Nicholas Partenza – Assistant Controller, Financial Reporting Bruce Schanzer – Chief Executive Officer Robin Zeigler – Chief Operating Officer Philip Mays – Chief Financial Officer

R.J. Milligan – Robert W. Baird Todd Thomas – KeyBanc Capital Markets Collin Mings – Raymond James

Welcome to the Fourth Quarter Cedar Realty Trust Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Nicholas Partenza, please proceed.

Good evening, and thank you for joining us for the Fourth Quarter 2017 Cedar Realty Trust Earnings Conference Call. Participating in today's call will be Bruce Schanzer, Chief Executive Officer; Robin Zeigler, Chief Operating Officer; and Philip Mays, Chief Financial Officer. Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements, and actual results may differ materially from those forward-looking statements. These statements are subject to numerous risks and uncertainties, including those disclosed in the Company's most recent Form 10-K for the year ended 2016, as it may be updated or supplemented by our subsequently filed quarterly reports on Form 10-Q and other periodic filings with the SEC. As a reminder, the forward-looking statements speak only as of the date of this call, February 8, 2018, and the Company undertakes no duty to update them. During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Cedar's earnings press release and supplemental financial information posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. With that, I will now turn the call over to Bruce Schanzer.

Thanks, Nick, and welcome to the fourth quarter 2017 earnings call of Cedar Realty Trust. On this call, we will spend a few moments on last year's performance, but will dedicate the bulk of our time to discussing what lies ahead. As always, before jumping into the subsequence of the call, I would like to thank our Board of Directors for their guidance and support, as well as my senior management team colleagues for their help in setting a tone for this organization through their collegiality, collaboration and everyday excellence. Last, but certainly, not least, I would like to thank all of team Cedar for their tireless efforts on behalf of this organization. This week started off on exciting note with the victory by the Philadelphia Eagles in the Super Bowl. As a Company that has staked part of its future to the city of Philadelphia, we were particularly excited by the victory. For those of you are sports fans, you're probably aware that Philadelphia has been experiencing a sports resurgence in other leagues as well. Specifically, the Philadelphia 76ers, the city's professional basketball team has become an exciting team with a lot of promise. The way they arrived at this point is something that has a lot of parallels to what we're doing at Cedar. The 76ers mantra is “Trust the Process”. This refers to a decision a few years ago by the executive management of the team to effectively dismantle the team and rebuild it with new players, a process that were taking number of seasons. This dramatic strategic change would require the patience of the 76ers fan base, and they were, therefore, asked by 76ers management to “Trust the Process”. After years of losses, this strategic repositioning of the team is now starting to bear fruit and the 76ers fans are being rewarded for having trusted the process. At Cedar, we've been asking the same with our shareholders and expect to similarly reward them in the years to come for having trusted the process. With much of the reward being derived from our redevelopment projects in Philadelphia as well as others in our D.C. to Boston footprint. However, like the 76ers this process requires patience and trust. Specifically, we have pursued an aggressive repositioning strategy over the past few years to focus on our best assets in our best markets that led themselves to in-cooperating non-retail uses or other value-add investments. This started with our initial divestiture of 70 assets and continued with the sale of another dozen or so centers as we started building up a presence in the higher-density markets within our footprints, with an especially large bet on Philadelphia and to a lesser extent D.C. As Robin will discuss in greater detail, we now expect, towards the end of 2018, to break ground at certain of these redevelopment projects. As previously discussed our plan is to cover this capital spend largely through the sale of our non-core shopping centers in lower density markets. However, with the continued challenges to retail performance and signs of value erosion on the asset level, we must nimbly navigate this challenging retail environment, while continuing to pursue our audacious plan to eventually owning portfolio that is predominantly urban and mixed-use. These challenges are evidenced by what we have experienced over the last couple of months. In 2016 and 2017, we essentially resolved our five anchor moveouts by releasing four of the five with the fifth poised to be finalized and in active lease negotiation. 2018 was meant to be the first full year, where in we benefited from these new anchor tenants. However, towards the end of 2017, we are presented with an opportunity to lock in some of our highly desirable anchor tenants for longer terms in exchange for agreeing to reduce their rent. This proactive tenant retention strategy is largely a function of learning we experience, while backfilling our vacant anchors to it that in many instances we are better served taking a little bit of pain in retaining a strong anchor than spending a lot of time in capital to replace an anchor. Unfortunately, while executing this proactive anchor retention strategy, we had Bon-Ton, a tenant in two at our properties filed for bankruptcy protection over the last few days. Although, we are in pretty good shape in terms of backfilling the Bon-Ton spaces with preliminary LOIs under negotiation, the combination of the lost earnings through rent concessions, coupled with the lost rent from Bon-Ton pretty much exhaust the upside that was embedded in 2018. As we look ahead, we are hopeful and shareholders ourselves that we can all eventually benefit from the embedded growth in our portfolio without having to contend with downward earnings pressure from one situation or another. That said given the large challenges facing retail, we take comfort in knowing that our longer term intent is to dramatically reduce our exposure to necessitudes [ph] of these market dynamics. We are further gratified by the moves we have made on the balance sheet front over the last few years. By terming out our debt until 2021 and refinancing the bulk of our Preferred B, we have reduced our cost of capital, while insulating ourselves from a capital markets correction. With the recent spike in yield on 10-year treasuries and their dramatic shopping center REITs sell off, these decisions appear to have been quite prescient. A further downward force on 2018 is, of course, the non-real estate matters with which we had to contend in, specifically the activism by Snow Park and the litigation commenced by our former COO, who was terminated by our Board of Directors for cause two years ago. Taken together, these two nonrecurring matters are expected to cost roughly $0.01 per share and increased G&A for 2018. On that topic, I would like to just take a moment to address the publicity generated when the Mozzachio lawsuit was filed. Allow me to assure you echoing statements our independent board has made publicly, the allegations raised in this terminated employees complaint against me and others are categorically false. Entirely without merit and shall be defended in due course. Above all, false claims of harassment brought by those seeking to profiteer of a public sentiment to service to the community of women who have suffered legitimate grievances of this nature and who had our full support and sympathy. We have every confidence that this matter will be favorably resolved in due course and we truly appreciate the support that all of our constituencies have shown us throughout this period. Looking ahead, we anticipate making headlines for you based on our real estate accomplishments such as the exciting redevelopment projects, we've been diligently working on and the progress we're making in growing our leased occupancy and our thoughtful and diligent approach to capital allocation. With that, I will turn it over to Robin.

