##### 



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 MARCH 31, 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 filero
    
    Accelerated filerþ
    
    Non-accelerated filero
    
    Smaller reporting companyo(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 April 30, 2008, there were 44,460,886 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  March 31, 2008 (unaudited) and December 31, 2007
    
    
    4Consolidated Statements of Income (unaudited)  Three months ended March 31, 2008 and 2007
    
    
    5Consolidated Statement of Shareholders Equity (unaudited)  Three months ended March 31, 2008
    
    
    6Consolidated Statements of Cash Flows (unaudited)  Three months ended March 31, 2008 and 2007
    
    
    7Notes to Consolidated Financial Statements (unaudited)  March 31, 2008
    
    
    8-25Item 2. Managements Discussion and Analysis of Financial Condition And Results of Operations
    
    
    26-35Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    36Part II. Other InformationItem 6. Exhibits
    
    
    37Signatures
    
    
    38
 2




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##### 



Forward-Looking Statements
  3




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##### 



CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Balance Sheets
 March 31,
    
    
    December 31,2008
    
    
    2007(unaudited)AssetsReal estate:Land
    
    $
    346,852,000
    
    
    $
    313,156,000Buildings and improvements
    
    
    1,286,335,000
    
    
    
    1,272,405,0001,633,187,000
    
    
    
    1,585,561,000Less accumulated depreciation
    
    
    (113,763,000
    )
    
    
    (103,135,000
    )Real estate, net
    
    
    1,519,424,000
    
    
    
    1,482,426,000Property and related assets held for sale, net of
accumulated depreciation
    
    
    12,170,000
    
    
    
    12,135,000Investment in unconsolidated joint venture
    
    
    3,775,000
    
    
    
    3,757,000Cash and cash equivalents
    
    
    14,434,000
    
    
    
    20,307,000Restricted cash
    
    
    19,172,000
    
    
    
    17,839,000Rents and other receivables, net
    
    
    9,148,000
    
    
    
    7,640,000Straight-line rents receivable
    
    
    11,941,000
    
    
    
    11,242,000Other assets
    
    
    10,402,000
    
    
    
    9,778,000Deferred charges, net
    
    
    28,952,000
    
    
    
    29,860,000Total assets
    
    $
    1,629,418,000
    
    
    $
    1,594,984,000Liabilities and shareholders equityMortgage loans payable
    
    $
    676,951,000
    
    
    $
    661,074,000Secured revolving credit facility
    
    
    226,740,000
    
    
    
    190,440,000Accounts payable and accrued expenses
    
    
    23,253,000
    
    
    
    26,068,000Unamortized intangible lease liabilities
    
    
    67,800,000
    
    
    
    71,157,000Total liabilities
    
    
    994,744,000
    
    
    
    948,739,000Minority interests in consolidated joint ventures
    
    
    57,669,000
    
    
    
    62,402,000Limited partners interest in Operating Partnership
    
    
    25,388,000
    
    
    
    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
44,461,000 and 44,238,000 shares, respectively, issued and
outstanding)
    
    
    2,668,000
    
    
    
    2,654,000Treasury stock (701,000 and 616,000 shares, respectively, at cost)
    
    
    (9,031,000
    )
    
    
    (8,192,000
    )Additional paid-in capital
    
    
    573,765,000
    
    
    
    572,392,000Cumulative distributions in excess of net income
    
    
    (104,406,000
    )
    
    
    (97,514,000
    )Accumulated other comprehensive (loss) income
    
    
    (129,000
    )
    
    
    64,000Total shareholders equity
    
    
    551,617,000
    
    
    
    558,154,000Total liabilities and shareholders equity
    
    $
    1,629,418,000
    
    
    $
    1,594,984,000
  4




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##### 



CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statements of Income
 (unaudited)
 Three months ended March 31,2008
    
    2007Revenues:Rents
    
    $
    34,071,000
    
    
    $
    28,274,000Expense recoveries
    
    
    8,918,000
    
    
    
