Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - TALON REAL ESTATE HOLDING CORP. | talr8ka081314.htm |
| EX-99 - EXHIBIT 99.1 - TALON REAL ESTATE HOLDING CORP. | exhibit991.htm |
| EX-23 - EXHIBIT 23.1 - TALON REAL ESTATE HOLDING CORP. | exhibit231.htm |
Exhibit 99.2
Talon Real Estate Holding Corp.
Pro Forma Consolidated Financial Statements
(Unaudited)
As previously announced, on May 29, 2014, Talon OP, L.P. (“Talon OP”), a Minnesota limited partnership and the entity through which Talon Real Estate Holding Corp. (the “Company”) conducts substantially all of its business, entered into a contribution agreement with Bren Road, LLC and acquired (the “Acquisition”), through Talon Bren Road, LLC, a Delaware limited liability company that is wholly owned by Talon OP, the Minneapolis Mart building and certain other assets located at 10301 Bren Road West, Minnetonka, MN (the “Property”). The consideration for the Property consists of (i) the assumption by Talon Bren Road, LLC of a secured loan of Bren Road, LLC from Bell State Bank & Trust with an aggregate principal amount of $11.5 million and an average interest rate of 4.65% which matures on May 28, 2019 (the “Loan”) and (ii) 5,200,000 common units of Talon OP. The acquisition closed on May 29, 2014.
The accompanying unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2014 reflects the Acquisition as if the purchase had occurred on March 31, 2014. The unaudited Pro Forma Statement of Operations for the quarter ended March 31, 2014 and the year ended December 31, 2013 reflects the Acquisition as if the purchase had occurred on January 1, 2013. The Pro Forma Consolidated Balance Sheet and Consolidated Statement of Operations for the quarter ended March 31, 2014 of the Company, prior to the Acquisition has been derived from the unaudited Consolidated Balance Sheet and Consolidated Statement of Operations included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed with the SEC on May 13, 2014. The accompanying unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2013 of the Company, prior to the Acquisition was derived from the unaudited Consolidated Statement of Operations for the year ended December 31, 2013 included in the Company’s filing on Form 10-K filed with the SEC on March 31, 2014.
Pro forma information is intended to provide investors with information about the impact of transactions by showing how specific transactions might have affected historical financial statements, illustrating the scope of the change in the historical financial position and results of operations. The adjustments made to historical financial information give effect to events that are directly attributable to the acquisition of the property and are factually supportable. The Unaudited Pro Forma Consolidated Financial Statements are prepared in accordance with Article 11 of Regulation S-X.
The Unaudited Pro Forma Consolidated Financial Statements set forth below are not fact and there can be no assurance that the Company’s results would not have differed significantly from those set forth below if the acquisition had actually occurred on January 1, 2013. Accordingly, the Unaudited Pro Forma Consolidated Financial Statements are presented for illustrative purposes only and do not purport to represent, and are not necessarily indicative of, what our actual financial position and results of operations would have been had the acquisition of the property occurred on the date indicated, nor are they indicative of our future financial position or results of operations. Readers are cautioned not to place undue reliance on such information and the Company makes no representations regarding the information set forth below or its ultimate performance compared to it. The Unaudited Pro Forma Consolidated Financial Statements exclude any non-recurring charges or credits directly attributable to the acquisition.
Talon Real Estate Holding Corp.
