CEDAR SHOPPING CENTERS, INC.
44 SOUTH BAYLES AVENUE
PORT WASHINGTON, NEW YORK 11050
CONTACT: LEO S. ULLMAN
PRESIDENT
(516) 767-6492
FOR IMMEDIATE RELEASE:
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CEDAR SHOPPING CENTERS, INC. - ANNOUNCES THIRD QUARTER RESULTS
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Port Washington, New York - November 15, 2004 - Cedar Shopping Centers, Inc.,
(NYSE: "CDR") (the "Company"), today reported net income for the quarter ended
September 30, 2004 of $1,208,000, or $0.07 per share, compared to a net loss of
$(228,000), or $(0.96) per share, for the same period last year. Net income for
the nine months ended September 30, 2004 was $4,454,000, or $0.27 per share,
compared to a net loss of $(467,000), or $ (1.78) per share for the same period
last year. The increases in net income and other results for 2004 over the 2003
amounts reflect, among other things, the Company's October 2003 common share
offering and related transactions, acquisitions completed through September 30,
2004, and the preferred share offering completed in July 2004. The Company had
outstanding 16,910,000 shares of common stock and Operating Partnership Units at
September 30, 2004 as compared to 806,000 shares and OP Units at September 30,
2003. Per share figures for the 2003 periods have been retroactively adjusted to
reflect the stock dividend and the subsequent reverse stock split effectuated in
2003.
Highlights
- ----------
o Funds from operations ("FFO") for the third quarter of 2004 increased to
$3,691,000 ($0.22 per share/unit), from a loss of ($194,000) ($0.24 per
share/unit) for the corresponding quarter of 2003. FFO for the nine months
ended September 30, 2004 increased to $11,313,000 ($0.67 per share/unit)
from a loss of ($11,000) or ($0.01 per share/unit) for the corresponding
period of 2003.
o Total revenues for the third quarter of 2004 at $12,464,000 was nearly
double the $6,671,000 in revenues for the third quarter of 2003. Revenues
for the nine months ended September 30, 2004 at $36,406,000 was more than
double the $18,094,000 in total revenues for the corresponding period of
2003.
o Net cash flows provided by operating activities increased to $11,136,000
for the nine months ended September 30, 2004 compared with $1,104,000 for
the corresponding period of 2003.
o The Company is presently involved in seven redevelopment projects and has
purchased a tract of land for a ground-up development of a Giant
supermarket-anchored center in Hanover Township, near Hershey,
Pennsylvania. These projects, the largest of which is the redevelopment of
the +/-500,000 sq. ft. Camp Hill Mall in Camp Hill, Pennsylvania, are
expected to come "on stream" and contribute meaningfully to FFO in 2005 and
thereafter.
o Occupancy for the portfolio as of September 30, 2004, including the various
redevelopment properties, was approximately 85%; excluding the
redevelopment properties, the occupancy level was approximately 95%.
o The Company has approximately 287,000 sq. ft. of signed new leases for
tenants who are not yet in occupancy at properties owned at September 30,
2004, representing approximately $4.2 million in annualized base rents
commencing at various dates throughout the next two years.
o The Company is currently paying dividends at the annual rate of $0.90 per
share of common stock which amounts are expected to be fully covered by
FFO.
o The Company's total assets as of September 30, 2004 were $423 million
compared to $350 million as of December 31, 2003. Fixed-rate mortgages as
of September 30, 2004 were $124.8 million, variable-rate mortgages,
including draw downs under the Company's secured credit facility of $29.0
million, were $52.7 million, and total debt was $177.5 million, or 42.0% of
the Company's assets. The Company's pro-rata share of total debt was 32.1%
of its total market capitalization.
o The Company has issued "Supplemental Financial Information" for the
period ended September 30, 2004, and has filed such information today as an
exhibit to its Form 8-K, which will also be available on the Company's
website at http://www.cedarshoppingcenters.com.
