Cedar Shopping Centers, Inc. (the “Company”) was organized in 1984 and elected to be taxed as a real estate investment trust (“REIT”) in 1986. The Company has focused on the ownership, operation and redevelopment of community and neighborhood shopping centers located in the Northeast, primarily in Pennsylvania. At December 31, 2004, the Company owned 31 properties, aggregating approximately 4.9 million square feet of gross leasable area (“GLA”).
Cedar Shopping Centers Partnership, L.P. (the “Operating Partnership”) is the entity through which the Company conducts substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets. At December 31, 2004 and 2003, the Company owned a 97.3% and 97.4%, respectively, economic interest in, and is the sole general partner of, the Operating Partnership. The limited partners’ interest in the Operating Partnership is adjusted at the end of each reporting period to an amount equal to the limited partners’ ownership percentage of the Operating Partnership’s net equity. Such ownership percentage was 2.7% and 2.6% at December 31, 2004 and 2003, respectively. The 454,000 OP Units outstanding at December 31, 2004 are economically equivalent to the Company’s common stock and are convertible into the Company’s common stock at the option of the holde rs on a one-to-one basis.
The consolidated financial statements include the accounts and operations of the Company, the Operating Partnership, its subsidiaries, and joint venture partnerships in which it participates. With respect to its joint ventures, the Company has general partnership interests ranging from 20% to 50% and, since the Company is the sole general partner, exercises substantial operating control over these entities, and has determined pursuant to The Financial Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities”, that they are not variable-interest entities, such partnerships are included in the consolidated financial statements. Prior years’ consolidated financial statements have been reclassified to conform to the 2004 presentation.
As used herein, the “Company” refers to Cedar Shopping Centers, Inc. and its subsidiaries on a consolidated basis, including the Operating Partnership, or, where the context so requires, Cedar Shopping Centers, Inc. only.
The accompanying financial statements are prepared on the accrual basis in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. Actual results could differ from these estimates.
Real estate investments are carried at cost less accumulated depreciation. The provision for depreciation has been calculated using the straight-line method based upon the following estimated useful lives of the respective assets:
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
| Buildings and improvements | 40 years |
| Tenant improvements | Over the lives of the respective leases |
Depreciation expense amounted to $9,753,000, $3,878,000, and $1,722,000 for 2004, 2003, and 2002, respectively. Additions and betterments that substantially extend the useful lives of the properties are capitalized. Expenditures for maintenance, repairs, and betterments that do not materially prolong the normal useful life of an asset are charged to operations as incurred, and amounted to $2,102,000, $1,903,000, and $827,000 for 2004, 2003, and 2002, respectively.
Upon the sale or other disposition of assets, the cost and related accumulated depreciation and amortization are removed from the accounts and the resulting gain or loss, if any, is reflected as discontinued operations. Real estate investments include costs of development and redevelopment activities, and construction in progress. Capitalized costs, including interest and other carrying costs during the construction and/or renovation periods, are included in the cost of the related asset and charged to operations through depreciation over the asset’s estimated useful life. Interest capitalized amounted to $1,633,000, $184,000, and none, in 2004, 2003, and 2002, respectively.
FASB’s Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, requires that management review each real estate investment for impairment whenever events or circumstances indicate that the carrying value of a real estate investment may not be recoverable. The review of recoverability is based on an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If an impairment trigger exists due to the inability to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds estimated fair market value. No impairment provisions were recorded by the Company during the three years ended December 31, 2004.
Real estate investments held for sale are carried at the lower of carrying amount or estimated fair value, less cost to sell. Depreciation and amortization are suspended during the period held for sale.
Intangible Lease Asset/Liability
SFAS No. 141, “Business Combinations”, and SFAS No. 142, “Goodwill and Other Intangibles”, require that management allocate the fair value of real estate acquired to land, building and building improvements. In addition, the fair value of in-place leases, consisting primarily of below-market rents, is allocated to intangible lease liabilities.
The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, building and building improvements based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses, and estimates of lost rental revenue during the expected lease-up
45
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
periods based on its evaluation of current market demand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs.
The value of in-place leases is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates, over (ii) the estimated fair value of the property as if vacant. Above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be received and management’s estimate of market lease rates, measured over the non-cancelable terms. This aggregate value is allocated among above-market and below-market leases, tenant relationships, and other intangibles based on management’s evaluation of the specific characteristics of each lease. The value of other intangibles is amortized to expense, and the above-market and below-market lease values are amortized to rental income over the remaining non-cancelable terms of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be immediately recognized in operations.
During 2004, the Company finalized the real estate valuation allocations with respect to property acquisitions completed during the fourth quarter of 2003 and, in this connection, the December 31, 2003 consolidated balance sheet was adjusted. Real estate, net, increased by $5,907,000, deferred charges (leasing costs) increased by $2,433,000, and unamortized intangible lease liabilities increased by $8,340,000; 2003 results of operations were not affected by these allocations. With respect to the Company’s 2004 acquisitions, the fair value of in-place leases and other intangibles has been allocated, on a preliminary basis, to the applicable intangible asset and liability accounts. Unamortized intangible lease liabilities of $25,227,000 and $13,552,000 at December 31, 2004 and 2003, respectively, relate primarily to below-market leases.
Revenues include $2,154,000, $879,000 and $146,000 for the years ended December 31, 2004, 2003 and 2002, respectively, relating to the amortization of intangible lease liabilities. Correspondingly, depreciation and amortization expense includes $2,656,000, $307,000 and $17,000 for the years ended December 31, 2004, 2003 and 2002, respectively, applicable to amounts allocated to intangible lease assets.
The unamortized balance of intangible lease liabilities at December 31, 2004 will be credited to future operations as follows:
| 2005 | | $ | 3,568,000 | |
| 2006 | | | 3,209,000 | |
| 2007 | | | 3,224,000 | |
| 2008 | | | 3,209,000 | |
| 2009 | | | 3,132,000 | |
| Thereafter | | | 8,885,000 | |
| | |
|
| |
| | | $ | 25,227,000 | |
| | |
|
| |
46
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
Cash Equivalents
Cash and cash equivalents consist of cash in banks and short-term investments with original maturities of less than ninety days.
Cash at Joint Ventures and Restricted Cash
Joint venture partnership agreements require, among other things, that the Company maintain separate cash accounts for the operation of the joint ventures, and distributions to the general and limited (joint venture) partners are strictly controlled. Cash at joint ventures amounted to $1,193,000 and $1,003,000 at December 31, 2004 and 2003, respectively.
The terms of several of the Company’s mortgage loans payable require it to deposit certain replacement and other reserves with its lenders. This restricted cash is generally available for property-level capital requirements for which the reserve was established. This cash is not, however, available to fund other property-level or Company-level obligations. Restricted cash amounted to $5,912,000 and $6,665,000 at December 31, 2004 and 2003, respectively.
Rents and Other Receivables
Management has determined that all of the Company’s leases with its various tenants are operating leases. Base rents are recognized on a straight-line basis over the terms of the related leases, net of valuation adjustments based on management’s assessment of credit, collection and other business risks. The excess of rents recognized over amounts contractually due is included in rents and other receivables on the consolidated balance sheet and, where applicable, are evaluated under the provisions of SFAS No. 144. The leases also typically provide for tenant reimbursements of common area maintenance and other operating expenses, and real estate taxes; such income is recognized in the period earned. The Company makes estimates as to the collectibility of its accounts receivables based on evaluations of tenant creditworthiness, current economic trends, and changes in customer payment patterns when determining the adequacy of its allowance for doubtful accounts.
Deferred Charges
Deferred charges consist principally of lease origination costs, the costs incurred in connection with the Company’s secured revolving credit facility and other long-term debt, and the cost of interest rate protection agreements. Such costs are amortized over the term of the related agreement and, where applicable, are evaluated under the provisions of SFAS No. 144.
Income Taxes
The Company has elected since 1986 to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. A REIT will generally not be subject to federal income taxation on that portion of its income that qualifies as REIT taxable income, to the extent that it distributes at least 90% of its taxable income to its shareholders and complies with certain other requirements.
47
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
Derivative Financial Instruments
The Company utilizes derivative financial instruments, principally interest rate swaps and interest rate caps, to manage its exposure to fluctuations in interest rates. The Company has established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instrument activities. The Company has not entered into, and does not plan to enter into, derivative financial instruments for trading or speculative purposes. Additionally, the Company has a policy of only entering into derivative contracts with major financial institutions.
SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, requires the Company to measure derivative instruments at fair value and to record them in the consolidated balance sheet as an asset or liability, depending on the Company’s rights or obligations under the applicable derivative contract. The Company’s derivative investments are primarily cash flow hedges that limit the base rate of variable rate debt. For cash flow hedges, the ineffective portion of a derivative’s change in fair value is immediately recognized in operations, if applicable, and the effective portion of the fair value difference of the derivative is reflected separately in shareholders’ equity as accumulated other comprehensive income (loss).
SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”, amended and clarified the accounting treatment of (1) derivative instruments (including certain derivative instruments embedded in other contracts), and (2) hedging activities that fall within the scope of SFAS No. 133. SFAS No. 149 also amended certain other existing pronouncements, which result in more consistent reporting of contracts that are derivatives in their entirety, or that contain embedded derivatives that warrant separate accounting. SFAS No. 149 was effective prospectively (1) for contracts entered into or modified after June 30, 2003, with certain exceptions, and (2) for hedging relationships designated after June 30, 2003, and has had no material affect on the Company’s results of operations.
Fair Value of Financial Instruments
SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”, requires the Company to disclose fair value information of all financial instruments for which it is practicable to estimate fair value. The Company’s financial instruments, other than fixed-rate mortgage loans payable, are generally short-term in nature, or bear interest at variable current market rates, and contain minimal credit risk. These instruments consist of cash and cash equivalents, cash at joint ventures and restricted cash, rents and other receivables, and accounts payable. The carrying amount of these assets and liabilities are assumed to be at fair value.
The fair values of fixed-rate mortgage loans payable, estimated utilizing discounted cash flow analysis at interest rates reflective of current market conditions, were $168,959,000 and $152,037,000, respectively, at December 31, 2004 and 2003; the carrying values of such loans were $161,476,000 and $145,458,000, respectively at those dates.
Earnings Per Share
In accordance with SFAS No. 128, “Earnings Per Share”, basic earnings per share (“EPS”) is computed by dividing net income available to common shareholders by the average number of common
48
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
shares outstanding for the period. Fully diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For 2004, 2003 and 2002, fully diluted EPS were not different than basic EPS.
In July 2003, the Company paid a stock dividend of one new share for each share of common stock outstanding. In October 2003, the Company effectuated a one-for-six “reverse” stock split. The accompanying financial statements and all share and per share data have been retroactively adjusted to give effect to the stock dividend and the reverse stock split.
Stock-Based Compensation
SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure”, which amended SFAS No. 123, “Accounting for Stock-Based Compensation”, provides alternative methods of transition for an entity that voluntarily adopts the fair value recognition method of recording stock option expense. It also amends the disclosure provisions of SFAS 123 and APB Opinion No. 28, “Interim Financial Reporting” to require disclosure in the summary of significant accounting policies, of the effects of an entity’s accounting policy with respect to stock options on reported net income and EPS in annual and interim financial statements.
