Acadia Realty Trust Prices Offering of 6,900,000 Common Shares
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Insights
The recent announcement by Acadia Realty Trust regarding an underwritten offering of 6,900,000 common shares at $16.75 per share is a strategic move that warrants a thorough financial analysis. The company's decision to potentially include an additional 900,000 shares for underwriters indicates a preemptive measure for over-allotments, which could lead to further capital inflow if exercised. This capital raise is significant as it directly impacts Acadia's equity base and dilutes current shareholders' ownership percentage.
From a financial perspective, the use of net proceeds for general corporate purposes such as funding future acquisitions, repaying debt and bolstering working capital is a common practice that can enhance a company's operational flexibility. However, it is important to assess the offering's timing and pricing in relation to current market conditions and the company's valuation. The offering price often reflects the market's perception of the company's value and growth prospects. If the price is set below the current market price, it could indicate a potential discount offering to attract investors, but it may also suggest a bearish outlook from the underwriters.
Investors should consider the implications of dilution on earnings per share (EPS) and the potential for increased financial leverage if the proceeds are used to repay debt. Acadia's balance sheet and future earnings reports will be key indicators to watch in the aftermath of this offering.
Acadia Realty Trust's public offering can be seen as a reflection of its growth strategy and the health of the real estate investment trust (REIT) market. REITs are typically evaluated based on their funds from operations (FFO), a measure of cash flow generated by their properties. By raising capital, Acadia may be positioning itself to capitalize on acquisition opportunities, which could potentially increase its FFO if the acquisitions are accretive.
It is also indicative of the company's confidence in its ability to deploy capital effectively, despite the dilutive effect of the offering on existing shareholders. The involvement of major financial institutions such as J.P. Morgan and BofA Securities as underwriters lends credibility to the offering and may facilitate a positive reception in the market.
Market participants will closely monitor the uptake of the offering and the subsequent deployment of the raised funds. Success in these areas could signal Acadia's operational strength and strategic acumen, potentially influencing the stock's performance in the medium to long term.
The offering by Acadia Realty Trust is conducted under the SEC's regulations, utilizing a shelf registration statement on Form S-3. This method allows for a more expedited process of securities offering, as the company can offer and sell securities without the need for a separate SEC review each time. The use of a prospectus supplement in conjunction with a base prospectus ensures that investors have access to the most current information regarding the offering.
The legal stipulation that the offering cannot occur in jurisdictions where it would be unlawful prior to registration or qualification under respective securities laws is a standard compliance measure. This protects both the company and potential investors from legal disputes arising from the sale of unregistered or non-qualified securities.
Investors should note that the legal framework surrounding such offerings is designed to provide transparency and protect investor interests through rigorous disclosure requirements. The role of the SEC's website in disseminating official documents related to the offering is a critical component of this regulatory environment.
Acadia intends to use the net proceeds from the offering for general corporate purposes, which may include funding future acquisitions, the repayment of outstanding indebtedness, working capital and other general corporate purposes.
J.P. Morgan and BofA Securities are serving as the underwriters for the offering.
The offering is being made only by means of a prospectus supplement and the accompanying base prospectus, which was filed as part of an effective shelf registration statement filed with the Securities and Exchange Commission (the “SEC”) on Form S-3 (File No. 333-275356). Copies of the base prospectus and preliminary prospectus supplement relating to the offering, as well as the final prospectus supplement once available, may be obtained from the SEC’s website at www.sec.gov or from J.P. Morgan, c/o Broadridge Financial Solutions, 1155 Long Island Avenue,
This press release does not constitute an offer to sell or a solicitation of an offer to buy any common shares of the Company, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Acadia
Acadia Realty Trust is an equity real estate investment trust (“REIT”) focused on delivering long-term, profitable growth via its dual – Core Portfolio and Fund – operating platforms and its disciplined, location-driven investment strategy. Acadia Realty Trust is accomplishing this goal by building a best-in-class core real estate portfolio with meaningful concentrations of assets in the nation’s most dynamic corridors; making profitable opportunistic and value-add investments through its series of discretionary, institutional funds; and maintaining a strong balance sheet.
Safe Harbor Statement
Certain statements in this press release 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. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations are generally identifiable by the use of words, such as “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 the Company's 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) macroeconomic conditions, including due to geopolitical conditions and instability, which may lead to a disruption of or lack of access to the capital markets, disruptions and instability in the banking and financial services industries and rising inflation; (ii) the Company’s success in implementing its business strategy and its ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (iii) 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; (iv) increases in the Company’s borrowing costs as a result of rising inflation, changes in interest rates and other factors, including the discontinuation of the USD London Interbank Offered Rate, which was effected on June 30, 2023; (v) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (vi) 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; (vii) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (viii) 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; (ix) the Company’s potential liability for environmental matters; (x) damage to the Company’s properties from catastrophic weather and other natural events, and the physical effects of climate change; (xi) the economic, political and social impact of, and uncertainty surrounding, any public health crisis, such as the COVID-19 Pandemic, which adversely affected the Company and its tenants’ business, financial condition, results of operations and liquidity; (xii) uninsured losses; (xiii) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (xiv) information technology security breaches, including increased cybersecurity risks relating to the use of remote technology; (xv) the loss of key executives; and (xvi) the accuracy of the Company’s methodologies and estimates regarding environmental, social and governance (“ESG”) metrics, goals and targets, tenant willingness and ability to collaborate towards reporting ESG metrics and meeting ESG goals and targets, and the impact of governmental regulation on its ESG efforts.
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” in the Company’s most recent Annual Report on Form 10-K and other periodic or current reports the Company files with the SEC. Any forward-looking statements in this press release 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 to reflect any changes in the Company’s expectations with regard thereto or changes in the events, conditions or circumstances on which such forward-looking statements are based.
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Jennifer Han
(914) 288-8100
Source: Acadia Realty Trust
FAQ
What is the underwritten offering announced by Acadia Realty Trust (AKR)?
When is the offering expected to close?
How does Acadia Realty Trust (AKR) intend to use the net proceeds from the offering?
Who are the underwriters for the offering?
Where can copies of the base prospectus and preliminary prospectus supplement be obtained?
Does the press release constitute an offer to sell or a solicitation of an offer to buy any common shares of the Company?
