Maryland (State or other jurisdiction of incorporation) | 001-33749 (Commission File Number) | 26-0500600 (I.R.S. Employer Identification No.) |
Delaware (State or other jurisdiction of incorporation) | 333-189057-01 (Commission File Number) | 94-2969738 (LR.S. Employer Identification No.) |
8905 Towne Centre Drive, Suite 108 San Diego, California | (858) 677-0900 (Registrants' Telephone Number, Including Area Code) | 92122 (Zip Code) |
Not applicable (Former Name or Former Address, if Changed Since Last Report) |
(a) | Financial Statement of Business Acquired. |
• | Independent Auditors’ Report |
• | Statement of Revenues and Certain Expenses for the year ended December 31, 2016 (Audited) and the three months ended March 31, 2017 (Unaudited) |
• | Notes to Statement of Revenues and Certain Expenses for the year ended December 31, 2016 (Audited) and the three months ended March 31, 2017 (Unaudited) |
• | Pro Forma Consolidated Statement of Operations and Comprehensive Income for the nine months ended September 30, 2017 (Unaudited) |
• | Pro Forma Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2016 (Unaudited) |
• | Notes to Pro Forma Consolidated Financial Statements (Unaudited) |
• | Pro Forma Consolidated Statement of Operations and Comprehensive Income for the nine months ended September 30, 2017 (Unaudited) |
• | Pro Forma Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2016 (Unaudited) |
• | Notes to Pro Forma Consolidated Financial Statements (Unaudited) |
By: | /s/ Michael B. Haines Name: Michael B. Haines Title: Chief Financial Officer |
By: | RETAIL OPPORTUNITY INVESTMENTS GP, LLC, its general partner |
By: | /s/ Michael B. Haines Name: Michael B. Haines Title: Chief Financial Officer |
Page | |
Highland Hill | |
Independent Auditors’ Report | F-1 |
Statement of Revenues and Certain Expenses for the year ended December 31, 2016 (Audited) and three months ended March 31, 2017 (Unaudited) | F-2 |
Notes to Statement of Revenues and Certain Expenses for the year ended December 31, 2016 (Audited) and three months ended March 31, 2017 (Unaudited) | F-3 |
Pro Forma Consolidated Financial Statements of Retail Opportunity Investments Corp. | |
Pro Forma Consolidated Statement of Operations and Comprehensive Income for the nine months ended September 30, 2017 (Unaudited) | F-6 |
Pro Forma Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2016 (Unaudited) | F-7 |
Notes to Pro Forma Consolidated Financial Statements (Unaudited) | F-8 |
Pro Forma Consolidated Financial Statements of Retail Opportunity Investments Partnership, LP | |
Pro Forma Consolidated Statement of Operations and Comprehensive Income for the nine months ended September 30, 2017 (Unaudited) | F-10 |
Pro Forma Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2016 (Unaudited) | F-11 |
Notes to Pro Forma Consolidated Financial Statements (Unaudited) | F-12 |
Year Ended December 31, 2016 | Three Months Ended March 31, 2017 (Unaudited) | ||||||
Revenues | |||||||
Rental income (note 4) | $ | 3,207 | $ | 852 | |||
Total revenues | 3,207 | 852 | |||||
Certain Expenses | |||||||
Utilities | 84 | 21 | |||||
Repairs, maintenance and supplies | 140 | 78 | |||||
Cleaning and landscaping | 68 | 11 | |||||
Real estate taxes | 293 | 78 | |||||
Insurance | 47 | 12 | |||||
Total certain expenses | 632 | 200 | |||||
Excess of revenues over certain expenses | $ | 2,575 | $ | 652 |
Year Ending December 31, | Amounts | ||
2017 | $ | 2,638 | |
2018 | 2,573 | ||
2019 | 2,372 | ||
2020 | 1,862 | ||
2021 | 1,795 | ||
Thereafter | 7,738 | ||
$ | 18,978 |
Company Historical (1) | Highland Hill (2) | Pro Forma Adjustments | Company Pro Forma | ||||||||||||
