##### 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, 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 August 3, 2007, there were 44,230,866 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, 2007 (unaudited) and December 31,2006
    
    4Consolidated Statements of Income (unaudited)  Three months and six months ended June 30, 2007 and 2006
    
    5Consolidated Statement of Shareholders Equity (unaudited)  Six months ended June 30, 2007
    
    6Consolidated Statements of Cash Flows (unaudited)  Six months ended June 30, 2007 and 2006
    
    7Notes to Consolidated Financial Statements (unaudited)  June 30, 2007
    
    8-22Item 2.
    
    Managements Discussion and Analysis of Financial Condition And Results of Operations
    
    23-32Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    32Item 4.
    
    Controls and Procedures
    
    33Part II. Other InformationItem 4.
    
    Submission of Matters to a Vote of Security Holders
    
    34Item 6.
    
    Exhibits
    
    34Signatures
    
    
    
    35CERTIFICATION OF CHIEF EXECUTIVE AND CHIEF FINANCIAL OFFICERSCERTIFICATION OF CHIEF EXECUTIVE AND CHIEF FINANCIAL OFFICERS--SECTION 906
  2




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Forward-Looking Statements
  3




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CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Balance Sheets
 June 30
    
    
    December 31,2007
    
    
    2006(unaudited)AssetsReal estate:Land
    
    $
    271,915,000
    
    
    $
    248,108,000Buildings and improvements
    
    
    1,098,290,000
    
    
    
    982,294,0001,370,205,000
    
    
    
    1,230,402,000Less accumulated depreciation
    
    
    (82,495,000
    )
    
    
    (64,458,000
    )Real estate, net
    
    
    1,287,710,000
    
    
    
    1,165,944,000Property and related assets held for sale, net of
accumulated depreciation
    
    
    11,838,000
    
    
    
    11,493,000Investment in unconsolidated joint venture
    
    
    3,700,000
    
    
    
    3,644,000Cash and cash equivalents
    
    
    18,258,000
    
    
    
    17,885,000Restricted cash
    
    
    12,268,000
    
    
    
    11,507,000Rents and other receivables, net
    
    
    4,640,000
    
    
    
    4,187,000Straight-line rents receivable
    
    
    9,632,000
    
    
    
    7,870,000Other assets
    
    
    5,878,000
    
    
    
    6,921,000Deferred charges, net
    
    
    25,811,000
    
    
    
    22,268,000Total assets
    
    $
    1,379,735,000
    
    
    $
    1,251,719,000Liabilities and shareholders equityMortgage loans payable
    
    $
    561,762,000
    
    
    $
    499,603,000Secured revolving credit facility
    
    
    138,990,000
    
    
    
    68,470,000Accounts payable, accrued expenses, and other
    
    
    17,333,000
    
    
    
    17,435,000Unamortized intangible lease liabilities
    
    
    55,789,000
    
    
    
    53,160,000Total liabilities
    
    
    773,874,000
    
    
    
    638,668,000Minority interests in consolidated joint ventures
    
    
    10,363,000
    
    
    
    9,132,000Limited partners interest in Operating Partnership
    
    
    25,606,000
    
    
    
    25,969,000Shareholders equity:Preferred stock ($.01 par value, $25.00 per share
liquidation value, 5,000,000 shares authorized, 3,550,000
shares issued and outstanding)
    
    
    88,750,000
    
    
    
    88,750,000Common stock ($.06 par value, 50,000,000 shares
authorized, 44,231,000 and 43,773,000 shares, respectively,
issued and outstanding)
    
    
    2,654,000
    
    
    
    2,626,000Treasury stock (616,000 and 502,000 shares, respectively, at
cost)
    
    
    (8,189,000
    )
    
    
    (6,378,000
    )Additional paid-in capital
    
    
    571,649,000
    
    
    
    564,637,000Cumulative distributions in excess of net income
    
    
    (85,126,000
    )
    
    
    (71,831,000
    )Accumulated other comprehensive income
    
    
    154,000
    
    
    
    146,000Total shareholders equity
    
    
    569,892,000
    
    
    
