Welcome to Fourth Quarter 2019 Cedar Realty Trust Earnings Conference Call. As a reminder this conference is being recorded. At this time, all audience lines have been placed on mute. We will conduct a question-and-answer session following the formal presentation. I will now turn the conference over to Nicholas Partenza, please proceed.

Good evening and thank you for joining us for the fourth quarter 2019 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 2018, as updated 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 6, 2020, 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 reconciliations 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.

Thanks Nick. Good evening and thank you all for participating in Cedar's fourth quarter 2019 earnings conference call. Joining me as always are my senior executive collegues and dialed in on the call as well our most of the members of team Cedar. I want to thank our board of directors and all team Cedar for their tireless efforts on behalf of the company and for consistently doing their work with collegiality, collaboration and everyday excellence. As a small retail REIT we have been buffeted by stiff capital market headwinds as reflected in our share price performance of late. As I've noted previously we have a tough time reconciling this trading level with both the intrinsic value of our real estate and with the progress we are making and executing our value-add renovation projects as well as our more ambitious urban mixed-use redevelopment projects. This cognitive dissonance has been exacerbated as we have seen a pickup in transaction activity in our footprint from our last earnings call and pretty solid visibility into the warranted cap rates for our assets. That said it continues to be a challenging operating environment with anchors at risk of vacating such as A.C. Moore vacating at two of our centers and with other anchors being open to vacating space relatively willingly such as what we’ve recently experienced with K-Mart at Valley Plaza and with shoppers at Metro Square. Greater detail on this is included in Phil's guidance comments. On top of the pressure from anchors the capital intensity of our asset type continues to drift up as we endeavor to maintain and hopefully grow occupancy and earnings in the phase of secular changes and challenges. This dynamic is not necessarily entirely unfavorable. For example, we agreed to an attractive lease termination payment at Metro Square…

Thanks Bruce. Good evening. The Cedar leasing team finished the year strong with 41 deals totaling 297,100 square feet at an average base rent of $15.08 per square foot bringing total leased occupancy up to 93.2%. This occupancy increase is 91 basis points above prior quarter and 220 basis points above the prior year. 28 renewals were executed this quarter at an average based rent of $15.84 per square foot with a spread of 5.9%. During the quarter we executed 12 comparable leases for which I would like to provide some detail. 6 comparable new leases were executed and historically difficult to lease spaces at an average base rent of $14.11 per square foot and a spread of 8.4%. Excluding grocery outlet a new junior anchor grocer at [Sweet Square] we executed an additional 5 new comparable leases at an average base rent of $11.37 per square foot and a spread of 20%. Despite the negative spread of the newly executed grocery outlet deal we are excited about the introduction of this new merchandising to [Sweet square] as the addition of a grocer positively impacts over all traffic at the center as well as its valuation. Grocery outlet will replace a currently vacant space and a tenant that was in arrears with a strong daily traffic driver. We expect this new tenancy in conjunction with existing LA Fitness will help catalyze renewed energy and tenant performance for this center. The two-Cedar development platforms the value add renovation platform and our mixed-use redevelopment platform continue to advance and execute exciting projects. The value added innovation pipeline currently includes Fishtown Crossing, Carmen's Plaza and Yorktown Plaza. Groundbreaking occurred at Fishtown crossing in Philadelphia in October 2019. The construction of a new small shop building is underway creating a home for Nifty Fifty…

Thanks Robin. On this call I will briefly highlight operating results and provide detail on our initial 2020 guidance. Starting with operating results. For the quarter operating FFO was $9.7 million or $0.11 per share and for the full year operating FFO $40.8 million or $0.45 per share. With regards to same property NOI growth for the year same property NOI increased 0.3% excluding redevelopment properties and decreased 0.3% when including those properties. The decrease relating to redevelopment properties was driven by intentional vacancy necessary to facilitate our urban mixed-use project at South Quarter Crossing slightly offset by lease up at Carmen's Plaza one of our value add renovations. Operating FFO and same property results are both consistent with our expectations and guidance discussed the last quarter. Moving to 2020 guidance. We are establishing an initial 2020 operating FFO guidance range of $0.49 to $0.51 per share. As detailed in our press release this guidance is based in part on the following. Same property NOI growth excluding redevelopments relatively flat. This reflects less than a full year of contractual rent from our two A.C. Moore locations given the uncertainty surrounding this tenant. While we are only excluding slightly more than $500,000 of contractual rent relating to this uncertainty due to the relatively small size of our same property pool this represents almost 1% of same property NOI. Next when redevelopments are included we expect same property NOI to decrease 1% to 2% driven by vacating tenants to facilitate our urban mix projects along with proactively recapturing the K-Mart space at Valley Plaza in early 2020 to facilitate a future value-add renovation. It also includes lease termination income from shoppers food warehouse for the early termination of its lease at Metro Square net a forgone rental payments of approximately $0.07 per share and a decrease in amortization income from intangible lease liabilities of approximately $0.02 per share. And finally dispositions of approximately $15 million to $25 million primarily in the second half of 2020. And with that I will open the call to questions.

