SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________________ to ___________________
Commission File Number 000-14510
CEDAR INCOME FUND, LTD.
(Exact Name of Registrant as Specified in its Charter)
MARYLAND
(State or Other Jurisdiction of Incorporation or Organization)
11-3440062
(I.R.S. Employer Identification No.)
44 South Bayles Avenue, Suite 304, Port Washington, New York 10050
(Address of Principal Executive Offices) (Zip)
Registrant's Telephone No., including Area Code (516) 767-6492
Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report.
Indicate by check 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 X No _______.
As of August 10, 1998, 542,111 shares of the Registrant's Common Stock,
$.01 par value per share, were outstanding.
CEDAR INCOME FUND, LTD.
QUARTERLY REPORT
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
TABLE OF CONTENTS
INDEX PAGE
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements (Unaudited).
Consolidated Balance Sheets of Cedar Income
Fund, Ltd. as of June 30, 1998 and December
31, 1997. 1
Consolidated Statements of Operations of Cedar
Income Fund, Ltd. for the Three and Six
Months Ended June 30, 1998 and 1997. 2
Consolidated Statements of Cash Flows of Cedar
Income Fund, Ltd. for the Six Months Ended
June 30, 1998 and 1997. 3
Notes to the Consolidated Financial Statements
of Cedar Income Fund, Ltd. 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities 10
Holders.
Item 6. Exhibits and Reports on Form 8-K. 11
SIGNATURES 11
INDEX TO EXHIBITS 12
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CEDAR INCOME FUND, LTD.
CONSOLIDATED BALANCE SHEETS
JUNE 30, December 31,
1998 1997
(Unaudited)
--------------------------------------
ASSETS:
Real estate:
Land $4,146,572 $ 4,126,044
Buildings and improvements 14,717,257 14,636,843
---------------------------------------
Less accumulated depreciation 18,863,829 18,762,887
(4,457,543) (4,217,699)
----------------------------------------
14,406,286 14,545,188
Mortgage note receivable --- 564,437
----------------------------------------
Cash and cash equivalents 14,406,286 15,109,625
Rent and other receivable 932,201 407,216
Interest receivable 75,609 130,615
Prepaid expenses --------- 3,881
141,160 109,624
Deferred lease commissions 159,901 164,826
Taxes held in escrow 39,823 15,891
----------------------------------------
Total assets $15,754,980 $15,941,683
========================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Mortgage loan payable $ 1,387,803 $1,400,259
Accounts payable and accrued expenses 246,350 162,320
Escrow payable 32,497 ---------
Amounts due to affiliates 4,543 62,570
Security deposits 82,006 80,085
Advance rents 27,347 9,347
----------------------------------------
Total liabilities 1,780,546 1,714,581
----------------------------------------
Limited Partner's minority interest in
consolidated Operating Partnership 10,056,942 ---------
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 5,000,000 and 0 shares
authorized, none issued or outstanding ----------- ----------
Common Stock, $.01 and $1.00 par value, 50,000,000 and 5,020,000 542,111 2,245,411
shares authorized, 542,111 and
2,245,411 shares issued and
outstanding, respectively
Additional paid in capital 3,375,381 11,981,691
----------------------------------------
Total stockholders' equity 3,917,492 14,227,102
----------------------------------------
Total liabilities and stockholders' equity $15,754,980 $15,941,683
========================================
SEE ACCOMPANYING NOTES.
