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Section 1: 10-Q (10-Q)

cdr-10q_20190630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 001-31817

 

CEDAR REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)

 

Maryland

42-1241468

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

44 South Bayles Avenue, Port Washington, New York 11050-3765

(Address of principal executive offices)     (Zip Code)

(516) 767-6492

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Name of each exchange on which registered

Trading Symbol(s)

Common Stock, $0.06 par value

New York Stock Exchange

CDR

7-1/4% Series B Cumulative Redeemable Preferred Stock, $25.00 Liquidation Value

New York Stock Exchange

CDRpB

6-1/2% Series C Cumulative Redeemable Preferred Stock, $25.00 Liquidation Value

New York Stock Exchange

CDRpC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

At July 31, 2019, there were 89,022,042 shares of Common Stock, $0.06 par value, outstanding.

 

 

1


CEDAR REALTY TRUST, INC.

INDEX

 

Forward-Looking Statements

3

 

 

Part I. Financial Information

 

 

 

 

 

Item 1.

 

Financial Statements (unaudited)

 

 

 

 

 

 

 

Consolidated Balance Sheets – June 30, 2019 and December 31, 2018

4

 

 

 

 

 

 

Consolidated Statements of Operations– Three and six months ended June 30, 2019 and 2018

5

 

 

 

 

 

 

Consolidated Statements of Comprehensive (Loss) Income – Three and six months ended June 30, 2019 and 2018

 

6

 

 

 

 

 

 

Consolidated Statements of Equity– Six months ended June 30, 2019 and 2018

7-10

 

 

 

 

 

 

Consolidated Statements of Cash Flows– Six months ended June 30, 2019 and 2018

11

 

 

 

 

 

 

Notes to Consolidated Financial Statements – June 30, 2019

12-21

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition And Results of Operations

22-29

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

29

 

 

 

 

Item 4.

 

Controls and Procedures

29

 

 

Part II. Other Information

 

 

 

 

 

Item 1.

 

Legal Proceedings

30

 

 

 

 

Item 1A.

 

Risk Factors

30

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

30

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

30

 

 

 

 

Item 4.

 

Mine Safety Disclosures

30

 

 

 

 

Item 5.

 

Other Information

30

 

 

 

 

Item 6.

 

Exhibits

30

 

 

 

 

Signatures

31

 

 

 

2


 

 

Forward-Looking Statements

Certain statements made in this Form 10-Q or incorporated by reference herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “may”, “will”, “should”, “estimates”, “projects”, “anticipates”, “believes”, “expects”, “intends”, “future”, and words of similar import, or the negative thereof. Factors which could cause actual results to differ materially from current expectations include, but are not limited to:  adverse general economic conditions in the United States and uncertainty in the credit and retail markets; financing risks, such as the inability to obtain new financing or refinancing on favorable terms as the result of market volatility or instability; risks related to the market for retail space generally, including reductions in consumer spending, variability in retailer demand for leased space, tenant bankruptcies, adverse impact of internet sales demand, ongoing consolidation in the retail sector and changes in economic conditions and consumer confidence; risks endemic to real estate and the real estate industry generally; the impact of the Company’s level of indebtedness on operating performance; inability of tenants to meet their rent and other lease obligations; adverse impact of new technology and e-commerce developments on the Company’s tenants; competitive risk; risks related to the geographic concentration of the Company’s properties in the Washington, D.C. to Boston corridor; the effects of natural and other disasters; the inability of the Company to realize anticipated returns from its redevelopment activities; and the risk factors discussed under Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Except for ongoing obligations to disclose material information as required by the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. All of the above factors are difficult to predict, contain uncertainties that may materially affect the Company’s actual results and may be beyond the Company’s control.  New factors emerge from time to time, and it is not possible for the Company’s management to predict all such factors or to assess the effects of each factor on the Company’s business. Accordingly, there can be no assurance that the Company’s current expectations will be realized.

