UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
to
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 5, 2013
SENTIO HEALTHCARE PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland | 000-53969 | 20-5721212 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
189 South Orange Ave, Suite 1700
Orlando, FL 32801
(Address of principal executive offices)
407- 999-7679
(Registrant’s telephone number, including area code)
Not Applicable
(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 obligations 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 240.14d-2(b) |
¨ | 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) |
ITEM 2.01 | COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS |
As reported in our Current Report on Form 8-K dated December 5, 2013, through wholly-owned subsidiaries, we acquired a 95% interest in a joint venture entity that owns Standish Village, located in Dorchester, MA. Standish Village is an assisted living facility which has a total of 108 beds in 85 units, which are dedicated to both assisted living and memory care. Senior Living Residences, LLC and its affiliates (collectively, “SLR”), which is not affiliated with us, is our joint venture partner in the $15.55 million transaction. Prior to the completion of this transaction, Standish Village was owned by SLR and a third-party entity. SLR specializes in the acquisition, development and management of senior housing communities. Based in Massachusetts, SLR owns or operates 10 senior living facilities in the New England area.
ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS. |
(a) | Financial statements of businesses acquired. The following financial statements relating to Standish Village are included at the end of this Amendment No. 1 to Current Report on Form 8-K dated December 5, 2013 and are filed herewith and incorporated herein by reference. |
Standish Village
Independent Auditors’ Report | 4 | |
Balance Sheets as of December 31, 2012 and 2011, and September 30, 2013 (unaudited) | 5 | |
Statements of Income for the Years ended December 31, 2012 and 2011, and Nine Months ended September 30, 2013 (unaudited) and 2012 (unaudited) | 6 | |
Statements of Owner’s Deficit for the Years ended December 31, 2012 and 2011, and Nine Months ended September 30, 2013 (unaudited) | 7 | |
Statements of Cash Flows for the Years ended December 31, 2012 and 2011, and Nine Months ended September 30, 2013 (unaudited) and September 30, 2012 (unaudited) | 8 | |
Notes to Financial Statements | 9 |
(b) | Pro forma financial information. The following unaudited pro forma financial statements of Sentio Healthcare Properties, Inc. relating to the acquisition of Standish Village are included at the end of this Amendment No. 1 to Current Report on Form 8-K dated December 5, 2013 and are filed herewith and incorporated herein by reference. |
Sentio Healthcare Properties, Inc.
Summary of Unaudited Pro Forma Financial Information | 12 | |
Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2013 | 13 | |
Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2012 | 14 | |
Unaudited Pro Forma Consolidated Statement of Operations for the Nine Months Ended September 30, 2013 | 15 |
2 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SENTIO HEALTHCARE PROPERTIES, INC. | ||
Dated: February 14, 2014 | By: | /s/ Sharon C. Kaiser |
Sharon C. Kaiser, | ||
Chief Financial Officer |
3 |
Independent Auditors’ Report
Sentio Healthcare Properties, Inc.
Standish Village:
We have audited the accompanying financial statements of Standish Village, which comprise the balance sheets as of December 31, 2012 and 2011, and the related statements of income, changes in owners’ deficit, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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 financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Standish Village as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles.
February 14, 2014
Orlando, Florida
Certified Public Accountants
4 |
STANDISH VILLAGE
Balance Sheets
September 30, 2013 (unaudited)
and December 31, 2012 and 2011
Assets | 9/30/2013 (Unaudited) | 2012 | 2011 | |||||||||
Cash | $ | 494,432 | $ | 926,285 | 515,768 | |||||||
Investments in real estate, net | 2,463,387 | 2,308,257 | 2,169,948 | |||||||||
Deferred financing costs, net | 31,242 | 43,467 | 59,767 | |||||||||
Tenant and other receivable, net | 119,925 | 121,116 | 216,196 | |||||||||
Prepaid expenses | 47,291 | 9,406 | 9,648 | |||||||||
Restricted cash | 516,922 | 504,694 | 461,439 | |||||||||
Total assets | $ | 3,673,199 | $ | 3,913,225 | 3,432,766 | |||||||
Liabilities and Owners' Deficit | ||||||||||||
Liabilities: | ||||||||||||
Notes payable | $ | 3,860,701 | $ | 3,926,569 | 4,010,237 | |||||||
Accounts payable and accrued liabilities | 249,569 | 269,432 | 192,053 | |||||||||
Prepaid rent and security deposits | 17,690 | 17,690 | 16,190 | |||||||||
Total liabilities | 4,127,960 | 4,213,691 | 4,218,480 | |||||||||
Equity: | ||||||||||||
Owners' deficit | (454,761 | ) | (300,466 | ) | (785,714 | ) | ||||||
Total owners’ deficit | (454,761 | ) | (300,466 | ) | (785,714 | ) | ||||||
Total liabilities and owners’ deficit | $ | 3,673,199 | $ | 3,913,225 | 3,432,766 |
See accompanying notes to financial statements.