    7,192,000Other
    
    
    207,000
    
    
    
    352,000Total revenues
    
    
    43,196,000
    
    
    
    35,818,000Expenses:Operating, maintenance and management
    
    
    8,138,000
    
    
    
    6,999,000Real estate and other property-related taxes
    
    
    4,627,000
    
    
    
    3,507,000General and administrative
    
    
    2,191,000
    
    
    
    1,998,000Depreciation and amortization
    
    
    11,529,000
    
    
    
    9,810,000Total expenses
    
    
    26,485,000
    
    
    
    22,314,000Operating income
    
    
    16,711,000
    
    
    
    13,504,000Non-operating income and expense:Interest expense, including amortization of
deferred financing costs
    
    
    (11,384,000
    )
    
    
    (7,920,000
    )Interest income
    
    
    158,000
    
    
    
    275,000Equity in income of unconsolidated joint venture
    
    
    150,000
    
    
    
    156,000Total non-operating income and expense
    
    
    (11,076,000
    )
    
    
    (7,489,000
    )Income before minority and limited partners interests
and discontinued operations
    
    
    5,635,000
    
    
    
    6,015,000Minority interests in consolidated joint ventures
    
    
    (706,000
    )
    
    
    (395,000
    )Limited partners interest in Operating Partnership
    
    
    (130,000
    )
    
    
    (156,000
    )Income from continuing operations
    
    
    4,799,000
    
    
    
    5,464,000Discontinued operations, net of limited partners interest
    
    
    280,000
    
    
    
    145,000Net income
    
    
    5,079,000
    
    
    
    5,609,000Preferred distribution requirements
    
    
    (1,967,000
    )
    
    
    (1,954,000
    )Net income applicable to common shareholders
    
    $
    3,112,000
    
    
    $
    3,655,000Per common share (basic):Income from continuing operations, net of preferred
distribution requirements
    
    $
    0.06
    
    
    $
    0.08Discontinued operations, net of limited partners interest
    
    
    0.01
    
    
    
    Net income applicable to common shareholders
    
    $
    0.07
    
    
    $
    0.08Per common share (diluted):Income from continuing operations, net of preferred
distribution requirements
    
    $
    0.06
    
    
    $
    0.08Discontinued operations, net of limited partners interest
    
    
    0.01
    
    
    
    Net income applicable to common shareholders
    
    $
    0.07
    
    
    $
    0.08Dividends to common shareholders
    
    $
    10,004,000
    
    
    $
    9,929,000Per common share
    
    $
    0.225
    
    
    $
    0.225Weighted average number of common shares outstanding:Basic
    
    
    44,458,000
    
    
    
    44,112,000Diluted
    
    
    44,459,000
    
    
    
    44,119,000
  5




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##### 



CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statement of Shareholders Equity
 Three months ended March 31, 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
    
    
    (loss) 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,079,000
    
    
    
    
    
    
    
    5,079,000Unrealized (loss) on change in fair value of cash
flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (193,000
    )
    
    
    (193,000
    )Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,886,000Deferred compensation activity, net
    
    
    
    
    
    
    
    
    
    
    219,000
    
    
    
    13,000
    
    
    
    (839,000
    )
    
    
    1,396,000
    
    
    
    
    
    
    
    
    
    
    
    570,000Conversion of OP Units into common stock
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    1,000
    
    
    
    
    
    
    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    41,000Preferred distribution requirements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,967,000
    )
    
    
    
    
    
    
    (1,967,000
    )Dividends to common shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,004,000
    )
    
    
    
    
    
    
    (10,004,000
    )Reallocation adjustment of limited partners interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,000
    )
    
    
    
    
    
    
    
    
    
    
    (63,000
    )Balance, March 31, 2008
    
    
    3,550,000
    
    
    $
    88,750,000
    
    
    
    44,461,000
    
    
    $
    2,668,000
    
    
    $
    (9,031,000
    )
    
    $
    573,765,000
    
    
    $
    (104,406,000
    )
    
    $
    (129,000
    )
    
    $
    551,617,000
  6




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##### 



CEDAR SHOPPING CENTERS, INC.
 