CEDAR INCOME FUND, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---------------------------------------------------------------------------------
Revenues:
Rental income $ 632,324 $ 603,699 $ 1,272,394 $ 1,142,318
Interest income 10,922 19,923 42,208 41,219
---------------------------------------------------------------------------------
Total Revenues 643,246 623,622 1,314,602 1,184,537
---------------------------------------------------------------------------------
Expenses:
Property expenses:
Wages and salaries --------- 5,436 -------- 10,154
Real estate taxes 59,609 64,070 119,218 128,493
Repairs and maintenance 46,887 87,338 118,346 162,873
Utilities 36,101 35,735 71,766 67,546
Management fee 31,758 30,185 63,710 57,166
Insurance 3,504 4,835 8,413 9,748
Other 25,342 26,621 26,621 51,724
---------------------------------------------------------------------------------
Property expenses,
excluding depreciation 203,201 254,220 430,231 488,134
Depreciation 118,826 105,575 239,844 217,934
---------------------------------------------------------------------------------
Total property expenses 322,027 359,795 670,075 706,068
---------------------------------------------------------------------------------
Interest 32,625 34,103 65,396 68,340
Administrative fees 24,468 25,266 50,244 50,619
Directors' fees and
expenses 12,733 10,034 33,738 21,899
Other administrative expenses 230,707 12,003 289,739 30,983
---------------------------------------------------------------------------------
Total expenses 622,560 441,201 1,118,192 877,909
---------------------------------------------------------------------------------
Net income $ 20,686 $ 182,421 $ 196,410 $ 306,628
=================================================================================
Net income per share $ 0.01 $ 0.08 $ 0.09 $ 0.14
=================================================================================
Dividends to stockholders $ 224,541 $ 224,541 $ 449,082 $ 449,082
=================================================================================
Dividends to stockholders per share $ 0.10 $ 0.10 $ 0.20 $ 0.20
=================================================================================
Average number of shares outstanding 2,245,411 2,245,411 2,245,411 2,245,411
================== ================ ============== =============
SEE ACCOMPANYING NOTES.
CEDAR INCOME FUND, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX Six
MONTHS Months
ENDED Ended
JUNE 30, June 30,
1998 1997
----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Rents collected $1,368,054 $1,158,002
Interest received 42,208 41,251
Payments for operating expenses (823,599) (601,774)
Interest paid (63,396) (66,507)
------------- ------------
Net cash provided by operating activities 521,267 530,972
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (100,951) (298,001)
Principal portion of scheduled mortgage loan collections 2,517 4,676
Principal repayment on mortgage loan receivable 561,920 ---------
Security deposits collected, net 1,770 15,825
------------- ------------
Net cash provided by (used in) by investing activities 465,256 (277,500)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal portion of scheduled mortgage loan payments (12,456) (11,345)
Dividends paid to stockholders (449,082) (449,082)
Net cash provided by (used in) financing activities (461,538) (460,427)
------------- ------------
Net increase (decrease) in cash and cash equivalents 524,985 (206,955)
Cash and cash equivalents at beginning of period 407,216 670,306
Cash and cash equivalents at end of period $932,201 $463,351
============= ============
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings $196,410 $306,628
Add (deduct) reconciling adjustments:
Depreciation 239,844 217,934
Amortization 1,834 1,833
Increase (decrease) in rent and other receivables 54,706 (16,075)
Decrease in interest receivable 3,881 32
Decrease (increase) in prepaid expenses (56,983) 8,500
Increase (decrease) in deferred lease commissions 4,925 (59,271)
Increase in operating accounts payable and accrued expenses 116,677 73,220
Decrease in amounts due to affiliates (58,027) (4,907)
Increase in advance rents 18,000 3,078
------------- ------------
Net cash provided by operating activities $ 521,267 530,972
============= =============
SEE ACCOMPANYING NOTES.
Cedar Income Fund, Ltd. Notes
to Consolidated Financial
Statements (Unaudited)
1. REORGANIZATION OF THE COMPANY
Pursuant to a Memorandum of Understanding dated as of December 5, 1997 (the
"Memorandum of Understanding"), between Cedar Income Fund, Ltd., an Iowa
corporation ("Old Cedar"), and SKR Management Corp. ("SKR"), Cedar Bay Company
("Cedar Bay"), an affiliate of SKR, purchased 1,893,038.335 shares of Old
Cedar's outstanding Common Stock, $1.00 par value per share ("Old Common
Stock"), on April 2, 1998 through a tender offer (the "Tender Offer") for a
purchase price of $7.00 per share in cash.
On June 26, 1998, Old Cedar merged (the "Merger") with and into Cedar Income
Fund, Ltd., a newly-formed Maryland corporation and a wholly-owned subsidiary of
Old Cedar ("New Cedar"). Immediately thereafter, New Cedar assigned
substantially all of its assets and liabilities to a newly-formed Delaware
limited partnership, Cedar Income Fund Partnership, L.P. (the "Operating
Partnership"), in exchange for an aggregate of 2,245,411 units of the Operating
Partnership ("Units"), which constituted the sole general partner interest and
all of the limited partnership interests in the Operating Partnership.
