InvenTrust Properties Corp. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - June 27, 2016

Attached files

file filename
EX-2.3 - EXHIBIT 2.3 - InvenTrust Properties Corp.exhibit23.htm
EX-2.2 - EXHIBIT 2.2 - InvenTrust Properties Corp.exhibit22.htm
8-K - 2016, 06-27 FORM 8-K (ITEM 2.01 UH DISPOSITION) - InvenTrust Properties Corp.ivtp20160627form8xkitem201uh.htm


Exhibit 99.1
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On June 21, 2016, InvenTrust Properties Corp. (the "Company") completed the previously announced sale of the Company's student housing business ("University House") to UHC Acquisition Sub LLC (the "Acquiror") pursuant to the terms of the Stock Purchase Agreement (the "Agreement"), dated as of January 3, 2016, by and among the Company, University House Communities Group, Inc. and the Acquiror, as amended by that certain Amendment No. 1 to the Agreement, dated as of May 30, 2016, and as further amended by that certain Amendment No. 2 to the Agreement, dated as of June 20, 2016. Following certain adjustments and the repayment of related debt, in each case pursuant to the terms of the Agreement, the Company received net cash consideration, after transaction costs, of approximately $845,000,000, $9,900,000 of which was deposited into escrow and relates to post closing obligations, the majority of which is held pending the expected completion of a development property in the third quarter of 2016.
On April 28, 2016 (the "Distribution Date"), the Company completed the previously announced spin-off ("Spin-off") of Highlands REIT, Inc. ("Highlands") through a taxable pro-rata distribution by the Company of 100% of the outstanding common stock, $0.01 per value per share of Highlands owned by it to holders of record of the Company’s common stock as of the close of business on April 25, 2016 (the “Record Date”). Each holder of record of the Company’s common stock received one share of Highlands' common stock for every one share of the Company’s common stock held at the close of business on the Record Date.
The following unaudited pro forma consolidated financial statements are based upon the historical consolidated financial statements for the Company, adjusted to reflect the sale of University House and the Spin-off, and include the Unaudited Pro Forma Consolidated Balance Sheet at March 31, 2016 and Pro Forma Consolidated Statements of Operations for the three months ended March 31, 2016 and the years ended 2015, 2014 and 2013.






INVENTRUST PROPERTIES CORP.
Unaudited Pro Forma Consolidated Balance Sheet
March 31, 2016
(Dollar amounts in thousands, except share amounts)
 
Consolidated Company (a)
 
Highlands
Pro Forma Adjustments
 
University House
Pro Forma Adjustments
 
Pro Forma Consolidated Company
 
 
 
 
 
 
 
March 31, 2016
 
 
 
March 31, 2016
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Investment properties:
 
 
 
 
 
 
 
Land
$
747,478

 
$
(138,665
)
(f)
$
(112,891
)
(q)
$
495,922

Building and other improvements
3,207,275

 
(637,910
)
(f)
(884,225
)
(q)
1,685,140

Construction in progress
100,038

 
—

(f)
(96,013
)
(q)
4,025

Total
4,054,791

 
(776,575
)
 
(1,093,129
)
 
2,185,087

Less accumulated depreciation
(677,321
)
 
170,987

(f)
105,919

(q)
(400,415
)
Net investment properties
3,377,470

 
(605,588
)
 
(987,210
)
 
1,784,672

Cash and cash equivalents
435,652

 
(20,000
)
(g)
854,196

(r)
1,269,848

Restricted cash and escrows
19,418

 
(5,682
)
(f)
(299
)
(q)
13,437

Investment in marketable securities
181,138

 
—

 
—

 
181,138

Investment in unconsolidated entities
177,837

 
—

 
—

 
177,837

Intangible assets, net
62,242

 
(10,423
)
(f)
(2,767
)
(q)
49,052

Accounts and rents receivable
39,578

 
(11,636
)
(f)
(1,830
)
(q)
26,112

Deferred costs and other assets
48,406

 
(3,251
)
(f)
(5,905
)
(q)
39,250

Assets of discontinued operations
2,235

 
—

 
—

 
2,235

Total assets
$
4,343,976

 
$
(656,580
)
 
$
(143,815
)
 
$
3,543,581

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Debt
$
2,022,416

 
$
(398,875
)
(f)
$
(368,192
)
(q)
$
1,255,349

Accounts payable and accrued expenses
79,333

 
(26,153
)
(f)
(17,763
)
(q)
35,417

Distributions payable
28,022

 
—

 
—

 
28,022

Intangible liabilities, net
40,631

 
(4,543
)
(f)
—

 
36,088

Other liabilities
26,334

 
(2,213
)
(f)
(9,650
)
(q)
14,471

Liabilities of discontinued operations
—

 
—

 
—

 
—

Total liabilities
2,196,736

 
(431,784
)
 