 Consolidated Statements of Cash Flows
 (unaudited)
 Three months ended March 31,2008
    
    
    2007Cash flow from operating activities:Net income
    
    $
    5,079,000
    
    
    $
    5,609,000Adjustments 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
    
    
    467,000
    
    
    
    129,000Equity in income of unconsolidated joint venture
    
    
    (150,000
    )
    
    
    (156,000
    )Distributions from unconsolidated joint venture
    
    
    132,000
    
    
    
    132,000Limited partners interest in Operating Partnership
    
    
    143,000
    
    
    
    163,000Straight-line rents receivable
    
    
    (711,000
    )
    
    
    (967,000
    )Depreciation and amortization
    
    
    11,529,000
    
    
    
    9,883,000Amortization of intangible lease liabilities
    
    
    (3,400,000
    )
    
    
    (2,589,000
    )Amortization relating to stock-based compensation
    
    
    734,000
    
    
    
    440,000Amortization of deferred financing costs
    
    
    403,000
    
    
    
    352,000Increases/decreases in operating assets and liabilities:Cash at consolidated joint ventures
    
    
    (148,000
    )
    
    
    25,000Rents and other receivables, net
    
    
    (1,509,000
    )
    
    
    (1,522,000
    )Other
    
    
    (272,000
    )
    
    
    (709,000
    )Accounts payable and accrued expenses
    
    
    (86,000
    )
    
    
    (3,908,000
    )Net cash provided by operating activities
    
    
    12,211,000
    
    
    
    6,882,000Cash flow from investing activities:Expenditures for real estate and improvements
    
    
    (29,956,000
    )
    
    
    (23,719,000
    )Purchase of consolidated joint venture minority interests
    
    
    (17,454,000
    )
    
    
    Investment in unconsolidated joint venture
    
    
    
    
    
    
    (8,000
    )Construction escrows and other
    
    
    (1,062,000
    )
    
    
    63,000Net cash (used in) investing activities
    
    
    (48,472,000
    )
    
    
    (23,664,000
    )Cash flow from financing activities:Net advances from line of credit
    
    
    36,300,000
    
    
    
    24,100,000Proceeds from sales of common stock
    
    
    
    
    
    
    4,132,000Proceeds from mortgage financings
    
    
    27,500,000
    
    
    
    Mortgage repayments
    
    
    (25,147,000
    )
    
    
    (2,022,000
    )Contribution from minority interest partner, net
    
    
    3,993,000
    
    
    
    Distributions in excess of earnings from consolidated joint venture
minority interests
    
    
    (27,000
    )
    
    
    Distributions to limited partners
    
    
    (457,000
    )
    
    
    (443,000
    )Preferred distribution requirements
    
    
    (1,970,000
    )
    
    
    (1,969,000
    )Distributions to common shareholders
    
    
    (10,004,000
    )
    
    
    (9,929,000
    )Refund (payments) of deferred financing costs, net
    
    
    200,000
    
    
    
    (198,000
    )Net cash provided by financing activities
    
    
    30,388,000
    
    
    
    13,671,000Net decrease in cash and cash equivalents
    
    
    (5,873,000
    )
    
    
    (3,111,000
    )Cash and cash equivalents at beginning of period
    
    
    20,307,000
    
    
    
    17,885,000Cash and cash equivalents at end of period
    
    $
    14,434,000
    
    
    $
    14,774,000
  7




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##### 



Cedar Shopping Centers, Inc.
 
