EX-99.2 17 exh992unauditedproformafin.htm PRO FORMA FINANCIAL STATEMENTS Exh 99.2 Unaudited Proforma Financial Statements - WREAS II & WRES


Exhibit 99.2


COLUMBIA PROPERTY TRUST, INC.
Summary of Unaudited Pro Forma Financial Statements
This pro forma information should be read in conjunction with the consolidated financial statements and notes thereto of the Registrant included herein on its annual report filed on Form 10-K for the twelve months ended December 31, 2012. In addition, this pro forma information should be read in conjunction with the financial statements and notes thereto of certain acquired entities included as an exhibit to this current report.
From inception through February 27, 2013, Columbia Property Trust, Inc. ("Columbia Property Trust") has operated as an externally advised REIT pursuant to an advisory agreement under which a subsidiary of Wells Real Estate Funds ("WREF"), including most recently Wells Real Estate Advisory Services II, LLC ("WREAS II"), and its affiliates performed certain key functions on behalf of Columbia Property Trust, including, among others, managing the day-to-day operations, investing capital proceeds and arranging financings. Also during this period of time, a subsidiary of WREF, including most recently Wells Real Estate Services, LLC ("WRES"), provided the personnel necessary to carry out property management services on behalf of Wells Management Company, Inc. ("Wells Management") and its affiliates pursuant to a property management agreement.
On February 28, 2013, Columbia Property Trust terminated the advisory and property management agreements and acquired WREAS II and WRES. As a result, the services described above will be performed by employees of Columbia Property Trust going forward. Contemporaneous with this transaction, Columbia Property Trust entered into a consulting agreement and an investor services agreement with WREF for the remainder of 2013. While no fees were paid to execute this transaction, Columbia Property Trust will pay fees to WREF for consulting and investor services for the remainder of 2013 (the "Self-Management Transactions").
The following unaudited pro forma balance sheet as of December 31, 2012 has been prepared to give effect to the Self-Management Transactions as if they occurred on December 31, 2012. The following unaudited pro forma statement of operations for the twelve months ended December 31, 2012, has been prepared to give effect to the Self-Management Transactions as if they occurred on January 1, 2012. These unaudited pro forma financial statements are prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the Self-Management Transactions been consummated as of December 31, 2012 with respect to the pro forma balance sheet, or as of January 1, 2012 with respect to the pro forma statement of operations.





COLUMBIA PROPERTY TRUST, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2012
(in thousands, unaudited)
 
 
Historical (a)
 
Self-Management Transactions
 
Pro Forma Total
Assets:
 
 
 
 
 
 
Real estate assets, at cost:
 
 
 
 
 
 
Land
 
$
789,237

 
$

 
$
789,237

Buildings and improvements
 
3,468,218

 

 
3,468,218

Intangible lease assets
 
341,460

 

 
341,460

Construction in progress
 
12,680

 

 
12,680

Total real estate assets
 
4,611,595

 

 
4,611,595

Cash and cash equivalents
 
53,657

 
2,860

 
56,517

Tenant receivables
 
134,099

 

 
134,099

Prepaid expenses and other assets
 
29,373

 
99

(b)

 
 
 
 
1,980

(c)
31,452

Due from affiliates
 

 
2,215

(d)

 
 
 
 
(1,920
)
(e)
295

Deferred financing costs
 
10,490

 

 
10,490

Intangible lease origination costs
 
206,927

 

 
206,927

Deferred lease costs
 
98,808

 

 
98,808

Investment in development authority bonds
 
586,000

 

 
586,000

Total assets
 
$
5,730,949

 
$
5,234

 
$
5,736,183

Liabilities:
 
 
 
 
 
 
Line of credit and notes payable
 
$
1,401,618

 
$

 
$
1,401,618

Bonds payable
 
248,678

 

 
248,678

Accounts payable, accrued expenses, and accrued capital expenditures
 
102,858

 
36,250

(f)

 
 
 
 