SFAS No. 123 established financial accounting and reporting standards for stock-based employee compensation plans, including all arrangements by which employees receive shares of stock or other equity instruments of the employer, or the employer incurs liabilities to employees in amounts based on the price of the employer’s stock. SFAS No. 123 defined a fair value based method of accounting for an employee stock option or similar equity instrument, and encouraged all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also allowed an entity to continue to measure compensation cost using the intrinsic value based method of accounting prescribed by APB Opinion No. 25, “Accounting for Stock Issued to Employees”. The Company has elected to continue using APB Opinion No. 25 and make pro forma disclosures of net income and EPS as if the fair value method of accounting defined in SFAS No. 123 had been applied.
In 2003, the Company’s shareholders approved an amendment to its stock option plan, originally approved by shareholders in 1998, authorizing the Company to issue option grants for a total of 2,000,000 shares. In 2001, the Company granted to five directors ten-year options to purchase 3,333 shares at $10.50 per share, the market value of the Company’s common stock on the date of the grant. The following table sets forth, on a pro forma basis, the net income (loss) and net income (loss) per share as if the fair value method of accounting defined in SFAS No. 123 had been applied:
49
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
| | | 2004 | | 2003 | | 2002 | |
| | |
|
| |
|
| |
|
| |
| Net income (loss) applicable to common shareholders, as reported | | $ | 5,702,000 | | $ | (21,351,000 | ) | $ | (468,000 | ) |
| Adjustment to amortize the value of stock options granted | | | (17,000 | ) | | (17,000 | ) | | (17,000 | ) |
| | |
|
| |
|
| |
|
| |
| Pro forma net income (loss) | | $ | 5,685,000 | | $ | (21,368,000 | ) | $ | (485,000 | ) |
| | |
|
| |
|
| |
|
| |
| Average number of common shares outstanding | | | 16,681,000 | | | 3,010,000 | | | 231,000 | |
| | |
|
| |
|
| |
|
| |
| Pro forma net income (loss) per common share | | $ | 0.34 | | $ | (7.10 | ) | $ | (2.10 | ) |
| | |
|
| |
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| |
|
| |
In 2004, the Company’s shareholders approved the 2004 Stock Incentive Plan, which provides for the granting of incentive stock options, stock appreciation rights, restricted shares, performance units and performance shares. The maximum number of shares of the Company’s common stock that may be issued pursuant to this plan is 850,000, and the maximum number of shares that may be subject to grants to any single participant may not exceed 250,000. The Company’s Board of Directors determined to grant $20,000 of restricted shares annually to each of its five independent directors, which shares would vest on the third anniversary of the grant date. In addition, the Board determined to grant $50,000 of restricted shares to each of three independent directors as consideration for past services rendered, which shares would vest 20% on the first anniversary of the grant date, and 40% each on the second and third anniversaries of the grant date. In August 2004, 19,970 shares of the Company’s common stock became issuable relating to these grants at $12.525 per share, the fair value on the date of grant, an aggregate of $250,000. Such shares were transferred to a Rabbi Trust for the benefit of the Directors, have been classified as treasury stock and deferred compensation plan in the Company’s consolidated balance sheet, and are accounted for pursuant to Emerging Issues Task Force (“EITF”) No. 97-14, “Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested”. Amortization of amounts deferred are being charged to operations over the vesting periods. Shares held by the Rabbi Trust are included in outstanding shares for EPS computations.
In connection with the Red Lion acquisition, the Operating Partnership issued warrants to purchase 83,333 OP Units to a minority interests partner in the property; such warrants have an exercise price of $13.50 per unit, subject to anti-dilution adjustments. The warrants became fully vested in January 2004 and expire in May 2012. The first 27,778 warrants were capitalized at fair value as part of the property acquisition cost; approximately $173,000 was charged to operations during each of 2003 and 2002.
Note 3. Public Offerings
In October 2003, the Company sold 13,500,000 shares of its common stock in a public offering at a price of $11.50 per share, and realized approximately $141.2 million after underwriting fees and offering costs. The Company’s shares were listed on the New York Stock Exchange and commenced trading on October 24, 2003. In November 2003, the underwriter exercised its over-allotment option to
50
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
purchase an additional 2,025,000 shares at $11.50 per share, less underwriting fees, and the Company received an additional $21.7 million.
In July 2004, the Company sold 2,350,000 shares of 8-7/8% Series A Cumulative Redeemable Preferred Stock in a public offering at a price of $25.00 per share, an aggregate of $58.75 million. The preferred stock has no stated maturity and is not convertible into any other security of the Company. The preferred stock is redeemable at the Company’s option on or after July 28, 2009 at a price of $25.00 per share, plus accrued and unpaid distributions. The net proceeds of the offering, after underwriting fees and offering costs, amounted to approximately $56.7 million, substantially all of which were used to repay amounts outstanding on the Company’s secured revolving credit facility.
In December 2004, the Company sold 2,500,000 shares of its common stock in a public offering at a price of $13.60 per share, and realized approximately $33.2 million after underwriting fees and offering costs, substantially all of which were used to repay amounts outstanding on the Company’s secured revolving credit facility. Later in December 2004, the underwriters exercised their over-allotment option to purchase an additional 375,000 shares at $13.60 per share less underwriting fees, and the Company received an additional $5.0 million of proceeds.
Note 4. Related-Party Transactions, Allocation of Costs and Expenses and Pro Forma Financial Information
Transactions with CBRA, SKR and Brentway
Prior to the 2003 public offering, the Company was externally advised and, in this connection, Cedar Bay Realty Advisors, Inc. (“CBRA”), SKR Management Corp. (“SKR”) and Brentway Management LLC (“Brentway”) (collectively the “External Advisor”) provided advisory, management and legal services to the Company. The Company paid fees in connection with these services of approximately $2.2 million and $1.9 million during 2003 and 2002, respectively. Contemporaneously with the public offering, CBRA and SKR merged into the Company and Brentway merged into the Operating Partnership. Each of the Company’s executive officers was also a principal or officer of the External Advisor and each became an employee of the Company, together with the other employees of the External Advisor. An independent committee of the Board retained a financial advisor who advised it as to the fairness of the consideration paid in connection with the merger. The merger was approved at the annual meeting of stockholders held in October 2003. The total consideration paid for the External Advisor was $11.96 million, comprised of 693,333 shares of the Company’s common stock and 346,667 OP Units, each valued at $11.50 per share/unit, and such consideration was charged to operations during 2003. The consideration was distributed to the owners, who are also executive officers of the Company, and to other officers and employees of the Company. In connection with the merger, an aggregate of 319,000 shares of the consideration, with a value of $3.7 million, was transferred to a Rabbi Trust for the benefit of certain of the Company’s executive officers; such shares have been classified as treasury stock in the Company’s consolidated financial statements, and are accounted for pursuant to EITF No. 97-14, “Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested”. Also in connection with the merger, 90,000 shares, with an aggregate value of $1.04 million, were distributed to non-executive employees. At the time the aggregate consideration for the External Advisor was being negotiated with the independent committee of the Board, the Company’s chairman and principal owner of the External Advisor agreed to reimburse these non–executive
51
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
employees for their personal income taxes incurred as a result of receiving the shares. The chairman paid $633,000 to the Company which, in accordance with Interpretation of APB 25, “Accounting for Stock Issued to Employees”, was credited to shareholders’ equity; the tax payments were charged to operations during 2003.
Transactions with CBC
Prior to the 2003 public offering, Cedar Bay Company (“CBC”) owned approximately 78% of the Company’s common stock and OP Units (comprised of approximately 63,000 shares of common stock and approximately 568,000 OP Units). CBC received $9.0 million of the proceeds from the public offering in connection with the repurchase all the OP Units owned by it ($15.85 per unit). The same financial advisor who opined as to the fairness of the consideration paid for the External Advisor also advised the independent committee of the Board as to the fairness of the consideration paid to CBC.
In May 2003, an affiliate of CBC loaned $750,000 to the Company, which was used to partially fund the deposit requirement for the South Philadelphia shopping center. The principal, plus interest at an annual rate of 15%, was repaid in full with the proceeds from the public offering.
In November 2003, the Company used approximately $2.4 million of the proceeds from the public offering to purchase the remaining 50% interest in The Point owned by an affiliate of CBC. The purchase price for this interest was arrived at through negotiation with the owner of CBC.
In December 2003, the Company used approximately $1.6 million of the proceeds from the public offering to acquire Golden Triangle from an affiliate of CBC. In connection with the acquisition, the Company assumed a $9.8 million 7.39% existing first mortgage.
In connection with the June 2002 acquisition of the Red Lion partnership interest from an affiliate of CBC, the Company agreed to pay $887,000 in three equal annual installments, plus interest at 7.5%. This loan was repaid in full with the proceeds from the public offering.
Transactions with Homburg Invest Inc.
In December 2002, Homburg Invest USA Inc., a wholly-owned subsidiary of Homburg Invest Inc. (“Homburg Invest”), which is owned approximately 62% by Mr. Richard Homburg, a director of the Company, purchased 3,300 Preferred OP Units for $3.0 million ($909.09 each), with a liquidation value of $1,000 each and a preferred distribution rate of 9%. In October 2003, the Company exercised its option and redeemed the Preferred OP Units from the proceeds of the public offering, at $1,200 per unit, an aggregate of $3.96 million. The $960,000 cost above par was charged to operations during 2003.
Homburg Invest supplied substantially all the equity (through the purchase of joint venture interests) in connection with the Company’s acquisitions of the Pine Grove Plaza, Swede Square and Wal-Mart center properties. Homburg Invest received 10% in origination fees for providing the equity in each acquisition. The Company had the option to buy the Homburg Invest joint venture interest in the Wal-Mart property for 120% of Homburg Invest’s original investment plus a 12% preferential return. In the case of the Pine Grove Plaza and Swede Square properties, the Company had the option to purchase the Homburg Invest joint venture interests provided that Homburg Invest receive a 15% annualized rate of
52
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
return from the date each center was acquired. The Company exercised these options and used the proceeds from the public offering to purchase these joint venture interests.
Homburg Invest provided to the Company a one-year, $1.1 million, 9% interest-only loan. The loan included a $100,000 entrance fee and required the payment of a $220,000 exit fee. The loan was used to partially fund the deposit requirements for the South Philadelphia property. This loan was repaid in full with the proceeds from the public offering and the entrance and exit fees were charged to operations during 2003. In addition, Homburg Invest arranged for and guaranteed the third-party financing for the acquisitions of the Valley Plaza and Wal-Mart properties, and received approximately $325,000 in fees from the third-party lender.
The entrance and exit fees paid to Homburg Invest in connection with the aforementioned transactions, either directly or indirectly, aggregated approximately $2.6 million.
Allocation of Costs and Expenses
Costs and expenses charged to operations during 2003 in connection with the above transactions (exclusive of fees paid to the External Advisor prior to the merger) are summarized as follows:
| | | Total | | Contract
termination
costs | | Early
extinguishment
of debt | | Other
costs | |
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|
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|
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| Acquisition of External Advisor | | $ | 11,960,000 | | $ | 11,960,000 | | $ | — | | $ | — | |
| Redemption of Preferred OP Units | | | 960,000 | | | — | | | — | | | 960,000 | |
| Mortgage defeasance | | | 4,754,000 | | | — | | | 4,754,000 | | | — | |
| Payment of employee personal income taxes | | | 633,000 | | | — | | | — | | | 633,000 | |
| Early extinguishment of debt | | | 2,181,000 | | | — | | | 2,181,000 | | | — | |
| Other | | | 300,000 | | | — | | | — | | | 300,000 | |
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| | | $ | 20,788,000 | | $ | 11,960,000 | | $ | 6,935,000 | | $ | 1,893,000 | |
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Pro Forma Financial Information (unaudited)
The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company for the years ended December 31, 2004 and 2003 as though (1) the transactions described above, (2) the 2003 public offering, and (3) the 2004 and 2003 property acquisitions were all completed as of January 1, 2003. This unaudited pro forma information does not purport to represent what the actual results of operations of the Company would have been had all the above occurred as of January 1, 2003, nor do they purport to predict the results of operations of future periods.