Thank you. At this time we'll be conducting a question-and-answer session. [Operator Instructions] Your first question comes from the line of R.J. Milligan with Baird. Please proceed with your question.

Thanks and good evening guys. Phil question on the A.C. Moore locations you mentioned 500k of rent being excluded. So that is a partial year is that correct?

Yes. Just you've probably read some of the news related to A.C. Moore but giving all the uncertainty around that tenet we have them in generally for the first quarter and not for the last three quarters. It's a little more than 500,000 it's close to 600,000 for the year.

So that if we look into 2021 assuming that those properties aren't retainated would that be that 1% of NOI or would be that would it be slightly higher than that?

Yes. So the same store pool excluding redevelopment for on an annual basis is about $70 million at this point because our redevelopment pools grown so 700,000 hundred bits are 1% of NOI for partially you're there it's about 600 for a full year it'd be 800. So either waves approximately 1% of same store NOI.

Okay. That's helpful. And then for the properties listed as held for sale that are expected in the back half of the year, can you talk about the decision to list those for sale and characteristics of those properties that are driving to make that decision?

It's actually -- it's a pretty straightforward analytical process. Ultimately until we need the capital more generally for redevelopment and things of that nature largely the assets that you're seeing [indiscernible] are assets that from an asset management perspective we feel have ripened and are optimally situated to be sold and I would tell you that that's just a good way of thinking about virtually everything that you see coming out in the held for sell bucket. I think as we start executing on our redevelopment as we've spoken about our thoughts are that one way that they might be permanent capitalizes with a capital that's embedded in our lower quartile assets but at this juncture assets that we're selling are more attributable to that at first rational which are assets that have ripened and where they're in a good situation to be sold now as opposed to sitting on them where value could potentially diminish.

And so for the most part that are stabilized?

Not necessarily but it's more that we think that they're ripe to be sold in as much as either they are stabilized and therefore they're ripe to be sold or there's a risk that their value could diminish whether or not stabilized in which case both of those instances we would look to divest them.

That's helpful and my last question is there was a $1.5 million item in the FFO which was a reversal of management transition costs. I wonder if you could give any more color on that?

Hey RJ it's Phil. Let me try to give you some color on that. In 2016 we accrued a contingent liability of 1.5 million associated with the termination of our former COO. Recently the arbitration related to this contingent liability concluded and we reverse the accrual. So while our GAAP earnings is caught reflect the benefit of this reversal we've excluded it from operating FFO and you can see that as it's noted in our FFO reconciliation table that we've excluded it there. Hopefully that gives you a little clarity and helps with your analysis for the quarter.

Yes and it was excluded when it was accrued, is that right?

Yes. So originally when it was accrued in ‘16 we excluded it from operating FFO so this quarter when we had the favorable benefit of reversing it we likewise excluded it from operating FFO to be consistent.

Makes sense, thanks guys.

Thanks.

Your next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Thanks. Good afternoon. First I just wanted to ask a little bit more about your capital plan here over the next few years and ask specifically about leverage. So funding for the larger mixed-use developments is expected to ramp. It's starting to ramp up a little bit here and leverage increase in the quarter. I am curious when you look at the corporate model where do you see leverage peaking on a debt to EBITDA basis and when do you see it begin ratcheting down?

