Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - Carey Watermark Investors Inc | cwi2015q38-kastoneleigh.htm |
| EX-99.1 - EXHIBIT 99.1 - Carey Watermark Investors Inc | cwi2015stoneleighexh991.htm |
Exhibit 99.2
CAREY WATERMARK INVESTORS INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Our pro forma condensed consolidated balance sheet as of September 30, 2015 has been prepared as if the significant transaction during the third quarter of 2015 (noted herein) had occurred as of September 30, 2015. Our pro forma condensed consolidated statement of operations for the nine months ended September 30, 2015 and for the year ended December 31, 2014 have been prepared based on our historical financial statements as if the significant investments and related financings during the nine months ended September 30, 2015 had occurred on January 1, 2014. Pro forma adjustments are intended to reflect what the effect would have been had we held our ownership interests as of January 1, 2014 on amounts that have been recorded in our historical consolidated statement of operations. In our opinion, all adjustments necessary to reflect the effects of these investments have been made.
The pro forma condensed consolidated financial information for the nine months ended September 30, 2015 should be read in conjunction with our historical consolidated financial statements and notes thereto in our Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2015. The pro forma condensed consolidated financial information for the year ended December 31, 2014 should be read in conjunction with our historical consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2014. The pro forma information is not necessarily indicative of our financial condition had the significant transactions occurred on September 30, 2015, or results of operations had the significant transactions occurred on January 1, 2014, nor are they necessarily indicative of our financial position, cash flows or results of operations of future periods. In addition, the provisional accounting is preliminary and therefore subject to change. Any such changes could have a material effect on the pro forma condensed consolidated financial information.
1 | |
CAREY WATERMARK INVESTORS INCORPORATED | ||||||||||||||
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) | ||||||||||||||
September 30, 2015 | ||||||||||||||
(in thousands) | ||||||||||||||
CWI | The Stoneleigh | |||||||||||||
Historical | Pro Forma | |||||||||||||
Assets | ||||||||||||||
Investments in real estate: | ||||||||||||||
Hotels, at cost | $ | 2,128,929 | $ | 68,589 | A | $ | 2,197,518 | |||||||
Accumulated depreciation | (107,457 | ) | — | (107,457 | ) | |||||||||
Net investments in hotels | 2,021,472 | 68,589 | 2,090,061 | |||||||||||
Equity investments in real estate | 86,774 | — | 86,774 | |||||||||||
Cash | 90,897 | (68,714 | ) | A | 63,007 | |||||||||
44,800 | A | |||||||||||||
(2,236 | ) | A | ||||||||||||
(1,314 | ) | A | ||||||||||||
(426 | ) | A | ||||||||||||
Intangible assets, net | 92,154 | — | 92,154 | |||||||||||
Accounts receivable | 22,549 | 66 | A | 22,615 | ||||||||||
Restricted cash | 76,854 | 1,314 | A | 78,168 | ||||||||||
Other assets | 35,559 | 284 | A | 36,269 | ||||||||||
426 | A | |||||||||||||
Total assets | $ | 2,426,259 | $ | 42,789 | $ | 2,469,048 | ||||||||
Liabilities and Equity | ||||||||||||||
Liabilities: | ||||||||||||||
Non-recourse debt | $ | 1,316,737 | $ | 44,800 | A | $ | 1,361,537 | |||||||
Accounts payable, accrued expenses and other liabilities | 105,304 | 225 | A | 105,529 | ||||||||||