53
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
| | | | 2004 | | | 2003 | |
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| Revenues | | $ | 61,159,000 | | $ | 56,927,000 | |
| Net income applicable to common shareholders | | $ | 6,768,000 | | $ | 7,332,000 | |
| Per common share (basic and fully diluted) | | $ | 0.41 | | $ | 0.44 | |
| Average number of common shares outstanding | | | 16,681,000 | | | 16,681,000 | |
Note 5. Real Estate
The following table summarizes the activity in real estate for 2004 and 2003:
| | | 2004 | | 2003 | |
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Cost | | | | | | | |
| Balance, beginning of year | | $ | 330,805,000 | | $ | 123,634,000 | |
| Properties acquired | | | 172,192,000 | | | 200,342,000 | |
| Improvements and betterments | | | 18,355,000 | | | 6,829,000 | |
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| Balance, end of year | | $ | 521,352,000 | | $ | 330,805,000 | |
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Accumulated depreciation | | | | | | | |
| Balance, beginning of year | | $ | 6,274,000 | | $ | 2,396,000 | |
| Depreciation expense | | | 9,753,000 | | | 3,878,000 | |
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| Balance, end of year | | $ | 16,027,000 | | $ | 6,274,000 | |
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During 2004, the Company acquired 8 properties, of which three are redevelopment properties; in addition, the Company acquired 55 acres of land for development and/or future expansion. During 2003, the Company acquired 14 properties, of which two were redevelopment properties.
At December 31, 2004, substantially all of the Company’s real estate was pledged as collateral for mortgage loans payable and the secured revolving credit facility. In addition, one of the Company’s properties is owned subject to a ground lease which provides for annual payments of $129,000, subject to cost-of-living adjustments, through May 2071.
Note 6. Rentals Under Operating Leases
Annual future base rents due to be received under non-cancelable operating leases in effect at December 31, 2004 are as follows:
54
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
| 2005 | | $ | 43,455,000 | |
| 2006 | | | 40,984,000 | |
| 2007 | | | 37,356,000 | |
| 2008 | | | 33,999,000 | |
| 2009 | | | 29,640,000 | |
| Thereafter | | | 169,717,000 | |
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| | | $ | 355,151,000 | |
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|
| |
Total future base rents do not include expense recoveries for real estate taxes and operating costs, or percentage rents based upon tenants’ sales volume. Such other rentals amounted to approximately $11,070,000, $5,724,000, and $2,990,000 in 2004, 2003, and 2002, respectively.
Giant Food Stores, Inc. (“Giant Foods”) and Stop & Shop, Inc., which are both owned by Ahold N.V., a Netherlands corporation, collectively accounted for approximately 10%, 12% and 10% of the Company’s total revenues in 2004, 2003 and 2002, respectively. The Giant Foods leases are generally guaranteed by the parent company.
Note 7. Mortgage Loans Payable, Secured Revolving Credit Facility, and Other Loans Payable
Mortgage loans payable at December 31, 2004 and 2003 consist of the following:
| | | | | | | | | | Balance at December 31, | |
Collateral property | | | Original
amount | | Interest
rate | | Maturity | |
| |
2004 | | 2003 |
| |
|
| |
| |
| |
|
| |
|
| |
| The Point | | $ | 20,000,000 | | 7.63 | % | Sep 2012 | | $ | 19,264,000 | | $ | 19,575,000 | |
| Academy Plaza | | | 10,715,000 | | 7.28 | % | Mar 2013 | | | 10,278,000 | | | 10,422,000 | |
| Port Richmond Village | | | 11,610,000 | | 7.17 | % | Mar 2008 | | | 11,135,000 | | | 11,292,000 | |
| Washington Center Shoppes | | | 6,236,000 | | 7.53 | % | Nov 2007 | | | 5,749,000 | | | 5,826,000 | |
| Red Lion | | | 16,800,000 | | 8.86 | % | Feb 2010 | | | 16,459,000 | | | 16,590,000 | |
| Loyal Plaza | | | 13,877,000 | | 7.18 | % | Jun 2011 | | | 13,532,000 | | | 13,677,000 | |
| Camp Hill Mall | | | 7,000,000 | | 4.74 | % | Nov 2005 | | | — | | | 7,000,000 | |
| Camp Hill Mall (a) | | | 7,000,000 | | LIBOR+1.95 | % | Nov 2005 | | | 14,000,000 | | | 7,000,000 | |
| LA Fitness Facility (b) | | | 5,000,000 | | LIBOR+2.75 | % | Dec 2007 | | | 4,955,000 | | | 4,559,000 | |
| Fairview Plaza | | | 6,080,000 | | 5.71 | % | Feb 2013 | | | 5,941,000 | | | 6,018,000 | |
| Halifax Plaza | | | 4,265,000 | | 6.83 | % | Feb 2010 | | | 4,100,000 | | | 4,190,000 | |
| Newport Plaza | | | 5,424,000 | | 6.83 | % | Feb 2010 | | | 5,237,000 | | | 5,346,000 | |
| Pine Grove | | | 6,000,000 | | 6.24 | % | Apr 2010 | | | 5,738,000 | | | 5,888,000 | |
| Pine Grove outparcel | | | 388,000 | | 8.50 | % | Mar 2006 | | | 388,000 | | | 388,000 | |
| Swede Square (b) | | | 5,560,000 | | LIBOR+2.75 | % | May 2005 | | | — | | | 5,560,000 | |
| Valley Plaza | | | 6,430,000 | | LIBOR+2.50 | % | Jun 2005 | | | — | | | 6,361,000 | |
| Wal-Mart | | | 5,444,000 | | LIBOR+2.50 | % | Aug 2005 | | | — | | | 5,441,000 | |
| Golden Triangle (c) | | | 10,325,000 | | 6.00 | % | Apr 2008 | | | 9,987,000 | | | 10,325,000 | |
| Townfair Center (c) | | | 10,351,000 | | 6.00 | % | Mar 2008 | | | 10,167,000 | | | — | |
| Franklin Village Plaza | | | 43,500,000 | | 4.81 | % | Nov 2011 | | | 43,500,000 | | | — | |
| | |
|
| | | | | |
|
| |
|
| |
| Totals | | $ | 202,005,000 | | | | | | $ | 180,430,000 | | $ | 145,458,000 | |
| | |
|
| | | | | |
|
| |
|
| |
55
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
| (a) | In February 2005, the Company received a commitment for an aggregate of $49 million in construction financing, which provides for the repayment of the $14 million in original acquisition financing, as well as funding for substantially all the projected redevelopment costs at the property. The facility will bear interest at 185 bps over LIBOR and mature in three years. |
| (b) | The LA Fitness Facility and Swede Square mortgage loans payable have minimum interest rate requirements of 5.75% and 7.25%, respectively. |
| (c) | The principal amounts and rates of interest on these assumed loans represent the fair market values at the dates of acquisition. The stated amounts were as follows: Golden Triangle - $9,825,000 at 7.39% and Townfair Center - $9,993,000 at 6.96%. |
Scheduled principal payments on mortgage loans payable at December 31, 2004 are as follows: 2005 - $16,094,000 (including the $14 million Camp Hill Mall obligation), 2006 - $2,595,000, 2007 - $12,754,000, 2008 - $30,292,000, 2009 - $1,542,000, and thereafter - $117,153,000.
Secured Revolving Credit Facility
In January 2004 (as amended in November 2004 and January 2005), the Company concluded a three-year $100 million (expandable to $200 million, subject to certain conditions being met) syndicated secured revolving credit facility with Bank of America (formerly Fleet National Bank) and several other banks, and Bank of America as agent, pursuant to which the Company pledged certain of its shopping center properties as collateral for borrowings thereunder. Borrowings under the facility aggregated $68,200,000 at December 31, 2004, and bore interest at a rate of 3.9% per annum. Based on covenants and collateral in place, the Company was permitted to draw the entire $100 million, and $31.8 million remained available as of that date. In January 2005, the banks’ commitments were increased to $140 million and the Company was permitted to draw approximately $120 million. The Company plans to add additional properties to the collateral pool with the intent to make the full facility available. Borrowings under the facility presently incur interest at a rate of LIBOR plus 150 basis points (“bps”), subject to increases to a maximum of 205 bps depending upon the Company’s leverage ratio, as defined. The facility also requires an unused portion fee of 15 or 20 bps, depending on the level of outstanding borrowings, and limits dividends to 95% of funds from operations, as defined. The Company has paid facility and arrangement fees to the banks, plus legal and other on-going closing costs as properties are added to the collateral pool, aggregating approximately $2.2 million through December 31, 2004.
The credit facility is used to fund acquisitions, development/redevelopment activities, capital expenditures, mortgage repayments, dividend distributions, working capital and other general corporate purposes. The facility is subject to customary financial covenants, including limits on leverage and other financial statement ratios.
In December 2003, Bank of America provided a $40 million secured bridge line of credit. Borrowings under that temporary facility aggregated $17 million at December 31, 2003, which were repaid in January 2004 when the syndicated facility was concluded.
56
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
Other Loans Payable
The December 31, 2002 balance of other loans payable of $7.5 million, together with $22.5 million of additional interim financing during 2003, were repaid in full with $30.0 million in funds from the 2003 public offering and the secured bridge line of credit. An additional $1.0 million of interim financing was converted, at the election of the lender, into approximately 93,000 OP Units.
Note 8. Interest Rate Hedges
In 2003 and 2002, the Company entered into interest rate swaps in connection with the Camp Hill Mall, Newport Plaza, Halifax Plaza and Pine Grove Plaza acquisitions converting LIBOR-based variable rate debt to fixed annual rates.
In November and December 2003, respectively, the Company entered into $20 million and $10 million non-specific five-year interest rate hedges capping LIBOR at 4.5%. Since these caps did not relate to specific debt, they were ineffective for accounting purposes and, accordingly, changes in their fair values were charged to operations. These hedge positions were closed in December 2004.
In December 2003, the Company entered into a fair value hedge with respect to its mortgage at Washington Center Shoppes. The derivative had swapped a fixed rate amortization schedule on $5,788,000 at 7.53% to a variable rate of LIBOR plus 250 bps through November 2007. The change in fair value of this hedge was charged to operations. This hedge position was closed in December 2004.