    577,950,000Total liabilities and shareholders equity
    
    $
    1,379,735,000
    
    
    $
    1,251,719,000
  4




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CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statements of Income
 (unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Rents
    
    $
    29,725,000
    
    
    $
    24,078,000
    
    
    $
    57,999,000
    
    
    $
    47,961,000Expense recoveries
    
    
    6,755,000
    
    
    
    5,595,000
    
    
    
    13,947,000
    
    
    
    11,124,000Other
    
    
    101,000
    
    
    
    287,000
    
    
    
    453,000
    
    
    
    493,000Total revenues
    
    
    36,581,000
    
    
    
    29,960,000
    
    
    
    72,399,000
    
    
    
    59,578,000Expenses:Operating, maintenance and management
    
    
    5,658,000
    
    
    
    5,305,000
    
    
    
    12,657,000
    
    
    
    11,435,000Real estate and other property-related taxes
    
    
    3,552,000
    
    
    
    3,076,000
    
    
    
    7,059,000
    
    
    
    5,954,000General and administrative
    
    
    3,220,000
    
    
    
    1,410,000
    
    
    
    5,218,000
    
    
    
    2,789,000Depreciation and amortization
    
    
    9,821,000
    
    
    
    7,981,000
    
    
    
    19,631,000
    
    
    
    16,505,000Total expenses
    
    
    22,251,000
    
    
    
    17,772,000
    
    
    
    44,565,000
    
    
    
    36,683,000Operating income
    
    
    14,330,000
    
    
    
    12,188,000
    
    
    
    27,834,000
    
    
    
    22,895,000Non-operating income and expense:Interest expense
    
    
    (9,185,000
    )
    
    
    (7,742,000
    )
    
    
    (16,753,000
    )
    
    
    (15,099,000
    )Amortization of deferred financing costs
    
    
    (377,000
    )
    
    
    (333,000
    )
    
    
    (729,000
    )
    
    
    (662,000
    )Interest income
    
    
    223,000
    
    
    
    121,000
    
    
    
    498,000
    
    
    
    237,000Equity in income (loss) of unconsolidated joint ventures
    
    
    157,000
    
    
    
    (15,000
    )
    
    
    313,000
    
    
    
    (40,000
    )Gain on sale of interest in unconsolidated joint venture
    
    
    
    
    
    
    141,000
    
    
    
    
    
    
    
    141,000Total non-operating income and expense
    
    
    (9,182,000
    )
    
    
    (7,828,000
    )
    
    
    (16,671,000
    )
    
    
    (15,423,000
    )Income before minority and limited partners interests
and discontinued operations
    
    
    5,148,000
    
    
    
    4,360,000
    
    
    
    11,163,000
    
    
    
    7,472,000Minority interests in consolidated joint ventures
    
    
    (300,000
    )
    
    
    (309,000
    )
    
    
    (695,000
    )
    
    
    (619,000
    )Limited partners interest in Operating Partnership
    
    
    (125,000
    )
    
    
    (105,000
    )
    
    
    (281,000
    )
    
    
    (148,000
    )Income from continuing operations
    
    
    4,723,000
    
    
    
    3,946,000
    
    
    
    10,187,000
    
    
    
    6,705,000Discontinued operations, net of limited partners interest
    
    
    182,000
    
    
    
    172,000
    
    
    
    327,000
    
    
    
    367,000Net income
    
    
    4,905,000
    
    
    
    4,118,000
    
    
    
    10,514,000
    
    
    
    7,072,000Preferred distribution requirements
    
    
    (1,984,000
    )
    
    
    (1,984,000
    )
    
    
    (3,938,000
    )
    
    
    (3,938,000
    )Net income applicable to common shareholders
    
    $
    2,921,000
    
    
    $
    2,134,000
    
    
    $
    6,576,000
    
    
    $
    3,134,000Per common share (basic):Income from continuing operations, net of preferred
distribution requirements
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.14
    
    
    $
    0.09Discontinued operations, net of limited partners interest
    
    
    
    
    
    
    
    
    
    $
    0.01
    
    
    
    0.01Net income applicable to common shareholders
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.15
    
