CEDAR SHOPPING CENTERS, INC.
44 SOUTH BAYLES AVENUE
PORT WASHINGTON, NEW YORK 11050
CONTACT: LEO S. ULLMAN
PRESIDENT
(516) 767-6492
FOR IMMEDIATE RELEASE:
======================
CEDAR SHOPPING CENTERS, INC. - ANNOUNCES SECOND QUARTER RESULTS
- ---------------------------------------------------------------
Port Washington, New York -August 10, 2004 - Cedar Shopping Centers, Inc.,
(NYSE: "CDR") (the "Company"), today reported net income for the quarter ended
June 30, 2004 of $1,903,000, or $0.12 per share, compared to a net loss of
$(40,000), or $(0.14) per share, for the same period last year. Net income for
the six months ended June 30, 2004 was $3,246,000, or $0.20 per share, compared
to a net loss of $(239,000), or $ (0.87) per share for the same period last
year. The Company had outstanding 16,910,000 shares of common stock and
Operating Partnership Units at June 30, 2004 as compared to 829,000 shares and
OP Units at June 30, 2003. Per share figures for the 2003 periods have been
retroactively adjusted to reflect the stock dividend and the subsequent reverse
stock split effectuated later in 2003.
Highlights
o We increased funds from operations ("FFO") for the second quarter of 2004
to $4,253,000 ($0.25 per share/unit), from $285,000 ($0.34 per share/unit)
for the corresponding quarter of 2003. FFO for the six months ended June
30, 2004 increased to $7,622,000 ($0.45 per share/unit) from $151,000
($0.18 per share/unit) for the corresponding period of 2003.
o We more than doubled total revenue for the second quarter of 2004 to
$12,667,000 compared to $6,138,000 for the second quarter of 2003. Revenues
for the six months ended June 30, 2004 increased to $23,942,000 from
$11,422,000 for the corresponding period of 2003.
o Net cash flows provided by operating activities increased to $7,830,000 for
the six months ended June 30, 2004 compared with $1,070,000 for the
corresponding period of 2003.
o We are presently involved in seven redevelopment projects and have under
option a tract of land for a ground-up development. These projects are
expected to come "on stream" and contribute substantially to FFO in 2005
and thereafter.
o Occupancy for the portfolio as of June 30, 2004, including the various
redevelopment properties, was approximately 84%; excluding the
redevelopment properties, the occupancy level was approximately 96%.
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o The Company has approximately 290,000 sq. ft. of signed new leases for
tenants who are not yet in occupancy, representing approximately $4.4
million in annualized base rents commencing at various dates throughout the
next two years.
o The Company is currently paying dividends at the annual rate of $0.90 per
share of common stock which amounts are expected to be fully covered by
FFO.
o As a result of our July 2004 preferred stock offering (see below), the
Company's June 30, 2004 pro forma percentage of its pro rata share of debt
to total market capitalization was approximately 34%.
Preferred Stock Issue
On July 28, 2004, the Company completed a public offering of 2,350,000 shares of
$25 Series A Cumulative Redeemable Preferred Stock, at a dividend rate of
8-7/8%, resulting in gross proceeds of $58,750,000. The shares have no stated
maturity and are redeemable after July 28, 2009. The net proceeds to the
Company, after underwriting fees and offering costs, were approximately $56.6
million, substantially all of which were used to reduce the Company's secured
revolving credit facility. As a result, the Company presently has available
approximately $63.3 million (such amount will be increased to approximately
$77.8 million after additional properties are added to the collateral pool) for
opportunistic acquisitions, joint venture investments, redevelopments and other
general corporate purposes. Several acquisitions and joint venture investment
opportunities are presently in various stages of negotiation.
Acquisitions
The Company, during the quarter, acquired four properties containing an
aggregate of approximately 464,000 square feet of gross leaseable area ("GLA").
The properties are Carbondale Plaza in Carbondale, PA, anchored by an Acme
Supermarket and a CVS drug store; Huntingdon Plaza and Lake Raystown Plaza,
adjacent properties in Huntingdon PA, anchored by a Giant Supermarket, a Peebles
Department Store and a Rite Aid drug store, and a property in Hamburg, PA. Each
property represents a redevelopment opportunity for the Company. The aggregate
purchase price for the four properties plus a parcel of land adjacent to Lake
Raystown Plaza was approximately $23.3 million.
