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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 SEPTEMBER 30, 2007
 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, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act (Check one):
 Large accelerated filer o Accelerated filer þ Non-accelerated filer o
 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 November 2, 2007, there were 44,230,766 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  September 30, 2007 (unaudited) and December 31, 2006
    
    
    4Consolidated Statements of Income (unaudited)  Three months and nine months ended September 30, 2007 and 2006
    
    
    5Consolidated Statement of Shareholders Equity (unaudited)  Nine months ended September 30, 2007
    
    
    6Consolidated Statements of Cash Flows (unaudited)  Nine months ended September 30, 2007 and 2006
    
    
    7Notes to Consolidated Financial Statements (unaudited)  September 30, 2007
    
    
    8-23Item 2. Managements Discussion and Analysis of Financial Condition And Results of Operations
    
    
    24-34Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    34Part II. Other InformationItem 4. Submission of Matters to a Vote of Security Holders
    
    
    36Item 6. Exhibits
    
    
    36Signatures
    
    
    37Articles of Incorporation of the CompanyAmendment to Articles of Incorporation of the Company filed on September 18, 2007Section 302 CertificationsSection 906 Certifications
  2




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Forward-Looking Statements
  3




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CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Balance Sheets
 September 30,
    
    
    December 31,2007
    
    
    2006(unaudited)AssetsReal estate:Land
    
    $
    296,372,000
    
    
    $
    248,108,000Buildings and improvements
    
    
    1,194,368,000
    
    
    
    982,294,0001,490,740,000
    
    
    
    1,230,402,000Less accumulated depreciation
    
    
    (91,781,000
    )
    
    
    (64,458,000
    )Real estate, net
    
    
    1,398,959,000
    
    
    
    1,165,944,000Property and related assets held for sale, net of
accumulated depreciation
    
    
    11,805,000
    
    
    
    11,493,000Investment in unconsolidated joint venture
    
    
    3,718,000
    
    
    
    3,644,000Cash and cash equivalents
    
    
    21,148,000
    
    
    
    17,885,000Restricted cash
    
    
    12,806,000
    
    
    
    11,507,000Rents and other receivables, net
    
    
    5,086,000
    
    
    
    4,187,000Straight-line rents receivable
    
    
    10,492,000
    
    
    
    7,870,000Other assets
    
    
    10,749,000
    
    
    
    6,921,000Deferred charges, net
    
    
    27,874,000
    
    
    
    22,268,000Total assets
    
    $
    1,502,637,000
    
    
    $
    1,251,719,000Liabilities and shareholders equityMortgage loans payable
    
    $
    637,045,000
    
    
    $
    499,603,000Secured revolving credit facility
    
    
    186,890,000
    
    
    
    68,470,000Accounts payable, accrued expenses, and other
    
    
    22,755,000
    
    
    
    17,435,000Unamortized intangible lease liabilities
    
    
    56,052,000
    
    
    
    53,160,000Total liabilities
    
    
    902,742,000
    
    
    
    638,668,000Minority interests in consolidated joint ventures
    
    
    10,321,000
    
    
    
    9,132,000Limited partners interest in Operating Partnership
    
    
    25,352,000
    
    
    
    25,969,000Shareholders equity:Preferred stock ($.01 par value, $25.00 per share
liquidation value, 12,500,000 and 5,000,000 shares, respectively,
authorized, 3,550,000 shares issued and outstanding)
    
    
    88,750,000
    
    
    
    88,750,000Common stock ($.06 par value, 150,000,000 and 50,000,000 shares,
respectively, authorized, 44,231,000 and 43,773,000 shares,
respectively, issued and outstanding)
    
    
    2,654,000
    
    
    
    2,626,000Treasury stock (613,000 and 502,000 shares, respectively, at cost)
    
    
    (8,156,000
    )
    
    
    (6,378,000
    )Additional paid-in capital
    
    
    572,017,000
    
    
    
    564,637,000Cumulative distributions in excess of net income
    
    
    (91,153,000
    )
    