Revenues | |||||||||||||||
Base rents | $ | 154,878 | $ | 938 | $ 1 (4) | $ | 155,817 | ||||||||
Recoveries from tenants | 43,100 | 263 | — | 43,363 | |||||||||||
Other income | 2,528 | — | — | 2,528 | |||||||||||
Total revenues | 200,506 | 1,201 | 1 | 201,708 | |||||||||||
Operating expenses | |||||||||||||||
Property operating | 28,630 | 157 | — | 28,787 | |||||||||||
Property taxes | 21,801 | 117 | — | 21,918 | |||||||||||
Depreciation and amortization | 71,330 | — | 356 (5) | 71,686 | |||||||||||
General and administrative expenses | 10,790 | — | — | 10,790 | |||||||||||
Acquisition transaction costs | 4 | — | — | 4 | |||||||||||
Other expense | 316 | — | — | 316 | |||||||||||
Total operating expenses | 132,871 | 274 | 356 | 133,501 | |||||||||||
Operating income | 67,635 | 927 | (355) | 68,207 | |||||||||||
Non-operating expenses | |||||||||||||||
Interest expense and other finance expenses | (37,060) | — | (345) (6) | (37,405) | |||||||||||
Net income | 30,575 | 927 | (700) | 30,802 | |||||||||||
Net income attributable to non-controlling interests | (2,947) | — | (22) (7) | (2,969) | |||||||||||
Net Income Attributable to Retail Opportunity Investments Corp. | $ | 27,628 | $ | 927 | $ | (722 | ) | $ | 27,833 | ||||||
Earnings per share – basic and diluted | $ | 0.25 | $ | 0.25 | |||||||||||
Dividends per common share | $ | 0.5625 | $ | 0.5625 | |||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 30,575 | $ | 927 | $ | (700 | ) | $ | 30,802 | ||||||
Other comprehensive income | |||||||||||||||
Unrealized swap derivative gain arising during the period | 1,617 | — | — | 1,617 | |||||||||||
Reclassification adjustment for amortization of interest expense included in net income | 1,491 | — | — | 1,491 | |||||||||||
Other comprehensive income | 3,108 | — | — | 3,108 | |||||||||||
Comprehensive income | 33,683 | 927 | (700) | 33,910 | |||||||||||
Comprehensive income attributable to non-controlling interests | (2,947) | — | (22) | (2,969) | |||||||||||
Comprehensive income attributable to Retail Opportunity Investments Corp. | $ | 30,736 | $ | 927 | $ | (722 | ) | $ | 30,941 |
Company Historical (1) | Highland Hill (3) | Pro Forma Adjustments | Company Pro Forma | ||||||||||||
Revenues | |||||||||||||||
Base rents | $ | 183,330 | $ | 2,633 | $ 4 (4) | $ | 185,967 | ||||||||
Recoveries from tenants | 51,454 | 574 | — | 52,028 | |||||||||||
Other income | 2,405 | — | — | 2,405 | |||||||||||
Total revenues | 237,189 | 3,207 | 4 | 240,400 | |||||||||||
Operating expenses | |||||||||||||||
Property operating | 32,201 | 339 | — | 32,540 | |||||||||||
Property taxes | 25,058 | 293 | — | 25,351 | |||||||||||
Depreciation and amortization | 88,359 | — | 948 (5) | 89,307 | |||||||||||
General and administrative expenses | 13,120 | — | — | 13,120 | |||||||||||
Acquisition transaction costs | 824 | — | — | 824 | |||||||||||
Other expense | 456 | — | — | 456 | |||||||||||
Total operating expenses | 160,018 | 632 | 948 | 161,598 | |||||||||||
Operating income | 77,171 | 2,575 | (944) | 78,802 | |||||||||||
Non-operating expenses | |||||||||||||||
Interest expense and other finance expenses | (40,741) | — | (711) (6) | (41,452) | |||||||||||
Net income | 36,430 | 2,575 | (1,655) | 37,350 | |||||||||||
Net income attributable to non-controlling interests | (3,676) | — | (93) (7) | (3,769) | |||||||||||
Net Income Attributable to Retail Opportunity Investments Corp. | $ | 32,754 | $ | 2,575 | $ | (1,748 | ) | $ | 33,581 | ||||||
Earnings per share – basic and diluted | $ | 0.31 | $ | 0.32 | |||||||||||
