Greetings, welcome to Cedar Realty Trust Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host Nicholas Partenza, Director of Financial Reporting. Mr. Partenza, you may begin.

Good evening and thank you for joining us for the third 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, October 30, 2019, 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 welcome to the third quarter 2019 earnings call for Cedar Realty Trust. With me as always are my senior management colleagues and dialed in our many of the members of team Cedar. I want to sincerely thank them for their commitment to our core values of collegiality, collaboration, and everyday excellence. I will keep my comments for the quarter brief. We continue advancing our redevelopments and have made terrific strides on the leasing front. I will let Robin spend more time on the redevelopment in her prepared remarks that would is worth highlighting that we broke ground on our value add redevelopment project at Fishtown Crossing and continue making good progress executing that project as well as our larger mixed use projects. I would note on the leasing front that this has been one of the better quarters in recent memory in terms of leasing volume and spreads. Leased occupancy in our core portfolio continues to grow and ignoring redevelopment, which might be choppy as we incur additional intentional vacancy. We anticipate continued positive momentum in our core portfolio in the quarters to come. There were a few large deals that were signed that certainly contributed to our results most notably the urban air lease at Trexler Mall that back-filled a vacant box previously occupied by the now bankrupt, Bon-Ton. My compliment is to Tim Havener and his leasing team for their efforts this quarter. Of course, the elephant in the room is our low share price. We continue to believe that there is a meaningful disconnect between our share price and our intrinsic value. We have observed softness in the investment sales market for shopping centers and a slight reduction in volume. However, there still does appear to be liquidity for our asset type and reasonable visibility as to their private market value. We hope that as we continue to successfully execute on our business plan that our stock price will likely appreciate and better reflects what we believe to be our warranted value. With that, I will give you Robin.

Thanks, Bruce. Good evening. Our leasing team has had one of the strongest quarters in the past 18 months. During third quarter 2019 a total of 576,200 comparable square feet, was leased at a cash spread of 8.5%. This represents 14 new leases where they spread 28.4% and 26 renewals, where they spread 0.9%. The renewal spread increases to 2.3% with the exception of an anchor deal executed with sacrifice, some spread to solidify occupancy at one of our centers and also cured a co-tenancy provision. Two non-comparable leases were completed this quarter, including a space that has not been leased since acquisition at an average rental rate of $18.65 per square foot. While our total new lease ABR is at $10.98 per square foot, this rental rate increases to $13.11 per square foot, when you exclude two anchor deals executed at rents below $10. The execution this quarter of the backfill of the approximate 60,000-square-foot Bon-Ton store at Trexler Mall with Urban Air and the backfill of a portion of the tops friendly market box with Tractor Supply, were completed at spreads of 95% and 158% respectively. Occupancy continues to be a keen focus for team Cedar. As of September 30, 2019 same-center leased occupancy increased 80 basis points to 92.2% over prior quarter. We have spoken in prior quarters about our strong leasing pipeline. Those fundamentals continue. We currently have approximately 60 new deals in our pipeline comprised of both renewals and new deals. The challenge we have is working with the tenants and their respective legal departments through the remainder of this year and holidays to get them executed timely. Here at Cedar we continue to advance our redevelopment platforms. As we have discussed in previous earnings calls, we have two platforms, our value-add renovation platform and…

Thanks, Robin. I’m going to add just a few brief highlights to Bruce and Robin’s remarks and then open the call to questions. Starting with operating results. For the quarter, operating FFO with $10.6 million or $0.12 per share compared to $10.2 million or $0.11 per share in the preceding quarter. Excluding redevelopment properties, same property in NOI when compared to the comparable quarter in 2018 increased 0.7%. When redevelopment properties are included NOI decreased 0.7%, primarily driven by the decommissioning of spaces at several properties to facilitate our redevelopment plans for these properties. In particular, much of this redevelopment activity is occurring at South Philadelphia shopping center. Moving to the balance sheet. There were no property dispositions and no common shares purchased under our common stock repurchase plan. We ended the quarter with debt-to-EBITDA of 8.1 times an approximately $115 million available under our revolving credit facility. Further, we have no debt maturing until 2021. And finally guidance. We’re reaffirming our full year operating FFO per share guidance range of $0.44 to $0.45 per share. The key assumptions related to this guidance are detailed in our press release and remain unchanged from the previous quarter except for property dispositions. We now expect dispositions for the full year to be approximately $25 million. And with that, I'll open the call to questions.

