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Cedar Realty Trust: Preferred And Common Shares That Have Been Thrown Out With The Bathwater

Brant Munro, CFA profile picture
Brant Munro, CFA


  • CDR sits at a compelling valuation of ~1.84x 2019 YE FFO and at least 62% below NAV.
  • Preferred share issuances also offer attractive risk reward ratios with 13% yields.
  • CDR has a very stable tenant mix that should enable it to sail through the crisis and deliver strong returns to investors.


Cedar Realty Trust, Inc. (CDR) currently sits at a compelling valuation at a price of $0.85/share and ~1.84x 2019 YE FFO and has a 4% forward looking yield. However, not only are the common shares trading at a compelling valuation, but so are the Class B (NYSE:CDR.PB) and C (NYSE:CDR.PC) preferred shares which both have yields at ~13% and trade at $12.65 and $14 per share respectively. Each with $0.01 par value and a $25/share liquidation value. Both series are however currently callable at $25/share.

There are many babies that have been thrown out with the bathwater in the current market sentiment. One such investment class is shopping center REITs. Not that all are created alike but CDR is one that has been "punished" far more than necessary (as though it is going bankrupt) and the current valuation is at an attractive entry point.

ChartData by YCharts

The stock first started plummeting in 2019 for a few reasons that have been discussed in previous articles:

  • Leases renewed at flat or low leasing spreads to lock in the crucial anchor tenants.

Source: 2019 YE Supplemental Information

  • YoY decline in revenue (5%) and rising G&A (11%) even though at 2019 YE FFO excluding financing and preferred share redemption costs only fell 6%.

Revenues were lower primarily as a result of (1) $5.4 million relating to a dark anchor tenant terminating its lease prior to the contractual expiration in 2018 at West Bridgewater Plaza, (2) a decrease of $3.4 million in rental revenues and expense recoveries attributable to properties that were sold or held for sale in 2019 and 2018, (3) a decrease of $0.8 million in rental revenues and expense recoveries attributable to same-center properties which was driven by the adoption of the new lease accounting standard.

General and administrative costs

This article was written by

Brant Munro, CFA profile picture
I am always on the lookout for businesses that have a strong cash generating ability and a strong enough competitive advantage that I can be sure they will be around for the next decade, and at a price where I can be as sure as possible that I can achieve at least 15 percent annualized returns, or else companies whose price is deeply discounted from their asset base as long as its highly marketable. Im not one to shy away from takeover targets, provided the target still has a strong business that I would be okay with owning it even if the takeover did not go through. Since I began investing on my own 3 years ago I have achieved an annualized time weighted return of about 16 percent, and plan to continue to beat that hurdle as I learn more.

Analyst’s Disclosure: I am/we are long CDR.PB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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