Cedar Income Fund, Ltd. - 10-Q Summary (Q1 2002)
Business Context and Reporting Period
This report covers the three-month period ended March 31, 2002. Cedar Income Fund, Ltd. (the "Company") is a Real Estate Investment Trust (REIT) operating through an umbrella partnership structure. The portfolio consists of five properties: one office building in Jacksonville, Florida, and four retail shopping centers (three in Pennsylvania, one in New Jersey). The Company is actively marketing the sale of its Southpoint property in Jacksonville to fund debt obligations.
Key Financial Metrics
| Metric | Q1 2002 | Q1 2001 |
|---|---|---|
| Total Revenue | $2,510,317 | $983,279 |
| Net Loss | $(52,872) | $(8,631) |
| Net Loss Per Share | $(0.08) | $(0.02) |
| Operating Cash Flow | $88,121 | $274,229 |
| Total Assets | $68,266,155 | $68,348,390 |
| Total Liabilities | $53,503,392 | $53,481,599 |
| Cash & Equivalents | $2,290,404 | $2,872,289 |
| Debt (Mortgage + Other) | $52,002,006 | $52,109,760 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased by approximately 155% to $2.51 million, driven by the acquisition of three supermarket-anchored shopping centers in October 2001 and increased rental revenue at The Point property.
- Expense Increase: Total expenses rose to $2.61 million from $995,844. Property expenses increased by roughly $900,000 due to the new acquisitions. Interest expense more than doubled to $920,552 due to assumed mortgages and new SWH financing.
- Cash Flow Decline: Net cash provided by operating activities decreased to $88,121 from $274,229, attributed to the timing of property sales in 2001 and the cash requirements of new acquisitions.
- Net Loss: The Company reported a net loss of $52,872, compared to $8,631 in the prior year, primarily due to higher interest and operating costs associated with the expanded portfolio.
Outlook, Risks, and Management Commentary
- Liquidity Strategy: Management expects to meet near-term obligations, including a mandatory $4.5 million payment on SWH financing due in November 2002, through the pending sale of the Southpoint property (expected net proceeds ~$4.4 million), existing cash ($2.3 million), and a new $1 million line of credit.
- Debt Maturities: The mortgage on The Point Shopping Center ($17.9 million) matures June 1, 2002. The Company expects to refinance this loan prior to maturity.
- Acquisition Pipeline: The Company has agreements to purchase a 7-acre development parcel in Fort Washington, PA, a 293,000 sq. ft. shopping center in Pennsylvania, and a 20% interest in a Philadelphia shopping center.
- Risks:
- Insurance Costs: Post-September 11, 2001, terrorism and directors' insurance premiums have risen significantly (D&O premiums up ~29%).
- Refinancing Risk: A substantial increase in interest rates could hinder refinancing efforts for maturing mortgages.
- Market Conditions: General economic conditions and tenant defaults remain risks to cash flow.
Investor Verification Checklist
- Sale of Southpoint: Verify the closing status and final net proceeds of the Southpoint property sale, which is critical for funding the November 2002 SWH debt payment.
- The Point Refinancing: Confirm the successful refinancing of the $17.9 million mortgage maturing June 1, 2002, and the terms of the new loan.
- SWH Financing Terms: Review the specific "back-end" payments and equity fees associated with the SWH loan, which could impact future cash flows upon sale or maturity.
- Insurance Renewals: Monitor the cost and availability of property insurance, specifically terrorism coverage, upon renewal in 2002.
- Related Party Fees: Note the reduction in acquisition/disposition fees payable to the advisor (CBRA) effective January 1, 2002, and the status of deferred fees.