Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-K

 

x

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

For the fiscal year ended December 31, 2011

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 Number)

 

44 South Bayles Avenue, Port Washington, NY   11050-3765
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (516) 767-6492

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

 

Title of each class

 

Name of each exchange on which registered

Common Stock, $0.06 par value

8-7/8% Series A Cumulative Redeemable

  New York Stock Exchange
Preferred Stock, $25.00 Liquidation Value   New York Stock Exchange

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

None

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

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

 

Large accelerated filer

 

¨

  

Accelerated filer

 

x

Non-accelerated filer

 

¨  (Do not check if a smaller reporting company)

  

Smaller reporting company

 

¨

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

Based on the closing sales price on June 30, 2011 of $5.15 per share, the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $345,676,000.

The number of shares outstanding of the registrant’s Common Stock $.06 par value was 69,315,860 on February 29, 2012.

 

 

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the registrant’s definitive proxy statement relating to its 2012 annual meeting of shareholders are incorporated herein by reference.

 

 

 


Table of Contents

CEDAR REALTY TRUST, INC.

TABLE OF CONTENTS

 

September 30, September 30,

Item No.

     

        Page No.        

 
PART I   

1and 2.

  Business and Properties     3   

1A.

  Risk Factors     16   

1B.

  Unresolved Staff Comments     25   

3.

  Legal Proceedings     25   

4.

  Mine Safety Disclosures     25   
PART II   

5.

  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities     28   

6.

  Selected Financial Data     31   

7.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations     33   

7A.

  Quantitative and Qualitative Disclosures about Market Risk     50   

8.

  Financial Statements and Supplementary Data     51   

9.

  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure     103   

9A.

  Controls and Procedures, including Management Report on Internal Control Over Financial Reporting     103   

9B.

  Other Information     105   
PART III   

10.

  Directors, Executive Officers and Corporate Governance     105   

11.

  Executive Compensation     105   

12.

  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters     105   

13.

  Certain Relationships and Related Transactions, and Director Independence     105   

14.

  Principal Accountant Fees and Services     105   
PART IV   

15

  Exhibits and Financial Statement Schedules     106   

 

2


Table of Contents

Part I.

 

Items 1 and  2. Business and Properties

General

Cedar Realty Trust, Inc. (the “Company”), organized in 1984, is a fully-integrated real estate investment trust which focuses primarily on ownership and operation of supermarket-anchored shopping centers straddling the Washington DC to Boston corridor. At December 31, 2011, the Company owned and managed a portfolio of 70 operating properties (excluding properties “held for sale/conveyance”) totaling approximately 9.6 million square feet of gross leasable area (“GLA”). In addition, the Company has an ownership interest in 22 operating properties, with approximately 3.7 million square feet of GLA, through its Cedar/RioCan joint venture in which the Company has a 20% interest. The entire managed portfolio, including the Cedar/RioCan properties, was approximately 93.1% leased at December 31, 2011.

During 2011, in keeping with its stated goal of reducing overall leverage to an appropriate level by selling non-core and limited growth potential assets, the Company determined (1) to completely exit the Ohio market, principally the Discount Drug Mart portfolio of drugstore/convenience centers, and concentrate on the mid-Atlantic and Northeast coastal regions (10 properties sold in 2011 and four properties “held for sale” as of December 31, 2011), (2) to concentrate on grocery-anchored strip centers, by disposing of its mall and single-tenant/triple-net-lease properties (three properties sold in 2011 and 11 properties “held for sale” as of December 31, 2011), and (3) to focus on improving operations and performance at the Company’s remaining properties, and to reduce development activities, by disposing of certain development projects, land acquired for development, and other non-core assets (four properties sold in 2011 and five properties “held for sale/conveyance” as of December 31, 2011). In addition, discontinued operations reflect the anticipated consummation of the Homburg joint venture buy/sell transactions (seven properties “held for sale” as of December 31, 2011).

The Company has elected to be taxed as a real estate investment trust (“REIT”) under applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a REIT under those provisions, the Company must have a preponderant percentage of its assets invested in, and income derived from, real estate and related sources. The Company’s objectives are to provide to its shareholders a professionally-managed real estate portfolio consisting primarily of supermarket-anchored shopping centers straddling the Washington DC to Boston corridor, which will provide substantial cash flow, currently and in the future, taking into account an acceptable modest risk profile, and which will present opportunities for additional growth in income and capital appreciation.

The Company, organized as a Maryland corporation, has established an umbrella partnership structure through the contribution of substantially all of its assets to Cedar Realty Trust Partnership L.P. (the “Operating Partnership”), organized as a limited partnership under the laws of Delaware. The Company conducts substantially all of its business through the Operating Partnership. At December 31, 2011, the Company owned 98.0% of the Operating Partnership and is its sole general partner. The approximately 1.4 million limited Operating Partnership Units (“OP Units”) are economically equivalent to the Company’s common stock and are convertible into the Company’s common stock at the option of the holders on a one-to-one basis.

 

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The Company derives substantially all of its revenues from rents and operating expense reimbursements received pursuant to long-term 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 supermarket-anchored community 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.

The Company, the Operating Partnership, their subsidiaries and affiliated partnerships are separate legal entities. For ease of reference, the terms “we”, “our”, “us”, “Company” and “Operating Partnership” (including their respective subsidiaries and affiliates) refer to the business and properties of all these entities, unless the context otherwise requires. The Company’s executive offices are located at 44 South Bayles Avenue, Port Washington, New York 11050-3765 (telephone 516-767-6492). The Company also maintains property management, construction management and/or leasing offices at several of its shopping-center properties. The Company’s website can be accessed at www.cedarrealtytrust.com, where a copy of the Company’s Forms 10-K, 10-Q, 8-K and other filings with the Securities and Exchange Commission (“SEC”) can be obtained free of charge. These SEC filings are added to the website as soon as reasonably practicable. The Company’s Code of Ethics, corporate governance guidelines and committee charters are also available on the website.

The Company’s Properties

Consolidated Portfolio

The following tables summarize information relating to the Company’s consolidated portfolio as of December 31, 2011:

 

September 30, September 30, September 30,
       Number of                 Percentage  

State

     properties        GLA        of GLA  

Pennsylvania

       34           5,309,000           55.3

Connecticut

       6           1,054,000           11.0

Massachusetts

       7           1,005,000           10.5

Maryland

       7           836,000           8.7

Virginia

       11           816,000           8.5

New Jersey

       3           373,000           3.9

New York

       2           200,000           2.1
    

 

 

      

 

 

      

 

 

 

Total consolidated portfolio

       70           9,593,000           100.0
    

 

 

      

 

 

      

 

 

 

 

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September 30, September 30, September 30, September 30, September 30, September 30,
       Number                                Annualized        Percentage  

Tenant

     of
stores
       GLA        % of GLA     Annualized
base rent
       base rent
per sq. ft.
       annualized
base rents
 

Top twenty tenants (a):

                          

Giant Foods

       16           981,000           10.2   $ 14,144,000         $ 14.42           13.9

LA Fitness

       6           251,000           2.6     4,028,000           16.05           4.0

Farm Fresh

       6           364,000           3.8     3,909,000           10.74           3.9

Shaw’s

       3           180,000           1.9     2,323,000           12.91           2.3

Food Lion

       7           243,000           2.5     1,925,000           7.92           1.9

Dollar Tree

       19           194,000           2.0     1,908,000           9.84           1.9

Stop & Shop

       3           196,000           2.0     1,802,000           9.19           1.8

Shop Rite

       2           118,000           1.2     1,695,000           18.80           1.7

Staples

       5           104,000           1.1     1,682,000           16.17           1.7

Redner’s

       4           202,000           2.1     1,514,000           7.50           1.5

United Artists

       1           78,000           0.8     1,456,000           18.67           1.4

Shoppers Food Warehouse

       2           120,000           1.3     1,237,000           10.31           1.2

Ukrop’s

       1           63,000           0.7     1,098,000           17.43           1.1

Carmike Cinema

       1           45,000           0.5     1,034,000           22.98           1.0

Rite Aid

       7           83,000           0.9     995,000           11.99           1.0

Giant Eagle

       1           84,000           0.9     922,000           10.98           0.9

Marshalls

       4           114,000           1.2     819,000           7.18           0.8

Dick’s Sporting Goods

       1           56,000           0.6     812,000           14.50           0.8

Home Depot

       1           103,000           1.1     773,000           7.50           0.8

Acme Markets

       3           172,000           1.8     756,000           4.40           0.7
    

 

 

      

 

 

      

 

 

   

 

 

      

 

 

      

 

 

 

Sub-total top twenty tenants

       93           3,751,000           39.1     44,832,000           11.95           44.2

Remaining tenants

       779           5,039,000           52.5     56,604,000           11.23           55.8
    

 

 

      

 

 

      

 

 

   

 

 

      

 

 

      

 

 

 

Sub-total all tenants (b)

       872           8,790,000           91.6   $ 101,436,000         $ 11.54           100.0
                

 

 

      

 

 

      

 

 

 

Vacant space

       N/A           803,000           8.4            
    

 

 

      

 

 

      

 

 

             

Total

       872           9,593,000           100.0            
    

 

 

      

 

 

      

 

 

             

 

(a)

Several of the tenants listed above share common ownership with other tenants including, without limitation, (1) Giant Foods, Stop & Shop, and Martins at Glen Allen (GLA of 63,000; annualized base rent of $418,000), (2) Farm Fresh, Shaw’s , Shop ‘n Save (GLA of 53,000; annualized base rent of $532,000) , Shoppers Food Warehouse, and Acme Markets.

 

(b)

Comprised of large tenants (greater than 15,000 sq. ft.) and small tenants as follows:

 

September 30, September 30, September 30, September 30, September 30,
                               Annualized        Percentage  
                      Annualized        base rent        annualized  
       GLA        % of GLA     base rent        per sq. ft.        base rents  

Large tenants

       6,224,000           70.8   $ 61,853,000         $ 9.94           61.0

Small tenants

       2,566,000           29.2     39,583,000           15.43           39.0
    

 

 

      

 

 

   

 

 

      

 

 

      

 

 

 

Total

       8,790,000           100.0   $ 101,436,000         $ 11.54           100.0
    

 

 

      

 

 

   

 

 

      

 

 

      

 

 

 

 

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September 30, September 30, September 30, September 30, September 30, September 30,

Year of lease

expiration

     Number
of leases
expiring
       GLA
expiring
       Percentage
of GLA
expiring
    Annualized
expiring

base rents
       Annualized
expiring  base

rents per sq. ft.
       Percentage
of  annualized
expiring

base rents
 

Month-To-Month

       18           47,000           0.5   $ 562,000         $ 11.96           0.6

2012

       107           377,000           4.3     4,364,000           11.58           4.3

2013

       119           520,000           5.9     6,985,000           13.43           6.9

2014

       132           1,185,000           13.5     10,642,000           8.98           10.5

2015

       135           1,267,000           14.4     13,465,000           10.63           13.3

2016

       117           1,025,000           11.7     11,112,000           10.84           11.0

2017

       67           815,000           9.3     9,712,000           11.92           9.6

2018

       36           480,000           5.5     6,478,000           13.50           6.4

2019

       25           330,000           3.8     3,745,000           11.35           3.7

2020

       32           884,000           10.1     8,123,000           9.19           8.0

2021

       29           404,000           4.6     5,698,000           14.10           5.6

2022

       6           40,000           0.5     540,000           13.50           0.5

Thereafter

       49           1,416,000           16.1     20,010,000           14.13           19.7
    

 

 

      

 

 

      

 

 

   

 

 

      

 

 

      

 

 

 

All tenants

       872           8,790,000           100.0   $ 101,436,000         $ 11.54           100.0
         

 

 

        

 

 

      

 

 

      

 

 

 

Vacant space

       N/A           803,000           N/A               
    

 

 

      

 

 

      

 

 

             

Total

       872           9,593,000           N/A               
    

 

 

      

 

 

      

 

 

             

 

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Table of Contents

 

Property description

     Percent
owned
    Year
acquired
       GLA        %
occupied
    Average
base rent per
leased sq. ft.
      

Major tenants (a)

Connecticut (6 properties)

                       

Groton Shopping Center

       100     2007           117,986           90.8   $ 10.96         TJ Maxx

Jordan Lane

       100     2005           181,730           97.7     10.87        

Stop & Shop

CW Price

Retro Fitness

New London Mall

       40     2009           259,293           96.9     13.98        

Shoprite

Marshalls

Homegoods

Petsmart

AC Moore

Oakland Commons

       100     2007           89,850           100.0     11.02        

Shaw’s

Bristol Ten Pin

Southington Shopping Center

       100     2003           155,842           98.7     6.72        

Wal-Mart

NAMCO

The Brickyard

       100     2004           249,553           59.7     8.39        

Home Depot

Syms

           

 

 

             

Total Connecticut

              1,054,254           88.1     10.65        
           

 

 

             

Maryland (7 properties)

                       

Kenley Village

       100     2005           51,894           76.6     9.00         Food Lion

Metro Square

       100     2008           71,896           100.0     18.68         Shoppers Food Warehouse

Oakland Mills

       100     2005           58,224           100.0     13.30         Food Lion

San Souci Plaza

       40     2009           264,134           86.9     10.21        

Shoppers Food Warehouse

Marshalls

Maximum Health and Fitness

St. James Square

       100     2005           39,903           100.0     11.38         Food Lion

Valley Plaza

       100     2003           190,939           97.2     4.75        

K-Mart

Ollie’s Bargain Outlet

Tractor Supply

Yorktowne Plaza

       100     2007           158,982           96.8     13.85         Food Lion
           

 

 

             

Total Maryland

              835,972           93.2     10.64        
           

 

 

             

 

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Property description

     Percent
owned
    Year
acquired
       GLA        %
occupied
    Average
base rent per
leased sq. ft.
    

