Cedar Income Fund, Ltd. - 10-Q Summary (Q2 1995)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 1995, for Cedar Income Fund, Ltd., a real estate investment trust. The company owns and operates retail and office properties, including Broadbent Business Center (Utah), Southpoint Parkway Center (Florida), and Corporate Center East (Illinois). As of June 30, 1995, the portfolio maintained a 98% occupancy rate.
Key Financial Metrics
| Metric | Six Months Ended June 30, 1995 | Six Months Ended June 30, 1994 |
|---|---|---|
| Total Revenue | $1,241,149 | $1,170,754 |
| Net Earnings | $356,529 | $310,426 |
| Earnings Per Share (EPS) | $0.16 | $0.14 |
| Funds from Operations (FFO) | $574,680 | $528,707 |
| Net Cash from Operating Activities | $632,053 | $611,332 |
| Cash and Cash Equivalents (End of Period) | $624,886 | $377,386 |
| Total Liabilities | $1,759,003 | $1,696,061 |
| Shareholders' Equity | $14,997,618 | $15,090,171 |
Dividends: The company paid $0.20 per share for the six-month period. A subsequent dividend of $0.10 per share was declared on July 20, 1995.
Material Changes vs. Prior Period
- Revenue Growth: Rental income increased 5% year-to-date ($1,199,911 vs. $1,139,487), driven by higher occupancy and rental rates at properties in Utah and Florida.
- Expense Increases: Total property expenses (excluding depreciation) rose to $492,579 from $463,754, primarily due to higher repairs and maintenance costs. However, real estate taxes decreased due to a partial refund on a Kentucky property, and wages declined due to staff reductions.
- Liquidity: Cash and cash equivalents increased by $177,871 during the period, bolstered by strong operating cash flows.
Outlook, Risks, and Management Commentary
Management attributes improved results to successful leasing activity and rate increases. However, a significant risk involves Hewlett Packard Corporation, which notified the company it will not renew its lease for 20,400 square feet at Corporate Center East (Bloomington, IL) upon expiration on September 30, 1995. This lease represented 11% of the company's 1994 revenue. While HP has extended the current lease until November 30, 1995, the company is actively seeking replacement tenants.
Liquidity is deemed sufficient to meet current obligations, supported by cash reserves, mortgage loan participations, and operating cash flow. Future dividends will depend on leasing activity and financial conditions.
Investor Verification Checklist
- Verify the status of replacement tenant negotiations for the 20,400 sq. ft. space at Corporate Center East following the HP lease expiration.
- Confirm the sustainability of the 98% occupancy rate given the potential vacancy at the Illinois property.
- Review the specific details of the real estate tax refund received for Germantown Square Shopping Center to assess if it is a recurring benefit.
- Monitor the trend in repairs and maintenance expenses to ensure they do not erode the margin gains from increased rents.