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Dynamic quotes 
OFFON

CEDAR REALTY TRUST, INC.

(CDR)
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CEDAR REALTY TRUST : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

07/29/2021 | 04:21pm EDT

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 from Washington, D.C. to Boston. At June
30, 2021, the Company owned and managed a portfolio of 53 operating properties
(excluding properties "held for sale") totaling 7.6 million square feet of gross
leasable area ("GLA"). The portfolio was 88.7% leased and 87.6% occupied at June
30, 2021.

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 entered into lease
modifications that deferred approximately $3.5 million and waived approximately
$2.4 million of rental income through June 30, 2021, respectively. As of June
30, 2021, the weighted average payback period for remaining deferred rent
receivable is approximately 10 months, beginning at various times from July 2020
through June 2021. The Company has collected approximately 97% and 96% of
contractual base rents and monthly tenant reimbursements for the quarters ended
June 30, 2021 and March 31, 2021, respectively.



Real Estate



On May 5, 2021, the Company formed a joint venture with Goldman Sachs Urban
Investment Group and Asland Capital Partners (the "Joint Venture") for the
construction of an approximately 258,000 square foot six-story commercial
building in Washington D.C. consisting of approximately 240,000 square feet of
office space which is 100% leased to the Washington, D.C., Department of General
Services ("DGS") for its headquarters and approximately 18,000 square feet of
street-level retail. The term of the lease with DGS is for 20 years and 10
months, to commence upon substantial completion and delivery to the DGS. This
building is planned as the first phase of Northeast Heights, a redevelopment of
two existing shopping centers, East River Park and Senator Square, into a
mixed-use residential, office and retail property. Further, the Joint Venture
has secured construction financing from JP Morgan not to exceed $105 million.
The construction loan initially bears interest at LIBOR plus 200 basis points
and has an initial term of three years with two, one-year extension options
subject to customary conditions. The Company will have a 10% interest in the
joint venture and be a co-general partner along with Asland Capital Partners.
The Company has contributed approximately $2.5 million of capital to the Joint
Venture as of June 30, 2021. The Company has sold approximately $8.0 million of
development costs to the Joint Venture as of June 30, 2021.



The Joint Venture 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 Joint Venture 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 Joint
Venture 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.







                                       22
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As of June 30, 2021, Carll's Corner, located in Bridgeton, New Jersey, has been classified as "real estate held for sale" on the accompanying consolidated balance sheet.


The following table shows the property dispositions during the six months ended
June 30, 2021:



                                                                                             Gain on Sale/
                                                                Date          Sales           Reversal of
Dispositions                    Location           GLA          Sold          Price           Impairment
Kempsville Crossing
(land parcel)              Virginia Beach, VA           -     2/24/2021   $   1,300,000     $     1,047,000
The Commons                Dubois, PA             203,309     5/5/2021        9,761,000           1,849,000
Camp Hill Shopping
Center                     Camp Hill, PA          430,198     6/21/2021      89,662,500          48,857,000
                                                  633,507                 $ 100,723,500     $    51,753,000


The gains on sale and the reversal of impairment are included in operating income in the accompanying consolidated statement of operations

Unsecured Revolving Credit Facility and Term Loans




On August 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.



On October 27, 2020, the Company utilized its revolving credit facility to repay
the $75.0 million term loan which was set to mature in February 2021. The
revolving credit facility matures in September 2021, and may be extended, at the
Company's option, for an additional one-year period, subject to customary
conditions.



On May 5, 2021, the Company closed a non-recourse mortgage for $114.0 million.
The mortgage matures June 1, 2031, bears interest at a fixed-rate of 3.49% and
requires payment of interest only for the first five years followed by payments
of principal and interest based on thirty-year amortization for the remainder of
the term. The loan is secured by five shopping centers consisting of Lawndale
Plaza, The Shops at Suffolk Downs, Christina Crossing, Trexlertown Plaza, and
The Point.  These properties had no pre-existing debt and the proceeds from this
new loan were used to reduce amounts outstanding under the Company's revolving
credit facility.



