EDGAR 10-K Filing

Company CIK: 761648
Filing Year: 2022
Filename: 761648_10-K_2022_0001564590-22-009649.json

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ITEM 1. BUSINESS
Items 1 and 2. Business and Properties
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 December 31, 2021, the Company owned and managed a portfolio of 50 operating properties (excluding properties “held for sale”) totaling 7.3 million square feet of gross leasable area (“GLA”). The portfolio was 91.0% leased and 88.2% occupied at December 31, 2021.
The Company, organized in 1984, has elected to be taxed as a real estate investment trust (“REIT”) under applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a REIT under those provisions, the Company must have a preponderant percentage of its assets invested in, and income derived from, real estate and related sources. The Company’s objectives are to provide to its stockholders a professionally-managed real estate portfolio consisting primarily of grocery-anchored shopping centers from Washington, D.C. to Boston, which will provide substantial cash flow, currently and in the future, taking into account an acceptable modest risk profile, and which will present opportunities for additional growth in income and capital appreciation.
The Company, organized as a Maryland corporation, has established an umbrella partnership structure through the contribution of substantially all of its assets to Cedar Realty Trust Partnership L.P. (the “Operating Partnership”), organized as a limited partnership under the laws of Delaware. The Company conducts substantially all of its business through the Operating Partnership. At December 31, 2021, the Company owned a 99.4% general and limited partnership interest in, and was the sole general partner of, the Operating Partnership. The limited partners’ interest in the Operating Partnership (0.6% at December 31, 2021) 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 81,000 OP Units outstanding at December 31, 2021 are economically equivalent to shares of 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.
On November 25, 2020, the Company effected a 1-for-6.6 reverse stock split of the issued and outstanding shares of common stock. Each 6.6 shares of the Company's issued and outstanding common stock were combined into one share of the Company's common stock. The number of authorized shares and the par value of the common stock were not changed. In addition, the Company amended the Limited Partnership Agreement of our Operating Partnership to effect a corresponding reverse split of the partnership interests of the Operating Partnership. In accordance with accounting principles generally accepted in the United States (“GAAP”), all shares of common stock, restricted stock units, OP Units and per share/unit information that are presented in this Form 10-K were adjusted to reflect the reverse split on a retroactive basis for all periods presented.
The Company derives substantially all of its revenues from rents and operating expense reimbursements received pursuant to long-term 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.
The Company, the Operating Partnership, their subsidiaries and affiliated partnerships are separate legal entities. For ease of reference, the terms “we”, “our”, “us”, “Company” and “Operating Partnership” (including their respective subsidiaries and affiliates) refer to the business and properties of all these entities, unless the context otherwise requires. The Company’s executive offices are located at 928 Carmans Road, Massapequa, New York 11758 (telephone 516-767-6492). The Company also maintains property management, construction management and/or leasing offices at several of its shopping-center properties. The Company’s website can be accessed at www.cedarrealtytrust.com, where a copy of the Company’s Forms 10-K, 10-Q, 8-K and other filings with the Securities and Exchange Commission (“SEC”) can be obtained free of charge. These SEC filings are added to the website as soon as reasonably practicable. The Company’s Code of Ethics, corporate governance guidelines and committee charters are also available on the website. Information on the website is not part of this Form 10-K.
Real Estate Summary
Average
Year
Percent
base rent per
Selected
Property Description
acquired
GLA
occupied
leased sq. ft.
Grocer Anchor
Other Anchors
Connecticut
Bethel Shopping Center
101,105
89.1
%
$
24.49
Big Y
Dollar Tree
Brickyard Plaza
227,598
99.2
%
8.84
Home Depot
Kohl's
Michaels
PetSmart
Groton Shopping Center
130,264
100.0
%
12.31
Aldi
TJ Maxx
Goodwill
Planet Fitness
Dollar Tree
Pet Supplies Plus
Jordan Lane
174,679
92.8
%
11.07
Stop & Shop
Crunch Fitness
Dollar Tree
Shopper's World
New London Mall
259,566
88.3
%
12.85
Shop Rite
Marshalls
Home Goods
PetSmart
Oakland Commons
90,100
100.0
%
6.37
Walmart
Bristol Ten Pin
Southington Center
155,842
98.5
%
7.96
Walmart
NAMCO
Southington Wine & Spirit
Total Connecticut
1,139,154
94.9
%
11.42
Delaware
Christina Crossing
119,446
93.8
%
19.33
Shop Rite
Maryland / Washington, D.C.
Oakland Mills
57,008
92.6
%
11.57
LA Mart
Patuxent Crossing (f/k/a San Souci Plaza) (a)
264,134
82.7
%
11.59
McKay's Market and Café
Marshalls
Home Goods
World Gym
JoAnn Fabrics
Dollar Tree
Shoppes at Arts District
35,676
100.0
%
36.06
Yes! Organic Market
Busboys and Poets
Valley Plaza
190,939
27.9
%
10.16
Tractor Supply
Yorktowne Plaza
136,197
57.7
%
13.49
Food Lion
Dollar Tree
Total Maryland / Washington, D.C.
683,954
64.1
%
13.75
Massachusetts
Fieldstone Marketplace
2005/2012
150,123
84.3
%
12.05
Shaw's
Work Out World
Dollar Tree
Family Dollar
Franklin Village Plaza
2004/2012
305,937
90.0
%
20.04
Stop & Shop
Marshalls
NRG Labs
Kings Plaza
168,243
82.2
%
8.69
Fun Z Trampoline Park
Ocean State Job Lot
Savers
Dollar General
Norwood Shopping Center
42,308
85.9
%
8.84
Big Y
Planet Fitness
Dollar Tree
The Shops at Suffolk Downs
121,187
98.8
%
14.62
Stop & Shop
Dollar Tree
Target (c)
Average
Year
Percent
base rent per
Selected
Property Description
acquired
GLA
occupied
leased sq. ft.
Grocer Anchor
Other Anchors
Massachusetts (continued)
Timpany Plaza
182,799
66.1
%
9.93
Big Lots
Gardner Theater
Tractor Supply
Dollar Tree
Webster Commons
98,984
96.7
%
11.97
Big Lots
Planet Fitness
CVS
Aubuchon Hardware
Total Massachusetts
1,069,581
85.3
%
13.87
New Jersey
Pine Grove Plaza
79,306
49.6
%
14.93
Acme Markets (c)
Dollar Tree
The Shops at Bloomfield Station
63,844
86.0
%
17.83
Super Foodtown
Washington Center Shoppes
157,300
93.1
%
11.81
Acme Markets
Planet Fitness
Total New Jersey
300,450
80.1
%
13.69
New York
Carmans Plaza
182,081
77.4
%
22.00
Key Food
Department of Motor Vehicles
Planet Fitness
Popcorn Beauty
Dollar Tree
Pennsylvania
Academy Plaza
136,685
89.0
%
15.39
Acme Markets
Rite Aid
Colonial Commons
410,432
92.0
%
13.72
Giant Foods (d)
Dick's Sporting Goods
Home Goods
Ross Dress For Less
Marshalls
JoAnn Fabrics
David's Furniture
Old Navy
Dollar Tree
Crossroads II (b)
133,717
98.7
%
19.76
Giant Foods
Dollar Tree
Fairview Commons
52,964
75.3
%
10.12
Grocery Outlet
Dollar Tree
Fishtown Crossing
131,043
88.4
%
18.49
IGA Supermarket
Pep Boys
Dollar Tree
Dollar General
Girard Plaza
35,688
100.0
%
16.29
Save A Lot
Dollar General
Gold Star Plaza
71,720
100.0
%
9.09
Redner's
Dollar Tree
Golden Triangle
202,790
98.4
%
12.77
LA Fitness
Marshalls
Staples
Immunotek
American Freight
Walgreens
Dollar Tree
Halifax Plaza
51,510
100.0
%
13.69
Giant Foods
Rite Aid
Hamburg Square
102,058
100.0
%
6.79
Redner's
Chesaco RV
Lawndale Plaza
92,773
100.0
%
18.73
Shop Rite
Meadows Marketplace
2004/2012
91,518
89.8
%
15.93
Giant Foods
Newport Plaza
64,489
97.0
%
13.17
Giant Foods
Rite Aid
Northside Commons
69,136
100.0
%
10.42
Redner's
Dollar Tree
Palmyra Shopping Center
111,051
93.7
%
7.84
Weis Markets
Goodwill
Average
Year
Percent
base rent per
Selected
Property Description
acquired
GLA
occupied
leased sq. ft.
Grocer Anchor
Other Anchors
Pennsylvania (continued)
Quartermaster Plaza
456,154
92.8
%
15.09
BJ's Wholesale Club
Home Depot
Planet Fitness
Staples
PetSmart
Walgreens
South Philadelphia
191,340
76.0
%
12.16
Shop Rite
Ross Dress for Less
LA Fitness
Kid City
Swede Square
100,809
92.6
%
15.73
Grocery Outlet
LA Fitness
The Point
260,625
87.8
%
14.99
Giant Foods
Burlington
Barton's Home Outlet
Staples
Dollar Tree
Trexler Mall
336,687
98.2
%
11.04
Kohl's
Urban Air
Lehigh Wellness Partners
Maxx Fitness
Marshalls
Home Goods
Dollar Tree
Trexlertown Plaza
325,171
98.3
%
14.09
Giant Foods
Hobby Lobby
Burlington
Big Lots
Tractor Supply
Total Pennsylvania
3,428,360
93.3
%
13.75
Virginia
Coliseum Marketplace
106,648
45.9
%
15.15
Michaels
Elmhurst Square
66,254
91.1
%
10.23
Food Lion
General Booth Plaza
71,639
100.0
%
15.37
Food Lion
Kempsville Crossing
79,512
97.7
%
11.10
Walmart
The Iron Asylum
Oak Ridge Shopping Center
38,700
100.0
%
11.09
Food Lion
Total Virginia
362,753
82.0
%
12.61
Total (91.0% leased at December 31, 2021)
7,285,779
88.2
%
$
13.60
(e)
(a)
On October 14, 2021, the Company acquired the 60% minority ownership percentage in the San Souci Plaza joint venture.
(b)
The Company has a 60% ownership interest in the Crossroads II joint venture. Based on partnership promotes, additional equity interests, and/or other terms of the related joint venture agreements, the Company currently recognizes the results of operations of these joint ventures in excess of its stated percentage ownership.
(c)
Tenant is a shadow anchor and is not included in GLA, percent occupied, and average base rent per leased sq.ft.
(d)
Giant Foods retains the leasehold obligation, as Hobby Lobby is a subtenant and currently occupying the space.
(e)
Average base rent is calculated as the aggregate, annualized contractual minimum rent for all occupied spaces divided by the aggregate GLA of all occupied spaces as of December 31, 2021. Tenant concessions are reflected in this measure except for a limited number of short-term (generally one to three months) free rent concessions provided to new tenants that took occupancy prior to the end of the reporting period but within the concession period. Average base rent would have been $13.50 per square foot if all such free rent concessions were reflected.
Tenant Concentration
Number
Annualized
Percentage
of
Percentage
Annualized
base rent
annualized
Tenant
stores
GLA
of GLA
base rent
per sq. ft.
base rents
Top twenty-five tenants (a):
Giant Foods
445,000
6.1
%
$
7,403,000
$
16.64
8.5
%
Shop Rite
250,000
3.4
%
4,092,000
16.37
4.7
%
Stop & Shop
211,000
2.9
%
2,938,000
13.92
3.4
%
Dollar Tree
222,000
3.0
%
2,327,000
10.48
2.7
%
Home Depot
253,000
3.5
%
1,977,000
7.81
2.3
%
BJ's Wholesale Club
118,000
1.6
%
1,760,000
14.92
2.0
%
Planet Fitness
119,000
1.6
%
1,681,000
14.13
1.9
%
Marshalls
170,000
2.3
%
1,576,000
9.27
1.8
%
Food Lion
163,000
2.2
%
1,563,000
9.59
1.8
%
Big Y
64,000
0.9
%
1,484,000
23.19
1.7
%
LA Fitness
113,000
1.6
%
1,361,000
12.04
1.6
%
Walmart
192,000
2.6
%
1,193,000
6.21
1.4
%
Redner's
159,000
2.2
%
1,165,000
7.33
1.3
%
Kohl's
147,000
2.0
%
1,031,000
7.01
1.2
%
Home Goods
105,000
1.4
%
1,009,000
9.61
1.2
%
Shaw's
68,000
0.9
%
925,000
13.60
1.1
%
Staples
68,000
0.9
%
879,000
12.93
1.0
%
Walgreens
29,000
0.4
%
875,000
30.17
1.0
%
PetSmart
63,000
0.9
%
857,000
13.60
1.0
%
Dick's Sporting Goods
56,000
0.8
%
784,000
14.00
0.9
%
Burlington Coat Factory
84,000
1.2
%
760,000
9.05
0.9
%
Lehigh Valley Health
33,000
0.5
%
673,000
20.39
0.8
%
Department of Motor Vehicles
19,000
0.3
%
669,000
35.21
0.8
%
Urban Air
61,000
0.8
%
570,000
9.34
0.7
%
Tractor Supply
71,000
1.0
%
565,000
7.96
0.6
%
Sub-total top twenty-five tenants
3,283,000
45.1
%
40,117,000
12.22
45.9
%
Remaining tenants
3,140,000
43.1
%
47,230,000
15.04
54.1
%
Sub-total all tenants (b)
6,423,000
88.2
%
$
87,347,000
$
13.60
100.0
%
Vacant space
N/A
863,000
11.8
%
Total
7,286,000
100.0
%
(a)
Several of the tenants listed above share common ownership with other tenants:
(1) Giant Foods, Stop & Shop and Food Lion, and (2) Marshalls, Home Goods, and TJ Maxx (GLA of 30,000; annualized base rent of $315,000).
(b)
Comprised of large tenants (10,000 or more GLA) and small tenants as follows:
Percentage
Annualized
Percentage
Occupied
of occupied
Annualized
base rent
annualized
GLA
GLA
base rent
per sq. ft.
base rents
Spaces ≥ 10,000 GLA
4,740,000
73.8
%
$
52,189,000
$
11.01
59.7
%
Spaces < 10,000 GLA
1,683,000
26.2
%
35,158,000
20.93
40.3
%
Total
6,423,000
100.0
%
$
87,347,000
$
13.60
100.0
%
Lease Expirations
Total Portfolio
Annualized
Percentage
Number
Percentage
expiring
of annualized
Year of lease
of leases
GLA
of GLA
base rents
expiring
expiration
expiring
expiring
expiring
per sq. ft.
base rents
Month-To-Month
175,000
2.7
%
$
16.04
3.2
%
295,000
4.6
%
19.56
6.6
%
593,000
9.2
%
14.55
9.9
%
796,000
12.4
%
14.33
13.1
%
1,052,000
16.4
%
12.37
14.9
%
580,000
9.0
%
14.16
9.4
%
444,000
6.9
%
13.75
7.0
%
399,000
6.2
%
11.09
5.1
%
610,000
9.5
%
13.07
9.1
%
436,000
6.8
%
10.50
5.2
%
419,000
6.5
%
16.73
8.0
%
Thereafter
624,000
9.7
%
11.89
8.5
%
All tenants
6,423,000
100.0
%
$
13.60
100.0
%
Spaces ≥ 10,000 GLA
Annualized
Percentage
Number
Percentage
expiring
of annualized
Year of lease
of leases
GLA
of GLA
base rents
expiring
expiration
expiring
expiring
expiring
per sq. ft.
base rents
Month-To-Month
36,000
0.8
%
$
6.72
0.5
%
112,000
2.4
%
16.55
3.6
%
429,000
9.1
%
11.73
9.7
%
588,000
12.4
%
11.29
12.7
%
775,000
16.4
%
9.80
14.6
%
391,000
8.2
%
11.10
8.3
%
286,000
6.0
%
11.31
6.2
%
330,000
7.0
%
8.89
5.6
%
528,000
11.1
%
12.03
12.2
%
365,000
7.7
%
8.31
5.8
%
347,000
7.3
%
14.41
9.6
%
Thereafter
553,000
11.7
%
10.65
11.3
%
All tenants
4,740,000
100.0
%
$
11.01
100.0
%
Spaces < 10,000 GLA
Annualized
Percentage
Number
Percentage
expiring
of annualized
Year of lease
of leases
GLA
of GLA
base rents
expiring
expiration
expiring
expiring
expiring
per sq. ft.
base rents
Month-To-Month
139,000
8.3
%
$
18.45
7.3
%
183,000
10.9
%
21.40
11.1
%
164,000
9.7
%
21.93
10.2
%
208,000
12.4
%
22.92
13.5
%
277,000
16.5
%
19.57
15.4
%
189,000
11.2
%
20.49
11.0
%
158,000
9.4
%
18.16
8.2
%
69,000
4.1
%
21.61
4.2
%
82,000
4.9
%
19.74
4.6
%
71,000
4.2
%
21.76
4.4
%
72,000
4.3
%
27.89
5.7
%
Thereafter
71,000
4.2
%
21.55
4.3
%
All tenants
1,683,000
100.0
%
$
20.93
100.0
%
The Company’s Properties
The following table summarizes information relating to the Company’s portfolio as of December 31, 2021:
Number of
Percentage
State
properties
GLA
of GLA
Pennsylvania
3,428,360
47.1
%
Connecticut
1,139,154
15.6
%
Massachusetts
1,069,581
14.7
%
Maryland / Washington, D.C.
683,954
9.4
%
Virginia
362,753
5.0
%
New Jersey
300,450
4.1
%
New York
182,081
2.5
%
Delaware
119,446
1.6
%
Total portfolio
7,285,779
100.0
%
The terms of the Company’s retail leases generally vary from tenancies at will to 25 years, excluding renewal options. Anchor tenant leases are typically for 10 to 25 years, with one or more renewal options available to the lessee upon expiration of the initial lease term. By contrast, smaller store leases are typically negotiated for five-year terms. The longer terms of major tenant leases serve to protect the Company against significant vacancies and to assure the presence of strong tenants which draw consumers to its centers. The shorter terms of smaller store leases allow the Company under appropriate circumstances to adjust rental rates periodically and, where possible, to upgrade or adjust the overall tenant mix.
Most leases contain provisions requiring tenants to pay their pro rata share of real estate taxes, insurance and certain operating costs. Some leases also provide that tenants pay percentage rent based upon sales volume generally in excess of certain negotiated minimums.
Excluding properties held for sale or sold, Giant Food Stores, LLC, Stop & Shop, Inc. and Food Lion, LLC, each of which is owned by Ahold N.V., a Netherlands corporation, leased an aggregate of approximately 11% of the Company’s GLA at December 31, 2021, and accounted for an aggregate of approximately 14% of the Company’s total revenues during 2021. No other tenant leased more than 10% of GLA at December 31, 2021, or contributed more than 10% of total revenues during 2021.
Executive Offices
The Company’s executive offices are located at 928 Carmans Road, Massapequa, New York.
Competition
The Company believes that competition for the acquisition and operation of grocery-anchored shopping centers is highly fragmented. It faces competition from institutional investors, public and private REITs, owner-operators engaged in the acquisition, ownership, redevelopment and leasing of shopping centers, as well as from numerous local, regional and national real estate developers and owners in each of its markets. It also faces competition in leasing available space at its properties to prospective tenants. Competition for tenants varies depending upon the characteristics of each local market in which the Company owns and manages properties. The Company believes that the principal competitive factors in attracting tenants in its market are location, price and other lease terms, the presence of anchor tenants, the mix, quality and sales results of other tenants, and maintenance, appearance, access and traffic patterns of its properties.
Governmental Regulations
Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material. We incur costs to monitor and take actions to comply with governmental regulations that are applicable to our business, which include, among others, federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property, the Americans with Disabilities Act of 1990 and laws and regulations applicable to our investment management business, including the U.S. Investment Advisers Act of 1940, the Alternative Investment Fund Managers Directive, 2011/61/EU and related laws and regulations. See “Item 1A - Risk Factors” for a discussion of material risks to us, including,
to the extent material, to our competitive position, relating to governmental regulations, and see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” together with our consolidated financial statements, including the related notes included therein, for a discussion of material information relevant to an assessment of our financial condition and results of operations, including, to the extent material, the effects that compliance with governmental regulations may have upon our capital expenditures and earnings.
Environmental Matters
Under various federal, state, and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or other contaminants at property owned, leased, managed or otherwise operated by such person, and may be held liable to a governmental entity or to third parties for property damage, and for investigation and cleanup costs in connection with such contamination. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such conditions, may adversely affect the owner’s, lessor’s or operator’s ability to sell or rent such property or to arrange financing using such property as collateral. In connection with the ownership, operation, redevelopment and management of real estate, the Company may potentially become liable for removal or remediation costs, as well as certain other related costs and liabilities, including governmental fines and injuries to persons and/or property. Generally, the Company’s tenants must comply with environmental laws and meet any remediation requirements. In addition, leases typically impose obligations on tenants to indemnify the Company from any compliance costs the Company may incur as a result of environmental conditions on the property caused by the tenant. However, if a lease does not require compliance and/or indemnification, or if a tenant fails to or cannot comply, the Company could be forced to pay these costs.
The Company believes that environmental studies conducted at the time of acquisition with respect to its properties did not reveal any material environmental liabilities for which the Company is responsible and that would have a material adverse effect on its business, results of operations or liquidity. However, no assurances can be given that existing environmental studies with respect to any of the properties reveal all environmental liabilities, that any prior owner of or tenant at a property did not create a material environmental condition not known to the Company, or that a material environmental condition does not otherwise exist at any one or more of its properties. If a material environmental condition does in fact exist, it could have an adverse impact upon the Company’s financial condition, results of operations and liquidity.
Human Capital Management
The Company believes our employees are our greatest asset, and we pride ourselves on the diversity they bring to the Company. As of December 31, 2021, The Company had 55 full-time employees and two part-time employees.
The Company’s compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business objectives and assist in the achievement of our strategic goals. All of the Company’s full-time employees are provided with a comprehensive benefits and wellness package which includes paid time off and parental leave, medical, dental and vision insurance, disability, life insurance, 401(k) matching, and other benefits. The Company encourages professional development and internal mobility.
The Company also feels that one of the keys to our success is the Company’s ability to benefit from a wide range of opinions and experiences. The Company believes the best way to accomplish this is through promoting diversity across all layers of our organization. As of December 31, 2021, 64% of the Company’s mid-level, non-executive managers were female, as well as 36% of the Company’s executive team. In addition, as of December 31, 2021, 58% of the Company’s employee population was female.

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ITEM 1A. RISK FACTORS
Item 1A.
Risk Factors
The following section sets forth material risks that may adversely affect our business and financial performance. The following risks, as well as the other information in this Annual Report on Form 10-K, including the accompanying consolidated financial statements and related notes, should be considered in evaluating us and our business. These risk factors are not exhaustive, and new risks may emerge from time to time. Investors should also refer to our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K for future periods for material updates to the risks below.
Risks Related to Our Business and Properties
Our properties consist primarily of grocery-anchored shopping centers. Our performance therefore is linked to economic conditions in the market for retail space generally.
Our properties consist primarily of grocery-anchored shopping centers, and our performance therefore is linked to economic conditions in the market for retail space generally. This means that we are subject to the risks that affect the retail environment generally, including the levels of consumer spending, the willingness of retailers to lease space in our shopping centers, tenant bankruptcies, the impact of e-commerce on the demand for retail space, ongoing consolidation in the retail sector, and changes in economic conditions and consumer confidence. A downturn in the U.S. economy and reduced consumer spending due to sustained levels of high unemployment or other factors could (i) negatively impact our tenants’ ability to meet their lease obligations due to poor operating results, lack of liquidity or other reasons, and therefore decrease the revenue generated by our properties and/or the value of our properties, (ii) affect our ability to lease space and negotiate and maintain favorable rents, and (iii) reduce the demand for leasing space in our shopping centers, which could result in a decline in our occupancy percentage and reduction in rental revenues.
Actual or perceived threats associated with epidemics, pandemics or other public health crises, including the COVID-19 pandemic, have had and could have, a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity and ability to satisfy debt service obligations.
Epidemics, pandemics or other public health crises, including the COVID-19 pandemic, that impact economic and market conditions, and government measures taken to alleviate their impact, including mandatory business shutdowns and stay-at-home orders, have had and could have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity, and ability to access capital markets and satisfy debt service obligations.
Our retail tenants depend on in-person interactions with their customers to generate unit-level profitability, and the COVID-19 pandemic and related governmental imposed restrictions have decreased, and may continue to decrease, customer willingness to frequent our tenants’ businesses, which may result in their inability to maintain profitability and make timely rental payments to us under their leases or to otherwise seek lease modifications or to declare bankruptcy. We collected approximately 96% of contractual base rents and monthly tenant reimbursements for the year ended December 31, 2021. We are in active discussions and negotiations with our impacted tenants and anticipate the need to grant rent concessions or other lease-related relief, such as the deferral of lease payments for a period of time to be paid over the remaining term of the lease, the financial impact of which is currently unknown.
Moreover, the ongoing COVID-19 pandemic and restrictions intended to prevent and mitigate its spread could have additional adverse effects on our business, including with regards to:
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the ability and willingness of our tenants to renew their leases upon expiration;
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our ability to re-lease properties on the same or better terms in the event of non-renewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant;
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the price of our common stock, which could lead to our common stock to be delisted from the NYSE;
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the adverse impact of current economic conditions on the market value of our real estate portfolio and consequently on our estimated value per share;
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anticipated returns from development and redevelopment projects, which have been temporarily delayed;
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to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices;
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state, local or industry-initiated efforts, such as a rent freeze for tenants or a suspension of a landlord’s ability to enforce evictions, which may affect our ability to collect rent or enforce remedies for the failure to pay rent;
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potential instability in the global financial markets, which could make it difficult for us to access debt and equity capital on attractive terms, or at all;
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our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due, and our potential inability to comply with the financial covenants of our credit facility and other debt agreements, which could result in a default and potential acceleration of indebtedness and impact our ability to make additional borrowings under our credit facility or otherwise in the future; and
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potential reduction in our operating effectiveness as employees work remotely or if key personnel become unavailable due to illness or other personal circumstances related to COVID-19, as well as increased cybersecurity risks related to the use of remote technology.