    
    (71,831,000
    )Accumulated other comprehensive income
    
    
    110,000
    
    
    
    146,000Total shareholders equity
    
    
    564,222,000
    
    
    
    577,950,000Total liabilities and shareholders equity
    
    $
    1,502,637,000
    
    
    $
    1,251,719,000
  4




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CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statements of Income
 (unaudited)
 Three months ended September 30,
    
    Nine months ended September 30,2007
    
    2006
    
    2007
    
    2006Revenues:Rents
    
    $
    30,487,000
    
    
    $
    25,899,000
    
    
    $
    88,486,000
    
    
    $
    73,860,000Expense recoveries
    
    
    6,875,000
    
    
    
    5,446,000
    
    
    
    20,822,000
    
    
    
    16,570,000Other
    
    
    115,000
    
    
    
    246,000
    
    
    
    568,000
    
    
    
    739,000Total revenues
    
    
    37,477,000
    
    
    
    31,591,000
    
    
    
    109,876,000
    
    
    
    91,169,000Expenses:Operating, maintenance and management
    
    
    5,660,000
    
    
    
    5,231,000
    
    
    
    18,317,000
    
    
    
    16,666,000Real estate and other property-related taxes
    
    
    3,869,000
    
    
    
    3,265,000
    
    
    
    10,928,000
    
    
    
    9,219,000General and administrative
    
    
    1,847,000
    
    
    
    1,431,000
    
    
    
    7,065,000
    
    
    
    4,220,000Depreciation and amortization
    
    
    10,065,000
    
    
    
    8,923,000
    
    
    
    29,696,000
    
    
    
    25,428,000Total expenses
    
    
    21,441,000
    
    
    
    18,850,000
    
    
    
    66,006,000
    
    
    
    55,533,000Operating income
    
    
    16,036,000
    
    
    
    12,741,000
    
    
    
    43,870,000
    
    
    
    35,636,000Non-operating income and expense:Interest expense
    
    
    (9,618,000
    )
    
    
    (8,556,000
    )
    
    
    (26,371,000
    )
    
    
    (23,655,000
    )Amortization of deferred financing costs
    
    
    (423,000
    )
    
    
    (341,000
    )
    
    
    (1,152,000
    )
    
    
    (1,003,000
    )Interest income
    
    
    82,000
    
    
    
    155,000
    
    
    
    580,000
    
    
    
    392,000Equity in income (loss) of unconsolidated joint ventures
    
    
    150,000
    
    
    
    
    
    
    
    463,000
    
    
    
    (40,000
    )Gain on sale of interest in unconsolidated joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141,000Total non-operating income and expense
    
    
    (9,809,000
    )
    
    
    (8,742,000
    )
    
    
    (26,480,000
    )
    
    
    (24,165,000
    )Income before minority and limited partners interests
and discontinued operations
    
    
    6,227,000
    
    
    
    3,999,000
    
    
    
    17,390,000
    
    
    
    11,471,000Minority interests in consolidated joint ventures
    
    
    (333,000
    )
    
    
    (324,000
    )
    
    
    (1,028,000
    )
    
    
    (943,000
    )Limited partners interest in Operating Partnership
    
    
    (169,000
    )
    
    
    (86,000
    )
    
    
    (450,000
    )
    
    
    (234,000
    )Income from continuing operations
    
    
    5,725,000
    
    
    
    3,589,000
    
    
    
    15,912,000
    
    
    
    10,294,000Discontinued operations, net of limited partners interest
    
    
    169,000
    
    
    
    165,000
    
    
    
    496,000
    
    
    
    532,000Net income
    
    
    5,894,000
    
    
    
    3,754,000
    
    
    
    16,408,000
    
    
    
    10,826,000Preferred distribution requirements
    
    
    (1,969,000
    )
    
    
    (1,969,000
    )
    
    
    (5,907,000
    )
    
