NSAM - 8-K/A AHI (1.5.2015)

0001597503-15-000006.txt : 20150220 0001597503-15-000006.hdr.sgml : 20150220 20150220170734 ACCESSION NUMBER: 0001597503-15-000006 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20141208 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20150220 DATE AS OF CHANGE: 20150220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NorthStar Asset Management Group Inc. CENTRAL INDEX KEY: 0001597503 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0701 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-36301 FILM NUMBER: 15636605 BUSINESS ADDRESS: STREET 1: 399 PARK AVENUE, 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-547-2600 MAIL ADDRESS: STREET 1: 399 PARK AVENUE, 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 8-K/A 1 nsam-8xkaahi152015.htm 8-K/A NSAM - 8-K/A AHI (1.5.2015)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 8, 2014

NorthStar Asset Management Group Inc.

(Exact name of registrant as specified in its charter)



Delaware (State or other jurisdiction of incorporation)	001-36301 (Commission File Number)	46-4591526 (I.R.S. Employer Identification No.)



399 Park Avenue, 18th Floor, New York, NY		10022
(Address of principal executive offices)		(Zip Code)

(212) 547-2600

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

On December 12, 2014, NorthStar Asset Management Group Inc. (“NSAM”) filed a Current Report on Form 8-K (the “Form 8-K”) disclosing NSAM's acquisition through its wholly owned subsidiary, Platform HealthCare Investor T-II, LLC (the “Purchaser”) of an approximately 47% interest (the “AHI Interest”) of AHI Newco, LLC (“AHI Ventures”), a Delaware limited liability company and direct wholly-owned subsidiary of American Healthcare Investors LLC (“AHI”) for $38 million in cash and $20 million (956,462 shares) of NSAM's common stock subject to certain lock-up and vesting restrictions ($10 million of NSAM's common stock vested immediately). This Amendment No. 1 to the Form 8-K is being filed to provide additional financial information in connection with such acquisition.

Item 9.01. Financial Statements and Exhibits.

The Form 8-K is hereby amended to include the following financial information.

(a) Financial Statements.

Audited consolidated financial statements of American Healthcare Investors LLC as of December 31, 2013, 2012 and 2011 and for the years ended December 31, 2013, 2012 and 2011 and an independent auditor’s report are attached as Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3 hereto and are incorporated by reference herein.

Unaudited consolidated financial statements of American Healthcare Investors LLC as of September 30, 2014 and for the nine months ended September 30, 2014 and 2013 are attached as Exhibit 99.4 hereto and are incorporated by reference herein.

(b) Pro Forma Financial Information.

The pro forma financial information required pursuant to Article 11 of Regulation S-X is attached as Exhibit 99.5 hereto:


•	Unaudited Pro Forma Combined Consolidated Statement of Operations of NorthStar Asset Management Group Inc. and subsidiaries for the nine months ended September 30, 2014


•	Unaudited Pro Forma Combined Consolidated Statement of Operations of NorthStar Asset Management Group Inc. and subsidiaries for the year ended December 31, 2013


•	Unaudited Pro Forma Combined Consolidated Balance Sheet of NorthStar Asset Management Group Inc. and subsidiaries as of September 30, 2014


•	Notes to Unaudited Pro Forma Combined Consolidated Financial Statements of NorthStar Asset Management Group Inc. and subsidiaries

(d) Exhibits.



Exhibit No.		Description
23.1		Consent of Bentson, Vuona & Westersten, LLP
99.1		Audited consolidated financial statements of American Healthcare Investors LLC as of and for the year ended December 31, 2013
99.2		Audited consolidated financial statements of American Healthcare Investors LLC as of and for the year ended December 31, 2012
99.3		Audited consolidated financial statements of American Healthcare Investors LLC as of and for the year ended December 31, 2011
99.4		Unaudited consolidated financial statements of American Healthcare Investors LLC as of and for the nine months ended September 30, 2014 and 2013
99.5		Pro forma financial information of NorthStar Asset Management Group Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



	NorthStar Asset Management Group Inc.
	(Registrant)

Date: February 20, 2015	By:	/s/ Ronald J. Lieberman
		Ronald J. Lieberman
		Executive Vice President, General Counsel and Secretary

EXHIBIT INDEX



Exhibit No.		Description
23.1		Consent of Bentson, Vuona & Westersten, LLP
99.1		Audited consolidated financial statements of American Healthcare Investors LLC as of and for the year ended December 31, 2013
99.2		Audited consolidated financial statements of American Healthcare Investors LLC as of and for the year ended December 31, 2012
99.3		Audited consolidated financial statements of American Healthcare Investors LLC as of and for the year ended December 31, 2011
99.4		Unaudited consolidated financial statements of American Healthcare Investors LLC as of and for the nine months ended September 30, 2014 and 2013
99.5		Pro forma financial information of NorthStar Asset Management Group Inc.

EX-23.1 2 ex231bvwconsent1.htm EXHIBIT 23.1 Ex 23.1 BVW Consent (1)

Exhibit 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the incorporation by reference in NorthStar Asset Management Group Inc.’s Registration Statement on Form S-8 (File No. 333-197104) and in the related prospectus of our reports dated March 5, 2014, March 1, 2013, and October 22, 2014 with respect to the consolidated financial statements of American Healthcare Investors LLC as of and for the year ended December 31, 2013, 2012 and 2011, respectively, included in this Current Report on Form 8-K/A of NorthStar Asset Management Group Inc.

/s/ Bentson, Vuona & Westersten, LLP

Bentson, Vuona & Westersten, LLP

Irvine, California

February 20, 2015

EX-99.1 3 exhibit991ahi123113fs1.htm EXHIBIT 99.1 Exhibit 99.1 AHI 12.31.13 FS (1)

Exhibit 99.1

AMERICAN HEALTHCARE

INVESTORS LLC AND SUBSIDIARIES

Financial Statements

December 31, 2013

TABLE OF CONTENTS



INDEPENDENT AUDITORS’ REPORT	1
FINANCIAL STATEMENTS
Consolidated Balance Sheet	2 - 3
Consolidated Statement of Income	4
Consolidated Statement of Changes in Equity	5
Consolidated Statement of Cash Flows	6
Notes to the Unaudited Financial Statements	7 - 11

BENTSON, VUONA & WESTERSTEN, LLP

Certified Public Accountants

INDEPENDENT AUDITORS’ REPORT

To the Members

American Healthcare Investors LLC and subsidiaries

Irvine, California

We have audited the accompanying consolidated financial statements of American Healthcare Investors LLC (a California partnership) and subsidiaries, which comprise the consolidated balance sheets as of December 31, 2013, and the related consolidated statements of income, changes in equity, and cash flows for the years then ended, and related notes to the financial statements.

