<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 31, 2000
UNI-INVEST (U.S.A.), LTD.
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(Exact name of registrant as specified in charter)
Maryland 0-14510 42-1241468
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(State or other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) No.)
44 South Bayles Avenue, Port Washington, New York 11050
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 767-6492
Cedar Income Fund, Ltd.
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(Former name or former address, if changed since last report)
<PAGE>
INDEX
Uni-Invest (U.S.A.), Ltd.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 2000 (unaudited) and
December 31, 1999
Consolidated Statements of Shareholders' Equity - March 31,
2000 (unaudited) and December 31, 1999
Consolidated Statements of Operations - Three Months Ended
March 31, 2000 and 1999 (unaudited)
Consolidated Statements of Cash Flows - Three Months Ended
March 31, 2000 and 1999 (unaudited)
Notes to Consolidated Financial Statements - March 31, 2000
(unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure of Market Risk
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
Part I Financial Information
Item 1 Financial Statements (unaudited)
Uni-Invest (U.S.A.). Ltd.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31
2000 1999
(Unaudited)
----------- -----------
<S> <C> <C>
Assets
Real Estate
Land $ 4,144,705 $ 4,144,705
Buildings and improvements 15,077,133 15,041,317
------------ ------------
19,221,838 19,186,022
Less accumulated depreciation (5,305,656) (5,190,825)
------------ ------------
Real estate 13,916,183 13,995,197
Cash and cash equivalents 2,205,630 2,298,334
Rents and other receivables 101,334 98,629
Deferred financing costs 100,000 --
Prepaid expenses 82,872 101,892
Deferred leasing commissions 123,655 122,944
Due from co-tenancy partner 29,311 56,993
Deferred rental income 12,312 12,312
Deferred legal costs 13,234 --
Taxes held in escrow 6,259 6,259
------------ ------------
Total Assets $ 16,590,790 $ 16,692,560
============ ============
Liabilities and Shareholders' Equity
Liabilities
Mortgage loan payable 1,339,328 1,346,750
Accounts payable and accrued expenses 339,458 365,790
Due to co-tenancy partner 7,071 46,158
Security deposits 89,921 87,919
Advance rents 68,687 42,095
------------ ------------
Total Liabilities 1,844,464 1,888,712
Limited partner's Interest in consolidated
Operating Partnership 9,534,027 9,560,913
Shareholders' Equity
Common stock ($.01 par value
50,000,000 shares authorized, 942,111
shares outstanding 9,421 9,421
Additional paid-in-capital 5,202,878 5,233,514
------------ ------------
Total shareholders' equity 5,212,299 5,242,935
------------ ------------
Total liabilities and shareholder's equity $ 16,590,790 $ 16,692,560
============ ============
</TABLE>
<PAGE>
Uni-Invest (U.S.A.). Ltd.
Consolidated Statements of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Additional Undistributed Total
Common Paid-In Net Shareholders'
Stock Capital Income Equity
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1999 $ 9,421 $ 5,233,514 $ -0- $ 5,242,935
Net income -- 63,575 63,575
Dividends to shareholders -0- (30,636) (63,575) (94,211)
----------- ----------- ----------- -----------
Balance at March 31, 2000 $ 9,421 $ 5,202,878 $ -- $ 5,212,299
=========== =========== =========== ===========
</TABLE>
<PAGE>
Uni-Invest (U.S.A.). Ltd.
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
2000 1999
---- ----
<S> <C> <C>
Revenue
Rents $ 655,892 $ 653,246
Interest 40,548 7,020
--------- ---------
Total Revenue 696,440 660,266
--------- ---------
Expenses
Property expenses:
Real estate taxes 65,930 62,283
Repairs and maintenance 56,588 53,355
Utilities 38,796 37,348
Management fee 34,736 30,550
Insurance 6,714 4,386
Other 14,099 19,661
--------- ---------
Property expenses, excluding depreciation 216,863 207,583
Depreciation 114,829 126,310
--------- ---------
Total property expenses 331,692 333,893
Interest 31,507 32,168
Administrative fees 24,468 24,468
Directors' fees and expenses 21,334 27,868
Other administrative 80,390 63,658
--------- ---------
Total Expenses 489,391 482,055
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Net income before limited partner's interest
in Operating Partnership $ 207,049 $ 178,211
Limited partner's interest (143,474) (141,586)
--------- ---------
Net income 63,575 36,625
--------- ---------
Net earnings per share $ 0.07 $ 0.07
========= =========
Dividends to shareholders $ 94,211 $ 54,211
========= =========
Dividends to shareholders per share $ 0.10 $ 0.10
========= =========
Average number of shares outstanding 942,111 542,111
========= =========
</TABLE>
<PAGE>
Uni-Invest (U.S.A.). Ltd.
