Attached files

file filename
EX-23.1 - CONSENT OF DELOITTE & TOUCHE, LLP - Excel Trust, Inc.dex231.htm

 

 

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): October 1, 2010

 

 

EXCEL TRUST, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Maryland   001-34698   27-1493212

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File No.)

 

(I.R.S. Employer

Identification No.)

17140 Bernardo Center Drive, Suite 300

San Diego, California 92128

(Address of Principal Executive Offices, Including Zip Code)

(858) 613-1800

(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:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


This Current Report on Form 8-K/A is being filed by Excel Trust, Inc. to provide the financial statements that were previously omitted in Item 9.01 of the Current Report on Form 8-K filed on October 6, 2010 relating to the acquisition of Brandywine Crossing Shopping Center (“Brandywine Crossing”) located in Brandywine, Maryland and Rosewick Crossing Shopping Center (“Rosewick Crossing”) located in La Plata, Maryland. In evaluating these acquisitions and determining the appropriate amount of consideration to be paid, we considered a variety of factors including property type, geographic markets and demographics, tenants and lease terms.

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial Statements of Businesses Acquired

Independent Auditors’ Report

Statements of Revenues and Expenses of Brandywine Crossing for the nine months ended September 30, 2010 (unaudited) and for the year ended December 31, 2009

Notes to Statements of Revenues and Certain Expenses

Independent Auditors’ Report

Statements of Revenues and Expenses of Rosewick Crossing for the nine months ended September 30, 2010 (unaudited) and for the year ended December 31, 2009

Notes to Statements of Revenues and Certain Expenses

 

(b) Unaudited Pro Forma Financial Information.

Unaudited Pro Forma Condensed Consolidated Balance Sheet of Excel Trust, Inc. as of September 30, 2010

Unaudited Pro Forma Condensed Consolidated Statement of Operations of Excel Trust, Inc. for the period from April 28, 2010 to September 30, 2010

Unaudited Pro Forma Condensed Combined Statement of Operations of Excel Trust, Inc. Predecessor for the period from January 1, 2010 to April 27, 2010

Unaudited Pro Forma Condensed Combined Statement of Operations of Excel Trust, Inc. Predecessor for the year ended December 31, 2009

Notes to Pro Forma Condensed Consolidated and Combined Statements of Operations of Excel Trust, Inc. and Excel Trust, Inc. Predecessor

 

(d) Exhibits

The following exhibits are filed herewith:

 

Exhibit

  

Description of Exhibit

10.1    Purchase and Sale Agreement and Joint Escrow Instructions between Faison-Brandywine, LLC and Excel Trust, L.P. dated September 3, 2010. (1)
10.2    Purchase and Sale Agreement and Joint Escrow Instructions between Faison-Rosewick, LLC and Excel Trust, L.P. dated September 3, 2010. (1)
23.1    Consent of Deloitte & Touche, LLP (2)

 

(1) Incorporated herein by reference to Excel Trust, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 9, 2010.
(2) Filed herewith.


INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of Excel Trust, Inc.

We have audited the accompanying statement of revenues and certain expenses (the “Historical Summary”) of Brandywine Crossing Shopping Center located in Brandywine, Maryland (the “Property”) for the year ended December 31, 2009. This Historical Summary is the responsibility of the Property’s management. Our responsibility is to express an opinion on the Historical Summary based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary 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 Historical Summaries, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in this Current Report on Form 8-K/A) as described in Note 1 to the Historical Summary and are not intended to be a complete presentation of the Property’s revenue and expenses.

