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Real Estate | 9 Months Ended
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Sep. 30, 2017
Acquisition and Disposition of Properties and Discontinued Operations [Abstract] |
Real Estate | Real Estate The Company’s consolidated real estate is comprised of the following (in thousands):
|  | September 30, 2017 |  | December 31, 2016
Land |  | $ | 659,547 |  |  | $ | 693,252 |
Buildings and improvements |  | 2,344,370 |  |  | 1,916,288 |
Tenant improvements |  | 140,027 |  |  | 132,220 |
Construction in progress |  | 22,052 |  |  | 19,789 |
Properties under capital lease |  | 76,965 |  |  | 76,965 |
Total |  | 3,242,961 |  |  | 2,838,514 |
Less: Accumulated depreciation |  | (337,961 | ) |  | (287,066 | )
Operating real estate, net |  | 2,905,000 |  |  | 2,551,448 |
Real estate under development, at cost |  | 237,434 |  |  | 543,486 |
Net investments in real estate |  | $ | 3,142,434 |  |  | $ | 3,094,934 |
Acquisitions During the nine months ended September 30, 2017 and the year ended December 31, 2016, the Company acquired the following consolidated retail properties (dollars in thousands):
Property and Location | Percent Acquired | Date of Acquisition | Purchase Price |  | Debt Assumed
2017 Acquisitions |  |  |  |  |
Fund IV: |  |  |  |  |
Lincoln Place - Fairview Heights, IL | 100% | Mar 13, 2017 | $ | 35,350 |  |  | $ | — |
Shaw's Plaza - Windham, ME (Note 3) | 100% | Jun 30, 2017 | 9,142 |  |  | — |
Subtotal Fund IV |  |  | 44,492 |  |  | — |
Fund V: |  |  |  |  |
Plaza Santa Fe - Santa Fe, NM | 100% | Jun 5, 2017 | 35,220 |  |  | — |
Hickory Ridge - Hickory, NC | 100% | Jul 27, 2017 | 44,020 |  |  | — |
New Towne Plaza - Canton, MI | 100% | Aug 4, 2017 | 26,000 |  |  | — |
Subtotal Fund V |  |  | 105,240 |  |  | — |
Total 2017 Acquisitions |  |  | $ | 149,732 |  |  | $ | — |
2016 Acquisitions |  |  |  |  |
Core Portfolio: |  |  |  |  |
991 Madison Avenue - New York, NY (a) | 100% | Mar 26, 2016 | $ | 76,628 |  |  | $ | — |
165 Newbury Street - Boston, MA | 100% | May 13, 2016 | 6,250 |  |  | — |
Concord & Milwaukee - Chicago, IL | 100% | Jul 28, 2016 | 6,000 |  |  | 2,902 |
151 North State Street - Chicago, IL | 100% | Aug 10, 2016 | 30,500 |  |  | 14,556 |
State & Washington - Chicago, IL | 100% | Aug 22, 2016 | 70,250 |  |  | 25,650 |
North & Kingsbury - Chicago, IL | 100% | Aug 29, 2016 | 34,000 |  |  | 13,409 |
Sullivan Center - Chicago, IL | 100% | Aug 31, 2016 | 146,939 |  |  | — |
California & Armitage - Chicago, IL | 100% | Sep 12, 2016 | 9,250 |  |  | 2,692 |
555 9th Street - San Francisco, CA | 100% | Nov 2, 2016 | 139,775 |  |  | 60,000 |
Subtotal Core Portfolio |  |  | 519,592 |  |  | 119,209 |
Fund IV: |  |  |  |  |
Restaurants at Fort Point - Boston, MA | 100% | Jan 14, 2016 | 11,500 |  |  | — |
1964 Union Street - San Francisco, CA (a) | 90% | Jan 28, 2016 | 2,250 |  |  | 1,463 |
Wake Forest Crossing - Wake Forest, NC | 100% | Sep 27, 2016 | 36,600 |  |  | — |
Airport Mall - Bangor, ME | 100% | Oct 28, 2016 | 10,250 |  |  | — |
Colonie Plaza - Albany, NY | 100% | Oct 28, 2016 | 15,000 |  |  | — |
Dauphin Plaza - Harrisburg, PA | 100% | Oct 28, 2016 | 16,000 |  |  | — |
JFK Plaza - Waterville, ME | 100% | Oct 28, 2016 | 6,500 |  |  | — |
Mayfair Shopping Center - Philadelphia, PA | 100% | Oct 28, 2016 | 16,600 |  |  | — |
Shaw's Plaza - Waterville, ME | 100% | Oct 28, 2016 | 13,800 |  |  | — |
Wells Plaza - Wells, ME | 100% | Oct 28, 2016 | 5,250 |  |  | — |
717 N Michigan - Chicago, IL | 100% | Dec 1, 2016 | 103,500 |  |  | — |
Subtotal Fund IV |  |  | 237,250 |  |  | 1,463 |
Total 2016 Acquisitions |  |  | $ | 756,842 |  |  | $ | 120,672 |
__________
(a) | These acquisitions were accounted for as asset acquisitions as the underlying properties did not meet the definition of a business.
