Cedar Shopping Centers' CEO Discusses Q3 2011 Results - Earnings Call Transcript

Nov. 9.11 | About: Cedar Realty (CDR)

Cedar Shopping Centers, Inc. (NYSE:CDR)

Q3 2011 Earnings Call

November 09, 2011 05:00 pm ET

Executives

Brad Cohen - ICR

Bruce Schanzer - President & CEO

Phil Mays - CFO

Brenda Walker - COO

Nancy Mozzachio - VP, Leasing

Analysts

Nathan Isbee - Stifel Nicolaus

Paul Adornato - BMO Capital Markets

Craig Schmidt - Bank of America Merrill Lynch

Rj Milligan - Raymond James

Todd Thomas - KeyBanc Capital Markets

Operator

Greetings, and welcome to the Cedar Realty Trust Incorporated third quarter 2011 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Brad Cohen of ICR. Thank you, Mr. Cohen. You may begin.

Brad Cohen

Thank you very much, operator. Good afternoon. At this time, management would like me to inform you that certain statements made during the call, which are not historical facts, may be deemed forward-looking statements within the meaning of Section 27A of the Securities and Exchange Commission of 1933 and Section 21E of the Securities and 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 that expectations will be achieved and that actual results may or will differ.

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

It is now my pleasure to turn the call over to Mr. Bruce Schanzer, Chief Executive Officer and President. Bruce?

Bruce Schanzer

Thanks, Brad. Good afternoon and welcome to the third quarter 2011 earnings call what is now called Cedar Realty Trust. Our new company name and logo signal the commencement of Cedar’s transformation into what we expect will be a better performing shopping center REIT through many of the measures we will be detailing on this call.

The primary focus of today’s call in vision to reviewing our third quarter results will be an overview what we plan to proceed are in the coming quarters. Since arriving in the middle of June 2011, we have focused on developing a plan to position Cedar to deliver compelling results on a consistent basis. We understand that implementing such a plan will take time and great effort, but one thing we’ve come to recognize from the work put in thus far is that our company has a very motivated and talented team of professionals and an attractive core portfolio in the highly desirable Washington DC to Boston corridor that is reliable and defensive.

Accordingly we think our efforts in revitalizing this company will be very rewarding for Cedar’s shareholders. The team at Cedar has already started to reflect improvements in decision making and operations. Upon arriving we set out to visit our entire portfolio, create business plans for each of our assets and meet with our major tenants.

This exercise in turn allowed us to develop multi-year asset-by-assets projections which we have incorporated into what we expect will be a more reliable corporate model. Having completed this process, we are now much better positioned to anticipate problems, improve transparency and make decisions that create long-term value.

In terms of operation, we have endeavored to make improvements on many fronts, too many to get into on this call. One that might be worth highlighting is that we have increased our focus on small shop leasing which is an area where there’s significant room for improvement. I expect to report increases in our small shop occupancy in the coming quarters.

A distinct takeaway for setting our company and its assets is that Cedar has remarkably high quality portfolio of primarily supermarket-anchored shopping centers with a very attractive geographic footprint. However, our portfolio is also cluttered with numerous and varied non-core assets which we value in the (inaudible) at approximately $150 million.

In considering these non-core assets, in the context that our high leverage which on a debt-to-EBITDA basis was 9.2 times when we started here and now hovers at around nine times. We concluded that the optimal strategy for the company would be to divest these non-core assets, many of which happens to be very low yielding and use the proceeds to reduce our leverage. When the execution of this strategy is completed over what we expect to be in the next 18 to 24 months, Cedar will have considerably less leverage, a later maturity schedule and improved debt service coverage, all achieved without a significant diminution in our earnings.

As significantly, we will have greater operational focus since what we remain will be an uncluttered portfolio of primarily grocery-anchored shopping centers straddling the Washington D.C. to Boston corridor. In addition, our demographics and operating metrics will have been meaningfully improved within the remaining portfolio.