We have reduced our common quarterly dividend in an effort to preserve cash due to current economic uncertainty and we may choose to do the same in the future. Additionally, we may in the future choose to pay distributions in our stock rather than solely in cash, which may result in our stockholders having a tax liability with respect to such distributions that exceeds the amount of cash received, if any.
While developments regarding the COVID-19 pandemic preclude any prediction as to its ultimate adverse impact, the current economic, political and social environment presents risks and uncertainties with respect to our and our tenants’ business, financial condition, results of operations, cash flows, liquidity and ability to satisfy debt service obligations.
The geographic concentration of our properties in the Washington, D.C. to Boston corridor exposes us to greater economic risks than if the distribution of our properties encompassed a broader region.
Our performance depends on the economic conditions in markets where our properties are geographically concentrated. Our properties are located largely in the region that straddles the Washington, D.C. to Boston corridor, which exposes us to greater economic risks than if our properties were more diversely located (in particular, 21 of our properties are located in Pennsylvania). Any adverse economic or real estate developments resulting from the regulatory environment, business climate, weather or other conditions in such regions could have an adverse impact on our business.
Anchor tenants are crucial to the success of our retail properties and vacated anchor space directly and indirectly affects our rental revenues.
Our properties consist primarily of grocery-anchored shopping centers. Anchor tenants pay a significant portion of the total rents at a property and contribute to the success of other tenants by drawing large numbers of customers to a property. Vacated anchor space not only directly reduces rental revenues, but, if not re-tenanted with a tenant with comparable consumer attraction, could adversely affect the rest of the property primarily through the loss of customer drawing power. In addition, in the event that certain anchor tenants cease to occupy a property, such an action results in a significant number of other tenants having the contractual right to terminate their leases, or pay a reduced rent based on a percentage of the tenant's sales, at the affected property, which could adversely affect the future income from such property, also known as “co-tenancy.”
Our performance and value are subject to risks associated with real estate assets and with the real estate industry.
Our performance and value are subject to risks associated with real estate assets and with the real estate industry, including, among other things, risks related to adverse changes in national, regional and local economic and market conditions. Our continued ability to make expected distributions to our stockholders depends on our ability to generate sufficient revenues to meet operating expenses, future debt service and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties.
These events and conditions include, but may not be limited to, the following:
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local oversupply, increased competition or declining demand for real estate;
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local economic conditions, which may be adversely impacted by business layoffs, industry slow-downs, natural disasters and other factors;
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weather conditions that may increase or decrease energy costs and other weather-related expenses;
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non-payment or deferred payment of rent or other charges by tenants, either as a result of tenant-specific financial conditions, or general economic events or circumstances adversely affecting consumer disposable income or credit;
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vacancies or an inability to rent space on acceptable terms;
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increased operating costs, including real estate taxes, insurance premiums, utilities, costs associated with the need to periodically renovate and re-lease space, and repairs and maintenance;
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volatility and/or increases in interest rates, or the non-availability of funds in the credit markets in general;
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increased costs of complying with current, new or expanded governmental regulations;
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the relative illiquidity of real estate investments;
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changing market demographics;
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changing traffic patterns; and
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an inability to refinance maturing debt in acceptable amounts and/or on acceptable terms.
In the event of default by a tenant, we may experience delays in enforcing, as well as incur substantial costs to enforce, our rights as a landlord. In addition, costs associated with our operations, such as real estate and personal property taxes, insurance, and mortgage payments, generally are not reduced even as occupancy or rental rates decrease, tenants fail to pay base and additional rent or other circumstances cause a reduction in income. As a result, our financial performance, cash flow from operations and our ability to make distributions to our stockholders may be adversely affected.
As substantially all of our revenue is derived from rental income, failure of tenants to pay rent or delays in arranging leases and occupancy at our properties could seriously harm our operating results and financial condition.
Substantially all of our revenue is derived from rental income from our properties. Downturns in the economy generally or in our tenants’ business may weaken our tenants’ financial condition and result in, among other things, delayed lease commencement, failure to make rental payments when due, non-extension of leases upon expiration, insolvency or bankruptcy. Any leasing delays, failure to make rental or other payments when due, or tenant bankruptcies, could result in the termination of tenants’ leases, which would have a negative impact on our operating results. In addition, adverse market and economic conditions and competition may impede our ability to renew leases or re-let space as leases expire, which could harm our business and operating results.
Our business may be seriously harmed if a major tenant fails to renew its lease(s) or vacates one or more properties and prevents us from re-leasing such premises by continuing to pay base rent for the balance of the lease terms. In addition, the loss of such a major tenant could result in lease terminations or reductions in rent by other tenants at the affected properties, as provided in their respective leases. Excluding properties held for sale or sold, no tenant leased more than 10% of GLA at December 31, 2021 or contributed more than 10% of total revenues during 2021, except for Giant Food Stores, LLC, Stop & Shop, Inc. and Food Lion, LLC, each of which is owned by Ahold N.V., a Netherlands corporation, which leased an aggregate of approximately 11% of our GLA at December 31, 2021, and accounted for an aggregate of approximately 14% of our total revenues, during 2021.
We may be restricted from re-leasing space based on existing exclusivity lease provisions with some of our tenants. In these cases, the leases contain provisions giving the tenant the exclusive right to sell particular types of merchandise or provide specific types of services within the particular retail center, which limits the ability of other tenants within that center to sell such merchandise or provide such services. When re-leasing space after a vacancy by one of such other tenants, such lease provisions may limit the number and types of prospective tenants for the vacant space. The failure to re-lease space or to re-lease space on satisfactory terms could harm operating results.
We face potential material adverse effects from tenant bankruptcies.
Any bankruptcy filings by, or relating to, one of our tenants or a lease guarantor would generally bar efforts by us to collect pre-bankruptcy debts from that tenant, or lease guarantor, unless we receive an order permitting us to do so from the bankruptcy court. A bankruptcy by a tenant or lease guarantor could delay efforts to collect past due balances, and could ultimately preclude full or, in fact, any collection of such sums. If a lease is affirmed by the tenant in bankruptcy, all pre-bankruptcy balances due under the lease must generally be paid in full. However, if a lease is disaffirmed by a tenant in bankruptcy, we would have only an unsecured claim for damages, which would be paid normally only to the extent that funds are available, and only in the same percentage as is paid to all other members of the same class of unsecured creditors. In addition, we may be unable to replace the tenant at current rental rates. It is
possible, and indeed likely, that we would recover substantially less than, or in fact no portion of, the full value of any unsecured claims we hold, and would be required to write off any straight-line rent receivable recorded for such tenant, which may in turn harm our financial condition.
Our development and redevelopment activities may not yield anticipated returns, which would harm our operating results and reduce funds available for distributions to stockholders.
We have limited experience in substantially developing and redeveloping properties in our markets. Development and redevelopment projects entail considerable risks, including:
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time lag between commencement and completion, leaving us exposed to higher-than-estimated construction costs, including labor and material costs, as well as changes in the overall rental markets;
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failure or inability to obtain construction or permanent financing on favorable terms;
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inability to sell properties we identify for sale as part of a capital recycling strategy;
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expenditure of money and time on projects that may never be completed;
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inability to secure key anchor or other tenants;
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inability to achieve projected rental rates or anticipated pace of lease-up;
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extensive approval processes, which are time sensitive and costly, and can materially affect the cost, timing and economic viability of such projects;
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delays in completion relating to weather, labor disruptions, construction or zoning delays; and
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higher costs incurred than originally estimated.
Properties we develop or redevelop may fail to achieve the occupancy or rental rates we project, within the time frames we project, which may result in the properties’ failure to achieve the returns we projected. Additionally, real estate under development activities typically require substantial time and attention from management, and the time frame required for development, construction and lease-up of these properties could require several years to realize any significant cash return.
Developing and redeveloping properties will require significant capital investment, which may be funded through debt and equity financing, implementing a capital recycling strategy, entering into a joint venture arrangement with respect to one or more properties, or suspending or reducing distributions to our stockholders.
Property ownership through joint ventures could limit our control of those investments and reduce their expected return.
As of December 31, 2021, we owned one of our operating properties through a consolidated joint venture. Our joint venture, and joint ventures we may enter into in the future, may involve risks not present with respect to our wholly owned properties, including the following:
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we may share decision-making authority with our joint venture partners regarding certain major decisions affecting the ownership or operation of the joint venture and the joint venture property, such as, but not limited to, (1) additional capital contribution requirements, (2) signing of major leases, (3) obtaining debt financing, and (4) obtaining consent prior to the sale or transfer of our interest in the joint venture to a third party, which may prevent us from taking actions that are opposed by our joint venture partners;
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our joint venture partners might become bankrupt or fail to fund their share of required capital contributions, which may increase our financial commitment to the joint venture;
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our joint venture partners may have business interests or goals with respect to the property that conflict with our business interests and goals, which could increase the likelihood of disputes regarding the ownership, management or disposition of the property and possibly disrupt the day-to-day operations of the property such as by delaying the implementation of important decisions until the conflict is resolved; and
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the activities of a joint venture could adversely affect our ability to qualify as a REIT.
“New Technology” developments may negatively impact our tenants and our business.
We may be adversely affected by developments in new technology, such as e-commerce, which may cause the business of certain of our tenants to become substantially diminished or functionally obsolete. As a result of such developments, our tenants may be unable to pay rent, become insolvent, file for bankruptcy protection, close their stores, or terminate their leases. The use of the Internet by consumers continues to gain in popularity and the migration toward new technology commerce is expected to continue.
Recent annual increases in online sales have also caused many retailers to sell products online on their websites with pick-ups at a store or warehouse or through deliveries, which may have the effect of decreasing the reported amount of their in-store sales and the amount of rent we are able to collect from them. With respect to grocer tenants, on-line grocery orders have become increasingly available, particularly in urban areas, but have not yet become a major factor affecting grocers in our portfolio. We cannot predict with certainty how growth in e-commerce, including same-day grocery delivery services, will impact the demand for space at our properties or how much revenue will be generated at “bricks and mortar” store locations in the future. If we are unable to anticipate and respond promptly to trends in retailer and consumer behavior, our occupancy levels and financial results could suffer.
Competition may impede our ability to renew leases or re-let spaces as leases expire, as well as impede our further growth, which could harm our business and operating results.
We face competition from similarly positioned retail centers that may affect our ability to renew leases or re-let space as leases expire, as well as impede our further growth. Certain national retail chain bankruptcies and resulting store closings/lease disaffirmations have generally resulted in increased available retail space which, in turn, has resulted in increased competitive pressure to renew tenant leases upon expiration and to find new tenants for vacant space at such properties. In addition, any new competitive properties that are developed within the trade areas of our existing properties may result in increased competition for customer traffic and creditworthy tenants. Increased competition for tenants may require us to make tenant and/or capital improvements to properties beyond those that we would otherwise have planned to make. Any unbudgeted tenant and/or capital improvements we undertake may reduce cash that would otherwise be available for distributions to stockholders.
Additionally, competition from other well-capitalized real estate investors, including other REITs and institutional investment funds may operate to reduce the properties available for acquisition in our markets, reduce the rate of return on our properties, and interfere with our ability to attract and retain tenants. High barriers to entry in the Washington, D.C. to Boston corridor due to mature economies, road patterns, density of population, restrictions on development, and high land costs, coupled with large numbers of often overlapping government jurisdictions, may make it difficult for us to continue to grow in these areas.
Mortgage debt obligations could expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.
If a property or group of properties is mortgaged to secure payment of debt and we are unable to meet mortgage payments, the holder of the mortgage or lender could foreclose on the property, resulting in a loss of our investment. Alternatively, if we decide to sell assets in the current market to raise funds to repay matured debt, it is possible that these properties will be disposed of at a loss.
Our properties may be subject to impairment charges.
On a periodic basis, we assess whether there are any indicators that the value of our held-for-use real estate assets and other investments may be impaired. Held-for-use real estate assets are impaired only if the estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. The estimate of cash flows considers factors such as expected future operating income, capital expenditures, trends and prospects, the effects of demand, tenant-operator performance, competition and other factors. If we are evaluating the potential sale of an asset or development alternatives, the future cash flow considerations include the most likely course of action at the balance sheet date based on current plans, intended holding periods and available market information including a market discount rate applied to the estimated future proceeds. We are required to make subjective assessments as to whether there are impairments in the value of our real estate assets and other investments. These assessments have a direct impact on our earnings because recording an impairment charge results in an immediate negative adjustment to earnings. There can be no assurance that we will not take additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our results of operations in the period in which the charge is taken.
Our capital migration strategy entails various risks.
We intend to sell properties and reinvest those proceeds in the acquisition of higher quality properties in our target markets, the development and redevelopment of our properties, or use the proceeds to pay down debt. While we hope to minimize the dilutive effect of these sales on our earnings, in the near term the returns on the disposed assets are likely to exceed the returns we are able to achieve through the reinvestment of those proceeds. Also, in the event we are unable to sell these assets for amounts equal to or in excess of their current carrying values, we would be required to recognize an impairment charge. Any such impairment charges or earnings dilution could materially and adversely affect our business, financial condition, operating results and cash flows and the market price of our publicly traded securities.
Future acquisitions may result in disruptions to our business, may strain management resources and may result in earnings per share and stockholder dilution.
If we acquire a business involving multiple properties, we will be required to integrate the operations, personnel and accounting and information systems of the acquired business and train, retain and motivate any key personnel from the acquired business. In addition, acquisitions of or investments in companies may cause disruptions in our operations and divert management’s attention away from day-to-day operations, which could impair our relationships with our current tenants and employees. The issuance of equity or debt securities in connection with any acquisition or investment could be substantially dilutive to our stockholders.
Commercial real estate investments are relatively illiquid.
Real estate investments are relatively illiquid. Our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, supply and demand, availability of financing, interest rates and other factors that are beyond our control. We cannot be certain that we will be able to sell any property for the price and other terms we seek, or that any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot estimate with certainty the length of time needed to find a willing purchaser and to complete the sale of a property. We may be required to expend funds to correct defects or to make improvements before a property can be sold. Factors that impede our ability to dispose of properties could adversely affect our financial condition and operating results.
Our business could be negatively affected by stockholder activism, which could impact the trading price and volatility of our common stock.
In recent years, proxy contests and other forms of stockholder activism have been directed against numerous public companies, including us. If a proxy contest or an unsolicited takeover proposal was made with respect to us, we could incur significant costs in defending the Company, which would have an adverse effect on our financial results. Stockholder activists may also seek to involve themselves in the governance, strategic direction and operations of the Company. If individuals are elected to our Board of Directors with a specific agenda, even though less than a majority, our ability to effectively and timely implement our current initiatives and execute on our long-term strategy may be adversely affected. While we continually and actively engage with stockholders and consider their views on business and strategy, stockholder activism consumes a significant amount of management’s attention and other company resources and diverts the attention of management and our employees from our business.
Any perceived uncertainties as to our future direction resulting from such stockholder activism or proxy contest could result in the loss of potential business opportunities, be exploited by our competitors, cause concern to our current or potential customers, and make it more difficult to attract and retain qualified personnel and business partners, all of which could adversely affect our business. Furthermore, actions of activist stockholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
Risks Related to Our Liquidity and Financial Condition
The level of our indebtedness and any constraints on credit may impede our operating performance, and put us at a competitive disadvantage.
The level of our indebtedness may harm our business and operating results by (1) requiring us to use a substantial portion of our available liquidity to pay required debt service and/or repayments or establish additional reserves, which would reduce amounts available for distributions, (2) placing us at a competitive disadvantage compared to competitors that have less debt or debt at more favorable terms, (3) making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions, and (4) limiting our ability to borrow more money for operations or capital expenditures. In addition, increases in interest rates may impede our operating performance and put us at a competitive disadvantage. Further, payments of required debt service or amounts due at maturity, or creation of additional reserves under loan agreements, could adversely affect our liquidity. Our organizational documents do not limit the level or amount of debt that we may incur, no do we have a policy limiting our debt to any particular level.
We may be adversely affected by changes in the London Interbank Offered Rate (“LIBOR”) reporting practices.
As of December 31, 2021, we had (1) approximately $66.0 million of variable-rate debt outstanding, which consists of our unsecured revolving credit facility, and (2) $300.0 million for which we have interest rate swap agreements that convert LIBOR rates to fixed rates. In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling
banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee ("ARRC") which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD LIBOR in derivatives and other financial contracts. Additionally, while U.S. official guidance states that there should be no new LIBOR trading after December 31, 2021, USD LIBOR will continue to be published until June 2023. We are not currently able to predict with certainty when USD LIBOR will cease to be available in the United States or when there will be sufficient liquidity in the SOFR markets. While the discontinuation of LIBOR and the related transition to an alternative rate would not affect our ability to borrow or maintain already outstanding borrowings or swaps, future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.
Any volatility or instability in the credit markets could adversely affect our ability to obtain new financing or to refinance existing indebtedness.
Any instability in the credit markets may negatively impact our ability to access debt financing, to arrange property-specific financing or to refinance our existing debt as it matures on favorable terms or at all. As a result, we may be forced to seek potentially less attractive financings, including equity investments, on terms that may not be favorable to us. In doing so, we may be compelled to dilute the interests of existing stockholders that could also adversely reduce the trading price of our common stock.
We may be exposed to additional risks through our hedging activities, including the risks that a counterparty will not perform and that the hedge will not yield the economic benefits we anticipate.
To manage our exposure to variable interest rate risk, we use derivative instruments that involve risk, such as the risk that counterparties may fail to honor their obligations under these arrangements, or that these arrangements may not be effective in reducing our exposure to interest rate changes. There can be no assurance that our hedging arrangements will qualify for hedge accounting or that our hedging activities will have the desired beneficial impact on our results of operations. If we decide to terminate a hedging agreement, there could be significant costs and cash requirements involved to fulfill our obligations under the hedging agreement. Failure to effectively hedge against interest rate changes may adversely affect our results of operations.
In addition, under the REIT qualification provisions of the Code, income we could receive from certain hedging transactions may be treated as non-qualifying income for purposes of the REIT gross income tests. As a result of these rules, we may need to limit or entirely avoid otherwise advantageous hedging techniques.
The financial covenants in our loan agreements may restrict our operating or acquisition activities, which may harm our financial condition and operating results.
The financial covenants in our loan agreements may restrict our operating or acquisition activities, which may harm our financial condition and operating results. Our unsecured credit facilities and the mortgages on our properties contain customary negative covenants, such as those that limit our ability, without the prior consent of the lender, to sell or otherwise transfer any ownership interest, to further mortgage the applicable property, to enter into leases, or to discontinue insurance coverage. Our ability to borrow under our unsecured revolving credit facility is subject to compliance with these financial and other covenants, including restrictions on the maximum availability, which is based on the adjusted net operating income of designated unencumbered properties, the payment of dividends, and overall restrictions on the amount of indebtedness we can incur. If we breach covenants in our debt agreements, the lenders could declare a default and require us to repay the debt immediately and, if the debt is secured, take possession of the property or properties securing the loan.
BUSINESS CONTINUITY RISKS
Our strategic alternatives process may not result in a successful corporate transaction or liquidity event.
On September 9, 2021, we announced that we are exploring, among other alternatives, a potential sale or merger involving the Company, and alternatively the potential sale of our core grocery-anchored shopping center portfolio and mixed-use redevelopment projects. This strategic alternatives process is ongoing. There can be no assurance that the strategic alternatives process will result in the announcement of consummation of any strategic transaction, or that any resulting plans or transactions will yield additional value for shareholders. Any potential transaction would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with us and the availability of financing to potential buyers on reasonable terms.
The process of exploring strategic alternatives could adversely impact our business, financial condition and results of operations. We could incur substantial expenses associated with identifying and evaluating potential strategic alternatives, including those related to equity compensation, severance pay and legal, accounting and financial advisory fees. In addition, the process may be time consuming and disruptive to our business operations, could divert the attention of management and the Board of Directors from our business, could negatively impact our ability to attract, retain and motivate key employees, and could expose us to potential litigation in connection with this process or any resulting transaction. Further, speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to the future of the Company could cause our stock price to fluctuate significantly.
As a relatively small public REIT, our general and administrative expenses constitute a larger percentage of our total revenues than those of many of our peers.
Our revenues for the year ended December 31, 2021 were $127.6 million. Because our company is smaller than many other publicly-traded REITs, our general and administrative expenses are, and will continue to be, a larger percentage of our total revenues than those of such peers. If we are unable to successfully execute on our strategy and grow our business, our general and administrative expenses will continue to have a greater effect on our financial performance and reduce the amount of cash flow available to distribute to our stockholders.
Natural disasters and severe weather conditions could have an adverse impact on our cash flow and operating results.
Some of our properties could be subject to potential natural or other disasters. In addition, we may acquire properties that are located in areas which are subject to natural disasters. Properties could also be affected by increases in the frequency or severity of hurricanes or other storms, whether such increases are caused by global climate changes or other factors. The occurrence of natural disasters or severe weather conditions can increase investment costs to repair or replace damaged properties, increase operating costs, increase future property insurance costs, and/or negatively impact the tenant demand for lease space. If insurance is unavailable to us, or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from such events, our earnings, liquidity and/or capital resources could be adversely affected.
Potential losses may not be covered by insurance.
Potential losses may not be covered by insurance. We carry comprehensive liability, fire, flood, extended coverage and rental loss insurance under a blanket policy covering all of our properties. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and industry practice. We do not carry insurance for losses related to war, nuclear accidents, and nuclear, biological and chemical occurrences from terrorist’s acts. Some of the insurance, such as those covering losses due to wind, floods and earthquakes, is subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses. The availability of insurance coverage may decrease and the prices for insurance may increase as a consequence of significant losses incurred by the insurance industry and other factors outside our control. As a result, we may be unable to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts and toxic mold, or, if offered, the expense of obtaining these types of insurance may not be justified. Additionally, certain tenants have termination rights in respect of certain casualties. If we receive casualty proceeds, we may not be able to reinvest such proceeds profitably or at all, and we may be forced to recognize taxable gain on the affected property. If we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Tenants may not properly maintain their insurance policies or have the ability to pay the deductibles associated with such policies. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.
Future terrorist attacks and shooting incidents could harm the demand for, and the value of, our properties.
Future terrorist attacks, such as the number of highly publicized terrorists acts and shootings that have occurred at domestic and international retail properties, could harm the demand for, and the value of, our properties. Terrorist attacks could directly impact the value of our properties through damage, destruction, loss or increased security costs, and the availability of insurance for such acts may be limited or may be subject to substantial cost increases. If such an incident were to occur at one of our properties, we may be subject to significant liability claims. While we attempt to mitigate this risk through insurance coverage and the employment of third party security services where we feel conditions warrant, we cannot guarantee that losses would not exceed applicable insurance coverages, thereby adversely affecting our results of operations and our ability to meet our obligations, including distributions to our stockholders. To the extent that our tenants are impacted by future attacks, their ability to continue to honor obligations under their existing leases could be adversely affected.
REGULATORY AND LITIGATION RISKS
We could incur significant costs related to government regulation and litigation over environmental matters and various other federal, state and local regulatory requirements.
All real property and the operations conducted on real property are subject to federal, state and local laws, ordinances and regulations relating to hazardous materials, environmental protection and human health and safety. Accordingly, we or our tenants may be required to investigate and clean up certain hazardous or toxic substances released on properties we own or operate, and also may be required to pay other related costs. Our leases typically impose obligations on our tenants to indemnify us for any compliance costs we may incur as a result of environmental conditions on the property caused by the tenant. If a tenant fails to or is unable to comply, we could be forced to pay these costs. If not addressed, environmental conditions could impair our ability to sell or re-lease the affected properties in the future, result in lower sales prices or rent payments, and restrict our ability to borrow funds using the affected properties as collateral.
We could incur significant costs related to government regulations and litigation over environmental matters. Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or other contaminants at property owned, leased, managed or otherwise operated by such person, and may be held liable to a governmental entity or to third parties for property damage, and for investigation, remediation and cleanup costs in connection with such contamination. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such conditions, may adversely affect the owner’s, lessor’s or operator’s ability to sell or rent such property or to arrange financing using such property as collateral. We may be liable without regard to whether we knew of, or were responsible for, the environmental contamination and with respect to properties we have acquired, whether the contamination occurred before or after the acquisition.
We believe environmental studies conducted at the time of acquisition with respect to all of our properties did not reveal any material environmental liabilities for which the Company is responsible, and we are unaware of any subsequent environmental matters that would have created a material liability. If one or more of our properties were not in compliance with federal, state and local laws, including environmental laws, we could be required to incur additional costs to bring the property into compliance. If we incur substantial costs to comply with such requirements, our business and operations could be adversely affected. If we fail to comply with such requirements, we might additionally incur governmental fines or private damage awards. There can be no assurance that existing requirements will not change or that future requirements will not require us to make significant unanticipated expenditures that will adversely impact our business and operations.
The Americans with Disabilities Act of 1990 (the “ADA”) could require us to take remedial steps with respect to our properties.
Our existing properties, as well as properties we may acquire, may be required to comply with Title III of the ADA. We may incur significant costs to comply with the ADA, as amended, and similar laws, which require that all public accommodations meet federal requirements related to access and use by disabled persons, and with various other federal, state and local regulatory requirements, such as state and local fire and life safety requirements.
Risks Related to Our Qualification as a REIT and other Tax Matters
If we fail to continue to qualify as a REIT, our distributions will not be deductible, and our income will be subject to taxation, thereby reducing earnings available for distribution.
