cdr-10q_20170630.htm

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

Indicate by check mark whether the registrant has submitted electronically 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 ☒ No ☐

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

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: At August 2, 2017, there were 91,319,605 shares of Common Stock, $0.06 par value, outstanding.

Certain statements made in this Form 10-Q or incorporated by reference herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “may”, “will”, “should”, “estimates”, “projects”, “anticipates”, “believes”, “expects”, “intends”, “future”, and words of similar import, or the negative thereof. Factors which could cause actual results to differ materially from current expectations include, but are not limited to: adverse general economic conditions in the United States and uncertainty in the credit and retail markets; financing risks, such as the inability to obtain new financing or refinancing on favorable terms as the result of market volatility or instability; risks related to the market for retail space generally, including reductions in consumer spending, variability in retailer demand for leased space, tenant bankruptcies, adverse impact of internet sales demand, ongoing consolidation in the retail sector and changes in economic conditions and consumer confidence; risks endemic to real estate and the real estate industry generally; the impact of the Company’s level of indebtedness on operating performance; inability of tenants to meet their rent and other lease obligations; adverse impact of new technology and e-commerce developments on the Company’s tenants; competitive risk; risks related to the geographic concentration of the Company’s properties in the Washington, D.C. to Boston corridor; the effects of natural and other disasters; the inability of the Company to realize anticipated returns from its redevelopment activities; and the risk factors discussed under Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

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

	June 30,			December 31,
	2017			2016
ASSETS
Real estate:
Land	$	302,096,000		$	301,299,000
Buildings and improvements		1,212,622,000			1,195,130,000
		1,514,718,000			1,496,429,000
Less accumulated depreciation		(323,925,000	)		(313,070,000	)
Real estate, net		1,190,793,000			1,183,359,000

Real estate held for sale		1,815,000			—
Cash and cash equivalents		2,937,000			2,882,000
Restricted cash		2,536,000			2,880,000
Receivables		15,803,000			14,894,000
Other assets and deferred charges, net		27,686,000			29,506,000
TOTAL ASSETS	$	1,241,570,000		$	1,233,521,000

LIABILITIES AND EQUITY
Mortgage loans payable	$	136,628,000		$	138,243,000
Unsecured revolving credit facility		86,500,000			72,000,000
Unsecured term loans		397,835,000			397,502,000
Accounts payable and accrued liabilities		25,874,000			23,463,000
Unamortized intangible lease liabilities		18,987,000			20,316,000
Total liabilities		665,824,000			651,524,000

Commitments and contingencies		—			—

Equity:
Cedar Realty Trust, Inc. shareholders' equity:
Preferred stock ($.01 par value, 12,500,000 shares authorized):
Series B ($25.00 per share liquidation value, 10,000,000 shares authorized, 7,950,000 issued and outstanding)		190,661,000			190,661,000
Common stock ($.06 par value, 150,000,000 shares authorized, 85,572,000 and 85,316,000 shares, issued and outstanding, respectively)		5,134,000			5,119,000
Treasury stock (3,374,000 and 3,264,000 shares, respectively, at cost)		(18,616,000	)		(18,129,000	)
Additional paid-in capital		831,667,000			829,526,000
Cumulative distributions in excess of net income		(435,316,000	)		(426,864,000	)
Accumulated other comprehensive income		738,000			427,000
Total Cedar Realty Trust, Inc. shareholders’ equity		574,268,000			580,740,000
Noncontrolling interests:
Minority interests in consolidated joint ventures		(877,000	)		(1,132,000	)
Limited partners’ OP Units		2,355,000			2,389,000
Total noncontrolling interests		1,478,000			1,257,000
Total equity		575,746,000			581,997,000
TOTAL LIABILITIES AND EQUITY	$	1,241,570,000		$	1,233,521,000

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
REVENUES
Rents	$	28,205,000		$	29,897,000		$	56,428,000		$	59,027,000
Expense recoveries		7,012,000			7,471,000			15,360,000			16,429,000
Other		482,000			504,000			685,000			667,000
Total revenues		35,699,000			37,872,000			72,473,000			76,123,000
EXPENSES
Operating, maintenance and management		5,462,000			5,636,000			12,506,000			12,791,000
Real estate and other property-related taxes		4,921,000			4,941,000			9,666,000			9,821,000
General and administrative		4,237,000			3,975,000			8,373,000			9,322,000
Acquisition pursuit costs		-			527,000			156,000			3,124,000
Depreciation and amortization		9,953,000			10,972,000			20,371,000			20,633,000
Total expenses		24,573,000			26,051,000			51,072,000			55,691,000

OTHER
Gain on sale		—			—			7,099,000			59,000
Impairment charges		(9,850,000	)		—			(9,850,000	)		—
Total other		(9,850,000	)		—			(2,751,000	)		59,000

OPERATING INCOME		1,276,000			11,821,000			18,650,000			20,491,000

NON-OPERATING INCOME AND EXPENSES
Interest expense		(5,665,000	)		(7,128,000	)		(11,094,000	)		(14,133,000	)
Early extinguishment of debt costs		—			102,000			—			13,000
Total non-operating income and expenses		(5,665,000	)		(7,026,000	)		(11,094,000	)		(14,120,000	)

NET (LOSS) INCOME		(4,389,000	)		4,795,000			7,556,000			6,371,000

Net (income) loss attributable to noncontrolling interests:
Minority interests in consolidated joint ventures		(118,000	)		100,000			(255,000	)		180,000
Limited partners’ interest in Operating Partnership		33,000			(7,000	)		1,000			—
Total net (income) loss attributable to noncontrolling interests		(85,000	)		93,000			(254,000	)		180,000

NET (LOSS) INCOME ATTRIBUTABLE TO CEDAR REALTY TRUST, INC.		(4,474,000	)		4,888,000			7,302,000			6,551,000

Preferred stock dividends		(3,602,000	)		(3,602,000	)		(7,204,000	)		(7,204,000	)

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(8,076,000	)	$	1,286,000		$	98,000		$	(653,000	)

NET (LOSS) INCOME PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS (BASIC AND DILUTED)	$	(0.10	)	$	0.01		$	(0.00	)	$	(0.01	)

Weighted average number of common shares - basic and diluted		81,771,000			81,677,000			81,753,000			81,667,000

