Cedar Shopping Centers Announces Second Quarter Results

- Stabilized Property Occupancy Remains 96% -
- Company Reiterates Full-Year Guidance -

PORT WASHINGTON, N.Y., July 30 /PRNewswire-FirstCall/ — Cedar Shopping
Centers, Inc. (NYSE: CDR) today reported its financial results for the
quarter ended June 30, 2008.

Highlights of Second Quarter 2008 Compared to Second Quarter 2007

— Net income applicable to common shareholders was $1.2 million ($0.03
per share) as compared to $2.9 million ($0.07 per share). Net income for
each period includes certain one-time charges.

— Funds from Operations (”FFO”) were $14.4 million ($0.31 per share/OP
unit), an increase of 12.3%.

— Revenues were $42.9 million, an increase of 16.1%.

— Occupancy for the Company’s stabilized portfolio remained
approximately 96% while total portfolio occupancy, including development
and redevelopment properties, remained approximately 92%.

Leo Ullman, Cedar’s CEO, stated, “Our second quarter 2008 results
indicate the strength of our operations and effective execution of our
business plan in this uncertain financial and economic environment. We
continue to have undiminished occupancy levels featuring strong performing
supermarket tenants with long-term leases. Our portfolio also has minimal
exposure to fashion, luxury, home furnishings and similar potentially
challenged tenancies. We remain risk averse in our approach and we will
continue to be vigilant, as always, as we seek enhancement of shareholder
value.”

Financial and Operating Results

Net income applicable to common shareholders was $1.2 million, or $0.03
per share, for the quarter ended June 30, 2008, as compared to $2.9
million, or $0.07 per share, for the quarter ended June 30, 2007. Net
income in the second quarter of 2008 includes, among other things, a
one-time depreciation charge of $1.9 million, or $0.04 per share, taken for
the demolition of a building on the Company’s property in Wyoming,
Michigan, as part of the Company’s redevelopment plans for the property.
Net income in the second quarter of 2007 included a one-time charge of
approximately $1.5 million ($0.03 per share) related primarily to the
retirement of the Company’s former CFO.

Total revenues for the quarter ended June 30, 2008 increased 16.1% to
$42.9 million from $37.0 million for the second quarter ended June 30,
2007.

FFO was $14.4 million, or $0.31 per share/OP unit for the quarter ended
June 30, 2008, as compared to $12.8 million, or $0.28 per share/OP unit for
the quarter ended June 30, 2007. FFO for the second quarter of this year as
compared to the second quarter of last year reflects a reduction of
approximately $0.01 per share from the contribution of the nine properties
to a joint venture with Homburg Invest, Inc. that the Company closed late
in the fourth quarter 2007 (the joint venture had a minor effect on net
income), substantially offset by the acquisition on March 18, 2008 of the
remaining approximate 75% joint venture interest in four Pennsylvania
supermarket-anchored properties from an affiliate of Kimco Realty
Corporation. Net income and FFO in the second quarter of 2008 both reflect
an approximate $0.01 per share benefit from lower interest rates applicable
to our variable rate debt. A reconciliation of net income applicable to
common shareholders to FFO is contained in the table accompanying this
release.

Cedar’s total revenues for the six months ended June 30, 2008 were
$86.6 million as compared to $73.1 million for the six months ended June
30, 2007. Net income applicable to common shareholders was $4.3 million, or
$0.10 per share, as compared to $6.6 million, or $0.15 per share, for the
six months ended June 30, 2007. FFO was $28.1 million, or $0.61 per
share/OP unit, as compared to $26.5 million, or $0.57 per share/OP unit,
for the six months ended June 30, 2007.

Net cash flows provided by operating activities were $28.4 million for
the six months ended June 30, 2008 as compared to $24.9 million for the
corresponding period of 2007.

Same Property Results

The Company owned 99 properties throughout both the second quarters of
2008 and 2007. Same property net operating income was $25.5 million in the
second quarter of 2008 as compared to $26.3 million in the second quarter
of 2007. The overall decrease reflects principally a reduction in revenue
and an increase in expenses in conjunction with the commencement of
redevelopment activities at certain properties, a reduction in revenue in
conjunction with the termination of a lease in the fourth quarter of 2007
which the Company expects to replace on more favorable terms, a reduction
in percentage rent, and an increase in the provision for doubtful accounts
for one tenant, partially offset by scheduled increases in base rent.