(395,605
)
 
1,369,347

Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ Equity
 
 
 
 
 
 
 
Preferred stock, $.001 par value
—

 
—

 
—

 
—

Common stock, $.001 par value
862

 
—

 
—

 
862

Additional paid in capital
6,066,846

 
—

 
—

 
6,066,846

Accumulated distributions in excess of net loss
(3,958,647
)
 
(224,796
)
(h)
251,790

(s)
(3,931,653
)
Accumulated other comprehensive income
38,179

 
—

 
—

 
38,179

Total stockholders’ equity
2,147,240

 
(224,796
)
 
251,790

 
2,174,234

Total liabilities and equity
$
4,343,976

 
$
(656,580
)
 
$
(143,815
)
 
$
3,543,581

See accompanying notes to the pro forma consolidated financial statements.




INVENTRUST PROPERTIES CORP.
Unaudited Pro Forma Consolidated Statement of Operations
Three months ended March 31, 2016
(Dollar amounts in thousands, except per share data)
 
Consolidated Company
 
Highlands
Pro Forma Adjustments
 
University House
Pro Forma Adjustments
 
Pro Forma
Consolidated Company
 
 
 
 
 
 
 
March 31, 2016 (b)
 
 
 
March 31, 2016
 
 
 
 
 
 
 
 
Income:
 
 
 
 
 
 
 
  Rental income
$
95,348

 
$
(22,367
)
(i)
$
(24,301
)
(t)
$
48,680

  Tenant recovery income
15,881

 
(2,664
)
(i)
(184
)
(t)
13,033

  Other property income
3,060

 
(186
)
(i)
(1,241
)
(t)
1,633

Total income
$
114,289

 
$
(25,217
)
 
$
(25,726
)
 
$
63,346

Expenses:
 
 
 
 
 
 
 
  General and administrative expenses
17,283

 
(129
)
(j)
(2,074
)
(u)
15,080

  Property operating expenses
17,310

 
(2,060
)
(k)
(7,078
)
(v)
8,172

  Real estate taxes
13,403

 
(2,098
)
(k)
(1,492
)
(v)
9,813

  Depreciation and amortization
38,515

 
(7,817
)
(k)
(10,141
)
(v)
20,557

  Provision for asset impairment
8,390

 
—

(l)
—

 
8,390

Total expenses
$
94,901

 
$
(12,104
)
 
$
(20,785
)
 
$
62,012

Operating income
$
19,388

 
$
(13,113
)
 
$
(4,941
)
 
$
1,334

Interest and dividend income
2,704

 
—

 
—

 
2,704

Gain on sale of investment properties
24,026

 
—

 
—

(aa)
24,026

Loss on extinguishment of debt
(948
)
 
—

 
—

 
(948
)
Other income
1,323

 
2

(n)
41

(w)
1,366

Interest expense
(24,062
)
 
6,178

(o)
2,897

(x)
(14,987
)
Equity in earnings of unconsolidated entities
1,276

 
—

 
(18
)
(y)
1,258

Gain on sale of investment in unconsolidated entities
1,434

 
—

 
1,434

(y)
2,868

Realized gain on sale of marketable securities, net
555

 
—

 
—

 
555

Income from continuing operations before income taxes
$
25,696

 
$
(6,933
)
 
$
(587
)
 
$
18,176

Income tax expense
(288
)
 
—

 
5

(z)
(283
)
Net income from continuing operations
$
25,408

 
$
(6,933
)
 
$
(582
)
 
$
17,893

Net income per common share, from continuing operations, basic and diluted
$
0.03

 
 
 
 
 
$
0.02

Weighted average number of common shares outstanding, basic
862,205,672

 
 
 
 
 
862,205,672

Weighted average number of common shares outstanding, diluted
862,291,672

 
 
 
 
 
862,291,672

See accompanying notes to the pro forma consolidated financial statements.





