EX-99.5 11 ex995-nshixproforma.htm EXHIBIT Ex. 99.5-NSHI-ProForma


Exhibit 99.5
INDEX TO PRO FORMA FINANCIAL STATEMENTS

NorthStar Healthcare Income, Inc. and Subsidiaries Unaudited Pro Forma Condensed Consolidated Financial Information
 

2
NorthStar Healthcare Income, Inc. and Subsidiaries Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2014
 

3
NorthStar Healthcare Income, Inc. and Subsidiaries Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2013
NorthStar Healthcare Income, Inc. and Subsidiaries Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2014
 

4

5
NorthStar Healthcare Income, Inc. and Subsidiaries Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
 

6







 




























1




NORTHSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2014 is presented as if NorthStar Healthcare Income, Inc. ( the “Company”) acquired an equity interest in the healthcare real estate portfolio (the “Portfolio”) formerly held by Griffin-American Healthcare REIT II, Inc. (“Griffin-American”) following completion of the previously announced merger (the "Merger") of Griffin-American with and into a subsidiary of NorthStar Realty Finance Corp. (the "NorthStar Realty"), on September 30, 2014.

The following unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2014 and year ended December 31, 2013 are presented as if the following occurred on January 1, 2013: (i) the Company acquired the Portfolio Interest for $188.0 million in cash, inclusive of its pro rata share of associated transaction costs, through a joint venture with NorthStar Realty that is structured as a Delaware general partnership (the “Partnership”). The Company's investment in the Portfolio is at NorthStar Realty’s cost basis and represents approximately 14% (the "Portfolio Interest"); (ii) the Company acquired a 570-unit portfolio of four senior living facilities located in Long Island, New York (the “Arbors Portfolio”) for a purchase price of $125.0 million, plus closing costs; (iii) the Company acquired an independent living facility comprised of 125-units located in Milford, Ohio (“Pinebrook LLC”); and (iv) the Company acquired an equity investment in a $1.05 billion healthcare real estate portfolio comprised of over 8,500 beds across 38 senior housing and 42 skilled nursing facilities (“Formation Portfolio”).

The allocation of the purchase price of the Portfolio Interest reflected in these unaudited pro forma condensed consolidated financial statements has been based upon preliminary estimates of the fair value of assets acquired. A final determination of the fair value of the acquired assets will be based on the valuation of the tangible and intangible assets and liabilities of the Portfolio that exist, if any, as of the date of the acquisition.  Consequently, the preliminary amounts allocated to tangible assets could change significantly from those used in the pro forma condensed consolidated financial statements presented and could result in a material change in depreciation and amortization of tangible assets. The fair value is a preliminary estimate and may be adjusted within one year of the acquisition in accordance with accounting principles accepted in the United States (“U.S. GAAP”). In addition, adjustments have been recorded to reflect cash provided by the Company’s offering proceeds, net of offering costs, through the date of the acquisition.
This unaudited pro forma condensed consolidated financial information should be read in conjunction with the historical consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2014 and are not necessarily indicative of what the actual financial position or results of operations would have been had the Company completed the proposed transaction as of the beginning of the period presented, nor is it necessarily indicative of future results.  In the opinion of the Company’s management, the pro forma condensed consolidated financial statements include all significant necessary adjustments that can be factually supported to reflect the effects of the acquisition.









2


 NORTHSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES
 PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014
(Dollars in Thousands, Except Per Share Data)
 
 
 
 
 
 
 
 
 
 
 
 
Historical(1)
 
Pro Forma Adjustments(2)
 
Pro Forma Griffin
 
Pro Forma
 
Revenues
 
 
 
 
 
 
 
 
 
Resident fee income
 
$
10,591

 
$
—

 
$
—

 
$
10,591

 
Rental income
 
4,149

 
7,305

 
—

 
11,454

 
Interest income
 
3,847

 
—

 
—

 
3,847

 
Total revenue
 
18,587

 
7,305

 
—

 
25,892

 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
Property operating expense
 
7,946

 
—

 
—

 
7,946

 
Interest expense
 
2,186

 
—

 
—

 
2,186

 
Transaction costs
 
3,354

 
—

 
—

 
3,354

 
Asset management and other fees-related party
 
6,471

 
—

 
—

 
6,471

 
General and administrative expenses
 
2,570

 
—

 
—

 
2,570

 
Depreciation and amortization
 
2,644

 
2,174

 
—

 
4,818

 
Total expenses
 
25,171

 
2,174

 
—

 
27,345

 
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
(6,584
)
 
