<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 2 TO SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
CEDAR INCOME FUND, LTD.
(NAME OF SUBJECT COMPANY)
CEDAR BAY COMPANY
(BIDDER)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
15043810
(CUSIP Number of Class of Securities)
Leo S. Ullman
Chief Executive Officer, Cedar Bay Company
c/o SKR Management Corp.
44 South Bayles Avenue
Port Washington, New York 11050
(516) 883-5577
(Name, Address and Telephone Number of Person Authorized
To Receive Notices and Communications on Behalf of Bidder)
Copies to:
Clinton A. Stuntebeck, Esq. Joseph R. Manghisi, Esq.
Schnader Harrison Segal & Lewis LLP Schnader Harrison Segal & Lewis LLP
1600 Market Street 330 Madison Avenue
Philadelphia, Pennsylvania 19103-7286 New York, New York 10017
(215) 751-2034 (212) 973-8038
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee
---------------------- --------------------
$15,717,877 $3,143.58
- -------------------------------------------------------------------------------
* For purposes of calculating the filing fee only. This calculation
assumes the purchase of approximately 2,245,411 shares of Common Stock of
Cedar Income Fund, Ltd. at $7.00 per share net in cash. The amount of the
filing fee, calculated in accordance with Regulation 240.0-11 promulgated
under the Securities Exchange Act of 1934, as amended, equals 1/50 of one
percent of the value of the maximum number of shares proposed to be purchased
pursuant to the Offer of Purchase.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and date of its filing.
Amount Previously Paid: Filing Party: Cedar Bay Company
Form of Registration No.: Date Filed: January 13, 1998
===============================================================================
<PAGE>
- ---------------------- ---------------------
CUSIP No. 15043810 14D-1 Page 2 of 7 Pages
- ---------------------- ---------------------
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON CEDAR BAY COMPANY
S.S. OR I.R.S. IDENTIFICATION 11-341-2264
NO. OF ABOVE PERSON
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS BK
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(E) AND 2(F) [ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION New York
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON 0
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN
ROW (7) 0
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON PN
- --------------------------------------------------------------------------------
This Schedule 14D-1 relates to a tender offer by Cedar Bay Company, a New
York general partnership (the "Purchaser"), to purchase up to, but not less
than a majority of, 2,245,411 shares of Common Stock, par value $1.00 per
share (the "Shares"), of Cedar Income Fund, Ltd., an Iowa business corporation
(the "Company"), at a price of $7.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase (the "Offer to Purchase") and the Letter of
Transmittal (which together constitute the "Offer"), which are annexed to and
filed with this Schedule 14D-1 as Exhibits (a)(1) and (a)(2), respectively.
This Schedule 14D-1 is being filed by the Purchaser.
2
<PAGE>
- ---------------------- ---------------------
CUSIP No. 15043810 14D-1 Page 3 of 7 Pages
- ---------------------- ---------------------
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Cedar Income Fund, Ltd., an Iowa
business corporation (the "Company"). The address of its principal executive
offices is 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499.
(b) The Purchaser, a New York general partnership, seeks to purchase,
pursuant to the terms of the Offer, up to 100% of, but not less than a
majority of, the 2,245,411 shares of common stock, par value $1.00 per share
(the "Shares") that are currently outstanding, at $7.00 per Share net to the
seller in cash. Reference is hereby made to the information set forth in
Section 9 ("Price Range of the Shares; Dividends") of the Offer to Purchase,
which is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d) Reference is hereby made to the information set forth in the
"Introduction" and Section 3 ("Certain Information Concerning the Purchaser
and its Affiliates") and Schedule I of the Offer to Purchase, each of which is
incorporated herein by reference.
(e) - (f) During the last five years, none of the Purchaser, nor, to the
best of its knowledge, any of its partners, nor any of their respective
corporate general partners (or any of their respective executive officers or
directors), directors or officers, as the case may be, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding any such person was
or is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
(g) Reference is made to the information set forth in Schedule I
("Partners, Directors and Executive Officers of the Purchaser and its
Affiliates") of the Offer to Purchase, which is incorporated herein by
reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) - (b) Except as described in Item 7 herein, there have been no
transactions between the Purchaser (the person filing this Schedule 14D-1) and
the Company (the subject company), or any of its employees, directors,
executive officers, controlling persons or affiliates during the three full
fiscal years preceding the date of this Schedule 14D-1. Reference is also
hereby made to the information set forth in the "Introduction," Section 3
("Certain Information Concerning the Purchaser and its Affiliates") and
Section 10 ("Background of the Transaction -- Memorandum of Understanding and
Tender Agreement") of the Offer to Purchase, which is incorporated herein by
reference.
3
<PAGE>
- ---------------------- ---------------------
CUSIP No. 15043810 14D-1 Page 4 of 7 Pages
- ---------------------- ---------------------
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) - (c) Reference is hereby made to the information set forth in Section
7 ("Financing of the Offer") of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) - (g) Reference is hereby made to the information set forth in the
"Introduction," Section 1 ("Background of the Transaction -- Memorandum of
Understanding and Tender Agreement"), Section 2 ("Purpose and Effects of the
Offer -- Operations Following Consummation of the Offer and Interests of SKR and
Others in the Transaction") and Section 5 ("Effect of the Offer on the Market
for the Shares; NASDAQ Listing; Exchange Act Registration; Status as Real Estate
Investment Trust"), of the Offer to Purchase, which is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) None.
(b) Reference is hereby made to the information set forth in Section 1
("Background of the Transaction -- Memorandum of Understanding and Tender
Agreement") of the Offer to Purchase, which is incorporated herein by reference.
Except pursuant to the Offer described herein, neither the Purchaser, nor, to
the best of its knowledge, any of its executive officers or partners, (or the
directors or executive officers of each such partners' respective corporate
general partners) has any beneficial interest in or right to acquire any of the
Shares.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
Reference is hereby made to the information set forth in the
"Introduction," Section 1 ("Background of the Transaction -- Memorandum of
Understanding and Tender Agreement") and Section 3 ("Certain Information
Concerning the Purchaser and its Affiliates") of the Offer to Purchase, which is
incorporated herein by reference.
4
<PAGE>
- ---------------------- ---------------------
CUSIP No. 15043810 14D-1 Page 5 of 7 Pages
- ---------------------- ---------------------
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the information set forth in Section 13
("Certain Fees and Expenses") of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Certain financial statements of the Purchaser and its affiliates have been
included in this Amendment No. 2 to Schedule 14D-1.
ITEM 10. ADDITIONAL INFORMATION.
(a) N/A
(b) Reference is hereby made to the information set forth in the
"Introduction" and Section 12 ("Certain Legal and Regulatory Matters") of the
Offer to Purchase, which is incorporated herein by reference.
(c) N/A
(d) N/A
(e) To the best knowledge of the Purchaser, no such proceedings are pending
or have been instituted.
(f) Reference is hereby made to the Offer to Purchase and the related
Letter of Transmittal, each of which is incorporated herein by reference.
5
<PAGE>
- ---------------------- ---------------------
CUSIP No. 15043810 14D-1 Page 6 of 7 Pages
- ---------------------- ---------------------
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT
NO.
- ---------
(1) Certain financial statements of the Purchaser and certain of its affiliates.
(2) Offer to Purchase, dated January 12, 1998, as amended.
(3) Press release issued by the Purchaser on February 24, 1998.
6
<PAGE>
- ---------------------- ---------------------
CUSIP No. 15043810 14D-1 Page 6 of 7 Pages
- ---------------------- ---------------------
After due inquiry and to the best of my knowledge and belief, I certify
that the information in this statement is true, complete and correct.
CEDAR BAY COMPANY
By: /s/ Leo S. Ullman
--------------------------------------
Name: Leo S. Ullman
Title: Chief Executive Officer
Dated: February 25, 1998 TRIANGLE CENTER ASSOCIATES, L.P.
By: Buttzville Corp., its
general partner
By: /s/ Leo S. Ullman
-----------------------------------
Name: Leo S. Ullman
Title: President
THE POINT ASSOCIATES, L.P.
By: Selbridge Corp., its
general partner
By: /s/ Leo S. Ullman
-----------------------------------
Name: Leo S. Ullman
Title: President
/s/ Leo S. Ullman
---------------------------------------
Leo S. Ullman
7
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- --------- -----------
(1) Certain financial statements of the Purchaser and certain of its affiliates.
(2) Offer to Purchase, dated January 12, 1998, as amended.
(3) Press release issued by the Purchaser on February 24, 1998.
<PAGE>
Cedar Bay Company
Triangle Center Associates, L.P.
The Point Associates, L.P.
(unaudited)
<TABLE>
<CAPTION>
Years Ended December 31, Proforma
----------------------------------------- --------
1995 1996 1997 1997
<S> <C> <C> <C> <C>
Combined Statements of Operations
Total Revenues $ 3,682,711 $ 4,181,179 $4,193,648 $4,347,189
Net Income (Loss) $ (270,738) $ 220,705 $ 68,714 $ (773,095)
December 31, 1997
-------------------------
Historical ProForma
---------- ---------
Combined Balance Sheets
Total Assets $27,254,807 $33,365,008
Total Indebtedness $13,020,418 $20,150,000
Total Other Liabilities 431,669 335,836
Total Liabilities $13,452,087 $20,485,836
Total Partners' Capital $13,802,720 $12,879,172
Total Liabilities and Partners'
Capital $27,254,807 $33,365,008
The proforma financial statements are
intended to reflect projected, but
presently uncommitted re-financing of the
two shopping center properties in the
amount of $20 million of a period of 10
years at an 8% interest rate with
amortization on a 25 year schedule, as
well as financing of the stock purchased
pursuant to the Tender Offer in an
aggregate amount of $6 million at an
interest rate of 13% without amortization
on a 2 year loan.
</TABLE>
<PAGE>
COMBINED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
December 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Assets
Rental property - at cost
Land $ 5,067,973 $ 5,067,973
Building, improvements and equipment (net of
accumulated depreciation of $4,641,879 and $3,821,049
respectively) 18,528,467 17,624,877
----------- -----------
Net rental property 23,596,440 22,692,850
Deposit Cedar Income Fund, LTD. (Note 1) 750,000
Cash 198,269 687,792
Real estate tax escrow 128,287 114,786
Restricted cash (Note 4) 513,545 501,827
Rents receivable 139,887 270,491
Deferred rents receivable 248,963 274,060
Prepaid expenses 180,923 166,240
Deferred costs (net of accumulated amortization
of $ 1,050,576 and $777,132 respectively) (Note 3) 1,498,493 1,355,491
----------- -----------
Total assets $27,254,807 $26,063,537
=========== ===========
Liabilities and partners' capital
Liabilities:
Mortgages payable (Note 4) $13,020,418 $11,349,855
Accrued interest 143,499 95,225
Accounts payable and accrued expenses 166,413 207,872
Advance from affiliate 90,000
Tenants' security deposits 31,757 76,579
----------- -----------
Total liabilities 13,452,087 11,729,531
Commitments and contingencies (Notes 1,2,4,5,6,7 and 8 )
Partners' capital 13,802,720 14,334,006
----------- -----------
Total liabilities and partners' capital $27,254,807 $26,063,537
=========== ===========
</TABLE>
See accompanying notes
<PAGE>
COMBINED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1997 1996 1995
----------- ----------- ----------
<S> <C> <C> <C>
Revenues
Rent
Base $ 2,772,383 $ 2,514,916 $ 2,485,368
Percentage rents 94,381 239,506 166,398
Tenant reimbursements 1,273,105 1,384,028 929,195
Other 53,779 42,729 101,750
----------- ----------- -----------
Total revenues 4,193,648 4,181,179 3,682,711
Expenses:
Payroll and related costs 222,568 217,394 208,181
Real estate taxes 398,098 395,084 422,435
Utilities 596,487 596,443 606,109
Insurance 55,206 53,486 54,730
Repairs and maintenance 203,723 262,607 213,514
Renting 211,045 196,457 205,339
Administrative 416,784 397,461 401,318
Interest 1,137,794 1,023,020 1,051,044
Depreciation 820,830 718,366 731,782
Amortization 62,399 100,156 58,997
----------- ----------- -----------
Total expenses 4,124,934 3,960,474 3,953,449
----------- ----------- -----------
Net income (loss) $ 68,714 $ 220,705 $ (270,738)
=========== =========== ===========
</TABLE>
See accompanying notes
<PAGE>
COMBINED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------
1997 1996 1995
--------------- -------------- ----------
<S> <C> <C> <C>
Operating activities
Net income (loss) $ 68,718 $ 220,705 $ (270,738)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 883,229 818,522 780,779
Amortization of deferred leasing costs 211,045 196,457 205,339
(Increase) decrease in restricted cash (11,718) 17,709 60,464
Increase in rents receivable 110,879 45,268 51,822
Decrease (increase) in prepaid expenses (27,644) 81,488 (94,164)
Increase (decrease) in accounts payable and accrued (41,103) (39,154) (166,085)
expenses
Increase in accrued interest 138,274 26,464 (8,681)
----------- ----------- -----------
Net cash provided by operating activities 1,331,680 1,367,459 558,736
Investing activities
Rental property additions (1,725,317) (443,800) (134,504)
Deferred Leasing (416,446) (64,572) (115,555)
Deposit - Cedar Income Fund, Ltd. (750,000) -- --
----------- ----------- -----------
Net cash used in investing activities (2,891,763) (508,372) (250,059)
Financing activities
Proceeds from borrowings 1,953,815 1,296,856 249,856
Scheduled mortgage principal payments (283,252) (891,604) (232,368)
Deferred mortgage costs -- (115,421) --
Partners' contributions -- -- 93,813
Partners' distributions (600,000) (820,000) (154,608)
----------- ----------- -----------
Net cash provided by (used in) financing activities 1,070,563 (530,169) (43,307)
Increase (decrease) in cash (489,520) 328,918 265,370
Cash - beginning of year 687,789 358,871 93,501
----------- ----------- -----------
Cash - end of year 198,269 687,789 358,871
=========== =========== ===========
Supplemental disclosure of cash flow information -
Cash paid during the year for interest $ 1,127,419 $ 999,104 $ 1,037,594
=========== =========== ===========
</TABLE>
See accompanying notes
<PAGE>
Cedar Bay Company
Triangle Center Associates, L.P.
