Cedar Realty Trust, Inc. — 2021 Form 10-K
Business context and reporting period
Annual report for the fiscal year ended December 31, 2021, filed March 10, 2022. Cedar Realty Trust is a REIT focused on grocery-anchored shopping centers in the Washington, D.C.–Boston corridor. At year-end it owned and managed 50 operating properties, excluding properties held for sale, with 7.3 million square feet of GLA; the portfolio was 91.0% leased and 88.2% occupied. Pennsylvania represented 47.1% of portfolio GLA.
Key financial metrics
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $127.6 million | $135.5 million |
| Property operating income | $81.1 million | $89.9 million |
| Same-property NOI | $68.1 million | $65.9 million |
| Net income (loss) | $(45.0) million | $(0.5) million |
| Net loss attributable to common shareholders | $(55.9) million; $(4.24) per share | $(11.8) million; $(0.92) per share |
| FFO / Operating FFO | $33.3 million / $33.8 million; $2.40 / $2.43 per diluted share | $39.8 million / $40.3 million; $2.88 / $2.91 per diluted share |
| Cash flow from operations | $45.0 million | $42.6 million |
| Cash and cash equivalents | $3.0 million | $1.6 million |
| Total debt and finance lease obligations, before issuance costs | $530.2 million | $626.3 million |
| Common dividend per share | $0.264 | $0.528 |
Year-end total assets were $1.02 billion, total liabilities $576.9 million, and total equity $440.0 million. Debt included $66.0 million drawn on a $185 million revolving facility, with $113.9 million of additional availability reported; the company stated it was in compliance with its financial covenants. Fixed-rate debt averaged 3.7%; variable-rate debt averaged 1.6%. A 100-basis-point change in rates on variable-rate debt was estimated to change annual interest cost by approximately $0.7 million.
Material changes versus prior year
- Revenue declined 5.9%, primarily due to the absence of $7.1 million of 2020 lease-termination income and lower revenue from properties sold or held for sale. Same-property NOI rose 3.4%, largely reflecting recovery from pandemic effects in 2020.
- Net loss widened substantially, principally due to impairment charges associated with the strategic alternatives process. The statement of operations reports impairment charges of $99.9 million; related disclosures report $101.7 million, including $83.2 million on held-for-use assets and $18.5 million on held-for-sale assets. The filing does not clearly reconcile these differing totals.
- Gain on sales increased to $49.9 million, mainly from the Camp Hill Shopping Center sale. Property-sale proceeds were $104.5 million in 2021. Debt and finance lease obligations fell from $626.3 million to $530.2 million, following repayments and new property-level financing.
- The company collected approximately 96% of contractual base rents and monthly tenant reimbursements in 2021. It reported rent deferrals of approximately $3.5 million and rent waivers of approximately $2.4 million under COVID-related lease relief.
Outlook, risks and unusual items
- Strategic transaction: On March 2, 2022, after year-end, Cedar announced agreements for a series of all-cash transactions: sale of 33 shopping centers for $840.0 million, Revelry redevelopment project for $34.0 million, and the company and remaining assets for $291.3 million. A sale of Northeast Heights for $46.5 million was still under negotiation. The shopping-center and remaining-assets transactions require shareholder approval; the shopping-center buyer agreed to backstop the two redevelopment sales for an aggregate $80.5 million if they do not close first. Completion and proceeds are not assured.
- Debt and liquidity: The revolving facility was amended to $185 million, with an August 2024 maturity and two optional one-year extensions; the $50 million term loan was extended to August 2026. The maturity schedule includes $100 million of term loans in 2023, $75 million of term loans and the $66 million revolver in 2024, and $75 million in 2025. Construction commitments were approximately $10.7 million at year-end.
- Development: A 10%-owned joint venture is developing Northeast Heights’ first phase, including a 258,000-square-foot D.C. office and retail building, fully leased to the District’s Department of General Services. Delivery was estimated for late 2022; the lease obligations are subject to annual budget appropriation.
- Principal risks: Tenant credit and rent collection, anchor-tenant departures and co-tenancy clauses, retail-sector change and e-commerce, COVID-related effects, geographic concentration, refinancing and interest-rate exposure, redevelopment execution, property impairments, environmental and weather-related losses, and REIT qualification. Ahold-owned grocery tenants collectively accounted for about 14% of 2021 revenue. Management cited no material litigation; it reported effective disclosure controls and internal control over financial reporting, and the auditor issued unqualified opinions.
- Dividends: Common dividends were reduced to $0.264 per share for 2021 from $0.528 in 2020. The board retains discretion to reduce or suspend future payments. Preferred dividends totaled $10.8 million in 2021.
Important facts for investors to verify
- Whether shareholders approved and the parties completed the announced asset and company sales, including final consideration, conditions, and treatment of redevelopment projects.
- The reconciliation and property-level basis for the $99.9 million impairment charge in the income statement versus the $101.7 million amount in the notes.
- Post-year-end debt repayment, refinancing needs, revolver availability, covenant compliance, and the impact of asset sales on debt and liquidity.
- Current rent collection, deferred-rent recovery, occupancy and leasing trends, and the status of major grocery tenants.
- The decision and capacity to maintain common and preferred dividends while meeting REIT distribution requirements and capital needs.