Due to related parties and affiliates | 3,021 | — | 3,021 | |||||||||||
Distributions payable | 18,773 | — | 18,773 | |||||||||||
Total liabilities | 1,443,835 | 45,025 | 1,488,860 | |||||||||||
Commitments and contingencies | ||||||||||||||
Equity: | ||||||||||||||
CWI stockholders’ equity: | ||||||||||||||
Common stock | 133 | — | 133 | |||||||||||
Additional paid-in capital | 1,111,355 | — | 1,111,355 | |||||||||||
Distributions and accumulated losses | (208,643 | ) | (2,236 | ) | A | (210,879 | ) | |||||||
Accumulated other comprehensive loss | (1,720 | ) | — | (1,720 | ) | |||||||||
Less: treasury stock at cost | (8,698 | ) | — | (8,698 | ) | |||||||||
Total CWI stockholders’ equity | 892,427 | (2,236 | ) | 890,191 | ||||||||||
Noncontrolling interests | 89,997 | — | 89,997 | |||||||||||
Total equity | 982,424 | (2,236 | ) | 980,188 | ||||||||||
Total liabilities and equity | $ | 2,426,259 | $ | 42,789 | $ | 2,469,048 | ||||||||
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements. | ||||||||||||||
2 | |
CAREY WATERMARK INVESTORS INCORPORATED | |||||||||||||||||||||||||
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) | |||||||||||||||||||||||||
For the Nine Months Ended September 30, 2015 | |||||||||||||||||||||||||
(in thousands except share and per share amounts) | |||||||||||||||||||||||||
Pro Forma Adjustments (Including Pre-Acquisition Historical Amounts) | |||||||||||||||||||||||||
CWI Historical | Westin Minneapolis | Westin Pasadena | The Stoneleigh | Weighted Average Shares | |||||||||||||||||||||
Pro Forma | |||||||||||||||||||||||||
Hotel Revenues | |||||||||||||||||||||||||
Rooms | $ | 278,292 | $ | 924 | B | $ | 4,258 | B | 8,031 | B | $ | 291,505 | |||||||||||||
Food and beverage | 84,647 | 363 | B | 1,520 | B | 2,261 | B | 88,791 | |||||||||||||||||
Other operating revenue | 32,682 | 24 | B | 93 | B | 306 | B | 33,105 | |||||||||||||||||
Total Hotel Revenues | 395,621 | 1,311 | 5,871 | 10,598 | 413,401 | ||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||
Hotel Expenses | |||||||||||||||||||||||||
Rooms | 60,125 | 216 | C | 761 | C | 1,316 | C | 62,418 | |||||||||||||||||
Food and beverage | 61,184 | 274 | C | 959 | C | 1,666 | C | 64,083 | |||||||||||||||||
Other hotel operating expenses | 18,107 | 20 | C | 39 | C | 55 | C | 18,221 | |||||||||||||||||
Sales and marketing | 39,049 | 150 | C | 680 | C | 1,290 | C | 41,169 | |||||||||||||||||
General and administrative | 32,568 | 155 | C | 443 | C | 924 | C | 34,090 | |||||||||||||||||
Repairs and maintenance | 13,972 | 55 | C | 191 | C | 354 | C | 14,572 | |||||||||||||||||
Utilities | 11,111 | 51 | C | 171 | C | 245 | C | 11,578 | |||||||||||||||||
Management fees | 9,694 | 39 | C | 176 | C | 318 | C | 10,227 | |||||||||||||||||
Property taxes, insurance, rent and other | 39,434 | 129 | C | 372 | C | 449 | C | 40,384 | |||||||||||||||||
Depreciation and amortization | 50,262 | 277 | C | 1,060 | C | 1,267 | C | 52,866 | |||||||||||||||||
Total Hotel Expenses | 335,506 | 1,366 | 4,852 | 7,884 | 349,608 | ||||||||||||||||||||
Other Operating Expenses | |||||||||||||||||||||||||
Acquisition-related expenses | 17,493 | (2,028 | ) | D | (4,375 | ) | D | (66 | ) | D | 11,024 | ||||||||||||||
Corporate general and administrative expenses | 8,833 | — | — | — | 8,833 | ||||||||||||||||||||
Asset management fees to affiliate and other expenses | 9,098 | 38 | E | 160 | E | 268 | E | 9,564 | |||||||||||||||||
Total Other Operating Expenses | 35,424 | (1,990 | ) | (4,215 | ) | 202 | 29,421 | ||||||||||||||||||
Operating Income | 24,691 | 1,935 | 5,234 | 2,512 | 34,372 | ||||||||||||||||||||
