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): April 4, 2013 |
Cole Corporate Income Trust, Inc. | |||||||||
(Exact Name of Registrant as Specified in Its Charter) | |||||||||
Maryland | 000-54940 | 27-2431980 | |||||||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||
2325 East Camelback Road, Suite 1100, Phoenix, Arizona 85016 | |||||||||
(Address of principal executive offices) | |||||||||
(Zip Code) | |||||||||
(602) 778-8700 | |||||||||
(Registrant’s telephone number, including area code) | |||||||||
None | |||||||||
(Former name or former address, if changed since last report) | |||||||||
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:
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))
Explanatory Note
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Cole Corporate Income Trust, Inc. (which may be referred to as the “Company,” “we,” “our,” and “us”) hereby amends the Current Report on Form 8-K filed on April 10, 2013 to provide the financial information required by Item 9.01 relating to our acquisition of an office building located in Seattle, Washington (the “F5 Property”) as described in such Current Report.
Item 9.01 | Financial Statements and Exhibits | |||
(a) Financial Statements of the Property Acquired | ||||
F5 Networks - Seattle, WA | ||||
Summary Financial Data Regarding F5 Networks, Inc. | 3 | |||
(b) Pro Forma Financial Information | ||||
Pro Forma Condensed Consolidated Balance Sheet (Unaudited) as of March 31, 2013 | 4 | |||
Pro Forma Condensed Consolidated Statement of Operations (Unaudited) for the three months ended | ||||
March 31, 2013 | 5 | |||
Pro Forma Condensed Consolidated Statement of Operations (Unaudited) for the year ended December 31, 2012 | 6 | |||
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited) | 7 | |||
(c) Shell Company Transactions | |
None | |
(d) Exhibits | |
None | |
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SUMMARY FINANCIAL DATA
F5 NETWORKS, INC.
We have acquired the F5 Property, which is leased to F5 Networks, Inc. (“F5 Networks”):
Year | Purchase | Square | ||||||
Property Location | Date Acquired | Built | Price | Feet | ||||
Seattle, WA | April 4, 2013 | 2000 | $142,500,000 | 299,643 | ||||
In evaluating the F5 Property as a potential acquisition, including the determination of the appropriate purchase price for the F5 Property, the Company considered a variety of factors, including the condition and financial performance of the property; the terms of the existing lease and the creditworthiness of the tenant; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; and neighborhood growth patterns and economic conditions. After reasonable inquiry, the Company is not aware of any material factors relating to the F5 Property, other than the factors disclosed herein, that would cause the reported financial information not to be indicative of future operating results.
Because the F5 Property is 100% leased on a long-term basis under a net lease whereby substantially all of the operating costs are the responsibility of the tenant, the Company believes that the financial condition and results of operations of the tenant, F5 Networks, are more relevant to investors than the financial statements of the F5 Property, and will enable investors to evaluate the creditworthiness of the tenant. Additionally, because the F5 Property is subject to a net lease, the historical property financial statements provide limited information other than rental income. As a result, pursuant to the guidance provided by the Securities and Exchange Commission (the "SEC"), please refer to the following financial information of the tenant of the acquired property:
For financial information for the quarterly period ended March 31, 2013 and for the fiscal year ended September 30, 2012, refer to the Quarterly Report on Form 10-Q filed by F5 Networks with the SEC on May 9, 2013 and the Annual Report on Form 10-K filed by F5 Networks with the SEC on November 21, 2012, respectively, which are publicly available on the SEC's web site, http://www.sec.gov.
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COLE CORPORATE INCOME TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
As of March 31, 2013
(in thousands, except share and per share amounts)
The following Pro Forma Condensed Consolidated Balance Sheet (Unaudited) is presented as if the Company had acquired the F5 Property on March 31, 2013.
This Pro Forma Condensed Consolidated Balance Sheet (Unaudited) as of March 31, 2013 should be read in conjunction with the Company’s historical financial statements and notes thereto for the three months ended March 31, 2013, included in the Company's Quarterly Report on Form 10-Q, filed effective as of May 14, 2013 with the SEC. This Pro Forma Condensed Consolidated Balance Sheet (Unaudited) is not necessarily indicative of what the actual financial position would have been had the Company completed the acquisition of the F5 Property on March 31, 2013, nor does it purport to represent its future financial position. This Pro Forma Condensed Consolidated Balance Sheet (Unaudited) only includes the impact of the acquisition of the F5 Property, which is considered to be a significant property acquisition pursuant to SEC Rule 3-14 of Regulation S-X.
