Notes to Consolidated Financial Statements
March 31, 2020
(unaudited)
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 March 31, 2020, the Company owned and managed a portfolio of 55 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 March 31, 2020, 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 March 31, 2020) 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 537,000 OP Units outstanding at March 31, 2020 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.
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
Principles of Consolidation/Basis of Preparation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by U.S. Generally Accepted Accounting Principles (“GAAP”) for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, all adjustments necessary for fair presentation (including normal recurring accruals) have been included. The financial statements are prepared on the accrual basis in accordance with 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. The unaudited consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
The unaudited 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 for which it is the primary beneficiary.
Supplemental Consolidated Statements of Cash Flows Information
|
|
Three months ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Supplemental disclosure of cash activities:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
5,653,000
|
|
|
$
|
5,745,000
|
|
Supplemental disclosure of non-cash activities:
|
|
|
|
|
|
|
|
|
Capitalization of interest and financing costs
|
|
|
593,000
|
|
|
|
258,000
|
|
Recognition of right-of-use assets and related lease liabilities
|
|
|
703,000
|
|
|
|
14,417,000
|
|
Recently Issued and Adopted Accounting Pronouncements
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 applies 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. During November 2018, the FASB issued ASU No. 2018-19, Codification Improvements
10
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
March 31, 2020
(unaudited)
to Topic 326, Financial Instruments - Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted in accordance with ASU No. 2016-02, Leases (Topic 842). The guidance requires 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 is also 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 is evaluating its election on a disaggregated basis, with such election applied consistently to leases with similar characteristics and similar circumstances. There were no lease concessions granted as a result of COVID-19 during the quarter ended March 31, 2020. The future impact of the Lease Modification Q&A is dependent upon the extent of lease concessions granted to tenants as a result of COVID-19 in future periods and the elections made by the Company at the time of entering into such concessions.
Note 3. Real Estate
Real Estate Held for Sale
As of March 31, 2020, Carll’s Corner, located in Bridgeton, New Jersey, Suffolk Plaza, located in Suffolk, Virginia, The Commons, located in Dubois Pennsylvania, and Metro Square, located in Owings Mills, Maryland, 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 three months ended March 31, 2020, included approximately $7.1 million of other income. Further, the Company classified this property as real estate held for sale during the first quarter of 2020.
During the quarter ended March 31, 2020, the Company recorded impairment charges of $7.5 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.
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 for properties in the process of being sold, (2) estimated sales prices, less costs to sell, based on discounted cash flow or income capitalization 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.
11
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
March 31, 2020
(unaudited)
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, 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 share-based 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 a similar term and maturity. As of March 31, 2020 and December 31, 2019, the fair value of the Company’s fixed rate mortgage loan payable, which was determined to be Level 3 within the valuation hierarchy, was $46.8 million and $46.6 million, respectively; the carrying value of such loan was $46.1 million and $46.4 million, respectively. As of March 31, 2020 and December 31, 2019, respectively, the aggregate fair values of the Company’s unsecured revolving credit facility and term loans approximated the carrying values. In addition, the fair value 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 March 31, 2020 and December 31, 2019, respectively.
The valuations of the assets and 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 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 March 31, 2020, 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. 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.
Valuations were prepared using internally-developed valuation models. These valuations are reviewed and approved, during each reporting period, by a diverse group of management, as deemed necessary, including personnel from the acquisition, accounting, finance, operations, development and leasing departments, and the valuations are updated as appropriate. In addition, the Company may engage third-party valuation experts to assist with the preparation of certain of its valuations.