Other Income and (Expenses) | |||||||||||||||||||||||||
Interest expense | (39,340 | ) | (189 | ) | F | (864 | ) | F | (1,315 | ) | F | (41,708 | ) | ||||||||||||
Equity in earnings of equity method investments in real estate | 3,065 | — | — | — | 3,065 | ||||||||||||||||||||
Net gain on extinguishment of debt | 1,840 | — | — | — | 1,840 | ||||||||||||||||||||
Other income | 2,390 | — | — | — | 2,390 | ||||||||||||||||||||
(32,045 | ) | (189 | ) | (864 | ) | (1,315 | ) | (34,413 | ) | ||||||||||||||||
(Loss) Income from Operations Before Income Taxes | (7,354 | ) | 1,746 | 4,370 | 1,197 | (41 | ) | ||||||||||||||||||
Provision for income taxes | (6,741 | ) | (19 | ) | G | (82 | ) | G | (130 | ) | G | (6,972 | ) | ||||||||||||
Net (Loss) Income | (14,095 | ) | 1,727 | 4,288 | 1,067 | (7,013 | ) | ||||||||||||||||||
Loss attributable to noncontrolling interests | 2,196 | — | — | — | 2,196 | ||||||||||||||||||||
Net (Loss) Income Attributable to CWI Stockholders | $ | (11,899 | ) | $ | 1,727 | $ | 4,288 | $ | 1,067 | $ | (4,817 | ) | |||||||||||||
Basic and Diluted Loss Per Share | $ | (0.09 | ) | $ | (0.03 | ) | |||||||||||||||||||
Basic and Diluted Weighted-Average Shares Outstanding | 130,832,077 | 12,143,079 | H | 142,975,156 | |||||||||||||||||||||
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements. | |||||||||||||||||||||||||
3 | |
CAREY WATERMARK INVESTORS INCORPORATED | |||||||||||||||||||||||||
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) | |||||||||||||||||||||||||
For the Year Ended December 31, 2014 | |||||||||||||||||||||||||
(in thousands except share and per share amounts) | |||||||||||||||||||||||||
Pro Forma Adjustments (Including Pre-Acquisition Historical Amounts) | |||||||||||||||||||||||||
CWI Historical | Westin Minneapolis | Westin Pasadena | The Stoneleigh | Weighted Average Shares | |||||||||||||||||||||
Pro Forma | |||||||||||||||||||||||||
Hotel Revenues | |||||||||||||||||||||||||
Rooms | $ | 248,987 | $ | 11,574 | B | $ | 20,930 | B | 9,429 | B | $ | 290,920 | |||||||||||||
Food and beverage | 68,095 | 3,324 | B | 7,924 | B | 2,673 | B | 82,016 | |||||||||||||||||
Other operating revenue | 30,997 | 220 | B | 511 | B | 522 | B | 32,250 | |||||||||||||||||
Total Hotel Revenues | 348,079 | 15,118 | 29,365 | 12,624 | 405,186 | ||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||
Hotel Expenses | |||||||||||||||||||||||||
Rooms | 64,483 | 2,312 | C | 3,858 | C | 1,690 | C | 72,343 | |||||||||||||||||
Food and beverage | 50,666 | 2,641 | C | 5,233 | C | 2,069 | C | 60,609 | |||||||||||||||||
Other hotel operating expenses | 17,167 | 183 | C | 391 | C | 346 | C | 18,087 | |||||||||||||||||
Sales and marketing | 32,431 | 1,678 | C | 3,591 | C | 1,373 | C | 39,073 | |||||||||||||||||
General and administrative | 27,951 | 1,289 | C | 2,188 | C | 1,248 | C | 32,676 | |||||||||||||||||
Repairs and maintenance | 13,121 | 496 | C | 937 | C | 464 | C | 15,018 | |||||||||||||||||
Utilities | 10,524 | 420 | C | 862 | C | 332 | C | 12,138 | |||||||||||||||||
Management fees | 8,169 | 453 | C | 881 | C | 379 | C | 9,882 | |||||||||||||||||
Property taxes, insurance, rent and other | 24,920 | 1,093 | C | 1,851 | C | 616 | C | 28,480 | |||||||||||||||||
Depreciation and amortization | 46,358 | 2,385 | C | 4,931 | C | 1,690 | C | 55,364 | |||||||||||||||||
Total Hotel Expenses | 295,790 | 12,950 | 24,723 | 10,207 | 343,670 | ||||||||||||||||||||
Other Operating Expenses | |||||||||||||||||||||||||
Acquisition-related expenses | 25,899 | (23 | ) | D | — | — | D | 25,876 | |||||||||||||||||