5 |
STANDISH VILLAGE
Statements of Income
Nine-month periods ended September 30, 2013 and 2012 (unaudited)
and years ended December 31, 2012 and 2011
9/30/2013 (Unaudited) | 9/30/2012 (Unaudited) | 2012 | 2011 | |||||||||||||
Revenues: | ||||||||||||||||
Rental revenues | $ | 3,509,674 | $ | 3,313,817 | $ | 4,472,607 | $ | 4,206,155 | ||||||||
Resident services and fee income | 15,981 | 28,269 | 34,605 | 28,968 | ||||||||||||
Tenant reimbursements and other income | 170,092 | 199,960 | 251,668 | 254,265 | ||||||||||||
Total revenue | 3,695,747 | 3,542,046 | 4,758,880 | 4,489,388 | ||||||||||||
Operating expenses: | ||||||||||||||||
Property operating and maintenance expenses | 2,467,899 | 2,544,087 | 3,399,777 | 3,504,948 | ||||||||||||
Asset management fees and expenses | 203,125 | 200,762 | 268,254 | 246,283 | ||||||||||||
Depreciation and amortization | 186,027 | 116,760 | 191,044 | 154,096 | ||||||||||||
2,857,051 | 2,861,609 | 3,859,075 | 3,905,327 | |||||||||||||
Income from operations | 838,696 | 680,437 | 899,805 | 584,061 | ||||||||||||
Interest expense | 164,989 | 166,113 | 222,557 | 225,373 | ||||||||||||
Net income | $ | 673,707 | $ | 514,324 | $ | 677,248 | $ | 358,688 |
See accompanying notes to financial statements.
6 |
STANDISH VILLAGE
Statements of Owners’ Deficit
Nine-month period ended September 30, 2013 (unaudited)
and years ended December 31, 2012 and 2011
Balance at January 1, 2011 | $ | (1,000,402 | ) | |
Distributions to owners | (144,000 | ) | ||
Net income | 358,688 | |||
Balance at December 31, 2011 | (785,714 | ) | ||
Distributions to owners | (192,000 | ) | ||
Net Income | 677,248 | |||
Balance and December 31, 2012 | (300,466 | ) | ||
Distributions to owners | (828,002 | ) | ||
Net income | 673,707 | |||
Balance at September 31, 2013 | $ | (454,761 | ) |
See accompanying notes to financial statements.
