SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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Cedar Income Fund, Ltd.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
------------------------------------------------------------------------
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Cedar Income Fund, Ltd.
44 South Bayles Avenue
Port Washington, New York 11050
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 23, 2002
To the Stockholders of Cedar Income Fund, Ltd.
The 2002 Annual Meeting of Stockholders of Cedar Income Fund, Ltd., a
Maryland corporation (the "Company"), will be held at the offices of Cedar Bay
Realty Advisors, Inc., 44 S. Bayles Avenue, Port Washington, New York 11050,
on September 23, 2002, at 4:00 PM, local time, for the following purposes:
1. To elect two Class I Directors; and
2. To approve the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending December 31, 2002; and
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on August 21, 2002,
as the record date for the determination of stockholders entitled to notice
of, and to vote at, the meeting.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. YOU ARE URGED
TO SIGN, DATE AND OTHERWISE COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON EVEN IF
YOU HAVE SIGNED AND RETURNED YOUR PROXY CARD.
By Order of the Board of Directors
/s/ Leo S. Ullman
---------------------
Leo S. Ullman
Chairman of the Board
Port Washington, New York
August 23, 2002
CEDAR INCOME FUND, LTD.
44 SOUTH BAYLES AVENUE
PORT WASHINGTON, NEW YORK 11050
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PROXY STATEMENT
----------------------------
The accompanying Proxy is solicited by the Board of Directors of Cedar
Income Fund, Ltd., a Maryland corporation (the "Company"), for use at the
Annual Meeting of Stockholders (the "Meeting") to be held on September 23,
2002, at 4:00 PM, local time, or any adjournment thereof, at which
stockholders of record at the close of business on August 21, 2002 shall be
entitled to vote. The cost of solicitation of proxies will be borne by the
Company. The Company may use the services of its directors, officers and
others to solicit proxies, personally or by telephone; arrangements may also
be made with brokerage houses and other custodians, nominees, fiduciaries and
stockholders of record to forward solicitation material to the beneficial
owners of stock held of record by such persons. The Company may reimburse such
solicitors for reasonable out-of-pocket expenses incurred by them in
soliciting, but no compensation will be paid for their services.
Each proxy executed and returned by a stockholder may be revoked at any time
before it is voted by timely submission of written notice of revocation or by
submission of a duly executed proxy bearing a later date (in either case
directed to the Secretary of the Company) or, if a stockholder is present at
the Meeting, such stockholder may elect to revoke the prior proxy and to vote
such shares personally.
There has been mailed to each Stockholder of Record, the Company's Annual
Report to Shareholders for the fiscal year ended December 31, 2001. It is
intended that this Proxy Statement and Form of Proxy will first be sent to
stockholders on or about August 23, 2002.
On August 21, 2002, the Company had outstanding and entitled to vote with
respect to all matters to be acted upon at the meeting 694,411 shares of
Common Stock, $.01 par value per share ("Common Stock"). Each holder of Common
Stock is entitled to one vote for each share of stock held by such holder. The
presence of holders representing a majority of all the votes entitled to be
cast at the meeting will constitute a quorum at the meeting. In accordance
with Maryland law, abstentions, but not broker non-votes, are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business. The proposals to elect two Directors and to approve
the appointment of the independent auditors for 2002 require the affirmative
vote of a majority of the shares voted on each such proposal in order to pass.
Abstentions and broker non-votes are not counted in determining the votes cast
with respect to any of the matters submitted to a vote of stockholders.
It is expected that the following business will be considered at the Meeting
and action taken thereon:
1. ELECTION OF DIRECTORS
Pursuant to the By-Laws of the Company, the Board of Directors of the
Company is currently comprised of six members who are divided into three
classes serving staggered three-year terms of office. It is proposed to elect
at this Meeting two Class I Directors, each to hold office for a three-year
term until the 2005 Annual Meeting of Stockholders and until his/her successor
is duly elected and qualifies. Remaining Class II and Class III Directors will
be elected at the Annual Meetings to be held in 2003 and 2004, respectively,
for three-year terms, and until their respective successors are duly elected
and qualify. It is intended that the accompanying form of Proxy will be voted
for the nominees set forth below, each of whom is presently a Director of the
Company. If some unexpected occurrence should make necessary, in the Board of
Directors' judgment, the substitution of some other person or persons for any
of the nominees, shares will be voted for such other person or persons as the
Board of Directors may select. The Board of Directors is not aware that any
nominee may be unable or unwilling to serve as a Director. The following table
sets forth certain information with respect to the nominees and also with
respect to each Director whose term of office will continue after this
Meeting.