	Cedar Realty Trust, Inc. Shareholders
	Preferred stock						Common stock												Cumulative			Accumulated
													Treasury			Additional			distributions			other
													stock,			paid-in			in excess of			comprehensive
	Shares			Amount			Shares			Amount			at cost			capital			net income			income		Total
Balance, December 31, 2016		7,950,000		$	190,661,000			85,316,000		$	5,119,000		$	(18,129,000	)	$	829,526,000		$	(426,864,000	)	$	427,000	$	580,740,000
Net income		—			—			—			—			—			—			7,302,000			—		7,302,000
Unrealized gain on change in fair value of flow hedges		—			—			—			—			—			—			—			311,000		311,000
Share-based compensation, net		—			—			255,000			15,000			(487,000	)		2,136,000			—			—		1,664,000
Common stock sales, net of issuance expenses		—			—			1,000			—			—			7,000			—			—		7,000
Preferred stock dividends		—			—			—			—			—			—			(7,204,000	)		—		(7,204,000	)
Distributions to common shareholders/noncontrolling interests		—			—			—			—			—			—			(8,550,000	)		—		(8,550,000	)
Reallocation adjustment of limited partners' interest		—			—			—			—			—			(2,000	)		—			—		(2,000	)
Balance, June 30, 2017		7,950,000		$	190,661,000			85,572,000		$	5,134,000		$	(18,616,000	)	$	831,667,000		$	(435,316,000	)	$	738,000	$	574,268,000

	Noncontrolling Interests
	Minority			Limited
	interest in			partners'
	consolidated			interest in
	joint			Operating						Total
	ventures			Partnership			Total			Equity
Balance, December 31, 2016	$	(1,132,000	)	$	2,389,000		$	1,257,000		$	581,997,000
Net income		255,000			(1,000	)		254,000			7,556,000
Unrealized gain on change in fair value of flow hedges		—			1,000			1,000			312,000
Share-based compensation, net		—			—			—			1,664,000
Common stock sales, net of issuance expenses		—			—			—			7,000
Preferred stock dividends		—			—			—			(7,204,000	)
Distributions to common shareholders/noncontrolling interests		—			(36,000	)		(36,000	)		(8,586,000	)
Reallocation adjustment of limited partners' interest		—			2,000			2,000			—
Balance, June 30, 2017	$	(877,000	)	$	2,355,000		$	1,478,000		$	575,746,000

	Six months ended June 30,
	2017			2016
OPERATING ACTIVITIES
Net income	$	7,556,000		$	6,371,000
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sales		(7,099,000	)		(59,000	)
Impairment charges		9,850,000			—
Straight-line rents		(496,000	)		230,000
Provision for doubtful accounts		762,000			631,000
Depreciation and amortization		20,371,000			20,633,000
Amortization of intangible lease liabilities, net		(1,275,000	)		(1,410,000	)
Expense relating to share-based compensation, net		1,833,000			1,340,000
Amortization (including accelerated write-off) of deferred financing costs		715,000			791,000
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Rents and other receivables		(1,466,000	)		(829,000	)
Prepaid expenses and other		270,000			878,000
Accounts payable and accrued liabilities		(696,000	)		(994,000	)
Net cash provided by operating activities		30,325,000			27,582,000

INVESTING ACTIVITIES
Acquisitions of real estate		(28,836,000	)		(31,928,000	)
Expenditures for real estate improvements		(9,037,000	)		(4,480,000	)
Net proceeds from sales of real estate		10,372,000			14,494,000
Construction escrows and other		177,000			1,883,000
Net cash (used in) investing activities		(27,324,000	)		(20,031,000	)

FINANCING ACTIVITIES
Repayments under revolving credit facility		(25,500,000	)		(62,000,000	)
Advances under revolving credit facility		40,000,000			76,000,000
Mortgage borrowing		—			50,000,000
Mortgage repayments		(1,663,000	)		(53,864,000	)
Payments of debt financing costs		—			(1,366,000	)
Noncontrolling interests:
Distributions to limited partners		(36,000	)		(35,000	)
Common stock sales less issuance expenses, net		7,000			11,000
Preferred stock dividends		(7,204,000	)		(7,204,000	)
Distributions to common shareholders		(8,550,000	)		(8,516,000	)
Net cash (used in) financing activities		(2,946,000	)		(6,974,000	)

Net increase in cash and cash equivalents		55,000			577,000
Cash and cash equivalents at beginning of period		2,882,000			2,083,000
Cash and cash equivalents at end of period	$	2,937,000		$	2,660,000

Cedar Realty Trust, Inc. (the “Company”) is a real estate investment trust (“REIT”) that focuses primarily on ownership, operation and redevelopment of grocery-anchored shopping centers in high-density urban markets from Washington, D.C. to Boston. At June 30, 2017, the Company owned and managed a portfolio of 61 operating properties (excluding properties “held for sale”).

Cedar Realty Trust Partnership, L.P. (the “Operating Partnership”) is the entity through which the Company conducts substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets. At June 30, 2017, the Company owned a 99.6% economic interest in, and was the sole general partner of, the Operating Partnership. The limited partners’ interest in the Operating Partnership (0.4% at June 30, 2017) is represented by Operating Partnership Units (“OP Units”). The carrying amount of such interest is adjusted at the end of each reporting period to an amount equal to the limited partners’ ownership percentage of the Operating Partnership’s net equity. The 351,000 OP Units outstanding at June 30, 2017 are economically equivalent to the Company’s common stock. The holders of OP Units have the right to exchange their OP Units for the same number of shares of the Company’s common stock or, at the Company’s option, for cash.

As used herein, the “Company” refers to Cedar Realty Trust, Inc. and its subsidiaries on a consolidated basis, including the Operating Partnership or, where the context so requires, Cedar Realty Trust, Inc. only.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by U.S. Generally Accepted Accounting Principles (“GAAP”) for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, all adjustments necessary for fair presentation (including normal recurring accruals) have been included. The financial statements are prepared on the accrual basis in accordance with GAAP, which requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. Actual results could differ from these estimates. The unaudited consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

The unaudited consolidated financial statements include the accounts and operations of the Company, the Operating Partnership, its subsidiaries, and certain joint venture partnerships in which it participates. The Company consolidates all variable interest entities for which it is the primary beneficiary.

In May 2014, the FASB issued guidance which amends the accounting for revenue recognition. Under the amended guidance, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled and receive in exchange for those goods or services. Leases are specifically excluded from this guidance and will be governed by the applicable lease codification; however, this update may have implications with respect to certain variable payment terms included in lease agreements. The guidance would be effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption not permitted. The Company is currently in the process of evaluating the guidance and has initiated a review to identify non-lease components, if any, in its lease agreements; however, based on its initial assessment, the Company does not believe it will have a material impact on its consolidated financial statements.