7 |
STANDISH VILLAGE
Statements of Cash Flows
Nine-month period ended September 30, 2013 and 2012 (unaudited)
and years ended December 31, 2012 and 2011
9/30/2013 (Unaudited) | 9/30/2012 (Unaudited) | 2012 | 2011 | |||||||||||||
Cash flows provided by operating activities: | ||||||||||||||||
Net income | $ | 673,707 | $ | 514,324 | $ | 677,248 | 358,688 | |||||||||
Adjustments to reconcile net income to net cash provided by | ||||||||||||||||
operating activities: | ||||||||||||||||
Depreciation and amortization | 186,027 | 116,760 | 191,044 | 154,096 | ||||||||||||
Bad debt expense | 4,211 | — | 37,638 | 36,324 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Tenant and other receivables | (3,020 | ) | 45,352 | 57,442 | (15,061 | ) | ||||||||||
Restricted cash | 56 | 63 | 84 | 49 | ||||||||||||
Prepaid expenses | (37,885 | ) | 544 | 242 | 760 | |||||||||||
Prepaid rent and security deposits | — | 1,500 | 1,500 | (29,329 | ) | |||||||||||
Accounts payable and accrued expenses | (19,863 | ) | 19,374 | 77,379 | 18,395 | |||||||||||
Net cash provided by operating activities | 803,233 | 697,917 | 1,042,577 | 523,922 | ||||||||||||
Cash flows provided by investing activities: | ||||||||||||||||
Additions to real estate | (328,932 | ) | (178,557 | ) | (313,053 | ) | (41,135 | ) | ||||||||
Restricted cash | (12,284 | ) | (16,200 | ) | (43,339 | ) | (11,900 | ) | ||||||||
Net cash used in investing activities | (341,216 | ) | (194,757 | ) | (356,392 | ) | (53,035 | ) | ||||||||
Cash flows used in financing activities: | ||||||||||||||||
Repayment of notes payable | (65,868 | ) | (62,282 | ) | (83,668 | ) | (79,154 | ) | ||||||||
Distributions paid | (828,002 | ) | (144,000 | ) | (192,000 | ) | (144,000 | ) | ||||||||
Net cash used in financing activities | (893,870 | ) | (206,282 | ) | (275,668 | ) | (223,154 | ) | ||||||||
Net (decrease) increase in cash | (431,853 | ) | 296,878 | 410,517 | 247,733 | |||||||||||
Cash, beginning of period | 926,285 | 515,768 | 515,768 | 268,035 | ||||||||||||
Cash, end of period | $ | 494,432 | $ | 812,646 | $ | 926,285 | 515,768 | |||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||||
Cash paid during the year for: | ||||||||||||||||
Interest expense | $ | 162,527 | $ | 166,113 | $ | 222,557 | 225,373 |
See accompanying notes to financial statements.
8 |
STANDISH VILLAGE
Notes to Financial Statements
September 30, 2013 (unaudited)
and December 31, 2012 and 2011
(1) | Description of Business |
On December 5, 2013, Sentio Healthcare Properties, Inc. acquired the real estate operations of Oaktree SLR, LLC (the “Company”), which was organized for the purpose of operating an assisted living residence generally known as Standish Village (the “Property”) located in Dorchester, Massachusetts. The accompanying financial statements represent the results of operations and financial position of the Property for the periods presented.
The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. Actual results could differ from those estimates.
(2) | Summary of Accounting Policies |
(a) | Cash and Cash Equivalents |
The Property considers all liquid temporary cash investments with maturities of three months or less at the date of purchase to be cash and cash equivalents.
(b) | Revenue Recognition |
Rental revenues are recognized when the services are provided. Revenues consist of room rent and ancillary services such as dietary supplements.
(c) | Impairment of Long-Lived Assets |
The Property evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. No impairment losses were recognized in the years ended December 31, 2012 and 2011.
(d) | Deferred Loan Costs, net |
The Property has capitalized as deferred cost certain expenditures related to the financing of the facility. Deferred loan costs are amortized to interest expense utilizing a method that approximates level-yield over the term of the related debt.
(e) | Owners’ Deficit |
Owners’ deficit represents the net amount of the Property’s liabilities in excess of assets the Owners held in the Property. Profits, losses, and distributions are allocated to the owners in accordance with the provisions of the respective operating agreement, which generally provide that distributions and allocations of profit and losses are made in accordance with each owner’s respective ownership interest.
(f) | Income Taxes |
Federal and state income taxes are not included in the financial statements because these taxes, if any, are the responsibility of the individual members of the LLC that own the property.
(g) | Tenant Receivables |
Tenant and other receivables are comprised of rental and reimbursement billings due from tenants. Tenant receivables are recorded at the original amount earned, less an allowance for any doubtful accounts. Management assesses the realizability of tenant receivables on an ongoing tenant by tenant basis and provides for allowances as such balances become uncollectible. The allowance for tenant receivables are included in property operating and maintenance expenses in the accompanying statements of income.
(h) | Restricted Cash |
Restricted cash represents amounts related to impound reserve accounts for property taxes and insurance as required under the terms the note payable. Based on the intended use of the restricted cash, we have classified changes in restricted cash within the statements of cash flows as operating or investing activities.
