The following discussion should be read in conjunction with the Company's consolidated financial statements and related notes thereto included elsewhere in this report.
Executive Summary The Company is a fully-integrated real estate investment trust that focuses primarily on ownership, operation and redevelopment of grocery-anchored shopping centers in high-density urban markets fromWashington, D.C. toBoston . AtJune 30, 2020 , the Company owned and managed a portfolio of 55 operating properties (excluding properties "held for sale") totaling 8.3 million square feet of gross leasable area ("GLA"). The portfolio was 90.0% leased and 88.9% occupied atJune 30, 2020 . The Company derives substantially all of its revenues from rents and operating expense reimbursements received pursuant to leases. The Company's operating results therefore depend on the ability of its tenants to make the payments required by the terms of their leases. The Company focuses its investment activities on grocery-anchored shopping centers. The Company believes that, because of the need of consumers to purchase food and other staple goods and services generally available at such centers, its type of "necessities-based" properties should provide relatively stable revenue flows even during difficult economic times.
Significant Circumstances and Transactions
COVID-19 Pandemic
As a result of COVID-19, the Company has received numerous rent relief requests, most often in the form of rent deferrals. The Company has evaluated, and continues to evaluate, each tenant rent relief request on an individual basis, considering a number of factors. Not all tenant requests have resulted in modification agreements, nor is the Company forgoing its contractual rights under its lease agreements. The Company has entered into lease modifications that deferred approximately$2.0 million and waived approximately$0.4 million for the quarter endedJune 30, 2020 , respectively. To date, the weighted average payback period of deferred rent is approximately 10 months, beginning at various time commencing inJuly 2020 throughMarch 2021 . For the quarter endedJune 30, 2020 , the Company has collected approximately 77% of contractual base rents and monthly tenant reimbursements. The Company currently remains in active discussions and negotiations with its impacted tenants and anticipates the need to grant additional rent concessions or other lease-related relief, such as the deferral of lease payments for a period of time to be paid over the remaining term of the lease. The nature and financial impact of such additional rent relief is currently unknown as negotiations are in progress. The extent to which COVID-19 impacts the Company's business, operations and financial results will depend on numerous evolving factors that the Company is not able to predict at this time.
As a result of the COVID-19 pandemic, the Company has taken the following actions:
• In
revolving credit facility to preserve financial flexibility. • InApril 2020 andJuly 2020 , the Company's Board of Directors declared a
quarterly common dividend of
share from the
cash per quarter.
• Dramatically reduced near-term redevelopment and other non-essential
capital expenditures. The Company currently estimates full year 2020 capital spend for its mixed-use urban redevelopments and value add renovations combined to be approximately$20 million (excluding approximately$7.5 million of capitalized overhead, interest and real estate taxes under GAAP). • Transitioned all but a limited number of essential employees to remote work and does not anticipate any adverse impact on its ability to continue to operate its business. Currently, the Company has a limited
number of employees coming into offices as needed and has employees
visiting properties only as necessary to ensure that the properties with
essential businesses that are open and operating are able to conduct business and serve their communities. Real Estate OnJuly 23, 2020 , the Company entered into a commercial lease agreement (the "Lease") with the Government of theDistrict of Columbia ("District"), for the lease by the District of office space in a new 6-story building to be constructed by the Company at 21 --------------------------------------------------------------------------------Senator Square . The building is planned to house the new office headquarters for theDistrict of Columbia's Department of General Services' ("DGS") 700-member workforce. The term of the Lease is 20 years and 10 months, to commence upon substantial completion and delivery to DGS. The Company anticipates commencement of construction to occur in the first quarter of 2021 and currently estimates that the space will be delivered during the end of the fourth quarter 2022. Upon completion of the building, the District will be obligated to pay initial annual net rent of approximately$5.4 million per year, subject to a 2.5% annual escalator on each anniversary of rent commencement, plus certain operating costs, property taxes and amortization of tenant improvements together totaling approximately an additional$8.1 million per year, for an aggregate total annual rent of approximately$13.5 million . The Lease provides for a free rent period of 10 months immediately following rent commencement. The Lease also provides the District with a tenant credit of approximately$6.8 million to be applied, at the District's election, against either annual rent or any other tenant payment obligations including tenant improvement costs, in excess of the tenant improvement allowance. Pursuant to the Lease, the landlord will contribute up to$155 per rentable square foot toward the cost of tenant improvements, to be amortized over 240 months. In addition, the Lease provides that the Company will contribute$9.38 per rentable square foot in additional tenant improvement allowance between the 10th and 12th Lease years, upon the District's timely election. The obligations of the District under the Lease are subject to annual budget appropriation. As ofJune 30, 2020 , Carll's Corner, located inBridgeton, New Jersey ,Metro Square , located inOwings Mills, Maryland ,Suffolk Plaza , located inSuffolk, Virginia , and The Commons, located inDubois Pennsylvania , have been classified as "real estate held for sale" on the accompanying consolidated balance sheet. OnJanuary 31, 2020 , the Company agreed to a cash payment in consideration for permitting a dark anchor tenant to terminate its lease prior to the contractual expiration atMetro Square . As a result of this termination, revenues for the six months endedJune 30, 2020 , included approximately$7.1 million of other income. Further, onJuly 9, 2020 , the Company sold this property for$4.3 million .