In February 2016, the FASB issued guidance which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of their classification. Leases with a term of twelve months or less will be accounted for pursuant to existing guidance for operating leases. The guidance is expected to result in the recognition of a right-to-use asset and related liability to account for the Company’s future obligations under its ground lease and executive office lease agreements for which the Company is the lessee. Additionally, the guidance will require that lessees and lessors capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. Under this guidance, allocated payroll costs and other costs that are incurred regardless of whether the lease is obtained will no longer be capitalized as initial direct costs and instead will be expensed as incurred. Lessors will continue to account for leases using an approach that is substantially equivalent to existing guidance for operating and other leases. The new lease accounting guidance requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The guidance would be effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption being permitted. The Company is currently in the process of evaluating the impact the adoption of the guidance will have on its consolidated financial statements.

In March 2016, the FASB issued guidance which amends the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows, and the policy election with respect to accounting for forfeitures either as they occur or by estimating forfeitures. The guidance was adopted on January 1, 2017. The Company has elected to account for forfeitures as they occur, and the guidance did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued guidance which enhances the methodology of measuring expected credit losses to include the use of forward-looking information to better calculate credit loss estimates. The guidance will apply to most financial assets measured at amortized cost and certain other instruments, including accounts receivable, straight-line rent receivables, loans, held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures. The guidance will require that the Company estimate the lifetime expected credit loss with respect to these receivables and record allowances that, when deducted from the balance of the receivables, represent the net amounts expected to be collected. The Company will also be required to disclose information about how it developed the allowances, including changes in the factors that influenced the Company’s estimate of expected credit losses and the reasons for those changes. The guidance would be effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently in the process of evaluating the impact the adoption of the guidance will have on its consolidated financial statements.

In August 2016, the FASB issued guidance that clarifies how an entity should classify certain cash receipts and cash payments on its statement of cash flows. The guidance established that an entity will classify cash payments for debt prepayment or extinguishment costs as financing cash flows. In addition, the guidance provides entities with an alternative to consider regarding the nature of the source of distributions that an investor receives from an equity method investment when classifying distributions received in its cash flow statement (the nature of the distribution approach). Alternatively, entities can elect to classify the distributions received from equity method investees based on the cumulative earnings approach. The guidance would be effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption being permitted. The Company has evaluated the guidance and does not believe it will have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued guidance that will require entities to show the changes in the total of cash, cash equivalents and restricted cash in the statement of cash flows. When cash, cash equivalents and restricted cash are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions on the balance sheet. This reconciliation can be presented either on the face of the statement of cash flows or in the notes to the financial statements. The guidance would be effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption being permitted. The Company has evaluated the guidance and does not believe it will have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued guidance which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset and/or a group of similar identifiable assets; if these criteria are met, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in the guidance on revenue from contracts with customers. The guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption being permitted. The Company has elected to early adopt this guidance effective January 1, 2017. The Company believes that most of its typical acquisitions of real estate will not meet the new definition of a business, and accordingly, will result in the capitalization of associated acquisition pursuit costs, as is the case in the acquisition of Christina Crossing (see Note 3 - “Real Estate”).

On February 22, 2017, the Company acquired Christina Crossing, located in Wilmington, Delaware. The purchase price for the property, which was unencumbered, was $27.9 million. In addition, the Company incurred transaction costs of $0.9 million. The purchase price has been allocated to real estate assets acquired and liabilities assumed.

On February 1, 2017, the Company sold an outparcel building adjacent to Camp Hill, located in Camp Hill, Pennsylvania, for $10.7 million, resulting in a $7.1 million gain which is included in operating income in the accompanying consolidated statement of operations.

The Company, when applicable, conducts a continuing review of the values for all properties “held for sale” based on final sales prices and sales contracts entered into. Impairment charges/reversals, if applicable, are based on a comparison of the carrying values of the properties with either (1) actual sales prices less costs to sell for properties sold, or contract amounts for properties in the process of being sold, (2) estimated sales prices, less costs to sell, based on discounted cash flow analyses, if no contract amounts are being negotiated (see Note 4 - “Fair Value Measurements”), or (3) with respect to land parcels, estimated sales prices, less costs to sell, based on comparable sales completed in the selected market areas. Prior to the Company’s determination to dispose of properties, which are subsequently reclassified to “held for sale”, the Company performed recoverability analyses based on the estimated undiscounted cash flows that were expected to result from the real estate investments’ use and eventual disposal. The projected undiscounted cash flows of each property reflects that the carrying value of each real estate investment would be recovered. However, as a result of the properties’ meeting the “held for sale” criteria, such properties were written down to the lower of their carrying value and estimated fair values less costs to sell.

As of June 30, 2017, Fredericksburg Way, located in Fredericksburg, Virginia, has been classified as “real estate held for sale” on the accompanying consolidated balance sheet. The Company recorded an impairment charge of $9.9 million during 2017, which is included in operating income in the accompanying consolidated statement of operations.

The carrying amounts of cash and cash equivalents, restricted cash, rents and other receivables, certain other assets, accounts payable and accrued liabilities, and variable-rate debt approximate their fair value due to their terms and/or short-term nature. The fair

value of the Company’s investments and liabilities related to share-based compensation were determined to be Level 1 within the valuation hierarchy, and were based on independent values provided by financial institutions.

The fair value of the Company’s fixed rate mortgage loans were estimated using available market information and discounted cash flow analyses based on borrowing rates the Company believes it could obtain with similar terms and maturities. As of June 30, 2017 and December 31, 2016, the aggregate fair values of the Company’s fixed rate mortgage loans payable, which were determined to be Level 3 within the valuation hierarchy, were $138.2 million and $143.2 million, respectively; the carrying values of such loans were $136.6 million and $138.2 million, respectively. As of June 30, 2017 and December 31, 2016, respectively, the aggregate fair values of the Company’s unsecured revolving credit facility and term loans approximated the carrying values.

The valuation of the assets and liabilities for the Company’s interest rate swaps, which are measured on a recurring basis, were determined to be Level 2 within the valuation hierarchy, and were based on independent values provided by financial institutions. Such valuations were determined using widely accepted valuation techniques, including discounted cash flow analyses, on the expected cash flows of each derivative. The analyses reflect the contractual terms of the swaps, including the period to maturity, and user-observable market-based inputs, including interest rate curves (“significant other observable inputs”). The fair value calculation also includes an amount for risk of non-performance using “significant unobservable inputs” such as estimates of current credit spreads to evaluate the likelihood of default. The Company has concluded that, as of June 30, 2017, the fair value associated with the “significant unobservable inputs” relating to the Company’s risk of non-performance was insignificant to the overall fair value of the interest rate swap agreements and, as a result, that the relevant inputs for purposes of calculating the fair value of the interest rate swap agreements, in their entirety, were based upon “significant other observable inputs”.