9 |
STANDISH VILLAGE
Notes to Financial Statements
September 30, 2013 (unaudited)
and December 31, 2012 and 2011
(3) | Investments in Real Estate, Net |
Investments in real estate consists of the following:
September 30, 2013 (Unaudited) | 2012 | 2011 | ||||||||||
Land | $ | 713,731 | $ | 713,731 | $ | 713,731 | ||||||
Buildings, improvements, and lease intangibles | 2,663,548 | 2,551,149 | 2,465,627 | |||||||||
Furniture, fixtures and equipment | 1,312,601 | 1,096,070 | 868,539 | |||||||||
4,689,880 | 4,360,950 | 4,047,897 | ||||||||||
Accumulated Depreciation | 2,226,494 | 2,052,693 | 1,877,949 | |||||||||
$ | 2,463,387 | $ | 2,308,257 | $ | 2,169,948 |
Building and improvements, fixtures, furniture, and equipment are stated at cost. The cost of additions, alterations, and improvements is capitalized. Expenditures for repairs and maintenance are expensed as incurred.
Depreciation and amortization are computed on a method that spreads the cost of the asset over the following estimated useful lives in a systematic and rational manner:
Building | 27.5 years | |
Furniture, fixtures, and equipment | 5 years | |
Improvements | 15 years |
As of December 31, 2010, the Company’s lease intangibles were fully amortized.
(4) | Related-Party Transactions |
During the periods presented, Standish Village had a management agreement with an affiliate of the owner. Total management fees incurred by Standish Village were $203,125 and $200,762 for the nine-month periods ended September 30, 2013 and 2012, respectively (unaudited), and $268,254 and $246,283 for the years ended December 31, 2012 and 2011, and are reflected within the accompanying combined statements of income.
10 |
STANDISH VILLAGE
Notes to Financial Statements
September 30, 2013 (unaudited)
and December 31, 2012 and 2011
(5) | Notes Payable |
The mortgage payable is as follows:
September
30, 2013 (unaudited) | 2012 | 2011 | ||||||||||
Massachusetts Housing Partnership Fund | ||||||||||||
Original amount: $4,440,000 | ||||||||||||
Interest rate: 5.56% | ||||||||||||
Due: 9/13/2015 | ||||||||||||
Security: assets of the Company and limited personal guarantees of members | $ | 3,860,701 | $ | 3,926,569 | 4,010,237 |
Current maturities of long-term debt for the year ending December 31, 2012 is as follows:
2013 | $ | 80,882 | ||
2014 | 93,054 | |||
2015 | 3,752,633 | |||
$ | 3,926,569 |
(6) | Subsequent Events |
The Property has evaluated the need for disclosures and/or adjustments resulting from subsequent events from the balance sheet date through February 14, 2014, the date at which the financial statements were available to be issued. Other than the transaction described in note 1, no events have occurred that require disclosure or adjustment to the financial statements.
(7) | Commitments and Contingencies |
We monitor our property for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist, we are not currently aware of any environmental liability with respect to the properties that we believe would have a material effect on our financial condition, results of operations and cash flows. Further, we are not aware of any environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency.
Our commitments and contingencies include the usual obligations of real estate owners and operators in the normal course of business. In the opinion of management, these matters are not expected to have a material impact on our consolidated financial position, cash flows and results of operations. We are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against the Company which if determined unfavorably to us would have a material adverse effect on our cash flows, financial condition or results of operations.
11 |
SENTIO HEALTHCARE PROPERTIES, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Consolidated Statements of Operations of Sentio Healthcare Properties, Inc. (the “Company”) for the year ended December 31, 2012 and for the nine months ended September 30, 2013 have been prepared as if the acquisition of Standish Village had occurred as of January 1, 2012. The unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2013 has been prepared as if the acquisition of the Portfolio had occurred on September 30, 2013.
The Unaudited Pro Forma Financial Information is based in part upon (i) the Audited Financial Statements of the Company for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012; the Unaudited Financial Statements of the Company as of and for the nine months ended September 30, 2013 included in the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2013; and (iii) the Statements of Operations of the Property for the year ended December 31, 2012 and nine months ended September 30, 2013 filed herewith.