Todd I'm going to take a little bit of this and then I'll hand it off to Phil to take a little bit of this at a high level our view is that we need to keep our eye on leverage. We’ve recognized that as part of endeavoring to transform this company from one that has historically owned secondary market grocery anchor shopping centers to one that owns first class urban mixed-use assets that there's going to be a period where leverage is going to drift up. We have a model that gives us a feel for that but what I would tell you is that beyond the model there are a number of different ways that we're going to manage both the capital spend and the recapitalization of assets along the way to make sure that we're managing debt assiduously. So certainly it's something that we have our eye on. We do recognize that leverage is up as of course going to drift up along the way but it's not something that we're being flip about. Right now at least the focus is on capitalizing South Quarter Crossing in particular since as Robin noted and I alluded to as well we commenced demolition in the last quarter and we anticipate hopefully breaking ground in short order we just need to button up the last few deals but I will let Phil talk through how we're going to be capitalizing that project.

Yes. So as Bruce discussed a little earlier asset sales will play portion of the rules there and how we capitalize those more so long term but also they'll help a little bit in the short term as we'll sell some of those but it's just thinking about South Quarter Crossing since its first up. That's combination of two properties South Philadelphia on one side, Quartermaster on the other. By far the bulk of the construction cost are on the South Philly side and that's where the work gets initiated first. What I'll tell you is we're in conversations with several of the banks in our bank groups. They are all very interested in doing a construction loan there and what's nice about it is the three anchors that are currently there ShopRite, LA Fitness and Ross are all staying and continue to pay. So there's an in-place value there that stays there the whole time. So that while the loan-to-value may be kind of what it typically is for a construction loan, the loan to construction cost will be very high. So the loan to construction cost could be like 80% or more so we can fund pretty much everything that's happening on the South Philly side which will go first through a construction loan if we go that route and that will probably play a part of the role here.

Okay. Got it. When you think about the trajectory of leverage here I guess near-term I mean can you sort of comment or describe how we should think about leverage maybe at your end? It sounds like you're expecting it to continue increasing. I mean how much more of an increase are you comfortable with in terms of taking your leverage up from here?

So when thinking about our debt to EBITDA, obviously our EBITDA is [indiscernible] $80-ish million and so obviously a full turn is 80 million and I would think that this year and thinking about our capital spend it's certainly not even going to approach that and even going into next year I think the aggregate spend probably won't even get there and we expect to stabilize the first apartment building and call it I'm just kind of doing a little bit on the fly looking at Robin I think in about two years call it and so I would say that that juncture right so after we stabilized the first apartment and we've spent again less than a incremental turn of debt to pay for it at that point we would obviously assess where we are in terms of how we think about the overall corporate capitalization recognizing that all of the incremental debt as Phil is describing will be incurred through this construction financing that we anticipate taking on to pay for the construction costs. So that will be the juncture at which I think we decide the further trajectory of leverage but certainly to get there and I was to get to the point of completing what we think of as the first phase will require significant meaningfully less than a full turn of incremental leverage at EBITDA basis.

Okay. And then Bruce you mentioned you talked about the lease termination of shoppers food at Metro Square. I think you commented that you might look to further unlock value or monetize that asset further and I don't see that asset held for sales. Just curious if you can discuss what's happening there?

Well, I think it is held for sale or at least certainly we intend to bring it to market if it's not formally on the held for sale list and so the price an interesting one tied in as much as this is almost we're being in the particular vertical or so area focus that we're in. In other words we focus on secondary market predominantly grocery anchored shopping centers coupled with our redevelopment efforts and a lot of these asses require some fairly thoughtful asset management and so in looking at this particular asset which was made up of a dark grocer and an out parcel building that has a number of tenants what we did is we thought through what was the way to optimize the value of that asset. Interestingly we had two choices one was to divest the asset with a dark anchor as well as with this out parcel building and we compared that with negotiating with the dark anchor tenant, a termination payment and then selling the asset where it would have a vacant anchor building as well as an out parcel building and remarkably and of course I don't want to spend money that we haven't yet made but it appears that the process of negotiating determination payment which again I commend the team for doing a very good and patient job of the meaningfully increased that termination fee during the course of the negotiation but that termination payment coupled with what we anticipate as the sales proceeds from the asset will represent an increase over the valuations that we had received from brokers for the asset as is of close to 40% or maybe even 50% depending on how successful we are in the sale process. So again that's a great example. We're talking about relatively small dollar amounts but still a great example of where through some thoughtful asset management we were able to create real material value out of that asset.

Okay. That's helpful and then just two quick ones for Phil here. One is the $0.07 per share the lease termination fee that's expected to be recognized in the first quarter. Is that right?

Yes, that should be recorded in the first quarter.

