3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended June 30, 1996 Commission file number 0-14510
CEDAR INCOME FUND, LTD.
(Exact name of registrant as specified in its charter)
Iowa 42-1241468
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4333 Edgewood Road N.E., Cedar 52499
Rapids, IA (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (319) 398-8975
N/A
(Former name, address and fiscal year, if changed since last
report)
Indicate by check-mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
The number of shares of common stock outstanding at August 12, 1996
was 2,245,411.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
Cedar Income Fund, Ltd.
Balance Sheets
(unaudited)
June 30, December 31,
1996 1995 1995
ASSETS
Real estate
Land 4,126,044 4,126,044 4,126,044
Buildings and improvements 14,200,539 14,200,539 14,200,539
18,326,583 18,326,583 18,326,583
Less accumulated depreciation (3,536,985) (3,100,148) (3,318,273)
14,789,598 15,226,435 15,008,310
Mortgage loan receivable 578,473 586,886 582,769
15,368,071 15,813,321 15,591,079
Cash and cash equivalents 885,556 624,886 772,144
Rent and other receivables 77,487 83,039 80,213
Interest receivable 3,977 4,035 4,007
Prepaid expenses 39,091 43,432 44,275
Deferred lease commissions 116,864 150,518 114,807
Taxes held in escrow 41,532 37,390 3,580
Total Assets 16,532,578 16,756,621 16,610,105
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage loan payable 1,434,320 1,454,517 1,444,654
Accounts payable and accrued expenses 185,076 168,927 99,673
Due to affiliates 25,576 25,528 28,762
Security deposits 64,810 68,491 66,869
Advance rents 15,305 41,540 8,519
Total Liabilitities 1,725,087 1,759,003 1,648,477
Shareholders' Equity
Common stock, $1 par value,
5,020,000 shares authorized 2,245,411 2,245,411 2,245,411
Additional paid-in capital 12,562,080 12,752,207 12,716,217
Total Shareholders' Equity 14,807,491 14,997,618 14,961,628
Total Liabilities and Shareholders'Equity 16,532,578 16,756,621 16,610,105
Cedar Income Fund, Ltd.
Statements of Operations
(unaduited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
REVENUE
Rents 521,652 599,724 1,080,699 1,199,911
Interest 23,251 21,532 46,496 41,238
Total Revenue 544,903 621,256 1,127,195 1,241,149
EXPENSES
Property expenses:
Real estate taxes 62,617 62,363 125,340 115,903
Wages and salaries 5,423 5,237 10,779 9,859
Repairs and maintenance 63,234 103,389 119,691 197,763
Utilities 34,039 29,610 68,261 56,250
Management fee 26,082 29,985 54,035 59,995
Insurance 5,227 3,623 9,538 7,314
Other 29,540 23,363 53,344 45,495
Property expenses, excluding 226,162 257,570 440,988 492,579
depreciation
Depreciation 109,063 109,063 218,712 218,151
Total property expenses 335,225 366,633 659,700 710,730
Interest 34,615 35,081 69,351 70,273
Administrative fees 25,004 24,825 49,979 49,630
Directors' fees and expenses 9,879 11,233 21,023 22,480
Other administrative 11,256 11,825 32,197 31,507
Total Expenses 415,979 449,597 832,250 884,620
Net earnings 128,924 171,659 294,945 356,529
Net earnings per share .06 .08 .13 .16
Dividends to shareholders 224,541 224,541 449,082 449,082
Dividends to shareholders per share .10 .10 .20 .20
Average number of shares outstanding 2,245,411 2,245,411 2,245,411 2,245,411
CEDAR INCOME FUND, Ltd.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Rents collected 1,090,091 1,157,971
Interest received 46,526 43,306
Payments for operating expenses (498,508) (500,784)
Interest paid (67,518) (68,440)
Net cash provided by operating activities 570,591 632,053
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal portion of scheduled
mortgage loan collections 4,296 3,948
Security deposits collected, net (2,059) 364
Net cash provided by investing activities 2,237 4,312
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal portion of scheduled
mortgage loan payments (10,334) (9,412)
Dividends paid to shareholders (449,082) (449,082)
Net cash used by financing activities (459,416) (458,494)
Net increase in cash and cash equivalents. 113,412 177,871
Cash and cash equivalents at beginning of period 772,144 447,015
Cash and cash equivalents at end of period 885,556 624,886
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings 294,945 356,529
Add (deduct) reconciling adjustments:
Depreciation 218,712 218,151
Amortization 1,833 1,834
Increase in rent and other receivables (35,226) (47,582)
Decrease in interest receivable 30 2,068
Decrease in prepaid expenses 3,351 8,317
Decrease (increase) in deferred lease commissions (2,057) 20,746
Increase in operating accounts payable,
accrued expenses and due to affiliates 82,217 79,334
Increase (decrease) in advance rents 6,786 (7,344)
Net cash provided by operating activities 570,591 632,053
NOTES TO FINANCIAL STATEMENTS
NOTE 1: The unaudited interim financial statements are
prepared in accordance with generally accepted accounting
principles and include all adjustments of a normal recurring
nature necessary for a fair presentation of the financial
position and quarterly results. Interim reports should be
read in conjunction with the audited financial statements
and related notes included in the 1995 Annual Report.