NOMINEES FOR ELECTION
Principal Term of
Occupation and Office Will Served as a
Name Age Positions Held Expire Director Since
----- --- -------------- ------ --------------
J.A.M.H. der Kinderen 62 Mr. der Kinderen, a Director of the Company since 1998, 2002 1998
was Director of Investments of the Rabobank Pension Fund
from 1984 through 1994. He has served, or currently
serves, as Chairman of the Board of Noro America Real
Estate B.V. (1995-present), Noro Amerika Vast Goed B.V.
(1985-present) and Mass Mutual Pierson (M.M.P.) (1988-
1997). Mr. der Kinderen has also served since 1996 as a
director of Warner Building Corporation, a real estate
investment trust.
Frank W. Matheson 58 Mr. Matheson, a Director of the Company since April 2002, 2002 2002
has been involved in the real estate industry for the past
13 years, serving as President and CEO of Homburg Canada
Incorporated, an international real estate company with
holdings in residential, commercial, industrial and retail
properties. Prior to that time, he was active in the
general insurance industry. An active community member,
Mr. Matheson is past Chairman of the Halifax School Board
and Halifax Forum Commission. He is presently Vice
Chairman and Director of the Halifax International
Airport. He has also served on other community and
corporate boards. Mr. Matheson is an affiliate of Homburg
Invest Inc., an owner of 150,000 shares of Common Stock of
the Company.
2
DIRECTORS WHOSE TERM OF OFFICE WILL CONTINUE AFTER MEETING
Principal Term of
Occupation and Office Will Served as a
Name Age Positions Held Expire Director Since
----- --- -------------- ------ --------------
Leo S. Ullman 63 Mr. Ullman, President and Chairman of the Board of 2004 1998
Directors of the Company, has been involved in real estate
property and asset management for approximately 25 years.
He has been Chairman and President of SKR Management Corp.
and Chairman of Brentway Management LLC from 1994 to date.
He has also been President of the Company and of Cedar Bay
Realty Advisors since their formation in 1998, as well as
President and sole director of a number of companies
affiliated with Cedar Bay Company, a principal shareholder
of the Company and the sole limited partner of Cedar
Income Fund Partnership, L.P. (the "Operating
Partnership"). Mr. Ullman was first elected as Chairman of
the Company in 1998 and served until November 1999. He was
re-elected in December 2000. He has been a member of the
New York Bar since 1966 and in private legal practice
until 1998. From 1984 until 1993, Mr. Ullman was a partner
in the New York law firm, Reid & Priest, and served as an
initial director of its real estate group. From 1993 until
the end of 1998, in addition to his real estate management
affiliations, Mr. Ullman was "of counsel" to the New York
office of the law firm Schnader Harrison Segal & Lewis,
LLP.
3
DIRECTORS WHOSE TERM OF OFFICE WILL CONTINUE AFTER MEETING
Principal Term of
Occupation and Office Will Served as a
Name Age Positions Held Expire Director Since
----- --- -------------- ------ --------------
Brenda J. Walker 49 Ms. Walker has been Vice President and a Director of the 2004 1998
Company since 1998, and served as its Treasurer from April
1998 until November 1999. She has been Vice President of
SKR Management Corp. since 1994, President of Brentway
Management LLC since 1994, and Vice President of API
Management Services Corp. and API Asset Management, Inc.
from 1992 through 1995. Ms. Walker has been involved in
real estate property and asset management for
approximately twenty-three years.
Everett B. Miller, III 57 Mr. Miller, a Director of the Company since 1998, became a 2003 1998
Member of the Board of Directors of Commonfund Realty,
Inc., a registered investment advisor, in May 2002. Prior
to that, Mr. Miller was the Chief Operating Officer of
Commonfund Realty and the President of Commonfund Realty's
numerous subsidiary corporations. From January 1995
through March 1997, Mr. Miller was the Principal
Investment Officer for Real Estate and Alternative
Investment at the Office of the Treasurer of the State of
Connecticut. Prior thereto, Mr. Miller was employed for 18
years at Travelers Realty Investment Co., at which his
last position was Senior Vice President.
