The board of directors of Cedar Realty Trust Inc. received and rejected an "unsolicited and unrealistic" merger proposal from Wheeler Real Estate Investment Trust Inc.
In a letter to Jon Wheeler, Wheeler's chairman, Cedar Realty's board said that the offer — which the board said it understands is backed by Cedar Realty shareholder Snow Park Capital — is not "in the best interest of Cedar and its shareholders."
The board expressed concern over how Wheeler's offer could create value for Cedar's shareholders, considering Wheeler's poor returns and financial performance. Wheeler also cut its quarterly dividend in May because it was unable to generate sufficient cash flows. It also is highly leveraged, with debt to EBITDA of nearly 10x.
Cedar's board also said that Wheeler's portfolio, which comprises class B and class C assets, does not align with the quality and positioning of Cedar's portfolio. Additionally, it pointed out that Cedar's market capitalization is about $550 million, while Wheeler's market capitalization is roughly $95 million.
