WHLRL — Wheeler Real Estate Investment Trust, Inc.

Cedar Realty Trust (WHLRL) Q2 2021 Earnings Call Summary

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, and 10.2% including redevelopment properties.
• Leased Occupancy: 88.7%, 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.
• Recent Transactions: Closed the sale of Camp Hill Mall for approximately $90 million at a 6.5% cap rate.

2. Strategic Updates and Business Highlights:

• The company is focusing on grocery-anchored shopping centers, which have shown resilience during the pandemic.
• A robust leasing pipeline is anticipated to drive NOI and occupancy growth in the coming quarters.
• Significant leasing activity with 40 leases executed totaling 209,100 square feet, including 15 new comparable leases.
• Joint venture with Goldman Sachs and Asland for the construction of the DGS office building in Washington, DC, is underway.
• Progress on redevelopment projects at Norwood, Valley Plaza, Yorktowne, and Fishtown Crossing.

3. Forward Guidance and Outlook:

• Management expects to see continued improvement in leasing activity and occupancy rates, potentially reaching low to mid-90% occupancy levels.
• Anticipation of better lease spreads as the market stabilizes and retailers expand operations.
• The company is optimistic about refinancing its revolving credit facility before its maturity in September 2021.

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

• The spread on new leases executed in Q2 was a negative 18.7%, attributed to deals negotiated during the pandemic.
• The company faces ongoing risks related to the COVID-19 pandemic, including potential impacts from new variants.
• Occupancy rates are still affected by intentional vacancies related to redevelopment projects.
• Elevated leasing costs were noted, which could impact profitability despite positive net effective rents.

5. Notable Q&A Insights:

• Management expressed confidence in the leasing pipeline, with expectations for continued momentum in leasing activity.
• The disconnect between public and private market valuations is a focus, with potential for further asset sales to exploit this gap.
• The board's recent changes have been positively received, with new directors contributing to strategic discussions.
• Flexibility in the recent mortgage financing allows for asset substitutions, which can facilitate future sales without needing to offload entire packages.
• Management acknowledged the competitive landscape but emphasized the unique value proposition of grocery-anchored retail in the current market environment.

Overall, Cedar Realty Trust is navigating a recovery phase post-pandemic, with a focus on enhancing occupancy and leveraging its grocery-anchored portfolio while addressing challenges related to lease spreads and ongoing market conditions.