Prepared and filed by St Ives Burrups
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C.  20549
 
 
FORM 8-K/A
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of Earliest Event Reported):  December 27, 2004
 
Cedar Shopping Centers, Inc.
(Exact name of registrant as specified in its charter)
 
Maryland
 
0-14510
 
42-1241468
(State or other jurisdiction of incorporation)
 
(Commission File No.)
 
(IRS Employer Identification No.)
 
 
 
 
 
44 South Bayles Avenue
Port Washington, NY
 
 
 
11050
(Address of principal executive offices)
 
 
 
(Zip Code)
 
 
 
 
 
(516) 767-6492
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Item 7.
Financial Statements, Pro Forma Financial Information and Exhibits For Certain Property Acquisitions:
 
 
 
Report of Independent Registered Public Accounting Firm
 
 
 
Statement of Revenues and Certain Expenses:
 
 
 
                    For the fiscal year ended June 30, 2004
 
 
 
                    For the three months ended September 30, 2004 (unaudited)
 
 
 
Notes to Statement of Revenues and Certain Expenses
 
 
 
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of  September  30, 2004
 
 
 
Unaudited Pro Forma Condensed Consolidated Statements of Income:
 
 
 
                    For the year ended December 31, 2003
 
 
 
                    For the nine months ended September 30, 2004
 
 
 
Notes to Pro Forma Condensed Consolidated Financial Statements
 
 
 
Exhibits:
 
 
 
23.1             Consent of Independent Registered Public Accounting Firm dated February 11, 2005
 
 
 
Signatures
 
Report of Independent Registered Public Accounting Firm
 
Board of Directors and Stockholders
Cedar Shopping Centers, Inc.
 
We have audited the statement of revenues and certain expenses of the Brickyard Shopping Center (the “Property”) for the fiscal year ended June 30, 2004. The financial statement is the responsibility of the Property’s management. Our responsibility is to express an opinion on this financial statement based on our audit.
 
We conducted our audit in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement.  An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Property’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
 
The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for inclusion in Form 8-K/A of Cedar Shopping Centers, Inc. and is not intended to be a complete presentation of the Property’s revenues and certain expenses.

In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of the Property as described in Note 1 for the fiscal year ended June 30, 2004, in conformity with U.S. generally accepted accounting principles.
 
/s/ ERNST & YOUNG LLP                     
 
New York, New York
February 11, 2005
 
 
Brickyard Shopping Center
Statement of Revenues and Certain Expenses
 
 
 
Three months
ended
September 30,2004
 
Fiscal year
ended
June 30, 2004
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Base rents
 
$
498,000
 
$
1,988,000
 
Tenant reimbursements
 
 
194,000
 
 
730,000
 
Percentage rents
 
 
—  
 
 
160,000
 
Other income
 
 
1,000
 
 
1,000
 
 
 
 
 
Total revenues
 
 
693,000
 
 
2,879,000
 
 
 
 
 
Certain expenses:
 
 
 
 
 
 
 
Real estate taxes
 
 
85,000
 
 
312,000
 
Property operating expenses
 
 
55,000
 
 
446,000
 
Management fees
 
 
13,000
 
 
43,000
 
 
 
 
 
Total certain expenses
 
 
153,000
 
 
801,000
 
 
 
 
 
Revenues in excess of certain expenses
 
$
540,000
 
$
2,078,000
 
 
 
 
 
 
See accompanying notes to financial statement.
 
 
Brickyard Shopping Center
Notes to Statement of Revenues and Certain Expenses
For the fiscal year ended June 30, 2004
For the three months ended September 30, 2004 (unaudited)
 
1.     Basis of Presentation
 
          Presented herein is the statement of revenues and certain expenses related to the operation of the Brickyard Shopping Center, located in Berlin, CT (the “Property”). The Property contains approximately 275,000 square feet of gross leasable area. Cedar Shopping Centers, Inc. acquired the Property in December 2004. 
 
