- Stabilized Property Occupancy Remains 96% - - Company Reiterates Full-Year Guidance -
PORT WASHINGTON, N.Y., July 30 /PRNewswire-FirstCall/ -- Cedar Shopping
Centers, Inc. (NYSE: CDR) today reported its financial results for the quarter
ended June 30, 2008.
Highlights of Second Quarter 2008 Compared to Second Quarter 2007
-- Net income applicable to common shareholders was $1.2 million ($0.03
per share) as compared to $2.9 million ($0.07 per share). Net income for each
period includes certain one-time charges.
-- Funds from Operations ("FFO") were $14.4 million ($0.31 per share/OP
unit), an increase of 12.3%.
-- Revenues were $42.9 million, an increase of 16.1%.
-- Occupancy for the Company's stabilized portfolio remained approximately
96% while total portfolio occupancy, including development and redevelopment
properties, remained approximately 92%.
Leo Ullman, Cedar's CEO, stated, "Our second quarter 2008 results indicate
the strength of our operations and effective execution of our business plan in
this uncertain financial and economic environment. We continue to have
undiminished occupancy levels featuring strong performing supermarket tenants
with long-term leases. Our portfolio also has minimal exposure to fashion,
luxury, home furnishings and similar potentially challenged tenancies. We
remain risk averse in our approach and we will continue to be vigilant, as
always, as we seek enhancement of shareholder value."
Financial and Operating Results
Net income applicable to common shareholders was $1.2 million, or $0.03
per share, for the quarter ended June 30, 2008, as compared to $2.9 million,
or $0.07 per share, for the quarter ended June 30, 2007. Net income in the
second quarter of 2008 includes, among other things, a one-time depreciation
charge of $1.9 million, or $0.04 per share, taken for the demolition of a
building on the Company's property in Wyoming, Michigan, as part of the
Company's redevelopment plans for the property. Net income in the second
quarter of 2007 included a one-time charge of approximately $1.5 million
($0.03 per share) related primarily to the retirement of the Company's former
CFO.
Total revenues for the quarter ended June 30, 2008 increased 16.1% to
$42.9 million from $37.0 million for the second quarter ended June 30, 2007.
FFO was $14.4 million, or $0.31 per share/OP unit for the quarter ended
June 30, 2008, as compared to $12.8 million, or $0.28 per share/OP unit for
the quarter ended June 30, 2007. FFO for the second quarter of this year as
compared to the second quarter of last year reflects a reduction of
approximately $0.01 per share from the contribution of the nine properties to
a joint venture with Homburg Invest, Inc. that the Company closed late in the
fourth quarter 2007 (the joint venture had a minor effect on net income),
substantially offset by the acquisition on March 18, 2008 of the remaining
approximate 75% joint venture interest in four Pennsylvania
supermarket-anchored properties from an affiliate of Kimco Realty Corporation.
Net income and FFO in the second quarter of 2008 both reflect an approximate
$0.01 per share benefit from lower interest rates applicable to our variable
rate debt. A reconciliation of net income applicable to common shareholders
to FFO is contained in the table accompanying this release.
Cedar's total revenues for the six months ended June 30, 2008 were $86.6
million as compared to $73.1 million for the six months ended June 30, 2007.
Net income applicable to common shareholders was $4.3 million, or $0.10 per
share, as compared to $6.6 million, or $0.15 per share, for the six months
ended June 30, 2007. FFO was $28.1 million, or $0.61 per share/OP unit, as
compared to $26.5 million, or $0.57 per share/OP unit, for the six months
ended June 30, 2007.
Net cash flows provided by operating activities were $28.4 million for the
six months ended June 30, 2008 as compared to $24.9 million for the
corresponding period of 2007.
Same Property Results
The Company owned 99 properties throughout both the second quarters of
2008 and 2007. Same property net operating income was $25.5 million in the
second quarter of 2008 as compared to $26.3 million in the second quarter of
2007. The overall decrease reflects principally a reduction in revenue and an
increase in expenses in conjunction with the commencement of redevelopment
activities at certain properties, a reduction in revenue in conjunction with
the termination of a lease in the fourth quarter of 2007 which the Company
expects to replace on more favorable terms, a reduction in percentage rent,
and an increase in the provision for doubtful accounts for one tenant,
partially offset by scheduled increases in base rent.
