During his firm’s presentation at NAREIT’s REIT Week in New York last week, Kenneth Bernstein, president and CEO of White Plains, N.Y.-based shopping center REIT Acadia Realty Trust, offered a candid assessment of the market for distressed assets and how the firm has regrouped after the wave of troubled properties failed to materialize.
One of Acadia’s avenues of growth in its time as a REIT has been a series of opportunity funds, through which it has pursued value-add acquisitions. As of December 31, 2010, it had launched three opportunity funds, the $90 million Acadia Strategic Opportunity Fund LP (launched in September 2001), the $300 million Acadia Strategic Opportunity Fund II LLC (launched in June 2004) and the $502.5 million Acadia Strategic Opportunity Fund III LLC (launched in May 2007).
The first two funds were fully invested and generated healthy returns for Acadia and other investors. (Acadia typically owns a minority stake in the funds, collects management fees and earns a promote fee, depending on the funds’ profitability.) The third fund is still active. To date it has made nine opportunistic investments and has approximately $200 million of capital available for new investments with an investment period that concludes in May 2012.
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