|
Organization and Basis of Presentation and Consolidation (Tables)
|
12 Months Ended |
|
Dec. 31, 2012
|
|
Business Acquisition
|
|
| Unaudited Pro Forma Condensed Consolidated Financial Information |
The following
unaudited pro forma condensed consolidated financial information is
presented to illustrate the estimated impact on the results of
operations of the Company assuming the formation transactions
discussed above occurred on January 1, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year Ended December 31,
2012 |
|
| |
|
WHLR and
Subsidiaries (1) |
|
|
PSF
Entities (2) |
|
|
Consolidated |
|
|
Total Revenues
|
|
$ |
2,433,979 |
|
|
$ |
2,883,035 |
|
|
$ |
5,317,014 |
|
|
Total Operating
Expenses
|
|
|
2,673,523 |
|
|
|
2,154,303 |
|
|
|
4,827,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating Income
(Loss)
|
|
|
(239,544 |
) |
|
|
728,732 |
|
|
|
489,188 |
|
|
Interest Expense
|
|
|
(966,113 |
) |
|
|
(784,930 |
) |
|
|
(1,751,043 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$ |
(1,205,657 |
) |
|
$ |
(56,198 |
) |
|
$ |
(1,261,855 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(1) |
Includes the operations of
the PSF Entities for the period from November 16, 2012 (date of
formation transactions) through December 31, 2012. |
| |
(2) |
Represents the estimated
operations of the PSF Entities for the period from January 1, 2012
until November 16, 2012. |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year Ended December 31,
2011 |
|
| |
|
WHLR and
Subsidiaries |
|
|
PSF
Entities |
|
|
Consolidated |
|
|
Total Revenues
|
|
$ |
1,925,277 |
|
|
$ |
3,080,563 |
|
|
$ |
5,005,840 |
|
|
Total Operating
Expenses
|
|
|
1,673,907 |
|
|
|
2,437,503 |
|
|
|
4,111,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
|
|
251,370 |
|
|
|
643,060 |
|
|
|
894,430 |
|
|
Interest Expense
|
|
|
(805,969 |
) |
|
|
(951,916 |
) |
|
|
(1,757,885 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$ |
(554,599 |
) |
|
$ |
(308,856 |
) |
|
$ |
(863,455 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate
|
|
| Summary of Consideration Paid and Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed |
The following
summarizes the consideration paid and the preliminary estimated
fair values of assets acquired and liabilities assumed in
conjunction with the acquisitions described above, along with a
description of the methods used to determine fair value. In
determining fair values, we considered many factors including, but
not limited to, cash flows, market cap rates, location, occupancy
rates, appraisals, other acquisitions and our knowledge of the
current acquisition market for similar properties.
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|
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| |
|
Harbor Point |
|
|
Twin
City |
|
|
Surry
Plaza |
|
|
Total |
|
|
Preliminary estimated fair
value of assets acquired and liabilities assumed:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment property
(a)
|
|
$ |
3,985,360 |
|
|
$ |
3,841,227 |
|
|
$ |
2,237,245 |
|
|
$ |
10,063,832 |
|
|
Lease intangibles and other
assets (b)
|
|
|
641,383 |
|
|
|
921,433 |
|
|
|
217,461 |
|
|
|
1,780,277 |
|
|
Accounts payable, accrued
expenses and other liabilities (c)
|
|
|
— |
|
|
|
— |
|
|
|
(60,352 |
) |
|
|
(60,352 |
) |
|
Above/(below) market leases
(d)
|
|
|
(76,743 |
) |
|
|
(262,660 |
) |
|
|
(154,706 |
) |
|
|
(494,109 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of net assets
acquired
|
|
$ |
4,550,000 |
|
|
$ |
4,500,000 |
|
|
$ |
2,239,648 |
|
|
$ |
11,289,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
consideration:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration paid with
cash and debt
|
|
$ |
4,550,000 |
|
|
$ |
4,500,000 |
|
|
$ |
1,745,530 |
|
|
$ |
10,795,530 |
|
|
Consideration paid with
common units
|
|
|
— |
|
|
|
— |
|
|
|
494,118 |
|
|
|
494,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consideration
(e)
|
|
$ |
4,550,000 |
|
|
$ |
4,500,000 |
|
|
$ |
2,239,648 |
|
|
$ |
11,289,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
a. |
Represents the preliminary
estimated fair value of the net investment properties acquired
which includes land, buildings, site improvements and tenant
improvements. The fair value was determined using following
approaches: |
| |
i. |
the market approach
valuation methodology for land by considering similar transactions
in the markets; |
| |
ii. |
a combination of the cost
approach and income approach valuation methodologies for buildings,
including replacement cost evaluations, “go dark”
analyses and residual calculations incorporating the land values;
and |
| |
iii. |
the cost approach valuation
methodology for site and tenant improvements, including replacement
costs and prevailing quoted market rates. |
| |
b. |
Represents the preliminary
estimated fair value of lease intangibles and other assets. Lease
intangibles include leasing commissions, in place leases and legal
and marketing fees associated with replacing existing leases. The
income approach was used to determine the fair value of these
intangible assets which included estimated market rates and
expenses. It was determined that carrying value approximated fair
value for other asset amounts. |
| |
c. |
Represents the preliminary
estimated fair value of accounts payable, accrued expenses and
other liabilities. It was determined that carrying value
approximated fair value for all amounts in these
categories. |
| |
d. |
Represents the preliminary
estimated fair value of above/below market leases. The income