In our opinion, the Historical Summary of the Property presents fairly, in all material respects, the revenues and certain expenses described in Note 1 to the Historical Summary of Brandywine Crossing Shopping Center located in Brandywine, Maryland for the year ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ DELOITTE & TOUCHE LLP
Los Angeles, California
December 15, 2010


BRANDYWINE CROSSING SHOPPING CENTER, BRANDYWINE, MARYLAND

STATEMENTS OF REVENUES AND CERTAIN EXPENSES

For the Nine Months Ended September 30, 2010 and the Year Ended December 31, 2009

 

     Nine months  ended
September 30,
2010
     Year ended
December 31,
2009
 
     (unaudited)         

Revenues:

     

Rental revenues

   $ 2,550,000       $ 1,459,000   

Tenant reimbursements

     580,000         634,000   

Other income

     3,000         27,000   
                 

Total revenue

     3,133,000         2,120,000   

Certain expenses

     

Property operating and maintenance

     463,000         445,000   

Property taxes

     334,000         459,000   

Management fees

     104,000         62,000   

Insurance

     19,000         32,000   
                 

Total certain expenses

     920,000         998,000   
                 

Revenues in excess of certain expenses

   $ 2,213,000       $ 1,122,000   
                 

See accompanying notes to statements of revenues and certain expenses.


BRANDYWINE CROSSING SHOPPING CENTER, BRANDYWINE, MARYLAND

NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES

1. Organization and Summary of Significant Accounting Policies

Organization

The accompanying statement of revenues and certain expenses includes the operations of Brandywine Crossing Shopping Center located in Brandywine, Maryland (the “Property”) which was acquired by Excel Trust, Inc. (the “Company”) from a nonaffiliated third party. The Property was acquired for approximately $45.1 million.

Basis of Presentation

The statement of revenues and certain operating expenses (the “Historical Summary”) has been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”), which requires certain information with respect to real estate operations to be included with certain filings with the SEC. The Historical Summary includes the historical revenues and certain operating expenses of the Property, exclusive of items which may not be comparable to the proposed future operations of the Property. Material amounts that would not be directly attributable to future operating results of the Property are excluded, and the Historical Summary is not intended to be a complete presentation of the Property’s revenues and expenses. Items excluded consist of depreciation, interest expense and federal and state income taxes.

The accompanying statement is not representative of the actual operations for the period presented, as certain expenses that may not be comparable to the expenses expected to be incurred by the Company in the future operations of the Property have been excluded. The Historical Summary for the period from January 1, 2010 to September 30, 2010 is unaudited and reflects all adjustments (consisting only of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of the operating results for the interim period presented. The results of operations for the period from January 1, 2010 to September 30, 2010 (unaudited) are not necessarily indicative of the expected results for the entire fiscal year ending December 31, 2010.

In the preparation of the accompanying Historical Summary, subsequent events were evaluated through December 15, 2010 the date the financial statements were issued.

Revenue Recognition

Rental revenue is recognized on an accrual basis as it is earned over the lives of the respective tenant leases on a straight-line basis. Estimated recoveries from certain tenants for their pro rata share of real estate taxes, insurance and other operating expense are recognized as revenues in the period the applicable expenses are incurred or as specified in the leases. Rental receivables are periodically evaluated for collectibility.

Repairs and Maintenance

Expenditures for repairs and maintenance are expensed as incurred.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ materially from the estimates in the near term.

Concentration of Credit Risk

The Property had three tenants account for more than 10% of revenues in the nine months ended September 30, 2010 (unaudited) and three tenants account for more than 10% of revenues in the year ended December 31, 2009. In the nine months ended September 30, 2010 (unaudited), these tenant represented approximately 19.4%, 10.5%, and 11.0% of total revenues. In 2009, these tenants represented approximately 23.8%, 18.3%, and 17.1% of total revenues, respectively.


BRANDYWINE CROSSING SHOPPING CENTER, BRANDYWINE, MARYLAND

NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES—(Continued)

 

2. Leases

The aggregate annual future minimum lease payments to be received under existing operating leases as of December 31, 2009 are as follows:

 

2010

   $ 3,142,000   

2011

     3,533,000   

2012

     3,560,000   

2013

     3,634,000   

2014

     3,450,000   

2015 and thereafter

     25,556,000   
        
   $ 42,875,000   
        

The Property was built in 2009 and was approximately 98% occupied at September 30, 2010 (unaudited). The Property is generally leased to tenants under lease terms that provide for the tenants to pay a pro rata share of their operating expenses. The above future minimum lease payments do not include amounts for tenant reimbursements of operating expenses.