    
    $
    0.10Per common share (diluted)Income from continuing operations, net of preferred
distribution requirements
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.14
    
    
    $
    0.09Discontinued operations, net of limited partners interest
    
    
    
    
    
    
    
    
    
    $
    0.01
    
    
    
    0.01Net income applicable to common shareholders
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.15
    
    
    $
    0.10Dividends to common shareholders
    
    $
    9,942,000
    
    
    $
    6,867,000
    
    
    $
    19,871,000
    
    
    $
    13,568,000Per common share
    
    $
    0.225
    
    
    $
    0.225
    
    
    $
    0.450
    
    
    $
    0.450Weighted average number of common shares outstanding:Basic
    
    
    44,194,000
    
    
    
    30,618,000
    
    
    
    44,153,000
    
    
    
    30,248,000Diluted
    
    
    44,198,000
    
    
    
    30,863,000
    
    
    
    44,158,000
    
    
    
    30,504,000
  5




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CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statement of Shareholders Equity
 Six months ended June 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,514,000
    
    
    
    
    
    
    
    10,514,000Unrealized gain (loss) on change in fair value
of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,000
    
    
    
    8,000Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,522,000Deferred compensation activity, net
    
    
    
    
    
    
    
    
    
    
    179,000
    
    
    
    11,000
    
    
    
    (1,811,000
    )
    
    
    3,111,000
    
    
    
    
    
    
    
    
    
    
    
    1,311,000Net 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,938,000
    )
    
    
    
    
    
    
    (3,938,000
    )Dividends to common shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,871,000
    )
    
    
    
    
    
    
    (19,871,000
    )Reallocation adjustment of limited partners
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (259,000
    )
    
    
    
    
    
    
    
    
    
    
    (259,000
    )Balance, June 30, 2007
    
    
    3,550,000
    
    
    $
    88,750,000
    
    
    
    44,231,000
    
    
    $
    2,654,000
    
    
    $
    (8,189,000
    )
    
    $
    571,649,000
    
    
    $
    (85,126,000
    )
    
    $
    154,000
    
    
    $
    569,892,000
  6




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##### Table of Contents



CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statements of Cash Flows
 (unaudited)
 Six months ended June 30,2007
    
    
    2006Cash flow from operating activities:Net income
    
    $
    10,514,000
    
    
    $
    7,072,000Adjustments 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
    
    
    163,000
    
    
    
    59,000Equity in (income) loss of unconsolidated joint ventures
    
    
    (313,000
    )
    
    
    40,000Distributions from unconsolidated joint venture
    
    
    265,000
    
    
    
    Gain on sale of interest in unconsolidated joint venture
    
    
    
    
    
    
    (141,000
    )Limited partners interest in Operating Partnership
    
    
    295,000
    
    
    
    167,000Straight-line rents receivable
    
    
    (1,806,000
    )
    
    
    (1,751,000
    )Depreciation and amortization
    
    
    19,781,000
    
    
    
    16,657,000Amortization of intangible lease liabilities
    
    
    (5,098,000
    )
    
    
    (4,671,000
    )Amortization relating to stock-based compensation
    
    
    1,154,000
    
    
    
    271,000Amortization of deferred financing costs
    
    
    729,000
    
    
    
    662,000Increases/decreases in operating assets and liabilities:Cash at consolidated joint ventures
    
    
    87,000
    
    
    
    671,000Rents and other receivables, net
    
    
    (453,000
    )
    
    
    (290,000
    )Other assets
    
    
    (23,000
    )
    
    
    (610,000
    )Accounts payable, accrued expenses and other
    
    
    (395,000
    )
    
    
    (727,000
    )Net cash provided by operating activities
    
    
    24,900,000
    
    
    
    17,409,000Cash flow from investing activities:Expenditures for real estate and improvements
    
    
    (92,646,000
    )
    
    
    (43,696,000
    )Investment in unconsolidated joint ventures
    
    
    (8,000
    )
    
    
    Proceeds from sale of interest in unconsolidated joint venture
    
    
    
    
    
    
    1,466,000Construction escrows and other
    
    
    (474,000
    )
    