The following table summarizes the notional values and fair values of the Company’s derivative financial instruments as of December 31, 2004 and 2003 (the fair value liabilities are included in accounts payable, accrued expenses and other; the fair value assets are included in deferred charges):
Hedge | | Type | | Notational
value | | Interest
rate | | Expiration
date | | Fair value at December 31, | |
|
2004 | | 2003 |
| |
| |
| |
| |
| |
| |
| |
| Interest rate swap | | Cash flow hedge | | $ | 4,190,000 | | 6.83 | % | Feb 2010 | | $ | (80,000 | ) | $ | (125,000 | ) |
| Interest rate swap | | Cash flow hedge | | | 5,346,000 | | 6.83 | % | Feb 2010 | | | (71,000 | ) | | (122,000 | ) |
| Interest rate swap | | Cash flow hedge | | | 5,888,000 | | 6.24 | % | Apr 2010 | | | — | | | (38,000 | ) |
| Interest rate swap | | Cash flow hedge | | | 7,000,000 | | 4.74 | % | Nov 2004 | | | — | | | (93,000 | ) |
| Interest rate cap | | Cash flow hedge | | | 20,000,000 | | 4.50 | % | Nov 2008 | | | — | | | 609,000 | |
| Interest rate cap | | Cash flow hedge | | | 10,000,000 | | 4.50 | % | Oct 2008 | | | — | | | 335,000 | |
| Interest rate swap | | Fair value hedge | | | 5,788,000 | | LIBOR +2.50 | % | Nov 2007 | | | — | | | 395,000 | |
During 2004, the Company recognized losses of $503,000, representing the change in fair value of the derivatives. A $220,000 gain was recorded in accumulated other comprehensive income (loss), a $7,000 gain was credited to limited partners’ interest, and the $730,000 ineffective portion of net loss was charged to operations (included in depreciation and amortization). During 2003, the Company recognized losses of $367,000, representing the change in fair value of the derivatives. A $112,000 gain was recorded in accumulated other comprehensive income (loss), a $266,000 loss was charged to limited partners’
57
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
interest, and the $213,000 ineffective portion of net loss was charged to operations. During 2002, an unrealized loss resulting from a change in the fair value of the derivatives totaled $224,000, of which $65,000 was reflected in accumulated other comprehensive income (loss) and $159,000 was charged to limited partners’ interest.
Note 9. Commitments and Contingencies
The Company is a party to certain legal actions arising in the normal course of business. Management does not expect there to be adverse consequences from these actions that would be material to the Company’s consolidated financial statements.
Under various federal, state, and local laws, ordinances, and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances, or petroleum product releases, at its properties. The owner may be liable to governmental entities or to third parties for property damage, and for investigation and cleanup costs incurred by such parties in connection with any contamination. Management is unaware of any environmental matters that would have a material impact on the Company’s consolidated financial statements.
The Company’s principal office is located in 6,200 square feet (increasing to 7,500 square feet effective March 1, 2005) at 44 South Bayles Avenue, Port Washington, NY, which it leases from a partnership owned 24% by the Company’s CEO. Future minimum rents payable under the terms of the lease, as amended, amount to $209,000, $220,000, $225,000, $231,000, $237,000, and $39,000 during the years 2005 through 2009, and through February 2010, respectively. The Company’s Wal-Mart shopping center is subject to a ground lease running through May 2071, with future minimum rents payable amounting to $129,000 per annum.
Note 10. Selected Quarterly Financial Data (unaudited)
| | | Quarter ended | | | |
Year | |
| | Year ended
December 31 | |
| | March 31 | | | June 30 | | | September 30 | | | December 31 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
2004 | | | | | | | | | | | | | | | | |
| Revenues | | $ | 11,275,000 | | $ | 12,667,000 | | $ | 12,464,000 | | $ | 14,738,000 | | $ | 51,144,000 | |
| Net income applicable to common shareholders | | | 1,343,000 | | | 1,903,000 | | | 1,208,000 | | | 1,248,000 | | | 5,702,000 | |
| Basic and fully diluted net income per share | | $ | 0.08 | | $ | 0.12 | | $ | 0.07 | | $ | 0.07 | | $ | 0.34 | |
2003 | | | | | | | | | | | | | | | | |
| Revenues | | $ | 5,284,000 | | $ | 6,138,000 | | $ | 6,672,000 | | $ | 8,585,000 | | $ | 26,679,000 | |
| Net loss applicable to common shareholders | | | (199,000 | ) | | (40,000 | ) | | (228,000 | ) | | (20,884,000 | ) | | (21,351,000 | ) |
| Basic and fully diluted net loss per share | | $ | (0.73 | ) | $ | (0.14 | ) | $ | (0.96 | ) | $ | (1.86 | ) | $ | (7.09 | ) |
2002 | | | | | | | | | | | | | | | | |
| Revenues | | $ | 2,510,000 | | $ | 2,657,000 | | $ | 3,614,000 | | $ | 4,208,000 | | $ | 12,989,000 | |
| Net loss applicable to common shareholders | | | (53,000 | ) | | (222,000 | ) | | (45,000 | ) | | (148,000 | ) | | (468,000 | ) |
| Basic and fully diluted net loss per share | | $ | (0.23 | ) | $ | (0.96 | ) | $ | (0.20 | ) | $ | (0.64 | ) | $ | (2.03 | ) |
Note 11. Subsequent Events
On February 2, 2005, the Company’s Board of Directors approved a dividend of $.225 per share with respect to its common stock as well as an equal distribution per unit on its 454,000 outstanding OP Units. At the same time, the Board approved a dividend of $0.554688 per share with respect to the
58
Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
December 31, 2004
Company’s 8-7/8% Series A Cumulative Redeemable Preferred Stock. The distributions were paid on February 22, 2005 to shareholders of record on February 14, 2005.
On February 7, 2005, the Company announced that it had reached an non-binding agreement to acquire a portfolio of 27 properties located primarily in Ohio. The properties contains approximately 735,000 sq. ft. of GLA, and the purchase price is expected to be approximately $90 million. Eleven of the properties are anchored by an Ohio-based drug store chain. The Company expects to finance the acquisition by (1) issuing approximately $15 million of OP Units, and (2) funding the balance with a combination of fixed-rate debt and borrowings from its secured revolving credit facility.
On March 2, 2005, the Company acquired the Kenley Village and St. James Square shopping centers, both located in Hagerstown, MD. These community shopping centers contain approximately 52,000 and 40,000 square feet of GLA, respectively, and both are anchored by Food Lion supermarkets. Kenley Village was built in 1988 and St. James Square was built in 2000. The combined purchase price for both properties, including closing costs, was approximately $8.3 million.
59
Item 9. Changes in, and Disagreements with Accountants on, Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in its filings under the Securities Exchange Act of 1934 is reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. In this regard, the Company has formed a Disclosure Committee currently comprised of several of the Company’s executive officers as well as certain other employees with knowledge of information that may be considered in the SEC reporting process. The Committee has responsibility for the development and assessment of the financial and non-financial information to be included in the reports filed with the SEC, and assists the Company’s Chief Executive Officer and Chief Financial Officer in connection with their certifications contained in the Company’s SEC filings. The Committee meets regularly and reports to the Audit Committee on a quarterly or more frequent basis. The Company’s principal executive and financial officers have evaluated its disclosure controls and procedures as of December 31, 2004, and have determined that such disclosure controls and procedures are effective.
Management Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control – Integrated Framework”. Based on such assessment, management believes that, as of December 31, 2004, the Company’s internal control over financial reporting is effective based on those criteria.
There have been no changes in the internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting during the last quarter of 2004.
Ernst & Young LLP, the Company’s independent auditors, have issued an audit report on management’s assessment of the Company’s internal control over financial reporting, which appears elsewhere in this report.
Item 9B. Other Information
None.
60
Part III.
Item 10. Directors and Executive Officers of the Registrant
This item is incorporated by reference to the definitive proxy statement for the 2005 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.
Item 11. Executive Compensation
This item is incorporated by reference to the definitive proxy statement for the 2005 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
This item is incorporated by reference to the definitive proxy statement for the 2005 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions
This item is incorporated by reference to the definitive proxy statement for the 2005 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.
Item 14. Principal Accountant Fees and Services
This item is incorporated by reference to the definitive proxy statement for the 2005 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A.
61
Part IV
Item 15. | | Exhibits and Financial Statement Schedules |
| | | |
| (a) | 1. | Financial Statements |
| | | |
| | | The response to this portion of Item 15 is included in Item 8 of this report. |
| | | |
| | 2. | Financial Statement Schedules |
| | | |
| | | III. Real Estate and Accumulated Depreciation |
| | | |
| | | All other schedules have been omitted because the required information is not present, is not present in amounts sufficient to require submission of the schedule, or is included in the consolidated financial statements or notes thereto. |
| | | |
| | 3. | Exhibits |
Item | | Title or Description |
| |
|
| 3.1.a | | Articles of Incorporation of the Company, as amended, incorporated by reference to Exhibits 3.1 and 3.2 of the Registration Statement on Form S-11 filed on August 20, 2003, as amended. |
| 3.1.b | | Articles Supplementary for 8-7/8% Series A Cumulative Redeemable Preferred Stock. |
| 3.2 | | By-laws of the Company, as amended, incorporated by reference to Exhibit 3.3 of the Registration Statement on Form S-11 filed on August 20, 2003, as amended. |