Portfolio
The Company, as of June 30, 2004, had a portfolio of 28 shopping center
properties, mostly supermarket-anchored community centers, located in four
states, with approximately 4.3 million square feet of GLA. The Company expects
to conclude additional acquisitions during the balance of the year.
Overview by Management
Leo Ullman, CEO, in a statement said "We are pleased to report results at
slightly better than projections and proud of the progress we continue to
evidence in our acquisition, development and redevelopment programs. We hope and
expect that these programs will add meaningfully to shareholder values
commencing toward the end of this year and continuing for the next couple of
years".
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Tom O'Keeffe, CFO, noted "Our recent successful offering of preferred stock will
permit us to continue to execute our business plan. While we think the costs of
the preferred stock offering will put some pressure on our next quarter's
results, we continue to expect to meet our guidance for the year".
New Leases
Annual base rents, excluding tenant reimbursements, for leases that have been
signed and for which the tenants have not yet occupied their premises, presently
amount to approximately $ 4.4 million. Rent payments, from these leases, are
expected to commence on the following schedule:
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QUARTER ENDING ANNUALIZED RENT
-------------- ---------------
September 30, 2004 $ 471,000
December 31, 2004 $ 928,000
March 31, 2005 $ 85,000
June 30, 2005 $ 644,000
September 30, 2005 $ 2,160,000
June 30, 2006 $ 65,000
-----------
$ 4,353,900
===========
----------------------------------------
After giving effect to such new leases, the occupancy rate for the portfolio of
properties held as of June 30, 2004 would have been approximately 89%.
Redevelopment (and Development) Pipeline
With respect to its redevelopment (and development) property pipeline, the
Company previously announced that Giant Food Stores, LLC had signed a lease
amendment for a new 91,000 sq. ft. Giant supermarket at the Camp Hill Mall.
Construction of that store and the Camp Hill redevelopment is proceeding as
expected. Pre-leasing for the balance of the retail space at the center is
nearing completion, including a new 40,000 sq. ft. medical facility.
Other development and redevelopment projects include the Company's properties in
Halifax, Newport and Lake Raystown, PA, all of which involve supermarket
expansions or new stores at those centers. The Carbondale, Hamburg and
Huntingdon, PA redevelopment properties each involve, among other things, the
re-leasing of former Ames stores. At the Golden Triangle Shopping Center
(Lancaster, PA), construction of the new L.A. Fitness facility is in progress,
and the Company has pre-leased one out-parcel and part of the remaining
vacancies. The Company is in the permit application process for the construction
of a ground-up 100,000 sq. ft. supermarket-anchored shopping center near
Hershey, PA. Construction is presently expected to commence before year-end with
completion in 2005.
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Guidance
The Company continues to expect FFO for 2004 to be in a range of $0.90-$1.00 per
share, and expects FFO for 2005 to be in the range of $1.10-$1.20 per share.
These forward looking projections are of course subject to uncertainties with
respect to acquisitions, development and redevelopment activities, leasing
activities, and short-term interest rates. The Company also expects to continue
to pay quarterly dividends of $0.225 per share ($0.90 on an annualized basis)
for the remainder of 2004 and 2005.
Interested parties are urged to review the Form 10-Q filed with the Securities
and Exchange Commission for the quarter ended June 30, 2004 for further details.
Investor Conference Call
Cedar Shopping Centers, Inc. will host a conference call on Thursday, August 12,
2004, at 11:00 AM (EDT) to discuss second quarter results. The U.S. dial in
number to call for this teleconference is (800) 299-7928. The international dial
in number is (617) 614-3926; use participant passcode 49132367. A replay of the
conference call will be available from August 12 at 1:00 PM through August 20 at
5:00 PM by using U.S. dial in number (888) 286-8010 and entering the passcode
21607111 (International callers may use dial in number (617) 801-6888 and use
the same passcode indicated for U.S. callers).
About Cedar Shopping Centers, Inc.
Cedar Shopping Centers, Inc., with headquarters in Port Washington, New York, is
a fully-integrated, self-administered and self-managed real estate investment
trust ("REIT") listed on the New York Stock Exchange. Its investments, which
total approximately 4.3 million sq. ft. of GLA, are focused primarily in
multi-tenant supermarket-anchored shopping centers in eastern Pennsylvania,
southern New Jersey, Maryland and Connecticut.