We have elected to be taxed as a REIT under the Code. We believe that we are qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year ended December 31, 2021, and we expect to continue to qualify as a REIT for future taxable years, but we cannot assure that we have qualified, or will remain qualified, as a REIT. The REIT qualification requirements are extremely complex and official interpretations of the U.S. federal income tax laws governing qualification as a REIT are limited. Certain aspects of our REIT qualification are beyond our control. For example, decreased revenues attributable to the COVID-19 pandemic may make it more difficult for us to meet the REIT gross income tests. Accordingly, we cannot be certain that we will be successful in operating so that we can remain qualified as a REIT. At any time, new laws, interpretations or court decisions may change the federal tax laws or the U.S. federal income tax consequences of our qualification as a REIT.
If we do not continue to qualify as a REIT and do not qualify for certain statutory relief provisions, our distributions will not be deductible, and our income will be subject to taxation, reducing earnings available for distribution. A REIT will generally not be subject to federal and substantially all state and local income taxation to the extent that it distributes its REIT taxable income to its stockholders and complies with certain other requirements. In addition, we would be subject to a 4% excise tax if we fail to distribute sufficient income to meet a minimum distribution test that requires us to distribute in a calendar year at least the sum of 85% of our ordinary
income, 95% of our capital gain and 100% of our aggregate undistributed income from prior years. If we cease to qualify as a REIT, we will also be subject to state and local income taxes in certain of the jurisdictions in which our properties are located. In addition, tax laws would no longer require us to pay any distributions to our stockholders. Unless we are entitled to relief under specific statutory provisions, we could not elect to be taxed as a REIT again for the four taxable years following the year during which we were disqualified. Even if we qualify as a REIT for U.S. federal income tax purposes, we may be subject to certain state and local income and franchise taxes and to U.S. federal income and excise taxes on our undistributed taxable income.
We intend to make distributions to stockholders to comply with the requirements of the Code. However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets, borrow funds or pay a portion of the dividend in common stock to meet the 90% distribution requirement of the Code. Certain assets generate substantial differences between taxable income and income recognized in accordance with accounting principles generally accepted in the United States (“GAAP”). Such assets include, without limitation, operating real estate that was acquired through structures that may limit or completely eliminate the depreciation deduction that would otherwise be available for income tax purposes. As a result, the Code requirement to distribute a substantial portion of our otherwise net taxable income in order to maintain REIT status could cause us to (1) distribute amounts that could otherwise be used for future acquisitions, capital expenditures or repayment of debt, (2) borrow on unfavorable terms, (3) sell assets on unfavorable terms, or (4) if necessary, pay a portion of our common dividend in common stock. If we fail to obtain debt or equity capital in the future, it could limit our operations and our ability to grow, which could have a material adverse effect on the value of our common stock.
Complying with REIT requirements may cause us to forego otherwise attractive opportunities and limit our growth opportunities.
In order to qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, our sources of income, the nature of our investments in commercial real estate and related assets, the amounts we distribute to stockholders and the ownership of our stock. We may also be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.
If our Operating Partnership is treated as a corporation for U.S. federal income tax purposes, we will cease to qualify as a REIT.
We believe our Operating Partnership qualifies and will continue to qualify as a partnership for U.S. federal income tax purposes. Assuming that it qualifies as a partnership for U.S. federal income tax purposes, our Operating Partnership generally will not be subject to U.S. federal income tax on its income. Instead, its partners, including us, generally are required to pay tax on their respective allocable share of our operating partnership’s income. No assurance can be provided, however, that the Internal Revenue Service (“IRS”) will not challenge our Operating Partnership’s status as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. For example, our Operating Partnership would be treated as a corporation for U.S. federal income tax purposes if it were deemed to be a “publicly traded partnership” and less than 90% of its income consisted of “qualified income” under the Code. If the IRS were successful in treating our Operating Partnership as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, therefore, cease to qualify as a REIT, and our Operating Partnership would become subject to U.S. federal, state and local income tax. The payment by our Operating Partnership of income tax would reduce significantly the amount of cash available to our Operating Partnership to satisfy obligations to make principal and interest payments on its debt and to make distribution to its partners, including us.
Our property taxes could increase due to property tax rate changes or reassessment, which could impact our cash flow.
Even if we qualify and maintain our status as a REIT, we are required to pay state and local property taxes on our properties. The property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities. Therefore, the amount of property taxes we pay in the future may increase substantially from what we have paid in the past and such increases may not be covered by tenants pursuant to our lease agreements. If the property taxes we pay increase, our financial condition, results of operations, cash flow, per share trading price of our common stock and our ability to satisfy our principal and interest obligations and to make distributions to our stockholders may be negatively impacted.
Frequent asset sales could trigger adverse tax consequences.
Tax laws applicable to REITs generally require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forego or defer sales of properties that otherwise would be in our best interest. Therefore, we may be unable to adjust our portfolio mix promptly in response to market conditions, which may adversely affect our financial position.
To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. We may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory.
In addition, the sale of our properties may generate gains for tax purposes which, if not adequately deferred through “like kind exchanges” under Section 1031 of the Code or other tax deference strategies, could require us to pay income taxes or make additional distributions to our stockholders, thus reducing our capital available for investment in other properties, or if the proceeds of such sales are already invested in other properties, require us to obtain additional funds to pay such taxes or make such distributions, in either such case to permit us to maintain our status as a REIT.
The partnership audit rules may alter who bears the liability in the event any subsidiary partnership (such as our Operating Partnership) is audited and an adjustment is assessed.
In the case of an audit of a partnership for a taxable year beginning after December 31, 2017, the partnership itself may be liable for a hypothetical increase in partner-level taxes (including interest and penalties) resulting from an adjustment of partnership tax items on audit, regardless of changes in the composition of the partners (or their relative ownership) between the year under audit and the year of the adjustment. Thus, for example, an audit assessment attributable to former partners of the Operating Partnership could be shifted to the partners in the year of the adjustment. The partnership audit rules also include an elective alternative method under which the additional taxes resulting from the adjustment are assessed from the affected partners (often referred to as a “push-out election”), subject to a higher rate of interest than otherwise would apply. The rules provide that when a push-out election causes a partner that is itself a partnership to be assessed with its share of such additional taxes from the adjustment, such partnership may cause such additional taxes to be pushed out to its own partners. In addition, applicable Treasury Regulations provide that a partnership may be able to request a modification of an adjustment that is based on deficiency dividends distributed by a partner that is a REIT. Many questions remain as to how the partnership audit rules will apply in practice, and it is not clear at this time what effect these rules will have on us. However, it is possible that a partnership in which we directly or indirectly invest may be subject to U.S. federal income tax, interest, and penalties in the event of a U.S. federal income tax audit as a result of these rules, and as a result could increase the U.S. federal income tax, interest, and/or penalties otherwise borne by us as a direct or indirect partner in any such partnership.
Failure to qualify as a domestically-controlled REIT could subject our non-U.S. stockholders to adverse U.S. federal income tax consequences.
We will be a domestically-controlled REIT if, at all times during a specified testing period, less than 50% in value of our shares are held directly or indirectly by non-U.S. stockholders. Because our shares are publicly traded, we cannot guarantee that we will, in fact, be a domestically-controlled REIT. If we fail to qualify as a domestically-controlled REIT, our non-U.S. stockholders (other than “qualified shareholders”, “qualified foreign pension funds” or “qualified controlled entities”) that otherwise would not be subject to U.S. federal income tax on the gain attributable to a sale of our shares would be subject to taxation upon such a sale if either (a) the shares were not considered to be “regularly traded” under applicable Treasury regulations on an established securities market, such as the NYSE, or (b) the shares were considered to be “regularly traded” on an established securities market and the selling non-U.S. stockholder owned, actually or constructively, more than 10% in value of the outstanding shares at any time during specified testing periods. If gain on the sale or exchange of our shares was subject to taxation for these reasons, the non-U.S. stockholder would be subject to U.S. federal income tax with respect to any gain on a net basis in a manner similar to the taxation of a taxable U.S. stockholder, subject to any applicable alternative minimum tax and special alternative minimum tax in the case of nonresident alien individuals, and corporate non-U.S. stockholders may be subject to an additional branch profits tax.
We may choose to make distributions in our own stock, in which case you may be required to pay income taxes without receiving any cash dividends.
In connection with our qualification as a REIT, we are required to annually distribute to our stockholders at least 90% of our REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. In order to satisfy this requirement, we may make distributions that are payable in cash and/or shares of our stock (which could account for up to 90% of the aggregate amount of such distributions) at the election of each stockholder. Taxable stockholders receiving such distributions will be required to include the full amount of such distributions as ordinary dividend income to the extent of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a result, U.S. stockholders may be required to pay income taxes with respect to such distributions in excess of the cash portion of the distribution received. Accordingly, U.S. stockholders receiving a distribution of our shares may be required to sell shares received in such distribution or may be required to sell other stock or assets owned by them, at a time that may be disadvantageous, in order to satisfy any tax imposed on such distribution. If a U.S. stockholder sells the stock that it receives as part of the distribution in order to pay this tax, the sales proceeds may be less than the amount it must include in income with respect to the distribution, depending on the market price of our stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required
to withhold U.S. tax with respect to such distribution, including in respect of all or a portion of such distribution that is payable in stock, by withholding or disposing of part of the shares included in such distribution and using the proceeds of such disposition to satisfy the withholding tax imposed. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividend income, such sale may put downward pressure on the market price of our stock.
Various tax aspects of such a taxable cash/stock distribution are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRS will not impose requirements in the future with respect to taxable cash/stock distributions, including on a retroactive basis, or assert that the requirements for such taxable cash/stock distributions have not been met.
Dividends paid by REITs generally do not qualify for reduced tax rates.
Generally, dividends payable by REITs do not qualify for reduced tax rates under the Code. For the calendar year 2021, the maximum federal individual tax rate for nonqualified dividends payable is 37.0%; qualified dividends from most C corporations received by individuals are subject to a reduced maximum federal rate of 20%. In addition to these rates, certain high income individuals may be subject to an additional 3.8% tax on certain investment income, including dividends and capital gains. As a REIT, our distributions to individual stockholders generally are not eligible for the reduced rates and are, consequently, taxed at ordinary income rates. Effective for taxable years beginning after December 31, 2017 and before January 1, 2026, those U.S. stockholders that are individuals, trusts or estates may deduct 20% of their dividends from REITs (excluding qualified dividend income and capital gains dividends). For those U.S. stockholders in the top marginal tax bracket of 37%, the deduction for REIT dividends yields an effective income tax rate of 29.6% (exclusive of the net investment income tax) on REIT dividends. The more favorable federal tax rates applicable to regular corporate dividends may result in the stock of REITs being perceived to be less attractive than the stock of corporations that pay dividends qualifying for reduced rates of tax, which may adversely affect the value of the stock of REITs.
Changes to the federal, state and municipality tax laws could have a significant negative impact on the overall economy, our tenants, and our business.
At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively. A shortfall in tax revenues for states and municipalities in which we operate may lead to changes in state and municipalities tax laws. We and our stockholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation, or administrative interpretation.
Stockholders are urged to consult with their own tax advisors with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on their investment in our shares.
Risks Related to Our Organization and Structure
Our charter and Maryland law contain provisions that may delay, defer or prevent a change of control transaction and depress our stock price.
Our charter and Maryland law contain provisions that may delay, defer or prevent a change of control transaction and depress the price of our common stock. The charter, subject to certain exceptions, authorizes directors to take such actions as are necessary and desirable relating to qualification as a REIT, and to limit any person to beneficial ownership of no more than 9.9% of the outstanding shares of our common stock. This ownership limit may delay or impede a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interests of stockholders. Our Board of Directors, in its sole discretion, may exempt a proposed transferee from the ownership limit, but not grant an exemption from the ownership limit to any proposed transferee whose direct or indirect ownership could jeopardize our status as a REIT. These restrictions on transferability and ownership will not apply if our Board of Directors determines that it is no longer in our best interests to continue to qualify as, or to be, a REIT. Our Board of Directors has waived the ownership limit to permit certain institutional investors to own common stock in excess of the ownership limit and may grant additional waivers in the future as long as the Company is able to maintain its REIT status. This concentration of ownership could deprive other stockholders of an opportunity to receive a premium for their shares of common stock as part of a sale of our Company and ultimately might affect the market price of our common stock.
We may authorize and issue stock and OP Units without stockholder approval. Our charter authorizes the Board of Directors to issue additional shares of common or preferred stock, to issue additional OP Units, to classify or reclassify any unissued shares of common or preferred stock, and to set the preferences, rights and other terms of such classified or unclassified shares. We have agreed not to use our preferred stock for anti-takeover purposes or in connection with a stockholder rights plan unless we obtain stockholder
approval. Certain provisions of the Maryland General Corporation Law (the “MGCL”) may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including:
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“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person or an affiliate thereof who beneficially owns 10% or more of the voting power of our shares) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights and special stockholder voting requirements on these combinations; and
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“control share” provisions that provide that our “control shares” (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of control shares) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
We have opted out of these provisions of the MGCL. However, the Board of Directors may, by resolution, elect to opt in to the business combination provisions of the MGCL, and we may, by amendment to our bylaws, opt in to the control share provisions of the MGCL.
Our ability to pay dividends is limited by the requirements of Maryland law.
Our ability to pay dividends on our common stock is limited by the laws of the State of Maryland. Under applicable Maryland law, a Maryland corporation generally may not make a distribution if, after giving effect to the distribution, the corporation would not be able to pay its debts as they become due in the usual course of business, or the value of the corporation’s total assets would be less than the sum of its total liabilities plus, unless the corporation’s charter provides otherwise, the amount that would be needed, if the corporation were dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. Accordingly, we generally may not make a distribution on our common stock if, after giving effect to the distribution, we would not be able to pay our debts as they become due in the usual course of business or our total assets would be less than the sum of our total liabilities plus, unless the terms of such class or series provide otherwise, the amount that would be needed to satisfy the preferential rights upon dissolution of the holders of shares of any class or series of preferred stock then outstanding, if any, with preferences senior to those of our common stock.
Our Board of Directors may change our strategy without stockholder approval.
Our Board of Directors may change our strategy with respect to capitalization, investment, distributions and/or operations. Our Board of Directors may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number or types of properties in which we may seek to invest or the concentration of investments in any one geographic region or the amount of development or redevelopment activity occurring across our portfolio. Although our Board of Directors has no present intention to revise or amend our strategies and policies, it may do so at any time without a vote by our stockholders. Accordingly, the results of decisions made by our Board of Directors and implemented by management could adversely affect our financial condition or results of operations, including our ability to distribute cash to stockholders or qualify as a REIT.
The rights of stockholders to take action against our directors and officers are limited.
Maryland law provides that a director or officer has no liability in that capacity if he or she satisfies his or her duties to us and our stockholders. As permitted by the MGCL, our charter limits the liability of our directors and officers to us and our stockholders for monetary damages, except for liability resulting from actual receipt of an improper benefit or profit in money, property or service, or a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated.
In addition, our charter and bylaws, as well as indemnification agreements that we have entered into with certain of our officers require us to indemnify our directors and officers, among others, for actions taken by them in those capacities to the maximum extent permitted by Maryland law. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist for companies organized in other jurisdictions. Accordingly, in the event that actions taken in good faith by any of our directors or officers impede the performance of our company, your ability to recover damages from such director or officer will be limited. In addition, we will be obligated to advance the defense costs incurred by our directors and officers with indemnification
agreements, and may, at the discretion of our Board of Directors, advance the defense costs incurred by our employees and other agents, in connection with legal proceedings.
Risks Related to Ownership of Our Common Stock
The market value of our debt and equity securities is subject to various factors that may cause significant fluctuations or volatility.
As with other publicly traded securities, the market price of our publicly traded securities depends on various factors which may change from time-to time and are often out of our control. Among the conditions that may affect the market price of our publicly traded securities are the following:
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the extent of institutional investor interest in us;
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the market perception of our business compared to other REITs;
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the market perception of retail REITs, in general, compared to other investment alternatives;
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our financial condition and performance, including changes in our funds from operations, operating funds from operations or earnings estimates;
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the market’s perception of our growth potential and potential future cash dividends;
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publication of research reports about us or our industry by securities analysts;
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speculation in the press or investment community;
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the passage of legislation or other regulatory developments that adversely affect us, our tax status, or our industry;
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our credit or analyst ratings;
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any future issuances of equity or debt securities;
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any future repurchases of equity securities;
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our failure to satisfy the listing requirements of the NYSE
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our failure to comply with the requirements of the Sarbanes-Oxley Act;
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additions or departures of key management personnel;
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strategic actions by us or our competitors, such as acquisitions or restructurings;
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an increase in market interest rates;
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our ability to access the capital markets to raise additional capital;
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and general economic and financial market conditions.
These factors may cause the market price of our common stock to decline, in some cases regardless of our financial condition, results of operations, business or prospects. Effective April 28, 2020, the average closing price of our common stock was less than $1.00 over the prior 30-consecutive trading day period, and as a result, we received notice from the NYSE that our stock could be delisted. Due to unprecedented market-wide declines as a result of the ongoing COVID-19 pandemic, the NYSE notice advised that we had until December 31, 2020 to regain compliance with the minimum share price requirement. On November 27, 2020, we completed a 1-for-6.6 reverse stock split of our common stock that resulted in the price of our common stock exceeding $1.00 per share and remaining above that level for at least the following 30 trading days, thereby curing the NYSE default. The reverse stock split did not require a stockholders’ vote.
It is impossible to ensure that the market price of our common stock will not fall in the future. A decrease in the market price of our common stock could reduce our ability to raise additional equity in the public markets. Selling common stock at a decreased market price would have a dilutive impact on existing stockholders.
Economic conditions in the U.S. economy in general, and any uncertainty in the credit markets and retail environment, could adversely affect our ability to continue to pay dividends or cause us to reduce the amount of our dividends.
We paid dividends totaling $0.26 per share during 2021, and paid dividends totaling $0.53 per share and $1.32 per share during 2020 and 2019, respectively. We reduced our common quarterly dividend in 2020 in an effort to preserve cash due to the current economic uncertainty. Any prolonged downturn in the state of the U.S. economy, weakness in capital markets and/or difficult retail environment may cause us to further reduce, or suspend, the payment of dividends, which could, among other things, affect our ability to qualify as a REIT for U.S. federal income tax purposes.
Future offerings of debt securities, which would be senior to our common and preferred stock, or equity securities, which would dilute the interests of our existing stockholders and may be senior to our existing common stock, may adversely affect the market prices of our common and preferred stock.
In the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities, including senior or subordinated notes and classes of preferred or common stock. Holders of debt securities or shares of preferred stock will generally be entitled to receive interest payments or distributions, both current and in connection with any liquidation or sale, prior to the holders of our common stock. Furthermore, offerings of common stock or other equity securities may dilute the holdings of our existing stockholders. We are not required to offer any such equity securities to existing stockholders on a preemptive basis, and future offerings of debt or equity securities, or perceptions that such offerings may occur, may reduce the market prices of our common and preferred stock or the distributions that we pay with respect to our common stock. Because we may generally issue any such debt or equity securities in the future without obtaining the consent of our stockholders, our stockholders bear the risk of our future offerings reducing the market prices of our common and preferred stock and diluting their proportionate ownership.
GENERAL RISKS
We face risks relating to cybersecurity attacks, loss of confidential information and other business disruptions.
We rely extensively on computer systems to manage our business and process transactions. Our business is at risk from and may be impacted by, cybersecurity attacks, including attempts to gain unauthorized access to our confidential data and other electronic security breaches. Such cyberattacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these threats including password protection, backup servers and annual penetration testing, there is no guarantee such efforts will be successful in preventing a cyberattack. Cybersecurity incidents, depending on their nature and scope, could potentially lead to the compromise of confidential information, improper use of our systems and networks, manipulation and destruction of data, system downtimes and operational disruptions, which in turn could adversely affect our reputation, competitiveness and results of operations. In the event a security breach or failure results in the disclosure of sensitive tenant or other third-party data, or the transmission of harmful/malicious code to third parties, we could be subject to liability or claims.
Furthermore, it is possible that our computer systems, including our back-up systems, could be subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, catastrophic events such as fires, hurricanes, earthquakes and tornadoes, and intentional and inadvertent acts and errors by our employees. Any material interruption in our computer systems or issues with the ongoing implementation of newly adopted IT solutions may have a material adverse effect on our business or results of operations or on our ability to timely and accurately report the results of our operations.
Our success depends on key personnel whose continued service is not guaranteed.
Our success depends on the efforts of key personnel, whose continued service is not guaranteed. If one or more of our senior executives or key employees are unwilling or unable to continue in their present positions or if their employment contracts are terminated or not renewed, we may not be able to replace them easily or at all. Competition for key personnel is intense, and such experienced individuals in our industry are in short supply. The loss of services of key personnel could materially and adversely affect our operations because of diminished relationships with lenders, sources of equity capital, construction companies, and existing and prospective tenants, and the ability to conduct our business and operations without material disruption.
We could be subject to litigation that may negatively impact our cash flows, financial condition and results of operations.
From time to time, we may be a defendant in lawsuits and regulatory proceedings relating to our business. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such litigation or proceedings. We could experience a negative impact to our cash flows, financial condition and results of operations due to an unfavorable outcome.
Increased scrutiny and expectations from investors, employees and other stakeholders regarding our environmental, social and governance (“ESG”) practices, as well as regulatory changes, could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our reputation, tenant and employee retention, and access to capital.
Companies across all industries are facing increasing scrutiny related to their ESG practices and reporting. Investors, employees and other stakeholders have begun to focus increasingly on ESG practices and to place increasing importance on the implications and social cost of their investments and other interactions with companies. For example, many investment funds focus on positive ESG
business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a factor in making an investment decision. In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make voting decisions on this basis. With this increased focus and demand, public reporting regarding ESG practices is becoming more broadly expected. If our ESG practices and reporting do not meet investor, employee or other stockholder expectations, which continue to evolve, our reputation and tenant retention may be negatively impacted. Any disclosure we make may include our policies and practices on a variety of ESG matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, and workforce inclusion and diversity. It is possible that investors or other stockholders may not be satisfied with our ESG reporting, ESG practices or speed of adoption of ESG initiatives. We could also incur additional costs and devote additional resources to monitor, report and implement various ESG practices. Our failure or perceived failure to meet the standards included in our ESG disclosure or the expectations of various investors and stakeholders could negatively impact our reputation, tenant and employee retention, and access to capital.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B.
Unresolved Staff Comments: None

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ITEM 2. PROPERTIES

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ITEM 3. LEGAL PROCEEDINGS
Item 3.
Legal Proceedings
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.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4.
Mine Safety Disclosures: Not applicable
Part II.

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
The Company had 13,658,437 shares of common stock outstanding held by approximately 190 stockholders of record at December 31, 2021. The Company believes it has more than approximately 4,000 beneficial holders of its common stock. The Company’s shares trade on the NYSE under the symbol “CDR”.
Stockholder Return Performance Presentation
The following line graph sets forth for the period January 1, 2017 through December 31, 2021, a comparison of the percentage change in the cumulative total stockholder return on the Company’s common stock compared to the cumulative total return of the Russell 2000 index and the National Association of Real Estate Investment Trusts All Equity REIT Index (“NAREIT All Equity REIT Index”). The graph assumes that the shares of the Company’s common stock were bought at the price of $100 per share and that the value of the investment in each of the Company’s common stock and the indices was $100 at the beginning of the period. The graph further assumes the reinvestment of dividends when paid.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6.
Selected Financial Data: Not required

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7.
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.
Executive Summary
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 December 31, 2021, the Company owned and managed a portfolio of 50 operating properties (excluding properties “held for sale”) totaling 7.3 million square feet of GLA. The portfolio was 91.0% leased and 88.2% occupied at December 31, 2021.
The Company, organized as a Maryland corporation, has established an umbrella partnership structure through the contribution of substantially all of its assets to the Operating Partnership, organized as a limited partnership under the laws of Delaware. The Company conducts substantially all of its business through the Operating Partnership. At December 31, 2021, the Company owned a 99.4% general and limited partnership interest in, and was the sole general partner of, the Operating Partnership. The limited partners’ interest in the Operating Partnership (0.6% at December 31, 2021) is represented by partnership units in the Operating Partnership (“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 81,000 OP Units outstanding at December 31, 2021 are economically equivalent to shares of 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. Unless specifically noted otherwise, all references to OP Units exclude limited partnership units held by the Company.
On November 25, 2020, the Company effected a 1-for-6.6 reverse stock split of the issued and outstanding shares of common stock. Each 6.6 shares of the Company's issued and outstanding common stock were combined into one share of the Company's common stock. The number of authorized shares and the par value of the common stock were not changed. In addition, the Company amended the Limited Partnership Agreement of our Operating Partnership to effect a corresponding reverse split of the partnership interests of the Operating Partnership. In accordance with GAAP, all shares of common stock, restricted stock units, OP Units and per share/unit information that are presented in this Form10-K were adjusted to reflect the reverse split on a retroactive basis for all periods presented.
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.
2021 Significant Circumstances and Transactions
COVID-19 Pandemic
As a result of COVID-19, the Company has received numerous rent relief requests, most often in the form of rent deferrals. The Company has entered into lease modifications that deferred approximately $3.5 million and waived approximately $2.4 million of rental income for 2021, respectively. To date, the weighted average payback period for remaining deferred rent receivable is approximately 10 months, beginning at various times from July 2020 through June 2021. The Company has collected approximately 96% of contractual base rents and monthly tenant reimbursements for the year ended December 31, 2021.
