Welcome to Fourth Quarter 2013 Acadia Realty Trust Earnings Conference Call. As a reminder, this conference is being recorded. At this time, all audience lines have been placed on mute. We will conduct a question-and-answer session following the formal presentation. (Operator Instructions). I will now turn the call over to Amy Rancanello, Vice President of Capital Markets and Investments. Please proceed.

Good afternoon and thank you for joining us, for the fourth quarter 2013 Acadia Realty Trust earnings conference call. Participating in today’s call will be Kenneth Bernstein, President and Chief Executive Officer; and Jon Grisham, Chief Financial Officer. Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934, and actual results may differ materially from those indicated by such forward-looking statements. Due to a variety of risks and uncertainties including those disclosed in the company’s most recent Form 10-K and other periodic filings with the SEC, forward-looking statements speak only as of the date of this call, February 13, 2014 and the company undertakes no duty to update them. During this call, management may refer to certain non-GAAP financial measures including Funds from operations and net operating income. Please see Acadia’s earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. With that, I will now turn the call over to Ken Bernstein.

Thank you, Amy. Good afternoon. Thank you for joining us. Today, I’ll start with an overview of our 2013 accomplishments then Jon will review our fourth quarter and year-end operating results as well as our guidance for this year. Last year, notwithstanding a fair amount of volatility in the REIT markets, we experienced steady and significant value enhancement to our real-estate portfolios across both our Core and our Fund platforms. First, the assets in our existing Core portfolio achieved strong same-store NOI growth of more than 7%. Then on top of that, this portfolio also benefited from well observed cap rate compression which was most noticeable for the types of high-quality retail assets that we now own. Then furthermore, we grew that portfolio by roughly 20% with over $220 million of accretive street retail acquisitions. With respect to our Fund platform, during the year we continued to make important leasing and development progress at asset including City Point in Downtown Brooklyn, Lincoln Park Center in Chicago. And similar to our Core portfolio, our operating Fund assets ranging from our Lincoln Road properties in Miami Beach to our Cortlandt Town Center in Westchester New York, they also benefited from cap rate compression. And then finally, we completed $123 million of additional Fund acquisitions as well. So, not only did our portfolio’s values increase but most importantly looking ahead, both platforms are well positioned and well capitalized to build on last year’s value with a solid collection of existing assets, strong embedded growth as well as plenty of powder. So, with that in mind, let’s begin with a review of our Core portfolio. I’m going to leave a detailed discussion of our operating results to Jon. But overall our Core portfolio performed well in 2013, and that was on the heels of…

Good afternoon. I’d like to recap 2013 results and then I’ll go to 2014 expectations. First related to 2013 earnings. FFO for the fourth quarter was $0.27, there are a few items to keep in mind related to this result. First, it included $2.3 million or $0.04 of non-cash retirement expenses, primarily related to divesting of unvested stock compensation from Mike Nielsen, who retired effective year-end 2013. It also included acquisition costs of $1.4 million or $0.02 on the Core and Fund deals that we closed during the fourth quarter. And there are few other pluses and minuses which more or less netted each other out during the quarter. So, adjusting for the combined $0.06 FFO would have been $0.33. And then looking at the year, FFO as we reported was $1.20. And in addition to the $0.06 in the fourth quarter that I just covered, we had another $2.1 million or $0.04 of acquisition costs incurred to the third quarter. So, adjusting for this total of $0.10, our normalized 2013 annual FFO was $1.30. This is well above our original 2013 guidance range of $1.17 to $1.25, which was also before acquisition costs. And it also exceeded our most recent updated guidance range which we provided last quarter of $1.26 to $1.29. Our Core portfolio performance for the quarter and year-to-date also exceeded our original and revised expectations. Looking at same-store NOI, year-to-date NOI increased 7.2%, again well above our original forecast and 20 basis points over last quarter’s revised forecasted range of 6.5% to 7%. The driver of this growth was an 8.5% increase in NOI from revenues which was offset a little by 1.3% reduction in NOI from increased operating expenses. This 7.2% growth includes the effect of two key re-anchoring projects at our Bloomfield and branch…

(Operator Instructions). And our first question comes from Jay Carlton from Green Street Advisors. Please go ahead. Jay Carlton – Green Street Advisors: Hi, great. Thanks. Hi, Jon, just a real quick question, you mentioned 4% to 5% same store NOI. Press release said 3.5% to 4.5%. Is there a change there or is there a difference in those numbers?

