Welcome to the Fourth Quarter 2016 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 call over to Nicholas Partenza. Please proceed.

Good evening. And thank you for joining us for the fourth quarter 2016 Cedar Realty Trust earnings conference call. Participating in today’s call will be Bruce Schanzer, Chief Executive Officer; Robin Ziegler, 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 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 2016, as it may be updated or supplemented 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 23, 2017, and the Company undertakes no duty to update that. 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 Web site for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. With that, I’ll now turn the call over to Bruce Schanzer.

Thanks Nick. Good evening and welcome to the fourth quarter 2016 earnings call for Cedar Realty Trust. As I will discuss in a moment, it has been a very busy few months at Cedar with dramatic advances on the leasing, redevelopment and capital migration fronts. Before reviewing our results, I want to take a moment and acknowledge my colleagues who are with me on this call, Phil Mays our CFO, Robin Ziegler our COO, Mike Winters our CIO, Adina Storch our General Counsel, and Charles Burkert our Senior Vice President of Construction and Development. I would also like to take a moment and thank all of the team Cedar for their continuing and tireless efforts to advance the causes of this Company through their commitments to everyday excellence. Before moving from the topic of team Cedar, I also want to take a moment to acknowledge Jim Burns our longest serving Board member, who let us know that he will not be standing to re-election of the Board. Jim has been an invaluable advisor to management and has set an example of professionalism and probity from which we have all learned a great deal. I am pleased to report that Gregg Gonsalves, a retired Goldman Sachs partner in their real-estate investment banking group will be nominated to fill soon to be vacated spot on the Board. Moving to our results. We are pleased that our 2016 full year operating FFO of $0.57 per share is above the range of our initial guidance. However, with the sale of Upland Square leading the year we are net short, which will lead to some earnings dilution in the near-term as reflecting in our 2017 guidance which Phil will elaborate on in a moment. Correspondingly, we are now well situated to exploit investment opportunities. Furthermore,…

Thank you, Bruce. Good evening. We had solid leasing performance this quarter with 271,000 square-feet of leases executed, raising our lease percentage to 91.9% and 92.6% on a total portfolio and same-store basis respectively, over the prior quarter. Overall, lease occupancy is up 40 basis points year-over-year while same property is down 20 basis points. These leases represent a comparable cash rent spread 25.7% of which new lease comparable spreads were 60.2% this quarter. This spread was a result of two key anchor deals; 24 Hour Fitness at Carman's Plaza; and Pat Catan's. at the Carman. Same property NOI growth for 2016 was 1.8% without redevelopment and 0.2%, including redevelopment. Since November 2015, the portfolio has been challenged with the vacancy of four anchors; Price Chopper at Webter Carman, Shop and Save at the Carman, Half Mart at Carman’s Plaza and Redner’s at Trexlertown Plaza. Additionally, in October 2016, the Acme at Carll’s Corner closed. We have been diligently and tactically engaged on the backs of all these vacant anchors and all five of these properties are poised well for the future. Anchor leases have been executed at Webster Carman’s, Carman's Plaza and the Carman’s for three of the five vacant boxes. There's an executed LOI with a lease and negotiation for Trexlertown Plaza and we are in active negotiations on the Carll’s Corner Box. It is worth noting that if these five anchors had continued their occupancy at their previous rent on a same property basis, same property NOI growth for 2016 would have been 2.8% with redevelopment and 2.7% without redevelopment. This growth supports our conviction that the underlying fundamentals are strong and once these new anchors are open and operating, we will return to normalized same property NOI growth. Same property NOI growth for the quarter was…

Thanks, Robin. On this call, I will provide a brief update on our balance sheet and highlight our operating results before focusing on our 2017 guidance. Starting with the balance sheet, during 2016, we continued to strengthen our balance sheet. We ended the year with only six mortgages, totaling about $140 million and 80% of our property NOI is now unencumbered. For the third consecutive year, we rolled down secured debt and this instance primarily through closing a new seven year $100 million unsecured term loan. Further, we ended the year with almost $170 million of availability on our revolver and no debt maturities for the next two years. Additionally, we have not yet settled our forward equity offering completed in 2016. As a quick reminder, our forward equity offering was for 5,750,000 common shares and we have until August 1, 2017 to settle it. It's currently our intention to physically settle and full by August 1, and the proceeds received will be $44 million less any dividends paid prior settlement and some administrative cost. With respect to FFO, for the quarter, operating FFO was $12.1 million or $0.14 per share. You may recall on our last call, I noted that the disposition of Upland Square would be about $0.01 per share dilutive per quarter until the proceeds are redeployed. In fact this is why sequentially operating FFO per share decreased $0.01 from the third quarter. For the full year, operating FFO was $49.2 million or $0.57 per share. This result is $0.01 above our guidance range for 2016. Now, moving to our 2017 guidance. We're establishing an initial 2017 operating FFO guidance range of $0.53 to $0.55 per share. Let me first give you some details related to this guidance and then provide a high level roll forward of…

Thank you. At this time, we’ll be conducting a question-and-answer session [Operator Instructions]. Our first question comes from the line of Collin Mings with Raymond James. Please proceed with your question.