Balance Sheet and Capital Position

Total assets were $1.65 billion at June 30, 2008 and $1.60 billion at
December 31, 2007. The Company had total debt outstanding of $934.6 million
at June 30, 2008 as compared to $851.5 million at December 31, 2007 and had
$49.9 million available under its secured and unsecured revolving credit
facilities and $7.2 million in available cash at June 30, 2008. The Company
implemented a new cash management system in the second quarter pursuant to
which the Company reduced its cash balance by approximately $13 million and
reduced its secured revolving credit facility by a corresponding amount. At
June 30, 2008, the Company’s fixed rate debt was approximately 72% of its
total indebtedness.

The Company has a development pipeline of between $350 and $400 million
that it expects to begin to put into service over the next 8 to 17 months.
It expects to fund these activities with borrowings under its existing
revolving credit facility, its newly-completed secured revolving line of
credit for construction/development projects (see below), borrowings under
property-specific construction financing arrangements, excess proceeds from
certain financings and refinancings, property sales proceeds and/or funds
from joint ventures.

In June 2008, the Company entered into a $150 million master revolving
construction facility that the Company expects to use to fund a significant
amount of its development activities in 2008 and subsequent years. The
Company has also received a conditional commitment from another bank to
provide construction financing for a large single asset development project
in Pottsgrove, Pennsylvania. The Company has secured commitments from
substantially all banks involved in the syndication of this commitment and
expects to close that financing during the third quarter of 2008.

Larry Kreider, Cedar’s Chief Financial Officer, noted, “The new
construction financing commitments which we have arranged, coupled with the
refinancing activity we have completed to date, as well as other existing
resources we have on hand, provide us with the capital to execute our
announced development and redevelopment plans. We believe our solid balance
sheet and prudent approach, along with the financial strength of our
tenants, place the Company in a strong position in the current economic
environment.”

Leasing Activity

In the second quarter of 2008, the Company signed 29 renewal leases
aggregating approximately 78,000 sq. ft. with an average increase in base
rents of 7.1%, and five new leases aggregating approximately 16,000 sq. ft.
with an average base rent of $19.43 per sq. ft. At different properties,
the Company had 15 terminated leases aggregating approximately 75,000 sq.
ft. with average base rent of $10.66 per sq. ft.

Second Quarter and Subsequent Acquisitions

On April 10, 2008, the Company acquired Stop & Shop Plaza in
Bridgeport, Connecticut, an approximate 55,000 sq. ft. property, for a
purchase price of approximately $10.9 million, including closing costs,
financed by (1) the assumption of an existing $7.0 million second mortgage
bearing interest at 6.17% per annum and maturing in 2017, and (2)
approximately $3.9 million from the Company’s secured revolving credit
facility.

Joint Venture Activities

On April 23, 2008 the Company entered into a joint venture for the
construction and development of an estimated 137,000 sq. ft. shopping
center in Hamilton Township (Stroudsburg), Pennsylvania. Total project
costs, including the purchase of land parcels, are estimated at $37
million. The Company is committed to paying a development fee of $500,000
and providing up to $9.5 million of equity capital for a 60% interest in
the joint venture, with a cumulative preferred rate of return of 9.25% per
annum on its invested funds. The Company’s initial $5.6 million
contribution to the joint venture was funded from its existing secured
revolving credit facility. The venture had previously acquired the land
parcels for this project at an aggregate cost of approximately $15.4
million, incurring mortgage indebtedness of approximately $10.8 million.
Approximately $19.0 million remains available for the project under an
existing second mortgage construction/development loan in the initial
amount of $27.8 million.

Financial Guidance

The Company reiterated that for the full year 2008 it expects to report
FFO of $1.22 to $1.26 per share/OP Unit. The Company’s guidance excludes
any impact on FFO from new or future development/redevelopment activities,
new acquisitions or dispositions or new joint venture arrangements of
existing properties. Should LIBOR continue at its current rate, the
Company’s FFO could benefit by up to $0.02 per share/OP Unit over the
remainder of the year. Conversely, based on the expected contribution of
properties to a second joint venture with Homburg Invest Inc. in the fourth
quarter of 2008, the Company could incur a net reduction in FFO of
approximately $0.01 to $0.02 per share/OP Unit in 2008.

Supplemental Information Package

The Company has issued “Supplemental Financial Information” for the
period ended June 30, 2008 and has filed such information today as an
exhibit to Form 8-K, which will also be available on the Company’s website
at http://www.cedarshoppingcenters.com.

Reference to Form 10-Q

Interested parties are urged to review the Form 10-Q to be filed with
the Securities and Exchange Commission for the quarter ended June 30, 2008,
when available, for further details.