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles general accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these consolidate financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Healthcare Investors LLC and subsidiaries as of December 31, 2013, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Bentson, Vuona & Westersten, LLP

BENTSON, VUONA & WESTERSTEN, LLP

Irvine, California

March 5, 2014

17 Goddard Irvine, California 92618 t 949.789.1050 f 949.789.1051

AMERICAN HEALTHCARE INVESTORS LLC

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2013



ASSETS
CURRENT ASSETS
Cash	$	11,538,617
Accounts receivable	2,997,587
Prepaid expenses and deposits	35,353
Investment in marketable securities	1,557,045
TOTAL CURRENT ASSETS	16,128,602
PROPERTY AND EQUIPMENT, net	167,648
LONG TERM ASSETS
Investment in real estate	2,000,000
Prepaid expenses - long term	517,852
Security deposit	56,682
TOTAL LONG TERM ASSETS	2,574,534
TOTAL ASSETS	$	18,870,784

Page 2

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS LLC

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2013



LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	206,490
Income taxes payable	178,000
Accrued wages and bonuses	1,361,322
Accrued expenses	20,000
TOTAL CURRENT LIABILITIES	1,765,812
TOTAL LIABILITIES	1,765,812
MEMBERS' EQUITY
Controlling interest in equity	16,243,853
Non-controlling interest in equity	861,119
TOTAL MEMBERS' EQUITY	17,104,972
TOTAL LIABILITIES & MEMBERS' EQUITY	$	18,870,784

Page 3

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS LLC

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

FOR YEAR ENDED DECEMBER 31, 2013



REVENUE	$	55,337,481
EXPENSES	10,342,361
OPERATING INCOME	44,995,120
INCOME BEFORE PROVISION FOR INCOME TAXES	44,995,120
PROVISION FOR INCOME TAXES	(490,590		)
INCOME INCLUDING NON-CONTROLLING INTEREST	44,504,530
NON-CONTROLLING INTEREST IN EARNINGS	(13,205,593		)
NET INCOME	$	31,298,937

Page 4

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS LLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR YEAR ENDED DECEMBER 31, 2013



	Beginning of Year		Capital Contributed During the Year		Net Income		Income of Non-controlling Interest		Distributions			End of Year
Members' Equity
Controlling Interest	$	5,146,731	$	—	$	31,298,937	$	—	$	(20,201,815	)	$	16,243,853
Non-controlling interest	804,057		—		—		13,205,593		(13,148,531		)	861,119
Total Members' Equity	$	5,950,788	$	—	$	31,298,937	$	13,205,593	$	(33,350,346	)	$	17,104,972

Page 5

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS LLC

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOW

FOR YEAR ENDED DECEMBER 31, 2013



CASH FLOWS FROM OPERATING ACTIVITIES
Net income including non-controlling interest	$	44,504,530
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	72,921
Marketable securities received as fees	(1,845,758		)
Changes in assets and liabilities
Increase in accounts receivable	(617,655		)
Increase in other current assets	(1,617,050		)
Increase in security deposit	(4,182		)
Decrease in accounts payable	(319,116		)
Decrease in income taxes payable	(22,000		)
Increase in accrued expenses	20,000
Increase in accrued wages	1,138,567
Net cash provided by operating activities	41,310,257
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment in real estate	(2,000,000		)
Purchase of fixed assets	(186,276		)
Net cash used by financing activities	(2,186,276		)
CASH FLOWS FROM FINANCING ACTIVITIES
Member distributions - controlling interest	(18,558,057		)
Member distributions - non-controlling interest	(13,148,531		)
Net cash used by financing activities	(31,706,588		)
Net increase in cash	7,417,393
CASH, BEGINNING OF YEAR	4,121,224
CASH, END OF YEAR	$	11,538,617
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for taxes	$	352,661

Page 6

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

American Healthcare Investors LLC

American Healthcare Investors LLC (“AHI”) is a Delaware LLC that was founded in 2011 by Jeffrey Hanson, Danny Prosky & Mathieu Streiff. The company focuses on providing real estate services to its clients including but not limited to acquiring, managing, and accounting for clinical healthcare real estate.

AHI Management Services Inc.

AHI Management Services Inc., a Delaware corporation is a 100% owned subsidiary of American Healthcare Investors. AHI Management Services was formed to handle property management and leasing services for programs managed by AHI. AHI Management Services collects property management fees, leasing commissions and construction management fees on an ongoing basis and remits the funds to AHI. There is a service agreement between the two companies where AHI provides all of the services of the subsidiary and in return, earns all of the fees paid out to AHI Management Services.

Griffin-American Healthcare REIT II Sub-Advisor

Griffin-American Healthcare REIT II Sub-Advisor is a joint venture between American Healthcare Investors, LLC (75%) and Griffin-American Healthcare REIT Advisor, LLC (25%). The sub-advisor was formed specifically to handle advisory services for Griffin-American Healthcare REIT II. All fees, with the exception of fees paid directly to AHI Management Services, are paid to the sub-advisor and distributions to the two partners are paid out per a joint venture agreement.

Griffin-American Healthcare REIT III Advisor, LLC

Griffin-American Healthcare REIT III Advisor is a joint venture between American Healthcare Investors, LLC (75%) and Griffin-Capital REIT Holdings LLC (25%). The advisor was formed specifically to handle advisory services for Griffin-American Healthcare REIT III. All fees, with the exception of fees paid directly to AHI Management Services, are paid to the advisor and distributions to the two partners are paid out per a joint venture agreement.

Principles of consolidation

The consolidated financial statements include the accounts of AHI, AHI Management Services, Inc., Griffin-American Healthcare REIT Sub-Advisor and Griffin-American Healthcare REIT III Advisor, LLC. All material intercompany transactions have been eliminated.

Cash

For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months of less.

Page 7

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts receivable and allowance for doubtful Accounts

Trade accounts receivable are stated at the amount management expects to collect from customers. Management provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance based on its assessment of the current status of individual accounts. As of December 31, 2013 all accounts receivable were considered collectible.

Property and equipment

Property and equipment is stated at cost. Depreciation of property and equipment is provided on the straight line basis over the estimated useful lives of the related assets, generally three to five years.

Income Taxes

The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under these provisions, the Company does not pay federal corporate income taxes on its taxable income. Instead, the stockholders are liable for individual federal income taxes on their respective shares of the Company’s taxable income. The State of California requires an S-Corporation to pay income taxes at the rate of 1.5% of state taxable income or $800 whichever is greater. Therefore, a provision for state income taxes will be provided in the financial statements as required.

The Company accounts for income taxes under provisions of Financial Accounting Standards Board ASC 740, whereby deferred taxes are provided on temporary differences arising from assets and liabilities whose bases are different for financial reporting and income tax purposes. As of December 31, 2013 the Company has no material timing differences. The Company has prepared an analysis of all open tax positions, a determination as to their certainty and measurement or any uncertain tax positions taken or expected to be taken. As of December 31, 2013, the Company does not have any uncertain tax positions that would result in a change to income taxes recognized in the Company’s financial statements.

Revenue Recognition

The Company earns its revenue from providing property management and leasing services on a monthly basis and handling advisory services for Griffin-American Healthcare REIT II.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Comprehensive Income

For the year ended December 31, 2013, there was no difference between net income and comprehensive income.

Page 8

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Advertising Costs

Advertising costs are charged to operations when incurred. Advertising expense in 2013 was $1,570.