Thanks Bruce. Good evening, we have continued our leasing momentum with a strong effort of the quarter, executing a total 38 deals, totaling over 270,000 square feet at an average 12-month rolling ABR of $13.23 per square foot. This brings our total leased occupancy to 93%. With the exclusion of a 2,300 square-foot Dunkin' Donuts lease to backfill a higher rent-paying bank pad, the total comparable lease spreads for fourth quarter are 7.7% and new lease spreads are 11.6%. Same-store NOI growth for the quarter excluding redevelopment is 0.1% year-over-year and 0.5%, including redevelopment. The increase from redevelopment is largely driven by Carman's Plaza, which we will discuss more in detail a little later. While we have all grown weary of discussing our five vacant anchors, given the current retail climate and activity the discussion is still relevant. As we shared previously, we have effectively taken care of the five vacant anchors. We are currently under lease negotiations for the former Acme at Carll's Corner and Popcorn Beauty is joining Keith's [ph] and the former Pathmark box at Carman's Plaza and rent is scheduled to commence March 2018. The same-store impact from the vacant anchors is expected to increase total NOI by approximately $1 million from 2017 to 2018. However, this will be off that by approximately $1 million from the anticipated closure of our two Bon-Ton, at Trexler Mall and the [indiscernible] since Bon-Ton filed chapter 11 bankruptcy earlier this week. On past calls, we've talked a lot about our proactive leasing. This is a prime example. Although Bon-Ton just announced their bankruptcy filing days ago, we have been preemptively marketing these boxes. Prior to their announced closure, we had a list of prospects for the boxes. We already have LOIs in place for all of the Trexler Mall box and 20,000 square feet of the 55,000 square feet [indiscernible] box. Additionally, in order to show up longer term with our better credit national tenants that are high – daily traffic drivers, we have strategically decided to grant net release to a few key resellers in categories such as grocer, hardware and fitness. As a result, in 2018, we anticipate $750,000 decrease in NOI due to the rent release. The combination of these three factors results in a same-store NOI guidance for 2018 being flat. All in all, we continue to make great strives and have positive momentum on executing our business plan. Our recent acquisition, Christina Crossing, is doing well under Cedar's ownership. We have leased our – or have under negotiation several small shop deals with better merchandising and stronger credit tenants, improving occupancy from 80.3% upon acquisition to 84.2%. We anticipate a 6% to 7% increase in NOI for this center year-over-year. We are also pursuing future potential development opportunities here in and around the center. As mentioned previously, progress continues at Carman's Plaza in Massapequa, New York, with a lease execution of Popcorn Beauty. All of the entitlements have been received. We anticipate delivery in 24 Hour Fitness in May 2018 on schedule, and the Plaza renovation for the remaining portion of the center is expected to commence in March. In Philadelphia, Pennsylvania, we are actively pulling together the final touch with an order to break ground on the first phase of Port Richmond Village this year, which entails reconfiguration of the small shop retail Facing Aramingo Avenue. It's a three-pad building, totaling 17,000 square feet. Also in Philly, South Quarter Crossing is making a very strong progress with multiple LOIs under negotiation and a very exciting tenant lineup involvement. Negotiations are underway for the grocer and anchor spaces at East River Park and Washington, D.C. And the excitement from national tenants, the community and the politicians in D.C. about the transformation of this – neighborhood is palpable. We anticipate that as these projects in the more urban densely populated areas come to fruition, we will be better insulated from the earnings volatility of large tranches of retail big boxes in lower population density market. We consistently look at value creation within our portfolio, and have an ongoing pipeline of opportunities that we continue to advance. It is our plan and expectation that the creative talents and the skill set of the team we now have in place will help us unlock the upside that we have identified within our portfolio to continue to grow the value of this company. I will now turn the call over to Phil.