Immediately after such assignment, Cedar Bay exchanged 1,703,300 shares of New
Cedar's Common Stock, $.01 par value per share ("New Common Stock"), for
1,703,300 limited partner Units in the Operating Partnership owned by New Cedar.
The shares of New Common Stock were cancelled upon their exchange by Cedar Bay.
Following these transactions, Cedar Bay owned 189,737 shares of New Common
Stock, aggregating approximately 35% of the issued and outstanding shares of New
Common Stock.
As used herein, the term "Company" refers to Old Cedar prior to the Merger and
New Cedar subsequent to the Merger and the term "Common Stock" refers to Old
Common Stock prior to the Merger and New Common Stock subsequent to the Merger.
As of June 30, 1998, the Company owned and operated three office properties
aggregating approximately 224,000 square feet located in Jacksonville, Florida,
Salt Lake City, Utah and Bloomington, Illinois and a 50% undivided interest in a
74,000 square foot retail property located in Louisville, Kentucky.
In March 1998, Life Investors Insurance Company of America, an affiliate of the
Company's former management company and advisor, exercised its right to
repurchase the mortgage receivable balance from the Company. The Company
invested the proceeds of this sale of the mortgage receivable balance in the
Company's money market fund.
2. BASIS OF PRESENTATION
The accompanying interim financial statements have been prepared by the
Company's management in accordance with generally accepted accounting principles
for interim financial information and in conjunction with the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, the interim financial statements presented herein reflect all
adjustments of a normal and recurring nature which are necessary to fairly state
the interim financial statements. The results of operations for the interim
period are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998. These financial statements should be read in
conjunction with the Company's audited financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
The accompanying consolidated financial statements include the consolidated
financial position of the Company and the Operating Partnership as of June 30,
1998. All significant intercompany balances and transactions have been
eliminated in consolidation.
Since the Company owns the sole general partner interest in the Operating
Partnership, which provides the Company with effective control over all
significant activities of the Operating Partnership, the Operating Partnership
is consolidated with the Company in the accompanying financial
statements as of June 30, 1998.
The minority interest as of June 30, 1998 (currently owned entirely by Cedar
Bay) represents approximately a 76% limited partner interest in the equity of
the Operating Partnership.
The Company intends to continue to qualify as a real estate investment trust
("REIT") under Sections 856 through 869 of the Internal Revenue Code of 1986, as
amended (the "Code"). As a REIT, the Company will not generally be subject to
Federal corporate income taxes as long as it satisfies certain technical
requirements of the Code relating to composition of its income and assets and
certain requirements relating to distributions of taxable income to
stockholders.
3. MORTGAGE NOTES PAYABLE
As of June 30, 1998, the Company had one fixed-rate mortgage loan obligation
which had a principal amount of $1,387,803 and which will mature on November 1,
2002. The loan is collateralized by the office property located in Salt Lake
City, Utah has an interest rate per annum of 9.375% and requires annual
principal and interest payments of $155,704.
4. STOCKHOLDERS' EQUITY
Currently, a Unit in the Operating Partnership and a share of Common Stock of
the Company have essentially the same economic characteristics as they
effectively share equally in the net income or loss and distributions of the
Operating Partnership.
Cedar Income Fund, Ltd.
Notes to Consolidated Financial Statements
(Unaudited)
4. STOCKHOLDERS' EQUITY (CONTINUED)
The Company established a stock option plan (the "Plan") for the purpose of
attracting and retaining executive officers, directors and other key employees.
As of June 30, 1998, 500,000 of the Company's authorized shares of Common Stock
have been reserved for issuance under the Plan. The Plan is administered by a
committee of the Board of Directors, which committee will, among other things,
select the number of shares subject to each grant, the vesting period for each
grant and the exercise price (subject to applicable regulations with respect to
incentive stock options) for the options. As of June 30, 1998, no options have
been granted under the Plan.
5. RELATED PARTY TRANSACTIONS
Pursuant to the Memorandum of Understanding (discussed in Note 1), the Company
terminated the Administrative and Advisory Agreement between the Company and
AEGON USA Realty Advisors, Inc., and the Management Agreement between the
Company and AEGON USA Realty Management, Inc. effective upon the consummation of
the Tender Offer.
