EX-99.2 4 a19-5872_1ex99d2.htm EX-99.2

Exhibit 99.2

 

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

On March 1, 2019, CIM/Oakland 1901 Harrison, LP (“1901 Owner”), CIM/Oakland 2353 Webster, LP (“2353 Owner”) and CIM/Oakland Center 21, LP (“Center 21 Owner,” and together with 1901 Owner and 2353 Owner, the “Sellers”), all of which are indirect, wholly-owned subsidiaries of CIM Commercial Trust Corporation (the “Company”), and SOF-XI U.S. MAR Acquisitions, L.L.C. (the “Buyer”), a Delaware limited liability company, completed the previously announced sale of the following properties located in Oakland, California: 1901 Harrison Street, 2353 Webster Street, 2101 Webster Street and 2100 Franklin Street (collectively, the “March Oakland Properties”).  The aggregate contract sales price was approximately $512 million.

 

The following unaudited pro forma consolidated financial statements of the Company have been prepared to reflect the effect of the sale of the March Oakland Properties as described in Item 2.01 of the Current Report on Form 8-K with which this Exhibit 99.1 is filed. The unaudited pro forma consolidated balance sheet as of September 30, 2018 is based on the balance sheet of the Company, and gives effect to the sale as if it occurred on September 30, 2018. The unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2018, and the unaudited pro forma consolidated statement of operations for the year ended December 31, 2017, are based on the historical consolidated statements of operations of the Company, and give effect to the sale of the March Oakland Properties as if it had occurred on January 1, 2017.

 

The unaudited pro forma consolidated financial statements presented below are based on assumptions and adjustments set forth in the notes thereto. The unaudited pro forma adjustments made in the compilation of the unaudited pro forma consolidated financial statements are directly attributable to the sale, are factually supportable, and based upon available information and assumptions that the Company considers reasonable, and have been made solely for purposes of developing such unaudited pro forma consolidated financial statements for illustrative purposes in compliance with the disclosure requirements of the Securities and Exchange Commission (the “SEC”). The unaudited pro forma consolidated financial statements are presented for informational purposes only and should not be considered indicative of actual results that would have been achieved had the sale of the March Oakland Properties actually been consummated on the dates indicated and does not purport to be indicative of the financial condition as of any future date or results of operation for any future period.

 

The unaudited pro forma consolidated financial statements, and the accompanying notes, should be read in conjunction with the Company’s Schedule 14C Information Statement filed with the SEC on January 9, 2019, the Company’s unaudited consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 filed with the SEC on November 13, 2018, and the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 12, 2018. Other than with respect to the sale of the March Oakland Properties, or as otherwise provided in the notes to the pro forma consolidated financial statements, such financial statements do not reflect events occurring after the date of the applicable statement, including the consummation of the sale by the Company of a property in Washington D.C. occurring in March 2019, as well as any adjustments related to the sale of other properties that are being marketed for sale.

 

 

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Balance Sheet

As of September 30, 2018

(in thousands, except share and per share amounts)

 

 

 

As Reported

 

Pro Forma

 

 

 

 

 

(A)

 

Adjustments (B)

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

Investments in real estate, net

 

$

1,066,971

 

$

(198,390

)

$

868,581

 

Cash and cash equivalents

 

97,040

 

272,454

(C)

369,494

 

Restricted cash

 

21,524

 

(5,538

)

15,986

 

Loans receivable, net

 

81,898

 

—

 

81,898

 

Accounts receivable, net

 

8,085

 

(1,627

)

6,458

 

Deferred rent receivable and charges, net

 

86,337

 

(20,234

)

66,103

 

Other intangible assets, net

 

10,684

 

(103

)

10,581

 

Other assets

 

19,176

 

(1,436

)

17,740

 

TOTAL ASSETS

 

$

1,391,715

 

$

45,126

 

$

1,436,841

 

LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

Debt, net

 

$

664,400

 

$

(205,007

)(D)

$

459,393

 

Accounts payable and accrued expenses

 

30,886

 

(8,257

)

22,629

 

Intangible liabilities, net

 

3,351

 

—

 

3,351

 

Due to related parties

 

10,838

 

(1,057

)

9,781

 

Other liabilities

 

15,657

 

(3,559

)

12,098

 

Total liabilities

 

725,132

 