Major tenants (a)

Massachusetts (7 properties)

                     

Fieldstone Marketplace

       20     2005           193,970           95.8     11.09      

Shaw’s

Flagship Cinema

New Bedford Wine and Spirits

Kings Plaza

       100     2007           168,243           95.2     6.22      

Work Out World

CW Price

Ocean State Job Lot

Savers

Norwood Shopping Center

       100     2006           102,459           98.2     7.71      

Hannaford Brothers

Rocky’s Ace Hardware

Dollar Tree

Price Chopper Plaza

       100     2007           101,824           91.1     10.87       Price Chopper

The Shops at Suffolk Downs

       100     2005           121,251           86.8     12.64       Stop & Shop

Timpany Plaza

       100     2007           183,775           91.8     6.60      

Stop & Shop

Big Lots

Gardner Theater

West Bridgewater Plaza

       100     2007           133,039           96.9     8.55      

Shaw’s

Big Lots

Planet Fitness

           

 

 

           

Total Massachusetts

              1,004,561           93.8     8.90      
           

 

 

           

New Jersey (3 properties)

                     

Carll’s Corner

       100     2007           129,582           88.5     8.92      

Acme Markets

Peebles

Pine Grove Plaza

       100     2003           86,089           94.4     10.44       Peebles

Washington Center Shoppes

       100     2001           157,394           95.6     8.86      

Acme Markets

Planet Fitness

           

 

 

           

Total New Jersey

              373,065           92.9     9.25      
           

 

 

           

New York (2 properties)

                     

Carman’s Plaza

       100     2007           194,806           91.1     17.12      

Pathmark

Extreme Fitness

Home Goods Department of Motor Vehicle

Kingston Plaza

       100     2006           5,324           100.0     26.67       Taco Bell
           

 

 

           

Total New York

              200,130           91.4     17.40      
           

 

 

           

 

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Table of Contents

 

Property description

     Percent
owned
    Year
acquired
       GLA        %
occupied
    Average
base rent per
leased sq. ft.
   

Major tenants (a)

Pennsylvania (34 properties)

                    

Academy Plaza

       100     2001           151,977           81.3     13.20     

Acme Markets

Camp Hill

       100     2002           472,717           98.8     13.44     

Boscov’s

Giant Foods

LA Fitness

Orthopedic Inst of PA

Barnes & Noble

Staples

Carbondale Plaza

       100     2004           121,135           91.8     6.97     

Weis Markets

Peebles

Circle Plaza

       100     2007           92,171           100.0     2.74      K-Mart

Colonial Commons

       100     2011           474,765           84.1     12.60     

Giant Foods

Dick’s Sporting Goods

L.A. Fitness

Ross Dress For Less

Marshalls

JoAnn Fabrics

David’s Furniture

Office Max

Crossroads II

       60 % (b)      2008           133,188           91.4     19.51      Giant Foods

East Chestnut

       100     2005           21,180           100.0     15.42      Rite Aid

Fairview Commons

       100     2007           59,578           68.9     6.87      Giant Foods

Fairview Plaza

       100     2003           69,579           100.0     12.31      Giant Foods

Fort Washington

       100     2002           41,000           100.0     19.90      LA Fitness

Gold Star Plaza

       100     2006           71,720           82.2     8.91      Redner’s

Golden Triangle

       100     2003           202,943           97.4     12.30     

LA Fitness

Marshalls

Staples

Just Cabinets

Aldi

Halifax Plaza

       100     2003           51,510           100.0     11.77      Giant Foods

Hamburg Commons

       100     2004           99,580           97.3     6.59     

Redner’s

Peebles

Huntingdon Plaza

       100     2004           142,845           68.1     5.49     

Sears

Peebles

Lake Raystown Plaza

       100     2004           140,159           95.6     12.51     

Giant Foods

Tractor Supply

Liberty Marketplace

       100     2005           68,200           91.2     17.45      Giant Foods

Meadows Marketplace

       20     2004           91,518           100.0     15.28      Giant Foods

Mechanicsburg Giant

       100     2005           51,500           100.0     21.78      Giant Foods

 

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Property description

     Percent
owned
    Year
acquired
       GLA        %
occupied
    Average
base rent per
leased sq. ft.
   

Major tenants (a)

Pennsylvania (continued)

                    

Newport Plaza

       100     2003           64,489           100.0     11.51      Giant Foods

Northside Commons

       100     2008           64,710           96.1     9.88      Redner’s Market

Palmyra Shopping Center

       100     2005           110,970           89.3     5.60     

Weis Markets

Rite Aid

Port Richmond Village

       100     2001           154,908           96.1     12.33     

Thriftway

Pep Boys

City Stores, Inc.

River View Plaza I, II and III

       100     2003           244,034           83.1     18.44     

United Artists

Avalon Carpet

Pep Boys

Staples

South Philadelphia

       100     2003           283,415           82.3     14.02     

Shop Rite

Ross Dress For Less

Bally’s Total Fitness

Modell’s

Swede Square

       100     2003           100,816           95.0     15.51      LA Fitness

The Commons

       100     2004           203,426           87.5     9.84     

Bon-Ton

Shop’n Save

TJ Maxx

The Point

       100     2000           268,037           99.0     12.30     

Burlington Coat Factory

Giant Foods

AC Moore

Staples

Townfair Center

       100     2004           218,662           99.1     8.56     

Lowe’s Home Centers

Giant Eagle

Michael’s Store

Trexler Mall

       100     2005           339,363           98.5     8.67     

Kohl’s

Bon-Ton

Giant Foods

Lehigh Wellness Partners

Trexlertown Fitness Club

Trexlertown Plaza

       100     2006           316,143           78.1     13.18     

Giant Foods

Redner’s

Big Lots

Tractor Supply

Sears

Upland Square

       60 % (b)      2007           382,578           93.6     16.55     

Giant Foods

Carmike Cinema

LA Fitness

Best Buy

TJ Maxx

Bed, Bath & Beyond

A.C. Moore

Staples

           

 

 

          

Total Pennsylvania

              5,308,816           91.1     12.37     
           

 

 

          

 

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Property description

  Percent
owned
    Year
acquired
    GLA     %
occupied
    Average
base rent per
leased sq. ft.
   

Major tenants (a)

Virginia (11 properties)

           

Annie Land Plaza

    100     2006        42,500        97.18     9.30      Food Lion

Coliseum Marketplace

    100     2005        103,069        80.74     15.59      Farm Fresh

Elmhurst Square

    100     2006        66,250        89.10     9.26      Food Lion

General Booth Plaza

    100     2005        73,320        95.09     12.53      Farm Fresh

Kempsville Crossing

    100     2005        94,477        98.68     11.13      Farm Fresh

Martin’s at Glen Allen

    100     2005        63,328        100.00     6.61      Martin’s

Oak Ridge Shopping Center

    100     2006        38,700        100.00     10.62      Food Lion

Smithfield Plaza

    100     2005/2008        134,664        95.32     9.25     

Farm Fresh

Maxway Peebles

Suffolk Plaza

    100     2005        67,216        100.00     9.40      Farm Fresh

Ukrop’s at Fredericksburg

    100     2005        63,000        100.00     17.42      Ukrop’s Supermarket

Virginia Little Creek

    100     2005        69,620        100.00     11.12      Farm Fresh
     

 

 

       

Total Virginia

        816,144        95.2     11.15     
     

 

 

       

Total Consolidated Portfolio (70 Properties)

      9,592,942        91.6   $ 11.54     
     

 

 

   

 

 

   

 

 

   

 

(a)

Major tenants are determined as tenants with 15,000 or more sq. ft. of GLA, tenants at single-tenant properties, or the largest tenant at a property.

The terms of the Company’s retail leases generally vary from tenancies at will to 25 years, excluding renewal options. Anchor tenant leases are typically for 10 to 25 years, with one or more renewal options available to the lessee upon expiration of the initial lease term. By contrast, smaller store leases are typically negotiated for five-year terms. The longer terms of major tenant leases serve to protect the Company against significant vacancies and to assure the presence of strong tenants which draw consumers to its centers. The shorter terms of smaller store leases allow the Company under appropriate circumstances to adjust rental rates periodically for non-major store space and, where possible, to upgrade or adjust the overall tenant mix.

Most leases contain provisions requiring tenants to pay their pro rata share of real estate taxes, insurance and certain operating costs. Some leases also provide that tenants pay percentage rent based upon sales volume generally in excess of certain negotiated minimums.

Giant Food Stores, LLC (“Giant Foods”), which is owned by Ahold N.V., a Netherlands corporation, leased approximately 10%, 8% and 8% of the Company’s GLA at December 31, 2011, 2010 and 2009, respectively, and accounted for approximately 13%, 11% and 10% of the Company’s total revenues during 2011, 2010 and 2009, respectively. Giant Foods, in combination with Stop & Shop, Inc., which is also owned by Ahold N.V., accounted for approximately 16%, 13% and 14% of the Company’s total revenues during 2011, 2010 and 2009, respectively. No other tenant leased more than 10% of GLA at December 31, 2011, 2010 or 2009, or contributed more than 10% of total revenues during 2011, 2010 or 2009.

 

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Table of Contents

Cedar/RioCan Joint Venture Portfolio

The following tables summarize information relating to the Cedar/RioCan joint venture portfolio as of December 31, 2011:

 

September 30, September 30, September 30,
       Number of                 Percentage  

State

     properties        GLA        of GLA  

Pennsylvania

       12           2,142,000           57.8

Massachusetts

       3           641,000           17.3

New Jersey

       2           409,000           11.1

Virginia

       2           276,000           7.4

Connecticut

       2           172,000           4.6

Maryland

       1           68,000           1.8
    

 

 

      

 

 

      

 

 

 

Total Cedar/RioCan joint venture portfolio

       22           3,708,000           100.0
    

 

 

      

 

 

      

 

 

 

 

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September 30, September 30, September 30, September 30, September 30,
       Percent                    Average         
       owned              %     base rent per         

Property description

     by Cedar     GLA        occupied     leased sq. ft.        Major tenants (a)

Connecticut (2 properties)

                  

Montville Commons

       20     117,916           97.5   $ 15.00         Stop & Shop

Stop & Shop Plaza

       20     54,510           100.0     16.69         Stop & Shop
      

 

 

             

Total Connecticut

         172,426           98.3     15.54        
      

 

 

             

Maryland (1 property)

                  

Marlboro Crossroads

       20     67,975           100.0     15.07         Giant Foods
      

 

 

             

Massachusetts (3 properties)

                  

Franklin Village Plaza

       20     304,347           93.2     19.72         Stop & Shop
                   Marshalls
                   Team Fitness

Northwoods Crossing

       20     159,562           100.0     11.70         BJ’s Wholesale Club
                   Tractor Supply

Raynham Commons

       20     176,609           97.7     11.57         Shaw’s
                   Marshall’s
                   JoAnn Fabrics
      

 

 

             

Total Massachusetts

         640,518           96.2     15.36        
      

 

 

             

New Jersey (2 properties)

                  

Cross Keys Place

       20     148,173           100.0     16.21         Sports Authority
                   Bed Bath & Beyond
                   AC Moore
                   Old Navy
                   Petco

Sunrise Plaza

       20     261,060           97.1     7.63         Home Depot
                   Kohl’s Department Store
                   Staples
      

 

 

             

Total New Jersey

         409,233           98.2     10.79        
      

 

 

             

Pennsylvania (12 properties)

                  

Blue Mountain Commons

       20     123,353           92.6     25.50         Giant Foods

Columbus Crossing

       20     142,166           100.0     17.21         Super Fresh
                   Old Navy
                   AC Moore

Creekview Plaza

       20     136,423           100.0     15.36         Giant Foods
                   L.A. Fitness
                   Bed Bath & Beyond

 

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September 30, September 30, September 30, September 30, September 30,
       Percent                    Average         
       owned              %     base rent per         

Property description

     by Cedar     GLA        occupied     leased sq. ft.        Major tenants (a)

Pennsylvania (continued)

                  

Exeter Commons

       20     361,321           97.9     12.84         Lowe’s
                   Giant Foods
                   Staples

Gettysburg Marketplace

       20     82,784           93.9     20.23         Giant Foods

Loyal Plaza

       20     293,825           98.3     8.06         K-Mart
                   Giant Foods
                   Staples

Monroe Marketplace

       20     340,930           96.2     10.52         Giant Food
                   Kohl’s Department Store
                   Dick’s Sporting Goods
                   Best Buy
                   Bed Bath & Beyond
                   Michael’s
                   Pet Smart

Northland Center

       20     108,260           97.6     9.83         Giant Foods

Pitney Road Plaza

       20     45,915           100.0     19.75         Best Buy

Sunset Crossing

       20     74,142           88.7     14.52         Giant Foods

Town Square Plaza

       20     127,678           100.0     13.01         Giant Foods
                   A.C. Moore
                   Pet Smart

York Marketplace

       20     305,410           96.1     8.53         Lowe’s
                   Giant Foods
                   Office Max
                   Super Shoes
      

 

 

             

Total Pennsylvania

         2,142,207           97.1     12.70        
      

 

 

             

Virginia (2 properties)

                  

New River Valley

       20     164,663           96.1     13.78         Best Buy
                   Ross Stores
                   Bed Bath & Beyond
                   Staples
                   Petsmart
                   Old Navy

Towne Crossing

       20     111,016           90.6     15.29         Bed Bath & Beyond
                   Michael’s
      

 

 

             

Total Virginia

         275,679           93.9     14.37        
      

 

 

             

Total Cedar/RioCan Joint Venture (22 properties)

         3,708,038           96.9   $ 13.24        
      

 

 

             

 

(a)

Major tenants are determined as tenants with 15,000 or more sq.ft of GLA.

 

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Table of Contents

Executive Offices

The Company’s executive offices are located at 44 South Bayles Avenue, Port Washington, New York, in which it presently occupies approximately 14,700 square feet leased from a partnership owned 44.9% by the Company’s former Chairman. The Company believes that the terms of its lease, which expires in February 2020, are at market.

Competition

The Company believes that competition for the acquisition and operation of retail shopping and convenience centers is highly fragmented. It faces competition from institutional investors, public and private REITs, owner-operators engaged in the acquisition, ownership and leasing of shopping centers, as well as from numerous local, regional and national real estate developers and owners in each of its markets. It also faces competition in leasing available space at its properties to prospective tenants. Competition for tenants varies depending upon the characteristics of each local market in which the Company owns and manages properties. The Company believes that the principal competitive factors in attracting tenants in its market areas are location, price and other lease terms, the presence of anchor tenants, the mix, quality and sales results of other tenants, and maintenance, appearance, access and traffic patterns of its properties.

