|
Company
|
Shares Traded*
|
% of Avg Volume
(3 month)
|
|
Secure Computing
(Nasdaq:SCUR)
|
3,746,690
|
586%
|
|
New Gold
(NYSE:NGD)
|
645,374
|
236%
|
|
Coeur d'Alene Mines
(NYSE:CDE)
|
23,422,244
|
190%
|
|
Cedar Income Fund
(NYSE:CDR)
|
715,729
|
185%
|
|
* Data as of 10:00am EST September 22, 2008
|
Will Cedar Income's Gamble Pay Off?Investors may be used to the formula of tough times equaling store closures, cutbacks and job layoffs, but Cedar Shopping Centers (CDR) is taking a different approach. Rather than waiting for an upswing in the economy, CDR, a real estate investment trust focused on supermarket anchored shopping centers, has chosen to expand.
Acquisitions and development during a weak economy will either prove to be a costly error in judgment or an inspired move into action.
From the beginning of 2007 through June of this year, CDR has acquired 22 shopping and convenience centers. CDR operates its 119 properties in nine Mid-Atlantic and New England states with additional properties as far west as Ohio and Michigan. The bulk of CDRs new developments are taking place in Pennsylvania. A review of CDR's quarterly presentation reveals that its no coincidence since 47.3% of its total
revenue for the three months ending June 30 were derived from the tax friendly state. Pennsylvania has a flat income tax rate of 3.07% and retirement income is not taxed altogether. Outside of Pennsylvania, additional development projects are in the pipeline for other cities including Revere, Mass., Naugatuck, Conn. and Roanoke, Va.
Environment
Even as oil prices surged earlier in the year customer could immediately relate rising fuel prices at the pump with rising prices in grocery stores. If anything, higher prices, which will turn some customers to fast food, will also convert another segment of shoppers from dining out regularly to patrons who make extra trips to the local shopping center. The more traffic the shopping centers can gather, the more likely the tenants are able to pay their rent to property owners like CDR.
Downgrade
Stifel Nicolas
downgraded CDR today. The downgrade could have been in response to the announcement of executive's contracts or possibly due to fear over the possibility of CDR overextending itself with its $350-400 million development pipeline.
Competition
CDR competes with larger
REITs like Maryland based
Federal Realty Investment Trust (NYSE:
FRT), New York based
Kimco Realty (NYSE:
KIM) and
Pennsylvania Real Estate Trust (NYSE:
PEI). With a market cap of just over $600 million, CDR is a small cap REIT play that has done well for investors this year returning 39.23% year to date. CDR is currently paying a healthy dividend of 6.40%.
Its dividend is higher than all of its competitors' except PEI which is currently yielding 10%. Investors should note that CDR's stock has trailed the performance of the S&P 500 once you extend your time horizon beyond returns over the past 12 months.
Final Thoughts
CDR at $13.46 is trading near its 52-week high of $14.38. The REIT's decision to expand during a credit crisis has been rewarded by an increase in its stock price. I think this is one definitely to watch as the Fed may have more economic tools to throw at the system, which could make a lower price for CDR more attractive.
For further reading, see
The REIT Way and
Basic Valuation Of A Real Estate Investment Trust.