Preferred Stock Issue and Amended Line of Credit Facility
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On July 28, 2004, the Company completed a public offering of 2,350,000 shares of
$25 Series A Cumulative Redeemable Preferred Stock, at a dividend rate of
8-7/8%, resulting in gross proceeds of $58,750,000. The shares have no stated
maturity and are redeemable, at the Company's option, after July 28, 2009. The
net proceeds to the Company, after underwriting fees and offering costs, were
approximately $56.7 million, substantially all of which were used to reduce the
Company's secured revolving credit facility.
On November 2, 2004, the Company concluded certain amendments to its secured
revolving credit facility in the original amount of $100 million. The amendments
included (1) a reduction in the interest rate margin to a range of 150 to 205
basis points above LIBOR from a range of 225 to 275 basis points above LIBOR,
depending on the Company's leverage ratio, (2) a reduction in the unused line
fee from 0.25% per annum to either 0.15% or 0.20% per annum, (3) an increase,
subject to certain conditions, of the maximum amount of the line to $200
million, and (4) certain revisions to other financial covenants under the line.
Acquisitions Subsequent to September 30, 2004
- ---------------------------------------------
On October 14, 2004, the Company acquired approximately 16 acres of land in
Hanover Township, near Hershey, Pennsylvania, for the development of a +/-95,000
sq. ft. shopping center to be anchored by a 65,300 sq. ft. Giant Foods
supermarket. The total development cost for the project, including the purchase
price of approximately $1.9 million for the land, is estimated at $10 million,
with completion scheduled in the third quarter of 2005.
On November 1, 2004, the Company acquired Franklin Village Plaza in Franklin,
Massachusetts, a community shopping center containing approximately 253,000 sq.
ft. of gross leasable area, with an adjacent office building of approximately
36,000 sq. ft. Tenants include a 55,000 sq. ft. Stop & Shop, Marshalls, Radio
Shack, Payless, Bath & Body Works and Applebees. Construction has commenced on
an expansion of the Stop & Shop store, which will increase its size to 75,000
sq. ft. The purchase price for the property was approximately $72.5 million,
including closing costs. The acquisition was funded by a $43.5 million,
seven-year, 4.81% interest-only first mortgage, with the balance provided from
the Company's revolving credit facility.
Portfolio
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The Company, as of this date, has a portfolio of 29 shopping center properties,
mostly supermarket-anchored community centers, located in five states, with
approximately 4.5 million square feet of GLA. The Company expects to conclude
additional acquisitions during the balance of the year.
Overview by Management
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Leo Ullman, CEO, in a statement said "We are pleased to report on our continued
progress. We believe that our acquisition, development and redevelopment
programs remain strong and we fully expect that these programs will add
meaningfully to shareholder values commencing toward the end of this year and
continuing for the next couple of years. During the past quarter, our Company
has also implemented a new reporting and property accounting system as well as
an internal control monitoring system which we believe will be very effective in
helping us meet Sarbanes-Oxley requirements."
Tom O'Keeffe, CFO, noted "Our offering of preferred stock this past quarter and
the subsequent renegotiation of our credit facility will permit us to continue
to execute our business plan. We also expect to meet our guidance for the year,
although, we will come in at the low end of the range. This is the result of
temporarily using the proceeds from the Preferred Stock Offering to pay down the
lower cost revolving credit facility."
New Leases
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Annual base rents, excluding tenant reimbursements, for leases that have been
signed and for which the tenants have not yet occupied their premises at
properties owned at September 30, 2004, presently amount to approximately $4.2
million. Rent payments, from these leases, are expected to commence on the
following schedule:
ANNUALIZED
QUARTER ENDING BASE RENT
--------------------- ----------
December 31, 2004 $ 928,000
March 31, 2005 85,000
June 30, 2005 984,000
September 30, 2005 2,160,000
June 30, 2006 65,000
----------
$4,222,000
==========
After giving effect to such new leases, the occupancy rate for the portfolio of
properties held as of September 30, 2004 would have increased from 85% to
approximately 93%.