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Net income $ 63,575 $ 36,625
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Limited partner's interest in Operating Partnership 143,474 141,586
Depreciation 114,835 138,536
(Increase) in deferred rental receivable -- (16,429)
Changes in operating assets and liabilities:
Increase in rent and other receivables (2,619) (24,724)
Decrease in prepaid expenses 19,020 25,590
Increase in deferred leasing commissions (711) (5,764)
Increase in taxes held in escrow -- (14,346)
(Decrease) increase in accounts payable (26,338) 52,786
Decrease in due from co-tenancy partner 27,682 25,770
Decrease in due to co-tenancy partner (39,087) (43,275)
Security deposits collected, net 2,002 1,623
Increase in advance rents 26,592 8,805
----------- -----------
Net cash provided by operating activities 328,425 326,783
Cash Flow From Investing Activities
Capital Expenditures (35,816) (18,975)
----------- -----------
Net cash used in investing activities (35,816) (18,975)
Cash Flow from Financing Activities
Principal portion of scheduled mortgage payments (7,422) (6,758)
Dividends paid (94,211) (54,211)
Distributions to limited partner (170,446) (170,330)
Financing costs (100,000) --
Deferred legal costs (13,234)
----------- -----------
Net cash used in financing activities (385,313) (231,299)
Net increase (decrease) in cash and cash equivalents (92,704) 76,509
Cash and cash equivalents at beginning of the period 2,298,334 678,196
----------- -----------
Cash and cash equivalents at end of the period $ 2,205,630 $ 754,705
=========== ===========
Supplemental Disclosure of Cash Activities
Interest Paid $ 31,507 $ 32,168
=========== ===========
</TABLE>
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 1. Background, Organization and Reorganization of the Company
Uni-Invest (U.S.A.), Ltd. (the "Company") was originally incorporated in Iowa on
December 10, 1984 under the name Cedar Income Fund, Ltd. ("Old Cedar"). Public
offerings of Common Stock were completed by Old Cedar in 1986 and 1988 and
raised approximately $19 million. Old Cedar invested the proceeds from these
offerings in four real estate properties and a mortgage loan participation,
utilizing only a minimum amount of indebtedness against the properties. The
mortgage loan participation has since been liquidated.
On April 2, 1998, Cedar Bay Company, ("CBC") a New York general partnership,
pursuant to a tender offer to purchase all of the outstanding shares of Common
Stock of Old Cedar for $7.00 per share in cash (the "Offer"), acquired
1,893,038.335 shares of Old Cedar's outstanding Common Stock, $1.00 par value
per share ("Old Common Stock"), representing approximately 85% of the
then-outstanding shares.
On June 26, 1998, Old Cedar merged with and into the Company, then newly formed
as a wholly-owned Maryland subsidiary of Old Cedar. Immediately thereafter, the
Company assigned substantially all of its assets and liabilities to a
newly-formed Delaware limited partnership, Cedar Income Fund Partnership, L.P.
(the "Operating Partnership"), in exchange for an aggregate of 2,245,411
operating partnership units of the Operating Partnership ("Units"), which
constituted the sole general partnership interest and all of the limited
partnership interests in the Operating Partnership. After such assignment, CBC
exchanged 1,703,300 shares of the Company's Common Stock, $0.01 par value per
share ("New Common Stock"), for 1,703,300 limited partnership units in the
Operating Partnership owned by the Company. The shares of New Common Stock were
cancelled by the Company upon their exchange by CBC. Following these
transactions, substantially all of the Company's assets consisted of the
controlling general partner interest of the Operating Partnership and
approximately 24% of the Units; substantially all of CBC's assets consisted of
189,737 shares of New Common Stock, approximately 35% of the then issued and
outstanding shares of New Common Stock, and approximately 76% of the Units.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 1. Background, Organization and Reorganization of the Company (Continued)
As of November 5, 1999, a Subscription Agreement was entered into by and between
the Company and Uni-Invest Holdings (U.S.A.) B.V., pursuant to which Uni-Invest
Holdings (U.S.A.) B.V. acquired on or about November 15, 1999, through a private
placement, 150,000 shares of Common Stock of the Company at $4.50 per share
(which price as of such date of issue was higher than the quoted price for such
shares on the NASDAQ). As a result of such placement and other private
placements of an additional 250,000 shares of Common Stock, as of November 15,
1999, Uni-Invest Holdings (U.S.A.) B.V. owned approximately 16% of the Common
Stock of the Company. CBC's Common Stock ownership was correspondingly reduced
from approximately 35% to approximately 20%. Also in accordance with the
agreement, and pursuant to Board of Directors' approval and shareholders'
approval at a special meeting held on February 24, 2000, the Company changed its
name from Cedar Income Fund, Ltd. to Uni-Invest (U.S.A.), Ltd. effective as of
February 29, 2000. The name of the Operating Partnership was correspondingly
changed from Cedar Income Fund Partnership, L.P. to Uni-Invest (U.S.A.)
Partnership, L.P. as of February 29, 2000.
At a Board meeting held on November 18, 1999 the following persons were elected
to the positions respectively set forth below:
Richard Homburg Chairman of the Board
Louis Ph. Marcus Treasurer
Lawrence W. Freeman, Esq. Assistant Secretary
In addition, the Company, Uni-Invest Holdings (U.S.A) B.V. and CBC entered into
a Stockholders' Agreement effective as of the issuance of stock pursuant to the
Subscription Agreement, wherein Uni-Invest Holdings (U.S.A.) B.V. and CBC
agreed, among other things, to hold their shares for a period of not less than
five years and setting forth certain provisions for the orderly sale or other
disposition of shares under certain circumstances, and also to provide certain
other arrangements common to such stockholders' agreements, including but not
limited to subscriber's representations and warranties to the effect that (i)
the shares are being acquired for the subscriber's own account, (ii) the
subscriber is an "accredited investor" within the meaning of Rule 501(a)
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and (iii) the subscriber has had access to all documents and information
requested. Further the subscriber acknowledges that the shares have not been
registered under the Securities Act. Pursuant to the Subscription Agreement, the
parties also agree to vote their shares in favor of a slate of directors
pursuant to which each of the respective parties would designate two persons for
election as directors of a board of directors which would also include not less
than three outside directors.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 1. Background, Organization and Reorganization of the Company (Continued)
The Stockholders' Agreement also calls for the creation by the Board of
Directors, as reconstituted, of an executive committee of the Board, the members
of which would be Richard Homburg and Leo S. Ullman.