NOTE 2. ACCOUNTS RECEIVABLE



	December 30, 2013
Trade	$	2,981,457
Allowance for doubtful accounts	—
	$	2,981,457

Accounts receivable are carried at original invoice amount and are written off when deemed uncollectible. Based on management’s evaluation of uncollected accounts receivable at the end of each year, an allowance for doubtful accounts was deemed unnecessary at December 31, 2013. There was no bad debt expense in 2013.

NOTE 3. MACHINERY AND EQUIPMENT

Equipment consists of the following:



	December 31, 2013
Computer equipment	$	33,119
Furniture and Fixtures	119,195
Leasehold Improvements	27,156
Office equipment	29,225
Software	19,096
Vehicles	39,925
	267,716
Less accumulated depreciation	(100,068		)
	$	167,648

Depreciation expense was $72,921 for the year ended December 31, 2013.

Page 9

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

NOTE 4. INVESTMENT IN MARKETABLE SECURITIES AND REAL ESTATE

Generally accepted accounting principles establish a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy under generally accepted accounting principles are described below:

Level 1 - Quoted market prices in active markets for identical assets or liabilities

Level 2 – Observable market based inputs or unobservable inputs corroborated by market data

Level 3 – Unobservable inputs reflecting the reporting entity’s own assumptions

The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques followed need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2013.

Equity Securities - The Company receives a portion of its fees in the form of stock of Griffin American Healthcare REIT II. The shares are received at the current offering price of $10.22 per share less 10% for a net cost of $9.198. During the year $551,814 of these shares were distributed out to the partners of the Company. At December 31, 2013 the Company held 147,320 in Griffin American Healthcare REIT II shares which it values at its cost basis of $1,355,049. The REIT shares were being offered through October 2013 at $10.22 per share; therefore, the Company has valued these shares using Level 1 inputs.

In addition, at December 31, 2013, the Company held 22,222 shares in Griffin-American Healthcare REIT III and 222 units of its operating partnership, both of which it values at their cost basis of $202,000, which is equivalent to the offering price of $10.00 per share less 10% for a net cost of $9.00. Griffin-American Healthcare REIT III commenced its offering of shares at $10.00 per share in February 2014; therefore, the Company has valued these shares and units using Level 1 inputs.

Investment Property - The Company purchased an investment property located in Mammoth, CA in August 2013. The Company obtained the property for $2,000,000. The seller is currently offering similar properties at prices which exceed the Company’s cost basis; therefore the Company has valued this investment using Level 2 inputs.

NOTE 5. INCOME TAXES

The Company’s income tax expense consists of the following for the year ended December 31, 2013:



Provision for California Franchise Tax	$	478,000
Provision for California LLC tax	12,590
	$	490,590

Page 10

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

The Company’s has no material timing differences that would result in deferred tax assets or liabilities.

NOTE 6. COMMITMENTS AND CONTINGENCIES—FACILITIES LEASE

The building in which the Company operates is being leased for a sixty month period starting August 1, 2013. The lease calls for monthly payments of $40,835 in the first year and escalates per the lease agreement for the subsequent years until the lease expires. Total rent payments for 2013 were $286,144.

The following is a schedule of future minimum lease payments required under the lease:



December 31,
2014	$	496,125
2015	510,957
2016	526,233
2017	542,046
2018	321,706
	$	2,397,067

NOTE 7. PHANTOM STOCK PLAN

The Company has adopted a Phantom Stock Plan. The Plan grants shares of Griffin-American Healthcare REIT II to certain employees. The shares vest two years from the grant date or a listing/sale of the REIT. The Company granted 24,462 shares in January 2013 and 28,500 shares in September 2013. These shares are valued at $9.198 per share which is the price the Company received these shares at. The granting of these shares resulted in an expense of $156,191 in 2013.

NOTE 8. SUBSEQUENT EVENTS

The Company has evaluated subsequent events for purposes of recognition or disclosure in the financial statements through March 5, 2014, which is the date the financial statements were available to be issued. No significant subsequent events have been identified that would require adjustment of or disclosure in the accompanying financial statements.

Page 11

See accompanying notes and auditors’ report.

EX-99.2 4 exhibit992ah123112fs1.htm EXHIBIT 99.2 Exhibit 99.2 AH 12.31.12 FS (1)

Exhibit 99.2

AMERICAN HEALTHCARE

INVESTORS, LLC AND SUBSIDIARIES

Financial Statements

December 31, 2012

TABLE OF CONTENTS



INDEPENDENT AUDITORS’ REPORT	1

FINANCIAL STATEMENTS

Consolidated Balance Sheet	3 - 4
Consolidated Statement of Income	5
Consolidated Statement of Changes in Equity	6
Consolidated Statement of Cash Flows	7
Notes to the Financial Statements	8 - 11

BENTSON, VUONA & WESTERSTEN, LLP

Certified Public Accountants

INDEPENDENT AUDITORS’ REPORT

To the Members

American Healthcare Investors, LLC and subsidiaries

We have audited the accompanying consolidated financial statements of American Healthcare Investors, LLC (a California partnership) and subsidiaries, which comprise the consolidated balance sheets as of December 31, 2012, and the related consolidated statements of income, changes in equity, and cash flows for the years then ended, and related notes to the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Healthcare Investors, LLC and subsidiaries as of December 31, 2012, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Bentson, Vuona & Westersten, LLP

BENTSON, VUONA & WESTERSTEN, LLP

Irvine, California

March 1, 2013

17 Goddard Irvine, California 92618 t 949.789.1050 f 949.789.1051

AMERICAN HEALTHCARE INVESTORS, LLC

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2012

ASSETS



CURRENT ASSETS
Cash	$	4,121,224
Accounts receivable, net	2,363,802
Other current assets	307,330
TOTAL CURRENT ASSETS	$	6,792,356

PROPERTY AND EQUIPMENT, net	54,293

LONG TERM ASSETS
Security deposit	52,501

TOTAL ASSETS	$	6,899,150

Page 3

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2012

LIABILITIES AND MEMBERS’ EQUITY



CURRENT LIABILITIES
Accounts payable	$	525,606
Income taxes payable	200,000
Accrued wages	222,755
TOTAL CURRENT LIABILITIES	948,361

TOTAL LIABILITIES	948,361

MEMBERS’ EQUITY
Controlling interest in equity	5,146,732
Non-controlling interest in equity	804,057
TOTAL MEMBERS’ EQUITY	5,950,789
TOTAL LIABILITIES & MEMBERS’ EQUITY	$	6,899,150

Page 4

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

FOR YEAR ENDED DECEMBER 31, 2012



REVENUE	$	27,234,474

EXPENSES	5,892,387

OPERATING INCOME	21,342,087

INCOME BEFORE PROVISION FOR INCOME TAXES	21,342,087

PROVISION FOR INCOME TAXES	(204,580		)

INCOME INCLUDING NON-CONTROLLING INTEREST	21,137,507

NON-CONTROLLING INTEREST IN EARNINGS	(7,417,107		)
NET INCOME	$	13,720,400

Page 5

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR YEAR ENDED DECEMBER 31, 2012