Nonfinancial assets and liabilities measured at fair value in the consolidated financial statements consist of real estate held for sale, which, if applicable, are measured on a nonrecurring basis, and have been determined to be (1) Level 2 within the valuation hierarchy, where applicable, based on the respective contracts of sale, adjusted for closing costs and expenses, or (2) Level 3 within the valuation hierarchy, where applicable, based on estimated sales prices, adjusted for closing costs and expenses, determined by discounted cash flow analyses, direct capitalization analyses or a sales comparison approach if no contracts had been concluded. The discounted cash flow and direct capitalization analyses include all estimated cash inflows and outflows over a specific holding period and, where applicable, any estimated debt premiums. These cash flows were composed of unobservable inputs which included forecasted rental revenues and expenses based upon existing in-place leases, market conditions and expectations for growth. Capitalization rates and discount rates utilized in these analyses were based upon observable rates that the Company believed to be within a reasonable range of current market rates for the respective properties. The sales comparison approach is utilized for certain land values and includes comparable sales that were completed in the selected market areas. The comparable sales utilized in these analyses were based upon observable per acre rates that the Company believes to be within a reasonable range of current market rates for the respective properties.

Valuations were prepared using internally-developed valuation models. These valuations are reviewed and approved, during each reporting period, by a diverse group of management, as deemed necessary, including personnel from the acquisition, accounting, finance, operations, development and leasing departments, and the valuations are updated as appropriate. In addition, the Company may engage third-party valuation experts to assist with the preparation of certain of its valuations.

The following tables show the hierarchy for those assets measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016, respectively:

	June 30, 2017
Description	Level 1		Level 2		Level 3		Total
Investments related to deferred
compensation liabilities (a)	$	482,000	$	—	$	—	$	482,000
Deferred compensation liabilities (b)	$	476,000	$	—	$	—	$	476,000
Interest rate swaps asset (a)	$	—	$	2,689,000	$	—	$	2,689,000
Interest rate swaps liability (b)	$	—	$	1,708,000	$	—	$	1,708,000


	December 31, 2016
Description	Level 1		Level 2		Level 3		Total
Investments related to deferred
compensation liabilities (a)	$	447,000	$	—	$	—	$	447,000
Deferred compensation liabilities (b)	$	435,000	$	—	$	—	$	435,000
Interest rate swaps asset (a)	$	—	$	3,074,000	$	—	$	3,074,000
Interest rate swaps liability (b)	$	—	$	2,321,000	$	—	$	2,321,000

(a) Included in other assets and deferred charges, net in the accompanying consolidated balance sheets.
(b) Included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.

The following table shows the hierarchy for the asset measured at fair value on a non-recurring basis as of June 30, 2017:

There were no assets measured at fair value on a non-recurring basis as of December 31, 2016. The following table details the quantitative information regarding Level 3 assets measured at fair value on a non-recurring basis as of June 30, 2017:

The Company has a $310 million unsecured credit facility which consists of (1) a $260 million revolving credit facility, and (2) a $50 million term loan. Under an accordion feature, the facility can be increased to $750 million, subject to customary conditions and lending commitments. As of June 30, 2017, the Company had $161.6 million available for additional borrowings under the revolving credit facility.

The Company’s failure to comply with the covenants or the occurrence of an event of default under the facilities could result in the acceleration of the related debt and exercise of other lender remedies. As of June 30, 2017, the Company is in compliance with all financial covenants. Interest on borrowings under the unsecured credit facility and term loans are based on the Company’s leverage ratio.

At June 30, 2017, the Company had $2.7 million included in other assets and deferred charges, net, as well as $1.7 million included in accounts payable and accrued liabilities on the consolidated balance sheet relating to the fair value of the interest rate swaps applicable to the unsecured term loans discussed above. Charges and/or credits relating to the changes in the fair value of the interest rate swaps are made to accumulated other comprehensive income (loss), noncontrolling interests (minority interests in consolidated joint ventures and limited partners’ interest), or operations (included in interest expense), as applicable. Over time, the unrealized gains and losses recorded in accumulated other comprehensive loss will be reclassified into earnings as an increase or reduction to interest expense in the same periods in which the hedged interest payments affect earnings. The Company estimates that approximately $1.5 million of accumulated other comprehensive loss will be reclassified as a charge to earnings within the next twelve months.

The following is a summary of the derivative financial instruments held by the Company at June 30, 2017 and December 31, 2016:

The following presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and the consolidated statements of equity for the three and six months ended June 30, 2017 and 2016, respectively:

As of June 30, 2017 the Company believes it has no significant risk associated with non-performance of the financial institutions which are the counterparties to its derivative contracts.

The Company is a party to certain legal actions arising in the normal course of business. Management does not expect there to be adverse consequences from these actions that would be material to the Company’s consolidated financial statements.

The Company’s 7.25% Series B Cumulative Redeemable Preferred Stock (“Series B Preferred Stock”) has a liquidation preference of $25.00 per share, has no stated maturity, is not convertible into any other security of the Company, and was redeemable, in whole or in part, at the Company’s option beginning May 22, 2017 at a price of $25.00 per share plus accrued and unpaid distributions.

On July 17, 2017, the Company announced it will redeem 1.5 million shares of Series B Preferred Stock at a price of $25.00 per share plus all accrued and unpaid dividends up to (but excluding) the redemption date of August 16, 2017, for a total of approximately $25.47 per share.

The following table provides a summary of dividends declared and paid per share:

On July 13, 2017, the Company’s Board of Directors declared a dividend of $0.05 per share with respect to its common stock. At the same time, the Board declared a dividend of $0.453125 per share with respect to the Company’s Series B Preferred Stock. The distributions are payable on August 21, 2017 to shareholders of record on August 11, 2017.

Rental revenues for the three and six months ended June 30, 2017 and 2016, respectively, comprise the following:

The following tables set forth certain share-based compensation information for the three and six months ended June 30, 2017 and 2016, respectively:

On May 2, 2017, the Company’s shareholders approved the 2017 Stock Incentive Plan (the “2017 Plan”), which replaces the Company’s 2012 Stock Incentive Plan (the “2012 Plan”). As of the effective date of the 2017 Plan, the Company did not grant any further awards under the 2012 Plan. The 2017 Plan describes certain terms and conditions governing the grant of, among other things, restricted stock awards. The maximum number of shares initially reserved and available for issuance is 4.0 million shares, which may be subject to adjustment under certain circumstances as described more fully in the 2017 Plan. At June 30, 2017, approximately 4.0 million shares remained available for grants under the 2017 Plan.

