-essential workers to stay home (March 22nd). Most of the country followed. And suddenly, our economy (which entered the crisis on sound footing) came to a grinding halt. Little did we know. Originally, we thought it would be a two-week shutdown. Those industries that could transition to a remote environment did so surprisingly successfully, including the real estate industry. Many were not so lucky – hotels, restaurants, theaters, airlines and cruise lines, just to name a few. Within weeks, the unemployment rate skyrocketed to 14.7%. Progress forward after tragedy. Now, almost a year later, we are still navigating through this horrific 100-year event. • The U.S. has lost 500,000 people to this virus and counting. Globally, the death toll has reached 2.5 million and counting. • Today, the unemployment rate remains elevated at 6.2%. • And, nationwide, our school system remains in crisis. Throughout this letter, I will discuss the economic impact of this pandemic on Acadia and its stakeholders; but we should not lose sight of the personal toll that this pandemic has taken on too many families. And while that toll has been worse than imagined, the advancements in vaccines and treatments have also been far more significant than previously anticipated. Where do we go from here? From a personal perspective, we continue to approach our neighbors with kindness and understanding, knowing that everyone is shouldering their own Covid burdens and losses. As for Acadia, we continue to push forward. Not only do we have a fiduciary responsibility to do so, but also, we have a responsibility to help rebuild our economy, regain the lost jobs, and make the world a safer, fairer and better place for everyone. So, as we look ahead to 2021, Acadia’s senior leaders and I are focused on four key areas: 1. Continuing to grow our resilient core portfolio and its revenues; 2. Maintaining a healthy balance sheet; 3. Continuing to execute on our opportunistic and value-add fund platform; and 4. Supporting and developing our energized team during this period of unprecedented disruption. CORE PORTFOLIO: UNEXPECTED COLLECTION CRISIS Oh the disruption! In a typical month, the collection rate for our core portfolio exceeds 95%. Last April, this rate plummeted to approximately 50%. (In comparison, during the dark days of the Global Financial Crisis, our collection rate never dropped below 95%.) And isn’t it ironic, don’t you think? Of the half who did not pay rent, the majority were national credit tenants with strong balance sheets. Why didn’t they pay? Well, remember: • The economic impact to these retailers was sudden and dramatic, and the outcome was uncertain. • We didn’t know how long this shutdown would last.


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    • It was unclear who should or would be legally responsible for the business interruption. Landlords? Insurers? The government? There are still some unknowns, but we have a lot more answers today: First, essential retailers were quick to reopen; in fact, some never closed (like our Whole Foods Market in Cambridge, MA and our Target at the Sullivan Center in Chicago, IL). This included not only supermarkets and drug stores but also home improvement and crafts stores, among others. As a result, the lights stayed on at many of our properties, even during lockdown. Second, with respect to responsibility: • Landlords: Several courts have now ruled that tenants may not withhold rent pursuant to their leases due to the pandemic. This does not relieve landlords of their responsibility to work with local tenants to help them get back on their feet; but the fear in the capital markets of unilateral rent relief has passed. The scarring will take a bit longer to resolve. • Insurers: Most business interruption insurance policies had exceptions for pandemics. (In our opinion, it is now up to our elected officials to create some type of future pandemic insurance, as they did with terrorism insurance.) • The government: That said, the government has already stepped up in other areas. Thanks to prompt and aggressive fiscal and monetary intervention, shock absorbers were put into place. While blunt and imperfect, these interventions provided liquidity and a critical lifeline to many of our retailers. As a result, by the fall, our collection rate was back up to 90%. And, in retrospect, the dip to 50% during the pandemic period is now over 85% with back-rent applied. Painful, but less so than we originally thought... just like our leasing pipeline. CORE PORTFOLIO: ROBUST LEASING PIPELINE We are seeing reacceleration of our leasing pipeline. Last spring, most tenants were frozen. When would they go back on offense, we wondered? Fast forward to today: • Our post-outbreak core leasing pipeline now exceeds $8 million. • Of this amount, approximately $3 million has already been executed. • The leasing momentum that began in our suburban portfolio, now extends to our street-retail properties. • On the street-retail front, not only are we signing leases in Greenwich, CT and Westport, CT but also in Soho, NY and the Gold Coast of Chicago. • In fact, we are at lease with two restauranteurs in Manhattan! (With minimal landlord work, of course.) We can see the end in sight. Thankfully, due to significant progress in vaccine development and treatment, it seems that retailers (and the rest of us!) are looking past this difficult winter to the reopening of the economy. And they want to position themselves in the right locations. This bodes well for Acadia’s portfolio and its future growth potential. Why? CORE PORTFOLIO: STRONG GROWTH OUTLOOK We own a high-quality portfolio that is both differentiated and diversified: • We invest across product types. 40% of our annual base rent comes from street-retail properties, 20% from urban properties and 40% from suburban shopping centers;


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    • Even our street retail is diversified. Our street-retail properties are located not only in the major gateway cities (New York, Chicago, Washington DC, Boston, San Francisco and Los Angeles) but also in the nearby (lower-density) suburbs such as Greenwich and Westport, CT; • We own the “safe haven.” Of our suburban shopping centers, roughly half are grocery anchored; • We own essentials. 34% of our annual base rent pertains to essential retailers; Target is our largest tenant. Royal Ahold, the TJX Companies, and Trader Joe’s are among our top 10. And yet, despite our portfolio’s strong attributes, our stock dramatically underperformed more traditional open-air portfolios. I suspect that the market recognized our differentiation (i.e. our exposure to the major gateway cities) but did not appreciate our diversification. Looking ahead, we are poised for a rebound, with multiple drivers available to us to achieve our long- term growth goals: 1. Lease-up of existing high-quality street-retail vacancy: After climbing too fast, market rents on many key streets peaked in 2017. Since then, rents have fallen. So, by the time Covid hit, the rent repricing was already well underway. Not only do we expect to see growth as physical occupancy catches up to leased occupancy, but also, we expect to see our leasing pipeline continue to convert letters of intent to executed leases as retailers see, and seize on, opportunities to occupy iconic locations at decades-low rents. (On the suburban front, shop rents experienced steady growth over the past several years; thus, the hope for additional upside there is a bit harder to see.) 2. Credit recovery: Additionally, we estimate that roughly half of our non-paying tenants will revert to contractual rent as pandemic pressures ease. As these tenants restabilize (sometime in 2022, we think), the corresponding reduction in credit losses should add approximately $7 million of annual NOI. CORE PORTFOLIO: THE FUTURE OF OUR CITIES As we look ahead to our own future, we are also contemplating the future of our great gateway cities. Here, the immediate impact of the Covid crisis was sudden and severe. What’s in store for 2021 and beyond? Well, the more I read predictions, the clearer it is that everyone is guessing! If the Covid crisis has taught me anything, it is an increased sense of humility. So, in my humble opinion: First, great cities require great leadership. Covid has been a crash course in the harsh realities of what it takes to make a city work, and the rebound of our cities is not “inevitable.” The historical desire of people to live and work in a city will not overcome bad policy and neglect. The good news is our city leaders seem to understand this, at least those with whom I’ve spoken. Now it’s time for them to act. Second, population trends are cyclical. In the immediate aftermath of the Covid outbreak, home sales in the nearby suburbs rebounded after years of stagnation; meanwhile, residential rents in many gateway cities dropped by the same percentage. Some gateway-city residents will permanently leave our cities, either for the surrounding suburbs or other parts of the country. Both trends began pre-Covid and will likely continue. That’s ok! After all, many millennials, especially, had lingered longer in cities than previous generations, and the fact that Covid pushed them to decamp to the suburbs doesn’t spell the end of our cities. In fact, we are already seeing others move back to the city to take advantage of low rents, which leads us to believe... Third, the city’s pull will remain strong, especially as vaccine distribution accelerates, social distancing wanes, work-from-office resumes and nightlife returns. We expect tourism to ramp up too. Because, for many, the desire to be in the center of arts, creativity, diversity and commerce is too compelling to give up.


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    Our retailers seem to agree. So, while many are debating the future of our gateway cities, our retailers are signing leases. The best indication of a rebound is our retailers returning to our key corridors. For example: • The RealReal, opening at 256 Greenwich Ave in Greenwich, CT; • An existing luxury retailer extending and expanding in the Gold Coast of Chicago; and • A luxury brand planting a flag on Spring St in Soho, NY. CORE PORTFOLIO: THE RETURN OF OUR SHOPPER Retailers are showing up because they see their shopper returning with enthusiasm. During lockdown, it seemed like most consumer spending was focused on necessities (e.g., food, other staples) and nesting (e.g., home furnishings, home electronics). While demand for these retail categories should remain steady (and those portions of our portfolio that cater to this area will continue to do well), there are clear signs that the consumer is ready to start shifting its attention to more discretionary areas. And, for the most part, the consumer is in a good position to do so: • Bloomberg estimates that U.S. consumers have $1.5 trillion in extra savings due to lockdown measures. • For many, housing values and stock portfolios are also higher. The affluent consumer is particularly well positioned. And, so is our portfolio: • Roughly 90% of our street and urban portfolio is in neighborhoods where household incomes rank above the 75th percentile, including Tribeca and Madison Ave in New York, Melrose Pl in Los Angeles, and Lincoln Park in Chicago. BALANCE SHEET: MAINTAINING FINANCIAL STRENGTH & FLEXIBILITY No matter the portfolio, we are the type that plan for rainy days. Never have we appreciated our conservative balance sheet more than during this pandemic! Keep in mind – to break even after operating expenses and debt service, we needed to collect approximately 40% of our rents (both core and funds). This has always felt very conservative… until Covid hit, and our cash collections plummeted to 50%. Accordingly, last May, we made the tough decision to suspend our dividend and retain cash. Now, sunnier days are upon us. And, after several months at a stable collection rate of 90%+, we recently decided to reinstate our dividend at $0.15 per common share. At this rate, we should be able to meet our projected tax obligations and still retain some cash, providing us with flexibility to continue to successfully navigate our company through the Covid crisis. Looking ahead, we’ll still plan for rainy days. And so, we remain focused on our traditional measures of balance sheet strength, which were in-line with our expectations as of year-end, with: • approximately 35% core debt to core GAV; and • 70% of our core NOI unencumbered. FUND PLATFORM: ATTRACTIVE RISK-ADJUSTED RETURNS Come rain or come shine, it’s always a good day to have a fund business with discretionary capital. We invest across the risk spectrum. But, over the past several years, as we saw new developments and repositionings not providing an appropriate risk-adjusted return, we shifted our acquisition attention to out- of-favor suburban shopping centers where we could get most of our return from existing cash flow. In fact,


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    between 2017 and 2019, our team thoughtfully aggregated a $650 million portfolio of these types of shopping centers, located across the United States, on behalf of our Fund V. Our “high-yield” investment thesis was simple: • Buy at an approximate 8% going-in unleveraged yield; • Leverage at two-thirds at a sub-4% interest rate; and • Clip a mid-teen return on our equity that we could distribute to our investors. As it turns out, this thesis was pandemic resistant. A year after the Covid outbreak, we are pleased to report that our Fund V portfolio is still performing consistent with our expectations. 1. Strong collections rate. After a bumpy spring, Fund V collections have restabilized at 90%+. 2. Continuing leasing momentum post-outbreak. Since mid-March, we have assembled a pipeline of new leases aggregating more than $5 million of annual base rent, of which approximately half have now been executed. This includes four new leases that will replace a Kmart at Frederick County Square in Maryland – at 5x the rent! 3. Opportunities to capitalize on cap rate arbitrage. Given continued strength in the net lease market, in January, we sold two parcels at Family Center at Riverdale in Utah at a spread to our cost basis that exceeded 200 basis points. 4. Stable leveraged returns. Our 2020 leveraged return including rent deferrals was approximately 14%. Looking ahead, we expect to achieve roughly the same return in 2021 and 2022, reflecting continued growth in NOI along with continued investment of equity to complete leasing activities. Today, we still have approximately $200 million of remaining capital commitments available to invest, which should enable us to acquire another $600 million of assets on a leveraged basis. And our high-yield thesis still works. So, we continue to evaluate deals like those we already own in this fund. At the same time, we are also reviewing opportunistic transactions – for example, distressed debt, capital restructurings, and value-add projects. These are all areas where we have successfully invested over the past two decades. Most importantly, we are focused on making sure that the fund gets rewarded for the risks it’s taking. Elsewhere in the fund portfolio, at City Point, in Downtown Brooklyn, NY – since the Covid outbreak, we have executed more than 70k sf of leases with office users, including a school. This is further proof that urban real estate is not dead. We are also seeing strong tenant interest for the former Century 21 space after that retailer declared bankruptcy last fall. Due to the vintage of that lease (immediately post-global financial crisis), we expect that to be a profitable re-leasing. LEADERSHIP: LAUNCHED NEW INITIATIVES Speaking of City Point, we hope you will come visit us to see Gillie & Marc’s U.S. Supreme Court Justice Ruth Bader Ginsburg statue, the latest addition to the Statues for Equality project, which seeks to balance gender representation in public art. It’s fitting that the installation of this statue is occurring as Diversity, Equity and Inclusion (“DEI”) storms into the forefront of the conversation. And it’s about time! We are proud that our team has embraced the importance of DEI and is implementing several new initiatives at Acadia, including: • Diversifying our summer internship program by partnering with organizations like Sponsors for Educational Opportunity; • Launching an internal women’s network with a quarterly speaker series; and • Beginning a cross-departmental mentoring program for new hires.


