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Cedar Realty Trust (CDR)

Participants
Nicholas Partenza Director, Financial Reporting
Bruce Schanzer Chief Executive Officer
Robin Zeigler Chief Operating Officer
Philip Mays Chief Financial Officer
Todd Thomas KeyBanc Capital Markets
Collin Mings Raymond James
Call transcript
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Operator

Welcome to the Second Quarter 2019 Cedar Realty Trust Earnings Conference Call.

As a reminder, this conference is being recorded. At this time, all audience lines have been placed on mute.

We will conduct a question-and-answer session following the formal presentation.

I will now turn the call over to Nicholas Partenza. proceed. Please

Nicholas Partenza

Schanzer, thank Realty us Participating and Trust call be and quarter the in Philip for Robin will Cedar Officer; Officer. XXXX earnings Bruce Mays you Chief evening Operating for joining second today's Zeigler, Financial Good Chief Executive Officer; Chief conference call.

statements. that by please differ statements the and results made may call such be that Before we statements may forward-looking begin, are from deemed indicated those materially forward-looking be aware during not historical, actual

are numerous most with those Form ended to statements our disclosed quarterly on in be XX-K year subsequently including These and uncertainties by reports may Form subject risks the or SEC. it the recent XXXX filings XX-Q the supplemented filed periodic updated and company's as for other

speak of no forward-looking date and As the this Xst, the undertakes the call company a them. reminder, only update as August XXXX to statements duty of

certain income. of may directly this Cedar's financial information financial including operating GAAP net supplemental reconciliations its and to call, posted the with measures funds non-GAAP management measures. comparable and financial on non-GAAP website During Please press financial release for operations measures these refer earnings most see from

will now call With that, Bruce Schanzer. the I to over turn

Bruce Schanzer

thank all and and dynamics. to jump experiencing joining acknowledge is quarter Cedar's right that second earnings Nick, Thanks, you opposing two in call. for XXXX I'm going today Cedar

with underlying price share the prospects our is to reconcile our the a to fallen or company. hand, has one the On of either for our with that impossible value assets level

and continues pipeline. growing advancing other everyday redevelopment our projects excellence team the with leasing work hand, On to our our

urban commence this first South been as fourth as closer Quarter to Crossing of large-scale mixed-use With redevelopments. our to never project quarter We soon the poised year. kicking off have our

the Quarter to anchor Quarter our of in executed. fully South deals. anchor lineup plan and We anchor at two negotiations at last the anchor our critical late-stage We once publicly are few elaborate more on of South leases leases all are have finalized on

development have and Kimco's Much Property agreement Philadelphia zoning in by and apartment most the project been of with for is partner public approvals. finalized were other the critical has domain. notably press this our recent up Alterra picked significant and received the We definitely development entitlements Group who have

generally to our objectives. More corporate the continues team advance

leasing a over Our remarkably solid activity been strong last the months has pipeline. XX with leasing very

as number Although, and of core visible the true our end not them assets. the the is well both This a at of we execute redevelopment second of before did for occupancy our growth hand. prospect quarter, as portfolio is

continue a generating be redevelopments to value-add this returns further. on completed value-add getting attractive of with opportunities. our will Furthermore, growing Robin pipeline expand

much are take we While don't too today, few are why ideas. we a time want I trading I as to to highlight would where speculating

there sale for is shopping which own with realizable First, liquidity. centers market highly small private liquid we readily relatively a

our of In as on rate information calculation. comparable share assets NAV blocks presentation building our markets posted corporate on our as cap the our well we within website,

or we in we recently. in for these consensus in NAV the information All whether assets addition financial portfolio sold more have supplemental the transactions, filing, our our In support market generally, share on Cedar.