[Operator Instructions] Our first question is from Collin Mings, Raymond James. Please proceed with your question.

Good afternoon everyone.

Hi, Collin.

First one from me, and I may have missed this Bruce, but or maybe misinterpreted it. But just in the prepared remarks, I believe you referenced some softness in the transaction market. Can you maybe just clarify or elaborate on that comment?

Sure. Just we've gotten reports that the volume of sales in our footprint is down meaningfully year-over-year. So whereas last year, at this point in the year, I believe there were 23 sales at this point, this year there's been fewer than 10 sales, I believe, eight or nine sales. And so that was what I was alluding to.

Got it, understood. I mean, maybe just continuing on that point, have you seen that reflected in any pricing? I know, again, a few quarters ago you put together some very interesting slides that just kind of highlighted the value in some of the properties that have transacted. So I was just curious if you actually seen that show up in pricing or is it just volume?

We do continue to update that slide. It's part of our corporate presentation. I would tell you that the fewer data points that we have, the harder it is to draw an inference about cap rate trends, since each transaction has its own idiosyncratic qualities that allow one to potentially differentiate it, whether it's a positive inference or a negative inference. And when you have a lot of data points, of course those idiosyncrasies are overwhelmed by just the magnitude of the data, with eight data points I would tell you that we can't really draw a meaningful inference about cap rate trends one way or the other. All I would say is that clearly right now there is a low in the amount of volume in our market. That's really all that we can say for now. But again, that's what I was referring to in my prepared remarks.

Okay. I appreciate that. Robin, just in the prepared remarks, again you discussed the Fishtown Crossing and I believe last quarter you referenced some of the jumps in rent you are witnessing are poised to get there, just maybe can you just elaborate a little bit more on where pre-leasing on that project stands and now the official groundbreakings occurred, just any additional details you can kind of update us on that front would be helpful?

Sure. As we've announced previously, the executed leases of Fishtown or with Starbucks and Nifty Fifty there are several other leases that are in various stages of negotiation at the property. The small shop rents there range between anywhere from the low forties on up from there. So, we're seeing a half the increase from the in-place rents of what was there previously after the renovation or the announcement of the renovation.

Okay. And then one thing I did want to circle back to and then I'll turn it over, but Bruce just earlier this year, you did make reference to potentially exploring JV partners at least potentially one of your redevelopments, just maybe any update now as several months have passed, any sort of update you can provide on that and particularly in context of the reference you made to the dislocation in the stock price in your comments earlier?

Sure. The comment on the share price is unrelated to our pursuit of potential joint venture partner. The more significant consideration in looking for a joint venture partner candidly is the incredibly deep availability of capital construction financing at attractive terms that really overwhelms the benefit of doing a joint venture. As you might imagine, joint ventures require a fair amount of give and take and negotiation. And almost inevitably what happens is the developer will get a benefit on the backend in exchange for making sure that the investor, the joint venture partner has greater certainty of return on the front end and the luxury of the financing that's available. It's so cheap and so flexible that even our prospective partners who we were talking to were asking why we would consider doing a joint venture which for a company such as Cedar even as small as we are would still represent a relatively modest amount of incremental capital in the face again of the very attractive financing that was available to us. And ultimately we concluded that while we're still open-minded about doing joint ventures and could potentially explore them in the future, again depending on what happened in the financing environment and also depending on what our capital needs are at a point in the future where potentially we're undertaking more than one project. So right now again, considering the construction financing market, we concluded that that was the better place to focus on for purposes of figuring out how to capitalize our first redevelopment project.

Okay. I appreciate all the detail there and I will turn it over. Thank you.