March 31, 2013 | Acquisition | Pro Forma as of | |||||||||
As Reported | Pro Forma Adjustments | March 31, 2013 | |||||||||
(a) | |||||||||||
ASSETS | |||||||||||
Investment in real estate assets: | |||||||||||
Land | $ | 38,203 | $ | 30,801 | (b) | $ | 69,004 | ||||
Buildings and improvements | 297,702 | 101,774 | (b) | 399,476 | |||||||
Acquired intangible lease assets | 47,382 | 9,617 | (b) | 56,999 | |||||||
Total investment in real estate assets, net | 383,287 | 142,192 | 525,479 | ||||||||
Cash and cash equivalents | 18,037 | (3,101 | ) | (c) | 14,936 | ||||||
Restricted cash | 1,407 | — | 1,407 | ||||||||
Rents and tenant receivables | 1,538 | — | 1,538 | ||||||||
Property escrow deposits, prepaid expenses and other assets | 3,879 | — | 3,879 | ||||||||
Deferred financing costs | 4,168 | 446 | (d) | 4,614 | |||||||
Total assets | $ | 412,316 | $ | 139,537 | $ | 551,853 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Credit facility and notes payable | $ | 146,400 | $ | 142,500 | (e) | $ | 288,900 | ||||
Accounts payable and accrued expenses | 3,026 | — | 3,026 | ||||||||
Escrowed investor proceeds | 1,098 | — | 1,098 | ||||||||
Due to affiliates | 1,264 | — | 1,264 | ||||||||
Acquired below market lease intangibles | 11,879 | — | 11,879 | ||||||||
Distributions payable | 1,497 | — | 1,497 | ||||||||
Deferred rental income and other liabilities | 1,266 | — | 1,266 | ||||||||
Total liabilities | 166,430 | 142,500 | 308,930 | ||||||||
Commitments and contingencies | |||||||||||
Redeemable common stock | 3,452 | — | 3,452 | ||||||||
STOCKHOLDERS’ EQUITY: | |||||||||||
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding | — | — | — | ||||||||
Common stock, $0.01 par value; 490,000,000 shares authorized, 29,507,542 shares issued and outstanding | 295 | — | 295 | ||||||||
Capital in excess of par value | 260,503 | — | 260,503 | ||||||||
Accumulated distributions in excess of earnings | (18,364 | ) | (2,963 | ) | (f) | (21,327 | ) | ||||
Total stockholders’ equity | 242,434 | (2,963 | ) | 239,471 | |||||||
Total liabilities and stockholders’ equity | $ | 412,316 | $ | 139,537 | $ | 551,853 | |||||
See accompanying Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited).
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COLE CORPORATE INCOME TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the Three Months Ended March 31, 2013
(in thousands, except share and per share amounts)
The following Pro Forma Condensed Consolidated Statement of Operations (Unaudited) is presented as if the Company had acquired the F5 Property on January 1, 2012.
This Pro Forma Condensed Consolidated Statement of Operations (Unaudited) should be read in conjunction with the Company’s historical financial statements and notes thereto for the three months ended March 31, 2013, included in the Company’s Quarterly Report on Form 10-Q, filed effective as of May 14, 2013 with the SEC. This Pro Forma Condensed Consolidated Statement of Operations (Unaudited) is not necessarily indicative of what actual results of operations would have been had the Company completed the acquisition of the F5 Property on January 1, 2012, nor does it purport to represent its future operations. This Pro Forma Condensed Consolidated Statement of Operations (Unaudited) only includes the impact of the acquisition of the F5 Property, which is considered to be a significant property acquisition pursuant to SEC Rule 3-14 of Regulation S-X.
