Cedar Shopping Centers to Purchase Up to Seven Shopping Centers for Approximately $200 Million

PORT WASHINGTON, N.Y., Aug. 16 /PRNewswire-FirstCall/ -- Cedar Shopping Centers, Inc. (NYSE: CDR) ("Cedar") today announced that it, on behalf of a joint venture between Cedar and RioCan Real Estate Investment Trust of Toronto, Canada, (TSX: REI.UN) ("RioCan"), has entered into a definitive purchase agreement to purchase five anchored shopping centers from Pennsylvania Real Estate Investment Trust (NYSE: PEI) ("PREIT") for approximately $134 million.  

Purchase of an additional property is subject to certain conditions, including terms of an existing partnership between a third party joint-venture partner and PREIT.  The properties will be purchased by the existing Cedar (20%) and RioCan (80%) joint venture which has acquired a number of properties to date.  

Cedar has also agreed to purchase from PREIT a seventh property, which will be owned by Cedar and RioCan on a 50-50 basis (through separate joint venture arrangements) with the expectation that the parties will eventually redevelop this property. Closing of the purchase of that property is subject to reaching agreement with a third-party joint venture partner of PREIT.

The aggregate purchase price for all seven properties, including the two properties in which PREIT owns joint venture interests, if in fact all closings are completed, would be approximately $200 million, exclusive of closing costs and adjustments.  Certain "earn-out" arrangements for lease-up of vacant premises during the next two years could potentially result in a further increase of the aggregate purchase price.

Three of the initial five properties to be acquired by the Cedar/RioCan joint venture are located in Pennsylvania, one in New Jersey, and one in Virginia.  The remaining two properties potentially to be acquired are also in Pennsylvania.  Four of the properties are anchored or shadow-anchored by supermarkets or a "club" store.  The aggregate owned-GLA of the initial five properties is approximately 936,000 square feet; for the seven properties the total owned-GLA is approximately 1.8 million square feet.

The initial five properties consist of the following:

• Monroe Marketplace in Selinsgrove, Pennsylvania, a 335,000 square foot shopping center, built in 2008 and anchored by a 76,000 square foot Giant Food Stores supermarket, a 68,000 square foot Kohl's Department Store and a 51,000 square foot Dick's Sporting Goods and shadow-anchored by a 127,000 square foot Target.
• Creekview Shopping Center in Warrington, Pennsylvania, a 136,000 square foot shopping center, built in 2001 and anchored by a 49,000 square foot Genardi's Supermarket and a 25,000 square foot Bed, Bath & Beyond, and shadow-anchored by an approximate 163,000 square foot Lowe's Home Improvement Center and a 126,000 square foot Target.
• Pitney Road Plaza in Lancaster Pennsylvania, a 46,000 square foot Best Buy store, built in 2009 and shadow-anchored by a Costco and a Lowe's Home Improvement Center.
• Sunrise Plaza, in Forked River, New Jersey, a 254,000 square foot shopping center, built in 2007 and anchored by a 131,000 square foot Home Depot, a 96,000 square foot Kohl's Department Store and a 20,000 square foot Staples.
• New River Valley Center in Christiansburg, Virginia, a 165,000 square foot shopping center, built in 2007 and anchored by a 30,000 square foot Best Buy, a 30,000 square foot Ross Stores, a 24,000 square foot Bed, Bath & Beyond, a 20,000 square foot Staples, an 18,000 square foot PetSmart and a 15,000 square foot Old Navy.

The two properties presently owned by PREIT together with joint venture partners, which are in contract to be sold to Cedar, but subject to closing conditions, as indicated above, including purchase of the interests of the third party partners, are:

• Red Rose Commons in Lancaster, Pennsylvania, a 263,000 square foot center, built in 1998, shadow anchored by a 116,000 square foot Home Depot and a 65,000 square foot Weis Supermarket, and anchored by a 43,000 square foot Sports Authority, a 37,000 square foot H.H. Gregg, a 30,000 square foot Office Max, a 29,000 square foot PetSmart, a 26,000 square foot Barnes & Noble, a 19,000 square foot Pep Boys and a 16,000 square foot Old Navy.
• The Whitehall Mall in Allentown, Pennsylvania, a 558,000 square foot shopping center, built in 1964 and redeveloped in 1998, anchored by a 213, 000 square foot Sears, an 82,000 square foot Kohl's Department Store and a 23,000 square foot Michael's Craft Store.  The Whitehall Mall includes approximately 50,000 square feet of largely vacant enclosed internal mall area.  This is the property that will be acquired by Cedar and RioCan on a 50-50 basis in contemplation of future re-development.

The Cedar/RioCan joint venture is expected to place fixed-rate financing at approximately 50-60% loan-to-value on all five initial properties, as well as Red Rose Commons, if acquired.

Whitehall Mall is presently subject to a first mortgage which matures in November 2018.  The current remaining balance on the loan is less than $12 million; the interest rate is 7% and amortization is on a 20-year schedule.  The loan is not assumable by right and is subject to a prepayment penalty.

The five properties being acquired by the existing Cedar (20%) and RioCan (80%) joint venture feature occupancy of approximately 97%; occupancy at Red Rose Commons is approximately 85% and occupancy at the Whitehall Mall (including the covered mall area) is approximately 92%.  The weighted average remaining lease term for all seven properties is 9.2 years and the weighted average base lease rate is $10.06 per square foot.

All closings, other than Whitehall Mall, are expected to occur by the end of 2010.

PREIT will continue to provide certain property management and leasing services for the properties for a three year period under an agreement to be entered into with the joint venture, terminable by the parties after twelve months.  Cedar Shopping Centers will retain overall asset and financial management responsibilities.

Leo S. Ullman, Cedar's CEO, reported, "Cedar and RioCan are delighted to acquire these strongly-anchored properties. These properties will greatly enhance the portfolio of the Cedar/RioCan joint venture, with an overwhelming preponderance of credit tenants including a number of supermarket and club anchors in strong, high demographic markets.  We also anticipate the potential to create additional value over time through our redevelopment, re-tenanting and 'de-malling' capabilities that have historically proven to be successful."

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 and butter"® supermarket-anchored shopping centers in coastal mid-Atlantic and New England states.  The Company presently owns and operates (both wholly-owned and in joint venture) approximately 13 million square feet of GLA at 118 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 RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $8.6 billion as at June 30, 2010. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 267 retail properties, including 11 under development, containing an aggregate of over 60 million square feet. RioCan owns an 80% interest in eight grocery anchored shopping centers in the United States and owns a 14% equity interest in Cedar Shopping Centers, Inc.  For further information, please refer to RioCan's website at www.riocan.com.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such 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 ourselves and our joint venture partners to repay or refinance debt obligations when due and to fund tenant improvements and capital expenditures.

SOURCE Cedar Shopping Centers, Inc.