Real Estate
On March 2, 2022, the Company announced that following its previously announced dual-track review of strategic alternatives, the Company has entered into definitive agreements that will result in the sale of the Company and its assets in a series of related all-cash transactions. The Company (1) entered into an agreement to sell a portfolio of 33 grocery-anchored shopping centers for $840.0 million, (2) entered into an agreement to sell the Revelry redevelopment project for $34.0 million, (3) is negotiating a contract for the sale of the Northeast Heights redevelopment project for $46.5 million and (4) entered into an agreement to sell the Company and its remaining assets for $291.3 million. The acquirer of the portfolio of 33 grocery-anchored shopping centers has agreed to backstop the two redevelopment transactions at the aggregate price of $80.5 million if they do not close before the closing of the shopping center portfolio transaction. The contracts to sell the 33 grocery-anchored shopping centers and to sell the Company and its remaining assets require shareholder approval.
As part of the dual-track strategic alternatives process, the Company has determined that certain of the Company’s operating properties would be sold significantly prior to the end of their previously estimated hold periods. The Company recorded $101.7 million in impairment charges.
On October 14, 2021, the Company acquired the 60% minority ownership percentage in the San Souci Plaza joint venture.
Investment in unconsolidated joint venture
On May 5, 2021, the Company formed a joint venture with Goldman Sachs Urban Investment Group and Asland Capital Partners (the “Joint Venture”) for the construction of an approximately 258,000 square foot six-story commercial building in Washington, D.C. consisting of approximately 240,000 square feet of office space which is 100% leased to the Washington, D.C., Department of General Services (“DGS”) for its headquarters and approximately 18,000 square feet of street-level retail. The term of the lease with DGS is for 20 years and 10 months, to commence upon substantial completion and delivery to the DGS. This building is planned as the first phase of Northeast Heights, a redevelopment of two existing shopping centers, East River Park and Senator Square, into a mixed-use residential, office and retail property. Further, the Joint Venture has secured construction financing from JP Morgan not to exceed $105 million. The construction loan initially bears interest at LIBOR plus 200 basis points and has an initial term of three years with two, one-year extension options subject to customary conditions. The Company has a 10% interest in the joint venture and is a co-general partner along with Asland Capital Partners. The Company has contributed approximately $4.7 million of capital to the Joint Venture as of December 31, 2021. The Company has sold approximately $8.0 million of development costs to the Joint Venture as of December 31, 2021.
The Joint Venture currently estimates that the space will be delivered during the end of the fourth quarter 2022. Upon completion of the building, DGS will be obligated to pay initial annual net rent of approximately $5.4 million per year, subject to a 2.5% annual escalator on each anniversary of rent commencement, plus certain operating costs, property taxes and amortization of tenant improvements together totaling approximately an additional $8.1 million per year, for an aggregate total annual rent of approximately $13.5 million. The lease provides for a free rent period of 10 months immediately following rent commencement. The lease also provides DGS with a tenant credit of approximately $6.8 million to be applied, at DGS’s election, against either annual rent or any other tenant payment obligations including tenant improvement costs, in excess of the tenant improvement allowance. Pursuant to the lease, the Joint Venture will contribute up to $155 per rentable square foot toward the cost of tenant improvements, to be amortized over 240 months. In addition, the lease provides that the Joint Venture will contribute $9.38 per rentable square foot in additional tenant improvement allowance between the 10th and 12th lease years, upon DGS’s timely election. The obligations of DGS under the lease are subject to annual budget appropriation.
As of December 31, 2021, Carll’s Corner, located in Bridgeton, New Jersey, Riverview Plaza, located in Philadelphia, Pennsylvania, and East River Park and Senator Square, both located in Washington, D.C., have been classified as “real estate held for sale” on the accompanying consolidated balance sheet.
During 2021, the Company sold the properties listed below:
Gain on Sale/
Date
Sales
Reversal of
Property
Location
Sold
Price
Impairment
Kempsville Crossing (land parcel)
Virginia Beach, VA
2/24/2021
$
1,300,000
$
1,047,000
The Commons
Dubois, PA
5/5/2021
9,761,000
1,849,000
Camp Hill Shopping Center
Camp Hill, PA
6/21/2021
89,662,500
48,857,000
$
100,723,500
$
51,753,000
The gain on sales and the reversal of impairments are included in operating income in the accompanying consolidated statement of operations.
Unsecured Revolving Credit Facility and Term Loans
On August 30, 2021, the Company amended its existing $300 million unsecured credit facility and $50 million term loan. After the amendment, the new unsecured revolving credit facility is $185 million with an expiration in August 2024. The new unsecured revolving credit facility may be extended, at the Company’s option for two additional one-year periods, subject to customary conditions. Interest on the borrowings under the new unsecured revolving credit facility component can range from LIBOR plus 135 bps to 195 bps (150 bps at December 31, 2021), based on the Company’s leverage ratio. The Company extended its $50 million term loan four years with an expiration in August 2026.
Mortgage Loans Payable
On May 5, 2021, the Company closed a non-recourse mortgage for $114.0 million. The mortgage matures June 1, 2031, bears interest at a fixed-rate of 3.49% and requires payment of interest only for the first five years followed by payments of principal and interest based on thirty-year amortization for the remainder of the term. The loan is secured by five shopping centers consisting of Lawndale Plaza, The Shops at Suffolk Downs, Christina Crossing, Trexlertown Plaza, and The Point. These properties had no pre-existing debt and the proceeds from this new loan were used to reduce amounts outstanding under the Company’s revolving credit facility.
2020 Significant Transactions
Dispositions
During 2020, the Company sold the properties listed below:
Date
Sales
Gain on
Property
Location
Sold
Price
Sale
Metro Square
Owings Mills, MD
7/9/2020
$
4,288,000
$
-
Oakland Mills outparcel building
Columbia, MD
9/17/2020
1,050,000
643,000
Glen Allen Shopping Center
Glen Allen, VA
10/8/2020
8,540,000
1,780,000
Pine Grove Plaza outparcel building
Brown Mills, NJ
11/2/2020
1,100,000
565,000
Suffolk Plaza
Suffolk, VA
12/10/2020
6,950,000
1,408,000
$
21,928,000
$
4,396,000
During the year ended December 31, 2020, the Company recorded impairment charges of $7.6 million in relation to properties classified as real estate held for sale, which are included in continuing operations in the accompanying consolidated statement of operations.
Real Estate
As of December 31, 2020, Carll’s Corner, located in Bridgeton, New Jersey, and The Commons, located in Dubois, Pennsylvania, have been classified as “real estate held for sale” on the accompanying consolidated balance sheet.
On January 31, 2020, the Company agreed to a cash payment in consideration for permitting a dark anchor tenant to terminate its lease prior to the contractual expiration at Metro Square. As a result of this termination, revenues for the nine months ended September 30, 2020, included approximately $7.1 million of other income.
Unsecured Revolving Credit Facility and Term Loans
On August 4, 2020, the Company amended its then existing $300 million unsecured credit facility and term loans. After such amendments, the Company’s financial ratios and borrowing base are all computed using trailing four quarters as opposed to the current quarter annualized and interest rate swaps that are a hedge of existing debt are now excluded from the definition of debt.
On October 27, 2020, the Company utilized its revolving credit facility to repay the $75.0 million term loan which was set to mature in February 2021. The revolving credit facility matures in September 2021, and may be extended, at the Company’s option, for an additional one-year period, subject to customary conditions.
Common Stock
On November 25, 2020, the Company effected a 1-for-6.6 reverse stock split of the issued and outstanding shares of common stock. Each 6.6 shares of the Company's issued and outstanding common stock were combined into one share of the Company's common stock. The number of authorized shares and the par value of the common stock were not changed. In addition, the Company amended the Limited Partnership Agreement of our Operating Partnership to effect a corresponding reverse split of the partnership interests of the Operating Partnership. In accordance with GAAP, all shares of common stock, restricted stock units, OP Units and per share/unit information that are presented in this Form 10-K were adjusted to reflect the reverse split on a retroactive basis for all periods presented.
Equity
On December 18, 2018, the Company’s Board of Directors approved a stock repurchase program, which authorized the Company to purchase up to $30.0 million of the Company’s common stock in the open market or through private transactions, subject to market conditions. The stock repurchase program expired on December 18, 2019. During 2019, the Company repurchased approximately 311,000 shares at a weighted average price per share of $22.03. Since approval of the plan on December 18, 2018, the Company repurchased 428,000 shares at a weighted average price per share of $21.45.
Summary of Critical Accounting Policies
The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition and the allowance for doubtful accounts receivable, real estate investments and purchase accounting allocations related thereto, asset impairment, and derivatives used to hedge interest-rate risks. Management’s estimates are based both on information that is currently available and on various other assumptions management believes to be reasonable under the circumstances. Actual results could differ from those estimates and those estimates could be different under varying assumptions or conditions.
The Company has identified the following critical accounting policies, the application of which requires significant judgments and estimates:
Revenue Recognition
Rental income with scheduled rent increases is recognized using the straight-line method over the respective terms of the leases. The aggregate excess of rental revenue recognized on a straight-line basis over base rents under applicable lease provisions is included in straight-line rents receivable on the consolidated balance sheet. Leases also generally contain provisions under which the tenants reimburse the Company for a portion of property operating expenses and real estate taxes incurred; such income is recognized in the periods earned. In addition, certain operating leases contain contingent rent provisions under which tenants are required to pay a percentage of their sales in excess of a specified amount as additional rent. The Company defers recognition of contingent rental income until those specified targets are met.
The Company must make estimates as to the collectability of its accounts receivable related to base rent, straight-line rent, expense reimbursements and other revenues. Management analyzes accounts receivable by considering tenant creditworthiness, current economic conditions, and changes in tenants’ payment patterns when evaluating the adequacy of the allowance for doubtful accounts receivable. These estimates have a direct impact on net income, because a higher bad debt allowance would result in lower net income, whereas a lower bad debt allowance would result in higher net income.
Real Estate Investments
Real estate investments are carried at cost less accumulated depreciation. The provision for depreciation is calculated using the straight-line method based on estimated useful lives. Expenditures for maintenance, repairs and betterments that do not materially prolong the normal useful life of an asset are charged to operations as incurred. Expenditures for betterments that substantially extend the useful lives of real estate assets are capitalized.
Real estate investments include costs of development and redevelopment activities, and construction in progress. Capitalized costs, including interest and other carrying costs during the construction and/or renovation periods, are included in the cost of the related asset and charged to operations through depreciation over the asset's estimated useful life. The Company is required to make subjective estimates as to the useful lives of its real estate assets for purposes of determining the amount of depreciation to reflect on an annual basis. These assessments have a direct impact on net income. A shorter estimate of the useful life of an asset would have the effect of
increasing depreciation expense and lowering net income, whereas a longer estimate of the useful life of an asset would have the effect of reducing depreciation expense and increasing net income.
A variety of costs are incurred in the acquisition, development and leasing of a property, such as pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs, and other costs incurred during the period of development. After a determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. The Company ceases capitalization on the portions substantially completed and occupied, or held available for occupancy, and capitalizes only those costs associated with the portions under construction. The Company considers a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but not later than one year from cessation of major development activity. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. The effect of a longer capitalization period would be to increase capitalized costs and would result in higher net income, whereas the effect of a shorter capitalization period would be to reduce capitalized costs and would result in lower net income.
The Company allocates the fair value of real estate acquired to land, buildings and improvements. In addition, the fair value of in-place leases is allocated to intangible lease assets and liabilities. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, which value is then allocated to land, buildings and improvements based on management’s determination of the fair values of such assets. In valuing an acquired property’s intangibles, factors considered by management include an estimate of carrying costs during the expected lease-up periods, such as real estate taxes, insurance, other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on its evaluation of current market demand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs.
The values of acquired above-market and below-market leases are recorded based on the present values (using discount rates which reflect the risks associated with the leases acquired) of the differences between the contractual amounts to be received and management’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time of the acquisitions. Such valuations include a consideration of the non-cancellable terms of the respective leases as well as any applicable renewal period(s). The fair values associated with below-market rental renewal options are determined based on the Company’s experience and the relevant facts and circumstances that existed at the time of the acquisitions. The values of above-market leases are amortized to rental income over the terms of the respective non-cancelable lease periods. The portion of the values of below-market leases associated with the original non-cancelable lease terms are amortized to rental income over the terms of the respective non-cancelable lease periods. The portion of the values of the leases associated with below-market renewal options that are likely of exercise are amortized to rental income over the respective renewal periods. The value of other intangible assets (including leasing commissions, tenant improvements, etc.) is amortized to expense over the applicable terms of the respective leases. If a lease were to be terminated prior to its stated expiration or not renewed, all unamortized amounts relating to that lease would be recognized in operations at that time.
Management is required to make subjective assessments in connection with its valuation of real estate acquisitions. These assessments have a direct impact on net income because (1) above-market and below-market lease intangibles are amortized to rental income and (2) the value of other intangibles is amortized to expense. Accordingly, higher allocations to below-market lease liability and other intangibles would result in higher rental income and amortization expense, whereas lower allocations to below-market lease liability and other intangibles would result in lower rental income and amortization expense.
Management reviews each real estate investment for impairment whenever events or circumstances indicate that the carrying value of a real estate investment may not be recoverable. The review of recoverability is based on an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition. These estimates of cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If an impairment event exists due to the projected inability to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds estimated fair value. A real estate investment held for sale is carried at the lower of its carrying amount or estimated fair value, less the cost of a potential sale. Depreciation and amortization are suspended during the period the property is held for sale. Management is required to make subjective assessments as to whether there are impairments in the value of its real estate properties. These assessments have a direct impact on net income, because an impairment loss is recognized in the period that the assessment is made.
New Accounting Pronouncements
See Note 2 of “Notes to Consolidated Financial Statements” included in Item 8 below for information relating to new accounting pronouncements.
Results of Operations
Comparison of 2021 to 2020
Change
Dollars
Percent
Revenues
$
127,550,000
$
135,538,000
$
(7,988,000
)
-5.9%
Property operating expenses
(46,446,000
)
(45,596,000
)
(850,000
)
1.9%
Property operating income
81,104,000
89,942,000
(8,838,000
)
General and administrative
(18,033,000
)
(16,865,000
)
(1,168,000
)
6.9%
Depreciation and amortization
(39,454,000
)
(48,412,000
)
8,958,000
-18.5%
Gain on sales
49,904,000
4,396,000
45,508,000
n/a
Impairment charges
(99,888,000
)
(7,607,000
)
(92,281,000
)
n/a
Interest expense
(18,636,000
)
(21,974,000
)
3,338,000
-15.2%
Net loss
(45,003,000
)
(520,000
)
(44,483,000
)
Net income attributable to noncontrolling interests
(96,000
)
(552,000
)
456,000
Net loss attributable to Cedar Realty Trust, Inc.
$
(45,099,000
)
$
(1,072,000
)
$
(44,027,000
)
Revenues were lower primarily as a result of (1) a reduction in lease termination fee income of $7.1 million of revenue received in the quarter ended March 31, 2020 relating to a dark anchor tenant terminating its lease prior to the contractual expiration in 2020 at Metro Square, and (2) a decrease of $8.5 million in rental revenues, straight line rents and expense recoveries, properties held for sale or sold in 2020 and 2021, which is partially offset by (3) an increase of $5.7 million in rental revenues, straight-line rents and expense recoveries at the same-center properties and (4) an increase of $1.6 million in rental revenues, straight-line rents and expense recoveries at the redevelopment properties. The increase related to the same-center properties and redevelopment properties is predominantly related to the negative impact of the COVID-19 pandemic on 2020.
Property operating expenses were higher primarily as a result of (1) an increase of $2.8 million in property operating expenses attributable to same-center properties, (2) an increase of $2.0 million in property operating expenses attributable to redevelopment properties, which is partially offset by (3) a decrease of $3.9 million in property operating expenses attributable to properties that were sold or held for sale in 2021 and 2020.
General and administrative costs were higher primarily as a result of (1) a $0.7 million increase in legal and professional expense, (2) a $0.6 million increase in other general and administrative accounts related predominately to state taxes, which is partially offset by (3) a $0.1 million decrease in payroll expense related to the reduction in head count in the fourth quarter of 2021.
Depreciation and amortization expenses were lower as a result of (1) a decrease of $5.9 million attributable to same-center properties predominately related to accelerated depreciation of tenant improvements and leasing commissions taken in 2020 as a result of tenants vacating their spaces, (2) a decrease of $2.0 million attributable to properties that were sold or held for sale in 2021 and 2020, which is partially offset by (3) an increase of $1.0 million attributable to redevelopment properties.
Gain on sales in 2021 relates to the sale of (1) Camp Hill Shopping Center, located in Camp Hill, Pennsylvania and (2) a land parcel located at Kempsville Crossing, located in Virginia, Beach, Virginia. Gain on sales in 2020 relates to the sale of (1) Glen Allen Shopping Center, located in Glen Allen, Virginia, (2) Suffolk Plaza, located in Suffolk, Virginia, (3) an outparcel building at Oakland Mills, located in Columbia, Maryland, and (4) an outparcel building at Pine Grove Plaza, located in Brown Mills, New Jersey.
Impairment charges in 2021 relate to (1) a reversal of impairment for The Commons, located in Dubois, Pennsylvania and (2) impairments taken as it relates to the strategic transaction undertaken by the Company. Impairment charges in 2020 relate to Metro Square, located in Owings Mills, Maryland, and The Commons, located in Dubois Pennsylvania.
Interest expense was lower as a result of (1) a decrease in the overall weighted average principle balance which resulted in a decrease in interest expense of $3.4 million, and (2) an increase in capitalized interest of $0.8 million, partially offset by (3) an increase in the overall weighted average interest rate which resulted in an increase in interest expense of $0.7 million and (4) an increase of $0.2 million related to the acceleration of amortization of deferred financing costs.
Comparison of 2020 to 2019
Change
Dollars
Percent
Revenues
$
135,538,000
$
144,083,000
$
(8,545,000
)
-5.9%
Property operating expenses
(45,596,000
)
(48,347,000
)
2,751,000
-5.7%
Property operating income
89,942,000
95,736,000
(5,794,000
)
General and administrative
(16,865,000
)
(18,804,000
)
1,939,000
-10.3%
Depreciation and amortization
(48,412,000
)
(45,861,000
)
(2,551,000
)
5.6%
Gain on sales
4,396,000
2,942,000
1,454,000
n/a
Impairment charges
(7,607,000
)
(8,938,000
)
1,331,000
n/a
Interest expense
(21,974,000
)
(23,509,000
)
1,535,000
-6.5%
Net (loss) income
(520,000
)
1,566,000
(2,086,000
)
Net income attributable to noncontrolling interests
(552,000
)
(490,000
)
(62,000
)
Net (loss) income attributable to Cedar Realty Trust, Inc.
$
(1,072,000
)
$
1,076,000
$
(2,148,000
)
Revenues were lower primarily as a result of the negative impact of the COVID-19 pandemic, which resulted in (1) a decrease of $5.4 million in rental revenues and expense recoveries and a decrease of $1.8 million in straight-line rental and the amortization of intangible lease liabilities revenues attributable to same-center properties, (2) a decrease of $5.5 million in rental revenues and expense recoveries and a decrease of $1.2 million in straight-line rental and the amortization of intangible lease liabilities revenues attributable to redevelopment properties. In addition, there was a decrease of $2.1 million in rental revenues and expense recoveries attributable to properties that were sold or held for sale in 2019 and 2018. These negative results were partially offset by (1) $7.1 million in revenue in the quarter ended March 31, 2020 relating to a dark anchor tenant terminating its lease prior to the contractual expiration in 2020 at Metro Square, and (2) an increase of $0.4 million in rental revenues and expense recoveries attributable to a property acquired in 2019.
Property operating expenses were lower primarily as a result of (1) a decrease of $2.0 million in property operating expenses attributable to redevelopment properties, (2) a decrease of $0.6 million in property operating expenses attributable to properties that were sold or held for sale in 2020 and 2019, and (3) a decrease of $0.3 million in property operating expenses attributable to same-center properties, partially offset by an increase of $0.2 million in property operating expenses attributable to a property acquired in 2019.
General and administrative costs were lower primarily as a result of (1) cost savings of $1.1 million as a result of the COVID-19 pandemic, predominately related to the cancellation of leasing conventions along with the related travel expenses and (2) a decrease of $0.9 million in legal and professional fees.
Depreciation and amortization expenses were higher as a result of (1) accelerated depreciation of tenant improvements and leasing commissions of $4.2 million as a result of tenants vacating their spaces, (2) accelerated depreciation of $2.1 million in the quarter ended March 31, 2020 relating to the demolition of certain existing buildings at a redevelopment property, (3) an increase of $1.3 million attributable to same-center properties, and (4) a $0.7 million write-off in the quarter ended March 31, 2020 arising from a lease termination for permitting a dark anchor to terminate its lease prior to the contractual expiration at a property that was classified held for sale in 2020, by (1) a decrease of $5.0 million attributable to redevelopment properties, and (2) a decrease of $0.6 million attributable to properties that were sold or held for sale in 2020 and 2019.
Gain on sales in 2020 relates to the sale of (1) Glen Allen Shopping Center, located in Glen Allen, Virginia, (2) Suffolk Plaza, located in Suffolk, Virginia, (3) an outparcel building at Oakland Mills, located in Columbia, Maryland, and (4) an outparcel building at Pine Grove Plaza, located in Brown Mills, New Jersey. Gain on sales in 2019 relates to the sale of Maxatawny Marketplace, located in Maxatawny, Pennsylvania and Fort Washington Center, located in Fort Washington, Pennsylvania.
Impairment charges in 2020 relates to Metro Square, located in Owings Mills, Maryland, and The Commons, located in Dubois Pennsylvania. Impairment charges in 2019 relate to The Commons, located in Dubois, Pennsylvania.
Interest expense was lower as a result of (1) a decrease in the overall weighted average interest rate which resulted in a decrease in interest expense of $1.8 million, and (2) an increase in capitalized interest of $1.0 million, partially offset by increase in the overall weighted average principal balance which resulted in an increase in interest expense of $1.3 million.as higher as a result of an increase in the overall weighted average interest rate.
Same-Property Net Operating Income
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:
Years ended December 31,
Operating (loss) income
$
(26,367,000
)
$
21,454,000
Add (deduct):
General and administrative
18,033,000
16,865,000
Gain on sales
(49,904,000
)
(4,396,000
)
Impairment charges
99,888,000
7,607,000
Depreciation and amortization
39,454,000
48,412,000
Straight-line rents
(270,000
)
1,208,000
Amortization of intangible lease liabilities
(1,074,000
)
(1,373,000
)
Other adjustments
(269,000
)
(585,000
)
NOI related to properties not defined as same-property
(11,407,000
)
(23,331,000
)
Same-property NOI
$
68,084,000
$
65,861,000
Number of same properties
Same-property occupancy, end of period
90.9
%
90.7
%
Same-property leased, end of period
91.8
%
92.0
%
Same-property average base rent, end of period
$
13.60
$
13.73
Same-property NOI for the comparable years increased 3.4% as a result of the negative impact of the COVID-19 pandemic in 2020 which reduced rental revenues for the same-property portfolio.
Leasing Activity
The following is a summary of the Company’s retail leasing activity during 2021:
Tenant
Leases
New rent
Prior rent
Cash basis
improvements
signed
GLA
per sq.ft.
per sq.ft.
% change
per sq.ft.
Renewals
580,400
$
15.08
$
14.81
1.8
%
$
1.47
New Leases - Comparable
321,600
13.86
13.36
3.7
%
43.92
(a)
New Leases - Non-Comparable (b)
122,300
18.66
n/a
n/a
70.07
(a)
Total (c)
1,024,300
$
15.12
n/a
n/a
$
22.98
(a)
Includes both tenant allowance and landlord work. Excludes first generation space.
(b)
Includes leases signed at first generation and expansion spaces.
(c)
Legal fees and leasing commissions averaged a combined total of $2.91 per square foot.
Liquidity and Capital Resources
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 access to financing for development projects, financing for additional construction projects, or proceeds from refinancing of existing debt.
Effective April 28, 2020, the average closing price of the Company’s common stock had been less than $1.00 over the prior 30-consecutive trading day period, and as a result, the Company received notice from the NYSE that the Company had until December 31, 2020 to regain compliance with the minimum share price requirement. The threat of delisting and/or a delisting of the Company’s common stock could have adverse effects, such as restricting the Company’s ability to obtain equity financing. On October 27, 2020, to regain compliance with the minimum NYSE share price requirement, the Company’s Board of Directors approved a plan to amend the Company’s articles of incorporation to effect a reverse stock split of the issued and outstanding shares of common stock.
On November 25, 2020, the Company effected a 1-for-6.6 reverse stock split of the issued and outstanding shares of common stock. Each 6.6 shares of the Company's issued and outstanding common stock were combined into one share of the Company's common stock. The number of authorized shares and the par value of the common stock were not changed. In addition, the Company amended the Limited Partnership Agreement of our Operating Partnership to effect a corresponding reverse split of the partnership interests of the Operating Partnership.
On August 30, 2021, the Company amended its existing $300 million unsecured credit facility and $50 million term loan. After the amendment, the new unsecured revolving credit facility is $185 million with an expiration in August 2024. The new unsecured revolving credit facility may be extended, at the Company’s option for two additional one-year periods, subject to customary conditions. Interest on the borrowings under the new unsecured revolving credit facility component can range from LIBOR plus 135 bps to 195 bps (150 bps at September 30, 2021), based on the Company’s leverage ratio. Interest on borrowings under the unsecured credit facility is based on the Company’s leverage ratio. The Company extended its $50 million term loan four years with an expiration in August 2026.
On August 4, 2020, the Company amended its then existing $300 million unsecured credit facility and term loans. After such amendments, the Company’s financial ratios and borrowing base are all computed using the trailing four quarters as opposed to the current quarter annualized and interest rate swaps that are a hedge of existing debt are now excluded from the definition of 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 facility contains restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. 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. Although the credit facility is unsecured, borrowing availability is based on unencumbered property adjusted net operating income for the trailing twelve months, as defined in the agreements. As of December 31, 2021, the Company had $66.0 million outstanding and $113.9 million available for additional borrowings under its revolving credit facility, and was in compliance with all financial covenants.