			Capital Contributed				Income of
	Beginning of		During the				Non-controlling
	Year		Year		Net Income		Interest		Distributions			End of Year
Members’ Equity:
Controlling Interest	$	392,132	$	300,000	$	13,720,400	$	—	$	(9,265,800	)	$	5,146,732
Non-controlling interest	—		—		—		7,417,107		(6,613,050		)	804,057
Total Members’ Equity	$	392,132	$	300,000	$	13,720,400	$	7,417,107	$	(15,878,850	)	$	5,950,789

Page 6

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOW

FOR YEAR ENDED DECEMBER 31, 2012



CASH FLOWS FROM OPERATING ACTIVITIES
Net income including non-controlling interest	$	21,137,507
Adjustments to reconcile net income to net cash from operating activities:

Depreciation	27,147
Changes in assets and liabilities:
Increase in accounts receivable	(2,363,802		)
Increase in other assets	(288,201		)
Increase in security deposit	(10,766		)
Increase in accounts payable	525,606
Increase in income taxes payable	200,000
Increase in accrued wages	222,755

Net cash provided by operating activities	19,450,246

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets	(81,440		)

Net cash used by investing activities	(81,440		)

CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributed during the year	300,000
Member distributions - controlling interest	(9,265,800		)
Member distributions - non-controlling interest	(6,613,050		)

Net cash used by financing activities	(15,578,850		)

Net increase in cash	3,789,956

CASH, BEGINNING OF YEAR	331,268

CASH, END OF YEAR	$	4,121,224

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the year for taxes	$	4,580

Page 7

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

American Healthcare Investors, LLC

American Healthcare Investors (“AHI”) is a Delaware LLC that was founded in 2011 by Jeffrey Hanson, Danny Prosky & Mathieu Streiff. The company focuses on providing real estate services to its clients including but not limited to acquiring, managing, and accounting for clinical healthcare real estate.

AHI Management Services Inc.

Griffin-American Healthcare REIT II Sub-Advisor

Griffin-American Healthcare REIT II Sub-Advisor is a joint venture between American Healthcare Investors, LLC (75%) and Griffin-Capital Healthcare REIT II Advisors (25%). The sub-advisor was formed specifically to handle advisory services for Griffin-American Healthcare REIT II. All fees, with the exception of fees paid directly to AHI Management Services, are paid to the sub-advisor and distributions to the two partners are paid out per a joint venture agreement.

Principles of consolidation

The consolidated financial statements include the accounts of AHI, AHI Management Services, Inc. and Griffin-American Healthcare REIT Sub-Advisor. All material intercompany transactions have been eliminated.

Cash

For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months of less.

Accounts receivable and allowance for doubtful Accounts

Trade accounts receivable are stated at the amount management expects to collect from customers. Management provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance based on its assessment of the current status of individual accounts. As of December 31, 2012 all accounts receivable were considered collectible.

Page 8

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property and equipment

Income Taxes

The Company accounts for income taxes under provisions of Financial Accounting Standards Board ASC 740, whereby deferred taxes are provided on temporary differences arising from assets and liabilities whose bases are different for financial reporting and income tax purposes. As of December 31, 2012 the Company has no material timing differences. The Company has prepared an analysis of all open tax positions, a determination as to their certainty and measurement or any uncertain tax positions taken or expected to be taken. As of December 31, 2012, the Company does not have any uncertain tax positions that would result in a change to income taxes recognized in the Company’s financial statements.

Revenue Recognition

The Company earns its revenue from providing property management and leasing services on a monthly basis and handling advisory services for Griffin-American Healthcare REIT II.

Use of Estimates

Comprehensive Income

For the year ended December 31, 2012, there was no difference between net income and comprehensive income.

Advertising Costs

Advertising costs are charged to operations when incurred. Advertising expense in 2012 was $1,436.

Page 9

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2. ACCOUNTS RECEIVABLE



	December 31, 2012
Trade	$	2,363,802
Allowance for doubtful accounts	—
	$	2,363,802

NOTE 3. MACHINERY AND EQUIPMENT

Equipment consists of the following:



	December 31, 2012
Computer equipment	$	33,119
Office equipment	29,225
Software	19,096
	81,440
Less accumulated depreciation	(27,147		)
	$	54,293

Depreciation expense was $27,147 for the year ended December 31, 2012.

NOTE 4. INCOME TAXES

The Company’s income tax expense consists of the following for the year ended December 31, 2012:



Provision for California Franchise Tax	$	204,000

The Company’s has no material timing differences that would result in deferred tax assets or liabilities.

NOTE 5. COMMITMENTS AND CONTINGENCIES—FACILITIES LEASE

The building in which the Company operates is being subleased through a company. The lease calls for monthly payments of $16,200 for a period of one year and one month with an option for a one year renewal at the end of the lease. Total rent payments for 2012 were $194,400.

Page 10

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

The following is a schedule of future minimum lease payments required under the lease:



Year ended December 31,

2013	$	194,400
2014	16,200
	$	210,600

NOTE 6. SUBSEQUENT EVENTS

The Company has evaluated subsequent events for purposes of recognition or disclosure in the financial statements through March 1, 2013, which is the date the financial statements were available to be issued. No significant subsequent events have been identified that would require adjustment of or disclosure in the accompanying financial statements.

Page 11

See accompanying notes and auditors’ report.

EX-99.3 5 exhibit993ah123111fs1.htm EXHIBIT 99.3 Exhibit 99.3 AH 12.31.11 FS (1)

Exhibit 99.3

AMERICAN HEALTHCARE INVESTORS, LLC

Financial Statements

December 31, 2011

TABLE OF CONTENTS



INDEPENDENT AUDITORS’ REPORT	1

FINANCIAL STATEMENTS

Balance Sheet	2
Statement of Income	3
Statement of Changes in Equity	4
Statement of Cash Flows	5
Notes to the Financial Statements	6 - 7

BENTSON, VUONA & WESTERSTEN, LLP

Certified Public Accountants

INDEPENDENT AUDITORS’ REPORT

To the Members

American Healthcare Investors, LLC

We have audited the accompanying financial statements of American Healthcare Investors, LLC (a California partnership), which comprise the balance sheet as of December 31, 2011, and the related statements of income, changes in equity, and cash flows for the period from inception, November 3, 2011 to December 31, 2011, and related notes to the financial statements.

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles general accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Healthcare Investors, LLC as of December 31, 2011, and the results of its operations and its cash flows for the initial period then ended in accordance with accounting principles generally accepted in the United States of America.