Thanks, Robin. On this call, I will briefly highlight operating results, recap recent balance sheet activity and provide our 2018 guidance. First operating results. For the quarter, operating FFO was $12.4 million, or $0.14 per share. For the full year, operating FFO was $48.3 million or $0.55 per share. This result is high-end of our full year guidance range. Same-property NOI growth, excluding redevelopment, is 0.1% for the quarter and negative 1.3% for the year. This result is in line with our full year guidance of negative 1% to negative 2%. As previously discussed, our 2017 decrease in same-property NOI was driven by releasing of anchor spaces vacated in late 2015, early 2016, along with the related but temporary co-tenancy impacts. Moving to the balance sheet. In mid-December, we issued additional 2 million shares of our 6.5% Series C Preferred Stock and use the proceeds to return equivalent number of shares of our 7.25% Series C Preferred Stock in mid-January. As we had to provide 30-day prior notice before redeeming the higher coupon Series C shares. At year-end, we had temporarily used the proceeds from this Preferred C offering to reduce the outstanding borrowings on our revolving credit facility, which resulted in us reporting debt to EBITDA of 6.9x and approximately $180 million of availability on our revolving credit facility at year-end. Reflecting the Preferred B redemption that took place in mid-January debt to EBITDA would have been 7.5x and revolving credit availability would have been approximately $130 million. This borrowing capacity, along with no debt maturities until 2021, provides us ample balance sheet flexibility as we enter 2018. Moving to 2018 guidance. We are establishing an initial 2018 operating FFO guidance range of $0.53 to $0.55 per share. This guidance is based in part on the following; same-property NOI excluding redevelopments being relatively flat, Bon-Ton bankruptcy impact of approximately $0.01 per share, incremental third-party fees related to shareholder activism and ongoing litigation in connection with the termination of our former Chief Operating Officer aggregating approximately $0.01 per share, and no acquisitions or dispositions as we'll update guidance quarterly for any completed transactions. This fits with the understanding primary drivers that are the relatively flat same-property NOI in our 2018 guidance, and we provide high-level roll forward. First, our two Bon-Ton locations will result in the loss of approximately $1 million, where almost 1.5% of same-property NOI. This loss offsets the anchor releasing progress we’ve accomplished that was poised to contribute a similar amount of the increase in 2018. Further, approximately $750,000 are slightly more than 1% of same-property NOI of anticipated anchor rent reductions Robin discussed will be offset by a similar amount of growth from the remaining same-property portfolio. Accordingly, these four components substantially offsetting each other in 2018, we anticipate relatively flat same-property NOI. We remain optimistic that our leasing efforts will result in slightly positive same-property NOI growth for 2018. Having given the relatively small size of our same-property pool with a little less than $750,000 representing 1% growth, we are establishing 2018 guidance based on relatively flat same-property NOI. Before concluding my remarks, let me add a little more context around our anchor leasing activity. First, we ultimately expect the releasing of the two Bon-Ton spaces combined to result in 20% higher rents based on LOI currently being negotiated, however, such rental ramp-up in 2019 through 2020. Accordingly, we will build the full but temporary impact from Bon-Ton vacating these spaces in 2018. Further, the anchor rent reductions we anticipate are admittedly a step back, it’s established from footing by proactively maintaining and spending time for anchors that have good credit and generate hyper traffic that we believe in the long run will benefit our junior anchors and small shop. Finally, while the leasing progress we have made regarding the same-property anchors that vacated in late 2015, early 2016 is blunted in 2018 by the Bon-Ton bankruptcy. All the related anchor replacements have not yet taken possession and begun paying rent. Accordingly, in addition to the incremental $1 million of cash NOI contribution they are poised to provide in 2018, it is being offset by Bon-Ton. We anticipate further incremental contributions of them of $500,000 in 2019 followed by an additional $500,000 in 2020. And with that I'll open the call to questions.