We’re excited about this strategy and as will be discussed in greater detail after Phil’s comments, it is already very much underway. However, before getting into too much detail, we would like to take a few minutes to review our third quarter results and discuss some of our accomplishments from a capital structure perspective. With that I give you Phil Mays

Phil Mays

Thank Bruce. Good afternoon everyone. On this call, I am going to highlight the financial results for the third quarter and then spend a few minutes talking about progress on our $300 million credit facility and a couple of recently completed debt refinancing. First starting with operating results. Recurring FFO was $0.12 per diluted share for the third quarter compared to $0.14 per diluted share for the prior year.

The decrease in the current FFO was due equally to that acquisition piece from our Cedar/RioCan JV and loss rent from the IRS vacating two properties in Philadelphia. Last quarter, we divested our interest in one of these properties and we are working with lender to commit our remaining property and resolve this matter by a year-end or early next year.

On the leasing front we continue to achieve consistent positive results. During the quarter, we executed renewals for 203,000 square feet at 5.1% increase on a cash basis. And new leases for 183,000 square feet at a weighted average rent of about $14 per square feet. This represents an increase of $2.5 above our consolidated portfolios weighted average in place rent.

Our leasing activity for the last couple quarters has now increased our total operating portfolio occupancy to 91.4% and our same center occupancy to 93.9%, a 90 and 70 basis points respectively over the prior year. As evidence of this leasing activity and occupancy gains, same center NOI for the current quarter increased 1.8% excluding redevelopment properties and 3.1% including redevelopment properties. The growth in redevelopment was driven by lease of Town Square Center which is 95% occupied.

We are discussing a lot of activity and changes on this call, and I hope that the very consistent results of our same center properties are not overlooked.

Now focusing on the balance sheet, we began the process of obtaining a new $300 million secured credit facility to combine and replace our existing $185 million stabilized facility and $150 million development facility. We are pleased to report that we have already received bank commitments for the full $300 million from existing lenders that have decided to continue their support and commitment to the company.

The new facility will consist of a three-year $225 revolver and a four-year $75 million term loan that will both have one-year extension options and bear interest at LIBOR plus a spread ranging from 200 to 300 basis points determine by our leverage ratio.

The spread will be approximately 275 basis points based on our current level. Of course, this facility is subject to completion of loan documents and customary closing conditions, but we are optimistic about closing it prior to year-end.

Additionally, we extended our Shore Mall financing for one year at the existing terms. The Shore Mall is one of the properties held for sale and its loan is pre payable at any time without penalty.

We also amended and extended our financing for Upland Square. The new Cedar facility has about $54 million outstanding but provides up to $71 million of availability at LIBOR plus 275 basis points. Although this property now almost 93% leased, we still have some small subspace to sell and entitlement for approximately an additional 80,000 square feet. But we will not start any expansion without planned leases, this facility gives us the time and the flexibility to expand the centers especially as they’re completed in the next year.

While we are just taking the first step towards repairing the balance sheet, these financings along with the other matters being discussed today do lay the ground work to reduce our leverage and establish a well added and manageable debt maturity profile.

Finally, I would like to briefly note our revised supplement for today. On our last call, I stated we would start to provide a revised supplement by the time we reported year-end results. However, given the changes being discussed today, we thought it was important to company this quarter’s call with a more thorough and transparent supplement.

Just as we are simplifying our business, I think you will find a new supplement, is more straightforward and less cluttered. In general, the new supplement provides data in three groupings. The first presents information about Cedar’s consolidated portfolio on a clean standalone basis. The second provides details about the Cedar/RioCan JV, and the last one details the properties that we have designated for sale. I am sure there are some additional improvements that we can and will make over time but I hope that after reviewing it, you will agree that we've made significant improvements and started closures. And with that, I will turn the call back to Bruce.

Bruce Schanzer

Thanks Phil. Our near-term strategic plan contemplates two essential elements. First, we intend to streamline our portfolio in order to improve our property type and geographic focus by selling all our non-core assets. We feel the streamlining will enhance our operations since we will be managing fewer sensors in a narrower and more attractive geographic footprint with a greater focus on maximizing the value and improving the cash flow of these assets.

