Real Estate

The Company’s consolidated real estate is comprised of the following (in thousands):



	March 31,			December 31,
	2017			2016
Land	$	649,533		$	693,252
Buildings and improvements	2,041,300			1,916,288
Tenant improvements	137,168			132,220
Construction in progress	21,644			19,789
Properties under capital lease	76,965			76,965
Total	2,926,610			2,838,514
Less: Accumulated depreciation	(305,074		)	(287,066		)
Operating real estate, net	2,621,536			2,551,448
Real estate under development, at cost	510,548			543,486
Net investment in real estate	$	3,132,084		$	3,094,934

Acquisitions

During the three months ended March 31, 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 Acquisition
Fund IV
Lincoln Place - Fairview Heights, IL	100%	Mar 13, 2017	$	35,350	$	—
Total 2017 Acquisitions			$	35,350	$	—

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 $0.3 million of acquisition costs for the three months ended March 31, 2017, of which $0.2 million related to the Core Portfolio and $0.1 million related to the Funds and $0.3 million of acquisition costs for the three months ended March 31, 2016, of which $0.2 million related to the Core Portfolio and $0.1 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 three months ended March 31, 2017 and the year ended December 31, 2016 (in thousands):



	Three Months Ended March 31,			Year Ended December 31,
	2017			2016
Net assets acquired:
Land	$	7,149		$	225,729
Buildings and improvements	22,201			458,525
Other assets	—			3,481
Acquisition-related intangible assets (in Acquired lease intangibles, net)	7,444			63,606
Acquisition-related intangible liabilities (in Acquired lease intangibles, net)	(1,444		)	(72,985		)
Above and below market debt assumed (included in Mortgages and other notes payable, net)	—			(119,601		)
Net assets acquired	$	35,350		$	558,755



Consideration:
Cash	$	34,687	$	677,964
Debt assumed	—		(119,209		)
Liabilities assumed	663		—
Total Consideration	$	35,350	$	558,755

Dispositions

During the 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
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 year ended December 31, 2016 were as follows (in thousands):



	Three Months Ended March 31,
	2017		2016
Rental revenues	$	—	$	4,963
Expenses	—		(550		)
Gain on disposition of properties	—		65,393
Income from continuing operations of disposed properties, net of income taxes	—		69,806
Amounts attributable to noncontrolling interests	—		(53,586		)
Net income attributable to Acadia	$	—	$	16,220

Property Held For Sale

At March 31, 2017 and December 31, 2016, the Company had one property in Fund II classified as held-for-sale with net assets of $21.5 million and subject to a mortgage of $25.5 million, which will be repaid prior to the sale. The property held for sale had net (loss) income of $(0.5) million, and $0.2 million for the three months ended March 31, 2017 and 2016, respectively.

Pro Forma Financial Information

The following unaudited pro forma consolidated operating data is presented for the three months ended March 31, 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 three months ended March 31, 2016 were completed on January 1, 2015. The related acquisition expenses of $0.3 million and $0.3 million reported during the three months ended March 31, 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 March 31,
	2017		2016
Pro forma revenues	$	62,478	$	53,314
Pro forma income from continuing operations	20,201		74,174
Pro forma net income attributable to Acadia	15,808		29,155
Pro forma basic and diluted earnings per share	0.19		0.39

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. At March 31, 2017 and December 31, 2016, the Company had one Core property, two properties in Fund II, three properties in Fund III and four properties in Fund IV classified as real estate under development. At December 31, 2016 accumulated costs aggregated $543.5 million. During the first quarter, the Company capitalized $3.8 million of additional costs, placed a portion of the City Point project for $113.2 million into service, and reclassified real estate with a carrying value of $76.4 million into real estate under development, resulting in a balance of $510.5 million at March 31, 2017.

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.