none inflation. inflation current NAV over NAV, share in being our NAV manner We reflected time and of our price. our in beyond will it current is Second, grow far that our anticipate above is we current we this redevelopment pipeline anticipate NAV, exceeds a beyond strong growth. Thus, believe our

making. Board Third, and strategic focused management we capital that thoughtful and team on have decision is keenly allocation a

astute track record demonstrated allocation others capital and decisions a some defensive. of offensive have We

at keenly are when addressing assure they and you when same financial public moments shares strategic optimal the this can We between manner. appropriate and private sense that and disconnect In for in repurchase and vein, valuation is mindset. What management the Cedar. on I assets assets focused analytical acquire as in Board as the that have common flexible a make stock they nimble well divest sell

and a effectively most environment the challenging Fourth, we group probably at They distracting professionals truly blue-chip and are significantly, a executed in markets. have executives. face of of have of retail Cedar that a operating capital team

professional I for that by for an for their sincerely will that growing excellence helping collective everyday personal environment thanking culture collegial. commitment conclude and collaborative is them to and allows Cedar at in and fulfillment

greater redevelopment. will Robin give to you and detail With our provide that, our results discuss operating I to on

Robin Zeigler

Good Bruce. evening. Thanks,

have strong volume the of rolling feet foot. highest per lease in at leasing of square months highest foot $XX.XX the per XXX,XXX rolling spaces average the rent last a had months leasing quarter of square square posting XX We last with XX the

average new square leases average a their were executed foot of spread $XX.XX per spread over of of XX at X%. at negative renewals rent rent. positive foot an and were an prior rent $XX.XX square executed per Five of a at X.X%

that, renewal the XX,XXX is grocer to it foot at for Some rent a was center. spread reduced in a secure negative done that strategic important to attributable square of anchor traffic-driving this at term was an

strategic converts renewal spread a the to this positive anchor of Exclusion deal, X.X%.

leases value-add renovations In quarter addition, completed an at square two foot. per this at non-comparable of $XX.XX our were small average shop rent

with to XX.X%. our Cedar, leases this are There well fundamentals operating strong working points deals occupancy rose renewals. in and pipeline. last quarter new XXX The Leased over XX basis a leasing XX XX are pipeline, currently at quarter

some XX mixed and over use new anchor under This deals executed pipeline deals an are renewal in post to LOI. feet deals with and been of and executed this square lease redevelopment. anchor feet represents XXX,XXX the which for junior are pipeline negotiation quarter of have almost additional XXX,XXX of related remainder end, deals, already square

out same is when store NOI flat. be to can This hard call

of store significant to closing another to the the move rent at from store positive has negative growth in pool. our of negative A on portfolio significantly. entire the the move to the rent or single size, can start movement impact same tenant $XXX,XXX our one or large a Given positive either new $XXX,XXX asset the a a to same NOI

about be We to continue redevelopment work. invigorated our

bringing we our to grocery efforts Cedar team about delivering As deserts that revitalizing talk and something community about food there enjoy. these is the neighborhood inherently with can internally, amenities meaningful

on we our two platform use our mixed shared redevelopments platform. of with calls, renovation categories: As All our fall three our redevelopment continue to and use have redevelopments previous mixed promise. into value-add great progress

play project to construction Crossing. will be Quartermaster Center The to a the first environment. mixed Shopping is anticipated live redevelopment use commence South combination South and This Philadelphia of create work Quarter

scope The approximately of XXX,XXX retail feet units. XXX residential square anticipated and project includes

negotiation. and execution leases We have made anchor several in small with in shop with lease leasing lease tremendous leases near multiple signed progress LOIs

was project. create addition overlay which construction an allow of commence to July project CMX-X anticipated to to Philadelphia in XXXX. the commercial mixed The XXXX on district side successfully in use, late is the The residential approved South of zoning allows the

square Riverview re-branded Plaza, programmed another units. as centric XXX,XXX for and approximately mixed use and entertainment Boulevard is merchandising. project reflect on Columbus Pennsylvania, the of and is in has residential over Christopher located revelry XXX retail to restaurant feet Philadelphia been project The

are negotiations these Lease for underway uses.