In addition, we will be improving our portfolio metrics through this process. Second, we will be reducing leverage. One of the elegant elements of our plan in my opinion is that many of the assets which are non-core strategically also are low yielding. When this process is completed, we expect to have less leverage, greater financial flexibility and a very manageable debt maturity schedule, all without suffering a meaningful reduction in earnings.

We have identified 50 assets, including 10 land parcels having an aggregate pro rata value, net of closing costs of approximately $150 million that we intend to sell or divest. Our plan is for all of the net proceeds to be used to reduce indebtedness. Many of these dispositions are underway with 30 properties representing approximately $90 million in value either under contract or [teed-up] to be return to a lender. We currently expect the balance of these dispositions to be completed within the next 18 to 24 months or hopefully sooner.

Notably at the conclusion of this process, we expected to be relatively modest reduction in FFO since many of these assets are low yielding and the interest savings largely offset by $7 million to $8 million in loss NOI. Also, we anticipate we will have reduced our debt to EBITDA ratio from roughly 9.2 times when we arrived at Cedar last quarter to less than eight times while reducing our FFO by roughly $2 million to $3 million.

The assets we intend to divest which are listed on pages 26 and 27 of our supplemental include our 12 discount marts in Ohio, 11 single-tenant net lease properties, three enclosed malls, the remaining IRS building in Philadelphia, six unanchored strip centers, seven of the property in Homburg joint venture and 10 land parcels that were being held for development. In total, we will be selling slightly less than 2.8 million square feet of GLA and we’ll be completely exiting the Michigan and Ohio markets.

I will now take a few minutes to walk you through those properties in greater detail. You might want to open this supplemental to page 26 to follow along. Regarding the Ohio discount drug mart portfolio, this divesture has been previously disclosed, is now under contract and is going through the loan assumption process. We hope to have this divesture largely completed by the end of Q1 2012. These are non-core assets from both a geographic and asset perspective.

Our 11 single-tenant net-lease properties are similarly non-core from a property type perspective with eight of those assets also non-core geographically as they’re scattered around Ohio. We have started the process of disposing of these assets with nine of the 11 now under contract.

Turning to the three enclosed malls Cedar owns, Shore Mall, Columbia Mall and The Point at Carlisle, each of these is cash flowing though generally low yielding and was acquired with the thought that it would be a good candidate for de-malling in a similar to our successful Camp Hill project. We have concluded that these malls will not make for suitable Cedar re-development and have therefore started the process of marketing these assets for sale.

The next category, what we described as other non-core assets in our supplemental includes Roosevelt II, our Philadelphia development property previously occupied by the IRS, which we are returning to the vendor and six non-core strip centers of which two are already under contract. For different reasons we have concluded that none of these assets stay into Cedar’s future plans.

As was previously disclosed, the nine asset Homburg joint venture is being unwound pursuant to a by sell provision exercised by Homburg. Since arriving, we negotiated the contract and have endeavored to drive the process forward. The deal currently contemplates Homburg acquiring seven assets for a sub 7% cap rate. We think this pricing is instructive considering that the properties in the Homburg JV are our typical shopping center assets. Cedar is acquiring two centers from the JV at a more attractive cap rate. Notably, with the exception of unwinding the Homburg JV, we are not selling any of our supermarket anchored shopping centers as part of this divestiture process.

The last category of the asset being divested is our land. Over years Cedar has acquired a number of land parcels for development totaling in the aggregate 148 acres. We have concluded that we will not be pursuing any of the development projects that had been contemplated for these assets.

And focusing since our arrival on our cost of capital, as well as likely market pricing for these assets on a stabilized basis, we have concluded that it would injudicious use of capital to continue to pursue these investments. Notably, these are good assets to divest, since they don’t offer any yield and are unlikely to otherwise be a source of value in the near term.

