Draft Dated: June 6, 2002
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 24, 2002
CEDAR INCOME FUND, LTD.
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(Exact name of registrant as specified in charter)
Maryland 0-14510 42-1241468
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(State or other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
44 South Bayles Avenue, Port Washington, New York 11050
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 767-6492
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(Former name or former address, if changed since last report)
Cedar Income Fund, Ltd.
Item 2. Acquisition or Disposition of Assets
1) Sale of the Company's Interest in Southpoint Parkway Center
(Jacksonville, Florida):
On May 24, 2002, Cedar Income Fund Partnership, L.P. (the "Operating
Partnership"), pursuant to a Contract of Sale dated as of February 1,
2002 and Addendum Number One thereto, dated March 20, 2002, sold its
interest in Southpoint Parkway Center, Jacksonville, Florida, to
Southpoint Parkway Center, L.C. for $4.7 million.
The Operating Partnership incurred closing costs and adjustments of
approximately $330,000, including brokers' commissions of $172,000 and
legal and other closing adjustments of approximately $158,000. Other
closing costs included a disposition fee paid to Cedar Bay Realty
Advisors, Inc. ("CBRA"), in accordance with the terms of the
Administrative and Advisory Agreement between CBRA and the Company, in
the amount of $46,750, representing 1% of the sales price.
The net sales proceeds of approximately $4,370,000 were used to
pay-down the existing $6 million financing entered into with SWH
Funding Corp. in connection with the purchase of three
supermarket-anchored shopping centers (two in Philadelphia, and one in
southern New Jersey) during the fourth quarter of 2001. In connection
with the pay-down, approximately $450,000 of deferred financing costs
were written off. (The write-off after limited partner's interest was
approximately $130,000).
The net cost basis of Southpoint Parkway Center on the books of the
Operating Partnership as of the closing date was approximately
$4,436,000. The net sales price after closing costs and adjustments was
approximately $4,370,000, resulting in a capital loss of approximately
$66,000. (The capital loss after limited partner's interest was
approximately $19,000). It should be noted that the cost basis for the
property had been reduced by $1,341,759 on the books of the Company
during the fourth quarter of 2001, to adjust the value to fair market
when the property was reclassified to "real estate held for sale".
The Southpoint property was the only remaining office property of the
Company and the last of the four properties acquired shortly after
organization of the Company in 1985-1986. The Company's remaining
portfolio consists primarily of supermarket-anchored shopping centers
in Pennsylvania and New Jersey.
Cedar Income Fund, Ltd.
Item 7. Financial Statements and Exhibits
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Pro Forma Combined Balance Sheet as of March 31, 2002.
Pro Forma Combined Statement of Operations for the three months ended
March 31, 2002.
Pro Forma Combined Statement of Operations for the twelve months ended
December 31, 2001.
Notes to Pro Forma Financial Statements.
The following exhibits are included herein:
(10.1) Real Estate Purchase and Sale Agreement between Cedar Income
Fund Partnership, L.P. and Southpoint Parkway Center, L.C. dated as of
February 1, 2002.
(10.2) Addendum Number One to Real Estate Purchase and Sale Agreement
between Cedar Income Fund Partnership, L.P. and Southpoint Parkway
Center, L.C. dated March 20, 2002.
(10.3) Exclusive Agreement to Sell between Weaver Realty Group,
Inc./Grubb & Ellis/Phoenix Realty Group and Cedar Income Fund
Partnership, L.P. dated July 30, 2001.
(10.4) Agreement Regarding Commission between Weaver Realty Group,
Inc./Grubb & Ellis/Phoenix Realty Group and Cedar Income Fund
Partnership, L.P. dated March 7, 2002.
(99) Press Release dated May 28, 2002, regarding sale of Southpoint
Parkway Center.
Cedar Income Fund, Ltd.
SIGNATURES
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.
By: /s/ Leo S. Ullman
------------------------
Leo S. Ullman
Chairman
Dated: June 7, 2002
Cedar Income Fund, Ltd.
Pro Forma Condensed Combined Balance Sheet
As of March 31, 2002
The following unaudited Pro Forma Condensed Combined Balance Sheet is presented
as if the Company had sold Southpoint Parkway Center on March 31, 2002. This Pro
Forma Condensed Combined Balance Sheet should be read in conjunction with the
Pro Forma Condensed Combined Statement of Operations of the Company and the
historical financial statements and notes thereto of the Company as filed on
Form 10-Q for the three months ended March 31, 2002. The Pro Forma Condensed
Combined Balance Sheet is unaudited and is not necessarily indicative of what
the actual financial position would have been had the Company sold Southpoint
Parkway Center on March 31, 2002, nor does it purport to represent the future
financial position of the Company.