James J. Burns 62 Mr. Burns, a Director of the Company since April 2001, has 2003 2001
been the Senior Vice President of Wellsford Real
Properties, Inc. since October 1999. He has served as
Chief Financial Officer since December 2000 and prior to
that he was Chief Accounting Officer. Mr. Burns is also a
director of One Liberty Properties, Inc., a net lease real
estate investment trust with ownership interests in
various types of properties. Mr. Burns is a Certified
Public Accountant and a member of the American Institute
of Certified Public Accountants. Mr. Burns was previously
a Senior Audit Partner with Ernst & Young's E & Y Kenneth
Leventhal Real Estate Group where he was employed for 25
years, including 23 years as a partner.
4
The Board of Directors and Committees of the Board
The powers of the Company are exercised by, or under authority of, and its
business and affairs are managed under the direction of, the Board of Directors.
In carrying out its responsibilities, the Board of Directors established an
Audit Committee, the members of which are Messrs. der Kinderen, Miller and
Burns. The principal functions of the Audit Committee include recommending to
the Board of Directors the selection of the independent auditors; consulting
with the independent auditors with respect to matters of interest to the Audit
Committee; approving the type, scope and costs of services to be performed by
the independent auditors; and reviewing the work of those persons responsible
for the Company's day-to-day compliance with accounting principles, financial
disclosures, income tax laws, internal controls and record keeping requirements.
The Board of Directors does not have standing nominating or compensation
committees. Special committees of the Board may be appointed from time to time
to consider and address specific matters of interest to the Board. During 2001,
the Board of Directors held four meetings. Each Director attended all the
meetings of the Board of Directors with the exception of one meeting at which
one of the Directors was absent. The Audit Committee held five meetings during
2001. With one exception, members of the Audit Committee each attended at least
80% of the meetings of the Committee during 2001. Mr. Burns became a member of
the Audit Committee in April 2001 and attended 66% of the meetings in 2001 as
from that date.
Compensation of Directors and Executive Officers
Ms. Walker and Mr. Ullman, who are each Officers and Directors of the
Company, and who are each also affiliated with Cedar Bay Company ("CBC") do
not receive any remuneration for their services to the Company other than
reimbursement of travel and other expenses incurred in connection with their
duties and fees paid by the Company to Cedar Bay Realty Advisors, Inc., a New
York corporation ("CBRA"), Brentway Management LLC, a New York limited
liability company ("Brentway") and SKR Management Corp., a New York
corporation ("SKR") as described below. During 2001, Directors not affiliated
with CBC, Mr. Miller, Mr. Burns and Mr. der Kinderen, received a quarterly fee
of $1,250 plus $750 for each board meeting attended. Effective January 1,
2002, independent directors' fees were increased to $2,500 per quarter and
attendance fees were increased to $1,000 per regular Board meeting and $250
per telephonic Audit Committee meeting.
Certain Relationships
Purchase of 20% interest in API Red Lion Shopping Center Associates
On May 31, 2002, Cedar-RL, LLC ("Cedar-RL"), a newly-formed special purpose,
wholly-owned subsidiary of the Operating Partnership, purchased from Silver
Circle Management Corp. ("Silver Circle"), an affiliate of Leo S. Ullman and
CBC (the limited partner of the Operating Partnership and a 27.4% owner of the
Company's outstanding shares), a 20% interest in API Red Lion Shopping Center
Associates ("Red Lion Associates"), a partnership owned by Leo S. Ullman (as
limited partner with an 8% ownership interest) and Silver Circle (as sole
general partner with a 92% ownership interest). The purchase price was
$1,182,857, of which $295,714 was paid at closing (May 31, 2002) out of the
Company's available cash with the balance evidenced by a promissory note (the
"Note") payable in three equal annual installments commencing one year after
closing and bearing interest at 7.5% due annually with each installment
payment. The Note may be prepaid in whole or in part at any time. The security
for the Note is a pledge by Cedar-RL of its interest in Red Lion Associates.
Also on May 31, 2002, Silver Circle and Leo S. Ullman sold an aggregate 69%
limited partnership interest in Red Lion Associates to Philadelphia ARC-Cedar
LLC ("ARC Cedar") for $4,360,500. As a result of such transactions, Leo S.
Ullman will have no continuing ownership interest in Red Lion Associates. The
proceeds of sale of Mr. Ullman's interest in Red Lion Associates were used in
their entirety to repay certain loans to Silver Circle. Mr. Ullman and Brenda
J. Walker, President and Vice President of the Company, respectively, are
officers of Silver Circle, but have no ownership interest in that entity.
The purchases were determined on an arm's-length basis, based on a valuation
of the Red Lion Shopping Center property at approximately $23 million
(approximately $6 million above existing first mortgage financing of
approximately $17 million). The Company previously commissioned and received
on December 14, 2001, an appraisal of the Red Lion Shopping Center from St.