It’s really not a change, 4% to 5% is the right now. So, we should straighten that on the press release. But it is 4% to 5%. Jay Carlton – Green Street Advisors: Okay, great. And then, I guess just on the re-leasing spread front, can you kind of give us a sense of what you’re looking at maybe from the street retail perspective versus the Core perspective. I know you kind of addressed it but are you thinking that over the next couple years that portfolio is an out-performer and is there a way to kind of quantify or how you’re thinking about that blended re-leasing spread?

Yes, so, for 2013 there wasn’t a lot of turnover in terms of the street portfolio components. So, there is not a good empirical result that we can look at to demonstrate our thesis in terms of the out-performance of that segment of the portfolio. As these leases roll, it will be over the next two, three, four, five years. I think our expectation certainly is that it will outperform the suburban category. But again, we’re just going to have to let some time lapse here in order to prove out the thesis. Jay Carlton – Green Street Advisors: Okay. And Ken, maybe just a follow-up on that. You mentioned 100 to 200 basis points of out-performance on the street retail NOI versus suburban. Is that kind of like a long-term run rate to think about or is it still too early in the transformation, or how should we be thinking about that next couple years?

Yes, and I think there is a few different important components. First of all, it’s the contractual growth, which is about 100 basis points higher than the contractual growth that we achieved in our suburban portfolio. And that’s just a difference in our leverage as we negotiate street retail leases versus negotiating with Kroger or with TJ Maxx or certainly with Target as well as including the smaller spaces in suburbia. So, there is about 100 basis points of contractual growth. Then on top of that what we have experienced is stronger market rent growth in the street portfolio. So, as we get back spaces or as leases come due for renewal, we’re also seeing another – it could be 100 basis points, it could be more than that, it could be several hundred basis points of superior growth. And what I pointed out there and Jon’s right, if you look at the contractual leases, it’s hard to say that in the second quarter of next year we’re going to have lease spreads of blank. But what we’ve seen in our street retail leases is more often than – certainly more often than the suburban leases, the leases have built-in mark-to-markets so their tenants have option to renew but those options are predicated on fair market value. We don’t see that in our suburban leases. And that because it’s a much more fragmented business in street retail, if a given tenant is not succeeding there – they are much quicker to be willing to give up that lease, then a discussion that we might have with the Bed Bath & Beyond or TJ Maxx etcetera. So, we also find that we can get additional growth above that 100 basis points due to the negotiator recapture space or the mark to fair market value. And that doesn’t even begin to then address the potential risks that we see to some other formats where there is downside that we’re not experiencing so far in terms of street retail. Jay Carlton – Green Street Advisors: Okay, great. Thanks, guys. Enjoy that weather.

Thank you, Jay.

Thank you. And our next question comes from Todd Thomas from KeyBanc. Please go ahead. Todd Thomas – KeyBanc: Hi. Thanks. Good afternoon. So, first question, Jon, so guidance excludes all acquisition costs. So, if we strip out all the noise in the fourth quarter, essentially, it sounds like we get to about $0.33. So, that’s $1.32 annualized. And then if you build up from the same-store guidance that’s another $0.04 to $0.05 or so plus the non-same store growth and acquisitions and so forth. I was just curious then looking at the range, $1.30 to $1.40, what are some of the moving parts that could really get numbers down either below the midpoint or even toward the low end which would really imply roughly flat or 0% normalized FFO growth?

Yes. So, probably the most significant item to keep in mind and it’s not a moving part at this point. It’s just – it’s an event that’s already occurred had to do with the monetization of the Fund II. So, we sold Fordham and Pelham in the fourth quarter, and that does create some transitory dilution, i.e. until we reinvest those into Fund IV, there is some earnings impact in the interim. And so, certainly from a NAV perspective, it’s accretive. We take that money that we’ve invested in Fund II plus profit. And we redeploy it in Fund IV. So, again, from an earnings perspective the risk is temporary downtime as it relates to that capital. So that sets us back $0.04 to $0.05 at the starting point of 2014. That’s why we have that low end of the $1.30 which presumes modest acquisitions. I think that the mid-point of our guidance is very much attainable. But that’s probably the biggest reason why you’re seeing that low end of $1.30. Todd Thomas – KeyBanc: Okay. And then, Ken, as you think about Fund IV investments from here, one of your peers that’s been involved in RCP-type investments mentioned several days ago that they expected it to be more active in ‘14 than they have and that there seems to be a lot of opportunity for that type of investment. I know that you haven’t participated in those types of transactions so much lately, but I was just curious if you’re seeing that same sort of opportunity unfold perhaps?