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of R.J. Milligan with Robert W. Baird. Please proceed with your questions. R.J. Milligan: Hey, guys, good afternoon. I was wondering can you give us a little bit more color on the rent reductions for the banking anchors where you had leases assigned. What were the reductions? What were terms that were adjusted? And I think that Phil, giving your comments of $1 million of incremental NOI in 2018 and another $500,000 in 2019, and another $500,000 in 2020, so that's $2 million. I think you guys had originally forecasted that that potentially could generate over $4 million of NOI once you re-tenanted those anchors? So I'm curious does that equate to a 50% rent reduction from what you guys had originally planned? If you could just some more color on that. Thanks.

Hey, R.J., it’s Phil. I will take the first – the last part of that question and then I'll let Robin deal with more detail on the rent reduction. But – so when I was talking about that I was talking about just in terms of same-store. One of the properties is not a same-store property and it's one of the higher rents the commons where the anchor replacement there is probably just grounded up close to a $1 million, so the two will get you to $3 million and then there's some already in place this year, and that gets you up close to $4 million. So the same – there was five of them – four of them are same store. And I was only dealing with the same-store impact. Does that help? R.J. Milligan: That helps in terms of equating the four to the four. But can you talk about or maybe Robin can talk about what – how many of those they can anchor leases that had been reassigned or renegotiated? And what were the new terms?