During the six months ended
Unsecured Revolving Credit Facility and Term Loans
OnAugust 4, 2020 , the Company amended its existing$300 million unsecured credit facility and term loans. After such amendments, the Company's financial ratios and borrowing base are now all computed using trailing four quarters as opposed to the current quarter annualized and interest rate swaps that are a hedge of existing debt are now excluded from the definition of debt.
Critical Accounting Policies
The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition and the allowance for doubtful accounts receivable, real estate investments and purchase accounting allocations related thereto, asset impairments, and derivatives used to hedge interest-rate risks. Management's estimates are based both on information that is currently available and on various other assumptions management believes to be reasonable under the circumstances. Actual results could differ from those estimates and those estimates could be different under varying assumptions or conditions. The Company believes there have been no material changes to the items disclosed as its critical accounting policies under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2019 . See Note 2 - "Summary of Significant Accounting Policies" for recently-adopted accounting pronouncements. 22
--------------------------------------------------------------------------------
Results of Operations
Comparison of three months ended
Change 2020 2019 Dollars Percent Revenues$ 28,620,000 $ 35,660,000 $ (7,040,000 ) -19.7% Property operating expenses (10,486,000 ) (11,249,000 ) 763,000 -6.8% Property operating income 18,134,000 24,411,000 (6,277,000 ) General and administrative (3,906,000 ) (5,418,000 ) 1,512,000 -27.9% Depreciation and amortization (14,426,000 ) (10,346,000 ) (4,080,000 ) 39.4% Gain on sales - 2,841,000 (2,841,000 ) n/a Impairment charges (133,000 ) - (133,000 ) n/a Interest expense (5,678,000 ) (5,944,000 ) 266,000 -4.5% Net (loss) income (6,009,000 ) 5,544,000 (11,553,000 ) Net (income) attributable to noncontrolling interests (88,000 ) (161,000 ) 73,000 Net (loss) income attributable to Cedar Realty Trust, Inc.$ (6,097,000 ) $ 5,383,000 $ (11,480,000 ) Revenues were lower primarily as a result of the negative impact of the COVID-19 pandemic, which resulted in (1) a decrease of$3.0 million in rental revenues and expense recoveries and a decrease of$1.0 million in straight-line rental revenues attributable to same-center properties, (2) a decrease of$2.1 million in rental revenues and expense recoveries and a decrease of$0.4 million in straight-line rental and the amortization of intangible lease liabilities revenues attributable to redevelopment properties. In addition, there was a decrease of$0.7 million in rental revenues and expense recoveries attributable to properties that were sold or held for sale in 2019 and 2018. These negative results were partially offset by an increase of$0.2 million in rental revenues and expense recoveries attributable to a property acquired in 2019. Property operating expenses were lower primarily as a result of (1) a decrease of$0.3 million in property operating expenses attributable to same-center properties, (2) a decrease of$0.3 million in property operating expenses attributable to redevelopment properties, and (3) a decrease of$0.3 million in property operating expenses attributable to properties that were sold or held for sale in 2020 and 2019, partially offset by an increase of$0.1 million in property operating expenses attributable to a property acquired in 2019. General and administrative costs were lower primarily as a result of (1) cost savings of$0.8 million as a result of the COVID-19 pandemic, predominately related to the cancellation of leasing conventions along with the related travel expenses, (2) a decrease of$0.5 million in payroll related costs, and (3) a decrease of$0.2 million in legal and professional fees. Depreciation and amortization expenses were higher as a result of (1) accelerated depreciation of tenant improvements and leasing commissions of$4.2 million as a result of tenants vacating their spaces, and (2) an increase of$0.1 million attributable to a property acquired in 2019, partially offset by a decrease of$0.2 million attributable to properties that were sold or held for sale in 2020 and 2019.
