Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - DC Industrial Liquidating Trust | d420451d8k.htm |
Exhibit 99.1
INDUSTRIAL INCOME TRUST INC.
PRO FORMA FINANCIAL INFORMATION
(Unaudited)
The following pro forma financial statements have been prepared to provide pro forma information with regard to real estate acquisitions and financing transactions, as applicable. The unaudited pro forma financial statements should be read in conjunction with Industrial Income Trust Inc.’s (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2012, and the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2012, filed with the SEC on August 10, 2012.
The accompanying unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2012, and for the year ended December 31, 2011, combine the Company’s historical operations with the purchase of each of the real property and financing transactions described below, as if those transactions had occurred on January 1, 2011.
On January 19, 2011, the Company acquired a 100% fee interest in two buildings located in the Pinnacle Industrial Center in Dallas, Texas aggregating approximately 575,000 square feet on 36.2 acres (“Rock Quarry 1 and 2”). The total aggregate acquisition cost of Rock Quarry 1 and 2 was approximately $25.7 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded these acquisitions using proceeds from its initial public offering.
On January 19, 2011, the Company acquired a 100% fee interest in one industrial building located in the Madison Business Center in Tampa, Florida aggregating approximately 147,000 square feet on 8.9 acres (the “Eagle Falls Distribution Center”). The total aggregate acquisition cost of the Eagle Falls Distribution Center was approximately $10.7 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded these acquisitions using proceeds from its initial public offering.
On January 27, 2011, the Company acquired a 100% fee interest in one industrial building located in Hagerstown, Maryland aggregating approximately 824,000 square feet on 70.3 acres (the “Hagerstown Distribution Center”). The total aggregate acquisition cost of the Hagerstown Distribution Center was approximately $41.2 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its initial public offering and debt financing.
On June 17, 2011, the Company acquired a 100% fee interest in two industrial buildings and a 100% leasehold interest in a third industrial building, aggregating approximately 2.0 million square feet on 143.2 acres. The buildings are located in Atlanta, Georgia; York, Pennsylvania; and Houston, Texas (collectively referred to as the “Regional Distribution Portfolio”). The total aggregate purchase price was approximately $111.8 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its initial public offering and debt financing.
On June 24, 2011, under the terms of a definitive agreement to acquire a 100% fee interest in nine industrial buildings aggregating approximately 1.4 million square feet on 108.8 acres located in Chicago, Illinois, (collectively, the “Chicago Industrial Portfolio”), the Company acquired six of the nine industrial buildings of the Chicago Industrial Portfolio aggregating approximately 1.1 million square feet on 84.8 acres. The total aggregate purchase price of this completed portion of the Chicago Industrial Portfolio was approximately $80.5 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its initial public offering and debt financing.
On August 4, 2011, the Company completed the acquisition of one of the remaining industrial buildings in the Chicago Industrial Portfolio, aggregating approximately 82,000 square feet on 4.5 acres. The total aggregate purchase price of this completed portion of the Chicago Industrial Portfolio was approximately $6.4 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its initial public offering and debt financing.
On August 25, 2011, the Company completed the acquisition of one of the remaining industrial buildings in the Chicago Industrial Portfolio, aggregating approximately 145,000 square feet on 9.5 acres. The total aggregate purchase price of this completed portion of the Chicago Industrial Portfolio was approximately $9.6 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its initial public offering and debt financing assumed by the Company.
On December 13, 2011, the Company completed the acquisition of the remaining industrial building in the Chicago Industrial Portfolio, aggregating approximately 65,000 square feet on 4.9 acres. The total aggregate purchase price of this completed portion of the Chicago Industrial Portfolio was approximately $5.2 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its initial public offering and debt financing assumed by the Company.
1
On December 15, 2011, the Company completed the acquisition of eight industrial buildings aggregating approximately 1.6 million square feet on 88.2 acres. The buildings are located in certain submarkets of Fort Lauderdale, Florida; Atlanta, Georgia; and Dallas, Texas (collectively, the “Regional Industrial Portfolio”). The total aggregate purchase price was approximately $104.5 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its initial public offering and debt financing.