          The accompanying financial statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate properties. Accordingly, the financial statement excludes certain expenses because they may not be comparable to those expected to be incurred in the proposed future operations of the Property. Items excluded consist of interest and depreciation and amortization which are not directly related to future operations.
 
2.     Use of Estimates
 
          The preparation of the statement of revenues and certain expenses in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the statement of revenues and certain expenses and accompanying notes. Actual results could differ from those estimates.
 
3.     Revenue Recognition
 
          The Property is being leased to tenants under operating leases. Minimum rental income is recognized on a straight-line basis over the terms of the leases. The excess of the amounts due pursuant to the underlying leases over the amount recognized was approximately $45,000 for the fiscal year ended June 30, 2004 and $23,000 for the three months ended September 30, 2004 (unaudited).
 
4.     Property Operating Expenses
 
          Property operating expenses for the fiscal year ended June 30, 2004 include approximately $45,000 for insurance, $104,000 for snow removal, $49,000 for utilities, $60,000 for repair and maintenance costs, $55,000 for security, $11,000 for professional fees, and $122,000 for other costs.
 
          Property operating expenses for the three months ended September 30, 2004 (unaudited) include $12,000 for insurance, $3,000 for utilities, $6,000 for repair and maintenance costs, $14,000 for security, $2,000 for professional fees, and $18,000 for other costs.
 
5.     Management Fees
 
          The property was managed by a third party management company pursuant to an agreement which provided for management fees of 1.5% of monthly net receipts, as defined.
 
6.     Significant Tenants
 
          Significant tenants include Sam’s Club, The Home Depot and Syms, which constituted approximately 97% of base rents for the fiscal year ended June 30, 2004.
 
7.     Future Minimum Lease Payments
 
          Future minimum lease payments to be received under non-cancelable operating leases for the years ending June 30 are as follows:
 
 
Brickyard Shopping Center
Notes to Statement of Revenues and Certain Expenses
For the fiscal year ended June 30, 2004
For the three months ended September 30, 2004 (unaudited)
(Continued)
 
2005
 
$
2,109,000
 
2006
 
 
2,017,000
 
2007
 
 
2,020,000
 
2008
 
 
2,022,000
 
2009
 
 
2,030,000
 
Thereafter
 
 
1,779,000
 
 
 
 
Total
 
$
11,977,000
 
 
 
 
 
          The lease agreements generally contain provisions for reimbursement of real estate taxes and operating expenses, on a pro rata basis, as well as for fixed increases in rent.
 
8.     Interim Unaudited Financial Information
 
          The statement of revenues and certain expenses for the three months ended September 30, 2004 are unaudited; however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the statement of revenues and certain expenses for this interim period have been included. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year.
 
 
Cedar Shopping Centers, Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2004
(Unaudited)
 
          The following unaudited pro forma condensed consolidated balance sheet is presented as if Cedar Shopping Centers, Inc. (the “Company”) had (1) acquired the Property, and (2) completed the previously-reported November 1, 2004 acquisition of Franklin Village Plaza, both as of September 30, 2004. This financial statement should be read in conjunction with the unaudited pro forma condensed consolidated statements of income, and the Company’s historical financial statements and notes thereto as filed on Form 10-K for the year ended December 31, 2003 and on Form 10-Q for the nine months ended September 30, 2004. The pro forma condensed consolidated balance sheet is unaudited and is not necessarily indicative of what the actual financial position would have been had the Company acquired Brickyard Shopping Center and completed the acquisition of Franklin Village Plaza as of  September 30, 2004, nor does it purport to represent the future financial position of the Company.
 