5,131

 
—

 
(1,453
)
 
 
 
 
 
 
 
 
 
 
 
Equity in earnings (losses) of unconsolidated venture
 
(93
)
 
1,190

 
(4,738
)
   (3) 
(3,641
)
 
Net income (loss)
 
(6,677
)
 
6,321

 
(4,738
)
 
(5,094
)
 
 
 
 
 
 
 
 
 
 
 
Net (income) loss attributable to non-controlling interests
 
35

 
—

 
—

 
35

 
Net income (loss) attributable to NorthStar Healthcare Income, Inc. common stockholders
 
$
(6,642
)
 
$
6,321

 
$
(4,738
)
 
$
(5,059
)
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share of common stock, basic/diluted
 
$
(0.23
)
 
 
 
 
 
$
(0.10
)
 
Weighted average number of shares of common stock
    outstanding
 
29,342

 
 
 
 
 
48,288

(4 
) 


















See accompanying notes to unaudited pro forma condensed consolidated financial statements.

3


 NORTHSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES
 PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 FOR THE YEAR ENDED DECEMBER 31, 2013
(Dollars in Thousands, Except Per Share Data)
 
 
 
 
 
 
 
 
 
 
 
 
Historical(1)
 
Pro Forma Adjustments(2)
 
Pro Forma Griffin
 
Pro Forma
 
Revenues
 
 
 
 
 
 
 
 
 
Rental income
 
$
488

 
$
10,623

 
$
—

 
$
11,111

 
Interest income
 
375

 
—

 
—

 
375

 
Resident fee income
 
38

 
2,462

 
—

 
2,500

 
Total revenue
 
901

 
13,085

 
—

 
13,986

 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
Property operating expense
 
24

 
1,092

 
—

 
1,116

 
Interest expense
 
98

 
534

 
—

 
632

 
Transaction costs
 
1,570

 
(309
)
 
—

 
1,261

 
Asset management and other fees-related party
 
1,334

 
—

 
—

 
1,334

 
General and administrative expenses
 
312

 
872

 
—

 
1,184

 
Depreciation and amortization
 
132

 
3,576

 
—

 
3,708

 
Total expenses
 
3,470

 
5,765

 
—

 
9,235

 
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
(2,569
)
 
7,320

 
—

 
4,751

 
 
 
 
 
 
 
 
 
 
 
Equity in earnings (losses) of unconsolidated venture
 
—

 
1,089

 
(19,937
)
  (3) 
(18,848
)
 
Net income (loss)
 
(2,569
)
 
8,409

 
(19,937
)
 
(14,097
)
 
 
 
 
 
 
 
 
 
 
 
Net (income) loss attributable to non-controlling interests
 
10

 
14

 
—

 
24

 
Net income (loss) attributable to NorthStar Healthcare Income, Inc. common stockholders
 
$
(2,559
)
 
$
8,423

 
$
(19,937
)
 
$
(14,073
)
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share of common stock, basic/diluted
 
$
(1.26
)
 
 
 
 
 
$
(0.22
)
 
Weighted average number of shares of common stock
    outstanding
 
2,026

 
 
 
 
 
65,376

(4) 












See accompanying notes to unaudited pro forma condensed consolidated financial statements.

4


 NORTHSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES
 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
 AS OF SEPTEMBER 30, 2014
(Dollars in Thousands)
 
 
 
 
 
 
 
 
 
 
 
Pro Forma
 
 
 
 
Historical (5)
 
Griffin
 
Pro Forma
Assets
 
 
 
 
 
 
Cash
 
$
91,635

 
$
(17,177
)
(6) 
$
74,458

Restricted cash
 
6,601

 
—

 
6,601

Operating real estate, net
 
260,293

 
—

 
260,293

Investment in and advances to unconsolidated venture
 
29,414

 
188,000

(7) 
217,414

Real estate debt investments, net
 
146,403

 
—

 
146,403

Receivables, net
 
5,205

 
—

 
5,205

Deferred costs, net
 
2,691

 
—

 
2,691

Total assets
 
$
542,242

 
$
170,823

 
$
713,065

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Mortgage notes payable
 
$
59,640

 
$
—

 
$
59,640

Due to related party
 
5,578

 
—

 
5,578

Escrow deposits payable
 
2,957

 
—

 
2,957

Distribution payable
 
2,857

 
—

 
2,857

Accounts payable and accrued expenses
 
2,044

 
—

 
2,044

Total liabilities
 
73,076

 
—

 
73,076

 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
NorthStar Healthcare Income, Inc. Stockholders' Equity
 