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    This is only the beginning. During my tenure as CEO, I commit to continuing to make meaningful progress on DEI and ESG overall. After all, it’s our responsibility to all our stakeholders. IN CONCLUSION So 2020 wasn’t a total bust. As you can see: • Our differentiated and diversified core portfolio held up to extreme pressures and is well positioned to thrive in the new normal; • Our conservative balance sheet kept us in a sound financial position, even when the capital markets froze; • Our complementary fund platform continued to deliver attractive risk-adjusted returns on an absolute and relative basis and will continue to be a growth driver in the year ahead; • Our leadership team showed up to work energized, even while working from home, and remains committed to driving positive organizational change; and • We all learned how to use zoom (mostly). Here’s to the year ahead – to health, to happiness, to a return to a new (and fairer) normal. Healthy regards, Kenneth F. Bernstein President & CEO February 2021 P.S. March 12, 2021: I think it’s important to note that this letter was written in February as our country was coming out of a “dark winter.” Over the past few weeks, we have seen continued signs of a recovery that is strengthening far faster than we ever could have imagined. This is incredibly encouraging to us and is giving our forward outlook even sturdier legs. Cheers!


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    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or 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 001-12002 ACADIA REALTY TRUST (Exact name of registrant in its charter) Maryland 23-2715194 (State or Other Jurisdiction of Incorporation or (I.R.S. Employer Identification No.) Organization) 411 Theodore Fremd Avenue, Suite 300 Rye, NY 10580 (Address of principal executive offices) (914) 288-8100 (Registrant’s telephone number, including area code) Title of class of registered securities Trading symbol Name of exchange on which registered Common shares of beneficial interest, par value AKR The New York Stock Exchange $0.001 per share Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☒ NO ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐ NO ☒ 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 ☒ NO ☐ Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 such files). YES ☒ NO ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer ☒ Accelerated Filer ☐ Emerging Growth Company ☐ Non-accelerated Filer ☐ Smaller Reporting Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) YES ☐ NO ☒ 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 $2,362.0 million, based on a price of $12.98 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 12, 2021 was 86,284,143. DOCUMENTS INCORPORATED BY REFERENCE Part III – Portions of the registrant’s definitive proxy statement relating to its 2021 Annual Meeting of Shareholders presently scheduled to be held May 6, 2021 to be filed pursuant to Regulation 14A.


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    ACADIA REALTY TRUST AND SUBSIDIARIES FORM 10-K INDEX Item No. Description Page PART I 1. Business 4 1A. Risk Factors 11 1B. Unresolved Staff Comments 26 2. Properties 27 3. Legal Proceedings 37 4. Mine Safety Disclosures 38 PART II 5. Market for Registrant’s Common Equity, Related Stockholder Matters, Issuer Purchases of Equity Securities and Performance Graph 39 6. Selected Financial Data 40 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 7A. Quantitative and Qualitative Disclosures about Market Risk 55 8. Financial Statements and Supplementary Data 57 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 119 9A. Controls and Procedures 119 9B. Other Information 120 PART III 10. Directors, Executive Officers and Corporate Governance 121 11. Executive Compensation 121 12. Security Ownership of Certain Beneficial Owners and Management 121 13. Certain Relationships and Related Transactions and Director Independence 121 14. Principal Accounting Fees and Services 121 PART IV 15. Exhibits and Financial Statement Schedules 122 16. Form 10-K Summary 125 SIGNATURES 126 2


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    SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in this Annual Report on Form 10-K (the “Report”) of Acadia Realty Trust, a Maryland real estate investment trust, (the “Company”) may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results and financial performance to be materially different from future results and financial performance expressed or implied by such forward-looking statements, including, but not limited to: (i) economic, political and social uncertainty surrounding the COVID-19 pandemic (the “COVID-19 Pandemic”), including (a) the effectiveness or lack of effectiveness of governmental relief in providing assistance to large and small businesses, including the Company’s tenants, that have suffered significant declines in revenues as a result of mandatory business shut-downs, “shelter-in-place” or “stay-at-home” orders and social distancing practices, as well as individuals adversely impacted by the COVID-19 Pandemic, (b) the duration of any such orders or other formal recommendations for social distancing and the speed and extent to which revenues of the Company’s retail tenants recover following the lifting of any such orders or recommendations, (c) the potential impact of any such events on the obligations of the Company’s tenants to make rent and other payments or honor other commitments under existing leases, (d) to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices, (e) the potential adverse impact on returns from development and redevelopment projects, and (f) the broader impact of the severe economic contraction and increase in unemployment that has occurred in the short term and negative consequences that will occur if these trends are not quickly reversed; (ii) the ability and willingness of the Company’s tenants (in particular its major tenants) and other third parties to satisfy their obligations under their respective contractual arrangements with the Company; (iii) macroeconomic conditions, such as a disruption of or lack of access to the capital markets; (iv) the Company’s success in implementing its business strategy and its ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (v) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and their effect on the Company’s revenues, earnings and funding sources; (vi) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the potential phasing out of the London Interbank Offered Rate after 2021; (vii) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (viii) the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (ix) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (x) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration, the Company’s ability to re-lease its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations the Company may incur in connection with the replacement of an existing tenant; (xi) the Company’s liability for environmental matters; (xii) damage to the Company’s properties from catastrophic weather and other natural events, and the physical effects of climate change; (xiii) uninsured losses; (xiv) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (xv) information technology security breaches, including increased cybersecurity risks relating to the use of remote technology during the COVID-19 Pandemic; and (xvi) the loss of key executives. The factors described above are not exhaustive and additional factors could adversely affect the Company’s future results and financial performance, including the risk factors discussed under the section captioned “Risk Factors 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 Report. These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein. Any forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or change in the events, conditions or circumstances on which such forward-looking statements are based. SPECIAL NOTE REGARDING CERTAIN REFERENCES All references to “Notes” throughout the document refer to the footnotes to the consolidated financial statements of the registrant referenced in Part II, Item 8. Financial Statements. 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, development 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). We generate additional growth through our Funds (as defined below) in which we co-invest with high-quality institutional investors. 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, 2020, 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 portfolio of high-quality retail properties located primarily in high-barrier-to-entry, densely-populated metropolitan areas (“Core Portfolio”). Our goal is to create value through accretive development 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 (as defined below) 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: o value-add investments in street retail properties, located in established and “next-generation” submarkets, with re-tenanting or repositioning opportunities, o opportunistic acquisitions of well-located real estate anchored by distressed retailers, and o 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. 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 4


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    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, development, 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 five funds (“Funds”); Acadia Strategic Opportunity Fund, LP (“Fund I,” which was liquidated in 2015), Acadia Strategic Opportunity Fund II, LLC (“Fund II”), Acadia Strategic Opportunity Fund III LLC (“Fund III”), Acadia Strategic Opportunity Fund IV LLC (“Fund IV”) and Acadia Strategic Opportunity Fund V LLC (“Fund V,” and our “current fund”). Due to our level of control, we consolidate these Funds for financial reporting purposes. Fund I and Fund II have also included investments in operating companies through Acadia Mervyn Investors I, LLC (“Mervyns I”, which was liquidated in 2018), 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”). 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, development, 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 flows are 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, included in Item 8 of this Report (“Notes to Consolidated Financial Statements”), for a detailed discussion of the Funds. 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 within our Core Portfolio, while ensuring access to sufficient capital to fund future growth. We intend to continue financing acquisitions and property development 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 Report. The Company maintains a share repurchase program which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program may be discontinued or extended at any time. We repurchased 1,219,065 and 2,294,235 shares for $22.4 million and $55.1 million, inclusive of fees, during the years ended December 31, 2020 and 2018, respectively. We did not repurchase any shares during the year ended December 31, 2019. As of December 31, 2020, management may repurchase up to approximately $122.6 million of the Company’s outstanding Common Shares under this program. See Note 10 for further details. We maintain 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. During 2019, we issued 5,164,055 Common Shares through our ATM program with gross proceeds of $147.7 million. See Note 10 for further details. No such issuances were made during 2020 or 2018. 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, development, leasing and management of retail real estate by creating value through property development, 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, the Company believes that its acquisitions are appropriately evaluated giving effect to each asset’s specific risks and returns. 5


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    INVESTING ACTIVITIES See Item 2. Properties for a description of the properties in our Core and Fund portfolios. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a detailed discussion of our consolidated and unconsolidated acquisitions. 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, trade areas. As we typically hold our Core Portfolio properties for long-term investment, we 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. We also make investments in first mortgages and other notes receivable collateralized by real estate, (“Structured Finance Program”) either directly or through entities having an ownership interest therein. Acquisitions During 2020, we acquired two consolidated properties in our Core Portfolio for a total of $19.2 million (Note 2) and acquired the noncontrolling interest in a real estate venture as discussed further below. Dispositions During 2020, we did not make any significant dispositions in our Core Portfolio. Structured Financing Investments During 2020, we provided total financing in the amount of $59.0 million within our Structured Financing segment and converted a note receivable in the amount of $38.7 million to acquire a noncontrolling interest in a real estate venture. As of December 31, 2020, we had $96.8 million of Core Portfolio investments in this program. See Note 3 for a detailed discussion of our Structured Finance Program. Funds Acquisitions During 2020, we did not make any real estate investments within our Fund portfolio. However, Fund IV acquired the venture partner’s interest in two properties (Note 4) for a total of $1.3 million which it subsequently consolidated. Dispositions During 2020, Fund IV sold a property and a land parcel for a total of $15.7 million and a property owned within Fund III was reimbursed for certain property improvement cost from a municipality in the amount of $6.3 million (Note 2). During 2020, Mervyns II liquidated a portion of its Investment in Albertsons (Note 4). Mervyns II recognized realized gains on the sale of or distributions from those shares in addition to the appreciation in the fair value of its remaining shares of Albertsons aggregating $95.6 million, of which the Company’s share was $27.1 million, for the year ended December 31, 2020. Structured Financing Investments During 2020, Fund II converted a $33.8 million loan, inclusive of accrued interest, to an incremental investment in real estate (Note 3). Development and Redevelopment Activities As part of our investing strategy, we invest in real estate assets that may require significant development. In addition, certain assets may require redevelopment to meet the demand of changing markets. As of December 31, 2020, there were four Fund development projects, and one Core Portfolio development project and four Core Portfolio redevelopment projects. During the year ended December 31, 2020, we placed one consolidated Fund property and a portion of a Fund property into service and placed a portion of one Fund property into development. 6


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    Substantially all remaining development and redevelopment costs are discretionary and depending upon the resumption of tenant interest due to aforementioned disruptions related to the COVID-19 Pandemic. See Item 2. Properties—Development Activities and Note 2. GOVERNMENT REGULATIONS AND ENVIRONMENTAL LAWS We are subject to federal, state and local laws and regulations, including environmental laws and regulations. We may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under our properties, 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, would reduce our revenues and ability to make distributions. Our existing properties, as well as properties we may acquire, as commercial facilities, are required to comply with the Americans with Disabilities Act of 1990. For information relating to compliance with the Americans with Disabilities Act, please see “Item 1A. Risk Factors — Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unplanned expenditures that could adversely affect our financial condition, cash flows and results of operations.” For information relating to environmental laws that may have an impact on our business, please see “Item 1A. Risk Factors — We are exposed to possible liability relating to environmental matters.” CORPORATE HEADQUARTERS Our executive office is located at 411 Theodore Fremd Avenue, Suite 300, Rye, New York 10580, and our telephone number is (914) 288-8100. HUMAN CAPITAL We recognize that our ability to achieve the high standards we set for our company can best be accomplished by curating a diverse team of top talent. We are committed to fostering an energized and motivated workforce through programs and benefits that promote employee satisfaction, advancement, equity and inclusion. As of December 31, 2020, we had 120 employees, of whom 94 were located at our executive office and 26 were located at regional property management offices. During 2020, our total turnover rate was approximately 7%. None of our employees are covered by collective bargaining agreements and management believes that its relationship with employees is good. Diversity, Equity and Inclusion Diversity, equity and inclusion (“DE&I”) are fundamental values of our business. We believe that our potential for success is maximized by having a diverse workforce that is reflective of our society and the communities we serve. As of December 31, 2020, women represent 56% of our employees, 30% of our management-level positions and 25% of our Board, and underrepresented minorities represent 25% of our employees and 21% of our management-level positions. Our DE&I Program is focused on fostering a professional environment that fully embraces individuals with varied backgrounds, cultures, races, identities, ages, perspectives, beliefs and values. The four pillars of our DE&I Program are awareness, acknowledgment, acceptance and advancement, and our mission is to raise awareness of systemic inequities and promote initiatives to dismantle any such inequities. Through education and awareness – including compulsory unconscious bias training for all employees – we are working to establish a corporate culture that is characterized by respect and acceptance. We believe that we have an individual and institutional responsibility to observe, promote and protect DE&I principles. We are committed to providing equal employment opportunities without regard to any actual or perceived characteristic protected by applicable local, state or federal laws, rules or regulations. Employee Engagement 7