The Point Associates, L.P.
Combined Statements of Partners' Capital
(Unaudited)
Balance at December 31, 1994 $ 15,264,834
Distributions (184,608)
Contributions 123,813
Net (loss) for the year ended December 31, 1995 (270,738)
------------
Balance at December 31, 1995 14,933,301
Distributions (820,000)
Net income for the year ended December 31, 1996 220,705
------------
Balance at December 31,1996 14,334,006
Distributions (600,000)
Net income for the year ended December 31, 1997 68,714
------------
Balance at December 30, 1997 $ 13,802,720
============
See accompanying notes
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Notes to Combined Financial Statements
(Unaudited)
December 31, 1997
1. Proposed Transaction, Organization and Nature of Business
Proposed Transaction
Cedar Bay Company, a New York General Partnership ("Cedar Bay"), was organized
in December 1997 by its two partners Triangle Center Associates, L.P.
("Triangle Center") and The Point Associates, L.P. ("The Point") to acquire
the stock of Cedar Income Fund, LTD ("Cedar Income"), a real estate investment
trust whose shares are traded on the NASDAQ, through a tender offer. Cedar Bay
has advanced a $750,000 deposit to Cedar Income in connection with the
transaction.
Organization and Nature of Business
On December 23, 1988, Triangle Center acquired and began operating a community
shopping center in Lancaster, Pennsylvania. The Property presently has
approximately 223,000 square feet of leasable retail space. In addition, this
property contains, as one or more separate tax lots, approximately 8 acres of
unimproved land zoned for residential development.
On December 23, 1988, The Point acquired and began operating a regional
shopping center in Lower Paxton Township, Dauphin County, Pennsylvania. The
shopping center has approximately 268,000 square feet of leasable retail space
and 28,000 square feet of office space.
Partner Allocations and Distributions
Pursuant to the Triangle Center partnership agreement, net profits or losses
are allocated among the partners, Buttzville Corp. ("Buttzville") and Leo S.
Ullman ("Ullman"), in proportion to the Sharing Ratio (as defined).
Distributions of cash are allocated to partners pro rata in accordance with
the Sharing Ratio.
The Point partnership agreement provides for the distribution of Cash Flow and
Proceeds of Capital Transactions, as defined therein, to the partners. Cash
Flow is to be distributed in the following priority: (i) to pay a cumulative
9% per annum return (compounded annually) on net cash contribution (as
defined) to Selbridge Corporation N.V. ("Selbridge") and the Class A Limited
Partner, Mr. Ullman and (ii) to the partners in
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Notes to Combined Financial Statements
(Unaudited)
December 31, 1997
1. Proposed Transaction, Organization and Nature of Business (continued)
proportion to their respective percentage interest. There are other provisions
for the distribution of Proceeds of Capital Transactions, as defined.
2. Summary of Significant Accounting Policies
Principles of Combination
The accompanying combined financial statements are prepared on a combined
basis as a result of the ownership of Cedar Bay by Triangle Center and The
Point and the ownership of the latter partnerships by Mr. Ullman and by
Selbridge and Buttzville which are ultimately owned by the same entity. All
significant intercompany transactions and balances have been eliminated in
combination.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles require management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Real Estate
Financial Accounting Standards Board Statement of Financial Accounting
Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flow estimated to be generated by those
assets are less than the assets' carrying amount SFAS No. 121 also addresses
the accounting for long-lived assets that are expected to disposed of. Through
December 31, 1997 no indicators of impairment were present and no impairment
losses have been recorded.
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Notes to Combined Financial Statements
(Unaudited)
December 31, 1997
2. Summary of Significant Accounting Policies (continued)
Depreciation of Real Estate Properties
Depreciation and amortization is computed on the straight-line method as
follows:
Category Term
- ------------------------------------------------------------------------------
Building 40 years
Building improvements remaining life of the building
Furniture and fixtures seven years
Tenant improvements remaining life of the lease
Amortization
Deferred financing and leasing costs are amortized as follows:
Method Life
--------------------------------------------
Financing costs Term of related mortgage 3 to 5 years
Leasing costs Term of related lease 3 to 10 years
Deferred financing costs are expensed when the associated debt is refinanced
before maturity.
Restricted Cash
Restricted cash consists of security deposits and additional mortgage
collateral.
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Notes to Combined Balance Sheet
(Unaudited)
December 31, 1997
2. Summary of Significant Accounting Policies (continued)
Revenue Recognition
Rental revenue is recognized on a straight-line basis over the term of the
lease. The excess of rents recognized over amounts contractually due pursuant
to the underlying leases are included in deferred rents receivable on the
accompanying combined balance sheet. Contractually due but unpaid rents are
also included in receivables on the accompanying combined balance sheets.
Income Taxes
The income or loss of the partnerships flow through to the partners, who are
responsible for including their share of the entity's income or loss on their
respective income tax returns.
Credit Risk
Management of Triangle Center and The Point performs on-going credit
evaluation of its tenants and requires certain tenants to provide security
deposits. As of December 31, 1997 three tenants occupy an aggregate of 54% of
the property owned by The Point and four tenants occupy an aggregate of 76% of
the property owned by Triangle Center.
3. Deferred Costs
Deferred costs and accumulated amortization as of December 31, 1997 and 1996
are as follows:
1997 1996
------------------------- -------------------------
Deferred Accumulated Deferred Accumulated
Costs Amortization Costs Amortization
---------- ---------- ---------- ----------
Financing costs $ 348,660 $ 203,403 $ 348,660 $ 141,004
Cedar Income
(transaction cost) 90,000
Leasing costs 2,110,409 847,173 1,783,963 636,128
---------- ---------- ---------- ----------
$2,549,069 $1,050,576 $2,132,623 $ 777,132
========== ========== ========== ==========
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Notes to Combined Financial Statements
(Unaudited)
December 31, 1997
4. Mortgage Notes Payable
The mortgage notes payable are collateralized by the respective properties,
assignments of rents and leases and $513,545 of restricted cash of Triangle
Center as of December 31, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
Mortgage Accrued Mortgage Accrued
Property/Partnership Mortgage Notes Payable Interest Payable Interest
- ----------------------------------------------------------------------------------------------------------------------------------
1997 1997 1996 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Point Center, Retail First Mortgage interest of
prime plus 1% (9.5% at December 31, 1997) monthly
payments of principle and interest based upon a 20
year amortization schedule, matures June 30, 1999 $ 4,635,076 $ 37,929 $ 4,758,193 $ 37,900
- ----------------------------------------------------------------------------------------------------------------------------------
The Point Center, Retail Second Mortgage, interest at 10%,
due no later than November 30, 1998 750,000 5,833
- ----------------------------------------------------------------------------------------------------------------------------------
Triangle Center,
Retail Center First Mortgage, interest 1.25% in excess of
Farmers First Bank ("Farmers") First Market Loan
rate not to exceed 9.25% (9.25% of December 31,
1997) amortized based upon a 216 month
amortization term due June 30, 2002 4,991,157 39,222 5,151,292 40,363
- ----------------------------------------------------------------------------------------------------------------------------------
Triangle Center,
Retail Center Second Mortgage construction loan
not to exceed $3,262,590 for tenant
improvements of which $1,778,405
remains available to be drawn at
December 31, 1997, interest at 1%
over Farmers note rate not to exceed
9.25% (9.25% effective rate at December
31, 1997) repayable from monthly operating
income, due on June 30, 2002 2,494,185 -- 1,290,370 8,216
- ----------------------------------------------------------------------------------------------------------------------------------
Triangle Center
(unimproved residential
land) First Mortgage, interest of 7.78%,
matured on June 17, 1995, owed to
an assignee of the Resolution Trust
Corporation which has commenced
foreclosure proceedings 150,000 *60,515 150,000 *46,645
----------- ----------- ----------- -----------
* includes penalties $13,020,418 $ 143,499 $11,349,855 $ 133,124
=========== =========== =========== ===========
</TABLE>
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Notes to Combined Financial Statements
(Unaudited)
December 31, 1997
4. Mortgage Notes Payable (Continued)
The Point's first mortgage loan agreement contains certain covenants,
including maintenance of a minimum debt service coverage ratio and a minimum
property occupancy level.
The second mortgage loan of The Point was obtained in December 1997 to fund
the deposit required for the Cedar Income tender offer (Note 1). It is
expected to be repaid from the financing proceeds of the tender offer. The
lender has been granted an option to purchase shares of Cedar Income from
Cedar Bay equal to the tender offer price based upon the loan amount and
accrued interest. The lender will also be granted an option to purchase 20,000
shares from Cedar Bay for the tender offer price, for up to one year from
issuance. Mr. Ullman has provided a limited guaranty of the loan.
Aggregate mandatory repayments of debt as of December 31,1997 are as follows:
1998 $ 1,206,784
1999 4,759,747
2000 268,378
2001 294,283
2002 6,491,226
-----------
$13,020,418
===========
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Notes to Combined Financial Statements
(Unaudited)
December 31, 1997
5. Leases
Rental income is derived from the leasing of space to retail and office
tenants. All leases are accounted for as operating leases. The leases are for
fixed terms of varying length. Leases generally provide for minimum rental
plus percentage rentals based on the tenant sales volume and also require each
tenant to pay its portion of increases, real estate taxes, common area
expenses and utility expense.
Minimum future rental income under noncancelable operating leases, excluding
any amount due as percentage rents and amounts that would be due from new
leases or the exercise of renewal options under existing leases, as of
December 31, 1997 is as follows:
1998 $ 2,257,513
1999 2,398,789
2000 2,090,796
2001 1,829,715
2002 1,773,257
Thereafter 9,352,729
-----------
$19,702,799
===========
6. Transactions With Related Parties
The are several business relationships with related parties, entities
partially or entirely owned by Leo S. Ullman, which involve management,
leasing, financing and construction management fees for the partners.
Transactions include the following:
Year ended December
----------------------------------
1997 1996 1995
-------- -------- --------
Management fees $128,823 $130,999 $100,579
Leasing commissions 250,818 101,590 32,185
Construction management fees 51,856 17,192 72,046
Legal 32,026 10,162 25,201
Financing fees 30,000
-------- -------- --------
$463,523 $289,943 $230,011
======== ======== ========
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Notes to Combined Financial Statements
(Unaudited)
December 31, 1997
6. Transactions With Related Parties (continued)
Due to related parties represents amounts due to Brentway Management LLC,
Acadia Management (prior management company) and SKR Management Corp.