Balance Sheet and Capital Position
Total assets were $1.65 billion at June 30, 2008 and $1.60 billion at
December 31, 2007. The Company had total debt outstanding of $934.6 million
at June 30, 2008 as compared to $851.5 million at December 31, 2007 and had
$49.9 million available under its secured and unsecured revolving credit
facilities and $7.2 million in available cash at June 30, 2008. The Company
implemented a new cash management system in the second quarter pursuant to
which the Company reduced its cash balance by approximately $13 million and
reduced its secured revolving credit facility by a corresponding amount. At
June 30, 2008, the Company's fixed rate debt was approximately 72% of its
total indebtedness.
The Company has a development pipeline of between $350 and $400 million
that it expects to begin to put into service over the next 8 to 17 months. It
expects to fund these activities with borrowings under its existing revolving
credit facility, its newly-completed secured revolving line of credit for
construction/development projects (see below), borrowings under
property-specific construction financing arrangements, excess proceeds from
certain financings and refinancings, property sales proceeds and/or funds from
joint ventures.
In June 2008, the Company entered into a $150 million master revolving
construction facility that the Company expects to use to fund a significant
amount of its development activities in 2008 and subsequent years. The Company
has also received a conditional commitment from another bank to provide
construction financing for a large single asset development project in
Pottsgrove, Pennsylvania. The Company has secured commitments from
substantially all banks involved in the syndication of this commitment and
expects to close that financing during the third quarter of 2008.
Larry Kreider, Cedar's Chief Financial Officer, noted, "The new
construction financing commitments which we have arranged, coupled with the
refinancing activity we have completed to date, as well as other existing
resources we have on hand, provide us with the capital to execute our
announced development and redevelopment plans. We believe our solid balance
sheet and prudent approach, along with the financial strength of our tenants,
place the Company in a strong position in the current economic environment."
Leasing Activity
In the second quarter of 2008, the Company signed 29 renewal leases
aggregating approximately 78,000 sq. ft. with an average increase in base
rents of 7.1%, and five new leases aggregating approximately 16,000 sq. ft.
with an average base rent of $19.43 per sq. ft. At different properties, the
Company had 15 terminated leases aggregating approximately 75,000 sq. ft. with
average base rent of $10.66 per sq. ft.
Second Quarter and Subsequent Acquisitions
On April 10, 2008, the Company acquired Stop & Shop Plaza in Bridgeport,
Connecticut, an approximate 55,000 sq. ft. property, for a purchase price of
approximately $10.9 million, including closing costs, financed by (1) the
assumption of an existing $7.0 million second mortgage bearing interest at
6.17% per annum and maturing in 2017, and (2) approximately $3.9 million from
the Company's secured revolving credit facility.
Joint Venture Activities
On April 23, 2008 the Company entered into a joint venture for the
construction and development of an estimated 137,000 sq. ft. shopping center
in Hamilton Township (Stroudsburg), Pennsylvania. Total project costs,
including the purchase of land parcels, are estimated at $37 million. The
Company is committed to paying a development fee of $500,000 and providing up
to $9.5 million of equity capital for a 60% interest in the joint venture,
with a cumulative preferred rate of return of 9.25% per annum on its invested
funds. The Company's initial $5.6 million contribution to the joint venture
was funded from its existing secured revolving credit facility. The venture
had previously acquired the land parcels for this project at an aggregate cost
of approximately $15.4 million, incurring mortgage indebtedness of
approximately $10.8 million. Approximately $19.0 million remains available for
the project under an existing second mortgage construction/development loan in
the initial amount of $27.8 million.
Financial Guidance
The Company reiterated that for the full year 2008 it expects to report
FFO of $1.22 to $1.26 per share/OP Unit. The Company's guidance excludes any
impact on FFO from new or future development/redevelopment activities, new
acquisitions or dispositions or new joint venture arrangements of existing
properties. Should LIBOR continue at its current rate, the Company's FFO
could benefit by up to $0.02 per share/OP Unit over the remainder of the year.
Conversely, based on the expected contribution of properties to a second joint
venture with Homburg Invest Inc. in the fourth quarter of 2008, the Company
could incur a net reduction in FFO of approximately $0.01 to $0.02 per
share/OP Unit in 2008.
Supplemental Information Package
The Company has issued "Supplemental Financial Information" for the period
ended June 30, 2008 and has filed such information today as an exhibit to Form
8-K, which will also be available on the Company's website at
www.cedarshoppingcenters.com.
Reference to Form 10-Q
Interested parties are urged to review the Form 10-Q to be filed with the
Securities and Exchange Commission for the quarter ended June 30, 2008, when
available, for further details.