The challenge with land is that the market for land divestitures is relatively weak, so unfortunately, these dispositions will not occur as quickly as the improved properties. Upon completion of all these divestitures we’ll have significantly streamlined our company in a manner that will resolve in a more understandable and more attractive portfolio of 92 primarily supermarket anchored shopping centers travelling the Washington DC to Boston corridor of which 70 will be owned on a consolidated basis and 22 will be 20% owned through the RioCan joint venture.

Focusing for a moment on our 70 consolidated ventures, our three mile per capita income improved to over $61,000 per year and our three mile population density increases to 82,000 people. This places us well above national averages. Additionally, those average are pro-forma average occupancy and our average base rent will have improved from our prior portfolio to our streamlined 70 consolidated centers by over 200 basis points as a result of these divestitures.

Lastly, nearly 77% of our centers will now be supermarket anchored, second most among all shopping center reads. Although this plan is underway and we are confident that it will be executed, I would be remiss if I didn’t a word caution at the timing of pricing of these dispositions is not set in stone. Moreover, I am certain that there will be challenges along the way in getting everything sold and closed. That said, we know it is the right decision to pursue this strategy as we build value for our stakeholders.

That leaves us with the last topic on our agenda, namely our dividend. We see our partnership with our shareholders to include a meaningful dividend to the extent supported by our free cash flow. That said, after a lot of thought we have made a decision to reduce our dividend in order to maximize our financial flexibility at this important juncture.

Our intention is to position the company in a manner that enables us to start to increase the dividend and to provide a consistent and growing dividend over time. Accordingly although the board will review the dividend policy quarterly, the board has decided to establish a target dividend in 2012 of $0.20 per share. To reiterate, we have complete confidence in our core shopping center platform and this dividend reduction is not a result of any distress. Rather it is a prudent capital decision considering our near-term strategy and long-term objectives.

Let me conclude with our vision for this company in the years ahead. I know it sounds audacious considering Cedar’s performance in the past, but we envision Cedar becoming a strong performing shopping center REIT. We want to be recognized not only for having well managed and defensive assets that offer consistent and reliable performance, but also as a company that judiciously utilizes its capital in a manner that adds to shareholder value.

We know it will take time, but more than our name has changed here at Cedar and we look forward to rewarding you for your patience and confidence as we evidence our renewed commitment to excellence.

With that I will open the call to questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question is coming from the line of Mr. Nathan Isbee with Stifel Nicolaus.

Nathan Isbee - Stifel Nicolaus

Just focusing on the asset sales, if you can talk a little bit more both about the Discount Drug Mart and may be the Humburg, both of them have some extenuating circumstances facing at the Discount Drug Mart and I would say in the 10-Q last quarter you had mentioned something about loan assumptions being denied by the banks in the Humburg bankruptcy.

Bruce Schanzer

I will handle some of this and I will ask Brenda Walker to handle some of this. Obviously these are both transactions that have required us to managing like a lot of asset disposition processes do. On the Humburg side, it’s not a secret that the Humburg organization in Canada has pursued a reorganization effort. From our perspective that hasn’t really impacted us too much, other than the fact that it just required us to be a little bit more involved in managing the process of disposing off these assets. I don't want to get into too much more detail on the Humburg front. We are feeling good about the process right now, but again we just need to stay on it and drive it to a successful conclusion and when it does conclude, we will be very forthcoming with more information on the Humburg front. Brenda I don’t know if you may want to try a little bit of an update on the loan assumption side for the Discount Drug Mart?

Brenda Walker

On the Discount Drug Mart side of the assumptions process, we have gotten through the servicers and have received letters approving the assumptions by the buyers. There are a few tweaks that the buyers would like to make to those assumption letters. I have indications that these tweaks are not substantive issues. We are now working on purchase of the sales document as well as loan assumption documents. So things are moving along and at pace.

Nathan Isbee - Stifel Nicolaus

And if you can just maybe and Brenda I don’t know if you are the one to address this. From my recollection there is five vacant supermarket spaces in your portfolio. Can you just about what progress you might have made in terms of finding replacements and what’s been going on at the small shops business centers?