    
    (2,759,000
    )Net cash (used in) investing activities
    
    
    (93,128,000
    )
    
    
    (44,989,000
    )Cash flow from financing activities:Net advances (repayments) from line of credit
    
    
    70,520,000
    
    
    
    (23,000,000
    )Proceeds from sales of common stock
    
    
    3,910,000
    
    
    
    61,560,000Proceeds from mortgage financings
    
    
    23,000,000
    
    
    
    14,588,000Mortgage repayments
    
    
    (4,125,000
    )
    
    
    (3,552,000
    )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
    
    
    (890,000
    )
    
    
    (698,000
    )Preferred distribution requirements
    
    
    (3,938,000
    )
    
    
    (3,938,000
    )Distributions to common shareholders
    
    
    (19,871,000
    )
    
    
    (13,568,000
    )Payment of deferred financing costs
    
    
    (1,053,000
    )
    
    
    (482,000
    )Net cash provided by financing activities
    
    
    68,601,000
    
    
    
    30,734,000Net increase in cash and cash equivalents
    
    
    373,000
    
    
    
    3,154,000Cash and cash equivalents at beginning of period
    
    
    17,885,000
    
    
    
    8,601,000Cash and cash equivalents at end of period
    
    $
    18,258,000
    
    
    $
    11,755,000
  7




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##### Table of Contents



Cedar Shopping Centers, Inc.
 
 Notes to Consolidated Financial Statements
 June 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
 June 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
 June 30, 2007
 (unaudited)
   Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Rents
    
    $
    290,000
    
    
    $
    289,000
    
    
    $
    580,000
    
    
    $
    578,000Expense recoveries
    
    
    79,000
    
    
    
    59,000
    
    
    
    162,000
    
    
    
    144,000Total revenues
    
    
    369,000
    
    
    
    348,000
    
    
    
    742,000
    
    
    
    722,000Expenses:Operating, maintenance and management
    
    
    32,000
    
    
    
    29,000
    
    
    
    110,000
    
    
    
    67,000Real estate and other property-related taxes
    
    
    71,000
    
    
    
    59,000
    
    
    
    141,000
    
    
    
    117,000Depreciation and amortization
    
    
    77,000
    
    
    
    79,000
    
    
    
    150,000
    
    
    
    152,000180,000
    
    
    
    167,000
    
    
    
    401,000
    
    
    
    336,000Operating income
    
    
    189,000
    
    
    
    181,000
    
    
    
    341,000
    
    
    
    386,000Limited partners interest
    
    
    (7,000
    )
    
    
    (9,000
    )
    
    
    (14,000
    )
    
    
    (19,000
    )Income from discontinued operations
    
    $
    182,000
    
    
    $
    172,000
    
    
    $
    327,000
    
    
    $
    367,000
 10




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##### Table of Contents



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




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##### Table of Contents



Cedar Shopping Centers, Inc.
 Notes to Consolidated Financial Statements
 June 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
June 30, 2007
(unaudited)
   Concentration of Credit Risk
  Deferred Charges, Net
  Jun 30,
    
    Dec 31,2007
    
    2006Deferred lease origination costs (1)
    
    $
    16,044,000
    
    
    $
    14,877,000Deferred financing costs (2)
    
    
    6,263,000
    
    
    
    5,939,000Other deferred charges
    
    
    3,504,000
    
    
    
    1,452,000$
    25,811,000
    
    
    $
    22,268,000
 
 (1)
    
    Deferred lease origination costs include intangible lease assets resulting from
purchase accounting allocations of
$11,726,000 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
June 30, 2007
(unaudited)
  Income Taxes
   Fair Value of Financial Assets and Liabilities
   14




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 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
June 30, 2007
(unaudited)
  Three months ended June 30,
    Six months ended June 30,2007
    
    2006
    
    2007
    
    2006Restricted share grants
    
    
    39,000
    
    
    
    11,000
    
    
    
    179,000
    
    
    