    
    (5,907,000
    )Net income applicable to common shareholders
    
    $
    3,925,000
    
    
    $
    1,785,000
    
    
    $
    10,501,000
    
    
    $
    4,919,000Per common share (basic):Income from continuing operations, net of preferred
distribution requirements
    
    $
    0.09
    
    
    $
    0.05
    
    
    $
    0.23
    
    
    $
    0.14Discontinued operations, net of limited partners interest
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    0.02Net income applicable to common shareholders
    
    $
    0.09
    
    
    $
    0.05
    
    
    $
    0.24
    
    
    $
    0.16Per common share (diluted)Income from continuing operations, net of preferred
distribution requirements
    
    $
    0.09
    
    
    $
    0.05
    
    
    $
    0.23
    
    
    $
    0.14Discontinued operations, net of limited partners interest
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    0.01Net income applicable to common shareholders
    
    $
    0.09
    
    
    $
    0.05
    
    
    $
    0.24
    
    
    $
    0.15Dividends to common shareholders
    
    $
    9,952,000
    
    
    $
    7,752,000
    
    
    $
    29,823,000
    
    
    $
    21,320,000Per common share
    
    $
    0.225
    
    
    $
    0.225
    
    
    $
    0.675
    
    
    $
    0.675Weighted average number of common shares outstanding:Basic
    
    
    44,231,000
    
    
    
    34,484,000
    
    
    
    44,179,000
    
    
    
    31,660,000Diluted
    
    
    44,234,000
    
    
    
    34,488,000
    
    
    
    44,183,000
    
    
    
    31,831,000
  5




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##### Table of Contents



CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statement of Shareholders Equity
 Nine months ended September 30, 2007
 (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, 2006
    
    
    3,550,000
    
    
    $
    88,750,000
    
    
    
    43,773,000
    
    
    $
    2,626,000
    
    
    $
    (6,378,000
    )
    
    $
    564,637,000
    
    
    $
    (71,831,000
    )
    
    $
    146,000
    
    
    $
    577,950,000Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,408,000
    
    
    
    
    
    
    
    16,408,000Unrealized gain (loss) on change in fair value
of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,000
    )
    
    
    (36,000
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,372,000Deferred compensation activity, net
    
    
    
    
    
    
    
    
    
    
    179,000
    
    
    
    11,000
    
    
    
    (1,778,000
    )
    
    
    3,496,000
    
    
    
    
    
    
    
    
    
    
    
    1,729,000Net proceeds from common stock sales
    
    
    
    
    
    
    
    
    
    
    275,000
    
    
    
    17,000
    
    
    
    
    
    
    
    4,115,000
    
    
    
    
    
    
    
    
    
    
    
    4,132,000Conversion of OP Units into common stock
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    
    
    
    
    
    
    
    
    45,000
    
    
    
    
    
    
    
    
    
    
    
    45,000Preferred distribution requirements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,907,000
    )
    
    
    
    
    
    
    (5,907,000
    )Dividends to common shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,823,000
    )
    
    
    
    
    
    
    (29,823,000
    )Reallocation adjustment of limited partners
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (276,000
    )
    
    
    
    
    
    
    
    
    
    
    (276,000
    )Balance, September 30, 2007
    
    
    3,550,000
    
    
    $
    88,750,000
    
    
    
    44,231,000
    
    
    $
    2,654,000
    
    
    $
    (8,156,000
    )
    
    $
    572,017,000
    
    
    $
    (91,153,000
    )
    
    $
    110,000
    
    
    $
    564,222,000
  6




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##### Table of Contents



CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statements of Cash Flows
 (unaudited)
 Nine months ended September 30,2007
    
    
    2006Cash flow from operating activities:Net income
    
    $
    16,408,000
    
    
    $
    10,826,000Adjustments 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
    
    
    231,000
    
    
    
    118,000Equity in (income) loss of unconsolidated joint ventures
    
    
    (463,000
    )
    
    
    40,000Distributions from unconsolidated joint venture
    
    
    397,000
    
    
    
    Gain on sale of interest in unconsolidated joint venture
    
    
    
    
    
