WHLRP — Wheeler Real Estate Investment Trust, Inc.

Cedar Realty Trust (WHLRP) Q2 2021 Earnings Call Summary

1. Key Financial Results and Metrics:

• Operating Funds from Operations (FFO) stood at $8.5 million, or $0.61 per share.
• Property Net Operating Income (NOI) was reported at $20.8 million.
• Same-property NOI increased by 8.2% year-over-year, and by 10.2% including redevelopment properties.
• Leased occupancy at the end of Q2 was 88.7%, a slight increase of 0.9% from the previous quarter, while same-property leased occupancy was 90.9%.

2. Strategic Updates and Business Highlights:

• Cedar Realty Trust successfully sold the Camp Hill Mall for approximately $90 million at a 6.5% cap rate, indicating strong market demand for grocery-anchored retail assets.
• The company has a robust leasing pipeline, with 40 leases executed totaling 209,100 square feet, and a notable increase in leasing activity expected to continue.
• A joint venture with Goldman Sachs for the Northeast Heights project in Washington, DC, is underway, with construction of the first phase expected to complete by December 2022.
• The company is focusing on value-add redevelopment projects across several shopping centers, which are progressing well.

3. Forward Guidance and Outlook:

• Management anticipates continued growth in NOI and occupancy due to a strong leasing pipeline and the recovery from pandemic impacts.
• There is optimism about returning to pre-pandemic occupancy levels in the low to mid-90% range over the next year.
• The company is exploring further asset sales to address the disconnect between its share price and underlying real estate value.

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

• New lease spreads for the quarter were negative at -18.7%, primarily due to deals negotiated during the pandemic; however, management expects improvements moving forward.
• The overall leased occupancy is still impacted by vacancies related to redevelopment projects, and the company may face future occupancy drag as it prepares for new phases of redevelopment.
• Concerns about potential impacts from new COVID-19 variants on retail operations and leasing activity were noted.

5. Notable Q&A Insights:

• Management expressed confidence in the leasing momentum, expecting continued improvement in occupancy rates.
• The board's recent changes have been positively received, with new directors contributing to strategic discussions, particularly regarding the disconnect between public and private market valuations.
• There is flexibility in the recent mortgage financing, allowing for asset substitutions without needing to sell the entire package.
• Management acknowledged the favorable market conditions for grocery-anchored retail and is considering additional asset sales to capitalize on these trends.

Overall, Cedar Realty Trust demonstrated resilience in its financial performance and strategic initiatives while navigating challenges from the pandemic and market dynamics.