During the six months ended June 30, 2017, there were 305,000 restricted shares issued, with a weighted average grant date fair value of $6.20 per share.

Basic earnings per share (“EPS”) is calculated by dividing net income (loss) attributable to the Company’s common shareholders by the weighted average number of common shares outstanding for the period including participating securities (restricted shares issued pursuant to the Company’s share-based compensation program are considered participating securities, as such shares have non-forfeitable rights to receive dividends). Unvested restricted shares are not allocated net losses and/or any excess of dividends declared over net income, as such amounts are allocated entirely to the common shareholders. For the three months ended June 30, 2017 and 2016, the Company had 3.8 million and 3.7 million, respectively, of weighted average unvested restricted shares outstanding. For the six months ended June 30, 2017 and 2016, the Company had 3.8 million and 3.6 million, respectively, of weighted average unvested restricted shares outstanding. The following table provides a reconciliation of the numerator and denominator of the EPS calculations for the three and six months ended June 30, 2017 and 2016, respectively:

Fully-diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into shares of common stock. The 5,750,000 common shares subject to the forward sale agreements (see Note 7 - “Shareholders’ Equity”) have been excluded from the denominator as they were anti-dilutive using the treasury stock method. Net loss attributable to noncontrolling interests of the Operating Partnership has been excluded from the numerator and the related OP Units have been excluded from the denominator for the purpose of calculating diluted EPS as there would have been no effect had such amounts been included. The weighted average number of OP Units outstanding were 351,000 and 352,000 for the three months ended June 30, 2017 and 2016, respectively, and 351,000 and 352,000 for the six months ended June 30, 2017 and 2016, respectively.

In determining subsequent events, management reviewed all activity from July 1, 2017 through the date of filing this Quarterly Report on Form 10-Q.

Item 2. 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.

The Company is a fully-integrated real estate investment trust that focuses primarily on ownership, operation and redevelopment of grocery-anchored shopping centers in high-density urban markets from Washington, D.C. to Boston. At June 30, 2017, the Company owned and managed a portfolio of 61 operating properties (excluding properties “held for sale”) totaling 9.0 million square feet of gross leasable area (“GLA”). The portfolio was 92.4% leased and 90.7% occupied at June 30, 2017.

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

On February 1, 2017, the Company sold an outparcel building adjacent to Camp Hill, located in Camp Hill, Pennsylvania, for $10.7 million, which resulted in a $7.1 million gain.

As of June 30, 2017, Fredericksburg Way, located in Fredericksburg, Virginia, has been classified as “real estate held for sale”. The Company recorded an impairment charge of $9.9 million in connection with the property during 2017.

The Company’s forward sales agreements, entered into on August 1, 2016 for the issuance of 5,750,000 common shares, were settled by August 1, 2017 for net proceeds, after adjustments for dividends paid and other administrative costs, of approximately $43.2 million. The proceeds of the offering will be used predominantly to redeem 1.5 million shares of Series B Preferred Stock, which the Company announced on July 17, 2017, at a price of $25.00 per share plus all accrued and unpaid dividends up to (but excluding) the redemption date of August 16, 2017, for a total of approximately $25.47 per share.

							Change
	2017			2016			Dollars			Percent
Revenues	$	35,699,000		$	37,872,000		$	(2,173,000	)		-5.7%
Property operating expenses		(10,383,000	)		(10,577,000	)		194,000			-1.8%
Property operating income		25,316,000			27,295,000			(1,979,000	)
General and administrative		(4,237,000	)		(3,975,000	)		(262,000	)		6.6%
Acquisition pursuit costs		—			(527,000	)		527,000		n/a
Depreciation and amortization		(9,953,000	)		(10,972,000	)		1,019,000			-9.3%
Impairment charges		(9,850,000	)		—			(9,850,000	)	n/a
Interest expense		(5,665,000	)		(7,128,000	)		1,463,000			-20.5%
Early extinguishment of debt costs		—			102,000			(102,000	)	n/a
Net (loss) income		(4,389,000	)		4,795,000			(9,184,000	)
Net (income) loss attributable to noncontrolling interests		(85,000	)		93,000			(178,000	)
Net (loss) income attributable to Cedar Realty Trust, Inc.	$	(4,474,000	)	$	4,888,000		$	(9,362,000	)

Revenues were lower primarily as a result of (1) a decrease of $2.4 million in rental revenues and expense recoveries attributable to properties that were sold in 2017 and 2016, (2) a decrease of $0.4 million in rental revenues and expense recoveries attributable to same-center properties, and (3) a decrease of $0.1 million in rental revenues and expense recoveries attributable to the Company’s redevelopment properties, partially offset by an increase of $0.8 million in rental revenues and expense recoveries attributable to properties acquired in 2017 and 2016.

Property operating expenses were lower primarily as a result of a decrease of $0.6 million in property operating expenses attributable to properties that were sold in 2017 and 2016, partially offset by an increase of $0.3 million in property operating expenses attributable to properties acquired in 2017 and 2016.

General and administrative costs were higher primarily as a result of an increase in professional fees.

Depreciation and amortization expenses were lower primarily as a result of (1) a decrease of $0.7 million attributable to redevelopment properties, (2) a decrease of $0.6 million attributable to properties that were sold in 2017 and 2016, and (3) a decrease of $0.2 million attributable to the Company’s same-center properties, partially offset by an increase of $0.5 million attributable to properties acquired in 2017 and 2016.

Impairment charges in 2017 relate to Fredericksburg Way, located in Fredericksburg, Virginia.

Interest expense was lower primarily as a result of (1) $0.9 million as a result of a decrease in the overall weighted average interest rate, and (2) $0.6 million as a result of a decrease in the overall outstanding principal balance of debt.

							Change
	2017			2016			Dollars			Percent
Revenues	$	72,473,000		$	76,123,000		$	(3,650,000	)		-4.8%
Property operating expenses		(22,172,000	)		(22,612,000	)		440,000			-1.9%
Property operating income		50,301,000			53,511,000			(3,210,000	)
General and administrative		(8,373,000	)		(9,322,000	)		949,000			-10.2%
Acquisition pursuit costs		(156,000	)		(3,124,000	)		2,968,000		n/a
Depreciation and amortization		(20,371,000	)		(20,633,000	)		262,000			-1.3%
Gain on sale		7,099,000			59,000			7,040,000		n/a
Impairment charges		(9,850,000	)		—			(9,850,000	)	n/a
Interest expense		(11,094,000	)		(14,133,000	)		3,039,000			-21.5%
Early extinguishment of debt costs		—			13,000			(13,000	)	n/a
Net income		7,556,000			6,371,000			1,185,000
Net (income) loss attributable to noncontrolling interests		(254,000	)		180,000			(434,000	)
Net income attributable to Cedar Realty Trust, Inc.	$	7,302,000		$	6,551,000		$	751,000

Revenues were lower primarily as a result of (1) a decrease of $4.9 million in rental revenues and expense recoveries attributable to properties that were sold in 2017 and 2016, and (2) a decrease of $0.8 million in rental revenues and expense recoveries attributable to same-center properties, partially offset by (1) an increase of $1.7 million in rental revenues and expense recoveries attributable to properties acquired in 2017 and 2016, and (2) an increase of $0.3 million in rental revenues and expense recoveries attributable to the Company’s redevelopment properties.