[Operator Instructions] Our next question is from Todd Thomas, KeyBanc Capital Markets. Please proceed with your question.

Hi, thanks. Good afternoon. I just wanted to ask about the same-store NOI growth, good to see them moving in the right direction here. So you're down roughly 30 basis point year-to-date. And I know the guidance has a relatively flat forecast for the full year. I'm not sure if there's really a range there sort of baked into that guidance. But thinking about the fourth quarter and then also sort of thinking about 2020, is it your expectation that we would continue to see that metric, same-store NOI growth, improve from here?

Hey Todd, this is Phil. We didn't give a range, we just said relatively flat for the full year. And we're still comfortable with relatively flat for the full year. And you know what I'm going to say next because I say it all the time when we talk about the same store pool, which is substantially the vast majority of our properties with a very small dollar amount of pool, right. So for any given quarter, the BOI is about $20 million, so 100 basis points is just $200,000. So you notice little things can move it quickly and have a large impact. For 2020, we've not any guidance, a lot of the things that are causing the difficult comparable periods such as the [indiscernible] vacate that happened in the bond town all are burning off, so we won't have this type of comparable periods. But again, it's a small pool and little things can move it. So we'll wait and we'll give a guidance on that on our next call.

Okay, understood. In terms of – let me ask about maybe base rents a little more specifically. So you have 170 basis points spread between leased and occupied space in the portfolio. It's a little wider than it's been. And you're releasing as you commented has been improving. Do you have some larger commencements that are scheduled to take place before the end of this year that we should be thinking about?

I think and I'm not sure about the specifics commencement there. When we do same store, we do it on a cash basis. So just the lease move into occupied, obviously there is a favorable thing, but it takes sometimes there's free rent periods and it takes a little while for that to kick in. And there's not that that the year's almost over Todd. So I don't think there's anything that's going to call like a dramatic change in same store in the last quarter as compared to this quarter.

Okay. And with the comments around dispositions, just following up there, I guess, you do have a few assets on the market or held for sale and you're having discussions with investors. So I'm just curious, I understand that maybe transaction volumes are down in your market, but in terms of the general level of interest from investors, can you comment on that? And then do you have a sense for timing at this point on the potential sale of Carll's Corner and Suffolk Plaza?

Sure. So the – well, they are juxtapose, they are unrelated. The assets that haven't yet sold for very asset specific reasons, unrelated to the more general dynamic there being slightly reduced volume that we've observed this year, well, obviously that volume has impacted our sales process as well in the sense that we're contributing to the lower volume. That said, the Suffolk assets is under contract, all right, pardon me, I should say that it's – we have a contract that I am retraining comments. And so we're at a juncture where we could see a finish line, of course, nothing is done until it's done. Carll's Corner is a very, very small asset that's going to eventually be sold for a modest amount. And we're just working through some practical issues there that we need to resolve before we can sell the asset, but again, it's not in our held for sale list, but it's not going to be a meaningful contributor to anything other than just eventually being removed from the list. And the last asset that we have hanging out there is in Western PA, it's really not even in the market that I was describing as having a reduced volume and we've just been waiting to finalize a lease there before we bring it to market. So again, very specific facts around our particular assets being sold. And the fact that they haven't sold is unrelated to this larger trend that I had observed through [indiscernible] that just being less volume asset sales in the most recent period.

Okay. Just one last one for Phil. The guidance included this year, that $750,000 related to the community outreach and some marketing costs, is that expected to continue in 2020?

Yes. I mean it will probably, it's across couple of our redevelopment properties. The run rates, probably a decent run rate also for next year, just the props related to will change as we kind of get further along on some redevelopments and start to ramp up others. But the run rate for this year and next year should be fairly consistent.

Okay. All right, great. Thank you.

We have reached the end of the question-and-answer session. And I will now turn the call back over to Bruce Schanzer for closing remarks.

Thank you, operator. Thank you for joining us this evening and for following our company. We look forward to continuing to report good news in the months and quarters ahead.

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