EX-99.1 2 a19-17039_1ex99d1.htm EX-99.1

Exhibit 99.1

 

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

On July 30, 2019, Union Square 941 Property LP, Union Square 825 Property LP and Union Square Plaza Owner LP, all of which are indirect subsidiaries of CIM Commercial Trust Corporation (the “Company”), and Network Realty Partners, LLC completed the previously announced sale of the following properties located in Washington, D.C. (collectively, the “Union Square Properties”): 999 North Capitol St. NE, 899 North Capitol St. NE and 901 North Capitol St. NE.  The aggregate contract sales price was $181,000,000.

 

The following unaudited pro forma consolidated financial statements of the Company have been prepared to reflect the effect on the Company and its consolidated subsidiaries of the sale of the Union Square Properties as described in Item 8.01 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 June 30, 2019 is based on the balance sheet of the Company, and gives effect to the sale of the Union Square Properties as if it occurred on June 30, 2019. The unaudited pro forma consolidated statement of operations for the six months ended June 30, 2019, and the unaudited pro forma consolidated statement of operations for the year ended December 31, 2018, are based on the historical consolidated statements of operations of the Company, and give effect to the sale of the Union Square Properties as if it had occurred on January 1, 2018.

 

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 of the Union Square Properties are factually supportable, and are 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 do not contain adjustments for events or transactions other than those related to the sale of the Union Square Properties. Further, 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 Union Square 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 unaudited consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 filed with the SEC on August 8, 2019 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, 2018 filed with the SEC on March 18, 2019.

 

 

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Balance Sheet

As of June 30, 2019

(In thousands, except share and per share amounts)

 

 

 

As Reported

 

Pro Forma

 

 

 

 

 

(A)

 

Adjustments (B)

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

Investments in real estate, net

 

$

504,302

 

$

—

 

$

504,302

 

Cash and cash equivalents

 

373,665

 

173,511

(C)

547,176

 

Restricted cash

 

10,824

 

—

 

10,824

 

Loans receivable, net

 

72,485

 

—

 

72,485

 

Accounts receivable, net

 

4,821

 

—

 

4,821

 

Deferred rent receivable and charges, net

 

33,158

 

—

 

33,158

 

Other intangible assets, net

 

8,252

 

—

 

8,252

 

Other assets

 

10,069

 

(204

)

9,865

 

Assets held for sale, net

 

178,927

 

(178,927

)

—

 

TOTAL ASSETS

 

$

1,196,503

 

$

(5,620

)

$

1,190,883

 

LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

Debt, net

 

$

162,337

 

$

—

 

$

162,337

 

Accounts payable and accrued expenses

 

13,288

 

—

 

13,288

 

Intangible liabilities, net

 

1,938

 

—

 

1,938

 

Due to related parties

 

6,775

 

—

 

6,775

 

Other liabilities

 

9,357

 

—

 

9,357

 

Liabilities associated with assets held for sale, net

 

3,245

 

(3,245

)

—

 

Total liabilities

 

196,940

 

(3,245

)

193,695

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

REDEEMABLE PREFERRED STOCK: Series A, $0.001 par value; 36,000,000 shares authorized; 1,460,245 and 1,459,045 shares issued and outstanding, respectively; liquidation preference of $25.00 per share, subject to adjustment

 

33,303

 

—

 

33,303

 

EQUITY:

 

 

 

 

 

 

 

Series A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 2,154,248 and 2,142,676 shares issued and outstanding, respectively; liquidation preference of $25.00 per share, subject to adjustment

 

53,327

 

—

 

53,327

 

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; 43,805,741 shares issued and outstanding

 

44

 

—

 

44

 

Additional paid-in capital

 

788,655

 

—

 

788,655

 

Distributions in excess of earnings

 

(105,634

)

(2,254

)(D)

(107,888

)

Total stockholders’ equity

 

965,643

 

(2,254

)

963,389

 

Noncontrolling interests

 

617

 

(121

)

496

 

Total equity

 

966,260

 

(2,375

)

963,885

 

TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY

 

$

1,196,503

 

$

(5,620

)

$

1,190,883

 

 

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

 

 

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Unaudited Pro Forma Consolidated Statement of Operations

For the Six Months Ended June 30, 2019

(In thousands, except per share amounts)

 

 

 

As Reported

 

Pro Forma

 

 

 

 

 

(E)

 

Adjustments (F)

 

Pro Forma

 

REVENUES:

 

 

 

 

 

 

 

Rental and other property income

 

$

56,000

 

$

(13,092

)

$

42,908

 

Hotel income

 

19,353

 

—

 

19,353

 

Interest and other income

 

8,780

 

(117

)

8,663

 

 

 

84,133

 

(13,209

)

70,924

 

EXPENSES:

 

 

 

 

 

 

 

Rental and other property operating

 

35,911

 

(5,413

)

30,498

 

Asset management and other fees to related parties

 

10,174

 

(814

)(G)

9,360

 

Interest

 

6,595

 

—

 

6,595

 

General and administrative

 

3,409

 

(104

)

3,305

 

Transaction costs

 

260

 

—

 

260

 

Depreciation and amortization

 

16,815

 

(4,517

)

12,298

 

Loss on early extinguishment of debt

 

29,982

 

—

 

29,982

 

Impairment of real estate

 

69,000

 

(69,000

)

—

 

 

 

172,146

 