 Notes to Consolidated Financial Statements
 March 31, 2008
 (unaudited)
 Note 1. Organization and Basis of Preparation
     8




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
    Note 2. Summary of Significant Accounting Policies
  Real Estate Investments and Discontinued Operations
  9




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
     10




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
  Three months ended March 31,2008
    
    2007Revenues:Rents
    
    $
    309,000
    
    
    $
    290,000Expense recoveries
    
    
    130,000
    
    
    
    83,000Total revenues
    
    
    439,000
    
    
    
    373,000Expenses:Operating, maintenance and management
    
    
    72,000
    
    
    
    78,000Real estate and other property-related taxes
    
    
    74,000
    
    
    
    70,000Depreciation and amortization
    
    
    
    
    
    
    73,000146,000
    
    
    
    221,000Operating income
    
    
    293,000
    
    
    
    152,000Limited partners interest
    
    
    (13,000
    )
    
    
    (7,000
    )Income from discontinued operations
    
    $
    280,000
    
    
    $
    145,000
  11




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
 Intangible Lease Asset/Liability
      12




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
 Cash and Cash Equivalents
  Restricted Cash
  Rents and Other Receivables
   13




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
 Concentration of Credit Risk
  Other Assets
  Mar 31,
    
    Dec 31,2008
    
    2007Deposits
    
    $
    5,374,000
    
    
    $
    4,594,000Prepaid expenses
    
    
    4,501,000
    
    
    
    4,493,000Other
    
    
    527,000
    
    
    
    691,000$
    10,402,000
    
    
    $
    9,778,000
 Deferred Charges, Net
  Mar 31,
    
    Dec 31,2008
    
    2007Lease origination costs (i)
    
    $
    19,082,000
    
    
    $
    19,218,000Financing costs (ii)
    
    
    7,290,000
    
    
    
    7,941,000Other
    
    
    2,580,000
    
    
    
    2,701,000$
    28,952,000
    
    
    $
    29,860,000
 
 (i)
    
    Deferred lease origination costs include intangible lease assets resulting from
purchase accounting allocations of $13,611,000 and $13,954,000, respectively.(ii)
    
    Deferred financing costs are incurred in connection with the Companys secured
revolving credit facility and other long-term debt.  14




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
  Income Taxes
  Derivative Financial Instruments
  Earnings Per Share
  Stock-Based Compensation
  15




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
   16




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
 Three months ended Mar 31,2008
    
    2007Restricted share grants
    
    
    219,000
    
    
    
    140,000Average per-share grant price
    
    $
    9.11
    
    
    $
    14.56Recorded as deferred compensation, net
    
    $
    2,001,000
    
    
    $
    2,044,000Total charged to operations (including adjustments to
reflect changes in the market price of the Companys
common stock: $146,000 and $39,000,
respectively)
    
    $
    734,000
    
    
    $
    440,000Non-vested shares:Non-vested, beginning of period
    
    
    380,000
    
    
    
    203,000Grants
    
    
    219,000
    
    
    
    140,000Vested during period
    
    
    
    
    
    
    Forfeitures
    
    
    
    
    
    
    Non-vested, end of period
    
    
    599,000
    
    
    
    343,000Value of shares vested during the
period (based on grant price)
    
    $
    
    
    
    $
    
    17




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
 Supplemental consolidated statement of cash flows information
 Three months ended Mar 31,2008
    
    2007Supplemental disclosure of cash activities:Interest paid
    
    $
    12,278,000
    
    
    $
    8,579,000Supplemental disclosure of non-cash activities:Additions to deferred compensation plans
    
    
    2,001,000
    
    
    
    2,044,000Issuance of non-interest bearing purchase money
mortgage (a)
    
    
    (14,575,000
    )
    
    
    Issuance of OP Units
    
    
    
    
    
    
    (18,000
    )Conversion of OP Units into common stock
    
    
    41,000
    
    
    
    Purchase accounting allocations:Intangible lease assets
    
    
    1,832,000
    
    
    
    5,518,000Intangible lease liabilities
    
    
    (43,000
    )
    
    
    (5,936,000
    )Net valuation decrease in non-interest bearing
purchase money mortgage (a)
    
    
    1,051,000
    
    
    
    Other non-cash investing and financing activities:Accrued real estate improvement costs
    
    
    (3,052,000
    )
    
    
    3,223,000Accrued construction escrows and other
    
    
    16,000
    
    
    
