##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 COMMISSION FILE NUMBER: 001-31817
 CEDAR SHOPPING CENTERS, INC.
 (Exact name of registrant as specified in its charter)
 Maryland
    
    42-1241468(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 44 South Bayles Avenue, Port Washington, New York  11050-3765(Address of principal executive offices)  (Zip Code)
 (516) 767-6492
 (Registrants telephone number, including area code)
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes þ No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
 Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).  Yes o No þ
 Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date: At July 31, 2008, there were 44,487,817 shares of Common Stock, $0.06
par value, outstanding.




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##### 



CEDAR SHOPPING CENTERS, INC.
 INDEX
 Forward-Looking Statements
    
    
    3Part I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets  June 30, 2008 (unaudited) and
December 31, 2007
    
    
    4Consolidated Statements of Income (unaudited)  Three months and
six months ended June 30, 2008 and 2007
    
    
    5Consolidated Statement of Shareholders Equity (unaudited)  Six
months ended June 30, 2008
    
    
    6Consolidated Statements of Cash Flows (unaudited)  Six months
ended June 30, 2008 and 2007
    
    
    7Notes to Consolidated Financial Statements (unaudited) 
June 30, 2008
    
    
    8-25Item 2. Managements Discussion and Analysis of Financial Condition
And Results of Operations
    
    
    26-36Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    36Item 4. Controls and
Procedures
    
    
    37Part II. Other InformationItem 4. Submission of Matters to a Vote of Security Holders
    
    
    38Item 6. Exhibits
    
    
    38Signatures
    
    
    39Sections 302 CertificationsSections 906 Certifications
  2




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Forward-Looking Statements
  3




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CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Balance Sheets
 June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)AssetsReal estate:Land
    
    $
    369,813,000
    
    
    $
    315,599,000Buildings and improvements
    
    
    1,320,355,000
    
    
    
    1,282,180,0001,690,168,000
    
    
    
    1,597,779,000Less accumulated depreciation
    
    
    (125,023,000
    )
    
    
    (103,621,000
    )Real estate, net
    
    
    1,565,145,000
    
    
    
    1,494,158,000Investment in unconsolidated joint venture
    
    
    4,791,000
    
    
    
    3,757,000Cash and cash equivalents
    
    
    7,203,000
    
    
    
    20,307,000Restricted cash
    
    
    19,508,000
    
    
    
    17,839,000Rents and other receivables, net
    
    
    6,920,000
    
    
    
    7,640,000Straight-line rents receivable
    
    
    12,927,000
    
    
    
    11,446,000Other assets
    
    
    6,472,000
    
    
    
    9,778,000Deferred charges, net
    
    
    31,653,000
    
    
    
    30,059,000Total assets
    
    $
    1,654,619,000
    
    
    $
    1,594,984,000Liabilities and shareholders equityMortgage loans payable
    
    $
    680,258,000
    
    
    $
    661,074,000Secured revolving credit facility
    
    
    254,390,000
    
    
    
    190,440,000Accounts payable and accrued expenses
    
    
    23,412,000
    
    
    
    26,068,000Unamortized intangible lease liabilities
    
    
    68,722,000
    
    
    
    71,157,000Total liabilities
    
    
    1,026,782,000
    
    
    
    948,739,000Minority interests in consolidated joint ventures
    
    
    58,688,000
    
    
    
    62,402,000Limited partners interest in Operating Partnership
    
    
    24,414,000
    
    
    
    25,689,000Shareholders equity:Preferred stock ($.01 par value, $25.00 per share
liquidation value, 12,500,000 shares authorized, 3,550,000
shares issued and outstanding)
    
    
    88,750,000
    
    
    
    88,750,000Common stock ($.06 par value, 150,000,000 shares authorized
44,488,000 and 44,238,000 shares, respectively, issued and
outstanding)
    
    
    2,669,000
    
    
    