 

 

3


CEDAR REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

Land

 

$

296,554,000

 

 

$

295,734,000

 

Buildings and improvements

 

 

1,222,918,000

 

 

 

1,212,948,000

 

 

 

 

1,519,472,000

 

 

 

1,508,682,000

 

Less accumulated depreciation

 

 

(375,708,000

)

 

 

(361,969,000

)

Real estate, net

 

 

1,143,764,000

 

 

 

1,146,713,000

 

 

 

 

 

 

 

 

 

 

Real estate held for sale

 

 

7,244,000

 

 

 

11,592,000

 

Cash and cash equivalents

 

 

2,081,000

 

 

 

1,977,000

 

Receivables

 

 

21,535,000

 

 

 

21,977,000

 

Other assets and deferred charges, net

 

 

41,705,000

 

 

 

40,642,000

 

TOTAL ASSETS

 

$

1,216,329,000

 

 

$

1,222,901,000

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Mortgage loan payable

 

$

46,848,000

 

 

$

47,315,000

 

Capital lease obligation

 

 

5,375,000

 

 

 

5,387,000

 

Unsecured revolving credit facility

 

 

99,000,000

 

 

 

100,000,000

 

Unsecured term loans

 

 

472,486,000

 

 

 

472,132,000

 

Accounts payable and accrued liabilities

 

 

47,031,000

 

 

 

26,142,000

 

Unamortized intangible lease liabilities

 

 

12,182,000

 

 

 

13,209,000

 

Total liabilities

 

 

682,922,000

 

 

 

664,185,000

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Cedar Realty Trust, Inc. shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

159,541,000

 

 

 

159,541,000

 

Common stock  ($.06 par value, 150,000,000 shares authorized, 89,025,000 and 90,436,000 shares, issued and outstanding, respectively)

 

 

5,341,000

 

 

 

5,426,000

 

Treasury stock  (3,085,000 and 2,971,000 shares, respectively, at cost)

 

 

(16,470,000

)

 

 

(16,572,000

)

Additional paid-in capital

 

 

870,582,000

 

 

 

875,565,000

 

Cumulative distributions in excess of net income

 

 

(482,258,000

)

 

 

(475,726,000

)

Accumulated other comprehensive (loss) income

 

 

(6,761,000

)

 

 

7,191,000

 

Total Cedar Realty Trust, Inc. shareholders' equity

 

 

529,975,000

 

 

 

555,425,000

 

Noncontrolling interests:

 

 

 

 

 

 

 

 

Minority interests in consolidated joint ventures

 

 

137,000

 

 

 

(112,000

)

Limited partners'  OP Units

 

 

3,295,000

 

 

 

3,403,000

 

Total noncontrolling interests

 

 

3,432,000

 

 

 

3,291,000

 

Total equity

 

 

533,407,000

 

 

 

558,716,000

 

TOTAL LIABILITIES AND EQUITY

 

$

1,216,329,000

 

 

$

1,222,901,000

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements

 

4


CEDAR REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenues

 

$

35,309,000

 

 

$

37,218,000

 

 

$

71,901,000

 

 

$

74,665,000

 

Other

 

 

351,000

 

 

 

4,132,000

 

 

 

642,000

 

 

 

4,253,000

 

Total revenues

 

 

35,660,000

 

 

 

41,350,000

 

 

 

72,543,000

 

 

 

78,918,000

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating, maintenance and management

 

 

6,162,000

 

 

 

5,994,000

 

 

 

14,129,000

 

 

 

13,788,000

 

Real estate and other property-related taxes

 

 

5,087,000

 

 

 

5,056,000

 

 

 

10,297,000

 

 

 

10,135,000

 

General and administrative

 

 

5,418,000

 

 

 

4,276,000

 

 

 

10,216,000

 

 

 

8,770,000

 

Depreciation and amortization

 

 

10,346,000

 

 

 

10,541,000

 

 

 

20,475,000

 

 

 

20,595,000

 

Total expenses

 

 

27,013,000

 

 

 

25,867,000

 

 

 

55,117,000

 

 

 

53,288,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sales

 

 

2,841,000

 

 

 

-

 

 

 

2,942,000

 

 