R.J., just to be clear, we're talking about two different items. So in other words, we're expecting an increase on account of these newly signed anchor leases. And Phil walk you through how they still are going to deliver $4 million, however, the 2018 same-store impact from those new anchor leases was going to be $1 million. Separate and apart from that, we negotiated and Rob will go into detail, rent concessions to certain other anchored tenants that caused the same-store NOI to go down by $1 million. And so there is a down $1 million, up $1 million dynamic, which neutralizes the same-store positive impact from new anchors coming on board. But those are two different pools of anchors. R.J. Milligan: Got you. That helps clears it up. So the $4 million is still in place for the new anchors signed, it's just going to be a longer impact to same-store NOI in terms of its $1 million in 2018, $500,000 in 2019, $500,000 in 2020. But – and that's the same-store pool, but if you take everything that's not in the same-store pool and the impact this year, you're still getting to close to your $4 million. And now the renegotiations or rent concessions were with the separate anchors and if Robin could talk about that, that would be helpful?

Exactly.

Sure. So we had a couple of anchors that came back to us in order to renew their lease. We decided to – in order to get them to renew their lease and have them stay in the center for a long-term, we gave them slight rent reduction to the turn of $4 or $5 a square foot in those cases. We had another tenant that we gave about $1 square foot too. We had a grocer tenant that we kept flat. And we had another grocer tenant that we shaved about $0.75 a foot off of. So those were the pool of tenants. And as we’ve said in the comments, these were strategic decisions that we made all of these fall on their large anchor tenants, they're all in the category of national tenants, major traffic drivers for the shopping centers and we felt like these were important tenants to lock up. These are all done in the vain of renewal or option exercises and the rent release or rent reductions were done in conjunction with renewal or option exercise, to keep them in long-term as a strategic decision relate to the longevity of small shops rent generation and increased for the shopping center. R.J. Milligan: That’s helpful. Is there a way that you can quantify? What was the average remaining lease term for those that you gave rent concessions to? And then Robin, you talked about $4, $5 a foot on one, $1 foot on another, can you talk about what's the average, say, downward spread between – if you groups all of them together where you provided rent concessions, what was the average leases term remaining on those anchors? And what was the average decline in rent?

Sure. So for all of the tenants, they were all expiring. So these were all tenants that were up for expiration that we have these discussions with. And on a ballpark, if you were to take the tranche of them and given average – on average, we took it down about $1.50. R.J. Milligan: Was that on a percentage basis, on a basis of what rent?

It’s about 300,000 square feet all together. R.J. Milligan: I guess it’s plenty.

It’s probably – I’d say it’s probably somewhere in the high single-digit, low double-digit, call it 10% just to keep the numbers around. I'm doing that on the top of my head, but that’s order of magnitude what we're talking about. R.J. Milligan: And my last question and I’ll get back in the queue is, do you anticipate more of these rent reductions in 2018?

Yes. Interestingly, if you look at our expiration schedule, the answer is we’re reasonably confident going into 2018. It won't be as significant, but as I've said in my comments, I think this is a team that we're probably going to see more than that we know whether other of our colleagues are seeing, which is that the world is really breaking down into have and have nots with – among retailers and haves, I read the headlines just like the have nots read the headlines and the folks that are stronger recognize that there is a value to keeping them. And they're leveraging the headlines. And yes, this is a game of poker where they have the retailer has a – the strong retailer has a bigger stack and a stronger hand. And that's no secret, and so as broad characterization, we and other landlords going to work with these anchor tenants to keep them. R.J. Milligan: Thanks, guys. I’ll get back in the queue.

Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Hi, thanks, good afternoon. Just first question, Bruce, and Robin, you both touched on some of the key redevelopments that you expect to commence by the end of 2018. Can you just shed some additional color on the timing of those starts and maybe provide some detail around the cost and scope of those projects? And then, on the current environment, Bruce, maybe you can also just touch on some of the progress that you are making on the disposition of additional assets, which you commented will be used to fund those redevelopments?