Gain on sale in 2019 relates to the sale of
Impairment charges in 2020 relates to
Interest expense was lower as a result of (1) a decrease in the overall weighted average interest rate which resulted in a decrease in interest expense of$0.8 million , and (2) an increase in capitalized interest of$0.3 million , partially offset by increase in the overall weighted average principal balance which resulted in an increase in interest expense of$0.8 million . 23 --------------------------------------------------------------------------------
Comparison of six months ended
Change 2020 2019 Dollars Percent Revenues$ 71,105,000 $ 72,543,000 $ (1,438,000 ) -2.0% Property operating expenses (23,329,000 ) (24,426,000 ) 1,097,000 -4.5% Property operating income 47,776,000 48,117,000 (341,000 ) General and administrative (8,908,000 ) (10,216,000 ) 1,308,000 -12.8% Depreciation and amortization (28,173,000 ) (20,475,000 ) (7,698,000 ) 37.6% Gain on sales - 2,942,000 (2,942,000 ) n/a Impairment charges (7,607,000 ) - (7,607,000 ) n/a Interest expense (11,195,000 ) (11,835,000 ) 640,000 -5.4% Net (loss) income (8,107,000 ) 8,533,000 (16,640,000 ) Net (income) attributable to noncontrolling interests (236,000 ) (268,000 ) 32,000 Net (loss) income attributable to Cedar Realty Trust, Inc.$ (8,343,000 ) $ 8,265,000 $ (16,608,000 ) Revenues were lower primarily as a result of the negative impact of the COVID-19 pandemic, which resulted in (1) a decrease of$3.2 million in rental revenues and expense recoveries and a decrease of$1.3 million in straight-line rental revenues attributable to same-center properties, (2) a decrease of$2.7 million in rental revenues and expense recoveries and a decrease of$0.4 million in straight-line rental and the amortization of intangible lease liabilities revenues attributable to redevelopment properties. In addition, there was a decrease of$1.3 million in rental revenues and expense recoveries attributable to properties that were sold or held for sale in 2019 and 2018. These negative results were partially offset by (1)$7.1 million in revenue in the quarter endedMarch 31, 2020 relating to a dark anchor tenant terminating its lease prior to the contractual expiration in 2020 atMetro Square , and (2) an increase of$0.4 million in rental revenues and expense recoveries attributable to a property acquired in 2019. Property operating expenses were lower primarily as a result of (1) a decrease of$0.4 million in property operating expenses attributable to same-center properties, (2) a decrease of$0.4 million in property operating expenses attributable to properties that were sold or held for sale in 2020 and 2019, and (3) a decrease of$0.3 million in property operating expenses attributable to redevelopment properties, partially offset by an increase of$0.2 million in property operating expenses attributable to a property acquired in 2019. General and administrative costs were lower primarily as a result of (1) cost savings of$0.7 million as a result of the COVID-19 pandemic, predominately related to the cancellation of leasing conventions along with the related travel expenses, (2) a decrease of$0.4 million in payroll related costs, and (3) a decrease of$0.2 million in legal and professional fees. Depreciation and amortization expenses were higher as a result (1) accelerated depreciation of tenant improvements and leasing commissions of$4.2 million as a result of tenants vacating their spaces, (2) accelerated depreciation of$2.1 million in the quarter endedMarch 31, 2020 relating to the demolition of certain existing buildings at a redevelopment property, (3) an increase of$1.0 million attributable to same-center properties, (4) a$0.8 million write-off in the quarter endedMarch 31, 2020 arising from a lease termination for permitting a dark anchor to terminate its lease prior to the contractual expiration at a property that was classified held for sale in 2020, and (5) an increase of$0.1 million attributable to a property acquired in 2019, partially offset by (1) a decrease of$0.4 million attributable to properties that were sold or held for sale in 2020 and 2019, and (2) a decrease of$0.2 million attributable to redevelopment properties.