    2,654,000Treasury stock (719,000 and 616,000 shares, respectively, at cost)
    
    
    (9,240,000
    )
    
    
    (8,192,000
    )Additional paid-in capital
    
    
    575,136,000
    
    
    
    572,392,000Cumulative distributions in excess of net income
    
    
    (113,185,000
    )
    
    
    (97,514,000
    )Accumulated other comprehensive income
    
    
    605,000
    
    
    
    64,000Total shareholders equity
    
    
    544,735,000
    
    
    
    558,154,000Total liabilities and shareholders equity
    
    $
    1,654,619,000
    
    
    $
    1,594,984,000
  4




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CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statements of Income
 (unaudited)
 Three months ended June 30,
    
    Six months ended June 30,2008
    
    2007
    
    2008
    
    2007Revenues:Rents
    
    $
    34,652,000
    
    
    $
    30,015,000
    
    
    $
    69,032,000
    
    
    $
    58,579,000Expense recoveries
    
    
    8,088,000
    
    
    
    6,834,000
    
    
    
    17,136,000
    
    
    
    14,109,000Other
    
    
    175,000
    
    
    
    101,000
    
    
    
    382,000
    
    
    
    453,000Total revenues
    
    
    42,915,000
    
    
    
    36,950,000
    
    
    
    86,550,000
    
    
    
    73,141,000Expenses:Operating, maintenance and management
    
    
    7,114,000
    
    
    
    5,690,000
    
    
    
    15,324,000
    
    
    
    12,767,000Real estate and other property-related taxes
    
    
    4,758,000
    
    
    
    3,623,000
    
    
    
    9,459,000
    
    
    
    7,200,000General and administrative
    
    
    2,323,000
    
    
    
    3,220,000
    
    
    
    4,514,000
    
    
    
    5,218,000Depreciation and amortization
    
    
    14,007,000
    
    
    
    9,898,000
    
    
    
    25,536,000
    
    
    
    19,781,000Total expenses
    
    
    28,202,000
    
    
    
    22,431,000
    
    
    
    54,833,000
    
    
    
    44,966,000Operating income
    
    
    14,713,000
    
    
    
    14,519,000
    
    
    
    31,717,000
    
    
    
    28,175,000Non-operating income and expense:Interest expense, including amortization of
deferred financing costs
    
    
    (11,279,000
    )
    
    
    (9,562,000
    )
    
    
    (22,663,000
    )
    
    
    (17,482,000
    )Interest income
    
    
    77,000
    
    
    
    223,000
    
    
    
    235,000
    
    
    
    498,000Equity in income of unconsolidated joint venture
    
    
    222,000
    
    
    
    157,000
    
    
    
    372,000
    
    
    
    313,000Total non-operating income and expense
    
    
    (10,980,000
    )
    
    
    (9,182,000
    )
    
    
    (22,056,000
    )
    
    
    (16,671,000
    )Income before minority and limited partners interests
    
    
    3,733,000
    
    
    
    5,337,000
    
    
    
    9,661,000
    
    
    
    11,504,000Minority interests in consolidated joint ventures
    
    
    (482,000
    )
    
    
    (300,000
    )
    
    
    (1,188,000
    )
    
    
    (695,000
    )Limited partners interest in Operating Partnership
    
    
    (56,000
    )
    
    
    (132,000
    )
    
    
    (199,000
    )
    
    
    (295,000
    )Net income
    
    
    3,195,000
    
    
    
    4,905,000
    
    
    
    8,274,000
    
    
    
    10,514,000Preferred distribution requirements
    
    
    (1,971,000
    )
    
    
    (1,984,000
    )
    
    
    (3,938,000
    )
    