While for ongoing. there required is and process no design zoning residential, entitlement normal variance is the

across River is corner and in Northeast Minnesota Heights and mixed Square the the at Avenue the Benning Northeast. use situated street Center of D.C. and Washington Shopping each located from project of third combination East Senator other is Our

D.C. was made and This will it to project program in retail private Class D.C. lot of political A include ever Washington X be garnered a investment square the million Ward density. office The X.X has of from politicians feet contemplated largest residential of support and

XXXX. in to This late the is not team a poised require development entitlement commence does rezoning. phase our And

then leases move are We grocers line national in the conversations up. the and first to shop small complete anchors merchandising with to and several anchor

In the activity our value-add just portfolio, as exciting. renovation is

the to project commenced a We stabilization. at grocer defensively have successfully Plaza we bankruptcy vacancy. experiencing and final headed lease-up when small Carman's we This completed finishing in the and construction shop were are -- had

as occupancy of to towards renovation, quarter, a nearing the teens the junior end projected execution. in million with the is $XX.X second at we XX% renovation return have the moving project Through deal have of upper increased anchor XX% stabilization. a This to

in mid-Xs. Center's XXXX $X Similarly, upon to Groton job renovation a XX.X% occupancy in This million increased return XXX% completion. the we Shopping from completed at value-add

renovations calls. We that are were launching discussed two additional value-add currently on previous

and former shop square creating have Fishtown a space pad Crossing Center Nifty buildings. an leasable small transforming Pennsylvania with and Avenue with $XX.XX Port at shop diner per rent small Leases in Aramingo been Crossing, foot. and obsolete Plaza on Cockeysville, Starbucks average Richmond is Shopping Maryland. Fishtown in adjacent of Philadelphia, the executed Yorktowne building Fifty

in begin at at and Fishtown quarter square been rent a prior to shop small relocated per zoning redevelopment construction average. foot anticipated The square is rents received plan foot. have $XX GameStop of The and and we XXXX. per was $XX.XX site the to accommodate Additionally, average to the renovation approval permits T-Mobile on fourth

a tenants. and inviting turnover facade stronger unique the suffered development complement atmosphere also of collection the renovation challenges. small re-lease tenant reposition more to local, the The includes and Yorktowne best area tenants common will and that and and merchandising visibility regional issues a vacancies which create plan with national strategy a to coupled shopping legacy shop

been mid average of executed construction Express and restaurant commence underway restaurants, at under is shop to sit-down IHOP per Leases process average LOIs with existing and The an anchors, square shops. and casual leases negotiation executed XXXX. have to and entitlement small are small to fast rent Panda late junior $XX.XX compared There square rent foot. the per as foot several in of with $XX concepts, is expected

our tell, towards As value and goal for the revitalized our Cedar of shareholders. creating work you building hard Cedar to platform can growing team continues more neighborhoods

With that, give Phil. I you will

Philip Mays

brief Robin's before add going call few just opening Thanks, the highlights Robin. and to to I'm to a questions. Bruce remarks

results. operating First,

operating to as fourth previous or locations FFO the decreased driven primarily X.X% Fallas quarter quarter. them. The the X.X% late the million, redevelopments by and of two NOI increased per with $X.XX previous Same-property with quarter decrease when period NOI vacating in comparable same-property excluding share was For quarter compared the $XX.X XXXX. including XXXX consistent in the in was

stats. to like some context also our about Would leasing add

we spaces and have a our reported Over drag our percentage of intentionally these caused centers at value-add on This to renovations. past over several vacated our the lease last process few years. facilitate mixed-use redevelopment years,

quarter, we of process planned mass redevelopments value-add this Port Philadelphia and at and Yorktowne. and two reached mixed-use our Riverview our critical with of this South During two Richmond renovations planned

expect the and a basis, lease these near-term and quarterly Accordingly, our majority to percentage of As we we for decommissioned the no demise intend in increase. lease positive the longer have impact on a sequential this them had even accounted related spaces, on temporary them. to

Moving to the balance sheet.