 
 
Cedar Shopping
Centers, Inc.
Historical (a)
 
Completed
Transaction
(b)
 
Acquired
Property
(c) (d)
 
Pro forma
September 30,
2004
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Land
 
$
75,272,000
 
$
14,502,000
 
$
5,642,000
 
$
95,416,000
 
Buildings and improvements
 
 
329,369,000
 
 
58,007,000
 
 
22,638,000
 
 
410,014,000
 
 
 
 
 
 
 
 
 
 
404,641,000
 
 
72,509,000
 
 
28,280,000
 
 
505,430,000
 
Less accumulated depreciation
 
 
(13,060,000
)
 
—  
 
 
—  
 
 
(13,060,000
)
 
 
 
 
 
 
Real estate, net
 
 
391,581,000
 
 
72,509,000
 
 
28,280,000
 
 
492,370,000
 
Cash and cash equivalents
 
 
7,093,000
 
 
—  
 
 
—  
 
 
7,093,000
 
Cash at joint ventures and restricted cash
 
 
6,243,000
 
 
127,000
 
 
—  
 
 
6,370,000
 
Rents and other receivables, net
 
 
3,762,000
 
 
—  
 
 
—  
 
 
3,762,000
 
Other assets
 
 
5,639,000
 
 
133,000
 
 
43,000
 
 
5,815,000
 
Deferred charges, net
 
 
8,599,000
 
 
133,000
 
 
—  
 
 
8,732,000
 
 
 
 
 
 
 
Total Assets
 
 
422,917,000
 
 
72,902,000
 
 
28,323,000
 
 
524,142,000
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans payable
 
 
148,602,000
 
 
43,500,000
 
 
—  
 
 
192,102,000
 
Secured revolving credit facility
 
 
28,950,000
 
 
29,159,000
 
 
28,254,000
 
 
86,363,000
 
Accounts payable, accrued expenses, and other
 
 
6,843,000
 
 
243,000
 
 
69,000
 
 
7,155,000
 
Deferred liabilities
 
 
19,857,000
 
 
 
 
 
—  
 
 
19,857,000
 
 
 
 
 
 
 
Total Liabilities
 
 
204,252,000
 
 
72,902,000
 
 
28,323,000
 
 
305,477,000
 
 
 
 
 
 
 
Minority interests
 
 
12,201,000
 
 
—  
 
 
—  
 
 
12,201,000
 
Limited partners’ interest in consolidated Operating Partnership
 
 
4,095,000
 
 
—  
 
 
—  
 
 
4,095,000
 
Shareholders’ Equity
 
 
202,369,000
 
 
—  
 
 
—  
 
 
202,369,000
 
 
 
 
 
 
 
Total Liabilities and Shareholders' Equity
 
$
422,917,000
 
$
72,902,000
 
$
28,323,000
 
$
524,142,000
 
 
 
 
 
 
 
 
See accompanying notes to pro forma condensed consolidated financial statements.
 
 
Cedar Shopping Centers, Inc.
Pro Forma Condensed Consolidated Statements of Income
For the year ended December 31, 2003
For the nine months ended September 30, 2004
(Unaudited)
 
          The following unaudited pro forma condensed consolidated statements of income are presented as if the Company had acquired Brickyard Shopping Center, concluded its 2003 public equity offering and related transactions, and acquired the properties it purchased throughout 2003 and 2004, as if all these transactions were completed as of January 1, 2003.  These financial statements should be read in conjunction with the Company’s historical financial statements and notes thereto as filed on Form 10-K for the year ended December 31, 2003 and on Form 10-Q for the nine months ended September 30, 2004. The pro forma condensed consolidated statements of income are unaudited and are not necessarily indicative of what the actual results of operations would have been had the Company acquired Brickyard Shopping Center, concluded its 2003 public offering and related transactions, acquired the properties it purchased throughout 2003 and 2004, all as of January 1, 2003, nor does it purport to represent the results of operations of the Company for future periods.
 