Nancy Mozzachio

I can give you some updates with regard to closed but (inaudible) location up in Connecticut. We are in very serious negotiations I guess in the final stages of negotiation with a major grocery store, tremendous credit to replace the entire square footage and we are very hopeful given the information that we have today that this transaction will be completed I’d say first quarter of 2012 with construction commencing probably by the end of first quarter 2012.

With regard to Kempsville Virginia where we also have a closed supervalue contact. We have small shop there, we have had no reduction in occupancy there and we’ve been renewing tenants, but do have interest from a grocer to take the entire square footage of that space and probably some of the ancillary square footage. We do have flexibility in those leases where tenants are situated that we can relocate them throughout the rest of the shopping center.

So we have had a lot of tremendous food fortune in having good conversations with retailers that look like they will commit in some of our closed, but paying grocery spaces.

Nathan Isbee - Stifel Nicolaus

And then just focusing back on the asset sales for a minute. Throughout this list here, we’ve had a 150 million. Can you talk about may be what’s beyond that in terms of the core portfolio core (inaudible) portfolio that you might be looking to divest.

Bruce Schanzer

We’re not really looking to divest anything beyond that. I think that our core portfolio is going to consist of our 70 consolidated assets. We have a 20% interest in 22 assets in a joint venture with RioCan and our focus is going to be on maximizing the value of those assets or we don’t really have plans to divest the assets beyond that. Our plan is to really maximize shareholder value by working those assets.

Nathan Isbee - Stifel Nicolaus

So this is really all that you have that you’re looking to get rid off at this point?

Bruce Schanzer

Nat, if I can just finish it. We think about our leverage on a debt-to-EBITDA basis and so you know these are all the assets that you know are handsome assets from a cash flow perspective and we wouldn’t be able to reduce our leverage on a debt-to-EBITDA basis by selling those assets in particular and from a strategic perspective they make a lot of sense, they fit right into our footprint. You know there might be assets that we’re going to sell on a one-off basis, but I'm of the view that residual portfolio as being an attractive portfolio for us to manage.

Nathan Isbee - Stifel Nicolaus

Well that’s what I was referring to. I mean not so much on the deleveraging, just in terms of the 70 that are left. I mean I would assume that there’re some in there that don’t have the same growth profiles that you might be looking for going forward.

Bruce Schanzer

Right, but we will be much more surgical with how we approach that and so I think that while I can't tell you that we’re going to own all 70 of these assets five years from now. I can tell you that you know, we’re not at this point looking to divest any of them necessarily and so to really be much more of a one-off type of an exercise as opposed to how we approach the divestiture strategy that we’re talking about now.

Nathan Isbee - Stifel Nicolaus

Okay and then just one final question on that. The new leases that you signed, do you have a same space spread on that not just to your total portfolio

Phil Mays

Hey, Nat, this is Phil. On the new leases, we don’t have a same state comp on that. A lot of these assets were brought in the last few years and the way we currently have the data in our system, it doesn’t just make it conducive to providing that but it’s something we’re working on.

Operator

Thank you. Our next question is coming from the line of Mr. Paul Adornato with BMO Capital Markets. Your line is now open. You may proceed with your question.

Paul Adornato - BMO Capital Markets

Thanks, good afternoon. Obviously RioCan has been the very important capital and strategic partner over the last 18 months. I was wondering what their involvement will be in the company during this repositioning phase? Do you still anticipate making acquisitions, perhaps only managed acquisitions?

Bruce Schanzer

I think, there are, I guess, maybe, many parts what you said there. They are not going to be involved in the process that we just described with divesting assets. So I think that from that perspective, obviously that’s something in which we’re going alone. We’re continuing to operate the 22 assets we have with them plus they’ve been buying some assets, not in an joint venture that we’ve been helping them close and manage and lease and hopefully we will continue to do that. In terms of whether we make investments through them going forward, I think that, I don’t want to speak with them but my impression is that we’ve said that we found assets that may change considering our cost of capital to invest in. I think that RioCan will be happy to continue to invest with us. Obviously that’s something that you would have to check with [Edge] on China, his team on. But, again, we’ve a very good relationship with them. If we identify assets together that makes sense for us to invest and considering our cost of capital we might invest in them. But I think that’s right now at least, the focus of this organization is, and executing the plan that that we’re describing with you on the phone right now.