Dividends per common share | $ | 0.72 | $ | 0.72 | |||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 36,430 | $ | 2,575 | $ | (1,655 | ) | $ | 37,350 | ||||||
Other comprehensive income | |||||||||||||||
Unrealized swap derivative gain arising during the period | 541 | — | — | 541 | |||||||||||
Reclassification adjustment for amortization of interest expense included in net income | 2,473 | — | — | 2,473 | |||||||||||
Other comprehensive income | 3,014 | — | — | 3,014 | |||||||||||
Comprehensive income | 39,444 | 2,575 | (1,655) | 40,364 | |||||||||||
Comprehensive income attributable to non-controlling interests | (3,676) | — | (93) | (3,769) | |||||||||||
Comprehensive income attributable to Retail Opportunity Investments Corp. | $ | 35,768 | $ | 2,575 | $ | (1,748 | ) | $ | 36,595 |
1. | Derived from the Company’s unaudited and audited financial statements for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. |
2. | Derived from the Property’s unaudited financial statements for the period January 1, 2017 through the date of acquisition of May 9, 2017. |
3. | Derived from the Property’s audited financial statements for the year ended December 31, 2016. |
4. | Reflects the pro forma adjustment of $1,000 and $4,000 for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively, to record operating rents on a straight-line basis beginning January 1, 2016. |
5. | Reflects the estimated depreciation for the Property based on the estimated values allocated to the buildings at the beginning of the period presented. Depreciation expense is computed on a straight-line basis over the estimated useful life of the assets as follows (dollar amounts in thousands): |
Estimated Useful Life | 2017 Depreciation Expense (a) | Year Ended December 31, 2016 Depreciation Expense | |||||
Building | 40 years | $356 | $948 |
6. | Reflects the pro forma adjustment to interest expense, assuming the Company had borrowed funds from its credit facility to cover the purchase price of the Property, as if the acquisition had been made on the first day of the period presented. |
7. | Reflects the pro forma adjustment of net income attributable to non-controlling interests as if the Company had acquired the Property on January 1, 2016. |
Company Historical (8) | Highland Hill (9) | Pro Forma Adjustments | Company Pro Forma | ||||||||||||
Revenues | |||||||||||||||
Base rents | $ | 154,878 | $ | 938 | $ 1 (11) | $ | 155,817 | ||||||||
Recoveries from tenants | 43,100 | 263 | — | 43,363 | |||||||||||
Other income | 2,528 | — | — | 2,528 | |||||||||||
Total revenues | 200,506 | 1,201 | 1 | 201,708 | |||||||||||
Operating expenses | |||||||||||||||
Property operating | 28,630 | 157 | — | 28,787 | |||||||||||
Property taxes | 21,801 | 117 | — | 21,918 | |||||||||||
Depreciation and amortization | 71,330 | — | 356 (12) | 71,686 | |||||||||||
General and administrative expenses | 10,790 | — | — | 10,790 | |||||||||||
Acquisition transaction costs | 4 | — | — | 4 | |||||||||||
Other expense | 316 | — | — | 316 | |||||||||||
Total operating expenses | 132,871 | 274 | 356 | 133,501 | |||||||||||
Operating income | 67,635 | 927 | (355) | 68,207 | |||||||||||
Non-operating expenses | |||||||||||||||
Interest expense and other finance expenses | (37,060) | — | (345) (13) | (37,405) | |||||||||||
Net Income Attributable to Retail Opportunity Investments Partnership, LP | $ | 30,575 | $ | 927 | $ | (700 | ) | $ | 30,802 | ||||||
Earnings per unit – basic and diluted | $ | 0.25 | $ | 0.25 | |||||||||||
Distributions per unit | $ | 0.5625 | $ | 0.5625 | |||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 30,575 | $ | 927 | $ | (700 | ) | $ | 30,802 | ||||||
Other comprehensive income | |||||||||||||||