The Unaudited Pro Forma Financial Information is presented for information purposes only and is not necessarily indicative of the results of operations of the Company that would have occurred if the acquisition of Standish Village had been completed on the date indicated, nor does it purport to be indicative of future results of operations. In the opinion of the Company’s management, all material adjustments necessary to reflect the effect of this transaction have been made.
12 |
SENTIO HEALTHCARE PROPERTIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of September 30, 2013
Standish | Pro Forma | ||||||||||
September 30, 2013 (A) | Village Acquisition | September 30, 2013 | |||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 18,265,000 | $ | (4,338,000 | )(B) | $ | 13,927,000 | ||||
Investments in real estate | |||||||||||
Land | 23,193,000 | 3,100,000 | (C) | 26,293,000 | |||||||
Buildings and Improvements, net | 154,439,000 | 10,294,000 | (C) | 164,733,000 | |||||||
Furniture, fixtures and equipment, net | 2,786,000 | 1,135,000 | (C) | 3,921,000 | |||||||
Intangible lease assets, net | 3,334,000 | 1,021,000 | (C) | 4,355,000 | |||||||
183,752,000 | 15,550,000 | 199,302,000 | |||||||||
Deferred financing costs, net | 1,496,000 | 228,000 | (D) | 1,724,000 | |||||||
Investments in unconsolidated entities | 1,458,000 | – | 1,458,000 | ||||||||
Tenant and other receivables, net | 2,912,000 | – | 2,912,000 | ||||||||
Restricted cash | 3,869,000 | 88,000 | (C) | 3,957,000 | |||||||
Deferred costs and other assets | 8,249,000 | 33,000 | (C) | 8,282,000 | |||||||
Goodwill | 5,965,000 | – | 5,965,000 | ||||||||
Total assets | $ | 225,966,000 | $ | 11,561,000 | $ | 237,527,000 | |||||
LIABILITIES AND EQUITY | |||||||||||
Libilities: | |||||||||||
Notes payable, net | $ | 143,605,000 | $ | 10,885,000 | (D) | $ | 154,490,000 | ||||
Accounts payable and accrued liabilities | 4,554,000 | 402,000 | (C) | 4,956,000 | |||||||
Prepaid rent and security deposits | 1,984,000 | – | 1,984,000 | ||||||||
Distributions payable | 1,544,000 | – | 1,544,000 | ||||||||
Total liabilities | 151,687,000 | 11,287,000 | 162,974,000 | ||||||||
Equity: | |||||||||||
Common stock, $0.01 par value; 580,000,000 shares authorized; | |||||||||||
12,615,208 shares issued and outstanding at | |||||||||||
September 30, 2013 | 126,000 | – | 126,000 | ||||||||
Additional paid-in capital | 84,953,000 | – | 84,953,000 | ||||||||
Accumulated deficit | (14,419,000 | ) | – | (14,419,000 | ) | ||||||
Total stockholders' equity | 70,660,000 | – | 70,660,000 | ||||||||
Noncontrolling interest | 3,619,000 | 274,000 | (E) | 3,893,000 | |||||||
Total stockholders' equity | 74,279,000 | 274,000 | 74,553,000 | ||||||||
Total liabilities and equity | $ | 225,966,000 | $ | 11,561,000 | $ | 237,527,000 |
(A) | Derived from the Company’s consolidated financial statements as of September 30, 2013. | |
(B) | Represents the net impact on the Company’s consolidated cash and cash equivalents as a result of the Standish Village acquisition. The acquisition was financed by the issuance of OP units and the financing arrangement noted in (D) below. The pro forma financial information is intended to provide information about the impact of the specific transaction of acquiring Standish Village, and therefore the net cash impact or noncontrolling interest balance has not been adjusted to reflect the impact of the issuance of OP units. |
(C) | Represents the $15.55 million purchase price allocation of Standish Village in accordance with US generally accepted accounting principles and other working capital assets acquired and liabilities assumed. The acquisition cost is allocated to a property’s tangible (primarily land, building, equipment and site improvements) and intangible (in-place leases) assets at their estimated fair value. The purchase price allocations of in-place lease values are calculated based on management’s evaluation of the specific characteristics of the tenant’s leases. |
(D) | This represents the note and related financing costs originated as part of the acquisition. |
(E) | Represents noncontrolling interest share of approximately 5.0% of Standish Village. |
13 |