On March 28, 2012, the Company acquired a 100% fee interest in 11 industrial buildings, aggregating approximately 3.5 million square feet on 201.3 acres, located in the submarkets of Plainfeld, Indiana and Lehigh Valley, Pennsylvania (collectively referred to as the “IN/PA Industrial Portfolio”). The total aggregate purchase price was approximately $137.3 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its initial public offering.
On May 10, 2012, the Company acquired a 100% fee interest in two industrial buildings aggregating approximately 1.6 million square feet on 96.4 acres. The buildings are located in Phoenix, Arizona (collectively, the “Cactus Distribution Centers”). The total aggregate purchase price was approximately $131.7 million, exclusive of transfer taxes, due diligence expenses, and other closing costs. The Company funded the acquisition using proceeds from its public offerings.
The Company entered into the following financing transactions prior to June 30, 2012, and these transactions are included in the Company’s historical condensed consolidated unaudited balance sheet as of June 30, 2012: $12.4 million mortgage note payable secured by the Rock Quarry 1 and 2 on January 19, 2011; $6.2 million mortgage note payable secured by the Eagle Falls Distribution Center on January 19, 2011; $23.4 million mortgage note payable secured by the Hagerstown Distribution Center on January 27, 2011; $66.9 million mortgage note payable secured by the Regional Distribution Portfolio on June 17, 2011; $43.1 million mortgage note payable secured by the six industrial buildings in the Chicago Industrial Portfolio that closed on June 24, 2011; assumption of a $6.2 million mortgage note payable secured by the industrial building in the Chicago Industrial Portfolio that closed on August 4, 2011; assumption of a $6.3 million mortgage note payable secured by the industrial building in the Chicago Industrial Portfolio that closed on August 25, 2011; assumption of a $4.5 million mortgage note payable secured by the industrial building in the Chicago Industrial Portfolio that closed on December 13, 2011; $61.0 million mortgage note payable secured by the eight industrial buildings in the Regional Industrial Portfolio that closed on December 15, 2011; and $82.4 million mortgage note payable secured by the IN/PA Industrial Portfolio on May 24, 2012.
The Company also entered into the following financing transaction subsequent to June 30, 2012: $76.6 million mortgage note payable secured by the Cactus Distribution Centers that closed on July 11, 2012.
The unaudited pro forma condensed consolidated statements of operations have been prepared by the Company’s management based upon the Company’s historical financial statements and certain historical financial information of the acquired properties. These pro forma statements may not be indicative of the results that actually would have occurred if these transactions had been in effect on the dates indicated, nor do they purport to represent our future financial results. The accompanying unaudited pro forma condensed consolidated statements of operations do not contemplate certain amounts that are not readily determinable, such as additional general and administrative expenses that are probable, or interest income that would be earned on cash balances.
2
INDUSTRIAL INCOME TRUST INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2012
(Unaudited)
| (in thousands, except per share data) |
Company Historical (1) |
Acquisitions (2) | Pro Forma Adjustments |
Consolidated Pro Forma |
||||||||||||
| Revenues: |
||||||||||||||||
| Rental revenues |
$ | 50,697 | $ | 7,148 | $ | (92 | )(3) | $ | 57,753 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
50,697 | 7,148 | (92 | ) | 57,753 | |||||||||||
| Operating expenses: |
||||||||||||||||
| Rental expenses |
12,103 | 1,087 | — | 13,190 | ||||||||||||
| Real estate-related depreciation and amortization |
24,101 | — | 3,619 | (3) | 27,720 | |||||||||||
| General and administrative expenses |
2,839 | — | — | 2,839 | ||||||||||||
| Asset management fees, related party |
4,763 | — | 534 | (4) | 5,297 | |||||||||||
| Acquisition-related expenses, related party |
4,812 | — | (2,689 | )(5) | 2,123 | |||||||||||
| Acquisition-related expenses |
3,716 | — | (1,143 | )(5) | 2,573 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
52,334 | 1,087 | 321 | 53,742 | ||||||||||||
| Other expenses: |
||||||||||||||||
| Equity in loss of unconsolidated joint venture |
1,420 | — | — | 1,420 | ||||||||||||
| Interest expense and other |
11,738 | — | 2,961 | (6) | 14,699 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other expenses |
13,158 | — | 2,961 | 16,119 | ||||||||||||
| Net (loss) income |
(14,795 | ) | 6,061 | (3,374 | ) | (12,108 | ) | |||||||||
| Net (loss) income attributable to noncontrolling interests |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net (loss) income attributable to common stockholders |
$ | (14,795 | ) | $ | 6,061 | $ | (3,374 | ) | $ | (12,108 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted-average shares outstanding |
85,632 | 114,256 | (7) | |||||||||||||
|
|
|
|
|
|||||||||||||
| Net loss per common share—basic and diluted |
$ | (0.17 | ) | $ | (0.11 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
The accompanying notes are an integral part of this pro forma condensed consolidated financial statement.