Okay. And then also was the $1.5 million that you discussed the reversal for the former COO, was that also it was that a benefit in the quarter to G&A?

Yes. So when we recorded it went to G&A so the reversal also came out to G&A and just to be clear I want to back up to the termination fees the $0.07 is net of what of rent that they would have paid for the year. So the feed the first quarter will impact a little more favorable than that but over the full year Todd once you kind of lose the rent that they paid over the full year the net impact with a full year $0.07.

Okay got it. All right. That's helpful. Thank you.

Your next question comes from line of Floris van Dijkum with Compass Point. Please proceed with your question.

Great. Thanks guys for taking my question. Just following up on something Todd asked about, can you quantify I mean I'm just trying to do the math here myself but the total redevelopment plans and spend it sounds like you're adding about 1.1 million square feet of retail and 1,600 apartment units to build all of that out yourself on your balance sheets potentially could see you double leveraged from your current levels if it's in urban locations which is where I think most of this space is. Could you just walk us through the plans and the funding because it appears like the leverage would shoot up quite a bit more or maybe I'm overlooking something.

Yes Floris, I'm not sure these numbers don't reconcile with anything that we're doing. So maybe what might make sense either we can, it probably just make sense maybe what we should do is talk about this offline after the call but those aren't the numbers that reflect either the three projects in the aggregate or any one of the three projects and of course these projects are happening over call it eight to maybe even ten years and so I think that would probably make sense to do this. We're happy to have a call you could have the whole C suite on the call with you and we could walk you through everything that we're doing there and walk you through our thoughts around it.

Okay and so and can you quantify perhaps what you expect to spend in both maybe just to make me feel a little more comfortable but and also the capital outlays in 2020 as well as 2021? Have you put together a plan or do you have like a schematics up for each of those projects yet?

So when you say each of those projects where we have a number of projects. I'm going to let Robin to some of this in more detail. We have as Robin described three value-add renovations and then we have three what we call our mixed-use redevelopment. The value-add renovations are all just in the zip code of 10 to maybe in the teens [indiscernible] less than $20 million each and Robin described one of them Carmen's Plaza which is basically done. Again very stout double-digit returns all these value add renovations relatively small numbers is very, very attractive returns and generally speaking they get paid either at a free cash flow or they can get paid with relatively modest incremental capital outlays that don't meaningfully increase leverage because they're supported by significant pickups in earnings. Now on the mixed-use redevelopments over the long term these will also be supported by meaningful pickups in the earnings but of course there's going to be as we were describing earlier I guess with Todd an increase in leverage over the next couple of years increase in leverage as again I was describing to Todd is not a very-very significant number. So when you talk about the next two years you're talking about less than a full turn of incremental debt on a debt to EBITDA basis and furthermore much of that is going to be coming from the construction facility that Phil was describing earlier.

Okay. So I'll reach you guys offline and I will go through. It's more pretty detailed up and just to make sure that I understand the guidance that you put out there that includes the $0.07 of term income is that correct?

Yes, the 2020 guidance includes that and in my prepared remarks there's I noticed those and a few other items during the press release offsetting that's a large non-cash item this mark-to-market or amortization of lease intangibles is decreasing significantly. It'll be a negative impact of about $0.02 per share which is obviously a non-cash item but it does impact GAAP and FFO but in the press release I will bullet it out there and if you have any questions you can give me a call.

Okay. I'll follow up with you guys. Thanks.

[Operator Instructions] Your next question comes from line of Collin Mings with Raymond James. Please proceed with your question.

Hi everyone.

Hi Collin.

First question for me I just want to go back to RJ's question real quick on A.C. Moore just given the outlook there any update on where you stand as far as any sort of retaining efforts?

Sure. Hi Colin, it's Robin. we have two A.C. Moore one of them at our New London property we do have a backfill tenant there and so we expect that that there will be a fairly short turnaround for that asset and then for the other location we are actively seeking a backfill for that one. So for the one location we expect as I said we are in lease with a charge of that one and the second one we are seeking for the second location.

Okay. And then switching gears I did want to come back to the leverage discussion but just from a different angle. I just was curious how do you balance a lot of focus with some of the prior questions around kind of net debt to EBITDA better than that metric but just trying to think about how you balance that versus your debt maturity profile as you think about some of the capital spend on some of these projects maybe just talk about it for that angle for a second if you can.