    
    (3,938,000
    )Net income applicable to common shareholders
    
    $
    1,224,000
    
    
    $
    2,921,000
    
    
    $
    4,336,000
    
    
    $
    6,576,000Per common share:Basic
    
    $
    0.03
    
    
    $
    0.07
    
    
    $
    0.10
    
    
    $
    0.15Diluted
    
    $
    0.03
    
    
    $
    0.07
    
    
    $
    0.10
    
    
    $
    0.15Dividends to common shareholders
    
    $
    10,003,000
    
    
    $
    9,942,000
    
    
    $
    20,007,000
    
    
    $
    19,871,000Per common share
    
    $
    0.225
    
    
    $
    0.225
    
    
    $
    0.450
    
    
    $
    0.450Weighted average number of common shares outstanding:Basic
    
    
    44,464,000
    
    
    
    44,194,000
    
    
    
    44,461,000
    
    
    
    44,153,000Diluted
    
    
    44,466,000
    
    
    
    44,198,000
    
    
    
    44,462,000
    
    
    
    44,158,000
  5




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##### Table of Contents



CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statement of Shareholders Equity
 Six months ended June 30, 2008
 (unaudited)
 Preferred stock
    
    
    Common stock
    
    
    
    
    
    
    
    
    
    
    Cumulative
    
    
    Accumulated$25.00
    
    
    
    
    
    
    
    
    
    
    Treasury
    
    
    Additional
    
    
    distributions
    
    
    other
    
    
    TotalLiquidation
    
    
    
    
    
    
    $0.06
    
    
    stock,
    
    
    paid-in
    
    
    in excess of
    
    
    comprehensive
    
    
    shareholdersShares
    
    
    value
    
    
    Shares
    
    
    Par value
    
    
    at cost
    
    
    capital
    
    
    net income
    
    
    income
    
    
    equityBalance, December 31, 2007
    
    
    3,550,000
    
    
    $
    88,750,000
    
    
    
    44,238,000
    
    
    $
    2,654,000
    
    
    $
    (8,192,000
    )
    
    $
    572,392,000
    
    
    $
    (97,514,000
    )
    
    $
    64,000
    
    
    $
    558,154,000Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,274,000
    
    
    
    
    
    
    
    8,274,000Unrealized gain on change in fair value of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    541,000
    
    
    
    541,000Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,815,000Deferred compensation activity, net
    
    
    
    
    
    
    
    
    
    
    246,000
    
    
    
    14,000
    
    
    
    (1,048,000
    )
    
    
    2,273,000
    
    
    
    
    
    
    
    
    
    
    
    1,239,000Conversion of OP Units into common stock
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    1,000
    
    
    
    
    
    
    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    41,000Preferred distribution requirements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,938,000
    )
    
    
    
    
    
    
    (3,938,000
    )Dividends to common shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,007,000
    )
    
    
    
    
    
    
    (20,007,000
    )Reallocation adjustment of limited partners interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    431,000
    
    
    
    
    
    
    
    
    
    
    
    431,000Balance, June 30, 2008
    
    
    3,550,000
    
    
    $
    88,750,000
    
    
    
    44,488,000
    
    
    $
    2,669,000
    
    
    $
    (9,240,000
    )
    
    $
    575,136,000
    
    
    $
    (113,185,000
    )
    
    $
    605,000
    
    
    $
    544,735,000
  6




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##### Table of Contents



CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statements of Cash Flows
 (unaudited)
 Six months ended June 30,2008
    
    
    2007Cash flow from operating activities:Net income
    
    $
    8,274,000
    
    
    $
    10,514,000Adjustments to reconcile net income to net cash provided by operating activities:Non-cash provisions:Earnings in excess of distributions of consolidated joint venture
minority interests
    
    
    949,000
    
    
    
    163,000Equity in income of unconsolidated joint venture
    
    
    (372,000
    )
    
    
    (313,000
    )Distributions from unconsolidated joint venture
    
    
    434,000
    
    
    
    265,000Limited partners interest in Operating Partnership
    
    
    199,000
    
    
    
    295,000Straight-line rents receivable
    
    
    (1,481,000
    )
    