Property operating expenses were lower primarily as a result of a decrease of $1.2 million in property operating expenses attributable to properties that were sold in 2017 and 2016, partially offset by an increase of $0.7 million in property operating expenses attributable to properties acquired in 2017 and 2016.

General and administrative costs were lower primarily as a result of $1.4 million of costs and estimated expenses associated with the Chief Operating Officer transition in 2016, offset by an increase in payroll, payroll related benefits, and professional fees.

Acquisition pursuit costs were lower in 2017 as compared to 2016 as the Company adopted the accounting guidance in 2017 which requires the capitalization of costs in typical acquisitions of real estate (see Note 2 - “Summary of Significant Accounting Policies”). Acquisition pursuit costs in 2017 relate to costs associated with acquisitions the Company chose not to continue to pursue. Acquisition pursuit costs in 2016, which were recorded under the prior accounting guidance, relate to (1) $1.7 million of transfer taxes relating to the buyout of a ground lease and acquisition of the fee interest in a currently owned property, (2) $0.6 million for the purchase of The Shops at Bloomfield Station, located in Bloomfield, New Jersey, (3) $0.5 million for the purchase of the Shoppes at Arts District, located in Hyattsville, Maryland, and (4) $0.4 million for additional real estate transfer taxes assessed on a property which was purchased in 2014.

Depreciation and amortization expenses were lower primarily as a result of (1) a decrease of $1.1 million attributable to properties that were sold in 2017 and 2016, (2) a decrease of $0.1 million attributable to redevelopment properties, and (3) a decrease of $0.1 million attributable to same-center properties, partially offset by an increase of $1.1 million attributable to properties acquired in 2017 and 2016.

Gain on sale in 2017 relates to the sale of an outparcel building adjacent to Camp Hill, located in Camp Hill, Pennsylvania.

Impairment charges in 2017 relate to Fredericksburg Way, located in Fredericksburg, Virginia.

Interest expense was lower primarily as a result of (1) $1.7 million as a result of a decrease in the overall weighted average interest rate, and (2) $1.3 million as a result of a decrease in the overall outstanding principal balance of debt.

Same-property net operating income (“same-property NOI”) is a widely-used non-GAAP financial measure for REITs that the Company believes, when considered with financial statements prepared in accordance with GAAP, is useful to investors as it provides an indication of the recurring cash generated by the Company’s properties by excluding certain non-cash revenues and expenses, as well as other infrequent items such as lease termination income which tends to fluctuate more than rents from year to year. Properties

are included in same-property NOI if they are owned and operated for the entirety of both periods being compared, except for properties undergoing significant redevelopment and expansion until such properties have stabilized, and properties classified as held for sale. Consistent with the capital treatment of such costs under GAAP, tenant improvements, leasing commissions and other direct leasing costs are excluded from same-property NOI.

The most directly comparable GAAP financial measure is consolidated operating income. Same-property NOI should not be considered as an alternative to consolidated operating income prepared in accordance with GAAP or as a measure of liquidity. Further, same-property NOI is a measure for which there is no standard industry definition and, as such, it is not consistently defined or reported on among the Company’s peers, and thus may not provide an adequate basis for comparison among REITs. The following table reconciles same-property NOI to the Company’s consolidated operating income:

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Consolidated operating income	$	1,276,000		$	11,821,000		$	18,650,000		$	20,491,000
Add (deduct):
General and administrative		4,237,000			3,975,000			8,373,000			9,322,000
Acquisition pursuit costs		—			527,000			156,000			3,124,000
Gain on sales		—			—			(7,099,000	)		(59,000	)
Impairment charges		9,850,000			—			9,850,000			—
Depreciation and amortization		9,953,000			10,972,000			20,371,000			20,633,000
Straight-line rents		(255,000	)		(87,000	)		(496,000	)		230,000
Amortization of intangible lease liabilities		(636,000	)		(725,000	)		(1,275,000	)		(1,410,000	)
Other adjustments		10,000			(327,000	)		126,000			(345,000	)
NOI related to properties not defined as same-property		(4,136,000	)		(5,365,000	)		(8,611,000	)		(11,095,000	)
Same-property NOI	$	20,299,000		$	20,791,000		$	40,045,000		$	40,891,000

Number of same properties		52			52			51			51
Same-property occupancy, end of period		92.1	%		92.5	%		92.1	%		92.5	%
Same-property leased, end of period		93.7	%		93.2	%		93.8	%		93.1	%
Same-property average base rent, end of period	$	13.16		$	13.16		$	13.05		$	13.05

Same-property NOI for the comparative three and six month periods decreased by 2.4% and 2.1%, respectively. The results reflect a decrease in occupancy of 40 bps, driven primarily by two vacant anchors which resulted in reduced rental revenue, along with certain related temporary co-tenancy rental reductions.

The following is a summary of the Company’s retail leasing activity during the six months ended June 30, 2017:

The Company funds operating expenses and other short-term liquidity requirements, including debt service, tenant improvements, leasing commissions, preferred and common dividend distributions and distributions to minority interest partners, if made, primarily from its operations. The Company may also use its revolving credit facility for these purposes. The Company expects

to fund long-term liquidity requirements for property acquisitions, redevelopment costs, capital improvements, and maturing debt initially with its revolving credit facility, and ultimately through a combination of issuing and/or assuming additional debt, the sale of equity securities, the issuance of additional OP Units, and/or the sale of properties. Although the Company believes it has access to secured and unsecured financing, there can be no assurance that the Company will have the availability of financing on completed development projects, additional construction financing, or proceeds from the refinancing of existing debt.

The Company’s unsecured credit facility and term loans contain financial covenants including, but not limited to, maximum debt leverage, maximum secured debt, minimum fixed charge coverage, and minimum net worth. In addition, the facilities contain restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. Although the credit facilities are unsecured, borrowing availability is based on unencumbered property adjusted net operating income, as defined in the agreements. The Company’s failure to comply with the covenants or the occurrence of an event of default under the facilities could result in the acceleration of the related debt and exercise of other lender remedies. As of June 30, 2017, the Company is in compliance with all financial covenants. Interest on borrowings under the unsecured credit facility and term loans are based on the Company’s leverage ratio.

