UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2004.
| ¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Transition Period From to .
Commission file number 0-50854
THOMAS PROPERTIES GROUP, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 20-0852352 | |
| (State or other jurisdiction of Incorporation or organization) |
(IRS employer identification number) | |
| 515 South Flower Street, Sixth Floor Los Angeles, CA |
90071 | |
| (Address of principal executive offices) | Zip Code | |
Registrant’s telephone number, including area code (213) 613-1900
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class |
Outstanding at November 19, 2004 | |
| Common Stock, $.01 par value per share |
14,295,814 |
THOMAS PROPERTIES GROUP, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2004
| PAGE NO. | ||||
| PART I. FINANCIAL INFORMATION |
||||
| ITEM 1. |
Combined Financial Statements of Thomas Properties Group, Inc. Predecessor | |||
| Combined Balance Sheets as of September 30, 2004 (unaudited) and December 31, 2003 |
2 | |||
| 3 | ||||
| Combined Statements of Cash Flows for the nine months ended September 30, 2004 and 2003 (unaudited) |
4 | |||
| 5 | ||||
| ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | ||
| ITEM 3. |
Quantitative and Qualitative Disclosure about Market Risk | 30 | ||
| ITEM 4. |
Controls and Procedures | 31 | ||
| PART II. OTHER INFORMATION |
||||
| ITEM 1. |
Legal Proceedings | 32 | ||
| ITEM 2. |
Changes in Securities and Use of Proceeds | 32 | ||
| ITEM 3. |
Defaults Upon Senior Securities | 32 | ||
| ITEM 4. |
Submission of Matters to a Vote of Security Holders | 32 | ||
| ITEM 5. |
Other Information | 32 | ||
| ITEM 6. |
Exhibits | 33 | ||
| 34 | ||||
PART I. FINANCIAL INFORMATION
| ITEM 1. | COMBINED FINANCIAL STATEMENTS |
Separate financial statements for Thomas Properties Group, Inc. (the “Company”) have not been presented as the Company had no operations from inception to September 30, 2004. Operations for the Company commenced upon the consummation of the initial public offering of the Company’s common stock on October 13, 2004. Therefore, combined financial statements for the Company’s predecessor (“Thomas Properties Group, Inc. Predecessor”) have been presented herein as of September 30, 2004 and December 31, 2003, and for the three and nine months ended September 30, 2004 and 2003.
1
THOMAS PROPERTIES GROUP, INC. PREDECESSOR
COMBINED BALANCE SHEETS
(In thousands, except share data)
| September 30, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Investments in real estate: |
||||||||
| Land and improvements |
$ | 51,527 | $ | 43,655 | ||||
| Buildings and improvements |
237,663 | 148,405 | ||||||
| Tenant improvements |
77,338 | 39,674 | ||||||
| 366,528 | 231,734 | |||||||
| Less accumulated depreciation |
(114,199 | ) | (66,998 | ) | ||||
| 252,329 | 164,736 | |||||||
| Investments in real estate—development property held for sale |
— | 1,965 | ||||||
| Investments in uncombined real estate entities |
23 | 13,207 | ||||||
| Cash and cash equivalents |
4,616 | 3,590 | ||||||
| Restricted cash |
10,782 | 8,116 | ||||||
| Rents and other receivables, net |
3,096 | 1,178 | ||||||
| Receivables—uncombined real estate entities |
685 | 186 | ||||||
| Deferred rents |
31,391 | 32,204 | ||||||
| Deferred leasing and loan costs, net |
11,407 | 3,804 | ||||||
| Other assets |
15,701 | 739 | ||||||
| Total assets |
$ | 330,030 | $ | 229,725 | ||||
| LIABILITIES AND OWNERS’ DEFICIT | ||||||||
| Liabilities: |
||||||||
| Mortgage loans |
$ | 208,027 | $ | 139,670 | ||||
| Other secured loans |
87,739 | 86,171 | ||||||
| Accounts payable and other liabilities |
10,987 | 2,748 | ||||||
| Prepaid rent |
2,845 | 2,873 | ||||||
| Total liabilities |
309,598 | 231,462 | ||||||
| Minority interest |
24,329 | 1,133 | ||||||
| Owners’ deficit: |
||||||||
| Common stock, $.01 par value, 10,000 shares authorized; 100 shares issued and outstanding |
— | — | ||||||
| Limited voting stock, $.01 par value, 17,000,000 shares authorized, 16,666,666 shares issued and outstanding |
167 | — | ||||||
| Additional paid-in capital |
1 | — | ||||||
| Deficit |
(4,065 | ) | (2,870 | ) | ||||
| Total owners’ deficit |
(3,897 | ) | (2,870 | ) | ||||
| Total liabilities and owners’ deficit |
$ | 330,030 | $ | 229,725 | ||||
See accompanying notes to combined financial statements.