On May 5, 2021, the Company closed a non-recourse mortgage for $114.0 million. The mortgage matures June 1, 2031, bears interest at a fixed-rate of 3.49% and requires payment of interest only for the first five years followed by payments of principal and interest based on thirty-year amortization for the remainder of the term. The loan is secured by five shopping centers consisting of Lawndale Plaza, The Shops at Suffolk Downs, Christina Crossing, Trexlertown Plaza, and The Point. These properties had no pre-existing debt and the proceeds from this new loan were used to reduce amounts outstanding under the Company’s revolving credit facility.
Debt and finance lease obligations are composed of the following at December 31, 2021:
December 31, 2021
Contractual
Maturity
Balance
interest rates
Description
dates
outstanding
weighted-average
Fixed-rate mortgage
Franklin Village
Jun 2026
$
44,571,000
3.9%
Shops at Suffolk Downs (a)
Jun 2031
15,600,000
3.5%
Trexlertown Plaza (a)
Jun 2031
36,100,000
3.5%
The Point (a)
Jun 2031
29,700,000
3.5%
Christina Crossing (a)
Jun 2031
17,000,000
3.5%
Lawndale Plaza (a)
Jun 2031
15,600,000
3.5%
Senator Square finance lease obligation
Sep 2050
5,596,000
5.3%
164,167,000
3.6%
Unsecured credit facilities:
Variable-rate:
Revolving credit facility (b)
Aug 2024
66,000,000
1.6%
Term loan
Sep 2022
-
n/a
Fixed-rate (c):
Term loan
Feb 2022
-
n/a
Term loan
Apr 2023
100,000,000
3.3%
Term loan
Sep 2024
75,000,000
3.8%
Term loan
Jul 2025
75,000,000
4.7%
Term loan
Aug 2026
50,000,000
3.3%
530,167,000
3.5%
Unamortized issuance costs
(3,129,000
)
$
527,038,000
(a)
The mortgages for these properties are cross-collateralized.
(b)
The revolving credit facility is subject to two one-year extensions at the Company’s option.
(c)
The interest rates on these term loans consist of LIBOR plus a credit spread based on the Company’s leverage ratio, for which the Company has interest rate swap agreements which convert the LIBOR rates to fixed rates. Accordingly, these term loans are presented as fixed-rate debt.
The following table details the Company’s debt and finance lease obligation maturities at December 31, 2021:
Mortgage Loan
Finance Lease
Revolving
Term
Unamortized
Year
Payable
Obligation
Credit Facility
Loans
Total
Issuance Costs
Total
$
1,116,000
$
37,000
$
-
$
-
$
1,153,000
$
(600,000
)
$
553,000
1,160,000
39,000
-
100,000,000
101,199,000
(518,000
)
100,681,000
1,206,000
41,000
66,000,000
(a)
75,000,000
142,247,000
(451,000
)
141,796,000
1,253,000
44,000
-
75,000,000
76,297,000
(359,000
)
75,938,000
40,922,000
48,000
-
50,000,000
90,970,000
(243,000
)
90,727,000
Thereafter
112,914,000
5,387,000
-
-
118,301,000
(958,000
)
117,343,000
$
158,571,000
$
5,596,000
$
66,000,000
$
300,000,000
$
530,167,000
$
(3,129,000
)
$
527,038,000
(a)
The revolving credit facility is subject to two one-year extensions at the Company's option.
Mortgage loans payable may 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 stock and preferred stock dividends during 2020, and has continued to declare and pay common stock and preferred stock dividends during 2021. 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. Additionally, the Board of Directors may reduce, as it did with the May 2020 common stock dividend of $0.01 per common share, or suspend payment of dividends to retain cash and reduce debt obligations and/or to fund redevelopments and other capital needs. The Company intends to continue to operate its business in a manner that will allow it to qualify as a REIT for U.S. federal income tax requirements.
The following table sets forth the Company’s significant debt repayment, interest, finance and operating lease obligations at December 31, 2021:
Maturity Date
Thereafter
Total
Debt:
Mortgage loan payable
$
1,116,000
1,160,000
$
1,206,000
$
1,253,000
$
40,922,000
$
112,914,000
$
158,571,000
Unsecured revolving credit facility (a)
-
-
66,000,000
-
-
-
66,000,000
Unsecured term loans
-
100,000,000
75,000,000
75,000,000
50,000,000
-
300,000,000
Interest payments (b)
18,315,000
16,013,000
13,571,000
9,356,000
5,669,000
16,931,000
79,855,000
Finance lease obligation (principal and interest)
333,000
333,000
333,000
333,000
335,000
10,059,000
11,726,000
Operating lease obligations
787,000
789,000
789,000
671,000
634,000
19,578,000
23,248,000
Total
$
20,551,000
$
118,295,000
$
156,899,000
$
86,613,000
$
97,560,000
$
159,482,000
$
639,400,000
(a)
The revolving credit facility is subject to two one-year extensions at the Company's option.
(b)
Represents interest payments expected to be incurred on the Company's debt obligations as of December 31, 2021, including interest that may subsequently be capitalized. The interest rates used in this calculation in regards to the unsecured revolving credit facility and term loan not subject to interest rate swap agreements consist of LIBOR plus a credit spread based on the Company’s leverage ratio as of December 31, 2021, with the rate in effect at December 31, 2021 being assumed to remain in effect until their maturities. The interest rates used in this calculation in regards to the unsecured term loans subject to interest rate swap agreements consists of LIBOR plus a credit spread based on the Company’s leverage ratio as of December 31, 2021, for which the Company has converted the LIBOR rates to fixed rates.
In addition, the Company has outstanding construction commitments totaling approximately $10.7 million at December 31, 2021.
Other than the items disclosed in the table above, the Company had no off-balance sheet arrangements as of December 31, 2021 that are reasonably likely to have a current or future material effect on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Net Cash Flows
Years ended December 31,
Cash flows provided by (used in):
Operating activities
$
44,962,000
$
42,580,000
$
53,675,000
Investing activities
$
71,534,000
$
(18,369,000
)
$
(22,342,000
)
Financing activities
$
(114,864,000
)
$
(25,321,000
)
$
(30,563,000
)
Operating Activities
Net cash provided by operating activities, before net changes in operating assets and liabilities, was $48.7 million, $57.5 million, and $56.1 million for 2021, 2020 and 2019, respectively. The decrease between 2021 and 2020 was primarily (1) a result of the Company accepting a payment of $8.0 million in consideration for permitting a dark anchor tenant to terminate its lease prior to the contractual expiration in 2020 and (2) property dispositions in 2021 and 2020. The increase between 2020 and 2019 was primarily a result of the Company accepting a payment of $8.0 million in consideration for permitting a dark anchor tenant to terminate its lease prior to the contractual expiration in 2020, which was partially offset by (1) the negative impact of the COVID-19 pandemic in 2020, and (2) property dispositions in 2020 and 2019.
Investing Activities
Net cash flows used in investing activities were primarily the result of the Company’s property disposition activities, property acquisitions and expenditures for property improvements. During 2021, the Company received proceeds of $104.5 million from the sale of properties, which was partially offset by (1) expenditures of $28.3 million for property improvements and (2) investment of $4.7 million in an unconsolidated joint venture. During 2020, the Company incurred expenditures of $39.6 million for property improvements, which was partially offset by $21.2 million in proceeds from the sale of properties. During 2019, the Company incurred expenditures of $31.9 million for property improvements, and acquired a property for $9.1 million, which was partially offset by $18.7 million in proceeds from the sales of properties.
Financing Activities
During 2021, the Company repaid $100.0 million of term loans, had $109.0 million of net, repayments under the revolving credit facility, had $14.7 million of preferred and common stock distributions, had $3.3 million of payments related to deferred financing costs,
had $1.1 million of mortgage repayments, had $0.5 million of termination payments related to a swap, which is partially offset by $114.0 million of property specific mortgages placed during 2021. During 2020, the Company repaid a $75.0 million term loan, had $17.9 million of preferred and common stock distributions, had $1.1 million of mortgage repayments, and paid $0.3 million of debt financing costs, which were partially offset by net advances of $69.0 million under the revolving credit facility. During 2019, the Company paid $28.6 million of preferred and common stock distributions, had $6.8 million of common stock repurchases, and had $1.0 million of mortgage repayments, which was partially offset by net borrowings of $6.0 million under the revolving credit facility.
Funds From Operations
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 (determined in accordance with GAAP), excluding gains (losses) from sales of real estate properties, impairment write-downs on real estate properties directly attributable to decreases in the value of depreciable real estate, 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 (loss) attributable to common shareholders to FFO and Operating FFO for the years ended December 31, 2021, 2020 and 2019 is as follows:
Years ended December 31,
Net loss attributable to common shareholders
$
(55,851,000
)
$
(11,824,000
)
$
(9,676,000
)
Real estate depreciation and amortization
39,380,000
48,297,000
45,677,000
Limited partners' interest
(329,000
)
(66,000
)
(57,000
)
Gain on sales
(49,904,000
)
(4,396,000
)
(2,942,000
)
Impairment charges
99,888,000
7,607,000
8,938,000
Consolidated minority interests:
Share of income
425,000
618,000
547,000
Share of FFO
(303,000
)
(388,000
)
(414,000
)
FFO applicable to diluted common shares
33,306,000
39,848,000
42,073,000
Redevelopment costs (a)
230,000
483,000
196,000
Reversal of management transition costs (b)
-
-
(1,500,000
)
Financing costs (c)
215,000
-
-
Operating FFO applicable to diluted common shares
$
33,751,000
$
40,331,000
$
40,769,000
FFO per diluted common share
$
2.40
$
2.88
$
3.05
Operating FFO per diluted common share
$
2.43
$
2.91
$
2.95
Weighted average number of diluted common shares (c):
Common shares and equivalents
13,814,000
13,758,000
13,728,000
OP Units
81,000
81,000
83,000
13,895,000
13,839,000
13,811,000
(a)
Includes redevelopment project costs expensed pursuant to GAAP such as certain demolition and lease termination costs.
(b)
General and administrative expenses were reduced as a result of the reversal of previously accrued expenses associated with the termination of the prior Chief Operating Officer. As original estimated expenses were added back to operating FFO when recorded in 2016, the reversal of such expenses have been deducted from Operating FFO.
(c)
For 2021, represents acceleration of amortization of financing costs related to term note paid-off prior to maturity.
(d)
The weighted average number of diluted common shares used to compute FFO and Operating FFO applicable to diluted common shares includes OP Units, unvested restricted stock units and unvested restricted shares/units that are excluded from the computation of diluted EPS.
Inflation
Prior to 2021, inflation was relatively low and did not have a significant detrimental impact on the Company’s results of operations. If inflation rates continue to increase, 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.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
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 December 31, 2021, the Company had $8.2 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.
At December 31, 2021, long-term debt consisted of a fixed-rate mortgage loan payable, a finance lease obligation, 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 $464.2 million of fixed-rate debt outstanding was 3.7%, with maturities at various dates through 2050. The average interest rate on the $66.0 million of variable-rate debt outstanding, which consists of the unsecured revolving credit facility, was 1.6%. With respect to the $66.0 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 $0.7 million per annum.
With respect to the Company’s fixed rate mortgage 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.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8.
Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
43-44
Consolidated Balance Sheets, December 31, 2021 and 2020
Consolidated Statements of Operations, years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income, years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Equity, years ended December 31, 2021, 2020 and 2019
48-49
Consolidated Statements of Cash Flows, years ended December 31, 2021, 2020 and 2019
Notes to Consolidated Financial Statements
Schedule Filed As Part Of This Report
Schedule III - Real Estate and Accumulated Depreciation, December 31, 2021
71-73
All other schedules have been omitted because the required information is not present, is not present in amounts sufficient to require submission of the schedule, or is included in the consolidated financial statements or notes thereto.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Cedar Realty Trust, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Cedar Realty Trust, Inc. as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and schedule listed in the index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 10, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
Impairment of Real Estate Investments
Description of the Matter
The Company’s real estate, net totaled $878.8 million as of December 31, 2021. As explained in Note 2 to the consolidated financial statements, the Company reviews each real estate investment held for use for impairment whenever events or circumstances indicate that the carrying value of a real estate investment may not be recoverable.
Auditing management’s impairment assessment was complex and involved a high degree of subjectivity due to the significant estimation required in determining the future estimated undiscounted net cash flows expected to be generated from assets with indicators of impairment. The estimated undiscounted cash flows are sensitive to assumptions such as expected future operating income, trends and prospects, as well as the effects of leasing demand, capital expenditures, competition and other factors, which are forward-looking and could be affected by future economic and market conditions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over management’s impairment process. This included testing controls over management’s review of the estimated undiscounted cash flows, including the significant assumptions and data used to develop the cash flows.
Our testing of the Company’s impairment assessment included, among other procedures, evaluating the appropriateness of the assumptions used to develop the estimated undiscounted cash flows. We utilized information obtained from market participants and recent industry market surveys to evaluate the assumptions used in the Company’s analyses. We held discussions with management regarding recent leasing activity and current and historical tenant credit quality and payment trends to understand the probability of future events that could affect the cash flow assumptions. We also searched for and evaluated information that corroborated or contradicted the Company’s assumptions. In addition, we tested the completeness and accuracy of the data that was used in management’s analyses.
/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 1984.
New York, New York
March 10, 2022
CEDAR REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
ASSETS
Real estate:
Land
$
259,968,000
$
284,694,000
Buildings and improvements
1,028,556,000
1,242,784,000
1,288,524,000
1,527,478,000
Less accumulated depreciation
(409,742,000
)
(428,569,000
)
Real estate, net
878,782,000
1,098,909,000
Real estate held for sale
73,251,000
9,498,000
Investment in unconsolidated joint venture
4,654,000
-
Cash and cash equivalents
3,039,000
1,637,000
Restricted cash
230,000
-
Receivables
21,868,000
21,952,000
Other assets and deferred charges, net
35,070,000
45,255,000
TOTAL ASSETS
$
1,016,894,000
$
1,177,251,000
LIABILITIES AND EQUITY
Mortgage loan payable
$
156,821,000
$
45,385,000
Finance lease obligation
5,314,000
5,340,000
Unsecured revolving credit facility
66,000,000
175,000,000
Unsecured term loans
298,903,000
398,549,000
Accounts payable and accrued liabilities
42,099,000
56,580,000
Unamortized intangible lease liabilities
7,789,000
8,939,000
Total liabilities
576,926,000
689,793,000
Commitments and contingencies
-
-
Equity:
Cedar Realty Trust, Inc. shareholders' equity:
Preferred stock
159,541,000
159,541,000
Common stock ($0.06 par value, 150,000,000 shares authorized, 13,658,000 and 13,530,000 shares, issued and outstanding, respectively)
820,000
812,000
Treasury stock (387,000 and 447,000 shares, respectively, at cost)
(13,266,000
)
(15,133,000
)
Additional paid-in capital
881,009,000
879,790,000
Cumulative distributions in excess of net income
(582,464,000
)
(522,696,000
)
Accumulated other comprehensive (loss)
(8,258,000
)
(18,816,000
)
Total Cedar Realty Trust, Inc. shareholders' equity
437,382,000
483,498,000
Noncontrolling interests:
Minority interests in consolidated joint ventures
-
1,053,000
Limited partners' OP Units
2,586,000
2,907,000
Total noncontrolling interests
2,586,000
3,960,000
Total equity
439,968,000
487,458,000
TOTAL LIABILITIES AND EQUITY
$
1,016,894,000
$
1,177,251,000
See accompanying notes to consolidated financial statements
CEDAR REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31,
REVENUES
Rental revenues
$
126,451,000
$
127,171,000
$
142,719,000
Other
1,099,000
8,367,000
1,364,000
Total revenues
127,550,000
135,538,000
144,083,000
EXPENSES
Operating, maintenance and management
26,817,000
25,545,000
27,593,000
Real estate and other property-related taxes
19,629,000
20,051,000
20,754,000
General and administrative
18,033,000
16,865,000
18,804,000
Depreciation and amortization
39,454,000
48,412,000
45,861,000
Total expenses
103,933,000
110,873,000
113,012,000
OTHER
Gain on sales
49,904,000
4,396,000
2,942,000
Impairment charges
(99,888,000
)
(7,607,000
)
(8,938,000
)
Total other
(49,984,000
)
(3,211,000
)
(5,996,000
)
OPERATING (LOSS) INCOME
(26,367,000
)
21,454,000
25,075,000
NON-OPERATING INCOME AND EXPENSES
Interest expense
(18,636,000
)
(21,974,000
)
(23,509,000
)
Total non-operating income and expenses
(18,636,000
)
(21,974,000
)
(23,509,000
)
NET (LOSS) INCOME
(45,003,000
)
(520,000
)
1,566,000
Net loss (income) attributable to noncontrolling interests:
Minority interests in consolidated joint ventures
(425,000
)
(618,000
)
(547,000
)
Limited partners' interest in Operating Partnership
329,000
66,000
57,000
Total net loss (income) attributable to noncontrolling interests
(96,000
)
(552,000
)
(490,000
)
NET (LOSS) INCOME ATTRIBUTABLE TO CEDAR REALTY TRUST, INC.
(45,099,000
)
(1,072,000
)
1,076,000
Preferred stock dividends
(10,752,000
)
(10,752,000
)
(10,752,000
)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
$
(55,851,000
)
$
(11,824,000
)
$
(9,676,000
)
NET LOSS PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS (BASIC AND DILUTED):
$
(4.24
)
$
(0.92
)
$
(0.78
)
Weighted average number of common shares - basic and diluted
13,213,000
13,104,000
13,082,000
See accompanying notes to consolidated financial statements
CEDAR REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended December 31,
Net (loss) income
$
(45,003,000
)
$
(520,000
)
$
1,566,000
Unrealized gain (loss) on change in fair value of cash flow hedges
10,624,000
(11,878,000
)
(14,286,000
)
Comprehensive loss
(34,379,000
)
(12,398,000
)
(12,720,000
)
Comprehensive income attributable to noncontrolling interests
(162,000
)
(481,000
)
(404,000
)
Comprehensive loss attributable to Cedar Realty Trust, Inc.
$
(34,541,000
)
$
(12,879,000
)
$
(13,124,000
)
See accompanying notes to consolidated financial statements
CEDAR REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF EQUITY
Years ended December 31, 2021, 2020 and 2019
Cedar Realty Trust, Inc. Shareholders
Cumulative
Accumulated
Treasury
Additional
distributions
other
Preferred stock
Common stock
stock,
paid-in
in excess of
comprehensive
Shares
Amount
Shares
Amount
at cost
capital
net income
loss
Total
Balance, December 31, 2018
6,450,000
$
159,541,000
13,702,000
$
822,000
$
(16,572,000
)
$
880,169,000
$
(475,726,000
)
$
7,191,000
$
555,425,000
Prior period adjustment - adoption of lease accounting standard
-
-
-
-
-
-
(515,000
)
-
(515,000
)
Balance, December 31, 2018, Restated
6,450,000
159,541,000
13,702,000
822,000
(16,572,000
)
880,169,000
(476,241,000
)
7,191,000
554,910,000
Net income (loss)
-
-
-
-
-
-
1,076,000
-
1,076,000
Unrealized gain on change in fair value of cash flow hedges
-
-
-
-
-
-
-
(14,200,000
)
(14,200,000
)
Share-based compensation, net
-
-
95,000
6,000
261,000
3,862,000
-
-
4,129,000
Common stock sales, net of issuance expenses
-
-
2,000
-
-
23,000
-
-
23,000
Common stock repurchases
(311,000
)
(19,000
)
-
(6,825,000
)
-
-
(6,844,000
)
Preferred stock dividends
-
-
-
-
-
-
(10,752,000
)
-
(10,752,000
)
Distributions to common shareholders/noncontrolling interests
-
-
-
-
-
-
(17,808,000
)
-
(17,808,000
)
Redemption of OP Units
-
-
-
-
-
-
-
-
-
Reallocation adjustment of limited partners' interest
-
-
-
-
-
27,000
-
-
27,000
Balance, December 31, 2019
6,450,000
159,541,000
13,488,000
809,000
(16,311,000
)
877,256,000
(503,725,000
)
(7,009,000
)
510,561,000
Net (loss) income
-
-
-
-
-
-
(1,072,000
)
-
(1,072,000
)
Unrealized (loss) on change in fair value of cash flow hedges
-
-
-
-
-
-
-
(11,807,000
)
(11,807,000
)
Share-based compensation, net
-
-
40,000
3,000
1,178,000
2,528,000
-
-
3,709,000
Common stock sales, net of issuance expenses
-
-
2,000
-
-
13,000
-
-
13,000
Preferred stock dividends
-
-
-
-
-
-
(10,752,000
)
-
(10,752,000
)
Distributions to common shareholders/noncontrolling interests
-
-
-
-
-
-
(7,147,000
)
-
(7,147,000
)
Reallocation adjustment of limited partners' interest
-
-
-
-
-
(7,000
)
-
-
(7,000
)
Balance, December 31, 2020
6,450,000
159,541,000
13,530,000
812,000
(15,133,000
)
879,790,000
(522,696,000
)
(18,816,000
)
483,498,000
Net (loss) income
-
-
-
-
-
-
(45,099,000
)
-
(45,099,000
)
Unrealized gain on change in fair value of cash flow hedges
-
-
-
-
-
-
-
10,558,000
10,558,000
Share-based compensation, net
-
-
128,000
8,000
1,867,000
(17,000
)
-
-
1,858,000
Common stock sales, net of issuance expenses
-
-
-
-
-
4,000
-
-
4,000
Preferred stock dividends
-
-
-
-
-
-
(10,752,000
)
-
(10,752,000
)
Distributions to common shareholders/noncontrolling interests
-
-
-
-
-
-
(3,917,000
)
-
(3,917,000
)
Reallocation adjustment of limited partners' interest
-
-
-
-
-
30,000
-
-
30,000
Conversion of OP Units to shares
-
-
-
-
-
-
-
-
-
Acquisition of minority interests
-
-
-
-
-
1,202,000
-
-
1,202,000
Balance, December 31, 2021
6,450,000
$
159,541,000
13,658,000
$
820,000
$
(13,266,000
)
$
881,009,000
$
(582,464,000
)
$
(8,258,000
)
$
437,382,000
CEDAR REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF EQUITY
Years ended December 31, 2021, 2020 and 2019
Continued
Noncontrolling Interests
Minority
Limited
interest in
partners'
consolidated
interest in
joint
Operating
Total
ventures
Partnership
Total
Equity
Balance, December 31, 2018
$
(112,000
)
$
3,403,000
$
3,291,000
$
558,716,000
Prior period adjustment - adoption of lease accounting standard
-
-
-
(515,000
)
Balance, December 31, 2018, Restated
(112,000
)
3,403,000
3,291,000
558,201,000
Net income (loss)
547,000
(57,000
)
490,000
1,566,000
Unrealized gain on change in fair value of cash flow hedges
-
(86,000
)
(86,000
)
(14,286,000
)
Share-based compensation, net
-
-
-
4,129,000
Common stock sales, net of issuance expenses
-
-
-
23,000
Common stock repurchases
-
-
-
(6,844,000
)
Preferred stock dividends
-
-
-
(10,752,000
)
Distributions to common shareholders/noncontrolling interests
-
(111,000
)
(111,000
)
(17,919,000
)
Redemption of OP Units
-
(43,000
)
(43,000
)
(43,000
)
Reallocation adjustment of limited partners' interest
-
(27,000
)
(27,000
)
-
Balance, December 31, 2019
435,000
3,079,000
3,514,000
514,075,000
Net (loss) income
618,000
(66,000
)
552,000
(520,000
)
Unrealized (loss) on change in fair value of cash flow hedges
-
(71,000
)
(71,000
)
(11,878,000
)
Share-based compensation, net
-
-
-
3,709,000
Common stock sales, net of issuance expenses
-
-
-
13,000
Preferred stock dividends
-
-
-
(10,752,000
)
Distributions to common shareholders/noncontrolling interests
-
(42,000
)
(42,000
)
(7,189,000
)
Reallocation adjustment of limited partners' interest
-
7,000
7,000
-
Balance, December 31, 2020
1,053,000
2,907,000
3,960,000
487,458,000
Net (loss) income
425,000
(329,000
)
96,000
(45,003,000
)
Unrealized gain on change in fair value of cash flow hedges
-
66,000
66,000
10,624,000
Share-based compensation, net
-
-
-
1,858,000
Common stock sales, net of issuance expenses
-
-
-
4,000
Preferred stock dividends
-
-
-
(10,752,000
)
Distributions to common shareholders/noncontrolling interests
-
(20,000
)
(20,000
)
(3,937,000
)
Reallocation adjustment of limited partners' interest
-
(30,000
)
(30,000
)
-
Conversion of OP Units to shares
-
(8,000
)
(8,000
)
(8,000
)
Acquisition of minority interests
(1,478,000
)
-
(1,478,000
)
(276,000
)
Balance, December 31, 2021
$
-
$
2,586,000
$
2,586,000
$
439,968,000
See accompanying notes to consolidated financial statements
CEDAR REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
OPERATING ACTIVITIES
Net (loss) income
$
(45,003,000
)
$
(520,000
)
$
1,566,000
Adjustments to reconcile net loss to net cash provided by operating activities:
Gain on sales
(49,904,000
)
(4,396,000
)
(2,942,000
)
Impairment charges
99,888,000
7,607,000
8,938,000
Straight-line rents and expenses, net
(161,000
)
1,279,000
(265,000
)
Provision for doubtful accounts
1,114,000
1,478,000
412,000
Depreciation and amortization
39,454,000
48,412,000
45,861,000
Amortization of intangible lease liabilities, net
(1,074,000
)
(1,373,000
)
(2,827,000
)
Expense relating to share-based compensation, net
3,043,000
3,723,000
4,117,000
Amortization of deferred financing costs
1,360,000
1,331,000
1,286,000
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Rents and other receivables
(1,266,000
)
(2,811,000
)
(812,000
)
Prepaid expenses and other
(2,709,000
)
(9,216,000
)
(3,037,000
)
Accounts payable and accrued liabilities
220,000
(2,934,000
)
1,378,000
Net cash provided by operating activities
44,962,000
42,580,000
53,675,000
INVESTING ACTIVITIES
Expenditures for real estate improvements
(28,309,000
)
(39,551,000
)
(31,910,000
)
Net proceeds from sales of real estate
104,497,000
21,182,000
18,651,000
Contributions to unconsolidated joint venture
(4,654,000
)
-
-
Acquisition of real estate
-
-
(9,083,000
)
Net cash provided by (used in) investing activities
71,534,000
(18,369,000
)
(22,342,000
)
FINANCING ACTIVITIES
Repayments under revolving credit facility
(188,000,000
)
(104,000,000
)
(21,000,000
)
Advances under revolving credit facility
79,000,000
173,000,000
27,000,000
Repayment under term loan
(100,000,000
)
(75,000,000
)
-
Termination payment related to interest rate swap
(503,000
)
-
-
Mortgage proceeds
114,000,000
-
-
Mortgage repayments
(1,110,000
)
(1,067,000
)
(1,027,000
)
Payments of debt financing costs
(3,278,000
)
(326,000
)
-
Noncontrolling interests:
Purchase of minority interest
(276,000
)
-
-
Distributions to limited partners
(20,000
)
(42,000
)
(111,000
)
Redemption of OP units
(8,000
)
-
(43,000
)
Common stock sales less issuance expenses, net
-
13,000
22,000
Common stock repurchases
-
-
(6,844,000
)
Preferred stock dividends
(10,752,000
)
(10,752,000
)
(10,752,000
)
Distributions to common shareholders
(3,917,000
)
(7,147,000
)
(17,808,000
)
Net cash used in financing activities
(114,864,000
)
(25,321,000
)
(30,563,000
)
Net increase (decrease) in cash, cash equivalents and restricted cash
1,632,000
(1,110,000
)
770,000
Cash, cash equivalents and restricted cash at beginning of period
1,637,000
2,747,000
1,977,000
Cash, cash equivalents and restricted cash at end of period
$
3,269,000
$
1,637,000
$
2,747,000
Reconciliation to consolidated balance sheets:
Cash and cash equivalents
$
3,039,000
$
1,637,000
$
2,747,000
Restricted cash
230,000
-
-
Cash, cash equivalents and restricted cash
$
3,269,000
$
1,637,000
$
2,747,000
See accompanying notes to consolidated financial statements
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
Note 1. Business and Organization
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 December 31, 2021, the Company owned and managed a portfolio of 50 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 December 31, 2021, the Company owned a 99.4% general and limited partnership interest in, and was the sole general partner of, the Operating Partnership. The limited partners’ interest in the Operating Partnership (0.6% at December 31, 2021) is represented by partnership units in the Operating Partnership (“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 81,000 OP Units outstanding at December 31, 2021 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. Unless specifically noted otherwise, all references to OP Units exclude limited partnership units held by the Company.
