Cedar Realty Trust, Inc. (NYSE:CDR) Q4 2018 Earnings Conference Call Transcript

Feb 07, 2019 • 05:00 pm ET


Cedar Realty Trust, Inc. (NYSE:CDR) Q4 2018 Earnings Conference Call Transcript


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Greetings and welcome to the Cedar Realty Trust Fourth Quarter 2018 Earnings Conference Call.

(Operator Instructions)

I would now like to turn the call over to your host Nicholas Partenza. Thank you. You may begin.

Nicholas Partenza

Good evening, and thank you for joining us for the fourth Quarter 2018 Cedar Realty Trust earnings conference call. Participating in today's call will be Bruce Schanzer, Chief Executive Officer; Robin Zeigler, Chief Operating Officer; and Philip Mays, Chief Financial Officer.

Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements, and actual results may differ materially from those indicated by such forward-looking statements. These statements are subject to numerous risks and uncertainties, including those disclosed in the Company's most recent Form 10-K for the year ended 2017, as it may be updated or supplemented by our subsequently filed quarterly reports on Form 10-Q and other periodic filings with the SEC. As a reminder, the forward-looking statements speak only as of the date of this call, February 7, 2019, and the Company undertakes no duty to update them.

During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Cedar's earnings press release and supplemental financial information posted on its website for a reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

With that, I will now turn the call over to Bruce Schanzer.

Bruce J. Schanzer

Thanks, Nick. Good evening, and welcome to the fourth Quarter 2018 earnings call for Cedar Realty Trust. Before beginning with my prepared remarks, I want to sincerely thank my senior executive colleagues who I'm -- whom I refer to as my kitchen cabinet, as well as all the members of team Cedar for their commitments to collaboration, congeniality and everyday excellence.

There was a famous aphorism ascribed to the economist John Maynard Keynes that states, the market can remain irrational longer than most investors can remain solvent. I was reminded of the same towards the end of this past December. On Monday, December 17th, we came to terms with a buyer for one of our bottom half assets. It was an approximately $10 million sale priced at a cap rate below 7%. Keep in mind, the consensus net asset value or NAV for Cedar of approximately $6.15 per share for our entire portfolio, utilizes a 7% cap rate which necessarily means that analysts in arriving at a cap rate for our portfolio, are using a cap rate above 7% for our bottom half assets.

On that day, December 17th, after weeks of downward pressure on our share price, we fell over 12% in a single day drifting down to a low of $2.73 per share in the days that followed. This share price level implied a cap rate for our entire portfolio of well over 9%. We were literally selling for more than a 50% discount to our consensus NAV. Equipped with the real-time market color