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 March 31, 1998 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)
44 South Bayles Avenue, Suite 304, Port Washington, NY 11050
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 767-6492
4333 Edgewood Road N.E., Cedar Rapids, IA, 52499
(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 May 13,
1998 was 2,245,411.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
CEDAR INCOME FUND, Ltd.
Balance Sheets
(unaudited)
March 31, December 31,
1998 1997 1997
ASSETS
Real estate
Land $ 4,126,044 4,126,044 4,126,044
Buildings and improvements 14,636,843 14,494,516 14,636,843
18,762,887 18,620,560 18,762,887
Less accumulated depreciation (4,338,715) (3,867,371) (4,217,699)
14,424,172 14,753,189 14,545,188
Mortgage loan receivable - 571,678 564,437
14,424,172 15,324,867 15,109,625
Cash and cash equivalents 1,861,886 529,293 407,216
Rent and other receivables 219,211 102,308 130,615
Interest receivable - 3,930 3,881
Prepaid expenses 107,017 71,915 109,624
Deferred lease commissions 169,076 176,573 164,826
Taxes held in escrow 24,889 30,252 15,896
Total Assets $ 16,806,251 16,239,138 15,941,683
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage loan payable $ 1,394,104 1,417,885 1,400,259
Accounts payable and accrued expenses 140,230 184,006 162,320
Due to affiliates - 2,976 62,570
Escrow payable 1,000,000 - -
Security deposits 81,255 86,415 80,085
Advance rents 12,375 23,110 9,347
Total Liabilities 2,627,964 1,714,392 1,714,581
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 11,932,876 12,279,335 11,981,691
Total Shareholders' Equity 14,178,287 14,524,746 14,227,102
Total Liabilities and Shareholders' Equity $ 16,806,251 16,239,138 15,941,683
Cedar Income Fund, Ltd.
Statements of Operations
(Unaudited)
Three Months Ended
March 31,
1998 1997
REVENUE
Rents $ 639,038 539,619
Interest 31,286 21,296
Total Revenue 670,324 560,915
EXPENSES
Property expenses:
Real estate taxes 59,609 64,423
Wages and salaries - 5,148
Repairs and maintenance 71,459 75,535
Utilities 35,666 31,811
Management fee 31,952 26,981
Insurance 4,909 4,913
Other 21,488 25,103
Property expenses, excluding depreciation 225,083 233,914
Depreciation 121,016 112,359
Total property expenses 346,099 346,273
Interest 33,687 34,237
Administrative fees 25,776 25,353
Directors' fees and expenses 21,005 11,865
Other administrative 68,031 18,980
Total Expenses 494,598 436,708
Net earnings $ 175,726 124,207
Basic and diluted net earnings per share $ .08 .06
Dividends to shareholders $ 224,541 224,541
Dividends to shareholders per share $ .10 .10
Average number of shares outstanding 2,245,411 2,245,411
CEDAR INCOME FUND, Ltd.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Rents collected $ 633,177 540,787
Interest received 35,167 21,312
Payments for operating expenses (515,814) (304,059)
Interest paid (32,771) (33,320)
Net cash provided by operating activities 119,759 224,720
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - (157,658)
Principal portion of scheduled
mortgage loan collections 2,517 2,313
Principal repayment on mortgage loan receivable 561,920 -
Security deposits collected, net 1,170 19,760
Net cash provided (used) by investing activities 565,607 (135,585)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal portion of scheduled
mortgage loan payments (6,155) (5,607)
Escrow funds received 1,000,000 -
Dividends paid to shareholders (224,541) (224,541)
Net cash provided (used) by financing activities 769,304 (230,148)
Net increase (decrease) in cash and cash equivalents 1,454,670 (141,013)
Cash and cash equivalents at beginning of period 407,216 670,306
Cash and cash equivalents at end of period $ 1,861,886 529,293
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings $ 175,726 124,207
Add (deduct) reconciling adjustments:
Depreciation 121,016 112,359
Amortization 916 916
Increase in rent and other receivables (97,589) (19,450)
Decrease in interest receivable 3,881 16
Decrease in prepaid expenses 1,691 11,927
Increase in deferred lease commissions (4,250) (60,425)
Increase (decrease) in operating accounts payable
and accrued expenses (22,090) 80,669
Decrease in due to affiliates (62,570) (33,562)
Increase in advance rents 3,028 8,063
Net cash provided by operating activities $ 119,759 224,720
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 1997 Annual Report on Form 10-K.
Note 2: Shareholders' equity, December 31, 1997 $ 14,227,102
Net earnings 175,726
Dividends to shareholders (224,541)
Shareholders' equity, March 31, 1998 $ 14,178,287
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Net earnings for the three months ended March 31, 1998 were
$175,726 ($.08 per share) compared to $124,207 ($.06 per
share) for the same period in 1997. (All per share amounts
are on a basic and diluted basis.) Net earnings were higher
in the first quarter of 1998, compared to 1997, primarily
due to an increase in rental income, partially offset by an
increase in other administrative expenses.
Rental income for the first quarter of 1998 was $639,038
compared to $539,619 for the first quarter in 1997, an
increase of 18%. Rental income at Southpoint Parkway Center
in Jacksonville, Florida increased by $57,000 due to higher
occupancy resulting from an existing tenant leasing an
additional 17,116 square feet. Rental income also increased
at Corporate Center East in Bloomington, Illinois by $40,000
due to higher occupancy as a result of the Company's success
in achieving occupancy of 100%. Rental income at Broadbent
Business Center in Salt Lake City, Utah and Germantown
Square in Louisville, Kentucky were relatively unchanged
from the prior year. The Company's real estate portfolio
had an overall occupancy rate of 98% at March 31, 1998.
Total property expenses, excluding depreciation, decreased
from 43% of rental income in 1997 to 35% in 1998. Wages and
salaries decreased by $5,000 due to the reduction of
property management personnel at Broadbent. Utilities
increased by $4,000 in 1998, an increase of 12%, due to an
increase in occupancy at Southpoint. Management fees
increased by $5,000 in 1998, an increase of 18%,
corresponding to the 18% increase in rental income.
Directors' fees and expenses increased by $9,000 due to an
increase in coverage for directors and officers insurance
and an increase in the annual premium. Other administrative
expenses increased by $49,000 due to legal fees and mailing
costs incurred in connection with the completion of the
tender offer for all Cedar shares.
Capital resources of the Company consist of equity in real
estate investments. In March 1998, Life Investors Insurance
Company of America exercised its right to repurchase the
entire mortgage receivable balance from the Company. As a
result, the Company invested the proceeds in the Company's
money market fund. The Company maintains its real estate in
good condition and provides adequate insurance coverage.
The Company's liquidity at March 31, 1998 is represented by
cash and cash equivalents 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 May 20, 1998 to shareholders of record May
10, 1998. The Board of Directors will continue to consider
leasing prospects, operating results and the financial
condition of the Company in determining future dividends.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter
of 1998.
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/ Brenda J. Walker
Brenda J. Walker
Vice President
(principal financial officer)
Dated: May 13, 1998