Investor Conference Call
The Company will host a conference call on Thursday, July 31, 2008, at
10:00 AM (EDT) to discuss the second quarter results. The U.S. dial-in number
to call for this teleconference is (888) 218-8172. The international dial-in
number is (913) 981-5580. A replay of the conference call will be available
from 2:30 PM (EDT) on August 1 through midnight (EDT) on August 15, 2008 by
using U.S. dial-in number (888) 203-1112 and entering the passcode 3380624
(international callers may use dial-in number (719) 457-0820 and use the same
passcode indicated for U.S. callers). The webcast of the conference call will
be available on the Company's website at www.cedarshoppingcenters.com and will
remain on the website for a limited time.
About Cedar Shopping Centers
Cedar Shopping Centers, Inc. is a fully-integrated real estate investment
trust which focuses primarily on ownership, operation, development and
redevelopment of supermarket-anchored shopping centers in nine mid-Atlantic
and New England states. The Company has realized significant growth in assets
and has completed a number of developments and redevelopments of retail
properties since its public offering in October 2003. The Company presently
owns and operates 119 properties aggregating 12 million square feet of gross
leasable area. The Company also owns a substantial pipeline of development
properties as well as approximately 382 acres of generally unimproved land
held primarily for ground-up development projects.
Forward-Looking Statements
Statements made or incorporated by reference in this press release include
certain "forward-looking statements". Such forward-looking statements include,
without limitation, statements containing the words "anticipates", "believes",
"expects", "intends", "future", and words of similar import which express the
Company's beliefs, expectations or intentions regarding future performance or
future events or trends. While forward-looking statements reflect good faith
beliefs, expectations or intentions, they are not guarantees of future
performance and involve known and unknown risks, uncertainties and other
factors, which may cause actual results, performance or achievements to differ
materially from anticipated future results, performance or achievements
expressed or implied by such forward-looking statements as a result of factors
outside of the Company's control. Certain factors that might cause such
differences include, but are not limited to, the following: real estate
investment considerations, such as the effect of economic and other conditions
in general and in the Company's market areas in particular; the financial
viability of the Company's tenants; the continuing availability of suitable
acquisitions, and development and redevelopment opportunities, on favorable
terms; the availability of equity and debt capital (including the availability
of construction financing) in the public and private markets; changes in
interest rates; the fact that returns from development, redevelopment and
acquisition activities may not be at expected levels or at expected times;
inherent risks in ongoing development and redevelopment projects including,
but not limited to, cost overruns resulting from weather delays, changes in
the nature and scope of development and redevelopment efforts, changes in
governmental regulations related thereto, and market factors involved in the
pricing of material and labor; the need to renew leases or re-let space upon
the expiration of current leases; and the financial flexibility to repay or
refinance debt obligations when due.
Non-GAAP Financial Measures -- FFO
Funds From Operations ("FFO") is a widely-recognized non-GAAP financial
measure for REITs that the Company believes, when considered with financial
statements determined in accordance with GAAP, is useful to investors in
understanding financial performance and providing a relevant basis for
comparison among REITs. In addition, FFO is useful to investors as 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 do other depreciable assets. Investors should review FFO, along
with GAAP net income, when trying to understand an equity REIT's operating
performance. The Company presents FFO because the Company considers it an
important supplemental measure of its operating performance and believes that
it is frequently used by securities analysts, investors and other interested
parties in the evaluation of REITs. Among other things, the Company uses FFO
or an adjusted FFO-based measure (1) as a criterion to determine
performance-based bonuses for members of senior management, (2) in performance
comparisons with other shopping center REITs, and (3) to measure compliance
with certain financial covenants under the terms of the Loan Agreement
relating to the Company's secured revolving credit facility.
The Company computes FFO in accordance with the "White Paper" on FFO
published by the National Association of Real Estate Investment Trusts
("NAREIT"), which defines FFO as net income applicable to common shareholders
(determined in accordance with GAAP), excluding gains or losses from debt
restructurings and sales of properties, plus real estate-related depreciation
and amortization, and after adjustments for partnerships and joint ventures
(which are computed to reflect FFO on the same basis).
FFO does not represent cash generated from operating activities and should
not be considered as an alternative to net income applicable to common
shareholders or to cash flow from operating activities. FFO is not indicative
of cash available to fund ongoing cash needs, including the ability to make
cash distributions. Although FFO is a measure used for comparability in
assessing the performance of REITs, as the NAREIT White Paper only provides
guidelines for computing FFO, the computation of FFO may vary from one company
to another.