2
THOMAS PROPERTIES GROUP, INC. PREDECESSOR
COMBINED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues: |
||||||||||||||||
| Rental |
$ | 8,317 | $ | 5,432 | $ | 19,526 | $ | 15,635 | ||||||||
| Tenant reimbursements |
4,399 | 2,495 | 10,090 | 7,488 | ||||||||||||
| Parking and other |
952 | 606 | 2,090 | 1,664 | ||||||||||||
| Investment advisory, management, leasing, and development services |
2,413 | 1,262 | 5,023 | 7,103 | ||||||||||||
| Investment advisory, management, leasing, and development services—uncombined real estate entities |
2,343 | 927 | 4,394 | 3,365 | ||||||||||||
| Total revenues |
18,424 | 10,722 | 41,123 | 35,255 | ||||||||||||
| Expenses: |
||||||||||||||||
| Rental property operating and maintenance |
3,365 | 1,785 | 7,822 | 5,307 | ||||||||||||
| Real estate taxes |
1,457 | 790 | 3,204 | 2,474 | ||||||||||||
| Investment advisory, management, leasing, and development services |
3,167 | 1,913 | 8,749 | 7,482 | ||||||||||||
| Rent—uncombined real estate entities |
53 | 123 | 217 | 225 | ||||||||||||
| Interest |
6,760 | 5,274 | 17,767 | 15,618 | ||||||||||||
| Depreciation and amortization |
2,674 | 1,532 | 5,862 | 4,371 | ||||||||||||
| Total expenses |
17,476 | 11,417 | 43,621 | 35,477 | ||||||||||||
| Operating income (loss) |
948 | (695 | ) | (2,498 | ) | (222 | ) | |||||||||
| Gain on sale of real estate |
— | — | 975 | — | ||||||||||||
| Equity in net loss of uncombined real estate entities |
(502 | ) | (424 | ) | (1,031 | ) | (1,008 | ) | ||||||||
| Minority interests |
(1,219 | ) | — | (1,622 | ) | — | ||||||||||
| Net loss |
$ | (773 | ) | $ | (1,119 | ) | $ | (4,176 | ) | $ | (1,230 | ) | ||||
See accompanying notes to combined financial statements.
3
THOMAS PROPERTIES GROUP, INC. PREDECESSOR
COMBINED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (4,176 | ) | $ | (1,230 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Equity in net loss of uncombined real estate entities |
1,031 | 1,008 | ||||||
| Gain on sale of real estate |
(975 | ) | — | |||||
| Deferred rents |
3,880 | 4,453 | ||||||
| Depreciation and amortization |
5,862 | 4,371 | ||||||
| Bad debt |
(225 | ) | — | |||||
| Amortization of loan costs |
293 | 99 | ||||||
| Minority interests |
1,622 | — | ||||||
| Changes in assets and liabilities: |
||||||||
| Rents and other receivables |
(1,352 | ) | (475 | ) | ||||
| Receivables—uncombined real estate entities |
(311 | ) | (144 | ) | ||||
| Other assets |
(7,001 | ) | (835 | ) | ||||
| Deferred leasing and loan costs |
(799 | ) | (616 | ) | ||||
| Deferred interest payable |
2,582 | 1,020 | ||||||
| Accounts payable and other liabilities |
6,571 | (555 | ) | |||||
| Prepaid rent |
(130 | ) | 2,076 | |||||
| Net cash provided by operating activities |
6,872 | 9,172 | ||||||
| Cash flows from investing activities: |
||||||||
| Expenditures for improvements to real estate |
(2,700 | ) | (1,061 | ) | ||||
| Expenditures for real estate improvements—land held for sale |
— | (87 | ) | |||||
| Proceeds from sale of real estate |
3,321 | — | ||||||
| Distributions received from uncombined real estate entities |
2,445 | 658 | ||||||
| Contributions to uncombined real estate entities |
(96 | ) | (5,004 | ) | ||||
| Escrow deposits in connection with the purchase transaction for One Commerce Square |
(6,000 | ) | — | |||||
| Cash acquired from One Commerce Square investment |
2,619 | — | ||||||
| Change in restricted cash |
(538 | ) | (3,566 | ) | ||||
| Net cash used in investing activities |
(949 | ) | (9,060 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Contributions from owners |
3,749 | 14,314 | ||||||
| Distributions to owners |
(1,417 | ) | (2,238 | ) | ||||
| Minority interest distributions |
(395 | ) | — | |||||
| Principal payments on notes payable |
(6,927 | ) | (2,351 | ) | ||||
| Repayment of loan |
— | (220,194 | ) | |||||
| Proceeds from mortgage loans and other secured loans |
93 | 209,791 | ||||||
| Payments on loan costs |
— | (2,082 | ) | |||||
| Net cash used in financing activities |
(4,897 | ) | (2,760 | ) | ||||
| Net increase (decrease) in cash and cash equivalents |
1,026 | |||||||