John Realty Associates, Inc. at $23.7 million, including the value of a master
lease on 49,588 sq. ft. by Silver Circle.
5
The Board of Directors of the Company commissioned, and has received, a
"fairness" opinion from the investment banking firm, Robert A. Stanger & Co.
Inc., with respect to the purchase of the partnership interest in Red Lion
Associates by the Operating Partnership.
SKR, an asset management company wholly-owned by Leo S. Ullman, has received
a fee from Silver Circle in connection with the sale of its ownership interest
in Red Lion Associates to ARC-Cedar and Cedar-RL in an amount equal to 1% of
the sales price not to exceed $100,000. The initial fee payable to SKR, based
on cash proceeds of the sales received by Silver Circle, was $43,767. CBRA,
the management company which is investment advisor to the Company and to the
Operating Partnership, and which is wholly-owned by Mr. Ullman, is generally
entitled under the Investment Advisory Agreement between CBRA and the Company
to an acquisition fee of 1% of the purchase price of any property acquired by
the Company or the Operating Partnership. The fee to which CBRA would
otherwise have been entitled with respect to the purchase of the 20% interest
in Red Lion Associates by the Operating Partnership has been waived by CBRA.
Administrative and Advisory Services
The Company is an "advised" real estate investment trust. Thus, the Company
does not have any employees. The Company has contracted with CBRA to provide
administrative, advisory, acquisition and divestiture services to the Company
pursuant to an Administrative and Advisory Agreement (the "Advisory
Agreement") entered into in April 1998, and amended as of August 21, 2000 and
January 1, 2002. CBRA is wholly-owned by Leo S. Ullman. Mr. Ullman is
President and a director of, and Brenda J. Walker is Vice President of, CBRA.
The term of the amended Advisory Agreement commenced as of August 21, 2000,
and extends for a period of five years. The Advisory Agreement is
automatically renewed annually thereafter for additional one-year periods,
subject to the right of a majority of independent directors to cancel the
Advisory Agreement upon sixty days' written notice. While Mr. Ullman and Ms.
Walker are not employed by the Company, they do receive remuneration from
CBRA, Brentway, and SKR, each of which receives fees from the Company.
Under the Advisory Agreement, CBRA is obligated to: (a) provide office space
and equipment, personnel and general office services necessary to conduct the
day-to-day operations of the Company; (b) select and conduct relations with
attorneys, brokers, banks and other lenders, with accountants (subject to
audit committee approval), and with such other parties as may be considered
necessary in connection with the Company's business and investment activities,
including, but not limited to, obtaining services required in the acquisition,
management and disposition of investments, collection and disbursement of
funds, payment of debts and fulfillment of obligations of the Company, and
prosecuting, handling and settling any claims of the Company; (c) provide
property acquisition and disposition services, research, economic and
statistical data, and investment and financial advice to the Company; and (d)
maintain appropriate legal, financial, tax, accounting and general business
records of activities of the Company and render appropriate periodic reports
to the Directors and stockholders of the Company and to regulatory agencies,
including the Internal Revenue Service, the Securities and Exchange
Commission, and similar state agencies.
The Advisory Agreement may be terminated (i) for cause upon not less than
sixty days' written notice and (ii) by vote of at least 75% of the independent
directors at the end of the third or fourth year of such five year term in the
event gross assets fail to increase by 15% per annum.
Pursuant to the Advisory Agreement as in effect through December 31, 2001,
CBRA was generally entitled to receive acquisition and disposition fees of 5%
of the gross purchase price and 3% of the gross sales price, respectively.
CBRA had agreed to defer certain acquisition fees to which it may otherwise
be entitled with respect to the possible acquisition by the Company or the
Operating Partnership of certain properties owned by CBC and/or its
affiliates. Further, CBRA had agreed to defer certain fees otherwise payable
with respect to the sales in 2001 of the Operating Partnership's Corporate
Center East and Broadbent Business Center properties.
With respect to the sales of these two properties, the Operating Partnership
paid to CBRA aggregate disposition fees of $71,600, representing 1% of the
sales prices. CBRA agreed with the Board of Directors and management to defer
an additional 2% (aggregate $143,200) to which it would otherwise be entitled
pursuant to
6
the terms of the agreement, which provided generally that the deferred amounts
would be reduced and eventually eliminated if CBRA remained investment advisor
to the Company beyond December 31, 2009.
