EX-99.1 2 a13-10850_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Index to Pro Forma Financial Information

 

 

 

Page

Unaudited Pro Forma Condensed Consolidated Financial Statements of iStar Financial, Inc.

 

 

Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012

 

1

Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012

 

2

Notes to the Pro Forma Condensed Consolidated Financial Statements

 

3

 


 

iStar Financial Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2012
(In thousands, except share data)
(Unaudited)

 

 

 

As
Reported

 

Pro Forma
Adjustments
(A)

 

 

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

 

Real estate, at cost

 

$

3,226,648

 

$

—

 

 

 

$

3,226,648

 

Less: accumulated depreciation

 

(427,625

)

—

 

 

 

(427,625

)

Real estate, net

 

2,799,023

 

—

 

 

 

2,799,023

 

Real estate available and held for sale

 

635,865

 

—

 

 

 

635,865

 

 

 

3,434,888

 

—

 

 

 

3,434,888

 

Loans receivable, net

 

1,829,985

 

—

 

 

 

1,829,985

 

Other investments

 

398,843

 

(205,773

)

B

 

193,070

 

Cash and cash equivalents

 

256,344

 

195,101

 

C

 

451,445

 

Restricted cash

 

36,778

 

—

 

 

 

36,778

 

Accrued interest and operating lease income receivable, net

 

15,226

 

—

 

 

 

15,226

 

Deferred operating lease income receivable

 

84,735

 

—

 

 

 

84,735

 

Deferred expenses and other assets, net

 

93,990

 

25,180

 

D

 

119,170

 

Total assets

 

$

6,150,789

 

$

14,508

 

 

 

$

6,165,297

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable, accrued expenses and other liabilities

 

$

132,460

 

$

—

 

 

 

$

132,460

 

Debt obligations, net

 

4,691,494

 

—

 

 

 

4,691,494

 

Total liabilities

 

4,823,954

 

—

 

 

 

4,823,954

 

Commitments and contingencies

 

—

 

—

 

 

 

—

 

Redeemable noncontrolling interests

 

13,681

 

—

 

 

 

13,681

 

Equity:

 

 

 

 

 

 

 

 

 

iStar Financial Inc. shareholders’ equity:

 

 

 

 

 

 

 

 

 

Preferred Stock Series D, E, F, G and I, liquidation preference $25.00 per share

 

22

 

—

 

 

 

22

 

High Performance Units

 

9,800

 

—

 

 

 

9,800

 

Common Stock, $0.001 par value, 200,000 shares authorized, 142,699 issued and 83,782 outstanding at December 31, 2012 and 140,028 issued and 81,920 outstanding at December 31, 2011

 

143

 

—

 

 

 

143

 

Additional paid-in capital

 

3,832,780

 

—

 

 

 

3,832,780

 

Retained earnings (deficit)

 

(2,360,647

)

16,411

 

E

 

(2,344,236

)

Accumulated other comprehensive income (loss)

 

(1,185

)

(1,903

)

F

 

(3,088

)

Treasury stock, at cost, $0.001 par value, 58,917 shares at December 31, 2012 and 58,108 shares at December 31, 2011

 

(241,969

)

—

 

 

 

(241,969

)

Total iStar Financial Inc. shareholders’ equity

 

1,238,944

 

14,508

 

 

 

1,253,452

 

Noncontrolling interests

 

74,210

 

—

 

 

 

74,210

 

Total equity

 

1,313,154

 

14,508

 

 

 

1,327,662

 

Total liabilities and equity

 

$

6,150,789

 

$

14,508

 

 

 

6,165,297

 

 

The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.

 

1


 

 iStar Financial Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2012
(In thousands, except per share data)
(Unaudited)

 

 

 

For the Year Ended December 31, 2012

 

 

 

As
Reported

 

Pro Forma
Adjustments
(G)

 

 

 

Pro Forma

 

Revenue:

 

 

 

 

 

 

 

 

 

Operating lease income

 

$

219,019

 

$

 

 

 

 

$

219,019

 

Interest income

 

133,410

 

—

 

 

 

133,410

 

Other income

 

48,043

 

—

 

 

 

48,043

 

Total revenue

 

400,472

 

—

 

 

 

400,472

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Interest expense

 

355,097

 

—

 

 

 

355,097

 

Real estate expense

 

151,827

 

—

 

 

 

151,827

 

Depreciation and amortization

 

69,350

 

—

 

 

 

69,350

 

General and administrative

 

80,856

 

—

 

 

 

80,856

 

Provision for loan losses

 

81,740

 

—

 

 

 

81,740

 

Impairment of assets

 

13,778

 

—

 

 

 

13,778

 

Other expense

 

17,266

 

—

 

 

 

17,266

 

Total costs and expenses

 

769,914

 

—

 

 

 

769,914

 

Income (loss) before earnings from equity method investments and other items

 

(369,442

)

—

 

 

 

(369,442

)

Gain (loss) on early extinguishment of debt, net

 

(37,816

)

—

 

 

 