For the Three Months Ended March 31, 2013 As Reported | Acquisition Pro Forma Adjustments | Pro Forma for the Three Months Ended March 31, 2013 | ||||||||||
(a) | (b) | |||||||||||
Revenues: | ||||||||||||
Rental and other property income | $ | 6,232 | $ | 2,449 | (c) | $ | 8,681 | |||||
Tenant reimbursement income | 1,240 | 756 | (d) | 1,996 | ||||||||
Total revenue | 7,472 | 3,205 | 10,677 | |||||||||
Expenses: | ||||||||||||
General and administrative expenses | 663 | — | 663 | |||||||||
Property operating expenses | 1,256 | 756 | (e) | 2,012 | ||||||||
Advisory fees and expenses | 680 | 267 | (f) | 947 | ||||||||
Acquisition related expenses | 3,756 | — | 3,756 | |||||||||
Depreciation | 1,846 | 850 | (g) | 2,696 | ||||||||
Amortization | 831 | 258 | (g) | 1,089 | ||||||||
Total operating expenses | 9,032 | 2,131 | 11,163 | |||||||||
Operating (loss) income | (1,560 | ) | 1,074 | (486 | ) | |||||||
Other income (expense): | ||||||||||||
Interest and other income | 5 | — | 5 | |||||||||
Interest expense | (1,749 | ) | (1,143 | ) | (h) | (2,892 | ) | |||||
Total other expense | (1,744 | ) | (1,143 | ) | (2,887 | ) | ||||||
Net loss | $ | (3,304 | ) | $ | (69 | ) | $ | (3,373 | ) | |||
Weighted average number of common shares outstanding: | ||||||||||||
Basic and diluted | 22,357,817 | — | 22,357,817 | |||||||||
Net loss per common share: | ||||||||||||
Basic and diluted | $ | (0.15 | ) | $ | — | $ | (0.15 | ) | ||||
See accompanying Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited).
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COLE CORPORATE INCOME TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the Year Ended December 31, 2012
(in thousands, except share and per share amounts)
The following Pro Forma Condensed Consolidated Statement of Operations (Unaudited) is presented as if the Company had acquired the F5 Property on January 1, 2012.
This Pro Forma Condensed Consolidated Statement of Operations (Unaudited) should be read in conjunction with the Company’s historical financial statements and notes thereto for the year ended December 31, 2012, included in the Company's Annual Report on Form 10-K, filed effective as of March 28, 2013 with the SEC. This Pro Forma Condensed Consolidated Statement of Operations (Unaudited) is not necessarily indicative of what actual results of operations would have been had the Company completed the acquisition of the F5 Property on January 1, 2012, nor does it purport to represent its future operations. This Pro Forma Condensed Consolidated Statement of Operations (Unaudited) only includes the impact of the acquisition of the F5 Property, which is considered to be a significant property acquisition pursuant to SEC Rule 3-14 of Regulation S-X.
For the Year Ended December 31, 2012 As Reported | Acquisition Pro Forma Adjustments | Pro Forma for the Year Ended December 31, 2012 | ||||||||||
(a) | (b) | |||||||||||
Revenues: | ||||||||||||
Rental and other property income | $ | 5,792 | $ | 9,798 | (c) | $ | 15,590 | |||||
Tenant reimbursement income | 1,680 | 3,024 | (d) | 4,704 | ||||||||
Total revenue | 7,472 | 12,822 | 20,294 | |||||||||
Expenses: | ||||||||||||
General and administrative expenses | 965 | — | 965 | |||||||||
Property operating expenses | 1,738 | 3,024 | (e) | 4,762 | ||||||||
Acquisition related expenses | 6,196 | — | 6,196 | |||||||||
Depreciation | 1,730 | 3,400 | (f) | 5,130 | ||||||||
Amortization | 801 | 1,032 | (f) | 1,833 | ||||||||
Total operating expenses | 11,430 | 7,456 | 18,886 | |||||||||
Operating (loss) income | (3,958 | ) | 5,366 | 1,408 | ||||||||
Other income (expense): | ||||||||||||
Interest and other income | 51 | — | 51 | |||||||||
Interest expense | (1,394 | ) | (4,567 | ) | (g) | (5,961 | ) | |||||
Total other expense | (1,343 | ) | (4,567 | ) | (5,910 | ) | ||||||
Net (loss) income | $ | (5,301 | ) | $ | 799 | $ | (4,502 | ) | ||||
Weighted average number of common shares outstanding: | ||||||||||||
Basic and diluted | 7,260,959 | — | 7,260,959 | |||||||||
Net loss per common share: | ||||||||||||
Basic and diluted | $ | (0.73 | ) | $ | — | $ | (0.62 | ) | ||||
See accompanying Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited).