Investor Conference Call

The Company will host a conference call on Thursday, July 31, 2008, at
10:00 AM (EDT) to discuss the second quarter results. The U.S. dial-in
number to call for this teleconference is (888) 218-8172. The international
dial-in number is (913) 981-5580. A replay of the conference call will be
available from 2:30 PM (EDT) on August 1 through midnight (EDT) on August
15, 2008 by using U.S. dial-in number (888) 203-1112 and entering the
passcode 3380624 (international callers may use dial-in number (719)
457-0820 and use the same passcode indicated for U.S. callers). The webcast
of the conference call will be available on the Company’s website at
http://www.cedarshoppingcenters.com and will remain on the website for a limited
time.

About Cedar Shopping Centers

Cedar Shopping Centers, Inc. is a fully-integrated real estate
investment trust which focuses primarily on ownership, operation,
development and redevelopment of supermarket-anchored shopping centers in
nine mid-Atlantic and New England states. The Company has realized
significant growth in assets and has completed a number of developments and
redevelopments of retail properties since its public offering in October
2003. The Company presently owns and operates 119 properties aggregating 12
million square feet of gross leasable area. The Company also owns a
substantial pipeline of development properties as well as approximately 382
acres of generally unimproved land held primarily for ground-up development
projects.

Forward-Looking Statements

Statements made or incorporated by reference in this press release
include certain “forward-looking statements”. Such forward-looking
statements include, without limitation, statements containing the words
“anticipates”, “believes”, “expects”, “intends”, “future”, and words of
similar import which express the Company’s beliefs, expectations or
intentions regarding future performance or future events or trends. While
forward-looking statements reflect good faith beliefs, expectations or
intentions, they are not guarantees of future performance and involve known
and unknown risks, uncertainties and other factors, which may cause actual
results, performance or achievements to differ materially from anticipated
future results, performance or achievements expressed or implied by such
forward-looking statements as a result of factors outside of the Company’s
control. Certain factors that might cause such differences include, but are
not limited to, the following: real estate investment considerations, such
as the effect of economic and other conditions in general and in the
Company’s market areas in particular; the financial viability of the
Company’s tenants; the continuing availability of suitable acquisitions,
and development and redevelopment opportunities, on favorable terms; the
availability of equity and debt capital (including the availability of
construction financing) in the public and private markets; changes in
interest rates; the fact that returns from development, redevelopment and
acquisition activities may not be at expected levels or at expected times;
inherent risks in ongoing development and redevelopment projects including,
but not limited to, cost overruns resulting from weather delays, changes in
the nature and scope of development and redevelopment efforts, changes in
governmental regulations related thereto, and market factors involved in
the pricing of material and labor; the need to renew leases or re-let space
upon the expiration of current leases; and the financial flexibility to
repay or refinance debt obligations when due.

Non-GAAP Financial Measures — FFO

Funds From Operations (”FFO”) is a widely-recognized non-GAAP financial
measure for REITs that the Company believes, when considered with financial
statements determined in accordance with GAAP, is useful to investors in
understanding financial performance and providing a relevant basis for
comparison among REITs. In addition, FFO is useful to investors as it
captures features particular to real estate performance by recognizing that
real estate generally appreciates over time or maintains residual value to
a much greater extent than do other depreciable assets. Investors should
review FFO, along with GAAP net income, when trying to understand an equity
REIT’s operating performance. The Company presents FFO because the Company
considers it an important supplemental measure of its operating performance
and believes that it is frequently used by securities analysts, investors
and other interested parties in the evaluation of REITs. Among other
things, the Company uses FFO or an adjusted FFO-based measure (1) as a
criterion to determine performance-based bonuses for members of senior
management, (2) in performance comparisons with other shopping center
REITs, and (3) to measure compliance with certain financial covenants under
the terms of the Loan Agreement relating to the Company’s secured revolving
credit facility.

The Company computes FFO in accordance with the “White Paper” on FFO
published by the National Association of Real Estate Investment Trusts
(”NAREIT”), which defines FFO as net income applicable to common
shareholders (determined in accordance with GAAP), excluding gains or
losses from debt restructurings and sales of properties, plus real
estate-related depreciation and amortization, and after adjustments for
partnerships and joint ventures (which are computed to reflect FFO on the
same basis).

FFO does not represent cash generated from operating activities and
should not be considered as an alternative to net income applicable to
common shareholders or to cash flow from operating activities. FFO is not
indicative of cash available to fund ongoing cash needs, including the
ability to make cash distributions. Although FFO is a measure used for
comparability in assessing the performance of REITs, as the NAREIT White
Paper only provides guidelines for computing FFO, the computation of FFO
may vary from one company to another.