 
 
 
 
 
Preferred stock, $0.01 par value; 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2014
 
—

 
—

 
—

Common stock, $0.01 par value; 400,000,000 shares authorized, 55,388,928 shares issued and outstanding as of September 30, 2014
 
554

 
189

(6) 
743

Additional paid-in capital
 
492,657

 
170,634

(6) 
663,291

Retained earnings (accumulated deficit)
 
(25,211
)
 
—

 
(25,211
)
Total NorthStar Healthcare Income, Inc. stockholders' equity
 
468,000

 
170,823

 
638,823

Non-controlling interests
 
1,166

 
—

 
1,166

Total equity
 
469,166

 
170,823

 
639,989

Total liabilities and equity
 
$
542,242

 
$
170,823

 
$
713,065











See accompanying notes to unaudited pro forma condensed consolidated financial statements.

5


NORHTSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)
Represents the Company's condensed consolidated statement of operations for the nine months ended September 30, 2014 and the year ended December 31, 2013.

(2)
The following summarizes the pro forma adjustments related to the transactions (dollars in thousands):
Nine Months Ended September 30, 2014
 
 
 
 
 
 
 
 
 
 
 Formation Portfolio
 
 Arbors Portfolio
 
 Total
 
 
Pro Forma Adjustments
 
Historical (ii)
 
Pro Forma Adjustments (iii)
 
 
Rental income
 
$
—

 
$
—

 
$
7,305

 
$
7,305

Resident fee income
 
—

 
21,378

 
(21,378
)
 
—

    Total other revenues
 
—

 
21,378

 
(14,073
)
 
7,305

 
 
 
 
 
 
 
 

Interest expense
 
—

 
—

 
—

 
—

Property operating expense
 
—

 
14,745

 
(14,745
)
 
—

Transaction costs
 
—

 
—

 
—

 
—

General and administrative expenses
 
—

 
477

 
(477
)
 
—

Depreciation and amortization
 
—

 
1,324

 
850

 
2,174

    Total expenses
 
—

 
16,546

 
(14,372
)
 
2,174

 
 
 
 
 
 
 
 

Income (loss) from operations
 
—


4,832

 
299


5,131

Equity in earnings (losses) of unconsolidated venture
 
1,190

 (i)  
—

 
—

 
1,190

Net income (loss) attributable to NorthStar Healthcare Income Trust, Inc. common stockholders
 
$
1,190


$
4,832

 
$
299


$
6,321


Year Ended December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Pinebrook
 
 Formation Portfolio
 
 Arbors Portfolio
 
 Total
 
 
Historical (iv)
 
Pro Forma Adjustments
 
Pro Forma Adjustments
 
Historical
 
Pro Forma Adjustments (iii)
 
 
Rental income
 
$
—

 
$
—

 
$
—

 
$
—

 
$
10,623

 
$
10,623

Resident fee income
 
1,875

 
587

 
—

 
30,203

 
(30,203
)
 
2,462

    Total other revenues
 
1,875

 
587

 
—

 
30,203

 
(19,580
)
 
13,085

 
 
 
 
 
 
 
 
 
 
 
 

Interest expense
 
623

 
(89
)
 (v)  
—

 
—

 
—

 
534

Property operating expense
 
837

 
255

 
—

 
21,148

 
(21,148
)
 
1,092

Transaction costs
 
—

 
(309
)
 (vi)  
—

 
—

 
—

 
(309
)
General and administrative expenses
 
658

 
214

 
—

 
449

 
(449
)
 
872

Depreciation and amortization
 
488

 
(73
)
 (vii)  
—

 
1,842

 
1,319

 
3,576

    Total expenses
 
2,606

 
(2
)
 
—

 
23,439

 
(20,278
)
 
5,765

 
 
 
 
 
 
 
 
 
 
 
 

Income (loss) from operations
 
(731
)
 
