Cedar Shopping Centers, Inc. (CDR)

Q2 2010 Earnings Conference Call

July 29, 2010 9:00 AM ET


Brad Cohen – IR, ICR

Leo Ullman – Chairman, CEO & President

Larry Kreider – CFO

Nancy Mozzachio – VP, Leasing


Todd Thomas – KeyBanc Capital Markets

Jordan Sadler – KeyBanc Capital Markets

Stephen Swett – Morgan Keegan

RJ Milligan – Raymond James

Mark Lutenski – BMO Capital Markets

Lindsey Scroll (ph) – Bank of America Merrill Lynch



Good morning and welcome to the Cedar Shopping Centers Incorporated second quarter 2010 earnings conference call. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation.

It’s now my pleasure to turn the floor over to your host, Brad Cohen with ICR.

Brad Cohen

Thank you very much, operator. Good morning. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical facts may be deemed forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995.

Although the company believes that expectations reflecting any forward-looking statements are based upon reasonable assumptions, they are subject to various risks and uncertainties. The company can provide no assurance of expectations will be achieved and actual results may differ.

Many of the factors and risks that could cause actual results to differ materially from expectations are detailed in the company’s press release and that release was put out yesterday and from time-to-time in the company’s filings with the Securities and Exchange Commission. In the end, the company undertakes no obligation to revise or update any forward-looking statements reflected in or circumstances after the date of the company’s release.

It is now my pleasure to turn the call over to Mr. Leo Ullman, Chairman, Chief Executive Officer and President. Leo?

Leo Ullman

Thank you very much, Brad. It may that your disclaimer will be longer than the prepared comments today. Good morning everyone and thank you very much for joining us today on the Cedar Shopping Centers earnings conference call for the second quarter 2010 results. With me on the call today is Larry Kreider, our Chief Financial Officer. Other members of our team, including Tom Richey, President of our Development and Construction Division; Brenda Walker, our Chief Operating Officer; and Nancy Mozzachio, our Vice President of Leasing are also on the call and available to you.

Cedar’s story for the second quarter is that we continued to execute on our business plan, focusing on leasing, continuing to deleverage our balance sheet and maintaining our strong occupancy levels.

As to deleveraging and Larry will provide additional details, note that the draws under our principal credit facility are down to $59 million from $276 million in April 2009. We have more $100 million of availability and our debt represents 60% of our total capital at a time today when our stock is trading in our view at a low multiple versus a level of debt to total market capitalization of nearly 90% in March 2009. Both our revenues and NOI continued to grow and our occupancy at a level of 90% remained undiminished with noteworthy continued strength for our stabilized properties.

As for leasing and kudos around (ph) to Nancy Mozzachio and her leasing team for turning in another strong performance, we yet again showed remarkable increases in renewal rents and rents for new leases on vacated premises. We have also improved a number of internal operating factors during the quarter. We are establishing an enterprise risk management function that will identify and evaluate the impact and likelihood of risks to our business, which should enhance our ability to deal with any such risks.

We are in the process of expanding our offices and installing more efficient communication systems. While there are costs associated with such improvements, the investment is important in terms of effectively managing our growth.

We have considerably enhanced our construction and development accounting systems to integrate them with our other property accounting systems. We have continued to enhance our joint venture accounting and reporting and we have made considerable progress toward a (inaudible) office while further expanding our data room capacities. These initiatives primarily under Brenda Walker’s and Joel I. Yarmak’s supervision, are also important investments in the effectiveness and efficiency of our current and future operations.

With respect to our portfolio, we are continuing our program of recycling capital. To that end, we are negotiating arrangements for some further dispositions of Discount Drug Mart anchored properties in Ohio.

Our development under Tom Richey’s guidance while ramped down considerably from prior years, are evolving and we are seeing a number of new opportunities for smaller grocery anchored ground up developments with nice profit possibilities. Specifically we are making progress on the ground up development in Kutztown with a signed giant foods stores lease and preliminary site plan approvals. Also we received additional approvals for our (inaudible) property.

Lease up of our cross roads two and up in squares properties is ongoing reaching more than 75% and 89% respectively. We will acquire land and a building presently leased to the U.S. government adjacent to our existing land and building, also leased to the U.S. government, on U.S. route 1, which is Roosevelt Boulevard in Northeast Philadelphia PA. The properties together represent a potential development site of approximately 40 acres.

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