    11,000Average fair value per share
    
    $
    14.35
    
    
    $
    14.66
    
    
    $
    14.52
    
    
    $
    14.66Recorded as deferred compensation
    
    $
    562,000
    
    
    $
    165,000
    
    
    $
    2,606,000
    
    
    $
    165,000Total charged to operations
    
    $
    714,000
    
    
    $
    158,000
    
    
    $
    1,154,000
    
    
    $
    271,000Non-vested shares:Non-vested, beginning of period
    
    
    343,000
    
    
    
    96,000
    
    
    
    203,000
    
    
    
    96,000Grants
    
    
    39,000
    
    
    
    11,000
    
    
    
    179,000
    
    
    
    11,000Vested during period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeitures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-vested, end of period
    
    
    382,000
    
    
    
    107,000
    
    
    
    382,000
    
    
    
    107,000Value of shares vested during the
period (based on grant date
fair value)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    16




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2007
(unaudited)
  SAB 108
  17




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2007
(unaudited)
 Supplemental consolidated statement of cash flows information
 Six months ended June 30,2007
    
    
    2006Supplemental disclosure of cash activities:Interest paid (including interest capitalized of
$1,865,000 and $1,547,000, respectively)
    
    $
    18,358,000
    
    
    $
    16,628,000Supplemental disclosure of non-cash activities:Additions to deferred compensation plans
    
    
    2,606,000
    
    
    
    165,000Assumption of mortgage loans payable
    
    
    (42,812,000
    )
    
    
    (36,844,000
    )Issuance of OP Units
    
    
    (18,000
    )
    
    
    (4,260,000
    )Conversion of OP Units into common stock
    
    
    45,000
    
    
    
    Purchase accounting allocations:Intangible lease assets
    
    
    15,951,000
    
    
    
    17,945,000Intangible lease liabilities
    
    
    (7,727,000
    )
    
    
    (23,116,000
    )Net valuation increases in assumed mortgage
loans payable (a)
    
    
    (472,000
    )
    
    
    (809,000
    )Deconsolidation 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 increases in assumed mortgage loans payable result from
adjusting the contract rates of interest (ranging from 4.9% to 5.9% per annum in 2007 and from 7.0%
to 7.3% per annum in 2006) to market rates of interest (5.5% in 2007 and ranging 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
June 30, 2007
(unaudited)
    Note 4. Real Estate
    19




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2007
(unaudited)
      Pro Forma Financial Information (unaudited)
  20




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2007
(unaudited)
  Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    36,735,000
    
    
    $
    35,787,000
    
    
    $
    74,642,000
    
    
    $
    72,071,000Net income applicable to common shareholders
    
    $
    2,899,000
    
    
    $
    1,494,000
    
    
    $
    6,222,000
    
    
    $
    2,334,000Per common share:Basic
    
    $
    0.07
    
    
    $
    0.05
    
    
    $
    0.14
    
    
    $
    0.08Diluted
    
    $
    0.07
    
    
    $
    0.05
    
    
    $
    0.14
    
    
    $
    0.08Weighted average number of common shares outstanding:Basic
    
    
    44,194,000
    
    
    
    30,618,000
    
    
    
    44,153,000
    
    
    
    30,248,000Diluted
    
    
    44,198,000
    
    
    
    30,863,000
    
    
    
    44,158,000
    
    
    
    30,504,000
 Note 5. Mortgage Loans Payable and Secured Revolving Credit Facility
  At June 30, 2007
    
    
    
    At December 31, 2006Interest rates
    
    
    
    
    
    
    
    
    Interest ratesBalance
    
    
    
    Weighted
    
    
    
    
    
    
    
    Balance
    
    
    
    WeightedDescription
    
    outstanding
    
    
    
    average
    
    
    Range
    
    
    
    outstanding
    
    
    
    average
    
    
    RangeFixed-rate mortgages
    
    $
    556,964,000
    
    
    
    
    5.7
    %
    
    
    4.8% - 7.6%
    
    
    
    $
    494,764,000
    
    
    
    
    5.7
    %
    
    
    4.8% - 7.6%Variable-rate mortgage
    
    
    4,798,000
    
    
    
    
    8.1
    %
    
    
    8.1
    
    
    
    
    4,839,000
    
    
    