| 3.3.a | | Agreement of Limited Partnership of Cedar Shopping Centers Partnership, L.P., incorporated by reference to Exhibit 3.4 the Registration Statement on Form S-11 filed on August 20, 2003, as amended. |
| 3.3.b | | Amendment No. 1 to Agreement of Limited Partnership of Cedar Shopping Centers Partnership, L.P., incorporated by reference to Exhibit 3.5 of the Registration Statement on Form S-11 filed on August 20, 2003, as amended. |
| 3.3.c | | Amendment No. 2 to Agreement of Limited Partnership of Cedar Shopping Centers Partnership, L.P. |
| 10.1.a | | [Intentionally left blank] |
| 10.1.b | | Standstill Agreement by and between Robert J. Ambrosi of ARC Properties, Inc. and Cedar Shopping Centers, Inc., dated May 31, 2002, incorporated by reference to Exhibit 10.3 of Form 8-K filed on June 13, 2002. |
| 10.1.c | | Indemnity Agreement by Cedar-RL, LLC to and for the benefit of Leo S. Ullman, dated as of May 31, 2002, incorporated by reference to Exhibit 10.5 of Form 8-K filed on June 13, 2002. |
| 10.1.d | | Promissory Note from Cedar-RL, LLC to Silver Circle Management Corp., dated as of May 31, 2002, incorporated by reference to Exhibit 10.6 of Form 8-K filed on June 13, 2002. |
| 10.1.e | | Subordinate Pledge and Security Agreement by Cedar-RL, LLC and Silver Circle Management Corp., dated as of May 31, 2002, incorporated by reference to Exhibit 10.7 of Form 8-K filed on June 13, 2002. |
| 10.1.f | | Compensation Agreement between Cedar Shopping Centers, Inc., Cedar Shopping Centers Partnership, L.P. SKR Management Corp., Cedar Bay Realty Advisors, Inc., Brentway Management LLC, Leo S. Ullman and ARC Properties, Inc., dated May 31, 2002, incorporated by reference to Exhibit 10.8 of Form 8-K filed on June 13, 2002. |
62
| 10.1.g | | Amended and Restated Limited Partnership Agreement of API Red Lion Shopping Center Associates, L.P., a New York Limited Partnership, among Cedar-RL, LLC and Silver Circle Management Corp. and Philadelphia ARC-Cedar, LLC, dated as of May 31, 2002, incorporated by reference to Exhibit 11.11 of Form 8-K filed on June 13, 2002. |
| 10.1.h | | Warrant by Cedar Shopping Centers Partnership, L.P. to ARC Properties, Inc., dated as of May 31, 2002, incorporated by reference to Exhibit 10.12 of Form 8-K filed on June 13, 2002. |
| 10.2.a | | Agreement to Purchase Real Estate by and between Loyal Plaza Venture, L.P. and Cedar Shopping Centers Partnership, L.P. dated January 7, 2002; First Amendment to Agreement to Purchase Real Estate by and between Loyal Plaza Venture, L.P. and Cedar Shopping Centers Partnership, L.P., dated February 22, 2002; Second Amendment to Agreement to Purchase Real Estate by and between Loyal Plaza Venture, L.P. and Cedar Shopping Centers Partnership, L.P., dated February 24, 2002; Third Amendment to Agreement to Purchase Real Estate between Loyal Plaza Venture, L.P. and Cedar Shopping Centers Partnership, L.P., dated March 1, 2002; Fourth Amendment to Agreement to Purchase Real Estate by and between Loyal Plaza Venture, L.P. and Cedar Shopping Centers Partnership, L.P., dated March 8, 2002; Fifth Amendment to Agreement to Purchase Real Estate by and between Loyal Plaza Venture, L.P. and Cedar Shopping Centers Partnership, L.P., dated March 13, 2002; Sixth Amendment to Agreement to Purchase Real Estate by and between Loyal Plaza Venture, L.P. and Cedar Shopping Centers Partnership, L.P., dated March 15, 2002; and Seventh Amendment to Agreement to Purchase Real Estate by and between Loyal Plaza Venture, L.P. and Cedar Shopping Centers Partnership, L.P., dated March 22, 2002 (collectively, the “Purchase Contract”), incorporated by reference to Exhibit 10.1 of Form 8-K filed on July 17, 2002. |
| 10.2.b | | Limited Partnership Agreement of Loyal Plaza Associates, L.P. between CIF-Loyal Plaza Associates, L.P. and Kimco Preferred Investor IV Trust, dated June 28, 3002, incorporated by reference to Exhibit 10.3 of Form 8-K filed on July 17, 2002. |
| 10.2.c | | Limited Partnership Agreement of CIF-Loyal Plaza Associates, L.P. by and among CIF-Loyal Plaza Associates, L.P. and Cedar Shopping Centers Partnership, L.P., dated as of June 28, 2002, incorporated by reference to Exhibit 10.4 of Form 8-K filed on July 17, 2002. |
| 10.2.d | | Open-End Mortgage and Security Agreement in the amount of $14 million (Original Mortgage) by Loyal Plaza Venture, L.P. (Borrower) and Glimcher Loyal Plaza Tenant, L.P. (Tenant) (collectively referred to as Mortgagor) to Lehman Brothers Bank, FSB (Lender), dated May 31, 2001, incorporated by reference to Exhibit 10.5 of Form 8-K file don July 17, 2002. |
| 10.2.e | | Loan Assumption and Modification Agreement by and among Loyal Plaza Associates, L.P. (Assuming Borrower), Cedar Shopping Centers, Inc. (Assuming Principal), Loyal Plaza Venture, L.P. (Original Borrower), Glimcher Properties Limited Partnership (Glimcher) and Glimcher Loyal Plaza Tenant, L.P. (Tenant), in favor of LaSalle Bank National Association (Trustee) and LB-UBS Commercial Mortgage Trust 2001-C3 (Lender), dated as of July 2, 2002, incorporated by reference to Exhibit 10.6 of Form 8-K filed on July 17, 2002. |
| 10.2.f | | Post Closing Agreement regarding the Assumption by Loyal Plaza Associates, L.P. (Assuming Borrower) of that certain Loan evidenced by that certain Note dated May 31, 2001, payable by Loyal Plaza Venture, L.P. (Original Borrower) to Lehman Brothers Bank, FSB (Original Lender) as secured by that certain Open-End Mortgage and Security Agreement of even date to Glimcher Loyal Plaza Tenant, L.P. (Mortgage) currently held |
63
| | | and owned by LaSalle Bank National Association (Trustee) of LB-UBS Commercial Trust (Lender), dated July 2, 2002, incorporated by reference to Exhibit 10.13 of Form 8-K filed on July 17, 2002. |
| 10.3.a | | Agreement of Purchase and Sale between Connecticut General Life Insurance Company and Cedar Shopping Centers Partnership, L.P., dated September 12, 2002, incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 9, 2002. |
| 10.3.b | | First Amendment to Agreement of Purchase and Sale between Connecticut General Life Insurance Company and Cedar Shopping Centers Partnership, L.P., dated September 12, 2002, incorporated by reference to Exhibit 10.2 of Form 8-K filed on December 9, 2002. |
| 10.3.c | | Second Amendment to Agreement of Purchase and Sale between Connecticut General Life Insurance Company and Cedar Shopping Centers Partnership, L.P., dated September 12, 2002, incorporated by reference to Exhibit 10.3 of Form 8-K filed on December 9, 2002. |
| 10.3.d | | Third Amendment to Agreement of Purchase and Sale between Connecticut General Life Insurance Company and Cedar Shopping Centers Partnership, L.P., dated as of November 15, 2002, incorporated by reference to Exhibit 10.4 of Form 8-K filed on December 9, 2002. |
| 10.3.e | | Limited Liability Company Agreement of Cedar-Camp Hill, LLC by Cedar Shopping Centers Partnership, L.P., effective as of November 1, 2002, incorporated by reference to Exhibit 10.6 of Form 8-K filed on December 9, 2002. |
| 10.3.f | | Loan Agreement by and between Cedar-Camp Hill, LLC and Citizens Bank of Pennsylvania, executed on November 14, 2002, incorporated by reference to Exhibit 10.10 of Form 8-K filed on December 9, 2002. |
| 10.3.g | | Open-End Mortgage and Security Agreement between Cedar-Camp Hill, LLC, Cedar Bay Realty Advisors, Inc. and Citizens Bank of Pennsylvania, executed on November 14, 2002, incorporated by reference to Exhibit 10.11 of Form 8-K filed on December 9, 2002. |
| 10.4.a | | Limited Partnership Agreement of Fairport Associates, L.P. between CIF-Fairport Associates, LLC and Kimco Preferred Investor III, Inc, dated as of January 8, 2003, incorporated by reference to Exhibit 10.1 of Form 8-K filed on February 21, 2003. |
| 10.4.b | | Limited Partnership Agreement of Fairview Plaza Associates, L.P. between CIF-Fairview Associates, LLC and Fairport Associates, L.P., dated as of January 10, 2003, incorporated by reference to Exhibit 10.3 of Form 8-K filed on February 21, 2003. |
| 10.4.c | | Loan Agreement from General Electric Capital Corp. to Fairview Plaza Associates, L.P., dated as of January 10, 2003, incorporated by reference to Exhibit 10.5 of Form 8-K filed on February 21, 2003. |
| 10.4.d | | Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Fairview Plaza Associates, L.P. for the benefit of General Electric Capital Corporation, is executed as of January 10, 2003, incorporated by reference to Exhibit 10.7 of Form 8-K filed on February 21, 2003. |
| 10.4.e | | Promissory Note for Fairview Plaza Associates, L.P. to General Electric Capital Corporation, dated January 10, 2003, incorporated by reference to Exhibit 10.8 of Form 8-K filed on February 21, 2003. |
| 10.4.f | | Loans to One Borrower Certificate from General Electric Capital Corp. to Fairview Plaza Associates, L.P. guaranteed by Cedar Income Fund, Ltd., dated January 10, 2003, incorporated by reference to Exhibit 10.10 of Form 8-K filed on February 21, 2003. |
| 10.4.g | | Agreement for the Sale of Real Estate of Newport Plaza by and between Cedar Income Fund Partnership, L.P. and Caldwell Development, Inc., dated in August 2002, incorporated by reference to Exhibit 10.11 of Form 8-K filed on February 21, 2003. |
| 10.4.h | | Limited Partnership Agreement of Newport Plaza Associates, L.P. between CIF-Newport Plaza Associates, LLC and Fairport Associates, L.P., dated as of January 7, 2003, incorporated by reference to Exhibit 10.12 of Form 8-K filed on February 21, 2003. |
64
| 10.4.i | | Indemnification Agreement between Mark G. Caldwell and Newport Plaza Associates, L.P. by and between Mark G. Caldwell and Newport Plaza Associates, L.P., dated February 6, 2003, incorporated by reference to Exhibit 10.16 of Form 8-K filed on February 21, 2003. |
| 10.4.j | | Loan Agreement by and between Newport Plaza Associates, L.P. and Citizens Bank of Pennsylvania, dated as of February 6, 2003, incorporated by reference to Exhibit 10.17 of Form 8-K filed on February 21, 2003. |
| 10.4.k | | Promissory Note from Citizens Bank of Pennsylvania for the benefit of Newport Plaza Associates, L.P., dated as of February 6, 2003, incorporated by reference to Exhibit 10.18 of Form 8-K filed on February 21, 2003. |
| 10.4.l | | Open-End Mortgage and Security Agreement between Newport Plaza Associates, L.P. and Citizens Bank of Pennsylvania, dated as of February 6, 2003, incorporated by reference to Exhibit 10.19 of Form 8-K filed on February 21, 2003. |