 

-

 

Impairment charges

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(21,396,000

)

Total other

 

 

2,841,000

 

 

 

-

 

 

 

2,942,000

 

 

 

(21,396,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

11,488,000

 

 

 

15,483,000

 

 

 

20,368,000

 

 

 

4,234,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-OPERATING INCOME AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(5,944,000

)

 

 

(5,546,000

)

 

 

(11,835,000

)

 

 

(10,917,000

)

Total non-operating income and expenses

 

 

(5,944,000

)

 

 

(5,546,000

)

 

 

(11,835,000

)

 

 

(10,917,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

 

5,544,000

 

 

 

9,937,000

 

 

 

8,533,000

 

 

 

(6,683,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (income) loss attributable to noncontrolling interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interests in consolidated joint ventures

 

 

(144,000

)

 

 

(133,000

)

 

 

(249,000

)

 

 

(268,000

)

Limited partners' interest in Operating Partnership

 

 

(17,000

)

 

 

(27,000

)

 

 

(19,000

)

 

 

60,000

 

Total net (income) attributable to noncontrolling interests

 

 

(161,000

)

 

 

(160,000

)

 

 

(268,000

)

 

 

(208,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO CEDAR REALTY TRUST, INC.

 

 

5,383,000

 

 

 

9,777,000

 

 

 

8,265,000

 

 

 

(6,891,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

 

(2,688,000

)

 

 

(2,688,000

)

 

 

(5,376,000

)

 

 

(5,487,000

)

Preferred stock redemption costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,507,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

 

$

2,695,000

 

 

$

7,089,000

 

 

$

2,889,000

 

 

$

(15,885,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.03

 

 

$

0.08

 

 

$

0.03

 

 

$

(0.19

)

Diluted

 

$

0.03

 

 

$

0.08

 

 

$

0.03

 

 

$

(0.19

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

86,260,000

 

 

 

88,011,000

 

 

 

86,420,000

 

 

 

87,817,000

 

Diluted

 

 

86,260,000

 

 

 

88,166,000

 

 

 

86,420,000

 

 

 

87,817,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements

 

5


CEDAR REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited)

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

5,544,000

 

 

$

9,937,000

 

 

$

8,533,000

 

 

$

(6,683,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income - unrealized (loss) gain on change in fair value of cash flow hedges

 

 

(8,596,000

)

 

 

1,937,000

 

 

 

(14,038,000

)

 

 

7,827,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income

 

 

(3,052,000

)

 

 

11,874,000

 

 

 

(5,505,000

)

 

 

1,144,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (income) attributable to noncontrolling interests

 

 

(108,000

)

 

 

(167,000

)

 

 

(182,000

)

 

 

(237,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income attributable to Cedar Realty Trust, Inc.

 

$

(3,160,000

)

 

$

11,707,000

 

 

$

(5,687,000

)

 

$

907,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements

 

 

6


 

CEDAR REALTY TRUST, INC.

Consolidated Statement of Equity

Six months ended June 30, 2019

(unaudited)

 

 

 

Cedar Realty Trust, Inc. Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury

 

 

Additional

 

 

distributions

 

 

other

 

 

 

 

 

 

 

Preferred stock

 

 

Common stock

 

 

stock,

 

 

paid-in

 

 

in excess of

 

 

comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

at cost

 

 

capital

 

 

net income

 

 

income

 

 

Total

 

Balance, December 31, 2018

 

 

6,450,000

 

 

$

159,541,000

 

 

 

90,436,000

 

 

$

5,426,000

 

 

$

(16,572,000

)

 

$

875,565,000

 

 

$

(475,726,000

)

 

$

7,191,000

 

 

$

555,425,000

 

Prior period adjustment - adoption of lease accounting standard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(515,000

)

 

 

 

 

 

(515,000

)

Balance, December 31, 2018, restated

 

 

6,450,000

 

 

 

159,541,000

 

 

 

90,436,000

 

 

 

5,426,000

 

 

 

(16,572,000

)

 

 

875,565,000

 

 

 