1,364

(g)
140,472

Due to affiliates
 
1,920

 
(1,920
)
(e)

 
 
 
 
391

(h)
391

Deferred income
 
28,071

 

 
28,071

Intangible lease liabilities
 
98,298

 

 
98,298

Obligations under capital leases
 
586,000

 

 
586,000

Total liabilities
 
2,467,443

 
36,085

 
2,503,528

Commitments and Contingencies
 

 
 
 
 
Redeemable Common Stock
 
99,526

 

 
99,526

Equity:
 
 
 

 

Common stock
 
5,476

 

 
5,476

Additional paid-in capital
 
4,897,782

 

 
4,897,782

Cumulative distributions in excess of earnings
 
(1,634,531
)
 
(36,250
)
(f)

 
 
 
 
1,980

(c)
 
 
 
 
 
3,419

(i)
(1,665,382
)
Redeemable common stock
 
(99,526
)
 

 
(99,526
)
Other comprehensive (loss) income
 
(5,221
)
 

 
(5,221
)
Total Columbia Property Trust, Inc. stockholders' equity
 
3,163,980

 
(30,851
)
 
3,133,129

Nonredeemable noncontrolling interests
 

 

 

Total equity
 
3,163,980

 
(30,851
)
 
3,133,129

Total liabilities, redeemable common stock, and equity
 
$
5,730,949

 
$
5,234

 
$
5,736,183

 
 
 
 
 
 
 






NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2012
(a)
Historical balances were extracted from the historical consolidated balance sheet as of December 31, 2012 of Columbia Property Trust, included herein on page F-3.
(b)
Reflects WREAS II's and WRES' prepaid 2013 operating expenses.
(c)
Reflects goodwill related to the in-place work force acquired in connection with the Self-Management Transactions, estimated based on the cost to assemble such workforce.
(d)
Reflects the amounts due to WREAS II and WRES from affiliated real estate funds, primarily related to asset management services provided by WREAS II and property management services provided by WRES.
(e)
Reflects the elimination of amounts due from/to Columbia Property Trust and WREAS II/WRES as of December 31, 2012, which is comprised of the following (in thousands):
 
Administrative reimbursements
$
1,360

 
 
Asset and property management fees
560

 
 
Total
$
1,920

 
 
 
 
 
(f)
Reflects fees incurred under the consulting services agreement ($30.50 million) and the transition services agreements ($5.75 million) upon executing the Self Management Transactions, which are payable monthly throughout 2013.
(g)
Reflects payroll accruals and administrative expenses owed to third-party vendors by WREAS II and WRES.
(h)
Reflects the administrative expenses owed by WREAS II and WRES to affiliated entities, primarily for operating expenses paid on WREAS II's and WRES' behalf by Wells Management or Wells Capital, Inc.
(i)
Reflects the balance of members' equity of WREAS II and WRES as of December 31, 2012.






COLUMBIA PROPERTY TRUST, INC.
PROFORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012
(in thousands, unaudited)
 
 
Historical (a)
 
Self-Management Transactions
 
Pro Forma Total
Revenues:
 
 
 
 
 
 
Rental income
 
$
442,284

 
$

 
$
442,284

Tenant reimbursements
 
104,863

 

 
104,863

Hotel income
 
23,049

 

 
23,049

Other property income
 
6,495

 
55,071

(b)

 
 
 
 
(36,462
)
(c)
 
 
 
 
 
(15,824
)
(d)
9,280

 
 
576,691

 
2,785

 
579,476

Expenses:
 
 
 
 
 
 
Property operating costs
 
173,466

 

 
173,466

Hotel operating costs
 
18,362

 

 
18,362

Asset and property management fees:
 
 
 
 
 

Related-party
 
34,394

 
(34,394
)
(c)

Other
 
2,826

 

 
2,826

Depreciation
 
114,107

 

 
114,107

Amortization
 
97,649

 

 
97,649

Impairment loss on real estate assets
 

 