Pro Forma Consolidated Balance Sheet
As of March 31, 2014
(Unaudited)
|
| Talon |
| Bren Road |
|
| Pro Forma Adjustments |
|
| Pro Forma Combined | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Land | $ | 250,000 |
| $ | 4,700,000 | (a) |
| $ | - |
|
| $ | 4,950,000 |
| Land improvements |
| 140,000 |
|
| - |
|
|
| - |
|
|
| 140,000 |
| Building & improvements |
| 3,449,040 |
|
| 12,444,250 | (a) |
|
| - |
|
|
| 15,893,290 |
| Equipment |
| 28,864 |
|
| - |
|
|
| - |
|
|
| 28,864 |
| Total property and equipment |
| 3,867,904 |
|
| 17,144,250 |
|
|
| - |
|
|
| 21,012,154 |
| Less: Accumulated depreciation |
| (1,811,875) |
|
| - |
|
|
| - |
|
|
| (1,811,875) |
| Net Property and Equipment |
| 2,056,029 |
|
| 17,144,250 |
|
|
| - |
|
|
| 19,200,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash |
| 15,348 |
|
| - |
|
|
| 58,472 | (f) |
|
| 73,820 |
| Deposits |
| 66,091 |
|
| - |
|
|
| - |
|
|
| 66,091 |
| Accounts receivable, net |
| 15,068 |
|
| - |
|
|
| - |
|
|
| 15,068 |
| Deferred rents receivable |
| 40,511 |
|
| - |
|
|
| - |
|
|
| 40,511 |
| Restricted escrows & reserves |
| 233,582 |
|
| - |
|
|
| 370,000 | (d) |
|
| 603,582 |
| Prepaid insurance |
| 32,254 |
|
| - |
|
|
| - |
|
|
| 32,254 |
| Deferred financing costs, net |
| 39,038 |
|
| - |
|
|
| 319,322 | (e) |
|
| 358,360 |
| Intangible assets, net |
| - |
|
| 987,000 | (a) |
|
| - |
|
|
| 987,000 |
| Other assets |
| - |
|
| - |
|
|
| 38,287 | (f) |
|
| 38,287 |
| TOTAL ASSETS | $ | 2,497,921 |
| $ | 18,131,250 |
|
| $ | 786,082 |
|
| $ | 21,415,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Notes payable | $ | 4,466,659 |
| $ | 11,500,000 | (b) |
| $ | 370,000 | (g) |
| $ | 16,336,659 |
| Notes payable - related party |
| 200,000 |
|
| - |
|
|
| - |
|
|
| 200,000 |
| Accounts payable |
| 539,525 |
|
| - |
|
|
| 43,632 | (f) |
|
| 583,157 |
| Accrued expenses |
| 320,719 |
|
| 132,430 | (c) |
|
| (31,797) | (f) |
|
| 421,352 |
| Tenant security deposits |
| 39,423 |
|
| - |
|
|
| 104,227 | (f) |
|
| 143,650 |
| Accrued interest |
| 28,751 |
|
| - |
|
|
| - |
|
|
| 28,751 |
| Other liabilities |
| - |
|
| - |
|
|
| 300,020 | (f) |
|
| 300,020 |
| Total Liabilities |
| 5,595,077 |
|
| 11,632,430 |
|
|
| 786,082 |
|
|
| 18,013,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SHAREHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred shares outstanding at $.001 par value; authorized 10,000,000 shares; none issued or outstanding as of March 31, 2014 | $ | - |
| $ | - |
|
| $ | - |
|
| $ | - |
| Common shares outstanding at $.001 par value; authorized 90,000,000 shares; 16,693,522 issued and outstanding as of March 31, 2014 |
| 16,693 |
|
| - |
|
|
| - |
|
|
| 16,693 |
| Additional paid in capital |
| 901,276 |
|
| - |
|
|
| - |
|
|
| 901,276 |
| Accumulated income (loss) |
| (2,773,742) |
|
| - |
|
|
| - |
|
|
| (2,773,742) |
| Total Talon Real Estate Holding Corp. shareholders' equity (deficit) |
| (1,855,773) |
|
| - |
|
|
| - |
|
|
| (1,855,773) |
| Noncontrolling interests - Operating Partnership |
| - |
|
| 6,498,820 |
|
|
| - |
|
|
| 6,498,820 |
| Noncontrolling interests - consolidated real estate entities |
| (1,241,383) |
|
| - |
|
|
| - |
|
|
| (1,241,383) |
| TOTAL SHAREHOLDERS' EQUITY (DEFICIT) |
| (3,097,156) |
|
| 6,498,820 |
|
|
| - |
|
|
| 3,401,664 |
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT) | $ | 2,497,921 |
| $ | 18,131,250 |
|
| $ | 786,082 |
|
| $ | 21,415,253 |
The accompanying notes are an integral part of these Unaudited Pro Forma Consolidated Financial Statements.
