Cedar Realty Trust Continues Portfolio Pruning

Bruce Schanzer, president and CEO of Cedar Realty Trust (NYSE: CDR), joined REIT.com for a CEO Spotlight video interview at REITWorld 2014: NAREIT’s Annual Convention for All Things REIT at the Atlanta Marriott Marquis.

Cedar Realty has undergone a repositioning of its portfolio in the last three years under Schanzer’s leadership. Previously, the company had what Schanzer described as a hodgepodge of 140 retail real estate assets.

“One of the things we set out to do was to bring the company a more focused, well-honed portfolio that had both a strategic focus and a geographic focus,” Schanzer said. As a result, Cedar Realty sold off roughly half of its portfolio in a two-year period, paring down its holdings to include only grocery-anchored shopping centers located in the corridor between Washington, D.C., and Boston. Now, the firm is continuing to reorganize the portfolio.

“We’re not yet satisfied with where the portfolio is, although we’re satisfied with our continued focus on executing our strategic plan,” Schanzer said. The company is now selling off the bottom half of its assets in terms of quality and using the proceeds to invest in higher-quality properties.

Looking ahead to 2015, Schanzer described fundamentals in the retail sector as “pretty solid.” He pointed out that the U.S. economy is improving: unemployment is declining, consumer sentiment is optimistic and consumer spending is growing. Additionally, retailers are expanding, according to Schanzer. Lastly, the addition of new supply to the stock of retail real estate has remained constrained, he said.

“This positive economic tailwind coupled with increased demand from retailers is being met with not so much new square footage,” Schanzer said. “Therefore, that’s a pretty positive context for landlords to run their businesses.”

From a broader perspective, Schanzer offered his thoughts on the impact of the baby boomer generation on the retail real estate sector. He noted that baby boomers are sensitive to issues of affordability, including providing for “basic consumer staples” such as food. They are also patronizing health-related businesses such as fitness clubs, he said.

“We feel pretty good about the fact that our portfolio does target that population,” Schanzer said.