WHLRD — Wheeler Real Estate Investment Trust, Inc.

Summary of Cedar Realty Trust (WHLRD) Q2 2021 Earnings Call

1. Key Financial Results and Metrics:

• Operating Funds from Operations (FFO): $8.5 million, or $0.61 per share.
• Property Net Operating Income (NOI): $20.8 million.
• Same-property NOI: Increased by 8.2% year-over-year; 10.2% including redevelopment properties.
• Leased Occupancy: 88.7%, up 0.9% from the previous quarter; same-property leased occupancy at 90.9%.
• 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:

• Asset Disposition: Closed the sale of Camp Hill Mall for approximately $90 million at a 6.5% cap rate, indicating strong market demand for grocery-anchored retail.
• Leasing Pipeline: Robust leasing activity anticipated to drive occupancy and NOI growth; 23 renewals completed with a positive spread of 2.6%.
• Redevelopment Projects: Progress on mixed-use developments, including a joint venture with Goldman Sachs for the Northeast Heights project in Washington, DC.
• Refinancing: Closed a $114 million non-recourse mortgage loan, significantly reducing debt on the revolving credit facility.

3. Forward Guidance and Outlook:

• Management expects continued growth in occupancy and NOI driven by a strong leasing pipeline.
• Anticipation of returning to pre-pandemic occupancy levels in the low to mid-90% range over the next year.
• Positive sentiment regarding grocery-anchored retail assets as a stable investment amid rising costs in other real estate classes.

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

• Negative Lease Spreads: New leases executed this quarter had a negative spread primarily due to deals negotiated during the pandemic.
• Occupancy Drag: Redevelopment projects may continue to impact overall occupancy rates temporarily.
• 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 optimism about increasing leasing activity, with expectations for improved lease spreads as the market stabilizes.
• Board Dynamics: New board members are actively contributing to discussions on capital allocation and addressing the disconnect between public and private market valuations.
• Flexibility in Financing: The mortgage agreement allows for asset substitution, providing flexibility in managing the portfolio.
• Market Conditions: Management noted a favorable environment for grocery-anchored retail, suggesting a balanced market where cap rates are influenced by returns on other asset classes.

Overall, Cedar Realty Trust demonstrated resilience in Q2 2021, with strong operational metrics and strategic initiatives aimed at enhancing shareholder value, despite facing challenges related to leasing spreads and occupancy impacts from redevelopment efforts.