Cedar Income Southpoint Repayment
Fund Parkway Center of Loan Pro Forma
Historical (a) Disposition (b) Payable (c) March 31, 2002
Assets
Real estate, net $ 57,063,006 $ - $ - $ 57,063,006
Real estate held for sale 4,401,800 (4,401,800) - -
Escrow - 4,372,296 (4,367,475) 4,821
Property deposits 150,000 - - 150,000
Cash and cash equivalents 2,290,404 (86,369) - 2,204,035
Restricted cash 889,757 - - 889,757
Rents and other receivables 423,432 (63,927) - 359,505
Deferred financing costs, net 1,372,477 - (449,534) 922,943
Deferred legal, net 178,936 - - 178,936
Prepaid expenses, net 519,647 (1,839) - 517,808
Deferred leasing commissions 606,565 - - 606,565
Deferred rental income 128,173 - - 128,173
Taxes held in escrow 241,958 - - 241,958
------------------ --------------- ---------------- ----------------
Total assets $ 68,266,155 $ (181,639) $(4,817,009) $ 63,267,507
================== =============== ================ ================
Liabilities and Shareholders' Equity
Mortgage loans payable $ 46,042,006 $ - $ - $ 46,042,006
Loan payable 5,960,000 - (4,367,475) 1,592,525
Accounts payable and accrued expenses 1,501,386 (91,844) - 1,409,542
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Total liabilities 53,503,392 (91,844) (4,367,475) 49,044,073
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Minority interest 2,301,845 - - 2,301,845
Limited partner's interest in consolidated
Operating Partnership 8,846,604 (63,853) (319,664) 8,463,087
Shareholders' Equity
Common stock 6,921 - - 6,921
Additional paid in capital 3,607,393 (25,942) (129,870) 3,451,581
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Total shareholders' equity 3,614,314 (25,942) (129,870) 3,458,502
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Total liabilities and shareholders' equity $ 68,266,155 $ (181,639) $(4,817,009) $ 63,267,507
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Total shareholders' equity in the Company
and limited partner's (equity) interest
in Operating Partnership and minority interest $ 14,762,763 $ (89,795) $ (449,534) $ 14,223,434
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See accompanying Notes to Pro Forma Financial Statements
Cedar Income Fund, Ltd.
Pro Forma Combined Statement of Operations
For the three months ended March 31, 2002
The following unaudited Pro Forma Condensed Combined Statement of Operations is
presented as if the Company had disposed of Southpoint Parkway Center as of
January 1, 2002, and the Company qualified as a REIT, distributed 90% of its
taxable income and, therefore, incurred no income tax expense during the period.
This Pro Forma Condensed Combined Statement of Operations should be read in
conjunction with the Pro Forma Condensed Combined Balance Sheet of the Company
and the historical financial statements and notes thereto of the Company as
filed on Form 10-Q for the three months ended March 31, 2002. The Pro Forma
Condensed Combined Statement of Operations is unaudited and is not necessarily
indicative of what the actual financial position would have been had the Company
sold Southpoint Parkway Center as of January 1, 2002, nor does it purport to
represent the operations of the Company for future periods.
Cedar Income Southpoint Pro Forma
Fund, Ltd. Parkway Center Pro Forma 3 Months Ended
Description Historical (d) Disposition (e) Adjustments (f) March 31, 2002
Revenues
Base rent $ 1,877,353 $ (259,097) $ - $ 1,618,256
Tenant escalations 622,639 (26,569) - 596,070
Interest 10,325 (90) - 10,235
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Total revenues 2,510,317 (285,756) - 2,224,561
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Expenses
Operating expenses:
Real estate taxes 288,674 (26,707) - 261,967
Property expenses 504,670 (138,776) - 365,894
Administrative 348,194 (18,021) - 330,173
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Total operating expenses 1,141,538 (183,504) - 958,034
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Interest 920,552 - (136,484) 784,068
Depreciation and amortization 552,255 - (186,421) 365,834
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Total expenses 2,614,345 (183,504) (322,905) 2,107,936
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Net (loss) income before minority interest and
limited partner's interest in Operating
Partnership (104,028) (102,252) 322,905 116,625
Minority interest (66,606) - - (66,606)
Limited partner's interest 117,762 72,711 (229,618) (39,145)
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Net (loss) income $ (52,872) $ (29,541) $ 93,287 $ 10,874
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Basic and diluted net income per share $ (0.08) $ (0.04) $ 0.13 $ 0.02
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See accompanying Notes to Pro Forma Financial Statements
Cedar Income Fund, Ltd.