Bentson, Vuona & Westersten, LLP

BENTSON, VUONA & WESTERSTEN, LLP

Irvine, California

October 22, 2014

17 Goddard Irvine, California 92618 t 949.789.1050 f 949.789.1051

AMERICAN HEALTHCARE INVESTORS, LLC

BALANCE SHEET

DECEMBER 31, 2011

ASSETS



CURRENT ASSETS
Cash	$	331,268
Receivable from REIT	19,129
TOTAL CURRENT ASSETS	350,397

LONG TERM ASSETS
Security deposit	41,734

TOTAL ASSETS	$	392,131

LIABILITIES AND MEMBERS’ EQUITY



CURRENT LIABILITIES
Accounts payable	$	—
TOTAL CURRENT LIABILITIES	—

TOTAL LIABILITIES	—

MEMBERS’ EQUITY
Members’ equity	392,131
TOTAL MEMBERS’ EQUITY	392,131
TOTAL LIABILITIES & MEMBERS’ EQUITY	$	392,131

Page 2

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

STATEMENT OF INCOME

PERIOD FROM NOVEMBER 3, 2011 (DATE OF INCEPTION) TO DECEMBER 31, 2011



REVENUE	$	—

EXPENSES	207,069

OPERATING LOSS	(207,069		)

LOSS BEFORE PROVISION FOR INCOME TAXES	(207,069		)

PROVISION FOR INCOME TAXES	800

NET LOSS	$	(207,869	)

Page 3

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

STATEMENT OF CHANGES IN EQUITY

PERIOD FROM NOVEMBER 3, 2011 (DATE OF INCEPTION) TO DECEMBER 31, 2011



			Capital Contributed
	Beginning of		During the
	Year		Year		Net Income			Distributions		End of Year
Members’ Equity:
Controlling Interest	$	—	$	600,000	$	(207,869	)	$	—	$	392,131
Total Members’ Equity	$	—	$	600,000	$	(207,869	)	$	—	$	392,131

Page 4

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

STATEMENT OF CASH FLOW

PERIOD FROM NOVEMBER 3, 2011 (DATE OF INCEPTION) TO DECEMBER 31, 2011



CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(207,869	)
Adjustments to reconcile net income to net cash from operating activities:

Changes in assets and liabilities:
Increase in receivable from REIT	(19,129		)
Increase in security deposit	(41,734		)
Increase in accounts payable	—

Net cash used by operating activities	(268,732		)

CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributed during the year	600,000

Net cash provided by financing activities	600,000

Net increase in cash	331,268

CASH, INCEPTION OF YEAR	—

CASH, END OF YEAR	$	331,268

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the year for taxes	$	—

Page 5

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

PERIOD FROM NOVEMBER 3, 2011 (DATE OF INCEPTION) TO DECEMBER 31, 2011

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

American Healthcare Investors, LLC

Cash

For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months of less.

Income Taxes

The Company has elected to be taxed as a partnership under of the Internal Revenue Code. Under these provisions, the Company does not pay federal income taxes on its taxable income. Instead, the partners are liable for individual federal income taxes on their respective shares of the Company’s taxable income. The State of California requires an LLC to pay income taxes $800 each year.

The Company accounts for income taxes under provisions of Financial Accounting Standards Board ASC 740, whereby deferred taxes are provided on temporary differences arising from assets and liabilities whose bases are different for financial reporting and income tax purposes. As of December 31, 2011 the Company has no material timing differences. The Company has prepared an analysis of all open tax positions, a determination as to their certainty and measurement or any uncertain tax positions taken or expected to be taken. As of December 31, 2011, the Company does not have any uncertain tax positions that would result in a change to income taxes recognized in the Company’s financial statements.

Use of Estimates

Comprehensive Loss

For the year ended December 31, 2011, there was no difference between net loss and comprehensive loss.

Advertising Costs

Advertising costs are charged to operations when incurred. Advertising expense in 2011 was $1,436.

Page 6

See accompanying notes and auditors’ report.

AMERICAN HEALTHCARE INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

PERIOD FROM NOVEMBER 3, 2011 (DATE OF INCEPTION) TO DECEMBER 31, 2011

NOTE 2. INCOME TAXES

The Company’s income tax expense consists of the following for the year ended December 31, 2011:



Provision for California Franchise Tax	$	800

The Company’s has no material timing differences that would result in deferred tax assets or liabilities.

NOTE 3. COMMITMENTS AND CONTINGENCIES—FACILITIES LEASE

The building in which the Company operates is being subleased through a company. The lease calls for monthly payments of $16,200 beginning January 2012 through January 2014. Total rent payments for 2011 were $0.

The following is a schedule of future minimum lease payments required under the lease:



Year ended December 31,
2012	$	162,000
2013	194,488
2014	16,200
	$	372,688

NOTE 4. SUBSEQUENT EVENTS

The Company has evaluated subsequent events for purposes of recognition or disclosure in the financial statements through October 22, 2014, which is the date the financial statements were available to be issued. No significant subsequent events have been identified that would require adjustment of or disclosure in the accompanying financial statements.

Page 7

See accompanying notes and auditors’ report.

EX-99.4 6 exhibit994ahi93014fs1.htm EXHIBIT 99.4 Exhibit 99.4 AHI 9.30.14 FS (1)

Exhibit 99.4

AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES

Unaudited Financial Statements

For the Nine Months Ended September 30, 2014 and 2013

TABLE OF CONTENTS

UNAUDITED FINANCIAL STATEMENTS

For the Nine Months ended September 30, 2014 and 2013



Unaudited Consolidated Balance Sheets	2 - 3
Unaudited Consolidated Statements of Income	4
Unaudited Consolidated Statements of Changes in Equity	5
Unaudited Consolidated Statements of Cash Flows	6
Notes to the Unaudited Financial Statements	7 - 12

AMERICAN HEALTHCARE INVESTORS LLC

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



ASSETS	September 30, 2014		December 31, 2013
	(Unaudited)
CURRENT ASSETS
Cash	$	2,336,675	$	11,538,617
Accounts receivable	2,409,164		2,997,587
Prepaid expenses and deposits	274,706		35,353
Investment in marketable securities	1,751,698		1,557,045
TOTAL CURRENT ASSETS	6,772,243		16,128,602
PROPERTY AND EQUIPMENT, net	112,957		167,648
LONG TERM ASSETS
Investment in real estate	2,000,000		2,000,000
Prepaid expenses - long term	432,499		517,852
Security deposit	60,340		56,682
TOTAL LONG TERM ASSETS	2,492,839		2,574,534
TOTAL ASSETS	$	9,378,039	$	18,870,784

Page 2

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



LIABILITIES AND MEMBERS’ EQUITY	September 30, 2014		December 31, 2013
	(Unaudited)
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	529,459	$	206,490
Income taxes payable	-		178,000
Accrued wages and bonuses	2,553,942		1,361,322
Accrued expenses	-		20,000
TOTAL CURRENT LIABILITIES	3,083,401		1,765,812
TOTAL LIABILITIES	3,083,401		1,765,812
MEMBERS' EQUITY
Controlling interest in equity	5,512,032		16,243,853
Non-controlling interest in equity	782,606		861,119
TOTAL MEMBERS' EQUITY	6,294,638		17,104,972
TOTAL LIABILITIES & MEMBERS' EQUITY	$	9,378,039	$	18,870,784

Page 3

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC

AND SUBSIDIARIES

CONSOLIDATED UNAUDITED STATEMENTS OF INCOME

(Unaudited)