(advances for transaction costs).
7. Contingencies
Triangle Center and The Point are parties to a variety of legal proceedings
arising in the ordinary course of business. Management believes that
substantially all of the these liabilities are covered by insurance. All of
these matters, taken together, are not expected to have a material adverse
impact on the combined partnerships' financial position.
8. Environmental Matters
Management believes that the properties are in compliance in all material
respects with applicable federal, state and local ordinances and regulations
regarding environmental issues. Management is not aware of any environmental
liability that it believes would have a material adverse impact on the
partnerships' combined financial position. Management is unaware of any
instances in which it would incur significant environmental cost if any of the
properties were sold.
9. Fair Value of Financial Instruments
The following disclosures of estimated fair value were determined by
management, using available market information and appropriate valuation
methodologies. Considerable judgment is necessary to interpret market data and
develop estimated fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts the combined entities could realize
on disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
Cash equivalents and mortgages payable substantially all of which are of
variable interest rate are carried at amounts which reasonably approximate
their fair values.
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Notes to Combined Financial Statements
(Unaudited)
December 31, 1997
9. Fair Value of Financial Instruments (continued)
Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 1997. Although
management is not aware of any factors that would significantly affect the
reasonable fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date and
current estimates of fair value may differ significantly from the amounts
presented herein.
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1997
(unaudited)
<TABLE>
<CAPTION>
Column A Column B Column C Column D
- ------------ ---------- -------------------------- --------------------------
Costs Capitalized
Subsequent to
Initial Cost Acquisition
--------------------------- --------------------------
Building and Building and
Description Encumbrance Land Improvements Land Improvements
- --------------- ----------- ---------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Golden Triangle $7,635,342 $2,326,789 $ 6,173,528 $2,385,627
Lancaster, PA
The Point 5,385,076 2,741,184 12,462,615 2,148,576
Harrisburg, PA ----------- ---------- ----------- ----------
$13,020,418 $5,067,973 $18,636,143 $4,534,203
=========== ========== =========== ==========
Column A Column E Column F Column G Column H Column I
- ------------ -------------------------------------- -------------- ----------- ----------- ---------------
Gross Amount at Which
Carried at Close of Period
-------------------------------------- Life on Which
Building and Accumulated Date of Date Depreciation is
Description Land Improvements Total Depreciation Construction Acquired Computed
- --------------- ----------- ---------- ----------- ---------- ---------- ----------- -----------
Golden Triangle $2,326,789 $ 8,559,155 $10,885,944 $1,134,424 - 12/23/98 Various
Lancaster, PA
The Point 2,741,184 14,611,191 17,352,375 3,507,455 - 12/23/98 Various
Harrisburg, PA ----------- ----------- ----------- ----------
$5,067,973 $23,170,346 $28,238,319 $4,641,879
=========== =========== =========== ==========
</TABLE>
<PAGE>
Cedar Bay Company
The Point Associates, L.P.
Triangle Center Associates, L.P.
Schedule III - Real Estate and Accumulated Depreciation (Continued)
(Unaudited)
December 31, 1997
The changes in real estate for the three years ended December 31, 1997 are as
follows:
1997 1996 1995
----------- ----------- -----------
Balance at beginning of period $26,513,002 $26,070,102 $25,935,598
Improvements 1,725,317 443,800 134,504
----------- ----------- -----------
Balance at end of period $28,238,319 $26,513,902 $26,070,102
=========== =========== ===========
The aggregate cost of land, buildings and improvements for Federal income tax
purposes at December 31, 1997 was approximately $28,238,319.
The changes in accumulated depreciation, exclusive of amounts relating to
equipment, autos, and furniture and fixtures, for the three years ended
December 31, 1997 are as follows:
1997 1996 1995
----------- ----------- -----------
Balance at beginning $ 3,821,049 $ 3,102,683 $ 2,370,901
Depreciation for period 820,830 718,366 731,782
----------- ----------- -----------
Balance at end of period $ 4,641,879 $ 3,821,049 $ 3,102,683
=========== =========== ===========
<PAGE>
Cedar Bay Company
Triangle Center Associates, L.P.
The Point Associates, L.P.
ProForma Combined
Balance Sheet
as of December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Combined Entities Combined
Historical (A) Adjustments ProForma
----------------- ----------- -----------
<S> <C> <C> <C>
Assets
Rental property - at cost
Land $ 5,067,973 $ 5,067,973
Building, improvements and equipment (net of
accumulated depreciation ) 18,528,467 18,528,467
----------- -----------
Net rental property 23,596,440 23,596,440
Deposit Cedar Income Fund, LTD. 750,000 (D) $ (750,000)
Investment in Cedar Income Fund, Ltd. (D) 11,788,413 5,281,502
(E) 215,000
(F) (6,721,911)
Cash 198,269 (B) 14,206,509 2,025,770
(D) (11,884,246)
(E) (1,216,673)
(F) 721,911
Real estate tax escrow 128,287 128,287
Restricted cash 513,545 (B) (513,545)
Rents receivable 139,887 139,887
Deferred rents receivable 248,963 248,963
Prepaid expenses 180,923 180,923
Deferred costs 1,498,493 (C) (145,257) 1,763,236
(E) 1,001,673
----------- -----------
Total assets $27,254,807 (G) (591,673) $33,365,008
=========== ===========
Liabilities and partners' capital
Liabilities:
Mortgages payable $13,020,418 (B) (12,120,418) 20,150,000
(B) 26,000,000
(D) (750,000)
(F) (6,000,000)
Accrued interest 143,499 (D) (5,833) 137,666
Accounts payable and accrued expenses 166,413 166,413
Due to affiliate 90,000 (D) (90,000)
Tenants' security deposits 31,757 31,757
----------- -----------
Total liabilities 13,452,087 20,485,836
Partners' capital 13,802,720 (B) (186,618) 12,879,172
(C) (145,257)
(G) (591,673)
----------- -----------
Total liabilities and partners' capital $27,254,807 $33,365,008
</TABLE>
See accompanying notes
<PAGE>
Cedar Bay Company
Triangle Center Associates, L.P.
The Point Associates, L.P.
ProForma
Combined Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Combined Entities Combined
Historical (H) Adjustments ProForma
--------------------- --------------- ---------------
<S> <C> <C> <C>
Revenues
Rent
Base $2,772,383 $2,772,383
Percentage rents 94,381 94,381
Tenant reimbursements 1,273,105 1,273,105
Equity in earnings of Cedar Income Fund, LTD. (N) 153,541 153,541
Other 53,779 53,779
---------- ----------
Total revenues 4,193,648 4,347,189
Expenses:
Payroll and related costs 222,568 222,568
Real estate taxes 398,098 398,098
Utilities 596,487 579,487
Insurance 55,206 55,206
Repairs and maintenance 203,723 203,723
Administrative 416,784 416,784
Interest 1,137,794 (H) (1,123,924) 1,553,870
(K) 2,320,000
(M) (780,000)
---------- ----------
3,010,660 3,446,736
---------- ----------
Income before Depreciation and Amortization
1,162,988 900,453
---------- ----------
Depreciation and Amortization
Depreciation 820,830 820,830
Renting (amortization of tenant improvements) 211,045 211,045
Amortization of financing costs 62,399 (J) (62,399) 641,673
(K) 345,836
(M) 295,837
---------- ----------
1,094,274 1,673,548
---------- ----------
$ 68,714 ($ 773,095)
Net income (loss) ---------- ----------
</TABLE>
See accompanying notes
<PAGE>
Cedar Bay Company
Triangle Center Associates, L.P.
The Point Associates, L.P.
Notes to ProForma
Combined Financial Information
December 31, 1997
(Unaudited)
Adjustments to the ProForma Combined Balance Sheet as of December 31, 1997
A. To reflect the combined partnerships historical combined balance
sheet as of December 31, 1997.
B. To reflect financing proceeds for acquisition of 75% Cedar Income
Fund LTD ("Cedar Income") stock, acquisition and financing
transaction costs, pay off existing mortgages and related repayment
penalties, utilization of existing mortgage cash collateral, and
excess financing proceeds for tenant improvements at the property
owned by the Point. (It is assumed that only 75% of Cedar Income
shares are tendered by existing stockholders in connection with the
tender offer).
It is assumed that the significant terms of the financing packages
are as follows:
Collateralized By Amount Interest Rate Due Date
----------------- ------ ------------- --------
Shopping Centers *20,000,000 8% 2008
of the Partnerships
Cedar Income Stock 6,000,000 13% 2000
*25 year amortization
C. To write off existing unamortized financing expense on mortgages paid
off.
D. To reflect acquisition of 75% of Cedar Income stock and repayment of
deposit loan, related accrued interest and advances from affiliate.
E. To record transaction costs of the acquisition of Cedar Income and
deferred financing costs on new financings.
F. To reflect the aggregate sales of Cedar Income stock to reduce
ownership from 75% to 33% of outstanding shares. This is assumed to
be necessary to reach certain maximum ownership amounts by Cedar Bay
to allow Cedar Income to continue to meet the qualified REIT
requirements of the Internal Revenue Code. In addition to reflect the
aggregate proceeds utilized to pay off the related outstanding debt
collateralized by the Cedar Income stock and to reflect the excess
proceeds in cash. The sales prices are assumed to be at the aggregate
per share purchase price and transaction costs.
G. To write off related unamortized deferred debt expense.
<PAGE>
Adjustments to ProForma Combined Statement of Operations for the year ended
December 31, 1997.
H. To reflect the combined partnerships historical combined statement of
operations for the year ended December 31, 1997.
I To eliminate historical interest expense on debt to be refinanced.
J To eliminate historical amortization of financing expense on debt to
be refinanced.
K. To reflect interest expense on new financings.
L. To reflect amortization of financing expense on new financings.
M. To write off unamortized financing expense after pay down of debt
collateralized by Cedar Income stock, resulting from sales of stock
to reduce holdings to 33% and to eliminate interest expense from pay
off of related debt.
N. To reflect 33% share of Cedar Income for 1997, less amortization of
acquisition basis adjustment
Share of net income $165,061
Amortization of basis adjustment (11,500)
--------
$153,561
========
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
CEDAR INCOME FUND, LTD.
at
$7.00 Net Per Share
by
CEDAR BAY COMPANY
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FEBRUARY 10, 1998, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
AMONG OTHER CONDITIONS, THIS OFFER IS CONDITIONED UPON AT LEAST A MAJORITY OF
THE OUTSTANDING SHARES OF COMMON STOCK OF CEDAR INCOME FUND, LTD. ("COMPANY")
BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE. SEE
SECTION 10. THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER AND HAS
DETERMINED, BASED IN PART UPON THE OPINION OF THE COMPANY'S FINANCIAL ADVISOR,
THAT THE OFFER IS FAIR FROM A FINANCIAL POINT OF VIEW TO THE HOLDERS OF SHARES,
AND RECOMMENDS THAT HOLDERS TENDER ALL OF THEIR SHARES TO THE PURCHASER PURSUANT
TO THE OFFER.
---------------------
IMPORTANT
Any stockholder desiring to tender any or all of his Shares should either
(a) complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal, mail or deliver
it and any other required documents to the Depositary and either deliver the
certificates for such Shares to the Depositary along with the Letter of
Transmittal or deliver such Shares pursuant to the procedure for the book-entry
transfer set forth in Section 8 herein or (b) request his broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
him. A stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person if he
desires to tender his Shares.
