Cedar Realty Trust, Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual filing, not a standalone fourth-quarter report. Financial amounts are in U.S. dollars; per-share amounts reflect the 1-for-6.6 reverse stock split.
Business context
Cedar Realty Trust is a REIT focused on owning, operating and redeveloping grocery-anchored shopping centers in the Washington, D.C.–to–Boston corridor. At year-end, it owned and managed 54 operating properties totaling 8.1 million square feet; the portfolio was 89.1% leased and 88.1% occupied. Pennsylvania represented 49.1% of portfolio GLA.
Financial performance and liquidity
| Metric | 2020 | 2019 | Change |
|---|---|---|---|
| Total revenue | $135.5 million | $144.1 million | Down 5.9% |
| Property operating income | $89.9 million | $95.7 million | Down $5.8 million |
| Operating income | $21.5 million | $25.1 million | Down $3.6 million |
| Net income (loss) | ($0.5 million) | $1.6 million | Declined $2.1 million |
| Net loss attributable to common shareholders | ($11.8 million) | ($9.7 million) | Loss widened |
| Basic and diluted loss per share | ($0.92) | ($0.78) | Loss per share widened |
| Funds from Operations (FFO) | $39.8 million ($2.88/share) | $42.1 million ($3.05/share) | Down 5.3% |
| Operating FFO | $40.3 million ($2.91/share) | $40.8 million ($2.95/share) | Down 1.1% |
| Cash from operating activities | $42.6 million | $53.7 million | Down $11.1 million |
| Common dividend per share | $0.528 | $1.32 | Reduced 60% year over year |
Revenue fell primarily because of COVID-19 impacts on rent and expense recoveries, including at same-center and redevelopment properties. Same-property NOI declined 6.8%, to $66.6 million; same-property occupancy was 90.0%, versus 91.0%. The filing reports no standalone quarterly margin guidance.
At December 31, total debt obligations were $624.3 million, compared with $630.6 million a year earlier. Cash and cash equivalents were $1.6 million. At the filing date, $175.0 million was drawn on the revolving facility and $56.7 million was available for additional borrowing; the company reported compliance with financial covenants. The revolver matures in September 2021, with a one-year extension option. The company identified $150.0 million of term-loan maturities in 2022.
Material changes and unusual items
- Quarterly common dividends were cut from $0.330 to $0.066 per share in 2020 to preserve cash. The company said future dividends remained at the board’s discretion.
- COVID-19 lease relief included approximately $3.2 million of rent deferrals and $1.5 million of rent waivers. The weighted-average stated payback period for deferred rent was about 10 months. Rent and tenant-reimbursement collections improved from 77% in Q2 to 91% in Q3 and 94% in Q4.
- The company recorded $7.1 million of 2020 revenue related to a dark anchor tenant’s early lease termination. Property sales totaled approximately $21.9 million and generated $4.4 million of gains. Impairment charges were $7.6 million, principally associated with held-for-sale properties.
- General and administrative costs declined $1.9 million, while depreciation and amortization rose $2.6 million, including accelerated write-offs associated with tenant departures and redevelopment activity.
- A 1-for-6.6 reverse stock split in November 2020 restored compliance with the NYSE minimum share-price requirement after a potential delisting notice.
- The company entered a 20-year, 10-month lease with the District of Columbia for planned office space at Senator Square. Construction was expected to begin in Q1 2021, with delivery estimated for late 2022; the District’s lease obligations are subject to annual budget appropriation.
Outlook, risks and contingencies
The filing provides no numerical earnings or FFO guidance. Management said the scale and duration of pandemic effects, additional rent relief, tenant recoveries and the financial impact of ongoing negotiations could not be predicted. It reduced near-term redevelopment and nonessential capital spending and cited possible additional concessions.
- Key risks include tenant nonpayment, bankruptcy, lease nonrenewal and lower re-leasing rents; e-commerce and broader retail-sector weakness; and geographic concentration in the Northeast corridor.
- Debt refinancing and covenant capacity are material concerns. The company cautioned that pandemic effects would be fully reflected in trailing-12-month unencumbered-property NOI by Q1 2021, potentially affecting borrowing availability and covenant compliance.
- Interest-rate swaps had a year-end fair-value liability of $18.9 million; the company estimated $6.9 million of accumulated hedge losses would be reclassified to earnings within 12 months. A 100-basis-point rate move on $150.0 million of variable-rate debt would change annual interest cost by approximately $1.5 million.
- Other risks include redevelopment returns, impairment estimates, property liquidity, environmental and regulatory obligations, insurance limitations, and maintaining REIT qualification. The filing reported no litigation expected to have a material adverse effect and no known material environmental liability.
- The independent auditor issued an unqualified opinion on the financial statements and internal controls; management also concluded internal control over financial reporting was effective.
Important facts for investors to verify
- Whether rent collections and deferred-rent repayments continued to improve after Q4, and the final cost of tenant concessions and non-collection.
- How the $175.0 million revolver maturity was addressed, including use of the extension option, refinancing, repayment or asset sales, and whether covenant headroom remained adequate.
- Whether occupancy and same-property NOI stabilized or recovered, particularly at redevelopment and lower-occupancy properties.
- Whether the reduced common dividend is sustainable alongside preferred dividends, debt service and capital needs.
- Progress, construction cost and funding for the Senator Square project, including the District’s annual appropriation condition and tenant-improvement obligations.
- Performance of held-for-sale assets and whether further impairment charges, dispositions or sale proceeds materially differ from year-end estimates.