05/28/2013 | By Carisa Chappell
Acadia Realty Trust (NYSE: AKR) is celebrating its 15th anniversary this summer. The shopping center REIT was formed in 1998 following the merger of RD Capital, Inc. and Mark Centers Trust, which would have been 20 years old on May 26.
Acadia specializes in the acquisition, redevelopment and operation of retail and urban mixed-use properties, with a focus on retail centers with visible street locations in high-traffic areas. The company currently owns and operates a portfolio of more than 10 million square feet of space across the United States.
Kenneth F. Bernstein, president and CEO, spoke with REIT.com about the company’s accomplishments and why he’s paying special attention to street retail.
REIT.com: What would you say are some of the primary ways that the company has evolved over the years?
Kenneth F. Bernstein: Over the past 15 years, we took over a troubled shopping center company, Mark Centers Trust, and have aggressively repositioned the company to where it is today. Thankfully over the past 15 years our shareholders have been well rewarded.
REIT.com: Are there currently any noticeable trends in the shopping center industry that are affecting how you do business?
Bernstein: When we took over Mark Centers Trust, it was primarily a suburban shopping center company in secondary markets with a variety of relatively fragile anchor tenants. We have transitioned the company over this time period into primarily dense suburban or urban high street retail properties. We did that by selling off the majority of the Mark Centers Trust assets and then, over the past five, 10 or 15 years, acquiring the assets that we think more justify the current trends and challenges in the retail industry.
Those trends include the reality that many of our retailers are embracing e-commerce as part of their multi-channel strategies. We think that while there will be some disruption and dislocation for some retailers and for some landlords, in the long term, for the best-located properties, multi-channel retailing will be a plus. And the kinds of properties we’ve been focused on acquiring have been those properties that we think will benefit the most from these trends.
The downside to some of the shifts is that many of these “big box” retailers will be able to merchandise with perhaps fewer stores and probably smaller footprints. There are some risks associated with that downsizing, and we’ve positioned our portfolio so that we’re hopefully well-protected against the shift.
REIT.com: During the first quarter, Acadia closed on an $86.6 million retail property on Chicago’s “Magnificent Mile,” North Michigan Avenue, and the company has been extremely active in the acquisitions market in late 2012. Do you see this continuing in 2013?
Bernstein: Our focus has primarily been in acquiring high street retail in those key markets that we’re involved with and includes New York City, downtown Chicago, South Beach in Miami and Washington, D.C., through to Boston. Again, our focus has been to own the kind of real estate for those retailers who need a physical bricks-and-mortar presence in key markets to complement their other channels of retailing. Our goal is to own that kind of retail.
REIT.com: How would you describe the company’s current investment strategy?
Bernstein: Our strategy is to acquire retail properties in the higher barrier to entry markets where—notwithstanding some of the ongoing trends and challenges in retail—we believe over the next five, 10 or 15 years, those retailers will do sufficient sales growth to justify strong rental growth.