A stockholder who desires to tender his Shares and whose certificates for
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedures for guaranteed delivery set forth in Section 8 herein.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number as set forth on the back cover of this
Offer to Purchase, and will be furnished promptly at the Purchaser's expense.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
---------------------
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
---------------------
January 12, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C> <C>
INTRODUCTION .......................................................................... 1
SPECIAL FACTORS ....................................................................... 1
1. Background of the Transaction -- Memorandum of Understanding and Tender
Agreement ..................................................................... 1
2. Purpose and Effects of the Offer -- Operations Following Consummation of the
Offer and Interests of SKR and Others in the Transaction ..................... 3
3. Certain Information Concerning the Purchaser and its Affiliates ............... 4
4. Certain Information Concerning the Company .................................... 5
5. Effect of the Offer on the Market for the Shares; NASDAQ Listing; Exchange
Act Registration; Status as Real Estate Investment Trust ..................... 6
6. Certain Federal Income Tax Consequences to Stockholders ........................ 7
7. Financing of the Offer ......................................................... 8
THE TENDER OFFER .................................................................. 9
8. Terms of the Offer ............................................................ 9
9. Price Range of the Shares; Dividends .......................................... 14
10. Certain Conditions of the Offer ................................................ 14
11. Extension of Offer Period -- Amendment and Termination ........................ 15
12. Certain Legal and Regulatory Matters .......................................... 16
13. Certain Fees and Expenses 16
14. Miscellaneous .................................................................. 17
SCHEDULE I
Partners, Directors And Executive Officers Of The Purchaser and Its Affiliates.. 18
SCHEDULE II
Beneficial Ownership Of Shares And Transactions During Past 60 Days By Certain
Directors And Executive Officers ............................................. 21
</TABLE>
i
<PAGE>
To All Holders of Shares of Common Stock of
Cedar Income Fund, Ltd:
INTRODUCTION
Cedar Bay Company, a New York general partnership ("Purchaser"), hereby
offers to purchase all, but not less than a majority, of the outstanding shares
of common stock, par value $1.00 per share ("Shares"), of CEDAR INCOME FUND,
LTD., an Iowa business corporation ("Company"), at a price of $7.00 per Share,
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which together constitute the "Offer"). Tendering stockholders
of the Company will not be obligated to pay brokerage fees or commissions or,
except as set forth in Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the sale of Shares pursuant to the Offer. The Purchaser will
pay all fees and expenses of The Bank of New York, which is acting as the
depositary bank in connection with the Offer ("Depositary"), as well as all fees
and expenses of Georgeson & Company Inc., which is acting as the information
agent in connection with the Offer ("Information Agent").
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997 ("September 30, 1997 10-Q"), there were 2,245,411
Shares outstanding as of September 30, 1997. Certain stockholders of the Company
("Selling Stockholders"), owning an aggregate of approximately 26% of the
outstanding Shares, have entered into an agreement ("Tender Agreement") with SKR
Management Corp. ("SKR"), an affiliate of the Purchaser (SKR has assigned all of
its rights in the Tender Agreement to the Purchaser), pursuant to which such
Selling Stockholders have agreed to tender their Shares to the Purchaser
pursuant to the Offer, subject to certain conditions described therein. The
Selling Stockholders consist of AEGON USA Realty Advisors, Inc. ("Existing
Advisor"), and its wholly-owned subsidiaries PFL Life Insurance Company, Bankers
United Life Assurance Company, Life Investors Insurance Company of America
("LIICA") and First AUSA Life Insurance Company. See Section 3 for additional
information concerning the Purchaser and its affiliates.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER AND HAS
DETERMINED, BASED IN PART UPON THE OPINION OF THE COMPANY'S FINANCIAL ADVISOR,
THAT THE OFFER IS FAIR FROM A FINANCIAL POINT OF VIEW TO THE SHAREHOLDERS AND
RECOMMENDS THAT SHAREHOLDERS TENDER ALL OF THEIR SHARES TO THE PURCHASER
PURSUANT TO THE OFFER.
The Offer is being made pursuant to a Memorandum of Understanding
("Memorandum of Understanding"), dated as of December 5, 1997, between the
Company and SKR Management Corp. ("SKR"), an affiliate of the Purchaser. SKR has
assigned its rights under the Memorandum of Understanding to the Purchaser. The
purpose of the Offer is to enable the Purchaser to acquire all, but not less
than a majority, of the outstanding Shares. Thereafter, the Purchaser will
endeavor to continue the Company's business and status as a "real estate
investment trust" ("REIT") under the Internal Revenue Code of 1986, as amended
(the "Code").
THIS OFFER IS SUBJECT TO CERTAIN TERMS AND CONDITIONS AND THIS OFFER TO PURCHASE
AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ
CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
1
<PAGE>
SPECIAL FACTORS
1. Background of the Transaction -- Memorandum of Understanding and Tender
Agreement.
Background of the Transaction. On April 27, 1997, Mr. Leo S. Ullman,
President of SKR, and Mr. Patrick E. Falconio, Chairman of the Board of the
Company, discussed a possible transaction between SKR and the Company. On May
15, 1997, Mr. Ullman, on behalf of SKR, transmitted a written proposal to the
Company to purchase all of the outstanding Shares for $5.00 per Share. On July
8, 1997, SKR and the Company signed a confidentiality agreement regarding
certain information being provided by the Company to SKR. Based on a subsequent
review of the properties owned by the Company and of certain other financial
information regarding the Company, on July 11, 1997, SKR issued a written
proposal to the Company increasing the proposed price to $7.00 per Share. On
August 28, 1997, SKR requested certain financial information from the Company.
From September 2, 1997 through September 5, 1997, representatives of SKR visited
the various properties owned by the Company, and met with representatives of the
Existing Advisor and the Company, for valuation and due diligence purposes. On
September 22, 1997, Mr. Roland Palm, a consultant to SKR, attended a meeting of
the Board of Directors of the Company to discuss SKR's July 11, 1997 proposal
and to present to the Company's Board of Directors an overview of SKR's
operations.
On September 24, 1997, the Company provided to SKR for review an initial
draft of the Memorandum of Understanding. Shortly thereafter, the Company
provided to SKR an initial draft of the Tender Agreement. Thereafter and through
December 4, 1997, the Company, the Selling Stockholders and SKR, and their
respective counsel, negotiated the terms and conditions of the Memorandum of
Understanding and the Tender Agreement, and on December 5, 1997, the Company and
SKR entered into the Memorandum of Understanding, and SKR and the Selling
Stockholders entered into the Tender Agreement.
Set forth below are summaries of the Memorandum of Understanding and the
Tender Agreement. Copies of the Memorandum of Understanding and the Tender
Agreement were attached as exhibits to the Company's Current Report on Form 8-K,
filed with the Securities and Exchange Commission (the "Commission") on December
8, 1997.
Memorandum of Understanding. On December 5, 1997, the Company and SKR
entered into the Memorandum of Understanding pursuant to which SKR (or its
affiliate), based on the terms and conditions set forth therein, would be
required to commence the Offer for a price of not less than $7.00 per Share. In
connection therewith, SKR was required to place into an escrow account $750,000
(the "Earnest Money Deposit"). The Company is entitled to retain the Earnest
Money Deposit except if, generally, (i) the Company enters into a contract with
a third party for the sale or other disposition of all or substantially all of
the Company or enters into certain other transactions described therein, (ii)
assuming that the Offer is timely commenced, the Offer is not consummated as a
result of a failure of any of the Tender Offer Conditions, (iii) the Company
breaches the Memorandum of Understanding, (iv) the Company's Board of Directors
does not recommend to the Company's shareholders that they tender their Shares
pursuant to the Offer or withdraws such recommendation, (v) the various
agreements with the Existing Advisor and its affiliates are not terminated upon
consummation of the Offer, or (vi) payment for the Shares occurs prior to
February 12, 1998.
The Memorandum of Understanding also provides for certain covenants of the
Company regarding the conduct of its business relative to the period of time
between the date thereof and the consummation of the Offer. The Memorandum of
Understanding also governs the respective rights and obligations of the
Purchaser and the Company in the event of a Competing Transaction (as defined in
the Memorandum of Understanding).
Tender Agreement. As contemplated by the Memorandum of Understanding, SKR
and the Selling Stockholders entered into the Tender Agreement in order to
induce SKR to execute the Memorandum of Understanding and in consideration of
the substantial expenses incurred and to be incurred by SKR and its affiliates
in connection therewith. The Selling Stockholders agreed, subject to certain
conditions, to tender or cause to be tendered to SKR pursuant to the Offer all
of their Shares. Other than the purchase price to be paid to the Selling
Stockholders upon any tender of their Shares to the Purchaser in accordance with
the Offer, no consideration was paid or required to be paid to such Selling
Stockholders by SKR or its affiliates in connection with the execution of the
Tender Agreement.
2
<PAGE>
In addition, the Tender Agreement provides for a "purchase option" with
respect to the Shares owned by the Selling Stockholders (the "Option")
exercisable by SKR under certain circumstances. Pursuant to the terms of the
Memorandum of Understanding and the Tender Agreement, SKR has assigned its
rights therein, respectively, to the Purchaser. Upon (i) receipt of notice from
the Selling Stockholders of a "Triggering Event," which is defined as the
proposal by any person or group of persons of a Competing Transaction (as
defined in the Tender Agreement) in which the consideration to be received by
holders of Shares is in excess of $7.00 per share in cash and which is
applicable to each Share outstanding (other than any Shares owned by the person
or group of persons proposing such Competing Transaction or any of their
respective affiliates), and (ii) the withdrawal by the Board of Directors of the
Company of its recommendation or proposed recommendation to the shareholders of
the Company that they tender their shares in the Offer, the Purchaser has the
right, pursuant to the Tender Agreement, to purchase all of the Shares owned by
the Selling Stockholders at a price determined as described below.
The purchase price payable by the Purchaser upon exercise of the Option
would be equal to the price per Share payable in the Competing Transaction
giving rise to the Triggering Event; provided, however, in the event the price
per share paid in the Offer or in such Competing Transaction is increased (i)
after the Purchaser has given notice of its intent to exercise the Option, then
the Purchaser would pay to the Selling Stockholders in cash at the closing an
additional amount per share for the shares to be purchased pursuant to the
Option equal to the difference between (x) the highest price per share paid or
to be paid by the Purchaser in the Offer or in such Competing Transaction, as
applicable, and (y) the per share purchase price previously anticipated to be
paid by the Purchaser to the Selling Stockholders, or (ii) after the Purchaser
has purchased the shares pursuant to the Option, then the Purchaser would
promptly pay to the Selling Stockholders in cash an additional amount per share
for the Shares so purchased equal to the difference between (x) the highest
price per share paid by the Purchaser in the Offer or in any Competing
Transaction, as applicable, and (y) the per share purchase price previously paid
by the Purchaser to the Selling Stockholders.
2. Purpose and Effects of the Offer -- Operations Following Consummation of the
Offer and Interests of SKR and Others in the Transaction.
Purpose and Effects of the Offer. The purpose of the Offer is to enable the
Purchaser to acquire all, but not less than a majority, of the outstanding
Shares. Thereafter, the Purchaser will endeavor to continue the Company's
business and status as a "real estate investment trust" under the Code.
After the consummation or termination of the Offer, the Purchaser reserves
the right to purchase in accordance with applicable laws and regulations
additional Shares in the open market, in privately-negotiated transactions, or
otherwise. Any additional purchase of Shares could be at a price higher or lower
than the price to be paid for Shares in the Offer and could be for cash or other
consideration. Alternatively, the Purchaser may sell or otherwise dispose of any
or all Shares acquired pursuant to the Offer or otherwise. Such transactions may
be reflected on terms and at prices then determined by the Purchaser, which may
vary from the price paid for Shares in the Offer.
Operations Following Consummation of the Offer and Interests of SKR and
Others in the Transaction. The Company has been advised and administered by the
Existing Advisor and its affiliates since the Company's initial public offering
in 1986 pursuant to an administrative and advisory agreement, a management
agreement and a shareholder services agreement. Upon consummation of the Offer
and the election of the new members of the Board of Directors of the Company by
the Purchaser, the Company will enter into: (i) an administrative and advisory
agreement pursuant to which the Purchaser or its affiliates will replace the
Existing Advisor as the advisor to the Company, and (ii) a management agreement
pursuant to which the Purchaser or its affiliates will be engaged as a property
manager for the Company's real estate investments. Each of these agreements will
contain terms which are substantially similar to the terms of the existing
agreements between the Existing Advisor and its affiliates and the Company. Leo
S. Ullman will be the chief executive officer of the new advisor and the new
management company. See Schedule I hereto for additional information concerning
the proposed directors and executive officers of the Purchaser, the Company,
SKR, Cedar Bay Realty Advisors, Inc. (the new advisor to the Company following
the consummation of the Offer) and Brentway Management LLC (the new property
manager to the Company following consummation of the Offer).