The Company entered into an Administrative and Advisory Agreement (the "Advisory
Agreement") with Cedar Bay Realty Advisors, Inc. ("Cedar Bay Realty") to provide
the Company with administrative, advisory, acquisition, divestiture, property
management, leasing and stockholder services. Cedar Bay Realty is wholly-owned
by Leo S. Ullman who is Chairman of the Board of Directors and President of the
Company. The term of the Advisory Agreement is for one (1) year and is
automatically renewed annually for an additional year subject to the right of
either party to cancel the Advisory Agreement upon 60 days written notice. Cedar
Bay Realty receives fees for its administrative and advisory services as
follows: (a) an administrative and advisory fee equal to 3/4 of 1% of the
estimated current value of real estate assets of the Company, plus 1/4 of 1% of
the estimated current value of all other assets of the Company; (b) an
acquisition fee equal to 5% of the gross purchase price of any real property
acquired during the term of the Advisory Agreement subject to a maximum amount
as defined; and (c) a disposition fee equal to 3% of the gross sales price, as
defined, of any real property disposed of during the term of the Advisory
Agreement; provided that no disposition fee shall be paid unless and until the
stockholders have received certain distributions from the Company. In addition,
Cedar Bay Realty may receive one-half of the brokerage commission on such a
disposition but only up to 3% of the price actually paid for the property,
subject to certain limitations. Furthermore, if the Advisory Agreement is
terminated prior to the liquidation of the Company, Cedar Bay Realty will be
entitled to payment for dispositions, as defined.
Cedar Income Fund, Ltd.
Notes to Consolidated Financial Statements
(Unaudited)
5. RELATED PARTY TRANSACTION (CONTINUED)
The Company entered into a Management Agreement (the "Management Agreement")
with Brentway Management LLC ("Brentway") to provide the Company with property
management and leasing services. Brentway is owned by Leo S. Ullman and Brenda
J. Walker who is Vice President and Treasurer of the Company. The term of the
Management Agreement is for one (1) year and is automatically renewed annually
for an additional year subject to the right of either party to cancel the
Management Agreement upon 60 days written notice. Brentway receives fees for its
property management services as follows: a management fee equal to 5% of the
gross income from properties managed and leasing fees of up to 6% of the rent to
be paid during the term of the lease procured. Brentway provides similar
services for other properties owned by partnerships in which Mr. Ullman has
interests.
On June 1, 1998, the Company entered into a Financial Advisory Agreement (the
"BVC Agreement") with B.V. Capital Markets, Inc. ("BVC") of which Jean-Bernard
Wurm, a director of the Company, serves as a director. Pursuant to the BVC
Agreement, BVC has agreed to perform the following services as financial advisor
to the Company: (a) advise on acquisition financing and/or line of credit for
future acquisitions; (b) advise on acquisitions of United States real property
interests and the consideration to be paid therefor; (c) advise on private
placements of the shares of the Company; (d) assist the Board of Directors in
developing suitable investment parameters for the Company; (e) develop and
maintain contacts on behalf of the Company with institutions with substantial
interests in real estate and capital markets; (f) advise the Board with respect
to additional private or public offerings of equity securities of the Company;
(g) review certain financial policy matters with consultants, accountants,
lenders, attorneys and other agents of the Company; and (h) prepare periodic
reports of its performance of the foregoing services. As compensation for the
foregoing services, the Company is required to pay BVC: (i) .25% of the
Company's net asset value, less any indebtedness affecting such net value, but
in any event, not less than $100,000 per year; (ii) a one-time payment of 1.5%
of 90% of the agreed value of properties contributed to the Company or its
affiliates by persons introduced to the Company by BVC; and (iii) upon the
Company becoming self-administered, a one-time payment equal to five times the
annual fee income attributable to fee receipts from clients or contacts of BVC
that have contributed property to the Company. The term of the BVC Agreement is
for a period of one (1) year and is automatically renewed annually for an
additional year subject to the right of either party to cancel at the end of any
year upon 60 days written notice.
6. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Exchange of limited partner interests in the Operating Partnership held by the
Company for Common Stock of the Company held by Cedar Bay and cancellation of
exchanged shares:
Common Stock 1,703,300
Capital in excess of $8,353,642
par value
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the accompanying
Consolidated Financial Statements of Cedar Income Fund, Ltd. (the "Company") and
related notes thereto.