Corporate general and administrative expenses | 11,845 | — | — | — | 11,845 | ||||||||||||||||||||
Asset management fees to affiliate and other | 7,329 | 337 | E | 768 | E | 358 | E | 8,792 | |||||||||||||||||
Total Other Operating Expenses | 45,073 | 314 | 768 | 358 | 46,513 | ||||||||||||||||||||
Operating Income | 7,216 | 1,854 | 3,874 | 2,059 | 15,003 | ||||||||||||||||||||
Other Income and (Expenses) | |||||||||||||||||||||||||
Interest expense | (36,405 | ) | (1,619 | ) | F | (3,418 | ) | F | (1,758 | ) | F | (43,200 | ) | ||||||||||||
Equity in losses of equity method investments in real estate | (731 | ) | — | — | — | (731 | ) | ||||||||||||||||||
Other income | 46 | — | — | — | 46 | ||||||||||||||||||||
(37,090 | ) | (1,619 | ) | (3,418 | ) | (1,758 | ) | (43,885 | ) | ||||||||||||||||
(Loss) Income from Operations Before Income Taxes | (29,874 | ) | 235 | 456 | 301 | (28,882 | ) | ||||||||||||||||||
Provision for income taxes | (3,846 | ) | (214 | ) | G | (409 | ) | G | (155 | ) | G | (4,624 | ) | ||||||||||||
Net (Loss) Income | (33,720 | ) | 21 | 47 | 146 | (33,506 | ) | ||||||||||||||||||
Loss attributable to noncontrolling interests | 988 | — | — | — | 988 | ||||||||||||||||||||
Net (Loss) Income Attributable to CWI Stockholders | $ | (32,732 | ) | $ | 21 | $ | 47 | $ | 146 | $ | (32,518 | ) | |||||||||||||
Basic and Diluted Loss Per Share | $ | (0.38 | ) | $ | (0.33 | ) | |||||||||||||||||||
Basic and Diluted Weighted-Average Shares Outstanding | 85,124,745 | 12,143,079 | H | 97,267,824 | |||||||||||||||||||||
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements. | |||||||||||||||||||||||||
4 | |
CAREY WATERMARK INVESTORS INCORPORATED
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
The pro forma condensed consolidated balance sheet as of September 30, 2015 and the pro forma condensed consolidated statement of operations for the nine months ended September 30, 2015 were derived from our historical consolidated financial statements included in our Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2015. The pro forma condensed consolidated statement of operations for the year ended December 31, 2014 was derived from our historical consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014.
Note 2. Historical Acquisitions
Other 2015 Transactions
On February 12, 2015 and March 19, 2015, we acquired controlling interests in two hotels: Westin Minneapolis and Westin Pasadena, respectively, from HEI Hotels & Resorts, an unaffiliated third party.
Both of the transactions noted above are reflected in our historical consolidated balance sheet at September 30, 2015 and, therefore, no pro forma adjustment to our historical consolidated balance sheet as of September 30, 2015 was required. In addition, the transactions noted above are reflected in our historical consolidated statement of operations for the nine months ended September 30, 2015 from their respective dates of acquisition through September 30, 2015. We made pro forma adjustments (Note 3, adjustments B through H) to reflect the impact on our results of operations had these acquisitions been made on January 1, 2014.
Note 3. Pro Forma Adjustments
A. Investment
Le Méridien Dallas, The Stoneleigh
On November 20, 2015, we acquired Le Méridien Dallas, The Stoneleigh, or The Stoneleigh, from HEI Hotels & Resorts, and acquired real estate and other hotel assets, net of assumed liabilities, totaling $68.7 million, as detailed in the table that follows. The 176-room full-service hotel is located in Dallas, Texas. The hotel will continue to be managed by HEI Hotels & Resorts.