3
<PAGE>
As soon as practicable after the consummation of the Offer and the election
of the new Board of Directors, the Purchaser may call a meeting of the Company's
shareholders in accordance with applicable law for the purpose of considering
possible proposals to amend the Restated Articles of Incorporation of the
Company (and, if necessary or appropriate, the Bylaws of the Company) and to
take such other actions as are necessary or appropriate (i) to facilitate the
acquisition and disposition of properties and other assets by the Company and
otherwise to facilitate the growth of the Company, (ii) to enhance the Company's
ability to raise funds through public or private offerings of securities
(including, without limitation, through a possible recapitalization or
restructuring), (iii) to achieve operational and administrative efficiencies and
(iv) to permit the issuance of securities, as and when appropriate, to persons
providing value to the Company.
With respect to the Germantown property (50% of which is owned by the
Company), the Purchaser is expected to cause the Company to enter into a
contract of sale with LIICA (an affiliate of AEGON USA, Inc.), the owner of the
50% undivided interest that the Company does not own, pursuant to which the
Company will purchase Life Investors' interest for approximately $3.25 million
(an appraised value) as soon as practicable after the consummation of the Offer,
and based upon the condition that the Offer is consummated.
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 (the "1996 10-K") indicates that the Company purchased, on September
20, 1993, a $600,000 participation in a promissory note owned by LIICA, which
participation yields 8.25% to the Company. LIICA has advised the Company that,
upon consummation of the Offer, it will repurchase the outstanding principal
amount represented by such participation from the Company, although no assurance
can be given that such repurchase will actually occur.
In connection with its consideration of the Offer, the Purchaser has
reviewed and will continue to review, on the basis of available information,
various possible business strategies that it may consider. If the Offer is
consummated, the Purchaser intends to conduct a review of the Company, its
assets, businesses, operations, properties, policies, corporate structure,
capitalization and management, and to consider what, if any, changes would be
desirable or appropriate in light of the circumstances which then exist.
Although no specific plans have been developed at this time and no commitments
have been made, in order to expand the capital base of the Company, the
Purchaser intends to cause the Company to raise additional capital through
future equity offerings and to obtain additional financing through credit
facilities.
3. Certain Information Concerning the Purchaser and its Affiliates.
The Purchaser is a newly-formed New York partnership operating pursuant to
a partnership agreement dated as of December 1, 1997. The principal office of
the Purchaser is located at 44 South Bayles Avenue, Port Washington, New York
11050. The Purchaser is owned by two limited partnerships, The Point Associates,
L.P., a Pennsylvania limited partnership ("Point Associates") and Triangle
Center Associates, L.P., a Pennsylvania limited partnership ("Triangle
Associates"). The general partner of Point Associates is Selbridge Corp., a
Delaware corporation ("Selbridge"), of which Leo S. Ullman is president.
Selbridge and Mr. Ullman (as limited partner) together own 100% of the equity
interest in Point Associates. The general partner of Triangle Associates is
Buttzville Corp., a Delaware corporation ("Buttzville"), of which Mr. Ullman is
president. Buttzville and Mr. Ullman (as limited partner) together own 100% of
the equity interest in Triangle Associates. Mr. Ullman is also the Chief
Executive Officer of the Purchaser.
The name, business address, current principal occupation or employment and
citizenship of each of the partners and executive officers of the Purchaser, SKR
and the Company (and certain of their respective affiliates), as proposed after
completion of the Offer, are set forth in Schedule I to this Offer to Purchase.
Except as set forth in this Offer to Purchase, neither the Purchaser, nor,
to the best knowledge of the Purchaser, any of the persons listed on Schedule I
hereto, nor any associate or majority-owned subsidiary of any of the foregoing,
beneficially owns any equity securities of the Company, and neither the
Purchaser, nor, to the best knowledge of the Purchaser, any of the persons or
entities referred to above, nor any director or executive officer of any
subsidiary of any of the foregoing, has effected any transaction in such equity
securities during the past 60 days.
Except as set forth in this Offer to Purchase or in the Company's reports
filed with the Commission, neither the Purchaser nor, to the best knowledge of
the Purchaser, any of the persons listed in Schedule I hereto,
4
<PAGE>
has any contract, arrangement, understanding or relationship (whether or not
legally enforceable) with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any of such securities,
joint ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss, or the giving or withholding of proxies, consents or
authorizations. Except as set forth in this Offer to Purchase or in the
Company's reports filed with the Commission, there have been no contacts,
negotiations or transactions which have occurred since January 1, 1995 between
the Purchaser or any of its subsidiaries, or, to the best knowledge of the
Purchaser, any of the persons listed in Schedule I hereto, on the one hand, and
the Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets. Except as set forth in this Offer to Purchase or in the Company's
reports filed with the Commission, neither the Purchaser nor, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I hereto, has
since January 1, 1995 had any transaction with the Company or any of its
executive officers, directors or affiliates which would require disclosure under
the rules and regulations of the Commission applicable to the Offer.
4. Certain Information Concerning the Company.
The information concerning the Company set forth below and contained
elsewhere in this Offer to Purchase is based on the Company's 1996 10-K, its
September 30, 1997 10-Q, and publicly available documents and records on file
with the Commission and other public sources. The Purchaser and its affiliates
assume no responsibility for the accuracy or completeness of the information
contained in such documents and records, or for any failure by the Company to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to the Purchaser.
The Company was incorporated in Iowa on December 10, 1984. The Existing
Advisor is the Company's advisor, and certain of its affiliates render certain
other services to the Company. The Company operates as a real estate investment
trust under the Code. The Company's principal executive offices are located at
4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499.
The Company's real estate investments consist of: 1) Corporate Center
East, located in Bloomington, Illinois, 2) Broadbent Business Center, located
in Salt Lake City, Utah, 3) Southpoint Parkway Center, located in Jacksonville,
Florida, and 4) a 50% undivided interest in Germantown Square Shopping Center,
located in Louisville, Kentucky. The Purchaser currently intends to cause the
Company to purchase the remaining interest in the Germantown property that is
currently owned by LIICA. See Section 2.
The selected financial information of the Company set forth below has been
taken from the Company's 1996 10-K (and its Form 10-K for the fiscal year ended
December 31, 1994) and its September 30, 1997 10-Q; such information has been
derived from and should be read in conjunction with the audited financial
statements and other financial information contained in the 1996 10-K and the
1996 Annual Report, and with the unaudited financial statements contained in the
September 30, 1997 10-Q. Such financial information is qualified in its entirety
by reference to such reports, respectively, and all of the financial statements
and related notes contained therein respectively.
5
<PAGE>
Selected Financial Data
(in thousands, except per share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended For the Years
September 30, Ended December 31,
1997 1996 1996 1995 1994
------------- ------------ ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Operating Data:
Total revenue ..................... $ 1,811 $ 1,684 $ 2,217 $ 2,487 $ 2,384
------- ------- ------- ------- -------
Property operating expenses ......... 547 489 645 704 713
Real estate taxes .................. 188 186 239 228 226
Interest ........................... 102 104 138 140 142
Depreciation and amortization ...... 336 328 437 436 437
Administrative expenses ............ 151 150 196 209 206
------- ------- ------- ------- -------
Total expenses ..................... 1,324 1,257 1,655 1,717 1,724
------- ------- ------- ------- -------
Net income ........................ $ 487 $ 427 $ 562 $ 770 $ 660
======= ======= ======= ======= =======
Net income per Share ............... $ 0.22 $ 0.19 $ 0.25 $ 0.34 $ 0.29
======= ======= ======= ======= =======
Balance Sheet Data:
Total assets ........................ 16,192 16,473 16,270 16,610 16,786
Mortgage payable .................. 1,406 1,429 1,423 1,445 1,464
Shareholders' equity ............... 14,439 14,716 14,625 14,962 15,090
Other Data:
Net cash provided by operating
activities ........................ 853 836 945 1,236 1,130
Net cash used in financing
activities ........................ (691) (689) (919) (917) (916)
Net cash provided by (used in)
investing activities ............ (279) (14) (128) 7 11
</TABLE>
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is obligated to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities, any material interests
of such persons in transactions with the Company and other matters is required
to be disclosed in proxy statements distributed to the Company's stockholders
and filed with the Commission. Such reports, proxy statements and other
information may be inspected at the Commission's public reference facilities at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be
available for inspection at the following regional offices of the Commission: 7
World Trade Center, New York, New York 10048; and 500 West Madison Street,
Chicago, Illinois 60661; and copies may be obtained by mail at prescribed rates,
from the principal office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
5. Effect of the Offer on the Market for the Shares; NASDAQ Listing; Exchange
Act Registration; Status as Real Estate Investment Trust.
Effect of the Offer on the Market for the Shares. The purchase of Shares
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and, depending upon the number of Shares so purchased pursuant to
the Offer, could adversely affect the liquidity and market value of the
remaining Shares held by the public. The purchase of Shares pursuant to the
Offer will also reduce the number of record holders of Shares. Based solely on
the 1996 Annual Report, as of March 3, 1997, there were 1,131 record holders of
Shares, and based solely on information provided by the Company, as of December
31, 1997, there were 1,131 record holders of Shares.
NASDAQ Listing. The Purchaser intends to use its best efforts to cause the
Shares to remain listed on the NASDAQ/ OTC system following the consummation of
the Offer. The extent of the public market for the
6
<PAGE>
Shares and availability of such quotations would, however, depend on such
factors as the number of holders and the aggregate market value of the Shares
remaining at such time, the interest in maintaining the market in the Shares on
the part of securities firms and, the possible termination of registration of
the Shares under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and other factors. The Purchaser and the Company cannot predict whether
the reduction of the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or marketability
of, the Shares or whether it would cause future market prices to be greater or
less than the Offer price. There can be no assurance that the Company will be
successful in maintaining a public market for its Shares.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System ("Federal Reserve Board") which
has the effect, among other things, of allowing brokers to extend credit on the
collateral of such Shares. Depending upon factors similar to those described
above regarding listing and market quotations, the Shares might no longer
constitute "margin securities" for purposes of the Federal Reserve Board's
margin regulations and, therefore, could no longer be used for collateral for
loans made by brokers.
Exchange Act Registration. The Shares are registered under the Exchange
Act. Such registration may be terminated upon application of the Company to the
Commission (or by the Commission on its own initiative) if the Shares are not
listed on a national securities exchange and there are fewer than 300 record
holders of Shares. Termination of registration of the Shares under the Exchange
Act would eliminate the information required to be furnished by the Company to
its stockholders and the Commission and would make certain provisions of the
Exchange Act, proxy statement in connection with stockholders' meetings pursuant
to Section 14(a) and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions no longer applicable to the Company.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended, may be
impaired or eliminated. The Purchaser does not intend to apply to the Commission
for termination of such registration upon consummation of the Offer.
Status as Real Estate Investment Trust. Based upon examination of publicly
available information concerning the Company, it appears to the Purchaser that
the Company qualifies as a REIT as defined under the Code. If the Company does
so qualify it is presently not subject to federal income tax on income or
capital gains so long as it meets certain requirements. If, pursuant to this
Offer, substantially all of the shareholders would tender their Shares, it is
possible that the Company would cease to qualify as a REIT if as a result of the
Offer or any other transaction (i) fewer than 100 persons beneficially owned
Shares of the Company during at least 31 days of its taxable year or (ii) Shares
representing more than 50% in value of all the Shares were beneficially owned at
any time during the last half of any such taxable year by five or fewer persons.
Disqualification of the Company as a REIT could have several adverse tax
consequences for the Company and its shareholders. The Company would no longer
be entitled to deduct dividends paid to its shareholders in computing its
taxable income, and, accordingly, would be taxed at ordinary U.S. federal, state
and local rates. Moreover, distributions of the Company's profits would have to
be treated by shareholders entirely as dividends, taxable as ordinary income,
regardless of whether such dividends were attributable to the Company's ordinary
income or its capital gains. Also, the Company would no longer be under any
requirement to distribute at least 95% of its REIT taxable income if it ceases
to qualify as a REIT, and for these and other reasons, dividends paid by the
Company might be reduced or eliminated. Although the Purchaser intends to cause
the Company to endeavor to continue its business and status as a REIT, there can
be no assurance that the Company will be successful in doing so.
6. Certain Federal Income Tax Consequences to Stockholders.
The following is a summary of certain U.S. Federal income tax consequences
of the receipt of cash for Shares sold pursuant to the Offer. This discussion is
based on the Code, applicable Treasury regulations thereunder, judicial and
administrative decisions, and Internal Revenue Service rulings and other
pronouncements as of the date hereof.