Pro Forma Combined Statement of Operations
For the twelve months ended December 31, 2001
The following unaudited Pro Forma Condensed Combined Statement of Operations is
presented as if the Company had disposed of Southpoint Parkway Center as of
January 1, 2001, and the Company qualified as a REIT, distributed 90% of its
taxable income and, therefore, incurred no income tax expense during the period.
This Pro Forma Condensed Combined Statement of Operations should be read in
conjunction with the Pro Forma Condensed Combined Balance Sheet of the Company
and the historical financial statements and notes thereto of the Company as
filed on Form 10-K for the year ended December 31, 2001. The Pro Forma Condensed
Combined Statement of Operations is unaudited and is not necessarily indicative
of what the actual financial results would have been had the Company disposed of
Southpoint Parkway Center as of January 1, 2001, nor does it purport to
represent the operations of the Company for future periods.
Cedar Income Southpoint Pro Forma
Fund Parkway Center Pro Forma Year Ended
Historical (g) Disposition (h) Adjustments (i) December 31, 2001
Revenues
Base rent $ 4,005,456 $ (1,008,148) $ - $ 2,997,308
Tenant escalations 811,412 (16,740) - 794,672
Interest 281,897 (403) - 281,494
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Total revenues 5,098,765 (1,025,291) - 4,073,474
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Expenses
Operating expenses:
Property expenses 1,006,540 (323,644) - 682,896
Real estate taxes 494,348 (106,447) - 387,901
Administrative 815,599 (19,077) - 796,522
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Total operating expenses 2,316,487 (449,168) - 1,867,319
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Interest 1,887,837 - (181,978) 1,705,859
Depreciation and amortization 991,334 (151,191) (149,203) 690,940
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Total expenses 5,195,658 (600,359) (331,181) 4,264,118
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Net (loss) income before minority interest,
limited partner's interest, loss on
impairment, and gain (loss) on sales (96,893) (424,932) 331,181 (190,644)
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Minority interest (44,129) - - (44,129)
Limited partner's interest 74,586 (651,956) (235,502) (812,872)
Loss on impairment (1,341,759) 1,341,759 - -
Gain on sale 1,638,416 - - 1,638,416
Loss on sale (295,610) - - (295,610)
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Net (loss) income before cumulative effect
adjustment (65,389) 264,871 95,679 295,161
Cumulative effect of change in accounting
principles, net of limited partner's share
of ($14,723) (6,014) - - (6,014)
Net (loss) income before extraordinary items (71,403) 264,871 95,679 289,147
Extraordinary items
Early extinguishment of debt (net of
limited partner's share of $187,834) (76,312) - - (76,312)
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Net (loss) income $ (147,715) $ 264,871 $ 95,679 $ 212,835
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Basic and diluted net income per share $ (0.21) $ 0.38 $ 0.14 $ 0.31
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See accompanying Notes to Pro Forma Financial Statements
Cedar Income Fund, Ltd.
Notes to Pro Forma Financial Statements
Pro Forma Condensed Combined Balance Sheet
a. Reflects the Company's historical balance sheet as of March 31, 2002.
b. Reflects the disposition of Southpoint Parkway Center for $4.7 million.
c. Reflects pay-down of the $6 million SWH financing by the net proceeds of
approximately $4,370,000, the write-off of related deferred financing costs
of approximately $450,000, and the limited partner's share of these costs.
Pro Forma Condensed Combined Statements of Operations for the three months ended
March 31, 2002
d. Reflects the historical operations of the Company for the three months
ended March 31, 2002.
e. Reflects the operations of Southpoint Parkway Center for the three months
ended March 31, 2002.
f. Reflects the interest expense associated with the pay-down of the $6
million SWH financing by the net proceeds of $4,370,000 and also reflects
the reduced amortization expense related to the $450,000 write-off of
deferred financing costs, shown net of limited partner's interest in the
Operating Partnership.
Pro forma Condensed Combined Statements of Operations for the Year Ended
December 31, 2001
g. Reflects the historical operations of the Company for the year ended
December 31, 2001.
h. Reflects the operations of Southpoint Parkway Center for the year ended
December 31, 2001.
i. Reflects the interest expense associated with the pay-down of the $6
million SWH financing by the net proceeds of $4,370,000 and also reflects
the reduced amortization expense related to the $450,000 write-off of
deferred financing costs, shown net of limited partner's interest in the
Operating Partnership.