Sure, so I will start as I mentioned in the call, Commons is already underway, and we anticipate finishing up the façade work as soon as the weather breaks on the spring, which is likely. We are Long Island, so hopefully the weather will cooperate, but we are planning this to – to begin that in March. And then with Port Richmond, we are planning to put a shovel in the ground there, probably the latter part of 2Q, beginning 3Q for Port Richmond. And then for South Quarter and East River, as I mentioned, the leasing progress there is going quite well, and we are getting a lot of really good tenant interest and the start of construction in some ways is predicated on the timing of lease execution for those. But the construction start for that could start at the latter part of 2018 into 2019, but is predicated on the timing of lease execution for that. But it is moving along quite nicely.

And then I guess, to pickup from that Todd, you're asking about disposition progress. So this is a larger strategic discussion. But divide up our thoughts into half, we could either sell these assets outright in some type of a large single transaction or we can sell them in more a manner in which we try to match fund them. I'm going to focus on that latter category. There is some last strategic transaction that occurs, you will read about it and obviously be done thoughtfully and there will be some rationale behind it that goes beyond the match funding of our redevelopments. In terms of the disposition progress, as we start spending the money, putting out the capital we'll literally start bringing assets to market. So we're slowly starting to prepare a few smaller assets to bring to market, But realistically, it won't be until we start spending the money that we’re going to start bringing these assets to market. As you know, we don't make a secret of this, of course. We have circa $100 million NOI about $28 million of $30 million of that is in our bottom two quartile assets, just you could – inferable from our corporate presentation. And so when you do that math, these are relatively small assets in terms of having on average $1 million of NOI per asset. And so there's a pretty liquid market for those assets. The transactions are not terribly complicated and so are comfortable that we could, again, match fund the dispositions with the capital spend as we incur it.

Okay, for some – in terms of some of the smaller assets, if you were to sell of a [indiscernible] have you seen any change in pricing in recent months as sort of the 10 years crept up?

So we haven’t, the answer is we suspect that – let me put it this way, we internally are – have raised our internal cap valuation for these assets as the tenure has started to drift up. We track, as I think as mentioned in a prior call, we track the transaction activity in our markets diligently and in fact probably do a better job of it almost than anyone. And we are not seeing very much transaction activity. So a lot of our view on cap rates has to do with drawing an inference from what we're seeing on some of the big box center activity and translating that into what we might expect to see on the community center front. Again it's in precise but we do think that our cap rates have probably creeped up to the tune of 25 basis points, maybe a little bit more, maybe 30 or 35 basis points. The nice thing is, from our perspective, again going back to the $30 million in round numbers of NOI. But these are relatively high cap rate assets, and so as a practical matter, when you have some cap rate movement on an asset that already has a high cap rate, you're not really talking about such meaningful value destruction that there's any reason to really panic. So we're monitoring the market. We do think cap rates are drifting up a little bit. It's not going at a pace or to a point where we feel we need to step on the gas and so for right now we are just kind of paying attention to what's going on and waiting till we start spending capital to bring these assets to market.

Okay, and Phil, just regarding the Bon-Ton so a penny per share about $1 million of NOI for the full year, when will rent payment be discontinued there? And then also what's the timing around the anchor leases that you renegotiated mid-term?

So on the Bon-Ton, we’ll get no rent in 2018 related to those. So you will see the full impact of the $1 million for that full $0.01 will come through an impact earnings in 2018, it will ramp with may be half an year, or little less than 2019 and then on to 2020.

Got it. Okay and just lastly, and apologies if I missed this, but – so the difference between NAREIT-defined FFO and operating FFO? So it's about $0.05 at the midpoint. I understand that the penny related activism and ongoing litigation. So what else specifically makes up the difference there?

None of the additional costs related activism is in there. What it is generally? Are you talking about guidance or?

Yeah, in the 2018 guidance.

So, a lot of that is demo and cost, re-development cost related to demoing properties as we start to advance them. So I can port Richmond for example, a building it up front that's coming completely down to provide space for three new pads, so a lot of that is demo cost. We generally just put development-related cost that get for expensed for GAAP that we when think about the returns, we would think about more as an investment and not an expense or financing costs that may get expensed for a GAAP such as early extinguishment payment. The incremental G&A, if you will, related to the other matters is not excluded, it's not an add-back for us. So it's almost completely related to just demolishing cost that get expensed for redevelopment in the guidance.