In general, sales of Shares by stockholders pursuant to the Offer will be
taxable transactions for U.S. Federal income tax purposes and may also be
taxable transactions under applicable state, local, foreign and other tax laws.
For Federal income tax purposes, a tendering stockholder will generally
recognize gain or loss equal
7
<PAGE>
to the difference between the amount of cash received by the stockholder
pursuant to the Offer and the stockholder's tax basis in the Shares sold
pursuant to the Offer. Recognized gain or loss will be long-term capital gain or
loss if the Shares are held for more than 18 months and will be mid-term capital
gain or loss if the Shares are held for more than 12 months but not more than 18
months.
For non-corporate taxpayers, long-term capital gain is currently subject to
a maximum marginal Federal income tax rate of 20% (10% for individuals in the
15% Federal income tax bracket). Mid-term capital gain is currently subject to a
maximum marginal Federal income tax rate of 28% (15% for individuals in the 15%
Federal income tax bracket). Short-term capital gain and ordinary income are
currently subject to a maximum marginal Federal income tax rate of 39.6%. Under
the Federal alternative minimum tax, the maximum rate for non-corporate
taxpayers on net capital gain is, generally, 20%. For corporations, the maximum
Federal income tax rate is 35% on both capital gains and ordinary income. If a
stockholder recognizes a capital loss as a result of the sale of Shares pursuant
to the Offer, such loss generally will only be deductible to the extent of other
capital gains, plus, in the case of an individual stockholder, $3,000 per year.
The foregoing discussion does not purport to deal with all aspects of
Federal income taxation and may not be applicable to certain types of
stockholders, including stockholders who acquired Shares pursuant to
compensation arrangements with the Company, individuals who are not citizens or
residents of the United States, foreign corporations, securities dealers, and
entities that are otherwise subject to special tax treatment under the Code
(such as insurance companies, tax-exempt entities and regulated investment
companies.)
THE TAX DISCUSSION SET FORTH ABOVE IS ONLY A SUMMARY OF CERTAIN TAX ISSUES
AND IS INCLUDED FOR GENERAL INFORMATION ONLY. THE TAX CONSEQUENCES OF A SALE
PURSUANT TO THE OFFER MAY VARY DEPENDING UPON, AMONG OTHER THINGS, THE
PARTICULAR CIRCUMSTANCES OF THE TENDERING STOCKHOLDER. NO INFORMATION IS
PROVIDED HEREIN AS TO THE STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF THE
TRANSACTION CONTEMPLATED BY THE OFFER. STOCKHOLDERS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL, STATE, LOCAL OR FOREIGN
TAX CONSEQUENCES OF SALES MADE BY THEM PURSUANT TO THE OFFER.
7. Financing of the Offer.
The total amount of funds required by the Purchaser to purchase the Shares
pursuant to the Offer and to pay related fees and expenses is expected to be
approximately $16,250,000, approximately $15,717,000 of which will be needed to
purchase the Shares that are tendered (assuming all Shares are tendered), and
approximately $533,000 of which will be needed for the Purchaser's out-of-pocket
expenses associated with the Offer.
Earnest Money Deposit Financing. In order to pay the Earnest Money Deposit
to the Company required under the Memorandum of Understanding, Point Associates
(one of the two partners of the Purchaser), on behalf of SKR, borrowed from
Donald E. Axinn an amount equal to $750,000 (the "Axinn Loan"). The principal
under the Axinn Loan must be repaid no later than November 30, 1998, together
with accrued interest thereon at an interest rate per annum equal to 10%. The
Axinn Loan is secured by a second mortgage and assignment of rents covering a
shopping center owned by Point Associates. The Purchaser, on behalf of Point
Associates, will repay the Axinn Loan upon the repayment of the Earnest Money
Deposit to the Purchaser by the Company as required by the Memorandum of
Understanding, or alternatively, from the proceeds of the credit facilities
provided by the Lender, as discussed below.
In addition, pursuant to an option agreement (the "Axinn Option
Agreement"), dated as of December 1, 1997, among Mr. Axinn, SKR, Point
Associates and the Purchaser, Mr. Axinn was granted an option to purchase from
SKR that number of Shares which is determinable, at Mr. Axinn's election, by
dividing either: (i) $250,000 (of the total principal amount of the Axinn Loan),
or (ii) $500,000 (of the total principal amount of the Axinn Loan), or (iii) the
aggregate principal and accrued interest outstanding under the Axinn Loan,
based, generally, on the price paid for the Shares by the Purchaser in the
Offer. The purchase price paid by Mr. Axinn for any such Shares shall be
effected through an adjustment to the then outstanding principal amount of the
Axinn Loan. Generally, such purchase option must be exercised, if at all, within
90 days after the consummation of the Offer.
8
<PAGE>
The Axinn Option Agreement also requires that SKR cause the Company to
issue to Axinn warrants to purchase 20,000 unregistered Shares, with an exercise
price equal to the amount paid for Shares by the Purchaser in the Offer. Such
warrants expire one year after issuance. If, for any reason, the Company is
unable to issue such warrants and the underlying Shares, Purchaser is required
to sell to Axinn up to 20,000 Shares then owned by Purchaser. Since the
Company's Restated Articles of Incorporation currently prohibit the issuance of
warrants or options, the necessary and affirmative corporate and stockholder
action will need to be taken prior to any such issuances to Mr.
Axinn.
Mr. Axinn has agreed not to sell or transfer any of the Shares acquired
upon exercise of the purchase option or warrants described above for a period of
18 months after such exercise and acquisition.
SKR has also agreed to cause Mr. Axinn to be elected to the Board of
Directors of the Company upon the full exercise of the Axinn Purchase Option,
and that, for so long as Purchaser, SKR or any of their affiliates owns Shares,
it will vote such Shares in favor of Mr. Axinn's election to such Board of
Directors.
Leo S. Ullman also executed in favor of Mr. Axinn a limited guaranty of the
obligations of Point Associates arising under the Axinn Loan and related
documentation.
Credit Facility. Simultaneously with the consummation of the Offer and
based on a credit facility commitment letter issued by Titan Management, L.P.
("Lender"), which is subject to the customary conditions typically found in such
commitment letters, the Purchaser expects to obtain from the Lender a credit
facility (the "Tender Offer Facility") in an amount up to $16,250,000 to be used
to finance (i) the purchase of the Shares tendered in the Offer and (ii) costs
incurred in connection with the Offer.
Amounts borrowed under the Tender Offer Facility will bear interest at an
annual rate of 13%, and will have a one-year term. The Purchaser, at its
election and upon payment of a 2% fee, may extend such term for an additional
year. Amounts borrowed under the Tender Offer Facility will be secured by a
pledge by the Purchaser of the Shares purchased in the Offer, as well as a grant
of mortgages on certain properties owned by the partners of the Purchaser.
The Purchaser does not presently have any plans, nor has the Purchaser made
any arrangements, to repay or refinance the Tender Offer Facility.
THE TENDER OFFER
8. Terms of the Offer. Upon the terms and subject to the conditions set
forth in the Offer (including, if the Offer is extended, amended or
supplemented, the terms and conditions of any such extension, amendment or
supplement), the Purchaser will accept for payment and will purchase all Shares
validly tendered on or prior to the Expiration Date (as hereinafter defined) and
not withdrawn in accordance with the procedures described herein. The term
"Expiration Date" means 12:00 Midnight, New York City time, on February 10, 1998
unless and until the Purchaser, in its sole discretion, shall have extended the
period of time for which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire.
This Offer to Purchase, the related Letter of Transmittal and the other
relevant materials are being mailed to record holders of Shares and are being
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
The Purchaser reserves the right (but shall not be obligated), in
accordance with applicable rules and regulations of the Commission, to waive any
or all of the conditions to the Offer. If, by the Expiration Date, any of such
conditions have not been satisfied, the Purchaser reserves the right to (a)
decline to accept for payment or pay for any Shares tendered, terminate the
Offer and return all tendered Shares to tendering stockholders, (b) extend the
Offer and, subject to the withdrawal rights described herein, retain all
tendered Shares until the expiration of the Offer as extended or (c) waive such
unsatisfied condition or conditions and, in accordance with applicable law and
subject to giving sufficient notice to stockholders pursuant to the Offer and in
compliance with applicable rules and regulations of the Commission, accept for
payment and pay for all Shares validly tendered.
9
<PAGE>
The Purchaser will disseminate public announcements concerning material
changes to the Offer in accordance with applicable law. The manner in which the
Purchaser will make any such public announcement may, if appropriate, be limited
to a press release.
Acceptance for Payment and Payment for Shares. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended, amended or
supplemented, the terms and conditions of any such extension, amendment or
supplement), the Purchaser will accept for payment and will purchase all Shares
validly tendered and not properly withdrawn on or prior to the Expiration Date
as soon as practicable after the later to occur of (i) the Expiration Date and
(ii) the satisfaction or waiver of the conditions of the Offer set forth in
Section 10. In any case, payment for Shares purchased pursuant to the Offer will
be made only after timely receipt by the Depositary of (a) certificates for such
Shares or timely confirmation (a "Book-Entry Confirmation") of the book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company or the Philadelphia Depository Trust Company (collectively, the
"Book-Entry Transfer Facilities"), pursuant to the procedures described herein,
(b) the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, and (c) any other documents required by the Letter of
Transmittal.
In addition, the Purchaser expressly reserves the right, in its sole
discretion, to delay the acceptance of payment of, or payment for, Shares in
order to comply in whole or in part with any applicable law. Any such delays
will be effected in compliance with Rule 14e-1(c) under the Exchange Act, which
requires that a person who makes a tender offer pay the consideration offered or
return tendered securities promptly after the termination or withdrawal of a
tender offer.
The Purchaser believes that the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder
(the "HSR Act") are not applicable to the Purchaser's purchase of Shares
pursuant to the Offer. However, if the HSR Act were deemed to be applicable to
the purchase of Shares pursuant to the Offer, the consummation of the Offer
could be delayed pending compliance therewith.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
prior to the Expiration Date as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance of such Shares for
payment pursuant to the Offer. In all cases, upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payment from the Purchaser and transmitting payment to validly tendering
stockholders. Under no circumstances will interest on the purchase price for
Shares be paid by the Purchaser by reason of any delay in making such payment.
If, for any reason whatsoever, acceptance for payment of or payment for any
Shares tendered pursuant to the Offer is delayed, or the Purchaser is unable to
accept for payment or pay for Shares tendered pursuant to the Offer, then,
without prejudice to the Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares and such Shares may not be withdrawn except
to the extent that the tendering stockholder is entitled to and duly exercises
withdrawal rights as described herein.
If any tendered Shares are not accepted for payment or purchased pursuant
to the Offer for any reason, or if certificates are submitted evidencing more
Shares than are tendered, certificates for such unpurchased or untendered Shares
will be returned, without expense to the tendering stockholder (or, in the case
of Shares delivered by book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, such Shares will be credited to an account
maintained within such Book-Entry Transfer Facility) as promptly as practicable
following the expiration, termination or withdrawal of the Offer.
If, on or prior to the Expiration Date, the Purchaser increases the
consideration offered to stockholders pursuant to the Offer, such increased
consideration would be paid to all holders of Shares that are purchased pursuant
to the Offer, whether or not such Shares were tendered prior to such increase in
consideration.
Procedures for Accepting the Offer and Tendering Shares.
Valid Tender. Except as set forth below, for Shares to be validly tendered
pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
any other required documents, must be received by the Depositary at one of its
addresses set forth
10
<PAGE>
on the back cover of this Offer to Purchase on or prior to the Expiration Date.
In addition, either (i) certificates representing such Shares must be received
by the Depositary along with the executed Letter of Transmittal (or facsimile
thereof) or such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below, and a Book-Entry Confirmation and the
executed Letter of Transmittal (or facsimile thereof) must be received by the
Depositary, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedure set forth below must be complied with. Delivery of
documents to a Book-Entry Transfer Facility does not constitute delivery to the
Depositary.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at each Book-Entry Transfer Facility for purposes of the Offer within
two (2) business days after the date of this Offer to Purchase. Any financial
institution that is a participant in any of the Book-Entry Transfer Facility
systems may make book-entry delivery of Shares by causing a Book- Entry Transfer
Facility to transfer such Shares into the Depositary's account, in accordance
with such Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents must, in any
case, be transmitted to and received by, the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date, or the guaranteed delivery procedure set forth below must be
complied with.