| 10.4.m | | Guaranty and Suretyship Agreement by Cedar Income Fund, Ltd. and Cedar Income Fund Partnership, L.P. made in favor of Citizens Bank of Pennsylvania, made as of February 6, 2003, incorporated by reference to Exhibit 10.23 of Form 8-K filed on February 21, 2003. |
| 10.4.n | | Agreement for the Sale of Real Estate of Halifax Plaza between Cedar Income Fund Partnership, L.P. and Caldwell Development Company, dated in August 2002, incorporated by reference to Exhibit 10.27 of Form 8-K filed on February 21, 2003. |
| 10.4.o | | First Addendum to Agreement of Sale of Halifax Plaza between Cedar Income Fund Partnership, L.P. and Caldwell Development Company, dated in August 2002, incorporated by reference to Exhibit 10.28 of Form 8-K filed on February 21, 2003. |
| 10.4.p | | Limited Partnership Agreement of Halifax Plaza Associates, L.P. between CIF-Halifax Plaza Associates, LLC and Fairport Associates, L.P., entered into as of January 7, 2003, incorporated by reference to Exhibit 10.29 of Form 8-K filed on February 21, 2003. |
| 10.4.q | | Indemnification Agreement between Mark G. Caldwell and Halifax Plaza Associates, L.P. by and between Mark G. Caldwell and Halifax Plaza Associates, L.P., dated as of February 6, 2003, incorporated by reference to Exhibit 10.32 of Form 8-K filed on February 21, 2003. |
| 10.4.r | | Loan Agreement by and between Halifax Plaza Associates, L.P. and Citizens Bank of Pennsylvania, made as of February 6, 2003, incorporated by reference to Exhibit 10.33 of Form 8-K filed on February 21, 2003. |
| 10.4.s | | Promissory Note for Halifax Plaza Associates, L.P. to Citizens Bank of Pennsylvania, dated as of February 6, 2003, incorporated by reference to Exhibit 10.34 of Form 8-K filed on February 21, 2003. |
| 10.4.t | | Open-End Mortgage and Security Agreement between Halifax Plaza Associates, L.P. and Citizens Bank of Pennsylvania, dated as of February 6, 2003, incorporated by reference to Exhibit 10.35 of Form 8-K filed on February 21, 2003. |
| 10.4.u | | Guaranty and Suretyship Agreement by Cedar Income Fund, Ltd. and Cedar Income Fund Partnership, L.P. in favor of Citizens Bank of Pennsylvania, made as of February 6, 2003, incorporated by reference to Exhibit 10.39 of Form 8-K filed on February 21, 2003. |
| 10.5.a.i | | Employment Agreement between Cedar Shopping Centers, Inc. and Leo S. Ullman, dated as of November 1, 2003, incorporated by reference to Exhibit 10.39 of the Registration Statement on Form S-11 filed on August 20, 2003, as amended. |
| 10.5.a.ii | | First Amendment to Employment Agreement between Cedar Shopping Centers, Inc. and Leo S. Ullman, dated as of March 23, 2004. |
| 10.5.b.i | | Employment Agreement between Cedar Shopping Centers, Inc. and Brenda J. Walker, dated as of November 1, 2003, incorporated by reference to Exhibit 10.40 of the Registration Statement on Form S-11 filed on August 20, 2003, as amended. |
| 10.5.b.ii | | First Amendment to Employment Agreement between Cedar Shopping Centers, Inc. and Brenda J. Walker, dated as of March 23, 2004. |
65
| 10.5.c.i | | Employment Agreement between Cedar Shopping Centers, Inc. and Thomas J. O’Keeffe, dated as of November 1, 2003, incorporated by reference to Exhibit 10.41 of the Registration Statement on Form S-11 filed on August 20, 2003, as amended. |
| 10.5.c.ii | | First Amendment to Employment Agreement between Cedar Shopping Centers, Inc. and Thomas J. O’Keeffe, dated as of March 23, 2004. |
| 10.5.d.i | | Employment Agreement between Cedar Shopping Centers, Inc. and Thomas B. Richey, dated as of November 1, 2003, incorporated by reference to Exhibit 10.42 of the Registration Statement on Form S-11 field on August 20, 2003, as amended. |
| 10.5.d.ii | | First Amendment to Employment Agreement between Cedar Shopping Centers, Inc. and Thomas B. Richey, dated as of March 23, 2004. |
| 10.5.e.i | | Employment Agreement between Cedar Shopping Centers, Inc. and Stuart H. Widowski, dated as of November 1, 2003, incorporated by reference to Exhibit 10.43 of the Registration Statement on Form S-11 filed on August 20, 2003, as amended. |
| 10.5.e.ii | | First Amendment to Employment Agreement between Cedar Shopping Centers, Inc. and Stuart H. Widowski, dated as of March 23, 2004. |
| 10.6.a | | Cedar Shopping Centers, Inc. Senior Executive Deferred Compensation Plan, effective as of October 29, 2003. |
| 10.6.b | | Amendment No. 1 to the Cedar Shopping Centers, Inc. Senior Executive Deferred Compensation Plan, effective as of October 29, 2003. |
| 10.6.c | | Amendment No. 2 to the Cedar Shopping Centers, Inc. Senior Executive Deferred Compensation Plan, effective as of August 9, 2004. |
| 10.7.a | | Agreement to Enter into Net Lease among SPSP, PSI, 24th Street (collectively. “Owners”) and Cedar I, dated as of April 23, 2003 (“Original Agreement”). |
| 10.7.b | | Amendment to Original Agreement among Owners and Cedar I, dated May 15, 2003. |
| 10.7.c | | Amendment to Original Agreement and Original Commitment among Owners and Cedar I, Cedar II and Cedar Income Fund Partnership, LP (“Cedar Partnership:) dated June 18, 2003 (the “Second Amendment Letter”). |
| 10.7.d | | Amended and Restated Agreement to Enter into Letter Agreement Among Owners, Cedar I and Cedar II, dated June 18, 2003. |
| 10.7.e | | Amendment to Original Agreement among Owners, Cedar I, Cedar II and Cedar Partnership, dated July 29, 2003. |
| 10.7.f | | Amendment to Original Agreement among Owners, Cedar I, Cedar II and Cedar Partnership, dated October 30, 2003. |
| 10.7.g | | Lease between Owners and Cedar I (the “Lease”). |
| 10.7.h | | Promissory Note in the original principal amount of $39,000,000 made by Owners in favor of Cedar II (the “Loan”). |
| 10.7.i | | Open-End Mortgage and Security Agreement made by Owners in favor of Cedar II, dated October 23, 2003 and made effective as of October 31, 2003. |
| 10.8.a | | Contribution Agreement by and among Owner Entities and Cedar LP, dated as of October 2, 2003. |
| 10.8.b | | Amendment to Contribution Agreement by and among Owner Entities and Cedar LP. |
| 10.8.c | | Loan Agreement between Owner Entities and Cedar Lender. |
| 10.8.d | | Promissory Note by Owner Entities in favor of Cedar Lender. |
| 10.8.e | | Pledge and Security Agreement by Owner Entities in favor of Cedar Lender. |
| 10.8.f | | Guaranty by Owner Principal in favor of Cedar GP, Cedar LP and Cedar Lender. |
| 10.8.g | | Agreement of Limited Partnership of the Partnership by and among Cedar GP, Cedar LP and Owner Entities. |
| 10.9.a | | Recapitalization Agreement by and among the Partnership, Owner Entities and Cedar LP, dated as of October 2, 2003. |
66
| 10.9.b | | Amendment to Recapitalization Agreement by and among the Partnership, Owner Entities and Cedar LP, dated November 3, 2003. |
| 10.9.c | | Second Amendment to Recapitalization Agreement by and among the Partnership and Owner Entities and Cedar LP. |
| 10.9.d | | Right of First Refusal by the Partnership to Owner Entities, executed on November 19, 2003, and effective as of December 9, 2003. |
| 10.9.e | | Loan Agreement between Owner Entities and Cedar Lender. |
| 10.9.f | | Promissory Note by Owner Entities in favor of Cedar Lender. |
| 10.9.g | | Pledge and Security Agreement by Owner Entities in favor of Cedar Lender. |
| 10.9.h | | Guaranty by Owner Principal in favor of Cedar GP, Cedar LP and Cedar Lender. |
| 10.9.i | | Promissory Note by Cedar Partners in favor of Lender. |
| 10.9.j | | Amended and Restated Partnership Agreement of Limited Partnership of the Partnership LP, by and among the Partnership, Cedar GP, Cedar LP and Owner Entities. |
| 10.10.a | | Loan Agreement (the “Loan Agreement”) by and among Cedar Shopping Centers Partnership, L.P., Fleet National Bank (now Bank of America), Commerzbank AG New York Branch, PB Capital Corporation, Manufacturers and Traders Trust Company, Sovereign Bank, Raymond James Bank, FSB, Citizens Bank and the other lending institutions which are or may become parties to the Loan Agreement (the “Lenders”) and Fleet National Bank (as Administrative Agent), dated January 30, 2004, incorporated by reference to Exhibit 10.1 of Form 8-K filed on March 22, 2004. |
| 10.10.b | | First Amendment to Loan Agreement, dated as of June 16, 2004. |
| 10.10.c | | Second Amendment to Loan Agreement, dated as of November 2, 2004, incorporated by reference to Exhibit 10.1 of Form 8-K filed on November 8, 2004. |
| 10.10.d | | Third Amendment to Loan Agreement, dated as of January 28, 2005. |
| 10.11.a | | Agreement of Purchase and Sale between Dubois Realty Partners, L.P. and Cedar Shopping Centers Partnership, L.P., dated as of December 24 2003, incorporated by reference to Exhibit 10.2 of Form 8-K filed on March 22, 2004. |
| 10.11.b | | Guaranty of Cedar Dubois, LLC by and among Cedar Shopping Centers Partnership, L.P. and Fleet National Bank, dated January 30, 2004, incorporated by reference to Exhibit 10.3 of Form 8-K filed on March 22, 2004. |
| 10.11.c | | Pledge and Security Agreement of Cedar Dubois, LLC by and between Cedar Shopping Centers Partnership, L.P. and Fleet National Bank, dated as of March 2004, incorporated by reference to Exhibit 10.4 of Form 8-K filed on March 22, 2004. |
| 10.11.d | | Open-End Mortgage and Security Agreement of Cedar Dubois, LLC between Fleet National Bank and Cedar Shopping Centers Partnership, L.P., dated as of March 2004, incorporated by reference to Exhibit 10.5 of Form 8-K filed on March 22, 2004. |
| 10.11.e | | Limited Liability Company Agreement of Cedar Dubois, LLC by Cedar Shopping Centers Partnership, L.P. as sole member, dated March 2004, incorporated by reference to Exhibit 10.8 of Form 8-K filed on March 22, 2004. |
| 10.11.f | | Agreement of Purchase and Sale between Townfair Center Associates and Townfair Center Associates, Phase III (comprised of P.J. Dick Incorporated and Michael Joseph Limited Partnership) and Cedar Shopping Centers Partnership, L.P., dated as of December 24, 2003, incorporated by reference to Exhibit 10.9 of Form 8-K filed on March 22, 2004. |
| 10.11.g | | Loan Agreement between Patrician Financial Company Limited Partnership as Lender and Townfair Center Associates as Borrower, dated as of February 13, 1998, incorporated by reference to Exhibit 10.10 of Form 8-K filed on March 22, 2004. |