 
 
For the year ended December 31, 2003
 
 
 
 
 
 
Cedar Shopping
Centers, Inc.
Historical (a)
 
Completed
Transactions
(b)
 
Acquired
Property
(c)
 
Pro forma
Adjustments
(d)
 
Pro forma
 
 
 
 
 
 
 
 
Revenues
 
$
26,506,000
 
$
27,331,000
 
$
2,952,000
 
$
138,000
 
$
56,927,000
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating, maintenance and management
 
 
7,190,000
 
 
5,236,000
 
 
452,000
 
 
(44,000
)
 
12,834,000
 
Real estate and other property-related taxes
 
 
2,861,000
 
 
2,404,000
 
 
338,000
 
 
—  
 
 
5,603,000
 
General and administrative
 
 
3,161,000
 
 
15,000
 
 
—  
 
 
—  
 
 
3,176,000
 
Interest
 
 
9,412,000
 
 
5,754,000
 
 
—  
 
 
987,000
 
 
16,153,000
 
Depreciation and amortization
 
 
5,023,000
 
 
5,192,000
 
 
—  
 
 
566,000
 
 
10,781,000
 
Costs incurred acquiring external advisor
 
 
11,960,000
 
 
(11,960,000
)
 
—  
 
 
—  
 
 
—  
 
Early extenguishment of debt
 
 
6,935,000
 
 
(6,935,000
)
 
—  
 
 
—  
 
 
—  
 
Other
 
 
1,893,000
 
 
(1,893,000
)
 
—  
 
 
—  
 
 
—  
 
 
 
 
 
 
 
 
Total expenses
 
 
48,435,000
 
 
(2,187,000
)
 
790,000
 
 
1,509,000
 
 
48,547,000
 
 
 
 
 
 
 
 
Income (loss) before the following:
 
 
(21,929,000
)
 
29,518,000
 
 
2,162,000
 
 
(1,371,000
)
 
8,380,000
 
Minority interests
 
 
(983,000
)
 
135,000
 
 
—  
 
 
—  
 
 
(848,000
)
Limited partners' interest
 
 
1,637,000
 
 
(1,816,000
)
 
—  
 
 
(21,000
)
 
(200,000
)
Preferred distribution requirements, net of limited partners’ interest
 
 
(76,000
)
 
76,000
 
 
—  
 
 
—  
 
 
—  
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(21,351,000
)
$
27,913,000
 
$
2,162,000
 
$
(1,392,000
)
$
7,332,000
 
 
 
 
 
 
 
 
Basic and fully diluted net income (loss) per share
 
$
(7.09
)
 
 
 
 
 
 
 
 
 
$
2.44
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of common shares outstanding
 
 
3,010,000
 
 
 
 
 
 
 
 
 
 
 
3,010,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to pro forma condensed consolidated financial statements.
 
 
Cedar Shopping Centers, Inc.
Pro Forma Condensed Consolidated Statements of Income
For the year ended December 31, 2003
For the nine months ended September 30, 2004
(Unaudited)
(Continued)
 
 
 
Centers, Inc.
Historical (a)
 
Transactions
(b)
 
Property
(c)
 
Adjustments
(d)
 
Pro forma
 
 
 
 
 
 
 
 
Revenues
 
$
36,406,000
 
$
6,472,000
 
$
2,168,000
 
$
114,000
 
$
45,160,000
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating, maintenance and management
 
 
7,746,000
 
 
1,247,000
 
 
374,000
 
 
(33,000
)
 
9,334,000
 
Real estate and other property-related taxes
 
 
3,707,000
 
 
443,000
 
 
241,000
 
 
—  
 
 
4,391,000
 
General and administrative
 
 
2,333,000
 
 
—  
 
 
—  
 
 
—  
 
 
2,333,000
 
Interest
 
 
7,561,000
 
 
2,979,000
 
 
—  
 
 
740,000
 
 
11,280,000
 
Depreciation and amortization
 
 
8,714,000
 
 
1,446,000
 
 
—  
 
 
425,000
 
 
10,585,000
 
 
 
 
 
 
 
 
Total expenses
 
 
30,061,000
 
 
6,115,000
 
 
615,000
 
 
1,132,000
 
 
37,923,000
 
 
 
 
 
 
 
 
Income before the following:
 
 
6,345,000
 
 
357,000
 
 
1,553,000
 
 
(1,018,000
)
 