Delivery of documents to a Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures does not constitute delivery to
the Depositary.
Signature Guarantees. Signatures on all Letters of Transmittal (and, if
required, any supplement thereto) must be guaranteed by a firm that is a bank,
broker, dealer, credit union, savings association or other entity which is a
member in good standing of the Securities Transfer Agent's Medallion Program (an
"Eligible Institution"), unless the Shares tendered thereby are tendered (i) by
the registered holder of Shares who has not completed either the box labeled
"Special Payment Instructions" or "Special Delivery Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. See
Instruction 1 set forth in the Letter of Transmittal.
If the certificates evidencing Shares are registered in the name of a
person other than the signer of the Letter of Transmittal, or if payment is to
be made to, or certificates for unpurchased Shares are to be issued or returned
to, a person other than the registered holder, then the tendered certificates
must be issued or returned to, a person other than the registered holder, then
the tendered certificates must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name or names of the registered
holder or holders appear on the certificates, with the signatures on the
certificates or stock powers guaranteed by an Eligible Institution as provided
in the Letter of Transmittal. See Instructions 1 and 5 set forth in the Letter
of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or the procedure for book-entry transfer
cannot be completed on a timely basis, such Shares may nevertheless be tendered
if all of the following guaranteed delivery procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser, is received by the
Depositary, as provided below, on or prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer, or a Book-Entry Confirmation, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other documents required by the Letter of
Transmittal are received by the Depositary within three (3) New York Stock
Exchange, Inc. trading days after the date of execution of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
11
<PAGE>
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for, or of Book-Entry Confirmation
with respect to, such Shares, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when certificates for Shares or
confirmations of book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility are actually received by the
Depositary.
The method of delivery of Shares, the Letter of Transmittal, and any other
required documents is at the option and sole risk of the tendering stockholder.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
Back-up Federal Tax Withholding. Unless an exemption applies under the
applicable law and regulations concerning "backup withholding" of U.S. Federal
income tax, the Depositary will be required to withhold, and will withhold 31%
of the gross proceeds otherwise payable to a stockholder or other payee pursuant
to the Offer unless the stockholder or other payee provides such person's tax
identification number (social security number or employer identification number)
and certifies that such number is correct and that such person is not subject to
backup withholding. Each tendering stockholder, other than a noncorporate
foreign stockholder, should complete and sign the main signature form and the
Substitute Form W-9 included as part of the Letter of Transmittal, so as to
provide the information and certification necessary to avoid backup withholding
and certain penalties, unless an applicable exemption exists and is proved in a
manner satisfactory to the Purchaser and the Depositary. Noncorporate foreign
stockholders should generally complete and sign a Form W-8, Certificate of
Foreign Status, a copy of which may be obtained from the Depositary, in order to
avoid backup withholding. See Instruction 9 set forth in the Letter of
Transmittal.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser, and each of them,
as such stockholder's attorney-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares and other securities or rights issued or issuable in
respect of such Shares on or after January 12, 1998, except for the purposes of
any dividend paid with a record date preceding the date the Shares are accepted
for payment pursuant to the Offer. All such proxies shall be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, the Purchaser accepts such Shares for
payment. Upon such acceptance for payment, all prior powers of attorney and
proxies given by such stockholder with respect to such Shares and such other
securities or rights will be revoked, without further action, and no subsequent
powers of attorneys and proxies may be given (and, if given, will not be deemed
effective) by such stockholder. The designees of the Purchaser will be empowered
to exercise all voting and other rights of such stockholder as they in their
sole discretion may deem proper with respect to such Shares and other securities
or rights at any annual or special meeting of the Company's stockholders, or any
adjournment or postponement thereof, or in connection with any action that may
be taken by consent in lieu of any such meeting or otherwise. The Purchaser
reserves the right to require that, in order for Shares to be validly tendered,
immediately upon the acceptance for payment of such Shares, the Purchaser or its
designee will be able to exercise full voting rights with respect to such Shares
and other securities, including voting at any meeting of stockholders then
scheduled.
Determination of Validity. All questions as to the form of documents and
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Shares will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. The Purchaser
reserves the absolute right to reject any or all tenders determined by it not to
be in proper form or the acceptance of or payment for which may, in the opinion
of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any of the conditions of the Offer or any defect or
irregularity in any tender of Shares of any particular stockholder whether or
not similar defects or irregularities are waived in the case of other
stockholders.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares will be deemed to have been validly
12
<PAGE>
made until all defects and irregularities have been cured or waived. None of the
Purchaser, any of its affiliates or assigns, if any, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Other Requirements. A tender of Shares pursuant to any one of the
procedures described above will constitute the tendering stockholder's
representation and warranty that (a) such stockholder owns the Shares being
tendered within the meaning of Rule 14e-4 promulgated under the Exchange Act,
(b) the tender of such Shares complies with Rule 14e-4, and (c) such stockholder
has the full power and authority to tender and assign the Shares tendered, as
specified in the Letter of Transmittal. The Purchaser's acceptance for payment
of Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering stockholder and the Purchaser upon the terms and subject
to the conditions of the Offer.
Withdrawal Rights. Except as otherwise provided below, tenders of Shares
made pursuant to the Offer are irrevocable. Shares tendered pursuant to the
Offer may be withdrawn at any time on or prior to the Expiration Date and,
unless theretofore accepted for payment as provided herein, may also be
withdrawn at any time after February 10, 1998.
For a withdrawal to be effective, a written, telegraphic, or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn, and (if certificates for
Shares have been tendered) the name of the registered holder of the Shares as
set forth in the certificate, if different from that of the person who tendered
such Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the tendering stockholder must also submit the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn and
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer described herein, the notice of withdrawal must specify
the name and number of the account at the appropriate Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with such
Book-Entry Transfer Facility's procedure. Withdrawals of Shares may not be
rescinded. Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described herein.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of the
Purchaser or any of its affiliates or assigns (if any), the Depositary, the
Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
13
<PAGE>
9. Price Range of the Shares; Dividends.
According to the Company's 1996 Annual Report to Shareholders (the "1996
Annual Report"), as of March 3, 1997, there were 2,245,411 Shares issued and
outstanding, owned by 1,131 shareholders of record. The Shares began trading on
the National Association of Securities Dealers Automated Quotations (NASDAQ)
System under the symbol "CEDR" on December 17, 1986. The following table sets
forth, for the periods indicated, the reported over-the-counter prices for the
Shares, all as reported in published financial sources.
1997
Quarter Ended High Low Close
------------- -------- -------- -------
March 31 .................. $4 3/4 $3 7/8 $4 5/8
June 30 ..................... 6 4 1/8 5 5/8
September 30 ............... 6 3/8 5 3/8 5 7/8
December 31 ............... 7 1/4 5 7/8 6 1/2
1996
Quarter Ended
-------------
March 31 .................. $4 1/2 $4 $4 1/4
June 30 ..................... 4 1/2 3 7/8 3 7/8
September 30 ............... 4 1/2 3 3/4 4
December 31 ............... 4 1/2 3 5/8 4 1/4
According to the 1996 Annual Report, the Company is required to distribute
at least 95% of its taxable income to continue to qualify as a "real estate
investment trust" under the Code. In each of 1997 and 1996, the Company paid
$0.40 per Share in cash dividends. While the Company expects to continue paying
dividends to shareholders after the Offer is consummated, there is no assurance
of future dividends, as such are dependent upon earnings, cash flow, the
financial condition of the Company and other factors. On December 4, 1997 (the
last full day of trading prior to the public announcement by the Company of the
Purchaser's intention to make the Offer) and on January 9, 1998 (the last full
day of trading prior to the commencement of the Offer) the reported closing
prices on NASDAQ for the Shares were $6 1/8 and $6 11/16 per Share,
respectively, according to published sources. Stockholders are urged to obtain a
current market quotation for the Shares before deciding whether to tender any
Shares.
10. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment, or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, any Shares
tendered and may postpone the acceptance for payment or, subject to the
restriction referred to above, payments for any Shares tendered, and may amend
or terminate the Offer (whether or not any Shares have theretofore been
purchased or paid for) if, in the sole discretion of the Purchaser, (i) the
condition that at least a majority of the outstanding Shares be validly tendered
and not withdrawn prior to the Expiration Date, as described on the cover page
of this Offer to Purchase, has not been satisfied prior to or on the Expiration
Date; or (ii) at any time on or after December 5, 1997 and prior to or on the
Expiration Date, any of the following events shall have occurred:
a. there exists any order or any action or proceeding, by or before any
court or governmental, administrative or regulatory authority or agency
which does or would reasonably be expected to unreasonably delay or
burden, restrain or prohibit the consummation of the Offer or seek to
obtain material damages in connection therewith; or
b. any applicable governmental approvals or consents necessary for the
consummation of the Offer shall not have been received, including,
without limitation, the expiration or termination of any applicable
waiting period under the HSR Act.
14
<PAGE>
The foregoing conditions are for the sole benefit of the Purchaser (and its
affiliates) and may be asserted by the Purchaser regardless of the circumstances
(including, without limitation, any action or inaction by the Purchaser) giving
rise to any such condition or may be waived by the Purchaser in whole or in part
from time to time in its sole discretion. The failure by the Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right and may be
asserted at any time and from time to time. Any determination by the Purchaser
concerning any of the events described in this Section 10 shall be final and
binding.
11. Extension of Offer Period -- Amendment and Termination.
The Purchaser expressly reserves the right (but shall have no obligation),
in its sole discretion, at any time and from time to time, to extend the period
of time during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension. In addition, the Offer may be extended, amended or terminated upon
the occurrence of any event described in Section 10.
If, prior to the Expiration Date, the Purchaser shall, in its sole
discretion, increase or decrease the percentage of Shares being sought (in the
case of any increase, by more than 2%) or increase or decrease the consideration
offered in the Offer to holders of Shares, and if, at the time that notice of
such increase or decrease is first published, sent or given to holders of
Shares, the Offer is scheduled to expire at any time earlier than the expiration
of the tenth business day from, and including, the date that such notice is
first so published, sent or given, then the Offer will be extended until the
expiration of such period of ten business days. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal holiday,
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
The Purchaser also expressly reserves the right, subject to applicable law,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of and, regardless of whether such Shares have
theretofore been accepted for payment, the payment for any Shares, or to
terminate the Offer and not accept for payment or pay for any Shares not
theretofore accepted for payment or paid for, upon the occurrence of any of the
conditions specified in Section 10 by giving oral or written notice thereof to
the Depositary, and (ii) at any time, or from time to time, to amend the Offer
at any time and in any respect by public announcement. The rights reserved by
the Purchaser in this paragraph are in addition to the Purchaser's right to
terminate the Offer pursuant to Section 10. Any extension of the period during
which the Offer is open, delay in acceptance or payment, or termination or
amendment of the Offer will be followed as promptly as practicable by public
announcement thereof, such announcement in the case of an extension to be issued
not later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d- 4(c) under the Exchange Act. Without limiting the
obligation of the Purchaser under such Rule or the manner in which the Purchaser
may choose to make any public announcement, the Purchaser shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement, other than by issuing a press release and making any appropriate
filing with the Commission.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its payment for Shares
or is unable to pay for Shares pursuant to the Offer, the Depositary may retain
tendered Shares on behalf of the Purchaser, and such Shares may not be withdrawn
except to the extent tendering stockholders are entitled to withdrawal rights as
described herein. The ability of the Purchaser to delay payment for Shares which
the Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition of the
Offer (including a waiver of the conditions set forth in the Introduction to
this Offer to Purchase), the Purchaser will disseminate additional tender offer
materials and extend the Offer if and to the extent required by Rules 14d-4(c)
and 14d-6(d) under the Exchange Act. The minimum period during which an offer
must remain open following material changes in the terms of the Offer or
information concerning the Offer, other than a change in price or a change in
percentage of securities sought, will depend
15
<PAGE>
upon the facts and circumstances, including the relative materiality of the
changes in terms or information. With respect to a change in price or a change
in percentage of securities sought, a minimum ten-business day period is
generally required to allow for adequate dissemination to stockholders and
investor response.