The following table sets forth the Company’s calculations of FFO for
the three and six months ended June 30, 2008 and 2007:

Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007

Net income applicable
to common
shareholders $1,224,000 $2,921,000 $4,336,000 $6,576,000
Add (deduct):
Real estate
depreciation and
amortization 13,939,000 9,837,000 25,400,000 19,667,000
Limited partners’
interest 56,000 132,000 199,000 295,000
Minority interests in
consolidated joint
ventures 482,000 300,000 1,188,000 695,000
Minority interests’
share of FFO
applicable to
consolidated joint
ventures (1,417,000) (426,000) (3,198,000) (917,000)
Equity in income of
unconsolidated joint
venture (222,000) (157,000) (372,000) (313,000)
FFO from
unconsolidated joint
venture 355,000 234,000 581,000 468,000
Funds From Operations $14,417,000 $12,841,000 $28,134,000 $26,471,000

FFO per common share
(assuming conversion
of OP Units):
Basic $0.31 $0.28 $0.61 $0.57
Diluted $0.31 $0.28 $0.61 $0.57

Weighted average
number of common
shares:
Shares used in
determination of
basic earnings per
share 44,464,000 44,194,000 44,461,000 44,153,000
Additional shares
assuming conversion
of OP Units (basic) 2,029,000 1,984,000 2,030,000 1,985,000
Shares used in
determination of
basic FFO per share 46,493,000 46,178,000 46,491,000 46,138,000

Shares used in
determination of
diluted earnings per
share 44,466,000 44,198,000 44,462,000 44,158,000
Additional shares
assuming conversion
of OP Units (diluted) 2,029,000 1,997,000 2,030,000 1,998,000
Shares used in
determination of
diluted FFO per share 46,495,000 46,195,000 46,492,000 46,156,000

CEDAR SHOPPING CENTERS, INC.
Consolidated Balance Sheets

June 30, December 31,
2008 2007
(unaudited)
Assets
Real estate:
Land $369,813,000 $315,599,000
Buildings and improvements 1,320,355,000 1,282,180,000
1,690,168,000 1,597,779,000
Less accumulated depreciation (125,023,000) (103,621,000)
Real estate, net 1,565,145,000 1,494,158,000

Investment in unconsolidated joint
venture 4,791,000 3,757,000

Cash and cash equivalents 7,203,000 20,307,000
Restricted cash 19,508,000 17,839,000
Rents and other receivables, net 6,920,000 7,640,000
Straight-line rents receivable 12,927,000 11,446,000
Other assets 6,472,000 9,778,000
Deferred charges, net 31,653,000 30,059,000
Total assets $1,654,619,000 $1,594,984,000

Liabilities and shareholders’ equity
Mortgage loans payable $680,258,000 $661,074,000
Secured revolving credit facility 254,390,000 190,440,000
Accounts payable and accrued expenses 23,412,000 26,068,000
Unamortized intangible lease
liabilities 68,722,000 71,157,000
Total liabilities 1,026,782,000 948,739,000

Minority interests in consolidated
joint ventures 58,688,000 62,402,000
Limited partners’ interest in
Operating Partnership 24,414,000 25,689,000

Shareholders’ equity:
Preferred stock ($.01 par value,
$25.00 per share liquidation
value, 12,500,000 shares
authorized, 3,550,000 shares
issued and outstanding) 88,750,000 88,750,000
Common stock ($.06 par value,
150,000,000 shares authorized
44,488,000 and 44,238,000 shares,
respectively, issued and
outstanding) 2,669,000 2,654,000
Treasury stock (719,000 and 616,000
shares, respectively, at cost) (9,240,000) (8,192,000)
Additional paid-in capital 575,136,000 572,392,000
Cumulative distributions in excess
of net income (113,185,000) (97,514,000)
Accumulated other comprehensive
income 605,000 64,000
Total shareholders’ equity 544,735,000 558,154,000
Total liabilities and shareholders’
equity $1,654,619,000 $1,594,984,000

CEDAR SHOPPING CENTERS, INC.
Consolidated Statements of Income
(unaudited)

Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007

Revenues:
Rents $34,652,000 $30,015,000 $69,032,000 $58,579,000
Expense recoveries 8,088,000 6,834,000 17,136,000 14,109,000
Other 175,000 101,000 382,000 453,000
Total revenues 42,915,000 36,950,000 86,550,000 73,141,000
Expenses:
Operating,
maintenance
and management 7,114,000 5,690,000 15,324,000 12,767,000
Real estate and other
property-related
taxes 4,758,000 3,623,000 9,459,000 7,200,000
General and
administrative 2,323,000 3,220,000 4,514,000 5,218,000
Depreciation and
amortization 14,007,000 9,898,000 25,536,000 19,781,000
Total expenses 28,202,000 22,431,000 54,833,000 44,966,000