3
INDUSTRIAL INCOME TRUST INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2011
(Unaudited)
| (in thousands, except per share data) |
Company Historical (1) |
Acquisitions (2) | Pro Forma Adjustments |
Consolidated Pro Forma |
||||||||||||
| Revenues: |
||||||||||||||||
| Rental revenues |
$ | 51,650 | $ | 40,959 | $ | (1,202 | )(3) | $ | 91,407 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
51,650 | 40,959 | (1,202 | ) | 91,407 | |||||||||||
| Operating expenses: |
||||||||||||||||
| Rental expenses |
11,131 | 9,308 | — | 20,439 | ||||||||||||
| Real estate-related depreciation and amortization |
22,481 | — | 21,509 | (3) | 43,990 | |||||||||||
| General and administrative expenses |
3,840 | — | — | 3,840 | ||||||||||||
| Asset management fees, related party |
4,868 | — | 3,672 | (4) | 8,540 | |||||||||||
| Acquisition-related expenses, related party |
10,378 | — | (2,841 | )(5) | 7,537 | |||||||||||
| Acquisition-related expenses |
7,597 | — | (2,017 | )(5) | 5,580 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
60,295 | 9,308 | 20,323 | 89,926 | ||||||||||||
| Other expenses: |
||||||||||||||||
| Equity in loss of unconsolidated joint venture |
2,034 | — | — | 2,034 | ||||||||||||
| Interest expense and other |
14,674 | — | 12,280 | (6) | 26,954 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other expenses |
16,708 | — | 12,280 | 28,988 | ||||||||||||
| Net (loss) income |
(25,353 | ) | 31,651 | (33,805 | ) | (27,507 | ) | |||||||||
| Net (loss) income attributable to noncontrolling interests |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net (loss) income attributable to common stockholders |
$ | (25,353 | ) | $ | 31,651 | $ | (33,805 | ) | $ | (27,507 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted-average shares outstanding |
37,423 | 114,256 | (7) | |||||||||||||
|
|
|
|
|
|||||||||||||
| Net loss per common share—basic and diluted |
$ | (0.68 | ) | $ | (0.24 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
The accompanying notes are an integral part of this pro forma condensed consolidated financial statement.
