Cedar Realty Trust, Inc. — 2023 Form 10-K
Business context and reporting period
For the fiscal year ended December 31, 2023. Cedar is a REIT focused on grocery-anchored retail centers, primarily in the Northeast. Following its 2022 asset sales and merger, it operated 19 properties totaling 2.83 million square feet at year-end. The portfolio was 89.6% leased and 86.4% occupied.
WHLR owns all of Cedar’s common stock; Cedar common shares are no longer publicly traded. Series B and Series C preferred shares remain listed on the NYSE.
Key financial and operating metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $34.6 million | $34.3 million |
| Property operating income | $21.5 million | $19.9 million |
| Operating income (loss) | $10.0 million | $(68.1) million |
| Net income (loss) from continuing operations | $2.0 million | $(79.0) million |
| Net income attributable to common shareholders | $(8.7) million | $33.3 million |
| Net cash from operating activities | $8.2 million | $(20.5) million |
- Property operating income was 62.0% of revenue and operating income was 29.0% of revenue, calculated from reported figures.
- Same-property NOI was $19.8 million, up 8.5%; year-end occupancy increased to 86.4% from 82.3%, and leased area to 89.6% from 86.2%.
- Capital expenditures for property improvements were $6.5 million. Operating cash flow less these expenditures was approximately $1.8 million, calculated from reported figures.
- At year-end, cash and cash equivalents were $6.5 million and restricted cash was $9.4 million. Total assets were $233.1 million and equity was $73.5 million.
- Secured fixed-rate debt was $144.1 million gross, or $140.5 million net of unamortized issuance costs, at a weighted-average contractual rate of 5.6%. Debt was collateralized by 13 properties. The filing reports no scheduled debt maturities in 2024 apart from $74,000 of principal payments.
- Preferred stock dividends were $10.8 million in 2023. Common shareholders received no 2023 dividend; $1.2 million of preferred dividends was accrued at year-end.
Material changes versus the prior comparable period
- Revenue increased 1.0%, while property operating expenses fell 8.4%; property operating income rose $1.5 million. Management attributed the improvement mainly to same-center rent and recovery growth and lower expenses.
- 2023 net income attributable to Cedar was $2.0 million, but preferred dividends produced a $8.7 million loss attributable to common shareholders. The 2022 comparison is substantially affected by the disposition and merger: it included $123.2 million of income from discontinued operations, including $125.5 million in sale gains, and $59.0 million of transaction costs.
- Corporate general and administrative expense declined to $3.2 million from $10.1 million, primarily reflecting lower transaction-related payroll and other costs. Net interest expense fell to $8.0 million from $10.9 million.
- The company sold a Carll’s Corner outparcel for $3.0 million, recognizing a $2.7 million gain. Debt increased by $9.1 million net of issuance costs, primarily reflecting the new Timpany Plaza loan.
Outlook, risks, contingencies and unusual items
- No formal earnings or NOI guidance is provided. Management said it is seeking to improve occupancy, including by backfilling vacant anchor spaces and replacing defaulted tenants; related tenant improvements and leasing commissions are expected to be funded in part by restricted cash, asset sales and property financing.
- On February 29, 2024, Cedar entered a revolving credit agreement for up to $9.5 million, bearing daily SOFR plus applicable margins of 2.85% in total. It matures February 28, 2025, with two optional three-month extensions, and is secured by six properties. Proceeds are intended for capital expenditures and tenant improvements.
- A preferred-stockholder lawsuit concerning the 2022 transactions was dismissed, but plaintiffs appealed to the Fourth Circuit; the appeal was fully briefed and its outcome remained uncertain at filing. A separate securities complaint was dismissed with prejudice, and another related action was dismissed based on the pending Maryland case.
- Key risks include tenant defaults or nonrenewals, vacancies, concentration in Northeast markets, retail competition and e-commerce, financing costs, inflation, insurance costs and exposure to severe weather. Five properties accounted for approximately 90.4% of property operating income in 2023.
- WHLR provides Cedar’s property management and leasing services. Cedar paid WHLR $2.1 million for these services in 2023 and reported $8.1 million due to WHLR at year-end. The fixed-rate Timpany Plaza loan bears 7.27%; $2.5 million of the committed loan amount remained subject to lease-related contingencies.
- The auditor issued an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal control.
Important facts for investors to verify
- Whether occupancy gains translate into rent collections and sustainable same-property NOI growth, especially at underoccupied centers.
- Availability and terms of financing, including the 2025 revolving-credit maturity, restricted-cash availability and satisfaction of the Timpany Plaza loan contingency.
- Preferred dividend coverage and payment capacity, given the common-shareholder loss, preferred distributions and accumulated preferred dividends.
- Developments in the Fourth Circuit appeal and any resulting litigation costs or liabilities.
- The composition and settlement of the $8.1 million related-party balance due to WHLR, and ongoing management, leasing and cost-sharing charges.