Paul Adornato - BMO Capital Markets

Okay. And is it possible that there might be some acquisitions during this period as well or will it be just be a dispositions that you have laid out?

Bruce Schanzer

Well, as I mentioned on the call, there are two acquisitions that we are making. We are acquiring two of the assets from the Homburg joint venture. So maybe 20% of those are going to be acquiring the 80% interest that Homburg go in. So we will be acquiring at least two assets at the time of that joint venture gets under way, which I would expect to be sometime in 2012.

Paul Adornato - BMO Capital Markets

Okay, and with respect to the use of proceeds, obviously deleveraging is very important and you’ve said what you intend to do. But you also mentioned that a potential Cap rate that might be indicative of the portfolio that would indicate probably a net asset value for Cedar, you know, some place far above where their stock is trading. And so, I was wondering if a share buyback could be in the cards over the next 18 months?

Bruce Schanzer

Yeah, once we execute this plan and our capital structure in a significantly better place, if we still had that opportunity, we might talk about it right now. That’s not something that we’re exploring. Right now, we are really focused on executing this plan and using the proceeds to reduce debt.

Operator

Thank you. Our next question is coming from the line of Mr. Craig Schmidt with Bank of America Merrill Lynch. Your line is open. You may proceed with your question.

Craig Schmidt - Bank of America Merrill Lynch

Thank you. I was wondering if you could give us some sense of where the CapEx may fall for the dispositions that you are targeting?

Phil Mays

Craig, you know, we are not really selling things that are conducive to evaluation on a cap rate basis other than the assets that we are selling to Homburg, since a lot of these things are land and malls that don’t really yield a lot. As I mentioned on the call, the effective yield on the overall disposition is going to be something around 5% just based on what we described just doing the math of $7 million to $8 million of lost NOI and roughly a $150 million of proceeds, but again net proceeds. But again that's just more of a yield than a cap rate. I mean these factors are really conducive to cap rate type valuation.

Craig Schmidt - Bank of America Merrill Lynch

Okay and then just as you are streamlining the geography, was there any consideration about disposing the more Central or Western Pennsylvania assets?

Bruce Schanzer

Yes. There definitely was, but again some of those were very good assets, and right now at least our focus is much more on honing our focus on our shopping center portfolio, from an asset type perspective and not as much trimming out certain shopping centers within the overall portfolio. So your point is fair and there's no question that the Western Pennsylvania assets could be ones that we take a hard look at once the dust settles on this divestiture program, but right now that's not what we are focusing on.

Operator

Thank you. Our next question is coming from the line of Mr. Rj Milligan with Raymond James. Your line is now open. You may proceed with your question.

Rj Milligan - Raymond James

Hi guys. most of my questions have been answered. I was wondering in the portfolio excluding the properties marked for dispositions what's the small shop occupancy?

Nancy Mozzachio

Well, we are about 84.3 in our small shop occupancy. Rj, its Nancy.

Rj Milligan - Raymond James

Okay and I guess how does that compare to, say, a year ago? I mean on the call you gave, I guess in your prepared remarks, you said that there was significant room for improvement. Is that from an occupancy perspective, is that a mix in terms of getting the right tenants and where do you see the room for improvement there.

Bruce Schanzer

The room for improvement is on the occupancy side. We see – that’s when you think about our overall portfolio being in the low 90’s one to the low 90’s then you think about our small shop space and this is already improvement over where its been, we’re saying that that’s really where there is room for improvement, obviously there is just driving occupancy there would clearly help our cash flow.

Rj Milligan - Raymond James

And I was wondering if you could give any color on the Board’s thought before we got here and to cut the dividend now versus may be two quarters ago when you guys came in or a quarter when you guys came in and any thoughts there?