Okay, so that is an add-back to operating FFO.

Yeah, I think if you look at the just a year-end, it's just items. There is no new items being added for next year, whatever. It is those items and for 2018, currently it's just really demolition related to redevelopment.

Okay, thank you.

[Operator Instructions] Our next question comes from the line of Collin Mings with Raymond James. Please proceed with your question.

Thanks, good afternoon. Bruce I just wanted to go back to the rent reduction for a second. I mean you noted those were strategic with quality anchors, but just how is negotiating power with some of the smaller shop tenants in D.C, with need to lower rents to keep some of those tenants in place as well.

So that is as you intimated in your question, Collin, that is a completely different dynamic, in which the leverage or the relationship, the leverage relationship between the landlord and the tenant is quite a bit different. That's not to say, if you have a productive tenant that we might not be reasonable with them in rent negotiations, but ultimately, we're trying to track sales and look at tenant health and to a large extent, we'll try to maximize rent from those small-shop tenants, and generally speaking, think about it as a function of how they're doing in the center. So I’ll give it to Robin to see if she wants amplify and that’s the one last point I would make is that the classic underlying rationale of the model that we employ, which is, of course, to have high-quality anchors that drive traffic in order to be able to extract good rents from the small-shop tenants remains the basic model of our centers. And so with that in mind, as we are giving rent concessions to the anchors, we're certainly trying to make sure that we get as much of that back from the small-shop tenants as we can.

Yes, I would just echo that I don’t have much to add there, except to say that it depends and we look at each situation on a case by case basis then as we look at changing some of the characteristics of some of our centers and nature of what the comp – what is an anchor is different as some of the centers do have in some centers, some would consider on paper small shops does operate as an anchor and some situations, but by and large, we look at each situation on a one-on-one basis, we look at cost of occupancy and tenant health and all those types of things. And make the most cogent strategic decision based on that shopping center and what it takes for the entire thing to work and to create the most long-term value there. So but by and large, it’s exactly what Bruce said.

Okay. And then maybe going back to one of RJ's follow-ups as far as just the expecting more of these, I think Bruce you commented as you kind of go through some of these upcoming lease expirations there might be some other things you take off hard look at in terms of what might be the best long-term, just curious how you think about maybe being even more proactive in trying to kind of reset the bar now versus kind of handling these may be as expirations or options to come up?

What I would say and hopefully, I understood your question, so I'm going to try to answer it and if I don't get it, could redirect for sure. We always want to grow our rents. We won't want to reduce our rents and so we don't – it's not that we go to our tenants and we say that to them how's this for a lower rent and see if they want to hit that bid, but rather we'll engage with strong tenants who we want to keep in advance of their option, exercise and recognizing again that strong anchors have leverage, we'll comfortably get into – or I should say comfortably will recognize that we need to be in a conversation that could entail rent reduction. And so that’s just becoming part of the business. And we are getting more and more comfortable with that as a facet of the business, not that we are happy about it, but that this is the environment that we are in, and so that's how we're approaching it. Does that answer your question?

Yes. That's helpful, just to kind of get strategically how you are thinking about it. I guess, couple of other quick ones from me just from an overall watch list perspective, anything else that’s kind of particularly on your radar screen and I don't want to get into too much detail, but just maybe characterize that versus a year ago?