Forward-Looking Statements
Certain statements contained in this Press Release constitute forward-looking
statements within the meaning of the securities laws. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general and specific economic and business
conditions, which will, among other things, affect demand for rental space, the
availability and creditworthiness of prospective tenants, lease rents and the
availability of financing; adverse changes in the Company's real estate markets,
including, among other things, competition with other companies; risks of real
estate development and acquisition; risks of adverse operating results and
creditworthiness of current tenants; governmental actions and initiatives; and
environmental/safety requirements. Such forward-looking statements speak only as
of the date hereof. The Company does not intend, and disclaims any duty or
obligation, to update or revise any forward-looking statements set forth in this
release to reflect any change in expectations, change in information, new
information, future events or circumstances on which such information was based.
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Non-GAAP Financial Measures - FFO
The Company considers FFO to be a relevant and meaningful supplemental measure
of the performance of the Company because it is predicated on a cash flow
analysis, contrasted with net income, a measure predicated on generally accepted
accounting principals ("GAAP"), which gives effect to non-cash items such as
depreciation. The Company computes FFO in accordance with the "White Paper" on
FFO published by the National Association of Real Estate Investment Trusts
("NAREIT"), as income before allocation to minority interests (computed in
accordance with GAAP), excluding gains or losses from debt restructurings and
sales of property, plus depreciation and amortization, and after preferred stock
distributions and adjustments for partially owned partnerships and joint
ventures. In computing FFO, the Company does not add back to net income the
amortization of costs incurred in connection with its financing activities or
depreciation of non-real estate assets, but does add back to net income those
items that are defined as "extraordinary" under GAAP. FFO does not represent
cash generated from operating activities in accordance with GAAP and should not
be considered as an alternative to cash flow as a measure of liquidity. Since
the NAREIT White Paper only provides guidelines for computing FFO, the
computation of FFO may vary from one company to another. FFO is not necessarily
indicative of cash available to fund ongoing cash needs.
The following table sets forth the Company's calculations of FFO:
- --------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ------------------------------
2004 2003 2004 2003
---------------------------- ------------------------------
Net income (loss) $ 1,903,000 $ (40,000) $ 3,246,000 $ (239,000)
Add (deduct):
Depreciation and amortization 2,506,000 798,000 4,698,000 1,523,000
Limited partners' interest 53,000 (46,000) 89,000 (449,000)
Minority interests 416,000 288,000 584,000 422,000
Minority interests share of FFO (625,000) (715,000) (995,000) (1,106,000)
---------------------------- ------------------------------
Funds from operations $ 4,253,000 $ 285,000 $ 7,622,000 $ 151,000
============================ ==============================
FFO per share/unit outstanding $ 0.25 $ 0.34 $ 0.45 $ 0.18
============================ ==============================
Average shares/units outstanding (1) 16,910,000 844,000 16,903,000 843,000
(1) Assumes conversion of OP Units
- --------------------------------------------------------------------------------------------------------------------
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CEDAR SHOPPING CENTERS, INC
CONSOLIDATED BALANCE SHEETS
JUNE 30,
2004 DECEMBER 31,
(UNAUDITED) 2003
------------- -------------
Assets
Real estate
Land $ 74,707,000 $ 61,774,000
Buildings and improvements 324,947,000 269,031,000
------------- -------------
399,654,000 330,805,000
Less accumulated depreciation (10,613,000) (6,274,000)
------------- -------------
Real estate, net 389,041,000 324,531,000
Cash and cash equivalents 3,561,000 6,154,000
Cash at joint ventures and restricted cash 6,591,000 6,208,000
Rents and other receivables, net 3,453,000 3,269,000
Other assets 2,847,000 3,000,000
Deferred charges, net 9,053,000 6,485,000
------------- -------------
Total Assets $ 414,546,000 $ 349,647,000
============= =============
Liabilities and Shareholders' Equity
Mortgage loans payable $ 149,049,000 $ 144,983,000
Secured revolving credit facility 75,000,000 17,000,000
Accounts payable, accrued expenses, and other 5,578,000 5,616,000
Deferred liabilities 20,112,000 14,430,000
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Total Liabilities 249,739,000 182,029,000
------------- -------------