Common Stock



On November 25, 2020, the Company effected a 1-for-6.6 reverse stock split of
the issued and outstanding shares of common stock. Each 6.6 shares of the
Company's issued and outstanding common stock were combined into one share of
the Company's common stock. The number of authorized shares and the par value of
the common stock were not changed. In addition, the Company amended the Limited
Partnership Agreement of our Operating Partnership to effect a corresponding
reverse split of the partnership interests of the Operating Partnership. In
accordance with GAAP, all shares of common stock, restricted stock units, OP
Units and per share/unit information that are presented in this Form 10-Q were
adjusted to reflect the reverse split on a retroactive basis for all periods
presented.

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 ended December 31, 2020. See Note 2 -
"Summary of Significant Accounting Policies" for recently-adopted accounting
pronouncements.

                                       23
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Results of Operations

Comparison of three months ended June 30, 2021 to June 30, 2020



                                                                                          Change
                                               2021              2020            Dollars          Percent
Revenues                                   $  32,220,000     $  28,620,000     $  3,600,000        12.6%
Property operating expenses                  (11,347,000 )     (10,486,000 )       (861,000 )       8.2%
Property operating income                     20,873,000        18,134,000  

2,739,000

General and administrative                    (4,873,000 )      (3,906,000 )       (967,000 )      24.8%
Depreciation and amortization                (10,257,000 )     (14,426,000 )      4,169,000        -28.9%
Gain on sales                                 48,857,000                 -       48,857,000         n/a
Impairment reversal (charges)                  1,849,000          (133,000 )      1,982,000         n/a
Interest expense                              (4,985,000 )      (5,678,000 )        693,000        -12.2%
Net income (loss)                             51,464,000        (6,009,000 )     57,473,000
Net (income) attributable to
noncontrolling interests                        (409,000 )         (88,000 )       (321,000 )
Net income (loss) attributable to Cedar
Realty Trust, Inc.                         $  51,055,000     $  (6,097,000 )   $ 57,152,000





Revenues were higher as a result of (1) an increase of $3.2 million in rental
revenues and expense recoveries attributable to same-center properties, (2) an
increase of $0.7 million in rental revenues and expense recoveries attributable
to redevelopment properties, which is partially off-set by (3) a decrease of
$0.4 million in rental revenues and expense recoveries attributable to
properties that were sold or held for sale in 2021 and 2020.



Property operating expenses were higher as a result of (1) an increase of $1.0
million in property operating expenses attributable to same center properties,
(2) an increase of $0.3 million in property operating expenses attributable to
redevelopment properties which is partially off-set by (3) a decrease of $0.4
million in property operating expenses attributable to properties sold or held
for sale during 2021 and 2020.

General and administrative costs were higher primarily as a result of (1) an
increase of $0.3 million related to corporate governance and proxy matters, (2)
an increase of $0.2 million related to legal expense, (3) an increase of $0.2
million of accelerated amortization of stock compensation related to the
retirement of two board members and (4) an increase of $0.2 million related to
payroll and payroll related expenses.

Depreciation and amortization expenses were lower as a result of (1) a decrease
of $4.6 million attributable to same center properties, (2) a decrease of $0.5
million attributable to properties that were sold or held for sale in 2021 and
2020, which is partially off-set by (3) an increase of $0.9 million attributable
to redevelopment properties.

Gain on sales in 2021 relates to the sale of Camp Hill Shopping Center, located Camp Hill, Pennsylvania.

Impairment reversal (charges) in 2021 relates to the sale of The Commons, located in Dubois, Pennsylvania. The impairment charges in 2020 relates to Metro Square, located in Owings Mill, Maryland and The Commons located in Dubois, Pennsylvania.


Interest expense was lower as a result of (1) a decrease in the overall weighted
average principal balance which resulted in a decrease in interest expense of
$1.1 million, (2) an increase in capitalized interest of $0.1 million, which is
partially off-set by (3) an increase in the overall weighted average interest
rate which resulted in an increase in interest expense of $0.4 million and (4)
an increase in the amortization of financing costs of $0.1 million.





