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    In 2020, we invited our employees to participate in an external employee satisfaction survey and achieved a 91% response rate. Our overall satisfaction score was 90% and our employee engagement score was 85%. Training and Development We believe in investing in talent at all levels within our organization. Whether through property tours that allow employees to learn about the projects they work on, or through access to online learning tutorials, employees are encouraged to take full advantage of professional development opportunities. Our senior management team focuses on succession planning for senior leadership and business unit lead roles and presents a succession plan to our Board annually. High potential employees that are identified as possible successors for senior-level roles are provided leadership training; 16 employees participated in our high potential leadership development program in 2020. We are committed to building our own talent pipeline. Through our summer internship program, we hope to plant the seeds for future growth and innovation. This program offers hands-on experience to students looking to specialize in the retail real estate industry and offers our company a fresh perspective. We attempt to recruit diverse candidates for our internship program through partnerships with external organizations. Health and Wellness All employees are eligible to participate in our Wellness Program which advocates and provides resources regarding nutrition, exercise, mental health and workplace ergonomics. We value the importance of personal growth and encourage employees to participate in company events, health initiatives and training courses. We offer a comprehensive benefits package to all employees. We adopted a “people first” approach to prioritize the safety and well-being of our employees in response to the COVID-19 pandemic (“COVID-19 Pandemic”). Effective March 20, 2020, we closed our offices and our employees successfully transitioned to working from their homes. Effective June 29, 2020, we have reopened our main office and have put robust protocols in place for protecting our employees against the spread of the COVID-19 virus that include UV sanitation lighting in restrooms, mandatory temperature screening for employees at entrances, and the use of a contact tracing app to comply with government mandates. To support our employees in the transition to remote work, we provided employees with the technology and training required to work from home and implemented video conferencing to maintain lines of communication across the organization. Further, we enhanced our benefit offerings by implementing an assistance program for employees and their families that includes, among other features, short-term counseling and limited legal and financial services at no cost to our employees or their families. We also provided employees with additional information on available resources to support mental health and emotional well-being and implemented wellness initiatives such as virtual meditation and yoga. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) Achievements and Initiatives We believe that responsible environmental, social and community stewardship and responsible corporate governance are an essential part of our mission to build a successful business and create long-term value for our company and our stakeholders. We have established both ESG and human rights policies. We have a multi-disciplinary ESG Committee, including several senior executives, steering our ESG Program, which is overseen by our Nominating and Corporate Governance Committee. Below are some highlights of our commitment to ESG principles. Environmental Sustainability We are committed to understanding the environmental impact of our operations and promoting environmental sustainability while maintaining high standards for our company and our stakeholders. We have undertaken numerous green initiatives, including the following: • LED Lighting and Smart Lighting Controls. Our energy reduction program includes replacing incandescent or fluorescent lighting within the parking lot and common areas of our properties with high efficiency LED lighting where possible. By utilizing lighting that is up to 80% more efficient than traditional lighting we can lower our electricity consumption, thereby reducing our harmful environmental impact while lowering operating costs for our tenants, improving our financial performance and enhancing the overall experience for our customers. The use of higher efficiency lighting also allows for fewer maintenance visits to the 8


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    properties and reduced waste through the use of fewer bulbs. Our goal is to complete LED lighting conversions at substantially all of our existing assets with parking lot lighting by the end of 2022 and to upgrade newly purchased assets to LED lighting as applicable shortly after acquisition. Our shopping centers also utilize lighting technology such as smart lighting controls for parking lots, common areas, walkways, signage, and facades, which provides significant energy savings. Smart controls incorporate cutting edge technology to ensure that lights are turned on only when necessary. • Water Conservation. We recognize the importance of reducing water consumption to mitigate burdens on the water supply and municipal wastewater systems, as well as to reduce the costs of operating our properties. Our water management program focuses on monitoring and reducing common area water consumption, while encouraging best water management practices by our tenants. We leverage technology to track, visualize and analyze our water consumption to identify and decrease excessive use. A majority of our properties benefit from the use of a landscape design focused on drought-resistant plantings that save water. For locations with irrigation, we aim to use smart irrigation systems and utilize apps to remotely control the systems with features like rain sensors and real-time controls. Through the use of submeters at our properties, we provide over 300 of our tenants with visibility into their water consumption and financial incentive to decrease such consumption, thereby guiding our tenants towards sustainable practices and operational cost savings. • Sustainable Roofs. We are implementing sustainable roofs where practicable throughout our portfolio to save energy, improve occupant comfort, and reduce heat-island effects. Many of our properties have green/living roofs or white roofs which reflect sunlight and absorb less heat than standard black roofs. We are also exploring the installation of solar projects at select locations within our portfolio which would promote renewable energy while providing our properties with an additional income stream from the solar project leases. • Sustainable Transportation. We recognize the shift in personal vehicle transportation towards electric vehicles (“EVs”) and its positive impact on reducing greenhouse gas emissions. We have implemented a gradual integration of EV charging stations within our portfolio, and intend to double the installation of EV charging stations every three years through 2029 beginning in 2020. We expect EV charging stations to be an important amenity for our tenants and their employees and customers in the years to come. Our properties are easily accessible and many are bike-friendly within close proximity to public transportation, which presents tenants, employees, and customers with the option to reduce air pollution and greenhouse gas emissions when traveling to our centers. • EarthCam Installation. Our property management department utilizes EarthCam cameras installed at nearly 50 properties to oversee our assets with greater efficiency. These cameras allow us to remotely monitor such properties while still allowing for quick response time. This has helped further reduce our carbon footprint by removing thousands of miles in unnecessary travel to and from our properties. • Climate Change. We are aware of the risk climate change presents to real estate investments generally and of the importance of developing a resilient portfolio in this regard. As of December 31, 2020, fewer than 5% of our properties were at increased flood risk or wind risk due to coastal zone proximity, and we have taken steps to mitigate the associated risks at those properties, including through increased insurance and physical measures such as waterproofing systems. We are continuing to expand our perspective, understanding and response to extreme weather events and the effects of climate change on our portfolio. • Corporate Office Initiatives. Our environmental initiatives extend to our corporate offices. We actively encourage departments to sign up for electronic/paperless billing whenever available, requesting vendors to send contracts and invoices electronically and we have implemented an electronic communication system for tenants, significantly reducing monthly and annual mailings. As a result of sustainability efforts made at our corporate headquarters, we have been certified as a green business by the Green Business Partnership and were awarded the Outstanding Achievement in Land Use during 2019. 9


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    Social DE&I are fundamental values of our business. For additional details regarding our DE&I Program, as well as employee engagement, employee training and development, and employee health and wellness initiatives, see the “Human Capital” section of this Item 1. Employee volunteerism and philanthropy program are key areas of focus for our company. We engage with local charitable and volunteer organizations to connect with those in need and provide support. We also encourage our employees to participate in company-sponsored events and to give back through time, effort, or monetary donations. We value the importance of community engagement through the facilitation of events at our properties. We engage in partnerships with local communities and non-profit organizations to host community events and fundraisers throughout our portfolio. The health and well-being of our tenants and their employees and customers are important to us. Our property operations professionals conduct regular inspections, repairs and improvements to maintain safe and secure shopping centers and enhance the retail experience. Recognizing the impact of the COVID-19 pandemic on our communities, we engaged in various philanthropic and community-focused activities, including sponsoring meals for frontline workers, donating space at certain of our centers for the collection and distribution of personal protective equipment for healthcare providers, and making a monetary donation to a public hospital in New York City. In addition, we have engaged with our tenants on a regular basis throughout the pandemic to offer assistance such as appropriate modifications to lease agreement terms, where possible, and accommodating requests for tenant outdoor seating and curbside pickup areas. For additional details on the impact of the COVID-19 pandemic on our tenants and our business, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. We strive to respect and promote human rights in accordance with the UN Guiding Principles on Business and Human Rights. We support freedom of association as proclaimed in the Universal Declaration of Human Rights. Governance We are dedicated to maintaining a high standard for corporate governance predicated on integrity, ethics, diversity and transparency. All of our board members stand for re-election every year. We seek to maintain a diverse board primarily comprised of independent trustees who represent a mix of varied experience, backgrounds, tenure and skills to ensure a broad range of perspectives is represented. Two of the seven independent trustees are female, earning our company recognition by 50/50 Women on Boards (formerly known as 2020 Women on Boards) for two consecutive years. Additionally, we regularly monitor developments in the area of corporate governance and seek to enhance our corporate governance structure based upon a review of new developments and recommended best practices, taking into account investor feedback. We believe that sound corporate governance strengthens the accountability of our board and management, and promotes the long-term interests of our shareholders. Governance highlights include: opt- out of the board self-classification provisions of Subtitle 8; no shareholder rights plan; annual election of trustees; majority voting standard for trustees with resignation policy if majority is not achieved; independent and diverse board with a lead independent trustee; regular succession planning; risk oversight by full board and committees; clawback, anti-hedging and anti-pledging policies; annual Say-on-Pay vote; and shareholders’ ability to call a special meeting. Our Corporate Governance Guidelines and associated policies mandate an elevated level of excellence from our company, the Board and management. Through transparency, alignment of interests, and removal of potential conflicts of interests, we ensure that our decisions and actions advance the interests of our shareholders, employees and other stakeholders. 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 Jason Blacksberg, 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. We use, and intend to use, the Investors page of our website as a means of disclosing material nonpublic information and of complying with our disclosure obligations under Regulation FD, including, without limitation, through the posting of investor presentations that may include 10


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    material nonpublic information. Accordingly, investors should monitor the Investors page, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this Annual Report on Form 10-K. CODE OF ETHICS AND WHISTLEBLOWER POLICIES Our board of trustees (the “Board”), 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 will 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. Set forth below are the risk factors that we believe are material to our investors. You should carefully consider these risk factors, together with all of the other information included in this Report, including our consolidated financial statements and the related notes thereto, before you decide whether to make an investment in our securities. The occurrence of any of the following risks could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. In such case, the trading price of our Common Shares could decline, and you may lose all or a significant part of your investment. This section includes or refers to certain forward-looking statements. See “Special Note Regarding Forward-Looking Statements” in this Report. The following risk factors are not exhaustive. Other sections of this Report may include additional factors that could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may affect our business. Investors should also refer to our quarterly reports on Form 10-Q and current reports on Form 8-K for future periods for material updates to these risk factors. Risk factors pertaining to our Company generally fall within the following broad areas: • risks related to our business, properties and tenants; • risks related to litigation, environmental matters and government regulation; • risks related to our management and structure; • risks related to our REIT status; and • general risk factors. RISKS RELATED TO OUR BUSINESS, OUR PROPERTIES AND OUR TENANTS Actual or perceived threats associated with epidemics, pandemics or other public health crises, including the COVID-19 Pandemic, could have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity, and ability to access the capital markets and satisfy debt service obligations. Epidemics, pandemics or other public health crises, including the current COVID-19 Pandemic, that impact economic and market conditions, particularly in the markets where our properties are located, and preventative measures taken to alleviate their impact, including mandatory business shutdowns, “shelter-in-place” or “stay-at-home” orders issued by local, state or federal authorities, may have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity, and ability to access capital markets and satisfy debt service obligations. Our retail tenants depend on in-person interactions with their customers to generate unit-level profitability, and an epidemic, pandemic or other public health crisis may decrease customer willingness to frequent, and mandated “shelter-in-place” or “stay-at-home” orders may prevent customers from frequenting, our tenants’ businesses, which may result in their inability to maintain profitability and make timely rental payments to us under their leases. Such restrictions may also affect customer behavior longer term by, among others, creating a preference for e-commerce. We own properties across the United States, including in some of the states that have been significantly impacted by the COVID-19 Pandemic, such as New York, New Jersey, Massachusetts, Pennsylvania and California. As of December 31, 2020, approximately 88% and 82% (based on annualized base rent, “ABR”) of Core Portfolio and Fund Portfolio retail tenants, respectively, are open or partially open for business. We cannot presently determine when or how many of our remaining tenants will reopen. As of December 31, 2020, we collected approximately 91% and 82% of Core Portfolio and Fund Portfolio pre-COVID billings (original contract rents without regard to 11