	Nine Months Ended September 30,
	2014			2013
REVENUE	$	24,497,878		$	35,479,686
EXPENSES	9,238,827			7,553,846
OPERATING INCOME	15,259,051			27,925,840
INCOME BEFORE PROVISION FOR INCOME TAXES	15,259,051			27,925,840
PROVISION FOR INCOME TAXES	(180,000		)	(145,000		)
INCOME INCLUDING NON-CONTROLLING INTEREST	15,079,051			27,780,840
NON-CONTROLLING INTEREST IN EARNINGS	(5,860,872		)	(8,041,200		)
NET INCOME	$	9,218,179		$	19,739,640

Page 4

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY



	Controlling Interest			Non-Controlling Interest			Total Members' Equity
December 31, 2012	$	5,146,731		$	804,057		$	5,950,788
Capital Contributed During the Year	—			—			—
Net Income	31,298,937			—			31,298,937
Income of Non-controlling Interest	—			13,205,593			13,205,593
Distributions	(20,201,815		)	(13,148,531		)	(33,350,346		)
December 31, 2013	16,243,853			861,119			17,104,972
Capital Contributed During the Year	—			—			—
Net Income	9,218,179			—			9,218,179
Income of Non-controlling Interest	—			5,860,872			5,860,872
Distributions	(19,950,000		)	(5,939,385		)	(25,889,385		)
September 30, 2014 (unaudited)	$	5,512,032		$	782,606		$	6,294,638

Page 5

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)



	Nine Months Ended September 30,
	2014			2013

CASH FLOWS FROM OPERATING ACTIVITIES
Net income including non-controlling interest	$	15,079,051		$	27,780,840
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	54,691			41,018
Marketable securities received as fees	(194,653		)	(1,484,626		)
Changes in assets and liabilities
Decrease in accounts receivable	588,423			(249,144		)
Increase in other current assets	(4,000		)	—
Decrease in prepaid expenses and deposits	—			265,330
Increase in security deposit	(3,658		)	(4,181		)
Increase in accounts payable and accrued expenses	302,969			246,414
Decrease in income taxes payable	(178,000		)	(200,000		)
Increase in accrued wages	1,192,620			502,331
Net cash provided by operating activities	16,837,443			26,897,982
CASH FLOWS FROM INVESTING ACTIVITIES
Real estate deposit	(150,000		)	—
Purchase of investment in real estate	—			(395,000		)
Purchase of fixed assets	—			(134,426		)
Net cash used by financing activities	(150,000		)	(529,426		)
CASH FLOWS FROM FINANCING ACTIVITIES
Member distributions - controlling interest	(19,950,000		)	(15,750,000		)
Member distributions - non-controlling interest	(5,939,385		)	(8,518,469		)
Net cash used by financing activities	(25,889,385		)	(24,268,469		)
Net decrease in cash	(9,201,942		)	2,100,087
CASH, BEGINNING OF YEAR	11,538,617			4,121,224
CASH, END OF YEAR	$	2,336,675		$	6,221,311
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for taxes	$	357,371		$	350,605

Page 6

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

American Healthcare Investors LLC

AHI Management Services Inc.

Griffin-American Healthcare REIT II Sub-Advisor

Griffin-American Healthcare REIT III Advisor, LLC

Principles of consolidation

The consolidated financial statements include the accounts of AHI, AHI Management Services, Inc., Griffin- American Healthcare REIT Sub-Advisor and Griffin-American Healthcare REIT III Advisor, LLC. All material intercompany transactions have been eliminated.

Cash

For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months of less.

Page 7

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)

Accounts receivable and allowance for doubtful Accounts

Trade accounts receivable are stated at the amount management expects to collect from customers. Management provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance based on its assessment of the current status of individual accounts. As of September 30, 2014 and December 31, 2013, all accounts receivable were considered collectible.

Property and equipment

Income Taxes

The Company accounts for income taxes under provisions of Financial Accounting Standards Board ASC

740, whereby deferred taxes are provided on temporary differences arising from assets and liabilities whose bases are different for financial reporting and income tax purposes. As of September 30, 2014 and December 31, 2013, the Company has no material timing differences. The Company has prepared an analysis of all open tax positions, a determination as to their certainty and measurement or any uncertain tax positions taken or expected to be taken. As of September 30, 2014 and December 31, 2013, the Company does not have any uncertain tax positions that would result in a change to income taxes recognized in the Company’s financial statements.

Revenue Recognition

The Company earns its revenue from providing property management and leasing services on a monthly basis and handling advisory services for Griffin-American Healthcare REIT II.

Use of Estimates

Comprehensive Income

For the nine months ended September 30, 2014 and 2013, there was no difference between net income and comprehensive income.

Page 8

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)

Advertising Costs

Advertising costs are charged to operations when incurred. Advertising expense for the nine months ended September 30, 2014 and 2013 was $1,614 and $1,570, respectively.

NOTE 2. ACCOUNTS RECEIVABLE



	September 30, 2014		December 31, 2013
Trade	$	2,409,164	$	2,981,457
Allowance for doubtful accounts	—		—
	$	2,409,164	$	2,981,457

Accounts receivable are carried at original invoice amount and are written off when deemed uncollectible. Based on management’s evaluation of uncollected accounts receivable at the end of each year, an allowance for doubtful accounts was deemed unnecessary as of September 30, 2014. There was no bad debt expense in 2014.

NOTE 3. MACHINERY AND EQUIPMENT

Equipment consists of the following:



	September 30, 2014			December 31, 2013
Computer equipment	$	33,119		$	33,119
Furniture and Fixtures	119,195			119,195
Leasehold Improvements	27,156			27,156
Office equipment	29,225			29,225
Software	19,096			19,096
Vehicles	39,925			39,925
	267,716			267,716
Less accumulated depreciation	(154,759		)	(100,068		)
	$	112,957		$	167,648

Depreciation expense was $54,691 and $41,018 for the nine months ended September 30, 2014 and 2013, respectively.

NOTE 4. INVESTMENT IN MARKETABLE SECURITIES AND REAL ESTATE

Page 9

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)

Level 1 - Quoted market prices in active markets for identical assets or liabilities

Level 2 – Observable market based inputs or unobservable inputs corroborated by market data

Level 3 – Unobservable inputs reflecting the reporting entity’s own assumptions

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used as of September 30, 2014 and December 31, 2013.

Equity Securities - The Company received a portion of its fees in the form of stock of Griffin-American Healthcare REIT II. The shares were received at the most recent offering price of $10.22 per share less 10% for a net cost of $9.198. As of September 30, 2014 the Company held 160,119 shares in Griffin American Healthcare REIT II shares which it values at its cost basis of $1,472,777. The REIT shares were being offered through October 2013 at $10.22 per share; therefore, the Company has valued these shares using Level 1 inputs.

In addition, the Company receives a portion of its fees in the form of stock of Griffin-American Healthcare REIT III. The shares are received at the most recent offering price of $10.00 per share less 10% for a net cost of $9.00. As of September 30, 2014 the Company held 8,547 shares in Griffin-American Healthcare REIT III shares which it values at its cost basis of $76,922.