Yes, I think the classic categories are still the ones that we have our eyes on. As you're aware, we don't have the types of tenants that have experience, that sorts of credit issues that a lot of other shopping centers or more operators own, Bon-Ton is a great example of something we don't have a lot of in our portfolio. So as we look out, it's, again, the classic kinds of challenge, retailers who do make us a little bit nervous and with whom we spent time thinking about strategically how to potentially release. What I would tell you is that this – we experience of Bon-Ton is a great example of the improvements that have occurred at Cedar over the years. And so, specifically, when we had our five anchor move-outs, to be fair that was before Robin and Tim Havener were here. And while we did a very solid job of addressing them, I don't think that we did what I will call a blue-chip job of addressing them. When we learned that Bon-Ton was having challenges, the approach is a quite a bit different such that when Bon-Ton, we were in the Bon-Ton was likely to going to file, we already had tenants pretty much for the entirety of what was coming back to us and as Robin disclosed, we have factored LOIs for a fair amount of it and we are reasonably confident just based on the level of interest that we are seeing for the balance of the [indiscernible] space, there is a reasonable likelihood that will all of this filled. That dynamic around the Bon-Ton bankruptcy and subsequent vacancy is the approach that we have been taking over the last couple of years with Robin and with Tim at the helm of our leasing efforts. And so I could tell you that in virtually all the situations were we have those type of tenants that could potentially go out. We also have lists of tenants who could very well go in. And people with whom we have spoken. And so I would tell you that the posture and the approach is different then so while I certainly – I could not only not promise you that we won't have more of these I could promise you that we will have more of these but what I across to tell you is that our approach is much more proactive and thoughtful and so we're able to manage through these in a much less painful manner.

Okay. And then just one last one from me going back to Todd's question, just as far as asset pricing, Bruce and the response that – you kind of indicated internally how you guys are thinking about at least maybe a 25 bp move in cap rate. I'm just curious – I may have missed this is that just on the kind of a bottom tier of the portfolio? Is that kind of a blended average would maybe the top tier not moving as much and some of the bottom tier moving more just – can you put a little bit more color around that? And then to the extent, have you seen – along these lines, have you seen any shift in terms of just the financing environment as you talk to potential players as you look to bring some more assets to the market?

So my comments Collin were specifically around the bottom two cortile assets, so the assets that I would say have cap rates in the high 7s to low 8s. The better quality stuff, where the lower cap rate stuff in our portfolio and what we're seeing as we speak with people are looking at opportunities in some of these higher cap – pardon me, higher quality, lower cap rate markets is that people are still solving and generally speaking cap rate is a way of describing a deal is not typically how a deal is underwritten. Right, so deals are typically underwritten too and unlevered or levered internal rate of return and I could tell you that the IRRs that investors are solving for in these high density markets, these core type assets, certainly the stabilized assets, you are still looking at unlevered IRRs that are sub 7. And so you are talking about going in cap rates that are still incredibly aggressive and we aren’t seeing a lot of transaction activities that tell us that's moved, but at the same time, that in turn supports the notion that those assets values are hanging in there. The only concluding point I'd make is that, of course, a lot of this is a function of the risk-free rate, right. As the risk-free rate, the 10-year rate climbs, it's a very difficult to pass it, that you're not going to see risky assets, go up, in terms of the yield that is required and therefore, the price going down. So we haven’t seen it yet, there has not been a lot of transaction activity in that slice of the market. But I would expect that if you see a sustained increase in the 10-year that you could very well see cap rates drift up in that part of the market as well.

Appreciate that color. Thanks Bruce.

Okay, Collin.

Thanks, Collin. And this Phil, let me just circle back real quick to Todd’s question about the difference between operating FFO and NAREIT FFO. There's one item I did forget and that feels like last year actually happened in early January, which was a redemption of the Series B Preferred and the redemption cost on that, Todd, were about $3.5 million, so that is more than half the difference with the remainder being demo, which I talked about earlier. But feels like last year because we issued the Series C last year the second half of that redeeming to B took place in the middle January and that was about $3.5 million and that is the other significant item that we're adding back there.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Bruce Schanzer for closing remarks.

Thank you all for joining us this evening and more generally, thank you for trusting the process at Cedar. We are pretty sure that there will not be a victory parade for us as there was today Eagles when we eventually achieved our audacious goals. But we are confident that our shareholders will be gratified for having trusted this management team as we patiently executed our thoughtful and disciplined strategy. With that, I wish you all a good night.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.