Bruce Schanzer - President and CEO Philip Mays - CFO Nancy Mozzachio - Head, Leasing Jennifer Bitterman - IR

Grant Keeney - KeyBanc Capital Markets Inc. Craig Schmidt – Bank of America/Merrill Lynch

Good evening and thank you for joining us for the first quarter 2014 Cedar Realty Trust earnings conference call. Participating in today’s call will be Bruce Schanzer, Chief Executive Officer; Philip Mays, Chief Financial Officer; and Nancy Mozzachio, Head of Leasing.

Before we begin, please be aware that statements made during the call, that are not historical maybe deemed forward-looking statements and actual results may differ materially from those indicated by such forward-looking statements due to a variety of risks and uncertainties including those disclosed in the Company’s most recent Form 10-K and other periodic filings with the SEC. Forward-looking statements speak only as the date of this call, May 6, 2014 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 posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

With that, I now turn the call over to Bruce Schanzer.

Thanks, Jennifer and thank you all for joining us this evening on Cedar’s first quarter 2014 earnings call. On this call, we will review our first quarter results and I’ll also spend a few minutes on the measures we’re taking to implement our long-term strategic plan.

Before jumping in, I’d like to acknowledge my colleagues who are with me on this call, namely Phil Mays, Brenda Walker, Nancy Mozzachio, Mike Winters, and Charles Burkert. I’d also like to introduce and welcome the newest member of our senior management team, Adina Storch, our new General Counsel who replace Stuart Widowski at the end of the quarter.

After 18 years with Cedar, Stuart has left us to pursue other opportunities and we wish him well. Adina joins us from a major New York law firm where she was a partner.

In addition to her collegiality and warmth which makes her a terrific addition to the senior management team. Adina had extraordinary professional credentials as evidenced by her repeatedly being recognized by various publications as one of the top lawyers in New York City.

I would be remiss if I do not as always give a heart felt acknowledgement and thank you to the balance of team Cedar for their commitment to everyday excellence and tireless efforts on behalf of the Company. The big news this quarter was our acquisition of Quartermaster Plaza from Forest City for $92.3 million.

The largest single asset transaction Cedar has ever completed. The Quartermaster acquisition is exciting for a number of reasons.

First, it was a truly off market acquisition of a high quality urban infill grocery-anchored shopping center at a reasonable price. Second, it allowed us to further intensify our Philadelphia footprint in a very strategic manner as this asset is directly across the street from our South Philadelphia shopping center.

With this acquisition, we now own 22% of the South Philadelphia retail submarket and furthermore now own more square footage in the City of Philadelphia than any other public shopping center REIT. This particular area of Philadelphia is experiencing a resurgence with significant institutional capital investment and ongoing gentrification.

We expect that our shareholders will be the beneficiaries of this dynamics over the coming years. Third, this acquisition also advances the objective of systematically improving our portfolio by acquiring higher quality grocery-anchored shopping center assets in our DC to Boston footprint, while divesting our lower quality centers to fund the acquisitions.

Notably, with the addition of Quartermaster, the top quartile of our portfolio now contributes over 40% of our net operating income or NOI has extraordinary demographic characteristics with over 2,100 households per square mile and over 146,000 people within three miles when combined the top half of our portfolio has over 1,700 households per square mile and roughly 118,000 people within three miles. Furthermore, the top half of our portfolio contributes roughly three quarters of our NOI or approximately 80% of our asset value.

The first quarter continued our progress of transitioning Cedar into a leading shopping center refocused on grocery-anchored shopping centers between Washington DC and Boston. We achieved operating funds from operations or operating FFO of $0.13 per share and had solid same-store NOI growth of 2.7% relative to the first quarter of 2013.

As Nancy and Phil will discuss in their comments, this performance was the result of continued strong asset management and operating performance. Especially gratifying is that this result came in the phase of a historically high snowfall, for which we’ve fixed price snow removal contract, and recovery rates that largely insulated us from the economic effects, though I will acknowledge they do not insulate us from the frustrations and indignities of digging at our cars and driveways every two days.