INVENTRUST PROPERTIES CORP.
Unaudited Pro Forma Consolidated Statement of Operations
Year ended December 31, 2015
(Dollar amounts in thousands, except per share data)
 
Consolidated Company
 
Highlands
Pro Forma Adjustments
 
University House
Pro Forma Adjustments
 
Pro Forma
Consolidated Company
 
 
 
 
 
 
 
December 31, 2015 (c)
 
 
 
December 31, 2015
 
 
 
 
 
 
 
 
Income:
 
 
 
 
 
 
 
  Rental income
$
370,662

 
$
(88,804
)
(i)
$
(77,127
)
(t)
$
204,731

  Tenant recovery income
69,668

 
(11,214
)
(i)
(665
)
(t)
57,789

  Other property income
9,714

 
(398
)
(i)
(4,295
)
(t)
5,021

Total income
$
450,044

 
$
(100,416
)
 
$
(82,087
)
 
$
267,541

Expenses:
 
 
 
 
 
 
 
  General and administrative expenses
78,218

 
(501
)
(j)
(9,691
)
(u)
68,026

  Property operating expenses
77,610

 
(9,234
)
(k)
(25,219
)
(v)
43,157

  Real estate taxes
50,870

 
(8,887
)
(k)
(4,497
)
(v)
37,486

  Depreciation and amortization
150,401

 
(32,519
)
(k)
(28,702
)
(v)
89,180

  Provision for asset impairment
108,154

 
—

 
—

 
108,154

Total expenses
$
465,253

 
$
(51,141
)
 
$
(68,109
)
 
$
346,003

Operating loss
$
(15,209
)
 
$
(49,275
)
 
$
(13,978
)
 
$
(78,462
)
Interest and dividend income
11,774

 
(1
)
(n)
—

 
11,773

Gain on sale of investment properties
40,682

 
197

(n)
—

 
40,879

Loss on extinguishment of debt
(4,568
)
 
—

 
—

 
(4,568
)
Other income
19,447

 
11

(n)
(168
)
(w)
19,290

Interest expense
(94,572
)
 
26,291

(o)
10,228

(x)
(58,053
)
Loss on contribution to joint venture
(12,919
)
 
—

 
—

 
(12,919
)
Equity in earnings of unconsolidated entities
35,167

 
—

 
89

(y)
35,256

Gain, (loss) and (impairment) of investment in unconsolidated entities, net
326

 
—

 
—

 
326

Realized gain on sale of marketable securities, net
20,459

 
—

 
—

 
20,459

Income (loss) from continuing operations before income taxes
$
587

 
$
(22,777
)
 
$
(3,829
)
 
$
(26,019
)
Income tax expense
(1,916
)
 
36

(p)
35

(z)
(1,845
)
Net loss from continuing operations
$
(1,329
)
 
$
(22,741
)
 
$
(3,794
)
 
$
(27,864
)
Net loss per common share, from continuing operations, basic and diluted
$
0.00

 
 
 
 
 
$
(0.03
)
Weighted average number of common shares outstanding, basic and diluted
861,830,627

 
 
 
 
 
861,830,627

See accompanying notes to the pro forma consolidated financial statements.






INVENTRUST PROPERTIES CORP.
Unaudited Pro Forma Consolidated Statement of Operations
Year ended December 31, 2014
(Dollar amounts in thousands, except per share data)
 
Consolidated Company
 
Highlands
Pro Forma Adjustments
 
University House
Pro Forma Adjustments
 
Pro Forma
Consolidated Company
 
 
 
 
 
 
 
December 31, 2014 (d)
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
Income:
 
 
 
 
 
 
 
  Rental income
$
377,067

 
$
(90,001
)
(i)
$
(66,351
)
(t)
$
220,715

  Tenant recovery income
66,046

 
(12,200
)
(i)
(542
)
(t)
53,304

  Other property income
9,361

 
(629
)
(i)
(3,594
)
(t)
5,138

Total income
$
452,474

 
$
(102,830
)
 
$
(70,487
)
 
$
279,157

Expenses:
 
 
 
 
 
 
 
  General and administrative expenses
64,332

 
(352
)
(j)
(4,171
)
(u)
59,809

  Property operating expenses
91,111

 
(12,081
)
(k)
(27,463
)
(v)
51,567

  Real estate taxes
45,604

 
(8,136
)
(k)
(3,602
)
(v)
33,866

  Depreciation and amortization
153,737

 
(30,292
)
(k)
(25,222
)
(v)
98,223

  Business manager fee
2,605

 
—

 
—

 
2,605

  Provision for asset impairment
80,774

 
(77,555
)
(m)
—

 
3,219

Total expenses
$
438,163

 
$
(128,416
)
 
$
(60,458
)
 
$
249,289

Operating income
$
14,311

 
$
25,586

 
$
(10,029
)
 
