Cedar Realty Trust, Inc. (CDR) is a real estate investment trust (REIT) that focuses on owning and operating income-producing retail properties, primarily grocery-anchored shopping centers, in the Northeast region of the United States. With a long-standing history dating back to the 1960s, the company has weathered various economic cycles and adapted its strategy to navigate the evolving retail landscape.
Business Overview and History Cedar Realty Trust was founded in 1968 and has since grown to become a significant player in the Northeast retail real estate market. The company's portfolio currently consists of 17 properties, primarily concentrated in the Northeast region, with a focus on grocery-anchored shopping centers. This strategic geographic concentration allows the company to leverage its expertise and relationships within the local markets.
In recent years, Cedar Realty Trust has faced significant challenges, particularly during the COVID-19 pandemic. In 2020, the company reported a net loss from continuing operations of $22.5 million, as it grappled with reduced rent collections and occupancy levels across its portfolio. To navigate this difficult period, the company implemented cost-saving measures and worked closely with its tenants to provide relief and maintain occupancy.
The challenges continued into 2021, with Cedar Realty Trust reporting a net loss from continuing operations of $35.7 million. The company's performance was impacted by the ongoing pandemic, as well as the write-off of certain capital assets. However, during this time, the company also made progress in its portfolio optimization efforts, completing several strategic dispositions.
Despite these setbacks, Cedar Realty Trust demonstrated resilience and adaptability. In 2022, the company reported a significant turnaround, with net income from continuing operations of $44.2 million. This improvement was driven by a combination of improved property operations, successful asset sales, and the company's disciplined approach to managing its balance sheet.
Throughout its history, Cedar Realty Trust has remained committed to its long-term strategy of owning and operating a well-positioned portfolio of grocery-anchored shopping centers. This focus has been a key driver of the company's performance, allowing it to navigate various market conditions and adapt to the evolving needs of its tenants and the retail landscape.
Financial Performance and Metrics Cedar Realty Trust's financial performance has been mixed in recent years, reflecting the broader challenges faced by the retail industry. In the company's 2023 fiscal year, it reported total revenue of $34.63 million, with a net income of $2.01 million. The company's operating cash flow for the year was $8.25 million, while its free cash flow stood at $1.79 million.
For the most recent quarter (Q3 2024), Cedar Realty Trust reported revenue of $24.79 million and a net loss of $33.32 million. The company's operating cash flow for the quarter was $7.48 million, with free cash flow reaching $19.37 million. The company experienced a 10.1% decrease in same-property NOI for the quarter, primarily due to an increased bad debt provision, partly related to the Big Lots bankruptcy, and increased one-time property operating expenses. However, this was partially offset by a 150 basis point increase in occupancy.
For the nine months ended September 30, 2024, the company saw a 0.3% increase in same-property NOI compared to the prior year period. This modest increase was primarily driven by the 150 basis point increase in occupancy, although it was partially offset by an increase in property operating expenses.
Key Financial Ratios Key financial ratios for Cedar Realty Trust as of the end of 2023 include: - Debt-to-Equity Ratio: 1.91x - Interest Coverage Ratio: 1.23x - Payout Ratio: -50.47% - Return on Equity: -5.28%
As of September 30, 2024, the company's debt-to-equity ratio stood at 18.83x, indicating a highly leveraged capital structure. The current ratio and quick ratio were both 1.86, suggesting adequate short-term liquidity.
Liquidity Cedar Realty Trust's liquidity position is reflected in its cash flow figures and available resources. As of September 30, 2024, the company had $17.51 million in cash and cash equivalents and $6.54 million in restricted cash. The company's $9.5 million revolving credit facility was closed on September 12, 2024, upon the disposition of one of the properties serving as collateral.
Revenue Streams and Property Performance Cedar Realty Trust generates revenue primarily through rental income from its portfolio of retail properties. For the nine-month period ended September 30, 2024, rental revenues amounted to $18.38 million, showing a slight increase from $17.79 million in the same period of 2023. This increase was attributed to higher occupancy levels and rental rate increases on renewed leases.
In addition to base rents, the company also generates revenue through expense recoveries from tenants, which totaled $6.16 million for the first nine months of 2024, up from $5.67 million in the same period of 2023. Other revenues, including items such as percentage rent and parking fees, amounted to $453,000 for the nine-month period in 2024.
The company's leasing activity has been robust, with 167,080 square feet of renewed leases during the first nine months of 2024, achieving a weighted average rental rate increase of 7.93% over prior lease rates. Additionally, Cedar Realty Trust signed 58,770 square feet of new leases at a weighted average rental rate of $13.30 per square foot, representing an 8.57% increase over prior in-place rents.
Recent Developments and Challenges In 2024, Cedar Realty Trust faced several significant developments that have shaped its trajectory. The company's tenant, Big Lots, Inc., filed for Chapter 11 bankruptcy protection in September 2024, highlighting the ongoing challenges facing the retail sector. The Big Lots leases accounted for approximately 0.53% of the company's annualized base rent, and the company is currently negotiating with Big Lots on potential lease modifications.
Additionally, in 2024, Cedar Realty Trust announced and commenced a modified Dutch auction tender offer to purchase up to $9 million of its 6.50% Series C Cumulative Redeemable Preferred Stock. This strategic move aimed to optimize the company's capital structure and enhance shareholder value.
The company's efforts to navigate the evolving retail landscape have also included strategic asset sales. During the nine months ended September 30, 2024, Cedar Realty Trust sold the Kings Plaza property in New Bedford, Massachusetts, and the Oakland Commons property in Bristol, Connecticut, generating net proceeds of $13.75 million and $5.66 million, respectively.
Outlook and Future Prospects As Cedar Realty Trust looks to the future, the company faces a range of challenges and opportunities. The ongoing shifts in consumer behavior and the rise of e-commerce continue to put pressure on traditional retail tenants, requiring the company to be agile in its tenant mix and property management strategies.
However, the company's focus on necessity-based, grocery-anchored shopping centers has provided a measure of stability, and the company remains committed to leveraging its expertise in the Northeast market to identify and capitalize on new opportunities. The company's recent tender offer for its preferred shares and its strategic asset sales indicate a proactive approach to managing its capital structure and portfolio.
Despite the headwinds facing the retail industry, Cedar Realty Trust's experienced management team and its diversified portfolio of properties provide a solid foundation for the company to navigate the challenges and identify avenues for growth. The company's ability to achieve rental rate increases on renewed leases and attract new tenants at higher rates demonstrates the underlying strength of its portfolio and market positioning.
As Cedar Realty Trust continues to adapt and evolve, investors will be closely monitoring its ability to generate consistent returns and enhance shareholder value in the years to come. The company's focus on maintaining high occupancy levels, managing property operating expenses, and optimizing its portfolio through strategic dispositions and acquisitions will be crucial in driving long-term growth and profitability in the competitive retail real estate market.