Early in the first quarter, we executed an equity and debt financing that I discussed in detail on our fourth quarter call in February. In addition, during the first quarter, we close on the Shore Mall sale, representing the combination of the plan announced in November of 2011 to divest $150 million in assets in order to focus the company on our grocery-anchored shopping center portfolio, and to reduce the leverage below eight times.

With the closing of the Shore Mall, we had in fact realized proceeds of over $170 million and reduced leverage to 7.3 times. The Quartermaster acquisition caused a temporary increase in our leverage to 7.9 times as you can see in our first quarter supplemental.

Note that with the assets currently teed up for sale that’s part of our capital recycling plan, we anticipate once again reducing leverage. The ability to quickly transform our Company and its shopping center portfolio is one of the benefits of being a REIT of our size, as we can be nimble and responsive to market dynamics and opportunities.

Hopefully, as we execute on our capital recycling efforts, the ongoing demographic improvements within our portfolio will come be recognized and appreciated by the capital markets. As Nancy will discuss, we continue to have success in addressing the leasing opportunity presented by having one-third of our portfolio rolling in the coming three years.

This quarter we once again had strong leasing volumes and spread completing 40 leases for 328,000 square feet. Notably, comparable leases had cash basis lease of 9.2%, consistent with the guidance we’ve previously given.

On the redevelopment front, we’re pursuing a number of different opportunities. However, they don’t generally lend themselves to quarterly updates until they write them.

One project that we commenced during the quarter is construction of the new Walmart Neighborhood Market at Kempsville Crossing. We expect to have that project completed by the end of the year and as previously disclosed anticipate achieving a double-digit unlevered internal rate of return.

In conclusion, we continue to make progress on all facets of our long-term strategic plan from leasing to value add investing to capital recycling, to balance sheet flexibility and leverage. We are keenly focused on building shareholder value and credibility on a foundation of clear communication with the street as well as rigorous analysis and capital discipline.

With that, I give you Nancy Mozzachio to discuss our leasing results.

Thanks so much, Bruce. Leasing results for the quarter of 2014 reflects a solid performance of our asset base.

Our portfolio lease rate is now 93.5% and small shop lease rate is up to 84%. We are continuing to execute on our plan to maximize asset value through lease up and in certain cases purposeful retenanting in our centers.

We are also carefully addressing our opportunities to pursue higher market rent as one-third of our gross leasable area [ph] [rolled] in 2014, 2015, and 2016. As discussed on prior calls, the leasing team spends a considerable amount of time analyzing retail sectors represented within our portfolio that are rightful retenanting.

Lease spaces are prime for our better use and higher rent. There are several creditworthy discounters and small format (indiscernible) replacing tenants in categories viewed as out of favor in many of our assets.

More specifically we’ve achieved significant progress on this front at Colonial Commons where Ulta and Old Navy opened during the first quarter. We also signed a lease with Noodles, a fast casual restaurant to occupy a former freestanding [ph] [fire] building and (indiscernible) undertake a sizable expansion and relocation in the center.

These retenanting activities represent a 12% gain over prior rent. And more importantly, this combination of high credit quality commitments at Colonial Commons is a catalyst to attract additional resell interest at the assets and further enhance its value.

I would also like to provide an update on our Kempsville Crossing asset in Virginia Beach. The new Wal-Mart neighborhood market is current undergoing vertical construction and we anticipate the opening in the fourth quarter of 2014.

We are in discussions with several high-quality small shop tenants to replace existing month-to-month shop base and will report on their progress in the coming quarters. Remember this shop base was kept on short-term leases to increase the overall return of the project which is projected in the mid-teens.

Now to renewals. We ended the quarter with 312,000 square feet of completed transaction achieving equally 6% cash spreads with no capital spent.

Looking back, as of December 31st, 2012 approximately 1.4 million square feet of space was set to expire in 2014, and just over 65% of this square footage represents tenants with contractual option. At the end of the first quarter 2014, approximately 70% of these options were exercised with initial cash spreads of 9.7%.