On December 18, 2001, the Board of Directors approved an Amendment to the
Advisory Agreement, reflecting a reduction in acquisition and disposition fees
payable to CBRA by the Company. Effective as of January 1, 2002, CBRA will
earn a disposition or acquisition fee, as applicable, equal to 1% of the sale/
purchase price; no other fees will be payable in connection with such
transactions.
Pursuant to the Advisory Agreement, CBRA was originally entitled to receive
an acquisition fee in the maximum amount of $1,737,500 (5%) with respect to
the acquisition of the three supermarket-anchored shopping centers and land
parcel acquired on October 9, 2001. Initially, CBRA agreed to accept a cash
fee in the amount of $173,750 (one-half of 1%). As for the balance of the fee,
CBRA had agreed to (1) waive a portion in the amount of $868,750 (2.5%) and
(2) defer a portion in the amount of $696,000 (2%). Subsequently, with
agreement of the Board of Directors, the cash fee portion paid to CBRA was
increased to 1% (aggregate $347,500), and the deferred portion was waived in
its entirety by CBRA.
In connection with the sale of Southpoint Parkway Center, a disposition fee
of $46,750 was paid to CBRA. This represents 1% of the sales price after
adjustments.
In connection with the acquisition of Loyal Plaza Shopping Center in July
2002, CBRA will receive an acquisition fee of $183,000 (1% of the purchase
price), which will be paid by the Company out of available cash flow.
As a result of the Amendment, it is expected that there will be no further
deferrals or waivers of fees payable by the Company to CBRA.
In 2001, CBRA was paid asset management fees and placement/disposition fees
of $163,404 and $419,100, respectively.
The following is a schedule of acquisition and disposition fees paid and
payable by the Company to CBRA reflecting the impact of the amendment and the
reduced acquisition and disposition fees related to the shopping centers:
Property Deferred Paid Total
- -----------------------------------------------------------------------------------------
2002 Transaction through June 30, 2002
Sale of Southpoint Parkway $ -- $ 46,750 $ 46,750
Red Lion Shopping Center (1) -- -- --
Loyal Plaza Shopping Center (2) -- -- --
2001 Transactions
Broadbent Business Center 106,000 53,000 159,000
Corporate Center 37,200 18,600 55,800
The three supermarket-anchored
shopping centers (3) -- 347,500 347,500
2000 Transaction
Germantown 52,500 22,500 75,000
----------------------------------
Total fees $195,700(4) $488,350 $684,050
==================================
- ---------------
(1) 1% acquisition fee waived by CBRA.
(2) 1% acquisition fee of $183,000 is payable to CBRA.
(3) The three supermarket-anchored shopping centers consist of Academy Plaza,
Port Richmond Village and Washington Center (including a development parcel
adjacent to Washington Center).
(4) Amount owed if the Administrative and Advisory Agreement with CBRA is not
continued beyond December 31, 2004.
7
As indicated above, deferred disposition and acquisition fees will be
reduced by 50% if CBRA remains investment advisor to the Company for the
period after December 31, 2004, but not beyond December 31, 2005. In the event
of termination or expiration of the Advisory Agreement after December 31,
2005, such deferred fees payable to Advisor shall be reduced by 10 percentage
points for each subsequent calendar year the Advisory Agreement remains in
effect, until reduced to zero in any event after December 31, 2009. Any
deferred disposition and acquisition fees payable to CBRA will also be waived
as of the effective date of termination of services by CBRA if the services of
CBRA are terminated voluntarily by CBRA.
Based on the above, it is probable that a liability has been incurred.
However, the liability at this point can only be estimated to be in the range
of zero and the full fee. There is no best estimate within the range. This
reflects the fact that depending on how long CBRA's services are being used,
the ultimate fee amount payable may well be zero. Accordingly, none of the
deferred fees have been reflected in the financial statements of the Company.
In addition to acquisition and disposition fees payable to CBRA, CBRA also
receives a monthly administrative and advisory fee equal to 1/12 of 3/4 of 1%
of the estimated current value of real estate assets of the Company, plus 1/12
of 1/4 of 1% of the estimated current value of all other assets of the
Company.
Property Management Services
Brentway provides property management, leasing, construction management and
loan placement services to the Company's real properties pursuant to a
Management Agreement dated April 1998 between Brentway and the Company (the
"Management Agreement") and individual management agreements between Brentway
and each of the Fund's properties. Brentway is owned by Mr. Ullman and Ms.
Walker, who are also Chairman and President of Brentway, respectively. Mr.
