Acadia Realty Trust is taking the offense in its dealings with troubled retailers. The White Plains, N.Y.-based REIT, which has a history of turning dark Caldors, Ames and Grand Union stores into Wal-Marts, Home Depots and Shaws, is putting $60 million into a joint venture with Klaff Realty and Lubert-Adler Management to invest in distressed, surplus or under-utilized properties owned or controlled by retailers. Klaff, a Chicago-based private real estate investment firm and Lubert-Adler, Klaff's Philadelphia-based capital partner, both have strong track records for acquiring the designation rights of bankrupt tenants and handling other real estate transactions for retailers in need of capital.

Acadia is no stranger to turning around a dying property itself. In January, the REIT replaced two former Ames stores at two of its centers in Lebanon, Pa., and Latham, N.Y., with a Home Depot and a Bon-Ton department store. Now, Acadia is gearing up for an acquisitions streak. Its new joint-venture investment represents 20 percent of a $300 million purse, aimed at acquiring as much as $1 billion worth of assets, leases and designation rights in the next three years from cash-strapped retailers.

“The steady stream of distressed national and regional retailers should provide ample anchor repositioning opportunities, which is Acadia's distinguishing expertise,” says Cobblestone Research analyst Paul Adornato.

Acadia, whose 9 million-square-foot portfolio of properties is mostly in the Northeast, is also paying $4 million in preferred operating partnership units for Klaff's management business, which handles 10 million square feet including 90 former Service Merchandise stores, 35 Levitz Home Furnishings stores acquired in a sale-leaseback transaction and 2 million square feet of retail assets acquired by Klaff. Fees will contribute up to $800,000 to Acadia's bottom line, Adornato says.