Certain tenants have lease termination options built into their leases, which are subject to termination fees. In the event that a tenant does exercise its option to terminate its lease early and the terminated space is not subsequently leased out, the amount of future minimum rent received will be reduced.

3. Related Party Transactions

In the nine months ended September 30, 2010 (unaudited) and the year ended December 31, 2009, $104,000 and $62,000 in property management fees were expensed to a company affiliated with the sellers of the Property, respectively.

4. Commitments and Contingencies

The Company may be subject to legal claims in the ordinary course of business as a property owner. The Company believes that the ultimate settlement of any potential claims will not have a material impact on the Property’s results of operations.


INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of Excel Trust, Inc.

We have audited the accompanying statement of revenues and certain expenses (the “Historical Summary”) of Rosewick Crossing Shopping Center located in La Plata, Maryland (the “Property”) for the year ended December 31, 2009. This Historical Summary is the responsibility of the Property’s management. Our responsibility is to express an opinion on the Historical Summary based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary 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 Historical Summary, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Historical Summaries were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in this Current Report on Form 8-K/A) as described in Note 1 to the Historical Summary and are not intended to be a complete presentation of the Property’s revenue and expenses.

In our opinion, the Historical Summary of the Property presents fairly, in all material respects, the revenues and certain expenses described in Note 1 to the Historical Summary of Rosewick Crossing Shopping Center located in La Plata, Maryland for the year ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ DELOITTE & TOUCHE LLP

Los Angeles, California

December 15, 2010


ROSEWICK CROSSING SHOPPING CENTER, LA PLATA, MARYLAND

STATEMENTS OF REVENUES AND CERTAIN EXPENSES

For the Nine Months Ended September 30, 2010 and the Year Ended December 31, 2009

 

     Nine months ended
September 30,

2010
     Year ended
December 31,

2009
 
     (unaudited)         

Revenues:

     

Rental revenues

   $ 1,494,000       $ 1,890,000   

Tenant reimbursements

     258,000         411,000   

Other income

     9,000         10,000  
                 

Total revenue

     1,761,000         2,311,000   

Certain expenses

     

Property operating and maintenance

     214,000         244,000   

Property taxes

     159,000         215,000   

Management fees

     55,000         72,000   

Insurance

     15,000         15,000   
                 

Total certain expenses

     443,000         546,000   
                 

Revenues in excess of certain expenses

   $ 1,318,000       $ 1,765,000   
                 

See accompanying notes to statements of revenues and certain expenses.


ROSEWICK CROSSING SHOPPING CENTER, LA PLATA, MARYLAND

NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES

1. Organization and Summary of Significant Accounting Policies

Organization

The accompanying statement of revenues and certain expenses includes the operations of Rosewick Crossing Shopping Center located in La Plata, Maryland (the “Property”) which was acquired by Excel Trust, Inc. (the “Company”) from a nonaffiliated third party. The Property was acquired for approximately $24.9 million.

Basis of Presentation

The statement of revenues and certain operating expenses (the “Historical Summary”) has been prepared for the purpose of complying with the provisions of Article 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”), which requires certain information with respect to real estate operations to be included with certain filings with the SEC. The Historical Summary includes the historical revenues and certain operating expenses of the Property, exclusive of items which may not be comparable to the proposed future operations of the Property. Material amounts that would not be directly attributable to future operating results of the Property are excluded, and the Historical Summary is not intended to be a complete presentation of the Property’s revenues and expenses. Items excluded consist of depreciation, interest expense and federal and state income taxes.

