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PORT WASHINGTON, NY-A proposed joint venture between locally based retail REIT Cedar Shopping Centers and Homburg Invest Inc. has been cancelled, with Homburg citing the credit crisis as the reason. The JV would have purchased 32 of Cedar’s 121 properties, including three in New York State, for approximately $128.9 million, and was scheduled to close on or around Dec. 15.

In a release, HII CEO Richard Homburg says his company had “substantially completed its due diligence” on the proposed JV. “However, recent unprecedented financial eventshave caused the virtual collapse of world capital markets directly causing the cancellation of this joint venture,” Homburg says in the release. “Unless governments get banks back to the business of lending, business will be forced to re-evaluate and make harsh decisions in order to deal with current economic circumstances.”

Scrapping the proposed JV–the second that Cedar and Halifax, NS-based HII have entered–may not be the end of the line for partnerships between the two companies. “The Homburg group has specifically indicated that they would hope to do projects with us in the future and have not excluded these properties,” Leo Ullman, founder and CEO of Cedar, tells Globe St.com. “However, I think it’s fair to assume that it could be quite a while before a new joint venture with respect to these properties with the Homburg group could in fact be contemplated. HII cited the upheaval in equity and debt markets in Europe and in Canada as well as in the US, and it would appear that in terms of funding such transactions, they–and we–must deal with those issues.” In a separate release, Cedar says it had hoped to realize net cash proceeds of approximately $49 million from the JV, and that the partnership could have resulted in a per-share reduction of about $0.05 in the company’s funds from operation.

Ullman says Cedar is “in discussions” with local developers about JV opportunities “in the context of substantially entitled and preleased properties. We are also pursuing the possibility of joint venturing the acquisition of a couple of stabilized supermarket-anchored properties in the Northeast with attractive assumable loans which have with meaningful remaining terms to maturity.”

With its finances healthy, Cedar is taking the cancellation in stride. Although the company would have liked to see the JV successfully concluded, “we are, of course, and have been for some time, very much attuned to the problems in equity and debt markets both in the US and abroad,” Ullman tells GlobeSt.com. “We have stressed, we have put into place financing facilities sufficient to fund our development pipeline for the next couple of years, and this is where we have contemplated some attractive future returns which should favorably affect our financial statements commencing in late 2009 and 2010.”

Cedar last week reported that its Q3 revenues increased 14.5% to $43.3 million from $37.8 million year-over-year from Q3 2007. Revenues for the nine months ended Sept. 30 were $129.9 million, compared to $111 million for the first three quarters of ‘07, an increase of 17%, according to a release. The REIT currently has assets of $1.67 billion as of the end of Q3, up from about $1.59 billion the year prior.

Last December, GlobeSt.com reported that Cedar and HII closed a $170-million JV on a portfolio of nine supermarket-anchored shopping centers, mostly in Pennsylvania. Cedar retains a 20% interest in that portfolio.

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