Yes. We opted not to participate in large club deals recently for a host of reasons, even though those large club deals have been very successful. But at the retailer level Todd, you’ve seen us acquire good real-estate where there were troubled retailers. We’ve just been doing it on one-off basis. And now we’re beginning to see opportunities on the pool basis. So that is certainly an area that our team is focused on. And it wouldn’t surprise me as you see the ongoing evolution of retailing and that there will be some more opportunities there. Todd Thomas – KeyBanc: Okay. And then just two last detail questions on a couple of properties. I was just looking in the supplement, so at 161st Street in Fund II, the anchor-lease expires this year. I was just wondering what the expectation there is in terms of that tenant renewing or if you’re expecting to sign with a replacement tenant, maybe what the spread might look like? And then also, Ken, you mentioned the 67th Street acquisition in Fund IV. I was just curious, you characterized it as being a below-market lease – the lease is expiring this year as well. Any color on what that mark-to-market might look like as well?

Sure. I’m not going to predict the spreads in either case 67th Street is though a good example of something I was discussing earlier. So Lucky brand jeans lease expired, they have an option to renew at fair market value. We have several other tenants who are very interested. So it’s our expectation that we get that space back and re-tenant it to another tenant at a much higher rent. When we get that done, I’ll show you the spreads and that will look very good. 161st Street, similarly still a little early, our expectation is we get the space back, that’s our business plan. And then it gets re-tenanted to multiple tenants. Todd Thomas – KeyBanc: Okay. Thank you.

Thank you. And our next question comes from Craig Schmidt from Bank of America. Please go ahead. Craig Schmidt – Bank of America: Thank you. I just wondered if you could talk a little bit about a street retail and possibly using the Rush and Walton Corners in the degree you feel you have some control in those assets?

Yes, Craig. And it’s an important part of our thesis which is to focus on certain markets where we already have a presence and then can add to it and understand what’s going on in those given street. Having intimate understanding of tenant sales trends etcetera. So, you could look in Lincoln Park, Chicago at Clark University, where we have now amassed a significant amount of the retail square footage on that corridor. And then as you pointed out on Rush and Walton, which is to some degree the Madison Avenue of Chicago, although Chicago is the other way around and appropriately. So, but this is the area of high street retailer for the more boutique tenant. As I mentioned, we have tenants ranging from Brioni to YSL as well the more mainstream the Lululemon’s of the world etcetera. We have been able through a series of four transactions to amass the majority of the retail square-footage in that corridor. Now there is still the ability to double and triple the amount of ownership right there. And I think over the next several years you’ll see us do that with Walton Street and Oak Street being fabulous streets for our retailers. And our retailers are telling that’s where they want to land if North Michigan Avenue is not the right format for them. So, you’ll see us do it on M Street, you’re certainly seeing it at the Fund level on Lincoln Road, and then the Rush Street Corridor is just another example. Craig Schmidt – Bank of America: Thank you.

Thank you. And our next question comes from Christine McElroy from Citi. Please go ahead. Christine McElroy – Citi: Hi, good afternoon, guys. Just following up on the street retail question. You talked about five caps on the recent deals on average. I assume that’s on ‘14 numbers. You also talked about contractual rent growth higher market rent growth, early recapture of space. I’m just wondering what sort of level of five to 10-year IRR’s you’re underwriting into some of these deals?