The Company has in hand, executed leases for approximately 407,000 square feet
at the +/-500,000 sq. ft., +/- $52 million (including acquisition cost) Camp
Hill Mall redevelopment project. New tenancies will include Giant Foods' larger,
new prototype store (91,000 sq. ft., plus mezzanine), Orthopedic Institute (a
40,000 sq. ft. new building), Staples (20,000 sq. ft.), Pier 1 (12,000 sq. ft.),
and a Hallmark card sytore (4,600 sq. ft.). Letters of intent have been signed
for an additional 60,000 square feet. The redevelopment is expected to be
completed in 2006.
Guidance
- --------
The Company expects FFO for 2004 to be at the low end of the
previously-announced range of $0.90-$1.00 per share, and expects FFO for 2005 to
be in the range of $1.10-$1.20 per share. FFO for 2004 is expected to be
impacted by the temporary use of the proceeds from the preferred stock offering
to pay down the lower-cost secured revolving credit facility. These forward
looking projections are of course subject to uncertainties with respect to
acquisitions, development and redevelopment activities, leasing activities, and
short-term interest rates. The Company also expects to continue to pay quarterly
dividends on its common stock at the rate of $0.225 per share ($0.90 per share
on an annualized basis) for the remainder of 2004 and 2005.
Interested parties are urged to review the Form 10-Q filed with the Securities
and Exchange Commission for the quarter ended September 30, 2004 for further
details.
Investor Conference Call
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The Company will host a conference call on Tuesday, November 16, 2004, at 11:00
AM (EDT) to discuss third quarter results. The U.S. dial-in number to call for
this teleconference is (800) 299-9630. The international dial-in number is (617)
786-2904; all callers should use participant passcode 45881723. A replay of the
conference call will be available from November 16 at 1:00 PM through November
22 at 5:00 PM by using U.S. dial-in number (888) 286-8010 and entering the
passcode 75662559 (international callers may use dial-in number (617) 801-6888
and use the same passcode indicated for U.S. callers).
About Cedar Shopping Centers, Inc.
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Cedar Shopping Centers, Inc., with headquarters in Port Washington, New York, is
a fully-integrated, self-administered and self-managed real estate investment
trust ("REIT") listed on the New York Stock Exchange. Its investments, which
total approximately 4.5 million sq. ft. of GLA, are focused primarily in
multi-tenant supermarket-anchored shopping centers in eastern Pennsylvania (24),
Massachusetts (1), southern New Jersey (2), Maryland (1), and Connecticut (1).
Forward-Looking Statements
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Certain statements contained in this press release constitute forward-looking
statements within the meaning of the securities laws. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general and specific economic and business
conditions, which may, among other things, affect demand for rental space, the
availability and creditworthiness of prospective tenants, lease rents and the
availability of financing; adverse changes in the Company's real estate markets,
including, among other things, competition with other companies; risks of real
estate development and acquisition; risks of adverse operating results and
creditworthiness of current tenants; governmental actions and initiatives; and
environmental/safety requirements. Such forward-looking statements speak only as
of the date hereof. The Company does not intend, and disclaims any duty or
obligation, to update or revise any forward-looking statements set forth in this
release to reflect any change in expectations, change in information, new
information, future events or circumstances on which such information was based.
Non-GAAP Financial Measures - FFO
- ---------------------------------
The Company considers FFO to be a relevant and meaningful supplemental measure
of the performance of the Company because it is predicated on a cash flow
analysis, contrasted with net income, a measure predicated on generally accepted
accounting principals ("GAAP"), which gives effect to non-cash items such as
depreciation and amortization. The Company computes FFO in accordance with the
"White Paper" on FFO published by the National Association of Real Estate
Investment Trusts ("NAREIT"), as income before allocation to minority interests
(computed in accordance with GAAP), excluding gains or losses from debt
restructurings and sales of property, plus depreciation and amortization, and
after preferred stock distribution requirements and adjustments for
partially-owned partnerships and joint ventures. In computing FFO, the Company
does not add back to net income the amortization of costs incurred in connection
with its financing activities or depreciation of non-real estate assets, but
would add back to net income those items that are defined as "extraordinary"
under GAAP. FFO does not represent cash generated from operating activities in
accordance with GAAP and should not be considered as an alternative to cash flow
as a measure of liquidity. Since the NAREIT White Paper only provides guidelines
for computing FFO, the computation of FFO may vary from one company to another.