Further, the Subscription Agreement, provides for the transfer of 50% of the
stock of Cedar Bay Realty Advisors, Inc. ("CBRA") to an affiliate of Uni-Invest
Holdings (U.S.A.) B.V. and the participation by such affiliate of Uni-Invest
Holdings (U.S.A.) B.V. generally in any increase in income of CBRA attributable
to growth of advisory fees arising from services rendered to the Company and to
the Operating Partnership.
The Subscription Agreement also provides for an affiliate of Uni-Invest Holdings
(U.S.A.) B.V. to acquire, without additional consideration, a 50% interest in
each of SKR Management Corp. and Brentway Management LLC, which companies shall
be merged, or otherwise acquired by CBRA. Further, the subscription agreement
provides for Uni-Invest Holdings (U.S.A.) B.V. to succeed HVB Capital Markets,
Inc. ("HVB") as financial advisor to the Company, after the expiration or other
termination of the then existing agreement with HVB Capital Markets, Inc. (the
"HVB Agreement") HVB agreed to terminate the HVB Agreement effective as of
December 31, 1999.
Uni-Invest Holdings (U.S.A) B.V. and Leo S. Ullman have entered into a
Stockholders' Agreement with respect to ownership of CBRA. That Agreement, in
general, also provides for a five year holding period, agreement among the
parties to change the name of CBRA to "Homburg/API Realty Advisors, Inc." and
other provisions common to such stockholder agreements, including but not
limited to agreement among the parties to vote their respective shares for a
board of directors of which both Leo Ullman and Richard Homburg would be
members.
The Subscription Agreement also calls for the guarantee by Uni-Invest Holdings
(U.S.A.) B.V. of the funding on or before May 15, 2000 of $7.5 million in
exchange for shares of the Company and/or Units in the Operating Partnership at
$4.50 per share/ Unit. The proceeds of such contribution, together with $7.5
million to be raised by the Company from other private placements of shares of
stock or Units, from refinancing of its existing properties and/or the sale of
its interests in one or more of the existing properties, would be used to
purchase three anchored strip shopping centers aggregating more than 700,000
square feet, substantially fully leased with many creditworthy tenants, in
Harrisburg (The Point Shopping Center), Lancaster (Golden Triangle Shopping
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 1. Background, Organization and Reorganization of the Company (Continued)
Center) and Philadelphia (Red Lion Shopping Center), Pennsylvania from CBC or
entities affiliated therewith. The aggregate purchase price for the three
properties is $15 million plus closing adjustments, where applicable, above
existing first mortgage liabilities estimated at approximately $37 million at
this time, is subject to third-party appraisals and "fairness" opinions by a
reputable independent investment banking firm. The purchase agreements to
reflect the foregoing were executed by the parties as of April 28, 2000.
It has also been agreed that CBC or its affiliates will contribute to the
Operating Partnership upon sale of the three Pennsylvania Shopping Center
Properties described above, $2.5 million in cash in exchange for certain Units
with certain priority payments at 8%.
The Company has agreed to pay a fee to an affiliate of Uni-Invest Holdings
(U.S.A.) B.V. in the amount of 5% of the $7.5 million for which Uni-Invest
Holdings (U.S.A.) B.V. guaranteed the placement, if, in fact, such placement is
funded. The fee would be payable in shares of Uni-Invest (U.S.A.), Ltd. or
Operating Partnership units of Uni-Invest (U.S.A.) Partnership, L.P. at $4.50
per share/unit. Further, in the event of funding by CBC or its affiliate(s) of
$2.5 million in cash in exchange for certain units, as described above, CBC or
its affiliate(s) will receive a fee equal to 5% of such funded placement also
payable in shares of Uni-Invest (U.S.A.), Ltd. or Operating Partnership units
in Uni-Invest (U.S.A.) Partnership, L.P. at $4.50 per share/unit.
Finally, the Company will receive an option to acquire a majority ownership
interest in a certain shopping center property of approximately 620,000 square
feet and adjacent land in Pleasantville, New Jersey, subject to certain
contingencies.
The sale of the three shopping centers described above was originally subject to
a closing on or before May 15, 2000 and is subject to agreement on closing
adjustments, due diligence reviews, and consents, where applicable, of lenders
and partners. Due diligence reviews have been satisfactorily completed and all
lender approvals have been obtained. However, certain required documentation,
including mortgage assumption agreements, legal opinions, fairness opinions
and the like, has not yet been completed. Therefore, the shopping center
purchase agreements have been amended to extend the closing date to be a date on
or before June 9, 2000.