OVERVIEW AND BACKGROUND
The Company operates as an equity-based real estate investment trust. It is
managed and advised by two entities that are affiliates of Leo S. Ullman, the
Chairman of the Board of Directors and President of the Company.
On June 26, 1998, Cedar Income Fund, Ltd., an Iowa corporation ("Old Cedar"),
merged (the "Merger") with and into Cedar Income Fund, Ltd., a newly-formed
Maryland corporation and a wholly-owned subsidiary of Old Cedar ("New Cedar").
Immediately thereafter, New Cedar assigned substantially all of its assets and
liabilities to a newly-formed Delaware limited partnership, Cedar Income Fund
Partnership, L.P. (the "Operating Partnership") in exchange for an aggregate of
2,245,411 units of the Operating Partnership ("Units"), which constituted the
sole general partner interest and all of the limited partnership interests in
the Operating Partnership. Immediately after such assignment, Cedar Bay
exchanged 1,703,300 shares of New Cedar's Common Stock, $.01 par value per share
("New Common Stock"), for 1,703,300 limited partner Units in the Operating
Partnership owned by New Cedar. The shares of New Common Stock were cancelled
upon their exchange by Cedar Bay. Following these transactions, Cedar Bay owned
189,737 shares of New Common Stock, aggregating approximately 35% of the issued
and outstanding shares of New Common Stock.
The Company has no employees and has contracted with Cedar Bay Realty Advisors,
Inc. ("Cedar Bay Realty") to provide the Company with administrative, advisory,
acquisition, divestiture, property management, leasing and stockholder services
pursuant to an Administrative and Advisory Agreement. Brentway Management LLC
("Brentway") provides property management and leasing services to the Company
pursuant to a Management Agreement. The Company has also entered into a
Financial Advisory Agreement with BVC Capital Markets, Inc. ("BVC") pursuant to
which BVC will perform certain services as a financial advisor to the Company.
As of June 30, 1998, the Company owned and operated (i) three office properties:
Southpoint Parkway Center, located in Jacksonville, Florida; Broadbent Business
Center, located in Salt Lake City, Utah; and Corporate Center East, located in
Bloomington, Illinois; and (ii) a 50% undivided interest in a retail property,
Germantown Square Shopping Center, located in Louisville, Kentucky.
RESULTS OF OPERATIONS
Net income for the three months and six months ended June 30, 1998 were $20,686
($.01 per share) and $196,410 ($.09 per share) compared to $182,421 ($.08 per
share) and $306,628 ($.14 per share), respectively, for the same periods in
1997. (All per share amounts are on a fully diluted basis.)
RESULTS OF OPERATIONS (CONTINUED)
Cash from operations (net income plus depreciation) for the three months and six
months ended June 30, 1998 were $139,512 and $436,254 compared to $287,996 and
$524,562 for the same periods a year ago. Net income and cash from operations
were significantly lower in the second quarter of 1998, compared to 1997,
primarily due to an increase in other administrative expenses as a result of the
Company's reorganization: changing its domicile to Maryland from Iowa, creating
the Operating Partnership and transferring substantially all of the assets of
the Company to the Operating Partnership.
Rental income for the three months and six months ended June 30, 1998 was
$632,324 and $1,272,394, compared to $603,699 and $1,142,318 for the same
periods in 1997, an increase of 4.7% and 11.4%, respectively. The increase in
rental income is primarily due to the lease of vacant space at Corporate Center
East in 1997 and increased base rent from a large tenant in Southpoint Parkway
Center in 1997.
Total property expenses, excluding depreciation, for the three months and six
months ended June 30, 1998 decreased to 32% and 34% of rental income from 42%
and 43% of rental income, respectively, for the same periods in 1997. For the
three months and six months ended June 30, 1998, repairs and maintenance
decreased $40,000 and $44,500 over the same periods in 1997, primarily due to
reduced costs at Broadbent Business Center and Corporate Center East.
LIQUIDITY AND CAPITAL RESOURCES
In March 1998, Life Investors Insurance Company of America, an affiliate of the
Company's former management company and advisor, exercised its right to
repurchase the mortgage receivable balance from the Company. The Company
invested the proceeds of this sale of the mortgage receivable balance in the
Company's money market fund.