During we Fort located Pennsylvania single-tenant Washington Port sold $X in million. the for Washington, center Center, quarter, a approximately

our is acquired Philadelphia $X South we Philadelphia in Center. adjacent to Gerard approximately for Girard Additionally, million. Plaza

X%. of $X.XX to in are the close redevelopment a the date are And were to we approximately redevelopments, same-property guidance high third quarter remain result to renovations. to time by the along near the which with new of our long new with year by us finally the in unchanged spaces including lease anchor higher per of largely for factors, close end driven growth of to we decommissioning year-end a the facilitate of for trimming value-add rent mixed-use The execution now $X.XX as a these guidance, but Both behind significantly of now existing of anticipated and FFO to to expected with flat except to guidance operating opposed changes various full the our as at expect opposed this be share. range $X.XX assumptions year key half NOI

the open I'll that, with to call questions. And

Operator

is question your [Operator Thomas, Please first question. proceed Instructions] Todd Capital Our with from Markets. KeyBanc

Todd Thomas

Good afternoon.

First just forecast. circle the the to up I to and your just on NOI same-store comment last wanted revision there growth Phil question, guidance

just understand of at little for the lease XXX result It it's realize basis I timing base little Can a that renewal just revision revision bit think like spread. but sounded back I lease a you a to a same-store, that point that but wasn't the a mentioned go small a it was You through positive more. bit? a trying clear?

Philip Mays

Yeah.

of and renovations. things. our was mixed-use at value-add it I amount and stats urban about our property a – redevelopments – two spoke of our that our two decommissioned two fair lease is we of really So, there

are a came so get proactively we back and quicker little to spaces we where happy the somebody didn't This renew and some just some it. and fortuitous needed space

it. to of So a our to little there's in That's need spaces pipeline. in order of vacated just part facilitate ultimately that bit vacating redevelopment be acceleration

start pipeline, longer And a who an have little to anchor, centers we of of our up who's little actually redevelopment significant increase for at paying in done, just next than cash one at the part going renewal rent. to where GAAP, anticipate cash of it aware we so a planned were Remember it's cash we and renewing and actually take is the this increase. our we is get bit these It's is a going of plans renewal do year, on thinking get same-store be that they'll we year. to not

Todd Thomas

it. Okay. today? the that project. Philly acquisition Girard about as de-lease Plaza South as mixed-use And then of the to Or And the continue just the Got so project? talk Girard to part are of that to acquisition Plaza going that in -- Can adjacent that's expecting densification of is context and is you project? operate you it larger the to

Bruce Schanzer

for project. thanks today. Girard question. the South next is to It does leased a Quarter Plaza fully Todd, asset sit the

center. However, continue the plan is a shopping to operate it as to

bullish we expect our occur, improvements on we've As clear, plans. redevelopment made part are execute we neighborhood I that we really Philadelphia of this very as this to will the like think and

very and by we're to the the of just So the just right virtue improvements to now, for value asset making be we're asset of surrounding going own the to happy neighborhood. grow the to

Todd Thomas

Okay. Washington disposition? the to And are you on the Girard share Plaza also and rate in the on Fitness LA cap Fort able

Bruce Schanzer

Sure.

Plaza cap. Girard the that right the net and cap. Washington was LA a cap -- And Fort around the around Fitness the deal at So X.XX% rate lease X% sold was was

Todd Thomas

represents talked the And and Can a that -- end place in pool? about of renewal mentioned Okay. you is leasing just occupancy some described of leasing talk what the in little And you much gains? the since quarter same-store you of leasing new how terms and of go you about Great. the that of has more that that detail in through that Robin volume. lastly, some the taken bit

Robin Zeigler

Sure.

that deals part there a So in anchor about is is there included that I of that our renewals of are and deals, it as about the is And half mixed-use new of new half of mentioned handful pipeline. of are redevelopment deals.

probably not same-store relates calculated that gone expect something XXX same-store, the XXX would I basis points about of I by year our have basis increase it, like it to the as points would that. by So but the to end back we and occupancy

Todd Thomas

Okay. That's Thank helpful. you. All right.

Operator

Raymond Please proceed Our Collin your question is James. from next Mings, with question.

