Cedar Shopping Centers Announces Purchase and Sale of Joint Venture Interests

PORT WASHINGTON, N.Y., Feb. 15, 2011 /PRNewswire/ -- Cedar Shopping Centers, Inc. (NYSE: CDR) today announced that, pursuant to the exercise of certain "buy-sell" provisions in joint venture agreements with Homburg Invest Inc. ("HII") (listed on the Toronto Stock Exchange and NYSE-Euronext Amsterdam),  Cedar has elected to purchase HII's 80% interest in one of the nine properties owned by the existing Cedar/Homburg joint ventures (Cedar 20%; Homburg 80%), while electing to sell its 20% interests in the remaining eight of the nine properties presently owned by the Cedar/Homburg joint ventures. The properties have been valued, in the aggregate, pursuant to the "buy-sell" arrangements, at approximately $55 million over existing property-specific financing of approximately $102.42 million.  Cedar's Property Management Agreements for the eight properties being sold will terminate at the closing of the sale to HII of its interest in the eight respective properties.  

The properties in which Cedar is selling its 20% interests represent seven properties in Pennsylvania and one in Massachusetts; all are supermarket anchored.  They are the following:

• Aston Center, Aston, PA (55,000 sq. ft.; Giant Food Stores supermarket anchor)
• Ayr Town Center, McConnellsburg, PA (50,000 sq. ft.; Giant Food Stores supermarket anchor)
• Scott Town Center, Bloomsburg, PA (54,335 sq. ft.; Giant Food Stores supermarket anchor)
• Stonehedge Square, Carlisle, PA (51,700 sq. ft.; Nell's Shurfine supermarket anchor)
• Pennsboro Commons, Enola, PA (66,225 sq. ft.; Giant Food Stores supermarket anchor)
• Parkway Plaza, Mechanicsburg, PA (67,000 sq. ft.; Giant Food Stores supermarket anchor)
• Spring Meadow Shopping Center, West Lawn, PA (65,000 sq. ft.; Giant Food Stores supermarket anchor)
• Fieldstone Marketplace, New Bedford, MA (68,000 sq. ft.; Shaw's supermarket (closed) anchor)

Hershey Property Being Purchased

Cedar is purchasing HII's 80% interest in Meadows Marketplace in Hershey, Pennsylvania for approximately $5.3 million. After closing, the property will then be wholly-owned by Cedar.

Meadows Marketplace, a 91,538 sq. ft. center, anchored by a 67,900 sq. ft. Giant supermarket, is a ground-up development by Cedar completed in 2006.  It is 97% leased with a lease pending for the 2,500 sq. ft. sole vacancy; the Company also has a signed, definitive long-term purchase contract for an additional outparcel property at the entrance to Meadows Marketplace.

Overall Results

The proceeds of the sales to Cedar will be approximately $9.7 million (above the existing debt, as of the date of the respective closings; Cedar, at the same time, as indicated, will pay approximately $5.3 million for HII's 80% interest in the Hershey property, thus resulting in net proceeds of the combined transactions to Cedar of approximately $4.3 million; the amount of exact net proceeds may vary, subject to timing of the closings.  The net proceeds will be used to reduce the outstanding balance under the Company's principal credit facility.

Closings, which are subject to customary closing conditions, including among other things, to lender approvals, where applicable, are expected by the end of the third quarter of 2011.  

The Cedar/Homburg joint venture will be terminated as of closing of these transactions.

Cedar expects to report a current gain for financial (non-tax) reporting purposes of approximately $6.5 million with respect to the sales described above, and a deferred gain on the Hershey property of approximately $4.7 million.  

Leo Ullman, Cedar's CEO, stated, "The transactions announced today represent further implementation of our business plan, including eliminating a substantial amount of debt while focusing on enhancing our balance sheet and demographic profile.

"The retention of our self-developed Hershey property is related to our recent purchase of Colonial Commons, both properties benefiting from the strong growth and demographics in the Hershey area."

About Cedar Shopping Centers, Inc.

Cedar Shopping Centers, Inc. is a fully-integrated real estate investment trust which focuses primarily on ownership, operation, development and redevelopment of "bread & butter"® supermarket-anchored shopping centers in coastal mid-Atlantic and New England states. The Company presently owns (both exclusively or in joint venture) and manages approximately 15.9 million square feet of GLA at 133 shopping center properties, of which more than 75% are anchored by supermarkets and/or drugstores with average remaining lease terms of approximately 11 years.

For additional financial and descriptive information on the Company, its operations and its portfolio, please refer to the Company's website at www.cedarshoppingcenters.com.

About Homburg Invest Inc.

Homburg Invest Inc. owns and develops a diversified portfolio of quality commercial real estate including office, retail, industrial and development properties throughout Europe and the United States, as well as 33.7% of the units of Homburg Canada Real Estate Investment Trust. The head office of the Company is located in Halifax, Nova Scotia.

Further information on the Company can be found on its website at http://www.homburginvest.com.

Forward-Looking Statements

Statements made or incorporated by reference in this press release include certain "forward-looking statements".  Forward-looking statements include, without limitation, statements containing the words "anticipates", "believes", "expects", "intends", "future", and words of similar import which express the Company's beliefs, expectations or intentions regarding future performance or future events or trends. While forward-looking statements reflect good faith beliefs, expectations, or intentions, they are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements as a result of factors outside of the Company's control. Certain factors that might cause such differences include, but are not limited to, the following: real estate investment considerations, such as the effect of economic and other conditions in general and in the Company's market areas in particular; the financial viability of the Company's tenants (including an inability to pay rent, filing for bankruptcy protection, closing stores and/or vacating the premises); the continuing availability of acquisition, development and redevelopment opportunities, on favorable terms; the availability of equity and debt capital (including the availability of construction financing) in the public and private markets; the availability of suitable joint venture partners and potential purchasers of the Company's properties if offered for sale; the ability of the Company's joint venture partners to fund their respective shares of  property acquisitions, tenant improvements and capital expenditures; changes in interest rates; the fact that returns from acquisition, development and redevelopment activities may not be at expected levels or at expected times; risks inherent in ongoing development and redevelopment projects including, but not limited to, cost overruns resulting from weather delays, changes in the nature and scope of development and redevelopment efforts, changes in governmental regulations relating thereto, and market factors involved in the pricing of material and labor; the need to renew leases or re-let space upon the expiration or termination of current leases and incur applicable required replacement costs; and the financial flexibility of the Company and its joint venture partners to repay or refinance debt obligations when due and to fund tenant improvements and capital expenditures.

SOURCE Cedar Shopping Centers, Inc.