    
    8.1
    %
    
    
    8.1561,762,000
    
    
    
    
    5.7
    %
    
    
    
    
    
    
    
    499,603,000
    
    
    
    
    5.7
    %Secured revolving
credit facility
    
    
    138,990,000
    
    
    
    
    6.4
    %
    
    
    
    
    
    
    
    68,470,000
    
    
    
    
    6.6
    %$
    700,752,000
    
    
    
    
    5.8
    %
    
    
    
    
    
    
    $
    568,073,000
    
    
    
    
    5.8
    %
 Secured Revolving Credit Facility
  21




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##### Table of Contents



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
June 30, 2007
(unaudited)
   Note 6. Subsequent Events
   22




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Executive Summary
    23




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##### Table of Contents



Summary of Critical Accounting Policies
   Revenue Recognition
   24




---



##### Table of Contents



Real Estate Investments
     25




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##### Table of Contents



Stock-Based Compensation
   26




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##### Table of Contents



Results of Operations
  Comparison of the quarter ended June 30, 2007 to the quarter ended June 30, 2006
 Properties heldThree months ended June 30,
    
    
    
    
    
    Percentage
    
    Acquisitions/
    
    throughout both2007
    
    2006
    
    Increase
    
    change
    
    dispositions
    
    periodsRents and expense recoveries
    
    $
    36,480,000
    
    
    $
    29,673,000
    
    
    $
    6,807,000
    
    
    
    23
    %
    
    $
    6,561,000
    
    
    $
    246,000Property operating expenses
    
    
    9,210,000
    
    
    
    8,381,000
    
    
    
    829,000
    
    
    
    10
    %
    
    
    986,000
    
    
    
    (157,000
    )Depreciation and amortization
    
    
    9,821,000
    
    
    
    7,981,000
    
    
    
    1,840,000
    
    
    
    23
    %
    
    
    2,130,000
    
    
    
    (290,000
    )General and administrative
    
    
    3,220,000
    
    
    
    1,410,000
    
    
    
    1,810,000
    
    
    
    128
    %
    
    
    n/a
    
    
    
    n/aNon-operating (income) and
expense, net (1)
    
    
    9,182,000
    
    
    
    7,828,000
    
    
    
    1,354,000
    
    
    
    17
    %
    
    
    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.
 27




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##### Table of Contents



General and administrative expenses.
 Non-operating income and expense, net.
 Comparison of the six months ended June 30, 2007 to the six months ended June 30, 2006
 PropertiesheldSix months ended June 30,
    
    
    
    
    
    Percentage
    
    Acquisitions/
    
    throughout2007
    
    2006
    
    Increase
    
    change
    
    dispositions
    
    both periodsRents and expense
recoveries
    
    $
    71,946,000
    
    
    $
    59,085,000
    
    
    $
    12,861,000
    
    
    
    22
    %
    
    $
    11,779,000
    
    
    $
    1,082,000Property operating
expenses
    
    
    19,716,000
    
    
    
    17,389,000
    
    
    
    2,327,000
    
    
    
    13
    %
    
    
    2,258,000
    
    
    
    69,000Depreciation and
amortization
    
    
    19,631,000
    
    
    
    16,505,000
    
    
    
    3,126,000
    
    
    
    19
    %
    
    
    3,772,000
    
    
    
    (646,000
    )General and administrative
    
    
    5,218,000
    
    
    
    2,789,000
    
    
    
    2,429,000
    
    
    
    87
    %
    
    
    n/a
    
    
    
    n/aNon-operating (income) and
expense, net (1)
    
    
    16,671,000
    
    
    
    15,423,000
    
    
    
    1,248,000
    
    
    
    8
    %
    
    
    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.
 28




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Non-operating income and expense, net.
 Liquidity and Capital Resources
     29




---



##### Table of Contents



Net Cash Flows
  Operating Activities
  Investing Activities
  Financing Activities
  30