    
    (141,000
    )Limited partners interest in Operating Partnership
    
    
    472,000
    
    
    
    262,000Straight-line rents receivable
    
    
    (2,686,000
    )
    
    
    (2,452,000
    )Depreciation and amortization
    
    
    29,921,000
    
    
    
    25,659,000Amortization of intangible lease liabilities
    
    
    (7,624,000
    )
    
    
    (7,713,000
    )Amortization relating to stock-based compensation
    
    
    1,456,000
    
    
    
    447,000Amortization of deferred financing costs
    
    
    1,152,000
    
    
    
    1,003,000Increases/decreases in operating assets and liabilities:Cash at consolidated joint ventures
    
    
    40,000
    
    
    
    652,000Rents and other receivables, net
    
    
    (899,000
    )
    
    
    (1,087,000
    )Other assets
    
    
    (5,343,000
    )
    
    
    (4,270,000
    )Accounts payable, accrued expenses and other
    
    
    3,769,000
    
    
    
    3,263,000Net cash provided by operating activities
    
    
    36,831,000
    
    
    
    26,607,000Cash flow from investing activities:Expenditures for real estate and improvements
    
    
    (134,014,000
    )
    
    
    (150,468,000
    )Investment in unconsolidated joint ventures
    
    
    (8,000
    )
    
    
    Proceeds from sale of interest in unconsolidated joint venture
    
    
    
    
    
    
    1,466,000Construction escrows and other
    
    
    (1,033,000
    )
    
    
    (3,621,000
    )Net cash (used in) investing activities
    
    
    (135,055,000
    )
    
    
    (152,623,000
    )Cash flow from financing activities:Net advances (repayments) from line of credit
    
    
    118,420,000
    
    
    
    67,650,000Proceeds from sales of common stock
    
    
    3,910,000
    
    
    
    74,053,000Proceeds from mortgage financings
    
    
    25,693,000
    
    
    
    26,333,000Mortgage repayments
    
    
    (8,468,000
    )
    
    
    (5,263,000
    )Contribution from minority interest partner
    
    
    1,048,000
    
    
    
    Distributions in excess of earnings from consolidated joint venture
minority interests
    
    
    
    
    
    
    (176,000
    )Distributions to limited partners
    
    
    (1,336,000
    )
    
    
    (1,111,000
    )Preferred distribution requirements
    
    
    (5,907,000
    )
    
    
    (5,907,000
    )Distributions to common shareholders
    
    
    (29,823,000
    )
    
    
    (21,320,000
    )Payment of deferred financing costs
    
    
    (2,050,000
    )
    
    
    (926,000
    )Net cash provided by financing activities
    
    
    101,487,000
    
    
    
    133,333,000Net increase in cash and cash equivalents
    
    
    3,263,000
    
    
    
    7,317,000Cash and cash equivalents at beginning of period
    
    
    17,885,000
    
    
    
    8,601,000Cash and cash equivalents at end of period
    
    $
    21,148,000
    
    
    $
    15,918,000
  7




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##### Table of Contents



Cedar Shopping Centers, Inc.
 
 Notes to Consolidated Financial Statements
 September 30, 2007
 (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
September 30, 2007
(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
September 30, 2007
(unaudited)
   Three months ended September 30,
    
    Nine months ended September 30,2007
    
    2006
    
    2007
    
    2006Revenues:Rents
    
    $
    297,000
    
    
    $
    288,000
    
    
    $
    877,000
    
    
    $
    866,000Expense recoveries
    
    
    71,000
    
    
    
    50,000
    
    
    
    233,000
    
    
    
    194,000Total revenues
    
    
    368,000
    
    
    
    338,000
    
    
    
    1,110,000
    
    
    
    1,060,000Expenses:Operating, maintenance and management
    
    
    32,000
    
    
    
    27,000
    
    
    
    142,000
    
    
    
    94,000Real estate and other property-related taxes
    
    
    84,000
    
    
    
    58,000
    
    
    
    225,000
    
    
    
