Acadia Realty Trust (NYSE:AKR) has initiated an at-the-market equity offering program to sell common shares with an aggregate sale price of up to $400 million, according to a filing with the Securities and Exchange Commission on Monday. The real estate investment trust, based in Rye, New York, entered into a sales agreement with a group of financial institutions, including BofA Securities, Barclays Capital, and Goldman Sachs, among others, to facilitate the sale of these shares.
The shares will be sold from time to time through ordinary transactions on the New York Stock Exchange or other marketplaces, at prevailing market prices or through negotiated transactions. Acadia may also enter into forward sale agreements with certain financial institutions where shares will be borrowed and sold by the institutions on behalf of the company.
Acadia Realty Trust plans to use the net proceeds for general corporate purposes, which may include funding future acquisitions, repaying outstanding debt, and other business investments. The net proceeds will be contributed to Acadia Realty Limited Partnership, the operating partnership of the company, for these purposes. The company, however, has the discretion to suspend the offering at any time.
The sales agreement allows for a commission of up to 2.0% of the gross sales price of the shares sold. Additionally, Acadia has the option to physically settle, cash settle, or net share settle any forward sale agreements, which could result in different financial outcomes, including the possibility of not receiving any proceeds or owing cash or shares to the forward purchasers under certain circumstances.
The sales agents and forward purchasers involved in the agreement have previously engaged in, and may continue to engage in, various commercial dealings with Acadia Realty Trust, from which they have received, and may in the future receive, compensation.
In other recent news, Acadia Realty Trust has announced an underwritten public offering of up to 5,000,000 common shares, with an additional option for underwriters to purchase up to 750,000 extra shares. The offering is set to take place on the New York Stock Exchange and is managed by Wells Fargo Securities, Goldman Sachs & Co. LLC, and Jefferies LLC. These firms will also act as forward sellers and purchasers in connection with the forward sale agreements.
The initial forward sale price is set at $22.89 per share, which could bring net proceeds of approximately $114.0 million, or up to $131.2 million if the underwriters' option is fully exercised.
The company has also expanded its revolving credit facility from $350 million to $525 million, providing additional capital for future investments and operational needs. This move was accompanied by the full repayment of a $175 million term loan. In their Q2 earnings call, Acadia Realty Trust reported a robust performance, leading to an increase in their full-year earnings guidance and quarterly dividend.
The growth was primarily driven by its street retail portfolio and the success of properties like City Point. These are some of the recent developments in the company's operations.
InvestingPro Insights
Acadia Realty Trust's (NYSE:AKR) decision to initiate an at-the-market equity offering program aligns with its strong market performance and financial stability. According to InvestingPro data, AKR has seen impressive price returns, with a 41.21% total return over the past six months and an 86.1% return over the last year. This positive momentum is further supported by the stock trading near its 52-week high, at 99.39% of that peak.
InvestingPro Tips highlight that AKR has maintained dividend payments for 26 consecutive years, demonstrating a commitment to shareholder returns. This consistency in dividend payments could make the new share offering more attractive to income-focused investors. Additionally, the company's liquid assets exceeding short-term obligations suggest a solid financial foundation to support this capital-raising initiative.
It's worth noting that AKR is trading at a high earnings multiple, with a P/E ratio of 2,740. This valuation metric, combined with the company's recent market performance, may influence investor perception of the new share offering's pricing.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for AKR, providing deeper insights into the company's financial health and market position.
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