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    deferral or abatement agreements excluding the impact of any security deposits applied against tenant accounts), respectively, for the fourth quarter 2020. We have negotiated rent concessions, substantially in the form of deferrals, with select tenants. We currently anticipate the above circumstances to negatively impact our revenues potentially for the remainder of 2021. Moreover, the ongoing COVID-19 Pandemic and restrictions intended to prevent and mitigate its spread could have additional adverse effects on our business, including with regards to: • the ability and willingness of our tenants to renew their leases upon expiration, our ability to re-lease the properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant, particularly in light of the adverse impact to the financial health of many retailers that has occurred and continues to occur as a result of the COVID-19 Pandemic and the significant uncertainty as to when and the conditions under which potential tenants will be able to operate physical retail locations in the future; • temporary or permanent migration out of major cities by customers, including cities where our properties are located, which may have a negative impact on our tenants’ businesses; • anticipated returns from development and redevelopment projects, which have been temporarily suspended; • to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices, • the broader impact of the severe economic contraction due to the COVID-19 Pandemic, the resulting increase in unemployment that has occurred in the short-term and its effect on consumer behavior, and negative consequences that will occur if these trends are not timely reversed; • macroeconomic conditions, such as a disruption of or lack of access to the capital markets and the adverse impact of the recent significant decline in our share price from prices prior to the spread of the COVID-19 Pandemic; • our ability to obtain additional indebtedness or pay down, refinance, restructure or extend our indebtedness as it becomes due, and the negative impact of reductions in rent on financial covenants related to corporate and/or property-level debt; and • potential reduction in our operating effectiveness as employees work remotely or if key personnel become unavailable due to illness or other personal circumstances related to COVID-19, as well as increased cybersecurity risks relating to the use of remote technology. The COVID-19 Pandemic and restrictions intended to prevent and mitigate its spread have already had a significant adverse impact on economic and market conditions around the world, including the United States and markets where our properties are located, which began during the first quarter of 2020 and could further trigger a period of sustained global and U.S. economic downturn or recession. While the rapid developments regarding the COVID-19 Pandemic preclude any prediction as to its ultimate adverse impact, the current economic, political and social environment presents material risks and uncertainties with respect to our and our tenants’ business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy debt service obligations. Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks described herein. There are risks relating to investments in real estate that could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and make distributions to our shareholders. 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), the quality and philosophy of management, competition from other available space, and the ability 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 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 or at all. 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. We rely on revenues derived from tenants, in particular our key tenants, and a decrease in those revenues could adversely affect our ability to make distributions to our shareholders. Revenue from our properties depends primarily on the ability of our tenants to pay the full amount of rent and other charges due under their leases on a timely basis. We derive significant revenues from a concentration of 20 key tenants which occupy space at more than one property and collectively account for approximately 24.4% of our consolidated revenue. We could be adversely affected in the event of the bankruptcy 12


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    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 Report 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 and vacated anchor space directly and indirectly affects our rental revenues. Certain of our properties are supported by “anchor” tenants. Anchor tenants pay a significant portion of the total rents at a property and contribute to the success of other tenants by drawing large numbers of customers to a property. Vacated anchor space not only directly reduces rental revenues, but, if not re- tenanted with a tenant with comparable consumer attraction, could adversely affect the rest of the property 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”), such as the case of 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 results 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, also known as “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 properties. See “Item 2. Properties—Major Tenants” in this Report. 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 financial condition, cash flows, results of operations 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. There can be no assurance that our major tenants will not declare bankruptcy, in which case we may be unable to recoup past and future rent in full, and to re-lease a terminated or rejected space on comparable terms or at all. 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 Report for additional information regarding the scheduled lease expirations in our portfolio. Our business is significantly influenced by demand for retail space generally, and a decrease in such demand may have a greater adverse effect on our business than if we owned a more diversified real estate portfolio. A decrease in the demand for retail space, may have a greater adverse effect on our business and financial condition than if we owned a more diversified real estate portfolio. The market for retail space has been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retailing companies and bankruptcy incidence, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets, and increasing consumer purchases through the Internet. To the extent that any of these conditions occur, they are likely to negatively affect market rents for retail space and could adversely affect our financial condition, cash flows, results of operations, the trading price of our Common Shares and our ability to satisfy our debt service obligations and to pay distributions to our shareholders. 13


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    E-commerce can have an impact on our business because it may cause a downturn in the business of our current tenants and affect future leases. The use of the Internet by retail consumers continues to gain in popularity and the migration toward e-commerce is expected to continue. The increase in Internet sales could result in a downturn in the business of our current tenants in their “brick and mortar” locations, adversely impacting their ability to satisfy their rent obligations, 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. Many of our real estate costs are fixed, even if income from our properties decreases, which would cause a decrease in net income. Our financial results depend primarily on leasing space at our properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes, insurance and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the property. As a result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to fully lease our properties on favorable terms. Additionally, properties that we develop or redevelop may not produce any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with such projects until they are fully occupied. 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, cash flows, and ability to satisfy our debt service obligations and to make distributions to our shareholders. In addition, the Code contains restrictions on a REITs ability to dispose of properties that are not applicable to other types of real estate companies. Our Board may establish investment criteria or limitations as it deems appropriate, but it 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 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. We could be adversely affected by conditions in the markets where our properties are geographically concentrated. Our performance depends on the economic conditions in markets where our properties are geographically concentrated. We have significant exposure to the greater New York and Chicago metropolitan regions, from which we derive 34.2% and 8.2% of the annual base rents within our Core Portfolio, respectively, and 16.3% and 6.8% 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, occur in these areas. Our development and construction activities could affect our operating results. We intend to continue the selective development and construction of retail properties (see “Item 1. Business —Investing Activities–Funds–Development Activities”). As opportunities arise, we may delay construction until sufficient pre-leasing is reached and financing is in place. Our development and construction activities include the risk that: • we may abandon development 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 development 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, including labor and material 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. 14


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    In addition, the entitlement and development of real estate entails extensive approval processes, sometimes involving multiple regulatory jurisdictions. It is common for a project to require multiple approvals, permits and consents from U.S. federal, state and local governing and regulatory bodies. Compliance with these and other regulations and standards is time intensive and costly and may require additional long range infrastructure review and approvals which can add to project cost. In addition, development of properties containing delineated wetlands may require one or more permits from the U.S. federal government and/or state and local governmental agencies. Any of these issues can materially affect the cost, timing and economic viability of our development and redevelopment projects. At times, we may also be required to use unionized construction workers or to pay the prevailing wage in a jurisdiction to unionized workers, which could increase projects costs and the risk of a strike, thereby affecting construction timelines. Additionally, the time frame required for development, 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 development of properties may hinder our growth and could have an adverse effect on our financial condition, cash flows and results of operations. In addition, new development activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management. Developments and acquisitions may fail to perform as expected which could adversely affect our results of operations. Our investment strategy includes the development and acquisition of retail properties in supply constrained markets in densely populated areas with high average household incomes and significant barriers to entry. The acquisition of such properties is highly competitive. Additionally, the development and acquisition of such properties entails risks that include the following, any of which could adversely affect our financial condition, cash flows, results of operations, and our ability to meet our debt obligations and make distributions to shareholders: • 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 or within the time frames we project 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. Historically, Fund I, Mervyns I and Fund III have provided Promote income. There can be no assurance that our 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 real estate assets may be subject to impairment charges. We periodically assess whether there are any indicators that the value of our real estate assets and other investments may be impaired. A property’s value is considered to be impaired only if the estimated aggregate future undiscounted property cash flows are less than the carrying value of the property. In our estimate of cash flows, we consider factors such as trends and prospects and the effects of demand and competition on expected future operating income. If we are evaluating the potential sale of an asset or redevelopment alternatives, the undiscounted future cash flows consider the most likely course of action as of the balance sheet date based on current plans, intended holding periods and available market information. We are required to make subjective assessments as to whether there are impairments in the value of our real estate assets and other investments. Impairment charges have an immediate direct impact on our earnings. There can be no assurance that we will not take additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our operating results in the period in which the charge is taken. If a third-party vendor fails to provide agreed upon services, we may suffer losses. 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 15


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    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. RISKS RELATED TO OUR LIQUIDITY AND INDEBTEDNESS If we decided to employ higher leverage levels, we would be subject to increased debt service requirements and a higher risk of default on our debt obligations, which could adversely affect our financial conditions, cash flows and ability to make distributions to our shareholders. In addition, increases or changes in interest rates could cause our borrowing costs to rise and may limit our ability to refinance debt. Although we have historically used moderate levels of leverage, we have incurred, and expect to continue to incur, indebtedness to support our activities. As of December 31, 2020, our outstanding indebtedness was $1,770.1 million, of which $626.9 million was variable rate indebtedness. None of our Declaration of Trust, our bylaws or any policy statement formally adopted by our Board 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 debt service requirements and a higher risk of default on our debt obligations. This in turn, could adversely affect our financial condition, cash flows and ability to make distributions to our shareholders. Although approximately 64.6% of our outstanding debt has fixed or effectively fixed interest rates, we also borrow funds at variable interest rates. Variable rate debt exposes us to changes in interest rates, which could cause our borrowing costs to rise and may limit our ability to refinance debt. Interest expense on our variable rate debt as of December 31, 2020 would increase by approximately $6.3 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. In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee ("ARRC"), which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified. The Company has contracts indexed to LIBOR and is monitoring and evaluating the risks related to potential discontinuation of LIBOR, including transitioning contracts to a new alternative rate and any resulting value transfer that may occur. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form. If a contract is not transitioned to an alternative reference rate and LIBOR is discontinued, the impact on our contracts is likely to vary by contract. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected. While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified. Alternative rates and other market changes related to the replacement of LIBOR, including the introduction of financial products and changes in market practices, may lead to risk modeling and valuation changes, such as adjusting interest rate accrual calculations and building a term structure for an alternative rate. The introduction of an alternative rate also may create additional basis risk and increased volatility as alternative rates are phased in and utilized in parallel with LIBOR. 16


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    Adjustments to systems and mathematical models to properly process and account for alternative rates will be required, which may strain the model risk management and information technology functions and result in substantial incremental costs for the Company. Our inability to raise capital for new Funds or to carry out our growth strategy could adversely affect our financial condition, cash flows and results of operations. Our earnings growth strategy is based on the acquisition and development 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. 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, “development” generally means an expansion or renovation of an existing property. Development 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 development 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, which have included investments in operating retailers. The inability of such 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 human capital issues, adequate supply of product and material, and merchandising issues. 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 would be adversely impacted. Because the Operating Partnership is the sole general partner or managing member of our Funds and earns promote distributions or fees for asset management, property management, construction, development, leasing and legal services, such a situation would also adversely impact the amount or ability to earn such promotes or fees. 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. RISKS RELATED TO LITIGATION, ENVIRONMENTAL MATTERS AND GOVERNMENTAL REGULATION We are exposed to 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. 17


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    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. 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, cash flows and results of operations. Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition, cash flows and results of operations. 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 could adversely affect our financial condition, cash flows and results of operations. We may from time to time be subject to litigation that could negatively impact our financial condition, cash flows, results of operations and the trading price of our Common Shares. We may from time to time be a defendant in lawsuits and regulatory proceedings relating to our business. Such litigation and proceedings may result in defense costs, settlements, fines or judgments against us, some of which may not be covered by insurance. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such litigation or proceedings. An unfavorable outcome may result in our having to pay significant fines, judgments or settlements, which, if uninsured, or if exceeding insurance coverage, could adversely impact our financial condition, cash flows, results of operations and the trading price of our Common Shares. Additionally, certain proceedings or the resolution of certain proceedings may affect the availability or cost of some of our insurance coverage and expose us to increased risks that would be uninsured. See Item 3 included in this Report and notes to the financial statements of our quarterly reports, for pending litigation, if any. Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unplanned expenditures that could adversely affect our financial condition, cash flows and results of operations. All of our properties are required to comply with the Americans with Disabilities Act (the “ADA”). The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While the tenants to whom we lease properties are obligated by law to comply with applicable ADA provisions, and are typically obligated to cover costs of compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs could be adversely affected. As a result of the foregoing or if a tenant is not obligated to cover the cost of compliance, we could be required to expend funds to comply with the provisions of the ADA, which could adversely affect our financial condition, cash flows and results of operations. In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to the properties. We may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could also adversely affect our financial condition, cash flows and results of operations. 18


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    RISKS RELATED TO OUR MANAGEMENT AND STRUCTURE The loss of key management members could have an adverse effect on our business, financial condition and results of operations. 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 business, financial condition and results of operations. Management continues to strengthen our team and we have CEO succession planning in place, but there can be no assurance that such planning will be capable of implementation or that our efforts will be successful. We have obtained key-man life insurance for Mr. Bernstein. In addition, we have entered into an employment agreement with Mr. Bernstein and into severance agreements with other senior executives; however, Mr. Bernstein and such executives may terminate their employment with us at will. 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 have pursued and may pursue 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 newly acquired properties. Our Board may change our investment policy or objectives without shareholder approval. Our Board 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 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 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 of decisions made by our Board as implemented by management may or may not serve the interests of all of our shareholders and could adversely affect our financial condition, cash flows, results of operations, and ability to satisfy our debt service obligations and to make distributions to our shareholders. Concentration of ownership by certain investors. As of December 31, 2020, four institutional shareholders own 5% or more individually, and 43.8% in the aggregate, of our Common Shares. While this ownership concentration does not jeopardize our qualification as a REIT (due to certain “look-through provisions”), 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 could prevent changes that would be beneficial to our shareholders. Our Board is authorized by our Declaration of Trust to establish and issue one or more series of preferred shares of beneficial interest without shareholder approval. We have not established any series of preferred shares other than the Series A and Series C Preferred OP Units in the Operating Partnership. However, the establishment and issuance of a class or series of preferred shares could make a change of control of us that could be in the best interests of the shareholders more difficult. In addition, we have entered into an employment agreement with our Chief Executive Officer and severance agreements with certain of 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), such 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 our shareholders generally. 19