(217,880

)

507,252

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

REDEEMABLE PREFERRED STOCK: Series A, $0.001 par value; 36,000,000 shares authorized; 1,893,183 and 1,890,943 shares issued and outstanding, respectively; liquidation preference of $25.00 per share, subject to adjustment

 

43,145

 

—

 

43,145

 

EQUITY:

 

 

 

 

 

 

 

Series A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 568,921 and 566,176 shares issued and outstanding, respectively; liquidation preference of $25.00 per share, subject to adjustment

 

14,062

 

—

 

14,062

 

Series L cumulative redeemable preferred stock, $0.001 par value; 9,000,000 shares authorized; 8,080,740 shares issued and outstanding; liquidation preference of $28.37 per share, subject to adjustment

 

229,251

 

—

 

229,251

 

Common stock, $0.001 par value; 900,000,000 shares authorized; 43,795,073 shares issued and outstanding

 

44

 

—

 

44

 

Additional paid-in capital

 

791,773

 

—

 

791,773

 

Accumulated other comprehensive income

 

3,038

 

—

 

3,038

 

Distributions in excess of earnings

 

(415,568

)

263,006

(E)

(152,562

)

Total stockholders’ equity

 

622,600

 

263,006

 

885,606

 

Noncontrolling interests

 

838

 

—

 

838

 

Total equity

 

623,438

 

263,006

 

886,444

 

TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY

 

$

1,391,715

 

$

45,126

 

$

1,436,841

 

 

The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

 

 

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Statement of Operations

For the Nine Months Ended September 30, 2018

(in thousands, except per share amounts)

 

 

 

As Reported

 

Pro Forma

 

 

 

 

 

(F)

 

Adjustments (G)

 

Pro Forma

 

REVENUES:

 

 

 

 

 

 

 

Rental and other property income

 

$

103,479

 

$

(27,493

)

$

75,986

 

Hotel income

 

27,564

 

—

 

27,564

 

Expense reimbursements

 

7,089

 

(1,247

)

5,842

 

Interest and other income

 

9,465

 

(114

)

9,351

 

 

 

147,597

 

(28,854

)

118,743

 

EXPENSES:

 

 

 

 

 

 

 

Rental and other property operating

 

59,238

 

(10,395

)

48,843

 

Asset management and other fees to related parties

 

18,475

 

(2,846

)(H)

15,629

 

Interest

 

20,409

 

(6,499

)

13,910

 

General and administrative

 

6,496

 

(366

)

6,130

 

Transaction costs

 

359

 

—

 

359

 

Depreciation and amortization

 

39,783

 

(10,567

)

29,216

 

 

 

144,760

 

(30,673

)

114,087

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

2,837

 

1,819

 

4,656

 

Provision for income taxes

 

795

 

—

 

795

 

NET INCOME

 

2,042

 

1,819

 

3,861

 

Net income attributable to noncontrolling interests

 

(15

)

—

 

(15

)

NET INCOME ATTRIBUTABLE TO THE COMPANY

 

2,027

 

1,819

 

3,846

 

Redeemable preferred stock dividends declared and accumulated

 

(11,380

)

—

 

(11,380

)

Redeemable preferred stock redemptions

 

3

 

—

 

3

 

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

 

$

(9,350

)

$

1,819

 

$

(7,531

)

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE:

 

 

 

 

 

 

 

Basic

 

$

(0.21

)

 

 

$

(0.17

)

Diluted

 

$

(0.21

)

 

 

$

(0.17

)

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

43,791

 

 

 

43,791

 

Diluted

 

43,791

 

 

 

43,791

 

 

The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

 

 

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2017

(in thousands, except per share amounts)

 

 

 

As Reported

 

Pro Forma

 

 

 

 

 

(I)

 

Adjustments (J)

 

Pro Forma

 

REVENUES:

 

 

 

 

 

 

 

Rental and other property income

 

$

166,587

 

$

(36,756

)

$

129,831

 

Hotel income

 

35,576

 

—

 

35,576

 

Expense reimbursements

 

16,646

 

(1,496

)

15,150

 

Interest and other income

 

17,567

 

(261

)

17,306

 

 

 

236,376

 

(38,513

)

197,863

 

EXPENSES:

 

 

 

 

 

 

 

Rental and other property operating

 