Environmental Matters

Under various federal, state, and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or other contaminants at property owned, leased, managed or otherwise operated by such person, and may be held liable to a governmental entity or to third parties for property damage, and for investigation and cleanup costs in connection with such contamination. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such conditions, may adversely affect the owner’s, lessor’s or operator’s ability to sell or rent such property or to arrange financing using such property as collateral. In connection with the ownership, operation and management of real estate, the Company may potentially become liable for removal or remediation costs, as well as certain other related costs and liabilities, including governmental fines and injuries to persons and/or property.

The Company believes that environmental studies conducted at the time of acquisition with respect to all of its properties have not revealed environmental liabilities that would have a material adverse effect on its business, results of operations or liquidity. However, no assurances can be given that existing environmental studies with respect to any of the properties reveal all environmental liabilities, that any prior owner of or tenant at a property did not create a material environmental condition not known to the Company, or that a material environmental condition does not otherwise exist at any one or more of its properties. If a material environmental condition does in fact exist, it could have an adverse impact upon the Company’s financial condition, results of operations and liquidity.

 

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Table of Contents

Employees

As of December 31, 2011, the Company had 115 employees (109 full-time and 6 part-time). The Company believes that its relations with its employees are good.

 

Item 1A. Risk Factors

Although improving somewhat in recent months, economic conditions in the U.S. economy in general, and specifically uncertainty in the credit markets and retail environment, could adversely affect our ability to continue to pay dividends or cause us to reduce further the amount of our dividends.

As a result of the then state of the U.S. economy, constrained capital markets and the difficult retail environment, on April 2, 2009 our Board of Directors suspended the payment of dividends. The Board reinstituted dividends at the annual rate of $.36 per share as of January 20, 2010. Subsequently, the Board determined to reduce the quarterly dividend for 2012 to a target annual rate of $.20 per share. However, there can be no assurance that as a result of economic conditions the Company will not be forced, once again, to suspend or reduce the payment of dividends.

Any volatility and instability in the credit markets could adversely affect our ability to obtain new financing or to refinance existing indebtedness.

Any continued uncertainty in the credit markets may negatively impact our ability to access debt financing, to arrange property-specific financing or to refinance our existing debt as it matures on favorable terms or at all. As a result, we may be forced to seek potentially less attractive financings, including equity investments on terms that may not be favorable to us. In doing so, the Company may be compelled to dilute the interests of existing shareholders that could also adversely reduce the trading price of our common stock.

Our properties consist primarily of supermarket-anchored community shopping centers. Our performance therefore is linked to economic conditions in the market for retail space generally.

Our properties consist primarily of supermarket-anchored community shopping centers, and our performance therefore is linked to economic conditions in the market for retail space generally. This also means that we are subject to the risks that affect the retail environment generally, including the levels of consumer spending, the willingness of retailers to lease space in our shopping centers, tenant bankruptcies, changes in economic conditions and consumer confidence. A downturn in the U.S. economy and reduced consumer spending could impact our tenants’ ability to meet their lease obligations due to poor operating results, lack of liquidity or other reasons, and therefore decrease the revenue generated by our properties and/or the value of our properties. Our ability to lease space and negotiate and maintain favorable rents could also be negatively impacted by the state of the U.S. economy. Moreover, the demand for leasing space in our shopping centers could also significantly decline during a significant downturn in the U.S. economy that could result in a decline in our occupancy percentage and reduction in rental revenues. The U.S. economy has experienced, and is expected to continue to experience, substantial unemployment at rates which approach their highest levels in the country’s history. Such levels of reported unemployment may in fact mask more serious

 

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Table of Contents

unemployment issues, such as persons who have not sought to re-enter the labor force after having been unemployed for substantial periods of time and, further, may not fairly reflect persons who are under-employed or temporarily employed. Sustained levels of high unemployment can be expected to have a serious negative impact on consumer spending in affected areas. While unemployment levels may vary considerably in different areas of the country, and within the markets in which we presently operate, any sustained unemployment may have a continuing negative impact on sales by our tenants at our various shopping centers.

There has been ongoing pressure on prices of petroleum products resulting from actual or potential dislocations in the world’s supply caused by political turmoil in countries which are major sources or distribution links for such products. This has tended to adversely impact the pricing of gasoline, among other products, in this country, which may cause shoppers to restrict their trips by automobile to shopping centers, reduce their purchases of gasoline and other products from the fuel service stations affiliated with the supermarkets at several of our properties, as well as reduce their levels of discretionary spending, all of which, in turn, could adversely affect sales at our properties.

Our performance and value are subject to risks associated with real estate assets and with the real estate industry.

Our performance and value are subject to risks associated with real estate assets and with the real estate industry, including, among other things, risks related to adverse changes in national, regional and local economic and market conditions. Our continued ability to make expected distributions to our shareholders depends on our ability to generate sufficient revenues to meet operating expenses, future debt service and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties. These events and conditions include, but may not be limited to, the following:

 

  1.

local oversupply, increased competition or declining demand for real estate;

 

  2.

local economic conditions, which may be adversely impacted by plant closings, business layoffs, industry slow-downs, weather conditions, natural disasters and other factors;

 

  3.

non-payment or deferred payment of rent or other charges by tenants, either as a result of tenant-specific financial ills, or general economic events or circumstances adversely affecting consumer disposable income or credit;

 

  4.

vacancies or an inability to rent space on acceptable terms;

 

  5.

increased operating costs, including real estate taxes, insurance premiums, utilities, and repairs and maintenance;

 

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Table of Contents
  6.

volatility and/or increases in interest rates, or the non-availability of funds in the credit markets in general;

 

  7.

increased costs of complying with current, new or expanded governmental regulations;

 

  8.

the relative illiquidity of real estate investments;

 

  9.

changing market demographics;

 

  10.

changing traffic patterns;

 

  11.

an inability to arrange property-specific replacement financing for maturing mortgage loans in acceptable amounts and/or on acceptable terms.

Our substantial indebtedness and any constraints on credit may impede our operating performance, and put us at a competitive disadvantage.

Our substantial debt may harm our business and operating results by (i) requiring us to use a substantial portion of our available liquidity to pay required debt service and/or repayments or establish additional reserves, which would reduce amounts available for distributions, (ii) placing us at a competitive disadvantage compared to competitors that have less debt or debt at more favorable terms, (iii) making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions, and (iv) limiting our ability to borrow more money for operations or capital expenditures. In addition, increases in interest rates may impede our operating performance and put us at a competitive disadvantage. Further, payments of required debt service or amounts due at maturity, or creation of additional reserves under loan agreements, could adversely affect our liquidity.

If we fail to dispose of properties presently held for sale or reduce our outstanding indebtedness, our financial condition may be adversely affected.

We have announced plans to dispose of certain shopping centers owned by us and to use the proceeds from the dispositions to reduce our outstanding indebtedness. If we fail to dispose of these properties in a timely fashion or if we do not realize the proceeds presently anticipated from such sales, we will not be able to reduce our outstanding debt as presently planned, which may adversely affect our financial condition.

As substantially all of our revenues are derived from rental income, failure of tenants to pay rent or delays in arranging leases and occupancy at our properties could seriously harm our operating results and financial condition.

Substantially all of our revenues are derived from rental income from our properties. Our tenants may experience a downturn in their respective businesses and/or in the economy generally at any time that may weaken their financial condition. As a result, any such tenants may delay lease commencement, fail to make rental payments when due, decline to extend a lease upon its expiration, become insolvent, or declare bankruptcy. Any leasing delays, failure to make rental or other payments when due, or tenant bankruptcies, could result in the termination of tenants’ leases, which would have a negative impact on our operating results. In addition, adverse market and economic conditions and competition may impede our ability to renew leases or re-let space as leases expire, which could harm our business and operating results.

 

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Our business may be seriously harmed if a major tenant fails to renew its lease(s) or vacates one or more properties and prevents us from re-leasing such premises by continuing to pay base rent for the balance of the lease terms. In addition, the loss of such a major tenant could result in lease terminations or reductions in rent by other tenants at the affected properties, as provided in their respective leases.

We may be restricted from re-leasing space based on existing exclusivity lease provisions with some of our tenants. In these cases, the leases contain provisions giving the tenant the exclusive right to sell particular types of merchandise or provide specific types of services within the particular retail center, which limits the ability of other tenants within that center to sell such merchandise or provide such services. When re-leasing space after a vacancy by one of such other tenants, such lease provisions may limit the number and types of prospective tenants for the vacant space. The failure to re-lease space or to re-lease space on satisfactory terms could harm operating results.

Any bankruptcy filings by, or relating to, one of our tenants or a lease guarantor would generally bar efforts by us to collect pre-bankruptcy debts from that tenant, or lease guarantor, unless we receive an order permitting us to do so from the bankruptcy court. A bankruptcy by a tenant or lease guarantor could delay efforts to collect past due balances, and could ultimately preclude full or, in fact, any collection of such sums. If a lease is affirmed by the tenant in bankruptcy, all pre-bankruptcy balances due under the lease must generally be paid in full. However, if a lease is disaffirmed by a tenant in bankruptcy, we would have only an unsecured claim for damages, which would be paid normally only to the extent that funds are available, and only in the same percentage as is paid to all other members of the same class of unsecured creditors. It is possible, and indeed likely, that we would recover substantially less than, or in fact no portion of, the full value of any unsecured claims we hold, which may in turn harm our financial condition.

“New Technology” developments may impact customer traffic at certain tenants’ stores and ultimately sales at such stores.

We may be adversely affected by developments of new technology which may cause the business of certain of our tenants to become substantially diminished or functionally obsolete, with the result that such tenants may be unable to pay rent, become insolvent, file for bankruptcy protection, close their stores, or terminate their leases. Examples of the potentially adverse effects of new technology on retail businesses include, amongst other things, the advent of on-line movie rentals on video stores, the effect of “e-books” and small screen readers on book stores, and increased sales of electronic products “on-line”.

Substantial recent annual increases in on-line sales have also caused many retailers to sell products on line on their websites with pick-ups at a store or warehouse or through deliveries. With special reference to our principal tenants, on-line grocery orders are available and especially useful in urban areas, but have not yet become a major factor affecting supermarkets in our portfolio.

 

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Competition may impede our ability to renew leases or re-let spaces as leases expire, which could harm our business and operating results.

We also face competition from similar retail centers within our respective trade areas that may affect our ability to renew leases or re-let space as leases expire. Certain national retail chain bankruptcies and resulting store closings/lease disaffirmations have generally resulted in increased available retail space which, in turn, has resulted in increased competitive pressure to renew tenant leases upon expiration and to find new tenants for vacant space at such properties. In addition, any new competitive properties that are developed within the trade areas of our existing properties may result in increased competition for customer traffic and creditworthy tenants. Increased competition for tenants may require us to make tenant and/or capital improvements to properties beyond those that we would otherwise have planned to make. Any unbudgeted tenant and/or capital improvements we undertake may reduce cash that would otherwise be available for distributions to shareholders. Ultimately, to the extent we are unable to renew leases or re-let space as leases expire, our business and operations could be negatively impacted.

Our current and future joint venture investments could be adversely affected by the lack of sole decision-making authority, reliance on joint venture partners’ financial condition, and any disputes that may arise between our joint venture partners and us.

We presently own a significant number of our properties in joint venture, and in the future we may continue to co-invest with third parties through joint ventures and/or contribute some of our properties to joint ventures. We are generally not in a position to exercise sole decision-making authority regarding the properties owned through joint ventures. Investments in joint ventures may, under certain circumstances, involve risks not present when a third party is not involved, including the possibility that joint venture partners might file for bankruptcy protection or fail to fund their share of required capital contributions. Joint venture partners may have business interests or goals that are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Such investments also may have the potential risk of impasses on decisions, such as a sale, because neither the joint venture partner nor we would have full control over the joint venture. Any disputes that may arise between joint venture partners and us may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business. Consequently, actions by or disputes with joint venture partners might result in subjecting properties owned by the joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party joint venture partners. Our joint venture partner(s) or we may not be in a position to respond to capital calls, and such calls could thus adversely affect our ownership or profits interest through subordination, dilution or super priorities. Also, the triggering of buy/sell provisions in the respective joint venture agreements could adversely affect our ownership interests.

As indicated, we have entered into joint venture arrangements with respect to a number of our properties. The applicable joint venture agreements generally include so-called “buy/sell” provisions pursuant to which, after a specified period of years, either party may initiate a “buy/sell” arrangement pursuant to which the initiating party can designate a value for the relevant property or properties, and the other party, after a specified notice period, may then elect either to sell its proportionate ownership interest in the joint venture based on that value for the entire property or to purchase the initiating party’s ownership interest based on such valuation for the entire property, subject to certain time limits for closing and other closing conditions where applicable. On February 15, 2011, Homburg Invest Inc., our co-venturer in nine supermarket-anchored shopping centers, initiated a “buy/sell” option under the joint venture agreement. For more information, see Notes 4 and 5 of Notes to Consolidated Financial Statements elsewhere in this report.

 

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The risk to us is that we may not be in a position financially, by virtue of lack of access to funds at an acceptable cost and within prescribed time limits, to purchase the co-venturer’s interest in the event of such “triggering” of the buy/sell provision by the co-venturer. Accordingly, we may be forced to sell our interest in the relevant property or properties on terms and at a time when such sale might not be considered in our best interests. In the event of such sale, we might also lose the benefit of various fees payable to us by the joint venture for property management, leasing and other services, as well as the benefit, where applicable, of a “promote” structure in such joint venture arrangement pursuant to which we could realize an additional share of profits, gains, cash flow, or proceeds of a sale, financing, refinancing or other capital transactions. Among other things, such sale could adversely affect on-going rental revenues, income from joint ventures, market penetration, relationships with tenants, and overall credit metrics.

The financial covenants in our loan agreements may restrict our operating or acquisition activities, which may harm our financial condition and operating results.