12
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
March 31, 2020
(unaudited)
The following tables show the hierarchy for those assets measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019, respectively:
|
|
March 31, 2020
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Investments related to deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation liabilities (a)
|
|
$
|
655,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
655,000
|
|
Deferred compensation liabilities (b)
|
|
$
|
659,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
659,000
|
|
Interest rate swaps asset (a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps liability (b)
|
|
$
|
—
|
|
|
$
|
22,062,000
|
|
|
$
|
—
|
|
|
$
|
22,062,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Investments related to deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation liabilities (a)
|
|
$
|
823,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
823,000
|
|
Deferred compensation liabilities (b)
|
|
$
|
824,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
824,000
|
|
Interest rate swaps asset (a)
|
|
$
|
—
|
|
|
$
|
136,000
|
|
|
$
|
—
|
|
|
$
|
136,000
|
|
Interest rate swaps liability (b)
|
|
$
|
—
|
|
|
$
|
7,180,000
|
|
|
$
|
—
|
|
|
$
|
7,180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
As of March 31, 2020, real estate held for sale on the consolidated balance sheet consisted of (1) one retail property, totaling $2.0 million, which was determined to be Level 3 asset under the hierarchy, and was measured at fair value less cost to sell on a non-recurring basis using an income capitalization approach, consisting of a capitalization rate of 8.5%, (2) one retail property, totaling $5.6 million, which was determined to be Level 3 asset under the hierarchy, and was measured at fair value less cost to sell on a non-recurring basis using a discounted cash flow approach, consisting of a capitalization rate of 11.5% and a discount rate of 8.0%, (3) one property, totaling $4.2 million, which was determined to be Level 3 asset under the hierarchy, and was measured at fair value less cost to sell on a non-recurring basis using a discounted cash flow approach, consisting of a capitalization rate of 9.5% and a discount rate of 11.0%, and (4) the carrying value of a property which is below its fair value.
13
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
March 31, 2020
(unaudited)
Note 5. Mortgage Loans Payable and Unsecured Credit Facility
Debt and finance lease obligations are composed of the following at March 31, 2020:
|
|
|
|
March 31, 2020
|
|
|
|
|
|
|
|
|
|
Contractual
|
|
|
|
Maturity
|
|
Balance
|
|
|
interest rates
|
|
Description
|
|
dates
|
|
outstanding
|
|
|
weighted-average
|
|
Fixed-rate mortgage
|
|
Jun 2026
|
|
$
|
46,425,000
|
|
|
3.9%
|
|
Finance lease obligation
|
|
Sep 2050
|
|
|
5,656,000
|
|
|
5.3%
|
|
Unsecured credit facilities (a):
|
|
|
|
|
|
|
|
|
|
|
Variable-rate:
|
|
|
|
|
|
|
|
|
|
|
Revolving credit facility
|
|
Sep 2021
|
(b)
|
|
182,000,000
|
|
|
2.5%
|
|
Term loan
|
|
Sep 2022
|
|
|
50,000,000
|
|
|
2.6%
|
|
Fixed-rate (c):
|
|
|
|
|
|
|
|
|
|
|
Term loan
|
|
Feb 2021
|
|
|
75,000,000
|
|
|
3.7%
|
|
Term loan
|
|
Feb 2022
|
|
|
50,000,000
|
|
|
3.1%
|
|
Term loan
|
|
Sep 2022
|
|
|
50,000,000
|
|
|
3.3%
|
|
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%
|
|
|
|
|
|
|
709,081,000
|
|
|
3.3%
|
|
Unamortized issuance costs
|
|
|
|
|
(2,578,000
|
)
|
|
|
|
|
|
|
|
|
$
|
706,503,000
|
|
|
|
|
|
|
(a)
|
During the quarter ended March 31, 2020, the weighted average interest rate for the Company’s unsecured credit facilities increased 14 basis points (“bps”) (ranging from an increase of 10 bps to 15 bps for each individual borrowing) as a result of an increase in the Company’s leverage ratio.
|
|
(b)
|
The revolving credit facility is subject to a one-year extension at the Company’s option.
|
|
(c)
|
The interest rates on these term loans consist of the London Interbank Offered Rate (“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
The Company has a $300 million unsecured credit facility which, as amended and restated on September 8, 2017, consists of (1) a $250 million revolving credit facility, expiring on September 8, 2021, and (2) a $50 million term loan, expiring on September 8, 2022. The revolving credit facility may be extended, at the Company’s option, for an additional one-year period, subject to customary conditions. Under an accordion feature, the facility can be increased to $750 million, subject to customary conditions and lending commitments. Interest on borrowings under the revolving credit facility component can range from LIBOR plus 135 bps to 195 bps (150 bps at March 31, 2020) and interest on borrowings under the term loan component can range from LIBOR plus 130 to 190 bps (145 bps at March 31, 2020), each based on the Company’s leverage ratio. During the quarter ended March 31, 2020, the weighted average interest rate for the Company’s unsecured credit facilities increased 14 bps (ranging from an increase of 10 bps to 15 bps for each individual borrowing) as a result of an increase in the Company’s leverage ratio. Interest on borrowings under the unsecured credit facility and term loans are based on the Company’s leverage ratio.