As for expiring TLA with no contractual options we have been successful in moving below market leases to higher post recession market rent with meaningful annual increases to drive future NOI growth. Notably, negotiated renewal’s within the same period reflects 8% cash spreads consistent with prior guidance.

As we further progressed in 2014, we continue our laser focus and proactive approach to drive solid rent spreads on expiring TLA. We continue to maximize asset value through lease-up and proactive re-tenanting on intensively exploring asset by asset, redevelopment and tenant expansion opportunity.

With that, I give you, Phil.

Thanks, Nancy. On this call I will discuss our first quarter operating results and provide updates on our balance sheet and 2014 guidance.

Starting with operating results. Operating FFO was $10.3 million or $0.13 per diluted share for the first quarter of 2014 compared to $8.7 million or $0.12 per diluted share for the first quarter of 2013.

Same-property NOI increased 2.7% for the quarter. This growth did include a favorable impact from re-leasing the dark anchor at Oakland Commons.

Excluding this favorable impact, same-property NOI increased 1.6%. As Bruce noted, no removal cost had little impact on our earnings for the quarter.

Our leases provide a high recovery rate plus no removal cost, and our property operations team has implemented a significant number, a fixed price, no removal contract. In fact the historically high snowfall in this quarter cost less than $100,000 as an incremental expense leakage compared to the first quarter of last year.

However what is notable is that due to the relative size of our same-property NOI pool for a single quarter our same-property NOI growth would have been about 40 basis points higher if not for this increased snowfall. Turning to the balance sheet.

We ended the quarter with over $130 million available under our revolving credit facility and net debt to EBITDA at 7.9 times after reflecting the recent acquisition of Quartermaster Plaza. As we progress with our capital recycling program and begin closing the dispositions of lower quartile assets, our temporarily elevated net debt to EBITDA will begin to decline.

Last quarter I discussed $150 million of unsecured term loans we closed in February. As a reminder these unsecured term loans consist of $75 million five year term loan, and $75 million seven year term loan for which the variable interest rates have been slopped beginning July 1st, 2014 to effective fixed rates of 3.37% and 4.27% respectively.

We fully borrowed the five year term loan at closing and anticipate the seven year -- borrowing the seven year term loan on or slightly before July 1st. After using the proceeds from these unsecured term loans to repay our 2014 mortgage maturities of which we have approximately $100 million remaining we will them encumbered about 60% of our property NOI.

And lastly guidance. We are reaffirming our 2014 operating FFO guidance of $0.51 to $0.54 per diluted share.

This guidance range is based on the same underlying assumptions provided on our fourth quarter 2013 call. The acquisition at Quartermaster Plaza at just over $92 million effectively meets the acquisition target we provided.

This does not mean that we will not acquire any additional assets during 2014, but at this time no additional acquisitions are included in our guidance. Also as discussed earlier, with the additional dispositions as we work towards our $100 million of targeted dispositions for 2014 thereby reducing our net debt to EBITDA.

And with that, I’ll open the call to questions.

Hi, good afternoon, this is actually Grant Keeney on for Todd.

Hi, Grant.

Bruce, you touched on in your opening remarks, but I was just curious as to whether [ph] [piercing] a higher volume of products that were brought to you by brokers or even like reverse enquiries after acquiring some sizable assets.

The answer is, yes we definitely are seeing a very high degree of products. I would characterize our transaction activity more broadly is that we look at three to four assets a week, and will probably acquire three to maybe five assets in a year.

So, we are very selective with what we’re looking at, we do see a fair amount of product, most of what -- our aspirational acquisition is actually something that is not being brought to us by a broker though, and I think that’s something we’re highlighting. So for example, the Quartermaster transaction was completely off-market.

The assets that we acquired in (indiscernible) while it was a broker transaction was brought to just a very small group of people and those are really the transactions that we’re really, ideally going to be taking down, but again we’re definitely seeing a fair amount of opportunity to invest and we’re just trying to be very selective in how we’re putting out our capital.