There can be no assurances that the closing of these transactions will in fact
be concluded. In the event that the funding by Uni-Invest Holdings (U.S.A.) B.V.
does not occur, the Company has the right to unwind the entire transaction with
Uni-Invest Holdings (U.S.A.) B.V., subject to certain conditions, including but
not limited to, the Company's option to repurchase Uni-Invest Holdings (U.S.A.)
B.V.'s Common Stock and change the name of the Company and the Operating
Partnership to eliminate the Uni-Invest name, to remove Richard Homburg and
Louis Marcus as directors and Chairman of the Board and Treasurer, respectively,
and to remove Lawrence Freeman as Assistant Secretary.
On April 3, 2000 the Company initiated the "buy-sell" provision in its
tenancy-in-common agreement with Life Investors Insurance Company of America,
("Life Investors"), an affiliate of the Company's former management company and
advisor, relative to Germantown Square, a 74,267 square foot retail property in
which the Company had held a 50% undivided interest. Life Investors notified the
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 1. Background, Organization and Reorganization of the Company (Continued)
Company as of April 28, 2000 that Life Investors elected to buy the Company's
50% undivided interest in Germantown Square, for approximately $3,000,000. The
closing of the sale occurred on May 11, 2000 and the Company has invested the
net proceeds in qualifying money market instruments pending the closing of the
purchase of the properties described above. The Company expects to recognize a
gain in the second quarter of approximately $100,000.
On January 15, 2000, the Company entered into a six month exclusive sales
agreement with a national brokerage company for the sale of the Jacksonville,
Florida (Southpoint) office facility to a qualified purchaser. However,
acceptance of any offer received by the broker is subject to board approval.
Accordingly, Southpoint continues to be classified as an operating property.
Further, the Company applied for and received a commitment for a $10 million
line of credit from a national commercial bank secured by first mortgage liens
on properties of the Operating Partnership. The Company closed on the line of
credit facility on May 10, 2000. The first drawdown was used to pay off the then
existing first mortgage on the Utah property. Such first drawdown was in the
amount of $1,515,644.08 which included $1,358,789.39 payable to the Utah first
mortgagee, legal fees for the bank and the Company, title charges and the bank's
quarterly administrative fee. The Company will use proceeds of additional
drawdowns under the commercial bank line of credit, the proceeds of the sale of
Germantown Square, deposits of cash held by the Company and the Operating
Partnership and $2.5 million to be contributed by CBC, as described above, to
meet the $7.5 million (plus closing costs, if any) required of the Company
pursuant to the Subscription Agreement. After the purchase of the three
Pennsylvania shopping centers, the Company's new commercial bank line of credit
contains a covenant that limits, while such credit facility is outstanding,
dividends/distributions to the greater of 75% of Funds From Operations less
capital expenditures plus (i) amounts necessary to maintain the Company's real
estate investment trust status and (ii) amounts necessary to avoid payment by
the Company of federal, state and excise taxes.
CBRA has agreed to defer until termination of its services as investment advisor
to the Company, any acquisition fees to which it would otherwise be entitled
with respect to the acquisition by the Company or the Operating Partnership of
interests in the properties from CBC or its affiliates and the disposal of the
Company's 50% undivided interest in Germantown Square described above.
Uni-Invest Holdings (U.S.A) B.V. is a private company organized and existing
under the laws of the Netherlands. Its stock is owned primarily by or for the
benefit of Richard Homburg and members of his family.
CBC is a New York general partnership. The Point Associates, L.P. a Pennsylvania
limited partnership, and Triangle Center Associates, L.P. a Pennsylvania limited
partnership, were the sole partners of CBC during 1998. The general partner of
The Point Associates, L.P. is Selbridge Corp., a Delaware corporation. The
general partner of Triangle Center Associates is Buttzville Corp., a Delaware
corporation. Leo S. Ullman is the sole limited partner in each of The Point
Associates, L.P. and Triangle Center Associates, L.P. and is an executive
officer and a director of each of Selbridge Corp. and Buttzville Corp. During
March and April 1999 The Point Associates, L.P. and Triangle Center Associates,
L.P., respectively, transferred their interests in CBC to TPA Ownership L.L.C.
("TPA") resulting in TPA temporarily being sole partner of CBC. Hicks Management
Corp. ("Hicks"), Ledford Corp. ("Ledford"), and Thomsville Corp. ("Thomsville")
were equal members in TPA. Leo S. Ullman is an executive officer and a director
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 1. Background, Organization and Reorganization of the Company (Continued)
of each of the aforementioned members of TPA. Effective December 31, 1999 TPA
was dissolved and all of the member interests were assigned to Hicks, Ledford,
and Thomsville, as general partnership interests, in equal one-third portions.
Immediately following and also effective December 31, 1999, each of the
aforementioned general partners transferred its one-third general partnership
interests to Duncomb Corp., Lindsay Management Corp. and Hicks Corp. The
transfer resulted in Duncomb Corp. having a 55% interest; Lindsay Management
Corp. a 40% interest, and Hicks Corp., a 5% interest. Mr. Ullman is an executive
officer and a director in Duncomb Corp., Lindsay Management Corp., and Hicks
Corp.