NOTE 2: Shareholders' equity, December 31, 1995 14,961,628
Net earnings 294,945
Dividends to shareholders (449,082)
Shareholders' equity, June 30, 1996 14,807,491
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
We are pleased to present the second quarter report for
Cedar Income Fund, Ltd. Net earnings for the three and six
months ended June 30, 1996 were $128,924 ($.06 per share)
and $294,945 ($.13 per share), respectively, compared to
$171,659 ($.08 per share) and $356,529 ($.16 per share) for
the same periods in 1995. Funds from operations (earnings
from operations plus depreciation) were $513,657 for the
first six months of 1996 compared to $574,680 for the same
period in 1995.
Net earnings and funds from operations declined from 1995 to
1996 primarily due to the Hewlett Packard Corporation
vacating 20,400 square feet of space at Corporate Center
East in Bloomington, Illinois when its lease expired on
December 31, 1995. The Company is in the process of
obtaining one or more replacement tenants for this space.
Despite Hewlett Packard vacating its space, the Company's
real estate portfolio had an overall occupancy rate of 87%
at June 30, 1996.
Rental income for the three and six months ended June 30,
1996 was $521,652 and $1,080,699, respectively, compared to
$599,724 and $1,199,911 for the same periods in 1995. The
decrease in rental income is attributed to Corporate Center
East, where Hewlett Packard contributed approximately
$141,000 in rents during the first two quarters of 1995.
This decrease was partially offset by an 11% increase in
rental income at Germantown Square in Louisville, Kentucky
due to higher base rents and expense recoveries. Rental
income at Southpoint Parkway Center in Jacksonville, Florida
and Broadbent Business Center in Salt Lake City, Utah was
relatively unchanged from a year ago. Interest income
increased by 13% due to a higher balance of funds available
for investment.
Total property expenses, excluding depreciation, decreased
from $492,579 for the first six months of 1995 to $440,988
for the same period in 1996, which represented 41% of rental
income for both years. Repairs and maintenance decreased in
the second quarter of 1996 compared to 1995 primarily due to
tenant remodeling and other expenses incurred in 1995 that
were not required this year. The increase in utilities is
partially attributed to Hewlett Packard vacating their
space, since they were responsible for their own utilities.
(This expense is now the Company's.) Other property
expenses have increased by 17%, primarily as a result of new
signage required at Corporate Center East.
Capital resources of the Company consist of equity in real
estate investments and a mortgage loan receivable. The
Company maintains its real estate in good condition and
provides adequate insurance coverage. The Company's
liquidity at June 30, 1996 is represented by cash and cash
equivalents of $885,556, a mortgage loan participation of
$578,473 and cash flow from operating activities. This
liquidity is considered sufficient to meet current
obligations.
The Board of Directors declared a dividend of $.10 per share
payable August 19, 1996 to shareholders of record August 6,
1996. The Board of Directors will continue to consider
leasing activity, operating results and the financial
condition of the Company in determining future dividends.
SIGNATURE
Pursuant to the requirements of the Securities Exchange act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
CEDAR INCOME FUND, LTD.
David Blankenship
President
(executive officer)
Roger L. Schulz
Controller
(principal accounting officer)
Dated: August 12, 1996