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Comparison of six months ended June 30, 2021 to June 30, 2020



                                                                                          Change
                                               2021              2020            Dollars          Percent
Revenues                                   $  65,771,000     $  71,105,000     $ (5,334,000 )      -7.5%
Property operating expenses                  (24,247,000 )     (23,329,000 )       (918,000 )       3.9%
Property operating income                     41,524,000        47,776,000       (6,252,000 )
General and administrative                    (9,401,000 )      (8,908,000 )       (493,000 )       5.5%
Depreciation and amortization                (21,468,000 )     (28,173,000 )      6,705,000        -23.8%
Gain on sales                                 49,904,000                 -       49,904,000         n/a
Impairment reversal (charges)                  1,849,000        (7,607,000 )      9,456,000         n/a
Interest expense                              (9,691,000 )     (11,195,000 )      1,504,000        -13.4%
Net income (loss)                             52,717,000        (8,107,000 )     60,824,000
Net (income) attributable to
noncontrolling interests                        (550,000 )        (236,000 )       (314,000 )
Net income (loss) attributable to Cedar
Realty Trust, Inc.                         $  52,167,000     $  (8,343,000 )   $ 60,510,000




Revenues were lower as a result of (1) $7.1 million relating to a dark anchor
tenant terminating its lease prior to the contractual expiration in 2020 at
Metro Square, (2) a decrease of $0.9 million in rental revenues and expense
recoveries attributable to properties that were sold or held for sale in 2021
and 2020, which is partially off-set by (3) an increase of $1.2 million in
rental revenues and expense recoveries attributable to same-center properties
and (4) an increase of $1.3 million in rental revenues and expense recoveries
attributable to redevelopment properties.



Property operating expenses were higher as a result of (1) an increase of $0.9
million in property operating expenses attributable to redevelopment properties,
(2) an increase of $0.6 million in property operating expenses attributable to
same center properties, which is partially off-set by (3) a decrease of $0.5
million in property operating expenses attributable to properties sold or held
for sale during 2021 and 2020.

General and administrative costs were higher primarily as a result of (1) an
increase of $0.5 million related to corporate governance and proxy matters, (2)
an increase of $0.3 million related to legal expense, (3) an increase of $0.2
million of accelerated amortization of stock compensation related to the
retirement of two board members, which is partially off-set by (4) a decrease of
$0.2 million in accounting and professional fees and (5) a decrease of $0.3
million in payroll and payroll overhead expenses.

Depreciation and amortization expenses were lower as a result of (1) a decrease
of $4.9 million attributable to same center properties, (2) a decrease of $0.3
million attributable to redevelopment properties and (3) a decrease of $1.4
million attributable to properties that were sold or held for sale in 2021 and
2020.

Gain on sales in 2021 relates to the sale of an outparcel building at Kempsville
Crossing, located in Virginia Beach, Virginia and Camp Hill Shopping Center,
located in Camp Hill, Pennsylvania.

Impairment reversal (charges) in in 2021 relates to the sale of The Commons,
located in Dubois, Pennsylvania. The impairment charges in 2020 relates to Metro
Square, located in Owings Mill, Maryland and The Commons, located in Dubois,
Pennsylvania

Interest expense was lower as a result of a decrease in the overall weighted
average principal balance which resulted in a decrease in interest expense of
$1.5 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 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.

                                       25

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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:



                                         For the three months ended June 30,           For the six months ended June 30,
                                            2021                     2020                  2021                   2020
Operating income (loss)              $        56,449,000       $        

(331,000 ) $ 62,408,000 $ 3,088,000 Add (deduct): General and administrative

                     4,873,000               3,906,000             9,401,000            8,908,000
Gain on sales                                (48,857,000 )                     -           (49,904,000 )                  -
Impairment (reversal) charges                 (1,849,000 )               133,000            (1,849,000 )          7,607,000
Depreciation and amortization                 10,257,000              14,426,000            21,468,000           28,173,000
Straight-line rents                             (229,000 )               988,000              (359,000 )            945,000
Amortization of intangible lease
liabilities                                     (263,000 )              (307,000 )            (539,000 )           (766,000 )
Other adjustments                                 14,000                 (59,000 )             (15,000 )             12,000
NOI related to properties not
defined as same-property                      (3,605,000 )            

(3,245,000 ) (7,209,000 ) (14,820,000 ) Same-property NOI

                    $        16,790,000       $      

15,511,000 $ 33,402,000 $ 33,147,000


Number of same properties                             45                      45                    45                   45
Same-property occupancy, end of
period                                              90.1 %                  90.7 %                90.1 %               90.7 %
Same-property leased, end of
period                                              90.9 %                  92.1 %                90.9 %               92.1 %
Same-property average base rent,
end of period                        $             13.55       $           13.73     $           13.55       $        13.73



Same-property NOI for the comparable three and six month periods increased 8.2% and 0.8%, respectively, as a result of the negative impact of the COVID-19 pandemic which reduced rental revenues for prior year same-property portfolio.