FFO is not necessarily indicative of cash available to fund ongoing cash needs.
The following table sets forth the Company's calculations of FFO:
Three months ended Sept 30, Nine months ended Sept 30,
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2004 2003 2004 2003
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Net income (loss) $ 1,208,000 $ (228,000) $ 4,454,000 $ (467,000)
Add (deduct):
Depreciation and amortization 2,671,000 914,000 7,369,000 2,434,000
Limited partners' interest 58,000 (490,000) 147,000 (939,000)
Limited partners' share of preferred distribution
requirements (25,000) (43,000) (25,000) (91,000)
Minority interests 274,000 367,000 858,000 790,000
Minority interests' share of FFO (495,000) (714,000) (1,490,000) (1,738,000)
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Funds from operations $ 3,691,000 $ (194,000) $11,313,000 $ (11,000)
==============================================================
FFO per common share/unit outstanding $ 0.22 $ (0.24) $ 0.67 $ (0.01)
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Average common shares/units outstanding (1) 16,910,000 806,000 16,905,000 831,000
==============================================================
(1) Assumes conversion of OP Units
CEDAR SHOPPING CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30,
2004 DECEMBER 31,
(UNAUDITED) 2003
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Assets
Real estate:
Land $ 75,272,000 $ 61,774,000
Buildings and improvements 329,369,000 269,031,000
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404,641,000 330,805,000
Less accumulated depreciation (13,060,000) (6,274,000)
------------ ------------
Real estate, net 391,581,000 324,531,000
Cash and cash equivalents 7,093,000 6,154,000
Cash at joint ventures and restricted cash 6,243,000 6,208,000
Rents and other receivables, net 3,762,000 3,269,000
Other assets 5,639,000 3,000,000
Deferred charges, net 8,599,000 6,485,000
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Total assets $422,917,000 $349,647,000
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Liabilities and shareholders' equity
Mortgage loans payable $148,602,000 $144,983,000
Secured revolving credit facility 28,950,000 17,000,000
Accounts payable, accrued expenses, and other 6,843,000 5,616,000
Deferred liabilities 19,857,000 14,430,000
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Total liabilities 204,252,000 182,029,000
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Minority interests 12,201,000 12,435,000
Limited partners' interest in consolidated Operating Partnership 4,095,000 4,035,000
Shareholders' equity:
Preferred stock ($.01 par value, $25.00 per share
liquidation value, 5,000,000 shares authorized, 2,350,000
shares issued and outstanding) 58,750,000 -
Common stock ($.06 par value, 50,000,000 shares
authorized, 16,456,000 shares issued and outstanding) 987,000 987,000
Treasury stock (319,000 shares, at cost) (3,669,000) (3,669,000)
Accumulated other comprehensive income 127,000 47,000
Additional paid-in capital 146,174,000 153,783,000
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Total shareholders' equity 202,369,000 151,148,000
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Total liabilities and shareholders' equity $422,917,000 $349,647,000
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CEDAR SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
2004 2003 2004 2003
----------- ---------- ----------- -----------
Revenues:
Rents $10,087,000 $5,199,000 $28,835,000 $14,122,000
Expense recoveries 2,253,000 1,452,000 7,188,000 3,912,000
Interest and other 124,000 20,000 383,000 60,000
----------- ---------- ----------- -----------
Total revenues 12,464,000 6,671,000 36,406,000 18,094,000
Expenses:
Operating, maintenance and management 2,349,000 1,594,000 7,746,000 4,784,000