All of the above acquisitions were deemed to be business combinations except 991 Madison Avenue and 1964 Union Street. The Company expensed $0.9 million of acquisition costs for the nine months ended September 30, 2017, of which $0.3 million related to the Core Portfolio and $0.6 million related to the Funds and $5.5 million of acquisition costs for the nine months ended September 30, 2016, of which $5.1 million related to the Core Portfolio and $0.4 million related to the Funds. Purchase Price Allocations The purchase prices for the business combinations were allocated to the acquired assets and assumed liabilities based on their estimated fair values at the dates of acquisition. The following table summarizes the allocation of the purchase price of properties acquired during the nine months ended September 30, 2017 and the year ended December 31, 2016 (in thousands):
| Nine Months Ended September 30, 2017 |  | Year Ended December 31, 2016
Net Assets Acquired: |  |  |
Land | $ | 21,917 |  |  | $ | 225,729 |
Buildings and improvements | 104,729 |  |  | 458,525 |
Other assets | — |  |  | 3,481 |
Acquisition-related intangible assets (in Acquired lease intangibles, net) | 31,378 |  |  | 63,606 |
Acquisition-related intangible liabilities (in Acquired lease intangibles, net) | (8,292 | ) |  | (72,985 | )
Above and below market debt assumed (included in Mortgages and other notes payable, net) | — |  |  | (119,601 | )
Net assets acquired | $ | 149,732 |  |  | $ | 558,755 |
Consideration: |  |  |
Cash | $ | 138,429 |  |  | $ | 439,546 |
Conversion of note receivable | 9,142 |  |  | — |
Debt assumed | — |  |  | 119,209 |
Liabilities assumed | 2,161 |  |  | — |
Total Consideration | $ | 149,732 |  |  | $ | 558,755 |
Dispositions During the nine months ended September 30, 2017 and year ended December 31, 2016, the Company disposed of the following consolidated properties (in thousands):
Property and Location | Owner | Date Sold | Sale Price |  | Gain on Sale
2017 Dispositions: |  |  |  |  |
New Hyde Park Shopping Center - New Hyde Park, NY | Fund III | Jul 6, 2017 | $ | 22,075 |  |  | $ | 6,433 |
216th Street - New York, NY | Fund II | Sep 11, 2017 | 30,579 |  |  | 6,539 |
Total 2017 Dispositions |  |  | $ | 52,654 |  |  | $ | 12,972 |
2016 Dispositions: |  |  |  |  |
Cortlandt Town Center (65%) - Mohegan Lake, NY (Note 4) | Fund III | Jan 28, 2016 | $ | 107,250 |  |  | $ | 65,393 |
Heritage Shops - Chicago, IL | Fund III | Apr 26, 2016 | 46,500 |  |  | 16,572 |
Total 2016 Dispositions |  |  | $ | 153,750 |  |  | $ | 81,965 |
The aggregate rental revenue, expenses and pre-tax income reported within continuing operations for the aforementioned consolidated properties that were sold during the nine months ended September 30, 2017 and year ended December 31, 2016 were as follows (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2017 |  | 2016 |  | 2017 |  | 2016
Rental revenues |  | $ | 503 |  |  | $ | 1,122 |  |  | $ | 2,136 |  |  | $ | 7,378 |
Expenses |  | (523 | ) |  | (1,095 | ) |  | (2,343 | ) |  | (4,745 | )
Loss on extinguishment of debt |  | (10 | ) |  | — |  |  | (10 | ) |  | (15 | )
Income from continuing operations of disposed properties before gain on disposition of properties |  | (30 | ) |  | 27 |  |  | (217 | ) |  | 2,618 |
Gain on disposition of properties, net of tax |  | 12,972 |  |  | — |  |  | 12,972 |  |  | 81,965 |
Net income attributable to noncontrolling interests |  | (9,166 | ) |  | (18 | ) |  | (9,034 | ) |  | (70,410 | )
Net income attributable to Acadia |  | $ | 3,776 |  |  | $ | 9 |  |  | $ | 3,721 |  |  | $ | 14,173 |