Minority interests 12,139,000 12,435,000
Limited partners' interest in consolidated Operating Partnership 4,174,000
4,035,000
Shareholders' Equity
Common stock ($.06 par value, 50,000,000 shares
authorized, 16,456,000 shares issued and outstanding) 987,000 987,000
Treasury stock (319,000 shares, at cost) (3,669,000) (3,669,000)
Accumulated other comprehensive gain 482,000 47,000
Additional paid-in capital 150,694,000 153,783,000
------------- -------------
Total Shareholders' Equity 148,494,000 151,148,000
------------- -------------
Total Liabilities and Shareholders' Equity $ 414,546,000 $ 349,647,000
============= =============
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CEDAR SHOPPING CENTERS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ------------------------------
2004 2003 2004 2003
----------- ----------- ------------ -----------
Revenues
Rents $ 9,939,000 $ 4,608,000 $ 18,748,000 $ 8,744,000
Expense recoveries 2,575,000 1,397,000 4,935,000 2,459,000
Interest and other 153,000 133,000 259,000 219,000
----------- ----------- ------------ -----------
Total Revenues 12,667,000 6,138,000 23,942,000 11,422,000
Expenses
Operating, maintenance and management 2,657,000 1,476,000 5,397,000 3,206,000
Real estate and other property-related taxes 1,244,000 612,000 2,344,000 1,232,000
General and administrative 985,000 649,000 1,627,000 1,172,000
Depreciation and amortization 2,834,000 926,000 5,556,000 1,767,000
Interest 2,575,000 2,252,000 5,099,000 4,290,000
----------- ----------- ------------ -----------
Total Expenses 10,295,000 5,915,000 20,023,000 11,667,000
Income (loss) before the following: 2,372,000 223,000 3,919,000 (245,000)
Minority interests (416,000) (288,000) (584,000) (422,000)
Limited partners' interest (53,000) 46,000 (89,000) 449,000
Distribution to preferred shareholders (net of
limited partners' interest of $48,000) - (21,000) - (21,000)
----------- ----------- ------------ -----------
Net income (loss) $ 1,903,000 $ (40,000) $ 3,246,000 $ (239,000)
=========== =========== ============ ===========
Net income (loss) per share $ 0.12 $ (0.14) $ 0.20 $ (0.87)
=========== =========== ============ ===========
Dividends to shareholders $ 3,703,000 $ - $ 6,335,000 $ -
=========== =========== ============ ===========
Dividends to shareholders per share $ 0.225 $ - $ 0.385 $ -
=========== =========== ============ ===========
Average number of shares outstanding 16,456,000 276,000 16,456,000 275,000
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CEDAR SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
-------------------------------
2004 2003
----------- -----------
Cash Flow From Operating Activities
Net income (loss) $ 3,246,000 $ (239,000)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Non-cash provisions:
Minority interests 179,000 226,000
Straight-line rents (701,000) (307,000)
Limited partners' interest 89,000 (449,000)
Depreciation and amortization 5,556,000 1,767,000
Amortization of intangible lease liabilities (976,000) (313,000)
Other (87,000) -
Changes in operating assets and liabilities:
Decrease in joint venture cash 142,000 167,000
Decrease (increase) in rents and other receivables 517,000 (191,000)
(Increase) in other assets (97,000) (745,000)
(Decrease) increase in accounts payable and accrued expenses (38,000) 1,154,000
----------- -----------
Net cash provided by operating activities 7,830,000 1,070,000
----------- -----------
Cash Flow From Investing Activities
Expenditures for real estate and improvements (53,006,000) (50,632,000)
(Increase) decrease in construction/improvement escrows (525,000) 98,000
----------- -----------
Net cash (used in) investing activities (53,531,000) (50,534,000)
----------- -----------
Cash Flow from Financing Activities
Proceeds from mortgage financings 723,000 37,612,000
Mortgage repayments (6,650,000) (583,000)
Line of credit and other interim financings 58,000,000 2,303,000
Contributions from minority interest partners - 8,840,000
Distributions to minority interest partners (475,000) (434,000)
Distributions to common shareholders (6,335,000) -
Distributions to limited partners (172,000) -
Distributions on Preferred Operating Partnership Units - (69,000)
Deferred financing costs and other, net (1,983,000) (915,000)
----------- -----------
Net cash provided by financing activities 43,108,000 46,754,000
----------- -----------
Net decrease in cash and cash equivalents (2,593,000) (2,710,000)
Cash and cash equivalents at beginning of the period 6,154,000 3,827,000
----------- -----------
Cash and cash equivalents at end of period $ 3,561,000 $ 1,117,000
=========== ===========
Supplemental Disclosure of Cash Activities:
Interest paid $ 5,522,000 $ 4,173,000
=========== ===========
Supplemental Disclosure of Non-Cash Financing Activities:
Assumption of mortgage loan payable $ 9,993,000 $ -
=========== ===========
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