Cedar Income Fund, Ltd. - 10-Q Summary (Q2 1996)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 1996, for Cedar Income Fund, Ltd. (also referred to as Cedar Realty Trust, Inc. in metadata). The registrant is a real estate investment trust owning commercial properties, including Corporate Center East (Illinois), Germantown Square (Kentucky), Southpoint Parkway Center (Florida), and Broadbent Business Center (Utah). As of August 12, 1996, there were 2,245,411 shares of common stock outstanding.
Key Financial Metrics
| Metric | Six Months Ended June 30, 1996 | Six Months Ended June 30, 1995 |
|---|---|---|
| Total Revenue | $1,127,195 | $1,241,149 |
| Net Earnings | $294,945 ($0.13/share) | $356,529 ($0.16/share) |
| Funds from Operations (FFO) | $513,657 | $574,680 |
| Net Cash from Operating Activities | $570,591 | $632,053 |
| Cash and Cash Equivalents | $885,556 | $624,886 |
| Total Assets | $16,532,578 | $16,610,105 |
| Total Liabilities | $1,725,087 | $1,648,477 |
| Shareholders' Equity | $14,807,491 | $14,961,628 |
| Dividends Paid | $449,082 ($0.20/share) | $449,082 ($0.20/share) |
Material Changes vs. Prior Period
- Revenue Decline: Rental income decreased by approximately $119,212 for the six-month period compared to 1995. This is primarily attributed to Hewlett Packard vacating 20,400 square feet at Corporate Center East in December 1995, resulting in a loss of roughly $141,000 in rent for the first half of 1995.
- Expense Reductions: Total property expenses (excluding depreciation) decreased to $440,988 from $492,579. Repairs and maintenance dropped significantly due to the absence of tenant remodeling costs incurred in 1995.
- Utility Costs: Utilities increased by $12,011 for the six-month period. This is partially due to the Company assuming responsibility for utilities at the vacated Hewlett Packard space, which were previously paid by the tenant.
- Interest Income: Interest income increased by 13% to $46,496 due to a higher balance of funds available for investment.
- Occupancy: Despite the vacancy, the overall portfolio occupancy rate remained at 87% as of June 30, 1996.
Outlook, Risks, and Management Commentary
- Leasing Activity: Management is actively seeking one or more replacement tenants for the 20,400 square feet vacated by Hewlett Packard at Corporate Center East.
- Positive Trends: Rental income at Germantown Square in Louisville, Kentucky, increased by 11% due to higher base rents and expense recoveries, partially offsetting the loss from Corporate Center East.
- Liquidity: The Company maintains sufficient liquidity with $885,556 in cash and cash equivalents, plus a mortgage loan participation of $578,473, to meet current obligations.
- Dividends: The Board declared a quarterly dividend of $0.10 per share, payable August 19, 1996. Future dividends will depend on leasing activity and operating results.
- Risks: The primary risk highlighted is the vacancy at Corporate Center East and the associated loss of rental income until replacement tenants are secured.
Investor Verification Checklist
- Verify the status of leasing negotiations for the 20,400 sq. ft. vacancy at Corporate Center East.
- Confirm the impact of the utility cost shift on future operating margins at Corporate Center East.
- Review the 1995 Annual Report for audited financial statements to compare with these unaudited interim figures.
- Monitor the 87% occupancy rate to ensure it does not decline further pending new leases.
- Assess the sustainability of the $0.10 quarterly dividend given the current net earnings of $0.13 per share for the six-month period.