(Reuters) - Activist hedge fund Snow Park Capital Management sent a letter to Cedar Realty Trust Inc (CDR.N) on Wednesday urging the U.S. shopping center owner to explore options, including a potential sale.
Snow Park said Cedar had already received several expressions of interest from potential buyers, and that its shares were trading significantly below where the company would be valued in a potential sale.
In addition, Snow Park urged Cedar to review management pay and find ways to reduce administrative costs, among other changes.
It criticized management’s plan to expand Cedar’s portfolio into mixed-use developments in urban centers, which it said would push the company outside its core area of competence.
Snow Park said it hoped the current board would voluntarily agree to its demands, but that it would consider nominating its own slate of board directors next year if it was not satisfied with the company’s progress.
Cedar responded in a statement on Wednesday: “Cedar Realty Trust’s Board and management team regularly evaluate strategic options to ensure the Company is best positioned to achieve our objective of driving shareholder value.”
Cedar declined to comment further.
Reuters first reported in September that Snow Park had built a stake in Cedar and has been urging it to consider selling itself.
Snow Park said a deal could potentially value Cedar at more than $8 per share, a substantial premium to its current trading price of around $5.60 per share.
Since new management took over in 2011, Cedar has been shifting out of noncore retail assets such as shopping malls to focus on grocery-anchored strip malls.
Snow Park said in July it had bought a stake in Dillard’s Inc (DDS.N) and encouraged the retailer to unlock the value of its real estate by considering other uses for some properties.
As many prominent retailers have gone 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. (bit.ly/2vAmFLI)
“We have no real exposure to distressed retailers,” he said.
Reporting by Carl'Donnell in New York; Editing by Matthew Lewis