approach was used to determine the fair value of above/below market
leases using market rental rates for similar
properties. |
| |
e. |
Represents the components
of purchase consideration paid. |
|
| Unaudited Pro Forma Condensed Consolidated Financial Information |
The following
unaudited pro forma condensed consolidated financial information is
presented to illustrate the estimated impact on the results of
operations of the Company assuming the transactions discussed above
occurred on January 1, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year Ended December 31,
2012 |
|
| |
|
WHLR and
Subsidiaries (1) |
|
|
December 2012
Acquisitions (2) |
|
|
Consolidated |
|
|
Total Revenues
|
|
$ |
2,433,979 |
|
|
$ |
1,322,250 |
|
|
$ |
3,756,229 |
|
|
Total Operating
Expenses
|
|
|
2,673,523 |
|
|
|
787,619 |
|
|
|
3,461,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
|
|
(239,544 |
) |
|
|
534,631 |
|
|
|
295,087 |
|
|
Interest Expense
|
|
|
(966,113 |
) |
|
|
(294,704 |
) |
|
|
(1,260,817 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
$ |
(1,205,657 |
) |
|
$ |
239,927 |
|
|
$ |
(965,730 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(1) |
Includes the operations of
the entities acquired for the period from their respective
acquisition date through December 31, 2012. |
| |
(2) |
Represents the estimated
operations of the entities acquired for the period from January 1,
2012 until their respective acquisition dates. |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year Ended December 31,
2011 |
|
| |
|
WHLR and
Subsidiaries |
|
|
December 2012
Acquisitions |
|
|
Consolidated |
|
|
Total Revenues
|
|
$ |
1,925,277 |
|
|
$ |
1,251,216 |
|
|
$ |
3,176,493 |
|
|
Total Operating
Expenses
|
|
|
1,673,907 |
|
|
|
805,514 |
|
|
|
2,479,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
|
|
251,370 |
|
|
|
445,702 |
|
|
|
697,072 |
|
|
Interest Expense
|
|
|
(805,969 |
) |
|
|
(349,862 |
) |
|
|
(1,155,831 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
$ |
(554,599 |
) |
|
$ |
95,840 |
|
|
$ |
(458,759 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSF Entities
|
|
| Summary of Consideration Paid and Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed |
The following
summarizes the consideration paid and the fair values of assets
acquired and liabilities assumed in conjunction with the Trust
acquiring the PSF Entities, along with a description of the methods
used to determine fair value. In determining fair values, we
considered many factors including, but not limited to, cash flows,
market cap rates, location, occupancy rates, appraisals, other
acquisitions and our knowledge of the current acquisition market
for similar properties.
|
|
|
|
|
|
Estimated fair value of
assets acquired and liabilities assumed:
|
|
|
|
|
|
Investment property
(a)
|
|
$ |
20,769,328 |
|
|
Tenant and other
receivables and other assets (b)
|
|
|
1,209,811 |
|
|
Other lease intangibles
(c)
|
|
|
3,250,840 |
|
|
Mortgage debt
(d)
|
|
|
(14,004,098 |
) |
|
Accounts payable, accrued
expenses and other liabilities (e)
|
|
|
(211,997 |
) |
|
Above/(below) market leases
(f)
|
|
|
(3,220,166 |
) |
|
|
|
|
|
|
Fair value of net assets
acquired
|
|
$ |
7,793,718 |
|
|
|
|
|
|
|
Less estimated purchase
consideration:
|
|
|
|
|
|
Estimated consideration
paid with common units
|
|
$ |
4,813,848 |
|
|
Estimated consideration
paid with cash
|
|
|
2,979,870 |
|
|
|
|
|
|
|
Total estimated
consideration (g)
|
|
$ |
7,793,718 |
|
|
|
|
|
|
| |
a. |
Represents the fair value
of the net investment properties acquired which includes land,
buildings, site improvements, tenant improvements and in place
leases. The fair value was determined using following
approaches: |
| |
i. |
the market approach
valuation methodology for land by considering similar transactions
in the markets; |
| |
ii. |
a combination of the cost
approach and income approach valuation methodologies for buildings,
including replacement cost evaluations, “go dark”
analyses and residual calculations incorporating the land
values; |
| |
iii. |
the cost approach valuation
methodology for site and tenant improvements, including replacement
costs and prevailing quoted market rates; and |
| |
iv. |
the income approach
valuation methodology for in place leases which considered
estimated market rental rates, expenses reimbursements and time
required to replace leases. |
| |
b. |
Represents the fair value
of tenant and other receivables and other current assets. It was
determined that carrying value approximated fair value for all
amounts in these categories. |
| |
c. |
Represents the fair value
of other lease intangibles which includes leasing commissions and
legal and marketing fees associated with replacing existing leases.
The income approach was used to determine the fair value of these
intangible assets which included estimated market rates and
expenses. |
| |
d. |
Represents the fair value
of mortgages payable which was calculated by performing a
discounted cash flow analysis on debt service using current
prevailing market interest on comparable debt. |
| |
e. |
Represents the fair value
of accounts payable, accrued expenses and other liabilities. It was
determined that carrying value approximated fair value for all
amounts in these categories. |
| |
f. |
Represents the fair value
of above/(below) market leases. The income approach was used to
determine the fair value of above/(below) market leases using
market rental rates for similar properties. |
| |
g. |
Represents the components
of purchase consideration paid. |
|