    
    (1,806,000
    )Depreciation and amortization
    
    
    25,536,000
    
    
    
    19,781,000Amortization of intangible lease liabilities
    
    
    (6,904,000
    )
    
    
    (5,098,000
    )Amortization relating to stock-based compensation
    
    
    1,341,000
    
    
    
    1,154,000Amortization of deferred financing costs
    
    
    799,000
    
    
    
    729,000Increases/decreases in operating assets and liabilities:Cash at consolidated joint ventures
    
    
    (266,000
    )
    
    
    87,000Rents and other receivables, net
    
    
    720,000
    
    
    
    (453,000
    )Other
    
    
    267,000
    
    
    
    (23,000
    )Accounts payable and accrued expenses
    
    
    (1,142,000
    )
    
    
    (395,000
    )Net cash provided by operating activities
    
    
    28,354,000
    
    
    
    24,900,000Cash flow from investing activities:Expenditures for real estate and improvements
    
    
    (50,439,000
    )
    
    
    (92,646,000
    )Purchase of consolidated joint venture minority interests
    
    
    (17,454,000
    )
    
    
    Investment in unconsolidated joint venture
    
    
    (1,094,000
    )
    
    
    (8,000
    )Construction escrows and other
    
    
    (1,299,000
    )
    
    
    (474,000
    )Net cash (used in) investing activities
    
    
    (70,286,000
    )
    
    
    (93,128,000
    )Cash flow from financing activities:Net advances from line of credit
    
    
    63,950,000
    
    
    
    70,520,000Proceeds from sales of common stock
    
    
    
    
    
    
    3,910,000Redemption of Operating Partnership Units
    
    
    (122,000
    )
    
    
    Proceeds from mortgage financings
    
    
    27,562,000
    
    
    
    23,000,000Mortgage repayments
    
    
    (40,058,000
    )
    
    
    (4,125,000
    )Contribution from minority interest partners, net
    
    
    4,269,000
    
    
    
    1,048,000Distributions in excess of earnings from consolidated joint venture
minority interests
    
    
    (27,000
    )
    
    
    Distributions to limited partners
    
    
    (913,000
    )
    
    
    (890,000
    )Preferred distribution requirements
    
    
    (3,938,000
    )
    
    
    (3,938,000
    )Distributions to common shareholders
    
    
    (20,007,000
    )
    
    
    (19,871,000
    )Payments of deferred financing costs, net
    
    
    (1,888,000
    )
    
    
    (1,053,000
    )Net cash provided by financing activities
    
    
    28,828,000
    
    
    
    68,601,000Net (decrease) increase in cash and cash equivalents
    
    
    (13,104,000
    )
    
    
    373,000Cash and cash equivalents at beginning of period
    
    
    20,307,000
    
    
    
    17,885,000Cash and cash equivalents at end of period
    
    $
    7,203,000
    
    
    $
    18,258,000
  7




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##### Table of Contents



Cedar Shopping Centers, Inc.
 
 Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
 Note 1. Organization and Basis of Preparation
     8




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
    Note 2. Summary of Significant Accounting Policies
  Real Estate Investments and Discontinued Operations
  9




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
     10




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
   Intangible Lease Asset/Liability
   11




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
    Cash and Cash Equivalents
  Restricted Cash
  12




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
  Rents and Other Receivables
   Concentration of Credit Risk
  Other Assets
  13




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
 Jun 30,
    
    Dec 31,2008
    
    2007Prepaid expenses
    
    $
    3,148,000
    
    
    $
    4,493,000Deposits
    
    
    2,735,000
    
    
    
    4,594,000Other
    
    
    589,000
    
    
    
    691,000$
    6,472,000
    
    
    $
    9,778,000
 Deferred Charges, Net
  Jun 30,
    
    Dec 31,2008
    
    2007Lease origination costs (i)
    
    $
    20,094,000
    
    
    $
    19,218,000Financing costs (ii)
    
