CDR-PB

Cedar Income Fund, Ltd. - 10-Q Summary (Period Ended Sept 30, 1999)

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended September 30, 1999, for Cedar Income Fund, Ltd. (the "Company"), a Maryland corporation operating as a Real Estate Investment Trust (REIT). The Company owns and operates three office properties in Jacksonville, FL; Salt Lake City, UT; and Bloomington, IL, plus a 50% interest in a retail property in Louisville, KY. As of September 30, 1999, the portfolio occupancy was 90%. The Company recently resolved a NASDAQ delisting threat regarding public float requirements through private placements and is pursuing a significant restructuring involving Uni-Invest Holdings (U.S.A.) B.V.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Rental income decreased 2.7% year-over-year for the nine-month period. This was driven by a write-off of a project receivable and temporary vacancy at Corporate Center East (Bloomington, IL), and an 8.4% revenue drop at Broadbent (Salt Lake City) due to increased vacancies and competition.
• Net Income Volatility: While net income per share increased slightly ($0.11 to $0.12), total net income dropped significantly ($187,170 to $64,612). The 1998 prior period included extraordinary administrative expenses related to a tender offer and reorganization, which inflated the 1999 comparison. The 1999 decrease is also attributed to the accounting treatment of the limited partner's interest in the Operating Partnership.
• Liquidity Reduction: Cash and cash equivalents decreased by approximately $266,702. This was primarily due to a $250,000 refundable deposit placed for a potential retail acquisition in Orlando, FL, which was subsequently withdrawn and refunded in October 1999.
• Expense Increases: Property expenses (excluding depreciation) rose by approximately $38,000 due to expensing prepaid commissions for a vacated tenant and increased repairs at Southpoint Parkway following Hurricane Floyd damage.

Outlook, Risks, and Unusual Items

• Strategic Restructuring: The Company entered into a Subscription Agreement with Uni-Invest Holdings (U.S.A.) B.V. to acquire 150,000 shares and potentially change the Company's name to "Uni-Invest (U.S.A.), Ltd." This transaction includes plans to acquire three shopping centers in Pennsylvania and contribute office properties in New York in exchange for preferred stock. Closing is targeted for May 15, 2000, subject to due diligence and financing.
• Dividend Policy Risk: The Company maintains a dividend policy of $0.10 per share per quarter. Current earnings ($0.12 for nine months) are insufficient to cover these distributions ($0.30 for nine months). Management notes that continuing this policy without income growth could impair cash reserves.
• Tenant Risks: A major tenant at Corporate Center East (49% of the space) faces financial uncertainty regarding lease renewal in March 2000. Additionally, Broadbent faces persistent vacancies due to new construction in the Salt Lake City market.
• Year 2000 Compliance: The Company relies on third-party advisors and managers for computer systems. While upgrades were completed by January 1999, there is no assurance that all service providers are fully compliant.

Investor Verification Checklist

• Confirm the status of the Uni-Invest Holdings private placement and the execution of the proposed property acquisition agreements (targeted closing May 2000).
• Verify the renewal status of the lease for the 12,226 sq. ft. tenant at Corporate Center East, which expires March 2000.
• Monitor the Company's cash reserves relative to its dividend payout policy, as current earnings do not cover distributions.
• Review the final terms of the name change and board reconstitution associated with the Uni-Invest transaction.
• Assess the impact of the $54,000 unbudgeted repair cost at Southpoint Parkway on future operating expenses.