Notes and management's assumptions to Unaudited Pro Forma Condensed Consolidated Financial Statements
(a) The acquisition of Bren Road, LLC was accounted for using preliminary estimates of the fair value of the tangible and intangible assets acquired and liabilities assumed in connection with the acquisition and are subject to change.
(b) Reflects liabilities assumed in connection with the acquisition.
(c ) Reflects estimated contingent liabilities included in the fair value of tangible and intangible assets acquired in connection with the acquisition related to the consulting agreement dated May 29, 2014 and cost of issuing equity.
(d) Reflects cash deposited into escrows reserved for capital improvements from proceeds of loans entered into with the contributor of the property in connection with the acquisition.
(e) Reflects acquisition costs incurred upon closing of the transaction.
(f) Reflects other assets and liabilities assumed in connection with the acquisition.
(g) Reflects proceeds from $370,000 of loans entered into at acquisition to fund capital improvement escrow accounts.
Talon Real Estate Holding Corp.
Pro Forma Consolidated Statement of Operations
For the Three Months Ended March 31, 2014
(Unaudited)
|
| Three Months Ended March 31, 2014 |
|
|
|
|
|
|
|
| ||||
|
| Talon Real Estate Holding Corp |
| Bren Road, LLC |
|
| Pro Forma Adjustments |
|
| Pro Forma Combined | ||||
|
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
| |
| REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rent | $ | 102,204 |
| $ | 339,287 |
|
| $ | - |
|
| $ | 441,491 |
| Tenant reimbursement |
| 31,486 |
|
| 254,446 |
|
|
| - |
|
|
| 285,932 |
| Other income |
| 1,010 |
|
| - |
|
|
| 97,481 |
| (a) |
| 98,491 |
| Total Revenue |
| 134,700 |
|
| 593,733 |
|
|
| 97,481 |
|
|
| 825,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and administrative |
| 128,853 |
|
| - |
|
|
| - |
|
|
| 128,853 |
| Salary and compensation |
| 594,465 |
|
| - |
|
|
| - |
|
|
| 594,465 |
| Professional |
| 57,415 |
|
| - |
|
|
| - |
|
|
| 57,415 |
| Property operating expenses |
| 18,409 |
|
| 208,308 |
|
|
| - |
|
|
| 226,717 |
| Real estate taxes & insurance |
| 36,896 |
|
| 92,906 |
|
|
| - |
|
|
| 129,802 |
| Depreciation and Amortization |
| 59,278 |
|
| - |
|
|
| 193,473 |
| (b) |
| 252,751 |
| Total Expenses |
| 895,316 |
|
| 301,214 |
|
|
| 193,473 |
|
|
| 1,390,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Loss |
| (760,616) |
|
| 292,519 |
|
|
| (95,992) |
|
|
| (564,089) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Expense |
| (76,332) |
|
| - |
|
|
| (140,468) |
| (c) |
| (216,800) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS |
| (836,948) |
|
| 292,519 |
|
|
| (236,460) |
|
|
| (780,889) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) attributable to noncontrolling interest - Operating Partnership |
| - |
|
| 96,824 |
| (d) |
| (78,268) |
| (d) |
| 18,556 |
| Net income (loss) attributable to noncontrolling interests - consolidated real estate entities |
| (30,030) |
|
| - |
|
|
| - |
|
|
| (30,030) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS ATTRIBUTABLE TO TALON REAL ESTATE HOLDING CORP. | $ | (806,918) |
| $ | 195,695 |
|
| $ | (158,192) |
|
| $ | (769,415) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) per share basic and diluted |
| - |
|
| - |
|
|
| - |
|
|
| (0.05) |
| Basic and diluted weighted average shares outstanding |
| - |
|
| - |
|
|
| - |
|
|
| 15,719,311 |
The accompanying notes are an integral part of these Unaudited Pro Forma Consolidated Financial Statements.
The accompanying notes are an integral part of these Unaudited Pro Forma Condensed Consolidated Financial Statements.