    
    8,982,000
    
    
    
    7,941,000Other
    
    
    2,577,000
    
    
    
    2,900,000$
    31,653,000
    
    
    $
    30,059,000
 
 (i)
    
    Deferred lease origination costs include intangible lease assets resulting from
purchase accounting allocations of $14,163,000 and $14,116,000, respectively.(ii)
    
    Deferred financing costs are incurred in connection with the Companys secured
revolving credit facilities and other long-term debt.  Income Taxes
  Derivative Financial Instruments
  14




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
  Earnings Per Share
  Stock-Based Compensation
   15




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
  16




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
 Three months ended Jun 30,
    
    Six months ended Jun 30,2008
    
    2007
    
    2008
    
    2007Restricted share grants
    
    
    27,000
    
    
    
    39,000
    
    
    
    246,000
    
    
    
    179,000Average per-share grant price
    
    $
    11.65
    
    
    $
    14.35
    
    
    $
    9.39
    
    
    $
    14.52Recorded as deferred compensation, net
    
    $
    313,000
    
    
    $
    562,000
    
    
    $
    2,314,000
    
    
    $
    2,606,000Charged to operations:Amortization relating to stock-based
compensation
    
    $
    668,000
    
    
    $
    918,000
    
    
    $
    1,256,000
    
    
    $
    1,319,000Adjustments to reflect changes in market
price of Companys common stock
    
    
    (61,000
    )
    
    
    (204,000
    )
    
    
    85,000
    
    
    
    (165,000
    )Total charged to operations
    
    $
    607,000
    
    
    $
    714,000
    
    
    $
    1,341,000
    
    
    $
    1,154,000Non-vested shares:Non-vested, beginning of period
    
    
    599,000
    
    
    
    343,000
    
    
    
    380,000
    
    
    
    203,000Grants
    
    
    27,000
    
    
    
    39,000
    
    
    
    246,000
    
    
    
    179,000Vested during period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeitures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-vested, end of period
    
    
    626,000
    
    
    
    382,000
    
    
    
    626,000
    
    
    
    382,000Value of shares vested during the
period (based on grant price)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    17




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
 Supplemental consolidated statement of cash flows information
 Six months ended Jun 30,2008
    
    2007Supplemental disclosure of cash activities:Interest paid
    
    $
    24,299,000
    
    
    $
    18,358,000Supplemental disclosure of non-cash activities:Additions to deferred compensation plans
    
    
    2,314,000
    
    
    
    2,606,000Issuance of non-interest bearing purchase money
mortgage (a)
    
    
    (14,575,000
    )
    
    
    Assumption of mortgage loans payable
    
    
    (18,156,000
    )
    
    
    (42,812,000
    )Assumption of interest rate swap liability
    
    
    (2,288,000
    )
    
    
    Issuance of OP Units
    
    
    
    
    
    
    (18,000
    )Conversion of OP Units into common stock
    
    
    41,000
    
    
    
    45,000Purchase accounting allocations:Intangible lease assets
    
    
    7,593,000
    
    
    
    15,951,000Intangible lease liabilities
    
    
    (4,469,000
    )
    
    
    (7,727,000
    )Net valuation decreases (increases) in non-interest
bearing purchase money mortgage and assumed
mortgage loans payable (a)
    
    
    1,051,000
    
    
    
    (472,000
    )Other non-cash investing and financing activities:Accrued real estate improvement costs
    
    
    (3,031,000
    )
    
    
    690,000Accrued construction escrows
    
    
    (46,000
    )
    
    
    Accrued financing costs and other
    
    
    (46,000
    )
    
    
    Accrued stock issuance expenses
    
    
    
    
    
    
    (222,000
    )Capitalization of deferred financing costs
    
    
    219,000
    
    
    
    
 
 (a)
    