We acquired The Stoneleigh through a wholly-owned subsidiary and obtained a non-recourse mortgage loan of $44.8 million, with an interest rate of London Interbank Offered Rate plus 3.25%, which has effectively been capped through the use of an interest rate cap. The loan is interest-only for 36 months and has a maturity date of December 1, 2020. We capitalized $0.4 million of deferred financing costs related to this loan.
The effect of an increase or decrease in interest rates of 1/8% on pro forma interest expense is less than $0.1 million for both the nine months ended September 30, 2015 and the year ended December 31, 2014.
In connection with this acquisition, we expensed acquisition costs of $2.2 million, including acquisition fees of $1.8 million paid to our advisor, which are reflected as a charge to Distributions and accumulated losses in the pro forma condensed consolidated balance sheet as of September 30, 2015. We placed $1.3 million into lender-held escrow accounts in connection with planned renovations.
5 | |
Notes to Pro Forma Condensed Consolidated Financial Statements
The following table presents a summary of assets acquired and liabilities assumed in this business combination, at the date of acquisition (in thousands):
The Stoneleigh | |||||||
Acquisition consideration | |||||||
Cash consideration | $ | 68,714 | |||||
Assets acquired at fair value: | |||||||
Buildings | $ | 57,989 | |||||
Land | 9,400 | ||||||
Furniture, fixtures and equipment | 1,200 | ||||||
Accounts receivable | 66 | ||||||
Other assets | 284 | ||||||
Liabilities assumed at fair value: | |||||||
Accounts payable, accrued expenses, and other liabilities | (225 | ) | |||||
Net assets acquired at fair value | $ | 68,714 | |||||
B. Hotel Revenue
Pro forma adjustments for hotel revenue are derived from the historical financial statements of each of our investments. The following pro forma adjustments for the nine months ended September 30, 2015 and the year ended December 31, 2014 represent the hotel revenues that would have been incurred in addition to those presented in our historical consolidated financial statements, when applicable (in thousands):
Pre-Acquisition Historical | |||||||||||||||
Nine Months Ended September 30, 2015 | |||||||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | |||||||||||||
Rooms | $ | 924 | $ | 4,258 | $ | 8,031 | |||||||||
Food and beverage | 363 | 1,520 | 2,261 | ||||||||||||
Other operating revenue | 24 | 93 | 306 | ||||||||||||
$ | 1,311 | $ | 5,871 | $ | 10,598 | ||||||||||
Pre-Acquisition Historical | ||||||||||||
Year Ended December 31, 2014 | ||||||||||||
Westin Minneapolis | Westin Minneapolis | The Stoneleigh | ||||||||||
Rooms | 11,574 | 20,930 | 9,429 | |||||||||
Food and beverage | 3,324 | 7,924 | 2,673 | |||||||||
Other operating revenue | 220 | 511 | 522 | |||||||||
15,118 | 29,365 | 12,624 | ||||||||||
6 | |
Notes to Pro Forma Condensed Consolidated Financial Statements
C. Hotel Expenses
Pro forma adjustments for hotel expenses are derived from the historical financial statements of our investments except for those related to depreciation and amortization, sales and marketing, and management fees, as illustrated below. The following pro forma adjustments for the nine months ended September 30, 2015 and the year ended December 31, 2014 represent the incremental hotel expenses that would have been incurred in addition to those presented in our historical consolidated financial statements, when applicable (in thousands):
Pre-Acquisition Historical | |||||||||||||||
Nine Months Ended September 30, 2015 | |||||||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | |||||||||||||
Rooms | $ | 216 | $ | 761 | $ | 1,316 | |||||||||
Food and beverage | 274 | 959 | 1,666 | ||||||||||||
Other hotel operating expenses | 20 | 39 | 55 | ||||||||||||
General and administrative | 155 | 443 | 924 | ||||||||||||
Repairs and maintenance | 55 | 191 | 354 | ||||||||||||
Utilities | 51 | 171 | 245 | ||||||||||||
Property taxes, insurance, rent and other | 129 | 372 | 449 | ||||||||||||
$ | 900 | $ | 2,936 | $ | 5,009 | ||||||||||