Okay, thanks. And then just continuing on Quartermaster that you’ve had it for a couple of months now, I’m just curious just to what you guys are seeing maybe longer term just in terms of the value add opportunities of the property or the adjacent property given that you have a sizable presence now in the market, if there are any synergies or any adjacent land anything like that?

So the primary strategic opportunity beyond the fact that it ended up itself as a great asset is that it sits across the street from our South Philadelphia shopping center, and we’re already seeing opportunities to potentially leverage the relationship between those two centers. At Quartermaster there is approximately 100,000 square feet of expansion potential and South Philadelphia is a center that will probably benefit from some capital investments.

And so between the opportunity to expand that Quartermaster and the opportunity to invest into both Quartermaster and South Philadelphia we think that the combination of those two centers will really allow us to optimize the returns out of the capital that we’re investing into that submarket.

Okay, thanks, it's helpful. And then just lastly on I guess just redevelopment in general.

I know you mentioned Kempsville, but what's your company anticipating to spend just for the year on redevelopment. I know you haven't mentioned any other properties at this time, but I was just curious kind of what you are looking at this time this year and then maybe next year (indiscernible) yields are similar to Kempsville at this point.

So in the past we’ve guided people to approximately $20 million a year on average that we’re going to invest and of course that is made up of smaller investments such as what we’re doing in Kempsville which is call it in the $4 million to $5 million range, as well as some larger opportunities that we’re looking at that we haven't yet discussed that are a multiple of Kempsville. But on average, I would guide you to that $20 million type level of capital investment from a value add perspective.

And we generally target a double digit un-levered IRR so we’re usually looking at about 10% un-levered IRR but sometimes we’ll do a little bit better like we’re doing in Kempsville. Generally speaking acceptance are in very limited situations would we tolerate doing meaningfully worse but maybe we would look at something in the high single-digits if there were some overarching strategic reason to do so.

Okay, thanks. One more, so if missed it, I am not sure if you’ve mentioned, just the cap rate on Quartermaster?

We did not disclose any raw materials. I know that Forest City described it as a 6.5% cap rate transaction in their press release.

Great. Thanks.

Thank you. We’re couple of weeks away from the ICSC Spring Convention, and I just wonder; what were some of your team’s objective’s that you’d like to accomplish during that week.

Well, I certainly speak for one vertical. I would ask Nancy Mozzachio or maybe Michael Winters to characterize how they’re seeing it.

But broadly speaking we’re seeing this as an opportunity to really advance a few different dialogues, one is leasing in general. Leasing in connection with some of the redevelopments that we’re pursing and then continuing to engage with some of the dialogues that we’re having with shopping center owners who are potentially almost with the idea of selling us their assets or interested in transacting in some manner or maybe Nancy you might want to touch on that and then maybe after that Mike maybe you could talk about it a little bit as well.

Hi, Craig. I can add to that a little bit.

I think our objectives are to meet with as many tenants as possible, learn about new concepts. We have limited amounts of time with each tenant.

So we spent (indiscernible) about the last six months putting together portfolio review which has taken place at tenant headquarters. So, we sort of home to add to those conversations that we’ve had over the last few months.

But really it's that focus on small shop occupancy and trying to drive that up, and I think it occurs from continual and frequent conversations with tenants about their contract and hopefully we can plug a few tenants into a number of our centers.

Yes, Craig it's Mike Winters speaking. We will continue to have dialogue with certain owners that we intend on meeting at the show as well as meet some new owners we haven't done business with in the past and we hope to get deals from that.

It's pretty simple.

Okay. Do you have meetings with any people that currently aren’t in your centers?

We do, definitely. We absolutely have undertaken to making into a tenant who’ve never done business with before.

And again as I mentioned earlier, I think it's important to understand and I know our retailers today is we’re bringing new concept to our minds, so they know we may have done a deal with or many deals with dollar trade for example they have another concept that they rolled out in certain parts of the country that we hope to capitalize on.

Okay. Thank you.

Thank you all for joining us this evening. We look forward to seeing you in the coming weeks at ICSC and then after that at NAREIT.

Have a good evening. Good bye.