| 10.11.h | | Promissory Note (Townfair Center Phases I & II) from Cedar Shopping Centers Partnership, L.P. to Patrician Financial Company Limited Partnership, Note Date: February 13, 1998, incorporated by reference to Exhibit 10.11 of Form 8-K filed on March 22, 2004. |
67
| 10.11.i | | Open-End Mortgage, Assignment of Leases and Rents and Security Agreement by Townfair Center Associates in favor of Patrician Financial Company Limited Partnership, entered into as of February 13, 1998, incorporated by reference to Exhibit 10.12 of Form 8-K filed on March 22, 2004. |
| 10.11.j | | Limited Liability Company Agreement of Cedar Townfair, LLC between Cedar Shopping Centers Partnership, L.P. as sole member and Frank Ullman as special member, dated March 2004, incorporated by reference to Exhibit 10.17 of Form 8-K filed on March 22, 2004. |
| 10.11.k | | Limited Liability Company Agreement of Cedar Townfair Phase III, LLC between Cedar Shopping Centers Partnership, L.P. as sole member, dated March 2004, incorporated by reference to Exhibit 10.18 of Form 8-K filed on March 22, 2004. |
| 10.12.a | | Agreement of Purchase and Sale by and between Roger V. Calarese and A. Richard Calarese as Trustees of the Franklin Village Trust and Cedar-Franklin Village, LLC, dated as of August 2, 2004, incorporated by reference to Exhibit 10.1 of Form 8-K filed on November 5, 2004. |
| 10.12.b | | Amendment to Agreement of Purchase and Sale by and between Roger V. Calarese and A. Richard Calarese as Trustees of the Franklin Village Trust and Cedar-Franklin Village, LLC, dated as of September 2, 2004, incorporated by reference to Exhibit 10.2 of Form 8-K filed on November 5, 2004. |
| 10.12.c | | Second Amendment to Agreement of Purchase and Sale by and between Roger V. Calarese and A. Richard Calarese as Trustees of the Franklin Village Trust and Cedar-Franklin Village, LLC, dated as of September 10, 2004, incorporated by reference to Exhibit 10.3 of Form 8-K filed on November 5, 2004. |
| 10.12.d | | Third Amendment to Agreement of Purchase and Sale by and between Roger V. Calarese and A. Richard Calarese as Trustees of the Franklin Village Trust and Cedar-Franklin Village, LLC, dated as of September 13, 2004, incorporated by reference to Exhibit 10.4 of Form 8-K filed on November 5, 2004. |
| 10.12.e | | Fourth Amendment to Agreement of Purchase and Sale by and between Roger V. Calarese and A. Richard Calarese as Trustees of the Franklin Village Trust and Cedar-Franklin Village, LLC, dated as of October 29, 2004, incorporated by reference to Exhibit 10.5 of Form 8-K filed on November 5, 2004. |
| 10.12.f | | Limited Liability Company Agreement of Cedar-Franklin Village LLC entered into by Cedar-Franklin Village 2 LLC as sole equity member, Suzanne M. Hay as Springing Member 1 and Jan Koeman as Springing Member 2, dated October 22, 2004, incorporated by reference to Exhibit 10.6 of Form 8-K filed on November 5, 2004. |
| 10.12.g | | Operating Agreement of Cedar-Franklin Village 2 LLC made and entered into by Cedar Shopping Centers Partnership, L.P. dated as of October 21, 2004, incorporated by reference to Exhibit 10.7 of Form 8-K filed on November 5, 2004. |
| 10.12.h | | Loan Agreement between Cedar-Franklin Village LLC as Borrower and Eurohypo AG, New York Branch as Lender, dated as of November 1, 2004, incorporated by reference to Exhibit 10.13 of Form 8-K filed on November 5, 2004. |
| 10.12.i | | Promissory Note for Cedar-Franklin Village LLC to Eurohypo AG, New York Branch, dated November 1, 2004, incorporated by reference to Exhibit 10.14 of Form 8-K filed on November 5, 2004. |
| 10.12.j | | Mortgage and Security Agreement for Cedar-Franklin Village LLC as Borrower to Eurohypo AG, New York Branch as Lender, dated as of November 1, 2004, incorporated by reference to Exhibit 10.15 of Form 8-K filed on November 5, 2004. |
| 10.12.k | | Guaranty for Cedar Shopping Centers Partnership, L.P. as Guarantor for the benefit of Eurohypo AG, New York Branch as Lender, executed as of November 1, 2004, incorporated by reference to Exhibit 10.18 of Form 8-K filed on November 5, 2004. |
68
| 10.12.l | | Supplemental Guaranty by Cedar Shopping Centers Partnership, L.P. as Guarantor for the benefit of Eurohypo AG, New York Branch as Lender, executed as of November 1, 2004, incorporated by reference to Exhibit 10.19 of Form 8-K filed on November 5, 2004. |
| 10.13.a | | Agreement of Purchase and Sale dated as of November 15, 2004, by and between Gateway Connecticut Properties, Inc., as Seller, and Cedar Shopping Centers Partnership, L.P., a Delaware Limited Partnership, as Purchaser, in respect of the Brickyard Shopping Center, incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 21, 2004. |
| 21.1 | | List of Subsidiaries of the Registrant |
| 23.1 | | Consent of Independent Registered Public Accounting Firm |
| 31.1 | | Section 302 Chief Executive Officer Certification |
| 31.2 | | Section 302 Chief Financial Officer Certification |
| 32.1 | | Section 906 Chief Executive Officer Certification |
| 32.2 | | Section 906 Chief Financial Officer Certification |
| (b) | Exhibits |
| | The response to this portion of Item 15 is included in Item 15(a) (3) above. |
| | |
| (c) | The following documents are filed as part of the report: |
| | |
| | None. |
69
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | CEDAR SHOPPING CENTERS, INC. | |
| | | | |
| | | | |
/s/ LEO S. ULLMAN | | /s/ THOMAS J. O’KEEFFE | |
| |
| |
| Leo S. Ullman | | Thomas J. O’Keeffe | |
| President and Chairman | | Chief Financial Officer | |
| (principal executive officer) | | (principal financial officer) | |
| | | | |
| | | | |
/s/ ANN MANERI | | /s/ JEFFREY L. GOLDBERG | |
| |
| |
| Ann Maneri | | Jeffrey L. Goldberg | |
| Property Controller | | Corporate Controller | |
| (principal accounting officer) | | | |
| | | | |
| | | | |
| March 10, 2005 | | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the registrant and in the capacities and as of the date indicated this report has been signed by the below.
/s/ JAMES J. BURNS | | /s/ J.A.M.H. DER KINDEREN | |
| |
| |
| James J. Burns | | J.A.M.H. der Kinderen | |
| Director | | Director | |
| | | | |
/s/ RICHARD HOMBURG | | /s/ EVERETT B. MILLER, III | |
| |
| |
| Richard Homburg | | Everett B. Miller, III | |
| Director | | Director | |
| | | | |
| | | | |
/s/ LEO S. ULLMAN | | /s/ BRENDA J. WALKER | |
| |
| |
| Leo S. Ullman | | Brenda J. Walker | |
| Director | | Director | |
| | | | |
/s/ROGER M. WIDMANN | | | |
| | | |
| Roger M. Widmann | | | |
| Director | | | |
| | | | |
| | | | |
| March 10, 2005 | | | |
70
CEDAR SHOPPING CENTERS, INC.
SCHEDULE III - Real Estate and Accumulated Depreciation
Year Ended December 31, 2004
Property
location/% - owned (1) | | Gross
leasable
area | | Year
acquired | | Year built/
year last
renovated | | Initial cost to Company | | Subsequent
cost
capitalized | |
|
Land | | Buildings and
improvements |
| |
| |
| |
| |
| |
| |
| |
STABILIZE2D PROPERTIES (2): | | | | | | | | | | | | | | | | |
| The Point | | 255,000 | | 2000 | | 1972/2001 | | $ | 2,700,000 | | $ | 10,800,000 | | $ | 11,179,000 | |
| Harrisburg, PA (100%) | | | | | | | | | | | | | | | | |
| Academy Plaza | | 153,000 | | 2001 | | 1965/1998 | | | 2,406,000 | | | 9,623,000 | | | 908,000 | |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| Port Richmond Village | | 155,000 | | 2001 | | 1988 | | | 2,942,000 | | | 11,769,000 | | | 324,000 | |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| Washington Center Shoppes | | 153,000 | | 2001 | | 1979/1995 | | | 1,811,000 | | | 7,314,000 | | | 859,000 | |
| Washington Tnsp, NJ (100%) | | | | | | | | | | | | | | | | |
| Red Lion | | 224,000 | | 2002 | | 1990/2000 | | | 4,221,000 | | | 16,531,000 | | | (658,000) | |
| Philadelphia, PA (20%) | | | | | | | | | | | | | | | | |
| Loyal Plaza | | 294,000 | | 2002 | | 1969/2000 | | | 3,853,000 | | | 15,620,000 | | | 1,129,000 | |
| Williamsport, PA (25%) | | | | | | | | | | | | | | | | |
| LA Fitness Facility | | 41,000 | | 2002 | | 2003 | | | 2,107,000 | | | — | | | 3,920,000 | |
| Fort Washington, PA (50%) | | | | | | | | | | | | | | | | |
| Fairview Plaza | | 70,000 | | 2003 | | 1992 | | | 1,810,000 | | | 7,272,000 | | | 156,000 | |
| New Cumberland, PA (30%) | | | | | | | | | | | | | | | | |
| Halifax Plaza | | 54,000 | | 2003 | | 1994 | | | 1,102,000 | | | 4,609,000 | | | 85,000 | |
| Halifax, PA (30%) | | | | | | | | | | | | | | | | |
| Newport Plaza | | 67,000 | | 2003 | | 1996 | | | 1,316,000 | | | 5,320,000 | | | 99,000 | |
| Newport, PA (30%) | | | | | | | | | | | | | | | | |
| Pine Grove Plaza | | 79,000 | | 2003 | | 2001/2002 | | | 1,622,000 | | | 6,489,000 | | | — | |
| Pemberton Tnsp, NJ (100%) | | | | | | | | | | | | | | | | |
| Swede Square | | 99,000 | | 2003 | | 1980/2004 | | | 1,555,000 | | | 6,232,000 | | | 1,932,000 | |
| East Norriton, PA (100%) | | | | | | | | | | | | | | | | |
| Valley Plaza | | 191,000 | | 2003 | | 1975/1994 | | | 1,950,000 | | | 7,766,000 | | | 59,000 | |
| Hagerstown, MD (100%) | | | | | | | | | | | | | | | | |
| Wal-Mart Center | | 156,000 | | 2003 | | 1972/2000 | | | — | | | 11,834,000 | | | 10,000 | |
| Southington, CT (100%) | | | | | | | | | | | | | | | | |
| South Philadelphia | | 283,000 | | 2003 | | 1950/2003 | | | 8,222,000 | | | 35,907,000 | | | 857,000 | |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| River View Plaza I II III | | 244,000 | | 2003 | | 1991/1998 | | | 9,718,000 | | | 40,356,000 | | | 75,000 | |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| Columbus Crossing | | 142,000 | | 2003 | | 2001 | | | 4,579,000 | | | 19,135,000 | | | 5,000 | |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| Sunset Crossing | | 74,000 | | 2003 | | 2002 | | | 2,150,000 | | | 8,980,000 | | | (13,000) | |
| Dickson City, PA (100%) | | | | | | | | | | | | | | | | |
| The Commons | | 175,000 | | 2004 | | 2000 - 2003 | | | 3,098,000 | | | 14,047,000 | | | 1,000 | |
| DuBois, PA (100%) | | | | | | | | | | | | | | | | |
| Townfair Center | | 204,000 | | 2004 | | 1995 - 2002 | | | 3,022,000 | | | 13,786,000 | | | 393,000 | |
| White Township, PA (100%) | | | | | | | | | | | | | | | | |
| Lake Raystown Plaza | | 84,000 | | 2004 | | 1995 | | | 1,482,000 | | | 6,735,000 | | | — | |
| Huntingdon, PA (100%) | | | | | | | | | | | | | | | | |
| Franklin Village Plaza | | 304,000 | | 2004 | | 1987/1989 | | | 13,825,000 | | | 58,203,000 | | | — | |