Currently, a Unit in the Operating Partnership and a share of Common Stock of
the Company have essentially the same economic characteristics, as they
effectively share equally in net income or loss and distributions of the
Operating Partnership.
The Company operates as a real estate investment trust ("REIT"). To qualify as a
REIT under applicable provisions of the Internal Revenue Code of 1986, as
amended, and Regulations thereto, the Company must have a significant percentage
of its assets invested in, and income derived from, real estate and related
sources. The Company's objectives are to provide its shareholders with a
professionally managed, diversified portfolio of commercial real estate
investments which will provide the best available cash flow and present an
opportunity for capital appreciation.
The Company, through its Operating Partnership, owns and operates three office
properties aggregating approximately 224,000 square feet, located in
Jacksonville, Florida, Salt Lake City, Utah and Bloomington, Illinois; and a 50%
undivided interest in a 74,000 square foot retail property located in
Louisville, Kentucky. The 50% undivided interest in Louisville, Kentucky was
sold on May 11, 2000.
Cedar Bay Realty Advisors, Inc. ("CBRA" and/or "Advisor") serves as investment
advisor to the Company pursuant to an Administrative and Advisory Agreement with
the Company substantially similar to the terms of that agreement previously in
effect between Old Cedar and AEGON USA Realty Advisors, Inc. ("AEGON") of Cedar
Rapids, Iowa, which served as investment advisor to the Company from formation
until April 3, 1998. Brentway Management LLC ("Brentway" and/or "Property
Manager"), a New York limited liability company provides property management
services for the Company's properties pursuant to a management agreement with
the Company on substantially the same terms as the agreement previously in
effect with AEGON. Brentway and CBRA are both affiliates of CBC, SKR Management
Corp. and Leo S. Ullman. Leo S. Ullman is President of the Company.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 2. Description of Business and Significant Accounting Policies
Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 2000
are not necessarily indicative of the results that may be expected for year
ended December 31, 2000.
The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant Company's Annual Report on Form
10-K for the year ended December 31, 1999.
Consolidation Policy and Related Matters
The accompanying consolidated financial statements include the consolidated
financial position of the Company and the Operating Partnership as of March 31,
2000. All significant intercompany balances and transactions have been
eliminated in consolidation.
As the Company owns the sole general partnership interest in the Operating
Partnership, which provides the Company with effective control over all
significant activities of the Operating Partnership, the Operating Partnership
is consolidated with the Company in the accompanying financial statements as of
March 31, 2000.
The limited partner's interest as of March 31, 2000 (currently owned entirely by
CBC) represents approximately a 64% limited partnership interest in the equity
of the Operating Partnership.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 2. Description of Business and Significant Accounting Policies (Continued)
Currently, a Unit in the Operating Partnership and a share of Common Stock of
the Company have essentially the same economic characteristics, as they
effectively share equally in net income or loss and distributions of the
Operating Partnership.
The accompanying financial statements include its 50% co-tenancy interest in the
assets, liabilities and operations of the retail property.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires 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.
Revenue Recognition
Minimum rental income is recognized on a straight-line basis over the term of
the lease. The excess of rents recognized over amounts contractually due are
included in deferred rents receivable on the accompanying balance sheets.
Contractually due but unpaid rents are included in tenant receivables on the
accompanying balance sheets. Certain lease agreements provide for reimbursement
of real estate taxes, insurance, common area maintenance costs and indexed
rental increases, which are recorded on an accrual basis.
Real Estate
Depreciation is computed utilizing the straight-line method over the estimated
useful lives of ten to forty years for buildings and improvements. Tenant
improvements, which are included in buildings and improvements, are amortized on
a straight-line basis over the term of the relevant lease.
Cash Equivalents
The Company considers highly liquid investments with a maturity of three months
or less when purchased, to be cash equivalents.
Deferred Costs
Leasing fees and loan costs are capitalized and amortized over the life of the
relevant lease or loan.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 2. Description of Business and Significant Accounting Policies (Continued)
Stock Options
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related interpretations
in accounting for its employee stock options because, the alternative fair value
accounting provided for under FASB Statement No. 123, "Accounting for
Stock-Based Compensation," (SFAS No. 123) requires use of option valuation
models that were not developed for use in valuing employee stock options.
The Company established a stock option plan (the "Plan") for the purpose of
attracting and retaining executive officers, directors and other key employees.
Five Hundred Thousand (500,000) of the Company's authorized shares of Common
Stock have been reserved for issuance under the Plan. The Plan is administered
by a committee of the Board of Directors, which committee will, among other
things, select the number of shares subject to each grant, the vesting period
for each grant and the exercise price (subject to applicable regulations with
respect to incentive stock options) for the options. As of March 31, 2000, no
options have been granted under the Plan.
Earnings Per Share
Statement of Financial Accounting Standard Board ("FASB") No. 128, "Earnings per
Share", was issued and adopted by the Company during 1997. Statement No. 128
replaced the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Since the Company has no potentially
dilutive securities outstanding, basic and diluted net income per share in
accordance with Statement No. 128 are the same and do not differ from amounts
previously reported as net income per share (primary earnings per share).
Accordingly, basic and diluted net income per share are computed using the
weighed average number of shares outstanding during the year.
