THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR ANY

APPLICABLE STATE SECURITIES LAWS. NO SALE, TRANSFER OR DISPOSITION OF THIS

WARRANT OR SUCH ISSUABLE SECURITIES MAY BE MADE EXCEPT PURSUANT TO (A) AN

EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE

STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO

THE PARTNERSHIP TO THE EFFECT THAT SUCH SALE, TRANSFER OR DISPOSITION IS EXEMPT

FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND THE RULES AND

REGULATIONS IN EFFECT THEREUNDER, AND ANY APPLICABLE STATE SECURITIES LAWS.





                       CEDAR INCOME FUND PARTNERSHIP, L.P.

                         OPERATING UNIT PURCHASE WARRANT



         This Warrant is issued as of May 31, 2002 ("Commencement Date"), by

CEDAR INCOME FUND PARTNERSHIP, L.P., a Delaware limited partnership (the

"Partnership"), to ARC PROPERTIES, INC., a New Jersey corporation, and its

successors and assigns (the "Holder").





         1.       Issuance of Warrant; Term; Price.

                  --------------------------------



                  1.1 Issuance. In consideration of services rendered and to be

rendered in accordance with the Compensation Agreement of even date herewith,

the Partnership hereby grants to Holder the right to purchase up to Five Hundred

Thousand (500,000) operating units (the "O.P. Units") of the Partnership (the

"Warrant Units") pursuant to its Agreement of Limited Partnership dated as of

June 1998 (the "Partnership Agreement"), subject to the terms hereinafter set

forth.



                  1.2 Terms of Exercise. This Warrant is exercisable by Holder

at any time, in whole or in part, on or after the Commencement Date and prior to

the tenth (10th) anniversary of the Commencement Date ("Expiration Date")

subject to the provisions hereinafter set forth. If this Warrant is exercised in

part only, the Partnership or its transfer agent shall, upon surrender of the

Warrant, execute and deliver a new Warrant evidencing the rights of the Holder

to purchase the remaining number of Warrant Units purchasable hereunder.



                  1.3 Exercise Price. This Warrant shall be exercisable at an

exercise price equal to $4.50 per O.P. Unit (the "Warrant Price").











{PAGE}



                  1.4 Conversion of O.P. Units Into Stock. At Holder's sole

election, after at least 60 days prior written notice to the REIT, Holder shall

be entitled to convert the O.P. Units into the Shares of the REIT on a one for

one basis, subject only to satisfying the procedural requirements set forth in

the Partnership Agreement.



                  1.5 Number of O.P. Units. Holder is currently structuring for

affiliates of the Partnership the acquisition of Red Lion Shopping Center in

Philadelphia, Pennsylvania, and Golden Triangle Shopping Center ("GT") in

Lancaster, Pennsylvania (individually, "Property" and collectively, the

"Properties"). The acquisitions are being structured with entities affiliated

with Holder acquiring limited partnership (or other ownership) interests (the

"Interest" or "Interests") in entities to be controlled by affiliates of the

Partnership. It is anticipated that Holder's Affiliates will contribute

approximately $4.4 million in capital for Red Lion and $4.1 million in capital

for Golden Triangle. On closing the acquisition by the Partnership's affiliates

of an interest in one or more of the Properties (the "Cedar Investment") and the

closing of the acquisition of an Interest in one or more of the Properties by

the Holder's affiliates (the "ARC Investment"), Holder shall be entitled to

purchase up to 500,000 O.P. Units (which are redeemable, subject to certain

procedural requirements set forth in the Operating Partnership's Agreement of

Limited Partnership, on a one for one basis for shares of the Stock) as follows:

(1) upon the closing of the Cedar Investment (acquiring a 20% general

partnership interest) in Red Lion and the ARC Investment (acquiring a 69%

limited partnership interest) in Red Lion, ARC shall be entitled to purchase

250,000 O.P. Units; and (2) upon the closing of the Cedar Investment (acquiring

a 20% general partnership interest) and the ARC Investment (acquiring a 69%

limited partnership interest) in GT, ARC shall be entitled to purchase an

additional 250,000 O.P. Units.



                  1.6 Vesting. Notwithstanding any provision herein to the

contrary, the right to purchase the O.P. Units shall vest as follows. The right

to purchase 250,000 O.P. Units associated with each of Red Lion and GT shall

vest 83,333.33 upon closing the transaction and the balance shall vest 83,333.33

on January 1 of the year following the closing and the remaining 83,333.34 shall

vest on January 1 two years following the closing. Finally, the rights of Holder

hereunder shall only vest if Holder has made its key employees reasonably

available to assist Cedar Group and Advisor Group (as defined in the

Compensation Agreement) in the manner described therein throughout such period.



         2. Adjustment of Number and Kind of Shares. In order to comply with the

terms of Section 3 of this Warrant, the number and kind of securities issuable

upon the exercise of this Warrant shall be subject to adjustment from time to

time, and the Partnership agrees to provide ten (10) days prior written notice

(an "Adjustment Notice") of the happening of any of the following events,

together with a certificate of adjustment executed by an officer of the

Partnership setting forth the nature of the adjustment and a brief description

of the event triggering adjustment:

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