    175,000Depreciation and amortization
    
    
    75,000
    
    
    
    79,000
    
    
    
    225,000
    
    
    
    231,000191,000
    
    
    
    164,000
    
    
    
    592,000
    
    
    
    500,000Operating income
    
    
    177,000
    
    
    
    174,000
    
    
    
    518,000
    
    
    
    560,000Limited partners interest
    
    
    (8,000
    )
    
    
    (9,000
    )
    
    
    (22,000
    )
    
    
    (28,000
    )Income from discontinued operations
    
    $
    169,000
    
    
    $
    165,000
    
    
    $
    496,000
    
    
    $
    532,000
 10




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
  Intangible Lease Asset/Liability
    11




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
   Cash and Cash Equivalents
  Restricted Cash
  Rents and Other Receivables
  12




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
   Concentration of Credit Risk
  Deferred Charges, Net
  Sep 30,
    
    
    Dec 31,2007
    
    
    2006Deferred lease origination costs (1)
    
    $
    16,867,000
    
    
    $
    14,877,000Deferred financing costs (2)
    
    
    6,837,000
    
    
    
    5,939,000Other deferred charges
    
    
    4,170,000
    
    
    
    1,452,000$
    27,874,000
    
    
    $
    22,268,000
 
 (1)
    
    Deferred lease origination costs include intangible lease assets resulting from purchase
accounting allocations of $12,501,000 and $11,523,000, respectively.(2)
    
    Deferred financing costs are incurred in connection with the Companys secured revolving
credit facility and other long-term debt.  13




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
  Income Taxes
   SAB 108
  Fair Value of Financial Assets and Liabilities
  14




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
   Earnings Per Share
  Stock-Based Compensation
   15




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
  Three months ended Sep 30,
    
    
    Nine months ended Sep 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Restricted share grants
    
    
    
    
    
    
    4,000
    
    
    
    179,000
    
    
    
    15,000Average fair value per share
    
    $
    
    
    
    $
    14.89
    
    
    $
    14.52
    
    
    $
    14.72Recorded as deferred compensation
    
    $
    
    
    
    $
    63,000
    
    
    $
    2,606,000
    
    
    $
    228,000Total charged to operations
    
    $
    302,000
    
    
    $
    176,000
    
    
    $
    1,456,000
    
    
    $
    447,000Non-vested shares:Non-vested, beginning of period
    
    
    382,000
    
    
    
    107,000
    
    
    
    203,000
    
    
    
    96,000Grants
    
    
    
    
    
    
    4,000
    
    
    
    179,000
    
    
    
    15,000Vested during period
    
    
    (9,000
    )
    
    
    (3,000
    )
    
    
    (9,000
    )
    
    
    (3,000
    )Forfeitures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-vested, end of period
    
    
    373,000
    
    
    
    108,000
    
    
    
    373,000
    
    
    
    108,000Value of shares vested during the
period (based on grant date
fair value)
    
    $
    120,000
    
    
    $
    40,000
    
    
    $
    120,000
    
    
    $
    40,000
 16




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
    17




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
 Supplemental consolidated statement of cash flows information
 Nine months ended Sep 30,2007
    
    
    2006Supplemental disclosure of cash activities:Interest paid (including interest capitalized of
$3,066,000 and $2,625,000, respectively)
    
    $
    28,892,000
    
    
    $
    24,644,000Supplemental disclosure of non-cash activities:Additions to deferred compensation plans
    
    
    2,606,000
    
    
    
    228,000Assumption of mortgage loans payable
    
    
    (120,664,000
    )
    
    
    (55,983,000
    )Issuance of OP Units
    
    
    (18,000
    )
    
    
    (4,260,000
    )Conversion of OP Units into common stock
    
    
    45,000
    
    
    
    Purchase accounting allocations:Intangible lease assets
    
    
    21,001,000
    
    
    
    25,826,000Intangible lease liabilities
    
    
    (10,516,000
    )
    