The financial covenants in our loan agreements may restrict our operating or acquisition activities, which may harm our financial condition and operating results. The mortgages on our properties contain customary negative covenants, such as those that limit our ability, without the prior consent of the lender, to sell or otherwise transfer any ownership interest, to further mortgage the applicable property, to enter into leases, or to discontinue insurance coverage. Our ability to borrow under our secured revolving credit facilities is subject to compliance with these financial and other covenants, including restrictions on property eligible for collateral, the payment of dividends, and overall restrictions on the amount of indebtedness we can incur. If we breach covenants in our debt agreements, the lenders could declare a default and require us to repay the debt immediately and, if the debt is secured, could take possession of the property or properties securing the loan.

A substantial portion of our properties straddle the Washington DC to Boston corridor, which exposes us to greater economic risks than if our properties were owned in several geographic regions.

Our properties are located largely in the mid-Atlantic and Northeast coastal regions, which exposes us to greater economic risks than if we owned properties in more geographic regions (in particular, 34 of our properties are located in Pennsylvania). Any adverse economic or real estate developments resulting from the regulatory environment, business climate, fiscal problems or weather in such regions could have an adverse impact on our prospects. In addition, the economic condition of each of our markets may be dependent on one or more industries. An economic downturn in one of these industry sectors may result in an increase in tenant vacancies, which may harm our performance in the affected markets. High barriers to entry in the Mid-Atlantic and Northeast due to mature economies, road patterns, density of population, restrictions on development, and high land costs, coupled with large numbers of often overlapping government jurisdictions, may make it difficult for the Company to continue to grow in these areas.

Our success depends on key personnel whose continued service is not guaranteed.

Our success depends on the efforts of key personnel, whose continued service is not guaranteed. Key personnel could be lost because we could not offer, among other things, competitive compensation programs. The loss of services of key personnel could materially and adversely affect our operations because of diminished relationships with lenders, sources of equity capital, construction companies, and existing and prospective tenants, and the ability to conduct our business and operations without material disruption.

 

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Potential losses may not be covered by insurance.

Potential losses may not be covered by insurance. We carry comprehensive liability, fire, flood, extended coverage and rental loss insurance under a blanket policy covering all of our properties. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and industry practice. We do not carry insurance for losses such as from war, nuclear accidents, and nuclear, biological and chemical occurrences from terrorist’s acts. Some of the insurance, such as that covering losses due to floods and earthquakes, is subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses. Additionally, certain tenants have termination rights in respect of certain casualties. If we receive casualty proceeds, we may not be able to reinvest such proceeds profitably or at all, and we may be forced to recognize taxable gain on the affected property. If we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.

Future terrorist attacks could harm the demand for, and the value of, our properties.

Future terrorist attacks, such as the attacks that occurred in New York, Pennsylvania and Washington, DC on September 11, 2001, and other acts of terrorism or war, could harm the demand for, and the value of, our properties. Terrorist attacks could directly impact the value of our properties through damage, destruction, loss or increased security costs, and the availability of insurance for such acts may be limited or may be subject to substantial cost increases. To the extent that our tenants are impacted by future attacks, their ability to continue to honor obligations under their existing leases could be adversely affected.

If we fail to continue as a REIT, our distributions will not be deductible, and our income will be subject to taxation, thereby reducing earnings available for distribution.

If we do not continue to qualify as a REIT, our distributions will not be deductible, and our income will be subject to taxation, reducing earnings available for distribution. We have elected to be taxed as a REIT under the Code. A REIT will generally not be subject to federal income taxation on that portion of its income that qualifies as REIT taxable income, to the extent that it distributes at least 90% of its taxable income to its shareholders and complies with certain other requirements. In addition, if we did not continue to qualify as a REIT, we may also be subject to state and local income taxes in certain of the jurisdictions in which our properties are located.

We intend to make distributions to shareholders to comply with the requirements of the Code. However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets, borrow funds or pay a portion of the dividend in common stock to meet the 90% distribution requirement of the Code. Certain assets generate substantial differences between

 

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taxable income and income recognized in accordance with accounting principles generally accepted in the United States (“GAAP”). Such assets include, without limitation, operating real estate that was acquired through structures that may limit or completely eliminate the depreciation deduction that would otherwise be available for income tax purposes. As a result, the Code requirement to distribute a substantial portion of our otherwise net taxable income in order to maintain REIT status could cause us to (i) distribute amounts that could otherwise be used for future acquisitions, capital expenditures or repayment of debt, (ii) borrow on unfavorable terms, (iii) sell assets on unfavorable terms or (iv) pay a portion of our common dividend in common stock. If we fail to obtain debt or equity capital in the future, it could limit our operations and our ability to grow, which could have a material adverse effect on the value of our common stock.

Dividends payable by REITs do not qualify for the reduced tax rates under tax legislation which reduced the maximum tax rate for dividends payable to individuals from 35% to 15% (through 2012). Although this legislation does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends could cause investors to perceive investments in REITs to be relatively less attractive than investments in the stock of corporations that pay dividends qualifying for reduced rates of tax, which in turn could adversely affect the value of the stock of REITs.

We could incur significant costs related to government regulation and litigation over environmental matters and various other federal, state and local regulatory requirements.

We could incur significant costs related to government regulations and litigation over environmental matters. Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or other contaminants at property owned, leased, managed or otherwise operated by such person, and may be held liable to a governmental entity or to third parties for property damage, and for investigation and cleanup costs in connection with such contamination. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such conditions, may adversely affect the owner’s, lessor’s or operator’s ability to sell or rent such property or to arrange financing using such property as collateral. In connection with the ownership, operation and management of real properties, we are potentially liable for removal or remediation costs, as well as certain other related costs and liabilities, including governmental fines, injuries to persons, and damage to property.

We may incur significant costs complying with the Americans with Disabilities Act of 1990, as amended, and similar laws, which require that all public accommodations meet federal requirements related to access and use by disabled persons, and with various other federal, state and local regulatory requirements, such as state and local fire and life safety requirements.

The Company believes environmental studies conducted at the time of acquisition with respect to all of our properties did not reveal any material environmental liabilities, and we are unaware of any subsequent environmental matters that would have created a material liability. We believe that our properties are currently in material compliance with applicable environmental, as well as non-environmental, statutory and regulatory requirements. If one or more of our properties were not in compliance with such federal, state and local laws, we could be required to incur additional costs to

 

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bring the property into compliance. If we incur substantial costs to comply with such requirements, our business and operations could be adversely affected. If we fail to comply with such requirements, we might incur governmental fines or private damage awards. We cannot presently determine whether existing requirements will change or whether future requirements will require us to make significant unanticipated expenditures that will adversely impact our business and operations.

Our charter and Maryland law contain provisions that may delay, defer or prevent a change of control transaction and depress our stock price.

Our charter and Maryland law contain provisions that may delay, defer or prevent a change of control transaction and depress the price of our common stock. The charter, subject to certain exceptions, authorizes directors to take such actions as are necessary and desirable relating to qualification as a REIT, and to limit any person to beneficial ownership of no more than 9.9% of the outstanding shares of our common stock. Our Board of Directors, in its sole discretion, may exempt a proposed transferee from the ownership limit, but may not grant an exemption from the ownership limit to any proposed transferee whose direct or indirect ownership could jeopardize our status as a REIT. These restrictions on transferability and ownership will not apply if our Board of Directors determines that it is no longer in our best interests to continue to qualify as, or to be, a REIT. This ownership limit may delay or impede a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interests of shareholders. Our Board of Directors has waived the ownership limit to permit each of Inland American Real Estate Trust, Inc. and RioCan Real Estate Investment Trust to acquire up to 14% and 16%, respectively, of our stock; provided, however, that each of them has agreed to various voting restrictions and standstill provisions.

We may authorize and issue stock and OP Units without shareholder approval. Our charter authorizes the Board of Directors to issue additional shares of common or preferred stock, to issue additional OP Units, to classify or reclassify any unissued shares of common or preferred stock, and to set the preferences, rights and other terms of such classified or unclassified shares. In connection with obtaining shareholder approval to increase the number of authorized shares of preferred stock, we have agreed not to use our preferred stock for anti-takeover purposes or in connection with a shareholder rights plan unless we obtain shareholder approval. Certain provisions of the Maryland General Corporation Law (the “MGCL”) may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

 

  1.

“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person or an affiliate thereof who beneficially owns 10% or more of the voting power of our shares) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights and special stockholder voting requirements on these combinations; and

 

  2.

“control share” provisions that provide that our “control shares” (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control

 

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share acquisition” (defined as the direct or indirect acquisition of ownership or control of control shares) have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

We have opted out of these provisions of the MGCL. However, the Board of Directors may, by resolution, elect to opt in to the business combination provisions of the MGCL, and we may, by amendment to our bylaws, opt in to the control share provisions of the MGCL.

 

Item 1B. Unresolved Staff Comments: None

 

Item 3. Legal Proceedings

The Company is not presently involved in any litigation, nor, to its knowledge, is any litigation threatened against the Company or its subsidiaries, which is either not covered by the Company’s liability insurance, or, in management’s opinion, would result in a material adverse effect on the Company’s financial position or results of operations.

 

Item 4. Mine Safety Disclosures: Not applicable

Directors and Executive Officers of the Company

Information regarding the Company’s directors and executive officers is set forth below:

 

Name

  

Age

  

Position

Bruce J. Schanzer

   43    Chief Executive Officer and President, Director

Roger M. Widmann

   72    Chairman of the Board of Directors

James J. Burns

   72    Director

Raghunath Davloor

   50    Director

Pamela N. Hootkin

   64    Director

Paul G. Kirk Jr.

   74    Director

Everett B. Miller III

   66    Director

Philip R. Mays

   44    Chief Financial Officer

Brenda J. Walker

   59    Vice President - Chief Operating Officer

Bruce J. Schanzer joined the Company in June 2011 as President, Chief Executive Officer and as a director. Prior thereto, Mr. Schanzer was employed by Goldman Sachs & Co. since 2007, with his most recent position being a managing director in the real estate investment banking group. From 2001 to 2007, he was employed by Merrill Lynch, with his last position being vice president in their real estate investment banking group. Earlier in his career, Mr. Schanzer practiced real estate law for six years in New York. Mr. Schanzer received a B.A. from Yeshiva University, an M.B.A. from the University of Chicago, and a J.D. from the Benjamin N. Cardozo School of Law, where he was a member of the Law Review.

 

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Roger M. Widmann, a director since October 2003, the non-executive Chairman of the Board since June 2011, and a member of the Compensation and Nominating/Corporate Governance Committees, is an investment banker. He was a principal of the investment banking firm of Tanner & Co., Inc. from 1997 to 2004. From 1986 to 1995, Mr. Widmann was a senior managing director of Chemical Securities, Inc., a subsidiary of Chemical Banking Corporation (now JPMorgan Chase Corporation). Prior to joining Chemical Securities, Inc., Mr. Widmann was a founder and managing director of First Reserve Corporation, the largest independent energy investing firm in the U.S. Previously, he was senior vice president with the investment banking firm of Donaldson, Lufkin & Jenrette, responsible for the firm’s domestic and international investment banking business. He had also been a vice president with New Court Securities (now Rothschild, Inc.). He was a director of Lydall, Inc. (listed on the New York Stock Exchange), a manufacturer of thermal, acoustical and filtration materials, from 1974 to 2004, and its chairman from 1998 to 2004. He is a director of Standard Motor Products, Inc. (listed on the New York Stock Exchange), a manufacturer of automobile replacement parts, is Chairman of Keystone National Group, a fund of private equity funds, and is Chairman and CEO of Cutwater Associates LLC, a corporate advisory firm. He is also a senior moderator of the Aspen Seminar at The Aspen Institute and Vice Chairman of Oxfam America. Mr. Widmann received an A.B. from Brown University and a J.D. from the Columbia University School of Law.

James J. Burns, a director since 2001 and a member of the Audit (Chair) and Nominating/Corporate Governance Committees, was chief financial officer and senior vice president of Reis, Inc. (formerly Wellsford Real Properties, Inc.) from December 2000 until March 2006, and vice chairman from April 2006 until March 2009, when he entered into a consulting role at that company (where he continues to have the primary responsibility for income tax reporting and compliance). He joined Reis in October 1999 as chief accounting officer upon his retirement from Ernst & Young LLP in September 1999. At Ernst & Young LLP, Mr. Burns was a senior audit partner in the E&Y Kenneth Leventhal Real Estate Group for 22 years. Since 2000, Mr. Burns has also served as a director of One Liberty Properties, Inc., a real estate investment trust listed on the New York Stock Exchange. Mr. Burns is a certified public accountant and a member of the American Institute of Certified Public Accountants. Mr. Burns received a B.A. and M.B.A. from Baruch College of the City University of New York.

Raghunath Davloor, a director since October 2009, is currently Executive Vice President and Chief Financial Officer of RioCan Real Estate Investment Trust, Canada’s largest real estate investment trust. RioCan, headquartered in Toronto, Ontario, is involved in the ownership, development, management, leasing, acquisition and redevelopment of retail properties across Canada. RioCan, through a subsidiary, owns an investment in the Company, and is a partner with the Company in several joint venture properties in the U.S. Prior to joining RioCan in February 2008, Mr. Davloor spent two years as Vice-President and Director of Investment Banking at TD Securities, covering the real estate sector. For ten years prior thereto, he was with O&Y Properties Corporation and O&Y REIT in a number of progressive positions, ultimately becoming Chief Financial Officer. Prior to joining O&Y, Mr. Davloor was a Senior Tax Manager at Arthur Andersen in the real estate advisory services group, specializing in real estate and international taxation. He is a chartered accountant and a member of the Institute of Chartered Accountants of Ontario. Mr. Davloor holds a Bachelor of Commerce degree from the University of Manitoba.

