CDR-PC — Cedar Realty Trust, Inc.

Cedar Realty Trust (CDR-PC) Q2 2021 Earnings Call Summary

1. Key Financial Results and Metrics:

• Operating FFO: $8.5 million, or $0.61 per share.
• Property NOI: $20.8 million.
• Same-Property NOI: Increased by 8.2% year-over-year, 10.2% including redevelopment properties.
• Leased Occupancy: 88.7% overall, a 0.9% increase from the previous quarter; same-property leased occupancy at 90.9%.
• Rent Collection: 97% of billed rent collected during the quarter.
• Leasing Activity: 40 leases executed totaling 209,100 square feet; 15 new comparable leases with a negative spread of 18.7%.

2. Strategic Updates and Business Highlights:

• Sale of Camp Hill Mall: Closed for approximately $90 million at a 6.5% cap rate, indicating strong market demand for grocery-anchored retail.
• Leasing Pipeline: Robust, with expectations of increased NOI and occupancy in the coming quarters.
• Joint Venture: Announced a partnership with Goldman Sachs and Asland for the DGS office building as part of the Northeast Heights project in Washington, DC.
• Redevelopment Progress: Notable leasing and construction milestones achieved at several properties, including Norwood and Valley Plaza.

3. Forward Guidance and Outlook:

• Management anticipates continued growth in NOI and occupancy driven by a strong leasing pipeline.
• Expectation to return to pre-pandemic occupancy levels (low to mid-90s) as redevelopments progress and new leases are finalized.
• Positive sentiment regarding the grocery-anchored retail market, with plans to explore further asset sales to address the disconnect between share price and underlying asset value.

4. Bad News, Challenges, or Points of Concern:

• Negative Lease Spreads: The recent new leases were executed at a negative spread of 18.7%, attributed to deals negotiated during the pandemic.
• Occupancy Drag from Redevelopments: Some current occupancy figures are affected by intentional vacancies related to redevelopment projects.
• Market Risks: Potential impacts from new COVID-19 variants and economic uncertainties could affect retail performance and leasing activity.

5. Notable Q&A Insights:

• Leasing Momentum: Management expressed confidence in the leasing momentum continuing, with expectations for improved lease spreads in future quarters.
• Board Changes: New board members are actively engaging in discussions about capital allocation and strategic decisions, maintaining a focus on addressing the valuation disconnect.
• Asset Sales Strategy: Management is considering additional asset sales to exploit the current favorable market conditions for grocery-anchored retail, reflecting on the classic REIT strategy of selling real estate when stock prices are undervalued.

Overall, Cedar Realty Trust reported a strong recovery from the pandemic with positive financial metrics and a solid strategic outlook, despite facing some challenges related to lease spreads and occupancy.