Basic and diluted net income per share are based on the weighted average number
of shares outstanding (942,651 for the three months ended March 31, 2000 and
542,111 for the first three quarters of 1999). Dividends to shareholders per
share are based on the actual number of shares outstanding on the respective
dates.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 2. Description of Business and Significant Accounting Policies (Continued)
In 1997, the FASB issued Statement No. 130, "Reporting Comprehensive Income"
("Statement 130") which is effective for fiscal years beginning after December
15, 1997. Statement 130 established standards for reporting comprehensive income
and its components in a full set of general-purpose financial statements.
Statement 130 requires that all components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other
financial statements. the adoption of this standard had no impact on the
Company's financial position or results of operations.
Segment Reporting
In 1997, the FASB issued Statement No. 131 "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131") which is effective for fiscal
years beginning after December 15, 1997. SFAS 131 establishes standards for
reporting information about operating segments in annual financial statements
and in interim financial reports. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
The adoption of this standard had no impact on the Company's financial position
or results of operations. The Company owns all of the interests in real estate
properties through the Operating Partnership. Previously, each of the properties
were evaluated on an individual basis. However, due to the numerous changes
being made by the Company or discussed in Note 1, the company has changed the
composition of its reportable segments to one segment.
Recent Pronouncements
In June 1999, the FASB issued Statement No. 137, amending Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which extended
the required date of adoption to the years beginning after June 15, 2000. The
Statement permits early adoption as of the beginning of any fiscal quarter after
its issuance. The Company expects to adopt the new Statement effective January
1, 2001. The Company does not anticipate that the adoption of this Statement
will have any effect on its results of operations or financial position.
Income Taxes
The Company generally will not be subject to federal income taxes as long as it
qualifies as a REIT under Sections 856-869 of The Internal Revenue Code of 1986,
as amended (the "Code"). A REIT will generally not be subject to federal income
taxation on that portion of income that qualifies as REIT taxable income and to
the extent that it distributes such taxable income to its stockholders and
complies with certain requirements of the Code relating to income and assets. As
a REIT, the Company is allowed to reduce taxable income by all or a portion of
distributions to stockholders and must distribute at least 95% of its REIT
taxable income to maintain qualification as a REIT. As distributions, for
federal income tax purposes, have exceeded REIT taxable income, no federal
income tax provision has been made.
Impairment of Long-Lived Assets
The Company reviews its real estate assets if indicators of impairment are
present to determine whether the carrying amount of the asset will be recovered.
Recognition of impairment is required if the undiscounted cash flows estimated
to be generated by the asset are less than the asset's carrying amount.
Measurement is based upon the fair value of the asset. As of March 31, 2000,
management determined that no impairment indicators exist.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 2. Description of Business and Significant Accounting Policies (Continued)
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
Note 3. Real Estate and Accumulated Depreciation
The Company's properties are leased to various tenants, whereby the Company
incurs normal real estate operating expenses associated with ownership.
Note 4. Mortgage Loan Payable
On October 30, 1992 the Company borrowed $1,500,000 to finance an existing
property. As of March 31, 2000, the mortgage outstanding principal balance is
$1,339,328. This loan is collateralized by Broadbent, with a carrying amount of
$3,279,762. The mortgage requires the repayment of principal based on a thirty
year amortization schedule at an interest rate of 9.375% and matures November 1,
2002. There is a prepayment provision which permits repayment beginning October
1997.
The Company paid off the mortgage loan on May 10, 2000 with a (the first)
drawdown on its commercial bank line of credit. The total due as of May 10, 2000
was $1,358,789.39 which amount was net of the real estate tax escrow and
included accrued interest and a 3% pre-payment penalty of $40,104.48.
Note 5. Related Party Transactions
Administrative and Advisory Services
The Company does not have any employees and has contracted with Cedar Bay Realty
Advisors, Inc., a New York corporation ("CBRA") to provide administrative,
advisory, acquisition and divestiture services to the Company pursuant to an
Administrative and Advisory Agreement (the "Advisory Agreement") entered into in
April 1998. CBRA is wholly-owned by Mr. Ullman. Mr. Ullman is President and a
director of, and Brenda J. Walker is Vice President of, CBRA. The term of the
Advisory Agreement is for one (1) year and is automatically renewed annually for
an additional year subject to the right of either party to cancel the Advisory
Agreement upon 60 days written notice.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 5. Related Party Transactions (Continued)
Under the Advisory Agreement, CBRA is obligated to: (a) provide office space and
equipment, personnel and general office services necessary to conduct the
day-to-day operations of the Company; (b) select and conduct relations with
accountants, attorneys, brokers, banks and other lenders, and such other parties
as may be considered necessary in connection with the Company's business and
investment activities, including, but not limited to, obtaining services
required in the acquisition, management and disposition of investments,
collection and disbursement of funds, payment of debts and fulfillment of
obligations of the Company, and prosecuting, handling and settling any claims of
the Company; (c) provide property acquisition and disposition services,
research, economic and statistical data, and investment and financial advice to
the Company; and (d) maintain appropriate legal, financial, tax, accounting and
general business records of activities of the Company and render appropriate
periodic reports to the Directors and stockholders of the Company and to
regulatory agencies, including the Internal Revenue Service, the Securities and
Exchange Commission, and similar state agencies.