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    Certain provisions of Maryland law may limit the ability of a third party to acquire control of our Company. Under the provisions of the Maryland General Corporation Law (the “MGCL”) 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 REIT's outstanding voting shares or an affiliate or an associate, as defined in the MGCL, of the REIT 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 REIT (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 the REIT and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the REIT and (ii) two-thirds of the votes entitled to be cast by holders of voting shares of the REIT 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 REIT'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 REIT 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 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. We have not elected to opt out of the business combination statute. 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 REIT. 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 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, 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. However, pursuant to the Articles Supplementary filed with the State Department of Assessments and Taxation of Maryland on November 9, 2017, which are referenced in Part IV Item 15 hereto, the Board approved a resolution to opt out of Section 3-803 of Subtitle 8 of Title 3 of the MGCL that allows the Board, without shareholder approval, to elect to classify into three classes with staggered three-year terms. The Articles Supplementary prohibit the Company, without the affirmative vote of a majority of the votes cast on the matter by shareholders entitled to vote generally in the election of trustees, from classifying the Board under 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. 20


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    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 in those or certain other capacities. As part of these indemnification obligations, we may be obligated to fund the defense costs incurred by our trustees and officers. 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. We currently have an exclusive obligation to seek investments for our Funds, which may prevent us from making acquisitions directly. Under the terms of the organizational documents of our Funds, our primary goal is to seek investments for the Funds, 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 Funds 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 Funds (which, in general, seek 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 Funds. Our joint venture investments carry additional risks not present in our direct investments 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 with respect to maintaining our qualification as a REIT. Actions by, or disputes with, joint venture partners might result in subjecting properties owned by the joint venture to additional risks. Other risks of joint venture investments include impasse on decisions, such as a sale, because neither we nor a joint venture partner may 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, which may jeopardize an investment and/or subject us to reputational risk. Such acts may or may not be covered by insurance. Any disputes that may arise between joint venture partners and us may result in potentially costly litigation or arbitration that would prevent our officers and/or trustees from focusing their time and effort on our business. In addition, we may in certain circumstances be liable for the actions of our third-party joint venture partners. 21


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    RISKS RELATED TO OUR REIT STATUS 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 entities. 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. On December 22, 2017, Pub. L. No. 115-97 (informally known as the Tax Cuts and Jobs Act (the “Act”)) was enacted into law. The Act made major changes to the Code, including a number of provisions of the Code that affect the taxation of REITs and their shareholders. The long-term effect of the significant changes made by the Act remains uncertain, and additional administrative guidance will be required in order to fully evaluate the effect of many provisions. The effect of any technical corrections with respect to the Act could have an adverse effect on use or our shareholders or holders of our debt securities. We may be required to borrow funds or sell assets to satisfy our REIT distribution requirements. Our cash flows may be insufficient to fund distributions required to maintain our qualification as a REIT as a result of differences in timing between the actual receipt of income and the recognition of income for U.S. Federal income tax purposes, or as a result of our inability to currently deduct certain expenditures that we must currently pay, such as capital expenditures, payments of compensation for which Section 162(m) of the Code denies a deduction, any business interest expense that is disallowed under Section 163 (j) of the Code (unless we elect to be an “electing real property trade or business”), and the creation of reserves or required amortization payments. If we do not have other funds available in these situations, we may need to borrow funds on a short-term basis or sell assets, even if the then- prevailing market conditions are not favorable for these borrowings or sales, in order to satisfy our REIT distribution requirements. Such actions could adversely affect our cash flow and results of operations. Dividends payable by REITs generally do not qualify for reduced tax rates. Certain qualified dividends paid by corporations to individuals, trusts and estates that are U.S. shareholders are taxed at capital gain rates, which are lower than ordinary income rates. Dividends of current and accumulated earnings and profits payable by REITs, however, are taxed at ordinary income rates as opposed to the capital gain rates. Pursuant to the Act, from 2018 through 2025, certain REIT shareholders will be permitted to deduct 20% of ordinary REIT dividends received. Dividends payable by REITs in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof and thereafter as taxable gain. The more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs, including us, to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which may negatively impact the trading prices of our securities. Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments. To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our Common Shares. In order to meet these tests, we may be required to forego investments we might otherwise make and refrain from engaging in certain activities. Thus, compliance with the REIT requirements may hinder our performance. 22


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    In addition, if we fail to comply with certain asset ownership tests at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification. As a result, we may be required to liquidate otherwise attractive investments. We have limits on ownership of our shares of beneficial interest. For us to qualify as a REIT for Federal income tax purposes, among other requirements, not more than 50% of the value of our shares of beneficial interest 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 shares of beneficial interest 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 shares of beneficial interest 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 shares of beneficial interest in violation of the ownership limitations. The ownership limits contained in our Declaration of Trust may have the effect of delaying, deferring or preventing a change of control of us. Actual or constructive ownership of our shares of beneficial interest 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. 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. GENERAL RISK FACTORS 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 development projects. Our operations and performance depend on general economic conditions, including consumer health. 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, in the event of a financial downturn, we will be able to obtain secured or unsecured loan facilities to meet our needs, including to purchase additional properties, to complete current development 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. Certain sectors of the U. S. economy are still experiencing weakness. Over the past several years, this structural weakness has resulted in periods of high unemployment, the bankruptcy or weakened financial condition of a number of retailers, decreased consumer spending, increased home foreclosures, low consumer confidence, and reduced demand and rental rates for certain retail space. There can be no assurance that the recovery will continue. General economic factors that are beyond our control, including, but not limited to, economic recessions, decreases in consumer confidence, reductions in consumer credit availability, increasing consumer debt levels, rising energy costs, higher tax rates, continued business layoffs, downsizing and industry slowdowns, and/or rising inflation, could have a negative impact on the business of our retail tenants. In turn, this could have a material adverse effect on our business because current or prospective tenants may, among other things, (i) have difficulty paying their rent obligations as they struggle to sell goods and services to consumers, (ii) be unwilling to enter into or 23


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    renew leases with us on favorable terms or at all, (iii) seek to terminate their existing leases with us or request rental concessions on such leases, or (iv) be forced to curtail operations or declare bankruptcy. Political and economic uncertainty could have an adverse effect on our business. We cannot predict how current political and economic uncertainty 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 generally 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 factors could adversely affect our financial condition, cash flows and results of operations. Inflation may adversely affect our financial condition, cash flows and results of operations. Increased inflation could have a more pronounced negative impact on our mortgage and debt interest and general and administrative expenses, as these costs could increase at a rate higher than our rents. Also, inflation may adversely affect tenant leases with stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses, which could be lower than the increase in inflation at any given time. It may also limit our ability to recover all of our operating expenses. Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our average rents, and in some cases, our percentage rents, where applicable. In addition, renewals of leases or future leases may not be negotiated on current terms, in which event we may recover a smaller percentage of our operating expenses. 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. Market factors could have an adverse effect on our share price and our ability to access the public equity markets. The market price of our Common Shares may fluctuate significantly in response to many factors, including: • actual or anticipated variations in our operating results, funds from operations, cash flows or liquidity; • changes in our earnings estimates or those of analysts; • changes in our dividend policy; • impairment charges affecting the carrying value of one or more of our Properties or other assets; • publication of research reports about us, the retail industry or the real estate industry generally; • increases in market interest rates that lead purchasers of our securities to seek higher dividend or interest rate yields; • changes in market valuations of similar companies; • adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt in the near and medium term and our ability to refinance such debt and the terms thereof or our plans to incur additional debt in the future; • additions or departures of key management personnel; • actions by institutional security holders; • proposed or adopted regulatory or legislative changes or developments; • speculation in the press or investment community; • the occurrence of any of the other risk factors included in, or incorporated by reference in, this report; and • general market and economic conditions. Many of the factors listed above are beyond our control. Those factors may cause the market price of our Common Shares to decline significantly, regardless of our financial performance, condition and prospects. We may not provide any assurance that the market price of our Common Shares will not fall in the future, and it may be difficult for holders to sell such securities at prices they find attractive, or at all. A 24


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    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. 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 or 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 utilize techniques that range from highly sophisticated efforts to electronically circumvent network security or overwhelm a website to more traditional intelligence gathering and social engineering aimed at obtaining information necessary to gain access. 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. Because 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 result in substantial financial and reputational cost, including but are not limited to: • Compromising of confidential information; • Manipulation and destruction of data; • Loss of trade secrets; • System downtimes and operational disruptions; • Remediation costs that may include liability for stolen assets or information and repairing system damage, as well as incentives offered to customers, tenants or other business partners in an effort to maintain the business relationships; • 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 and tenant confidence; and • Costly 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, 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. 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, natural disasters or health crises could adversely affect our properties and business. Some of our current or future properties could be subject to natural disasters and may be impacted by climate change. To the extent climate change causes adverse changes in weather patterns, rising sea levels or extreme temperatures, our properties in certain markets may be 25


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    adversely affected. Specifically, properties located in coastal regions could be affected by any future increases in sea levels or in the frequency or severity of hurricanes and storms, whether caused by climate change or other factors. Additionally, we own properties in Southern California, which in recent years has experienced intense draught and wildfires and has had earthquake activity. Climate change could have a variety of direct or indirect adverse effects on our properties and business, including: • 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, floods, wildfires or other natural disasters; • Increased insurance premiums and deductibles, or a decrease in or unavailability of coverage, for properties in areas subject to severe weather, such as hurricanes, floods, wildfires or other natural disasters; • 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 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. Moreover, compliance with new laws or regulations related to climate change, including compliance with “green” building codes, may require us to make improvements to our existing properties or pay additional taxes and fees assessed on us or our properties. Although we strive to identify, analyze, and respond to the risk and opportunities that climate change presents, at this time there can be no assurance that climate change will have an adverse effect on us. Public health crises, pandemics and epidemics, such as those caused by new strains of viruses such as H5N1 (avian flu), severe acute respiratory syndrome (SARS) and, most recently, the novel coronavirus (COVID-19), are expected to increase as international travel continues to rise and could adversely impact our business by interrupting our tenants’ business, supply chains and transactional activities, disrupting travel, and negatively impacting local, national or global economies. Future terrorist attacks or civil unrest could harm the demand for, and the value of, our properties. Over the past several years, a number of highly publicized terrorist acts and shootings have occurred at domestic and international retail 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. 26


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    ITEM 2. PROPERTIES. Retail Properties The discussion and tables in this Item 2. include wholly-owned and partially-owned 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, 2020, there are 126 operating properties in our Core Portfolio totaling approximately 5.6 million square feet of gross leasable area (“GLA”) excluding four properties under redevelopment and one property in development. 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 1,000 to 800,000 square feet and as of December 31, 2020, were in total, excluding the properties that were pre-stabilized or under redevelopment, 89.0% occupied. As of December 31, 2020, we owned and operated 52 properties totaling approximately 7.3 million square feet of GLA in our Funds, excluding four properties under development. In addition to shopping centers, the Funds have invested in mixed-use properties, which generally include retail activities. The Fund properties are located in 17 states and the District of Columbia and, as of December 31, 2020, were in total, excluding the properties under development, 85.1% occupied. Within our Core Portfolio and Funds, we had approximately 1,100 retail leases as of December 31, 2020. A significant portion 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. An insignificant portion 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 and expense reimbursements accounted for substantially all of our total revenues for the year ended December 31, 2020. Six of our Core Portfolio properties and three 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 of these locations. No individual property or tenant contributed in excess of 10% of our total revenues for the years ended December 31, 2020, 2019 or 2018. See Note 7 in the Notes to Consolidated Financial Statements, for information on the mortgage debt pertaining to our properties. 27