    
    (30,532,000
    )Net valuation decreases (increases) in assumed
mortgage loans payable (a)
    
    
    447,000
    
    
    
    (484,000
    )De-consolidation of Red Lion joint venture:Real estate, net
    
    
    
    
    
    $
    18,365,000Mortgage loans payable
    
    
    
    
    
    
    (16,310,000
    )Other assets/liabilities, net
    
    
    
    
    
    
    1,721,000Minority interest
    
    
    
    
    
    
    (2,411,000
    )Investment in and advances to unconsolidated
joint venture, as of January 1, 2006
    
    
    
    
    
    $
    1,365,000
 
 (a)
    
    The net valuation decreases (increases) in assumed mortgage loans payable result from adjusting
the contract rates of interest (ranging from 4.9% to 6.2% per annum in 2007 and from 5.6% to 7.3%
per annum in 2006) to market rates of interest (ranging from 5.5% to 6.5% in 2007 and from 5.7 to
6.0% per annum in 2006).  Note 3. Common/Preferred Stock Issuances
  18




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
     Note 4. Real Estate
    19




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
    Joint Venture Arrangements
  20




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
   Pro Forma Financial Information (unaudited)
  Three months ended Sep 30,
    
    Nine months ended Sep 30,2007
    
    2006
    
    2007
    
    2006Revenues
    
    $
    39,646,000
    
    
    $
    38,306,000
    
    
    $
    119,475,000
    
    
    $
    115,436,000Net income applicable to common shareholders
    
    $
    3,468,000
    
    
    $
    1,130,000
    
    
    $
    8,721,000
    
    
    $
    2,790,000Per common share:Basic
    
    $
    0.08
    
    
    $
    0.03
    
    
    $
    0.20
    
    
    $
    0.09Diluted
    
    $
    0.08
    
    
    $
    0.03
    
    
    $
    0.20
    
    
    $
    0.09Weighted average number of common shares outstanding:Basic
    
    
    44,231,000
    
    
    
    34,484,000
    
    
    
    44,179,000
    
    
    
    31,660,000Diluted
    
    
    44,234,000
    
    
    
    34,488,000
    
    
    
    44,183,000
    
    
    
    31,831,000
 Real Estate Pledged
  21




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
 Note 5. Mortgage Loans Payable and Secured Revolving Credit Facility
  Sep 30, 2007

    
    Dec 31, 2006Interest rates

    
    
    
    
    
    Interest ratesBalance
    
    
    Weighted
    
    
    
    
    
    
    Balance
    
    
    WeightedDescription
    
    outstanding
    
    
    average
    
    
    Range
    
    
    outstanding
    
    
    average
    
    
    RangeFixed-rate mortgages
    
    $
    632,268,000
    
    
    
    5.7
    %
    
    
    4.8% - 7.6
    %
    
    $
    494,764,000
    
    
    
    5.7
    %
    
    
    4.8% - 7.6
    %Variable-rate mortgage
    
    
    4,777,000
    
    
    
    7.9
    %
    
    
    7.9
    %
    
    
    4,839,000
    
    
    
    8.1
    %
    
    
    8.1
    %637,045,000
    
    
    
    5.8
    %
    
    
    
    
    
    
    499,603,000
    
    
    
    5.7
    %Secured revolving credit facility
    
    
    186,890,000
    
    
    
    6.7
    %
    
    
    
    
    
    
    68,470,000
    
    
    
    6.6
    %$
    823,935,000
    
    
    
    6.0
    %
    
    
    
    
    
    $
    568,073,000
    
    
    
    5.8
    %
 Secured Revolving Credit Facility
   22




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(unaudited)
 Note 6. Subsequent Events
    23




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Executive Summary
    24




---



##### Table of Contents



Summary of Critical Accounting Policies
   Revenue Recognition
   25




---



##### Table of Contents



Real Estate Investments
     26




---



##### Table of Contents



Stock-Based Compensation
   27




---



##### Table of Contents



Results of Operations
  Comparison of the quarter ended September 30, 2007 to the quarter ended September 30, 2006
 PropertiesheldThree months ended Sep 30,
    