 

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Pamela N. Hootkin, a director since June 2008 and a member of the Audit and Compensation Committees, has been senior vice president at PVH Corp. (formerly Phillips-Van Heusen Corporation) since May 2010. She joined PVH Corp. in 1988 as vice president, treasurer and corporate secretary; in 1999 she became vice president, treasurer and director of investor relations, and in June 2007 she became senior vice president, treasurer and director of investor relations. From 1986 to 1988, Ms. Hootkin was vice president and chief financial officer of Yves Saint Laurent Parfums, Inc. From 1975 to 1986, she was employed by Squibb Corporation in various capacities, with her last position being vice president and treasurer of a division of Squibb. Ms. Hootkin is a board member of Safe Horizon, New York (a not-for-profit organization) where she also serves on the executive and finance committees. Ms. Hootkin received a B.A. from the State University of New York at Binghamton and a M.A. from Boston University.

Paul G. Kirk, Jr., a director from 2005 to September 2009, when he resigned as the result of his appointment as a United States Senator for Massachusetts to the seat previously held by the late Senator Edward M. Kennedy, and re-elected to the Board in June 2010, is a member of the Compensation and Nominating/Corporate Governance (Chair) Committees, and is a retired partner of the law firm of Sullivan & Worcester, LLP of Boston, MA. He was a member of the firm from 1977 through 1990. He also serves as Chairman and CEO of Kirk & Associates, Inc., a business advisory and consulting firm. Mr. Kirk currently serves on the Board of Directors of the Hartford Financial Services Group, Inc. and the Advisory Board of Bloomberg Government. He served on the Board of Directors of Rayonier, Incorporated (a real estate investment trust listed on the New York Stock Exchange) from 1994 to 2011. He has previously served on the Boards of Directors of ITT Corporation (1989-1997) and of Bradley Real Estate, Inc. (1991-2000), a real estate investment trust that was subsequently acquired by Heritage Property Investment Trust, Inc. Mr. Kirk was a founding Director of the John F. Kennedy Library Foundation and served as its Chairman from 1992 to 2009. He was a founding Director of the Commission on Presidential Debates and served as its Co-Chairman from 1987 to 2009. From 1985 to 1989, Mr. Kirk served as Chairman of the Democratic Party of the U.S., and from 1983-1985 as its Treasurer. A graduate of Harvard College and Harvard Law School, Mr. Kirk is past-Chairman of the Harvard Board of Overseers’ Nominating Committee and of the Harvard Board of Overseers’ Committee to Visit the Department of Athletics. He has received many awards for civic leadership and public service, including honorary doctors of law degrees from Stonehill College and the Southern New England School of Law.

Everett B. Miller, III, a director since 1998 and a member of the Audit and Compensation (Chair) Committees, retired at the end of 2011 from his position as vice president of alternative investments at the YMCA Retirement Fund, a position he held since September 2003. Mr. Miller is a member of the Real Estate Advisory Committee of the New York State Common Retirement Fund, a position he has held since March 2003. Prior to his retirement in May 2002 from Commonfund Realty, Inc., a registered investment advisor, Mr. Miller was the chief operating officer of that company from 1997 until May 2002. From January 1995 through March 1997, Mr. Miller was the Principal Investment Officer for Real Estate and Alternative Investment at the Office of the Treasurer of the State of Connecticut. Prior thereto, Mr. Miller was employed for eighteen years at affiliates of Travelers Realty Investment Co., at which his last position was senior vice president. Mr. Miller received a B.S. from Yale University.

 

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Philip R. Mays joined the Company in June 2011 as Chief Financial Officer. From May 2005 until June 2011, Mr. Mays was with Federal Realty Investment Trust, a publicly-traded equity REIT specializing in shopping centers, where he initially served as Controller, was subsequently promoted to Chief Accounting Officer in September 2006, and again to Vice President, Chief Accounting Officer in February 2007. Prior to joining Federal Realty, he was Vice President of Finance and Corporate Controller for CRIIMI MAE, Inc. from June 2004 until May 2005. Earlier in his career, Mr. Mays held various accounting and finance positions, including seven years as an accountant at Ernst & Young, LLP, with his last position being senior manager, where he supervised audits and assisted clients in the real estate, construction and hospitality industries, including publicly-traded REITs. Mr. Mays is a certified public accountant and a member of the American Institute of Certified Public Accountants. Mr. Mays received a B.S. degree from Jacksonville University, Florida.

Brenda J. Walker has been a vice president of the Company since 1998, was elected Chief Operating Office in 2009, was a director from 1998 until June 2008, and was treasurer from April 1998 until November 1999. She was an executive officer since 1992 of the real estate management companies, and their respective predecessors and affiliates, which were merged into the Company in 2003. Ms. Walker has been involved in real estate-related finance, property and asset management for more than thirty-five years. Ms. Walker received a B.A. from Lincoln University, Pennsylvania.

Part II.

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Dividend Information

A corporation electing REIT status is required to distribute at least 90% of its “REIT taxable income”, as defined in the Code, to continue qualification as a REIT. The Company paid dividends totaling $0.36 per share during 2011. However, in keeping with its stated goal of reducing overall leverage, and in order to maximize financial flexibility, the Company’s Board of Directors determined to reduce the quarterly dividend for 2012 to a target rate of $0.05 per share (an annual rate of $0.20 per share). 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.

Market Information

The Company had 67,928,337 shares of common stock outstanding held by approximately 700 shareholders of record at December 31, 2011. The Company believes it has more than 6,000 beneficial holders of its common stock. The Company’s shares trade on the NYSE under the symbol “CDR”. The following table sets forth, for each quarter for the last two years, (i) the high, low, and closing prices of the Company’s common stock, and (ii) dividends paid:

 

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September 30, September 30, September 30, September 30,

Quarter ended

     Market price range        Dividends  
       High        Low        Close        paid  

2011

                   

March 31

     $ 6.58         $ 5.26         $ 6.03         $ 0.09   

June 30

       6.27           4.82           5.15         $ 0.09   

September 30

       5.44           3.01           3.11         $ 0.09   

December 31

       4.71           2.65           4.31         $ 0.09   

2010

                   

March 31

     $ 8.20         $ 6.26         $ 7.91         $ —     

June 30

       8.39           5.85           6.02         $ 0.09   

September 30

       6.67           4.91           6.08         $ 0.09   

December 31

       6.81           5.81           6.29         $ 0.09   

Stockholder Return Performance Presentation

The following line graph sets forth for the period January 1, 2007 through December 31, 2011 a comparison of the percentage change in the cumulative total stockholder return on the Company’s common stock compared to the cumulative total return of the Russell 2000 index and the National Association of Real Estate Investment Trusts Equity REIT Total Return Index.

The graph assumes that the shares of the Company’s common stock were bought at the price of $100 per share and that the value of the investment in each of the Company’s common stock and the indices was $100 at the beginning of the period. The graph further assumes the reinvestment of dividends when paid.

 

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LOGO

 

September 30, September 30, September 30, September 30, September 30, September 30,
                 Period Ending  

Index

     01/01/07        12/31/07        12/31/08        12/31/09        12/31/10        12/31/11  

Cedar Realty Trust, Inc.

       100.00           68.55           51.51           50.95           49.11           36.46   

Russell 2000

       100.00           98.43           65.18           82.89           105.14           100.75   

NAREIT All Equity REIT Index

       100.00           84.31           52.50           67.20           85.98           93.10   

 

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Item 6. Selected Financial Data (a)

 

September 30, September 30, September 30, September 30, September 30,
       Years ended December 31,  
       2011      2010      2009      2008      2007  

Operations data:

                

Total revenues

     $ 135,413,000       $ 131,572,000       $ 140,395,000       $ 127,005,000       $ 111,784,000   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Expenses:

                

Property operating expenses

       44,236,000         41,783,000         40,457,000         35,056,000         28,523,000   

General and administrative

       11,085,000         9,537,000         10,158,000         8,586,000         9,041,000   

Management transition charges

       6,530,000         —           —           —           —     

Impairments

       7,148,000         2,493,000         23,636,000         —           —     

Acquisition transaction costs and terminated projects

       1,436,000         3,958,000         4,367,000         855,000         —     

Depreciation and amortization

       43,250,000         34,872,000         42,853,000         37,097,000         30,914,000   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

       113,685,000         92,643,000         121,471,000         81,594,000         68,478,000   

Operating income

       21,728,000         38,929,000         18,924,000         45,411,000         43,306,000   

Non-operating income and expense:

                

Interest expense and amortization/write-off of deferred financing costs

       (41,870,000      (45,690,000      (41,669,000      (36,667,000      (30,947,000

Equity in (loss) income of unconsolidated joint ventures

       (6,290,000      484,000         1,098,000         956,000         634,000   

Gain on sale

       130,000         —           521,000         —           —     

Interest income

       349,000         21,000         63,000         271,000         769,000   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total non-operating income and expense

       (47,681,000      (45,185,000      (39,987,000      (35,440,000      (29,544,000

(Loss) income before discontinued operations

       (25,953,000      (6,256,000      (21,063,000      9,971,000         13,762,000   

(Loss) income from discontinued operations

       (83,445,000      (38,098,000      3,495,000         10,827,000         10,105,000   

Gain on sales of discontinued operations

       884,000         170,000         557,000         —           —     
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net (loss) income

       (108,514,000      (44,184,000      (17,011,000      20,798,000         23,867,000   

Less, net loss (income) attributable to noncontrolling interests

                

Minority interests in consolidated joint ventures

       2,507,000         1,613,000         (772,000      (2,157,000      (1,415,000

Limited partners’ interest in Operating Partnership

       2,446,000         1,282,000         912,000         (468,000      (627,000
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

       (103,561,000      (41,289,000      (16,871,000      18,173,000         21,825,000   

Preferred distribution requirements

       (14,200,000      (10,196,000      (7,876,000      (7,877,000      (7,877,000
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net (loss) income attributable to common shareholders

     $ (117,761,000    $ (51,485,000    $ (24,747,000    $ 10,296,000       $ 13,948,000   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Per common share (basic and diluted) attributable to common shareholders:

                

Continuing operations

     $ (0.61    $ (0.24    $ (0.60    $ (0.01    $ 0.09   

Discontinued operations

       (1.18      (0.57      0.06         0.24         0.23   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     $ (1.79    $ (0.81    $ (0.54    $ 0.23       $ 0.32   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Amounts attributable to Cedar Realty Trust, Inc. common shareholders, net of limited partners’ interest

                

(Loss) income from continuing operations

     $ (39,236,000    $ (15,504,000    $ (27,630,000    $ (65,000    $ 4,278,000   

(Loss) income from discontinued operations

       (78,525,000      (35,981,000      2,883,000         10,361,000         9,670,000   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net (loss) income

     $ (117,761,000    $ (51,485,000    $ (24,747,000    $ 10,296,000       $ 13,948,000   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Dividends to common shareholders

     $ 24,705,000       $ 17,749,000       $ 9,742,000       $ 40,027,000       $ 39,775,000   

Per common share

     $ 0.3600       $ 0.2700       $ 0.2025       $ 0.9000       $ 0.9000   

Weighted average number of common shares—basic

       66,387,000         63,843,000         46,234,000         44,475,000         44,193,000   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average number of common shares—diluted

       66,387,000         63,862,000         46,234,000         44,475,000         44,197,000   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Item 6. Selected Financial Data (a) (continued)

 

September 30, September 30, September 30, September 30, September 30,
       Years ended December 31,  
       2011     2010     2009     2008     2007  

Balance sheet data:

            

Real estate, net

     $ 1,171,513,000      $ 1,132,313,000      $ 1,146,939,000      $ 1,045,046,000      $ 946,659,000   

Real estate to be transferred to a joint venture

       —          —          139,743,000        194,952,000        165,277,000   

Real estate held for sale/conveyance

       206,674,000        348,743,000        392,649,000        419,717,000        403,768,000   

Investment in unconsolidated joint ventures

       44,743,000        52,466,000        14,113,000        4,976,000        3,757,000   

Other assets

       89,233,000        88,965,000        91,674,000        70,337,000        83,634,000   
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

     $ 1,512,163,000      $ 1,622,487,000      $ 1,785,118,000      $ 1,735,028,000      $ 1,603,095,000   
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgages and loans payable

     $ 755,344,000      $ 683,122,000      $ 799,667,000      $ 771,991,000      $ 605,177,000   

Mortgage loans payable—real estate to be transferred to a joint venture

       —          —          94,018,000        77,307,000        70,458,000   

Mortgage loans payable—real estate held for sale/conveyance

       122,604,000        156,991,000        158,762,000        164,175,000        175,879,000   

Other liabilities

       73,827,000        76,850,000        106,269,000        116,361,000        105,654,000   
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

       951,775,000        916,963,000        1,158,716,000        1,129,834,000        957,168,000   

Noncontrolling interest—limited partners’ mezzanine OP Units

       4,616,000        7,053,000        12,638,000        14,257,000        15,570,000   

Equity:

            

Cedar Realty Trust, Inc. shareholders’ equity

       493,843,000        630,066,000        538,456,000        523,521,000        557,849,000   

Noncontrolling interests

       61,929,000        68,405,000        75,308,000        67,416,000        72,508,000   
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

       555,772,000        698,471,000        613,764,000        590,937,000        630,357,000   
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

     $ 1,512,163,000      $ 1,622,487,000      $ 1,785,118,000      $ 1,735,028,000      $ 1,603,095,000   
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares:

            

Basic earnings per share

       66,387,000        63,843,000        46,234,000        44,475,000        44,193,000   
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

       66,387,000        63,862,000        46,234,000        44,475,000        44,197,000   
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other data:

            

Funds From Operations (“FFO”) (b)

     $ 26,717,000      $ 29,510,000      $ 51,776,000      $ 56,859,000      $ 56,190,000   

Cash flows provided by (used in):

            

Operating activities

     $ 39,246,000      $ 41,702,000      $ 51,942,000      $ 60,815,000      $ 53,503,000   

Investing activities

     $ (64,241,000   $ (29,834,000   $ (70,026,000   $ (151,390,000   $ (192,432,000

Financing activities

     $ 22,899,000      $ (14,866,000   $ 27,017,000      $ 75,517,000      $ 143,735,000   

Square feet of GLA

       9,593,000        9,015,000        8,809,000        7,853,000        7,698,000   

Percent leased

       92     90     91     92     92

Average annualized base rent per leased square foot

     $ 11.54      $ 11.34      $ 10.92      $ 10.68      $ 10.47   

 

(a)

The data presented reflect certain reclassifications of prior period amounts to conform to the 2011 presentation, principally to reflect the sale and/or treatment as “held for sale/conveyance” of certain operating properties and the treatment thereof as “discontinued operations”. The reclassifications had no impact on the previously-reported net income attributable to common shareholders or earnings per share.