12. Certain Legal and Regulatory Matters.
Except as set forth in this Offer to Purchase, based on a review of
publicly available filings by the Company with the Commission and other publicly
available information regarding the Company, the Purchaser is not aware of any
licenses or regulatory permits that appear to be material to the business of the
Company and its subsidiaries, taken as a whole, and that might be adversely
affected by the Purchaser's acquisition of Shares as contemplated in this Offer
to Purchase, or any filings, approvals or other actions by or with any domestic
or foreign governmental authority or administrative agency that would be
required prior to the acquisition of Shares by the Purchaser pursuant to the
Offer as contemplated herein. If any such approval or other action be required,
it is the Purchaser's present intention that such additional approval or action
would be sought, except as described below. While, except as otherwise described
in this Offer to Purchase, there is no present intent to delay the acceptance
for payment of, or the payment for, Shares tendered pursuant to the Offer
pending receipt of any such additional approval or the taking of any such
action, there can be no assurance that any such additional approval or action,
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to the Company's business, or other substantial
conditions complied with in order to obtain such approval or action or in the
event that such approvals were not obtained or such actions were not taken. The
Purchaser's obligation to purchase and pay for Shares is subject to certain
conditions, including conditions with respect to litigation and governmental
actions.
The Purchaser does not believe that the provisions of the HSR Act are
applicable to the Purchaser's purchase of Shares pursuant to the Offer. However,
if the HSR Act were deemed to be applicable to the purchase of Shares pursuant
to the Offer, the consummation of the Offer could be delayed pending compliance
therewith.
State Takeover Laws. A number of states, including Iowa, have adopted
takeover laws which purport, to varying degrees, to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have substantial assets, security holders, principal executive offices or
principal places of business therein. The Purchaser intends to comply with any
applicable state takeover statutes in connection with the Offer. The Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor any
action taken in connection herewith is intended as a waiver of that right.
In the event that any state takeover statute or takeover provision is found
applicable to the Offer, the Purchaser might be unable to accept for payment or
purchase Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for purchase or pay for any Shares tendered.
13. Certain Fees and Expenses.
Georgeson & Company Inc. has been retained by the Purchaser to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interview, and may request brokers, dealers and other nominee stockholders to
forward material relating to the Offer to beneficial owners. Customary
compensation will be paid for such services in addition to reimbursement of
reasonable out-of-pocket expenses. The Purchaser has agreed to indemnify the
Information Agent against certain liabilities and expenses, including any
liabilities under the federal securities laws.
In addition, The Bank of New York has been retained by the Purchaser to act
as the Depositary in connection with the Offer. The Depositary will receive
reasonable and customary compensation for its services in connection with the
Offer, will be reimbursed for its reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies and other nominees will, upon
request, be reimbursed by the Purchaser for reasonable and necessary clerical
and mailing expenses incurred by them in forwarding materials to their
customers.
16
<PAGE>
14. Miscellaneous.
The Offer is being made to all holders of Shares. The Purchaser is not
aware of any jurisdiction where the making of the Offer is prohibited by
administrative or judicial action pursuant to a valid statute. If the Purchaser
becomes aware of any valid statute prohibiting the making of the Offer, the
Purchaser will make a reasonable good faith effort to comply with such statue.
If, after such reasonable good faith effort, the Purchaser cannot comply with
such statute, the Offer will not be made to nor will tenders be accepted from or
on behalf of the holders of Shares in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1 (together with exhibits) pursuant to Rule 14d-3 promulgated under
the Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Schedule 14D-1 and any amendments
thereto (including exhibits) may be examined and copies may be obtained from the
office of the Commission in the same manner as described in Section 8 with
respect to information concerning the Company, except that they will not be
available at the regional offices of the Commission.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, any such
information or representation must not be relied upon as having been authorized.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to the
Offer, shall, under any circumstances, create any implication that there has
been no change in the affairs of the Purchaser or the Company since the date as
of which information is furnished or the date hereof.
CEDAR BAY COMPANY
January 12, 1998
17
<PAGE>
SCHEDULE I
PARTNERS, DIRECTORS AND EXECUTIVE OFFICERS
OF THE PURCHASER AND ITS AFFILIATES
The following sets forth the name, business address, citizenship and
present principal occupation or employment, together with the name, principal
business and address (if different from the business address) of any corporation
or entity in which such employment is conducted, of the partners, directors and
executive officers (as applicable) of the Purchaser, Cedar Bay Realty Advisors,
Inc., Brentway Management LLC and the Company (as contemplated after the
consummation of the Offer).
<TABLE>
<CAPTION>
Current Principal
Occupation and
Affiliations During
Name the Past Five Years Present Business Address
---- ------------------- ------------------------
<S> <C> <C>
I. Cedar Bay Company, a N/A c/o SKR Management
New York general partner- 44 South Bayles AvenuePort
ship (Purchaser) Washington, NY 11050
Purchaser's Partners Real estate owner c/o SKR Management
The Point Associates, L.P., a 44 South Bayles Avenue
Pennsylvania limited partner- Port Washington, NY 11050
ship (one of the two partners
of the Purchaser), whose gen-
eral partner is Selbridge
Corp., a Delaware corpora-
tion.
Triangle Center Associates, Real estate owner c/o SKR Management Corp.
L.P., a Pennsylvania limited 44 South Bayles Avenue
partnership (one of the two Port Washington, NY 11050
partners of the Purchaser),
whose general partner is
Buttzville Corp., a Delaware
corporation.
Purchaser's Executive Officers
Leo S. Ullman, Chief Real estate asset management c/o SKR Management Corp.
Executive Officer(1) including: President of API 44 South Bayles Avenu
(U.S. citizen) Asset Management Services Port Washington, NY 11050
Corp. and API Asset Manage-
ment, Inc. from 1992 through
1995; President of SKR Man-
agement Corp. from 1994
through the current date;
Chairman of Brentway Man-
agement LLC from 1994
through the current date;
President of Cedar Bay
Realty Advisors, Inc. since its
formation in January 1998.
Mr. Ullman has also been the
President and sole director of
Selbridge Corp. and Buttz-
ville Corp. (the two partners
of the Purchaser) from 1994
through the current date.
</TABLE>
- ---------------------
(1) Mr. Ullman (age 58) has been involved in real estate asset management
for approximately twenty years and has been practicing law for more than thirty
years. Mr. Ullman has a B.A. from Harvard University and a J.D. and M.B.A. from
Columbia University. Since 1993, Mr. Ullman has also served as "of counsel" to
Schnader Harrison Segal & Lewis, LLP, counsel to the Purchaser and certain of
its affiliates in connection with the Offer.
18
<PAGE>
<TABLE>
<CAPTION>
Current Principal
Occupation and
Affiliations During
Name the Past Five Years Present Business Address
---- ------------------- ------------------------
<S> <C> <C>
Brenda J. Walker, Vice Real estate asset management c/o SKR Management Corp.
President(2) including: Vice President of 44 South Bayles Avenue
(U.S. citizen) API Asset Management Ser- Port Washington, NY 11050
vices Corp. and API Asset
Management, Inc. from 1992
through 1995; President of
Brentway Management LLC
from 1994 through the current
date; Vice President of SKR
II. Cedar Bay Realty Advi- Real estate asset management c/o SKR Management Corp.
sors, Inc., a New York corpo- 44 South Bayles Avenue
ration (proposed new advisor Port Washington, NY 11050
to the Company following
consummation of the Offer)
Executive Officers and Directors
- --------------------------------
Leo S. Ullman, President See above c/o SKR Management Corp.
44 South Bayles Avenue
Port Washington, NY 11050
Brenda J. Walker, Vice President See above c/o SKR Management Corp.
44 South Bayles Avenue
Port Washington, NY 11050
III. Brentway Management Real estate asset management c/o SKR Management Corp.
LLC, a New York limited 44 South Bayles Avenue Port
liability company (proposed Washington, NY 11050 Cur
new property manager to the
Company following
consummation of the Offer)
Executive Officers and Members
- ------------------------------
Leo S. Ullman, Chairman See above c/o SKR Management Corp.
44 South Bayles Avenue
Port Washington, NY 11050
Brenda J. Walker, President See above c/o SKR Management Corp.
44 South Bayles Avenue
Port Washington, NY 11050
</TABLE>
- ---------------------
(2) Ms. Walker (age 45) has been involved in real estate asset management
for approximately fifteen years, and has a B.A. from Lincoln University.
19
<PAGE>
<TABLE>
<CAPTION>
Current Principal
Occupation and
Affiliations During
Name the Past Five Years Present Business Address
---- ------------------- ------------------------
<S> <C> <C>
IV. Cedar Income Fund, Ltd.
(as proposed following con-
summation of the Offer)
Executive Officers
- ------------------
Leo S. Ullman, Chairman of the See above c/o SKR Management Corp.
Board and President 44 South Bayles Avenue
Port Washington, NY 11050
Brenda J. Walker, Vice President See above c/o SKR Management Corp.
and Treasurer 44 South Bayles Avenue
Port Washington, NY 11050
Directors
- ---------
Leo S. Ullman See above c/o SKR Management Corp.
44 South Bayles Avenue
Port Washington, NY 11050
J.A.M.H. der Kinderen From 1984 through 1994, Mr. Boschdijk 696
(age 57; Citizen of The Neth- der Kinderen was Director of 5624 CB Eindhoven
erlands) Investments of Rabobank The Netherlands
Pension Fund, and has been
or is Chairman of the Board
of the following entities:
Rodin Properties - Shore
Mall, N.V. (1990-1995), Mass
Mutual Pierson (M.M.P.)
(1988-1997), Noro Amerika
Vast Goed B.V. (1985-
present), Noro America Real
Estate B.V. (1995-present),
and, from 1996 to the present,
a director of Warner Building
Corporation.
Everett B. Miller III Mr. Miller is currently the 450 Post Road East
(age 50; U.S. citizen) Senior Vice President and Westport, CT 06881
Chief Executive Officer of
Endowment Realty Investors,
Inc., a regulated investment advisor. Prior
to that, starting in March 1997, Mr. Miller
was the Senior Vice President and Chief
Exceutive Officer of Finite REITs,
Endowment Realty Investors and Endowment
Realty Investors II. 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 to that, Mr. Miller was
employed for twenty years at Travellers
Realty Investment Co., at which his last
position was Senior Vice President.
</TABLE>
20
<PAGE>
SCHEDULE II
BENEFICIAL OWNERSHIP OF SHARES AND TRANSACTIONS DURING
PAST 60 DAYS BY CERTAIN DIRECTORS AND EXECUTIVE OFFICERS.
Neither the Purchaser, nor any of its partners (or the executive officers
of such partners' respective corporate general partners), has purchased or sold
Shares during the past 60 days.
21
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Courier:
Tender & Exchange (For Eligible Institutions Only) Tender & Exchange
Department (212) 815-6213 Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm Facsimile By Telephone: Receive and Deliver Window
New York, New York 1-800-507-9537 New York, New York 10286
10286-1248
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below, and
will be furnished promptly at the Purchaser's expense. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
---------------------
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
<PAGE>
FOR IMMEDIATE RELEASE CONTACT: Brenda J. Walker
Vice President
Cedar Bay Company
(516) 883-5577
TENDER OFFER FOR CEDAR INCOME FUND, LTD. EXTENDED
PORT WASHINGTON, NEW YORK -- February 24, 1998 -- Cedar Bay Company
("Cedar Bay") today announced that the expiration date of its tender offer (the
"Offer") to acquire all, but not less than a majority, of the outstanding
shares of common stock (the "Shares") of Cedar Income Fund, Ltd. for $7.00 per
share (net to the seller in cash) has been extended to 12:00 Midnight, New York
City time, on March 27, 1998, unless the Offer is extended, in order to
finalize financing arrangements. The Bank of New York (the depositary bank for
the Offer) has reported to the Purchaser that, as of the close of business on
Monday, February 23, 1998, approximately 73% of the Shares had been validly
tendered in accordance with the Offer.
The Offer is being made pursuant and subject to the terms and
conditions set forth in the Offer to Purchase dated January 12, 1998. Cedar Bay
has previously filed with the Securities and Exchange Commission a Tender Offer
Statement on Schedule 14D-1, as amended, which contains additional information
relating to the Offer, of which the Offer to Purchase is an exhibit.
The Information Agent for the Offer is Georgeson & Company Inc.
