Acadia Realty Trust (NYSE:AKR) Q4 2022 Earnings Call Transcript

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Craig Mailman: And not to be the dead horse, I guess I’m just trying to come out from a different angle, in same store, right? Just trying to think of the headwind from bad debt, the 4,150 generic is baked in. And then you said kind of think about 200 totals. So that means 50 basis points in for the balance, right? Of the above and beyond, which you would think is mostly Wilmington, but I guess not 100%. But I’m just trying to think of if you get it through the first half of the year, you’re losing the back half 50 basis points. Can we assume the majority of that is Wilmington?

Ken Bernstein: I think as I highlight on the Floris’ question roughly 275 total is everything, and about 200 same store with a current expectation that Bed Bath, Wilmington, we get that back in end of June. But again, that’s a guesstimate, but that’s our current expectation. So, I think, call that about 50 basis points for Bed Bath. So I think you’re thinking about it correct.

Craig Mailman: And so, total though, between that and the prior period of collections, the 5.5 would’ve been 9.5 essentially.

Ken Bernstein: Correct. Yes, I mean, I was a little bit more conservative than that, but yes, I mean, I think again would’ve had very strong. That 5% to 6% would’ve been significantly stronger.

Craig Mailman: That’s helpful. I didn’t mean to get too in the weeds there. Okay. Then just separately on the leasing in front, Ken, you talked about some of these urban markets coming back, but I guess just higher level, as you think about the ease of backfilling, Wilmington versus San Francisco, right? Moves two polar opposites terms, the San Francisco being where it is today, but as retailers sit there today, right, like what’s the depth of the demand pool for some of those not quite recovered urban areas versus first ring suburbs or like a Greenwich you highlighted a couple times that’s more of a suburban kind of street retail kind of can you just go through the difference in the depth of demand for those two types of product?

Ken Bernstein: Yes. And I think it’s also worth not ignoring what we’ll call second ring suburbs. There’s markets that pre COVID, we really weren’t sure and our retailers weren’t — really weren’t sure that they wanted to be, and they got a COVID lift because of work remote. Now how long that holds, we’ll have to see, but there still seems to be decent demand even in secondary, tertiary. So, let’s not even ignore that. And you’ve seen that in other companies, prince. You see that to the extent that some of our Fund V assets fall into that category. There’s no doubt that the Greenwich’s of the world benefited. And I’d say right now, this week, it’s a bit easier probably to lease space if there’s any worthwhile vacancy in Greenwich, than it is in San Francisco, because San Francisco is still in the earlier stages of that recovery.

And my guess is, you will see more stabilization in some of those assets that have done well. But I’m encouraged whether it’s North Michigan Avenue with Alo Yoga or 555 9th or elsewhere that our retailers are saying, you know what? We are seeing our shopper coming back. And retailers have to think one, three, five years ahead, not necessarily where they are right now. Final point is, I think we need to be prepared for the Midtown Manhattans of the world, for the places that do not have a strong residential footprint short-term, that those are going to be the hardest selves, because it’s going to take a while for people to get back in the office. They will, New York especially the neighborhood is doing just fine. But those pieces then when we think about how to get retailers excited, if it is really just a 9 to 5, Tuesday to Thursday environment, those are going to be the toughest.

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