Cedar Realty Trust, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; the filing also provides unaudited quarterly data. The year was dominated by asset sales and the company’s merger with Wheeler Real Estate Investment Trust, Inc. (WHLR).
Business context and major transactions
Cedar was a REIT focused on grocery-anchored shopping centers in the Northeast. On July 7, 2022, it sold 33 grocery-anchored centers and redevelopment assets for approximately $879 million in gross proceeds, including assumed debt. On August 22, 2022, WHLR completed its all-cash merger with Cedar. Common shares were canceled for $9.48 per share, in addition to a previously declared $19.52 special dividend; Cedar’s common stock ceased trading on the NYSE. Cedar became a wholly owned WHLR subsidiary. Its Series B and Series C preferred shares remain outstanding and NYSE-listed.
At year-end, Cedar reported 19 operating properties totaling 2.9 million square feet; they were 86.2% leased and 82.3% occupied.
Financial results and key metrics
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue from continuing operations | $34.0 million | $39.2 million |
| Operating loss | $68.1 million | $21.8 million |
| Net income (loss) attributable to Cedar | $44.0 million | $(45.1) million |
| Net income (loss) attributable to common shareholders | $33.3 million; $2.48 per share | $(55.9) million; $(4.24) per share |
| Net cash from (used in) operating activities | $(20.5) million | $45.0 million |
| Same-property NOI | $18.2 million | $19.3 million |
| Operating FFO | $12.2 million; $0.88 per diluted share | $33.8 million; $2.43 per diluted share |
2022 net income included a $125.5 million gain on sales reported in discontinued operations. Continuing operations included $59.0 million of transaction costs, of which $33.5 million related to employee severance, and $9.4 million of impairment charges. Accordingly, reported net income and EPS do not represent recurring performance. Revenue declined 13.2% year over year; same-property NOI declined 5.4%, which management attributed primarily to non-recurring operating expenses. Year-end same-property occupancy was 82.3%, versus 83.5% in 2021.
Cash flow from investing activities was $676.8 million, primarily reflecting property sale proceeds; financing activities used $646.1 million. Financing cash outflows included $408.1 million of preferred and common distributions and substantial debt repayments. Year-end cash and cash equivalents were $3.9 million, with $9.6 million of restricted cash.
Debt, liquidity and capital structure
At December 31, 2022, debt had $135.0 million principal outstanding, or $131.5 million net of unamortized issuance costs. It comprised $110.0 million of fixed-rate Guggenheim debt at 5.25% and $25.0 million of fixed-rate Citi debt at 6.35%, collateralized by 12 properties. The loans mature in 2032 and 2033; no debt maturities were scheduled for 2023. The loans require interest-only payments until amortization begins on the Guggenheim loan in December 2027; the Citi loan is interest-only through maturity.
The company repaid its $130.0 million KeyBank facility by year-end using proceeds from the two new loans. Management identified operating cash, asset dispositions, refinancing and efforts to lease vacant anchor space as liquidity measures. Restricted cash is generally limited to specified property-level uses. Preferred stock with an aggregate $159.5 million balance remained outstanding; preferred dividends were paid through the fourth quarter of 2022, and dividends were declared for the first quarter of 2023.
Outlook, risks and unusual items
The filing provides no specific earnings or operating guidance. Management discussed plans to backfill vacant anchor spaces, replace defaulting tenants, fund tenant improvements partly from restricted cash, and use dispositions, refinancing and operating cash to support liquidity. Inflation and higher interest rates may raise borrowing costs and affect tenants; leases generally provide for recovery of some property expenses.
- Litigation: Preferred-stockholder lawsuits concerning merger and distribution rights remained unresolved, as did a securities-fraud action and another preferred-stockholder class action. The company stated that outcomes were uncertain. Several other merger-related proxy lawsuits were voluntarily dismissed.
- Operating and financial risks: Tenant defaults or bankruptcies, vacancies and anchor departures, retail-sector and e-commerce changes, concentration in the Northeast, refinancing and covenant risks, and property impairments could affect results and liquidity.
- Other exposures: Environmental compliance, severe weather and insurance limits, cybersecurity, REIT qualification, and costs or disruption from integration with WHLR remain risks.
- Controls and audit: Management and the auditor reported effective internal control over financial reporting as of year-end; the financial statements received an unqualified audit opinion.
Important facts for investors to verify
- Confirm the terms and completion accounting for the asset sales and merger, including the $19.52 special dividend and $9.48 common-share merger payment.
- Review the continuing preferred-stockholder and securities litigation, potential outcomes, and any subsequent developments.
- Assess the remaining portfolio’s occupancy, anchor exposure, lease expirations and leasing costs, especially vacant space.
- Verify debt covenants, collateral, required reserves, interest obligations and WHLR’s support or cost-sharing arrangements.
- Separate recurring property performance from sale gains, impairments, transaction costs and discontinued operations when assessing earnings and cash generation.