The Company's liquidity at June 30, 1998 represented by cash and cash
equivalents was $932,201 compared to $407,216 at December 31, 1997, an increase
of $524,985. Cash flow from operating activities, for the six month period ended
June 30, 1998 was $521,267 compared with $530,972 over the same period in 1997,
a decrease of $9,705. The Company considers this liquidity sufficient to meet
current operating needs, including dividend requirements.
The Company is seeking line of credit and equity capital to be used for future
growth and acquisitions. There is no assurance that these will be obtained.
INFLATION
Low to moderate levels of inflation during the past few years have favorably
impacted the Company's operations by stabilizing operating expenses. At the same
time, low inflation has the indirect effect of reducing the Company's ability to
increase tenant rents. Many of the leases of the Company's properties include
provisions requiring the tenants to reimburse the Company for the amounts spent
by the Company on property operating expenses and other provisions the result of
which is to minimize the effect of inflation.
YEAR 2000 ISSUE
Although the Company does not employ any computer systems in its business, Cedar
Bay Realty, the Company's advisor, and Brentway, the Company's property manager,
do employ computer systems in managing the Company's business. The Company could
be adversely affected if the computer systems used by Cedar Bay Realty, Brentway
or other service providers do not properly process and calculate date related
information from and after January 1, 2000. Cedar Bay Realty and Brentway have
advised the Company that they are taking steps which they believe are reasonably
designed to address this issue with respect to computer systems that they use.
These steps include an upgrade of their computer software to a version that will
properly process and calculate date related information from and after January
1, 2000. In addition, Cedar Bay Realty and Brentway have advised the Company
that they will endeavor to obtain reasonable assurances that comparable steps
are being taken by the Company's other major service providers. Cedar Bay Realty
and Brentway have informed the Company that they currently anticipate the
upgrade of their computer software prior to January 1, 1999. While the Company
believes that the planning efforts of Cedar Bay Realty and Brentway are adequate
to address the Company's Year 2000 concerns, there can be no assurance that the
systems of other companies on which the Company's systems and operations rely
will be converted on a timely basis and will not have a material effect on the
Company. The cost of Cedar Bay Realty and Brentway's Year 2000 initiatives will
be borne entirely by Cedar Bay and Brentway, respectively, and not by the
Company.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The Company held its Annual Meeting of Stockholders on June 25, 1998,
at which the following matters were voted upon:
1. Approval of change in state of incorporation.
2. Approval of transfer of assets to the Operating
Partnership.
3. Election of five directors, divided and classified into three
classes.
4. Approval of Ernst & Young LLP as independent auditors for the
fiscal year ending December 31, 1998.
5. Approval of 1998 Stock Option Plan.
The results of the meeting were as follows:
FOR AGAINST ABSTAIN
--- ------- -------
Proposal 1 1,914,190.571 1,212.312 2,784.00
Proposal 2 1,914,190.571 1,412.312 2,584.00
Proposal 4 1,970,162.571 512.312 1,762.00
Proposal 5 1,914,390.571 1,412.312 2,384.00
The results with respect to the election of directors were as follows:
FOR WITHHELD AUTHORITY
--- ------------------
Leo S. Ullman 1,971,102.571 1,334.312
J.A.M.H. der Kinderen 1,971,102.571 1,334.312
Everett B Miller III 1,971,102.571 1,334.312
Brenda J. Walker 1,971,102.571 1,334.312
Jean-Bernard Wurm 1,971,102.571 1,334.312
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit 3(i) Articles of Incorporation
Exhibit 3(ii) By-laws (Incorporated by
Reference to Appendix D to the Registrant's
Definitive Schedule 14A filed on June 9, 1998)
Exhibit 10.1 Administrative and Advisory Agreement
Exhibit 10.2 Management Agreement
Exhibit 10.3 Financial Advisory Agreement
Exhibit 27 Financial Data Schedule
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CEDAR INCOME FUND, LTD.
Date: August 14, 1998 By: /s/ Brenda J. Walker
-----------------------------
Brenda J. Walker
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
CEDAR INCOME FUND, LTD.
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- -------- ------------ -------------
3(i) Articles of Incorporation 13
10.1 Administrative and Advisory Agreement 27
10.2 Management Agreement 36
10.3 Financial Advisory Agreement 46
27 Financial Data Schedule 57