The following table sets forth the Company's calculations of FFO for the
three and six months ended June 30, 2008 and 2007:
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
Net income applicable
to common
shareholders $1,224,000 $2,921,000 $4,336,000 $6,576,000
Add (deduct):
Real estate
depreciation and
amortization 13,939,0009,837,000 25,400,000 19,667,000
Limited partners'
interest 56,000 132,000 199,000 295,000
Minority interests in
consolidated joint
ventures482,000 300,0001,188,000 695,000
Minority interests'
share of FFO
applicable to
consolidated joint
ventures (1,417,000)(426,000) (3,198,000)(917,000)
Equity in income of
unconsolidated joint
venture(222,000)(157,000)(372,000)(313,000)
FFO from
unconsolidated joint
venture 355,000 234,000 581,000 468,000
Funds From Operations $14,417,000 $12,841,000 $28,134,000 $26,471,000
FFO per common share
(assuming conversion
of OP Units):
Basic $0.31$0.28$0.61$0.57
Diluted$0.31$0.28$0.61$0.57
Weighted average
number of common
shares:
Shares used in
determination of
basic earnings per
share 44,464,000 44,194,000 44,461,000 44,153,000
Additional shares
assuming conversion
of OP Units (basic) 2,029,0001,984,0002,030,0001,985,000
Shares used in
determination of
basic FFO per share46,493,000 46,178,000 46,491,000 46,138,000
Shares used in
determination of
diluted earnings per
share 44,466,000 44,198,000 44,462,000 44,158,000
Additional shares
assuming conversion
of OP Units (diluted) 2,029,0001,997,0002,030,0001,998,000
Shares used in
determination of
diluted FFO per share 46,495,000 46,195,000 46,492,000 46,156,000
CEDAR SHOPPING CENTERS, INC.
Consolidated Balance Sheets
June 30,December 31,
2008 2007
(unaudited)
Assets
Real estate:
Land $369,813,000 $315,599,000
Buildings and improvements 1,320,355,000 1,282,180,000
1,690,168,000 1,597,779,000
Less accumulated depreciation (125,023,000) (103,621,000)
Real estate, net 1,565,145,000 1,494,158,000
Investment in unconsolidated joint
venture 4,791,000 3,757,000
Cash and cash equivalents 7,203,00020,307,000
Restricted cash 19,508,00017,839,000
Rents and other receivables, net 6,920,000 7,640,000
Straight-line rents receivable12,927,00011,446,000
Other assets 6,472,000 9,778,000
Deferred charges, net 31,653,00030,059,000
Total assets$1,654,619,000$1,594,984,000
Liabilities and shareholders' equity
Mortgage loans payable $680,258,000 $661,074,000
Secured revolving credit facility254,390,000 190,440,000
Accounts payable and accrued expenses 23,412,00026,068,000
Unamortized intangible lease
liabilities 68,722,00071,157,000
Total liabilities1,026,782,000 948,739,000
Minority interests in consolidated
joint ventures 58,688,00062,402,000
Limited partners' interest in
Operating Partnership 24,414,00025,689,000
Shareholders' equity:
Preferred stock ($.01 par value,
$25.00 per share liquidation
value, 12,500,000 shares
authorized, 3,550,000 shares
issued and outstanding) 88,750,00088,750,000
Common stock ($.06 par value,
150,000,000 shares authorized
44,488,000 and 44,238,000 shares,
respectively, issued and
outstanding) 2,669,000 2,654,000
Treasury stock (719,000 and 616,000
shares, respectively, at cost) (9,240,000) (8,192,000)
Additional paid-in capital 575,136,000 572,392,000
Cumulative distributions in excess
of net income (113,185,000) (97,514,000)
Accumulated other comprehensive
income 605,00064,000
Total shareholders' equity 544,735,000 558,154,000
Total liabilities and shareholders'
equity $1,654,619,000$1,594,984,000
CEDAR SHOPPING CENTERS, INC.