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.
Note 2. Summary of Significant Accounting Policies
Reverse Stock Split
On November 25, 2020, the Company effected a 1-for-6.6 reverse stock split of the issued and outstanding shares of common stock. Each 6.6 shares of the Company's issued and outstanding common stock were combined into one share of the Company's common stock. The number of authorized shares and the par value of the common stock were not changed. In addition, the Company amended the Limited Partnership Agreement of our Operating Partnership to effect a corresponding reverse split of the partnership interests of the Operating Partnership. In accordance with accounting principles generally accepted in the United States (“GAAP”), all shares of common stock, restricted stock units, OP Units and per share/unit information that are presented in this Form 10-K were adjusted to reflect the reverse split on a retroactive basis for all periods presented.
Principles of Consolidation/Basis of Preparation
The 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 (“VIEs”) for which it is the primary beneficiary. Generally, a VIE is an entity with one or more of the following characteristics: (1) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (2) as a group, the holders of the equity investment at risk (a) lack the power through voting or similar rights to make decisions about the entity’s activities that significantly impact the entity’s performance, (b) have no obligation to absorb the expected losses of the entity, or (c) have no right to receive the expected residual returns of the entity, or (3) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately fewer voting rights. A VIE is required to be consolidated by its primary beneficiary. The primary beneficiary of a VIE has (1) the power to direct the activities that most significantly impact the entity’s economic performance, and (2) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Significant judgments related to these determinations include estimates about the current values, performance of real estate held by these VIEs, and general market conditions.
The Financial Accounting Standards Board (“FASB”) issued guidance which amended the consolidation requirements, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. Under the analysis, limited partnerships and other similar entities will be considered variable interest entities unless the limited partners hold substantive kick-out rights or participating rights. The guidance was adopted on January 1, 2016. The Company has a 60%-owned joint venture originally formed to develop the project known as Crossroads II. This joint venture is consolidated as it is deemed to be a VIE and the Company is the primary beneficiary. The Company (1) guaranteed all related debt, (2) does not require its partners to fund additional capital requirements, (3) has an economic interest greater than its voting proportion and (4) directs the management activities that significantly
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
impact the performance of the joint venture. At December 31, 2021, this VIE owned real estate with a carrying value of $36.2 million and no mortgage loan payable.
The accompanying financial statements are prepared on the accrual basis in accordance with accounting principles generally accepted in the United States (“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.
Real Estate Investments
Real estate investments are carried at cost less accumulated depreciation. The provision for depreciation is calculated using the straight-line method based upon the estimated useful lives of the respective assets of between 3 and 40 years, with buildings being depreciated at the upper end of the range. Depreciation expense amounted to $36.3 million, $43.6 million and $41.8 million for 2021, 2020 and 2019, respectively. Expenditures for betterments that substantially extend the useful lives of the assets are capitalized. Expenditures for maintenance, repairs, and betterments that do not substantially prolong the normal useful life of an asset are charged to operations as incurred.
Real estate investments include costs of development and redevelopment activities, and construction in progress. Capitalized costs, including interest and other carrying costs during the construction and/or renovation periods, are included in the cost of the related asset and charged to operations through depreciation over the asset’s estimated useful life. A variety of costs are incurred in the development and leasing of a property, such as pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs, and other costs incurred during the period of development. After a determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. The Company ceases capitalization on the portions substantially completed and occupied, or held available for occupancy, and capitalizes only those costs associated with the portions under development. The Company considers a construction project to be substantially completed and held available for occupancy upon the completion of tenant improvements, but not later than one year from cessation of major construction activity.
The Company allocates the fair value of real estate acquired to land, buildings and improvements. In addition, the fair value of in-place leases is allocated to intangible lease assets and liabilities. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, which value is then allocated to land, buildings and improvements based on management’s determination of the fair values of these assets. In valuing an acquired property’s intangibles, factors considered by management include an estimate of carrying costs during the expected lease-up periods, such as real estate taxes, insurance, other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on its evaluation of current market demand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs.
The values of acquired above-market and below-market leases are recorded based on the present values (using discount rates which reflect the risks associated with the leases acquired) of the differences between the contractual amounts to be received and management’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time of the acquisitions. Such valuations include consideration of the non-cancellable terms of the respective leases as well as any applicable renewal periods. The fair values associated with below-market rental renewal options are determined based on the Company’s experience and the relevant facts and circumstances that existed at the time of the acquisitions. The values of above-market leases are amortized to rental income over the terms of the respective non-cancelable lease periods. The portion of the values of below-market leases associated with the original non-cancelable lease terms are amortized to rental income over the terms of the respective non-cancelable lease periods. The portion of the values of the leases associated with below-market renewal options that are likely of exercise are amortized to rental income over the respective renewal periods. The value of other intangible assets (including leasing commissions, tenant improvements, etc.) is amortized to expense over the applicable terms of the respective leases. If a lease were to be terminated prior to its stated expiration or not renewed, all unamortized amounts relating to that lease would be recognized in operations at that time.
Management reviews each real estate investment for impairment whenever events or circumstances indicate that the carrying value of a real estate investment may not be recoverable. The review of recoverability of real estate investments held for use is based on an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, capital
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
expenditures, competition and other factors. If an impairment event exists due to the projected inability to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds estimated fair value.
Properties Held For Sale
The Company follows the guidance for reporting discontinued operations, whereby a disposal of an individual property or group of properties is required to be reported in “discontinued operations” only if the disposal represents a strategic shift that has, or will have, a major effect on the Company’s operations and financial results. The results of operations for those properties not meeting such criteria are reported in “continuing operations” in the consolidated statements of operations.
The carrying values of the assets and liabilities of properties determined to be held for sale, principally the net book values of the real estate and the related mortgage loans payable expected to be assumed by the buyers, are reclassified as “held for sale” on the Company’s consolidated balance sheets at the time such determinations are made, on a prospective basis only. In addition, the Company anticipates that sales of all such properties remaining classified as “held for sale” at the balance sheet date will be concluded within one year from such date.
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 less costs to sell 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.
Cash and Cash Equivalents / Restricted Cash
Cash and cash equivalents consist of cash in banks and short-term investments with original maturities when purchased of less than ninety days, and include cash at a consolidated joint venture of $0.2 million at December 31, 2021 and cash at consolidated joint ventures of $0.2 million at December 31, 2020.
The terms of mortgage loans payable may 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.
Fair Value Measurements
The accounting guidance for fair value measurement establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels:
•
Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•
Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible while also considering counterparty credit risk in the assessment of fair value.
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
Revenue Recognition and Receivables
Management has determined that all of the Company’s leases with its various tenants are operating leases. Rental income with scheduled rent increases is recognized using the straight-line method over the respective non-cancelable terms of the leases. The aggregate excess of rental revenue recognized on a straight-line basis over the contractual base rents is included in receivables on the consolidated balance sheet. Leases also generally contain provisions under which the tenants reimburse the Company for a portion of property operating expenses and real estate taxes incurred, generally attributable to their respective allocable portions of gross leasable area. Such income is recognized in the periods earned. In addition, a limited number of operating leases contain contingent rent provisions under which tenants are required to pay, as additional rent, a percentage of their sales in excess of a specified amount. The Company defers recognition of contingent rental income until those specified sales targets are met. Revenues also include items such as lease termination fees, which tend to fluctuate more than rents from year to year. Termination fees are fees that the Company has agreed to accept in consideration for permitting certain tenants to terminate their lease prior to the contractual expiration. The Company recognizes lease termination income when the following conditions are met: (1) the lease termination agreement has been executed, (2) the lease termination fee is determinable, (3) all the Company’s landlord services pursuant to the terminated lease have been rendered, and (4) collectability of the lease termination fee is assured.
In November 2018, the FASB clarified the existing accounting treatment relating to receivables arising from operating leases, stating that such receivables are not within the scope of the expected credit loss standard and that impairment of receivables arising from operating leases should be accounted for in accordance with the recently-adopted lease accounting standard. This required the Company, as of January 1, 2019, to review its existing lease portfolio to determine if all future lease payments are probable of collection and, if the Company determined that all future lease payments are not probable of collection, the Company will account for these leases on a cash basis. This required that all amounts that were historically recorded as bad debt expense, and previously included in operating expenses in the Company’s consolidated statement of operations, now be recorded as a direct reduction of rental revenues. In accordance with this guidance, $0.7 million, $8.3 million and $2.4 million of rental revenue relating to certain leases that were no longer deemed probable of collection were not recorded as rental revenue for the years ended December 31, 2021, 2020 and 2019, respectively. Of these amounts, $0.2 million, $1.4 million and $0.3 million, respectively, represented deferred rent receivables that were written-off for the years ended December 31, 2021, 2020 and 2019. The allowance for doubtful accounts was $2.2 million and $1.4 million at December 31, 2021 and 2020, respectively. The provision for doubtful accounts (included in operating, maintenance and management expenses) was $1.1 million, $1.5 million and $0.4 million in 2021, 2020 and 2019, respectively.
Segment Information
The Company’s primary business is the ownership and operation of grocery-anchored shopping centers. The Company reviews operating and financial information for each property on an individual basis and, accordingly, each property represents an individual operating segment. The Company evaluates financial performance using property operating income, which consists of rental income and other property income, less operating expenses and real estate taxes. No individual property constitutes more than 10% of the Company’s revenues or property operating income, and the Company has no operations outside of the United States of America. Therefore, the Company has aggregated its properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in major metropolitan areas, and have similar tenant mixes.
Income Taxes
The Company, organized in 1984, has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). A REIT will generally not be subject to federal income taxation on that portion of its income that qualifies as REIT taxable income, to the extent that it distributes at least 90% of such REIT taxable income to its stockholders and complies with certain other requirements. As of December 31, 2021, the Company was in compliance with all REIT requirements.
The Company follows a two-step approach for evaluating uncertain federal, state and local tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that more-likely-than-not will be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. The Company has not identified any uncertain tax positions which would require an accrual.
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
Derivative Financial Instruments
The Company occasionally utilizes derivative financial instruments, principally interest rate swaps, to manage its exposure to fluctuations in interest rates. The Company has established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. Derivative financial instruments must be effective in reducing the Company’s interest rate risk exposure in order to qualify for hedge accounting. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income for each period until the derivative financial instrument matures or is settled. Any derivative financial instrument used for risk management that does not meet the hedging criteria is marked-to-market with the changes in value included in net income. The Company has not entered into, and does not plan to enter into, derivative financial instruments for trading or speculative purposes.
Share-Based Compensation
During 2017, the Company’s shareholders approved the 2017 Stock Incentive Plan (the “2017 Plan”), which replaced the Company’s 2012 Stock Incentive Plan (the “2012 Plan”). As of the effective date of the 2017 Plan, the Company may not grant any further awards under the 2012 Plan. The 2017 Plan establishes the procedures for the granting of, among other things, restricted stock awards. On May 1, 2019, the Company’s shareholders approved an amendment to the 2017 Plan, which increased the maximum number of shares of the Company’s common stock that may be issued pursuant to the 2017 Plan by 303,000 shares, to a new total of 909,000 shares (see Note 14 - “Share-Based Compensation”), and the maximum number of shares that may be granted to a participant in any calendar year may not exceed 76,000. All grants issued pursuant to the 2017 Plan generally vest (1) at the end of designated time periods for time-based grants, or (2) upon the completion of a designated period of performance for performance-based grants and satisfaction of performance criteria. Time-based grants are valued according to the market price for the Company’s common stock at the date of grant. For performance-based grants, the Company generally engages an independent appraisal company to determine the value of the shares at the date of grant, taking into account the underlying contingency risks associated with the performance criteria. The value of all grants are being expensed on a straight-line basis over their respective vesting periods (irrespective of achievement of the market performance-based grants) adjusted, as applicable, for forfeitures. For restricted share grants subject to graded vesting, the amounts expensed are at least equal to the measured expense of each vested tranche. Based on the terms of the 2017 Plan, those grants of restricted shares that are contributed to the Rabbi Trusts are classified as treasury stock on the Company’s consolidated balance sheet.
Supplemental Consolidated Statements of Cash Flows Information
Years ended December 31,
Supplemental disclosure of cash activities:
Cash paid for interest
$
20,219,000
$
23,208,000
$
23,859,000
Supplemental disclosure of non-cash activities:
Capitalization of interest and financing costs
3,399,000
2,674,000
1,649,000
Buildings and improvements included in accounts payable and accrued liabilities
871,000
2,976,000
3,669,000
Recognition of right-of-use assets and related lease liabilities
-
703,000
13,778,000
Issued and Adopted Accounting Pronouncements
In February 2016, the FASB issued guidance amending 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, effective for annual and interim reporting periods beginning on or after December 15, 2018, 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. The Company is not required to reassess the classification of existing ground leases where it is the lessee and therefore these leases will continue to be accounted for as operating leases. 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 continue to be accounted for pursuant to existing guidance for operating leases. Based on the Company’s future obligations under its ground lease and executive office lease agreements for which the Company is the lessee, the newly adopted guidance resulted in the recognition of (1) right-of-use assets of $14.6 million included in other assets and deferred charges, net, and (2) right-of-use liabilities of $14.6 million included in accounts payable and accrued liabilities, on the Company’s
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
consolidated balance sheet as of January 1, 2019. In the event the Company modifies existing ground leases or enters into new ground leases after adoption of the new standard, such leases may be classified as finance leases. Additionally, the guidance requires 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. During 2019, the Company expensed $2.8 million of leasing costs which would have previously been capitalized.
The FASB provided lessors with a practical expedient, elected by class of underlying asset, to account for lease and non-lease components as a single lease component if certain criteria are met. Lessors that make these elections are required to provide additional disclosures. The FASB provided an additional (and optional) transition method that allows entities to initially apply the guidance at the adoption date (January 1, 2019) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company applied both these practical expedients upon adoption. The practical expedient allowed the Company to not separate expenses reimbursed by customers from the associated rental revenue if certain criteria were met. The Company assessed these criteria and concluded that the timing and pattern of transfer for rental revenue and the associated rental expense recoveries are the same and, as the leases qualify as operating leases, the Company accounted for and presented rents and expense recoveries as a single component under rental revenues in the consolidated statement of operations for 2019.
In November 2018, the FASB clarified the existing accounting treatment relating to receivables arising from operating leases, stating that such receivables are not within the scope of the expected credit loss standard and that impairment of receivables arising from operating leases should be accounted for in accordance with the recently-adopted lease accounting standard. This required the Company to review its existing lease portfolio to determine if all future lease payments are probable of collection and, if the Company determined that all future lease payments are not probable of collection, the Company will account for these leases on a cash basis. This required that all amounts that were historically recorded as bad debt expense, and previously included in operating expenses in the Company’s consolidated statement of operations, now be recorded as a direct reduction of rental revenues. As permitted by the standard upon adoption, the Company recorded a $0.5 million prior-period adjustment to opening equity which the Company has reflected in the consolidated statement of equity for 2019.
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, 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 was effective January 1, 2020, and the guidance did not have a material effect on the Company’s consolidated financial statements.
In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of a novel strain of coronavirus (“COVID-19”). Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under ASC 842. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance (i.e., assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election. The Company evaluated its election on a disaggregated basis, with such election applied consistently to leases with similar characteristics and similar circumstances.
During 2021 and 2020, the Company provided lease concessions to certain tenants in response to the impact of COVID-19, in the form of rent deferrals. The Company has made an election to account for such lease concessions consistent with how those concessions would be accounted for under ASC 842 if enforceable rights and obligations for those concessions had already existed in the leases. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in our rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than total payments required by the original lease.
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
Substantially all of the Company’s concessions to date provide for a deferral of payments with no substantive changes to the consideration in the original lease. These deferrals affect the timing, but not the amount, of the lease payments. The Company is accounting for these deferrals as if no changes to the lease were made. Under this accounting, the Company increases its receivables as tenant payments accrue and continues to recognize rental income. During 2020 and 2021, the Company has entered into lease modifications that deferred approximately $3.5 million, of which $2.4 million relates to deferrals that the Company continued to recognize rental income. In addition, during 2020 and 2021, the Company has entered into agreements that waived approximately $2.4 million of rent.
Note 3. Real Estate
On March 2, 2022, the Company announced that following its previously announced dual-track review of strategic alternatives, the Company has entered into definitive agreements that will result in the sale of the Company and its assets in a series of related all-cash transactions. The Company (1) entered into an agreement to sell a portfolio of 33 grocery-anchored shopping centers for $840.0 million, (2) entered into an agreement to sell the Revelry redevelopment project for $34.0 million, (3) is negotiating a contract for the sale of the Northeast Heights redevelopment project for $46.5 million and (4) entered into an agreement to sell the Company and its remaining assets for $291.3 million. The acquirer of the portfolio of 33 grocery-anchored shopping centers has agreed to backstop the two redevelopment transactions at the aggregate price of $80.5 million if they do not close before the closing of the shopping center portfolio transaction. The contracts to sell the 33 grocery-anchored shopping centers and to sell the Company and its remaining assets require shareholder approval.
As part of the dual-track strategic alternatives process, the Company has determined that certain of the Company’s operating properties would be sold significantly prior to the end of their previously estimated hold periods. The Company recorded $101.7 million in impairment charges, of which $83.2 million relate to assets held for use and $18.5 million relate to assets held for sale. These impairment charges have been included in continuing operations in the accompanying consolidated statements of operations.
Investment in unconsolidated joint venture
On May 5, 2021, the Company formed a joint venture with Goldman Sachs Urban Investment Group and Asland Capital Partners (the “Joint Venture”) for the construction of an approximately 258,000 square foot six-story commercial building in Washington, D.C. consisting of approximately 240,000 square feet of office space which is 100% leased to the Washington, D.C., Department of General Services (“DGS”) for its headquarters and approximately 18,000 square feet of street-level retail. The term of the lease with DGS is for 20 years and 10 months, to commence upon substantial completion and delivery to the DGS. This building is planned as the first phase of Northeast Heights, a redevelopment of two existing shopping centers, East River Park and Senator Square, into a mixed-use residential, office and retail property. Further, the Joint Venture has secured construction financing from JP Morgan not to exceed $105 million. The construction loan initially bears interest at LIBOR plus 200 basis points and has an initial term of three years with two, one-year extension options subject to customary conditions. The Company has a 10% interest in the joint venture and is a co-general partner along with Asland Capital Partners. The Company has contributed approximately $4.7 million of capital to the Joint Venture as of December 31, 2021. The Company has sold approximately $8.0 million of development costs to the Joint Venture as part of its formation on May 5, 2021.
The Joint Venture currently estimates that the space will be delivered during the end of the fourth quarter 2022. Upon completion of the building, DGS will be obligated to pay initial annual net rent of approximately $5.4 million per year, subject to a 2.5% annual escalator on each anniversary of rent commencement, plus certain operating costs, property taxes and amortization of tenant improvements together totaling approximately an additional $8.1 million per year, for an aggregate total annual rent of approximately $13.5 million. The lease provides for a free rent period of 10 months immediately following rent commencement. The Lease also provides DGS with a tenant credit of approximately $6.8 million to be applied, at DGS’s election, against either annual rent or any other tenant payment obligations including tenant improvement costs, in excess of the tenant improvement allowance. Pursuant to the lease, the Joint Venture will contribute up to $155 per rentable square foot toward the cost of tenant improvements, to be amortized over 240 months. In addition, the lease provides that the Joint Venture will contribute $9.38 per rentable square foot in additional tenant
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
improvement allowance between the 10th and 12th lease years, upon DGS’s timely election. The obligations of DGS under the Lease are subject to annual budget appropriation.
Real estate activity for 2021 and 2020 is composed of the following:
Years ended December 31,
Cost
Balance, beginning of year
$
1,527,478,000
$
1,515,206,000
Properties transferred to held for sale
(184,639,000
)
(22,512,000
)
Outparcel dispositions
(387,000
)
(840,000
)
Property impairments
(83,224,000
)
-
Improvements and betterments
29,296,000
35,624,000
Balance, end of the year
$
1,288,524,000
$
1,527,478,000
Accumulated depreciation
Balance, beginning of the year
$
428,569,000
$
389,861,000
Properties transferred held for sale
(55,165,000
)
(3,947,000
)
Outparcel dispositions
-
(90,000
)
Depreciation expense
36,338,000
42,745,000
Balance, end of the year
$
409,742,000
$
428,569,000
Net book value
$
878,782,000
$
1,098,909,000
At December 31, 2021, certain properties were pledged as collateral for a mortgage loan payable. See Note 8 - “Mortgage Loans Payable and Credit Facilities”.
2021 Acquisition
On October 14, 2021, the Company purchased the 60% minority ownership in the San Souci Plaza joint venture, located in California, Maryland. The purchase price for the minority ownership was $0.3 million.
2019 Acquisition
On June 19, 2019, the Company purchased Girard Plaza, a shopping center adjacent to its South Philadelphia property, located in Philadelphia, Pennsylvania. The purchase price for the property was $8.5 million, which has been allocated to real estate assets and liabilities.
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
Dispositions
During 2021, 2020 and 2019, the Company sold the properties listed below:
Gain on Sale/
Date
Sales
Reversal of
Property
Location
Sold
Price
Impairment
Kempsville Crossing (land parcel)
Virginia Beach, VA
2/24/2021
$
1,300,000
$
1,047,000
The Commons
Dubois, PA
5/5/2021
9,761,000
1,849,000
Camp Hill Shopping Center
Camp Hill, PA
6/21/2021
89,662,500
48,857,000
$
100,723,500
$
51,753,000
Metro Square
Owings Mills, MD
7/9/2020
$
4,288,000
$
-
Oakland Mills outparcel building
Columbia, MD
9/17/2020
1,050,000
643,000
Glen Allen Shopping Center
Glen Allen, VA
10/8/2020
8,540,000
1,780,000
Pine Grove Plaza outparcel building
Brown Mills, NJ
11/2/2020
1,100,000
565,000
Suffolk Plaza
Suffolk, VA
12/10/2020
6,950,000
1,408,000
$
21,928,000
$
4,396,000
Maxatawny Marketplace
Maxatawny, PA
2/15/2019
$
10,330,000
$
101,000
Fort Washington Center
Fort Washington, PA
6/26/2019
9,048,000
2,841,000
$
19,378,000
$
2,942,000
The Company recorded impairment charges of $7.2 million relating to Metro Square during 2020, which are included in continuing operations in the accompanying consolidated statements of operations.
Real Estate Held for Sale
As of December 31, 2021, Carll’s Corner, located in Bridgeton, New Jersey, Riverview Plaza, located in Philadelphia, Pennsylvania, and East River Park and Senator Square, both located in Washington, D.C., have been classified as “real estate held for sale” on the accompanying consolidated balance sheet.
During 2021, the Company recorded a (1) reversal of impairment charges of $1.8 million for The Commons, located in Dubois, Pennsylvania, and (2) recorded, as part of the dual-track strategic alternatives process, impairment charges of $18.5 million. In addition, the Company recorded impairment charges of $0.4 million and $8.9 million in connection with The Commons in 2020 and 2019, respectively. These impairment charges have been included in continuing operations in the accompanying consolidated statement of operations.