589

 
—

 
6,764

 
698

 
7,320

Net (income) loss attributable to non-controlling interests
 
—

 
14

 (viii)  
—

 
—

 
—

 
14

Equity in earnings (losses) of unconsolidated venture
 
—

 
—

 
1,089

 (ix)  
—

 
—

 
1,089

Net income (loss) attributable to NorthStar Healthcare Income Trust, Inc. common stockholders
 
$
(731
)
 
$
603

 
$
1,089

 
$
6,764

 
$
698

 
$
8,423







6



(i)
In May 2014, the Company, through a general partnership with a subsidiary of NorthStar Realty, entered into a joint venture with an affiliate of Formation Capital, LLC to acquire the Formation Portfolio. The Company contributed $23.4 million for an approximate 5.6% interest in the Formation Portfolio. For the period from January 1, 2014 to the acquisition date, the Formation Portfolio generated net income of $13.5 million of which $6.8 million was the impact of adjusting for the effects of the preliminary purchase price allocation of the Formation Portfolio and the removal of transaction costs. For the period from January 1, 2014 to the acquisition date, the Company’s proportionate interest in earnings from such investment was $1.2 million.

(ii)
In September 2014, the Company acquired a 570-unit portfolio of four senior living facilities located in Long Island, New York (the “Arbors Portfolio”) for a purchase price of $125.0 million, plus closing costs. The historical information represents the Arbors Portfolio unaudited results of operations for the period from January 1, 2014 to the acquisition date.

(iii)
The pro forma adjustments represent the acquisition of the Arbors Portfolio as if it had occurred on January 1, 2013 for the statement of operations for the nine months ended September 30, 2014 and for the year ended December 31, 2013. The pro forma adjustments include:

(1) the Arbors Portfolio’s contractual rent revenue for the nine months ended September 30, 2014 and year ended December 31, 2013 was $5.8 million and $8.5 million, respectively and the straight-line rent adjustment for the the nine months ended September 30, 2014 and year ended December 31, 2013 was $1.5 million and $2.1 million, respectively;
 
(2) the value allocated to building and furniture, fixtures and equipment is depreciated based on an estimated useful life of 40 and 10 years, respectively.

(iv)
Represents audited financial statements of Pinebrook, LLC for the year ended December 31, 2013. Pinebrook, LLC was acquired in December 2013.

(v)
Represents the net impact of the interest rate on new borrowings and amortization of deferred financing costs of $0.5 million for Pinebrook, LLC for the year ended December 31, 2013.

(vi)
Represents adjustments to exclude transaction costs incurred in connection with the transaction.

(vii)
Represents the decrease in depreciation and amortization expense based on the preliminary purchase price allocation for Pinebrook, LLC.

(viii)Represents the Company’s non-controlling interest allocation to the joint venture partner based on the terms of the joint venture agreement.

(ix) For the year ended December 31, 2013, the Formation Portfolio generated net income of $13.8 million. For the year ended December 31, 2013, the impact of adjusting for the effects of the preliminary purchase price allocation of the Formation Portfolio and the removal of transaction costs resulted in net income of $19.3 million. For the year ended December 31, 2013, the Company’s proportionate interest in earnings from such investment was $1.1 million.

(x) Represents audited financial statements of the Arbors Portfolio.



(3)
Pursuant to the Purchase Agreement, the Company acquired the Portfolio Interest for $188.0 million in cash, inclusive of its pro rata share of associated transaction costs, through the Partnership. For the nine months ended September 30,

7


2014 and year ended December 31, 2013, the Portfolio generated net loss of $33.7 million and $141.9 million, respectively after adjusting for the affects of the preliminary purchase price allocation of the Portfolio of the . For the nine months ended September 30, 2014 and the year ended December 31, 2013, the Company’s proportionate interest in losses from such investment was $4.7 million and $19.9 million, respectively.

(4)
Amount represents the weighted average number of shares of the Company’s common stock from the initial public offering, at $10.00 per share, required to generate sufficient offering proceeds, net of offering costs, to fund the purchase of the Portfolio Interest. The calculation assumes these proceeds were raised as of January 1, 2013.

(5) 
Represents the Company’s condensed consolidated balance sheet as of September 30, 2014.

(6)
The Company issued 18.9 million shares and raised $170.6 million in net offering proceeds for the period from September 30, 2014 through December 3, 2014 and used $188.0 million to fund the purchase of the Portfolio Interest.


8