| Franklin, MA (100%) | | | | | | | | | | | | | | | | |
| The Brickyard | | 275,000 | | 2004 | | 1989 - 1990 | | | 6,463,000 | | | 28,198,000 | | | 42,000 | |
| | |
| | | | | |
| |
| |
| |
| Berlin, CT (100%) | | 3,776,000 | | | | | | | 81,954,000 | | | 346,526,000 | | | 21,362,000 | |
| | |
| | | | | |
| |
| |
| |
Property
location/% - owned (1) | | Gross amount at which carried at Dec 31, 2004 | | Accumulated
depreciation
(4) | | Amount Of
encumbrance | |
|
Land | | Buildings and
improvements | | Total |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
STABILIZED PROPERTIES (2): | | | | | | | | | | | | | | | | |
| The Point | | $ | 2,996,000 | | $ | 21,683,000 | | $ | 24,679,000 | | $ | 2,121,000 | | $ | 19,264,000 | |
| Harrisburg, PA (100%) | | | | | | | | | | | | | | | | |
| Academy Plaza | | | 2,406,000 | | | 10,531,000 | | | 12,937,000 | | | 822,000 | | | 10,278,000 | |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| Port Richmond Village | | | 2,942,000 | | | 12,093,000 | | | 15,035,000 | | | 979,000 | | | 11,135,000 | |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| Washington Center Shoppes | | | 1,811,000 | | | 8,173,000 | | | 9,984,000 | | | 691,000 | | | 5,749,000 | |
| Washington Tnsp, NJ (100%) | | | | | | | | | | | | | | | | |
| Red Lion | | | 4,221,000 | | | 15,873,000 | | | 20,094,000 | | | 1,099,000 | | | 16,459,000 | |
| Philadelphia, PA (20%) | | | | | | | | | | | | | | | | |
| Loyal Plaza | | | 3,853,000 | | | 16,749,000 | | | 20,602,000 | | | 1,007,000 | | | 13,532,000 | |
| Williamsport, PA (25%) | | | | | | | | | | | | | | | | |
| LA Fitness Facility | | | 2,107,000 | | | 3,920,000 | | | 6,027,000 | | | 97,000 | | | 4,955,000 | |
| Fort Washington, PA (50%) | | | | | | | | | | | | | | | | |
| Fairview Plaza | | | 1,810,000 | | | 7,428,000 | | | 9,238,000 | | | 367,000 | | | 5,941,000 | |
| New Cumberland, PA (30%) | | | | | | | | | | | | | | | | |
| Halifax Plaza | | | 1,102,000 | | | 4,694,000 | | | 5,796,000 | | | 225,000 | | | 4,100,000 | |
| Halifax, PA (30%) | | | | | | | | | | | | | | | | |
| Newport Plaza | | | 1,316,000 | | | 5,419,000 | | | 6,735,000 | | | 260,000 | | | 5,237,000 | |
| Newport, PA (30%) | | | | | | | | | | | | | | | | |
| Pine Grove Plaza | | | 1,622,000 | | | 6,489,000 | | | 8,111,000 | | | 282,000 | | | 5,738,000 | |
| Pemberton Tnsp, NJ (100%) | | | | | | | | | | | | | | | | |
| Swede Square | | | 2,268,000 | | | 7,451,000 | | | 9,719,000 | | | 412,000 | | | | (3) |
| East Norriton, PA (100%) | | | | | | | | | | | | | | | | |
| Valley Plaza | | | 1,950,000 | | | 7,825,000 | | | 9,775,000 | | | 292,000 | | | | (3) |
| Hagerstown, MD (100%) | | | | | | | | | | | | | | | | |
| Wal-Mart Center | | | — | | | 11,844,000 | | | 11,844,000 | | | 395,000 | | | | |
| Southington, CT (100%) | | | | | | | | | | | | | | | | |
| South Philadelphia | | | 8,222,000 | | | 36,764,000 | | | 44,986,000 | | | 1,384,000 | | | | (3) |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| River View Plaza I II III | | | 9,718,000 | | | 40,431,000 | | | 50,149,000 | | | 1,492,000 | | | | (3) |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| Columbus Crossing | | | 4,579,000 | | | 19,140,000 | | | 23,719,000 | | | 610,000 | | | | (3) |
| Philadelphia, PA (100%) | | | | | | | | | | | | | | | | |
| Sunset Crossing | | | 2,150,000 | | | 8,967,000 | | | 11,117,000 | | | 268,000 | | | | (3) |
| Dickson City, PA (100%) | | | | | | | | | | | | | | | | |
| The Commons | | | 3,098,000 | | | 14,048,000 | | | 17,146,000 | | | 475,000 | | | | (3) |
| DuBois, PA (100%) | | | | | | | | | | | | | | | | |
| Townfair Center | | | 3,022,000 | | | 14,179,000 | | | 17,201,000 | | | 405,000 | | | 10,167,000 | |
| White Township, PA (100%) | | | | | | | | | | | | | | | | |
| Lake Raystown Plaza | | | 1,482,000 | | | 6,735,000 | | | 8,217,000 | | | 144,000 | | | | (3) |
| Huntingdon, PA (100%) | | | | | | | | | | | | | | | | |
| Franklin Village Plaza | | | 13,825,000 | | | 58,203,000 | | | 72,028,000 | | | 422,000 | | | 43,500,000 | |
| Franklin, MA (100%) | | | | | | | | | | | | | | | | |
| The Brickyard | | | 6,463,000 | | | 28,240,000 | | | 34,703,000 | | | 6,000 | | | | (3) |
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|
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|
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|
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|
| |
| Berlin, CT (100%) | | | 82,963,000 | | | 366,879,000 | | | 449,842,000 | | | 14,255,000 | | | 156,055,000 | |
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71
CEDAR SHOPPING CENTERS, INC.
SCHEDULE III - Real Estate and Accumulated Depreciation
Year Ended December 31, 2004 (continued)
Property
location/% - owned (1) | | Gross
leasable
area | | Year
acquired | | Year built/
year last
renovated | | Initial cost to Company | | Subsequent
cost
capitalized | |
|
Land | | Buildings and
improvements |
| |
| |
| |
| |
| |
| |
| |
DEVELOPMENT/REDEVELOPMENT PROPERTIES: | | | | | | | | | | | | | | | | |
| Camp Hill Mall | | 449,000 | | 2002 | | 1958/2004 | | | 4,460,000 | | | 17,857,000 | | | 10,897,000 | |
| Camp Hill, PA (100%) | | | | | | | | | | | | | | | | |
| Golden Triangle | | 192,000 | | 2003 | | 1960/2004 | | | 2,320,000 | | | 9,713,000 | | | 1,787,000 | |
| Lancaster, PA (100%) | | | | | | | | | | | | | | | | |
| Carbondale Plaza | | 130,000 | | 2004 | | 1972 | | | 1,586,000 | | | 7,289,000 | | | 95,000 | |
| Carbondale, PA (100%) | | | | | | | | | | | | | | | | |
| Huntingdon Plaza | | 151,000 | | 2004 | | 1972 - 2003 | | | 933,000 | | | 4,129,000 | | | 39,000 | |
| Huntingdon, PA (100%) | | | | | | | | | | | | | | | | |
| Hamburg Commons | | 98,000 | | 2004 | | 1988 - 1993 | | | 1,153,000 | | | 4,678,000 | | | 117,000 | |
| Hamburg, PA (100%) | | | | | | | | | | | | | | | | |
| Meadows Marketplace | | 91,000 | | 2004 | | 2004 | | | 1,914,000 | | | — | | | 63,000 | |
| So. Hanover Tnsp, PA (100%) | | | | | | | | | | | | | | | | |
| | |
| | | | | |
| |
| |
| |
| | | 1,111,000 | | | | | | | 12,366,000 | | | 43,666,000 | | | 12,998,000 | |
| | |
| | | | | |
| |
| |
| |
LAND ASSETS: | | | | | | | | | | | | | | | | |
| Washington Center Shoppes | | | | | | | | | | | | | | | | |
| parcel | | N/A | | 2001 | | N/A | | | 250,000 | | | — | | | — | |
| Washington Tnsp, NJ (100%) | | | | | | | | | | | | | | | | |
| Pine Grove Plaza parcel | | N/A | | 2003 | | N/A | | | 388,000 | | | — | | | — | |
| Pemberton Township, NJ (100%) | | | | | | | | | | | | | | | | |
| Lake Raystown Plaza parcel | | N/A | | 2004 | | N/A | | | 749,000 | | | — | | | 21,000 | |
| Huntingdon, PA (100%) | | | | | | | | | | | | | | | | |
| Halifax Plaza parcel | | N/A | | 2004 | | N/A | | | 901,000 | | | — | | | 171,000 | |
| Halifax, PA (100%) | | | | | | | | | | | | | | | | |
| | |
| | | | | |
| |
| |
| |
| | | — | | | | | | | 2,288,000 | | | — | | | 192,000 | |
| | |
| | | | | |
| |
| |
| |
Totals | | 4,887,000 | | | | | | $ | 96,608,000 | | $ | 390,192,000 | | $ | 34,552,000 | |
| | |
| | | | | |
| |
| |
| |
Property
location/% - owned (1) | | Gross amount at which carried at Dec 31, 2004 | | Accumulated
depreciation
(4) | | Amount Of
encumbrance | |
|
Land | | Buildings and
improvements | | Total |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
DEVELOPMENT/REDEVELOPMENT PROPERTIES: | | | | | | | | | | | | | | | | |
| Camp Hill Mall | | | 4,460,000 | | | 28,754,000 | | | 33,214,000 | | | 957,000 | | | 14,000,000 | |
| Camp Hill, PA (100%) | | | | | | | | | | | | | | | | |
| Golden Triangle | | | 2,320,000 | | | 11,500,000 | | | 13,820,000 | | | 429,000 | | | 9,987,000 | |
| Lancaster, PA (100%) | | | | | | | | | | | | | | | | |
| Carbondale Plaza | | | 1,586,000 | | | 7,384,000 | | | 8,970,000 | | | 212,000 | | | | |
| Carbondale, PA (100%) | | | | | | | | | | | | | | | | |
| Huntingdon Plaza | | | 933,000 | | | 4,168,000 | | | 5,101,000 | | | 98,000 | | | | (3) |
| Huntingdon, PA (100%) | | | | | | | | | | | | | | | | |
| Hamburg Commons | | | 1,153,000 | | | 4,795,000 | | | 5,948,000 | | | 76,000 | | | | |
| Hamburg, PA (100%) | | | | | | | | | | | | | | | | |
| Meadows Marketplace | | | 1,914,000 | | | 63,000 | | | 1,977,000 | | | — | | | | |
| So. Hanover Tnsp, PA (100%) | | | | | | | | | | | | | | | | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| | | | 12,366,000 | | | 56,664,000 | | | 69,030,000 | | | 1,772,000 | | | 23,987,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
LAND ASSETS: | | | | | | | | | | | | | | | | |
| Washington Center Shoppes | | | | | | | | | | | | | | | | |
| parcel | | | 250,000 | | | — | | | 250,000 | | | — | | | | |
| Washington Tnsp, NJ (100%) | | | | | | | | | | | | | | | | |
| Pine Grove Plaza parcel | | | 388,000 | | | — | | | 388,000 | | | — | | | 388,000 | |
| Pemberton Township, NJ (100%) | | | | | | | | | | | | | | | | |
| Lake Raystown Plaza parcel | | | 749,000 | | | 21,000 | | | 770,000 | | | — | | | | |
| Huntingdon, PA (100%) | | | | | | | | | | | | | | | | |
| Halifax Plaza parcel | | | 901,000 | | | 171,000 | | | 1,072,000 | | | — | | | | |
| Halifax, PA (100%) | | | | | | | | | | | | | | | | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
| | | | 2,288,000 | | | 192,000 | | | 2,480,000 | | | — | | | 388,000 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
Totals | | $ | 97,617,000 | | $ | 423,735,000 | | $ | 521,352,000 | | $ | 16,027,000 | | $ | 180,430,000 | |
| | |
|
| |
|
| |
|
| |
|
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|
| |
| (1) | Other than the partnerships owning the Red Lion and the LA Fitness Facility properties, the terms of the several joint venture agreements provide, among other things, that the minority interest partners receive certain preferential returns on their investments prior to any distributions to the Company. |
| | |
| (2) | “Stabilized properties” are those properties, with no development/redevelopment activities, having an occupancy rate of at least 80%. |
| | |
| (3) | Properties pledged as collateral under the Company’s secured revolving credit facility, including Valley Plaza which is in the process of being added to the collateral pool. The total net book value of all such properties was $209,451,000 at December 31, 2004; the total amounts outstanding under the secured revolving credit facility at that date was $68,200,000. |
| | |
| (4) | Depreciation is provided over the estimated useful lives of buildings and improvements, which range from 5 to 40 years. |
72
No 