---



##### Table of Contents



Funds From Operations
    31




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##### Table of Contents



Three months ended June 30,
    
    Six months ended June 30,2007
    
    2006
    
    2007
    
    2006Net income applicable to common
shareholders
    
    $
    2,921,000
    
    
    $
    2,134,000
    
    
    $
    6,576,000
    
    
    $
    3,134,000Add (deduct):Real estate depreciation and amortization
    
    
    9,837,000
    
    
    
    8,029,000
    
    
    
    19,667,000
    
    
    
    16,600,000Limited partners interest
    
    
    132,000
    
    
    
    114,000
    
    
    
    295,000
    
    
    
    167,000Minority interests in consolidated joint ventures
    
    
    300,000
    
    
    
    309,000
    
    
    
    695,000
    
    
    
    619,000Minority interests share of FFO applicable to
consolidated joint ventures
    
    
    (426,000
    )
    
    
    (446,000
    )
    
    
    (917,000
    )
    
    
    (912,000
    )Equity in (income) loss of unconsolidated
joint ventures
    
    
    (157,000
    )
    
    
    15,000
    
    
    
    (313,000
    )
    
    
    40,000Gain on sale of interest in unconsolidated joint venture
    
    
    
    
    
    
    (141,000
    )
    
    
    
    
    
    
    (141,000
    )FFO from unconsolidated joint ventures
    
    
    234,000
    
    
    
    (2,000
    )
    
    
    468,000
    
    
    
    (5,000
    )Funds from operations
    
    $
    12,841,000
    
    
    $
    10,012,000
    
    
    $
    26,471,000
    
    
    $
    19,502,000FFO per common share (assuming conversion
of OP Units):Basic
    
    $
    0.28
    
    
    $
    0.31
    
    
    $
    0.57
    
    
    $
    0.61Diluted
    
    $
    0.28
    
    
    $
    0.31
    
    
    $
    0.57
    
    
    $
    0.61Weighted average number of common shares:Shares used in determination of basic earnings
per share
    
    
    44,194,000
    
    
    
    30,618,000
    
    
    
    44,153,000
    
    
    
    30,248,000Additional shares assuming conversion
of OP Units (basic)
    
    
    1,984,000
    
    
    
    1,632,000
    
    
    
    1,985,000
    
    
    
    1,594,000Shares used in determination of basic FFO per share
    
    
    46,178,000
    
    
    
    32,250,000
    
    
    
    46,138,000
    
    
    
    31,842,000Shares used in determination of diluted earnings
per share
    
    
    44,198,000
    
    
    
    30,863,000
    
    
    
    44,158,000
    
    
    
    30,504,000Additional shares assuming conversion
of OP Units (diluted)
    
    
    1,997,000
    
    
    
    1,638,000
    
    
    
    1,998,000
    
    
    
    1,601,000Shares used in determination of diluted FFO per share
    
    
    46,195,000
    
    
    
    32,501,000
    
    
    
    46,156,000
    
    
    
    32,105,000
 Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  32




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Item 4. Controls and Procedures
   33




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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 Articles of Incorporation
to increase the number of authorized shares of common and preferred stock.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, 2007.
  Withheld/
    
    
    
    
    
    BrokerFor
    
    Against
    
    Abstain
    
    Non-Votes1. Directors:James J. Burns
    
    
    40,797,007
    
    
    
    750,367Richard Homburg
    
    
    40,100,733
    
    
    
    1,446,641Paul G. Kirk, Jr.
    
    
    40,804,884
    
    
    
    742,490Everett B. Miller, III
    
    
    40,808,536
    
    
    
    738,838Leo S. Ullman
    
    
    40,703,038
    
    
    
    844,336Brenda J. Walker
    
    
    40,704,527
    
    
    
    842,847Roger M. Widmann
    
    
    40,807,784
    
    
    
    739,5902. Increasing authorized shares
of common and preferred stock
    
    
    21,986,672
    
    
    
    13,824,347
    
    
    
    78,630
    
    
    
    5,657,7253. Independent registered
public accounting firm
    
    
    41,343,297
    
    
    
    183,716
    
    
    
    20,361
  
 Item 6.
    
    ExhibitsExhibit 31
    
    Section 302 CertificationsExhibit 32
    
    Section 906 Certifications
 34




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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)
  35