Ullman is President and Chairman of the Company and Ms. Walker is Vice
President and Director of the Company. The term of the Management Agreement is
for one year and is automatically renewed annually for additional one-year
periods subject to the right of either party to cancel the Management
Agreement upon sixty days' written notice. Under the Management Agreement,
Brentway is obligated to provide property management services, which include
leasing and collection of rent, maintenance of books and records,
establishment of bank accounts and payment of expenses, maintenance and
operation of property, reporting and accounting for the Company regarding
property operations, and maintenance of insurance.
As discussed above, Brentway has entered into individual management
agreements with each entity holding title to the properties owned by the
Company. Such individual management agreements are required by the properties'
first mortgage lenders and in some instances by the individual partnership
agreements. The following table outlines the fees provided in the Management
Agreement and the fees provided in each property's management agreement
(Greentree Road is vacant land and as such there is no individual management
agreement):
8
Management Leasing Construction Loan Placement
Subject Fee Fee [4] Management Fee Fee
- --------------------------------------------- ---------- ------- -------------- --------------
Management Agreement of April 1998 5% 6% N/A N/A
Academy Plaza [5] 4% 4.5% 5% 1%
Port Richmond Village [5] 4% 4.5% 5% 1%
Washington Center [5] 4% 4.5% 5% 1%
The Point Shopping Center [5] 3% 4.5% 5% 1% [1]
Red Lion Shopping Center [2] [5] 4% 4.5% 5% 1% [1]
Loyal Plaza Shopping Center [3] 3% 4% 5% N/A
- ---------------
[1] Up to a maximum of $100,000.
[2] As of May 31, 2002, 20% of all fees paid to Brentway are in turn paid to
ARC-Cedar Manager LLC pursuant to terms of the purchase agreement regarding
the acquisition by ARC-Cedar of a 69% limited partnership interest in Red
Lion Associates.
[3] Acquired July 2, 2002.
[4] Only if no outside broker.
[5] In the event an outside broker is involved, then the fee to Brentway is
generally 2.25%. In the event Brentway can achieve savings vis-a-vis the
outside broker's full commission, then Brentway shall be entitled to one-
half of the savings on the outside broker's otherwise full commission.
Administrative and Advisory, Property Management, Leasing and Other Fees
Paid to Related Parties:
Years ended
December 31,
2001 2000
-------- -------
Administrative and Advisory Fees
Cedar Bay Realty Advisors, Inc. $163,404 $97,872
-----------------------
Property Management Fees
Brentway $103,149 $69,611
-----------------------
Construction Management Fees
Brentway (1) $180,000 $28,239
-----------------------
Leasing Fees
Brentway $135,354 $44,063
-----------------------
Legal Fees
Stuart H. Widowski / SKR Management Corp. (2) $181,525 $33,088
-----------------------
Loan Placement Fees
Brentway (3) $100,000 $ --
-----------------------
- ---------------
(1) Brentway was entitled to a construction management fee of 5% of the hard
costs of construction ($7,266,835). Brentway agreed on a fee of $200,000 of
which $180,000 was paid in 2001.
(2) Fees of $181,525 were paid to Stuart H. Widowski, Esq., SKR's in-house
counsel and Secretary of the Company, through SKR, an affiliate of CBRA,
Brentway, and Leo S. Ullman, for legal services provided. Of such fee,
$85,000 was attributable to the acquisition of the three supermarket-
anchored shopping centers and negotiation of the corresponding financing.
(3) A placement fee of $100,000 was paid to Brentway in 2001 for services
rendered in obtaining a refinancing of The Point Associates, L.P.'s first
mortgage loan.
Leasing and management fees paid by the Company during these periods were
also paid to third parties. Brentway subcontracted with local management
companies for site management and leasing services for the Company's office
properties in Jacksonville, Florida, and Salt Lake City, Utah, which properties
were sold as of May 24, 2002 and May 22, 2002, respectively.
9
Legal Services
SKR Management Corp. is wholly-owned by Leo S. Ullman. Stuart H. Widowski,
Esq. through SKR, provides certain legal services to the Company and its
properties at rates which the Company believes to be less than those
prevailing in the market.
In 2001, SKR was paid fees for legal services in the amount of $181,525.
Audit Committee Report
The Audit Committee is comprised of James J. Burns, J.A.M.H. der Kinderen
and Everett B. Miller, III, all of whom are independent directors. The Audit
Committee operates under a written charter which was adopted by the Board of
Directors on June 14, 2000. The Audit Committee recommends and the Board
appoints the Company's independent accountants.
Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing
an independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility, among other things, is to
monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the
Audit Committee that its consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the consolidated financial statements
with management and the independent accountants. The Audit Committee discussed
with the independent accountants matters required to be discussed by the
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Company's independent accountants also provided to the Audit Committee
the written disclosures and letter required by the Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees), and the
Audit Committee discussed with the independent accountants the firm's
independence. The Audit Committee also considered whether the provision by
Ernst & Young LLP of certain other non-audited related services to the Company
is compatible with maintaining such auditors' independence.
Based on the Audit Committee's discussion with management and the
independent accountants and the Audit Committee's review of the representation
of management and the report of the independent accountants to the Audit
Committee, the Audit Committee recommended that the Board of Directors include
the audited consolidated financial statements in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001, filed with the Securities
and Exchange Commission.
Audit Committee:
----------------
James J. Burns
J.A.M.H. der Kinderen
Everett B. Miller, III
10
Stockholder Return Performance Presentation
The following line graph sets forth for the period January 1, 1997 through
December 31, 2001, a comparison of the percentage change in the cumulative
total stockholder return on the Company's Common Stock compared to the
cumulative total return of the Standard & Poor's ("S&P") Stock Index; and the
index of equity real estate investment trusts prepared by the National
Association of Real Estate Investment Trusts ("NAREIT"), the NAREIT Equity
REIT Total Return Index.
The graph assumes that the shares of the Company's Common Stock were bought
at the price of $100 per share and that the value of the investment in each of
the Company's Common Stock and the indices was $100 at the beginning of the
period. The graph further assumes the reinvestment of dividends when paid.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG CEDAR INCOME FUND, LTD. NEW, THE S&P 500 INDEX
AND THE NAREIT EQUITY INDEX
[GRAPHIC OMITTED]
* $100 invested on 12/31/96 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
Cumulative Total Return
-------------------------------------------------------------
12/96 12/97 12/98 12/99 12/00 12/01
CEDAR INCOME FUND, LTD. .............. 100.00 165.44 168.96 181.83 85.13 134.60
S & P 500 ............................ 100.00 133.36 171.47 207.56 188.66 166.24
NAREIT EQUITY ........................ 100.00 120.26 99.21 94.63 119.58 136.24
11
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information with respect to each person and
group (as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934 (the "Exchange Act")) known by the Company to be the beneficial owner
of more than five percent (5%) of the outstanding shares of Common Stock as of
August 21, 2002. Each such owner has sole voting and investment powers with
respect to the shares of Common Stock owned by it.
Number of Shares
Name and Address Beneficially Owned Percent of Class
- ---------------- ------------------ ----------------
Cedar Bay Company(1) 1,890,737 78.9%
c/o SKR Management Corp.
44 South Bayles Avenue
Port Washington, NY 11050
Homburg Invest Inc. 150,000 21.6%
11 Akerley Boulevard
Halifax, Nova Scotia
Canada B3B1V7
The following table sets forth the number of shares of Common Stock
beneficially owned as of August 21, 2002 by each Director and officer and by
all Directors and officers as a group (7 persons).
Amount and Nature
Name of Beneficial Ownership Percent of Class
- ---- ----------------------- ----------------
Leo S. Ullman .................... 1,896,470(2)(4) 79.1%
James J. Burns ................... 3,333(4) (3)
Frank W. Matheson ................ 0(4) NA
J.A.M.H. der Kinderen ............ 3,433(4) (3)
Everett B. Miller III ............ 3,433(4) (3)
Brenda J. Walker ................. 3,833(4) (3)
Stuart H. Widowski ............... 500 (3)
Directors and Officers as a group
(7 persons) .................... 79.2%
Compliance With Section 16(a) of The Exchange Act
The Company believes that during 2001 all of its officers, Directors and
holders of more than 10% of its Common Stock complied with all filing
requirements under Section 16(a) of the Securities Exchange Act of 1934, except
that each of the five directors failed to file in a timely manner Form 5,
reporting on the grant of stock options during 2001. Each of Ms. Walker and Mr.
Widowski failed to file a Form 4 reporting two transactions, both relating to
the acquisition of 200 shares of Common Stock each. Mr. Ullman failed to file
Form 4 reporting three transactions relating to the acquisition of 600 shares of
Common Stock. In making this disclosure, the Company has relied solely on
written representations of its Directors, officers and more than 10% holders and
on copies of reports that have been filed with the Securities and Exchange
Commission.