    
    
    
    
    Percentage
    
    
    
    
    
    throughout2007
    
    2006
    
    Increase
    
    change
    
    Acquisitions
    
    both periodsRents and expense recoveries
    
    $
    37,362,000
    
    
    $
    31,345,000
    
    
    $
    6,017,000
    
    
    
    19
    %
    
    $
    5,279,000
    
    
    $
    738,000Property operating expenses
    
    
    9,529,000
    
    
    
    8,496,000
    
    
    
    1,033,000
    
    
    
    12
    %
    
    
    1,060,000
    
    
    
    (27,000
    )Depreciation and
amortization
    
    
    10,065,000
    
    
    
    8,923,000
    
    
    
    1,142,000
    
    
    
    13
    %
    
    
    1,708,000
    
    
    
    (566,000
    )General and administrative
    
    
    1,847,000
    
    
    
    1,431,000
    
    
    
    416,000
    
    
    
    29
    %
    
    
    n/a
    
    
    
    n/aNon-operating (income) and
expense, net (1)
    
    
    9,809,000
    
    
    
    8,742,000
    
    
    
    1,067,000
    
    
    
    12
    %
    
    
    n/a
    
    
    
    n/a
 
 (1)
    
    Non-operating income and expense consists principally of interest expense, amortization of deferred financing costs,
and equity in income (loss) of unconsolidated joint ventures. Properties held throughout both periods
 28




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##### Table of Contents



General and administrative expenses.
 Non-operating income and expense, net.
 Comparison of the nine months ended September 30, 2007 to the nine months ended September 30,
2006
 PropertiesheldNine months ended Sep 30,
    
    
    
    
    
    Percentage
    
    Acquisitions/
    
    throughout2007
    
    2006
    
    Increase
    
    change
    
    dispositions
    
    both periodsRents and expense recoveries
    
    $
    109,308,000
    
    
    $
    90,430,000
    
    
    $
    18,878,000
    
    
    
    21
    %
    
    $
    17,476,000
    
    
    $
    1,402,000Property operating expenses
    
    
    29,245,000
    
    
    
    25,885,000
    
    
    
    3,360,000
    
    
    
    13
    %
    
    
    3,571,000
    
    
    
    (211,000
    )Depreciation and
amortization
    
    
    29,696,000
    
    
    
    25,428,000
    
    
    
    4,268,000
    
    
    
    17
    %
    
    
    5,523,000
    
    
    
    (1,255,000
    )General and administrative
    
    
    7,065,000
    
    
    
    4,220,000
    
    
    
    2,845,000
    
    
    
    67
    %
    
    
    n/a
    
    
    
    n/aNon-operating (income) and
expense, net (1)
    
    
    26,480,000
    
    
    
    24,165,000
    
    
    
    2,315,000
    
    
    
    10
    %
    
    
    n/a
    
    
    
    n/a
 
 (1)
    
    Non-operating income and expense consists principally of interest expense, amortization of deferred financing costs,
and equity in income (loss) of unconsolidated joint ventures. Properties held throughout both periods
 General and administrative expenses.
 29




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##### Table of Contents



Non-operating income and expense, net.
 Liquidity and Capital Resources
     30




---



##### Table of Contents



Net Cash Flows
  Operating Activities
  Investing Activities
  31




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Financing Activities
  Funds From Operations
   32




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##### Table of Contents



Three months ended September 30,
    
    Nine months ended September 30,2007
    
    2006
    
    2007
    
    2006Net income applicable to common
shareholders
    
    $
    3,925,000
    
    
    $
    1,785,000
    
    
    $
    10,501,000
    
    
    $
    4,919,000Add (deduct):Real estate depreciation and amortization
    
    
    10,078,000
    
    
    
    8,963,000
    
    
    
    29,745,000
    
    
    
    25,563,000Limited partners interest
    
    
    179,000
    
    
    
    95,000
    
    
    
