WHLRL — Wheeler Real Estate Investment Trust, Inc.

Cedar Realty Trust (WHLRL) 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.
• Leased Occupancy: 88.7%, up 0.9% from the previous quarter; same-property leased occupancy at 90.9%.
• Rent Collection: 97% of billed rent collected during the quarter.
• Leasing Activity: Executed 40 leases totaling 209,100 square feet, with 15 new comparable leases at 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 shopping centers.
• Leasing Pipeline: Robust with expectations for increased NOI and occupancy, driven by a strong demand for space in grocery-anchored centers.
• Joint Venture: Announced a partnership with Goldman Sachs for the construction of the DGS office building, part of the Northeast Heights project in Washington, DC.
• Redevelopment Projects: Progress made on several value-add redevelopment initiatives, including Norwood, Valley Plaza, and Fishtown Crossing.

3. Forward Guidance and Outlook

• Management anticipates continued growth in NOI and occupancy in the coming quarters, supported by a strong leasing pipeline.
• Expectation to return to pre-pandemic occupancy levels (low to mid-90s) as redevelopments are executed and leasing activity increases.
• Continued focus on maximizing shareholder value amidst the disconnect between share price and underlying real estate value.

4. Bad News, Challenges, or Points of Concern

• Negative Lease Spreads: New leases executed this quarter reflected a significant negative spread of 18.7%, primarily due to deals negotiated during the pandemic.
• Occupancy Impact from Redevelopments: Current occupancy levels are affected by intentional vacancies related to redevelopment projects, which may continue to influence metrics in the near term.
• Market Risks: Potential for new COVID-19 variants could impact retail operations and leasing momentum.

5. Notable Q&A Insights

• Leasing Momentum: Management expressed optimism about the increasing leasing activity and expected improvements in lease spreads moving forward.
• Board Changes: New board members are actively engaged and focused on addressing the disconnect between public and private market valuations.
• Flexibility in Financing: The recent mortgage financing allows for asset substitution, providing flexibility in managing the portfolio.
• Market Conditions: Management noted a favorable environment for grocery-anchored retail, suggesting it may be a good time for further asset sales to capitalize on current valuations.

Overall, Cedar Realty Trust demonstrated resilience in its financial performance amidst the ongoing recovery from the pandemic, with a strategic focus on grocery-anchored properties and redevelopment projects. However, challenges remain, particularly regarding lease spreads and occupancy levels influenced by redevelopment activities.