Operating income 14,713,000 14,519,000 31,717,000 28,175,000
Non-operating income
and expense:
Interest expense,
including
amortization of
deferred financing
costs (11,279,000) (9,562,000) (22,663,000) (17,482,000)
Interest income 77,000 223,000 235,000 498,000
Equity in income of
unconsolidated joint
venture 222,000 157,000 372,000 313,000
Total non-operating
income and expense (10,980,000) (9,182,000) (22,056,000) (16,671,000)

Income before minority
and limited partners’
interests 3,733,000 5,337,000 9,661,000 11,504,000

Minority interests in
consolidated joint
ventures (482,000) (300,000) (1,188,000) (695,000)
Limited partners’
interest in Operating
Partnership (56,000) (132,000) (199,000) (295,000)

Net income 3,195,000 4,905,000 8,274,000 10,514,000

Preferred distribution
requirements (1,971,000) (1,984,000) (3,938,000) (3,938,000)
Net income applicable
to common
shareholders $1,224,000 $2,921,000 $4,336,000 $6,576,000

Per common share:
Basic $0.03 $0.07 $0.10 $0.15
Diluted $0.03 $0.07 $0.10 $0.15

Dividends to common
shareholders $10,003,000 $9,942,000 $20,007,000 $19,871,000
Per common share $0.225 $0.225 $0.450 $0.450

Weighted average
number of common
shares outstanding:
Basic 44,464,000 44,194,000 44,461,000 44,153,000
Diluted 44,466,000 44,198,000 44,462,000 44,158,000

CEDAR SHOPPING CENTERS, INC.
Consolidated Statements of Cash Flows
(unaudited)

Six months ended June 30,
2008 2007
Cash flow from operating activities:
Net income $8,274,000 $10,514,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Non-cash provisions:
Earnings in excess of distributions
of consolidated joint venture
minority interests 949,000 163,000
Equity in income of unconsolidated
joint venture (372,000) (313,000)
Distributions from unconsolidated
joint venture 434,000 265,000
Limited partners’ interest in
Operating Partnership 199,000 295,000
Straight-line rents receivable (1,481,000) (1,806,000)
Depreciation and amortization 25,536,000 19,781,000
Amortization of intangible lease
liabilities (6,904,000) (5,098,000)
Amortization relating to stock-based
compensation 1,341,000 1,154,000
Amortization of deferred financing
costs 799,000 729,000
Increases/decreases in operating
assets and liabilities:
Cash at consolidated joint ventures (266,000) 87,000
Rents and other receivables, net 720,000 (453,000)
Other 267,000 (23,000)
Accounts payable and accrued
expenses (1,142,000) (395,000)
Net cash provided by operating
activities 28,354,000 24,900,000

Cash flow from investing activities:
Expenditures for real estate and
improvements (50,439,000) (92,646,000)
Purchase of consolidated joint
venture minority interests (17,454,000) -
Investment in unconsolidated joint
venture (1,094,000) (8,000)
Construction escrows and other (1,299,000) (474,000)
Net cash (used in) investing
activities (70,286,000) (93,128,000)

Cash flow from financing activities:
Net advances from line of credit 63,950,000 70,520,000
Proceeds from sales of common stock - 3,910,000
Redemption of Operating Partnership
Units (122,000) -
Proceeds from mortgage financings 27,562,000 23,000,000
Mortgage repayments (40,058,000) (4,125,000)
Contribution from minority interest
partners, net 4,269,000 1,048,000
Distributions in excess of earnings
from consolidated joint venture
minority interests (27,000) -
Distributions to limited partners (913,000) (890,000)
Preferred distribution requirements (3,938,000) (3,938,000)
Distributions to common shareholders (20,007,000) (19,871,000)
Payments of deferred financing costs,
net (1,888,000) (1,053,000)
Net cash provided by financing
activities 28,828,000 68,601,000

Net (decrease) increase in cash and
cash equivalents (13,104,000) 373,000
Cash and cash equivalents at
beginning of period 20,307,000 17,885,000
Cash and cash equivalents at end of
period $7,203,000 $18,258,000

Real Estate Central

Cedar Shopping Centers Announces Second Quarter Results

Recent Posts

Categories

Archives

Meta