Gain on sale in 2019 relates to the sale of
Impairment charges in 2020 relates to
Interest expense was lower as a result of (1) a decrease in the overall weighted average interest rate which resulted in a decrease in interest expense of$1.5 million , and (2) an increase in capitalized interest of$0.1 million , partially offset by increase in the overall weighted average principal balance which resulted in an increase in interest expense of$1.0 million .
Same-Property Net Operating Income
Same-property net operating income ("same-property NOI") is a widely-used non-GAAP financial measure for REITs that the Company believes, when considered with financial statements prepared in accordance with GAAP, is useful to investors as it provides an indication of the recurring cash generated by the Company's properties by excluding certain non-cash revenues and expenses, as well as other infrequent items such as lease termination income which tends to fluctuate more than rents from year to year. Properties 24 -------------------------------------------------------------------------------- are included in same-property NOI if they are owned and operated for the entirety of both periods being compared, except for properties undergoing significant redevelopment and expansion until such properties have stabilized, and properties classified as held for sale. Consistent with the capital treatment of such costs under GAAP, tenant improvements, leasing commissions and other direct leasing costs are excluded from same-property NOI. The most directly comparable GAAP financial measure is consolidated operating income. Same-property NOI should not be considered as an alternative to consolidated operating income prepared in accordance with GAAP or as a measure of liquidity. Further, same-property NOI is a measure for which there is no standard industry definition and, as such, it is not consistently defined or reported on among the Company's peers, and thus may not provide an adequate basis for comparison among REITs. The following table reconciles same-property NOI to the Company's consolidated operating income: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Operating (loss) income$ (331,000 ) $ 11,488,000 $ 3,088,000 $ 20,368,000 Add (deduct): General and administrative 3,906,000 5,418,000 8,908,000 10,216,000 Gain on sales - (2,841,000 ) - (2,942,000 ) Impairment charges 133,000 - 7,607,000 - Depreciation and amortization 14,426,000 10,346,000 28,173,000 20,475,000 Straight-line rents 988,000 (111,000 ) 945,000 (335,000 ) Amortization of intangible lease liabilities (307,000 ) (631,000 ) (766,000 ) (1,222,000 ) Other adjustments (54,000 ) (108,000 ) 1,000 (123,000 ) NOI related to properties not defined as same-property (3,041,000 ) (5,145,000 ) (14,287,000 ) (10,212,000 ) Same-property NOI$ 15,720,000 $ 18,416,000 $
33,669,000
Number of same properties 46 46 46 46 Same-property occupancy, end of period 90.2 % 91.4 % 90.2 % 91.4 % Same-property leased, end of period 91.5 % 91.6 % 91.5 % 91.6 % Same-property average base rent, end of period $ 13.57$ 13.56 $ 13.57 $ 13.56
Same-property NOI for the comparable three and six month periods decreased 14.6% and 7.1%, respectively as a result of the negative impact of the COVID-19 pandemic which reduced rental revenues for the same-property portfolio.
Leasing Activity
The following is a summary of the Company's retail leasing activity during the
six months ended
Tenant New rent Prior rent Cash basis improvements Leases per per % per signed GLA sq.ft. ($)
sq.ft. ($) change sq.ft. ($) Renewals 34 440,300 13.52 13.34 1.4 % 1.54 New Leases - Comparable 16 49,900 19.21 22.75 -15.5 % 33.87 (a) New Leases - Non-Comparable (b) 1 1,600 23.00 n/a n/a 0.00 (a) Total (c) 51 491,800 14.13 n/a n/a 4.81 (a) Includes both tenant allowance and landlord work. Excludes first generation space. (b) Includes leases signed at first generation and expansion spaces.