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, as defined in the agreements. As of the date of filing this Quarterly Report on Form 10-Q, the Company had $176.9
14
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
March 31, 2020
(unaudited)
million outstanding and $31,000 available for additional borrowings under its revolving credit facility, and was is in compliance with all financial covenants. However, the COVID-19 pandemic may negatively impact the Company’s future ability to remain compliant with all financial covenants, including the ability to generate sufficient unencumbered property adjusted net operating income to support current borrowings.
Derivative Financial Instruments
The fair values of the interest rate swaps applicable to the unsecured term loans discussed above are included in other assets and deferred charges, net, and accounts payable and accrued liabilities on the consolidated balance sheet at March 31, 2020. 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), 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 $6.9 million of accumulated other comprehensive loss will be reclassified as a decrease to earnings within the next twelve months.
The following is a summary of the derivative financial instruments held by the Company at March 31, 2020 and December 31, 2019:
March 31, 2020
|
Designation/
|
|
|
|
|
|
|
|
Fair
|
|
|
Maturity
|
|
Balance sheet
|
Cash flow
|
|
Derivative
|
|
Count
|
|
|
value
|
|
|
dates
|
|
location
|
Qualifying
|
|
Interest rate swaps
|
|
|
7
|
|
|
$
|
22,062,000
|
|
|
2020-2025
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
Designation/
|
|
|
|
|
|
|
|
Fair
|
|
|
Maturity
|
|
Balance sheet
|
Cash flow
|
|
Derivative
|
|
Count
|
|
|
value
|
|
|
dates
|
|
location
|
Qualifying
|
|
Interest rate swaps
|
|
|
2
|
|
|
$
|
136,000
|
|
|
2020-2023
|
|
Other assets and deferred charges, net
|
Qualifying
|
|
Interest rate swaps
|
|
|
6
|
|
|
$
|
7,180,000
|
|
|
2021-2025
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notional values of the interest rate swaps held by the Company at March 31, 2020 and December 31, 2019 were $425.0 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 for the three months ended March 31, 2020 and 2019, respectively:
|
|
|
|
(Loss) gain recognized in other
|
|
|
|
|
|
comprehensive (loss) income
|
|
|
|
|
|
(effective portion)
|
|
Designation/
|
|
|
|
Three months ended March 31,
|
|
Cash flow
|
|
Derivative
|
|
2020
|
|
|
2019
|
|
Qualifying
|
|
Interest rate swaps
|
|
$
|
(15,363,000
|
)
|
|
$
|
(4,877,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) recognized in other
|
|
|
|
|
|
comprehensive (loss) income
|
|
|
|
|
|
reclassified into earnings (effective portion)
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
Classification
|
|
2020
|
|
|
2019
|
|
|
|
Continuing Operations
|
|
$
|
(349,000
|
)
|
|
$
|
565,000
|
|
As of March 31, 2020 the Company believes it has no significant risk associated with non-performance of the financial institutions which are the counterparties to its derivative contracts.
15
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
March 31, 2020
(unaudited)
Note 6. 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.
The Company is the lessee under several ground lease and its executive office lease agreements. As of March 31, 2020, the Company’s weighted average remaining lease term is approximately 31.1 years and the weighted average discount rate used to calculate the Company’s lease liability is approximately 5.7%. Rent expense under the Company’s ground lease and executive office lease agreements was approximately $0.4 million and $0.4 million for the three months ended March 31, 2020 and 2019, respectively.
During the first quarter of 2020, COVID-19 began spreading globally, with the outbreak being classified as a pandemic by the World Health Organization on March 11, 2020. The Company currently faces significant risks and uncertainties related to the adverse effect of the COVID-19 pandemic, which has created significant economic uncertainty and volatility. Certain tenants have announced temporary closures of their stores and have requested rent deferrals or forgiveness during this pandemic. COVID-19 could have a material and adverse effect on the Company’s financial condition, results of operations and cash flow which could result in (1) the Company’s tenants being unable to fully meet their obligations and to seek modification of their obligations, resulting in increases in uncollectible rents and a reduction in rental income, (2) difficulties in the Company’s future compliance with financial covenants in regards to its unsecured credit facilities, and (3) the recognition of impairments charges of the Company’s real estate.
The Company’s financial results were not significantly impacted by the COVID-19 pandemic for the quarter ended March 31, 2020. The Company collected approximately 70% of April contractual base rents and monthly tenant reimbursements. The Company currently remains in active discussions and negotiations with its impacted tenants and anticipates 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 nature and financial impact of such rent relief is currently unknown as negotiations are in progress. The extent to which COVID-19 impacts the Company’s business, operations and financial results will depend on numerous evolving factors that the Company is not able to predict at this time.