Sure. I will hand over this to Phil again in a second I think that we have been very focused of course on maintaining a cushion on our debt maturities and we'll certainly endeavor to do that. I think that thematically an important idea to understand with respect to these mixed use redevelopment is that this is the reflection of an ambition that we have to meaningfully improve our asset quality from where it has historically been and that will require us to embark on a journey which is what we're embarking on that will represent a departure from an asset type of grocery anchored shopping centers and suburban markets to urban mixed-use assets and what's interesting is when people think of Cedar they don't think of Cedar owning those kinds of assets and a lot of the questions that we get and that we get on calls like this relate to that almost a discomfort with the unfamiliar with the fact that people are used to thinking of Cedar in one way and we're asking them to think about Cedar in a different way and so again we're happy to walk you through that but I think that the thing to understand is that -- this is the beginning of a process that we're undertaking that will involve us taking out a little bit more leverage. Of course we're going to be keenly focused I'm making sure that there's no existential risk associated with that but certainly this is the beginning of a process where you hope to again transform the portfolio. And so here that's very much part of this undertaking. With that I will let Phil speak a little bit about the debt maturities.

Yes Colin. I think consistent with how we've behaved and what we've done over the last few years we acknowledge our leverages is elevated and one of the ways we mitigated is not having too much come due in one year and also by trying to avoid any near-term debt maturities. So if you look at our schedule currently there's no debt maturities in 2020. The revolver has an extension so if you move that out then there's only 75 million in 2021. So I think you should continue to expect us to address our maturities early and try to avoid having any near-term maturities and trying to keep them all so well laddered and then additionally I'll just add mostly these urban mixed-use projects have a residential component. So as those residential buildings are completed and stabilized one thing we can consider doing is looking at agency debt to really turn those out for a long time. So that will give us another option there once those buildings start to come online. Is that helpful?

Helpful color. Thank you for that. One last one for me and just going back to the prepared remarks and recognizing this has been a topic on a number of calls recently but given in today's prepared remarks just highlighted that the pickup is transaction activity during the quarter. Bruce I don't know if you can maybe expand upon that a little bit more just again given the disposition and plan here for the year and again the potential to continue to recycle some capital just your latest thought that would be helpful.

Quick comment and I'll be honest with you I actually in terms of that comment really with you in mind so I'm glad you picked up on that. As you correctly know last quarter I made mention of the fact that transaction volume had been light. I was concerned because of course that could have been a canary in the coal mine so to speak and as much as one way that you start seeing a market deteriorate is that you see transaction volume dry up. It turns out that again we -- you talked about one quarters transaction volume in a relatively small market and ultimately I think the issue was around the sample size because we have seen a transaction activity pick up in the fourth quarter, a lot of deals that were struck in the fourth quarter in fact have been closing in the first quarter. And so we've in fact seen very healthy level of volume in our markets relating to our asset type. And so, I just wanted to update you and obviously anybody else to keep track of this, with respect to that dynamic. Because I do think that one of the important things to understand about grocery-anchored shopping centers in particular and this is in contrast to certainly malls but even to big-box retail or other types of open air shopping centers is that these assets are on the smaller side and what we again continue to see is this very high degree of liquidity when it comes to these types of assets since there is just a significant amount of transaction volume around them. And therefore a ready number of transactions that you could point to get comfortable with views on value from a cap rate perspective.

So, just overall it sounds like this pickup in transaction activity gives you confidence to be able to execute on your disposition targets and continue to use that as a mechanism to help fund some of the up mentioned projects.

Not as much, that's part of the kind of it's not so much that as much as just that one of the things and again you and I've spoken about this a fair amount. We are continually focusing on a number of metrics as we think about various capital allocation decision. So, one of them is of course the weighted average cost of capital. Then we're constantly updating our WAC to make sure that we understand what our cost of funds is and in a similar vein we're continually updating our net asset value. And so, it's really in that calculation that we really need to have a pretty good feel for what the prevailing cap rate environment is so that we could comfortably point all the transaction activity in the market when we it's about the view on the valuation for our assets. As you probably know and certainly as it's publicly available, we put out in our corporate presentation. And we updated every quarter a graph that walks through the distribution of cap rates for all the transactions in the market. And again, we plan on updating that as we do every quarter and so this information will be embodied on that slide in our corporate presentation.

Now, I always look forward to that slide. With that, please I'll turn it over. Thank you.

Your next question is a follow-up from Floris van Dijkum with Compass Point. Please proceed with your question.