Philip Mays

Hey Rj its Phil. I can’t really give you color on the Board’s thought before we got here, but you know once we got here really it wasn’t one thing these decisions typically aren’t -- it was a balance of several things. Looking in our fad, looking at our tax needs, the flexibility we needed during that time we executed this plan and as a result of all that we decided to set the target where it’s at.

Operator

(Operator Instructions) Ladies and gentlemen, our last question is coming from the line of Mr. Todd Thomas of KeyBanc Capital Markets. Your line is now open.

Todd Thomas - KeyBanc Capital Markets

I am here with Jordan Sadler as well. Bruce, just following up on that small shop leasing and the focus where you know that you expect to report increased occupancy in that segment; what are your plans for the improvements and what are you seeing today that’s giving you that confidence?

Bruce Schanzer

Well, it takes time, I am sorry I don’t if anybody on speaker; there is a little bit of an echo there. We’re already starting to make progress there and we’ve launched a number of initiatives that really aren’t worth not getting into in too much detail on this call to give us – that make us optimistic that there we’re going to see occupancy improved or continue to improve on the small shop front and you know the practical reality is that it just takes time between when we get from an LOI to a leased to when occupancy tick-up and so we have just based on the pipeline that we’re seeing a degree of confidence that we’re going to see improvement there.

Todd Thomas - KeyBanc Capital Markets

And then a question for Phil on the balance sheet; how much availability do you have on the lines today, I see that there’s $166 million outstanding with how much dry powder actual availability do you have on those lines that you could draw down on today?

Philip Mays

Yeah, I believe today its right around $80 million.

Todd Thomas - KeyBanc Capital Markets

And so, for the new $300 million facility, the $225 million revolver, you know much do you project at closing that you’ll have available with based on the collateral that will be securing the line?

Philip Mays

We’ll have to wait for all the new appraisals in order to come in, but it should be a similar borrowing base and we should be able to with the proceeds above and beyond that that’s repay increased availability by about 50. And I think -- and Todd I am looking at right here, I think our current availability is closer to 70.

Todd Thomas - KeyBanc Capital Markets

And then Bruce, a bigger picture of question I guess following up on Paul’s question, assuming the asset sales go as planned and you will down the portfolio to this new portfolio of core assets. What’s your revision or initial thoughts surrounding Cedar’s growth in the future?

Bruce Schanzer

I think that some of the answer to that question would be function of where our cost of capital settles out after we get through this whole process. But I think that broadly speaking what you’re going to see from us is a more disciplined approach to how we use our capital and a greater focus on enhancing the value of our assets and mining our existing portfolio for value creation of opportunities.

And so again, some of this will be a function of where our cost of capital settles out in terms of the extent to which we can identify acquisition opportunities that makes sense and when we think add shareholder value. But I think one characteristic is you’ll see our company is a much disciplined approach to how we use our capital and you’ll see us realistically mining our portfolio for a lot of the growth that hopefully you’ll see out of the company in the future.

Operator

Ladies and gentlemen, our final question is coming from the line of Mr. Nathan Isbee of Stifel Nicolaus. Your line is open. You may proceed with your question.

Nathan Isbee - Stifel Nicolaus

Just one quick follow-up, the development and redevelopment CapEx number have jumped quite a bit too about $13 million for the quarter; can you just give a little color what was behind that?

Philip Mays

Yeah Nathan, its Phil Mays. The majority of that was Trexlertown where we are building out for the signed giant lease there.

Operator

Ladies and gentlemen, we have reached the end of our question and answer session. I would like to turn the floor back to Mr. Schanzer for any closing remarks.

Bruce Schanzer

Thank you for joining us this evening and what we feel is an important call in the history of our company. We realize winning back the trust of the investor community is not accomplished in matter of days or weeks and it’s not achieved with a single earnings call. However, one thing I could tell you is that we expect the coming years to be very rewarding for our company and its stake holders. Have a good evening.

Operator

Ladies and gentlemen, this does conclude today’s conference call. You may disconnect your lines at this time. Thank you very much for your participation. Have a wonderful evening.

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