(c) Legal fees and leasing commissions averaged a combined total of
square foot.
Liquidity and Capital Resources
The Company funds operating expenses and other short-term liquidity requirements, including debt service, tenant improvements, leasing commissions, preferred and common dividend distributions and distributions to minority interest partners, if made, primarily from its operations. The Company may also use its revolving credit facility for these purposes. The Company expects to fund long-term liquidity requirements for property acquisitions, redevelopment costs, capital improvements, and maturing debt 25 -------------------------------------------------------------------------------- initially with its revolving credit facility, and ultimately through a combination of issuing and/or assuming additional debt, the sale of equity securities, the issuance of additional OP Units, and/or the sale of properties. Although the Company believes it has access to secured and unsecured financing, there can be no assurance that the Company will have access to financing for development projects, financing for additional construction projects, or proceeds from refinancing of existing debt. As a result of the COVID-19 pandemic which has created significant economic uncertainty, the Company took the following actions: (1) inMarch 2020 , the Company borrowed an aggregate$75.0 million under its revolving credit facility to preserve financial flexibility, (2) inApril 2020 andJuly 2020 , the Company's Board of Directors declared a quarterly common dividend of$0.01 per share, reduced from$0.05 per share from theFebruary 2020 dividend, which preserves$3.6 million of cash per quarter, and (3) dramatically reduced near-term redevelopment and other non-essential capital expenditures. The Company currently estimates capital spend in 2020 to be approximately$15 million for its three ongoing mixed-use urban redevelopment projects. EffectiveApril 28, 2020 , the average closing price of the Company's common stock had been less than$1.00 over the prior 30-consecutive trading day period, and as a result, the Company received notice from the NYSE that the Company has untilDecember 31, 2020 to regain compliance with the minimum share price requirement. The threat of delisting and/or a delisting of the Company's common stock could have adverse effects, such as restricting the Company's ability to obtain equity financing. The Company will continue to monitor the closing price of its common stock and consider available options. OnAugust 4, 2020 , the Company amended its existing$300 million unsecured credit facility and term loans. After such amendments, the Company's financial ratios and borrowing base are now all computed using trailing four quarters as opposed to the current quarter annualized and interest rate swaps that are a hedge of existing debt are now excluded from the definition of debt. The$300 million unsecured credit facility consists of (1) a$250 million revolving credit facility, and (2) a$50 million term loan. The revolving credit facility may be extended, at the Company's option, for an additional one-year period, subject to customary conditions. Under an accordion feature, the facility can be increased to$750 million , subject to customary conditions and lending commitments. Interest on borrowings under the unsecured credit facility and term loans are based on the Company's leverage ratio. The Company's unsecured credit facility and term loans contain financial covenants including, but not limited to, maximum debt leverage, maximum secured debt, minimum fixed charge coverage, and minimum net worth. In addition, the facility contains restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. The Company's failure to comply with the covenants or the occurrence of an event of default under the facilities could result in the acceleration of the related debt and exercise of other lender remedies. Although the credit facility is unsecured, borrowing availability is based on unencumbered property adjusted net operating income for the trailing twelve months, as defined in the agreements. As of the date of filing this Quarterly Report on Form 10-Q, the Company had$106.9 million outstanding and$74.5 available for additional borrowings under its revolving credit facility, and was in compliance with all financial covenants. However, the COVID-19 pandemic may negatively impact the Company's future ability to remain compliant with all financial covenants, including the ability to generate sufficient unencumbered property adjusted net operating income to support current borrowings. See "Item 1A - Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2020 . 26 -------------------------------------------------------------------------------- Debt and finance lease obligations are composed of the following atJune 30, 2020 : June 30, 2020 Contractual Maturity Balance interest rates Description dates outstanding weighted-average Fixed-rate mortgage Jun 2026$ 46,167,000 3.9% Finance lease obligation Sep 2050 5,649,000 5.3% Unsecured credit facilities (a): Variable-rate: Revolving credit facility Sep 2021 (b) 176,900,000 2.4% Term loan Sep 2022 50,000,000 2.6% Fixed-rate (c): Term loan Feb 2021 75,000,000 3.7% Term loan Feb 2022 50,000,000 3.1% Term loan Sep 2022 50,000,000 3.3% Term loan Apr 2023 100,000,000 3.3% Term loan Sep 2024 75,000,000 3.8% Term loan Jul 2025 75,000,000 4.7% 703,716,000 3.3% Unamortized issuance costs (2,386,000 )$ 701,330,000
(a) During the third quarter of 2020, the weighted average interest rate for
the Company's unsecured credit facilities will increase 15 bps as a result of an increase in the Company's leverage ratio.