Lastly, as of September 30, 2014, the Company held 22,222 shares in Griffin-American Healthcare REIT III and 222 units of its operating partnership, both of which it values at their cost basis of $202,000, which is equivalent to the offering price of $10.00 per share less 10% for a net cost of $9.00. The REIT shares are being offered at $10.00 per share; therefore, the Company has valued these shares using Level 1 inputs.

Investment Property - The Company purchased an investment property located in Mammoth, CA in August

2013. The Company obtained the property for $2,000,000. The seller is currently offering similar properties at prices which exceed the Company’s cost basis; therefore the Company has valued this investment using Level 2 inputs.

Page 10

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)

NOTE 5. INCOME TAXES

The Company’s income tax expense consists of the following:



	Nine Months September 30,
	2014		2013
	(unaudited)		(unaudited)
Provision for California Franchise Tax	$	167,410	$	132,410
Provision for California LLC tax	12,590		12,590
	$	180,000	$	145,000

The Company’s has no material timing differences that would result in deferred tax assets or liabilities.

NOTE 6. COMMITMENTS AND CONTINGENCIES—FACILITIES LEASE

The building in which the Company operates is being leased for a sixty month period starting August 1,

2013. The lease calls for monthly payments of $40,835 in the first year and escalates per the lease agreement for the subsequent years until the lease expires. Total rent payments for the nine months ended September 30, 2014 and 2013 were $368,373 and $81,670 respectively.

The following is a schedule of future minimum lease payments required under the lease as of September 30, 2014:



October 1, 2014 - December 31, 2014	$	126,167
2015	510,957
2016	526,233
2017	542,046
2018	321,706
	$	2,027,109

NOTE 7. PHANTOM STOCK PLAN

The Company has adopted a Phantom Stock Plan. The Plan grants shares of Griffin-American Healthcare REIT II to certain employees. The shares vest two years from the grant date or a listing/sale of the REIT. The Company granted 24,462 shares in January 2013, 28,500 shares in September 2013 and 28,000 in January 2014. These shares are valued at $9.198 per share which is the price the Company received these shares at. The granting of these shares resulted in an expense of $271,790 and $84,240 for the nine months ended September 30, 2014 and 2013, respectively.

Page 11

See accompanying notes.

AMERICAN HEALTHCARE INVESTORS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 and 2013 (Unaudited)

NOTE 8. SUBSEQUENT EVENTS

The Company has evaluated subsequent events for purposes of recognition or disclosure in the financial statements through November 3, 2014, which is the date the financial statements were available to be issued. No significant subsequent events have been identified that would require adjustment of or disclosure in the accompanying financial statements.

Page 12

See accompanying notes.

EX-99.5 7 exhibit995ahiproforma.htm EXHIBIT 99.5 Exhibit 99.5 AHI Proforma

Exhibit 99.5

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma combined consolidated balance sheet as of September 30, 2014 is presented as if NorthStar Asset Management Group Inc. (the “Company”) acquired an approximate 47% interest in American Healthcare Investors LLC (“AHI”). AHI is a healthcare focused real estate investment management firm with over 60 real estate professionals. AHI co-sponsored and advised Griffin-American Healthcare REIT II, Inc. (“GAHR II”), a non-traded healthcare focused real estate investment trust (“REIT”) that completed its offering in October 2014. In addition, AHI co-sponsors and advises Griffin-American Healthcare REIT III, Inc., which is currently raising capital for a $1.9 billion non-traded healthcare focused REIT.

The following unaudited pro forma combined consolidated statement 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 its equity investment in AHI; and (ii) the spin-off of the Company from NorthStar Realty. The historical nine months ended September 30, 2014 includes: (i) the Company’s results of operations for the three months ended September 30, 2014 which represents the activity following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014 and (ii) the Company’s results of operations for the six months ended June 30, 2014, which represents a carve-out of revenues and expenses attributable to the Company. The historical year ended December 31, 2013 represents a carve-out of revenues and expenses attributable to the Company. These expenses include an allocation of indirect expenses from NorthStar Realty, including salaries, equity-based compensation and other general and administrative expenses (primarily occupancy and other cost) based on an estimate had NorthStar Realty’s historical asset management business been run as an independent entity. This allocation method was principally based on relative headcount and management’s knowledge of NorthStar Realty’s operations.

The unaudited pro forma combined consolidated financial information should be read in conjunction with the historical combined consolidated financial statements and notes thereto included in the Company’s Registration Statement on Form 10, as amended 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 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.

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(Dollars in Thousands, Except Share and Per Share Data)



	Historical ⁽¹⁾			NSAM Spin Adjustment				AHI Adjustment				Pro Forma
Revenues
Asset management and other fees, related parties	$	78,300		$	63,436		⁽²⁾	$	—			$	141,736
Selling commission and dealer manager fees, related parties	61,010			—				—				61,010
Other income	699			—				—				699
Total revenues	140,009			63,436				—				203,445
Expenses
Commission expense	57,389			—				—				57,389
Transaction costs	24,476			(24,476		)	⁽³⁾	—				—
Other expense	793			—				450			⁽⁶⁾	1,243
General and administrative expenses
Salaries and related expense	21,994			15,207			⁽⁴⁾	—				37,201
Equity-based compensation expense	30,286			5,758			⁽⁵⁾	—				36,044
Other general and administrative expenses	10,792			6,101			⁽⁴⁾	—				16,893
Total general and administrative expenses	63,072			27,066				—				90,138
Total expenses	145,730			2,590				450				148,770
Income (loss) from operations	(5,721		)	60,846				(450		)		54,675
Equity in earnings (losses) of unconsolidated venture	—			—				4,518			⁽⁷⁾	4,518
Income (loss) before income taxes	(5,721		)	60,846				4,068				59,193
Income tax (expense) benefit	(6,087		)	(12,169		)	⁽⁹⁾	(1,709		)	⁽⁸⁾	(19,965		)
Net income (loss)	$	(11,808	)	$	48,677			$	2,359			$	39,228
Earnings per share:
Basic	$	(0.06	)									$	0.21
Dilutive	$	(0.06	)									$	0.20
Weighted average number of shares:
Basic	188,609,446											189,565,975			⁽¹⁰⁾
Dilutive	188,609,446											194,698,646			⁽¹⁰⁾

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

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2013

(Dollars in Thousands, Except Share and Per Share Data)