4
INDUSTRIAL INCOME TRUST INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND FOR THE
YEAR ENDED DECEMBER 31, 2011
(Unaudited)
| (1) | Reflects the Company’s historical condensed consolidated statement of operations for the six months ended June 30, 2012 and for the year ended December 31, 2011. Refer to the Company’s historical condensed consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2012, and the Company’s Annual Report on Form 10-K filed with the SEC on March 9, 2012. |
| (2) | The tables below set forth the incremental impact of rental revenue and rental expense of the properties acquired by the Company based on the historical operations of such properties for the periods prior to acquisition. The incremental rental revenue includes base rent, which is presented on a straight-line basis. The incremental straight-line rent adjustment resulted in an increase to rental revenue of approximately $0.3 million for the six months ended June 30, 2012 and approximately $6.7 million for the year ended December 31, 2011. The incremental reimbursement and other revenue primarily consists of rental expense recoveries. The incremental rental expense includes operating expenses, insurance expense, and property management fees. |
Rental Revenue Impact:
| For the Six Months Ended June 30, 2012 |
For the Year Ended December 31, 2011 |
|||||||||||||||
| (dollars in thousands) |
Incremental Rental Revenue |
Incremental Reimbursement and Other Revenue |
Incremental Rental Revenue |
Incremental Reimbursement and Other Revenue |
||||||||||||
| Rock Quarry 1 and 2 |
$ | — | $ | — | $ | 72 | $ | 11 | ||||||||
| Eagle Falls Distribution Center |
— | — | 36 | 2 | ||||||||||||
| Hagerstown Distribution Center |
— | — | 232 | 35 | ||||||||||||
| Regional Distribution Portfolio |
— | — | 3,923 | 424 | ||||||||||||
| Chicago Industrial Portfolio |
— | — | 3,584 | 654 | ||||||||||||
| Regional Industrial Portfolio |
— | — | 6,504 | 2,036 | ||||||||||||
| IN/PA Industrial Portfolio |
3,190 | 299 | 11,666 | 1,221 | ||||||||||||
| Cactus Distribution Centers |
2,438 | 1,221 | 8,925 | 1,634 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 5,628 | $ | 1,520 | $ | 34,942 | $ | 6,017 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Rental Expense Impact:
| For the Six Months Ended June 30, 2012 |
For the Year Ended December 31, 2011 |
|||||||||||||||
| (dollars in thousands) |
Incremental Rental Expense |
Incremental Real Estate Taxes |
Incremental Rental Expense |
Incremental Real Estate Taxes |
||||||||||||
| Rock Quarry 1 and 2 |
$ | — | $ | — | $ | 9 | $ | 6 | ||||||||
| Eagle Falls Distribution Center |
— | — | 3 | 6 | ||||||||||||
| Hagerstown Distribution Center |
— | — | 9 | 22 | ||||||||||||
| Regional Distribution Portfolio |
— | — | 202 | 361 | ||||||||||||
| Chicago Industrial Portfolio |
— | — | 487 | 635 | ||||||||||||
| Regional Industrial Portfolio |
— | — | 1,030 | 1,255 | ||||||||||||
| IN/PA Industrial Portfolio |
231 | 496 | 1,764 | 1,877 | ||||||||||||
| Cactus Distribution Centers |
86 | 274 | 449 | 1,193 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 317 | $ | 770 | $ | 3,953 | $ | 5,355 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
5
| (3) | The following table sets forth the incremental depreciation and amortization expense of the properties acquired by the Company. Pursuant to the purchase price allocations, the amount allocated to building will be depreciated on a straight-line basis over a period of 20 to 40 years, and the amounts allocated to intangible in-place lease assets will be amortized on a straight-line basis over the lease term. Above-market lease assets are amortized as a reduction in rental revenue over the remaining lease term. Below market lease liabilities are amortized as an increase in rental revenue over the remaining lease term, including any renewal periods, as applicable. |
| For the Six Months
Ended June 30, 2012 |
For the Year Ended December 31, 2011 |
|||||||||||||||
| (dollars in thousands) |
Incremental Depreciation and Amortization |
Incremental Amortization of (Above) Below Market Lease Intangibles, net |
Incremental Depreciation and Amortization |
Incremental Amortization of (Above) Below Market Lease Intangibles, net |
||||||||||||
| Rock Quarry 1 and 2 |
$ | — | $ | — | $ | 92 | $ | (7 | ) | |||||||