Note 4. Fair Value Measurements
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 deferred 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 loan was 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 December 31, 2021 and December 31, 2020, the fair value of the Company’s fixed rate mortgage loan payable, which was determined to be Level 3 within the valuation hierarchy, was $159.0 million and $47.0 million, respectively; the carrying value of such loan, was $156.8 million and $45.4 million, respectively. As of December 31, 2021 and December 31, 2020, respectively, the aggregate fair values of the
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
Company’s unsecured revolving credit facility and term loans approximated the carrying values. In addition, the fair values of the Company’s mortgage note receivable and finance lease obligation, which were determined to be Level 3 within the valuation hierarchy, approximated their carrying values as of December 31, 2021 and December 31, 2020, respectively.
The valuation of the 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 December 31, 2021, 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, income capitalization analyses or a sales comparison approach if no contracts had been concluded. The discounted cash flow and income 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.
The following tables show the hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2021 and December 31, 2020, respectively:
December 31, 2021
Description
Level 1
Level 2
Level 3
Total
Investments related to deferred
compensation liabilities (a)
$
955,000
$
-
$
-
$
955,000
Deferred compensation liabilities (b)
$
982,000
$
-
$
-
$
982,000
Interest rate swaps liability (b)
$
-
$
8,232,000
$
-
$
8,232,000
December 31, 2020
Description
Level 1
Level 2
Level 3
Total
Investments related to deferred
compensation liabilities (a)
$
948,000
$
-
$
-
$
948,000
Deferred compensation liabilities (b)
$
952,000
$
-
$
-
$
952,000
Interest rate swaps liability (b)
$
-
$
18,927,000
$
-
$
18,927,000
(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.
In connection with the dual-track strategic alternatives process, it was determined that certain of the Company’s operating properties would be sold significantly prior to the end of their previously estimated hold periods. As of December 31, 2021, the Company tested the recoverability of real estate held for use and, as a result of the carrying amount of the assets not being deemed recoverable
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
and exceeding their fair value as measured on an asset by asset basis, recorded $83.2 million in impairment charges. These charges are included in Impairment charges in the consolidated statement of operations. Such assets have an aggregate fair value of $194.5 million as of December 31, 2021. The fair value of the assets was determined to be Level 2.
As of December 31, 2021, real estate held for sale on the consolidated balance sheet consisted of four retail properties, totaling $73.3 million, which were determined to be Level 2 assets under the hierarchy, for which the carrying values were below their fair values. During 2021, the Company recorded an impairment of $18.5 million, which is included in Impairment charges in the consolidated statement of operations.
Note 5. Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents in excess of insured amounts and tenant receivables. The Company places its cash and cash equivalents with high quality financial institutions. Management performs ongoing credit evaluations of its tenants and requires certain tenants to provide security deposits and/or suitable guarantees.
Excluding properties held for sale and sold, Giant Food Stores, LLC, Stop & Shop, Inc. and Food Lion, LLC, each of which is owned by Ahold N.V., a Netherlands corporation, accounted for an aggregate of approximately 14%, 13% and 12% of the Company’s total revenues during 2021, 2020 and 2019, respectively.
The Company’s properties are located largely in the region straddling the Washington, D.C. to Boston corridor, which exposes it to greater economic risks than if the properties it owned were located in a greater number of geographic regions (in particular, 21 of the Company’s properties are located in Pennsylvania).
Note 6. Receivables
Receivables at December 31, 2021 and 2020 are composed of the following:
December 31,
Rents and other receivables, net (a)
$
7,242,000
$
6,541,000
Mortgage note receivable
3,500,000
3,500,000
Straight-line rents, net
11,126,000
11,911,000
$
21,868,000
$
21,952,000
(a)
Includes $0.3 million of net receivables related to deferred rent as a result of COVID-19 as of December 31, 2021.
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
Note 7. Other Assets and Deferred Charges, Net
Other assets and deferred charges, net, at December 31, 2021 and 2020 are composed of the following:
December 31,
Lease origination costs (a)
$
15,233,000
$
22,331,000
Right-of-use assets
9,861,000
13,828,000
Prepaid expenses
7,255,000
6,906,000
Investments related to share-based compensation
955,000
948,000
Unsecured revolving credit facility financing costs
1,134,000
623,000
Leasehold improvements, furniture and fixtures
50,000
85,000
Other
582,000
534,000
Total other assets and deferred charges, net
$
35,070,000
$
45,255,000
(a)
Lease origination costs include the unamortized balance of intangible lease assets resulting from purchase accounting allocations of $4.5 million (cost of $17.8 million and accumulated amortization of $13.3 million) and $5.5 million (cost of $19.4 million and accumulated amortization of $13.9 million) as of December 31, 2021 and 2020, respectively.
Deferred charges are amortized over the terms of the related agreements. Amortization expense related to deferred charges (including amortization of deferred financing costs included in non-operating income and expense) amounted to $4.7 million, $6.2 million and $5.3 million for 2021, 2020, and 2019, respectively. The unamortized balances of deferred lease origination costs is net of accumulated amortization of $36.3 million at December 31, 2021. In addition, deferred financing costs relating to the unsecured revolving credit facility is net of accumulated amortization of $2.9 million at December 31, 2021. Deferred lease origination costs and deferred financing costs relating to the unsecured revolving credit facility will be charged to future operations as follows:
Lease
Unsecured revolving
origination
credit facility
costs
financing costs
$
2,311,000
$
424,000
2,046,000
424,000
1,733,000
286,000
1,451,000
-
1,263,000
-
Thereafter
6,429,000
-
$
15,233,000
$
1,134,000
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
Note 8. Mortgage Loans Payable and Unsecured Credit Facilities
Debt and finance lease obligations are composed of the following at December 31, 2021 and 2020:
December 31, 2021
December 31, 2020
Contractual
Contractual
Maturity
Balance
interest rates
Balance
interest rates
Description
dates
outstanding
weighted-average
outstanding
weighted-average
Fixed-rate mortgage
Franklin Village
Jun 2026
$
44,571,000
3.9%
$
45,645,000
3.9%
Shops at Suffolk Downs (a)
Jun 2031
15,600,000
3.5%
-
n/a
Trexlertown Plaza (a)
Jun 2031
36,100,000
3.5%
-
n/a
The Point (a)
Jun 2031
29,700,000
3.5%
-
n/a
Christina Crossing (a)
Jun 2031
17,000,000
3.5%
-
n/a
Lawndale Plaza (a)
Jun 2031
15,600,000
3.5%
-
n/a
Senator Square finance lease obligation
Sep 2050
5,596,000
5.3%
5,631,000
5.3%
164,167,000
3.6%
51,276,000
4.1%
Unsecured credit facilities:
Variable-rate:
Revolving credit facility (b)
Aug 2024
66,000,000
1.6%
175,000,000
2.7%
Term loan
Sep 2022
-
n/a
50,000,000
1.9%
Fixed-rate (c):
Term loan
Feb 2022
-
n/a
50,000,000
3.3%
Term loan
Apr 2023
100,000,000
3.3%
100,000,000
3.5%
Term loan
Sep 2024
75,000,000
3.8%
75,000,000
3.9%
Term loan
Jul 2025
75,000,000
4.7%
75,000,000
4.8%
Term loan
Aug 2026
50,000,000
3.3%
50,000,000
3.5%
530,167,000
3.5%
626,276,000
3.4%
Unamortized issuance costs
(3,129,000
)
(2,002,000
)
$
527,038,000
$
624,274,000
(a)
The mortgages for these properties are cross-collateralized.
(b)
The revolving credit facility is subject to two one-year extensions at the Company’s option.
(c)
The interest rates on these term loans consist of LIBOR plus a credit spread based on the Company’s leverage ratio, for which the Company has interest rate swap agreements which convert the LIBOR rates to fixed rates. Accordingly, these term loans are presented as fixed-rate debt.
Unsecured Revolving Credit Facility and Term Loans
On August 30, 2021, the Company amended its existing $300 million unsecured credit facility and $50 million term loan. After the amendment, the new unsecured revolving credit facility is $185 million with an expiration in August 2024. The new unsecured revolving credit facility may be extended, at the Company’s option for two additional one-year periods, subject to customary conditions. Interest on the borrowings under the new unsecured revolving credit facility component can range from LIBOR plus 135 bps to 195 bps (150 bps at December 31, 2021), based on the Company’s leverage ratio. The Company extended its $50 million term loan four years with an expiration in August 2026.
On August 4, 2020, the Company amended its then existing $300 million unsecured credit facility and term loans. After such amendments, the Company’s financial ratios and borrowing base are all computed using the trailing four quarters as opposed to the current quarter annualized and interest rate swaps that are a hedge of existing debt are now excluded from the definition of 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 facility contains restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. 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
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
other lender remedies. Although the credit facility is unsecured, borrowing availability is based on unencumbered property adjusted net operating income for the trailing twelve months, as defined in the agreements. As of December 31, 2021, the Company had $66.0 million outstanding and $113.9 million available for additional borrowings under its revolving credit facility, and was in compliance with all financial covenants.
Mortgage Loans Payable
On May 5, 2021, the Company closed a non-recourse mortgage for $114.0 million. The mortgage matures June 1, 2031, bears interest at a fixed-rate of 3.49% and requires payment of interest only for the first five years followed by payments of principal and interest based on thirty-year amortization for the remainder of the term. The loan is secured by five shopping centers consisting of Lawndale Plaza, The Shops at Suffolk Downs, Christina Crossing, Trexlertown Plaza, and The Point. These properties had no pre-existing debt and the proceeds from this new loan were used to reduce amounts outstanding under the Company’s revolving credit facility.
Scheduled Principal Payments
Scheduled principal payments on a mortgage loan payable, finance lease obligation, unsecured term loans, and the unsecured credit facility at December 31, 2021, due on various dates from 2023 to 2050, are as follows:
Mortgage Loan
Finance Lease
Revolving
Term
Unamortized
Year
Payable
Obligation
Credit Facility
Loans
Total
Issuance Costs
Total
$
1,116,000
$
37,000
$
-
$
-
$
1,153,000
$
(600,000
)
$
553,000
1,160,000
39,000
-
100,000,000
101,199,000
(518,000
)
100,681,000
1,206,000
41,000
66,000,000
(a)
75,000,000
142,247,000
(451,000
)
141,796,000
1,253,000
44,000
-
75,000,000
76,297,000
(359,000
)
75,938,000
40,922,000
48,000
-
50,000,000
90,970,000
(243,000
)
90,727,000
Thereafter
112,914,000
5,387,000
-
-
118,301,000
(958,000
)
117,343,000
$
158,571,000
$
5,596,000
$
66,000,000
$
300,000,000
$
530,167,000
$
(3,129,000
)
$
527,038,000
(a)
The revolving credit facility is subject to two one-year extensions at the Company's option.
Derivative Financial Instruments
At December 31, 2021, the Company had $8.2 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 $4.9 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 December 31, 2021 and December 31, 2020:
December 31, 2021
Designation/
Fair
Maturity
Balance sheet
Cash flow
Derivative
Count
value
dates
location
Qualifying
Interest rate swaps
$
8,232,000
2023-2025
Accounts payable and accrued liabilities
December 31, 2020
Designation/
Fair
Maturity
Balance sheet
Cash flow
Derivative
Count
value
dates
location
Qualifying
Interest rate swaps
$
18,927,000
2021-2025
Accounts payable and accrued liabilities
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
The notional values of the interest rate swaps held by the Company at December 31, 2021 and December 31, 2020 were $300.0 million and $425.0 million, respectively.
The following presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and the consolidated statements of equity 2021, 2020 and 2019, respectively:
Gain (loss) recognized in other
comprehensive (loss) income
(effective portion)
Designation/
Years ended December 31,
Cash flow
Derivative
Qualifying
Interest rate swaps
$
(4,148,000
)
$
(17,940,000
)
$
(13,090,000
)
(Loss) gain recognized in other
comprehensive (loss) income
reclassified into earnings (effective portion)
Years ended December 31,
Classification
Continuing Operations
$
(6,476,000
)
$
(6,062,000
)
$
1,196,000
As of December 31, 2021, the Company believes it has no significant risk associated with non-performance of the financial institutions which are the counterparties to its derivative contracts.
Note 9. Intangible Lease Asset/Liability
Unamortized intangible lease liabilities that relate to below-market leases amounted to $7.8 million and $8.9 million at December 31, 2021 and December 31, 2020, respectively. Unamortized intangible lease assets that relate to above-market leases amounted to $0.1 million and $0.2 million at December 31, 2021 and December 31, 2020, respectively.
The unamortized balance of intangible lease liabilities at December 31, 2021 is net of accumulated amortization of $38.2 million, and will be credited to future operations as follows:
$
1,049,000
990,000
600,000
578,000
537,000
Thereafter
4,035,000
$
7,789,000
Note 10. Commitments and Contingencies
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.
Under various federal, state, and local laws, ordinances, and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances, or petroleum product releases, at its properties. The owner may be liable to governmental entities or to third parties for property damage, and for investigation and cleanup costs incurred by such parties in connection with any contamination. Generally, the Company’s tenants must comply with environmental laws and meet any remediation requirements. In addition, leases typically impose obligations on tenants to indemnify the Company from any compliance costs the Company may incur as a result of environmental conditions on the property caused by the tenant. However, if a lease does not require compliance, or if a tenant fails to or cannot comply, the Company could be forced to pay these costs. Management is unaware of any environmental matters that would have a material impact on the Company’s consolidated financial statements.
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
The Company’s executive offices are located at 928 Carmans Road, Massapequa, New York.
The Company is the lessee under several ground lease and its executive office lease agreements. In accordance with the adoption of the new lease accounting standard (see Note 2 - “Issued and Adopted Accounting Pronouncements”), the Company recorded right-of-use assets and related lease liabilities for these leases as of January 1, 2019. As of December 31, 2021, the Company’s weighted average remaining lease term is approximately 30.3 years and the weighted average discount rate used to calculate the Company’s lease liability is approximately 4.8%. Rent expense under the Company’s ground lease and executive office lease agreements was approximately $1.2 million, $1.8 million and $1.7 million for 2021, 2020 and 2019, respectively.
The following table represents a reconciliation of the Company’s undiscounted future minimum lease payments for its ground lease and executive office lease agreements applicable to right-of-use liabilities as of December 31, 2021:
$
787,000
789,000
789,000
671,000
634,000
Thereafter
19,578,000
Total undiscounted future minimum lease payments
23,248,000
Future minimum lease payments, discount
(13,028,000
)
Right-of-use liabilities
$
10,220,000
Note 11. Shareholders’ Equity
Preferred Stock
The Company’s 7.25% Series B Cumulative Redeemable Preferred Stock “Series B Preferred Stock” has no stated maturity, is not convertible into any other security of the Company, and is 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.
The Company’s 6.50% Series C Cumulative Redeemable Preferred Stock “Series C Preferred Stock” has no stated maturity, is not convertible into any other security of the Company, and is redeemable at the Company’s option beginning August 24, 2022 at a price of $25.00 per share plus accrued and unpaid distributions.
The Company is authorized to issue up to 12,500,000 shares of preferred stock. The following tables summarize details about the Company’s preferred stock:
Series B
Series C
Preferred Stock
Preferred Stock
Par value
$
0.01
$
0.01
Liquidation value
$
25.00
$
25.00
December 31, 2021
December 31, 2020
Series B
Series C
Series B
Series C
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Shares authorized
1,450,000
6,450,000
1,450,000
6,450,000
Shares issued and outstanding
1,450,000
5,000,000
1,450,000
5,000,000
Balance
$
34,767,000
$
124,774,000
$
34,767,000
$
124,774,000
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
Common Stock
On November 25, 2020, the Company effected a 1-for-6.6 reverse stock split of the issued and outstanding shares of common stock. Each 6.6 shares of the Company's issued and outstanding common stock were combined into one share of the Company's common stock. The number of authorized shares and the par value of the common stock were not changed. In addition, the Company amended the Limited Partnership Agreement of our Operating Partnership to effect a corresponding reverse split of the partnership interests of the Operating Partnership. In accordance with GAAP, all shares of common stock, restricted stock units, OP Units and per share/unit information that are presented in this Form 10-K were adjusted to reflect the reverse split on a retroactive basis for all periods presented.
On December 18, 2018, the Company’s Board of Directors approved a stock repurchase program, which authorized the Company to purchase up to $30.0 million of the Company’s common stock in the open market or through private transactions, subject to market conditions. The stock repurchase program expired on December 18, 2019. During 2018, the Company repurchased approximately 117,000 shares at a weighted average price per share of $19.91. During 2019, the Company repurchased an additional 311,000 shares at a weighted average price per share of $22.03. Since approval of the plan on December 18, 2018, the Company has repurchased 428,000 shares at a weighted average price per share of $21.45.
The Company has a Dividend Reinvestment and Direct Stock Purchase Plan (“DRIP”) which offers a convenient method for shareholders to invest cash dividends and/or make optional cash payments to purchase shares of the Company’s common stock. Such purchases are at 100% of market value. There were no significant transactions under the DRIP during 2021, 2020 and 2019. At December 31, 2021, there remained 426,000 shares authorized under the DRIP.
Dividends
The following table provides a summary of dividends declared and paid per share:
Years ended December 31,
Common stock
$
0.264
$
0.528
$
1.320
7.25% Series B Preferred Stock
$
1.812
$
1.812
$
1.812
6.50% Series C Preferred Stock
$
1.625
$
1.625
$
1.625
At December 31, 2021 and 2020, there were $1.2 million and $1.2 million, respectively, of accrued preferred stock dividends.
On January 20, 2022, the Company’s Board of Directors declared a dividend of $0.066 per share with respect to its common stock. At the same time, the Board declared a dividend of $0.453125 and $0.406250 per share with respect to the Company’s Series B Preferred Stock and Series C Preferred Stock, respectively. The distributions are payable on February 22, 2022 to shareholders of record on February 11, 2022.
Note 12. Revenues
Rents for 2021, 2020 and 2019, respectively, are comprised of the following:
Years ended December 31,
Base rents
$
92,738,000
$
95,987,000
$
105,041,000
Expense recoveries
31,022,000
29,241,000
33,475,000
Percentage rent
1,347,000
1,778,000
971,000
Straight-line rents
270,000
(1,208,000
)
405,000
Amortization of intangible lease liabilities, net
1,074,000
1,373,000
2,827,000
Total rents
$
126,451,000
$
127,171,000
$
142,719,000
The Company recognizes lease termination income when the following conditions are met: (1) the lease termination agreement has been executed, (2) the lease termination fee is determinable, (3) all the Company’s landlord services pursuant to the terminated lease have been rendered, and (4) collectability of the lease termination fee is assured. On January 31, 2020, the Company agreed to a cash
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
payment in consideration for permitting a dark anchor tenant to terminate its lease prior to the contractual expiration at Metro Square. As a result of this termination, revenues for 2020, included approximately $7.1 million of other income.
The Company reviews the collectability of charges under its tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. During 2021 and 2020, the Company’s assessment has specifically included the impact of the COVID-19 pandemic, which represents a material risk to collectability. In the event that collectability with respect to any tenant changes, the Company recognizes an adjustment to rental income. The Company’s review of collectability of charges under its operating leases includes any accrued rental revenues related to the straight-line method of reporting rental revenue. The Company identified various tenants where collection was no longer considered probable, and therefore, during the years ended December 31, 2021 and 2020, respectively, $0.7 million and $6.9 million of billed charges, consisting of rent and tenant reimbursements, were unpaid. Based on the Company’s determination to record revenue on a cash basis for these tenants, these amounts were not recorded as revenue.
Annual future base rents due to be received under non-cancelable operating leases in effect at December 31, 2021 are approximately as follows (excluding those base rents applicable to properties classified as real estate held for sale):
$
87,221,000
84,883,000
74,689,000
62,993,000
51,829,000
Thereafter
201,182,000
$
562,797,000
Total future minimum rents do not include expense recoveries for real estate taxes and operating costs, or percentage rents based upon tenants’ sales volume. Such additional revenue amounts aggregated approximately $32.5 million, $31.1 million and $34.4 million for 2021, 2020 and 2019, respectively. Such amounts do not include amortization of intangible lease liabilities.
Note 13. 401(k) Retirement Plan
The Company has a 401(k) retirement plan (the “Plan”), which permits all eligible employees to defer a portion of their compensation under the Code. Pursuant to the provisions of the Plan, the Company may make discretionary contributions on behalf of eligible employees. The Company made contributions to the Plan of $327,000, $375,000, and $387,000 for 2021, 2020, and 2019, respectively.
Note 14. Share-Based Compensation
The following tables set forth certain share-based compensation information for 2021, 2020, and 2019, respectively:
Years ended December 31,
Expense relating to share/unit grants
$
3,229,000
$
3,954,000
$
4,496,000
Amounts capitalized
(186,000
)
(231,000
)
(379,000
)
Total charged to operations
$
3,043,000
$
3,723,000
$
4,117,000
Weighted average
Shares
grant date value
Unvested shares/units, December 31, 2020
642,000
$
25.86
Restricted share grants
149,000
11.98
Vested during period
(247,000
)
24.10
Forfeitures/cancellations
(52,000
)
17.07
Unvested shares/units, December 31, 2021
492,000
$
23.47
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
At December 31, 2021, approximately 0.2 million shares remained available for grants pursuant to the 2017 Plan and, at that date, there remained an aggregate of $3.5 million applicable to all grants and awards to be expensed over a weighted average period of 1.7 years.
During 2021, there were 149,000 time-based restricted shares issued with a weighted average grant date fair value of $11.98 per share. During 2020, there were 63,000 time-based restricted shares issued, with a weighted average grant date fair value of $17.48 per share. During 2019, there were 79,000 time-based restricted shares issued, with a weighted average grant date fair value of $21.25 per share.
The total fair values of shares vested during 2021, 2020, and 2019 were $6.0 million, $0.9 million, and $0.5 million, respectively.
President and CEO Employment Contract
Upon employment on June 15, 2011, the Company’s President and CEO received restricted share grants totaling 378,800 shares, one-half of which was time-based, vesting upon the seventh anniversary of the date of grant (June 15, 2018), and the other half market performance-based, to be earned if the total annual return on an investment in the Company’s common stock (“TSR”) was at least an average of 6.5% per year for the seven years ended June 15, 2018. On June 15, 2018, approximately 189,400 time-based shares vested and approximately 189,400 market performance-based shares were forfeited as the market performance criteria was not achieved.
On June 15, 2018, in connection with a new amended and restated employment agreement, the Company’s President and CEO received an approximate 152,000 time-based restricted share grant at a market price of $28.91. However, as a result of an existing limitation within the 2017 Plan, only approximately 114,000 shares were granted on June 15, 2018, with the remaining 38,000 shares granted on January 1, 2019. All 152,000 time-based restricted shares will vest upon the fifth anniversary of the effective date of the employment agreement (June 15, 2023), subject to the Company’s President and CEO continuous employment with the Company through such date, subject to certain exceptions. Consistent with such time-based restricted grant awards to other participants, dividends will be paid on these shares.
In addition, on June 15, 2018, the Company’s President and CEO was also granted a market performance-based equity award of approximately 227,000 restricted stock units (“RSUs”) and approximately 227,000 dividend equivalent rights (“DERs”) of the Company. Each RSU represents a contingent right to receive one common share if certain market performance criteria are achieved. During the three years ending June 15, 2021 (the “Interim Performance Period”), a maximum of approximately 114,000 shares can be earned. Any portion of the market performance-based equity award that is not earned as of the end of the Interim Performance Period will be carried forward for calculation for the five years ending June 15, 2023 (the “Full Performance Period”). The percentage of the market performance-based equity award to be earned will be determined based on the Company’s average annual TSR over the Interim Performance Period and/or over the Full Performance Period as follows: if average annual TSR (1) is below 4%, the percentage of grant earned would be 0%, (2) equals 4%, the percentage of grant earned would be 33.3%, (3) equals 6.5%, the percentage of grant earned would be 66.7%, and (4) equals 10% or above, the percentage of grant earned would be 100%. Linear interpolation shall be applied to determine the percentage of the market performance-based equity award that is earned where the average annual TSR over the performance period falls between the percentages set forth above. An independent appraisal determined the value of the market performance-based equity award for the interim and full performance periods to be $21.78 and $19.60 per share, respectively, compared to a market price at the date of grant of $28.91 per share. Based on market performance for the Interim Performance Period, it was determined the Company’s President and CEO earned 113,636 shares. Accordingly, on July 20, 2021, the Company issued 113,636 common shares to the CEO and paid him $0.3 million for the related DERs.
The DERs will accrue and will be deemed to be reinvested into the Company’s common stock and payment with respect to the dividend equivalent rights will be deferred until the end of the Interim Performance Period, or the Full Performance Period, as the case may be, to coincide with the vesting, if any, of the market performance-based equity award. Payment will only be made for the portion of the market performance-based equity award that is earned and vests.
Note 15. Earnings 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 that have non-forfeitable rights to receive dividends issued pursuant to the Company’s share-based compensation program are considered
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
December 31, 2021
participating securities). Unvested restricted shares that are participating securities 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 2021, 2020 and 2019, the Company had 0.4 million, 0.4 million and 0.4 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 2021, 2020 and 2019, respectively:
Years ended December 31,
Numerator
Net (loss) income
$
(45,003,000
)
$
(520,000
)
$
1,566,000
Preferred stock dividends
(10,752,000
)
(10,752,000
)
(10,752,000
)
Net (income) attributable to noncontrolling interests
(96,000
)
(552,000
)
(490,000
)
Net earnings allocated to unvested shares
(117,000
)
(238,000
)
(558,000
)
Net loss attributable to vested common shares
$
(55,968,000
)
$
(12,062,000
)
$
(10,234,000
)
Denominator
Weighted average number of vested common shares outstanding, basic and diluted
13,213,000
13,104,000
13,082,000
Net loss per common share attributable to common shareholders, basic and diluted
$
(4.24
)
$
(0.92
)
$
(0.78
)
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. For 2021, 2020 and 2019, no restricted stock units would have been issuable under the Company’s President and CEO market performance-based equity award (see Note 14 - “Share-Based Compensation”) had the measurement periods ended on December 31, 2021, 2020 and 2019, respectively. Therefore, this market performance-based equity award had no impact in calculating diluted EPS for 2021, 2020 and 2019. 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 was 81,000, 81,000 and 83,000 for 2021, 2020 and 2019, respectively.