SENTIO HEALTHCARE PROPERTIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2012
Historical (A) | Standish Village Acquisition | Pro Forma | ||||||||||
Revenue: | ||||||||||||
Rental revenue | $ | 33,123,000 | $ | 4,473,000 | (B) | $ | 37,596,000 | |||||
Resident services and fee income | 13,981,000 | 34,000 | 14,015,000 | |||||||||
Tenant reimbursements and other income | 1,529,000 | 252,000 | (B) | 1,781,000 | ||||||||
48,633,000 | 4,759,000 | 53,392,000 | ||||||||||
Expenses: | ||||||||||||
Property operating and maintenance | 29,941,000 | 3,668,000 | (C) | 33,609,000 | ||||||||
General and administrative expenses | 1,783,000 | – | 1,783,000 | |||||||||
Asset management fees and expenses | 2,152,000 | 150,000 | (D) | 2,302,000 | ||||||||
Real estate acquisition | 1,387,000 | – | 1,387,000 | |||||||||
Depreciation and amortization | 7,095,000 | 1,309,000 | (E) | 8,404,000 | ||||||||
42,358,000 | 5,127,000 | 47,485,000 | ||||||||||
Income (loss) from operations | 6,275,000 | (368,000 | ) | 5,907,000 | ||||||||
Other (income) expense: | ||||||||||||
Interest expense, net | 6,960,000 | 763,000 | (F) | 7,723,000 | ||||||||
Loss on debt extinguishment and other expense | 1,179,000 | – | 1,179,000 | |||||||||
Equity on loss from unconsolidated entities | 228,000 | – | 228,000 | |||||||||
Gain on remeasurement of investment in unconsolidated entity | (1,282,000 | ) | – | (1,282,000 | ) | |||||||
Net loss | (810,000 | ) | (1,131,000 | ) | (1,941,000 | ) | ||||||
Net income (loss) attributable to noncontrolling interests | 72,000 | (57,000 | )(G) | 15,000 | ||||||||
Net loss attributable to common stockholders | $ | (882,000 | ) | $ | (1,074,000 | ) | $ | (1,956,000 | ) | |||
Net income (loss) | ||||||||||||
Basic and diluted net loss per common share | ||||||||||||
attributable to common stockholders | $ | (0.07 | ) | $ | (0.15 | ) | ||||||
Weighted average number of common shares | 12,871,670 | 12,871,670 |
(A) | Represents the historical results of operations of the Company for the year ended December 31, 2012. |
(B) | Represents Standish Village’s rental revenues and other income for the year ended December 31, 2012. |
(C) | Represents Standish Village’s operating expenses (not reflected in the historical statement of operations of the Company for the year ended December 31, 2012) based on historical operations of the previous owner. This increase includes the following expenses: general employee expenses, resident services, food and beverage, housekeeping/laundry, maintenance, marketing, and management fees. |
(D) | Represents asset management fees that would be due to our advisor had the assets been acquired on January 1, 2012. The advisory agreement requires us to pay our advisor an acquisition fee in an amount equal to 1.0% of the investments acquired, including any debt attributable to such investments. |
(E) | Represents depreciation expense based on the allocation of the purchase price. Buildings, improvements and property and equipment are depreciated on a straight-line method over a 39, 15 and 5-year period, respectively. The amortization of in-place leases is based on an estimated useful life of 10 months. The Company allocates the purchase price in accordance with US generally accepted accounting principles. The purchase price is allocated to a property’s tangible (primarily land, building, site improvements and furniture, fixtures and equipment) and intangible assets at their estimated fair value. |
(F) | Represents interest expense which is calculated based on the rate per the loan agreements at the time of closing the acquisition. |
(G) | Represents noncontrolling interest share of approximately 5.0% of the net loss of Standish Village. The pro forma financial information is intended to provide information about the impact of the specific transaction of acquiring Standish Village, and therefore the net income (loss) attributable to noncontrolling interests has not been adjusted to reflect the impact of the preferred distribution on the Sentio Healthcare OP, LP units issued in connection with the acquisition. This amount would have increased the net loss attributable to noncontrolling interests by approximately $38,000. |