| Eagle Falls Distribution Center |
— | — | 26 | (16 | ) | |||||||||||
| Hagerstown Distribution Center |
— | — | 138 | 2 | ||||||||||||
| Regional Distribution Portfolio |
— | — | 2,203 | (135 | ) | |||||||||||
| Chicago Industrial Portfolio |
— | — | 2,616 | (546 | ) | |||||||||||
| Regional Industrial Portfolio |
— | — | 3,909 | (217 | ) | |||||||||||
| IN/PA Industrial Portfolio |
2,382 | 36 | 8,592 | 119 | ||||||||||||
| Cactus Distribution Centers |
1,237 | (128 | ) | 3,933 | (402 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 3,619 | $ | (92 | ) | $ | 21,509 | $ | (1,202 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (4) | Asset management fees were calculated as though the properties acquired by the Company during 2012 and 2011 had been managed by Industrial Income Advisors, LLC, the Company’s Advisor, since January 1, 2011. The management fee consists of a monthly fee of one-twelfth of 0.80% of the aggregate cost (including debt, whether borrowed or assumed), before non-cash reserves and depreciation, of each real property asset within the Company’s portfolio. |
| (5) | The acquisition costs incurred by the Company related to these property acquisitions have been excluded from the presentation of the pro forma statement of operations, as these costs were directly attributable to property acquisition transactions and are not recurring in nature. The following table sets forth the impact of acquisition-related expenses of the properties acquired by the Company. |
| For the Six Months Ended June 30, 2012 |
For the Year Ended December 31, 2011 |
|||||||||||||||
| (dollars in thousands) |
Acquisition- Related Expenses, Related Party |
Acquisition- Related Expenses |
Acquisition- Related Expenses, Related Party |
Acquisition- Related Expenses |
||||||||||||
| Rock Quarry 1 and 2 |
$ | — | $ | — | $ | (514 | ) | $ | (125 | ) | ||||||
| Eagle Falls Distribution Center |
— | — | (213 | ) | (60 | ) | ||||||||||
| Hagerstown Distribution Center |
— | — | (823 | ) | (535 | ) | ||||||||||
| Regional Distribution Portfolio |
— | — | (1,918 | ) | (1,046 | ) | ||||||||||
| Chicago Industrial Portfolio |
— | — | (1,017 | ) | (823 | ) | ||||||||||
| Regional Industrial Portfolio |
— | — | (1,045 | ) | (571 | ) | ||||||||||
| IN/PA Industrial Portfolio |
(1,373 | ) | (1,071 | ) | 1,373 | 1,071 | ||||||||||
| Cactus Distribution Centers |
(1,316 | ) | (72 | ) | 1,316 | 72 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | (2,689 | ) | $ | (1,143 | ) | $ | (2,841 | ) | $ | (2,017 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
6
| (6) | The following table sets forth the incremental interest expense calculated based on the terms of the mortgage notes payable as if these financings were outstanding as of January 1, 2011: |
| Estimated Incremental Interest Expense |
||||||||||||||||||
| Issuance Date |
Maturity Date |
Interest Rate |
Amount Financed |
For the Six Months Ended June 30, 2012 |
For the Year
Ended December 31, 2011 |
|||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| January 27, 2011 |
November 1, 2020 | 4.81 | % | $ | 12,400 | $ | — | $ | 49 | |||||||||
| January 27, 2011 |
November 1, 2020 | 4.81 | % | 6,160 | — | 24 | ||||||||||||
| January 27, 2011 |
November 1, 2020 | 4.81 | % | 23,440 | — | 93 | ||||||||||||
| June 17, 2011 |
July 1, 2021 | 4.70 | % | 66,869 | — | 1,501 | ||||||||||||
| June 24, 2011 |
July 1, 2021 | 4.70 | % | 43,131 | — | 1,014 | ||||||||||||
| August 4, 2011 |
June 5, 2017 | 5.61 | % | 6,150 | — | 233 | ||||||||||||
| August 25, 2011 |
July 11, 2016 | 6.24 | % | 6,345 | — | 264 | ||||||||||||
| December 13, 2011 |
March 11, 2017 | 5.77 | % | 4,480 | — | 241 | ||||||||||||
| December 15, 2011 |
January 5, 2019 | 3.90 | % | 61,000 | — | 2,181 | ||||||||||||
| May 24, 2012 |
July 1, 2022 | 4.25 | % | 82,350 | 1,371 | 3,500 | ||||||||||||
| July 11, 2012 |
August 1, 2023 | 4.15 | % | 76,616 | 1,590 | 3,180 | ||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| Total |
$ | 388,941 | $ | 2,961 | $ | 12,280 | ||||||||||||
|
|
|
|
|
|
|
|||||||||||||
| (7) | The pro forma weighted average shares of common stock outstanding for the six months ended June 30, 2012 and for the year ended December 31, 2011 were calculated to reflect all shares sold through August 31, 2012 as if they had been issued on January 1, 2011. |
7