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, 1997 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
incorporation or organization) Identification No.)
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, 1997
was 2,245,411.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
CEDAR INCOME FUND, Ltd.
Balance Sheets
(unaudited)
September 30, December 31,
1997 1996 1996
ASSETS
Real estate
Land $ 4,126,044 4,126,044 4,126,044
Buildings and improvements 14,636,844 14,219,153 14,336,858
18,762,888 18,345,197 18,462,902
Less accumulated depreciation (4,090,823) (3,646,023) (3,755,012)
14,672,065 14,699,174 14,707,890
Mortgage loan receivable 566,902 576,256 573,991
15,238,967 15,275,430 15,281,881
Cash and cash equivalents 553,585 903,972 670,306
Rent and other receivables 86,677 83,207 95,413
Interest receivable 3,897 3,962 3,946
Prepaid expenses 78,055 31,055 84,758
Deferred lease commissions 170,336 114,840 116,148
Taxes held in escrow 60,504 60,508 17,697
Total Assets $ 16,192,021 16,472,974 16,270,149
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage loan payable $ 1,406,272 1,428,969 1,423,492
Accounts payable and accrued expenses 217,813 220,930 103,337
Due to affiliates 30,191 28,343 36,538
Security deposits 80,585 64,556 66,655
Advance rents 18,023 14,551 15,047
Total Liabilities 1,752,884 1,757,349 1,645,069
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 12,193,726 12,470,214 12,379,669
Total Shareholders' Equity 14,439,137 14,715,625 14,625,080
Total Liabilities and Shareholders' Equity $ 16,192,021 16,472,974 16,270,149
Cedar Income Fund, Ltd.
Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
REVENUE
Rents $ 606,590 532,692 1,749,908 1,613,391
Interest 19,647 24,313 60,866 70,809
Total Revenue 626,237 557,005 1,810,774 1,684,200
EXPENSES
Property expenses:
Real estate taxes 59,247 61,094 187,740 186,434
Wages and salaries 172 5,587 10,756 16,366
Repairs and maintenance 80,781 69,754 243,654 189,445
Utilities 49,986 45,615 117,532 113,876
Management fee 30,329 26,634 87,495 80,669
Insurance 4,761 4,856 14,509 14,394
Other 21,030 20,614 72,754 73,958
Property expenses, excluding depreciation 246,306 234,154 734,440 675,142
Depreciation 117,877 109,038 335,811 327,750
Total property expenses 364,183 343,192 1,070,251 1,002,892
Interest 33,968 34,492 102,308 103,843
Administrative fees 25,279 25,307 75,898 75,286
Directors' fees and expenses 10,844 12,064 32,743 33,087
Other administrative 10,911 9,274 41,894 41,471
Total Expenses 445,185 424,329 1,323,094 1,256,579
Net earnings $ 181,052 132,676 487,680 427,621
Net earnings per share $ .08 .06 .22 .19
Dividends to shareholders $ 224,541 224,541 673,623 673,624
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,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Rents collected $ 1,761,620 1,617,652
Interest received 60,915 70,854
Payments for operating expenses (869,888) (751,862)
Interest paid (99,558) (101,093)
Net cash provided by operating activities 853,089 835,551
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (299,985) (18,614)
Principal portion of scheduled
mortgage loan collections 7,089 6,513
Security deposits collected, net 13,929 (2,313)
Net cash used by investing activities (278,967) (14,414)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal portion of scheduled
mortgage loan payments (17,220) (15,685)
Dividends paid to shareholders (673,623) (673,624)
Net cash used by financing activities (690,843) (689,309)
Net increase (decrease) in cash and cash equivalents (116,721) 131,828
Cash and cash equivalents at beginning of period 670,306 772,144
Cash and cash equivalents at end of period $ 553,585 903,972
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings $ 487,680 427,621
Add (deduct) reconciling adjustments:
Depreciation 335,811 327,750
Amortization 2,749 2,750
Increase in rent and other receivables (34,071) (59,922)
Decrease in interest receivable 49 45
Decrease in prepaid expenses 3,954 10,470
Increase in deferred lease commissions (54,188) (33)
Increase in operating accounts payable
and accrued expenses 114,476 121,257
Decrease in due to affiliates (6,347) (419)
Increase in advance rents 2,976 6,032
Net cash provided by operating activities $ 853,089 835,551
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 1996 Annual Report.
Note 2: Shareholders' equity, December 31, 1996 $ 14,625,080
Net earnings 487,680
Dividends to shareholders (673,623)
Shareholders' equity, September 30, 1997 $ 14,439,137
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, 1997 were $181,052 ($.08 per
share) and $487,680 ($.22 per share), respectively, compared
to $132,676 ($.06 per share) and $427,621 ($.19 per share)
for the same periods in 1996. Net earnings increased from
1996 to 1997 primarily due to an increase in rental income
at Corporate Center East in Bloomington, Illinois, which was
partially offset by an increase in repairs and maintenance
expenses. The Company's real estate portfolio had an
overall occupancy rate of 97% at September 30, 1997.
Rental income for the three and nine months ended September
30, 1997 was $606,590 and $1,749,908, respectively, compared
to $532,692 and $1,613,391 for the same periods in 1996.
This increase is primarily attributable to the Company's
eventual success in locating replacement tenants at
Corporate Center East for 20,000 square feet of space that
had been vacant since the end of 1995, resulting in an
increase in rental income of $111,000 compared to the same
period a year ago. Broadbent Business Center in Salt Lake
City, Utah also had improved occupancy this year, which
resulted in higher rental income of $41,000. These
increases were partially offset by a decrease of $23,000 in
rental income at Southpoint Parkway Center in Jacksonville,
Florida due to lower occupancy during the first quarter this
year. The Company has subsequently leased this vacant space
at Southpoint to an existing tenant. Rental income at
Germantown Square in Louisville, Kentucky was relatively
unchanged from a year ago. Interest income decreased by 14%
due to a lower balance of funds available for investment.
Total property expenses, excluding depreciation, increased
from $675,142 for the first nine months of 1996, to $734,440
for the same period in 1997. These amounts represent 42% of
rental income for both years. Repairs and maintenance were
higher for the first nine months of 1997 compared to the
same period in 1996 primarily due to tenant remodeling and
other expenses incurred in 1997 that were not required last
year. For the nine months ended September 30, 1997 compared
to the same period one year ago, wages and salaries
decreased by 34% due to the reduction of property management
personnel at Broadbent. As mentioned above, the Company has
been successful in locating replacement tenants for the
vacant spaces that existed at Corporate Center East and
Southpoint. As a result of releasing this space, the
Company incurred capital expenditures of $300,000 and lease
commissions of $78,000 through September 30, 1997.
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, 1997 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, including
capital expenditures.
The Board of Directors declared a dividend of $.10 per
share, payable November 17, 1997 to shareholders of record
November 7, 1997. The Board of Directors will continue to
consider leasing prospects, 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.
/s/ Alan F. Fletcher
Alan F. Fletcher
Vice President and Treasurer
(principal financial officer)
/s/ Roger L. Schulz
Roger L. Schulz
Controller
(principal accounting officer)
Dated: November 13, 1997