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COLE CORPORATE INCOME TRUST, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2013
Notes to Pro Forma Condensed Consolidated Balance Sheet (Unaudited) as of March 31, 2013
a. Reflects the Company’s historical balance sheet as of March 31, 2013.
b. Reflects the preliminary allocation of the purchase price related to the acquisition of the F5 Property, which is preliminary and subject to change. The purchase price of the F5 Property of $142.5 million was offset by a $308,000 credit received at closing to arrive at the preliminary purchase price allocation.
c. Represents cash paid for financing and acquisition-related costs associated with the purchase of the F5 Property.
d. Represents the Company’s loan costs related to the debt incurred to purchase the F5 Property.
e. Represents the Company’s borrowings incurred on its secured revolving credit facility (the "Credit Facility") and additional mortgage debt (the "Mortgage Note") incurred to finance the purchase of the F5 Property. The Credit Facility provides for up to $400.0 million of borrowings pursuant to a credit agreement. The Credit Facility will bear interest at rates depending on the type of loan specified, which at the time of the F5 Property acquisition was 2.70% for Eurodollar rate loans and 4.75% for floating rate loans. The Mortgage Note bears interest at a fixed rate of 3.55% and matures on May 1, 2023.
f. Adjustment reflects the expensing of acquisition-related costs as required under generally accepted accounting principles. The amount represents costs incurred to complete the acquisition of the F5 Property, including title, legal, accounting and acquisition-related costs.
Notes to Pro Forma Condensed Consolidated Statement of Operations (Unaudited) for the Three Months Ended March 31, 2013
a. Reflects the Company’s historical results of operations for the three months ended March 31, 2013.
b. In connection with the purchase of the F5 Property, the Company incurred $3.0 million of acquisition-related transaction costs, which have been excluded from the Pro Forma Condensed Consolidated Statement of Operations (Unaudited) for the three months ended March 31, 2013, as these amounts represent non-recurring charges.
c. Represents the straight-line rental revenue in accordance with the lease agreement of the F5 Property.
d. Represents tenant reimbursement income for operating expenses, including property taxes, maintenance, and insurance, for the F5 Property. The amount is an estimate based on historical operating results of the property.
e. Reflects the property operating expenses for the F5 Property, including property taxes, maintenance, and insurance, which are paid by the Company and reimbursed by F5 Networks. The amount is an estimate based on historical operating results of the property.
f. Represents the advisory fee paid to an affiliate, which is calculated based on an annualized rate of 0.75% of the Company's average invested assets. The advisory fee was calculated based on the purchase price of the F5 Property.
g. Represents depreciation and amortization expenses for the F5 Property. Depreciation and amortization expenses are based on the Company’s preliminary purchase price allocation. Real estate and related assets, other than land, are depreciated or amortized on a straight-line basis. The estimated useful lives of the Company’s real estate and related assets by class are generally as follows:
Building | 40 years | |
Tenant improvements | Lesser of useful life or lease term | |
Intangible lease assets | Lease term | |
h. Represents interest expense and deferred financing cost amortization associated with the borrowings on the Credit Facility and the Mortgage Note incurred to finance the acquisition of the F5 Property.
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COLE CORPORATE INCOME TRUST, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2013
Notes to Pro Forma Condensed Consolidated Statement of Operations (Unaudited) for the Year Ended December 31, 2012
a. Reflects the Company’s historical results of operations for the year ended December 31, 2012.
b. In connection with the purchase of the F5 Property, the Company incurred $3.0 million of acquisition-related transaction costs, which have been excluded from the Pro Forma Condensed Consolidated Statement of Operations (Unaudited) for the year ended December 31, 2012, as these amounts represent non-recurring charges.
c. Represents the straight-line rental revenue in accordance with the lease agreement of the F5 Property.
d. Represents tenant reimbursement income for operating expenses, including property taxes, maintenance, and insurance, for the F5 Property. The amount is an estimate based on historical operating results of the property.
e. Reflects the property operating expenses for the F5 Property, including property taxes, maintenance, and insurance, which are paid by the Company and reimbursed by F5 Networks. The amount is an estimate based on historical operating results of the property.
f. Represents depreciation and amortization expenses for the F5 Property. Depreciation and amortization expenses are based on the Company’s preliminary purchase price allocation. Real estate and related assets, other than land, are depreciated or amortized on a straight-line basis. The estimated useful lives of the Company’s real estate and related assets by class are generally as follows:
Building | 40 years | |
Tenant improvements | Lesser of useful life or lease term | |
Intangible lease assets | Lease term | |
g. Represents interest expense and deferred financing cost amortization associated with the borrowings on the Credit Facility and the Mortgage Note incurred to finance the acquisition of the F5 Property.
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SIGNATURE
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.
Dated: June 20, 2013 | COLE CORPORATE INCOME TRUST, INC. | |
By: | /s/ Gavin B. Brandon | |
Name: | Gavin B. Brandon | |
Title: | Vice President of Accounting | |
Principal Accounting Officer | ||
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