    474,000
    
    
    
    262,000Minority interests in consolidated joint ventures
    
    
    333,000
    
    
    
    324,000
    
    
    
    1,028,000
    
    
    
    943,000Minority interests share of FFO applicable to
consolidated joint ventures
    
    
    (448,000
    )
    
    
    (438,000
    )
    
    
    (1,365,000
    )
    
    
    (1,350,000
    )Equity in (income) loss of unconsolidated
joint ventures
    
    
    (150,000
    )
    
    
    
    
    
    
    (463,000
    )
    
    
    40,000Gain on sale of interest in unconsolidated joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (141,000
    )FFO from unconsolidated joint ventures
    
    
    233,000
    
    
    
    
    
    
    
    701,000
    
    
    
    (5,000
    )Funds from operations
    
    $
    14,150,000
    
    
    $
    10,729,000
    
    
    $
    40,621,000
    
    
    $
    30,231,000FFO per common share (assuming conversion
of OP Units):Basic
    
    $
    0.31
    
    
    $
    0.30
    
    
    $
    0.88
    
    
    $
    0.91Diluted
    
    $
    0.31
    
    
    $
    0.30
    
    
    $
    0.88
    
    
    $
    0.90Weighted average number of common shares:Shares used in determination of basic earnings
per share
    
    
    44,231,000
    
    
    
    34,484,000
    
    
    
    44,179,000
    
    
    
    31,660,000Additional shares assuming conversion
of OP Units (basic)
    
    
    1,982,000
    
    
    
    1,837,000
    
    
    
    1,984,000
    
    
    
    1,675,000Shares used in determination of basic FFO per share
    
    
    46,213,000
    
    
    
    36,321,000
    
    
    
    46,163,000
    
    
    
    33,335,000Shares used in determination of diluted earnings
per share
    
    
    44,234,000
    
    
    
    34,488,000
    
    
    
    44,183,000
    
    
    
    31,831,000Additional shares assuming conversion
of OP Units (diluted)
    
    
    1,981,000
    
    
    
    1,846,000
    
    
    
    1,993,000
    
    
    
    1,683,000Shares used in determination of diluted FFO per share
    
    
    46,215,000
    
    
    
    36,334,000
    
    
    
    46,176,000
    
    
    
    33,514,000
 33




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##### Table of Contents



Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
  34




---



##### Table of Contents



35




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##### Table of Contents



Part II Other Information
 
 Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    The approval of an amendment to the Companys Articles of Incorporation to
increase the number of authorized shares of common stock.2.
    
    The approval of an amendment to the Companys Articles of Incorporation to
increase the number of authorized shares of preferred stock and to prohibit use of such
preferred stock for anti-takeover purposes.
  Withheld/
    
    
    
    
    
    BrokerFor
    
    Against
    
    Abstain
    
    Non-Votes1. Increasing authorized shares
of common stock
    
    
    32,976,877
    
    
    
    8,057,167
    
    
    
    72,500
    
    
    
    02. Increasing authorized shares of
preferred stock and prohibiting
use of such preferred stock for
anit-takeover purposes
    
    
    33,524,817
    
    
    
    2,239,274
    
    
    
    100,464
    
    
    
    5,241,989
 
 Item 6. Exhibits
 Exhibit 3.1.a
    
    Articles of Incorporation of the Company, including all
amendments and articles supplementary previously filedExhibit 3.1.b
    
    Amendment to Articles of Incorporation of the Company filed
on September 18, 2007Exhibit 31
    
    Section 302 CertificationsExhibit 32
    
    Section 906 Certifications
 36




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##### Table of Contents



SIGNATURES
   By:
    
    /s/ LEO S. ULLMAN

Leo S. Ullman
    
    
    
    By:
    
    /s/ LAWRENCE E. KREIDER, JR.

Lawrence E. Kreider, Jr.Chairman of the Board, Chief
Executive Officer and President (Principal executive officer)
    
    
    
    
    
    Chief Financial Officer
(Principal financial officer)
  37