Property-specific mortgage loans payable 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 Internal Revenue Code of 1986, as amended (the “Code”). The Company paid common and preferred stock dividends during 2016, and has continued to declare and pay common and preferred stock dividends during 2017. 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.

Net cash provided by operating activities, before net changes in operating assets and liabilities, was $32.2 million for the six months ended June 30, 2017 and $28.5 million for the six months ended June 30, 2016. The $3.7 million increase was primarily attributable to the decrease in acquisition pursuit costs, interest expense and management transition costs.

Net cash flows used in investing activities were primarily the result of the Company’s property acquisitions, expenditures for property improvements and property disposition activities. During the six months ended June 30, 2017, the Company acquired a shopping center for $28.8 million, and incurred expenditures of $9.0 million for property improvements, which was offset by $10.4 million in proceeds from the sale of an outparcel building, and a decrease of $0.2 million in construction escrows and other. During the six months ended June 30, 2016, the Company acquired two shopping centers, which were partially paid in cash for $31.9 million, and incurred expenditures of $4.5 million for property improvements, which was offset by $14.5 million in proceeds from the sale of a property classified as held for sale, and a decrease of $1.9 million in construction escrows and other.

During the six months ended June 30, 2017, the Company had $15.8 million of preferred and common stock distributions and $1.7 million of repayments of mortgage obligations, which was offset by net borrowings of $14.5 million under the revolving credit facility. During the six months ended June 30, 2016, the Company made $53.9 million of repayments of mortgage obligations, $15.7 million of preferred and common stock distributions, and $1.4 million of payments for debt financing costs, which was offset by a mortgage borrowing of $50.0 million and net borrowings of $14.0 million under the revolving credit facility.

Funds From Operations (“FFO”) is a widely recognized supplemental non-GAAP measure utilized to evaluate the financial performance of a REIT. The Company presents FFO in accordance with the definition adopted by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT generally defines FFO as net income attributable to common shareholders (determined in accordance with GAAP), excluding gains (losses) from sales of real estate properties, impairment provisions on real estate properties, plus real estate related depreciation and amortization, and adjustments for partnerships and joint ventures to reflect FFO on the same basis. The Company considers FFO to be an appropriate measure of its financial performance because 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 other depreciable assets.

The Company also considers Operating Funds From Operations (“Operating FFO”) to be an additional meaningful financial measure of financial performance because it excludes items the Company does not believe are indicative of its core operating performance, such as non-capitalized acquisition pursuit costs, amounts relating to early extinguishment of debt and preferred stock redemption costs, management transition costs and certain redevelopment costs. The Company believes Operating FFO further assists in comparing the Company’s performance across reporting periods on a consistent basis by excluding such items.

FFO and Operating FFO should be reviewed with net income attributable to common shareholders, the most directly comparable GAAP financial measure, when trying to understand the Company’s operating performance. FFO and Operating FFO do not represent cash generated from operating activities and should not be considered as an alternative to net income attributable to common shareholders or to cash flow from operating activities. The Company’s computations of FFO and Operating FFO may differ from the computations utilized by other REITs and, accordingly, may not by comparable to such REITs.

A reconciliation of net income (loss) income attributable to common shareholders to FFO and Operating FFO for the three and six months ended June 30, 2017 and 2016 is as follows:

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Net (loss) income attributable to common shareholders	$	(8,076,000	)	$	1,286,000		$	98,000		$	(653,000	)
Real estate depreciation and amortization		9,905,000			10,930,000			20,280,000			20,548,000
Limited partners' interest		(33,000	)		7,000			(1,000	)		—
Gain on sales		—			—			(7,099,000	)		(59,000	)
Impairment charges		9,850,000			—			9,850,000			—
Consolidated minority interests:
Share of income / (loss)		118,000			(100,000	)		255,000			(180,000	)
Share of FFO		(92,000	)		(47,000	)		(197,000	)		(112,000	)
FFO applicable to diluted common shares		11,672,000			12,076,000			23,186,000			19,544,000
Acquisition pursuit costs (a)		—			527,000			156,000			3,124,000
Financing costs (b)		—			(102,000	)		—			(13,000	)
Redevelopment costs (c)		37,000			83,000			37,000			476,000
Management transition costs (d)		—			—			—			1,427,000
Operating FFO applicable to diluted common shares	$	11,709,000		$	12,584,000		$	23,379,000		$	24,558,000

FFO per diluted common share	$	0.14		$	0.14		$	0.27		$	0.23
Operating FFO per diluted common share	$	0.14		$	0.15		$	0.27		$	0.29
Weighted average number of diluted common shares (e):
Common shares		85,568,000			85,342,000			85,520,000			85,278,000
OP Units		351,000			352,000			351,000			352,000
		85,919,000			85,694,000			85,871,000			85,630,000

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 inflation-sensitive costs such as 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.

One of the principal market risks facing the Company is the risk of interest rate changes, primarily through its variable-rate revolving credit facility and term loans. 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 either fixed rates or at variable rates and enter into derivative financial instruments, such as interest rate swaps, to mitigate its interest rate risk. The Company does not enter into derivative or interest rate transactions for speculative purposes. The Company is not directly subject to foreign currency risk.

The Company has entered into forward interest rate swap agreements which convert the LIBOR rates to fixed rates for certain unsecured term loans. At June 30, 2017, the Company had $2.7 million included in deferred charges and other assets, net, as well as $1.7 million included in accounts payable and accrued liabilities on the consolidated balance sheet relating to the fair value of the interest rate swaps applicable to certain unsecured term loans. Based on the Company’s leverage ratio at June 30, 2017, the following table details the unsecured term loans which are subject to interest rate swap agreements:

At June 30, 2017, long-term debt consisted of fixed-rate mortgage loans payable, unsecured term loans, and the Company’s unsecured variable-rate credit facility. Excluding unamortized premiums and debt issuance costs, the average interest rate on the $486.7 million of fixed-rate debt outstanding was 3.6%, with maturities at various dates through 2029. The average interest rate on the $136.5 million of variable-rate debt outstanding, which consists of the unsecured revolving credit facility and a term loan, was 2.5%. With respect to the $136.5 million of variable-rate debt, if contractual interest rates either increase or decrease by 100 bps, the Company’s interest cost would increase or decrease respectively by approximately $1.4 million per annum.