Unrealized swap derivative gain arising during the period | 1,617 | — | — | 1,617 | |||||||||||
Reclassification adjustment for amortization of interest expense included in net income | 1,491 | — | — | 1,491 | |||||||||||
Other comprehensive income | 3,108 | — | — | 3,108 | |||||||||||
Comprehensive income | $ | 33,683 | $ | 927 | $ | (700 | ) | $ | 33,910 |
Company Historical (8) | Highland Hill(10) | Pro Forma Adjustments | Company Pro Forma | ||||||||||||
Revenues | |||||||||||||||
Base rents | $ | 183,330 | $ | 2,633 | $ 4 (11) | $ | 185,967 | ||||||||
Recoveries from tenants | 51,454 | 574 | — | 52,028 | |||||||||||
Other income | 2,405 | — | — | 2,405 | |||||||||||
Total revenues | 237,189 | 3,207 | 4 | 240,400 | |||||||||||
Operating expenses | |||||||||||||||
Property operating | 32,201 | 339 | — | 32,540 | |||||||||||
Property taxes | 25,058 | 293 | — | 25,351 | |||||||||||
Depreciation and amortization | 88,359 | — | 948 (12) | 89,307 | |||||||||||
General and administrative expenses | 13,120 | — | — | 13,120 | |||||||||||
Acquisition transaction costs | 824 | — | — | 824 | |||||||||||
Other expense | 456 | — | — | 456 | |||||||||||
Total operating expenses | 160,018 | 632 | 948 | 161,598 | |||||||||||
Operating income | 77,171 | 2,575 | (944) | 78,802 | |||||||||||
Non-operating expenses | |||||||||||||||
Interest expense and other finance expenses | (40,741) | — | (711) (13) | (41,452) | |||||||||||
Net Income Attributable to Retail Opportunity Investments Partnership, LP | $ | 36,430 | $ | 2,575 | $ | (1,655 | ) | $ | 37,350 | ||||||
Earnings per unit – basic and diluted | $ | 0.31 | $ | 0.32 | |||||||||||
Distributions per unit | $ | 0.72 | $ | 0.72 | |||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 36,430 | $ | 2,575 | $ | (1,655 | ) | $ | 37,350 | ||||||
Other comprehensive income | |||||||||||||||
Unrealized swap derivative gain arising during the period | 541 | — | — | 541 | |||||||||||
Reclassification adjustment for amortization of interest expense included in net income | 2,473 | — | — | 2,473 | |||||||||||
Other comprehensive income | 3,014 | — | — | 3,014 | |||||||||||
Comprehensive income | $ | 39,444 | $ | 2,575 | $ | (1,655 | ) | $ | 40,364 |
8. | Derived from the Operating Partnership’s unaudited and audited financial statements for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. |
9. | Derived from the Property’s unaudited financial statements for the period January 1, 2017 through the date of acquisition of May 9, 2017. |
10. | Derived from the Property’s audited financial statements for the year ended December 31, 2016. |
11. | Reflects the pro forma adjustment of $1,000 and $4,000 for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively, to record operating rents on a straight-line basis beginning January 1, 2016. |
12. | Reflects the estimated depreciation for the Property based on the estimated values allocated to the buildings at the beginning of the period presented. Depreciation expense is computed on a straight-line basis over the estimated useful life of the assets as follows (dollar amounts in thousands): |
Estimated Useful Life | 2017 Depreciation Expense (a) | Year Ended December 31, 2016 Depreciation Expense | |||||
Building | 40 years | $356 | $948 |
(a) | Represents the period January 1, 2017 through the date of acquisition of May 9, 2017 for the Property. |
13. | Reflects the pro forma adjustment to interest expense, assuming the Operating Partnership had borrowed funds from its credit facility to cover the purchase price of the Property, as if the acquisition had been made on the first day of the period presented. |