    The valuation decrease in the purchase money mortgage obligation results from adjusting the
contract rate (non-interest bearing) to a market rate of 9.25% per annum. Recently-Issued Accounting Pronouncements
  18




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
     19




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
   Note 3. Real Estate
     20




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
   Joint Venture Activities
   21




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
     22




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
 Pro Forma Financial Information (unaudited)
  Three months ended Jun 30,
    
    Six months ended Jun 30,2008
    
    2007
    
    2008
    
    2007Revenues
    
    $
    42,923,000
    
    
    $
    41,939,000
    
    
    $
    86,877,000
    
    
    $
    85,052,000Net income applicable to common shareholders
    
    $
    1,208,000
    
    
    $
    2,412,000
    
    
    $
    4,333,000
    
    
    $
    5,267,000Per common share:Basic
    
    $
    0.03
    
    
    $
    0.05
    
    
    $
    0.10
    
    
    $
    0.12Diluted
    
    $
    0.03
    
    
    $
    0.05
    
    
    $
    0.10
    
    
    $
    0.12Weighted average number of common shares outstanding:Basic
    
    
    44,464,000
    
    
    
    44,194,000
    
    
    
    44,461,000
    
    
    
    44,153,000Diluted
    
    
    44,466,000
    
    
    
    44,198,000
    
    
    
    44,462,000
    
    
    
    44,158,000
 Real Estate Pledged
  Note 4. Mortgage Loans Payable and Secured Revolving Credit Facility; Construction Facility
 Secured Debt
  23




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
 Jun 30, 2008
    
    Dec 31, 2007Interest rates
    
    
    
    
    
    
    Interest ratesBalance
    
    
    Weighted
    
    
    
    
    
    Balance
    
    
    WeightedDescription
    
    outstanding
    
    
    average
    
    Range
    
    outstanding
    
    
    average
    
    RangeFixed-rate mortgages
    
    $
    677,281,000
    
    
    
    
    5.8
    %
    
    
    4.8%-9.3
    %
    
    $
    656,320,000
    
    
    
    
    5.7
    %
    
    
    4.8%-7.6
    %Variable-rate mortgages
    
    
    2,977,000
    
    
    
    
    4.4
    %
    
    
    4.4%

    
    
    4,754,000
    
    
    
    
    7.7
    %
    
    
    7.7%680,258,000
    
    
    
    
    5.8
    %
    
    
    
    
    
    
    661,074,000
    
    
    
    
    5.7
    %Secured revolving credit facility
    
    
    254,390,000
    
    
    
    
    3.6
    %
    
    
    
    
    
    
    190,440,000
    
    
    
    
    6.2
    %$
    934,648,000
    
    
    
    
    5.2
    %
    
    
    
    
    
    $
    851,514,000
    
    
    
    
    5.8
    %
 Secured Revolving Credit Facility
   Secured Revolving Construction Credit Facility
  24




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)
  Note 5. Subsequent Events
   25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Executive Summary
     26




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##### Table of Contents



Summary of Critical Accounting Policies
   Revenue Recognition
   27




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##### Table of Contents



Real Estate Investments
    28




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##### Table of Contents



Stock-Based Compensation
  29




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##### Table of Contents



Results of Operations
  30




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##### Table of Contents



Comparison of the quarter ended June 30, 2008 to the quarter ended June 30, 2007
 PropertiesThree months ended Jun 30,
    
    Increase/
    
    Percentage
    
    
    
    
    
    held in2008
    
    2007
    
    (decrease)
    
    change
    
    Acquisitions
    
    both periodsTotal revenues
    
    $
    42,915,000
    
    
    $
    36,950,000
    
    
    $
    5,965,000
    
    
    
    16
    %
    
    $
    6,290,000
    
    
    $
    (325,000
    )Property operating expenses
    
    
    11,872,000
    
    
    
    9,313,000
    
    
    
    2,559,000
    
    
    
    27
    %
    
    
    2,105,000
    
    
    