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    The following table sets forth more specific information with respect to each of our Core properties at December 31, 2020: Gross Annualized Year Acadia's Leasable In Place Leased Base ABR/ Per Property (a) Key Tenants Acquired Interest Area (GLA) Occupancy Occupancy Rent (ABR) Square Foot STREET AND URBAN RETAIL Chicago Metro 664 N. Michigan Avenue Tommy Bahama, 2013 Ann Taylor Loft 100.0% 18,141 100.0% 100.0% $ 3,558,848 $ 196.18 840 N. Michigan Avenue H & M, Verizon 2014 Wireless 88.4% 87,135 100.0% 100.0% 8,381,048 96.18 Rush and Walton Streets Lululemon, BHLDN, 2011 Collection (6 properties) Reformation, 2012 Sprinkles 100.0% 40,384 81.0% 81.0% 5,674,095 173.43 651-671 West Diversey Trader Joe's, 2011 Urban Outfitters 100.0% 46,259 100.0% 100.0% 2,051,814 44.35 Clark Street and W. Diversey 2011 Collection (4 properties) Starbucks 2012 100.0% 53,309 53.2% 53.2% 1,214,057 42.79 Halsted and Armitage Serena and Lily, 2011 Collection (13 properties) Bonobos, Allbirds 2012 Warby Parker, 2019 Marine Layer, 2020 Kiehl's 100.0% 52,804 100.0% 100.0% 2,467,088 46.72 North Lincoln Park Chicago Champion, 2011 Collection (6 properties) Carhartt 2014 100.0% 49,921 46.8% 46.8% 870,271 37.24 State and Washington Nordstrom Rack, 2016 Uniqlo 100.0% 78,771 100.0% 100.0% 3,327,875 42.25 151 N. State Street Walgreens 2016 100.0% 27,385 100.0% 100.0% 1,430,000 52.22 North and Kingsbury Old Navy 2016 100.0% 41,700 69.0% 69.0% 1,145,821 39.81 Concord and Milwaukee — 2016 100.0% 13,105 100.0% 100.0% 430,235 32.83 California and Armitage — 2016 100.0% 18,275 70.6% 70.6% 668,622 51.86 Roosevelt Galleria Petco, Vitamin 2015 Shoppe 100.0% 37,995 47.7% 47.7% 608,958 33.59 Sullivan Center Target, DSW 2016 100.0% 176,181 95.4% 95.4% 6,355,644 37.83 741,365 85.8% 87.1% $ 38,184,376 $ 60.05 New York Metro Soho Collection Paper Source, 2011 (11 properties) Faherty, ALC 2014 Stone Island, Taft, 2019 Frame, Theory 2020 100.0% 36,769 90.8% 90.8% 8,982,663 268.99 5-7 East 17th Street — 2008 100.0% 11,467 0.0% 0.0% — — 200 West 54th Street — 2007 100.0% 5,777 48.0% 48.0% 1,188,283 428.36 61 Main Street — 2014 100.0% 3,470 100.0% 100.0% — — 181 Main Street TD Bank 2012 100.0% 11,350 67.0% 67.0% 800,000 105.26 4401 White Plains Road Walgreens 2011 100.0% 12,964 100.0% 100.0% 625,000 48.21 Bartow Avenue — 2005 100.0% 14,590 80.0% 80.0% 364,560 31.22 239 Greenwich Avenue Betteridge Jewelers 1998 75.0% 16,553 100.0% 100.0% 1,690,359 102.12 252-256 Greenwich Avenue Madewell, 2014 Blue Mercury 100.0% 7,986 100.0% 100.0% 950,500 119.02 2914 Third Avenue Planet Fitness 2006 100.0% 40,320 74.4% 74.4% 768,172 25.60 868 Broadway Dr. Martens 2013 100.0% 2,031 100.0% 100.0% 814,426 401.00 313-315 Bowery (b) John Varvatos, 2013 Patagonia 100.0% 6,600 100.0% 100.0% 479,160 72.60 120 West Broadway HSBC Bank 2013 100.0% 13,838 79.8% 79.8% 2,006,561 181.78 2520 Flatbush Avenue Bob's Disc. Furniture, 2014 Capital One 100.0% 29,114 100.0% 100.0% 1,169,540 40.17 28


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    Gross Annualized Year Acadia's Leasable In Place Leased Base ABR/ Per Property (a) Key Tenants Acquired Interest Area (GLA) Occupancy Occupancy Rent (ABR) Square Foot 991 Madison Avenue Vera Wang, 2016 Gabriella Hearst 100.0% 7,513 91.1% 91.1% 2,834,853 414.01 Shops at Grand Stop & Shop (Ahold) 2014 100.0% 99,685 100.0% 100.0% 3,341,645 33.52 Gotham Plaza Bank of America, 2016 Footlocker 49.0% 25,927 50.2% 58.3% 856,195 65.85 345,954 85.2% 85.8% 26,871,917 91.17 San Francisco Metro 555 9th Street Bed, Bath & 2016 Beyond, Nordstrom Rack 100.0% 148,832 100.0% 100.0% 6,293,465 42.29 148,832 100.0% 100.0% 6,293,465 42.29 Los Angeles Metro Melrose Place Collection The Row, Chloe, 2019 Oscar de la Renta 100.0% 14,000 100.0% 100.0% 2,455,933 175.42 14,000 100.0% 100.0% 2,455,933 175.42 District of Columbia Metro 1739-53 & 1801-03 TD Bank 2012 Connecticut Avenue 100.0% 20,669 65.0% 65.0% 874,531 65.12 Rhode Island Place Ross Dress for Less 2012 Shopping Center 100.0% 57,667 89.1% 93.4% 1,617,822 31.48 M Street and Wisconsin Corridor Lululemon, Rent the 2011 (26 Properties) (c) Runway,CB2, 2016 The Reformation 2019 25.2% 244,259 74.5% 74.5% 13,195,611 72.55 322,595 76.5% 77.2% 15,687,964 63.59 Boston Metro 330-340 River Street Whole Foods 2012 100.0% 54,226 100.0% 100.0% 1,243,517 22.93 165 Newbury Street Starbucks 2016 100.0% 1,050 100.0% 100.0% 286,051 272.43 55,276 100.0% 100.0% 1,529,568 27.67 Total Street and Urban Retail 1,628,022 85.7% 86.6% $ 91,023,223 $ 65.23 Acadia Share Total Street and Urban Retail 1,414,229 87.4% 88.3% $ 79,643,219 $ 64.46 SUBURBAN PROPERTIES New Jersey Marketplace of Absecon Walgreens, Dollar Tree 1998 100.0% 104,556 86.2% 86.2% 1,346,391 14.94 60 Orange Street (d) Home Depot 2012 98.0% 101,715 100.0% 100.0% 730,000 7.18 New York Village Commons — 1998 Shopping Center 100.0% 87,128 96.1% 96.1% 2,791,713 33.33 Branch Plaza LA Fitness, 1998 The Fresh Market 100.0% 123,345 94.2% 98.8% 3,252,007 27.99 Amboy Center Stop & Shop (Ahold) 2005 100.0% 63,290 86.1% 86.1% 1,842,043 33.82 LA Fitness LA Fitness 2007 100.0% 55,000 100.0% 100.0% 1,485,287 27.01 Crossroads Shopping Center HomeGoods,Pet- 1998 Smart, Kmart 49.0% 311,904 77.4% 86.5% 5,816,454 24.09 29


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    Gross Annualized Year Acadia's Leasable In Place Leased Base ABR/ Per Property (a) Key Tenants Acquired Interest Area (GLA) Occupancy Occupancy Rent (ABR) Square Foot New Loudon Center Price Chopper, 1993 Marshalls 100.0% 255,673 91.6% 95.1% 1,911,563 8.16 28 Jericho Turnpike Kohl's 2012 100.0% 96,363 100.0% 100.0% 1,815,000 18.84 Bedford Green Shop Rite, CVS 2014 100.0% 90,589 78.2% 78.2% 2,311,305 32.63 Connecticut Town Line Plaza (e) Wal-Mart, Stop 1998 & Shop (Ahold) 100.0% 206,089 100.0% 100.0% 1,876,846 17.25 Massachusetts Methuen Shopping Center Wal-Mart, 1998 Market Basket 100.0% 130,021 100.0% 100.0% 1,406,392 10.82 Crescent Plaza Home Depot, Shaw's 1993 (Supervalu) 100.0% 218,148 96.0% 96.0% 1,958,088 9.35 201 Needham Street Michael's 2014 100.0% 20,409 100.0% 100.0% 646,965 31.70 163 Highland Avenue Staples, Petco 2015 100.0% 40,505 100.0% 100.0% 1,490,575 36.80 Vermont The Gateway Shopping Center Shaw's (Supervalu) 1999 100.0% 101,474 100.0% 100.0% 2,212,261 21.80 Illinois Hobson West Plaza Garden Fresh 1998 Markets 100.0% 98,962 96.2% 97.8% 1,157,620 12.16 Indiana Merrillville Plaza Jo-Ann Fabrics, 1998 TJ Maxx 100.0% 236,002 51.0% 55.4% 1,865,110 15.49 Michigan Bloomfield Town Square Best Buy, 1998 HomeGoods, TJ Maxx 100.0% 235,022 89.8% 89.8% 3,546,933 16.80 Delaware Town Center and Other Lowes, Bed Bath & 2003 (2 properties) Beyond, Target 100.0% 800,018 91.3% 91.3% 12,725,291 17.43 Market Square Shopping Center Trader Joe's, 2003 TJ Maxx 100.0% 102,047 97.4% 97.4% 3,102,866 31.22 Naamans Road — 2006 100.0% 19,850 30.1% 30.1% 433,785 72.60 Pennsylvania Mark Plaza Kmart 1993 100.0% 106,856 100.0% 100.0% 244,279 2.29 Plaza 422 Home Depot 1993 100.0% 156,279 100.0% 100.0% 894,880 5.73 Chestnut Hill — 2006 100.0% 37,646 86.3% 86.3% 813,942 25.05 Abington Towne Center (f) Target, TJ Maxx 1998 100.0% 216,871 100.0% 100.0% 1,234,473 20.83 30


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    Gross Annualized Year Acadia's Leasable In Place Leased Base ABR/ Per Property (a) Key Tenants Acquired Interest Area (GLA) Occupancy Occupancy Rent (ABR) Square Foot Total Suburban Properties 4,015,762 90.3% 91.7% $ 58,912,069 $ 17.35 Acadia Share Total Suburban Properties 3,854,657 90.8% 91.9% $ 55,931,077 $ 17.10 Total Core Properties 5,643,784 89.0% 90.2% $ 149,935,292 $ 31.27 Acadia Share Total Core Properties 5,272,454 89.9% 90.9% $ 135,574,296 $ 30.05 (a) Excludes properties under development or redevelopment, see “Development and Redevelopment Activities” section below. The above occupancy and rent amounts do not include space which is currently leased, other than “leased occupancy,” but for which rent payment has not yet commenced. Residential and office GLA are excluded. (b) Represents the annual base rent paid to Acadia pursuant to a master lessee and does not reflect the rent paid by the retail tenants at the property. (c) Excludes 94,000 square feet of office GLA. (d) Sold in 2021 (e) Anchor GLA includes a 97,300 square foot Wal-Mart store which is not owned by the Company. This square footage has been excluded for calculating annualized base rent per square foot. (f) Anchor GLA includes a 157,616 square foot Target store which is not owned by the Company. This square footage has been excluded for calculating annualized base rent per square foot. 31


  • Page 39

    The following table sets forth more specific information with respect to each of our Fund properties at December 31, 2020: Gross Leasable ABR/Per Year Acadia's Area In Place Leased Annualized Base Square Property (a) Key Tenants Acquired Interest (GLA) Occupancy Occupancy Rent (ABR) Foot Fund II Portfolio Detail New York City Point - Phase I and II Target, Alamo Drafthouse 2007 26.7% 469,518 42.5% 65.2% $ 5,377,929 $ 26.95 Total - Fund II 469,518 42.5% 65.2% $ 5,377,929 $ 26.95 Fund III Portfolio Detail New York 654 Broadway ─ 2011 24.5% 2,896 100.0% 100.0% $ 455,000 $ 157.11 640 Broadway Swatch 2012 15.5% 4,637 100.0% 100.0% 1,154,857 249.05 Cortlandt Crossing ShopRite, HomeSense 2012 24.5% 127,849 81.1% 81.1% 2,902,195 27.97 Total - Fund III 135,382 82.2% 82.2% $ 4,512,052 $ 40.55 Fund IV Portfolio Detail New York 801 Madison Avenue ─ 2015 23.1% 2,522 —% —% $ — $ — 210 Bowery ─ 2012 23.1% 2,538 —% —% — — 27 East 61st Street ─ 2014 23.1% 4,177 —% —% — — 17 East 71st Street The Row 2014 23.1% 8,432 100.0% 100.0% 2,026,754 240.36 1035 Third Avenue (b) ─ 2015 23.1% 7,634 58.5% 80.4% 1,052,474 235.51 New Jersey Paramus Plaza Ashley Furniture, Marshalls 2013 11.6% 153,494 59.3% 100.0% 2,104,536 23.13 Massachusetts Restaurants at Fort Point ─ 2016 23.1% 15,711 100.0% 100.0% 1,009,945 64.28 Maine Airport Mall Hannaford, Marshalls 2016 23.1% 222,100 86.6% 86.6% 1,277,283 6.64 Wells Plaza Reny's, Dollar Tree 2016 23.1% 90,434 98.3% 98.3% 742,942 8.35 Shaw's Plaza (Waterville) Shaw's 2016 23.1% 119,015 96.6% 96.6% 1,316,813 11.45 Shaw's Plaza (Windham) Shaw's 2017 23.1% 124,171 86.5% 86.5% 951,866 8.87 Pennsylvania Dauphin Plaza Price Rite, Ashley Furniture 2016 23.1% 206,206 91.9% 91.9% 1,893,815 10.00 Mayfair Shopping Center Planet Fitness, Dollar Tree 2016 23.1% 115,411 96.3% 96.3% 1,908,927 17.17 Rhode Island 650 Bald Hill Road Dick's Sporting Goods, 2015 Burlington Coat Factory 20.8% 160,448 85.4% 85.4% 2,025,172 14.79 Virginia Promenade at Manassas Home Depot 2013 22.8% 280,760 98.6% 98.6% 3,630,599 13.11 Delaware Eden Square Giant Food, LA Fitness 2014 22.8% 229,840 89.7% 89.7% 3,096,115 15.02 Illinois Lincoln Place Kohl's, Marshall's, Ross 2017 23.1% 272,060 95.6% 95.6% 3,059,780 11.77 Georgia Broughton Street Portfolio H&M, Lululemon, (13 properties) Michael Kors, Starbucks 2014 23.1% 96,341 82.1% 82.1% 2,991,993 37.84 North Carolina Wake Forest Crossing Lowe's, TJ Maxx 2016 23.1% 202,880 95.6% 95.6% 2,941,626 15.16 California 146 Geary Street ─ 2015 23.1% 11,436 —% —% — — Union and Fillmore Eileen Fisher, L'Occitane, Collection (3 properties) Bonobos 2015 20.8% 7,148 100.0% 100.0% 735,902 102.95 Total - Fund IV 2,332,758 89.3% 92.1% $ 32,766,542 $ 15.72 Fund V Portfolio Detail New Mexico Plaza Santa Fe TJ Maxx, Best Buy, Ross Dress for Less 2017 20.1% 224,223 97.5% 98.1% $ 3,886,164 $ 17.77 Michigan New Towne Plaza Kohl's, Jo-Ann's, DSW 2017 20.1% 193,446 93.0% 97.6% 2,146,260 11.92 Fairlane Green TJ Maxx, Michaels, 2017 Bed Bath & Beyond 20.1% 252,904 90.9% 93.7% 4,832,967 21.03 Maryland 32