$
29,868

Interest and dividend income
12,713

 
(3
)
(n)
—

 
12,710

Gain on sale of investment properties
73,232

 
2,937

(n)
(3,652
)
(w)
72,517

Gain on extinguishment of debt
34,515

 
(11,964
)
(n)
—

 
22,551

Other income
2,669

 
(483
)
(n)
(19
)
(w)
2,167

Interest expense
(120,668
)
 
29,269

(o)
11,719

(x)
(79,680
)
Equity in earnings of unconsolidated entities
81,179

 
—

 
(150
)
(y)
81,029

Gain, (loss) and (impairment) of investment in unconsolidated entities, net
56,352

 
—

 
—

 
56,352

Realized gain on sale of marketable securities, net
43,025

 
—

 
—

 
43,025

Income from continuing operations before income taxes
$
197,328

 
$
45,342

 
$
(2,131
)
 
$
240,539

Income tax expense
(917
)
 
112

(p)
58

(z)
(747
)
Net income from continuing operations
$
196,411

 
$
45,454

 
$
(2,073
)
 
$
239,792

Net income per common share, from continuing operations, basic and diluted
$
0.22

 
 
 
 
 
$
0.27

Weighted average number of common shares outstanding, basic and diluted
878,064,982

 
 
 
 
 
878,064,982

See accompanying notes to the pro forma consolidated financial statements.






INVENTRUST PROPERTIES CORP.
Pro Forma Consolidated Statement of Operations
Year ended December 31, 2013
(Dollar amounts in thousands, except per share data)
 
Consolidated Company
 
Highlands
Pro Forma Adjustments
 
University House
Pro Forma Adjustments
 
Pro Forma
Consolidated Company
 
 
 
 
 
 
 
December 31, 2013 (e)
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
Income:
 
 
 
 
 
 
 
  Rental income
$
377,876

 
$
(94,609
)
(i)
$
(52,594
)
(t)
$
230,673

  Tenant recovery income
71,207

 
(13,137
)
(i)
(521
)
(t)
57,549

  Other property income
7,202

 
(657
)
(i)
(2,412
)
(t)
4,133

Total income
$
456,285

 
$
(108,403
)
 
$
(55,527
)
 
$
292,355

Expenses:
 
 
 
 
 
 
 
  General and administrative expenses
48,318

 
(95
)
(j)
(2,155
)
(u)
46,068

  Property operating expenses
84,735

 
(12,446
)
(k)
(17,968
)
(v)
54,321

  Real estate taxes
50,380

 
(9,980
)
(k)
(3,883
)
(v)
36,517

  Depreciation and amortization
167,071

 
(40,043
)
(k)
(23,731
)
(v)
103,297

  Business manager fee
37,962

 
—

 
—

 
37,962

  Provision for asset impairment
195,680

 
(185,359
)
(m)
—

 
10,321

Total expenses
$
584,146

 
$
(247,923
)
 
$
(47,737
)
 
$
288,486

Operating (loss) income
$
(127,861
)
 
$
139,520

 
$
(7,790
)
 
$
3,869

Interest and dividend income
18,855

 
(1,004
)
(n)
(1
)
(w)
17,850

Gain on sale of investment properties
14,001

 
—

 
—

 
14,001

Loss on extinguishment of debt
(472
)
 
50

(n)
775

(w)
353

Other income
3,627

 
(889
)
(n)
(273
)
(w)
2,465

Interest expense
(133,454
)
 
32,699

(o)
10,844

(x)
(89,911
)
Equity in earnings of unconsolidated entities
11,474

 
—

 
136

(y)
11,610

Loss and impairment of investment in unconsolidated entities, net
(2,957
)
 
—

 
—

 
(2,957
)
Realized gain on sale of marketable securities, net
31,539

 
—

 
—

 
31,539

Loss from continuing operations before income taxes
$
(185,248
)
 
$
170,376

 
$
3,691

 
$
(11,181
)
Income tax expense
(1,231
)
 
91

(p)
23

(z)
(1,117
)
Net loss from continuing operations
$
(186,479
)
 
$
170,467

 
$
3,714

 
$
(12,298
)
Net loss per common share, from continuing operations, basic and diluted
$
(0.21
)
 
 
 
 
 
$
(0.01
)
Weighted average number of common shares outstanding, basic and diluted
899,842,722

 
 
 
 
 
899,842,722

See accompanying notes to the pro forma consolidated financial statements






INVENTRUST PROPERTIES CORP.
Notes to Pro Forma Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands)

1) Basis of Presentation

The unaudited pro forma financial information is presented to illustrate the effect of the Spin-off and the sale of University House on the Company’s historical financial position and operating results. The unaudited pro forma consolidated balance sheet is as of March 31, 2016 and is based upon the Company's historical statements after giving effect to the Spin-off and the sale of University House as if they had occurred on March 31, 2016. The unaudited pro forma consolidated statement of operations for the three months ended March 31, 2016 and the years ended December 31, 2015, 2014 and 2013 are based upon the Company's historical statements for such periods after giving effect to the Spin-off and the sale of University House as if they had occurred on January 1 of the earliest period presented. The unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements and notes thereto of the Company contained in the Annual Report on Form 10-K for the year ended December 31, 2015 and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.