    454,000Depreciation and amortization
    
    
    14,007,000
    
    
    
    9,898,000
    
    
    
    4,109,000
    
    
    
    42
    %
    
    
    2,069,000
    
    
    
    2,040,000General and administrative
    
    
    2,323,000
    
    
    
    3,220,000
    
    
    
    (897,000
    )
    
    
    -28
    %
    
    
    n/a
    
    
    
    n/aNon-operating income and
expense, net (i)
    
    
    10,980,000
    
    
    
    9,182,000
    
    
    
    1,798,000
    
    
    
    20
    %
    
    
    n/a
    
    
    
    n/a
 
 (i)
    
    Non-operating income and expense consists principally of interest expense (including
amortization of deferred financing costs), and equity in income of an unconsolidated joint venture. Properties held in both periods
 Explanation
 Total revenues
 Property operating expenses
 Depreciation and amortization
 General and administrative expenses
 Non-operating income and expense, net
 31




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##### Table of Contents



Comparison of the six months ended June 30, 2008 to the six months ended June 30, 2007
 PropertiesSix months ended Jun 30,
    
    Increase/
    
    Percentage
    
    
    
    
    
    held in2008
    
    2007
    
    decrease)
    
    change
    
    Acquisitions
    
    both periodsTotal revenues
    
    $
    86,550,000
    
    
    $
    73,141,000
    
    
    $
    13,409,000
    
    
    
    18
    %
    
    $
    14,287,000
    
    
    $
    (878,000
    )Property operating expenses
    
    
    24,783,000
    
    
    
    19,967,000
    
    
    
    4,816,000
    
    
    
    24
    %
    
    
    4,314,000
    
    
    
    502,000Depreciation and amortization
    
    
    25,536,000
    
    
    
    19,781,000
    
    
    
    5,755,000
    
    
    
    29
    %
    
    
    4,215,000
    
    
    
    1,540,000General and administrative
    
    
    4,514,000
    
    
    
    5,218,000
    
    
    
    (704,000
    )
    
    
    -13
    %
    
    
    n/a
    
    
    
    n/aNon-operating income and
expense, net (i)
    
    
    22,056,000
    
    
    
    16,671,000
    
    
    
    5,385,000
    
    
    
    32
    %
    
    
    n/a
    
    
    
    n/a
 
 (i)
    
    Non-operating income and expense consists principally of interest expense (including
amortization of deferred financing costs), and equity in income of an unconsolidated joint venture. Properties held in both periods
 Explanation
 Total revenues
 Property operating expenses
 Depreciation and amortization
 General and administrative expenses
 32




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##### Table of Contents



Non-operating income and expense, net
 Liquidity and Capital Resources
     33




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##### Table of Contents



Net Cash Flows
 Operating Activities
  Investing Activities
  Financing Activities
  34




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##### Table of Contents



Funds From Operations
    35




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##### Table of Contents



Three months ended Jun 30,
    
    Six months ended Jun 30,2008
    
    2007
    
    2008
    
    2007Net income applicable to common shareholders
    
    $
    1,224,000
    
    
    $
    2,921,000
    
    
    $
    4,336,000
    
    
    $
    6,576,000Add (deduct):Real estate depreciation and amortization
    
    
    13,939,000
    
    
    
    9,837,000
    
    
    
    25,400,000
    
    
    
    19,667,000Limited partners interest
    
    
    56,000
    
    
    
    132,000
    
    
    
    199,000
    
    
    
    295,000Minority interests in consolidated joint ventures
    
    
    482,000
    
    
    
    300,000
    
    
    
    1,188,000
    
    
    
    695,000Minority interests share of FFO applicable to
consolidated joint ventures
    
    
    (1,417,000
    )
    
    
    (426,000
    )
    
    
    (3,198,000
    )
    
    
    (917,000
    )Equity in income of unconsolidated joint venture
    
    
    (222,000
    )
    