Properties Held For Sale At December 31, 2016, the Company had one property in Fund II classified as held-for-sale with total assets of $21.5 million and subject to a mortgage of $25.5 million. At September 30, 2017, the Company had one property in Fund II classified as held-for-sale, City Point Condominium Tower I, with total assets of $95.9 million and subject to mortgages aggregating $81.0 million, which will be repaid at closing. Upon classification as held for sale, the Company recognized an impairment charge of approximately $3.8 million (Note 8) relating to expected transaction costs associated with the sale. Additionally, the Company recognized a charge to income attributable to Acadia of approximately $1.1 million to adjust the non-controlling interest holder’s ownership in this property to its estimated redemption amount as a result of the sale at September 30, 2017. This property had a net loss of $4.3 million excluding losses attributable to noncontrolling interests of $3.9 million for the three and nine months ended September 30, 2017. On October 13, 2017, this property was sold and the associated mortgage was repaid (Note 15). Pro Forma Financial Information The following unaudited pro forma consolidated operating data is presented for the three and nine months ended September 30, 2017, as if the acquisitions of the properties acquired during that period were completed on January 1, 2016 and as if the acquisition of the properties acquired during the nine months ended September 30, 2016 were completed on January 1, 2015. The related acquisition expenses of $0.9 million and $5.5 million reported during the nine months ended September 30, 2017 and 2016, respectively have been reflected as pro forma charges at January 1, 2016 and January 1, 2015, respectively. The unaudited supplemental pro forma operating data is not necessarily indicative of what the actual results of operations of the Company would have been, assuming the transactions had been completed as set forth above, nor do they purport to represent the Company’s results of operations for future periods.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
Pro forma revenues | $ | 63,253 |  |  | $ | 51,871 |  |  | $ | 191,673 |  |  | $ | 164,410 |
Pro forma income from continuing operations | 368 |  |  | 1,092 |  |  | 26,439 |  |  | 19,504 |
Pro forma net income attributable to Acadia | 12,912 |  |  | 6,839 |  |  | 40,608 |  |  | 54,201 |
Pro forma basic and diluted earnings per share | 0.15 |  |  | 0.08 |  |  | 0.48 |  |  | 0.66 |
Real Estate Under Development and Construction in Progress Real estate under development represents the Company’s consolidated properties that have not yet been placed into service while undergoing substantial development or construction. Depreciation and amortization expense for the nine months ended September 30, 2017 includes $2.0 million of accelerated depreciation related to a building under development that was demolished. Development activity comprised the following during the periods presented (dollars in thousands):
| December 31, 2016 |  | Nine Months Ended September 30, 2017 |  | September 30, 2017
| Number of Properties |  | Carrying Value |  | Transfers In |  | Capitalized Costs |  | Transfers Out |  | Number of Properties |  | Carrying Value
Core | 1 |  |  | $ | 2,530 |  |  | $ | 7,258 |  |  | $ | 3,852 |  |  | $ | 5,441 |  |  | 2 |  |  | $ | 8,199 |
Fund II | 2 |  |  | 443,012 |  |  | — |  |  | 7,677 |  |  | 414,000 |  |  | 1 |  |  | 36,689 |
Fund III | 3 |  |  | 51,421 |  |  | — |  |  | 13,838 |  |  | 8,146 |  |  | 2 |  |  | 57,113 |
Fund IV | 8 |  |  | 46,523 |  |  | 79,624 |  |  | 13,883 |  |  | 4,597 |  |  | 8 |  |  | 135,433 |
Total | 14 |  |  | $ | 543,486 |  |  | $ | 86,882 |  |  | $ | 39,250 |  |  | $ | 432,184 |  |  | 13 |  |  | $ | 237,434 |
During the nine months ended September 30, 2017, the Company placed substantially all of the City Point project into service. Construction in progress pertains to construction activity at the Company’s operating properties which are in service and continue to operate during the construction period.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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