Snow Park Capital Pens Letter To Cedar Park, Urges Consideration of Strategic Options

Oct 25 2017 | 7:54pm ET

Jeff Pierce’s activist hedge fund Snow Park Capital Management has sent a letter to Cedar Realty Trust’s board of directors calling on it to explore strategic options to increase shareholder value, including a potential sale of the company or liquidation of its assets. 

Snow Park disclosed an ownership stake in Cedar Realty back in September and now holds approximately 3.5% of the company’s outstanding common stock. Cedar Realty is a REIT investing primarily supermarket-anchored shopping centers in the U.S. mid-Atlantic and Northeastern coastal regions.

In the letter, Snow Park wrote that the company’s current share price of around $5.55 is significantly below where it – or its assets - would be valued in a potential sale. Snow Park estimates Cedar Realty’s NAV to be in the $7-$8.25 range, the activist investor said, and took the company to task not only for persistent underperformance but also for rebuffing several financial and strategic firms that have expressed interest in the company’s asset portfolio. 

Snow Park’s letter further slammed management’s plan to pivot the firm towards mixed-use developments, writing “we do not find credible management’s claims that the ‘next leg of value creation’ will come from the high-risk, mixed-use developments that it has described only in abstract terms and for which the Company has no core competence or identifiable experience,” and taking issue with compensation agreements with insiders that allow them to “earn compensation packages more typically seen at Fortune 500 companies or professional athletic teams rather than tiny, subscale REITs.”

Snow Park held an introductory call with the board on October 9, according to the letter, and while it hopes “recent overtures” suggest a willingness to address the fund’s frustrations, will consider nominated a slate of independent director candidates for election at the company’s 2018 annual meeting.

For its part, Cedar responded to Snow Park’s letter Wednesday with fairly boilerplate language, saying in a statement that the company “welcomes open communications with all shareholders, and appreciates constructive input that may advance our goal of enhancing value,” and that its board and management team “regularly evaluate strategic options.”

New York-based Snow Park Capital Partners is an investment advisor that focuses on publicly traded real estate securities. The firm most recently took on department store chain Dillards with a similar push to unlock value it considers trapped in real estate assets. 

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