CBRA receives fees for its administrative and advisory services as follows:
(a) a monthly administrative and advisory fee equal to 1/12 of 3/4 of 1% of the
estimated current value of real estate assets of the Company, plus 1/12 of 1/4
of 1% of the estimated current value of all other assets of the Company; (b) an
acquisition fee equal to 5% of the gross purchase price (before expenses and
without deducting indebtedness assumed) of any real property acquired during the
term of the Advisory Agreement; provided that the total of all such acquisition
fees plus acquisition expenses in connection with the purchase of any real
property shall be reasonable and shall not exceed 6% of the amount paid or
allocated to the purchase, development, construction or improvement of a
property, exclusive of acquisition fees and acquisition expenses; and (c) a
disposition fee equal to 3% of the gross sales price (before expenses but
without deducting any indebtedness against the property) of any real property
disposed of during the term of the Advisory Agreement; provided that no
disposition fee shall be paid unless and until the stockholders have received
certain distributions from the Company. In addition, CBRA may receive one-half
of the brokerage commission on such a disposition but only up to 3% of the price
actually paid for the property, subject to certain limitations. Furthermore, if
the Advisory Agreement is terminated prior to the liquidation of the Company,
CBRA will be entitled to payment of disposition fees based on the ratio of the
number of years the Advisory Agreement was operative to the number of years from
the date the Advisory Agreement was entered into that such fee became payable.
No incentive, acquisition or disposition fees were paid during the first quarter
of 2000.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 5. Related Party Transactions (Continued)
Management Services
Brentway Management LLC, a New York limited liability company ("Brentway")
provides property management and leasing services to the Company's real property
pursuant to a Management Agreement (the "Management Agreement") entered into in
April 1998. Brentway is owned by Mr. Ullman and Ms. Walker, who are also
Chairman and President of Brentway, respectively. The term of the Management
Agreement is for one (1) year and is automatically renewed annually for an
additional year subject to the right of either party to cancel the Management
Agreement upon 60 days' written notice. Under the Management Agreement, Brentway
is obligated to provide property management services, which include leasing and
collection of rent, maintenance of books and records, establishment of bank
accounts and payment of expenses, maintenance and operation of property,
reporting and accounting to the Company regarding property operations, and
maintenance of insurance. All of the duties of Brentway are to be fulfilled at
the Company's expense; provided, however, that the Company is not required to
reimburse Brentway for personnel expenses other than for on-site personnel at
the properties managed. Brentway receives fees for its property management
services as follows: a monthly management fee equal to 5% of the gross income
from properties managed and leasing fees of up to 6% of the rent to be paid
during the term of the lease procured. Brentway has subcontracted with various
local management companies for site management and leasing services.
Financial Advisory Agreement
In June 1998, the Company entered into a Financial Advisory Agreement (the "HVB
Agreement") with HVB Capital Markets Inc., as successor to B.V. Capital Markets,
Inc. ("HVB"), pursuant to which HVB agreed to perform the following services as
financial advisor to the Company: (a) advise on acquisition financing and/or
lines of credit for future acquisitions; (b) advise on acquisitions of United
States real property interests and the consideration to be paid therefor; (c)
advise on private placements of the shares of the Company; (d) assist the Board
of Directors in developing suitable investment parameters for the Company; (e)
develop and maintain contacts on behalf of the Company with institutions with
substantial interests in real estate and capital markets; (f) advise the Board
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 5. Related Party Transactions (Continued)
with respect to additional private or public offerings of equity securities of
the Company; (g) review certain financial policy matters with consultants,
accountants, lenders, attorneys and other agents of the Company; and (h) prepare
periodic reports of its performance of the foregoing services. As compensation
for the foregoing services, the Company was required to pay HVB, (i) .25% of the
Company's net asset value, less any indebtedness affecting such net value, but
in any event, not less than $100,000 per year; (ii) a one-time payment of 1.5%
of 90% of the agreed value of properties contributed to the Company or its
affiliates by persons introduced to the Company by HVB; and (iii) upon the
Company Item becoming self-administered, a one-time payment equal to five times
the annual fee income attributable to fee receipts from clients or contacts of
HVB that have contributed property to the Company. The term of the HVB Agreement
was for a period of one (1) year and was automatically renewed for an additional
year subject to the right of either party to cancel at the end of any year upon
60 days' written notice. Mr. Jean-Bernard Wurm, a Director of the Company from
April 1998 until December 31, 1999, when he resigned, is a director of HVB. HVB
was paid for financial advisory services in 1999. HVB agreed to terminate the
HVB Agreement effective as of December 31, 1999.
January 1 - January 1 -
March 31, 2000 March 31, 1999
-----------------------------------
Management Fees
AEGON $ 6,556 $ 4,772
Brentway 28,180 10,664
Leasing Fees
AEGON 552 1,222
Administrative and Advisory
CBRA 24,468 24,468
AEGON -- 25,770
HVB 25,000
Uni-Invest Holdings (U.S.A.) B.V. 25,000
Legal
SKR 525 5,550
Fees of $525 were paid to Stuart H. Widowski, Esq., SKR Management Corp.'s
in-house counsel and Secretary of the Company, through SKR Management Corp., an
affiliate of CBRA, Brentway, CBC and Leo S. Ullman, for legal services provided.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Note 6. Co-tenancy Interest
On September 28, 1988, the Company purchased a 50% co-tenancy interest in
Germantown. The remaining 50% co-tenancy interest is owned by Life Investors, an
affiliate of AEGON. Germantown is managed solely by AEGON. As of March 31, 2000,
amounts due to co-tenancy partner, and amounts due from co-tenancy partner were
$7,071 and $29,311, respectively. As of March 31, 1999, amounts due to
co-tenancy partner, and amounts due from co-tenancy partner were $46,158 and
$56,993, respectively.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the historical
financial statements of the Company and related notes.
