EX-99.2 27 ex99-2.htm ex99-2.htm

Exhibit 99.2


SELECTED COMBINING PRO FORMA FINANCIAL DATA
 
The following unaudited pro forma financial information of FSP 303 East Wacker Drive Corp. (the “Company” or the “Registrant”) gives effect to the acquisition of a property (“303 East Wacker Drive” or the "Property") on January 5, 2007 by the Company.
 
The unaudited pro forma financial information has been prepared based upon certain pro forma adjustments to the historical financial statements of the Company and 303 East Wacker Drive.  The Company’s balance sheet as of December 31, 2007 reflects the acquisition of 303 East Wacker Drive; therefore a pro forma balance sheet is not presented.  The pro forma statements of operations for the year ended December 31, 2007 is presented as if the acquisition of 303 East Wacker Drive occurred at January 1, 2007.
 
Certain balances in 303 East Wacker Drive’s financial statements have been reclassified to conform to the Company’s presentation.
 
The unaudited pro forma financial information has been derived from the financial statements of the Company and 303 East Wacker Drive and should be read in conjunction with those financial statements and the accompanying notes.  For additional information, please refer to the financial statements included in the Company’s Registration Statement on Form 10 and Exhibit 99.1 thereto.
 
The unaudited pro forma combined financial statement data are not necessarily indicative of what the actual results of operations of the Company would have been for the period indicated, nor do they purport to represent the results of operations of the Company for any future period.
 

 

 

 
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FSP 303 East Wacker Drive Corp.
Combining Pro Forma Statements of Operations
For the Year Ended
December 31, 2007
(Unaudited)


                   
         
303 East
        
         
Wacker Drive
        
   
Historical
    
Acquisition
        
(in thousands, except per share amounts)
  
Company
    
(b)
    
Pro Forma
  
Revenue:
                  
     Rental income
   $ 22,118     $ 244     $ 22,362  
Total revenue
     22,118       244       22,362  
Expenses:
                        
     Rental operating expenses
     5,856       84       5,940  
     Real estate taxes and insurance
     5,735       63       5,798  
     Depreciation and amortization
     5,667       4       5,671  
     Interest
     13,810       120       13,930  
Total expenses
     31,068       271       31,339  
                         
Loss before interest income
     (8,950 )     (27 )     (8,977 )
   Interest Income
     433       -       433  
Net loss
     (8,517 )             (8,544 )
                         
Distribution paid to common stockholder
     (1,010 )     -       (1,010 )
Net loss attributable to preferred stockholder
   $ (9,527 )   $ (27 )   $ (9,554 )
                         
Weighted average shares outstanding,
                        
     basic and diluted
     894               894  
                         
Net loss per preferred share, basic and diluted
   $ (10,657 )           $ (10,853 )



 
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FSP 303 East Wacker Drive Corp.
NOTES TO COMBINING PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
 

 
BASIS OF PRESENTATION
 
The following unaudited combining pro forma financial statement presentation has been prepared based upon certain pro forma adjustments to the historical financial statements of the Company.  The pro forma statements of income are presented as if the acquisition had occurred as of the beginning of the periods presented.
 
The acquisition of the Property on January 5, 2007 has been treated as a purchase of assets.  The Property’s assets and liabilities have been recorded on the Company’s books at their fair value as of January 5, 2007 as determined in accordance with generally accepted accounting principles in the United States (or “GAAP”).

PRO FORMA ADJUSTMENTS
 
Certain assumptions regarding the operations of the Company have been made in connection with the preparation of the combining financial pro forma information.  These assumptions are as follows:
 
 
(a)
The Company has elected to be, and will qualify as, a real estate investment trust for federal income tax purposes.  The Company has met the various required tests; therefore, no provision for federal or state income taxes has been reflected on real estate operations.
 
 
(b)
The following table combines the historical operations of the Property for the period starting January 1, 2007 through the acquisition date.
 
                   
   
303 East
    
Adjustments
        
(in thousands)
  
Wacker Drive
    
resulting from
    
Pro Forma
  
   
Historical
    
Acquisition
    
Adjustment
  
                   
Revenue:
                  
Rental (1a)
   $ 245     $ (1 )   $ 244  
Total revenue
     245       (1 )     244  
                         
Expenses:
                        
Rental operating expenses
     84       -       84  
Real estate taxes and insurance
     63       -       63  
Depreciation and amortization (1b)
     -       4       4  
Interest (2)
     -       120       120  
Total expenses
     147       124       271  
                         
Income (loss) before interest income
     98       (125 )     (27 )
   Interest Income
     -       -       -  
Net income (loss)
     98       (125 )     (27 )
                         
Distribution paid to common stockholder
     -       -       -  
Net income (loss) attributable to preferred stockholder
   $ 98     $ (125 )   $ (27 )

 


 
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The following table presents the allocation of the purchase price to each asset or liability with the expected useful life and the pro forma adjustments for the depreciation and amortization:
 
                             
               
Depreciation/
            
               
Amortization
    
Pro Forma
      
   
Allocated
    
Life
    
Monthly
    
Adjustment
      
 (in thousands)
  
Purchase Price
    
(years)
    
Amount
    
Amount
      
                             
 Land
   $ 26,200      
N/A
     $ -     $ -      
 Building
     128,502      
39
       274       3  
(1b)
  
 Acquired favorable leases
     8,034      
3
       49       1  
(1a)
  
 Acquired unfavorable leases
     (613 )    
6
       (12 )     -  
(1a)
  
 Acquired real estate leases
     11,222      
3
       119       1  
(1b)
  
 Total
   $ 173,345      
 
     $ 430     $ 5      
                                     

 
(1a) The pro forma rental adjustment includes amounts related to the amortization of above and/or below market leases, which are being amortized over the remaining non-cancelable term of the respective leases in accordance with SFAS 141.
 
(1b) The pro forma for depreciation and amortization is due to depreciation of the acquired building and improvements using a straight-line method over and estimated life of 39 years.  In addition, the value of the in place leases (exclusive of the value of above and/or below market leases), are being amortized over the remaining non-cancelable term of the respective leases in accordance with SFAS 141.
 
(2) The pro forma interest expense adjustment includes amounts related to the $167 million acquisition mortgage loan payable to Franklin Street Properties Corp. to reflect as if the loan was outstanding from January 1, 2007 through the acquisition date at the weighted average interest rate of 6.53% that FSP had charged the Company.  An increase in the interest rate of 0.125% (1/8th of 1 percent) would increase the pro forma interest expense by approximately $2,300.
 


 
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