101,585

 

(14,585

)

87,000

 

Asset management and other fees to related parties

 

30,251

 

(3,513

)(K)

26,738

 

Interest

 

36,338

 

(8,690

)

27,648

 

General and administrative

 

5,479

 

(105

)

5,374

 

Transaction costs

 

11,862

 

—

 

11,862

 

Depreciation and amortization

 

58,364

 

(13,852

)

44,512

 

Impairment of real estate

 

13,100

 

—

 

13,100

 

 

 

256,979

 

(40,745

)

216,234

 

Gain on sale of real estate

 

401,737

 

—

 

401,737

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

381,134

 

2,232

 

383,366

 

Provision for income taxes

 

1,376

 

—

 

1,376

 

NET INCOME

 

379,758

 

2,232

 

381,990

 

Net income attributable to noncontrolling interests

 

(21

)

—

 

(21

)

NET INCOME ATTRIBUTABLE TO THE COMPANY

 

379,737

 

2,232

 

381,969

 

Redeemable preferred stock dividends declared and accumulated

 

(1,926

)

—

 

(1,926

)

Redeemable preferred stock redemptions

 

2

 

—

 

2

 

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

 

$

377,813

 

$

2,232

 

$

380,045

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE:

 

 

 

 

 

 

 

Basic

 

$

5.47

 

 

 

$

5.50

 

Diluted

 

$

5.47

 

 

 

$

5.50

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

69,062

 

 

 

69,062

 

Diluted

 

69,070

 

 

 

69,070

 

 

The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

 

 

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

Pro Forma Adjustments

 

(A)       Reflects the Company’s consolidated balance sheet as of September 30, 2018, as contained in the financial statements presented in the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2018.

 

(B)       Except as described in (C) below, represents the elimination of the assets and liabilities associated with the March Oakland Properties, with the exception of property-level cash, which is assumed to be retained by the Company.

 

(C)       Represents net proceeds received by the Company upon sale of the March Oakland Properties, which is net of changes to cash for settlement of property level other assets and liabilities, defeasance of property level debt, prorations and adjustments, transaction costs directly attributable to the sale, and, as applicable, property-level restricted cash, which is assumed to be converted to unrestricted cash upon sale and retained by the Company.

 

(D)       Represents property level debt, net of deferred financing costs, associated with the March Oakland Properties, which was defeased in conjunction with the sale of the properties.

 

(E)        Represents the excess of the net cash proceeds from the sale of the March Oakland Properties over the carrying value, as of September 30, 2018, of the assets net of liabilities of the March Oakland Properties. This amount has not been reflected in the pro forma consolidated statements of operations as it is considered to be nonrecurring in nature.

 

(F)         Reflects the consolidated results of operations of the Company for the nine months ended September 30, 2018, as contained in the financial statements presented in the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2018. Redeemable preferred stock dividends accumulated and redeemable preferred stock dividends declared were aggregated under the caption “Redeemable preferred stock dividends declared and accumulated.”

 

(G)       Represents the elimination of actual revenues and expenses associated with the March Oakland Properties for the nine months ended September 30, 2018, except as described in (H) below.

 

(H)      Represents the impact to asset management fees assuming the sale of the March Oakland Properties occurred on January 1, 2017. Asset management fees are calculated as a percentage of the daily average gross fair value of investments.

 

(I)           Reflects the consolidated results of operations of the Company for the year ended December 31, 2017, as contained in the financial statements presented in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2018. To conform to the presentation for the nine months ended September 30, 2018, hotel revenues, which were reported in rental and other property income in our audited consolidated statement of operations for the year ended December 31, 2017, have been presented as a separate financial statement line item. Additionally, redeemable preferred stock dividends accumulated, which were presented in Note 10 to our audited consolidated financial statements for the year ended December 31, 2017, are presented on the face of the income statement and are aggregated with redeemable preferred stock dividends declared under the caption “Redeemable preferred stock dividends declared and accumulated.”

 

(J)           Represents the elimination of actual revenues and expenses associated with the March Oakland Properties for the year ended December 31, 2017, except as described in (K) below.

 

(K)       Represents the impact to asset management fees assuming the sale of the March Oakland Properties occurred on January 1, 2017. Asset management fees are calculated as a percentage of the daily average gross fair value of investments.