Note 7. Shareholders’ Equity
Preferred Stock
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
|
|
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
|
|
16
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
March 31, 2020
(unaudited)
Dividends
The following table provides a summary of dividends declared and paid per share:
|
|
Three months ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Common stock
|
|
$
|
0.050
|
|
|
$
|
0.050
|
|
7.25% Series B Preferred Stock
|
|
$
|
0.453
|
|
|
$
|
0.453
|
|
6.50% Series C Preferred Stock
|
|
$
|
0.406
|
|
|
$
|
0.406
|
|
On April 15, 2020, the Company’s Board of Directors declared a dividend of $0.01 per share with respect to its common stock. At the same time, the Board declared dividends 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 May 20, 2020 to shareholders of record on May 8, 2020.
Note 8. Revenues
Rental revenues for the three months ended March 31, 2020 and 2019, respectively, comprise the following:
|
|
Three months ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Base rents
|
|
$
|
25,762,000
|
|
|
$
|
26,401,000
|
|
Expense recoveries
|
|
|
8,555,000
|
|
|
|
9,194,000
|
|
Percentage rent
|
|
|
296,000
|
|
|
|
182,000
|
|
Straight-line rents
|
|
|
43,000
|
|
|
|
224,000
|
|
Amortization of intangible lease liabilities, net
|
|
|
459,000
|
|
|
|
591,000
|
|
Total rents
|
|
$
|
35,115,000
|
|
|
$
|
36,592,000
|
|
|
|
|
|
|
|
|
|
|
Note 9. Share-Based Compensation
The following tables set forth certain share-based compensation information for the three months ended March 31, 2020 and 2019, respectively:
|
|
Three months ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Expense relating to share/unit grants
|
|
$
|
1,077,000
|
|
|
$
|
1,097,000
|
|
Amounts capitalized
|
|
|
(63,000
|
)
|
|
|
(82,000
|
)
|
Total charged to operations
|
|
$
|
1,014,000
|
|
|
$
|
1,015,000
|
|
|
|
|
|
|
|
|
|
|
During the three months ended March 31, 2020 there were 378,000 restricted shares issued, with a weighted average grant date fair value of $2.81 per share.
17
Cedar Realty Trust, Inc.
Notes to Consolidated Financial Statements
March 31, 2020
(unaudited)
Note 10. 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 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 the three months ended March 31, 2020 and 2019, the Company had 2.9 million and 2.8 million, respectively, of weighted average unvested restricted shares outstanding that were participating securities. The following table provides a reconciliation of the numerator and denominator of the EPS calculations for the three months ended March 31, 2020 and 2019:
|
|
Three months ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Numerator
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(2,098,000
|
)
|
|
$
|
2,989,000
|
|
Preferred stock dividends
|
|
|
(2,688,000
|
)
|
|
|
(2,688,000
|
)
|
Net (income) attributable to noncontrolling interests
|
|
|
(148,000
|
)
|
|
|
(107,000
|
)
|
Net earnings allocated to unvested shares
|
|
|
(154,000
|
)
|
|
|
(144,000
|
)
|
Net (loss) income attributable to vested common shares
|
|
$
|
(5,088,000
|
)
|
|
$
|
50,000
|
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average number of vested common shares outstanding, basic and diluted
|
|
|
86,370,000
|
|
|
|
86,580,000
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per common share attributable to common shareholders, basic and diluted
|
|
$
|
(0.06
|
)
|
|
$
|
0.00
|
|
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 the three months ended March 31, 2020 and 2019, no restricted stock units (“RSU’s”) would have been issuable under the Company’s President and CEO market performance-based equity award had the measurement period ended on March 31, 2020, and 2019, respectively; therefore this market performance-based equity award had no impact in calculation diluted EPS. Net income/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 dilutive effect had such amounts been included. The weighted average number of OP Units outstanding were 537,000 and 553,000 for the three months ended March 31, 2020 and 2019, respectively.
Note 11. Subsequent Events
In determining subsequent events, management reviewed all activity from April 1, 2020 through the date of filing this Quarterly Report on Form 10-Q. Other than those events disclosed in this report, there were no other events or transactions that occurred that would require adjustment to, or disclosure in, the Company’s consolidated financial statements.
18