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 September 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 (I.R.S. Employer Identification No.)
of incorporation or organization)
4333 Edgewood Road N.E., Cedar Rapids, IA 52499
(Address of principal executive offices) (Zip Code)
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 November 13, 1996
was 2,245,411.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets
(unaudited)
September 30, December 31,
1996 1995 1995
Assets
Real estate
Land $ 4,126,044 4,126,044 4,126,044
Buildings and improvements 14,219,153 14,200,539 14,200,539
18,345,197 18,326,583 18,326,583
Less accumulated depreciation (3,646,023) (3,209,210) (3,318,273)
14,699,174 15,117,373 15,008,310
Mortgage loan receivable 576,256 584,849 582,769
15,275,430 15,702,222 15,591,079
Cash and cash equivalents 903,972 754,957 772,144
Rent and other receivables 83,207 86,503 80,213
Interest receivable 3,962 4,021 4,007
Prepaid expenses 31,055 34,722 44,275
Deferred lease commissions 114,840 134,353 114,807
Taxes held in escrow 60,508 50,933 3,580
$ 16,472,974 16,767,711 16,610,105
Liabilities and Shareholders' Equity
Liabilities
Mortgage loan payable $ 1,428,969 1,449,643 1,444,654
Accounts payable and
accrued expenses 220,930 206,553 99,673
Due to affiliates 28,343 34,588 28,762
Security deposits 64,556 67,870 66,869
Advance rents 14,551 30,270 8,519
1,757,349 1,788,924 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 12,470,214 12,733,376 12,716,217
14,715,625 14,978,787 14,961,628
$ 16,472,974 16,767,711 16,610,105
Cedar Income Fund, Ltd.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenue
Rents $ 532,692 607,355 1,613,391 1,807,266
Interest 24,313 22,125 70,809 63,363
557,005 629,480 1,684,200 1,870,629
Expenses
Property expenses:
Real estate taxes 61,094 63,857 186,434 179,760
Wages and salaries 5,587 5,320 16,366 15,179
Repairs and maintenance 69,754 59,743 189,445 257,506
Utilities 45,615 43,644 113,876 99,894
Management fee 26,634 30,367 80,669 90,362
Insurance 4,856 5,093 14,394 12,407
Other 20,614 22,205 73,958 67,700
Property expenses, excluding depreciation 234,154 230,229 675,142 722,808
Depreciation 109,038 109,062 327,750 327,213
Total property expenses 343,192 339,291 1,002,892 1,050,021
Interest 34,492 34,969 103,843 105,242
Administrative fees 25,307 24,912 75,286 74,542
Directors' fees and expenses 12,064 10,044 33,087 32,524
Other administrative 9,274 14,554 41,471 46,061
424,329 423,770 1,256,579 1,308,390
Net earnings $ 132,676 205,710 427,621 562,239
Net earnings per share $ .06 .09 .19 .25
Dividends to shareholders $ 224,542 224,541 673,624 673,623
Dividends to shareholders per share $ .10 .10 .30 .30
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)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Rents collected $ 1,617,652 1,750,592
Interest received 70,854 65,445
Payments for operating expenses (751,862) (723,422)
Interest paid (101,093) (102,492)
Net cash provided by operating activities 835,551 990,123
Cash flows from investing activities:
Capital expenditures (18,614) --
Principal portion of scheduled
mortgage loan collections 6,513 5,985
Security deposits collected, net (2,313) (257)
Net cash provided (used) by investing activities (14,414) 5,728
Cash flows from financing activities:
Principal portion of scheduled
mortgage loan payments (15,685) (14,286)
Dividends paid to shareholders (673,624) (673,623)
Net cash used by financing activities (689,309) (687,909)
Net increase in cash and
cash equivalents 131,828 307,942
Cash and cash equivalents
at beginning of period 772,144 447,015
Cash and cash equivalents
at end of period $ 903,972 754,957
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings $ 427,621 562,239
Add (deduct) reconciling adjustments:
Depreciation 327,750 327,213
Amortization 2,750 2,750
Increase in rent and
other receivables (59,922) (64,589)
Decrease in interest receivable 45 2,082
Decrease in prepaid expenses 10,470 16,111
Decrease (increase) in deferred
lease commissions (33) 36,911
Increase in operating accounts payable,
accrued expenses and due to affiliates 120,838 126,020
Increase (decrease) in advance rents 6,032 (18,614)
Net cash provided by operating activities $ 835,551 990,123
[FN]
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 pesentation 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 427,621
Dividends to shareholders (673,624)
Shareholders' equity, September 30, 1996 $ 14,715,625
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
We are pleased to present the third quarter report for Cedar
Income Fund, Ltd. Net earnings for the three and nine months
ended September 30, 1996 were $132,676 ($.06 per share) and
$427,621 ($.19 per share), respectively, compared to $205,710
($.09 per share) and $562,239 ($.25 per share) for the same
periods in 1995. Funds from operations (earnings from operations
plus depreciation) were $755,371 for the first nine months of
1996 compared to $889,452 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 and has subsequently leased 8,000 square feet of this
space. The Company's real estate portfolio had an overall
occupancy rate of 90% at September 30, 1996.
Rental income for the three and nine months ended September 30,
1996 was $532,692 and $1,613,391, respectively, compared to
$607,355 and $1,807,266 for the same periods in 1995. The
decrease in rental income is attributed to Corporate Center East,
where Hewlett Packard contributed approximately $210,000 in rents
during the first three quarters of 1995. This decrease was
partially offset by a 6% 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. The
increase in interest income is due to a higher balance of funds
available for investment.
Total property expenses, excluding depreciation, decreased from
$722,808 for the first nine months of 1995 to $675,142 for the
same period in 1996, representing 40% and 42% of rental income,
respectively. Repairs and maintenance decreased primarily due to
tenant remodeling and other expenses incurred in 1995 that have
not been required this year. The increase in utilities is
primarily because Hewlett Packard was responsible for their own
utilities at Corporate Center East, but this expense is now the
Company's. The increase in other property expenses is primarily
the 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 September 30,
1996 is represented by cash and cash equivalents, a mortgage loan
participation and cash flow from operating activities. This
liquidity is considered sufficient to meet current obligations.
It has been the intention of the Company since its inception to
be essentially self-liquidating. While there are no legal
requirements that the Company be liquidated by a particular date
or within any particular time frame, the original expectation was
that the Company would be liquidated ten years following the
stock offering (completed in 1986). The manner in which the
liquidation was intended to be accomplished was by eventually
selling the assets and distributing to shareholders the net cash
proceeds. There are actually several options available to the
Company, so the Board of Directors has begun exploring the
various possibilities.
The Board of Directors declared a dividend of $.10 per share
payable November 18, 1996 to shareholders of record November 5,
1996. The Board of Directors will continue to consider leasing
prospects, operating results and the financial condition of the
Company in determining future dividends.
Edwin B. Lancaster, a director of the Company since its
inception, passed away on October 25, 1996. Mr. Lancaster will
be remembered for his knowledge and insight, his integrity and
dedication, and his genuine care and concern for the best
interests of the Company and its shareholders. He will most
certainly be missed by everyone who had the privilege of knowing
him. We extend our deepest sympathies to his family and friends.
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.
Alan F. Fletcher
Vice President and Treasurer
(principal financial officer)
Roger L. Schulz
Controller
(principal accounting officer)
Dated: November 13, 1996