Pre-Acquisition Historical | |||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | |||||||||||||
Rooms | $ | 2,312 | $ | 3,858 | $ | 1,690 | |||||||||
Food and beverage | 2,641 | 5,233 | 2,069 | ||||||||||||
Other hotel operating expenses | 183 | 391 | 346 | ||||||||||||
General and administrative | 1,289 | 2,188 | 1,248 | ||||||||||||
Repairs and maintenance | 496 | 937 | 464 | ||||||||||||
Utilities | 420 | 862 | 332 | ||||||||||||
Property taxes, insurance, rent and other | 1,093 | 1,851 | 616 | ||||||||||||
$ | 8,434 | $ | 15,320 | $ | 6,765 | ||||||||||
Adjusted Hotel Expenses
Pro forma adjustments for sales and marketing and management fees reflect expenses resulting from franchise and management agreements, respectively, entered into upon acquisition, when applicable. Pro forma adjustments for depreciation and amortization reflect depreciation and amortization of the acquired assets at fair value on a straight-line basis using the estimated useful lives of the properties (limited to 40 years for buildings and ranging generally from four years up to the remaining life of the building at the time of addition for building improvements), site improvements (generally four to 15 years) and furniture, fixtures and equipment (generally one to 12 years). The following pro forma adjustments for the nine months ended September 30, 2015 and the year ended December 31, 2014 represent the hotel expenses that would have been incurred in addition to those presented in our historical consolidated financial statements, when applicable (in thousands):
7 | |
Notes to Pro Forma Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2015 | |||||||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | |||||||||||||
Sales and marketing - pre-acquisition historical | $ | 150 | $ | 680 | $ | 1,046 | |||||||||
Sales and marketing - pro forma adjustments | — | — | 244 | ||||||||||||
Sales and marketing - pro forma results | $ | 150 | $ | 680 | $ | 1,290 | |||||||||
Management fees - pre-acquisition historical | $ | 39 | $ | 193 | $ | 318 | |||||||||
Management fees - pro forma adjustments | — | (17 | ) | — | |||||||||||
Management fees - pro forma results | $ | 39 | $ | 176 | $ | 318 | |||||||||
Depreciation and amortization - pre-acquisition historical | $ | 125 | $ | 677 | $ | 1,493 | |||||||||
Depreciation and amortization - pro forma adjustments | 152 | 383 | (226 | ) | |||||||||||
Depreciation and amortization - pro forma results | $ | 277 | $ | 1,060 | $ | 1,267 | |||||||||
Year Ended December 31, 2014 | |||||||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | |||||||||||||
Sales and marketing - pre-acquisition historical | $ | 1,678 | $ | 3,190 | $ | 1,081 | |||||||||
Sales and marketing - pro forma adjustments | — | 401 | 292 | ||||||||||||
Sales and marketing - pro forma results | $ | 1,678 | $ | 3,591 | $ | 1,373 | |||||||||
Management fees - pre-acquisition historical | $ | 453 | $ | 959 | $ | 379 | |||||||||
Management fees - pro forma adjustments | — | (78 | ) | — | |||||||||||
Management fees - pro forma results | $ | 453 | $ | 881 | $ | 379 | |||||||||
Depreciation and amortization - pre-acquisition historical | $ | 1,082 | $ | 3,208 | $ | 1,628 | |||||||||
Depreciation and amortization - pro forma adjustments | 1,303 | 1,723 | 62 | ||||||||||||
Depreciation and amortization - pro forma results | $ | 2,385 | $ | 4,931 | $ | 1,690 | |||||||||
8 | |
Notes to Pro Forma Condensed Consolidated Financial Statements
D. Acquisition-Related Expenses
Acquisition costs of $2.0 million, $4.4 million, and less than $0.1 million related to Westin Minneapolis, Westin Pasadena, and The Stoneleigh, respectively, which are non-recurring in nature, are reflected in our historical consolidated statement of operations for the nine months ended September 30, 2015. For the year ended December 31, 2014, less than $0.1 million of acquisition costs related to Westin Minneapolis are reflected in our historical consolidated statement of operations. We have reflected a pro forma adjustment to exclude these non-recurring charges from our pro forma condensed consolidated statement of operations.