Note 16. Subsequent Events
In determining subsequent events, management reviewed all activity from January 1, 2022 through the date of filing this Annual Report on Form 10-K.
Cedar Realty Trust, Inc.
Schedule III
Real Estate and Accumulated Depreciation
Year built/
Gross
Initial cost to the Company
Year
Percent
Year last
leasable
Building and
Property
State
acquired
owned
renovated
area
Land
Improvements
Academy Plaza
PA
100%
1965/2013
136,685
$
2,406,000
$
9,623,000
Big Y Shopping Center
CT
100%
101,105
11,272,000
23,395,000
Carmans Plaza
NY
100%
1954/2007
182,081
8,539,000
35,804,000
Christina Crossing
DE
100%
119,446
4,341,000
23,227,000
Coliseum Marketplace
VA
100%
1987/2012
106,648
2,924,000
14,416,000
Colonial Commons
PA
100%
2011/2013
410,432
9,367,000
37,496,000
Crossroads II
PA
60%
133,717
15,383,000
-
Elmhurst Square
VA
100%
1961-1983
66,254
1,371,000
5,994,000
Fairview Commons
PA
100%
1976/2003
52,964
858,000
3,568,000
Fieldstone Marketplace
MA
2005/2012
100%
1988/2003
150,123
5,229,000
21,440,000
Fishtown Crossing
PA
100%
131,043
2,942,000
11,769,000
Frankin Village Plaza (a)
MA
2004/2012
100%
1987/2005
305,937
14,270,000
61,915,000
General Booth Plaza
VA
100%
71,639
1,935,000
9,493,000
Girard Plaza
PA
100%
1950's/2010
35,688
4,685,000
4,648,000
Gold Star Plaza
PA
100%
71,720
1,644,000
6,519,000
Golden Triangle
PA
100%
1960/2005
202,790
2,320,000
9,713,000
Groton Shopping Center
CT
100%
130,264
3,070,000
12,320,000
Halifax Plaza
PA
100%
51,510
1,412,000
5,799,000
Hamburg Square
PA
100%
1993/2010
102,058
1,153,000
4,678,000
Jordan Lane
CT
100%
1969/1991
174,679
4,291,000
21,176,000
Kempsville Crossing
VA
100%
1985/2013
79,512
2,207,000
11,000,000
Kings Plaza
MA
100%
1970/1994
168,243
2,413,000
12,604,000
Lawndale Plaza
PA
100%
92,773
3,635,000
21,854,000
Meadows Marketplace
PA
2004/2012
100%
91,518
1,914,000
-
Newport Plaza
PA
100%
64,489
1,721,000
7,758,000
New London Mall
CT
100%
1967/1997
259,566
14,891,000
24,967,000
Northside Commons
PA
100%
69,136
3,332,000
-
Norwood Shopping Center
MA
100%
1965/2013
42,308
1,874,000
8,453,000
Oak Ridge Shopping Center
VA
100%
38,700
960,000
4,254,000
Oakland Commons
CT
100%
1962/2013
90,100
2,504,000
15,662,000
Oakland Mills
MD
100%
1960's/2004
57,008
1,611,000
6,292,000
Palmyra Shopping Center
PA
100%
1960/2012
111,051
1,488,000
6,566,000
Pine Grove Plaza
NJ
100%
2001/2002
79,306
2,010,000
6,489,000
Quartermaster Plaza
PA
100%
456,154
37,031,000
54,210,000
San Souci Plaza
MD
100%
1985-1997
264,134
14,849,000
18,445,000
Shoppes at Arts District
DC
100%
35,676
2,247,000
18,616,000
South Philadelphia
PA
100%
1950/2003
191,340
8,222,000
36,314,000
Southington Center
CT
100%
1972/2000
155,842
-
11,834,000
Swede Square
PA
100%
1980/2012
100,809
2,268,000
6,232,000
The Brickyard
CT
100%
1990/2012
227,598
7,632,000
29,308,000
The Point
PA
100%
1972/2012
260,625
2,700,000
10,800,000
The Shops at Bloomfield Station
NJ
100%
63,844
625,000
17,674,000
The Shops at Suffolk Downs
MA
100%
2005/2011
121,187
7,580,000
11,089,000
Timpany Plaza
MA
100%
1970's-1989
182,799
3,412,000
19,240,000
Trexler Mall
PA
100%
1973/2013
336,687
6,932,000
32,815,000
Trexlertown Plaza
PA
100%
1990/2011
325,171
13,349,000
23,867,000
Valley Plaza
MD
100%
1975/1994
190,939
1,950,000
7,766,000
Washington Centers Shoppes
NJ
100%
1979/1995
157,300
2,061,000
7,314,000
Webster Plaza
MA
100%
1960's-2004
98,984
3,551,000
18,412,000
Yorktowne Plaza
MD
100%
1970/2000
136,197
5,940,000
25,505,000
Other
n/a
n/a
100%
n/a
-
1,965,000
-
Total Portfolio
7,285,779
$
262,286,000
$
798,333,000
Cedar Realty Trust, Inc.
Schedule III
Real Estate and Accumulated Depreciation
Gross amount at which carried at
(continued)
Subsequent
December 31, 2021
cost
Building and
Accumulated
Property
capitalized (b)
Land
improvements
Total
depreciation
Academy Plaza
$
6,322,000
$
2,406,000
$
15,945,000
$
18,351,000
$
7,175,000
Big Y Shopping Center
(838,000
)
10,268,000
23,561,000
33,829,000
6,266,000
Carmans Plaza
13,051,000
8,421,000
48,973,000
57,394,000
19,451,000
Christina Crossing
1,716,000
4,341,000
24,943,000
29,284,000
4,558,000
Coliseum Marketplace
(3,050,000
)
3,586,000
10,704,000
14,290,000
8,916,000
Colonial Commons
8,026,000
9,367,000
45,522,000
54,889,000
17,944,000
Crossroads II
29,794,000
17,671,000
27,506,000
45,177,000
8,909,000
Elmhurst Square
1,299,000
1,371,000
7,293,000
8,664,000
2,922,000
Fairview Commons
461,000
858,000
4,029,000
4,887,000
1,637,000
Fieldstone Marketplace
(3,367,000
)
5,167,000
18,135,000
23,302,000
11,607,000
Fishtown Crossing
13,892,000
2,843,000
25,760,000
28,603,000
5,919,000
Frankin Village Plaza (a)
6,998,000
14,681,000
68,502,000
83,183,000
21,479,000
General Booth Plaza
(109,000
)
1,935,000
9,384,000
11,319,000
3,819,000
Girard Plaza
(2,989,000
)
4,685,000
1,659,000
6,344,000
649,000
Gold Star Plaza
802,000
1,644,000
7,321,000
8,965,000
3,596,000
Golden Triangle
12,672,000
2,320,000
22,385,000
24,705,000
10,926,000
Groton Shopping Center
8,567,000
3,113,000
20,844,000
23,957,000
7,142,000
Halifax Plaza
562,000
1,347,000
6,426,000
7,773,000
3,216,000
Hamburg Square
6,332,000
1,153,000
11,010,000
12,163,000
4,560,000
Jordan Lane
1,537,000
4,291,000
22,713,000
27,004,000
9,346,000
Kempsville Crossing
(2,837,000
)
2,038,000
8,332,000
10,370,000
3,664,000
Kings Plaza
1,933,000
2,408,000
14,542,000
16,950,000
4,971,000
Lawndale Plaza
1,092,000
3,635,000
22,946,000
26,581,000
5,442,000
Meadows Marketplace
11,978,000
1,914,000
11,978,000
13,892,000
4,651,000
Newport Plaza
587,000
1,682,000
8,384,000
10,066,000
4,183,000
New London Mall
5,022,000
8,807,000
36,073,000
44,880,000
16,240,000
Northside Commons
9,390,000
3,379,000
9,343,000
12,722,000
3,124,000
Norwood Shopping Center
5,128,000
1,874,000
13,581,000
15,455,000
4,754,000
Oak Ridge Shopping Center
478,000
960,000
4,732,000
5,692,000
2,016,000
Oakland Commons
(3,466,000
)
2,504,000
12,196,000
14,700,000
6,273,000
Oakland Mills
1,145,000
1,530,000
7,518,000
9,048,000
3,311,000
Palmyra Shopping Center
2,156,000
1,488,000
8,722,000
10,210,000
4,008,000
Pine Grove Plaza
612,000
1,622,000
7,489,000
9,111,000
3,618,000
Quartermaster Plaza
3,721,000
37,031,000
57,931,000
94,962,000
14,798,000
San Souci Plaza
5,195,000
13,211,000
25,278,000
38,489,000
13,905,000
Shoppes at Arts District
91,000
2,247,000
18,707,000
20,954,000
3,924,000
South Philadelphia
(3,839,000
)
10,363,000
30,334,000
40,697,000
24,206,000
Southington Center
1,456,000
-
13,290,000
13,290,000
5,822,000
Swede Square
8,739,000
2,272,000
14,967,000
17,239,000
6,787,000
The Brickyard
576,000
7,648,000
29,868,000
37,516,000
13,955,000
The Point
20,418,000
2,996,000
30,922,000
33,918,000
14,490,000
The Shops at Bloomfield Station
(3,820,000
)
625,000
13,854,000
14,479,000
3,756,000
The Shops at Suffolk Downs
10,633,000
7,580,000
21,722,000
29,302,000
8,599,000
Timpany Plaza
(4,879,000
)
3,368,000
14,405,000
17,773,000
7,651,000
Trexler Mall
13,874,000
6,932,000
46,689,000
53,621,000
18,349,000
Trexlertown Plaza
31,090,000
15,674,000
52,632,000
68,306,000
16,527,000
Valley Plaza
5,370,000
1,950,000
13,136,000
15,086,000
4,689,000
Washington Centers Shoppes
7,159,000
2,000,000
14,534,000
16,534,000
6,767,000
Webster Plaza
(1,656,000
)
4,082,000
16,225,000
20,307,000
8,001,000
Yorktowne Plaza
(2,562,000
)
5,801,000
23,082,000
28,883,000
10,734,000
Other
1,443,000
879,000
2,529,000
3,408,000
490,000
Total Portfolio
$
227,905,000
$
259,968,000
$
1,028,556,000
$
1,288,524,000
$
409,742,000
Cedar Realty Trust, Inc.
Schedule III
Real Estate and Accumulated Depreciation
The changes in real estate and accumulated depreciation for the years ended December 31, 2021, 2020 and 2019, respectively, are as follows:
Cost
Balance, beginning of the year
$
1,527,478,000
$
1,515,206,000
$
1,508,682,000
Properties transferred to held for sale
(184,639,000
)
(22,512,000
)
(36,265,000
)
Property acquisitions
-
-
9,333,000
Outparcel dispositions
(387,000
)
(840,000
)
-
Property impairments
(83,224,000
)
-
-
Improvements and betterments
29,296,000
35,624,000
37,089,000
Asset write-offs
-
-
(3,633,000
)
Balance, end of the year
$
1,288,524,000
$
1,527,478,000
(c)
$
1,515,206,000
Accumulated depreciation
Balance, beginning of the year
$
428,569,000
$
389,861,000
$
361,969,000
Properties transferred to held for sale
(55,165,000
)
(3,947,000
)
(10,143,000
)
Outparcel dispositions
-
(90,000
)
-
Depreciation expense (d)
36,338,000
42,745,000
41,142,000
Asset write-offs
-
-
(3,107,000
)
Balance, end of the year
$
409,742,000
$
428,569,000
$
389,861,000
Net book value
$
878,782,000
$
1,098,909,000
$
1,125,345,000
(a)
Amount of encumbrance totals $164.2 million at December 31, 2021.
(b)
Negative amounts represent write-offs of fully depreciated assets and impairments.
(c)
At December 31, 2021, the aggregate cost for federal income tax purposes was approximately $34.5 million greater than the Company's recorded values.
(d)
Depreciation is provided over the estimated useful lives of the buildings and improvements, which range from 3 to 40 years.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None

---

ITEM 9A. CONTROLS AND PROCEDURES
Item 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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 Disclosure 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 Disclosure 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 December 31, 2021, and have concluded that such disclosure controls and procedures are effective.
During the three months ended December 31, 2021, 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.
Management Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control - 2013 Integrated Framework”. Based on such assessment, management believes that, as of December 31, 2021, the Company’s internal control over financial reporting is effective based on those criteria.
Ernst & Young LLP, the Company’s independent registered public accounting firm, has issued an opinion on the Company’s internal control over financial reporting, which appears elsewhere in this report.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Cedar Realty Trust, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Cedar Realty Trust, Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Cedar Realty Trust, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and schedule listed in the Index at Item 15(a) and our report dated March 10, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Item 9A. Controls and Procedures - “Management Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ ERNST & YOUNG LLP
New York, New York
March 10, 2022

---

ITEM 9B. OTHER INFORMATION
Item 9B.
Other Information
None.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10.
Directors, Executive Officers and Corporate Governance
This item is incorporated by reference to the definitive proxy statement for the 2022 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.

---

ITEM 11. EXECUTIVE COMPENSATION
Item 11.
Executive Compensation
This item is incorporated by reference to the definitive proxy statement for the 2022 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
This item is incorporated by reference to the definitive proxy statement for the 2022 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13.
Certain Relationships and Related Transactions and Director Independence
This item is incorporated by reference to the definitive proxy statement for the 2022 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14.
Principal Accountant Fees and Services
This item is incorporated by reference to the definitive proxy statement for the 2022 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.
Part IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15.
Exhibits and Financial Statement Schedules
(a)
1. Financial Statements
The response to this portion of Item 15 is included in Item 8 of this report.
2.
Financial Statement Schedules
The response to this portion of Item 15 is included in Item 8 of this report.
3.
Exhibits
Item
Title or Description
3.1.a
Articles of Incorporation of Cedar Realty Trust, Inc., incorporated by reference to Exhibit 3.1 of Form 10-K for the year ended December 31, 2013.
3.1.b
Articles Supplementary to Articles of Incorporation of Cedar Realty Trust, Inc., incorporated by reference to Exhibit 3.2 of Form 8-A filed on August 18, 2017.
3.1.c
Articles Supplementary to Articles of Incorporation of Cedar Realty Trust, Inc., incorporated by reference to Exhibit 3.1 of Form 8-K filed on August 22, 2017.
3.1.d
Articles Supplementary to Articles of Incorporation of Cedar Realty Trust, Inc., incorporated by reference to Exhibit 3.1 of Form 8-K filed on December 15, 2017.
3.1.e
Articles of Amendment to the Articles of Incorporation of Cedar Realty Trust, Inc., incorporated by reference to Exhibit 3.1 of Form 8-K filed on May 7, 2018.
3.1.f
Articles of Amendment to the Articles of Incorporation of Cedar Realty Trust, Inc., incorporated by reference to Exhibit 3.1 of Form 8-K filed on November 27, 2020.
3.1.g
Articles of Amendment to the Articles of Incorporation of Cedar Realty Trust, Inc., incorporated by reference to Exhibit 3.2 of Form 8-K filed on November 27, 2020.
3.2
Amended and Restated By-laws of Cedar Realty Trust, Inc., incorporated by reference to Exhibit 3.2 of Form 8-K filed on November 2, 2020.
3.3.a
Agreement of Limited Partnership of Cedar Shopping Centers Partnership, L.P., incorporated by reference to Exhibit 3.4 of the Registration Statement on Form S-11/A filed on October 14, 2003.
3.3.b
Amendment No. 1 to Agreement of Limited Partnership of Cedar Shopping Centers Partnership, L.P., incorporated by reference to Exhibit 3.5 of the Registration Statement on Form S-11/A filed on October 14, 2003.
3.3.c
Amendment No. 2 to Agreement of Limited Partnership of Cedar Shopping Centers Partnership, L.P., incorporated by reference to Exhibit 3.3.c of Form 10-K for the year ended December 31, 2004.
3.3.d
Amendment No. 3 to Agreement of Limited Partnership of Cedar Shopping Centers Partnership, L.P., incorporated by reference to Exhibit 3.3.d of Form 10-K for the year ended December 31, 2006.
3.3.e
Amendment No. 4 to Agreement of Limited Partnership of Cedar Shopping Centers Partnership, L.P., incorporated by reference to Exhibit 3.2 of Form 10-Q for the quarterly period ended September 30, 2010.
3.3.f
Amendment No. 5 to Agreement of Limited Partnership of Cedar Realty Trust Partnership, L.P., incorporated by reference to Exhibit 3.2 of Form 8-K filed on May 16, 2012.
3.3.g
Amendment No. 6 to Agreement of Limited Partnership of Cedar Realty Trust Partnership, L.P., incorporated by reference to Exhibit 3.2 of Form 8-K filed on May 29, 2012.
Item
Title or Description
3.3.h
Amendment No. 7 to Agreement of Limited Partnership of Cedar Realty Trust Partnership, L.P., incorporated by reference to Exhibit 3.2 of Form 8-K filed on September 14, 2012.
3.3.i
Amendment No. 8 to Agreement of Limited Partnership of Cedar Realty Trust Partnership, L.P., incorporated by reference to Exhibit 3.3 of Form 8-K filed on November 21, 2012.
3.3.j
Amendment No. 9 to Agreement of Limited Partnership of Cedar Realty Trust Partnership, L.P., incorporated by reference to Exhibit 3.2 of Form 8-K filed on February 11, 2013.
3.3.k
Amendment No. 10 to Agreement of Limited Partnership of Cedar Realty Trust Partnership, L.P., incorporated by reference to Exhibit 3.3 of Form 8-K filed on August 22, 2017.
3.3.1
Amendment No. 11 to Agreement of Limited Partnership of Cedar Realty Trust Partnership, L.P., incorporated by reference to Exhibit 3.2 of Form 8-K filed on December 15, 2017.
3.3.m
Amendment No. 12 to Agreement of Limited Partnership of Cedar Realty Trust Partnership, L.P., incorporated by reference to Exhibit 3.3m of Form 10-K for the year ended December 31, 2020.
4.1
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, incorporated by reference to Exhibit 4.1 of Form 10-K for the year ended December 31, 2019.
10.1.a.1*
Cedar Realty Trust, Inc. 2012 Stock Incentive Plan, incorporated by reference to Exhibit A of the Definitive Proxy Statement filed on April 25, 2012.
10.1.a.2*
First Amendment to Cedar Realty Trust, Inc. 2012 Stock Incentive Plan.
10.1.b.1*
Cedar Realty Trust, Inc. 2017 Stock Incentive Plan, incorporated by reference to Annex A of the Definitive Proxy Statement filed on March 23, 2017.
10.1.b.2*
First Amendment to Cedar Realty Trust, Inc. 2017 Stock Incentive Plan, incorporated by reference to Annex A of the Definitive Proxy Statement filed on March 29, 2019.
10.1.b.3*
Second Amendment to Cedar Realty Trust, Inc. 2017 Stock Incentive Plan.
10.2.a*
2005 Cedar Shopping Centers, Inc. Deferred Compensation Plan, incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 22, 2005.
10.2.b*
Amendment No. 1 to the 2005 Cedar Shopping Centers, Inc. Deferred Compensation Plan, effective as of December 21, 2006, incorporated by reference to Exhibit 10.2.b of Form 10-K for the year ended December 31, 2006.
10.2.c*
Amendment No. 2 to the 2005 Cedar Shopping Centers, Inc. Deferred Compensation Plan, effective as of December 11, 2007, incorporated by reference to Exhibit 10.2.c of Form 10-K for the year ended December 31, 2007.
10.2.d*
Amendment No. 3 to the 2005 Cedar Shopping Centers, Inc. Deferred Compensation Plan, effective as of December 16, 2008, incorporated by reference to Exhibit 10.2.d of Form 10-K for the year ended December 31, 2008.
10.2.e*
Amendment No. 4 to the 2005 Cedar Shopping Centers, Inc. Deferred Compensation Plan, effective as of June 30, 2011, incorporated by reference to Exhibit 10.4 of Form 10-Q for the quarterly period ended September 30, 2011.
10.2.f*
Amendment No. 5 to the 2005 Cedar Realty Trust, Inc. Deferred Compensation Plan, effective as of December 14, 2011, incorporated by reference to Exhibit 10.2.f of Form 10-K for the year ended December 31, 2011.
10.2.g*
Amendment No. 6 to the 2005 Cedar Realty Trust, Inc. Deferred Compensation Plan, effective as of December 12, 2012, incorporated by reference to Exhibit 10.2.g of Form 10-K for the year ended December 31, 2012.
Item
Title or Description
10.2.h*
Amendment No. 7 to the 2005 Cedar Realty Trust, Inc. Deferred Compensation Plan, effective as of December 24, 2013, incorporated by reference to Exhibit 10.2.h of Form 10-K for the year ended December 31, 2013.
10.3.a*
Amended and Restated Employment Agreement between Cedar Realty Trust, Inc. and Bruce J. Schanzer, dated effective as of June 15, 2018, incorporated by reference to Exhibit 10.1 of Form 8-K filed on June 18, 2018.
10.3.b*
Amended and Restated Employment Agreement between Cedar Realty Trust, Inc. and Philip Mays, dated effective as of June 6, 2018, incorporated by reference to Exhibit 10.1 of Form 8-K filed on January 3, 2019.
10.3.c*
Amended and Restated Employment Agreement between Cedar Realty Trust, Inc. and Robin McBride Zeigler, dated effective as of April 1, 2019, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarterly period ended September 30, 2019.
10.4.a.1
Fourth Amended and Restated Loan Agreement (the “Loan Agreement”) by and among Cedar Realty Trust Partnership, L.P., KeyBank National Association and other lending institutions which are or may become parties to the Loan Agreement, and KeyBank National Association (as Administrative Agent), dated as of September 8, 2017, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarterly period ended September 30, 2017.
10.4.a.2
First Amendment to Fourth Amended and Restated Loan Agreement, dated as of July 24, 2018, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarterly period ended June 30, 2018.
10.4.a.3
Second Amendment to Fourth Amended and Restated Loan Agreement, dated as of August 4, 2020, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarterly period ended September 30, 2020.
10.4.b.1
Third Amended and Restated Loan Agreement (the “Loan Agreement”) by and among Cedar Realty Trust Partnership, L.P., KeyBank National Association and other lending institutions which are or may become parties to the Loan Agreement, and KeyBank National Association (as Administrative Agent), dated as of July 24, 2018, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarterly period ended June 30, 2018.
10.4.b.2
First Amendment to Third Amended and Restated Loan Agreement, dated as of August 4, 2020, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarterly period ended September 30, 2020.
10.4.b.3
Second Amendment to Third Amended and Restated Loan Agreement, dated as of August 30, 2021, incorporated by reference to Exhibit 10.3 of Form 10-Q for the quarterly period ended September 30, 2021.
10.4.c
Fifth Amended and Restated Loan Agreement (the “Loan Agreement”) by and among Cedar Realty Trust Partnership, L.P., KeyBank National Association and other lending institutions which are or may become parties to the Loan Agreement, and KeyBank National Association (as administrative Agent) dated as of August 30, 2021, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarterly period ended September 30, 2021.
10.4.d.1
Loan Agreement (the “Loan Agreement”) by and among Cedar Realty Trust Partnership, L.P., Regions Bank and other lending institutions which are or may become parties to the Loan Agreement, and KeyBank National Association (as Administrative Agent), dated as of April 26, 2016 incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarterly period ended March 31, 2016.
10.4.d.2
First Amendment to Loan Agreement, dated as of July 15, 2016 incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarterly period ended September 30, 2016.
10.4.d.3
Second Amendment to Loan Agreement, dated as of July 24, 2018, incorporated by reference to Exhibit 10.3 of Form 10-Q for the quarterly period ended June 30, 2018.
10.4.d.4
Third Amendment to Loan Agreement, dated as of August 4, 2020, incorporated by reference to Exhibit 10.3 of Form 10-Q for the quarterly period ended September 30, 2020.
10.4.d.5
Fourth Amendment to Loan Agreement, dated as of August 30, 2021, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarterly period ended September 30, 2021.
Item
Title or Description
10.5
Commercial Lease Agreement with the Government of the District of Columbia’s Department of General Services, incorporated by reference to Exhibit 10.4 of Form 10-Q for the quarterly period ended September 30, 2020.
10.6
Loan Agreement, by and among Cedar Christina Crossing, LLC, Cedar-Revere LLC, The Point Associates, L.P., Cedar-Trexler Plaza 2, LLC, Cedar-Trexler Plaza 3, LLC, Lawndale I, LP and The Guardian Life Insurance Company of America, dated as of May 5, 2021, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarterly period ended June 30, 2021.
21.1
List of Subsidiaries of the Registrant
23.1
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
31.1
Rule 13a-14(a) Certification of Chief Executive Officer
31.2
Rule 13a-14(a) Certification of Chief Financial Officer
32.1
Section 1350 Certification of Chief Executive Officer
32.2
Section 1350 Certification of Chief Financial Officer
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because iXBRLtags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Management contracts or compensatory plans required to be filed pursuant to Rule 601 of Regulation S-K.
(b)
Exhibits
The response to this portion of Item 15 is included in Item 15(a)(3) above.
(c)
The following financial statement schedules are filed as part of the report:
The response to this portion of Item 15 is included in Item 15(a)(2) above.