Options Granted
Effective July 10, 2001, options were granted to each of the then-five
Directors to purchase 10,000 shares at $3.50 per share, the stock price as of
that date. The options vest over a three year period, commencing one year
after grant. None of the options has been exercised.
- ---------------
(1) Represents 189,737 shares of Common Stock and 1,701,000 Units convertible
into shares of Common Stock owned by Cedar Bay Company. Cedar Bay Company
is a New York partnership owned 55% by Duncomb Corp., 40% by Lindsay
Management Corp. and 5% by Hicks Corp. Mr. Ullman is an executive officer
and a Director, but not an owner, of each of those entities.
(2) Mr. Ullman may be deemed to be the beneficial owner of all the shares of
Common Stock and Units owned by Cedar Bay Company. Mr. Ullman disclaims
beneficial ownership of such securities. Mr. Ullman owns 2,400 shares of
the Company's Common Stock.
(3) Less than 1%.
(4) Includes 3,333 shares of Common Stock issuable on exercise of stock
options.
12
2. APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending December 31,
2002. Ernst & Young LLP acted as the Company's auditors in 2001. A
representative of Ernst & Young LLP is expected to be available telephonically
at the meeting with the opportunity to make a statement if such representative
so desires and to respond to appropriate questions.
Audit Fees
The aggregate fees we were billed by Ernst & Young LLP for professional
services rendered for the audit of our annual financial statements for 2001
and the reviews of the financial statements included in our Forms 10-Q for
2001 were $86,500.
Financial Information Systems Design and Implementation Fees
Ernst & Young LLP did not render any services to us during 2001 related to
financial information systems design and implementation. Therefore, we were
not billed for any services of that type.
All Other Fees
The aggregate fees we were billed for 2001 by Ernst & Young LLP for
professional services other than those described above under the captions of
"Audit Fees" and "Financial Information Systems Design and Implementation Fees"
were $46,360, including 3-14 (property acquisition) audits, 8-K and 8-K/ A
filings, research, attendance at Audit Committee meetings and out of pocket
expenses.
Audit Committee Consideration of these Fees
Our Audit Committee has considered whether the provision of the services
under the category "All Other Fees" is compatible with maintaining the
independence of Ernst & Young LLP.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS.
3. OTHER MATTERS
Stockholder Proposals
Proposals of stockholders intended to be presented at the Company's 2002
Annual Meeting of Stockholders must be received by the Company on or prior to
April 25, 2003 to be eligible for inclusion in the Company's Proxy Statement
and form of Proxy to be used in connection with such meeting.
Other Business
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the Meeting
is that hereinabove set forth. If any other matter or matters are properly
brought before the meeting, or any adjournment thereof, it is the intention of
the persons named in the accompanying form of Proxy to vote the Proxy on such
matters in accordance with their judgment.
Leo S. Ullman
Chairman of the Board
Dated: August 23, 2002
13
PROXY
CEDAR INCOME FUND, LTD.
2002 Annual Meeting of Stockholders - September 23, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Cedar Income Fund, Ltd., a Maryland
corporation, hereby appoints Leo S. Ullman and Brenda J. Walker and each of them
the proxies of the undersigned with full power of substitution to vote at the
Annual Meeting of Stockholders of the Company to be held at 4:00 PM on,
September 23, 2002, and at any adjournment or adjournments thereof (the
"Meeting"), with all the power which the undersigned would have if personally
present, hereby revoking any proxy heretofore given. The undersigned hereby
acknowledges receipt of the proxy statement for the Meeting and instructs the
proxies to vote as directed on the reverse side.
--------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
--------------
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
CEDAR INCOME FUND, LTD.
September 23, 2002
| Please Detach and Mail in the Envelope Provided |
A /X/ Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" PROPOSALS 1 AND 2.
FOR all nominees
listed at right
(except as marked
to the contrary) WITHHELD
1. To elect 2 / / / / Nominees:
nominees J.A.M.H. der Kinderen
for Directors: Frank W. Matheson
- ----------------------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To ratify the appointment of Ernst & Young LLP as independent auditors for / / / / / /
the fiscal year ending December 31, 2002.
3. With discretionary authority upon such other matters as may properly come before the Meeting.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED BELOW, FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2002, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
Signature_____________________________________ Date ___________ Signature_____________________________________ Date ___________
NOTE: Please sign exactly as your name appears on this proxy card. When signing as attorney, executor, trustee or guardian,
please give your full title.