Leasing Activity

The following is a summary of the Company's retail leasing activity during the six months ended June 30, 2021:



                                                                                                       Tenant
                                                    New rent        Prior rent      Cash basis      improvements
                         Leases                        per             per               %               per
                         signed         GLA        sq.ft. ($)       sq.ft. ($)        change         sq.ft. ($)
Renewals                      44       297,300           14.55            14.37             1.2 %            2.08
New Leases -
Comparable                    19        79,600           18.45            20.08            -8.1 %           31.49   (a)
New Leases -
Non-Comparable (b)             8       100,400           17.18              n/a             n/a             69.59   (a)
Total (c)                     71       477,300           15.75              n/a             n/a             21.18





    (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 $2.10 per

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 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.

                                       26

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Effective April 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 had
until December 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. On October 27, 2020, to regain compliance with the
minimum NYSE share price requirement, the Company's Board of Directors approved
a plan to amend the Company's articles of incorporation to effect a reverse
stock split of the issued and outstanding shares of common stock.



On November 25, 2020, the Company effected a 1-for-6.6 reverse stock split of
the issued and outstanding shares of common stock. Each 6.6 shares of the
Company's issued and outstanding common stock were combined into one share of
the Company's common stock. The number of authorized shares and the par value of
the common stock were not changed. In addition, the Company amended the Limited
Partnership Agreement of our Operating Partnership to effect a corresponding
reverse split of the partnership interests of the Operating Partnership.



On August 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 the 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 $12.0 million
outstanding and $112.1 million available for additional borrowings under its
revolving credit facility, and was in compliance with all financial covenants.



On May 5, 2021, the Company closed a non-recourse mortgage for $114.0 million.
The mortgage matures June 1, 2031, bears interest at a fixed-rate of 3.49% and
requires payment of interest only for the first five years followed by payments
of principal and interest based on thirty-year amortization for the remainder of
the term. The loan is secured by five shopping centers consisting of Lawndale
Plaza, The Shops at Suffolk Downs, Christina Crossing, Trexlertown Plaza, and
The Point.  These properties had no pre-existing debt and the proceeds from this
new loan were used to reduce amounts outstanding under the Company's revolving
credit facility.













































                                       27
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Debt and finance lease obligations are composed of the following at June 30,
2021:



                                                                 June 30, 2021
                                                                            Contractual
                                     Maturity        Balance              interest rates
Description                           dates        outstanding           weighted-average
Fixed-rate mortgage
Franklin Village                     Jun 2026     $   45,113,000               3.9%
Shops at Suffolk Downs (a)          June 2031         15,600,000               3.5%
Trexlertown Plaza (a)               June 2031         36,100,000               3.5%
The Point (a)                       June 2031         29,700,000               3.5%
Christina Crossing (a)              June 2031         17,000,000               3.5%
Lawndale Plaza (a)                  June 2031         15,600,000               3.5%
Senator Square finance lease
obligation                           Sep 2050          5,615,000               5.3%
                                                     164,728,000               3.6%
Unsecured credit facilities (b):
Variable-rate:
Revolving credit facility (c)        Sep 2021         12,000,000               1.7%
Term loan                            Sep 2022         50,000,000               1.8%
Fixed-rate (d):
Term loan                            Sep 2022         50,000,000               3.5%
Term loan                            Apr 2023        100,000,000               3.5%
Term loan                            Sep 2024         75,000,000               3.9%
Term loan                            Jul 2025         75,000,000               4.8%
                                                     526,728,000               3.6%
Unamortized issuance costs                            (3,208,000 )
                                                  $  523,520,000




  (a) The mortgages for these properties are cross-collateralized.


(b) During the third quarter of 2021, the weighted average interest rate for

the Company's unsecured credit facilities will decrease 15 basis points

("bps") as a result of a decrease in the Company's leverage ratio.

(c) The revolving credit facility is subject to a one-year extension at the

Company's option.