First question for me just and so I appreciate the detail there as far as the guidance. But one thing struck me is still a lot of the hiring comments that you guys made as far as different parts of the organization. Can you maybe just give us an idea of what the G&A run rate we should expect this year would be?

I think if you look at this year, it was $18.2 million and our operating FFO have adjustment for about $1.4 million for the COO transition. That gets you around $16.8 million. It won't be all that different from that, it’ll be slightly higher maybe with those additions on the re-development team, so call it 17ish.

And then going back to the same store NOI guidance, and again I appreciate all the detail as far as the moving pieces there. But would you say -- I think in November, you suggested that it could maybe -- there definitely be a drag in some of the anchor vacancies, but it probably wouldn’t turn negative. Would you say the delta between here and what outlook was in November was part due to the function of where you are as far as that re-development pipeline and some of the progression there? Is that a fair way to think about it?

Yes. And I think on that call, I said it would be negative early in the year, but not likely for the full year out. That is same context regarding the size and pool that I did on this one. But yes, we’ve -- Robin has been here almost a year now and we’re looking at re-development. It's not just -- we hope to start the near-term but even several years out. So, what that mine was for planning a lot earlier, so with more clarity on our re-development activities, our remerchandising activities, our re-anchoring activities; also with the -- the new anchors moving in, the free rent periods. And all the related co-tenancy impacts from this. We just have a lot more clarity on that now. So, while we’re excited about the long-term value creation that that re-development pipeline is going to add, it's disruptive in '17.

and then we've talked about on the last few calls and I know Bruce your comments, that one day that, there will also be a page in the supplemental detailing a lot of these projects. Would you care to venture at least in terms of ‘17, what type of maybe capital spend on redevelopment, or are we still in the pre-spend on a lot of these projects.

Look, I think that once this thing gets going, I would say the average annual capital spend is the thing up, which is what we’ve indicated we would like to achieve. And I would suggest it gets closer to maybe $50 million a year. This year I don’t think necessarily it will be at that magnitude. So again we’re still laying the groundwork yet and have shovels in the ground. But certainly, we’ll be able to maintain the run rate we’ve had in the past of 20 to 30. But these projects are going to be multiyear multiphase projects that will -- you’ll see average annual spend drift up closer to $50 million. And again as I said shortly after Robin started, our hope is to get it to be about 5% venture price value every year. So we would like to maybe even see that drift up. And has to be for projects that depends all and that makes sense and that deliver the appropriate risk adjusted returns.

And then just one last big picture question, I'll turn it over. Bruce just as you think about there is clearly been some upward pressure in cap rates in the acquisition market. Just curious, how that factors into recognizing you're kind of pursuing a long-term strategy here is related to capital migration, but any sort of near-term changes on what you might look to sell or potentially buy just given some of that upward pressure in the marketplace.

We're not really seeing, we're seeing clearly implied cap rate pressured up, just based on where REIT’s are trading in markets we're not feeling that kind of upward pressured. So certainly on the transaction front, whether it's things we're looking to buy or things we're looking to sell, the cap rate -- certainly, cap rates aren’t going down but that seems some dramatic uptick in cap rates. I would acknowledge that one of the reasons why we feel pretty good about our platform and where we're taking it is that these development projects that we're pursuing are higher yielding and that with our cost of capital they certainly deliver very attractive returns. But then even if there was to be a little bit inflation, even if you were to see cap rates truly drift up, we would still be creating substantial value for our shareholders by pursuing these redevelopments. So, I would say that for now at least we're not seeing the kind of upward pressure that might be implied by where REIT’s are trading right now.

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

First back to the same-store NOI growth guidance, there's a lot of moving pieces. But can you just help us understand maybe how to think about growth throughout the year, what the trajectory looks like. So maybe we can understand also what the magnitude of the decrease might look like early in the year just to help set expectations a little bit?

So for the full year, we're looking at negative one to two. The last half people start taking delivery. We start getting additional rent from that and it start to cure some of the affinities, a lot of the co-tenancies have lagged, but even after the cure, they don’t necessarily stop immediately. I can tell you the full year is going to be in that range. And it will be a little higher early in the year. Again, for one quarter Todd, 200,000 moves 100 bps.. So it will be a little higher, on the high end of that range or even a little higher than the high end of that range for the first couple of quarters most likely.

So if we look through 2017 a little bit with all this activity that's taking place, you'll have the commencements at some of the four anchor boxes, offset by some additional move-outs and some of the temporary rent relief and downtime around these redevelopments. But is the activity expected to weigh on 2018, or do you think it might normalize later in ’17 and into ‘18?

