Snow Park Capital Partners LP has built a stake in retail-focused real estate investment trust Cedar Realty Trust Inc (CDR.N) and is urging it to explore strategic options, including a potential sale, according to two people familiar with the matter.
Cedar shares rose as much as 4 percent on the news, and ended up more than 3 percent at $5.62, giving the Port Washington, New York-based company a market capitalization of $513 million.
Talks between Snow Park, an activist hedge fund, and Cedar are at an early stage, and it is unclear if Cedar will decide to conduct a strategic review or consider a challenge to the company’s board, the sources said this week.
The sources requested anonymity because the matter is not public. Cedar and Snow Park did not immediately respond to requests for comment.
Under new management since 2011, Cedar has been shifting out of non-core retail assets such as shopping malls to focus on grocery-anchored strip malls.
As many prominent retailers went bankrupt during the sector’s downturn over the past year, Cedar’s stock has fallen from highs of more than $8 in mid-2016 to less than $6 in recent months.
“We still struggle to reconcile the negative sentiment in the news media and among investors on account of the secular changes in retailing with the progress we continue to make,” Chief Executive Bruce Schanzer said during the company’s earnings call in August.
“We have no real exposure to distressed retailers,” he said.
Earlier this year, Cedar Realty considered a sale to rival retail REIT DDR Corp (DDR.N), but decided against it, the sources said.
DDR did not immediately respond to requests for comment.
DDR has hired a new CEO, David Lukes, and announced plans to streamline its organizational structure.
Snow Park said in July it had bought a stake in Dillard’s Inc (DDS.N) and has encouraged the retailer to unlock the value of its real estate by considering other uses for some properties.
Last year, Snow Park took a stake in luxury apartment developer Monogram Residential Trust and urged it to explore options including a sale.
In July, Monogram agreed to sell itself to an investment group led by Greystar Real Estate Partners LLC. The deal, valued at around $4.4 billion, closed this week.
Source: Reuters.com