(d) 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 Company is currently exploring secured and unsecured refinancing options
with various lenders. The following table details the Company's debt and finance
lease obligation maturities at June 30, 2021:



             Mortgage Loan       Finance Lease          Revolving               Term
   Year         Payable           Obligation         Credit Facility            Loans             Total
   2021      $      542,000     $        19,000            12,000,000   (c) $           -     $  12,561,000
   2022           1,116,000              37,000                     -         100,000,000       101,153,000
   2023           1,160,000              39,000                     -         100,000,000       101,199,000
   2024           1,206,000              41,000                     -          75,000,000        76,247,000
   2025           1,253,000              44,000                     -          75,000,000        76,297,000
Thereafter      153,836,000           5,435,000                     -                   -       159,271,000
             $  159,113,000     $     5,615,000     $      12,000,000       $ 350,000,000     $ 526,728,000



(a) The revolving credit facility is subject to a one-year extension at the

Company's option.



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 2020, and has continued to declare and pay common and
preferred stock dividends during 2021. 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 the May 2020 common stock dividend of $0.01
per common share, or

                                       28
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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 for
U.S. federal income tax requirements.

Net Cash Flows



                                      For the six months ended June 30,
                                           2021                  2020
Cash flows provided by (used in):
Operating activities                $       24,804,000       $  24,518,000
Investing activities                $       88,254,000       $ (18,644,000 )
Financing activities                $     (108,862,000 )     $  59,612,000




Operating Activities

Net cash provided by operating activities, before net changes in operating
assets and liabilities, was $24.8 million for the six months ended June 30, 2021
and $31.2 million for the six months ended June 30, 2020. The decrease 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 2020, and (2) property dispositions
in 2020.

Investing Activities



Net cash flows provided by (used in) investing activities were primarily the
result of the Company's expenditures for property improvements and property
disposition activities. During the six months ended June 30, 2021 the Company
received $104.5 million in proceeds from the sale of properties, which was
partially off-set by $138 million for property improvements and $2.5 million in
contributions to an unconsolidated joint venture. During the six months ended
June 30, 2020, the Company incurred expenditures of $18.6 million for property
improvements.

Financing Activities



During the six months ended June 30, 2021, the Company had net payments of
$163.0 million under the revolving credit facility, a $50.0 million of term note
pay-off, $7.2 million of preferred and common stock distributions, $0.5 million
of mortgage repayments, and $1.6 million of debt financing costs, $0.5 million
of termination payments related to a swap liability, which were partially offset
by net property specific mortgage note payables of $114.0 million. During the
six months ended June 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.

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 the National
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

                                       29

--------------------------------------------------------------------------------


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.

A reconciliation of net income (loss) attributable to common shareholders to FFO
and Operating FFO for the three and six months ended June 30, 2021 and 2020 is
as follows:



                                        Three months ended June 30,           Six months ended June 30,
                                           2021               2020             2021              2020
Net income (loss) attributable to
common shareholders                   $    48,367,000     $ (8,785,000 )   $  46,791,000     $ (13,719,000 )
Real estate depreciation and
amortization                               10,227,000       14,400,000        21,420,000        28,105,000
Limited partners' interest                    287,000          (52,000 )         278,000           (80,000 )
Gain on sales                             (48,857,000 )              -       (49,904,000 )               -
Impairment (reversal) charges              (1,849,000 )        133,000        (1,849,000 )       7,607,000
Consolidated minority interests:
Share of income                               122,000          140,000           272,000           316,000
Share of FFO                                  (88,000 )       (118,000 )        (201,000 )        (261,000 )
FFO applicable to diluted common
shares                                      8,209,000        5,718,000        16,807,000        21,968,000
Redevelopment costs (a)                       230,000                -           230,000           483,000
Financing costs (b)                            44,000                -            44,000                 -
Operating FFO applicable to diluted
common shares                         $     8,483,000     $  5,718,000     

$ 17,081,000 $ 22,451,000


FFO per diluted common share          $          0.59     $       0.41     $        1.21     $        1.59
Operating FFO per diluted common
share                                 $          0.61     $       0.41     $        1.23     $        1.62
Weighted average number of diluted
common shares (c):
Common shares and equivalents              13,855,000       13,762,000        13,845,000        13,757,000
OP Units                                       81,000           81,000            81,000            81,000
                                           13,936,000       13,843,000        13,926,000        13,838,000



(a) Includes redevelopment project costs expensed pursuant to GAAP such as

certain demolition and lease termination costs.

(b) Represents acceleration of amortization of financing costs related to term note paid-off prior to maturity.

(c) 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 the U.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.

© Edgar Online, source Glimpses

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