We would expect ’18 to normalize that. The one that I’ll add is we always do our same store, it was an imperfect metric. We do it on cash and try to make it helpful and as transparent as possible. And a few of those anchors will have some free rent period, but we expect ’18 to be much more normalized.

For the three anchors where leases are signed, will the free rent periods burn off by the end of ‘17?

Not on all of them.

And then just shifting over to the acquisition to Christina Square, what's the time frame that you would expect in order to stabilize that property? And what type of stabilized yield are you underwriting that too?

We think it will probably take couple of years to stabilize yields. We’ll probably be in the mid sevens if not higher. It was very exciting about what's going in Wilmington, and it's since the name of the center, its Christina Crossing. But what's going on in Wilmington right now, especially rate around this property is that the group who we bought this center from is primarily a residential developer and does some office. This was their only shopping center asset. And they are in the process of master planning and developing significant amounts of residential and commercial around this shopping center. And so, our merchandise strategy is oriented towards a lot of the improvements that are going to be going on around the property. And we’re generally with what's going on in downtown Wilmington and in the center is literally walking distance from the Amtrak station in Wilmington; and as we expect going to benefit from a lot of the exciting residential development that’s going on in downtown Wilmington now.

Thank you [Operator Instructions]. Our next question comes from the line of Floris van Dijkum with Boenning. Please proceed with your question.

Quick question, you touched upon this a little bit earlier, Bruce. But as we talk to investors, I mean, and most of your peers, they're all talking about secondary and tertiary markets seeing cap rate increases, sometimes as high as 100 basis points, but somewhere in the range of 50 to 200 basis points. How concerned are you about your bucket that you're looking to sell, which is up to -- according to our estimate somewhere like 30% of your NOI potentially. Do you see risks to rising cap rates?

Floris, I don’t mean to be sarcastic. But I would worry more about -- we see talking in their own books, and I would -- where cap rates are going in secondary markets, I think that what we have seen and we have exposure to secondary market shopping centers and urban market primary market centers. And I could tell you that the cap rate relationship has endured. We’ve sold assets in the secondary markets. We bought assets in these primary markets, and we continue to see, call it 150 to maybe 200 basis points of cap rates spread, pretty consistently across those markets. And so I would -- I could tell you, we just don’t worry that much about it. We still have conviction around our basic strategy, which is that we can buy assets in our target market, sell assets in our non-target markets and continue to migrate capital at reasonable cap rate spread between what we’re selling and what we’re buying.

And the acquisition, you just announced the Christina property, it appears some decent upside. Do you expect to get a couple more of these kinds of properties in your portfolio over the next quarter or two?

We have a terrific pipeline of potential acquisitions. Just to give you a feel for how these off-market deals come together, Mike Winters who's in the room, literally has been chasing after this deal for four years, maybe five years already, pretty much since I was here. We've been talking about this deal and this being a market that we wanted to get into. And so, we these deals take time. And it's very hard sometimes to predict when the stars will align. So, the key is have enough of these deals in the pipeline where something hopefully breaks your way in a relatively consistent manner. So, we can’t tell you which one it'll be, but we can tell you that with enough of them in the pipeline that something will break our way. And so we're optimistic looking out through the balance of the year just based on what we're working on, and the various things we're underwriting that we should be able to take down another two or maybe even three assets this year. But again as Christina Crossing is a great example, it takes time and patience to land these deals.

And I guess one final question, maybe I mean do you think at some point, it makes sense or when you think you're going to be ready to maybe lay out your vision for the Company in three to five years' time. I guess, we're still little bit early in the phase of portfolio restructuring in some ways. But when you think you’re going to be able to say this is who we plan to be and this is what our balance sheet and the Company is going to look like a growth profile, long-term growth profile looks like?

Floris, I think we've already done that. And maybe it’d be helpful since we're concluding here to summarize. We're focused on gross re-anchored shopping centers between Washington DC and Boston. And as it relates to portfolio transformation, we continue to migrate our capital from low density markets to high density markets. And we continue to pursue redevelopments of the assets that we own or that we acquire in these high density markets. And that’s the strategy for Cedar and that's going to be the strategy for Cedar for the foreseeable future. And hopefully we'll continue to build this foundation for creating value over time. I've been at the Company now for a little bit less than six years, and we've gone from 140 assets to 60 assets. We've executed on our strategy that's been reasonably, clearly articulated to the street and we’ll continue to execute on that strategy until we feel that we need to evolve that strategy as the marketplace evolves.

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

Thank you all for joining us this evening. We appreciate your continued interest and support as we successfully transform this Company to an owner of first rate retail assets in the highest density markets between Washington DC and Boston through our leasing, redevelopment and capital migration activities.

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