 

(b)

See Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a reconciliation of FFO to net (loss) attributable to common shareholders. FFO has been restated for prior years based on a recent NAREIT clarification with respect to the computation of FFO.

 

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 which currently focuses primarily on ownership and operation of supermarket-anchored shopping centers straddling the Washington DC to Boston corridor. At December 31, 2011, the Company owned and managed a portfolio of 70 operating properties (excluding properties “held for sale/conveyance”) totaling approximately 9.6 million square feet of GLA. In addition, the Company has an ownership interest in 22 operating properties, with approximately 3.7 million square feet of GLA, through its Cedar/RioCan joint venture in which the Company has a 20% interest. The entire managed portfolio, including the Cedar/RioCan properties, was approximately 93.1% leased at December 31, 2011.

During 2011, in keeping with its stated goal of reducing overall leverage to an appropriate level by selling non-core and limited growth potential assets, the Company determined (1) to completely exit the Ohio market, principally the Discount Drug Mart portfolio of drugstore/convenience centers, and concentrate on the mid-Atlantic and Northeast coastal regions (four properties “held for sale” as of December 31, 2011), (2) to concentrate on grocery-anchored strip centers, by disposing of its mall and single-tenant/triple-net-lease properties (11 properties “held for sale” as of December 31, 2011), and (3) to focus on improving operations and performance at the Company’s remaining properties, and to reduce development activities, by disposing of certain development projects, land acquired for development, and other non-core assets (five properties “held for sale/conveyance” as of December 31, 2011). In addition, discontinued operations reflect the anticipated consummation of the Homburg joint venture buy/sell transactions (seven properties “held for sale” as of December 31, 2011).

The Company, organized as a Maryland corporation, has established an umbrella partnership structure through the contribution of substantially all of its assets to the Operating Partnership, organized as a limited partnership under the laws of Delaware. The Company conducts substantially all of its business through the Operating Partnership. At December 31, 2011, the Company owned 98.0% of the Operating Partnership and is its sole general partner. The approximately 1.4 million OP Units are economically equivalent to the Company’s common stock and are convertible into the Company’s common stock at the option of the holders on a one-to-one basis.

The Company derives substantially all of its revenues from rents and operating expense reimbursements received pursuant to long-term 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 supermarket-anchored community 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.

 

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The Cedar/RioCan joint venture has acquired primarily stabilized supermarket-anchored properties in the Company’s primary market areas. The Company believes it gains additional benefits with tenants and vendors by having an interest in managing these additional properties within its primary markets.

Significant Transactions

On January 26, 2012, the Company entered into a $300 million secured credit facility (the “Credit Facility”). The Credit Facility amends, restates and consolidates the Company’s prior $185 million stabilized property revolving credit facility ($74,035,000 outstanding at December 31, 2011, bearing interest at 5.5% per annum) and its $150 million development property credit facility ($92,282,000 outstanding at December 31, 2011, bearing interest at 2.5% per annum) that were due to expire on January 31, 2012 and June 13, 2012, respectively. In anticipation of the new Credit Facility, the Company determined to forego its one-year extension option applicable to the stabilized property credit revolving facility.

 

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The table below details 2011 acquisitions and dispositions:

Acquisitions

 

September 30, September 30, September 30, September 30,
              GLA /        Date        Purchase  

Property

     Location      Acreage        Acquired        Price  

Consolidated

                   

Colonial Commons

     Lower Paxton Township, PA        474,765           1/14/2011         $ 49,100,000   

Unconsolidated Cedar/RioCan Joint Venture

                   

Northwoods Crossing

     Taunton, MA        159,562           4/15/2011         $ 23,400,000   

Dispositions

 

September 30, September 30, September 30, September 30,
              GLA/        Date        Sales  

Property

     Location      Acreage        Sold        Price  

Consolidated

                   

Bergstrasse Land

     Ephrata, PA        7.7 acres           2/14/2011         $ 1,900,000   

Enon Discount Drug Mart Plaza

     Enon, OH        42,876           3/30/2011           2,125,000   

Hills & Dales Discount Drug Mart Plaza

     Canton, OH        33,553           3/30/2011           1,907,000   

Fairfield Plaza

     Fairfield, CT        72,279           4/15/2011           10,840,000   

CVS at Kingston

     Kingston, NY        13,013           11/14/2011           5,250,000   

CVS at Kinderhook

     Kinderhook, NY        13,225           12/8/2011           4,000,000   

Shoppes at Salem Run

     Fredericksburg, VA        15,100           12/12/2011           1,675,000   

Virginia Center Commons

     Glen Allen, VA        9,763           12/21/2011           3,550,000   

Centerville Discount Drug Mart Plaza

     Centerville, OH        49,287           12/28/2011           2,743,000   

Clyde Discount Drug Mart Plaza

     Clyde, OH        34,592           12/28/2011           1,903,000   

FirstMerit Bank at Cuyahoga Falls

     Cuyahoga Falls, OH        3,200           12/28/2011           915,000   

Lodi Discount Drug Mart Plaza

     Lodi, OH        38,576           12/28/2011           2,319,000   

Mason Discount Drug Mart Plaza

     Mason, OH        52,896           12/28/2011           4,653,000   

Ontario Discount Drug Mart Plaza

     Ontario, OH        38,623           12/28/2011           2,141,000   

Pickerington Discount Drug Mart Plaza

     Pickerington, OH        47,810           12/28/2011           4,072,000   

Polaris Discount Drug Mart Plaza

     Polaris, OH        50,283           12/28/2011           4,370,000   

Shelby Discount Drug Mart Plaza

     Shelby, OH        36,596           12/28/2011           2,141,000   
                   

 

 

 

Total

                    $ 56,504,000   
                   

 

 

 

 

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Discontinued operations, land dispositions and write-off of investment in unconsolidated joint venture

In connection with management’s review of the Company’s real estate investments, the Company determined (1) to completely exit the Ohio market, principally the Discount Drug Mart portfolio of drugstore/convenience centers, and concentrate on the mid-Atlantic and Northeast coastal regions (four properties “held for sale” as of December 31, 2011), (2) to concentrate on grocery-anchored strip centers, by disposing of its mall and single-tenant/triple-net-lease properties (11 properties “held for sale” as of December 31, 2011), and (3) to focus on improving operations and performance at the Company’s remaining properties, and to reduce development activities, by disposing of certain development projects, land acquired for development, and other non-core assets (five properties “held for sale/conveyance” as of December 31, 2011). In addition, discontinued operations reflect the anticipated consummation of the Homburg joint venture buy/sell transactions (seven properties “held for sale” as of December 31, 2011).

The carrying values of the assets and liabilities of these properties, principally the net book values of the real estate and the related mortgage loans payable to be assumed by the buyers (or conveyed to the mortgagee), have been reclassified as “held for sale/conveyance” on the Company’s consolidated balance sheets at December 31, 2011 and December 31, 2010. In addition, the properties’ results of operations have been classified as “discontinued operations” for all periods presented. Impairment charges relating to operating properties are included in discontinued operations in the accompanying statements of operations; impairment charges relating to land parcels are included in operating income in the accompanying statements of operations. The impairment charge amounts included in operating income for 2010 and 2009 relate to properties transferred to the Cedar/RioCan joint venture. The following is a summary of these charges:

 

September 30, September 30, September 30,
       Years ended December 31,  
       2011        2010        2009  

Impairment charges—land parcels and properties transferred to Cedar/RioCan joint venture

     $ 7,148,000         $ 2,493,000         $ 23,636,000   
    

 

 

      

 

 

      

 

 

 

Write-off of investment in unconsolidated joint venture

     $ 7,961,000         $ —           $ —     
    

 

 

      

 

 

      

 

 

 

Impairment charges—properties held for sale/conveyance

     $ 88,458,000         $ 39,822,000         $ 3,559,000   
    

 

 

      

 

 

      

 

 

 

Impairment charges included in discontinued operations for 2011 included $11.1 million related to the Discount Drug Mart portfolio, $33.1 million related to malls, $5.3 million related to single-tenant/triple-net-lease properties, $36.6 million related to development projects and other non-core properties, and $2.4 million related to the Homburg joint venture properties. Impairment charges included in discontinued operations for 2010 included $26.8 million related to the Discount Drug Mart portfolio, $12.6 million related to malls, $0.1 million related to a single-tenant/triple-net-lease property, and $0.3 million related to a development project. Impairment charges included in discontinued operations for 2009 included $2.4 million related to the Discount Drug Mart portfolio and $1.2 million related to single-tenant/triple-net-lease properties.

 

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Summary of 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 impairment, 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 has identified the following critical accounting policies, the application of which requires significant judgments and estimates:

Revenue Recognition

Rental income with scheduled rent increases is recognized using the straight-line method over the respective terms of the leases. The aggregate excess of rental revenue recognized on a straight-line basis over base rents under applicable lease provisions is included in straight-line rents receivable on the consolidated balance sheet. Leases also generally contain provisions under which the tenants reimburse the Company for a portion of property operating expenses and real estate taxes incurred; such income is recognized in the periods earned. In addition, certain operating leases contain contingent rent provisions under which tenants are required to pay a percentage of their sales in excess of a specified amount as additional rent. The Company defers recognition of contingent rental income until those specified targets are met.

The Company must make estimates as to the collectability of its accounts receivable related to base rent, straight-line rent, expense reimbursements and other revenues. Management analyzes accounts receivable by considering tenant creditworthiness, current economic conditions, and changes in tenants’ payment patterns when evaluating the adequacy of the allowance for doubtful accounts receivable. These estimates have a direct impact on net income, because a higher bad debt allowance would result in lower net income, whereas a lower bad debt allowance would result in higher net income.

Real Estate Investments

Real estate investments are carried at cost less accumulated depreciation. The provision for depreciation is calculated using the straight-line method based on estimated useful lives. Expenditures for maintenance, repairs and betterments that do not materially prolong the normal useful life of an asset are charged to operations as incurred. Expenditures for betterments that substantially extend the useful lives of real estate assets are capitalized.

 

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Real estate investments include costs of development and redevelopment activities, and construction in progress. Capitalized costs, including interest and other carrying costs during the construction and/or renovation periods, are included in the cost of the related asset and charged to operations through depreciation over the asset’s estimated useful life. The Company is required to make subjective estimates as to the useful lives of its real estate assets for purposes of determining the amount of depreciation to reflect on an annual basis. These assessments have a direct impact on net income. A shorter estimate of the useful life of an asset would have the effect of increasing depreciation expense and lowering net income, whereas a longer estimate of the useful life of an asset would have the effect of reducing depreciation expense and increasing net income.

A variety of costs are incurred in the acquisition, development and leasing of a property, such as pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs, and other costs incurred during the period of development. After a determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. The Company ceases capitalization on the portions substantially completed and occupied, or held available for occupancy, and capitalizes only those costs associated with the portions under construction. The Company considers a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but not later than one year from cessation of major development activity. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The effect of a longer capitalization period would be to increase capitalized costs and would result in higher net income, whereas the effect of a shorter capitalization period would be to reduce capitalized costs and would result in lower net income.

The Company allocates the fair value of real estate acquired to land, buildings and improvements. In addition, the fair value of in-place leases is allocated to intangible lease assets and liabilities. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, which value is then allocated to land, buildings and improvements based on management’s determination of the relative fair values of such assets. In valuing an acquired property’s intangibles, factors considered by management include an estimate of carrying costs during the expected lease-up periods, such as real estate taxes, insurance, other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on its evaluation of current market demand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs.

The values of acquired above-market and below-market leases are recorded based on the present values (using discount rates which reflect the risks associated with the leases acquired) of the differences between the contractual amounts to be received and management’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time of the acquisitions. Such valuations include a consideration of the non-cancellable terms of the respective leases as well as any applicable renewal period(s). The fair values associated with below-market rental renewal options are determined based on the Company’s experience and the relevant facts and circumstances that existed at the time of the acquisitions. The values of above-market leases are amortized to rental income over the terms of the respective non-cancelable lease periods. The portion of the values of below-market leases associated with the original non-cancelable lease terms are amortized

 

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to rental income over the terms of the respective non-cancelable lease periods. The portion of the values of the leases associated with below-market renewal options that are likely of exercise are amortized to rental income over the respective renewal periods. The value of other intangible assets (including leasing commissions, tenant improvements, etc.) is amortized to expense over the applicable terms of the respective leases. If a lease were to be terminated prior to its stated expiration or not renewed, all unamortized amounts relating to that lease would be recognized in operations at that time.

Management is required to make subjective assessments in connection with its valuation of real estate acquisitions. These assessments have a direct impact on net income, because (i) above-market and below-market lease intangibles are amortized to rental income, and (ii) the value of other intangibles is amortized to expense. Accordingly, higher allocations to below-market lease liability and other intangibles would result in higher rental income and amortization expense, whereas lower allocations to below-market lease liability and other intangibles would result in lower rental income and amortization expense.

Management reviews each real estate investment for impairment whenever events or circumstances indicate that the carrying value of a real estate investment may not be recoverable. The review of recoverability is based on an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition. These estimates of cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If an impairment event exists due to the projected inability to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds estimated fair value. A real estate investment held for sale is carried at the lower of its carrying amount or estimated fair value, less the cost of a potential sale. Depreciation and amortization are suspended during the period the property is held for sale. Management is required to make subjective assessments as to whether there are impairments in the value of its real estate properties. These assessments have a direct impact on net income, because an impairment loss is recognized in the period that the assessment is made.

New Accounting Pronouncements

See Note 2 of Notes to Consolidated Financial Statements included in Item 8 below for information relating to new accounting pronouncements.