(b) The revolving credit facility is subject to a one-year extension at the Company's option.
(b) The interest rates on these term loans consist of LIBOR plus a credit spread based on the Company's leverage ratio, for which the Company has interest rate swap agreements which convert the LIBOR rates to fixed rates. Accordingly, these term loans are presented as fixed-rate debt. The following table details the Company's debt and finance lease obligation maturities atJune 30, 2020 : Mortgage Loan Finance Lease Revolving Term Year Payable Obligation Credit Facility Loans Total 2020$ 522,000 $ 17,000 $ - $ -$ 539,000 2021 1,074,000 35,000 176,900,000
(a) 75,000,000 253,009,000
2022 1,116,000 37,000 - 150,000,000 151,153,000 2023 1,160,000 39,000 - 100,000,000 101,199,000 2024 1,206,000 41,000 - 75,000,000 76,247,000 Thereafter 41,089,000 5,480,000 - 75,000,000 121,569,000$ 46,167,000 $ 5,649,000 $ 176,900,000 $ 475,000,000 $ 703,716,000
(a) The revolving credit facility is subject to a one-year extension at the
Company's option.
The remaining property-specific mortgage loan payable matures in 2026. Mortgage loans payable may require the Company to deposit certain replacement and other reserves with its lenders. Such "restricted cash" is generally available only for property-level requirements for which the reserves have been established, and is not available to fund other property-level or Company-level obligations. In order to continue qualifying as a REIT, the Company is required to distribute at least 90% of its "REIT taxable income", as defined in the Internal Revenue Code of 1986, as amended (the "Code"). The Company paid common and preferred stock dividends during 2019, and has continued to declare and pay common and preferred stock dividends during 2020. While the Company intends to continue paying regular quarterly dividends, future dividend declarations will continue to be at the discretion of the Board of Directors, and will depend on the cash flow and financial condition of the Company, capital requirements, annual distribution requirements under the REIT provisions of the Code, and such other factors as the Board of Directors may deem relevant. Additionally, the Board of Directors may reduce, as it did with theMay 2020 common stock dividend of$0.01 per common share, or 27
-------------------------------------------------------------------------------- suspend payment of dividends to retain cash and reduce debt obligations and/or to fund redevelopments and other capital needs. The Company intends to continue to operate its business in a manner that will allow it to qualify as a REIT forU.S. federal income tax requirements. Net Cash Flows Six months ended June 30, 2020 2019 Cash flows provided by (used in): Operating activities$ 24,518,000 $ 28,392,000 Investing activities$ (18,644,000 ) $ (5,606,000 ) Financing activities$ 59,612,000 $ (22,682,000 ) Operating Activities Net cash provided by operating activities, before net changes in operating assets and liabilities, was$31.2 million for the six months endedJune 30, 2020 and$27.5 million for the six months endedJune 30, 2019 . The increase was primarily a result of the Company accepting a payment of$8.0 million in consideration for permitting a dark anchor tenant to terminate its lease prior to the contractual expiration in 2020, which was partially offset by (1) the negative impact of the COVID-19 pandemic in the quarter endedJune 30, 2020 , and (2) property dispositions in 2019.
Investing Activities
Net cash flows used in investing activities were primarily the result of the Company's property acquisitions, expenditures for property improvements and property disposition activities. During the six months endedJune 30, 2020 the Company incurred expenditures of$18.6 million for property improvements. During the six months endedJune 30, 2019 , the Company incurred expenditures of$15.2 million for property improvements, and acquired a property for$9.1 million , which was partially offset by$18.7 million in proceeds from the sales of properties. Financing Activities During the six months endedJune 30, 2020 , the Company had net advances of$70.9 million under the revolving credit facility, which was partially offset by$10.7 million of preferred and common stock distributions, and$0.5 million of mortgage repayments. During the six months endedJune 30, 2019 , the Company paid$14.3 million of preferred and common stock distributions, had$6.8 million of common stock repurchases, had net repayments of$1.0 million under the revolving credit facility, and$0.5 million of mortgage repayments.