    
    (157,000
    )
    
    
    (372,000
    )
    
    
    (313,000
    )FFO from unconsolidated joint venture
    
    
    355,000
    
    
    
    234,000
    
    
    
    581,000
    
    
    
    468,000Funds From Operations
    
    $
    14,417,000
    
    
    $
    12,841,000
    
    
    $
    28,134,000
    
    
    $
    26,471,000FFO per common share (assuming conversion of OP Units):Basic
    
    $
    0.31
    
    
    $
    0.28
    
    
    $
    0.61
    
    
    $
    0.57Diluted
    
    $
    0.31
    
    
    $
    0.28
    
    
    $
    0.61
    
    
    $
    0.57Weighted average number of common shares:Shares used in determination of basic earnings per share
    
    
    44,464,000
    
    
    
    44,194,000
    
    
    
    44,461,000
    
    
    
    44,153,000Additional shares assuming conversion of OP Units (basic)
    
    
    2,029,000
    
    
    
    1,984,000
    
    
    
    2,030,000
    
    
    
    1,985,000Shares used in determination of basic FFO per share
    
    
    46,493,000
    
    
    
    46,178,000
    
    
    
    46,491,000
    
    
    
    46,138,000Shares used in determination of diluted earnings per share
    
    
    44,466,000
    
    
    
    44,198,000
    
    
    
    44,462,000
    
    
    
    44,158,000Additional shares assuming conversion of OP Units (diltued)
    
    
    2,029,000
    
    
    
    1,997,000
    
    
    
    2,030,000
    
    
    
    1,998,000Shares used in determination of diluted FFO per share
    
    
    46,495,000
    
    
    
    46,195,000
    
    
    
    46,492,000
    
    
    
    46,156,000
 Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   36




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Item 4. Controls and Procedures
   37




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##### Table of Contents



Part II Other Information
 
 Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    The election of seven directors.2.
    
    The approval of an amendment to the Companys 2004 Stock Incentive Plan
increasing the authorized shares available thereunder and increasing the number of
 shares that may be granted to any one participant.3.
    
    The approval of the appointment of Ernst & Young LLP as the Companys
independent registered public accounting firm for the fiscal year ending December 31,
2008.
  Withheld/
    
    
    
    
    
    BrokerFor
    
    Against
    
    Abstain
    
    Non-Votes1. Directors:James J. Burns
    
    
    40,682,727
    
    
    
    435,488Richard Homburg
    
    
    40,736,476
    
    
    
    381,739Pamela N. Hootkin
    
    
    40,733,532
    
    
    
    384,683Paul G. Kirk, Jr.
    
    
    40,384,844
    
    
    
    733,371Everett B. Miller, III
    
    
    40,683,882
    
    
    
    434,333Leo S. Ullman
    
    
    40,727,076
    
    
    
    391,139Roger M. Widmann
    
    
    40,680,827
    
    
    
    437,3882. Amendment to 2004 Incentive
Stock Plan
    
    
    30,888,265
    
    
    
    3,121,580
    
    
    
    1,257,6453. Independent registered
public accounting firm
    
    
    40,963,878
    
    
    
    157,515
    
    
    
    23,821
 
 Item 6. Exhibits
 Exhibit 10.1
    
    Loan Agreement dated as of June 13, 2008, incorporated by
reference to Exhibit 10.1 of Form 8-K filed on June 17, 2008
 Exhibit 31
    
    Section 302 Certifications
 Exhibit 32
    
    Section 906 Certifications
 38




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##### Table of Contents



SIGNATURES
   By: /s/ LEO S. ULLMAN
    
    By: /s/ LAWRENCE E. KREIDER, JR.Leo S. Ullman
    
    Lawrence E. Kreider, Jr.Chairman of the Board, Chief
    
    Chief Financial OfficerExecutive Officer and President
    
    (Principal financial officer)(Principal executive officer)August 4, 2008
 39