Results of Operations

Differences in results of operations between 2011 and 2010, and between 2010 and 2009, respectively, were primarily due to the Company’s property disposition program resulting from its determination (1) to completely exit the Ohio market, principally the Discount Drug Mart portfolio of drugstore/convenience centers, and concentrate on the mid-Atlantic and Northeast coastal regions (10 properties sold in 2011 and four properties “held for sale” as of December 31, 2011), (2) to concentrate on grocery-anchored strip centers, by disposing of its mall and single-tenant/triple-net-lease properties (three properties sold in 2011 and 11 properties “held for sale” as of December 31, 2011), and (3) to focus on improving operations and performance at the Company’s remaining properties, and to reduce development activities, by disposing of certain development projects, land acquired for development, and other non-core assets (four properties sold in 2011 and five properties “held for sale/conveyance” as

 

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of December 31, 2011). In addition, the Company determined not to proceed with the redevelopment of two vacant single-tenant, adjacent land parcels in Philadelphia, Pennsylvania (one owned in joint venture and the other 100%-owned by the Company). Since January 1, 2009, the Company has sold, or has treated as “held for sale/conveyance”, 64 properties aggregating approximately 3.3 million square feet of GLA. Properties “held for sale/conveyance” also reflect the anticipated consummation of the Homburg joint venture buy/sell transactions. As a result, in addition to an $8.0 million write-off of its redevelopment joint venture investment in June 2011, the Company has recorded impairment charges related to discontinued operations of $88.5 million, $39.8 million and $3.6 million during 2011, 2010 and 2009, respectively. Results for 2011 also include management transition charges of approximately $6.5 million. Differences in results of operations between 2011 and 2010, and 2010 and 2009 also reflect increased results from a greater number of properties owned by the unconsolidated Cedar/RioCan joint venture, as well as more ground-up development and redevelopment projects coming on line.

Net (loss) attributable to common shareholders was ($117.8) million, ($51.5) million and ($24.7) million for 2011, 2010 and 2009, respectively.

Comparison of 2011 to 2010

 

September 30, September 30, September 30, September 30, September 30, September 30,
                                               Properties  
                         Increase      Percent              held in  
       2011        2010        (decrease)      change     Other        both periods  

Total revenues

     $ 135,413,000         $ 131,572,000         $ 3,841,000         3   $ 2,607,000         $ 1,234,000   

Property operating expenses

       44,236,000           41,783,000           2,453,000         6     997,000           1,456,000   

Depreciation and amortization

       43,250,000           34,872,000           8,378,000         24     2,223,000           6,155,000   

General and administrative

       11,085,000           9,537,000           1,548,000         16       

Management transition charges

       6,530,000           —             6,530,000             

Impairments

       7,148,000           2,493,000           4,655,000             

Acquisition transaction costs and terminated projects

       1,436,000           3,958,000           (2,522,000          

Interest expense, including amortization of deferred financing costs

       41,870,000           43,138,000           (1,268,000      -3       

Accelerated write-off of deferred financing costs

       —             2,552,000           (2,552,000          

Unconsolidated joint ventures:

                        

Equity in income

       1,671,000           484,000           1,187,000             

Write off of investment

       7,961,000           —             7,961,000             

Gain on sale

       130,000           —             130,000             

Discontinued operations:

                        

Income from operations

       5,013,000           1,724,000           3,289,000             

Impairment charges

       88,458,000           39,822,000           48,636,000             

Gain on sales

       884,000           170,000           714,000             

 

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Properties held in both periods. The Company held 67 properties (excluding “held for sale/conveyance”, ground-up and redevelopment properties) throughout 2011 and 2010.

Total revenues were higher primarily as a result of increases in (i) base rent and tenant recoveries at ground-up development properties ($1.3 million), (ii) base rent and tenant recoveries at operating properties ($1.3 million), (iii) base rent and tenant recoveries at redevelopment properties ($1.0 million), and (iv) percentage rent ($0.1 million), which are partially off-set by decreases in (v) amortization of intangible lease liabilities ($1.2 million), (vi) joint venture fee income ($0.8 million), and (vii) straight-line rents ($0.5 million).

Property operating expenses were higher primarily as a result of increases in (i) payroll and related expenses ($0.8 million), (ii) real estate taxes ($0.3 million), (iii) snow removal costs ($0.3 million), (iv) billable tenant utilities ($0.1 million), (v) repairs and maintenance ($0.1 million), (vi) insurance expense ($0.1 million), and (vii) other operating expenses ($0.2 million), which are partially off-set by decreases in (viii) the provision for doubtful accounts ($0.2 million) and (ix) utility expense ($0.2 million).

Depreciation and amortization expenses increased primarily as a result of the change in use of a building, at a redevelopment project, which is scheduled to be demolished in 2012. Other factors contributing to the increase included additional depreciation expense at ground-up and redevelopment properties as improvements have been placed into service, and increases related to capital improvements at operating properties.

General and administrative expenses were higher primarily as a result of increases in (i) payroll and payroll related expenses ($0.3 million), (ii) a legal settlement received in the Company’s favor in 2010 in excess of a legal settlement received in the Company’s favor in 2011 ($0.5 million), (iii) accounting and other professional fees ($0.2 million), (iv) information technology costs ($0.2 million), (v) rent expense ($0.1 million) and (vi) other costs ($0.2 million).

Management transition charges in 2011 relate to the retirement of the Company’s then Chairman of the Board, Chief Executive Officer and President, and the end of the employment of the Company’s then Chief Financial Officer, and include (i) an aggregate of approximately $3.7 million in cash severance payments (including the cost of related payroll taxes and benefits), (ii) the write off of all amounts related to the vesting of restricted share grants (an aggregate of approximately $2.0 million), and (iii) approximately $0.8 million of other non-recurring costs, primarily professional fees and expenses related to the hiring of a new President/Chief Executive Officer and Chief Financial Officer.

Impairments for 2011 relate principally to land parcels treated as “held for sale”, as more fully discussed elsewhere in this report. Impairments for 2010 relate principally to properties initially transferred to the Cedar/RioCan joint venture.

Acquisition transaction costs and terminated projects were lower in 2011 primarily due to fees accrued in 2010 to the Company’s advisor related to the RioCan joint venture transactions.

 

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Interest expense, including amortization of deferred financing costs decreased primarily as a result of (i) lower amortization of deferred financing costs, principally related to the accelerated write-off of deferred financing costs in September 2010 ($1.4 million), (ii) lower outstanding borrowings under the Company’s credit facilities ($1.1 million), and (iii) higher capitalized interest ($0.3 million), which are partially off-set by (iv) an increase in mortgage interest expense as a result of property acquisitions and property-specific financings ($1.5 million).

Accelerated write-off of deferred financing costs in 2010 resulted from the Company, at its option, reducing the commitments under the stabilized property credit facility from $285.0 million to $185.0 million.

Equity in income of unconsolidated joint ventures was higher in 2011 as a result of an increase in operating results from the Cedar/RioCan joint venture, primarily lower acquisition transaction costs in 2011 compared to those incurred in 2010, offset by nominal operating results in 2011 as compared with 2010 from the joint venture redevelopment property in Philadelphia (as more fully discussed elsewhere in this report).

Write-off of investment in unconsolidated joint venture relates to the aforementioned redevelopment joint venture, as more fully discussed elsewhere in this report.

Discontinued operations for 2011 and 2010 include the results of operations, impairment charges and gain on sales for properties sold or treated as “held for sale/conveyance”, as more fully discussed elsewhere in this report.

The “Other” column includes results for the following properties:

 

September 30, September 30, September 30,
       Total      Property      Depreciation and  
       revenues      operating expenses      amortization  

Properties acquired after January 1, 2010

     $ 5,911,000       $ 1,937,000         $2,223,000   

Properties prior to transfer to Cedar/RioCan joint venture

       (3,304,000      (940,000      —     
    

 

 

    

 

 

    

 

 

 
     $ 2,607,000       $ 997,000         $2,223,000   
    

 

 

    

 

 

    

 

 

 

 

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Comparison 2010 to 2009

 

September 30, September 30, September 30, September 30, September 30, September 30,
                                             Properties  
                         Increase      Percent            held in  
       2010        2009        (decrease)      change     Other      both periods  

Total revenues

     $ 131,572,000         $ 140,395,000         $ (8,823,000      -6   $ (14,369,000      5,546,000   

Property operating expenses

       41,783,000           40,457,000           1,326,000         3     (3,496,000      4,822,000   

Depreciation and amortization

       34,872,000           42,853,000           (7,981,000      -19     (1,997,000      (5,984,000

General and administrative

       9,537,000           10,158,000           (621,000      -6     

Impairments

       2,493,000           23,636,000           (21,143,000        

Acquisition transaction costs and terminated projects

       3,958,000           4,367,000           (409,000        

Interest expense, including amortization of deferred financing costs

       43,138,000           41,669,000           1,469,000         4     

Accelerated write-off of deferred financing costs

       2,552,000           —             2,552,000           

Equity in income of unconsolidated joint ventures:

       484,000           1,098,000           (614,000        

Gain on sale

       —             521,000           (521,000        

Discontinued operations:

                      

Income from operations

       1,724,000           7,054,000           (5,330,000        

Impairment charges

       39,822,000           3,559,000           36,263,000           

Gain on sales

       170,000           557,000           (387,000        

Properties held in both periods. The Company held 65 properties (excluding “held for sale/conveyance”, ground-up and redevelopment properties) throughout 2010 and 2009.

Total revenues were higher primarily as a result of increases in (i) base rent and recovery income at ground-up development properties ($6.6 million), (ii) joint venture fee income ($3.5 million), and (iii) base rent and recovery income at operating properties ($0.8 million), which are partially off-set by decreases in (iv) amortization of intangible lease liabilities ($3.6 million), (v) base rent and recovery income at redevelopment properties ($1.3 million), (vi) straight-line rents ($0.4 million), and (vii) percentage rent and other income ($0.1 million).

Property operating expenses were higher primarily as a result of increases in (i) real estate tax expense ($1.7 million), (ii) payroll and related expenses ($1.4 million), (iii) management fees paid to third parties ($0.6 million), (iv) other operating expenses ($0.4 million), (v) utility expense ($0.2 million), (vi) non-billable expenses ($0.2 million), (vii) snow removal costs ($0.2 million), (viii) provision for doubtful accounts ($0.2 million), and (ix) professional fees ($0.1 million), which are partially off-set by a decrease in (x) insurance expense ($0.2 million).

 

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Depreciation and amortization expenses decreased primarily as a result of completion of scheduled depreciation and amortization at certain properties and the razing of a building at a redevelopment project in 2009.

General and administrative expenses were lower primarily as a result of a legal settlement received in the Company’s favor in 2010 ($0.7 million).

Impairments for 2010 and 2009 relate to the properties initially transferred to the Cedar/RioCan joint venture.

Acquisition transaction costs and terminated projects for 2010 include (i) an acquisition fee paid to the Company’s investment advisor related to the Cedar/RioCan joint venture ($2.7 million), and (ii) the write off of costs incurred in the prior years related to (a) a potential development project in Milford, Delaware that the Company determined would not go forward ($1.3 million), and (b) a cancelled acquisition ($0.1 million). Acquisition transaction costs and terminated projects for 2009 include (i) the costs associated with the acquisitions of San Souci Plaza and New London Mall (net of minority interest share) and the costs primarily associated with a cancelled acquisition (an aggregate of $1.5 million), (ii) the decision to terminate potential development opportunities in Williamsport, Pennsylvania and Ephrata, Pennsylvania (an aggregate of $2.8 million), and (iii) the costs primarily associated with a cancelled acquisition.

Interest expense, including amortization of deferred financing costs increased primarily as a result of (i) lower capitalized interest ($3.6 million), (ii) higher amortization of deferred financing costs, related principally to the closing of the stabilized property credit facility in November 2009 ($1.1 million), and (iii) increased borrowings under the Company’s credit facilities ($0.4 million), which are partially off-set by (iv) lower balances of mortgage loans payable, related principally to the initial transfers of properties to the Cedar/RioCan joint venture ($3.5 million).

Accelerated write-off of deferred financing costs in 2010 resulted from the Company, at its option, reducing the commitments under the stabilized property credit facility from $285.0 million to $185.0 million.

Equity in income of unconsolidated joint ventures was lower in 2010 as a result of higher acquisition transaction costs in 2010 compared to those incurred in 2009.

Discontinued operations for 2010 and 2009 include the results of operations, impairment charges and gain on sales for properties sold or treated as “held for sale/conveyance”, as more fully discussed elsewhere in this report.

 

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The “Other” column includes the results for the following properties:

 

September 30, September 30, September 30,
       Total      Property      Depreciation and  
       revenues      operating expenses      amortization  

Properties acquired after January 1, 2009

     $ 716,000       $ 300,000       $ 2,190,000   

Properties prior to transfer to Cedar/RioCan joint venture

       (15,085,000      (3,796,000      (4,187,000
    

 

 

    

 

 

    

 

 

 
     $ (14,369,000    $ (3,496,000    $ (1,997,000
    

 

 

    

 

 

    

 

 

 

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, if made, and distributions to minority interest partners, if made, primarily from its operations and distributions received from the Cedar/RioCan joint venture. The Company may also use its revolving credit facilities for these purposes. The Company expects to fund long-term liquidity requirements for property acquisitions, redevelopment costs, remaining development costs, capital improvements, joint venture contributions, and maturing debt initially with its credit facilities, and ultimately through a combination of issuing and/or assuming additional mortgage debt, the sale of equity securities, the issuance of additional OP Units, and the sale of properties or interests therein (including joint venture arrangements). Although the Company believes it has access to secured financing, there can be no assurance that the Company will have the availability of mortgage financing on completed development projects, additional construction financing, net proceeds from the contribution of properties to joint ventures, or proceeds from the refinancing of existing debt.