7,237,000
 
Minority interests
 
 
(858,000
)
 
—  
 
 
—  
 
 
—  
 
 
(858,000
)
Limited partners’ interest
 
 
(147,000
)
 
(9,000
)
 
—  
 
 
(14,000
)
 
(170,000
)
Preferred distribution requirements, net of limited partners’ interest
 
 
(886,000
)
 
—  
 
 
—  
 
 
—  
 
 
(886,000
)
 
 
 
 
 
 
 
Net income
 
$
4,454,000
 
$
348,000
 
$
1,553,000
 
$
(1,032,000
)
$
5,323,000
 
 
 
 
 
 
 
 
Basic and fully diluted net income per share
 
$
0.27
 
 
 
 
 
 
 
 
 
 
$
0.32
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of common shares outstanding
 
 
16,456,000
 
 
 
 
 
 
 
 
 
 
 
16,456,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to pro forma condensed consolidated financial statements.
 
 
Cedar Shopping Centers, Inc.
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
 
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2004
 
(a)
Reflects the Company’s historical balance sheet as of September 30, 2004 (unaudited), as previously filed.
 
 
(b)
Reflects the November 1, 2004 acquisition of Franklin Village Plaza.
 
 
(c)
Reflects the acquisition of the Brickyard Shopping Center.
 
 
(d)
The Company intends to account for the acquisition in accordance with Statements of Financial Accounting Standards No. 141, “Business Combinations”, and No. 142, “Goodwill and Other Intangibles”, and is currently in the process of analyzing the fair value of Brickyard Shopping Center’s in-place leases. No value has yet been assigned to the leases and, therefore, the purchase price allocation is preliminary and subject to change.
 
 
 
Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 2003
 
 
(a)
Reflects the Company’s historical operations for the year ended December 31, 2003, as previously filed.
 
 
(b)
Reflects the Company’s 2003 public offering, related transactions, and properties acquired throughout 2003 and 2004, as if all these transactions were completed as of January 1, 2003.
 
 
(c)
Reflects the operations of the Brickyard Shopping Center for the year ended December 31, 2003.
 
 
(d)
Reflects an increase in revenues (straight-line rents), interest, depreciation and amortization, and limited partners’ interest, and a reduction in operating expenses (management fees), with respect to Brickyard Shopping Center. The Company intends to account for the acquisition in accordance with Statements of Financial Accounting Standards No. 141, “Business Combinations”, and No. 142, “Goodwill and Other Intangibles”, and is currently in the process of analyzing the fair value of Brickyard Shopping Center’s in-place leases. No value has yet been assigned to the leases and, therefore, the purchase price allocation is preliminary and subject to change.
 
 
 
Pro Forma Condensed Consolidated Statement of Income for the nine months ended September 30, 2004
 
 
(a)
Reflects the Company’s historical operations for the nine months ended September 30, 2004 (unaudited), as previously filed.
 
 
(b)
Reflects properties acquired during 2004, as if these transactions were completed as of January 1, 2003.
 
 
(c)
Reflects the operations of Brickyard Shopping Center for the period from January 1, 2004 through September 30, 2004.
 
 
(d)
Reflects an increase in revenues (straight-line rents), interest, depreciation and amortization, and limited partners’ interest, and a reduction in operating expenses (management fees) with respect to Brickyard Shopping Center. The Company intends to account for the acquisition in accordance with Statements of Financial Accounting Standards No. 141, “Business Combinations”, and No. 142, “Goodwill and Other Intangibles”, and is currently in the process of analyzing the fair value of Brickyard Shopping Center’s in-place leases. No value has yet been assigned to the leases and, therefore, the purchase price allocation is preliminary and subject to change.
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed on its behalf by the undersigned hereunto duly authorized.
 
CEDAR SHOPPING CENTERS, INC.
 
 
/s/ THOMAS J. O’ KEEFFE
 
 
Thomas J. O’Keeffe
 
Chief Financial Officer
 
 
 
Dated:   February 23, 2005