 

General and administrative
 
25,163

 
24,190

(e)

 
 
 
 
(15,824
)
(d)
 
 
 
 
 
34,270

(f)
 
 
 
 
 
(1,311
)
(h)
 
 
 
 
 
(126
)
(i)
66,362

Acquisition fees and expenses
 
1,876

 
(1,500
)
(j)
376

 
 
467,843

 
5,305

 
473,148

Real estate operating income
 
108,848

 
(2,520
)
 
106,328

Other income (expense):
 
 
 
 
 
 
Interest expense
 
(106,391
)
 

 
(106,391
)
Interest and other income
 
39,871

 
2,941

(g)

 
 
 
 
(1,311
)
(h)
 
 
 
 
 
(126
)
(i)
 
 
 
 
 
(1,500
)
(j)
39,875

Loss on interest rate swaps
 
(1,225
)
 

 
(1,225
)
 
 
(67,745
)
 
4

 
(67,741
)
Income (loss) before income tax (expense) benefit
 
41,103

 
(2,516
)
 
38,587

Income tax (expense) benefit
 
(586
)
 

 
(586
)
Income (loss) from continuing operations
 
40,517

 
(2,516
)
 
38,001

Discontinued operations:
 
 
 
 
 
 
Operating income (loss) from discontinued operations
 
(12,591
)
 
2,068

(c)
(10,523
)
Gains on dispositions of discontinued operations
 
20,117

 

 
20,117

Income from discontinued operations
 
7,526

 
2,068

 
9,594

Net income (loss)
 
48,043

 
(448
)
 
47,595

Less: net income attributable to nonredeemable noncontrolling interests
 
(4
)
 

 
(4
)
Net income (loss) attributable to the common stockholders of Wells Real Estate Investment Trust II, Inc.
 
$
48,039

 
$
(448
)
 
$
47,591

 
 
 
 
 
 
 





NOTES TO UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012
(a)
Historical balances were extracted from the audited consolidated statements of operations as of December 31, 2012 of Columbia Property Trust included herein on page F-4.
(b)
Reflects asset and property management fees, and salary and expense reimbursements earned by WREAS II and WRES during 2012.
(c)
Reflects the elimination of asset and property management fees of $32.0 million and $4.5 million, respectively, incurred by Columbia Property Trust for services provided by WREAS II and WRES during 2012. Of the total fees incurred, $2.1 million relates to nine properties sold in December 2012 for $260.5 million, and is, therefore, included in operating income (loss) from discontinued operations.
(d)
Reflects the elimination of salary and expense reimbursements incurred by Columbia Property Trust related to services provided by WREAS II and WRES during 2012.
(e)
Reflects general and administrative costs incurred by WREAS II and WRES during 2012, primarily related to salaries and benefits and information technology costs.
(f)
Reflects fees incurred under the consulting services agreement ($30.5 million) and the transition services agreements ($5.75 million) upon executing the Self Management Transactions, which are payable monthly throughout 2013. A portion of these fees ($1.98 million) was allocated to goodwill (which is included in prepaid and other assets on the balance sheet) based on the estimated value of the workforce acquired from WREAS II and WRES by Columbia Property Trust.
(g)
Reflects the fees earned by WREAS II in connection with: (h) the sale of nine properties for $260.5 million in December 2012, (i) leasing space to Columbia Property Trust at WREF's corporate headquarters from July 2012 through December 2012, and (j) the acquisition of the 333 Market Street Building for $395.0 million in December 2012.
(h)
Reflects the elimination of the disposition fees payable to WREAS II related to selling nine properties in December of 2012 for $260.5 million.
(i)
Reflects the elimination of the $26,000 per month of rent payable to WREAS II in connection with leasing space at the WREF's corporate headquarters from July 2012 through December 2012.
(j)
Reflects the elimination of the acquisition fees payable to WREAS II related to the acquisition of the 333 Market Street Building for $395.0 million in December 2012.