Debt is comprised of the following at December 31, 2011:

 

September 30, September 30, September 30,
                Interest rates
       Balance        Weighted      

Description

     outstanding        average    

Range

Fixed-rate mortgages

     $ 525,259,000           5.8   5.0% -7.6%

Variable-rate mortgage

       63,768,000           3.0  
    

 

 

      

 

 

   

Total property-specific mortgages

       589,027,000           5.5  

Stabilized property credit facility

       74,035,000           5.5  

Development property credit facility

       92,282,000           2.5  
    

 

 

      

 

 

   
     $ 755,344,000           5.2  
    

 

 

      

 

 

   

On January 26, 2012, the Company entered into a new $300 million amended, restated and consolidated credit facility. The Credit Facility is comprised of a four-year $75 million term loan and a three-year $225 million revolving credit facility, subject to collateral in place (the Company has pledged 27 of its shopping center properties as collateral for such borrowings, including seven properties which are being treated as “real estate held for sale/conveyance”). Borrowings under the new facility are initially priced at LIBOR plus 275 bps (a total of 3.0% per annum at closing) and can range from LIBOR plus 200 to 300 bps based on the Company’s leverage ratio. Subject to customary conditions, the

 

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term loan and the revolving credit facility may both be extended for one additional year at the Company’s option. Under an accordion feature, the Credit Facility can be increased to $500 million, subject to customary conditions, collateral in place and lending commitments from participating banks. The Credit Facility contains financial covenants including, but not limited to, maximum debt leverage, minimum interest coverage, minimum fixed charge coverage, and minimum net worth. In addition, the Credit Facility contains restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. The Credit Facility is available to fund acquisitions, redevelopment and remaining development activities, capital expenditures, mortgage repayments, dividend distributions, working capital and other general corporate purposes. Based on covenant measurements and collateral in place at the closing, the Company was permitted to draw up to approximately $232.8 million, of which approximately $62.8 million remained available as of that date (after payment of closing costs, fees and expenses).

The variable-rate mortgage represents a $70.7 million construction facility, as amended in November 2011, pursuant to which the Company has pledged its joint venture ground-up development property in Pottsgrove, Pennsylvania as collateral for borrowings thereunder. The facility is guaranteed by the Company and will expire in October 2013, subject to a one-year extension option. Borrowings under the facility bear interest the Company’s option at either LIBOR plus a spread of 275 bps or the agent bank’s prime rate plus a spread of 125 bps, with principal payable based on a 30-year amortization schedule. Borrowings outstanding under the facility aggregated $63.8 million at December 31, 2011, and such borrowings bore interest at a rate of 3.5% per annum.

Other property-specific mortgage loans payable at December 31, 2011 consisted of fixed-rate notes totaling $525.3 million, with a weighted average interest rate of 5.8%. For 2012, the Company has approximately $9.3 million of scheduled debt principal amortization payments and $29.6 million of scheduled balloon payments.

Total mortgage loans payable and secured credit facilities have an overall weighted average interest rate of 5.2% and mature at various dates through 2029. The terms of several of the Company’s mortgage loans payable 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 Code. The Company paid dividends totaling $0.36 per share during 2011. However, in keeping with its stated goal of reducing overall leverage, and in order to maximize financial flexibility, the Company’s Board of Directors determined to reduce the quarterly dividend for 2012 to a target rate of $0.05 per share (an annual rate of $0.20 per share). 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.

 

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Contractual obligations and commercial commitments

The following table sets forth the Company’s significant debt repayment, interest and operating lease obligations at December 31, 2011:

 

Septem Septem Septem Septem Septem Septem Septem
    Maturity Date  
    2012     2013     2014     2015     2016     Thereafter     Total  

Debt: (i)

             

Mortgage loans payable (ii)

  $ 38,980,000      $ 125,328,000      $ 106,436,000      $ 77,325,000      $ 98,937,000      $ 142,021,000      $ 589,027,000   

Credit facilities (iii)

    —          —          —          91,317,000        75,000,000        —          166,317,000   

Interest payments (iv)

    32,506,000        27,058,000        21,335,000        14,385,000        12,558,000        12,838,000        120,680,000   

Operating lease obligations

    1,539,000        1,553,000        1,567,000        1,583,000        1,596,000        11,787,000        19,625,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 73,025,000      $ 153,939,000      $ 129,338,000      $ 184,610,000      $ 188,091,000      $ 166,646,000      $ 895,649,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(i)

Does not include amounts applicable to unconsolidated joint ventures or discontinued operations.

 

(ii)

Mortgage loans payable for 2013 includes $62.2 million applicable to property-specific construction financing which is subject to a one-year extension option.

 

(iii)

Reflects the amended, restated and consolidated credit facility concluded on January 26, 2012; each of the 2015 and 2016 amounts are subject to a one-year extension option.

 

(iv)

Represents interest payments expected to be incurred on the Company’s consolidated debt obligations as of December 31, 2011, including capitalized interest. For variable-rate debt, the rate in effect at December 31, 2011 ( or the initial pricing of the new credit facility ) is assumed to remain in effect until the maturities of the respective obligations.

In addition, the Company plans to spend between $20 million and $25 million during 2012 in connection with redevelopment and remaining development activities in process as of December 31, 2011.

Net Cash Flows

 

September 30, September 30, September 30,
        2011      2010      2009  

Cash flows provided by (used in):

          

Operating activities

     $ 39,246,000       $ 41,702,000       $ 51,942,000   

Investing activities

     $ (64,241,000    $ (29,834,000    $ (70,026,000

Financing activities

     $ 22,899,000       $ (14,866,000    $ 27,017,000   

Operating Activities

The comparative changes in net cash flows provided by operating activities during 2011, 2010 and 2009 were primarily the result of the impact of the Cedar/RioCan joint venture transactions, the Company’s property acquisition/disposition program, and continuing development/redevelopment activities.

 

 

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Investing Activities

Net cash flows used in investing activities were primarily the result of the Cedar/RioCan joint venture transactions and the Company’s acquisition/disposition activities. During 2011, the Company acquired a grocery-anchored shopping center and incurred expenditures for property improvements (an aggregate of $92.1 million), had an increase in loans and other receivables and construction escrows ($6.2 million) and made investments in the Cedar/RioCan joint venture ($4.3 million), offset by proceeds from sales of properties treated as discontinued operations ($30.6 million), net proceeds relating to the properties transferred to the Cedar/RioCan joint venture ($3.5 million) and distribution of capital from the Cedar/RioCan joint venture ($4.3 million). During 2010, the Company made investments in the Cedar/RioCan joint venture ($51.4 million), acquired a single-tenant office property and incurred expenditures for property improvements (an aggregate of $30.2 million), and had an increase in other receivables and construction escrows (an aggregate of $3.4 million), offset by proceeds from the transfers of five properties to the Cedar/RioCan joint venture ($31.0 million), distributions of capital from the Cedar/RioCan joint venture ($21.5 million), and the sales of properties treated as discontinued operations ($2.7 million). During 2009, the Company acquired two shopping and convenience centers and incurred expenditures for property improvements, an aggregate of $108.3 million. The Company realized proceeds from the transfers of two properties to the RioCan joint venture ($32.1 million) and from the sales of properties treated as discontinued operations ($6.8 million).

Financing Activities

During 2011, the Company received proceeds from mortgage refinancings ($45.8 million), net advances from its revolving credit facilities ($33.7 million), proceeds from the sale of common stock ($4.3 million), and had a contribution from a consolidated joint venture minority interest ($0.3 million), offset by preferred and common stock distributions ($38.9 million), repayment of mortgage obligations ($17.4 million), distributions to noncontrolling interest (minority interest and limited partners—$3.8 million), and the payment of debt financing costs ($1.1 million). During 2010, the Company had net repayments to its revolving credit facilities ($125.1 million), preferred and common stock distributions ($31.9 million), repayment of mortgage obligations ($20.9 million, including $11.0 million of mortgage balloon payments), termination payments relating to interest rate swaps ($5.5 million), distributions paid to noncontrolling interests (minority interest and limited partners—$4.2 million), redemptions of OP Units ($3.4 million), and the payment of debt financing costs ($2.0 million), offset by the proceeds from sales of preferred and common stock ($141.2 million), the proceeds of mortgage financings ($27.0 million), and the proceeds from the exercise of the RioCan warrant ($10.0 million). During 2009, the Company received proceeds of mortgage financings of $60.9 million, proceeds from sales of common stock of $40.9 million, $12.2 million in contributions from noncontrolling interests (minority interest partners), and $5.0 million in proceeds from a standby equity advance (not settled as of December 31, 2009), offset by net repayments to its revolving credit facilities of $46.8 million, repayment of mortgage obligations of $18.2 million (including $8.9 million of mortgage balloon payments), preferred and common stock distributions of $12.9 million, the payment of financing costs of $10.0 million, and distributions paid to noncontrolling interests (minority and limited partner interests) of $4.1 million.

 

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Funds From Operations

Funds From Operations “FFO” is a widely-recognized non-GAAP financial measure for REITs that the Company believes, when considered with financial statements determined in accordance with GAAP, is useful to investors in understanding financial performance and providing a relevant basis for comparison among REITs. In addition, FFO is useful to investors as 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 do other depreciable assets. Investors should review FFO, along with GAAP net income, when trying to understand a REIT’s operating performance. The Company considers FFO an important supplemental measure of its operating performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs.

The Company computes FFO in accordance with the “White Paper” published by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income applicable to common shareholders (determined in accordance with GAAP), excluding gains or losses from debt restructurings and sales of properties, plus real estate-related depreciation and amortization, and after adjustments for partnerships and joint ventures (which are computed to reflect FFO on the same basis). In addition, NAREIT has recently clarified its computation of FFO so as to exclude impairment charges for all periods presented. FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income applicable to common shareholders or to cash flow from operating activities. FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one company to another. The following table sets forth the Company’s calculations of FFO for 2011, 2010 and 2009:

 

September 30, September 30, September 30,
       2011      2010      2009  

Net loss attributable to common shareholders

     $ (117,761,000    $ (51,485,000    $ (24,747,000

Add (deduct):

          

Real estate depreciation and amortization

       48,353,000         46,279,000         55,391,000   

Limited partners’ interest

       (2,446,000      (1,282,000      (912,000

Impairment charges and write-off of joint venture interest

       103,567,000         42,315,000         27,195,000   

Gain on sales

       (884,000      (170,000      (557,000

Consolidated minority interest:

          

Share of income

       (2,507,000      (1,613,000      772,000   

Share of FFO

       (5,918,000      (6,846,000      (5,787,000

Unconsolidated joint venture:

          

Share of income

       (1,671,000      (484,000      (1,098,000

Share of FFO

       5,984,000         2,796,000         1,519,000   
    

 

 

    

 

 

    

 

 

 

FFO

     $ 26,717,000       $ 29,510,000       $ 51,776,000   
    

 

 

    

 

 

    

 

 

 

 

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Inflation

Inflation has been relatively low in recent years and has not had a significant detrimental impact on the Company’s results of operations. Should inflation rates increase in the future, 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 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.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

One of the principal market risks facing the Company is interest rate risk on its credit facilities. The Company may, when advantageous, hedge its interest rate risk by using derivative financial instruments. The Company is not subject to foreign currency risk.

The Company is exposed to interest rate changes primarily through (i) the variable-rate credit facilities used to maintain liquidity, fund capital expenditures, ground-up development/redevelopment activities, and expand its real estate investment portfolio, (ii) property-specific variable-rate construction financing, and (iii) other property-specific variable-rate mortgages. The Company’s objectives with respect to interest rate risk are to limit the impact of interest rate changes on operations and cash flows, and to lower its overall borrowing costs. To achieve these objectives, the Company may borrow at fixed rates and may enter into derivative financial instruments such as interest rate swaps, caps, etc., in order to mitigate its interest rate risk on a related variable-rate financial instrument. The Company does not enter into derivative or interest rate transactions for speculative purposes. At December 31, 2011, the Company had approximately $32.1 million of mortgage loans payable subject to interest rate swaps which converted LIBOR-based variable rates to fixed annual rates ranging from 5.2% and 6.5% per annum. At that date, the Company had accrued liabilities of $2.1 million (included in accounts payable and accrued expenses on the consolidated balance sheet) relating to the fair value of interest rate swaps applicable to these mortgage loans payable.

At December 31, 2011, long-term debt consisted of fixed-rate mortgage loans payable and variable-rate debt (principally the Company’s variable-rate credit facilities). The average interest rate on the $525.3 million of fixed-rate indebtedness outstanding was 5.8%, with maturities at various dates through 2029. The average interest rate on the $230.1 million of variable-rate debt (including $166.3 million in advances under the Company’s revolving credit facilities) was 3.6% (3.0% reflecting the amended, restated and consolidated credit facility concluded January 26, 2012). The $75 million term loan segment of the new facility matures in January 2016, and the $91.3 million revolving credit segment matures in January 2015, each subject to a one-year extension option. With respect to the $230.1 million of variable-rate debt outstanding at December 31, 2011, if interest rates either increase or decrease by 1%, the Company’s interest cost would increase or decrease respectively by approximately $2.3 million per annum.

 

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Item 8. Financial Statements and Supplementary Data

 

Report of Independent Registered Public Accounting Firm

     52   

Consolidated Balance Sheets, December 31, 2011 and 2010

     53   

Consolidated Statements of Operations, years ended December 31, 2011, 2010 and 2009

     54   

Consolidated Statements of Equity, years ended December 31, 2011, 2010 and 2009

     55-56   

Consolidated Statements of Cash Flows, years ended December 31, 2011, 2010 and 2009

     57   

Notes to Consolidated Financial Statements

     58-97   

Schedule Filed As Part Of This Report

  

Schedule III – Real Estate and Accumulated Depreciation, December 31, 2011

     98-102   

All other schedules have been omitted because the required information is not present, is not present in amounts sufficient to require submission of the schedule, or is included in the consolidated financial statements or notes thereto.

 

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

Cedar Realty Trust, Inc.

We have audited the accompanying consolidated balance sheets of Cedar Realty Trust, Inc. (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedule listed in the Index at Item 8. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cedar Realty Trust, Inc. at December 31, 2011 and 2010, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cedar Realty Trust, Inc.’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 6, 2012 expressed an unqualified opinion thereon.

 

/s/ ERNST & YOUNG LLP

New York, New York

March 6, 2012

 

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CEDAR REALTY TRUST, INC.

Consolidated Balance Sheets

 

September 30, September 30,
       December 31      December 31,  
       2011      2010  

Assets

       

Real estate:

       

Land

     $ 269,479,000       $ 261,673,000   

Buildings and improvements

       1,099,642,000         1,028,443,000   
    

 

 

    

 

 

 
       1,369,121,000         1,290,116,000   

Less accumulated deprec