    Capitalization of deferred financing costs
    
    
    111,000
    
    
    
    
 
 (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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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
    19




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
   Note 3. Common Stock Issuance
  Note 4. Real Estate
   20




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
  Joint Venture Activities
    21




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
  Pro Forma Financial Information (unaudited)
  Three months ended Mar 31,2008
    
    2007Revenues
    
    $
    43,292,000
    
    
    $
    42,517,000Net income applicable to common shareholders
    
    $
    3,200,000
    
    
    $
    3,231,000Per common share:Basic
    
    $
    0.07
    
    
    $
    0.07Diluted
    
    $
    0.07
    
    
    $
    0.07Weighted average number of common shares outstanding:Basic
    
    
    44,458,000
    
    
    
    44,112,000Diluted
    
    
    44,459,000
    
    
    
    44,119,000
 Real Estate Pledged
  22




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
 Note 5. Mortgage Loans Payable and Secured Revolving Credit Facility; Construction Facility
 Secured Debt
  Mar 31, 2008
    
    Dec 31, 2007Interest rates
    
    
    
    
    
    Interest ratesBalance
    
    Weighted
    
    
    
    
    
    Balance
    
    WeightedDescription
    
    outstanding
    
    average
    
    Range
    
    outstanding
    
    average
    
    RangeFixed-rate mortgages
    
    $
    676,951,000
    
    
    
    5.8
    %
    
    
    4.8%-9.3
    %
    
    $
    656,320,000
    
    
    
    5.7
    %
    
    
    4.8%-7.6
    %Variable-rate mortgage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,754,000
    
    
    
    7.7
    %
    
    
    7.7
    %676,951,000
    

    
    5.8
    %
    
    
    
    
    
    
    661,074,000
    
    
    
    5.7
    %Secured revolving credit facility
    
    
    226,740,000
    

    
    4.0
    %
    
    
    
    
    
    
    190,440,000
    
    
    
    6.2
    %$
    903,691,000
    

    
    5.3
    %
    
    
    
    
    
    $
    851,514,000
    
    
    
    5.8
    %
 Secured Revolving Credit Facility
   23




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##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
 Secured Revolving Construction Credit Facility
  Note 6. Subsequent Events
     24




---



##### 



Cedar Shopping Centers, Inc.
Notes to Consolidated Financial Statements
March 31, 2008
(unaudited)
   25




---



##### 



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




---



##### 



Summary of Critical Accounting Policies
   Revenue Recognition
   27




---



##### 



Real Estate Investments
    28




---



##### 



Stock-Based Compensation
  29




---



##### 



Results of Operations
  30




---



##### 



Comparison of the quarter ended March 31, 2008 to the quarter ended March 31, 2007
 PropertiesThree months ended Mar 31,
    
    
    
    
    
    Percentage
    
    
    
    
    
    held in2008
    
    2007
    
    Increase
    
    change
    
    Acquisitions
    
    both periodsTotal revenues
    
    $
    43,196,000
    
    
    $
    35,818,000
    
    
    $
    7,378,000
    
    
    
    21
    %
    
    $
    8,029,000
    
    
    $
    (651,000
    )Property operating expenses
    
    
    12,765,000
    
    
    
    10,506,000
    
    
    
    2,259,000
    
    
    
    22
    %
    
    
    2,211,000
    
    
    
    48,000Depreciation and amortization
    
    
    11,529,000
    
    
    
    9,810,000
    
    
    
    1,719,000
    
    
    
    18
    %
    
    
    2,117,000
    
    
    
    (398,000
    )General and administrative
    
    
    2,191,000
    
    
    
    1,998,000
    
    
    
    193,000
    
    
    
    10
    %
    
    
    n/a
    
    
    
    n/aNon-operating income and
expense, net (i)
    
    
    11,076,000
    
    
    
    7,489,000
    
    
    
    3,587,000
    
    
    
    48
    %
    
    
    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
    

Increase
(decrease)Total revenues:Base rents  Increase due primarily to new leases and
lease renewals at higher rates, net of approximately
$100,000 related to a lease terminated in the quarter
ended December 31, 2007.
    