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SENTIO HEALTHCARE PROPERTIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2013
Historical (A) | Standish Village Acquisition | Pro Forma | ||||||||||
Revenue: | ||||||||||||
Rental revenue | $ | 25,373,000 | $ | 3,510,000 | (B) | $ | 28,883,000 | |||||
Resident services and fee income | 18,115,000 | 16,000 | 18,131,000 | |||||||||
Tenant reimbursements and other income | 1,212,000 | 170,000 | (B) | 1,382,000 | ||||||||
44,700,000 | 3,696,000 | 48,396,000 | ||||||||||
Expenses: | ||||||||||||
Property operating and maintenance | 26,899,000 | 2,468,000 | (C) | 29,367,000 | ||||||||
General and administrative expenses | 1,186,000 | – | 1,186,000 | |||||||||
Asset management fees and expenses | 2,125,000 | 150,000 | (D) | 2,275,000 | ||||||||
Depreciation and amortization | 6,317,000 | 340,000 | (E) | 6,657,000 | ||||||||
36,527,000 | 2,958,000 | 39,985,000 | ||||||||||
Income from operations | 8,173,000 | 738,000 | 8,911,000 | |||||||||
Other (income) expense: | ||||||||||||
Interest expense, net | 6,121,000 | 572,000 | (F) | 6,693,000 | ||||||||
Equity in loss (income) from unconsolidated entities | (24,000 | ) | – | (24,000 | ) | |||||||
Gain on disposition of investment in unconsolidated entity | (1,701,000 | ) | – | (1,701,000 | ) | |||||||
Net Income | 3,777,000 | 166,000 | 3,943,000 | |||||||||
Net income attributable to noncontrolling interests | 260,000 | 8,000 | (G) | 268,000 | ||||||||
Net income attributable to common stockholders | $ | 3,517,000 | $ | 158,000 | $ | 3,675,000 | ||||||
Net income (loss) | ||||||||||||
Basic and diluted net income per common share | ||||||||||||
attributable to common stockholders | $ | 0.28 | $ | 0.29 | ||||||||
Weighted average number of common shares | 12,756,221 | 12,756,221 |
(A) | Represents the historical results of operations of the Company for the nine months ended September 30, 2013. |
(B) | Represents the Standish Village’s rental revenues and other income for the nine months ended September 30, 2013. |
(C) | Represents Standish Village’s operating expenses (not reflected in the historical statement of operations of the Company for the nine months ended September 30, 2013) based on historical operations of the previous owner. This increase includes the following expenses: general employee expenses, resident services, food and beverage, housekeeping/laundry, maintenance, marketing, and management fees. |
(D) | Represents asset management fees that would be due to our advisor had the assets been acquired on January 1, 2012. The advisory agreement requires us to pay our advisor an acquisition fee in an amount equal to 1.0% of the investments acquired, including any debt attributable to such investments. |
(E) | Represents depreciation expense based on the allocation of the purchase price. Buildings, improvements and property and equipment are depreciated on a straight-line method over a 39, 15 and 5-year period, respectively. The amortization of in-place leases is based on an allocation of $1,020,000 which is amortized over nine months. The amortization of in place leases is based on an estimated useful life of 10 months. The Company allocates the purchase price in accordance with US generally accepted accounting principles. The purchase price is allocated to a property’s tangible (primarily land, building, site improvements and furniture, fixtures and equipment) and intangible assets at their estimated fair value. |
(F) | Represents interest expense which is calculated based on the rate per the loan agreements at the time of closing the acquisition. |
(G) | Represents noncontrolling interest share of approximately 5.0% of the net loss of Standish Village. The pro forma financial information is intended to provide information about the impact of the specific transaction of acquiring Standish Village, and therefore the net income attributable to noncontrolling interests has not been adjusted to reflect the impact of the preferred distribution on the Sentio Healthcare OP, LP units issued in connection with the acquisition. This amount would have increased the net income attributable to noncontrolling interests by approximately $29,000. |
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