Consolidated Statements of Income
(unaudited)
Three months endedSix months ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Rents$34,652,000 $30,015,000 $69,032,000 $58,579,000
Expense recoveries 8,088,0006,834,000 17,136,000 14,109,000
Other175,000 101,000 382,000 453,000
Total revenues 42,915,000 36,950,000 86,550,000 73,141,000
Expenses:
Operating,
maintenance
and management7,114,0005,690,000 15,324,000 12,767,000
Real estate and other
property-related
taxes 4,758,0003,623,0009,459,0007,200,000
General and
administrative2,323,0003,220,0004,514,0005,218,000
Depreciation and
amortization 14,007,0009,898,000 25,536,000 19,781,000
Total expenses 28,202,000 22,431,000 54,833,000 44,966,000
Operating income14,713,000 14,519,000 31,717,000 28,175,000
Non-operating income
and expense:
Interest expense,
including
amortization of
deferred financing
costs (11,279,000) (9,562,000) (22,663,000) (17,482,000)
Interest income 77,000 223,000 235,000 498,000
Equity in income of
unconsolidated joint
venture 222,000 157,000 372,000 313,000
Total non-operating
income and expense(10,980,000) (9,182,000) (22,056,000) (16,671,000)
Income before minority
and limited partners'
interests 3,733,0005,337,0009,661,000 11,504,000
Minority interests in
consolidated joint
ventures (482,000)(300,000) (1,188,000)(695,000)
Limited partners'
interest in Operating
Partnership (56,000)(132,000)(199,000)(295,000)
Net income 3,195,0004,905,0008,274,000 10,514,000
Preferred distribution
requirements (1,971,000) (1,984,000) (3,938,000) (3,938,000)
Net income applicable
to common
shareholders $1,224,000 $2,921,000 $4,336,000 $6,576,000
Per common share:
Basic $0.03$0.07$0.10$0.15
Diluted$0.03$0.07$0.10$0.15
Dividends to common
shareholders $10,003,000 $9,942,000 $20,007,000 $19,871,000
Per common share$0.225 $0.225 $0.450 $0.450
Weighted average
number of common
shares outstanding:
Basic 44,464,000 44,194,000 44,461,000 44,153,000
Diluted 44,466,000 44,198,000 44,462,000 44,158,000
CEDAR SHOPPING CENTERS, INC.
Consolidated Statements of Cash Flows
(unaudited)
Six months ended June 30,
2008 2007
Cash flow from operating activities:
Net income$8,274,000 $10,514,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Non-cash provisions:
Earnings in excess of distributions
of consolidated joint venture
minority interests 949,000 163,000
Equity in income of unconsolidated
joint venture (372,000) (313,000)
Distributions from unconsolidated
joint venture 434,000 265,000
Limited partners' interest in
Operating Partnership 199,000 295,000
Straight-line rents receivable(1,481,000) (1,806,000)
Depreciation and amortization 25,536,00019,781,000
Amortization of intangible lease
liabilities (6,904,000) (5,098,000)
Amortization relating to stock-based
compensation 1,341,000 1,154,000
Amortization of deferred financing
costs 799,000 729,000
Increases/decreases in operating
assets and liabilities:
Cash at consolidated joint ventures (266,000) 87,000
Rents and other receivables, net 720,000 (453,000)
Other267,000 (23,000)
Accounts payable and accrued
expenses (1,142,000) (395,000)
Net cash provided by operating
activities 28,354,00024,900,000
Cash flow from investing activities:
Expenditures for real estate and
improvements(50,439,000) (92,646,000)
Purchase of consolidated joint
venture minority interests (17,454,000)-
Investment in unconsolidated joint
venture (1,094,000) (8,000)
Construction escrows and other(1,299,000) (474,000)
Net cash (used in) investing
activities(70,286,000) (93,128,000)
Cash flow from financing activities:
Net advances from line of credit 63,950,00070,520,000
Proceeds from sales of common stock- 3,910,000
Redemption of Operating Partnership
Units (122,000)-
Proceeds from mortgage financings 27,562,00023,000,000
Mortgage repayments (40,058,000) (4,125,000)
Contribution from minority interest
partners, net 4,269,000 1,048,000
Distributions in excess of earnings
from consolidated joint venture
minority interests (27,000) -
Distributions to limited partners(913,000)(890,000)
Preferred distribution requirements(3,938,000) (3,938,000)
Distributions to common shareholders (20,007,000) (19,871,000)
Payments of deferred financing costs,
net (1,888,000) (1,053,000)
Net cash provided by financing
activities28,828,000 68,601,000
Net (decrease) increase in cash and
cash equivalents (13,104,000) 373,000
Cash and cash equivalents at
beginning of period 20,307,000 17,885,000
Cash and cash equivalents at end of
period $7,203,000 $18,258,000
SOURCE Cedar Shopping Centers, Inc.