The accompanying statement is not representative of the actual operations for the period presented, as certain expenses that may not be comparable to the expenses expected to be incurred by the Company in the future operations of the Property have been excluded. The Historical Summary for the period from January 1, 2010 to September 30, 2010 is unaudited and reflects all adjustments (consisting only of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of the operating results for the interim period presented. The results of operations for the period from January 1, 2010 to September 30, 2010 (unaudited) are not necessarily indicative of the expected results for the entire fiscal year ending December 31, 2010.

In the preparation of the accompanying Historical Summary, subsequent events were evaluated through December 15, 2010 the date the financial statements were issued.

Revenue Recognition

Rental revenue is recognized on an accrual basis as it is earned over the lives of the respective tenant leases on a straight-line basis. Estimated recoveries from certain tenants for their pro rata share of real estate taxes, insurance and other operating expense are recognized as revenues in the period the applicable expenses are incurred or as specified in the leases. Rental receivables are periodically evaluated for collectability.

Repairs and Maintenance

Expenditures for repairs and maintenance are expensed as incurred.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ materially from the estimates in the near term.

Concentration of Credit Risk

The Property had two tenants account for more than 10% of revenues in the nine months ended September 30, 2010 (unaudited) and in the year ended December 31, 2009. In the nine months ended September 30, 2010 (unaudited), these tenants represented approximately 40.5% and 12.0% of total revenues, respectively. In 2009, these tenants represented approximately 54.0% and 16.0% of total revenues, respectively.


ROSEWICK CROSSING SHOPPING CENTER, LA PLATA, MARYLAND

NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES—(Continued)

 

2. Leases

The aggregate annual future minimum lease payments to be received under existing operating leases as of December 31, 2009 are as follows:

 

2010

   $ 1,823,000   

2011

     1,865,000   

2012

     1,899,000   

2013

     1,863,000   

2014

     1,465,000   

2015 and thereafter

     16,383,000   
        
   $ 25,298,000   
        

The Property was built in 2008 and was approximately 84.6% occupied at September 30, 2010 (unaudited). The Property is generally leased to tenants under lease terms that provide for the tenants to pay a pro rata share of their operating expenses. The above future minimum lease payments do not include amounts for tenant reimbursements of operating expenses.

Certain tenants have lease termination options built into their leases, which are subject to termination fees. In the event that a tenant does exercise its option to terminate its lease early and the terminated space is not subsequently leased out, the amount of future minimum rent received will be reduced.

3. Related Party Transactions

In the nine months ended September 30, 2010 (unaudited) and the year ended December 31, 2009, $55,000 and $72,000 in property management fees were expensed to a company affiliated with the sellers of the Property, respectively.

4. Commitments and Contingencies

The Company may be subject to legal claims in the ordinary course of business as a property owner. The Company believes that the ultimate settlement of any potential claims will not have a material impact on the Property’s results of operations.


Excel Trust, Inc.

Pro Forma Condensed Consolidated Financial Statements

(Unaudited)

The following unaudited pro forma financial information of Excel Trust, Inc. (the “Company”) is based on the historical financial statements of the Company and Excel Trust, Inc. Predecessor (the “Predecessor”). The unaudited pro forma condensed consolidated balance sheet as of September 30, 2010 and condensed consolidated and combined statements of operations of the Company for the period April 28, 2010 to September 30, 2010 and the Predecessor for the period from January 1, 2010 to April 28, 2010 and for the year ended December 31, 2009 have been prepared as if the acquisitions of Brandywine Crossing Shopping Center and Rosewick Crossing Shopping Center (the “Properties”) had occurred on January 1, 2009.