Right, sorry guys. One I have a follow-up here. If I add all the apartments potential developments together. I mean, you're looking at over a 1000 units as you've indicated. Do you have internal people who can help you manage that process because it's a different asset class than what you're currently invested in. Or it's the idea that bring along JV partners in each of those three mixed use projects.

Great question, Floris. I'm not going to have Robin answer this question because I don’t need her to read off her own resume and certainly Michael Sommer our head of construction development would do the same. We have the people overseeing these redevelopments both Robin and Michael has incredibly specific relevant experience whether it relates to overall mixed use redevelopments in urban markets. Again Robin has an extensive track record of seeing these types of projects through from beginning to end and of course that includes many mixed use projects with apartments in them, you just could look at Cedar Realty's website if you want to get comfortable with that. And Michael Sommer has arguably the more extensive resume doing residential and doing multi-family. So, certainly we have real subject matter experts in the geography in which we're focused on to execute these projects. Now all that said, we're certainly leveraging third parties to execute it because that's part of what folks like Robin and Michael do when executing these projects. And so, will have third parties overseeing leasing, we'll have third parties who will be doing property management. But the expertise that goes with developing these types of projects is certainly in-house and again we have tremendous confidence in our in-house experts and very frankly getting to see it every single day. Gives me tremendous confidence that we have a great team who'd execute these types of projects.

Is it right Bruce, to think that you are unlikely to partner with an apartment developer for these projects?

Again, these are we're using I'm not sure if these uppercase terms or lowercase terms, in term of developer and JV partner and things like that. We're this is not something that's being entirely in-house at theatre and so we are of course working with third parties in the process of doing a construction, doing the development, doing the leasing, doing the design. All facets of this project are being done with third parties because that's just the nature of the development process. And so, while we may or may not joint venture from a capital perspective, we might not, depends on the situation and it also could vary depending on where we are in the course of executing the redevelopment. Certainly in terms of there you just nuts and bolts doing one of these projects that we have a very good team here but certainly we don't have a team that does this without leveraging professionals who we contract with to help us executive these projects. So, it's just in that is just the way all of these projects get done.

Okay. And the asset health for sale though is its $12 million, obviously presumably that will have to get increased help. And how much digital assets sales do you have to in your expectation of a turn and its increase in leverage by the end of next year.

Or maybe --. As what's contemplated being put in that bucket?

Sorry, so Floris let me be clear. Obviously we're selling call it $12 million or so, or that does not meaningfully going to change our EBITDA, so my comment about that EBITDA, I was not accounting for the fact that that EBITDA will be reduced a little bit by these asset sale. These assets that we're selling now we're not selling capitals tangibles or either I give that now it's helping finance the projects. But ultimately the reason why we're selling these assets now is because these assets that were describing earlier in response to an earlier questionnaire write for sale and that's why we're selling them now. The thought process behind divesting assets come forward is over the medium term as we execute these projects and of course as we take on leverage. The thought is to permanently capitalize these projects by migrating the capital of Cedar from our lower core tile assets into these projects. However in the near term what we hoped to do is to maintain cash flow by holding on to these assets taking on some leverage a then delivering or permanently capitalizing these assets through the proceeds of asset sales. But the inter room measure as we've discussed a little bit tonight is going to be by taking on construction debt to finance the projects.

Okay. One more question on the on your sort of your, you've mentioned in your estimates you are accounting for the A.C. Moore, you've taken them out of your -- and so what any additional incremental bad debt or credit loss that you have in your estimates for 2020?

Related to --.

I' m sorry.

Related specifically with A.C. Moore or just Moore in general?

Moore in general. And I'm talking about outside of the A.C. Moore that you talked about. Is there, are there any other, how do you see, how do you look at the credit loss environments and your bad debt environment for 2020?

And when we look at it for 2020, I think it'll be fairly consistent with '19, it could actually be a little improved because our team has worked diligently on addressing tenant's that we're having problem's stay in their full red. And either helping them at the property through marketing or whatever. All our getting rid of them and come in an agreement to let them exit and replace more improved tenants. Now being a new on the watch list that concerns me, so I would expect that to similar '19 but likely slightly better than 199?

Okay thanks, Phil.

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

Thank you all for joining us this evening. We look forward to keeping you posted on our progress in the month ahead.

This concludes today's conference, you may disconnect your lines at this time. Thank you for your participation.