Cedar Income Fund, Ltd. - 10-Q Summary (Q2 1997)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 1997, for Cedar Income Fund, Ltd. The registrant is a real estate investment trust (REIT) with a portfolio including properties in Illinois, Utah, Florida, and Kentucky. As of August 1, 1997, there were 2,245,411 shares of common stock outstanding.
Key Financial Metrics
| Metric | Three Months Ended June 30, 1997 |
Six Months Ended June 30, 1997 |
Six Months Ended June 30, 1996 |
|---|---|---|---|
| Total Revenue | $623,622 | $1,184,537 | $1,127,195 |
| Net Earnings | $182,421 | $306,628 | $294,945 |
| Net Earnings Per Share | $0.08 | $0.14 | $0.13 |
| Dividends Per Share | $0.10 | $0.20 | $0.20 |
| Operating Cash Flow (6mo) | N/A | $530,972 | $570,591 |
| Cash & Equivalents (End of Period) | $463,351 | $463,351 | $885,556 |
| Total Debt (Mortgage Payable) | $1,412,147 | $1,412,147 | $1,423,492 |
| Occupancy Rate | 97% | 97% | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Rental income increased by approximately 15.7% for the six months ended June 30, 1997, compared to the prior year. This was driven by the successful leasing of 20,000 square feet at Corporate Center East (Bloomington, IL) and increased occupancy at Broadbent Business Center (Salt Lake City, UT).
- Expense Increases: Total property expenses (excluding depreciation) rose to $488,134 for the six-month period (43% of rental income) from $440,988 (41%) in the prior year. Repairs and maintenance expenses increased significantly due to tenant remodeling costs.
- Net Earnings: Net earnings for the six months increased by $11,683 (4%) to $306,628, despite higher operating expenses, due to the revenue gains.
- Liquidity: Cash and cash equivalents decreased by $206,955 during the six-month period, primarily due to capital expenditures of $298,000 and dividend payments of $449,082.
Outlook, Risks, and Management Commentary
- Leasing Success: Management highlighted the successful re-leasing of previously vacant space at Corporate Center East and Southpoint Parkway (Jacksonville, FL), where a new tenant began paying rent on the full space in May 1997.
- Capital Expenditures: The company incurred $298,000 in capital expenditures and $73,000 in lease commissions through June 30, 1997, to prepare spaces for new tenants.
- Liquidity Position: Management states that current liquidity (cash, mortgage loan participation, and operating cash flow) is sufficient to meet obligations, including future capital expenditures.
- Dividends: The Board declared a quarterly dividend of $0.10 per share, payable August 18, 1997. Future dividends will depend on leasing prospects and financial condition.
- Risks: The filing notes a decrease in interest income (11%) due to lower funds available for investment. No specific new material risks were disclosed beyond standard operational variances.
Investor Verification Checklist
- Verify the sustainability of the 97% occupancy rate following the recent leasing of vacant spaces at Corporate Center East and Southpoint Parkway.
- Confirm the impact of the $298,000 capital expenditure on future cash flow and whether similar tenant remodeling costs are expected to recur.
- Monitor the trend of operating expenses as a percentage of rental income, which increased from 41% to 43% year-over-year.
- Review the cash balance reduction of over $200,000 to ensure sufficient liquidity remains for upcoming dividend payments and maintenance needs.