Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - TALON REAL ESTATE HOLDING CORP. | talr8ka091614.htm |
| EX-23 - EXHIBIT 23.1 - TALON REAL ESTATE HOLDING CORP. | exhibit231.htm |
| EX-99 - EXHIBIT 99.1 - TALON REAL ESTATE HOLDING CORP. | exhibit991.htm |
Exhibit 99.2
Talon Real Estate Holding Corp.
Pro Forma Consolidated Financial Statements
(Unaudited)
As previously announced, on July 2, 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 Jackson I, LLC, 3014-20, LLC, Fairfield Apartments, LLC, 4330, LLC and Lakes Area Properties, LLC (the “Contributors”) and acquired (the “Acquisition”) the First Trust Center building and certain other assets located at 180 5th Street East, St. Paul, MN (the “Property”) into Talon First Trust, LLC, a wholly-owned subsidiary of Talon OP. The consideration for the Property consists of (i) $32 million of cash, (ii) 30,000 preferred units of Talon OP and (iii) 4 million common units of Talon OP. The acquisition closed on July 2, 2014.
The accompanying unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2014 reflects the Acquisition as if the purchase had occurred on June 30, 2014. The unaudited Pro Forma Statement of Operations for the six months ended June 30, 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 six months ended June 30, 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 June 30, 2014, filed with the SEC on August 14, 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
UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET
AS OF JUNE 30, 2014
|
| Talon Real Estate Holding Corp |
| First Trust Building |
|
| Pro Forma Adjustments |
|
| Pro Forma Combined | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Land | $ | 4,950,000 |
| $ | 3,447,000 | (a) |
| $ | - |
|
| $ | 8,397,000 |
| Land improvements |
| 140,000 |
|
| - |
|
|
| - |
|
|
| 140,000 |
| Building & improvements |
| 15,893,290 |
|
| 29,219,000 | (a) |
|
| - |
|
|
| 45,112,290 |
| Equipment |
| 28,864 |
|
| - |
|
|
| - |
|
|
| 28,864 |
| Total property and equipment |
| 21,012,154 |
|
| 32,666,000 |
|
|
| - |
|
|
| 53,678,154 |
| Less: Accumulated depreciation |
| (1,909,259) |
|
| - |
|
|
| - |
|
|
| (1,909,259) |
| Net Property and Equipment |
| 19,102,895 |
|
| 32,666,000 |
|
|
| - |
|
|
| 51,768,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash |
| 10,211 |
|
| - |
|
|
| - |
|
|
| 10,211 |
| Deposits |
| 66,091 |
|
| - |
|
|
| - |
|
|
| 66,091 |
| Accounts receivable, net |
| 28,554 |
|
| - |
|
|
| - |
|
|
| 28,554 |
| Deferred rents receivable |
| 44,012 |
|
| - |
|
|
| - |
|
|
| 44,012 |
| Restricted escrows & reserves |
| 587,991 |
|
| - |
|
|
| 1,129,691 | (b) |
|
| 1,717,682 |
| Prepaid insurance |
| - |
|
| - |
|
|
| 113,076 | (e) |
|
| 113,076 |
| Deferred financing costs, net |
| 473,338 |
|
| - |
|
|
| 641,028 | (c) |
|
| 1,114,366 |
| Intangible assets, net |
| 969,312 |
|
| 7,334,000 | (a) |
|
| - |
|
|
| 8,303,312 |
| Other assets |
| - |
|
| - |
|
|
| 20,444 | (e) |
|
| 20,444 |
| TOTAL ASSETS | $ | 21,282,404 |
| $ | 40,000,000 |
|
| $ | 1,904,239 |
|
| $ | 63,186,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Notes payable | $ | 16,320,386 |
| $ | 32,000,000 | (d) |
| $ | 1,140,000 |
|
| $ | 49,460,386 |
| Notes payable - related party |
| 200,000 |
|
| - |
|
|
| - |
|
|
| 200,000 |
| Prepaid rent |
| - |
|
| - |
|
|
| 706,523 | (e) |
|
| 706,523 |
| Accounts payable |
| 852,556 |
|
| - |
|
|
| 19,992 | (e) |
|
| 872,548 |
| Accrued expenses |
| 585,957 |
|
| - |
|
|
| - |
|
|
| 585,957 |
| Tenant security deposits |
| 143,650 |
|
| - |
|
|
| 37,724 | (e) |
|
| 181,374 |
| Accrued interest |
| 81,945 |
|
| - |
|
|
| - |
|
|
| 81,945 |
| Redeemable preferred 6% OP units |
| - |
|
| 3,000,000 | (f) |
|
| - |
|
|
| 3,000,000 |
| Total Liabilities |
| 18,184,494 |
|
| 35,000,000 |
|
|
| 1,904,239 |
|
|
| 55,088,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SHAREHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred shares outstanding at $.001 par value; authorized 10,000,000 shares; none issued or outstanding as of June 30, 2014 | $ | - |