Funds From Operations
Funds From Operations ("FFO") is a widely recognized supplemental non-GAAP measure utilized to evaluate the financial performance of a REIT. The Company presents FFO in accordance with the definition adopted by theNational Association of Real Estate Investment Trusts ("Nareit"). Nareit generally defines FFO as net income (determined in accordance with GAAP), excluding gains (losses) from sales of real estate properties, impairment write-downs on real estate properties directly attributable to decreases in the value of depreciable real estate, plus real estate related depreciation and amortization, and adjustments for partnerships and joint ventures to reflect FFO on the same basis. The Company considers FFO to be an appropriate measure of its financial performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than other depreciable assets. The Company also considers Operating Funds From Operations ("Operating FFO") to be an additional meaningful financial measure of financial performance because it excludes items the Company does not believe are indicative of its core operating performance, such as non-capitalized acquisition pursuit costs, amounts relating to early extinguishment of debt and preferred stock redemption costs, management transition costs and certain redevelopment costs. The Company believes Operating FFO further assists in comparing the Company's performance across reporting periods on a consistent basis by excluding such items. FFO and Operating FFO should be reviewed with net income attributable to common shareholders, the most directly comparable GAAP financial measure, when trying to understand the Company's operating performance. FFO and Operating FFO do not represent cash generated from operating activities and should not be considered as an alternative to net income attributable to common shareholders or to cash flow from operating activities. The Company's computations of FFO and Operating FFO may differ from the computations utilized by other REITs and, accordingly, may not by comparable to such REITs. 28 -------------------------------------------------------------------------------- A reconciliation of net (loss) income attributable to common shareholders to FFO and Operating FFO for the three and six months endedJune 30, 2020 and 2019 is as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Net (loss) income attributable to common shareholders$ (8,785,000 ) $ 2,695,000 $ (13,719,000 ) $ 2,889,000 Real estate depreciation and amortization 14,400,000 10,300,000 28,105,000 20,383,000 Limited partners' interest (52,000 ) 17,000 (80,000 ) 19,000 Gain on sales - (2,841,000 ) - (2,942,000 ) Impairment charges 133,000 - 7,607,000 - Consolidated minority interests: Share of income 140,000 144,000 316,000 249,000 Share of FFO (118,000 ) (107,000 ) (261,000 ) (186,000 ) FFO applicable to diluted common shares 5,718,000 10,208,000 21,968,000 20,412,000 Redevelopment costs (a) - - 483,000 - Operating FFO applicable to diluted common shares$ 5,718,000 $ 10,208,000
FFO per diluted common share $ 0.06$ 0.11 $ 0.24 $ 0.22 Operating FFO per diluted common share $ 0.06$ 0.11 $ 0.25 $ 0.22 Weighted average number of diluted common shares (b): Common shares and equivalents 90,829,000 90,526,000 90,798,000 90,694,000 OP Units 537,000 553,000 537,000 553,000 91,366,000 91,079,000 91,335,000 91,247,000
(a) Includes redevelopment project costs expensed pursuant to GAAP such as
certain demolition and lease termination costs.
(b) The weighted average number of diluted common shares used to compute FFO
and Operating FFO applicable to diluted common shares includes OP Units and
unvested restricted shares/units that are excluded from the computation of
diluted EPS. Inflation Inflation has been relatively low in recent years and has not had a significant detrimental impact on the Company's results of operations. There have been mixed indications of an increase in inflation in theU.S. economy. If inflation rates increase, substantially all of the Company's tenant leases contain provisions designed to partially mitigate the negative impact of inflation in the near term. Such lease provisions include clauses that require tenants to reimburse the Company for inflation-sensitive costs such as real estate taxes and many of the operating expenses it incurs. Significant inflation rate increases over a prolonged period of time may have a material adverse impact on the Company's business.
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