(37,816

)

Earnings from equity method investments

 

103,009

 

(60,669

)

H

 

42,340

 

Income (loss) from continuing operations before income taxes

 

(304,249

)

(60,669

)

 

 

(364,918

)

Income tax (expense) benefit

 

(8,445

)

2,219

 

I

 

(6,226

)

Income (loss) from continuing operations

 

(312,694

)

(58,450

)

 

 

(371,144

)

Income (loss) from discontinued operations

 

(19,465

)

—

 

 

 

(19,465

)

Gain from discontinued operations

 

27,257

 

—

 

 

 

27,257

 

Income from sales of residential property

 

63,472

 

—

 

 

 

63,472

 

Net income (loss)

 

(241,430

)

(58,450

)

 

 

(299,880

)

Net (income) loss attributable to noncontrolling interests

 

1,500

 

—

 

 

 

1,500

 

Net income (loss) attributable to iStar Financial Inc.

 

(239,930

)

(58,450

)

 

 

(298,380

)

Preferred dividends

 

(42,320

)

 

 

 

 

(42,320

)

Net income (loss) allocable to HPU holders and Participating Security holders

 

9,253

 

—

 

 

 

9,253

 

Net income (loss) allocable to common shareholders

 

$

(272,997

)

$

(58,450

)

 

 

$

(331,447

)

 

 

 

 

 

 

 

 

 

 

Per common share data:

 

 

 

 

 

 

 

 

 

Income (loss) attributable to iStar Financial Inc. from continuing operations (1):

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(3.35

)

 

 

 

 

$

(4.05

)

Weighted average number of common shares — basic & diluted

 

83,742

 

 

 

 

 

83,742

 

Per HPU share data:

 

 

 

 

 

 

 

 

 

Income (loss) attributable to iStar Financial Inc. from continuing operations (1):

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(633.94

)

 

 

 

 

$

(766.47

)

Weighted average number of HPU shares—basic and diluted

 

15

 

 

 

 

 

15

 

 

Explanatory Note:

 

(1)         For the year ended December 31, 2012, pro forma income (loss) attributable to iStar Financial Inc. from continuing operations and allocable to the common shareholder and HPU holders was ($339,214) and ($11,497), respectively, on both a basic and dilutive basis.

 

The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.

 

2


 

iStar Financial Inc.

 

Notes to the Pro Forma Condensed Consolidated Financial Statements

 

(unaudited)

 

On April 19, 2013, iStar Financial, Inc. (the “Company”) completed the sale of its 24% equity interest in LNR Property LLC (“LNR”) and received $220 million in proceeds. The sale was part of a larger transaction whereby the Company and other sellers (together, the “Owners”) sold 100% of the common stock of LNR to Starwood Property Trust Inc. and investment firm Starwood Capital Group (together, “Starwood”) pursuant to the Unit Purchase Agreement (“Purchase Agreement”) entered into by the Owners and Starwood on January 23, 2013 for an aggregate purchase price of $1.1 billion.

 

Basis of Presentation

 

The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012 has been prepared to reflect the effect of the LNR transaction as if it had occurred on December 31, 2012.  The accompanying  unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012, are presented assuming the LNR transaction had been completed on January 1, 2012.

 

In management’s opinion, all material adjustments necessary to reflect the impact of the LNR transaction have been made in the accompanying unaudited pro forma Condensed Consolidated Financial Statements. The accompanying unaudited Pro Forma Condensed Consolidated Financial Statements are not necessarily indicative of the financial condition, results of operations or cash flows that would have been reported had the transactions occurred on the dates specified, nor are they indicative of the Company’s future financial condition or results of operations. The unaudited pro forma adjustments are based upon information and assumptions available at the time of the filing of this Current Report on Form 8-K.

 

The unaudited condensed consolidated pro forma financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

Unaudited Pro Forma Adjustments

 

The pro forma adjustments have been prepared to reflect the following:

 

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2012:

 

(A)       Adjustments reflect the effect of the LNR transaction as if it had occurred on December 31, 2012.

 

(B)       Reflects the elimination of the carrying value of the investment assuming the investment was sold on December 31, 2012.

 

(C)       Reflects the cash proceeds received on April 19, 2013.

 

(D)       Reflects proceeds held in escrow as part of the sale for potential indemnification obligations. The Company is not currently aware that any material indemnifications claims are probable of occurring.

 

(E)        Reflects net impact to retained earnings (deficit) after adjusting for changes to assets, liabilities and accumulated other comprehensive income (loss).

 

(F)         Reflects the realization of the Company’s share in LNR’s accumulated other comprehensive income (loss) as of December 31, 2012.

 

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012:

 

(G)       Adjustment reflects the effect of the LNR transaction as if it had occurred on January 1, 2012.

 

(H)      Reflects the removal of the 2012 earnings from the LNR investment that was recognized by the Company during 2012.

 

(I)           Reflects the reversal of tax expenses that was attributable to the LNR equity in earnings recognized by the Company in 2012.

 

3