Real estate and other property-related taxes 1,363,000 662,000 3,707,000 1,895,000
General and administrative 706,000 355,000 2,333,000 1,542,000
Depreciation and amortization 3,158,000 1,150,000 8,714,000 2,917,000
Interest 2,462,000 3,243,000 7,561,000 7,533,000
----------- ---------- ----------- -----------
Total expenses 10,038,000 7,004,000 30,061,000 18,671,000
Income (loss) before the following: 2,426,000 (333,000) 6,345,000 (577,000)
Minority interests (274,000) (367,000) (858,000) (790,000)
Limited partners' interest (58,000) 490,000 (147,000) 939,000
Preferred distribution requirements (net of
limited partners' share of $25,000,
$43,000, $25,000 and $91,000,
respectively) (886,000) (18,000) (886,000) (39,000)
----------- ---------- ----------- -----------
Net income (loss) $ 1,208,000 $ (228,000) $ 4,454,000 $ (467,000)
=========== ========== =========== ===========
Net income (loss) per share $ 0.07 $ (0.96) $ 0.27 $ (1.78)
=========== ========== =========== ===========
Dividends to common shareholders $ 3,703,000 $ - $10,038,000 $ -
=========== ========== =========== ===========
Dividends to common shareholders per share $ 0.225 $ - $ 0.610 $ -
=========== ========== =========== ===========
Average number of common shares outstanding 16,456,000 238,000 16,456,000 263,000
=========== ========== =========== ===========
CEDAR SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2004 2003
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Cash flow from operating activities:
Net income (loss) $ 4,454,000 $ (467,000)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Non-cash provisions:
Minority interests 385,000 234,000
Straight-line rents (905,000) (520,000)
Limited partners' interest 147,000 (939,000)
Depreciation and amortization 8,714,000 2,917,000
Amortization of intangible lease liabilities (1,555,000) (590,000)
Limited partners' share of preferred distribution requirements (25,000) -
Other (141,000) -
Changes in operating assets and liabilities:
Decrease (increase) in joint venture cash 74,000 (101,000)
Decrease in rents and other receivables 412,000 98,000
(Increase) in other assets (1,651,000) (1,267,000)
Increase in accounts payable and accrued expenses 1,227,000 1,739,000
------------ ------------
Net cash provided by operating activities 11,136,000 1,104,000
------------ ------------
Cash flow from investing activities:
Expenditures for real estate and improvements (59,128,000) (60,721,000)
(Increase) decrease in construction/improvement escrows (109,000) 400,000
------------ ------------
Net cash (used in) investing activities (59,237,000) (60,321,000)
------------ ------------
Cash flow from financing activities:
Proceeds from mortgage financings 723,000 46,927,000
Mortgage repayments (7,097,000) (1,053,000)
Line of credit and other interim financings, net 11,950,000 6,091,000
Net proceeds from preferred stock offering 56,725,000 -
Contributions from minority interest partners - 9,665,000
Distributions to minority interest partners (619,000) (548,000)
Distributions to common shareholders (10,038,000) -
Distributions to limited partners (275,000) -
Preferred distributions - (130,000)
Deferred financing, leasing and other costs, net (2,329,000) (2,822,000)
------------ ------------
Net cash provided by financing activities 49,040,000 58,130,000
------------ ------------
Net increase (decrease) in cash and cash equivalents 939,000 (1,087,000)
Cash and cash equivalents at beginning of period 6,154,000 3,827,000
------------ ------------
Cash and cash equivalents at end of period $ 7,093,000 $ 2,740,000
============ ============
Supplemental disclosure of cash activities:
Interest paid $ 8,536,000 $ 6,119,000
============ ============
Supplemental disclosure of non-cash financing activities:
Assumption of mortgage loan payable $ 9,993,000 $ -
============ ============