| $ | - |
|
| $ | - |
|
| $ | - |
| Common shares outstanding at $.001 par value; authorized 90,000,000 shares; 16,693,522 issued and outstanding as of June 30, 2014 |
| 16,693 |
|
| - |
|
|
| - |
|
|
| 16,693 |
| Additional paid in capital |
| 951,016 |
|
| - |
|
|
| - |
|
|
| 951,016 |
| Accumulated income (loss) |
| (3,028,681) |
|
| - |
|
|
| - |
|
|
| (3,028,681) |
| Total Talon Real Estate Holding Corp. shareholders' equity (deficit) |
| (2,060,972) |
|
| - |
|
|
| - |
|
|
| (2,060,972) |
| Noncontrolling interests - Operating Partnership |
| 6,468,359 |
|
| 5,000,000 | (g) |
|
| - |
|
|
| 11,468,359 |
| Noncontrolling interests - consolidated real estate entities |
| (1,309,477) |
|
| - |
|
|
| - |
|
|
| (1,309,477) |
| TOTAL SHAREHOLDERS' EQUITY (DEFICIT) |
| 3,097,910 |
|
| 5,000,000 |
|
|
| - |
|
|
| 8,097,910 |
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT) | $ | 21,282,404 |
| $ | 40,000,000 |
|
| $ | 1,904,239 |
|
| $ | 63,186,643 |
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 the First Trust Building 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 cash deposited into escrows in connection with the acquisition financing.
(c ) Reflects acquisition costs incurred upon closing of the transaction.
(d) Reflects notes entered into at time of acquisition.
(e) Reflects other assets and liabilities assumed in connection with the acquisition.
(f) Reflects issuance of 6% Cumulative Redeemable Preferred Talon OP units in connection with the acquisition.
(g) Reflects issuance of Talon OP common units in connection with the acquisition.
TALON REAL ESTATE HOLDING CORP
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
|
| Six Months Ended June 30, 2014 |
|
|
|
|
|
|
|
| ||||
|
| Talon Real Estate Holding Corp |
| First Trust Building |
|
| Pro Forma Adjustments |
|
| Pro Forma Combined | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rent | $ | 330,818 |
| $ | 2,547,479 |
|
| $ | 320,017 | (d) |
| $ | 3,198,314 |
| Tenant reimbursement |
| 155,799 |
|
| 1,439,787 |
|
|
| - |
|
|
| 1,595,586 |
| Other income |
| 1,330 |
|
| 77,579 |
|
|
| - |
|
|
| 78,909 |
| Total Revenue |
| 487,947 |
|
| 4,064,845 |
|
|
| 320,017 |
|
|
| 4,872,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and administrative |
| 205,632 |
|
| - |
|
|
| - |
|
|
| 205,632 |
| Salary and compensation |
| 773,609 |
|
| - |
|
|
| - |
|
|
| 773,609 |
| Professional |
| 141,657 |
|
| - |
|
|
| - |
|
|
| 141,657 |
| Property operating expenses |
| 65,610 |
|
| 2,611,209 |
|
|
| - |
|
|
| 2,676,819 |
| Real estate taxes & insurance |
| 106,748 |
|
| 583,612 |
|
|
| - |
|
|
| 690,360 |
| Depreciation and Amortization |
| 181,574 |
|
| - |
|
|
| 1,508,994 | (a) |
|
| 1,690,568 |
| Total Expenses |
| 1,474,830 |
|
| 3,194,821 |
|
|
| 1,508,994 |
|
|
| 6,178,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Loss |
| (986,883) |
|
| 870,024 |
|
|
| (1,188,977) |
|
|
| (1,305,836) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Expense |
| (203,559) |
|
| - |
|
|
| (1,063,948) | (b) |
|
| (1,267,507) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS |
| (1,190,442) |
|
| 870,024 |
|
|
| (2,252,925) |
|
|
| (2,573,343) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) attributable to noncontrolling interest - Operating Partnership |
| (30,461) |
|
| 218,376 | (c) |
|
| (565,484) | (c) |
|
| (377,569) |
| Net income (loss) attributable to noncontrolling interests - consolidated real estate entities |
| (98,124) |
|
| - |
|
|
| - |
|
|
| (98,124) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS ATTRIBUTABLE TO TALON REAL ESTATE HOLDING CORP. | $ | (1,061,857) |
| $ | 651,648 |
|
| $ | (1,687,441) |
|
| $ | (2,097,650) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) per share basic and diluted |
|
|
|
|
|
|
|
|
|
|
| $ | (0.13) |
| Basic and diluted weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| 15,966,006 |
The accompanying notes are an integral part of these Unaudited Pro Forma Condensed Consolidated Financial Statements.