With respect to the Company’s fixed rate mortgage notes and unsecured term loans, changes in interest rates generally do not affect the Company’s interest expense as these notes are at fixed rates for extended terms. Because the Company presently intends to hold its existing fixed-rate debt either to maturity or until the sale of the associated property, these fixed-rate notes pose an interest rate risk to the Company’s results of operations and its working capital position only upon the refinancing of that indebtedness. The Company’s possible risk is from increases in long-term interest rates that may occur as this may increase the cost of refinancing maturing fixed-rate debt. In addition, the Company may incur prepayment penalties or defeasance costs when prepaying or defeasing debt.

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), designed to ensure that information required to be disclosed in its filings under the Exchange Act is reported within the time periods specified in the rules and regulations of the Securities and Exchange Commission (“SEC”). In this regard, the Company has formed a Disclosure Committee currently comprising several of the Company’s executive officers as well as certain other employees with knowledge of information that may be considered in the SEC reporting process. The Committee has responsibility for the development and assessment of the financial and non-financial information to be included in the reports filed with the SEC, and assists the Company’s Chief Executive Officer and Chief Financial Officer in connection with their certifications contained in the Company’s SEC filings. The Committee meets regularly and reports to the Audit Committee on a quarterly or more frequent basis. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated its disclosure controls and procedures as of June 30, 2017, and have concluded that such disclosure controls and procedures are effective.

During the three months ended June 30, 2017, there have been no changes in the Company’s internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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.

There were no material changes to the Risk Factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

A list of exhibits to this quarterly report on Form 10-Q is set forth on the Exhibit Index immediately preceding such exhibits and is incorporated herein by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Large accelerated filer	☐		Accelerated filer	☒

Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐

			Emerging growth company	☐

Forward-Looking Statements		3

Part I. Financial Information

Item 1.	Financial Statements (unaudited)

	Consolidated Balance Sheets – June 30, 2017 and December 31, 2016	4

	Consolidated Statements of Operations– Three and six months ended June 30, 2017 and 2016	5

	Consolidated Statements of Comprehensive Income – Three and six months ended June 30, 2017 and 2016	6
	Consolidated Statement of Equity– Six months ended June 30, 2017	7

	Consolidated Statements of Cash Flows– Six months ended June 30, 2017 and 2016	8

	Notes to Consolidated Financial Statements – June 30, 2017	9-17

Item 2.	Management’s Discussion and Analysis of Financial Condition And Results of Operations	18-25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25-26

Part II. Other Information

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	27

Signatures		28

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016

Net (loss) income	$	(4,389,000	)	$	4,795,000		$	7,556,000		$	6,371,000

Other comprehensive income - unrealized (loss) gain on change in fair value of cash flow hedges		(1,028,000	)		(4,596,000	)		312,000			(9,566,000	)

Comprehensive (loss) income		(5,417,000	)		199,000			7,868,000			(3,195,000	)

Comprehensive (income) loss attributable to noncontrolling interests		(81,000	)		112,000			(255,000	)		220,000

Comprehensive (loss) income attributable to Cedar Realty Trust, Inc.	$	(5,498,000	)	$	311,000		$	7,613,000		$	(2,975,000	)

	Six months ended June 30,
	2017		2016
Supplemental disclosure of cash activities:
Cash paid for interest	$	10,543,000	$	13,871,000
Supplemental disclosure of non-cash activities:
Capitalization of interest and financing costs		285,000		349,000
Mortgage loan payable assumed upon acquisition		—		(8,501,000	)

		Gain (loss) recognized in other
		comprehensive income
		(effective portion)
Designation/		Three months ended June 30,						Six months ended June 30,
Cash flow	Derivative	2017			2016			2017			2016
Qualifying	Interest rate swaps	$	(1,678,000	)	$	(5,504,000	)	$	(1,204,000	)	$	(11,396,000	)

		(Loss) recognized in other
		comprehensive income
		reclassified into earnings (effective portion)
		Three months ended June 30,						Six months ended June 30,
	Classification	2017			2016			2017			2016
	Continuing Operations	$	(650,000	)	$	(908,000	)	$	(1,516,000	)	$	(1,830,000	)

												Tenant
					New rent		Prior rent		Cash basis			improvements
	Leases				per		per		%			per
	signed		GLA		sq.ft. ($)		sq.ft. ($)		change			sq.ft. ($) (a)
Renewals		59		450,800		12.92		12.19		6.0	%		0.00
New Leases - Comparable		12		104,000		13.93		12.75		9.3	%		46.86
New Leases - Non-Comparable (b)		6		32,600	n/a		n/a		n/a			n/a
Total (c)		77		587,400		13.33	n/a		n/a				9.85

	June 30, 2017
				Contractual interest rates
	Balance			Weighted -
Description	outstanding			average		Range
Fixed-rate mortgages	$	136,692,000			4.6%	3.9% - 7.5%
Unsecured credit facilities:
Variable-rate:
Revolving credit facility		86,500,000			2.5%
Term loan		50,000,000			2.5%
Fixed-rate (a):
Term loan		75,000,000			2.9%
Term loan		50,000,000			2.8%
Term loan		75,000,000			4.0%
Term loan		50,000,000			3.3%
Term loan		100,000,000			3.2%
		623,192,000			3.4%
Unamortized premium		602,000
Unamortized debt issuance costs		(2,831,000	)
	$	620,963,000

	Secured Debt				Unsecured Debt
	Scheduled		Balloon		Revolving			Term
Year	Amortization		Payments		Credit Facility			Loans		Total
2017	$	1,625,000	$	-	$	-		$	-	$	1,625,000
2018		3,377,000		-		-			-		3,377,000
2019		3,542,000		-		86,500,000	(a)		75,000,000		165,042,000
2020		3,707,000		-		-			100,000,000		103,707,000
2021		3,253,000		22,367,000		-			75,000,000		100,620,000
Thereafter		11,561,000		87,260,000		-			150,000,000		248,821,000
	$	27,065,000	$	109,627,000	$	86,500,000		$	400,000,000	$	623,192,000

		Effective	Maturity	Effective fixed
Amount		date	date	interest rate
$	75,000,000	July 2014	February 2019		2.9%
$	50,000,000	July 2015	February 2020		2.8%
$	75,000,000	July 2014	February 2021		4.0%
$	50,000,000	July 2015	February 2022		3.3%
$	100,000,000	November 2016	April 2023		3.2%

By:	/s/ BRUCE J. SCHANZER	By:	/s/ PHILIP R. MAYS
	Bruce J. Schanzer		Philip R. Mays
	President and Chief Executive Officer (Principal executive officer)		Executive Vice President, Chief Financial Officer and Treasurer
			(Principal financial officer)


	August 4, 2017