E. Asset Management Fees
We pay our advisor an annual asset management fee equal to 0.50% of the aggregate average market value of our investments. Pro forma adjustments for such fees are reflected in the accompanying pro forma condensed consolidated statement of operations in order to reflect what the fee would have been had the acquisition of investments occurred on January 1, 2014. The following pro forma adjustments for the nine months ended September 30, 2015 and year ended December 31, 2014 represent incremental asset management fees that would have been incurred in addition to asset management fees presented in our historical consolidated financial statements (in thousands):
Nine Months Ended September 30, 2015 | ||||||||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | ||||||||||||||
Asset management fee expense - pre-acquisition historical | $ | — | $ | — | $ | 45 | ||||||||||
Asset management fee expense - pro forma adjustments | 38 | 160 | 223 | |||||||||||||
Asset management fee expense - pro forma results | $ | 38 | $ | 160 | $ | 268 | ||||||||||
Year Ended December 31, 2014 | ||||||||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | ||||||||||||||
Asset management fee expense - pre-acquisition historical | $ | — | $ | — | $ | 60 | ||||||||||
Asset management fee expense - pro forma adjustments | 337 | 768 | 298 | |||||||||||||
Asset management fee expense - pro forma results | $ | 337 | $ | 768 | $ | 358 | ||||||||||
F. Interest Expense
The following pro forma adjustments for the nine months ended September 30, 2015 and year ended December 31, 2014 represent the incremental interest expense that would have been incurred in addition to the amount presented in our historical consolidated financial statements (in thousands):
Nine Months Ended September 30, 2015 | ||||||||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | ||||||||||||||
Interest expense - pre-acquisition historical | $ | 101 | $ | 442 | $ | 867 | ||||||||||
Interest expense - pro forma adjustments | 88 | 422 | 448 | |||||||||||||
Interest expense - pro forma results | $ | 189 | $ | 864 | $ | 1,315 | ||||||||||
Year Ended December 31, 2014 | ||||||||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | ||||||||||||||
Interest expense - pre-acquisition historical | $ | 874 | $ | 2,096 | $ | 1,112 | ||||||||||
Interest expense - pro forma adjustments | 745 | 1,322 | 646 | |||||||||||||
Interest expense - pro forma results | $ | 1,619 | $ | 3,418 | $ | 1,758 | ||||||||||
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Notes to Pro Forma Condensed Consolidated Financial Statements
G. Provision for Income Taxes
We have reflected pro forma adjustments related to our investments based upon an estimated effective tax rate, which takes into account the fact that certain activities are taxable and other activities are pass-through items for income tax purposes. The following pro forma adjustments for the nine months ended September 30, 2015 and year ended December 31, 2014 reflect the incremental income tax provisions that would have been incurred, based on the new entity structure, in addition to the amounts presented in our historical consolidated financial statements, if any (in thousands):
Nine Months Ended September 30, 2015 | |||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | |||||||||
Provision for income taxes - pre-acquisition historical | $ | — | $ | — | $ | — | |||||
Provision for income taxes - pro forma adjustments | 19 | 82 | 130 | ||||||||
Provision for income taxes - pro forma results | $ | 19 | $ | 82 | $ | 130 | |||||
Year Ended December 31, 2015 | |||||||||||
Westin Minneapolis | Westin Pasadena | The Stoneleigh | |||||||||
Provision for income taxes - pre-acquisition historical | $ | — | $ | — | $ | — | |||||
Provision for income taxes - pro forma adjustments | 214 | 409 | 155 | ||||||||
Provision for income taxes - pro forma results | $ | 214 | $ | 409 | $ | 155 | |||||
H. Weighted-Average Shares
The pro forma weighted-average shares outstanding were determined as if the number of shares required to raise the funds used for each acquisition included in these pro forma condensed consolidated financial statements were issued on January 1, 2014.
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