Collin Mings

Thanks. Good afternoon, everyone.

Bruce Schanzer

afternoon. Good

Philip Mays

Hi, Collin.

Collin Mings

was remarks in prepared from now the it on back the to discussed But back the quarter. over XX% going where Bruce you down the recognizing just Just capital with last company constraints buying stock XQ.

any take asset those gap? there? disconnect at to the you valuation the advantage Or little looking more of see you are expand some maybe -- a that stock more Just price potentially regarding just accelerating sales out bit on and prepared remarks

Bruce Schanzer

Happy Sure, Collin. do to that.

why address So of I question. don't two facets your different

in to obviously we first, course are really pursue buyback, constraints strictly to there again about. it is the which something financial a of share buyback share as terms practical continue continuing our two And of think makes just that sense undertaking. So to only

credit One of to our of. facility is mindful want corporate that we're sure in make constrained them we

measure, have is the to enterprise given G&A size the our that of amount that and a significant little value back of G&A. that platform, by strain creating as substantial on platform value, have a that now our because the size we ability of stock, to a the of smaller are a we contract and a then our requires harder fact a which bit of And second enterprise we spend we fact amount a that is platform create the and the recognition buying potentially

its lower very on face than investment rate rates at the on pace, entire assets company is are compelling which obviously selling its is cap although, cap So the implied trading opportunity. at that a

enterprise our sort of doing value our continue we within -- right our jumping the to that that facility. facet mindfulness just constraints study, practical your G&A some that's within how relates are one around so are there again, our our in not that, to governors the just and question. your to credit And And answer both of first

In like of look, alternatives. share the terms think capital about second we thinking things allocation about our and facet our price

an year asset engaged has in actively buying Girard what we to we've a for example for Plaza that asset over it an bought is and contract asset, point was well been two the under for an been be great years. a sold So happens and well over

decided that's that's But price. about we that share reason where much ultimately we hard And transaction on of given the fact close a the to pretty why example thought long it, an our and

This capital not decision. might optimal allocation be an

again, share our with our allocation decisions. And force various all across more is, price our so where it it does clearly. more think much And spend of us capital about capital much to analytically

Collin Mings

couple we some then, Again G&A the And are the you with And discussion up picking that on front, ago, making of the as on platform. on associated the year the personnel helpful point the That's as a discussed that. there. G&A Okay. of investments you maybe importance made front. of far quarters this

redevelopments. But as just will move from -- additional kind path need again, -- the talk about do as about investments start of redevelopments do you continuing these the you see thinking XXXX, in where scale to we down with some to think you ability Maybe are? to given about if G&A of here the

Or we of this off grow you've just you investments to made to point will? being the kind able this if kind think should again of of continue about that to

Bruce Schanzer

there pieces major certainly that So, as, we I our on tell the incremental to into G&A. have plans. will place margin look will we deeper dive you probably in these the redevelopments be redevelopment execute

tell understand that Construction us and just and of Robin what to them. our then, this between you But Head who's I will Sommer, underneath is joined team is Development they have that and and also something Michael as the

XX company to as of the team put would is we projects be CEO proud to our together things times this of incredibly that's off that show a exciting, a been able types really this. like the have that a will that to jewel to develop have expertise be assets one shop The crown in size

a to. as kind at and creation hand the forward that shareholder that just And look value contemplate, of we

So to of our a certainly, achieve leverage we're both that lot off able of G&A. there'll be and financially operationally

So is ability in And really second a team lot spend. value while are be there the plans. of long to in the place. might execute And create a really terms our Certainly, some have big pieces for to on that time. we its none incremental of

Collin Mings

you. Thank Okay.

Operator

remarks. at turn Bruce Instructions] There questions like time. further to, no closing Schanzer are would to And back I for [Operator the call this over

Bruce Schanzer

joining conclude the you just thanking for and would all I balance you summer. an by this of enjoyable all, us wishing evening,

Operator

today's This conference. concludes

disconnect at you time. You lines participation. your Thank may your this for