(476,241,000

)

 

 

7,191,000

 

 

 

554,910,000

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,882,000

 

 

 

 

 

 

2,882,000

 

Unrealized (loss) on change in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,409,000

)

 

 

(5,409,000

)

Share-based compensation, net

 

 

 

 

 

 

 

 

650,000

 

 

 

39,000

 

 

 

22,000

 

 

 

692,000

 

 

 

 

 

 

 

 

 

753,000

 

Common stock sales, net of issuance expenses

 

 

 

 

 

 

 

 

1,000

 

 

 

 

 

 

 

 

 

5,000

 

 

 

 

 

 

 

 

 

5,000

 

Common stock repurchases

 

 

 

 

 

 

 

 

(2,050,000

)

 

 

(123,000

)

 

 

 

 

 

(6,721,000

)

 

 

 

 

 

 

 

 

(6,844,000

)

Preferred stock dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,688,000

)

 

 

 

 

 

(2,688,000

)

Distributions to common shareholders/noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,455,000

)

 

 

 

 

 

(4,455,000

)

Reallocation adjustment of limited partners' interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,000

)

 

 

 

 

 

 

 

 

(12,000

)

Balance, March 31, 2019

 

 

6,450,000

 

 

$

159,541,000

 

 

 

89,037,000

 

 

$

5,342,000

 

 

$

(16,550,000

)

 

$

869,529,000

 

 

$

(480,502,000

)

 

$

1,782,000

 

 

$

539,142,000

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,383,000

 

 

 

 

 

 

5,383,000

 

Unrealized (loss) on change in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,543,000

)

 

 

(8,543,000

)

Share-based compensation, net

 

 

 

 

 

 

 

 

(13,000

)

 

 

(1,000

)

 

 

80,000

 

 

 

1,053,000

 

 

 

 

 

 

 

 

 

1,132,000

 

Common stock sales, net of issuance expenses

 

 

 

 

 

 

 

 

1,000

 

 

 

 

 

 

 

 

 

3,000

 

 

 

 

 

 

 

 

 

3,000

 

Common stock repurchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,688,000

)

 

 

 

 

 

(2,688,000

)

Distributions to common shareholders/noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,451,000

)

 

 

 

 

 

(4,451,000

)

Reallocation adjustment of limited partners' interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,000

)

 

 

 

 

 

 

 

 

(3,000

)

Balance, June 30, 2019

 

 

6,450,000

 

 

$

159,541,000

 

 

 

89,025,000

 

 

$

5,341,000

 

 

$

(16,470,000

)

 

$

870,582,000

 

 

$

(482,258,000

)

 

$

(6,761,000

)

 

$

529,975,000

 

7


 

CEDAR REALTY TRUST, INC.

Consolidated Statement of Equity

Six months ended June 30, 2019

Continued

(unaudited)

 

 

 

Noncontrolling Interests

 

 

 

 

 

 

 

Minority

 

 

Limited

 

 

 

 

 

 

 

 

 

 

 

interest in

 

 

partners'

 

 

 

 

 

 

 

 

 

 

 

consolidated

 

 

interest in

 

 

 

 

 

 

 

 

 

 

 

joint

 

 

Operating

 

 

 

 

 

 

Total

 

 

 

ventures

 

 

Partnership

 

 

Total

 

 

Equity

 

Balance, December 31, 2018

 

$

(112,000

)

 

$

3,403,000

 

 

$

3,291,000

 

 

$

558,716,000

 

Prior period adjustment - adoption of lease accounting standard

 

 

 

 

 

 

 

 

 

 

 

(515,000

)

Balance, December 31, 2018, restated

 

 

(112,000

)

 

 

3,403,000

 

 

 

3,291,000

 

 

 

558,201,000

 

Net income

 

 

105,000

 

 

 

2,000

 

 

 

107,000

 

 

 

2,989,000

 

Unrealized (loss) on change in fair value of cash flow hedges

 

 

 

 

 

(33,000

)

 

 

(33,000

)

 

 

(5,442,000

)

Share-based compensation, net