    $
    281,000Percentage rents  Decrease due to more timely receipt
of tenant sales documentation for the December 2007
quarter as compared to the December 2006 quarter,
resulting in more percentage rent recognition in the
first quarter of 2007.
    
    
    (164,000
    )Straight-line
rents  Decrease due primarily to higher straight-line rents during initial
periods for two large tenancies during the quarter
ended March 31, 2007. The quarter ended March 31,
2007 also included recognition of $175,000 as a result
of the resolution of an issue applicable to one
tenant.
    
    
    (476,000
    )Amortization of intangible lease liabilities 
Decrease due to the higher level of lease terminations
by tenants in the quarter ended March 31, 2007 that
accelerated the amortization of intangible lease
liabilities applicable to those tenants.
    
    
    (325,000
    )Expense recoveries  Increase due to higher level of
operating expenses and real estate taxes subject to
recovery from tenants.
    
    
    176,000Other  Decrease due to higher level of lease
terminations by tenants in the quarter ended March 31,
2007
    
    
    (143,000
    )$
    (651,000
    )
 31




---



##### 



Explanation
    

Increase
(decrease)Property operating expenses Increase due to
increased real estate taxes as a result of higher
assessments and higher other operating expenses
subject to recovery from tenants, partially offset by
a lower provision for doubtful accounts of $271,000 (a
non-recoverable expense).
    
    $
    48,000Depreciation and amortization Decrease due to the
higher level of lease terminations by tenants in the
quarter ended March 31, 2007 that accelerated
depreciation and amortization of tenant improvements
and deferred lease origination fees applicable to
those tenants.
    
    $
    (398,000
    )
 General and administrative expenses
 Non-operating income and expense, net
 Liquidity and Capital Resources
    32




---



##### 



Net Cash Flows
  Operating Activities
  Investing Activities
  33




---



##### 



Financing Activities
  Funds From Operations
    34




---



##### 



Three months ended March 31,2008
    
    
    2007Net income applicable to common shareholders
    
    $
    3,112,000
    
    
    $
    3,655,000Add (deduct):Real estate depreciation and amortization
    
    
    11,461,000
    
    
    
    9,830,000Limited partners interest
    
    
    143,000
    
    
    
    163,000Minority interests in consolidated joint ventures
    
    
    706,000
    
    
    
    395,000Minority interests share of FFO applicable to
consolidated joint ventures
    
    
    (1,781,000
    )
    
    
    (491,000
    )Equity in income of unconsolidated joint venture
    
    
    (150,000
    )
    
    
    (156,000
    )FFO from unconsolidated joint venture
    
    
    226,000
    
    
    
    234,000Funds From Operations
    
    $
    13,717,000
    
    
    $
    13,630,000FFO per common share (assuming conversion of OP Units):Basic
    
    $
    0.30
    
    
    $
    0.30Diluted
    
    $
    0.30
    
    
    $
    0.30Weighted average number of common shares:Shares used in determination of basic earnings per share
    
    
    44,458,000
    
    
    
    44,112,000Additional shares assuming conversion of OP Units (basic)
    
    
    2,030,000
    
    
    
    1,985,000Shares used in determination of basic FFO per share
    
    
    46,488,000
    
    
    
    46,097,000Shares used in determination of diluted earnings per share
    
    
    44,459,000
    
    
    
    44,119,000Additional shares assuming conversion of OP Units (diltued)
    
    
    2,030,000
    
    
    
    1,999,000Shares used in determination of diluted FFO per share
    
    
    46,489,000
    
    
    
    46,118,000
 Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   35




---



##### 



Item 4. Controls and Procedures
   36




---



##### 



Part II Other Information
 
 Item 6. Exhibits
 
 37




---



##### 



SIGNATURES
  CEDAR SHOPPING CENTERS, INC.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)
  38