(a) Reflects depreciation and amortization expense from preliminary estimates of fair value for tangible and intangible assets at acquisition that are subject to change.
(b) Reflects interest expense for the period on the loans and preferred units entered into at acquisition as if entered at January 1, 2013.
(c) Reflects the noncontrolling interest from the issuance of 4,000,000 Talon OP, LP common units at acquisition.
(d) Reflects adjustment to straight-line rent revenue for tenant concessions included in building's historical financials for the period.
TALON REAL ESTATE HOLDING CORP
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
|
| Year Ended December 31, 2013 |
|
|
|
|
|
|
|
| ||||
|
| Talon Real Estate Holding Corp |
| First Trust Building |
|
| Pro Forma Adjustments |
|
| Pro Forma Combined | ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rent | $ | 433,196 |
| $ | 5,095,466 |
|
| $ | 640,034 | (d) |
| $ | 6,168,696 |
| Tenant reimbursement |
| 104,275 |
|
| 3,063,552 |
|
|
| - |
|
|
| 3,167,827 |
| Other income |
| 6,763 |
|
| 151,928 |
|
|
| - |
|
|
| 158,691 |
| Total Revenue |
| 544,234 |
|
| 8,310,946 |
|
|
| 640,034 |
|
|
| 9,495,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
|
| 4,937,887 |
|
|
| - |
|
|
| 4,997,911 |
| Real estate taxes & insurance |
| 144,167 |
|
| 1,088,061 |
|
|
| - |
|
|
| 1,232,228 |
| Depreciation and Amortization |
| 262,403 |
|
| - |
|
|
| 3,017,988 | (a) |
|
| 3,280,391 |
| Total Expenses |
| 1,707,184 |
|
| 6,025,848 |
|
|
| 3,017,988 |
|
|
| 10,751,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Loss |
| (1,162,950) |
|
| 2,284,998 |
|
|
| (2,377,954) |
|
|
| (1,255,906) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Expense |
| (298,025) |
|
| - |
|
|
| (2,112,016) | (b) |
|
| (2,410,041) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS |
| (1,460,975) |
|
| 2,284,998 |
|
|
| (4,489,970) |
|
|
| (3,665,947) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) attributable to noncontrolling interest - Operating Partnership |
| - |
|
| 598,669 | (c) |
|
| (1,176,372) | (c) |
|
| (577,703) |
| 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) |
| $ | 1,686,329 |
|
| $ | (3,313,598) |
|
| $ | (2,917,898) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) per share basic and diluted |
|
|
|
|
|
|
|
|
|
|
| $ | (0.19) |
| Basic and diluted weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| 15,281,886 |
The accompanying notes are an integral part of these Unaudited Pro Forma Condensed Consolidated Financial Statements.
(a) Reflects depreciation and amortization expense from preliminary estimates of fair value for tangible and intangible assets at acquisition that are subject to change.
(b) Reflects interest expense for the period on the loans and preferred units entered into at acquisition as if entered at January 1, 2013.
(c) Reflects the noncontrolling interest from the issuance of 4,000,000 Talon OP, LP common units at acquisition.
(d) Reflects adjustment to straight-line rent revenue for tenant concessions included in building's historical financials for the period.