(a) Reflects an estimate for any deficit in achieving $1,560,000 of net operating income per year for the first three years to be received from the contributor provided by the Contribution Agreement dated May 29, 2014.
(b) Reflects depreciation and amortization expense from preliminary estimates of fair value for tangible and intangible assets at acquisition that are subject to change.
(c ) Reflects interest expense for the period on the loans entered into at acquisition as if entered at January 1, 2013.
(d) Reflects the noncontrolling interest from the issuance of 5,200,000 Talon OP, LP common units at acquisition.
Talon Real Estate Holding Corp.
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2013
(Unaudited)
|
| Year Ended December 31, 2013 |
|
|
|
|
|
|
|
| ||||
|
| Talon Real Estate Holding Corp |
| Bren Road, LLC |
|
| Pro Forma Adjustments |
|
| Pro Forma Combined | ||||
|
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
| |
| REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rent | $ | 433,196 |
| $ | 1,329,395 |
|
| $ | - |
|
| $ | 1,762,591 |
| Tenant reimbursement |
| 104,275 |
|
| 1,115,598 |
|
|
| - |
|
|
| 1,219,873 |
| Other income |
| 6,763 |
|
| 8,574 |
|
|
| 97,067 |
| (a) |
| 112,404 |
| Total Revenue |
| 544,234 |
|
| 2,453,567 |
|
|
| 97,067 |
|
|
| 3,094,868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and administrative |
| 232,796 |
|
| - |
|
|
| - |
|
|
| 232,796 |
| Salary and compensation |
| 439,950 |
|
| - |
|
|
| - |
|
|
| 439,950 |
| Professional |
| 567,844 |
|
| - |
|
|
| - |
|
|
| 567,844 |
| Property operating expenses |
| 60,024 |
|
| 637,986 |
|
|
| - |
|
|
| 698,010 |
| Real estate taxes & insurance |
| 144,167 |
|
| 352,648 |
|
|
| - |
|
|
| 496,815 |
| Depreciation and Amortization |
| 262,403 |
|
| - |
|
|
| 773,892 |
| (b) |
| 1,036,295 |
| Total Expenses |
| 1,707,184 |
|
| 990,634 |
|
|
| 773,892 |
|
|
| 3,471,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Loss |
| (1,162,950) |
|
| 1,462,933 |
|
|
| (676,825) |
|
|
| (376,842) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Expense |
| (298,025) |
|
| - |
|
|
| (590,716) |
| (c) |
| (888,741) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS |
| (1,460,975) |
|
| 1,462,933 |
|
|
| (1,267,541) |
|
|
| (1,265,583) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) attributable to noncontrolling interest - Operating Partnership |
| - |
|
| 497,397 |
| (d) |
| (430,964) |
| (d) |
| 66,433 |
| Net income (loss) attributable to noncontrolling interests - consolidated real estate entities |
| (170,346) |
|
| - |
|
|
| - |
|
|
| (170,346) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS ATTRIBUTABLE TO TALON REAL ESTATE HOLDING CORP. | $ | (1,290,629) |
| $ | 965,536 |
|
| $ | (836,577) |
|
| $ | (1,161,670) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) per share basic and diluted |
| - |
|
| - |
|
|
| - |
|
|
| (0.08) |
| Basic and diluted weighted average shares outstanding |
| - |
|
| - |
|
|
| - |
|
|
| 15,281,886 |
The accompanying notes are an integral part of these Unaudited Pro Forma Consolidated Financial Statements.
The accompanying notes are an integral part of these Unaudited Pro Forma Condensed Consolidated Financial Statements.
(a) Reflects an estimate for any deficit in achieving $1,560,000 of net operating income per year for the first three years to be received from the contributor provided by the Contribution Agreement dated May 29, 2014 with the contributor.
(b) Reflects depreciation and amortization expense from preliminary estimates of fair value for tangible and intangible assets at acquisition that are subject to change.
(c ) Reflects interest expense for the period on the loans entered into at acquisition as if entered at January 1, 2013.
(d) Reflects the noncontrolling interest from the issuance of 5,200,000 Talon OP, LP common units at acquisition.