	Historical ⁽¹⁾			NSAM Spin Adjustment				AHI Adjustment				Pro Forma
Revenues
Asset management and other fees, related parties	$	26,633		$	100,681		⁽²⁾	$	—			$	127,314
Selling commission and dealer manager fees, related parties	62,572			—				—				62,572
Other income	733			—				—				733
Total revenues	89,938			100,681				—				190,619
Expenses
Commission expense	57,325			—				—				57,325
Transaction costs	1,590			(1,590		)	⁽³⁾	—				—
Other expense	145			—				600			⁽⁶⁾	745
General and administrative expenses												—
Salaries and related expense	21,364			14,992			⁽⁴⁾	—				36,356
Equity-based compensation expense	5,157			3,324			⁽⁵⁾	—				8,481
Other general and administrative expenses	6,352			11,055			⁽⁴⁾	—				17,407
Total general and administrative expenses	32,873			29,371				—				62,244
Total expenses	91,933			27,781				600				120,314
Income (loss) from operations	(1,995		)	72,900				(600		)		70,305
Equity in earnings (losses) of unconsolidated venture	—			—				14,905			⁽⁷⁾	14,905
Income (loss) before income taxes	(1,995		)	72,900				14,305				85,210
Income tax (expense) benefit	—			(14,580		)	⁽⁹⁾	(6,008		)	⁽⁸⁾	(20,588		)
Net income (loss)	$	(1,995	)	$	58,320			$	8,297			$	64,622
Earnings per share:
Basic												$	0.34
Dilutive												$	0.34
Weighted average number of shares:
Basic												190,055,395			⁽¹⁰⁾
Dilutive												191,441,806			⁽¹⁰⁾

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

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2014

(Dollars in Thousands)



	Historical ⁽¹¹⁾			Pro Forma Adjustments				Pro Forma
Assets
Cash	$	105,019		$	(41,112	)	⁽⁷⁾	$	63,907
Restricted cash	3,132			—				3,132
Receivables, related parties	77,973			—				77,973
Investment in unconsolidated ventures	3,926			51,112			⁽⁷⁾	55,038
Other assets	12,065			—				12,065
Total assets	$	202,115		$	10,000			$	212,115
Liabilities
Accounts payable and accrued expenses	$	34,060		$	—			$	34,060
Total liabilities	34,060			—				34,060
Commitments and contingencies
Equity
NorthStar Asset Management Group Inc. Stockholders’ Equity
Preferred stock	—			—				—
Common stock	1,886			5			⁽⁷⁾	1,891
Additional paid-in capital	255,107			9,995			⁽⁷⁾	265,102
Retained earnings (accumulated deficit)	(88,938		)	—				(88,938		)
Total equity	168,055			10,000				178,055
Total liabilities and equity	$	202,115		$	10,000			$	212,115

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

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS


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


(2)	Represents an adjustment to add the estimated NorthStar Realty management fee income of $63.4 million and $100.7 million for the nine months ended September 30, 2014 and year ended December 31, 2013, respectively. The computation for the pro forma adjustment related to the base management fee from NorthStar Realty is summarized as follows (dollars in thousands):



	Nine Months Ended September 30, 2014			Year Ended December 31, 2013
Base Management fee	$	75,000		$	100,000
Add:⁽ⁱ⁾
Common and preferred equity raised ⁽ⁱⁱ⁾	11,842			374
Equity issued from exchangeable senior notes ⁽ⁱⁱⁱ⁾	5,624			6
RXR Realty asset management business ^(iv)	7,500			301
Aerium Investment ^(iv)	2,833			—
Less:
Management fee incurred ^(v)	(39,363		)	—
Total pro forma management fee ^(vi)	$	63,436		$	100,681

_____________________________


(i)	Amounts are prorated based on number of days outstanding for the respective item through September 30, 2014 and December 31, 2013, respectively.


(ii)	Represents 1.5% per annum of the net proceeds of all common equity and preferred equity issued by NorthStar Realty after December 10, 2013 through September 30, 2014 and December 31, 2013, respectively. NorthStar Realty raised net proceeds in common equity of $649.3 million on December 17, 2013 and net proceeds in common and preferred equity of $1.03 billion through September 30, 2014.

(iii)

Represents 1.5% per annum of NorthStar Realty equity issued in exchange or conversion of exchangeable senior notes based on the stock price at the date of issuance. From December 2013, an aggregate 23.0 million shares (adjusted for the reverse split effected on June 30, 2014) of common stock were issued in connection with the conversion of $383.2 million of NorthStar Realty's exchangeable senior notes. Also represents 1.5% per annum of NorthStar Realty equity issued in connection with certain transactions.


(iv)	Represents the annual base management fee related to RXR Realty LLC’s asset management business and the Aerium Investment. The fee was calculated based on $10 million per annum from the date NorthStar Realty entered into each agreement.


(v)	Represents the management fee earned for the three months ended September 30, 2014 included in the Company's unaudited combined consolidated statement of operations for the nine months ended September 30, 2014.


(vi)	Based on adjusted pro forma CAD per share, the Company would not have met the necessary hurdle to receive any incentive fee for the periods presented.


(3)	Transaction costs related to the spin-off include legal, accounting, tax and other professional services and relocation and start-up costs and are not included as part of the pro forma statement of operations.

(4)

Salaries and related expense is based on an estimate of employees that would have been employed at the Company. Most of NorthStar Realty’s employees at the time of the spin-off became employees of the Company except for executive officers, employees engaged in NorthStar Realty’s loan origination business at the time of the spin-off and certain other employees that became co-employees of both the Company and NorthStar Realty. The Company allocated general and administrative expenses, including operating expenses such as corporate overhead, based on the expectation that the Company's general and administrative expenses represented approximately 80% of the aggregate general and administrative expenses of NorthStar Realty and the Company post spin.

(5)

For the nine months ended September 30, 2014, equity-based compensation represents 50% of NorthStar Realty's equity-based compensation expense for the six months ended June 30, 2014 excluding grants under the NorthStar Asset Management Group Inc. 2014 Omnibus Stock Incentive Plan and the Company's equity-based compensation expense for the nine months ended September 30, 2014. For the year ended December 31, 2013, equity-based compensation represents 50% of NorthStar Realty's equity-based compensation expense.


(6)	Represents the base management fee of $50,000 per month the Company will pay AHI for providing certain asset management, property management and other services to the Company to assist in managing the existing healthcare assets.

(7)

Represents equity in earnings of AHI's net income for the nine months ended September 30, 2014 and year ended December 31, 2013 of $9.2 million and $31.3 million, respectively. The Company acquired an approximate 47% ownership interest in AHI for $37.5 million in cash, plus closing costs, and $20.0 million of the Company’s common stock subject to certain lock-up and vesting restrictions ($10.0 million of the Company's common stock vested immediately). In addition, upon the achievement of certain performance based metrics over a five-year period, the Company could be required to issue up to an additional $15 million of Company common stock.


(8)	Represents the income tax provision related to the income earned from acquisition of interest in AHI at the effective U.S. tax rate of 42%.


(9)	The Company operates internationally and domestically through multiple operating subsidiaries. Each of the jurisdictions in which the Company operates has its own tax law and tax rate, where the tax rate outside the United States may be lower than the U.S. federal statutory income tax rate. The estimate effective tax rate on operations is approximately 20%.

(10)

The weighted average shares used to compute basic and diluted earnings per share includes the 956,462 shares the Company granted to AHI in connection with the acquisition. To compute basic and diluted earnings per share, the Company used the weighted average basic and diluted shares outstanding for the nine months ended September 30, 2014 and year ended December 31, 2013, adjusted for the AHI shares and any dilutive securities.


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

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