The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are not intended to represent or be indicative of the Company's consolidated results of operations or financial position that would have been reported had the Spin-off and the sale of University House been completed as of the dates presented, and should not be taken as representation of the Company's future consolidated results of operations or financial condition. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable under the circumstances; however, actual amounts could differ.

2) Pro Forma adjustments

(a)
Reflects the Company’s unaudited consolidated balance sheet as of March 31, 2016.
(b)
Reflects the Company's historical consolidated statement of operations for the three months ended March 31, 2016.
(c)
Reflects the Company's historical consolidated statement of operations for the year ended December 31, 2015.
(d)
Reflects the Company's historical consolidated statement of operations for the year ended December 31, 2014.
(e)
Reflects the Company's historical consolidated statement of operations for the year ended December 31, 2013.

For references (f) through (p) - On the Distribution Date, the Company completed the previously announced Spin-off.

(f)
Reflects the elimination of assets and liabilities of Highlands as of March 31, 2016.
(g)
Reflects an adjustment, such that following the capital contribution from the Company, Highlands will hold approximately $20,000 in cash.
(h)
Reflects the pro forma recapitalization of the Company's equity. As of the Distribution Date, the Company distributed the net assets of the Company's investment in Highlands through the distribution of shares of Highlands’ common stock. Each holder of record of the Company’s common stock received one share of Highlands’ common stock for every one share of the Company’s common stock held at the close of business on the Record Date.
(i)
Reflects the elimination of rental income, tenant recovery income and other property income of Highlands.
(j)
Reflects the elimination of general and administrative expense of Highlands related to general corporate expense.
(k)
Reflects the elimination of expenses of Highlands that are necessary for and associated with revenue producing activities, such as property operating expense and real estate taxes.
(l)
The Company recorded approximately $55,000 of asset impairment charges at the time of the Spin-off.
(m)
Reflects the elimination of asset impairment charges of investment properties of Highlands.
(n)
Reflects the elimination of interest and dividend income, other income, gain on the sale of investment properties and gain (loss) on the extinguishment of debt associated with Highlands.
(o)
Reflects the elimination of interest expense incurred on debt directly attributable to investment properties of Highlands.
(p)
Reflects the elimination of income tax expense directly attributable to Highlands.







For references (q) through (aa) - On the Closing Date, the Company completed the previously announced sale of University House. The following pro forma adjustments reflect that sale.

(q)
Reflects the elimination of assets and liabilities of University House as of March 31, 2016.
(r)
Reflects the receipt of net proceeds of the sale of University House plus cash retained by the Company at close. The Company anticipates using the net proceeds from the transaction to advance the growth strategy of retail portfolio, which includes, among other things, acquisitions, debt reduction and general corporate purposes, which may include a share buyback.
(s)
Reflects the estimated gain and net proration credits arising from the sale of University House.
(t)
Reflects the elimination of rental income, tenant recovery income and other property income of University House.
(u)
Reflects the elimination of general and administrative expense of University House.
(v)
Reflects the elimination of expenses of University House that are necessary for and associated with revenue producing activities, such as property operating expenses and real estate taxes. This adjustment does not reflect any one-time non-recurring costs, primarily transaction costs and prepayment penalties, directly related to the closing of the sale of University House which will be included in the statement of operations of the Company within the twelve months following the closing.
(w)
Reflects the elimination of interest and dividend income, other income, gain on the sale of investment properties, and loss on extinguishment of debt of University House.
(x)
Reflects the elimination of interest expense incurred on debt directly attributable to investment properties of University House.
(y)
Reflects the elimination of the equity in earnings and the gain on sale of the investment in an unconsolidated entity.
(z)
Reflects the elimination of income tax expense directly attributable to University House.
(aa)
The estimated gain on sale of University House, which closed on June 21, 2016 is $364,000, including proration credits. The gain on sale has not been included in the pro forma statement of operations for the periods presented.



InvenTrust Properties Corp. Reports