Good question. Because the problem with IRRs and is here then making some kind of assumption on exit cap. And these assets that we’re acquiring for the most part are in our Core where we plan on holding them for an infinite life. What I would suggest is, we will do better than 100 basis points of relative out-performance in terms of the NOI growth. A stabilized supermarket anchored center should roll-off between 1.5% and 2.5% growth. And a discounter anchored center probably has slightly lower contractual growth. Our street retail, as I said should have at least 100, maybe 200 basis points higher growth. Then, on top of that when you think about the residual value to get to 10-year IRR, what our retailers are telling us is that flagship locations, branding locations, street retail locations are where they’re going to put most of their efforts into in terms of growth given the realities of omnichannel retailing. And so we expect that the growth profile 10 years from now will look even stronger than on the other asset classes. And thus, we think that the cap rate on exit will be superior. Now the reason I’m dancing around what exit cap rates would be 10 years from now is obviously interest rate are going to be a big portion of that guestimate. And I absolutely am not going to forecast for you where interest rates are going to be 10 years from now. What I will tell you is we believe, on a relative basis, we are making the right decision for our shareholders selling our A&P anchored center in New Jersey at about 6.5 cap, and buying this higher growth that are protected on the downside, more upside opportunity, higher growth assets going in at about 5 with superior growth. I’ll defer to you as to the 10-year analysis on that. But we think that our shareholders would be well rewarded for. Christine McElroy – Citi: That’s helpful, thanks. On the same property occupancy data, Jon, you had a 230 basis point jump in the leased rate, but then physical occupancy’s up only 40 bps year-over-year, what does that spread between leased and commence mean for the level of sort of economic impact or occupancy upside that you expect in ‘14 guidance?

Yes. So, give or take, so when you look at 4% to 5% and it is 4% to 5% run by the way. Looking at that same-store NOI growth, probably somewhere around 150 basis points give or take relates to that spread between year-end occupied and leased occupancy. And it primarily relates to really half of it give or take relates to our crossroads asset, where we are re-anchoring the former A&P supermarket there. That should commence the latter half of 2014. And then the other half is various handful of losses throughout the balance of the portfolio. So again, stripping that out same-store NOIs 3.5% approximately, so that’s the impact as it relates to that spread. Christine McElroy – Citi: Okay. And same-store expenses, just looking at that number, just down pretty meaningfully year-over-year, wonder if you could address that and then also within that 4% to 5% same-store NOI guidance, what are you expecting for revenue growth versus expense growth?

So, we think similar to 2013, it’s driven by revenue growth. Depending on how many more snow-storms we have, like the one I’m looking at outside the window, we’ll see what the expense variance looks like. But assuming for the most part, normal weather patterns, I think again there will be some drag from expenses but mostly just inflationary give or take. So not all that different, in terms of distribution between revenue and expenses as we saw in ‘13. Christine McElroy – Citi: Okay. And then just lastly, the $1.3 million impairment of the asset that flowed through the Funds in disc ops in the quarter, it didn’t look like that was backed out of FFO. What was that charge?

Yes. So that relates to our pre-recession investment in some land in Sheepshead Bay. And we bought that for give or take $20 million. And we’re selling it for give or take $20 million. And the impairment relates to primarily development fees and some other carrying costs that were capitalized during that hold. So, given that it is un-depreciated land, it is included in FFO in terms of debt impairment charge. Christine McElroy – Citi: Got you. Thank you very much.

Thank you. And our next question comes from Rich Moore from RBC Capital Markets. Please go ahead. Rich Moore – RBC Capital Markets: Hi, good afternoon guys. When you look at acquisitions or I guess both the Fund and the Core going forward. Is it almost entirely street retail, is that what you’re thinking Ken at this point?

No, Rich. At the Fund level, we’ll buy high yield. We bought a supermarket anchored center just South of DC. We bought it at 9% yield because the supermarket lease was short-term and then we extended it. Where we can buy high-yields we’ll buy high-yields, where we can buy debt, we’ll buy debt and RCP will take us to a lot of different places. And so the nice thing about the Fund business is we certainly can do a lot of different things within our wheelhouse of expertise. But it can vary in asset quality because I don’t mind buying, trading sardines at the Fund level. I’m not comfortable at the Core buying assets where we have to time the exit, because it’s a lot harder with Core assets to buy and trade, at the Fund level it’s relatively easy. The only other piece of that is our biases has been, I don’t want to say just towards street retail, but listening to our retailers and understanding that most of their interest in expanding. When I ask our retailers, where are you most willing to pay us more rent five years from now, it is in the more dense, the more urban, the more 24x7 live, work, play markets. So, whether we’re talking to Target and TJ Maxx or we’re talking to more high-street retail soft goods retailers, their enthusiasm, the opportunity for growth, the opportunity for entrepreneurial returns seems to show up there. So, that’s why you’re seeing a fair amount of activity there. Rich Moore – RBC Capital Markets: Okay, all right. Thank you, Ken. And so, is the – I guess is the competition heating up at all for these kinds of assets because it doesn’t seem like the public guys are gravitating all that much, I mean, you see them occasionally but they don’t seem to gravitate quite as heavily as you guys have towards this sort of asset. Is there other competition now, this is becoming more difficult or I guess how do you size that up?