Such unaudited pro forma financial information should be read in conjunction with the historical combined financial statements of the Company and Predecessor for the year ended December 31, 2009, including the notes thereto, which were filed as part of the Company’s Registration Statement on Form S-11, as amended, filed with the Securities and Exchange Commission on April 22, 2010 and the Company’s subsequent Quarterly Reports on Form 10-Q for the periods ended March 31, 2010, June 30, 2010 and September 30, 2010. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations of the Company and Predecessor that would have occurred if the acquisition of the Properties had been completed on the dates indicated, nor does it purport to represent the Company and Predecessor’s results of operations as of any future date or for any future period. The pro forma condensed consolidated and combined statements of operations of the Company and Predecessor only include the acquisition of the Properties. In addition, the pro forma condensed consolidated and combined financial statements are based upon pro forma allocations of the purchase price of the Properties based upon preliminary estimates of fair value of the assets and liabilities acquired in connection with the acquisition. These allocations may be adjusted in the future upon finalization of these preliminary estimates. Management believes all material adjustments necessary to reflect the effect of their acquisition have been made to the unaudited pro forma financial information.


EXCEL TRUST, INC

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 2010

(in thousands, except per share amounts)

 

     Company
Historical (A)
     Acquisition
of Brandywine
Crossing
Shopping Center  at
Brandywine,
Maryland
(B)
    Acquisition
of Rosewick
Crossing
Shopping  Center
at
Rosewick,
Maryland
(B)
    Company
Pro Forma
 

ASSETS:

         

Property, net

   $ 201,368       $ 38,493      $ 22,594      $ 262,455   

Cash and cash equivalents

     57,862         (20,309     (25,295     12,258   

Lease intangibles, net

     26,274         7,106        3,445        36,825   

Other

     32,726         (24,632     197       8,291   
                                 

Total Assets

   $ 318,230       $ 658      $ 941      $ 319,829   
                                 

LIABILITIES AND EQUITY:

         

Liabilities:

         

Mortgage and notes payable

   $ 104,469       $ —        $ —        $ 104,469   

Accounts payable and other liabilities

     11,423         742       47       12,212   

Lease intangibles, net

     4,034         521        1,117        5,672   
                                 

Total liabilities

     119,926         1,263        1,164        122,353   

Equity:

         

Total stockholder’s equity

     190,507         (581     (214     189,712   

Non-controlling interests

     7,797         (24     (9 )     7,764   
                                 

Total equity

     198,304         (605     (223     197,476   
                                 

Total liabilities and equity

   $ 318,230       $ 658      $ 941      $ 319,829   
                                 

See accompanying notes


EXCEL TRUST, INC

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Period from April 28, 2010 to September 30, 2010

(in thousands, except per share amounts)

 

     Company
Historical (C)
    Acquisition
of Brandywine
Crossing
Shopping Center at
Brandywine,  Maryland
(D)
    Ac Acquisition
of Rosewick
Crossing
Shopping Center at
Rosewick, Maryland
(E)
    Company
Pro Forma
 

REVENUES:

        

Rental revenue

   $ 6,113      $ 1,317      $ 755      $ 8,185   

Tenant recoveries

     651        283        149        1,083   

Other income

     86        3        3       92   
                                

Total revenues

     6,850        1,603        907        9,360   

EXPENSES:

        

Maintenance and repairs

     220        205        90        515   

Real estate taxes

     825        185        88        1,098   

Management fees

     42        59        31        132   

Other operating expenses

     252        —          —          252   

General and administrative

     4,021        —          —          4,021   

Depreciation and amortization

     2,994        571        328        3,893   
                                

Total expenses

     8,354        1,020        537        9,911   

Net operating (loss) income

     (1,504     583        370        (551

Interest expense

     (1,623     (276     (344     (2,243

Interest income

     158        —          —          158   
                                

Net (loss) income

     (2,969     307        26        (2,636

Non-controlling interest

     (117     12        1        (104
                                

Net (loss) income attributable to the common stockholders

   $ (2,852   $ 295      $ 25      $ (2,532
                                

Basic and diluted loss per share

   $ (0.18       $ (0.16
                    

Weighted-average common shares outstanding - basic and diluted

     15,509            15,509   
                    

See accompanying notes


EXCEL TRUST, INC. PREDECESSOR

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

Period from January 1, 2010 to April 27, 2010

(in thousands)