(79,848

)

92,298

 

Gain on sale of real estate

 

432,802

 

—

 

432,802

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

344,789

 

66,639

 

411,428

 

Provision for income taxes

 

599

 

—

 

599

 

NET INCOME

 

344,190

 

66,639

 

410,829

 

Net loss (income) attributable to noncontrolling interests

 

173

 

(201

)

(28

)

NET INCOME ATTRIBUTABLE TO THE COMPANY

 

344,363

 

66,438

 

410,801

 

Redeemable preferred stock dividends declared or accumulated

 

(8,464

)

—

 

(8,464

)

Redeemable preferred stock redemptions

 

(8

)

—

 

(8

)

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

 

$

335,891

 

$

66,438

 

$

402,329

 

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE:

 

 

 

 

 

 

 

Basic

 

$

7.67

 

 

 

$

9.19

 

Diluted

 

$

7.36

 

 

 

$

8.81

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

43,793

 

 

 

43,793

 

Diluted

 

45,804

 

 

 

45,804

 

 

The accompanying notes are an integral part of these 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, 2018

(In thousands, except per share amounts)

 

 

 

As Reported

 

Pro Forma

 

 

 

 

 

(H)

 

Adjustments (I)

 

Pro Forma

 

REVENUES:

 

 

 

 

 

 

 

Rental and other property income

 

$

147,095

 

$

(25,721

)

$

121,374

 

Hotel income

 

35,672

 

—

 

35,672

 

Interest and other income

 

14,703

 

(444

)

14,259

 

 

 

197,470

 

(26,165

)

171,305

 

EXPENSES:

 

 

 

 

 

 

 

Rental and other property operating

 

79,917

 

(10,582

)

69,335

 

Asset management and other fees to related parties

 

24,451

 

(2,100

)(J)

22,351

 

Interest

 

27,702

 

—

 

27,702

 

General and administrative

 

9,167

 

(223

)

8,944

 

Transaction costs

 

938

 

—

 

938

 

Depreciation and amortization

 

53,228

 

(10,562

)

42,666

 

 

 

195,403

 

(23,467

)

171,936

 

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES

 

2,067

 

(2,698

)

(631

)

Provision for income taxes

 

925

 

—

 

925

 

NET INCOME (LOSS)

 

1,142

 

(2,698

)

(1,556

)

Net income attributable to noncontrolling interests

 

(21

)

(29

)

(50

)

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

 

1,121

 

(2,727

)

(1,606

)

Redeemable preferred stock dividends declared or accumulated

 

(15,423

)

—

 

(15,423

)

Redeemable preferred stock redemptions

 

4

 

—

 

4

 

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

 

$

(14,298

)

$

(2,727

)

$

(17,025

)

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE:

 

 

 

 

 

 

 

Basic

 

$

(0.33

)

 

 

$

(0.39

)

Diluted

 

$

(0.33

)

 

 

$

(0.39

)

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

43,792

 

 

 

43,792

 

Diluted

 

43,792

 

 

 

43,792

 

 

The accompanying notes are an integral part of these 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 June 30, 2019, as contained in the financial statements presented in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 8, 2019.

(B)       Except as described in (C) below, represents the elimination of the assets and liabilities associated with the Union Square 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 Union Square Properties, which is net of changes to cash for settlement of property-level other assets and liabilities, prorations and adjustments, and transaction costs directly attributable to the sale.

(D)       Represents the excess of the net cash proceeds from the sale of the Union Square Properties over the carrying value, as of June 30, 2019, of the assets net of liabilities of the Union Square Properties. This amount has not been reflected in the pro forma consolidated statements of operations as it is considered to be nonrecurring in nature.

(E)        Reflects the consolidated results of operations of the Company for the six months ended June 30, 2019, as contained in the financial statements presented in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 8, 2019.

(F)         Represents the elimination of actual revenues and expenses associated with the Union Square Properties for the six months ended June 30, 2019, except as described in (G) below.

(G)       Represents the impact to asset management fees assuming the sale of the Union Square Properties occurred on January 1, 2018. Asset management fees are calculated as a percentage of the daily average gross fair value of investments.

(H)      Reflects the consolidated results of operations of the Company for the year ended December 31, 2018, as contained in the financial statements presented in the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2019. Certain prior period amounts have been reclassified to conform with the presentation for the six months ended June 30, 2019. With the adoption of Accounting Standards Update 2016-02, Leases (Topic 842) and the election of the lessor practical expedient not to separate lease and non-lease components, $9,039,000 of expense reimbursements were reclassified as rental and other property income and $984,000 of non-lease component expense reimbursements recognized under the revenue recognition guidance were reclassified as interest and other income on the consolidated statement of operations for the year ended December 31, 2018. Under the new leasing guidance, bad debt expense associated with changes in the collectability assessment for operating leases shall be recorded as adjustments to rental and other property income rather than rental and other property operating expenses. The impact of this reclassification resulted in a $254,000 reclassification from rental and other property expenses to rental and other property income on the consolidated statement of operations for the year ended December 31, 2018.

(I)           Represents the elimination of actual revenues and expenses associated with the Union Square Properties for the year ended December 31, 2018, except as described in (J) below.

(J)           Represents the impact to asset management fees assuming the sale of the Union Square Properties occurred on January 1, 2018. Asset management fees are calculated as a percentage of the daily average gross fair value of investments.