Well, I really hope the rest of the public guys stay away. Although on Lincoln Road, we bought a nice chunk of real estate down there and on our last call everyone was asking me about general growth acquisition on North Michigan Avenue. So, they are certainly around periodically. And I wouldn’t discount SL Greene’s activity in New York either. Yes, there is plenty of competition there always have been Rich for high-quality assets. There is institutional capital, there is private entrepreneurial capital. We’ve always been comfortable with the fact that these are competitive markets. We’re good at that. And we have discretionary capital, we have a very good balance sheet, we have a very good track record and a lot of credibility. So, when we see an asset, we want, I know we’ll stand a good fighting chance of acquiring it providing it makes sense. And the fact that there is less public company involvement is due to the fact that some of these assets are smaller acquisitions. At our size, we can afford to amass the assets the way we’ve been doing on Rush and Walton, the way we’ve been doing on M Street. For the large guys, I get that that’s not a scalable business. So, that may give us an advantage within the public market. But then I clearly recognize there is plenty of competition and we’re up for that fight. Rich Moore – RBC Capital Markets: Okay. I got you. And so the $92 million that you have under contract in the Core is that more street retail?

Yes. Rich Moore – RBC Capital Markets: Okay, great. Thank you. And then, I wanted to ask you guys two on Kroger. I think you had a, promote in the quarter on some of those assets, on the sale of some of those assets. Is there more of that, I guess, you’re expecting and I saw the guidance didn’t really have much in the way of promotes. And I assume that was more Fund level type promotes, Funds II and III. But I mean, is there, is there more of the Kroger type stuff or the opportunistic retail stuff that you might give promotes on?

Yes, not for 2014 Rich. So, Fund I, the promote related to, we had $12 million seller financing that we collected on in the fourth quarter and we distributed our proceeds and recognized to promote. That’s really it for Fund I in terms of expected promote.

On Kroger but.

On Kroger. We still have remaining RCP, could be some there as well to the extent that there is additional value in the Mervin’s portfolio, which we think there is some. And the timing of that obviously, we can’t be certain of that. But we don’t expect – don’t expect too much of that in ‘14. And then as it relates to future promotes, Funds II, Funds III, that will be a ‘15 and beyond event and don’t expect anything in the near future as it relates to that. Rich Moore – RBC Capital Markets: Okay, great. Thanks guys.

Okay.

Thank you. And our last question will come from Mike Mueller from JPMorgan. Please go ahead. Mike Mueller – JPMorgan: Hi, I missed the beginning of the call. I apologize if this was discussed. But I heard the acquisition guidance, is there anything in the plan whether it’s in guidance or not but being contemplated in terms of additional monetization’s of Fund assets that could be significant?

Not significant, we have a couple of Fund II assets and we’ve talked about these before to 16th Street potentially. We have one remaining self-storage property at Liberty Avenue, one or two others. But in the aggregate no more than say $100 million.

Plus then phase III of City Point, which that we do expect that to monetize in this year.

Correct, correct, although obviously, no earnings dilution?

Right, right. Rich Moore – RBC Capital Markets: Okay. So if we’re thinking about dilution, I mean, nothing like storage or nothing like the fourth quarter stuff?

Correct. Rich Moore – RBC Capital Markets: Because at this point it seems like, got it. Okay, that was it. Thanks.

Good.

Thank you. I will now turn the call over to Ken Bernstein for closing remarks.

Thank you all for joining us. Those of you on Eastern Seaboard, I hope you are someplace safe and warm. Those of you on the West Coast, we forgive you. Speak to everybody soon.