Results of Operations
The Company owns office, office/warehouse, and retail properties in four U.S.
cities. The Company's properties continue to compete with centers and office
buildings of similar size, tenant mix and location. As of March 31, 2000, the
combined lease occupancy of the Company's four properties was 90%. Operating
results in the forthcoming year will be influenced by the ability of current
tenants to continue paying rent, and the Company's ability to renew expiring
tenant leases and obtain new leases at competitive rental rates.
Rental income for the three months ended March 31, 2000 was $655,892 compared to
$653,246 for the corresponding period in 1999.
Interest income increased by approximately $33,500 due to the additional funds
available for investment generated by the November 15, 1999 sale of Common Stock
(see Note 1 to the financial statements).
Total property expenses, excluding depreciation, were $216,863 for the three
month period ended March 31, 2000, compared to $207,583 for the corresponding
period in 1999, an increase of approximately $9,000. This increase is
attributable to an increase in real estate taxes at Germantown Square, and an
increase in repairs and maintenance at Southpoint Parkway Center.
Net income for the three month period ended March 31, 2000 was $63,575 ($0.07
per share) compared to $36,625 ($0.07 per share) for the corresponding period in
1999. The increase in net income for the three months ended March 31, 2000 over
the corresponding period in 1999 is due primarily to the increase in interest
income.
Liquidity and Capital Resources
The Company's liquidity at March 31, 2000 represented by cash and cash
equivalents was $2,205,603 compared to $2,298,334 at December 31, 1999, a
decrease of $92,704. This decrease is primarily attributable to the $100,000
financing deposit made with KeyBank during the first quarter of 2000. Cash flow
from operating activities for the three month period ended March 31, 2000 was
$328,425 compared to $326,783 for the corresponding period in 1999.
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
The Company has continued its policy to date of distributing dividends equal to
$0.10 per share, an amount generally equal to $54,211 per quarter through
November 14, 1999 and $94,211 since the sale of additional stock on November 15,
1999. In addition, the Company has maintained a policy of distributing equal
amounts per Operating Partnership Unit of Uni-Invest (U.S.A.) Partnership, L.P.
Such amounts generally equal $170,330 per quarter. Such distributions are
substantially in excess of amounts presently required to be distributed in order
to meet the tests for continued REIT status which generally require
distributions of 95% of qualified REIT taxable income, as defined in the
Internal Revenue Code of 1986 and Regulations thereto. During the three month
period ended March 31, 2000, for example, earnings per share were approximately
$0.07. If the Company's dividend policy is to continue, absent further growth in
income of the Operating Partnership, the ability to distribute dividends
substantially in excess of current income could impair the cash reserves which
the Directors would deem to be appropriate to the business of the Company.
After the purchase of the three Pennsylvania shopping centers, the Company's new
commercial bank line of credit contains a covenant that limits, while such
credit facility is outstanding, dividends/distributions to 75% of Funds From
Operations less capital expenditures plus (i) amounts necessary to maintain the
Company's real estate investment trust status and (ii) amounts necessary to
avoid payment by the Company of federal, state and excise taxes.
Inflation
Low to moderate levels of inflation during the past few years have favorably
impacted the Company's operations by stabilizing operating expenses. At the same
time, low inflation has the indirect effect of reducing the Company's ability to
increase tenant rents. The Company's properties have tenants whose leases
include expense reimbursements and other provisions to minimize the affect of
inflation. These factors, in the long run, are expected to result in more
attractive returns from the Company's real estate portfolio as compared to
short-term investment vehicles.
Year 2000 Issue
The Company has received no reports of incidents of system or facilities
malfunctions related to the inability of computes and/or computer software to
process and calculate date-related information from and after January 1, 2000.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
None
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
Part II Other Information
Item 1. Legal Proceedings
None
Item 2. Change in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Securities Holders
1. To elect one Class I Director, two Class II Directors and one Class
III director;
2. To approve the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 31,
2000;
Item 5. Other Infromation
None
Item 6. Exhibits and Reports on Form 8-K
1. Keybank Line of Credit Agreement (to be filed on a future 8-K)
<PAGE>
Uni-Invest (U.S.A.), Ltd.
Notes to Consolidated Financial Statements
Unaudited
CEDAR INCOME FUND, LTD.
March 31, 2000
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
UNI-INVEST (U.S.A.) LTD.
- ------------------------------ ------------------------------
Leo S. Ullman Brenda J. Walker
President Vice President and Director
(principal executive officer) (principal financial officer)
------------------------------
Ann Maneri
Controller
(principal accounting officer)
May ____, 2000
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
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<PP&E> 19,227,838
<DEPRECIATION> (5,305,656)
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<COMMON> 9,421
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<TOTAL-LIABILITY-AND-EQUITY> 16,590,790
<SALES> 0
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