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    Gross Leasable ABR/Per Year Acadia's Area In Place Leased Annualized Base Square Property (a) Key Tenants Acquired Interest (GLA) Occupancy Occupancy Rent (ABR) Foot Frederick County (2 properties) Kohl's, Best Buy, 2019 Ross Dress for Less 18.1% 524,156 71.2% 78.4% 5,574,534 14.93 Connecticut Tri-City Plaza TJ Maxx, HomeGoods 2019 18.1% 302,888 89.7% 89.7% 3,923,263 14.44 Virginia Landstown Commons Best Buy, Bed Bath & Beyond, 2019 Ross Dress for Less 20.1% 404,808 90.2% 90.9% 7,628,581 20.90 Florida Palm Coast Landing TJ Maxx, PetSmart, 2019 Ross Dress for Less 20.1% 171,324 91.6% 94.5% 3,173,477 20.22 North Carolina Hickory Ridge Kohl's, Best Buy, Dick's 2017 20.1% 380,565 85.7% 85.7% 3,753,287 11.51 Rhode Island Lincoln Commons Stop and Shop, Marshalls, 2019 HomeGoods 20.1% 455,441 84.5% 85.6% 5,096,369 13.25 Alabama Trussville Promenade Wal-Mart, Regal Cinemas 2018 20.1% 463,681 94.7% 95.1% 4,485,983 10.21 Georgia Hiram Pavilion Kohl's, HomeGoods 2018 20.1% 362,675 97.2% 97.8% 4,190,542 11.89 California Elk Grove Commons Kohl's, HomeGoods 2018 20.1% 220,726 83.6% 86.2% 4,179,967 22.65 Utah Family Center at Riverdale Target, Sportman's 2019 Warehouse 18.0% 427,696 83.1% 86.0% 3,658,747 10.30 Total - Fund V 4,384,533 87.5% 89.6% $ 56,530,141 $ 14.73 TOTAL FUND PROPERTIES 7,322,191 85.1% 88.7% 99,186,664 $ 15.91 Acadia Share of Total Fund Properties 1,529,710 84.8% 88.3% $ 20,776,556 $ 16.01 (a) Excludes properties under development, see “Development and Redevelopment Activities” section below. The above occupancy and rent amounts do not include space which is currently leased, other than “leased occupancy,” but for which rent payment has not yet commenced. Residential and office GLA are excluded. (b) Property also includes 12,371 square feet of 2nd floor office space and a 29,760 square-foot parking garage (131 spaces). 33


  • Page 41

    Major Tenants No individual retail tenant accounted for more than 5.5% of total Core and Fund base rents for the year ended December 31, 2020, or occupied more than 7.3% of total Core and Fund leased GLA as of December 31, 2020. The following table sets forth certain information for the 20 largest retail tenants by base rent for leases in place as of December 31, 2020. 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 Retail Tenant Number of Annualized Total Annualized Stores in Base Portfolio Base Retail Tenant Portfolio (a) Total GLA Rent (a) GLA Rent Target 5 495 $ 8,554 7.3% 5.5% H&M 2 60 5,138 0.9% 3.3% Walgreens (b) 7 98 4,086 1.4% 2.6% Bed, Bath, and Beyond (c) 5 184 4,103 2.7% 2.6% TJX Companies (d) 27 335 3,861 4.9% 2.5% Royal Ahold (e) 6 194 3,794 2.9% 2.4% Nordstrom, Inc. 2 89 3,515 1.3% 2.2% Trader Joe's 5 48 2,720 0.7% 1.7% LA Fitness International LLC 3 108 2,680 1.6% 1.7% Kohls 7 203 2,605 3.0% 1.7% Verizon 7 28 2,604 0.4% 1.7% Gap(f) 9 66 2,506 1.0% 1.6% Lululemon 5 9 2,499 0.1% 1.6% Fast Retailing (g) 2 32 2,269 0.5% 1.5% Albertsons Companies(h) 4 154 2,266 2.3% 1.4% Home Depot 4 337 2,193 5.0% 1.4% Dick's Sporting Goods, Inc 4 121 1,846 1.8% 1.2% Bob's Discount Furniture 2 69 1,843 1.0% 1.2% Ulta Salon Cosmetic & Fragrance 10 43 1,780 0.6% 1.1% Michael's 7 66 1,611 1.0% 1.0% Total 123 2,739 62,473 40.3% 40.0% (a) Does not include tenants that operate at only one Acadia location (b) Walgreens (5 locations), Rite Aid (2 locations) (c) Bed Bath and Beyond (4 locations), Christmas Tree Shops (1 location) (d) TJ Maxx (11 locations), Marshalls (8 locations), HomeGoods (6 locations), HomeSense (2 locations) (e) Stop and Shop (4 locations), Giant (1 location), Hannaford (1 location) (f) Old Navy (7 locations), Banana Republic (1 location), Gap (1 location) (g) Uniqlo (1 location), Theory (1 location) (h) Shaw’s (4 locations) 34


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    Lease Expirations The following tables show scheduled lease expirations on a pro rata basis for retail tenants in place as of December 31, 2020, assuming that none of the tenants exercise renewal options (GLA and Annualized Base Rent in thousands): Core Portfolio Annualized Base Rent (a, b) GLA Current Number of Annual Percentage Square Percentage Leases Maturing in Leases Rent of Total Feet of Total Month to Month 7 $ 367 0.3% 15 0.3% 2021 47 8,579 6.3% 333 7.4% 2022 55 13,974 10.3% 359 8.0% 2023 64 23,394 17.3% 662 14.8% 2024 53 15,467 11.4% 615 13.7% 2025 62 19,364 14.3% 548 12.2% 2026 53 14,259 10.5% 514 11.5% 2027 23 5,260 3.9% 157 3.5% 2028 37 14,860 11.0% 678 15.1% 2029 28 7,845 5.8% 256 5.7% 2030 17 3,298 2.4% 79 1.8% Thereafter 22 8,907 6.5% 270 6.0% Total 468 $ 135,574 100.0% 4,486 100.0% Funds Annualized Base Rent (a, b) GLA Current Number of Annual Percentage Square Percentage Leases Maturing in Leases Rent of Total Feet of Total Month to Month 19 $ 175 0.8% 9 0.7% 2021 68 1,691 8.1% 114 8.8% 2022 79 2,076 10.0% 132 10.1% 2023 72 1,827 8.8% 116 9.0% 2024 69 2,022 9.7% 140 10.8% 2025 83 3,284 15.8% 226 17.4% 2026 53 1,458 7.0% 66 5.1% 2027 24 757 3.6% 69 5.2% 2028 31 1,507 7.3% 70 5.4% 2029 33 1,711 8.2% 102 7.9% 2030 32 1,050 5.1% 69 5.3% Thereafter 31 3,219 15.6% 185 14.3% Total 594 $ 20,777 100.0% 1,298 100.0% (a) Base rents do not include percentage rents, additional rents for property expense reimbursements, nor contractual rent escalations. (b) No single market, except as discussed below under Geographic Concentrations, 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. 35


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    Geographic Concentrations The following table summarizes our operating retail properties by region, excluding redevelopment properties, as of December 31, 2020. 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 Rent per Annualized Occupied % Occupied Base Square Foot Annualized Region GLA (a,c) (b) Rent (b, c) (c) GLA Base Rent Core Portfolio: New York Metro (d) 1,457 89.4% $ 46,333 $ 35.56 27.6% 34.2% Chicago Metro 731 85.6% 37,212 59.47 13.9% 27.4% Mid-Atlantic 1,439 93.6% 19,450 16.20 27.3% 14.3% New England 772 98.9% 11,121 16.67 14.6% 8.2% Midwest 570 74.9% 6,570 15.40 10.8% 4.8% San Francisco Metro 149 100.0% 6,293 42.29 2.8% 4.6% Washington D.C. Metro 140 79.5% 6,139 55.21 2.7% 4.5% Los Angeles Metro 14 100.0% 2,456 175.42 0.3% 2.0% Total Core Operating Properties 5,272 89.9% $ 135,574 $ 30.05 100.0% 100.0% Fund Portfolio: Southeast 428 91.9% $ 6,040 $ 15.38 28.0% 29.1% Northeast 481 85.7% 5,267 12.79 31.4% 25.4% New York Metro (d) 182 51.5% 3,393 36.23 11.9% 16.3% Mid-Atlantic 116 94.6% 1,534 13.92 7.6% 7.4% West 121 83.3% 1,499 14.84 7.9% 7.2% Midwest 90 91.8% 1,403 17.03 5.9% 6.8% Southwest 45 97.5% 781 17.77 2.9% 3.8% Chicago Metro 63 95.6% 707 11.77 4.1% 3.4% San Francisco Metro 4 36.0% 153 102.95 0.3% 0.6% Total Fund Operating Properties 1,530 84.8% $ 20,777 $ 16.01 100.0% 100.0% (a) 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. (b) 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, 2020. (c) The amounts presented reflect the Operating Partnership's pro-rata shares of properties included within each region. (d) New York Metro includes the tri-state and surrounding states. 36


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    Development and Redevelopment Activities As part of our strategy, we invest in retail real estate assets that may require significant development. As of December 31, 2020, we had the following development or redevelopment projects in various stages of the development process: Acquisition and Development Costs (a) Estimated Square Occupied Ownership Estimated Feet Upon /Leased Key Incurred Estimated Future Estimated Total Property (a) Location Stabilization Completion Rate Tenants Description (b) Range Range Development: CORE 1238 Wisconsin 80.0% Washington DC 2023 29,000 —% TBD Redevelopment/addition to existing building with ground level retail, upper floor office and residential units upon completion. Discretionary spend upon securing tenant(s) $ 3.6 $ 26.8 to $ 28.0 $ 30.4 to $ 31.6 FUND II City Point Phase 94.2% Brooklyn, NY 2021 72,000 0%/88% BASIS Discretionary spend upon III (c) Independent securing tenant(s) for Schools lease up 47.0 19.0 to 22.0 66.0 to 69.0 FUND III Broad Hollow 100.0% Farmingdale, NY TBD TBD —% TBD Discretionary spend upon Commons securing necessary approvals and tenant(s) for lease up 23.1 26.9 to 36.9 50.0 to 60.0 FUND IV 110 University 100.0% New York, NY 2022 14,000 —% TBD Discretionary spend upon Place securing tenant(s) for lease up. Excludes Parking Garage. 14.0 6.6 to 11.0 20.6 to 25.0 717 N. Michigan 100.0% Chicago, IL 2025 62,000 30%/30% Disney Discretionary spend upon Avenue Store securing tenant(s) for lease up 116.4 12.0 to 19.5 128.4 to 135.9 $ 204.1 $ 91.3 $ 117.4 $ 295.4 $ 321.5 Major Redevelopment: CORE City Center 100.0% San Francisco, CA 2021 241,000 65%/98% Target, Ground up development Whole of pad sites and street Foods, level retail and re- PetSmart tenanting/redevelopment for Whole Foods $ 196.9 $ 7.0 to $ 10.0 $ 203.9 to $ 206.9 Elmwood Park 100.0% Elmwood Park, NJ 2022 144,000 51%/78% Lidl Re-tenanting and split of former 48,000 square foot Acme with 28,000 square foot Lidl and 20,000 square feet of remaining for discretionary spend; façade upgrade 1.6 3.4 to 3.9 5.0 to 5.5 Route 6 Mall 100.0% Honesdale, PA TBD TBD 17%/17% TBD Discretionary spend for re-tenanting former 120,000 square foot Kmart anchor space once tenant(s) are secured — 5.0 to 7.0 5.0 to 7.0 Mad River 100.0% Dayton, OH TBD TBD 48%/48% TBD Discretionary spend for the re-tenanting former 33,000 square foot Babies R Us space once tenant(s) are secured — 1.9 to 2.3 1.9 to 2.3 $ 198.5 $ 17.3 $ 23.2 $ 215.8 $ 221.7 (a) Ownership percentages and costs represent the Core or Fund level ownership and not Acadia’s pro rata share. (b) Incurred amounts include costs associated with the initial carrying value. (c) Incurred amounts include the conversion of a $33.8 million note receivable to improvements in the property. ITEM 3. LEGAL PROCEEDINGS. 37


