                                                                    Exhibit 99.1
                    SECOND AMENDMENT TO EMPLOYMENT AGREEMENT


         This SECOND  AMENDMENT TO EMPLOYMENT  AGREEMENT  (this  "Amendment") is
effective  as of  January  1, 2004,  and  entered  into as of May 4, 2004 by and
between  KENNETH F. BERNSTEIN,  an individual  residing in the State of New York
("Executive"),  and ACADIA REALTY TRUST, a Maryland real estate investment trust
with offices at 1311 Mamaroneck Avenue,  Suite 260, White Plains, New York 10605
(the "Trust").

         WHEREAS,  Executive is presently employed by the Company pursuant to an
Employment  Agreement  between the Trust and  Executive  dated as of October 23,
1998 (the "Agreement"); and

         WHEREAS, the Agreement was amended by the First Amendment to Employment
Agreement dated as of January 1, 2001; and

         WHEREAS,  Executive  and the  Trust  desire  to  amend  the  Employment
Agreement as hereinafter set forth.

         NOW, THEREFORE,  for good and valuable consideration,  receipt of which
is hereby acknowledged, Executive and the Trust agree as follows:

          1. SUB-PARAGRAPH 2(A). The second sentence of sub-paragraph 2(a) is
hereby deleted and the following substituted therefor:

         "The  Employment  Period shall be for a minimum term of three (3) years
         commencing  on the  date of this  Agreement  and  ending  on the  third
         anniversary thereof (the "Employment Term")."

          2. NEW SUB-PARAGRAPH 3(B). The following shall be substituted in its
entirety for sub-paragraph 3(b) of the Employment Agreement:

                  "(b) Place of Employment. The principal place of employment of
         Executive shall be the Trust's executive  offices in White Plains,  New
         York."

          3. NEW SUB-PARAGRAPH 4(A). The following shall be substituted for the
first sentence of sub-paragraph 4(a) of the Employment Agreement:

                  "(a) Salary.  From January 1, 2004 and  thereafter  during the
         Employment  Period,  the Trust shall pay the Executive a minimum annual
         base  salary in the amount of  $312,000  (the  "Annual  Base  Salary"),
         payable in accordance with the Trust's regular payroll practices."

          4. SUB-PARAGRAPH 4(B). The following shall be substituted in its
entirety for sub-paragraph 4(b) of the Employment Agreement:

<PAGE>

                  "(b) Incentive Compensation Bonuses. Following the end of each
         calendar  year  during  the  Employment  Period,  commencing  with  the
         calendar  year ending  December 31, 2004 (each such calendar year being
         referred to herein as an "Incentive  Bonus Period")  Executive shall be
         considered for an incentive  bonus (the  "Incentive  Bonus") based upon
         Executive's  performance and the financial and operating results of the
         Trust for such Incentive Bonus Period,  which bonus shall be payable in
         such  amount  and at such  time  as the  Compensation  Committee  shall
         determine,   it  being  understood,   however,  that  the  Compensation
         Committee shall be guided by some of the following factors:

         o  achieving stated goals of the Trust;
         o  total return to shareholders;
         o  achieving FFO goals;
         o  other similar measurements of the Executive's performance.

                  The Incentive Bonus will include both cash,  restricted shares
         and options to purchase  Common  Shares as the  Compensation  Committee
         shall approve, in its sole discretion. Any such options shall be issued
         at the then fair  market  value of the Common  Shares and on such other
         terms as the Compensation Committee shall determine."

          5. SUBPARAGRAPH 5(A)(IV). The names "New York, New York" and "Port
Washington, New York" shall be deleted and "White Plains, New York" shall be
substituted therefor.

          6. NEW SUB-PARAGRAPH 7(II). The following shall be substituted in its
entirety for sub-paragraph 7(ii) of the Employment Agreement:

                  "(ii) an amount  computed at an  annualized  rate equal to the
         Executive's Annual Base Salary at the rate then in effect pro-rated for
         the period  commencing on the day following the date of termination and
         ending  three  years  from  the  date of  termination  (the  "Severance
         Salary"); plus"

          7. NEW SUB-PARAGRAPH 7(IV). The following shall be substituted in its
entirety for sub-paragraph 7(iv) of the Employment Agreement:

                  "(iv) a further amount computed at an annualized rate equal to
         the average of the total cash value of the bonuses  (whether awarded as
         Cash Incentive  Bonuses or in restricted stock, the value of the latter
         to be calculated as of the date of the award)  awarded to the Executive
         for each of the last two (2) calendar years  immediately  preceding the
         year in which the Executive's  employment is terminated,  pro-rated for
         the period  commencing on the day following the date of termination and
         ending three years from the date of  termination  ("Severance  Bonus");
         plus"

          8. AFFIRMATION. Except as amended hereby, the Employment Agreement
shall remain in full force and effect.

<PAGE>

          9. COUNTERPARTS. This Amendment may be executed in separate
counterparts, each of which is deemed to be an original and both of which taken
together shall constitute one and the same agreement.

          10. CHOICE OF LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws thereunder.

          11. ENTIRE AGREEMENT. This Amendment constitutes the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
other prior agreement and undertakings, both written and oral, between the
parties with respect to the subject matter hereof.

                           [SIGNATURE PAGE TO FOLLOW]

<PAGE>


         IN WITNESS WHEREOF the  undersigned  have executed this Amendment as of
the date first above written.

                                            ACADIA REALTY TRUST



                                            By:
                                                ---------------------------
                                                     Robert Masters
                                                  Senior Vice President



                                            -------------------------------
                                            Kenneth F. Bernstein