 

     Company
Historical (C)
    Acquisition
of Brandywine
Crossing
Shopping Center at
Brandywine,  Maryland
(D)
    Ac Acquisition
of Rosewick
Crossing
Shopping Center at
Rosewick, Maryland
(E)
    Company
Pro Forma
 

REVENUES:

        

Rental revenue

   $ 1,455      $ 1,112      $ 731      $ 3,298   

Tenant recoveries

     113        297        149        559   

Other income

     —          —          7       7   
                                

Total revenues

     1,568        1,409        887        3,864   

EXPENSES:

        

Maintenance and repairs

     98        259        122        479   

Real estate taxes

     140        148        70        358   

Management fees

     43        45        25        113   

Other operating expenses

     98        19        17        134   

General and administrative

     8        —          —          8   

Depreciation and amortization

     542        449        262        1,253   
                                

Total expenses

     929        920        496        2,345   

Net operating income

     639        489        391        1,519   

Interest expense

     (483     (221     (275     (979

Interest income

     —          —          —          —     
                                

Net income

     156        268        116        540   

Non-controlling interest

     290        —          —          290   
                                

Net (loss) income attributable to the controlling interest

   $ (134   $ 268      $ 116      $ 250   
                                

See accompanying notes


EXCEL TRUST, INC. PREDECESSOR

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2009

(in thousands)

 

     Company
Historical (C)
    Acquisition
of Brandywine
Crossing
Shopping Center at
Brandywine,  Maryland
(D)
    Acquisition
of Rosewick
Crossing
Shopping Center at
Rosewick,  Maryland
(E)
    Company
Pro Forma
 

REVENUES:

        

Rental revenue

   $ 4,731      $ 1,375      $ 1,934      $ 8,040   

Tenant recoveries

     259        634        411        1,304   

Other income

     —          27        10        37   
                                

Total revenues

     4,990        2,036        2,355        9,381   

EXPENSES:

        

Maintenance and repairs

     245        445        244        934   

Real estate taxes

     399        458        214        1,071   

Management fees

     134        62        72        268   

Other operating expenses

     451        32        —          483   

General and administrative

     45        —          —          45   

Depreciation and amortization

     2,045        1,074        787        3,906   
                                

Total expenses

     3,319        2,071        1,317        6,707   

Net operating income

     1,671        (35     1,038        2,674   

Interest expense

     (1,359     (662     (825     (2,846

Interest income

     6        —          —          6   
                                

Net income (loss)

     318        (697     213        (166

Non-controlling interest

     75        —          —          75   
                                

Net income (loss) attributable to the controlling interest

   $ 243      $ (697   $ 213      $ (241
                                

See accompanying notes


EXCEL TRUST, INC. AND

EXCEL TRUST, INC. PREDECESSOR

NOTES TO CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

(A) Derived from the Company’s condensed consolidated and combined financial statements as of September 30, 2010.

(B) To reflect the acquisition of Brandywine Crossing Shopping Center and Rosewick Crossing Shopping Center as if they were acquired on September 30, 2010 for a combined purchase price of $70,000 not including closing costs. The acquisitions were funded with cash from draws on the Company’s credit facility as of September 30, 2010 and proceeds from the initial public offering that was completed on April 28, 2010. In addition, the Company made $24,623 of deposits into escrow to fund the acquisitions, which were classified as other assets in the historical balance sheet as of September 30, 2010. The acquisition method of accounting was used to allocate the purchase price to tangible and indentified intangible assets and liabilities and other working capital liabilities assumed according to their fair values. The purchase price has been allocated for the pro forma adjustments as follows:

 

     Brandywine
Crossing
    Rosewick
Crossing
 

Land

   $ 20,309      $ 11,665   

Building

     14,588        8,384   

Site improvements

     2,949        1,930   

Tenant improvements

     647        615   

Lease intangible assets

     7,106        3,445   

Lease intangible liabilities

     (521     (1,117
                
   $ 45,078      $ 24,922   
                

(C) Derived from the Company’s and the Predecessor’s condensed consolidated and combined financial statements of operations for the period from April 28, 2010 to September 30, 2010, the period from January 1, 2010 to April 27, 2010 and the year ended December 31, 2009.