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    As previously disclosed in our periodic filings, one of our subsidiaries was party to a litigation matter that was settled on October 30, 2020 as further described in Note 7. In addition, from time to time, we are a party to various legal proceedings, claims or regulatory inquiries and investigations arising out of, or incident to, our ordinary course of business. While we are unable to predict with certainty the outcome of any particular matter, management does not expect, when such matters are resolved, that our resulting exposure to loss contingencies, if any, will have a material adverse effect on our consolidated financial position. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 38


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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. Market Information, Dividends and Holders of Record of our Common Shares At February 12, 2021, there were 254 holders of record of our Common Shares, which are traded on the New York Stock Exchange under the symbol “AKR.” Our quarterly dividends declared are discussed in Note 10 and the characterization of such dividends for Federal Income Tax purposes is discussed in Note 14. Securities Authorized for Issuance Under Equity Compensation Plans At the 2020 annual shareholders’ meeting, the shareholders' approved the 2020 Share Incentive Plan (the “2020 Plan”). This plan replaced the Second Amended and Restated 2006 Incentive Plan (the “2006 Plan”) and increased the aggregate number of Common Shares authorized for issuance by 2,650,000 shares for a total of 2,829,953 shares available to be issued (which includes 179,953 carried over from the 2006 Plan). The 2020 Plan authorizes the Company to issue options, Restricted Shares, LTIP Units and other securities (collectively “Awards”) to, among others, the Company’s officers, trustees and employees. See Note 13 in the Notes to Consolidated Financial Statements, for a summary of our Share Incentive Plans. The following table provides information related to the 2020 Plan as of December 31, 2020: Equity Compensation Plan Information (a) (b) (c) Number of securities remaining Number of available for securities to future issuance be issued upon under equity exercise of Weighted-average compensation outstanding exercise price plans (excluding options, of outstanding securities warrants and options, warrants reflected in rights and rights column (a)) Equity compensation plans approved by security holders — $ — 2,738,013 Equity compensation plans not approved by security holders — — — Total — $ — 2,738,013 Remaining Common Shares available under the 2020 Plan are as follows: Outstanding Common Shares as of December 31, 2020 86,268,303 Outstanding OP Units as of December 31, 2020 4,890,875 Total Outstanding Common Shares and OP Units 91,159,178 Common Shares and OP Units pursuant to the 2020 Plan 2,829,953 Less: Issuance of Restricted Shares and LTIP Units Granted (91,940) Number of Common Shares remaining available 2,738,013 39


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    Share Price Performance The following graph compares the cumulative total shareholder return for our Common Shares for the period commencing December 31, 2015, through December 31, 2020, 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, 2015, 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. At December 31, Index 2015 2016 2017 2018 2019 2020 Acadia Realty Trust $ 100.00 $ 102.04 $ 88.64 $ 80.31 $ 91.37 $ 51.08 Russell 2000 100.00 121.31 139.08 123.76 155.35 186.36 NAREIT All Equity REIT Index 100.00 108.63 118.05 113.28 145.75 138.28 SNL REIT Retail Shopping Ctr Index 100.00 103.49 92.02 77.22 98.14 70.96 Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities None. Issuer Purchases of Equity Securities The Company maintains a share repurchase program which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program may be discontinued or extended at any time. The Company repurchased 1,219,065 and 2,294,235 shares for $22.4 million and $55.1 million, inclusive of fees, during the years ended December 31, 2020 and 2018, respectively. The Company did not repurchase any shares during the year ended December 31, 2019. As of December 31, 2020, management may repurchase up to approximately $122.6 million of the Company’s outstanding Common Shares under this program. ITEM 6. SELECTED FINANCIAL DATA Not applicable. 40


  • Page 48

    ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW As of December 31, 2020, there were 187 properties, which we own or have an ownership interest in, within our Core Portfolio and 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 properties primarily consist of street and urban retail, and suburban shopping centers. See Item 2. Properties for a summary of our wholly-owned and partially-owned retail properties and their physical occupancies at December 31, 2020. 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. 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 and create value through accretive development 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. 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. SIGNIFICANT DEVELOPMENTS DURING THE YEAR ENDED DECEMBER 31, 2020 Special Note Regarding the COVID-19 Pandemic During the first quarter of 2020, the COVID-19 Pandemic began to impact the Company. In order to protect citizens and slow the spread of COVID-19, a majority of state governments in the United States instituted restrictions on travel, implemented “shelter-in-place” or “stay-at-home” orders and social distancing practices, and mandated shutdowns of certain “non-essential” businesses for what was then an indeterminate period of time. As a result, a majority of the Company’s retail tenants were forced to temporarily close their businesses during all or a portion of the second quarter of 2020. While most tenants have since reopened, the tenant closures created concern regarding the Company’s ability to fully collect rents billed during the second and third quarters of 2020 and possibly thereafter from non-operating tenants, many of which have requested rent concessions from the Company. In addition, the COVID-19 Pandemic has had a significant adverse impact on economic and market conditions resulting in a decline in the Company’s share price, disruption of or lack of access to debt and the capital markets, and depressed real estate values, among others. The Company notes the following as a result of the COVID-19 Pandemic: • Effective March 20, 2020, the Company closed its offices and its employees successfully transitioned to working from their homes. Effective June 29, 2020 the Company has reopened its main office and has put robust protocols in place for protecting its employees against the spread of the COVID-19 virus. Effective January 8, 2021, the Company has provided an option to its employees work from home through February 28, 2021. • On March 31, 2020, the Company issued a press release relaying that certain major development and construction projects had been placed on hold and withdrew its 2020 guidance. • The Company reviewed its assets for impairment at December 31, 2020 and March 31, 2020 and determined that it would take aggregate non- cash impairment charges of $34.0 million and $51.5 million, of which $8.2 million and $12.4 million, respectively, was the Company’s pro-rata share, estimated holding periods, estimated net operating income and cap rates at selected properties due to circumstances stemming from the COVID-19 Pandemic (Note 8). The Company reviewed its assets for impairment at June 30, 2020 and September 30, 2020 and determined that no additional impairment charges were required for these periods. 41


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    • Tenant Operating Status (Unaudited) – The following table illustrates the percentage of the Company’s consolidated and unconsolidated ABR derived from stores which were open or partially open for business as of the dates indicated: Percentage of Tenants Open for Business as of June 30, September 30, December 31, January 31, 2020 2020 2020 2021 Core 74% 86% 88% 89% Fund 74% 88% 82% 85% • Rent Collections – The following table depicts collections of pre-COVID billings (original contract rents without regard to deferral or abatement agreements) and excludes the impact of any security deposits applied against tenant accounts as of the dates shown: Collections as of: January 31, 2021 September 30, 2020 for December 31, 2020 for for Second Quarter Third Quarter Second Quarter Third Quarter Fourth Quarter Fourth Quarter 2020 2020 2020 2020 2020 2020 (Unaudited) Core 74% 85% 76% 87% 91% 92% Fund 65% 77% 67% 79% 82% 84% • The Company has negotiated rent deferrals and abatements with select tenants. As of December 31, 2020, the Company has deferred rents aggregating $10.7 million included in Rents receivable on its balance sheet and through December 31, 2020 has abated rents of $2.6 million as the Company’s proportionate share (Note 1). Subsequent to December 31, 2020 and through January 31, 2021 the Company has entered into 13 additional deferral and abatement agreements (Note 16). • The Company reviewed the collectability of its rents receivable and straight-line rents and has recorded credit loss reserves of approximately $46.8 million of which $29.9 million was the Company’s share, (Note 1, Note 3) during the year ended December 31, 2020 primarily related to projected tenant defaults stemming from business closures attributable to the COVID-19 Pandemic. • The Company continues to have active discussions with existing and potential new tenants for new and renewed leases. However, the uncertainty relating to the COVID-19 Pandemic could result in higher vacancy than the Company otherwise would have experienced, a longer amount of time to fill vacancies and potentially lower rental rates. As of December 31, 2020, approximately 6.6% and 8.9% of the Company’s Core and Fund portfolio annualized base rents, respectively, were subject to month-to-month leases or leases scheduled to expire in 2021 and 10.3% and 10.0%, respectively, was subject to leases scheduled to expire in 2022. • The Company has numerous long-dated interest rate cash flow hedges (Note 7, Note 8) in place to effectively fix the interest rates on its variable- rate debt. In periods when current referenced interest rates fall below strike rates of the swap, the Company is required to make payments that are charged to interest expense. The fair value of the interest rate swaps at December 31, 2020 was a liability of $90.1 million, which represents the present value of expected payments over the weighted-average remaining term of the swaps, which was 7.6 years. • At December 31, 2020 a Fund III mortgage and a Fund IV term loan aggregating $115.2 million, or $27.1 million at the Company’s share, had not met their liquidity requirements. In addition, at that same date, three Fund mortgages aggregating $124.1 million, or $25.6 million at the Company’s share, had not met their debt yield and/or debt service coverage ratio requirements. Some of these lenders may require cash sweeps of property rents until these conditions are remedied (Note 7). • Beginning with the second quarter of 2020, the Board temporarily suspended distributions on its Common Shares and Common OP Units, which suspension the Board has determined to continue through the fourth quarter of 2020. Assuming that current operating conditions continue to prevail, the Company currently expects to reinstate quarterly distributions in the first quarter of 2021, which would be subject to Board approval at that time (Note 10). While the Company currently considers the disruptions associated with the COVID-19 Pandemic to be temporary, if such disruptions escalate, are protracted or have a more severe impact than anticipated, they may have a material adverse effect on the Company’s revenues, results of operations, financial condition, and liquidity in future periods. 42


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    Investments Core Portfolio During the year ended December 31, 2020, we invested in two properties aggregating $19.2 million, inclusive of transaction costs, within our Core portfolio as follows: • On January 9, 2020, we acquired a fully-occupied retail condominium, 37 Greene Street, located in the SoHo section of New York City, for $15.7 million. • On February 13, 2020, we acquired a fully-occupied, mixed-use building in Chicago, Illinois, for $3.5 million. On April 1, 2020, as described further below, in a non-cash transaction, we converted a note receivable into the remaining venture partner’s interest in Town Center. We consolidated the previously unconsolidated investment (Note 4). In addition, we obtained our partner’s 78.22% noncontrolling interest in Brandywine Holdings for nominal consideration upon settlement of a legal matter (Note 7). Funds During June, Mervyns II liquidated a portion of the shares it owns in connection with its Investment in Albertsons (Note 4), which had an initial public offering. Mervyns II recognized realized gains on the sale of those shares in addition to the appreciation in the fair value of its remaining shares of Albertsons. Unrealized holding gains, distributions and other for the year ended December 31, 2020 includes Mervyns II’s $72.4 million share of net unrealized holding gains through December 31, 2020 and its $23.2 million share of realized distributions related to its Investment in Albertsons, of which the Company’s aggregate share is $27.1 million. During the year ended December 31, 2020, we did not make any investments within our Fund portfolio. However, Fund IV acquired the venture partner’s interest in two of its Broughton Street properties for $1.3 million (Note 4) and now consolidates those properties. In addition, Fund II converted its $33.8 million note receivable for an interest in real estate on November 2, 2020 (Note 3). Dispositions of Real Estate During the year ended December 31, 2020, we sold two land parcels in our Core Portfolio for a total of $0.4 million. In addition, a Fund IV property, two Fund III parcels and a Fund IV parcel were sold for a total of $22.0 million. These transactions resulted in an aggregate gain of $0.7 million of which the Company’s share was $0.3 million (Note 2). Financing Activity During the year ended December 31, 2020, the Company had the following financing activity (Note 7): • obtained a Core term loan for $30.0 million • settled a mortgage that was previously in default for $30.0 million and recognized a gain on debt extinguishment of $18.3 million, of which $4.1 million was the Company’s share • paid off a Fund IV mortgage in the amount of $11.6 million in connection with the sale of a property • extended the maturity dates of the Fund II term loan, the Fund V Subscription line and seven Fund mortgages, which had aggregate outstanding balances of $425.6 million at December 31, 2020; and • reduced borrowings on three Fund loans totaling $103.4 million by $11.5 million. Structured Financing Investments During the year ended December 31, 2020, the Company had the following Structured Financing investment activity (Note 3): • On January 17, 2020, the Company provided a loan for $54.0 million to an entity that owns an interest in 850 Third Avenue, in Brooklyn, New York • On February 6, 2020, the Company provided a loan for $5.0 million to one of the Company’s venture partners • On April 1, 2020, in a non-cash transaction, the Company converted its $38.7 million note receivable plus accrued interest of $2.0 million to a controlling interest in Town Center in Wilmington, Delaware as described above • On November 2, 2020, in a non-cash transaction, Fund II converted its $33.8 million note receivable including accrued interest to construction improvements on its retail condominium at City Point in Brooklyn, New York; and • One Core and one Fund III notes receivable matured but were not repaid. These notes, which aggregated $31.6 million including accrued interest, remained in default at December 31, 2020; however, management has determined for each loan that the collateral is sufficient to cover the loan’s carrying value at December 31, 2020. In addition, there are certain personal guarantees associated with these notes receivable. 43

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