(D) To reflect the acquisition of Brandywine Crossing Shopping Center as if it was acquired on January 1, 2009. The pro forma adjustments include the pro forma operations of the property. The acquisition method of accounting was used to allocate the purchase price to tangible and indentified intangible assets and liabilities according to their fair values. The amount allocated to building, site improvements and tenant improvements is depreciated over an estimated useful life of 40 years, 15 years and an average of 6 years, respectively. The amounts allocated to intangible lease assets are amortized over the lives of the leases with an average life of 11 years.

Historical revenue of $1,757, $1,316 and $2,120, is decreased by $69, $51 and $84, for the pro forma net amortization of above and below market leases for the period from April 28, 2010 to September 30, 2010, the period from January 1, 2010 to April 27, 2010 and the year ended December 31, 2009, respectively.

Interest expense reflects borrowings from the Company’s credit facility used to fund the acquisition. Interest is assumed to be 4.25%. The Company’s credit facility bears interest LIBOR plus a margin of 2.75%, with a LIBOR floor of 1.50%. As LIBOR was approximately 0.26% at September 30, 2010, an increase or decrease in LIBOR of 0.125% would have no effect on the Company’s interest rate given the LIBOR floor.

(E) To reflect the acquisition of Rosewick Crossing Shopping Center as if it was acquired on January 1, 2009. The pro forma adjustments include the pro forma operations of the property. The acquisition method of accounting was used to allocate the


EXCEL TRUST, INC. AND

EXCEL TRUST, INC. PREDECESSOR

NOTES TO CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS—(Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

 

purchase price to tangible and indentified intangible assets and liabilities according to their fair values. The amount allocated to building, site improvements and tenant improvements is depreciated over an estimated useful life of 40 years, 15 years and an average of 7 years, respectively. The amounts allocated to intangible lease assets are amortized over the lives of the leases with an average life of 12 years.

Historical revenue of $889, $872 and $2,311, is increased by $18, $15 and $44, for the pro forma net amortization of above and below market leases for the period from April 28, 2010 to September 30, 2010, the period from January 1, 2010 to April 27, 2010 and the year ended December 31, 2009, respectively.

Interest expense reflects borrowings from the Company’s credit facility used to fund the acquisition. Interest is assumed to be 4.25%. The Company’s credit facility bears interest LIBOR plus a margin of 2.75%, with a LIBOR floor of 1.50%. As LIBOR was approximately 0.26% at September 30, 2010, an increase or decrease in LIBOR of 0.125% would have no effect on the Company’s interest rate given the LIBOR floor.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: December 15, 2010     Excel Trust, Inc.
    By:  

/S/    JAMES Y. NAKAGAWA        

      James Y. Nakagawa
      Chief Financial Officer


EXHIBITS

 

Exhibit

  

Description of Exhibit

10.1    Purchase and Sale Agreement and Joint Escrow Instructions between Faison-Brandywine, LLC and Excel Trust, L.P. dated September 3, 2010. (1)
10.2    Purchase and Sale Agreement and Joint Escrow Instructions between Faison-Rosewick, LLC and Excel Trust, L.P. dated September 3, 2010. (1)
23.1    Consent of Deloitte & Touche, LLP (2)

 

(1) Incorporated herein by reference to Excel Trust, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 9, 2010.
(2) Filed herewith.